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Appeal No. 469 of 1966. Appeal by special leave from the judgment and decree dated November 25, 1965 of the Bombay High Court in Civil Revision Application No. 1579 of 1962. section G. Patwardhan and M. V. Goswami, for the appellant S.T. Desai and K. L. Hathi, for respondent No.1 The Judgment of the Court was delivered by Bachawat, J. The question arising in this appeal by special leave is whether in a case falling under sub s.(3)(a) of section 12 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (Act No. 57 of 1947), a tenant can claim protection from eviction by showing his readiness and willingness to pay the arrears of rent before the date of the institution of the suit. The appellant 's husband was a tenant of a flat The rent was in arrears 136 for a period of more than six months. On December 22, 1956, the landlord served a notice on the tenant demanding the rent. The tenant neglected to pay the rent within one month of the notice. On January 11, 1957, he died. On February 4, 1957, the appellant sent the arrears of rent to the landlord by money order, but the landlord refused to accept the payment. On February 5, 1957, the landlord instituted the present suit for eviction of the appellant. The trial Court decreed the suit. The appellant filed a revision application before the Bombay High Court, but this application was dismissed by the High Court. It is to be noticed that the rent was in arrears for a period of more than six months. The tenant neglected to make payment of the arrears of rent within one month of the service of the notice by the landlord under sub section (2) of s.12. The rent was payable by the month, and there was no dispute regarding the amount of the rent. The case was, therefore, precisely covered by sub section (3)(a) of section 12. Nevertheless, the appellant submitted that as she was ready and willing to pay the rent before the institution of the suit, she could claim protection under sub section (1) of section 12. She submitted that the decided cases support this conten tion. In Mohanlal vs Maheshwari Mills Ltd.( '), P. N. Bhagwati, J. held that even in a case falling under sub section (3) (a), a tenant could, by paying or showing his readiness and willingness to pay the arrears of rent before the institution of the suit, claim protection from eviction under sub section A similar opinion was expressed by a Divisional Bench of the Gujarat High Court in Ambalal vs Babaidas(2). The judgment under appeal dissented from the view expressed by the Gujarat High Court. The Bombay High Court held, and, in our opinion, rightly, that in a case falling under sub section (3)(a), the tenant could not claim protection from eviction by showing his readiness and willingness to pay the rent before the institution of the suit. Sub section (1) of section 12 imposes a general restriction on the landlord 's right to recover possession of the premises so long as the tenant pays or is ready and willing to pay the rent and observes and performs the other conditions of the tenancy. Subsection (2) of section 12 imposes the further restriction that no suit for recovery of possession on the ground of non payment of rent shall be instituted by the landlord until the expiration of one month after a notice in writing demanding the rent. Sub section (3)(a) provides for the consequences which will follow where the rent is payable by the month, there is no dispute regarding the amount of rent, the rent is in arrears for a period of six months or more, and the tenant neglects to make payment within one month of the service of the notice under sub s (2). In such a case, the tenant (1) (1962) 3 Gujarat Law Reporter, 574 at pp. 618 to 62). (2) (1962) 3 Gujarat Law Reporter 625, 644. 137 cannot claim any protection under sub section (1), and the Court is bound to pass a decree for eviction. At the material time, sub section (3) (a) of section 12 read : "Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub s (2), the Court may pass a decree for eviction in any such suit for recovery of possession. " The word "may" in this sub section has the effect of "shall". In Bhatya Punjalal Bhagwanddin vs Dave Bhagwatprasad Prabhuprasad(l), this Court held that where the requirements of sub section (3)(a) were satisfied, the Court was bound to pass a decree for eviction. The section has now been suitably amended, and the word "shall" has been substituted for the word "may" by Maharashtra Act No. 14 of 1963. If the conditions of sub section (3)(a) are satisfied, the tenant cannot claim any protection from eviction under the Act. By terdering the arrears of rent after the expiry of one month from the service of the notice under sub section (2), he cannot claim the protection under sub section It is immaterial whether the tender was made before or after the institution of the suit. In a case falling within sub section (3)(a), the tenant must be dealt with under the special provisions of sub section (3)(a), and he cannot claim any protection from eviction under the general provisions of sub section The landlord is vested with the right to recover possession of the premises if the rent is in arrears for a period of six months or more, "the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2)", and the other conditions of sub section (3)(a) are satisfied. This right cannot be defeated by showing that the tenant was ready and willing to pay the arrears of rent after the default, but before the institution of the suit. In effect, the appellant asks us to rewrite the section and to substitute in it the following condition : "the tenant neglects to make payment thereof until the date of the institution of the suit. " It is not possible to rewrite the section in the manner suggested by the appellant. The appellant 's case fell precisely within sub section (3)(a) and she could not obtain immunity from eviction by tendering the rent before the institution of the suit. The appeal is dismissed with costs. V.P.S. Appral dismissed. (1) ; ,330 331.

The tenant of a flat was in arrears of rent for more than six months. The landlord served a notice on the tenant demanding the rent. The tenant did not pay it within one month of the notice, but tendered it after the expiry of the month. The landlord refused to receive it and filed a suit for eviction under section 12(3) (a) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The tenant claimed the protection of section 12(1) of the Act on the ground that she was ready and willing to pay the rent before the institution of the suit. HELD : Under section 12(3) (a), the landlord is vested with the right to recover possession of the premises if the rent is in arrears for six months or more, the tenant neglects to pay it until after the expiry of one month after notice demanding the rent and other conditions of sub s.(3) (a) are saitisfied. This right cannot be defeated by showing that the tenant was ready and willing to pay the rent after the default but before the institution of the suit. In a case falling within sub section (3) (a), the tenant must be dealt with under its special provisions and he cannot claim any protection from eviction under the general provisions of sub section (1): and the court was bound to pass a decree for eviction. [137 E, F] Bhaiya Punjalal Dhagwanddin vs Dave Bhagwat Prosad Prabhuprasad, [19631 3 S.C.R. 312, followed. Mohanlal vs Maheshwari Mills Ltd. and Ambala, vs Babaldas, , overrules.

: Criminal Appeal Nos. 380 of 1989 and 323 of 1988. From the Judgment and Order dated 28.1.1988 of the Allahabad High Court in Crl. Appln. No. 995 of 1987. G. Ramaswamy, Additional Solicitor General, Anil Dev Singh, Miss A. Subhashini and R.P. Kapur for the Appellants. R.L. Kohli, Manoj Saxena and R.D. Upadhyay for the Respondents. The Judgment of the Court was delivered by DUTT, J. These two appeals by special leave, one pre ferred by the State of U .P. and the other by the State Bank of India, are directed against the judgment of the Allahabad High Court whereby the High Court has quashed the criminal proceedings being Crime Case No. 40 of 1983 in the Court of Special Judge, Anti Corruption, only as against the respond ent R.K. Srivastava. In quashing the proceedings in the exercise of its jurisdiction under section 482 Cr. P.C., the High Court took the view that allegations made in the First Information Report 836 (FIR) did not constitute any offence. In order to appreciate the view of the High Court, it is necessary to refer to the FIR which reads as follows: "An information has been received that Shri P.C. Saxena and Shri Ram Kumar Srivastava while posted and functioning as Accountant and Clerk cum Godown Keeper in the State Bank of India, Agriculture Development Branch, Budaun, respectively entered into a criminal conspira cy with Shri Sarwant Singh and his wife Smt. Rajwant Kaur, Props. of M/s. National Mill Store, Budaun, during the month of June, 1982 to cheat the State Bank of India, Budaun, and in pursuance of the said criminal conspiracy an.amount of Rs.54,600 ' was withdrawn on the basis of false credit entry made in the books of accounts of the Bank and connected credit and debit vouchers were also prepared and passed by the accused employees of the Bank and payment were made to the accused persons, namely, Shri Sarwant Singh and Smt. Rajwant Kaur who tendered cheque No. 348459 dated 2.5. 1982 for Rs.18,600 cheque No. 348482 for Rs. 19,200, date 2.6. 1982 and cheque No. 502206 dated 2.6.82 for Rs. 16,800 = 54,600. The above facts constitute offence punishable u/s 120 B, 420, 468,471 I.P.C. and 5(2) r/w 5(1)(d) of PC Act, 1947. A regular case is therefore regis tered and its investigation is entrusted to Shri V.P. Arya, Inspector of this establish ment." According to the FIR, as against three cheques of the aggre gate amount of Rs.54,600, presumably of three different Banks, a credit entry was made in the accounts of M/s. National Mill Stores Co., Budaun, and M/s. New Manufacturing Co., Budaun, and their partners, Sardar Sarwant Singh and his wife Smt. Rajwant Kaur, in the State Bank of India and the said sum of Rs.54,600 was allowed to be withdrawn by them by the respondent and the accused P.C. Saxena. The allegations in the FIR appear to be vague and al though it is alleged that the respondent and the accused P.C. Saxena made false credit entries in the books of ac counts of the Bank and connected credit and debit vouchers were also prepared and passed by them, no 837 particulars of the same have been given. It appears from the chargesheet that the said Shri Sarwant Singh and his wife Smt. Rajwant Kaur and their firms, namely, M/s. National Mill Stores Co., Budaun, and M/s. New ManufaCturing Co., Budaun, have current accounts in the State Bank of India, Budaun. After the said three cheques amounting to Rs.54,600 were tendered, the respondent and the accused P.C. Saxena sent the said cheques for clearance and allowed the said Shri Sarwant Singh and his wife Smt. Rajwant Kaur to with draw the sum of Rs. 54,600 from their current account. It is now a well settled principle of law that if the allegations made in the FIR are taken at their face value and accepted in their entirety do not constitute an offence, the criminal proceedings instituted on the basis of such FIR should be quashed. In the instant case, on the basis of the said FIR the respondent and the said P.C. Saxena and Shri Sarwant Singh were charged under sections 120 B, 420, 468 and 471 I.P.C. and section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act, 1947. According to the appellant, as no prima facie case was made out against Smt. Rajwant Kaur, wife of Shri Sarwant Singh, she has been dropped from the array of the accused persons. The question is whether the facts disclosed in the FIR constitute the offences with which the accused have been charged. It is manifestly clear from the allegations in the FIR that the respondent or the other accused had no inten tion whatsoever to make any wrongful gain or to make any wrongful loss to the Bank. They had accepted the said three cheques amounting to Rs.54,600 and sent the same for clear ance after debiting the LOC account. The said cheques have been encashed and the money was received by the State Bank of India. It may be that there was some delay in crediting the LOC account or that the money against the three cheques were credited in the accounts of the said Shri Sarwant Singh and his wife, but the allegations made either in the FIR or in the charge sheet do not show that the respondent and the said P.C. Saxena had acted dishonestly, that is to say, acted with a deliberate intention to cause wrongful gain or wrongful loss. In our opinion, the High Court has rightly held that the allegations made in the FIR do not constitute any offence of cheating, nor do they constitute any offence of forgery. It is true that it has been alleged that the said sum of Rs.54,600 was withdrawn on the basis of false credit entries made in the books of accounts of the Bank and connected credit and debit vouchers were also prepared and passed by the respondent and the other accused. When the said sum of Rs.54,600 838 had been allowed to be withdrawn by the said Shri Sarwant Singh and his wife, necessary entries had to be made in the books of accounts, but it is not understandable how these entries can be characterised as false entries. No document has been referred to in the FIR as the outcome of forgery. The High Court has rightly held that as the criminal proceedings have been started against the respondent on the basis of a FIR which does not contain any definite accusa tion, it amounts to an abuse of process of the court and, as such, is liable to be quashed. We entirely agree with the view expressed by the High Court. The High Court has quashed the proceedings only as against the respondent No. 1, R.K. Srivastava. In our opin ion, when the allegations in the FIR are the same against all the accused persons, the entire proceedings as against all the accused persons including the said P.C. Saxena and the said Shri Satwant Singh should be quashed. Accordingly, while we uphold the judgment of the High Court, we quash the entire criminal proceedings being Crime Case No. 40 of 1983 also as against the accused P.C. Saxena and Shri Sarwant Singh. The appeals are disposed of as above. N.P.V. Appeals disposed of.

The respondents, two employees of a nationalised Bank and two account holders, were charged with offences punisha ble under Sections 120B, 420, 468, 471 I.P.C. and 5(2) read with Section 5(1)(d) of the Prevention of Corruption Act, 1947. The F.I.R. alleged that the two Bank employees entered into a criminal conspiracy with the two account holders to cheat the Bank and, in pursuance thereof an amount of Rs.54,600 was allowed to be withdrawn by the account hold ers, who had tendered three cheques aggregating to Rs.54,600, on the basis of the false credit entries in the books of accounts of the Bank, and connected credit and debit vouchers were also prepared. The case against one of the account holders was later dropped. The High Court quashed the proceedings only against Respondent No. 1 on the ground that the allegations made in the F.I.R. did not constitute any offence of cheating or forgery. Against this decision, the State as well as the Bank filed appeals in this Court. Quashing the proceedings against all the respondents, HELD: 1. If the allegations made in the FIR taken at their face value and accepted in their entirety do not constitute an offence, the criminal proceedings instituted on the basis of such FIR should be quashed. [837C] In the instant case, the Respondent No. 1 and the other accused had accepted the three cheques in question and sent the same for clearance after debiting the LOC account. The cheques were encashed and the money was received by the Bank. It may be that there was some delay in crediting the LOC account or that the money against the three 835 cheques were credited in the accounts of the account hold ers, but the allegations made either in the FIR or in the charge sheet do not show that they had acted dishonestly, or with deliberate intention to cause wrongful gain or wrongful loss to the Bank. When the amount was allowed to be with drawn by the account holders, necessary entries had to be made in the accounts of the Bank and these entries cannot be characterised as false. No document has been referred to in the FIR as the outcome of forgery. [837E F, 838A] The High Court was, therefore, right in holding that the allegations made in the FIR did not constitute any offence of cheating or forgery and that as the criminal proceedings had been started on the basis of a FIR which did not contain any definite accusation and it amounted to an abuse of process of the Court, they were liable to be quashed. [837G, 838B] Since the allegations in the FIR are the same against all the accused persons, the entire proceedings as against all the accused persons should be quashed. Accordingly, the entire criminal proceedings are quashed. [838C]

Appeals Nos. 165 and 166 01 1965. Appeals from the judgment and decree dated May 7, 1960 of the Madras High Court in O.S.A. Nos. 25 and 52 of 1956. S.V. Gupte, Naunit Lal and R. Thiagarajan, for the appellants (in both the appeals). N.C. Chatterjee, section Balakrishnan for R. Ganapathy lyer, for the respondent (in both the appeals). The Judgment of the Court was delivered by Bachawat, J. The dispute arises out of a contract between the appellants and the respondent entered into on November 13, 1951. The terms of this contract were recorded in writing in the form of a letter written by the respondent to appellant No. 1 and set out below: "Messrs. P.S.N.S. Ambalavana Chettiar and Company Ltd., 260, Angappa Naicken Street, Madras. Dear Sirs, We confirm having purchased from you and the Madras Paper Marketing Company, Madras, 500 tons of Russian Newsprint as per the following description : About.70 per cent in reels of 34 inches width. " 15 per cent in reels of 22 inches width. " 15 per cent in reels of 36 inches width. at annas 9 per lb. Ex Wharf Bombay duty, etc., paid. The buyers are to take delivery within four days of the offer of delivery. Any wharfage, etc., up to the fourth day of the offer of delivery will be on seller 's account and thereafter on buyer 's account. We have also sold you about 415 tons of Russian newsprint in sheets in size of about 30"X 42" (760 mm X 1085 mm) ex godown, Madras at Re. 0 9 6 per lb. We will keep the stock of sheets in our godown on your account free of rent. We shall advance you moneys against this newsprint at annas 8 per lb. This advance will carry interest at 5 per cent per annum. We will also charge you the exact amount of insurance which we pay to our Insurance Company against the goods. 241 We shall pay Rs. 5,60,000 to your Bankers in Bombay and take delivery of the 500 tons of newsprint from the harbour in Bombay. Accounts wilt be made on the basis of the above arrangement and whatever one party is liable to pay to the other will be adjusted subsequently. Thanking you, Yours faithfully, For Express Newspapers Limited Director. " The document shows that the respondent agreed to buy from the appellants 500 tons of Russian newsprint in reels at 9 annas per lb., ex wharf Bombay, and to take delivery of the goods on payment of Rs. 5,60,000. At the same time, the appellants agreed to buy from the respondent 415 tons of Russian newsprint in sheets then lying in a godown in Madras at 9 annas 6 pies per lb. upon the term that the appellants would pay the insurance charge and also interest at 5 per cent per annum on an amount equivalent to the price of the goods calculated at 8 annas per lb. The understanding was that the appellants would within a reasonable time take delivery of the goods bought by them in instalments and the accounts would be finally adjusted on the completion the deliveries. It may be mentioned that appellant No. 2 carried on business under the name and style of Madras Paper Marketing Company. On November 26, 1951, the parties orally agreed that instead of 500 tons the respondent would buy 300 tons of newsprint in reels and that instead of 415 'tons the appellants would buy 300 tons of newsprint in sheets and the terms of the contract dated November 13, 1951 would stand varied accordingly. On December 5, 1951, the respondent took delivery of 300 tons of newsprint in reels on payment of Rs. 3,18,706 9 10 and a sum of Rs. 57,816 13 2 remained due to the appellants on account of the price of these goods. From November 29, 1951 up to February 27, 1952, the appellants took delivery of 122324 lbs. of newsprint in sheets on payment of. 63,032 15 9 to the respondent. Subsequently, the appellants refused to take 'delivery of the balance 547501 lbs. of newsprint in sheets. Counsel for the parties agreed before us that March 29, 1952 was the date when the appellants repudiated the contract. On April 21, 1952 after giving notice to the appellants the respondent resold the balance goods to one G.R. Lala at 61/2 annas per lb. On April 18, 1952, the appellants filed in the High Court of Madras C.S. No. 175 of 1952 claiming from the respondent 242 Rs. 57,816 13 2 on account of the balance price of 300 tons of newsprint in reels and interest thereon. The respondent admitted the claim for the balance price. On July 30, 1952, the respondent filed in the High Court of Madras C.S. No. 262 of 1952 claiming a decree for Rs. 62,266 13 2 on account of the balance price of 122324 lbs. , the deficiency 'on resale of 547501 lbs. of the newsprint in sheets, interest and insurance charges after setting off the sum of Rs. 57,816 13 2 due to the appellants. The principal defence of the appellants was that the contract with regard to 415 tons of newsprint in sheets was cancelled in November, 1951 and that appellant No. 2 was not a party to this contract. The appellants also denied the factum and validity of the resale. The two suits were tried. by Rajagopala Ayyangar, J. He dismissed C.S. No. 175 of 1952 and decreed C.S. No. 262 of 1952. From these two decrees, the appellants filed two appeals in the High Court of Madras. A Division Bench of the High Court dismissed the two appeals. The present appeals have been filed on certificates granted by the High Court. The two Courts concurrently found that (1 ) appellant No. was a party to the contract of purchase of 415 tons of newsprint in sheets, (2) on November 26, 1951 the parties orally agreed that instead of 415 tons the appellants would buy 300 tons of the newsprint and (3) there was no cancellation of the contract as alleged by the appellants. These findings are not challenged. The two Courts concurrently found that the resale held on April 21, 1952 was genuine and was effected at a proper price on due notice and after proper advertisement. Mr. Gupte attempted to challenge these findings, but we see no reason to interfere with them. The principal argument advanced by Mr. Gupte was that the property in the goods resold on April 21, 1952 had not passed to the appellants and the resale was consequently invalid. We are inclined to accept this argument. It is to be noticed that the contract did not envisage any loan of money by ,the respondent to the appellants on the security of the newsprint in sheets. The payment of Rs. 3,18,706 9 10 was made by the respondent towards part discharge of its liability for the price of the newsprint in reels. No. doubt, the contract stated: "We shall advance you moneys against this newsprint at annas 8 per lb. This advance will carry interest at 5 per cent per annum. " But the real import of this clause was that the appellants would pay interest at 5 per cent per annum on an amount equivalent to the price of the newsprint in sheets calculated at 8 annas per lb. The respondent was not a pledge of the newsprint in sheets and had no right to sell the goods under section 176 of the . The real question is whether the respondent had the right to resell the goods under section 54(2) of the . 243 The seller can claim as damages the difference between the contract price and the amount realised on resale of the goods where he has the right of resale under section 54(2) of the . The statutory power of resale under section 54(2) arises if the property in the goods has passed to the buyer subject to the lien of the unpaid seller. Where the property in the goods has not passed to the buyer, the seller has no right of resale under section 54(2). The question is whether the property in the 300 tons of newsprint in sheets had passed to the appellants before the resale. On November 13, 1951, the respondent agreed to sell to the appellants tile stock of 415 tons of newsprint in sheets then lying in the respondent 's godown in Madras. There was an unconditional contract for the sale of specific goods in a deliverable state and the property in the goods then passed to the appellants. But on November 26, 1951, the contract was varied in a material particular. The parties, agreed that the appellants would buy only 300 tons of the stock of 415 tons of newsprint then lying in the respondent 's godown. The result was that in place of the original contract for sale of specific goods a contract for sale of unascertained goods was substituted. Rajagopala Ayyangar, J. held that the effect of the variation of the contract on November 26, 1951 was that the appellants and the respondent became joint owners of the stock 45 tons. In our opinion, this was not the correct legal position. The parties did not intend that the appellants would buy undivided share in 415 tons of newsprint. On November 26, 1951 the bargain between the parties was that the appellants would buy and the respondent would sell 300 tons out of the larger stock of 415 tons. The appellate Court held that the property in the entire 415 tons passed to the appellants who were subsequently reviewed from their liability to take 115 tons and that the respondent could resell any 300 tons out of the larger stock of 415 tons. We are unable to accept 'this line of reasoning. It is true that originally the property in the entire 415 tons had passed to the appellants. But the result of the variation of the contract was to annul the passing of property in the goods. The effect of the bargain on November 26, 1951 was that the respondent would sell and deliver to the appellants any 300 tons out of the larger stock of 415 tons. As from November 26, 1951, the property in the entire stock of 415 tons belonged to the respondent. The parties did not intend that as from November 26, 1951 the property in any individual portion of the stock of 415 tons would remain vested in the appellants. 244 Section 18 of the provides that where there is a contract for the sale of unascertained goods no property the goods is transferred to the buyer unless and until the goods are ascertained. It is a condition precedent to the passing property under a contract of sale that the goods are ascertained. The condition is not fulfilled where there is a contract for sale of a portion of a specified larger stock. Till the portion is identified and appropriated to the contract, no property passes to the buyer. In Gillett vs Hill(1), Bayley, B. said: "Where there is a bargain for a certain quantity extra greater quantity, and there is h power of selection in the vendor to deliver which he thinks fit, then the right to them does not pass to the vendee until the vendor has made his selection, and trover is not maintain able before that is done. If I agree to deliver a certain quantity of oil as ten out of eighteen tons, on one can say Which part of the whole quantity I have agreed to deliver until a selection is made. There is no individuality until it has been divided. " No portion of 415 tons of the newsprint lying in the respondent 's godown was appropriated to the contract by the respondent with the appellants 's consent before the resale. On the date of the resale, property in the goods had not passed to. the buyer Consequently, the respondent had no right to resell the goods under section 54(2). The claim to recover the deficiency on resale is not suitable. The respondent to claim as damages the difference between the contract price and the market price on the date of the breach. Where no time is fixed under the contract of sale for acceptance of the goods, the measure of damages is prima facie the difference between the contract price and the market price on the date of the refusal by the buyer to accept the goods, see Illustration (c) to section 73 of the . In the present case, no time was fixed in the contract for acceptance of the goods. On March 29, 1952, the appellants refused to accept the goods. The respondent is entitled to the difference between the contract price and the market price on March 29, 1952. Counsel for both parties requested us that instead of remanding the matter we should assess the damages on this basis and finally dispose of the matter. We have gone through the materials on the record and with the assistance of counsel, we assess the market price of the Russian newsprint in sheets on March 29, 1952 at 8 annas per lb. Counsel on both sides agreed to this assessment. The claim of the respondent for Rs. 6,7)8 5 1 on account of interest and Rs. 1,119 6 0 for insurance charges is admitted (1) ; , ,873. 245 before us by Mr. Gupte. On this basis, the final position is as follows: (Rupees) Price of 122324 lbs. at 91 1/2 annas per lb. less Rs. 63,032 15 9 9,596 14 3 Difference on 547051 lbs.at 11/2 annas per lb. 51,286 0 6 Interest 6,795 5 1 Insurance charges . 1,119 6 0 Total amount due to the respondent . 68,797 9 10 Deduct amount due to the appellants . 57,816 13 2 Balance due to the.respondent . . 10,980 12 8 In the result, Civil Appeal No. 165 of 1965 is allowed in part, the decrees passed by the Courts below are varied by substituting therefore a decree in favour of the respondent against the appellants for a sum of Rs. 10,980 12 8 with interest thereon at 6 per cent per annum from July 30, 1952. The decrees for 'costs passed by the Courts below are affirmed. There will be no order as to costs in this Court. Civil Appeal No. 166 of 1965 is dismissed. No order as to cost thereof. V.P.S. C.A. 165 of 1965 allowed in part. C.A. 166 of 1965 dismissed.

On 13th November 1951, the respondent agreed to sell to the appellants a stock of 415 tons of newsprint in sheets then lying in the respondent 's godown. On 26th November, the parties varied the contract by agreeing that the appellants would buy only 300 tons out of the. stock of 415 tons. After taking delivery of a part of the newsprint, the appellants refused to take delivery of the balance and repudiated the contract on 29th March 1952. On 21st April the respondent, after notice to the appellants. resold the balance at a lesser rate. The suit flied by the respondent claiming from the appellants the deficiency on resale was decreed. In appeal to this Court, Held: (1) The claim was unsustainable. (a) As the respondent was not a pledge of the newsprint, the respondent had no right to sell the goods under section 176 of the . [242H] (b) A seller can claim as damages the difference between the contract price and the amount realised on resale of the goods where he has the right of resale under section 54 (2) of the Indian . But this statutory power of resale arises only if the property in the goods has passed to the buyer subject to the lien of the unpaid seller. Under section 18 of the Sale of Goods Act. it is a condition precedent to the passing of property under a contract of sale that the goods are ascertained. In the present case, when the contract was originally entered into for the sale of 415 tons there was an unconditional contract for the sale of specific goods in a deliverable state and the property in those goods then passed to the appellants. But the effect of the variation was not to make the appellants and respondent joint owners of the stock of 415 tons. Nor was it merely to relieve the appellants from their liability to take 115 tons. The effect was to annul the passing of the property. so that. as from 26th November the property in the entire stock of 415 tons belonged to the respondent. The result was that in place of the original contract for sale of specific goods a contract for sale of unascertained goods was substituted. No portion of the stock of 415 tons was appropriated to the contract by the respondent with the appellants ' consent before the resale. Therefore, on the date of resale. the property in the goods had not passed to the buyer (appellants) and the respondent had no right to resell.1243A. E. F H; 244A B] Gillett vs Hill; ,, ; , applied. (2) As no time was fixed under the contract of sale for acceptance of the goods, under section 73 of the Indian Contract Act, the respondent was entitled to the difference between the contract price and the market price on 29th March 1952, the date of repudiation, as damages. [244E C] 240

Appeal No. 159 of 1951. Appeal by special leave from the judgment and order dated 13th of April, 1951, of the High Court of Judicature at Madras (Rajamannar C.J. and Somasundaram J.) in C.M.P. No. 122/15 of 1950. M.C. Setalvad (C. R. Pattabhi Raman, with him) for the appellant. C.K. Daphtary (M. Natesan, with him) for the respondent No.1 V.K.T. Chari, Advocate General of Madras (R. Ganapathi lyer, with him) for respondent No. 4. 1952. March 17. The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J. This appeal arises as the result of special leave to appeal granted by this Court on the 1st of May, 1951, against an order of the Madras High Court dated 13th April, 1951, quashing certain proceedings of the Regional Transport Authority, Tanjore, and the Cen tral Traffic Board, Madras, dated 19th January, 1950, and 3rd March, 585 1950, respectively, and an order of the first respondent (the State of Madras) dated 7th November, 1950, and direct ing the issue to Messrs. Raman and Raman Ltd., (Petitioners before the High Court) of permits for the five buses in respect of which a joint application had been made original ly by them and one T.D. Balasubramania Pillai. The present appellant, G. Veerappa Pillai, was the fourth respondent in the High Court. The present first respondents (Messrs. Raman and Raman Ltd.) were the peti tioners before the High Court Present respondents Nos. 2, 3 and 4 were respectively respondents Nos. 1, 2 and 3 before the High Court. The dispute is between the appellant and Messrs. Raman and Raman Ltd., who were competing bus proprietors in the Tanjore District; and it is over the issues of five perma nent permits for buses Nos. M.D.O. 81, M.D.O. 230, M.D.O. 6, M.D.O. 7 and M. D.O. 759 on the route between Kumbakonam and Karaikal. It has been a long drawn game with many moves, counter moves, advances and checkmates, both sides display ing unusual assiduity and skill in their manoeuvres for position. But it is unnecessary to set out in great detail all the steps taken, as they have been narrated in the order of High Court and many of them are of insignificant rele vance for disposal of this appeal. I shall state here only what is material. The 'C ' permits for the five buses stood originally in the name of Balasubramania Pillai. The buses were agreed to be purchased from him by Messrs. Raman and Raman Ltd., and there was a joint application by the transferor and trans feree on 10th March, 1944, for transfer of the ownership and of the 'C ' permits in the name of the purchasers. Two days later, Veerappa Pillai, proprietor of the Sri Sathi Viias Bus Service, who is the appellant before us, applied for temporary permits to ply two of his own vehicles over the same route, stating that the vehicles of the two agencies which held the permits were mostly out of action. It was a fact that out of the five buses sold 586 by Balasubramania Pillai, only two were then running; the other three were under repairs. The permanent permits for the sold buses were suspended by order of the Secretary dated 28th March, 1944. Temporary permits for buses M.D.O. 920, 894, 918, M.S.C. 7632 and 7482 had been issued to Veerappa Pillai during the same month. Now we come to another chapter in the story. Balasubra mania Pillai resiled from the joint application and repudi ated it as having been got from him by fraud. The Secre tary, Road Traffic Board, thereupon refused to transfer the ownership on the 19th March, 1944, and this order was con firmed by the Board on 29th May, 1944, Balasubramania Pillai and Veerappa Pillai made a joint application on 10th April, 1944, for transfer of the buses and the original permits in favour of Veerappa Pillai who had on the same date agreed to purchase the vehicles. The Secretary granted this applica tion on the same date Messrs. Raman and Raman Ltd., took the matter before the Central Road Traffic Board and they made an order on 16th August, 1944, upholding the issue of tempo rary permits to Veerappa Pillai for his buses M.D.O. 920, 894,918, M.S.C. 7632 and 7482, but setting aside the trans fer of registry of the original buses and the transfer of the permits relating to the same. On an application by Veerappa Pillai to review its order dated 16th August, 1944, the Central Road Traffic Board allowed on 27th November, 1944, only the transfer of the ownership of the buses but not a transfer of the permits. Yet another move in the game was this Veerappa Pillai filed a suit in the court of the Subordinate Judge, Kumbako nam, on 3rd October, 1944, for recovery of possession of the original five buses from Messrs. Raman and Raman Ltd., on the strength of his purchase from Balasubramania Pillai. The Subordinate Judge appointed Veerappa Pillai as Receiver on 17th March, 1945, and the five disputed buses were deliv ered to him on 26th April, 1945. Two of the buses M.D.O. 6 and 7 were repaired by him and put on the route under his temporary permits. The suit was decreed in 587 his favour on 2nd May, 1946. Later, he repaired the other three buses M.D.O. 759, 230 and 81 and began to run them on the same route under the temporary permits he held. Veerappa Pillai was discharged from receivership on 18th September, 1946. On the strength of the Sub Court decree, Veerappa Pillai again applied for a permanent transfer of the permits, and on 22nd July, 1946, the Central Road Traffic Board trans ferred the petition to the Regional Transport Authority with an intimation that it saw no objection to the issue of regular permits to Veerappa Pillai for the disputed buses or to their transfer in his name, provided there were valid permits in existence. This view appears to have been modi fied later and on 2nd September, 1946, the Regional Trans port Officer directed the issue of temporary permits to the buses for the period from 3rd September, 1946, to 31st October, 1946, subject to the condition that the issue of the permits did not affect the rights of either party in the matter under dispute. Thereupon, the Government was moved by Veerappa Pillai and also by Messrs. Raman and Raman Ltd., but the Government declined to interfere and the result was an order on 30th June, 1947, by the Regional Transport Authority to the following effect: " Since the subject matter is on appeal before the High Court, the matter will lie over pending the decision of the High Court. The temporary permits are continued as is being done." A fresh petition by Veerappa Pillai to the Central Road Traffic Board, Madras, was unsuccessful, but a further appeal to the Government of Madras ended in his favour in an order dated 29th March, 1949. The order is in these terms : "Shri Sathi Viias Bus Service, Porayar, Tanjore dis trict, have been permitted by the Regional Transport Author ity, Tanjore, to run their buses M.D.O. 6, 7, 81, 230 and 750 on the Kumbakonam Karaikal route on temporary permits from 1944 pending 588 the High Court 's decision on the question of permanent ownership of the buses. Government consider it undesirable to keep these buses running on temporary permits for a long and indefinite period. Further Sri Sathi Vilas Bus Service have secured the decision of the Sub Court, Kumbako nam, in their favour about the permanent ownership of the buses. In the circumstances the Regional Transport Authori ty, Tanjore, is directed to grant permanent permits for the buses of Sri Sathi Vilas Bus Service, Porayar, referred to above in lieu of the existing temporary permits. " On the basis of this Government order, permanent permits were issued in favour of Veerappa Pillai on 18th April, 1949. Getting to know of this last order, Messrs. Raman and Raman Ltd.,approached the Government Madras with a petition praying for clarification of the order by making it expressly subject to the decision of the High Court regarding the title to the said five buses and that in the event of the High Court deciding the appeal in favour of Messrs. Raman and Raman Ltd. "the above said five permanent permits will be taken away from Veerappa Pillai and given to them." The Minister of Transport, who dealt with the matter, stated on the petition "that was my inten tion also. " The High Court reversed the decree of the Sub Court on 2nd September, 1949, and came to the conclusion that the title of Messrs. Raman and Raman Ltd., to the five buses prevailed over that of Veerappa Pillai. On 19th September, 1949, they applied to the Government for cancellation of the five permits issued to Veerappa Pillai and for grant of the same to them. The Government declined to interfere as the Regional Transport Authority was the competent authority, vide order dated 16th November, 1949. In their application to the Regional 'Fransport Authority dated 28th November, 1949, Messrs. Raman and Raman Ltd., asked for withdrawal of the permits. In the meantime, that is on 14th October, 1949, Veerappa Pillai applied for renewal of his permanent permits held for his own 589 buses Nos. M.D.O. 1357, 20, 1366, 1110, 1077, M.D.O. 1368 and M.S.C.7632, which had been substituted for the disputed buses as they had become unroadworthy and useless. The application for renewal has under section 58, sub clause (2), of the Act to be treated as a fresh application for new permits. This procedure was followed and on 22nd October, 1949, a notification was issued inviting objections against the renewal and giving 30th November, 1949, as the date of hearing. No objections were received and the Secretary renewed the permits for two years from 1st January, 1950. This order was dated 3rd January, 1950. The Regional Trans port Authority dealing with the application of Messrs. Raman and Raman Ltd., dated 28th November, 1949, resolved on 19th January, 1950, that the permanent permits issued to Veerap pa Pillai should be cancelled, that the route should be declared vacant in respect of the five buses and fresh applications should be invited and dealt with on the merits. The order further stated that "in the meanwhile Sri G. Veerappa Pillai and Raman and Raman will be given temporary permits for running two and three buses respectively on the route. The permanent permits will be cancelled with imme diate effect. Raman and Raman should put in the buses as quickly as possible. Till then Sri Veerappa Pillai will be given temporary permits so as not to dislocate public traf fic. " Both the parties were dissatisfied with this order and preferred appeals to the Central Road Traffic Board, Madras, which dismissed the appeal of Messrs. Raman and Raman Ltd., and restored the permanent permits of Veerappa Pillai by order dated the 3rd March, 1950. Messrs Raman and Raman Ltd., moved the Government, but it declined to interfere by G.O., dated 7th November, 1950. Thereupon, Messrs. Raman and Raman Ltd., moved the High Court on 4th December, 1950, under article 226 of the Constitution in Civil Miscellaneous Petition No. 12215 of 1950 for a writ of certiorari for quashing the orders and the proceedings of the 590 Regional Transport Authority, the Central Road Traffic Board, Madras, and the State of Madras dated 19th January, 1950, 3rd March, 1950, and 7th November, 1950, respectively, and for the issue of a writ of mandamus or other such appro priate directions to the first respondent to transfer, issue or grant "the five pucca permits in respect of the route Kumbakonam to Karaikkal to the petitioner herein" (Messrs. Raman and Raman Ltd.) It is on this petition that 'the order challenged in this appeal was made by the High Court. The High Court took the view that throughout all the stages prior to the High Court 's decree, the parties, the transport authorities vested with the power to issue per mits, and the Government also proceeded upon the footing that the transfer of the permits was dependent on the title to the buses and that Veerappa Pillai obtained the temporary and permanent permits only in his capacity as transferee and not in his individual right. To quote the learned Chief Justice:"the conduct of the parties, the attitude of the transport authorities including the Government are all explicable only on the assumption that the rights of parties were consequent on the ownership of the five vehicles in question. The fourth respondent having obtained the benefit of temporary and permanent permits as a transferee from Balasubramania Pillai all this time cannot be heard now to say after the decision of this Court which has negatived his claim and upheld the claim of the applicant that the appli cant should not enjoy the fruits of his success. " He further points out that the procedure laid down by the Motor Vehi cles Act and the rules for grant of fresh permits was not followed and that long before the application for renewal was allowed, the Regional Transport Authority had been informed of the decision of the High Court. The order of the Central Road Traffic Board was in his opinion most unsatis factory, as it was based on a quibbling distinction between "withdrawal" and "cancellation" of the permits. In his view, the orders complained against deprived Messrs. Raman and Raman Ltd., of the fruits of the 591 decree obtained by them at the hands of the High Court after much expenditure of time and money. An examination of the relevant sections of the Motor Vehicles Act does not support the view that the issue of a permit for a bus which falls within the definition of a "stage carriage " is necessarily dependent on the ownership of vehicle. All that is required for obtaining a permit is possession of the bus. As ownership is not a condition precedent for the grant of permits and as a person can get a permit provided he is in possession of a vehicle which satisfies the requirements of the statute or the rules framed thereunder, we have to hold that the parties and the authorities were labouring under a misconception if they entertained a contrary view. But the assumption on which they proceeded may perhaps be explained, if not justified, on the ground that it was supposed that the question of ownership of the vehicles had an important or material bearing on the question as to which of them had a preferen tialclaim for the permits. It may well be it Was one of the factors to be taken into account and it seems to us that this was apparently the reason why the question of issue of permanent permits was postponed from time to time till we come to the order of the Government dated 29th March, on petitions presented by both the contestants. If matters had stood as they were till the Government had made this order, something could have been said in favour of Messrs. Raman and Raman Ltd., in the event of their ultimate success in the High Court as regards the title to the five buses. But the said order altered the situation. In the order, the direction for the grant of permanent permits is not rested solely on the decision of the Sub Court in favour of Veerappa Pillai but another reason was also given, namely, that Government considered it undesirable to keep the buses running on temporary permits for a long and indefinite period. In giving this reason, they were stating a policy. 77 592 As observed already, the High Court by their judg ment dated 2nd September, 1949, reversed the decree of the Subordinate Judge and dismissed Veerappa Pillai 's suit for possession of the buses based on his title. If it were the law that the question of possession based on ownership was decisive as regards the grant of permits, and if no other circumstances were available to be taken into account when the question of the issue of permanent permits again came up for consideration, it would have been easy to hold that Messrs. Raman and Raman Ltd., had at least a preferential claim. But unfortunately for them, both these requisites are not satisfied. It has been point ed out already that nowhere do we find in the Act anything to indicate that the issue of permits depends on ownership. Other circumstances which had a material bear ing as to which of them was entitled to the permits had come into existence since the date of the original joint application and were taken into account by the transport authorities and by the Government. The order of 19th January, 1950, of the Regional Transport Authority sought to render rough and ready justice between the par ties by the adoption of what may be called a middle course. The terms of the order have already been set out. Before disposing of the appeals of both the parties, the Central Traffic Board appears to have called for a report from the Regional Transport Officer. In this report, attention was drawn to the fact that all the five buses had been replaced by new vehicles and that the registration certificates had been cancelled as a result of the replacement. After Balasubramania Pillai, it was Veerappa Pillai who was running the buses continuously on this route for nearly 5 years and he also obtained the privilege of securing the permanent permits. The Central Traffic Board 's order of 3rd March, 1950, restoring the permanent permits of Veerappa Pillai was based on the fact that Messrs. Raman and Raman Ltd. asked for withdrawal of the permits and not their cancellation and that no opportunity had been given to Veerappa Pillai to show cause why his permits should not be cancelled; and 593 the procedure prescribed for cancellation was not followed. When the Government was moved by Messrs. Raman and Raman Ltd., under section 64 (a) of the Motor Vehicles Act, they had before them a petition for withdrawal of the perma nent permits issued to Veerappa Pillai and for transfer or grant of five 'pucca permits ' relating to the five buses. The Government granted stay of the appellate order of the Central Road Traffic Board pending disposal of the revision petition 'and called for a report from the subordinate trans port authorities. Two important facts were brought to the notice of the Government in the report Messrs. Raman and Raman Ltd. did not file any objections to the renewal of the permits sought by Veerappa Pillai. What is more important, they had no permits from the French authorities enabling them to run any buses on the portion of the route which lay in French territory. It was further pointed out that there was no subsisting joint application to support the request for transfer and that the original permits in the name of Bala. subramanian had ceased to exist after 31st December 1944. The Government had also before them two petitions dated 8th March, 1950, and 25th October, 1950, from Messrs Raman and Raman Ltd. and two petitions dated 29th March, 1950, and 8th June, 1950, from Veerappa Pillai. It is on the basis of all these materials that the Government de clined to interfere with the decision of the Central Road Traffic Board. It is contended for the appellant that in this state of affairs the High Court acting under Article 226 of the Constitution had no right to interfere with the orders of the transport authorities. It is unnecessary for the disposal of this appeal to consider and decide on the exact scope and extent of the jurisdiction of the High Court under Article 226. Whether the writs it can issue must be analogous to the writs of habeas corpus, mandamus, prohibition, quo warranto and certiorari specified therein and the power is subject to all the limitations, or restrictions 594 imposed on the exercise of this jurisdiction, or whether the High Court is at liberty to issue any "suitable directions or orders or writs untramelled ,by any condi tions, whenever the interests of justice so require, is a large and somewhat difficult problem which does not arise for solution now. Mr. Setalvad appearing for the appellant urged two narrower grounds as sufficient for his purposes. Firstly, he urged that however wide the jurisdiction of the High Court might be under Article 226, it could never exer cise its powers under the article in such a manner as to convert itself into a court of appeal sitting in judgment over every tribunal or authority in the State discharging administrative or quasi judicial functions. Secondly, he maintained that the Motor Vehicles Act with the rules framed thereunder dealing with the grant of permits is a self contained code and that in respect of the rights and liabil ities created by such a statute the manner of enforcement must be sought within the statute itself. It was further urged by him that in any event, the High Court could not substitute its own view or discretion for the view taken or discretion exercised by the specified authorities, even if it was erroneous or unsound. Such writs as are referred to in Article 226 are obvi ously intended to enable the High Court to issue them in grave cases where the subordinate tribunals or bodies or officers act wholly without jurisdiction, or in excess of it, or in violation of the principles of natural justice, or refuse to exercise a jurisdiction vested in them, or there is an error apparent on the face of the record, and such act, omission, error, or excess has resulted in manifest injustice. However extensive the jurisdiction may be, it seems to us that it is not so wide or large as to enable the High Court to convert itself into a Court of appeal and examine for itself the correctness of the decision impugned and decide what is the proper view to be taken or the order to be made Mr. Daphtary, who appeared for the respondent, said nothing to controvert this position. His argument 595 was that if all along the authorities and the Government had proceeded upon a particular footing and dealt with the rights of the parties on that basis, it was not open to them afterwards to change front and give the go by altogether to the conception of the rights of parties entertained by them till then. According to him, there was manifest injustice to his client in allowing them to do so and this was the reason which impelled the High Court to make the order which is the subject matter of challenge in this appeal. The Motor Vehicles Act is a statute which creates new rights and liabilities and prescribes an elaborate procedure for their regulation. No one is entitled to a permit as of right even if he satisfies all the prescribed conditions. The grant of a permit is entirely within the discretion of the transport authorities and naturally depends on several circumstances which have to be taken into account. The Regional Transport Authority and the Provincial Transport Authority are entrusted under section 42 with this power. They may be described as administrative bodies exercising quasijudicial functions in the matter of the grant of per mits. Under rule 8 of the Madras Motor Vehicles Rules the Regional Transport Authority is called the Road Traffic Board and the Provincial Transport Authority is called the Central Road Traffic Board. These bodies or authorities are constituted by the Provincial ' Government. The matters which are to be taken into account in granting or refusing a stage carriage permit are specified in section 47. By delegation under rule 134 A, the Secretary of the Road Traf fic Board may exercise certain powers as regards the grant or refusal of stage carriage permits and under rule 136 there is an appeal to the Board from these orders. Similar powers of delegation are vested in the Secretary to the Central Board and an appeal lies to the Central Board under rule 148(1). From an original order of the Road Traffic Board there is an appeal to the Central Board and from the original orders of the Central Board to the Government, vide rules 147 and 148 An amendment introduced by the Madras Act XX of 1948 596 and found as section 64 A in the Act vests a power of revi sion in the Provincial Government. Besides this specific provision, there is a general provision in section 43 A that the Provincial Government may issue such orders and direc tions of a general character as it may consider necessary to the Provincial Transport Authority or a Regional Transport Authority in respect of any matter relating to road trans port; and such transport authority shall give effect to all such orders and directions. There is, therefore, a regular hierarchy of administrative bodies established to deal with the regulation of transport by means of motor vehicles. 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 had. As observed already, the issue or refusal of permits is solely within the discretion of the transport authorities and it is not a matter of right. We are accordingly of opinion that this was not a case for interference with the discretion that was exercised by the Transport Authorities paying regard to all the facts and the surrounding circumstances. Further, it will be noticed that the High Court here did not content itself with merely quashing the proceedings, it went further and directed the Regional Transport Authority, Tanjore, "to grant to the petitioner permits in respect of the five buses in respect of which a joint application was made originally by the petitioner and Balasubramania Pillai and that in case the above buses have been condemned, the petitioner shall be at liberty to provide substitutes within such time as may be prescribed by the authorities. " Such a direction was clearly in excess of its powers and jurisdic tion. 597 For the reasons given above, the appeal is allowed and the order of the High Court set aside. Each party will bear their own costs of these proceedings throughout. Appeal allowed. Agent for respondent No. 1: M.S.K. Sastri. Agent for respondent No. 4: P.A. Mehta.

The writs referred to in article 226 are intended to enable the High Court to issue them in grave cases where the subordinate tribunals or bodies or officers act wholly without jurisdiction, or in excess of it, or in violation of the principles of natural justice, or refuse to exercise a jurisdiction vested in them, or there is an error apparent on the face of the record and such act, omission or error or excess has resulted in manifest injustice. However exten sive the jurisdiction may be, it is not so wide or large as to enable the High Court to convert itself into a court of appeal and examine for itself the correctness of the, deci sions impugned and decide what is the proper view to be taken or the order to be made. The Motor Vehicles Act contains 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, and the issue or refusal of permits is solely within the discretion of the transport authorities; it is not a matter of right. Where, in a dispute between two rival claimants for running through a particular route five buses, which each of them alleged he had purchased from a third person, the Central Road Traffic Board, Madras, after calling for a report from the Regional Transport Officer and considering several circumstances that had a material bearing on the case, restored the permanent permits which had been granted to one of the claimants, but on an application by the other claimant under article 226 of the Constitution to the High Court of Madras for a writ of certiorari quashing the orders of the Regional Transport Authority, the Central Road Traffic Board and the State of Madras, and for a writ of mandamus to the respondents to transfer, issue or grant 584 permanent permits to the petitioner, the High Court set aside the order of the Central Traffic Board, relying mainly on the fact that the petitioner 's title to the five buses had been established and directed the Regional Traffic Authority to grant to the petitioner permits in respect of the five buses: Held, that under the Motor Vehicles Act, the issue of a permit for a bus was not dependent on the ownership of the bus but on other considerations also, and as the Central Traffic Board had issued an order granting permits to one of the claimants after considering all circumstances the High Court acted erroneously in interfering with the Order of Traffic Board on an application under article 226 and in any event the order of the High Court issuing a direction to the Regional Transport Authority to grant permits to the other party was clearly in excess of its powers and jurisdiction. The Motor Vehicles Act is a statute which creates new rights and liabilities and prescribes an elaborate procedure for their regulation. No one is entitled to a permit as of right even if he satisfies all the prescribed conditions. The grant of a permit is entirely within the discretion of the transport authorities and naturally depends on several circumstances which have to be taken into account.

Civil Appeal No. 2534 of 1969. (Appeal by special leave from the judgment and order dated the 19 8 1969 of the Andhra Pradesh High Court at Hyderabad in C.R.P. No. 2190 of 1968.) P. P. Juneja, for the appellant. G. N. Rao, for the respondent. 552 The Judgment of the Court was delivered by BEG J. The defendant appellant had taken a house on rent under a registered lease dated 10th February, 1958, on a monthly rent of rent Rs. 250/ for a period of five years for running a lodging house. It J is admitted by both sides that in February, 1963, the lease had expired. According to the landlord respondent, the defendant appellant had continued to hold over as a tenant "on the same terms" by which he, presumably, meant that it was a month to month tenancy. The Andhra Pradesh Building (Lease, Rent and Eviction) Control Act, 1960, (hereinafter referred to as 'the Act ') came into opera ton before the lease expired. The appellant seemed to be constantly making defaults in payments of rent. The landlord responden had, therefore, to file a suit for arrears of rent in the Court of District Munsif, Visakhapatnam, which was decreed on 4th April, 1962. The landlord respondent had to file a petition on 21st April, 1962, under Section 10 of the Act before the Rent Controller, Visakhapatnam for the eviction of the appellant as no rent was paid from 1st December, 1961 to 31st March, 1962. There was a compromise on 12th October, 1962. The appellant agreed to clear arrears and to pay rents regularly. The appellant, however, wailfully defaulted again in payments of rent from September, 1963 to April, 1964. A notice dated 8th April, 1964, was sent by registered post by the landlord respondent to the appellant terminating his tenancy and calling upon him to pay up the arrears of rent and vacate the house by the end of April, 1964. This came back with the endorsement that the appellant was refusing to accept it. On 9th `` April, 1964, the respondent filed another petition under Section 10 of the Act before the Rent Controller of Visakhapatnam who ordered the eviction of the appellant after holding all the flimsy defenses of the t appellant to be unsubstantiated. The Subordinate Judge of Visakhapatnam dismissed the tenant 's appeal on 23rd October, 1968. The appellant 's revision application to the High Court was also rejected on 19th August, 1969. The only question raised by the appellant before us, in this appeal by special leave, is that no notice under Section 106 of the Transfer of Property Act had been served upon the appellant according to the finding of the Andhra Pradesh High Court itself. It was, therefore, urged , that the petition under Section 10 of the Act could not succeed. The Andhra Pradesh High Court had, however, relied upon Ulligamma Ors. V. section Mohan Rao & ors. (1), where a Division Bench of that High Court had held that the Act, with which we are now concerned, provided a procedure for eviction of tenants which was self contained so that no recourse to the provisions of Section 106 of the Transfer of Property Act was necessary. We may also refer here to the observations of this Court. in Raval & Co. vs K. C. Ramachandran & ors.(2). There, this Court noticed (1) (1969) 1 An. P.R. Law Jolurnal 351. (2) [197412 S.C.R. 629 @ 634 553 Shri Hem Chand vs Shrmati Sham Devi(1), and pointed out "that it was held there that the Act under consideration in that case provided the whole procedure for obtaining the relief of ejectment, and, that being so, provisions of Section 106 of the Transfer of Property Act had no relevance". No doubt the decision mentioned with approval by this Court related to another enactment. But, the principle indicated by this Court was the same as that applied by the Andhra Pradesh High Court. It is true that, in Mangilal vs Sugan. Chand Rathi (Deceased) etc.(2), this Court has held that the provisions of Section 4 of the Madhya Pradesh Accommodation Control Act of 1955 do not dispense with the requirement to comply with the provisions of Section 16 of the Transfer of Property Act. In that case, however, Section 4 of the Madhya Pradesh Act merely operated as a bar to an ordinary civil suit so that service of a notice under Section 106 of the Transfer of Property Act became relevant in considering whether an ordinary civil suit filed on a ground which constituted an exception to the bar contained in Section 4 had to be preceded by a notice under Section 106 of the Transfer of Property Act. In the context of the remedy of ejectment by an ordinary civil suit, it was held that the usual notice of termination of tenancy under Section long of the Transfer of Pro party Act was necessary to terminate a tenancy as a condition precedent to the maintainability of such a suit. In the case before us, the respondent landlord relied upon a provision for special summary proceedings for eviction of tenants under an Act which contains all the requirements for those proceedings. We, therefore think that the learned Judge of the Andhra Pradesh High Court had correctly applied the principle laid down by a Division Bench decision of that Court. He rightly distinguished such a case from Mangilal 's case (supra), where an entirely different kind of provision of another Act in another State was being considered by this Court. The Division Bench decision of the High Court, applied by the learned Judge, had, we think, enunciated the correct principle. A question raised before us by learned Counsel for the respondent is whether the notice sent by the respondent landlord could be held not to have been served at all simply because the postman, who had made the endorsement of refusal, had not been produced. The Andhra Pradesh High Court had relied upon Meghji Kanji Patel vs Kundanmal Chamanlal (a), to hold that the notice was not served. There, a writ of summons, sought to be served by registered post, had been returned with the endorsement "refused". The Bombay High Court held G that the presumption of service had been repelled by the defendant 's statement on oath that he had not refused it as it was never brought to him. In this state of evidence, it was held that, unless the postman was produced, the statement of the defendant on oath must prevail. An (1) I.L.R. [1955] Punj. (2) A.I.R. 1965 SC 101. (3) A.I.R. 1968 Bombay 387. 3 608SCI/76 554 ex paste decree, passed on the basis of such an alleged service was, therefore, set aside. On facts found, the view expressed could not be held to be incorrect. In Nirmalabala Debi vs Provat Kumar Basa(1), it was held by the Calcutta High Court, that a letter sent by registered post, with the endorsement "refused" on the cover, could be presumed to have been duly served upon the addressee without examining the postman who had tried to effect service. What was held there was that the mere fact that the latter had come back with the endorsement "refused" could not raise a presumption of failure to serve. On the other hand, the presumption under section 114 of the Evidence Act would be that, in the ordinary course of business, it was received by the addressee and actually refused by him. This is also a correct statement of the law. The two decisions are reconcilable. The Calcutta High Court applied a rebuttable presumption which had not been repelled by any evidence. In the Bombay case, the presumption had been held to have been rebutted by the evidence of the defendant on oath so that it meant that the plaintiff could not succeed without further evidence. The Andhra Pradesh High Court had applied the ratio disdained of the Bombay case because the defendant appellant before us had deposed that he had not received the notice. It may be that, on a closer examination of evidence on record, the Court could have reached the conclusion that the defendant had full knowledge of the notice and had actually refused it knowingly. It is not always necessary, in such cases, to produce the postman who tried to effect service. The denial of service by a party may be found to be incorrect from its own admissions or conduct. We do not think it necessary to go into this question any further as we agree with the High Court on the first point argued before us. Consequently, this appeal is dismissed with costs. P.B.R. Appear dismissed.

The respondent landlord filed a petition under section 10 of the Andhra Pradesh Building (Lease, Rent and Eviction) Control Act, 1960, for the eviction of the appellant tenant. There was a compromise. Since the tenant defaulted in payment of the rent thereafter, a registered notice terminating the tenancy issued by the landlord, came back with an endorsement that the appellant had refused to accept it. Later. the tenant was ordered to be evicted. 'The tenant 's appeal to the appellate court and then his revision application to the High Court were rejected. Relying upon an earlier Division Bench decision of that Court, the High Court held that the Act provided a self contained procedure for eviction of tenants, and therefore, compliance with the provisions of section 106, Transfer of Property Act was unnecessary. Dismissing the tenant 's appeal, ^ HELD: The High Court has correctly applied the principle laid down by a Division Bench of that court in Mohan & ors. vs section Mohan Rao & Ors. [1969] An. P.R. Law Journal 351. [553 E] Raval & Co. vs K. C. Ramacharndran & ors. [19741 2 SCR 629 @ 634 and Shri Hern Chand vs Shrimali Sham Devi. ILR 1955 Puni. 36, referred to. In Mangilal vs Sugan Chand Rathi [AIR 1955 SC 101] this Court was considering an entirely different kind of provision of another Act in another State, and this case is distinguishable. In the context of the remedy of ejectment by an ordinary civil suit it was held in that case that the usual notice of termination _ of tenancy under section 106. Transfer of Property Act was necesary. [553F & D] boiler [In cases where a party denies receipt of registered notice it is not always necessary to produce the postman who tried to effect service. Denial of service by a party may be found to be incorrect from its own admissions or conduct. The decision of the Bombay High Court in M. K. Patel vs Kundan Mal Chamanlal and that of the Calcutta High Court in Nirmal Bala Devi. vs Provar Kumar Basu are reconcilable. The Calcutta High Court applied a rebuttable presumption under section 114, Evidence Act, that the letter was received by the addressee in the ordinary course of blazons was refused by him because the presumption from the endorsement made upon it had not been repelled by any , evidence. In the Bombay case, the presumption had been held to have been `J rebutted by the evidence of the defendant on oath so that it meant that the plaintiff could not succeed without further evidence.] [554C E]

vil Appeal No. 1491 (NN) of 1988. From the Judgment and Order dated 30.5. 1986 of the Delhi High Court in W. No. 578 of 1981. A. Subba Rao, P. Parmeshwaran and Mrs. Sushma Suri for the Appellants. H.N. Salve, P.K. Ram and D.N. Misra for the Respondent. 872 The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal by special leave and is connected with Civil Appeal No. 859. This is an appeal from the judgment and order of the High Court of Delhi dated 30th May, 1986. It appears that in October, 1975, Trade Notices were issued on the basis of the directive of the Ministry of Finance to the effect that the owners of the brand name are to be treated as the manufacturers of the goods. In April, 1977, price list submitted by the respondent declaring the assessable value on the basis of the price at which the assessee respondent sold the goods. Thereafter on 16th April, 1977, there was a letter written by respondent giving the list of the customers of the respondent and clarifying the terms and conditions on which the assessee sold the goods. On August 22, 1977, the appellants wrote a letter to the assessee respondent seeking certain information, intera lia, to the effect whether the assessee and its buyers were related persons. A reply was given on 10th September, 1977 by the assessee to the aforesaid letter. First notice was issued asking the assessee to show cause as to why the assessable value be not determined at the price the buyers of the assessee sold the goods (instead of the price at which the assessee sold the goods to its buyers). There was a reply and the second show cause notice was issued on 28th January, 1981. These show cause notices were challenged and the High Court quashed the said notices. Aggrieved thereby, this appeal has been filed. The respondent is a registered company carrying on the business of manufacturing and selling filters. Some of the goods are sold by the respondent to its customers under the respective brand names. The respondent filed a price list at which price the goods were sold to the customers. In view of the principles indicated in the judgment in Civil Appeal No. 859 and the facts adduced before the High Court, the High Court 's judgment cannot be interfered. The appeal, therefore, fails and is accordingly dismissed. T.N.A. Appeal dismissed.

The respondent company, manufacturer of filters, was selling the goods to its customers under brand names. It declared its assessable value on the basis of the price at which it sold the goods. Show Cause Notices, requiring assessable value to he determined at the price the buyers of the respondent company sold the goods, issued to the re spondent were challenged by it and quashed by the High Court. Hence this appeal by the Revenue. Dismissing the appeal, this Court HELD: 1. For the purposes of the excise duty, the market value of the goods of the respondent company was the price charged by it, and not the market value at which the buyers of the respondent company sold the goods. The High Court, therefore, rightly quashed the Show Cause Notices. [872C] The Union of India & Ors. vs M/s Playworld Electronics Pvt. Ltd. & Anr., Civil Appeal No. 859 of 1988 (S.C.) decid ed on 2nd May, 1989, applied.

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

The respondent was the successful candidate at the general election held in March, 1957, for the Punjab Legislative Assembly. The appellant who was one of the unsuccessful candidates, filed an election petition and challenged the validity of the respondent 's election on the grounds, inter alia, that the latter was not a citizen of India and was, therefore, not qualified to stand for election. It was found that he was born of Indian parents sometime in 1927 in India as defined in the Government of India Act, 1935, in a village which since August 15, 1947, became part of Pakistan, that in 1944 he had moved from his home district to Jullunder in what is now the territory of India, and that after August 15, 1947, he definitely made up his mind to settle in India with the intention of residing there permanently. There was some evidence to show that he went to Burma in January, 1950, and made unsuccessful attempts to secure permission from the Government of Burma to stay there permanently. The question was whether the respondent could be deemed to be a citizen of India within the meaning of article 6 of the Constitution of India. Held:(1) that the expression " migrated to the territory of India " in article 6 of the Constitution means " migrated at any time before the commencement of the Constitution to a place now in the territory of India ". (2)that in article 6 the words " migrated to the territory of India " mean " come to the territory of India with the intention of residing there permanently ". (3)that where a person moves from one country to another and has, at the time of moving, a intention to remain in the country where he moved only temporarily, but later on forms the intention of residing there permanently, he should be held in law to have migrated to that country at the later point of time. (4)that for applying the test of being " ordinarily resi dent in the territory of India since the date of his migration " in article 6(b)(i), what is necessary to be shown is that during the period beginning with the date on which migration became 577 complete and ending with November 26, 1949, as a whole, the person has been " ordinarily resident in the territory of India ". Whether he was not in India on January 26, 1950, or whether he formed an intention of taking up his permanent residence in Burma when he left for that place in January, 1950, was not relevant. (5)That the words " ordinarily resident " in the Consti tution mean " resident during this period without any serious break ". It is not necessary that for every day of this period the person should have resided in India. (6)that the respondent satisfied the requirements of article 6 ofthe Constitution and that his claim to be deemed a citizen of India must be upheld.

: Special Leave Petition (Criminal) No. 1543 of 1984. From the Judgment and order dated the 3rd day of May, 1984 of the Delhi High Court in Crl. M(M) No. 421 of 1984 995 R.N. Poddar for the Petitioner. Miss Rani Jethmalani for the Respondent. The Judgment of the Court was delivered by B VENKATARAMIAH, J. Four persons Maj. General (Retd.) F.D. Larkins, Air Vice Marshal (Retd.) K.H. Larkins, Lt. Col. (Retd.) Jasbir Singh and Jaspal Singh Gill alias Jassi Gill, the respondent herein, were accused of having committed offences punishable under sections 3, 5 and 9 of the Official Secrets Act, 1923 read with section 120 B of the Indian Penal Code and of them F.D. Larkins and Jasbir Singh were also accused of having committed the offence punishable under section 6 of the Official Secrets Act, 1923 in a complaint filed by the Deputy Commissioner of Police, Special Branch, Delhi with the authorisation of the Government of India before the Additional Chief Metropolitan Magistrate, Patiala House, New Delhi. The prosecution case appears to rest inter alia on the following facts: On March 24, 1983, Group Captain Jasjit Singh informed the Air Vice Marshal (now Air Marshal) Shri section Raghavendran that for some days immediately prior to that date AVM (Retd.) K.H. Larkins then resident of Azad Apartments, Mehrauli Road, New Delhi, under whom he had served earlier was inducing him to pass on secret manuals of aircrafts used by the Indian Air Force for a consideration of Rs. 20,000/ per document. AVM Raghavendran brought this to the notice of his superiors. Thereafter further information was collected and the movements of AVM (Retd.) K.H. Larkins were kept under observation. The links of the said K.H. Larkins and his brother Major General (Retd.) F.D. Larkins were discovered. A First Information Report was registered at Police Station, Tughlak Road, New Delhi. On November 11, 1983 raids were conducted at the residence of K.H. Larkins as well as that of F.D. Larkins. Certain incriminating items are stated to have been recovered from the latter 's 996 house. It is alleged that on interrogation after arrest F.D. Larkins and K.H. Larkins confessed that they had been passing on classified information relating to the defence of the country to a foreign agency. It is further alleged that Major General (Retd). F.D. Larkins stated that he had engaged Lt. Col. (Retd.) Jasbir Singh as his sub agent for procuring secret/restricted documents and manuals relating to armament. On this disclosure the search of the house of Jasbir Singh was conducted on November 13 1983 and he was arrested and remanded to police custody. It is stated that on interrogation he disclosed that he had been passing on secret/classified information to Major General (Retd.) F.D. Larkins and Jaspal Singh Gill, the respondent, for monetary consideration. He appears to have further disclosed that many secret/restricted manuals and documents were unauthorisedly got issued to him from D.G.I. and EME libraries to which he gained access through the good offices of certain Army Officers and by impersonating himself as a serving officer when actually he was retired and that the information contained in these documents and manuals was passed on by him to Major General (Retd.) F.D. Larkins and Jaspal Singh Gill alias Jassi Gill resident of 82, Sunder Nagar, New Delhi, the respondent, who represented a private firm namely, M/s EMGEE International Pvt. Ltd, and with whom he, Lt. Col (Retd.) Jasbir Singh, was also working as consultant. On the basis of the said disclosure made by the said Jasbir Singh the search of the house of Jaspal Singh Gill alias Jassi Gill, the respondent herein was conducted at 82, Sunder Nagar, New Delhi. Some secret/restricted documents alongwith a Defence telephone directory connected with the Army are stated to have been recovered from his possession and he was arrested on November 19, 1983. It is alleged that the respondent herein had obtained classified information on defence matters through the aforesaid Jasbir Singh for monetary consideration and had passed on the information to the U.S. Intelligence Operator. During the search of the house of Jaspal Singh as many as 13 invitation cards from the U.S. Officials for cocktail and dinner parties are alleged to have been recovered showing the association of the respondent 997 with foreign agents as defined in section 4 of the Official Secrets Act. It is alleged that the respondent was paying Rs. 1,000/ per month to the Jasbir Singh and Rs. 1,000/ per month to the wife of Jasbir Singh. It is further alleged that the copy of the Defence telephone directory was a restricted document, the disclosure of the contents of which to unauthorised persons is prejudicial to the interest and security of the country. All the accused persons including the respondent have been committed to the Court of Sessions for the various offences which are really of a serious nature. During the investigation, the respondent made an application for bail before the Addl. Sessions Judge, New Delhi and it was rejected in January, 1984. Then again he made another application for bail before the Sessions Court. Before the said application could be taken up, he made an application under section 482 of the Criminal Procedure Code before the High Court of Delhi for bail. The learned Judge of the High Court who heard the bail application went into the merits of the case and after holding that the material before the Court was insufficient to sustain the conviction of the respondent proceeded to enlarge him on bail subject to his furnishing a personal bond in the sum of Rs. 5,000/ with one surety in the like amount. It may be stated here that the very same learned Judge had dismissed earlier the bail application of Jasbir Singh who was the employee of the respondent. Aggrieved by the order of the High Court enlarging the respondent on bail, the prosecution has filed this Special Leave Petition for revoking the said order of bail. The offence punishable under section 3 of the Official Secrets Act, 1923 with which the respondent is charged relates to military affairs and it is punishable with imprisonment which may extend to fourteen years. This Court in The State vs Captain Jagjit Singh has indicated that the Court should exercise a 998 greater degree of care in enlarging on bail an accused who is charged with the offence punishable under section 3 of the Official Secrets Act when it relates to military affairs. I have also gone through the decisions of this Court in Gurcharan Singh & Ors. vs State (Delhi Administration) and Gudikanti Narasimhulu & Ors. vs Public Prosecutor, High Court of Andhra Pradesh which deal with the principles governing the grant of bail. It may be mentioned here that in the last of the above cases, the accused had been acquitted by the trial court but convicted by the High Court on appeal. On a consideration of the above three decisions, I am of the view that the Court before granting bail in cases involving non bailable offences particularly where the trial has not yet commenced should take into consideration various matters such as the nature and seriousness of the offence, the character of the evidence, circumstances which are peculiar to the accused, a reasonable possibility of the presence of the accused not being secured at the trial, reasonable apprehension of witnesses being tampered with, the larger interests of the public or the State and similar other considerations. On going through the order passed by the High Court, I feel that its decision that the material collected by the prosecutions and the evidence to be adduced at the trial would not be sufficient to sustain a conviction appears to be a premature one in the circumstances of this case. Since the trial is yet to begin, I do not propose to say anything more at this stage lest it should prejudice either the accused or the prosecution than observing that on a perusal of the complaint and the other material available in the case, it cannot reasonably be stated that the prosecution case against the respondent is such that it can be thrown out at the threshold. It appears that a prima facie case is made out against the respondent. The gravity of the offences is quite obvious. They relate to the security of the State, Espionage and intelligence are utilised to pass on information regarding military plans, equipment, technical advances etc. of one country to another. Naturally passing on of such information from our country to a foreign country is bound to be most harmful to our country. The 999 persons accused alongwith the respondent are admittedly ex military men well versed in military affairs who are capable of establishing bridges with the sensitive sections of the defence services. The respondent is also alleged to be having some dealings with the defence department and Jasbir Singh is in the employment of the respondent. The allegations made by the prosecution which no doubt have still to be established at the trial suggest that the respondent and the persons accused alongwith him are persons of easy conscience in so far as the interests and security of the country are concerned. The current situation in the country is such that it can be easily be exploited by unscrupulous men to their own or to some foreign power 's advantage. These aspects of the case do not appear to have been considered by the High Court. It is seen that while dismissing the bail application of Jasbir Singh on April 24, 1984, the learned Judge of the High Court had relied on the decision of this Court in Captain Jagjit Singh 's case (supra), he has not even referred to that decision while granting bail to the respondent on May 3, 1984. Some of the observations made by the High Court against the sustainability of the case of criminal conspiracy alleged by the prosecution at this stage were not called for. The circumstances of this case are such that the question whether the case of criminal conspiracy had been made out or not should have been left to be decided by the trial court at the end of the trial on a consideration of the entire evidence adduced in the case. In the circumstances, I am of the view that the High Court should not have enlarged the respondent on bail in the larger interests of the state. It is urged that the respondent is a person who has undergone a cardiac operation and needs constant medical attention. I am sure that the prison authorities will arrange for proper treatment of the respondent whenever the deed for it arises. I am informed that in a criminal revision petition filed by one of the accused, the High Court has stayed the trial of the case The High Court is requested to dispose of the case early since the accused are all in judicial custody. The order of bail passed by the High Court was suspended by this Court by an order made on June 4, 1984 and the respon 1000 dent was ordered to be re arrested and kept in judicial custody The respondent is now taken back into judicial custody. In the result, the order of the High Court enlarging the respondent on bail is set aside and the respondent is directed to remain judicial custody until further orders to be passed by a competent court. The trial court shall proceed to dispose of the case without feeling itself bound by any of the observations of the High Court.

The respondent along with three others were accused of having committed offences punishable under sections 3,5 and 9 of the Official Secrets Act, 1923 read with section 120 B of the Indian Penal Code and therefore committed to the Court of Sessions for the said offences which are of a serious nature. During the investigation, the respondent made an application for bail before the Additional Sessions Judge, New Delhi and it was rejected in January, 1984. Then again he made another application for bail before the Sessions Court. Before the said application could be taken up he made an application under section 482 of the Criminal Procedure Code before the High Court of Delhi for bail. The learned Judge of the High Court who heard the bail application went into the merits of the case and after holding that the material before the Court was insufficient to sustain the conviction of the respondent proceeded to enlarge him on bail subject to his furnishing a Personal bond in the sum of Rs. 5,000/ with one surety in the like amount. However, the very same Learned Judge had dismissed earlier the bail application of Jasbir Singh who was the employee of the respondent. Aggrieved by the order of the High Court enlarging the respondent on bail, the prosecution has filed this special leave petition for revoking the said order of bail: Allowing the petition, the Court. ^ HELD: 1:1. The Court before granting bail in cases involving non bailable offences particularly where the trial has not yet commenced should 994 take into consideration various matters such as the nature and seriousness of the offence, the character of the evidence, circumstance which are peculiar to the accused, a reasonable possibility of the presence of the accused not being secured at the trial, reasonable apprehension of witnesses being tampered with, the larger undressed of the public or the State and similar other considerations. Further, the Court should exercise a greater degree of care in enlarging on bail an accused who is charged with the offence punishable under section 3 of the Official Secrets Act when it relates to military affairs. Here the offence punishable under section 3 of the Official Secrets Act, 1923 with which the respondent is charged relates to military affairs and it is punishable with imprisonment which may extend to fourteen years. The State vs Captain Jagjit Singh, ; Gurcharan Singh & Ors vs State (Delhi Admn.), ; ; Gudikanti Narsaimhulu & Ors. vs Public Prosecutor, High Court of Andhra Pradesh, [1978] 2 S.C.R. 361, referred to [998C D; 998A; 997H] 1:2. The decision of the High Court that the material collected by the prosecution and the evidence to be adduced at the trial would not be sufficient to sustain a conviction appears to be a premature one in the circumstances of this case. The allegations made by the prosecution which no doubt have still to be established at the trial suggest that the respondent and the persons accused alongwith him are persons of easy conscience in so far as the interests and security of the country is concerned. The current situation in the country is such that it can easily be exploited by unscrupulous men to their own or to some foreign power 's advantage. These aspects of the case do not appear to have been considered by the High Court. Further, while dismissing the bail application of Jasbir Singh on April 24, 1984, the learned Judge of the High Court had relied on the decision of this Court in Captain Jagjit Singh 's case, he has not even referred to that decision while granting bail to the respondent on May 3, 1984. Some of the observations made by the High Court against the sustainability of the case of criminal conspiracy alleged by the prosecution at this stage were not called for. The circumstance of this case are such that the question whether the case of criminal conspiracy had been made out or not should have been left to be decided by the trial court at the end of the trial on a consideration of the entire evidence adduced in the case. Therefore, the High Court should not have enlarged the respondent on bail in the larger interest of the State. [998E; 999B F]

N: Criminal Appeal Nos. 346 and 387 of 1975. Appeals by Special Leave from the Judgment and Order dated 6 8 75 of the Bombay High Court in Criminal Appeal No. 1005 and 1006 of 1973. Lalit Chari, P. R. Guna, A. K. Srivastava and Vineet Kumar for the Appellant in Crl. A. No. 387/75. R. L. Kohli, P. P. Rao, R. C. Kohli and R. Nagarathnam for the Appellant in Crl. A. No. 346/75. V. section Desai, H. R. Khanna and M. N. Shroff for the Respondent in both the appeals. The Judgment of the Court was delivered by JASWANT SINGH, J. The above noted two criminal appeals which are directed against the common judgment and order dated August 6, 1975 of the High Court of Judicature at Bombay affirming on appeal the judgment and order dated August 6, 1973 of the Special Judge, Greater Bombay, convicting section P. Bhatnagar, appellant in the aforesaid first appeal, (hereinafter described as A 1) under section 120B read with sections 409 and 109 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act, 1947, and sentencing him to six months simple imprisonment on each of the said two courts as well as convicting A. section Krishnaswamy, appellant in the aforesaid second appeal (hereinafter described as A 2) under the aforesaid two counts but reducing his sentence from nine months ' imprisonment to six months simple imprisonment on each one of those counts, shall be disposed of by this judgment. Briefly put the case as set up by the prosecution was: In 1964, the Indian Oil Corporation (hereinafter referred to as 'the Corporation ') which is a Government owned company, decided to purchase 13 acres and odd of a hilly tract of land situate in village Mahul in Trombay (Bombay) from the Tatas for the purpose of erecting black furnace oil storage tanks and construction of administrative buildings. After the area was taken over by the Corporation Varandani (P. W. 20), Junior Engineer of the Corporation surveyed the land in October, 1964, under the directions of A 1 and A 2, the Engineering Manager and Senior Engineer respectively of the Engi 878 neering Department of the Marketing Division of the Corporation with a view to find out the extent of rock cutting and filling which might be required to be done for levelling the area of 7 acres out of the said tract of land. The kacha level plan (Exh. 125) and worksheets prepared by Varandani on October 13, 1964 and November 3, 1964 respectively during the course of his aforesaid survey (which were signed by A 1 and A 2, showed that 16,80,000 cft. of rock cutting work and 8,00,000 cft. of filling work would have to be done to suit the purpose for which the land was acquired. Estimate (Exh. 27) prepared by Varandani indicated that expenditure at the rate of Rs. 30/ per 100 cft. for rock cutting and Rs. 10/ per 100 cft. for filling would have to be incurred. Pucca tracing (Exh. 34) of level plan (Exh. 125) and copies thereof signed by A 1 and A 2, and contour plan prepared by Varandani and approved by Engineering Manager were kept on the record. On the basis of the survey and the estimate of expenditure made by Varandani, notice (Exh. 28) inviting tenders from experienced civil contractors for rock cutting, filling and levelling of the land in question was prepared by A 2 on February 2, 1965, and was forwarded (under his signatures) by A 1 to the Finance Department for approval on February 5, 1965. After the approval of the Finance Department, the Public Relations Officer of the Corporation by his letter (Exh. 29) dated February 11, 1965 requested Times of India, Indian Express and Free Press to publish the tender notice (Exh. 28) wherein it was stated that the tenders which should reach the Corporation by 2.30 P.M. on March 2, 1965 would be opened at 3.00 P.M. on that date. In response to this notice eleven firms of contractors including Ram & Co. submitted their tenders. N. N. Desai (hereinafter described as A 4) however abstained from submitting his tender. In the meanwhile, it was decided that instead of having stack measurement as provided in Exhibit 28, it would be desirable to have the measurements on the basis of differences between the existing and finished levels. Accordingly, on March 5, 1965, the aforesaid eleven tenderers were asked to submit revised tenders on the basis of the amended tender notice by March 15, 1965. Although fresh tenders were restricted to the original eleven tenderers, a tender form was issued to A 4 in response to the application made by him on March 8, 1965. On opening the tenders on March 15, 1965, it was found that five out of the eleven original tenderers and four new ones including A 4 had submitted their tenders, that the tender of Ram & Co. whereby it had quoted Rs. 28/ per 100 cft. for cutting work and 'nil amount for filling was the 879 lowest and that the second lowest tender was of A 4 who had quoted Rs. 26/ per 100 cft. for cutting and Rs. 6/ per 100 cft. for filling work. Thus, the actual amount as per quotation of Ram & Co. was Rs. 4,70,400/ and that of A 4 was Rs. 4,84,800/ for 16,80,000 cft. of cutting work and 8,00,000 cft. of filling work. On discovering that the tender of his firm was the lowest, Roshan Lal, a partner of Ram & Co. addressed communication dated March 20, 1965 to the Managing Director of the Corporation requesting him that the aforesaid job of rock cutting and filling be entrusted to his firm in view of its working experience detailed therein but handed over the same to A 1. At or about this time, Messrs Labitos Oil Fields Limited, a British firm whom the Corporation was trying to collaborate in its project advised the Corporation that instead of three levels (steppings) which had been planned as per cantour map (Exh. 34) there should be a single level and instead of the survey being on the basis of 100 ft. spacing as done earlier by Varadani, it should be on the basis of 10 ft. spacing. Accordingly A 1 and A 2 told Varadani (P.W. 20) and section D. Vaidya, another Assistant Engineer (hereinafter described as A 3) to make a fresh survey alongwith A 4 according to the advice of Messers Labitos Oil Fields Limited as it had been almost decided to entrust the aforesaid work to A 4. Pursuant to the instructions of A 1 and A 2, B. N. Desai, a representative of A 4 was associated with the revised survey which was carried from March 21 to March 26, 1965. As a result of the joint survey, kacha level plan (Exh. 22) and work sheet (Exh. 23) were prepared by A 3 under the directions of Varandani. As a result of this survey, it was found that rock cutting and filling would have to be done to the extent of 23,30,454 cft. and 31,500 cft. respectively as against 16,80,000 cft. and 8,00,000 cft. respectively as found as a result of the earlier survey. Notwithstanding the large variations in the cutting and filling work which required to be done as a result of the revised joint survey, the Engineering Department did not invite fresh tenders but instead prepared another comparative statement on the basis of the rates quoted by Ram & Co. and A 4 in their tenders opened on March 15, 1965 and showed therein that the tender of A 4 had turned out to be the lowest and that of Ram & Co. to be the second lowest. On April 7, 1965, A 2 drew up tender committee proceedings (Exh. 16) as reproduced below and got them signed by A 1 in the hope that the recommendations made therein would be accepted by Srivastava, (P.W. 5) the Financial Controller and Patel, the Operation Manager of the Corporation, who were the other members of the Tender Committee, in addition to A 1 and finally by Gopal Krishan, the then Chairman of the Company : 880 "Ref. No. ENG/ASK/Q 250 April 7, 1965. Subject : Tender Committee proceedings for the finalisation of rock cutting, levelling of plot, taken over from M/s. Tata at Bombay. (1) We had taken over 13.5 acres of land from M/s. Tata Power House at Trombay. It was intended to level this plot of land and recover about 7 acres of land by cutting and levelling in order to put up our Black Storage tanks and other allied facilities. Due to the uneven terrain, it was decided to have two steppings so that the storage tanks may be installed at a higher level and the remaining administrative blocks, were house stores etc., at a lower level. Accordingly, Public Tenders were invited for rock cutting and filling this area on 100 cft. basis. (2) Subsequently, M/s. Lobitos Oil Fields Ltd. Ellesmere Port, Wirral, Cheshire, had negotiations with us for putting up a Transformer Oil Blending Plant at this site. The representatives of the above firm during their discussions with C. & section M. and M. E. (accused No. 1) stated, that they would like to have only plain piece of land instead of steppings as was decided by us previously. This will entail additional cutting and minimise the quantity of filling. (3) Our estimated quantity previously was 16,80,000 cft. of cutting and 8,00,000 cft. of filling. As per the revision in the levels to be maintained at this site that the total quantity of cutting comes to 23,30,456 cft. The quantity of filling comes to 31,500 cft. The total estimated cost for the original work was Rs. 6,13,200/ . A comparative statement has been drawn as per the tendered rates quoted by the various parties and the position of the first three is as follows: ____________________________________________________________ section Name of Contractor Qty. Rate Amount Total No. %Cft. ____________________________________________________________ 1 N.N. Desai Cutting 23,30,450 26/ Sd. 605917 607807 Filing 31500 Cft. 1890 6/ 2 Ram & Co. Cutting 2330450 652526 652526 28/ Cft. Filing 31500 Cft. free 3 Library Construction Cutting 2330450 652526 28/ Cft. 655676 Filing 31500 Cft. 3150 ____________________________________________________________ 881 M/s. N. N. Desai, Contractor are the lowest. The Tender Committee therefore recommends that this work may be allotted to M/s. N. N. Desai, Contractor at their quoted rate of Rs. 6,07,807/ being the lowest tenderer. Sd/ (section P. Bhatnagar) M. E. (A. K. Srivastava) F.O. (H. B. Patel) O.M. Approved (P. A. Gopalakrishnan) Chairman. " Contrary to the expectations of A 1 and A 2, Srivastava (P.W. 5) refused to be a party to the Tender Committee recommendations. Ignoring not only the opposition of Srivastava and the suggestion of the Accounts Officer of the Finance Department and the Assistant Finance Controller of the Corporation made vide Exhibit 68 and Exhibit 31 respectively while processing the tender committee proceedings that in view of the fact that both the quantity and value of the work had increased substantially as a result of the revised survey, it would be fair and proper to ask all the contractors who had responded to the tender notice to re submit their quotations but also the offer made by Ram & Co. (which possessed the requisite skill and equipment) to execute the contract at the lower rates of Rs. 20/ per 100 cft. for rock cutting and Rs. 15/ per 100 cft. for filling as well as the flat refusal to reduce his rates given by A 4 during the negotiations conducted at the suggestion of the Accounts Department of the Corporation on April 17, 1965 with the three contractors mentioned in Exhibit 16, A 2 carried on, in pursuance of the conspiracy entered into between himself and A 1 and A 4 fresh negotiations with A 4 on or about April 20, 1965 without associating any member of the Finance Department and persuaded him to accept the lowest revised rates offered by Ram & Co. although he did not possess the requisite experience in and equipment for rock cutting and filling and by passing the Financial Controller forwarded the papers to the Operation Manager who not being conversant with the proceedings supported A 2 for entrusting the contract to A 4 at the lowest rates offered by Ram & Co. On the Tender Committee recommendations reaching him in circulation. Srivastava put on record his bold and emphatic protest but eventually reluctantly gave his con 882 currence to the recommendations made by A 1 and the Operation Manager as is evident from the concluding sentence of the Note: "The case is recommended for acceptance of the Chairman only because the Engineering Manager has certified that he would not be able to accept any responsibility about the deadline if work is not given to Desai." Although according to A 2 's note (Exh. 33) dated April 19, 1965, the Coordinator and Sales Manager was keen to have the site developed as early as possible, the latter held up the matter for nearly three months in the vain expectation that the work would be done free of cost either by the Government of Maharashtra or the Bharat Sevak Samaj and it was not before July 15, 1967 that he gave his approval to A 1 's proposal to award the contract to A 4 whereafter accepting the said proposal the Managing Director of the Marketing Division and Chairman of the Board of Directors of the Corporation accorded sanction to the entrustment of the work to A 4. On receipt of the sanction, A 1 forwarded the papers with his endorsement to the Financial Controller on July 29, 1965. On July 30, 1965, work order (Exh. 19) manifesting quantity of rock cutting work as 29,30,450 cft., filling work as 90,000 cft. and value of the work as Rs. 5,99,590/ as against the corresponding figures of 23,30,450 cft., 31,500 cft. and Rs. 4,70,000/ respectively as specified in the final sanction which was based on the aforesaid level statement (Exh. 22) and work sheet (Exh. 23) was prepared and handed over by A 2 to A 4. Copies of the work order were also endorsed by A 2 to the Bills Section of the Engineering Department and the Accounts Section of the Finance Department of the Corporation with the endorsement "the above has Chairman 's approval on our note of even reference dated 7th April 1965. Please have the agreement executed. Earnest money of unsuccessful tenderers may also please be refunded early. " On July 30, 1965, formal contract (Exh. 74) mentioning only the number and date of the work order in the blank columns of the printed form was prepared and signed by A 4 and a representative of the Company. The joint level statement Exhibit 22 and the work sheet Exhibit 23 in respect of the joint survey made between March 21 and 26, 1965 for ascertaining the extent of rock cutting and filling which formed the basis for invitation of tenders and the final sanction in favour of A 4 were not only left unsigned by the concerned but were actually removed from the file and were substituted by spurious level plan (Exh. 24) and its copy (Exh. 38) which were fabricated by A 3 to justify the inflated figures of rock cutting and filling work mentioned in the work order (Exh. 19) dated 883 July 29/30, 1965. On August 19, 1965, fabricated level plans (Exhibits 24 and 38) prepared by A 3 were sent to A 4 as annexures to Exhibit 106 which ran as under: "We are enclosing herewith two prints of spot level of land area to be dressed and levelled at our Trombay plot. The whole plot should be brought to a level of 102.00 as directed. Please return to us a copy of the Blue Print showing spot levels duly signed as a token of acceptance of the same for payment." While A 4 retained one of the spurious plans viz. Exhibit 38 with himself, he returned the other viz. Exhibit 24 after putting his initials thereon. Thereafter A 3 endorsed on the letter Exhibit 106 that 'the print signed by A 4 should be filed by Sukhtankar (P.W. 13) who is in charge of the filing section. ' Accordingly, Sukhtankar filed Exhibit 106 alongwith Exhibit 24 in the Bill Section. The actual rock cutting operations commenced with effect from August 1, 1965 and on August 27, 1965, A 4 prepared and submitted the first running bill (Exhibit 51) indicating that 8,00,000 cft. of cutting work and 80,000 cft. of filling work had been completed. This bill was accompanied by the certificate of A 3 reading as under : "The measurements on which column No. 3 of this bill are based were taken by me on 24 8 65 and recorded at pages of MMC No. 7201. Certified that the quantities of work actually executed as shown in column No. 4 has actually been done and in no case less than the on account payments claimed. " The above certificate was countersigned by A 2 on August 26, 1965. A 2, A 3 and A 4 also signed measurement certificate (Exhibit 52) which read as follows: "We certify that the measurements given above are the actual works carried out in accordance with the drawings and specifications as indicated in the work order referred to above. " On the basis of these certificates, the first on account running bill was passed and paid for. Thereafter the second and third running bills and measurement certificates Exhibits 53 and 54 dated Septem 884 ber 16, 1965 and November 17, 1965 respectively claiming that the additional cutting work of 5,00,000 cft. and 8,00,000 cft. had been done were likewise prepared by A 4 and signed by A 3 and counter signed by A 2. The fourth running bill and measurement certificate (Exh. 55) dated February 22, 1966 claiming that additional work to the extent of 7,00,000 cft. had been done was prepared by A 4 and signed by A 3. This bill which was countersigned by K. section Joshi, another Senior Engineer who was put incharge of the Project in the absence of A 2 who had been transferred to Delhi was also paid. On November 8, 1966, one Gurunath Naik (P.W. 17) who was working as a Junior or Assistant Engineer for some time in Bombay and for the remaining period at Allahabad, Kanpur and Mugalsarai was called by A 1 and asked to see Ramrao, the then Junior Engineering Manager. Accordingly Naik met Ramrao who directed him to go to the spot and have the level drawings. Pursuant to this direction, Naik went to the site for spot verification and reported to Ramrao vide Exhibit 18 that excepting at one place where he got a level of 102 9 nowhere else did he get a level of 102. Naik also reported that as against an area of 7.4 acres which had to be levelled hardly an area of 4.8 acres was attempted to be levelled. On December 30, 1966, A 4 submitted his final bill (Exh. 56) claiming to have completed the work by August 11, 1966. This bill bore the certificate dated December 29, 1966 of A 3 to the effect that the measurements on which column No. 3 of the bill was based was taken by him on that date, and had been recorded in the measurements of the M.B.M.C. book. A 3 also recorded a further certificate to the effect that the work had been completed 100% according to the specifications and drawings. This certificate of A 3 was followed by another certificate of A 4 that he accepted the above certificate and certified that the amount of payment which he received on that bill would be in full and final settlement of all his claims in respect of the work excepting the refund of his security deposit. By this bill, A 4 claimed to have done 3,84,720 cft. of cutting work and 18,200 cft. of filling work in addition to the work covered by the four earlier running bills. Thus A 4 claimed to have done 31,84,720 cft. of rock cutting work and 98,200 cft. of filling work. On this bill, which bore the certificates of A 3 and A 4 was countersigned by Ramrao on December 30, 1961 and wherein it was falsely claimed by A 4 that the work was completed on August 11, 1966 although that date was also much beyond the stipulated date A 3 recorded the following note: 885 "The final bill amounts to Rs. 6,51,674/ and is in excess of work order amount by Rs. 52,084. Since this excess is within 10% of the ordered amount, M.E. may kindly approve." Accordingly the papers were laid before A 1 who accorded the desired approval the moment the bill was laid before him and sent it for payment to the Accounts Officer ignoring the practice which required all such bills involving an excess of 10% over the sanctioned amount to be submitted to the Chairman for sanction. On the bill coming before the Accounts Department for scrutiny, it pointed out that since the actual work exceeded the sanctioned amount by Rs. 52,084/ for which originally the approval of the Chairman was taken, the excess needed to be regularised by obtaining his sanction. It was also pointed out that as the contractor had not completed the work within the stipulated time, the question of imposition of penalty also required to be considered. On the pay order being returned to the Engineering Department, Ramrao, the then Deputy Engineering Manager, submitted the following reply vide Exhibit 59 dated January 12, 1967: "The work is now completed as required. However to acquire the required level and gradient, the quantity of work has increased. The party has now submitted their final bill for this work amounting to Rs. 6,51,674/ which is in excess by Rs. 52,084/ than the original amount of work order. The excess is within 10% of the original estimate, M.D. is therefore requested to kindly approve the excess work done and to pass the final bill for Rs. 6,51,674/ . As per the work order, the work was to be completed within 4 months (120 working days). However, the Contractors could not complete this work including the disposal of the excavated stuff within this time limit due to the fact that there was no approach available to this plot. The party has completed the work expeditiously, after the approach was given to them by M/s. Tatas. M. D. is therefore, requested to consider this aspect and approve the time limit extension upto 11 8 1966, the date on which the party has completed the work." 886 On the matter coming back to the Finance Department, Shende (P.W. 16) pointed out that not only the quantities of rock cutting and filling work which were found as a result of the survey made between March 21 and 26, 1965 had been enormously inflated in the work order but the work claimed to have been done also exceeded the inflated figures mentioned in the work order. He, therefore, suggested that the Department might agree to the payment of extra amount to A 4 subject to A 1 's obtaining the Board 's ratification. Sometime before March 28, 1967, Krishnaswamy Rajam (P.W. 1), the Chief Internal Auditor, was summoned by the Managing Director and the General Manager and was asked to have a personal talk with A 3 in connection with the matter. On P.W. 1 's questioning A 3 on March 28, 1967, the latter made confessional statement (Exh. 21) which is reproduced below for facility of reference: "Regarding rock cutting and filling at Trombay site I wish to bring to your kind attention the following: I was assigned to this job after the work was started at site by M/s N. N. Desai. The original estimates for cutting and filling were 16,80,000 cft. and 8,00,000 cft. respectively. It was later revised to 23,30,450 cft. and 31,500 cft. for cutting and filling. I have got the workings for this revision with me at Ahmedabad. (He refers to the genuine level statements and plans and worksheets Exs. 22 and 23 which were prepared by him under the directions of Varandani between 21st and 26th March, 1965). Later on I was advised by my superiors to give a still further upward revision giving the quantities as 29,30,450 cft. for cutting and 90,000 cft. for filling. The work sheets prepared by me and signed by contractor only (N. N. Desai) has no bearing to actual quantities involved. I had merely acted as asked by my superiors in preparing worksheets accordingly which has resulted in this upward revision. I have also given measurement certificates in this regard in line with the revised wrong quantities. I realise now this has resulted in making excess payments to the contractor. I beg to be excused for having done such a thing which was done solely at the instance of my superiors in Engineering Depart 887 ment. E.M. (accused No. 1) and Dy. E.M. are aware of this. " Thereupon P.W. 1 put up the papers before the Managing Director and the General Manager who advised him to start investigation on particular lines. During the course of the inquiry, A 2 told P.W. 1 that the work order which as far as he remembered was prepared by A 3 was cursorily signed by him due to heavy rush of work and that while checking the running bills submitted for payment, he normally checked the percentage of progress of work certified by the Assistant Engineer. On further investigation made on April 1, 1967, A 3 produced the genuine level statement (Exh. 22) and the work sheet (Exh. 23) before P.W. 1 and told him that the substitution of the fabricated level statement and work sheet relating to rock cutting and filling at Trombay was done at the instance of Joshi, A 2 and A 1 and that they were aware of the same. To the further question as to what was the basis for the work order for the figure of 29,00,000 cft. of rock cutting and 90,000 cft. of filling, A 3 told P.W. 1 that there was no basis for the work order and the quantities were fixed to suit sanctioned amount. On a query being made by P.W. 1 from Ramrao regarding the final bill, he admitted that he had not personally checked the calculations and had counter signed the bill relying on the accuracy of the measurements shown in the bill which was prepared by A 3. He further stated that he had not personally checked the calculations based on the final bill and initialled joint levels which according to him were normally done by the Assistant Engineer. During the course of this inquiry, Murthy (P.W. 18) was deputed by A 1 and Krishnaswamy (P.W. 1) to go to the spot and find out the work which had actually been done. Thereupon, Murthy (P.W. 18) submitted his interim report on April 6, 1967 pointing out that at only one place the level was 103.94 and elsewhere it remained much more. By his final report (Exh. 44) dated April 20, 1967, Murthy (P.W. 18) pointed out that actually on the spot only 9,73,000 cft. of rock cutting and 50,000 cft. of filling had been done. After recording the statements of A 2, A 3 and A 4, Krishnaswamy (P.W. 1) submitted a detailed report (Exh. 25) on April 8, 1967 to the Managing Director through the Financial Controller. In his report, P.W. 1 also pointed out that contour plan/levels statement which in case of this nature are jointly signed by the contractor and the representative of the Engineering Department were not available in the instant case for inspection and that A 3 had produced a level statement alleged to have been processed by him and Varandani which was not signed by any body including A 3 's superiors. P.W. 1 also 888 pointed out in the course of the report that the quantities of rock cutting and filling shown in the work order were 29,30,450 cft. and 90,000 cft. respectively and that there was an increase of 6,00,000 cft. of rock cutting straightaway. Krishnaswamy (P.W. 1) also mentioned in his report that according to A 3, the level statement giving the figure of 29,30,450 cft. for cutting and 90,000 cft. for filling had been signed by A 4. On the report being put up before the then Financial Controller, he directed that before proceeding with the matter, it was necessary to call for the comments of A 1. Thereupon after calling for a report from Ramrao, A 1 gave his comments vide Exhibit 178 dated April 17, 1967 wherein after doubting the competence and qualification of P.W. 1 to hold the investigation, he offered to send one of the senior engineers from Western Branch to carry out an independent survey to find out the quantity of work done by A 4 and suggested that measurements might be made by reference to the kacha level statement (Exh. 125), the work sheet (Exh. 126) and the contour plan (Exh. 34) which were checked by A 2 and approved by him and which must be with the department. On April 18, 1967, A 1 sent for A 3 and questioned him in regard to the matter. In the statement penned by A 3 himself, he stated that he changed the levels of drawing of Trombay plot regarding rock cutting and filling job at the instance of A 2 and KSJ (i.e. Joshi) but did not inform A 1. On May 3, 1967, A 1 issued show cause notices to A 2 and A 3 with a view to hold departmental enquiry against them. By his reply dated May 20, 1967 to the show cause notice, A 3 stated that he had changed the original contour plan at the instance of A 2. On getting information on July 15, 1967 that A 4 was having some rock cutting done on the site although he had in his final bill claimed that he had fully completed the work on August 11, 1966, A 1 and A 2 visited the site along with Lakshmanan, the Operations Manager and finding that the work of rock cutting was still going on and that the claim of A 4 as certified by A 3 and countersigned by Ramrao about the work having been completed on August 11, 1966 was apparently false had the measurements of rock cutting and filling work taken by Ganapathy. As the measurements taken by Ganpathy were on the basis of level plans prepared by Tatas in which the bench mark was 94.5 as against the bench mark of 100 for the survey in question, the Managing Director had the measurements taken by M/s R. L. Dalal & Co. The report of Dalal & Co. showed that the rock cutting work done was 9,60,000 cft. and filling work was 1,96,000 cft. 889 On July 28, 1967, the Managing Director issued a charge sheet to A 1, A 2, A 3 and Ramrao. In his reply (Exh.64) dated August 4, 1967 to the charge sheet, A 3 submitted that whatever he did was under the orders of A 1 and the Deputy Engineering Manager. This time he did not mention A 2 to be responsible for anything done by him. On the same day i.e. August 4, 1967, A 1 sent for A 3 in his cabin and questioned him in the presence of three other officers viz. Roy Chowdhary (P.W.2), who was the Deputy Financial Controller, Shriyan (P.W.23), the Assistant Engineer, and Vora, the Senior Engineer. On this Occasion, A 3 allegedly made statement (Exh.43) absolving A 1 and throwing the entire responsibility on A 2. While the three other officers and A 1 signed the statement (Exh.48) made by A 3, A 3 declined to sign it and fled away from the chamber on some excuse and rushed to the chamber of Krishnaswamy, Chief Internal Auditor whereupon Roy Chowdhary (P.W.2) also followed A 3 to the chamber of Krishnaswamy. In the chamber of Krishnaswamy, A 3 resiled from the statement. Having regard to the position adopted by A 3 in resiling from his earlier statement of that very day before A 1, Roy Chowdhary reminded him that in the morning in his presence, he had stated that it was A 2 who was responsible for asking him to change the drawing and increase the quantities. To this question of Roy Chowdhary in the chamber of Krishnaswamy, A 3 replied in the negative and stated that A 1 called him and Joshi into his room and instructed him personally to increase the quantity. When questioned by Roy Chowdhary as to why he did not come out with that truth in the room of A 1 in the presence of Roy Chowdhary, A 3 replied that he did not do so out of fear or A 1. In his reply to the charge sheet, Ramrao inter alia stated that he signed the bill (Exh.56) relying on the certificate of A 3 who had been assigned to the job and added that according to the practice prevailing in the Corporation, Senior Engineers were not expected to verify the measurements. Elaborating his explanation, he stated that just as Senior Engineer, Doraiswamy could not proceed to a BPI nor Senior Engineer Vora nor Senior Engineer Chari could proceed to an installation just to verify the billed quantities in view of the fact that there were a number of bills on each work order and so many work orders for each location. Similarly in the Branches, Senior Engineers who were controlling the work for so many depots and installations were not expected to verify the quantities in each bill; that however, if there was a dispute with the contractor or there was some other reason to doubt the correctness of the Assistant Engineer 's certificate, the Senior 890 Engineer might either take measurements himself or get them taken by another Assistant Engineer; that subsequent to the counter signature by the Senior Engineer, the bill was passed on to the Engineering Bills Section where the bills were checked by the Accountant against sanctions, work order, rates and amounts, deductions for cement A.C. sheets or other materials supplied and security; deposit etc; that the Accountant prepared the pay order giving all these details for signature by a Senior Engineer as far as possible other than the countersigning Senior Engineer; that the bill then went to the Accounts Department where it was subjected to further detailed scrutiny before payment; that on December 30, 1966 Vaidya brought the bill for Rs.79, 674/ dated December 30, 1966 to him for counter signature; that it would have normally been put up to K. section Joshi but was brought to him as he was not available; that Vaidya was the Assistant Engineer who had handled that contract from the time of placing the work order; that the bill was for the work carried out by the Contractor subsequent to the previous 'on account bill ' 21 2 66 (nearly 10 months earlier) i.e. about 3.18 lakhs cft. at Rs. 20/ per 100 cft. of cutting and 18,200 cft. of filling at Rs. 15/ per 100 cft; that he had visited Trombay number of times in connection with other works during the period commencing from August, 1966 and was aware that the Contractor had carried out approximately that much work during 1966; that the extra quantity required sanction of competent authority; that the previous bills passed showed that the major portion of the work was carried out during the period August to December, 1965 and about 7 lakhs CFT of cutting during December, 1965 to February, 1966; that A. section Krishnaswamy who placed the work order had countersigned bills upto 21 lakhs cft. of cutting and 80,000 cft. of filling as early as November 17, 1965 and subsequently K. section Joshi had countersigned a bill for an additional 7 lakhs cft. of cutting and the contractor had already been paid Rs. 5.72 lakhs less security deposit; that he, therefore countersigned the bill dated December 30, 1966 and passed it on to M.E. for approval of the extra quantity of cutting; that M.E. approved on the same date and the bills was sent to Engineering Bills for scrutiny by the Accountant in respect of sanctions, work order terms etc; that he also particularly instructed that the bill should be shown to K. section Joshi before the pay order was issued since normally the bill should have gone to him for counter signature; that the Accountant carried out his instructions; that the counter signature did not denote final passing of a bill but only that it might be proceeded further and subjected to all the necessary administrative and financial checks before payment; that all the bills for the work had been certified by the Assistant Engineer incharge who was fully familiar with work and the previous bills had been counter 891 signed by colleagues of status equal to him; that he had no reasons to suspect any malpractice or mistakes and also there was no dispute with contractor; that he had exercise the normal technical checks which were the functions denoted by counter signature as per the prevailing practice and that countersignature did not imply correctness of the quantities certified by the Assistant Engineer (who alone was responsible for the correctness) in either the current or previous bills. When the matter was thus pending, a confidential information reached Rege, the Deputy Superintendent of Police, C.B.I. (P.W. 27) who registered the case on December 27, 1967. During the course of investigation, he visited the office of the Corporation, took charge of all the concerned documents, had the site measured by Shivashankar, Technical Examiner, Central Intelligence Service, (P.W.4) according to whom the cutting and filling work done by the contractor was to the extent of 9,61,000 cft. and 1,50,000 cft. respectively and after securing the requisite sanction, prosecuted A 1, A 2 and A 3 and also submitted the charge sheet against A 4 with the result that all the four accused were convicted. In these appeals, we have had the advantage of hearing full dressed arguments of counsel on both sides who diligently prepared the case and put across their respective contentions with great ability. We must point out at the outset that although the trial court had clearly acquitted A 1 of the charge under section 409 read with section 120 B and section 109 of the Indian Penal Code it unfortunately forgot to keep that fact in mind with the result that while concluding its judgment it held him guilty on that charge as well. In the circumstances, it was not open to the High Court in the appeal by A 1 to go into that charge and reverse the findings arrived at by the trial court. We will accordingly be concerned with the question of validity of A 1 's conviction under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act only but so far as A 2 is concerned, we will have to examine the validity of his conviction under all the charges. Before examining the sufficiency or otherwise of the material bearing, on the charges against both the appellants, we consider it necessary to have a clear concept of the meaning and ambit of the phraseology "by corrupt or illegal means or by otherwise abusing his position as public servant" used in section 5(1)(d) of the Prevention of Corruption Act, 1947 (hereinafter referred to as 'the Act ') for the contravention of which the appellants have been convicted. It will be advantageous in this connection to refer to two decisions rendered by this 892 Court in M. Narayanana Nambiar vs State of Kerala(1) and Major section K. Kale vs State of Maharashtra.(2) In the first case, Subba Rao, J. (as he then was) while construing clause (d) of sub section (1) of section 5 of the Act observed: "The pharaseology 'by otherwise abusing his position as public servant ' covers acts done otherwise than by corrupt or illegal means by an officer abusing his position. The gist of the offence under this clause is that a public officer abusing his position as a public servant obtains for himself or for any other person any valuable thing or pecuniary advantage. "Abuse" means misuse i.e. using his position for something for which it is not intended. That abuse may be by corrupt or illegal means or otherwise than those means. The word 'otherwise ' has wide connotation and if no limitation is placed on it the words 'corrupt ', 'illegal ' and 'otherwise ' mentioned in the clause become surplusage, for on that construction every abuse of position is gathered by the clause. So some limitation will have to be put on that word and that limitation is that it takes colour from the preceding words along with which it appears in the clause, that is to say something savouring of dishonest act on his part. The contention of the learned counsel that if the clause is widely construed even a recommendation made by a public servant for securing a job for another may come within the clause and that could not have been the intention of the Legislature. But in our view such inocuous acts will not be covered by the said clause. The juxtaposition of the word otherwise ' with the words "corrupt or illegal means" and the dishonesty implict in the word "abuse" indicate the necessity for a dishonest intention on his part to bring him within the meaning of the clause. Whether he abused his position or not depends upon the facts of each case. " Following the decision in M. Narayanan Nambiar vs State of Kerala (supra), it was held by this Court in Major section K. Kale vs State of Maharashtra (supra) that the abuse of a position in order to come within the mischief of the section must necessarily be dishonest so that it may be proved that the accused caused deliberate loss to the department. It was further held in this case that it is for the prosecution to prove affirmatively that the accused by corrupt or illegal means or by abusing his position obtained any pecuniary advantage for some other 893 person. It would, therefore, be necessary to find out in this case as to whether the accused abused their position and acted dishonestly or with a corrupt or oblique motive in having the contract in question entrusted to A 4. As the courts below have rested their judgments on a constellation of circumstances, it would be well to bear in mind the fundamental rule relating to the proof of guilt based on circumstantial evidence which has been settled by a long line of decisions of this Court. The rule is to the effect that in cases depending on circumstantial evidence, there is always the danger that conjecture or suspicion may take the place of legal proof. In such cases the mind is apt to take a pleasure in adapting circumstances to one another, and even in straining them a little, if need be, to force them to form parts of one connected whole; and the more ingenious the mind of the individual, the more likely it is, considering such matters to cover reach and mislead itself, to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete. In cases where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so established should be consistent only with the hypotheisis of the guilt of the accused. Again, the circumstances should be of a conclusive nature and they should be such as to exclude every hypothesis but the one proposed to be proved. In other words, there must be a chain of evidence so far complete as not to leave any reasonable grounds for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human probability the act must have been done by the accused. (See Hanumant Govind Nargundkar vs State of M.P.,(1) Palvinder Kaur vs State of Punjab(2) and Charan Singh vs State of U.P.(3). The principle that inculpatory fact must be inconsistent with the innocence of the accused and incapable of explanation on any other hypothesis than that of guilt does not mean that any extravagant hypothesis would be sufficient to sustain the principle, but that the hypothesis suggested must be reasonable. (See Govinda Reddy vs State of Mysore(4). 894 Keeping in view the aforesaid construction placed on section 5(1)(d) of the Act and the principles with regard to proof of guilt based on circumstantial evidence, let us now turn to the various circumstances which have been relied upon by the High Court in holding the appellants guilty and see whether they factually exist and if so whether they are of such a character as to be wholly incompatible with the innocence of the appellants and consistent only with their guilt. In so doing, we purpose to divide the aforesaid circumstances under the following broad heads and deal with them seriatim: 1. The conduct of the appellants evidencing their keenness to have the contract entrusted to A 4. 2. Issue of work order (Exh. 19) with inflated figures relating to rock cutting and filling. Removal of statement of level plan (Exh. 22) and work sheet (Exh. 23) from the departmental file and fabrication and substitution in their place of the fabricated ones by A 3. 4. Despatch on August 19, 1965 of spurious level plan (Exh. 24) and its copy (Exh. 38) by A 2 to A 4 as annexures to Exhibit 106. Counter signing of the on running bills by A 2. 6. The initialling of the final bill by A 1. The first circumstance relied upon by the High Court in this behalf is that though the revised tender notice was limited to the eleven contractors who had originally submitted their tenders in response to the Tender Notice (Exh. 28), the appellants improperly got a tender form issued to A 4 and entertained by the Tender Committee. It is true that the copies of Exhibit 15 on which the prosecution has sought to rely were sent by registered post to the eleven original tenderers by the Engineering Department of the Corporation but it cannot be overlooked that there is nothing in Exhibit 15 or elshhere on the record to indicate that other contractors were precluded from submitting their tenders or that the corrigendum extending the date for submission of the tenders was neither intended to be published nor was it actually published. It seems that the attention of the High Court was not drawn to the communication (Exh. 29) dated March 9, 1965 addressed by Ranganath, Public Relations 895 Officer, to the Advertisement Manager, Times of India and others and the corrigendum forming annexure thereto which ran as under: " INDIAN OIL CORPORATION LIMITED (MARKETING DIVISION) Clarke Road, Mahalaxmi, Bombay 34, WB, India IN REPLY PLEASE REFER TO PR 31 317 9th March, 1965 To The Advertisement Manager, The Times of India, (Bombay) The Indian Express, (Bombay) Free Press Journal, (Bombay) Dear Sir, Subject: Tender No. 249/65 Corrigendum Attached is text of an advertisement for IMMEDIATE Publication utilising the minimum possible space under Public Notice/Tenders or in its appropriate place. We would appreciate your treating this request as URGENT. Thanking you. Yours faithfully, Sd/ (B. V. Ranganath) Public Relations Officer Encl: One. Engineering Manager, H.O. with reference to their inter office memo No Eng/ASK dated 9 3 1965. We are trying to get it published on March 10. INDIAN OIL CORPORATION LTD. (MARKETING DIVISION) Corrigendum to Public Tender No. 249/65 The last date for receiving this Tender has been extended to 15th March, 1965 at 2 30 P.M. and will be opened the same day at The attention of the High Court also does not seem to have been invited to the above noted endorsement at the foot of Exhibit 29. The High Court also seems to be wrong in thinking that out of the nine contractors who submitted their tenders in response to the revised tender notice, eight were from the original nine tenders and the ninth was A 4. A comparison of the two lists viz. the one of the original tenders and the other of those contactors who submitted their tenders in response to the revised tender notice would make it clear that five contractors appearing in the second list were fresh tenderers. The Financial Controller 's note (Exh. 17) dated April 2, 1965 which appears to be the outcome of some personal pique itself shows that it was only on April 15, 1965 that it was agreed between the members of the Tender Committee that the grant of the contract would be confined to one the of the three lowest tenderers, one of whom was A 4. The fact that none of the eleven officers of the Finance and the Engineering Department of the Corporation who handled the file relating to the grant of the contract in question ever raised any objection regarding the improper reception or entertainment of A 4 's tender by the Engineering Department is a proof positive of the fact that there was nothing wrong about the issue of tender form to A 4 or its entertainment by the appellants. Thus it is clear that the first circumstance relied upon by the High Court had no factual existence and could not be pressed into service against the appellants. The next finding of the High Court that while Ram & Co. was best fitted for entrustment of the contract in question in view of the vast experience and equipment possessed by it, A 4 did not have any such merit. It is a matter of common knowledge that rock cutting is not a specialised job and no extra ordinary skill or experience is required for the same and that every civil construction involves some sort of rock cutting. It is also in evidence that A 4 who was the Corporation 's old and tried contractor had previously executed 98 works including the one on the An top Hill in Bombay for the Corporation to its entire satisfication, and out of the aforesaid works many related to installations which were more complicated than rock cutting and filling. It would also be noticed that in the notes put up 897 by them neither Srivastava (P.W. 5) nor Shivananda, Superintendent, nor Khurana, Assistant Financial Controller of the Finance Department, nor the Operation Manager ever pointed out that A14 lacked the requisite experience or competence which disentitled him to the grant of the contract. In fact Shivananda and Khurana had suggested as an alternative to inviting fresh tenders that A 4 should be asked to reduce his rates in view of the revised figures on account of which the value of the contract had gone up considerably. It would also be noticed that the High Court while rightly holding that Exhibit 122 was not delivered to A 1 by Roshan Lal (P.W. 19) tell into an error in observing that A 1 had a hand in suppressing it. It seems to have escaped its notice that at the negotiations conducted on April 17, 1965 with the three lowest tenderers viz. Ram and Co., Liberty and Co., and A 4 by the Tender Committee, of which P.W. 5 was a prominent member, Roshan Lal was present and while pressing his firm 's claim to the grant of the contract he did draw the attention of the members of the Committee to the contents of Ext. 122 sent earlier by his firm to the Corporation. This is evident from Roshan Lal 's own admission that he informed the corporation in writing as to his experience in the line and whatever he had written he had also told the concerned officers who were two or there in number. If A 1 would have had a hand in suppressing Ext. 122 he would not have allowed it is to remain on the file. That apart a bare perusal of report Ext. 33 which is fairly detailed is enough to show that neither A 1 nor A 2 was interested in suppressing or distorting any material fact. There was, therefore, hardly any justification for the observation in question. The third finding of the High Court that the appellants told Vrindani (P.W. 20) and Vaidya (A 3) that it had already been decided to entrust the contract to A 4 and in order not to loose time, a joint survey should be made, is also erroneous. It is unbelievable that A 1 and A 2 who were pre occupied with several projects would go and tell Vrindani who was three or four steps below them and was admittedly not a member of the conspiracy nor concerned with policy matters that it had been already decided to assign the contract to A 4. The aforesaid briefing attributed to the appellants also seems to be incredible in view of the fact that it was only on the basis of the level measurements taken by P.W. 20 and A 3 during the survey made by them between March 20 and 26, 1965 that A 4 turned out to be the lowest tenderer and at the time when the briefing is alleged to have been given the lowest tender was of Ram & Co. 898 The insinuation implicit in the fourth finding of the High Court that Exts. 16, 17, 30 33 and 123 led to the inference that A 1 was the author and architect of the proposal for acceptance of A 4 's tender, is also unwarranted. There is nothing in these documents which can be interpreted to indicate that the appellant was actuated by any ulterior or corrupt motive or that he was guilty of any mis demeanour, irregularity or impropriety. On the contrary the said documents particularly Exts. 16 and 33, which like an open book fairly set out all the facts and circumstances bearing upon the allotment of the contract in question including the claim thereto of Ram & Co. not only manifest, that the procedure referred to by P.W. 1 in his deposition for inviting and finalizing the tenders was meticulously followed in the present case, but also establish A 1 's bona fides. It has also to be borne in mind that the Tender Committee which comprised of the Operation Manager and the Financial Controller in addition to A 1 had only an advisory role to play and the decision to entrust the contract to a particular contractor lay with the Chairman of the Board of Directors in consultation with the coordinator and Sales Manager who was above the Tender Committee. That the appellant 's proposal favouring A 4 was in the interest of the corporation both from the point of view of economy as well as speedy and satisfactory execution of work and was solely inspired by his concern to avoid the sad experience which the corporation had in respect of rock cutting work at An top hill with the Kore Brothers which was a new party is evident from the following endorsement made on A 33 by H. B. Patel, Operation Manager: "In view of the urgency and our past experience with a new party at An top hill, I agree to Senior Engineer 's proposal that we give the job to M/s. N. N. Desai at the lowest tendered rates. " The fifth finding of the High Court that the appellants had negotiations on their own with A 4 with a sinister object is also against the weight of the material on the record. The act of the appellants in trying to ascertain from A 4 whether he was prepared to reduce his rates to the level of M/s. Ram & Co. which seems to have been taken in consultation and agreement with P.W. 5 was, in our opinion, guiltless, It would be well to remember in this connection that Shrivastava P.W. 5 himself admitted in the course of his deposition that there was practice in their corporation of asking the second lowest tenderer to match his rates with the lowest tender. The proposal about the allotment of work in favour of A 4 was, therefore, not only consistent with the practice but was also in the interest of the corporation. 899 In view of the foregoing we are inclined to think that the conduct of the appellants in prefering A 4 to any new contractor did not savour of dishonest intention. Re. 2: Coming to the work order (Exh. 19) containing inflated figures which is the corner stone of the prosecution case, it may be pointed out that the prosecution has not been able to produce any evidence showing the circumstances under which it was prepared. The observation od the High Court that the work order must be the creation of not only A 2 but of A 1 as well seems to be based upon mere conjecture. It would be noticed that the work order does not bear the signatures of A 1 and there is nothing to show that in the normal course, the work order had to come to A 1 before being issued to A 4 We cannot also in this connection afford to lose sight of the observations made by the trial court at page 279 of the Paper Book that 'it is a common ground that accused No. 1 is not concerned with the making of the order and that it is also a common ground that a work order is issued by the Engineer Incharge '. In these circumstances, it is difficult to understand how the High Court came to the conclusion that the work order (Exh. 19) was the creation of not only A 2 but of A 1 as well. It seems that the finding of the High Court was influenced by its finding with regard to Exhibits 16 and 33. In view, however, of our finding with regard to Exhibits 16 and 33, the observation of the High Court that the work order was also the creation of A 1 cannot be substained. We will, accordingly advert to the material on the record with a view only to see how far it reflects on the bonafides of A 2. The prosecution has not led any evidence to prove that A 2 dictated or prepared the work order. The proven facts show that according to the normal practice prevalent in the department it is not the Senior Engineer like appellant No. 2 who is incharge of the Project that prepared a work order but an assistant or Junior Engineer in charge of the work working under him. Although Varandani has in the course of his deposition tried to suggest that the work order was prepared by A 2, his suggestion cannot be relied upon in the face of Exhibit 67 wherein he told P.W. 1 that the work order was presumably prepared by Vaidya, A 3. It is highly improbable that on the very day of the grant of the sanction of the contract in question A 2 would take the extremely hazardous step of inflating the figures to obtain undue advantage for A 4 specially when he knew that the fraud would be at once discovered by reference to the sanction which had been transmitted to the Finance Department. The prosecution theory that the work order giving inflated figures was not only signed but was also prepared by A 2 is also negatived 900 by the following endorsement on the copy of the work order sent to the Bills and Accounts Sections of the Engineering Department of the Corporation: "The above has Chairman 's approval on our note of even reference dated 7th April, 1965. Please have the agreement executed. Earnest money of unsuccessful tenderers may be refunded early. " The above quoted endorsement completely demolished the prosecution case. If A 2 had been the author of Exhibit 19, or had suspected that his subordinate would have dared to inflate the quantities of the work, it is inconceivable that he would have made the above quoted insertion giving the particulars of the above mentioned note meant for the Chairman 's aproval in the copy of the work order addressed to the Bills and Accounts Sections which would have furnished a valuable clue for the speedy detection of the fraud that is alleged to have been perpetrated. Again if A 2 were really a conspirator who had falsely inflated the figures of rock cutting and filling in the work order he would have seen to it that the potential documentary evidence embodied in Exhibit 125 which showed the genuine levels on the spot was destroyed or done away with. The fact that he did not do anything of the kind raises a strong doubt about his culpability. Thus though it cannot be gainsaid that A 2 has been extremely negligent in not scrutinising the papers, it seems to us that he affixed his signatures in a routine manner to the work order prepared by his subordinate engineer without realizing the importance of his act placing implicit faith in the integrity of the latter. Re. 3: There is no clear, cogent and convincing evidence to show that A 1 or A 2 or both had a hand in the removal of the level plan (Exh. 22) or the work sheet (Exh. 23) from the departmental file relating to the contract in question and substitution in their place of the faked level plan (Exh. 24) and work sheet (Exh. 38) which were admittedly fabricated by A 3. The statements made from time to time by A 3 in this behalf being contradictory and discrepant as would be evident from the following table: ____________________________________________________________ section Date No.of Text of the statement No the Exhi bit ____________________________________________________________ 1 28 3 1967 21 The Original estimates for cutting and filling were 16,80,000 cft. and 8,00,000 cft. respectively. It was later revised 23,30,450 cft. and 31,500 cft 901 ____________________________________________________________ section Date No.of Text of the statement No the Exhi bit ____________________________________________________________ for cutting and filing. Later on I was advised by my superior in Engg. Dept., E and Dy. E.M. to give a still further upward revision giving the quantities as 29,30,450 cft. for cutting and 90,000 cft. for filling. 2 1 4 1967 36 ASK, KSJ and SPB asked me to substi tute SHS relating to rock cutting & filling at Trombay which was resulted in larger quantities of cutting and filling and they are fully aware of it. 3 18 4 1967 39 & 41 I told R. Krishnaswamy when he called me on 29 3 1967 that A.S. Krishnaswamy and K.S. Joshi told me to change the levels of drawings of Trombay plot regarding rock cutting/filling job . In reply to the further query of R. Krishna swamy, I told him that I did not inform M.E. about this and that he might be knowing. 5 20 5 1967 69 In addition to the statement dated 18 4 1967, I have to submit that I was asked to change the original contour, place by A.S. Krishnaswamy, Senior Engineer. 6 4 8 1967 43 Sometime in September, 1965, A.S. Krishnaswamy told me to increase the levels at random and bring the quality to about 30 lakhs cft. I did so accordingly. 7 4 8 1967 42 The Engineering Manager called me and Shri Joshi into his room one day and instructed me personally to increase the quantity. ____________________________________________________________ the prosecution ought to have made a serious attempt to produce K. section Joshi whose testimony was essential to clear up the mystery in which the whole affair is shrouded. The non production of K. section Joshi who appears to have been one of the main actors in the drama has left a lacuna which is very difficult to bridge. In the present state of evidence, it is inconceivable that A 1 who admittedly had a meritorious record of service, had won commendation from the Board of Directors for designing a tank and saving considerable sums of money and who was the only Head of Department to be given three advance increments for his integrity and efficient work and who had no are to grind would be a party to the unholy conspiracy for the removal of genuine level plan and work sheet and their substitution by spurious ones simply to obtain some pecuniary advantage for A 4 who was neither his friend nor relative. The position of A 2 is also 902 not materially different as in his case also the prosecution has not been able to show that he derived any monetary gain out of the transaction. Re. 4 : A bare perusal of statement contained in Exhibit 43 which according to H.N. Roy Chowdhary (P.W. 2) and C. L. Shriyan (P.W. 23) was voluntarily and without any pressure made by A 3 is enough to show that it was in September, 1965 that A 3 increased the levels shown in the original drawings and brought up the quantity of rock cutting to 30 lakhs cft. This statement totally knocks the bottom out of the prosecution case that the spurious level plan and the work sheet were despatched to A 4 on August 19, 1965 as annexures to Exhibit 106. If the spurious plan and the work sheet came into existence in September, 1965, it is difficult to understand how they could be despatched to A 4 alongwith Exhibit 106 on August 19, 1965. The conclusion, therefore, is irresistible that when the communication (Exh. 106) was despatched to A 4, it was not accompanied by fabricated level plan (Exh. 24) and work sheet (Exh. 38) but by the genuine ones viz. Exhibits 22 and 23 and that it was later on that the genuine ones were removed and retained by A 3 who during the course of the enquiry by R. Krishnaswamy (P.W. 1) brought them from Ahmedabad and handed them over to P.W. 1. The ommission on the part of Shriyan who claims to be certain that A 3 got the tracings Exhibits 24 and 38 prepared by him in April/May, 1965 to contradict A 3 when he made the aforesaid statement (Exh. 43) is also intriguing and lends assurance to the correctness of our conclusion. 5: The first thing to be borne in mind with regard to the measurement certificates on the running bills is that it is the Assistant Engineer incharge of the work who is responsible for taking measurements of the actual quantities of the work executed by the contractor for entering the same in the measurement book and for recording a certificate that the measurements given in the bill are of the actual work carried out on spot in accordance with the Department 's drawings and specifications. It has also to be remembered that A 1 had to look after the Corporation 's projects and installations all over India and A 2 had to look after and supervise a large number of the Corporation 's projects under the Western Branch which included installations at Sabarmati, Ahmedabad, Okha and Kandla in Gujarat and Sewri, Wadala and Trombay in Maharashtra and parts of Madhya Pradesh. It cannot also be ignored that according to Ganpati (D.W. 3) when a Senior Engineer visits the site, he determines the progress of the work by visual inspection determining visually the approximate 903 quantity of the work done. All this apart, an examination of the running bills (Exhibits 51, 53, 54, 55 and 56) shows that all of them bear the certificates as referred to and reproduced at page 11 of this judgment. It would be noted that whereas first three of these bills bear the counter signatures of A 2, Bill (Exh. 55) bears the countersignatures of K. section Joshi, Senior Engineer and Bill (Exh. 56) bears the counter signatures of Ramrao, another Senior Engineer, who was absolved in the departmental enquiry. Now the fact that A 2 countersigned the first three bills does not appear to be material in view of the following statement made by Ramrao vide Exhibit 107: "I had no reason to doubt Shri Vaidya 's figures. Countersignature of a bill as per our prevailing practice is not indicative of verification but only indicates that there is no reason to doubt the correctness of the figures. " The fact that K. section Joshi, Senior Engineer, also countersigned the bill (Exh. 55) which contains inflated figures and no action was taken against him also lends assurance to the inference that the counter signatures were appended merely as a routine by the Senior Engineers who seem to have reposed blind and unflinching faith on the honesty of their subordinates. Now if Ramrao who countersigned the bill (Exh. 56) showing the quantity of cutting work as 31 lakhs cft. was exonerated in the departmental enquiry and no action was taken against K. section Joshi who made the wrong endorsement in respect of the measurement on Exhibit 55 or against Vora who had prepared the note (Exh. 58) showing that the work had been completed, it is difficult to understand how A 2 could be treated differently and criminal intention attributed to him. The finding of the High Court in respect of the third running bill (Exh. 54) that the very defence of A 2 would itself furnish the best evidence of the conspiracy involving A 1 is not correct for apart from other infirmities from which if suffer, it is well settled that the defence taken by one accused cannot in law be treated as evidence against his co accused. Re. 6 : The finding of the High Court that A 1 signed the bill (Exh. 56) and sanctioned excess amount involved knowing full well that the bill was not true is also against weight of the evidence on the record. It cannot in the first instance be forgotten that it was on July 29, 1965 that A 1 could have had occasion to see the figures of the work for which sanction was granted by the Chairman of the Board of Directors and the bill (Exh. 56) was put up to him on 904 December 30, 1967. In the absence of the sanction from which the genuine figures could have been gleaned, it would not be reasonable to expect A 1 to remember the sanctioned figures after the lapse of 17 months specially when it is admitted on all hands that being the head of the Engineering Department, he had to tour extensively to supervise several projects spread all over the country and to discharge multifarious duties in connection therewith. The bill, it would be noted was prepared by A 3 and was countersigned by no less a functionary than the Deputy Engineering Manager, Ramrao, who was next below A 1 in the hierarchy of the Department. In the note prepared by him, it was not pointed out by A 3 that the bill had to go to the Managing Director. The evidence in the case also shows that A 1 was not expected to meticulously scrutinize the bill but was concerned only with the initialling of the note which although it had passed through several hands did not indicate that the competent authority to grant sanction for the excess amount was the Chairman of the Board of Directors. It will also be wrong to hold A 1 responsible for simply initialling the note contained in Exhibit 56 without examining Ramrao who approved the bill including the note and also countersigned the measurement certificate before it came to A 1. In the circumstances, the mere initialling by A 1 of the bill alongside the note marked for him by A 2 is, therefore not a circumstance which can unmistakably be said to point to the guilt of the appellant. An analysis of the circumstantial evidence adduced by the prosecution does not in our opinion lead to an unerring certainty that A 1 and A 2 acted with any dishonest or corrupt motive or abused their position. In conclusion we cannot help observing that non examination by the prosecution of Ramrao, Joshi, Vora and Patel who were material witnesses for the unfolding of its case has left some yawning gaps in the evidence which we have found very difficult to bridge. If these persons had been produce many of the points which have remained obscure and hidden up would have been cleared up. For the foregoing reasons, we allow the appeals, set aside the convictions of the appellants and the sentences imposed upon them and acquit them of the offences with which they were charged. P.B.R. Appeals allowed.

Both the appellants were officers of Indian Oil Corporation. The Corporation invited tenders from experienced contractors for rock cutting, filling and levelling of certain land acquired by it. On the notified date it opened the tenders received from eleven contractors. But in the meantime since it made a change in the specification of work to be done it asked the tenderers to submit revised tender. The direction to submit fresh tenders was restricted only to the original 11 tenderers. Even so it was alleged that a tender form was issued by the appellants to A 4, who was not one of the 11 tenderers. there was again a change in the specification of the work to be done at the suggestion of foreign collaborators. The appellants were alleged to have asked the concerned officers of the Corporation to make a fresh survey along with A 4, keeping in view the suggestion of the foreign collaborators. Eventually the contract was given to A 4. The prosecution alleged that (1) the conduct of the appellants showed their keenness to have the contract entrusted to A 4. (2) the issue of work order was inflated with figures relating to rock cutting and filling; and (3) the appellants removed certain original documents from the departmental files and substituted in their place fabricated material. The appellants who were charged with offences under section 120B and section 109 IPC and section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act, 1947 were convicted and sentenced to undergo imprisonment. On the question whether the appellants had been rightly convicted under section 5(1)(d) of the Prevention of Corruption Act. Allowing the appeals, ^ HELD: 1. An analysis of the circumstantial evidence adduced by the prosecution did not lead to the unerring certainty that the appellants acted with any dishonest or corrupt motive or abused their position. [904 F] 2. (a) It is well settled that abuse of position, in order to come within the mischief of section 5(1)(d) of the Act, must necessarily be dishonest so that it may be proved that the accused caused deliberate loss to the department. Further it is for the prosecution to prove affirmatively that the accused, by corrupt or illegal means or by abusing his position, obtained any pecuniary advantage for some other person. [892 G; 893 A]. (b) Again, the fundamental rule relating to the proof of guilt based on circumstantial evidence is that there is always danger that conjecture or suspicion might take the place of legal proof. In such cases the mind is apt to take a pleasure in adapting circumstances to one another and even in straining them a 876 little, if need be to force them to form parts of one connected whole and the more ingenious the mind of the individual the more likely it is, in considering such matters, to over reach and mislead itself to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete. [893 B D]. (c) In cases where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so established should be consistent only with the hypothesis of the guilt of the accused. Again, the circumstances should be of a conclusive nature and should be such as to exclude every hypothesis but the one proposed to be proved. In other words there must be a chain of evidence so far complete as not to give any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human probability the act must have been done by the accused. [893 D F]. M. Narayanana Nambiar vs State of Kerala, [1963] Supp. 2 SCR 724; Major section K. Kale vs State of Maharashtra, ; ; Hanumant Govind Nergundkar vs State of M.P., [1952] SCR 1091, AIR 1952 SC 343; Palvinder Kaur vs State of Punjab, ; ; Charan Singh vs State of U.P., AIR 1967 SC 529; referred to. (d) The principle that inculpatory fact must be inconsistent with the innocence of the accused and incapable of explanation on any other hypothesis than that of guilt does not mean that any extravagant hypothesis would be sufficient to sustain the principle, but that the hypothesis suggested must be reasonable. [893 G]. Govinda Reddy vs State of Mysore, AIR 1960 SC 29; referred to. In the instant case the conduct of the appellants in preferring A 4 to any new contractor did not savour of dishonest intentions on their part. Although the notice was sent by registered post to the 11 original tenderers there is nothing in that notice or elsewhere on the record to indicate that other contractors were precluded from submitting their tenders or that the corrigendum extending the date for submission of the tenders was neither intended to be published nor was it actually published. The High Court had missed this fact. The High Court was also wrong in thinking that out of the nine contractors who submitted their revised tenders eight were from the original nine tenderers and the ninth was A 4. In fact five of the contractors that submitted the fresh tenders were fresh tenderers. Moreover none of the officers of the Finance and Engineering Department of the Corporation who handled the file relating to the grant of contract ever raised any objection regarding the improper reception or entertainment of A 4 's tender. This showed that there was nothing wrong about the issue of tender Form to A 4 or its entertainment by the appellants. The contract in question was not a specialised job requiring any extra ordinary skill. A 4 was the Corporation 's old and tried contractor who had previously executed a number of works including rock cutting. (2) Though it cannot be gainsaid that the second appellant had been extremely negligent in not scrutinising the papers, he affixed his signature in a routine manner to the work order prepared by his subordinates without realising 877 the importance of his act, placing implicit faith in the integrity of the latter. [900 E F] (3) There is no clear, cogent and convincing evidence to show that the appellants had a hand in the removal of the level plans from the departmental file relating to the contract and substitution of the faked plans. [900 G].

Appeal No. 144 of 1955. Appeal by special leave from the judgment and order dated September 25, 1953, of the Labour Appellate Tribunal of India, Calcutta in Miscellaneous Case No. C 112 of 1953. C. K. Daphtary, Solicitor General of India, A. B. N. Sinha and B. P. Maheshwari, for the appellant. section P. Sinha, R. Patnaik and A. D. Mathur, for the respondents. 801 1956. October 11. The Judgment of the Court was delivered by section K. DAS J. , This is an appeal by special leave from a decision of the Labour Appellate Tribunal, Calcutta, dated the 25th September, 1953. The relevant facts lie within a narrow compass. On the 4th of May 1953 the appellant, the Rohtas Industries Limited, Dalmianagar, made an application to the said Labour Appellate Tribunal under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVIII of 1950), hereinafter referred to as the Act, for permission to discharge ninety six temporary employees in the following circumstances. The appellant company have a number of factories at Dalmianagar including a cement factory, power house, pulp mill, paper factory, chemical factory, factory for the manufacture of certain acids and an asbestos cement factory. The company had a number of temporary employees who were engaged temporarily in connection with certain erection works for the extension and enlargement of those factories. The terms of employment of these employees were embodied in a temporary appointment form which was signed by the employees as well as the management. The said terms stated, inter alia, that "the company could discharge the employee at any time without notice, compensation and giving any reason therefor, whether on completion of the work on which the employee was engaged or earlier"; the terms also made it clear that whether the employee was on the same job or some other job, in the same department or some other, either on temporary work or permanent work, he would remain a temporary employee until the Works Manager issued a written letter expressly making him a permanent employee. As and when the various erection works were completed, the temporary employees were first put on a list of spare men and then discharged. Some time prior to the 3rd of July 1952, sixty nine of these temporary employees were spared for being discharged. The names of these sixty nine employees were given in two lists, Appendix 802 A and Appendix B. It was alleged that on the 3rd of July 1952, a number of these employees headed by one Brij Nandan Pandey entered the office of Shri L. C. Jain, Manager of the Cement Factory, and Brij Nandan Pandey assaulted the Manager. A serious situation resulted from that 'incident and the company stopped the sixty nine temporary employees from coming to their factories or to their Labour Office and issued a notice to them stating that the company were applying to the Industrial Tribunal for permission to terminate their services. At that time an industrial dispute relating to, among other things, the payment of bonus to the employees was pending adjudication in the Court of the Industrial Tribunal, Bihar. On the 5th of July 1952, the appellant company made an application to the said Tribu nal for permission to discharge the sixty nine employees. The application was made under section 33 of the . On the 12th of July 1952, forty nine out of the said sixty nine employees made an application, under section 33 A of the , to the Chairman, Industrial Tribunal, Bihar, on the allegation that the appellant company had discharged sixty nine employees on the 5th July 1952 and had thereby contravened section 33 of the . On the 20th of August 1952, thirty six more temporary employees were put on the spare list and an application was made to the Industrial Tribunal Bihar, for including these thirty six persons also in the application which had been made for permission to discharge the temporary men; thus, all told, the application related to one hundred and five temporary men. The case of the appellant company was that the completion of the erection works for which these temporary men were originally employed was a gradual process and so far as the Cement Factory erection work was concerned, it was completed by the end of March 1952 except for certain minor additions and alterations. Therefore, the appellant company no longer required the services of the temporary employees and they were put on the spare list as and 803 when their services were no longer required. The two applications which had been made to the Industrial Tribunal, Bihar, the one under section 33 of the and the other under section 33 A of the said Act, remained pending with the Industrial Tribunal till the 17th of December 1952 on which date the application under section 33 A filed by forty nine of the sixty nine temporary employees, was dismissed. On the 3rd of January 1953, the Chairman of the Industrial Tribunal, Bihar, intimated to the appellant company that the Tribunal was no longer competent to pass any orders on the application under section 33 of the , as the adjudication proceedings on the main reference had already concluded. Two appeals were taken to the Labour Appellate Tribunal, one from the award made on the main adjudication and the other from the order made on the application under section 33 A of the . On the 20th May 1953, the appeal from the order under section 33 A was dismissed. As we are not concerned with that appeal in any way, nothing further need be said about it in this judgment. The appeal from the main award was pending on the 4th of May 1953 on which date the appellant company made their application under section 22 of the Act to the Labour Appellate Tribunal for permission to discharge ninety six of the temporary employees. Though there were one hundred and five temporary employees originally, with regard to whom an application had been made to the Industrial Tribunal, Bihar, nine out of them voluntarily left the service of the company; therefore, the number of temporary employees regarding whom the application under section 22 of the Act was made was ninety. six only. , The application was contested by forty two of the temporary employees, and in their affidavit they denied that any of the sixty nine workmen were originally recruited as temporary workmen and they further denied that they were involved in the incident relating to the assault on Shri L.C. Jain on the 3rd of July 1952. They said that in effect they were 804 permanent employees and enjoyed all the benefits of permanent employees. They further stated. : "The erection work of the cement plants of the petitioners was completed towards the end of 1950 and it is therefore patently false to suggest that we became redundant as a result of the completion of the erection of the cement plants. It is significant to note that a large number of workmen who had worked on the job of erecting the cement plants were discharged shortly after the completion of the said work on the ground that they were surplus. The cement plants started to Work in full swing from about the first quarter of 1951 and we were working in the said cement plant producing cement from the very beginning. right up to 5th July 1952, when we were informed that we were surplus. In fact the real reason for the proposed retrenchment is the petitioner 's desire to increase the rate of exploitation of its workmen by increasing the workload". With regard to the terms embodied in the appointment form, it was alleged that on or about the 3rd of December 1948 the employees of the appellant company were forced to go on strike on account of an industrial dispute; towards the end of the strike the workmen became exhausted and drifted back to work. The strike was ultimately called off and the appellant company taking full advantage of their victory compelled a section of the workmen, who did not return to work until the strike was called off, to sign the ap pointment form with the purpose of humiliating and terrorising them. The Labour Appellate Tribunal gave its decision on the 25th September 1953 which is the decision under appeal. It dismissed the application of the appellant. company on a finding which the Tribunal expressed in the following words: "It is thus clear that these 96 workmen had been working in the production departments from as far back as the beginning of the year 1951 and so the completion of the erection work cannot be put forward as the ground for their retrenchment". 805 Referring to the Directors ' Report dated the 10th of July 1951, the Tribunal came to the conclusion that the workmen 's version that the erection works had been completed by the end of 1950 was supported by the said report. In other words, the decision of the Labour Appellate Tribunal was primarily based on the finding that the erection works were completed by the end of 1950 and therefore there was no ground for discharging the ninety six temporary men. Learned counsel for the appellant has contended before us that (1) the Appellate Tribunal did not correctly appreciate the true scope and effect of section 22 of the Act; (2) the Appellate Tribunal gave attention to only one point, namely, the completion of erection works, and did not consider the other circumstances put forward on behalf of the appellant in support of their application; (3) instead of considering the real point which arose for determination on an application under section 22 of the Act, the Appellate Tribunal confined its attention to a point which was not decisive of the question before it; and (4) by reason of its failure to consider the real point for determination, the order of the Appellate Tribunal has resulted in manifest injustice. In our opinion, these contentions are correct and should be upheld. It was pointed out in The Automobile Products of India Ltd. vs Rukmaji Bala(1) that section 22 of the Act confers on the Appellate Tribunal a special jurisdiction which is in the nature of original jurisdiction and the Tribunal being an authority of limited jurisdiction must be confined to the exercise of such functions and powers as are actually conferred on it. With regard to the scope of section 22 of the Act, it was observed: "The object of section 22 of the 1950 Act like that of section 33 of the 1947 Act as amended is to protect the workmen concerned in disputes which form the subject matter of pending proceedings against victimisation by the employer on account of their having raised industrial disputes or their continuing the (1) ; 105 105 806 pending proceedings. It is further the object of the two sections to ensure that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of those proceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relation between the employer and the workmen. To achieve this object a ban has been imposed upon the ordinary right which the employer has under the ordinary law governing a contract of employment. Section 22 of the 1950 Act and section 33 of the 1947 Act which impose the ban also provide for the removal of that ban by the granting of express permission in writing in appropriate cases by the authority mentioned therein. The purpose of these two sections being to determine whether the ban should be re moved or not, all that is required of the authority exercising jurisdiction under these sections is to accord or withhold permission". The earlier decision of this Court in Atherton West & Co. Ltd. vs Suti Mill Mazdoor Union(1) dealt with clause 23 of the U. P. Government Notification dated the 10th March 1948 made in exercise of the powers conferred by sections 3 and 8 of the U. P. , and it was there observed that the scope of the enquiry was to come to a conclusion whether there was a prima facie case made out for the discharge or dismissal of the workman and the employer, his agent or manager was not actuated by any improper motives or did not resort to any unfair practice or victimisation in the matter of the proposed discharge or dismissal of the workman. That being the scope of the enquiry on an application under section 22 of the Act, what the Labour Appellate Tribunal had to decide in the present case was whether the appellant company had made out a Prima facie,case for the proposed discharge and whether they were resorting to any unfair practice or victimisation in the matter of the proposed discharge. (1) ; 807 Instead of doing that, the Labour Appellate Tribunal dismissed the application of the appellant company on the only ground that the version of the workmen that the erection works had been completed by the end of 1950 was supported by the Report of the Directors dated the 10th July 1951. Learned counsel for the appellant has rightly pointed out that even in respect of the completion of erection works the conclusion of the Appellate Tribunal is a complete non sequitur. First of all, the Directors ' Report was dated the 10th July 1951 though the balance sheet of the company with which the report was dealing related to the period ending on the 31st October 1950 The report naturally referred to such works as were completed on or before the 10th of July 1951. It should be obvious that the completion of erection works must be a gradual process, and while some of the erection works might have been completed by the end of 1950 or July 1951, some were still in the process of completion. Under their terms of employment, temporary employees could be moved from one work to the other and the mere circumstance, that they were employed in a production department for some time, even if true, did not make them permanent employees; nor did the circumstance that they enjoyed some of the benefits of permanent employees make them permanent. These are circumstances which have been completely ignored by the Labour Appellate Tribunal. It is worthy of note that in their application dated the 12th of July 1952, the forty nine workmen admitted: "though most of us were originally recruited for erection work in the Cement Factory, many of us were later on transferred as permanent workers to sugar and paper factories and some of us were absorbed as permanent workers in the maintenance section of the Cement Factory". (Vide paragraph 3 of the application). In the joint affidavit filed on the 12th August, 1953, in reply to the appellant 's application under section 22 of the Act, the said workmen denied however that 808 they were at any time engaged temporarily for temporary work vide paragraphs 3 and 6 of the affidavit. Obviously, they were shifting from the position which they had originally taken up. No evidence was given that the men who were employed temporarily were afterwards made permanent. They filed a schedule, marked 'A ', to their affidavit wherein they showed their period of service and the name of the factory or plant from where their duties stopped. On an ex amination of the schedule (Annexure A) it appears that a number of them were put on the spare list when the erection work was completed some time in 1952. 'Annexure 'A ' therefore supports the case of the appellant company that the completion of the erection works was a gradual process, some were completed in 1950, some in 1951 and some in 1952. The first batch of sixty nine employees with whom we are concerned were put on the spare list between March and July 1952 and the second batch were put on the spare list in August 1952 when the relevant erection works were completed. The finding of the Labour Appellate Tribunal with regard to the completion of erection works was vitiated by reason of the failure to take into consideration the circumstances stated above. With regard to the terms of employment embodied in the temporary appointment form, the respondents ' case was that the appointment forms were signed as a result of the strike in 1948; it was never suggested that these forms were never signed at all and the comment of learned counsel for the respondents that the appellant company have not produced the appointment forms has very little force. The respondents gave no evidence in support of the allegation that the appointment forms were taken from them for the purpose of humiliating or terrorising them, nor did the Appellate Tribunal come to any such finding. None of the affidavits filed on behalf of the respondents suggested, even in a remote way, that the appellant company were resorting to any unfair practice or victimisation in the matter of the pro posed discharge. 809 Learned counsel for the respondents has contended before us that the finding of the Labour Appellate Tribunal is a finding on a question of fact, namely, whether the respondents were temporary or permanent employees. He has argued that this Court should not interfere even though the finding is based on reasons which may not appear convincing to us. We have, however, pointed out that the Labour Appellate Tribunal gave no finding on the question whether the respondents were temporary employees or not. The only finding which the Tribunal gave related to a different matter, namely, the completion of erection works. Secondly, learned counsel for the respondents has contended that under section 22 of the Act the Appellate Tribunal had a discretion either to lift the ban or not to lift it and in a matter of discretion this Court should not interfere. It is true that this Court does not sit upon the decisions of Industrial Tribunals like an ordinary Court of appeal, and there must be special circumstances to justify the exercise of our special power under article 136 of the Constitution. In our opinion, such special circumstances exist in the present case where the Labour Appellate Tribunal has not directed its mind to the real question to be decided on an application under section 22 of the Act and has passed an order on the basis of a somewhat irrelevant finding which has resulted in manifest injustice. The discretion which an Industrial Tribunal has must be exercised in accordance with well recognised principles. There is undoubtedly a distinction between commercial and industrial arbitration. As has been pointed out by Ludwig Teller (Labour Disputes and Collective Bargaining) Vol. 1, page 536: "Industrial arbitration may involve the extension of an existing agreement, or the making of a new one, or in general the creation of new obligations or modifications of old ones, while commercial arbitration generally concerns itself with interpretation of existing obligations and disputes relating to existing agreements". 810 A Court of law proceeds on the footing that no power exists in the courts to make contracts for people; and the parties must make their own contracts. The courts reach their limit of power when they enforce contracts which the parties have made. An Industrial Tribunal is not so fettered and may create new obligations or modify contracts in the interests of industrial peace, to protect legitimate trade union activities and to prevent unfair practice or victimisation. We cannot, however, accept the extreme position canvassed before us that an Industrial Tribunal can ignore altogether an existing agreement or existing obligations for no rhyme or reason whatsoever. It has been necessary for us to go into the facts and circumstances of this case in greater detail than is usual with this Court, because the Labour Appellate Tribunal did not do so. The Act under which the Appellate Tribunal purported to pass its order has now been repealed by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956. A question of some nicety as to the correct interpretation of section 33 of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 might have arisen if we had thought fit to remand this case. We do not, however, think it necessary to pass an order of remand in this case and therefore abstain from expressing any opinion as to the correct position in law under subsection (2) of section 33 of that Act. No new facts need investigation in this case. Learned counsel for the parties have taken us through all the affidavits filed and the facts necessary for an enquiry under section 22 of the Act clearly emerge from those affidavits. We are satisfied Prima facie that the respondents were temporary employees and were put on the spare list as and when the erection works were gradually completed. The appellant company have made out a prima facie case for the permission which they have asked for and there is no suggestion even of any unfair practice or victimisation. In these circumstances, we would allow the appeal, set aside the decision of the Labour Appellate Tribunal dated the 25th September 1953 and pass the order 811 Which that Tribunal should have passed in this case, namely, that permission be granted to the appellant to discharge ninety six temporary workmen. In the circumstances of this case, we think that the parties must bear their own costs throughout. Appeal allowed.

The scope of an enquiry under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, is whether there is a prima facie case made out for the proposed discharge of the workman and the employer has not resorted to any unfair practice or victimisation. Though an Industrial Tribunal can create new obligations or modify contracts in the. interests of industrial peace or to prevent unfair practice or victimisation, its discretion has to be exercised in accordance with well recognised principles and it cannot ignore altogether an existing agreement or existing obligations. The Automobile Products of India Ltd. vs Rukmaji Bala ([1955] 1 S.C.R. 1241) and Atherton West & Co. Ltd. vs Suti Mill Mazdoor Union, ([1953] S.C.R. 780), relied on. Where, as in the present case, the Labour Appellate Tribunal did not direct its mind to the real question to be decided on an application under section 22 of the Act for permission to discharge the temporary employees and without deciding whether the workmen were temporary employees or not, passed an order dismissing the application on the basis of a finding which was not determinative of the real point or question at issue, held that the decision must be set aside and the proper order passed.

Civil Appeal No. 1376 of 1978. (Appeal by special leave from the judgment and order dated the 1st February, 1978 of the Kerala High Court in M.F.A. No. 53 of 1977) L.N. Sinha, Attorney General, J. M. Joseph, K John and Shri Narain for the Appellant. D C.S. Vaidlyanathan, (A.C.), for the Respondent. The Judgment of the Court was delivered by CHANDRACHUD, C.J. The question which arises in this appeal by special leave is whether a debt owed by the respondent, an agriculturist, to the appellant The State Bank of Travancore falls within the purview of the Kerala Agriculturists ' Debt Relief Act, 11 of 1970, hereinafter called 'the Act '. The respondent had an overdraft Account with the Erattupetta Branch of the Kottayam Orient Bank Ltd., at the foot of which he owed a sum of over Rs. 3000/ to the Bank. The said Bank which was a 'Banking Company ' as defined in the Banking Regulation Act, 1949, was amalgamated with the appellant Bank with effect from June 17, 1961 in pursuance of a scheme of amalgamation prepared by the Reserve Bank of India in exercise of the powers conferred by section 45 (4) of the Banking Regulation Act and sanctioned by the Central Government under sub section (7) of section 45. Upon the amalgamation, all assets and liabilities of the Kottayam Orient Bank stood transferred to the appellant Bank. The notification containing the scheme of amalgamation was 342 published in the Gazette of India Extra ordinary dated May 16, 1961 . The appellant filed a suit (O.S. No. 28 of 1963) in the Sub Court, Meenachil, against the respondent for recovery of the amount due from him in the overdraft Account with the Kottayam Orient Bank, the right to recover which had come to be vested in the appellant as a result of the aforesaid scheme of amalgamation. That suit was decreed in favour of the appellant, but when it took out execution proceedings in the Sub Court, Kottayam, the respondent filed a petition under section 8 of the Act seeking amendment of the decree in terms of the provisions of the Act. The respondent claimed that he was an agriculturist within the meaning of the Act and was therefore entitled to the benefit of its provisions, including those relating to the scaling down of debts. The learned Subordinate Judge assumed, what was evidently not controverted, that the respondent was an agriculturist. But the learned Judge held that the respondent was not entitled to the benefit of the provision regarding scaling down of the debt because the debt, having been once owed by him to the Kottayam Orient Bank Ltd., which was a 'Banking Company as defined in the Banking Regulation Act, 1949, was outside the purview of section 5 of the Act which provided for the scaling down of debts owed by agriculturists. According to the learned Judge, the respondent was only entitled to the benefit of the proviso to section 2 (4) (l) of the Act under which the amount could be repaid in eight half yearly instalments. Since the relief which the respondent had asked for was that his debt should be scaled down and since he was held not entitled to that relief, his application was dismissed by the learned Judge. The respondent preferred an appeal to the High Court of Kerala, the maintainability of which was challenged by the appellant on the ground that no appeal lay against the order passed by the Subordinate Judge on the application filed by the respondent under section 8 of the Act. The High Court accepted the preliminary objection but granted permission to the respondent to convert the appeal into a Civil Revision Application and dealt with it as such. In view of the general importance of the questions involved in the matter, the revision application was referred by a Division Bench to the Full Bench. It was contended in the High Court on behalf of the appellant, Bank that the debt owed to it by the respondent was excluded 343 from the operation of the Act by reason of section 2 (4) (a) (ii) and section 2 (4) (1) of the Act. By its judgment dated February 1, 1978 the High Court rejected that contention, allowed the Revision Application and held that the respondent was entitled to all the relevant benefits of the Act, including the benefit scaling down of the debt. The Bank questions the correctness of that judgment in this appeal. Section 8 of the Act provides, in so far as is material, that where, before the commencement of the Act, a court has passed a decree for, the repayment of a debt, it shall, on the application of a judgment debtor, who is an agriculturist, apply the provisions of the Act to such a decree and shall amend the decree accordingly. It is in pursuance of this section that the respondent applied to the executing Court for amendment of the decree. Section 4(1) of the Act provides that notwithstanding anything contained hl any law or contract or in a decree of any court, but subject to the provisions of sub section (5), an agriculturist may discharge his debts in the manner specified in sub sections (2) and (3). Sub section (2) of section 4 provides that if any debt is repaid in seventeen equal half yearly instalments together with interest at the rates specified in section 5, the whole debt shall be deemed to be discharged. Sub section (3) specifies the period within which the instalments have to be paid. The respondent claims the benefit of the provision contained in section 4 (1) of the Act. In order to decide whether the respondent is entitled to the relief claimed by him, it would be necessary to consider the provisions of sections 2 (1) and 2 (4) of the Act. The short title of the Act shows that it was passed in order to give relief to indebted agriculturists in the State of Kerala. The State Legislature felt the necessity of passing the Act because, the Kerala Agriculturists ' Debt Relief Act, 31 of 1958, conferred benefits on agricultural debtors in respect of debts incurred by them before July 14, 1958 only. The Statement of objects and Reasons of the Act slows that the agricultural indebtedness amongst the poorer sections of the community showed an upward trend after July 14, 1958 owing to various economic factors. A more comprehensive legislation was therefore introduced by the State Legislature in the shape of the present Act in substitution of the Act of 1958. The Act came into force on July 14, 1970. Section 2 (1) of the Act which defines an "agriculturist" need not be reproduced because it was common ground at all stages bet 344 ween the parties that the respondent is an agriculturist within the meaning of the definition in section 2 (1). Section 2 (4) of the Act, in so far as is material for our purposes, reads thus: "Section 2 (4):"debt" means any liability in cash or kind, whether secured or unsecured, due from or incurred by an agriculturist on or before the commencement of this Act, whether payable under a contract, or under a decree or order of any court, or otherwise, but does not include: (a) any sum payable to: (i) the Government of Kerala or the Government of India or the Government of any other State or Union territory or any local authority; or (ii) the Reserve Bank of India or the State Bank of India or any subsidiary bank within the meaning of clause (k) of section 2 of the State Bank of India (Subsidiary Act, 1959, or the Travancore Credit Bank (in liquidation) constituted under the Travancore Credit Bank Act, IV of 1113: Provided that the right of the bank to recover the sum did not arise by reason of: (A) any assignment made or (B) any transfer effected by operation of law, subsequent to the 1st day of July, 1957". As stated above, the respondent is admittedly an agriculturist and he owes a sum of money to the appellant Bank under a decree passed in its favour by the Sub Court, Meenacil, in O.S. No. 28 of 1963. The liability which the respondent owes to the appellant Bank is therefore a "debt" within the meaning of section 2 (4) of the Act. But certain liabilities are excluded from the ambit of the definition of "Debt". The liabilities which are thus excluded from the definition of debt are specified in clauses (a) to (n) of section 2 (4). We are concerned in this appeal with the liabilities specified in clause (a) (ii) and clause (1) of section 2 (4), which are excluded from 345 the operation of clause 2 (4). We will first consider the implications of the exclusion provided for in sub clause (ii) of clause (a) of section 2 (4). Under the aforesaid sub clause, any sum payable to a subsidiary bank within the meaning of section 2 (k) of the , is excluded from the definition of "debt". Section 2 (k) of the Act of 1959 defines a "subsidiary bank" to mean any new bank, including the Hyderabad Bank and the Saurashtra Bank. The expression "new bank" is defined in section 2 (f) of the Act of 1959 to mean any of the banks constituted under section 3. Section 3 provides that with effect from such date, as the Central Government may specify, there shall be constituted the new banks specified in the section. Clause (f) of section 3 mentions the State Bank of Travancore amongst the new banks which may be constituted under section 3. It is thus clear that the appellant Bank, namely, the State Bank of Travancore, is a subsidiary bank as contemplated by sub clause (ii) of clause (a) of section 2 (4) of the Act. If the matter were to rest there, the decretal amount payable by the respondent to the appellant Bank will not be a debt within the meaning of section 2 (4) of the Act, since the appellant is a subsidiary bank within the meaning of section 2 (k) of the . But by reason of clause (B) of the proviso to section 2 (4) (a) (ii) of the Act, the amount payable to a subsidiary bank is not to be regarded as a debt within the meaning of the Act, only if the right of the subsidiary bank to recover the amount did not arise by reason of any transfer effected by operation of law subsequent to July 1, 1957. The proviso is thus in the nature of an exception to the exceptions contained in section 2 (4) (a) (ii) of the Act. The respondent initially owed a sum exceeding Rs. 3000/ to the Erattupetta Branch of the Kottayam Orient Bank Ltd. which was amalgamated with the appellant Bank with effect from June 17, 1961 pursuant to an amalgamation scheme prepared by the Reserve Bank of India. All the rights, assets and liabilities of the Kottayam Orient Bank were transferred to the appellant Bank as a result of the amalgamation. The notification containing the scheme of amalgamation was published on May 16, 1961. Thus, the right of the appellant Bank, though it is a subsidiary Bank, to recover the amount from the respondent arose by reason of a transfer effected by operation of law, namely, the scheme of amalgamation, which came into effect after July 1, 1957. Since clause (B) of the proviso to section 2 (4) (a) (ii) is attracted, the appellant Bank will not be entitled to the benefit of the exclusion contained in section 2 (4) (a) 346 (ii) of the Act and the respondents claim to the benefits of the Act will remain unaffected by that provision. That makes it necessary to consider the question whether the appellant Bank can get the advantage of any of the other exclusionary clauses (a) to (n) of section 2 (4) of the Act. The only other clause of section 2 (4) which is relied upon by the appellant in this behalf is clause (1), according to which the word 'debt ' as defined in section 2 (4) will not include: "any debt exceeding three thousand rupees borrowed under a single transaction and due before the commencement of this Act to any banking company; (emphasis supplied) Provided that in the case of any debt exceeding three thousand rupees borrowed under a single transaction and due before the commencement of this Act to any banking company, any agriculturist debtor shall be entitled to repay such debt in eight equal half yearly instalments as provided in sub section (3) of section 4, but the provisions of section 5 shall not apply to such debt. " The question for consideration is whether the amount which the respondent is liable to pay under the decree was "due before the commencement of the Act to any Banking Company". Turning first to the question whether the appellant Bank is a banking company, the learned Subordinate Judge assumed that it is, but no attempt was made to sustain that finding in the High Court. Shri Abdul Khader, who appears on behalf of the appellant conceded before us that it is not a banking company. The concession is rightly made, since according to section 2(2) of the Act, 'Banking Company ' means a banking company as defined in the Banking Regulation Act, 1949. Section S(c) of the Act of 1949 defines a banking company to mean any Company which transacts the business of banking in India (subject to the provision contained in the Explanation to the section). Thus, in order that a bank may be a banking company, it is in the first place necessary that it must be a "company". The State Bank of Travancore, which is the appellant before us, is not a 'company ' properly so called. It is a subsidiary bank which falls within the definition of section 2(k) of the . It was established by the Central Government in accordance with the Act of 1959 and is not a 'company ' and 347 therefore, not a banking company. It must follow that the decretal debt which the respondent is liable to pay to the appellant is not owed to a banking company. It was indeed not owed to any banking company at all on July 14, 1970, being the date on which the Act came into force. It may be recalled that the respondent owed a certain sum exceeding three thousand rupees to the Kottayam Orient Bank Ltd., a banking company, on an overdraft account. That Bank was amalgamated with the appellant Bank with effect from May 16, 1961, as a result of which the latter acquired the right to recover the amount from the respondent. It filed Suit No. 28 of 1963 to recover that amount and obtained a decree against the respondent. lt is precisely this small conspectus of facts, namely, that the amount was at one time owed to a banking company but was not owed to a banking company at the commencement of the Act, which raises the question as regards the true interpretation of clause (1) of section 2 (4). The fact that the amount which the respondent owes to the appellant was not owed to a banking company on the date on which the Act came into force, the appellant not being a banking company, does not provide a final solution to the problem under consideration. The reason for this is that clause (1) of section 2(4) speaks of a debt "due before the commencement" of the Act to any banking company, thereby purporting to make the state of affairs existing before the commencement of the Act decisive of the application of that clause. The contention of the learned Attorney General, who led the argument on behalf of the appellant, is that the respondent owed the debt before the commencement of the Act to a banking company and, therefore, the appellant is entitled to claim the benefit of the exclusion provided for in clause (1). The argument is that, for the purposes of clause (1), it does not matter to whom the debt is owed on the date of the commencement of the Act: what matters is to whom the debt was owed before the commencement of the Act. The learned Attorney General is apparently justified in making this submission which rests on the plain language of clause (1) of section 2(4), the plain, grammatical meaning of the words of the statute being generally a safe guide to their interpretation. But having considered the submission in its diverse implications, we find ourselves unable to accept it. 348 In order to judge the validity of the submission made by the Attorney General, one must of necessity have regard to the object and purpose of the Act. The object of the Act is to relieve agricultural indebtedness. In order to achieve that object, the legislature conferred certain benefits on agricultural debtors but, while doing so, it excluded a class of debts from the operation of the Act, namely, debts of the description mentioned in clauses (a) to (n) of section 2(4). One class of debts taken out from the operation of the Act is debts owed to banking companies, as specified in clause (1). The reason for this exception is obvious. It is notorious that money lenders exploit needy agriculturists and impose upon them harsh and onerous terms while granting loans to them. But that charge does not hold true in the case of representative institutions, like banks and banking companies. They are governed by their rules and regulations which do not change from debtor to debtor and which, if any thing, are intended to benefit the weaker sections of society. It is for this reason that debts owing to such creditors are excepted from the operation of the Act. A necessary implication and an inevitable consequence of the Attorney General 's argument is that in order to attract the application of clause (1) of section 2 (4), it is enough to show that the debt was, at some time before the commencement of the Act, owed to a banking company; it does not matter whether it was in its inception owed to a private money lender and, equally so, whether it was owed to such a money lender on the date of the commencement of the Act. This argument, if accepted, will defeat the very object of the Act. The sole test which assumes relevance according to that argument is whether the debt was owed, at any time before the commencement of the Act, to a banking company. It means that it is enough for the purpose of attracting clause (1) that, at some time in the past, may be in a chain of transfers, the right to recover the debt was vested in a banking company. A simple illustration will elucidate the point. If a private money lender had initially granted a loan to an agricultural debtor on usurious terms but the right to recover that debt came to be vested in a banking company some time before the commencement of the Act, the debtor will not be able to avail himself of the benefit of the provisions of the Act because, at some point of time before the commencement of the Act, the debt was owed to a banking company. And this would be so irrespective of whether the banking company continues to be entitled to recover the debt on the date of the commencement of the Act. Even if it assigns its 349 right to a private individual, the debtor will be debarred from claiming the benefit of the Act because, what is of decisive importance, according to the Attorney General 's argument is the fact whether, some time before the commencement of the Act, the debt was due to a banking company. We do not think the Legislature could have intended to produce such a startling result. The plain language of the clause, if interpreted so plainly, will frustrate rather than further the object of the Act. Relief to agricultural debtors, who have suffered the oppression of private moneylenders, has to be the guiding star which must illumine and inform the interpretation of the beneficent provisions of the Act. When clause (1) speaks of a debt due "before the commencement" of the Act to a banking company, it does undoubtedly mean what it says, namely, that the debt must have been due to a banking company before the commencement of the Act. But it means something more: that the debt must also be due to a banking company at the commencement of the Act. We quite see that we are reading into the clause the word "at" which is not there because, whereas it speaks of a debt due "before" the commencement of the Act, we are reading the clause as relating to a debt which was due "at" and "before" the commencement of the Act to any banking company. We would have normally hesitated to fashion the clause by so restructuring it but we see no escape from that course, since that is the only rational manner by which we can give meaning and content to it, so as to further the object of the Act. There is one more aspect of the matter which needs to be amplified and it is this: When clause (1) speaks of a debt due before the commencement of the Act, what it truly means to convey is not that the debt should have been due to a banking company at some point of time before the commencement of the Act, but that it must be a debt which was incurred from a banking company before the commencement of the Act. Thus, the application of clause (1) is subject to these conditions: (i) The debt must have been incurred from a banking company; (ii) the debt must have been so incurred before the commencement of the Act, and (iii) the debt must be due to a banking company on the date of the commencement of the Act. These are cumulative conditions and unless each one of them is satisfied, clause (1) will not be attracted and the exclusion provided for there 350 in will not be available as an answer to the relief sought by the debtor in terms of the Act. Our attention was drawn by the Attorney General to the provisions of sections 2 (4) and 2 (4) (j) of the Act the former using the expression "on or before the commencement" of the Act and the latter "at the commencement" of the Act. Relying upon the different phraseology used in these two provisions and in clause (1) inter se, he urged that the legislature has chosen its words carefully and that when it intended to make the state of affairs existing "at" the commencement of the Act relevant, it has said so. We are not impressed by this submission. Section 2 (4) which defines a "debt" had to provide that debt means a liability due from or incurred by an agriculturist "on or before the commencement" of the Act. It could not be that liabilities incurred before the commencement of the Act would be "debts" even though they are not due on the date of commencement of the Act. The words "on or before the commencement" of the Act are used in the context of liabilities "due from or incurred" by an agriculturist. For similar reasons, clause (j) had to use the expression "at the commencement" of the Act, the subject matter of that clause being debts due to widows. The benefit of the exclusion provided for in clause (j) could only be given to widows to whom debts were due "at the commencement" of the Act. The legislature could not have given that benefit in respect of debts which were due before but not at the commencement of the Act. Thus, the language used in the two provisionals on which the learned Attorney General relies is suited to the particular subject matter with which those provisions deal and is apposite to the context in which that language is used. We have given to the provision of clause (1) an interpretation which, while giving effect to the intention of the legislature in the light of the object of the Act, brings out the true meaning of the provision contained in that clause. The literal construction will create an anomalous situation and lead to absurdidities and injustice. That construction has therefore to be avoided. Any other interpretation of clause (1) will make it vulnerable to a constitutional challenge on the ground of infraction of the guarantee of equality. The object of the Act being to confer certain benefits on agricultural debtors, the legislature would be under an obligation, while excepting a certain category of debts from the operation of the Act, to make a classification which will answer the test of article 14. Debts incurred from banking companies and due to such companies at the commencement of the Act would fall into 351 a separate and distinct class, the classification bearing a nexus with A the object of the Act. If debts incurred from private money lenders are brought within the terms of clause (1) on the theory that the right to recover the debt had passed on to a banking company sometime before the commencement of the Act, the clause would be unconstitutional for the reason that it accords a different treatment to a category of debts without a valid basis and without the classification having a nexus with the object of the Act. In State of Rajasthan vs Mukanchand section 2 (e) of Jagirdar 's Debt Reduction Act, 1937 was held invalid on the ground that it infringed Article 14 of the Constitution. The object of that Act was to reduce the debts secured on jagir lands which had been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act. The Jagirdar 's capacity to pay debts had been reduced by the resumption of his lands and the object of the Act was to ameliorate his condition. It was held that no intelligible principle underlies the exempted category of debts mentioned in section 2(e) since the fact that the debts were owed to a government or to a local authority or similar other bodies, had no real relationship with the object sought to be achieved by the Act. In Fatehand Himmatlal vs Slate of Maharashtra, in which the constitutionality of the Maharashtra Debt Relief Act, 1976 was challenged, it was held by this Court that the exemption granted by the statute to credit institutions and banks was reasonable because liabilities due to Government, local authorities and other credit institutions were not tainted by the view of the debtor 's exploitation. Fatehchand would be an authority for the proposition that clause (1), in the manner interpreted by us, does not violate Article 14 of the Constitution. Shri Vaidyanathan, who appears on behalf of the respondent, contended that the claim made by the appellant Bank falls squarely under section 2 (4) (a) (ii) of the Act and that if the appellant is not entitled to the benefit of the specific provision contained therein, it is impermissible to consider whether it can claim the benefit of some other exclusionary clause like clause (1). Counsel is right to the extent that the appellant is not entitled to claim the benefit of the provision contained in section 2 (4)(a)(ii) because of Proviso B to that 352 section. The simple reason in support of this conclusion is that the right of the appellant to recover the debt arose by reason of a transfer effected by operation of law subsequent to July 1, 1957. We have already dealt with that aspect of the matter. But we are not inclined to accept the submission that if a particular case falls under a specific clause of section 2 (4) which is found to be inapplicable, the creditor is debarred from claiming the benefit of any of the other clauses (a) to (n). The object of the exclusionary clauses is to take category of debts from out of the operation of the Act and there is no reason why, if a specific clause is inapplicable, the creditor cannot seek the benefit of the other clauses. The exclusionary clauses, together, are certainly exhaustive of the categories of excepted debts but to make those clauses mutually exclusive will be to impair unduly the efficacy of the very object of taking away a certain class of debts from the operation of the Act. We are not therefore, inclined to accept the submission made by the learned counsel that section 2 (4) (a) (ii) is exhaustive of all circumstances in which a subsidiary bank can claim the benefit of the exceptions to section 2 (4). For these reasons we affirm the view of the High Court that the exclusion provided for in clause (1) of section 2 (4) of the Act can be availed of if the debt is due to a banking company at the time of the commencement of the Act. We have already indicated that the other condition which must be satisfied in order that clause (1) may apply is that the debt must have been incurred from a banking company before the commencement of the Act. For these reasons we dismiss the appeal. Appellant will pay the costs of the respondent throughout. S.R. Appeal dismissed.

The respondent had an overdraft account with the Erattupetta Branch of the Kottayam orient Bank Ltd. at the foot of which he owed a sum of over Rs. 3000/ to the Bank. The said Bank which was a 'Banking Company ' as defined in the Banking Regulation Act, 1949, was amalgamated with the appellant Bank with effect from June 17, 1961. The appellant Bank filed a suit (O,S, 28 of 1963) in the Sub Court, Meenachil, against the respondent for recovery of the amount due from him in the overdraft Account with the Kottayam orient Bank, the right to recover which had come to be vested in the appellant as a result of the scheme of amalgamation. The suit was decreed in favour of the appellant but when it took out execution proceedings in the Sub Court, Kottayam, the respondent filed an application under section 8 of the Kerala Agriculturists ' Debt Relief Act claiming that being an agriculturist within the meaning of that Act, he was entitled to the benefit of its provisions including those relating to the scaling down of debts. The learned Subordinate Judge dismissed the application holding: (i) that the respondent was not entitled to the benefit of the provisions regarding scaling down of the debt because the debt, having been once owed by him to the Kottayam orient Bank Ltd. which was a Banking Company as defined in the Banking Regulation Act, 1949, was outside the purview of section S of the Act which provided for the scaling down of debts owed by agriculturists; and (ii) that he was only entitled to the benefit of the proviso to section 2(4) (l) of the Act under which the amount could be repaid in eight half yearly instalments The Revision Application preferred by the respondent was referred to the Full Bench of the High Court. It was contended on behalf of the appellant Bank that the debt owed to it by the respondent was excluded from the operation of the Act by reason of section 2 (4) (a) (ii) and section 2 (4) (1) of the Act. By its judgment dated February 1, 1978 the High Court rejected that contention, allowed the Revision Application and held that the respondent was entitled to all the relevant benefits of the Act, including the benefit of scaling down of the debt and hence the appeal by special leave. 339 Dismissing the appeal, the Court ^ HELD: 1:1. The appellant Bank will not be entitled to the benefit of the exclusion contained in section 2 (4) (a) (ii) of the Kerala Agriculturists ' Debt Relief Act, 1970 in view of clause (B) of the proviso to the section and the respondent 's claim to the benefits of the Act will remain unaffected by that provision. [345H, 346 A] 1: 2. The respondent is admittedly an agriculturist and he owes a sum of money to the appellant Bank under a decree passed in its favour by the Sub Court, Meenachil, in O.S. No. 28 of 1963. The liability which the respondent owes to the appellant Bank is, therefore a "debt" within the meaning of section 2 (4) of the Act. [344 F G] However, since the appellant Bank, namely, the State Bank of Travancore, . is a subsidiary bank within the meaning of section 2 (k) of the and also as contemplated by sub clause (ii) of clause (a) of section 2(4) of the Act, the decretal amount payable by the respondent to the appellant Bank will not be a debt within the meaning of section 2(4) of the Act. [345 C D] 1: 3. By reason of clause (B) of the proviso to section 2 (4) (a) (ii) of the Act, which proviso is in the nature of an exception to the exceptions contained in the said section the amount payable to a subsidiary bank is not to be regarded as a debt within the meaning of the Act, only if the right of the subsidiary bank to recover the amount did not arise by reason of any transfer effected by operation of law subsequent to July 1, 1957. Here, the notification containing the scheme of amalgamation was published on May 16. Thus, the right of the appellant Bank, though is a subsidiary Bank, to recover the amount from the respondent arose by reason of a transfer effected by operation of law, namely, the scheme of amalgamation, which came into effect after July 1, 1957. [345 D E, G] 2: l. The State Bank of Travancore, is not a 'company ' properly so called. It is a subsidiary bank. It was established by the Central Government in accordance with The Act of 1959 and is not a 'company and, therefore not a banking company. Therefore, the decretal debt which the respondent is liable to pay to the appellant is not owed to a "banking company". It was indeed not owed to any "banking company" at all on July 14, 1970 being the date on which the Act came into force. [346 G H, 347 A] 3: 1. The exclusion provided for in clause (I) of section 2 (4) of the Act can be availed of, if the debt is due to a banking company at the time of the commencement of the Act. [352 D E] 3: 2. The object of the Act is to relieve agricultural indebtedness. In order to achieve that object, the legislature conferred certain benefits on agricultural debtors but, while doing so, it excluded a class of debts from the operation of the Act, namely, debts of the description mentioned in clauses (a) to (n) of section 2 (4). One class of debts taken out from the operation of the Act is debts owed to banking companies, as specified in clause (1). The reason for this exception being that, unlike money lenders who 340 exploit needy agriculturists and impose upon them harsh and onerous terms while granting loans to them, representative institutions, like banks and banking companies, are governed be their rules and regulations which do not change from debtor to debtor and which, if anything, are intended to benefit the weaker sections of society. [348 A C] 3: 3. Relief to agricultural debtors who have suffered the oppression of private money lenders, has to be the guiding star which must illumine and inform the interpretation of the beneficient provisions of the Act. When clause (1) speaks of a debt due "before the commencement" of the Act to a banking company, it does undoubtedly mean what it says, namely, that the debt must have been due to a banking company before the commencement of the Act. But it means something more: that the debt must also be due to a banking company at the commencement of the Act. Reading into the clause the word "at" which is not there, is the only rational manner by which meaning and content could be given to it, so as to further the object of the Act. [349 B E] Further clause (I) speaks of a debt due before the commencement of the Act, what it truly means to convey is not that the debt should have been due to a banking company at some point of time before the commencement of the Act, but that it must be a debt which was incurred from a banking company before the commencement of the Act. [349 E F] Thus, the application of clause (I) is subject to these conditions: (i) The debt must have been incurred from a banking company; (ii) the debt must have been so incurred before the commencement of the Act; and (iii) the debt must be due to a banking company on the date of the commencement of the Act. These are cumulative conditions and unless each one of them is satisfied, clause (I) will not be attracted and the exclusion provided for therein will not be available as an answer to the relief sought by the debtor in terms of the Act. [349G H, 350 A] 3: 4. Section 2 (4) which defines a "debt" had to provide that debt means a liability due from or incurred by an agriculturist "on or before the commencement" of the Act. It could not be that liabilities incurred before the commencement of the Act would be "debts" even though they are not due on the date of commencement of the Act. The words "on or before the commencement" of the Act are used in the context of liabilities "due from or incurred" by an agrieculturist. For similar reasons, clause (j) had to use the expression "at the commencement" of the Act, the subject matter of that clause being debts due to widows. The benefit of the exclusion provided for in clause (j) could only be given to widows to whom debts were due "at the commencement" of the Act. The legislature could not have given that benefit in respect of debts which were due before but not at the commencement of the Act. Thus, the language used in the two provisions is suited to the particular subject matter with which those provisions deal and is apposite to the context in which that language is used. [350 C F] 3:5. The object of the Act being to confer certain benefits on agricultural debtors, the legislature would be under an obligation, while excepting a certain category of debts from the operation of the Act, to make a classification which will answer the test of article 14. Debts incurred from banking companies and 341 due to such companies at the commencement of the Act would fall into a separate and distinct class, the classification bearing a nexus with the object of the Act. If debts incurred from private money lenders are brought within the terms of clause (I) on the theory that the right to recover the debt had passed on to a banking company sometime before the commencement of the Act, the clause would be unconstitutional for the reason that it accords a different treatment to a category of debts without a valid basis and without the classification having a nexus with the object of the Act. [350G H, 357A B] State of Rajasthan vs Mukanchand ; ; Fatehchand Himmatlal vs State of Maharashtra, ; , applied.

ISDICTION: Writ Petition Nos. 147 to 151 of 1976. (Under Article 32 of the Constitution) WITH SPECIAL LEAVE PETITION (CIVIL) No.7905 OF 1979 From the Judgment and Order dated 29 8 1978 of the Allahabad High Court, in S.A. No. 887/70. M.C. Bhandare, Mrs. section Bhandare and T. Sreedharan for the Petitioners. L.N. Sinha, Attorney General, Mr. M.K. Banerjee, Addl. Solicitor General, R.B. Datar, A.K. Ganguli, R.N. Sachthey and Miss A. Subhashini for RR 1 and 2. F.S. Nariman, Anil B. Dawan, P.H. Parekh, C.B. Singh and R. Karanjwala for RR 1 & 19. S.C. Gupta and Ramesh Chand for RR 14. Madan Bhatia and D. Goburdhan for RR 20. Y.S. Chitale, V.M. Tarkunde, and A.N. Karkhanis for RR 28 and 31. S.D. Gupta in person for impleading RR in WP 147/76. Girdharee Singh and S.K. Jain for the Intervener. 147 The Judgment of the Court was delivered by, CHINNAPPA REDDY, J. Several hundred Railway Engineers who should have been busy elsewhere, building bridges, laying or doubling tracks and so on have found themselves in the corridors of this Court in pursuit of the leaves of career. Quite a contingent was present in Court anxiously watching the proceedings and listening with expect attention to every word that fell from counsel and judge. One could not help wondering whether this multitiered. 'multi varne ' Service system was itself not productive of a career neurosis, destructive of the very efficiency which is sought to achieve. In this case, as in most other service matters that reach this Court, the question which arise for consideration relate to classification, confirmation, seniority, promotion etc., questions which appear to agitate the minds of the members of all services. Administrators seeking to find solutions to some of the problems very soon discover that their solutions are no more than illusions and have created other problems. First one party and then another party, all seek the protection of the Court. The Court is no expert administrator. Lacking expertise, lacking the administrator 's access to information, there are obvious limitations to what the Court may be. The Court may at best attempt to solve some basic legal issues. That the Court strives to do without disturbing the administrative equilibrium. The service with which we are concerned in this Case is the Indian Railway Service of Engineers, Class I. While the petitioners claim that they were appointed to this service after selection by the Union Public Service Commission, the respondents allege that the petitioners were appointed as temporary Engineers only, constituting a special class and service by themselves, and were not appointed to the Indian Railway Service of Engineers Class I at all. It appears that from the time of the first Five Year Plan onwards several important assignments such as the construction of major bridges, new lines, doubling of electrification of existing lines etc. were taken up by the Civil Engineering Department of the Indian Railways. It became necessary to create a number of temporary posts of Class I (Indian Railway Service of Engineers) and Class II Engineers to carry out these works. In 1955 it was estimated that about 200 additional Engineers would be necessary within the next two years to deal with the planning, surveying, estimating and construction of the multitude of the proposed development works. It was not thought possible to 148 meet the additional personnel requirements from existing sources, which were direct recruitment to Class I on the basis of the results of a competitive examination and promotion to Class II from Class III. Though the conversion of some of the temporary posts into permanent ones might meet part of the requirement, it was thought, recruitment through normal channel to such posts would necessarily have to be spread over a period of years so as to avoid 'bunching of officers within particular age group '. It was, therefore, decided to recruit, in the first instance, fifty temporary Engineers immediately. Their scale of pay was to be the same as that of the Indian Railway Service of Engineers. The age limit was to be 25 to 35 years so as to attract Engineers with practical experience. The appointments were to be normally made on the minimum of the time scale but persons with previous experience could be fitted into the scale at a higher stage. As the posts were to be temporary, it was decided that an incentive should be given to attract suitable candidates by reserving a proportion of the permanent vacancies in the Indian Railway Service of Engineers each year for being filled by such temporary Engineers. Six vacancies in the Indian Railway Service of Engineers were to be so earmarked annually to start with. The quota could be increased later. On permanent appointment to the Indian Railway Service of Engineers seniority would count from the date of such appointment. Proposals on these lines were conveyed by the Railway Board to the Union Public Service Commission on February 21, 1955 with a request to take steps for the early recruitment of temporary Engineers. A formal requisition in the prescribed form was also sent to the Union Public Service Commission. In this form, the post was designated as "Assistant Engineer", the number of posts was mentioned as 50, and, the class of service to which the post belonged was mentioned as "Gazetted Railway Service". Against the heading "whether permanent or temporary", the posts were mentioned as "temporary". Against the column "if the post is temporary, please state : (a) when it was sanctioned; (b) the period for which it has been sanctioned and (c) irrespective of the period of sanction how long it is expected to last and whether it is expected to be retained on a permanent basis eventually", it was mentioned that the posts would be sanctioned shortly in connection with a number of projects, that the period would be two years in the first instance but was likely to be extended upto five years and that the employment might continue indefinitely but on a temporary basis. It was specified that the candidates would be eligible to be considered for absorption in permanent vacancies at the rate of six per year. The scale was mentioned as Rs. 350 350 380 380 30 590 E.B. 30 770 40 850, this being the Junior Scale of pay of Indian Railway Service of Engineers Class I. It was 149 said that higher initial salary was permissible according to experience and qualifications. The academic qualifications were to be the same as for regular recruitment to Indian Railway Service of Engineers. Against the heading prospects of promotion to higher post it was stated that they might be considered for promotion to senior scale posts in the grade of Rs. 600 40 1000 50/2 1150 according to the exigencies of service. Similar proposals and "indents" for recruitment of temporary officers to six other departments of the Railways were also simultaneously made. Pursuant to the requisition by the Railway Board, the Union Public Service Commission issued an advertisement inviting applications for "50 posts of Assistant Engineers, Ministry of Railways, Service Class I (Gazetted), posts temporary for two years in the first instance but likely to continue". The minimum educational qualification was stated to be a Degree in Civil Engineering, but an additional qualification of 'about 3 years experience as a Civil Engineer ' was also prescribed. The qualification was relaxable at the discretion of the commission in the case of candidates otherwise well qualified. It was mentioned in the advertisement that the candidates would be eligible 'for being considered for absorption in permanent vacancies at the rate of six per year ' and might be considered 'for promotion to senior grade posts in the scale of Rs. 600 40 1100 50/2 1150 according to the exigencies of service '. It appears that the reference to Class I in the advertisement was considered by the Railway Board to be a mistake. The Railway Board, therefore, addressed a letter dated October 31, 1955 to the Union Public Service Commission pointing out that in their requisition they had indicated "Gazetted Railway Service" as the service to which recruitment was to be made and that it was not intended that it should be either Class I or Class II. It was also mentioned that statements had been made on the floor of the Lok Sabha and Rajya Sabha that the posts were "temporary" and "neither in Class I nor in Class II". The Commission was accordingly requested to issue a suitable correction slip. Thereafter, in the subsequent advertisements issued by the Union Public Service Commission there was no reference to Class I. It was merely mentioned that applications were invited for specified number of posts of "Assistant Engineers (Civil), Ministry of Railways, posts temporary but likely to continue". The petitioners in the various Writ Petitions who submitted their applications in response to such advertisements, were selected by the Union Public Service Commission, at various times between 1955 150 and 1964 and were offered appointments as 'Temporary Assistant Engineers ' by the Railway Board. Everyone of them was told that the appointment would be on a temporary basis in the scale of Rs. 350 350 380 380 30 590 E.B. 30 770 40 850. They were also expressly told that the posts to which they were appointed would be neither in Class I nor in Class II, service though they were eligible, on completion of three years service, to be considered alongwith other temporary Assistant Engineers for absorption in Class I (Junior Scale) against vacancies ear marked from time to time for the absorption of temporary Assistant Engineers in the Indian Railway Service of Engineers Cadre upto a maximum of six per year. They were also expressly informed that in the event of their being selected in Class I Service their seniority would count from the date of their permanent appointment to Class I Service. They were required to execute service agreements "as applicable to temporary officers". It was also stipulated that in all matters not specifically referred to in the order of appointment, the person appointed would be governed by the provisions of the Indian Railway Establishment Code and the extant orders issued from time to time. The petitioners accepted the terms offered to them and joined duty in the posts to which they were appointed. The agreements which the petitioners and others like them were required to execute and which they presumably did execute (were in a standard form known as 'Agreement for Temporary Assistant Officers of the Indian Railways '. Paragraph 2 of the standard form and agreement specified that the appointment was in a gazetted post C which is neither in Class I nor in Class II service) on scale Rs. 350 350 380 380 30 590 E.B. 770 40 850. Paragraph 5 mentioned that the person appointed would be eligible along with other temporary Assistant Officers "for being considered for absorption in the permanent vacancies in the Class I (junior scale) of the. . department upto a maximum number of vacancies in a year as may be fixed by the Government" and that in the event of his being selected for that service his seniority would count from the date of confirmation. Paragraph 6 recited that he would be considered for appointment to a Senior Scale post. The agreement provided that in respect of matters for which no provision was made in it, the provisions of the Indian Railway Establishment Code from time to time in force or rules made thereunder shall apply to the extent they were applicable to temporary Assistant officers. It was further provided that the decision of the Government as to their applicability, interpretation and effect shall be final. It should be mentioned here that though there was no previous Presidential sanction for making appointments to posts which were 151 neither in Class I nor in Class II but merely in 'gazetted service ', the matter was rectified and Presidential sanction was subsequently obtained in November, 1956. This was communicated by the Railway Board to the General Managers of all Indian Railways by letter No. E 55RC 16 (Pt. A) dated November, 22, 1956. It was also decided by the President that the Railway Board of the competent authority to appoint Temporary Assistant Officers in the various departments of the Railways. This was mentioned by the Board in letter No. E. (GF P) 56RC 16 Pt. A dated 18 12 57 addressed to the General Managers of all Indian Railways. Between the years 1955 and 1964 as many as 553 temporary Assistant Engineers were appointed after selection by the Union Public Service Commission. Though in their orders of appointment as temporary Assistant Engineers, the petitioners and others were told that six of them would be absorbed into the Indian Railway Service of Engineers Class I every year, the quota was increased to eight per year in 1957 and fifteen per year in 1961. In 1960 the quota was fixed at "60% of the actual intake of Probationers from the CES etc. examinations". Again in 1975 the quota was increased to 25 per year. The net result was that all but a 107 temporary Assistant Engineers were left unabsorbed by the time of the filing of the Writ Petitions and they too were finally absorbed in 1979 by what was described to us as a 'blanket order '. We were informed that the validity of the absorption on this mass scale is under challenge in some Writ Petitions filed by members of the Indian Railway Service of Engineers, Class I. At this juncture we also find it necessary to mention that the Railway Board decided, on September 17, 1965, that the temporary officers so absorbed into the Indian Railway Service of Engineers should also be given weightage in seniority "on the basis of half the total number of years of continuous service in working posts on Railways prior to their permanent absorption into Class I, subject to a maximum weightage of five years". This, of course, was the result of representations made by the temporary officers. This too we are told is under challenge. The petitioners have filed these Writ Petitions in a representative capacity purporting to represent all temporary Assistant Engineers appointed on the recommendation of the Union Public Service Commission, claiming that, in law, they could only be and were appointed to the Indian Railway Service of Engineers Class I right from the beginning and that the Railway Board was wrong in treating them as belonging to neither Class I nor Class II. They claim that they were appointed to temporary posts in the cadre of Indian Railway Service 152 of Engineers Class I and that their seniority had to be reckoned on the basis of their length of continuous service, though they concede that in any given year those appointed on the basis of the results of the competitive examination might be placed above those appointed on the basis of the selection by the Union Public Service Commission. They contend that the Railway Board had no authority to create an unclassified service, as it were, outside the provisions of the Indian Railway Establishment Code. Notwithstanding the requisitions issued by the Railway Board, the advertisements issued by the Union Public Service Commission and the letters of appointment issued to the petitioners, they contend that they were appointed to the cadre of Indian Railway Service of Engineers Class I and to no other service. They contend that they were recruited to Class I service under rule 130(d) of the Indian Railway Establishment Code which provides for "occasional admission of other qualified persons on the recommendations of the Union Public Service Commission". They question the vires of the note to Rule 106 which was added by way of amendment in 1956 and which provided that 'temporary Assistant Officers would not be classified either as Class I or as Class II '. The petitioners claim that the distinction made by the Railway Administration between Assistant Officers recruited on the basis of the results of the competitive examination and the temporary Assistant Officers recruited on the recommendation of the Union Public Service Commission was discriminatory and offended Articles 14 and 16. They contend that all Assistant Officers formed one class under the Indian Railway Establishment Code. The further classification of Assistant Officers into those that were recruited on the basis of a competitive examination and those that were recruited on the recommendation of the Union Public Service Commission was a "micro classification" not permissible under the law. They point out that the minimum academic qualifications and the scales of pay of the Permanent and the Temporary Engineers (for the sake of brevity the Assistant Officers appointed on the basis of the results of the competitive examination may hereafter be described as permanent Engineers while those appointed on the basis of the recommendation of the Union Public Service Commission may be described as Temporary Engineers) were identical, the duties and functions were the same and they occupied interchangeable posts. They further allege that, in any case, the right of absorption of six temporary Engineers only every year into the Indian Railway Service of Engineers were arbitrary and inequitous. It had resulted in such gross injustice that two decades of service of several of the petitioners. was to be counted for nothing. 153 11. Before proceeding to consider the various contentions raised on behalf of the petitioners it is necessary to make a brief reference to the history, service and legal, of one of the many petitioners. Shri Katyani Dayal was working as an Assistant Engineer in the service of the Punjab Government from 1952 onwards. He was one of those who was selected by the Union Public Service Commission and appointed as a temporary Engineer in 1958. He was drawing pay in the junior scale. He crossed the Efficiency Bar in 1966 and according to him he was thereafter entitled to be considered for promotion to the senior scale to the post of District Officers. He founded his claim on r. 133(3) (c) on the basis that he was an Assistant Officer within the meaning of that expression as then defined by r. 102(3). As he was not so promoted and as it was proposed, on the basis of some circulars, to promote permanent Engineers of four years standing, he filed a Writ Petition in the High Court of Allahabad claiming that he was entitled to be considered for promotion to officiating post of District Officer. The Railway Board opposed the claim of Katyani Dayal on the ground that he was a temporary Assistant Engineer and not an Assistant Officer and therefore, not entitled to be promoted in terms of r. 133(3)(c). The Railway Board 's contention was over ruled by a learned Single Judge of the High Court and a direction was given to the Railway Administration to consider the claim of the petitioner for appointment in officiating vacancies to the posts of District Officers as soon as vacancies arose. The Railway Administration was directed to ignore the circulars which gave preference to Class I junior scale officers of four years standing or more as against temporary Assistant Engineers. An appeal filed by the Railway Administration under the Letters Patent was dismissed by a Division Bench of the High Court. Though the Division Bench dismissed the appeal on August 1, 1974, the Railway Administration did not implement the judgment but instead on December 12, 1975 amended rule 102(3), 133(3)(c) and (f) and introduced new rule 102(17) so as to expressly exclude temporary Assistant Officer [newly defined by r. 102(7) from the category of Assistant Officer and thus make him ineligible for promotion to the senior scale under r. 133 (3)(c) and (f)]. It appears that the status of the temporary Assistant Engineers recruited on the recommendation of the Union Public Service Commission has been the subject matter of the decisions of several High Courts. Some of them have been placed before us. The relevant provisions of the Indian Railway Establishment Code may now be referred to. 154 14. Rule 102(3) originally defined an Assistant Officer to mean 'a Gazetted Railway Servant drawing pay on the scale applicable to Junior Scale Officers ', but 'was not to include a Class II Officer '. By an amendment made on December 31, 1975, the expression was redefined and an 'Assistant Officer ' now 'means a Gazetted Class I Railway Servant drawing pay in the junior scale. It does not include a Class II Officer or a temporary Assistant Officer who is not classified either as Class I or Class II '. Prior to December 31, 1975 "Temporary Assistant Officer" was not defined but by an amendment dated December 31, 1975 "Temporary Assistant Officer" has been defined and now means "a gazetted Railway servant drawing pay on the scale applicable to junior Scale Officers but not classified either as Class I or as Class II Officer". Rule 102(13) defines a 'Railway, Servant ' as meaning a person who is a member of a service or who holds a post under the administrative control of the Railway Board, including a person who holds a post in the Railway Board. Rules 105 and 106 to the extent they are relevant are as follows: "105. For the purpose of the rules in this Volume the railway services shall be classified as follows: Gazetted (1) The Railway Services, Class I. (2) The Railway Services, Class II. Non gazetted. (3) The Railway Services, Class III. (4) The Railway Services, Class IV. (5) The Workshop Staff. Establishments and categories (including probationers), falling under the services mentioned in rule 105, are shown below Class I (1) Posts in the Railway Board; 155 (2) Directors, Joint Directors, Deputy Directors, Assistant Directors, Railway Board and Research, Designs and Standards Organisation; Secretary, Deputy Secretary, Under Secretary and Section Officers, Grade II, Railway Board. (3) Indian Railway Service of Engineers; (4) Indian Railway Accounts Service; (5) Indian Railway Traffic Services; (6) Indian Railway Service of Mechanical Engineers; (7) Indian Railway Service of Electrical Engineers; (8) Indian Railway Service of Signal Engineers; (9) Indian Railway Medical Service; (10) Indian Railway Stores Service; (11) Senior Revenue Establishment, Indian Railways, comprising such specialist and Miscellaneous posts as have been included in Class I e.g., Chemist and Metallurgists (Senior Scale) and Chief Cashiers (Senior Scale). Class II Gazetted posts not included in Class I. Note. Temporary Assistant Officers will not be classified either as Class I or Class II. Class III * * * * * Class IV * * * * * It must be mentioned here that this Note to rule 106 was not there originally but was added in 1956. Rule 107 provides that the prescribed scale of pay admissible to Railway servants belonging to Railway Service Class I and Class II shall be as specified in appendix XIV. 156 Rule 108 may also be extracted here and it is as follows: "108. Sanctioned strength of cadres. Subject to any statutory provision in this regard, the strength, including both the number and character of posts of the Railway Services, Class I and II, shall be determined by the Railway Board, General Managers of Indian Railways may create temporary posts in the Railway Services, Class I and Class II, subject to such limits as may be laid down by the Railway Board. Provided the total number of sanctioned gazetted post in any grade (Heads of Departments, Deputy Heads of Departments, District Officers, Assistant Officers are Class II Officers) of the service concerned is not exceeded, General Managers are empowered to vary solely in the public interest having regard to changes in the work and responsibilities of the posts, concerned (and not in the interest of individual officers), the distribution of posts within that grade for a period not exceeding 12 months". Rule 109 to the extent it is relevant in this case is as follows: "109. The cadres of the services and departments included in Railway Services, Classes I and II (other than the Medical Department and specialists posts) on Indian Railways shall be fixed in accordance with the principles stated below : (1) Separate cadres shall be maintained for each Indian Railway. (2) The number of permanent working posts, that is, posts required for ordinary duty on the railway, shall be first determined for each service or department and divided into the following grades : (i) Administrative, (ii) District Officers, 157 (iii)Assistant Officers and Class II Services. (b) * * * * (c) The number of posts to be allotted to the Assistant Officers ' grade shall be calculated with reference to the total number of Administrative and District Officers ' Posts, and shall be so fixed as to allow of a continuous flow of promotion from the Assistant Officers ' grade to the higher grade after a given period of service. For this purpose, all the administrative posts, including the general administrative posts, shall be taken into account. (d) The rest of the posts included in (a) (iii) shall be allotted to the Class II Service. (e) The total number of posts thus arrived at for each grade in a department shall form the permanent duty strength of each service or department. (3) * * * * (4) * * * * Rule 112 provides that the number of posts sanctioned in each grade in a department shall in no case be exceeded without the sanction of the authority competent to create a post, either permanent or temporary in the grade. Rule 116 prescribes that except as provided in r. 133(4) officiating promotion to the Assistant Officer 's grade or to a higher grade of gazetted Railway Servants from Class II service or from the non gazetted establishment is not permissible. Rule 118(1) provides that the number of Gazetted Railway servants on duty in a department shall not exceed the permanent duty strength sanctioned for that department. Rule 125 prescribes that all appointments to a Railway Service Class II shall be made by the President on the recommendation of the Union Public Service Commission from time to time in accordance with the rules framed by them. 158 Rule 129 provides that the rate of normal recruitment shall be determined by the President with reference to the sanctioned strength of a service or Department. Rule 130 is important and may be fully extracted here. It is as follows: "130. Method of recruitment. Recruitment to Class I service in the various departments of Railways shall be made through (a) competitive examination held in India by the Union Public Service Commission; (b) promotion of specially qualified gazetted railway servants of the Class II Service including officiating gazetted railway servants of the service or department; (c) in the case of Transportation (Power) and Mechanical Engineering Department, by appointment of candidates as Special Class Apprentices; and (d) occasional admission of other qualified persons on the recommendation of the Union Public Service Commission. The quota reserved for permanent promotion from Class II to Class I has been fixed at 33 1/3% of the vacancies in the Junior Scale, Class I (Senior Scale in the case of Medical Department). Rule 131 provides that Probationers to the Railway Service Class I shall be required to undergo a period of training as may be prescribed by the President. Rule 132 provides for recruitment to Railway Service Class II. Rule 133 deals with promotions to gazetted posts. We are concerned with rule 133(3)(c) and (f) which to the extent relevant were previously as follows: "133. Promotions to gazetted posts. (1) * * * * (2) * * * * 159 (3) The General Manager may appoint (a) * * * * (b) * * * * (c) An Assistant Officer to officiate as District Officer, provided that such a gazetted railway servant who has not passed the efficiency bar may be so appointed only, if (i) a gazetted railway servant who has passed the efficiency bar is not available; or (ii) the vacancy is not expected to exceed three months; (d)(e) * * * (f) substantively, an Assistant Officer to the District grade provided such promotions are made in strict order of seniority subject further to the condition that no officer shall be so promoted unless he has rendered not less than ten years of total service and has been declared fit to cross the efficiency bar in the junior scale. The period of 10 years of total service will also include the two years of training in the case of direct recruits. In respect of promoted gazetted railway servants all those placed in the Seniority list above the last direct recruit who fulfils the above condition will receive confirmation in their turn. " These provisions were also amended on December 31, 1975, and they are now as follows : "(c) an Assistant Officer to officiate in the Senior Scale provided that such an Assistant Officer who has not passed the efficiency bar may be so appointed only, if an Assistant Officer, who has passed the efficiency bar is not available; (d) * * * * 160 (f) substantively, an Assistant Officer to the Senior Scale, provided such promotions are made in strict order of seniority subject further to the condition that no officer shall be so promoted unless he has rendered not less than eight years of total service and has been declared fit to cross the efficiency bar in the junior scale. The period of eight years of total service will also include the two years of training in the case of direct recruits. In respect of promoted gazetted railway servants all those placed in the seniority list above the last direct recruit who fulfils the above condition will receive a confirmation in their turn". Rule 139 makes provision for the making of recruitment rules and the note to rule 139 provides that in the case of recruitment to gazetted posts, the rules should be published in the Gazette of India in the section allotted to Statutory Rules and Orders. Rule 144 obliges every railway servant to execute an agreement with the President of India at the time of his substantive appointment and further provides that those appointed for a limited period may also be required to execute such agreements. Rule 2003(3) defines cadre as meaning 'the strength of a service or a part of a service sanctioned as a separate unit '. Rule 2003(22) defines a permanent post as meaning a post carrying a definite rate of pay sanctioned without limit of time. Rule 2003(29) defines a temporary post as meaning a post carrying a definite rate of pay sanctioned for a limited time. Rule 2003(30) defines a tenure post as meaning a permanent post which an individual Railway servant may not hold for more than a limited period. Rule 2003(31) defines time scale of pay and whole of it may be extracted here: "(31) (a) Time scale pay means pay which subject to any conditions prescribes in these rules, rises by periodical increments from a minimum to a maximum. It includes the slabs of pay formerly known as progressive. (b) Time scales are said to be identical if the minimum, the maximum, the period of increment and the rate of increment of the time scales are identical 161 (c) A post is said to be on the same, time scale as another post on a time scale if the two time scales are identical and the posts fall within a cadre, or a class in a cadre, such cadre or class having been created in order to fill all posts involving duties of approximately the same character or degree of responsibility, in a service or establishment or group of establishments; so that the pay of the holder of any particular post is determined by his position in the cadre or class, and not by the fact that he holds that post". The earlier narrated facts show that for quite several years it was distinctly understood by the appointing authority as well as the persons appointed that those who were appointed as Temporary Assistant Engineers on the basis of the selection made by the Union Public Service Commission did not belong either to Class I or to Class II of the Indian Railway Service of Engineers. It was understood that they would be eligible for being considered for absorption in the Indian Railway Service of Engineers Class I in an annual quota reserved for such absorption and that their seniority would be reckoned thereafter from the date of their confirmation in Class I. It was also understood that they would be eligible for being considered for promotion to officiating posts in the senior scale. This position in regard to their status was made clear, without the possibility of a shadow of doubt, in the letters of appointment issued to them and the agreements which they were required to execute. Considerable argument as advanced on the question whether a service not contemplated by the Indian Railway Establishment Code could be created and whether appointments of Gazetted Railway servants not falling in Class I or Class II and therefore falling outside the provisions of the Indian Railway Establishment Code could be made. The submission was that the Indian Railway Establishment Code did not contemplate a class of service which did not belong either to Class I or Class II, and that every gazetted railway servant had to belong either to Class I or Class II and the question whether the posts to which appointments were made belonged to Class I or not had to be determined with reference to the minimum educational qualifications prescribed for the post, the scales of pay, the functions and duties etc. It was submitted that notwithstanding the clear assertion in the letters of appointment and the agreements, the petitioners must, in law, be considered to have been appointed to the Indian Railway Service of Engineers Class I and to no other service. article 53 of the Constitution vests the executive power of the Union in the President, to be exercised by him either directly or through 162 officers subordinate to him, in accordance with the Constitution. article 73(1)(a) stipulates that the executive power of the Union shall extent "to the matters with respect to which Parliament has power to make laws". "Union Public Service and all India Services" are included in item 70 of the Union List (List I of the Seventh Schedule) enumerating the matters with respect to which Parliament has the exclusive power to make laws. The proviso to article 309 of the Constitution makes it competent for the President or such person as he may direct in the case of services and posts in connection with the affairs of the Union, to make rules regulating the recruitment, and the conditions of service of persons appointed, to such services and posts until provision in that behalf is made by or under an Act of the Parliament to regulate the recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the Union. The inevitable sequitur from these Constitutional provisions is that the President, acting directly or through Officers subordinate to him, is free to constitute a service (with as many cadres as he chooses), to create posts without constituting a service or to create posts outside (the cadres of) the constituted service. The President (or the person directed by him) may, or, again if he so chooses he may not, make rules regulating the recruitment and conditions of service of persons appointed to such service or posts. He is also free to make or not to make appointments to such services or posts. Nor is it obligatory for him to make rules of recruitment etc. before a service may be constituted or a post created or filled. But if there is an Act of Parliament or a rule under the proviso to article 309 on the matter, the executive power, under Articles 53 and 73, may not be exercised in a manner in consistent with or contrary to such Act or rule (vide B. N. Nagarajan & Ors. vs State of Mysore & Ors., State of Kerala vs M. K. Krishan Nair & Ors., etc. So, the previous existence of the Indian Railway Service of Engineers and the rules made for recruitment to that service do not bar the constitution of another service or the creation of posts outside the cadres of the Indian Railway Service of Engineers. That, precisely, was what was done in 1956 and subsequent years upto 1965. The administrative expedience and exigence of the time required the creation of temporary posts outside the cadres of the Indian Railway 163 Service of Engineers. The circumstances and the reasons necessitating the creation of these posts of Temporary Engineers were fully set out in the 'letters of indent ' addressed by the Railway Board to the Union Public Service Commission, the details of which have already been mentioned by us in paragraph 4 supra. The posts so created were not to be confused with the posts in the cadre of the Indian Railway Service of Engineers Class I notwithstanding that the scale of pay and the duties were to be the same. That the posts were not to be treated as in Class I or in Class II of the Indian Railway Service of Engineers was expressly mentioned and clarified in the requisitions made by the Railway Board to the Union Public Service Commission and the correspondence which ensued between the Railway Board and the Union Public Service Commission. It was also made clear in the letters of appointment and the agreements required to be executed by the persons appointed. Though to start with there was no Presidential sanction for the creation of the posts of Temporary Assistant Officers in the various Departments of Indian Railways, which were neither in Class I nor in Class II but merely in gazetted service, the matter was soon rectified by the grant of Presidential sanction for the posts in November 1956 and by the President further specifying the Railway Board as the authority competent to make appointments of such temporary Assistant Officers. This is apparent from the letter No. E 55RC 16(Pt. A) dated November 22, 1956 and letter No. 5 (GF P)56 RC 16/Pt. A dated December 12, 1956 to which we have referred in paragraph 8 supra. The posts of Temporary Assistant Officers were thus created, and appointments made, under valid authority and outside the existing cadres of the Indian Railway Service of Engineers. The letters of "indent", the advertisements, the letters of appointment and the agreements show that the temporary Assistant Officers appointed in this fashion after selection by the Union Public Service Commission were to be a source of recruitment to the Indian Railway Service of Engineers Class I. It was so understood from the inception by the persons appointed as well as the Railway Administration. In fact subsequent absorptions into the Indian Railway Service of Engineers was the sugar, if one may use such an expression, held cut to those seeking appointment as temporary Assistant Officers. Year by year a few Temporary Assistant Officers were indeed absorbed into the Indian Railway Service of Engineers after selection by a Departmental Promotion Committee and be it noted, not automatically on the basis of seniority. If Temporary Assistant Officers were to be a source of recruitment to the Indian Railway Service of Engineers Class I, we do not see how any temporary Assistant Officer could possibly be under 164 any misapprehension that he was appointed to the Indian Railway Service of Engineers Class I or could claim that he was appointed to such service. It is not possible to accept the submission that they must be considered to have been appointed under r. 130(d) of the Indian Railway Establishment Code which provides for occasional admission of other qualified persons on the recommendation of the Union Public Service Commission merely because they were selected for appointment by the Union Public Service Commission, their scale of pay was the same as that of the Class I Junior Scale Officers of the Indian Railway Service of Engineers and their duties were the same. There were special reasons for recruiting Temporary Assistant Officers outside the cadres of the Indian Railway Service of Engineers and when it was admittedly and avowedly so done, and when right through such officers were merely treated as a source of recruitment to the Indian Railway Service of Engineers, it would not be permissible for us to hold that the Temporary Assistant Officers were recruited to the cadre of the Indian Railway Service of Engineers Class I. 20. One of the submissions of the petitioners was that whatever the Railway Board might be asserting now or might have asserted even from the inception, factually, the Temporary Assistant Officers were appointed to temporary posts borne on the cadre of Indian Railway Service of Engineers Class I and not to any ex cadre posts. It was submitted that the posts to which appointments were made were not temporary posts in the sense that they were posts of short duration; they were posts, which admittedly were likely to continue indefinitely and even made permanent. The appointments could, therefore, have only been made to temporary posts borne on the cadre of the Indian Railway Service of Engineers. We do not think that there is any substance in these submissions. It is no doubt true that a cadre may consist of permanent as well as temporary posts and there may be permanent vacancies in permanent as well as temporary posts borne on the cadre. But it does not follow that appointments stated to be made to posts outside the vary service and therefore necessarily outside the cadre must be considered to be made to temporary posts borne on the cadre merely because the posts were likely to continue indefinitely and did so continue. We do not see how we can ignore the very purpose of scheme of recruitment of Temporary Assistant Officer which was to recruit Temporary Assistant Officers outside the existing Service and cadres to meet the anticipated requirements of certain special objects. Even in the requisition made in the prescribed form by the Railway Board to the Union Public Service Commission it was men 165 tioned "the posts will be sanctioned shortly in connection with a number of projects". It was not mentioned that the posts were already borne on the cadre of the Indian Railway Service of Engineers. Our attention was invited to the Annual Administrative Reports where, it was said, no distinction was made between classified and unclassified service. We do not think that these reports are of the slightest help. The reports merely refer to appointments, temporary as well as permanent, made in the gazetted service by direct recruitment. Gazetted Railway services must include both the Indian Railway Service of Engineers and the Gazetted Railway Service constituted by the temporary Assistant Officers. Therefore, by merely taking into account the number of Temporary Assistant Officers for the purpose of calculating the total number of persons appointed to Gazetted Railway Service it cannot conceivably be said that Temporary Assistant Officers were appointed to cadre posts in the Indian Railway Service of Engineers. Our attention was also invited to the classified lists of Officers published by the Railway Board. This list takes the case of the petitioners no further. There is nothing in the list to indicate that persons who were appointed as Temporary Assistant Officers were appointed to posts borne on the cadre of Indian Railway Service of Engineers. On the other hand under the column "Date of appointment to Class" no entry is made against the names of any of the Temporary Assistant Officers who had not yet been absorbed into the Indian Railway Service of Engineers. We were also referred to the reports of the Administrative Reforms Commission where it is said "In the Railways there is a sizeable number of unclassified posts equivalent to Junior Class I and only a small number of them are taken each year into the regular service". This statement does not support the case of the petitioners that they were appointed to posts borne on the cadre of Indian Railway Service of Engineers. Far from it. Passages from the reports of the Central Pay Commission were also read out to us to emphasize that the posts have continued over the years indefinitely. If posts were initially created and sanctioned for short periods, we do not see how the subsequent continuance of the posts indefinitely would make persons appointed to the posts members of the regular service, namely, the Indian Railway Service of Engineers Class I. 21. Considerable argument was advanced on the question of the 'status ' and the effect of the 'note ' found below rule 106. It was said that the note did not form part of the rules made by the President under the proviso to Article 309 of the Constitution and therefore it could not amend the other statutory rules. The note was neither declaratory nor explanatory and was of no affect whatever. We think that the argument regarding the 'status ' and the effect of the note is of no real 166 relevance. The note merely states an existing fact known to all concerned. It was known that posts of Temporary Assistant Officers in gazetted railway service who were not to be classified 'either as Class I or as Class II ' had been sanctioned by the President who had designated the Railway Board as the authority competent to make appointments to those posts. The note below rule 106 merely stated this fact. With or without the note, the Temporary Assistant Officers would still not be classified either as Class I or Class II. Their classification outside Class I and Class II was not dependant on the note but on the Presidential action in regard to the creation of the posts. This is perhaps an appropriate stage for referring to the amendments, introduced in 1975, to the Indian Railway Establishment Code. The expression 'Temporary Assistant Officers ', which was not previously defined in the Railway Establishment Code, was sought to be defined by new clause 17 of R. 102 to mean "a Gazetted Railway Servant drawing pay on the scale applicable to Junior Scale Offices but not classified either as Class I or as Class II Officer". The expression Assistant Officer was redefined so as not to include a Temporary Assistant Officer who was not 'classified either as Class I or as Class II '. Apart from the principal submission that the 1975 amendments were violative of articles 14 and 16 of the Constitution, it was submitted that the amendments were prospective in nature and did not affect the petitioners all of whom had been appointed as Temporary Assistant Officers long prior to the 1975 amendment. We do not think that the amendments have any effect one way or the other on the status of the Temporary Assistant Officers. What was always well known to the Temporary Assistant Officers and the Railway Board and what was the inevitable result of the Presidential sanction for the creation of posts which were not to be classified either as Class I or Class II, was made explicit in the Indian Railway Establishment code also by the introduction of these amendments. This became necessary because in the Writ Petition filed by Katyani Dayal, the Allahabad High Court, while appearing to hold that Temporary Assistant Officers belonged neither to Class I nor to Class II service, held that they came within the then existing definition of 'Assistant Officer ' so as to entitle them for promotion under r. 133 of the Indian Railway Establishment Code. We are afraid it was the use of the expression 'Temporary Assistant Officer ' that has led to considerable confusion. The expression 'Temporary Assistant Officer ' was coined to describe the new post created for the first time in 1955. The expression was not used to signify officers temporarily holding the posts of Assistant Officers in the several established Railway Services. For instance a Class II Assistant Engineer 167 who is temporarily promoted to hold the post of an Assistant Engineer Class I may be described as a Temporary Assistant Officer but he certainly would not be a 'Temporary Assistant Officer ' appointed to any of the posts specially created by the President which were neither in Class I nor in Class II. The word 'Temporary ' in the expression 'Temporary Assistant Officer ' was not used to qualify the words Assistant Officer. The whole of the expression was intended to describe the particular post, which was neither in Class I nor Class II, which was created in 1955. There would not have been any confusion and it would have been much happier if instead of the expression Temporary Assistant Officer some other expression such as Special Assistant Officer or Special Assistant Engineer had been chosen. We are of the view that the Allahabad High Court was not justified in looking at the amended definition of 'Assistant Officer ' in isolation and concluding that the expression 'Assistant Officer ' included Temporary Assistant Officer because Temporary Assistant Officer was also a gazetted Railway servant who drew the junior scale of pay. The definition of Assistant Officer was not to be read in isolation in that manner. It should have been read conjunctively with Rules 105, 106 and 108. A reference to Rule 105 would show that for the purposes of the rules in the Indian Railway Establishment Code, Railway services were to be classified into Class I, Class II, Class III, Class IV and Workshop staff. Rule 106 specified the appointment and categories falling under the services mentioned in Rule 105. Rule 108 required the Railway Board to fix the strength of the Railway Services ' Class I and Class II. There could therefore, be no question of an officer not falling within the class, category or cadre specified in rules 105, 106 and 108 claiming to be an 'Assistant Officer ' within the meaning of that expression. A person recruited to the post of 'Temporary Assistant Officer ' not classified as Class I or Class II Officer could not claim to belong to the Class, category or cadre specified in Rules 105, 106 and 108 and was, therefore, not an Assistant Officer within the meaning of that expression even before the 1975 amendment. We now come to the principal submission made to us namely that the classification of Temporary Assistant Officers separately from the Indian Railway Service of Engineers Class I was discriminatory and had no nexus to the object to be achieved namely efficiency of service and was, therefore, violative of Articles 14 and 16 of the Constitution. It was argued that the minimum academic qualification for the posts of 'Temporary Assistant Officer ' was the same as that prescribed for entry into the Indian Railway Service of Engineers Class I, the scale of pay of 'Temporary Assistant Officer ' was the same as hat of a Class I Officer of Junior Scale, the functions and duties were 168 similar and on all matters not expressly provided, the Temporary Assistant Officers like Class I officers were to be governed by the provisions of the Railway Establishment Code and the Rules made thereunder. There was so much identity on all vital and important matters that the classification of 'Temporary Assistant Officers ' outside the Indian Railway Service of Engineers Class I was arbitrary. It led to all manner of discrimination in the matter of advancement in service, seniority, promotion etc. The unfairness of it all was sought to be graphically demonstrated by pointing out how after twenty years of service Temporary Assistant Officers continued to be Temporary Assistant Officers while Class I officers recruited much later were placed much higher than them in order of seniority and had risen to much higher positions in the service. Another limb of the argument on the question of discrimination was that all Assistant Officers whether they were permanent Assistant Officers or Temporary Assistant Officers constituted a single cadre and it was not permissible to further classify them on the basis of the manner of their recruitment, namely, by competitive examination or by selection by the Union Public Service Commission. Part of this submission has already been met by us and we have shown how Temporary Assistant Officers are not Assistant Officers within the meaning of that expression in the Indian Railway Establishment Code. It is true that the minimum educational qualification for the post of Temporary Assistant Officer was the same as that for recruitment to the Indian Railway Service of Engineers Class I. It is true that the scale of pay is the same, and the functions and duties are the same. It is also true that except to the extent provided, the Temporary Assistant Officers were also subject to the provisions of the Indian Railway Establishment Code and the rules made thereunder. But, there are certain fundamental differences between two classes which cannot be ignored and which demand attention. To begin with, the object of recruitment to the Indian Railway Service of Engineers is to provide Officers of the highest quality to meet the requirements of all posts in the service including Senior Administrative posts. Rule 109(2)(c) of the Indian Railway Establishment Code, extracted earlier expressly provides that the number of posts to be allotted to the Assistant Officers ' grade shall be calculated with reference to the total number of administrative and District Officers ' posts, and shall be so fixed as to allow of a continuous flow of promotion from the Assistant Officers ' grade to the higher grades after a given period of service. For this purpose all the administrative posts including the general Administrative posts are required to be taken into account. On the 169 other hand the object of recruiting Temporary Assistant Officers was to meet specific requirements of various projects with a prospect of promotion in a temporary capacity to a senior scale post and absorption into the Indian Railway Service of Engineers Class I. They were not to be members of the Indian Railway Service of Engineers but were to be a source of recruitment to the Indian Railway Service of Engineers. Thus the very appointments of Temporary Assistant Officers were to temporary posts outside the cadre and outside the recruitment rules of the Indian Railway Service of Engineers Class I and the very nature of this tenure was precarious, whereas Class I Officers recruited on the basis of a result of competitive examination were appointed to cadre posts strictly in accordance with the recruitment rules. Next and equally important, is the fundamental qualitative differences, linked with the method of recruitment. True, the minimum educational qualification is the same. But, those who are recruited directly to the Indian Railway Service of Engineers Class I are subjected to stiff and competitive, written and personality tests. Only the very best can aspire to come out successful. The Temporary Assistant Officers were not subjected either to a written or to a personality test but were selected on the basis of an interview by the Union Public Service Commission. In addition to the minimum educational qualification, three years ' experience as a Civil Engineer was also prescribed. Thus while brilliance was the beacon light which beckoned those aspiring to become members of the Indian Railway Service of Engineers Class I, it was replaced by experience in the case of those wanting to be Temporary Assistant Officers. Again the appointing authority in the case of Indian Railway Service of Engineers Class I is the President while the appointing authority in the case of Temporary Assistant Officers was the Railway Board, no doubt, pursuant to the authority given by the President. Different courses of training were prescribed for the Indian Railway Service of Engineers and the Temporary Assistant Officers. For the Indian Railway Service of Engineers the training is an intensive and comprehensive one designed to equip them for higher posts in the Department too, while the training for Temporary Assistant Engineers was a brief six months ' training intended merely to equip them for carrying out the specific jobs. In the matter of terms and conditions of service, while the provisions of the Indian Railway Establishment Code are fully applicable to the Indian Railway Service of Engineers Class I, those provisions are applicable to "Temporary Assistant Officers" to the extent there is no specific provision in their letter of appointment and agreement. 170 26. Keeping in mind these similarities and dissimilarities, let us examine the legal position. We cannot do better than to refer to the decisions cited at the Bar, not all, but a few illustrative cases. In State of Punjab vs Joginder Singh, the question arose whether the constitution by the State of two Services consisting of employees doing the same work but with different scales of pay or subject to different conditions of service such as promotional opportunities was violative of Articles 14 and 16 of the Constitution. The argument based on the postulate that equal work must receive equal pay was repelled by quoting the following observations from an earlier decision of the Court in Kishori Mohanlal vs Union of India. : "The only other contention raised in that there is discrimination between Class I and Class II officers inasmuch as though they do the same kind of work their pay scales are different. This, it is said, violates article 14 of the Constitution. If this contention had any validity, there could be no incremental scales of pay fixed dependant on the duration of an officer 's service. The abstract doctrine of equal pay for equal work has nothing to do with article 14. The contention that article 14 of the Constitution has been violated therefore, also fails. " The second postulate that if there was equality in pay and work there must be equal conditions of service was rejected as unsound. It was observed (at p. 191 192): "If, for instance, an existing service is recruited on the basis of a certain qualification, the creation of another service for doing the same work, it might be in the same way but with better prospects of promotion cannot be said to be unconstitutional, and the fact that the rules framed permit free transfers of personnel of the two groups to places held by the other would not make any difference. We are not basing this answer on any theory that if a government servant enters into any contract regulating the conditions of his service he cannot call in aid the constitutional guarantees because he is bound by his contract. But this conclusion rests on different and wider public grounds, viz., that the government which is carrying on the administration has necessarily to have a choice in the constitution of the services to man the administration and that the limitations imposed by the constitution are not 171 such as to preclude the creation of such services. Besides, there might, for instance, be temporary recruitment to meet an exigency or an emergency which is not expected to last for any appreciable period of time. To deny to the government the power to recruit temporary staff drawing the same pay and doing the same work as other permanent incumbents within the cadre strength but governed by different rules and conditions of service, it might be including promotions, would be to impose restraints on the manner of administration which we believe was not intended by the constitution. ' Examining the facts of the case before them the Court noticed that the two services started as independent services, the qualifications prescribed for entry into each were different, the method of recruitment and the machinery for recruitment were different and they continued as different services and were never interpreted into one service. The Court said (at p. 193): "If they were distinct services, there was no question of inter se seniority between members of the two services, nor of any comparison between the two in the matter of promotion for founding an argument based upon article 14 or article 16(1). They started dissimilarity and they continued dissimilarly and any dissimilarity in their treatment would not be a denial of equal opportunity, for it is common ground that within each group there is no denial of that freedom guaranteed by the two Articles". In State of Jammu & Kashmir vs Triloki Nath Khosa & Ors. a rule which provided that only those Assistant Engineers who possessed a degree in Engineering would be eligible for promotion as Executive Engineer and which totally denied any opportunity for promotion to Assistant Engineers who were Diploma holders was challenged as infringing the fundamental rights guaranteed by Articles 14 and 16 of the Constitution. Under the rules, recruitment to the cadre of Assistant Engineer was to be made by direct recruitment of Degree holders in Civil Engineering or by transfer of degree or diploma holders who had served as Supervisors for a period of not less than five years. The argument was that degree holders and diploma holders having been integrated into a common class of Assistant Engineers, there was no justification for the classification for promotion to the post of Executive Engineer. The Court upheld the rule and held that the classification of Assistant Engineers into degree holders 172 and Diploma holders could not be said to rest on any unreal or unreasonable basis. Classification made with a view to achieving administrative efficiency in the Engineering Service was clearly co related to higher educational qualifications since higher educational qualifications was atleast presumptive evidence of higher mental equipment. Educational qualification was always recognised as a safe criteria for determining the validity of classification. The earlier decisions of the Court in Roshan Lal Tandon vs Union of India, and Moryan Coutindo & Ors. vs Collector of Customs, Bombay & Ors., were distinguished on the ground that they were cases where direct recruits and promotes who were fused into a common stream of service were sought to be treated differently by reference to the consideration that they were recruited from different sources whereas in the case before the Court the classification rested fairly and squarely on the consideration of educational qualifications. It was pointed out that the earlier cases did not rule out a classification on a basis other than that they were drawn from different sources. However, while upholding the validity of the rule Chandrachud, J., and Krishna Iyer, J., uttered words of caution and it is upon these words of caution that the petitioners rely. Chandrachud, J., said (at p. 790): "But we hope that this judgment will not be construed as a charter for making minute and microcosmic classifications. Excellence is, or ought to be, the goal of all good government and excellence and equality are not friendly bed fellows. A pragmatic approach has therefore to be adopted in order to harmonize the requirements of public services with the aspirations of public servants. But let us not evolve through imperceptible extensions, a theory of classification which may subvert, perhaps submerge, the previous guarantee of quality. The eminent spirit of an ideal society is equality and so we must not be left to ask in wonderment. What after all in the operational residue of equality and equal opportunity?" Krishna Iyer, J., said (at p. 792): "Mini classifications based on micro distinctions are false to our egalitarian faith and only substantial and straightforward classifications plainly promoting relevant goals can have constitutional validity. To overdo classification is to undo equality". 173 29. In Mohammed Shujat Ali & Ors. etc. vs Union of India & Ors. etc. one of the questions which arose for consideration was whether the distinction made between Graduate Supervisors and non Graduate Supervisors and the allocation, to these categories, of three and one vacancies respectively out of every four vacancies in the next higher promotional posts was violative of Articles 14 and 16 of the Constitution. After quoting with approval the observations of Chandrachud, J., and Krishna Iyer, J., in State of J. & K vs Trilokinath Khosa (supra). Bhagwati J., observed (at p. 481): "To permit discrimination based on educational attainments not obliged by the nature of the duties of the higher post is to stifle the social thrust of the equality clause. A rule of promotion which, while conceding that non graduate Supervisors are also fit to be promoted as Assistant Engineers, reserves a higher quota of vacancies for promotion for graduate supervisors as against non graduate Supervisors, would clearly be calculated to destroy the guarantee of equal opportunity". After saying so much the Court, however, upheld the rule which made the differentiation between Graduate and non Graduate Supervisors on the ground that the differentiation had not been made for the first time by the impugned rule and graduate Supervisors had always been treated as a distinct and separate class and the two were never integrated into one class. Since the two categories of Supervisors were never fused into one class, it was held, there was no question of unconstitutional discrimination on the ground of differential treatment being given to them. In section B. Patwardhan & Ors. vs State of Maharashtra & Ors. the question concerned a formula of seniority. Direct recruits and promotees, though drawn from two different sources, constituted, in that case, a single integrated cadre. They discharged identical functions, bore similar responsibilities and acquired an equal amount of experience in their respective assignments. Yet, the formula provided that probationers recruited during any year shall in a bunch be treated as senior to promotees confirmed in that year. While the formula gave to the direct recruits the benefit of even the one year 's period of training and another year 's period of probation for the purposes of seniority, it denied to promotees the benefit of their long and valuable experience. There was no intelligible ground for the differentiation, bearing nexus with efficiency in public service. 174 'Confirmation was one of the inglorious uncertainties of government service depending neither on efficiency of the incumbent nor on the availability of substantive vacancies, and it was on confirmation that the promotees seniority was made to depend. The formula was struck down by the Court. Reliance was placed on the decision of the Court in A. K. Subraman vs Union of India, where it had been held, while interpreting rules relating to Central Engineering Service Class that though in cases where recruitment was made from different sources a quota system could be validly applied, the quota rule was to be enforced at the time of initial recruitment to the post of officiating Executive Engineer and not at the time of their confirmation. The Court had further observed that there was a well recognised distinction between promotion and confirmation and that the tests to be applied for the purpose of promotion were entirely different from those that had to be applied at the time of confirmation. In H. section Verma & Ors. vs Secretary, Ministry of Shipping & Transport & Ors.(2), the facts were somewhat peculiar. Certain persons were directly recruited to the Engineering Service of the Ministry of Shipping and Transport (Roads Wing) as a result of a written competitive examination. Certain other persons were also directly recruited but by interview through the Union Public Service Commission, although such a method of selection was not contemplated by the rules. In 1966 a rule was added providing for selection by interview through the Union Public Service Commission. The 1966 rule was held not to be retrospective in some Writ Petitions filed in the Delhi High Court by the persons who had been recruited as a result of written competitive examination. The High Court while holding that the amendment was not retrospective did not hold that those appointed prior to 1966 by the interview method were not regularly appointed. Instead, the High Court held that they were appointed and promoted to ex cadre posts. In 1973 a notification was issued by the Government to the effect that the Officers appointed by the interview method must be deemed to have been industed into the service as temporary officers in 1966. Later in 1976 the Government decided to set up two Services to be called the Central Engineering Service (Roads). Group 'A ', comprising of Officers appointed by the method of examination and the other the Central Engineering Pool, Group 'A ', comprising of officers appointed by the method of interview. Officers of both the services were eligible to be promoted to certain posts called "isolated posts". Appointments to the 'isolated posts ' were to be made by selection or promotion, as the case may be, on the recommendation of a Departmental Pro 175 motion Committee from an integrated list of officers to be drawn up on the basis of the length of their continuous service in their respective grades. The officers appointed by the method of interview assailed the rules contending that though they were appointed to their posts long before the officers appointed by the method of competitive examination, they would rank much below the latter in the list of seniority and would consequently be denied promotional opportunities to higher posts. Having regard to the very complicated nature of the facts, the Court after discussion with the learned counsel appearing for the various parties and the Government made an order, which they thought was best and just in all the circumstances of the case. While issuing the directions certain observations were made. It was said (at p. 427): ". We are unable to suggest the contention that persons holding similar posts and having similar responsibilities to discharge can be classified into different categories for the mere reason that some of them were recruited directly by the interview method and some were recruited directly on the result of a competitive examination. Were it permissible to make such classifications, ingenuity may suggest the nature of curriculum in different years as the basis of classification. If subjection to different kinds of tests as a condition of eligibility produces qualitative difference in the ability of persons recruited to similar posts, it may perhaps become necessary to limit the promotional opportunities, in regard to the relatively higher posts, to those whose abilities are remarkably higher. But, it is nobody 's case and the Government has made no grievance that the petitioners who were appointed by the interview method are in any way inferior in ability, efficiency or educational qualifications to those who were appointed after a written competitive examination. In the matter of experience too, the petitioners are in no way inferior to the contesting respondents". The Court however, took care to add: "Though classification which proceeds merely on the basis that certain persons were recruited after going through one test and certain others after going through another test would be unscientific, it cannot be said on the facts of the instant case that there can be no valid basis or justification for classifying the various officers of the Roads Wing into separate categories. As we have stated earlier, 176 the appointments of some of the petitioners and some of the respondents were made in violation of the rules which were in force at the relevant time. It is in respect of that class of persons that the Delhi High Court was driven to hold that they must be deemed to have been appointed to ex cadre posts. . But, the fact remains that persons who were appointed contrary to the rules but to ex cadre posts were taken initially for purposes of certain projects to which we have already referred. Their precarious tenure was continued from time to time but that will not furnish justification for treating them on the same footing as others whose appointments were made strictly in accordance with the rules and who were appointed to posts borne on the cadre of the Central Engineering Service. A division of these two classes of officers into separate categories will remove possible injustice to those who were appointed to cadre posts in that their promotional opportunities will not be blocked or hindered by ex cadre officers who were recruited on a large scale to meet an urgent necessity. Such a classification will also minimise the injustice which would otherwise have been caused to those who were appointed to ex cadre posts". We have referred, without comment, to a few earlier decisions of this Court and quoted the observations of learned Judges therein. These decisions and the observations extracted therefrom illustrate and emphasise that there are and there can be no absolutes when we consider claims to justice on complaints of inequality. The Marxian ultimate of a classless society, however laudable that may be, is evidently not what is sought to be achieved by Articles 14 and 16 of the Constitution. The goal is a limited one. It is equality among comparables. A necessary, but not necessarily cynical, implication of equality among comparable is the permissibility of reasonable classification, having nexus with the object to be achieved. So, it was said that if two services started and continued dissimilarly, though they apparently discharged similar duties, they were not comparable services so as to furnish a basis for the claim to equality (State of Punjab vs Joginder Singh) (supra). But, if in the same service there were two sources of recruitment to the same posts, a classification based solely on source of recruitment was not permissible (Roshan Lal Tandon vs Union of India, and Mervyn Coutinda & Ors. vs Collector of Customs, Bombay & Ors.) (supra). This was also the principle of the decision in section B. Patwardhan & Ors. vs State of Maharashtra & Ors. (supra). Even so, Chandrachud, J., Krishna Iyer, 177 J., and Bhagwati, J., had to recognise, even if reluctantly, that even among the members of the same service, a classification based otherwise than on mere source of recruitment such as educational qualification was at times permissible. But necessary words of caution against making 'minute and micro cosmic ' classifications were uttered. (State of Jammu & Kashmir vs Trilokinath Khosa, (Supra) and Mohammad Shujat Ali & Ors. etc. vs Union of India & Ors. etc. (supra). Chandrachud, J., however drew the line when among members of the same service a classification was sought to be made between those who had been recruited on the basis of results of a competitive examination and those who had come in by the method of interview. But, here again he felt constrained to say that those who were appointed to ex cadre posts outside the rules and whose tenure was therefore precarious could not claim to be treated on the same footing as those who were appointed strictly in accordance with the rules and to posts borne on the cadre of the service (H. section Verma & Anr. vs Secretary, Ministry of Shipping & Transport & Ors.) (supra). If we now look at the facts of the case before us, we find that the service comprising the Temporary Assistant Officers and the Indian Railway Service of Engineers Class I started separately and never became one. The objects of their recruitment were different as explained earlier, the methods of recruitment were dissimilar and the appointing authority was not the same. The training that was imparted was also unlike. The very tenure of the Temporary Assistant Officers was precarious and their immediate aspiration was only to be absorbed into the Indian Railway Service of Engineers class I. These distinctive features marked out the Temporary Assistant Officers as a Class apart from the Indian Railway Service of Engineers Class I and therefore there was no question of entitlement of equal rights with the latter. Of course, once they were absorbed into the Indian Railway Service of Engineers they would be entitled not to be treated differently thereafter. Their seniority would ordinarily be reckoned from the date of their absorption into the Indian Railway Service of Engineers, as promised in their letters of appointment. No doubt these officers merited something more than the 'long wait ' at the portals of the Indian Railway Service of Engineers. The Railway Board however, appears to have tried to make the 'long wait ' a little less tedious by giving them weightage of half of their length of service as Temporary Assistant Officers, subject to a maximum of five years. We wish to say nothing about the validity of such weightage as we understand it is in question elsewhere. Though we are denying the claim of the petitioners to equality because of the history, origin, and structure of the Services and the 178 existing legal position in relation thereto, we do not wish to be understood as saying that there is any thing 'doctrinaire ' in the principles of 'equal pay for equal work ' and 'equal status for equal pay and equal work '. They are not goals to be scoffed at. It may be that in the present societal context the goals appear to be distant. But they are goals worthy of attainment and let us hope, with no overtones of cynicism, that these goals will be achieved in the not too distant future. All the Writ Petitions and applications for the grant of Special Leave are dismissed but without any order as to costs. S.R. Petitions dismissed.

Several assignments such as the construction of major bridges, new lines, doubling of and electrification of existing lines etc. were taken up the Engineering Department of the Indian Railways and to carry out these works, a number of temporary posts of Class I (Indian Railway Service of Engineers) and Class II engineers were created. It was not thought possible to meet additional personnel requirements from existing sources, i.e. direct recruitment to Class I by competitive examination and promotion to class II from class III. Instead, under a special scheme the various writ petitioners were appointed at various times between 1955 and 1964 as temporary Assistant Engineers by the Railway Board. Everyone of them was told that the appointment, would be on a temporary basis, that the post to which they were appointed would be neither in Class I nor in Class II service though they were eligible, on completion of three year 's service, to be considered along with other temporary Assistant Engineers for absorption in Class I (Junior Scale) against vacancies ear marked from time to time for such absorption in the Indian Railway Service of Engineers cadre upto a maximum of six per year, and that in the event of their being selected in Class I Service their seniority would count from the date of the permanent appointment to Class I service. They were required to execute service agreements "as applicable to temporary officers". The petitioners accepted the terms offered to them and joined duty in the post to which they were appointed. The petitioners also executed agreements in a standard form known as "Agreement for Temporary Assistant Officers of the Indian Railways". 140 Though in their orders of appointment as temporary Assistant Engineers the petitioners and others were told that six of them would be absorbed into the Indian Railway Service of Engineers Class I every year, the quota was increased to eight per year in 1957 and fifteen per year in 1961. In 1960, the quota was fixed at 60 per cent of the actual intake of probationers from the CES etc. examinations. Again in 1975 the quota was increased to 25 per year. The net result was that all but a 107 temporary Assistant Engineers were left unabsorbed by the time of the filing of the writ petitions and they too were finally absorbed in 1979 by a blanket order. On September 17, 1965, the Railway Board decided that the temporary officers so absorbed into the Railway Service of Engineers should be given weightage in seniority "on the basis of half the total number of years of continuous service in working posts on Railways prior to their permanent absorption into Class I, subject to maximum weightage of five years. " One of the writ petitioners, Katyani Dayal field a writ petition in the Allahabad High Court claiming promotion to the Senior scale post of District Officer. He found his claim on Rule 133(3)(c) of the Railway Establishment Code on the basis that he was an Assistant Officer within the meaning of that expression as then defined by Rule 102(3). The High Court allowed the writ petition and gave a direction to the Railway Administration to consider the claim of the petitioner for appointment in officiating vacancies to the post of District Officer as soon as vacancies arose, ignoring the circulars which gave preference to Class I junior scale officers of four years standing or more as against temporary Assistant Engineers. An appeal filed by the Railway Administration under the Letters Patent was dismissed by a Division Bench of the High Court. Though the Division Bench dismissed the appeal on August 1, 1974, the Railway Administration did not implement the judgment but instead on December 12, 1975 amended the Rule 102(3), 133(3)(c) and (f) and introduced new rule 102(17) so as to expressly exclude temporary Assistant Officers (newly defined by Rule 102 (7), from the category of Assistant Officers and thus make them ineligible for promotion to the senior scale under Rule 133(3)(c) and (f). The petitioners, therefore, have filed these writ petitions in a representative capacity purporting to represent all temporary Assistant Engineers appointed on the recommendation of the Union Public Service Commission, claiming that, in law they could only be and were appointed to the Indian Railway Service of Engineers Class I right from the beginning and that the Railway Board was wrong in treating them as belonging to neither Class I nor Class II. They claimed that they were appointed to temporary posts in the cadre of Indian Railway Service of Engineers Class I and that their seniority had to be reckoned on the basis of their length of continuous service, though they 141 conceded that in any given year those appointed on the basis of the results of the competitive examination might be placed above those appointed on the basis of the selection by the Union Public Service Commission. Dismissing the petitions the Court ^ HELD: (1) articles 53, 73(1)(a) and 309, make it clear that the President, acting directly or through officers subordinate to him is free to constitute a service (with as many cadres as he chooses), to create posts without constituting a service or to create posts outside (the cadres of) the constituted service. The President (or the person directed by him) may, or, again, if he so chooses he may not make rules regulating the recruitment and conditions of service of persons appointed to such service or posts. He is also free to make or not to make appointments to such services or posts. Nor is it obligatory for him to make rules of recruitment etc. before a service may be constituted or a post created or filled. But, if there is an Act of Parliament or a rule under the proviso to Article 309 on the matter, the executive power under Articles 53 and 73, may not be exercised in a manner inconsistent with or contrary to such Act or rule. [162D F] B.N. Nagarajan vs State of Mysore, [1966] SCR 682 @ 686; State of Kerala vs M.K. Krishnan Nair and ors. ; , at 874; referred to. (2) The previous existence of the Indian Railway Service of Engineers and the rules made for recruitment to that service do not bar the constitution of another service or the creation of posts outside the cadres of the Indian Railway Service of Engineers. Though to start with there was no Presidential sanction for the creation of the posts of Temporary Assistant Officers in the various departments of Indian Railways, which were neither in Class I nor in Class II but merely in gazetted service, the matter was soon rectified by the grant of Presidential sanction for the posts in November 1956, and by the President further specifying the Railway Board as the authority competent to make appointment of such temporary Assistant Officers. The posts of Temporary Assistant Officers were thus created and appointments made, under valid authority and outside the existing cadres of the Indian Railway Service of Engineers. The letters of "indent", the advertisements, the letters of appointment and the agreements show that the temporary Assistant Officers appointed in this fashion after selection by the Union Public Service Commission were to be a source of recruitment to the Indian Railway Service of Engineers Class I. If Temporary Assistant Officers were to be a source of recruitment to the Indian Railway Service of Engineers Class, no temporary Assistant Officer could possibly be under any misapprehension that he was 142 appointed to the Indian Railway Service of Engineers Class I or could claim that he was appointed to such service. [162G H, 163G H, 164A] The petitioners cannot be considered to have been appointed under rule 130(d) of the Indian Railway Establishment Code which provides for occasional admission of other qualified persons on the recommendation of the Union Public Service Commission merely because they were selected for appointment by the Union Public Service Commission, their scale of pay was the same as that of the Class I Junior Scale Officers of the Indian Railway Service of Engineers and their duties were the same. [164A C] (3) It is no doubt true that a cadre may consist of permanent vacancies in permanent as well as temporary posts borne on the cadre. But it does not follow that appointments stated to be made to posts outside the very service and therefore necessarily outside the cadre must be considered to be made to temporary posts borne on the cadre merely because the posts were likely to continue indefinitely and did so continue. [164 F G] The Annual Administrative Reports merely refer to appointments, temporary as well as permanent, made in the gazetted service by direct recruitment. Gazetted Railway services must include both the Indian Railway Service of Engineers and the Gazetted Railway Service constituted by the temporary Assistant Officers. Therefore, by merely taking into account the number of Temporary Assistant Officers for the purpose of calculating the total number of persons appointed to Gazetted Railway Service it cannot conceivably be said that Temporary Assistant Officers were appointed to cadre posts in the Indian Railway Service of Engineers. Even the classified lists of Gazetted officers do not indicate that persons who were appointed as Temporary Assistant Officers were appointed to posts borne on the cadre of Indian Railway Service of Engineers. On the other hand under the column "Date of appointment to Class" no entry is made against the names of any of the Temporary Assistant Officers who had not yet been absorbed into the Indian Railway Service of Engineers. [165 B C, D E] If posts were initially created and sanctioned, the subsequent continuance of the posts indefinitely would not make persons appointed to the posts members of the Railway Service, namely, the Indian Railway Service of Engineers Class I. [165 F G] (4) The note below Rule 106 of the Railway Establishment Code merely states an existing fact known to all concerned, namely, that posts of Temporary Assistant Officers in gazetted railway service who were not to be classified 'either as Class I or as Class II ' had been sanctioned by the President 143 who had designated the Railway Board as the authority competent to make appointments to those posts. With or without the note, the Temporary Assistant Officers would still not be classified either as Class I or Class II. Their classification outside Class I and Class II was not dependant on the note but on the Presidential sanction in regard to the creation of the posts. [166 A B] (5) Temporary Assistant Officers are not Assistant Officers within the meaning of that expression in the Indian Railway Establishment Code. The expression "Temporary Assistant Officer", which was not previously defined in the Railway Establishment Code, was sought to be defined by new clause 17 of R.102 to mean "a Gazetted Railway Servant drawing pay on the scale applicable to junior Scale Officers but not classified either as Class I or as Class II Officers. The expression Assistant Officer was redefined so as not to include a Temporary Assistant Officer who was not 'classified ' either as Class I or as Class II. [166 C D] The amendments do not have any effect one way or the other on the status of the Temporary Assistant Officers. What was always well known to the Temporary Assistant Officers and the Railway Board and what was the inevitable result of the Presidential sanction for the creation of posts which were not to be classified either as Class I or Class II, was made explicit in the Indian Railway Establishment Code also by the introduction of these amendments. This became necessary because in the Writ Petition filed by Katyani Dayal, the Allahabad High Court, while appearing to hold that Temporary Assistant Officers belonged neither to Class I nor to Class II service, held that they came within the then existing definition of 'Assistant Officer ' so as to entitle them for promotion under r. 133 of the Indian Railway Establishment Code. [166E G] The definition of Assistant Officer was not to be read in isolation but should have been read conjunctively with Rules 105, 106 and 108. A reference to Rule 105 would show that for the purposes of the rules in the Indian Railway Establishment Code, Railway services were to be classified into Class I, Class II, Class III, Class IV and workshop staff. Rule 106 specified the appointments and categories falling under the services mentioned in Rule 105. Rule 108 required the Railway Board to fix the strength of the Railway Services, Class I and II. There could therefore, be no question of an officer not falling within the class, category or cadres specified in rules 105, 106 and 108 claiming to be an 'Assistant Officer ' within the meaning of that expression. A person recruited to the post of Temporary Assistant Officer not classified as Class I or Class II Officer could not claim to belong to the Class, category or cadre spe 144 cified in Rules 105, 106 and 108 and was, therefore, not an Assistant Officers within the meaning of that expression even before the 1975 amendment. [167 D F] (6) There are and there can be no absolutes when the Court considers claims to justice on complaints of inequality. The Marxian of a classless society, however laudable that may be, is evidently not what is sought to be achieved by articles 14 and 16 of the Constitution. The goal is a limited one. It is equality among comparables. A necessary, but not necessarily cynical, implication of equality among comparables is the permissibility of reasonable classification, having nexus with the object to be achieved. If two services started and continued dissimilarly, though they apparently discharged similar duties, they were not comparable services so as to furnish a basis for the claim to equality. But if in the same service there were two sources of recruitment to the same service, a classification based solely on source of recruitment was not permissible. [176 E G] State of Punjab vs Joginder Singh, [1963] Supp. 2 SCR 169, 191, 192; Roshan Lal Tandon vs Union of India, ; and Mervyn Coutindo & Ors. vs Collector of Customs, Bombay and Ors. , ; ; referred to. (7) Those who were appointed to ex cadre posts outside the rules and whose tenure was therefore precarious could not claim to be treated on the same footing as those who were appointed strictly in accordance with the rules and posts borne on the cadre of the service. [177 F G] H.S. Varma & Ors. vs Secretary, Ministry of Shipping and Transport & Ors. ; @ 427, 428; referred to. (8) The classification of Temporary Assistant Officers separately from the Indian Railway Service of Engineers Class I is neither discriminatory nor is violative of Articles 14 and 16 of the Constitution for the reason that it had no nexus to the object to be achieved namely efficiency of service. [167 G H] The service comprising the Temporary Assistant Officers and the Indian Railway Service of Engineers Class I started separately and never became one. The objects of their recruitment were different, the methods of recruitment were dissimilar and the appointing authority was not the same. The training that was imparted was also unlike. The very tenure of the Temporary Assistant Officers was precarious and their immediate aspiration was only to be absorbed into the Indian Railway Services of Engineers Class I. These distinctive features marked out the Temporary Assistant Officers as a Class apart from the Indian 145 Railway Service of Engineers Class I and therefore there was no question of entitlement of equal rights with the latter. Of course, once they were absorbed into the Indian Railway Service of Engineers they would be entitled not to be treated differently thereafter. Their seniority would ordinarily be reckoned from the date of their absorption into the Indian Railway Service of Engineers, as promised in their letters of appointment. No doubt these Officers merited something more than the 'long wait ' at the portals of the Indian Railway Service of Engineers. The Railway Board however, appears to have tried to make the long wait a little less tedious by giving them weightage of half of their length of service as Temporary Assistant Officers, subject to maximum of five years [177D G] Equally important, is the fundamental qualitative difference, linked with the method of recruitment. True, the minimum educational qualification is the same. But, those who are recruited directly to the Indian Railway Service of Engineers Class I are subjected to stiff and competative, written and personality tests. Only the very best can aspire to come out successful. The Temporary Assistant Officers were not subjected either to a written or to a personality test but were selected on the basis of an interview by the Union Public Service Commission. In addition to the minimum educational qualification, three years ' experience as a Civil Engineer was also prescribed. Thus while brilliance was the beacon light which beckoned those aspiring to become members of the Indian Railway Service of Engineers Class I, it was replaced by experience in the case of those wanting to be Temporary Assistant Officers. Again the appointing authority in the case of Indian Railway Service of Engineers Class I is the President while the appointing authority in the case of Temporary Assistant Officers was the Railway Board, no doubt, pursuant to the authority given by the President. Different courses of training were prescribed for the Indian Railway Service of Engineers and the Temporary Assistant Officers. For the Indian Railway Service of Engineers the training is an intensive and comprehensive one designed to equip them for higher posts in the Department too; while the training for Temporary Assistant Engineers was a brief six months ' training intended merely to equip them for carrying out the specific jobs. In the matter of terms and conditions of service, while the provisions of the Indian Railway Establishment Code are fully applicable to the Indian Railway Service of Engineers Class I, those provisions are applicable to 'Temporary Assistant Officers ' to the extent there is no specific provision in their letter of appointment and agreement. [169 C H] State of Punjab vs Joginder Singh, [1963] Supp. 2 SCR 169, @ 191, 192, Kishori Mohanlal vs Union of India, A.I.R. , Jammu & Kashmir vs Triloki Nath Khosa and Ors., ; @ 790, 792 Roshan Lal Tandon vs Union of India, ; ; Mervyn Coutindo and Ors. vs 146 Collector of Customs, Bombay and Ors. , ; , Mohammad Sujat Ali and Ors. vs Union of India and Ors. ; , @ 481, S.B. Patwardhan and Ors. vs State of Maharashtra and Ors. ; ; A. K. Subraman vs Union of India, [1975] 2 SCR 979 and M.S. Verma and Ors. vs Secty. Ministry of Shipping & Transport and Ors. , ; @ 427, 428; discussed. Observation: There is nothing 'doctrinaire ' in the principle of "equal pay for equal work" and "equal status for equal pay and equal work". They are not goals to be scoffed at. It may be that in the present societal context, the goals may appear to be distant. But they are goals worthy of attainment and would be achieved in the not too distant future. [178 A B]

Nos. 189 to 193 of 1955. Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. G. section Pathak, (Rameshwar Nath and Rajinder Narain, with him) for the petitioners in Petition No. 189 of 1955. Rameshwar Nath and Rajinder Narain, for petitioners in Petition No. 190 of 1955. Sri Narain Andley and Rajinder Narain, for petitioners in Petitions Nos. 191 to 193 of 1955. T. L. Shevde, Advocate General of Madhya Pradesh (I. N. Shroff, with him), for respondents in all petitions. September 29. This judgment will dispose of all the five petitions (Nos. 189 to 193 of 1955) which have been heard together and which raise the same question as to the constitutional validity of the C.P. & Berar Motor Vehicles (Amendment) Act, 1947 (Act III of 1948). The facts are short and simple. Each of the petitioners has been 'carrying on business as stage carriage operator for a considerable number of years under permits granted under section 58 of the (Central Act IV of 1939) as amended by the C.P. & Berar Motor Vehicles (Amendment) Act.$ 1947 (Act III of 1948). Prior to the amendment section 58 of the Motor tVehicles Act, 1939 was in the following terms: "58(1). A permit other than a temporary permit issued under section 62 shall be effective without renewal for such period, not less than three years and not more than five years, as the Regional Transport Authority, may in its discretion specify in the permit. Provided that in the case of a permit issued or renewed within two years of the commencement of this Act, the permit shall be effective without renewal 75 for such period of less than three years as the Provincial Government may prescribe. (2) A permit may be renewed on an application made and disposed of as if it were an application for a permit: Provided that, other conditions being equal, an application for renewal shall be given preference over new applications for permits". It will be noticed that under the section as it originally stood the permit granted thereunder was for a period of not less than 3 years and not more than 5 years and a permit holder applying for renewal of the permit had, other things being equal, preference over new applicants for permit over the same route and would ordinarily get such renewal. Very far reaching amendments were introduced by the C.P. & Berar Motor. Vehicles (Amendment) Act, 1947 into the in its application to Central Provinces and Berar. By section 3 of the amending Act, item (ii) of subsection (1) of section 43 of the Central Act was replaced by the following items: " (ii) fix maximum, minimum or specified, fares or freights for stage carriages and public carriers to be applicable throughout the province or within any area or any route within the province, or (iii)notwithstanding anything contained in section 58 or section 60 cancel any permit granted under the Act in respect, of a transport vehicle or class of such permits either generally or in any area specified in the notification: Provided that no such notification shall be issued before the expiry of a period of three months from the date of a notification declaring its intention to do so: Provided further that when any such permit has been cancelled, the permit holder shall be entitled to Such compensation as may be provided in the rules; or (iv)declare that it will engage in the business o road transport service either generally or in any area specified in the notification". 593 The following subsection (3) was added after subsection (2) of section 58 of the Central Act by section 8 of the amending Act, namely: "(3) Notwithstanding anything contained in subsection (1), the Provincial Government may order a Regional Transport Authority or the Provincial Transport Authority to limit the period for which any permit or class of permits is issued to any period less than the minimum specified in the Act". Section 9 of the amending Act added after section 58 a new section reading as follows: "58 A. Notwithstanding. anything herein before contained the Provincial Government may by order direct any Regional Transport Authority or the Provincial Transport Authority to grant a stage carriage permit to the Provincial Government or any undertaking in which the Provincial Government is financially interested or a permit holder whose permit has been cancelled under section 43 or any local authority specified in the order". The result of these amendments was that power was given to the Government (i) to fix fares or freights throughout the Province or for any area or for any route, (ii) to cancel any permit after the expiry of three months from the date of notification declaring its intention to do so and on payment of such compensation as might be provided by the Rules, (iii) to declare its intention to engage in the business of road transport generally or in any area specified in the notification, (iv) to limit the period of the license to a period less than the minimum specified in the Act and (v) to direct the specified Transport Authority to grant a permit, inter alia, to the Government or any undertaking in which Government was financially interested. It may be mentioned here that in the State of Madhya Pradesh there are two motor transport companies known as C. P. Transport Services Ltd., and Provincial Transport Co. Ltd., in which, at the date of these writ petitions, the State of Madhya Pradesh and the Union of India held about 85 per cent. of the share capital. Indeed, since the filing of these petitions the entire undertakings of these 594 companies have been purchased by the State of Madhya Pradesh and the latter are now running the services. on some routes for which permits had been granted to them. A cursory perusal of the new provisions introduced by, the amending Act will show that very extensive powers were conferred on the Provincial Government and the latter were authorised, in exercise of these powers, not only to regulate or control the fares or freights but also to take up the entire motor transport business in the province and run it in competition with and even to the exclusion of all motor transport operators. It was in exercise of the powers under the newly added sub section (3) of section 58 that the period of the permit was limited to four months at a time. It was in exercise of powers conferred on it by the new section 43 (1) (iv) that the Notification hereinafter mentioned declaring the intention of the Government to take up certain routes was issued. It is obvious that these extensive powers were given to the Provincial Government to carry out and implement the policy of nationalisation of the road transport business adopted by the Government. At the date of the passing of the amending Act (III of 1948) there was no such thing as fundamental rights of the citizens and it was well within the legislative competency of the Provincial Legislature to enact that law. It has been conceded that the amending Act was, at the date of its passing, a perfectly valid piece of legislation. Then came our Constitution on the 26th January 1950. Part III of the Constitution is headed "Fundamental Rights" and consists of articles 12 to 35. By article 19(1) the Constitution guarantees to all citizens the right to freedom under seven heads. Although in article 19(1) all these rights are expressed in unqualified language, none of them, however, is absolute, for each of them is cut down or limited by whichever of the several clauses (2) to (6) of that article is applicable to the particular right. Thus the right to practise any profession or to carry on any occupation, trade or business conferred by article 19(1)(g) was 595 controlled by clause (6) which, prior to its amendment to which reference will presently be made, ran as follows: "(6) 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, and, in particular, nothing in the said sub clause shall affect the operation of any existing law in so far as it prescribes or empowers any authority to prescribe, or prevent the State from making any law prescribing or empowering any authority to prescribe, the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business". The fundamental rights conferred by articles 14 to 35 are protected by the provisions of article 13 the relevant portions of which are as follows: "13. (1) All laws in force in the territory of India immediately before the commencement of this "Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. (2)The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void" The amending Act (III of 1948) was, at the commencement of the Constitution, an existing law. The new provisions introduced by the Act authorised the Provincial Government to exclude all private motor transport operators from the field of transport business. Prima facie, therefore, it was an infraction of the provisions of article 19 (1) (g) of the Constitution and would be void under article 13(1), unless this invasion by the Provincial Legislature of the funda mental right could be justified under the provisions of clause (6) of article 19 on the ground that it imposed reasonable restrictions on the exercise of the right under article 19(1)(g) in the interests of the general 596 public. In Shagir Ahmad vs The State of U.P. & Others(1) it was held by this Court that if the word "restriction" was taken and read in the sense of limitation and not extinction then clearly the law there under review which, like the amending Act now before us, sanctioned the imposition of total prohibition on the right to carry on the business of a motor transport operator could not be justified under article 19(6). It was further held in that case that if the word "restriction" in clause (6) of article 19 of the Constitution, as in other clauses of that article, were to be taken in certain circumstances to include prohibition as well, even then, having regard to the nature of the trade which was perfectly innocuous and to the number of persons who depended upon business of this kind for their livelihood, the impugned law could not be justifled as reasonable. In this view of the matter, there is no escape from the conclusion that the amending Act, in so far as it was inconsistent with article 19 (1) (g) read with clause (6) of that article, became, under article 13(1), void "to the extent of such inconsistency" and if there were nothing else in the case the matter would have been completely covered by the decision of this Court in that case. On the 18th June 1951 however, was passed the Constitution (First Amendment) Act, 1951. By section 3(1) of that Act for clause (2) of article,19 a new sub clause was substituted which was expressly made retrospective. Clause (6) of article 19 was also amended. That clause, so amended, now reads as follows: "(6) 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, and, in particular, nothing in the said sub clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to, (1) ; 597 (i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or (ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise". It will be noticed that clause (6), as amended, was not made retrospective as the amended clause (2) had been made. The contention of the respondents before us is that although the amending Act, on the authority of our decision in Shagir Ahmad 's case (supra), became on and from the 26th January 1950 void as against the citizens to the extent of its inconsistency with the provisions of article 19(1)(g), nevertheless, after the 18th June 1951 when clause (6) was amended by the Constitution (First Amendment) Act, 1951 the amending Act ceased to be inconsistent with the fundamental right guaranteed by article 19(1) (g) read with the amended clause (6) of that article, because that clause, as it now stands, permits the creation by law of State monopoly in respect, inter alia, of motor transport business and it became operative again even as against the citizens. The petitioners, on the other hand, contend that the law having become void for unconstitutionality was dead and could not be vitalised by a subsequent amendment of the Constitution removing the constitutional objection, unless it was re enacted, and reference is made to Prof. Cooley 's work on Constitutional Limitations, Vol. I, p. 384 Note referred to in our judgment in Shagir Ahmad 's case (supra) and to similar other authorities. The question thus raised by the respondents, however, was not raised by the learned Advocate General in that case, although the notification was published by the U. P. Government on the 25th March 1953 and the proposed scheme was published on the 7th April, 1953, i.e., long after the Constitution (First Amendment) Act, 1951 had been passed. This question was not considered by this Court in Shagir Ahmad 's case, for it was there conceded (see p. 720 of the report) that the validity of the U. P. Act which, in this res 598 pect, was similar to the C. P. '& Berar Act now under consideration. , was not to be decided by applying the provisions of the amendea clause (6). Nor was this problem raised before or considered by this Court in Behram Khurshed Pesikaka vs The State of Bombay(1) We, therefore, conceive it to be open to us to go into the new question that has now been mooted before us and to consider what effect the amended clause (6) has on the impugned Act. This involves a question of construction of article 13 of the Constitution. The meaning to be given to the word "void" in article 13 is no longer res integra, for the matter stands concluded by the majority decision of this Court in Keshavan Madhava Menon vs The State of Bombay(1). We have to apply the ratio decidendi in that case to the facts of the present case. The impugned Act was an existing law at the time when the Constitution came into force. That existing law imposed on the exercise of the right guaranteed to the citizens of India by article 19 (1) (g) restrictions which could not be justified as reasonable under clause (6) as it then stood and consequently under article 13 (1) that existing law became void "to the extent of such inconsistency". As explained in Keshavan Madhava Menon 'section case (supra) the law became void not in toto or for all purposes or for all times or for all persons but only "to the extent of such inconsiatency", that is to say, to the extent it became inconsistent with the provisions of Part III which conferred the fundamental rights on the citizens. It did not become void independently of the existence of the rights guaranteed by Part III. In other words, on and after the commencement of the Constitution the existing law, as a result of its becoming inconsistent with the provisions of article 19(1)(g) read with clause (6) as it then stood, could not be permitted to stand in the. way of the exercise of that fundamental right. Article 13(1) by reason of its language cannot be read as having obliterated the entire operation of the inconsistent law or having wiped it out altogether from (1) (1955] 1 S.C.R. 613. (2) ; 599 the statute, book. Such law existed for all past tran sactions and for enforcement of rights and liabilities accrued before the date of the Constitution, as was held in Keghavan Madhava Menon 's case. The law continued in force, even after the commencement of the Constitution, with respect to persons who were not citizens and could riot claim the fundamental right. In short, article 13(1) had the effect of nullifying or rendering the existing law which had become inconsistent with article 19(1) (g) read with clause (6) as it then stood ineffectual, nugatory and devoid of any legal force or binding effect only with respect to the exercise of the fundamental right on and after the date of the commencement of the Constitution. Therefore, between the 26th January 1950 and the 18th June 1951 the impugned Act could not stand in the way of the exercise of the fundamental right of a citizen under article 190(1) (g). The true position,is that the impugned law became, as it were, eclipsed, for the time being, by the fundamental right. The effect of the Constitution (First Amendment) Act 1951 was to remove I the shadow and to make the impugned Act free from all blemish or infirmity. If that were not SO. , then it is not intelligible what "existing law" could have been sought to be saved from the operation of article 19(1)(g) by the amended clause (6) in so far,as it sanctioned the creation of State monopoly, for, ex hypothesi, all existing laws creating such monopoly had already become void at the date of the commencement of the Constitution in view of clause (6) as it then stood. The American authorities refer only. to post Constitution laws, which were inconsit tent with the provisions of the Constitution. Such laws never came to life but were still born as it were The American authorities, therefore, cannot full apply to pre Constitution laws which were perfectly valid before the Constitution. But apart from this distinction between re Constitution and post Constitution laws on which, however, we need not rest on decision, it. must, be held that these American authorities can have no application to our Constitution All laws, existing or future, which are inconsistent 76 with the provision s of Part III of our Constitution are by the express provision of article 13, rendered void "to the extent of such, inconsistency". Such 'laws were not dead for all purposes. They existed for the purposes of pre Constitution tights and liabilities and they remained operative, even after the Constitution, as against non citizens. It is only as against the citizens that they remained in a dormant or moribund condition. In our judgment, after the amendment of clause (6) of article 19 on the 18th June 1951, the impugned Act ceased to be unconstitutional and became revivified and enforceable against citizens as well as against non citizens. It is true that as the amended clause (6) was not made retrospective the impugned Act could have no operation as against citizens between the 26th January 1950 and the 18th June 1951 and no rights ' and obligations could be founded on the provisions of the impugned Act during the said period whereas the amended clause (2) by reason of its being expressly made retrospective had effect even during that period. But after the amendment of clause (6) the impugned Act immediately became fully operative even as against the citizens. The; notification declaring the intention of the State to take over the bus routes to the exclusion of all other motor transport operators was published on the 4th February 1955 when it was perfectly constitutional for the State to, do so. In our judgment the contentions put forward by the respondents as to the effect of the Constitution (First Amendment) Act, 1951 are well, founded and the objections urged against them by the petitioners are untenable and must be negatived. The petitioners then contend that assuming that one impugned Act cannot be questioned on the ground of infringement of their fundamental right under article 19(1)(g) read with clause (6) of that article, there has been another infraction of their fundamental right in that they have been deprived of their property ' namely, the right to ply motor vehicle ' s for gain which is an interest in a commercial undertaking and, therefore, the impugned Act does Conflict with the provisions of article 31 (2) of the Constitution and 601 again they rely on our decision in Shagir Ahmad 's case. Here, too if there were nothing else in the case this contention may have been unanswerable. But unfortunately for the petitioners there is the Constitution (Fourth Amendment) Act, 1955 which ' came into farce on the 27th April 1955, By section 2 of that Act article 31 of the Constitution was amended and for clause (2) of that article the following clauses were substituted: "(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the mariner in which the compensation is to be determined and given; and no such law shall be called in question in any :court on the ground that the compensation provided by that law is not adequate. (2 A) Where a, law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation, owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property". Article 31 A of the Constitution was also amended. There can be no question that the amended provisions, if they apply, save the impugned law, for it does not provide for the transfer of the ownership or right to possession of any property and cannot, there, fore, be deemed to, provide for the compulsory acquisition or requisitioning of any property. But the petitioners contend, as they did with regard to the Constitution (First Amendment) Act, 1951, that these amendments which came into force on the 27th April 1955 are not retrospective and can have no application to the present case. It is quite true that the impugned AN became inconsistent with article 31 as soon as the Constitution came into force on the 26th January 1950 as held by this Court in Shagir Ahamad 's case (supra) and continued to be so inconsistent right 602 up to the 27th April 1955 and therefore, under article, 13(1) became void "to the extent of such inconsistency ". Nevertheless, that inconsistency was removed on and from the 27th April 1955 by the Constitution (Fourth Amendment) Act, 1955. The present writ petitions were filed on the 27th May 1955, exactly a month after the Constitution (Fourth Amendment) Act. 1955 came into force, and, on a parity of reasoning here in before mentioned, the petitioners cannot be permitted to challenge the constitutionality of the impugned Act on and from the 27th April 1955 and this objection also cannot prevail. Learned counsel for the petitioners sought to raise the question as to the invalidity of the impugned Act even before the advent of the Constitution. Prior to the Constitution, when there were no fundamental rights, section 299 of the Government of India Act, 1935 which corresponds to article 31 had been construed by the Federal Court in Rao Bahadur Kunwar Lal Singh vs The Central Provinces and Berar(1) and in other cases referred to in Rajah of Bobbili vs The State of Madras(2) and it was held by the Federal Court that the word "acquisition" occurring in section 299 had the limited meaning of actual transference of ownership and not the wide meaning of deprivation of any kind that has been given by this Court in Subodh Gopal Bose 's case(3) to that word acquisition appearing in article 31(2) in the light of the other provisions of the Constitution. ' It is, therefore, not clear at all that the impugned Act was in conflict With section 299 of the Government of India Act,1935. Besides, this objection was not taken or even hinted at in the petitions and cannot be permitted to be raised at this stage. The result, therefore, is that these petitions must be dismissed. In the circumstances of this case we make no order as to costs. (1) [1944]F.C.R. 284. (2) , 193 194".

The petitioners who carried on their business as stage carriage operators of Madhya Pradesh for a considerable number of years challenged the constitutional validity of the C.P. & Berar Motor Vehicles (Amendment) Act, 1947 (Act III of 1948) which amended the (Central Act IV of 1939) and conferred extensive powers on the Provincial Government including the power to create a monopoly of the motor transport business in its favour to the exclusion of all motor transport operators. In exercise of the powers conferred by new section 43(1)(iv) a notification was issued on the 4th of February, 1955, declaring the intention of the Government to take up certain routes. The case of the petitioners was that the passing of the Constitution and the grant of fundamental rights rendered the Act void under article 13(1) being inconsistent with the provisions of articles 19(1)(g) and 31(2), and reliance was placed on the decision. of the Supreme Court in Shagir Ahmad vs The State of U.P. & others. On behalf of the respondents it was contended that although as a result of the said decision the impugned Act was rendered void, the Constitution (First 'Amendment) Act, 1951, and the Constitution (Fourth Amendment) Act, 1955, bad the effect of removing the inconsistency and the Amending Act (III of 1948) became operative again. It was, however, contended on behalf of the petitioners that the impugned Act being void under article 13(1) was dead and could not be revivified by any subsequent amendment of the Constitution. It must be re enacted. Held that Shagir Ahmad 's case had no application and the contentions put forward by the respondents were well founded and must be accepted. That it is well settled: that the word 'void ' In article 13 means void to the extent of the inconsistency with a fundamental right and the language of the article makes it clear that the entire operation of an inconsistent Act is not wiped out. It applies to past transactions and the rights and liabilities accruing therefrom and continues even after the commencement of the Constitution to apply to non citizens. Keshavan Madhava Menon vs The State of Bombay [1961] S.C.R. 288, relied on. The true effect of article 13(1) is to render an Act, inconsistent with a fundamental right, inoperative to the extent of the 'inconsistency. It is overshadowed by the fundamental right ' and remains dormant but is not dead. With the amendment made in cl. (6) of article 19 by the first Amendment Act the provisions of the impugned Act were no longer inconsistent therewith and the result was that the impugned Act began to operate once again from the date of such amendment with this difference that, unlike amended clause (2) of article 19 which was expressly made retrospective, no rights and obligations could be founded on the provisions of the impugned Act from the date of the Commencement of the Constitution till the date of the amendment. The notification declaring the intention of the State to take over the bus routes to the exclusion of all other motor transport operators was, therefore, perfectly valid. Shagir Ahmad vs The State of U.P. & Others, ; and Behram Khurshed Pesikaka vs The State of Bombay, [1965] 1 S.C.R. 613, distinguished and held inapplicable. American authorities held inapplicable. Nor can the impugned Act, on a parity of reasoning be held to infringe, any longer the fundamental rights of the petitioners under article 31(2) in view of the amendment effectd there in by the Constituation (Fourth Amendment) Act of 1956 which came into force on the 27th April, 1955, these petitions having been filed thereafter, and the petitioners could not be allowed to challenge the validity of the impugned Act on that ground. Semble. It is not clear at all that the impugned Act was in conflict with section 299 of the Government of India Act, 1935, before the advent of the Constitution.

: Criminal Appeal No. 10 of 1974. Appeal by Special Leave from the Judgment and Order dated 22 11 1973 of the Karnataka High Court in Criminal Appeal No. 221/73 section section Javali and B. P. Singh for the Appellant. M. Veerappa and J. R. Dass for the Respondent. The Judgment of the Court was delivered by FAZAL ALI, J. In this appeal by Special Leave the appellant has been convicted under section 34 of the Mysore Excise Act and sentenced to three months ' rigorous imprisonment and a fine of Rs. 100/ for being in possession of 48 bottles of liquor which were recovered from a car which was being driven by the appellant. Mr. Javali appearing for the appellant has raised a short point before us. He has submitted that the Inspector of Excise who searched the car along with the panchas had no jurisdiction to do so because he did so without complying with 1132 the provisions of section 54 of the Excise Act. In our opinion, the contention is well founded and must prevail, Section 53 runs thus: "If a Magistrate, upon information and after such inquiry (if any) as he thinks necessary, has reasons to believe that an offence under section 32, section 33, section 34, section 36 or section 37 has been, is being or is likely to be committed, he may issue a warrant (a) for the search of any place in which he has reason to believe, that any intoxicant still, utensil, implement, apparatus or materials which are used for the commission of such offence or in respect of which such has been, is being, or is likely to be, committed, are kept or concealed, and (b) for the arrest of any person whom he has reason to believe to have been, to be, or to be likely to be engaged in the commission of any such offence. " Thus this section relates to a contingency where the Statute enjoins that any inspector before searching a place must obtain a warrant from the magistrate. Section 54 is a special provision which arises in urgent cases where it may not be possible for the officer concerned to get a warrant from the Magistrate. Section 54 runs thus: "Whenever the Excise Commissioner or a Deputy Commissioner or any police officer not below the rank of an officer uncharge of a police station or any Excise Officer not below such rank as may be prescribed has reason to believe that an offence under section 32, section 33, section 34, section 36, or section 37 has been, is being, or is likely to be committed, and that a search warrant cannot be obtained without affording the offender an opportunity of escape or of concealing evidence of the offence, he may after recording the grounds of his belief (a) at any time by day or by night enter and search any place and seize anything found therein which he has reason to believe to be liable to confiscation under this Act, and (b) detain and search and, if he thinks proper, arrest any person found in such place whom he has reason to believe to be guilty of such offence as aforesaid. " In the instant case, it is admitted that the inspector who searched the car of the appellant had not made any record of any ground on the basis 1133 of which he had a reasonable belief that an offence under the Act, was being committed before proceeding to search the car and thus the provisions of section 54 were not at all complied with. This, therefore, renders the entire search without jurisdiction and as a logical corollary, vitiates the conviction. We feel that both sections 53 and 54 contain valuable safeguards for the liberty of the citizen in order to protect them from ill founded or frivolous prosecution or harassment. The point was taken before the High Court which appears to have brushed aside this legal lacuna without making any real attempt to analyses the effect of the provisions of section 53 and 54. The High Court observed that these two sections were wholly irrelavant. With due respect, we are unable to approve of such a cryptic approach to a legal question which is of far reaching consequences. It was, however, suggested that the word "place" would not include the car, but the definition of the word "place" under the Act clearly includes vehicle which would include a car. Thus the ground on which the argument of the petitioner has been rejected by the High Court cannot be sustained by us. We are satisfied that there has been a direct non compliance of the provisions of section 54 which renders the search completely without jurisdiction. In this view of the matter, the appeal is allowed, the conviction and sentence passed on the appellant is set aside and he is acquitted of the charges framed against him. M.R Appeal allowed.

The appellant was convicted under section 34 of the Mysore Excise Act and sentenced to three months R.I. and a fine of Rs. 100/ for being in possession of 48 bottles of liquor, recovered from the car being driven by him. It was contended that the provisions of section 54 had not been complied with, and the search was made without jurisdiction. Allowing the appeal, the Court, ^ HELD: 1. The Inspector who searched the car of the appellant had not made any record of any ground on the basis of which he had a reasonable belief that an offence under the Act, was being committed, before proceeding to search the car, and thus the provisions of section 54 were not at all complied with, thereby rendering the entire search without jurisdiction and, as a logical corollary, vitiating the conviction. [1132H, 1133A B] 2. Both, Sections 53 and 54 contain valuable safeguards for the liberty of the citizen in order to protect them from ill founded or frivolous prosecution or harassment. [1133B]

No. 10 of 1950. Appeal from a Judgment of the High Court of Judicature at Bombay (Chagla C.J. and Tendolkar J.) dated 29th March, 1950, in Suit No. 24 of 1950. December 20. The Court delivered Judgment as follows: FAZL ALI J. I have read the judgment prepared by my brother, Mahajan J., and generally agree with his conclu sions and reasonings, but, having regard to 54 the importance of the points raised, I wish to add a short judgment of my own. There are really three questions to be decided in this appeal, and they are as follows : (1) Whether the Bombay City Civil Court Act, 1948 (Act XL of 1948), is ultra vires the Legislature of the State of Bombay; (2) Whether in any event section 4 of the above Act is ultra vires the State Legislature; and (3) Whether the Bombay High Court has jurisdicion to try the suit. The first and the third questions have been answered by the High Court in favour of the appellant and the second question has been answered in favour of the respondents. In this Court, the appellant attacked the judgment of the High Court in so far as it concerns the second question, whereas the first respondent attacked it in so far as it concerns the first and the third questions. The Bombay City Civil Court Act purports to create in additional civil court for Greater Bombay having jurisdic tion to try, receive and dispose of all suits and other proceedings of a civil nature not exceeding a certain value, subject to certain exceptions which need not be referred to here. It was contended on behalf of the respondents that the Act is ultra vires the Legislature of the State of Bombay, because it confers jurisdiction on the new court not only in respect of maters which the Provincial Legislature is compe tent to legislate upon under List II of the 7th Schedule to the Government of India Act, 1935, but also in regard to matters in respect of which only the Central or Federal Legislature can legislate under List I (such as, for in stance, promissory notes, which is one of the subjects mentioned in entry 28 of List I). To understand this argu ment, it is necessary to refer to entry 53 of List , entries 1 and 2 of List II and also entry 15 of List II. These entries run as follows : Entry 53, List I : 55 "Jurisdiction and powers of all courts except the Feder al Court, with respect to any of the matters in this List . ." Entries 1 and 2, List II : "1 . the administration of justice;constitution and organisation of all courts except the Federal Court . " "2. Jurisdiction and powers of all courts except the Federal Court, with respect to any of the matters in this List . " Entry 15, List III : "Jurisdiction and powers of all courts except the Feder al Court, with respect to any of the matters in this List. " The respondents ' contention may appear at the first sight to be a plausible one, but, in my opinion, it is not well founded in law. For the purpose of correctly deciding the question raised, we must first try to understand the meaning of the following items in entry 1 of List II, "administration of justice, constitution and organization of all courts except the Federal Court. " A reference to the three Legislative Lists shows that "administration of jus tice" is entirely a provincial subject on which only the Provincial Legislature can legislate. The same remark ap plies to "constitution and organization of all courts except the Federal Court. " The expression "administration of jus tice" has a wide meaning, and includes administration of civil as well as criminal justice, and in my opinion entry 1 in List II, which I have quoted, is a complete and self contained entry. In this entry, no reference is made to the jurisdiction and powers of courts, because the expressions "administration of justice" and "constitution and organi zation of courts", which have been used therein without any qualification or limitation, are wide enough to include the 'power and jurisdiction of courts, for how can justice be administered if courts have no power and jurisdiction to administer it, and how can courts function without any power or jurisdiction. Once this fact is clearly 56 grasped, it follows that, by virtue of the words used in entry 1 of List II, the Provincial Legislature can invest the courts constituted by it with power and jurisdiction to try every cause or matter that can be dealt with by a court of civil or criminal jurisdiction,and that the expression "administration of justice" must necessarily include the power to try suits and proceedings of a civil as well as criminal nature, irrespective of who the parties to the suit or proceeding or what its subject matter may be. This power must necessarily include the power of defining, enlarging, altering, amending and diminishing the jurisdiction of the courts and defining their jurisdiction territorially and pecuniarily. The question then arises as to the exact meaning of entry 2 of List II and entry 53 of List I, which are said to militate against the above construction. These entries, in my opinion, confer special powers on Provincial and Central Legislatures, as opposed to the general power conferred on the Provincial Legislature by entry 1 of List II, the spe cial powers being the logical consequence or concomitant of the power of the two Legislatures to legislate with regard to the matters included in their respective Legislative Lists. The effect of these entries is that while legislating with regard to the matters in their respective Legislative Lists, the two Legislatures are competent also to make provisions in the several Acts enacted by them, concerning the jurisdiction and powers of courts in regard to the subject matter of the Acts, because otherwise the legisla tion may not be quite complete or effective. The words used in entry 2 of List II and entry 53 of List I are wide enough to empower the two Legislatures to legislate negatively as well as affirmatively with regard to the jurisdiction of the courts in respect of the matters within their respective legislative ambits. In other words, they can exclude or bar the jurisdiction of the courts in regard to those matters, and they can also confer special jurisdiction on certain courts. They can also, apart from the general power which the courts usually exercise, confer power on the courts to 57 pass certain special orders, instances of which I shall give later. In this connection, reference may be made to section 9 of the Code of Civil Procedure, which provides that "the Courts shall have jurisdiction to try all suits of a civil nature ' excepting suits of which their cognizance is either expressly or impliedly barred. " This section obviously postulates among other things the barring of the jurisdiction of the civil courts by Legislatures with respect to particular classes of suits of a civil nature, and the statute book abounds in instances in which the jurisdiction of the civil courts is barred under Acts passed by the Central and Provincial Legislatures. There are also many Acts providing that any suit or proceed ing concerning the subjects matters of those Acts shall be triable by the court or courts specified therein. Such provisions are to be found in a number of Acts enacted both prior to and after the enactment of the Government of India Act, 1935, and there can be no doubt that the British Par liament while enacting that Act was fully aware of the existing legislative practice obtaining in this country as well as of the fact that the provisions in question were sometimes necessary and therefore it empowered the Central and Provincial Legislatures to make them under entry 53 of List I and entry 2 of List II, respectively. This, in my opinion, is the true meaning of these entries, and it also explains why a separate entry was necessary enabling the two Legislatures to legislate with regard to the power and jurisdiction of the courts in respect of the subject matters mentioned in the three Legislative Lists. But for an express provision like that made in the entries referred to above, the two Legislatures might not have been able to confer special jurisdiction on the courts in regard to the matters set out in the Legislative Lists, nor could they have been able to bar the jurisdiction of the ordinary courts in regard to them, however necessary or desirable such a course might have appeared to them. 8 58 It should be noted that the words used in these entries are: "jurisdiction and power". "Power" is a comprehensive word, which includes all the procedural and substantive powers which may be exercised by a court, but the full significance of the use of the word in the context can be grasped only by reading a large number of local and special Acts in which power has been given to Courts to pass certain special and unusual orders. For example, section 13 of the Indian , provides that " where any person is convicted of an offence punishable under any rule made under clauses . the Court by which he is convicted may direct that the aircraft or arti cle or substance, as the case may be, in respect of which the offence has been committed, shall be forfeited to His Majesty. " Reference may also be made to section 24 of the Indian Arms Act, 1878, which provides that "when any person is convicted of an offence punishable under this Act, committed by him in respect of any arms, ammunition or military stores, it shall be in the discretion of the convicting Court or Magistrate further to direct that the whole or any portion of such arms, ammunition or mili tary stores, and any vessel . . . shall be confiscated." (See also section 10 of the [Act I of 1944], and section 13 of the Food Adul teration Act, 1919 [Bengal Act VI of 1919], which are in similar terms, and the various Acts relating to money lend ers and money lending which confer special power on the courts of reopening several kinds of transactions for the relief of debtors.) It seems to me that the word "power" was added to the word "jurisdiction", in entry 53 of List I, entry 2 of List II, and entry 15 of List III, in order to enable the two Legislatures to grant special powers like those I have mentioned to the courts which are to deal with the subject matter of any special legislation. A reference to the Acts passed after the enactment of the Government of India Act, 1935, will show that 59 special provisions with regard to the jurisdiction of courts have been made even after the passing of that Act, in a large number of Central and local Acts. Confining ourselves to the Acts passed by the Bombay Legislature, since we are concerned here with one of such Acts, we find that in The Bombay Probation of Offenders Act, 1938 (Bombay Act No. XIX of 1938), section a empowers the following courts "to exer cise powers under the Act, (a) the High Court, (b) a Court of Session, (c) a District Magistrate, (d) a Sub Divisional Magistrate, (e) a salaried Magistrate . " Similarly, in the Bombay Agricultural Produce Markets Act, 1939, sec tion 23 provides that "no offence under this Act . shall be tried by a Court other than that of a Presidency Magistrate, or a Magistrate of the First Class or a Magis trate of the Second Class specially empowered in this be half. " Section 11 of the Bombay Cotton Control Act, 1942, provides that "no criminal court inferior to that of a Presidency Magistrate or a Magistrate of the Second Class shall try any offence under this Act". Section 19 of the Bombay Sales of Motor Spirit Taxation Act, 1946, and section 5 of the Bombay Harijan Temple Entry Act, 1947, are provi sions which exclude the jurisdiction of courts under certain circumstances. Similar instances may be multiplied from the Acts of the Central Legislature and other Provincial Legis latures, but, in my opinion, the instances I have quoted are sufficient to show (1) that the practice which prevailed before the Government of India Act has continued even after its enactment, and (2) that the words "jurisdiction and powers" have been consistently construed to bear the meaning which I have attributed to them. The interpretation which is sought to be put on the entries by the respondent is in my opinion open to the following objections : (1).It involves the curtailment of the meaning of the expression "administration of justice" in such a way as to rob it of its primary content the jurisdiction and powers of the court, without which justice cannot be administered. 60 (2) It makes it necessary to read entry 2 of List II as part of entry 1 of the same List, though it has been sepa rately numbered as an independent entry. This is opposed to the scheme followed in the three Legislative Lists, which seems to be that each particular entry should relate to a separate subject or group of cognate subjects, each subject or group of subjects being independent of the others (subject only to incidental overlapping). The construction suggested by the respondents makes it necessary to assume that though according to their line of reasoning the words "jurisdiction and powers of courts, etc. " occurring in entry 2 of List II should have been put in entry 1 of the same List, being intimately connected with the subject of "admin istration of justice and the constitution and organization of courts", it was without any apparent reason numbered separately and made an independent entry. (3) The suggested construction would exclude from the jurisdiction of the Provincial Courts a large number of matters which normally come before courts exercising civil or criminal jurisdiction and, if it is accepted, the courts will not be able to function in the fullest sense unless both the Provincial and Central Legislatures have by piece meal legislation or otherwise exhausted their power of legislating on all the subjects comprised in Lists II and I respectively. Even after they have exhausted such power, the courts will not be able to deal with important matters, such as contracts, transfer of property, arbitration, wills and succession, criminal law, etc., which are subjects mentioned in List III, until one of the two Legislatures has legislated in regard to those subjects, which raises two important questions: (1) Which of the two Legislatures has to do it first; and (2) How is the conflict to be avoided ? That the construction put by the respondents will lead to anomalous results which could not have been within the contemplation of the British Parliament while enacting the Government of India Act, 1935, may be illustrated by one or two examples. Reference 61 might here be made to entry 26 of List I, which deals with "carriage of passengers and goods by sea or by b air. " It should be supposed that if any of the goods carried by air are lost and a suit is instituted in regard to them, the suit will be triable by the court having jurisdiction over the matter under the Civil Procedure Code, subject to any special legislation on the subject by the Central Legisla ture, in spite of the fact that the carriage of goods and passengers by sea or by air is a subject mentioned in List I. But, on the view propounded before us by the respondent, the Provincial civil courts will not be competent to try such a suit, unless they are empowered to do so by the Central Legislature. In order to show to what absurd result this doctrine may be pushed, and in order to avoid the criticism of taking for granted what is in controversy, we may take a very extreme example, because the soundness of the respondents ' contention can be tested only by trying to find out what would happen if we were to stretch it to the utmost limit to which it can be stretched. Entry 13 in List I is: "the Banaras Hindu University and the Aligarh Muslim University." Under entry 53 of List I, the Central Legisla ture has power to legislate in regard to the jurisdiction and powers of courts in respect of the subject matter of entry 13. It may therefore be supposed, having regard to the wide language used in entry 13, that it is open to the Central Legislature to enact that suits in which these Universities are concerned as plaintiff or as defendant, will be triable only by the particular court mentioned in the enactment concerned and that no other court shall have jurisdiction in regard to such suits, It is difficult to think that until such a legislation is made, a court which would otherwise be the proper court, has no jurisdiction to try any suit in which one of these Universities is a party, no matter what the subject matter of the suit may be. I am certain that the framers of the Government of India Act did not contemplate such a result. We all know that at the date when the Government of India Act, 1935, was passed, there were in existence 62 in the different Provinces a large number of courts of law and the administration of justice throughout the Provinces was in the hands of these provincial courts. The civil courts in the Province used to try all suits and proceedings of a civil nature which are triable under section 9 of the Civil Procedure Code, and the criminal courts used to try all criminal cases which are triable under the Code of Criminal Procedure. The jurisdiction and power of the courts were not confined to cases in regard to the subjects stated in List II, nor were they debarred from dealing with cases relating to matters which have been assigned to List I. The jurisdiction of the courts depended in civil cases on a "cause of action" giving rise to a civil liability, and in criminal cases on the commission of an offence, and on the provisions made in the two Codes of Procedure as to the venue of the trial and other relevant matters. It seems to me that the Government of India Act, 1935, did not contem plate any drastic change in the existing system of adminis tration of justice, but what it contemplated was that that system should continue subject to future legislation by the proper Legislature; Central or Provincial, barring the jurisdiction of courts or conferring jurisdiction or power on special courts with regard to the matters included in the appropriate Legislative Lists, should there be any occasion for such special legislation. Under the Govern ment of India Act, 1935, every Province became more or less an autonomous unit with a complete machinery for administer ing justice to the fullest extent. In my opinion, there is nothing in the Act of 1935 to show that there was any inten tion on the part of its framers to affect the machinery so drastically as to confine it to the administration of a mere partial or truncated kind of justice relating only to mat ters specified in List II. Mr. Setalvad, the ]earned Attorney Genera], who ap peared on behalf of the appellant, in supporting the im pugned Act, argued before us that for the purpose of decid ing this appeal, we might also refer to entry 4 List III. His contention was that the impugned 63 Act having had the assent of the Governor General, it would be permissible to see what powers the Provincial Legislature could exercise under Lists II and III taken together. If the course which he suggests is adopted, then the subjects on which the Provincial Legislature can legislate would be: (1) administration of justice; (2)constitution and organiza tion of courts; and (3) civil procedure, including all matters included in the Code of Civil Procedure at the date of the passing of the Government of India Act, 1935. One of the matters included in the Civil Procedure Code is the jurisdiction of courts, Section 9 of the Code provides, as I have already stated, that the courts shall have jurisdic tion to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. There are are also provisions in the Code dealing with the territorial and pecuniary jurisdiction of the courts. The three entries will thus cover exactly the field which is covered by item 14 of section 92 of the Canadian Constitution which comprises the following matters: "administration of justice in the Provinces, including constitution, maintenance and organization of provincial courts both of civil and criminal jurisdiction including procedure in civil matters in those courts. " It has been held in Canada that the words referred to above include the power and jurisdiction of courts, and, under that item, the provincial Legislature can confer the widest power on the courts. It seems to me that the approach suggested by the learned Attorney General is useful for testing whether entry 2 of List II was intended to be treated as the sole and only basis of the power of the Provincial Legislature to confer jurisdiction on the provincial courts and whether it was really the intention of the British Parliament to empower the Provincial Legislature to confer jurisdiction of only such a limited character as can be conferred on the provin cial courts under entry 2 of List II, if that entry is treated as a self sufficient entry. In my opinion, the correct view is to hold that it is not necessary to call into aid either entry 4 of List III or any of the 64 provisions of the Canadian Constitution in this case, and that the words "administration of justice; constitution and organization of courts" are by themselves sufficient to empower the Provincial Legislature to invest a new court with all the power which has been conferred upon it by the impugned Act. It is of course open to the Central Legisla ture to bar the jurisdiction of the new court by a special enactment with regard to any of the matters in List I, but so long as such jurisdiction is not barred, the court will have jurisdiction try all suits and proceedings of a civil nature as enacted in the Act in question. I think that if the Provincial Legislature had merely enhanced the pecuniary jurisdiction of any of the existing civil courts there could have been no objection to that course. Why then should there, be any objection when, instead of investing one of the existing courts with power to try suits and proceedings of a civil nature not exceeding a certain amount, the Legis lature has created a new court and invested it with the same power. Perhaps, it will be simpler to deal at this stage with the third question, namely, whether the Bombay City Civil Court has jurisdiction to try a suit based on a promissory note. So far as this point is concerned, the respondent bases his contention on entries 28 and 33 of List I. Entry 28 relates to "cheques, bills of exchange, promissory notes and other like instruments". Entry 53, as already stated, relates to "jurisdiction and powers of courts with respect to any of the matters in List I." It is contended on behalf of the respondent that the effect of these two entries, when they are read together, is that no court can try a suit relating to a promissory note, unless it is invested with the jurisdiction to try such a suit by the Central Legisla ture by virtue of the power given by entry 53 of List I. The question so raised is covered by the answer to the first question, and I shall only add that the answer already given to that question finds some support in the case of Prafulla Kumar Mukherjee and Others vs Bank of Commerce Limited Khulnal (1), in which the arguments of the (1) [1947] F.C.R.28. 65 respondents before the Privy Council proceeded on the same lines as the arguments of the respondents before us. The question raised in that case was as to the validity of the Bengal Money lenders ' Act, 1940, which limited the amount recoverable by a money lender on his loans and interests on them, and prohibited the payments of sums larger than those permitted by the Act. The validity of the Act was questioned by the respondent Bank in certain suits brought by them to recover loans and interests alleged to be due on promisso ry notes executed by the appellants borrowers as well as in suits brought by the debtors claiming relief under the Act. The argument put forward on behalf of the Bank was that the Bengal Legislature by the impugned Act had attempted to legislate on subjects expressly forbidden to it and expressly and exclusively reserved for the Federal Legislature, that is to say, in relation to promissory notes and banking, which are reserved for the Federal Legislature exclusively, under entries 28 and 38 respectively of List I. On the other hand, the arguments put forward on behalf of the appellants was that the impugned Act was in pith and substance legislation dealing with money lending and that in so far as it dealt with promissory notes or banking that was only incidental or ancillary to the effective use of the admitted legislative powers of the Provincial Legislature to deal with money lending. 'This argument of the appellants was substantially accepted by the Privy Council. The second point raised on behalf of the respondent relates to the validity of section 4 of the Act, which runs as follows : "Subject to the exceptions specified in section 3, the Provincial Government, may by notification in the Official Gazette, invest the City Civil Court with jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature, arising within the Greater Bombay and of such value not exceeding Rs. 25,000 as may be specified in the notification. " 9 66 It is contended that this section is invalid, because the Provincial Legislature has thereby delegated its legis lative powers to the Provincial Government which it cannot do. This contention does not appear to me to be sound. The section itself shows that the provincial Legislature having exercised its judgment and determined that the new Court should be invested with jurisdiction to try suits and pro ceedings of a civil nature of a value not exceeding Rs. 25,000, left it to the Provincial Government to determine when the Court should be invested with this larger jurisdic tion, for which the limit had been fixed. It is clear that if and when the new court has to be invested with the larger jurisdiction, that jurisdiction would be due to no other authority than the Provincial Legislature itself and the court would exercise that jurisdiction by virtue of the Act itself. As several of my learned colleagues have pointed out, the case of Queen vs Burah (1), the authority of which was not questioned before us, fully covers the contention raised, and the impugned provision is an instance of what the Privy Council has designated as conditional legislation, and does not really delegate any legislative power but merely prescribes as to how effect is to be given to what the Legislature has already decided. As the Privy Council has pointed out, 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 instances it may be highly convenient and desirable. Examples of such legislation abound in England, America and other countries. As some of the American Judges have remarked, "there are many things upon which wise and useful legislation must depend which cannot be known to the law making power and must therefore be the subject of enquiry and determination outside the halls of legislation (Field vs Clark (2). Mr. Setalvad, the learned Attorney General who appeared on behalf of the appellant, contended that in this country even delegated legislation is (1) 3 A.C. 889. (2) ; , 67 permissible, but I do not consider it necessary to go into that question, because the principle enunciated in Queen vs BUrah(1) is sufficient to dispose of the contention raised here. I think that the present case stands well outside what was laid down by the Federal Court in Jitendranath Gupta vs The Province of Bihar,(2) as two of my colleagues who were parties to the majority decision in that case have pointed out. In the result, this appeal is allowed. PATANJALI SASTRI J. This appeal raises the important ques tion of the constitutional validity of the Bombay City Civil Court Act, 1948 (hereinafter referred to as the Act) and though I concur in the conclusion reached by the majority of my learned brothers I wish to state precisely the reasons which lead me to that conclusion. The first respondent brought the suit in the High Court at Bombay on its orginal side for recovery of Rs. 11,704 from the second respondent on promissory notes. Notwithstanding that the jurisdiction of the High Court to try suits cog nisable by the City Civil Court was barred under section 12 of the Act and the pecuniary limit of the jurisdiction of the latter court had been enhanced from Rs. 10,000 to Rs. 25,000 by a notification issued by the Provincial Government under section 4 of the Act, it was stated in the plaint that the High Court had jurisdiction to try the suit because the Act as well as the said notification was ultra vires and void. In view of the constitutional issues thus raised, the State of Bombay, the appellant herein was on its own motion, made a party defendant. The High Court (Chagla C.J. and Tendolkar J.) held (1) the Act was intra vires, but (2) that section 4 which autho rised the Provincial Government to enhance the jurisdiction of the City Court up to the limit of Rs. 25,000 amounted to a delegation of legislative power, and as such, was void and inoperative, with the result that the suit, which ex ceeded Rs. 10,000 in (1)5 I.A. 178. (2) 68 value and was not cognisable by the City Court apart from the impeached notification, was held to have been property laid in the High Court. Both these findings have been challenged before us as erroneous, the first by the first respondent and the second by the appellant. On the first point, learned counsel for the first re spondent urged that section 100 of the Government of india Act, 1935, read with entries 53 of List I, 2 of List II and 15 of List III, the relevant parts of which are in identical terms, namely, "jurisdiction and powers of all courts except the Federal Court with respect to any of the matters in this List", conferred power on Legislatures in British India to make laws with respect to jurisdiction of courts only in relation to matters falling within their respec tive legislative fields, and that, therefore, the expres sions "administration of justice" and "constitution and organisation of courts" in entry 1 of List II, although they might be wide enough, if that entry stood alone, to include the topic of "jurisdiction and powers of courts", should not be construed in that comprehensive sense as such construc tion would give no effect to the limiting words in entry 2 which would then become meaningless indeed if those expres sions in entry 1 included the power to legislate with re spect to jurisdiction also, there would be no need for entry 2, while, on the other hand, without including such power, they would still have ample content, as various other mat ters relating to administration of justice and constitu tion of courts would have to be provided for, The scheme disclosed by the three separate entries in identical terms in the three lists was said to be this: The, Provincial Legislatures were to have the power of constituting courts and providing for administration of justice, but the power to invest the courts with jurisdiction was to rest with the Federal Legislature in respect of the matters mentioned in List I and with the Provincial Legislature in respect of the matters mentioned in List Ii, while both the Federal and the Provincial Legislatures were to have such power with respect to 69 the matters mentioned in List III subject to the provisions of section 107. It was, therefore, submitted that the Act, in so far as it purported to provide by section 3 that the City Civil Court established thereunder "shall have juris diction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding Rs. 10,000 in value and arising within Greater Bombay" (with certain exceptions not material here) was ultra vires the Provincial Legislature, constituting as it did a direct invasion of the Federal field marked out by entry 53 of List I. As all the three entries dealt with the same topic of jurisdiction and powers of courts, there was no room, it was said, for the application of the doctrine of incidental enroachment. The argument is not without force. The Bombay High Court in Mulchand vs Raman (1), which was followed by the learned Judges in the present case, and the Attorney General who adopted the same line before us, invoked the doctrine of pith and substance in answer to the argument on behalf of the respondent. But that doctrine, while it often furnishes the key to the solution of problems arising out of the distribution of overlapping legislative powers in a Federal system, is not of much assistance in meeting the difficulty in finding any usefulness in entry 2 if under entry 1 the Provincial Legislature were intended to have the power to legislate generally with respect to the jurisdiction and powers of courts. The greater power must include the less. A similar difficulty in construing entry 4 of List III and entry 2 of List II arose in Stewart vs Brojendra Kishore (2) and led a Division Bench of the Calcutta High Court to construe the expression "civil procedure" occurring in the former entry in a "limited sense" as excluding jurisdiction and powers of courts. After referring to the decision of the Judicial Committee in In re Marriage Reference(3) where "marriage ,and divorce" in the Dominion List was construed as excluding matters relating to the "solemnisation of marriage (1) 51 B.L.R. 86. (3) 628 (2) A.I.R. 1939 Cal. 628 70 in the province" because the latter topic was specifically included in the Provincial List, the learned Judges ob served: "The position is similar here. 'Civil procedure ' in the Concurrent Legislative List must be held to exclude matters relating to jurisdiction and powers of courts since special provision is made for those matters elsewhere in the lists." "To hold otherwise", they pointed out, "would be completely to wipe out the second entry in the Provincial Legislative List." Learned counsel for the first respondent strongly relied on that decision and suggested that, if it had been brought to the notice of the learned Judges in Mulchand vs Raman (1), their decision might well have been the other way. On the other hand, the Attorney General submitted that there could be no question of conflict between two entries in the same list and that the natural meaning of one should not be restricted simply because of the presence of the other. He placed reliance on the following observations of Gwyer C.J. in Aliqa Begum 's case (4) "It would be practi cally impossible for example to define each item in the Provincial List in such a way as to make it exclusive of every item in that list and Parliament seems to have been content to take a number of comprehensive categories and to describe each of them by words of broad and general import. I think, however, that none of the items in the lists is to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. " These observations were, however, made to support the conclusion that the power to legislate with respect to" collection of rents" under entry 21 of List II includes the power to legislate with respect to any limitation on the power of a landlord to collect rents, that is to say, with respect to the remission of rents as well, and that, therefore, the United Provinces Regularisation of Remissions Act, 1933, was intra vires. General observations made in such context (4) ,134 71 do not answer the objection that the wider construction of entry 1 would deprive entry 2 of all its content and reduce it to useless lumber. I am therefore, of opinion that the words" ' administration of justice" and "constitution and organisation of courts" occurring in entry 1 must be under stood in a restricted sense excluding from their scope "jurisdiction and powers of courts" dealt with specifically in entry 2. This does not, however, compel the conclusion that it is beyond the competence of the Provincial Legislature to confer general jurisdiction on courts constituted by it, for, if entry 1 does not by itself enable the legislature to do so, entry 2 certainly does when read with entry 1. It should be remembered and this is what the argument for restricting the legislative power of provinces in regard to jurisdiction overlooks that "administration of justice" is one of the matters mentioned in List II itself. The Provin cial Legislature, therefore, is competent under entry 2 to legislate conferring jurisdiction on courts with respect to administration of justice, that is to say, general juris diction to administer justice by adjudicating on all matters brought before them, except, of course, matters excluded expressly or by implication either by an existing law con tinued in force or by a statute passed by the appropriate legislature under the entries in the three Lists relating to jurisdiction and powers of courts. In other words, though "administration of justice" in entry 1 does not authorise legislation with respect to jurisdiction and powers of courts, the legislative power under entry 2 in regard to the tatter topic, which can be legitimately exercised" with respect to any of the matters in this List," can be exer cised with respect to administration of justice, one of the matters comprised in that List, with the result that the subject of general jurisdiction is brought within the autho rised area of provincial legislation. This view thus leaves a field in which entry 2 could apply. When once the Provincial Legislature is found competent to make a law with respect to the general jurisdiction of courts, the apparent conflict with the 72 central legislative power under entry 53 of List I can be resolved in a given case by invoking the doctrine of pith and substance and incidental encroachment. For, that rule, though not of much assistance in construing entries 1 and 2 which occur in the same List II, has its legitimate applica tion in ascertaining the true character of an enactment and attributing it to the appropriate list where the Federal and the Provincial Lists happen to overlap. Accordingly, if the Legislature of Bombay was, in conferring jurisdiction on the City Civil Court to hear and determine all suits of a civil nature, really legislating on a subject which was within the ambit of its legislative power, and if in doing so, it encroached on the forbidden field marked off by entry 53 of List 1, the encroachment should be taken to be only inciden tal. It may be that such encroachment extends to the whole of that field, but that is immaterial, as pointed out by the Judicial Committee in the Khulna Bank case(1). One of the questions their Lordships put to themselves in that case was "Once it is determined that the pith and substance is money lending, is the extent to which the federal field is invaded a material matter?" Answering the question in the negative their Lordships observed: "No doubt it is an important matter, not, as their Lordships think, because the validity of an Act can be determined by discriminating between de grees of invasion, but for the purpose of determining what is the pith and substance of the impugned Act. Its provi sions may advance so far into the federal territory as to show that its true nature is not concerned with provincial matters, but the question is not, has its 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 accord ing to its true content". In answering the objection that that view does not give sufficient effect to the words of precedence used in section 100 of the Government of (1) [1947] F.C.R.28. 73 India Act as between the three Lists, their Lordships went on to say "No doubt where they come in conflict List I has priority over Lists III and II, and List III has priority over List II; but the question still remains priority in what respect? Does the priority ' of the Federal Legislature prevent the Provincial Legislature from dealing with any matter which may incidentally affect any item in its list or in each case has one to consider what the substance of an Act is and whatever its ancillary effect, attribute it to the appropriate list according to its true character ? In their Lordships ' opinion the latter is the true view. " The test for determining whether in pith and substance a particular enactment falls within one list or another is further elucidated in a passage quoted with approval from Lefroy 's Treatise on Canadian Constitutional Law in the judgment of the Federal Court in the Bank of Commerce case(1). "It seems quite possible" says the learned writer, summarising the effect of the Privy Council decisions on the point "that a particular Act regarded from one aspect might be intra vires of a Provincial Legislature and yet regarded from another aspect might also be intra vires of the Domin ion Parliament. In other words, what is properly to be called the subject matter of an Act may depend upon what is the true aspect of the Act. The cases which illustrated this principle show. by 'aspect ' here must be understood the aspect or point of view of the legislator in legislating the object, purpose and scope of the legisla tion. The word is used subjectively of the legislator rather than objectively of the matter legislated upon. " Applying that test there can be little doubt that the im pugned Act must, in its pith and substance, be attributed to List II. as the legislators of Bombay were certainly not conferring on the new court, which they were constituting under the Act, jurisdiction with ' respect to any of the matters in List I. They were, as section 3 clearly indi cates constituting a new court, the Bombay City Civil Court, and investing it with the (1) [1944] F.C.R.126,139. 10 74 general jurisdiction to try all suits of a civil nature within certain. pecuniary and territorial limits, and if they were acting, as I have endeavoured to show, within the scope of the legislative power conferred on them under entry 2 read with entry 1 of List II, it seems immaterial that the enactment, so far as one aspect of jurisdiction, namely, its conferment, is concerned, encroaches practically on the whole of the federal field marked out by entry 53 of List I. The encroachment, however, would still leave ample room for the exercise by the Centre of its legislative power under entry 53 in regard to other aspects of jurisdiction and powers of courts. This view is strongly reinforced by a consideration of the legislative practice prevailing in this country prior to the passing of the Government of India Act, 1935. That it is legitimate to have regard to legislative practice in deter mining the scope of legislative powers has been recognised in decisions of high authority (e.g., Croft vs Dunphy) (1), It had long been the practice in this country to constitute and organise courts with general jurisdiction over all persons and matters subject only to certain pecuniary and territorial limitations, and to confer special jurisdiction limited to certain specified cases or matters either on the ordinary courts in addition to their general jurisdiction or on tribunals set up to deal with such matters exclusively. The various Provincial Civil Court Acts as well as the provisions of the Civil and Criminal Procedure Codes invest the courts, both civil and criminal, with general jurisdic tion, that is to say, power to adjudicate in respect of all persons and all matters except those that are specifically excluded or brought within the cognisance of tribunals with special or limited jurisdiction extending only to those matters. The grading of the courts too in their heirarchy has reference to the pecuniary and territorial limits rather than to the nature and kind of the subject matter which they are empowered to deal with. It is reasonable to presume that this system of organisation of courts in (1) ,165 75 British India was known to the framers of the Government of India Act, 1935, and it cannot be readily supposed that they wanted to introduce a radical change by which the power of constituting courts and providing for administration of justice is to be vested in the Provincial Legislatures, while jurisdiction has to be conferred by piecemeal legisla tion by the Federal and Provincial Legislatures with respect to specific matters falling within their respective legisla tive fields which are by no means capable of c]ear demarca tion. The constitutional puzzles which such a system is likely to pose to the legislatures no less than to the courts and the litigant public in the country whenever a new court is constituted in finding out by searching through the legislative lists, whether jurisdiction to deal with a particular matter or power to make a particular order is validly conferred by the appropriate legislature must make one pause and examine the relevant provisions of the Govern ment of India Act to see if there is anything in them to compel the acceptance of so novel a system. After giving the matter my careful consideration, I am convinced that both the language of the provisions and the antecedent legislative practice support the conclusion that the Provin cial Legislatures which have the exclusive power of consti tuting and organising courts and of providing for the admin istration of justice in their respective provinces, have also the power of investing the courts with general juris diction. On the question whether section 4 of the Act operates as a delegation of legislative power, I entirely agree with the reasoning and conclusion of my learned brother Das who has said all I wish to say in his judgment which I have had the advantage of reading, and, like him, I reserve the larger question raised by the Attorney General as to how far it is open to the legislatures in this country, while acting within their authorised areas, to delegate their legislative powers to other agencies. I find it no more necessary in the present case to decide that point than in Jatindranath 76 Gupta 's case(I) where I preferred to rest my decision on a narrower ground. It follows that the High Court has no jurisdiction :0 hear and determine the first respondent 's suit and I agree that the appeal should be allowed. MAHAJAN J. This is an appeal from the judgment of the High Court of Judicature at Bombay dated the 29th March, 1950, in Suit No. 240 of 1950, holding that section 4 of the Bombay City Civil Court Act (Bombay Act XL of 1948) is ultra vires the Provincial Legislature. The facts are that on the 6th February, 1950, the first respondent presented a plaint to the Prothonotary and Senior Master of the High Court for filing a summary suit against the second respondent to recover a sum of Rs. 11,704 24 alleged to be due under promissory notes. This suit was instituted in the High Court, in contravention of a notifi cation dated the 20th January, 1950, issued under section 4 of the City Civil Court Act, under which suits up to the pecuniary limit of Rs. 25,000 could be heard only by the City Civil Court, and not by the High Court. As the question of jurisdiction was of importance, the matter was referred to the sitting Judge in Chambers. On 23rd February, 1950, the learned Judge admitted the plaint holding that section 4 of the Act was ultra vires the Provincial Legislature and the notification issued under it was consequently inopera tive and that the High Court had jurisdiction to hear the suit. The first respondent thereupon took out summons for judgment against the second respondent. On the application of the AdvocateGeneral, the State of Bombay was impleaded as defendant at this stage and the proceedings were trans ferred to a Division Bench of the High Court. The Division Bench upheld the view of the Judge in Chambers and returned the cause to him for disposal on the merits. The State of Bombay, dissatisfied with this decision, has preferred the present appeal. (1) 77 Two questions have been canvassed in this appeal: (1) whether the City Civil Court Act is ultra vires the legisla ture of the Province of Bombay in so far as it deals with the jurisdiction and powers of the High Court and City Civil Court with respect to matters in List I of the Seventh Schedule of the Government of India Act, 1935; and (2) whether section 4 of the Act is void as it purports to delegate to the Provincial Government legislative authority in the matter of investing the City Civil Court with ex tended jurisdiction. Bombay Act of 1948 came into force on 10th May, 1948. It was considered expedient to establish an additional civil court for Greater Bombay presumably with the object of relieving congestion of work on the original side of the Bombay High Court. Sections 3, 4 and 12 of the Act are in these terms : "3. The State Government may, by notification in the Official Gazette, establish for the Greater Bombay a court, to be called the Bombay City Civil Court. Notwithstanding anything contained in any law, such court shall have juris diction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding ten thousand rupees in value, and arising within the Greater Bombay, except suits or proceedings which are cognisable (a) by the High Court as a Court of Admiralty or Vice Admiralty or as a Colonial Court of Admiralty, or as a Court having testamentary, intestate or matrimonial jurisdiction, or (b) by the High Court for the relief of insolvent debt ors, or (c) by the High Court under any special law other than the Letters Patent, or (d) by the Small Cause Court: Provided that the State Government may, from time to time, after consultation with the High Court, by a like notifica tion extend the jurisdiction of the City Court to any suits or proceedings which are cognisable by the High Court as a court having testamentary or 78 ntestate jurisdiction or for the relief of insolvent debt ors. Subject to the exceptions specified in section a the State Government may by notification in the Official Ga zette, invest the City Court with jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature arising within the Greater Bombay and of such value not exceeding twenty five thousand rupees as may be specified in the notification. Notwithstanding anything contained in any law, the High Court shall not have jurisdiction to try suits and proceedings cognisable by the City Court: Provided that the High Court may, for any special rea son, and at any stage remove for trial by itself any suit or proceeding from the City Court. " On the second question the High Court held that section 4 of the Act was inoperative as it purported to delegate the law making powers of the legislature to an outside authority and hence the notification issued in pursuance of it had no effect whatsoever and did not take away the jurisdiction of the High Court to try the present suit. On the first ques tion the High Court placed reliance on its own earlier decision in Mulchand Kundanmal Jagtiani vs Raman Hiralal Shah(1), and held that the Act was intra vires the Bombay Legislature. The appellant assails the correctness of the decision of the High Court on the second point and supports the decision on the first point. The first respondent, on the other hand, while supporting the decision of the High Court on the second question, challenges its correctness in regard to the first question. The learned Attorney General contends that the High Court placed an erroneous construc tion on sections 3 and 4 of the Act; that reading the two sections together the effect is that the legislature has set up the City Civil Court with an initial jurisdiction of Rs. 10,000 and has placed an outside limit of Rs. 25,000 on its pecuniary jurisdiction and that it (1) 79 has left to the discretion of the Provincial Government the determination of the circumstances under which this exten sion of the pecuniary jurisdiction between Rs. 10,000 to Rs. 25,000 is to take place. It was said that section 4 is in the nature of a conditional legislation and that under it no legislative function has been delegated to the Provincial Government. The learned Chief Justice in the court below disposed of this contention with the following,observations: "I am also conscious of the fact that an Act must be construed in a manner which would reconcile its differ ent sections but with the best of intention in the world I do not see how it is possible to read sections 3 and 4 together so as to come to the conclusion for which the AdvocateGeneral contends. To my mind it is patent that the Legislature never applied its mind to the question as to whether the new court which it was setting up should have a jurisdiction higher than that of Rs. 10,000. It never passed any judgment on that question. It never laid down any policy with regard to that question and section 4 is not a section which merely directs the Provincial Government to carry out the policy laid down by the legislature . but it is a section which confers upon the Provincial Gov ernment the power to confer jurisdiction upon the Court, or in other words, it is a section which entitled the Provin cial Government to lay down its policy as to whether the new Court should have the increased jurisdiction up to twenty five thousand rupees. " I find it difficult to accept this view. Without apply ing its mind to the question as to whether the new Court which it was setting up should have a jurisdiction higher than Rs. 10,000, how could the legislature possibly enact in section 4 that the pecuniary jurisdiction of the new court would not exceed Rs. 25,000. The fixation of the maximum limit of the court 's pecuniary jurisdiction is the result of exercise of legislative will, as without arriving at this judgment it would not have been able to determine the out side limit of the pecuniary jurisdiction of the new 80 court. The policy of the legislature in regard to the pecuniary jurisdiction of the court that was being set up was settled by sections 3 and 4 of the Act and it was to the effect that initially its pecuniary jurisdiction will be limited to Rs. 10,000 and that in future if circumstances make it desirable and this was left to the determination of the Provincial Government it could be given jurisdiction to hear cases up to the value of Rs. 25,000. It was also determined that the extension of the pecuniary jurisdiction of the new court will be subject to the provisions contained in the exceptions to section 3. I am therefore of the opinion that the learned Chief Justice was not right in saying that the legislative mind was never applied as to the conditions subject to which and as to the amount up to which the new court could have pecuniary jurisdiction. All that was left to the discretion of the Provincial Government was the determination of the circumstances under which the new court would be clothed with enhanced pecuniary jurisdiction. The vital matters of policy having been determined, the actual execution of that policy was left to the Provincial Government and to such conditional legislation no exception could be taken. The section does not empower the Provincial Government to enact a law as regards the pecuniary jurisdic tion of the new court and it can in no sense be held to be legislation conferring legislative power on the Provincial Government. In Queen vs Burah(1), section 9 of Act XXII of 1869, which was a piece of legislation analogous to section 4 of the City Civil Court Act, was held intra vires by their Lordships of the Privy Council. By the 9th section power was conferred on the Lieutenant Governor of Bengal to deter mine whether the Act or any part of it should be applied to certain districts. In other words, authority to extend the territorial limits of the operation of the statute was conferred on the Lieutenant Governor and such extension had the result of depriving the High Court of its jurisdiction in those areas and of conferring jurisdiction in respect to them (1) 5 I.A. 178. 81 on the commissioner. Objection was taken as to the validity of section 9 on the ground that it was legislation delegat ing legislative power and was therefore void, Their Lord ships negatived this contention and held that section 9 was intra vires the Governor General 's power to make laws and was a piece of conditional legislation. That was a case of an extension of territorial limits within which an Act of the Legislature was to be in force, whereas the present is a case of extension of pecuniary limits of a court 's jurisdic tion. In principle, there seems no difference between the two cases and the present case is therefore within the rule of the decision in Queen vs Burah(1). Their Lordships in holding section9 intra vires made the following observations : "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 exer cised, the efficacy of the acts done under them would be due to any other legislative authority than that of the Gover nor, 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 legis lation exist as to particular subjects, whether in an Impe rial 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 discre tion, entrusted by the Legislature to persons in whom it places confidence, is no uncommon thing; and, in many cir cumstances. it may be highly convenient. The British Stat ute Book abounds with examples of it; and it cannot be supposed that the Imperial Parliament did not, when consti tuting the (1) 5 I A. 178, 11 82 Indian Legislature, contemplate this kind of conditional legislation as within the scrape of the legislative powers which it from time to time conferred. certainly used no words to exclude it. " These observations appositely apply to the legislative provision contained in section 4 of the impugned Act. The true distinction is between the delegation of power to make the law which necessarily involves a discretion as to what it shall be and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law. Objection may be taken to the former but not to the latter. Reference in this connection may also be made to the decision of the Supreme Court of America in Field vs Clark(1) wherein referring to Locke 's case(2) the following observations were made : "To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature of the power to act wisely for the public wel fare whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully know. " The proper distinction the court said was this: "The Legislature cannot delegate its power to make a law, but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends make, its own action depend. To deny this would be to stop the wheels of government. There are many things upon which wise and useful legislation must depend which cannot be known to the law making power, and, must there fore, be a subject of inquiry and determination outside of the halls of legislation. " The High Court in support of its view placed considera ble reliance on the decision of the Federal Court in Jatin dra Nath Gupta vs The Province of Bihar(3) and it was con sidered that the present case fell1 within the ambit of the rule therein laid down. It seems to me that the decision in the Bihar case has no application to the case in hand. The Federal Court there was (1) 143 U.S.649. (3) [1949] F.C.R.595. (2) 72 Pa.491. 83 dealing with an Act which contained the following provisions in section 1, sub section (3) : "The Act shall remain in force for a period of one year from the date of its commencement: Provided that the Provincial Government may, by notifi cation, on a resolution passed by the Bihar Legislative Assembly and agreed to by the Bihar Legislative Council, direct that this Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification. " In connection with this proviso I said in my judgment in that case that the power conferred therein was much larger than was conferred on the Lieutenant Governor in Queen vs Burah(1) inasmuch as it authorised the Provincial Government to modify the Act and also to re enact it. It was pointed out that "distinction between delegation of power to make the law which necessarily involves a discretion as to what it shall be, and conferring discretion or authority as to its execution to be exercised Under and in pursuance of the law is a true one and has to be made in all cases where such a question is raised. " The following observations made by me there pointedly bring out the distinction between the two cases : "The proviso which has been assailed in this case. judged on the above test, comes within the ambit of delegat ed legislation, and is thus an improper piece of legislation and is void. To my mind, it not only amounts to abdication of legislative authority by the Provincial Legislature, it goes further and amounts to setting up a parallel Legisla ture for enacting a modified Bihar Maintenance of Public Order Act and for enacting a provision in it that that Act has to be enacted for a further period of one year. A careful analysis of the proviso bears out the above conclu sion. It may be asked what does the proviso purport to do in terms and in substance ? The answer is that it empowers the Provincial Government to issue a notification saying (1) 5 I.A. 178. 84 that the Provincial Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification . Modification of statute amounts to re enacting it partially. It involves the power to say that certain parts of it are no longer parts of the statute and that a statute with X sections is now enact ed with Y sections. In the act of modification is involved a legislative power as a discretion has to be exercised wheth er certain parts of the statute are to remain law in future or not or have to be deleted from it. The power to modify may even involve a power to repeal parts of it. A modified statute is not the same original statute. It is a new Act and logically speaking, it amounts to enacting a new law. " I have not been able to follow how these observations concerning the Bihar statute could be relied upon by the High Court in support of its decision in respect 10 the invalidity of section 4 of the Bombay City Civil Court Act. The two provisions are not analogous in any manner whatsoev er and that being so, no support can be derived by the respondent from this decision. In the concluding portion of his judgment under appeal the learned Chief Justice observed as follows: " Now applying once more these tests to the City Civil Court Act, we find that the Legislature in the exercise of its legislative power has set up a Civil Court with a limit ed jurisdiction under section 5 of the Act. It has not set up a court with jurisdiction higher than ten thousand rupees. Having set up a court of limited jurisdiction it has given to the Provincial Government under section 4 the power to center upon that court a higher jurisdiction up to twen ty five thousand rupees. Now this power which is conferred upon the Provincial Government is a power which could only have been exercised by the Legislature itself. " It seems to me that the above observations are based on a construction of sections 3 and 4 of the Act which these sections cannot legitimately bear. As already observed. the Legislature set up a Civil Court for Greater 85 Bombay and decided that, to start with, it will have pecuni ary jurisdiction up to Rs. 10,000. It also decided at the same time that it would also have jurisdiction up to Rs. 25,000 as soon as circumstances, necessitate it the Provin cial Government was constituted the judge of those circum stances. What the limit of that jurisdiction was to be was in unmistakeable terms enacted in section 4 of the Act. It was not left to the will of the Provincial Government to confer on that court any pecuniary jurisdiction that it liked to confer upon it. It would be by force of the legis lative power of section 4 that the City Civil Court will be vested with enhanced jurisdiction but that vesting cannot take place till a notification is issued by the Provincial Government. It is conditional on that event only. For the reasons given above, in my judgment, the High Court was in error in holding that section 4 of the City Civil Court Act was void and ultra vires the Provincial legislature. In this view the notification issued under section 4 must be held to be effective. That being so, it is unnecessary to go into the question raised by the learned Attorney General that assuming that section 4 of the Act was delegation of legislative power, it was still valid. The next question to decide is whether the Act is ultra vires the Bombay Legislature. In order to appreciate Mr. Seervai 's contention on this point it is necessary to set out some of the provisions of the Government of India Act, 1935. relevant to the enquiry. These are contained in sec tion 100. and in the Seventh Schedule in entries 28 and 53 of List I, entries 1 and 2 of List II, and entries 4 and 15 of List III. They are in these terms: Sec. (1) Notwithstanding anything in the two next succeeding sub sections, the Federal Legislature, has, and a Provincial Legislature has not power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule to this Act (hereinafter called the "Feder al Legislative List.") 86 (2) Notwithstanding anything in the next succeeding sub section, the Federal Legislature, and, subject to the pre ceding subsection, a Provincial Legislature also, have power to make laws with respect to any of the matters enumerated in List III in the said Schedule (hereinafter called the "Concurrent Legislative List.") (3) Subject to the two preceding sub sections, the Provin cial Legislature has, and the Federal Legislature has not, power to make laws for a Province or any part thereof with respect 10 any of the matters enumerated in List II in the said Schedule (hereinafter called the" Provincial Legis lative List.") (4) The Federal Legislature has power to make laws with respect to matters enumerated in the Provincial Legislative List except for a Province or any part thereof. List I. 23. Cheques, bills of exchange, promissory notes and other like instruments. Jurisdiction and powers of all courts, except the Federal Court, with respect to any of the matters in this list and, to such extent as is expressly authorized by Part IX of this Act, the enlargement of the appellate jurisdic tion of the Federal Court, and the conferring thereon of supplemental powers. List II. Public order (but not including the use of His Majesty 's naval, military or air forces in aid of the civil power); the administration of justice; constitu tion and organization of all courts, except the Federal Court, and fees taken therein; preventive detention for reasons connected with the maintenance of public order; persons subject to such detention. Jurisdiction and powers of all courts except the Federal Court, with respect to any of the matters in this list; procedure in Rent and Revenue Courts. List III.4. Civil Procedure, including the Law of Limitation and all matters included in the Code of Civil Procedure at the date of the passing of this Act; the recovery in a Governor 's Province or a Chief 87 Commissioner 's Province of claims in respect of taxes and other public demands, including arrears of land revenue and sums recoverable as such, arising outside that Province. Jurisdiction and powers of all courts except the Federal Court, with respect to any of the matters in this list. Mr. Seervat contends that section 3 of the impugned Act is void because it directly trenches on the exclusive legis lative powers of the Centre conferred on it by List I of the Seventh Schedule inasmuch as 'it confers jurisdiction on the new court in respect to all cases of a civil nature. The expression "all cases of a civil nature" presumably brings within the ambit of the Act suits in respect to subjects contained in List I. He urged that the three simi lar entries in the three is, name]y, entry 53 in List I, entry 2 in List II and entry 15 in List III indicated that in respect to the subjects covered by the three fields of legislation demarcated for the two Legislatures the Parlia ment empowered each of them respectively to make laws in respect to jurisdiction and power of courts and that in view of the provisions of section 100 of the Constitution Act the Provincial Legislature had no power to make any law confer ring jurisdiction on courts in respect to subjects covered by List I. In other words, the Federal Legislature alone could legislate on the jurisdiction and powers of a court in regard to the subjects in List I. Similarly in respect of subjects contained in the Provincial List, jurisdiction and power of courts could only be determined by a law enacted by the Provincial Legislature and that in respect of items contained in List III, both Legislatures could make laws on the subject of jurisdiction and powers of courts. It was said that the exceptions and the proviso to section 3 of the City Civil Court Act in dear terms disclosed that jurisdic tion in respect to the subjects on which the Provincial Legislature had no competence to legislate was also con ferred on the new court. Section '12 of the Act by which the High Court was deprived of all jurisdiction on matters that fell 88 within the jurisdiction of the City Civil Court was assailed on similar grounds. In regard to the legislative power conferred under entry I of List 11 on the Provincial Legis lature it was contended that this wide power stood limited by the three entries above mentioned and that under it legislation could only be made to the extent of establishing and organizing courts but no legislation under it was per missible in respect to the powers of those courts. The learned Attorney General, on the other hand, con tends that the Act is intra vires the Bombay Legislature under entry 1 of List II and under entries 4 ' and 15 of List III, it having received the assent of the Governor General. It was urged that the Provincial Legislature had exclusive legislative power on the subject of administration of jus tice and constitution and organization of all courts and that this power necessarily included the power to make a law in respect to the jurisdiction of courts established and constituted by it and that the impugned legislation in pith and substance being on the subject of administration of justice, it could not be held ultra vires even if it trenched on the field of legislation of the Federal Legisla ture. In regard to entry 53 of List I, entry 2 of List II and entry 15 of List II of the Schedule, it was said that these conferred legislative power on the respective Legisla tures to confer special jurisdiction on established courts in respect of particular subjects only if it was considered necessary to do so. In other words the argument was that the Provincial Government could create a court of general jurisdiction legislating under entry 1 of List II and that it was then open to both the Central and the Provincial Legislatures to confer special jurisdiction on courts in respect to particular matters that were covered by the respective lists. In my opinion, the contention of the learned Attorney General that the Act is intra vires the Bombay Legislature under entry 1 of List If is sound and I am in respectful agreement with the view expressed by the Chief Justice of Bombay on this point in Mulchand Kundanmal Jagtiani vs Raman Hiralal 89 Shah (1). The learned Chief Justice when dealing with this point said as follows: "If, therefore, the Act deals with administration of justice and constitutes a court for that purpose and confers ordi nary civil jurisdiction upon it, in my opinion, the legis lation clearly falls within the legislative competence of the Provincial Legislature and is covered by item 1 of List 11 of Schedule 7. That item expressly confers upon the Provincial Legislature the power to legislate with regard to the administration of justice and the constitution and organization of all courts except the Federal Court. It is difficult to imagine how a court can be constituted without any jurisdiction, and if Parliament has made the adminis tration of justice exclusively upon the Provincial Legisla ture the power to constitute and organize all courts, it must follow, that the power is given to the Provincial Legislature to confer the ordinary civil jurisdiction upon the courts to carry on with their work. Item 2 of List II deals with jurisdiction and power of all courts except the Federal Court with respect to any of the matters in this list, and Mr. Mistree 's argument is that item 1 is limited and conditioned by item 2 and what he contends is that the only power that the Provincial Legislature has is undoubted ly to create courts, but to confer upon them only such jurisdiction as relates to items comprised in List II. I am unable to accept that contention or that interpretation of List 11 in Schedule 7. Each item in List 11 is an independ ent item, supplementary of each other, and not limited by each other in any way. Item 1 having given the general power to the Provincial Legislature with regard to all matters of administration of justice and with regard to the constitution and organization of all courts, further gives the power to the Legislature to confer special juris diction, if needs be, and special power, if needs be, to these courts with regard to any of the items mentioned in List 11. It is impossible to read item 2 as curtailing (1) 12 90 and restricting the very wide power with regard to adminis tration of justice given to the Provincial "Legislature under item 1. Similarly in List I the Federal Legislature has been given the power under item 53 to confer jurisdic tion and power upon any court with regard to matters falling under any of the items in that list, and, therefore, it would be competent to the Federal Legislature to confer any special jurisdiction or power which it thought proper upon any court with regard to suits on promissory notes or mat ters arising under the Negotiable Instruments Act. ". It seems to me that the legislative power conferred on the Provincial legislature by item 1 of List II has been con ferred by use Of language which is of the widest amplitude (administration of justice and constitution and organization of all courts). It was not denied that the phrase employed would include within its ambit legislative power in respect to jurisdiction and power of courts established for the purpose of administration of justice. Moreover, the words appear to be sufficient to confer upon the Provincial Legis lature the right to regulate and provide for the whole machinery connected with the administration of justice in the PrOvince. Legislation on the subject administra tion of justice and constitution of courts of justice would be ineffective and incomplete unless and until the courts established under it were clothed with the jurisdiction and power to hear and decide causes. It is difficult to visua lise a statute dealing with administration of justice and the subject of constitution and organization of courts without a definition of the jurisdiction and powers of those courts, as without such definition such a statute would be like a body without a soul. To enact it would be an idle formality. By its own force it would not have power to clothe a court with any power or jurisdiction whatsoever. It would have to look to an outside authority and to another statute to become effective. Such an enactment is, so far as I know, unknown to legislative practice and history. The Parliament by making administration of justice a provin cial subject 91 could not be considered to have conferred power of legisla tion on the Provincial Legislature of an ineffective and useless nature. Following the line of argument taken by Mr. Mistree before the High Court of Bombay, Mr. Seervai stren uously contended that the only legislative power conferred on the Provincial Legislature by entry 1 of List II was in respect to the establishment of a court and its constitution and that no legislative power was given to it to make a law in respect to jurisdiction and power of the court estab lished by it. The argument, logically analysed, comes to this: that a statute will contain the name of the court, the number of its judges, the method of their appointment, the salaries to be drawn by them and it will then stop short at that stage and will not include any provision defining the powers of the tribunal or its other jurisdiction and that the court so constituted could acquire jurisdiction only when a law was made relating to its jurisdiction and powers by the Federal Legislature under entry 53 of List I, by the Provincial Legislature under entry 2 of List II and by either Legisla ture under entry 15 of List III. The learned counsel con tended that this peculiar result was the natural consequence of a federal constitution with divided powers, and that entries 53, 2 and 15 of the three respective lists limit and curtail the wide power conferred on the Provincial Legisla ture by item 1 of List II. It is difficult to accede to this contention because it would amount to holding that though the Provincial Legislature under item 2 of List II has been given the widest power of legislation in the matter of administration of justice and constitution and Organiza tion of courts and though that field has been demarcated for it as its exclusive field of legislation, yet all that it can do, acting within that field, is merely to establish a court without any competency to function and that in can only become an effective instrument for administering jus tice by laws enacted elsewere or under powers conferred under other items of the different lists. I am unable to read items 53, 2 and 15 of the three respective 92 lists as imposing limitations on legislative power con ferred on the Province by item 1 of List II. Such a con struction of the Act would not only do violence to the plain language of item 1 of List II but would be contrary to its scheme under which administration of justice was made a provincial subject. It is significant that no other Legis lature has been given the power to bring into existence a court. A court without powers and jurisdiction would be an anomaly as it would not be able to discharge the func tion of administration of justice and the statute estab lishing such a court could not be said to be a law on the subject of administration of justice. It is a fundamental principle of the construction of a constitution that every thing necessary for the exercise of powers is included in the grant of power. Everything necessary for the effective execution of power of legislation must therefore be taken to be conferred by the constitution with that power. It may be observed that in exercise of legislative power under item 1 of List 11 a provincial Legislature can alter the constitu tion of the existing courts, can abolish them, reorganize them and can establish new courts. If the construction contended for by Mr. Seervai is accepted, then the existing courts re established or re organised by the provincial Legislature would not be able to function till legislation under item 53 of List I, under item 2 of List II or item 15 of List III also simultaneously was made. I do not think that such a result was in the contemplation of parliament. Mr. Seervai with some force argued that it full effect is given to the comprehensive phraseology employed in item 1 of List II, then it would result in making the provisions of item 2 of List II, of item 53 of List I and item 15 of List III nugatory. in other words, if the provincial Legislature could bring into existence a court of general jurisdiction which could hear all causes on subjects concerning which legislative power was divided in the three lists, then the conferment of legislative power on the Federal Legislature under item 53 of List 1, on the provincial Legislature under item 2 in List II and on both the Legislatures under 93 item 15 of List III was purposeless. In my opinion, this argument is not a valid one and the premises on which it is based are not sound. The three lists of subjects contained in Schedule 7 have not been drawn up with any scientific precision and the various items in them overlap. The point kept in view in drawing up the lists was to see that all possible power of legislation was included ,within their ambit. By making administration of justice a provincial subject and by conferring on the Provincial Legislature power to legislate on this subject and also on the subject of constitution and organization of courts, Parliament conferred on that Legislature an effective power which included within its ambit the law making power on the sub ject of jurisdiction of courts. The Provincial Legislature could therefore bring into existence a court with general jurisdiction to administer justice on all matters coming before it within certain territorial and pecuniary limits, subject of course to the condition that such general juris diction may be expressly or impliedly taken away by the provisions of other laws. The Parliament having divided the field of legislation between the two Legislatures, naturally thought that as a corollary or a necessary consequence of this division of legislative power it was necessary to provide by way of a complementary provision a legislative power specifically on the two Legislatures in respect to the jurisdiction and powers of courts on subjects which were within their exclusive legislative field. If a Legislature could exclusively legislate in respect to particular sub jects, as a necessary consequence it should also have the power to legislate in respect to jurisdiction and power of the court dealing with that subject. It is this power that has been conferred by entries 53, 2 and 15 above mentioned on the two Legislatures. Entries 42 and 99 of List I, entries 37 and 42 of List II and entries 25 and 36 of List III are of a similar consequential character. The respective Legislatures are therefore competent to confer special powers on courts and can create special jurisdic tions acting under those powers in respect to 94 their divided fields of legislation. Instances of confer ment of powers and jurisdiction on courts to hear cases on particular subjects were well known to Parliament. Such powers had been conferred on different courts in respect of testamentary and intestate jurisdiction, admiralty jurisdic tion, under the Indian Companies Act, under the Succession Act, Guardians and Wards Act and under the various. Rent Acts and Acts dealing with relief of indebtedness. In view of the division of powers in respect to different subjects, power was given under item 53 of List I, item 2 of last II and item 15 of List III to the different Legislatures when dealing with those subjects also to legislate on the ques tion of jurisdiction and powers of the courts. This confer ment of legislative power to create special jurisdiction in respect to particular subjects does not in any way curtail the legislative power conferred on the Provincial Legisla ture under item 1 of List II. As soon as special legisla tive power under item 53 of List I, under item 2 of List II and item 15 of List III is exercised, the causes that arise in respect to those subjects would then only be heard in jurisdictions created by those statutes and not in the courts of general jurisdiction entrusted with the normal administration of justice. In the language of section 9 of the Code of Civil Procedure, jurisdiction of the general courts will then become barred by those statutes. I am therefore of the opinion that under item 1 of List II the Provincial Legislature has complete competence not only to establish courts for the administration of justice but to confer on them jurisdiction to hear all causes of a civil nature, and that this power is not curtailed or limit ed by power of legislation conferred on the two Legislatures under items 53, 2 and 15 of the three lists. On the other hand, these three items confer on the respective Legisla tures power to legislate when dealing with particular sub jects within their exclusive legislative field to make laws in respect of jurisdiction and powers of courts that will be competent to hear causes relating to those subjects; in other words, this is a power of creating special 95 jurisdictions only. This interpretation of the entries in the lists is not only in accordance with the scheme of the statute but it harmonizes the different entries in the lists and does not make any of them nugatory and in effective. The interpretation contended for by Mr. Seervai would reduce the power of the Provincial Legislature under item 1 to almost nothingness. The crux of the case is whether item 1 of List 11 should be given a limited construction which makes it nugatory or whether a limited construction is to be placed on items 53, 2 and 15 of the three lists. I have no hesitation in holding that both in the light of principles of construction of statutes and principles of legislation, the course to adopt is the one that I have indicated above. Finally, it was contended that section 12 of the Act in any case was a void piece of legislation as it deprived the High Court of its jurisdiction even in respect to subjects contained in List I of the Seventh Schedule. In view of the construction that I have placed on item 1 of List II this argument has no force. If the Legislature has power to bring into existence a court and confer jurisdiction and power on it, a fortiori it has power to take away the jurisdic tion and power that already exist in other courts. More over, the Bombay City Civil Court Act in section a has excepted from the jurisdiction of the new court all cases which the High Court can hear under any special law. Spe cial law has been defined as a law applicable to a particu lar subject. If under List 1 of the Seventh Schedule the Federal Legislature by any law determines that a case has to be heard by the High Court, section 5 will not affect the jurisdiction of that court in any manner whatsoever. The result, therefore, is that the Bombay City Civil Court Act is a statute which is wholly within the legisla tive field of the Province under item 1 of List II and its validity cannot be affected even if it incidentally trenches on other fields of legislation. It is not a statute dealing with any of the subjects mentioned in List I and therefore it cannot be said that the 96 Provincial Legislature has in any way usurped the power demarcated for the Centre. In view of this conclusion I think it unnecessary to pronounce any opinion on the other points raised by the learned Attorney General. For the reasons given above I allow the appeal preferred by the Government of Bombay and set aside the decision of the High Court holding that section 4 of the City Civil Court Act (XL of 1948) is void. In the circumstances of the case I leave the parties t9 bear their own costs of the appeal. MUKHERJEA J. In my opinion this appeal should be allowed and I concur substantially in the line of reasoning adopted by my learned brother Mahajan J. in his judgment. Having regard to the constitutional importance of the questions raised in this case, I would desire to add some observations of mine own. There are really two questions which require considera tion in this appeal. The first is whether section 4 of the Bombay City Civil Court Act, 1948, is void and inoperative by reason of its amounting to a delegation of legisltive powers by the Provincial Legislature to the Provincial Government of Bombay. The Bombay High Court has answered this question in the affirmative and it is entirely upon this ground that the judgment appealed against is based. The propriety of this decision has been challenged by the learned Attorney General who appeared on behalf of the State of Bombay in support of this appeal. On the other hand, Mr. Seervai, appearing on behalf of the respondents, has not only attempted to repel the contention ad vanced by the learned Attorney General, but has sought to support the judgment appealed against on another and a more comprehensive ground which, if accepted, would make the entire Bombay City Civil Court Act a void piece of legisla tion, as being an encroachment by the Provincial Legislature upon the field of legislation reserved for the Centre under List I of Schedule 7 to the Government of India Act, 1935. 97 As regards the first point, I agree that the contention of the appellant is sound and must prevail. I have no hesi tation in holding that the Legislature in empowering the Provincial Government to invest the City Court, by notifica tion, with jurisdiction of such value not exceeding Rs. 25,000 as may be specified in the Notification, has not delegated its legislative authority to the Provincial Gov ernment. The provision relates only to the enforcement of the policy which the Legislature itself has laid down. The law was full and complete when it left the legislative chamber permitting the Provincial Government to increase the pecuniary jurisdiction of the City Court up to a certain amount which was specified in the Statute itself. What the Provincial Government is to do is not to make any law; it has to execute the will of the Legislature by determining the time at which and the extent to which, within the limits fixed by the Legislature, the jurisdiction of the court should be extended. This is a species of conditional legis lation which comes directly within the principle enunciated by the Judicial Committee in The Queen vs Burah(1), where the taking effect of a particular provision of law is made to depend upon determination of certain facts and conditions by an outside authority. The learned Judges of the Bombay High Court in coming to their decision on the point seem to have been influenced to some extent by the pronouncement of the Federal Court in Jatindranath Gupta vs Province of Bihar(2), and the learned. Counsel for the respondents naturally placed reliance upon it. I was myself a party to the majority decision in that case and expressed my views in a separate judgment. I do not think that there is anything in my judgment which lends support to the contention which the respondents have put forward. I stated expressly in course of, my Judgment on the authority of the well known American decision in Locke 's appeal(3) that a legislature may not (1) 5 I.A. 178. (3) 13 American Reports 716. 13 98 delegate its powers to make law but "it can make a law to delegate a power to determine some fact or state of things upon which the law makes or intends to make its own action depend "; and that the inhibition against delegation does not extend to legislation which is complete in itself, though its operation is made to depend upon contingencies the ascertainment of which is left to an external body. The subject matter of dispute in the Bihar case was the validity of a proviso engrafted upon section 1, subsection (3) of the Bihar Maintenance of Public Order Act. The sub section laid down that the Act would remain in force for a period of one year from the date of its commencement. The proviso then added "that the Provincial Government may, by notification on a resolution passed by the Bihar Legislative Assembly and agreed to by the Bihar Legislative Council direct that this Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification." Mr. Seervai would have been probably right in invoking the decision in that case as an authority in his favour if the proviso simply empowered the Provincial Government, upon compliance with the condi tions prescribed therein, to extend the duration of the Act for a further period of one year, the maximum period being fixed by the Legislature itself. The proviso, however, went further and authorised the Provincial Government to decide at the end of the year not merely whether the Act should be continued for another year but whether the Act itself was to be modified in any way or not. It was conceded by the learned Counsel appearing for the Province of Bihar that to authorise another body to modify a statute amounts to in vesting that body with legislative powers. What the learned Counsel contended for, was that the power of modification was severable from the power of extending the duration of the statute and the invalidity of one part of the proviso should not affect its other part. To this contention my answer was that the two provisions were inter related in such a manner in the statute that one could not be severed from the other. 99 Obvious]y, the facts of this case are quite different, and all that I need say with regard to my pronouncement in Jatindranath Gupta 's case is that the principle upon which that case was decided is not applicable and cannot be at tracted, to the present case. I may state here that a question in the broad form as to whether a Provincial Legislature exercising its legislative powers within the limits prescribed by the Imperial Parlia ment in the Government of India Act, 1935, could delegate its legislative functions in any manner to an outside au thority as it thought proper, was neither raised nor decided in Jatindranath Gupta 's case. The learned Attorney General has not very properly invited any final decision on that point in the present case and I would refrain from express ing any opinion upon it. ' The second point appears to be of some complexity and it was decided by the Bombay High Court adversely to the re spondents on the basis of an earlier pronouncement of the same Court in Mulchand vs Raman(1). The arguments of Mr. Seervai are really directed at assailing the correctness of this earlier decision which the learned Judges held to be binding on them in the present case. The contention of Mr. Seervai, in substance, is, that the Bombay City Civil Court Act, which is a piece of provincial legislation, is ultra vires the legislature inasmuch as it purports to endow the City Court, which it brings into existence, with jurisdic tion to receive, try and dispose of "all suits and other proceedings of a civil nature" with certain exceptions that are specified in the different sub sections of section 8. What is said is that the expression "all suits of a civil nature" is wide enough to include suits in respect to mat ters specified in List I of the Seventh Schedule of the Constitution Act with regard to which the Central Legisla ture alone is competent to confer jurisdiction on courts under entry 53 of the said List. It is argued that so far as the Provincial Legislature is concerned, it may empower all courts (except the Federal Court) with jurisdiction in respect to any of the matters in the Provincial List. (1) 100 and it may also be capable of exercising like powers in regard to subjects enumerated in the Concurrent List as provided for in article 15 of List III, subject to the conditions laid down in section 107 of the Act. But as the scope of section 3 of the Bombay City Civil Court Act is not limited to matters in Lists II and III only and its language can embrace subjects coming under List I as well, and fur thermore as the different subjects both within and outside the provincial and concurrent fields dealt with by section 3 are inextricably, intertwined and not capable of severance or demarcation, the whole Act must be held to be ultra vires. In answer to this, it has been urged by the learned Attorney General that amongst the subjects included in Item 1 of the Provincial List are "the administration of justice and constitution and organization of all courts except the Federal Court", and these expressions obviously include within their ambit the conferring of general jurisdiction to hear and decide cases upon courts which are set up by the Provincial Legislature, and without which they cannot func tion as courts at all. 'It is said that Item 2 of the Provincial List which mentions "jurisdiction and powers of all courts except the Federal Court with respect to any of the matters in this List" does not in any way limit or curtail the ordinary connotation of the ,expressions "admin istration of justice and constitution of courts" as used in Item I of the said List referred to above. It cannot be disputed that the words "administration of justice" occuring in Item 1 of the Provincial List, unless they are limited in any way, are of sufficient amplitude to confer upon the Provincial Legislature the right to regulate and provide for the whole machinery connected with the administration of justice. Section 92, of the North America Act deals with the exclusive powers of the Provincial Legis latures and clause (14) of the section speaks of "the admin istration of justice in the Provinces" as including "the constitution, maintenance and organization of Provincial Courts. " In interpreting this provision of the constitution it has been held in North America that the words 101 "constitution, maintenance and organization of courts" plainly include the power to define the jurisdiction of such courts territorially as well as in other respects(2). Mr. Seervai argues that this might be the normal meaning of the words if they stood alone. But if Items 1 and 2 of the Provincial List are read together, the conclusion cannot be avoided that the expressions "administration of justice and constitution of courts" do not include "jurisdiction and powers of courts" which are separately dealt with under Item 2. To find out, therefore, the extent of powers of the Provincial Legislature in respect conferring jurisdic tion upon courts, the relevant item to be looked to is not Item 1 but Item 2 of the Provincial List. The contention in this form seems to me to be plainly unacceptable. I agree with Mr. Setalvad that the different topics in the same Legislative List should not be read as exclusive of one another. As was observed by Sir Maurice Gwyer in The United Provinces vs Atiqa Begum(1), "the sub jects dealt with in the three Legislative Lists are not always set out with scientific definition. It would be practically impossible for example to define each item in the Provincial List in such a way as to make it exclusive of every other item in that List, and Parliament seems to have been content to take a number of comprehensive categories and to describe each of them by a word of broad and general import . I think that none of the items in the List is to be read in a narrow or restricted sense, and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. " As there can be no question of conflict between two items in the same List, there is no warrant for restricting the natural meaning of one for the simple reason that the same subject might in some aspect come within the purview of the other. The difficulty, however, arises when we come to entry 53 of List I. Under this entry, it is the Central (1) Re County Courts of British, Columbia 21 S.C.R. 446. (2) at p. 134. 102 Legislature that has been given the power of legislating in regard to jurisdiction and powers of all courts except the Federal Court in respect to any of the matters in List L The difficulty that one is confronted with, is that if Item 1 of the Provincial List is taken to empower the Provincial Legislature to invest a court with jurisdiction with respect to all subjects no matter in whichever List it might occur, a clear conflict is bound to arise between Item 1 of the Provincial List and Item 53 of the Central List; and a Provincial legislation trespassing upon the exclusive field of the Centre would be void and inoperative under section 100 of the Constitution Act. This being the posi tion, a way would have to be found out to avoid the conflict. As the Privy Council observed in the case of the Citizens Insurance Company of Canada vs Parsons(2) "it could not have been the intention that a conflict should exist and in order to prevent such a result the two sections must be read together and the language of the one interpreted and where necessary modified by the other." Mr. Seervai suggests that the proper way of reconciling this apparent conflict would be to read the words "adminis tration of justice and constitution of courts" occurring in entry 1 of the Provincial List as exclusive of any matter relating to jurisdiction of courts. The Provincial Legisla ture can only set up or constitute courts but their juris diction or power of deciding cases must be derived from the Central or the Provincial Legislature or, from either of them in accordance with the subjects to which such juris diction relates. The Provincial Legislature can endow the court with jurisdiction in respect to any matter in List II and the Central Legislature can do the same with regard to subjects specified in List I. So far as matters in the Concurrent List are concerned, either of the Legislatures can make provisions in respect of them subject to the condi tions laid down in section 107 the Constitution Act. (2).A.C. ,96 at p. 109. 103 This argument, though apparently plausible, cannot, in my opinion, be accepted as sound. It is to be noted that the right to set up courts and to provide for the whole machinery of administration of justice has been given exclu sively to the Provincial Legislature. Under section 101 of the North America Act, the Parliament of Canada has a re serve of power to create additional courts for better admin istration of the laws of Canada but the Indian Constitution Act of 1935 does not give any such power to the Central Legislature. Courts are to be established by the Provincial Legislature alone. The word 'court ' certainly means a place where justice is judicially administered, The appointment of Judges and officers or the mere setting apart of a place where the Judges are to meet, are not sufficient to consti tute a court. A court cannot administer justice unless it is vested with jurisdiction to decide cases and "the consti tution of a court necessarily includes its jurisdiction. "(1) If Mr. Seervai 's contention is accepted, the result will be that when a Provincial Legislature estab lishes a civil court, it can only be invested with jurisdic tion to decide cases in respect to matters coming within the Provincial List. Such court can have no power to decide cases relating to any matter which is enumerated in List I so long as the appropriate Legislature does not confer upon it the requisite authority. Thus an ordinary Provincial Court established to decide civil suits would be entitled to entertain all money claims but not a claim on a promissory note; nor could it entertain a suit for recovery of corpora tion tax, for Negotiable Instruments and corporation tax are subjects of the Central List. This certainly was not the scheme of the Constitution Act. In my opinion, the proper way to avoid a conflict would be to read entry 1 of the Provincial List, which contains the only provision relating to constitution of courts and administration of justice, along with the group of three entries, viz., entry 53 of List I, entry 2 of List II and entry 15 of List III with which it is supposed to be in conflict, (1) Vide Clement 's Canadian Consitution, 3rd Edn., p. 527, 104 and to interpret the language of one by that of the other. Entry 1 of List II uses the expressions "administration of justice and constitution of all courts" in a perfectly general manner. No particular subject is specified to which the administration of justice might relate or for which a court might be constituted. It can, therefore, be legitimately interpreted to refer to a general jurisdiction to decide cases not limited to any particular subject. The other three items on the other hand relate to particular matters appearing in the three Lists and what they contem plate is the vesting of jurisdiction in courts with regard to such specific items only. In one case the jurisdiction is 'general ' as is implied in the expression "administration of justice", while in the other three the jurisdiction is 'particular ' as limited to particular matters and hence exclusive. I agree with my learned brother Patanjali Sastri J. that one approved way of determining the scope of a legislative topic is to have regard to what has been ordi narily treated as embraced within that topic in the legisla tive practice of the country(2); and if that test is ap plied, the interpretation suggested above would appear to be perfectly legitimate. The distinction between general and particular jurisdiction has always been recognised in the legislative practice of this country prior to the passing of the Constitution Act of 1935 and also after that. There have been always in this country civil courts of certain classes and categories graded in a certain manner according to their pecuniary jurisdiction and empowered to entertain and decide all suits of a civil nature within particular localities. Particular jurisdiction again have been conferred on some one or the other of these courts to try cases relating to certain specified matters. Thus there have been special jurisdictions created for insolvency, probate or guardianship proceedings, for deciding disputes relating to compulsory acquisition of land and for dealing with cases arising under the Rent Acts or the different legislations passed in recent years (2) vide Croft vs Dunphy. 105 for scaling down exorbitant rates of interest or giving relief to rural debtors. Similar instances may be cited with regard to conferring of special jurisdiction in criminal cases. There will be no difficulty in interpreting in a proper manner the different entries in the Legislative Lists re ferred to above if this distinction between general and special jurisdiction is kept in view. The entire scheme of the Constitution Act of 1935 is to vest the power of estab lishing courts upon the Provincial Legislature. The Provin cial Legislature can endow the courts which it sets up with general jurisdiction to decide all cases which, according to the law of the land, are triable in a court of law, and all these powers can be exercised under entry I of List II. If the Central Legislature or the Provincial Legislature chooses to confer special jurisdiction on certain courts in respect to matters enumerated in their appropriate legisla tive lists, they can exercise such powers under the three entries specified above. But the exercise of any such powers by the Central Government would not m any way conflict with the powers exercisable by the Provincial Legislature under entry 1 of List II. The expression 'general ' must always be understood as being opposed to what is 'special ' or exclu sive. If the Central Legislature vests any particular juris diction upon a court in respect to a Central matter, that matter would cease to be a general matter and consequently the court having general jurisdiction would no longer deal with that, but the general jurisdiction of such courts would not be affected thereby. The contents of general jurisdic tion are always indeterminate and are not susceptible of any specific enumeration. In this view, I do not think that it would be at all necessary to invoke 'the pith and substance ' doctrine in avoiding the possibility of incidental encroach ment by the Provincial Legislature upon Central subjects in regard to conferring jurisdiction upon courts. If the expression 'jurisdiction ' in entry 53 of List I means and refers to special jurisdiction only, there cannot be even an incidental encroachment upon such special jurisdiction 14 106 by reason of the conferring of general jurisdiction upon courts by the Provincial Legislature under entry 1 of List II. As I have said already what is 'special ' or made so, will automatically cease to be in the category of what is 'general ' and no question of a conflict would at all arise. It may be pointed out in this connection that in the Canadian Constitution also, the general scheme is to carry on administration of justice throughout Canada through the medium of provincial courts. Subject to the residuary power reserved to the Dominion Parliament under section 101 of the North America Act, the Constitution has assigned to the provinces the exclusive power in relation to administration of justice including the maintenance, constitution and organization of courts. There is no limitation in any provincial court along the line of division that exists between matters within the legislative competence of the Dominion Parliament and of the Provincial Legislative Assemblies (1). There is indeed no such thing as Entry 53 in List I of the Indian Act in the Canadian Constitution, but there are judicial pronouncements to the effect that the Dominion Parliament can impose jurisdiction on provincial courts over Dominion subjects (2). It may be that the British Parliament in framing the legislative topics in the Government of India Act of 1935 in regard to administration of justice and jurisdiction of courts wanted to adopt the Canadian model with such modifications as they considered necessary. It is, however, immaterial to speculate on these matters. For the reasons given above, I am of the opinion that the decision of the Bombay High Court in Mulchand vs Raman(3) is correct, and the contention of Mr. Seervai should fail. In the result, the appeal is allowed and the judgment of the High Court is set aside. DAS J: I agree that this appeal should be allowed. In view of the importance of the questions raised in (1) Vide Clement 's Canadian Constitution p. 526. (2) Vide Lefroy 's Canada 's Federal system p. 541, (3) 107 this appeal, I consider it right to state 'my reasons for coming to that conclusion. The salient facts, as to which there is no dispute, are as follows: On May 10, 1948, the Provincial Legislature of Bombay passed Act No. XL of 1948, called the Bombay City Civil Court Act, 1948. It was passed with a view "to estab lish an additional Civil Court for Greater Bombay. " The provisions of that Act which will be relevant for the pur poses of the present appeal may now be set out: "1. (2) It shall come into force on such date as the Provincial Government may, by notification in the Official Gazette, appoint in this behalf. The Provincial Government may, by notification in the Official Gazette, establish for the Greater Bombay a Court, to be called the Bombay City Civil Court. Notwith standing anything contained in any law, such Court shall have jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding ten thousand rupees in value, and arising within the Greater Bombay, except suits or proceedings which are cognizable (a) by the High Court as a Court of Admiralty or Vice Admiralty or as a Colonial Court of Admiralty, or as a Court having testamentary, intestate or matrimonial jurisdiction, or (b) by the High Court for the relief of insolvent debt ors, or (c) by the High Court under any special law other than the Letters Patent, or (d) by the Small Cause Court: Provided that the Provincial Government may, from time to time, after consultation with the High Court, by a like notification extend the jurisdiction of the City Court to any suits or proceedings of the nature specified in Clauses (a) and (b). Subject to the exceptions specified in section 3, the Provincial Government may, by notification in the Offi cial Gazette, invest the City Court with jurisdiction to receive, try and dispose of all suits and 108 other proceedings of a civil nature arising within the Greater Bombay and of such value not exceeding twenty five thousand rupees as may be specified in the notification. Notwithstanding anything contained in any law, the High Court shall not have jurisdiction to try suits and proceedings cognizable by the City Court: Provided that the High Court may, for any special rea son, and at any stage, remove for trial by itself any suit or proceeding from the City Court. " The Act received the assent of the Governor General about the same time. It came into force on August 16, 1948, by a notification issued by the Provincial Government and published in the Official Gazette. Simultaneously with the passing of the above Act the Bombay Legislature also enacted Act (XLI of 1948) called the Bombay High Court Letters Patent Amendment Act, 1948. By section3 of that Act Clause 12 of the Letters Patent was amended by adding the following words: "Except that the said High Court shall not have such Original jurisdiction in cases falling within the jurisdic tion of the Small Cause Court at Bombay or the Bombay City Civil Court. " Shortly after the passing of the above Acts, the validi ty of the Bombay City Civil Court Act (XL of 1948) was challenged in Mulchand Kundanmal Jagtiani vs Raman Hiralal Shah(1), a suit on promissory notes filed in the Original side of the High Court. A Division Bench of the Bombay High Court (Chagla C.J. and Bhagwati J.), on September 2, 1948, held that the Act was well within the legislative competence of the Provincial Legislature and was not ultra vires. Leave was given to the plaintiff in that suit under section 205 of the Government of India Act, 1935, to appeal to the Federal Court but no such appeal appears to have been filed. On January 20, 1950, the Provincial Government of Bombay issued the following notification No. 2346/5 in the Official Gazette: (1) A,I.R. 1949 Bom. 197; 109 "In exercise of the powers conferred by section 4 of the Bombay City Civil Court Act, 1948 (Bombay, Act XL of 1948), the Government of Bombay is pleased to invest, with effect from and on the date of this notification, the City Court with jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding twen ty five thousand rupees in value, and arising within the Greater Bombay subject, however, to the exceptions specified in section a of the said Act. " On February 6, 1950, the first respondent Narothamdas Jethabhai presented a plaint before the Prothonotary of the Bombay High Court for recovery of Rs. 11,704 5 4 with further interest due by the second respondent Aloysious Pinto Phillips upon three several promissory notes. In paragraph 4 of this plaint it was expressly pleaded that the High Court had jurisdiction to receive, try and dispose of that suit because (1)the Bombay City Civil Court Act, 1048, was ultra vires and (2) at least section 4 of that Act and the notification issued thereunder were ultra vires. Having some doubts as to whether in view of the notification issued 1 by the Provincial Government under section 4 of the Act the plaint could be admitted in the High Court, the Prothon otary placed the matter under the rules of the Court before Bhagwati J. who was then the Judge in Chambers. By his judgment delivered on February 23, 1950, Bhagwati J. held that section 4 of the Act and the notification issued there under were ultra vires and void and that the High Court, therefore, had jurisdiction to entertain the suit. The plaint was accordingly received and admitted. The first respondent thereupon took out a summons under the rules of the Court for leave to sign judgment against the second respondent. The State of Bombay was, on its own application, added as a party to the suit. The matter was put up before a Division Bench (Chagla C.J. and Tendolkar J.) for trial of the following issues: 110 "(1) Whether Act XL of 1948 is ultra vires of the Legis lature of the State of Bombay. (2) Whether,Section 4 of Act XL of 1948 is in any event ultra rites of the Legislature of the State of Bombay. (3) Whether the Government of Bombay Notification 'No. 2346/5 dated 20th January, i1950, is ultra vires, void and inoperative in law. (4) Whether this Court has jurisdiction to try the suit. The larger point involved in issue No. 1 having been concluded by the earlier decision of the Division Bench in Mulchand Kundanmal Jagtiani vs Raman Hiralal Shah(1) that issue was answered in the negative without any argument but leave was reserved to the first respondent to contest the correctness of that earlier decision in this Court. The Division Bench in agreement with Bhagwati J. held that by section 4 of the Act the Provincial Legislature did not itself legislate but delegated the power of legislation to the Provincial Government which it had no power to do and, therefore, section 4 and along with it the notification No. 2346/5 issued thereunder were ultra vires, void and inoperative. Accordingly they answered issues Nos. (2), (3) and (4)in the affirmative and sent the summons for judgment back to the learned Judge taking miscellaneous matters to dispose it of on merits. The State of Bombay has now come up before us in appeal from this decision of the High Court. The Advocate General of Madras has intervened in support of this appeal and for maintaining the validity of the Madras City Civil Court Act (VII of 1892) section 3A of which inserted in 1935 by way of amendment is in identical terms with section 4 of the Bombay Act except that the amount of the value was fixed at Rs. 10,000 in section 3A of the Madras Act instead of Rs. 25,000 fixed in section 4 of the Bombay Act. The distinction between conditional legislation and delegation of legislative power has been well known (1) 51 Bom L R.86 111 ever since the decision of the Privy Council in R.v. Burah(1) and the other Privy Council cases cited in the judgments of the High Court. It is firmly established that conditional legislation is not only permissible but is indeed in many cases convenient and necessary. The difficul ty which confronts the Courts is in ascertaining whether a particular provision of a Statute constitutes a conditional legislation as explained in the decisions of the Privy Council. In the present case the High Court, on a construc tion of section 4 of the Bombay City Civil Court Act, came to the conclusion that it was not an instance of conditional legislation at all. The use of the word "invest" in section 4 was considered by the High Court to be very significant and the difference between the language in section 3 and that in section 4 appeared to them to be very marked and striking. According to the High Court while by section a the Legislature itself set up a Court with a particular pecuniary jurisdiction, under section 4 the Legislature itself did not invest the Court with any higher jurisdiction but left it to the Provincial Government to exercise the function which the Government of India Act laid down should be exercised by the Provincial Legislature. The learned Chief Justice expressed the view that the Legislature never applied its mind to the question as to whether the new Court which it was setting up should have a jurisdiction higher than that of Rs. 10,000, and that section 4 was not a sec tion which merely directed the Provincial Government to carry out the policy laid down by the Legislature, but that it was a section which conferred upon the Provincial Govern ment the power to confer jurisdiction upon the Court. Then, after referring to R.V. Baruha(1) and several other cases and purporting to apply the tests laid down in the decisions to the Act the learned Chief Justice concluded that the Legislature in the exercise of its legislative power had set up a Civil Court with a limited jurisdiction under section a of the Act, that it had not set up a Court with a jurisdiction higher than ten thousand rupees and (1) L.R 5 I. A. 178. 112 that, having set up a Court of, limited jurisdiction, it had given to the Provincial Government under section 4 the power to confer upon that Court a higher jurisdiction up to twenty five thousand rupees. This power, which was con ferred upon the Provincial Government was according to the Chief Justice, a power which could only have been exercised by the Legislature itself. I am unable to accept the afore mentioned construction of sections 3 and 4 of the Act. As I have already said, the High Court rounded their conclusions principally on the observations of their Lord ships of the Privy Council in R.v. Burah(1) and certain other Privy Council cases. It will be useful, therefore, to analyse the Privy Council decision in R.v. Burah(1). In 1869 the Indian Legislature passed an Act (No. XXII of 1869) purporting, first, to remove a district called Garo Hills from the jurisdiction of the Courts of civil and criminal jurisdiction and from the law prescribed for such Courts by Regulations and Acts and, secondly, to vest the administra tion of civil and criminal justice, within the same territo ry, in such officers as the Lieutenant Governor of Bengal might, for the purpose of tribunals of first instance, or of reference and appeal, from time to time appoint. The Act was to come into operation on such day as the Lieutenant Governor of Bengal should, by notification in the Calcutta Gazette, direct. The 8th section authorised the Lieuten ant Governor of Bengal by notification in the Calcutta Gazette to extend to the said territory, any law or any portion of any law then in force in other territories sub ject to his government or which may thereafter be enacted by the Council of the Governor General or of himself. The 9th section of that Act provided: "The said Lieutenant Governor may from time to time, by notification in the Calcutta Gazette, extend mutatis mutan dis all or any of the provisions contained in the other sections of this Act to the Jaintia Hills, the Naga Hills, and to such portion of the Khasi Hills, as for the time being forms part of British India, (1) L.R. 5 I.A. 178. 113 Every such notification shall specify the boundaries of the territories to which it applies. " On October 14, 1871, the Lieutenant Governor of Bengal issued a notification in exercise of the powers conferred on him by section 9 extending the provisions of that Act to the territory known as the Khasi and Jaintia Hills and excluded therefrom the jurisdiction of the Courts of civil and crimi nal justice. The respondent Burah and another person having been convicted by the Deputy Commissioner of the Khasi and Jaintia Hills of murder and sentenced to death, which was later on commuted to transportation for life, they from jail sent a petition of appeal against their conviction. The provisions of Act XXII of 1869 having been extended, by notification under section 9, to the Khasi and Jaintia Hills, the High Court would have no jurisdiction to enter tain the appeal, unless section 9 and the notification were ultra rites and void. The majority of the Judges of the Full Bench constituted for considering the question took the view that section 9 was really not legislation but was an in stance of delegation of legislative power. The Crown ob tained special leave to appeal to the Privy Council. In summarising the effect of the provisions of sections 1 to 8 of that Act on Garo Hills Lord Selborne who delivered the judgment of the Privy Council observed at page 194 that the Governor General in council had 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 should take place, that the Legisla ture had 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 territo ries subject to the same Government were such as it might be fit and proper to apply to this 15 114 district also, but that, as it was not certain that all those laws, and every part of them, could with equal conven ience be so applied, it was expedient, on that point also, to entrust a discretion to the LieutenantGovernor. His Lordship then proceeded to state the true meaning and effect of the provisions of section 9: "This having been 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 dis trict of the Khasi and Jaintia Hills should also be removed from the jurisdiction of the existing Courts, and brought under the same provisions with the Garo Hills, not neces sarily 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 en trusted for these purposes also, a discretionary power to the Lieutenant Governor. " Finally, his Lordship concluded at p. 195: "Their Lordships think that it is a fallacy to speak of the powers thus conferred upon the LieutenantGovernor (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 legisla tion is now absolute. Where plenary powers of legislation exist as to particular subjects, whether in an imperial or in a provinciall Legislature, they may, in their Lordships ' judgment be well exercised, either absolutely or condition ally. Legislation, conditional on the use of particular powers, or on the exercise of a limited discretion, entrust ed by the Legislature to persons in whom it places confi dence, 115 is no uncommon thing; and, in many circumstances, it may be highly convenient. " If the reasonings underlying the observations of the ' Bombay High Court were correct then on those very reasonings it could be held in Burah 's case(1) that while in enacting sections 1 to 8 the Legislature had applied its mind and laid down its policy as to the exclusion of the Garo Hills from the jurisdiction of the Courts the Legislature did not apply its mind and did not lay down any policy as to the exclusion of the Khasi and Jaintia Hills rom the jurisdic tion of the Courts but had left it to the Lieutenant Gover nor to do what it alone could do. This construction quite clearly did not find favour with the Privy Council. The Privy Council by construction spelt out of the very language section 9 that the Legislature itself had decided that it was fit and proper that the Khasi and Jaintia Hills should also be removed from the jurisdiction of the existing Courts and brought under the same provisions as applied to the Garo Hills, not necessarily and at all events but if and when the LieutenantGovernor should think it desirable to do so and accordingly entrusted a discretionary power to the Lieutenant Governor. Adopting the same method of construc tion and adopting the language of Lord Selborne it may well be said that in enacting section 3 the Legislature itself has determined, in the due and ordinary course of legisla tion, to establish an additional Court of civil jurisdiction with jurisdiction to entertain suits and other proceedings arising within the Greater Bombay of the value up to Rs. 10,000 leaving it, by section 1 (2), to the Provincial Government to say at what time that change should take place. Likewise, it may be said that in enacting section 4 the Legislature itself has decided that it is fit, and proper to extend the pecuniary jurisdiction of the new Court, not necessarily and at all events or all at once but if and when the Provincial Government should think it de sirable to do so and accordingly entrusted a discretionary power to the Provincial Government. It is entirely wrong to say that the (1) L.R. 5 I.A. 178. 116 Legislature has not applied its mind or laid down any poli cy. Indeed, the very fact that the extension of pecuniary jurisdiction should not exceed twenty five thousand rupees, that the extension should be subject to the exceptions specified in section 3 clearly indicate that the Legislature itself has decided that the extension of the pecuniary jurisdiction of the new Court should be made, not necessarily or at all events or all at any one time but when the Provincial Government may consider. it desirable to do so and while entrusting a discretionary power with the Provincial Government to determine the time for investing such extended jurisdiction on the new Court, the Legislature itself has also prescribed the limits of such extension. The efficacy of the Act of extension of jurisdiction is, there fore, not due to any other legislative authority than that of the Legislature itself. The expression "invest" does not appear to me to have any special significance. It only implies or indicates the result of the fulfilment of the condition which the Legislature itself laid down. To use the language of Lord Selborne the extension of jurisdiction is directly and immediately under and by virtue of this very Act itself. Here there is no effacement of the Legislature, no abdication of the legislative power. On the contrary, the proper Legislature has exercised its judgment as to the possible necessity for the extension of the pecuniary juris diction of the new Court and the result of that judgment has been to legislate conditionally as to such extension and that the condition having been fulfilled by the issue of the notification by the Provincial Government the legislation has now become absolute. In my judgment the construction put upon sections 3 and 4 by the High Court was erroneous and cannot be supported either on principle or on authority. When properly construed in the light of the observations and decision of the Privy CounCil in R.v. Burah(1) as indi cated above section 4 does not amount to a delegation of legislative power at all but constitutes what is known as conditional legislation. (1) L.R. 5 I.A 178. 117 Reliance was placed by the High Court on the decision of the Federal Court of India in Jatindra Nath Gupta vs Prov ince of Bihar (1) in support of their conclusions. That case was concerned with the question of the validity of the proviso to section 1 (3)of the Bihar Maintenance of Public Order Act (V of 1947). Section 1 (a) provided that the Act should remain in force for a period of one year from the date of its commencement. The relevant part of the proviso was in the following terms: "Provided that the Provincial Government may, by notifi cation, on a resolution passed by the Bihar Legislative Assembly and agreed to by the Bihar Legislative Council, direct that this Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification. " Three of the learned Judges held that the proviso and the notification thereunder were ultra vires and void They laid particular emphasis on the power given to the Provin cial Government to make any modification in the Act when extending its life as indicating that it was a delegation of legislative power. Another learned Judge did not decide this point but agreed to set aside the order of detention on another ground not material for our present purpose and the remaining learned Judge took a different view of the effect of the proviso and held that it was a conditional legisla tion within the meaning of the decision in R., vs Burah(2). I do not find it necessary, for the purposes of the present appeal, to express any view as to the correctness of the decision of the Federal Court in that case. Assuming, but without deciding, that the entrustment with the Provincial Government of the power to extend the life of an Act with such modifications as the Provincial Government in its unfettered discretion thought fit to make was nothing but a delegation of legislative powers, there is no such power of modification given to the Provincial Government by section 4 of the Bombay City Civil Court (1) A.I.R. 1949 F.C. 175, (.2) L.R. 5 I.A. 178. and, therefore, that decision of the Federal Court can have no application to the case before us. The learned Attorney General wants to go further and contend that under the Government of India Act, 1935, it was permissible for the Legislatures, Central or Provincial, while acting within their respective legislative fields, to delegate their legislative powers. In the view I have ex pressed above, namely, that section 4 of the Bombay City Civil Court Act, 1948, does not involve any delegation of legislative power, I do not consider it necessary, on this occasion, to go into that question and I reserve my right to consider and decide that question including the question of the correctness of the decision of the Federal Court in Jatindra Nath Gupta 's case(1) on that point as and when occasion may arise in future. Learned counsel for the first respondent then raises before us the larger question as to whether the Bombay City Civil Court Act, 1948, as a whole was or was not within the legislative competence of the Provincial Legislature of Bombay. Legislative powers were by section 100 of the Gov ernment of India Act, 1935, distributed amongst the Federal and the Provincial Legislatures. Under that section the Federal Legislature had, and the Provincial Legislature had not, power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule to that Act. Likewise, the Provincial Legislature had, and the Federal Legislature had not, power to make laws the Province with respect to my of the matters enumerated in List II in that Schedule. It will be noticed that 'the section, while af firmatively giving legislative power with respect to certain matters to one Legislature, expressly excluded the legisla tive power of the other Legislature with respect to those matters. Lastly, section 100 gave concurrent power of legis lation to the Federal as well as to the Provincial Legisla ture with respect to matters enumerated in List III in that Schedule. Section 107 of that Act made provision for resolv ing the inconsistency, if any, between a Provincial law and a Federal law or the existing Indian (1) A.I.R. 1949 F.C. 175 119 law with respect to any of the matters in the Concurrent List (i.e., List III). Turning now to the three lists we find several entries relating to Courts, the relevant por tions of which are as follows : List I. Entry 53: Jurisdiction and powers of all Courts, except the Federal Court, with respect to any of the matters in this list . List II. Entry 1: . . the administration of justice, constitution and organisation of all Courts, except the Federal Court, and fees taken therein; . Entry 2: Jurisdiction and powers of all Courts, except the Federal Court, with respect to any of the matters in this list; procedure in Rent and Revenue Courts. List III. PART 1. Entry 2: Criminal Procedure, including all matters included in the Code of the Criminal Procedure at the date of the passing of this Act. Entry 4: Civil Procedure, including the law of Limita tion and all matters included in the Code of Civil Procedure at the date of the passing of this Entry 15: Jurisdiction and powers of all Courts, except the Federal Court, with respect to any of the matters in this list. Learned Attorney General urges that entry 1 in List II clearly indicates that administration of justice had been expressly made a provincial subject and that it was only the Provincial Legislature which could make laws with respect to administration of justice. The next steps in the argument are that there could be no administration of justice unless Courts were constituted and organised, that the constitution and organisation of Courts would be meaningless enterprises for the Provincial Legislatures to indulge in, unless the Courts so constituted and organised were 120 vitalised by being invested with jurisdiction and powers to receive, try and determine suits and other proceedings. The argument, therefore, is that entry 1 in List II by itself gave power to the Provincial Legislature not only to consti tute and organise Courts but also to confer jurisdiction and powers on them. The learned Attorney General relies on Jagtiani 's case(1) and points out that under entry 1 admin istration of justice was entirely a provincial responsibili ty and the Provincial Legislature was authorised to make laws with respect to administration of justice. Administra tion of justice, so the argument ' proceeds, is inseparable from Courts and Courts without jurisdiction is an incompre hensible notion. The conclusion sought to be established. therefore, is that under entry 1 alone of List II the Provincial Legislature had power to make a law not merely constituting a new Court but, investing such new Court with general jurisdiction and powers to receive, try and deter mine all suits and other proceedings. If entry 1 in List II stood alone and entry 53 in List I, entry 2 in List II and entry 15 in List HI were not in the Seventh Schedule, the argument would have been unanswerable. In Section 92 of the British North America Act, 1867, there was no separate provision authorising the making of laws with respect to jurisdiction and powers of Courts and, therefore, the au thority to make laws with respect to the jurisdiction and powers of Courts had of necessity to be found in and spelt out of the words ' 'administration of justice" occurring in section 92 (14) of that Act. There is, however, no such pressing or compelling necessity for giving such wide and all embracing meaning to the words "administration of jus tice" in entry 1 of List 11. The expression "administration of justice" may be an expression of wide import and may ordinarily, and in the absence of anything indicating any contrary intention, cover and include within its ambit several things as component parts of it, namely, the consti tution and organisation of Courts, jurisdiction and powers of the Courts and the laws to be administered by the Courts. But the legislative (1) 51 Bom. L.B. 86. 121 practice in England as well as in India has been to deal With these topics separately in legislative enactments: see for example Indian High Courts Act 1861. (24 and 25 Vic., c. 104) sections 2 and 19; Government of India Act, 1935, sections 220 and 223, the Letters i Patent of the Bombay High Court, 1865, and also the different Civil Courts Acts. Of these, one topic, namely, "constitution and organisa tion of Courts" had been expressly included in entry 1 of List II in addition to "administration of justice", a fact of some significance which must be noted although I do not say that the inclusion of the words "constitution and organ isation of all Courts" in entry 1 of List II by itself and in the absence of anything else cut down the generality of the meaning of the expression "administration of justice" which preceded those words, for such a construction may militate against the principle laid down by the Privy Coun cil in Meghraj vs Allah Rakhia(1). Further, entry 2 in List II would have been wholly unnecessary if the expression "administration of justice" in entry 1 in List II were to be given the wide meaning contended for by the learned Attor neyGeneral, for if under entry 1 ' in List II the Provincial Legislature had plenary powers to make laws conferring on, or taking away from, Courts, existing or newly constituted, 0jurisdiction and powers of the widest description, such power would also include the lesser power of conferring jurisdiction and powers with respect to any of the matters enumerated in List II, such as is contemplated by entry 2 in List II. The greater power would certainly have included the lesser. I do not say that the presence of entry 2 in List II by itself cut down the ambit of the expression "administration of justice" in entry 1, for if there were only entries 1 and 2 in List II and there were no entries like entry 53 in List I and entry 15 in List III, it might have been argued with some plausibility that in framing the two entries in the same list not much care was bestowed by the draftsman to prevent overlapping and that as (1) L.R. 74 I.A. 12, at p.20 16 16 122 both the entries in one and the same list gave legislative power to the same Legislature the overlapping caused no confusion or inconvenience and that it was not necessary, therefore, to construe entry 1 of List II as cut down by entry 2 in the same List. The important thing to notice is that the topic of "jUrisdiction and powers of Courts" had not been included in entry 1 in List II along with the topic of "constitUtion and organization of Courts", but the legislative powers with respect to the topic of "jurisdic tion and powers of the Courts" had been distributed between the Federal and the Provincial Legislatures in the manner set forth in entry 53 in List I, entry 2 in List II and entry 15 in List III. The inclusion of "constitution and organisation of Courts" as a separate item in entry 1 in List II, the omission of the topic of "jurisdiction and powers of Courts" from entry 1 and the deliberate distribu tion of powers to make laws with respect to jurisdiction and powers of Courts with respect to the several matters speci fied in the three lists clearly indicate to my mind that the intention of Parliament was not, by entry 1 in List II by itself, to authorise the Provincial Legislature to make any law with respect to the jurisdiction and powers of Courts. In my judgment, entry 1 in List II cannot be read as at all giving any power to the Provincial Legislature to confer any jurisdiction or power on any Court it might constitute or organise under that entry and that the expressions "admin istration of justice" and "constitution and organisation of Courts" occurring in entry 1 in List II should be read as exclusive of "the jurisdiction and powers of Courts" the powers of legislation with respect to which were distributed under entry 53 in List I, entry 2 in List II and entry 15 in List III. Such a construction will be consonant with the principle of construction laid down by, the Privy Council in the case of In re Marriage Legislation in Canada(1). It is next said that entry 1 in List II gave general powers to the Provincial Legislature to make laws (1) 123 conferring general jurisdiction and powers on Courts consti tuted by it under that entry while entry 53 in List I, entry 2 in List II and entry 15 in List III conferred special powers on the Federal and Provincial Legislatures to make laws conferring special jurisdiction and powers with respect to matters specified in their respective Lists. As I have already pointed out, if entry 1 in List II conferred plenary powers on the Provincial Legislature to make laws with respect to jurisdiction and powers of Courts in widest terms, entry 2 in List II would be wholly redundant, for the wider power itself would include the lesser power. Further,the very concession that entry 53 in List 1, entry 2 in List II and entry 15 in List III gave special powers to the Legislature to confer special jurisdiction and powers necessarily amounts to an admission that the powers conferred on the Provincial Legislature by entry 1 in List II were exclusive of the powers conferred under entry 53 in List I, entry 2 in List II and entry 15 in List III, for if entry 1 in List II gave power to the Provincial Legislature to make laws conferring general jurisdiction of the widest kind which included jurisdiction and powers with respect to all matters specified in all the Lists, then the utility of entry 53 in List I, entry 2 in List II and entry 15 in List III as giving special powers to make laws conferring special jurisdiction would vanish altogether. Special power to confer special jurisdiction would be meaningless if it were included in the general power also. This circumstance by itself should be sufficient to induce the Court to assign a limited scope and ambit to the power conferred on the Pro vincial Legislature under entry 1 in List II. We, there fore, come back to the same conclusion that entry 1 in List II should be construed and read as conferring on the Provin cial Legislature all powers with respect to administration of justice and constitution and organisation of Courts minus the power to make laws with respect to the jurisdiction and powers of Courts. It is pointed out that under entry 1 in List II it was only the Provincial Legislature which alone could 124 constitute and organise a new Court and if that entry did not empower the Provincial Legislature to vest in such new Court the general jurisdiction and power to re ceive, try and dispose of all kinds of suits and other proceedings, then no new Court of general jurisdiction could be established at all. As will be seen hereafter, the Provincial Legislature has, under entry 2 in List II, power to make laws conferring wide general jurisdiction and powers on a newly constituted Court and consequently a forced construction need not be placed on entry 1 in List II. It is said that if the Provincial Legislature could not, under entry 1 in List II, confer jurisdiction on a new Court set up by under that entry, the result would have been that the Provincial Legislature would have had to set up a new Court by one law made under entry 1 of List II without conferring on it any jurisdiction whatever and would have had to make another law with respect to ' the jurisdic tion and powers of such Court. I see no force in this, for the Provincial Legislature could by one and the same law have set up a Court under entry 1 in List II and vested in the Court jurisdiction and powers with respect to any of the matters specified in List II and, subject to section 107 of the Act, with respect to any of the matters enumerated in List III. It is wrong to assume that the Provincial Legisla ture could not make one law under both entry 1 and entry 2 in List II and entry 15 in List III at one and the same time. A good deal of argument was advanced before us as to the applicability of the doctrine of pith and substance and, indeed, the decision of the Bombay High Court in Jagtiani 's case was practically rounded on that doctrine. Shortly put, the argument, as advanced, is that under entry 1 in List II the Provincial Legislature had power to make laws with respect to administration of justice; that, therefore, the Provincial Legislature had power, under entry 1 itself, to make laws conferring general jurisdiction and powers on Courts constituted and organised by it under that entry; that if in making such law 125 the Provincial Legislature incidentally enroached upon the legislative field assigned to the Federal Legislature under entry 58 in List I with respect to the jurisdiction and powers of Court with respect to any of the matters specified in List I, such incidental encrochment did not invalidate the law, as in pith and substance it was a law within the legislative powers. In my judgment, this argu ment really begs the question. The doctrine of pith and substance postulates, for its application, that the impugned law is substantially within the legislative competence of the particular Legislature that made it, but only inciden tally encroached upon the legislative field of another Legislature. The doctrine saves this incidental en croachment if only the law is in pith and substance within the legislative field of the particular Legislature which made it. Therefore, if the Provincial Legislature under entry 1 had power to vest general jurisdiction on a newly constituted Court, then if the law made by it incidentally gave jurisdiction to the Court with respect to matters specified in List I the question of the applicability of the doctrine of pith and substance might have arisen. I have already pointed out that, on a proper construction, entry 1 of List II did not empower the Provincial Legislature to confer any jurisdiction or power on the Court and the ex pression "administration of justice" had to be read as covering matters relating to administration of justice other than jurisdiction and powers of Court and, if that were so, the discussion of the doctrine of pith and substance does not arise at all. I find it difficult to support the rea sonings adopted by the Bombay High Court in Jagtiani 's case. The argument as to the applicability of the doctrine of pith and substance to the impugned Act can, however, be well maintained in the following modified form: Under entry 2 in List II the Provincial Legislature had power to make laws with respect to the jurisdiction and powers of Courts with respect to any of the matters enumerated in List II; that "administration of justice" in entry 1 is one of the matters in 126 List II; that, therefore, the Provincial Legislature had power to confer the widest general jurisdiction on any new Court or take away the entire jurisdiction from any existing Court and there being this power, the doctrine of pith and substance applies. It is suggested that this argument cannot be formulated in view of the language used in entry 2 in List II. It is pointed out that entry 2 treats "any of the matters in this List" as subject matter "with respect to" which, i.e., "over" which the Court may be authorised to exercise jurisdiction and power. This construction of entry 2 is obviously fallacious, because jurisdiction and powers of the Court "over" administration of justice as a subject matter is meaningless and entry 2 can never be read with entry 1. This circumstance alone shows that the words ' 'with respect to" occurring in entry 2 in List 11 when applied to entry 1 did not mean "over" but really meant "relating to" or "touching" or "concerning" or "for" admin istration of justice, and so read and understood, entry 2, read with entry 1 in List 11, clearly authorised the Provin cial Legislature to make a law conferring on or taking away from a Court general jurisdiction and powers relating to or touching or concerning or for administration of justice. This line of reasoning has been so very fully and lucidly dealt with by my brother Sastri J. that I have nothing to add thereto and I respectfully adopt his reasonings and conclusion on the point. This argument, in my opinion, resolves all difficulties by vesting power in the Provincial Legislature to confer general jurisdiction on Courts consti tuted and organised by it for effective administration of justice which was made its special responsibility. Any argument as to deliberate encroachment that might have been rounded on the Proviso to section 3 of the Act which ena bled the Provincial Government to give to the City Court even Admiralty jurisdiction which was a matter in List I has been set at rest by the amendment of the Proviso by Bombay Act XXVI of 1950. The impugned Bombay Act may, in my judg ment, be well supported as a law made by the Provincial Legislature under 127 entry 2 read with entry 1 in List II and I hold accordingly. I, therefore, concur in the order that this appeal be al lowed. In the view I have taken, it is not necessary to discuss the contention of the learned Attorney General that the Bombay City Civil Court Act may be supported as a piece of legislation made by the Provincial Legislature of Bombay under entry 4 read with entry 15 in Part I of List III and I express no opinion on that point. Appeal allowed.

The Bombay City Civil Court Act of 1948, an Act passed by the Provincial Legislature of Bombay, provided by section 3 that the Provincial Government may, by notification in the official Gazette, establish for the Greater Bombay a court to be called the Bombay City Civil Court, and that this court shall, notwithstanding anything contained in any law, have jurisdiction to receive, try ' and dispose of all suits and other proceedings of a civil nature nob exceeding Rs. 10,000 in value arising within Greater Bombay except certain kinds of suits which were specified in the section. Section 4 of the Act provided that subject to the exceptions speci fied in 8. 3 the Provincial Government may, by notification in the official Gazette, invest the City Civil Court with jurisdiction to 52 receive, try and dispose of all suits and other proceedings of civil nature arising within the Greater Bombay and of such value not exceeding Rs. 25,000 as may be specified in the notification. Section 12 barred the jurisdiction of the Bombay High Court to try suits and proceedings cognizable by the City Civil Court. In exercise of the powers conferred by section 4 the Provincial Government invested the City Civil Court with jurisdiction to receive, try and dispose of all suits and proceedings of a civil nature not exceeding Rs. 25,000 in value. The first respondent instituted a suit in the High Court of Bombay for recovery of Rs. 11,704 on the basis of a promissory note, contending that the Provincial Legislature had no power to make laws with respect to juris diction of courts in regard to suits on promissory notes which was a matter covered by item 53 of List I, and the Bombay City Civil Court Act of 1948 was therefore ultra vires. It was further contended on his behalf that in any event section 4 of the Act was invalid as it involved a delega tion of legislative powers to the Provincial Government and that the suit was therefore cognisable by the High Court. Held by the Full Court. (i) that the impugned Act was a law with respect to a matter enumerated in List II and was not ultra vires; (ii)that, as the legislature had exercised its judgment and determined that the City Civil Court should be invested with pecuniary jurisdiction up to Rs. 9,5,000 and all that was left to the discretion of the Provincial Government was the determination of the conditions under which the court should be invested with the enhanced juris diction, section 4 did not involve any delegation of legislative powers but was only an instance of conditional legislation and was not ultra vires or invalid on this ground; (iii) inasmuch as the impugned Act was in pith and substance a law with respect to a matter covered by List II, the fact that it incidentally affected suits relating to promissory notes (a subject falling within items 28 and 53 of List I) would not affect its validity and the suit was accordingly not cognisable by the High. Court. Per FAZL ALI, MEHR CHAND MAHAJAN and MUKHERJEA JJ. The power of the Provincial Legislature to make laws with re spect to "administration of justice" and "constitution and organisation of all courts" under item 1 of List II is wide enough to include the power to make laws with regard to the jurisdiction of courts established by the Provincial Legis lature; the object of item 53 of List I, item 9, of List II and item 15 of List III is to confer special powers on the Central and the Provincial Legislatures to make laws relat ing to the jurisdiction of courts with respect the particu lar matters that are referred to in Lists I and II respec tively and the Concurrent List, and these provisions do not in any way curtail the power of Provincial Legislature under Item I of List II to make laws with regard to juris diction of courts and to confer jurisdiction on courts established by it to try all causes of a civil nature sub ject to the power of the Central and 53 Provincial Legislatures to make special provisions relating to particular subjects referred to in the Lists. Per PATANJALI SASTRI and DAS JJ. The words" adminis tration of justice" and "constitution and organisation of all courts" in item 1 of List II must be understood in a restricted sense excluding from their scope "jurisdiction and powers of courts" as the latter subject is specifically dealt with in item 2 List II. Item 1 of List II does not therefore by itself authorise legislation with respect to jurisdiction and powers of courts, and the legisltive power under item 9. in regard to "jurisdiction 'and powers of courts ", which can legitimately be exercised with respect to any of the matters in List II, can be exercised with respect to administration of justice as this is one of the matters enumerated in that List, with the result that the subject of general jurisdiction of courts is brought within the authorised area of provincial legislation; and as the Provincial Legislature is thus competant to make a law with respect to the general jurisdiction of the court, the apparent conflict with the central legislative power under item 53 of List I can be resolved by invoking the doctrine of pith and substance and incidental encroachment. [The legislative practice which prevailed in India before 1935 was relied on in this case in support of the view that the Provincial Legislatures had power under the constitution of 1935 to invest courts constituted by them with general pecuniary jurisdiction]. Quaere: Whether it was not open to the Legislatures of India under the Government of India Act of 1935 to delegate their legislative powers to other agencies. Queen vs Burah (59. A 178).applied. Jatindra Nath Gupta vs Province of Bihar distinguished. Mulchand Kundanmmal Jagtiani vs Raman (51 Born. L.R. 86 :, United Provinces vs Atiqa Begum Prafulla Kumar Mukherjea and Others vs Bank of Commerce, Khulna referred

Civil Appeal No.1396 of 1991. From the Judgement and Order dated 8.3.1990 of the Orissa High Court in Case No. 2867 of 1987. Mrs. Uma Metha Jain and M.A. Firoz for the Appellant. Ashok Kumar Panda for the Respondents. The Judgement of the Court was delivered by KULDIP SINGH, J. Special leave granted. Rabinarayan Mohapatra the appellant was appointed as Hindi Teacher in Bani gochha, M.E. School (Orrisa) for a period of 89 days or till a candidate selected by the State Selection Board was made available. He joined the school on July 12, 1982. The appointment was made by the District Inspector (Schools) on the recommendation of the managing committee of the school. He continued to serve the school with repeated spells of 89 day appointments and one day break in between the spells, till May 25, 1986. He was not paid the salary for the period of summer vacations during all these years. Although the period of summer vacation during all these years. Although the appellant continues to serve the school to date under orders of the managing committee yet his appointment after 1986 has not been approved by the educational authorities. The managing committee even passed a resolution on July 6,1987, requesting the educational authorities of the State of Orissa to approve the continuous appointment of the appellant as Hindi Teacher but no action was taken by the said authorities. The appellant filed a writ petition under Article 226 of the Constitution of India before the Orissa High Court claiming regularisation as Hindi Teacher with effect from July 12,1982. The only argument raised before the High Court was that the appellant was entitled to be regularised in terms of the provisions of Section 3 of the Orissa Aided Educational Institutions (Appointment of Teachers Validation) Act, 1989 (hereinafter called 'the Validation Act '). The relevant part of Section 3 of the Act is reproduced hereinafter : 3. Validation of certain appointments Not withstanding 993 anything contained in the Education Act or in the Rules or Regulations framed thereunder. (a) graduate teacher, intermediate and matriculate teachers, physical education teachers and classical teachers and Hindi teachers of aided schools appointed by the managing authorities of such schools on ad hoc basic on or after the 1st December , 1976 but not later than the 31st December, 1984; (b) . . . (c) . . . who have continuous service as such teachers or lecturers for a period of at least one year without any break or with a break or breaks in one or more aided schools or Colleges and who are continuing as such teachers or whose services have been terminated after the 31st December ,1984 save for misconduct or. . . shall for all intents and purposes, be deemed to have been validly and regularly appointed, and no such appointment shall be challenged in any court of law merely on the ground that the appointment was made otherwise than in accordance with procedure laid down in the Education Act and the Rules and Regulations framed thereunder;. . . . . The High Court rejected the prayer for regularisation, and held that the appellant was not entitled to the benefit of the Validation Act, on the following reasoning; "Admittedly, the petitioner was appointed on 12.7.1982 and continued till 18.7.1986 with breaks in between and the petitioner 's appointment was conditioned by the stipulation that he would continue until replaced by a candidate from the Select List. His case, therefore, will not come within the preview of the Validation Act and, therefore, the question of issuing any direction to regularise his service in a substantive vacancy because of the Validation Act does not arise. " We have heard Mrs. Uma Mehta Jain, learned counsel for the applellant. This Court in Rattan Lal vs State of Haryana. A.I.R. 1987 S.C. 478 speaking through Venkataramaiah, J. (as the learned Judge then was ) observed as under: 994 "The State Government of Haryana has failed to discharge that duty in these cases. It has been appointing teachers for quite some time on an ad hoc basis for short periods as stated above without any justifiable reason. In some cases the appointments are made for a period of six months only and they are renewed after break of a few days. The number of teachers in the State of Haryana who are thus appointed on such ad hoc basis is very large indeed. If the teachers had been appointed regularly, they would have been entitled to the benefits of summer vacation along with the salary and allowances payable in respect of that period and to all other privileges such as casual leave, medical leave, maternity leave etc. available to all the Government servants. These benefits are denied to these ad hoc teachers unreasonably on account of this pernicious system of appointment adopted by the State Government. These ad hoc teachers are unnecessarily subjected to an arbitrary `hiring and firing ' policy. These teachers who constitute the bulk of the educated unemployed are compelled to accept these jobs on an ad hoc basis with miserable conditions of service. The Government appears to be exploiting this situation. This is not a sound personnel policy. It is bound to have serious repurcussions on the education institutions and the children studying there. The policy of `ad hocism ' followed by the State Government for a long period has led to the breach of Article 14 of the Constitution. Such a situation cannot be permitted to last any longer. It is needless to say that the State Government is expected to function as a model employer". "We strongly deprecate the policy of the State Government under which `ad hoc ' teachers are denied the salary and allowances or the period of the summer vacation by resorting to the fictional breaks of the type referred to above. These `ad hoc ' teachers shall be paid salary and allowances for the period of summer vacation as long as they hold the office under this order. Those who are entitled to maternity or medical leave shall also be granted such leave in accordance with the rules. " The Validation Act has been enacted by the Orissa legislature with the obvious object of granting relief to those members of teaching community who are being exploited for years together by keeping 995 them in short spell appointments like 89 day appointments as here with one day break and in the process denying them their rightful dues and other service benefits. Inspite of repeated depreciation by this Court the practice continues to be followed by various State Governments in the country. Under the Constitution the State is committed to secure right to education for all citizens. Bulk of our population is yet illiterate. Till the time illiteracy is effaced from the country the resolution enshrined in the Preamble cannot be fulfilled. Education is the dire need of the country. There are neither enough schools nor teachers to teach. Insecurity is writ large on the face of the teaching community because of nebulous and unsatisfactory conditions of service. In order to make the existing educational set up effective and efficient it is necessary to do away with ad hocism in teaching appointments. An appointment on 89 day basis with one day break which deprives a teacher of his salary for the period of summer vacation and other service benefits, is wholly arbitrary and suffers from the vice of discrimination. The Validation Act covers the field upto December 31, 1984. The State of Orissa will do well to consider the cases of all those who have completed one year or more as ad hoc teachers after December, 31, 1984 and come out with a scheme or any other appropriate measure to regularise their services. Mrs. Jain contended that on the plain reading of Section 3 of the Validation Act the appellant is entitled to be regularised as Hindi Teacher with effect from July 12,1982. To come within the purview of the Validation Act the following conditions are to be satisfied: 1. The appointment by the managing authority of the school on ad hoc basis must be on or after the 1st December, 1976 but not later than 31st December, 1984; 2. The service as such teacher is continuous for a period of atleast one year without any break or with a break or breaks in one or more aided schools; 3. Is continuing as such teacher or his services were terminated after the 31st December, 1984 save for misconduct. The apellant was appointed on July 12,1982 and has been working with the approval of the authorities for almost 4 years with short breaks. The managing committee is still utilising his services though there is no approval by the educational authorities for the period subsequent to 1986. It is no body 's case that his services were 996 ever terminated on grounds of inefficiency or misconduct. The case of the appellant is, thus, fully covered by Section 3 of the Validation Act. We are of the view that the High Court erred in denying the benefit of the Validation Act to the appellant on the ground that his initial appointment for 89 days was conditioned by the stipulation that he would continue until replaced by a candidate from the select list. The High Court read into the Act what was not there. In response to the notice issued in the Special Leave Petition the managing committee through its Secretary cum Head Master has stated that the appellant is still continuing to serve as Hindi teacher in the school under the orders of the managing committee. We therefore, set aside the judgment of the High Court and direct the respondents to treat the appellant as the regularly appointed Hindi teacher in the school with effect from July 12, 1982. The appeallant shall be entitled to his salary, including the salary for summer vacations and other breaks which must be taken as non est, from the date of his regular appointment i.e. July 12, 1982. The respondents are directed to pay the arrears of salary and other emoluments due to the appellant as a result of his regularisation within a period of 3 months from today.

The appellant was appointed as Hindi Teacher in the M.E. School for a period of 89 days from July 12,1982 by the District Inspector (Schools) on the recommendation of the Managing Committee of the School. He continued to serve the school with repeated spells of 89 day appointments and one day break in between the spells, till may 25, 1986. He was not paid the salary for the period of summer vacations during all these years. Although the appellant continues to serve the school to date under orders of the managing committee, but his appointment after 1986 was not approved by the educational authorities, in spite of the resolution of the managing committee dated July 6,1987. The appellant filed a writ petition before the High Court claiming regularisation with effect from July 12,1982, contending that he was entitled to be regularsed in terms of the provisions of Section 3 of the Orissa Aided Educational Institutions (Appointment of Teachers Validation) Act, 1989. The High Court dismissed the petition holding that the appellant was not entitled to the benefit of the Validation ACt, against which present appeal was filed by the appellant contending that his services were to be regularised with effect from July 12, 1982 under the provisions contained in Section 3 of the Validation Act. Allowing the appeal, this Court, 991 HELD:1.1. The Validation Act has been enacted by the Orissa Legislature with the obvious object of granting relief to those members of the teaching community who are being exploited for years together by keeping them in short spell appointments like 89 day appointments with one day break and in the process denying them their rightful dues and other service benefits.[994G 995A] 1.2 An appointment on 89 day basis with one day break which deprives a teacher of his salary for the period of summer vacation and other service benefits, is wholly arbitrary and suffers from the vice of discrimination. The Validation Act covers the field upto December 31, 1984. The State of Orissa will do well to consider the cases of all those who have completed one year or more as ad hoc teachers after December 31,1984 and come out with a scheme or any other appropriate measure to regularise their services.[995C D] 2. To come with in the preview of the Validation Act the following conditions are to be satisfied: 1. The appointment by the managing authority of the school on ad hoc basis must be on or after the 1st December 1976 but not later than 31st December 1984. The services as such teacher is continuous for a period of at least one year without any break or with a break or breaks in one or more aided schools; 3. Is continuing as such teacher or his services were terminated after the 31st December ,1984 save for misconduct.[995E G] 2.2. The appellant was appointed on July 12,1982 and has been working with the approval of the authorities for almost 4 years with short breaks. The managing committee is still utilising his services though there is no approval by the educational authorities for the period subsequent to 1986. The case of the appellant is, thus, fully covered by Section 3 of the Validation Act.[995G 996A] 3. The High Court erred in denying the benefit of the Validation Act to the appellant on the ground that his initial appointment for 89 days was conditioned by the stipulation that he would continue until replaced by a candidate from the select list. The High Court read into the Act what was not there,[996A B] 992 Rattan Lal vs State of Haryana, A.I.R. 1987 S.C. 478, followed.

ivil Appeal No. 173 of 1986. From the Judgment and Order dated 29.3. 1985 of the Andhra Pradesh Administrative Tribunal, Hyderabad in Repre sentation Petition No. 1589 of 1983. WITH Writ Petition (Civil) Nos. 11135 37 of 1984. 485 (Under Article 32 of the Constitution of India). C. Sitharamaiah, G. Prabhakar, D. Prakash Reddy, B. Rajeshwar Rao and Vimal Dave for the Appellants. Subodh Markandeya, W.A. Nomani, Seshagiri Rao, Mrs. Chitra Markandeya and A. Subba Rao for the Respondents. The Judgment of the Court was delivered by SHARMA, J. Civil Appeal No. 173 of 1986: By the judgment under appeal the Andhra Pradesh Adminis trative Tribunal has accepted the claim of seniority pressed by the respondents in their Representation Petition No. 1589 of 1983. The respondents were working as Lower Division Clerks (LDCs) in the district police offices/units in Andhra Pra desh, when the question of appointing LDCs in the Chief Office arose. It was decided to give an opportunity to the LDCs working in the district police offices/units on the condition that they would be willing not to rely upon their service rendered in the district police offices/units for the purpose of seniority and that their seniority would be counted with effect from the date they joined the Chief Office. Accordingly a Memorandum Rc. No. 1020/S1/68 dated 21.11. 1968 (Annexure 'A ') was issued to the district police offices/units. The choice was limited to probationers and approved probationers having good service records. The letter expressly stated that the appointees were to be put at the bottom of the list of probationers or approved proba tioners already working in the Chief Office. Immediately thereafter the respondents and two other LDCs, who are not parties to the present case, expressed their desire to join the Chief Office on the condition as mentioned in the said memorandum. They in positive terms declared in Annexure 'C ' series their willingness to forego their seniority. After examination of their service records, orders were passed and accordingly Memorandum Rc. No. 1020/S1/68 dated 1.6. 197 (1 Annexure '0 ') was issued to the heads of departments of the concerned district police offices/units. A pointed reference to the memorandum of 21.11. 1968 was made stating that the clerks in question were to take their seniority from the date of their joining the duty in the Chief Office as already mentioned in their letters. Accordingly, all the five respondents joined their duty in the Chief Office after submitting, with reference to the memorandum dated 1.6. 1970, separate letters (at pages 40 44 of the 486 paper book) addressed to the Inspector General of Police, stating that: "I submit that I am willing to take the last rank in senior ity in the category of LDCs. in Chief Office from the date reporting duty in Chief Office. " Their respective dates of joining the Chief Office are detailed in the Memorandum dated 7.9.1970, Annexure 'H ' (page 47 of the paper book). They were placed on probation with the condition that if they failed to complete their probation satisfactorily they would be sent back to their original district/unit offices. The respondents satisfactorily completed their proba tion and were substantively confirmed in the Chief Office and their seniority was counted with effect from the dates they joined the Chief Office. In 1983 they filed an applica tion before the Andhra Pradesh Administrative Tribunal claiming that they were entitled to count their service rendered in the district police offices/units for the pur pose of their seniority in the Chief Office, which has been allowed by the impugned judgment. In support of their claim the respondents relied on the Memorandum Rc. No. 1020/S1/68 dated 18.1. 1969 (Annexure 'B ') issued by the office of the Inspector General of Police to the heads of the district police organisations/units, stating that, "In continuation of the Chief Office memorandum cited, the Commissioner of Police, all Superintendents of Police and Commandants etc., are requested to state whether there are any L.D. Clerks willing to come on transfer to Chief Office, if the condition stipulated in the Memorandum cited regarding taking of last rank is not insisted upon. The records of the L.D. Clerks recommended should be good. " It has been argued before the Tribunal as also before us that this letter clearly indicates that adequate number of clerks from the district police offices/units were not available and a decision to forgo the condition in regard to the seniority of the clerks was taken. It has been contended that in view of this departmental decision the respondents should not be bound down by their statements made in Annex ures 'C ' series and in their letters Annexures 'E ' series. The Tribunal has accepted their plea. 487 5. Mr. C. Sitharamaiah, the learned counsel appearing in support of the appeal, has urged that the Memorandum Annex ure 'B ' does not indicate any final decision taken by the Department. The learned counsel appears to be right. A perusal of the letter makes it clear that the office of the Inspector General of Police was only making an inquiry in the terms indicated therein. It is true that presumably. sufficient number of volunteers from the district police offices/units were not available which promoted the authori ty concerned to issue the letter Annexure 'B ', but it does not go beyond circulating a query. It cannot be suggested on its basis that there was a reversal of the policy with respect to the counting of the seniority of the incoming LDCs from the district police offices/units. It has been asserted in the counter affidavit of the State filed before the Tribunal that not a single person was allowed to join the Chief Office on the condition indicated in Annexure 'B ', and it has not been denied on behalf of the respondents either before the Tribunal or before us. The respondents have not been able to produce a copy of any decision taken on the lines indicated in Annexure 'B ' nor have they been able to cite even a single case of an LDC joining the Chief Office on such a supposed decision. We have, therefore, no hesitation in holding that the condition mentioned in Annex ure 'B ' is of no avail to the respondents. The learned counsel for the respondents referred to r. 16 of the A.P. Ministerial Service Rules (hereinafter referred to as the Rules) and urged that when the respond ents were permitted to join the Chief Office, they were allowed to do so by way of a regular transfer from one department to another and this was done for administrative exigencies of the Police Department, within the meaning of the said Rules, and not on their own request. They are, therefore, entitled to count their earlier service for the purpose of seniority. It is alleged that the fact that the respondents were paid travelling allowances for joining the Chief Office corroborates their stand. We have considered the argument addressed on behalf of the respondents along with the relevant documents but do not find any merit in their stand. It has to be appreciated that the cadre of the Chief Office is altogether different from cadre,of the district police offices/units where the respondents were earlier appointed and they were not liable to be transferred to the Chief Office. The service conditions at the Chief Office were better, which was presumably the reason for the respondents to give up their claim based upon their past services. It is true that the differential advantage was not so substantial as to attract every LDC working in the dis trict offices/units, and in that situation the letter Annex ure 'B ' had to be circulated. However, so far the respond ents and the two others 488 were concerned, they found it in their own interest to forego their claim of seniority on the Oasis of their past services and they did so. It is significant to note that their letters Annexures 'E ' series were sent to the Inspec tor General of Police many months after the issuance of Annexure 'B ' and they were allowed to join the Chief Office on clear Understanding that they would not be entitled to count their past services. It is, therefore, idle to suggest that the respondents can.now turn back and repudiate their commitment expressly made many months after Annexure 'B '. So far the allegation regarding payment of travelling allowance is concerned, the same has been dealt with in paragraph 6 of the counter affidavit of the appellant filed before the Tribunal in the following terms: "They cannot claim seniority now after a lapse of 13 years on the ground that they were given T.T.A. at the time of their transfer. No orders were issued from this office to the Subordinate Officer that the petitioners are eligible for T.T.A. and joining time. In fact the Dy. Inspr. of Police, Hyderabad Range in his order No. 534/E/256/70 Hr. Dt. 5.6.70, addressed to Supdt. of Police, Medak had specif ically informed that the petitioners No. 1 and 2 are not entitled for any T.T.A. and joining time." [t is urged that inspite of the clarification made by the Deputy Inspector General of Police, as stated above, if some officers permitted the respondents to draw travelling allow ance, this cannot be a ground to hold that it was a case of regular departmental transfer. The '. 16 cannot, therefore, be held to be applicable in the present case. Mr. Sitharamaiah urged that having regard to the entire circumstances as spelt out of the different documents on the records of the present case, it should be held that the Memorandum Annexure A ' issued by the Office of the 'Inspector General of Police was a mere invitation to the LDCs in the district police offices/units to apply for appointment in the Chief Office with the condition mentioned therein. and availing of the opportunity, the respondents accordingly requested by their statements and letters for appointment in the Chief Office. It is suggested by the learned counsel that if the case be treated to be one of transfer, it has to be held, in the circumstances, to be at the request of the LDCs concerned within the meaning of r. 16 of the Rules. There considerable substance in the alter native argument of Mr. Sithara 489 maiah also, but, it is not necessary to go into this ques tion deeper as the absorption of the respondents in the Chief Office cannot be treated by way of transfer within the meaning of the Rules. Besides the above infirmities there are two other important considerations which weigh heavily against the respondents. The petition before the Tribunal was filed by the respondents after a period of 13 years of their initial appointment in the Chief Office, during which period many orders consistent with the terms of service as indicated in the Memorandum Annexure 'A ' must have been passed in favour of the other incumbents of the service. The courts and tribunals should be slow in disturbing the settled affairs in a service for such a long period. Besides, the respond ents, in the application before the Tribunal, did not im plead their colleagues who have been prejudicially affected by the impugned judgment. It cannot be assumed that the respondents had no knowledge about them. As was rightly pointed out by Mr. Sitharamaiah, although in paragraph 4(d) of their application before the Tribunal (page 53 of the paper book) the respondents mentioned one Vijaya Chand alleged to be an officiating LDC who was put over them, they did not implead even him. We are, therefore, of the view that apart from the merits of the case, the petition of the respondents before the Tribunal was fit to be rejected on the ground of the above mentioned last two points. Finally the learned counsel for the respondents said that in any event they should not be put below those persons who had not successfully completed their probation in the Chief Office on the date the respondents joined there. We do not find any merit in this submission either. Accordingly, the judgment under appeal passed by the Andhra Pradesh Administrative Tribunal is set aside and the Representation petition of the respondents is dismissed. The appeal is allowed, but, in the circumstances, there will be no order as to costs. Writ Petitions (Civil) Nos. 11135 37 of 1984: 11. These applications under Article 32 of the Constitu tion have been filed by the three petitioners who were appointed during the years 1965 67 in the Central Office of the Inspector General of Police (now redesignated as Direc tor General and Inspector General of Police), Andhra Pra desh. Since they had not passed the general examination held for the purpose, a special qualifying examination was held in 1968 to facilitate the petitioners and other similarly situated persons to pass at the test. The petitioners, however, did not appear at this 490 examination. Another special qualifying examination was held in 1974 and the petitioners successfully cleared the same. Thereafter, by an order dated 17.6. 1976 (Annexure 'E '), their services were regularised with effect from 1.8.1972. Their claim in the present case is for counting their sen iority with effect from their initial dates of appointment in the years 1965 67 12. It has been contended by the learned counsel for the petitioners that they were not qualified for the 1968 exami nation and at the very first opportunity available to them in 1974, they passed the special qualifying examination and, therefore, they should not be penalised by ignoring their services rendered before 1.8. 1972. It is significant to note that although the impugned order was passed in 1976, the petitioners did not commence any legal remedy before the year 1984 when they filed the present application directly before this Court after a period of 8 years. By way of a preliminary objection, Mr. Subbarao, the learned counsel appearing for some of the officers impleaded as respondents in this petition, has drawn our attention to the fact that earlier a writ application, being W.P. No. 106 of 1980, was filed by some of the employees of the central office making similar claim of seniority and the present petitioners specifically stated that their case would be governed by the judgment in the earlier writ petition which was ultimately dismissed by this Court on August 8, 1986 (M. Nirmala and Others vs State of Andhra Pradesh and Others, Mr. Subbarao contends that after the dismissal of the earlier case, the petitioners now cannot be permitted to urge any new ground in support of their claim. The reply on behalf of the petitioners is that if the earli er writ application had been allowed, they would also be entitled to succeed, but after its dismissal their claim cannot be rejected without examination of the additional questions which did not arise in the earlier case. On merits the reply on behalf of the Government of Andhra Pradesh is that the respondent officers had joined the office of the Inspector General of Police after qualify ing at the general examination held for the purpose, and since the petitioners did not appear at the examination, they cannot be equated with the respondent officers. The general examinations for recruitment to the central office were held in 1964, 1965, 1966, 1967 and 1968, but the peti tioners did not choose to avail of the ordinary method for joining the service. Instead 491 they entered the service by the side door and their depart ment, taking an attitude liberal to them and other similar officers, decided to hold special qualifying examinations. It is contended that in these circumstances the rule as laid down in Memorandum No. 473/Y1/70 5 dated 24.7. 1970 (Annex ure 'VII ') is clearly applicable, and for the purpose of seniority the petitioners were given the advantage of two years of service rendered by them prior to their successful ly completing the special qualifying examination. The argu ment is well founded. The learned counsel also pointed out that the standard of the special qualifying examination was not the same as that of the general examination held for recruitment. Besides the weakness in the case of the petitioners as mentioned above, the delay of 8 years on their part to initiate legal remedy is fatal and these writ petitions are fit to be rejected on this ground alone. The writ applica tions are, therefore, dismissed with costs payable to the respondents represented by Mr. Subbarao. G.N. Appeal allowed and writ petition dismissed.

The respondents in the Civil Appeal, were working as Lower Division Clerks in the district police offices/units. Some posts of Lower Division Clerks fell vacant in the Chief Office and it was decided to fill up the same by appointing Lower Division Clerks with good service record from the district police offices. Accordingly a Memorandum was issued on 21.11. 1968 which expressly stated that the appointees would be put at the bottom of the list of Lower Division Clerks already working in the Chief Office. The respondents and two others expressed their willingness to join and also to forego their seniority. Accordingly an order was passed and the respondents joined duty in the Chief Office in 1970 and were placed on probation. They completed the probation satisfactorily and were confirmed with their seniority counted from the dates they joined Chief Office. Later, in 1983 they filed a Representation Petition before the State Administrative Tribunal that in view of Memorandum dated 18.1.1969 which stated that the condition regarding taking last rank would not be insisted upon, the respondents were entitled to count their service rendered in the district police offices/units for the purpose of senior ity in the Chief Office. The Tribunal allowed the petition. The State has preferred the appeal against the said order. The petitioners in the Writ Petitions were appointed in the years 1965 to 1967. Since they did not pass the general examination, a special qualifying examination was held in 1968. They did not appear at the examination. Another chance was given in 1974 and the petitioners successfully cleared the same. By an order dated 17.6.1976, their services were regularised with effect from 1.8.1972. The petitioners challenged the validity of the order, claiming, that their seniority 483 should be counted from the dates they were appointed. Allowing the appeal and dismissing the Writ Petitions, HELD: 1. It has to be appreciated that the cadre of the Chief Office is altogether different from the cadre of the district police offices/ units where the respondents were earlier appointed and they were not liable to be transferred to the Chief Office. The service conditions at the Chief Office were better, which was presumably the reason for the respondents to give up their claim based upon their past services. It is true that the differential advantage was not so substantial as to attract every Lower Division Clerk working in the district offices/units, and in that situation the letter dated 21.11.1968 had to be circulated. However, so far the respondents and the two others were concerned, they found it in their own interest to forego their claim of seniority on the basis of their past services and they did so. It is significant to note that their letters expressing their willingness to join Chief Office by foregoing their seniority were sent to the Inspector General of Police many months after the issuance of circular dated 18.1.1969 stat ing that the condition of foregoing seniority would not be insisted upon and they were allowed to join the Chief Office on clear understanding that they would not be entitled to count their past services. It is, therefore, idle to suggest that the respondents can now turn back and repudiate their commitment expressly made many months after the said circu lar. [297G H; 298A B] 2. So far the allegation regarding payment of travelling allowance is concerned, if some officers permitted the respondents to draw travelling allowance, this cannot be a ground to hold that it was a case of regular departmental transfer. Rule 16 of the Andhra Pradesh Ministerial Service Rules cannot, therefore, be held to be applicable in the present case. [298C E] 3. The petition before the Tribunal was filed by the respondents after a period of 13 years of their initial appointment in the Chief Office, during which period many orders consistent with the terms of service as indicated in the Memorandum dated 21.11.1968, must have been passed in favour of the other incumbents of the service. The courts and tribunals should be slow in disturbing the settled affairs in a service for such a long period. Besides, the respondents, in the application before the Tribunal, did not implead their colleagues who have been prejudicially affect ed by the impugned judgment. It cannot be assumed that the respondents had no knowledge about them. Apart from the merits of the case, the petition of the respondents before the Tribunal 484 was fit to be rejected on these grounds. [298B D] 4. There is also no merit in the contention that the respondents should not be put below those persons who had not successfully completed their probation in the Chief Office on the date the respondents joined there. [299E] 5.1 As regards the Writ Petitions, it is significant to note that although the impugned order was passed in 1976, the petitioners did not commence any legal remedy before the year 1984 when they filed the present application directly before this Court after a period of 8 years. [300C] 5.2 Though a Writ Petition was filed by some of the employees of the Central Office making similar claim of seniority the same was ultimately dismissed by this Court on August 8, 1986. [300E] M. Nirmala and others vs State of Andhra Pradesh and Others, , referred to. 5.3 The respondent officers had joined the Central Office after qualifying at the general examination held for the purpose, and since the petitioners did not appear at the examination, they cannot be equated with the respondent officers. The general examinations for recruitment to the Central Office were held in 1964, 1965, 1966, 1967 and 1968, but the petitioners did not choose to avail of the ordinary method for joining the service. Instead they entered the service by the side door and their department, taking an attitude liberal to them and other similar officers, decided to hold special qualifying examinations. However, for the purpose of seniority the petitioners were given the advan tage of two years of service rendered by them prior to their successfully completing the special qualifying examination. Even the standard of the special qualifying examination was not the same as that of the general examination held for recruitment. [300G H; 301A B]

ivil Appeal No. 21 of 1955. Appeal under Article 133(1)(c) of the Constitution of India against the Judgment and Order dated the 12th January 1954 of the Pepsu High Court in Civil Misc. No. 182 of 1953. M. C. Setalvad, Attorney General of India, Veda Vyas and Jagannath Kaushal, (Naunit Lal, with them),for the appellant. The respondents did not appear. September 15. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. The appellant was a candidate for election to the Legislative Assembly of the State of PEPSU from the Dhuri Constituency, and having secured the largest number of votes was declared duly elected. The first respondent who is one of the electors in the Constituency filed the petition out of which the present appeal arises, for setting aside the election on the grounds, inter alia, (1) that the nomination of one Mali Singh had been wrongly rejected by the returning officer, and (2) that the ap pellant was guilty of the corrupt practice of bribery. The Tribunal held that both these grounds were made out, and accordingly set aside the election. It further recorded a finding in terms of section 99 (1) (a) of the Representation of the People Act No. XLIII of 1951 that the appellant was proved to have committed the corrupt practice of bribery as mentioned in section 123(1) of the Act. The Appellant thereupon filed in the High Court of Patiala and East Punjab States 450 Union an application under Article 227 attacking the finding of the Tribunal that he was guilty of bribery. The order of the Tribunal in so far as it set aside his election was not challenged. By order dated 12 1 1954 the High Court upheld the findings of the Tribunal, and dismissed the application, and by order dated 7 6 1954 granted a certificate for appeal to this Court under Article 133(1)(c). That is how the appeal comes before us. On behalf of the appellant, the learned AttorneyGeneral raised two contentions: (1) The finding that the appellant was guilty of bribery was reached in disregard of the mandatory provisions of section 83, and that it was besides open to other legal objections; and (2) the finding recorded under section 99 of the Act was bad, because no notice was given to the appellant, and no enquiry held as required by the proviso to section 99. This point was not taken in ' the application under Article 227, and was sought to be raised at the time of the argument in the High Court; but the learned Judges declined to entertain it. (1) On the first question, the complaint of the appellant is that in the election petition the allegations relating to bribery were vague and wanting in particulars, and that the petition should accordingly have been dismissed under sections 83 and 85 of the Act; that the charge that was sought to be proved at the hearing was at variance with the charge as alleged in the petition, and that the Tribunal had erred in giving a finding of bribery on the basis not of the allegations in the petition but of the evidence adduced at the trial. The allegations in the petition relating to this charge are as follows: "The sweepers of Small Town Committee, Dhuri were each granted good work allowance at Rs. 5 p.m. for three months only during Election days, simply because they happened to be voters in the said Constituency, vide letter No. ST/1(4)/52/20702 dated 7th December, 1951. All this was done to induce these sweepers to vote for the respondent No. 1, The allowance was against the Rules", 460 The reply of the appellant to this charge was as follows: "The sweepers of Small Town Committee represented to me in writing that their pays should be increased, and they also quoted the pays that the employees of other Small Town Committees and Municipal Committees were getting. The representation was forwarded to the Secretariat. The Secretariat examined it on merits, passed legal orders. Such concessions were also shown to other employees of the various Small Town Committees and Municipal Committees in Pepsu before and after this case. This was an official act done in the routine and not to induce the sweepers to vote for respondent No. 1". On these averments, the following issue was framed: "5. Whether the sweepers of Small Town Committee, Dhuri, were granted good work allowance at Rs. 5 p.m. for three months only during the election days in order to induce them to vote for the Respondent No. 1?" At the trial, the petitioner examined the Darogba of the Small Town Committee (P.W. 28), and five sweepers, P.Ws. 12, 13, 14, 39 and 40, and their evidence was that sometime in November 1951 the appellant came to Dhuri, enquired about the number of sweepers in the service of the Committee, and offered to raise their pay if they would vote for him, that the sweepers thereupon held a meeting and considered the suggestion of the appellant, and then decided to vote for him, if the pay was increased. It must be stated that the appellant was then Minister for Health, and was in charge of Local Administration. On 28 11 1951 he passed an order on a memorial sent by the sweepers that their pay would be increased by Rs. 5 per mensem. Objection to the order was taken by the Department, and thereupon, the appellant passed the modified order dated 7 12 1951 granting good work allowance for a period of three months from December 1951 to February 1952. The Tribunal accepted the evidence on the side of the petitioner that the appellant offered to increase the salary of the sweepers in 1951, and held that the order dated 461 7 12 1951, granting good work allowance for the election period was the outcome of the bargain come to in November 1951, and that the charge of bribery had been established. It is contended for the appellant that in the petition there was no mention of the bargain on which the finding of bribery by the Tribunal was based, that the charge in the petition related only to the order dated 7 12 1951, and that accordingly it was not open to the petitioner to travel beyond the petition and adduce evidence in proof of a bargain which had not been pleaded. This is to put too technical and narrow a construction on the averments. The charge in the petition was not merely that the appellant had passed the order dated 7 12 1951 but that he had passed it with a view to induce the sweepers to vote for him. That clearly raised the question as to the circumstances under which the order came to be passed, whether it was in the course of official routine as the appellant pleaded, or under circumstances which were calculated to influence the voters. Issue 5 put the matter beyond doubt, when it pointedly raised the question whether the grant was "for three months only during the election days in order to induce them (the sweepers) to vote for the respondent No. I". Under the circumstances, the complaint that the evidence and the finding as to the bargain went beyond the pleadings and should be ignored appears to be without any substance. It may be that the allegations in the petition are not as full as they might have been; but if the appellant was really embarrassed by the vagueness of the charge, it was open to him to have called for particulars; but he did not do so. At the trial, the petitioner first adduced evidence, and his witnesses spoke to the bargain in November, 1951. It is stated on behalf of the appellant that he objected to the reception of the evidence on the question of bargain, as it was not pleaded. But this is denied by the petitioner in his affidavit filed in the High Court dated 3 12 1953. Even apart from this, the witnesses on behalf of the petitioner gave evidence on this point on the 8th and 11th 462 November, 15th and 16th December, 1952, and on the 2nd February, 1953. Then the appellant entered on his defence. On 26 2 1951 he examined R.W. 4, a member of the Small Town Committee, to rebut the evidence on the side of the petitioner, and himself went into the box and deposed to the circumstances under which the order came to be passed. Having regard to the above facts, there is and can be no complaint that the appellant was misled, or was prejudiced by the alleged defect in the pleadings. The contention that is urged for him is that the petition should have been dismissed under section 83 for want of particulars. This was rightly rejected by the High Court as without force, and we are in agreement with it. It is next contended that there is no evidence or finding that the sweepers were entitled to vote in the Constituency, or that the appellant was a candidate as defined in section 79(2) at the time when the bargain was made. But the allegation in the petition is clear that the order dated 7 12 1951 was made with a view "to induce the sweepers to vote for the appellant". The reply of the appellant to this was that the order was made in the course of official routine and "not to induce the sweepers to vote" for him. Far from there being any specific denial that the sweepers were electors, the reply of the appellant proceeds on the basis that they were entitle to vote. This objection was not raised before the Tribunal, and, as pointed out by the High Court, P.W. 12 does say in his evidence that he is a voter. This contention must accordingly be overruled. Nor is there any substance in the contention that there is no proof that the appellant was a candidate at the time of 'the bargain. this again is an objection which was not taken before the Tribunal, and on the evidence of the witnesses examined on the side of the petitioner which was accepted by the Tribunal, the appellant would be a prospective candidate as defined in section 79(b) of the Act. The finding that the appellant is guilty of bribery is therefore not open to attack. (2) It is next contended that the order of the 463 Tribunal in so far as it recorded a finding that the ap pellant had committed the corrupt practice specified in section 123(1) is bad, as no notice was given to him as required by the proviso to section 99 and no opportunity to show cause against it. Section 99 runs as follows: "99. (1) At the time of making an order under section 98 the Tribunal shall also make an order(a) whether any charge is made in the petition of any corrupt or illegal practice having been committed at the election, recording (i) a finding whether any corrupt or illegal practice has or has not been proved to have been committed by, or with the connivance of, any candidate or his agent at the election, and the nature of that corrupt or illegal practice; and (ii) the names of all persons, if any, who have been proved at the trial to have been guilty of any corrupt or illegal practice and the nature of that practice, together with any such recommendations as the Tribunal may think proper to make for the exemption of any persons from any disq ualifications which they may have incurred in this connection under sections 141 to 143. Provided that no person shall be named in the order under sub clause (ii) of clause (a) unless(a) he has been given notice to appear before the Tribunal and to show cause why he should not be so named; and (b) if he appears in pursuance of the notice, he has been given an opportunity of cross examining any witness who has already been examined by the Tribunal, and has given evidence against him, of calling evidence in his defence and of being heard The point for decision is whether it was obligatory on the part of the Tribunal to issue notice under the above proviso to parties to the election petition before recording a finding under section 99(1)(a). The contention of the appellant is that under section 99 (1) (a) the Tribunal has to record the names of all persons 59 464 who are proved to have been guilty of corrupt or illegal practice, that that would include both parties to the petition as well as non parties, that the proviso requires that notice should be given to all persons who are to be named under section 99 (1) (a), subclause (ii), and that the appellant was accordingly entitled to fresh notice under the proviso. It is argued that if the language of the enactment is interpreted in its literal and grammatical sense, there could be no escape from the conclusion that parties to the petition are also entitled to notice under the proviso. But it is a rule of interpretation wellestablished that, "Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence". (Maxwell 's Interpretation of Statutes, 10th Edition, page 229). Reading the proviso along with clause (b) thereto, and construing it in its set ting in the section, we are of opinion that notwithstanding the wideness of the language used, the proviso contemplates notice only to persons who are not parties to the petition. The object of giving notice to a person under the proviso is obviously to give him an opportunity to be heard before a finding is given under section 99 (1) (a) (i) that he has committed a corrupt or illegal practice. This clearly appears from clause (b) of the proviso, which enacts that the person to whom notice is to be given should have an opportunity of crossexamining witnesses who had been examined before and given evidence against him, of calling his own evidence and of being heard. This is in accordance with the rule of natural justice which requires that no one should be condemned without being given an opportunity to be heard. The reason of the rule, therefore, requires that notice should be given to persons who had had no previous opportunity in respect of the matters mentioned in sub clause (b) to the pro 465 viso. Such for example would be witnesses, and possibly agents of the parties, as observed in Nyalchand Virchand vs Election Tribunal(1), though it is not necessary to decide that point, but it cannot refer to parties to the petition who have had every opportunity of taking part in the trial and presenting their case. Where an election petition is founded on a charge of corrupt practice on the part of the candidate, that becomes the subject matter of enquiry in the petition itself. , If at the trial the Tribunal came to the conelusion that the charge had been proved, then it has to hold under section 100(2) (b) that the election is void, and pass an order to that effect under section 98 (d). Section 99 (1) enacts that the finding of corrupt practice under section 99 (1) (a) (i) or naming a person under section 99 (1) (a) (ii) should be at the time of making an order under section 98. If the contention of the appellant is to be accepted, then the result will be that even though there was a full trial of the charges set out in the petition, if the Tribunal is disposed to bold them proved it has first to give notice of the finding which it proposes to give, to the parties, and hold a fresh trial of the very matters that had been already tried. That is an extraordinary result, for which it is difficult to discover any reason or justification. It was argued by the learned Attorney "General that the giving to a party to a proceeding a second opportunity to be heard was not unknown to law, and he cited the instance of an accused in a warrant case being given a further opportunity to recall and cross examine prosecution witnesses after charge is framed, and of a civil servant being given an opportunity under Article 311 to show cause against the action proposed to be taken against him. In a warrant case, the accused is not bound to crossexamine the prosecution witnesses before charge is framed, and in the case of civil servants, the decision that they are entitled to a second opportunity was based on the peculiar language of sections 240(2) and (3) of the Government of India Act, 1935, and Article 311 of the Constitution. They are (1) [1953] 8 Election Law Reports 417, 421, 466 exceptional cases, and do not furnish any safe or useful guidance in the interpretation of section 99. The appellant also sought support for his contention that notice should be given under the proviso even to persons who are parties to the election petition, in the provision in section 99 (1) (a) (ii) that the Tribunal might make such recommendations as it thinks proper for exemption of any persons from any disqualifications which may have been incurred under sections 141 to 143. The argument is that the disqualifications mentioned in section 143 could only be with reference to candidates, as they relate to default in filing return of election expenses or in filing false returns, that before the Tribunal could take action under this provision it would have to give notice to the persons affected thereby who must necessarily be parties to the petition, and that if the proviso applies when action is to be taken under section 143, there is no reason why it should not apply when action is to be taken under the other sections of the Act as well. The fallacy in this argument is in thinking that notice to a person is requisite for making a recommendation under section 99(1) (a) (ii). Section 99(1) (a) (ii) deals with two distinct matters naming persons who are proved to have been guilty of corrupt and illegal practices, and recommending whether there should be any exemption in respect of the disqualifications mentioned in sections 141 to 143, and the proviso, properly construed, requires notice only in the former case and not the latter. It will be noticed that while in cases falling within sections 139 and 140 the disqualification is automatic and immutable, in cases falling within sections 141 to 143 the Election Commission has power to grant exemption under section 144 of the Act. It is to guide the Commission in exercising its powers under section 144, that the Tribunal is directed in section 99 (1) (a) (ii) to make any recommendations with reference thereto. The jurisdiction of the Tribunal in respect of this matter is purely advisory. There is nothing to prevent the Commission from taking up the question of exemption under section 144 suo motu, even though the 467 Tribunal has made no recommendation. Indeed, there is nothing to prevent the person adversely affected from applying directly to the Commission for exemption. While, therefore, there is compelling reason why a person should have an opportunity of showing cause before he is named, there is none such when the question is one of recommendation. As we construe the proviso, it confers no right on any person, party or stranger, to be heard on the question whether he should be recommended for exemption from the disqualifications under sections 141 to 143. The provision for exemption in section 99 (1) (a) (ii) therefore does not lend any support to the contention of the appellant that notice should be given to parties to the petition under the proviso before they are named. Reliance was also placed by the appellant on the decision of the Election Tribunal in Kesho Ram vs Hazura Singh(1), wherein it was held by a majority that notice under the proviso to section 99 should be given to the parties to the petition also. For the reasons given above, we do not agree with the decision of the majority. Our conclusion is that while the persons to be named under section 99(1)(a)(ii) would include both parties to the petition as well as non parties, the proviso thereto applies only to persons who had no opportunity of taking part in the trial, and that, therefore, whether notice should issue under the proviso will depend on whether the person had an opportunity to cross examine witnesses who had given evidence against him and to adduce his own evidence. This conclusion is in accord with the law in England. Under section 140 sub clause (1) of the Representation of the People Act, 1949, an election Court has to state in its report the names of all persons who are found guilty of corrupt and illegal practice but "in the case of some one who is not a party to the petition nor a candidate on behalf of whom the seat or office is claimed by the petition", the court has to issue notice to him, give him an opportunity of being (1) (1953] 8 Election Law Reports 320. 468 heard by himself, and calling evidence in his defence. It was sugested for the appellant that the law as enacted in section 99 makes a deliberate departure from that under section 140(1) of the English Act. The difference in the wording between the two sections is due to the difference in the arrangement of the topics of the two statutes, and there is no reason to hold that with reference to the substance of the matter, there was any intention to depart from the English law on the subject; nor is there any reason therefor. In the present case, the appellant was a party to the petition, and it was his election that was being questioned therein. He had ample opportunity of being heard, and was, in fact, heard, and therefore there was no need to issue a notice to him under the proviso to section 99 before recording a finding under section 99 (1) (a) (ii). Further, even if we agree with the contention of the appellant that notice under the proviso should be given to a party to the petition, seeing that the reliefs which could be claimed in the election petition under section 84 are those mentioned in section 98, and that action under section 99 (1) (a) is to be taken at the time when the order under section 98 is pronounced, there is no insuperable difficulty in treating the notice to the party in the election petition as notice for purposes of the proviso to section 99(1) (a) as well. This reasoning will not apply to persons who are not parties to the petition, and a notice to them will, be necessary under the proviso, before they axe named. In the result, all the contentions urged in support of the appeal fail, which must accordingly be rejected. As the respondent has not appeared to contest the appeal, there will be no order as to costs.

Where the respondent in an election petition contended that the allegations in the election petition were vague and wanting in particulars, but did not call for any particulars which it was open to him to do and was not found to have been misled or in any way prejudiced in his defence, it was not open to him to contend that the petition was liable to be dismissed for non compliance with the provisions of section 83 of the Act. Clauses (a) and (b) of the proviso to section 99 of the Representation of the People Act read together leave no scope for doubt that clause (a) contemplates notice only to such persons as were not parties to the election petition and it is, therefore, not obligatory on the Tribunal under cl. (a) to issue notices on such persons as were parties in order that it may name them for disqualification under sub clause (ii) of section 99(1)(a) of the Act. Clause (b) to the proviso obviously has the effect of excluding such persons as have already had the opportunity of cross examining witnesses, calling evidence and of being heard, which the clause seeks to afford. The Indian and the English Law on the matter are substantially the same. Kesho Ram vs Hazura Singh, [1953] 8 Election Law Reports 320, overruled. The jurisdiction that sub clause (ii) of section 99(1)(a) of the Act confers on the Tribunal for making recommendation for exemption 458 from disqualifications mentioned in sections 141 to 143 is purely advisory. Where it omits to do so, aggrieved parties have access to the Election Commission which under section 144 has the power to act suo motu. No person, be he a party or a stranger, has a right to be heard by the Tribunal on the question of such exemption and, therefore, no question of any service of notice under the proviso in this regard can arise. Even supposing that the proviso requires notice on a party to the election petition, the notice to him of the election petition itself can be treated as a notice under the proviso.

Appeal No. 728 of 1964. Appeal by special leave from the. judgment and decree dated September 25, 1961 of the Punjab High Court in Civil Regular Second Appeal 343 of 1961. section K. Mehta and K. L. Mehta, for the appellant. A. D. Mathur, for the respondents. The Judgment of the Court was delivered by Bhargava, J. One Ramji Dass died leaving behind a widow, Smt. Bhagwani. At the time of his death, he owned some land and a house. 4 bighas and 17 biswas of the land were mortgaged by Smt. Bhagwani on 2nd May, 1948 in favour of respondent No. 3, Babu Ram. Later, on 22nd August, 1949, she executed a deed of gift in respect of the house and the land covering an area of 50 bighas and 14 biswas in favour of Smt. Kala Wanti who was related to her as a grandniece. Sawan Ram appellant instituted a suit for a declaration that both these alienations were without legal necessity and were not binding on him, claiming that he was the nearest reversioner of Ramji Dass, being his collateral. In that, suit, Smt. Bhagwni the donee, Smt. Kala Wanti, respondent No. 1, and the mortgagee, Babu Ram, respondent No. 3, were impleaded as defendants. That suit was decreed and Smt. Bhagwani went up in appeal to the High Court. During the pendency of the appeal, Smt. Bhagwani adopted respondent No. 2, Deep Chand, the son of Brahmanand and his wife, respondent No. 1, Smt. Kala Wanti. A deed of adoption was executed by her in that respect on 24th August, 1959. The appeal was dismissed in spite of this adoption. Bhagwani died on 31st October, 1959, and thereupon, the appellant brought a suit for possession of the house and the land which had been gifted by Smt. Bhagwani to respondent No. 1 as well as for possession of the land which she had mortgaged with respondent No. 3. It was claimed that Smt. Bhagwani had only a life interest in all these properties, because she had divested herself of all the rights in those properties on 22nd August, 1949, before the (No. 30 of 1956) came into force. The adoption of Deep Chand was also challenged as fictitious and ineffective. It was further urged that, even if that adoption was valid, Deep Chand became the adopted son of Smt. Bhagwani and could not succeed to the properties of Ramji Dass. The suit was dismissed by the trial court, holding that the adoption of Deep Chand was valid and that, though Smt. Bhagwani had not become the full owner of the property under the , Deep Chand was entitled to succeed to the property of Ramji Dass in preference to the appellant, so that the appellant could not claim possession of these pro 689 perties. That order was upheld by the High Court. of Punjab, and the appellant has now come up to this Court in appeal by special leave. In this appeal before us, only two points have been urged by learned counsel for the appellant. The first point taken is that, even though the appellant did not challenge the finding of fact that respondent No. 2 was, in fact, adopted by Smt. Bhagwani, that adoption was invalid under clause (Ii) of section 6 read with sub section (2) of section 9 of the (No. 78 of 1956) (hereinafter referred to as "the Act"). It is urged that, under section 9 (2) of the Act, if the father of a child is alive, he alone has the right to give in adoption, though the right is not to be exercised, save with the consent of the mother. In this case, reliance was placed on the language of the deed of adoption dated 14th August, 1959, to urge that Deep Chand was, in fact, given in adoption to Smt. Bhagwani by his mother, respondent No. 1, even though his father, Brahmanand, was alive. This point raised on behalf of the appellant is negatived by the evidence on the record. There is oral evidence of the adoption which has been accepted by the lower courts, and it shows that. Deep Chand was given in adoption by both the parents to Smt. Bhagwani. Even the deed of adoption dated 24th August, 1959, on which reliance was placed on behalf of the appellant in support of this argument, does not bear out the suggestion that Deep Chand was given in adoption by his mother and not by his father. The deed clearly mentions that "the parents of Deep Chand have, of their own free will, given, Deep Chand to me, the executant, today as my adopted son. " This recitation is followed by a sentence which states : "Mst. Kala Wanti, mother of Deep Chand, has put her thumb mark hereunder in token of her consent. " It was from this solitary sentence that inference was sought to be drawn that Deep Chand had been given in adoption by his mother, Kala Wanti and not by the father. The deed, in the earlier sentence quoted above, clearly mentions that Deep Chand had been given in adoption by his "parents" which necessarily includes the father. This later sentence, it appears, was put in the deed, because section 9(2) of the Act mentions that the father is not to exercise his right of giving his child in adoption, save with the consent of the mother. "The consent of the mother" having been used in the Act which was applicable, the draftsmen of the deed included in it the fact that Deep Chand 's mother had actually given her consent and obtained her thumb impression in token thereof. This mention of the consent cannot, in these cir cumstances, be held to show that it was the mother who, in fact, gave the child in adoption and not the father. The second point and the one, on which reliance is mainly placed by learned counsel for the appellant, is that, according 690 to him, under the Act, an independent right of adoption is given to a Hindu female and if a widow adopts a son, he becomes the adopted son of the widow only and is not to be deemed to be the son of her deceased husband. Under the Shastric Hindu Law, no doubt, if a Hindu widow made an adoption after the death of her husband on the basis of consent obtained from him in his lifetime, the adopted son was deemed to be the son of the deceased husband also; but it is urged that the Act has completely changed this policy. In support of this proposition, learned counsel drew our attention to the provisions of section 8 of the Act, under which any female Hindu, who is of sound mind, who is not a minor, and who is not married, or if married, whose marriage has been dissolved or whose husband is dead or has completely and finally renounced the world or has ceased to be a Hindu or has been declared by a court of competent jurisdiction to be of unsound mind, has been granted the capacity to take a son or a daughter in adoption. Then reference was made to section 12 of the Act, which runs as follows : "12. An adopted child shall be deemed to be the child of his or her adoptive father or mother for all purposes with effect from the date of adoption and from such date all the ties of the child in the family of his or her birth shall be deemed to be severed and replaced by those created by the adoption in the adoptive family; Provided that (a) the child cannot marry any person whom he or she could not have married if he or she had continued in the family of his or her birth; (b) any property which vested in the adopted child before the adoption shall continue to vest in such person subject to the obligations, if any, attaching to the owner ship of such property, including the obligation to maintain relatives in the family of his or her birth , (c) the adopted child shall not divest any person of any estate which vested in him or her before the adoption. " Reliance was also placed on sections 13 and 14 of the Act which are reproduced below: "13. Subject to any agreement to the contrary, an adoption does not deprive the adoptive father or mother of the power to dispose of his or her property by transfer inter vivos or by will. (1) Where a Hindu who has a wife living adopts a child, she shall be deemed to be the adoptive mother. 691 (2) Where an adoption has been made with the consent of more than one wife, the senior most in marriage among them shall be deemed to be the adoptive mother and the others to be, step mothers. (3) Where a widower or a bachelor adopts a child, any wife whom he subsequently marries shall be. deemed to be; the stepmother of the adopted child. (4) Where a widow or an unmarried woman adopts a child, any husband whom she marries subsequently shall be deemed to be the stepfather of the adopted child. " On the basis of these provisions, it was urged that the scheme of the Act is that, when a Hindu female adopts a child, he becomes the adopted son of the Hindu female only and does not necessarily become the son of the deceased husband, if the Hindu female be a widow. Emphasis was laid on the fact 'that even an unmarried female Hindu is permitted to take a son or daughter in adoption and in such a case, naturally, no question would arise of the adopted child becoming the adopted son of a Hindu male also. In this connection, reliance was placed on a decision of the High Court of Andhra Pradesh in Nara Hanumantha Rao vs Nara Hanumayya and Another(1). For convenience, the facts of that case may be briefly reproduced as given in the head note to indicate the question of law that fell to be decided. A and his two sons B and C were members of a Hindu joint family. B died on 26th August, 1924 leaving behind his widow D. A died in the year 1936. On 17th June, 1957, D adopted E, and E filed the suit against C and his son F for partition and separate possession of a half share in the properties. The trial court held : (1) that there is a custom among the members of the Kamma caste, to which the parties belonged, whereby the adoption of a boy more than 15 years old is valid; and (2) that the adoption of E could not have the result of divesting the interest of B that had vested in C long prior to the date of the adoption, having regard to the provisions of the Act. In appeal, the High Court upheld the decision of the trial court on both the points that were raised. The existence of the caste custom, by which boys aged more than 15 years could be adopted, was held to be sufficiently proved by evidence. Then the High Court proceeded to consider the provisions of the Act to find out whether E could claim a share in the property of B, the deceased husband of D who had adopted him. The learned Judges of the High Court enumerated the contents of the various relevant sections of the Act and then proceeded to consider whether E could claim a right in the property left by B. The Court, after reproducing the provisions of section 12 of the Act held : (1) [1964] I Andhra Weekly Reporter, 156. 69 2 "Under the terms of the above section, an adopted child is deemed to be the child of his or her adoptive father or mother for all purposes with effect from the date of the adoption. Relying on the words "for all purposes", it is argued that the adopted child has the same rights and privileges in the family of the adopter as the legitimate child. From the language of the section, it is manifest that an adopted child is deemed to be the child of his or her adoptive father or mother. The use of the word "or" between the words "father" and "mother ' makes this abundantly clear. The use of the expression "with effect from the date of adoption" as also the language of clause (c) of the Proviso are important. The expression "with effect from the date of adoption" introduces a vital change in the pre existing law. Under the law as it stood before the Act came into operation, the ground on which an adopted son was held entitled to take in defeasance of the rights acquired prior to his adoption was that, in the eye of law, his adoption related back, by a legal fiction, to the date of death of his adoptive father. The rights of the adopted son, which were rested on the theory of "relation back", can no longer be claimed by him. This is clear from the specific provision made in section 12 that the rights of the adopted are to be determined with effect from the date of adoption. Clause (c) of the Proviso to section 12 lays down the explicit rule that the adoption of a son or daughter, by a male or female Hindu is not to result in the divesting of any estate vested in any person prior to the adoption. " When finally expressing its opinion on the question of law, the Court said : "The Act has made a notable departure from the previous law in allowing a widow to adopt a son or daughter to herself in her own right. Under the Act, there is no question of the adopted child divesting of any property vested in any person or even in herself. The provisions of section 13 make this position clear, by providing that an adoption does not deprive the adoptive father or mother of the powers to dispose of his or her property by transfer inter vivos or by will. On a fair interpretation of the provisions of section 12 of the Act, we are of the opinion that the section has the effect of abrogating the ordinary rule of Mitakshara law that, as a result of the adoption made by the widow, the adoptee acquires rights to the share of his. deceased 39 6 adoptive father which has passed by survivorship to his father 's brothers. " We are unable to accept this interpretation of the provisions of the Act by the Andhra Pradesh High Court as it appears to us that the High Court ignored two important provisions of the Act and did not consider their effect when arriving at its decision. The first provision, which is of great significance, is contained in section 5 (1) of the Act which lays down : "No adoption shall be made after the commencement of this Act by or to a Hindu except in accordance with the provisions contained in this Chapter, and any adoption made in contravention of the said provisions shall be void. " It is significant that, in this section, the adoption to be made is mentioned as "by or to a Hindu". Thus, adoption is envisaged as being of two kinds. One is adoption by a Hindu, and the other is adoption to a Hindu. If the view canvassed on behalf of the appellant be accepted, the consequence will be that there will be only adoptions by Hindus and not to Hindus. On the face of it, adoption to a Hindu was intended to cover cases where an adoption is by one person, while the child adopted becomes the adopted son of another person also. It is only in such a case that it can be said that the adoption has been made to that other person. The most common instance will naturally be that of adoption by a female Hindu who is married and whose husband is dead, or has completely and finally renounced the world, or has been declared by a court of competent jurisdiction to be of unsound mind. In such a case, the actual adoption would be by the female Hindu, while the adoption will be not only to herself, but also to her husband who is dead, or has completely and finally renounced the world or has been declared to be of unsound mind. The second provision, which was ignored by the Andhra Pradesh High Court, is one contained in section 12 itself. 'The section, in its principal clause, not only lays down that the adopted child shall be deemed to be the child of his or her adoptive father or mother for all purposes with effect from. the date of the adoption, but, in addition, goes on to define the rights of such an adopted child. It lays down that from such date all the ties of the child in the family of his or her birth shall be deemed to be severed and replaced by those created by the adoption in the adoptive family. A question naturally arises what is the adoptive family of a child who is adopted by a widow, or by a married woman whose husband has completely and finally renounced the world or has been declared to be of unsound mind even though alive. It is well recognized that, after a female is married, she belongs to the family of her husband. The child adopted by her must also, therefore, belong to the same family. On adoption by a widow, therefore, the adopted son is to be deemed to be a member of the family of the deceased husband of the widow. Further still, he loses all his rights in the family of his birth and those rights 694 are replaced by the rights created by the adoption in the adoptive family. The right, which the child had, to succeed to property by virtue of being the son of his natural father, in the family of his birth, is, thus, clearly to be replaced by similar rights in the adoptive family and, consequently, he would certainly obtain those rights in the capacity of a member of that family as an adopted son of the deceased husband of the widow, or the married female, taking him in adoption. This provision in section 12 of the Act, thus, itself makes it clear that, on adoption by a Hindu female who has 'been married, the adopted son will, in effect, be the adopted son of her husband also. This aspect was ignored by the Andhra Pradesh High Court when dealing with the effect ,of the language used in other parts of this section. It may, however, be mentioned that the conclusion which we have arrived at does not indicate that the ultimate decision given by the Andhra Pradesh High Court was in any way incorrect. As we have mentioned earlier, the question in that case as whether E, after the adoption by D, the widow of B, could divest C of the rights which had already vested in C before the adoption. It is significant that by the year 1936 C was the sole male member of ,the Hindu joint family which owned the disputed property. B died in the year 1924 and A died in 1936. By that time, the Hindu Women 's Rights to Property Act had not been enacted and, consequently, C, as the sole male survivor of the family became full owner of that property. In these circumstances, it was clear that after, the adoption of E by D, E could not divest C of the rights already vested in him in view of the special provision contained in clause (c) of the proviso to section 12 of the Act. It appears that, by making such a provision, the Act has narrowed down the rights of an adopted child as compared with the rights of a child born posthumously. Under the Shastric law, if a child was adopted by a widow, he was treated as a natural born child and, consequently, he could divest other members of the family of rights vested in them prior to his adoption. It was only with the limited object of avoiding any such consequence on the adoption of a child by a Hindu widow that these provisions in clause (c) of the proviso to section 12, and section 13 of the Act were incorporated. In that respect, the rights of the adopted child were restricted. It is to be noted that this restriction was placed on the rights of a child adopted by either a male Hindu or a female Hindu and not merely in a case of adoption by a female Hindu. This restriction on the rights of the adopted child cannot, therefore, in our opinion, lead to any inference that a child adopted by a widow will not be deemed to be the adopted son of her deceased husband. The second ground taken on behalf of the appellant also, therefore, fails. The appeal is, consequently, dismissed with costs. Y.P. Appeal dismissed.

A widow, whose husband had died before the Hindu Succession Act came into force, adopted respondent 2 after the enforcement of the Act. On the widow 's death, the appellant the nearest reversioner of her husband, filed a suit challenging the adoption. The trial court dismissed the suit, which, in appeal, the High Court upheld. In appeal, to this Court the appellant contended that (i) the adoption was invalid under (ii) of section 6 read with section 9 (2) of the as the son was given in adoption by his mother, even though his father was alive; and (ii) under the , an independent right of adoption is given to Hindu female and if a widow adopts a son, he becomes the adopted son of the widow only and was not deemed to be the son of her deceased husband. HELD : The appeal must be dismissed. (i) The evidence on record established that the son was given in adoption by both the parents. The deed of adoption mentions that the had been given in adoption by his "Parents which necessarily includes the father. The following sentence stating that the mother of the boy had 'put her thumb mark hereunder in token of her consent, ' was put in the deed, because section 9(2) of the Adoptions and Maintenance Act mentions that the father is not to exercise his right of giving his child in adoption, save with the consent of the mother. "The consent of the, mother" having been used in the Act which was applicable, the draftsmen of the deed included in it the fact that the boy 's mother had actually given her consent and obtained her thumb impression in token thereof. 689D H] (ii) The provision in section 12 of the Act, makes it clear that, on adoption by a Hindu female who has been married, the adopted son will, in effect, be the adopted son of her husband also. Under the Shastric Law if a child was adopted by a widow, he was treated as a natural born child and, consequently, he could divest other members of the family of rights vested in them prior to his adoption. It was only with the limited object of avoiding any such consequence on the adoption of a child by a Hindu widow that the provisions in clause (c) of the proviso to section 12, and section 13 of the Act were incorporated. In that respect, the rights of the adopted child were restricted. It is to be noted that this restriction was placed on the rights of a child adopted by either a male Hindu or a female Hindu and not merely in a case of adoption by a female Hindu. This restriction on the rights of the adopted child cannot, therefore, lead to any inference that a child adopted by a widow will not be deemed to be the adopted son of her deceased husband. [694B C,F H] Nara Hanumantha Rao vs Nara Hanumayya and another, [1964] 1 Andhra Weekly Reporter, 156, discussed.

s Nos. 188 and 189 of 1954. Under article 32 of the Constitution of India for the enforcement of Fundamental Rights. H. M. Seervai, J. B. Dadgchanji and Rajinder Narain for petitioners. C. K. Daphtary, Solicitor General for India (M.M. Kaul and P. G. Gokhale, with him) for respondent. October 14. The Judgment of the Court was delivered by MUKHERJEA J. We now take up the two connected petitions under article 32 of the Constitution. In one of these petitions, to wit Petition No. 188, Shri Bijay Cotton Mills Ltd. (hereinafter called 'the company '), the appellant in Civil Appeal No. 139 of 1954, figures as the petitioner, while the other petition, to wit, 755 Petition No. 189, has been filed by a number of employee working under it. To appreciate the contentions of Mr. Seervai, who appears in support of both these petitions, it will be necessary to narrate a few antecedent facts : It appears that sometime in 1950 there was an industrial dispute between the company and its labourers regarding enhancement of wages and the dispute was referred by the Government of Ajmer to an. Industrial Tribunal, by a notification dated the 1st December, 1950. The tribunal made its award on the 27th November, 195 1, and held that "the present earning capacity of the mill precludes the award of higher rates of wages and higher dearness allowance. " The employees took an appeal against this award to the Appellate Tribunal. While this appeal was pending, the Chief Commissioner, Ajmer, took steps for the fixation of minimum wages of labourers in the textile industry within the State, under the provisions of the Minimum Wages Act. A committee was formed, as has already been stated, on the 17th of January, 1952, which submitted its report on the 4th of October, following and on the 7th of October, 1952, the notification was issued fixing the minimum rates of wages, against which writ petitions were filed by several textile companies including the petitioner company. In the meantime however the appeal filed by the labourers of the company proceeded, in the usual way, before the Appellate Tribunal. The Appellate Tribunal sent the case back to the Industrial Tribunal for further investigation and the latter made its final award on the 8th of September, 1953, by which it rejected the basis upon which minimum wages of Rs. 56 were fixed by the Chief Commissioner and fixed the minimum wages including the dearness allowance at Rs. 35 only. The company states in its petition that the minimum wages fixed by the State Government of Ajmer is altogether prohibitory and it is not at all possible for the company to carry on its business on payment of such wages. Accordingly the company closed its mills on and from the 1st April, 1953. There were about 1500 labourers working in the mills of the company and since January, 1954, several hundreds of 754 them, it is said, approached the managing authorities and requested them to open the mills expressing their willingness to work at Rs. 35 as wages as fixed by the Industrial Tribunal. Though the majority of workers were agreeable to work on the wages fixed by the Industrial Tribunal, the company is unable to open the mills by reason of the fact that the Minimum Wages Act makes it a criminal offence not to pay the wages fixed under the Act. This being the position and as the Minimum Wages Act stands in the way of the company 's carrying on its business, on terms agreed to between itself and its workers, Petition No. 188 of 1954 has been filed by the company challenging the constitutional validity of the material provisions of the Minimum Wages Act itself. The workmen who are willing to work at less than the minimum wages fixed by the State Government have filed the other petition supporting all the allegations of the company. Mr. Seervai, who appears in support of both these petitions, has invited us to hold that the material provisions of the Minimum Wages Act are illegal and ultra vires by reason of their conflicting with the fundamental rights of the employers and the employed guaranteed under article 19(1) (g) of the Constitution and that they are not protected by clause (6) of that article. It is contended by the learned counsel that the Minimum Wages Act puts unreasonable restrictions upon the rights of the employer in the sense that he is prevented from carrying on trade or business unless he is prepared to pay minimum wages. The rights of the employees are also restricted, inasmuch as they are disabled from working in any trade or industry on the terms agreed to between them and their employers. It is pointed out that the provisions relating to the fixation of minimum wages are unreasonable and arbitrary. The whole thing has been left to the unfettered discretion of the "appropriate Government" and even when a committee is appointed, the report or advice of such committee is not binding on the Government. The decision of the committee is final and is not open to further review or challenge in any Court of law. The learned counsel further says that the restrictions put by the Act are altogether unreasonable 755 and even oppressive with regard to one class of employers, who for purely economic reasons are not able to pay the minimum wages but who have no intention to exploit labour at all. In such cases the provisions of the Act have no reasonable relation to the object which it has in view. We will examine these contentions in their proper order. It can scarcely be disputed that securing of living wages to labourers which ensure not only bare physical subsistence but also the maintenance of health and decency, is conducive to the general interest of the public. This is one of the Directive Principles of State Policy embodied in article 43 of our Constitution. It is well known that in 1928 there was a Minimum Wages Fixing Machinery Convention held at Geneva and the resolutions passed in that convention were embodied in the International Labour Code. The Minimum Wages Act is said to have been passed with a view to give effect to these resolutions (vide section I. Est., etc. vs The State of Madras)(1). If the labourers are to be secured in the enjoyment of minimum wages and they are to be protected against exploitation by their employers, it is absolutely necessary that restraints should be imposed upon their freedom of contract and such restrictions cannot in any sense be said to be unreasonable. On the other hand, the employers cannot be heard to complain if they are compelled to pay minimum wages to their labourers even though the labourers, on account of their poverty and helplessness, are willing to work on lesser wages. We could not really appreciate the argument of Mr. Seervai that the provisions of the Act are bound to affect harshly and even oppressively a particular class of employers who for purely economic reasons are unable to 'pay the minimum wages fixed by the authorities but have absolutely no dishonest intention of exploiting their labourers. If it is in the interest of the general public that the labourers should be secured adequate living wages, the intentions of the employers whether good or bad are really irrelevant. Individual employers might find it difficult to carry on the business on the basis of the minimum wages fixed under the (1) ,521. 756 Act but this must be due entirely to the economic conditions of these particular employers. That cannot be a reason for the striking ' down the law itself as unreasonable. As regards the procedure for the fixing of minimum wages, the "appropriate Government" has undoubtedly been given very large powers. But it has to take into consideration, before fixing wages, the advice of the committee if one is appointed, or the representations on his proposals made by persons who are likely to be affected thereby. Consultation with advisory bodies has been made obligatory on all occasions of revision of minimum wages, and section 8 of the Act provides for the appointment of a Central Advisory Board for the purpose of advising the Central as well as the State Government both in the matter of fixing and revision of minimum wages. Such Central Advisory body is to act also as a coordinating agent for coordinating the work of the different advisory bodies. In the committees or the advisory bodies the employers and the employees have an equal number of representatives and there are certain independent members besides them who are expected to take a fair and impartial view of the matter. These provisions in our opinion, constitute an adequate safeguard against any hasty or capricious decision by the "appropriate Government. " In suitable cases the "appropriate Government" has also been given the power of granting exemptions from the operation of the provisions of this Act. There is no provision undoubtedly for a further review of the decision of the "appropriate Government", but we do not think that by itself would make the provisions of the Act unreasonable. In our opinion, the restrictions, though they interfere to some extent with the freedom of trade or business guaranteed under article 19(1) (g) of the Constitution, are reasonable and being imposed in the interest of the general public are protected by the terms of clause (6) of article 19. The result is that the petitions are dismissed. We make no order as to costs. Petitions dismissed.

The provisions of sections 3, 4 and 5 of the Minimum Wages Act (XI of 1948) empower the appropriate Government to fix the minimum rate of wages in an industrial dispute between the employer and the employed and it is a criminal offence not to pay the wages thus fixed under the Act. Held, that the restrictions imposed upon the freedom of contract by the fixation of minimum rates of wages though they interfere to some extent with the freedom of trade or business guaranteed under article 19(1)(g) of the Constitution are not unreasonable and being imposed in the interest of general public and with a view to carry out one of the Directive Principles of State Policy as embodied in article 43 of the Constitution are protected by the terms of el. (6) of article 19. section 1. vs The State of Madras, (1954) 1 M.L.J. 518 referred to.

ivil Appeal No. 3388 of 1984. From the Judgment and Order dated 4.4.1989 of the Andhra Pradesh High Court in C.R.P. No. 1450 of 1981. A.K. Sen, C. Sitaramiah, P.A. Chaudhary, K. Jagannatha Rao, P.R. Ramachandra Murthy, Mrs. Anjani, K. Ram Kumar, Y.P. Rao, P.S.R. Murhty, B. Kanta Rao, N.D.B. Raju, R.N. Keshwani, R.F. Nariman, Raj Kumar Gupta, P.C. Kapur, Rajen dra Chaudhary, A. Subba Rao, K.R. Nagaraja, P.K. Rao, A.T.M. Sampath, P.N. Ramalingam, R. Venkatramani, G. Narasimhulu, G.N. Rao and S.K. Sucharita for the Appellants. K. Parasaran, T.V.S.N. Chari, Mrs. B. Sunita Rao, Ms. Manjula Gupta and V. Sekhar for the Respondents. The Judgment of the Court was delivered by KANIA, J. This is a group of matters comprising Civil Appeal No. 3388 of 1984 in this Court and other cases which have been placed before us for hearing along with this appeal. We propose to deal first with Civil Appeal No. 3388 of 1984. This appeal by special leave is directed against a judgment of the Andhra Pradesh High Court in Civil Revision Petition No. 1450 of 1981. The question involved in the appeal before the High Court from which this appeal arises was whether land which has been agreed to be sold by the owner under an agreement of sale and possession of which was delivered in part performance of the agreement .for sale but pursuant to which no conveyance had been executed till the relevant date, could be included both in the holding of the owner vendor as 223 well as the purchaser or whether it was liable to be includ ed only in the holding of the purchaser for the purposes of the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 (hereinafter referred to as 'the said Act '). There are a number of connected matters where the same question is involved and which have been placed for hearing before us. In some of these cases, a part of the considera tion has been paid and in a few others, the entire consider ation has been paid. It has also been alleged that the possession of the land was transferred to the purchaser pursuant to the agreements of sale referred to. In some of these cases, lands belonging to the owners have been given on lease to tenants who are in possession thereof as les sees. In order to appreciate the controversy arising before us, it is necessary to bear in mind the relevant provisions of the said Act. Before the said Act was enacted, there was in force in Andhra Pradesh an Act entitled Andhra Pradesh (Ceiling on Agricultural Holdings) Act, 1961 which provided for the imposition of a ceiling on holdings of agricultural land. After that Act had been in force for some time, the Central Committee on Land Reforms made certain recommenda tions regarding the fixation of ceiling on agricultural holdings and in line with this proposed policy, the said Act was enacted in 1973 to bring about comprehensive legislation for the imposition of ceiling on agricultural holdings in the State of Andhra Pradesh and with a view to replace the aforesaid Act of 1961 as well as Andhra Pradesh Agricultural Lands (Prohibition of Alienation Act, 1972). The object of the legislation was to take over the lands in excess of the ceiling prescribed and to distribute the same among landless and other deserving persons to subserve the common good. The said Act was included in the Ninth Schedule to the Constitu tion at Item 67 by the Constitution 34th (Amendment) Act and was protected under Article 31 A. The object of the said Act was agrarian reform. Under sub section (c) of section 3 of the said Act 'ceiling area ' is defined as under: "3(c): 'ceiling area ' means the extent of land specified in section 4 or section 4 A to be ceiling area. " It may be mentioned here that the agricultural land was classified into wet land, dry land and so on and appropriate areas were fixed as ceiling in respect of such lands taking into account the nature and yield capacity of the lands in question. Section 3(i) runs as follows: 224 "3(i): 'holding ' means the entire land held by a person (i) as an owner; (ii) as a limited owner; (iii) as an usufructuary mortgagee; (iv) as a tenant; (v) who is in possession by virtue of a mortgage by condi tional sale or through part performance of a contract for the sale of land or otherwise; or in one or more of such capacities; and the expression 'to hold land ' shall be construed accordingly; Explanation: Where the same land is held by one person in one capacity and by another person in any other capacity, such land shall be included in the holding of both such persons. " Section 3(m) provides that "notified date" means the date notified under sub section (3) of section 1 on which the said Act came into force. It may be mentioned that the notified date in respect of the said Act is 1.1.1975. Very briefly stated, under section 4, the ceiling area in the case of a family unit consisting of not more than five members was prescribed as one standard holding. Where the family consisted of more than five members, there was, broadly speaking, a proportionate increase in the ceiling area. Under section 5, the standard holding is fixed taking into account the classification of the land according to the nature of the land. Sub section (1) of section 7 runs as follows: "7(1). Special provision in respect of certain transfers, etc. already made: Where on or after the 24th January, 1971 but before the notified date, any person has transferred whether by way of sale, gift, usufructuary mortgage, exchange, settlement, surrender or in any other manner whatsoever, any land held by him or created a trust of any land held by him, then the burden of proving that such transfer or creation of trust has not been effected in anticipation of, and with a view to avoiding or defeating the objects of any law relating to a reduction in the ceiling on agricultural holdings, shall be on 225 such person, and where he has not so proved, such transfer or creation of trust, shall be disregarded for the purpose of the computation of the ceiling area of such person. " Very briefly stated, sub section (2) of section 7 pro vides inter alia that any alienation made. by way of sale, lease for a period exceeding six years, gift, exchange, usufructuary mortgage or otherwise as set out in the said sub section on or after 2nd May, 1972 and before the noti fied date in contravention of the Andhra Pradesh Agricultur al Land (Prohibition of Alienation) Act, 1972 shall be null and void. The other sub sections also provide that in the various other circumstances set out therein alienations made will be disregarded for purposes of fixation of ceiling. Section 8 provides, in brief, that every person whose holding on the notified date together with any land trans ferred by him on or after 24th January, 1971 exceeds the specified limits, shall within 30 days from the notified date, namely 1.1. 1975 or such extended period as the Gov ernment may notify in that behalf furnish a declaration in respect of his holding to the competent Tribunal. Section 9 deals with determination of the ceiling area by the Tribunal constituted under Section 6. Section 10 deals with the surrender of lands in certain cases. Sub section (5) of the said section provides that it shall be open to the Tribunal to refuse to accept the surrender of any land as contemplated under sub section (1) or deemed surrender of land as contemplated under sub section (4) of the said section in the circumstances set out in sub section (5). Section 11 deals with the vesting of surrendered lands. Section 12 deals with revision and vesting of lands surrendered. The opening part of that section provides that where any land is surrendered or deemed to have been surren dered under the said Act by any usufructuary mortgagee or a tenant, the possession of such land shall, subject to such rules, as may be prescribed, revert to the owner. Sub sec tion (4) of section 12 provides that where any land is surrendered or is deemed to have been surrendered under the said Act by any person in possession by virtue of a mortgage by conditional sale or through a part performance of con tract for sale or otherwise the possession of such land shall subject to such rules as may be prescribed, revert to the owner. Sub section (5 A) make an analogous provision in connection with lands surrendered by limited owners and provides that such surrendered lands shall revert to the person having a vested interest in the remainder. 226 Section 13 makes special provision for the exclusion from the holding of the owner of land belonging to him held by a protected tenant where such land or part thereof stands transferred to the protected tenant under Section 38A of the Andhra Pradesh (Telengana Area) Tenancy and Agricultural Land Act, 1950. Before going into the merits of the contentions urged and considering the proper interpretation to be given to the relevant sections of the said Act, we cannot lose sight of the fact that the said Act is a piece of agrarian legisla tion enacted with a view to achieve a more equitable distri bution of lands for common good and with a view to subserve the objectives enshrined in Article 39 of the Constitution, being one of the Directive Principles embodied in the Con stitution. Provisions of such a legislation have to be interpreted liberally and with a view to furthering the object of the legislation and not with a view to defeat the same in a strict and constricted manner in which a taxing law, for instance, might be interpreted. The main submission of learned counsel for the appel lants is that the expression 'holding ' has been defined in sub section (i) of Section 3 of the said Act, the definition section set out earlier, as meaning the entire land held by a person (emphasis supplied) and that the use of the said word "held" in the definition indicates that the person who is supposed to hold the land, must necessarily be the person in possession of the said land; and hence where, in part performance of an agreement for sale or under a lease, the purchaser or lessee has been put in possession of any land, the owner of the said land cannot any longer be regarded as holding the said land and it cannot be said that the said land is held by him. It was submitted by learned counsel that in view of this context although the Explanation to sub section (i) of section 3 is very widely worded, its meaning cannot be so extended as to cover a case where the owner of the land is no longer in possession of the land and has parted with the possession thereof under an agreement creating a right, legal or equitable, in the land concerned. We find it difficult to accept this contention. Clauses (i) to (v) of subsection (i) of section 3 set out the various capacities in which a person can be said to "hold" land for the purposes of the said Act and among these capacities are "as a usufructuary mortgagee, as a tenant and as one who is in possession by virtue of a mortgage by conditional sale or through part performance of a contract of sale". The very language of sub section (i) of section 3 indicates that land can be held as contemplated in the said sub section by persons in a number of capacities. The Explanation in plain language states that the same land can be held by 227 one person in one capacity and by another person in a dif ferent capacity and provides that such land shall be includ ed in the holdings of both such persons. The Explanation thus clearly contemplates that the same land can be held as contemplated under sub section (i) by one person as the owner and by another person as his lessee or as a person to whom the owner has delivered possession of the land in part performance of an agreement to sell. On a plain reading of the language used in the Explanation, we find it that it is not possible to accept the submission that only where the land is in possession of a person can that land be regarded as held by him. Apart from what we have pointed out earlier we find that the question which arises before us in this appeal is al ready covered by the decision of this Court in State of Andhra Pradesh vs Mohd. Ashrafuddin, ; The facts of the case were that out of the total holding of his land the respondent transferred some land to another person under two unregistered sale deeds pursuant to an agreement for sale and gifted.away some land to his son. In the return submitted by him under the said Act the respondent did not include in his holding the area transferred under the unreg istered sale deeds or the land gifted by him which was in the possession of the purchaser and donee respectively. The Land Reforms Tribunal ignoring the two transfers computed his holding at 1.7692 standard holding and called upon him to surrender land equivalent to 0.7692 standard holding. In revision, the High Court held that the land transferred under the two sale deeds could not be included in the hold ing of the respondent for ascertaining the ceiling area. In coming to this conclusion, the High Court gave the benefit of section 53A of the Transfer of Property Act to the person in possession of the plot pursuant to the contract for sale and treated the land as a part of his holding. On appeal to this court, a Division Bench comprising three learned Judges of this Court reversed the decision of the High Court and held that the High Court was in error in holding that the land in the possession of the transferee cannot be taken to be a part of the holding of the respondent. It was held by this Court that the expression "held" connotes both owner ship as well as possession. In the context of the definition it is not possible to interpret the term "holding" only in the sense of possession. The Explanation to the definition of the term "holding" clearly contemplates that the same land can be the holding of two different persons holding the land in different capacities, (See page 486). The Court went on to state that: "It is by now well settled that a person in possession pursuant to a contract for sale does not get title to the land 228 unless there is a valid document of title in his favour. In the instant case it has already been pointed out that the transferee came into possession in pursuance of an agreement for sale but no valid deed of title was executed in his favour. Therefore, the ownership remained with the respond ent transferor. But even in the absence of a valid deed of title the possession pursuant to an agreement of transfer cannot be said to be illegal and the transferee is entitled to remain in possession" The Court went on to observe that: "There may conceivably be cases where the same land is included in holding of two persons in different capacities and serious prejudice might be caused to one or both of them if they were asked to surrender the excess area. To safe guard the interest of the owners in such a case the legisla ture has made a provision in section 12(4) and (5) of the Act. Even so there might be cases where some prejudice might be caused to some tenure holders. " The Court further observed that: "But if the definition of the term 'holding ' is couched in clear and unambiguous language the court has to accept it as it stands. So construed the same land can be a part of the holding of various persons holding it in different capaci ties. When the terms of the definition are clear and unam biguous there is no question of taking extraneous aid for construing it. " The correctness of this decision has been upheld by this court in Begulla Bapi Raju etc. vs State of Andhra Pradesh etc. etc., 1 at p. 7 17. In that case one of the contentions urged on behalf of the petition ers was that land transferred by the petitioners under various transfer deeds to the outsiders and who came in possession also could not be included in the holding of the petitioners. This argument was negatived by a Bench compris ing three learned Judges of this Court, which followed the decision of this Court in Mohd. Ashrafuddin 's case (supra), and did not accept the plea that the decision in that case required reconsideration. The question raised for our determination in this appeal is 229 directly covered against the appellant by the decisions of this Court in two cases just referred to by us. In these circumstances, even assuming that there is another equally plausible view regarding the construction and the legal effect of section 3(i) of the said Act read with Explana tion, that would not necessarily justify our reconsidering the question which has already been decided by this Court, although the decision was rendered by a Bench comprising only three learned Judges of this Court. In our opinion, unless we find that the decisions in the aforesaid cases are erroneous, it would not be proper on our part to reconsider the same. Apart from this, as we have pointed out earlier, in our view, considering the clear language of section 3(i) of the said Act read with Explanation to that section, the view taken in Mohd. Ashrafuddin 's case (supra) is, with respect, the correct view, and we are inclined to take the same view on the construction and legal effect of that provision. Learned counsel for the appellant sought to place reli ance on the decision of a Division Bench of the Andhra Pradesh High Court in The Authorised Officer (LR), Vijayawa da vs Kalyanam China Venkata Narasayya, [1978] 1 A.P. Law Journal 98. In that case a Division Bench of the Andhra Pradesh High Court took the view that, if the owner of the land has put the transferee in possession of the land in part performance of a contract for sale, such land can be included only in the holding of the transferee and cannot simultaneously be computed in the holding of the transferor as well, for that land is not "held" by him as an "owner". It could be included in the holding of the transferor only as and when the transferee surrenders that land and that land reverts to the transferor as provided under section 12 of the said Act. The Division Bench also took the view that the expression "holding" and the expression "held by a person" occurring in section 3(i) of the said Act must be construed as taking in the idea of actual possession and not merely any right, title or interest in the land devoid of actual possession. In our view, this decision cannot be regarded as laying d,own good law and must be treated as overruled by the decisions of this Court in Mohd. Ashrafud din 's case (supra) and Begulla Bapi Raju 's case (supra). We cannot lose sight of the fact that the said Act is a piece of agrarian reform legislation passed with a view to effec tively fix a ceiling on agricultural holdings and to achieve equitable distribution of surplus land among the landless and the other deserving persons. The plain language of section 3(i) read with Explanation supports the view taken by this Court in Mohd. Ashrafuddin 's case (supra). 1t is true that the Division Bench of the Andhra Pradesh High Court in the aforesaid judgment has given certain examples 230 where the interpretation which has been given in Mohd. Ashrafuddin 's case (supra), might lead to some hardship. That, however, in our opinion, cannot justify restricting the effect of the plain language of the relevant provisions in the manner done by the Division Bench of the Andhra Pradesh High Court. The Explanation to section 3(i) was incorporated in the said Act because the legislature took the view that, but for such a drastic provision, it would not be possible to effectively implement the provisions of the said Act regarding the acquisition of surplus land and distribution of the surplus land to the landless and the other deserving persons. It is a notorious fact that there were a large number of cases where agreements for sale or documents for lease in respect of excess lands were executed by owners of lands in excess Of the ceiling area with a view to defeat the provisions of the said Act. In fact, a perusal of the facts in the cases before us generally lends support to the existence of such a situation. In these circum stances, if the legislature has used language in section 3(i) and the Explanation thereto which, on a plain reading, shows that in case of land covered under an agreement for sale or an agreement of lease, even though the purchaser or the lessee might be in possession of the land, it would be included in the holdings of both of the purchaser as well as the owner or the lessee and the owner, we see no reason to cut down the plain meaning of the language employed in that provision, merely because that it might possibly result in hardship in few cases. Moreover we find that, to some ex tent, the legislature has tried to mitigate this hardship by providing that, if the purchaser under the agreement of sale or the lessee has in his holding land in excess of the ceiling area, such excess would revert to the owner of the land. If the interpretation sought to be put by learned counsel for the appellants, which finds support from the aforementioned decision of the Andhra Pradesh High Court, were correct, we fail to see why such a provision as afore stated for reversion of excess land to the owner should have been made. It was contended by learned counsel for the appellants that if the construction placed on the said provisions by the judgment of the Division Bench of the Andhra Pradesh High Court in the aforesaid judgment was accepted, it is not as if the object of the said legislation would be defeated because where an agreement for sale or agreement of lease cannot be shown to be bona fide, the land would be included in the holding of the owner. This circumstance. however. is of a little avail. Where such agreements for sale or of lease are executed in writing and possession is handed over to the purchaser or the lessee, it would be very difficult to show that the transaction was not bona fide although the agreement might well have been executed really with a 231 view to defeat the provisions of the said Act. We cannot lose sight of the fact that section 3(i) and the Explanation only deals with cases where the transfer of ownership is not complete and the owner does not part completely with his legal interest in the land, so that on the termination of the agreement for sale or agreement of lease without any document being registered, the land would fully revert to the owner. Moreover, in many cases, it was found that the owner of the land himself continued to cultivate the land claiming that he was doing so on behalf of his son who was the lessee or the purchaser under an agreement. In these circumstances, we fail to see any reason to cut down the plain meaning of the provisions of section 3(i) and the Explanation thereto. It was submitted by learned counsel for the appellants that the definition of the word 'holding ' contained in sub section (i) of section 3 was an exhaustive definition and that definition contained in the main section could not be interpreted in the light of the Explanation thereto. It was submitted by him that the meaning of the term 'holding ' and 'held ' in sub section (i) of section 3 could not be governed by the Explanation. In support of the contention, reliance was placed on a decision of this Court in Burmah Shell Oil Storage and Distributing Co. of India Ltd. & Anr. vs The Commercial Tax Officer and Others, at pp. 914 917. In our opinion, this decision is hardly of any assistance in the matter before us. It is well settled that the provisions in an Act have to be read harmoniously and in the light of the context in which they occur. In our opin ion, there can be no quarrel with the reliance being placed on the Explanation in order to understand the meaning of the term "holding" and "held" used in sub section (i) of section 3 of the said Act. Although some other decisions have been referred to us, we do not think any useful purpose would be served by discussing the same in view of what we have ob served earlier, nor would it serve any purpose to refer to the various examples of ownership set out in the American Jurisprudence to which our attention was drawn. In the result, in our opinion, there is no merit in the appeal and the same must fail and is dismissed. Looking to the facts and circumstances of the case, we, however, direct that there will be no order as to costs of the appeal. The other connected Civil Appeals and Special Leave Petitions have all been directed to be tagged with the aforesaid Civil Appeal disposed of by us as they involve the same points as raised in the said 232 Civil Appeal. Following our decision, the said Civil Appeals and the Special Leave Petitions are dismissed but with no order as to costs. In view of the dismissal of all the Appeals and Special Leave Petitions, the Civil Miscellaneous Petitions therein do not survive and all are dismissed with no order as to costs. Interim orders, if any, are vacated. Appeals and P.S. S Petitions dismissed.

Sub section (i) of section 3 of the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 defines the expression "holding" as meaning the entire land held by a person as an owner, a limited owner, usufructuary mortga gee, a tenant and as one who is in possession by virtue of a mortgage by conditional sale or through part performance of a contract of sale. The Explanation thereto states that where the same land is held by one person in one capacity and by another person in any other capacity such land shall be included in the holding of both such persons. The appellants/petitioners had alienated agricultural lands under agreements of sale and the possession of these lands was delivered in part performance of the said agree ments but no conveyance of the said lands had been executed till the relevant date. A question arose whether such land could be excluded from the holding of the owner vendor within the meaning of the Act. The Land Reforms Appellate Tribunal found that the vendees alone were in possession and enjoyment of the respective lands and, therefore, the appel lants could not be said to be holding the said lands. The High Court held that the lands covered by the agreements of sale have to be included in the holdings of the appellants as well. In these appeals and special leave petitions filed by them it was contended that use of the word 'held ' in the definition in section 3(i) indicates that the person who is supposed to hold the land must necessarily be the person in possession of the said land and hence where, in part per formance of an agreement of sale or under a lease, the purchaser or lessee has been put in possession of any land, the owner of the said land cannot any longer be regarded as holding the same, and that although the 221 Explanation to sub s.(i) of s.3 was very widely worded, its meaning could not be so extended as to cover a case where the owner of the land had parted with the possession thereof under an agreement creating a right, legal or equitable, in the land concerned. Dismissing the appeals and the special leave petitions, the Court, HELD: 1. The Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 is a piece of agrarian legislation enacted with a view to achieve a more equitable distribution of land for common good and with a view to subserve the objectives enshrined in Article 39 of the Constitution, being one of the Directive Principles embodied in the Constitution. Provisions of such a legislation have to be interpreted liberally and with a view to furthering the object of the legislation. [226B C] 2.1 The very language of sub s.(i) of s.3 indicates that a person can 'hold ' land for the purposes of the Act as an owner, as a limited owner, as a usufructuary mortgagee, as a tenant and as one who is in possession by virtue of a mort gage by conditional sale or through part performance of a contract of sale. The Explanation thereto in plain language states that the same land can be held by one person in one capacity and by another person in a different capacity and provides that such land shall be included in the holdings of both such persons. The Explanation thus clearly contemplates that the same land can be "held" as contemplated under sub section (i) by one person as the owner and by another person as his lessee or as a person to whom the owner has delivered possession of the land in part performance of an agreement to sell. It cannot, ,therefore, be said that only where the land is in possession of a person can that land be regarded as held by him. 1226G 227B] 2.2 The Explanation to section 3(i) was incorporated in the Andhra Pradesh Land Reforms Act because the legislature took the view that, but for such a drastic provision, it would not be possible to effectively implement the provisions of the said Act regarding the acquisition and distribution of the surplus land to the landless and other deserving per sons. If the legislature has used language in section 3(i) and the Explanation thereto which on a plain reading shows that in case of land covered under an agreement for sale or an agreement of lease, even though the purchaser or the lessee might be in possession of the land, it would be included in the holdings of both of the purchaser as well.as the owner or the lessee and the owner, there is no reason to cut down the plain meaning of the language employed in that provision [230B, C D] 222 State of Andhra Pradesh vs Mohd. Ashrafuddin, ; applied; Begulla Bapi Raju etc. vs State of Andhra Pradesh etc. ; , referred to. Burmah Shell oil Storage and Distributing Co. of India Ltd. & Anr. vs The Commercial Tax Officer & Ors., , distinguished. The Authorised Officer (LR), Vijayawada vs Kalyanam China Venkata Narasayya, [1978] 1 A.P. Law Journal 98 over ruled.

Civil Appeal No. 513 of 1958. Appeal by special leave from the judgment and order dated November 20, 1957, of the Bombay High Court in First Appeal No. 600 of 1956, arising out of the judgment and order dated October 17, 1956, of the District Judge, Poona, in Misc. Petition No. 2 of 1956. H. D. Banaji, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant. A. V. Viswanatha Sastri, Sorab N. Vakil, B. K. B. Naidu and I. N. Shroff, for respondents Nos. 1 and 2. 1960. February, 22. The Judgment of the Court was delivered by SARKAR, J. Respondents Nos. I to 4 are shareholders in the company which is the appellant in this case. They made an application against the appellant and its directors under section 153 C of the Companies Act, 1913 before that Act was repealed on April 1, 1956, as hereinafter mentioned, for certain reliefs which it is not necessary to state. This Act will be referred to as the Act of 1913. This application had been made to the Court of the District Judge of Poona which Court had been empowered to exercise jurisdiction under the Act of 1913 by a notification issued by the Government of Bombay under section 3(1) of that Act. Before the application could be disposed of by the District Judge, Poona, the Act of 1913 was repealed and re enacted on April 1, 1956, by the Companies Act of 1956, which will be referred to as the Act of 1956. On or about June 28, 1956, the appellant made an application to the District Judge of Poona for an order dismissing the application under section 153 C of the 87 Act of 1913 on the ground that on the repeal of that Act the Court had ceased to have jurisdiction to deal with it. The District Judge of Poona dismissed this application. The appellants appeal to the High Court of Bombay against this dismissal also failed. Hence the present appeal. Section 644 of the Act of 1956 repeals the Act of 1913 and certain other legislation relating to companies. Sections 645 to 657 of the Act of 1956 contain various saving provisions. Mr. Banaji appearing for the appellant contended that the proceeding before the District Judge of Poona under section 153 C of the Act of 1913 had not been saved by any of these provisions. We do not consider it necessary to pronounce on this question for it seems to us clear that that proceeding can be continued in spite of the repeal of the Act of 1913 in view of section 6 of the General Clauses Act. Section 658 of the Act of 1956 expressly provides that, "The mention of particular matters in sections 645 to 657 or in any other provision of this Act shall not prejudice the general application of s.6 of the (X of 1.897), with respect to the effect of repeals." Mr. Banaji said that section 658 had been enacted ex abundante cautela. Be it so. Section 6 of the none the less remains applicable with respect to the effect of the repeal of the Act of 1913. Section 6 of the provides that where an Act is repealed, then, unless a different intention appears, the repeal shall not affect any right or liability acquired or incurred under the repealed enactment or any legal proceeding in respect of such right or liability and the legal proceeding may be continued as, if the repealing Act had not been passed. There is no dispute that section 153 C of the Act of 1913 gave certain rights to the shareholders of a company and put the company as also its directors and manag ing agents under certain liabilities. The application under that section was for enforcement of these rights and liabilities. Section 6 of the would therefore preserve the rights and liabilities created by section 153 C of the Act of 1913 and a continuance of the proceeding in respect thereof would be 88 competent in spite of the repeal of the Act of 1913, unless of course a different intention would be gathered. Now it has been held by this Court in State of Punjab vs Mohar Singh (1) that section 6 applies even where the repealing Act contains fresh legislation on the same subject but in such a case one would have to look to the provisions of the new Act for the purposes of determining whether they indicate a different intention. The Act of 1956 not only repeals the Act of 1913 but contains other fresh legislation on the matters enacted by the Act of 1913. It was further observed in State of Punjab vs Mohar Singh (1) that in trying to ascertain whether there is a contrary intention in the new legislation, " the line of enquiry would be not whether the new Act expressly keeps &live old rights and liabilities but whether it manifests an intention to destroy them. " The question then is whether the Act of 1956 indicates that it was intended thereby to destroy the rights created by section 153 C of the Act of 1913. Mr. Banaji said that section 647 of the Act of 1956 indicates an intention to destroy the rights created by section 153 C of the Act of 1913. We find nothing there to support this view. That section only says that where the winding up of a company commences before the commencement of the Act of 1956, the company shall be wound up as if that Act had not been passed, but section 555(7) of the Act of 1956 will apply in respect of moneys paid into the Companies Liquidation Account. All that this section does is to make the provisions of the repealed Act applicable to the winding up notwithstanding the repeal. The provisions of section 555(7) need not be referred to as they do not affect the question. Section 647 of the Act of 1956 therefore indicates no intention that the rights created by section 153 C of the Act of 1913 shall be destroyed. Nor is an argument tenable that since by section 647 the Act of 1956 expressly makes the repealed Act applicable to a winding up commenced under it, it impliedly indicates that in other matters the repealed Act cannot be resorted to, for, in view of section 658 of the Act of 1956, (1) ; 89 the mention of a particular matter in section 647 would not prejudice the application of section 6 of the ; in other words, nothing in section 647 is to be understood as indicating an intention that section 6 of the is not to apply. On the other hand, the parties are agreed that the provisions of section 153 C of the Act of 1913 have been substantially re enacted by the Act of 1956 and this would indicate an intention not to destroy the rights created by section 153 C. Mr. Banaji then drew our attention to section 10 of the Act of 1956 and section 24 of the . Section 10 of the Act of 1956 corresponds to section 3 of the Act of 1913 and deals with the jurisdiction of Courts. Under section 10 the Central Government may empower a District Court to exercise jurisdiction under the Act, not being the jurisdiction conferred among others by sections 397 to 407 nor in respect of the winding up of companies with a paid up share capital of not less than Rs. 1,00,000. Sections 397 to 407 of the Act of 1956, it is agreed, contain ' substantially the provis sions of section 153 C of the Act of 1913. It has also to be stated that the paid up capital of the appellant is more than Rs. 1,00,000 and the application under section 153 C of the Act of 1913 contained a prayer in the alternative for the winding up of the appellant. Section 24 of the provides that where any Act is repealed and re enacted with or without modifications, then, unless it is otherwise expressly provided, any notification issued under the repealed Act shall, so far as it is not inconsistent with the provisions re enacted, continue in force and be deemed to have been issued under the provisions so re enacted unless and until it is superseded by a notification issued under those provisions. Mr. Banaji points out that in view of section 10 of the Act of 1956 a District Court can no longer be empowered to deal with an application of the kind made to the District Judge of Poona, as that application asks for reliefs similar to those contemplated by sections 397 to 407 of the Act of 1956 and also asks for the winding up of a company whose paid up capital exceeds Rs. 1,00,000 and power to deal with such an 90 application cannot now be given to a District Court. He, therefore, says that the notification issued under the Act of 1913 empowering the District Judge of Poona to deal with the application would be inconsistent in this respect with the provisions of the Act of 1956 and could not in view of section 24 of the be deemed to continue in force after the repeal of the Act of 1913. Hence it is contended that the notification has ceased to have any force and the District Judge of Poona has no longer any jurisdic tion to hear the application. It is also said that this shows that the Act of 1956 indicates that the rights acquired under the Act of 1913 would come to an end on its repeal. We are unable to accept these contentions. Section 10 of the Act of 1956 deals only with the jurisdiction of courts. It shows that the District Courts can no longer be empowered to deal with applications under the Act of 1956 in respect of matters contemplated by section 153 C of the Act of 1913. This does not indicate that the rights created by section 153 C of the Act of 1913 were intended to be destroyed. As we have earlier pointed out from State of Punjab vs Mohar Singh (1), the contrary intention in the repealing Act must show that the rights under the old Act were intended to be destroyed in order to prevent the application of section 6 of the . But it is said that section 24 of the puts an end to the notification giving power to the District Judge, Poona to hear the application under section 153 C of the Act of 1913 as that notification is inconsistent with section 10 of the Act of 1956 and the District Judge cannot, therefore, continue to deal with the applica tion. Section 24 does not however purport to put an end to any notification. It is not intended to terminate any notification; all it does is to continue a notification in force in the stated circumstances after the Act under which it was issued, is repealed. Section 24 therefore does not cancel the notification empowering the District Judge of Poona to exercise jurisdiction under the Act of l9l3. It seems to us that since under section 6 of the the proceeding in respect of the application under section 153 C (1) [1955] I S.C.R. 893 91 of the Act of 1913 may be continued after the repeal of that Act, it follows that the District Judge of Poona continues to have jurisdiction to entertain it. If it were not so, then section 6 would become infructuous. For these reasons we think that the appeal must fail and it is therefore dismissed with costs. Appeal dismissed.

The respondent had made an application under section 53 C Of the Companies Act, 1913, with an alternative prayer for winding up against the appellant company, to the District judge, Poona, who had been authorised under the Act to exercise jurisdiction. While the application was pending the Companies Act, 1913, was repealed by the . The appellant company thereupon applied to the District judge to dismiss the application on the ground that he had ceased to have any jurisdiction to deal with the application on the repeal of the Of 1913. Held, that section 6 of the General Clauses Act preserved the jurisdiction of the District judge to deal with the application under section 153 C Of the Indian Of 1913, notwithstanding the repeal of that Act. Section 647 of the did not indicate any intention to affect the rights under the Indian of 19I3, for section 658 of the of 1956 made section 6 of the General Clauses Act applicable notwithstanding anything contained in section 647 of that Act. 86 Section 24 of the General Clauses Act does not put an end to any notification. It does not therefore cancel the notification issued under the Indian of I9I3 in so far as that notification empowered the District judge to exercise jurisdiction under section 153 C of the Indian of I9I3 even though under section 10 of the of 1956, a District judge can no longer be empowered to exercise jurisdiction under (a) sections 1397 to 407 of the , which correspond to section I53 C Of the Indian , 19I3 or (b) in respect of the winding up of a company with a paid up share capital of not less than Rs. 1,00,000/ which the appellant company was.

N: Criminal Appeal No. 483 of 1979. Appeal by Special Leave from the Judgment and Order dated 22 3 1979 of the Patna High Court in Crl. A. No. 356 and 407/73. B. P. Singh and L. R. Singh for the Appellants. section N. Jha and U. P. Singh for the Respondent. The Order of the Court was delivered by KRISHNA IYER, J. We have heard the arguments of appellants ' counsel with specific reference to Munni Marandi and Babua Marandi the appellants herein. We have also read through the evidence relating to these accused persons aided by counsel for the State. The role attributed to Munni Marandi is that he was a member of the crowd which chased the deceased and in that sense was liable under Section 149 read with 326 I.P.C. We cannot fault the High Court for the conviction rendered, but having due regard to the age of the accused and to the absence of any overt act on his part, we consider that a sentence of two years ' R.I. will, in the circumstances of this case, meet the ends of justice. 588 Babua Marandi, a boy aged 15, was also in the crowd. In the excited chase of the deceased, this boy also followed and when the actual sword thrust was made by Ranjit Chaudhry, this boy held the deceased. In this sense, his part is different from that of Munni Marandi. We are not, therefore, disposed to interfere with his conviction or the sentence. Nevertheless, it is important to remember that Babua Marandi was aged 15 years at time of the offence. It is regrettable and this Court has pointed this out more than once that there is no Children Act in Bihar, and in this International Year of the Child we have to emphasize that the Legislature is expected to do its duty by the children of Bihar by considering the passing of a measure like the Children Act which long ago had been circulated by the Central Government and which exists in some other states in the country. Be that as it may, we are unable to deal with Babua Marandi as a child for the simple reason that absence of legislation cannot be made up for by Judicial legislation. All that we can do, in the hapless circumstances of the case and in the helpless situation of legislative vacuum, is to direct that Babua Marandi be placed either in an open prison or in a model prison or any other prison available in the State where young offenders are kept apart from the adult offenders. The special reason which induces us to make this direction is that, as is well known, adolescents should be separated from adults in prison campuses. The vices are obvious and we, therefore, direct accordingly. V.D.K. Appeal dismissed.

Dismissing the appeal by special leave, the Court ^ HELD: 1. Having due regard to the age of the accused Munni Marandi and to the absence of any overt act, a sentence of two years R.I. would, in the circumstances of his case meet the ends of justice for the offence u/s 149 read with Section 326 I.P.C. [587 G H] 2. Absence of legislation cannot be made up for by judicial legislation, Babua Marandi was aged 15 years at the time of the offence and there is no Children Act in Bihar. Though the conviction or sentence cannot be interfered with, in the hapless circumstances of the case and in the helpless situation of legislative vacuum all that this Court can do is to direct that Babua Marandi be placed either in an open prison or in a model prison or any other prison available in the State where young offenders are kept apart from the adult offenders. The special directions for doing so is that adolescents should be separated from adults in prison campuses for obvious reasons. [588C E]

Appeal No. 358 of 1958. 645 Appeal by special leave from the judgment and order dated 8th March, 1956, of the former Bombay High Court in I.T.R. No. 55 of 1955. A. N. Kripal and D. Gupta, for the appellant. N. A. Palkhivala and B. P. Maheshwari, for the respondents. November 24. The Judgment of the Court was delivered by KAPUR, J. This is an appeal by special leave against the judgment and order of the High Court of Bombay in Income tax Reference No. 55 of 1955, in which two questions of law were stated for opinion and both were answered in favour of the assessee and against the Commissioner of Income tax who is the appellant before us and the assessee is the respondent. The facts of this case are these: The respondent is a registered firm carrying on business as commission agents in Bombay. For purposes of its business it borrowed money from time to time from Banks on joint promissory notes executed by it and by others with joint and several liability. On September 26, 1949, the respondent borrowed Rs. 1,00,000 from the Bank of India on a pronote executed jointly with one Kishorilal. Out of this amount a sum of Rs. 50,000 was taken by the respondent for purposes of its business and the rest by Kishorilal. Kishorilal however failed to meet his liability and became a bankrupt. The respondent had therefore to pay the Bank the whole amount, i.e., Rs. 1,00,000 with interest. Out of the amount taken by Kishorilal the respondent received in the accounting year, from the Official Assignee, a sum of Rs. 18,805 and claimed the balance, i.e., Rs. 31,740 as deduction. The accounting year was from August 26, 1949 to July 17, 1950, the assessment year being 1951 52. This claim was disallowed both by the Income tax Officer as well as the Appellate Assistant Commissioner. On Appeal to the Income tax Appellate Tribunal this sum was allowed ,as an allowable deduction under section 10(2)(xv) of the Income tax Act and as business loss. 82 646 At the instance of the Commissioner a case was stated to the High Court of Bombay by the Income tax Appellate Tribunal. In the statement of the case which was agreed to by both parties the Tribunal said: "For the purpose of his business, he borrows from time to time money on joint and several liability from banks. The Commercial practice is to borrow money from banks on joint and several liability. An illustration will explain what we mean. A and B require Rs. 50,000 each. They find that the Bank would not advance Rs. 50,000 to each on his individual security. They however, find that the Bank would be prepared to advance Rupees one lach on their joint and several liability. They take Rupees one lac on joint and several liability and then divide the money equally between themselves. " It also found that the Banks advanced monies to some constituents on their personal security also but they had to pay a higher rate of interest than when the money was borrowed on joint and several responsibility; that Rs. 1,00,000 borrowed from the Bank was in accordance with the commercial practice of Bombay. On these facts the following two questions of law were referred to the High Court: "(1) Whether the assessee 's claim is sustainable under section 10(2)(xv) of the Act? (2) Whether the assessee 's claim that the loss was a business loss and, therefore, allowable as a deduction in computing the profits of the assessee 's business is sustainable under law?" Both these questions were answered in favour of the respondent and against the appellant. Counsel for the Commissioner challenged the findings of the Tribunal in regard to the existence of commercial practice in Bombay but this ground of attack is not available to him because not only did the Tribunal give this finding in its Order, but in the agreed statement of the case also this finding was repeated as is shown by the passage quoted above. The High Court also has proceeded on the basis of this commercial practice. In the judgment under appeal the learned Chief Justice said: 647 "The finding of the Tribunal is clear and explicit that what the assessee was doing was not something out of the ordinary, but in borrowing this money on joint and several liability he was following a practice which was established as a commercial practice. Therefore, the transaction was clearly in the course of the business and incidental to the business and it is this transaction which resulted in a loss to the assesses, he having to pay the liability of the surety. " Therefore this appeal has to be decided on the basis that a commercial practice of financing business by borrowing money on joint and several liability was established. It was argued on behalf of the appellant that this court in Madan Gopal Bagla vs Commissioner of Income Tax, West Bengal (1) had decided against the allowability of such losses. But the facts of that case when carefully scrutinised are distinguishable and the decision does not support the contentions of the appellant. No doubt certain features of that case and the present one are similar but they differ in essential features. In that case the assessee was a timber merchant who obtained a loan of Rs. 1 lac from the Bank of India on the joint security of himself and one Mamraj, which the assessee paid off. Mamraj also obtained a loan of Rs. I lac on the joint security of himself and the assessee. Mamraj became an insolvent and the assessee had to pay the whole of the amount borrowed with interest thereon. The assessee there received a certain amount of money by way of dividends from the Receiver and the balance he wrote off as bad debt in the assessment year and claimed it as an allowable deduction under section 10. The High Court there held that the debt could not be said to be a debt in respect of the business of the assessee as he was not carrying on the business of standing surety for other persons nor was he a money lender, he being simply a timber merchant; that it had not been established nor was it alleged that he was in the habit of standing surety for other persons "along with them for purposes of securing loans for their use and benefit" and even if money (1) ; 648 had been so borrowed and there had been a loss the loss would have been a capital loss and not a business loss to the assessee. This statement of the law was approved by this Court but there mutuality, as an essential ingredient of the custom established, was found to be lacking as is shown by the following passage from the judgment of the court. "The custom stated before the Appellate Assistant Commissioner was that persons carrying on business in Bombay used to borrow monies on joint security from the Banks in order to facilitate getting financial assistance from the Banks and that too at lower rates of interest. A businessman could procure financial assistance from the Banks on his own, but he would in that case have to pay a higher rate of interest. He would have to pay a lower rate of interest if he could procure as surety another business man, who would be approved by the Bank. This, however, did not mean that mutual accommodation by businessmen was necessarily an ingredient part of that custom. A could procure B, C or D to join him as surety in order to achieve this objective, but it did not necessarily follow that if A wanted to procure B, C or D to thus join him as surety he could only do so if he in his own turn joined B, C or D as surety in the loans which B, C or D procured in their turns from the Banks for financing their respective businesses. Unless that factor was established, the mere procurement by A of B, C or D as surety would not be sufficient to establish the custom sought to be relied upon by the appellant so as to make the transaction of his having joined Mumraj Rambhagat as surety in the loan procured by Mumraj Rambhagat from Imperial Bank of India, a transaction in the course of carrying on his own timber business and to make the loss in the transaction a trading loss or a bad debt of the timber business of the appellant. " Continuing at page 558 it was observed: "There were thus elements of mutuality and the essential ingredient in the carrying on of the money lending business, which were elements of the custom 649 proved in that case, both of which are wanting in the present case before us." Mr. Palkhivala for the respondent rightly argued that Madan Gopal Bagla 's case (1) was decided against the assessee because the custom of persons standing surety for each other for borrowing money and the element of mutuality which was an essential ingredient in the case of Commissioner of Income Tax, Madras vs section A. section Ramaswamy Chettiar (2) was not proved. In the latter case it was established that there was a well recognised custom amongst Chettiars of raising funds for their business of money lenders by the execution of joint pronotes and that if a loss was sustained by one of the executants having to pay the whole on account of inability of the other it was a deductible loss. The appellant also relied on a judgment of the Madras High Court in Commissioner of Income Tax vs section R. Subramanya Pillai (3). In that case the assessee was a book seller who from time to time jointly with another person borrowed money out of which he employed a portion in his business. One of such amounts borrowed was Rs. 16,200 out of which the assessee took Rs. 10,450 for his business needs and the other debtor took the balance. The latter became insolvent and the assessee had to pay the whole of the money borrowed and claimed it as allowable deduction under section 10(2)(xi) or section 10(2)(xv) of the Act or as business loss and it was hold that he was not entitled, because the loss sustained by the assessee was too remote from the business of book selling carried on by him and was not sufficiently connected with the trade and therefore fell outside the range of those amounts which could properly be brought into profit and loss account of the business. The decision in Commissioner of Income Tax vs section A. section Ramaswamy Chettiar (2) was there distinguished on the ground that the decision must be confined to its own peculiar facts and did not apply to business as the one in Subramanya Pillai 's Case (3). The following passage from (1) ; , (2) (3) 650 the judgment of Viswanatha Sastri, J., in that case is relevant: "But there the business was one of money lending and the Court found that according to the wellknown and well recognised mercantile custom of Nattukottai bankers, they were in the habit of raising 'funds which formed the stock in trade of their money lending business by the execution of joint promissory notes in favour of bankers. That was apparently the usual technique of obtaining credit adopted by the Nattukottai Chetti community money lenders. In the context this Court held that where a Nattukottai Chetti money lender paid off in their entirety the debts jointly due by him and another as a result of the latter 's inability to pay, the loss sustained as a result of this transaction was a loss of the moneylending business itself and therefore a deductible item in computing profits. " In the instant case it has been found that there was a well recognised commercial practice in Bombay of carrying on business by borrowing money from Banks on joint and several liability. It was also found that by so doing the borrower could borrow money at a lower rate of interest than he otherwise would have paid; that the respondent had, in accordance with the commercial practice, borrowed the money, the whole of which he had to return because the joint promisor Kishori Lal had become bankrupt; mutuality was also held proved. It cannot be said that the essential feature of the case now before us is in principle different from that of the Commissioner of Income tax vs Ramaswamy Chettiar (1). In both cases the finding is that there is mutuality and custom of borrowing money on joint pronotes for the carrying on of business. In our opinion in the circumstances proved in the present case, and on the facts established and on the findings given, the respondent was rightly held to be entitled to deduct the loss which was suffered by him in the transaction in dispute. Counsel for the assessee drew our attention to a (1) 651 Privy Council judgment Montreal Coke and Manufacturing Co. vs Minister of National Revenue (1) but that, case can have no application to the facts of the present case because it was found there as a fact that the assessees 's financial arrangements were quite distinct from the activities by which they earned their income and expenditure incurred in relation to the financing ' of their business was not expenditure in the earning of their income within the statute. It was then contended that the loss of the respondent was a 0capital loss and for this again reliance was placed on the judgment of this Court in Madan Gopal Bagla 's case (2 ) and particularly on the observation at page 559 where Bhagwati, J., quoted with approval the observations of the High Court in the judgment but as we have pointed out the facts of that case are distinguishable and what was said there has no application to the facts and circumstances proved in the present case. In our view the judgment of the High Court is right and we therefore dismiss this appeal with costs. Appeal dismissed.

For the purposes of its business the respondent borrowed a certain sum of money from the Bank of India on a pronote executed jointly by him and one Kishorilal in accordance with a commercial practice of carrying on business by borrowing money from Banks on joint and several liability. The money was divided half and half between the respondent and Kishorilal but Kishorilal failed to pay off his liability as he became a bankrupt and the respondent had to pay the whole amount to the Bank. The respondent, however, received from the Official Assignee a part of the sum taken by the Kishorilal leaving a balance still unpaid. The respondent 's claim to deduct this unpaid balance under section 10(2)(XV) of the Income tax Act was refused by the Income tax Officer and the Appellate Assistant Commissioner but was allowed by the Income tax Appellate Tribunal on appeal. On a reference made at the instance of the appellant the High Court decided the question in favour of the respondent assessee. On appeal by the appellant by special leave, Held, that the view taken by the High Court was correct. On the finding that there was a well establised Commercial practice of financing business by borrowing money on joint and several liability and by so doing the respondent could borrow at a lower rate of interest, and that there was mutuality between the borrowers for standing surety for each other for loans taken for business purposes, the respondent assessee in computing his business profits was entitled to deduct the loss suffered by him in paying the sum not paid by his co borrower. Commissioner of Income tax vs Ramaswami Chettiar, , applied. Madan Gopal Bagla vs Commissioner of Income tax, West Bengal, ; , Commissioner or Income tax vs section R. Subramanya Pillai, distinguished. Montreal Coke and Manufacturing Co. vs Minister of National Revenue, [1945] 13 I.T.R. Supp. 1, not applicable.

iminal Appeal No. 64 of 1958. Appeal by special leave from the judgment and order dated December 3, 1956, of the Allahabad High Court in Criminal Reference No. 159 of 1956. N. C. Sen, for the appellant. C. K. Daphtary, Solicitor General of India,. Purshottam Tricumdas, G. C. Mathur and C. P. Lal, for the respondent. April 1. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal by special leave is directed against the judgment of the High Court of Judicature at Allahabad rejecting the reference made by the learned Sessions Judge under section 488 of the Code of Criminal Procedure. The appellant is a minor and lives under the guardianship of his mother, Smt. Gita Basu. On September 14, 1955, the appellant, through his mother, filed an application under section 488 of the Code of Criminal Procedure (hereinafter referred to as the Code) in the Court of the City Magistrate, Allahabad, praying for an order against the respondent, Advocate General, Uttar Pradesh, Allahabad, for maintenance alleging that he is his putative father. Without giving notice to the respondent, the Magistrate posted the petition for evidence on September 20, 1955. On that date, the appellant 's guardian was examined and she was also cross examined by the Magistrate at some length. 433 After she was examined, the Magistrate directed her to produce any further evidence she might like to lead under section 202 of the Code and, for that purpose, he adjourned the petition for hearing to September 26, 1955, on which date one police constable was examined and the learned Magistrate made the endorsement that the applicant said that she would examine no other witness. On September 27, 1955, the appellant filed a petition before the Magistrate stating that section 200 of the Code had no application and that no enquiry need be made before issuing notice to the respondent. If, however, the Court treated the application as a complaint, the applicant asked for time to adduce further evidence in support of the application for maintenance. On that petition the learned Magistrate made the endorsement " lead the further evidence, please, if you like ". On October 6, 1955, the guardian of the appellant examined one more witness. On that date, the learned Magistrate made in the proceeding sheet the endorsement no further evidence to be led at this stage On October 10, 1955, the learned Magistrate made an order dismissing the application. He agreed with the petitioner 's contention that sections 200 to 203 of the Code did not apply to the application for maintenance; but he expressed the view that he should be satisfied that the petitioner had a prima facie case before he issued notice to the respondent. He then proceeded to consider the evidence and came to the conclusion that he was not satisfied that the respondent was the father of Nand Lal, and on that finding he refused to issue notice of the application to the respondent, and dis missed the application. The appellant filed a revision against that order of the learned Magistrate to the Sessions Judge, Allahabad. The learned Sessions Judge, after considering the materials placed before the Magistrate, came to the conclusion that it was a fit case in which the Magistrate ought to have issued summons to the respondent under sub section (6) of section 488 of the Code. He submitted the record to the High Court of Judicature at Allahabad recommending that the order passed by the Magistrate be set aside and that the Magistrate be ordered to proceed with the 434 application in accordance with law. The reference came up for hearing before Chowdhry, J., who, on the analogy of other sections of the Code held that the Magistrate in holding a preliminary enquiry acted in consonance with the general scheme of the Code and that, therefore, the order dismissing the application was not vitiated by any illegality or irregularity. He observed that it was conceded by the appellant before the Magistrate that the Magistrate could hold a preliminary enquiry and that, therefore, it was not open to the appellant to question its propriety. He also found that every opportunity was given to the guardian of the appellant to lead such evidence as he desired to produce and that, therefore, the appellant was not prejudiced by the alleged irregularity. On the main tainability of the reference, he held that the finding arrived at by the learned Magistrate was one of fact on the materials placed on the record and, as the Magistrate did not act perversely or in contravention of some well established principles of law or procedure, the learned Sessions Judge should not have made the reference. The learned Judge finally pointed out that the proceedings were only summary in nature and that they did not deprive the appellant of his right to seek remedy, if any, in a civil court. In the result, the reference was rejected. The appellant by this appeal questions the correctness of that order. Learned counsel for the appellant contends that the learned Magistrate followed a procedure not contemplated by the Code of Criminal Procedure and that in any event he conducted the enquiry in a manner which, to say the least, was unjust to the appellant. The learned Solicitor General, appearing for the respondent, supported the procedure adopted by the Magistrate and also the finding arrived at by him. He further contended that the appellant in the High Court as well as before the Magistrate conceded that the Magistrate had power to make a preliminary enquiry and that, therefore, he should not be allowed to question the validity of the enquiry for the first time before this Court. Ordinarily, in a case like this we should have been disinclined to interfere with the order of the High 435 Court in an appeal filed under article 136 of the Constitution. But, this appeal discloses exceptional circumstances which compel us to depart from the ordinary practice. It is not correct to state that the appellant had conceded throughout that a Magistrate can make a preliminary enquiry under section 488 of the Code before issuing notice to the respondent. , Indeed the judgment of the Magistrate discloses that on behalf of the appellant certain decisions were cited in support of the contention that an application under section 488 of the Code does not come under the purview of sections 200 to 203 of the Code. Section 200 of the Code provides for the examination of the complainant and the wit nesses present in court. Section 202 enables him to make a further enquiry before issuing notice. Section 203 empowers him to dismiss a petition, if in his judgment no sufficient ground for proceeding with the case has been made out. The contention raised by the appellant, therefore, can only mean that the Magistrate cannot make a preliminary enquiry in the manner contemplated by the said provisions. Indeed, the Magistrate accepted this contention; but he observed: "But, as the learned counsel submit, I have to be satisfied that a notice under section 488 Cr. P.C. should issue to the opposite party before issue it and that, therefore, all that has come on record as yet is admissible for consideration of the question whether the notice should be issued or not ". This observation did not record any concession on the part of the appellant that the Magistrate could make a preliminary enquiry. In the context of the first submission, the second submission could only mean that the Magistrate could satisfy himself before issuing notice, whether the application was ex facie not maintainable or frivolous. In the revision petition filed before the Sessions Judge, the appellant raised the following ground : " Because the court below while correctly holding that application made by the applicant under section 488 Cr. P. C. did not attract the operation of the provisions made in sections 200 to 203 of the said Code and further that in pursuance of the mandatory provision in s, 488(6) all evidence under 436 Chapter XXXVI of the said Code shall be taken in the presence of the opposite party, has erred in law in directing evidence to be led under section 200 Cr P. C. and in considering the said evidence has usurped a jurisdiction not vested in it by law. " The judgment of the learned Sessions Judge also disclosed that this point was raised before him. Though the learned Sessions Judge accepted the contention that sections 200 to 203 of the Code had no application, he remarked that " in this case the learned Magistrate thought it fit to satisfy himself if this was a case fit enough in which he should issue a notice." Before the learned Judge of the High Court, it does not appear that any concession, even in a limited form, was made. Chowdhry, J., observes in his judgment ". it appears that it was conceded by the learned counsel appearing for the applicant that the Magistrate had to satisfy himself in limine that a notice of the application in question should issue to the opposite party. " This observation is only a reproduction of what the Magistrate stated in his judgment. Learned counsel, who appeared for the appellant in the High Court, does not appear to have made any fresh concession before the High Court and we do not think that the learned Judge was justified in drawing from the observations of the Magistrate that it was conceded on behalf of the applicant that it would be a pro per procedure for the court to make such a preliminary enquiry in order to satisfy itself that notice should issue to the opposite party. As we have pointed out, the main contention of the petitioner throughout was that the Magistrate had no power to make a preliminary enquiry and the concession, even if it had been made, can only mean, in the context, that the Magistrate could satisfy himself whether, on the allegations in the petition, it was a frivolous petition. The first question is whether section 488 of the Code contemplates any preliminary enquiry on the part of a Magistrate before he could issue notice to the opposite party. The answer to this question turns upon the construction of the provisions of section 488 of the Code. Chapter XXXVI of the Code contains three 437 provisions. The heading of the Chapter is " of The Maintenance of Wives and Children". The relevant provisions read: Section 488. (1) If any person having sufficient means neglects or refuses to maintain his wife or his legitimate or illegitimate child unable to maintain itself, the District Magistrate, a Presidency, Magistrate, a Sub divisional Magistrate or a Magistrate of the first class may, upon proof of such neglect or refusal, order such person to make a monthly allowance for the maintenance of his wife or such child, at such monthly rate, not exceeding five hundred rupees in the whole, as such Magistrate thinks fit, and to pay the same to such person as the Magistrate from time to time directs. x x x (6) All evidence under this Chapter shall be taken in the presence of the husband or father, as the case may be, or when his personal attendance is dispensed with, in the presence of his pleader, and shall be recorded in the manner prescribed in the case of summons cases: x x x Section 489 provides for the alteration in the allowance under section 488, and section 490 prescribes the procedure for the enforcement of the order of maintenance. The relief given tinder this Chapter is essentially of civil nature. It prescribes a summary procedure for compelling a man to maintain his wife or children. The findings of a magistrate under this Chapter are not final and the parties can legitimately agitate their rights in a civil court. This Chapter is a self contained one. It recognizes the right of a child or wife to claim maintenance. It prescribes the procedure to be followed and provides for the enforcement of the decision of the magistrate. Under section 488, so far as it is relevant to the present enquiry, an illegitimate child unable to maintain itself is entitled to a monthly allowance for its maintenance, if the putative father having sufficient means neglects or refuses to maintain it. It is suggested that unless the child is admitted by the putative father to be his illegitimate child, the 56 438 magistrate has no power to make an order for payment of maintenance. This argument, if accepted, would make the entire section nugatory. The basis of an application for maintenance of a child is the paternity of the child irrespective of its legitimacy or illegitimacy. The section by conferring jurisdiction on the magistrate to make an allowance for the maintenance of the child, by necessary implication, confers power on him to decide the jurisdictional fact whether the child is the illegitimate child of the respondent. It is the duty of the court, before making the order, to find definitely, though in a summary manner, the paternity of the child. Sub section (6) of section 488 is mandatory in form and in clear terms it prescribes the procedure to be followed by the Magistrate. Under that subsection, all evidence under that Chapter shall be taken in the presence of the husband or the father, as the case maybe, or, when his personal attendance is dispensed with, in the presence of his pleader, and shall be recorded in the manner prescribed in the case of summons cases. The word " all " with which the sub section opens emphasizes the fact that no evidence shall be taken in the absence of the father or his pleader. It is conceded that sections 200 to 203 of the Code do not apply to an application under section 488 of the Code. As the proceedings are of a civil nature, the Code does not contemplate any preliminary enquiry. When the terms are clear, there is no scope for drawing inspiration from other sections of the Code, or for deviating from the procedure prescribed to fill up an alleged lacuna. It is said that if no preliminary enquiry be held, even in a blackmailing action notice will have to go to the respondent. There is nothing incongruous in this position; for, if a suit is filed in a civil court for a decree for maintenance by a child against the alleged putative father, summons will go to him without any preliminary enquiry. We are not impressed by the argument that the sub section itself is intended only for the benefit of the respondent. It appears to us that notice to the respondent is in the interest of both the applicant as well as the respondent while it enables the respondent to be present when evidence is taken against him, it lightens the burden 439 of the petitioner, for an honest respondent may admit his paternity of the child, if that was a fact and may contest only the quantum of maintenance. We, therefore, hold that section 488 of the Code does not contemplate a preliminary enquiry before issuing a notice, but lays down that all evidence under that Chapter should be taken in the presence of the respondent or his pleader, indicating thereby that one enquiry only should be held after notice. The more objectionable feature in this case is that the Magistrate followed a procedure; which is, to say the least, unjust to the appellant. The appellant 's guardian was examined by the Magistrate, and she related the circumstances that led to her illicit intimacy with the respondent; she has stated in what circumstance the intimacy commenced. She filed copies of the notices sent by her, through an advocate, by registered post to the respondent demanding maintenance and stated that she received the acknowledgments but the respondent did not think it fit to reply. She filed a photograph wherein she and the respondent were seated on chairs with the appellant standing between them. A servant was also examined, who deposed that she had seen the respondent visiting the appellant 's mother at odd hours. This evidence, ordinarily, would be sufficient, even if the procedure followed by the Magistrate was permissible, to give notice to the respondent. But the learned Magistrate cross examined the mother of the appellant at great length. The cross examination discloses that the Magistrate had either uncommon powers of intuition or extraneous sources of information, for he elicited so many minute details of her life that only an advocate well instructed in his brief could possibly do. The singularity of the method adopted by the Magistrate does not end there. The learned Magistrate, though he subsequently held that he could not make a preli minary enquiry as contemplated by sections 200 to 203 of the Code, examined the mother of the appellant at great length and then gave her opportunity under section 202 of the Code to produce other evidence. After examining two more witnesses, the learned Magistrate ordered that " no further evidence to be led at this 440 stage ". This order indicates that the learned Magistrate prevented the appellant at that stage to examine other witnesses. Even if a liberal meaning was given to the terms of the order, it would mean that at that time the Magistrate was inclined to give notice to the respondent but changed his mind subsequently. Thereafter, the Magistrate considered the evidence and delivered a judgment holding that the paternity of the appellant had not been established. While there was uncontradicted evidence sufficient for the Magistrate to give notice to the respondent, he recorded a finding against the appellant before the entire evidence was placed before him. While accepting the contention of the appellant that the procedure under sections 200 to 203 of the Code did not apply, in fact he followed that procedure and converted the preliminary enquiry into a trial for the determination of the question raised. Indeed, he took upon himself the role of a cross examining counsel engaged by the respondent. The record discloses that presumably the Magistrate was oppressed by the high status of the respondent, and instead of making a sincere attempt to ascertain the truth proceeded to adopt a procedure which is not warranted by the Code of Criminal Procedure, and to make an unjudicial approach to the case of the appellant. In the courts of law, there cannot be a double standard one for the highly placed and another for the rest: the Magistrate has no concern with personalities who are parties to the case before him but only with its merits. After carefully going through the entire record, we are satisfied that the appellant was not given full opportunity to establish his case in the manner prescribed by law. We should not be understood to have expressed any opinion on the merits of the case; they fall to be considered on the entire evidence which may be produced by the appellant in the presence of the respondent or his pleader, as the case may be. In the result, the order of the High Court is set aside and the reference made by the Sessions Judge is accepted and the 'application is remanded to the Court of the Magistrate, First Class, Allahabad, for disposal according to law. Appeal allowed.

The appellant who was a minor filed an application by his mother as his guardian under section 488 of the Code of Criminal Procedure in the Court of the City Magistrate, Allahabad, praying for an order against the respondent, for maintenance alleging that he was his putative father. The Magistrate summarily dismissed the appellant 's application without issuing notice to the respondent as required by s.488, Criminal Procedure Code. The Court of Session in revision against the Magistrate 's order came to the conclusion that it was a fit case in which the Magistrate ought to have issued summons to the respondent and submitted the record to the High Court recommending that the order passed by the Magistrate be set aside and that the Magistrate be ordered to proceed with the application in accordance with law. TheHighCourtrejectedtheSessionsCourt preference and refused to certify that the case was a fit one for appeal to the Supreme Court. On appeal by special leave : Held, that the appellant was not given full opportunity to establish his case in the manner prescribed by law. 432 Section 488 of the Code of Criminal Procedure does not contemplate a preliminary enquiry before issuing a notice but lays down that all evidence under that section should be taken in the presence of the respondent or his pleader indicating thereby that one enquiry only should be held after notice. Sub section (6) of section 488 is mandatory in form and in clear terms it prescribes the procedure to be followed by the Magistrate. It is the duty of the Court, before making the order, to find definitely, though in a summary manner, the paternity of child. Chapter XXXVI of the Code of Criminal Procedure is a self contained one and the relief given under it is essentially of a civil nature. It prescribes a summary procedure for compelling a man to maintain his wife or children. The findings of a Magistrate under this chapter are not final and the parties can legitimately agitate their rights in a civil court.

tition (Civil) Nos. 507 and 1260 of 1989. (Under Article 32 of the Constitution of India). M.K. Ramamurthy, Rajinder Sachhar, Dr. Francis Julion, Ms. Aruna Mathur, A. Mariarputham, Ms. section Dikshit, section Va sudevan and Pradeep Misra for the Petitioners. For the Respondents Nemo. The following Order of the Court was delivered by 496 section RANGANATHAN, J. This order will dispose of a prelimi nary objection raised on behalf of the respondents that these writ petitions should be dismissed because the peti tioners have suppressed certain material facts from this Court and have also tried to abuse the process of court in the manner hereinafter appearing. Writ Petition No. 507 of 1989 has been filed by the All India State Bank Officers ' Federation (hereinafter called 'the Federation ') through its President. It was filed in this Court on 21st April, 89 and was supported by an affida vit of Umed Singh, President of the Federation, affirming the contents of the petition to be true to his personal knowledge. By this writ petition the Federation seeks to impugn a new promotion policy decided upon by the State Bank of India (hereinafter called 'the Bank '). In paragraph 9(mm) of the petition it is stated that the petitioners are ap proaching this Court in great haste as the Bank is moving with great speed and is likely to constitute Departmental Promotion Committees and declare the results of the inter views in implementation of the new promotion policy within the next two or three days. In the affidavit of Umed Singh, referred to earlier, it has been stated in para 4 that the petitioners have not filed any other similar writ petition in this Honourable Court or any other High Court. In the counter affidavit filed on behalf of Bank, it is stated that the statement in paragraph 4 of the petition in support of the writ petition is false. It is pointed out that the Federation through its Deputy General Secretary had filed Writ Petition No. 5286 of 1989 in the High Court of Andhra Pradesh at Hyderabad along with an application No. 6969 of 1989, seeking stay of the promotion policy. On 13.4.89 the Andhra Pradesh High Court admitted the writ petition but the learned judge rejected the application for interim stay observing "that he was prima facie satisfied that the selection is going on according to a fair procedure and that there is no need to stay any of the interviews or the appointment". It is further pointed out that another petition has also been filed by the State Bank of India Officers ' Association (Karnataka) having its office at Bangalore in the Karnataka High Court, being Writ Petition No. 7848 of 1989. It is, therefore, submitted that the petitioners have suppressed from this Court the material fact that a writ petition has already been filed by them in the Andhra Pradesh High Court and that an application for stay had been made and rejected by the said court. A second objection to the 497 maintainability. of the petition raised on behalf of the Bank in paragraph 3 of its counter affidavit was that since promotions had already been made they could not be disturbed "as the promoted officers have not been made parties". It is common ground that 58 officers had been promoted w.e.f. 24th April, 89 but no steps were taken to implead these officers, who would be directly affected as a result of the prayer made in the writ petition. To these objections, a rejoinder was filed on behalf of the petitioners, supported again by an affidavit of Umed Singh on the 23rd of October, 1989. The two objections raised by the Bank were sought to be refuted in the follow ing manner: "1. That the contents of para 1 are denied and it is reiter ated that the writ petition is maintainable as there is clear violation of fundamental rights guaranteed to the petitioners. The writ petition filed in the Andhra Pradesh High Court has since been withdrawn as per the undertaking given to the Supreme Court during arguments on 24.4.89. The deponent had no knowledge of the writ petition filed before the High Court of Andhra Pradesh, hence as soon as it came to his knowledge the same has been withdrawn. Even otherwise the deponent understands that in the said writ petition the stay of interviews was prayed and the same was declined on representation made by the respondent bank. It is indeed regrettable that even before Hon 'ble High Court the bank made incorrect statements. A perusal of the order of High Court would show the same. Regarding the question of making such employees who have been promoted as a party respondent, it is submitted that firstly it is the promotion policy which had been challenged being arbitrary, discriminatory and framed in gross violation of the prescribed procedure and provisions of law, secondly the petitioners even today do not know the names of all such 58 candidates who have been promoted favoured." (emphasis added) It may be mentioned here that Writ Petition No. 507 of 1989 came up for admission before a Bench of this Court on 26th April, 1989. Apparently, the counsel for the State Bank of India was present and accepted notice on behalf of the bank. The Bench passed the following order: 498 "Issue notice, Mr. S.S. Sharma, learned counsel accepts notice on behalf of the State Bank of India. Counter affida vit shall be filed within four weeks from today. Reply, if any, shall be filed within two weeks thereafter, the matter will be placed for final disposal on 24.10.1989 subject to overnight part heard. The promotion if given in the meantime will be subject to the decision in the writ petition. Mr. K.K. Venugopal, learned counsel states that the writ peti tion which has been filed before the High Court will be withdrawn." The Writ Petition came on for hearing before us on 5th April, 1990. Sri G. Ramaswamy, counsel for the Bank, put the above objections in the forefront as preliminary objections. After hearing him and the counsel for the petitioner, we directed the petitioner federation to file a better affida vit explaining the correct position. In compliance with the direction given by us, another affidavit has been filed by Sri Umed Singh. In this affidavit, again, although purport ing to "tender an unqualified apology" for the misstatement in the earlier affidavit, the deponent reiterated "that he did not know on the date of swearing of the affidavit on 21.4.89 that some other office bearer of the petitioner federation has filed such a petition". He claims to have come to know of it only on the 23rd April, 1989 from a telephonic conversation with the Deputy Secretary and wishes to take credit for the fact that he at once informed his counsel about it who in turn brought it to the notice of the Court at the time of the preliminary hearing on 26th April, 1989. The truth of these allegations is refuted on behalf of the Bank. It is submitted that the counsel for the petition er did not, even at the time of hearing on 26.4.89, bring to the notice of this Court the fact that he had filed a peti tion in the Andhra Pradesh High Court. On the other hand, it is claimed, it was the counsel for the Bank who was present and who took notice on behalf of the Bank, that brought to the notice of the Court that the petitioner had already moved the Andhra Pradesh High Court in regard to the same relief and it was only thereafter that the counsel for the petitioner made a statement that the petitioner would with drew the petition filed in the Andhra Pradesh High Court. Even this, it is pointed out, they did not do immediately as stated in Umed Singh 's affidavit for the said petition was withdrawn only much later on 27th of July, 1989. On behalf of the Bank it is also pointed out that the statement made in the rejoinder filed by Umed Singh, sup ported by his affidavit, 499 that the addresses of the 58 promotees was not known to the petitioner is again a total falsehood as is demonstrated by two circumstances. In the first place, in the writ petition filed in the Karnataka High Court, the petitioner there has joined all the 58 officers as parties and an application was moved before the said High Court on 27th April, 89, seeking stay of promotion of the said respondents. That apart, on 1st May, 89, a fortnightly bulletin issued by the State Bank of India Officers ' Association (Mumbai circle), which is admitted to be one of the associations affiliated to the petitioner Federation, carries a message of congratulations to all the 58 officers, who had been promoted w.e.f. 24th April, 89. The names of all the 58 officers so promoted has been set out in this bulletin. In this state of the record, learned counsel for the Bank strongly urges that we should dismiss the writ petition straightaway on the ground that the petitioner has not come to Court with clean hands. We have heard learned counsel on both sides at length. There is no doubt left in our minds that the petitioner has not only suppressed material facts in the petition but has also tried to abuse judicial process. The explanation that the President of the Federation when he filed the writ in this Court on 21st April, 89, was not aware that a petition had been filed in the Andhra Pradesh High Court (repeated for a second time in the affidavit of 5th April ' 90) is, in our opinion, is totally unacceptable. Admittedly the federa tion was considerably agitated by the new promotion policy. The matter was considered to be very urgent and the federa tion was too keen to obtain a stay of implementation of the policy which, it feared. the Bank might do any day. In this situation, not even the most gullible of persons would be credulous enough to accept the explanation that the Deputy General Secretary of the Federation had not apprised the President of their failure to obtain the stay order from the Andhra Pradesh High Court. It is totally unbelievable that between 13.4.89, when the interim application in the Andhra Pradesh High Court was rejected and 21.4.89 when the writ petition was filed, the President was not aware of what had happened in the High Court. It is deplorable that such an explanation should have been not only put forward in the original rejoinder but should have been repeated again in the latest affidavit. The petitioner had, in our opinion, deliberately suppressed from the petition this crucial and important fact. As to the credit sought for having brought this fact to the notice of the Court on 25.4.89. the circum stances suggest that perhaps they would not have brought it to the notice of the court at all had not counsel on behalf of the Bank been present. to receive notice 500 when the matter was moved for admission on 26.4.89. whether, as asserted by the counsel for the petitioner, the petition er considered it prudent, in view of the presence of the Bank 's counsel, to volunteer at the time of the said hearing the information that a petition had been filed in the Andhra Pradesh High Court and to offer an undertaking that it would be withdrawn or whether, as alleged in a "statement of facts" ' placed before us by Sri S.S Sharma, the learned counsel for the Bank who appeared at the hearing, even this information had to be supplied to the Court by the Bank, is a controversy into which we need not enter. We shall proceed on the assumption that the statement made by the counsel for the petitioner is correct, but even that does not explain why a reference to the writ petition in the High Court was not made in the writ petition as it had to be made. The statement in the affidavit of Umed Singh that no petition had been filed in any High Court was clearly and plainly false. It is equally clear that the statement made in the rejoinder affidavit that "till today (i.e. 23rd October, 1989) the petitioner federation is not aware of the names of the promoted officers" is again an incorrect statement. These officers had been impleaded in the interim application for the relief sought against them in the Karnataka High Court as early as 27.4.89. That apart the federation could not have been unaware of the contents of the bulletin issued by the Mumbai circle of the SBI Officer 's Association issued on 1.5.89. There is no doubt that the petitioner did not deliberately implead the 58 promoted officers. Sri Sachhar, for the petitioner, sought to contend that these 58 officers may be proper parties but not necessary parties and he referred us to the judgments of this Court in The General Manager, South Central Railway, Secunderabad and Another vs A.V.R. Siddhantti and Ors., and Col. D.D. Joshi & Ors. vs Union of India & Ors. , [1983] 2 S.C.C. 235. We are not here concerned with the question whether these officers were necessary or proper parties and, indeed, this issue is no longer alive as, subsequently, the peti tioner itself has undertaken to implead these 58 officers and notices have been issued to them in both the writ peti tions. What we are concerned here with is the statement, in the rejoinder affidavit that the Federation was not aware of the names of the 58 officers till November 1989 which, in the circumstances is a clear misstatement. Apart from misstatements in the affidavits filed before this Court, the petitioner Federation has clearly resorted to tactics which can only be described as abuse of the process of court. The simultane 501 ous filing of writ petitions in various High Courts on the same issue though purportedly on behalf of different associ ations of the Officers of the Bank, is a practice which has to be discouraged. Sri Sachhar and Sri Ramamurthy wished to pinpoint the necessity and importance of petitions being filed by different associations in order to discharge satis factorily their responsibilities towards their respective members. We are not quite able to appreciate such necessity where there is no diversity but only a commonness of inter est. All that they had to do was to join forces and demon strate their unity by filing a petition in a Single Court. It seems the object here in filing different petitions in different Courts was a totally different and not very laud able one. Again an attempt was made to obtain a stay in the Andhra Pradesh High Court and when that attempt failed the writ petition here was filed. In this the petitioners were able to obtain only an order that any promotions made during the pendency of the petition would be subject to the deci sion in the writ petition. But, having obtained this order on 26.4.89, it is curious and inexplicable that an affiliat ed association should have made an application on 27.4.89 in the Karnataka High Court praying for a stay of the promo tions. These are only tactics that it will be indulged in by a chronic and compulsive litigant and not by a federation like the petitioner. We have set out the facts in this case at some length and passed a detailed order because we are deeply grieved to come across such conduct on the part of an association, which claims to represent high placed officers of a premier bank of this country. One expects such officers to fight their battles fairly and squarely and not to stoop low to gain, what can only be, temporary victories by keeping away material facts from the court. It is common knowledge that, of late, statements are being made in petitions and affida vits recklessly and without proper verification not to speak of dishonest and deliberate misstatements. We, therefore, take this opportunity to record our strong and emphatic disapproval of the conduct of the petitioners in this case and hope that this will be a lesson to the present petition er as well as to other litigants and that atleast in future people will act more truthfully and with a greater sense of responsibility. The question that now remains to be considered is wheth er the petition is liable to be dismissed for this conduct of the President of the Federation. Sri Rajendra Sachhar, appearing on behalf of the petitioners, sought to get over the Bank 's objections by addressing certain technical argu ments. He submitted that even if Writ Petition No. 507/ 89 was liable to be dismissed for mis statement and suppression there 502 would be no reason to dismiss C.W.P. No. 1260 of 1989 which has been filed by another association of the same officers. He also sought to contend that, since it had been brought to the notice of this Court on 26.4.89 that a petition had been filed in a High Court and that it was being withdrawn, the order passed by this Court on 26.4.89 should be taken as having condoned any mis statement or mis conduct or defects in the writ petition. We are not inclined to accept these submissions. However, it is not necessary to discuss this aspect further as we do not wish to penalise the various officers who may suffer as a consequence of the new policy, which they wish to challenge, for the misstatements or wrong steps taken by the Officers of the federation perhaps, in their over anxiety to get quick interim relief. We do not wish to decline them an opportunity to put forward their grievances before the court by dismissing these writ peti tions on the preliminary objections raised by the Bank. In fact, we should like to place on record our appreciation of the stand taken by Sri G. Ramaswamy, learned counsel for the Bank in this respect. He fairly stated that, as he is ap pearing for a public sector undertaking, he is quite pre pared to contest the writ petitions on their merits and that his preliminary objections were primarily intended to bring to our notice the conduct of the petitioners in this case. We are glad he did it as this was a matter which needed serious notice. We should like to record our dis approval of the way in which the proceedings have been conducted on behalf of the Federation. However, as mentioned above, we overrule the preliminary objections and will proceed to dispose of the writ petitions on their merits. The Writ Petitions are adjourned, as per separate order, to 17.7.90 for further hearing.

The All India State Bank Officers ' Federation filed a Writ Petition in this Court on the 24th April, 1989 seeking to impugn a new promotion policy initiated by the State Bank of India. The petition was supported by an affidavit of the President of the Federation affirming the contents of the petition to be true to his personal knowledge, and submit ting in paragraph 9(mm) of the petition that the petitioners were approaching this Court in great haste as the Bank was moving with great speed to implement its new promotion policy and was likely to constitute a Departmental Promotion Committee, and declare the results. In para 4 it was submit ted that the petitioners had not filed any other similar petition either in this Court or any other High Court. When the writ petition came up for admission before a Bench of this Court on April 26, 1989, counsel for the State Bank of India was present and accepted notice on behalf of the Bank. The Writ Petition was contested by the Bank which sub mitted in its counter affidavit that the statement in para 4 of the petition in support of the writ petition was false, and pointed out that the Federation through its Deputy General Secretary had filed a Writ Petition in the High Court of Andhra Pradesh along with an application seeking stay of the promotion policy, and that the High Court admit ted the Writ Petition on April 13, 1989 but rejected the application for interim stay, and further pointed out that another petition had been filed by the State Bank of India Officers ' Association (Karnataka) in the Karnataka High Court. A second objection as regards the maintainability of the 494 petition was raised in para 3 that since the promotions had already been made they could not be disturbed and that no steps were taken to implead those officers, who would be directly affected as a result of the prayer made in the writ petition. To the aforesaid objections raised by the Bank the petitioner filed a rejoinder supported by an affidavit of the President of the Federation, submitting that the depo nent did not have any knowledge of the writ petition filed in the High Court of Andhra Pradesh, and that as soon as it came to his knowledge it was withdrawn. and that the peti tioners did not know the names of all the 58 candidates who had been promoted favoured. When the Writ Petition was taken up for further hearing on April 5, 1990, counsel for the Bank objected to the maintainability of the writ petition on the grounds of suppression of material facts and abuse of the process of court. The Court directed the petitioner to file a better affidavit, and the petitioner Federation filed a better affidavit explaining the correct position and tendering an unqualified apology for the mis statements in the earlier affidavit, but still reiterated that they came to know of the writ petition in the Andhra Pradesh High Court only on April 23, 1989 and that, at the time of the preliminary hearing, it was brought to the notice of the Court by the Respondent 's counsel. The respondent pointed out that the statements made in the rejoinder filed by the petitioners that they were not aware of the names of the promoted officers till November, 1989 was a total falsehood because; (i) the writ petition filed in the Karnataka High Court made all of them parties to the writ petition, and (ii) the names of the promoted officers were listed in the fortnightly bulletin of the State Bank Officers ' Association dated 1st May, 1989 carry ing a message of congratulations to all of them. Disposing of the preliminary objections and adjourning the writ petition for further hearing on merits, the Court, HELD: 1. Apart from mis statements in the affidavits filed before this Court the petitioner federation has clear ly resorted to tactics which can only be described as abuse of the process of court. The simultaneous filing of writ petitions in various High Courts on the same issue though purportedly on behalf of different associations of the Officers of the Bank, is a practice which has to be discour aged. [500H; 501A] 495 2. An attempt was made to obtain a stay in the Andhra Pradesh High Court and when that attempt failed the writ petition here was filed. In this the petitioners were able to obtain only an order that any "promotions made during the pendency of the petition would be subject to the decision in the writ petition. But having obtained this order on April 26, 1989, it is curious and inexplicable that an affiliated association should have made an application on April 27, 1989 in the Karnataka High Court praying for a stay of the promotions. These are only tactics that will be indulged in by a chronic and compulsive litigant and not by a Federation like the petitioner. [501C D] 3. One expects that officers fight their battles fairly and squarely and not stoop low to gain what can only be temporary victories by keeping away material facts from the court. [501E] 4. It is common knowledge that, of late, statements are being made in petitions and affidavits recklessly without proper verifications not to speak of dishonest and deliber ate misstatements. Strong and emphatic disapproval of the conduct of the petitioners in this case is recorded in the hope that this will be a lesson to the present petitioners as well as to other litigants and that atleast in future people will act more truthfully and with a greater sense of responsibility. [501F G] 5. The Court does not wish to penalise the various officers who may suffer as a consequences of the new policy, which they wish to challenge, and decline them an opportuni ty to put forward their grievances before the Court, for the mis statements or wrong steps taken by the officers of the Federation in their over anxiety to get quick interim re lief. [502B C]

titions Nos. 4038, 4147, 4148, 4149, 4150, 4202, 4204, 4207, 4213, 4215, 4222, 4224, 4227, 4232, 4236, 4246, 4249, 4251, 4259, 4311, 4343 & 4347 of 1978. (Under Article 32 of the Constitution). V. M. Tarkunde, P. H. Parekh, C. B. Singh and Mukul Mudgar for the Petitioners in W.P. Nos. 4038 and 4244/78. Yogeshwar Prasad, Mrs. Rani Chhabra and Miss M. Bali for the Petitioners in W.P. Nos. 4147 4150, 4207, 4232 and 4343/78. B. R. Kapur and section K. Sabharwal for the Petitioners in W.P. Nos. 4213, 4215, 4246, 4249, 4311, 4224 and 4227/78. O. P. Sharma for the Petitioners in W.P. Nos. 4222, 4259/78. Pramod Swarup for the Petitioner in W.P. 4347/78. Shreepal Singh for the Petitioner in W.P. 4236/78. M. P. Jha for the Petitioner in W.P. 4251/78. M. C. Bhandare (In W.P. 4204 and 4227/78 only) Mrs. section Bhandare, A. N. Karkhanis and Miss Malini Poduval for R. 3 (In W.P. 4204, 4227/78) and for R. 3 in 4215 and for R. 3 4 in 4249/78. G. L. Sanghi (In W.P. 4038/78 only) section K. Mehta, K. R. Nagaraja, P. N. Puri and G. Lal for Municipality (rr) in W.P. 4038, 4207, 4215, 4249, 4227. Hardev Singh and R. section Sodhi for the State of Punjab in (W.P. 4038/78). Bishamber Lal for the State of Punjab in (W. P. 4147/78). 848 Naunit Lal for Municipal Committee (R.6) in W.P. 4249 and for r. 4 in 4227/78. The Judgment of the Court was delivered by KRISHNA IYER, J. This heavy bunch of writ petitions impeaching the validity of a tax on foreign liquor raises a few familiar legal riddles. A rupee per bottle sold within every municipal town or city is the impugned levy, meant, according to the Punjab Government, to serve the twin purposes of replenishing the resources of municipal bodies reduced by house tax exemptions and of weaning drinkers from overly consuming foreign liquor as a prohibitionist gesture. To pick the pocket of every spirituous bibber of the higher brackets by a tiny tax may be but a feeble homage to article 47 of the Constitution, and to finance welfare projects with this tainted tax may be queer Gandhiana. The will to enforce 'dry ' sobriety in society and to abolish massive human squaller by fleecing the fat few, is made of sterner stuff, maybe. But matters of means and ends, of police and morality, are largely for the legislature and validity is the province of the court. We let slip the observation only because, from a certain angle, these dual grounds make odd companions and add to the credibility gap, although our focus is solely on the legality of the levy. It is better to begin with the story of the tax under challenge. The petitioners are all licensees to trade in foreign liquor including Indian made foreign liquor. They are either wholesalers or retailers and pay excise duty and other fees and taxes including sales tax under the general sales tax law which imposes a levy of 10 per cent, on sales of foreign liquor. There are also octroi levies of 10 per cent, and educational tax of 2 per cent, and these add up to a considerable burden; but the commodity taxed is foreign liquor, Indian made or other, whose consumer usually belongs to the well to do sectors. The municipalities of Punjab are governed by two enactments. The numerous little ones are statutory bodies created and controlled by the Punjab Municipal Act, 1911 and the few large ones by the Punjab Municipal Corporation Act, 1976 (the Act, for brevity, hereafter). For our purposes, the provisions run on identical terms and so we will take up the latter statute which compresses into one section a plurality of sections in the former, and set out the common scheme to study the critical issues raised. Arguments have been addressed only on this basis. The immediate facts which have launched the litigative rocket need to be narrated now to get a hang of the core questions in their correct perspective. The State of Punjab, in April 1977, under its statutory 849 power [section 90(4)] required the various municipal bodies in the State to impose a tax on the sale et al, of foreign liquor at the rate of Re. 1/ per bottle with effect from May 20, 1977. The municipal authorities having tarried too long or totally failed to take action pursuant to this directive, the State directly entered the fiscal arena and issued a Notification under section 90(5) dated May 31, 1977, which reads thus: "Whereas the Government of Punjab, in exercise of the powers conferred by sub section (4) of section 90 of the Punjab Municipal Corporation Act, 1063 A PSLG 77/12170, dated 11th April, 1977, required of the Municipal Corporation of Ludhiana in Punjab to impose tax on the sale of "Indian made Foreign Liquor" at the rate of rupee one per bottle, by the 20th May, 1977. And Whereas, the Municipal Corporation of Ludhiana has failed to carry out the aforesaid order of the Punjab Government within the stipulated period. Now, therefore, in exercise of the powers conferred by sub section (5) of section 90 of the Punjab Municipal Corporation Act, 1976, the President of India is pleased to impose/modify the tax on the sale of "Indian made Foreign Liquor" within the Municipal Corporation of Ludhiana at the rate of rupee one per bottle. The tax shall come into force with effect from 1st June, 1977. L.S. BINDRA Joint Secretary to Govt. Punjab Local Government Department" This notification, issued under section 90(5) read with section 90(2)(b) of the Act, was later modified marginally but survives substantially. The petitioners (licensees) challenge its vires both as contrary to the statutory provision (section 90) and as violative of the Constitution. The triple shapes of the fatal constitutional pathology are that (a) section 90 (2)(b) of the Act suffers from the vice of excessive delegation or legislative abdication; (b) there are no guidelines for the exercise of the vagariously wide fiscal power of the corporation or Government which make it too unreasonable to be salvaged by article 19(5) and too arbitrary to be 'equal ' under article 14; and (c) the order itself is vitiated by multiple infirmities. The principal invalidatory charge, based on the Act, is that section 90(4) interdicts any tax 'already imposed '. The present tax is on sales and there is, under the general sales tax law, already a like levy on sales of foreign liquor in the State, and so the second fiscal venture is beyond Government 's power. We have to consider these grounds of attack on the notification which are the emphatic submissions of 850 Shri Tarkunde who led the arguments. There are more subsidiary submissions urged by other counsel on a lower key, though, but we have to deal with them too in due course. Briefly, they are (a) that in picking out for taxation, from the broad spectrum of luxury goods or intoxicants, foreign liquor alone, discrimination has been practised, (b) that even assuming that Government can exercise the power of the municipal body, it may not do so without adhering to the procedural fairness implied in the Explanation to section 90(2) applicable to municipal bodies and (c) that unequals are being treated equally because the tax of Re. 1/ bottle at a flat rate disregards germane considerations like the price of the liquor or the degree of alcoholic content. A feeble plea that the tax is bad because of the vice of double taxation and is unreasonable because there are heavy prior levies was also voiced. Some of these contentions hardly merit consideration, but have been mentioned out of courtesy to counsel. The last one, for instance, deserves the least attention. There is nothing in article 265 of the Constitution from which one can spin out the constitutional vice called double taxation. (Bad economics may be good law and vice versa). Dealing with a somewhat similar argument, the Bombay High Court gave short shrift to it in Western India Theatres(1). Some undeserving contentions die hard, rather survive after death. The only epitaph we may inscribe is: Rest in peace and don 't be re born ! If on the same subject matter the legislature chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure save where other prohibitions exist. Likewise, the plea that a flat rate of Re. 1/ per bottle, be it brandy or other stronger beverage or be it Rs. 50/ or Rs. 500/ per bottle, cannot be seriously pressed. In the field of taxation many complex factors enter the fixation and flexibility is necessary for the taxing authority to make a reasonably good job of it. Moopil Nair 's case(2) does not discredit as unconstitutional anathema all flat rates of taxation. Maybe, in marginal cases where the virtual impact of irrationally uniform impost on the same subject is glaringly discriminatory, expropriatory and beyond legislative competence, different considerations may arise; but to condemn into invalidity a tax because it is levied at a conveniently flat rate having regard to the commodity or service which has a high range of prices and the minimal effect on the overall price, its easy means of collection and a variety of other pragmatic variables, is an absurdity, especially because in fiscal matters large liberality must be extended to the Government having regard to the plurality of criteria 851 which have to go into the fiscal success of the measure. Of course, despite this forensic generosity, if there is patent discrimination in the sense of treating dissimilar things similarly or vice versa, the court may treat the tax as suspect and scrutinise its vires more closely. In the present case, intoxicating liquids falling in the well known category of foreign liquors form one class and a flat minimal rate of Re. 1/ per bottle has no constitutional stigma of inequality. It is so easy to conceive of innumerable taxes imposed in this manner in the daily governance of the country that illustrations are unnecessary. As excisable articles go, foreign liquor is a distinct category and absence of micro classification within the broad genus does not attract the argument of inequality. Likewise, picking and choosing within limits is inevitable in taxation. The correct law is found in East India Tobacco Co.(1) "It is not in dispute that taxation laws must also pass the test of Art 14. That has been laid down recently by this Court in Moopil Nair vs The State of Kerala. But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of article 14. The following statement of the law in Willis on "Constitutional Law" page 587, would correctly represent the position with reference to taxing statutes under our Constitution: "A State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably. . The Supreme Court has been practical and has permitted a very wide latitude in classification for taxation." (See also Abdul Shakoor & Co. case)(2). The foreign liquor levy does not fail on this score. Shri Yogeshwar Prasad urged that section 90(2) obligated the municipal body to offer an opportunity to the residents of the city to file objections to the tax proposed and consider them before finalising 852 the impost. This fair procedure must attach to the exercise of the power even under section 90(5); and since that has not been done the impugned notification must fail. It is clear from section 90 that the scheme is that if the municipal corporation wishes to impose a tax under section 90(2) it must go through the due process indicated in the Proviso and secure Government 's approval. But if Government is to exercise its power under section 90(5) no such procedural fetter is found in the Section. Maybe, that power is different from procedure for its exercise; but unless the statute insists, it is impossible for the court to imply invitation of objections and consideration thereof from the residents. For this simple reason, there is no merit in the submission. Whether the failure to hear before fixing a tax has a lethal effect upon the fiscal power of the Government under section 90(5) also is of little moment although urged by the same counsel. May be, it is desirable that the State acquaints itself with the actual sentiments of the denizens of the local area before imposing tax on them. But it is not inherent in the constitutional requirements for the exercise of the State 's power of taxation that objections should be called for and considered. 'No taxation without representation ' is a slogan with a different dimension and has nothing to do with a levy by a government controlled by an elected legislature exercising its power of taxation. We are unable to accede to the contention that representations from the residents not having been invited the taxation notification is bad in law. What is wholesome is different from what is imperative. Indeed, we are left with the two major arguments addressed by Shri Tarkunde and echoed or endorsed by other counsel. Even here, we may dispose of the submission based on the wording in section 90(4), namely, that taxing power under section can be exercised in respect of a particular impost only if that species of tax is "not already imposed". The power under section 90(4) is permissible only if the tax is new and not already imposed. The petitioner 's argument is that the tax is on sales and is clearly a sales tax. There is already a sales tax on foreign liquor at the rate of 10 per cent, under the Punjab General Sales Tax Act, 1948. So the present rupee tax is a second round in breach of the forbiddance in section 90(4). Simple enough, if the expression 'not already imposed ' in section 90(4) is a ban on further tax whatever the statute; but if the taboo is not on the topology of the tax but limited to the specific statute the contention is specious. And it takes little reflection to hold the latter to correct view. We must remember the statutory setting and the placement of the provision. section 90 occurs in Chapter VIII headed 'Taxation '. That Section prim 853 arily empowers municipal corporations to levy taxes. section 90(1) specifies a number of items many of which are taxed also at State level, e.g. lands, vehicles. section 90(2) is so widely worded that many taxes covered by it would already have been occupied field at the State or even Central level. The municipal body may not have any index of taxes already imposed by other bodies and they are many. section 90 would then be a precarious power, often an exercise in futility and frequently a litigative trap. No. That is not the meaning of the prohibition `not already imposed '. The Government exercises the power of the corporation under section 90(5) and cannot enter what is forbidden ground for the latter. And what is forbidden is that the municipal body shall not repeat the same tax, if it has imposed that tax earlier under that Act. The injunction is plain and is confined to repetition of those taxes which the municipality has already imposed. If the Corporation has not already imposed the tax proposed, the embargo is absent. It is of no moment that some other body, including the State Legislature has already entered the field. The question is : has the municipal committee or corporation, under this Act, already exacted a similar tax? If it has, the second exercise is anathema. Nobody has a case that the corporation has earlier taxed foreign liquor under this Act. Therefore, the submission has no substance and we reject it. The sole surviving ground of invalidation pressed by the petitioners which deserves serious examination is what we have outlined right at the outset, viz., that on the face of section 90(2), (3), (4) and (5) read together, unconstitutionality is writ large, in the sense of naked and uncanalised power with every essential legislative function surrendered to the humour and hubris of the State Executive. If this charge be true the consequence is in no doubt. The vice of unreasonableness and arbitrariness are manifestations of the same vice as has been pointed out in P. N. Kaushal etc.(1). An examination of excessive delegation of legislative power takes us to the scheme of the Act and insight into the dynamics of municipal administration. Certain fundamentals must be remembered in this context and then the text of the provision understood in the constitutional perspective. The Founding Document of the nation has created the three great instrumentalities and entrusted them with certain basic powers legislative, judicative and executive. Abdication of these powers by the concerned instrumentalities, it is axiomatic, amounts to betrayal of the Constitution itself and it is intolerable in law. This means that the legislature cannot self efface its 854 personality and make over, in terms plenary, the essential legislative functions. The legislature is responsible and responsive to the people and its representatives, the delegate may not be and that is why excessive delegation and legislative hara kiri have been frowned upon by constitutional law. This is a trite proposition but the complexities of modern administration are so bafflingly intricate and bristle with details, urgencies, difficulties and need for flexibility that our massive legislatures may not get off to a start if they must directly and comprehensively handle legislative business in all their plenitude, proliferation and particularisation. Delegation of some part of legislative power becomes a compulsive necessity for viability. If the 500 odd parliamentarians are to focus on every minuscule of legislative detail leaving nothing to subordinate agencies the annual output may be both unsatisfactory and negligible. The Lawmaking is not a turnkey project, ready made in all detail and once this situation is grasped the dynamics of delegation easily follow. Thus, we reach the second constitutional rule that the essentials of legislative functions shall not be delegated but the inessentials, however numerous and significant they be, may well be made over to appropriate agencies. Of course, every delegate is subject to the authority and control of the principal and exercise of delegated power can always be directed, corrected or cancelled by the principal. Therefore, the third principle that emerges is that even if there be delegation, parliamentary control over delegated legislation should be a living continuity as a constitutional necessity. Within these triple principles, Operation Delegation is at once expedient, exigent and even essential if the legislative process is not to get stuck up or bogged down or come to a grinding halt with a few complicated bills. It is apt to excerpt here an oft quoted observation from Vasantlal Maganbhai Sanjanwala affirmed in Devi Das Gopal Krishnan & Ors(1) : "The Constitution confers a power and imposes a duty on the legislature to make laws. The essential legislative function is the determination of the legislative policy and its formulation as a rule of conduct. Obviously it cannot abdicate its functions in favour of another. But in view of the multifarious activities of a welfare State, it cannot presumably work out all the details to suit the varying aspects of a complex situation. It must necessarily delegate the working out of details to the executive or any other agency. But there is a danger inherent in such a process of delegation. An over 855 burdened legislature or one controlled by a powerful executive may unduly overstep the limits of delegation. It may not lay down any policy at all; it may declare its policy in vague and general terms; it may not set down any standard for the guidance of the executive; it may confer an arbitrary power on the executive to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation. This self effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. It is for a Court to hold on a fair, generous and liberal construction of an impugned statute whether the legislature exceeded such limits. But the said liberal construction should not be carried by the Courts to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power conferred on executive authorities. It is the duty of the Court to strike down without any hesitation any arbitrary power conferred on the executive by the legislature. " Such being the basics, accepted by presidential profusion of this Court, we have to examine whether any essential legislative function has been transplanted into the hands of Government or corporation by the Act, whether the delegation itself is an entrustment of overboard power, so unguided that the delegate may run amok and do what is arbitrary, unreasonable and violative of Articles 14 and 19 of the Constitution. Taxation is exaction and even expropriation and, therefore, the right to property is in peril when a fiscal measure is afoot. Article 10 comes into play when law is made for purposes of taxation and that law must comply with Part III. Arbitrariness must be excluded in the law, for, if power is arbitrary it is potential inequality and article 14 is fatally allergic to inequality before the law. These generalities take us to the particularities of the present case. Shri Tarkunde turned the forensic fusillade on the total absence of guidance and regulation anywhere in the statute, expressly or implicitly, and on a true construction, according to him, a blanket power has been vested by section 90 on the corporation and, indubitably, on the Government. The jurisprudence of delegation of legislative power, as earlier mentioned, has been the subject matter of this Court 's pronouncements. In the absence of the rate of taxation being indicated by the Legislature, Shri Tarkunde and other counsel appearing on either side drew our attention to Liberty Cinema,(1) the land mark case on the point. The later decisions have affirmed the principle in Liberty Cinema. But 856 before we enter into a fuller discussion we may concretize the specific contention urged by counsel for the petitioners. Section 90(1) sets out certain items for taxation by the corporation. The taxes so levied are to be utilised for the purposes of the Act. Therefore, there is a clear directive contained in the provision about the purpose and limit of the tax. What is needed for the purposes of the Act by way of financial resources may be levied by the corporation. Beyond that, No. If the corporation has a fancy for spending money on purposes unconnected with the Act and seeks to levy a tax for the fulfillment of such extra statutory objects the mis adventure must fail. Moreover, the items on which taxes may be imposed are also specified. Thus, the legislature has fixed the purpose of the taxation, the objects of the taxation and the limits of the taxation. In short, section 90(1) is a textbook illustration of valid delegation by the legislature. The offending area is approached as we move down to sub section (2) (b) which enables the corporation "to levy any other tax which the State Legislature has power to impose under the Constitution". The fiscal area is obviously specious and so the question directly arises whether this over broad provision accords with or exceeds the principles of delegation. Sub section (3) leaves the rates of levy to be specified by the Government and the legislature, argue petitioners ' counsel, has given no indication of the minima or the maxima of such rates. Can such non fixation of at least the maximum rate of taxation be upheld or does it enable the delegate to usurp the essential functions of the legislature ? When we proceed further to sub section (5), the Government is clothed with the power to notify the tax which the corporation shall levy and, in exercising this power, not even the wholesome obligation of receiving representations could considering objections, contained in the Proviso to section 90(2), is present. Can such untrammeled power, liberated from local pressures and intimate appreciation of municipal needs, be sanctioned as within the deligible ambit ? These are the substantial grounds of attack which we have to consider presently. Back to the Liberty Cinema case (supra), Sarkar, J. who spoke for the majority overruled the contention that the levy in question was a fee and held that it was a tax and addressed himself to the question of excessive delegation of legislative functions to the municipal corporation "because it left it entirely to the latter to fix the amount of the tax and provided no guidance for that purpose". While what constitutes an essential feature cannot be delineated in detail it certainly cannot include a change of policy. The legislature is the master of legislative policy and if the delegate is free to switch policy it may be usurpation of legislative power itself. So we have 857 to investigate whether the policy of legislation has been indicated sufficiently or even change of policy has been left to the sweet will and pleasure of the delegate in this case. We are clearly of the view that there is fixation of the policy of the legislation in the matter of taxation, as a close study of section 90 reveals; and exceeding that policy will invalidate the action of the delegate. What is that policy ? The levy of the taxes shall be only for the purposes of the Act. Diversion for other purposes is illegal. Exactions beyond the requirements for the fulfillment of the purposes of the Act are also invalid. Like in section 90(1), section 90(2) also contains the words of limitation `for the purposes of this Act ' and that limiting factor governs sub sections (3), (4) and (5). Sub section (3) vests nothing new beyond sub sections (1) and (2). Sub section (4) does not authorise the government to direct the corporation to impose any tax falling outside sub section (1) or sub section (2). Sub section (5) also is subject to a similar circumscription because the Government cannot issue an order to impose a tax outside the limitation of sub section (1) or sub section (2). Thus, the impugned provision contains a severe restriction that the taxation leviable by the corporation, or by the Government acting for the corporation, shall be geared wholly to the goals of the Act. The fiscal policy of section 90 is manifest. No tax under guise of section 90(2) (b) can be charged if the purposes of the Act do not require or sanction it. The expression "purposes of this Act" is pregnant with meaning. It sets a ceiling on the total quantum that may be collected. It canalises the objects for which the fiscal levies may be spent. It brings into focus the functions, obligatory or optional, of the municipal bodies and the raising of resources necessary for discharging those functions nothing more, nothing else. In Liberty Cinema (supra) it was contended that the rate of tax was an essential feature of legislation and if the power to fix it were abandoned it amounted to abdication of legislative power. After an exhaustive examination of the judgments of this Court, Sarkar, J. reached the conclusion that there was clear authority "that the fixing of rates may be left to the non legislative body". The matter does not end here, since the delegate may under guise of this freedom tyrannies and exact exorbitant sums which the legislature would hardly have intended. If this possibility exists and there is no guideline given to the non legislative body in the matter of fixation of rates, the result may be a frustration of the legislative object itself. For this reason, the Court in the Liberty Cinema (supra) case observed as axiomatic : "No doubt when the power to fix rates of taxes is left to another body, the legislature must provide guidance for such 858 fixation. The question then is, was such guidance provided in the Act ? We first wish to observe that the validity of the guidance cannot be tested by a rigid uniform rule; that must depend on the object of the Act giving power to fix the rate. It is said that the delegation of power to fix the rates of taxes authorised for meeting the needs of the delegate to be valid, must provide the maximum rate that can be fixed, or lay down rules indicating that maximum. We are unable to see how the specification of the maximum rate supplies any guidance as to how the amount of the tax which no doubt has to be below the maximum, is to be fixed. Provision for such maximum only sets out a limit of the rate to be imposed and a limit is only a limit and not a guidance. It seems to us that there are various decisions of this Court which support the proposition that for a statutory provision for raising revenue for the purposes of the delegate, as the section now under consideration is, the needs of the taxing body for carrying out its functions under the statute for which alone the taxing power was conferred on it, may afford sufficient guidance to make the power to fix the rate of tax valid." (Pp. 493 494) In the Western India Theatres case (supra) the power given to the corporation (of the city of Poona), in terms very wide, to levy "any other tax" came to be considered from the point of view of abdication of legislative function. The negation of this argument was based on the key words of limitation contained therein, namely, "for the purposes of the Act" and it was held "that this permits sufficient guidance for the imposition of the tax." In Devi Das Gopal Krishnan & Ors. (supra) this Court again considered a similar contention. The crucial passage in the judgment of Sarkar, J. was there extracted with approval by Subba Rao, C.J. : "It (the Municipal Corporation) has to perform various statutory functions. It is often given power to decide when and in what manner the functions are to performed. For all this it needs money and its needs will vary from time to time, with the prevailing exigencies. Its power to collect tax, however, is necessarily limited by the expenses required to discharge those functions. It has, therefore, where rates have not been specified in the statute, to fix such rates as may be necessary to meet its needs. That, we think, would be sufficient guidance to make the exercise of its power to fix the rates valid. "#R#(Pp. 562 563) 859 In the Municipal Corporation of Delhi(1) case, the proposition that where the power conferred on the corporation was not unguided, although widely worded, it could not be said to amount to excessive delegation, was upheld. Delegation coupled with a policy direction is good. Counsel emphasised that the court had made a significant distinction between the local body with limited functions like a municipality and Government : "The needs of the State are unlimited and the purposes for which the State exists are also unlimited. The result of making delegation of a tax like sales tax to the State Government means a power to fix the tax without any limit even if the needs and purposes of the State are to be taken into account. On the other hand, in the case of a municipality, however large may be the amount required by it for its purposes it cannot be unlimited, for the amount that a municipality can spend is limited by the purposes for which it is created. A municipality cannot spend anything for any purposes other than those specified in the Act which creates it. Therefore in the case of a municipal body, however large may be its needs, there is a limit to those needs in view of the provisions of the Act creating it. In such circumstances there is a clear distinction between delegating a power to fix rates of tax, like the sales tax, to the State Government and delegating a power to fix certain local taxes for local needs to a municipal body. A review of these authorities therefore leads to the conclusion that so far as this Court is concerned the principle is well established that essential legislative function consists of the determination of the legislative policy and its formulation as a binding rule of conduct and cannot be delegated by the legislature. Nor is there any unlimited right of delegation inherent in the legislative power itself. The legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere. What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the parti 860 cular Act with which the Court has to deal including its preamable. Further it appears to us that the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation." ". . . . . It is too late in the day to contend that the jurisprudence of delegation of legislative power does not sanction parting with the power to fix the rate of taxation, given indication of the legislative policy with sufficient clarity. In the case of a body like a municipality with functions which are limited and the requisite resources also limited, the guideline contained in the expression "for the purposes of the Act" is sufficient, although in the case of the State or Central Government a mere indication that taxation may be raised for the purposes of the State may be giving a carte blanche containing no indicium of policy or purposeful limitation. In a welfare State allowing in privations, the total financial needs may take us to astronomical figures. Obviously that will be no guideline and so must be bad in law. Something more precise is necessary; some policy orientation must be particularised Shri Tarkunde relied on this differentiation in attacking section 90(6) of the Act. He argued that had the municipal corporation done the job there would have been some guidance from the section. But when the Government did it, it did not have any such restraint and could, therefore, run berserk. We do not appreciate this contention as we will explain at a later stage. Suffice it to say that flexibility in the form the legislative guidance may take, is to be expected. Wanchoo, C.J. explained : "It will depend upon the circumstances of each statute under consideration; in some cases guidance in broad general terms may be enough; in other cases more detailed guidance may be necessary. As we are concerned in the present case with the field of taxation, let us look at the nature of guidance necessary in this field. The guidance may take the form of providing maximum rate of tax upto which a local body may be given the discretion to make its choice, or it may take the form of providing for consultation with the people of the local area and then fixing the rates after such consultation. It may also take the form of subjecting the rate to be fixed by the local body to the approval of Government which acts as a watch dog on the actions of the local body in this matter on behalf of the legislature. There may be other ways in which guidance may 861 be provided. But the purpose of guidance, whatsoever may be the manner thereof, is to see that the local body fixes a reasonable rate of taxation for the local area concerned. So long as the legislature has made provision to achieve that reasonable rates of taxation are fixed by local bodies, whatever may be the method employed for this purpose provided it is effective, it may be said that there is guidance for the purpose of fixation of rates of taxation. The reasonableness of rates may be ensured by fixing a maximum beyond which the local bodies may not go. It may be ensured by providing safeguards laying down the procedure for consulting the wishes of the local inhabitants. It may consist in the supervision by Government of the rate of taxation by local bodies. So long as the law has provided a method by which the local body can be controlled and there is provision to sec that reasonable rates are fixed, it can be said that there is guidance in the matter of fixing rates for local taxation. As we have already said there is pre eminently a case for delegating, the fixation of rates of tax to the local body and so long as the legislature has provided a method for seeing that rates fixed are reasonable, be it in one form or another, it may be said that there is guidance for fixing rates of taxation and the power assigned to the local body for fixing the rates is not uncontrolled and uncanalised. It is on the basis of these principles that we have to consider the Act with which we are concerned. (pp. 269 270) In the Municipal Corporation of Delhi (supra) case it was significantly observed : "According to our history also there is a wide area of delegation in the matter of imposition of taxes to local bodies subject to controls and safeguards of various kinds which partake of the nature of guidance in the matter of fixing rates for local taxation. It is in this historical background that we have to examine the provisions of the Act impugned before us." (p. 271) Both the sides relied on certain important criteria contained in the judgment of Wanchoo, C.J., especially because it is a Bench of seven Judges and the ratio therein laid down has considerable authority and binds us. Dealing with municipal bodies and the nature and 862 content in that Municipal Act, the court observed what is instructive for us in the present case : "This is in our opinion a great check on the elected councillors acting unreasonably and fixing unreasonable rates of taxation. This is a democratic method of bringing to book the elected representatives who act unreasonably in such matters. It is however urged that section 490 of the Act provides for the supersession of the Corporation in case it is not competent to perform or persistently makes default in the performance of duties imposed upon it by or under the Act or any other law or exceeds or abuses its power. In such a case the elected body may be superseded and all powers and duties conferred and imposed upon the Corporation shall be exercised and performed by such officer or authority as the Central Government may provide in this behalf. It is urged that when this happens the power of taxation goes in the hands of some officer or authority appointed by Government who is not accountable to the local electorate and who may exercise all the powers of taxation conferred on the elected Corporation by the Act. " "Another guide or control on the limit or taxation is to be found in the purposes of the Act. The Corporation has been assigned certain obligatory functions which it must perform and for which it must find money by taxation. It has also been assigned certain discretionary functions. If it undertakes any of them it must find money. Even though the money that has to be found may be large, it is not, as we have already indicated, unlimited for it must be only for the discharge of functions whether obligatory or optional assigned to the Corporation. The limit to which the Corporation can tax is therefore circumscribed by the need to finance the functions, obligatory or optional which it has to or may undertake to perform. It will not be open to the Corporation by the use of taxing power to collect more than it needs for the functions it performs. " "Another limit and guideline is provided by the necessity of adopting budget estimates each year as laid down in section 109 of the Act. That section provides for division of the budget of the Corporation into four parts i.e. general, electricity supply, transport, water and sewage disposal. The budget will show the revenue and expenditure and those 863 must balance so that the limit of taxation cannot exceed the needs of the Corporation as shown in the budget to be prepared under the provisions of the Act. These four budgets are prepared by four Standing Committees of the Corporation and are presented to the Corporation where they are adopted after debate by the elected representatives of the local area. Preparation of budget estimates and their approval by the Corporation is therefore another limit and guideline within which the power of taxation has to be exercised. Even though the needs may be large, we have already indicated that they cannot be unlimited in the case of the Corporation, for its functions both obligatory and optional are well defined under the Act. Here again there is a limit to which the taxing power of the Corporation can be exercised in the matter of optional taxes as well, even though there is no maximum fixed as such in the Act." (Pp. 271 273) In the present case it was the State Government, not the municipal corporation, which fixed the rate; but the Government did only what the Corporation ought to have done. It acted for the purposes of the corporation 's finances and functions and not to replenish its own coffers. In the Municipal Corporation of Ahmedabad City,(1) a further point fell for consideration which has some relevance to the present set of arguments. Shri Tarkunde submitted that even if the provision requiring the sanction of the Government for the rate fixed by the corporation were a guideline and a control indicative of a legislative policy, that was absent in the impugned levy since the Government directly acted. Shelat, J. negatived a kindred submission: ". .It is impossible to say that when a provision requiring sanction of the Government to the maximum rate fixed by the Corporation is absent, the rest of the factors which exist in the Act lose their efficacy and cease to be guidelines. Furthermore, if the Corporation were to misuse the flexibility of the power given to it in fixing the rates, the State legislature can at any moment withdraw that flexibility by fixing the maximum limit up to which the Corporation can tax. Indeed, the State Legislature has now done so by section 4 of Gujarat Act, 8 of 1968. In view of the decisions cited above it is not possible for us to agree with counsel 's contention 864 that the Act confers on the Corporation such arbitrary and uncontrolled power as to render such conferment an excessive delegation. "(1) We have no hesitation in holding that the law is well settled and none of the canons governing delegation of legislative power have been breached in the present case. We will explain a little more in detail, with specific reference to the scheme of the Act, why we hold that the tax is valid and does not suffer from the infirmity of excessive delegation. The thrust of Shri Tarkunde 's argument is that even if, in the light of Liberty Cinema (supra) and later rulings, guidelines are found in section 90 (2) of the Act, the notified impost being by the State Government did not have the benefit of such guidelines. The local body knew precisely the local needs and the cost of such local services. Like wise, the local councillors would be responsive and to local lobbies and be restrained from reckless taxes. None of these controls were operational when Government acted or directed. Moreover, the absence of the wholesome obligation to receive and pay regard to objections [Proviso to section 90(2)] removed the procedural check envisaged by the Legislature. These criticisms highlight the role of Government in the setting of section 90(5) and its competence to be acquainted with the needs of municipal denizens, the finances of the local body and the like. It must be remembered that as between two interpretations that which sustains the validity of the law must be preferred. A close look at the schematic provisions and administrative realities is very revealing. Is Government innocent of the total needs of municipal bodies and indifferent to the legitimate pressures of its denizens ? An overview of local self government may set the perspective. The statutory pattern of municipal government is substantially the same all over the country. The relevant legislation fabricates these local bodies, invests them with corporate personality, breathes life into them, charges them with welfare functions, some obligatory, some optional, regulates their composition through elected representatives, provides for their finances by fees and taxes and heavily controls their self government status through a Department of the State Government in various ways, including direction and correction, sanction and supersession. Consequentially the law clothes the State Government with considerable powers over almost every aspect of municipal work 865 ing Local self government, realistically speaking, is a simulacrum of article 40 and democratically speaking, a half hearted euphemism, for in substance, these elected species are talking phantoms with a hierarchy of State officials hobbling their locomotion. Their exercises are strictly overseen by the State Government, their resources are precariously dependent on the grace of the latter and their, functions are fulfilled through a chief executive appointed by the State Government. Floor level democracy in India is a devalued rupee, article 40 and the evocative opening words of the Constitution, notwithstanding. Grass roots never sprout until decentralisation becomes a fighting creed, not a pious chant. What happens to Panchayats applies to municipalities. This description has critical relevance to the cases on hand because one of the propositions underlying the major arguments advanced before us is that while municipal bodies know their needs and respond to local pressures and tailor their taxes accordingly, the distant State Government is neither aware nor responsive and the impugned tax measure is bad because the pragmatic and policy guidelines of (a) the local people 's welfare requirements vis a vis available municipal finances, and (b) people 's pressurising proximacy and municipality ' correctional reaction to undue tax burdens are absent when the power is exercised by a remote control board niched in the State Secretariat. But if the picture is of a powerless talking shop of elected councillors passing resolutions but all the do 's and don 'ts, sanctions and approvals, countermands and even supersession of the Council itself reside in the State Government, the effective voice, the meaningful responses, the appreciation of budgetary needs and gaps and need for grants and a host of other responsibilities can be traced to the Government. Such is the backdrop to the discussion of the issues raised. Now let us scan the Act from this angle. Corporations are created for the purposes of carrying out the provisions of the Act and they are charged with municipal administration (see section 4). So, corporations cannot do anything beyond the purposes set out in the statutory provisions. This itself is a statutory restriction on action. The composition of the body corporate is by periodically elected councillors (see section 5) and this feature ensures responsive action. The powers necessary for municipal government are spelt out as also the obligatory and discretionary functions (see Chapter III). Now come certain other aspects of local self government. The entire executive power of the corporation vests in the Commissioner who is appointed by Government. This means that the Corporation Council takes a back seat in the municipal administration see sections 47, 866 52 et al. Section 54 brings the Government into the expenditure picture. The municipal staff also is, in a way, under Government control (section 71). Money shall be spent by the municipality only according to budget provisions and budget estimates shall be submitted to Government for approval which has the power to modify them. Thus, the financial control over the corporation by Government is a statutory fact. Now we may consider the mode of raising tax revenue. Any non traditional tax (i.e. which falls under section 90(2) of the Act) has to be with the prior approval of Government. Indeed, affirmative direction to impose taxes may be issued by the Government to the local body and if the addressee is indifferent the Government itself may impose the tax and the corporation shall levy such tax. Sub section (6) enables Government to make other tax payments to municipal bodies. Municipal borrowings require government sanction, municipal accounts shall be audited by government auditors. Chapter XXII provides for further government control upto even supersession of the corporation itself. Even the resolutions of corporations may be suspended by Government and its proceedings annulled or modified. There is a whole army of governmental minions in the department of local self government to sit upon, check, oversee and control municipal doings that the elective element becomes a decorative parlour. This conspectus of provisions brings into bold relief the anaemic nature of municipal autonomy. Full blooded units of self government, reflecting full faith in decentralised democracy uninhibited by a hierarchy of bureaucrats is the vision of article 40. While the Gandhian goal is of a shining crescent on a starry sky the sorry reality is that our municipalities vis a vis government are wan like a full moon at midday. This study of the statutory scheme shows that, in large measure, municipal councils reign, municipal commissioners rule; local self government is an experiment in directed democracy by the bureaucracy, article 40, notwithstanding. State Governments master mind municipal administration in broad policies and even in smaller details and legally can suspend resolutions and supersede the organ itself. Municipal legislation sanctions this Operation Mask. If pluralism and decentralisation are to strengthen our democracy more authority and autonomy, at least experimentally, must be vested in local bodies. To day, prompt elections when periods expire are rare; councillors exist, debate, resolve, but power eludes them. Even so, municipal maya also counts ceremonially and otherwise. 867 To set the record straight, we must state that many municipal bodies do exercise their limited powers properly and serve the public without nagging interference by Government officials. Municipalities are realities, often precarious, though. This statutorily sanctified comprehensive oversight by Government weaken the assumption of Shri Tarkunde that State Governments know little of the needs and respond remotely to the pressures of the locality and that the guidelines stressed in the rulings cited above vanish when Government directly operates under section 90(5). The finances, budgetary estimates and many aspects of the affairs of each municipal body, reach the Government, channelled through its minions, and, by force of statute, are approved, sanctioned, modified or reversed by the State Secretariat. So, there is not much force in the submission that under section 90(5) governmental action may be a blind man 's buff, not intelligent appreciation. Secondly, under section 90(5) Government acts to augment municipal revenues and so will, understandably, inform itself of the needs of the corporation and, on fiscal economics, 'of what the traffic will bear '. The statutory strategy also ensures this. First, a directive is given, obviously after considering relevant matters. Only if indifference or intractability is displayed, the fiscal sword of section 90(5) is unsheathed. Moreover, there is overall control by the legislature, sometimes, ineffective, sometimes meaningful. It is familiar knowledge that there are a number of institutionalised means by which the legislature exercises supervision and control over municipal matters. Broadly speaking, they are: (a) through inter relations, (b) by discussions and debates, (c) by approval or otherwise of rules and orders, and (d) by financial control when the budget is presented. A study of the legislative proceedings in the various States of the country brings out many of these means of control (see Indian Administrative System, edited by Ramesh K. Arora & Co. Chapter 17). In a sense, the general municipal administration comes under fire in the House on many occasions, including during the debate on the Governor 's Address. Financial control and supervision by the legislators come up when budget proposals which contain allocation for municipal administration are presented to the House and at the time of the Appropriations Bill. Moreover, the Public Accounts Committee, the Estimates Committee and like other bodies also make functional probes into municipal administration fiscal and other. There may be a big gap between the power of control and its actual exercise but it is also a fact that in a general way the political echelons in Government and the bureaucracy in turn are influenced in their policies by the criticisms 868 of the municipal administration on the floor of the House and through other representations. We cannot, therefore, dismiss the legal position that there is control by the Legislature over Government in its supervision of municipal administration therefore, delegated legislation cannot be said to be uncontrolled or unchecked by the delegator. This discussion is of critical importance in view of the argument put forward by Shri Tarkunde that when Government exercises power under section 90(6) it is a law unto itself, unbridled and uncontrolled by the Legislature. We may now refer to a few decisions which have been brought to our notice by counsel appearing for the municipal bodies and the State of Punjab to make out that the needs of municipalities and the pressures of local people are within the ken of the State Government and they also respond like municipal bodies and guide themselves in the manner corporations do. More importantly, excessive delegation stands negatived because of legislative control over Government. Even in the Liberty Cinema case, (supra) the control by Government over the municipal administration was relied upon as a policy guideline and it is an a fortiori case if the Government itself takes action, responsible and responsive as it is to the elected representatives of the House. Great stress was laid on Papiah 's case(1) which dealt with subordinate legislation elaborately and upheld the validity of a provision where, superficially viewed, too wide a power had been delegated. Mathew, J. speaking for the court, gave considerable latitude to the Legislature in delegating its power and referred to many prior rulings. He quotes Subba Rao, C.J. to say: "An over burdened Legislature or one controlled by a powerful executive may unduly overstep the limits of delegation. It may not lay down any policy at all; It may declare its policy in vague and general terms; it may not set down any standard for the guidance of the executive; it may confer an arbitrary power on the executive to change or modify the policy laid down by it, without reserving for itself any control over subordinate legislation. This self effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. "(2) 869 Nevertheless, this observation was neutralised by another made by Hegde, J. in Bishar Dayal (1): "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. Text book doctrines evolved in the 19th Century be come out of date. " Mathew, J. proceeded to cover English cases and reached the conclusion: "The legislature may also retain its control over its delegate by exercising its power of repeal. This was the basis on which the Privy Council in Cobb & Co. vs Kropp(2) upheld the validity of delegation of the power to fix rates to the Commissioner Transport in that case." (P.613) The learned Judge quoted the Privy Council(3) which held that the Legislature was entitled to use any agent or machinery that it considered for carrying out the object and the purposes of the Acts and to use the Commissioner for Transport as its instrument to fix and recover the licence and permit fees, provided it preserved its own capacity intact and retained perfect control over him; that as it could at any time repeal the legislation and withdraw such authority and discretion as it had vested in him, it had not assigned, transferred or abrogated its sovereign power to levy taxes, nor had it renounced or abdicated its responsibilities in favour of a newly created legislative authority and that, accordingly, the two Acts were valid, Lord Morris of Borth y Gest said: "What they (the legislature) 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, Nor did the Queensland Legislatare 'create and endow ' with its own 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 (1919) A.C. 945 at 946)." 870 The point to be emphasised and this is rather crucial is the statement of their Lordships that the legislature preserved its capacity intact and retained perfect control over the Commissioner for Transport inasmuch as it could at any time repeal the legislation and with draw the authority and discretion it had vested in him, and, therefore, the legislature did not abdicate its functions. The proposition so stated is very wide and sweeping. By that standard, there is nothing unconstitutional about section 90(5) of the Act. In the course of the argument certain observations of this Court were read to the effect that there was always a check by the courts on unconstitutional misuse of delegated power and that, in itself with out more, was good enough to make the delegation good. So stated, the proposition may be perhaps too wide to be valid; for any naked delegation may then be sustained by stating that the court is there as the watch dog. We do not have to go that far in the present case and so we make no final pronouncement on this extension of delegations jurisprudence. We must state, while concluding that Punjab & Haryana High Court has overruled similar contentions on grounds which have our approval [see AIR 1977 P&H 297 and 74 PLR We are conscious that constitutional legitimation of unlimited power of delegation to the Executive by the Legislature may, on critical occasions, be subversive of responsible government and erosive of democratic order. That peril prompts us to hint at certain portents to our parliamentary system, not because they are likely new but because society may have to pay the price some day. As a back drop to this train of thoughts a few statements from a working paper presented by Prof. Upendra Baxi of the Delhi University at a recent seminar may be excerpted: ". law making remains the, more or less, exclusive prerogative of a small cross section of elites. This necessarily affects both the quality of the law made as well its special communication, acceptance and effectivity. It also reinforces the highly centralised system of power. It is time that we considered the desirability and feasibility of building into the law making processes a substantial amount of public participation." 871 "People 's participation in the enforcement and implementation of the law is also not actively sought, sponsored or structured by the State. Equally now is the idea that there should be a "social audit" of major legislations by the beneficiaries or, more generally, the consumers of legal justice." ". The situation in regard to delegated legislation the volume of which is immensely greater than that of usual legislation, is even more alarming. The Indian Parliament enacted from the period 1973 to 1977 a total of 302 laws; as against this the total number of statutory orders and rules passed in the same period was approximately 25,414. Corresponding figures for States and union territories are not just available but the number of rules issued under the delegated legislation powers may well be astronomical. " Plenary powers of law making are entrusted to elected representatives. But the political government instructed by the bureaucracy, by and large, gets bills through with the aid of the three line whip. Even otherwise, legislators are some times innocent of legal skills; and complex legislations call for considerable information and instruction. The law making sequence leaves much to subordinate legislation which, in practical terms, means surrender to the surrogate, viz., the bureaucracy which occupies commanding heights within the Secretariat. The technocracy and the bureaucracy which mostly draft subordinate legislation are perhaps well meaning and well informed but insulated from parliamentary audit, isolated from popular pressure and paper logged most of the time. And units of local self government are reduced to a para babel mechanisms, what with a pyramid of officialdom above them. The core of Shri Tarkunde 's argument, even though rejected in legal terms by force of precedents, has a realistic touch to the effect that municipal administration in the matter of taxation, if taken over by Government as under section 90(5) of the Act, becomes administration by the barrel of the Secretariat pen. The doctrine of delegation, in its extreme positions, is fraught with democracy by proxy of a coterie, of which the nation, in its naivete, may not be fully cognizant. Therefore, the system of law making and performance auditing needs careful, yet radical, re structuring, if participative, pluralist Government by the People is not to be jettisoned. We have laid down the law and obeyed the precedents but felt it necessary to lay bare briefly the political portents implicit in the extent law, for action by the national leadership betimes. Who owns and operates India, that is Bharat ? That disturbing interrogation becomes deeply relevant 872 as we debate and decide the jurisprudence of delegation of power and vicarious exercise and so we have pardonably ventured to make heuristic hints and to project new perspectives. The journey 's end is in sight. The discussion has come to a close. The notification suffers from no infirmity. The writ petitions stand dismissed. Costs one set. (to the state) P.H.P. Petitions dismissed.

The Municipalities of Punjab are governed by two enactments. The numerous little ones are statutory bodies created and controlled by the Punjab Municipal Act, 1911 and few large ones by the Punjab Municipal Corporation Act, 1976. For the purpose of the present petitions the provisions run on identical terms. The State of Punjab in April, 1977 required the various municipal bodies in the State to impose tax on the sale of Indian made foreign liquor @ Re. 1/ per bottle w.e.f. 20 5 1977. The Municipal authorities having failed to take action pursuant to the directive the State of Punjab directly issued a notification under sec. 90(5) of the Punjab Municipal Corporation Act, 1976 and similar provision of the Municipal Act, 1911. The petitioner challenged the constitutional validity of the said statutes and levy on the following grounds: 1. Section 90(2)(b) of the Act suffers from the vice of excessive delegation or legislative abdication. There are no guidelines for the exercise of the wide fiscal power of the Corporation or Government which make it too unreasonable to be salvaged by article 19(5) and too arbitrary to be equal under article 14. The order imposing the tax itself is vitiated because: (a) It seeks to impose the tax which is already imposed and, therefore, violates section 90 (4); (b) There is double taxation; (c) It levies too heavy taxation; (d) Picking out from the broad spectrum of luxury goods or intoxicants the Indian made foreign liquor amounts to discrimination; (e) No opportunity of being heard was given; (f) Unequals are being treated equally by imposing Re. 1/ per bottle irrespective of the type of liquor taxed, price of the liquor and alcoholic content. Dismissing the appeal. ^ HELD: (1) There is nothing in article 265 of the Constitution prohibiting double taxation. [850 D] 846 Cantonment Board Poona vs Western India Theatres Ltd., AIR 1954 Bom. 261 approved. (b) The plea that flat rate of Re. 1/ per bottle be it on brandy or other stronger beverage or be it Rs. 50/ or Rs. 500/ per bottle cannot be seriously pressed. In the field of taxation many complex factors enter the fixation and flexibility is necessary for the taxing authority. [850E F] Moopil Nair (K.T.) vs State of Kerala, ; ; East India Tobacco Co. vs State of A.P., ; at 406; A. Hajee Abdul Shakoor & Co. vs State of Madras. ; at 230 referred to. (2) If the Municipal body proposed to impose a tax it is required to offer an opportunity to the residents of area. No such procedural fetter is to be found under sec. 90(5) if the levy is imposed by the State Government. It is impossible for the Court to imply invitation of objections. 'No taxation without representation ' is not applicable to a Government controlled by an elected legislature exercising its power of taxation. [852B, C, D] (3) Sec. 90(4) talks of tax not already imposed. The Sales Tax imposed by the state legislature under the Punjab General Sales Tax Act 1948 is no bar to the present levy. Section 90 deals with the levy of taxes for Municipal Corporation. The injunction is confined to repetition of the taxes which the Municipality has already imposed. If the Corporation has not already imposed the tax. the embargo is absent. It is of no moment that some other body, including the State Legislature has already entered the field. The question is has the Municipal Committee or Corporation under this Act already exacted a similar tax ? [852F, H, 853BC] (4) The Founding Document of the nation has created the three great instrumentalities and entrusted them with certain basic powers legislative, judicative and executive. Abdication of these powers by the concerned instrumentalities, amounts to betrayal of the constitution and it is intolerable in law. The legislature cannot delegate the essential legislative functions. The legislature is responsible to the people and its representative, the delegate may not be and this is why excessive delegation have been frowned upon by constitutional law. However, the complexities of modern administration are so bafflingly intricate and bristle with details, urgencies difficulties and the need for flexibility is such that our legislature may not get off to a start if they must directly and comprehensively handle legislative business in all their plenitude and particularisation. Delegation of some part of legislative power becomes a compulsive necessity for viability. Of course, every delegate is subject to the authority and control of the principal and exercise of delegated power can always be directed or cancelled by the Principal. Therefore, even if there be delegation, parliamentary control over delegated legislation should be a living continuity as a constitutional necessity. [853GH, 854A, B, C, D, E] Devi Das Gopal Krishnan & Ors. vs State of Punjab & Ors. , ; at 565; P. N. Kaushal etc. vs vs Union of India & Ors. ; ; Corp. of Calcutta & Anr. vs Liberty Cinema, referred to. The taxes levied under the Act can be utilised only for the purpose of the Act. There is a clear purpose contained in the provisions about the purpose and limit of the tax. What is needed for the purpose of the Act by way of financial resources may be levied by the Corporation. Beyond that not. Moreover the 847 items on which taxes may be imposed are also specified. Thus the legislature has fixed the purpose of the taxation, objects of the taxation and limits of the taxation. [856A B] It is too late in the day to contend that the jurisprudence of delegation of legislative power does not sanction parting with the power to fix the rate of taxation, given indication of the legislative policy with sufficient clarity. [860 B] When the Government is imposing taxes for the Municipality the Government is bound to know what ought to have been done by the Municipality. The whole scheme of the statute shows that Government has an important role to play in the running of the municipalities. The financial control over the corporation is with the State Government. [865E] As between the two interpretations that which sustains the validity of law must be preferred. [864E] M. K. Papiah & Sons vs The Excise Commr. & Anr., ; ; Sita Ram Bishambhar Dayal vs State of U.P., ; referred to.

Appeal No. 78 of 1954. Appeal from the judgment and decree dated April 17, 1950, of the Bombay High Court in Appeal No. 642 of 1949, arising out of the judgment and decree dated July 30, 1949, of the Court of Civil Judge, Senior Division, Ahmedabad in Suit No. 10 of 1946. Purshottam Tricumdas, M. H. Chhatarpati and section section Shukla, for the appellants. H. N. Sanyal, Additional Solicitor General of India and I. N. Shroff, for the respondent. March 21. The Judgment of the Court was delivered by GAJENDRAGADKAR J. This is an appeal by the plaintiffs against the decree passed by the High Court of Bombay dismissing their suit to recover from the defendant Rs. 1,52,334 8 9 as damages for breach of contract for non delivery of certain cotton goods. The plaintiffs ' claim had been decreed by the trial court but on appeal it has been dismissed. The appellants are the partners of M/S. Navinchandra & Co. This partnership had placed an order with the respondent for 251 bales of printed chints on or about July 4, 1942, and the said order had been accepted by the respondent by its letters dated July 1 1 and July 20, 1942. The delivery period for the said goods was fixed for the months of September and October, 1942. Another order was placed by the 215 appellants with the respondent for 31 bales of printed chints on July 24, 1942, and this order was accepted by the respondent on July 25, 1942. The delivery of these goods was to be given in the month of October 1942. On August 9, 1942, the workers in the respondent mills went on strike in sympathy with the Quit India, movement which had then commenced. In consequence, the respondent wrote to the appellants ' firm on August 15, 1942, and stated that, in view of the strike and the political situation, the delivery time of all the pending contracts should be automatically understood as extended for the period the working of the mills was stopped and until the normal state of affairs recurred. The strike came to an end and the mills resumed working on November 22, 1942. On December 5, 1942, Jasubhai, who was then in charge of the management of the mills was approached by the appellants, Keshavlal and Ratilal, for obtaining delivery of the goods. He, however, told them that the appellants ' contracts were void and so no delivery could be claimed or given. On December 6, 1942, the said Jasubhai wrote to the appellants informing them that their contracts were not binding on the mills as they were null and void. It may be mentioned at this stage that, when the contracts were made between the appellants and the respondent, Chinubhai Lalbhai was in charge of the managing agency of the mills. Subsequently, on September 18, 1942, as a result of the compromise between Chinubhai and his brothers Jasubhai and Babubhai, this managing agency of the mills fell to the share of Jasubhai and Babubhai. On December 17, 1942, the appellants wrote to the respondent that, as the respondent had extended the time of delivery of all goods by its letter dated August 15, 1942, the respondent was bound to deliver the contracted goods and that if the respondent did not do so, the appellants would be compelled to take legal proceedings against the respondent. In reply, the respondent repeated its earlier contentions by its letter dated December 20, 1942. The appellants then formally demanded the delivery of goods in January 216 and again in February 1943, and, since the demand was not complied with, the appellants filed the present suit on January 9, 1946, claiming damages to the extent of Rs. 1,52,334 8 9 with interest and costs. In the plaint, it was alleged that the suit was in time because the request made by the respondent for extension of time had been accepted by the appellants. 'The suit was resisted by the respondent on several grounds. In particular, the respondent urged that there was no agreement between the parties with regard to the extension of time and so the suit was barred by limitation. The learned trial judge framed several issues with two of which the present appeal is concerned. These two issues related to the question of extension of time for the performance of the contract and the plea of limitation. On both these points, the learned judge found in favour of the appellants. In the result the appellants ' claim was decreed. The respondent then preferred an appeal in the High Court at Bombay and his appeal was allowed. The learned Judges of the High Court have held that the oral evidence led by the appellants to show the acceptance of the respondent 's proposal for the extension of time could not be treated as true or reliable. They also rejected the appellants ' case on the ground that the conduct of the appellants subsequent to the stoppage of the respondent 's mills did not show acceptance of the respondent 's proposal for extension of time. Besides, in the opinion of the High Court, even if acceptance had been proved, it was not possible to ascribe any certain or definite meaning to the words used by the respondent in its letter dated August 15, 1942 (exhibit P. 78), and so this agreement to extend time was void since it wag vague and uncertain. That is why it was held that the appellants ' suit was barred by time. It is these findings which are challenged before us by the appellants in the present appeal. It is obvious that the value of the claim in the trial court as well as before us is more than Rs. 20,000 and the judgment of the High Court under appeal has reversed the decree passed by the learned trial judge. The appellants are thus entitled to agitate 217 both questions of fact and of law before us in this appeal. The first point which has been urged before us by the appellants is in respect of the finding made by the High Court against the appellants on the question of the extension of time for the performance of the contract. The argument is that the learned Judges of the High Court were in error in rejecting the oral ' evidence led by the appellants. It would, therefore, be necessary to consider the material evidence bearing on this point. The proposal to extend time was made by the respondent by its letter (exhibit P. 78) on August 15, 1942. Ratilal P. W. I stated that, four or five days after this letter was received, he went to Ahmedabad where he met and consulted Keshavlal. Then he saw Chinubhai at the mills and told him that he accepted the extension of time as per the said letter. In cross examination, Ratilal added that he met Chinubhai at the office in his mills. I He also stated that, besides the subject of extension of time, no other matter was discussed between them at the said meeting. He admitted that no letter had been written by the appellants confirming their acceptance of the respondent 's proposal to extend time. The evidence given by Ratilal is corroborated by the testimony of Keshavlal. It appears on the evidence of both these witnesses that, after the mills reopened, they had gone to Jasubhai and demanded delivery of the bales according to the contracts. The appellants argued that there is really no reason why the evidence of these two witnesses should be disbelieved. It is significant that the main plea raised by the respondent against the appellants ' claim in the present suit was that the contract itself was invalid and not bind ing on it and that the letter written by Laxmidas on August 15, 1942, was likewise unauthoirised and not binding on it. These pleas have been negatived in the courts below. It is fairly clear from the record that the attitude adopted by the respondent in the present dispute was actuated more by Jasubhai 's prejudice against Chinubhai and it may be safely 28 218 asserted that some of the pleas taken by the respondent were known to the respondent to be untenable. The appellant,% rely upon this conduct of the respondent and suggest that the oral testimony of Ratilal and Keshavlal is consistent with probabilities and should be believed. Chinubhai also gave evidence in the case. He stated that the proposal to extend time had 'been conveyed by Laxmidas under his instructions. It is common ground that similar request was made to all the constituents of the mills both in Ahmedabad and outside Ahmedabad. Chinubhai did not remember whether he had got any written reply to the letter of August 15, 1942, from the appellants but the effect of some of the statements made by him would generally appear to be that lie had received oral acceptance of the said proposal from the appellants. However, in answer to further questions put to him in cross examination, Chinubhai stated that he did not remember whether the appellants accepted the offer or not. It is, however, clear that the evidence of Chinubhai is not at all inconsistent with the statements made by Ratilal and Keshavlal. It is common ground that the prices of the goods were rising at the material time and so it is more likely that the appellants were willing to extend time because they would naturally be keen on obtaining delivery of the goods under the contract. In both the courts below an argument appears to have been urged by reference to the sauda books kept by the respondent. Shri Dharamasi Harilal had brought the sauda books in the court but neither party got the books exhibited in the case. The learned trial judge took the view that, since the sauda books were not produced and proved by the respondent, it led to the inference that, if the books had been produced, they would have shown an endorsement made against the suit contracts that the extension of time had been agreed upon by the appellants. On the other hand, the learned Judges of the High Court were inclined to draw the inference that, since the appellants did not want the said sauda books to be exhibited, it would appear that the said books did not contain any note about the extension. In our opinion, it would be 219 unsafe to draw either of these two inferences in the present case. Therefore, the decision of the question would depend upon the appreciation of oral evidence considered in the light of probabilities and other relevant circumstances in the case. On the whole, we are disposed to take the view that the evidence given by Ratilal and Keshavlal is true. Besides, the conduct of the parties also points to the ' same conclusion. If the period for the delivery of the goods had not been extended by mutual consent, we would normally have expected the appellants to make a demand for delivery of the goods on due dates as fixed under the original contracts. It is conceded that no such demand was made. On the other hand, it is only after the mills reopened that Ratilal and Keshavlal saw Jasubhai and discussed with him the question about the delivery of the goods. This is admitted by the respondent in its letter dated December 6, 1942, (exhibit P. 62). The appellants were, however, told by the respondent that the saudas of their firm were not binding on the respondent and that the same were void. It is somewhat remarkable that though this document disputes the validity of the sauda, even alternatively it does not suggest that the period of extension had not been agreed to by the appellants. It may be that, since Jasubhai then wanted to challenge the validity of the contracts themselves, he did not care to make any alternative plea. But however that may be, the conduct of the appellants is, in our opinion, consistent with their case that they had agreed to the extension of time. The true legal position in regard to the extension of time for the performance of a contract is quite clear under section 63 of the Indian Contract Act. Every promise, as the section provides, may extend time for the performance of the contract. The question as to how extension of time may be agreed upon by the parties has been the subject matter of some argument at the Bar in the present appeal. There can be no doubt, we think, that both the buyer and the seller must agree to extend time for the delivery of goods. It would not be open to the promise by his unilateral act to extend 220 the time for performance of his own accord for his own benefit. It is true that the agreement to extend time need not necessarily be reduced to writing. It may be proved by oral evidence. In some cases it may be proved by evidence of conduct. Forbearance on, the part of the buyer to make a demand for the delivery of goods on the due date as fixed in the original contract may conceivably be relevant on the question of the intention of the ' buyer to accept the seller 's proposal to extend time. It would be difficult to lay down any hard and fast rule about the requirements of proof of such an agreement. It would naturally be a question of fact in each case to be determined in the light of evidence adduced by the parties. Having regard to the probabilities in this case, and to the conduct of the parties at the relevant time, we think the appellants are entitled to urge that their oral evidence about the acceptance of the respondent 's proposal for the extension of time should be believed and the finding of the learned trial judge on this question should be confirmed. The finding in favour of the appellants on this point is not, however, decisive of the dispute between the parties in the present appeal. It still remains to be considered whether the agreement between the parties about the extension of time suffers from the infirmity of uncertainty and vagueness. The learned Judges of the High Court have come to the conclusion that the letter of August 15, 1942, which is the basis of the agreement for the extension of time is so vague and uncertain that the agreement as to extension of time itself becomes void and unenforceable. The correctness of this conclusion must now be considered. The basis of the agreement is the letter and so it is the construction of this letter which assumes considerable importance. This is how the letter reads: Dear Sirs, Your good selves are well aware of the present political situation on account of which entire working of our Mills is closed. At present, it is difficult to say as to how long this state of affairs will continue and as such we regret 221 we cannot fulfil the orders placed by you with us in time. Under the circumstances, please note that the delivery time of all your pending contracts with us shall be automatically understood as extended for the period the working is stopped and till the normal state of affairs recurs. " It would be noticed that the letter begins by making a reference to the current political situation which led to the closure of the mills and it adds that it was vary difficult to anticipate how long the said state of affairs would continue. It is common knowledge that, at the material time, the whole country in general and the city of Ahmedabad in particular was in the grip of a very serious political agitation and nobody could anticipate how long the strike resulting from the said, agitation would last. It 'is in that atmosphere of uncertainty that the respondent requested the appellants to note that the time for delivery would be automatically extended " for the period the working is stopped and till the normal state of affairs recurs ". The first condition does not present any difficulty. As soon as the strike came to an end and the closure of the mills was terminated, the first condition would be satisfied. It is the second condition that creates the real difficulty. What exactly was meant by the introduction of the second condition is really difficult to determine. So many factors would contribute to the restoration of the normal state of affairs that the satisfaction of the second condition inevitably introduces an element of grave uncertainty and vagueness in the said proposal. If the normal state of affairs contemplated by the second condition refers to the normal state of affairs in the political situation in the country that would be absolutely and patently uncertain. Even if this normal state of affairs is construed favourably to the appellants and it is assumed that it has reference to the working of the mills, that again does not appreciably help to remove the elements of uncertainty and vagueness. When can normal working of the mills be deemed to recur? For the normal working of the mills several factors are essential. The full complement of workmen should be 222 present. The requisite raw material should be available and coal in sufficient quantities must be in stock. Some other conditions also may be necessary to make the working of the mills fully normal. Now, unless all the constituent elements of the normal working of the mills are definitely specified and agreed upon, the general expression used in the letter in that behalf cannot be construed as showing anything definite or certain. Therefore, even if the appellants ' evidence about the acceptance is believed, that only shows in a very general and loose way the acceptance of the proposal contained in the letter. It does not assist us in determining what was understood between the parties and agreed upon by them as constituting the normal state of affairs mentioned in the letter. In this connection, it would be relevant to refer to the material allegations in the plaint itself. In para. 7, the plaint has averred that the plaintiffs agreed to the said extension of time for the delivery of the said goods as suggested by the defendant, that is by a period during which the said mills would remain closed. In other words, the whole of the plaint proceeds on the assumption that the extension of the period for the delivery of goods had reference only to the stoppage of the mills. Indeed, it was sought to be argued at one stage that the second condition in the letter should be treated as a meaningless surplusage and the extension of time agreed upon between the parties should be read in the light of the first condition alone. In support of this argument reliance was placed on the decision in Nicolene Ld. vs Simmonds (1). In that case, a contract for the sale of a quantity of reinforcing steel bars was expressed as subject to " the usual conditions of acceptance ". The seller repudiated the contract whereupon the buyers claimed and were awarded by the trial judge damages for the breach of contract. On appeal, the seller contended that the contract was not concluded there being no consensus ad item in regard to the conditions of acceptance. It was held that, there being no " usual conditions of acceptance ", the condition was meaningless and should be ignored, and that the (1) , 552. 223 contract was complete and enforceable. Dealing with the relevant clause, Denning L. J. observed, "that clause was so vague and uncertain as to be incapable of any precise meaning. It is clearly severable from the rest of the contract. It can be rejected without impairing the sense or reasonableness of the contract as a whole, and it should be so reacted. The contract should be held good and the clause ignored ". Then ' the learned Lord Justice pointed out that " the parties themselves treated the contract as subsisting. They regarded it as creating binding obligations between them and it would be most unfortunate if the law should say otherwise ". " You would find ", observed the learned Lord Justice, " defaulters all scanning their contracts to find some meaningless clause on which to ride free ". In our opinion, this decision can be of no assistance to the appellants ' case before us. The second condition in the letter in question constitutes a clause which had to be agreed upon by the parties since it formed one of the conditions of the respondent 's proposals for the extension of time. The respondent 's proposal was to extend time for the performance of the contract subject to two conditions and unless both the conditions were agreed upon between the parties there would be no valid or binding extension of time under section 63 of the Indian Contract Act. The fact that the second condition introduced by the respondent is vague and uncertain, does not necessarily show that the said condition was intended by the respondent to be the addition of a meaningless surplusage. If that be the true position, then the material allegations in the plaint itself demonstrably prove that there has been no acceptance by the appellants of the second condition mentioned by the respondent in its proposal to extend time for the performance of the contract. Besides, as we have already indicated, it is really difficult to hold that the respondent had a clear and precise notion as to the constituent elements of the second condition mentioned in its letter and that the appellants were duly apprised of the said constituent elements and agreed with the said condition with that knowledge. In this connection, we may usefully refer to the decision 224 of the House of Lords in Scammel (G.) And Nephew, Ld. vs (Ouston) (H. C. And J. 0.) (1). In this case, the respondent had agreed to purchase from the appellant a new motor van but stipulated that this order was given on the understanding that the balance of purchase price can be had on the hire purchase terms over a. period of two years. The House of Lords held that the clause as to hire purchase terms was so vague that no precise meaning could be attributed to it and consequently there was no enforceable contract between the parties. In his speech, Lord Wright observed that " the object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not at mere form. But the test of intention is to be found in the words used. If these words, considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract ". Then the learned Law Lord added that his reason for thinking that the clause was vague was not only based on the actual vagueness and unintelligibility of the words used but was confirmed by the startling diversity of the explanations tendered by those who think there was a bargain of what the bargain was. We would like to add that, when the appellants attempted to explain the true meaning of the second condition, it was discovered that the explanations given by the appellants ' counsel were diverse and inconsistent. We must, therefore, hold that the learned Judges of the High Court were right in coming to the conclusion that the conditions mentioned by the respondent in its letter asking for extension of time were so vague and uncertain that it is not possible to ascertain definitely the period for which the time for the performance of the contract was really intended to be extended. In such a case, the agreement for extension must be held to be vague and (1) 225 uncertain and as such void under section 29 of the Indian Contract Act. There is one more point which must be considered. It was strongly urged before us by the appellants that, in the trial court, no plea had been taken by the respondent that the agreement for the extension of time was vague and uncertain. No such plea appears to have been taken even in the grounds of appeal preferred by the respondent in the High Court at Bombay; but apparently the plea was allowed to be raised in the High Court and the appellants took no objection to it at that stage. It cannot be said that it was not open to the High Court to allow such a plea to be raised even for the first time in appeal. After all, the plea raised is a plea of law based solely upon the construction of the letter which is the basis of the case for the extension of time for the performance of the contract and so it was competent to the appeal court to allow such a plea to be raised under 0. 41, r. 2, of the Code of Civil Procedure. If, on a fair construction, the condition mentioned in the document is held to be vague or uncertain, no evidence can be admitted to remove the said vagueness or uncertainty. The provisions of section 93 of the Indian Evidence Act are clear on this point. It is the language of the document alone that will decide the question. It would not be open to the parties or to the court to attempt to remove the defect of vagueness or uncertainty by relying upon any extrinsic evidence. Such an attempt would really mean the making of a new contract between the parties. That is why we do not think that the appellants can now effectively raise the point that the plea of vagueness should not have been entertained in the High Court. The result is we confirm the finding of the High Court on the question of vagueness or uncertainty of the agreement to extend time and that must inevitably lead to the dismissal of the present appeal. We are, however, free to state that we have reached this conclusion with some reluctance because we are satisfied that there are no bona fides in the attitude 29 226 adopted by the respondent in the present litigation. The main pleas raised by the respondent against the binding character of the contracts themselves as well as against the authority of Laxmidas to write the letter for extension of time have been rejected by both the courts below, and the only ground on which the respondent succeeds before us was made on behalf of the ,respondent for the first time in appeal. Under these circumstances we think the fair order as to costs would be that parties should bear their own costs throughout. The result is the appeal fails and is dismissed but there would be no order as to costs throughout. Appeal dismissed.

The appellants entered into a contract with the respondent mills for the purchase of certain goods in which the time for delivery was fixed for the months of September and October, 1942. Before the expiry of the time fixed there was a strike in the mills and the respondent wrote a letter to the appellants on August 15, 1942, that in view of the strike and the political situation, the delivery time of all the pending contracts should be automatically understood as extended for the period the working of the mills was stopped and until the normal state of affairs recurred. Though the strike came to an end the respondent declined to give delivery of the goods on the ground that the contracts were void. In the suit filed by the appellants on January 9, 1946, for damages for breach of the contract the respondent pleaded that there was no agreement between the parties with regard to the extension of time and so the suit was barred by limitation. The appellants ' case and their evidence which was consistent with the conduct of the parties at the relevant time only showed definitely that they had orally agreed to the proposal made by the respondent for extension of time for the period during which the mills would remain closed, and as regards the second condition referred to in the respondent 's letter dated August 15, 1942, " till the normal state of affairs recurs (which was vague and uncertain), the evidence did not show that there was an acceptance by the appellants of the said condition. The question was whether there was an enforceable agreement for extension of time for performance of the contract within the meaning of the Indian Contract Act : Held, (1) An extension of time for the performance of the contract Under section 63 of the Indian Contract Act must be based upon an agreement between the parties, and it would not be open to the promise by his unilateral act to extend the time for performance of his own accord for his own benefit. Such an agreement need not necessarily be reduced to writing and can be proved by oral evidence or by evidence of conduct. (2) The respondent 's proposal for extension of time contained in the letter dated August 15, 1942, was subject to two conditions, and the fact that the second condition was vague and 214 uncertain does not necessarily show that it was intended to be treated as a meaningless surpluses. As there was no acceptance by the appellants of the second condition there was no valid or binding agreement for extension of time under section 63 of the Indian Contract Act. Nicolene Ld. vs Simmonds, , distinguished. (3) In any event as the conditions were so vague and uncer tain that it was not possible to ascertain definitely the period for which the time for the performance of the contract was really intended to be extended, the agreement for extension was void under section 29 Of the Indian Contract Act. Scammel (G.) and Nephew, Ld. vs Oustom (H. C. and 1. G.) Queston, , relied on.

Appeals Nos. 220, 423 and 424 of 1962. Appeals from the judgment and order dated January 12, 1960 and August 19, 1960 of the Andhra Pradesh High Court, in Writ Appeals Nos. 120 and 57 of 1960. S.K. Bose and B. P. Maheshwari, for the appellant(in C. A. No. 220 of 1962). M.C. Setalvad, section K. Bose and Sardar Bahadar, for the appellants (in C. As. 423 & 424 of 1962). K. R. Chaudhuri and P. D. Menon, for respondent No, 1 (in all the appeals). 450 1963. March 20. The judgment of the Court was delivered by WANCHOO J. These three appeals on certificates raise the same question and will be dealt with together. It will be enough to refer to the facts of one appeal only i.e., No. 220, to understand the point arising for decision, the facts in the other appeals being similar. Briefly the facts in appeal No. 220 are that an order referring certain disputes between the appellant and its workmen was made to the Industrial Tribunal, Andhra Pradesh on June 6, 1956. The tribunal sent its award to Government in September, 1957. Under section 17 of the Industrial Disputes Act, No. XIV of 1947 (hereinafter referred to as the Act), the award has to be published by the appropriate government within a period of thirty days from the date of its receipt by the government in such manner as the government thinks fit. Before, however, the Government could publish the award under section 17, the parties to the dispute which had been referred for adjudication came to a settlement and on October 1, 1957, a letter was written to Government signed jointly on behalf of the employer and the employees intimating that the dispute, which had been pending before the tribunal, had been settled and a request was made to Government not to publish the award. The Government, however, expressed its inability to withhold the publication of the award, the view taken by the Government being that section 17 of the Act was mandatory and the Government was bound to publish the award. Thereupon the appellants filed writ petitions before the High Court under article 226 of the Constitution praying that the Government may be directed not to publish the award sent to it by the industrial tribunal. The High Court held that section 17 was mandatory and it was not open to Government to withhold 451 publication of an award sent to it by an industrial tribunal. Therefore it was not open to the High Court to direct the Government not to publish the award when the law enjoined upon it to publish it. The writ petitions were thereforedismissed. There were then application for certificats which were granted and that is how the matter has come up before us. The main contention on behalf of the appellants before us is that section 17 of the Act when it provides for the publication of an award is directory and not mandatory. In the alternative, it is contended that even if section 17 is mandatory some via media has to be found in view of the conflict that would arise between an award published under section 17 (1) and a settlement which is binding under section 18(1),and therefore where there is a settlement which is binding tinder section 18(1 ) it would be open to the Government not to publish the award in these special circumstance. We are of opinion that the first contention on behalf of the appellants, namely, that the publication of the award under section 17 (1) is directory cannot be accepted. Section 17 (1) lays down that every award shall within a period of thirty) days from the date of its receipt by the appropriate government be published in such manner as the appropriate government think fit. The use of the word "shall" is a pointer to section 17(1 ) being mandatory, though undoubtedly in certain circumstances the word "shall" used in a statute may be equal to the word "may". In the presentcase however it seems to us that when the word "shall" was used in section 17(1) the intention was to give a mandate to Government to Publish the award within the time fixed therein. This is enforced by the fact that sub section (2) of section 17 provides that "the award published under Sub section (1) shall be final and shall not be called in question by any 452 court in any manner whatsover". Obviously when the legislature intended the award on publication to be final, it could not have intended that the Government concerned had the power to withhold publication of the award. Further section 17A shows that whatever power the Government has in the matter of an award is specifically provided in that section, which allows the Government in certain circumstances to declare that the award shall riot become enforceable on the expiry of thirty days from the date of its publication, which under section 17 A is the date of the enforceability of the award. Section 17 A also envisages that the award must be published though the Government may declare in certain con tingencies that it may not be enforceable. Subsection (2) of section 17A also gives power to Government to make an order rejecting or modifying the award within ninety days from the date of its publication. It is clear therefore reading section 17 and section 17A together that the intention behind section 17 (1) is that a duty is cast on Government to publish the award within thirty days of its receipt and the provision for its publication is mandatory and not merely directory. This however does not end the matter, particularly after the amendment of the Act by Central Act XXXVI of 1956 by which section 18 (1) was introduced in the Act. Section 18 (1) provides that a settlement arrived at by agreement between the employer and workmen otherwise than in the course of conciliation proceeding shall be binding on the parties to the agreement. 'Settlement" is defined in section 2 (p) as meaning a settlement arrived at in the course 'or conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to the appropriate Government and the conciliation 453 officer. When such an agreement has been arrived at, though not in the course of conciliation proceedings, it becomes a settlement and section 18 (1) lays down that such a settlement shall be binding on the parties thereto. Further section 18 (3) provides that an award which has become enforceable shall be binding on all parties to the industrial dispute and others. Section 19 (1) provides that a settlement comes into operation on such date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on the date on which the memorandum of settlement is signed by the parties to the dispute. In the present case the settlement that was arrived at between the parties to the dispute was signed on October 1, 1957, and as it had not fixed any date for its coming into force, it became operative from October 1, 1957 itself and was binding on the parties to the agreement who were also before the industrial tribunal and would be bound by the award after its publication. The contention on behalf of the appellant in the alternative is this. It is said that the main purpose of the Act is to maintain peace between the parties in an industrial concern. Where therefore parties to an industrial dispute have reached a settlement which is binding under section 18 (1), the dispute between them really comes to an end. In such a case it is urged that the settlement arrived at between the parties should be respected and industrial peace should not be allowed to be disturbed by the publication of the award which might be different from the settlement. There is no doubt that a settlement of the dispute between the parties themselves is to be preferred, where it can be arrived at, to industrial adjudication, as the settlement is likely to lead to more lasting peace than an award, as it is arrived at by the free will of the parties and is a pointer to there being goodwill between them. Even though this may be so, we have still to reconcile the mandatory 454 character of the provision Contained in section 17 (1) for the publication of the award to the equally mandatory character of the binding nature of the settlement arrived at between the parties as provided in section Is (1). Ordinarily there should be Do difficulty about the matter, for if a settlement has been arrived at between the parties while the dispute is pending before the tribunal, the parties would file the settlement before the tribunal and the tribunal would make the award in accordance with the settlement. In the State of Bihar vs D. N. Ganguly (1), dealing with an argument urged before this Court that where a settlment has been arrived at between the parties, village an industrial dispute is pending before a tribunal, the only remedy for giving effect to such a settlement would be to cancel the reference, this Court observed that though the Act did not contain any provision specifically authorising the industrial tribunal to record a compromise and pass an award in its terms corresponding to the provisions of O. XXIII, r. 3 of ' the Code of Civil Procedure, it would be very unreasonable to assume that the industrial tribunal would insist upon dealing with the dispute on the merits even after it is informed that the dispute has been amicably settled between the parties, and there can be no doubt that if a dispute before a tribunal is ambicably settled, the tribunal would immediately agree to make an award in terms of the settlement between the parties. In that case this Court dealt with what would happen if a settlement was arrived at while the matter was pending before the tribunal. The difficulty arises in the present case because the proceedings before the tribunal had come to an end, and the tribunal had sent its award to Government before the settlement was arrived at on October 1, 1957. There is no provision in the Act dealing with such a situation ' just as there was no provision in the Act dealing with the situation which arose where the parties came (1) ; 455 to an agreement while the dispute was pending before the tribunal. This Court held in Ganguly 's case (1), that in such a situation the settlement or compromise would have to be filed before the tribunal and the tribunal would make an award thereupon in accordance with the settlement. Difficulty, however, arises when the matter has gone beyond the purview of the tribunal as in the present case. That difficulty in our opinion has to be resolved in order to avoid possible conflict between section 18 (1 ) which makes the settlement arrived at between the parties otherwise than in the course of conciliation proceeding binding on the parties and the terms of an award which are binding under section 18 (3) on publication and which may not be the same as the terms of the settlement binding under section 18 (1). The only way in our view to resolve the possible conflict which would arise between a settlement which is binding under section 18 (1) and an award which may become binding under section 18 (3) on publication is to withhold the publication of the award once the Government has been informed jointly by the parties that a settlement binding under section 18 (1) has been arrived at. It is true that section 17 (1) is mandatory and ordinarily the Government has to publish an award sent to it by the tribunal ; but where a situation like the one in the present cases arises which may lead to a conflict between a settlement under section 18 (1) and an award binding under section IS (3) on publication, the only solution is to withhold the award from publication. This would not in our opinion in any way affect the mandatory nature of the provision in section 17 (1), for the Government would ordinarily have to publish the award but for the special situation arising in such cases. The matter may be looked at in another way The reference to the tribunal is for the purpose of resolving the dispute that may have arisen between employers and their workmen. Where a settlement (1) ; 456 is arrived at between the parties to a dispute before the tribunal after the award has been submitted to Government butbefore its publication, there is in fact no dispute left to be resolved by the publication of the award. In such a case, the award sent to Government mayvery well be considered to have become infructuous and so the Government should refrain from publishing Such an award because no dispute ramains to be resolved by it. It is however urged that the view we have taken may create a difficulty inasmuch as it is possible for one party or the other to represent to the Government that the settlement has been arrived at as a result of fraud, misrepresentation or undue influence or that it is not binding as the workmen 's representative had bartered away their interests for personal considerations. This difficulty, if it is a diffi culty, will always be there even in a case where a settlement has been arrived at ordinarily between the parties and is binding under section 18 (1), even though no dispute has been referred in that connection to a tribunal. Ordinarily, however, such difficulty should not arise at all, if we read sections 2 (p), 18 (1) and 19 (1) of the Act together. Section 2 (p) lays down what a settlement is and it includes "a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to the appropriate govern ment and the conciliation officer". Therefore the settlement has to be signed in the manner prescribed by the rules and a copy of it has to be sent to the Government and the conciliation officer. This should ordinarily ensure that the agreement has been arrived at without any of those defects to which we have referred above, if it is in accordance with the rules. Then section 18 (1) provides that such a settlement would be binding between the parties and vs 19 (1) provides 457 that it shall come into force on the date it was signed or on the date on which it says that it shall come into force. Therefore as soon ' as an agreement is signed in the prescribed manner and a copy of it is sent to the Government and the conciliation officer it becomes binding at once on the parties to it and comes into operation on the date it is signed or on the date which might be mentioned in it for its coming into operation. In such a case there is no scope for any inquiry by Government as to the bona fide character of the settlement which becomes binding and comes into operation once it is signed in the manner provided in the rules and a copy is sent to the Government and the conciliation officer. The settlement having thus become binding and in many cases having already come into operation, there is no scope for any inquiry by the Government as to the bona fides of the settlement. In such a case in view of the possibility of conflict between the settlement in view of its binding nature under section 18 (1) and an award which might become binding on publication under section 18 (3), the proper course for the Government is to withhold the award from publication to avoid this conflict. If any dispute of the nature referred to above arises as to a. settlement, that would be another industrial dispute, which the Government may refer for adjudication and if on such an adjudication the settlement is found not to be binding under section 18 (1) of the Act it will always be open to the Government then to publish the award which it had withheld, though we do not think that such instances are likely to be anything but extremely rare. We are therefore of opinion that though section 17 (1) is mandatory and the Government is bound to publish the award received by it from an industrial tribunal, the situation arising in a case like the present is of an exceptional nature and requires reconciliation between section 18 (1) and section t8 (3), and in such a situation the only way to reconcile the two provisions is to withhold the publication of the award, as a binding 458 settlement has already come into force in order to avoid possible conflict between a binding settlement under section 18 (1) and a binding award under section 18 (3). In such a situation we are of opinion that the Government ought not to publish the award under section 17 (1) and in cases where government is going to publish it, it can be directed not to publish the award in view of the binding settlement arrived at between the parties under section 18 (1) with respect to the very matters which were the subject matter of adjudication under the award. We therefore allow the appeals and direct the Government not to publish the awards sent to it by the industrial tribunal in these cases in view of the binding nature of the settlements arrived at between the parties under section 18 (1) of the Act. In the circumstances we order the parties to bear their own costs. Appeals allowed.

The facts of the three appeals are similar and the questions of law involved are identical. Industrial disputes having arisen between the appellants and their workmen the disputes were referred for adjudication. After the Tribunal forwarded their Awards to the Government the parties in each dispute came to settlement. Thereafter letters were sent to the Government requesting them to withhold the publication of the Awards. The Government replied that under section 17 of the Act it was mandatory for the Government to publish the Awards and they could not withhold publication. Thereupon writ petitions were filed before the High Court under article 226 of the Constitution praying that the Government might be directed to withhold the publication. The High Court held that since the provisions of section 17 of the Act were mandatory it was not open to the High Court to issue writs as prayed for and rejected, the petitions. The present appeals are by way of certificate granted by the High Court. The main contentions in the appeals were that the provisions of section 17 were not mandatory but were only directory and in the alternative that even if they were mandatory some via media had to be found in view of the conflict that would arise between an award published under section 17 (1) and a settlement which was binding under section 18 (1) and therefore where there was a settlement which was binding under section 18 (1) it would be open to the Government not to publish the award. It was con. tended on behalf of the respondent that if the argument of the appellants was accepted it would create a difficult situation in as much as it would be possible for one party or the other to represent to the Government that the settlement had been arrived at 449 as a result of fraud, misrepresentation or undue influence and corruption etc. Held, that it is clear on a reading of section 17 and section 17A together that the intention behind section 17 (1) is that a duty is cast on Government to publish the award within thirty days of its receipt and the provision for its publication is mandatory and not merely directory. When an agreement at has been arrived at between the parties, though not in the course course of conciliation proceedings, it becomes a settlement as per the definition under section 2 (p) and section 18 (1) lays down that such a Settlement shall be binding on all the parties to it. If a situation like the one in the present case arises which may lead to a conflict between a settlement under section 18 (1) and an award binding under section 18 (3) on publication, the only solution is to withhold the award from publication. This would not in any way affect the mandatory nature of the provisions in section 17 (1) for the Government would ordinarily have to publish the award but for the special situation arising in such cases. If any dispute arises as to the binding nature of the settlement on grounds of fraud or misrepresentation etc. that would be another industrial dispute, which the Government may refer for adjudication and if such a settlement is found not to be binding under section 18 (1) of the Act it will always be open to the Government to publish the Award which it had withheld. State of Bihar vs D. N. Ganguly, ; , referred to.

Civil Appeal No. 1831 of 1973. Appeal by Special Leave from the Judgment and Order dated 4 5 1970 of the Allahabad High Court in Spl. Appeal No. 453/69. B. P. Maheshwari and Suresh Sethi for the Appellants. Ex Parte for the Respondents. The Judgment of the Court was delivered by SARKARIA, J. This appeal is directed against a judgment, dated May 4, 1970, of the High Court of Allahabad. It arises in these circumstances: One Matadin, father of Ram Lochan, respondent 6 herein, was a fixed rate tenant of the plots in dispute measuring 2.11 acres. One Ram Naresh Singh (deceased), brother of appellant 1 herein, 735 namely Mahadeo Prasad Singh, obtained a money decree against Matadin on February 18, 1953 from the Judge, Small Causes Court, Varanasi suit No. 847 of 1953. Ram Naresh Singh sought to execute the decree. As a consequence, the decree was transferred from the Court of the Judge of Small Causes to the Court of Munsif, Varanasi, for execution. The plots in dispute were put to auction by the executing court, and were purchased by the decree holder on July 20, 1956. The sale was confirmed on August 29, 1956 and the sale certificate was issued on September 8, 1956. The decreeholder purchaser, Ram Naresh Singh, took delivery of possession over these plots on March 14, 1957. Thereafter, he further sold the plots to appellant 2 and respondents 6 to 10. Matadin, however, died sometime in 1960. Thereafter his son Ram Lochan respondent 1, herein, instituted a suit on June 14, 1961 i.e. more than three years after the delivery of possession to the decree holder purchaser, Ram Naresh Singh, under section 229B read with Section 209 of the U. P. Zamindari Abolition and Land Reforms Act in the Revenue court against the present appellants, for a declaration that he is in possession of the suit land as Bhoomidar. In the alternative, he claimed the relief of possession on the same basis. He pleaded that his father, Ram Naresh Singh was the original Bhoomidar and remained in possession of the suit land till his death and thereafter, the plaintiff as the heir of the deceased continue in possession as Bhoomidar. He further alleged that the sale in favour of Ram Naresh Singh was without jurisdiction and a nullity; as it had been made without the knowledge of or notice to his father. The suit was resisted by the appellant, who is original defendant 1, and respondents 7 to 10, who are original defendants 2 to 5, inter alia on the ground that the suit was barred as res judicata and also under section 47 of the Code of Civil Procedure, and Article 181 of the Limitation Act. Defendants 2 to 5 further pleaded that they were bona fide purchasers for value and, therefore, their rights in the suit land were protected under Section 41 of the Transfer of Property Act. They also, alleged that they had made improvements on the suit land and were entitled to the benefit of Section 51 of the Transfer of Property Act. The trial court, by its judgment, dated August 30, 1965. dismissed the suit, holding, inter alia, that It was barred by the principle of constructive res judicata as also under Section 47 of the Code of Civil Procedure; that the Revenue Court had no jurisdiction to entertain and try the suit; that the appellants 6 to 736 10 were bona fide purchasers for value and, as such, were entitled to the benefit of Sections 41 and 51 of the Transfer of Property Act; that the suit was barred by Article 181 of the Limitation Act, 1908 as well as by Section 34(5) of the U.P. Land Reforms Act; and that Ram Naresh Singh had been in possession since March 14, 1967, i.e., the date on which he obtained delivery of possession in execution of his decree as auction purchaser. Aggrieved, the plaintiff (respondent 1) preferred an appeal to the Court of the Additional Commissioner, Varanasi, who by his judgment dated December 28, 1965, allowed the appeal and held that the executing court had no jurisdiction to sell the suit land under Section 42 of the Code of Civil Procedure, as amended by the U.P. Civil Laws (Amendment) Act. 1954 and that the suit was not barred as res judicata or under Section 47 of the Code of Civil Procedure. The Additional Commissioner further held that the possession of Ram Naresh Singh was unlawful as it was on the basis of the void sale, dated March 4, 1960, which could not confer any title on him; that the judgment debtor had no knowledge about the execution proceedings; that the suit property worth Rs. 6,000 was for a very meagre amount and the sale was vitiated by fraud in publishing and conducting the sale. Ram Lochan and Ram Naresh Singh carried a second appeal against the decision to the Board of Revenue. During the pendency of that second appeal, Ram Naresh Singh died and Mahadeo Prasad Singh, appellant 1, was substituted in his place. The Board dismissed the appeal on the ground that the auction sale with regard to the suit land in pursuance of the decree of the Judge, Small Causes Court, was void and, as such, did not invest the decree holder purchaser with any title and consequently, the possession of the appellant was without any title. The Board further held that the auction sale did not affect the suit under Section 209 of the U.P. Zamindari Abolition and the Land Reforms Act. To impugn the judgment of the Board, Mahadeo Prasad Singh, appellant herein, as well as respondents 6 to 10 filed a writ petition under Article 226 of the Constitution in the High Court of Allahabad. A learned Single Judge, who heard the writ petition, allowed it by his judgment, dated April 23, 1969, and quashed the judgments of the Board of Revenue as well as of the Additional Commissioner, who are respondents 2 and 3 herein. Following an earlier judgment of a Division Bench of the same Court in Suraj Bux Singh vs Badri Prasad & Anr. the learned Judge held 737 that the execution sale of the suit land was proper as per the provisions of Section 42 of the Code of Civil Procedure; that prior to its amendment in U.P. by the U.P. Civil Laws (Amendment) Act 1954, the executing court had the same powers in relation to execution as it would have had if the decree had been passed by itself; that the decree in the present suit was passed on February 18, 1953, i.e. prior to the coming into force of the Amendment Act of 1954 and, as such, the amended Section 42 did not apply to it; and that the decree having been passed prior to the date of the amendment, should be executed in accordance with the provisions of Section 42 as it stood prior to its amendment; and that as a result, the suit for declaration as well as for possession would have to fail. The learned Single Judge did not go into the question as to whether the suit was barred by Section 47 of the Code of Civil Procedure. Against the judgment of the learned Single Judge, respondent 1, herein, preferred a Special Appeal which was referred to a Full Bench of the High Court consisting of three learned Judges. The two Judges, in majority, held that the Small Cause Court had no power to execute the decree by attachment and sale of immovable property; that the transferee court, namely, the court of the Munsif had the same powers as that of the Small Cause Court and, therefore, that court also had no jurisdiction to execute the decree by attachment and sale of the immovable property; that the right to execute a decree by attachment and sale of immovable property is a matter of procedure, while the right to realise the decretal amount by attachment and sale is a substantive right of the decree holder, that the date on which the decree was put into execution, the amendment of Section 42 had already come into force and the power of the transferee court had become co terminus with that of the transferor court; and that the amendment did not save the right of the appellant to execute the decree of the Small Causes Court by attachment and sale of immovable property. Sinha, J. however, dissented. He took the view that the Amendment Act did not apply to the present suit and that a substantive right had accrued to Ram Naresh Singh on the passing of the decree to execute it by attachment and sale of the immovable property and that right was clearly saved to him by virtue of Section 3 of the Amendment Act. In accordance with the view of the majority, the appeal of respondent 1 was allowed and the Order of the learned Single Judge was set aside. Hence this appeal by special leave by the appellants. 738 Thus, the principal question that falls to be considered in this appeal is whether the High Court was right in holding that the execution sale of the land in dispute was totally without jurisdiction and null and void. Some relevant dates may be noted. Ram Naresh obtained the decree from the Court of Small Causes on February 18, 1953. On the decree holder 's application under Section 39 of the Code of Civil Procedure, the decree was transferred to the Court of the Munsif on January 24, 1955 and was put into execution after the U.P. (Amendment) Act XXIV of 1954 had come into force. This sale in favour of the decree holder himself took place on July 20, 1956. It was confirmed on August 29, 1956 and the sale certificate was issued to the purchaser on September 8, 1956. The auction purchaser took delivery of possession as per Dakhalnama on March 24, 1957. The decree holder purchaser further sold the plots in dispute to defendants 2 to 5. Next, at this stage, the relevant provisions of the Code of Civil Procedure and the U.P. Civil Laws (Reforms and Amendment) Act (Act No. XXIV of 1954) may be noticed. Section 38 of the Code of Civil Procedure provides that "a decree may be executed either by the Court which passed it or by the Court to which it is sent for execution". In the instant case, as already seen, the decree was passed by the Small Cause Court which was competent to execute it, but (in view of Order 21, Rule 82 of the Code) not by attachment and sale of the immovable property of the judgment debtor. That is to say, that Court could execute it by attachment and sale of the movable property of the judgment debtor, if it was, of course, not exempt under Section 60 of the Code of Civil Procedure or under any other law. Section 39 of the Code deals with transfer of decree. Its material part reads thus: "39(1).The Court which passed a decree may, on the application of the decree holder, send it for execution to another Court of competent jurisdiction (a) if the person against whom the decree is passed actually and voluntarily resides or carries on business, or personally works for gain, within the local limits of the jurisdiction of such other Court, or (b)if such person has not property within the local limits of the jurisdiction of the Court which passed the decree sufficient to satisfy such decree and has property 739 within the local limits of the jurisdiction of such other Court, or (c)if the decree directs the sale or delivery of immovable property situate outside the local limits of the jurisdiction of the Court which passed it, or (d)if the court which passed the decree considers for any other reason, which it shall record in writing, that the decree should be executed by such other Court. (2)The Court which passed a decree may of its own motion send it for execution to any subordinate Court of competent jurisdiction. (3) . . . . . " In the instant case, the decree was transferred under clause (d) of sub section (1) of Section 39. Unlike the other clauses (a) to (c) of the sub section, it seems that under clause (d), the Court has a rational discretion to transfer or not to transfer the decree passed by it. This is apparent from the word "may" used in the opening part of sub section (1), and the requirement of recording reasons for the transfer under clause (d). It follows therefore, that under Section 39 (1) a decree holder has no indefeasible right to get his application for transfer of decree to another Court ipso facto accepted by the Court which passed it, particularly in a case which is not covered by clauses (a), (b) and (c) of that sub section. Section 42 of the Code indicates the powers of the transferee court for executing a transferred decree. The material part of this section, prior to its amendment by the U.P. Act (No. XXIV) of 1954, reads as under: "The Court executing a decree sent to it shall have the same powers in executing such decree as if it had been passed by itself. All persons disobeying or obstructing the execution of the decree shall be punishable by such Court in the same manner as if it had passed the decree. And its order in executing such decree shall be subject to the same rules in respect of appeal as if the decree had been passed by itself.". (emphasis added) The provisions in sub sections (2), (3) and (4) of the Section are not relevant for our purpose. The U.P. Act (No. XXIV of 1954) amended with effect from November 30, 1954, Section 42 of the Code, and after that amendment sub section (1) of the Section read as under: 740 "The Court executing the decree sent to it shall have the same power in executing such decree as if it had been passed by itself. All persons disobeying or obstructing the execution of decree shall be punished by such Court in the same manner as if it had passed the decree and its order in executing such decree shall be subject to the same rules in respect of appeal as if the decree had been passed by itself." (emphasis added) Thus, for the words "as if it had been passed by itself" occurring in the first sentence of sub section (1) of Section 42, the Amending Act 24 of 1954 substituted the words "as the Court which passed it". The effect of such substitution was that the powers of the transferee Court in executing the transferred decree became coterminous with the powers of the Court which had passed it. The result was that if the power of the transferor Court to execute its own decree were in any respect restricted, the same restriction would attach to the powers of the transferee Court in executing the transferred decree, notwithstanding the position that the powers of the transferee Court in executing its own decree were not so restricted. Section 3 of the U.P. Civil Laws (Reforms and Amendment) Act, saves certain rights already acquired or accrued. It is in these terms: "3(1)Any amendment made by this Act shall not affect the validity, invalidity, effect or consequence of anything already done or suffered, or any right, title, obligation or liability already acquired, accrued or incurred or any release or discharge of or from any debt, decree, liability, or any jurisdiction already exercised, and any proceeding instituted or commenced in any Court prior to the commencement of this Act shall, notwithstanding any amendment herein made, continue to be heard and decided by such Court. (2)Where by reason of any amendment herein made in the Indian Limitation Act, 1908, or any other enactment mentioned in column 2 of the schedule, the period of limitation prescribed for any suit or appeal has been modified or a different period of limitation will hereafter govern any such suit or appeal, then, notwithstanding any amendment so made or the fact that the suit or appeal would now lie in a different Court, the period of limitation applicable to a suit or appeal, as aforesaid, in which time has begun to run before the commencement of this Act, shall continue to be the period 741 which but for the amendment so made would have been available. Before dealing with the contentions canvassed, we may remind ourselves of some well known principles of interpretation in regard to the retrospective operation of statutes. As a general rule, a statute which takes away or impairs substantive rights acquired under the existing law is construed to have a prospective operation unless the language of that statute expressly or by inevitable intendment compels a contrary construction. But this presumption as to prospective operation of a statute does not apply to an enactment affecting procedure or practice such as the Code of Civil Procedure. The reason is that no person has a vested right in any course of procedure. "The general principle indeed seems to be that alterations in the procedure are always retrospective, unless there be some good reason against it". (See Mulla 's Code of Civil Procedure, 13th Edn. I, page 6, and In the light of the above principles, the question posed for our decision, resolves itself into the two fold issue : whether the decree holder had acquired a substantive right (a) to get the decree passed by the Court of Small Causes, transferred to the Court of the Munsif and (b) thereafter to have is executed by the transferee Court in any of the modes provided in Section 51 of the Code of Civil Procedure, including the mode by attachment and sale of the immovable property of the judgment debtor. As before the High Court, here also, it is contended on behalf of the decree holder that he had acquired this two fold substantive right before the coming into force of the U.P. (Amendment Act XXIV) of 1954, and, as such, it was saved by Section 3(1) of this Amendment Act. It is maintained that the two fold right aforesaid is a substantive right and not merely a matter of procedure. Support for this argument has been sought from a decision of this Court in Garikapati vs Subbiah Choudhry. Reference has also been made to a Division Bench judgment of the Allahabad High Court in Suraj Bux Singh vs Badri Prasad. In the alternative, it is submitted that assuming the sale was without jurisdiction, then also, that question would relate to the execution, discharge or satisfaction of the decree and, as such, the remedy of the judgment debtor was to proceed by an application 742 under Section 47 of the Code of Civil Procedure and not by a suit as has been done by the plaintiff in the instant case. In short, the argument is that in any event, the present suit was barred by Section 47 of the Code. It appears to us that none of these contentions stands a close examination. It may be noted that the fasciculus of Sections 51 to 54 of the Code of Civil Procedure appear under the heading "PROCEDURE IN EXECUTION". Section 51 is captioned "Powers of Court to enforce execution". It reads thus : "Subject to such conditions and limitations as may be prescribed, the Court may, on the application of the decree holder, order execution of the decree (a) by delivery of any property specifically decreed; (b) by attachment and sale or by sales without attachment of any property; (c) . . . . . . . . (d) by appointing a receiver; or (e) in such other manner as the nature of the relief granted may require : Provided that, where the decree is for the payment of money, execution by detention in prison shall not be ordered unless, after giving the judgment debtor an opportunity of showing cause why he should not be committed to prison, the Court, for reasons recorded in writing, is satisfied. . . ." This Section "merely enumerates the different modes of execution in general terms while the conditions and limitations under which alone the respective modes can be availed of are prescribed further on by different provisions". I.R. Commentaries Vol. I, 9th Edn. p. 863). The opening words of the Section "Subject to such conditions and limitations as may be prescribed" put it beyond doubt that there is no wide or unrestricted jurisdiction to order execution or to claim execution in every case in all the modes indicated therein. 'Prescribed ' has been defined in Section 2(16) of the Code to mean "prescribed by rules", and "rules", under Section 2(18) means "rules and forms" contained in the First Schedule of the Code or framed by the respective superior Courts in different States under Section 122 or Section 125. 743 We are one with the High Court (majority) that this phrase cannot be construed to mean that the powers of the executing Court under this Section are not subject to the other conditions and limitations enacted in the other sections of the Code. For instance, the mode, (b), by attachment and sale of the property of the judgment debtor, may not be available in respect of property which falls within the exemption of section 60 of the Code. Although ordinarily the decree holder has an option to choose any particular mode for execution of his money decree, it will not be correct to say that the Court has absolutely no discretion to place any limitation as to the mode in which the decree is to be executed. The option of the judgment debtor, for instance, to apply under Order 21. Rule 30, C.P.C. for execution of a decree simultaneously against both the person and the property of the judgment debtor is subject to exercise by the Court of a judicial discretion vested in it under Order 21, Rule 21, C.P.C. We have already noticed, that under Section 39(1) (d), the decree holder has no indefeasible, substantive right to get a decree of a Court of Small Causes passed in his favour transferred to another Court. Cases are conceivable where the decree is of such a petty amount that the Court of Small Causes thinks that it can easily be executed by it by attachment and sale of the movable property of the judgment debtor. In the instant case, also the decree was for a small amount of Rs. 300 and odd and we understand that the application for transfer was made under clause (d) of Section 39(1). Thus, the decree holder 's right to make an application for transfer of his decree under section 39(1) (d) is a mere procedural right. The Court of Small Causes could in its discretion, for reasons to be recorded, refuse to transfer it to the Court of the Munsif. In other words, the decree holder had no vested or substantive right to get the decree transferred to the Court of the Munsif for execution. The first limb of the issue is therefore answered against the appellant. As regards the second limb of the issue, we find ourselves entirely in agreement with the High Court that the provisions of Section 51 are merely procedural in character. A decree holder gets a right to execute the decree only in accordance with the 744 procedure provided by law in force at the time when the execution is sought. If a mode of procedure different from the one which obtained at the date of the passing of the decree, has been provided by law, the decree holder is bound to proceed in execution according to the altered procedure. The Amendment Act XXIV of 1954 had taken away the power of the transferee court to execute the transferred decree by attachment and sale of the immovable property by making it coterminous with that of the transferor Court which, in the instant case, was the Small Cause Court and in view of the prohibition contained in Order 21, Rule 82, Code of Civil Procedure, had no power to execute its decree by sale of immovable property. That being the position, the Court of the Munsif to whom the decree had also been transferred for execution, had also no jurisdiction to order sale of the immovable property of the judgment debtor. Thus considered, the sale of the immovable property ordered by the Munsif in execution of the decree of the Court of Small Causes transferred to him, was wholly without jurisdiction and a nullity. Once we come to the conclusion that the sale in question was totally null and void, the alternative contention of the appellants with regard to the suit being barred by Section 47 of the Code of Civil Procedure, does not survive. This is not a case of an irregular or voidable sale which continues to subsist so long as it is not set aside, but of a sale which was entirely without jurisdiction. It was non est in the eye of law. Such a nullity does not from its very nature, need setting aside. As pointed out by this Court in Kiran Singh vs Chaman Paswan, ". it is a fundamental principle, well established that a decree passed by a Court without jurisdiction, is a nullity; and that its invalidity could be set up whenever it is sought to be enforced or relied upon, even at the stage of execution, and even in collateral proceedings". Most of the rulings which have been cited in support of their alternative contention by the appellants, were also cited before 745 the High Court and have been rightly distinguished. We need not go into the same. Before we part with the judgment, we may, however, note that the amendment made by the U.P. (Act XXIV) of 1954 was deleted by another U.P. (Amendment) Act XIV of 1970, and the unamended sub section (1) of Section 42, as it existed before the amendment of 1954, was revived. But, this Amendment Act (XIV of 1970) was not given retrospective operation. It did not affect the previous operation of the Amendment Act XXIV of 1954 or anything suffered or done thereunder. For the foregoing reasons, we uphold the impugned judgment and dismiss this appeal. In view of the law point involved, we leave the parties to pay and bear their own costs. P.B.R. Appeal dismissed.

A decree, according to section 38 of the Code of Civil Procedure, may be executed either by the Court which passed it or by the Court to which it is sent for execution. Section 39(1)(d) provides that the Court which passed a decree may, on the application of the decree holder, send it for execution to another Court of competent jurisdiction, if the Court, which passed the decree, considers for any other reason, which it shall record in writing, that the decree should be executed by such other Court. Section 42 of the Code, which indicates the powers of the transferee Court for executing the transferred decree, before its amendment in 1954, provided that the Court executing the decree sent to it, shall have the same powers in executing such decree "as if it had been passed by itself." After the amendment the words "as the Court which has passed it" were substituted for the words "as if it has been passed by itself". Section 3 of the U.P. Civil Laws (Reform and Amendment) Act saved certain rights already acquired or accrued. In February, 1953 the brother of appellant No. 1 obtained a decree from the Court of Small Causes which on his application under section 39 of the Code, was transferred to the Court of Munsif in January, 1955 and put into execution after the U.P. (Amendment) Act XXIV of 1954 had come into force. In the sale the decree holder himself purchased the land in July, 1956 and took possession of the property. He later sold the property to defendant nos. 2 to 5. The suit of respondent No. 1 for a declaration that the sale in favour of appellant No. 1 was without jurisdiction and therefore a nullity was dismissed by the trial Court. On appeal the Additional Commissioner held that the executing court had no jurisdiction to sell the suit land under section 42 of the C.P.C. as amended by the U. P. Civil Laws (Amendment) Act, 1954 Dismissing the appeal, the Board of Revenue held that the auction sale in pursuance of the decree of the Judge, Small Causes Court was void and did not invest the decree holder purchaser with any title. 733 On the appellant 's writ petition a single Judge of the High Court quashed the judgment of the Revenue Board as well as of the Additional Commissioner holding that the execution sale of the land was proper under section 42 of the Code, that prior to its amendment by the U. P. Civil Laws (Amendment) Act, 1954, the executing court had the same powers in relation to execution as it would have had if the decree had been passed by itself and the decree having been passed prior to the amendment of section 42 this section did not apply and the decree should have been executed in accordance with the provisions of section 42 prior to its amendment. On appeal a Full Bench of the High Court (by majority) held that since the Small Causes Court had no power to execute the decree by attachment and sale of immovable property, the Munsif 's Court to which the decree was transferred for execution, possessing the same powers as the Small Causes Court, had no jurisdiction to execute the decree by attachment and sale of the immovable property. It was contended before this Court on behalf of the decree holder that he had acquired a substantive right to get the decree of the Court of Small Causes transferred to the Court of Munsif for execution and thereafter to have it executed by the transferee court in any of the modes provided in section 51 C.P.C. and this two fold substantive right having accrued to him before the coming into force of the 1954 Amendment, it was saved by section 3 of this Amendment Act. Dismissing the appeal, ^ HELD: 1 (a) Under section 39(1)(d) a decree holder has no indefeasible substantive right to get his application for transfer of a decree to another Court ipso facto accepted by the Court which passed it, particularly in a case which is not covered by clauses (a), (b) & (c) of that sub section. The effect of substitution of the words "as the court which passed it" for the words "as if it had been passed by itself" was that powers of the transferee Court in executing the transferred decree became co terminus with the powers of the Court, which passed it. Therefore, if the power of the transferor Court to execute its own decree were in any respect restricted, the same restriction would attach to the powers of the transferee Court in executing the transferred decree notwithstanding the position that the powers of the transferee Court in executing its own decree were not so restricted. [739E; 740C D] (b) The opening words of section 51 (subject to such conditions and limitations as may be prescribed) put it beyond doubt that there is no wide or unrestricted jurisdiction to order execution or to claim execution in every case in all the modes indicated therein. The High Court (per majority) was right in construing it to mean that the powers of the executing court under this section are not subject to the other conditions and limitations enacted in the other sections of the Code. Although ordinarily a decree holder has an option to choose any particular mode for execution of his money decree it may not be correct to say that the Court has absolutely no discretion to place any limitation as to the mode in which the decree is to be executed. [742G, 743A B] In the instant case, the decree holder 's right to make an application for transfer of his decree under section 39(1)(d) is a mere procedural right. The Court of Small Causes could, in its discretion for reasons to be recorded, 734 refuse to transfer it to the Court of Munsif. In other words the decree holder had no vested or substantive right to get the decree transferred to the Court of the Munsif for execution. [743F G] (c) The well settled principle in regard to the retrospective operation of statutes is that as a general rule, a statute which takes away or impairs substantive rights acquired under the existing law is construed to have a prospective operation unless the language of that statute expressly or by inevitable intendment compels a contrary construction. But this presumption as to prospective operation of a statute does not apply to an enactment affecting procedure or practice such as the Code of Civil Procedure because no person has a vested right in any course of procedure. [741 B C] 2.(a) The High Court was right in holding that the provisions of section 51 are merely procedural in character. A decree holder gets a right to execute the decree only in accordance with the procedure provided by the law in force at the time when execution is sought. If a mode of procedure different from the one which obtained at the date of passing of the decree has been provided by law, the decree holder is bound to proceed in execution according to the altered procedure. [744A B] (b) The Amendment Act XXIV of 1954 had taken away the power of transferee Court to execute the transferred decree by attachment and sale of the immovable property by making it co terminus with that of the transferor Court (the Small Cause Court) and in view of the prohibition contained in Order 21 Rule 82 C.P.C. it had no power to execute its decree by sale of immovable property. That being the position, the Court of the Munsif to which the decree had been transferred for execution had no jurisdiction to order sale of the immovable property of the judgment debtor. The sale ordered by the Munsif in execution of the decree of the Court of Small Causes transferred to him was, therefore, wholly without jurisdiction and a nullity. [744 B D] Kiran Singh vs Chaman Paswan, ; referred to.

N: Criminal Appeal No. 451 of 1978. Appeal by Special leave from the Judgment AND order dated S G 78 of the Bombay High Court in Criminal Application No. 15 of 1978. Ram Jethmalani Ashok Desai, section J. Thakore, K. R. Krishnamurthy, Sri Narain for M/s J. B. Dadachanji and Co. for the Appellants. H. R. Khanna and M. N. Shroff for the State of Maharashtra. P. N. Lekhi, Girish Chandra and Miss A. Subhashini for Union of India. The judgment of the Court was delivered by SEN, J. This appeal by special leave directed against a judgment of the Bombay High Court dated 5th June, 1978, dismissing a petition filed by the appellant under Article 226 of the Constitution, by which he prayed for the issue of a writ of habeas corpus, and the connected petition under Article 32 of the Constitution by his wife for the issuance of a writ of habeas corpus for his release raise a common question and therefore they are disposed of by this common judgment. A vessel known as 'Jamnaprasad ' BLS 61 valued at one lac of rupees was found grounded in a creek off the coast near village KimKhadi on the 20th August, 1977. On receipt of information regarding the grounding of the vessel the Customs officers, Hansot, visited the spot and examined the contents of the cargo aboard the aforesaid grounded vessel. It was laden with 12 rolls of stainless steel sheets each weighing one tonne, valued at Rs. 15,44,400/ . The aforesaid vessel and the contraband goods found aboard it were seized by the 318 Customs officers for action under the . They made inquiries about the whereabouts of the crew members of the aforesaid vessel 'Jamnaprasad ' and were successful in apprehending them and the others involved. Intelligence gathered by the Customs officers clearly indicate that the appellant was the main person connected with the smuggling of the aforesaid cargo of contraband goods, namely 12 stainless steel sheets recovered from vessel 'Jamnaprasad ' BLS 61. The appellant, who ostensibly carries on the business of manufacturing, sale and export of Umrao brand wick stoves, spray pumps, cash and jewellery metal boxes, in the name and style of "Umrao Industries" and has his factory for the manufacture of the aforesaid items at village Kim, has been detained by an order of the Addl. Secretary to the Government of India, Ministry of Finance (Department of Revenue), New Delhi, dated the 1st of February, 1978 under sub section (1) of section 3 of the , with a view to prevent him from smuggling goods. He was arrested and placed under detention on the 5th of February, 1978, and is at present detained in the Central Prison, Bombay. At the time of his arrest, the appellant was served with the order of detention together with the grounds of detention with full particulars on which the order of detention was based. On 15th February, 1978 the case was referred by the Government to the Advisory Board as required under section 8(b) of the Act to enable the Board to make its report under sub cl. (a) of cl. (4) of Article 22 of the. Constitution. The appellant made two representations against his detention to the Government, one dated the 4th and the other dated the 6th of March, 1978, which were received by the Government on the 7th and 8th March, 1978, respectively. The Advisory Board had, in the meanwhile addressed a letter dated 21st of February, 1978, to the Government intimating that the case would be taken up on the 13th March, asking that the detenu be produced at the hearing and the Government should also forward the representation, if any, made by the appellant, together with the comments/decision of the Government, if any. On the 13th of March, the appellant was accordingly produced before the Advisory Board. The Government placed before the Board the two representations made by the appellant together with its comments. The appellant was heard in person; the Government 's point of view was placed before the Advisory Board by the Deputy Secretary to the Government, Ministry of Finance, Department of Revenue, who was accompanied by the Assistant Collector. Customs, 319 Bulsar. On the 16th of March, 1978, the appellant sent a telegram to the Advisory Board supplementing his oral submissions. The detaining authority rejected the representations made by the appellant on 1 8th of March, 1978. On 10th of April, 1978 the Advisory Board submitted its report giving its opinion that there was sufficient cause for the detention. The Government accordingly confirmed the order B, of detention. In the light of the circumstances appearing, it was conceded that the grounds for detention set out the facts with sufficient degree of particularity and that it did furnish sufficient nexus for forming the subjective satisfaction of the detaining authority. The order of detention was, therefore, not challenged on the ground that the grounds furnished were vague or indefinite or lacking in particulars or were not adequate or sufficient for the satisfaction of the detaining authority, or for the making of any effective representation. It is argued that the detention of the appellant was, however, bad for two reasons namely, (1) the detention was in violation of the constitutional right guaranteed under Article 22(5), inasmuch as the Government withheld consideration of the representations made by the appellant till after the hearing before the Advisory Board, and (2) the impugned order of detention is bad due to non application of mind inasmuch as the facts alleged clearly and distinctly show that the appellant did not himself smuggle the contraband goods. Both the contentions are, in our opinion, wholly devoid of substance. It is urged that the Government was under a constitutional obligation to consider the representations before the hearing before the Advisory Board. There is no quarrel with the principle but the difficulty is about the application of the principle on the facts and circumstances of the present case. In fact, the Government has to reach its decision uninfluenced by the opinion of the Advisory Board. It is, however, urged that the Government; in This particular case, had not made up its mind till the hearing before the Advisory Board on 13th March, 1978, and therefore, its decision reached on the 18th March was not that independent application of mind that the law requires, because by then the proceedings had: begun before the Board and the Government must have been influenced in its decision. There is no warrant for the submission that the disposal of the 1 representations made by the Government, in the instant case, was not in conformity with Article 22(5) of the Constitution. First, we shall 320 deal with the law on the subject before dealing with the factual aspect. Article 22(5) of the Constitution enacts: "When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order." In Abdul Karim & ors. vs State of West Bengal(t) this Court interpreted the language of Article 22(5) and observed: "Article 22(5) does not expressly say to whom the representation is to be made and how the detaining authority is to deal with the representation. But it is necessarily implicit in the language of article 22(5) that the State Government to whom the representation is made should properly consider the representation as expeditiously as possible. The constitution of an Advisory Board under section 8 of the Act does not relieve the State Government from the legal obligation to consider the representation of the detenu as soon as it is received by it. " It was further observed: "In our opinion, the constitutional right to make a representation guaranteed by article 22(5) must be taken to in elude by necessary implication the constitutional right to a proper consideration of the representation by the authority to whom it is made. The right of representation under article 22(5) is a valuable constitutional right and is not a mere formality. It is, therefore, not possible to accept the argument of the respondent that the State Government is not under a legal obligation to consider the representation of the detenu or that the representation must be kept in cold storage in the archives! of the Secretariat till the time or occasion for sending it to the Advisory Board is reached. If the view point contended for by the respondent is correct, the constitutional right under article 22(5) would be rendered illusory. " Thus the two obligations of the Government to refer the case of the detenu to the Advisory Board and to obtain its report on the one hand and to give an earliest opportunity to him to make a representation and consider the representation on the other, are two distinct obligations independent of each other. (1) ; , 321 In Pankaj Kumar Chakrabarty & ors. vs State of West Bengal(1), this Court again considered cl. (5) of article 22 and enunciate the Following principle: "In our view, it is clear from cls. 4 and S of article 22 that there is a dual obligation on the appropriate Government and a dual right in favour of the detenu, namely, (1) to have his representation irrespective of the length of detention considered by the appropriate Government and (2) to have once again that representation in the light of the circumstances of the case considered by the board before it gives its opinion. If in the light of that representation the board finds that there is no sufficient cause for detention the Government has to revoke the order of detention and set at liberty the detenu. Thus, whereas the Government considers the re presentation to ascertain whether the order is in conformity with its power under the relevant law, the board considers such representation from the point of view of arriving at its opinion whether there is sufficient cause for detention. " It is, therefore, well settled that in case of preventive detention of a citizen, the Constitution by article 22(5) as interpreted by this Court, enjoins that the obligation of the appropriate Government to afford the detenu the opportunity to make a representation and to consider that representation is distinct from the Government 's obligation to constitute a Board and to communicate the representation, amongst other materials, to the Board to enable it to form its opinion and to obtain such opinion. The nature of the dual obligation of the Government and the corresponding dual right in favour of the detenu under article 22(5) was reiterated by this Court in Khairul Haque vs The State of West Bengal(2) in these words: "It is implicit in the language of article 22 that the appropriate Government, while discharging its duty to consider the representation, cannot depend upon the views of the Board on such representation. It has to consider the representation on its own without being influenced by any such view of the Board. There was, therefore, no reason for the Government to wait for considering the petitioner 's representation until it had received the report of the Advisory Board. As laid down in Sk. Abdul Karim & ors. vs State of West Bengal (supra), the obligation of the appropriate (1) [1970] I SCR 543. (2) W.P. No. 246 of 1969, decided on September 10, 1969. 322 Government under article 22(5) is to consider the representation made by the detenu as expeditiously as possible. The consideration by the Government of such representation has to be, as aforesaid, independent of any opinion which may be expressed by the Advisory Board. The fact that article 22(5) enjoins upon the detaining authority to afford to the detenu the earliest opportunity to make a representation must implicitly mean That such representation must, when made, be considered and disposed of as expeditiously as possible, otherwise, it is obvious that the obligation to furnish the earliest opportunity to make a representation loses both its purpose and meaning. " The same procedural safeguards were reaffirmed by this Court in Jayanarayan Sukul vs State of West Bengal (1) and Dhurus Kanu vs State of West Bengal.(2) The High Court in this case, and the Delhi High Court in Thaneshwar Singh vs The Union of India & ors.(3) appear to be labouring under misconception that merely because there is no express provision in s.8(b) of the placing an obligation to forward the representation made by the detenu along with the reference to the Advisory Board, unlike those contained in s.9 of the and s.10 of the Maintenance of Intemal Security Act, 1971 there is no obligation cast on the Government to consider the representation made by the detenu before forwarding it to the Advisory Board. We have no doubt in our mind that when liberty of the subject is involved, whether be it under the or the or the , it is the bounden duty of the court to satisfy itself that all the safeguards provided by the law have been scrupulously observed and that the subject is not deprived of his personal liberty otherwise than in accordance with law. The relevant Articles of the Constitution having a bearing on this question is article 22. Two of these safeguards, which relate to the observance of the principle of natural justice and which a fortiori are intended to act as a check on the arbitrary exercise of power, are tor be found in article 22(5) of the Constitution. (1) ; (2) AIR 1975 SC 571. (3) Cr W. No 6 of 1978 decided on September 25, 1978 (Delhi High Court) 323 When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, communicate to such person the 'grounds ' on which the order has been made and shall afford him the earliest opportunity of making representation against the order, These procedural safeguards are ingrained in our system by judicial interpretation. The power of preventive detention by the Government under the , is necessarily subject to the limitations enjoined on the exercise of such power by Art 22(5) of the Constitution. as constructed by this Court. Thus, this Court in Khudiram Das vs The State of West Bengal & ors (1) observed: "The constitutional imperatives enacted in this article are two fold: (1) the detaining authority must, as soon as may be, that is, as soon as practicable after the detention, communicate to the detenu the grounds on which the order of detention has been made, and (2) the detaining authority must afford the detenu the earliest opportunity of making a representation against the order of detention. These are the barest minimum safeguards which must be abserved before an executive authority can be permitted to preventively detain a person and thereby drown his right of personal liberty in the name of public good and social security. " This has always been the view consistently taken by this Court in a series of decision. It is not necessary to burden this judgment with citations of these decisions. The view to the contrary taken by the Bombay and the Delhi High Courts that these procedural safe guards are not available to a person detained under the is clearly wrong. The Constitution is all pervasive. All laws made by a State must, therefore, yield to constitutional limitations and restrictions. The citizen 's right to personal liberty is guaranteed by Article 22 irrespective of his political beliefs, class, creed or religion. This Court has forged certain procedural safeguards in the case of preventive detention of citizens. These safeguards might be designated as a regulative 'Postulate of Respect ', that is, respect for the intrinsic dignity of the human person. (1) ; 324 In pursuit of the idealistic considerations as to the inherent worth and dignity of men, the Parliament, in the light of the experience gained recently, repealed the . The repeal of that Act is necessitated to promote the citizen 's right to personal liberty, which is a fundamental and pervasive theme of the Constitution, to guard against the preventive detention of a person for political beliefs. This was also in accord with the recommendation of the Law Commission in its Forty seventh Report, p. 2, para 1.4, that preventive detention should be retained only for preventing anti social and economic offences. The repeal of the and the retention of the , however, does not imply that preventive detention, which is an anachronism in a democratic society like ours, can be freely used, without any power of judicial review and without any checks and balances, against persons engaged in anti social and economic offences. This assumption by the two High Courts ignores centuries of judicial lawmaking when it denies the competence of courts to weigh competing social interests. The courts have always viewed with disfavour the detention without trial whatever be the nature of offence. The detention of individuals without trial for any length of time, howsoever short, is wholly inconsistent with the basic ideas of our Government. To put it less euphemistically, the alternative is the renunciation of judicial review itself, and acceptance of the intolerable principle that the Government is the judge of its own powers. So, this Court observed in Prabhu Dayal Deorah vs District Magistrate, Kamrup: "We say and we think it is necessary to repeat, that the gravity of the evil to the community resulting from antisocial activities can never furnish an adequate reason for invading, the personal liberty of a citizen, except in accordance with the procedure established by the constitution and the laws. The history of personal liberty is largely the history of insistence on observance of procedure. Observance of procedure has been the bastion against wanton assaults on personal liberty over the years. Under our Constitution, the only guarantee of personal liberty for person is that he shall not be deprived of it except in accordance with the procedure established by law. The need today for maintenance of supplies and services essential to the community cannot be over emphasized. There will be no social security without maintenance of adequate supplies (1) ; at 22 23. 325 and services essential to the community. But social security is not the only goal of a good society. There are other values in a society. Our country is taking singular pride in the democratic ideals enshrined in its Constitution and the most cherished of these ideals is personal liberty. It would indeed be ironic if, in the name of social security, we would sanction the subversion of this liberty. " The constitutional safeguards embodied in article 22(5) of the Constitution, as construed by this Court, must, therefore, be read into the provisions of section 8(b) of to prevent any arbitrary executive action. In the instant case, however, there was no infraction or the constitutional safeguards enshrined in article 22(5). We are satisfied that there was no failure on the part of the Government to discharge its obligation under article 22(5). The records of the Government as well as of Advisory Board have been placed before us It clearly shows that the Government had forwarded the two representations made by the appellant on the 4th and 6th of March, 1978, alongwith its comments in writing together with a forwarding letter on the 9th of March, 1978. From a bare perusal of the forwarding letter and the accompanying para wise comments in writing, it is amply clear that the Government had already formed an opinion that the order of detention was in conformity with its powers under the law. It cannot, therefore, be said that the Government in rejecting the representations made by the appellant by its order dated 18th March, 1978 was, in any way, influenced by the views expressed by the Board. Though, the Government was represented at the hearing by the Deputy Secretary, Ministry of Finance, Revenue Department, and the Assistant Collector, Customs, Bulsar, it is nobody 's case that the Advisory Board had at the hearing indicated its mind as to whether there was sufficient cause for detention. On the contrary, the telegram sent by the appellant on the 16th March, 1978 ex facie shows that the Board had not expressed its mind at the hearing. It is, therefore, irrefutable that the Government had taken a decision uninfluenced by what transpired at the hearing before the Board. The matter was dealt with by the Government at all levels, and the detaining authority had come to an independent conclusion of his own by applying his mind to the facts and circumstances of the case. Here, similarly the Board by its report dated the 10th April, 1978 independently arrived at its opinion that there was sufficient cause for detention . 326 Learned counsel for the appellant next strenuously contends that there was non application of mind on the part of the detaining authority. It was submitted that though the order for detention was made with a view to preventing the appellant from smuggling goods, i.e., under cl. (i) of sub section (1) of section 3 of the Act, his case on the facts revealed in the grounds for detention clearly fell under cl.(ii) of sub s.(1) of section 3, as he could not, by any stretch of imagination, be treated to be a smuggler but he was only an abettor. May be, he instigated, organised and facilitated the act of smuggling, but it is said, the actual smuggling of the contraband goods, was by others. His act, there fore, constituted abetment of smuggling for which there is a separate clause under section 3(i)(ii). The order of detention cannot, therefore, be justified under s.3(1) (i). Applying a wrong clause, it is urged, shows non application of mind. We are afraid, the learned counsel is stretching the argument too fine. Section 3(1) of the Act, so far material reads: The Central Government or the State Government or any officer of the Central Government, not below the rank of a Joint Secretary to that Government, specially em powered for the purposes of this section by that Government, or any officer of a State Government, not below the rank of a Secretary to that Government, specially em powered for the purposes of this section by that Government, may, if satisfied, with respect to any person (including a foreigner), that, with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from (i) smuggling goods, or (ii) abetting the smuggling of goods, or;" There is, no doubt, a distinction between an act of smuggling and abetting the smuggling of goods for purposes of preventive detention under section 3 (1) of the Act. Nonetheless, the term "smuggling ' as defined in section 2(e) of the Act has the same meaning as in section 2(39) the , which, when read with section 111 of that Act, is wide enough to include and make liable not only the actual smuggler but also persons abetting the smuggling or contraband goods as well as all persons dealing in such goods, etc. Though the provisions of cls. (i) and (ii) of sub s(1) of section 3 of the Act may operate on different fields, which may sometimes, as here, overlap, still a wider meaning is given 327 to the term 'smuggling in section 2(e) of the Act, with a view to broaden the scope of preventive detention. Sub section (1) of section 3 of the Act provides for the different grounds of detention. Clause (i) relates lo smuggling of goods, clause (ii) relates to abetting the smuggling of goods, clause (iii) relates to engaging in transporting or concealing or keeping smuggled goods, clause (v) relates to harbouring persons engaged in smuggling goods or in abetting the smuggling of goods. It must, therefore, be assumed that the intention of the legislature was to treat the smuggling of goods and abetting the smuggling of goods as grounds separate and distinct, and both are separate grounds for detention i.e., to take in all such activities which result in accomplishment of smuggling of contraband goods. In a case like the present, where there is a widespread network employed by a person, it cannot be said that he is not engaged in the act of smuggling. It is accepted before us that the appellant. instigated, organised and facilitated the smuggling of the contraband goods in question. Not only that but he is really the person to whom the goods belonged. The appellant went to the extent of going to Dubai for purchasing the contraband goods, had thereafter taken delivery of the same at Dubai and had them loaded into the vessel; the vessel actually belonged to the appellant and the crew members were engaged by his agent Siddiq Hussain, who was sent from Bombay to Dubai to bring the vessel. He took charge of the vessel as a tindel and but for the fact that the rudder of the vessel failed, the contraband stainless steel rolls would have landed in the creek near The factory of the appellant. It is clear that Kunji Mohmed, in whose name the vessel 'Jamnaprasad ' BLS 61 was registered, was merely a dummy but the vessel actually belonged to the appellant, who had purchased it from one Kasam Jamal for a sum of Rs. 40,000/ . It was he who got the vessel repaired at Bombay and an oil engine fitted; and, he, through his agent Siddiq Hussain Sup, engaged the members of the crew. It appears that the appellant left for Dubai on the 18th of May, 1977 by air and returned to Bombay on the 2nd June, 1977. He prolonged this stay at Dubai/Abu Dhabi for seven days and had to pay a fine of 100 Dirhams per day for his over stay. During his period of stay at Dubai, he purchased 20 rolls of stainless steel sheets worth rupees 20 lacs. It also appears that the appellant and Kunji Mohmed wanted to load the whole of the contraband good into the vessel but the driver Ali and Amad Mamad, the tindel, refused to carry such a heavy cargo. The appellant told them that 328 he would go to Bombay and send Siddiq Hussain Sup. It further appears that the oil engine in the vessel was replaced, with his concurrence, with a new diesel engine. After his departure, only 12 rolls of stainless steel sheets could be loaded in the vessel by Kunji Mohmed and Amad Mamad. There after, while the vessel was on its voyage to India it developed engine trouble and had to remain at sea for about ten days whereafter, it returned to Sarjah port in Dubai. In the meanwhile, Siddiq Hussain Sup had reached there from Bombay, on instructions from the appellant, and took charge of the vessel as tindel. The vessel again left Sarjah port but had W remain in the sea near Khodgam for about 8 to 10 days due to stormy weather. After a voyage of about 6 to 7 days, the vessel reached near the coast of India outside the creek where it was found grounded. It had to be anchored at a place known to Siddiq Hussain Sup, that is, near about the factory of Umrao Industries belonging to the appellant in village Kim, but the crew members lost the track and had to move around the creek for about 4 days because the rudder had failed. Then lt entered the aforesaid creek, some 20 kms. away from the factory, where it ran aground due to damage to the rudder. During a search of the house of Kunji Mohmed, certain documents relating to the repairs of vessel No. BLS 61 and a dairy containing telephone Nos. 395279, 375943 and 361973 and also one postal receipt No. 55955 issued by Jamnagar Post office showing looking of a trunk call to telephone No. 395279 or 375943 were found. The first two telephone numbers have been installed at the Bombay office of the appellant, while the third is at his residence at Bombay. The postal receipt No. 55955 showed that this trunk call from Jamnagar was booked for Bombay in the name of the appellant. Two more trunk call ticket Nos. L. 0285 and 158, dated 18th June, 1977 showed that the former trunk call was booked by him to Okha telephone No. 91 with Siddiq Hussain Sup as P.P., while the latter was in respect of the return call (lightening) made by the appellant to the aforesaid okha telephone. The trunk call booked from telephone No. 91 okha was to the appellant 's office telephone No. 395279 in Bombay with P. P. Babubhai. Obviously, the over stay of the appellant at Dubai was in connection with the loading of the contraband stainless steel sheet rolls, which have been valued at Rs. 15,44,400/ . The synchronising of the visit with the taking of the vessel to Dubai, and then loading of the stainless steel rolls for the purpose of transportation to India, are very significant and unimpeachable circumstances to show the smuggling pro pensities of the appellant. 329 It is quite clear from the facts set out in the grounds of detention, that the appellant was the person who was actually engaged in the act of smuggling of the contraband stainless steel rolls into the Indian customs waters. It is, therefore, clear that for all intents and purposes the appellant was the actual smuggler and not a mere abettor. Furthermore, the activities of the appellant were such that his case would be covered by both clauses (i) and (ii) of section 3(1) of the Act. Thus, there was due application of mind. It is manifest that the appellant could in the instant case be detained under sub s.(1) of section 3 of the both under clauses (i) and (ii) thereof. In any case, even assuming that the appellant was merely an abettor of the smuggling of 12 rolls of stainless steel sheets on this occasion, still his activities in this transaction afforded sufficient grounds for the prognosis that he would have himself indulged in actual smuggling of the balance lot of 8 rolls of stainless steel sheets remaining behind at Dubai, if not detained, and as such cl. (i) section 3(1) of the Act was properly invoked. In the result, both the appeal as well as the writ petition must fail and are dismissed. There shall be no order as to cost P.B.R. Appeal and Petition dismissed.

The appellant was detained under section 3(1) of the Conservation of Foreign Exchange an(1) Prevention of Smuggling Activities Act, 1974 with a view to prevent him from smuggling goods. Two representations made by him against his detention were forwarded by the Government to the Advisory Board with its comments. He was later produced before the Advisory Board. On receipt of the Advisory Board 's report that there was sufficient cause for detention, the order of detention was confirmed by the Government. The High Court dismissed his petition under article 226 of the Constitution. In appeal the appellant challenged the order of detention on the ground that (1) it was in violation of the right guaranteed under article 22(5) inasmuch as the Government withheld consideration of the representations made by him till after the hearing by the Advisory Board, and (2) the impugned order of detention was bad due to non application of mind of the detaining authority inasmuch as the facts alleged clearly and distinctly showed that the appellant did not himself smuggle the goods. Dismissing the appeal, ^ HELD: (1)(a) There was no warrant for the submission that the disposal of the representations made by the Government was not in conformity with article 22(5) of the Constitution. [319H] (b) It is well settled that in case of preventive detention of a citizen, Art 22(5) of the Constitution enjoins that the obligation of the appropriate Government to afford the detenu an opportunity to make a representation and to consider that representation is distinct from the Government s obligation to constitute a Board and to communicate the representation, amongst other material, to the Board to. enable it to form its opinion and to obtain such opinion. [321E] Abdul Karim & ors. vs State of West Bengal; , ; Pankaj Kumar Cluakrabarly & ors. vs State of West Bengal; , , Khuairul Haque vs The State of West Bengal W. P. No. 246 of 1969, decided on September 10, 1969, Jayanarayan sukul vs State of West Bengal; , Dhurus Kanu vs State of West Bengal, AIR 1975 SC 571; referred to. (c) The constitutional safeguards embodied in article 22(5) must be read into the provisions of section 8(b) of the Conservation of Foreign Exchange and Preventional of Smuggling Activities Act, 1974 to prevent any arbitrary executive action. Merely because there is no express provision in section 8(b) of the Act placing an obligation to forward the representation made by the detenu along 316 with the reference to the Advisory Board unlike the provisions contained in section 9 of the and section 10 of the , it cannot be said that there is no obligation cast on the Government to consider the representation made by the detenu before forwarding it to the Advisory Board. [325C; 322D E] Thaneshwar Singh vs The Union of India & ors. , Cr. W. No. 6 of 197 decided on September 25, 1978 (Delhi High Court); over ruled. (d) When the liberty of the subject is involved, whether it is under the or the or the , it is the bounden duty of the Court to satisfy itself that all the safeguards provided by the law had been scrupulously observed and that the subject was not deprived of his personal liberty otherwise than in accordance with his. [322 G] (e) When any person is detained in pursuance of an order made under any law providing for preventive detention the authority making the order shall, as soon as may be, communicate to such person the ground on which the order had been made and shall afford him the earliest opportunity of making representations against the order. These procedural safeguards are ingrained in our system of judicial interpretation. The power of preventive detention by the Government under the Act is necessarily subject to the limitations enjoined on the exercise of such power by article 22(5) of the Constitution. [323A] Khudiram Das vs The State of West Bengal & ors. ; referred to. In the instant case there was no infraction of constitutional safeguards enshrined under article 22(5) and there was no failure on the part of the Government to discharge its obligations under that article. Quite clearly the Government had forwarded the appellant 's two representations alongwith its comments to the Advisory Board. A perusal of the comments of the Government make it clear that the Government had already formed an opinion that the order of detention was in conformity with its powers under the law. It cannot be said that in rejecting the appellant 's representations the Government was influenced by the views expressed by the Board. At the hearing the Board had not indicated its mind as to whether there was sufficient cause for detention. It is, therefore, irrefutable that the Government had taken a decision uninfluenced by what transpired at the hearing before the Board. The matter was dealt with by the Government all: all levels, and the detaining authority had come to an independent conclusion of its own by applying its mind to the facts and circumstances of the case. [325D H] (2)(a) The intention of the legislature in enacting section 3(1) was to treat the smuggling of goods and abetting the smuggling of goods as grounds separate and distinct and both are separate grounds for detention i.e. to take in all such activities which result in accomplishment of smuggling of contraband goods. 'the term 'smuggling ' as defined in section 2(e) of the Act read with section 2(39) and s 111 of the Customs Act, is wide enough to include and make liable not only the actual smugglers but also persons abetting the smugglers, of contraband goods as well as all persons dealing with any such goods. A wider meaning is given to the term 'smuggling ' in section 2(e) of the Act with a view to broaden the scope of Preventive detention. In a case like the present where a wide 317 spread network is employed by a person, it cannot be said that he was not Engaged in the act of smuggling. The appellant was not only the person who instigated, organised and facilitated the smuggling of the contraband goods but he was really a person to whom the goods belonged. The facts set out in the ground of detention make it clear that the appellant was the person who was actually engaged in the act of smuggling of contraband goods into the Indian Customs waters For all intents and purposes the appellant was the actual smuggler and not a mere abettor His " activities were such that his case would be covered by both clauses (i) and (ii) of section 3(1) of the Act. [326G H; 327A B] (b) Assuming that the appellant was merely an abettor in the smuggling of contraband goods on this occasion, still his activities in this transaction afforded sufficient grounds for the prognosis that he would have himself included in actual smuggling of the balance of contraband goods by remaining behind in the foreign country. [329D]

N: Criminal Appeal No. 175 of 1988. 298 From the Judgment and order dated 10.2.86 in the High Court of Bombay in Crl. Writ Petition No. 295 of 1986. Kuldeep Singh, Solicitor General, Ms. A. Subhashini, Mrs. Sushma Suri and B. Parthasarthy for the Appellants. C.L. Sareen, O.K. Khuller, R.C. Kohli and Mrs. H. Wahi for the Respondents. The following order of the Court was delivered: O R D E R Special leave granted. This appeal is by special leave. The appellant who is Deputy Chief Controller of Imports and Exports filed a complaint in the Court of Chief Metropolitan Magistrate, Bombay alleging commission of offence under Section 5 of the Imports and Exports (Control) Act, 1947 by the respondents 1 and 2. The said case got transferred to the Court of the Additional Chief Metropolitan Magistrate, 38th Court, Ballard Estate, Bombay and was numbered as 82/S of 1983. The respondent No. 1 is a private limited company with its registered office at Bombay and the respondent No. 2 is its Managing Director. To this complaint proviso (a) of Section 200 of the Code of Criminal Procedure was applicable. Therefore, cognizance was taken of the offence alleged without examining the appellant. On 17.1.1983, an application was filed on behalf of the two accused persons for recall of the summonses and dismissal of the complaint. On 12th of May 1983, the learned Magistrate dismissed the petition. The order of the learned magistrate was assailed before the High Court and on 2.9.1983, the High Court dismissed it. Then the matter was brought to this Court by filing an application for special leave on 12.12.1983, this Court dismissed the leave application. The case set down for trial after charges were framed. An application was made to the trial court at this stage to discharge the Managing Director, Respondent No. 2 in exercise of inherent powers by contending that the company was prepared to admit its guilt and may be appropriately penalised and the Managing Director against whom there was no allegation of any criminal conduct should be discharged. The learned Magistrate by a reasoned order dated 17th February, 1986, dismissed the application and directed that the trial should proceed against both. That order was assailed by the respondents before the Bombay High Court by filing a criminal writ 299 petition. The High Court by its order dated 10th July, 1986, which is impugned in this appeal, held: "On perusal of the averments it is seen that at the time the learned Trial Judge issued/processed against the petitioners accused, the Department and the State had merely filed a complaint case along with list of witnesses and documents. None of the statements of witnesses or copies of documents were produced before the Trial Judge. The complainant 's verification statement is also not recorded. As such the order of issuance of process is clearly a result of non application of mind by the trial Judge. Such order would mean that merely on filing a complaint the process could be issued. It would be unjust to the accused if process is issued against him by the Magistrate without first satisfying himself about the nature of the case and whether there exists sufficient grounds for proceeding with the case. Since this is not done, then in the instant case the process issued against petitioner No. 2 (Managing Director) is liable to be quashed on this ground alone. Without short circuiting the other grounds it must be pointed out that perusal of the complaint and in particular page 23 of the complaint shows that the prosecution intends to charge petitioner No. 2 as the principal offender along with the petitioner No. 1 company. That is not possible for the simple reason that offence under Section 5 of the Imports and Exports (Control) Act is done Principally by the licencee (Company in this case) and/or by the abetter to the offence. There are no allegations in the complaint that the petitioner No. 2 either aided or abetted in the contravention of licence conditions by the petitioner No. 1 Company. As such on this ground also the process issued against petitioner No. 2 is liable to be and is quashed and set aside. " The criticism advanced by the learned Judge against the trying Magistrate is wholly untenable and is perhaps applicable to the learned Judge. If reference had been made to Section 200 Proviso (a) of the Code of Criminal Procedure, what has been advanced as the most impressive ground for quashing the proceedings against the respondent No. 2 could not at all have been accepted. The learned Judge obviously has not cared to look into the procedural law applicable to the factual situation before him. The learned Judge also lost sight of the fact that similar objections had once been raised and his High 300 Court had refused to entertain the same and the order of the High Court had been upheld here by dismissing the special leave petition. The portion we have extracted from the order of the High Court suggested that the learned Judge wanted to draw a distinction between then and now by saying that the records of investigation had not then been available. Records of investigation are not evidence in this case and a complaint could not be quashed by referring to the investigation records particularly when the petition of the complainant did allege facts which prima facie show commission of an offence. The learned Judge did note the fact that the licencee was a company but lost sight of the fact that a company by itself could not act. Obviously the Company has to act through some one. In the petition of the complainant there was clear allegation that the Managing Director had committed the offence acting on behalf of the licencee. If the complainant 's petition had been properly scrutinized the second ground advanced in the impugned order for quashing the proceedings against the Managing Director could not have been utilised in the impugned order. Both the grounds are wholly untenable and, therefore, the order of the High Court has got to be reversed. We allow the appeal and vacate the order of the High Court. Once the order of the High Court is vacated the order of the learned Magistrate would revive and the prosecution as directed by the learned Magistrate has now to continue. The petition of the complainant at page 21 of the paper book shows that the offence was committed between 1967 and 1969 which is some 20 years back. While we have no sympathy for the respondent No. 2 and we are clearly of the opinion that he has no equity in his favour and the delay after the complaint had been filed has been mostly on account of his mala fide move, we do not think it would be in the interest of justice to allow a prosecution to start 20 years after the offence has been committed. If we could convict the respondent No. 2 in accordance with law, we would have been prepared to do so taking the facts of the case and conduct of the respondent into consideration but that would not be possible within the framework of the law of procedure. We, therefore, do not propose to allow the learned Magistrate to proceed with the trial of the case at this belated stage. We accordingly direct the case to be closed against respondent No. 2 without further delay. Ordinarily, in a criminal case of this type there would have been no order for costs. But keeping in view the background of the case, the manner in which the respondent No. 2 has behaved and the fact that he is squarely responsible for delaying the 301 proceedings by reiterating the same contention twice over. We are of A the definite opinion that the respondent No. 2 should be made to suffer exemplary costs. We accordingly direct that he shall be called upon to pay a sum of Rs. 10,000 by way of costs and the said amount is to be deposited in the trial court within one month hence failing which the trial court shall have a direction to recover the same as fine and pay the amount to the complainant. Compliance shall be reported to the Registry of this Court.

% A complaint filed in the court of the Chief Metropolitan Magistrate by the appellant, Chief Controller of Imports and Exports, against respondents Nos. 1 and 2, a private limited company and its Managing Director for the alleged commission of an offence under section 5 of the Imports and Exports (Control) Act, 1947 was subsequently transferred to another court and cognizance of the offence alleged was taken without examining the appellant as proviso (a) of section 200 of the Code of Criminal Procedure was applicable to this complaint. An application filed by the accused persons for recall of summons and dismissal of complaint was dismissed by the trial Magistrate. An appeal against the aforesaid order was dismissed by the High Court. A special leave application filed against the High Court 's order was dismissed by the Supreme Court. An application made at the trial stage for the discharge of respondent No. 2, the Managing Director on the plea that there was no allegation of any criminal misconduct against him and the Company respondent No. 1 was prepared to admit its guilt and may be appropriately penalised, was dismissed by the trial court. On appeal, the High Court quashed the process issued against respondent No. 2 on the ground that the order of issuance of process 297 was clearly as a result of non application of mind by the trial Judge because when the process was issued against the petitioners, the Department and the State had merely filed a complaint case along with list of witnesses and documents, and none of the statements of witnesses or copies of documents was produced before the trial Judge, and that respondent No. 2 could not be prosecuted under section 5 of the Act, as the prosecution intended to charge him as principal offender alongwith respondent No. 1 the Company and there were no allegations in the complaint that respondent No. 2 either aided or abetted in the contravention of the licence conditions by respondent No. 1 Company. Allowing the Department 's appeal, ^ HELD: 1.1 The High Court had not cared to look into procedural law applicable to the factual situation before it. If a reference had been made to section 200, Proviso (a) of Code of Criminal Procedure, the proceedings against respondent No. 2 could not have been quashed. [299G H] 1.2 Records of investigation are not evidence in the instant case, and a complaint could not be quashed by referring to the investigation records, particularly when the petition of the complainant did allege facts which prima facie show commission of an offence. [300B] The High Court overlooked the fact that similar objections raised earlier were rejected by the same High Court, and this decision was upheld by the Supreme Court, and drew a distinction between the two situations, by saying that records of investigation were not available on the earlier occasion. [300A B] 1.3 The licensee was a company and a company by itself could not act, and has to act through someone. Since there was clear allegation that the Managing Director had committed the offence, acting on behalf of the licensee, there was no justification for quashing the proceedings against respondent No. 2. [300C] Order of the High Court is vacated. However, since the offence was committed 20 years back, it would not be in the interest of justice to allow a prosecution to start and the trial to be proceeded with at this belated stage even though respondent No. 2 has no equity in his favour and the delay has been mostly on account of his mala fide move. Hence the case against respondent No. 2 is directed to be closed forthwith. [300E,G]

N: Criminal Appeal Nos. 126 127 of 1972. (From the Judgment and Order dt. 21 4 72 of the Gujarat Court in Criminal Revision Appln. 490 491 of 1971). section K. Dholakia and R. Ramachandran for the appellants. section P. Nayar and M. N. Shroff for the respondents. The Judgment of the Court was delivered by KOSHAL, J. By this judgment we shall dispose of Criminal Appeals Nos. 126 and 127 of 1972 both of which have been instituted on certificates granted under Article 134(1) (c) of the Constitution of India by the High Court of Gujarat against the judgment dated April 21, 1972 of a Division Bench of that Court upholding the conviction of each of the appellants under section 4 or section 5 of the Bombay Prevention of Gambling Act 1887 (hereinafter referred to as the Bombay Acc) and a sentence of imprisonment coupled with fine. Appeal No. 126 of 1972 has been filed by eight persons. Appellant No. 1 has been convicted of an offence under section 4 of the Bombay Act for keeping a common gaming house, while his seven co appellants were found guilty of an offence under section 5 of that Act. In Criminal Appeal No. 127 of 1972, appellant No. 1 is the same person who figures as appellant No. 1 in the former appeal and the conviction recorded against him is one for an offence under section or, in the alternative, under section 5 of the Bombay Act. His two co appellants have earned a conviction under the section last mentioned. The two appeals have arisen from Criminal Revisions Nos. 490 A and 491 of 1971 both of which were dismissed by the High Court through the impugned judgment. In Appeal No. 126 of 1972, appellant No. 1 was said to be keeping or using house No. 1408 situate in Ward No. 1 of Himatnagar town as a common gaming house and appellants Nos. 2 and 3 were said to have been employed by him for carrying on in that house the business of betting on Worli Matka figures. On a search by the police, appellants Nos. 2 to 8 were found present in the house from which numerous betting slips and boards indicating the opening and closing figures of Worli Matka betting were recovered. A personal search of appellants Nos. 2 and 3 yielded counterfoils of the said slips. The allegations against the three appellants in criminal appeal No. 127 of 1972 were that all of them were found present for the purpose of gaming in the said house which was, as already stated, being rum by appellant No. 1 as a common gaming house. The only contention raised on behalf of the appellants before the High Court was that the said house had not been proved to be a "common gaming house" within the meaning of the definition of that expression occurring in section 3 of the Bombay Act. That definition runs thus In this Act, "common gaming house" means (i) in the case of gaming (a) on the market price of cotton, opium or other commodity or on the digits of the number used is stating such price, or (b) on the amount of variation in the market price of any such commodity or on the digits of the number used in stating the amount of such variation, or (c) on the market price of any stock or share or on the digits of the number used in stating such price, or G (d) on the occurrence or non occurrence of rain or other natural event, or (e) on the quantity of rainfall or on the digits of the number used in stating such quantity, or (f) on the pictures, digits or figures of one or more playing cards or other documents or objects bearing numbers, or on the total of such digits 36 or figures, or on the basis of the occurrence or non occurrence of any uncertain future event, or on the result of any draw, or on the basis of the sequence or any permutation or combination of such pictures, digits, figures, numbers, events or draws any house, room or place whatsoever in which such gaming takes place or in which instruments of gaming are kept or used for such gaming: (ii) in the case of any other form of gaming, any house, room or place whatsoever in which any instruments of gaming are kept or used for the profit or gain of the person owning, occupying, using or keeping such house, room or place by way of charge for the use of such house, room or place or instrument or other wise howsoever. " Clause (i) of the definition is obviously inapplicable to the cases in hand and the plea of the prosecution has throughout been that the house in question squarely falls within clause (ii) thereof. This plea was challenged before the High Court on behalf of the appellants with the contention that the house abovementioned had not been shown to be kept for use "for the profit or gain of the person owning, occupying . . " because, according to their learned counsel, the profit or gain mentioned in the definition must have a direct relation with the use of the premises or with the instruments of gaming and a mere expectation or probability of profit arising from gaming itself would not be sufficient to bring the place within the definition of a common gaming house. The High Court noted that there was a clear distinction between the language employed in the two clauses of the definition so that while the element of profit or gain of the person owning or occupying the premises in question was immaterial under clause (i), it was an essential requirement of clause (ii) which deals with forms of gaming not covered by sub clauses (a) to (f) of clause (i). The High Court therefore analyses the provisions of clause (ii) and formed the opinion that the expression "or otherwise howsoever" occurring therein had the widest amplitude and did not take its colour from the immediately preceding portion of the clause which employs the words "by way, of charge for the use of such house, room or place or instrument". Discussing the matter further the High Court was of the opinion that the requirement of the expression "for the profit and gain of the person owning, occupying. " was that the purpose of occupying or using the premises must be such profit or gain as meant a probability 37 Or expectation of profit or gain and not necessarily a certainty of it A and that the expression would embrace even a case where the keeper of the premises expected to gain by the process of gaming itself. In coming to this conclusion, the High Court relied upon two Division Bench judgments of the Bombay High Court reported in Emperor vs Dattatraya Shankar Paranjpe and another(1) and Emperor vs Chimanlal Sankalchand(Z) and rejected as untenable an opinion to the contrary expressed in some Allahabad cases and a single Bench decision of the Bombay High Court in State vs Vardilal Natuchand, (Criminal Appeal No. 551 of 1964 decided on the 14th of January 1965). The argument raised before the High Court on behalf of the appellants has been reiterated before us by their learned counsel, Shri section K. Dholakia, but on a consideration of the definition extracted above, we cannot agree with him. It is common ground between the parties that the present case is not covered by clause (i) of the definition so that what has to be considered is the language of clause (ii) thereof. For the applicability of the clause last mentioned, the following conditions have to be fulfilled: D (1) Instruments of gaming must be kept or used in the premises in question. (2) The keeping or using of the instruments aforesaid must be for the profit or gain of the person owning, occupying, using or keeping such premises. (3) Such profit or gain may be by way of charge for the use of the premises or of the instruments or in any other manner whatsoever. We fully agree with the High Court that the expression "or otherwise howsoever" is of the widest amplitude and cannot be restricted F. in its scope by the words immediately preceding it which lay down that the profit or gain may be by way of charge for the use of the premises. In this connection we may usefully quote from the judgment of Shah, Acting C.J., who delivered the judgment of the Division Bench in Emperor vs Dattatraya Shankar Paranjpe, (Supra). "It is essential for the prosecution under this definition to establish that instruments of gaming were kept or used in he house, room or place for profit or gain of the person owning, occupying, using or keeping the house, room or place. It may be done by establishing that the person did so either by a charge for use of the instruments of gaming or of the house, room or place, or otherwise howsoever. The (1) 25 Bombay Law Reporter 1089 = A.I.R. 1924 Bombay 184. (2) 47 Bombay Law Reporter 75 = A.I.R. 1945 Bombay 305. 38 expression "otherwise howsoever" appears to be very com prehensive, and does not suggest any limitation, such as is contended on behalf of the accused." . . . . . . . . . . . . . . . "We have heard an interesting argument on the question as to how far the words justify the somewhat restricted meaning which has been put upon the definition by the learned Judge of the Allahabad High Court; and after a careful consideration of the arguments urged on either side, and with great respect to the learned Judges, I have come to the conclusion that the words of the definition which we have to construe here would not have their full meaning if we were to accept the narrow construction. I do not think that on a proper construction of the definition the prosecution can be restricted for the purpose of proving that a particular house, room or place is a common gaming house, to the two alternatives mentioned in the case of Lachchi Ram vs Emperor( '). It is sufficient if the house is one in which instruments of gaming are kept or used for the profit or gain of the person keeping or using such place, i.e., where the person keeping or using the house knows that profit or gain 4 15 Will in all probability result from the use of the instruments of gaming. The profit or gain may not actually result from such use. But if profit or gain is the probable and expected result of the game itself and if that is the purpose of keeping or using the instruments, it would be sufficient, in my opinion, to bring the case within the scope of the definition. At the same time it is clear that the prosecution must establish that the purpose is profit or gain. This may be done either by showing that the owner was charging for use of the instruments of gaming or for the use of the house, room or place, or in any other manner that may be possible under the circumstances of the case, having regard to the nature of the game carried on in that house. " The opinion of Shah, Acting C.J., was noted with approval in Emperor vs Chimanlal Sankalchand (supra), the reasoning adopted in which may be reproduced with advantage: "Lachchi Ram 's case was considered by a Division Bench of this Court in Emperor vs Dattatraya (1923) 25 Bombay (1) A.l. R. 1922 All. 61. 39 Law Reporter (1089) and was dissented from. It was held that to constitute a common gaming house it was sufficient if it was one in which instruments of gaming were kept or used for the profit or gain of the person keeping or using such place, i.e., where the person keeping or using the house knew that profit or gain would in all probability result from the use of the instruments of gaming. The profit or gain may not actually result from such use. But if profit or gain is the probable and expected result of the game itself and if that is the purpose of keeping or using the instruments, it would be sufficient to bring the case within the scope of the definition. C "It is argued by Mr. Pochaji on behalf of the accused that even in that case it was observed that 'the prosecution must establish that the purpose was profit or gain and that that might be done either by showing that the owner was charging for the use of the instruments of gaming or for the use of the room or place or in any other manner. ' The words 'or in any other manner, ' (which were used there instead of the words appearing at the end of the definition ' 'or otherwise howsoever ') cannot be regarded as restricting the profit or gain of the owner or occupier of the house to profit or gain in a manner ejusdem generis with what pre cedes those words, and hence even the hope of making a profit out of the gambling itself is sufficient to satisfy the requirement of the definition of common gaming house. It may happen that the occupier of a house may allow it to be used by the public for gambling and he himself may take part in it in the hope of making a profit, although he may not necessarily make it every time. Such a hope is sufficient to make the house a common gaming house and the occupier liable for keeping such a house. " We fully agree with the interpretation of the definition of the term "common gaming house" occurring in section 3 of the Bombay Act as propounded in, the two Bombay authorities cited above, as also in the impugned judgment, that interpretation being in conformity with the unambiguous language employed by the legislature. The opinion to the contrary expressed in Lachchi Ram 's case (supra) and in other decisions is found to be incorrect. The learned counsel for the appellants concedes that if the interpretation placed on clause (ii) of the definition by the impugned judgment be upheld, the conviction of the appellants in the two appeals 40 is well founded. However, we may state that there is another good reason for up holding the conviction and that flows from the presumption which has to be raised under section 7 of the Bombay Act which states: "When any instrument of gaming has been seized in any house, room of place entered under section 6 or about the person of any one found therein, and in the case of any other thing so seized if the court is satisfied that the Police Officer who entered such house, room or place had reason able grounds for suspecting that the thing so seized was an instrument of gaming, the seizure of such instrument or thing shall be evidence, until the contrary is proved, that such house, room or place is used as a common gaming house and the persons found therein were then present for the purpose of gaming, although no ' gaming was actually seen by the Magistrate or the Police Officer or by any person acting under the authority of either of them: Provided that the aforesaid presumption shall be made, notwithstanding any defect in the warrant or order in pursuance of which the house, room or place was entered under section 6. if the Court considers the defect not: to be a material one. " It is not disputed that instruments of gaming were seized from the premises in question in both the appeals. That circumstances, according to the section, "shall be evidence, until the contrary is proved, that such house, room or place is used as a comon gaming house and the persons found therein were present for the purpose of gaming, although no gaming was actually seen . " . The profit or gain mentioned in clause (ii) of the definition and also the other requirements of that clause are a matter of peremptory presumption which has to be raised by the court as soon as the seizure of instruments of gaming from the place in question is proved, as is the case here. Admittedly, there is no evidence in rebuttal of the presumption which must therefore be raised and which furnishes a good basis for the conviction of the appellants. In the result both the appeals fail and are dismissed. P.B.R. Appeals dismissed.

The term "common gaming house" has been defined in section 3 of the Bombay `Prevention of Gambling Act, 1887. Under cl. (i) of the section a house or place in which any of six different types of gaming enumerated therein takes place or in which instruments of gaming are kept or used for such gaming would fall within the definition. Clause (ii) of that section states that in the case of any other form of gaming (a) any house, room or place whatsoever in which any instruments of gaming are kept or used (b) for the profit or gain of the person owning, occupying, using or keeping such house, etc., (c) by way of charge for the use of such house, room or instrument or otherwise howsover, would be a common gaming house. Certain instruments of gaming were seized by the police from the premises of appellant No. 1 in both the appeals. He was convicted for keeping a common gaming house while the other appellants were convicted of an offence under section 5 of the Act. On appeal, rejecting the appellants ' contention that a mere expectation or probability of profit arising from gaming, without establishing a direct relation with the use of the premises or with instruments of gaming, would not be sufficient to bring the place within the scope of the definition, the High Court held that the purpose of occupying or using the premises must be such profit or gain as meant a probability or expectation of profit or gain and not necessarily a certainty of it. F The argument urged before the High Court was reiterated in appeal before this Court. Dismissing the appeals, ^ HELD: 1. The expression "or otherwise howsoever" is of the widest amplitude and cannot be restricted to the words immediately preceding it, namely, "for profit or gain. by way of charge for the use of the premises." [37F] 2. For proving that a particular house, room or place was a common gaming house, it would be sufficient if it was shown that the house was one in which instruments of gaming were kept or were used for the profit or gain of the person keeping or using such place, that is, where the person keeping or using the house knew that profit or gain would in all probability la result from the use of the instruments of gaming. Profit or gain may not actually result from such use. Even the hope of making a profit out of the 34 gambling would be sufficient to satisfy the definition. In given case the occupier of a house may allow it to be used by the public for gambling and he himself may take part in it in the hope of making profit although he may not necessarily make it every time. Such a hope would be sufficient to make the house a common gaming house and the occupier liable for keeping such a house. At the same time the prosecution must establish that the purpose of keeping or using the instruments was profit or gain, which may be done either by showing that the owner was charging for use of the instruments of gaming or for the use of the house, room or place or in any other manner that may be possible having regard to the nature of the game carried [38E, 39E F] 3. The profit or gain and the other requirements mentioned in cl. (ii) of the definition are a matter of peremptory presumption which has to be raised by the court as soon as seizure of instruments of gaming from the place is proved. Section 7 which allows a presumption to be raised against the accused, provides that seizure of instruments of gaming from the premises shall be evidence, until the contrary was proved, that they were used as a common gaming house and the persons found therein were present for the purpose of gaming, although no gaming was actually seen. In the instant case there is no evidence in rebuttal of the presumption. [40F Gl

Appeals Nos. 575 and 576 of 1966. Appeals by special leave from the judgment and order dated October 5, 1963 of the Patna High Court in Misc. Judicial Cases Nos. 1274 and 1275 of 1960. D.Narasaraju, section K. Aiyar, R. N. Sachthey and B. D. Sharma, for the appellants (in both the appeals). M.C. Chagla and U. P. Singh, for the respondent (in, both the appeals). The Judgment of the Court was delivered by Shah, J. The respondent Ramniklal Kothari carried on busi ness in diverse lines as a partner in four different firms. He received from time to time income from the different registered firms as his share of profits. For the assessment year 1955 56 the respondent declared his share of profits from the four firms at Rs. 77,027/ and he claimed an allowance of Rs. 13,283/ being payment of salary and bonus to staff, expenses for maintenance and depreciation of motor car, travelling expenses and interest. The Income tax Officer, Hazaribagh, allowed the claim for interest as a permissible deduction and disallowed the rest. In the view of the Income tax Officer since the respondent did not carry on any independent business, the amount, except interest, were not claimable by the respondent on his own account; if at all, the amounts should have been claimed as business ex incurred in the accounts of the four firms. For the assessment year 1956 57 the respondent declared Rs. 53,540 as his share of the profits 'in the four firms and claimed an aggregate amount of Rs. 19,380 as admissible deduction on various grounds including Rs. 1,956 as interest paid by him. The Income tax Officer allowed the claim for interest and disallowed the rest of the claim. The Appellate Assistant Commissioner confirmed the orders of the Income tax Officer. But the Income tax Appellate Tribunal set aside the orders passed by the Income tax Officer and remanded the cases for examination of the nature of expenditure claimed to have been incurred by the respondent. In the view of the Tribunal share of the profits received by the respondent from the firms was taxable as business income, and appropriate deductions admissible under section 10(2) of the Income tax Act, 1922, were allowable in commuting the taxable income of the respondent, 862 The Tribunal then referred the following question in the two cases to the High Court of Patna for opinion under section 66(1) of the Indian Income tax Act, 1922: "Whether the expenses incurred by the assessee (who was not carrying on any independent business of his own), in earning income from various firms in which he was a partner, are allowable in law as deductions ?" The High Court of Patna answered the reference in favour of the respondent. With special leave granted by this Court, these two appeals have been preferred by the Commissioner of Incometax. Where a person carries on business by himself or in partner ship with others, profits and gains earned by him are income liable to be taxed under section 10 of the Indian Income tax Act, 1922. Share in the profits of a partnership received by a partner is " profits and gains of business" carried on by him and is on that account liable to be computed under section 10, and it is a matter of no moment that the total profits of the partnership were computed in the manner provided by section 1 0 of the Income tax Act and allowances admissible to the partnership in the computation of the profits and gains were taken into account. Income of the partnership carrying on business is computed as business income. The share of the partner in the taxable profits of the registered firms liable to be included under section 23(5)(a)(ii) in his total income is still received as income from business carried on by him. Counsel for the Commissioner accepted, and in our judgment counsel was right in so doing, that the share of the respondent from the profits of the firm was income from business carried on by the partner. Business carried on by a firm is business carried on by the partners. Profits of the firm are profits earned by all the partners in carrying on the business. In the individual assessment of the partner, his share from the firm 's business is liable to be taken into account under section 10(1). Being income from business, allowances appropriate under section 10(2) are admissible before the taxable income is determined. Section 23(5)(a)(ii) provides that the share of the partner in the profits and gains of a registered firm shall be included in the total income of the partner; and section 16(1)(b) requires that salary, interest, commission or other remuneration payable by the firm beside the share in the balance of profits is to be taken into account in determining the total income. But it is not thereby implied that expenditure Properly allowable in earning the profits, salary, interest, commission or other remuneration is not to be allowed in determining the taxable total income of the partner. The receipt by the partner is business income for the, purpose of 863 s.10(1), and being business income, expenditure necessary for the purpose of earning that income and appropriate allowances are deductible therefrom in determining the taxable income of the partner. The legal principles which we have endeavoured to set out are well settled by several decisions. In Shantikumar Narottam Morarji vs Commissioner of Income tax, Bombay City(1) the High ' Court of Bombay held that it is not correct as a general legal proposition that a, partner in a registered firm is not entitled to claim any deduction against the share of the profits included in his total income, the share having been arrived at on the assessment of the firm with regard to its profits. It would be open to the partner to claim a deduction provided he satisfies the taxing authority that such deduction represents necessary expenditure, the expenditure being incurred in order to enable him to earn the profits which are being subjected to tax. In Basantlal Gupta vs Commissioner of Income tax, Madras(2) the High Court of Madras held that in determining the income of an assessee who is a partner, deduction under section 10(2) of the Income tax Act may be made from his share of income in the firm even after the share has been ascertained. An allowance under section 10(2) will be permissible in proper cases even after the share has been ascertained if the expenditure sought to be deducted was incurred by the partner solely and exclusively for the purpose of earning his share in the income of the firm. In a case decided by the High Court of Patna in Jitmal Bhu ramal vs Commissioner of Income tax, Bihar & Orissa(3) a Hindu undivided family which was a partner in a firm claimed that the salary paid to its members for attending to the business of the firm was incurred as a matter of commercial expediency and for the purpose of earning profits from the partnership business. The Court held that in the assessment of the Hindu undivided family the expenditure would be properly claimed as an allowance under section 10(2) (xv) of the Indian Income tax Act, 1922. Jitmal Bhuramars case(4) was brought in appeal to this Court : see Jitmal Bhuramal vs Commissioner of Income tax, Bihar & Orissa(4). It was observed by this Court that a Hindu undivided family will be allowed to deduct salary paid to members of the family, if the payment is made as a matter of commercial or business expediency, but the service rendered must be to the family in relation to the business of the family. Counsel for the Commissioner relied upon an unreported judgment of the High Court of Calcutta in Messrs. Iswardas Subh (1) (2) (3) (4) (sc.) 864 karan vs Commissioner of Income tax, West Bengal(1). In that case a Hindu undivided family entered into a partnership agreement with third parties for the purpose of carrying on a rice mill business. It was not possible for any of the members of the family to attend personally to that business and, therefore, the family employed a Munim to look after its interest. Salary paid to the Munim was claimed as an allowance in determining the taxable income out of the share of the partnership income. Chakravartti, C.J., delivering the judgment of the Court was of the opinion that since the Munim did not look after the interest of the assessee in the firm 's business, but only as a servant of the assessee, the amount paid to the Munim was not an allowance admissible in determining the taxable income. In any event, observed the learned Chief Justice, the profits which have come to the assessee from the partnership have come as net profits, and after they have so come, there cannot be any further deduction on account of expenditure incurred not by the partnership but by the partner who received the share or incurred on any account whatsoever. We are unable to agree with the view expressed by the learn ed Chief Justice. The case was apparently not fully argued and counsel for the assessee conceded that the amount paid to the Munim was not a permissible deduction in assessing the taxable income of the family out of the share of the profits received from the firm. The appeals fail and are dismissed with costs. One hearing fee. V.P.S. Appeals dismissed.

The respondent was carrying on business in diverse lines as a partner in four different firms. For the assessment years 1955 56 and 1956 57 he declared his share of profits from the four firms and claimed deductions made up of salary and bonus to staff, expenses for maintenance and depreciation of motor car, travelling expenses and interest. The Incometax Officer and the Appellate Assistant Commissioner allowed only the claim for interest as a permissible deduction. The Tribunal set aside the orders and remanded the cases for the two years for an examination of the nature of expenditure claimed to have been incurred by the respondent, as, in its view, deductions admissible under section 10(2) of the Incometax Act, 1922 were allowable in computing the taxable income of the respondent. On the question, whether expenses incurred by the respondent (who was not carrying on any independent business of his own), in earning income from the various firms in which he was a partner, were allowable in law as deductions, the High Court held in favour of the respondent. In appeal to this Court, HELD : Section 23 (5) (a) (ii) of the Income tax Act, 1922 provides that the share of the partner in the profits and gains of a registered firm shall be included in the total income of the partner. The share so received by the partner is 'profits and gains of business ' carried on by him and is on that account liable to be computed under section 10. The receipt being business income for the purpose of section 10(1) expenditure necessary for the purpose of earning that income and allowances appropriate under section 10(2) are deductible therefrom in determining the taxable income of the partner. The facts that in computing the total profits of the partnership allowances admissible to the partnership in the computation of its profits and gains were taken into account, in the manner provided by section 10, or that section 16(1)(b) requires that salary, interest, commission or other remuneration payable by the firm besides the share in the balance of profit is to be taken into account, do not imply that in determining the taxable income of the partner, expenditure incurred by the partner in earning the profits, salary, interest. commission or other remuneration is not to be allowed. [862 C.H] Shantikumar Narottam Morarji vs Commissioner of Income tax, Bombay City, , Jitmal Bhuramal vs Commissioner of Incometax, Bihar & Orissa, and Basantlal Gupta vs Commissioner of lncome tax, Madras, , approved. M/s. Iswardas Subhkaran vs Commissioner of Income tax West Bengal, Income tax Reference No. 38 of 1952 dated June 2, 1953, of the Calcutta High Court, disapproved.

N: Criminal Appeal No. 440 of 1976. Appeal by Special leave from the Judgment and Order dated the 3rd September, 1975 of the Allahabad High Court in Criminal Misc. Case No. 3291 of 1972. Shankar Ghose, R.P. Bhatt, section R. Aggarwala, Praveen Kumar, and Anil Kumar Sharma for the Appellants. B.D. Sharma, Dalveer Bhandari, H. M. Singh, and R. section Yadav for the Respondent (State). 324 Yogeshwar Prasad and Mrs. Rani Chhabra for Municipal Board. The Judgment of the Court was delivered by VENKATARAMIAH, J. This appeal by special leave arises out of a complaint instituted under section 155 of the U.P. Municipalities Act, 1916 (Act. No. II of 1916) (hereinafter referred to as 'the Act ') by the Municipal Board of Pilibhit in the court of the Sub Divisional Magistrate, Puranpur, District Pilibhit against the Managing Director, the General Manager and the Cane Manager of L. H. Sugar Factory Pilibhit and one Bishan Swaroop, an employee of the said Sugar Factory, the appellants herein, alleging that they had brought by railway on November 30, 1967 into their godown at the railway siding situated within their Sugar Factory which was within the limits of the Pilibhit Municipal Board for purposes of consumption or use three wagon loads of sugarcane weighing in all 804 maunds for which octroi of Rs. 8.48 P. was payable under the bye laws of the Municipal Board published under notification dated May 18, 1960 without paying the said octroi. The said complaint was filed on September 12, 1968. During the proceedings before the Magistrate the appellants pleaded that since the payment of octroi by the factory of the appellants on sugarcane brought by railway had been exempted by an order of the Government of the United Provinces bearing G. O. No. 3613(1)/XI 395 dated November 20, 1936, the prosecution should fail. The relevant part of the Government order which is contained in a letter addressed by the Municipal Department of the Government of the United Provinces to the Commissioner of Rohilkhand Division reads thus: "I am directed to say that Government have, after full examination of the question of local taxation of sugarcane imported for the manufacture of sugar in factories situated within the limits of certain municipalities, decided that there is no justification for the continuance of taxes on rail borne cane which is delivered at the railway sidings situated inside the sugar factories because the municipalities concerned render no service with regard to it. The Governor acting with his ministers is accordingly pleased to exempt, under section 157(3) of the United Provinces Municipalities Act, 1916, with immediate effect, all such sugarcane from the octroi duty levied in the municipality of Pilibhit. The Municipal 325 Board of Pilibhit may be informed accordingly and also directed to take formal action to amend its octroi schedule to that effect. " After the above plea was raised, the complainant Municipal Board went on seeking adjournments in the criminal case and the case remained undisposed of for nearly four years. So the appellants filed a petition under section 561 A of the Code of Criminal Procedure, 1898 (Act No. V of 1 98) before the High Court of Allahabad in Criminal Misc. Case No. 3291 of 1972 in September, 1972 requesting the High Court to quash the proceedings on the ground that they were vexatious. In the High Court the appellants admitted that they had brought into the municipal area of Pilibhit sugarcane by railway as pleaded by the Municipal Board without paying octroi but submitted that octroi was not payable in view of the exemption granted by the State Government under section 157(3) of the Act. The High Court rejected the plea of the appellants and dismissed the petition filed by them on the ground that the case was governed by certain earlier judgments of the High Court and that the exemption was no longer available as the octroi claimed was a new levy not covered by it. Although there was some dispute about the existence of the Government order granting the exemption, the High Court held that such an order had been passed by the Provincial Government but it was of no avail to the appellants. Accordingly the High Court dismissed the petition filed by the appellants. Against the judgment of the High Court, this appeal has been filed. At the outset it should be stated that until the complaint was filed in the year 1968 the Municipal Board had not collected any octroi from the factory in question on sugarcane brought by railway. We are also informed that by an order communicated to all the Divisional Commissioners and the District Magistrates of the State of Uttar Pradesh on June 3, 1982, the levy of octroi on sugarcane brought by sugar factories into the municipalities in the State of Uttar Pradesh for crushing purposes is generally exempted irrespective of the mode of transport used to bring such sugarcane. The relevant part of that communication reads thus: "Sub:Exemption from octroi on sugarcane brought for crushing in sugar mills within municipal limits. 326 Sir, On the above subject, in continuation of the radiogram of the Government No. 2065 B/11 9 82 dated 27.5.1982, I have been directed to state that in exercise of the powers conferred under sec. 157(3) of the U.P. Municipalities Act, 1916, the Governor exempts sugarcane brought within municipal limits for crushing in sugar mills from octroi duty with immediate effect. You are requested to ensure that the order is carried out and acknowledge receipt of the Government order. Yours faithfully, Sd/ Shashi Kant Jain Under Secretary" This communication may, however, have no bearing on the period in question but only shows how the State Government has understood the scope of its power under section 157(3) of the Act. Since all the facts are admitted the only question which requires to be considered is whether on the relevant date the appellants were liable in law to pay octroi on sugarcane brought by them by railway into the sugar factory which was situated within the municipal limits of Pilibhit. Chapter V of the Act contains the provisions relating to municipal taxation. Section 128(1) (viii) and section 157 of the Act are in that Chapter. The relevant part of section 128 (as it stood in the year 1936) and section 157 are as follows: "128. Taxes which may be imposed (1) Subject to any general rules or special orders of the Local Government in this behalf, the taxes which a board may impose in the whole or any part of a municipality are (i) a tax on the annual value of buildings or lands or of both; (ii) a tax on trades and callings carried on within the municipal limits and deriving special advantages from, or imposing special burdens on, municipal services; 327 (iii)a tax on trades, callings and vocations including all employments remunerated by salary or fees; (iv) tax on vehicles and other conveyances plying for hire or kept within the municipality or on boats moored therein; (v) a tax on dogs kept within the municipality; (vi) a tax on animals used for riding, driving, draught or burden, when kept within the municipality; (vii)a toll on vehicles and other conveyances, animals and laden coolies entering the municipality; (viii)an octroi on goods or animals brought within the municipality for consumption or use therein;" (There are seven other clauses in section 128(1) which relate to other taxes). Exemption (1) A board may exempt, for a period not exceeding one year, from the payment of a tax, or any portion of a tax, imposed under this Act by any person who is in its opinion, by reason of poverty, unable to pay the same and may renew such exemption as often as it deems necessary. (2)A board may, by a special resolution confirmed by the Local Government in the case of cities and by the Commissioner in other cases, exempt from the payment of a tax, or any portion of a tax, imposed under this Act any person or class of persons or any property or description of property. (3)The Local Government may, by order, exempt from the payment of a tax, or any portion of a tax, imposed under this Act any person or class of persons or any property or description of property. " 328 It may be noted that while the power of exemption under sub sections (1) and (2) of section 157 of the Act is vested in the Municipal Board, the power of exemption under sub section (3) of section 157 is exercisable by the Local Government. Under sub section (2) of section 157 the resolution of the Municipal Board granting exemption should, however, be confirmed by the Local Government or the Commissioner, as the case may be. The first submission made before us is somewhat subtle and needs to be considered in some detail. It is argued that since the exemption had been given under the order dated November 20, 1936 on the ground that there was no justification for the continuance of the levy of taxes on rail borne sugarcane as the municipalities were not rendering any service in regard to it, the levy from which exemption had been given by that order was either a terminal tax or a fee and not a tax. Since what is being levied as octroi from the year 1960 was a tax, the order of exemption would be inapplicable to it. In support of the first part of this argument that the tax referred to in the order of exemption could only be a terminal tax reliance was placed on a decision of the Federal Court in The Punjab Flour and General Mills Co., Ltd. Lahore vs The Chief Officer, Corporation of the City of Lahore and the Province of the Punjab.(1) In that case the Federal Court had to construe the meaning of entry 58 of List I of the Seventh Schedule to the Government of India Act, 1935 which read as '58. Terminal taxes on goods or passengers carried by railway or air; taxes on railway fares and freights ' and of entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 which read as '49. Cesses on the entry of goods into a local area for consumption, use or sale therein '. The facts in that case were these: The Lahore Municipality had in the year 1926 imposed under its then existing power of taxation a tax called terminal tax calculated on the gross weight of consignments or per tail as the case might be at the rates and on the specified articles or animals, specified in the Schedule to the notification imposing the levy, imported into its municipal limits by rail or by road. This was superseded by a notification issued in the year 1938 by which the municipality gave notice of the imposition of a new tax called 'octroi (without refunds) ' which was to be calculated on the gross weight of consignments and on animals per tail at the rates and on the articles specified in the Schedule to the relevant notification 329 imported into its limits. This notification was superseded by a further notification of the year 1940 by which a tax called 'octroi (without refunds) ' was to be charged at the new rates with effect from May 11, 1940 on consignments including grain, imported into its limits. The Punjab Flour and General Mills Co. Ltd., Lahore which was importing for use or consumption grain into its factory which was situated within the Lahore municipal limits contended that the tax in question was a terminal tax, by whatever name it might have been called, falling under entry 58 of List I of the Seventh Schedule to the Government of India Act, 1935 and was not imposable in 1938 or in 1940 after the relevant provisions of the Government of India Act, 1935 had come into force. It was contended by the company that the tax in question did not fall under entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935. The Federal Court after explaining the difference between the terminal taxes and cesses which can be levied on goods imported into a local area for purposes of use, consumption or sale therein rejected the contention of the company with these observations: "There appears to us a definite distinction between the type of taxes referred to as terminal taxes in entry No. 58 of List 1 of the Seventh Schedule and the type of taxes referred to as cesses on the entry of goods into a local area in entry No. 49 of List II. The former taxes must be (a) terminal (and) (b) confined to goods and passengers carried by railway or air. They must be chargeable at a rail or air terminus and be referable to services (Whether of carriage or otherwise) rendered or to be rendered by some rail or air transport organisation. The essential features of the cesses referred to in entry No. 49 of List II are on the other hand simply (a) the entry of goods into a definite local area and (b) the requirement that the goods should enter for the purpose of consumption, use sale therein. It is to be noted that there is no limitation on the manner by which the goods to be subjected to such cesses may enter. There is no ground for suggesting that entry of goods by rail or air is any less contemplated than entry by waterway or road. It was argued by the appellant 's counsel that because by entry No. 20 of List I Federal railways and the regulation of railways and so forth is included in the Central Government Legislative List and by List II the Provincial 330 Government is mainly given powers of legislation over roads and internal waterways and transport thereon (entry No. 18), it should therefore be deduced that all taxation on rail and air borne goods must be imposed, if at all, under the powers conferred by entry No. 58 of List 1 and that powers of taxation conferred by entry No. 49 of List II must be confined to goods that enter by road or internal waterway only. We cannot accept this argument. It is not in our judgment justified by the wording of the various entries in the two Lists and would impose a limitation on local taxation under entry No. 49, in List II, which would often work most inequitably in practice between those importing goods by road or waterway and those who could import by rail or air. In our judgment there is no limitation to be implied in entry No. 49 List II, in regard to the manner in which goods may be transported into a local area. It follows that so far as rail borne goods are concerned the same goods may well be subjected to taxation under entry No. 58 of List I as well as to local taxation under entry No. 49 of List II. The grounds of taxation under the two entries are as indicated above, radically different, and there is no case for suggesting that taxation under the one entry limits or interferes in any way with taxation under the other. " It is true that in the course of the above decision it is observed that the element of service to be rendered is treated as an ingredient of a terminal tax but that does not mean that when tax is clearly laid on goods when they are brought into a local area for purposes of use, sale or consumption, it ceased to be a tax levied under section 128 (1) (viii) read with entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 merely because of the reason given for granting exemption under the order the Provincial Government dated November 20, 1936 issued under section 157 (3) of the Act. There is no doubt that the octroi which was being levied in 1936 when the exemption was granted and the subsequent levy imposed in the year 1960 are both taxes levied under the Act and fall within the State List both under the Government of India Act, 1935 and under the Constitution. It was not a terminal tax falling under entry 58 of List I of the Seventh Schedule to the Government of India Act, 1935. It does not 331 also fall under entry 89 of List I of the Seventh Schedule to the Constitution now. The said levy came within entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 and now falls under entry 52 of List II of the Seventh Schedule to the Constitution. The exemption granted in the year 1936 should be construed as an exemption from all taxation by way of octroi leviable and levied under the Act on rail borne sugarcane and that exemption would continue until it is either rescinded or modified or becomes inapplicable for any other reason. The second part of the above submission was that the levy was in the nature of a fee and not a tax as it had been described as a cess in entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935. There is no merit in this submission also. A cess may either be a tax or a fee. Whether a cess in a given context is a tax or a fee depends upon the purpose for which it is levied. The very decision relied on by the respondents in this connection, namely The Hingir Rampur Coal Co., Ltd. & Ors. vs The State of Orissa & Ors.(1) substantiates the above view. In that case this Court held that the cess imposed by the Orissa Mining Areas Development Fund Act, 1952 was a fee relatable to entries 23 and 66 of List II of the Seventh Schedule to the Constitution having regard to the object and the scheme of that Act and the purpose for which the cess collected under it was to be used. There is no doubt that in entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 the expression 'cesses ' is used in the sense of 'taxes '. In entry 52 of List II of the Seventh Schedule to the Constitution, the expression 'taxes ' is substituted in the place of the expression 'cesses ' which was in the former entry 49 in the Government of India Act, 1935 but the nature and content of the legislative power under both are the same. The decision of the Federal Court in the case of the Punjab Flour and General Mills Co. Ltd. (supra) itself shows that a cess levied in exercise of the power under entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 was a tax irrespective of any refund allowed or not allowed by the Government as can be seen from the following observation made by the Federal Court at page 26 of the Report: "We can see no cause whatsoever for holding that if cesses are imposed in pursuance of the powers conferred 332 by entry No. 49 in List II, any provision need be made for refunds. Whether or not there should be any refunds in respect of such cesses appears to us to be a matter open for determination by Provincial or local taxing authority, and the existence or non existence of a provision of system of refunds cannot affect the tax being or not being a cess within entry No. 49. " It is also significant that the word 'octroi in section 128 (1) (viii) of the Act is found in the group of taxes referred to in section 128. All sums received by a Municipal Board on account of the various levies made under section 128 have to be credited to the municipal fund under section 114 of the Act which can be utilised for the purposes of the Municipal Board as stated in section 120 of the Act. The sum received as octroi is also dealt with like any other tax. There is no element of quid pro quo between the person who pays the octroi and the Municipal Board. Hence octroi being a tax it was competent to the Provincial Government to make an order under section 157 (3) of the Act exempting railborne sugarcane from payment of octroi. The next submission urged before us is that the appellants having failed in an earlier writ petition in which they had questioned the validity of the levy of octroi cannot now be permitted to challenge the levy again in these proceedings. The facts bearing on the above contention are these: In the year 1960, by a notification published in the Official Gazette dated April 23, 1960 the Municipal Board of Pilibhit promulgated new rules relating to the levy of octroi and also published a fresh schedule of rates of octroi in the Official Gazette dated May 18, 1960. This was done with the previous sanction of the State Government under section 133 of the Act. The octroi imposed by these notifications related to number of articles including sugar, sugarcane etc. The appellants who were liable to pay octroi on many of those articles challenged in a petition filed under Article 226 of the Constitution in Civil Misc. Writ No. 2310 of 1960 on the file of the High Court of Allahabad the validity of the levy on the ground that the procedure followed in imposing octroi at the fresh rates was not valid It was also pleaded that sugar industry being a controlled industry levy of octroi on sugar was invalid. By that notification octroi had been imposed also on the import of sugarcane into the municipal limits of Pilibhit for purposes of sale, use or consumption. That petition was 333 dismissed by the High Court. It is urged that because that petition had been dismissed, it is not open to the appellants now to contend that the exemption granted under the order of 1936 was still available. The High Court has accepted this contention urged on behalf of the respondents. With due respect, we should say that the conclusion of the High Court on the above point is erroneous. In the earlier writ petition, the appellants had challenged the validity of the new octroi bye laws and the imposition of octroi on many articles brought by them into the municipal limits. By reason of the dismissal of the writ petition, they would no doubt be not entitled to reagitate the same question. In this case the question involved is a different one and that is whether even if the octroi bye laws and the imposition of octroi on sugarcane was good, the Municipal Board of Pilibhit is competent to recover octroi on sugarcane brought by rail by reason of the exemption accorded under section 157 (3). There is however, no dispute that octroi would be payable under the octroi bye laws when sugarcane is brought by the appellants by any other means of transport. In the circumstances, the High Court was in error in holding that the order of exemption granted under section 157 (3) was the same as any general rule or special order of the State Government referred to in sub section (1) of section 128 subject to which the Municipal Board may impose any tax referred to therein and the effect of the exemption granted in 1936 was also in issue in the earlier writ petition. In that writ petition the said question was neither directly nor constructively in issue in that case. An exemption becomes operative only when the tax is validly imposed under section 128. The restriction that may be imposed by any general rule or special order of the State Government under section 128 (1) affects the initial power of the Municipal Board to levy a tax. An order under section 157 (3) operates only after a tax is validly imposed with the sanction of the State Government or of the Commissioner as the case may be, as stated in section 133 of the Act. It is, therefore, open to the appellants to contend even after the dismissal of their earlier petition that they are entitled to the limited exemption granted by the order of 1936, generally in favour of a number of sugar factories in several municipal areas. The decision of the High Court of Allahabad in Vir Singh & Ors. vs Municipal Board & Anr.(1) also has no bearing on this question. 334 The next question is whether the nature of the tax levied under clause (viii) of section 128(1) of the Act has undergone any change after the commencement of the Constitution. The said clause has not been materially amended after the commencement of the Constitution. While it formerly read as 'an octroi on goods or animals brought within the municipality for consumption or use therein ' now it reads as 'an octroi on goods or animals brought within the municipality for consumption, use or sale therein ' by reason of the addition of the word 'sale ' by an amending Act passed subsequent to the commencement of the Constitution. The High Court has observed that after the commencement of the Constitution there has been a material change in the nature of octroi levied under the Act and on account of the framing of the new bye laws the exemption granted under section 157(3) would no longer be available for the following reasons: "It is significant that under Government of India Act, 1935, 7th Schedule, List II, item No. 49 provides cess on the entry of goods into the local area for consumption or use or sale therein. For the purposes of cess, it was necessary that the local body should render some service as principle of quid pro quo applies. Under the Constitution of India 7th Schedule, List II, item No. 52 provides for levying taxes on the entry of goods into the area for consumption or use or sale therein. The tax certainly is different from cess and as such different considerations arise for levying taxes. Learned counsel for the opposite party has also pointed out that by Act VII of 1953, section 128(1) (viii) has been substituted and as such more powers were conferred on the Municipal Board. The only difference is that octroi can now be imposed on goods meant for sale also. The fact remains that the Government order of 1936 was under section 157(3) of the Act and as such had the effect of allowing exemption with regard to levy of octroi duty on sugarcane according to the rules then in force. When the rules themselves were changed and new bye laws had been enforced, which had the sanction of State Government or the delegated authority that exemption could no longer apply unless fresh order was passed under section 157(3) of the Act. " 335 With respect, we should express our disagreement with the above view. As already observed by us, under the Government of India Act, 1935, octroi leviable under entry 49 of List II of the Seventh Schedule thereto was not a fee but was a tax. The new set of bye laws with the modified rates of octroi brought into force in 1960 by the Municipal Board though with the sanction of the State Government does not have the effect of rescinding or annulling the exemption granted under section 157(3) by the former Provincial Government. An order under section 157(3) can be withdrawn or modified by the State Government only. Even if the said provision is capable of a construction that when the new bye law or rates of tax imposed by the Municipal Board with the sanction of the Government under section 133 which are totally inconsistent with the exemption granted earlier under section 157(3) the exemption would cease, in the instant case we do not find any such irreconcilable inconsistency between the notification published in 1960 and the order of exemption made in the year 1936 which is in respect of a number of municipalities. While under the notification of 1960 octroi is payable on the import of sugarcane into the municipal limits for purposes of sale, use or consumption, by virtue of the order made in 1936 under section 157(3) sugarcane brought by rail and delivered at the railway siding inside the factory premises alone is exempted from the levy of octroi. Sugarcane brought by other means of transport would be governed by the notification issued in 1960. It is worthy of note that there is no provision in the notification of 1960 to the effect that the said exemption is either withdrawn or that sugarcane brought by rail would be taxable. The order of exemption does not say that it relates to a particular tax levied under a specific notification issued by a particular Municipal Board. It is in general terms and therefore the exemption would continue to operate even after the notification was issued in 1960 in supersession of the former notification in so for as rail borne sugarcane is concerned. If the contention urged by the Municipal Board is accepted, then it would indirectly arm a Municipal Board to get over any order of exemption passed by the State Government by merely amending its taxation bye laws. It may be noted here that in the case of municipalities other than city municipalities, the sanctioning authority is the Commissioner and not the State Government while under section 157(3) the State Government alone can grant exemption. Hence such a construction should be avoided. It is significant that for nearly eight years after the promulgation of the new bye laws no claim was made by the Municipal Board in respect of octroi payable on rail borne sugarcane 336 and subsequently the State Government by the letter dated June 3, 1982 referred to above has enlarged the scope of exemption by exempting from payment of octroi on sugarcane brought into the municipal limits of all municipalities for crushing in the sugar mills irrespective of the mode of transport employed for bringing it. On a consideration of all the contentions urged by the parties before us we hold that the Municipal Board of Pilibhit was not entitled to collect octroi on sugarcane brought into its municipal limits by the appellants by rail on the relevant date. The prosecution, therefore, is not sustainable. In the result, this appeal is allowed, the judgment of the High Court is set aside and the proceedings in the Magistrate 's court out of which this appeal has arisen are quashed. There will be no order as to costs. H.S.K. Appeal allowed.

The respondent Municipal Board filed a complaint in the trial court against the appellants under section 155 of the U.P. Municipalities Act, 1916 alleging that the appellants had brought by railway on November 30, 1967 at the railway siding in their sugar factory within the limits of the respondent for purposes of consumption or use certain quantity of sugarcane without paying octroi payable under the new bye laws of the respondent published on May 18, 1960. The appellants pleaded that since the payment of octroi on sugarcane brought by railway at the railway siding situated inside their factory had been exempted by U.P. Government 's order dated November 20, 1936 passed under section 157 (3) of the Act the prosecution should fail. As the respondent went on seeking adjournments and the case remained undisposed of for nearly four years, the appellants filed a petition under section 561 A of the Code of Criminal Procedure, 1898 in the High Court for quashing the proceedings on the ground that they were vexatious. The High Court dismissed the petition observing that after the commencement of the Constitution there has been a material change in the nature of octroi levied under the Act and on account of the framing of the new bye laws the exemption granted under section 157(3) of the Act would no longer be available. The High Court held that since a petition filed by the appellants challenging the notification containing the new bye laws was earlier dismissed by the High Court it was not open to the appellants now to contend that the exemption granted under the Order of 1936 was still available. In this appeal the respondent contended that the levy from which exemption had been given by the Order of 1936 was either a terminal tax or a fee and not a tax and since what was being levied as octroi from the year 1960 322 under the new bye laws was a tax, the order of exemption would not be applicable to it. Allowing the appeal, ^ HELD: The respondent was not entitled to collect octroi on sugarcane brought into its municipal limits by the appellants by rail on the relevant date. [336 B] The word 'octroi ' in section 128(1) (viii) of the Act is found in the group of taxes referred to in section 128. The sum received by a Municipal Board on account of octroi is also dealt with like any other tax. There is no element of quid pro quo between the person who pays the octroi and the Municipal Board. The octroi leviable under entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 was not a fee but was a tax. [332 B C, 335 A] A cess may either be a tax or a fee. Whether a cess in a given context is a tax or a fee depends upon the purpose for which it is levied. In entry 49 of List II of the Seventh Schedule of the Government of India Act, 1935 the expression 'cesses ' is used in the sense of 'taxes '. In entry 52 of List II of the Seventh Schedule of the Constitution the expression 'taxes ' is substituted in the place of the expression 'cesses ' which was in the former entry 49 in the Government of India Act, 1935, but the nature and content of the legislative power under both are the same. [331 C, E F] When tax is clearly levied on goods when they are brought into a local area for purposes of use, sale or consumption, it does not cease to be a tax levied under section 128(1) read with entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 merely because the municipalities concerned render no service with regard to it. G] The Punjab Flour and General Mills Co., Ltd., Lahore vs The Chief Officer, Corporation of the City of Lahore and the Province of the Punjab, ; and The Hingir Rampur Coal Co., Ltd., & Ors. vs The State of Orissa & Ors., ; referred to. The octroi which was being levied in 1936 when the exemption was granted and the subsequent levy imposed in the year 1960 are both taxes levied under the Act and fall within the State List both under the Government of India Act, 1935 and under the Constitution. It was not a terminal tax falling under entry 58 of List I of the Seventh Schedule to the Government of India, Act, 1935. It does not also fall under entry 89 of List I of the Seventh Schedule to the Constitution now. The said levy came within entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 and now falls under entry 52 of List II of the Seventh Schedule of the Constitution. The exemption granted in the year 1936 should be construed as an exemption from all taxation by way of octroi leviable and levied under the Act on rail borne sugarcane and that exemption would continue until it is either rescinded or modified by the State Government or becomes inapplicable for any other reason. The new set of bye laws brought into force in 1960 by the Municipal Board though with 323 the sanction of the State Government does not have the effect of rescinding or annulling the exemption granted under section 157(3) by the former Provincial Government. [330 G, 331, A B, 336 A D] There is no irreconcilable in consistency between notification published in 1960 and the order of exemption made in the year 1936. While under the Notification of 1960 octroi is payable on the import of sugarcane into municipal limits for purposes of sale, use or consumption, by virtue of the order made in 1936 under section 157(3) sugarcane brought by rail and delivered at the railway siding inside the factory premises alone is exempted from the levy of octroi. Sugarcane brought by other means of transport would be governed by the notification issued in 1960. There is no provision in the notification of 1960 to the effect that the said exemption is either withdrawn or that sugarcane brought by rail would be taxable. [335 C E] The High Court was in error in holding that the order of exemption granted under section 157(3) was the same as any general rule or special order of the State Government referred to in sub section (1) of section 128 subject to which the Municipal Board may impose any tax referred to therein and the effect of the exemption granted in 1936 was also in issue in earlier writ petition. In that writ petition the said question was neither directly nor constructively in issue. An exemption becomes operative only when the tax is validly imposed under section 128. The restriction that may be imposed by any general rule or special order of the State Government under section 128(1) affects the initial power of the Municipal Board to levy a tax. An order under section 157(3) operates only after a tax is validly imposed with the sanction of the State Government or of the Commissioner as the case may be, as stated in section 133 of the Act. It is therefore, open to the appellants to contend even after the dismissal of their earlier petition that they are entitled to the limited exemption granted by the Order of 1936. [333 D G] Vir Singh & Ors. vs Municipal Board & Anr., Civil Misc. Writ No. 3181 of 1960 decided on May 4, 1960, not relevant to the point raised.

Appeals Nos. 2012 and 201 of 1969. Appeals from the judgment and order dated September 23, 1968 of the Madras High Court in Writ Appeals Nos. 106 and 107 of 1968. A.K. Sen and A. V. Rangam, for the appellants (in both the appeals). T. A. Ramachandran, for the respondent (in both the appeals), 10 L694SupCI/71 818 The Judgment of the Court was delivered by Shah J. Motor Lorry No. K.L.R. 3919 driven along a highway from Coimbatore in the State of Madras towards the border of the State of Kerala was when searched by the Check Post Officer found to carry 85 bags of foodstuffs 45 bags of maids, 20 bags of flour and 20 bags of Khandsari sugar. The driver of the motor lorry was found to carry with him a bill of sale and a delivery note which covered 85 bags of flour. On the ground that without a bill of sale or delivery note maid a and Khandsari sugar were attempted to be transported, and, suspecting that there was an attempt at evasion of sales tax, the Check Post Officer by order dated March 2, 1965, confiscated the goods and gave an option to M/s. K. P. Abdulla & Bros. the owners of the goods to pay Rs. 1,000 'as penalty in lieu of confiscation. The owners of the goods then moved a petition in the High Court of Madras challenging the validity of section 42 (3) (a) of the Madras General Sales Tax Act, 1959, and for an order quashing the penalty, and another petition for a direction to the State of Madras and the Check Post Officer to return the goods seized and "confiscated while in transit". Ramakrishnan, J., rejected the petitions. In appeals filed by the owners, the petitions were allowed and the orders imposing penalty and confiscation of goods were set aside. The State of Madras has appealed to this Court with certificate granted by the High Court. Section 42 of the Madras General Sales Tax Act, 1959, provides "(1) If the Government consider that with a view to prevent or check evasion of tax under this Act in any place or places in the State, it is necessary so to do, they may, by notification, direct the setting up of a check post or the erection of a barrier or both, at such place or places as may be notified. "(2) At every check post or barrier mentioned in sub section (1), or at any other place when so required by any officer empowered by the Government in this behalf, the driver or any other person in charge of any vehicle or boat shall stop the vehicle or boat, as the case may be, and keep it stationary as long as may reasonably be necessary, and allow the officer in charge of the check post or barrier, or the officer empowered as aforesaid, to examine the contents in the vehicle or boat and inspect all records relating to the goods carried, which are in the possession of such driver, or other person in charge, who shall, if so required, 819 give his name and address and the name and address of the owner of the vehicle or boat as well as those of the consignor and the consignee of the goods. (3)The officer in charge of the check post or barrier, or the officer empowered as aforesaid, shall have power to seize and confiscate any goods which are under transport by any vehicle or boat and are not covered by, (i) a bill of sale or delivery note, (ii)a Goods Vehicle Record, a Trip Sheet or a Log, Book, as the case may be; and (iii)such other documents as may be prescribed under section 43 and 44; Provided that before ordering confiscation the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner; Provided further that the officer ordering the confiscation shall give the person affected option to pay in lieu of confiscation (a)in cases where the goods are taxable under this Act, in addition to the, tax recoverable, a sum of money not exceeding one thousand rupees, or double the amount of tax recoverable, whichever is greater; and (b)in other cases, a sum of money not exceeding one thousand rupees. " By sub section (2) the driver or any person in charge of the vehicle is required to stop the, vehicle and to allow the officer in charge of the check post or barrier to examine the contents in the vehicle, and to inspect all records relating to the goods carried in the vehicle. The officer in charge of the check post or barrier is invested with power by sub section (3) to seize and confiscate any goods which are carried and are not covered by the documents specified therein. The officer is required when ordering confiscation to give the person affected option to pay penalty in lieu of confiscation. Entry 54 of List II of the Seventh Schedule to the Constitution authorises the State Legislature to legislate in respect of taxes on the sale or purchase of goods. A legislative entry does not merely enunciate powers : it specifies a field of legislation and the widest import and significance should be attached to it. Power to legislate on a specified topic includes power to legislate in respect of 820 matters which may fairly and reasonably be said to be comprehended therein: see The United Provinces vs Mst. Atiqa Begum and Others(1); Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City(2); and Balaji vs Income tax Officer, Special Investigation Circle(3). , A taxing entry therefore confers power upon the Legislature to legislate for matters ancillary or incidental including provisions for preventing evasion of tax. Subsections (1) & (2) of section 42 are intended to set up machinery for preventing evasion of. sales tax. But, in our judgment, the power to confiscate goods carried in a vehicle cannot be said to be fairly and reasonably comprehended in the power to legislate in respect of taxes on sale or purchase of goods. By sub section (3) the officer in charge of the check post or barrier has the power to seize and confiscate any goods which are being carried in any vehicle if they are not covered by the documents specified in the three subclauses. Sub section (3) assumes that all goods carried in a vehicle near a check post are goods which have been sold within the State of Madras and in respect of which liability to pay sales tax has arisen, and authorises the check post officer, unless the specified documents are produced at the check post or the barrier, to seize and confiscate the goods and to give an option to the person affected to pay penalty in lieu of confiscation. provision so enacted on the assumption that goods carried in a vehicle from one State to another must be presumed to be transported after sale within the State is unwarranted. In any event power conferred by sub section (3) to seize and confiscate add to levy penalty in respect of all goods which are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax. A person carrying his own goods even as personal luggage from one State to another or for consumption, because he is unable to produce the documents specified in clauses (i), (ii) & (iii) of sub section (3) of section 42, stands in danger of having his goods forfeited. Power under sub section (3) of section 42 cannot be said to be ancil lary or incidental to the power to legislate for levy of sales tax. The High Court was of the view that the question which fell to be determined was concluded by the judgment of this Court in The Commissioner of Commercial Taxes and Others vs R. section Jhaver and Others,(4). That case arose under section 41(2) of the Madras General Sales Tax Act 1 of 1959, and this Court struck down the power conferred under the Madras General Sales Tax Act, 1959, upon the officer of the Government to seize such accounts, registers, records or other documents of the dealer as he may consider necessary, if he had reason to suspect that any dealer is attempted to evade payment of any tax, fee or other (1) (2) [1955] 1 S.C.R. 829 (3) ; (4) ; 821 amount. This Court held that tax and penalty cannot be levied before the first sale in the State, and on that account authority conferred to levy tax and penalty before the sale and to confiscate the goods for non payment was outside the legislative competence of the State That case may have no direct bearing in this case. In the present case, however, the power to confiscate the goods and to levy penalty in lieu of confiscation, when in respect of the goods found in a vehicle the driver of the vehicle is not carrying with him the documents specified therein, is not a provision which is ancillary or incidental to the power to tax sale of goods. The appeals therefore fail and are dismissed with costs. One hearing fee. Y.P. Appeals dismissed.

By sub section 3 of section 42 of the Madras General Sales Tax Act, 1959, the Officer in charge of a check post or barrier has the power to seize and confiscate any goods which are being carried in any vehicle if they are not covered by the documents specified in the three sub clauses. On the question whether the power to confiscate goods and to levy penalty in lieu of confiscation, when in respect of the goods found in a vehicle the driver of the, vehicle is not carrying with him the documents specified therein, is a provision which is ancillary or incidental to them power to legislate in respect of taxes on the sale or purchase of goods in entry 54 of List II of the Seventh Schedule to the Constitution, HELD : A taxing entry confers power upon the legislature to legislate for matters ancillary or incidental, including provisions for preventing evasion of tax. But the power conferred by sub section (3) to seize and confiscate and to levy penalty in respect of all goods which. are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax. [819 H 820 B; 820 E] Commissioner of Commercial Taxes & Ors., vs R. section Jhevar & Ors., ; , held inapplicable. United Provinces vs Mst. Atiqa Begum & Ors., [1940] F.C.R. 110; Navinchandra Mafatlal vs Commissioner of Income tax, Bombay City, [1955] 1 S.C.R. 829 and Balaji vs Income tax Officer, Special Investigation Circle, ; , referred to.

Appeal No. 616 of 1963. Appeal from the judgment and order dated September 21, 1961 of the Bombay High Court (Nagpur Bench) at Nagpur in Special Civil Application No. 2 of 1961. section G. Patwardhan, G. L. Sanghi, J. B. Dadabhanji, O. C. Mathur and Ravinder Narain, for the appellant. A. G. Ratnaparkhi, for the respondents. The Judgment of the Court was delivered by Shah, J. The first respondent Tukaram was a protected lessee within the meaning of that expression in the Berar Regulation of Agricultural Leases Act 24 of 1951 hereinafter called "the Berar Act" in respect of certain land at Monza Karwand in the Vidarbha Region (now in the State of Maharashtra). The appellant who is the owner of the land served a notice under section 9(1) of the Berar Act terminating the tenancy on the ground that he required the land for personal cultivation, and submitted an application to the Revenue Officer under section 8(1)(g) of the Berar Act for an order determining the tenancy. The Revenue Officer determined the tenancy by order dated July 2, 1957 and made it effective from April 1, 1958. In the meantime the Governor of the State of Bombay (the Vidarbha region having been incorporated within the State of Bombay by the ) issued Ordinance 4 of 1957 which was later replaced by Act 9 of 1958 known as the Bombay Vidarbha Region Agricultural Tenants (Prosection from Eviction and Amendment of Tenancy Laws) Act, 1957. By section 3 of Act 9 of 1958 a ban was imposed against eviction of tenants, and by section 4 all proceedings pending at the date of the commencement of the Act, or which may be instituted during the period the Act remained in force, for termination of any tenancy and for eviction of tenants were to be stayed on certain conditions set out in that section. Bombay Act 9 of 1958 and the Berar Act 24 of 1951 were repealed by the Bombay Tenancy and Agricultural Lands (Vidarbha Region and Kutch Area) Act, 99 of 1958, which may hereinafter be referred to as "the Tenancy Act". The appellant applied on May 15, 1958 to the Naib Tahsildar, Chikhli for an order for "restoration of possession" of the land. By order dated August 2, 1960 the Naib Tahsildar ordered "restoration of possession of the land" to the appellant. 597 In appeal the Sub Divisional Officer, Buldana set aside the order of the Naib Tahsildar because in his view the application was not maintainable in that the appellant had failed to comply with the requirements of section 38 of the Tenancy Act. The Revenue Tribunal confirmed the order of the Sub Divisional Officer. The appellant then moved the High Court of Judicature at Bombay praying for a writ or direction quashing the order of the Sub Divisional Officer, Buldana and of the Revenue Tribunal and for an order for restoration of possession of the land in pursuance of the order of Naib Tahsildar. The High Court set aside the order of the Naib Tahsildar, the Sub Divisional Officer and the Revenue Tribunal and remanded the case to the Tahsildar for dealing with the application made by the appellant in the light of the directions given in the judgment. The appellant appeals to this Court, with certificate under article 133 (1)(c) of the Constitution ranted by the High Court. The contention urged on behalf of the appellant is that the High Court should have restored the order passed by the Naib Tahsildar and should not have reopened the inquiry as directed in its judgment. It is necessary in the first instance to make a brief survey of the diverse statutory provisions in their relation to the progress of the dispute, which have a bearing on the question which falls to be determined. The land was originally in the Vidharbha region which before the Bombay Reorganisation, Act, 1956 was a part of the State of Madhya Pradesh, and the tenancy of the land was governed by the Berar Act. The first respondent was a protected lessee in respect of the land under section 3 of the Berar Act. Section 8 of the Act imposed restrictions. on termination of protected leases. It was provided that notwithstanding any agreement, usage, decree or order of a court of law, the lease of any land held by a protected lessee shall not be terminated except under orders of a Revenue Officer made on any of the grounds contained therein. Even if the landlord desired to obtain possession of the land for bona fide personal cultivation, he had to obtain an order in that behalf under section 8(1)(g). Section 9 enabled the landlord to terminate the lease of a protected lessee if he required the land for personal cultivation by giving notice of the prescribed duration and setting out the reasons for determination of the tenancy. A tenant served with the notice under sub section (1) could under sub section (3) apply to the Revenue Officer for a declaration that the notice shall have no effect or for permission to give up some other land of the same landholder in lieu of the land mentioned in the notice. Sub sections (4), (5), (6), (7) and (8) dealt with the proce 598 dure and powers of the Revenue Officer. The landlord had, after serving a notice under section 9 (1), to obtain an order under section 8 (1) (g) that possession was required by him bonafide for personal cultivation. Section 1 9 of the Berar Act prescribed the procedure for ejectment of a protected lessee. Sub section (1) provided: " A landholder may apply to the Revenue Officer to eject a protected lessee against whom an order for the termination of the lease has been passed under sections 8 or 9." Sub section (2) enabled a tenant dispossessed of land otherwise than in accordance with the provisions of the Act to apply to the Revenue Officer for restoration of the possession. By sub section (3) it was provided : "On receipt of an application under sub section (1) or (2), the Revenue Officer may, after making such summary enquiry as he deems fit, pass an order for restoring possession of the land to the landholder or the protected lessee as the case may be and may take such steps as may be necessary to give effect to his order." The appellant had obtained from the Revenue Officer concerned an order tinder section 8 ( 1) (g) determining the tenancy effective from April 1, 1958. But before that date Ordinance 4 of 1957 was promulgated. This Ordinance was later replaced by Bombay Act 9 of 1958. By section 4 of Bombay Act 9 of 1958 all proceedings either pending at the date of commencement of the Act or which may be instituted (during the period the Act remained in force) for termination of the tenancies were Stayed. The Tenancy Act (Bombay Act 99 of 1958) which was brought into force on December 30, 1958 repealed Bombay Act 9 of 1958 and the Berar Act and made diverse provisions with regard to protection of tenants. By section 9 of the Tenancy Act it was provided that no tenancy of any land shall be terminated merely on the round that the period fixed for its duration whether by agreement or otherwise had expired, and by section 19 it was provided that notwithstanding any agreement, usage, decree or order of a court of law, the tenancy of any land held by a tenant shall not be terminated unless certain conditions specified therein were fulfilled. Section 36 of the Tenancy Act set up the procedure to be followed, inter alia, for obtaining possession from a tenant after determination of the tenancy, and sub section (2) enacted that no landlord shall obtain possession of any ]an(], dwelling house 599 or site used for any allied pursuit held by a tenant except under an order of the Tahsildar. By sub section (3) it was provided that on receipt of an application under sub section (1) the Tahsildar shall, after holding an inquiry, pass such order thereon as he deems fit provided that where an application under sub section (2) is made by a landlord in pursuance of the right conferred on him under section 38, the Tahsildar may first decide as preliminary issue, whether the conditions specified in cls. (c) and (d) of sub section (3), and cls. (b), (c) and (d) of sub section (4) of that section are satisfied. That takes us to section 38. By the first sub section, as it was originally enacted, it was provided : " Notwithstanding anything contained in section 9 or 19 but subject to the provisions of sub sections (2) to (5), a landlord may after giving to the tenant one year 's notice in writing at any time within two years from the commencement of this Act and making an application for possession under sub section (2) of section 36, terminate the tenancy of the land held by a tenant other than an occupancy tenant if he bona fide requires the land for cultivating it personally :" (Amendment of this sub section by Maharashtra Act 5 of 1961 is not material for the purpose of this appeal.) By sub section (3) it was provided that the right of a landlord to terminate a tenancy under sub section (1) shall be subject to the conditions contained in cls. (a) to (e) (which need not, for the purpose of this appeal, be set out). Sub section (4) imposed on the right of the landlord certain restrictions in terminating the tenancy. A landlord may not terminate a tenancy (a) so as to reduce the area with the tenant below a certain limit, or (b) contravene the provisions of the Bombay Prevention of Fragmentation Act, or (c) where the tenant is a member of a co operative farming society, or (d) where the tenant is a co operative farming society. Sub section (4A) dealt with the special case of a member of armed forces ceasing to be a member of the serving force. Sub sections (5), (6) and (7) made certain incidental provisions. By sub section (1) of section 132, amongst others, the Berar Act and Bombay Act 9 of 1958 were repealed. By sub section (2) it was provided that nothing in sub section (1) shall, save as expressly provided in the Act, affect or be deemed to affect (i) any right, title, interest, obligation or liability already acquired, accrued before the commencement of the Act or (ii) any legal proceeding or remedy in respect of any, such right, title, interest, obligation or liability or anything done or suffered before the commencement of the Act, and any such 7Sup./65 10 600 proceedings shall be instituted, continued and disposed of, as if Act 99 of 1958 had not been passed. Sub section (3) provided : "Notwithstanding anything contained in sub section (1) (a) all proceedings for the termination of the tenancy and ejectment of a tenant or for the recovery or restoration of the possession of the land under the provisions of the enactments so repealed, pending on the date of the commencement of this Act before a Revenue Officer or in appeal or revision before any appellate or revising authority shall be deemed to have been instituted and pending before the corresponding authority under this Act and shall be disposed of in accordance with the provisions of this Act, and (b). . . . As from December 30, 1958 the Berar Act ceased to be in operation. But by sub section (2) of section 132 any right, title, interest, obligation or liability already acquired before the commencement of the Tenancy Act remained enforceable and any legal proceedings in respect of such right, title, interest, obligation or liability could be instituted, continued and disposed of as if Bombay Act 99 of 1958 had not been passed. But to this reservation an exception was made by sub section (3) that a proceeding for termination of tenancy and ejectment of the tenant or for recovery or restoration of possession of the land under any repealed provisions, pending on the date of the commencement of Act 99 of 1958 before a Revenue Officer. was to be deemed to have been instituted and pending before the corresponding authority under the Tenancy Act and was to be disposed of in accordance with the provisions of that Act. Therefore when a proceeding was pending for termination 'of the tenancy and ejectment of a tenant the proceeding had to be disposed of in accordance with the provisions of the Tenancy Act, notwithstanding anything contained in sub section If the expression "proceedings pending on the date of commencement of this Act" in section 132(3)(a) be literally interpreted, a somewhat anomalous situation may result. An application under section 19 of the Berar Act pursuant to an order under sections 8 and 9, instituted before the Tenancy Act was enacted, will have to be disposed of in accordance with the provisions of the Tenancy Act, but if no proceeding under section 19 be commenced the proceeding would not be governed in terms by sub section (3) and would by the operation of sub section (2) be instituted and continued as if the Tenancy Act was not passed. This problem engaged 601 the attention of the Bombay High Court in Jayantraj Kanakmal Zambad and Another vs Hari Dagdu and Others(1), in which the facts were closely parallel to the facts in the present case. An order determining the lease under sections 8 & 9 of the Berar Act was obtained by the landlord before the Tenancy Act was enacted, and at a time when Bombay Act 9 of 1958 was in force, and proceedings were started by the landlord for obtaining possession from the tenant, after the Tenancy Act was brought into force. The High Court held that the application by the landlord for possession against the tenant whose tenancy was determined by an order under the Berar Act has, if instituted after the Tenancy Act was brought into force, to be decided according to the provi sions of the latter Act by virtue of section 132(3) and not under the Berar Act, and that an order for termination of the lease under section 8 does not come to an end until an order is made under sub s.(3) of section 19. The Court therefore in that case avoided the anomaly arising from the words of sub section (3) by holding that an order made under section 8 or under section 9 of the Berar Act relating to termination of a lease does not terminate the proceeding, and it comes to an end when an order under section 19 of the Act is made. The High Court in the judgment under appeal, following the decision in Jayantroj Kanakmal Zambad 's case(1) held that the application filed by the appellant purporting to be under section 36(7) of the Tenancy Act must be regarded as an application under section 19 of the Berar Act and therefore be deemed to 'be a continuation of the application under sections 8 & 9 of the Berar Act. which was pending at the date when the Tenancy Act was brought into force, and to such an application section 38 (1) did not apply, but by virtue of sub section (3) cl. (a) of section 132 the application had to be disposed of in accordance with the provisions of the Tenancy Act, thereby making the provisions of section 38(3) and section 38(4) applicable thereto. Mr. Patwardhan for the appellant has, for the purpose of this appeal, not sought to canvass the correctness of the view of the judgment in Jayantraj Kanakmal Zambad 's case, but has submitted that the High Court has not correctly interpreted section 132(3) of the Tenancy Act. The appellant had acquired a right to obtain possession of the land on determination made by the Revenue Officer by order dated July 2, 1957 and a legal proceeding in respect thereof could be instituted or continued by virtue of sub section (2) of section 132 as if the Tenancy Act had not been passed. The exception made (1) I.L.R. F.B. 602 by sub section (3) of section 132 in respect of proceedings for termination of the tenancy and ejectment of a tenant which are pending on the date of the commencement of the Tenancy Act is limited in its content. Proceedings which are pending are to be deemed to have been instituted and pending before the corresponding authority under the Act and must be disposed of in accordance with the provisions of the Tenancy Act. By the use of the expression " shall be disposed of in accordance with the provisions of this Act" apparently the Legislature intended to attract the procedural provisions of the Tenancy Act, and not the conditions precedent to the institution of fresh proceedings. To hold otherwise would be to make a large inroad upon sub section (2) of section 132 which made the right, title or interest already acquired by virtue of any previous order passed by competent authority unenforceable, even though it was expressly declared enforceable as if the Tenancy Act had not been passed. The High Court was, in our judgment, right in holding that the application filed by the appellant for obtaining an order for possession against the first respondent must be treated as one under section 19 of the Berar Act, and must be tried before the corresponding authority. Being a pending proceeding in respect of a right acquired before the Act, it had to be continued and disposed of as if the Tenancy Act had not been passed [sub section (2)], subject to the reservation in respect of two matters relating to the competence of the officers to try the proceeding and to the procedure in respect of the trial. The appellant had obtained an order determining the tenancy of the first respondent. That order had to be enforced in the manner provided by section 19(1) i.e. the Revenue Officer had to make such summary inquiry as be deemed fit, and had to pass an order for restoring possession of the land to the landholder and to take such steps as may be necessary to give effect to his order. Since the repeal of the Berar Act the proceeding pending before the Revenue Officer would stand transferred to the Tahsildar. The Tahsildar was bound to give effect to the rights already acquired before the Tenancy Act was enacted, and in giving effect to those rights he had to follow the procedure prescribed by the Tenancy Act. Between sections 19(3) of the Berar Act and 36(3) of the Tenancy Act in the matter of procedure there does not appear to us any substantial difference. Under the Berar Act a summary inquiry has to be made by the Revenue Officer, whereas under the Tenancy Act the Tahsildar must hold an inquiry and pass such order (consistently with the rights of the parties) as he deems fit. But to the trial of the application for enforcement of the right acquired under the 603 Berar Act, section 38 of the Tenancy Act could not be attracted. Section 38 authorises the landlord to obtain possession of the land from a tenant, if the landlord bona fide required the land for cultivating it personally. In order to effectuate that right, the landlord must give a notice of one year 's duration in writing and make an application for possession under section 36 within the prescribed period. The section is in terms prospective and does not purport to affect rights acquired before the date on which the Tenancy Act was brought into force. The High Court was therefore also right in observing "The notice referred to in sub section (1) of section 38 could not obviously have been given in respect of proceedings which were pending or which are deemed to have been pending on the date of the commencement of this Act. It does not also appear that it was the intention of the Legislature that such proceedings should be kept pending for a further period until a fresh notice as required by sub section (1) of section 38 had been given. For the same reasons, the proviso to sub section (2) of section 36 will not apply in such cases. " But we are unable to agree with the High Court that sub sections (3) and (4) of section 38 apply to an application filed or deemed to be filed under section 19 of the Berar Act. The High Court appears to be of the view that by the use of the expression "shall be disposed of in accordance with the provisions of this Act" it was intended that "all the provisions of the Act, which would apply to an application made under sub section (2) of section 36, would also apply to application which are deemed to have been made under this section", and therefore it followed that sub sections (3) and (4) of section 38 applied to all applications for obtaining possession of the land for personal cultivation made under section 19 of the Berar Act which were pending or which were deemed to have been pending on the date of the commencement of the Tenancy Act. It may be noticed that sub section (3) of section 38 in terms makes the right of the landlord to terminate a tenancy under sub section (1), subject to conditions mentioned therein. If there be no determination of the tenancy by notice in writing under sub section (1), sub section (3) could have no application. The words of sub section (4) are undoubtedly general. But the setting in which the sub section occurs clearly indicates that it is intended to apply to tenancies determined under section 38(1). Large protection which was granted by section 19 of the Tenancy Act 604 has been withdrawn from tenants who may be regarded as con tumacious. By section 38(1) a landlord desiring to cultivate the land personally is given the right to terminate the tenancy, but the right is made subject to the conditions prescribed in sub section (3) and the legislature has by sub section (4) (a) sought to make an equitable adjustments between the claims of the landlord and the tenant. If sub section (4) be read as imposing a restriction on the determination of all tenancies, it would imply grant of projection to a contumacious tenant as well. The Legislature could not have intended that in making equitable adjustments between the rights of landlords and tenants contumacious tenants who have disentitled themselves otherwise to the protection of section 19 should still be benefited. Again if sub section (4) be read as applying to determination of every agricultural tenancy, its proper place would have been in sub section (3) of section 36, and the proviso thereto would riot have been drafted in the manner it is found in the Act. By cls. (c) & (d) of sub section (4) tenants who are cooperative societies or members of cooperative societies are not liable to be evicted, and if the opening words of sub section (4) are intended to be read as applicable to termination of all tenancies, whatever the reason, we would have expected some indication to that effect in section 19 of the tenancy Act. Again inclusion of sub sections (2) to (5) in the non obstante clause in sub section (1) supports the view that the expression "In no case a tenancy shall be terminated" being. part, of an integrated scheme means that a tenancy determined "or reasons and in the manner set out in sub section (1) of section 38 must be determined consistently with sub section (4), but where the determination of the tenancy is not under sub section (1) of section 38, sub section (4) has no application. The application made by the appellant is undoubtedly one for ejectment of the tenant and for recovery of possession. The Naib Tahsildar was competent to entertain the application. It is true that the application was orginally filed under sections 8 & 9 of the Berar Act on the ground that the, landlord required the land bona fide for his personal cultivation, but once an order was passed under section 8 (1) (g) by the Revenue Officer, the only inquiry contemplated to be made on an application under section 19 was a summary inquiry before an order for possession was made in favour of the landlord. At that stage, there was no scope for the application of the conditions and restrictions prescribed by sub sections (3) & (4) of section 38, for, in our view, those provisions do not apply to proceedings to enforce rights acquired when the Berar Act was in operation. 605 We therefore modify the order passed by the High Court and direct that the orders passed by the Tahsildar and the Revenue Tribunal will be set aside and the matter will be remanded to the Tahsildar for dealing with the application on the footing that it is an application to enforce the right conferred by sections 8 & 9 of the Berar Regulation of Agricultural Leases Act, 1951 and the provisions of section 38 of the Bombay Act 99 of 1958 have no application thereto. There will be no order as to costs in this appeal. Order modified and case remanded.

The land in dispute as in the Vidarbha region originally forming part of the State of Madhya Pradesh, to which the Berar Regulation of Agricultural Leases Act, 1951 (Berar Act) applied. Under the Act, a landlord requiring land for personal cultivation, could terminate a lease by issuing a notice to the lessee under section 9, and obtaining an order in that behalf from the Revenue Officer under section 8(1)(g) and then, applying to the Revenue Officer for ejectment of the lessee. On the landlord 's application, the Officer, after making such summary enquiry as he deems fit, may pass an order restoring possession to the landlord. After the merger of the Vidarbha region with the State of Bombay, the Bombay Tenancy and Agricultural Lands (Vidarbha region and Kutch Area) Act (Tenancy Act) was passed on December 30, 1958 repealing, the Berar Act. Section 36 of the Tenancy Act set up a procedure for obtaining possession from a tenant and provided that the landlord may apply to the Tahsildar who, after holding an enquiry, may pass such order as he deems fit. Section 38(1) authorised the landlord to obtain possession of land from a tenant, if the landlord, bona fide required the land for personal cultivation and in order to efecetuate that right, the landlord must give a notice of one year 's duration in writing and make an application for possession under section 36, within the prescribed period. By section 38(3) it was provided that the right of a landlord to terminate a tenancy under section 38(1) shall be subject to the conditions contained in cls. (a) to (e) of sub section (3) and sub ,section (4) imposed certain restrictions on the right of the landlord to terminate a tenancy. By section 132(2) any right already acquired before 30th December 1958 remained enforceable. and any legal proceeding in respect of such right, could be instituted, continued and disposed of as if the Tenancy Act had not been passed. But to this reservation an exception was made by section 132(3) that a proceeding pending on 30th December 1958, was to be deemed to have been instituted and pending before the corresponding authority tinder the Tenancy Act, and was to be disposed of in accordance with its provisions. The appellant had obtained from the Revenue Officer concerned an order, determining the tenancy of the respondent under section 8(1)(g) of the Berar Act. effective from 1st April 1958. On 15th May 1959 after the Tenancy Act had come into force the appellant applied to the Tahsildar under section 36 for an order for restoration of possession. The Tahsildar ordered restoration of possession. but on appeal the Sub Divisional Officer set aside the order on the ground that the appellant failed to comply with the requirements of section 38 of the Tenancy Act. and the Revenue Tribunal confirmed the order of the Sub Divisional Officer. In a petition for the issue of a writ, the High Court set aside all the orders of the subordinate tribunals and remanded the case to the Tahsildar for dealing with the application in the light of directions given in its judgment. The High Court 595 held that though section 36(1) of the Tenancy Act did not apply to the appellant 's application, by vitrue of section 132(3) the provision of section 38(3) and (4) were applicable to it. In his appeal to the Supreme Court, the appellant contended that the High Court had not correctly interpreted section 132(3) and that it should have restored the order passed by the Tahsildar Direct should not have reopened the enquiry. HELD : The Tahsildar was competent to entertain the appellant 's application for recovery of possession. Once an order was passed under section 8(1)(g) of the Berar Act by the Revenue Officer, the only enquiry contemplated to be made on an application under section 19 of the Act, was a summary enquiry before an order for possession was made in favour of the landlord. At that stage there was no scope for the application of the conditions and restrictions prescribed by section 38(3) and (4), for those provisions do not apply to proceedings to enforce rights acquired when the Berar Act was in operation. Therefore the Tahsildar should deal with the application on the footing that it was an application to enforce right conferred by sections 8 and of the Berar Act and that the provisions of section 38 of the Tenancy Act have no application thereto. [604 F H; 605 A B] The appellant had acquired a right to obtain possession of the land on the determination made by the Revenue Officer under section 8(1)(g) of the Berar Act. An order made under section 8 or section 9 of the Berar Act relating to termination of a lease does not terminate the proceeding it comes to an end only when an order under section 19 of the Act is made. Therefore, the application filed by the appellant purporting to be under section 36(2) of the Tenancy Act must be regarded its an application under section 19 of the Berar Act, and deemed to be a Continuation of the application under sections 8 and 9 of the Berar Act and pending at the date when the Tenancy Act was brought into force. Since the repeal of the Berar Act the proceeding would stand transferred to the Tahsildar, who was bound to give effect to the rights already acquired before the Tenancy Act was enacted under section 132(2), and in doing so, under section 132(3) he bad to follow the procedure prescribed by the Tenancy Act, But the exception made in section 132(3) is limited in its content. By the use of the expression 'shall be disposed of in accordance with the provisions of this Act '. the legislature intended to attract the procedural provisions of the Tenancy Act and not the conditions precedent to the institution of fresh proceedings. Therefore, a pending proceeding in respect of a right acquired before the Act, had to be continued and disposed of as if the Tenancy Act had not been passed, subject to the reservation in respect of two matters relating to the competence of the officers to try the proceedings and to the procedure in respect of the trial. Between section 19(3) of the Berar Act and section 36(3) of the Tenancy Act in the matter of procedure there is no substantial difference. But to the trial of the application for enforcement of the right acquired trader the Berar Act, section 38 of the Tenancy Act could not be attracted. Section 38(1) is in terms prospective and does not purport to affect rights acquired before the Tenancy Act was brought into force. Section 38(3) and (4) do not apply to an application filed or deemed to be filed under section 19 of the Berar Act. Section 38(3) in term makes the right of the landlord to terminate a tenancy under sub section subject to conditions mentioned therein. The words of section 38(4). are undoubtedly general, but the setting in which the sub section occurs indicating that it is also intended to apply to tenancies determined under section 38(1). Therefore where the determination of the tenancy is not under 38(1), sub sections (3) and (4) have no application. D, E, 60 A, B. F. G H, 603 B, E, F H] 596 Jayantraj Kanakanial Zambad vs Hari Dagdu, I.L.R. , approved.

Appeal No. 1899 of 1967. Appeal by special leave from the judgment and order dated August 24, 1966 of the Calcutta High Court in Income tax Reference No. 91 of 1962. G. C. Sharma, F. Kuwnaria, B. R. Diwan and P. K. Mukherjee, for the appellant. Jagadish Swarup, Solicitor General, P. L. Juneja, R. N. Sachthey and B. D. Sharma, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave from the judgment of the Calcutta High Court in an Income tax Reference. The assessee who is the appellant is a public limited company doing the business of jute and manufacturing of jute goods. The method of accounting followed by the assessee is the mercantile system. During the assessment year 1955 56 (the previous year ended on 31st December, 1954), the assessee claimed a deduction of Rs. 1,49,776/on account of sales tax determined to be payable by the sales tax authorities on the sales made by the assessee during the. aforesaid previous year. The sequence of dates may be mentioned. The income tax return was filed on 13th January, 1956. The demand notice was served by the Sales Tax authorities on the 21st November 1957. On 9th November, 1959, the assessee filed a revised return claiming the aforesaid deduction. The assessee had taken the order by which the demand for such tax had been created to the higher departmental authorities, as it was contesting its liability to the extent that had been determined. The Income tax Officer, however, completed the assessment on 11th March, 2 7 9 1960 before any final decision was given in the proceedings relating to the assessment of sales tax. According to the Income Tax Officer, the assessee was not entitled to claim the deduction of the aforesaid amount of sales tax inasmuch as it had denied its liability to pay that amount and had made no provision in its books with regard to the payment of that amount. The Appellate Assistant Commissioner confirmed the order of the Income tax Officer. The Appellate Tribunal dismissed the,, appeal of the assessee. The following question of law was referred by the Tribunal for the opinion of the High Court: "Whether on the facts and in the circumstances of the case, amount of Rs. 1,49,776/ . which was claimed by the assessee as a deduction on account of sales tax was deductible as a business expense?" The High Court was of the opinion that unpaid and disputed sales tax liability could not form the basis of a claim for deduction for the purposes of income tax. The reasoning of the High Court mainly was that for the purpose of claiming a deduction under section 10(2) (xv) or the Income Tax Act, 1922 (hereinafter called the "Act"), mere legal liability was not enough. There had to be an expenditure in the first place and it must be laid Out or expended wholly and exclusively for the purpose of such business. The High Court further held that unpaid and disputed sales tax could not be validly deducted in the computation of business income even under section 10 (1) of the Act. It has been submitted on behalf of the assessee that sales tax paid or unpaid would be admissible deduction under section 10 (2)(xv) as well as under section 10 (1). It is pointed out that if the method of accounting adopted by the assessee is cash system,, it would qualify for deduction only in the year in which it has been actually paid. If the method of accounting is mercantile system, then the deduction will be permissible in the year to which the liability relates irrespective of the point of time wheel the liability has actual been discharged. Section (10)5 provides that in sub section (2) "paid" means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed, under the section. The argument proceeds that in order 19 L1245 Su CI/71 280 therefore, that sales tax may qualify for deduction under section 10 (2) (xv), it has to be in the nature of an 'expenditure ' which has either been actually paid during the year of account or for the payment of which, the liability has been incurred in the accounting year, according as the method of accounting followed by the assessee is cash system or mercantile system. It is indisputable that the amount of sales tax paid or payable by the assessee is an 'expendi ture ' within the meaning of section 10 (2) (xv). The amount in question was thus a kind of expenditure about which there can be no doubt that it had been laid out or expended wholly or exclusively for the purpose of business carried on by the assessee. The submission on behalf of the assessee in the alternative is that apart from valid deductibility of sales tax as an expenditure under section 10 (2) (xv) of the Act, it is a permissible deduction even under section 10 (1). The profits of a business which are to be assessed to tax must be real profits and they have to, be ascertained on ordinary principles of commercial trading and commercial accounting. Where an assessee is under a liability or is bound to make certain payment from the gross receipts, the profits and gains can only be net amount after 'such an amount is deducted from the gross profits or receipts. In Commissioner of Income tax, West Bengal II vs Royal Boot House,(1) it was held that where the assessee followed the mercantile system of accounting and, without disputing the liability to pay the Sales Tax had made a provision for its payment in its account even though he had not actually paid the tax over to the authorities, the assessee was entitled to deduction in respect of the provision for sales tax from his income under section 10(2) (xv) of the Act. It was, pointed out that under the provisions of the Sales Tax statutes, the liability to pay the tax was not dependent upon assessment or demand but was an obligation to pay the tax either annually, quarterly or monthly, as the case might be. This case was and has been sought to be distinguished by the Revenue on the ground that the liability to pay the Sales Tax had not been disputed and the assessee had made a provision for its payment in its account As, will be presently (1) 281 seen this distinction is without substance and does not affect the true legal position. Now under all sales tax laws including the statute with which we are concerned, the moment a dealer makes either purchases or sales which are subject to taxation, the obligation to pay the tax arises and taxability is attracted. Although that liability cannot be enforced till the quantification is effected by assessment proceedings, the liability for payment of tax is independent of the assessment. It is significant that in the present case, the liability had even been quantified and a demand had been created in the sum of Rs. 1,49,776/ by means of the notice dated 21st November, 1957 during the pendency of the assessment proceedings before the Income Tax Officer and before the finalisation of the assessment. It is not possible ' to comprehend how the liability would cease to be one because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long as the contention of the assessee did not prevail with regard to the quantum of liability etc. An assessee that follows the mercantile system of accounting is entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the profits and gains were being computed. It can again not be disputed that the liability to payment of sales tax had accrued during the year of assessment even though it had to be discharged at a future date. In Pope The King Match Factory vs Commissioner of Income tax, Madras (1) a demand for excise duty was served on the assessee and though he was objecting to it and seeking to get the order of the Collector of Excise reversed, he debited that amount in his accounts. on the last day of his accounting year and claimed that amount as a deductible allowance on the ground that he was keeping his accounts on the mercantile basis. The Madras High Court had no difficulty in holding that the, assessee had incurred an enforceable legal liability on and from the date on which he received the Collector 's demand for payment and that his endeavor to get out of that liability by preferring appeals could not in any way detract from or retard the efficacy of the liability which (1) 28 2 had been imposed upon him by the competent excise authority. In our judgment, the above decision lays down the law correctly. The main contention of the learned Solicitor General is that the assessee failed to debit the liability in its books of accounts and, therefore, it was debarred from claiming the same as deduction either under section 10 (1) or under section 10 (2) (xv) of the Act. We are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although under the law, a deduction must be allowed by the Income Tax Officer, the assesses will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter. The assessee who was maintaining accounts on the mercantile system was fully justified in claiming deduction of the sum of Rs. 1,49,776/being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. it may be added that the liability remained in tact even after the assessee had taken appeals to higher authorities or Courts which failed. The appeal is consequently allowed and the judgment of the High Court is set aside. The question which was referred is answered in favour of the assessee and against the Revenue. The assessee will be entitled to costs in this Court and in the High Court. Appeal allowed.

The appellant was a public limited company doing the business of jute and manufacturing of jute goods. It followed the mercantile system of accounting. Before the Income tax Officer in connection with the assessment year 1955 56 the appellant claimed a deduction on account of assessed sales tax. The demand of sales tax waS contested by the appellant before the higher sales tax authorities but before the matter was finalised the Income tax Officer completed the assessment. He disallowed appellant 's claim for deduction of sales tax on the ground that the liability, to pay sales tax had not been accented by the appellant and no provision had been made in its books with regard to payment of the assessed amount. The authorities Linder the Act dismissed the appeals. The High Court in reference was of the opinion that unpaid and disputed sales tax liability could not form the basis of a claim for deduction In appeal by special leave to this Court the appellant submitted that sales tax paid or unpaid would be admissible deduction under s.10(2)(xv) as well as section 10(1) of the Income tax Act, 1922, and that where the mercantile system of accounting was observed the deduction would be permissible in the year to which the liability relates irrespective of the point of time when the liability has been actually discharged. HELD: Under all sales tax laws including the statute applicable to the present case the moment a dealer makes either purchase or sales which are subject to taxation, the obligation to pay tax arises and taxability is attracted. Although that liability cannot be enforced till the quantification is effected by assessment proceedings, the liability for payment of tax is independent of the assessment. In the present case the liability had even been quantified. The liability could not cease to be one merely because the assessee had taken proceedings before higher authorities. An assessee that follows the mercantile system of accounting is entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the profits and gains were being computed even though it had to be discharged at a future date. [281B F] Commissioner of Income tax West Bengal II vs Royal Boot House, and Pope The King Match Factory vs Commissioner of Income tax Madras, , applied. 278 The contention that since the assessee had failed to debit the liability in its books of accounts, it was debarred from claiming the same as deduction either under s.10(1) or s.10(2)(xv) of the Act could not be accepted. Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can existence or absence of entries in the books of accounts be decisive or conclusive in the matter. [282 C E] The appeal must accordingly be allowed.

minal Appeal No. 248 of 1960. Appeal by special leave from the judgment and order dated October 31, 1960, of the Rajasthan High Court in D. B. Criminal Appeal No. 290 of 1960 and D. B, Criminal Murder Reference No 7 of 1960. 591 R. L. Anand, C. L. Sareen and B. L. Kohli, for the appellants. S.K. Kapur and T. M. Sen, for the respondent 1961. September. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave from the judgment of the Rajasthan High Court. It arises out of an incident in which Bhimsen was murdered on May 8, 1959 at Mandi Pili Bangan shortly before 3 P.m. The prosecution story briefly was, that there was bad blood between Ramratan appellant and the members of the family of Bhimsen on account of panchayat elections in which they had supported rival candidates. Another cause for. enmity was that some time before the occurrences Ramratan appellant was prosecuted under section 307 of the Indian Penal Code and Bhimsen was cited as a prosecution witness in that case and Ramratan did not like that. Bhimsen and his father brought some gram for sale on the night between May 7/8, 1959, to Pili Bangan. Bhimsen returned to the village to bring more grain and came back at about10/11 A.M. on the 8th on his tractor trolly along with his brother Ram Partap. The gram was to be sold 'through Roopram and was stacked in front of his shop in the mandi. Ram Partap was apparently not interested in the sale; and had wandered away leaving his father Jawanaram and his brother Bhimsen at the shop. Shortly before 3 p.m. while the gram was being weighed by Lekhram weighman, the three appellants and two others (namely, Moman and Ramsingh) came up there armed with ,guns. Ramratan shouted that the enemy should not be allowed to escape as Bhimsen was trying to enter the shop of Roopram to save himself on seeing these persons. Before, however, Bhimsen could enter the shop of Roopram, Ramratan came in between and fired at him from a distance 592 about 5 feet. Bhimsen got injured and fell down and died soon after. Jawanaram raised his hands and asked the assailants not to kill Bhimsen but Hansraj appellant fired at him causing a wound on his left hand,. which resulted in a compound fracture. Maniram also fired at. Jawanaram but he dropped on the ground and pellets hit Lekhram weighman who was standing behind Jawanaram. Thereafter all the assailants ran away. Roopram had shut up his shop when the incident took place and he only came out When everything was over. Jawanaram asked him to send telegram to police station Suratgarh and told him the names of the five assailants. Thereafter jawanaram started for the police outpost in Pili Bangan to make a report; but Ramsingh constable met him on the way at a short distance from the shop of Roopram. Thereupon Jawanaram made a report (exhibit P 1) to Ramsingh then and there. While this report was being recorded, Ram Partap also turned up. After the report had been recorded, Jawanaram was sent to the hospital where his injuries were examined at 3 30 P.m. Ramsingh constable went to the spot after recording the report and found the dead body of Bhimsen lying in front of Roopram 's shop It appears that head constable gone outside and returned at 5 P.M. and started investigation thereafter. The Sub inspector arrived on the scene at about 6 p.m. and took over the investigation and. completed it. Thereafter the three appellants and two others who have been acquitted by the Sessions Judge were prosecuted for this murder. The case of the appellants was that they had not committed this offence and that they had been implicated on account of enmity They examined no evidence in defence. The main prosecution evidence consisted of the statements of Jawanaram, his son Ram Partap, Roopram and Lekhram as to what happened at the spot. Jawanaram related the whole story as given above, Ram Partap said that he had come near 593 the spot on seeing the assailants going that way and hid himself at some distance and saw the incident from there. Roopram 's statement was that he shut up his shop as soon as he heard some noise outside and did not see the assailants. When he came out, however, he was told by Jawanaram the names of the five assailants and saw Bhimsen lying dead. He had also heard three reports of gunshots from inside his shop. He saw Jawanaram and Lekhram were also there injured and Jawanaram went away shortly after for making the report. Sometime thereafter the police came to the spot and started investigation. Lekhram stated that he was there weighing the gram. Four or five persons armed with guns came there and shouted and fired two or three times with the result that Bhimsen, Jawanaram and he were injured and Bhimsen died immediately. But he was unable to say whether the five persons in the dock were the assailants. Because of certain answers that he gave in cross examination this witness was treated as hostile by the prosecution. The Sessions Judge relied on the statement of Jawanaram and convicted the three appellants. He however, gave the benefit of doubt to the other two assailants and acquitted them. He did not rely on the statement of Ram Partap as he was of the view that Ram Partap did not arrive in the Mandi till about 6 P.m. He also did not rely on the statement of Lekhram, which in any case was useless in so far as the connection of the appellants with the crime was concerned. As to Roopram he held that his statement that Jawanaram had told him the names of the assailants immediately after the incident was over when he came out of his shop could not be used as corroborate on of the statement of Jawanaram under section 157 of the Indian Evidence Act, as Jawanaram had not said in his statement in Court that he had told Roopram the names of the five assailants He was also doubtful whether the report (exhibit P 1) was 594 recorded at 3 P.m. and thought that it might have been recorded any time up to 6 P.m. But even so he placed full reliance on the evidence of Jawanaram only and convicted the three appellants, sentencing Ramratan to death and the other two to imprisonment for life. This was followed by an appeal to the High Court by the convicted persons. The Sessions Judge also made a reference for the confirmation of the sentence of death passed on Pamratan. The High Court dismissed the appeal. It also accepted the evidence of Jawanaram in the main. The High Court was further of opinion that Ram Partap was in Pili Bagan when the incident took place having come there with his brother Bhimsen at about10/11 A.M.; but the High Court did not think it fit to rely on his evidence as to the actual incident, for it thought that he had not been able to see it properly from where he said he was hiding. Further the High Court did not consider the evidence of Lekhram of much value as if, did not connect the appellants with the crime. But the High Court was of the opinion that Roopram 's statement that Jawanaram had told him immediately after the occurrence the names of the five assailants was admissible in evidence and could be used to corroborate the statement of Jawanaram. The High Court thought that this statement of Roopram was admissible under section 6 as well as under a. 157 of the Evidence Act. The High Court therefore upheld the conviction on the evidence of Jawanaram corroborated as it was by the evidence of Roopram. The High Court having refused to grant a certificate, the appellants applied to this Court for special leave which was granted; and that is how the matter has come up before us. Two main contentions have been urged before, us on behalf of the appellants. In the first place, it is urged that the High Court was not right in the view that the statement of Roopram was 595 admissible under section 6 and section 157 of the Indian Evidence Act and went to corroborate the statement of Jawanaram. Secondly, it is urged that once the statement of Roopram is ruled out as inadmissible there is only the statement of Jawanaram left to connect the appellants with the crime and in the circumstances of this case that solitary evidence should 'De held insufficient to bring home the guilt to the appellants. The first question therefore that arises in the appeal is whether the statement of Roopram to the effect that Jawanaram told him immediately after the incident, when he came out of his shop that the appellants and two others were responsible for the murder of Bhimsen and the injuries to Lekhram and himself, is admissible, either under section 6 or under section 157 of the Indian Evidence Act. We (lo riot think it necessary to consider whether this statement of Roopram is admissible under section 6 of the Evidence Act and shall confine ourselves to the question. whether it can be admitted under section 157 as corroboration of Jawanaram 's state ment. Learned counsclfor the appellants in this connection relies on Mt. Misri vs Emperor (1), and Nazar Singh vs The State (2) which support him and lay down that unless the witness to be corroborated says in his statement in court that be, had told certain things immediately after the incident to another person, that other person cannot give evidence and say that the witness bad told him certain things immediately after the incident. The argument is that the corroboration that is envisaged by section 157 is of the statement of the witness in court that he had told certain things to the person corroborating the witness 's statement, and if the witness did not say in court that he had told certain things to that person, that person cannot state that the witness had told him certain things immediately after the incident and (1) A.I.R. 1934 Sind 100, (2) A.I.R. 1931 Pepsu 66. 596 thus corroborate him. We are of opinion that this contention is incorrect. Section 157 is in these terms: ",In order to corroborate the testimony of a witness, any former statement made by such witness relating to the same fact, or at about the time when the fact took place, or before any authority legally competent to investigate the fact, may be proved. " It is clear that there are only two things which are essential for this section to apply. The first is that a witness should have Riven testimony with respect to some fact. The second is that he should have made a statement earlier with respect to the same fact at or about the time when the fact took place or before any authority legally competent to investigate the fact. If these two things are present, the former statement can be proved to corroborate the testimony of the witness in court. The former statement may be in writing or may be made orally to some person at or about the time when the fact took place, if it is made orally to some person at or about the time when the fact took place, that person would be competent to depose to the former statement and corroborate the testimony of the witness in court. There is nothing in section 157 which requires that before the corroborating witness deposes to the former statement the witness to be corroborated must also say in his testimony in court that he had made that former statement to the witness who is corroborating him. It is true that often it does happen that the witness to be corroborated says that he had made a former statement about the fact to some person and then that person steps into the witness box and says that the witness to be corroborated had made a statement to him about the fact at or about the time ",hen the fa ct took place. But in our opinion it is not necessary in view of the words of section 157 that in order to make corroborating evidence admissible, the witness to be corroborated must also say in his evidence that he had made such 597 and such statement to the witness who is to corroborate him, at or about the time when the fact took place. As we have said already what section 157 requires is that the witness to be corroborated must give evidence in court of some fact. If that is done, his testimony in court relating to that fact can be corroborated under section 157 by any former statement made by him relating to the same fact, and it is not necessary that the witness to be corroborated should also say in his statement in court that he made some statement at or about the time when the fact took place to such and such person. The words of section 157 are in our opinion clear and require only two things indicated by us above in order to make the former statement admissible as corroboration. We are therefore of opinion that the Sind and Pepsu cases were wrongly decided. Now let us see what happend in this case. Jawanaram was examined in court and stated about a certain fact (namely, that the assailants of Bhimsen, Lekhram and himself were five persons whom he named). The testimony of Jawanaram to be corroborated is his statement in court with respect to the fact that five persons attacked Bhimsen, Lekhram and himself. Section 157 makes his former statement with respect to the same fact admissible provided that the statement was made at or about the time when the fact took place or before any legal authority competent to investigate the fact. In this case we are concerned with the first of the two conditions necessary, namely, whether he had made that former statement relating to the same fact. at or about the time when the fact took place. The former statement which can be used as corroboration must be about the fact namely that Jawanaram had seen five persons attacking Bhimsen, Lekhram and himself and must have been made at or about the time when the fact took place i. e., when the attack was made. Now Roopram says that Jawanaram 598 had made the statement immediately after the incident was over that five persons including the three appellants had attacked Bhimsen, Lekhram and himself. This was therefore a former statement of Jawanaram at or about the time when the fact took place, namely, the attack by five persons on Bhim sen and others. This former statement can be proved by the person to whom it was made and can be used as corroboration of the evidence of Jawanaram. It was not necessary before the statement of Roopram as to what he heard from Jawanaram can be admissible for Jawanaram also to say in his testimony in court that he bad told Roopram immediately after the incident the names of the five assailants of Bhimsen and others. The former statement which can be used as corrobo ration is the, statement at or about the time the fact took place about which evidence has been given in court by the witness to be corroborated. Section 157 does not contemplate that before the; former statement can be proved in corroboration, the witness to be corroborated must also say in his testimony that he had made the, former statement. Of course if the witness to be corroborated also says in his testimony that he had made the former statement to someone that would add to the weight of the evidence of the person who gives evidence in corroboration, just as if the witness to be corroborated says in his evidence that he had made no former statement to anybody that may make the statement of any witness appearing as corroborating witness as to the former statement of little value. But in order to make the former statement admissible under section 157 it is not necessary that the witness to be corroborated must also, besides making the former statement at or about the time the fact took place, say in court in his testimony that he had made the former statement. We are therefore of opinion that even though Jawanaram did not say in his statement in court that he had told Roopram the names of the five assailants, Roopram 's 599 evidence that Jawanaram had made such a statement would be admissible under section 157 in corroboration of Jawanaram 's testimony as to the fact that five persons had attacked Bhimsen and others. As to the value to be attached to this corroboration in the present case, it is enough to say that Roopram is an independent witness and even though Jawanaram may not have said in evidence that he had told the names of the assailants to Roopram (perhaps by inadvertence as the High Court seems to think), we agree with the High Court in accepting the statement of Roopram that Jawanaram had immediately named the five persons who had attacked Bhimsen, Lekhram and himself. Thus the statement of Roopram corroborates the statement of Jawanaram in two ways : firstly, that there was an incident in front of his shop in which Bhimsen was murdered and Jawanaram and Lekhram were injured, arid secondly, proves the former statement of Jawanaram as to the persons who took part in the incident, thus corroborating his statement in court under s.157. This is not therefore a case where there is no corroboration of the testimony of Jawanaram, even if he were the solitary witness of the incident itself. As to the second point, namely, that we should not accept the solitary testimony of Jawanaram in the circumstances of this case, learned counsclrelies on Vemireddy Satyanarayan Reddy vs The State of Hyderabad (1). In that case there was the solitary testimony of one witness and it was urged that he was an accomplice. This Court hold that he was not an accomplice but remarked that "we would still want corroboration on material particulars in this particular case, as he is the only witness to the crime and as it would be unsafe to hang four people on his sole testimony unless we feclconvinced that he is speaking the truth. " The reason why this Court said so in that (1) ; 600 case was that though the witness was not an accomplice his position was considered somewhat analogous to that of an accomplice though not exactly the same. It was in those circumstances that this Court said that corroboration in material particulars would be required in the circumstances of that case. We are of opinion that those observations cannot be divorced from the context of that case. In the present case Jawanaram is neither an accomplice nor anything analogous to an accomplice; he is an ordinary witness who was undoubtedly present at the time the incident took place. '.rho case of such a solitary witness was considered by this Court in Vadivelu Thevar vs The State of Madras (1) and after referring to the earlier case it was held that as a general rule a court may act on the testimony of a single witness, though uncorroborated. It was further held that unless corroboration is insisted upon by statute, courts should not insist on corroboration except in cages where the nature of the testimony of the single witness itself requires as a rule of prudence, that corroboration should be insisted upon, and that the question whether corroboration of the testimony of a single witness was or was not necessary, must depend upon facts and circumstances of each case. These are the general principles which we have to apply in the case of the testimony of a single witness, like Jawanaram. But as we have held that in the present case there is corroboration of Jawanaram 's statement by his former statement deposed to by Roopram, it is not a case of altogether uncorroborated testimony of a single witness. In any case the evidence of Jawanaram has been considered by both the Sessions Judge and the High Court, and the Sessions Judge was prepared to convict the appellants on the sole testimony of Jawanaram while the High Court has also accepted that testimony, though it has added that it is corroborated by the statement of Roopram. In (1) ; 601 the circumstances when the evidence of Jawanaram has been accepted by both the courts, with or without corroboration, we see no reason to disagree with the conclusion of the two courts as to the value of Jawanaram 's evidence. The criticism made against the acceptance of the evidence of Jawanaram has been considered by the two courts and in spite of that criticism the two courts have come to the conclusion that the evidence of Jawanaram is reliable. We agree with the estimate of that evidence by the two courts and hold that Jawanaram 's evidence can be relied on in the circumstances of this case. Two main points are urged in this connection to shake the testimony of Jawanaram. It is said that Jawanaram has introduced Ram Partap in the first information report and that the Sessions Judge at any rate did not believe that Ram Partap was in Pill Bangan before 6 P.m. though the High Court held otherwise. Secondly, it is said that Jawanaram did not make the first report at about 3 P. M. and the Sessions Judge at any rate held that the report could have been made at any time upto 6 P.m. though the High Court held otherwise. We have been taken through the evidence in this connection and we agree with the High Court that even though Ram Partap might not have actually seen the incident he had definitely come to Pili Bangan at about II A.M. with his brother Bhimsen. There is the evidence of Ram Singh constable who says that Ram Partap came there when the report (exhibit P 1) was being written at about 3 P.m., which is supported by the fact that Ram Partap 's presence is mentioned in the report. The defence relied on a statement in the inquest report (Ex. P 4) in which it is mentioned at the end that Ram Partap son of Jawanaram also arrived during the course of the completion of the inquest report and was sent along with the corpse. This means that Ram Partap was not present when the inquest proceedings began and arrived there when they 602 were coming to an end. From this it cannot be inferred that Ram Partap was not in Pili Bangan at all before 6 P.m. There. is ample evidence, which the High Court has rightly believed, to show that Ram Partap had come to Pili Bangan at about 10 or 11 A. M. The other criticism with respect to the time when the report (exhibit P.1) was made is also in our opinion unjustified and the High Court was right in the view it took in that connection. There is no doubt that Jawanaram reached the hospital at 3 30 P.m. as deposed to by Dr. Sudershan Singh and that he was sent by the police. It is obvious therefore that Jawanaram had contacted the police before 3 30 P.m. It stands to reason that if he had contacted the police before 3 30 P.m. be must have made a report of the incident also and that is what exactly Ram Singh constable deposes. We agree with the High Court that in the circumstances there is no reason to disbelieve the statement of Ram Singh constable. The Sessions Judge was doubtful of the evidence of Ram Singh because he was of the view that documentary evidence from the police outpost at Pili Bangan had not been produced in support of Ram Singh 's statement. Ram Singh was asked about it and stated that though exhibit P 1 did not bear the despatch number as it was not sent to the outpost at all, he must have made entries in the diary of the outpost about his starting from there and his return and also about the occurrence, though he did not remember about it. After this statement of Ram Singh, the Sessions Judge was not right in disbelieving him because of the non production of the entries from the outpost. It would have been better if the prosecution had produced those entries ; but even if the prosecution rested upon the oral testimony of Ram Singh, the Sessions Judge could and should himself have sent for those entries, if he was inclined to disbelieve the oral testimony of Ram Singh constable who appears 603 to be a reliable witness. In the circumstances we are of opinion that the view of the High Court that the report was written at 3 P. m. as stated by Ram Singh constable is correct. The evidence of Jawanaram therefore cannot be rejected on these two grounds. Lastly it was urged that Jawanaram bad named five assailants and at least two have been acquitted, and that shows that Jawanaram is not wholly reliable. It is enough to point out that the Sessions Judge gave the benefit of doubt so far as two accused persons were concerned. He did not hold that Jawanaram 's evidence was false with respect to those two persons. Apparently those two persons did not take any active part in the incident and that may have led the Sessions Judge to give them the benefit of doubt; that is, however, no reason for disbelieving the testimony of Jawana ram. We are therefore of opinion that the two courts below were right in relying on Jawanaram. His evidence is corroborated undoubtedly by other witnesses to the extent that the incident did take place at the shop of Roopram; his statement that the three appellants and two others were the assailants is corroborated by his former statement made immediately after the incident was over and deposed to by Roopram. In the circumstances we are of opinion that the appellants have been rightly convicted. Two of the appellants (namely, Maniram and Hansraj) have been sentenced to imprisonment for life while Ramratan has been sentenced to death. The reason why Ramratan has been sentenced to death is that he was the man who shot Bhimsen. He was also the leader of this group and the enmity was directly between him and the members of the family of Jawanaram. We agree with the High Court that there are no extenuating 604 circumstances which would justify the reduction of sentence of death passed on Ramratan. The appeal therefore fails and is hereby dismissed. Appeal dismissed.

The appellants were convicted on a charge of murder on the sole testimony of one witness. Another prosecution witness deposed that the former witness told him immediately after the incident that the appellants were responsible for the murder. The question which arose was whether it was necessary for the former witness also to depose in Court that he had told the names of the murderers to the other witness immediately after the occurrence or whether his former statement be proved under s.157 of the Indian Evidence Act to corroborate his. testimony without his deposing about it in Court. Held, that it was not necessary under section 137 of the Evidence Act that the witness to be corroborated must also say in his testimony in court that he had made the former statement to the witness who was corroborating him. What s.157 required was that the witness to be corroborated must give evidence in court of some fact and if that was done his testimony in court relating to that fact could be corroborated by any former statement made by him relating to the same fact. Mt. Misri vs Emperor, A.I.R. 1934 Sind 100 and Nazar Singh vs The State, A.I.R. 1951 Pepsu 66, held as wrongly decided. As a general rule a court may act on the testimony of a single witness, though uncorroborated and the question whether corroboration of the testimony of a single witness was or was not necessary must depend on the circumstances of each case. Vemireddy Satyanarayan Reddy vs The State of Hyderabad, ; , distinguished. Vedivelu Thevar vs The State of Madras, ; , followed.

Civil Appeals Nos. 814 815 of 1968. From the Judgment and Order dated 7th September. 1966 of the Andhra Pradesh High Court in Writ Appeal Nos. 71 and 72 of 1964 respectively. R. V. Pillai, for the appellant. P Ram Reddy and C. N. Rao, for the respondents. The Judgment of the Court was delivered by KRISHNA IYER J. A forest contractor the appellant who had allegedly excess felled trees beyond the permitted number under two contracts entered into by him with the State of Andhra Pradesh, was directed by the Conservator of Forests the firs, respondent to suffer two. levies. One item represented the loss sustained by the State on account of the illicit cutting and the other was a penalty imposed under r. 29 of the Forest Contract Rules (for short, the Rules) issued in exercise of the powers conferred under sections 44 and 79 of the Hyderabad Forest Act, 1355F (for short, the Act). The factual story out of which the legal controversy springs may be narrated in simple terms. Admittedly, the appellant was granted two forest contracts to fell and remove a specific number of trees from government forest, in accordance with the Act and the Rules. The Contracts were of two years ' duration ending with 31st December 1960. It was found by the Forest officers that the appellant contractor had felled more trees and so he was given a notice calling for his explanation about this detected breach of condition. In C.A. 814 of 1968 such notice was issued on June 25, 1960 but no explanation was forthcoming. So the Conservator determined the amount representing the loss caused by the unauthorised cutting of trees. On July 22, 1960 the District Forest officer informed the appellant that the Conservator of Forest, who is the appropriate authority under the Rules, had fixed Rs. 11,426/ as representing the loss sustained by Government and Rs.11,250/ as penalty under r. 29. The contractor. thereupon, prayed for re enumeration of the 772 trees cut from the forest by his application, dated July 30, 1960. He was informed by the forest authorities, by communication dated August '24, 1960 to check the stumps in the coupe as desired by the petitioner before September 15, 1960. This opportunity was also not availed of by the appellant. Consequently, the Conservator levied a penalty, as earlier proposed. Thus there were two items (1) the loss caused by illicit cutting; (ii) the penalty imposed under the rules for breach of conditions of the contract. There were three small amounts of fine also, all together resulting in a sum of Rs. 23,088.00. Eventually, the contract was terminated on December 28, 1960 under r. 30 of the Rules. Long later, in January 1962, the amount stated above was sought to be realised by revenue recovery process by the Tahsildar, `by his attachment order, dated January 8, 1962. Thereupon a writ petition was filed by the appellant challenging the demand. He succeeded before the learned Single Judge but a Division Bench, in appeal carried by the State, reversed this order and the appellant has invoked the jurisdiction of this Court under article 133(1) (a) and (b) of the Constitution. In C.A. 815 of 1968 a similar excess felling by the same contractor was detected by the concerned officials and notice was issued to the appellant to explain how he had felled 255 trees in excess of the contractual figure. The appellant denied the illicit felling whereupon a date was fixed for checking the coupe in his presence, as requested by him. The contractor however did not avail himself of the opportunity so afforded despite a second date for inspection being fixed to suit his convenience. Eventually the Conservator of Forests fixed the loss sustained by government on account of the illicit felling of trees and also the penalty for breach of the conditions of the contract. This was done on October 16, 1960 and the appellant was asked to pay the sum by notice. dated October 28, 1960. On the same date, the lease was also terminated. Long later, on January 9, 1962 proceedings for realisation of the amounts were initiated by the Tahsildar. This step drove the contractor to move a writ petition, which shared the fate, at the single Judge 's level and in appeal, of the sister writ petition already adverted to. In the same manner he has moved this Court in appeal, by certificate. Two points were urged by Mr. R V. Pillai, learned counsel for the appellant, one relating to the loss assessed and sought to be realised by the State under the two contracts on account of excess felling, the other relating to the imposition of penalty under r. 29 and its validity. The first point does not survive because in both the writ petitions which were disposed of together by a common judgment the learned Single Judge rejected the contention with the observation 'I find no substance in the arguments advanced in this behalf . No provision was brought to any notice which disentitles the government to collect those items '. If the appellant had been aggrieved by the negation of his plea under this head he should have challenged it in appeal which he did not. Thus the matter has become final and he` cannot, in this Court, revive it at all. There is only a single question that therefore deserves our consideration. 773 Was the penalty in the two cases imposed validly ? The learned Single Judge held, on a study of rr. 29 and 31 that the impost was illegal for reasons which we find difficult to accept. The Division Bench, in appeal, disagreed with the learned Single Judge for reasons which are unclear although our conclusion concurs with theirs. The rules regulating the consequence of a breach of the conditions of forest contracts were originally promulgated in Urdu in the Hyderabad State but we have been handed up the Manual of Civil Laws, Andhra Pradesh, which contains those rules in English. Rule 29(3) reads slightly obscurely but, in the absence of the original Urdu rules, we have to make do with the English version. There are two types of penalties which we may conveniently designate as 'major ' and 'minor ', in the contemplation of the Forest Rules Rule 29 deals with the major penalties while r. 31 relates to minor penalties. Where the breach of the conditions of the contract committed by the forest contractor is serious, the contract itself is to be terminated and a substantial penalty is to be imposed which 'shall not exceed one quarter of the total consideration paid by the contractor '. If the branch is of lesser significance, then the authority may not propose to terminate the contract on account thereof but may recover a portion of the 'whole penalty provided for in r. 29 ' not exceeding Rs. 100/ . In short, if the contravention is grave, the contract is cancelled and a heavy penalty imposed but if the breach is inconsequential the contract continues but a lighter penalty is imposed. In the present case it is apparent that the authorities terminated the contract and it is equally clear that the breach was serious. Rule 31 which deals with trivial breaches and lighter penalties is inapplicable. The only question then is whether the exercise of the power to impose a penalty under r. 29 has been (a) in compliance with natural justice; and. (b) in fulfilment of the conditions precedent for the exercise of the power. The facts we have set out earlier make it clear that an opportunity had been afforded in the case of both the contracts before finally quantifying the penalty to be levied but, the contractor did not avail himself of the opportunity. While it is clear that in the absence of a statutory exclusion of natural justice any exercise of power prejudicially affecting another must be in conformity with the rules of natural justice, we are satisfied that in the present case there is no foundation for the grievance of the petitioner on this score. The substantial issue is as to whether the termination of the contract for breach of conditions should precede the impost of penalty. According to Shri Pillai, that is the meaning of r. 29 read in the light of r. 30(3). There is seeming varbal support for this contention but n closer scrutiny pricks the bubble. Rule 29 may well be read at this stage '29. (1) Penalty on termination of a contract for breach of conditions. Every forest contract shall be in writing in the form annexed hereto and shall contain a provision whereby the 774 forest contractor binds himself to do all the duties and acts A required to be done by or under the contract, and covenants that he and his servants and agents shall abstain from all the acts forbidden by or under such contract. (2) The sums to be mentioned in a forest contract as payable in case of a breach of any such stipulation shall not exceed one quarter of the total consideration to be paid by the contractor, and shall be recoverable in accordance with the provisions of the Hyderabad Forest Act 1355 F and of this rule: Provided that where such consideration is not an ascertained amount the forest officer executing the contract shall make an estimate of the total amount that would be payable if the contract were fully complied with, and such estimate shall be deemed to be., for the purpose of this sub rule, the total consideration to be paid by the contractor. (3) This sum shall be realized from the contractor if the contract has been duly terminated in accordance with the provisions of rule 30, and then only under the written order of the forest officer executing the contract." Shri Ram Reddy, for the respondent, urges that ascertaining the amount which is to be levied as a penalty need not be preceded by the termination of the contract. Indeed, according to him, it is only` if there is an investigation of the nature of the breach, the quantum of loss inflicted on the State and other circumstances that a decision as to whether the contract should be terminated or not can be taken. If it is found that the breach of condition be willful and the damage substantial, the penalty will be imposed under r. 29 and a decision will be taken for termination of the contract. However, the sum fixed as penalty shall not be realised from the contractor until the contract has been duly terminated in accordance with the provisions of r. 30. This is because you cannot keep a contract alive and claim that a grave breach of conditions has been committed. That would be too inconsistent a stance for the State to adopt. It is true that the termination of the contract under r. 30 is a condition precedent to realisation of the penalty from the contractor but realisation is different from imposition. The forest authorities quantify and impose the penalty. The revenue authorities as well as the forest authorities adopt the various steps prescribed in r. 30(3) for realisation of the sum In the present case it was the Tehsildar who sought to realise the penalty and he did this after the contract was terminated. Indeed, r. 30(3) uses the expression 'recover ' which is in consonance with 'realise ' in r. 29(3) . We think that the true meaning of rr. 29 and 30, read together, is that the forest authorities must move from stage to stage in the following manner. Once they detect a breach, they must investigate to understand and estimate, the nature and degree of damage caused by the breach. If it is serious, they must proceed to ascertain the 775 sum to be fixed as penalty. In doing this, a reasonable opportunity must be given to the affected party. After that the penalty shall be quantified and the contract shall be terminated, in the event of the authorities coming to the decision that the breach is grave enough for that drastic step. Once the contract is terminated, the last procedure is realisation which can in no case be before the termination of the contract. The realisation of the penalty may be in one or other of the was set out for recovery under r. 30. Of course, if the breach is of a venial nature, r. 31 is attracted, the contract is continued and only a small portion of the penalty envisaged in r. 29 is collected. The view we have taken of the scheme of the rules leaves us in no doubt that the order of penalty is right and the judgment of the Division Bench is correct in the conclusion and the appeals, in the result, must fail. The circumstances are such that the litigation is purely induced by the obscure official translation of r. 29 from Urdu to English with an obvious omission of 'not '. This and the other attendant features of the case persuade us to direct that the parties shall bear their costs throughout. V.M.K. Appeals dismissed.

The appellant & Forest Contractor felled trees in excess of the permitted number authorised by the contract entered into by him with the State of Andhra Pradesh Certain penalty was imposed on the appellant under rule 29 of he Forest Contract Rules framed in exercise of the powers conferred by Hyderabad Forest Act The Forest Officer found that the appellant felled more trees and therefore, gave a show cause notice to the appellant The appellant prayed for re enumeration of the trees given from the forest. He was given an opportunity which was not availed by him to check the stumps in the coupe as desired by him Consequently, a penalty was levied. Thereafter, the contract was terminated After the termination of the contract the process for recovery of the penalty was started Rule 29 reads as under: (1) Penalty on termination of a contract for breach of conditions: Every forest contract shall be in writing in the form annexed hereto and shall contain a provision whereby the forest contractor binds him self to do all the duties and acts required to be done by or under the contract, and convenants that he and his servants and agents shall abstain from all the acts forbidden by or under such contract (2) The sums to be mentioned in a forest contract as payable in case of a breach of any such stipulation shall not exceed one quarter of the total consideration to be paid by the contractor, and shall be recoverable in accordance with the provisions of the Hyderabad Forest Act 1355 and of this rule Provided that where such consideration is not an ascertained amount the forest officer executing the contract shall make an estimate of the total amount that would be payable if the contract were fully complied with, and such estimate shall be deemed to be for the purpose of this sub rule the total consideration to be paid by the contractor. (3) This sum shall be realized from the contractor if the contract has been duly terminated in accordance with the provisions of rule 30, and then only under the written order or the forest officer executing the contract" The appellant filed a Writ Petition in the High Court challenging the validity of the imposition of the penalty. The learned Single Judge allowed the Writ Petition but the Division Bench allowed` the appeal filed by the State In an appeal by certificate, it was contended by the appellant before this Court that the termination of the contract for breach of conditions mentioned in rule 29 should precede the impost of penalty. It was further contended that the principles of natural justice were violated The respondent contended that ascertaining the amount which is to be levied as a penalty. need not be preceded by the termination of the contract. Dismissing the appeal, ^ HELD: 1 It is clear that in the absence of a statutory exclusion of natural justice any exercise of power prejudicially affecting another must be in conformity with the rules of natural justice. In the present case. we are satisfied 771 that there is no foundation for the grievance of the appellant on the score of natural justice since an opportunity was afforded to the appellant before finally quantifying the penalty to be levied but the appellant did not avail himself of the opportunity. [773 E F] 2. On a true construction of rule 29 once a Forest Authority detects a breach it must investigate the extent and estimate, the nature and degree of damage caused by the breach, If it is serious they must proceed to ascertain the sum to be fixed as penalty. In doing this, a reasonable opportunity must be given to the affected party. After that, the penalty shall be quantified and the contract shall be terminated in the event the authorities come to the conclusion that the breach is grave enough for that drastic step. Once the contract is; terminated the last procedure is realisation which can in no case be before the termination of the contract. [774H, 775 A B.]

Special Leave Petition (Civil) No. 11525 of 1983 From the Judgment and Order dated the 10th March, 1983 of the Madhya Pradesh High Court in Misc. (First) Appeal No. 88 of 1979 M. section Gujral and R. N. Poddar for the Petitioners. The Judgment of the Court was delivered by THAKKAR, J. Two mishaps, one 'to the train ' by which a passenger is travelling, and another, a sympthetic one, having nexus with the former, and going arm in arm with it, 'to the passenger ' himself, must occur in the course of the same transaction in order to attract liability of the Railway Administration under Section 82A of the Indian Railways Act, 1890, rightly contends counsel for the Railway. The High Court, in our opinion, was in error in not upholding this unexceptionable proposition and in awarding compensation to a passenger on the premise that it was not essential to establish that there was an 'accident to the train, by which the passenger was travelling. Counsel for the Railway was fair enough (we very highly appreciate this gesture) to state that it was on account of the erroneous interpretation placed by the High Court which was likely to give rise to untenable claims in future, rather than the relatively small amount awarded to the passenger, that the Railway was obliged to approach this Court by way of the present Special Leave Petition. We declined to interfere with the operative order of the High Court in exercise of jurisdiction under article 136 of the Constitution of India having regard to the size of the award (both sides would have expended more than the amount at stake in litigation expenses if leave was granted) but observed that the view taken by the High Court in regard to the question of law involved in the matter was erroneous. We now 558 proceed to articulate our reasons in support of the view expressed by us. The question of interpretation of Section 82A of the Act has arisen in the following contextual backdrop. The respondent was travelling by train in his capacity as a bonafide passenger. While the bogie in which the respondent was travelling was being shunted at a Railway Station, the respondent accidentally fell down from the train, near the water column at the end of the platform, and his right hand was crushed by that part of the train which was being shunted As to how exactly the respondent sustained the injury, the versions of the parties differ. The District Judge did not accept the version of the respondent that the bogie in which he was travelling received a sudden jerk and he fell down on that account. The Railway Administration on the other hand contended that the respondent sustained the injury in the manner described in the relevant contemporaneous record (Assistant Station Master 's Diary) namely: "the injury was sustained by the appellant in going to the rear end of the train and possibly boarding one of the bogies which was being detached during the shunting operation and in this process he appears to have been hit by the water column when these bogies (a part of the train) were being moved during the shunting operation. " Now Section 82A of the Act in so far as material reads thus: "82A Liability of Railway Administration in respect of accidents to trains carrying passengers (1) When in the course of working a railway accident occurs, being either a collision between trains of which one is a train carrying passengers or the derailment of or other accident to a train or any part of a train carrying passengers then, whether or not there has been any wrongful act, neglect or default on the part of the railway administration 559 such as would entitle a person who has been injured or has suffered loss to maintain an action and recover damages in respect thereof, the railway administration shall, notwithstanding any other provision of law to the contrary, be liable to pay compensation to the extent set out in sub section (2) and to that extent only for loss occasioned by the death of a passenger dying as a result of such accident, and for personal injury and loss, destruction or deterioration of animals or goods by the passenger and accompanying the passenger in his compartment or on the train, sustained as a result of such accident. (2) This liability of a railway administration under this Section shall in no case exceed fifty thousand rupees in respect of any one person." (Emphasis added). In interpreting Section 82A the High Court speaks thus: "The word accident therefore according to its ordinary meaning, which must be given to it and construed in the context in which it is used in Section 82A must mean to include within its ambit all incidents resulting in the death of or bodily injury to any passenger during his rail journey, occurring in the course of working a railway, if it involves a passenger train or a part thereof. Any incident treated as railway accident involving a passenger train by the public at large and the railway staff should be treated to be such an accident, falling within the ambit of Section 82A. Any mishap or misfortune in the working of a railway involving a passenger train or a part thereof resulting in the death of or personal injury to a passenger travelling therein, during his rail journey is an accident within the ambit of Section 82A. This will, of course exclude any incident voluntarily and consciously invited by the passenger, i.e. suicide by jumping in front of the moving train. " In our opinion the High Court has shut its eyes to the 560 significance of the essential precondition engrafted in Section 82A in regard to the 'accident, to the train '. Why we say so will become evident presently. A 'body scan ' of the aforesaid provision (Section 82A) reveals that: (1) The machinery of the Section is set in motion only provided there is an 'accident '. (2) The accident must be 'to ' the train ' or 'part of the train ' carrying passengers. (3) The accident to the train carrying passengers may be due to: (a) Collision of two trains one of which is the train carrying passengers; or (b) derailment of such train; or (c) other accident 'to ' such a train. (4) In case any passenger travelling by such train dies, or sustains any injury to his person or property, as a result of or on account of such accident to the train or a part of the train carrying passengers, compensation to the extent provided in the Section will become payable. (5) Such compensation will be payable regardless of whether or not the accident to the train carrying passengers is due to negligence or fault on the part of the railway administration. That the 'accident ' envisioned by the first part of Section 82A (i) is an accident 'to ' the 'train ' or 'a part of the train ' is self evident. The Section speaks of an accident by reason of either (1) collision or (2) derailment or (3) other accident to a train. There is therefore no room for any ambiguity on that score. 561 So also it cannot be gainsaid that the accident, adverted to therein cannot refer to an accident to a passenger 'whilst ' on a passenger train even if the said train is not at all involved in any accident. Common sense and reason buttress this proposition, for, the philosophy of Section 82A appears to be to turn an existing 'fault ' liability into a 'fault or no fault ' liability. Why? Because a carrier who transports passengers as a part of his business, when he charges fare, impliedly guarantees to carry him with safety in so far as such safety is within his power. It is within his power to transport the passenger without an accident to the train, for such an accident is not something which is ordinarily or in the normal course of events inherent in the running of a train. And presumably in order to be 'fair ' to the passengers who pay the 'fare ' for a safe (safe from accident to the train) journey, the legislature, with an eye on social welfare, has provided for compensation by a summary proceeding and has made the liability fault free. But to ensure safe travel is not to "insure" the passenger against accident to himself 'whilst ' travelling. The distinction deserves to be spot lighted. What 'is ' provided is compensation for death or injury caused or loss sustained on account of accident 'to ' the train. What is 'not ' provided is compensation for death of the passenger 'whilst ' travelling or injury sustained by a passenger 'whilst ' travelling on the train, say, by reason of his own act, default, or misfortune, which has no nexus with the 'accident to the train '. In other words what the Section does is to turn a liability which was 'contingent on fault ' into an 'absolute ' liability. What, however, it does not do, is to provide a free 'insurance cover ' to the person and property of a passenger so that compensation can be claimed for the accidental death of or injury to the passenger and/or loss or damage to his property even when there has been no 'accident ' to the train carrying such a passenger. What is the position when a passenger falls down from the train while the bogie, in which he is travelling, is being shunted? Say, when he is standing in the door frame or his trying 562 to get in or get out of the train, on account of the jolt to the bogie at the time of impact with the rest of the train? Is it an accident 'to the train ' so as to attract the liability under Section 82A? The answer substantially depends on the answer to the question: what is an 'accident '? An accident is an occurrence or an event which is unforeseen and startles one when it takes place but does not startle one when it does not take place. It is the happening of the unexpected, not the happening of the expected, which is called an accident. In other words an event or occurrence the happening of which is ordinarily expected in the normal course by almost every one undertaking a rail journey cannot be called an 'accident '. But the happening of something which is not inherent in the normal course of events, and which is not ordinarily expected to happen or occur, is called a mishap or an accident. Now a collision of two trains or derailment of a train or blowing up of a train is something which no one ordinarily expects in the course of a journey. That is why it falls within the parameters of the definition of accident. But a jolt to the bogie which is detached from one train and attached to another cannot be termed as an accident. No shunting can take place without such a jerk or an impact atleast when it is attached or annexed to a train by a shunting engine. If a passenger tumbles inside the compartment or tumbles out of the compartment when he is getting inside the compartment, or stepping out of the compartment, it cannot be said that an accident has occurred to the train or a part of the train. It is doubtless an accident 'to the passenger '. But not to the train. Otherwise it will have to be held that every time a bogie is detached in the course of shunting operation and attached or annexed to a train in the course of the said operation the train meets with an accident. And if such an event or occurrence is to be ordinarily expected as a part of every day life, it cannot be termed as an accident accident to the train (or a part of it). In the case of a mishap to the passenger in such circumstances it cannot be said that there has been an accident to the train and the mishap has nexus with it. The liability under Section 82A will not therefore be attracted in such cases. Or in the case of a mishap to a passenger in similar circumstances, such as an injury sustained on account of falling down whilst getting on or off a running or stationary train or sustained when he slips in a compartment or when something falls on him whilst travelling. All such 563 mishaps, when not connected with the accident to the train, or a part of it, would be accidents to the passenger only. And until both the mishaps take place, one to the train, and another, a sympathetic, one to the passenger, the liability under Section 82A of the Act will not be attracted. So also, unless the loss or damage to the property of a passenger is attributable to the accident to the train, liability under Section 82A will not be attracted. In our opinion, Section 82A of the Indian Railways Act, 1890 is not capable of the rather strained interpretation placed by the High Court and the true position of law is as unfolded in the discussion made heretobefore.

The respondent was travelling by train as a bona fide passenger. While the bogie in which he was travelling was being shunted at a Railway Station, the respondent fell down from the train near the water column at the end of the platform and his right hand was crushed by that part of the train which was being shunted. The District Judge did not accept the version of the respondent that the bogie in which he was travelling received a sudden jerk and that he fell down on that account, and dismissed the application for compensation, In appeal, the High Court, held that the word 'accident ' in section 82A must mean to include within its ambit all incidents resulting in the death of or bodily injury to any passenger during his rail journey, occuring in the course of working of a railway, if it involves a passenger train or apart thereof, and awarded compensation on the premise that it was not essential to establish that there was an 'accident to the train ' by which the passenger was travelling. In the Appeal to this Court, on the question of liability of the Railway Administration under Section 82A of the Indian Railways Act, 1890. ^ HELD: 1. The liability under Section 82A will not be attracted in the case of a mishap or injury sustained by a passenger on account of falling down whilst getting on or off a running or stationary train or sustained when he slips in a compartment or when something falls on him whilst travelling. All such mishaps, when not connected with the accident 556 to the train, or a part of it, would be accidents to the passenger only. And until both the mishaps take place, one to the train, and another, a sympathetic one to the passenger, the liability under section 82A of the Act will not be attracted. So also, unless the loss or damage to the property of a passenger is attributable to the accident to the train, liability under Section 82A will not be attracted. [562G 563A] In the instant case, liability under Section 82A will not be attracted, as it cannot be said that there has been an accident to the train and the mishap has nexus with it. [562G] 2. The philosophy of Section 82A appears to be to turn an existing 'fault liability into a 'fault ' or no fault ' liability. And presumably in order to be 'fair ' to the passengers who pay the 'fare ' for a safe (safe from accident to the train) journey, the legislature, with an eye on social welfare, has provided for compensation by a summary proceeding and has made the liability fault free. [561B D] 3. That the 'accident ' envisioned by the first part of Section 82A(1) is an accident 'to ' the 'train ' or 'a part of the train ' is self evident. The Section speaks of an accident by reason of either (1) collision or (2) derailment or (3) other accident to a train. [560G H] 4. What is provided is compensation for death or injury caused or loss sustained on account of accident 'to ' the train. What is 'not ' provided is compensation for death of the passenger 'whilst ' travelling or injury sustained by a passenger 'whilst travelling on the train, say by reason of his own act default or misfortune, which has no nexus with the 'accident ' to the train. ' What the section does is to turn a liability which was contingent on fault into an 'absolute ' liability. What however, it does not do, is to provide a free insurance cover to the person and property of a passenger so that compensation can be claimed for the accidental death of or injury to the passenger and or loss or damage to his property even when there has been no 'accident ' to the train carrying such a passenger. [561E G] 5. An accident is an occurrence or an event which is unforeseen and startles one when it takes place but does not startle one when it does not take place. It is the happening of the unexpected, not the happening of the expected, which is called an accident. An event or occurrence the happening of which is ordinarily expected in the normal course by almost every one undertaking a rail journey cannot be called an 'accident '. But the happening of something which is not inherent in the normal course of events and which is not ordinarily expected to happen or occur is called a mishap or an accident. A collision of two trains or derailment of a train or blowing up of a train is something which no one ordinarily expects in the course of a journey. That is why it falls within the parameters of the definition of accident. But a jolt to the bogie which is detached from one train and attached to another cannot be termed as an accident. No shunting can take place without such a jerk or an impact at least when it is attached or annexed to a train by a shunting engine. if a passenger 557 tumbles inside the compartment or tumbles out of the compartment when he is getting inside the compartment or stepping out of the compartment it cannot be said that an accident has occurred to the train or part of the train. It is doubtless an accident 'to the passenger '. But not to the train. [562B F]

ition No. 631 of 1980. Under Article 32 of the Constitution.) Ram Jethmalani, M. M. Lodha and Harjinder, Singh for the Petitioner. R. B. Datar, R. N. Sachthey and M. N. Shroff for the Respondents. FAZAL ALI, J. (Vacation Judge) The detenu was detained under sub Section (t) of Section 3 of The Conservation of Foreign Exchange and Prevention of Smuggling Activities (in short COFEPOSA) by the Government of Gujarat by its order dated January 30, 1980. The order was passed by Mr. P. M. Shah, Deputy Secretary to the Government of Gujarat who authenticated the said order on behalf of the State Government. The detenu while making a representation to the State Government also prayed for supply of documents to him in order to make a more effective representation. These documents however were supplied on March 27, 1980 although the order of detention was itself confirmed on March 21, 1980. In the representation sent to the Government, the detenu had made a specific prayer that his representation should be forwarded to the Central Government for being considered. In support of the rule, Mr. Ram Jethmalani, counsel appearing for the detenu raised two points before this Court. In the first place it was submitted that the counsel on behalf of the detenu has expressly pleaded that the grounds of detention were couched in English, a language which the detenu did not understand at all and these grounds were not explained to him. A specific ground on this aspect of the matter has been taken in ground No. XIII at page 21 of the petition which may be extracted thus: "That the detenu does not know English. The grounds of detention and the order of detention were in English. No vernacular translation of the grounds was given nor they were explained to detenu in a language known to him." This allegation seems to have been denied by the respondents in para 14 of the affidavit of Mr. P. M. Shah, on behalf of the detaining authority, where he stated that the grounds were explained to the detenu in the language known to him. It was averred in para 5 that one Mr. A. K. Sharma, Police Inspector, C.I.D. (Crime Branch), Ahmedabad had explained to the detenu the order of detention and the grounds communicated to him on January 30, 1980. This affidavit, in my opinion, is wholly inadmissible in evidence. If it was 14O0 a fact that Mr. Sharma had personally explained the grounds to the detenu then the respondents should have filed an affidavit of Mr. Sharma himself to show that he had actually explained the contents of the grounds to the detenu by translating the same in the language which he understood. No such affidavit is forthcoming. No Contemporaneous record has been produced to show that Mr. Sharma had actually explained or translated the grounds to the detenu. The service of the ground of detention on the detenu is a very precious constitutional right and where the grounds are couched in a language which is not known to the detenu, unless the contents of the grounds are fully explained and translated to the detenu, it will tantamount to not serving the grounds of detention to the detenu and would thus vitiate the detention ex facie. In case of Hadibandhu Das vs District Magistrate, Cuttak & Anr. ; , it was clearly held that merely oral explanation of an order without supplying him a translation in a script or language which the detenu understood amounted to a denial of right of being communicated the grounds. Tn the instant case, it is not even alleged in the affidavit of Mr. Shah that any translation or translated script of the grounds was furnished to the detenu. In case of Hadibandhu Das vs District Magistrate, Cuttack & ground alone. I would however like to observe that in cases where the detaining authority is satisfied that the grounds are couched in a language which is not known to the detenu, it must see to it that the grounds are explained to the detenu, a translated script is given to him and the grounds bear some sort of a certificate to show that the grounds have been explained to the detenu in the language which he understands. A bare denial at the stage when Habeas Corpus petition is filed in the court by the detaining authority that these formalities were observed would be of no consequence particularly when it is not supported by any document or by any affidavit of the person who had done the job of explaining or translation. We have pointed out in several cases that courts frown on detention without trial and insist on the strict compliance of the constitutional safeguards enshrined in Article 22(5) to the letter of the law, because a non compliance of these safeguards would itself be sufficient to vitiate the order of detention. Despite our repeated observations, unfortunately, however the detaining authority continues to pass orders of detention in a casual or cavalier fashion with the result that the courts are compelled to release the detenus. We hope an trust that in future the detaining authorities should fully apply their mind so as to result in a strict compliance of the constitutional safeguards contained in the Constitution more particularly because the liberty of the subject is. in peril. 14O1 Another ground taken by Mr. Ram Jethmalani in support of the rule is that although the detenu had made a specific prayer in his representation to the State Government that his representation should he forwarded to the Central Government for consideration under section 11 of the Act, yet the detaining authority did not choose to forward the representation to the Central Government at all. This position is admitted and the defence taken is that as the detenu had himself sent a copy to the Central Government, the detaining authority did not think it necessary to forward the representation to the Central Government. This defence is wholly unacceptable. Section l l of the Act confers a constitutional right on the detenu to have his representation considered by the Central Government. It is true that the Central Government has a discretion to revoke or confirm the detention but the detenu has undoubtedly a right that his representation should be considered by the Central Government for whatever worth it is. The mere fact that the detenu had sent a copy to the Central Government does not absolve the detaining authority from the statutory duty of forwarding the representation of the detenu to the Central Government. For these reasons therefore I am satisfied that the continued detention of the detenu in this case is legally invalid. I therefore allow this application and direct that the detenu be released forthwith. As the detenu has now been transferred to Bhavnagar, the order be sent to the Jailor at Bhavnagar. S.R. Petition allowed.

Allowing the petition, the Court ^ HELD: 1. Where the detaining authority is satisfied that the grounds are couched in a language which is not known to the detenu, it must see to it that the grounds are explained to the detenu, a translated script is given to him and the grounds bear some sort of a certificate to show that the grounds have been explained to the detenu in the language, which he understands. [14O0 D E] A bare denial at the stage when the Habeas Corpus petition is filed in the court by the detaining authority that those formalities were observed would be of no consequence particularly when it is not supported by any document or by any affidavit of the person who had done the job of explaining or translation. [14O0 E F] Hadibandhu Das vs District Magistrate, Cuttack and Anr. ; followed. Courts frown on detention without trial and insist on the strict compliance of the constitutional safeguards enshrined in Article 22(5) to She letter of the law, because a non compliance of these safeguards would itself be sufficient to vitiate the order of detention. [14O0 F G] 3. Section ll of COFEPOSA confers a constitutional right on the detenu to have his representation considered by the Central Government. It is true that the Central Government has a discretion to revoke or confirm the detention but the detenu has undoubtedly a right that his representation should be considered by the Central Government for whatever worth it is. The mere fact that the detenu had sent a copy to the Central Government does not absolve the detaining authority from the statutory duty of forwarding the representation to the Central Government. [14O1 B D] [The Court expressed the hope that in future the detaining authorities should fully apply their mind so as to result in a strict compliance of the constitutional safeguards contained in the Constitution, more particularly, be cause the liberty of the subject is in peril.]

ivil Appeal No. 3838 of 1989. From the Judgment and Order dated 12.10. 1987 of the Bombay High Court in Appeal No. 244 of 1983. C.S. Vaidyanathan, S.R. Bhat and K.V. Mohan for the Appellant. M.S. Ganesh for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Special leave granted. This is an appeal from the judgment and order dated October 12, 1987 of the Division Bench of the High Court of Bombay. The appellant had chartered their vessel 'KRISTEL ' to the respondent for carrying oil from Arabian Gulf to India under a charter party, dated 30th November, 1979. Clause 40(a) of the charter party provided that the charter shall be construed and the relations between the parties shall be determined in accordance with the English Law. Clause 40(b) of the charter party provided that any dispute arising under the charter party shall be decided by the English Courts but that either party may elect, in writing, to have the dispute referred to the arbitration of a single arbitrator in London in accordance with the (English) Arbi tration Act, 1950. , Disputes and differences arose between the parties, and they appointed one Mr. Robert William Reed of the Baltic Exchange and of 28, Reddons Road, Beckenham, Kent BR 3 ILZ to be the sole arbitrator. The parties appeared before the arbitrator represented by their respective Solicitors and counsel. The arbitrator made his award on 28th July, 1982 which contained, inter alia, as follows: "I AWARD AND ADJUDGE that the Charterers do 73 forthwith pay the Owners the sum of U.S. $ 291,822.00 (United States Dollars two hundred and ninetyone thousand eight hundred and twenty two only) together with interest at the rate of 15 per cent per annum as from 20th June, 1980, to the date of this my Final Award in full and final settlement of the matters at issue in the Reference. I FURTHER AWARD AND ADJUDGE that the Charter ers do bear and pay their own and the Owners ' costs of the Reference (the latter to be taxed in the event of disagreement) and that the Charterers do bear and pay the cost of this my Final Award which I hereby tax and settle at E4,684 including my disbursements. Provided always that if in the first instance the Owners shall have paid the said cost of this my Award, then they shall be entitled to an immediate refund from the Charterers of the sum so paid." As mentioned hereinbefore, the arbitrator awarded the cost of reference to be taxed in the event of disagreement. The respondent paid only the principal sum and failed and neglected to pay any interest on it and the appellant 's cost of reference to arbitration and the cost of the award. Pursuant to section 20 of the English Arbitration Act, 1950 a sum directed to be paid by the award shall carry interest as from the date of the award at the same rate as the judg ment date. It appears that from 8th June, 1982 the interest rate on judgment debt in England was 14% per annum. The award is enforceable under the Foreign Awards (Recognition & Enforcement) Act, 1961 (hereinafter called 'the Act '). The appellant filed an application under the Act in the High Court of Bombay, inter alia, contending for the judgment be pronounced and a decree to be passed according to the award in favour of the appellant. The learned Single Judge of the High Court by his judgment and order dated 21st February, 1983 decreed in favour of the appellant and di rected the respondent to pay interest and costs of the award so awarded by the arbitrator and also cost of the petition. The learned Judge, however, rejected the appellant 's prayer for the cost of reference to arbitration, and also rejected the applicant 's prayer that in the alternative liberty should be reserved in respect of the said prayer. The said prayer was made orally but was refused by the learned Single Judge because as he observed that he saw no reason to re serve such liberty, as the appellant had not taken any steps. 74 Aggrieved by the said judgment and order dated 21st February, 1983 the appellant preferred an appeal before the Division Bench of the High Court. During the pendency of the said appeal in the High Court the appellant 's costs of reference to arbitration as awarded by the arbitrator were taxed because of the failure of the parties to agree and the taxed amount was Pound 10,901.45 by the Taxing Master of the Supreme Court of Judicature, England. A taxation certificate dated 19th December, 1984 was issued and the same was pro duced at the time of hearing of the appeal before the Divi sion Bench. Before the Division Bench, cross objections had been filed on behalf of the respondent. By judgment dated 12th October, 1987, the Division Bench of the High Court dismissed the respondent 's cross objections, and held that the only point related to the refusal of the learned Single Judge to grant liberty to the appellant to file a separate petition upon the costs of the reference to arbitration being quantified. The Division Bench held that at the time when the petition was filed, there had been no agreement upon or reference for taxing of such costs, and as such it appears that the application to have the costs taxed was made only after the appeal was filed. No order could be made directing the respondent to make payment to the appellant of the costs so taxed. The Division Bench held that if the appellant was entitled to file a fresh petition for such costs, it might adopt such proceedings. Aggrieved thereby, the appellant has come up before this Court. We are unable to uphold the views of the Division Bench of the Bombay High Court that no order could have been made by the Division Bench directing the respondent to make payment to the appellant 's costs so taxed. Foreign awards, as it manifests, are executable in this country under the provisions of the Act. The Act in question was passed to give effect to the convention on the recognition and en forcement of foreign arbitrator 's award. Section 6 of the Act is as follows: "Enforcement of Foreign Award: (1) Where the Court is satisfied that the Foreign award is enforceable under this Act, the court shall order the award to be filed and shall proceed to pronounce judgment according to the award. (2) Upon the judgment so pronounced, a decree shall follow and no appeal shall lie from such decree except in so far as the decree is in excess of or not in accordance with the award." Thus foreign award is enforceable in India. In such a case the 75 Court is obliged to direct that the award be filed and proceed to pronounce judgment according to the award. And upon the judgment so pronounced a decree shall follow. This Court had occasion to examine the purpose and terms of the Act in Renusagar Power Co. Ltd. vs General Electric Co. & Anr., ; This Court held referring to the objects that the Act seeks to achieve speedy settlement of disputes arising from international trade through arbitra tion. The Act was enacted to give effect to the Newyork International Convention on the Recognition and Enforcement of Foreign Awards to which India was a party. This Court noted that it is obvious that since the Act was calculated and designed to subserve the cause of facilitating interna tional trade and promotion thereof by providing for speedy settlement of disputes arising in such trade through arbi tration, any expression or phrase occurring therein should receive, consistent with its literal and grammatical sense, a liberal construction. The judgment has been pronounced in terms of the afore said and a decree has followed. The award enjoins, inter alia, "that the Chatterers do pay and bear their own costs and the owner 's costs of reference (the latter to be taxed in the event of disagreement). The judgment and decree which was pronounced in terms of the award did not direct any cost taxed or quantified of the reference to be paid. Indubita bly, the costs of reference have been awarded. The award, read properly, means, so far as costs of the reference are concerned, that it was an award upon certain conditions, i.e., the award stipulated that the costs of reference will be paid. The costs of such reference were, however, directed to be determined either by agreement between the parties and in case there was no agreement or disagreement, to be taxed. The parties have not been able to agree. It appears from the averments made in the pleadings before the High Court, there was no agreement as to the costs, and the steps were taken after the appeal was filed before the Division Bench to have the costs taxed. But there is no evidence of any delay or laches on the part of the appellant, as such, which would disentitle the appellant to such costs. In that view of the matter this award can legitimately be considered as an award directing payment of costs upon the condition that these will be taxed on the failure of agreement or disagreement between the parties. The parties have failed to agree. The costs have been taxed and certified. There is no dispute as to the costs taxed or certified. We are of the opinion that law, justice and equity in the facts and the circumstances of this case, enjoin that the appellant should have such costs. The appellant has taken all possible steps that could be 76 taken in the situation contemplated by the award. The appel lant has written for agreement about the costs of reference. The respondent did not agree. The appellant took steps to have the costs taxed in London, and the costs have been taxed. On behalf of the respondent, several contentions were urged mainly on the ground that there is no scope for addi tion to the award and the award had to be executed as it was and the costs of reference had not been awarded. We are in agreement with Mr. Ganesh that the award must be executed as it is and there is no scope for any addition to any award in executing a foreign award but the award to be executed must be properly construed and given effect to. If the award is ambiguous, the court has jurisdiction to determine what it means. In this case, the award is not ambiguous. It is clear that the costs of reference should be paid by the respond ent, and that such costs should be paid as are determined by agreement between the parties and in case of failure of the agreement by the taxation, such costs have been taxed and were placed before the Division Bench before it pronounced its judgment. Our attention was drawn to the decision in Re Becker Shillan & Co. and Barry Bros., , where it was held that where an umpire in making his award dealt with the costs of the award including the expenses of the hire of the room for the arbitration and shorthand notes, but made no order as to the general costs of the parties to the reference, the court would not presume that he has exercised his discretion to make no order as to costs or that he has left them to be borne by the parties who incurred them, but will conclude that the question of costs has not been dealt with at all and, therefore, should remit the award to him for reconsideration. In our opinion, the said decision has no application to the facts of this case. The instant appeal before us is not a case where the award has not dealt with the costs of reference, rather it has specifically dealt with the same. It has categorically provided that cost of reference is to be paid by the respondent. The award has stated that such cost should be agreed between the parties and in case there was no agreement, cost should be taxed. The award is clear and unambiguous and does not leave this question undecided. In the circumstances, there is no scope of remission of this award or not enforcing what the arbitrator has awarded. Under the Act, if an application is filed for decree in terms of the award, the court in upholding the award ought to grant a decree in terms of the award and not substract any portion thereof. Since the award directed costs of appellant 's reference to be paid as is mutually agreed upon or as taxed, the Division Bench ought to have 77 passed an order for costs as taxed. We, therefore, direct that the award to be enforced and the costs as mentioned hereinbefore should also be payable by the respondent. The judgment and order of the High Court are modified to that extent. In the facts and the circum stances of the case, we do not make any order as to costs of this appeal. R.S.S. Appeal allowed.

The appellant company had chartered their vessel to the respondent for carrying oil from Arabian Gulf to India under a charter party. Disputes and differences arose between the parties and the matter was referred to a single arbitrator in London, as stipulated in the charter party. The arbitra tor awarded a certain sum to be paid by the respondent to the appellant, with interest. The arbitrator further awarded to the appellant the costs of the reference, which were to be taxed in the event of disagreement. The respondent paid only the principal sum and failed and neglected to pay interest, the appellant 's cost of reference to arbitration, and the cost of the award. The appellant filed an applica tion under the Foreign Awards (Recognition & Enforcement) Act, 1961 in the High Court of Bombay. The learned Single Judge of the High Court directed the respondent to pay interest and costs of the award so awarded by the arbitrator and also cost of the petition. The learned Judge however rejected the appellant 's prayer for the cost of reference to arbitration, and also rejected the applicant 's prayer that in the alternative liberty should be reserved in re spect of the said prayer. The appellant preferred an appeal before the Division Bench. During the pendency of this appeal the appellant 's costs of reference to arbitration as awarded by the arbitrator were taxed and a taxation certifi cate was produced at the time of hearing of the appeal. The Division Bench held that at the time when the petition was filed, there had been no agreement upon or reference for taxing. of such costs, it appeared that the application to have the costs taxed was made only after the appeal was filed; and as such no order could be made directing the respondent to make payment to the appellant of the costs so taxed. Before this Court it was urged on behalf of the respond ent that there was no scope for addition to the award, and the award had to be executed as it was, and the costs of reference had not been awarded. 71 Allowing the appeal, this Court, HELD: (1) Foreign awards, as it manifests, are executa ble in this country under the provisions of the Foreign Awards (Recognition & Enforcement) Act, 1961. The Act was passed to give effect to the convention on the recognition and enforcement of foreign arbitrator 's award. [74F] (2) It is obvious that since the Act was calculated and designed to subserve the cause of facilitating international trade and promotion thereof by providing for speedy settle ment of disputes arising in such trade through arbitration, any expression or phrase occurring therein should receive, consistent with its literal and grammatical sense, a liberal construction. [75B] Renusagar Power Co. Ltd. vs General Electric Co. & Anr., ; , referred to. (3) The Court agrees that the award must be executed as it is and there is no scope for any addition to any award. But the award to be executed must be properly construed and given effect to. If the award is ambiguous, the court has jurisdiction to determine what it means. [75C] (4) In the instant case, the award is not ambiguous. The award, read properly, means, so far as costs of the refer ence are concerned, that it was an award upon certain condi tions, i.e. the award stipulated that the costs of reference will be paid. The costs of such reference were, however, directed to be determined either by agreement between the parties and in case there was no agreement or disagreement, to be taxed. [75E] (5) Law, justice and equity in the facts and the circum stances of this case, enjoin that the appellant should have such costs. The appellant has taken all possible steps that could be taken in the situation contemplated by the award. The appellant has written for agreement about the costs of reference. The respondent did not agree. The appellant took steps to have the costs taxed in London, and the costs have been taxed. [75H; 76A] (6) There is no evidence of the delay or laches on the part of the appellant, as such, which would disentitle the appellant to such costs. [75F] 72 (7) Under the Act, if an application is filed for decree in terms of the award. the court in upholding the award ought to grant a decree in terms of the award and not sub stract any portion thereof. Since the award directed costs of appellant 's reference to be paid as is mutually agreed upon or as taxed, the Division Bench ought to have passed an order for costs as taxed. [76H; 77A]

minal Appeal No. 164 of 1962. Appeal from the judgment and order dated May 2, 1962, of the Allahabad High Court in Criminal Revision No. 1579 of 1961. O. P. Rana and C. P. Lal, for the appellant. Harnam Singh Chadda and Harbans Singh, for the respondent. February 6, 1964. The Judgment of the Court was delivered by AYYANGAR J. This appeal which comes before us on a certificate of fitness granted by the High Court of Allahabad under article 134(1)(c) of the Constitution, is against a judgment of that Court acquitting the respondent Kartar Singh of an offence under section 7 read with section 16 (1)(a) (i) of the which may be conveniently referred to as the Act. 681 The facts giving rise to the prosecution are briefly these: The respondent runs a shop at Haldwani and among the products sold by him is ghee. On March 19, 1960 a quantity of the ghee was purchased by the Food Inspector of the area and he put samples of the purchase into three phials which were sealed in the respondent 's presence. It may be mentioned that even in the seizure memo the Food Inspector noted the ghee purchased by him as "pahadi ghee". One of the samples was forwarded to the Public Analyst to the Government of Uttar Pradesh for analysis forascertaining whether the said ghee was adulterated. The analysis disclosed that in several respects the samplewas sub standard and that in particular it had a ReichertValue of 22 5 as against the prescribed minimum of 28 for ghee in Uttar Pradesh. After setting out the details of the ana lysis, the Public Analyst expressed the opinion that the sample "contained a small proportion of vegetable fat or oil foreign to pure ghee". On receipt of this report, the Medical Officer of Health, Haidwani sanctioned the pro secution of the respondent and a complaint was thereafter laid before the Magistrate 1st Class by the Food Inspector. The respondent pleaded not guilty and entered on his defence. Subsequently, the second sample was got analysed by the Director, Central Food Laboratory, who reported that his analysis disclosed a Reichert Value of 21 7 as against 22 5 of the Public Analyst. The opinion expressed by him as regards the sample of ghee which he analysed was the same as that of the Public Analyst, viz., that the sample was adulterated. The defence of the respondent who admitted that he had sold the ghee, samples of which were the subject of analysis, but denied it was adulterated, was two fold: (1) He had obtained the ghee which he sold from Jodhpur, (2) The sample must be held not to be adulterated on the basis of the decision of the Allahabad High Court in State vs Malik Ram(1). The plea by the respondent regarding the ghee sold having come from Jodhpur was made because if this were established under the rules framed under the Act, to which (1) A.I.R. 1962 AU. 682 we shall later refer, the minimum Reichert value prescribed for ghee in the Jodhpur area was 21 and that minimum re quirement was satisfied by the sample analysed. The res pondent led evidence to prove his purchase from Jodhpur but the learned Magistrate did not accept this case. The other defence was a point of law relying on the decision of a Division Bench of the Allahabad High Court reported as State vs Malik Ram(1). The learned Judges who decided that case drew a distinction between ghee obtained from Cattle in the hill districts of Uttar Pradesh and those from cattle in the plains. This decision was relied on by the respondent because the ghee sold by him was noted as 'pahadi ghee ' by the Food Inspector. The learned Judges held that notwithstanding the terms of the rules to which we shall later refer, ghee obtained from hilly areas of Uttar Pradesh like Kumaun hills, could not be held to be adulterated if its Reichert value was equal to that prescribed for Himachal Pradesh which was mostly a hilly area. They therefore held that though the rules under the Food Adulteration Act prescribed a minimum Reichert value of 28 for ghee for the entire State of Uttar Pradesh, still if ghee from hill areas of the Uttar Pradesh State reached a minimum of 26 Reichert value, such ghee would not be "adulterated ghee". We shall consider the correctness of this decision after completing the narrative of the proceedings. The learned Magistrate held that this decision did not affect the present case because the Reichert value of the respondent 's ghee was less than 26.The Magistrate therefore convicted the respondent andsentenced him to rigorous imprisonment for a period of sixmonths and a fine of Rs. 500 and in default to furtherimprisonment for three months. The respondent preferred an appeal to the Sessions Judge Kumaon, and raised the same pleas and defences as he put forward before the learned Magistrate. The Sessions Judge concurred in the finding of the Magistrate regarding the story of the respondent having bought the ghee from Jodhpur, and he also agreed with the Magistrate about the effect of the decision of the Division Bench of the High Court which was also relied on before him. The (1) A.I.R. 1962 All. 683 Sessions Judge, however, while upholding the conviction reduced the sentence of imprisonment from six months to one month and the fine to Rs. 200. The respondent thereupon filed a Criminal Revision petition to the High Court under sections 435 and 439 of the Criminal Procedure Code. The learned Judge of the High Court agreed with the Courts below on the finding of fact as regards the Jodhpur origin of the ghee observing "as the file stands I am satisfied that this ghee was of local origin". There was, of course, no point raised before him as regards the correctness of the analysis. 'Me learned Judge, however, held that the basis on which the Reichert value had been prescribed for the several areas in the country was not based on any rational classification and he therefore held that it was sufficient if any vendor of ghee in the country satisfied the minimum standards prescribed for any area under these rules. As there were areas in the country in regard to which a minimum Reichert value of 21 had been prescribed, he held that the respondent was not guilty of adulteration and so directed his acquittal. It is from this decision that the present appeal has been filed by the State. Before considering the point about the standards prescribed under the Food Adulteration Act being violative of article 14, an Article which though not specifically mentioned, is apparently the ground upon which the learned Judge has held that the prescription of the Reichert value of 28 for Uttar Pradesh was unenforceable, it would be necessary to set out the statutory provisions on which the decision of the present appeal turns. The preamble to the Act describes it as one "to make provision for the prevention of adulteration of food". Section 2 defines the word 'adulterated ' as follows : "An article of food shall be deemed to be adulterated (i) if the quality or purity of the article falls below the prescribed standard or its constituents are present in quantities which are in excess of the prescribed limits of variability;" 684 to read only the portion that is material. Section 3 enables the Central Government to constitute a committee for food standards and it runs "3.(1) The Central Government shall, as soon as may be after the commencement of this Act, constitute a Committee called the Central Committee for Food Standards to advise the Central Government and the State Governments on matters arising out of the administration of this Art and to carry out the other functions assigned to it under this Act. (2) The Committee shall consist of the following members, namely: (a) the Director General, Health Services, ex officio, who shall be the Chairman; (b) the Director of the Central Food Laboratory, ex officio; (c) two experts nominated by the Central Government; (d) one representative each of the Central Ministries of Food and Agriculture, Commerce and Industry, Railways and Defence nominated by the Central Government; (e) one representative each nominated by the Government of each State; (f) two representatives nominated by the Central Government to represent the Union territories; (g) two representatives of Industry and Com merce nominated by the Central Government; (h) one representative of the medical profession nominated by the Indian Council of Medical Reserch". 685 Section 7 which prohibits the manufacture and sale of adulterated food reads: "No person shall himself or by any person on his behalf manufacture for sale, or store, sell or distribute (i) any adulterated food;. " Section 8 makes provision for State Governments appointing Public Analysts and section 9 for the appointment of Food Ins pectors. The next material provision is that contained in section 13 which deals with the reports of the analysis of food for the purpose of ascertaining whether there are adulterat ed or sub standard etc. Its first sub section directs the Public Analyst to make a report and under sub section (3) the Certificate issued by the Director of the Central Food Laboratory under sub section (2) is to supersede the report given by a Public Analyst under sub section Section 16 provides for the penalties for offences under the ' Act. Section 23 confers on the Central Government power to make rules but these rules have to be framed after consultation with the Committee established under section 3 and among the rules which might be made are Section 23(1)(b) defining the standards of quality for, and fixing the limits of variability permissible in respect of, any article of food;. . . "23. (2) All rules made by the Central Government under this Act shall as soon as possible after they are made be laid before both Houses of Parliament. " Under the power conferred by section 23, the Prevention of Food Adulteration Rules, 1955, were promulgated. Rule 5 which occurs in Part III of the rules headed "Definitions and Standards of quality" specifies that "the standards of quality of the various articles of food specified in Appendix B to these rules are as defined in that appendix. " Ghee is one of the articles of food whose standards are prescribed in Appendix B, milk and milk products being listed under head A 1 1. Ghee is dealt with in item 14 of A 11 and the standard prescribed for it runs: Ghee means the pure clarified fat derived solely from milk or from curds or from cream to 686 which, no colouring matter or preservative has been added. It shall conform to the following specifications in Punjab, Uttar Pradesh, Bhopal Vindhya Pradesh, Bihar, West Bengal (except Bishnupur) and PEPSU (except Mahendragarh): (a). . . (b) Reichert Value Not less than 28. (c). . . . (d). . . . In Madras, Andhra, Travancore Cochin, Hyderabad, Mysore, Orissa, Assam, Tripura, Manipur, Madhya Bharat, Bombay, Himachal Pradesh, Mahendragarh District of PEPSU, Madhya Pradesh (except cotton tract areas) and Rajasthan (except Jodhpur) the specifications will be the same as above except that Reichert value shall be not less than 26.0. In Saurashtra, Kutch, cotton tract areas of Madhya Pradesh, Jodhpur Division of Rajasthan and Bishnupur Sub division of West Bengal the Reichert value shall not be less than 21 and the Butyro refractometer reading at 40 degree C shall be between 41 5 to 45.0. The limits for free fatty acids and moisture shall be the same as for ghee in Punjab, PEPSU etc. given above. Explanation. By cotton tract is meant the areas in Madhya Pradesh where cotton seed is extensively fed to the cattle. The learned counsel for the State has urged before us that the learned Judge was not justified in striking down or re drafting the rules framed by the Central Government in the manner in which he has done, purporting to invoke article 14 of the Constitution, and in virtually setting up what he considered was the reasonable standard of quality which should determine whether the ghee sold by the respondent was adulterated or not. We entirely agree with this submission. Now, it is common ground that if the rules were valid and the standards prescribed enforceable, the ghee 687 sold by the respondent was 'adulterated ' with the result that the respondent was guilty of an offence under section 7 read with section 16 of 'the Act. The only question is whether there was any material placed before the Court for refusing to apply the rules for determining the standards of quality. The standards themselves, it would be noticed, have been prescribed by the Central Government on the advice of a Committee which included in its composition persons considered experts in the field of food technology and food analysis. In the circumstances, if the rule has to be struck down as imposing unreasonable or discriminatory standards, it could not be done merely on any apriori reasoning but only as a result of materials placed before the Court by way of scientific analysis. It is obvious that this can be done only when the party invoking the protection of article 14 makes averments with details to sustain such a plea and leads evidence to establish his allegations. That where a party seeks to impeach the validity of a rule made by a competent authority on the ground that the rules offend article 14 the burden is on him to plead and prove the infir mity is too well established to need elaboration. If, therefore, the respondent desired to challenge the validity of the rule on the ground either of its unreasonableness or its discriminatory nature, he had to lay a foundation for it by setting out the facts necessary to sustain such a plea and adduce cogent and convincing evidence to make out his case, for there is a presumption that every factor which is relevant or material has been taken into account in formu lating the classification of the zones and the prescription of the minimum standards to each zone, and where we have a rule framed with the assistance of a committee containing experts such as the one constituted under section 3 of the Act, that presumption is strong, if not overwhelming. We might in this connection add that the respondent cannot assert any fundamental right under article 19(1) to carry on business in adulterated foodstuffs. Where the necessary facts have been pleaded and established, the Court would have materials before it on which it could base findings, as regards the reasonableness or otherwise or of the discriminatory nature of the rules. In 688 the absence of a pleading and proof of unreasonableness or arbitrariness the Court cannot accept the statement of a party as to the unreasonableness or unconstitutionality of a rule and refuse to enforce the rule as it stands merely because in its view the standards are too high and for this reason the rule is unreasonable. In the case before us there was neither pleading nor proof of any facts directed to that end. The only basis on which the contention re garding unreasonableness or discrimination was raised was an apriori argument addressed to the Court, that the division into the zones was not rational, in that hilly and plain areas of the country were not differentiated for the prescription of the minimum Reichert values. That a distinction should exist between hilly regions and plains, was again based on apriori reasoning resting on the different minimum Reichert values prescribed for Himachal Pradesh and Uttar Pradesh and on no other. It was, however, not as if the entire State of Himachal Pradesh is of uniform elevation or even as if no part of that State is plain country but yet if the same minimum was prescribed for the entire area of Himachal Pradesh, that would clearly show that the elevation of a place is not the only factor to be taken into account. At this stage it might be pointed out that the test for Reichert or Reichert Meissl value of ghee is one of the important tests for detecting adulteration with certain vegetable oils by determining the proportion of the volatile soluble acids in the ghee. The presence of the adulterant disturbs the ratio existing in normal butter fat or ghee between soluble and insoluble acids and volatile and non volatile acids. The Reichert value of pure ghee is not constant, but is dependent on several factors among them the breed of the cattle to be found in an area, whether the cattle are pasture fed or stall fed, and the nature of the additional feed given, the nature of the terrain, the rain fall and climatic conditions etc. That the feed available for the cattle is a very material and determining factor is apparent even from the rules, for a distinction is drawn between different areas of Madhya Pradesh depending on cotton seed being available for feeding the cattle. It is on the basis of the conjoint effects of these and other factors which 689 obtain in the different areas, some pointing to a higher Reichert value and others neutralising it and after extensive survey conducted from samples collected and analysed during various seasons, that the country has been divided into zones under the rule in Appendix 'B ' and the minimum Reichert value ascertained and prescribed for each. From the fact that certain areas included in some of the zones are hilly, it does not automatically follow that was the potent factor or the only factor which was taken into consideration for prescribing the standard for that region. Without appreciating the several factors which bear upon the Reichert value of the ghee produced in a locality and the value attributed to each of these several relevant factors, it would not be possible to pronounce upon the reasonable ness or correctness of the classification of the areas and the prescription of different standards to each of them. In State vs Malik Ram (1) a Division Bench of the High Court held that because certain areas of Uttar Pradesh were hilly, the Reichert value prescribed for the hilly areas like those in Himachal Pradesh should be adopted and be given effect to notwithstanding there was no ambiguity in the rules as regards the area where the prescribed standards should be applicable. Except a principle which the Court deduced from the rules themselves there was no material before the Court that the minimum standard prescribed for Uttar Pradesh was defective in any respect. The approach adopted by the learned Judges in Malik Ram 's case appears to us to be a reversal of the well recognised principle that it is for those who challenge the constitutionality of a statute or a statutory rule to allege and prove the grounds of invalidity and the adoption of the contrary rule that when a party makes such a challenge it is for those who seek to support it to sustain it by positive evidence of its reasonableness and legality. The Court evolved from a reading of the rules a principle that the standards vary with the elevation of the place, without having before it any materials for such a conclusion save what it considered was the rationale underlying the division into zones. As already explained, even in Himachal Pradesh the elevation of every place is not the same and there are areas which (1) A.I.R. 1962 All. 134 159 S.C. 44 690 are higher than others and so the test adopted does not even satisfy logic. We do not consider that the Court was justified in practically legislating and laying down what the rules should be rather than give effect to the law by adherence to the rules as framed. In the case now under appeal the learned Judge took the matter a step further and he adopted the lowest Reichert value prescribed for any area in the country as that which he would adopt for every other area in the country disre garding the rules. We find no justification for this either and, in fact, if the learned Judges in Malik Ram 's case(1) were in error in applying the Himachal standard to hilly areas of Uttar Pradesh, the judgment now under appeal discloses even more error. We might add that if one could legitimately discard the standard prescribed in the rules, as the learned Judge has done, we do not see any principle in holding, as he seems to indicate, that where the Reichert value is below 21 the ghee should be treated as adulterated. We, therefore, hold that the learned Judge was not justified in allowing the revision of the respondent and acquitting him. The result is that the appeal is allowed, the acquittal of the respondent is set aside and his conviction restored. It was stated to us on behalf of the respondent that of the imprisonment for one month to which the sentence passed on him by the Magistrate was modified by the Sessions Judge, he had already undergone a sentence of 18 days. He has been on bail practically since the admission of his Revision Petition in the High Court. In the circumstances, we consider that the sentence of imprisonment passed on him might be reduced to the period already undergone. The sentence of fine imposed will, however, stand. Appeal allowed. 1) A.I.R. 1962 All.

The respondent was tried for the commission of an offence under section 7 read with section 16(1)(a)(i) of the for selling adulterated ghee. The analysis of the ghee had disclosed that it had a Reichert Value of only 22 5 whereas the minimum Reichert value fixed for Uttar Pradesh, where the respondent sold the ghee, was 28. The defence of the respondent was that he had obtained the ghee which he sold from Jodhpur where the Reichert value fixed was only 22 and that the sample must be held not to be adulterated on the basis of the decision of the Allahabad High Court in State vs Malik Ram, A.1,R. 1962 All. This decision laid down that a distinction should be made between ghee obtained from cattle in the hill districts and ghee obtained from cattle in the plains and that ghee obtained from the hill districts of U.P. cannot be held to be adulterated if its Reichert value was equal to that prescribed for Himachal Pradesh which is a hilly area. It was the contention of the respondent that his ghee was admittedly pahadi ghee and therefore this decision would apply. The First Class Magistrate rejected these contentions and convicted him and sentenced him to six months ' R.I. and a fine of Rs. 500. On appeal the Sessions Judge concurred in the findings of the trial court but reduced the sentence. The respondent thereupon filed a Criminal Revision Petition before the High Court. The High Court agreed with the courts below that the ghee was not Jodhpur ghee but it was produced locally. But it held that the Reichert values as fixed were not based on any reasonable classification and therefore it was sufficient if a vendor satisfied the minimum standard prescribed for any area in the country and since the minimum prescribed for certain areas is 21 and since the ghee in question had 22 2 the respondent was not guilty of the offence charged. The State thereupon appealed to this Court by way of a certificate under article 134(1)(e) of the Constitution. It was urged by the appellant that the High Court was wrong in striking down or re drafting the rules framed by the Central Government in the manner in which the High Court has done purporting to invoke 680 article 14 of the Constitution and virtually setting up what the High Court considered was the reasonable standard. Held: (i) Where the Government have prescribed certain standards after taking into considerations various factors the court cannot strike down these standards as unreasonable or discriminatory merely on some priori reasoning. It can do so only by basing its decision on materials placed before it by way of scientific analysis. The party invoking article 14 must make averments with details to sustain such a plea and lead evidence to establish his allegations. In the absence of such plea and evidence the court cannot accept the statement of a party as to the unconstitutionality of a rule and refuse to enforce that rule as it stands merely because in its view the standards are too high and for this reason the rule is unreasonable. (ii) Applying these principles it is found that the case State vs Malik Ram (A.I.R. 1962 All. 156) was wrongly decided by the Allahabad High Court. In the case under appeal the High Court took the matter a step further and adopted the lowest Reichert value prescribed for any area in the country as what should be adopted for every other area in the country disregarding the rules. Hence the High Court was wrong in allowing the revisions.

Appeal No. 395 of 1959. Appeal by special leave from the Award dated November 25, 1957 of the Industrial Tribunal, Bombay, in Reference (I. T.) No. 24 of 1956. N. C. Chatterjee, D. H. Buch and K. L. Hathi, for the appellants. M. C. Setalvad, Attorney General for India, J. B. Dadachanji and section N. Andley, for the respondent Nos. 1 and 2. M. C. Setalvad, Attorney General for India, Dewan Chaman Lal Pandhi and I. N. Shroff, for the respondent No. 3. 1960. November 30. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave in an industrial matter. It appears that the appellants were originally in the service of the Scindia Steam Navigation Co. Ltd. (hereinafter called the Scindias). Their services were transferred by way of loan to the Air Services of India Limited (hereinafter referred to as the ASI). The ASI was formed in 1937 and was 813 purchased by the Scindias in 1943 and by 1946 was a full subsidiary of the Scindias. Therefore from 1946 to about 1951, a large number of employees of the, Scindias were transferred to the ASI for indefinite periods. The Scindias had a number of subsidiaries and it was usual for the Scindias to transfer their employees to their subsidiary companies and take them back whenever they found necessary to do so. The ' appellants who were thus transferred to the ASI were to get the same scale of pay as the employees of the Scindias and the same terms and conditions of service (including bonus whenever the Scindias paid it) were to apply. The Scindias retained the right to recall these loaned employees and it is the case of the appellants that they were entitled to go back to the Scindias if they so desired. Thus the terms and conditions of service of these loaned employees of the ASI were different from those employees of the ASI who were recruited by the ASI itself. This state of affairs continued till 1952 when the Government of India contemplated nationalisation of the existing air lines operating in India with effect from June 1953 or thereabouts. When legislation for this purpose was on the anvil the appellants felt perturbed about their status in the ASI which was going to be taken over by the Indian Air Lines Corporation (hereinafter called the Corporation), which was expected to be established after the , No. XXVII of 1953, (hereinafter called the Act) came into force. They therefore addressed a letter to the Scindias on April 6, 1953, requesting that as the Government of India intended to nationalise all the air lines in India with effect from 1 June, 1953, or subsequent thereto, they wanted to be taken back by the Scindias. On April 24, the Scindias sent a reply to this letter in which they pointed out that all persons working in the ASI would be governed by cl. 20 of the Air Corporation Bill of 1953, when the Bill was enacted into law. It was also pointed out that this clause would apply to all those actually working with the ASI on 103 814 the appointed day irrespective of whether they were recruited by the ASI directly or transferred to the ASI from the Scindias or other associated concerns. It was further pointed out that if the loaned employees or others, employed under the 'ASI, did not want to join ,the proposed Corporation they would have the option not to do so under the proviso to cl. 20(1) of the 'Bill; but in case any employee of the ASI whether loaned or otherwise made the option not to join the proposed Corporation, the Scindias would treat them as having resigned from service, as the Scindias could not absorb them. In that case such employees would be entitled only to the usual retirement benefits and would not be entitled to retrenchment compensation. Finally, it was hoped that all those in the employ of the ASI, whether loaned or otherwise, having been guaranteed continuity of employment in the new set up would see that the Scindias would not be burdened with surplus staff, requiring consequential retrenchment of the same or more junior personnel by the Scindias. On April 29, 1953, a reply was sent by the union on behalf of the appellants to the Scindias. It was pointed out that the loaned staff should not be forced to go to the proposed Corporation without any consideration of their claim for re absorption into the Scindias. It was suggested that the matter might be taken up with the Government of India and the persons directly recruited by the ASI who were with other subsidiary companies might be taken by the proposed Corporation in place of the appellants. It seems that this suggestion was taken up with the Government of India but nothing came out of it, particularly because the persons directly recruited by the ASI. who were employed in other subsidiary companies did not want to go back to the ASI. In the meantime, the Scindias issued a circular on May 6,1953, to all the employees under the ASI including the loaned employees, in which they pointed out that all the persons working with the ASI would be governed by cl. 20(1) when the Bill became law and would be absorbed in the proposed Corporation, unless 815 they took advantage of the proviso to cl. 20(1). It was also pointed out that such employees as took advantage of the proviso to el. 20(1) would be treated as having resigned from service and would be entitled to usual retirement benefits as on voluntary retirement, and to nothing more. It was also said that their conditions of service would be the same until duly altered or amended by the proposed Corporation. The circular then dealt with certain matters relating to provident fund with which we are however not concerned. It appears that the Act was passed on May 28, 1953. 20(1) of the Act, with which we are concerned, is in these terms: "(1) Every officer or other employee of an existing air company (except a director, managing agent, manager or any other person entitled to manage the whole or a substantial part of the business and affairs of the company under a special agreement) employed by that company prior to the first day of July, 1952, and still in its employment immediately before the appointed day shall, in so far as such officer or other employee is employed in connection with the undertaking which has vested in either of the Corporations by virtue of this Act, become as from the appointed date an officer or other employee, as the case may be, of the Corporation in which the undertaking has vested and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same under the existing air company if its undertaking had not vested in the Corporation and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms or conditions are duly altered by the Corporation : Provided nothing contained in this section shall apply to any officer or other employee who has, by notice in writing given to the Corporation concerned prior to such date as may be fixed by the Central Government by notification in the official gazette 816 intimated his intention of not becoming an officer or other employee of the Corporation." After the Act was passed, notice was sent on June 17, 1953, to each employee of all the air companies which were being taken over by the proposed Corporation m and he was asked to inform the officer on special duty by July 10, 1953, if he desired to give the notice contemplated by the proviso to section 20(1). A form was sent in which the notice was to be given and it was ordered that it should reach the Chairman of the Corporation by registered post by July 10. The appellants admittedly did not give this notice as required by the proviso to section 20(1). In the meantime on June 8, 1953, a demand was made on behalf of the appellants in which the Scindias were asked to give an assurance to them that in the event of retrenchment of any loaned staff by the proposed Corporation within the first five years without any fault, the said staff would be taken back by the Scindias. Certain other demands were also made. The Scindias replied to this letter on July 3 and pointed out that they could not agree to give an assurance to take back the loaned staff in case it was retrenched by the proposed Corporation within the next five years. We are not concerned with the other demands and the replies thereto. On July 8, a letter was written on behalf of the appellants to the Scindias in which it was said that the appellants could not accept the contention contained in the circular of May 6, 1953. Though the appellants were carrying on this correspondence with the Scindias, they did not exercise the option which was given to them under the proviso to section 20(1) of the Act,. by July 10, 1953. First of August, 1953, was notified the appointed day under section 16 of the Act and from that date the undertakings of the "existing air companies" vested in the Corporation established under the Act (except the Air India International). So on August:1, 1953, the ASI vested in the Corporation and section 20(1) of the Act came into force. Hence as none of the appellants had exercised the option given to them under the proviso, they would also be governed by the said provision, 817 unless the contention. raised on their behalf that they could in no case be governed by section 20(1), is accepted. The tribunal came to the conclusion that, whatever the position of the appellants as loaned staff from the Scindias to the ASI, as they were informed on May 6, 1953, of the exact position by the Scindias and they did not ask for a reference of an industrial dispute immediately thereafter with the Scindias and as they" ' did not exercise the option given to them by the proviso to section 20(1) before July 10, 1953, they would be governed by section 20(1) of the Act. In consequence, they became the employees. of the Corporation as from August 1, 1953 and would thus have no right there after to claim that they were still the employees of the Scindias and had a right to revert to them. The consequence of all this was that they were held not to be entitled to any of the benefits which they claimed in the alternative according to the order of reference. It is this order of the tribunal rejecting the reference which has been impugned before us in the present appeal. The main contention of Mr. Chatterjee on behalf of the appellants is that they are not governed by section 20 (1) of the Act and in any case the contract of service between the appellants and the Scindias was not assignable and transferable even by law and finally that even if section 20(1) applied, the Scindias were bound to take back the appellants. We are of opinion that there is no force in any of these contentions. 20(1) lays down that every officer or employee of the "existing air companies" employed by them prior to the first day of July, 1952, and still in their employment immediately before the appointed day shall become as I from the appointed day an officer or employee, as the case may be, of the Corporation in which the undertakings are vested. The object of this provision was to ensure continuity of service to the employees of the "existing air companies" which were being taken over by the Corporation and was thus for the benefit of the officers and employees concerned. It is further provided in section 20(1) that the terms of service etc. would be the same until they are duly altered by the Corporation. One should have thought that the employees of the air 818 companies would welcome this provision as it ensured them continuity of service on the same terms till they were duly altered. Further there was no compulsion on the employees or the officers of the "existing air companies" to serve the Corporation if they did not want to do so. The proviso laid down that any officer or other employee who did not want to go into the service of the Corporation could get out of service by notice in writing given to the Corporation before the date fixed, which was in this case July 10, 1953. Therefore, even if the argument of Mr. Chatterjee that the contract of service between the appellants and their employers had been transferred or assigned by this section and that this could not be done,, be correct, it loses all its force, for the proviso made it clear that any one who did not want to join the Corporation, was free not to do so, after giving notice upto a certain date. Mr. Chatterjee in this connection relied on Nokes vs Doncaster Amalgamated Collieries Ltd. where it was observed at p. 1018 "It is, of course, indisputable that (apart from statutory provision to the contrary) the benefit of a contract entered into by A to render personal service to X cannot be transferred by X to Y without A 's consent, which is the same thing as saying that, in order to produce the desired result,, the old contract between A and X would have to be terminated by notice or by mutual consent and a new contract of service entered into by agreement between A and Y." This observation itself shows that a contract of service may be transferred by a statutory provision; but in the present case, as we have already said, there was no compulsory transfer of the contract of service between the "existing air companies", and their officers and employees to the Corporation for each of them was given the option not to join the Corporation, if he gave notice to that effect. The provision of section 20(1) read with the proviso is a perfectly reasonable provision and, as a matter of fact, in the interest of employees themselves. But, Mr. Chatterjee argues that section 20(1) will only apply to those who were in the employ of the "existing air companies"; it would not (1) , 819 apply to those who might be working for the "existing air companies" on being loaned from some other company. In other words, the argument is that the, appellants were in the employ not of the ASI but of the Scinaias and therefore section 20(1) would not apply to them and they would not become the employees of the Corporation by virtue of that provision when they failed to exercise the option given to them by the proviso. According to him, only those employees of the ASI who were directly recruited by it, would be covered by section 20(1). We are of opinion that this argument is fallacious. It is true that the appellants were not originally recruited by the ASI. They were recruited by the Scindias and were transferred on loan to the ASI on various dates from 1946 to 1951. But for the purposes of section 20(1) we have to see two things: namely, (i) whether the officer or employee was employed by the existing air company on July 1, 1952, and (ii) whether he was still in its employment on the appointed day, (namely, August 1,1953). Now it is not disputed that the appellants were working in fact for the ASI on July 1, 1952, and were also working for it on August 1, 1953. But it is contended that though they were working for the ASI they were still not in its employment in law and were in the employment of the Scindias because at one time they had been loaned by the Scindias to the ASI. Let us examine the exact position of the appellants in order to determine whether they were in the employ of the ASI or not. It is not disputed that they were working for the ASI and were being paid by it; their hours of work as well as control over their work was all by the ASI. From this it would naturally follow that they were the employees of the ASI, even though they might not have been directly recruited by it. It is true that there were certain special features of their employment with the ASI. These special features were that they were on the same terms and conditions of service as were enjoyed by the employees of the Scindias in the matter of remuneration, leave, bonus, etc. It may also be that they could not be, dismissed by the ASI and the Scindias may have had to take action in case it was 820 desired to dismiss them. Further it may be that they could be recalled by the Scindias and it may even be that they might have the option to go back to the Scindias. But these are only three special terms of their employment with the ASI. Subject to these special terms, they would for all purposes be the employees of the ASI and thus would in law be in the employment of the ASI both on July 1, 1952 and on August 1, 1953. The existence of these special terms in the case of these appellants would not in law make them any the less employees of the ASI, for whom they were working and who were paying them, who had power of control and direction over them; who would grant them leave, fix their hours of work and so on. There can in our opinion be no doubt that subject to these special terms the appellants were in the employ of the ASI in law. They would therefore be in the employ of the ASI prior to July 1, 1952 and would still be in its employ immediately before August 1, 1953. Consequently, they would clearly be governed by section 20(1). As they did not exercise the option given to them by the proviso to section 20(1), they became the employees of the Corporation from August 1, 1953, by the terms of the statute. The last point that has been urged is that even if section 20(1) applies, the Scindias are bound to take back the appellants. Suffice it to say that there is no force in this contention either. As soon as the appellants became by force of law the employees of the Corporation, as they did so become on August 1, 1953, in the circumstances of this case, they had no further right against the Scindias and could not; claim to be taken back in their employment on the ground that they were still their employees, in spite of the operation of section 20(1) of the Act. Nor could they claim any of the alternative benefits specified in the order of reference, as from August 1, 1953, they are by operation of law only the employees of the Corporation and can have no rights whatsoever against the Scindias. We are therefore of opinion that the tribunal 's decision is correct. The appeal fails and is thereby dismissed. There will be no order as to costs. Appeal dismissed.

Section 20(1) of the (XXVII of 1953), read with the proviso, is a perfectly reasonable provision and in the interest of the employees and it is not correct to say that it can apply only to the direct recruits of the existing air 812 companies and not at all to loaned employees working under them. The two conditions of its applications are (i) that the officer or employee was employed by the existing air company on July 1, 1952, and (ii) that he was still in its employment on August 1, 1953, the appointed day. In the instant case where the appellants who had been recruited by the Scindia Steam Navigation Co., Ltd., and on purchase by it of the Air Services of India Ltd., loaned to the latter, and were working under its direction and control on and between the said dates and being paid by it, Held, that in law they were the employees of the Air Ser vices of India from the appointed day, notwithstanding the existence of certain special features of their employment, and as such governed by section 20(1) of the Act and since they did not exercise the option given to them under the proviso, they became employees of the Corporation established under the Act and ceased to have any rights against the original employers. Nokes vs Doncaster Amalgamated Collieries Ltd., [1940] A.C. 1014, considered.

Civil Appeal No. 1365 of 1968 From the Judgment and Decree dated the 8 12 66 of the Madras High Court in Appeal No. 609 of 1961. K. N. Balasubrahmaniam and Miss Lily Thomas for the Appellant. K. Jayaram for the Respondent. The Judgment of the Court was delivered by JASWANT SINGH, J. This is an appeal by certificate granted by the High Court of Judicature at Madras under Article 133(1) (a) and (b) of the Constitution of India against its judgment and decree dated December 8, 1966 in A. section No. 609 of 1961. The facts culminating in this appeal lie in a short compass and may be briefly stated thus: Kota Venkatachala Pathy whose legal representatives are the respondents herein and Kota Narayanan, the appellant herein, were real brothers being the sons of one Kota Rangaswami Chettiar. Together with their cousin Subramanyam Chettiar, the son of Kota Kuppuswami Chettiar, the brother of Kota Rangaswami Chettiar, they formed a joint family which was a trading one. Prior to 1927, Subramanyam Chettiar was the manager and karta of the family. After 1927 Kota Venkatachala Pathy took over the management of the family and its properties. By registered deed dated May 29, 1929 (Exh. A 1) a partition of joint family properties was effected between Subramanyam Chettiar on the one hand and Kota Venkatachala Pathy and his brother, Kota Narayanan, who was then a minor, on the other, each branch taking a half share. As karta of the joint family. Subramanyam Chettiar had, before November 20, 1927 incurred debts to the tune of Rs. 9,506/ from several creditors. Five items of joint family properties detailed in Schedule D 1 to the deed of partition were earmarked for the discharge of the aforesaid debts and were given over to Kota Venkatachala Pathy who was made responsible for the discharge of the debts. These debts were discharged by Kota Venkatachala Pathy before March 26, 1934. On September 7, 1956, Kota Venkatachala Pathy brought a suit, being No. O. section 87 of 1956, in the Court of the Subordinate Judge of Vellore, North Arcot, for partition and separate possession of 3/4th of the properties set out in Schedule 'A ' to the plaint, 1/2 of the properties set out in Schedule A 1 to the plaint and whole of the properties set out in Schedule 'B ' to the plaint. One of the items namely, item No. 1 of Schedule 639 'B ' to the plaint which consists of four shops is what remains undisposed out of the properties mentioned in Schedule 'D 1 ' to the deed of partition which were set apart for the purpose of discharging the aforesaid debts incurred by Subramanyam Chettiar before 1927. The case as set out by Kota Venkatachala Pathy in his plaint was that the properties set out in Schedule 'B 1 ' to the deed of partition were given over to him absolutely for the discharge of the aforesaid debts set out in Schedule 'D ' to the deed of partition and it was provided in the said deed that either he would discharge the debts mentioned in the deed or undertake to pay the same himself within a month from the registration of the document and obtain and hand over to Subramanyam Chettiar receipts from the creditors specifically mentioned there that Subramanyam Chettiar was not liable for payment of the aforesaid debts and that if the aforesaid conditions were not satisfied by him i.e. by Kota Venkatachala Pathy and any loss was occasioned to the former, the latter would be liable for those losses. The case of Kota Venkatachala Pathy further was that since he had discharged the debts detailed in Schedule 'D ' to the deed of partition, he was entitled to the exclusive possession of item No. 1 of Schedule 'B ' to the plaint as his self acquired property by virtue of the terms of deed of partition and also to the rest of the properties detailed in the said Schedule 'B ' as he had purchased the same with his own funds. Kota Venkatachala Pathy based his claim of 3/4th share in properties detailed in Schedule 'A ' to the plaint on the ground that he was entitled to 1/4th by birth as a coparcener and the rest of the half share allotted to Subramanyam Chettiar as he had purchased the same from auction purchasers. The relief for accounts was based by Kota Venkatachala Pathy on the ground that there was an oral division in status in 1938 and it was the appellant who was managing the properties either as a co owner or as an agent since then. The appellant resisted the claim of extra share made by Kota Venkatachala Pathy and contended that the latter was entitled only to half share in all the suit properties. According to the appellant, the family debts set out in Schedule 'D ' to the aforesaid deed of partition was discharged by Kota Venkatachala Pathy not only by the sale of the properties set out in Schedule 'D 1 ' to the deed of partition but also by substantially utilising other joint family properties available for division. It was also contended by the appellant that since Kota Venkatachala Pathy acted as Karta of his branch, the aforesaid deed of partition should be construed as meaning that any item salvaged or saved after the discharge of the aforesaid family debts would be ancestral property and not exclusive property of the plaintiff. As regards the properties other than item No. 1 of Exhibit 'B ' of the plaint, it was contended by the appellant that they were also to be shared half and half between him and Kota Venkatachala Pathy as they were purchased from the joint family funds. With regard to the relief for rendition of accounts, the appellant contended that he became the Karta of the joint family in 1947 and Kota Venkatachala Pathy was not entitled to the relief of rendition of account till the date of the suit when alone there was a division of status and not in 1938 as claimed by Kota Venkatachala Pathy. 640 On a consideration of the evidence adduced in the case, the Trial Court by its judgment and decree dated September 12, 1960, held that there was no division in status till the date of the suit. With regard to item No. 1 of Schedule 'B ' to the plaint, the Trial Court held that the total amount of debts paid was Rs. 15,669 6 2 and out of D 1 Schedule properties of the estimated value of Rs. 9,506/ only Rs. 2,575/ were realized from the sale of four items thereof and the balance of the debts were discharged from out of the joint family assets like jewels, outstandings realized and other immovable properties allotted to Rangaswamy Chettiar 's branch in 1929 partition and that the conversion of such joint family assets was made by Kota Venkatachala Pathy who was managing the family till 1957. The Trial Court accordingly held that the properties namely item No. 1 of Schedule 'B ' to the plaint should be deemed to have been salvaged by detriment to the paternal estate. The Trial Court also found that as the defendant appellant herein was a minor at the time of 1929 partition and Kota Venkatachala Pathy, the original plaintiff had acted as his guardian, the latter must be deemed to have acted for the former also when he undertook to discharge the debts and that as between the original plaintiff and defendant to whom the properties were jointly allotted under Exhibit A 1, there was a position of implied trust in respect of properties set out in Schedule 'A ' and 'B ' to the plaint. The Trial Court also upheld the appellant 's plea of blending of all the properties by Kota Venkatachala Pathy. The Trial Court also found that properties covered by sale deeds Exhibit B 1 and Exhibit B 4 which originally formed part of the half share allotted to Subramanyam Chettiar though purchased by the original plaintiff in his own name were joint family properties and as such were liable to partition in equal shares. The Trial Court negatived the claim of Kota Venkatachala Pathy for a share in excess of one half in the aforesaid properties and held that he was entitled to only one half of all the suit properties. The Trial Court also decreed that the appellant shall render true and proper accounts in respect of the income and expenses regarding half share of the respondents in the properties mentioned in Schedule A, A 1 and to the plaint from 1947 onwards but did not give directions as to the assets and funds of capital nature withdrawn by Kota Venkatachala Pathy from out of the joint family utilised for his own separate and independent business. Aggrieved by this judgment, Kota Venkatachala Pathy, the original plaintiff, whose legal representatives are the respondents herein, preferred an appeal to the High Court of Judicature of Madras. By its judgment dated December 8, 1966, the High Court allowed the appeal in part, set aside the judgment and decree of the Trial Court and decreed the suit brought by the original plaintiff with regard to item No. 1 of Schedule to the plaint holding that the properties mentioned in Schedule D 1 to the partition deed were conveyed absolutely to the original plaintiff in lieu of his undertaking to be liable to discharge the entire debts mentioned in Schedule 'D ' to the partition deed whether the properties were sufficient or insufficient to discharge the same and if there was any surplus out of the properties he was to have the same absolutely, but if the properties were not sufficient, he was to dis 641 charge the debts on his own responsibility without making Subramanyam Chettiar liable for the same; that though a portion of the debts were discharged out of the joint family funds that only cast on the legal representatives of the original plaintiff a liability to account to the appellant for such drawings as the original plaintiff might have made and whatever amount was found to be so drawn would have to be debited against his i.e. the original plaintiff, after giving him credit for whatever amount he might have put into the common fund. The High Court further held that in determining the net drawals by the original plaintiff from the joint family funds, credit would be given to him for drawings made by the appellant by way of receipts of rents from item No. 1 of Schedule 'B ' to the plaint; that the original plaintiff was not liable to account for the joint family properties as there was no proof of mismanagement, mishandling or improper application of joint family properties or funds and that the defendant was also not liable to account to the original plaintiff for the management of the properties of which he was in charge. The High Court affirmed the judgment of the Trial Court in regard to the properties covered by Exhibits B 1 and B 4 holding that these were acquired with the common funds of the original plaintiff and the appellant which he was managing. Dissatisfied with this judgment and decree, the defendant has come up in appeal to this Court. The learned counsel for the appellant has, while supporting the appeal, strenuously urged that the properties mentioned in Schedule D 1 to the deed of partition (Exh. A 1) were not intended by the parties thereto to be given to Kota Venkatachala Pathy as his separate properties but were given to him only for a specific purpose viz. for discharging the family debts; that the ancestral properties could not be converted into separate properties by means of an arrangement arrived at between Subramanyam Chettiar and Kota Venkatachala Pathy; that the character of a property has to be decided after considering whether it is saved as a result of detriment to the paternal estate and as in the instant case, property mentioned at item No. 1 of Schedule D 1 to the deed of partition was saved by using the joint family assets, the said property could not but be regarded as the ancestral property of the parties which was subject to partition. He has further urged that in any event D 1 Schedule properties lost the character of separate properties as they were blended by Kota Venkatachala Pathy with the joint family properties. He has lastly urged that the directions given by the High Court with regard to accounting cannot be sustained as they are neither clear nor justified. The principal question for determination in this case is whether the properties mentioned in D 1 Schedule to the deed of partition were separate properties of Kota Venkatachala Pathy or retained the character of ancestral properties. The answer to this question depends largely on the construction of the deed of partition (Exh. A 1), material portion whereof is reproduced below for facility of reference: "Venkatachala Pathy the individual No. 2 shall discharge the debts described in 'D ' Schedule, the debts payable to outsiders by Subramanyam Chetti amongst us for the 642 amount borrowed for conducting the family business prior to 20 11 27 and individual No. 2 for discharging the loans, shall enjoy absolutely the properties mentioned in Schedule D 1. Venkatachalapathi Chetti, the individual No. 2 shall either discharge the debts within a month from the date of registration of this document and obtain receipt for the creditors stating that Subramanyam Chetti is not liable to the aforesaid loans and shall give those receipts to Subramanyam Chetti. If it is not done so and thereby any loss is caused to Subramanyam Chetti by creditors, Venkatachalapathi Chetti shall be liable for those losses. The aforesaid Venkatachalapathi Chetti himself shall get possession of D 1 Schedule properties given to him in lieu of discharging the aforesaid debts whether those properties are adjusted to the aforesaid debts, or whether there remain any balance or any deficit". The salient features of the deed as extracted above are: (1) sole responsibility for discharge of the debts detailed in Schedule D 1 to the deed of partition which were payable to the outsiders was placed on Kota Venkatachala Pathy. (2) The liability cast on Kota Venkatachala Pathy for the discharge of the debts was not to the extent of the properties detailed in Schedule D 1 to the deed of partition but was irrespective of the sufficiency or otherwise of the properties and any deficit or surplus was to be met or enjoyed by him exclusively. (3) The debts were to be discharged by Kota Venkatachala Pathy within a month of the registration of the deed and he was required to have it in writing from the creditors that Subramanyam Chettiar was no longer liable for the debts. (4) In case, there was a default on the part of Kota Venkatachala Pathy to discharge the debts as undertaken by him and any loss was caused to Subramanyam Chettiar, to the former was to indemnify the latter. (5) Exclusive dominion, control and enjoyment of the properties mentioned in Schedule D 1 was vested in Kota Venkatachala Pathy in consideration of the obligation undertaken by him to discharge the debts. The aforesaid salient features leave no manner for doubt that the properties mentioned in D 1 Schedule to the deed of partition were given to Kota Venkatachala Pathy in lieu of the personal undertaking given by him to discharge the aforesaid debts. In other words, the conveyance of the properties to Kota Venkatachala Pathy was in the nature of remuneration for the services to be rendered by him. It will be useful in this connection to refer to the decision of this Court in Raj Kumar Singh Kukam Chandji vs Commissioner of Income tax, Madhya Pradesh where on the question whether the managing director 's remuneration received by the assessee was assessable in his individual hands or in the hands of the assessee 's Hindu undivided family, this Court expressed the view that the remuneration was assessable as the assessee 's individual income and not as the income of his Hindu undivided family. We are, therefore, of the 643 view that Schedule D 1 properties were given absolutely to Kota Venkatachala Pathy as his separate properties. Let us now see as to whether the aforesaid arrangement entered between the members of the Hindu undivided family whereby properties mentioned in Schedule D 1 to the deed of partition were made over to Kota Venkatachala Pathy was valid according to Hindu Law. A reference to page 426 of Mayne 's Treatise on Hindu Law and Usage (11th Edition) makes it clear that while dividing the family estate, it is necessary for the joint family to take account of both the assets and the debts for which the undivided estate is liable and to make provision for discharge of the debts. It is also well settled by the decisions of this Court in Sahu Madho Das vs Pandit, Mukand Ram Maturi Pullaian vs Maturi Narasimham and section Shanmugam Pillai & Ors. vs K. Shanmugam Pillai Ors. that if family arrangements which are governed by a special equity peculiar to themselves or entered into bonafide to maintain peace or bring about harmony in the family and the terms thereof are fair taking into consideration the circumstances of the case, every effort must be made by the Court to recognise and sustain it. Examining the matter in the light of these principles, we find that by the aforesaid arrangement both Subramanyam Chettiar and the defendant appellant were absolved of the responsibility to discharge the family debts and liability was cast on Kota Venkatachala Pathy alone to discharge the same irrespective of the fact whether the properties mentioned in Schedule D 1 to Exhibit A 1 ultimately turned out to be sufficient or insufficient to meet the burden. Thus the arrangement being bonafide and its terms being fair, we cannot but hold that it was valid and the properties detailed in Schedule D 1 to the deed of partition became separate properties of Kota Venkatachala Pathy from the date of the execution of the deed of partition and are not liable to partition. This takes us to the question as to whether there was, as contended by the appellant, any blending of the properties mentioned in Schedule D 1 to the deed of partition with the rest of the properties of the joint family consisting of Kota Venkatachala Pathy and the appellant. It is true that property separate or self acquired of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by the owner into the common stock with intention of abandoning his separate claim therein but the question whether a coparcener has done so or not is entirely a question of fact to be decided in the light of all the circumstances of the case. It must be established that there was a clear intention on the part of the coparcener to waive his separate rights such an intention cannot be inferred merely from the physical mixing of the property with his joint family or from the fact that other members of the family are allowed to use the property jointly with himself or that the income of the separate property is utilised out of generosity or kindness to support persons whom the holder is not bound to support or from the failure to maintain separate accounts for an 644 act of generosity or kindness cannot ordinarily be regarded as an admission of a legal obligation. (See Lakkireddi Chinna Venkata Reddi & Ors. vs Lakkireddi Lakshmama and G. Narayana Ram vs G. Chamaraju & Ors. In the instant case we are unable to find that there was any intention on the part of Kota Venkatachala Pathy of abandoning his separate rights over the properties set out in Schedule D 1 to the deed of partition. The mere fact that these properties were not separately entered by Kota Venkatachala Pathy in the account books or that no separate account of the earning from these properties was maintained by him cannot rob the properties of their character of self acquired properties. We are accordingly of the view that there was no blending of the properties by Kota Venkatachala Pathy as contended by the appellant. The mere fact that some amount out of the joint family funds was used for discharge of the debts mentioned in Schedule to the deed of partition is also of no consequence. If any amount out of the joint family funds was used for the discharge of the outstandings payable to the outside debtors, the legal representatives of Kota Venkatachala Pathy would, as pointed out by the High Court be liable for them. There is also no substance in the last contention advanced on behalf of the appellant. The legal position is well settled that in the absence of proof of misappropriation or fraudulent or improper conversion by the manager of a joint family a coparcener seeking partition is not entitled to call upon the manager to account for his past dealing with the family property. The coparcener is entitled only to an account of the joint family property as it exists on the date he demands partition. In the instant case there being no evidence to establish any misappropriation or fraudulent conversion of the joint family property by Kota Venkatachala Pathy during the period he acted as karta of the family, we are unable to interfere with the direction issued by the High Court which is just and proper. For the foregoing reasons, the appeal fails and is hereby dismissed but in the circumstances of the case without any order as to costs. V.P.S. Appeal dismissed.

The appellant and V, father of respondents, were brothers. They, together with their cousin, formed a joint Hindu family. In a partition in 1929 between the two branches, certain properties were given to V for discharging some family debts. V took over the management of his branch of the family and after discharging the debts, filed in 1956 a suit for partition against the appellant claiming, inter alia, that one of the items earmarked for the discharge of the debts which remained undisposed of, was his exclusive property as it was given to him absolutely; and also for accounts on the ground that the appellant took over the management from 1938. The trial court negatived the claim in respect of the property, but directed the appellant to give accounts from 1947 when admittedly he took over management. On appeal, the High Court upheld V 's claim with respect to the property and gave modified directions for accounts by the parties. Dismissing the appeal to this Court, ^ HELD: (1) The properties given to V became his separate properties from the date of the partition deed of 1929 and were not liable to partition. [643A] (a) The salient features of the deed are, (i) the sole responsibility for discharge of the debts was placed on V; (ii) V 's liability was not to the extent of the properties but was irrespective of the sufficiency or otherwise of the properties and any deficit or surplus was to be met or enjoyed by him exclusively; (iii) the cousin was no longer liable for the debts; (iv) in case there was a default on V 's part, and if, any loss was caused to the cousin he was to be indemnified by V; and (v) exclusive dominion and control over, and enjoyment of, the properties was vested in V in consideration of the obligation undertaken by him to discharge the debts. The properties were thus given to V in view of his personal undertaking to discharge the debts, and, the conveyance was in the nature of remuneration for services to be rendered by him. [642 C G] Raj Kumar Singh Kukam Chandji vs Commissioner of Income tax Madhya Pradesh referred to. (b) The arrangement was valid because it was bona fide and its terms were fair. [643E] Sahu Madho Das vs Pandit Mukand Ram ; , Maturi Pullaiah vs Maturi Narasimham AIR 1966 SC 1836 and section Shanmugam Pillai & Ors. vs K. Shanmugam Pillai & Ors. ; referred to. (c) There was no blending of the properties by V with other joint family properties. There was no evidence of any intention on V 's part to abandon his separate rights over the properties. The mere fact that they were not separately entered by him in the account books or that no separate account of the earnings from them was maintained by him cannot rob them of their separate character. [644B C] Lakkireddi Chinna Venkata Reddi & Ors. vs Lakkireddi Lakshmama ; and G. Narayana Ram vs C. Chamaraju & Ors. ; referred to. 638 (d) If any amount of the joint family funds was used by V for the discharge of the debts, the respondents (legal representatives of V) would be liable for them, but that would not affect the character of the properties. [644 C D] (2) It is well settled that in the absence of proof of misappropriation or fraudulent or improper conversion by the manager, a coparcener, seeking partition, cannot call upon the manager to account for his past dealings with the family property. Since there was no evidence of any misappropriation by V, he was not liable for accounts during his period of management. [644E F]

Appeals Nos. 256 267 of 1966. Appeals by special leave from the Award dated April 6, 1964 of the Central Government Labour Court, Dhanbad in Ap plications L.C. Nos. 237 / 245, 228 / 247, 238 / 250, 230 / 252, 239 / 254, 229/255 of 1962. H.R. Gokhale and D. N. Gupta, for the appellant (in all the appeals). Janardan Sharma, for the respondents (in all the appeals). The Judgment of the Court was delivered by Shelat, J. These appeals by the special leave arise out of applications filed by workmen of the appellant company claiming bonus under the Scheme framed by the Central Government under the, Coal Mines Provident Fund and Bonus Schemes Act, 46 of 1948 and railway fares and leave wages under the award of the Industrial Tribunal (Colliery Disputes) which came into effect as from February 22, 1954. The Central Government Labour Court at Dhanbad allowed their claim under section 33C (2) of the . Mr. Gokhale for the appellant company challenged the correctness of the Labour Court 's decision and raised the following contentions : (1) that the Labour Court had no jurisdiction to try these applications under section 33C (2): (a)because section 33C(2) contemplates recovery of money payable under an award, settlement or under the provisions of Chapter VA of the only 142 and not under any other statute or scheme framed there under; (b)that under section 33C(2) the benefit capable of being computed in terms of money is a non monetary benefit and not a claim for money itself; and (c)that the proceedings under section 33C(2) being in the nature of execution proceedings substantial questions between an employer and his employee cannot be adjudicated by the Labour Court under this section; (2)that in any case these applications were barred by limitation prescribed by the said bonus Scheme and/or due to laches on the part of the respondents , (3)that under the said Scheme the respondents are not entitled to bonus as they were employed as domestic servants and were during the relevant period performing domestic and personal work; and (4)that the direction to pay bonus for the period prior to the dates on which these respondents were employed was in valid. The contention as to jurisdiction of the Labour Court depends on the true construction of section 33C(2) as it stood in 1962 when these applications were filed and before its amendment by Act 36 of 1964. Section 33C(2) has so far been the subject matter of decision by this Court in three cases, viz., Punjab National Bank Ltd. vs Kharbanda(1), Central Bank of India vs Rajagopalan(2) and Bombay Gas Co. Ltd. vs Gopal Bhiva(3). The following propositions on the question as to the scope of section 33C(2) are deducible from these three decisions: (1)The legislative history indicates that the legislature, after providing broadly for the investigation and settlement of disputes on the basis of collective bargaining, recognised the need of individual workmen of a speedy remedy to enforce their existing, individual rights and therefore inserted section 33A in 1950 and section 33C in 1956. These two sections illustrate cases in which individual workmen can enforce their rights without having to take recourse to section 10(1) and without having to depend on their union to espouse their case. (2)In view of this history two considerations are relevant while construing the scope of section 33C. Where industrial disputes arise between workmen acting collec tively and their employers such disputes must be adjudicated upon in the manner prescribed by the Act, as for (1) [1962] Supp. 2 S.C.R. 977. (2) ; (3) ; 143 instance under section 10(1). But having regard to the legislative policy to provide a speedy remedy to Individual ' workmen for enforcing their existing rights, it would not be reasonable to exclude their existing rights sought to be implemented by individual workmen. Therefore though in determining the scope of section 33C care should be taken not to exclude cases which legitimately fall within its purview, cases which fall, for instance under section 10(1), cannot be brought under section 33C; (3)Section 33C which is in terms similar to those in section 20 ofthe Industrial Disputes (Appellate Tribunal) Act,, 1950 is a provision in the nature of an executing provision; (4)Section 33C(1) applies to cases where money is due to a workman under an award or settlement or under Chapter VA of the Act already calculated and ascertained and therefore there is no dispute about its computation. But sub section 2 applies both to non monetary as well as monetary benefits. In the case of monetary benefit it applies where such benefit though due is not calculated and there is a dispute about its calculation; (5)Section 33C(2) takes within its purview cases of workmen who claim that the benefit to which they are entitled should be computed in terms of money even though the right to the benefit on which their claim is based is disputed by their employers. It is open to the Labour Court to interpret the award or settlement on which the workmen 's right rests. (6) The fact that the words of limitation used in section 20(2) of the Industrial Disputes (Appellate Tribunal Act. 1950 are omitted in section 33C(2) shows that the scope, of section 33C(2) is wider than that of section 33C(1). Therefore, whereas sub section 1 is confined to claims arising under an award or settlement or Chapter VA. claims which can be entertained under sub section are not so confined to those under an award, settlement or Chapter VA. (7)Though the court did not indicate which cases other than those under subsection would fall under sub section 2. it pointed out illustrative cases which would not fall under sub section 2, viz., cases which Would ap propriately be adjudicated under section 10(1) or claims which have already been the subject matter of settlement to which sections 18 and 19 would apply. (8)Since proceedings under section 33C(2) are analogous to execution proceeding and the Labour Court called upon to compute in terms of money the benefit claimed by a workman is in such cases in the position of an executing court. the Labour Court like the executing court 144 in execution proceedings governed by the Code of Civil Procedure, is competent under section 33C(2) to interpret the award or settlement where the benefit is claimed under such award or settlement and it would be open to it to consider the plea of nullity where the award is made without jurisdiction. It is clear that the right to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship between an industrial workman and his employer. Since the scope of sub sec. 2 is wider than that of subsec. 1 and the sub section is not confined to cases arising under an award, settlement or under the, provisions of Chapter VA. there is no reason to hold that a benefit provided by a statute or a Scheme made thereunder, without there being anything contrary tinder such statute or section 33C(2), cannot fall within sub section 2. Consequently, the benefit provided in the bonus scheme made under the Coal Mines Provident Fund and Bonus Schemes Act, 1948 which remains to be computed must fall under sub section 2 and the Labour Court therefore had jurisdiction to entertain and try such a claim, it being a claim in respect of an existing right arising from the relationship of an industrial workman and his employer. The contention that the Labour Court had no jurisdiction because the claim arose under the said scheme or because the benefit was monetary or because it involved any substantial question between the Company and the workmen must, in view of the said decisions, fail. These applications were made in 1962 though they related to claims for the years commencing from 1948 and onwards. The contention therefore was that part of these claims, at any rate, must be held to be barred either by limitation or by reason of laches on the part of the workmen. The answer to this contention is clearly provided in the case of Bombay Gas Co.(1) where a distinction was drawn between considerations which would prevail in an industrial adjudication and those which must prevail in a case filed under a statutory provision such as section 33C(2). This court pointed out there that whereas an industrial dispute is entertained on grounds of social justice and therefore a Tribunal would in such a case take into consideration factors such as delay or laches, such considerations are irrelevant to claims made under a statutory provision unless such provision lays down any period of limitation. The Court held that there is no justification in inductina period of limitation provided in the Limitation Act into the provisions of section 33C(2) which do not lay down any limitation and that such a provision can only be made by legislature if it thought fit and not by the court on an analogy or any other such consideration. It is a matter of some significance that though the legislature (1)[1964] 3 S.C.R. 709. 145 amended section 33C by Act 36 of 1964 and introduced limitation in the section, it did so by means of a proviso only in respect of claims made under sub sec. 1 but did not provide any limitation for claims under sub section 2. In view of this fact and the decision in Bombay Gas Company 's case(1) Mr. Gokhale conceded that he could not press the contention that the present claims were barred by limitation or laches. Some reliance however was sought to be placed on cl. 3 of section 9A of the Bonus Scheme. Section 9(A) contemplates that the employer has first to tender the bonus payable to the workman under the Scheme. If the bonus, in spite of the tender, remains unclaimed for six months after such tender, he is required to have it credited in the Reserve Account established under the Scheme. The section then provides by cl. 2 that the bonus amount shall be paid in the seventh month from the end of the quarter to which it relates by depositing it in such government treasury as may be prescribed and the original chalan of such deposit shall be sent within the time set out therein to the Coal Mines Provident Fund Commissioner. Clause (3) then provides that a workman who desires payment of arrears of bonus payable to him shall apply to the said Commissioner within three years from the last date of the quarter to which the bonus relates. The period of three years of limitation thus applies to applications for payment by the Commissioner from the deposit made in the treasury and has no application to claims under section 33C(2) which as aforesaid makes no provision for limitation The contention that the respondents workmen, though admittedly the employees of the appellant company, were not entitled to bonus under the Scheme as they were doing domestic and personal work, viz., of supplying water at the residence of certain junior officers of the Company throughout the relevant period, is also not tenable. The relevant portion of section 1 of the Bonus Scheme relied on by the Company reads as follows: "1. Class of employees eligible to qualify for bonus Except as hereinafter provided, every employee in a coal mine to which this Scheme applies shall be eligible to qualify for bonus. Exceptions An employee in a coal mine shall not be entitled to a bonus under the Scheme for the period during which (a). . . . . (b)he is employed as a mali, sweeper or domestic servant on domestic or personal work. . " (1) ; my(N)ISCI 12 146 Under this section every employee of the Company except as therein provided is eligible for bonus. The exception provides that a person though an employee in a colliery is not entitled to bonus inter alia for the period during which he is employed as a mali, sweeper or domestic servant on domestic and personal work. Two conditions are therefore necessary to render an employee ineligible for bonus : (1) that he is employed as a mali, a sweeper or a domestic servant and (2) that he performs during the relevant period domestic or personal work. To render an employee ineligible for bonus under this exception both the capacity and the nature of work are relevant factors. It follows that even though an employee is employed as a mali, a sweeper or a domestic servant if he does non domestic or non personal work he will be entitled to bonus and would lose his right to it only during that period that he does domestic or personal work. In Bhowra Collicry vs Its Workmen(1) this Court construed this very exception and held that if the concerned workmen were employed and worked as garden mazdoors and malis to look after the gardens attached to the bungalows occupied by the Colliery officers they would not be eligible for the bonus notwithstanding the fact that the bungalows were owned by the Colliery, the workmen were Colliery 's employees and worked under the Company 's orders and were liable to be transferred from one job to another. Thus the employment of a person as a mali, sweeper or a domestic servant and discharge by him of domestic or personal work as distinguished from non domestic and non personal work, i.e., work relating to the colliery, are necessary conditions before the exception can apply. In view of the admitted position that the respondents work men were employees of the Company the burden of proof that they fell within the exception is clearly on the Company. In its written statement the Company no doubt averred that these workmen were employed as domestic servants and carried out domestic and personal duties and were therefore not eligible for the bonus. But it is clear from the evidence of the two witnesses examined by the Company that the Company failed to establish either that the respondents were employed as domestic servants or that they were exclusively en aged on domestic or personal, work. On the other hand, from the evidence of Sibu, one of the respondent workmen, it appears that the respondents were employed in the colliery, that they were not assigned the exclusive duty of supplying water, at the residence of the junior officers but that they supplied water at certain pit heads. On this evidence the Labour Court has given a finding that they were engaged in supplying water at certain points in the colliery. In these circumstances the Labour Court was justified in coming to the conclusion that the exception did not apply. (1) 147 The last contention which remains to be considered was that the Labour Court was not right in awarding the claim of the workmen in full, both as regards bonus and railway fares and leave wages. According to the Company, none of these workmen was in its employment in 1948, that they were appointed at different dates and that they would at best be entitled to bonus for the period during which they were so employed. This contention has, however, no force in view of the Company not having disputed the quantum of relief claimed by the workmen both as regards bonus as also the railway fares and leave wages. The appeals are dismissed with costs. Appeal dismissed.

The respondents workmen filed applications in 1962 claiming bonus under the Scheme framed by the Central Government under the Coal Mines Provident Fund and Bonus Schemes Act, 1948 and railway fares and leave wages from 1948 onwards. The Labour Court, Dhanbad allowed their claims under section 33C(2) of the , which, in appeals to this Court, the appellant Company challenged, contending, that (1) the Labour Court had no jurisdiction to try these applications under section 33C(2); (ii) the applications were barred by Limitation prescribed by the bonus Scheme and/or due to laches. and (iii) under the said Scheme the workmen were not entitled to bonus as they were employed as domestic servants. HELD:The appeals must fail. (i)The right to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship ' between an industrial workman and his employer. Since the scope of sub see. 2 of section 33C is wider than that of sub s 1, and the sub section is not confined to cases arising under an award settlement or under the provisions of Chapter VA there is no reason to hold that a benefit provided by statute or a Scheme made thereunder, without there being anything contrary under such statute or section 33C(2), cannot fall within sub section 2. Consequently. the benefit provided in the bonus scheme made under the Coal Mines Provident Fund and Bonus Schemes Act, 1948 which remained to be computed must fall under sub section 2 and the Labour Court therefore had jurisdiction to entertain and try such a claim, it being a claim in respect of an existing right arising from the relationship of an industrial workman and his employer. [144B D]. Punjab National Bank Ldt. vs Kharbanda [1962] Supp. 2 S.C.R. 977 Central Bank of India vs Rajagopalan [1964] 3 S.C.R. 140, and Bombay Gas Co., Ltd. vs Gopal Bhiva [1964] 3 S.C.R. 709 relied on, (ii)There is no justification for inducting a period of limitation provided in the Limitation Act into the provisions of section 33C(2) which do not lay down any limitation. It is a matter of some significance that though the legislature amended section 33C by Act 36 of 1964 and introduced limitation in that Section, it did so by means of a proviso only in respect of claims made under sub sec. 1 but did not provide any such limitation for claims under sub sec. [14 4H 145B]. Bombay Gas Co. Ltd. vs Gopal Bhiva ; relied on. 141 The period of three years of limitation provided for by clause (3) of section 9A of ;the Bonus Scheme applies to applications for payment by the Coal Mines Provident Fund Commissioner from the deposit made in the Government treasury and has no application to claims under section 33C(2) which makes no provision for limitation. [145D E]. (iii)Two conditions are necessary to render an employee ineligible for Bonus under section 1 of the Bonus Scheme: (1) that he is employed as a mali, a sweeper or a domestic servant, and (2) that he performs during the relevant period domestic or personal work. To render an employee ineligible for bonus under this exception both the capacity and the nature of work are relevant factors. It follows that even though an employee is employed as a mali, a sweeper or a domestic servant if he does non domestic or non personal work he will be entitled to bonus and would lose his right to A only during that period that he does domestic or personal work. [146B C]. Bhowra Colliery vs Its Workmen, , relied on. On the evidence, the respondents were employed in the colliery, they were not assigned the exclusive duty of supplying water at the residence of the junior officers but they supplied water at certain pit heads. So the exception did not apply.

Appeal No. 1728 of 1967. Appeal by special leave from the judgment and order dated February 23, 1967 of the Bombay High Court, Nagpur Bench in Civil Revision No. 32 of 1965. W. section Barlingay and A. G. Ratnaparkhi, for the appellants. M. C. Bhandare and section P. Nayar, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave from a judg ment of the Bombay High Court (Nagpur Bench). The appel lants had filed a suit for claiming proprietary rights in a property which was known as "Navegaon tank" and which consisted of several khasras with a total acreage of 3104 odd. These villages were Malguzari villages. By virtue of the provisions of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands), Act, 1950 the malguzari of this tank were deprived of their rights and the Government took over possession. The compensation was paid by the Government after holding enquiry provided by the Act. The appellants, however, claimed a declaration that they still continued to be owners as before and wanted a permanent injunction restraining the Government from interfering with their rights. Alternatively it was prayed that if the Government was found to be in possession then a decree for possession be granted in their favour. 605 The Court Fee which was paid by the appellants was cal culated on the following basis. It was alleged that compensation of Rs. 1126/ only had been paid, to the proprietors and therefore the tank had to be valued on the basis of that figure for the purpose of court fee and jurisdiction. In addition owing to the injunction claimed an additional court fee of Rs. 501 was paid. On behalf of the State an objection was raised in the trial court that the value of the tank would not be less than Rs. 10,00,000/ and court fee on that amount should have been paid. The trial court came to the conclusion that the suit was for possession of land on the evidence which was produced it was held that the value of the land was Rs. 25,00,000/ . The appellants were directed to pay court fee on that amount and make appropriate amendments in the plaint. The appellants approached the High Court on the revisional side and challenged the decision of the trial court on the question of court fee. The High Court referred to section 6(i) (v) of the Bombay Court Fees Act, 1959, which was in force at the material time. This provision may be reproduced "In suits for the possession of land, houses and gardens according to the value of the subject matter; and such value, shall be deemed to be, where the subject matter is a house or garden according to the market value of the house or garden and where the subject matter is land." (a). . (b) (c). . According to the High Court the court fee was payable according to the value of the subject matter of the suit. So far as the houses and gardens were concerned it was the market value on which the court fee had to be paid. As regards the land subclauses (a), (b) and (c) contained a qualification with regard to those lands which were liable to pay land revenue to the State. Since tank was land covered under water it had to be valued as on the date of the suit without taking into consideration the improvements which might have been made. The value was of the subject matter and it would be that value which would be relevant for the purpose of court fee and jurisdiction. The matter was remanded to the trial court for further enquiry in the matter. It appears that according to the view of the High Court the court fee is payable under section 6 (i) (v) even with regard to land 606 on its value which according to the counsel for the State would be the market value. In our judgment section 6 (i) (v) does not admit of any such method of calculating the court fee where the subject matter is land. There is no doubt that where the subject matter is a house or a garden, in a suit for possession the court fee has to be paid according to the market value of the house or garden but where the subject matter is land the court fee has to be calculated according to what has been provided in the subclauses (a), (b) and (c) with regard to different categories of land. It may be that in clause (v) the land which has not been assessed to land revenue is not covered by, clauses (a), (b) and (c) but then the court fee will have to be calculated under some ,other provision of the Act but not on the basis of the value of the land. If there is any lacuna in the Bombay Act that will not justify the court in straining the language of clause (v) and reading it in such a way that if the land does not fall within sub clauses ,(a), (b) and (c) mentioned therein it must be valued in the same way as a house or a garden and court fee should be paid on that value. If, however, it is found that the land underneath the tank is assessed to land revenue then there is no difficulty and the court fee has to be calculated in accordance with the provisions of section 6(i) (v). But if the court fee cannot be determined under that provision it will be for the trial court to decide, under which provision court fee is payable and the appellant shall be required to pay that amount of court fee which is payable under the appropriate provision. The appeal is consequently allowed and the order of the High Court is set aside. The case is remanded to the trial court for disposal in accordance with law. Costs shall abide the event. K.B.N. Appeal allowed.

In a suit for possession of land court fee was held to be payable, under section 6(1) (v) of the Bombay Court Fees Act, 1959, on the value of the land. On appeal, HELD : Under section 6(i)(v) in a suit for possession of land the court fee has to be calculated according to what has been provided in subclauses (a) (b) and (c) with regard to different categories of land. It may be that in cl. (v) the land which has not been assessed to land revenue is not covered by clause (a), (b) and (c) but then the court fee will have to be calculated under some other provision of the Act but not on the basis of the value of the land. [606 A]

vil Appeal Nos. 8 & 9 of 1989. From the Judgment and Order dated 17.2.1987 of the Bombay High Court in Appeal No. 179 and 149 of 1987. T.U. Mehta, A. Subba Rao, P. Parmeshwaran, Harish N. Salve, N.D. Garg, Rajiv K. Garg, P.H. Parekh, Ms. Ayesha Misra and M.N. Shroff for the appearing parties. By these two special leave petitions under Article 136 of the Constitution, the Union of India and the Chief and the Joint Chief Controllers of Imports and Exports seek special leave to appeal from two appellate Judgments of the Division Bench of the High Court of Judica ture at Bombay Both dated 17.2.1987 in appeal Nos. 179 of 1987 and 149 of 1987 affirming in appeal orders of learned Single Judges dated 5.9.1985 in W.P. 1125 of 1985 and dated 19.9.1985 in W.P. 1918 of 1986, respectively, by which the writ petitions filed by M/s. Suksha International and M/s. Nutan Gems, respondents in these appeals, were allowed and appellants directed to revalidate 4 the imprest licences of the respondents and endorse them for import of OGL items, under paragraph 185[4] of the Import Export Policy of 1982 83 [AM 1983.] 2. Special leave, in both the petitions, is granted and the appeals taken up for final hearing, heard and disposed of by this common judgment. We have heard Shri Subbarao, learned counsel for the appellants and Shri Harish Salve, learned counsel for the respondents who were the writ peti tioners before the High Court. M/s. Suksha International, respondent in SLP 2579 of 1987, is a diamond exporter and is a registered Export House for the purposes of the Import Export Policy. The said export house was granted an Imprest Licence No. 0451365 dated 15.6.1981 of a value of (Rs. 1,53,80,000) for import of 'uncut ' and 'unset ' diamonds with corresponding export obligations. Respondent claimed that upon the due fulfilment by it of its export obligations it became entitled to revalidation and endorsement for export of OCM items of the imprest, Accordingly, on 3.8.1983 the said Export House applied under paragraph 185(4) of AM/83 policy, for such revalidation and endorsement of its imprest licence. Appellant No. 3 by his decision dated 21.9.1983, rejected this claim of the re spondent. Aggrieved by this rejection, respondent filed in the High Court under Article 226 of the Constitution a writ petition assailing the legality of the order dated 21.9.1983 and seeking a mandamus to the appellants to en dorse the Imprest Licence. Learned Single Judge of the High Court by his order dated 5.9. 1986 allowed the writ petition and issued the direction preyed for. This order was carried up in appeal before the Division Bench of the High Court in appeal No. 179 of 1987. The appeal came to be dismissed on 17.2. M/s. Nutan Gems, respondent in SLP 2580 of 1987 is a recognised Export House which had, similarly, been granted an Imprest Licence dated 24.2. 1983 for the import of uncut and unset diamonds with certain export obligations attached to it and that after the due discharge of the export obliga tions, Respondent became entitled to a revalidation and endorsement of the Imprest Licence for import of DGL items. The application dated 19.1.1984 made in this behalf by the respondent was rejected by appellant No. 6 by his order dated 19.3. M/s. Nutan Gems filed writ petition No. 1813 of 1985 in the High Court for issue of an appropriate writ quashing the said order of rejection and directing appellants to revalidate and endorse the 5 Imprest Licence. On 19.9.1985. Learned Single Judge allowed the writ petition. This Order was affirmed in appeal No. 149 of 1985 by the Division Bench on 17.2. These appellate judgments of the High Court are assailed in these appeals. Though a number of contentions are raised in the Memorandum of Special Leave Petition, the points, however, pressed at the hearing admit of being formulated thus: (a) that in the Import Export Policy, 1982 83 the entitlement of Registered Export Houses to the facility of revalidation and endorsement of OGL items under paragraph 185(4) is subject to and conditioned upon the express limitation in clause (7) of paragraph 185 of the Policy and that the High Court was in error in di recting revalidation and endorsement without reference to the mandatory prescription in clause (7). (b) that the High Court was in error in ignoring the contention of the appellants that respondents had rendered themselves disentitled to relief on ground of the inordi nate and unexplained delay in filing the writ petitions. In W.P. 1125 of 1985 (from which SLP 2579 of 1987 arises) the rejection of the prayer for revalidation was on 21.9. 1983 and the writ petition was filed in April, 1985; and in WP 1813 of 1985 (from which SLP 2580 of 1987 arises) the rejection of the prayer was on 18.3.1984 and the writ petition was filed on 10.9.1986, after a lapse of one and a half years in each case. (c) that, at all events, the direc tions issued for the endorsement must be limited only to items as limited by the pro nouncement of this Court in Rajprakash Chemi cals Ltd. vs Union of India, and D. Navinchandra & Co. vs Union of India, ; and other cases bearing on the question; and not in terms now directed by the High Court. We may first dispose of contention (c) on which there does not appear to be much controversy. Shri Subba Rao submitted that the High Court was in clear error in brushing aside this argument and affirming the learned Single Judge on the basis that the S.L.P. filed by 6 the appellants in Ripal Kumar & Co. 's case had been rejected by this Court. Shri Harish Salve, however, submitted that the decisions of this Court in Indo Afgan Chamber of Com merce vs Union of India; , ; Rajprakash Chemi cals Ltd. vs Union of India, ; Union of India vs Godrej Soaps (Pvt.) Ltd., ; and D. Navinchandra & Co. vs Union of India, ; etc do not have any direct beating on the question of the enti tlement of the Export Houses to revalidation and endorsement for OCL items under para 185(4) of A M 1983 Policy but relate to the question as to the limitations on the permis sibility of the items of import, consequent upon the changes in the policy. This question becomes relevant, says Shri Salve, at a stage which is subsequent to the revalidation and endorsement of the Imprest Licence and that the position in the present cases has not yet reached that stage. Howev er, he submitted that as to the choice of items permissible for import, the matter would of course, have to be deter mined the guided by these pronouncements. As Contention (c) is not in controversy it is not necessary to dwell on it any further. What, however, remain to be considered are the contentions (a) and (b). Re: Contention (a): Clauses (3), (4), (5) and (7) of para 185 of the policy provide: (3) Where REP licence has been issued to the Export House on its own exports, the facility of importing OGL items under sub para(1) above will be allowed without debit to the value of such REP licence, provided the value of such imports does not exceed the value of the REP licence. (4) The facility for import of OGL items available in sub para (3) above, may also be allowed, on merits, to Export Houses against their advance/imprest licences on account of which they are rendered ineligible to obtain REP licence. In such cases, however, the value upto which the OGL import may be allowed, will not exceed the value to which the Export House would have been eligible to the REP licence, had he not obtained advance/imprest licence in question. This facility will be available to the Export House after he has discharged the export obligation imposed on the advance/imprest licence. There fore, if by the time, the Export House becomes eligible to this facility, 7 the advance/imprest licence has expired, or, if the original validity left unused by that time is less than six months, the licensing authority will revalidate the licence simulta neously so as to give to the licence holder a time of six months for the purpose of import ing OGL item under this facility. (5) Export Houses who wish to take advantage of this facility of import of OGL items should get the licences concerned en dorsed by the licensing authority as under: "This licence will also be valid for import of OGL items under para 125 of Import Export Policy, 1982 83, subject to the condi tions laid down, and shall be nontransferable." (7) Import of OGL items by Export Houses under these provisions shall be subject to the condition, inter alia that the shipment of goods shall take place within the validity of the OGL i.e. 31st March, 1983. or within the validity period of the import licence itself (without any grace period), whichever date is earlier. This restriction will also apply to licences issued before 1.4.1982 in respect of items which continue to be on OGL in 1982 83 policy. (The restriction regarding grace period will not, however, apply in cases where shipment can be made within the permis sible grace period on or before 31.3.1981). Appellants ' contention is that clauses (4) and (7) of para 135 are part of an integrated policy scheme, providing for certain incentives to export houses and have to be read together and that the import of OGL items is strictly sub ject to the specific condition that the shipment of goods shall take place within the validity of the OGL i.e. 31.3.1983 or within the validity period of the licence itself which ever date is earlier. If this condition is held to be attracted to the case of an Imprest Licence also, then, quite obviously, the claim in the writ petitions would have to fail, as the application for revalidation is beyond the outer most time limit set for the import itself. Indeed, this question was left open by this Court while dismissing SLP 7389 of 1985 (Union of India vs Messrs H. Patel & Co.). In its order dated 19.7.1985 this Court said: " . . We, however, make it very clear that we express 8 no opinion on the validity of the above said contention based on paragraph 185(7) referred to above. The true effect of the said provi sion is left open to be considered in an appropriate case when an occasion arises to do so. Sri Salve, submitted that in the very nature of the procedures and exercises inherent in the effectuation of an imprest licence, as distinguished from Replenishment Li cence, the Export House has first to import the uncut and unset diamonds and thereafter fulfill its export obligations of cut and polished diamonds as a necessary antecedent for the effectuation of its entitlement to a revalidation and endorsement for OGL items. The very nature of the time consuming transactions that are required to be gone through preceding the very creation of the right to revalidation and endorsement are inconsistent with the feasibility of compli ance with the time schedule in para 185(7). Learned Counsel says that the view that should commend itself, both on construction and in equity, is that having regard to the innate differences in the nature of the obligations and conditions to be fulfilled between the holders of imprest licences on the one hand and the replenishment licences on the other and having regard, further, to the circumstances that export houses, which, under Imprest Licences, have first to import uncut and unset diamonds and thereafter fulfill their export obligations before becoming entitled to the import of OGL items, it would be a wholly unreasonable exercise in construction to import the condition in clause (7) into clause (4) and that clause (4) should, therefore, be treated on its true construction, as a special provision constituting an exception to the generality of the provision in clause (7). Otherwise, says counsel, the resulting posi tion would be that the satisfaction of the cumulative condi tions in clauses (4) and (7) by an Export House under an Imprest Licence would well nigh be impossible. This way of hormonising clauses (4) and (7) of para 185, it is submitted, has commended itself to the High Court in several other writ petitions involving the interpretation of clauses (4) and (7) of paragraph 185 of the AM 1983 policy. Sri Salve submits that it is reasonable to exclude imprest licences from the requirement of clause (7). We have considered the rival contentions on the point. Para 185(4) was intended to provide certain incen tives to the Export Houses which, upon grant of Imprest Licences, fulfill their countervailing obligations in the matter of export commitments. The provision 9 is a beneficial one. Clauses (4) and (7), no doubt, on their plain wording present certain constructional difficulties and the view sought to be put across by Shri Subba Rao for the appellant, on the plain language of clause (7), is not without possibilities. However, the basis of a harmonious construction which commended itself to the High Court in other similar cases appears to us to advance and promote the objects of the policy in paragraph 185(4) and is, at all events, not an unreasonable view to take of the matter. In some of these cases this Court has declined to interfere with this interpretation by rejecting petitions for special leave. Acceptance of the interpretation suggested by Shri Subba Rao would, in our opinion, unduly restrict the scope of the beneficial provision and, in many instances which would otherwise fall within the beneficial scope of the policy in para 185(4), take away with one hand what the policy gives with the other. We think we should accept the submissions of Shri Harish Salve which is consistent with the view taken of the matter by the High Court in other cases and hold that the conditions in para 185(4) of the policy would not be attracted to the case of Export Houses which are granted Imprest Licences. Accordingly we hold and answer contention (a) against the appellants. (10) Re: Contention (b): This pertains to appellants ' plea of delay as a bar to relief. Appellants have aired a serious grievance over this aspect. Shri Subba Rao streneously contended that the re spondents had approached the High Court after an inordinate and unexplained delay of over one and a half years in each of these cases and that appellants ' objection as to the disentitlement of the respondents to relief on the ground of delay was not even so much as adverted to by the learned Single Judge or the Division Bench. Learned counsel submit ted that promptitude and vigilant pursuit of legal remedies with diligence is basic to the entitlement to relief in the jurisdiction under Article 226, which is both extraordinary and discretionary and that in the present cases the delay of one and a half years in moving the Court should have been held crucial particularly where grant of import licence is cancelled. The pleadings in the writ petitions are not before us. We will proceed on the assumption that appellants had taken this objection before the learned Single Judge of the High Court and raised the plea as to the bar of delay in their appeals before the Division Bench of the High Court. If this point had been taken, we are afraid the High Court 10 was not justified in ignoring it or brushing it aside. Indeed the learned Single Judge of the High Court allowed the writ petitions in both these cases by short orders in similar terms, relying upon an earlier decision dated 19/20th August, 1985, in writ petition No. 2477 of 1984. The relevant part of the order reads: "Relevant facts and circumstances of this petition are similar to the relevant facts and circumstances in Writ Petition No. 2477 of 1984 decided by this Court on 19/20th August, 1985. Besides, as in the said Writ Petition No. 2477 of 1984, in the present case also there is no such delay as to preclude the petitioners from the relief claimed. In all the circumstances and for reasons stated in Writ Petition No. 2477 of 1984 the following order is passed on this Writ Petition. The petition succeeds and the same is allowed. " Thereafter, the learned judge proceeded to issue specific directions. Shri Subba Rao would say that the reference in the order by learned Single Judge to the contention on the point of delay as bar to relief had nothing to do with the specif ic contention of the appellants ' that there was inordinate and unexplained delay in approaching the Court. This, learned counsel submits, would be clear, by a reference to the aspect of the delay dealt with and considered in WP 2477 of 1984, on which the learned Single Judge relied. The order of the same learned Single Judge in WP 2477 of 1984, in which the particular aspect of delay is considered is at para 8 of that order. That para in the order in WP 2477 of 1984 reads: "Mr. Joshi, learned counsel for the respondents, submitted that the petitioners were not entitled to relief because of delay. It is not possible to agree. After the redemp tion certificate on 16th November, 1983, application for revalidation and OGL endorse ment was made within four months therefrom on 12th March, 1984. There is, in the circum stances, no such delay as to warrant its ejection on that ground. The contention thus fails and is rejected. " Shri Subba Rao submits that the delay referred to in the above paragraph is the delay in seeking revalidation and endorsement after 11 the issue of redemption certificate and not the delay in filing the writ petition and that in both the present cases the plea of delay in filing the writ petitions has not received due consideration by the High Court. Shri Subba Rao referred to a number of pronouncements of this Court, to substantiate that such unexplained delay particularly in matters dealing with import licences would bar relief and that un explained delay, by itself and without more, is a factor disentitling a person to relief. He submitted that absence of prejudice to the opposite party, by itself, would not justify delay and that in the context of grant of import licences passage of time brings with it, as here, problems of conflicting policy considerations. Where change of policy would impart crucial significance to the delays, Courts, learned counsel says, should insist upon even a higher degree of promptitude. He, accordingly, submitted that the writ petitions should be dismissed on the ground alone of delay in filing them. This contention of the appellant cannot be brushed aside. If appellants had raised a specific plea of delay as a bar to the grant of relief and the delays in the present cases, having regard to the nature of the subject matter, were not inconsiderable it was perhaps necessary for the High Court to have specifically dealt with the plea. The aspect of delay adverted to by the learned Single Judge in the course of the order was a different one. However, we think it would be somewhat unfair for the respondents, who have succeeded in the High Court, to decide this question without an opportunity to them to satisfy the Court as to the reasons, if any, for the delay and as to the sufficiency of such reasons. We assume that the plea had been taken before the High Court by the appellants as this submission of the learned counsel for the appellant was not controverted. We think it would be appropriate that the appellants ' appeals before the High Court are remitted to the High Court for such consideration as the Appellate Bench may now bestow on this contention of the appellants. If the appellate bench is persuaded to view that the delay is satisfactorily explained it may proceed to confirm the orders of the learned Single Judge, subject, of course, to the question of permissibility of the importable items to be determined in the light of the pronouncements of this Court referred to at contention (c). If, on the contrary, the delay is held by the Division Bench to be such as to disen title respondents to relief, the Division Bench may proceed to allow the appeals and dismiss the writ petitions. All other controversies in the appeal shall be held to have been concluded in favour of the respondents. 12 Accordingly, the appellate judgments of the High Court under appeal are set aside and the appeals 149 of 1987 and 179 of 1987 before the High Court are remitted for a fresh disposal as indicated above. The High Court might also consider the desirability of a very early disposal of the appeals. These appeals are disposed of accordingly. There will, however, be no order as to costs in these appeals. N.V.K. Appeals disposed of.

The respondents in the appeals were recognised Export Houses which had been granted Imprest licences for the import of 'uncut ' and 'unset ' diamonds with certain export obligations attached to them. After the due discharge of the export obligations, the respondents became entitled to revalidation and endorsement of the said Imprestlicence for import of OGL items. The said Export Houses applied under paragraph 185(4) of AM83 policy for revalidation and endorsement of the Imprest Licences. The appellant No. 3, the Chief Controller of Imports and Exports, rejected this claim of the respondents. Being aggrieved by the aforesaid order of rejection, respondents filed writ petitions in the High Court assailing the legality of the orders 2 rejecting their claims, and seeking a mandamus to the appel lants to endorse the Imprest Licences. Single Judge of the High Court allowed the writ peti tions, and the order was affirmed in appeal by the Division Bench. In the appeals by the Union of India to this Court, it was contended on behalf of the appellants that: (a) in the Import Export Policy 1982 83, the entitlement of Registered Export Houses to the facility of revalidation and endorse ment of OGL items under paragraph 184 is subject to and conditioned upon the express limitations contained in clause (7) of paragraph 185 of the Policy, and that the High Court was in error in directing revalidation and endorsement without reference to the mandatory prescription provided in the said clause, and (b) that the High Court was in error in ignoring the contentions of the appellants that the respond ents had rendered themselves disentitled to relief on the ground of the inordinate and unexplained delay of one and a half years in the filing of the writ petitions. Disposing of the Appeals, the Court, HELD: l(a) Para 185(4) was intended to provide certain incentives to the Export Houses which, upon grant of Im prest Licences, fulfil their countervailing obligations in the matter of export commitments. The provision is a benefi cial one. [8H; 9A] 1(b) Clauses (4) and (7), no doubt, on their plain wording present certain constructional difficulties, and it is possible to take the view that the said clauses are part of an integrated policy scheme, providing for certain incen tives to export houses and have to be read together. This view, however, will unduly restrict the scope of the benefi cial provision. [9A, C] 1(c) That the conditions in para 185(4) of the Policy would not be attracted to the case of Export Houses which are granted Imprest Licences, would be a harmonious con struction of clauses (4) and (7) which appears to advance and promote the objects of the policy in Paragraph 185(4) and is, at all events, not an unreasonable view to take of the matter. [9B] 1(d) An interpretation which would unduly restrict the beneficial scope of the policy in para 185(4), would take away with one hand what the policy of the law gives with the other. [9C] 3 2(a) If appellants had raised a specific plea of delay as a bar to the grant of relief and the delays in the present cases, having regard to the nature of the subject matter, were not inconsiderable it was perhaps necessary for the High Court to have specifically dealt with the plea. The aspect of delay adverted to by the Single Judge was a different one viz. the delay in seeking revalidation and endorsement after the issue of the redemption certifi cate and not the delay in the filing of the writ petitions. [11D] 2(b) It would therefore he appropriate that the appel lants ' appeals before the High Court are remitted to the Appellate Bench of the High Court. If the Appellate Bench is persuaded to view that the delay is satisfactorily explained it may proceed to confirm the orders of the Single Judge subject to the question that the permissibility of the importable items be determined in the light of the pro nouncements of this Court in Rajprakash Chemicals Ltd. vs Union of India, AIR 1986 SC 1621 and D. Navinchandra & Co. vs Union of India; , If the delay is held by the Appellate Bench to be such as to disentitle the respond ents to relief, it will proceed to allow the appeals and dismiss the writ petitions. [11F H]

N: Criminal Appeal No. 243 of 1979. Appeal by Special Leave from the Judgment and Order dated 13 9 1978 of the Delhi High Court in Criminal Revision No. 271/78. U. R. Lalit, R. Bana, M. N. Shroff and Miss A. Subhashini for the Appellant. K.L. Arora, R. section Sodhi and H. C. Gulati for Respondent No. 1. V. B. Ganatra, I. N. Shroff and H. section Parihar for Respondent No. 3. The Judgment of the Court was delivered by SEN J. In this appeal, by special leave, from the judgment of the Delhi High Court, two questions arise which are one of very general importance. The first is, in a case where the manufacturer of an article of food is a company, which has nominated a person under sub so 1019 (2) of section 17 of the , as the person responsible, whether the sales manager at one of its branches can be prosecuted for an offence punishable under s.16 (1) (a) read with s.7 (i) of the Act, when the article of food sold at the branch is found to be adulterated within the meaning of s.2 (ia) of the Act. The second is, whether after the introduction of the new s.17 by Act 34 of 1976, when an offence is committed by a company, which has nominated a person responsible under s.17 (2), it is not permissible to prosecute any other officer of the company not being nominated under subs. (2), unless there is allegation that the offence had been committed 'with the consent or connivance of, or was attributable to, any neglect on the part of such officer. Upon the first question the facts lie within the smallest possible compass. On June 23, 1977 the Delhi Administration filed a complaint under s.7 (i) read with s.16 (1) (a) and s.17 against (1) M/s. Ahmed Oomar Bhoy, Ahmed Mills, Bombay, manufacturers of the well known 'postman ' brand or refined groundnut oil, (2) their distributors M/s. Gainda Mull Hem Raj, New Delhi, a partnership firm, and its managing Partner Mehar Chand Jain, (3) M/s. Amar Provision & General Store, Netaji Nagar Market, New Delhi and its owner Amrik Lal, the retailer, (4) Y. A. Khan, Manager Quality Control, Ahmed Mills appointed by the manufacturers as the person responsible under section 17(2) of the Act, and (5) the two Sales Managers, Delhi Branch of M/s. Ahmed Oomer Bhoy, manufacturers, I. K. Nangia and Y. P. Bhasin. It was alleged that on August 31, 1976, S.D. Sharma, Food Inspector, New Delhi Municipal Committee lifted a sample of 'Postman ' brand refined groundnut oil from M/s. Amar Provision & General Store, which was sold/supplied to it by M/s. Gainda Mull Hem Raj on August 20, 1976, and the same by the Public Analyst by his report dated September 9, 1976 was found to be adulterated due to the presence of 'castor oil ' (Not an edible oil). It was further alleged that this adulterated article of food was supplied/sold to M/s. Gainda Mull Hem Raj by M/s. Ahmed Oomer Bhoy on August 20, 1976 through its Sales Managers at Delhi, I. K. Nangia and Y. P. Bhasin. The Metropolitan Magistrate, Delhi by his order dated April 1, 1978 found that there was a prima facie case against M/s. Ahmed Oomer Bhoy, the manufacturers of the 'Postman ' brand refined groundnut oil, their distributors at Delhi M/s. Gainda Mull Hem Raj and M/s. Amar Provision Store, the retailer, as well as against Y. A. Khan, the Quality Control Manager, Ahmed Mills, but declined to issue any 1020 process against the respondents I. K. Nangia and Y. P. Bhasin, the two Sales Managers of M/s. Ahmed Oomer Bhoy at Delhi observing that though they had effected the sale of the adulterated article of food 'they were not concerned with the manufacture of the article in question but had only effected the sale thereof '. He accordingly, dismissed the complaint against them holding that their prosecution was misconceived. The Delhi Administration moved the High Court in revision but it declined to interfere. There can be no doubt that the order made by the learned Metropolitan Magistrate refusing to issue any process against the respondents is wholly unwarranted. It cannot be said that there is no material for presuming that these respondents had not committed an offence and, therefore, it was not open to the learned Metropolitan Magistrate to come to the conclusion that there was no basis for proceeding against them. The test as laid down by this Court in the State of Bihar vs Ramesh Singh is that at the initial stage, if there is a strong suspicion which leads the Court to think that there is a ground for presuming that the accused has committed an offence, then it is not open to the Court to say that there was no sufficient ground for proceeding against the accused. In the instant case, the allegations in the complaint constitute a prima facie case against the respondents of having committed an offence under s.7 (i) read with s.16 (1) (a) of the Act. In the complaint, the material allegations are as follows: "6. That the adulterated article of food was supplied/ sold to M/s. Gainda Mull Hem Raj on 20 8 76 by M/s. Ahmed Oomer Bhoy through its sales managers at Delhi I. K. Nangia and Y. P. Bhasin. That accused Y. A. Khan is the Quality Control Manager of accused No. 5 and accused I. K. Nangia and Y. P. Bhasin are the Sales Managers (Local Branch) of accused No. 5 and were incharge of and responsible to it for the conduct of its business at the time of commission of offences by accused No. 5. " The words "were incharge of" and "responsible to it for the conduct of its business" are wide enough to include all the business activities of M/s. Ahmed Oomer Bhoy at Delhi. It is a common ground that they have a Delhi Office at 2 A/3, Asaf Ali Road, New Delhi, and 1021 that the two respondents I.K. Nangia and Y. P. Bhasin are the Sales Managers. The complaint makes a specific allegation that the respondents were incharge of and were responsible to their employers for the conduct of their business at Delhi. section D. Sharma, Food Inspector, PW 1 has stated during the enquiry under section 202 of the Code of Criminal Procedure that the adulterated article of food in question was sold by them to the distributors M/s. Gainda Mull Hem Raj vide bill No. 62 dated August 20, 1976. Further, he goes on to, say, that they were incharge of and responsible to M/s. Ahmed Oomer Bhoy for the conduct of their business in Delhi at that time. Now, the person actually effecting the sale of an adulterated article of food is directly liable under s.7 (i) of the Act, which reads: "7. No person shall himself or by any person on his behalf manufacture for sale, or store, sell or distribute. (i) any adulterated food;" The manufactures M/s, Ahmed Oomer Bhoy, Bombay became liable because they were directly selling the adulterated article through their branch office at Delhi. The respondents I. K. Nangia and Y. P. Bhasin also became liable because of the words "by any person on his behalf" which include their agents and servants. That appears to be the true construction of the section. In view of this, the learned Metropolitan Magistrate could not have dismissed the complaint against the respondents. It appears that M/s. Ahmed Oomer Bhoy, Bombay had appointed the accused Y. A. Khan, Manager Quality Control, Ahmed Mills to be the person responsible for the company under s.17 (2) on July 31, 1976. It is argued on the strength of section 17 (1) (a) (i) that the respondents could not, therefore, be prosecuted for the offence committed by M/s. Ahmed Oomer Bhoy. This contention, in our opinion, needs only to be stated to be rejected. Not only does it involve attributing to the Legislature something which was never intended, but it conflicts with the ordinary canons of constructions. The question turns upon a proper construction of the new section 17, introduced by Act 34 of 1976, which in so far as material reads: "17. (i) Where an offence under this Act has been committed by a company (a) (i) the person, if any, who has been nominated under sub section (2) to be in charge of, and responsible to, the 1022 company for the conduct of the business of the company (hereafter in this section referred to as the person responsible), or (ii) where no person has been so nominated, every person who at the time the offence was committed was incharge of and was responsible to, the company for the conduct of the business of the company; and (b) the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of such offence. (2) Any company may, by order in writing, authorise any of its directors or managers (such manager being employed mainly in a managerial or supervisory capacity) to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under this Act and may give notice to the Local (Health) Authority, in such form and in such manner as may be prescribed, that it has nominated such director or manager as the person responsible, along with the written consent of such director or manager for being so nominated. Explanation. Where a company has different establishments, or branches or different units in any establishment or branch, different persons may be nominated under this sub section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit. (3) x x x x x x x (4) Notwithstanding anything contained in the foregoing sub sections, where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is 1023 attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, [not being a person nominated under sub section (2)] such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. " On the plain meaning of the section, when an offence has been committed by a company, where there is no nomination under section 17 (2), every person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business, is deemed to be guilt of the offence and is liable to be proceeded against and punished. Notwithstanding the nomination of a person under s.17 (2), any director, manager, secretary or other officer of the company [not being a person nominated under sub section (2)] can also be vicariously made liable if it is proved that the offence has been committed "with the consent or connivance of, or is attributable to any neglect on the part of such person '. It is, however, strenuously urged that the company having nominated the accused Y. A. Khan, Quality Control Manager, Ahmed Mills to be the person responsible under s.17 (2), he is the only person liable to be proceeded against throughout the country and the prosecution of the respondents is wholly misconceived. Our attention has been drawn to the nomination form, and it says that he shall be responsible for the company. We are afraid, there is no substance in this contention. There is nothing in the document to show that the nomination is effective not only for the registered office of the company at Bombay but also for all its branches in different States. Such a construction would, in our opinion, render the Explanation to section 17 (2) wholly illusory. Where there is a large business organization with a widespread network of sales organisations throughout the country, it ought to nominate different persons for different places or face the consequences set forth in s.17 (1) (a) (ii). The Explanation appended to s.17 (2) does, in terms, contemplate that where a company has different establishments or branches or different units in any establishment or branch, it may nominate different persons in relation to different establishments or branches or units and the person so nominated in relation to any establishment or branch or unit shall be deemed to be the person responsible in respect of such establishment or branch or unit. The language of the Explanation shows a purpose and, therefore, a cons 1024 truction consistent with that purpose must reasonably be placed upon it. We are clear that the Explanation to section 17(2), although in terms permissive, imposes duty upon such a company to nominate a person in relation to different establishments or branches or units. There can be no doubt that this implies the performance of a public duty, as otherwise, the scheme underlying the section would be unworkable. The case, in our opinion, comes with in the dictum of Lord Cairns in Julius vs Lord Bishop of Oxford: "There may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something, in the conditions under which it is to be done, something in the title of the persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed to exercise that power when called upon to do so. " The Explanation lays down the mode in which the requirements of section 17 (2) should be complied with. Normally, the word 'may ' implies what is optional, but for the reasons stated, it should in the context in which it appears, mean 'must '. There is an element of compulsion. It is power coupled with a duty. In Maxwell on Interpretation of Statutes, 11th Edn. at p. 231, the principle is stated thus: "Statutes which authorise persons to do acts For the benefit of others, or, as it is sometimes said, for the public good or the advancement of justice, have often given rise to controversy when conferring the authority in terms simply enabling and not mandatory. In enacting that they "may" or "shall, if they think fit", or, "shall have power", or that "it shall be lawful" for them to do such acts, a statute appears to use the language of mere permission, but it has been so often decided as to have become an axiom that in such cases such expressions may have to say the least a compulsory force, and so could seem to be modified by judicial exposition." (Emphasis supplied). Though the company is not a body or authority, there is no reason why the same principle should not apply. It is thus wrong to suggest 1025 that the Explanation is only an enabling provision, when its breach entails in the consequences indicated above. It is not left to one 's choice, but the law makes it imperative. Admittedly, M/s. Ahmed Oomer Bhoy had not at the material time nominated any person, in relation to their Delhi branch. The matter is, therefore, squarely covered by section 17 (1) (a) (ii). On the two questions formulated, the answer is self evident. The individual liability of the sales manager is distinct and separate from the corporate liability of the manufacturer. In case of a 'company prosecution ', the company along with its agent, that is, the person nominated under s.17 (2) as well as the sales manager can both be prosecuted under s.7 (i) read with s.16 (1) (a). Notwithstanding the nomination of a person responsible under section 17(2), there can also be prosecution of any director, manager, secretary or other officer of the company under section 17(4). But in such a case it is necessary for the prosecution to prove that the offence has been committed 'with the consent or connivance of, or is attributable to, any neglect on the part of such person '. The result, therefore, is that the order of the Metropolitan Magistrate is set aside and he is directed to issue summons to the respondents and proceed with the trial according to law. V.D.K. Appeal allowed.

On August 31, 1976, the Food Inspector lifted a sample of 'Postman ' brand refined ground nut oil from M/s. Amar Provision & General Stores, which was sold/supplied to it by M/s. Gainda Mull Hem Raj on August 20, 1976 and the same was found, as per the Public Analyst 's report dated September 9, 1976, to be adulterated due to the presence of Castoroil (not an edible oil). This adulterated article of food was supplied/sold to Gainda Mull Hemraj by M/s. Ahmad Oomer Bhoy through its sales managers at Delhi, T. K. Nangia and Y. P. Bhasin. On June 23, 1977, the Delhi Administration filed a complaint under section 7(1) read with Section 16(1)(a) and Section 17 against (i) M/s. Ahmed Oomer Bhoy Ahmed Mills, Bombay manufacturers of well known brand Postman groundnut oil (ii) their distributors M/s. Gainda Mull Hemraj, New Delhi, a partnership firm, and its managing Partner Meher Chand Jain (iii) M/s. Amar Provision and General Stores, Netajinagar Market, New Delhi and its owner Amrik Lal, the retailer (iv) Y. A. Khan, Manager, Quality Control, Ahmed Mills appointed by the manufacturers as the person responsible under section 17(2) of the Act, and (v) The two sales managers, Delhi Branch of M/s. Ahmed Oomer Bhoy, manufacturers, I.K. Nangia and Y. P. Bhasin. The Metropolitan Magistrate, Delhi by his order dated April 1, 1978 found that there was a prima facie case against all except the two sales managers and issued process accordingly. He dismissed the complaint against the respondents on the ground "that they were not concerned with the manufacturer of the article in question, but had only effected the sale thereof". The Delhi Administration moved the High Court in revision against dismissal, but it declined to interfere. 1017 Allowing the appeal by special leave the Court, ^ HELD: 1. At the initial stage, if there is strong suspicion which leads the Court to think that there is a ground for presuming that the accused had committed an offence, then it is not open to the Court to say that there was no sufficient ground for proceeding against the accused. [1020 C D] In the instant case, the allegations in the complaint constitute a prima facie, case against the respondents of having committed an offence under section 7(1) read with section 16(1)(a) of the . The words "were in charge of" and "responsible to it for the conduct of its business" are wide enough to include all the business activities of M/s. Ahmed Oomer Bhoy at Delhi who have their office at Delhi and the two respondents are the sales Managers. [1020 E, G H, 1021 A] State of Bihar vs Ramesh Singh, ; ; applied. The person actually effecting the sale of an adulterated article of food is directly liable under section 7(i) of the Act. The manufacturers M/s. Ahmed Oomer Bhoy, Bombay became liable because they were directly selling the adulterated article through their branch office at Delhi. The respondents I. K. Nangia and Y. P. Bhasin also became liable because of the words "by any person on his behalf" in Section 7 which includes their agents and servants. In view of this, the learned Metropolitan Magistrate should not have dismissed the complaint against the respondents. [1021 C F] 3. On the plain meaning of the new section 17, introduced by Act 34 of 1976, when an offence has been committed by a company, where there is no nomination under s 17(2), every person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business, is deemed to be guilty of the offence and is liable to be proceeded against and punished. Notwithstanding the nomination of a person under section 17(2), any director, manager, secretary or other officer of the company [not being a person nominated under sub section (2)] can also be vicariously made liable if it is proved that the offence has been committed "with the consent or connivance of, or is attributable to any neglect on the part of such person". [1023 B D] 4. To construe section 17(2) of the Act to mean that the only person liable to be proceeded is the named/nominated person under section 17(2) would render the Explanation to Section 17(2) wholly illusory. [1023 E F] 5. Where there is a large business organisation, with a widespread network of sales organisation throughout the country, it ought to nominate different persons for different places or face the consequences set forth in section 17(1)(a)(ii). The Explanation appended to section 17(2) does, in terms, contemplate that where a company has different establishments or branches or different units in any establishment or branch, it may nominate different persons in relation to different establishments or branches or units and the person so nominated in relation to any establishment or branch or unit shall be deemed to be the person responsible in respect of such establishment or branch or unit. The language of the Explanation shows a purpose and, therefore, a construction consistent with that purpose must reasonably be placed upon it. [1024 F H, 1025 A] 1018 The Explanation to section 17(2), although in terms permissive imposes a duty upon such a company to nominate a person in relation to different establishments or branches or units. There can be no doubt that this implies the performance of a public duty, as otherwise, the scheme underlying the section would be unworkable. [1024 A D] The Explanation lays down the mode in which the requirements of section 17(2) should be complied with. Normally, the word 'may implies what is optional, but for the reasons stated, it should in the context in which it appears. mean 'must '. There is an element of compulsion. It is a power coupled with a duty. Though the company is not a body or authority, there is no reason why the same principle should not apply. It is thus wrong to suggest that the Explanation is only an enabling provision, when its breach entails in the consequences indicated above. It is not left to one 's choice, but the law makes it imperative. Admittedly, M/s. Anand Oomer Bhoy had not at the material time nominated any person, in relation to their Delhi branch. The matter is, therefore, squarely conversed by section 17(1)(a)(ii). [1024D E, H, 1025 A] Julias vs Lord Bishop of Oxford, ; quoted with approval. The individual liability of the sales manager is distinct and separate from the corporate liability of the manufacturer. In case of a 'company prosecution ', the company alongwith its agent, that is, the person nominated under section 17(2) as well as the sales manager can both be prosecuted under section 7(i) read with section 16(1) (a). Notwithstanding the nomination of a person responsible under section 17(2), there can also be prosecution of any director, manager, secretary, or other officer of the company under section 17(4). But in such a case it is necessary for the prosecution to prove that the offence has been committed 'with the consent or connivance of, or is attributable to, any neglect on the part of such person '. [1025 B D]

: Civil Appeal No. 2006 of 1968. (From the Judgment and Decree dated 26 11 1961 of the Punjab High Court Circuit Bench at Delhi in Execution Second Appeal No. 158 D of 1964). Bishan Narain and D.N. Mishra, for the appellant. V.S. Desai, B.P. Singh and A.K. Srivastava, for the respond ent. The JUdgment of .the Court was delivered by BHAGWATI, J. This appeal by certificate raises a short but interesting question of law relating to the interpreta tion and effect of the proviso to section 3 of the Delhi Rent Control Act, 1958. The dispute in this appeal relates to a shop situate on the ground floor of a building bearing Municipal No. 624 36 (Old) 530 35 (New) situate in Sadar Bazar, Delhi. The building was an evacuee property and it was acquired by the Central Government under section 12 ,of the and formed part of the compensation pool. It was sold by public auction and the appellant being the highest bidder was accepted as the auction purchaser by the managing officer on 5th September, 1955. It does not appear from the record as to when the appellant paid the full purchase price to the managing officer but presumably he did so before 23rd September, 1955 when the sale was confirmed in his favour by the managing officer. The sale certificate was not issued in favour of the appellant for a considerable time and we are told that even until now it has not been issued, but possession of the building was handed over to. the appellant on 30th August, 1956 and a letter dated 3rd September, 1956 was addressed by the managing officer to the respondent intimating to him that since possession of the building had been handed over to the appellant, the respondent should pay rent to the appellant and otherwise deal directly with him with effect from 30th August. This letter was addressed to the respondent, because at that time the respondent was in possession of one other shop in the same building as a tenant and pursuant to this letter, he attorned tenancy in respect of that shop to the appellant. On 1st September, 1956, the appellant let out the shop in dispute thereinafter referred to as the prem ises) to the respondent and the latter continued in posses sion of the premises as a monthly tenant. However, on 10th August, 1959 the appellant gave a notice to quit terminating the tenancy of the respondent and calling upon him to hand over vacant possession of the premises by the mid night of 31st August, 1959. The respondent declined to comply with the requisition contained in the notice and hence the appel lant filed a suit in the Court of the Senior Subordinate Judge, Delhi on 15th September, 1959 for recovery of posses sion of the premises from the respondent. There was also a claim made in the suit for recovery of arrears of rent but this claim is no longer material and we need not dwell on it. The respondent resisted the claim for eviction inter alia on the ground that the certificate of sale not having been issued in favour of the 62 appellant, he was not the owner of the premises and hence he was not legally competent to let out the premises to the respondent nor was he entitled to recover possession of the premises, from the respondent. The respondent also disputed the jurisdiction of the court on the ground that the. Delhi Rent Control Act, 1958 which had come into force on 9th February, 1959 was applicable to the tenancy of the premises and by reason of section 50 of that Act, the civil court had no jurisdiction to entertain the suit. The Trial Court took the view, on a reading of the decision of this Court in M/s Bombay Salt and Chemical Industries vs L.J. Johnson, (1) that since the certificate of sale was not issued in favour of the appellant, he had not become the owner of the premises and the premises continued to belong to the Government and by reason of section 3 which provided that "Nothing in this Act shall apply to any premises be longing to the Government", the Delhi Rent Control Act, 1958 was not applicable to the tenancy in respect of the premises and the civil court had jurisdiction to entertain the suit. The Trial Court ' also. held that since the full purchase price had been paid by the appellant and posses sion of the premises had been handed over by the managing officer to the appellant on 30th August, 1956, the appellant was legally competent to let out the premises to the re spondent and the premises having been lawfully let out by the appellant to the respondent, there was relationship of landlord and tenant between the parties and since the 'tenancy was validly terminated by the appellant by giving notice to. quit in accordance with the provisions of section 106 of the Transfer of Property Act, the appellant was entitled to recover possession of the premises from the respondent. A decree for eviction was accordingly passed by the Trial Court in favour of the appellant. The respondent preferred an appeal but the appeal was dismissed ' by the Additional District Judge, Delhi on substantially the same view as that taken by the Trial Court. This was followed by a second appeal to the High Court but that appeal also met with the same fate and the decree for eviction became final between the parties. Now, before the decree for eviction could be executed, an amendment was made in section 3 of the Delhi Rent Control Act, 1958 which is very material. We shall immediately refer to, this amendment, but before we do so, it would be convenient to advert too, few relevant provisions,of the Delhi Rent Control Act, 1958. This Act came into force with effect from 9th February, 1959 and it was intended to provide inter alia for control of rents and evictions. Section 14, sub section (1) granted protection to the tenant against eviction by providing that notwithstanding anything contained in any other law or contract, no order or decree for recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant, but the proviso. to this sub section laid down certain grounds on which the Controller could, on an appli cation made to him in the prescribed manner, make an order for recovery of possession of the premises. Since the jurisdiction to make (1) A.I.R. 1958 S.C. 289. 63 an order for recovery of possession of premises o.n one or more of the specified grounds was given to the Controller under section 14, subsection (1), section 50 ousted the jurisdiction of the civil court by declaring that, save as otherwise expressly provided in the Act, no civil court shall entertain any suit or proceeding in so far as it relates inter alia to eviction of any tenant from any prem ises to which the Act applies or to any other matter which the Controller is empowered by or under the Act to decide. If, therefore, the premises in the present case were prem ises to which the Act applied, the civil court would have no jurisdiction to entertain the suit filed by the appellant for recovery of possession of the premises from the respond ent. But section 3, as it stood prior to its amendment, by Act 4 of 1963, provided that nothing in the Act shall apply to any premises belonging to the Government. The view taken by the Trial Court and affirmed by the Additional District Judge and the High Court was that since the certificate of sale was not issued in favour of the appellant, the premises continued 'to belong to the Government and on this view, the Act clearly did not apply tO the premises and neither sec tion 14, sub section (1) nor section 50 being applicable, the civil court continued to have jurisdiction to entertain the suit. This was the reason why the decree for eviction was passed by the Trial Court against the respondent and it was affirmed by the Additional District Judge and the High Court. But by the time the decree for eviction came to be executed, the following proviso was added in section 3 by Act 4 of 1963 with retrospective effect: "Provided that where any premises be longing to Government have been or are lawful ly let by any person by virtue of an agreement with the Government or otherwise, then, not withstanding any judgment, decree or order of any court or other authority, the provisions of this Act shall apply to such tenancy. " The effect of the addition of the proviso with retro spective effect was as if the proviso had always been there right from the time when the Act was enacted. Therefore, when an application was flied by the appellant for execution of the decree for eviction against the respondent on 31st August, 1963, an objection was raised on behalf of the respondent that by reason of the retrospective introduction of the proviso in section 3, the decree for eviction was rendered null and void as a decree passed by a court without jurisdiction and hence it was not executable against the respondent. This objection was negatived by the executing court on the ground that that was not an .objection which could be entertained in execution and the executing court must proceed to execute the decree which had become final between the parties. The respondent preferred an appeal but the first appellate court took the view that, on the facts of the case, the proviso to section 3 was not attracted and hence the decree for eviction .could not be said to be one passed by a court without jurisdiction and on this view, it upheld the order of the executing court and rejected the appeal. This led to the filing of a further appeal and in this appeal the High Court held 'that since the certificate of sale was hot issued in favour of the appellant, the building continued to belong 64 to the Government but the appellant having paid the full purchase price of the building and the sale of the building in favour of the appellant having been confirmed and posses sion having been handed over to him in pursuance of the sale, the appellant was legally competent to let out the premises to the respondent and the letting of the the prem ises by the appellant in favour of the respondent on 1st September, 1956 was lawful and hence the condition for the applicability of the proviso to section 3 was satisfied, and since the proviso was introduced in section 3 with retro spective effect, it must be held that the Act was applicable to the premises at the date of the institution of the suit and consequently the civil court had no jurisdiction to entertain the suit and in that view, the decree for eviction was a nullity. The High Court accordingly allowed the appeal and held that the decree for eviction being null and void could not be executed against the respondent. This view taken by the. High Court is challenged in the present appeal preferred by special leave obtained from this Court. Now, the law is well settled that an executing court cannot go behind the decree nor can it question its legali ty or correctness. But there is one exception to this gener al rule and that is that where the decree sought to be executed is a nullity for lack of inherent jurisdiction in the court passing it, its invalidity can be set up in an execution proceeding. Where there is lack of inherent jurisdiction, it goes to the root of the competence of the court to try the case and a decree which is a nullity is void and can be declared to be void by any court in which it is presented. Its nullity can be set up whenever and whenever it is sought to be enforced or relied upon and even at the stage of execution or even in collateral proceedings. The executing court can, therefore, entertain an objection that the decree is a nullity and can refuse to execute the decree. By doing so, the executing court would not incur the reproach that it is going behind the decree, because the the decree being null and void, there would really be no decree at all. Vide Kiran Singh vs Chaman Paswan(1) and Seth Hiralal Patni vs Sri Kali Nath.(2) It is, therefore, obvious that in the present case, it was competent to the executing court to examine whether the decree for eviction was a nullity on the ground that the civil court had no inherent jurisdiction to entertain the suit in which the decree for eviction was passed. If the decree for eviction was a nullity, the executing court could declare it to be such and decline to execute it against the respondent. The position which obtained when the suit for eviction was instituted by the appellant against the respondent was that section 3, as it stood prior to.its amendment by Act 4 of 1963, was in force and that excluded the applicability of the Delhi Rent Control Act. 1958 to premises belonging to the Government. The premises in the present case, were vested in the Government under section 12 of the Displaced Persons (Compensation & Rehabilitation) Act, 1954 and they were sold by public auction to the appellant and though full purchase price (1) ; (2) ; 65 was paid by the appellant and the sale was confirmed in his favor and possession was also handed over to him, the cer tificate of sale was, for some inexplicable reason, not issued in his favour. The Trial Court, therefore, took the view, and this view was affirmed by the Additional District Judge as well as the High Court, that the appellant did not become the owner of the premises and they continued to belong to the Government and for this reason, it was held that the Delhi Rent Control Act, 1958 did not apply to the premises and the civil court had jurisdiction to entertain the suit for eviction. The Trial Court also found, and this finding too was accepted by the Additional District Judge as well as the High Court, that though the certificate of sale was not issued in his favour, the appellant was competent to let out the premises and the letting of the premises by him in favour of the respondent on 1st Septem ber, 1956 was lawful and since the tenancy of the respond ent was validly terminated by the appellant by giving notice to quit, the appellant was entitled to a decree for eviction against the respondent. But, as pointed out above, section 3 was amended with retrospective effect by the introduction of the proviso and the question is whether the introduction of the proviso with retrospective effect had the effect of rendering the decree for eviction null and void. Since the proviso was introduced with retrospective effect, it must be deemed to be part of section 3 since the time that the Delhi Rent Control Act, 1958 was enacted. It was pointed out by Lord Asquith of Bishopstone in East End Dwellings Co. Ltd. vs Finsbury Borough Council(1) in a passage which has become classical by reason of its felicity of language that "if you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompa nied it. One of those in this case is emancipation from the 1939 level of rents. The statute Says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of. affairs". The proviso must, therefore, for all legal pur poses, be deemed to have been included in section 3 as from the date of enactment of the Delhi Rent. Control Act, 1958. If that be the true position, then obviously it must be held that the provisions of the Delhi Rent Control Act, 1958 were applicable to the tenancy of the respondent, for the premises though belonging to the Government, were law fully let out by the appellant to the respondent and the condition of the proviso was satisfied. That was the posi tion which, by reason of the legal fiction brought about by the retrospective introduction of the proviso in section, 3, must be held to have prevailed at the date. of the institu tion of the suit and the provisions of the Delhi Rent Con trol Act, 1958 being applicable, it must be concluded that the civil court had no inherent jurisdiction to entertain the suit (vide section 50) and the decree for eviction was a nullity. Prima facie, it may appear somewhat strange that a decree for eviction which was good and valid when it was made should be treated as null and void by "(1) [1952] A. C. 132. 66 virtue of the retrospective introduction of the proviso in section 3. But such a result is necessarily involved in the legal fiction created by the retrospective operation of the proviso. If, as a result of the said fiction, we must read the proviso as forming part of section 3 as from the date of enactment of the Delhi Rent Control Act, 1958, the conclu sion is inescapable that the civil court had no inherent jurisdiction to entertain the suit and the Trial Court as well as the Additional District Judge and the High Court were in error in exercising jurisdiction in relation to the suit when their Jurisdiction was clearly excluded by section 50. The appellant, however, urged that the introduction of the proviso in section 3 should not be given greater retro spective operation than necessary and it should not be so construed as to affect decrees for eviction which had al ready become final between the parties. Now, it is true, and that is a settled principle of construction, that the court ought not to give a larger retrospective operation to a statutory provision than what can plainly be seen to have been meant by the legislature. This rule of interpretation is hallowed by time and sanctified by decisions, though we are not at all sure whether it should have validity in the context of changed social norms and values. But even so, we do not see how the retrospective introduction of the proviso in section 3 can be construed so as to leave unimpaired a decree for eviction already passed, when the question arises in execution whether it is a nullity. The logical and inevitable consequence of the introduction of the proviso in section 3 with retrospective effect would be to read the proviso a.s if it were part or the section at the date when the Delhi Rent Control Act, 1958 was enacted and the legal fiction created by the retrospective operation must be carried to its logical extent and all the consequences and incidents must be worked out as if the proviso formed part of the section right from the beginning. This would clearly render the decree for eviction a nullity and since in execu tion proceeding, an objection as to nullity of a decree can always be raised and the executing court can examine whether the decree iS a nullity, the principle of finality of the decree cannot be invoked by the appellant to avoid the consequences and incidents flowing from the retrospective introduction of the proviso in section 3. Moreover the words notwithstanding any Judgment, decree or order of any court or or other authority in the proviso make it clear and leave no doubt that the legislature intended that the finality of "judgment, decree or order of any court or other authority" should not stand in the way of giving full effect to the retrospective introduction of the proviso in section 3 and applying the provisions of the Delhi Rent Control Act, 1958 in cases falling m the proviso. We are therefore, of the view that the High Court was right in taking the view that by reason of the introduction of the proviso in section 3 with retrospective effect the decree for eviction was a nullity and the executing court was justified in declining to execute it against the re spondent. 67 We accordingly dismiss the appeal with costs throughout but order and direct the respondent to pay to the appellant all the arrears of rent in respect of the premises which remain to be paid by him to the appellant in the following installments: Rs. 2,000/ on or before 30th April, 1977; and out of the balance a further sum of Rs. 2,000 within three months thereafter and the balance, if any, by 31st October, 1977. The respondent through his counsel under takes to make payment of the arrears in the manner afore said. P.H.P. Appeal dismissed.

The appellant purchased in a public auction a building which was evacuee property. Before the sale certificate was made out in favour of the appellant, the possession of the building was handed over to him. He in turn let out a shop in the said building to the respondent. The appellant filed a suit for eviction in the Civil Court against the respond ent. The Civil Court passed a decree for eviction and negatived the contention of the respondent that the Delhi Rent Control Act, 1958 was applicable and, therefore, the jurisdiction of the Civil Court was barred. The Court relied on section 3 of the Delhi Rent Control Act which provides that nothing in the Act shall apply to any premises belonging to the Government. The decree for eviction was confirmed by the Appellate Court and then by the High Court in Second Appeal. Before the decree could be executed section 3 was amended by adding a proviso with retrospective effect, which provided that where any premises belonging to Government have been lawfully let out by any person, then notwithstanding any judgment, decree or order of any court the provisions of the Act would apply to the tenancy. The Executing Court held that it was not competent to it .to go into the question whether the decree was rendered d nullity on the ground that the jurisdiction of the Civil Court was ousted by the introduction of :the proviso in section 3 with retrospective effect since the decree had become final between the parties. The Appellate Court upheld the said decision. The High Court in Second Appeal reversed the decision of the two courts below and held that the decree was a nullity and could not be executed. Dismissing the appeal this Court, HELD :(1) An executing court cannot go behind the. decree nor can it question its legality or correctness but where a decree sought to be executed is a nullity for lack of inherent jurisdiction in the court passing it, its inva lidity can be set up in an execution proceeding. [64C D] Vide Kiran Singh vs Chaman Paswan and Seth Hiralal Patni vs Sri Kali Nath, ; , followed. (2) Since the proviso was introduced with retrospective effect it must be deemed to be part of section 3Since. the time the Delhi Rent Control Act was enacted. [65 D] East End Dwellings Co. Ltd. vs Finsbury Borough Council [1952] A.C. 132, approved. As a result of the fiction the proviso must be deemed to be part of section 3 from the date of enactment of the Act. The logical and inevitable Consequence of the introduction of the proviso. in section 3 with retrospective effect would be to read the proviso as if it were part of the section at the date when the Act was 'enacted, and the legal fiction created by the retrospective operation must be carried to its logical extent and all the consequences and incidents must be worked out as if the proviso forms part of the section right from the beginning. The phrase "notwithstand ing any judgment; decree or order of any court" in the proviso makes it clear that the legislature intended" that the finality of the judgment,decree etc., should not stand in the way of giving full effect to the= retrospective operation of the proviso in section 3. [66C G] 61

Civil Appeal No. 811 of 1988. 399 From the Judgment and order dated 9.12.1986 of the Punjab and Haryana High Court in C.W.P. No. 2213 of 1986 and C.M.P. No 1519 of 1986. P.P. Rao, K.K. Patel, P.S. Pradhan and Rajiv Dutta for the Appellant. Dr. Y.S. Chitale, S.C. Mahanta, section Ramachandran, Mahabir Singh and C.V. Subba Rao for the Respondents. The Judgment of the Court was delivered by SINGH, J. Special Leave granted. This appeal is directed against the judgment and order of the High Court of Punjab and Haryana dated 9.12.1986 dismissing the appellant 's writ petition under Article 226 of the Constitution challenging the order dated 30. 12.1986 dispensing with the appellant 's services as Addl. District and Sessions Judge in terms of Rule 10(3) of the Punjab Superior Judicial Service Rules, 1963. Initially, the appellant was an advocate practising law in the High Court of Punjab and Haryana. He was selected for appointment to the Haryana Superior Judicial Service by the High Court. On the recommendation of the High Court the State Government by its order dated 14.4.1983 appointed the appellant as Addl. District and Sessions Judge on probation for a period of two years in accordance with Rule 10(1) of the Punjab Superior Judicial Service Rules 1963, as adopted by the State of Haryana (hereinafter referred to as the Rules). The High Court by its order dated 27.4.1983 posted the appellant to Hissar as Addl. District and Sessions Judge where he joined his duties on 2.5. While he was posted at Hissar certain incidents took place as a result of which the Bar Association of Hissar passed a resolution against the appellant and as a result of which he was transferred from Hissar to Narnaul as Addl. District & Sessions Judge where he assumed charge of his office on 5.5.1984. While the appellant was posted at Narnaul inquiry into certain complaints against him was held by a Judge of the High Court. After the inquiry the High Court at its meeting held on 21.3.1985 resolved that the appellant 's work and conduct was not satisfactory during his probationary period and as such his services deserved to be dispensed with forthwith. The High Court forwarded its recommendation for terminating the appellant 's services to the State Government by its letter dated 28.3.1985. Before the State 400 Government could issue any orders, the appellant filed a writ petition under Article 32 of the Constitution before this Court challenging the High Court 's decision. On 14.4.1985 this court permitted the appellant to withdraw the petition with liberty to file the same before the High Court. The appellant thereafter filed a writ petition before the High Court challenging the resolution of the High Court as well as certain other consequential orders to which reference shall be made at a later stage. A Division Bench of the High Court by its elaborate order dated 9.12.1986 dismissed the writ petition on the findings that the appellant 's work and conduct was not satisfactory and as he was on probation his services were rightly terminated without giving any opportunity to the appellant. Thereafter, the State Government pursuant to the recommendation of the High Court issued orders on 30.12.1986 terminating the appellant 's services in accordance with Rule 10(3). Aggrieved, the appellant has challenged the order of the High Court under appeal as well as the order of the State Government terminating his services. Before the High Court the appellant laid main stress on the question that the order of termination which had been passed without holding an enquiry giving reasonable opportunity to him to defend himself was violative of Article 311(2) of the Constitution as the same was based on a number of complaints and allegations as well as the report of a Judge of the High Court who had made inquiries into the complaints against the appellant. The High Court considered the question in detail and recorded its finding that since the appellant was a probationer his services could be discharged without giving any opportunity to him in accordance with the Rules. The High Court further held that the inquiry which was held by a judge of the High Court was not for the purpose of taking any disciplinary proceedings or imposing any punishment on the appellant instead the inquiry was held to find out the appellant 's suitability to the service. Shri P.P. Rao, learned counsel for the appellant, challenged the findings of the High Court and urged that since the High Court resolved to terminate the appellant 's services on the basis of the inquiry report submitted by a learned Judge of the High Court, the constitutional protection available to the appellant under Article 311(2) of the Constitution, and the principles of natural justice had been violated. On the other hand, Dr. Y.S. Chitale appearing for the High Court submitted that the resolution of the High Court did not cause any stigma to the appellant and the inquiry held by the High Court was merely to judge his suitability for the service. The appellant was not entitled to the constitutional protection of Article 311(2) of the Constitution nor he was entitled to 401 any opportunity of hearing before taking the decision for terminating the appellant 's probationary period. We do not consider it necessary to deal with these rival submissions as in our opinion the High Court had no relevant material in coming to the conclusion that the appellant 's work and conduct was not satisfactory during his probationary period. It appears to us as we shall presently show that the material which was taken into account was non existent, while the other material was not relevant and further the allegations which were taken into consideration remained unsubstantiated. Having perused the entire material placed before us we are of the opinion that the High Court committed error in holding that the appellant 's work and conduct was not satisfactory and that his services were liable to be terminated. We would now consider the facts and circumstances which persuaded the High Court on its administrative side in taking the decision to dispense with the appellant 's services. On his selection the appellant was firstly posted at Hissar where he joined his duties on 2.5.1983. While at Hissar the appellant decided a criminal case under Sections 363/366 IPC (State vs Ram Niwas) on l0.9.1983. The appellant acquitted the accused for the offence under Section 366 IPC but convicted him under Section 363 IPC and released him on one year 's probation. The accused preferred appeal against his conviction to the High Court. Justice A.S. Bains by his order dated 5.4.1984 allowed the appeal on the ground that the prosecution had failed to prove its case against the accused beyond reasonable doubt and therefore it was not safe to maintain his conviction. In the course of his judgment Justice Bains made the following observations against the appellant: "I am constrained to remark that the judgment recorded by the trial court is extremely poor and is not based on the evidence on the record. The trial court seems to have wrongly convicted the appellant. " The appellant made representation against the aforesaid remarks but the High Court refused to grant any relief to the appellant on the ground that the remarks awarded to him had been made in judicial proceedings. The appellant made a representation for placing his representation before the learned Judge who had awarded remarks against him but that too was not accepted. The appellant, thereafter, approached the High Court in the judicial side by means of an application under Section 482 of the Code of Criminal Procedure for expunging the aforesaid remarks but he could not get any relief. Ultimately, the appellant approached this court by means of Criminal Misc. Peti 402 tion No. 1377 of 1987 for expunging the aforesaid remarks. This Court A by its order dated 7th September 1987 held that from the facts and circumstances of the case it could not be said that the order and judgment of the Addl. District & Sessions Judge was not based on the evidence on record and the remarks made by Justice Bains were unwarranted. This Court directed that the aforesaid remarks should be expunged from the judgment in appeal. These facts show that the remarks made by Justice Bains against the appellant were unjustified, unwarranted and they ceased to be in force. On 26.9.1983 while the petitioner was recording the statement of an Assistant Sub inspector of police in a sessions case, an advocate of Hissar Sh. Nar Singh Bishnoi, came into the appellant 's court and made a request to the appellant that Thakur Dass, the Assistant Sub inspector of police whose statement was being recorded as a witness in a sessions case should be directed to appear in a complaint case against him (the Assistant Sub inspector of police) pending in the court of Chief Judicial Magistrate, Hissar. The appellant told the Advocate Sh. Nar Singh Bishnoi that the Chief Judicial Magistrate should direct Thakur Dass the witness to appear in his court and Shri Bishnoi might himself bring summons and serve the same on Thakur Dass. Bishnoi went to the court of Chief Judicial Magistrate for bringing summons meanwhile the statement of Thakur Dass was recorded and on being discharged from the witness box he became free. The appellant waited for more than half an hour but Shri Bishnoi did not turn up with the summons. Thereupon he discharged Thakur Dass. It was not strictly his duty as a Judge to detain the witness after his evidence was recorded for the purpose of serving summons in a complaint case on him. Shortly, thereafter Sh. Bishnoi, advocate, came to the appellant 's court and finding that the witness had already left the court he expressed his anger towards the appellant who was still presiding over his court and threatened him saying that he would see that no judicial officer would dare to act in such a manner. Nar Singh Bishnoi, advocate, thereupon addressed a letter to the President of Bar Association requesting that a meeting of the Bar Association should be held which read as follows: "To The President, Distt. Bar Association Hissar, Subject: To consider the behaviour of Sh. I.C. Jain, Additional Sessions Judge. 403 Sir, It is submitted that today i.e. On 26.9.1983, I had presented an application in the court of Sh. I.C. Jain, Additional Sessions Judge, Hissar in the presence and on behalf of my client, Sh. Punam Chand, for effecting the service of summons on accused Thakur Dass S.I. At that time Thakur Dass S.I. was appearing as witness in the witness box in the court of Sh. I.C. Jain, and I.C. Jain refused to pass any order on my application and I was asked to bring the summons. When after obtaining the Dasti summons from the court of Sh. L.N. Mittal, C.J.M. Hissar, in whose court complaint was pending, I went to the court of Sh. I.C. Jain, by that time Thakur Dass had already fled away and he was seen going on Motor Cycle by my client. Behaviour meted out to me by Shri I.C Jain is in fact wrong and mishehaviour with the lawyers community at large. I pray to all the members of Bar Association, Hissar that matter may be considered by calling for urgent meeting. Sd/ Nar Singh Bishnoi, Advocate Hissar" On the aforesaid letter a meeting of the Bar was convened on 27.9.1983 and the following resolution was passed: "Resolved that the attitude and the behaviour of Shri I.C. Jain, Additional District & Sessions Judge, Hissar towards the members of the Bar is most deplorable, verges (sic) and condemnable for being rude un cooperative and insulting." The Bar Association forwarded a copy of the resolution to the High Court and also to the District and Sessions Judge, Hissar. The appellant on getting information about the resolution addressed a letter to the Registrar of the High Court on 8.10.1983 giving his version about the incident and he further sought advice of the High Court as to whether in the circumstances the witness (Thakur Dass) should have been detained on the request of the counsel for a party to enable him to bring summons for effecting service on him and further whether it was the duty of the appellant as an Addl. District & Sessions Judge to get the service effected without their being any requisition from the 404 court of the Chief Judicial Magistrate. It appears that the High Court did not give any reply to the appellant and the guidance sought for by the appellant remained unattended. These facts clearly show how the members of the Bar Association passed the resolution condemning a judicial officer on trifling matter without applying their mind to the question. The appellant being an Additional Sessions Judge was not bound by law to detain the witness to enable counsel of a private party to bring Dasti summons for effecting service on the said witness. The members of the Bar practising before the court should be aware of the legal position and they should not have indulged in passing a resolution condemning the appellant without there being any justifiable cause for the same. If the members of the Bar Association pass resolution against the presiding officers working in subordinate courts without there being any justifiable cause it would be difficult for judicial officers to perform their judicial functions and discharge their responsibilities in an objective and unbiased manner. We are distressed to find that the High Court instead of protecting the appellant took this incident into consideration in assessing the appellant 's work and conduct. In May 1984 the appellant was transferred to Narnaul and it appears that some incidents took place there also and complaints were made to the High Court against the appellant. On 14.9.1984 Ram Nath Mehlawat, an advocate cum journalist publishing a local weekly newspaper named 'Jan Hirdey 'and who was also connected with a social organisation 'Janata Kalyan Samiti ' was assaulted by certain persons. On a complaint made by Sh. Mehlawat, a criminal case was registered and it was committed to sessions for trial. The appellant convicted the accused persons except one under Sections 325/324 read with Section 34 of the Indian Penal Code. The appellant rejected the plea of the complainant Sh. Ram Nath Mehlawat that he was a public servant that the injuries were caused to him while performing public duty. The appellant held that no offence under Sections 332/353 IPC was made out. Ram Nath Mehlawat made a complaint to the High Court against the appellant alleging that the appellant had adjourned the case on several dates and he had acquitted the accused of offence punishable under Sections 332/353 IPC on extraneous consideration. He further alleged that the appellant had accepted illegal gratification in acquitting the accused and further releasing the convicting accused persons on probation. The allegations contained in the complaint of Sh. Ram Nath Mehlawat were enquired into by Justice Surinder Singh. As regards correctness of the judgment is concerned it is relevant to note that Sh. Ram Nath Mehlawat filed appeal before the High Court 405 against the appellant 's order releasing accused persons on probation and also a criminal revision against the order of acquittal on the charges under Sections 332/353/149 and 148 of Indian Penal Code and also against the order of releasing the convicted accused persons on probation. The appeal was dismissed on merits by Justice Tiwana, who observed that he found no infirmity in the conclusion recorded by the trial judge. The learned Judge held that Ram Nath Mehlawat, Advocate, was not a public servant though he may have been a Project Director of Adult Education Project run by a social organisation. The learned Judge further held that the conclusion of the trial judge (appellant) was correct and there was no merit in the appeal. In this view both appeal and revision filed by Sh. Ram Nath Mehlawat were dismissed and the order passed by the appellant was upheld. These facts show that Ram Nath Mehlawat failed in his attempt to get the appellant 's order set aside by the High Court. Having failed to do so on the judicial side he made several complaints against the appellant making wild allegations against him about the aforesaid cases. It appears he was instrumental in getting complaints made about other matters also. These complaints were referred to the vigilance judge, who enquired into those matters and the report of the vigilance judge was placed before the full court of the High Court on 27.7.1985. After considering the appellant 's confidential roll the High Court resolved to dispense with the appellant 's services. It is asserted on behalf of the High Court that since the appellant 's work and conduct were not found satisfactory during the period of probation of two years the court decided to dispense with his services forthwith. Consequently it made recommendation to the State Government for issuing necessary orders. The decision to dispense with the appellant 's services was taken at the full court meeting of the High Court held on 21st March, 1980. Along with agenda a note was circulated to the Hon 'ble Judges, referring to five complaints out of which four complaints had been inquired into by Justice Surinder Singh and the fifth complaint remained without any inquiry. The report of Justice Surinder Singh was considered by the High Court along with appellant 's service record. The High Court formed opinion that the appellant 's work and conduct was not satisfactory. Since the report of Justice Surinder Singh vigilance judge formed foundation for taking action against the appellant, we consider it necessary to refer to the same in detail. A copy of the report is on file on perusal of the same we find that in all four complaints were referred to Justice Surinder Singh who was Vigilance Judge for inquiry. The first complaint was by R.N. 406 Mehlawat, Project Director, Adult Education. He raised a grievance A that on July 25, 1984 the appellant convicted the four accused but he went out of the way to institute an inquiry against Ranjit Singh accused and also against the defence witness for forging a document. He further released all the convicted accused persons on probation. Shri Mehlawat was aggrieved that though he was a public servant the accused were not convicted under Section 332 of the Indian Penal Code. He alleged that he had received information that the appellant had received illegal gratification to the tune of Rs.25,000 from the accused for taking lenient view in the matter. The vigilance judge recorded the statement of the appellant and other relevant persons in his report he stated that it was difficult for him to come to a definite finding although the allegations contained in the complaint filed by Shri Mehlawat could not be said without any basis but he recommended that the complaint required further investigation. We have earlier noted that Mehlawat had filed appeal and revision against the appellant 's order but he failed. Justice Tiwana found no merit in the appeal and revision and he upheld the order of the appellant. Justice Tiwana expressly held that Mehlawat was not a public servant even though he was a project Director of the Adult Education Project, and the conclusion of the trial court was correct and there was no merit in the appeal and revision. We are distressed to notice that even though the High Court had upheld the appellant 's order on the judicial side it took exception to the appellant 's conduct in passing the orders against Sh. Mehlawat. Mehlawat had also made allegations that the appellant had accepted illegal gratification in instalments in giving judgment in his case but during the enquiry by the vigilance judge he could not produce any evidence to that effect. It is a matter of common knowledge that many a time when a litigant is unsuccessful he makes allegations against the presiding officer stating that he had received illegal gratification. Mehlawat was an unsuccessful litigant and he was highly prejudiced and biased against the appellant. Any complaint made by him against the appellant could not be taken at its face value specially so when the appellant 's order had been upheld by the High Court. The vigilance judge did not record any finding against the appellant. He observed that the complaint required further investigation. The second matter in respect of which the vigilance judge held inquiry was on the basis of an annonymous complaint pertaining to a civil appeal entitled Sher Singh & ors vs Mahender Singh in which it was alleged that the appellant had during the course of arguments tried to persuade the respondent to compromise the matter. It was alleged 407 that after the arguments were concluded the case was adjourned for several dates for judgment. There was no allegation of any corruption or dishonest motive. The vigilance judge came to the conclusion that the adjournment of the case was unnecessary as the case was a very old one. However the vigilance judge, further held that the complaint being annoymous it required further probe. The third complaint was made by Mukut Bihari Sanghi, an advocate, practising at Narnaul. He alleged that the appellant heard civil appeal entitled Mohan Lal vs Honda Ram on 20th September 1984 and fixed the same for orders for 22nd September, 1984 but the judgment was pronounced on 10th october, 1984. We have perused the copy of the complaint made by Shri Sanghi but there is no allegation that the appellant committed any misconduct or that he acted on any extraneous reasons in granting adjournment. The appellant stated before the vigilance judge that after arguments were completed he had fixed a date for order but as the parties wanted to compromise, he postponed the delivery of judgment for few days in order to enable the parties to settle the dispute but since no settlement was communicated to the court he pronounced the judgment on 10th october, 1984. The vigilance judge, however, made an observation that the case was glaring example of the manner of working of the appellant in judicial cases. In the absence of any extraneous circumstances, we do not find any impropriety in a judicial officer postponing the pronouncement of the order to enable the parties to settle the dispute. It is interesting to note that Sh. Mukut Bihari Singhi, advocate, was twice held guilty for contempt of court. He was convicted for contempt of court by the High Court. He wanted to browbeat the appellant. His complaint, however, did not contain any allegation of corruption. The High Court failed to appreciate that no appeal was preferred against the appellant 's judgment in the case of Mohan Lal vs Honda Ram as the parties were satisfied with the judgment. In our opinion the complaint deserved no consideration it should have been rejected out right. The fourth complaint had been made by one Khem Chand, his grievance had been that his Rent Control Appeal had been dismissed by the appellant on 24th November 1984 and he had allowed him two months time to vacate the premises. He applied for obtaining a certified copy of the judgment but he could not get the same. Instead he got the same, after inordinate delay. The appellant 's explanation was that the copying section was not under his control or supervision therefore he could not be blamed for the delay caused in supplying certified copy of the judgment to Khem Chand. The vigilance judge did not express any opinion on this matter. The above analysis of the report of the Vigilance Judge would 408 show that out of four complaints the vigilance judge expressed opinion that matter relating to item No. 1 and 2 needed further investigation and enquiry as he was not in a position to record any definite finding on the allegations made in those complaints. As regards the third complaint of Mukut Bihari Sanghi there was nothing wrong in postponing the pronouncement of the order with a view to give time to the parties to compromise the matter. Finally, as regards Khem Chand 's complaint the vigilance judge did not express am, opinion on the matter. The report of the vigilance judge does not show that the appellant 's work and conduct were not satisfactory or that he was not fit to act as a Judicial officer. While considering this question it must be kept in mind that complaints, in respect of which the learned Judge observed that the same needed further inquiry into the matter, could not at all be considered against the appellant. If the inquiry had been held and the appellant had been given opportunity to place his version before the inquiry officer, correct facts would have emerged. But in the absence of any further inquiry as suggested by the vigilance judge, the High Court was not justified in considering those matters in concluding that the appellant 's work and conduct was not satisfactory. As regards the confidential roll of the appellant is concerned it is noteworthy that when the High Court considered the matter on 2 1.3.1985 the appellant 's annual report was available only for the first year of his service namely 1983 84. The report for that year was satisfactory. Entry for the year 1984 85 was awarded by Justice S.P. Goyal who was Inspecting Judge on 15.4.1985. He awarded Grade 'B ' plus to the appellant which means that appellant 's work was good. But this entry could not be taken into consideration by the High Court as it had already taken the decision on 21.3.1985 to dispense with the appellant 's services. We are distressed to find that when the aforesaid entry for 1984 85 came up for consideration before the full court of the High Court it modified the same and down graded the entry from 'B ' plus to 'C ' which means appellant 's work was unsatisfactory. During the hearing we asked the learned counsel appearing for the High Court to produce material on the basis of which the High Court modified the entry given by Justice S.P. Goyal for the year 1984 85 but he was unable to place any material before us to support the decision of the High Court in modifing the entry. The modification of the entry is therefore without any material and is not sustainable in law. It is thus clear that so far as annual entry on the appellant 's confidential roll is concerned there was no material against him which could show that the appellant 's work and conduct was unsatisfactory. The facts and circumstances discussed earlier clearly show that the appellant 's 409 services were terminated merely on the basis of the report made by the vigilance judge which we have discussed in detail earlier. The note appended to the agenda of the meeting referred only to the inquiry report and it did not refer to any other matter. The Vigilance Judge failed to express any positive opinion against the appellant instead he observed that the complaints required further investigation. If the High Court wanted to take action against the appellant on the basis of the complaints which were the subject of enquiry by the vigilance judge, it should have initiated disciplinary proceedings against the appellant, then the appellant could get opportunity to prove his innocense. We have already discussed in detail that the facts stated in the complaints and the report submitted by the vigilance judge did not show any defect in appellant 's work as a judicial officer. While considering complaints of irregularities against a judicial officer on probation the High Court should have kept in mind that the incidents which were subject matter of enquiry related to the very first year of appellant 's service. Every judicial officer is likely to commit mistake of some kind or the other in passing orders in the initial stage of his service which a mature judicial offficer would not do. However, if the orders are passed without there being any corrupt motive, the same should be over looked by the High Court and proper guidance should be provided to him. If after warning and guidance the officer on probation is not able to improve, his services should be terminated. Under the Constitution the High Court has control over the subordinate judiciary. While exercising that control it is under a constitutional obligation to guide and protect judicial officers. An honest strict judicial officer is likely to have adversaries in the mofussil courts. If complaints are entertained on trifling matters relating to judicial orders which may have been upheld by the High Court on the judicial side no judicial officer would feel protected and it would be difficult for him to discharge his duties in an honest and independent manner. An independent and honest judiciary is a sine qua non for Rule of law. If judicial officers are under constant threat of complaint and enquiry on trifling matters and if High Court encourages annonymous complaints to hold the field the subordinate judiciary will not be able to administer justice in an independent and honest manner. It is therefore imperative that the High Court should also take steps to protect its honest officers by ignoring ill conceived or motivated complaints made by the unscrupulous lawyers and litigants. Having regard to facts and circumstances of the instant case we have no doubt in our mind that the resolution passed by the Bar Association against the appellant was wholly unjustified and the complaints made by Sh. Mehalawat and 410 others were motivated which did not deserve any credit. Even the vigilance judge after holding enquiry did not record any finding that the appellant was guilty of any corrupt motive or that he had not acted judicially. All that was said against him was that he had acted improperly in granting adjournments. In view of our discussion we allow the appeal, set aside the order dated 9.12.1986 and order of the State Government dated 30.12.1986. We direct that appellant shall be reinstated in service, with continuity of service and arrears of salary and allowances and other benefits. The appellant is entitled to the costs which we quantify at Rs.5,000. S.L. Appeal allowed.

This appeal by special leave was directed against the Judgment of the High Court, dismissing the appellant 's writ petition challenging the order dispensing with his services. The appellant was appointed as Addl. District and Sessions Judge on probation for two years. While he was on probation, there were certain complaints against him, and an inquiry was held by a Judge of the High Court, as a result whereof the High Court by its resolution recommended the termination of the appellant 's services to the State Government. The appellant filed a writ petition before the High Court, challenging the said resolution of the High Court. The High Court dismissed the writ petition whereupon the State Government issued orders terminating the appellant 's services. Aggrieved, the appellant moved this Court, challenging the orders of the High Court and the State government above said. The appellant contended that since the High Court had resolved that his services should be terminated on the basis of the inquiry report, the constitutional protection available to him under Article 311(2) of the Constitution and the principles of natural justice had been violated. Counsel for the High Court submitted that the inquiry held was merely to judge the appellant 's suitability for service, and the appellant was not entitled to the constitutional protection of Article 311(2) of the Constitution, or to any opportunity of hearing before taking the decision regarding the termination of his probationary period. Allowing the appeal, the Court, 397 ^ HELD: The High Court had no relevant material in coming to the conclusion that the appellant 's work and conduct was not satisfactory during his probationary period. The material taken into consideration was non existent, while the other material was not relevant, and the allegations taken into consideration against him remained unsubstantiated. The High Court erred in holding the appellant 's work and conduct to be unsatisfactory, and in terminating his services. [401 A C] In one case, adverse remarks made against the appellant by the High Court (Bains, J.) had been directed by this Court in appeal to be expunged as they were found to be unjustified and unwarranted. In another case, members of the Bar Association had passed a resolution condemning the appellant on a trifling matter without applying their mind to the question involved. The members of the Bar practising before the Court should be aware of the legal position and they should not have passed the resolution condemning the appellant without there being any justifiable cause. If the members of the Bar Association pass resolutions against the presiding officers working in subordinate courts without any justifiable cause, it would be difficult for the judicial officers to perform their judicial functions and discharge their responsibilities in an objective and unbiased manner. The High Court, instead of protecting the appellant, distressingly took the Bar resolution into consideration in assessing the appellant 's work and conduct. [402B; 404B D] The complaints against the appellant were enquired into by Justice Surinder Singh, Vigilance Judge, and his report had formed the foundation for the action taken by the High Court against the appellant. An analysis of the report of the Vigilance Judge showed that out of four complaints, in respect of two of them the Vigilance Judge had expressed the opinion that the matter needed further investigation and enquiry and he was not in a position to record any definite finding on the allegations made in those complaints. As regards the third complaint, officers had committed no wrong in postponing the pronouncement of the order, with a view to give time to the parties to compromise. As regards the fourth matter Khem Chand 's complaint the Vigilance Judge had not expressed any opinion. The report of the Vigilance Judge did not show that the work and conduct of the appellant were not satisfactory or that he was not fit to act as a judicial officer. The complaints in respect of which the Vigilance Judge had observed that the same needed further inquiry, could not at all be considered against the appellant. The High Court was not justified in considering those matters in concluding that the appellant 's work and conduct was not satisfactory. [407H; 408A D] 398 So far as the annual entry on the appellant 's confidential roll was A concerned, there was no material against him to show that his work and conduct was unsatisfactory. [408G H] While considering complaints of irregularities against the judicial officer on probation, the High Court should have kept in mind that the incidents related to the very first year of appellant 's service. Every Judicial officer is likely to commit mistakes of some kind or the other in passing orders in the initial stage of his service, which a mature judicial officer would not do. If the orders are passed without any corrupt motive, the same should be overlooked by the High Court and proper guidance should be provided to him. If after the warning and guidance, the officer on probation is not able to improve, his services may be terminated. [409C E] While exercising control over the subordinate judiciary under the Constitution, the High Court is under a constitutional obligation to guide and protect judicial officers. An honest, strict judicial officer is likely to have adversaries. If complaints are entertained on trifling matters relating to judicial orders which may have been upheld by the High Court on the judicial side, and if the judicial officers are under constant threat of complaints and enquiry on trifling matters, and if the High Court encourages anonymous complaints, no judicial officer would feel, secure, and it would be difficult for him to discharge his duties in an honest and independent manner. An independent and honest judiciary is a sine qua non for the Rule of law. It is imperative that the High Court should take steps to protect its honest judicial officers by ignoring ill conceived or motivated complaints made by unscrupulous lawyers and litigants. [409E G] In this case, the resolution passed by the Bar Association against the appellant was wholly unjustified and the complaints made by others were motivated which did not deserve credit. Even the Vigilance Judge did not record any finding that the appellant was guilty of any corrupt motive or that he had not acted judicially. [409H; 410A] The orders of the High Court and the State Government were set aside. The appellant was directed to be reinstated with continuity of service and arrears of salary and allowances and other benefits. [410B C]

minal Appeal No. 109 of 1967. Appeal by special leave from the judgment and order dated May 4, 1967 of the Patna High Court in Criminal Appeal No. 455 of 1965. Debobrata Mookherjee and P. K. Ghosh, for the appellant. D, P. Jha, for the respondent. 565 The Judgment of the Court was delivered by Hegde, J. In this appeal by special leave, Mr. Debabrata Mookherjee learned counsel for the appellant advanced the following contentions : (1) the investigation conducted in this case was without the authority of law, (2) the nature of the onus under section 4 of the Prevention of Corruption Act has been wrongly construed by the High Court as well as the trial court, and (3) the sanction granted under section 6 of the Prevention of Corruption Act is invalid in law as the authority who granted the same had no competence to do so. The facts leading upto this appeal are these. The appellant was an assistant medical officer in the railway hospital at Gaya in the year 1964. PW 4 Doman Ram was a khalasi working under the inspector of works, Eastern Railway, Gaya. On March 2, 1964, as he was suffering from dysentery and stomach pain he was sent to the appellant along with a sick note for treatment. The case of PW 4 was that when he went to the appellant for treatment the appellant demanded and received, from him Rs. 2 as illegal gratification for treating him. Thereafter he was. treated by the appellant on the 5th, 7th. 9th and 12th of that month. By the 12th he had completely recovered and, therefore he wanted to rejoin duty and for that purpose he requested the appellant to give him a fitness certificate. For issuing him that certificate the appellant demanded Rs. 5 as bribe and he further told PW 4 that unless he paid him the said sum by March 14, 1964, he (appellant) would remove PW 4 's name from, the sick list. After this talk, when PW 4 was going out of the hospital he met a person by name Babu. He complained to Babu about the behavior of the appellant. The said person told him that he would meet him again on March 14, 1964, but on March 14 Mr. A. C. Das PW 17, Inspector of Special Police Establishment met PW 4 in his house and ascertained from him all that had happened. Thereafter PW 4 met PW 17 again at the railway station as desired by the latter. From there both of them went to the district Dak bungalow where PW 17 recorded the complaint of PW 4. The same day PW 17 obtained from the First Class Magistrate an order under section 5A of the Prevention of Corruption Act. Thereafter, PW 4 produced before PW 17 a five rupee currency note in the presence of panch witnesses. PW 17 noted the number of the currency note in question, prepared a memorandum in respect of the same, got it attested by the panch witnesses and thereafter returned the said currency note to PW 4 to be given to the appellant in case he made any further demand for bribe. After these preliminaries were over PW 4 went to the appellant along with the panch witnesses. There when PW 4 asked for the certificate, the appellant repeated his earlier demand. Then PW 4 gave him the currency note in question. This was seen by the panch 566 witnesses. Immediately signal was given to PW 17 who came to the hospital and. asked the appellant to produce the five rupee note received by him from PW 4. At this stage the appellant became extremely nervous. He admitted that PW 4 had paid him Rs. 5 but that according to him was a return of the loan given to him by the appellant. He produced the currency note in question. After investigation the appellant was charged under section 161 IPC and section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act. The plea of the appellant was that PW 4 and his wife were doing odd jobs in his house; PW 4 was a drunkard and hence was always in need; he used to often borrow from him (appellant); he had borrowed Rs. 5/ from him some. days prior to the date of the trap and he returned that amount on that day. The appellant examined some witnesses in support of that plea. The trial court as well as the High Court accepted the prosecution evidence; rejected the defence version and convicted the appellant both under section 161, IPC as will as section 5(2) of the Prevention of Corruption Act. They have given good reasons in support of the findings of fact reached by them. As this Court does not go into questions of fact except under exceptional circumstances, Mr. Mookherjea primarily confined himself to the legal issues arising in the case. His first contention was that the investigation held in this case was without the authority of law and hence the. appellant is entitled to be acquitted. He urged that in view of section 5A of the Prevention of Corruption Act, PW 17 who was only an Inspector of police could not have investigated the case without the prior permission of a magistrate of the first class; on March 12, 1964 he merely applied for and obtained from a first class magistrate permission to lay a trap; the permission to, investigate the case was obtained by him only on the 21st but by that time the entire investigation was over; hence there was no valid investigation. The application made by PW 17 on the 12th was under section 5A of the Prevention of Corruption Act Therein, it is true, he had only asked for permission to lay a trap. It must be remembered that the permission given was one under section 5A. A permission under that provision is a permission to investigate the case. Laying the trap is a part of the investigation. It is so laid down by this Court in State of Madhya Pradesh vs Mubarak Ali(). An investigation is one and indivisible. [ All steps taken by PW 17 to ascertain the truth of the complaint made by PW 4 alleging that the appellant was attempting to obtain bribe from him, come within the expression 'investigation ' under section 4(1) of the Code of Criminal Procedure. 'Investigation ' includes all the proceedings (1) [1959] 2 S.C.R.201. 567 under the Code for the collection of evidence conducted by a police officer or any person (other than a magistrate) who is authorised by a magistrate in this behalf. The scope of the expression 'investigate ' found in section 5A of the Prevention of Corruption Act was explained by this Court in H. N. Rishbud and Inder Singh vs State of Delhi( ) and State of Uttar Pradesh vs Bhagwant Kishore Joshi(2). Section 5A does not contemplate two sanctions, one for laying the trap, and another for further investigation. Once an order under that provision is made that order covers the entire, investigation. A permission given under that provision enables the officer concerned not only to lay a trap but also to hold further investigation. There is no doubt that PW 17 was under a mistaken impression that he should obtain two permissions, one for laying the trap and another for investigating the case. Evidently because of that he applied for a second permission Rome days after the trap was laid. But that permission was wholly superfluous and the same does not affect the validity of the earlier order. Hence there is no basis for the contention that any portion of the investigation in this case was done without the authority of law. It was next urged that before granting the permission the learned magistrate did not apply his mind to the question whether there was any need for granting the sanie. Before permitting PW 17 he should, have first ascertained whether any officer of the rank of Deputy Superintendent or above was not immediately available to investigate the case, and whether 'there was any other reason for departing from the normal rule laid down by the legislature, namely, that cases of this nature should be investigated by officers of the rank of Deputy Superintendent of Police or above. It was further contended on behalf of the appellant that the earned magistrate made the order casually he gave no reason in support of his order and hence the permission granted does not meet the requirements of the law. The object of the legislature in enacting section 5A was to see that the investigation of offenses punishable under sections 161, 165 or 165A, IPC as well as those under section 5 of the Prevention of Corruption Act should be done ordinarily by officers of the rank of deputy superintendent or above N4 doubt section 5A also provides for an alternative procedure. An officer below the rank of deputy superintendent can investigate those: offenses if he obtains the previous permission of a first class magistrate. The legislature proceeded on the basis that except for good reasons the magistrate would not accord permission for officers below the rank of a deputy superintendent to investigate those offenses. But exigencies of administrative convenience may require I that some of those (1) ; (2) ; 568 cases have to be investigated by officers below the rank of Deputy Superintendents. For that reason it was provided that ' in such circumstances the permission of a. magistrate of the first class should be obtained. This Court has laid down in State of Madhya Pradesh vs Mubarak Ali( ') that the statutory safeguards under section 5A must strictly be complied with for they are. conceived in public interest and were provided as a guarantee against frivolous and vexatious proceedings. A magistrate, can not surrender his discretion to a police officer but must exercise it having regard to the relevant material made available to him at the stage of granting permission. He must also be satisfied that there is reason owing to exigencies of the administrative convenience to entrust a subordinate officer with the investigAtion. It is further observed therein that it is desirable that the order giving the permission should ordinarily on the face of it disclose the reasons for giving permission. The order giving permission under section 5A in this case does not give any reason. On the application submitted by PW 17 the learned magistrate merely ordered "Permission granted". PW 17 did not mention in his application any special reason for permitting him to investigate the case unless we consider the statement in the application "Today is the date fixed for issuing the fit certificate: after receiving a bribe money of Rs. 5 from him" as impliedly a ground in, support of his application. It is surprising that even after this Court pointed out the significance of section 5A in several decisions there 'are still some magistrates and police officers who continue to act in a casual manner. It is obvious that they are ignorant of the decisions of this Court. But the legality of the investigation held in this case does not appear to have been challenged in the trial court. The charge leveled against the appellant is established by satisfactory and therefore all that we have now to see is whether the accused was prejudiced by the fact that investigation of this case was made by an officer below the rank of a Deputy Superintendent, as laid down by this Court in Munnalal vs State of Uttar PradeSh(2) and State of Uttar Pradesh vs Bhagwant Kishore Joshi(3). No prejudice was pleaded much less established An illegality committed in the course of an investigation does not affect the competence and jurisdiction of the court for trial and where cognizance of the case has in fact been taken and the case has proceed to termination the invalidity of the preceding investigation does not vitiate "the result unless the miscarriage of justice has been caused thereby, See Rishbud and Inder Singh vs State of Delhi(4). We next take up the question as to the, scope of section 4 of the Prevention of Corruption Act. As, mentioned earlier, the appel (1) (2) ; (3) ; (4) (1955] 1 S.C.R. 1150. 569 lant admits the fact that he received a sum of Rs. 5 from PW 4 on March 14, 1964. Once that fact is admitted by him, the court has to presume unless the contrary is proved by the appellant that he accepted the sum in question as a motive or reward for issuing the fit certificate. Mr. Mookherjea 's contention was that the presumption in question does not arise unless the prosecution proves that the amount in question was paid as a bribe. He urged that the presumption under section 4 arises only when the prosecution proves that the Appellant had received "any gratification (other than legal remuneration) or any valuable thing from any person". He laid stress on the Word gratification ' and according to him the word 'gratification ' can only mean something that is given as a corrupt reward. If this contention of Mr. Mookherjea is correct then the presumption in question would become absolutely useless. It is not necessary to go into this question in any great detail as the question is no more res Integra. In C.I. Emden vs State of U.P. (I") this Court held that the "presumption under section 4 arose when it was shown that the Accused had received the stated amount and that the, said amount Was not legal remuneration. The word 'gratification ' in section 4(1) was given its literal dictionary meaning of satisfaction of appetite or desire; it could not be construed to mean money paid by way of a bribe. " The Court further observed "If the word 'gratification ' is construed to mean money paid by way of a bribe then it would be futile or superfluous to prescribe for the.raising of the presumption. Technically it may no doubt be suggested that the object which the statutory presumption serves on, this construction is that the court may then presume that the money was paid by way of a bribe as a motive or reward as required by section 161 of the Code. In our opinion this could not have been the intention of the Legislature in prescribing the; statutory presumption under section 4(1). In the context we see no justification for not giving the word 'gratification ' its literal dictionary meaning. There is another consideration which supports this construction. The presumption has also to be raised when it is shown that the accused person has received valuable thing. This clause his reference to, the offence punishable under s, 165 of the Code; and there is no doubt that one of the essential ingredients, of the said offence is that the valuable things should have been received by the accused without consideration or for a not be suggested that the relevant clause in section 4(1) (1) ; 570 which deals with the acceptance of any valuable thing should be interpreted to impose upon the prosecution an obligation to prove not only that the valuable thing has been received by the accused but that it has been received by him without consideration or for a consideration which he knows to be inadequate. The plain meaning of this clause undoubtedly requires the presumption to be raised whenever it is shown that the valuable thing has been received by the accused without anything more. If that is the true, position in respect of the construction of this part of section 4(1) it would be unreasonable to, hold that the word gratification ' in the same clause imports the necessity to prove not only the payment of money but the incriminating character of the said payment. It is true that the Legislature might have used the word money ' or 'consideration ' as has been done by the relevant section of the English statute; but if the dictionary meaning of the word 'gratification ' fits in with the scheme of the section and leads to the same result as the meaning of the word valuable thing ' mentioned in the same clause, we see no justification for adding any clause to qualify the word 'gratification '; the view for which the appellant contends in effect amounts to adding a qualifying clause to describe gratification. " The same view was taken by this Court in Dhanvantrai Balwantrai Desai vs State of Maharashtra(1) and again in V. D. Jhangan vs State of Uttar Pradesh(2). It was next contended that to discharge the burden placed on the appellant under section 4 all that he has to do is to offer a reasonable explanation, the burden placed on him by section 4(1) being somewhat analogous to that 'Placed on an accused under section 114 of the Evidence Act. This branch of the law is also well settled by the decisions of ' this Court. Section 114 of the Evidence Act provides that the court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. Under that provision the court is not bound to draw any presumption of fact. 'It is within its discretion to draw a presumption or not. But under s, 4(1) the court is bound to draw the presumption mentioned therein. ',The presumption in question will hold good unless the accused proves the contrary. In other words, the burden of proving the contrary is squarely placed on the accused. A fact is said to be when after Considering the matters before it the court either believes it to exist or con (1) A.T.R. (2) ; 571 siders its existence was so probable that a prudent man ought under the circumstances of the particular case to act upon the supposition that it exists. The proof given by the accused must satisfy the aforementioned conditions. If it does not satisfy those conditions then he cannot be said to, have proved the contrary. In Dhanvantrai Balwantrai vs State of Maharashtra( ') this Court considered the nature of the proof required to be given by ' the accused under section 4 (I). Therein this, Court held that the burden resting on the accused person in such a case would not be as light as that placed on him under section 114 of the Evidence Act and the same cannot be held to be discharged merely by reason of the fact that the explanation offered by him is reasonable and prob able. It must further be shown that the explanation is a true one. The words 'unless the contrary is proved ' which occur in that provision make it clear that the presumption has to be rebutted by proof and not by a bare explanation which is merely plausible. The same view was taken by this Court in V. D. Jhangan vs State of Uttar Pradesh (2). But at the same time it was mentioned in that decision that the burden resting on the accused will be satisfied if the accused person establishes his case by a preponderance of probability and it is not necessary for him to establish his case by the test of proof beyond reasonable doubt. In other words, the, nature of the burden placed on him is not the same as that placed on prosecution which must not only prove its case but prove it beyond reasonable doubt. In the instant case the evidence adduced by the appellant in support of his plea was not accepted by the trial court as well as the High Court. Hence it must be held that he had not discharged the burden placed on him by law. ' This takes us to the last point urged by Mr. Mookherjea namely that the sanction to prosecute granted by PW 1, the chief medical officer, under section 6(1) of the Prevention of Corruption Act is invalid as he was not the authority competent to remove the appellant from his office and hence the prosecution is vitiated. Section 6(1), to the extent it is material for our present purpose, reads : "No court shall take cognizance of an offence punishable under section 161 or section 164 or section 165 of the Indian Penal Code, or Under sub section (2) or sub section 3A of section 5 of this Act, alleged to have been committed by a public servant, except with the previous sanction, (a). . . . . (b). . . . . (c) in the case of any other person, of the authority competent to remove him from his office." (1) A.I.R. 1964 S.C. 575. L7 Sup. CI/68 12 (2) ; 572 This Court has laid down in R. R. Chari vs State of U.P.(1); as well as in several other decisions that no court can validly take cognizance of any of the offenses mentioned in section 6(1) of the Prevention of Corruption Act without the previous sanction of the authority competent to remove from office the accused. Without a valid sanction the court had no jurisdiction to try the case. Hence, if the sanction accorded in: this case is invalid then the appellant is entitled to be acquitted. P.W. I deposed that the appellant was a class III officer and that he could have been appointed or dismissed by the Deputy Agent Personnel who is subordinate to him. Therefore he (P.W. 1) was competent to grant previous sanction under section 6 (1) of the Prevention of Corruption Act. P.W. 1 's assertion that the appellant could have been removed from 'his office either by the Deputy Agent Personnel or by himself was challenged in his cross examination. The trial court as well as the High Court have relied on the oral evidence of P.W. 1 in coming to the conclusion that the sanction granted is valid. In our opinion those courts erred in relying on oral evidence in deciding the validity of the sanction granted. Hence, we asked the learned counsel for the respondent to satisfy us with reference to the rules on the subject that P.W. 1 was competent to remove the appellant from his office. For this, ,purpose we granted him several adjournments. Though our attention has now been invited to some rules, those rules do not establish that P.W. I as competent to grant the sanction in question. It was contended on behalf of. the appellant that he was a gazetted officer and therefore he could be removed only by the Railway Board. This contention does not appear to be correct. As seen from the Government of India, Ministry of Railways publication under the title "authorised scales of pay", the appellant is a class HI officer. From that publication it is further seen that F only class I and II officers are designated as gazetted officers. In support of his contention that he was a gazetted officer, the ap pellant relied on the Railway Board 's letter No. PC/60/PS 5/MH3 dated 2 3 1962. 'Paragraph 4 of that letter the only relevant paragraph for our present purpose says that an assistant surgeon after five years service shall hold the honorary gazetted rank and shall be entitled to the usual privileges granted to gazetted officers in matters such as passes, allotment of quarters. This letter merely indicates that the officers mentioned therein are entitled to certain privileges which are ordinarily available to gazetted officers. We are unable to 'read that letter as raising the rank of the appellant to that of a gazetted officer. Therefore we proceed on the basis that the appellant was a non gazetted officer. But the question still remains whether P.W. 1 was competent to remove him (1) ; 573 from service. In view of appendix 3 8 of the Indian Railways Establishment Code Vol. III (4th re print, dated 26 7 1962), we may take it that P.W. 1 was the head of the department to which the appellant belongs. The next question is whether the head of his department was competent to remove the appellant from his service. As per r. 134 of the Indian Railway Establishment Code, pub lished in 1959, authorities competent to make first appointment to non gazetted posts in the Indian Railways are the General Manager, the Chief Administrative Officer or lower authority to whom he may delegate power. There is no evidence to show that this power has been delegated to the heads of the department. No provision in the Indian Railway Establishment Code 1959 prescribing the authorities competent to remove from office a class III officer was brought to our notice. But the prefatory note to Vol. I of the Code says, "The revised Chapter XVII and revised Appendices I and XII will be printed later for inclusion in this edition. Till such times these are printed, the rules and provisions contained in Chapter XVII and Appendices IV and XVIII in the 1951 Edition (Reprint) as, amended from time to time shall continue to apply." In 1961 new rules relating to discipline and appeal of railway servants other than employed in the railway protection force have been published. Rule 1701 says, "Without prejudice to the provisions of any law, for the time being in force, relating to the conduct of Government servants, or to the rules made under section 47 (e) of the Indian Railways Act, 1890 (9 of 1890), the conduct of railway servants shall be governed by the rules contained in Appendix Vlll. " Our attention has not been invited to any rules made under section 47 (e) of the Indian Railways Act, 1890 or any other statutory rules. Hence we are proceeding on the basis that the aforementioned r. 1701 governs the present case. Rule 1705 says that the authorities who are competent to place a railway servant under suspension and to impose penalties on him are specified in the Schedules 1, II and III appended to the Rules. Rule 1707 sets out the various punishments that may be imposed on a railway servant which includes removal from service as well as dismissal from service. Schedule I deals with railway servants employed in the Railway Board 's office, the Research, Design and Standard Organisation, the Railway Staff College, Baroda, the Advanced Permanent Way Training School, Poona, the Railway Service Commission, the Railway Rates Tribunal, the Railway Liaison Office and all other railway offices which are not enumerated above. Schedule I does not apply to the case of railway servants employed in the zonal railways. As regards them, provision is made in Sch. From that Schedule it is seen that though a head of the Department can impose on Class III officers 574 censure as well as some other punishments detailed therein, he is not competent to impose on them the punishment of removal from service, compulsory retirement or dismissal from service. Those punishments, as seen from the Schedule,can be imposed on them only by thE appointing authority or any other higher authority. P.W. 1 is not shown to be the appointing authority. On the material before us it is not possible to come to the conclusion that P.W. 1 was competent to grant sanction under section 6 (1)of the Prevention of Corruption Act. We accordingly allow this appeal and set aside the conviction of the appellant. He is on bail. His bail bond stands cancelled. V.P.S. Appeal allowed.

The appellant was an assistant medical officer in a railway hospital at Gaya. Though he had certain privileges ordinarily available to gazetted officers he was only a non gazetted Class III officer. He was convicted for offenses tinder section 161 I.P.C. and 'section 5 (2) read with section 5 (I) (d) of the Prevention of Corruption Act, 1947. The complaint that he had received illegal gratification, was investigated into by an Inspector of Police. The Inspector obtained permission from a First Class Magistrate for laying a trap, investigated into the case, and later, after the entire investigation was over, he obtained permission from the Magistrate to investigate into, the case. The sanction to prosecute required under section 6(1) of the Act, was granted by the Chief Medical Officer, who was the bead of the department. The conviction was challenged on the following grounds : (1) The investigation was without authority of law, because, under section 5A, the Inspector could not have investigated without the prior permission of a Magistrate of the First Class; (2) The permission granted by the Magistrate did not meet the requirements of law because, it was given casually and without applying his mind to the question as to whether there was any need for departing from the normal rule laid down in the section, namely, that such cases should ordinarily be investigated by an officer of the rank of Dy. Superintendent of Police or above and there should be good reasons before a Magistrate accords permission to officers below that rank; (3) The presumption under section 4 that the appellant had accepted the sum a motive or reward should not be drawn unless the prosecution proved that the amount was paid as a bribe; (4) The presumption was rebutted by the appellant 's explanation that what was paid to him was the return of a loan; and (5) the sanction to prosecute granted by the Chief Medical Officer was invalid as lie was not the authority competent to remove him. HELD : (1) There is no basis for the contention that any portion of ' the investigation was done without authority by law. [567 D]. Investigation under section 4(1) Cr. P.C. is one and indivisible and includes all the steps taken by the Inspector to ascertain the truth of the complaint alleging that the appellant was attempting to obtain a bribe. Laying a trap, is a part of the investigation and a permission given under section 5A of the Prevention of Corruption Act enables the officer concerned not only to lay a trap but also to further investigate. The fact that the Inspector of Police obtain the two permissions, one for laying a trap and 564 another for investigating the case, does not affect the earlier order as the second permission was wholly superfluous. [566 G H, 567 B D] (2) The order giving permission to. the Inspector did not give any reasons and there is thus a violation of section 5A. But an illegality committed in the course of an investigation does not vitiate the result of a trial unless there was a miscarriage of justice. In the present case the legality of the investigation was not challenged in the trial court and prejudice to the appellant was neither pleaded nor established. [568 C D, F G]. (3) The presumption under section 4 arises when it is shown that the accused had received the stated amount and that the said amount was not legal remuneration. [569 D]. (4) The words 'unless the contrary is proved ' in section 4(1) show that the presumption was to be rebutted by proof and not by a bare explanation which is merely plausible. The 'burden testing on the accused will however be satisfied if he establishes his case by a mere preponderance of probability and it is not necessary for him to prove it beyond reasonable doubt. In the present case, the appellant 's plea was not accepted by the trial court and the High Court and hence, it must be held that he had not discharged the burden placed on him. [571 C E]. State of M.P. vs Mubarak Ali, , H. N. Rishbud and Inder Singh vs State of Delhi, [1955] 1 S.C.R. 1150, State of U.P. vs Bhagwant Kishore Joshi, A.I.R. , Munnalal vs State of U.P. ; , C. 1. Emden vs State of U.P. ; , Dhanvantrai Balwantrai Desai vs State of Maharashtra, A.I.R. and V. D. Jhangan vs, State of U.P. ; , followed. (5) Under section 6(1) (c) of the Prevention of Corruption Act, the appellant could not be prosecuted without the previous sanction of the authority competent to remove him. Oral evidence of the officer giving sanction cannot be relied on for deciding the validity of the sanction. The Court must be satisfied by reference to the rules on the subject. Schedule 11 to the 1961 Rules relating to discipline and appeal of railway servants makes provision for the punishment of railway servants employed in zonal railways. Under the Schedule I a head of a department was not competent to impose on Class III officers the punishment of removal from service. That punishment could only be imposed by an appointing authority or any other higher authority. Under r, 134. the authorities competent to make first appointments to non gazetted posts are the General Manager. the Chief Administrative Officer or a lower authority to whom he may delegate power; but the power has not been delegated to heads of departments. Therefore, the Chief Medical Officer was neither the appointing authority nor was he competent to. remove the appellant from his Office. Hence he was also not competent to grant the sanction for prosecuting the appellant. D; 573B C, H;574A B]. R. R. Chari vs State of U.P. [1963].1 S.C.R. 121, followed.

Civil Appeal No. 571 of 1969. Appeal by Special Leave from the Order dated the 6th September, 1968/26th October 1968 of the Government of India, Ministry of Finance (Department of Revenue and Insurance) bearing No. 5262 of 1968. J. L. Nain, Mrs. A. K. Verma for J. D. Dadachanji & Co., for the Appellant. R. B. Datar and Miss A. Subhashini, for the Respondent. The Judgment of the Court was delivered by SARKARIA, J. This is an appeal by special leave against an order of the Government of India, Ministry of Finance (Department of Revenue and Insurance). The order was passed by Shri B. Sen, Commissioner (Revision applications), Government of India. Indian Hard Metal (P) Ltd., the appellant, had imported 15 metric tonnes of wolfram ore from London. The Customs authorities classified the said ore under item 87 of the Indian Customs Tariff and charged duty at the rate of 60 per cent ad valorem amounting to Rs. 62,871.03P., instead of classifying the imported ore either under item 26 of item 70(7) which are free from duty. These relevant items, as entered in the Imported Tariff, may be set out as under: Item Name of Article Nature of Standard No. duty rate of 26 Metallic ores all X Free X sorts except ores and pigments ores and antimony ore. 70(7) Cobalt chromium tungsten X Free magnesium and all other nonferrous virgin metals not otherwise specified. SECTION XXII (ARTICLES NOT OTHERWISE SPECIFIED) 87 All other articles not otherwis specified. Revenue 60 per cent ad valorem. The classification made under the residuary item 87 at the time of the import was upheld by the Assistant Collector of Customs; and the Commissioner of Customs dismissed the appeal of the assessee by an order dated July 31, 1965, holding that the 381 bags of wolfram ore was correctly assessable at the rate of 60 per cent duty under item 87 of the Indian Customs Tariff, and not being covered either 471 by entry 26 or 70(7) of the Indian Customs Tariff, was not duty free. The appellant preferred a revision petition under section 131 of the Customs Act to the Government of India who declined to interfere and dismissed the revision. Hence this appeal. Mr. Nain, appearing for the appellant, submits that the ore in question contained a concentrate of 74% of tungsten from wolfram and the rest were impurities. This concentration is the result of 'selective mining ' process which involves crushing, washing and magnetic separation. It does not bring about any chemical change in the metal. At the minepit in its natural form, the ore is not of marketable quality because the tungsten content in ' it, then is hardly 0.5 to 2 per cent. By the aforesaid concentrating process, the ore is converted into ore of commercial quality. It is maintained that in commercial parlance wolfram ore of marketable quality must contain a minimum of 655 'o to 70% of the metal, and in one of better quality, the content may be as high as 79%. Even after being subjected to such process, the ore concentrate does not cease to be tungsten 'ore ' within the contemplation of item 70(7) of the Indian Import Tariff. In sup port of his contentions, learned counsel has relied upon the judgment of this Court in Minerals & Metals Trading Corporation of India Ltd. vs Union of India & Ors.(1) and certain Certificates of experts, as also an extract from the treatise on 'Tungsten ', by C.J. Smithells Chapman Hall. As against this, Mr. Datar has drawn our attention to the order, dated July 31, 1965, wherein the Appellate Collector of Customs has observed that no evidence was adduced by the importer to substantiate the contentions that the ore in question had undergone no chemical process before being imported, and that the inference is that such high purification of the concentrate could have been possible only by applying process other than by water, crushing and magnetic separation. It is stressed that the decision of this Court in Minerals & Metals Trading Corporation of India Ltd. (supra), is not applicable because in that case the percentage of tungsten in the ore was 65% only and that much concentration could be reached by physical process only, such as, crushing washing etc.; while in the instant case, the percentage of the wolfram contained in the goods concerned is little over 75%. In our opinion, the mere fact that the percentage of tungsten in the ore concentrate in the instant case is about 75 per cent, does not take the case out of the ratio of this Court 's decision cited by Mr. Nain. (1) [l973] I S.C.R. 997. 472 In Minerals & Metals Trading Corporation of India Ltd. (supra), the appellant had imported 200 metric tons of wolfram concentrate from Russia, under a contract which prescribed minimum contents of 65 % of W03 in the concentrate. The Customs authorities levied duty at the rate of 60% ad valorem under item 87 of the First Schedule The appellant claimed refund on the ground that no duty was leviable as the goods imported was an "ore" and fell, under item 27 or 70(7) of the Import Tariff. The Assistant Collector of Customs held that the appellant was not entitled to refund because the term "ore" mentioned in the text of item 26 is confined to articles which are in form and condition in which they are mined and not as wolfram ore concentrate in powder form as in that case. On appeal by the importer, the Appellate Collector head that the goods in question were in the manufactured form made by special specifications by dressing and were thus not "ores". The Central Government rejected the revision application filed by the appellant, holding that the examination by the Chemists showed that the uniform granules of the material were not only separated from rock but also from various impurities and had been subjected to such processing as would take them out of the category of metallic ore mentioned in Intern 26. This Court, speaking through Grover J., allowed the importer 's appeal, with these apposite observations: "There is a good deal of force in the argument of Mr. Setalvad for the appellant that the normally acceptable merchantable quality of wolfram or tungsten contains a minimum 65 % WO33. This is the usable ore and it is in that sense that it is commercially understood. Wolfram ore when , mined contains only 0.5 to 2 per cent W03 and in order to make it usable and merchantable ore with minimum 65% W03, concentration is necessary. If item 26 of the Import Tariff is to be restricted to wolfram being material containing 0.5 to 2 per cent W03, it would be mainly rock which can neither be imported in large quantity and which will have no market. The separating of wolfram ore from the rock to make it usable ore is a process of selective mining. It is not a manufacturing process. The important test is that the chemical structure of the ore should remain the same. Whether the ore imported is in powder or granule form is wholly immaterial. What has to be seen is what is meant in international trade and in the market by wolfram ore containing 60% or more W03. On that there is a 473 preponderant weight of authority bath of experts and books and of writings on the subject which show that wolfram ore when detached and taken out from the rock in which it is embedded, either by crushing the rock and sorting out pieces of wolfram ore by washing or magnetic separation and other similar and necessary process, it becomes a concentrate but does not cease to be ore." (emphasis added) There is ample authority for the view that the tungsten content in the wolfram ore of marketable quality may vary from 60 to 79 per cent, and a concentration within these limits, of the metal in the ore can be attained simply by a process of a "selective mining", that is, by physical process not involving any chemical change in the metal. The following passage (vide Annexure "I ' in the record) culled out from the Introduction to the treatise on "Tungsten" by C.J. Smithells Chapman Hall, fully bears out this conclusion: "Mining. Tungsten ores, although so widely distributed rarely occur in massive form. The ores are usually found in narrow veins, but in some of the rich deposits the veins may in places be several metres wide. Castrate is the commonest metallic mineral associated with tungsten, but minerals containing bismuth, molybdenum, lead and copper are frequently found; pyrite and arsenopyrite are objection able minerals, which may be present in appreciable amounts, and other common minerals are quartz and fluorite. There are several kinds of ore deposits classified as segregates, pegmatites replacement deposits, veins and placers. The tungsten content of the ore as it is mined is usually from 0.5 to 2 per cent, although it amounts to 6 per cent in rare instances. The concentration of tungsten ores depends chiefly on gravity methods, taking advantage of the high density of the metal, ,although flotation methods are also used. the concentrates, which contain 60 70 per cent W03, to or the better qualities 75 79 per cent should be virtually free from S.P, As, sb, Bi, Cu, Sn, Ti, and Mo. Magnetic are employed to separate the tin and tungsten in the concentrates. Scheelite, however, is non magnetic, but when it occurs with garnet, as it does in Tasmania, the garnet may be removed magnetically. The concentration of Wolframite ores is difficult on account of their mica like formation. Excessive crushing leads to high losses in tabling and as far as 12 978 SCI178 12 978SCI/78 474 possible the ore should be separated when coarsely crushed " (Emphasis supplied ) There is on the record another Certificate in the form of a letter, dated February 3, 1965, from the Director, National Metallurgical Laboratory, Jamshedpur, addressed to the Controller of Customs, Calcutta, in which it is opined: "The wolfram ore is always selectively mined in the techllical terminology. such "selective mining" does not constitute a manufacturing process. Unless selective mining is done, the tungsten ore cannot be exported or even sold in the country of its origin. In view of the above, the import of selectively mined tungsten ore containing 65 % W03 or more should not be regarded as the import of a product which has been manufactured overseas and has passed through the manufacturing process. By the expression 'selectively mined ', we mean that the wolfram ore is detached and taken out from the rock in which it is embedded and this is done by crushing the rock and sorting out piece of wolfram ore therefrom either by hand or by washing or magnetic separation. " Then, there is another Certificate from R. V. Briggs & Co. Pvt. Ltd., who claim to have been analysing various ores and minerals including wolframite for over 60 years. According to these experts, wolframite is always concentrated as part of the mining operation. The normal method is by washing the crushed ore, thereby freeing the mineral from the gangue. These experts have further certified that the wolfram ore, which they have analysed for M/s. India Hard Metals, is processed except for physical concentration by washing. It may be observed that in the Minerals & Metal Trading Corporation (ibid), also, this Court had relied upon a similar Certificate from R. V. Briggs & Co. Still, another Certificate, dated January 13, 1965, which is more or less to the same effect as the Certificate of the National Metallurgical Laboratory, was brought in evidence. A similar Certificate from this Laboratory was relied upon as authentic expert opinion in the earlier case, also, decided by this Court. No authority or expert opinion has been cited before us that a concentration of 75 per cent tungsten in wolframite ore of commercial quality, cannot be achieved merely by 'selective mining ', i.e. the physical process of crushing, washing, gravitation, magnetic separation or the like. Nor is there any evidence on the record to show 475 that the mined ore was subjected to any chemical process which caused a change in the chemical structure of the ore. The finding of the Appellate Collector of Customs that such a high degree (75%) of tungsten metal virtually free from impurities in the material, could be attained only by some chemical manufacturing process and not merely by crushing, washing or magnetic separation, is not based on any evidence whatever. It is contrary to the opinions of expects and authorities on the subject, which were brought on the record. It is evident from the passage extracted from Smithells ' treatise, and the other Certificates of experts, mentioned above, that in order to bring mined wolframite ore to a marketable quality, it has to be concentrated by physical methods, such as, crushing, washing, gravitation, magnetic separation etc. And by such physical process only, a concentration of WO3 varying from 60 per cent to 79 per cent in the ore can be achieved. Wolframite (WO3) of ordinary merchantable quality contains 60 to 70 per cent of tungsten, while wolframite ore of better commercial quality contains 75 to 79 per cent of the metal In the light of the above discussion, there is no manner of doubt that the goods imported by the appellants had to be classified as imported ore, falling either under item 26 or item 70(7) of the Import Tariff, and as such, no duty was leviable on them. The appellants are, therefore, entitled to the refund of the duty paid by them on the goods in question. In the result, the appeal is allowed with costs, and the impugned orders including the Order dated October, 26, 1968, of the Central Government, are set aside. The respondents are directed to make appropriate orders for refunding the amounts collected from the appellants by way of import duty on the goods in question. N.V.K. Appeal allowed .

The appellant imported wolfram ore. The Customs Authorities classified the said ore under the residuary Item 87 of the Indian Customs Tariff and charged duty at the rate of 60% ad valorem. Metallic ores (Item 26) and cobalt, chromium, tungsten magnesium etc. [Item No. 70(7)] are allowed to be imported free of duty. The aforesaid classification was upheld by the Assistant Collector of Customs and the appeal to the Commissioner of Customs was dismissed. The appellant 's revision petition under section 131 of the Customs Act to the Government was also dismissed. n In the appeal to this Court it was contended on behalf of the appellant that the imported ore contained a concentrate of 74% of tungsten from wolfram and the rest were impurities, that the concentration was the result of 'selective mining ' process which involves crushing, washing and magnetic separation that in better quality ore the content may be as high as 79% and that even after being subjected to such process, the ore concentrate does not cease to be tungsten 'ore ' within the contemplation of Item 70(7) of the Indian Customs Tariff. Allowing the appeal, ^ HELD: 1. The goods imported had to be classified as imported ore, falling either under Item 26 or Item 70(7) of the Import Tariff, and no duty was leviable on them. The appellants are entitled to refund of duty paid by them. [475 E] 2. The mere fact that the percentage of tungsten in the ore concentrate in the instant case is about 75% does not take the case out of the ratio of this Court 's decision in Minerals & Metal Trading Corporation of India Ltd. vs Union of India & Ors., [471 H] 3. There is ample authority for the view that the tungsten content in the wolfram ore of marketable quality may vary from 60 to 79%, and a concentration within these limits of the metal in the ore can be attained simply by a process of a "selective mining", that is by physical process not involving any chemical change in the metal. Wolframite of ordinary merchantable quality contains 60 to 70% of tungsten, while wolframite ore of better commercial quality contains 75 to 79% of the metal. [473 C, 475D] "Tungsten" by C.J. Smithells Chapman Hall Introduction. referred 4. The finding of the appellate Collector of Customs that such a high degree (75% ) of the tungsten metal virtually free from impurities in the material, could be attained only by some chemical manufacturing process and not merely by 470 crushing, washing or magnetic separation, is not based on any evidence whatever. It is contrary to the opinion of experts and authorities on the subject, which were brought on the record. [475B]

Civil Appeals Nos. 58 59 and 880 883 of 1971. From the Judgment and order dated 10 4 1970 of the Madras High Court in Writ Petition Nos. 437/67 and 520/68 and Tax Cases Nos. 135 138 of 1970 respectively. P. Ram Reddy, A. V. Rangam and Miss A. Subhashini, for the Appellant in C.As. 58 59/71. Sachin Chandra Chaudhury and Mrs. section Gopalakrishnan for Respondent. Gobind Das. P. H. Parekh and Miss Manju Jetley for the Intervener (M/s Durga Steel) The Judgment of the Court was delivered by BEG, J. The two Civil Appeals Nos.58 59 of 1971 arise out of a judgment of a Division Bench of the Madras High Court dismissing two Writ Petitions filed against notices issued by a Commercial Tax officer showing institution of Sales tax assessment proceedings in respect of certain iron and steel goods for the assessment year 1965 66 in Writ Petition No. 437 of 1967 and for the assessment year 1966 67 in Writ Petition No. 520 of 1968. The High Court of Madras had certified the cases as fit for appeal to this Court under Article 132 and 133(1)(a) and (c) of the Constitution. Although, the Writ Petitions had been dismissed on the ground that they involve an investigation into the question of fact whether the iron and steel scrap, out of which the manufactured goods, sought to be subjected to Sales tax, had been made, were already taxed or not, yet, the State of Tamil Nadu was aggrieved by the decision of the Madras High Court holding that the manufactured goods, said to consist of "steel rounds, flats, angles, plates, bars" or similar goods in other forms and shapes, could not be taxed again if the material out of which they were made had already been subjected to sales ' tax once an iron and steel scrap as both were "Iron and steel". It was possible to leave the assessing authorities free to decide all the questions which they had jurisdiction to consider. But, it appears that the Madras High Court thought it proper to decide the question as the Sales ' tax 170 authorities had already adopted the view, in other cases, that such goods, though covered by the broad genus "Iron and Steel", were separately taxable commodities because each kind of "Iron and Steel" goods was a commercially different and separately taxable species or category. Moreover, this very question was also before the High Court in regular revision petitions under the Tamil Nadu Sales Tax Act (hereinafter referred to as 'the Tamil Nadu Act '). Civil Appeals Nos. 880 883 of 1971 arise out of four petitions for revision under the provisions of the Tamil Nadu Act for the years 1964 65 and 1965 66, which were allowed by the Madras High Court 4 setting aside assessment orders by following its judgment and decision mentioned above given on 24 6 1970 on Writ Petitions Nos. 437 of 1967 and 520 of 1968. The Madras High Court had also granted Certificates of fitness for appeal to this Court under Article 132 read " with Article 133(1)(a)(c) in the four cases before it on revision petitions. Hence, six cases were connected and heard together by us. 58 59 of 1971 before this Court, arise in all of them. All the six cases before us relate to what are known as "declared goods" under Section 14 of the Central Sales Tax Act (hereinafter referred to as 'the Central Act '). It was claimed, on behalf of the r dealers, sought to be assessed in each case, that, by reason of the restrictions imposed by Section 15 of the Central Act, the levy of tax under the Tamil Nadu Act was not permissible. The list of goods given there at No. (iv), as it stood in 1968, was: "(IV) Iron and Steel, that it to say (a) 'pig iron and iron scrap (b) iron plates sold in the same form in which they are directly Produced by the rolling mill; (C) steel scrap, steel ingots, steel billets, steel bars and rods; (d) (i) steel plates (ii) steel sheets, (iii) sheet bars and tin bars, sold in the same form in which they are (iv) rolled steel sections, directly produced by the rolling mill;" (v) tool alloy steel, , sole in the same from in which they are directly produced by the rolling mil;" By the Central Sales Tax (Amendment) Act 61 of 1972, clause (iv) r was redrafted. It now reads as follows: "(iv) iron and steel, that is to say (i) pig iron and cast iron including ingot, moulds, bottom plates, iron scrap, cast iron scrap, runner scrap andiron skull scrap; (ii) steel semis (ingots, slabs, blooms and billets of all qualities, shapes and sizes); (iii)skelp bars, tin bars, sheet bars, heebars and sleeper bars; 171 (iv) steel bars (rounds, rods, squares, flats, octagone and A hexagone, plain and ribbed or twister, in coil from as well as straight lengths): (v) steel structurals (angles, joints, channels, tees, sheet piling sections, sections or any other rolled sections); (vi) sheets, hoops, strips and skelp, both black and galvanised, hot and cold rolled, plain and corrugated, in all qualities, in straight lengths and in coil form, as rolled and in rivetted condition; (vii)plates both plain and chequered in all qualities; (viii)discs, rings, forgings and steel castings; (ix) tool, alloy and special steels of any of the above categories; (x) steel melting scrap in all forms including steel kull, turnings and borings; (xi) steel cubes, both welded and seamless, of all diameters and lengths, including tube fittings; (xii)tin plates, both hot dipped and electrolytic and tin free plates; (xiii)fish plate bars, bearing plate bars, crossing sleeper bars, fish plates, bearing plates, crossing sleepers and pressed steel sleepers, rails heavy and crane rails; (xiv)wheels, tyres, axles and wheel sets; (xv) wire rods and wires rolled, drawn, galvanised, alumanised, tinned or coated such as by copper; (xvi)defectives, rejects, cuttings or end pieces of any of the above categories"; It will be seen that "Iron and Steel" is now divided into 16 categories which clearly embrace widely different commercial commodities, from mere scrap iron and left overs of processes of manufacturing to "wires" and "wheels, tyres, axles, and wheel sets". Some of the enumerated items like "melting scrap" or "tool alloys" and "special steels" could serve as raw material out of which other goods are made and others are definitely varieties of manufactured goods. The G reason given, in the statement of objects and reasons of the 1972 Act, for an elucidation of the "definition" of iron and steel, was that the "definition" had led to varying interpretations by assessing authorities and the courts so that a comprehensive list of specified declared iron and steel goods would remove ambiguity. The Select Committee, which recommended the amendment, called each specified category "a sub item" falling under "Iron and Steer '. Apparently, the intention was to consider each "sub item" as a separate taxable commodity for purposes of Sales ' tax. Perhaps some items could overlap, but no difficultly arises in cases before us due to this feature. As we have 172 pointed out, the statement of reasons for amendment spoke of Section 14(iv) as a "definition" of "Iron and Steel". A definition is expected to be exhaustive. Its very terms may, however, show that it is not meant to be exhaustive. For example, a purported definition may say that the term sought to be defined "includes" what it specifies, but, in `that case, the definition itself is not complete. Although, we have looked at the subsequent amendment of 1972 in order to find an indication of the original intention, because subsequent history of legislation is not irrelevant, yet, we think that, even if we confine our attention to Section 14 as it originally stood at the relevant time, with which we are concerned in the cases before us, the object was not to lay down that all the categories or sub items of goods, as specified separately even before the amendment of 1972, were to b viewed as a single saleable commodity called "Iron and Steel" for purposes of determining a starting point for a series of sales. The more natural and normal meaning of such a mode of listing special or declared kinds of goods seems to us to be that the object of specification was to enumerate only those categories of items, each of which was to serve as a new starting point for a series of sales, which were to be classed as "declared" goods. What we have inferred above also appears to us to be the significance and effect of the use of words "that is to say" in accordance with their normal connotation and effect. Thus, in Stroud 's Judicial Dictionary, 4th Edn.5, at page 2753, we find: "THAT IS TO SAY. (1) 'That is to say ' is the commencement of an ancillary clause which explains the meaning of the principal clause. It has the following properties: (1) it must not be contrary to the principal clause: (2) it must neither increase nor diminish it; (3) but where the principal clause is general in terms it may restrict it: see this explained with many examples, Stukeloy vs Butler Hob. 171"; The quotation, given above, from Stroud 's Judicial Dictionary shows that, ordinarily, the expression "that is to say" is employed to make clear and fix the meaning of what is to be explained or defined. Such words are not used, as a rule, to amplify a meaning while removing a possible doubt for which purpose the word "includes" is generally employed. In unusual cases, depending upon the context of the words "that is to say", this expression may be followed by illustrative in stances. In Megh Raj & Anr.vs Allah Rakhia & Ors.(1) the words "that is to say. ", with reference to a general category "land" were held to introduce "the most general concept" when followed, inter alia, by the words: "Rights in or over land. Both were wide classes. The object of using them or subject matter of legislation was, obviously, to lay down a wide power to legislate. But, in the context of single point sales ' tax, subject to special conditions when imposed on separate categories of specified goods, the expression was apparently employed to specifically enumerate separate categories of goods on a given list. The purpose of such specification and enumeration in a statute dealing with sales ' tax at a single point in a series of sales would, very naturally, be to indicate the types of goods each of which would constitute at separate class for a series of sales. Otherwise, the listing itself loses all meaning and would be without any purpose behind it. Learned Counsel appearing for an intervener argued that the chemical position of iron and steel affords a clue to the meaning of "Iron and Steel" as used in Section 14 of the Central Act. We are unable to agree that this could be what Parliament or any legislature would be thinking of when enumerating items to be taxed as commercial goods. The ordinary meaning to be assigned to a taxable item in a list of specified items is that each item so specified is considered as a separately taxable item for purposes of single point taxation in a series of sales unless the contrary is shown. Some confusion has arisen because the separate items are all listed under one heading "Iron and Steel". If the object was to make iron and steel taxable as a substance, the entry could have been: "Goods of Iron and Steel." Perhaps even this would not have been clear enough. The entry to clearly have that meaning would have to be: "Iron and Steel irrespective of change of form shape or character of goods made out of them". This is the very unusual meaning which the respondents would like us to adopt. If that was the meaning, sales ' tax law itself would undergo a change from being a law which normally taxes sales of "goods" to a law which taxes sales of substances out of which goods are made. We, however, prefer the more natural and normal interpretation which follows plainly from the fact of separate specification and numbering of each item. This means that each item so specified forms a separate species for each series of sales although they may all belong to the genus: ' 'Iron and Steel." Hence, if iron and steel "plates" are melted t and converted into "wire" and then sold in the market, such wire would only be taxable once so long as it retains its identity as a commercial goods belonging to the category "wire" made of either iron or steel. The mere fact that the substance or raw material out of which it is made has also been taxed in some other form, when it was sold as a separate commercial commodity, would make up difference for purposes of the law of sales ' tax. The object appears to us to be to tax sales of. goods of each variety and not the sale of the substance. Out of which they are made. As we all know, sales ' tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have 174 been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales ' tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are`merely jointed together, they may remain commercially the same goods which cannot be taxed again, in a series sales, so long as they retain their identity as goods of a particular type. In State of Madhya Bharat vs Hiralal(1) this Court held that a dealer, who bought some scrap iron locally and imported some iron plates from outside and then converted the material into bars, flats and plates, by rolling them in his mills, and then sold them, was still entitled to exemption given to iron and steel from sales tax. But, in that case, the language of the provision giving the exemption justified this interpretation. The exemption was given to a sale by either an importer or a purchaser of "goods prepared from any metal other than gold or silver. In that context, it had become necessary to examine whether the exemption from sales ' tax was meant for all goods made out of a particular sub stance, or for goods as separate commercial commodities. This Court held that the raw material from which the goods were made was decisive for the purposes of the exemption given. This Court said (at p 315): "A comparison of the said two Notifications brings out the distinction between raw materials of iron and steel and the goods prepared from iron and steel while the former is exempted from tax, the latter is taxed. Therefore, iron and steel used as raw material for manufacturing other goods are exempted from taxation. So long as iron and steel continue to be raw materials, they enjoy the exemption. Scrap iron purchased by the respondent was merely re rolled into bars, flats and plates. They were processed for convenience of sale. The raw materials were only re rolled to give them attractive and acceptable forms. They did not in the process lose their character as iron and steel. The dealer sold 'Iron and steel ' in the shape of bars,` flats and plates and the customer purchased 'iron and steel ' in that shape. We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the Notification. " The law to be interpreted in Hiralal 's case (supra) was entirely different. In interpreting it, this Court did observe that a mere change of the form of a substance excepted from sales ' tax did not matter. The language of the notifications involved there made it clear that the exemption was for the metal used. In the cases before us now the object of single point taxation is the commercial commodity and not the sub stance out of which it is made. each commercial commodity here becomes a separate object of taxation in series of sales of that commercial commodity so long as it retains its identity as that commodity. vs (1) [1966] 17 S.T.C. 313, 315. 175 The State of Punjab & ors.(1) where Subba Rao, C.J. speaking for a Constitution Bench of this Court, said at (p. 447). "Now coming to Civil Appeals Nos. 39 to 43 of 1965, the first additional point raised is that when iron scrap is converted into rolled steel it`does not involve the process of manufacture. Before the High Court this contention was not pressed. That apart, it is clear that scrap iron ingots undergo a vital change in the process of manufacture and are converted into a different commodity, viz, rolled steer sections. During the process the scarp iron loses its identity and becomes a new marketable commodity. " The process is certainly one of manufacture. It is true that the question whether goods to be taxed have been subjected to a manufacturing process so as to produce a new market able commodity, is the decisive test in determining whether an excise duty is leviable or not on certain goods. No doubt, in the law dealing with the sales tax, the taxable event is the sale and not the manufacture of goods. Nevertheless, if the question is whether a new commercial commodity has come into existence or not, so that its sale is a new taxable event, in the Sales ' Tax law, it may also become necessary to consider whether a manufacturing process, which has altered the identity of the commercial commodity, has taken place. The law of sale tax is also concerned with "goods" of various descriptions. It, therefore, becomes necessary to determine when they cease to be goods of one taxable description and become those of a commercially different category and description. It appears to us that the position has been simplified by the amendment of the law, as indicated above, so that each of the categories falling under "Iron and Steel" constitutes a new species of commercial commodity more clearly new. It follows that when one commercial commodity is transformed into another, it becomes a separate commodity for purposes of sales tax. We think that the Madras High Court had committed an error in applying Hiralal 's case (supra) to the decision of cases now before us which turns really on a correct interpretation of Section 14 of the Central Act. On the question now before us, we approve of the reasoning adopted by a Division Bench of the Punjab High Court in Devgun Iron & Steel Rolling Mills vs State of PunJab(2). Section 15 of the Central Act places certain restrictions and conditions upon State enactments imposing Sales tax. It says: Every sales tax law of a State shall, in so for as it imposes or authorises the imposition of a tax on the sale or (1) (1967) 20 S.T.C. 430 at 447. (2) (1961) 12 S.T.C. p. 590 176 purchase of declared goods, be subject to the following restrictions and conditions, namely: (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent of the sale or purchase price thereof,. and such tax shall not be levied at more than one stage; (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter State trade or commerce, and tax has been paid under this Act in respect of the sale of such goods in the course of inter State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale ill the course of inter State trade or commerce in such manner and subject to such condition as may be provided in any law in force in that State". It has not been shown to us that any provision of the Tamil Nadu Sales Tax Act violates Section 15 of the Central Act enacted in accordance with Article 266(3) of the Constitution. Section 3 of the Tamil Nadu Act leviesm taxes on sales and purchases of "goods" as defined in Section 2(j) of the Act: "(j) 'goods, means all kinds of movable property (other than newspapers, actionable claims, stocks and shares and securities) and includes all materials, commodities, and articles (including these to be used in the fitting out, improvement or repair of movable property), and all growing crops grass or things attached to, or forming part of, the land which are agree to be severed before sale or under the contract of sale," Section 4 of the Tamil Nadu Act lays down: "4. Tax in respect of declared goods. Notwithstanding anything contained in Section 3, the tax under this Act shall be payable by a dealer or the sale or purchase inside the State of declared goods at the rate and only at the point specified against each in the Second Schedule on the turn over in such goods in each year, whatever be the quantum of turnover in that year". Item 4 of the second schedule specifies the rates of tax in accordance with the Central Act. It reproduces Section 14(iv) of the Central Act. On an amendment of Section 14(iv) of the Central Act, serial No. 4 of the second schedule of the Tamil Nadu Act was also correspondingly amended so as to reproduce the sixteen items found in Section 14(iv) of the Central Act. Other provisions only fortify our conclusion. 177 The result is that we allow these appeals. We set aside the orders of the High Court and restore the orders of the assessing authorities in cases giving rise to Civil Appeals Nos. 880 883 of 1971. In cases but of which Civil Appeals Nos.58 59 of 1971 arise, we set aside the judgment of the High Court but maintain its order dismissing the Writ Petitions and order that the assessing authorities will now proceed to determine such question of fact and law as still survive for determination after the decision given above of the question considered by us. The parties will bear their own costs. P.H.P. Appeals allowed.

The respondents are dealers under the Tamil Nadu Sales Tax Act. Section 14 of the Central Sales Tax Act declares certain goods enumerated therein of ` ' special importance in inter state trade or commerce. The list of goods given at serial No. IV reads as under: (IV) Iron and Steel, that is to say (a) pig iron and iron scrap . (b) iron plates sold in the same form in which they are directly produced by the rolling mill; (c) steel scrap, steel ingots, steel billets, steel bars and rods, (d) (i) steel plates (ii) steel sheets, (iii) sheet bars and tin bars, (iv) rolled steel sections, I mill. (v) tool alloy steel, J sole in the same from in which they are directly produced by the rolling mill. The said clause IV was amended by the Central Sales Tax Amendment Act, Act 61 of 1972 by which certain more entries were added. Section 15 of the Central Sales Tax Act provides that the tax payable under a State Law on sale or purchase of declared goods shall not be levied at more than one stage. Respondents used to purchase iron scrap and thereafter used to convert them into steel rounds, flats, plates etc. The scrap was already subject to tax once. The respondents contended that the entry Iron & Steel was wide enough to include scrap as well as the steel rounds, flats, plates, etc. made out of the scrap which was subject to tax once and that, therefore, the sale of the steel rounds, flats, plates, etc., cannot be subjected to tax again under the Tamil Nadu Sales Tax Act. The High Court accepted the contention of the respondents. Allowing an appeal by certificate, ^ HELD: 1. The intention was to consider each sub item in clause IV as a separate taxable commodity for purposes of sales tax. The object was not to lay down that all the categories or sub items of goods specified separately were to be viewed as a single saleable commodity called iron and steel for purposes j of determining a starting point for a series of sales. The note against sub division of Clause IV makes it clear that even each sub category of a sub item retains its identity as a commercially separate item for purposes of sales tax so long as it retains the sub division. [171Gm, 172B C] 2. The expression 'that is to say ' is employed to make it clear and fix the meaning of words to be explained or defined. Such words are not used, as a rule, to amplify a meaning while removing a possible doubt for which purpose the word 'includes ' is generally employed. The precise meaning of the words 169 that is to say ' must vary with the context. The purpose of the expression in a sales A lax law would be to indicate the types of goods each of which would constitute separate class for a series of sales. [172F H, 173B] 3. The chemical composition of iron and steel cannot afford a clue to the meaning of iron and steel. Sales Tax Law taxes sales of goods and is not a taxation on sales of substance out of which goods are made. We prefer to follow the more natural and normal interpretation which follows plainly from the fact of separate specification numbering of each item. State of Madhya Pradesh vs Hira Lal; (1966) 17 STC 313 315 distinguished. The case cf Devidas applied. [173C. E F] 4. It has not been shown to, us that any provision of the Tamilnadu Sales Tax Act violates section 15 of the Central Sales Tax Act enacted in accordance with Article 286(3) of the Constitution. Section 2(j) of the Tamil Nadu Act defines goods and section 4 imposes charge in respect of tax on declared goods. The Tamilnadu Act borrows clause (IV) of section 14 of the Central Sales Tax Act. [176 C H] C

Appeal No. 222 of 1960. Appeal from the judgment and order dated December 15, 1959, of the Punjab High Court (Circuit Bench), Delhi, in R. F. Appeal No. 77 D of 1954. G. section Pathak and B. C. Misra, for the appellant. Mukat Behari Lal Bhargava and J. P. Goyal, for respondents Nos. 1 to 7. 1960. December 5. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. The short question of law( which arises for decision in, the present appeal by special leave is whether the appeal preferred against the appellant and respondents 8 and 9 in the High Court of Punjab by respondents 2 to 7 'was competent in law or not. This question arises unDer somewhat unusual circumstances. It appears that an agreement of sale of one third of the one fourth share in the property covered by the document was entered into between Gokal Dhish Bhargava and the appellant Jagat Dhish Bhargava. Gokal Dhish Bhargava sued the appel lant and pro forms respondents 8 and 9 for specific performance of the said agreement of sale in the Court of the Senior Civil Judge, New Delhi (Civil Suit No. 684/128 of 1949/50). This suit was dismissed on 920 March 12, 1954. , Pending decision in the trial court Gokal Dhish Bhargava (fled and his son Jawahar Lal Bhargava, respondent 1 and Chunni Lal Bhargava were brought on the record as legal representatives. After the suit was dismissed and before the appeal in question was preferred in the High Court Chunni Lal Bhargava died; thereupon respondents 2 to 7, as his legal representatives, joined respondent 1 in preferring an appeal against the said decree in the High Court of Punjab. The memo of appeal along with the judgment dismissing the suit and the taxed bill of costs endorsed on the back of the last page of the judgment was filed in the High Court on July 29, 1954. It is the competence of this appeal that was questioned before the High Court and is in dispute before us in the present appeal. The record shows that on March 24,1954, an application was made by respondents 2 to 7 (who will be called the respondents hereafter) for a certified copy of the judgment and decree passed in the said suit for specific performance. A certified copy of the judgment and the bill of costs was supplied to them but the decree had not been drawn up and no copy of the decree was therefore supplied to them. In the result the appeal was filed without the certified copy of the decree and only with the certified copy of the judgment and the bill of costs. On August 2, 1954, the Assistant Registrar of the High Court returned the memo of appeal filed by the respondents to their counsel and pointed out to him that ' since no copy of the decree had been filed the presentation of the appeal was defective and the defect needed to be rectified. Thereafter, on August 16, 1954, the respondents ' counsel refiled the appeal with an endorsement that a memo of costs alone had been prepared by the trial court and no decree had been drawn up, and so the appeal should be held to be properly filed. Apparently this explanation was treated ' as satisfactory by the office of the High Court and the appeal was registered as No. 77 D of 1954. In due course the appeal was placed for preliminary hearing under 0. 41, r. 11 of the Code of Civil 921 Procedure before Dulat, J. who admitted it on August 30, 1954. Notice of the appeal was accordingly served on the appellant and the pro forma respondents. Ultimately when the appeal became ready for hearing it was put up on the Board of the Circuit Bench of the High Court to be heard on December 26, 1958. Meanwhile on December 23., 1958, the appellant served a notice on the respondents ' counsel intimating to him that he proposed to raise a preliminary objection against the competence of the appeal on the ground that the decree under appeal had not been filed as required under 0. 41, r. 1 along with the memo of appeal and the certified copy of the judgment. Next day, that is to say on December 24, 1958, the respondents moved the trial Court for drawing up of the decree, but since the record had in the meantime been sent by the trial Court to the High Court no decree could be drawn up by the trial Court, and so the motion became infructuous. The appeal, however, did not reach hearing on December 26, 1958. On December 29, 1958, the respondents moved the Court that the appeal should be declared to be maintainable as the memo of costs which alone had been prepared by the trial Court read along with the concluding paragraph of the judgment may be held to satisfy the requirements of the decree; in the alternative they prayed that the record of the suit in the trial Court should be sent for to enable them to get a decree prepared with a view to file the same in the High Court along with their appeal. Bishan Narain, J., before whom this application was taken out for orders, directed that it may be heard by the Bench which would hear the appeal. Eventually the appeal came on for hearing before Falshaw and Chopra, JJ. on De ember 8, 1959. At the said hearing the appellant raised a preliminary objection that the appeal was not competent having regard to the mandatory provisions of 0. 41, r. 1, and urged that the appeal should be dismissed as incompetent. This preliminary objection was, however, not upheld by the High Court, and it was held that "the proper course to follow was to allow the respondents a 922 month 's time for the purpose of getting a decree drawn up in the proper form by the lower Court and obtaining a copy thereof ". Accordingly the record which had in the meanwhile been received by the High Court after the appeal was admitted under 0. 41, r. 11 was ordered to be sent back to the lower Court without delay. It is against this order which was passed by the High Court on December 15, 1959, that the present appeal by special leave has been filed. On behalf of the appellant Mr. Pathak contends that the appeal filed before the High Court was plainly and manifestly incompetent, and so the High Court was in error in not dismissing it on that ground. The position of law under 0. 41, r. 1 is absolutely clear. Under the said rule every appeal has to be preferred in the form of a memorandum signed by the appellant or his pleader and presented to the Court or to such officer as it appoints in that behalf, and has to be accompanied by a copy of the decree appealed from, and of the judgment on which it is founded. Rule 1 empowers the appellate Court to dispense with the filing of the judgment but there is no jurisdiction in the appellate Court to dispense with the filing of the decree. Where the decree consists of different distinct and severable directions enforceable against the same or several defendants the Court may permit the filing of such portions of the decree as are the subject matter of the appeal but that is a problem with which we are not concerned in the present case. In law the appeal is not so much against the judgment as against the decree; that is why Article 156 of the Limitation Act prescribes a period of 90 days for such appeals and provides that the period commences to run from the date of the decree under appeal. Therefore there is no doubt that the requirements that the decree should be filed along with the memorandum of appeal is mandatory, and in the absence of the decree the filing of the appeal would be incomplete, defective and incompetent. That, however, cannot finally dispose of the point raised by the appellant before us. In the present case the respondents had applied for a certified copy of 923 the judgment as well as the decree in the trial Court on March 24, 1954, and they were not given a copy of the decree for the simple reason that no decree was drawn up; what they were given was a copy of the judgment and taxed bill of costs endorsed on the back of the last page of the judgment. These documents they filed along with their memo of appeal; but that would not affect the mandatory requirement of 0. 41, r. 1. In considering the effect of this defect in the presentation of the appeal we must bear in mind the rules of procedure in regard to the drawing up of the decree. The position in that behalf is absolutely clear. Section 33 of the Code of Civil Procedure requires that the Court, after the case has been heard, shall pronounce judgment, and on such judgment a decree shall follow. Order 20, r. 3 provides, inter alia, that the judgment shall be dated and signed by the judge in the open Court at the time of pronouncing it, and under r. 4, sub r. (2) a judgment has to contain a concise statement of the case, the points for determination, the decision thereon and the reasons for such decision. Rule 6 of the same Order prescribes the con. tents of the decree. It provides that the decree shall agree with the judgment and shall contain the particulars therein specified. Under r. 7 it is provided that the decree shall bear the date, the day on which the judgment was pronounced, and it directs that when the judge has satisfied himself that the decree has been drawn up in accordance with the judgment he shall sign the decree. It is, therefore, clear that the drawing up of the decree in the present case was the function and the duty of the office, and it was obligatory on the judge to examine the decree when drawn up, and if satisfied that it has been properly drawn up to sign it. Except in places where the dual system prevails the litigant or his lawyer ' does not play any material or important part in the drawing up of the decree. In fact the process of drawing up of the ' decree is beyond the litigant 's control. Therefore, there is no doubt whatever that in failing to draw up a decree in the present suit the office of the trial Court was negligent in the discharge of its duties, and 924 the said negligence was not even noticed by the learned trial judge himself. Unfortunately, when the appeal was presented in the High Court, even the office of the High Court was not as careful in examining the appeal as it should ,,have been, and as we have already indicated the appeal passed through the stage of admission under 0. 41, r. 11 without the defect in the appeal being brought to the notice of the learned judge who admitted it. Thus it is quite clear on the record that the respondents had applied for a certified copy of the judgment and the decree, and when they were given only a certified copy of the judgment and the bill of costs they filed the same along with the memo of appeal in the bona fide belief that the said documents would meet the requirements of 0. 41, r. 1. It is true that before the appeal came on for actual hearing before the High Court the appellant gave notice to the respondents about his intention to raise a preliminary objection that the appeal had not been properly filed; but, as we have already pointed out, the attempt made by the respondents to move the trial Court to draw up the decree proved infructuous and ultimately the High Court thought that in.fairness to the respondents they ought to be allowed time to obtain the certified copy of the decree and file it before it; and so the High Court passed the order under appeal. The appellant contends that this order is manifestly erroneous in law; according to him the only order which could and should have been passed was to dismiss the appeal as incompetent under 0. 41, r.1. The problem thus posed by the appellant for our decision has now become academic because subsequent to the decision of the High Court under appeal the respondents have in fact obtained Po certified copy of the decree on December 23, 1959, and have filed it in the High Court on the same day. This fact immediately raises the question as to whether the appeal which has admittedly been completely and properly filed on December 23, 1959, was in time or not. If it appears that on the date when the decree was thus filed the 925 presentation of the appeal was in time then the objection raised by the appellant against the propriety or the correctness of the High Court 's order under appeal would be purely technical and academic. The answer to the question as to whether the presentation of the appeal on December 23, 1959, is in time or not would depend upon the construction of section 12, sub section (2) of the Limitation Act. We have already noticed that the period prescribed for filing the present appeal is 90 days from the date of the decree. Section 12, sub section (2) provides, inter alia, that in computing the period of limitation "the time requisite for obtaining a copy of the decree shall be excluded". What then is the time which can be legitimately deemed to have been taken for obtaining the copy of the decree in the present case? Where a decree is not drawn up immediately or soon after a judgment is pronounced, two types of cases may arise. A litigant feeling aggrieved by the decision may apply for the certified copy of the judgment and decree before the decree is drawn up, or he may apply for the said decree after it is drawn up. In the former case, where the litigant has done all that he could and has made a proper application for obtaining the necessary copies, the time requisite for obtaining the copies must necessarily include not only the time taken for the actual supply of the certified copy of the decree but also for the drawing up of the decree itself. In other words, the time taken by the office or the Court in drawing up a decree after a litigant has applied for its certified copy on judgment being pronounced, would be treated as a part of the time taken for obtaining the certified copy of the said decree. Mr. Pathak has fairly conceded that on this point there is a consensus of judicial opinion, and in view of the formidable and imposing array of authorities against him he did not raise any contention about the validity of the view take in all those cases. (Vide: Tarabati Koer vs Lala Jagdeo Narain (1); Bani Madhub Mitter vs Mathungini Dassi & Ors. (Full Bench) (2);Gabriel Christian vs (1) (2) Cal 104. 926 Chandra Mohan Missir (Full Bench) (1); Jayashankar Mulshankar Mehta vs Mayabhai Lalbhai Shah (Full Bench) (2); Gokul Prasad vs Kunwar Bahadur & Ors.(3); and Umda vs Rupchand & Ors. (Nagpur Full Bench) (1)). There is, however, a sharp difference of opinion in regard to cases where an application for a certified copy of the decree is made after the said decree is drawn up. In dealing with such cases Courts have differed as to what would be the period requisite for obtaining the certified copy of the decree. The Bombay, Calcutta and Patna High Courts, appear to have held that the period taken in drawing up of the decree would be part of the requisite period, while other High Courts have taken a contrary view. It is significant that though the High Courts have thus differed on this point, in every case an attempt is judicially made to do justice between the parties. With that aspect of the problem, however, we are not concerned in the present appeal. The position, therefore, is that when the certified copy of the decree was filed by the respondents in the High Court on December 23, 1969, the whole of the period between the date of the application for the certified copy and the date when the decree was actually signed would have to be excluded under section 12, sub section Inevitably the presentation of the appeal on December 23, 1959 would be in time. It is true that more than five years have thus elapsed after the pronouncement of the judgment but for this long delay and lapse of time the respondents are not much to blame. The failure of the trial Court to draw up the decree as well as the failure of the relevant department in the High Court to examine the defect in the presentation of the appeal at the initial stage have contributed substantially to the present unfortunate position. In such a case there can be no doubt that the litigant deserves to be protected against the default committed or negligence shown by the Court or its officers in the discharge of their duties. As observed by Cairnes, L. C. in Rodger vs Comptoir (1) Pat. (2) (1951) 54 B.L.R. II. (3) Lucknow 250. (4) 927 d 'Escompte de Paris (1) as early as 1871 "one of the first and highest duties of all Courts is to take care that the act of the Court does no injury to any of the suitors"; that is why we think that in view of the subsequent event which has happened in this case, namely, the filing of the certified copy of the decree in the, High Court, the question raised by the appellant has( become technical and academic. Faced with this position Mr. Pathak attempted to argue that the application made by the respondents on March 24, 1954, was not really an application for a certified copy of the decree; he contendea that it was an application for the certified copy of the judgment and the bill of costs. This argument is wholly untenable. The words used in the application clearly show that it was an application for a certified copy of the judgment as well as the decretal order, and as subsequent events have shown, a certified copy of the decree was ultimately supplied to the respondents in pursuance of this application. Then it was argued that the respondents should have moved the trial Court for the drawing up of a decree as soon as they found that no decree a been drawn up. It may be assumed that the respondents might have adopted this course; but where the dual system does not exist it would be idle to contend that it is a part of the duty of a litigant to remind the Court or its office about its obligation to draw up a decree after the judgment is pronounced in any suit. It may be that decrees when drawn up are shown to the lawyers of the parties; but essentially drawing up of the decree is the function of the Court and its office, and it would be unreasonable to penalise a party for the default of the office by suggesting that it was necessary that the party should have moved the Court for the drawing up of the decree. Therefore, we are not satisfied that tie appellant is justified in attributing to the respondents any default for which the penalty of dismissing their appeal can be legitimately imposed on them. The result is that the appeal preferred by the respondents on December 23, (1) (1871) L.R. 3 P.C. 465, 475. 928 1959, is proper and in time and it can now be dealt with in accordance with law. It is true that in the circumstances over which the respondents had no control the appeal in question has already been admitted under 0. 41, r. 11, and as a result of the decision under appeal it may not have to go through that process again. Dulat, J. who heard the appeal for admission was satisfied that it deserved to be admitted and we do not think it necessary to require that the present appeal should go through the formality of the procedure prescribed by 0. 41, r. 11 once again. This posi tion is no doubt, unusual, but in the circumstances of the case it is impossible to say that the order passed by the High Court is not fair and just. Let us then consider the technical point raised by the appellant challenging the validity or the propriety of the order under appeal. The argument is that 0. 41, r. 1 is mandatory, and as soon as it is shown that an appeal has been filed with a memorandum of appeal accompanied only with a certified copy of the judgment the appeal must be dismissed as being incompetent, the relevant provisions of 0. 41 with regard to the filing of the decree being of a mandatory character. It would be difficult to accede to the proposition thus advanced in a broad and general form. If at the time when the appeal is preferred a decree has already been drawn up by the trial Court and the appellant has not applied for it in time it would be a clear case where the appeal would be incompetent and a penalty of dismissal would be justified. The position would, however, be substantially different if at the time when the appeal is presented before the appellate Court a decree in fact had not been drawn up by the trial Court; in such a case if an application has been made by the appellant for, a certified copy of the decree, then all that can be said against the appeal preferred by him is that the appeal is premature since a decree has not been drawn up, and it is the decree against which an appeal lies. In such a case, if the office of the High Court examines the appeal carefully and discovery the defect the appeal may be returned to the appellant for presentation 929 with the certified copy of the decree after it is obtained. In the case like the present, if the appeal has passed through the stage of admission through oversight of the office, then the only fair and rational course to adopt would be to adjourn the hearing of the appeal with a direction that the appellant should produce the certified copy of the decree as soon as it is supplied to him. In such a case it would be open to the High Court, and we apprehend it would be its duty, to direct the subordinate Court to draw up the decree forthwith without any delay. On the other hand, if a decree has been drawn up and an application for its certified copy has been made by the appellant after the decree was drawn up, the office of the appellate Court should return the appeal to the appellant as defective, and when the decree is filed by him the question of limitation may be examined on the merits. It is obvious that the complications in the present case have arisen as a result of two factors; the failure of the trial Court to draw up the decree as required by the Code, and the failure of the office in the High Court to notice the defect and to take appropriate action at the initial stage before the appeal was placed for admission under 0. 41, r. 11. It would thus be clear that no hard and fast 'rule of general applicability can be laid down for dealing with appeals defectively filed under 0. 41, r. 1. Appropriate orders will have to be passed having regard to the circumstances of each case, but the most important step to take in cases of defective presentation of appeals is that they should be carefully scrutinized at the initial stage soon after they are filed and the appellant required to remedy the defects. Therefore, in our opinion, the appellant is not justified in challenging the propriety or the validity of the order passed by the High Court because in the circumstances to which we have already adverted the said order is obviously fair and just. The High Court realised that it would be very unfair to penalise the party for the mistake committed by the trial Court and its own office, and so it has given time to the respondents to 930 apply for a certified copy of the decree and then proceed with the appeal. In this connection our attention has been drawn to the fact that in the Punjab High Court two conflicting and inconsistent views appear to have been taken in its reported decisions. Dealing with appeals filed with out a certified copy of the decree some decisions have dismissed the appeals as defective, and have given effect to the mandatory words in 0. 41, r. 1, without presumably examining the question as to whether the failure of the trial Court to draw up the decree would have any bearing or relevance on the point or not. (Vide: Gela Ram vs Ganga Ram(1); Municipal Committee, Chiniot vs Bashi Ram (2); Mubarak Ali Shah vs Secretary of State (3); Nur Din vs Secretary of State (4) Hakam Beg vs Rahim Shah (5); Fazal Karim vs Des Raj (6); and Banwari Lal Varma vs Amrit Sagar Gupta (7). On the other hand it has in some cases been held that it would be fair and just that the hearing of the appeal should be adjourned to enable the appellant to obtain a certified copy of the decree and produce it before the appellate Court (Vide: Manoharlal vs Nanak Chand (8); Mt. Jeewani vs Mt. Misri (9); and, Sher Muhammad vs Muhammad Khan (10). It would obviously have been better if this conflict of judicial opinion in the reported decisions of the High Court had been resolved by a Full Bench of the said High Court but that does not appear to have been done so far. However, as we have indicated, the question about the competence of the appeal has to be judged in each case on its own facts and appropriate orders must be passed at the initial stage soon after the appeal is presented in the appellate Court. If any disputed question of limitation arises it may have to go before the Court for judicial decision. In the result the order passed by the High Court is right. Having regard to the fact that the decree (1) A.I.R. (1920) 1 Lah. 223 (3) A.I.R. (1925) Lah. 438. (5) A I.R. (7) A.I.R. (1940) East Punj. (9) A.I.R. (1919) Lah. (2) A.I.R (1922) Lah. (4) A. I.R. (6) (8) A.I.R. (1919) Lah. (10) A.I.R. (1924) Lah. 352. 931 under appeal has already been filed by the respondents before the High Court on December 23, 1959, the High Court should now proceed to hear the appeal on the merits and deal with it in accordance with law. In the circumstances of this case we make no order as to costs. Appeal dismissed.

The respondents filed a suit for specific performance against the appellant which was dismissed on March 12, 1954. On March 24 the respondents made an application for a certified copy of the judgment and decree. The decree was not drawn up and the respondents were supplied a certified copy of the judgment and the memo of costs. The respondents filed an appeal before the High Court without the certified copy of the decree and only with the certified copy of the judgment and the memo of costs. The appeal was admitted under 0. 41, r. 11 Code of Civil Procedure on August 30, 1954. On December 23, 1958, the appellant served a notice on the respondents that he would raise a preliminary objection at the hearing that the appeal was incompetent as a certified copy of the decree was not filed as required by 0. 41, r. 1. On December 24, 1958, the respondents moved the trial Court for drawing up of the decree, but since the record was in the High Court this could not be done. At the hearing of the appeal, the appellant raised the preliminary objection, but the High Court passed an order on December 15, 1959, allowing the respondents one month 's time for getting a decree drawn up and obtaining. a copy and directed the record to be sent to the trial Court. Against this order the appellant preferred an appeal to the Supreme Court contending that the High Court was bound to dismiss the appeal as it was manifestly incompetent under 0. 41, r. 1. Subsequently, on December 23, 1959, the respondents obtained a certified copy of the decree and filed it before the High Court the same day. The appellant contended that the appeal was to be deemed to be filed on this date and was time barred. Held, that in the circumstances of this case the order passed by the High Court was right. ' There was no doubt that 0. 41, r. 1 was mandatory and in the absence of or the decree the filing of the appeal was incomplete, defective and incompetent. The office of the trial Court was negligent in not drawing up a decree and the office of the High Court was also not as careful as it should have been in examining the appeal and these have contributed substantially to the unfortunate position. In such a case, the respondents deserved to be protected. Besides the, 919 question had become academic and technical in view of subse quent events. The certified copy of the decree was filed on December 23, 1959, and even if the appeal was considered to have been filed on that date, it was within time. Under section 12(2) of the Limitation Act the respondents could treat the time taken in the drawing up of the decree after the application for a certified copy thereof had been made as part of the time taken in obtaining the certified copy of the decree. Tarabati Koer vs Lala jagdeo Narain, , Bani Madhub Mitter vs Matungini Desai, Cal. 104 (F.B.), Gabriel Christian vs 'Chandra Mohan Missir, Pat. 284(F.B.), Jayashankar Mulshankar Mehta vs Mayabhai Lalbhai Shah, , Gokul Prasad vs Kunwar Bahadur, Luck. 250 and Umda vs Rupchand, , referred to. Rodger vs Comptoir d 'Escompte de Paris, (1871) L.R. 3 P.C. 465, relied on.

Appeal No. 1720 of 1986. From the Judgment and Order dated 5.7.1985 of the Andhra Pradesh High Court in Writ Appeal No. 577 of 1985. B. Kanta Rao for the Appellant. K. Madhava Reddy and G. Prabhakar for the Respondents. The Judgment of the Court was delivered by KANIA, J. This is an appeal by Special Leave from the judgment of a Division Bench of the Andhra Pradesh High Court dismissing the Writ Appeal No.577 of 1985 filed in that Court. Very few facts are necessary for the disposal of this ap peal. The appellant is the owner of a plot comprising roughly 2 acres of land in Ramavarappadu village, Vijayawada Taluk, in the Krishna District in Andhra Pradesh. The Government of Andhra Pradesh sought to acquire about 1 acre and 89 cents out of the aforesaid land for a public propose. A Notifica tion under section 4(1) of the Land Acquisition Act, 1894 (hereinafter referred to as "the said Act") was published in the Government 117 Gazette on February 9, 1976. The substance of the said notification was published in the locality where the land proposed to be acquired is situated, on April 2, 1978, long after the period of 40 days within which it was required to be published as per the provisions of section 4(1) of the said Act as amended by the Andhra Pradesh (Amendment) Act, 1983, (Act 9 of 1983). Enquiry under section 5A of the said Act was dispensed with invoking the urgency clause as per section 17(4) of the said Act. Notification under section 6 was published on the same day as the publication of the notification under section 4(1) of the said Act. An inquiry was conducted regarding the fixation of compensation to be awarded to the appellant and others whose lands were ac quired under the said notification. It appears that during the course of the said inquiry the appellant stated to the Land Acquisition Officer concerned that he was willing to agree to the land being acquired provided he was given compensation in a lump sum. Probably the reason was that if the compensation was awarded in a lump sum without delay, the appellant might have been able to purchase some other land, as his holding was under the ceiling limit. The aforesaid facts have been found by the Trial Court and accepted by the High Court. On November 9, 1979, before any award was made, the consent to the acquisi tion of the land given by the appellant, as aforestated, was withdrawn by him and on May 14, 1981, the appellant filed a writ petition in the High Court questioning the validity of the land acquisition proceedings. The learned Single Judge before whom the said writ petition along with another writ petition came up for hearing held that the appellant had agreed to the acquisition of the said land on compensation being paid as aforestated, and hence it was not open to the appellant to challenge the validity of the said notifica tions issued under section 4(1) and section 6 of the said Act. It was held by him that the withdrawal of the said representation or consent by the appellant did not in any manner assist him. The learned Judge dismissed the writ petition filed by the appellant without going into the merits of the aforesaid petition on the aforesaid basis. This judgment was upheld by the Division Bench of the High Court which dismissed the aforesaid writ appeal. It is the correctness of these decisions which is impugned before us. In our view, the learned Single Judge and the Division Bench of the High Court of Andhra Pradesh were, with re spect, clearly in error in dismissing the respective writ petition and the appeal filed by the appellant on the ground that the appellant had stated that he was willing to accept the acquisition provided a lump sum compensation was awarded to him. The statement of the appellant amounted in law to no more than an offer in terms of the Contract Act. The said offer was never accepted by the Land Acquisition Officer to whom it was made. Leave alone, making 118 the award of lump sum compensation, no award at all was made by the said officer awarding compensation to the appellant till November 9, 1979, when the aforesaid offer was with drawn by the appellant or even till the writ petition was filed. Till the offer was accepted there was no contract between the parties and the appellant was entitled to with draw his offer. There was nothing inequitable or improper in withdrawing the offer, as the appellant was in no way bound to keep the offer open indefinitely. The writ petition, therefore, ought not to have been dismissed on the ground of the appellant having made a statement or consented as afore stated before the Land Acquisition Officer. On the merits, it is clear that the acquisition of the land is bad in law because the substance of the notification under section 40) of the said Act was not published in the locality within forty days of the publication of the notifi cation in the Government Gazette. The time limit of forty days for such publication in the locality has been made mandatory by section 4(1) of the said Act as amended by the Andhra Pradesh (Amendment) Act. It is well settled that such non compliance renders acquisition bad in law. In the result, the appeal succeeds and Rule in the writ petition is made absolute. It is declared that the acquisi tion of the aforesaid land of the appellant is bad in law. If the possession has been taken, the same must be returned to the appellant. The appeal is allowed as aforestated with costs throughout. T.N.A. Appeal Allowed.

Proceedings for acquisition of appellant 's land were initiated. and a Notification under section 4(1) of the Land Acquisition Act, 1894 was published in the Government Ga zette. The substance of the said Notification was published in the locality long after 40 days within which it was required to be published under Section 4(1) of 1894 Act 'as amended by the Andhra pradesh(Amendment) Act, 1983. During the course of enquiry regarding the fixation of compensa tion, the appellant consented to his land being acquired provided he was given compensation in a lump sum. However, before any award was made he withdrew his consent and filed a petition challenging the validity of the acquisition proceedings. A Single Judge of the High Court dismissed his petition by holding that since he gave his consent to the acquisition of land he could not challenge the acquisition proceedings. On appeal the decision of the Single Judge was confirmed by the Division Bench of the High Court. Against the decision of the Division Bench of the High Court, an appeal was filed in this Court. Allowing the appeal, this Court, HELD: 1. The Single Judge and the Division Bench of the. High Court were clearly in error in dismissing the respective writ petition and the appeal filed by the appel lant respectively. The appellant 's statement that he was willing to accept the acquisition provided a lump sum com pensation was awarded to him amounted 115 116 in law to no more than an offer in terms of the Contract ACt. The said offer was never accepted by the Land Acquisi tion Officer to whom it was made. Leave alone, making the award of lump sum compensation, no award at all was made by the said officer awarding compensation to the appellant till the aforesaid offer was withdrawn by the appellant or even till the writ petition was filed. Till the offer was accept ed there was no contract between the parties and the appel lant was entitled to withdraw his offer. There was nothing inequitable or improper in withdrawing the offer, as the appellant was in no way bound to keep the offer open indefi nitely. 1117 G H, 118 A] 2. The acquisition of the appellant 's land is bad in law because the substance of the Notification was not pub lished in the locality within forty days of the publication of the Notification in the Government Gazette. The time limit of forty days for such publication in the locality has been made mandatory by section 4(1) of the 1894 Act as amended by the Andhra Pradesh (Amendment) Act, 1983. Such non compliance renders acquisition bad in law. [118 C]

Appeals . 101 to 104 of 1957. Appeals from the judgment and order dated February 4, 1954, of the Mysore High Court in Regular, Second Appeals Nos. 5 and 6 of 1953 and Writ Petitions Nos. 67 and 68 of 1953 respectively. H. N. Sanyal, Additional Solicitor General of India, R.Ganapathy Iyer and D. Gupta for the appellant. A. V. Visv)anatha Sastri, M. section K. Sastri and ' T. R. V. Sastri for A. G. Ratnaparkhi, for the respondents. February 20. The Judgment of the Court was delivered by WANCHOO, J. These are four appeals on certificates granted by the Mysore High Court. They will be disposed of together as the. points raised in them are common. The facts of these cases are complicated and may be mentioned in some detail. On July 7, 1949, the then State 'of Mysore passed The Mysore Administration of Evacuee Property (Emergency) Act, No. XLVII of 1949 (hereinafter called the. first Mysore Act). It provided for the appointment of a Custodian of Evacuee Property for the State of Mysore and other officers subordinate to him for the purpose of administering evacuee property in that 858 State. Section 2(c) defined an " evacuee " and section 2(d) evacuee property ". Section 5 laid down that all evacuee property situate in Mysore would vest in the custodian. Section 6 provided for a notification by the Custodian in the Mysore Gazette of evacuee property vested in him. Section 8 provided that any person claiming any right to or interest in any property notified under section 6 as evacuee property or in respect of which a demand requiring a surrender of possession had been made by the Custodian might arefer a claim to the Custodian on the ground that he property was not evacuee property or his interest in the property had not been affected by the provisions of that Act. It was further provided that the Custodian was, to hold a summary inquiry in the prescribed manner into such claims and after taking such evidence as might be produced, pass an order stating the reasons there for) either rejecting the claim :or allowing it wholly or in part. Finally, section 30 provided for an appeal to the High Court where the original order under section 8 had been passed by the Custodian, an Additional Custodian or an Authorised Deputy Custodian. This Act remained in force till it was replaced by the Mysore Administration of Evacuee Property (Second) (Emergency) Act, No. LXXIV of 1949 (hereinafter called the second Mysore Act), which came into force on November 29, 1949. On September 21, 1949, the Custodian issued a notification by which he declared the properties. of the two respondents as evacuee properties which had vested in him, as the, respondents had become evacuees. Thereupon two claims were filed under section 8 of the first Mysore Act separately by the two respondents. These claims were investigated by the Deputy Custodian who dismissed the same on April 17, 1950, declaring that the, properties were evacuee properties. , It may be mentioned that in the meantime, the second Mysore Act had come into force by which the first Mysore Act was repealed. But section 53(2) of the second Mysore Act provided, that anything done or any action taken. in the exercise of any power conferred by the first Mysore Act shall be deemed to have been done 859 or taken in the exercise of the powers conferred by the second Mysore Act. It was also provided that any penalty incurred or proceeding commenced under the first Mysore Act shall be deemed to be a penalty incurred or proceeding commenced under the second Mysore Act as if the latter Act were in force on the day on which such thing was done, action taken, penalty incurred or proceeding commenced. There was how. ever one difference in the two Mysore Acts. The first Mysore Act had provided by section 5 for the vesting of all evacuee property situate in Mysore ipso facto in the Custodian; section 6 then provided for notification by the Custodian and section 8 for preferring claims. The second Mysore Act however made a departure from this and section 5 thereof provided that " a where the Custodian is of opinion that any property is evacuee property within the meaning of this Act he may, after causing notice thereof to be given in such manner as may be prescribed to the persons interested, and after holding such inquiry into the matter as the circumstances of the case permit, pass an order declaring any such property to be evacuee property. " Section 6 then provided for vesting of any property declared to be evacuee property in the Custodian. Thus while under the first Mysore Act the evacuee property vested in the Custodian and the person who claimed that it was not evacuee property had to make an application under section 8 and to get it declared that it was not evacuee property, under the second Mysore Act there was no vesting in the Custodian and the Custodian had to give a notice in the manner prescribed (if he thought any property to be evacuee property) and after hearing the persons interested to declare the property to be evacuee property; and it was only thereafter that the property vested in him as evacuee property. Further, the second Mysore Act also defined the " Custodian General " as the Custodian General of Evacuee Property in India appointed by the Government of India under section 5 of the Administration of Evacuee Property Ordinance (Central Ordinance No, XXVII of 1049), which had come 860 into force on October 18, 1949. Further there was a change in the forum of appeals and instead of the High Court the appeal lay to the Custodian General from an order passed under section 5 of the second Mysore Act where the original order had been passed by the 'Custodian, Additional Custodian or Authorised Deputy Custodian and in some cases to the District Judge designated in this behalf by the Government under sections 22 and 23 of the second Mysore Act. In addition, provision was made by section 25 of the second Mysore Act for revision by the Custodian General of orders passed by the District Judge or the Custodian on appeal. It may be mentioned that the , No. XXXI of 1950 (hereinafter called the Act), came into force on the day the Deputy Custodian passed the order dated April 17, 1950. It may also be mentioned that in the meantime the Constitution of India had come into force on January 26, 1950, and the former State of Mysore had become the new Part B State of Mysore under the Constitution. The Act was to apply to the whole of India except the States of Assam, West Bengal, Tripura, Manipur and Jammu and Kashmir. Thus the Act applied to the Part B State of Mysore on April 17, 1950, and though there was no specific provision then in the Act repealing the second Mysore Act it is not seriously disputed that the Act by necessary implication repealed the second Mysore Act, as the Act substantially enacted all that was contained in the second Mysore Act. However that may be, appeals were filed against the order of April 17, 1950, before the Custodian. These appeals were allowed on August 22, 1950. The Custodian held that there was not sufficient evidence to prove the respondents as evacuees and consequently the properties in question could not be treated as evacuee properties. On October 3,1950, the Custodian General gave notices to the respondents under section 27 of the Act in respect of the order of the: Custodian dated August 22, 1950, and asked them to show cause why '; the said order of the Custodian be not revised, On December 7, 1950, the Administration of Evacuee 861 Property (Amendment) Act, No. LXVI of 1950, was passed by which inter alia section 58 of the Act was amended and it was provided that if immediately before the. commencement of the Act there was in force in any State to which the Act extended any law which corresponded to the Act and which was not repealed by, sub section (1) it shall stand repealed. This was made retrospective from the date from which the Act came into force (namely, April 17, 1950) and so the repeal of evacuee property laws which were in force in those States to which the Act applied which was implicit in it was made explicit from December 7, 1950, so that frum April 17, 1950, only the Act held the field. On February 11, 1952, the Custodian General set aside the order of the Custodian dated August 22, 1950, and ordered that further proceedings in these cases should be taken before the Custodian as an original matter and be was directed to dispose of the cases afresh in the light of the evidence already recorded and such other evidence as might be produced before him by the two respondents. When the matter thus came back to the Custodian he ordered the Deputy Custodian on April 7, 1952, to record the evidence and then submit the record to him for final disposal. Eventually, the matter came before the Custodian for final disposal on December 2, 1952. He held that the two respondents were evacuees and their properties were evacuee properties. This was followed by two appeals to the High Court on January 2, 1953. As, however, the respondents felt some doubt whether any appeal lay to the High Court two writ petitions were also filed on September 7, 1953, against the order of the Custodian. The two appeals as well as the two writ petitions were disposed of by the High Court by a common judgment on February 4, 1954. The High Court held that the appeals before it were competent. It further seems to have 'held that the CustodianGeneral had no power under section 27 of the Act to revise the order passed by the Custodian on August 22,1950. Finally, as the High Court held that the appeals were competent it went into the matter as an appellate court and came to the conclusion that the order of the 862 Custodian dated December 2, 1952, was erroneous. It, therefore, allowed the appeals as well as the writ petitions and set aside the order of the Custodian dated December 2, 1952, and restored the earlier order of the Custodian dated August 22, 1950. Thereupon "followed applications by the Custodian of Evacuee Property, Mysore, for certificates to file appeals to this Court on which the High Court granted the certificates, and that is how the four appeals have come up before us. The main contention of the learned Additional Solicitor General on behalf of the appellant is two. He urges firstly that the High Court was in error when it held that the Custodian General had no power to set aside the order of August 22, 1950, under section 27 of the Act. In the second place, his contention is that the High Court was in error in holding that an appeal lay to it from the order of the Custodian dated December 2, 1952. Therefore, the High Court could not deal with the matter before it as if it were hearing an appeal; it could only consider the writ petitions before it and in doing so it would not be justified in issuing a writ of certiorari against the order of December 2, 1952, because that order was not passed without jurisdiction and there was no error of law apparent on the face of the record to call for interference with it. Mr. Sastri for the respondents In reply submits that as the proceedings in these oases began under a. 8 of the first Mysore Act and as there was nothing corresponding to that section either in the second Mysore Act or in the Act, which replaced successively the first Mysore Act, the High Court was entitled to hear an appeal from the order of Decem ber 2, 1952, as that order must be held to have be On passed in a proceeding under the first Mysore Act, even if it be that the Custodian General had the jurisdiction to set aside the order of August 22, 1960 under section 27 of the Act. Further, Mr. Sastri contends that the Custodian General had no jurisdiction to set aside the order of August 22, 1960, under section 27 of the Act. 863 The first point therefore which falls for consideration is whether the Custodian General had jurisdiction to set aside the order of August 22,1950, under section 27; for if he had no such jurisdiction the High Court may be entitled after holding that the Custodian General 's order of February 11, 1952, was without jurisdiction, to set aside all subsequent proceedings, leaving:the order of August 22, 1950, operative and in full force (assuming for this purpose that the High. Court had jurisdiction in writ proceedings to set aside the order of the Custodian General whose headquarters were in New Delhi). Now the first Mysore Act had no provision relating to the Custodian General. It was the second Mysore Act which for the first time brought in the CustodianGeneral and gave him powers of revision under section 25 with respect to orders passed by the Custodian or the District Judge in. appeal. Then came the Act on April 17, 1950, by which the Custodian General was given the power to call for the record of any procee in which any District Judge or Custodian had passed an order for the purpose of satisfying himself as to the legality or propriety of any such order and to pass such order in relation thereto as he thought fit. This provision is wider than the provision in the second Mysore Act and is not confined to orders passed by a District Judge or a Custodian in appeal and would apply even to original orders passed by the Custodian, which term, according to the definition in section 2(c) includes any Additional, Deputy or Assistant Custodian of evacuee property. We have already pointed out that the Act provides substantially for all ,matters contained in the second Mysore Act and therefore must be held to have repealed the second Mysore Act by implication. but in any case the question whether the second Mysore Act was repealed by the Act when it came into force on April 17, 1950, I" been set at rest by the later Central Act, LXVI of 1950. That Act was passed on December 7, 1950, and 2 thereof began thus: "For section 58 of the, , the following section shall be 864 substituted. and shall be deemed always to have been substituted. " This clearly shows that Central Act LXVI was amending section 58 retrospectively from the date on which it came into force (namely, April 17, 1950). The new section 58 which was thus substituted in the Act from April 17, 1950, contained sub section (2) which is as follows: " If, immediately before the commencement of this Act, there is in force in any State to which this Act extends any law which corresponds to this Act and which is not repealed by sub section (1), that corresponding law shall stand repealed. " It is clear therefore that the second Mysore Act was expressly repealed as from April 17, 1950, by the Act in view of this substituted section 58 put into it retrospectively by Act LXVI, for the second Mysore Act was undoubtedly a law corresponding to the Act. The High Court seems to have overlooked the fact that Act LXVI gave retrospective operation to the new section 58(2) which was inserted in the Act. It seems to think that the second Mysore Act was repealed on December 7, 1950, when Act LXVI came into force. The High Court was further in error in holding that the amended sub section (3) of section 58 which was put into the Act also came into force from December 7, 1950, while as matter of fact it came into force from April 17, 1950, when the Act itself first came into force. The position when the Custodian General gave notice in October, 1950, under section 27 of the Act therefore was that the first Mysore Act had already been re. 'pealed by the second Mysore Act and the second Mysore Act had been repealed by the Act as from April 17, 1950, and therefore in October, 1960, only the Act held the field. The question then arises whether it was open to the Custodian General to revise the order dated August 22, 1950, under section 27 of the Act in February, 1952. Now section 27 is very wide in terms and gives power to the Custodian General at any. time either on his own motion or on application made to him in this behalf. , to call for the record of any proceeding in which any District Judge or Custodian 865 has passed an order for the purpose of satisfying himself as to the legality or propriety of any order and to pass such order in relation thereto as he thinks fit. Prima facie, therefore, these wide words give power to the Custodian General to revise any order passed by the Custodian. It is urged on behalf of then respondents that the Custodian General could; not revise the order dated August 22, 1950. We are not impressed by this argument. Now the Act was passed in 1950 to set up a central organisation for the custody, management and control, etc. , of property declared by law to be evacuee property with the Custodian General at the head. It is also clear that all similar laws existing in various States on the date the Act came into force (namely, April 17, 1950) were repealed by it. The intention of the Legislature obviously was to provide for the custody and management etc. of evacuee property in the manner provided in the Act with the Custodian General as the head of the organisation. Further, action taken with respect to evacuee property under the first Mysore Act was deemed under section 53 (2) of the second Mysore Act to have been taken thereunder and finally any action taken in the exercise of the power conferred by the second Mysore Act was deemed to have been taken in the exercise of the powers conferred by the Act. Therefore, any action taken with respect to evacuee property and any order passed by any Custodian in any proceeding with respect to such property would be subject to the revisory jurisdiction of the CustodianGeneral under section 27 in view of the wide language thereof and the fact that proceedings started under the first Mysore Act. would not, in our opinion, make any difference to the power of the Custodian General under section 27. Obviously the order of August 22, 1950 was passed when the Act was in force in a proceeding relating to evacuee property by the Custodian and the Custodian General would be competentunder section 27 to call for the record of that proceeding and satisfy himself as to the legality or propriety of any such order and thereafter pass, such order in relation thereto so he thought fit, We are, therefore, of opinion that ' 866 considering the purpose for which the Act was passed and the successive saving clauaes in the second Mysore Act and in the Act,,the Custodian General had the power under section 27 to call for the record of the proceed. ing in which the order of August ' 22, 1950, was passed &ad consider its legality or propriety and Pass such order in relation thereto as he thought fit. Even if the notice of October, 1950, may be open to question as it was issued before Act LXVI of 1950 was passed, there can be no doubt that the order of February,, 1952, under a. 27 was passed after hearing the parties and would be valid and within the jurisdiction of the Custodian General when it was passed. Therefore, the order of the Custodian General dated February II,, 1952, being within his jurisdiction would not be liable to be set aside on a writ of certiorari as if the Custodian General had acted without jurisdiction. The subsequent proceedings, therefore, which took place after the order of the Custodian General would also be with jurisdiction and would not be liable to be set aside on a writ of certiorari on the ground that they were without jurisdiction. The High Court, thereforewas in error in holding that the order of the Custodian, General dated February 11, 1952,was without juries diction and therefore all subsequent proceedings taken in pursuance thereof were also without jurisdiction, with the result that the order of August 22, 1950 stood fully operative. This brings us to the next question whether any appeal lay to the High Court against the order of December 2, 1952. There is no,doubt that the proceedings in the present case commenced under the first, Mysore Act with a notification under is. 6 and claim applications under section 8. If the original proceeding had finished when the first Mysore Act was in force and the order of December 2, 1952, had been passed during its operation there would undoubtedly have been as appeal to the High Court under section 30 thereof. But the, first Mysore Act, was repealed by the second Mysore Act in. November, 1949, and the second Mysore Act was in its turn repealed by the Act #,a from April 1950. The, questions therefore, that arises for consideration 867 is 'Whether after the repeal of the first Mysore Act an appeal would still lie to the High Court from the order of December 2, 1952. The main contention of Mr. Sastri in this behalf is that if the second Mysore Act or the Act contained provisions which were similar to the provisions contained in section 8 of the first Mysore Act, it may have been possible to say that the remedy provided by the first Mysore Act under section 30 had been superseded by the remedy provided in the Act, that remedy being an appeal to the Custodian General under section 24 of the Act. The argument further proceeds that neither the second Mysore Act nor the Act provides anything similar to what was provided by section 8 of the first Mysore Act. Therefore, even though the first Mysore Act was repealed by the second Mysore Act the proceedings in the present case must be deemed to be still under the first Mysore Act which must be deemed to be existing for this purpose and, therefore, the right of appeal being a vested one and &rising when the proceedings commenced, there would still be a right of appeal under section 30 of the first Mysore Act in spite of its being repealed. When the matter came before the Custodian in 19,52 it was contended before him that the proceedings should be taken to be under the first Mysore Act. He accepted this contention, though he added that it was immaterial for the purposes of the present cases as the definition of " evacuee " in section 2(c) of the first Mysore Act was practically the same as in section 2(d) of the Act. It is urged that in view of the manner in which the Custodian, dealt with the case when he passed the order. dated December 2, 1952, the proceedings before him must be taken to be under the first Mysore Act and if so an appeal would lie to the High Court under ,section 30.,of the first Mysore Act. This view has been accepted by the High Court also and that is why it hold; that the appeals before it were competent; and it is,, the correctness of this view which has been challenged before us. Now there is no doubt that the right of appeal is a substantive right and arises when A proceeding is commenced and cannot be taken away by subsequent 868 legislation, except by express provision or necessary intendment. There is no express provision in the present case taking away the right of appeal conferred by the first Mysore Act. We have therefore to see whether it can be said that the right of appeal conferred by the first Mysore Act has been taken away by necessary intendment by the subsequent legislation ; and if so whether it has been completely taken away or has been replaced by another right of appeal, though not to the High Court. Under the first Mysore Act, as we have already pointed out, evacuee property ipso facto vested in the Custodian under section 5. There. after the Custodian was expected to notify such property under section 6. On such notification or where the Custodian demanded surrender of possession a person claiming any right to the property was entitled to make an application preferring a claim before the Custodian. That application was dealt by the Custodian in a summary manner and he had 'the power either to reject the application or allow it in whole or in part. An order passed by the Deputy or the Assistant Custodian under section 8 was appealable to the Custodian and an order passed by the Custodian or Additional Custodian or an authorized Deputy Custodian was appealable to the High Court. The contention on behalf of the respondents is that when the first Mysore Act was replaced by the second Mysore Act, there was a vital change in the procedure and therefore cases in which proceedings had commenced under section 8 could only be dealt with under the first Mysore Act and for that purpose the first Mysore Act would be deemed to be alive under a. 6 (e) of the Mysore General Clauses Act, No. III of 1899, which corresponds to section 6 (e) of the General Clauses Act, No. X of 1897. Now there is no doubt that the proceedings in these cases commenced under the first Mysore Act though they terminated when that Act was no longer in force. What we have to see is whether there is anything in the repealing legislation which by necessary intendment took away the right of appeal provided by the first Mysore Act and substituted in its place another right of appeal provided by the repealing Act, 869 The argument of Mr. Sastri is that there is nothing in the second Mysore Act which repealed the first Mysore Act corresponding to section 8 of the first Mysore Act and therefore in spite of the repeal of the first Mysore Act proceedings commenced under a. 8 of that Act would continue to be governed thereby, including the right of appeal. In this connection he urges that the scheme of the second Mysore Act with respect to evacuee property is vitally different from the scheme which is to be found in the first Mysore Act. In the second Mysore Act there is no provision corresponding to section 5 of the first Mysore Act by which any property becomes ipso far to evacuee property and vests in the Custodian. Under the second Mysore Act the Custodian has first to form a tentative opinion whether the property is evacuee property and after he has formed such opinion he gives notice thereof to the persons interested; after such notice is given he holds inquiry into the matter and thereafter passes an order declaring the property to be evacuee property. Thus under the first Mysore Act the property became evacuee property ipso facto and the person claiming any interest in it had to proceed under section 8 and make a claim which had to be investigated and thereafter the Custodian finally declared whether the property, which he had notified under section 6 was evacuee property or not. Under the second Mysore Act there being no vesting ipso facto, the proceeding commences; with a notice by the Custodian to the person interested followed by an inquiry after which the Custodian decides to declare the property evacuee if he finds it to be so under the law. Further under the second Mysore Act when an order was passed declaring property to be evacuee property under a. 5 it was open to the person aggrieved by such order to file an appeal to the Custodian where the original order had been passed by the Deputy Custodian or Assistant Custodian and to the Custodian General where the original order had been passed by the Custodian, Additional Custodian or Authorised Deputy Custodian. There was also in certain cases appeal to the District Judge; but we are not concerned with that in the 870 present appeals. The position under the Act was also the same as under the second Mysore Act and the right of appeal was also similar. It is thus true that there has been a change in the procedure by which evacuee property is finally declared to be evacuee property. Under the first Mysore Act the property became evacuee property and the person had to go and file a claim and establish that it was not. That claim was investigated and after investigation the Custodian had to come to a final conclusion whether the property was evacuee or not. 'If he came to the conclusion that it was evacuee property, the vesting under section 5 was confirmed. If on the other hand he came to the conclusion that the pro perty was not evacuee property the legal effect was that there was no vesting under section 5 of the first Mysore Act. Under the second Mysore Act the property did not ipso facto vest in the Custodian as evacuee property but he formed a tentative opinion as to whether it was evacuee property and then gave notices to the persons interested. They appeared before him and the matter was investigated. He then had to come to a final conclusion whether the property was evacuee property or not. If he came to the conclusion that it was evacuee property he declared it to be such; if on the other hand he came to the conclusion that it was not evacuee property the proceedings came to an end. It will be seen therefore on a comparison of the two procedures that though there is difference between the two, the difference is not of a vital or substantial nature. In the one case the ' law started with the presumption that the property was evacuee property and the person interested had to go and make a claim and establish that it was not evacuee property and the matter had to be investigated and the Custodian finally had to come to the conclusion one way or the other. In the other case the law did not start with the presumption but only a tentative opinion was to be formed by, the Custodian who gave notice to the person interested and the matter was then investigated and thereafter the Custodian had to decide finally one way or the other 871 But in both cases the question whether the property was evacuee property or not was investigated and it was only after investigation that it could be finally said whether the property was evacuee property or, not. Therefore, though there may be an apparent difference between what is provided by a. 8 in the, first Mysore Act and by section 5 in the second Mysore Act as also by section 7 in the Act, the difference is, not material and it is only after investigation, whether under section 8 of the first Mysore Act, or under section 5 of the second Mysore Act or under section 7 of the Act that the Custodian comes to the final conclusion whether the property is evacuee property or not. Under the circumstances it would not in our opinion be unreasonable to say that the investigation provided under a. 8 of the first Mysore Act and the subsequent remedies following on an order under section 8 are in substance the same as the investigation provided under section 5 of the second Mysore. Act ores. 7 of the Act and the subsequent remedies following on an order thereon. We cannot, therefore, agree with the High Court that there is nothing in the second Mysore. Act to correspond to section 8 of the first Mysore Act and therefore these proceedings which began under the first Mysore Act must continue to be governed by that Act in spite of its repeal by the second Mysore Act. As we have pointed out above the proceedings under section 8 of the first Mysore Act are in substance equal to proceedings under section 5 of the second Mysore Act and therefore proceedings commenced under the first Mysore Act must in view of a. 53(2) of the second Mysore Act, be deemed to be proceedings under section 5 of the latter Act. Once that conclusion is reached and it seems to us that it is inevitable it follows that an order made in a proceeding commenced under section 8 of the first Mysore Act must be deemed to be an order made under section 5(1) of the second Mysore Act or under section 7(1) of; the Act. In this connection it is relevant to point out that; it could not have been the intention of the legislature to keep the first Mysore Act alive for certain purposes for all, time the whole object of passing the subsequent Acts is plainly against such an assumption. 872 The next question that arises is whether the second Mysore Act and the Act took away the right of appeal which lay to the High Court under the first Mysore Act and substituted for it another right of appeal by necessary intendment. As we have already Pointed out, there is no express provision either in the second Mysore Act or in the Act in this behalf. But once it is held that proceedings which commenced under section 8 of the first Mysore Act must, when the second Mysore Act came into force, be deemed under section 53(2) thereof to be proceeding under section 5(1) or when the Act came into be deemed under section 58(3) thereof to be proceeding under section 7(1) and must be continued under those provisions, it follows that the legislature necessarily intended that all subsequent action following an order under section 5(1) or section 7(1) must be taken under the second Mysore Act or under the Act as the case may be. It could not have been intended by the legislature when it was expressly providing for appeal from an order under section 5(1) of the second Mysore Act or under section 7(1) of the Act that a proceeding commenced under the first Mysore Act (which was equivalent to a proceeding under section 5(1) or section 7(1) should continue to be governed in the matter of appeal by the first Mysore Act. This is therefore in our view a case where by necessary intendment (though not by express provision) the legislature intended that the provision as to appeals provided by subsequent legislation should supersede the provision as to appeals under the first Mysore Act. We may point out that this is not a case where the right of appeal disappears altogether,, all that happens is that where the order is passed by the Custodian the appeal lies to the Custodian General instead of to the High Court. The legislature has provided another forum where the appeal will lie and in the circumstances it must be held that by necessary intendment the legislature intended that forum alone to be, the forum where the appeal will lie and not the forum under the first Mysore Act. Reference in this connection may be made to Garikapatti Veeraya vs 873 N. Subbiah Choudhury (1), where this Court held that the vested right of appeal was a substantive right and was governed by the law prevailing at the time of th commencement of the suit and comprised all successive rights of appeal from court to court which really constituted one proceeding but added that such right could be taken away expressly or by necessary intendment. In the present cases we are of opinion that once proceedings under section 8(1) of the first Mysore Act are held to be similar to proceedings under section 5(1) of the second Mysore Act or section 7(1) of the Act, it must necessarily follow that the legislature intended this all subsequent proceedings in the nature of appeal after the first Mysore Act came to an end, must being the forum provided by the subsequent legislation We are therefore of opinion that the High Court was in error in holding that appeals to it lay from the order of December 2, 1952. The result of the view we have taken is that the High Court was not justified in looking into the order of December 2, 1952, as an appellate court,, though I would be justified in scrutinizing that order as if it was brought before it under article 226 of the Constitutional for issue of a writ of certiorari. The limit of th jurisdiction of the High Court in issuing writs of certiorari was considered by this Court in Hari Vis Kamath vs Syed Ahmed Ishaque and others (2) and the following four propositions were laid down: (1) Certiorari will be issued for correcting errors of jurisdiction ; (2)Certiorari will also be, issued when the Court or Tribunal acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an opportunity to the parties to be heard, or violates the principles of natural justice; (3), The court issuing a writ of critorari acts in exercise of a supervisory land not appellate jurisdiction. One consequence of this is that, the court will not review findings of fact reached by. the inferior court or tribunal, even if they be erroneous; (4)An error in the decision or determination itself may also be amenable to a writ of certiorari if (1) ; (1) ; , 874 it is a manifest error apparent on the face of the proceedings, e.g., when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent error which can be corrected by certiorari but not a mere wrong decision. In the present case, the Custodian had jurisdiction to decide the matter once it is held that the, Castodian General had jurisdiction to set aside the order of August 22, 1950. The main question for decision in these cases was whether the respondents were evacuees within the meaning of a. 2(c) of the first Mysore Act. The questions that fall for decision under section 2(o) are questions of fact and as pointed out in Hari Vishnu Kamath 's case (2) it is not open on a writ praying for certiorari to review findings of fact reached by an inferior court or tribunal even though they may be erroneous. Further, unless there is a patent error of law there can be no interference by a writ of certiorari. While dealing with the writ petitions the main argument that appealed to the High Court was that the Custodian General, had no Jurisdiction in revision to reopen the earlier proceedings and in consequence all subsequent proceedings were null and void The High Court was further aware of the fact that, the ordinary remedy of the respondents in these cases against the order of December 2, 1952, was to appeal to the Custodian General tinder section 24 of the Act; but as it was of the view that the order of ;the Custodian General under a. 27 was without jurisdiction it held that it should interfere and set aside the order of December 2, 1952, which was also without jurisdiction and restore that, of August 22,1950. In the view we have taken, the order of the Custodian General was with jurisdiction and therefore there was in our opinion no reason for the High Court interfere in the exercise of its jurisdiction under article 226 of the Constitution with the order of December 2, 1952, as this is a case where only a writ of certiorari could issue and that is not justified in view of the decision in Hari Vishnu Kamath 's case(1) (1) ; 875 We therefore allow the appeals, set aside the order of the High Court and restore that of the Custodian dated December 2, 1952. This of course will not take away the right if any of the respondents to approach the Custodian General, for we have not considered the merits of the order, of December 2, 1952. In the circumstances of this case we pass no order as to costs. Appeals allowed.

On July 7, 1949, the then State of Mysore passed the Mysore Administration of Evacuee Property (Emergency) Act, 1949, providing, inter alia, for the appointment of a Custodian of Evacuee Property for the State of Mysore for the purpose of administering evacuee property in the State. By section 6 all evacuee property vested in the Custodian under section 5 had to be notified by him in the Mysore Gazette, while section 8 provided that any person claiming any right to any property notified under section 6 might prefer a claim to the Custodian on the ground that the property was not evacuee property. Section 30 provided for an appeal to the High Court where the original order under section 8 had been passed by the Custodian, an Additional Custodian or an Authorised Deputy Custodian. This Act was replaced by the Mysore Administration of Evacuee Property (Second) (Emergency) Act, 1949, which came into force on November 29, 1949. Section 53(2) of that Act provided that anything done or any action taken in the exercise of any power conferred by the earlier Act shall be deemed to have been done or taken in the exercise of the powers conferred by the later Act. Under the second Act, instead of the High Court an appeal from the order of the Custodian lay to the Custodian General, appointed by the Government of India under the provisions of the Administration of Evacuee property Ordinance, 1949, which had come into force on October 18, 1949 ; and in addition, section 25 Of that Act provided for revision by the Custodian General of orders passed by the Custodian. The , which was passed by Parliament and which came into force on April 17, 1950, provided substantially for all matters contained in the second 856 Mysore Act. Section 27 gave the Custodian General powers of revision against the orders of the Custodian, and section 58 as amended and given retrospective operation, provided that " if, immediately before the commencement of this Act, there was in force in any State to which this Act extended any law which corresponded to this Act and which was not repealed. . that corresponding law shall stand repealed. " On September 21, 1949, the Custodian issued a notification declaring the properties of the respondents as evacuee properties, and claims filed by them under section 8 of the earlier Mysore Act were investigated by the Deputy Custodian who dismissed the same on April 17, 1950. Appeals were filed against the said order before the Custodian and were allowed on August 22, 1950. on the ground that there was not sufficient evidence to prove the respondents as evacuees and consequently the properties in question could not be treated as evacuee properties. On October 3, 1950, the Custodian General gave notice to the respondents under section 27 of the , in respect of the order of the Custodian dated August 22, 1950, and asked them to show cause why the said order be not revised. On February II, 1952, the Custodian General set aside the order and directed the Custodian to dispose of the cases afresh. On December 2, 1952, the Custodian passed an order by which he held that the respondents were evacuees and that their properties were evacuee properties. Against this order the respondents filed two appeals to the High Court, and also two writ petitions under article 226 of the Constitution as they had doubts whether any appeal lay to the High Court. The High Court took the view that the Custodian General bad no power under section 27 of the Act to revise the order of the Custodian and that as the proceedings in these cases began under section 8 of the first Mysore Act and as there was nothing corresponding to that section either in the second Mysore Act or in the Act of 1950, the High Court was entitled to hear the appeal from the order of December 2, 1952, as that order must be held to have been passed in proceedings under the first Mysore Act. The High Court then went into the matter as an appellate court and came to the conclusion that the order of the Custodian dated December 2, 1952, 'Was erroneous. Held, that the High Court erred in holding that the order of the Custodian General dated February II, 1952, was without jurisdiction. Considering the purpose for which the Administra tion of Evacuee Property Act, 195o, was passed and the successive saving clauses in the second Mysore Act and in the Act, the Custodian General bad the power under S ' 27 to call for the record of the proceeding in which the order of August 22, 1950, was passed and consider its legality or propriety. Held, further, that the High Court was also in error in holding that appeals to it lay from the order of December 2, 1952. 857 An order made in a proceeding commenced under section 8 of the. first Mysore Act must be deemed to be an order made under section 5(1) of the second Mysore Act or under section 7(1) of the Act, in view of section 53(2) of the second Mysore Act and section 58(3) of the Act. Consequently, by necessary intendment, the legislature must have intended that the provision as to appeals provided by subsequent legislation should supersede the provision as to appeals under the first Mysore Act. Garikapatti Vecraya vs N. Subbiah Choudhury ; , referred to. Since the main question for decision in these cases was whe ther the respondents were evacuees, and as such a question was one of fact, the High Court was not justified in looking into the order of December 2, 1952, as an appellate court in dealing with applications for a writ of certiorari under article 226 of the, Constitution. Hari Vishnu Kamath vs Syed Ahmad Ishaque and Others, ; , applied.

Civil Appeal Nos. 626 & 629 of 1971. From the Judgment and Order dated 5 8 1970 of the Rajasthan High Court in R.F.A. No. 31/60. 630 section T. Desai and Naunit Lal for the Appellant. P. R. Mridul, B. P. Sharma, Krishna Bhatt and R. K. Bhatt for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. These two cross appeals by certificate arise out of a suit for possession of a house situate in Bikaner and for damages for use and occupation thereof filed in Civil Original Case No. 17 of 1957 on the file of the District Judge, Bikaner. The plaintiffs in the suit are the appellants in Civil Appeal No. 626 of 1971 and the defendant is the appellant in Civil Appeal No. 629 of 1971. The genealogy showing the relationship between the parties is given below: Sur Singh | | | | | Gad Singh Bharat Singh Bhim Singh Kan Singh | (Died in (P.I.) (Deft.) | Sept. 1955) | | | | | | | | Duley Dhaney Deep | Singh Singh Singh | | | Himmat Dalip Singh Singh (P.2.) (Died in Sept. 56) Gad Singh, Bharat Singh, Bhim Singh (plaintiff No. 1) and Kan Singh (defendant) are the sons of Sur Singh. Bharat Singh died unmarried in September, 1955. Gad Singh died thereafter leaving behind him three sons, Duley Singh, Dhaney Singh and Deep Singh. Dalip Singh, the second son of plaintiff No.1 died in September, 1956. Bharat Singh and the defendant were residing in the house which was the subject matter of the suit. After the death of Bharat Singh, the plaintiffs Bhim Singh and Himmat Singh filed the suit out of which this appeal arises against Kan Singh, the defendant for recovery of possession of the suit house and other ancillary reliefs. In the plaint, they 631 pleaded that the suit house belonged to them by virtue of a patta dated July 12, 1940 issued in their names; that the defendant who was the brother of plaintiff No. 1 and uncle of plaintiff No. 2 was living in a part of the house with their consent; that plaintiff No. 2 and his younger brother Dalip Singh were also living in the house till the year 1956; that the defendant had refused to receive a notice issued by them in the month of September, 1957 calling upon him to hand over possession of the house to the plaintiffs; that the defendant had done so on account of personal ill will and that the plaintiffs were, therefore, entitled to recover possession of the suit house and damages from the defendant. These were briefly the allegations made in the plaint. On the above basis, the plaintiffs prayed for a decree for the reliefs referred to above. In the written statement, the defendant did not admit the existence of the patta on the basis of which the plaintiffs claimed title to the suit house. He denied the allegation that the plaintiffs were the owners in possession of the suit house. He claimed that he was the exclusive owner of the suit house, and in support of the said claim stated as follows: There was a partition amongst the sons of Sur Singh in the year 1929. At that partition, Gad Singh and plaintiff No. 1 became separated and they were given all the family properties which were situated in their village, Roda. As Bharat Singh and the defendant had been educated at the expense of the family, they were not given any share in the property. Bharat Singh and he settled in Bikaner and lived together as members of joint Hindu family. Bharat Singh died on September 2, 1955 leaving the defendant as a surviving coparcener. On his death, the defendant became the owner of the properties of Bharat Singh 'as a member of joint Hindu family '. He further pleaded that from the year 1928, Bharat Singh and he who were working as the Aid de Camp and Private Secretary respectively of the Maharaja of Bikaner were living in the suit house which then belonged to the Maharaja. The defendant filed an application for purchasing the house. The proceedings had not terminated when the defendant left the service of the Maharaja and went to Banaras for higher studies. On his return from Banaras, he joined the service of the Maharaja in the civil department of Bikaner. After a long time on account of the joint efforts of Bharat Singh and the defendant, the sale of the house was sanctioned. Bharat Singh who was living jointly with him paid the consideration for the sale on November 4, 1939 'out of the joint income. ' Thus according to the defendant, Bharat Singh and he became its owners from the date of payment of the consideration. He 632 further pleaded that 'if the patta of the property had been granted in the names of the plaintiffs due to some reasons, political and other surrounding circumstances and for the safety of the property, it cannot affect the right of the defendant '. It was also stated that Bharat Singh and the defendant had not executed any sale deed in favour of the plaintiffs and so they could not become owners of the suit house. In another part of the written statement, the defendant pleaded thus: "The plaintiffs have taken the entire ancestral property of the village. Still they are harassing the defendant due to avarice. The defendant and Thakur Bharat Singh had been doing Government service. So there was always danger or removal or confiscation of the property. Even if Thakur Bharat Singh might have written or given his consent for entering the names of the plaintiffs in the patta in this view, it is not binding. The plaintiffs are at the most 'benami ' even though the patta which is not admitted might be proved. " It is thus seen that the defendant put forward a two fold claim to the suit house one on the basis of the right of survivorship another on the basis of a joint purchase along with Bharat Singh. Even though in one part of the written statement, he declined to admit the existence of the patta, in paragraph 13 of the written statement which is extracted above, he put forward the plea that the plaintiffs were at the most holding the property as benamdars. He, however, did not claim that he was entitled to the property as an heir of Bharat Singh alongwith plaintiff No. 1. and Gad Singh who would have inherited the estate of Bharat Singh on his death being his nearest heirs. In the reply, the plaintiffs denied that the defendant was entitled to the suit house as a surviving coparcener on the death of Bharat Singh. They, however, pleaded that plaintiff No. 1 had purchased the suit house out of his income; that Bharat Singh used to love plaintiff No. 2 'as his son ' and was thinking of adopting him but he died all of a sudden and that the defendant had not disclosed in his written statement the special political circumstances under which the names of the plaintiffs were entered in the patta. They denied that the defendant had any interest in the suit house. On the basis of the oral and documentary evidence produced before him, the learned District Judge who tried the suit held that Bharat Singh had secured the house from the Government of Bikaner for the plaintiffs with their money; that the patta of the house had been granted by the Patta Court in favour of the plaintiffs; that the plaintiffs were in possession of the suit house till September, 1956 and that the 633 defendant being their close relative was living in the house not on his own account but with the plaintiffs ' permission. The learned District Judge also held that the defendant had failed to prove that the suit house had been acquired by him and Bharat Singh with their joint fund. Accordingly he decreed the suit for possession of the house in favour of the plaintiffs and further directed that the defendant should pay damages for use and occupation at the rate of Rs. 50 per month from September 20, 1956 till the possession of the house was restored to them. Aggrieved by the decree of the trial court, the defendant filed an appeal before the High Court of Rajasthan in Civil First Appeal No. 31 of 1960. The High Court rejected the case of the plaintiffs that the consideration for the house had been paid by Bharat Singh out of the funds belonging to them and also the case of the defendant that the house had been purchased by Bharat Singh with the aid of joint family funds belonging to himself and the defendant. The High Court held that the house had been purchased by Bharat Singh out of his own money in the names of the plaintiffs without any intention to confer any beneficial interest on them. It further held that the suit house belonged to Bharat Singh and on his death, Gad Singh, plaintiff No. 1 and the defendant succeeded to his estate which included the suit house in equal shares. Accordingly in substitution of the decree passed by the trial court, the High Court made a decree for joint possession in favour of plaintiff No. 1. The rest of the claim of the plaintiffs was rejected. Dissatisfied with the decree of the High Court, the plaintiffs and the defendant have filed these two appeals as mentioned above. The principal issue which arises for consideration relates to the ownership of the suit house. It is admitted on all hands that though Bharat Singh and the defendant were living in the suit house from the year 1928, it continued to be the property of the Maharaja of Bikaner till the date on which the patta (Exh. 4) was issued by the Patta Court of Bikaner and that on the issue of the patta, the State Government ceased to be its owner. It is also not disputed that the patta constituted the title deed in respect of the suit house and it was issued in the names of the plaintiffs on receipt of a sum of Rs. 5,000. On January 11, 1930, the defendant had made an application, a certified copy of which is marked as Exhibit A 116 to the Revenue Minister of the State of Bikaner making enquiry about the price of the suit house on coming to know that the State Government intended to sell it. After the above application was made, the defendant left the service of the State of Bikaner and went to Banaras for studies. Bharat Singh who was also an employee of the State Gov 634 ernment was working as the Aid de Camp of the Maharaja in 1939. At the request of Bharat Singh, an order was made by the Maharaja on May 4, 1939 sanctioning the sale of the suit house for a sum of Rs. 5,000. Exhibit A 118 is the certified copy of the said order. Exhibit A 120 is a certified copy of the order of Tehsil Malmandi showing that a sum of Rs. 5,000 had been deposited on behalf of Bharat Singh towards the price of the suit house. It also shows that Bharat Singh was asked to intimate the name of the person in whose favour the patta should be prepared. Presumably, the patta was issued in the names of the plaintiffs as desired by Bharat Singh and Exhibit A 121 shows that it was handed over on September 30, 1940. The patta was produced before the trial court by the plaintiffs. By the time the patta was issued in the names of the plaintiffs, the mother of plaintiff No. 2 had died. He was about eight years of age in 1940 and he and his younger brother, Dalip Singh were under the protection of Bharat Singh who was a bachelor. They were staying with him in the suit house. The defendant also was residing in it. The plaintiffs who claimed title to the property under the patta in the course of the trial attempted to prove that the sum of Rs. 5,000 which was paid by way of consideration for the patta by Bharat Singh came out of the jewels of the mother of plaintiff No. 2 which had come into the possession of Bharat Singh on her death. The plaintiff No. 2 who gave evidence in the trial court stated that he had not given any money to Bharat Singh for the purchase of the house but he had come to know from his father, plaintiff No. 1 that it had been purchased with his money. Jaswant Singh (P.W. 2) and Kesri Singh (P.W. 3) to whose evidence we will make a reference in some detail at a later stage also stated that they had heard from Bharat Singh that the jewels of the mother of plaintiff No. 2 were with him suggesting that they could have been the source of the price house. Plaintiff No. 1 who could have given evidence on the above question did not enter the witness box. It is stated that he was a person of weak mind and after the death of Bharat Singh was behaving almost like a mad man. The defendant stated in the course of his evidence that the mother of plaintiff No. 2 had gold jewels weighing about 3 4 tolas only. In this state of evidence, it is difficult to hold that the plaintiffs have established that the consideration for the suit house was paid by them. The finding of the trial court that the house had been purchased by Bharat Singh for the plaintiffs with their money cannot be upheld. The case of the defendant that the price of the suit house was paid out of the funds belonging to him and Bharat Singh has been rejected both by the trial court and the High Court. On going 635 through the evidence adduced by the defendant, we feel that there is no reason for us to disturb the concurrent findings arrived at by the trial court and the High Court on the above question. We shall, therefore, proceed to decide the question of title on the basis that the consideration for the purchase of the house was paid by Bharat Singh out of his own funds. It was contended by the learned counsel for the defendant that since the plaintiffs had failed to establish that they had contributed the price paid for the suit house, the suit should be dismissed without going into the question whether Bharat Singh had purchased the suit house with his money in the names of the plaintiffs for the benefit of plaintiff No. 2. The plaint does not disclose the name of the person or persons who paid the sale price of the suit house. The suit is based on the patta standing in the names of the plaintiffs. In the written statement of the defendant, there was an allegation to the effect that even though the patta was standing in the names of the plaintiffs, they were only benamidars and the real title was with Bharat Singh and the defendant. The particulars of the circumstances which compelled Bharat Singh or the defendant to take the patta in the names of the plaintiffs were not disclosed although it was stated that it had been done owing to some political and other surrounding circumstances and for the safety of the property. From the evidence led by the parties, we are satisfied that they knew during the trial of the suit that the question whether the transfer effected under the patta was a benami transaction or not arose for consideration in the case. Even in the appeal before the High Court, the main question on which arguments were addressed was whether the transaction was a benami transaction or not. Merely because the plaintiffs attempted to prove in the trial court that the money paid for purchasing the house came out of their funds, they cannot in the circumstances of this case be prevented from claiming title to the property on the basis that even though Bharat Singh had paid the consideration therefor, plaintiff No. 2 alone was entitled to the suit house. Reference may be made here to the decision of this Court in Bhagwati Prasad vs Shri Chandramaul(1) where the Court observed as follows: "There can be no doubt that if a party asks for a relief on a clear and specific grounds, and in the issues or at the trial, no other ground is covered either directly or by necessary implication, it would not be open to the said party to 636 attempt to sustain the same claim on a ground which is entirely new. . But in considering the application of this doctrine to the facts of the present case, it is necessary to bear in mind the other principle that considerations of form cannot over ride the legitimate considerations of substance. If a plea is not specifically made and yet it is covered by an issue by implication, and the parties knew that the said plea was involved in the trial, then the mere fact that the plea was not expressly taken in the pleadings would not necessarily disentitle a party from relying upon it if it is satisfactorily proved by evidence. The general rule no doubt is that the relief should be founded on pleadings made by the parties. But where the substantial matters relating to the title of both parties to the suit are touched, though in directly or even obscurely in the issues, and evidence has been led about them, then the argument that a particular matter was not expressly taken in the pleadings would be purely formal and technical and cannot succeed in every case. What the Court has to consider in dealing with such an objection is: did the parties know that the matter in question was involved in the trial, and did they lead evidence about it ?" After holding that the parties to the said case were not taken by surprise, the Court granted the relief prayed for by the plaintiff on the basis that defendant was a licensee even though the plaintiff had pleaded in his plaint that the defendant was tenant. In the above case, the Court distinguished the decision in Trojan & Co. Ltd. vs RM. N. N. Haggappa Chettiar(1) on which much reliance was placed by the learned counsel for the defendant before us. In the case of Trojan & Co. Ltd. (supra), this Court came to the conclusion that the alternative claim on which relief was sought was not at all within the knowledge of the parties in the course of the trial. The case before us is not of the nature. In Ismail Mussajee Mookerdum vs Hafiz Boo(2) the plaintiff laid claim to a property which had been transferred in her name by her mother alleging that she had paid the purchase money to her mother. The court came to the conclusion that she had failed to prove that she had paid the consideration. Still a decree was made in her favour holding that she had become the owner of the property by virtue of the transfer in her favour even though consideration had not been 637 paid by her since it had been established in the case that her mother intended to transfer the beneficial interest in the property in her favour. This is borne out from the following passage at page 95: "In her evidence, which was very confused, she tried to say that she paid that purchase money to her mother. This was clearly untrue: as both Courts have found. The fact, therefore, remains that the properties purchased by the sale proceeds were purchased no doubt in Hafiz Boo 's name, but were purchased out of funds emanating from her mother 's estate. This circumstance no doubt, if taken alone, affords evidence that the transaction was benami, but there is, in their Lordships ' opinion, enough in the facts of the case to negative any such inference." Moreover no plea was raised on behalf of the defendant before the High Court in this case contending that the High Court should not go into the question whether the transfer under the patta was a benami transaction or not. We, therefore, reject the above contention and proceed to examine whether the High Court was right in arriving at the conclusion that the plaintiffs were only benamidars holding the property for the benefit of its real owner, Bharat Singh as the consideration therefor had emanated from him. Under the English law, when real or personal property is purchased in the name of a stranger, a resulting trust will be presumed in favour of the person who is proved to have paid the purchase money in the character of the purchaser. It is, however, open to the transferee to rebut that presumption by showing that the intention of the person who contributed the purchase money was that the transferee should himself acquire the beneficial interest in the property. There is, however, an exception to the above rule of presumption made by the English law when the person who gets the legal title under the conveyance is either a child or the wife of the person who contributes the purchase money or his grand child, whose father is dead. The rule applicable in such cases is known as the doctrine of advancement which requires the court to presume that the purchase is for the benefit of the person in whose favour the legal title is transferred even though the purchase money may have been contributed by the father or the husband or the grandfather, as the case may be, unless such presumption is rebutted by evidence showing that it was the intention of the person who paid the purchase money that the transferee should not become the real owner of the property in question. The doctrine of advancement is not in vogue in India. 638 The counterpart of the English law of resulting trust referred to above is the Indian law of benami transactions. Two kinds of benami transactions are generally recognized in India. Where a person buys a property with his own money but in the name of another person without any intention to benefit such other person, the transaction is called benami. In that case, the transferee holds the property for the benefit of the person who has contributed the purchase money, and he is the real owner. The second case which is loosely termed as a benami transaction is a case where a person who is the owner of the property executes a conveyance in favour of another without the intention of transferring the title to the property thereunder. In this case, the transferor continues to be the real owner. The difference between the two kinds of benami transactions referred to above lies in the fact that whereas in the former case, there is an operative transfer from the transfer to the transferee though the transferee holds the property for the benefit of the person who has contributed the purchase money, in the latter case, there is no operative transfer at all and the title rests with the transferor notwithstanding the execution of the conveyance. One common feature, however, in both these cases is that the real title is divorced from the ostensible title and they are vested in different persons. The question whether a transaction is a benami transaction or not mainly depends upon the intention of the person who has contributed the purchase money in the former case and upon the intention of the person who has executed the conveyance in the latter case. The principle underlying the former case is also statutorily recognized in section 82 of the which provides that where property is transferred to one person for a consideration paid or provided by another person and it appears that such other person did not intend to pay or provide such consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or providing the consideration. This view is in accord with the following observations made by this Court in Meenakshi Mills. Madurai vs The Commissioner of Income Tax, Madras(1): "In this connection, it is necessary to note that the word 'benami ' is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real, as for example when A sells properties to B but the sale deed mentions X as the purchaser. Here the sale itself is genuine, but the real purchaser is B, X being his benamidar. This is 639 the class of transactions which is usually termed as benami. But the word 'benami ' is also occasionally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid." In Mohammad Sadiq Ali Khan vs Fakhr Jahan Begum & Ors.(1) the facts were these: A Mahemmodan bought an immovable property taking the conveyance in the name of his daughter who was five years of age. The income was credited to a separate account, but it was in part applied to purposes with which she had no concern. Upon her marriage, the deed was sent for the inspection of her father in law. After the death of the donor it was contended that the property was part of his estate, the purchase being benami. The Judicial Committee of the Privy Council held that there was a valid gift to the daughter because there was proof of a bona fide intention to give, and that intention was established. In the course of the above decision, it was observed thus: "The purchase of this property was a very natural provision by Baqar Ali for the daughter of his favourite wife, and though there may be no presumption of advancement in such cases in India, very little evidence of intention would be sufficient to turn the scale. The sending of the deed for the inspection of the lady 's father in law, which the Chief Court held to be established, was clearly a representation that the property was hers, and their Lordships agree with the learned Judges in the conclusion to which they came. " 640 In Manmohan Dass & Ors. vs Mr. Ramdei & Anr. (1) Lord Macmillian speaking for the Judicial Committee observed: In order to determine the question of the validity or invalidity of the deed of gift in question it is of assistance to consider. 'the surrounding circumstances, the position of the parties and their relation to one another, the motives which could govern their actions and their subsequent conduct. ' Dalip Singh vs Nawal Kanwar 35 I.A. 104 (P.C.) always remembering that the onus of proof rests upon the party impeaching the deed. The principle enunciated by Lord Macmillan in the case of Manmohan Dass & Ors. (supra) has been followed by this Court in Jayadayal Poddar (deceased) through his L. Rs. & Anr. vs Mst. Bibi Hazara & Ors.(2) where Sarkaria, J. observed thus: "It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of a benami is the intention of the party or parties concerned; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation and the person expressly shown as the purchaser or transferee in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs. Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid tests, uniformly applicable in all situations, can be laid down; yet in weighing the probabilities and for gathering 641 the relevant indicia, the courts are usually guided by these circumstances: (1) the source from which the purchase money came; (2) the nature and possesion of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any between the claimant and the alleged benamidar; (5) the custody of the title deeds after the sale and (6) the conduct of the parties concerned in dealing with the property after the sale. " The principle governing the determination of the question whether a transfer is a benami transaction or not may be summed up thus: (1) The burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction; (2) if it is proved that the purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary; (3) the true character of the transaction is governed by the intention of the person who has contributed the purchase money and (4) the question as to what his intention was has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the motives governing their action in bringing about the transaction and their subsequent conduct etc. Now we shall refer to the facts of the present case. When the suit house was purchased from the Maharaja of Bikaner, Bharat Singh was a bachelor and he did not marry till his death in the year 1955. The wife of Bhim Singh had died before 1939 leaving behind her two young children. Plaintiff No. 2 was about eight years old in the year 1939 and his younger brother Dalip Singh was about two years old. These two children were living with Bharat Singh. Bhim Singh, plaintiff No. 1 was almost in indigent condition. The defendant had by then acquired a degree in law and also had practised as a lawyer for some time. It is stated that the defendant had again been employed in the service of the State of Bikaner. The patta was issued in the names of plaintiffs 1 and 2 at the request of Bharat Singh. Even though the defendant stated in the written statement that the patta had been taken in the names of the plaintiffs owing to certain political circumstances, he had not disclosed in the course of his evidence those circumstances which compelled Bharat Singh to secure the patta in the names of the plaintiffs, though at one stage, he stated that it was under his advice that Bharat Singh got the patta in the names of the plaintiffs. Bharat 642 Singh had no motive to suppress from the knowledge of the public that he had acquired the property. It was suggested in the course of the arguments that he had taken the patta in the names of the plaintiffs because he was in the service of the State. We do not find any substance in this submission because the property was being purchased from the State Government itself and there was no need for him to shield his title from the knowledge of the State Government. It appears that Bharat Singh acquired the suit house for the benefit of plaintiff No. 2 for the following circumstances: The first circumstance is that the original patta had been handed over by Bharat Singh to plaintiff No. 2 on his passing B. Sc. Examination. This fact is proved by the evidence of plaintiff No. 2 and it is corroborated by the fact that the patta was produced by the plaintiffs before the Court. In the course of his evidence, the defendant no doubt stated that the patta had been stolen by plaintiff No. 2 from the suit house during the twelve days following the death of Bharat Singh when the keys of Bharat Singh 's residence had been handed over to plaintiff No. 2 by the defendant. It is difficult to believe the above statement of the defendant because of two circumstances (i) that the defendant did not state in the written statement that the patta had been stolen by plaintiff No. 2 and (ii) that within a month or two after the death of Bharat Singh, plaintiff No. 2 wrote a letter which is marked as Exhibit A 124 to the defendant stating that the rumour which the defendant was spreading that plaintiff No. 2 had stolen some articles from the suit house was not true since whenever plaintiff No. 2 opened room or any of the almirahs of Bharat Singh in the suit house, Devi Singh the son of the defendant was keeping watch over him. That letter has been produced by the defendant and there is no reference in it to a false rumour being spread about the theft of the patta by plaintiff No. 2. Plaintiff No. 2 however, while asserting his claim to the suit house in the course of that letter stated that he had seen that the patta had been executed in his favour; and that the patta contained his name. The defendant does not appear to have sent any reply to Exhibit A. 124 nor did he call upon the plaintiffs to return the patta to him. He did not also file a complaint stating that the patta had been stolen by plaintiff No. 2. We are of the view that there is no reason to disbelieve the evidence of plaintiff No. 2 that the patta had been handed over to him by Bharat Singh on his passing the B.Sc. examination. This conduct of Bharat Singh establishes that it was the intention of Bharat Singh when he secured the patta from the State Government in the names of the plaintiffs the plaintiff No. 2 whom he loved should become the owner. It is no doubt true that the name of plaintiff No. 1 is also included in the patta. It may have been so included by way 643 of abundant caution as plaintiff No. 2 was a minor when the patta was issued. The above circumstance is similar to the one which persuaded their Lordships of the Privy Council in the case of Mohammad Sadiq Ali Khan (supra) to hold that the property involved in that case belonged to the person in whose favour the conveyance had been executed. The second circumstance which supports the view that Bharat Singh intended that plaintiff No. 2 should become the owner of the suit house is proved by the declarations made by Bharat Singh regarding the title to the suit house. Jaswant Singh (P.W. 2) was a former Prime Minister of the State of Bikaner. His wife was a cousin of plaintiff No. 1, Bharat Singh and the defendant. Being a close relative of Bharat Singh who was also the Aid de Camp of the Maharaja of Bikaner, he was quite intimate with Bharat Singh who used to discuss with him about his personal affairs. P.W. 2 has stated in the course of his evidence that Bharat Singh thought it proper to purchase the house in the name of plaintiff No. 2 and that he intended to make plaintiff No. 2 his heir and successor. He has also stated that Bharat Singh had expressed his desire to give all his property to plaintiff No. 2 by a will and that he had told Kesri Singh (P.W. 3) just a day prior to his (Bharat Singh 's) death that a will was to be executed. This statement of Jaswant Singh (PW. 2) is corroborated by the evidence of Kesri Singh (P.W. 3) whose wife was also a cousin of Bharat Singh, plaintiff No. 1 and the defendant. The relevant portion of the deposition of Kesri Singh (P.W. 3) reads thus: "I came from Jaipur to Bikaner by train one day before the death of Bharat Singh and when I was returning after a walk I found Bharat Singh standing at the gate of his house. I asked Bharat Singh to accompany me to my house to have tea etc. Bharat Singh came with me to my house. Bharat Singh told me at my house that he was not quite all right and that he might die at any time. He wanted to execute a will. He further told me that his house really belonged to Himmat Singh. It has been purchased in his name. He wanted to give even other property to Himmat Singh. By other property which Bharat Singh wanted to give to Himmat Singh was meant Motor car, bank balance and the presents which he had. The house regarding which my talk took place with Bharat Singh at my house was the house in dispute. " There is no reason to disbelieve the evidence of these two witnesses. Their evidence is corroborated by the deposition of Dr. Himmat Singh (D.W. 6) who was the Secretary of a Club in Bikaner 644 of which Bharat Singh was a member. He was examined by the defendant himself as his witness. In the course of his cross examination, Dr. Himmat Singh (D.W. 6) referred to what Bharat Singh had told him a few months prior to his death. The substance of his deposition is found in the judgment of the trial court, the relevant portion of which reads thus: "D.W. 6 Dr. Himmat Singh is the Secretary of the Sardul Club, Bikaner. He is the Senior Eye Surgeon in the Government Hospital, Bikaner. He has stated that Bharat Singh was the member of Sardul Club. A sum of Rs. 425/6/ remained outstanding against him till the year 1955. This amount was received on 28 10 1955. He has said that he does not know who deposited this amount. On the merits of the case, he has stated that he intimately knew Bharat Singh and members of his family. Bhim Singh and his sons Himmat Singh and Dalip Singh used to live in this house. Bharat Singh took this house for Bhim Singh and Himmat Singh. Four months before his death, Bharat Singh told the witness that he had already taken the house for Bhim Singh and Himmat Singh and that whatever else would remain with him shall go to them. Dr. Himmat Singh refutes the defendant 's stand and supports the plaintiff 's case. " It was argued on behalf of the defendant that there is some variation between the deposition of Dr. Himmat Singh (D.W. 6) and the above passage found in the judgment of the trial court and that the evidence of D.W. 6 should not be believed as he had turned hostile. The deposition of Dr. Himmat Singh (D.W. 6) was read out to us. It was also brought to our notice that an application had been made by the defendant to treat D.W. 6 as hostile and that it had not been granted by the trial court. Even though there is a slight variation between what is stated by D.W. 6 and what is contained in the judgment of the trial court with regard to certain details, we do not feel that the said variation is of any substantial nature. The evidence of D.W. 6 suggests that Bharat Singh was of the view even during his life time that the suit house belonged to plaintiffs and not to himself. Even though an application had been made by the defendant to treat D.W. 6 as hostile, we feel that this part of the evidence of D.W. 6 cannot be rejected on that ground since it is consistent with the evidence of Jaswant Singh (P.W. 2) and Kesri Singh (P.W. 3). It is seen from the judgment of the High Court that the effect of the statement of Kesri Singh (P.W.3) in his deposition that Bharat Singh 645 had told him that the suit house was the property of plaintiff No. 2 has not been considered. The High Court while dealing with the evidence of Jaswant Singh (P.W. 2) and Kesri Singh (P.W. 3) laid more emphasis on those parts of their evidence where there was a reference to the alleged utilisation of the jewels or moneys belonging to the plaintiffs by Bharat Singh for the purpose of acquiring the suit house. The High Court has also observed in the course of its judgment that neither of them had stated that Bharat Singh had told them that he was purchasing or had purchased the suit house as a gift to Bhim Singh and Himmat Singh. The above observation does not appear to be consistent with the evidence of Kesri Singh (P.W. 3) discussed above. It was, however, contended on behalf of the defendant that the statement made by Bharat Singh in the year 1955 could not be accepted as evidence in proof of the nature of the transaction which had taken place in the year 1940. It was contended that the question whether a transaction was of a benami nature or not should be decided on the basis of evidence about facts which had taken place at or about the time of the transaction and not by statements made several years after the date of the transaction. In support of the above contention, the learned counsel for the defendant relied on the decision of the House of Lords in Shephard & Anr. vs Cartwright & Anr.(1). The facts of that case were these: In 1929, a father, with an associate, promoted several private companies and caused a large part of the shares, for which he subscribed, to be allotted in varying proportions to his three children, one of them being then an infant. There was no evidence as to the circumstances in which the allotments were made. The companies were successful and in 1934 the father and his associate promoted a public company which acquired the shares of all the companies. The children signed the requisite documents at the request of their father without understanding what they were doing. He received a cash consideration and at various times sold, and received the proceeds of sale of, their shares in the new company. He subsequently placed to the credit of the children respectively in separate deposit accounts the exact amount of the cash consideration for the old shares and round sums in each case equivalent to proceeds of sale of the new shares. Later he obtained the children 's signatures to documents, of the contents of which they were ignorant, authorising him to withdraw money from these accounts and without their knowledge he drew on the accounts, which were by the end of 1936 exhausted, part of the sums withdrawn being dealt with for the benefit of the children but a large part remaining unaccounted for. He died in 646 1949. In the action filed against his executors, it was contended by them that the subsequent conduct of the father showed that when the shares were got allotted by him in the names of the children in 1929, he did not intend to make them the real owners of the shares and that the presumption of advancement had been rebutted. This contention was met by the plea that the subsequent conduct of the father in dealing with the shares as if they were his own could not be relied upon either in his favour or in favour of his representatives, executors and administrators to prove that he had no intention to create any beneficial interest in his children in the shares in question when they were obtained. On these facts, the House of Lords held that the subsequent acts and declarations of the father could not be relied upon in his favour or in favour of his executors to rebut the presumption of advancement. Viscount Simonds in the course of his judgment observed thus: "My Lords, I do not distinguish between the purchase of shares and the acquisition of shares upon allotment, and I think that the law is clear that on the one hand where a man purchases shares and they are registered in the name of a stranger there is a resulting trust in favour of the purchaser; on the other hand, if they are registered in the name of a child or one to whom the purchaser then stood in loco parentis, there is no such resulting trust but a presumption of advancement. Equally it is clear that the presumption may be rebutted but should not, as Lord Eldon said, give way to slight circumstances: Finch vs Finch ; It must then be asked by what evidence can the presumption be rebutted, and it would, I think, be very unfortunate if any doubt were cast (as I think it has been by certain passages in the judgments under review) upon the well settled law on this subject. It is, I think, correctly stated in substantially the same terms in every text book that I have consulted and supported by authority extending over a long period of time. I will take, as an example, a passage from Snell 's Equity, 24th ed., p. 153, which is as follows: "The acts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the 647 declaration. But subsequent declarations are admissible as evidence only against the party who made them, and not in his favour. " The above passage, we are of the view, does not really assist the defendant in this case. What was held by the House of Lords in the case of Shephard & Anr. (supra) was that the presumption of advancement could be displaced only by a statement or conduct anterior to or contemporaneous to the purchase nor could any conduct of the children operate against them as admissions against their interest as they acted without the knowledge of the facts. In the instant case, we are concerned with the conduct and declarations of Bharat Singh subsequent to the transaction which were against his interest. The evidence regarding such conduct and declarations is not being used in his favour but against the legal representative of Bharat Singh i.e. the defendant who would have become entitled to claim a share in the suit house if it had formed part of his estate. Such conduct or declaration would be admissible even according to the above decision of the House of Lords in which the statement of law in Snell 's Equity to the effect `but subsequent declarations are admissible as evidence only against the party who made them, and not in his favour ' is quoted with approval. The declarations made by Bharat Singh would be admissible as admissions under the provisions of the Indian Evidence Act being statements made by him against his proprietary interest under section 21 and section 32(3) of the Indian Evidence Act The defendant cannot also derive any assistance from the decision of this Court in Bibi Saddiqa Fatima vs Saiyed Mohammad Mahmood Hasan(1). The question before the Court in the case of Bibi Siddiqa Fatima (supra) was whether a property which had been purchased by a husband in his wife 's name out of the fund belonging to a waqf of which he was a Mutawalli could be claimed by the wife as her own property. This Court held that the wife who was the ostensible owner could not be treated as a real owner having regard to the fact that the purchase money had come out of a fund belonging to a waqf over which her husband who was the Mutawalli had no uncontrolled or absolute interest. In reaching the above conclusion, this Court observed thus : "We may again emphasize that in a case of this nature, all the aspects of the benami law including the 648 question of burden of proof cannot justifiably be applied fully. Once it is found, as it has been consistently found, that the property was acquired with the money of the waqf, a presumption would arise that the property is a waqf property irrespective of the fact as to in whose name it was acquired. The Mutawalli by transgressing the limits of his power and showing undue favour to one of the beneficiaries in disregard to a large number of other beneficiaries could not be and should not be permitted to gain advantage by this method for one beneficiary which in substance would be gaining advantage for himself. In such a situation it will not be unreasonable to say rather it would be quite legitimate to infer, that it was for the plaintiff to establish that the property acquired was her personal property and not the property of the waqf. " It was next contended that the defendant had spent money on the repairs and reconstruction of the building subsequent to the date of the patta and that therefore, he must be held to have acquired some interest in it. We have gone through the evidence bearing on the above question. We are satisfied that the defendant has not established that he had spent any money at all for construction and repairs. Even if he has spent some money in that way with the knowledge of the actual state of affairs, it would not in law confer on the defendant any proprietary interest in the property. It is also significant that neither Gad Singh during his life time nor his children after his death have laid any claim to a share in the suit house which they were entitled to claim alongwith the defendant if it was in fact a part of the estate of Bharat Singh. Their conduct also probabilities the case of the plaintiffs that Bharat Singh did not intend to retain for himself any interest in the suit house. On the material placed before us, we are satisfied that the transaction under which the patta was obtained was not a benami transaction and that Bharat Singh had acquired the suit house with his money with the intention of constituting plaintiff No. 2 as the absolute owner thereof. Plaintiff No. 2 is, therefore, entitled to a decree for possession of the suit house. The trial court passed a decree directing the defendant to pay damages for use and occupation in respect of the suit house at the rate of Rs. 50/ per month from September 20, 1956 till the 649 possession of the house was delivered to the plaintiffs. The operation of the decree of the trial court was stayed by the High Court during the pendency of the appeal before it. In view of the decree passed by the High Court, the defendant has continued to be in possession of the suit house till now. Nearly twenty years have elapsed from the date of the institution of the suit. In the circumstances, we are of the view that the defendant should be directed to pay mesne profits at the rate of Rs. 50/ per month till today and that an enquiry should be made by the trial court under Order 20, Rule 12 of the Code of Civil Procedure to determine the mesne profits payable by the defendant hereafter till the date of delivery of possession. In the result, the decree passed by the High Court is set aside and a decree is passed directing the defendant to deliver possession of the suit house to plaintiff No. 2 and to pay mesne profits to him at the rate of Rs. 50/ per month from September 20, 1956 till today and also to pay future mesne profits as per decree to be passed by the trial court under Order 20, Rule 12 of the Code of Civil Procedure. For the foregoing reasons, Civil Appeal No. 626 of 1971 is accordingly allowed with costs throughout. Civil Appeal No. 629 of 1971 is dismissed but without costs. C.A. 626/71 allowed. P.B.R. C.A. 629/71 dismissed.

Plaintiff No. 1 and plaintiff No. 2 were father and son while defendant was the brother of plaintiff No. 1. The plaintiffs in their suit against the defendant claimed that the suit house in which the defendant was living, belonged to them by virtue of a patta issued in their names. They alleged that the deceased brother of plaintiff No. 1, who remained a bachelor till his death, loved plaintiff No. 2 as his son and had thought of adopting plaintiff No. 2 but since he died all of a sudden it could not be done. The defendant on the other hand claimed that he and his deceased brother lived as members of a joint family after the partition of their family that as a result of the joint efforts of himself and his deceased brother the Maharaja, of Bikaner sanctioned sale of the house to them, that the purchase money was paid out of their joint income but that the patta was granted in the names of the plaintiffs due to political reasons and therefore the plaintiffs were at the most benamidars. The trial court held that the house was acquired by the deceased brother from the Government of Bikaner for the plaintiffs and the patta was granted in favour of the plaintiffs and that they were in its possession till 1956. It rejected the defendant 's claim that it was acquired with the joint funds of himself and his deceased brother. On appeal the High Court held that the house had been purchased by the deceased brother out of his own money in the names of the plaintiffs without any intention to confer any beneficial interest on them and on his death plaintiff No. 1 and the defendant succeeded jointly to the estate as his heirs. ^ HELD: The transaction under which the patta was obtained was not a benami transaction. The house was acquired by the deceased brother with his money and with the intention of constituting plaintiff No. 2 as the absolute owner thereof. [648G] Where a person buys property with his own money but in the name of another person without any intention to benefit such other person, the transaction is called benami. In that case the transferee holds the property for the benefit of the person who has contributed the purchase money and he is a real owner. The second case which is loosely termed a benami transaction is a case where a person, who is the owner of the property, executes a conveyance in favour of another without the intention of transferring the title to the property thereunder. In this case the transferor continues to be the real owner. The difference between the two kinds of benami transactions is that whereas in the former there is an operative transfer from the transferor to the transferee, though the transferee holds the property for the benefit of the person who has 629 contributed the purchase money, in the latter there is no operative transfer at all and the title rests with the transferor notwithstanding the execution of the conveyance. One common feature in both cases is that the real title is divorced from the ostensible title and they are vested in different persons. The question whether a transaction is a benami transaction or not depends upon the intention of the person who has contributed the purchase money in the former case, and upon the intention of the person who has executed the conveyance in the latter case. The principle underlying the former case is statutorily recognized in section 82 of the Indian Trust Act, 1882. [638B E] Meenakshi Mills, Madurai vs The Commissioner of Income Tax, Madras, ; at p. 722; Mohammad Sadiq Ali Khan vs Fakhr Jahan Begam & Ors. 59 I.A. 1; Manmohan Das & Ors. vs Mr. Ramdai & Anr. A.I.R. 1931 P. C. 175; Jaydayal Poddar (deceased) through his L.Rs. & Anr. vs Mst. Bibi Hazra & Ors. referred to. 2. The principles governing the determination of the question whether a transfer is a benami or not are: (1) The burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction; (2) if it is proved that the purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary; (3) the true character of the transaction is governed by the intention of the person who has contributed the purchase money and (4) the question as to what his intention was, has to be decided on the basis of the surrounding circumstances, the relationship of the parties the motives governing their action in bringing about the transaction and their subsequent conduct. [641C E] In the instant case the deceased brother was a bachelor. On the death of the wife of plaintiff No. 1, plaintiff No. 2 and his younger brother were staying with the deceased brother. Plaintiff No. 1 was almost in an indigent condition while defendant practised law for some time and later entered into service. The patta for the house was issued in the name of plaintiffs nos. 1 and 2 at the request of the deceased brother for the benefit of plaintiff No. 2 and was handed over to him after he completed his education. This conduct of the deceased brother established that it was his intention that, when he secured the patta from the State Government in the names of plaintiffs it was his intention that plaintiff No. 2 whom he loved, should become the owner. [641F H] 3. The declaration made by the deceased, who had contributed the purchase money subsequent to the date of purchase to the effect that the property belonged to plaintiff No. 2 was admissible in evidence either under section 32(3) or section 21 of the Indian Evidence Act to prove his intention that he intended that plaintiff No. 2 should become its owner. [647E] Shephard & Anr. vs Cartwright & Anr. ; , distinguished.

Appeal No. 119 of 1955. Appeal from the judgment and order dated June 16, 1953, of the Punjab High Court in Civil Reference No. 1 of 1953. A. V. Viswanatha Sastri and Naunit Lal, for the appellant. H. N. Sanyal, Additional Solicitor General of India, R. Gopalakrishnan, R. H. Dhebar and D. Gupta, for the respondent. November 24. The Judgment of the Court was delivered by SARKAR, J. The appellant is a company carrying on business as a distiller of country liquor. It was incorporated in May 1945 and was in fact a previously existing company called the Amritsar Distillery Co. Ltd. reconstructed under the provisions of the Company 's Act. The appellant carried on the same business as its predecessor, namely, sale of the produce of its distillery to licensed wholesalers. The wholesalers in their turn sold the liquor to licensed retailers from whom the actual consumers made their purchases. The entire trade was largely controlled by Government regulations. After the war started the demand for country liquor increased but difficulty was felt in finding bottles in which the liquor was to be sold. In order to relieve the scarcity of bottles the Government devised in 1940 a scheme called the buy back scheme. The scheme in substance was that a distiller on a sale of liquor became entitled to charge a wholesaler a price for the bottles in which the liquor was supplied at rates fixed by the Government which he was bound to repay to the wholesaler on the latter returning the bottles. The 685 same arrangement, but with prices calculated at different rates was made for the liquor sold in bottles by a wholesaler to a retailer and by a retailer to the consumers. Apparently it was conceived that the price fixed under the scheme would be found to be higher than the price which the bottles would fetch in the open market and the arrangement for the refund of the price would therefore encourage the return of the bottles from the consumers through the intermediaries ultimately to the distiller. The price refundable was later increased perhaps because the previous price did not fully achieve the desired result of the bottles finding their way back to the distillers. Sometime in 1944, the Amritsar Distillery Co. Ltd. which then was in existence, insisted on the wholesalers paying to it in addition to the price of the bottles fixed under the buy back scheme, certain amounts described as security deposits and calculated at varying rates per bottle according to sizes for the bottles in which the liquor was supplied to them promising to pay back for each bottle returned at the rate ' applicable to it and further promising to pay back the entire amount paid on a transaction when 90 per cent. of the bottles covered by it had been returned. The company while it was in existence realised these additional sums and so did the appellant after it took over the business. The object of demanding and taking these additional sums was obviously to provide additional inducement for the return of the bottles to the distiller so that its trade in selling the produce of its distillery might not be hampered for want of bottles. No time limit had been fixed within which the bottles had to be returned in order to entitle a wholesaler to the refund, nor does it appear that a refund had ever been refused. The price of the bottles received by the appellant under the buy back scheme was entered by it in its general trading account while the additional sum received for them was entered in the general ledger under the heading " Empty Bottles Return Security Deposit Account ". It is not disputed that for the accounting periods with which this case is concerned, the additional amounts had been taken 686 without Government 's sanction and entirely as a condition imposed by the appellant itself for the sale of its liquor. The appellant was assessed to income tax on the balance of the amounts of these additional sums left after the refunds made there out. It had also been assessed to business profits tax and excess profits tax on the same balance. Its appeals against the orders of assessment to these taxes to the Appellate Assistant Commissioner and thereafter to the Tribunal failed. It then obtained an order referring a certain question arising out of the assessments for decision by the High Court of Punjab. The question originally suggested was reframed and in its final form reads thus: Whether on the facts and circumstances of the case the collections by the assessee company described in its accounts as " empty bottle return security deposits" were income assessable under section 10 of the Income tax Act? The High Court answered the question in the affirmative. The present appeal is against that decision which related to all the three varieties of taxes for which the appellant had been made liable. We are concerned in this appeal only with the additional sums demanded and received by the appellant and described as security deposit and not with the price of bottles which also it took under government sanction. The question is whether these amounts called security deposits were. trading receipts. Now, as already stated, the appellant 's trade consisted in selling in bottles liquor produced in its distillery to wholesalers. The sale was made on these terms: In each transaction of sale the appellant took from the wholesaler the price of the liquor, a certain sum fixed by the government, as price of the bottles in which the liquor was supplied and a further sum described as security deposit for the return of the bottles. The moneys taken as price of the bottles were returned as and when the bottles were returned. The moneys described as security deposit were also returned as and when the bottles were returned with only this difference that in this case the entire sum taken in one 687 transaction was refunded when 90 per cent. of the bottles covered by it had been returned, though the remaining 10 per cent. had not been returned. Such being the nature of the appellant 's trade and the manner in which it was conducted, these additional sums appear to us to be its trading receipts. Mr. Vishwanatha Sastri appearing on behalf of the appellant first contended that on these facts the amounts could not be regarded as price and that therefore they were not trading receipts. He said that the price of the bottles was separately fixed and the amount taken as deposit was different from and exclusive of, it. This contention is founded on the use of the word price in the buy back scheme in connection with the rates which the distiller was entitled to charge a wholesaler for the bottles. It seems to us that this contention lays undue emphasis on that word. We think that the High Court took substantially a correct view of the matter when it said that in realising these amounts " the company was really charging an extra price for the bottles ". It is clear to us that the trade consisted of sale of bottled liquor and the consideration for the sale was constituted by several amounts respectively called, the price of the liquor, the price of the bottles and the security deposit. Unless all these sums were paid the appellant would not have sold the liquor. So the amount which was called security deposit was actually a part of the consideration for the sale and therefore part of the price of what was sold. Nor does it make any difference that the price of the bottles was entered in the general trading account while the so called deposit was entered in a separate ledger termed " empty bottles return deposit account ", for, what was a consideration for the sale cannot cease to be so by being written up in the books in a particular manner. Again the fact that the money paid as price of the bottles was repaid as and when the bottles were returned while the other moneys were repaid in full when 90 per cent. of the bottles were returned does not affect the question for ,none of these sums ceased to be parts of the consideration because it had been agreed that they would be 688 refunded in different manners. It is not contended that the fact that the additional sums might have to be refunded showed that they were not part of the price. It could not be so contended because what was expressly said to be the price of bottles and admitted to be price was also refundable. If so, then a slightly different method providing for their refund cannot by itself prevent these additional sums from being Price. Now, if these additional sums were not part of the price, what were they ? Mr. Sastri said that they were deposits securing the return of the bottles. According to him if they were such security deposits, they were not trading receipts. Again we are unable to agree. There could be no security given for the return of the bottles unless there was a right to their return for if there was no such right, there would be nothing to secure. Now we find no trace of such a right in the statement of the care. The wholesalers were clearly under no obligation to return the bottles. The only thing that Mr. Sastri could point out for establishing such an obligation was the use of the words " security de posit ". We are unable to hold that these words alone are sufficient to create an obligation in the wholesalers to return the bottles which they had bought. If it had been intended to impose an obligation on the wholesalers to return the bottles, these would not have been sold to them at all and a bargain would have been expressly made for the return of the bottles and the security deposit would then have been sensible and secured their return. The fact that there was no time limit fixed for the return of the bottles to obtain the refund also indicates that there was no obligation to return the bottles. The substance of the bargain clearly was that the appellant having sold the bottles agreed to take them back and repay all the amounts paid in respect of them. For this part of the case Mr. Sastri relied on Davies vs The Shell Company of China Ltd. (1), but we do not think that case assists at all. What had happened there was that the Shell Company had appointed a large number of agents in China to sell its products (1) 689 and had taken from each agent a deposit to secure itself against the risk of default by the agent duly to PI account for the sale proceeds. The deposits were made in Chinese dollars and later converted into sterling. When the Company closed its business in China it reconverted the deposits into Chinese dollars and refunded to the agents the deposits made by them. Owing to a favourable exchange for the conversion of sterling into dollars, the Company made a profit and it was sought to assess this profit to income tax. It was held that the profit could not be taxed, for the deposits out of which it was made were really not trading receipts at all. Jenkins, L. J., observed at p. 157: " Mr. Grant described the agents ' deposits as part of the Company 's trading structure, not trade receipts but anterior to the stage of trade receipts, and I think that is a fair description of them. It seems to me that it would be an abuse of language to describe one of these agents, after he had made a deposit, as a trade creditor of the Company; he is a creditor of the Company in respect of the deposit, not on account of any goods supplied or services rendered by him in the course of its trade, but simply by virtue of the fact that he has been appointed an agent of the Company with a view to him trading on its behalf, and as a condition of his appointment has deposited with or, in other words, lent to the company the amount of his stipulated deposit. " lie also said at p. 156: it If the agent 's deposit had in truth been a payment in advance to be applied by the Company in discharging the sums from time to time due from the agent in respect of petroleum products transferred to the agent and sold by him the case might well be different and might well fall within the ratio deciding of Landes Bros. vs Simpson (1) and Imperial Tobacco Co. vs Kelly (2). But that is not the character of the deposits here in question. The intention manifested by the terms of the agreement is that the deposit should be (1) (2) 87 690 retained by the Company, carrying interest for the benefit of the depositor throughout the terms of the agency. It is to be available during the period of the agency for making good the agent 's defaults in the event of any default by him ; but otherwise it remains, as I see it, simply as a loan owing by the Company to the agent and repayable on the termination of the agency ". It would therefore appear that the deposits in that case were held not to be trading receipts because they had not been made as part of a trading transaction. It was held that they had been received anterior to the commencement of the trading transactions and really formed the trading structure of the Company. The character of the amounts with which we are Concerned is entirely different. They were parts of the trading transactions themselves and very essential parts: the appellant would not sell liquor unless these amounts were paid and the trade of the appellant was to make profit out of these sales. The fact that in certain circumstances these amounts had to be repaid did not alter their nature as trading receipts. We have already said that it is not disputed that what was expressly termed as price of bottles was a trading receipt though these had to be repaid in almost similar circumstances. We may point out that it had not been said in Shell Company case(1) that the deposits were not trading receipts for the reason that they might have to be refunded; the reason for the decision was otherwise as we have earlier pointed out, namely, that they were no part of the trading transactions. We therefore think that the deposits dealt with in the Shell Company case were entirely of a different nature and that case does not help. Mr. Sanyal was prepared to argue that even if the amounts were securities deposited for the return of the bottles, they would still be trading receipts, for they were part of the trading transactions and the return of the bottles was necessary to enable the appellant to carry on its trade, namely, to sell liquor in them. As we have held that the amounts had not been paid as security for the return of the bottles, we do not (1) 691 consider it necessary to pronounce upon thiscontention. We might also refer to the observationsmade in Imperial Tobacco Co. vs Kelly(1) mentioned in the Shell Company case (2) and set out below. There the Company in the course of its trading activity used to purchase tobacco in America and for that purpose had to acquire American dollars. It so happened that after it had acquired a certain amount of dollars for making the purchases, it was prevented from buying tobacco in America by Government orders passed due to outbreak of war. While the dollars lay with the Company, they appreciated in value and later the Treasury acquired the dollars and paid the Company for them in sterling at the then current rate of exchange, as a result of which payment the Company made a profit. It was hold that the profit was a trading receipt of the Company. Lord Greene said at p. 300: " The purchase of the dollars was the first step in carrying out an intended commercial transaction, namely, the purchase of tobacco leaf. The dollars were bought in contemplation of that and nothing else ". He also observed that the dollars " were an essential part of a contemplated commercial operation ". It seems to us that the amounts with which this case is concerned, were paid and were refundable as an integral part of a commercial transaction, namely, the sale of liquor in bottles by the appellant to a wholesaler. The case nearest to the present one is, in our view, that decided by this Court in K. M. section Lakshmanier & Sons vs Commissioner of Income tax and Excess Profits Tax, Madras (3). There the appellants, who were the assessees, were merchants carrying on business as the sole selling agents for yarn manufactured by the Madura Mills Co. Ltd. They sold the yarn to their constituents and in the relevant accounting period the sales were made under three successive arrangements each of which covered a part of it. Under each arrangement, the assessees were paid a certain initial (1) (2) (3) ; 692 sum by their customers. The question was as to the nature of these initial payments. Under the first arrangement " the appellants had two accounts for each constituent, namely, ' a contract deposit account ' and ' a current yarn account ', crediting the moneys received from the customers in the former account and transferring them to the yarn account in adjustment of the price of the bales supplied then and there, that is, as and when deliveries were made under a contract either in instalment or in full ". It was held that the amounts received from the customers under this arrangement were taxable as they were merely advance payments of the price and could riot therefore be regarded as borrowed money. This was clearly so because under this arrangement cash was deposited by a purchaser in respect of a contract of purchase at the time it was made and was to be applied when the goods had been delivered by the appellant under that contract towards the price payable in respect of them, such price not being payable in any other manner. The arrangement for the second part of the accounting period was that the payment made by a constituent at the time of the making of a contract was taken as " Contracts advance fixed deposit " and it was refunded when the goods under the contract had been supplied and the price in respect thereof paid in full irrespective of the earlier payment. With respect to the payment initially made under this arrangement Patanjali Sastri, C. J., said at p. 1067 : ". we are of opinion that, having regard to the terms of the arrangement then in force, they partake more of the nature of trading receipts than of security deposits. It will be seen that the amounts received were treated as advance payments in relation to each " contract number " and though the agreement provided for the payment of the price in full by the customer and for the deposit being returned to him on the completion of delivery under the contract, the transaction is one providing in substance and effect for the adjustment of the mutual obligations on the completion of the contract. We hold accordingly that 693 the sums received during this period cannot be regarded as borrowed money. . It seems to us that the amounts involved in the present case were exactly of the nature of the deposits made in the second period in Lakshmanier & Sons ' case (1). There, as here, as soon as a transaction of sale was made the seller received certain moneys in respect of it. It is true that in Lakshmanier & Sons ' case the transaction was a contract to sell goods in future whereas in the present case the transaction was a sale completed by delivery of the goods and receipt of the consideration. But that cannot change the nature of the payment. In Lakshmanier & Sons ' case, the payment initially made was refundable after the price had been paid; in the present case the contract is to refund the amount on the return of the bottles already sold. In each case therefore the payment was made as part of a trading transaction and in each case it was refundable on certain events happening. In each case again the payment was described as a deposit. As in that case, so in the present case, the payment cannot be taken to have been made by way of a security deposit. We must therefore on the authority of Laskhmanier & Sons ' case, hold the amounts in the present case to have been trading receipts. It was Mr. Sastri 's effort to bring the case within the arrangement that prevailed in the third part of the accounting period in Laskhmanier & Sons ' case, the initial payments made during which were held to be loans. But we think that he has not succeeded in this. The payments during the third period were made under the following arrangements: " Instead of calling for amounts from you towards 'Security Deposit ' due to bales for which we are entering into forward contracts with you and returning the same to you from the said deposit then and there, as we are doing now, and in order to make it feasible, we have decided to demand from you a certain sum towards Security Deposit and keep the same with us so long as our business connections under forward contracts will continue with you." Under this arrangement a certain (1)[1953] S.C.R. 1057. 694 sum was kept in deposit once and for all and there. after Lakshmanier & Sons commenced to enter into the trading transactions, namely, forward contracts for sale of yarn with the constituents who deposited the money. The sum so deposited was to be refunded with interest at three per cent. per annum at the end of the business connection between the parties, if necessary, after retaining there out any amount due on the contracts made with the constituent which, the latter was at the termination of the business found not to have paid. Patanjali Sastri, C. J., observed at p. 1063 in regard to the deposits made under this arrangement: "The amount deposited by a customer was no longer to have any relation to the price fixed for the goods to be delivered under a forward contract either in instalments or otherwise. Such price was to be paid by the customer in full against delivery in respect of each contract without, any adjustment out of the deposit, which was to be held by the appellants as security for the due performance of his contracts by the customer so long as his dealings with the appellants by way of forward contract continued, the appel lants paying interest at 3 per cent. in the meanwhile, and having, as appears from the course of dealings between the parties ' the use of the money for their own business. It was only at the end of the " business connection " with the appellants that an adjustment was to be made towards any possible liability arising out of the customer 's default. Apart from such a contingency arising, the appellants undertook to repay an equivalent amount at the termination of the dealings. The transaction had thus all the essential elements of a contract of loan, and we accordingly hold that the deposits received under the final arrangement constitute borrowed money ". Having observed that the description of the payment made by the customer as a deposit made no difference for a deposit included as a loan, the learned Chief Justice further said at p. 1064: " The fact that one of the conditions is that it is to be adjusted against a claim arising out of a possible 695 default of the depositor cannot alter the character of the transaction. Nor can the fact that the purpose for which the deposit is made is to provide a security for the due performance of a collateral contract invest the deposit with a different character. It remains a loan of which the repayment in full is conditioned by the due fulfilment of. the obligations under, the collateral contract ". In coming to the view that he did with regard to the arrangement prevailing in the third period, the learned Chief Justice referred ' with approval to the case of Davies vs Shell Company of China(1) which we have earlier mentioned. Now it seems to us that the reasons on which the learned Chief Justice based his conclusion that the deposits during the third period were loans do not apply to the present case. In the present case, unlike in Lakshmanier & Sons ' case, the amount paid has a relation to the price of the goods sold ; it is part of that price as we have earlier said. It was a condition of each transaction of sale by the appellant. It was refundable to the wholesaler as soon as he returned the bottles in which the liquor had been supplied to him in the transaction in respect of which the deposit had been made. The deposit in the present case was really not a security at all ; it did not secure to the appellant anything. Unlike Lakshmanier & Sons ' case, in the present case a deposit was made every time a transaction took place and it was refundable under the terms of that transaction independently of other deposits under other transactions. In Lakshmanier & Sons ' case, the deposit was in the nature of the assee 's trading structure and anterior to the trading operations, as were the deposits considered in Shell Company case(1). In the case in hand the deposit was part of each trading transaction. It was re. fundable under the terms of the contract relating to a trading transaction under which it had been made; it was not made under an independent contract nor was its refund conditioned by a collateral contract, as happened in Lakshmanier & Sons ' case. (1) 696 We therefore think that the present case is governed by the arrangement covering the second period and: not the third period mentioned in Lakshmanier & Sons case (1), and, come to the conclusion that the amounts with which we are concerned were trading receipts. Mr. Sastri also referred us to Morley vs Pattersall and contended that the amounts with which we are concerned, were of the same kind as those consideredin that case and were not income. It seems to us that there is no similarity between the two cases at all. Tattersall was a firm who sold horses of its constituents on their behalf and received the price which it was liable to pay them. It so happened that in the course of years various customers did not come and demand the amounts due to them. Initially Tattersall showed those amounts in its accounts as liabilities which they really were. Later it thought that it would never have to pay back these amounts and thereupon transferred them to the credit of its partners. The Revenue sought to tax the amounts so transferred as Tattersall 's income. The question was whether the amounts upon transfer became Tattersall 's income. It was never contended that the amounts when received as price of the constituent 's horses sold were Tattersall 's income and the only contention was that they became income upon being transferred to the credit of the partners. It was held that the amounts had not by being entered on the credit side, become income of the firm. Sir Wilfrid Greene said at p. 65 : " Mr. Hill 's argument was to the effect that, although they were not trading receipts at the moment of receipt, they had at that moment the potentiality of becoming trading receipts. That proposition involves a view of Income Tax Law in which I can discover no merit except that of novelty. " Then again he said: " It seems to me that the quality and nature of a receipt for Income Tax purposes is fixed once and for all when it is received. What the partners did in (1) ; (2) 697 this case, as I have said, was to decide among themselves that what they had previously regarded as a liability of the firm they would not, for practical reasons, regard as a liability; but that does not mean that at that moment they received something, nor does it mean that at that moment they imprinted upon some existing asset a quality different from what it had possessed before. There was no existing asset at all at that time. " All that this case decided was that moneys which were not when received, income and as to this there was no question could never later become income. With such a case we are not concerned. The case turned on the fact that the moneys received by Tattersall were never its moneys; they had been received on behalf of others and that receipt only created a liability towards them. Now it seems to us quite impossible to say that the amounts with which we are concerned were not the appellant 's moneys in the sense that the constituent 's moneys in the hands of Tattersall were not its. The amounts in this case were not received on account of any one but the appellant. No doubt these moneys might have to be refunded if certain things happened which however might never happen, but that did not make them the moneys of those who might become entitled to the refund. Mr. Sastri referred us to the observations of Sir Wilfrid Greene, M. R., in Morley vs Tattersall (1) at p. 65 to the effect that, " The money which was received was money which had not got any profit making quality about it; it was money which, in a business sense, was a client 's money and nobody else 's" and contended that the amounts involved in the presentcase were of the same nature. We are unable to agree. If we are right in our view that the amounts were trading receipts, it follows that they must have a profit making quality about them. Their payment was insisted upon as a condition upon which alone the liquor would be supplied with an agreement that they would. be repaid oil the return of the bottles. They (1)(1938) 88 698 were part of the transactions of sale of liquor which produced the profit and therefore they had a profit making quality. Again, a wholesaler was quite free to return the bottles or not as he liked and if he did not return them, the appellant had no liability to refund. It would then keep the moneys as its own and they would then certainly be profit. The moneys when paid were the moneys of the appellant and were thereafter in no sense the moneys of the persons who paid them. Having given the matter our anxious consideration which the difficulties involved in it require, we think that the correct view to take is that the amounts paid to the appellant and described as " Empty Bottles Return Security Deposit " were trading receipts and therefore income of the appellant assessable to tax. We agree with the High Court that the question framed for decision in this case, should be answered in the affirmative. In the result the appeal fails and is dismissed. The appellant will pay the costs in this Court. Appeal dismissed.

The appellant, a distiller of country liquor, carried on the business of selling liquor to licensed wholesalers. Due to shortage of bottles during the war a scheme was evolved, where under the distiller could charge a wholesaler a price for the bottles in which liquor was supplied at rates fixed by the Government, which lie was bound to repay to the wholesaler on his returning the bottles. In addition to this the appellant took a further sum from the wholesalers described as 'security deposit ' for the return of the bottles. Like the price of the bottles these moneys were also repaid as and when the bottles were returned with this difference that the entire sum was refunded only when go% of the bottles covered by it had been returned. The appellant was assessed to income tax on the balance of the amounts of these additional sums left after the refunds made there out. Held, that the amounts paid to the appellant and described as 'security deposit ' were trading receipts and therefore income of the appellant assessable to tax. These amounts were paid as an integral part of the commercial transaction of the sale of liquor in bottles and represented an extra price charged for the bottles. They were not security deposits as there was nothing to secure, there being no right to the return of the bottles. 684 K. M. section Lakshmanier & Sons vs Commissioner of Income tax and Excess Profits Tax, Madras, ; , followed. Davies vs The Shell Company of China Ltd., (1951) Tax Cas. 133; and Morley vs Tattersall, , distinguished. Imperial Tobacco Co. vs Kelly, , referred to.

l Appeals Nos. 1239 to 1241 of 1966. Appeals by special leave from the Award dated October 1, 1965 of the Industrial Tribunal, Maharashtra, Bombay in Reference (I.T.) Nos. 84, 112 and 121 of 1959. K. T. Sule, M. G. Phadnis and Vineet Kumar, for the appel lants (in all the appeals). G. B. Pai, P. N. Tiwari and P. K. Rele, for the respondents (in all the appeals). 3 7 5 P. Jaganmohan Reddy, J. These three Appeals are by the P. Jaganmohan Reddy,J. These three appeals are by the Workmen of the three Respondent Companies respectively Civil Appeal No. 1239 of 1966 is against Greaves Cotton & Co. Ltd., Civil Appeal No. 1240 of 1966 is against Greaves Cotton & Crompton Parkinson Pvt. Ltd., (later amalgamated in 1966 and a new Company formed as Crompton Greaves Ltd.), and Civil Appeal No. 1241 of 1966 is against Kenyon Greaves Pvt. Ltd. On the 29th April 1958 a charter of demands was presented by the Workmen through their Trade Union Greaves Cotton and Allied Companies Employees Union to the Respondents in the above three Appeals and to Russian & Hornby India Pvt. Ltd. These demands were in respect of the wage scale, dearness allowance, leave gratuity etc. After the conciliation proceedings under sub section (4) of Section 12 of the (hereinafter called the 'Act '). had failed, the disputes in respect of the aforesaid matters were ultimately referred by the Maharashtra Government to Shri P. D. Sawarkar for adjudication under Section 10 (1) (d) read with 12 (5 ) of the Act. In respect of demands made against Greaves Cotton & Co. Ltd., the reference was made on 8 4 59 and 24 12 59; against Greaves Cotton & Crompton Parkinson Pvt. Ltd. on 30 5 59 and 24 12 59 and that against Kenyon Greaves Pvt. Ltd., on 8 6 59 and 9 1 60 respectively. We are here not concerned with the other references. By an Award dated 3rd June, 15th and 16th June 1960 the Sawarkar Tribunal revised the wage scales and dearness allowance of all workmen employed by those Companies. Ruston & Hornby India Pvt. Ltd. appealed against the Awards to this Court which by a common Judgment dated 14th November 1963 held that the wage scale and dearness allowance fixed by the Industrial Tribunal for the clerical and subordinate staff did not require any interference and to that extent dismissed the Appeal. It however set aside the wage scale and dearness allowance fixed for factory workmen and remanded the matter to the Tribunal for fresh fixation of wage scale and dearness allowance with these observations : "We allow the Appeal with respect to the factory workmen and send the case back to the Tribunal for fixing the wage structure including basic wages and dearness allowance and for granting adjustments in the light of the observations by us. The new Award pur suant to this Award will come into force from the same date namely April 1, 1959". When the references were taken up by the Tribunal on remand the parties agreed that in view of the decision of this Court certain 3 76 references stood finally disposed of namely references dated 24th December, 1959 by the Workmen in Greaves Cotton & Co. Ltd., and in Greaves Cotton & Crompton Parkinson Pvt. Ltd. and that dated 9th January 1960 by the workmen of Kenyon Greaves Pvt. Ltd. The other three which were also held to be finally disposed of were against the Workmen of Ruston & Hornby India Pvt. Ltd. with which we are not concerned in this Appeal. The parties however, agreed that only three references dated 8th April, 1959, 30th May 1959 and 8th June, 1959 by workmen against Greaves Cotton & Co. Ltd., Greaves Cotton & Crompton Parkinson Pvt. Ltd., and Kenyon Greaves Pvt. Ltd. survive. During, the proceedings before the Tribunal two questions were raised (1) Whether the Supreme Court remanded the matter for consideration of the dispute in respect of certain categories of employees including those of the Supervisors; and (2) Whether it was open to the Respondents to claim fixation of service conditions on the basis of individual units. On behalf of the employees it was contended that the dispute regarding the Foremen or Supervisors who were included in the term subordinate staff was concluded by the Judgment of the Supreme Court inasmuch as it had dismissed the Appeal in respect of Clerical and subordinate staff. The employers on the other hand contended that the reference was in respect of the six categories of Workmen specified in the Supreme Court Judgment which included Supervisors. Shri Athalye who was the then Judge of the Industrial Court after hearing the parties made an order on 14th July 1964, inter alia holding : (1) That the Companies were precluded from agitating that wage scales in the different factories should be fixed on the basis of individual units; and (2) that the Sawarkar Award was set aside by this Court in respect of all workmen except those who could be properly classified as office staff. After this order the Respondents were asked to file statements regarding comparative wage scales of Supervisors, in their concerns as well as in other concerns. These statements were filed without prejudice to their contention that the Tribunal had no jurisdiction to fix wage scale in respect of Supervisory staff. The documents filed on behalf of the third Respondent namely Kenyon Greaves Pvt Ltd., showed that it did not employ any staff in the Supervisory grade. Thereafter the references were heard by Shri Paralkar who had succeeded Shri Athalye as Judge, 377 Industrial Tribunal. It was contended before him that the Foreman (Supervisors) were not workmen within the definition given in the Act and that no wage scales in respect of the Supervisors in the Respondent Companies should be fixed. The stand taken by the Appellant was that it was not open to the Respondent Companies to raise the question whether the Supervisors were Workmen within the meaning of the Act as it did not arise on the remand orders made by this Court. In the alternative it was contended that many Supervisory work men, concerned in the dispute were drawing a total salary below Rs. 500 'and that even if everyone of them was promoted from the category of supervisors or for the sake of argument it was held that Foremen and Supervisory staff were not workmen within the meaning of the Act, the Workmen had a right to raise a dispute regarding wage scale and dearness allowance of the Supervisory staff because they have a communist of interest with them. The Tribunal therefore had jurisdiction to entertain the depute in respect of wage scales and dearness allowance of the Supervisory staff. The Appellant also contended on behalf of the Workmen that the only question that was pending before the Tribunal was to fix wages for factory workmen and therefore the Tribunal had no jurisdiction to decide at that stage as to which category the workmen belonged. The Tribunal by its Award of the 1st October 1965 held after hearing the parties that Supervisors were not workmen within the meaning of the Act and that the claim for revision of wage scale and dearness allowance payable to them was in that view rejected. Against this Award the above Appeals were filed by Special Leave granted by this Court confined only to the point whether the decision contained in paragraph 15 and 16 of the Award was correct. At the outset it was conceded by the parties that Civil Appeal No. 1241 of 1966 by the Workmen against the Kenyon Greaves Pvt. Ltd. did not survive because there are no persons working in the Supervisory capacities and drawing less than Rs. 500/being the two conditions requisite under Section 2 (s) (iv) of the Act to be a 'Workman the non fulfilment of which would deprive the Tribunal of its jurisdiction to determine the dispute; and therefore the appeal has to be dismissed. Even in respect of the other two appeals the learned Advocate for the Respondent submits that there are no workman working in the Supervisory capacities and drawing less than Rs. 500/ in the 3 78 other two Undertakings in respect of which the Appeals have been filed and consequently they should also be dismissed. We shall, however, deal with this submission later on. Before us five contentions have been urged by the learned Advocate for the Appellant: First whether the case of Supervisors was at all remanded to the Tribunal for adjudication by the Supreme Court; Secondly whether it was open to the Respondents to agitate when the matter was remanded to the Tribunal, for the first time to challenge the jurisdiction of the Tribunal to fix wage scale and dearness allowance of the Supervisors; Thirdly whether Supervisors getting less than Rs. 500/ per month on the crucial date namely the date of reference can raise a dispute regarding wages which take them beyond Rs. 500/ ; Fourthly whether workmen can raise a dispute about non workmen, as regards terms of employment of non workmen and in what circumstances. Fifthly whether the Tribunal on remand is right in holding that in December 1964, none of the Supervisors were drawing less than Rs. 500/ . With respect to the first two contentions the Appellant 's learned Advocate submits that in the Special Leave Petition against the Award passed by Mr. Sawarkar neither the wage scales of Supervisors nor any question about the jurisdiction of the Tribunal was raised nor was such a contention urged before this Court in the Appeals which were partly allowed and remanded by this Court. Even before the Industrial Tribunal, after the remand, when the Respondent Companies in compliance with its orders dated 15 1 54 submitted statements giving the names of workmen including Supervisors (Foremen) which were covered by the reference and gave their details as called for by the said Tribunal, the comments of the Appellants which were submitted on 27 2 64 were that the category of Supervisors was not covered by the order of remand, and the wage scale and dearness allowance for that category have been confirmed by this Court by its judgment dated the 14th November 63. This was controverted by the Respondents and by further supplementary written statement dated 16 3 64, each of the Respondent Companies, it is alleged, tried to cover up and reagents the matter which had already been settled by this Court regarding uniform service conditions for the entire Greaves Cotton group of Companies on the basis that Greaves Cotton & Co., was the principal Company. 379 Even in these supplementary written statements it is alleged no question was taken up by the Respondent Companies that the Foremen were not workmen within the meaning of the Act. The Appellant had on 24 3 64 submitted an application to the Industrial Tribunal stating that the supplementary written statements should not be taken on record since the issue in the said supplementary statements regarding uniformity in the wage scale and dearness allowance was decided by this Court. It also urged that the issue regarding Drivers, Cleaners and apprentices and Supervisors were categories remanded by the Supreme Court for fixing their wage scale should be decided as a preliminary issue. As we have already stated the Tribunal gave its decision on the two issues which were raised before it after this Court had remanded the matter. On the other hand it is contended by the Respondents that it is not open to the Appellants to raise this question because the Special Leave having been confined only to the point whether the decision contained in paragraphs 15 and 16 of the Award is correct, it is open to it to urge that the Supervisors were not workmen. It was pointed out that from Paragraph 15 and 16 of the Award it is evident that the demand for the revision of the wage scale and dearness allowance of the Supervisors even for the lowest grade on the lowest scale made them non workmen as their emoluments exceed Rs. 500/ , which decision also clearly indicates that the question of fixation of the Supervisors wage scale and dearness allowance was remanded to the Tribunal. It is further stated that this Court had in its Judgment dated 14th November 1963 allowed the Appeal with respect to the 'factory workers ' and sent the case back top the Tribunal for fixing the wage structure for the 'factory workmen ', that it is implicit in the order of remand that the Tribunal would have jurisdiction to determine whether any employee of the factory was or was not a workman within the meaning of the Act; that if the Appellant 's contention is accepted it would virtually mean that this Court by its Judgment had conferred a jurisdiction on the Tribunal to deal with the case of non workmen which the Tribunal under the Act did not possess; and that the question whether there is community of interest between other workmen of the Respondent and Supervisors who may be non workmen is a mixed question of fact and law, which has not been raised before the Tribunal and ought not be allowed to be raised for the first time before this Court. It is also contended that the question whether some of the workmen could raise a dispute regarding the grades of the Supervisors as there is a community of interest was not the subject matter of the decision in para 15 and 16 of the Award, and that since the wages including dearness allowance of all supervisors at the date of the Award were in excess of 380 Rs. 500/ the question of considering the claims of the Supervisors who were non workmen at the instance of supervisors workmen ,does not arise. It is not in our view necessary to go into these several contentions except to examine the scope of the Judgment of this Court in Civil Appeals Nos. 272 280 of 1962 dated 14 11 61 by which the remand was made to the Tribunal. The order is in the following terms : "We therefore dismiss the Appeal so far as retrospective effect and adjustments as also fixation of wages and dearness allowance with respect to clerical and subordinate staff are concerned. We allow the appeal with respect to factory workmen and send the cases back to Tribunal for fixing the wage structure including basic wage and dearness allowance and for granting adjustments in the light of the observations made by us. ". The Award of the Tribunal which this Court was considering in the said appeals dealt with the clerical and subordinate staff separately from the factory workmen. It is in respect of the portion of the Award relating to Clerks and subordinate staff that the appeal was dismissed and that dealing with the factory workmen was remanded. Factory workmen had been divided into six categories and the employees of the Respondents had been directed to be fixed with separate wages for each category. These six categories were: (i) Unskilled. (ii) Semi skilled I. (iii) Semi skilled II. (iv) Skilled I. (v) Skilled II, and (vi) Skilled III. Apart from this the Sawarkar Tribunal in para 58 said, in those references it was concerned with the factory work men of only the three Respondent Companies; that different scales of wages prevail for different classes of workmen but which categories should be placed in which class is not prescribed. It referred to the wage scale of different classes of workmen prescribed by Shri Divatia in which apart from the above six categories, three categories of Supervisors grade I, II & III were also given. The Tribunal, however, while retaining these six categories introduced a seventh category of higher unskilled, which as this Court observed was not justified because there cannot be degrees of want of skill among unskilled class. Apart from this the main attack was on the wages fixed for these six categories on the ground that 381 the Tribunal completely overlooked the wages prevalent for these categories in concerns which it had considered comparable. Court observed "but the way in which the Tribunal has dealt with the matter shows that it paid scant regard to the exemplars. filed before it and did not care to make the comparison for factory. workmen in the same way in which it had made comparison for clerical and subordinate staff. In this circumstances wagescales fixed for factory workmen must be set aside and the matter remanded to the Tribunal to fix wage scales for factory workmen dividing them into six categories as at present and then fixing wage after taking into account wages prevalent in comparable concerns. The parties will be at liberty to lead further ' evidence in this connection". It is clear from this judgment that the subordinates and factory workmen were, treated separately and we cannot accept the contention of the learned Advocate for he Appellant that in dismissing the appeal this Court had rejected the contentions of the Respondents relating to the Supervisors who according to it were included in the category of subordinate: staff. Earlier the Sawarkar Award had after noticing that there are 3 sub divisions in the category of Supervisors laid down the scales which were higher having regard to its desire to prescribe the same scales for the three sub divisions as those for skilled sub division 1. It is also apparent from the statements ' filed that the Foremen or Supervisors were divided into 3 categories according to their pay scales. The pay of the Grade I was Rs. 360 20 500, of Grade Rs. 300 15 360 and of Grade III Rs. 250 10 300. The Appellants themselves referred to these Supervisors as Foreman. Work men under Section 2 (s) (iv) of the Act means any person (including an apprentice) employed in any industry to do any skilled or unskilled manual supervisory or technical work, "but does not include any such person who being employed in a supervisory capacity, draws wages exceeding Rs. 500/ per mensem or exercise either by the nature of the duties attached to the office or by reasons of the powers vested in him, functions mainly of a managerial nature". This Court in remanding the case of the factory workmen had under contemplation all those workmen who on the date of the reference were employed in a Supervisory capacity and drawing less than Rs. 500/ as these were included in six categories of workmen as classified by the Tribunal. We do not think there is anything in the remand order to warrant the submission that the case of Supervisors was included among the category of subordinate staff or that it was not remanded. After the remand the Tribunal was justified in holding that this Court had set aside 'the Award of the previous Tribunal in respect of all those workers who could not be properly classified as office staff in which the Foremen or Supervisors could not be Am L 1340 Sup CI/71 382 included. It is also not the case of the Appellants that workers who were working in a Supervisory capacity were classified as ,office staff. In our view it was open to both the parties to raise all the contentions that were open to them because on remand the wage structure of the factory workers including basic wage and their dearness allowance had to be considered afresh. This conclusion is supported by the fact that parties were given liberty to adduce further evidence in respect thereto. A reference to para 15 and 16 of the Award to which special leave is confined makes it clear that both parties were proceeding on the basis that the Tribunal has jurisdiction to deal with those supervisors who under the Act are workmen. The only controversy was whether the Tribunal could fix a wage scale, for them which will ultimately give them a total wage together with basic pay and dearness allowance of over Rs. 500/ p.m. or fix scale which has an initial starting salary with dearness allowance in excess of Rs. 500/ p.m. which makes them non workmen and thus deprive it of jurisdiction to deal with the dispute. It may be of interest to notice the arguments addressed before the Tribunal on behalf of the parties. The contention by the Companies was that though the Supervisors may be in the category of workmen at the time of the reference the Tribunal would have no jurisdiction to revise their wages and grant to them at any stage, a total emoluments exceeding Rs. 500/as that would convert them into non workmen. On the other band on behalf of the employees the submission was that the Companies had not raised this question in appeal before the Supreme ,Court and in any case it was 'not open to them to contend that the 'Tribunal had no jurisdiction to revise the wage scales of this class as Shri Athalye in ' his order of 14 7 64 had on a consideration of the Judgment of this Court held that the question of revision of the wages and dearness allowance of the Supervisors class was to be considered by that Tribunal. In our view therefore, the ,dispute relating to the Supervisors wage structure and dearness allowance could, certainly on the plea of both employers and employees, be determined by the Tribunal. The only question that could be raised and has been raised was whether the Tribunal has jurisdiction to fix wage scales to go beyond Rs. 500/ and whether as a matter of fact there were any workmen at the time of the dispute who were working in a supervisory capacity drawing a wage not exceeding Rs. 500/ . The Tribunal noted that Shri Phadke for the Companies did not urge that the persons for whom revision was sought are engaged in managerial functions or at the time the dispute arose were all non workmen so is to dis,entitle them to raise the dispute and to exclude the jurisdiction of the Tribunal altogether. If it were so, the Tribunal observed, the question must be deemed to have been impliedly concluded by the decision of the Supreme Court and the interpretation put 383 there were persons employed in a Supervisory capacity drawing a wage not exceeding Rs. 500/ and who as workmen within the amended definition of that expression were interested in demanding scales which take them beyond Rs. 500/ . But it was contended by the Companies that even if the employees are entitled to raise the demand the Tribunal would have no jurisdiction to grant it in a manner so as to convert them into non workmen. On these contentions the Tribunal held that although 'the Supervisors drawing a wage not exceeding Rs. 500/ may be entitled to raise the demand and ask for a scale which would take them beyond Rs. 500/ they would not be justified in making a claim for a scale which at the very commencement would provide them with a wage in excess of Rs. 500/ . A claim for Rs. 300/as basic wage for the last grade of Supervisors together with a claim for dearness allowance would come to an amount in excess of Rs. 500/ and thus convert the Supervisors into non workmen even at the very commencement. Such a claim, the Tribunal thought would obviously not be tenable because although it may be permissible on the grounds of social justice to revise the wage scale which may be justified by the circumstances in the case it will not be permissible for the Tirbunal to fix it so as to convert a workman into a non workman. This leads us to the consideration of the third and the fourth point urged before us namely whether the Supervisors getting less than Rs. 500/ per month on the crucial date which is the date of reference can raise the dispute for wages taking them beyond Rs. 500/ and whether workmen can raise a dispute about non workmen. In our view the Tribunal has jurisdiction to consider revision of wage scale, dearness allowance and other emoluments so long as there is a category of workmen who are employed in a supervisory capacity and drawing less than Rs. 500/ . Even where the workman in a supervisory capacity ask for a pay structure which takes them beyoned Rs. 500 that by itself does not preclude its jurisdiction to determine what is the proper wage structure, for that class or category of workmen. The view of the Tribunal was that though it is possible for Supervisors who are workmen on the date of the reference to demand a wage scale beyond Rs. 500/ they would not be justified in making a claim for a scale which at the very commencement would give them a wage in excess of Rs. 500/ so as to take them out of the category of workmen and make them non workmen. The learned Advocate for the Appellant submits that merely because a claim is made by the Supervisors for an initial wage in excess of Rs. 500/it does not imply that it will be granted or merely for that reason deprive the Tribunal of its jurisdiction to pass an Award in respect of a wage which it considers to be fair and proper. There 384 is no gain saying the fact that once a Tribunal is vested with the, jurisdiction to entertain the dispute which is validly . referred, it does not cease to continue that jurisdiction merely because the claim made goes beyond the wage which takes workmen out of that category and make them non workmen. What has to be seen is whether on the date of the reference there was any dispute in respect of the workmen which could be referred under the Act to the Tribunal. In any case can workmen raise a dispute about non workmen even if many or all of them have since the reference become non working ? In All India Reserve Bank of India Employees Association vs Reserve Bank of India,(1) this Court had occasion to consider these aspects. In that case Class 11 and Class III staff of the Reserve Bank of India through their Association and Class IV staff through their Union raised an industrial dispute which was referred 'by the Central Govt. to the Tribunal. One of the items referred concerned scales of pay, allowances and sundry matters connected with the conditions of service of the three classes, the most important ones being the demand of Class 11 staff claiming a scale commencing with Rs. 500/ . The Tribunal held that the Class II staff worked in a Supervisory capacity and this demand for a minimum salary of Rs. 500/ , if conceded, would take the said staff out of the category of 'workman ' as defined in Sec. 2(s) of the Act. Such an Award, and any Award, carrying wages beyond Rs. 500/ at any stage, was according to the Tribunal beyond its jurisdiction to make. It also held that other workmen could not raise a dispute which would involve consideration of matters in relation to non workmen and that it would be even beyond the jurisdiction of the Central Govt. to refer such a dispute under the Act. The Tribunal therefore made no Award in regard to the Supervisory staff in Class IT. This Court held that the Tribunal was not justified in holding that if at a future time an incumbent would draw wags in the time scale in excess of Rs. 500/ , the matter must be taken to be withdrawn from the jurisdiction of the Central Govt. to make a reference in respect of him and the Tribunal to be ousted of the jurisdiction to decide the dispute, if referred Supervisory staff drawing less than Rs. 5001 per month cannot be debarred from claiming that they should draw more than Rs. 500/presently or at some future stage in their service. They can only be deprived of the benefits, if they are non workmen at the time they seek the protection of the Act. It was further held that in Sec. 2 (k) of the Act the word person has not been limited to 'workmen ' and must therefore receive a more general (1) ; 3 8 5 meaning. But it does not mean any person unconnected with the disputants in relation to whom the dispute is not of the kind described. It could not have been intended that although the dispute does not concern them in the least, workmen are entitled to fight it out on behalf of non workmen. But if the dispute is regarding employment, non employment, terms of employment, or conditions of labour of non workmen in which workmen are themselves vitally interested the workmen may be able to raise an industrial dispute. Workmen can for example raise a dispute that a class of employees not within the definition of 'workmen ' should be recruited by promotion from workmen. When they do so the workmen raise a dispute about the terms of their own employment though incidentally the terms of employment of those who are not workmen is involved. But workmen cannot take up a dispute in respect of a class of employees who are not workmen and in whose terms of employment those workmen have no direct interest of their own. What direct interest suffices is a question of fact but it must be a real and positive interest.and not fanciful or remote. Hidayatullah, J, as he then was, speaking for this Court concluded at page 45 thus : "It follows therefore that the National Tribunal was in error in considering the claim of class 2 employees whether at the instance of members drawing less than Rs. 500/ as wages or at the instance of those lower down in the scale of employment. The National Tribunal was also in error in thinking that scales of wages in excess of Rs. 500 per month at any stage were not within the jurisdiction of the Tribunal or that Govt. could not make a reference in such a contingency. We would have been required to consider the scales applicable to those in Class 11 but for the fact that the Reserve Bank has fixed scales which are admitted to be quite generous". The case of Workmen of Dimakuchi Tea Estate vs Management Dimakuchi Tea Estate, (q) was referred to with approval. There the majority section R. Dass, C.J, section K. Das, J. (A. K. Sarkar J, dissenting) had held that the workmen cannot raise a dispute in respect of a non workman one Dr. K. P. Banerjee whose services were terminated by the management by paying him one month salary in lieu of notice. It was contended that Dr. Banerjee being not a workman his case is not one of an industrial dispute under the Act and is therefore beyond the jurisdiction of the Tribunal to give any relief to him. The matter had been referred to a Board known as 'the Tripartite (1) ; 386 Appellate Board which recommended that Dr. Banerjee should be reinstated from the date of his discharge. Later the Govt. of Assam referred the dispute for adjudication to a Tribunal constituted under Sec. 6 of the Act. The Tribunal held that it had no jurisdiction to give any relief to him. The Appeal to the Labour Appellate Tribunal of India, Calcutta was also dismissed. Special Leave was granted, but was limited to the question whether the dispute in relation to a person who is not a workman falls within the scope of an industrial dispute under Sec. 2(k) of the Act. The majority held that where the workmen raise a dispute as against their employer the "person regarding whom the dispute is raised must be one in whose employment, non employment, terms of employment or conditions of labour (as the case may be) the parties to the dispute have a direct or substantial interest. . Where the workmen raise a dispute as against their employer the personregardin g whose employment, non employment, terms ofemployment or conditions of labour the dispute israisedneed not be, strictly speaking, a 'workman ' within the meaning of the Act, but must be one in whose employment, non employment, terms of employment or conditions of labour the workmen as a class have a direct or substantial interest". Applying these principles the majority came to the conclusion that Dr. Banerjee who belonged to the Medical or Technical staff was not a workman and the Appellants had neither direct nor substantial interest in his employment or non employment and even assuming that he was a member of the same trade Union it cannot be said on the test laid down that the dispute regarding his termination of service was an industrial dispute within the meaning of Sec. 2(k) of the Act. section K. Das, J, who delivered the judgment of the majority in the above case also spoke for the Court in Workmen vs Dahingeapara Tea Estate.(1) In the Dahingeapara case on the sale of the Tea Estate as a going concern the purchaser continued to employ the labour and some members of the staff of the vendor. The question was whether the dispute raised by such workmen regarding the employment of the rest of the members of the old staff was an industrial dispute. It was held that it was. The reference was against the outgoing management as I well as against the incoming management of the Tea Estate. It may be noticed that under the agreement of sale an option was given to the purchaser to continue in employment, the members of (1) A.I.R. 1968 S.C. 1026. 387 the staff. it also made the vendor liable for the claims by the members of the staff not so retained in service by the purchaser. In these circumstances it was held that as between the vendor and the discharged workmen the latter came within the definition of the workmen as they were discharged during the pendency of conciliation proceedings. This fact however, did not make them workmen of the purchaser. Even then they were persons in whose employment or non employment the actual workmen of the Dahingeapara Tea Estate were directly interested. The ratio of the Western India Automobile Association vs Industrial Tribunal, Bombay,(1) as, also of the later decision in Workmen of Dimakunchi Tea Estate vs Management ( 2 ) was made applicable and the dispute was held to be clearly an in dustrial dispute within the meaning of the Act. A reference is made to the Standard Vacuum Refining Company of India Ltd., vs Its workmen & Anr., (3) where the question relating to the dispute arising out of the demand for the abolition of the contract system of employing labour for cleaning and maintenance work at the refinery including the premises and plant belonging to it and for absorbing the workmen employed through the contractors into the regular service of the Company was considered. The Company objected to the reference on the ground that : ( 1 ) it was incompetent inasmuch as there was no dispute between it and the Res pondents, and it was not open to them ,to raise a dispute with respect to the workmen of some other employer namely the contractor; and (2) in any case it was for the Company to decide what was the best method of carrying on its business and the Tribunal could not interfere with function of the management. The Tribunal held that the reference was competent and that the claim was justified. Following the Dimakuchi case this Court held that the dispute in the present case was an industrial dispute because (1) the Respondents had a community of interests with the workmen of the contractor; (2) they had also a substantial interest in the subject matter of the dispute in the sense that the class to which they belonged, namely workmen, was substantially affected thereby, and (3) the Company could give relief in the matter. The conclusion of the Tribunal that the contract system should be abolished was held to be just in the circumstances of the case and should not be interfered with. It would therefore appear that the consistent view of this Court is that non workmen as well as Workmen can raise a dispute in respect of matters affecting their employment, conditions of service etc., where they have a community of interests, provided they are direct and are not remote. As stated in the (1) ; (2) A. I. R. 388 Reserve Bank of India 's case(1) "But workmen cannot take up a dispute in respect of a class of employees who are not workmen and in whose terms of employment, those workmen have no direct interest of their own". At any rate as long as there are persons in the category of workmen in respect of whom a dispute has been referred it cannot be said that the Tribunal has no jurisdiction notwithstanding the fact that some or many of them may become non workmen during the pendency of the dispute. In these circumstances the Tribunal in our view was wrong in holding that the dispute regarding Supervisors was not maintainable merely because a demand was made for a higher wage scale, which would take them out of the category of workmen. The Tribunal has jurisdiction to decide these matters because on the crucial date the supervisors were workmen and merely because of the demand the Tribunal does not lose its jurisdiction to prescribe the pay scales and the dearness allowance either by reason :of the fact that the maximum will go beyond Rs. 500/ or that even the initial pay demanded will be more than Rs. 500/ . Provided that at the time of adjudication there are some at least in the category who are workmen. But the question is if there are none at all and all of them have become, non workmen either during the pendency or at the time of adjudication, does the dispute survive ? In other words does the dispute remain a dispute between employers and workmen within the meaning of Section 2 (k) of the Act? These questions arise out of the fifth contention urged before us by the learned Advocate for the Respondents namely whether in fact there are now any supervisors working in any of the Companies because as the learned Advocate for the Respondent contends, if, they are none and they are all non workmen, the dispute lapses and at any rate the fixation of a wage scale for non existing workmen would be an exercise in futility. The learned Advocate for the Appellant contests this proposition on the ground that even if there are no supervisor workmen working in the Companies, the matter should be considered by the Tribunal inasmuch as any pay scale prescribed by it would have retrospective operation as from the 1st of April 59 which what this Court had directed while remanding the case back to the Tribunal in Civil Appeals Nos. 272 280 of 1962. For this reason it is said that those workmen who have since gone out of the category of workmen ,or have retired or resigned would be entitled to the benefit of the pay structure and could recover arrears. In the Reserve Bank case(") a similar situation had to be considered. The reference to the National Tribunal was in 1960 and by the time the matter came to be decided all of them were getting wages in (1)[1966] 1 S.C. 25. 3 8 9 excess of Rs. 500/ per month and were non workmen. It was held at page 46 "In view of the fact that all of them now receive at the start 'wages ' in excess of Rs. 500/ per month, there is really no issue left concerning them,, once we have held that they are working in a supervisory capacity. " In the result the Appeal was dismissed with the observation that it would have partly succeeded but for the creation of new scales of pay for Class II employees and acceptance of some of the minor points by the Reserve Bank. It is however, contended by the learned Advocate for the Appellant that in that case Mr. Chari had acknowledged at page 37 that the scales of pay which were awarded were as generous as the present circumstances of our country permit. In view of this admission it is said that this Court made no order and therefore that should not be taken into consideration in deciding whether the matter should be remended to the Tribunal for fixing pay scales of the Supervisors. The learned Advocate however ignored the observation immediately preceding the admission made by Mr. Chari. It was observed at page 37 "but more than this the minimum total emoluments as envisaged by the definition of wages, even at the commencement of service of each and every member of Class II staff on January 1, 1962 now exceed Rs. 500/ p.m. This of course was done with a view to withdrawing the whole class from the ambit of the reference, because it is supposed, no member of the class can now come within the definition of 'workman '. We shall, of course, decide the question whether the resolution has that effect. If it does, it certainly relieves us of the task of considering scales of pay for these employees for no remit is now possible as no National Tribunal is sitting. The scales have been accepted as generous, the dispute regarding scales of pay for Class II employees under the reference, really ceases to be a live issue". The decision, therefore, must be understood in the light of the above observations. The reason for this conclusion is that if there are no workmen of the category with respect to whom a dispute has been referred the Tribunal cannot be called upon to prescribe a wage structure for non existing workmen, nor does it have the jurisdiction to do so. The dispute in this sense must be deemed to have lapsed. The question therefore to be determined in this case is whether as a matter of fact there are any workmen now working in a Supervisory capacity who are drawing more than Rs. 500/ , so that it would be futile for us to direct the Tribunal to fix scales of Day and dearness allowance in respect of a category of employees who are no longer workmen and with respect 3 90 to whom the reference can be said to have been withdrawn as in the case of the Reserve Bank of India. In 'Support of this contention that there are in fact no supervisors at present who can be termed workmen in the two Companies the learned Advocate for the Respondents asked for permission to file an affidavit which permission we gave with liberty to the Appellant to file a counter. Accordingly the Appellant, has filed a counter and the Respondents have submitted their rejoinders. In paragraph 3 of the affidavit filed on behalf of the Respondents it is stated that the Second Respondent Company namely Greaves Cotton & Crompton Parkinson Pvt. Ltd. (Crompton Greaves Ltd). , employed 15 employees in the Supervisory cadre as shown in the statement filed in pursuance of the Tribunals order dated 15 1 64 but as on the date of the affidavit only four persons remained in the Supervisory cadre Grade 11. There are no person employed in other Supervisory grade. It was.also pointed out that all these 4 employees were in the Supervisory Grade II and drawing a total salary as on July 1971 exceeding Rs. 500/ a month. In the annexure to the affidavit the reason given was that eachone of the Supervisors at the time when the statement was filedin January 1964 had ceased to be a Super visor. Out of the15 persons, whose names were given, four resigned. 2 retired, one died two retrenched and two were, promoted as Technical Assistants. The remaining four of them are all drawing per month a salary of Rs. 545/50 as Grade II Supervisors. These are S/Shri Deshmukh, Gurbax Singh Kaslay and Pastakia. In so far as Greaves Cotton & Co. Ltd., is concerned, it was urged that even on 1 1 64 as per exhibit RC. 2 the only three Supervisors who had been working with them were drawing a salary in excess of Rs. 500/ which will take them out of the category of workmen. These are G. G. Naik, section section Kulkarni, M. D. Gupte, who were on that date drawing a total salary of Rs. 505/ ; Rs. 581/73, and Rs. 545/58 respectively. This statement was again reiterated in the rejoinder, where it was stated that these were promoted in 1965, the latter two as Assistant Engineers and the former as Superintendent Cone & tube plant. The counter affidavit by the Appellant sworn to by the General Secretary of the Greaves Cotton & allied Companies Union apart from containing averments which are not germanium to the matter in issue does not traverse the specific statement in respect of each one of the Super visors nor does it say that any of them were still supervisors drawing a salary of less than Rs. 500/ . It was because of the submission of the learned Advocate on instructions that there are still some Supervisors 3 91 employed by the Respondents who are workmen within the meaning of Sec. 2 (s) of the Act, we had asked him to file a counter giving the name of the person or, persons who are still working in that capacity and their total emoluments; but we find from the counter except for a bare denial no specific averment as aforesaid has been made nor does the counter states categorically who are the persons who are now working as Supervisors and drawing less than Rs. 500/ . With the counter were annexed two statements Annexure 'A ' & Annexure 'B ', the former showing supervisors working in Greaves Cotton & Crompton Parkinson Ltd., as on 30 5 59 with wage drawn by them on that date, the latter is the statement showing list of Supervisors working in the said Company as on 1st October '65 and the wage drawn by them for the month of September, 1965. Merely to state that there were Supervisors on 8 4 59 the day on which the Govt. of Maharashtra made the reference or in 1964 or 1965 or to say that even today there are Supervisors working in that Com pany or that the Industrial Tribunal went into the question and gave its finding against the Company holding that there were Departmental Foremen in the Factories of Greaves Cotton & Co. Ltd., does not advance the case any further than what it was when we permitted the Respondents to file the affidavit. We cannot therefore accept a mere denial in respect of the crucial point whether today there are Supervisors working in the Respondent Companies who are drawing a basic wage together with dearness allowance of less than Rs. 5001/ as stated in the affidavit and again reiterated in the rejoinder. The entire argument of the Respondents that any decision given by this Court would be otiose is based upon the existence or non existence of the said fact. In view of the omission to state specifically in the counter the names of the persons who as of now are still working as Supervisors and drawing less than Rs. 500/ we cannot but hold that the averments made by the Respondents that there are no employees who are working at present in a supervisory capacity and who can be said to be workmen, have been substantiated. If so, for the reasons given the issue lapses, as such these appeals will be dismissed but in the circumstances without costs.

This Court, in appeal against the award of the Industrial Tribunal in disputes between the appellants and the respondents, confirmed the wage scale and dearness allowance fixed by the Industrial Tribnual for the clerical and subordinate staff, but set aside the wage scale and dearness allowance fixed for factory workmen and remanded the matter to the Tribunal for fresh fixation. When the matter was taken up by the Tribunal the workmen contended that the dispute regarding foremen or supervisors was, concluded by the judgment of this Court on the ground that they were included in subordinate staff. The Tribunal, however, held that the supervisors were not workmen within the meaning of the , and hence the claim for revision of wages and dearness allowance payable to them should be rejected. In appeal by special leave to this Court, on the questions : (1) Whether the case of supervisors was remanded to the Tribunal for adjudication; (2) whether it was open to the respondents to contend for the first time after remand that the Tribunal had no jurisdiction to fix the wage scale and dearness allowance of supervisors; (3) Whether supervisors getting less than Rs. 500/ per mensem on the date of reference could raise the dispute regarding wages which would take their 'salary beyond Rs. 500 per mensem; (4) Whether, if the supervisors were all non workmen, the appellants could raise a dispute about their terms of employment, and (5) whether in fact none of the supervisors was drawing less than ' Rs. 500 per mensem when the matter was taken up on remand and the Tribunal was, therefore, right in rejecting the appellant 's claim for fixation of the wage scale and dearness allowance of supervisors. HELD : (1) The judgment of this Court shows that the subordinate staff and factory workmen were treated separately. This Court in remanding the case of the factory workmen had under contemplation all those workmen, who on the date of reference, were employed in a supervisory capacity and drawing less than Rs. 500. There is nothing in the remand order to warrant the submission that the case of supervisors was included in the category of subordinate staff, or, that it was not remanded. [381 C D, F H] (2) It was open to both parties to raise all the contentions that were open to them, because, on remand the wage structure of the factory workers, including basic wage and dearness allowance, had to be considered afresh. A reference to paragraphs 15 and 16 of the award, to which the special leave was confined, showed that both parties were proceeding on the basis that the Tribunal had jurisdiction to deal with those supervisors who, under the Act, were workmen. [382 A C] (3) The Tribunal bad jurisdiction to consider revision of wages, dearness allowance and other emoluments so long as there is a category of 374 workmen who though employed in a supervisory capacity, were drawing less than Rs. 500/ . Even if they ask for a pay structure which takes their salary beyond Rs. 500/ that by itself does not preclude the jurisdiction of the Tribunal to determine what is the proper wage structure for that class or category of workmen. Once a Tribunal is vested with the jurisdiction to entertain the dispute it does not cease to have that jurisdiction merely because the claim made goes beyond the wages which takes workmen out of that category and makes them non workmen. What has to be seen is whether on date of reference there was any dispute in respect of workmen which could be referred under the Act to the Tribunal. Therefore, supervisory staff drawing less than Rs. 500/ per mensem cannot be debarred from claiming that they should draw more than Rs. 500/presently that is, at the very commencement of inquiry or at Some future stage in their service. They can only be deprived of the benefits if they are non workmen at the time they seek the protection of the Act. [383 F H; 384 A C G H] (4) Workmen can raise a dispute in respect of matters affecting the employment, conditions of service etc. of workmen as well as non workmen, when they have a community of interest. Such interest must be real and positive and not merely fanciful or remote. But workmen cannot take up a dispute in respect of a class of employees who are not workmen and in whose terms of employment the workmen have no direct interest of their own. , What interest suffices as direct is a question of fact; but as long as there are persons in the category of workmen in respect of whom a dispute has been referred it cannot be said that the Tribunal has no jurisdiction, notwithstanding the fact that some or many of them may become non workmen during the pendency of the dispute. [385 A D; 387 H; 388 A B] All India Reserve Bank of India Employees Association v, Reserve Bank of India; , , Workmen of Dimakuchi Tea Estate vs Management of Dimakuchi Tea Estate, ; , Workmen vs Dahingeapara Tea Estate, A.I.R. 1968 S.C. 1026, Western India Automobile Association vs Industrial Tribunal, Bombay, and Standard Vacuum Refining Company India vs Its Workmen, ; , followed. (5) In the present case, however, on the evidence, it must be held that when the matter was taken up on remand there were no supervisors drawing less than Rs. 500/ per mensem and hence, there were no employees who were working in a supervisory capacity who can be said to be workmen. If there are no workmen of the category with respect to whom a dispute ,has been referred, the Tribunal cannot be called upon to prescribe a wage structure for non existing workmen nor does it have jurisdiction to do so. The dispute with respect to them, must be deemed to have elapsed. [388 C F; 389 G H]

ition No. 2701 of 1981. (Under article 32 of the Constitution of India.) section K Mehta, P. N. Puri, E. M. Sardul Anam, M. K Dua and K M. Jain for the Petitioner. V. M. Tarkunde and section K Jain for Respondents Nos. 7, 8, 15, 25 28, 29, 31, 33, 38, 41. K Parasaran Sol. Gen. and Badri Das Sharma for Respondent No. 1. N.L. Jain and Badri Das Sharma for Respondent No. 2. Badri Das Sharma for Respondent No. 3. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. What is the ideal mode of selection to a Public Service, by written examination, by oral test (viva voce), or by a combination of both ? If the last, what is the proper, relative weight that should be attached to the written examination and the oral test ? Is the oral test so pernicious in practice, as suggested by some, that it should be abandoned without regrets or the weight to be attached to it be made minimal ? Has any such consensus emerged among the informed and the cognoscenti as to require the Court to scrap a selection as arbitrary on the sole ground that the weight accorded to the oral test appeared to be high ? 323 Pursuant to the Rajasthan Judicial Service rules made by the Governor of Rajasthan in consultation with the Rajasthan Public Service Commission and the High Court of Rajasthan, the Rajasthan Public Service Commission held a competitive examination for recruitment of Munsifs. The competitive examination consisted of a written examination with two papers in law carrying 100 marks each and two papers, one in Hindi and the other in English, each carrying SO marks and a viva voce examination carrying 100 marks. The viva voce examination was conducted by a Board consisting of Hon 'ble Mr. Justice P. D. Kudal, Judge, Rajasthan High Court, Shri Hari Datt Gupta, Chairman, Rajasthan Public Service Commission, Adaviappa, Member, Rajasthan Public Service Commission and an expert. The expert Member was either Dr. I. C. Saxena, or Shri Kagzi or Shri Jallan who sat by rotation. Schedule III of the Rajasthan Judicial Service rules prescribes the criteria to be considered and the matters to be tested in the viva voce examination. The relevant paragraph is as follows: "In interviewing the candidates, the suitability for employment to the judicial service shall be decided with reference to his record at the school, College and University and his character, personality, address and physique. The questions which may be put up to him may be of a general nature and will not necessarily be academic or legal. The candidates will also be put questions to test the general knowledge including knowledge of current affairs and present day problems. The marks so awarded shall be added to the marks obtained in the written test by each candidate. '. The result of the competitive examination was announced by the Rajasthan Public Service Commission on March 12, 1981 and respondent Nos. 3 to 41 were declared selected for appointment. Out of the 39 candidates who were selected for appointment, one belonged to the scheduled castes and the rest belonged to the general category. The last of the candidates belonging to the general category who was selected for appointment obtained a total of 190 marks in the examination, 135 in written examination and 55 in the viva voce. The petitioner who obtained a total of 189 marks, 159 in the written test and 30 in the viva voce was not selected for appointment. He has filed the present writ petition under article 32 of the Constitution questioning the selection. 324 Shri Mehta learned counsel for the petitioner raised two principal contentions before us. The first was that the entire selection was vitiated by the allocation of 25 percent of the total marks for the viva voce examination. The submission was that the allocation of so high a percentage of marks for the interview test introduced an irredeemable element of arbitrariness so as to offend Articles 14 and 16 of the Constitution. In support of this submission reliance was placed on the decisions of this Court in Ajay Hasia etc. Khalid Mujib Sehravardi & ors. etc.(l) Shri Mehta 's second contention was that marks were awarded in the interview test in a single lot instead of sub dividing and awarding marks separately under various heads for the various matters tested in the interview. Reliance was placed on Periakaruppan vs Stare of ' Tamil Nadu (2). The object of any process of selection for entry into a public service is to secure the best and the most suitable person for the job, avoiding patronage and favouritism. Selection based on merit, tested impartially and objectively, is the essential foundation of any useful and efficient public service. So, open competitive examination has come to be accepted almost universally as the gateway to public services". "The ideal in recruitment is to do away with unfairness(3)". "Competitive examinations were the answer to the twin problems represented by democracy and the requirements of good administration. They were the means by which equality of opportunity was to be united with efficiency. By this means favouritism was to be excluded and the goal of securing the best man for every job was to be achieved(4)". "open competitive examinations are a peculiarly democratic institution. Any qualified person may come forward. His relative competence for appointment is determined by a neutral, disinterested body on the basis of objective evidence supplied by the candidate himself. No one has "pull"; everyone stands on his own feet. The system is not only highly democratic it is fair and equitable to every competitor. The same rules govern, the same procedures apply, the same yardstick is used to test competence(S). How should the competitive examination be devised ? The 325 Kothari Committee on Recruitment Policy and Selection methods in their report said: "A system of recruitment almost totally dependent on assessment of a person 's academic knowledge and skills, as distinct from ability to deal with pressing problems of economic and social development, with people, and with novel situations cannot serve the needs of today, much less of tomorrow. We venture to suggest that our recruitment procedures should be such that we can select candidates who can not only assimilate knowledge and sift material to understand the ramifications of a situation or a problem but have the potential to develop an original or innovative approach to the solution of problems". It is now well recognised that while a written examination assesses a candidate 's knowledge and intellectual ability, an interview test is valuable to assess a candidate 's overall intellectual and personal qualities. While a written examination has certain distinct advantage over the interview test there are yet no written tests which can evaluate a candidate 's initiative, alertness, resourcefulness, dependableness, cooperativeness, capacity for clear and logical presentation, effectiveness, in discussion, effectiveness in meeting and dealing with others, adaptability, judgment, ability to make decision, ability to lead, intellectual and moral integrity. Some of these qualities may be evaluated, perhaps with some degree of error, by an interview test, much depending on the constitution of the interview Board. O. Glenn Stahl in his Public Personnel Administration points out: "Any form of written test possesses certain administrative advantages over the oral and performance types. The written form is much easier and cheaper to administer. It can be given to a large number of individuals at the same time, thus conserving the time of the examiners. As a general rule it is easier to evaluate objectively, and the technical proficiency demanded in rating is usually, although not always, less. The oral test has long served as a basic selection tool in private employment but has been more slowly accepted in the public field. This conservatism arises out of three considerations: (I) the difficulty of developing valid and reliable oral tests; (2) the difficulty of securing a reviewable record of an oral test; and (3) public suspicion of the oral as a channel for the exertion of politi 326 cal influence through the destruction of anonymity. Despite these acknowledged disadvantages, however, orals have been used increasingly in public personnel testing and have become important instruments wherever tests of personal attributes are considered essential. As we have noted no satisfactory written tests have yet been devised for measuring such personal characteristics as initiative, ingenuity and ability to elicit cooperation, many of which are of prime importance. When properly employed, the oral test today deserves a place in the battery used by the technical examiner. The general principle is that resort should never be had to an oral if the relevant factor to be tested can be measured at some other point in the examining process. The reason is that the reliability of the oral, even under the best of conditions, tends to be lower than that of the well designed written test. The oral test should be confined, then, to the evaluation of relevant traits which cannot be measured in any other way" (p. 92) In the United Nations Hand Book on Civil Service Laws and Practice it is said: ". the written papers permit an assessment of culture and intellectual competence. The interview permits an assessment of qualities of character which written papers ignore; it attempts to assess the man himself and not his intellectual abilities". Thus, the written examination assesses the man 's intellect and the interview test the man himself and "the twain shall meet" for a proper selection. If both written examination and interview test are to be essential features of proper selection, the question may arise as to the weight to be attached respectively to them. In the case of admission to a college, for instance, where the candidate 's personality is yet to develop and it is too early to identify the personal qualities for which greater importance may have to be attached in later life, greater weight has per force to be given to performance in the written examination. The importance to be attached to the interview test must be minimal. That was what was decided by this Court in Periakaruppan vs State of Tamil Nadu, Ajay Hasia etc. vs Khalid Mujib Sehravardi & ors. , (supra) and other cases. On the other hand, in the case of services to which recruitment has necessarily to be made from persons of mature 327 personality, interview test may be the only way, subject to basic and essential academic and professional requirements being satisfied. To subject such persons to a written examination may yield unfruitful and negative results, apart from its being an act or cruelty to those persons. There are, of course, many services to which recruitment is made from younger candidates whose personalities are on the threshold of development and who show signs of great promise, and the discerning may in an interview test, catch a glimpse of the future personality. In the case of such services, where sound selection must combine academic ability with personality promise, some weight has to be given, though not much too great weight, to the interview test. There cannot be any rule of thumb regarding the precise weight to be given. It must vary from service to service according to the requirements of the service. the minimum qualifications prescribed, the age group from which the selection is to be made, the body to which the task of holding the interview test is proposed to be entrusted and a host of other factors. It is a matter for determination by experts. It is a matter for research. It is not for Courts to pronounce upon it unless exaggerated weight has been given with proven or obvious oblique motives. The Kothari Committee also suggested that in view of the obvious importance of the subject, it may be examined in detail by the Research Unit of the Union of Public Service Commission. In this background, let us now examine the situation presented by the Rajasthan rules. The Rajasthan Judicial Service rules leave been made by the Governor of Rajasthan in consultation with the High Court of Rajasthan and the Rajasthan Public Service Commission. The High Court may be expected to know the precise requirements of the judicial service of the State and the calibre of the available source material, while the Public Service Commission is an expert body thoroughly conversant with recruitment policies and selection methods. Both the High Court and the Public Service Commission are independent bodies, outside executive control, occupying special positions and enjoying special status under the constitution. Neither is an outside agency. Both are well acquainted with the particular needs of their State and the people. If the Governor, in consultation with the High Court and the Public Service Commission of the State makes rules stipulating seventy five percent of the marks for the written examination and twenty five percent for the interview test, on what basis can a Court say that twenty five percent for the interview test is on the high side ? It must not also be forgotten that the interview test is generally conducted 328 and was, in the present case, conducted by a body consisting of a Judge of the High Court, the Chairman and a member of the Public Service Commission an d a special invitee expert. There can surely be no legitime grievance or hint of arbitrariness against this body. Yet another factor worthy of consideration is that the candidates expected to offer themselves for selection are not raw Graduates freshly out of college but are persons who have already received a certain amount of professional training. The source material is such that some weightage must be given to the interview test and can it possibly be said that twenty five per cent of the total marks is an exaggerated weightage. We may add here that it has been made clear by the Chairman, Rajasthan Public Service Commission on whose behalf a counter affidavit has been filed before us that the marks obtained by the candidates at the written examination were not made available to the members of the interview Board either before or at the time of the interview. We are unhesitatingly of the view that the selection cannot be struck down on the ground that more than due weightage was given to the interview test. The second ground of attack must fail for the same reason as the first ground of attack. The rules themselves do not provide for the allocation of marks under different heads at the interview test. The criteria for the interview test bas been laid down by the rules. lt is for the interviewing body to take a general decision whether to allocate marks under different heads or to award marks in a single lot. The award of marks under different heads may lead to a distorted picture of the candidate on occasions. On the other hand the totality of the impression created by the candidate on the interviewing body may give a more accurate picture of the candidate 's personality. It is for the interviewing body to choose the appropriate method of marking at the selection to each service. There cannot be any magic formulae in these matters and courts cannot sit it judgment over the methods of marking employed by interviewing bodies unless, as we said, it is proven or obvious that the method of marking was chosen with oblique motive. Both the cases cited before us Periakaruppan 's case and Ajay Hasia 's case were cases of admission to colleges. We have already pointed out that the provision for marks for interview test need not and cannot be the same for admission to colleges and entry into public services. In fact in Periakaruppan 's case, even in the case of college admissions the Court observed: 329 "While we do feel that the marks allotted for interview are on the high side and it may be appropriate for the Government to re examine the question, we are unable to uphold the contention that it was not within the power of the Government to provide such high marks for interview or that there was any arbitrary exercise of power". It is true that in Periakaruppan 's case the Court held that the non allocation of marks under various heads in the interview test was illegal but that was because the instructions to the Selection Committee provided that marks were to be awarded at the interview on the basis of five distinct tests. It was thought that the failure to allocate marks under each head or distinct test was an illegality. But, in the case before us, the rule merely and generally indicates the criteria to be considered in the interview test without dividing the interview test into distinct, if we may so call them, sub tests. We do not think that Periakaruppan 's case, which, as we said, deals with admission to a college, affords any true guidance to us. Ajay Hasia 's case was also a case of admission to a college. The Court while upholding the interview test as not irrational or irrelevant though unsatisfactory and capable of abuse, made the following observation: "We would, however, like to point out that in the matter of admission of colleges or even in the matter of public employment, the oral interview test as presently held should not be relied upon as an exclusive test, but it may be resorted to only as an additional or supplementary test and, moreover, great care must be taken to see that persons who are appointed to conduct the oral interview test are men of high integrity, calibre and qualification". The Court then proceeded to consider the next question raised before them, whether the allocation of 33 113 percent of the total marks for the interview test vitiated the selection procedure as arbitrary and unreasonable. It was held that it did and reference was made to the fact that even for selection of candidates for the Indian Administrative Service the marks allocated for the interview test were only 12.2 percent of the total. It was then observed, "under the existing circumstances, allocation of more than 15% of the total marks for the oral interview would be arbitrary and unreasonable and would be liable to be struck down as constitutionally invalid". The observations of the Court were made, primarily 330 in connection with the problem of admission to colleges, where naturally, academic performance must be given prime importance. The words "or even in The matter of public employment" occurring in the first extracted passage and the reference to the marks allocated for the interview test in the Indian Administrative Service examination were not intended to lay down any wide, general rule that the same principle that applied in the matter of admission to colleges also applied in the matter of recruitment to public services. The observation relating to public employment was per incuriam since the matter did not fall for the consideration of the Court in that case. Nor do we think that the Court intended any wide construction of their observation. As already observed by us the weight to be given to the interview test should depend on the requirement of the service to which recruitment is made, the source material available for recruitment, the composition of the interview Board and several like factors. Ordinarily recruitment to public services is regulated by rules made under the proviso to article 309 of the Constitution and we would be usurping a function which is not ours, if we try to redetermine the appropriate method of selection and the relative weight to be attached to the various tests. If we do that we would be rewriting the rules but we guard ourselves against being understood as saying that we would not interfere even in cases of proven or obvious oblique motive. There is none in the present case. The Writ Petition is therefore dismissed but in the circumstances there will be no order regarding costs. V.D.K. Petition dismissed.

Pursuant to the Rajasthan Judicial Service Rules made by the Governor of Rajasthan in consultation with the Rajasthan Public Service Commission and the High Court of Rajasthan, the Rajasthan Public Service Commission held a competitive examination for recruitment of Munsifs. The competitive examination consisted of a written examination with two papers in law carrying 100 marks each and two papers, one in Hindi and the other in English, each carrying SO marks and a viva voce examination carrying 100 marks. The viva voce examination was conducted by a Board consisting of Hon 'ble Mr Justice P. D. Kudal, Judge, Rajasthan High Court, Shri Hari Dutt Gupta, Chairman, Rajasthan Public Service Commission, Adaviappa, Member, Rajasthan Public Service Commission and an expert. The expert Member was either Dr. I.C. Saxena, or Shri Kagzi or Shri Jallan who sat by rotation. Out of the 39 candidates (respondents 3 to 41) who were selected for appointment, one belonged to the scheduled caste and the rest belonged to the general category. The last of the candidates belonging to the general category who was selected for appointment obtained a total of 190 marks in the examination, 135 in the written examination and 55 in the viva voce. The petitioner who obtained a total of 189 marks, 159 in the written test and 30 in the viva voce was not selected for appointment. Hence the writ petition, by the petitioner contending: (a) the allocation of so high percentage of marks for the interview test introduced an irredeemable element of arbitrariness so as to offend Articles 14 and 16 of the Constitution; (b) awarding of marks in the interview test in a single lot instead of sub dividing and awarding marks separately under various heads for the various matters tested in the interview was bad in law. Dismissing the writ petition, the Court ^ HELD: 1. The object of any process of selection for entry into a public service is to secure the best and tho most suitable person for the job, avoiding patronage and favouritism. Selection based on merit, tested impartially and objectively, is the essential foundation of any useful and efficient public service. [324 C D] 321 1:2. While a written examination assesses a candidate 's knowledge and intellectual ability, an interview test is valuable to assess a candidate 's overall intellectual and personal qualities. While a written examination has certain distinct advantages over the interview test there are yet no written test: which can evaluate a candidate 's initiative, alertness resourcefulness, dependableness, co operativeness, capacity for clear and logical presentation, effectiveness in discussion, effectiveness in meeting and dealing with others, adaptability, judgement, ability to make decision, ability to lead, intellectual and moral integrity. Some of these qualities may be evaluated, perhaps with some degree of error, by an interview test, much depending on the constitution of the interview Board. Thus the written examination assesses the man 's intellect and the interview test the man himself and "the twain shall meet" for a proper selection. [325 C E, 326 F] 2. As regards the weight to be attached respectively to the written test and the oral test, there cannot be any rule of thumb regarding the precise weight to be given. It must vary from service to service according to the requirements of the service, the minimum qualifications, prescribed, the age group from which the selection is to be made, the body to which the task of holding the interview test is proposed to be entrusted and a host of other factors. It is a matter for determination by experts and for research. It is not for courts to pronounce upon it unless exaggerated weight has been given with proven or obvious oblique motives. [326 F. 327 C D] Periakaruppan vs State Tamil Nadu, [1971] 2 S.C.R. and Ajay Hasia etc. vs Khalid Mujlb Sehravardi & Ors., A.I.R. 1981 S.C. 487, explained. Ordinarily recruitment to public services is regulated by rules made under the proviso to Article 309 of the Constitution and courts would be usurping a function which is not theirs, if they try to redetermine the appropriate method of selection and the relative weight to be attached to the various tests. If the courts do that, they will be rewriting the rules but, however, courts would interfere certainly in cases of proven or obvious oblique motives. [330 C D] In the instant case, the selection cannot ba struck down on the ground that more than due weightage was given to the interview test: (a) The Rajasthan Judicial Service Rules have been made by the Governor of Rajasthan in consultation with the High Court of Rajasthan and the Rajasthan Public Service Commission. Both are well acquainted with the particular needs of their State and the people. If the Governor, in consultation with the High Court and the Public Service Commission of the State makes rules stipulating seventy five per cent of the marks for the written examination and twenty five per cent for the interview test, Courts have no basis on which to say that twenty five per cent for the interview test is on the high side; (b) the interview test is generally conducted and was, in the present case, conducted by a body consisting of a Judge of the High Court, the Chairman and a member of the Public Service Commission and a special invitee expert, and as such no legitimate grievance or hint of arbitrariness could be made against this body; (c) the candidates expected to offer themselves for selection are not raw graduates freshly out of college but are persons who have already received a certain amount of professional training. The source material is such that some weightage must be given to the interview test 322 and (d) the marks obtained by the candidates at the written examination were not made available to the members of the interviewing Board either before or at the time of the interview. [327 E H, 328 A C] 4. Courts cannot sit in judgment over the methods of marking employed by interviewing bodies unless, it is proven or obvious that the method of marking was chosen with oblique motive. In the instant case, the Rajasthan Judicial Rules generally indicate the criteria to be considered in the interview test without dividing the interview test into distinct sub tests. It is for the interviewing body to take a general decision whether to allocate marks under different heads or to award marks in a single lot. The award of marks under different heads may lead to a distorted picture of the candidate on occasions. On the other hand, the totality of the impression created by the candidate on the interviewing body may give a more accurate picture of the candidate 's personality. [328 D G] Periakaruppan vs State of Tamil Nadu, [1971] 2 S.C.R. 430 and Ajay Hasia etc. vs Khalid Mujib Sheravardi and Ors., ; , discussed and distinguished.

Appeals Nos. 311 to 366 of 1964. Appeals from the judgment and decrees dated December 6, 1957, December 16, 1958, January 29, 1959 of the Allahabad High Court in Special Appeals Nos. 343 and 381 416 of 1955, 548 of 1958 49 55 and 57 67 of 1959 respectively. M. C. Setalvad, B. P. Jha and J. P. Goyal, for the appel lant. G. section Pathak, B. Dutta and Naunit Lal, for the respondents (in C.A.s Nos. 311 366/64). The Judgment of the Court was delivered by Hidayatullah, J. These appeals involve a short common point of law and to appreciate it the narration of a few simple facts will be sufficient. On October 29, 1941, the Hardwar Union Municipal Board (for brevity called the Board in this Judgment) issued a notification (No. 4188/XI 416 41) by which it imposed a toll on motor vehicles and tongas entering or leaving the municipal limits with passengers, at the rate of 2 annas per passenger. There were nine classes of persons who were exempted and one such class was persons travelling in motor vehicles and tongas from Rishikesh. Exemption certificates valid to the end of the calendar year were available in respect of some of the other classes. The notification purported to be issued in exercise of powers conferred by section 128(1)(xiv) of the U.P. Municipalities Act 1916 (U.P. Act 2 of 1916). Accompanying the notification were rules for the levy ,and collection of the toll. On February 22, 1955, a second notification was issued (No. 830/XXIII 16(C) 53 54), this time in exercise of the powers conferred by section 128(1)(vii) of the Act, and it increased the toll from 2 annas to 4 annas per passenger and added rickshaws to the vehicles. This notification also removed the exemption in favour of persons travelling from Rishikesh. The Board established a toll barrier on the Rishikesh/ Hardwar road at a place called Kharkhari within the limits of Hardwar Municipality. Toll was collected at that barrier from 893 vehicles entering the municipal area or departing from it, at the rate of 4 annas per passenger travelling by motor car, tonga or rickshaw. On September 18, 1957, a third notification (No. 2706B (a)XI C 57) was issued, once again in exercise of powers conferred by section 128(1)(xiv) and the Board amended the description of the toll in the notification of 1941 and deleted the exemption which had been granted to persons travelling between Rishikesh and Hardwar. The final description of the tax reads "In the Description of the tax (i) . "A toll tax on motor vehicles, rickshaws and tongas entering or leaving the limits of the Hardwar Union Municipality with passengers to be levied at the rate of annas 4 per passenger". (ii)Delete the clause (c) "All persons travelling in motor vehicles and tongas from and to Rishikesh ' given under the proviso 2 to paragraph 1. " The last notification was issued after the respondents who are owners of motor vehicles plying between Rishikesh and Hardwar had filed their petitions under article 226 of the Constitution challenging the toll. The judgment, which is impugned here by the Board as appellant, is by a Divisional Bench consisting of Mootham C.J. and Shrivastava J. in a special appeal decided on December 6, 1957. The special appeal was filed against a judgment of Mehrotra J. dated September 26, 1955. Mr. Justice Mehrotra had held that toll could not be levied at all on vehicles going outside the Municipal limits and he issued a writ ordering the Board to desist from collecting toll on vehicles leaving Hardwar Union Municipality. He upheld the levy of toll on vehicles entering the municipal limits. Other contentions against, the notifications which sought to have the levy of toll in any shape or form declared illegal were rejected. The Divisional Bench maintained the order but held that although toll could be levied on vehicles leaving the municipal area, it could not be levied on the same vehicle if it had been once levied on its entry into the municipal area. The Divisional Bench modified the order by adding a direction that the appellant Board should not levy toll on vehicles leaving the municipal limits, which had paid toll on entry into these limits. The Bench observed further "We think, therefore, with respect, that the learned Judge went too far when he said that a toll cannot be 894 levied on a vehicle going out of the limits of the Municipal Board. . " Following its own decision the Divisional Bench dismissed the other special appeals but certified all cases as fit for appeal to this Court and that is how these fifty six appeals are before us. Now it has been ruled on many an occasion in this Court that local authorities like the Board do not act as legislatures when they impose a tax but as the agent of the State Legislatures. Their powers and the extent of these powers must be found in the statute which erects them and endows them with such powers. This proposition is so indisputable that Mr. Setalvad for the Board did not seek to contradict it in any way. We must, therefore, look at the U.P. Municipalities Act first. Section 128(1) of the Act read in 1941 as follows : "128. Taxes which may be imposed : (1)Subject to any general rules or special orders of the Provincial Government in this behalf, the taxes which a board may impose in the whole or any part of a municipality are . . . (vii)a toll on vehicles and other conveyances, animals and laden coolies entering the municipality; . . . (xiv)any other tax which the Provincial Legislature has power to impose in the Province under the Government of India Act, 1935. (The words "Provincial Legislature", "Province" and "the Government of India Act 1935" have now been replaced by the words "State Legislature", "State" and "the Constitution" respectively.) Mr. Setalvad has relied upon both the clauses of section 128(1) quoted above. He has further relied upon the concept of tolls which according to him envisages collection both on entry and departure. He has drawn particular attention to the first and the third notifications in which cl. (xiv) is mentioned as the source of power and has contended that the clause being residuary and enabling can bring the full amplitude of the power of the legislature to levy tolls to the aid of cl. (vii) which is restricted in its operation. We shall now consider these arguments. 895 The scheme of section 128 is that it enumerates by name certain taxes, and confers power on the Boards to levy them and then it enacts cl. (xiv) which is intended to cover other taxes which the Provincial (now the State) Legislature has authority to impose but which are not in the enumeration. In this way the delegated powers of the Boards are equated to the legislative powers of the Legislature of the Province (now the State). Since tolls were first imposed in Hardwar in 1941, we must view cl. (Xiv) in the light of the Government of India Act 1935. The powers of the Provincial Legislature in this context could flow from entries 52 and 53 only of the Provincial Legislative List in the Seventh Schedule of the Constitution Act of 1935. These entries read 52 "Dues on passengers and goods carried on inland waterways;" 53 "Tolls". The corresponding provisions under the Constitution are to be found in entries 56 and 59 of the State List. They read : 56 "Taxes on goods and passengers carried by road or on inland waterways;" 59 "Tolls". It will thus be seen that in 1941 the Provincial Legislature had no power to impose a tax on passengers carried over inland roads and whether or not the levy we are considering could be regarded at all as a tax on passengers, it could not be so regarded in 1941. It could be justified as a toll only under entry No. 53. The difficulty in accepting the first notification in respect of toll on vehicles leaving the municipality which is sought to be supported under cl. (xiv)is this : the Provincial Legislature expressly gave a limited power to levy toll on vehicles entering the municipality. Power which flowed from entry 53, whatever it might have been, was made over to the municipal Board to be exercised in a particular manner and that manner was stated in cl. (vii). If the matter is confirmed to cl. (vii) it is clear that the Board could levy toll only on vehicles entering the municipality and not on vehicles leaving the municipality. The Legislature having expressly so limited the power of the Board, we think that no extension of that power could be contemplated under cl. (xiv) even if it may be right to say that tolls as such can be levied on vehicles leaving the municipality as well as on vehicles entering the municipality a point which we do not decide. The larger power, if any, must be held to be cut down by necessary implication. To permit tolls to be levied on vehicles leaving the municipality would render ineffec 896 tive that part of cl. (vii) which lays emphasis on vehicles entering the municipality. Such an extension of power through cl. (xiv) cannot be supported. When the Board amended the notification in 1955 the position regarding tolls remained unaltered. The power of the Legislature derivable from entry 59 of the Constitution was not available because the tax was not a tax on passengers but on vehicles and the power to levy tolls continued to be res tricted to vehicles entering the municipality. That restriction made it impossible to extend the power regarding tolls in respect of vehicles leaving the municipality. The second notification also drew power from cl. (vii) only and that was patently wrong because that clause limited the power to levy tolls on vehicles entering the municipality. The third notification was irrelevant as it came after the petitions were filed in the High Court and it was also subject to the same restriction. We were referred to dictionaries and to rulings of the English Courts in an attempt to widen the meaning of the word "toll". There were many kinds of tolls and all, of course, must be taken to be comprehended by the entry relating to tolls in the Government of India Act, 1935 or the Constitution. There were for example toll thorough and toll traverse which were the two main subdivisions and there was toll stallage. The first was a levy prescribed by towns for animals or men that went through highways of a town or over ferries, bridges etc. belonging to it. Toll traverse was charged for passing over a private person 's ground. Toll stallage was a charge for occupation of land by pitching stalls in fairs and markets. A toll was thus a tribute or custom paid for a privilege, generally for passage over or for using a bridge, road, ferry, railway and sometimes for occupation of market, port, anchorage etc. The justification for tolls was that the person charged enjoyed a privilege and the amount went towards the construction, improvement or upkeep of these things. Tolls were a common feature of mediaeval Europe and England and toll roads and turnpike roads were so common that it was impossible to go any distance without having to pay some charge. Tolls went out of fashion and were abandoned because they were very unpopular and the charges for maintenance of roads, bridges, ferries etc. were directly levied as taxes. They lingered for sometime as octrois which were picturesquely described as "in gate" tolls being collected at the gates of a town or toll barriers. Even octrois have disappeared in Europe and England but they have continued to persist in India. Whether such tolls were collected only on entry or only on departure or both on entry and departure it is not easy to say. 897 Mr. Setalvad could give no instance of any practice in which they were levied both on entry and exit on the same vehicle. The better view appears to be that they can be collected only once and at the point of entry only though for convenience, they may be collected at any one end as for example toll for crossing a bridge which allows either entry to the bridge or takes the toll after the bridge is traversed. It is taken from those about to enter and from those about to leave but not twice. We need not concern ourselves with this problem which was placed before us by Mr. Setalvad because toll as such can only be collected under the Municipalities Act from vehicles entering the municipal limits. This, in our opinion, exhausts all the power delegated by the Legislature to the municipal Boards and that power cannot be extended either by considerations derived from the nature of tolls or from the residuary cl. (xiv). It is, therefore, sufficient to say that in the Hardwar Municipality the power to collect tolls was limited in 1941 by cl. (vii) of section 128 (1 ) and that power continues to be so limited. In this view of the matter the distinction made by the Divi sional Bench between vehicles which need not pay toll on leaving the municipal limits because they have paid toll on entry and vehicles which have not paid any toll till leaving, may not be quite correct. Mr. Setalvad contended that this distinction must not continue because the amount of toll is dependent on the number of passengers in the vehicle and the vehicle may enter with few passengers and leave with many more. That in our opinion is an irrelevant consideration because the right to levy toll is confined to vehicles entering the municipality and no question of vehicles leaving the municipality can enter the discussion. The Divisional Bench was in error in introducing this consideration and the decision of Mehrotra J. was right in all the circumstances of the case. As, however, the owners of vehicles have not appealed or objected, we will only dismiss the appeals and order no modification in the order of the Divisional Bench. The appellant Board shall bear the cases of this appeal. One hearing fee. Appeals dismissed.

In 1941 the appellant Municipal Board issued a notification under section 128 (1) (xiv) of the U.P. Municipalities Act,, 1916, by which it imposed a toll on motor vehicles and tongas entering or leaving the municipal limits with passengers, at the rate of 2 as per passenger. In 1955, a second notification was issued under section 128(1)(vii) by which the toll was increased from 2 as. to 4 as. The respondents, who were owners of motor vehicles, filed petitions under ArT 226 challenging the toll. Thereafter, a third notification was issued under section 128(1)(xiv) by which the description of the toll was amended. A single judge of the High Court held that the toll could not be levied on vehicles leaving the municipal limits and issued a writ prohibiting the collecting of toll on such Vehicles. On appeal, a Divisional Bench of the High Court held that toll could also be levied on vehicles leaving the municipality, but it could not be levied on the same vehicle if the toll had been levied on its entry into the municipality. In this Court, it was contended by the appellant that, cl. (xiv) being residuary and enabling, brought the full amplitude of the power of the State Legislature or levy toll to the aid of el. (vii), and therefore, according to the concept of a toll it could be levied on vehicles both on entering into and departing from the municipality. HELD:Section 128(1) (vii) which enabled the levy of toll on a vehicle entering the municipality, exhausted all the power delegated by the Legislature to the appellant and that power could not be extended either by the considerations derived from the nature of tolls or from the residuary el. (xiv). Therefore, the toll could be collected only from vehicles entering the municipality. The distinction made by the Divisional Bench between vehicles which pay toll on entering and which do not pay any toll till leaving was irrelevant, because the question of vehicles leaving the municipality could not enter the discussion. [897 B F] Since the tolls were first imposed in 1941, el. (xiv) must be viewed in the light of the Constitution Act of 1935. The scheme of section 128 of the U.P. Act is that it enumerates certain taxes and confers powers on municipalities to levy them and then it enacts el. (xiv) which is intended to cover the taxes not enumerated which the Provincial Legislature had authority to impose. The relevant powers of theprovincial Legislature were found in Entries 52 and 53 of the Provincial Legislative List of the Constitution Act of 1935. Entry 52 could not be relied did not enable the Provincial Legislature to impose taxes carried over inland routes. The power which flowed from made over to the appellant to be exercised in the particular in el. (vii), that is, on vehicles entering the municipality, the tolls to be levied on vehicles leaving the municipality el. (vii) ineffective. [895 A C, E G, H] on because it on passengers Entry 53 was manner stated and to permit would render 892 The power of the State Legislature derivable from Entries 56 and 59 of the State List of the Constitution was not available for the second notification because, while Entry 56 permitted tax on passengers, the toll was not a tax on passengers but on vehicles; and the power to levy tons under Entry 59 continued to be restricted to vehicles entering the municipality. Besides, cl. (vii) under which it was issued limited the power to vehicles entering the municipality. The third notification was irrelevant, as was issued after the petitions were filed. [896 A C]

Nos. 2132 and 2133 of 1970. Appeal by certificate from the judgment and order dated June 22, 1965 of the Calcutta High Court in I.T. Reference No. 36 of 1961. Sukumar Mitra J. L. Hathi, T. A. Ramachandran, K. L. Hathi and P. C. Kapur, for the appellant. V. section Desai, R. N. Sachthey and B. D. Sharma, for the res pondent. The Judgment of the Court was delivered by Grover, J. These appeals have been brought by certificate from a judgment of the Calcutta High Court in two Income tax References. It is most unfortunate that the statement of the case contains certain omissions and errors and does not appear to have been drafted with the usual care with which such statements are drawn. The assesses Guzdar Kajora Coal Mines Ltd. which was incorporated on July 4, 1945 purchased by a deed of convey ance dated April 3, 1966 executed by the liquidators of Guzdar 744 Kajora Colliery Co. Ltd. all the colliery lands, hereditaments and premises, mines, minerals, powers and privileges and all ,other hereditaments together with the machinery thereon belonging to the latter company. It was stipulated in the deed of ,conveyance that the sale was to be effective from July 1, 1945. The consideration for the transfer was Rs. 6 lacs and was allocated as follows : "(a) the value of the machinery plants stores including stock of goods grains coals at the pithead and other movable properties appertaining to the said colliery the property in which is capable of passing by delivery being . Rs. 3,50,000/ . (b) the value of the buildings and structures be longing to the said colliery being Rs. 1,50,000/ . (c) the value of the rest of the properties appertaining, to the said colliery not capable of being passed by delivery being Rs. 1,00,000/ " Soon after the assessee company came into existence it took over the business from the vendor company and claimed depre ciation for the assessment year 1946 47 on the basis of, the figures the comparative statement of which is given in the statement of the case. This statement contains the written down value as per the assessment record of the vendor company the valuation of the assets as per the balance sheet of the vendor company and the valuation by the assessee company as per balance sheet as on December 30, 1945. The Income tax Officer 'allowed depreciation on the basis of those figures. This state of affairs continued till the assessment year 1952 53 when the Income tax Officer again allowed depreciation on the old basis. Before, the Appellate Assistant Commissioner the assessee raised a ground ,that the Income tax Officer should. have worked ,out the depreciation figures on the basis of balance sheet valuation of the assets as per the audited accounts submitted by the assessee and as claimed in the return. With regard to the assessment year 1953 54 the same position was taken up. The assessee appealed to the Income tax Appellate Tribunal, having failed in its contentions before the Appellate Assistant Commissioner. It was contended before the Appellate Tribunal by the assessee that although it had paid a sum of Rs. 6 lacs as consideration for the transfer of the mines the value taken by the department for the purpose of determining depreciation Was much lower. It was pointed out that the purchase had been made after obtaining, the 745 opinion of an expert and the assessee was being subjected to great hardship depreciation being determined only on the old written down value of the assets and not on the basis of the original cost of acquisition. The Appellate Tribunal was of the view that substantial injustice would result to the assessee if the depreciation continued to be allowed on the old basis if the case of the assessee had any substance. It was felt that a proper investigation as to the value paid by the assessee in taking over the old company was necessary. The matter was remanded to the Income tax Officer to hold an inquiry after giving an opportunity to the assessee to place all the available material in support of its claim. With regard to the assessment year 1953 54 also the case was remanded with similar directions. The Income tax Officer made a report on July 6, 1960. According to his findings some of the Directors and Shareholders of the two companies were the same and they were connected in many ways. Furthermore the valuation of the depreciable assets and the consumable stores had been written up whereas the valuation of the non depreciable assets like mines etc. had been written down. As regards the report of the expert A. N. Mitter dated September 1, 1945 he was unable to contact him in spite of making an effort to do so. The report made by the second expert section N. Mullick dated October 19, 1955 and January 30, 1957 together with the clarification made by him on November 20, 1959 were considered by him. He also examined 8. N. Mullick under section 37 of the Indian Income tax Act, 1922, hereinafter called the 'Act '. He came to the conclusion that the vendor had been making good profits but no provision had been made for the goodwill of the company in the business and if such a provision had been made it would have worked out at Rs. 2,56,960/ having regard to the profits made for the preceding four years. He made an allocation of Rs. 6 lacs as follows "(1) Good will Rs. 2,56,960/ (2) Mines and development as per balance sheet of M/s. Guzdar Gajore Colliery Co. Ltd. as at 30 6 45. Rs.2,48,323/ (3) Stores and stock Rs.60,744/ and worked out the value of other depreciable assets at Rs. 33,973/ " Before the Appellate Tribunal the remand report of the Income tax Officer was assailed on behalf of the assessee on various grounds. The Tribunal observed that when the assessments for the years 1946 47 and 1947 48 were made the assessee 13 Ll52SupCI/73 746 chose to give the valuation in its balance sheet on a certain basis which was accepted and no appeal was taken to the higher authorities and although the rule of estoppel could not be applied but "acquiscence of the assessee shows which way the wind blew". When a settled thing was sought to be reopened the Income tax Officer had a right to see whether there was any Justification for the "radical departure from the settled practice". It was held that the Income tax Officer was to go behind the valuation. As regards the goodwill the contention raised on behalf of the assessee was that the same was included in the item of one lakh mentioned in the sale deed. According to the report of Mr. Mullick it was included in the item of Rs. 3,50,006. This is what the Tribunal proceeded to observe: "It seems to us, the simple truth of the matter is that the figure of Rs. 3,50,000/ , Rs. 1,50,000/ and Rs. 1,00,000/ were arbitrarily put. and there was no clear cut or understandable break up of valuation (?) clause 3 of the break up in the deed of 3rd April 1946, which talks of the value of the rest of the properties appertaining to the said colliery not capable of being passed by delivery being valued at Rs. 1,00,000/shows that these properties which had I not been in clause 1 and 2 were comprised in this and it seems too much to say that good will is included in this. it would be more true to say that good will was thought of or conceived of but not provided for in the break up of valuation". The appeals were consequently dismissed. The, assessee moved the Tribunal for referring certain questions of law to the Tribunal. The following question was framed by the Tribunal and referred to the High Court : "Whether on the facts and in the circumstances of the case the Income tax Officer was competent to go beyond the conveyance and fix a valuation of the assets on his own ?" The High Court was of the view that the Income tax Officer was competent to make a fresh computation as to the value of the assets of the assessee if the facts and circumstances of a particular case justified following such a course. Even on the question of valuation of the good will it was observed " Further, it should be remembered that although the Income tax Officer has made the valuation of the goodwill by working out the normally accepted method of taking the profits of the four preceding years, this 747 method of calculation or this normal practice has not been challenged by the assessee. The revenue has. examined all the relevant facts of the case including the reports of Mr. Mitter and Mr. Mullick and the Tribunal has agreed with those findings of facts and we do not think that we can interfere with those findings". The answer to the question referred was given in the affirmative. Learned counsel for the assessee has assailed the decision of the High Court on a number of grounds. It has been urged inter alia that the High Court had not kept in view the general and well established principle that the statement with regard to valuation contained in a formal document should be prima facie accepted as cornet. There can be no justification, it has been pointed out, for any court or Tribunal "to rip up a transaction not impeached as dishonest and not proved to be such, merely because the company may have paid an extravagant price for their property". A great deal of emphasis has been laid on behalf of the assessee on the report submitted by the experts justifying the valuation given in the deed of conveyance. In the absence of fraud, collusion, inflation or false transaction made with an ulterior purpose the Income tax authorities, it is said, were precluded from going behind the agreement of purchase in determining the purchase price fixing their own valuation. The other point canvassed on behalf of the assessee is that good will was not included in the valuation given in the deed of conveyance nor was it ever intended that any good will of the business should be sold by the vendor company. This contention, however, appears to run counter to What was argued before the High Court and the Tribunal nor can it be said to be covered by the question which was referred. On the case as put before the Appellate Tribunal and the. High Court and the question referred with regard to the two assessment years in question we are unable to see any such error or infirmity that would Justify interference by us in these appeals. _ It has been strenuously urged on behalf of the assessee that since the decision of the Tribunal or the High Court could not operate as res judicata for other assessment years with regard to which assessments are still pending, the assessee would be entitled to raise all the points which are relevant with regard to the question of valuation for the purpose of determining depreciation. We have been pressed to indicate broadly the principles for future guidance as it will be open to the assessee to raise all the points relevant for the purpose of determination of the amount of depreciation allowance in the assessments which are still pending and have not been finally disposed of. 748 Section 10(2) (vi) of the Act, to the extent it is material is as follows "(2) Such profits or gains shall be computed after making the following allowances, namely: (vi) in respect of depreciation of such buildings machinery, plant or furniture being the property of the assessee, a sum equivalent, where the assets are ships other than ships ordinarily plying on inland waters, to such percentage on the original cost thereof to the assessce as may in any case or class of cases be prescribed and in any other case, to such percentage on the written down value thereof as may in any case ,or class of cases be prescribed; Provided that (a). . (b). . (c) The aggregate of all allowances in res pect of depreciation made under this clause and clause (vi a) or under any Act repealed hereby, or under the Indian Income tax Act, 1886 (II of 1886), shall, in no case exceed the original cost to the assessee of the buildings, machinery, plant or furniture, as the case may be;" Keeping in view sub section (5) of section 10 of the Act, the original actual cost to the assessee of the asset with regard to which depreciation allowance is claimed has to be ascertained for the purpose inter alia of finding out the written down value in case of assets other than ocean going ships. For the purpose of getting the benefit of clause (c) of the proviso to sub section (2)(vi) also the original cost has also to be ascertained. The Privy Council laid down in Commissioner of Income tax, Madras vs The Buckingham and Carnatic Co., Ltd. Madras(1), that the word "assessee" in section 10(2)(vi) of the Act refers to the person who owns the assets and who is being assessed and depreciation allowance has to be based on the original cost of such property to such person. This principle was laid down in a case where the assessee had acquired the business of another assessee and it was emphasised that the original cost to be consi dered was the original cost to the person who was being actually assessed and not the original cost of those assets to the previous (1) 749 owner of the business. Reference was made to the above decision of the Privy Council in the judgment of this Court in Jogta Coal Co. Ltd. vs Commissioner of Income tax West Bengal(1) and it was observed "We do not think that there is any doubt on the wording of the section or on the interpretation that has been put upon those words that the cost to be calculated for the purpose of depreciation allowance is the cost to the assessee and not to the person who makes the sale. . Now the original cost of a particular asset is a question of fact which has to be determined on the evidence or the material produced before or available to the Income tax authorities. Any document or formal deed mentioning the consideration or the cost paid for the purchase of an asset by an assessee would be a piece if evidence and prima facie the statements or figures given therein would show how much the cost of the asset to the assessee is. But if circumstances exist showing that a fictitious price has been put on the asset or there is fraud or collusion between the vendor and the vendee and there has been inflation or deflation of value for ulterior purposes it is open to the Income tax authorities to refuse to accept the price mentioned in the deed or alleged by the assessee and to ascertain what the actual cost was: See Pindi Kashmir Transport Co. Ltd. vs Commissioner of Income tax Lahore (2 ) and Kalooram Govindram vs Commissioner of Income tax Madhya Pradesh, Nagpur and Bhandara(3). In this view ' of the matter it is open to the Income tax authorities to determine and to the assessee to show. whether the good will of the business is or is not included in the consideration or the price paid for the acquisition of the asset. In other words even if it is not expressly mentioned that goodwill has been sold it can be shown and ascertained by evidence whether the same has been purchased or not by the assessee. The expression "good will" has been considered and explained by this Court in section C. Cambatta & Co. P. Ltd. vs Commissioner Excess Profits Tax, Bombay(4) and nothing more need be said about it. The principles stated by us are by no means exhaustive and are mainly illustrative. Keeping in view the facts of the present case we may make it clear that if circumstances exist for going behind the valuation as 'also the allocation given in the deed of conveyance it was and is open to the Income tax authorities to determine the valuation as well as the allocation between depreciable and non depreciable assets. (1) (2) (3) (4) 750 The present appeals, however, must fail for the reasons stated earlier and are hereby dismissed. We make no order as to costs in this Court. V.P.S. Appeal dismissed.

The appellant purchased on July 1, 1945, the property of a colliery company and the consideration of Rs. 6 lacs was allocated in the sale deed in a certain manner among the various items purchased. From the assessment year 1946 47 to the assessment year 1952 53, the appellant claimed depreciation on the basis of the written down value of the assets as per the. assessment record of the vendor company, and the Income tax officer allowed depreciation on that basis. For the assessment year 1952 53, however, the appellant contended that the depreciation should have been worked out on the basis of balance sheet valuation of the assets as per the audited accounts submitted by the appellant and as claimed in their return. The Appellate Assistant Commissioner held against the appellant. On appeal, the appellate Tribunal remanded the matter to the Income tax Officer, and the income tax Officer, after inquiry, held that some of the directors of the vendor company and the appellant were the same, that the valuation of the depreciable assets had been written up while that of the non depreciable assets was written down and that no provision was made for the goodwill of the vendor company even though it was making good profits. He made the allocation of Rs. 6 lacs in a different manner, and included the goodwill of the vendor also as having been sold to the appellant, and made provision for it from out of the Rs. 6 lacs. The Tribunal accepted the report of the Income tax Officer and held that when the settled practice was sought to be reopened by the appellant the Income tax Officer had a right to see whether there was any justification ,for the departure, that the break up of the valuation in the sale deed was in fact arbitrary and that it was unlikely that the goodwill was provided for in the break up of the valuation in the sale deed. On reference, the High Court also held that the Income tax Officer was competent to go beyond the conveyance and refix the valuation and that he bad correctly worked out the valuation of the goodwill after examining all the relevant facts and reports of experts and that the method adopted was not challenged by the appellant. Dismissing the appeal to this Court, HELD : In the case of an asset, other than ocean going ships, with regard to which depreciation allowance is claimed under 'section 10(2)(vi) of the Income tax Act, 1922, in view of section 10(5), the original actual cost to an assessee of the asset has to be ascertained for the purpose of finding out its written down value. For the purpose of getting the benefit of cl. (c) of the proviso to section 10(2) (vi) also the original cost to the assessee,that is theperson who owns the asset and who is being assessed,has to be ascertained. [748F H] 743 The original cost of a particular asset is a question of fact which has to to determined on the evidence or on the material produced before or available to the Income tax authorities. Any document or formal deed mentioning the consideration or the cost paid for the purchase of an asset by an assessee would be a piece of evidence and prima facie the statements or figures given therein show how much the cost of the asset to the assessee is. But if circumstances exist showing that a fictitious price has been put on the asset or there is fraud or collusion between the vendor and the vendee and there has been inflation or deflation of value for ulterior purposes it is open to the Income tax authorities to refuse to accept the price mentioned in the deed or alleged by the assessee and to ascertain what the actual original cost was. [749C E] Even if it is not expressly mentioned that goodwill has been sold it can be shown and ascertained by evidence whether it has been purchased or not by the assessee. [749F G] Commissioner of income Tax, Madras vs The Buckingham & Carnatic Co. Ltd. Madras, [935] I.T.R. 384; Jogta Coal Co. Ltd. V. Commissioner of Income Tax, West Bengal 36 I.T.R. 521; Pindi Kashmir Transport Co. Ltd. vs Commissioner of Income Tax, Lahore ; and Kalooram Govindranm vs Commissioner of Income Tax, Madhya Pradesh, Nagpur and Bhandara, , referred to. tax Therefore, in the circumstances of this case it was open to the Incomeauthorities to go behind the valuation as also the allocation given in the deed of conveyance and to determine afresh the valuation as well as the allocation between the depreciable and non depreciable assets. [749G H]

Appeal No. 782 of 1991. From the Judgment and Order dated 10.7.1990 of the Bombay 484 High Court in Appeal No. 423 of 1987. Ashok H. Desai, Vinay Tulzapurkar, Raghu Kothare and Rajiv Dutta for the Appeallant. Soli J. Sorabjee, D.R. Poddar, Ms. Purnima, Atul Sharma, A.V.Palli, E.C.Agrawala and V.B.Joshi for the Respondents. The Judgments of the Court was delivered by OJHA, J. Special leave granted. This appeal by special leave has been preferred against the judgment dated 10th July, 1990 of the Bombay High Court in Appeal No. 423 of 1987. Respondent No. I is a private limited company whereas Respondents 2 to 4 are its Directors. Respondent No. 1, for setting up a factory, sought financial assistance from the appellant and the appellant sanctioned a loan of Rupees thirty lakhs. In order to secure the loan Respondent No. 1 executed a deed of mortgage of certain properties on 29th June, 1979 and Respondents 2 to 4 on the same date by executing a deed of guarantee stood surety for repayment of the said loan. It was a case of personal guarantee only as no property was given in security. For the sake of brevity the appellant, Respondent No. I and Respondents 2 to 4 shall hereinafter be referred to as the Corporation, the Company and the sureties respectively. The amount of loan was to be advanced in phases and after the Corporation had advanced a part of the total sanctioned loan, the Company did not want to avail of the balance of the amount as it seems to have lost interest in setting up the factory for reasons with which we are not concerned. The Corporation consequently called upon the Company to repay the amount already advanced together with interest and on its failure to do so took possession under Section 29 of the (for short the Act) over the industrial concern, a term defined under Section 2(c) of the Act and took steps to realise its outstanding dues by transfer of property in the manner provided therein. However, notwithstanding advertisement for sale thereof having been made on several occasions the Corporation could not get an offer of more than about Rupees five lakhs. Having failed to recover the amount due to it in the manner stated above, the Corporation proceeded to recover the same from the sureties whose liability was coextensive and for this purpose it filed a petition in the High Court under Sections 31 and 32 of the Act arraying 485 the Company as Respondent No. I and the sureties as Resondents 2 to 4, with the prayer that "the respondents be jointly and severally ordered and decreed to pay the petitioners the sum of Rs 15,87,391.20 as per particulars hereto annexed and marked exhibit H. with further interest at the rates of 14 1/2% per annum till payment and may further "be ordered to pay to the petitioners costs of the petition". Thus, according to the relief claimed in the petition the liability of the respondents with regard to the amount payable to the Corporation on the date of making of the petition was for a sum which was more than Rupees fifty thousand which, as will be presently shown, represents maximum amount over which the Bombay City Civil Court has pecuniary jurisdiction. The respondents contested the petition and raised three pleas in defence: (1) A petition under Sections 31 and 32 of the Act could be filed only in the Bombay City Civil Court and the High Court had no jurisdiction to entertain it, (2) the relief claimed in the petition could not be granted under Sections 31 and 32 of the Act inasmuch as these sections did not contemplate passing of a money decree not only against the principal debtor but also against the sureties; and (3) the provisions in the Act relating to enforcement of the liability of a surety were ultra vires Article 14 of the Constitution. The learned Single Judge of the High Court before whom the petition came up for hearing did not, in view of his finding on the first two pleas, entertain any argument on the last plea nor has the said plea been raised before us and as such the same does not need to be gone into. As regards the second plea it was conceded before the learned Single Judge on behalf of the Corporation by its learned counsel that no such money decree could be passed against the Company as was claimed in the petition. It was, however, asserted that such a decree could be passed as against the sureties. In this view of the matter the petition was treated and decided as being confined against the sureties only. In regard to the plea of jurisdiction the learned Single Judge took the view that since an appeal was pending before a Division Bench of the High Court against the judgment of a Single Judge in Misc Petition No. 357 of 1985, Maharashtra State Financial Corporation vs Hindtex Engineers Pvt. Ltd., decided on 3rd December, 1986 (since reported in , in which it had been held that such a petition was maintainable in the High Court, he would proceed to decide the petition on merits on the assumption that he had jurisdiction to entertain it. On merits, he took the view that no money decree could be passed in a petition under Sections 31 and 32 of the Act 486 even against the sureties and since in the instant case sureties had admittedly not given any security except their personal guarantee the said surety could be enforced only in the ordinary course and not under the special machinery provided under the Act. The petition was accordingly dismissed. Aggrieved by the judgment of the learned Single Judge the Corporation preferred an appeal before a Division Bench which has been dismissed by the judgment under appeal. The Division Bench not only upheld the finding of the Single Judge on merits but also over ruled the decision reported in and held that the High Court had no jurisdiction to entertain a petition under Sections 31 and 32 of the Act. Shri Ashok Desai, Senior Advocate appearing for the Appellant Corporation has assailed the findings of the High Court in the judgment under appeal both on merits and on the plea about jurisdiction. Shri Soli J. Sorabjee, Senior Advocate appearing for the respondents has in reply asserted that the findings of the High Court on both the pleas were unassailable. An application for intervention being I.A. No. 3 of 1990 has been made on behalf of Nav Bharat Udyog, a partnernship firm having its office at Mehta Building, 2nd Floor, 47, Nagindas Marg, Bombay, confined to the plea with regard to jurisdiction and it has been urged by learned counsel for the intervenor also, in line with the submission made by learned counsel for the respondents, that it is only the Bombay City Civil Court and not the High Court which has jurisdiction to entertain a petition under sections 31 and 32 of the Act. For the sake of facility in considering the respective submissions made by learned counsel for the parties we find it useful to refer to the statutory provisions relevant in this behalf. Section 2 of the Bombay City Civil Court Act, 1948 contains definitions and inter alia provides: "2. In this Act unless there is anything repugnant in the subject or context, (1) "City Court" means the Court established under Section 3; (2) "High Court" means the High Court of Judicature at Bombay" 487 Section 3 in its turn provides: "3. The State Government may by notification in the Official Gazette, establish for the Greater Bombay a court, to be called the Bombay city Civil Court. Notwithstanding anything contained in any law, such court shall have jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding fifty thousand rupees in value, and arising within the Greater Bombay, except suits or proceedings which are cognizable (a) by the High Court as a Court of Admiralty or Vice Admiralty or as a Colonial Court of Admiralty, or as a Court having testamentary, intestate or matrimonial jurisdiction, or (b) by the High Court for the relief of insolvent debtors, or (c) by the High Court under any special law other than the Letters Patent; or (d) by the Small Cause Court: Provided that the State Government may, from time to time, after consultation with the High Court, by a like notification extend the jurisdiction of the City Court to any suits or proceedings which are cognizable by the High Court as a court having testamentary or intestate jurisdiction or for the relief of insolvent debtor. " The other Section which is relevant is Section 12 which reads: "12. Notwithstanding anything contained in any law, the High Court shall not have jurisdiction to try suits and proceedings cognizable by the City Court; Provided that the High Court may, for any special reason, and at any stage remove for trial by itself any suit or proceeding from the City Court. " As regards Sections 31 and 32 of the , since the submissions made by learned counsel for the 488 parties referred to most of the provisions contained therein these two Sections may be quoted in their entirety. They read: "31. (1) Where an industrial concern, in breach of any agreement makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation or where the Financial Corporation requires an industrial concern to make immediate repayment of any loan or advance under section 30 and the industrial concern fails to make such repayment, then, without prejudice to the provisions of section 29 of this Act and of section 69 of the any officer of the Financial Corporation, generally or specifically authorised by the Board in this behalf, may apply to the district judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs, namely: (a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security for the loan or advance; or (aa) for enforcing the liability of any surety; or (b) for transferring the management of the industrial concern to the Financial Corporation; or (c) for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended. (2) An application under sub section (1) shall state the nature and extent of the liability of the industrial concern to the Financial Corporation, the ground on which it is made and such other particulars as may be prescribed. (1) When the application is for the reliefs mentioned in clauses (a) and (c) of sub section (1) of section 31, the 489 district judge shall pass an ad interim order attaching the security, or so much of the property of the industrial concern as would on being sold realise in his estimate an amount equivalent in value to the outstanding liability of the industrial concern to the Financial Corporation, together with the costs of the proceedings taken under section 31, with or without an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment. (IA) When the application is for the relief mentioned in clause (aa) of sub section (1) of section 31, the district judge shall issue a notice calling upon the surety to show cause on a date to be specified in the notice why his liability should not be enforced. (2) When the application is for the relief mentioned in clause (b) of sub section (1) of section 31, the district judge shall grant an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment and issue a notice calling upon the industrial concern to show cause, on a date to be specified in the notice, why the management of the industrial concern should not be transferred to the Financial Corporation. (3) Before passing any order under sub section I) or sub section (2) or issuing a notice under sub section (IA), the district judge may, if he thinks fit, examine the officer making the application. (4) At the same time as he passes an order under sub section (1), the district judge shall issue to the industrial concern or to the owner of the security attached a notice accompanied by copies of the order, the application and the evidence, if any, recorded by him calling upon it or him to show cause on a date to be specified in the notice why the ad interim order of attachment should not be made absolute or the injunction confirmed. (4A) If no cause is shown on or before the date specified in the notice under sub section (IA), the district judge shall forthwith order the enforcement of the liability of the surety. 490 (5) If no cause is shown on or before the date specified in the notice under sub sections (2) and (4), the district judge shall forthwith make the ad interim order absolute and direct the sale of the attached property or transfer the management of the industrial concern to the Financial Corporation or confirm the injunction. (6) If cause is shown, the district judge shall proceed to investigate the claim of the Financial Corporation in accordance with the provisions contained in the Code of Civil Procedure, 1908, in so far as such provisions may be applied thereto. (7) After making an investigation under sub section (6), the district judge may (a) confirm the order of attachment and direct the sale of the attached property; (b) vary the order of attachment so as to release a portion of the property from attachment and direct the sale of the remainder of the attached property; (c) release the property from attachment; (d) confirm or dissolve the injunction; (da) direct the enforcement of the liability of the surety or reject the claim made in this behalf, or (e) transfer the management of the industrial concern to the Financial Corporation or reject the claim made in this behalf; Provided that when making an order under clause (c) or making an order rejecting the claim to enforce the liability of the surety under clause (da) or making an order rejecting the claim to transfer the management of the industrial concern to the Financial Corporation under clause (e), the district judge may make such further orders as he thinks necessary to protect the interests of the Financial Corporation and may apportion the costs of the proceedings in such manner as he thinks fit: 491 Provided further that unless the Financial Corporation intimates to the district judge that it will not appeal against any order releasing any property from attachment or rejecting the claim to enforce the liability of the surety or rejecting the claim to transfer the industrial concern to the Financial Corporation, such order shall not be given effect to, until the expiry of the period fixed under sub section (9) within which an appeal may be preferred or, if an appeal is preferred, unless the High Court otherwise directs until the appeal is disposed of. (8) An order of attachment or sale of property under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure, 1908 for the attachment or sale of property in execution of a decree as if the Financial Corporation were the decree holder. (8A) An order under this section transferring the management of an industrial concern to the Financial Corporation shall be carried into effect, as far as may be practicable, in the manner provided in the Code of Civil Procedure, 1908, for the possession of immovable property or the delivery of immovable property in execution of a decree, as if the Financial Corporation were the decree holder. (9) Any party aggrieved by an order under sub section (4A), sub section (5) or sub section (7) may, within thirty days from, the date of the order, appeal to the High Court, and upon such appeal the High Court may, after hearing the parties, pass such orders thereon as it thinks proper. (10) Where proceedings for liquidation in respect of an industrial concern have commenced before an application is made under sub section (1) of section 31, nothing in this section shall be construed as giving to the Financial Corporation any preference over the other creditors of the industrial concern not conferred on it by any other law. (11) The functions of a district judge under this section shall be exercisable 492 (a) in a presidency town, where there is a City Civil Court having jurisdiction, by a judge of that court and in the absence of such court, by the High Court; and b) elsewhere, also by an additional district judge or by any judge of the principal court of civil jurisdiction. (12) For the removal of doubts it is hereby declared that any court competent to grant an ad interim injunction under this section shall also have the power to appoint a Receiver and to exercise all the court powers incidental thereto. At this place it may be pointed out that with regard to the enforcement of the liability of a surety it was held by a Full Bench of the Allahabad High Court in Munnalal Gupta vs Uttar Pradesh Financial Corporation and Another, A.I.R. 1975 Allahabad 416 that from the scheme of the Act it is clear that the speedy remedy contained in Section 31 is available not against the surety but against the borrower only. In arriving at this conclusion reference was made inter alia to the reliefs (a), (b) and (c) contained in sub section (1) of Section 31 and to sub section (4) of Section 32 of the Act as it then stood. It was pointed out that this sub section (4) contemplated a notice to the borrower industrial concern after an interim order had been passed to show cause why the ad interim injunction should not be made absolute but did not contemplate a notice to the surety and that it would be unthinkable that the Legislature intended that the property of the surety may be attached and put to sale without even a notice to him. It appears that in order to meet the difficulty in enforcing the liability of a surety as pointed out in the case of Munnalal Gupta (supra) Parliament found it necessary to make specific provisions in this behalf and passed the State Financial Corporations (Amendment) Act, 1985 (hereinafter referred to as Act 43 of 1985). Among other amendments made by Act 43 of 1985 were the following: (i) In sub section (1) of Section 31 clause (aa) was inserted. (ii) In Section 32 a new sub section (lA) and in sub section (3) thereof the words "or issuing a notice under sub section (lA)" were inserted. 493 (iii) Sub section (4) of Section 32 was substituted with an inclusion of sub section (4A). (iv) The word "or" occurring at the end of clause (d) of sub section (7) was omitted and a new clause (da) was inserted. (v) In the first proviso after sub section (7) the words "or making an order rejecting the claim to enforce the liability of the surety under clause (da) or making an order rejecting the claim to transfer the management of the industrial concern to the Financial Corporation under clause (e)" and in the second provis1on the words "or rejecting the claim to enforce the liability of the surety or rejecting the claim to transfer the industrial concern to the Financial Corporation" were inserted and in sub section (9) the words "under sub section (4A), sub section (5)" were substituted for "under sub section (5)" By the same Act 43 of 1985 a new Section 32G was inserted which reads: "32G. Where any amount is due to the Financial Corporation in respect of any accommodation granted by it to any industrial concern, the Financial Corporation or any person authorised by it in writing in this behalf, may, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the amount due to it, and if the State Government or such authority, as that Government may specify in this behalf, is satisfied, after following such procedure as may be prescribed, that any amount is so due, it may 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. " Having extracted the relevant statutory provisions we now take up the question of jurisdiction. Sub section (1) of Section 31 of the Act contemplates making of the petition thereunder "to the district judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business". A petition so made is to be decided in the manner provided by Section 32 of the Act, subsection (11) whereof inter alia provides that the functions of a district judge under the said Section shall be exercisable, in a Presidency town, where there is a City Civil Court having jurisdiction, by a judge 494 of the court and in the absence of such court, by the High Court. It has been urged by learned counsel for the appellant that in a case to which the provisions contained in sub section (1) of Section 32 of the Act and of the Bombay City Civil Court apply, if the extent of the liability sought to be enforced against a surety is upto Rupees fifty thousand a petition under Section 31 read with Section 32 of the Act would lie before the Bombay City Civil Court and if the liability is more than the said amount it would lie before the High Court. This, according to him is apparent from the use of the words "having jurisdiction" in sub section (11) of Section 32 of the Act and the extent of the pecuniary jurisdiction of the Bombay City Civil Court as contained in Section 3 of the Bombay City Civil Court Act. According to him since in the instant case the liability sought to be enforced against the sureties was for a sum of more than Rupees fifty thousand the petition made by the appellant was maintainable in the High Court alone and not in the Bombay City Civil Court. On the other hand, it has been urged on behalf of the respondents and the intervenor by their learned counsel that word "jurisdiction" used in sub section (1) of Section 31 and sub section (11) of Section 32 of the Act connotes territorial jurisdiction alone and that the concept of pecuniary jurisdiction is beyond the scope of Sections 31 and 32 in view of the decision of this Court in Gujarat State Financial Corporation vs Natson Manufacturing Co. Pvt. Ltd. and Ors., relied on in M/s. Everest Industrial Corporation and Ors. vs Gujarat State Financial Corporation, [ ; and Maganlal vs M/s. Jaiswal Industries, Neemach and Ors., [ ; which lays down that an application under Section 31(1) of the Act is neither a plaint as contemplated by Article I of Schedule I nor an application in the nature of a plaint as contemplated by Article 7 of the Court Fees Act, 1870, that the special procedure contained in Section 3 1(1) was not even something akin to a suit of a mortgagee to recover mortgage money by sale of mortgaged property, that even if the Corporation applicant so chooses it cannot pray for a preliminary decree for accounts or final decree for payment of money nor can it seek any personal liability, that the Corporation cannot pray for a decree of its outstanding dues, that the reliefs contemplated by Section 31(1) on being granted do not result in a money decree or decree for recovery of outstanding loans or advance, that a substantive relief in an application under Section 31(1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree and that such relief cannot be valued in terms of the monetary gain or prevention of monetary loss. 495 Having given our anxious consideration to the question we are inclined to agree with the submission made by learned counsel for the appellant. The three decisions of this Court referred to above and relied on by learned counsel for the respondents were not cases relating to the enforcement of a liability of a surety made possible by the amendments by Act 43 of 1985. In our opinion, what has been laid down therein does not in any way militate against ascertaining in monetary terms value or the extent of the liability of a surety, which is sought to be enforced and there is intrinsic evidence in Sections 31 and 32 themselves to support this view. Sub section (2) of Section 31 makes it obligatory to state the "extent of the liability (1) of Section 32 refers to "an amount equivalent in value to the outstanding liability". Sub section (lA) of Section 32 contemplates notice to the surety to show cause "why his liability" should not be enforced. Sub section (6) of Section 32 contemplates investigation and determination of "the claim" of the Financial Corporation which is to be recovered. If the application under Section 3 1(1) is made before the district judge, there is no difficulty because he has unlimited pecuniary jurisdiction. The difficulty arises, as in the instant case, when such application is to be made either before the city Civil Court or the High Court as contemplated by sub section (11) of Section 32. In our opinion, the extent of the liability stated in the application as contemplated by sub section (2) of Section 31 of the Act would represent the value of the claim of the Corporation and if such value is upto Rupees fifty thousand the application would lie in the City Civil Court and if it is more than that amount it would lie in the High Court. This interpretation would give meaning and relevance to the words "having jurisdiction" used in sub section (11) of Section 32. A different interpretation would render superfluous or otiose not only the words "having jurisdiction" but also the words"and in the absence of such court, by the High Court" occurring in the said sub section (11) inasmuch as in a Presidency town, in terms of territorial jurisdiction, the jurisdiction of the City Civil Court and of the High Court is co terminus. That it is so is clear from Section 3 of the Bombay city Civil Court Act and the definition of the term "Presidency town" contained in Section 3(44) of the according to which "Presidency town" shall mean the local limits for the time being of the ordinary original civil jurisdiction of the High Court of Judicature at Calcutta, Madras or Bombay, as the case may be. It is a settled rule of interpretation of statutes that if the language and words used are plain and unambiguous, full effect must be given to them as they stand and in the garb of finding out the intention of the 496 Legislature no words should be added thereto or subtracted there from. Likewise, it is again a settled rule of interpretation that statutory provisions should be construed in a manner which subserves the purpose of the enactment and does not defeat it and that no part thereof is rendered surplus or otiose. The aforesaid interpretation of sub section (II) of Section 32 of the Act is not only in conformity with the rule of interpretation referred to above, it also does not militate in any way with the concept of an application under Section 31(1) of the Act, not being a plaint in a suit for recovery of money. Reliance in this behalf has been placed by learned counsel for the intervenor on a decision of the Delhi High Court in Parkash Playing Cards Manufacturing Company vs Delhi Financial Corporation, In our opinion, however, the said decision is of little assistance in resolving the plea of jurisdiction raised in the instant case, namely, whether in a Presidency town an application under Section 31(1) of the Act is to be made before a City Civil Court or High Court. In the case of Parkash Cards Manufacturing Company (supra), the provision which came up for consideration in the forefront was Section 5 of the and the question of jurisdiction was largely considered on that basis. Sub section (11) of Section 32 with pointed reference to the jurisdiction exercisable by a City Civil Court in a Presidency town and the High Court did not fall for consideration in that case. The case which throws some light on the point is a decision of the Calcutta Court Court in West Bengal Financial Corporation vs Gluco Series Private Limited, where it was held: "Section 32 sub section (1 1) does not say that the City Civil Court will have exclusive jurisdiction but states "in the Presidency Town where there is City Civil Court having jurisdiction, by a Judge of that Court and in the absence of such Court by the High Court. " The words "in the absence of such Court" mean in the absence of such Court having jurisdiction in the matter. The City Civil Court has no jurisdiction to entertain and try suits and proceedings of Civil nature exceeding Rs.50,000 in value. Here the value of the claims in the proceedings exceeds much more than Rs.50,000 and, therefore, under Section 32, sub section (11) this proceeding has been duly instituted in the High Court. 497 In the instant case the extent of the liability of the surety being more than Rupees fifty thousand, the application could only have been filed and was rightly filed in the High Court and the finding in the judgment under appeal to the contrary for holding that the High Court had no jurisdiction to entertain the application cannot be sustained. Now we come to the second plea raised on behalf of the respondents, namely, that the relief claimed in the petition could not be granted under Sections 31 and 32 of the Act inasmuch as these sections did not contemplate passing of a money decree not only against the principal debtor but also against the sureties. In so far as the special machinery provided under Sections 31 and 32 of the Act being applied to a surety who has given some property in security, it has been pointed out by learned counsel for the appellant that even before the amendment introduced in these sections by Act 43 of 1985 a Division Bench of the Kerala High Court had, in Thressiamma Varghese vs K. section F. Corporation, AIR 1986 Kerala 222, taken the view that the provisions contained in these sections would be applicable. According to teamed counsel, in any view of the matter, after the amendment of these sections by Act 43 of 1985 introducing specific provisions for enforcement of the liability of a surety, the matter is now beyond doubt that the procedure contained in these sections shall be applicable for the enforcement of the liability of such surety who has given some property in security. According to him even in the judgment under appeal the High Court has accepted this proposition and has expressed its reservation with regard to enforcement of the liability of a surety who has not given any property in security and has given only a personal guarantee. Reference in this connection has been made to the following observations in the judgment under appeal: "Even if the Corporation s now entitled to obtain relief also against any property which might have been given a security by the surety, the further question would remain whether the Corporation is entitled under Section 31(l)(aa) to obtain any relief personally against such a surety. " Indeed, the submission even before us which was made by learned counsel for the appellant has been that the only effect of the 1985 amendment is that it enables proceedings to be taken for the realisation of the security given by the surety in respect of his own 498 liability whereas such proceedings could not be taken before the amendment. He, however, asserted that the Act even after the amendment does not enable a monetary decree to be passed against the surety any more than a decree can be passed against the principal debtor. According to him, in this view of the matter, in the instant case, the liability of the sureties could not be enforced under Sections 31 and 32 of the Act in as much as they had given only personal guarantee and had not given any property in security. In the background of the rules of interpretation of statutes adverted to earlier and the specific provisions with regard to enforcement of the liability of a surety introduced in Sections 31 and 32 of the Act by Act 43 of 1985 we find it difficult to agree with the submission made by learned counsel for the respondents. It is true, as has been indicated above, that this Court has in the case of Gujarat State Financial Corporation (supra) taken the view that Sections 31 and 32 of the Act do not contemplate the passing of a money decree and the principle laid down in that case has been relied on in two later decisions referred to above. The said principle would, in our opinion, not come in the way of enforcing the liability under Sections 31 and 32 of the Act even against the surety who has given only a personal guarantee. As indicated earlier those were not cases dealing with the question of enforcement of the liability of such a surety and naturally, therefore, the provisions in this behalf specifically introduced in Sections 31 and 32 of the Act by Act 43 of 1985 were not considered in those cases. However, in this connection what is of significance is that clause (aa) inserted in sub section (1) of Section 31 of the Act by Act 43 of 1985 uses the words "any surety". On its plain grammatical meaning there can be no doubt that the term "any surety" will include not only a surety who has given some security but also one who has given only a personal guarantee. If the submission made by learned counsel for the respondents is accepted the words "who has given property by way of security" will have to be added after the words "any surety". Such a course not only militates against the normal rule of interpretation but also tends to defeat the very purpose of the amendment introduced by Act 43 of 1985 enabling the Financial Corporation to make an application under Section 31(1) of the Act "for enforcing the liability of any surety", inasmuch as it would have the effect of restricting or qualifying the amplitude of the term "any surety" which the Legislature has in its wisdom thought it fit to use in its widest sense. The procedure, in our opinion, for enforcing the liability of a surety who has given only a personal guarantee would, after the amendment introduced by Act 43 of 1985, be that an application under Section 31(1) shall lie for enforc 499 ing the liability of such surety as contemplated by clause (aa) of the said section. On such an application being made notice shall be issued to the surety as contemplated by sub section (1A) of Section 32. This may, in view of sub section (3), be done after examining the officer making the application. If no cause is shown in pursuance of the notice served on him by the surety sub section (4A) of Section 32 contemplates passing of an order forthwith for the enforcement of the liability of surety. If, on the other hand, cause is shown the claim of the Financial Corporation shall be determined as contemplated by sub section (6) of Section 32 and thereafter a direction as contemplated by clause (da) of sub section (7) shall be issued for the enforcement of the liability of the surety or rejecting the claim made in this behalf. In the case of Maganlal (supra) which related to the relief contemplated by clause (a) of Section 31(1) of the Act it was pointed out that the purpose of enacting Sections 31 and 32 of the Act was apparently to provide for a speedy remedy for recovery of the dues of the Financial Corporation and that these sections had the effect of cutting across and dispensing with the provisions of the Code of Civil Procedure, 1908 (hereinafter referred to as the Code) from the stage of filing a suit to the stage of obtaining a decree in execution whereof such properties as are referred to in clause (a) of sub section (1) of Section 31 could be sold. In our opinion, on the same principle, even in a case where the relief claimed in the application under Section 31(1) of the Act is for enforcing the liability of a surety who has given only a personal guarantee, sub section (4A) of Section 32 where no cause is shown and clause (da) of sub section (7) where cause is shown contemplate cutting across and dispensing with the provisions of the Code from the stage of filing a suit to the stage of obtaining a decree against the surety, the passing of an order which can straightaway be executed as if it were a decree against the surety which may be passed in the event of a suit being filed. As seen above, sub section (2) of Section 31 enjoins upon the Financial Corporation to state the "extent of the liability of the industrial concern" in the application to be made under sub section (1) thereof. Since the liability of the surety is co extensive the same shall, in the absence of anything contrary in the surety bond, be the liability of the surety also. In a case where there is any provision confining the liability of the surety, the extent of the liability to be shown in the application shall be such as is in conformity with the surety bond. When no cause is shown by the surety on being served with the show cause notice the order which will be passed under sub section (4A) of Section 32 would be for the enforcement against the surety of that liability which is stated in the application. Where, however, cause has been shown by the surety the extent of his liability shall be determined 500 as contemplated in sub section (6) of Section 32 and it is the liability so determined which shall be enforced under clause (da) of sub section (7) of Section 32. It does not require any elucidation that the extent of the liability referred to above will necessarily have to be in the very nature of things in terms of monetary value even though it may not be possible to call it a decree stricto sensu defined in Section 2(2) of the Code for recovery of money. Here, Section 46B of the Act may be usefully extracted: "46B. The provision of this Act and of any rule or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern. On its plain language, in the absence of anything inconsistent in the Act, the provisions of the Code shall obviously be applicable for the enforcement of the liability of the surety directed to be enforced as aforesaid in the same manner as a decree is enforced in a suit instituted in this behalf. It is true, as has been emphasised by learned counsel for the respondents, that there is no provision corresponding to sub section (8) of Section 32 for the enforcement of the liability of a surety who has given only personal guarantee but, in our opinion, keeping in view the amendments introduced by Act 43 of 1985, it is not very significant. To us it appears that in view of Section 46B of the Act and for the reasons to be stated shortly even if Section 46B was not there, in the absence of any provision to the contrary in the Act, that order also, which was passed in a case where relief contemplated by clause (a) of Section 31(1) of the Act was claimed, could have been enforced in the manner provided in the Code. The purpose of yet inserting sub section (8) in Section 32 seems to be that it was not intended to apply the provisions of execution of a decree for attachment or sale of property as contained in the Code in its entirety and to achieve this purpose the words "as far as practicable" were used in that sub section. To us it appears that in the absence of any provision such as sub section (8) of Section 32 applying the manner provided in the Code for the execution of a decree against a surety only "as far as practicable" the entire provision contained in this behalf in the Code 501 shall be applicable. this would be so in view of the use of the expression "any other law for the time being applicable to an industrial concern". That the Code is applicable to an industrial concern also is not in dispute and cannot be doubted. We may now state our reasons for holding that even if Section 46B of the Act was not there the provisions of the Code for the execution of a decree against a surety who had given only personal guarantee would, in the absence of any provision to the contrary in the Act, be applicable. In view of the decision of this Court in The Central Taikies Ltd. Kanpur vs Dwarka Prasad, ; , where it was held that a persona designata is a person selected as an individual in his private capacity, and not in his capacity as filling a particular character or office, since the term used in Section 31(1) of the Act is "district judge" it cannot be doubted that the district judge is not a persona designata but a court of ordinary civil jurisdiction while exercising jurisdiction under Sections 31 and 32 of the Act. In National Sewing Thread Co. Ltd. vs James Chadwick & Bros. Ltd., ; while repelling the objection that an appeal under the Letters Patent against the judgment of a Single Judge passed in an appeal against the decision of the Registrar under Section 76(1) of the was not maintainable it was held at pages 1033 34 of the Report: "Obviously after the appeal had reached the High Court it has to be determined according to the rules of practice and procedure of that Court and in accordance with the provisions of the charter under which that court is constituted and which confers on it power in respect to the method and manner of exercising that jurisdiction. The rule is well settled that when a statute directs that an appeal shall lie to a Court already established, then that appeal must be regulated by the practice and procedure of that Court. This rule was very succinctly stated by Viscount Haldane L.C. in National Telephone Co. Ltd. vs Postmaster General, in these terms: "When a question is stated to referred to an established Court without more, it, in my opinion, imports that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches. " 502 The same view was expressed by their Lordships of the Privy Council in R.M.A.R.A. Adaikappa Chettiar vs Ra. Chandrasekhara Thevar, wherein it was said: "Where a legal right is in dispute and the ordinary Courts of the country are seized of such dispute the Courts are governed by the ordinary rules of procedure applicable thereto and an appeal lies if authorised by such rules, notwithstanding that the legal right claimed arises under a special statute which does not, in terms confer a right of appeal." Again in Secretary of State for India vs Chellikani Rama Rao, when dealing with the case under the Madras Forest Act their Lordships observed as follows: "It was contended on behalf of the appellant that all further proceedings in Courts in India or by way of appeal were incompetent, these being excluded by the terms of the statute just quoted. In their Lordships ' opinion this objection is not well founded. Their view is that when proceedings of this character reach the District Court, that Court is appealed to as one of the ordinary Courts of the country, with regard to whose procedure, orders, and decrees the ordinary rules of the Civil Procedure Code apply." Though the facts of the cases laying down the above rule were not exactly similar to the facts of the present case, the principle enunciated therein is one of general application and has an apposite application to the facts and circumstances of the present case. Section 76 of the confers a right of appeal to the High Court and says nothing more about it. That being so, the High Court being seized as such of the appellate jurisdiction conferred by section 76 it has to exercise that jurisdiction in the same manner as it exercises its other appellate jurisdiction and when such jurisdiction is exercised by a single Judge, his judgment becomes subject to appeal under clause 15 of the Letters Patent there being nothing to the contrary in the . And it is in view of this decision that we are of the opinion that the provisions of the Code would have, even in the absence of Section 503 46B of the Act, been attracted in the matter of enforcing the liability of a surety. In view of the foregoing discussion, the finding of the High Court even on this point cannot be sustained. Since, however, the High Court has not made a determination of the liability of the sureties as contemplated by sub section (6) of Section 32 of the Act, the matter has to be sent back to it for doing so and thereafter to pass an order as contemplated by clause (da) of sub section (7) of Section 32 of the Act and to proceed to enforce the liability so determined an against the sureties. In the result, this appeal succeeds and is allowed with costs and the judgment of the Division Bench and also of the Single Judge of the High Court are set aside. The High Court shall now decide the application made by the appellant in accordance with law and in the light of the observations made above. S.C. AGRAWAL, J. Special leave granted. In this appeal two questions arise for consideration: 1) whether a petition under sections 31 and 32 of the (hereinafter referred to as 'the Act ') can be filed only in the Bombay Civil City Court and the Bombay High Court, on its original side, has no jurisdiction to entertain it? and 2) whether in such a petition, a decree/order can be passed directing payment of money by respondents nos. 2 to 4 who stood surety for repayment of the loan advanced by the appellant, Financial Corporation to respondent No. 1? The Division Bench of the Bombay High Court has answered both these questions against the appellant. My learned brother Ojha, J. has disagreed with this view of the Bombay High Court on both the questions. He has held that as the extent of the liability of the surety is more than Rupees fifty thousand the application could only have been filed and was rightly filed in the High Court which had the jurisdiction to entertain it. He has also held that in view of the amendments introduced in the Act by the Amending Act 43 of 1985, an order for payment of money can be passed against the surety who has given only a personal guarantee. While I am fully in agreement with the decision of my learned brother on the first question with regard to the jurisdiction of the Bombay High Court to entertain the petition filed by the appellant, I have not been able to persuade myself to agree with the view taken by him on the second question. Section 31 of the Act has been described in the marginal note as special provisions for enforcement of claims by the Financial Corpora 504 tion. It deals with a situation where an industrial concern, in breach of any agreement, makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation or where the Financial Corporation requires an industrial concern to make immediate repayment of any loan or advance under section 30 of the Act and the industrial concern fails to make such repayment. It enables an officer of the Financial Corporation, generally or specially authorised by the Board in this behalf, to apply to the District Judge within the limits of whose jurisdiction the Industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs: (a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security for the loan or advance; or (aa) for enforcing the liability of any surety; or (b) for transferring the management of the industrial concern to the Financial Corporation; or (c) for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended. Clause (aa) was inserted in sub section (1) of section 31 by section 19 of Act 43 of 1985. Section 32 of the Act prescribes the procedure to be followed by the District Judge in respect of applications under section 31 of the Act. Prior to the amendments introduced in it by Act 43 of 1985, the said section read as under: "32. Procedure of district judge in respect of applications under Section 31. (1) When the application is for the reliefs mentioned in clauses (a) and (c) of sub section (1) of section 31, the district judge shall pass an ad interim order attaching the security, or so much of the property of the industrial concern as would on being sold realise in his estimate an amount equivalent in value to the outstanding 505 liability of the industrial concern to the Financial Corporation, together with the costs of the poceedings taken under section 31, with or without an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment. (2) When the application is for the relief mentioned in clause (b) of sub section (1) of section 31, the district judge shall grant an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment and issue a notice calling upon the industrial concern to show cause, on a date to be specified in the notice, why the management of the industrial concern should not be transferred to the Financial Corporation. (3) Before passing any order under sub section (1) or sub section (2) the district judge may, if he thinks fit, examine the officer making the application. (4) At the same time as he passes an order under sub section (1), the district judge shall issue to the industrial concern a notice accompanied by copies of the order, the application and the evidence, if any, recorded by him calling upon it to show cause on a date to be specified in the notice why the ad interim order of attachment should not be made absolute or the injunction confirmed. (5) If no cause is shown on or before the date specified in the notice under sub sections (2) and (4), the district judge shall forthwith make the ad interim order absolute and direct the sale of the attached property or transfer the management of the industrial concern to the Financial Corporation or confirm the injunction. (6) If cause is shown, the district judge shall proceed to investigate the claim of the Financial Corporation in accordance with the provisions contained in the Code of Civil procedure, 1908, in so far as such provisions may be applied thereto. (7) After making an investigation under sub section (6), the district judge may 506 (a) confirm the order of attachment and direct the sale of the attached property: (b) Vary the order of attachment so as to release a portion of the property from attachment and direct the sale of the remainder of the attached property; (c) release the property from attachment; (d) confirm or dissolve the injunction; or (e) transfer the management of the industrial concern to the Financial Corporation or reject the claim made in this behalf: Provided that when making an order under clause (c) the district judge may make such further orders as he thinks necessary to protect the interests of the Financial Corporation and may apportion the costs of the proceedings in such manner as he thinks fit: Provided further that unless the Financial Corporation intimates to the district judge that it will not appeal against any order releasing any property from attachment, such order shall not be given effect to, untill the expiry of the period fixed under sub section (9) within which an appeal may be preferred or, if an appeal is preferred, unless the High Court otherwise directs until the appeal is disposed of. (8) An order of attachment or sale of property under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure, 1908 for the attachment or sale of property in execution of a decree, as if the Financial Corporation were the decree holder. (8A) An order under this section transferring the management of an industrial concern to the Financial Corporation shall be carried into effect, as far as may be practicable, in the manner provided in the Code of Civil Procedure, 1908, for the possession of immovable property of the delivery of movable property in execution of a decree, as if the Financial Corporation were the decree holder. 507 (9) Any party aggrieved by an order under sub section (5) or sub section (7) may, within thirty days from the date of the order, appeal to the High Court, and upon such appeal the High Court may, after hearing the parties, pass such orders thereon as it thinks proper. (10) Where proceedings for liquidation in respect of an industrial concern have commenced before an application is made under sub section (1) of section 31, nothing in this section shall be construed as giving to the Financial Corporation any preference over the other creditors of the industrial concern not conferred on it by any other law. (11) The functions of a district judge under this section shall be exercisable (a) in a presidency town, where there is a city civil court having jurisdiction, by a judge of that court and in the absence of such court, by the High Court; and (b) elsewhere, also by an additional district judge or by any judge of the principal court of civil jurisdiction. (12) For the removal of doubts it is hereby declared that any court competent to grant an ad interim injunction under this section shall also have the power to appoint a Receiver and to exercise all the other powers incidental thereto. " By Act 43 of 1985, the following amendments have been introduced in section 32 of the Act: (1) Sub section (1A) which reads as under was inserted: "(1A) When the application is for the relief mentioned in clause (aa) of sub section (1) of section 31, the district judge shall issue a notice calling upon the surety to show cause on a date to be specified in the notice why his liability should not be enforced." (2) In sub section (3), the words, or issuing a notice under sub section (1A) "were inserted after the words" "or sub section (2)". 508 (3) Subsection (4) was substituted by sub sections (4) and (4A), which read as under: "(4) At the same time as he passes an order under subsection (1), the district judge shall issue to the industrial concern or to the owner of the security attached a notice accompanied by copies of the order, the application and the evidence, if any, recorded by him calling upon it or him to show cause on a date to be specified in the notice why the ad interim order of attachment should not be made absolute or the injunction confirmed. (4A) If no cause is shown on or before the date specified in the notice under sub section (1A), the district judge shall forthwith order the enforcement of the liability of the surety. (4) In sub section (7), clause (da) was inserted which provides as under: "(da) direct the enforcement of the liability of the surety or reject the claim made in this behalf; or" (5) In the first proviso to sub section (7), the words "or making an order rejecting the claim to enforce the liability of the surety under clause (da) or making an order rejecting the claim to transfer the management of the industrial concern to the Financial Corporation under clause (e)" were inserted after the words "order under clause (c)". (6) In the second proviso to sub section (7), the following words were inserted after words "any property from attachment": or rejecting the claim to enforce the liability of the surety or rejecting the claim to transfer the industrial concern to the Financial Corporation." (7) In sub section (9), for the words "sub section (5)", the words "under sub section (4A), sub section (5)" were substituted. In order to find an answer to the second question, it is necessary to construe the words "for enforcing the liability of any surety" which were introduced by way of clause (aa) in sub section (1) of section 31 509 by the Act 43 of 1985, and also find mention in sub sections (IA), (4A) and (7) of section 32. The learned counsel for the appellant has urged that the said words are wide in their amplitude and would cover a case where the surety has given a personal guarantee only and his liability is purely monetary. The learned counsel for the sureties, viz., respondents Nos. 2, 3 and 4, has, on the other hand, submitted that the said words must be construed in a more limited sense to cover only those cases where surety has given security of property to guarantee the repayment of loan and in such an event the remedy provided by sections 31 and 32 of the Act can be invoked against the surety and that the said provisions do not enable passing of an order for payment of a monetary sum against the surety who has given personal guarantee only. In order to deal with these rival contentions, it would be of relevance to take note of the state of law existing on the date of the enactment of Act 43 of 1985 whereby amendments were introduced in sections 31 and 32 of the Act. The provisions contained in sections 31 and 32 of the Act came up for consideration before this Court in Gujarat State Financial Corporation vs M/s Natson Manufacturing Co. (P) Ltd. & Ors., ; That case related to payment of court fee on an application submitted under section 31(1) of the Act and the question for consideration was whether such an application should be treated on par with a suit by a mortgagee to enforce the mortgage debt by sale of the mortgaged property which is being treated as a money suit failing within the purview of Article 1 of Schedule I to the Bombay Court Fees Act, 1959 or it should bear a fixed court fee under the residuary Article 1(c) to Schedule II of the said Act. This Court disagreeing withthe view of the Gujarat High Court, held that an application under section 31(1) of the Act would be covered by the residuary Article 1(c) of Schedule II to the said Act and it should bear a fixed court fee. In this context, this Court has examined the nature of the proceedings contemplated by section 31(1) of the Act. After referring to the provisions of the Act, this Court has held that "it would be inappropriate to say that an application under section 31(1) is something akin to a suit by a mortgagee to recover mortgage money by sale of mortgaged property" and that "in an application under section 31(1), the Corporation does not and cannot pray for a decree for its outstanding dues" and that none of the three reliefs mentioned in sub section (1) of section 31, if granted, "results in a money decree or decree for recovery of outstanding loans or advance" (pages 378 379). After referring to the provisions contained in sub section (6) of section 32, which provides for investigation of the claim of the Financial Corporation in 510 accordance with the provisions contained in the code of Civil Procedure, 1908, this Court has laid down: "The claim of the Corporation is not the monetary claim to be investigated though it may become necessary to specify the figure for the purpose of determining how much of the security should be sold. But the investigation of the claim does not involve all the contentions that can be raised in a suit. The claim of the Corporation is that there is a breach of agreement or default in making repayment of loan or advance or instalment thereof and, therefore, the mortgaged property should be sold. It is not a money claim. The contest can be that the jurisdictional fact which enables the Corporation to seek the relief of sale of property is not available to it or no case is made out for transfer of management of the industrial concern. " (p.381) This Court has further emphasised that sub section (7) of section 32 "prescribes what reliefs can be given after investigation under subsection (6) is made, and it clearly gives a clue to the nature of contest under sub section (6)" and further that sub section (8) of section 32 . 'only prescribes the mode and method of executing the order of attachment or sale of property as provided in the Code of Civil Procedure". According to this Court, "the provision contained in sub section (6) does not expand the contest in the application under section 31(1) as to render the application to be a suit between a mortgagee and the mortgagor for sale of mortgaged property" (p.381). This Court has held that "the substantive relief in an application under section 31(1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree" (p.382). In Everest Industrial Corporation & Ors. vs Gujarat State Financial Corporation, this Court was examining the question whether the rate of interest on the amount payable under an order passed under section 32 of the Act from the date said order is governed by section 34 of the Code of Civil Procedure, 1908 or whether it is payable at the contractual rate. This Court held that section 34 CPC was not applicable to these proceedings. After referring to the earlier decision in Gujarat State Financial Corporation vs M/s Natson Manufacturing Co. (P) Ltd. & Ors. case (supra), this Court has reiterated that the proceedings instituted under section 31(1) of the Act is something akin to an application for attachment of property in execution of a decree at a stage posterior 511 to the passing of the decree and, therefore, no question of passing any order under section 34 CPC would arise since section 34 CPC would be applicable only at the stage of the passing of the decree and not to a stage posterior to the passing of the decree. In Maganlal etc. vs Jaiswal Industries Neemach & Ors., , after referring to the decisions mentioned above, this Court has observed: "In view of these two decisions, the law seems to be settled that an application under section 31(1) of the Act cannot be put on par to a suit for enforcement of a mortgage nor the order passed thereon under section 32 of the Act be put on par as if it was an order in a suit between a mortgagee and the mortgagor for sale of mortgaged property. On the other hand the substantive relief in an application section 31(1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree." (p.710) The question whether the provisions of sections 31 and 32 of the Act could be invoked against the property of the surety came up for consideration before a full bench of the Allahabad High Court in Munnalal Gupta vs Uttar Pradesh Financial Corporation & Anr., AIR 1975 ALL 416. In that case, the surety had mortgaged his house by way of collateral security for the loan granted to the borrower industrial concern and the Financial Corporation had moved an application under section 31 of the Act for sale of the property of the surety which had been mortgaged as well as the property of the principal debtor which had been mortgaged and the question was whether an order for sale of the property of the surety could be passed on an application under section 31( 1) of the Act. It was held that the relief which can be granted by a District Judge under section 32 of the Act must be confined against the borrower industrial concern and its property and that the District Judge can pass an ad interim order attaching the security or so much of the property of the industrial concern as would be sufficient in his opinion to satisfy the outstanding liability. It was laid down that the order of attachment is restricted to the property of industrial concern given to the Corporation by way of surety and he is not empowered to attach the property of a person other than an industrial concern. According to the said decision, a surety, who is not a partner or otherwise interested in the industrial concern, cannot be proceeded against under section 31 so that his property, even if mortgaged with the Corporation, cannot be attached 512 by the District Judge. In this context, the teamed Judges pointed out the sub section (4) of section 32 contemplates a notice to the borrower industrial concern after an interim order has been passed to show cause why the ad interim injunction should not be made absolute and the said provision does not contemplate a notice to the surety and that it would be unthinkable that the legislature intended that the property of the surety may be attached and put to sale without even a notice to him. The amendments introduced in sections 31 and 32 by Act 43 of 1985 seek to remove the lacunae in those provisions as pointed out in the aforesaid judgment of the Allahabad High Court and with that end in view clause (aa) has been inserted in sub section (1) of section 31 whereby a Financial Corporation can move an application under section 31(1) for enforcing the liability of any surety and amendments have been made in section 32 to prescribe the procedure for grant of the said relief on such application. Express provision has been made in sub section (1A) of section 32 for issuing a notice to the surety requiring him to show cause why his liability should not be enforced. It is argued on behalf of the appellant that the words "for enforcing the liability of any surety" are wide in their amplitude to cover the monetary liability of a surety who has given personal guarantee only and has not given his property as security for repayment of the loan by the borrower industrial concern, though it is not disputed that in so far as the borrower industrial concern is concerned, the amendments introduced in sections 31 and 32 by Act 43 of 1985 do not alter the existing law and no order in the nature of a money decree can be passed against him in these proceedings. It is, however, urged that in so far as the surety is concerned the position is different and in view of the amendments introduced in sections 31 and 32, an order in the nature of a money decree can be passed against the surety who has given personal guarantee only and has not given security of his property for repayment of the loan. This argument implies that as a result of the amendments introduced in sections 31 and 32 by Act 43 of 1985 while the nature of the proceedings as against the borrower industrial concern remains unchanged and the said proceedings continue to be proceedings akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree, the nature of these poceedings has been changed in so far as the surety is concerned and they have become proceedings in which an order in the nature of a money decree can be passed. In other words, in a case where the borrower industrial concern has obtained a loan from the Financial Corporation without furnishing the security of property on the basis of 513 a personal guarantee given by the surety, the Financial Corporation will have to proceed against the borrower industrial concern by instituting a regular suit for recovery of the dues whereas it can proceed against the surety under sections 31 and 32 of the Act. It means that as compared to the principal debtor the Financial Corporation vis a vis the surety has been placed on a more advantageous Position. It may, however, be mentioned that under the common law, which finds re enactment in section 128 of the , the liability of the surety is coextensive with that of the principal debtor unless it is otherwise provided by the contract. It means that the liability must be proved against the surety in the same way as against the principal debtor. Thus under the general law the surety stands on the same footing as the principal debtor. These submissions raise the question: can the legislature be attributed the intention to alter the existing law so as to bring about a change in the nature of proceedings under sections 31 and 32 of the Act and also to alter the general law relating to the enforcement of the liability of the surety? I find it difficult to answer this question in the affirmative. In the matter of interpretation of statutes, a principle which is well recognised in England is: "it is thought to be in the highest degree improbable that Parliament would depart from the general system of law without expressing its intention with irresistible clearness, and to give any such effect to general words merely because this would be their widest, usual, natural or literal meaning would be to place on them a construction other than that which Parliament must be supposed to have intended." (See: Mexwell on The Interpretation of Statutes, 12th Edition, p. 116). In Minet vs Leman, [1955] (20) Eeav. Sir John Romilly, M.R. stated as a principle of construction, which could not be disputed, that "the general words of the Act are not to be so construed as to alter the previous policy of the law, unless no sense or meaning can be applied to those words consistently with the intention of preserving the existing policy untouched". In this context, it would be of relevance to take note of the decision of this court in M.K.Ranganathan & Anr. vs Government of Madras & Ors. , ; In that case this Court was required to construe the words "or any sale held without leave of the Court of any of the properties of the Company" which were added in section 232 (1) of the Indian Companies Act, 1913 by Act 22 of 1936. the said amendment was introduced with a view to get over the decision of the Allahabad High Court in Kayastha Training and Banking Corporation Ltd vs Sat Narain Singh, All. 433. The question was whether the words which had been added refer only to sales held through the intervention of the 514 court or whether they included the sales effected by the secured creditors outside the winding up and without the intervention of the court. This Court held that the said words referred only to sales held through the intervention of the Court and that the amendments whereby these words were introduced were not intended to bring within the sweep of the general words "sales effected by the secured creditors outside the winding up". In order to arrive at this conclusion, this Court placed reliance on the principle of interpretation referred to above and it was observed: "If the construction sought to be put upon the words "or any sale held without leave of the Court of any of the properties" by the Appellants were accepted it would effect a fundamental alteration in the law as it stood before the amendment was inserted in section 232 by Act XXII of 1936. Whereas before the amendment the secured creditor stood outside the winding up and could if the mortgage deed so provided, realise his security without the intervention of the Court by effecting a sale either by private treaty or by public auction, no such sale could be effected by him after the amendment and that was certainly a fundamental alteration in the law which could not be effected unless one found words used which pointed unmistakably to that conclusion or unless such intention was expressed with irresistible clearness. Having regard to the circumstances under which the amendment was inserted in section 232 by Act XXII of 1936 and also having regard to the context we are not prepared to hold that the Legislature in inserting that amendment intended to effect a fundamental alteration in law with irresistible clearness. Such a great and sudden change of policy could not be attributed to the Legislature and it would be legitimate therefore to adopt the narrower interpretation of those words of the amendment rather than an interpretation which would have the contrary effect." (p. 388) In my opinion, regard must be had of this principle of interpretation while construing the expression "for enforcing the liability of any surety" which has been inserted by way of clause (aa) in sub section (1) of section 31 by Act 43 of 1985. Considering the amendments introduced in sections 31 and 32 of the Act by Act 43 of 1985 and having regard to the principle of interpretation referred to above I do not find any provision in the said amendments which may indicate that 515 Parliament has evinced an intention to effect a fundamental alteration in the law with irresistible clearness. In this context, it would be of relevance to note that while introducing the said amendments Parliament has chosen not to make any alteration in relation to the following matters: (1) In the marginal note, section 31 is described as `special provisions for enforcement of claims by Financial Corporation '. No alteration has been made therein by Act 43 of 1985 and section 31 continues to be a special provision for enforcement of claims by Financial Corporation. (2) Parliament has not expressly indicated that an order for payment of money only may be passed against the surety. (3) Although in sub sections (8) and (8A) of section 32, express provision has been made prescribing the procedure for carrying into effect an order of attachment and sale of property and an order transferring the management of an industrial concern to the Financial Corporation passed under sub section (7) of section 32, no specific provision was made prescribing the procedure for carrying into effect of an order passed under clause (da) of sub section (7) of section 32 directing the enforcement of the liability of the surety. It cannot be comprehended that while making a provision which would enable passing of an order in the nature of a money decree against a surety on an application under section 31 of the Act, Parliament would have refrained from making a corresponding provision prescribing the procedure for carrying into effect of such an order. Having regard to the features referred to above, it appears to be more in consonance with the scheme of the Act and the object underlying sections 31 and 32 that by introducing the amendments in sections 31 and 32 of the Act, Parliament intended to place the surety on the same footing as the principal debtor in the matter of enforcement of the claims of the Financial Corporation so as to enable the Financial Corporation to obtain relief against the properties of the principal debtor as well as the surety. If considered in this perspective, the expression "enforcing the liability of any surety" in clause (aa) of section 31(1) would mean enforcing the liability of a surety in the same manner as the liability of principal debtor is enforced, i.e., by attachment and sale of property keeping in view that the proceedings under sections 31 and 32 of the Act are akin to an application for attachment of property in execution of a decree at a stage posterior to the passing 516 of the decree. This construction would obviate the need for a procedure for carrying into effect of the order passed under clause (da) of sub section (7) of section 32 of the Act because such an order would be an order for attachment and sale of the property of the surety and it can be carried into effect in accordance with sub section (8) of section 32 which prescribes the procedure for carrying into effect an order for attachment and sale of property. This construction will also preserve the special nature of the proceedings under section 31 and would not result in bringing about a fundamental alteration in the law laid down by this Court with regard to the nature of these proceedings as well as the general law whereunder a surety is to be treated on par with the principal debtor. For the reasons aforesaid, I am in agreement with the view of the Division Bench of the High Court on this question and I am unable to concur with the decision of my learned brother Ojha, J. I would, therefore, uphold the decision of the Division Bench of the High Court that the petition whereby the appellant had sought the relief of a money decree for payment of Rs. 15,87,391.20 paise against respondents 2 to 4 was not maintainable and the said relief could not be granted to the appellant in proceedings under section 31 of the Act. As a result, the petition filed by the appellant must be dismissed and for the same reason this appeal also must fail. R. N. J. Appeal allowed.

Respondent No. 1 a Private Limited Company, was sanctioned a loan of Rs.30 lakh by the Appellant Corporation for the setting up of a factory. To secure this loan a mortgage deed of certain properties was executed by the Company and Respondents 2 to 4 as its directors had executed a personal Surety Bond without any security for its repayment. After obtaining a part of the sanctioned loan, which was to be given in phases, the Company became disinterested in availing of the balance amount. Consequently the Corporation demanded back the amount ahead taken together with interest and on the company 's failure to do so, it took over the Industrial Concern under section 29 of the Act and initiated steps to realise its dues by putting the property to sale. Having failed to recover the amount as no adequate offer was forthcoming despite repeated advertisements, it filed a petition before the Bombay High Court under sections 31 and 32 of the Act both against the Company as well as its directors sureties praying for a decree in the sum of Rs. 15,87,391.20 to be passed against them jointly and severally. The respondents contested the petition contending (a) that a petition under sections 31 and 32 of the Act could be filed only before the City Civil Court and the High Court had no jurisdiction to entertain it, (b) that no money decree can be passed under sections 31 and 32 of the Act, and (c) that the provision in the Act relating to enforcement of the 481 liablity of surety were ultra vires of Article 149 of the Constitution. The learned single judge relying on an earlier decision of the Bombay High Court reported in 1987 Mah. L.J 243 held that the High Court had to entertain the petition but on merits took the view that no money decree could be passed under sections 31 and 32 even against the sureties and since in the instant case the sureties had not given any security except their personal guarantee, the same could be enforced only in the ordinary course and not under the special machinery provided under the Act. In view of his findings on the first two pleas no arguments were entertained on the last plea and accordingly the petition was dismissed. The Division Bench while dismissing the appeal not only upheld the finding of the single Judge on merits but also overruled the decision reported in and held that the High Court had no jurisdiction to entertain a petition under sections 31 and 32 of the Act. The Corporation came up in appeal before this court by special leave against this decision of the High Court of Bombay. The impugned judgement was assailed by the Appellant Corporation both on merites and on the plea of juridiction. The respondents in reply asserted that the findings of the High Court on both pleas were unassailable. Allowing the appeal, by a majority decision, HELD: A. By the Full Court (i)The extent of the liability stated in the application as contemplated by sub section (2) of section 31 of the Act would represent the value of the claim of the Corporation and if since value is upto Rupees Fifty Thousand, the application would lie in the City City Court and if it is more than that amount it would lie in the High Court. This interpretation would give meaning and relevance to the words "having jurisdiction" used in sub section (11) of section 32. A different interpretation would render superfluous or otiose not only the words "having jurisdiction" but also the words and in the absence such court, by the High Court, occurring in the said sub section (11) inasmuch as in a Presidency town, in terms of territorial jurisdiction, the jurisdiction of the City Civil Court and of the High Court is co terminus [495D F] (ii) In the instant case the extent of liability of the surety being more than Rupees fifty thousand, the application could only have been filed and was rightly filed in the High Court and the finding in the 482 judgment under appeal to the contrary for holding that the High Court had no jurisdiction to entertain the application cannot be sustained. [497A] B. Per N. D. Ojha, J. for himself and Ranganathan, J. (iii) There can be no doubt that the term, "any surety" used in clause (aa) in sub section (1) of section 31 of the Act, will include not only a surety who has given some security but also one who has given only a personal guarantee. In our opinion, in a case where the relief claimed in the application under section 31(1) of the Act is for enforcing the liability of a surety who has given only a personal guarantee, sub section 4(A) of section 32 where no cause is shown and clause (da) of sub section (7) where cause is shown, contemplate cutting across and dispensing with the provisions of the Code of Civil Procedure from the stage of filing a suit to the stage of obtaining a decree against the surety, the passing of an order which can straightaway be executed as if it were a decree against the surety which may be passed in the event of suit being filed. [498F, 499E] (iv) In the absence of any provision such as sub section (8) of section 32 of the Act applying the manner provided in the Code for the execution of a decree against a surety only "as far as practicable" the entire provision contained in this behalf in the Code shall be applicable. This would be so in view of the use of the expression "any other law for the time being applicable to an industrial concern" used in section 46B of the Act. That the Code is applicable to an industrial concern also is not in dispute and cannot be doubted. [50OH 501A] (v) Even in the absence of section 46B of the Act the provisions of the Code would have been attracted in the matter of enforcing the liability of a surety in view of the decision of this Court in National Sewing Thread Co. Ltd. vs James Chadwick & Bros. Ltd., ; inasmuch as the District Judge while exercising jurisdiction under sections 31 and 32 of the Act is not a persona designate but a court of ordinary civil jurisdiction. [501B D] (Per section C. Agrawal, J. Dissenting.) It cannot be comprehended that while making provision which would enable passing of an order in the nature of a money decree against a surety on an application under section 31 of the Act, Parliament would have refrained from making a corresponding provision prescribing the procedure for carrying into effect such an order. It 483 appears to be more in consonance with the scheme of the Act and the object underlying sections 31 and 32 that by introducing the amendments in sections 31 and 32 of the Act the Parliament intended to place the surety on the same footing as the principal debtor so as to enable the Financial Corporation to obtain relief against the properties of the principal debtor as well as the surety [515E G] If considered in this perspective, the expression "enforcing the liability of any surety" in clause (aa) of section 31(1) would mean enforcing the liability of a surety in the same manner as the liability of principal debtor is enforced, by attachment and sale of property keeping in view that the proceedings under sections 31 and 32 of the Act are akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree. The relief of a money decree sought against the sureties respondents 2 to 4 was not maintainable and the said relief could not be granted to the appellant in proceedings under section 31 of the Act. As a result, the petition filed by the appellant must be dismissed and for the same reason this appeal must fail. [515G 516A, 516D E] Munnalal Gupta vs Uttar Pradesh Financial Corporation & Anr. ,A.I.R. 1975 Allahabad 416; Thressiamma Varghese vs K. section F. Corporation, A.I.R. 1986 Kerala 222; Maharashtra State Financial Corporation vs Hindtex Engineers Pvt. Ltd., ; Kayastha Training & Banking Corporation Ltd vs Sat Narain Singh, All. 433; M. K. Ranganathan & Anr. vs Government of Madras & Ors. ,[1955] 2 S.C.R. 374; The Central Talkies Ltd., Kanpur vs Dwarka Prasad, ; , referred to. Maganlal V. MIS. Jaiswal Industries, Neemach & Ors., ; ; M/s. Everest Industrial Corporation & Ors. vs Gujarat State Financial Corporation, [1987] 3S.C.C. 597; Parkash Playing Cards Manufacturing Co. vs Delhi Financial Corporation, ; Gujarat State Financial Corporation V. Natson Manufacturing Co. Pvt. Ltd. & Ors., , distinguished. West Bengal Financial Corporation vs Gluco Series Pvt. Ltd. ,A.I.R. , approved.

No. 164 01 1958. Writ Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights. N. C. Chatterjee and Naunit Lal, for the petitioners. N. section Bindra and D. Gupta, for the respondent. April 10. The Judgment of the Court was delivered by AYYANGAR, J. The constitutional validity of the Ay. operative provisions of the Punjab Shops and Commercial Establishments Act, 1958 (Punjab Act 15 of 1958), which we shall hereafter refer to as the Act, is challenged in this writ petition filed under article 32 of the Constitution, seeking reliefs appropriate to such a challenge. There are two petitioners and the nature of the business carried on by, them, which is set out in the 854 petition, indicates that they have combined with a view to bring up before the Court the implications of the enactment with reference to different types of business which trades in the Punjab might be ' carrying on and which would be impeded or restricted by the provisions of the Act. The first petitioner states that he has a shop at Mandi Dabwali in Hissar District where he carries on business in the purchase and sale of grains, etc. in wholesale. The relevant averment in regard to the nature of his business is that the customers who supply him with goods bring them loaded in carts drawn by camels or bullocks and that these vehicles arrive at his godowns at all hours of the day and night. He also states that for the purpose of the purchases or sales effected by him, he receives messages by telephone and telegram both during the day and the night. These, according to him, render necessary, if he has to carry on business as he has been doing all along, that his place of business should be kept open practically the whole of the day and night, i.e., for all the 24 hours. The second petitioner states that he is carrying on a retail business on a small scale, and that he employs no outsider but attends to all the work in the shop himself, with the assistance, if necessary, of the members of his family. In this case also it is stated that the goods purchased are brought to him at all hours of the day and night and similarly he has to receive messages during the entire period. It is in this background that the petitioners desire that the Court should view the restrictions imposed upon them by those provisions of the Act which are challenged in the petition. We shall now proceed to set out he impugned provisions of the Act with a view to determine whether for all or any of the reasons set out in the petition,any of them could be said to constitute an unreasonable restriction on the right to carry on trade or business so as not to be protected by article 19(6) of the Constitution which is the gravamen of the complaint formulated in the petition. The Act received the assent of the President on April 25, 1958, and was published in the Punjab 855 Gazette on May 1, 1958. According to the preamble, it is an Act to provide for the regulation of conditions of work and employment in shops and commercial establishments. The Act repealed and re enacted, with modifications, the Punjab Trade Employees Act, 1940, to which enactment also it would be necessary to advert in its proper place. Section 1(3) of the Act provides that the Act shall come into force on such date as Government may, by notification appoint in this behalf and by a notification under this provision the Act was directed to come into force from June 1, 1958. The Act, however,, did not of its own force apply to the entirety of the Punjab State, for section 1(4) enacted: "1(4). It shall apply in the first instance to the areas specified in the Schedule, but Government may by notification direct that it shall also apply to such other area and on such date as may be specified in the notification." Mandi Dabwali where the petitioners carry on business is one of the local areas in the district of Hissar set out in the Schedule annexed. We might here note that the main grievance of the petitioners appears to, be that it has not been brought into force in neighbouring local areas and that this disparity in the regulations is acting to the disadvantage of people carrying on business in the areas set out in the Schedule. This, however, cannot obviously be a ground of constitutional grievance and learned Counsel therefore very properly did not rely on it except merely to draw our attention to this fact. Section 2(iv) defines a 'a commercial establishment ' to which the Act applies as meaning "any premises wherein any business, trade or profession is carried on for profit", omitting the unnecessary words. Section 2(v) defines 'day ' as meaning "the period of twenty four hours beginning at midnight", again omitting what is immaterial. The operative provisions of the Act which were attacked in the petition are sections 7 and 9 and it would be convenient to set out their material terms: "7. Hours of employment. (1) Subject to the 856 provisions of this Act, no person shall be employed about the business of an establishment for more than forty eight hours in any one week, and nine hours in any one day. (2). . . . . . (3). . . . . . (4). . . . . . (5). . . . . . 9. Opening and closing hours. No establishment shall, save as otherwise provided by this Act, open earlier than ten o 'clock in the morning or close later than eight o 'clock in the evening; Provided that any customer who was in the establishment before the closing hour may be served during the period of fifteen minutes immediately following such hour; Provided further that the State Government may, by order and for reasons to be recorded in writing, allow an establishment attached to a factory to open at eight o 'clock in the morning and close at six o 'clock in the evening. Provided further that the State Government may, by notification in the official Gazette, fix such other opening and closing hours in respect of any establishment or class of establishments, for such period and on such conditions, as may be specified in such notification. " For the sake of completeness and to understand the scheme of the enactment we would set out the terms of section 10 also, which reads: "10. Close day. (1) Save as otherwise provided by this Act, every establishment shall remain close on every Sunday: Provided that, in the case of an establishment attached to a factory, the employer may substitute the close day of such establishment so as to correspond to the substituted close day of the factory in the same manner and subject to the same conditions as are laid down in this behalf in the . (2) (i) The employer of an establishment shall in the prescribed form intimate to the prescribed 857 authority the working hours and the period of interval of the employed persons within fifteen days of the date of registration of the establishment. (ii)The employer of an establishment may change, the working hours and the period of interval once in a quarter of the year by giving intimation in the prescribed form to the prescribed authority at least fifteen days before the change is to take place. (3) Notwithstanding anything contained in subsection (1), the employer of an establishment may open his establishment on the close day if (a) such day happens to coincide with. a festival; and (b) employees required to work on that day are paid remuneration at double the rate of their normal wages calculated by the hour". It is urged by Mr. Chatterji learned Counsel for the petitioners that having regard to the nature of the petitioners ' business, whose features we have set out earlier, it would be impossible for them to carry it on in the manner in which they have been doing up to now, unless the Act permitted the first petitioner to work without regard to the restrictions imposed by the limitation as to hours of work of employees imposed by section 7(1) of the Act, and both the petitioners without regard to the hours for the opening and closing of the "establishments" under section 9. Before entering on a discussion of the constitutional propriety of the restrictions imposed we may point out that the provisions of the Act contemplate that establishments might fall under three categories:. (1) where it is necessary in the public interest, and having regard to the service which they render to the community, that the normal hours of working should not be subject to the restrictions imposed by sections 9 or 10, (2) those in which there is no need for complete freedom from these restrictions, but in which an adjustment merely as regards the hours set out in section 9 is sufficient, (3) those in which neither the requirements of the trade nor, of course, the interest of the general public 858 would suffer if the establishment adjusted its operations in conformity with the Act. The first head is dealt with by section 4 of the Act which reads: "4. Provisions of sections 9 and 10 not applicable to certain establishments. Nothing in sections 9 and 10 shall apply to (a) clubs, hotels, boarding houses, stalls and refreshment rooms at the railway stations; (b) shops of barbers and hair dressers; (c) shops dealing mainly in meat, fish, poultry, eggs, dairy produce (except ghee), bread, confectionery, sweets, chocolates, ice, ice cream, cooked food, fruit, flowers, vegetables or green fodder; (d) shops dealing mainly in medicines or medical or surgical requisites or appliances and establishments for the treatment or care of the sick, infirm, destitute or mentally unfit; (e) shops dealing in articles required for funerals, burials or cremations; (f) shops dealing in pans (betel leaves), biris or cigarettes, or liquid refreshments sold retail for con sumption on the premises; (g) shops dealing in newspapers or periodicals, editing and despatching sections of the newspaper offices and offices of the news agencies; (h) cinemas, theatres and other places of public entertainment; (i) establishments for the retail sale of petrol and petroleum products used for transport; (j) shops in regimental institutes, garrison shops and troop canteens in cantonments; (k) tanneries; (1) retail trade carried on at an exhibition or show, if such retail trade is subsidiary or ancillary only to the main purpose of the exhibition or show; (m) oil mills not registered under the ; (n) brick and lime kilns; (o) commercial establishments engaged in the manufacture of bronze and brass utensils so far as 859 it is confined to the process of melting in furnaces; and (p) saltpetre refineries." Similarly by notification of the State Government State dated June 1, 1958, the following classes of establishments wer e exempted from the provisions of SS. 9 and 10: "(1) establishments dealing in the retail sale of Phullian, Murmura, sugar coated grams and Reoris; (2) commercial colleges of shorthand and type writing. (vide Punjab Government notification No. 6567. S Lab. 58/1737 RA, dated June 1, 1958.) (3)all booking offices of the Transport (vide Punjab Government notification No. 6147/ 5815 C Lab 58/1741 RA, dated June 1, 1958). " (2)The second category of cases are those covered by the second and third provisos to section 9. Action has been taken under the third proviso to section 9, by a notification which was issued at the same time as when the Act was brought into force which runs in the following terms: "The following categories of establishments in the State of Punjab shall not open earlier than eight o 'clock in the morning or close later than six o 'clock in the evening during the period from 1st May to thirty first August every year: (1)establishments dealing in timber, manufacture of furniture, tents, supply of furniture or tents on hire, cycles or their repairs or painting or dyeing; (2)establishments, other than tailoring establishments, which include 'workshops ' or other establishments where articles are produced, adapted or manufactured, with a view to their use, transport or sale; and (3) establishments dealing in agricultural produce brought for sale by producers.(vide Notification No. 6567. S Lab 58/1735 RA, dated June 1, 1958)." (3) Those outside section 4 and which are not covered by notifications under the provisos to section 9 have, of 860 course, to adjust their business in accordance with the requirements of the Act. It is in the context of these exceptions and the elasticity for which provision is made to meet the imperative requirements of particular types of business, that the constitutional objection has to be considered. The constitutional objection is that, the impugned provisions impose unreasonable restrictions on the fundamental right of the petitioners "to carry on their trade or business". The regulation of contracts of labour so as to ameliorate their conditions of work is in reality a problem of human relationship and social control for the advancement of the community. The public and social interest in the health and efficiency of the worker is, at the present day, beyond challenge. Our Constitution does not protect or guarantee any fundamental right in the nature of the provision in article 1, section 10(1), of the U. section Constitution against "impairment of the obligation of contracts". The only test of constitutional validity therefore is whether the provision in the impugned law, which is enacted to avoid physical overstrain of the worker, and so as to afford him better conditions of work, and more regulated hours, thus ensuring to him a reasonable amount of leisure factors which would render the restrictions in the interest of the general public, is unreasonable from the point of view of the employer. For answering this question it would be necessary to ask are the restrictions necessary, or do they go beyond what is reasonably needed to protect the worker? Judged by this test, neither the 48 hour week, nor the specification of the opening and closing hours can be said to have gone beyond what by modern standards are necessary for ensuring the health and efficiency of the employee. It might also be added that the concept of what is necessary to secure the welfare of labour, or indeed of the elements which determine its content are neither of them fixed or static, but are dynamic, being merely the manifestation or index of the social conscience as it grows and develops from time to time. Besides, this point regarding restrictions of this 861 nature being unreasonable is concluded against the petitioners by the decision of this Court in Manohar Lal vs The State of Punjab (1) judgment on which was delivered on November 11, 1960. The provision there impugned was section 7 of the Punjab Trade Employees Act, 1940, (which, as stated earlier, had been repealed and re enacted with modifications by the Act) which directed that the shops and establishments to which it applied should remain closed on one day in the week (corresponding to section 10 of the Act of 1958). The appellant before this Court was a small trader who did not employ any person under him but who, like the second petitioner before us, himself with the members of his family attended to all the requirements of his shop. Basing himself on this feature he challenged the validity of the provision which restricted his right to carry on his business in such manner as he chose on all the seven days in the week. In repelling these objections this Court said: "The ratio of the legislation is social interest in the health of the worker who forms an essential part of the community and in whose welfare, therefore, the community is vitally interested. It is in the light of this purpose that the provisions of the Act have to be scrutinized. . The learned Judges of the High Court have rested their decision on this part of the case on the reasoning that the terms of the impugned section might be justified on the ground that it is designed in the interest of the owner of the shop or establishment himself and that his health and welfare is a matter of interest not only to himself but to the general public. A restriction imposed, with a view to secure thi s purpose would, in our opinion, be clearly saved by article 19(6). Apart from this, the constitutionality of the impugned provision might be sustained on another ground also, viz., with a view to avoid evasion of provisions specifically designed for the protection of workmen employed. It may be pointed out that acts innocent in themselves may be prohibited and the restrictions in that regard would (1) ; 862 be reasonable, if the same were necessary to secure the efficient enforcement of valid provisions. The inclusion of a reasonable margin to ensure effective enforcement will not stamp a law otherwise valid as within legislative competence with the character of unconstitutionality as being unreasonable." These observations, in our opinion, clearly apply and suffice to support the validity of the related provisions here impugned. The petition fails and is dismissed with costs. Petition dismissed.

Section 7 of the Punjab Shops and Commercial Establishments Act, 1958, provided that no person shall be employed about the business of an establishment for more than forty eight hours in any week and nine hours in any one day. Under section 9 of the Act no establishment shall save otherwise provided by the Act,open earlier than ten o 'clock in the morning or close later than eight o 'clock in the evening. The petitioners challenged the constitutional validity of the aforesaid provisions of the Act on the ground that having,, regard to the nature of their business, it would be impossible for them to carry it on in the manner in which they were doing unless the Act permitted them to work without regard to the restrictions imposed by the limitation as to hours of work of employees under section 7(1) or the hours for the opening and closing of the establishments under section 9, and that, 853 consequently, these provisions imposed unreasonable restric tions on their fundamental right to carry on their trade or business under article 19(1)(e) of the Constitution of India. The petitioners ' case was that their business was such that the customers who supplied them with goods brought them in vehicles which arrived at their godowns at all hours of the day and night and that they received messages by telephone and telegram similarly both during day and night. These according to them rendered it necessary that their place of business should be kept open practically for all the 24 hours of the day. Held, that ss.7 and 9 of the Punjab Shops and Commercial Establishments Act, 1958 are intra vires the Constitution of India. The test of constitutional validity is whether the impugned provisions of the Act which were enacted to afford the worker better conditions of work and more regulated hours so as to avoid physical overstrain and ensure to him a reasonable amount of leisure in the interest of the general public, are unreasonable restrictions from the point of view of the employer and go beyond what is reasonably needed to protect the worker. judged by this test, neither the 48 hour week, nor the specification of the opening and closing hours could be said to have gone beyond what by modern standards are necessary for ensuring the health and efficiency of the employee. Manohar Lal vs The State of Punjab, ; , followed.

ivil Appeal No. 1375 of 1974 605 From the Judgment and Order dated 21.2. 1971 of the Allahabad High Court in Excise Profit Tax Reference No. 55 of 1968. Dr. V. Gauri Shankar and Miss A. Subhashini for the Appellant. S.T. Desai, Harish Salve, Mrs. A.K. Verma and D.N. Mishra for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This appeal is directed against the judgment and order of the High Court of Allahabad dated 21st February 1971. It relates to the assessment under the Excess Profits Tax Act, 1940 (hereinafter called the 'Act '). The assessee was an unregistered firm carrying on business of manufacture and sale of katechu. The chargeable account ing period was 1 4 1943 to 31.3. There were two partners of the assessee firm, namely, L. Phoolchand and M/s Biharilal Balkishan each having profits in proportion of 11 annas and 5 annas respectively. The work in connection with the extraction of Katechu was carried on in Nepal by 1. Phoolchand and the sale of Katechu were effected by M/s Biharilal Balkishan at their shops in Kanpur. The assessee firm did not maintain any books of account and the entire record of the business transaction was maintained in the books of M/s Biharilal Balkishan in the account styled "Kalyanmal Phoolchand". The assessee firm had taken a jungle on lease for this purpose and had extracted Katechu from October, 1940 to September, 1941. The sales of katechu extracted were effect ed from 30th May, 1941 to 29th September, 1941. Thereafter another jungle was taken on lease in November, 1942 and Katechu were extracted from 23rd November, 1942 to 6th November, 1944. The sales in this case were effected between 26th July, 1943 to 4th April, 1944. The High Court divided the entire period of manufacture and sale as follows: 1. October 28, 1940 to March 31, 1941, failing in the financial year ending March 31,1941. Katechu was manufac tured but there was no sale. April 1, 1941 to September 29, 1941, failing in the financial year ending March 31, 1942. Sales took place from May 30, 1941 to September 29, 1941. 606 3. November 23, 1942 to March 31, 1943, falling in the financial year ending March 31, 1943. Katechu was manufac tured but there was no sale. April 1, 1943 to March 31, 1944, falling in the finan cial year ending March 31, 1944, sales took place from July 26, 1943 to March 31, 1944. April 1, 1944 to April 4, 1944, falling in the finan cial year ending March 31. 1945, sales were effected from April 1, 1944 to April 4, 1944, when the business was dis continued. Therefore, while there was manufacturing activity there was no sale during the financial years ending 31st March, 1941 and 31st March, 1943. The dispute in this case is with regard to the set off of deficiency of profit relating to the periods 20th October, 1940 to 17th October, 1941 and 23rd November, 1942 to 31st March, 1943. The Excess Profit Tax Officer did not set off the said deficiency of profits that accrued in respect of the period 1940 41 out of the profits for the chargeable accounting period from 1.4.1943 to 31.3. The submission of the assessee was that the business carried on during the charge able accounting period under consideration was not separate to and distinct from the business carried on in 1940 41. The Excess Profit Tax Officer held that business carried on during October, 1940 to October, 2941 was completely differ ent from the business carried on during the chargeable accounting period under consideration. The Appellate Assistant Commissioner on appeal found that the constitution of the firm during the chargeable accounting period was the same as in 1940 41 and the ac counts were maintained in the same fashion; and that the same business of manufacturing Katechu in Nepal and selling the finished products at kanpur was carried on. The Appel late Assistant Commissioner, therefore, held that the asses see was entitled to set off in respect of the deficiency of profits accruing in the year 1940 41. The Appellate Assist ant Commissioner further found that the assessee had effect ed sales only during 30th May, 1941 to 29th September, 1941. As such there were no sales either during or until 30th May, 1941 land subsequent to 29th September, 1941. As such he held that there was no profit arising during the accounting period ending on 31st March, 1941. He, therefore, confirmed that there were no profits and losses during the chargeable accounting 607 period ending on 31st March, 1941 and as such there could be no deficiency of profits. In the premises, according to the Appellate Assistant Commissioner, the assessee was entitled to a set off of the deficiency only for the chargeable accounting period ending on 31st March, 1942 which consisted of the period 1st April, 1941 to 29th September. He allowed such deficiency of Rs.5,600 only. So far as the deficiency pertaining to the period November, 1942 to 3 Ist March, 1943 was concerned, the facts were that the manufac turing operations started in Nepal on or about 23rd Novem ber, 1942 and the sales of Katechu started at Kanpur on 26th July, 1943 Katechu produced in Nepal from 23rd November, 1942 to 31st March, 1943 remained in stock till the last date of the chargeable accounting period namely 31st March, 1943 and no part of it was sold. As the assessee did not maintain any books of account, the provisions of section 13 of the Income Tax Act, 1922 as applied to the Act vide section 21 of the Act were applicable. The revenue, there fore, valued the stock in trade at cost and held that there could be no profit or loss during the chargeable accounting period. In appeal, the assessee had urged that deficiency in profits pertaining to the chargeable accounting periods from October, 1940 to 31st March, 1941 and 23rd November, 1942 to 31st March, 1943 should be allowed a set off in computing the excess profits for the year under consideration. It was submitted that there was no profits pertaining to the said chargeable accounting period, and therefore, the standard profits as provided in the Act became the deficiency of the said two chargeable accounting periods which should have been allowed set off. It was further urged on behalf of the assessee that the manufacturing operations were carried on during the said periods and as such it could not be said that the assessee did not carry on any business. The Tribunal, however, held that no profits accrued unless sale was effected and, therefore, there was no merit in the submission made on behalf of the assessee that during the said two chargeable accounting periods, although there were no sales effected, yet profits accrued to the assessee. It was urged on behalf of the revenue that as provided in the Act, the provisions of the Act would apply to every business of which any part of profits was made during the chargeable accounting period, is chargeable to income tax. It was further urged that no part of profits, if any, which accrued during the said two chargeable accounting periods could be charged and were in fact not so charged, to income tax, as no sales were effected and, therefore, the Act itself did not apply to the said two chargeable account ing periods. The Tribunal accepted this contention on behalf of the revenue and as 608 such confirmed the order of the Appellate Assistant Commis sioner. On the said facts, the following question of law was referred to the High Court at the instance of the assessee: "Whether, on the facts and in the circum stances of the case, the assessee was entitled to a set off of deficiency of profits relating to the period 28.10.1940 to 31.3.1941 and 23.11. 1942 to 31.3.1943 from the profits of the chargeable accounting period 1.4.1943 to 31.3.1944 in accordance with the provisions of the E.P.T. Act, 1940?" The High Court held that it was not disputed before them that the assessee was carrying on the same business from 28th October, 1940 to 4th April, 1944 for the purpose of the Act. The only question was whether the assessee could be said to have suffered any deficiency of profits during the period 28th October, 1940 to 31st March, 1941 and 23rd November, 1942 to 31st March, 1943 and was whether entitled to be given the benefit of such deficiency. of profit. The High Court referred to certain definitions and recognised and in our opinion rightly that there were sever al stages in business activities before profits could be realised. The High Court observed that profits realised were not of the sale alone. The profits were attributable to the manufacturing operations as well. The High Court referred to certain decisions to which our attention was also drawn where under the Act as to the place where the profits arose, the courts had enquired into the place where the manufactur ing took place and where the sales took place. This conten tion is no longer relevant for the controversy before us. It was accepted before us that a manufacturing process may begin in one year and result in sale in another year and also that manufacturing process may take at one place and sale at another place. For the purpose of computing the profit of certain operation, it is true as the High Court noted, that manufacture and sale might take place in two different years. The High Court held that though chargeable levy was an annual charge and generally for the purpose of the levy of the annual charge the profits of the year preceding the year of charge are taken into consideration if the manufacturing activity leading to the production of finished article which was subsequently sold contributed to the profits realised, according to the High Court, it mattered little whether or not the manufacturing activity of the sale related to the same period of 609 twelve months. Some part of the profits realised would be attributable to the manufacturing activities and, therefore, could be said to arise during the period when manufacturing was carried on even though sales were effected in the next year. The High Court, therefore, was of the view that it was necessary to ,determine what part of the profits realised upon the sales from 30th May, 1941 to 29th September, 1941 could be attributed to the manufacturing activity between 28th OCtober, 1940 to March, 1941 and then to compute the deficiency of profits for the chargeable accounting period ending 31st March, 1941. That might require, according to the High Court, a fresh determination of the profits earned during the period 1st April, 1941 to 29th September, 1941 and, consequently, of the deficiency of profits during the chargeable accounting period ending 31st March, 1942. The High Court was of the view that the deficiency of profits for the chargeable accounting periods ending 31st March, 1941 and 31st March, 1942 would have to be set off when computing the excess profits for the relevant chargeable accounting period ending 31st March, 1944. The High Court expressed the view that under section 2(5) of the Act the job of the assessee in the extraction and sale of Katechu under the two jungle leases must be considered as a single business for the purpose of the Act. The High Court, there fore, came to the conclusion that upon the principle of apportionment of profits to which it had adverted to, the profits earned upon sales effected during the chargeable accounting period ending 31st March, 1944 must similarly be apportioned between the manufacturing activity during the chargeable accounting period ending 31st March, 1943 and the sales during the chargeable accounting period ending 31st March, 1944 and the deficiency of profits worked out on that basis in respect of the chargeable accounting period ending 3 Ist March, 1943 must be set off in computing the excess profits for the chargeable accounting period ending 31st March, 1944. The High Court, therefore, did not accept the opinion of the Tribunal that because the chargeable account ing periods ending 31st March, 1941 and 31st March, 1943 were occupied with manufacturing activity alone and there were no sales, therefore, no part of the profits realised upon the sales could be apportioned to those chargeable accounting periods and consequently that it could not be said that there was any deficiency of profits during those periods. The question referred to the High Court was an swered in affirmative. In order to appreciate the real controversy in this matter, it is appropriate to refer to the observations of Kania, J., as the Chief Justice then was, in the decision in the case of Commissioner of Income 610 Tax, Bombay vs Raipur Manufacturing Co., Ltd.; at 733. It was observed as follows: "The Excess Profits Tax Act as shown by the preamble itself is a legislation to impose tax on excess profits arising out of certain business. The Income tax Act is the principal legislation which imposes a tax on the income of a person. Section 6 divides the income under five heads which are chargeable to tax. The fourth head is profits and gains of busi ness, profession or vocation. Out of that a certain portion is carved out by the Legisla ture for the purpose of imposing the excess profits tax. I am unable to accept the conten tion of the Commissioner that the Excess Profits Tax Act is an entirety independent legislation, which is connected with the Income tax. Act only to the extent it is expressly so stated in the Excess Profits Tax ' Act. The scheme that the Excess Profits Tax Act is a legislation intended to tax the profits of certain business in excess of a certain limit as provided in that Act. It is therefore complementary to the Income tax Act by its very nature." As the Statement of Objects of the Act stated that the outbreak of war, while it has necessitated greatly increased expenditure by the Government on defence and other services, has simultaneously created opportunities for the earning by companies and persons engaged in business of abnormally large profits. The object of the Bill (which later became the Act was to secure for the Government a considerable portion of the additional business profits which accrued as a result of the conditions prevailing during the war. To begin with the right to impose a tax of 50% of the excess of the profit made in any accounting period after the 1st day of April, 1939 was given. It had subsequently been increased to 66 2/3 %. Section 2(1) of the Act defines the 'accounting period '. Section 2(6) defines 'chargeable accounting period as (a) any accounting period falling wholly within the term begin ning on the 1st day of September, 1939, and ending on the 31st day of March, 1946 and (b) where any accounting period falls partly within and partly without the said term, such part of that accounting period as fails within the said term. The 'standard profits ' is defined under section 2(2) which was required to be computed in accordance with the provisions of section 6 of the Act. It is not necessary in view of the controversy before us to refer to other defini tions except that section 2(3) deals with 'average 611 amount of capital ' which is relevant for computation of the excess profits. Section 6 defines the 'standard profits ' and how it is to be computed. As there was no controversy on this aspect before us, it is not necessary to deal with it. Section 2(9) defines 'deficiency of profits ' as follows: (9) "deficiency of profits" means "(i) where profits have been made in any chargeable accounting period, the amount by which such profits fall short of the stand ard profits; (ii) where a loss has been made in any charge able accounting period, the amount of the loss added to the amount of the standard profits;" Section 4 defines 'charge of tax ' as follows: "Charge of tax" ( 1 ) Subject to the provi sions of this Act, there shall in respect of any business to which this Act applies, be charged, levied and paid on the amount by which the profits during any chargeable ac counting period exceed the standard profits a tax (in this Act referred to as "excess prof its tax") which shall, in respect of any chargeable accounting period ending on or before the 31st day of March, 1941, be equal to fifty per cent, of that excess and shall, in respect of any chargeable accounting period beginning after that date, be equal to such percentage of that excess as may be fixed by the annual Finance Act; Provided that any profits which are, under the provisions of sub section (3) of section 4 of the Indian Incometax Act, 1922, exempt from income tax, and all profits from any business of life insurance shall be total ly exempt from excess profits tax under this Act. Provided further that in the. case of any business which includes the mining of any mineral, any bonus paid by or through the Central Government in. respect of increased out put of the mineral shall be totally exempt from excess profits tax under this Act. (2)Where a chargeable accounting period falls partly 612 before and partly after the end of March, 1941, the foregoing provisions of this section shall apply as if so much of that chargeable accounting period as falls before, and so much of that chargeable accounting period as falls after, the said end of March were each a separate chargeable accounting period, and as if the excess of profits of that separate chargeable accounting period were an appor tioned part of the excess of profits arising in the whole period determined in accordance with the provisions of section 7A." Section 7 deals with the relief on occurrence of defi ciency of profits and provides in substance that where a deficiency of profits occurs in any chargeable accounting period in any business, the profits of the business charge able with excess profits tax shall be deemed to be reduced and relief shall be granted according to the provisions laid down therein. The main question in this case is to keep the distinc tion between 'accounting period ' and 'chargeable accounting period '. The accounting period, it has to be borne in mind, is the twelve months ' proceeding just on the basis of the income tax year and the assessment must be made on the same basis. The 'chargeable accounting period ' is the period beginning from 1st September, 1939 ending after amendment on 31st March, 1946. So if there is any deficiency of profits in any of the accounting period which has not been absolved in the assessment for that year may be carried forward but the assessment must be made on the basis of the accounting period. This has to be emphasised and it must be borne in mind that though it is wholly immaterial whether the manu facture and sale took place in the same year or in two different years, the division of time into periods for its assessment must be made in a real sense as in the income tax one, and then make appropriate adjustments. Therefore the profits and losses of each year must be computed on yearly basis in terms of the definition of 'accounting period ' under section 2(1) of the Act. But if any deficiency of profits remains unabsolved, it may be carried forward against any excess profits made and set off during the next accounting period. The chargeable accounting period is the period from 1st September, 1939 to 31st March, 1946. But each year 's excess profit & loss must be computed in the manner contemplated in section 2(1) of the Act. So if there was any deficiency of profits in any particular period, it must be determined on that basis. In order to work out the scheme of the Act, there must be proper devetailing of the concept of "accounting period", 613 "chargeable accounting period" and basic scheme of the Income Tax Act bearing in mind that excess profits are excess of profits which were intended to be mopped up during the war period intended to be taxed separately and differ ently. This view finds support in the decision of the Alla habad High Court. In the case of Haji Rahmat Ullah and Co. vs Commissioner of Income tax, U.P., the High Court of Allahabad held that a payment received in any year subsequently to a chargeable accounting period is not liable to be treated as the profits of that period, merely because the work which occasioned that payment was done during that period. The "profits during the chargeable accounting peri od" are those profits respecting which a right to receive had accrued or arisen during that period. If the right to receive those profits had accrued or arisen subsequently, then even though they had accrued or arisen by reason of work done during the chargeable accounting period, these were not liable to be treated as the profits of that charge able accounting period. The High Court observed that it would seem ex facie that if the profits earned during a certain period are taxable under the Income tax Act, it is a part of those very profits which is liable to excess profits tax. Whether the profits in the one case could be identified with the profits in the other would be determined by refer ence to the period in which those accrued or arose. It was emphasised that the profits during the chargeable accounting period must be computed under the Excess Profits Tax on the same basis as are profits for an income tax assessment. It is clear that excess profits tax is attracted in respect of a business to which the Act applied when the profits during the chargeable accounting period exceed the standard profit. It has to be clearly borne in mind that the Act is not an entirely different Act in the sense that it proceeds upon the concept completely different from the notions of Income tax and has its source in an entirely different tax concept. More profits which were likely to have been earned during those years, these were made subject to excess profits. It appears to us that the period of assessment in the Act is an "accounting period" in the same way as the 'previ ous year ' is the period of assessment for the purpose of Income Tax. Though profit in a composite transaction could be apportioned as between manufacture and sale in the same accounting year, such an apportionment is not permissible when one part of the transaction, i.e. manufacture, fails in one chargeable accounting period and falls in another part of the accounting period i.e. the trading operations, i.e. falls in another accounting period, then set off of defi ciency in profits under section 7 of the Act is permitted but a necessary precondition was that profit 614 must be made in the accounting period to which the deficien cy relates. The profits attributed on apportionment was outside the scope of section 7 of the Act. It must be remem bered that the 'excess profit ' under the Act is profit determined under the Income Tax Act subject to prescribed adjustments. If the income tax assessment discloses nil profits, no separate profit can be determined independently under the Act. The position of the Excess Profits Tax Act was explained by Lord President Clyde in Edward Collins & Sons. Ltd. vs The Commissioner of Inland Revenue, at 780 where the Lord President emphasised that subject to certain modi fication those profits had to be determined in the same way and on the same principle as a trader 's profits and gains have to be computed for the purposes of the Incometax Act. It is a general principle, in the computation of the annual profits of a trade or business under the Income Tax Acts, that those elements of profit or gain, and those only, enter into the computation which are earned or ascertained in the year to which the enquiry refers; and in like manner, only those elements of loss or expense enter into the computation which are suffered or incurred during that year. The same principle, in our opinion, would be applicable to the facts of this case. The decision of this Court in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay, 18 I.T.R. 472 related entirely to a different context where certain part of the activities occurred at Raichur and the sales took place in Bombay, the question was whether the activity which the assessee carried on at Raichur was part of their business within the meaning of the third proviso to section 5 of the Act, that the profits of a part of the business, the manufacturing of oil in their mills at Raichur, accused or arose at Raichur and that such profits were not assessa ble to excess profits tax under the third proviso to Section 5 of the Act. That is not the controversy here.controversy is not so much where the profits arose nor is the controver sy whether the profits arose during the chargeable account ing period but where the profits arose during the 'account ing period ' and as such whether the deficiency of the prof its not arising during 'counting period ' but during the 'chargeable accounting period ' could be set off without computation. The method of computation under section 7 of the Act must be on the basis of 'accounting period ' and after that the deficiency in profits for that period should be computed on that basis and after set off carried forward to be set off during the chargeable accounting period. It is thus an harmonious construction of 615 the different provisions of the Act is possible and the true excess profits, if any, as contemplated by the Act be deter mined. The concept of 'accounting period ' in the background of the 'chargeable accounting period ' can thus be harmo nised. The accounting period was 1st April, 1943 to 31st March, 1944. In the facts of the case we are of the opinion that the question must be answered in the negative and in favour of the revenue. The appeal is allowed and the judg ment and order of the High Court are set aside. In the facts and circumstances of the case, parties will pay and bear their own costs. A.P.J. Appeal allowed.

The assessee was an unregistered firm carrying on busi ness of manufacture and sale of Katechu. The firm carried on the work of extraction of Katechu in Nepal and sales were affected in Kanpur. It had first taken a jungle on lease and Katechu were extracted from October 1940 to September, 1941. Sales were effected from 30th May, 1941 to 29th September, 1941. Thereafter, another jungle was taken on lease and Katechu were extracted from 23rd November, 1942 to 6th November, 1944. The sales were effected between 26th July, 1943 to 4th April, 1944. The assessee claimed set off of deficiency of profit for the periods 20th October, 1940 to 17th October, 1941 and 23rd November, 1942 to 31st March, 1943 on the ground that the business carried on during the chargeable accounting period 1 4 1943 to 31 3 1944 was not separate to and dis tinct from the business carried on in 1940 41. The Excess Profit Tax Officer did not set off the defi ciency of profits that accrued in respect of the period 1940 41 out of the profits for the chargeable accounting period from 1 4 1943 to 31 3 1944, and held that the busi ness carried on during October, 1940 to October, 1941 was completely different from the business carried on during the aforesaid chargeable accounting period. So far as the deficiency pertaining to the period Novem ber, 1942 to 31st March, 1943 was concerned, the manufactur ing operations started on or about 23rd November, 1942 and the sales started on 26th July, 1943. Katechu produced from 23rd November, 1942 to 31st March, 1943 remained in stock till the last date of the chargeable accounting period. namely, 31st March, 1943. As the assessee did not, maintain any books of account, the provisions of section 13 of the Income Tax were applicable. The Revenue, therefore, valued the stock intrade at cost and held that there could be no profit or loss during the chargeable accounting period. In appeal, the assessee urge that deficiency in profits pertaining to the chargeable accounting periods from Octo ber, 1940 to 31st March, 1941, and 23rd November, 1942 to 31st March, 1943 should be allowed a set off in computing the excess profits and as there were no profits during the said chargeable accounting period, the standard profits became the deficiency of the said two years which should have been allowed set off and that as manufacturing opera tions were carried on during the said periods, it could not be said that the assessee did not carry on any business. The Appellate Assistant Commissioner found that the constitution of the firm during the chargeable accounting period was the same as in 1940 41, that the accounts were maintained in the same fashion and the same business was carried on, that the assessee had effected sales only during 30th May, 1941 to 29th September, 1941 and held that the assessee was entitled to set off in respect of the deficien cy of profits. He, therefore, confirmed that there were no profits and losses during the chargeable accounting period ending on 31st March, 1941 and as such there could be no deficiency of profits. The assessee was, therefore, held to be entitled to a set off of the deficiency only for the chargeable accounting period ending on 31st March, 1942 which consisted of the period 1st April. 1941 to 29th Sep tember. The Tribunal, however, held that no profits accrued unless sale was effected and accepting the contention of the Revenue that no part of profits, which accrued during the said two chargeable accounting periods could be charged and were in fact not so charged to income tax, as no sales were effected, the Act itself did not apply and confirmed the order of the Appellate Assistant Commissioner. The High Court divided the entire period of manufacture and sales to determine the question whether there was manu facturing activity and sale; (1) October 28, 1940 to March 31, 1941, failing in the financial year ending March 31, 1941, Katechu was manufactured but there was no sale; (2) April 1, 1941 to September 29, 1941, failing in the finan cial year ending March 31, 1942; sales took place from May 30, 1941 to September 29, 1941; (3) November 23, 1942 to March 31, 1943 failing in the financial year ending March 31, 1943; Katechu was manufactured but there was no sale; (4) April 1, 1943 to March 31, 603 1944, failing in the financial year ending March 31,. 1944; sale took place from July 26, 1943 to March 31, 1944; (5) April 1, 1944 to April 4, 1944, failing in the financial year ending March 31, 1945; sales were effected from April 1, 1944 to April 4, 1944 when the business was discontinued. It held that while there was manufacturing activity there was no sale during the financial years ending March 31, 1941 to March 31, 1943, that the profits earned upon sales ef fected during the chargeable accounting period ending 31st March, 1944 must be apportioned between the manufacturing activity during the chargeable accounting period ending 31st March, 1943 and the sales during the chargeable accounting period ending 31st March, 1944 and that the deficiency of profits must be set off in computing the excess profits for the chargeable accounting period ending 31st March, 1944. The High Court, therefore, did not accept the opinion of the Tribunal and held that the assessee was entitled to a set off of deficiency of profits relating to the periods 28 10 1940 to 31 3 1941 and 23 11 1942 to 31 3 1943 from the profits of the chargeable accounting period 1 4 1943 to 31 3 1944. Allowing the Appeal, HELD: 1. The scheme contained in the Excess Profits Tax Act is a legislation intended to tax the profits of certain business in excess of a certain limit as provided in that Act. It is, therefore, complementary to the Income Tax Act by its very nature. [610D] Commissioner of Income Tax, Bombay vs Raipur Manufactur ing Co., Ltd., at 733, followed. In order to work out the scheme of the Act, there must be proper dovetailing of the concept of 'accounting period '. 'chargeable accounting period ' and basic scheme of the Income Tax Act bearing in mind that excess profits are excess of profits which were intended to be mopped up during the war period, to be taxed separately and differently. [612H; 613A B] 3. If the right to receive those profits had accrued or arisen subsequently then even though they had accrued or arisen by reason of work done during the chargeable account ing period, these were not liable to be treated as the profits of that chargeable accounting period. [613C] 4.Whether the profits in the one case could be identi fied with the profits in the other would be determined by reference to the period in which those accrued or arose. The profits during the chargeable 604 accounting period must be computed under the Excess Profits Tax on the same basis as are profits for an income tax assessment. [613D E] Haji Rahmat Ullah and Co. vs Commissioner of Income tax, U.P., , relied upon. It has to be clearly borne in mind that the Act is not an entirely different Act in the sense that it proceeds upon the concept completely different from the notions of Income Tax and has its source in an entirely different tax concept. More profits which were likely to have been earned due to profits, these were made subject to excess profits. [613E F] 6. Though profit in a composite transaction could be apportioned as between manufacture and sale in the same accounting year, such an apportionment is not permissible when one part of the transaction, i.e. manufacture, falls in one chargeable accounting period and falls in another part of the accounting period i.e. the trading operations i.e. falls in another accounting period, then set off deficiency in profits under section 7 of the Act is permitted but a necessary precondition was that profit must be made in the accounting period to which the deficiency relates. [613G H; 614A] 7. The excess profit under the Act is profit determined under the Income Tax Act subject to prescribed adjustments. If the income tax assessment discloses nil profits, no separate profit can be determined independently under the Act. [614A B] 8. It is a general principle, in the computation of the manual profits of a trade or business under the Income Tax Acts, that those elements of profits or gain, and those only, enter into the computation which are earned or ascer tained in the year to which the enquiry refers; and in like manner, only those elements of loss or expense enter into the computation which are suffered or incurred during that year. [614C D] Edward Collins & Sons Ltd. vs The Commissioners of Inland Revenue, at 780, followed and Commission er of Incometax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay, 18 I.T.R. 472, distinguished.

Appeals Nos. 246 and 287 of 1965. Appeals by special leave from the Award dated March 5 1964 of the Seventh Industrial Tribunal West Bengal in Case No. VIII 60 of 1963. M. C. Setalvad, and D. N. MukherJee, for the appellant in (C. A. No. 246/65) and respondent in (C.A. No. 287/65). A.S. R. Chari and B. P. Maheshivari, for respondent in (C.A. No. 246/65) and appellant in (C.A. No. 287/65). Two matters in dispute between the management and the workmen Were referred to the tribunal relating to (i) the age of retirement of the workmen at the head office and the factory of the company and (ii) the introduction of : gratuity scheme for workmen employed at the head office and the factory. The tribunal fixed the age of retirement for clerical an( ,subordinate staff at 58 years and for workmen in the factory a 55 years. The tribunal also introduced a gratuity scheme after 5 2 5. considering the objections raised to the draft scheme proposed by the company. of the two appeals one is by the company relating to the gratuity scheme and the other by the workmen relating to the age of retirement as well as to the gratuity scheme. We shall first consider the question of age of retirement. It may be mentioned that there was no retirement age in force in this company and so the position when the reference was made was that the workmen could continue to work so long as they were physically or mentally fit. The workmen contended that the age of retirement both for the head office and factory workmen should be fixed at 60 years. The company however proposed that the age of retirement should be 55 years for all workmen. The tribunal as already indicated has fixed the age of retirement at 58 years for clerical and subordinate staff and 55 years for factory workmen and has apparently relied on the decision of this Court in Workmen of Jessop & Co. Limited vs Jessop and Company Limited(1). Now this is a case where there was no age of retirement before the reference was made and the workmen whether at the head office or at the factory were all entitled to work so long as they were physically or mentally fit. So far as the existing workmen are concerned, we think that the tribunal should have fixed the age of retirement at 60 years both for the factory workmen as well as head office workmen. It is enough in this connection to refer tothe decision of this Court in Guest, Keen,Williams (Private) Limited vs Sterling(P.J.) (2) where in a similar situation this Court fixed the ageof retirement at 60 years in the case of existing workmen. Then there is the question as to future workmen and whether their age of retirement should also be fixed at the same level as in the case of existing workmen. We are of opinion that generally speaking there should not be any difference in the age of retirement of existing workmen and others to be employed in future in a case like the present unless there are special circumstances justifying such difference. In this connection our attention is drawn to the case of Guest, Keen, Williams (P) Limited(2) where the age of retirement of future workmen was 55 years. In that case however the age of retirement of future workmen was fixed at 55 years by the Standing Order and the question whether that age of retirement should be changed was not before this Court for consideration. All that this Court had to consider in that case was whether the age of retirement of existing employees, before the Standing Order fixing the age of retirement at 55 years was intro (1) (2) ; : :526 educed, should be 60 years or not. In the present company so far there is no age of retirement and unless there are valid and cogent reasons for making a diference in the age of retirement of existing workmen and those employed in future, the future workmen .should also have the benefit of the same, age of superannuation. Considering that there has been a general improvement in the standard of health in this country and also considering that longevity has increased, fixation of age of retirement at 60 years appears to us to be quite reasonable in the present circumstances. Age of retirement at 55 years was fixed in the last century in government service and had become the pattern for fixing the age of retirement everywhere. But time in our opinion has now come considering the improvement in the standard of health and increase in longevity in this country during the last fifty years that the age of retirement should be fixed at a higher level, and we consider that generally speaking in the present circumstances fixing the age ,of retirement at 60 years would be fair and proper, unless there are special circumstances justifying fixation of a lower age of retirement. Now so far as the clerical and subordinate staff are concerned, we are of opinion that there is no reason for any difference in the age of retirement as between the existing staff and the future staff. Their work is exactly the same, and in the circumstances there ;should be the same age of retirement. As to the factory workmen, it is urged that their age of retirement should be fixed at a lower level as work in the factory is more arduous than the work of clerical and subordinate staff, and in this connection reliance is placed on the decision of this Court in Jessop and Company(1) where one age was fixed for clerical and .subordinate staff and a slightly lower age was fixed for the factory workmen. Here again we are of opinion that generally speaking, there is no reason for making a difference in the age of retirement as between clerical and subordinate staff on the one hand and 'factory workmen on the other, unless such difference can be justified on cogent and valid grounds. It is only where work in the factory is of a particularly arduous nature that there may be reason for fixing a lower age of retirement for factory workmen as compared to clerical and sub ordinate staff. This appears to have been no in the case of jessop and Company(1) for that was a heavy engineering concern, where presumably work in the factory was much more arduous as com (1)[1964] 527 pared to the work of clerical and subordinate staff. There might therefore have been then some justification for fixing a lower age, of retirement for factory workmen in the case of those factories where the work is of a particularly arduous nature. But the present company is a paints manufacturing company and there is in our opinion no reason to suppose that the work in the factory in the present case is particularly arduous as compared to the work of clerical and subordinate staff. We therefore think that even in the case of future factory workmen in the present concern there is no special reason why the age of retirement should be fixed at a lower level. It is of course always possible for an employer to terminature the services of a workman if he becomes physically or mentally incapable of working before the, age of retirement. This power being there, there is no reason to suppose that there will be inefficiency in work on account of fixing the age of retirement at 60 years; on the other hand with the age of retirement at 60 years there *HI be added advantage that more experienced workmen will be available to the management and that would be a cause for greater efficiency. On the whole therefore we are of opinion that the age, of retirement in the case of factory workmen also in the present company should be fixed at the age of 60 years. We therefore modify the award of the tribunal and fix the age of retirement for the clerical and subordinate staff as well as for the factory workmen, whether existing or future, at the age of 60 yews. We now turn to the gratuity scheme. Two points have been urged on behalf of the company in this connection. The tribunal has fixed five years minimum service in order to enable a workman to earn gratuity. This has been provided in the event of (a) death of an employee while in service of the company, (b) discharge or voluntary retirement of an employee on grounds of medical unfitness, (c) voluntary retirement or resignation before reaching the age of superannuation, (d) retirement on reaching the age of superannuation, or (e) termination of service by the company for reasons other than misconduct resulting in loss to the company in money and property. The management objects to the minimum period being five years in the case of voluntary retirement or resignation before reaching the age of superannuation. It is contended that gratuity schemes usually provide for a longer minimum of service in the case of voluntary retirement or resignation before reaching the age of superannuation. We think that there is substance in this contention. The reason for providing a longer minimum period for earning gratuity in the case of 528 voluntary retirement or resignation is to see that workmen do not leave one concern after another after putting the short Minimum service qualifying for gratuity. A longer minimum in the case of voluntary retirement or resignation makes it more probable that the workmen would stick to the company where they are working. That is why gratuity schemes usually provide for a longer minimum in the case of voluntary retirement or resignation. We may in this connection refer to the Express Newspapers (Private) Limited vs the Union of India(1) where a short minimum for voluntary retirement or resignation was struck down. Again in The Garment Cleaning Works vs Its Workmen(2), 10 years minimum was prescribed to enable an employee, to claim gratuity if he resigned. In the Management of Wenger and Company vs Their workmen(3), a distinction was made between termination of service by the employer and termination resulting from resignation given by an employee. In the first case the minimum was fixed at 5 years; in the second the minimum period was fixed at 10 years by this Court. We therefore modify the gratuity scheme in this regard and order that in the case of voluntary retirement or resignation by an employee before reaching the age of superannuation, the minimum period of qualifying service for gratuity should be ten years, and not five years as prescribed by the tribunal. The next point that has been urged on behalf of the manage ment in this connection is that the tribunal has while fixing 21 days ' basic wage or salary as the quantum for gratuity for each completed year of service included dearness allowance in the words "basic wage or salary". It is urged that the usual pattern of gratuity scheme provides for gratuity on basic wages, and dearness allowance generally speaking is not included in basic wages for fixing the quantum of gratuity. It is further urged that by including dearness allowance within the definition of "basic wages or salary" as given in the scheme in this case, the tribunal has really more or less doubled the quantum of gratuity for each completed year of service. There is in our opinion force in this contention also. In May and Baker (India) Limited vs Their workmen(4), the workmen claimed in this Court that gratuity should be fixed on gross salary. In that case the tribunal had fixed the quantum on basic salary i.e. it had not included (1)[1955] S.C.R.12, at p. 158. (3)A.I.R. (2)[1962] 1 S.C,R. 711, 714. (4) [1961] 11 L.L.J. 529 dearness allowance for this purpose and the reason given by the tribunal for fixing the quantum of gratuity on basic salary was that the workmen in that case were getting double retiring benefit, namely both gratuity and provident fund. That view of the tribunal was upheld by this Court. On the other hand, it has been urged that in some cases quantum of gratuity has been fixed on gross salary i.e. basic wages plus dearness allowance and in this connection reference was made to British India Corporation vs The Workmen(1). In that case this Court upheld the award of the tribunal fixing gratuity on the basis of consolidated wages. This Court pointed out that the usual pattern was to fix quantum of gratuity on the basis of basic wages but refused to interfere in that case because the practice in the concern in that case already existing was to fix gratuity on consolidated wages. In the present case also there is a provident fund scheme in force. So with the introduction of the gratuity scheme, the employees will be getting double retiring benefit. In such circumstances we are of opinion that the tribunal should not have defined basic wages so as to include dearness allowance. Besides as the gratuity scheme is being introduced for the first time in this concern, it would be proper to follow the usual pattern of fixing the quantum of gratuity on basic wages (excluding dearness allowance), especially when there is another retiring benefit in the shape of provident fund already existing in this concern. We therefore modify the award of the tribunal in this respect and order that gratuity should be paid at the rate of 21 days ' basic wages or salary for each completed year of service, and this basic wage will not include dearness allowance or any other allowance. Subject to these modifications, the scheme framed by the tribunal will stand. The workmen have also assailed the gratuity scheme and their case is that they should have been granted 30 days wages as prayed for by them instead of 21 days ' basic wages fixed by the tribunal. We do not think there is any case for increasing the quantum of gratuity fixed by the tribunal at 21 days ' basic wages as modified by us for each completed year of service, for there is a provident fund scheme also in force in this concern and the workmen are thus getting two retiring benefits. No other point has been pressed before us. (1) (1965) Vol. 10 Factory Law Reports 244. 5 30 We therefore partly allow the appeal of the company and make the two modifications in the gratuity scheme as indicated above. We also partly allow the appeal of the workmen and fix the retirement age for all workmen existing or future clerical, subordinate and factory workmen at 60 years. In the circumstances we make no order as to costs in both the appeals. Appeals allowed in part.

Two matters in dispute between the management of a paints manufacturing company and their workmen, namely: (1) the are of retirement of the workmen and (ii) the introduction of a gratuity scheme for them, were referred to the Industrial Tribunal. Before the reference was made the workmen were entitled to work so long as they were physically and mentally fit. The Tribunal fixed the age of retirement for clerical and subordinate staff at 58 years and for the factory workmen at 55 )rears. The Tribunal also introduced a gratuity scheme. It fixed 5 years minimum service in order to enable a workman to earn gratuity and while fixing 21 days ' basic wage or salary as the quantum for gratuity for each completed year of service, included dearness allowance in the words "basic wage or salary. " Both the management and workmen appealed to this Court. The workmen contended that : (i) the age of retirement both for the staff of the head office and the factory workmen should be fixed at 60 years, and (ii) 30 days ' wages instead of 21 days should have been fixed as the quantum for gratuity. The management objected to the minimum period of five years to enable a workman to earn gratuity even in the case of voluntary retirement or resignation and contended for a longer minimum of service. The management also urged that dearness allowance should not be included in the basic wages for fixing the quantum of gratuity. HELD:(i) The award of the Tribunal should be modified, fixing :he age of retirement, for the clerical and subordinate staff as well as for the factory workmen, whether existing or future,at the age of 60 years. [527 E] Age of retirement of 55 years was fixed in the last century in government service and had become the pattern for fixing the age of retirement everywhere. But considering the improvement in the standard of health and increase in longevity, the age of retirement should be fixed ordinarily it the higher level of 60 years. Since the work in the factory in the present case was not particularly arduous as compared to that of the clerical and subordinate staff, even in the case of factory workmen there s no reason why the age of retirement should be fixed at a lower level, specially when the management could always terminate the services of a workman if he becomes physically or mentally incapable of working, before the age of retirement. With the age of retirement at 60 years here will be the added advantage that more experienced workmen will be available to the management and that would be a cause for greater efficiency. As there are no valid and cogent reasons for making a difference in the age of retirement of existing workmen and those employed in future, the future workmen, both clerical and subordinate staff as 524 well as factory workmen, should also have the benefit of the same age of superannuation. [526 B D; 527 B D] (ii)No case for increasing the quantum of gratuity from 21 days basic wage to 30 days ' basic wage had been made out by the workmen, especially when there was a provident fund scheme also in force in the concern and the workmen, were thus getting two retiring benefits. [529 H] (iii)In the case of voluntary retirement or resignation by an employee before reaching the age of superannuation, the minimum period of qualifying service for gratuity should be 10 years, and not 5 years as prescribed by the Tribunal. [528 E] The reason for pro tiding a longer minimum period of earning gratuity in the case of voluntary retirement or resignation is to see that workmen do no ' leave one concern after another, after putting in the short minimum service qualifying for gratuity; and gratuity schemes usually provide for a longer minimum in the case of voluntary retirement or resignation. [527 A B] (iv)Gratuity should be paid at the rate of 21 days ' basic wage or Wary for each completed year of service, but such basic wage would not include dearness or any other allowance. [529 F] As the gratuity scheme was being introduced for the first time in the concern, it would be proper to follow the usual pattern of fixing the quantum of gratuity on basic wages, excluding dearness allowance, especially when there was another retiring benefit in the shape of provident fund already existing in the concern. [529 E] Case law reviewed.

riminal Appeals Nos. 20 to 23 of 1955. Appeals by special leave from the judgment and order dated May 7, 1954, of the Madras High Court in Criminal Revision Cases Nos. 57 to 60 of 1954 and Case Referred Nos. 2 to 5 of 1954. N. C. Chatterji, section Venkatakrishnan and section Subramanian, for the appellants. V. K. T. Chari, Advocate General, Madras, Ganapathy Iyer and T. M. Sen, for the respondent. November 28. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. The point for decision in these appeals is whether sections 4(2), 28, 29, 30, 31 and 32 of the Madras Prohibition Act No. X of 1937, hereinafter referred to as the Act, are unconstitutional and void. It will be convenient first to set out the impugned statutory provisions. Section 4, omitting what is not material runs as follows; 401 4(1) " Whoever (a) imports, exports, transports or possesses liquor or any intoxicating drug; or (g) uses, keeps or has in his possession any materials, still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug; or (j) consumes or buys liquor or any intoxicating drug ; or (k) allows any of the acts aforesaid upon premises in his immediate possession, shall be punished Provided that nothing contained in this sub section shall apply to any act done under, and in accordance with, the provisions of this Act or the terms of any rule, notification, order, licence or permit issued thereunder. (2) It shall be presumed until the contrary is shown (a) that a person accused of any offence under clauses (a) to (j) of sub section (1) has committed such offence in respect of any liquor or intoxicating drug or any still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug, or any such materials as are ordinarily used in the tapping of toddy or the manufacture of liquor or any intoxicating drug, for the possession of which he is unable to account satisfactorily ; and (b) that a person accused of any offence under clause (k) of sub section (1) has committed such offence if an offence is proved to have been committed in premises in his immediate possession in respect of any liquor or intoxicating drug or any still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug, or any such materials as are ordinarily used in the tapping of toddy or the manufacture of liquor or any intoxicating drug. 402 Section 28 provides that if any Collector, Prohibition Officer or Magistrate has reason to believe that an offence under section 4(1) has been committed, he may issue a warrant for search. Section 29 confers on certain officers power to search and seize articles even without a warrant, under certain circumstances. Section 30 provides for certain classes of officers entering any place by day or night for inspection of stills, implements, liquor and the like. Section 31 authorises the officers empowered to make entry under sections 28, 29 or 30, to break open any door or window and remove obstacles, if otherwise they could not make entry. Section 32 confers authority on a Prohibition Officer or any officer of the Police or Land Revenue Departments to arrest without warrant any person found committing any offence under section 4(1). Now, the facts are that on November 18, 1953, the Prohibition Officer, Madras City, and the Deputy Commissioner of Police made a search of premises No. 28, Thanikachala Chetty Street, Thyagarayanagar, Madras, and seized several bottles of foreign liquor and glasses containing whisky and soda. The appellant, Lakshmanan Chettiar, was residing at the premises, and the other three appellants, A. section Krishna, R. Venkataraman and V. section Krishnaswamy, were found drinking from the glass tumblers. All the four were immediately put under arrest and in due course charge sheets were laid against them for offences under the Act. The three appellants other than Lakshmanan Chettiar were charged under sections 4 (1) (a) and 4 (1) (j) for possession and consumption of liquor, and Lakshmanan Chettiar was charged under section 4 (1) (k) for allowing the above acts in premises in his immediate possession, a under section 12 for abetment of the offences. He was also charged under section 4 (1) (a) on the allegation that though he was a permit holder, he was in possession of more units than were allowed under the permit, and that by reason of the proviso to that section, he had committed an offence under section 4 (1) (a). Immediately after service of summons, the appellants filed an application unders. 432 of the Criminal Procedure Code, wherein they contended that sections 4(2) and 28 to 32 of the Act were 403 repugnant to the provisions of the Constitution, and were therefore void, and prayed that the above question might be referred for the decision of the High Court. The Third Presidency Magistrate, before whom the proceedings were pending, allowed the application, and referred to the High Court as many as seven questions on the constitutionality of various sections of the Act. This reference was heard by Rajamannar, C.J., and Umamaheswaram, J., who held, disagreeing with the appellants, that sections 4(2) and 28 to 32 were valid,, and answered the reference against them. Against this judgment, the appellants have preferred the present appeals under article 136 of the Constitution. Two contentions have been urged in support of the appeals: (1) Section 4(2) and sa. 28 to 32 of the Act are void under section 107 of the Government of India Act, 1935, which was the Constitution Act in force when the Act in question was passed, because they are repugnant to the provisions of existing Indian laws with respect to the same matter, to wit, I of 1872 and Criminal Procedure Code Act No. V of 1898, and (2) the impugned sections are repugnant to article 14 of the Constitution, and have therefore become void under article 13(1). (1) Taking the first contention, the point for ' decision is whether the impugned provisions are hit by section 107 of the Government of India Act, 1935. Subsection (1) of section 107, which is the relevant provision, runs as follows: "If any provision of a Provincial law is repugnant to any provision of a Federal law which the Federal legislature is competent to enact or to any provision of an existing Indian law with respect to one of the matters enumerated in the Concurrent Legislative List, then, subject to the provisions of this section, the Federal law, whether passed before or after the Provincial law, or, as the case may be, the existing Indian law, shall prevail and the Provincial law shall, to the extent of the repugnancy, be void. " 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 404 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. The first question, therefore, that has to be decided is, is the subject matter of the impugned legislation one that falls, within the Provincial List, in which case section 107 would be inapplicable, or is it one which falls within the Concurrent List, in which case the further question, whether it is repugnant to the Central legislation will have to be decided ? The Entries in the Lists which are material for the present discussion are the following: List II Provincial Legislative List. Jurisdiction and powers of all courts except the Federal Court, with respect to any of the matters in this list; procedure in Rent and Revenue Courts. Intoxicating liquors and narcotic drugs, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs, but subject, as respects opium, to the provisions of List I and, as respects poisons and dangerous drugs, to the provisions of List 111. Offences against laws with respect of any of the matters in this list. List III Concurrent Legislative List. Criminal Procedure, including all matters included in the Code of Criminal Procedure at the date of the passing of this Act. Evidence and oaths; recognition of laws, public acts and records and judicial proceedings. Now, it is not contested that the Madras Prohibition Act, as a whole, is a law in respect of intoxicating liquors, falling within Entry 31 of the Provincial list. The declared object of the enactment as stated in the preamble to it is "to bring about the prohibition. of the production, manufacture, possession, export, import, transport, purchase, sale and assumption of 405 intoxicating liquors. . And this is carried out in section 4(1), which enacts prohibition in respect of the above matters, and imposes penalties for breach of the same. The other provisions of the Act may broadly be divided into those which are intended to effectuate section 4(1) and those which regulate the grant of licences and permits. The legislation is thus on a topic which is reserved to the Provinces and would therefore fall outside a. 107(1) of the Constitution Act. The argument of Mr. N. C. Chatterjee for the appellant is that though the Act is within the competence of the Provincial Legislature in so far as it prohibits possession, sale, consumption, etc., of liquor under 3. 4(1), the matters dealt with under section 4(2) and sections 28 to 32 fall not within Entry 31 of List II but within Entries 5 and 2 respectively of List III, and to that extent, the legislation is on matters enumerated in the Concurrent List. He contends that a. 4(2) enacting as it does a presumption to be drawn by the court on certain facts being established, deals with what is purely a matter of evidence, and it is therefore not a law on intoxicating liquors but evidence. Likewise, he argues, the provisions in sections 28 to 32 deal with matters pertaining to Criminal Procedure, such as warrants, seizure and arrest, and have no connection with intoxicating liquors. It is accordingly contended that sections 4(2) and 28 to 32 are legislation under Entries 5 and 2 of List III, and that their validity must be tested under section 107(1). The appellants are right in their contention that section 4(2) of the Act enacts a rule of evidence but does it follow from this that it is a law on evidence, such as is contemplated by Entry 5 in the Concurrent List ? so also sections 28 to 32 undoubtedly deal with matters of Procedure in relation to crimes, but are they for that reason to be regarded as legislation on Criminal Procedure Code within Entry 2 of List III ? The basic assumption on which the argument of the appellants rests is that the heads of legislation set out in the several Lists are so precisely drawn as to be mutually exclusive. But then, it must be remembered that we are construing a federal Constitution, It is of the 406 essence of such a Constitution that there should be a distribution of the legislative powers of the Federation between the Centre and the Provinces. The scheme Of distribution has varied with different Constitutions, but even when the Constitution enumerates elaborately the topics on which the Centre and the States could legislate, some overlapping of, the fields of legislation is inevitable. The British North America Act, 1867, which established a federal Constitution for Canada, enumerated in sections 91 and 92 the topic, ,, on which the Dominion and the Provinces could respectively legislate. Notwithstanding that the lists were framed so as to be fairly full and comprehensive, it was not long before it was found that the topics enumerated in the two sections overlapped, and the Privy Council had time and again to pass on the constitutionality of laws made by the Dominion and Provincial legislatures. It was in this situation that the Privy Council evolved the doctrine, that for deciding whether an impugned legislation was intra vires, regard must be had to its pith and substance. That is to say, if a statute is found in substance to relate to a topic with. in the competence of the legislature, it should be held to be intra vires, even though it might incidentally trench on topics not within its legislative competence The extent of the encroachment on matters beyond its competence may be an element in determining whether the legislation is colourable, that is, whether in the guise of making a law on a matter within it competence, the legislature is, in truth, making a law on a subject beyond its competence. But where that is not the position, then the fact of encroachmen does not affect the vires of the law even as regards the area of encroachment. Vide Citizens Insurance Company of Canada vs William Parson8(1), The Attorney General of Ontario vs The Attorney General for the Dominion of Canada(1), The Attorney General of Ontari, vs The Attorney General for the Dominion(3 ), Union Colliery Company of British Columbia vs Bryden(4) Attorney General for ' Canada vs Attorney General for (1) [1881] 7 A. C. 96. (3) (2) (4) 407 Ontario(,), Attorney General for Alberta vs AttorneyGeneral for Canada(2 ), and Board of Trustees of Letherbridge Northern Irrigation District vs Independent Order of Foresters(1). The principles laid down in the above decisions have been applied in deciding questions as to the vires of statutes passed by the Indian legislatures under the Government of India Act, 1935. In Subrahmanyan Chettiar vs Muttuswami Goundan(4), the question was as to whether the Madras Agriculturalist ' Relief Act IV of 1938, which was within the exclusive competence of the Provincial Legislature under Entries 20 and 21 in List 11 was ultra vires, in so far as it related to promissory notes executed by agriculturists by reason of the fact that under Entry 28, List I, "cheques, bills of exchange, promissory notes and other like instruments " were matters falling within the exclusive jurisdiction of the Centre. In holding that the legislation was intra vires, Sir Maurice Gwyer C. J. stated the reason in these terms: " 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 adherence 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 its 'true nature and character ', for the purpose of determining whether it is legislation in respect of matters in this list or in that. . " This point arose directly for decision before the Privy Council in Prafulla 'Kumar Mukherjee vs The Bank of Commerce, Ltd. (5). There, the question was whether the Bengal Money Lenders Act, 1940, which (1) (4) (2) (5) [1946 47] 74 I.A. 23. (3) 53 408 limited the amount recoverable by a money lender for principal and interest on his loans, was valid in so far as it related to promissory notes. Money lending is within the exclusive competence of the Provincial Legislature under Item 27 of List II, but promissory note is a topic reserved for the Centre, vide List 1, Item 28. It was held by the Privy Council that the pith and substance of the impugned legislation being money lending, it was valid notwithstanding that it incidentally encroached on a field of legislation reserved for the Centre under Entry 28. After quoting with approval the observations of Sir Maurice Gwyer C.J. in Subrahmanyan Chettiar vs Muttuswami Goundan, (supra) above quoted, Lord Porter observed: "Their Lordships agree that this passage correctly describes the grounds on which the rule is founded, and that it applies to Indian as well as to Dominion legislation. "No doubt experience of past difficulties has made the provisions of the Indian Act more exact in some particulars, and the existence of the Concurrent List has made it easier to distinguish between those matters which are essential in determining to which list particular provision should be attributed and those which are merely incidental. But the overlapping of subjectmatter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. Subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to Provincial legislation could never effectively be dealt with. " Then, dealing with the question of the extent of the invasion by the Provincial legislation into the Federal fields, Lord Porter observed: "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 409 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. " Then, there is the decision of the Federal Court in Lakhi Narayan Das vs The Province of Bihar (1). There, the question related to the validity of Ordinance No. IV of 1949 promulgated by the Governor of Bihar. It was attacked on the ground that as a legislation in terms of the Ordinance would have been void, under section 107(1) of the Government of India Act, the Ordinance itself was void. The object of the Ordinance was the maintenance of public order, and under Entry I of List II, that is a topic within the exclusive competence of the Province. Then the Ordinance provided for preventive detention, imposition of collective fines, control of processions and public meetings, and there were special provisions for arrest and trial for offences under the Act. The contention was that though the sections of the Ordinance relating to maintenance of public order might be covered by Entry I in List II, the sections constituting the offences and providing for search and trial fell within Items I and 2 of the Concurrent List, and they were void as being repugnant to the provisions of the Criminal Procedure Code. In rejecting this contention, Mukherjea J. observed: " Thus all the provisions of the Ordinance relate to or are concerned primarily with the maintenance of public order in the Province of Bihar and provide for preventive detention and similar other measures in connection with the same. It is true that violation of the provisions of the Ordinance or of orders passed under it have been made criminal offences but offences against laws with respect to matters specified in List 11 (1) 410 would come within Item 37 of List II itself, and have been expressly excluded from Item I of the Concurrent List. The ancillary matters laying down the procedure for trial of such offences and the conferring of jurisdiction on certain courts for that purpose would be covered completely by Item 2 of List II and it is not necessary for the Provincial Legislature to invoke the powers under Item 2 of the Concurrent List." He accordingly held that the entire legislation fell within Entries I and 2 of List II, and that no question of repugnancy under section 107(1) arose. This reasoning furnishes a complete answer to the contention of the appellants. The position, then, might thus be summed up When a law is impugned on the ground. that it is ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the legislation. To do that, one must have regard to the enactment as a whole, to its objects and to the scope and effect of its provisions. If on such examination it is found that the legislation is in substance one on a matter assigned to the legislature, then it must be held to be valid in its entirety, even though it might inci dentally trench on matters which are beyond its competence. It would be quite an erroneous approach to the question to view such a statute not as an organic whole, but as a mere collection of sections, then disintegrate it into parts, examine under what heads of legislation those parts would severally fall, and by that process determine what portions thereof are intra vires, and what are not. Now, the Madras Prohibition Act is, as already stated, both in form and in substance, a law relating to intoxicating liquors. The presumptions in section 4(2) are not presumptions which are to be raised in the trial of all criminal cases, as are those enacted in the Evidence Act. They are to be raised only in the trial of offences under section 4(1) of the Act. They are therefore purely ancillary to the exercise of the legis lative power in respect of Entry 31 in List 11. So also, the provisions relating to search, seizure and arrest in sections 28 to 32 are only with reference to offences 411 committed or suspected to have been committed under the Act. They have no Operation generally or to offences which fall outside the Act. Neither the presumptions in section 4(2) nor the provisions contained in sections 28 to 32 have any operation apart from offences created by the Act, and must, in our opinion, be held to be wholly ancillary to the legislation under Entry 31 in List II. The Madras Prohibition Act is thus in its entirety a law within the exclusive competence of the Provincial Legislature, and the question of repugnancy under section 107(1) does not arise. (2) It is next contended that the presumptions raised in section 4(2) of the Act, are repugnant to article 14 of the Constitution, and that the section must accordingly be declared to have become void under article 13(1). We are unable to see how section 4(2) offends the requirement as to equality before law or the equal protection of laws. The presumptions enacted therein have to be raised against all persons against whom the facts mentioned therein are established. The argument of Mr. N. C. Chatterjee is that the facts set out in section 4(2) on which the presumption of guilt is raised have no reasonable relation to the offences themselves, that for example, possession of liquor can be no evidence of possession of materials or apparatus for manufacture of liquor under section 4(1)(g), nor possession of materials, apparatus for manufacture of liquor, evidence of possession or consumption of liquor under section 4(1) (a) and (j), and that therefore the impugned provision must be struck down as denying equal protection. He relied in support of this contention on the following observations of Holmes J. in William N. McFarland vs American Sugar Refining Company (1): " As to the presumptions, of course the legislatures may go a good way in raising one or in changing the burden of proof, but there are limits. It is essential that there shall be some rational connection between the fact proved and the ultimate fact presumed, and that the inference of one fact from proof of another shall not be so unreasonable as to be a purely arbitrary mandate. Mobile J. & K.C.R. Co. vs Turnipseed(2)." (1) ; at 86 87 ; ; , 904. (2) ; , 43; ; , 80. 412 The law on this subject is thus stated by Rottschaefer on Constitutional Law, 1939 Edition, at page 835: " The power of a legislature to prescribe rules of evidence is universally recognised, but it is equally well established that due process limits it in this matter. It may establish rebuttable presumptions only if there is a rational connection between what is proved and what is permitted to be inferred therefrom. " The law would thus appear to be based on the due ,process clause, and it is extremely doubtful whether it can have application under our Constitution. But a reference to American authorities clearly shows that the presumptions of the kind enacted in section 4 (2) have been upheld as reasonable and not hit by the due process or equal protection clause. In Albert J. Adams vs People of the State of New York (1), a law of New York had made it an (offence to be knowingly in possession of gambling instruments, and enacted further that possession of such instruments was presumptive evidence of knowledge. It is thus in terms similar to section 4(1)(a) of the Act, which makes it an offence to be in possession of liquor, and to section 4(2) which raises a rebuttable presumption of guilt under section 4(1)(a). In rejecting the contention that the presumption was a violation of the due process clause, the Court observed: " We fail to perceive any force in this argument. The policy slips are property of an unusual character, and not likely, particularly in large quantities, to be found in the possession of innocent parties. Like other gambling paraphernalia, their possession indicates their use or intended use, and may well raise some inference against their possessor in the absence of explanation. Such is the effect of this statute. Innocent persons would have no trouble in explaining the possession of these tickets, and in any event the possession is only prima facie evidence, and the party is permitted to produce such testimony as will show the truth concerning the possession of the slips. Furthermore, it is within the established power of the state to prescribe the evidence which is to be received in the courts of its own government." (1) ; ; 413 In Robert Hawes vs State of Georgia (1), the question arose with reference to a statute of the State of Georgia, which had made it an offence to knowingly permit persons to locate in premises apparatus for distilling and manufacturing prohibited liquors. It also enacted a presumption that when such apparatus was found in a place, the person in occupation thereof shall be presumed to have knowingly permitted the location of the apparatus. The question was whether this presumption was repugnant to the due process clause. In holding that it was not, the Court observed: " Distilling spirits is not an ordinary incident of a farm, and, in a prohibition state, has illicit character and purpose, and certainly is not so silent and obscure in use that one who rented a farm upon which it was or had been conducted would probably be ignorant of it. On the contrary, it may be presumed that one on such a farm, or one who occupies it, will know what there is upon it. It is not 'arbitrary for the state to act upon the presumption and erect it into evidence of knowledge;. not peremptory, of course, but subject to explanation, and affording the means of explanation. " It is therefore clear that even on the application of the due process clause, the presumptions laid down in section 4(2) cannot be struck down as unconstitutional. We should add that the construction which the appellants seek to put on section 4 (2) that a person in possession of liquor could, under that section, be presumed to have committed an offence under section 4(1) (g) or that a person who is in possession of materials, implement or apparatus could be presumed to have committed offences under section 4 (1) (a) and (j) is not correct. In our opinion, the matters mentioned in section 4 (2) should be read distributively in relation to the offences mentioned in section 4(1). Possession of liquor, for example, is an offence under section 4(1) (a). The presumption in section 4(2) is that if it is found in the possession of a person, he should be presumed to have committed the offence under section 4(1)(a), unless he could give satisfactory explanation therefor, as for example, that it must have been foisted in the place without his knowledge. Likewise, it would be an (1) ; ; 414 offence under section 4(1)(g) to be in possession of materials, still, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor. Under section 4(2)(a), if a person is found to be in possession of materials or other things mentioned in the sub section, there is a presumption that he has committed an offence under section 4(1)(g), but it is open to him to account satisfactorily therefor. The contention, therefore, that there is no reasonable relation between the presumption and the offence is, in our opinion, based on a misreading of the section. Both the contentions urged on behalf of the appellants having failed, these appeals are dismissed. Appeals dismissed.

The appellants were charged before the Presidency Magistrate for offences under the Madras Prohibition Act, 1937 and when the cases were taken up for trial they raised the contentions that SS. 4(2) and 28 to 32 of the Act are void under section 107(I) of the Government of India Act, 1935, because they are repugnant to the provisions of the , and the Code of Criminal Procedure, 1898, and also because they are repugnant to article 14 Of the Constitution of India. On their application, the Magistrate referred the questions for the opinion of the High Court under section 432 ' of the Code of Criminal Procedure. The High Court having answered the questions against the appellants they preferred the present appeal under article 136. Held, that the Madras Prohibition Act, 1937, is both in form and in substance a law relating to intoxicating liquors and that the presumptions in section 4(2) and the provisions relating to search, seizure and arrest in SS. 28 to 32 of the Act have no operation apart from offences created by the Act and are wholly ancillary to the exercise of the legislative power under Entry 31 in List II, Sch. 7 of the Government of India Act, 1935. Accordingly the Act is in its entirety a law within the exclusive competence of the Provincial Legislature and the question of repugnancy under section 107(1) of the Government of India Act, 1935, does not arise. When a law is impugned on the ground that it is ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the legislation. To do that, one must have regard to the enactment as a whole, to its objects and to the scope and effect of its provisions. If on such examination it is found that the legislation is in substance one on a matter assigned to the legislature, then it must be held to be valid in its entirety, even though it might incidentally trench on matters which are beyond its competence. It would be quite an erroneous approach to the question to view such a statute not as an organic whole, but as a mere collection of sections, then disintegrate it into parts, examine under what heads of legislation those parts 52 400 would severally fall, and by that process determine what portions thereof are intra vires, and what are not. Subrahmanyan Chettiar vs Muthuswami Goundain, (1940) F.C.R. 188, Pyafulla Kumar Mukherjee vs The Bank of Commerce Ltd. (1940) L.R. 74 I.A. 23 and Lakhi Narayan Das vs The Province of Bihar , relied on. Held further, that the presumptions in section 4(2) Of the Act do not off end the requirements as to equality before law or the equal protection of laws under article 14, as they have to be raised against all persons against whom the facts mentioned therein are established. Even assuming that the law in America that a presumption of guilt would offend the requirement of the equal protection of laws unless there is a rational connection between the act proved and the ultimate fact presumed, could have application to the Indian Constitution, on a proper reading of the sections there is a reasonable relation between the presumption raised in section 4(2) and the offences under section 4(1). William N. McFarland vs American Sugar Refining Company, ; 24I U.S. 79; , Albert 1. Adams vs People of the State of New York, ; and Robert Hawes vs State of Georiya, 258 U.S. I ; , referred to.

Appeal No. 1438 of.1967. Appeal by special leave from the judgment and decree dated September 27, 1962 of the Madhya Pradesh High Court, Gwalior Bench in Civil Appeal No. 310 of 1960. section T. Desai and P. C. Bhartari, for the appellants. 19 B. C. Misra, Bhajan Ramrakhyani and Urmila Kapoor,for respondents Nos. 1 to 4, 8 and 10 to 12. The Judgment of the Court was delivered by Dua, J. This is the plaintiffs ' appeal by special leave from a common judgment and decree of a learned Single Judge of the Madhya Pradesh High Court at Gwalior dated September 27, 1962 partially allowing the defendants ' second appeal and dismissing that of the plaintiffs. It is not necessary to state the detailed facts of the case. Facts necessary for the purpose of this appeal alone may briefly be stated. In May, 1939 Ramle Singh and Jomdar Singh created a mortgage of the suit land in favour of Munshi Singh for a sum of Rs. 2,242/14/ . It is said that in May, 1943 notice given by the mortgagors for redemption of the mortgage was refused by the mortgagee. In June, 1943 the suit giving rise to the present appeal was instituted for redemption of the mortgage. Some other persons who were found to be in possession of the land, claiming to be tenants, were also impleaded as defendants. On May 25, 1951 Madhya Bharat Zamindari Abolition Act XIII of 1951 was enforced. It appears that an application to amend the plaint as a result of the new enactment was disallowed by the trial Court, but on revision the Madhya Pradesh High Court by its order dated October 10, 1955 reversed the order of the trial Court and permitted the plaintiffs to amend the plaint. The pleadings after the amendment gave rise to nearly 17 issues on the merits. On October 10, 1958 the suit was decreed in respect of the relief for redemption but claim in regard to mesne profits was disallowed. Preliminary decree for redemption was accordingly granted. In the course of its judgment the trial Court observed under issue No. 10 as follows : "I have in preceding paras shown that as per allegations in the written statements and the patwari papers, it appears that the suit lands have been in possession of Hanumantsingh, Shambhoosingh, khemsingh, Mansingh and ' Namdassingh. It will be discussed later whether they and descendants of Munshisingh are joint owners or not. Before abolition of zamindari, the records show half of the suit lands as the Khundkasht of the above defendants and half as the tenancy holding of Namdas (Kastkari). These entries however do not confer any title on the parties. Their right to remain in possession is limited i.e. till such time as the property is redeemed by the mortgagers i.e. the plaintiffs. These entries or the rights shown therein cannot prejudice the right of the plaintiffs. " 20 The Court while deciding issues Nos. 16 and 17 observed thus A "I have discussed these issues earlier in a different context. I may briefly add that Abolition of Zamindari Act does not affect the right of the plaintiffs to recover possession of lands which were placed in possession of the mortgagees (1956, M.B.L.J. Rameshwar vs Bhogiram). Defendants Hanumantsingh and others did not acquire possession of the suit lands by virtue of the sale in favour of their father Daulat Singh because they had purchased only an equity of redemption as, will appear from the judgment in Civil Suit No. 21/2001 filed on record. Entries as Pacca Krishak cannot affect the rights under the mortgage bond. I find accordingly." Three appeals were presented in the District Court against the. decree founded on this judgment, one of them being by the plaintiffs challenging refusal by the trial Court to grant mesne profits. In October, 1960 the plaintiffs ' appeal was partly allowed and mesne profits decreed from the date of deposit of the mortgage amount in Court. The other two appeals were dismissed. That Court disposed of all appeals by a common judgment and came to the conclusion that the lands had been mortgaged with possession by Samle Singh and Jomdar Singh with Munshi Singh and that they were under self cultivation of the plaintiffs before the mortgage, the mortgagees having come into possession by reason of the mortgage. The matter was taken by the defendants to the High Court on second appeal, the plaintiffs having also preferred an appeal in that. Court against the decree of the first appellate Court declining to give full relief claimed in regard to mesne profits. In the High Court also three appeals were presented. The High Court partially allowed the defendants ' appeal in view of the provisions of the Madhya Bharat Zamindari Abolition Act XIII of 1951. The plaintiffs were held entitled to redeem the mortgage by paying the mortgage money but disentitled to get possession of the mortgaged land. The proprietary rights including the right to get possession having vested in the State under the aforesaid Act, the plaintiffs, according to the High Court, could only claim compensation from the Government on the basis of their proprietary rights after redeeming the mortgage by making payment of the mortgage money. In support of this view the High Court relied on this Court 's decision in Haji Sk. Subhan vs Madho Rag(1), considering that decision to be decisive of the point in issue. That decision, however, appears to us to be directly concerned with the Madhya Pradesh Abolition of Proprietary Rights (Estates, Muhals, alienated land) Act, 1950 (Madhya Pradesh Act 1 of 1951). Before us the short question raised on behalf of the appellants is that reliance on the Madhya Bharat Zamindari Abolition Act XIII of (1) [1962] Supp. 1 S.C.R. 123. 2 1 1951 for the first time in the High Court was improper and that in any event without affording an opportunity to the appellants to show that the said Act did not apply to the case in hand, their suit could not have been dismissed. The submission is not wholly correct. There was in fact an amendment of the plaint pursuant to the enactment of the Madhya Bharat Abolition of Zamindari Act and additional issues were framed on the amended pleadings. , The parties and the courts were thus not ignorant of the existence of the said Act on the statute book. Turning to the Act in question, it was brought on the statute book in 1951, as the preamble shows, in order "to provide for the public purposes of the improvement of agriculture and financial condition of agriculturists by abolition and acquisition, of the rights of proprietors in villages, muhala, chaks or blocks settled on zamindari system which is only a. system of,, keeping an intermediary between the State and the tenants injurious to the betterment of agriculture as well as the agriculturists in Madhya Bharat and for other matters connected therewith," "Proprietor" as defined in section 2(a) means, "as respects a village, muhal or land settled on zamindari system, a person owning whether in trust or for his own benefit such village, muhal or land and includes (1) a Malguzar as defined in sub clause (12) of section 2 of Qanoon Mal, Gwalior State, Samvat 1983; and (2) as respects a chak or block a chakdar or blockdar whose lease granted to him by the Government under any Act, Rule or Circular relating to chaks and blocks, includes also, amongst its other conditions, a condition that he shall acquire the proprietary rights in respect of that chak or block when the conditions of the lease are fulfilled; (3) the heir and successors in interest of a proprietor; Section 2(c) defines "Khud kasht" to mean "land cultivated by the Zamindar himself or through employees or hired laborers and includes sir land." Sections 3 and 4 which occur in Chapter II dealing "vesting of proprietary rights in the State" provides as under : "3. Vesting of proprietary rights in the State. (1) Save as otherwise provided in this Act and subject to the provisions of section 8, on and from a date to be specified by a notification by the Government in this behalf (hereinafter referred 22 to as the date of vesting all proprietary rights in a village, muhal land, chak or block in Madhya Bharat vesting in a proprietor of such village, Muhal, land, chak or block as the case may be, or in a person having interest in such proprietary right through the proprietor shall pass from such proprietor or such other person, to and vest in the State free of all encumbrances. (2) After issue of a notification under sub section (1)no right shall be acquired in or over the land to which the said notification relates except by succession or under a decree or order of a Court or under a grant or contract in writing made or entered into by or on behalf of the Government; and no fresh clearings for cultivation or for any other purpose shall be made in such land except in accordance with such rules as may be made by the Government in this behalf. (3) The Government may by notification published in the Gazette vary the date specified under sub section (1) at any time before such date. Consequences of the vesting of an estate in the State. (1) Save as otherwise provided in this Act when the notification under section 3 in respect of any area has been published in the gazette, then, notwithstanding anything contained in any contract, grant or document or in any other law for the time being in force, the consequences as hereinafter set forth shall from the beginning of the date specified in such notification (hereinafter referred to as the date of vesting) ensue, namely : (a) all rights, title and interest of the proprietor in such area, including land (cultivable, barren or Bir), forest, trees, fisheries, wells (other than private wells) tanks, ponds, water channels ferries, path ways, village sites, hats and bazars and mela grounds and in all sub soil including rights, if any, in mines and minerals, whether being worked or not shall cease and be vested in the State free from all encumbrances; 23 (b) all grants and confirmation of title of or to land in the property so vesting or of or to any right or privilege in respect of such property or land revenue in respect thereof shall, whether liable to resumption or not, determine; (c) all rents and cesses in respect of any holding in the property so vesting for any period after the date of vesting which, but for such vesting would have been payable to the proprietor, shall vest in the State and be payable to the Government and any payment made in contravention of this clause shall not be a valid discharge of the person liable to pay the same; Explanation =The word "Holding" shall for the purpose of this clause be deemed to include also land given, on behalf of the proprietor, to any person on rent for any purpose other than cultivation , (d) all arrears of revenue, cesses or other dues in respect of any property so vesting and due by the proprietor for any period prior to the date of vesting shall continue to be recoverable from such proprietor and may ' without prejudice to any other mode of recovery, be realised by deducting the amount from the compensation money payable to such proprietor under Chapter V; (e) The, interest of the proprietor so acquired shall not be liable to attachment or sale in execution of any decree, or other process of any court, civil or revenue, and any attachment existing at the date of vesting or any order for attachment passed before such date shall, subject to the provisions of section 73 of the , cease to be in force. (f) every mortgage with possession existing on the property so vesting_or part thereof on the date immediately preceding the date of vesting shall, to the extent of the amount secured on such property or part thereof be deemed without prejudice to the rights of the State under section 3, to have been substituted by a simple mortgage. 24 (2) Notwithstanding anything contained in subsection (1) the proprietor shall continue to. remain. in possession of his khud kasht land, so recorded in the annual village papers before the date of vesting. (3) Nothing contained in sub section ( 1 ) shall operate as bar to the recovery by the outgoing proprietor of any sum which becomes due to him before the date of vesting in virtue of his proprietary rights. " A plain reading of these sections would show that all rights, title and interests of the proprietors in the area notified were to cease and were instead to vest in the State free from all encumbrances with effect from the date of notification and after such vesting in the State every mortgage with possession existing on the property so vested or part thereof on the date immediately preceding the date of vesting, to the extent of the amount secured on such property or part thereof, is to be deemed, without prejudice to the right of the State under section 3 to have been substituted by a simple mortgage. The proprietor, however, notwithstanding other consequences of the vesting in a State, is entitled to continue to remain in possession of his khud kasht land which is so recorded in the annual village papers before the date of vesting. Now it was clearly open to the plaintiffs to show that the land in question was khud kasht and, therefore, in accordance with section 4 they were entitled to remain in possession thereof. On behalf of the appellants ' also our attention was invited to the decision of this Court in the case of Haji Sk. Subhan(1) and specific reliance was placed on observations at page 139 of the report which suggests that a person continuing in possession on the basis of entries in the village papers, which had to be presumed to be correct, was not affected by the Act. Reference was also made to the observation at page 142 of the report where right to possess was upheld in favour of the party who had obtained A declaration of being an owner in possession. On behalf of the respondents reliance was placed on Rana Sheo Ambar Singh vs Allahabad Bank Ltd., Allahabad (2 , but that decision does not deal with the Madhya Bharat Act which concerns. That is with the U.P. Zamin dari Abolition and Land Reforms Act 1 of 1951, the scheme of which is not shown to be similar to that of the Madhya Bharat Act so far as it concerns us in the present case. That decision is, therefore, of little assistance in construing the Madhya Bharat Act. Another decision on which the respondents ' learned Advocate has placed reliance is Raja Sailendra Narayan Bhaj Deo vs Kumar Jagat Kishore Prasad Narayan Singh(s) which again (1) [1962] Supp. I S.C.R. 123. (2) ; (3) [1962] Supp. 2 S.C.R. 119. 25 deals with the Bihar Lands Reforms Act and not with the Madhya Bharat Act. The scheme of the Bihar Act being also dissimilar from that of the Madhya Bharat Act, this decision too cannot be of much help. The last decision relied on by Shri Mishra is Suraj Ahir vs Prithinath Singh and others(1) which is concerned with the Bihar Lands Reforms Act XXX of 1950 as amended by Act XVI of 1959. This decision is equally unhelpful. In our opinion the High Court was in error in allowing the appeal before it and in dismissing the plaintiff appellants ' suit for possession on the authority of this Court 's decision in the case of Haji Sk. Subhan(2). In the reported case the word "document" as occurring in section 4(1) of the M.P. Abolition of Proprietary Rights (M.P. Act 1 of 1951) was construed to include a decree of the Court and it was held that the principle that the executing Court cannot question the decree and has to execute it, had no operation on the facts of that case, because the objection was not based on the invalidity of the decree but on the effect of the aforesaid Act on the rights of the decree holder proprietor, to retain possession. The facts of that case were, therefore, different and so was the problem requiring solution. The precise question requiring decision by the Court in the present case was lost sight of and not properly adverted to. We are required in the present case to consider the effect of section 4(1) (f) of the M.P. Act XIll of 1951 on the rights of the plaintiff appellants to redeem the mortgage and secure possession of the mortgaged land. It may be pointed out that both the contesting parties the appellants and the respondents before us claim for themselves actual possession of the land in dispute as Khud kashi and also assert that the relevant entries in the annual village papers before the date of vesting showed them in such possession. On this basis they both claim right to retain possession even against the State. These rival controversial claims pressed by both the parties was the central question involving proper appraisal of material on the record and this basic dispute had to be first adverted to and judicially determined and thereafter the Court had to consider the applicability of the relevant provisions of the M.P. Act XIII of 1951 to the facts found. As the question of vesting of title in the State was also of vital importance it was, in our opinion, fit and proper for the Courts below to have issued notice, to the State as well, thereby enabling it to be impleaded as a party if it so desired. The approach of the High Court is erroneous and its decision highly unsatisfactory. The controlling questionseems to have been missed. We, therefore, allow the appeal and remit the case back to the High Court for a fresh decision of the (1) ; Sup. Cl.170 3 (2) [1962] Supp. 1 S.C.P. 12?. 26 appeal after notice to the State and after hearing it, in case it desires to be heard. It would also be open to the High Court, if it considers just and proper, to implead the State and if necessary to permit it to adduce evidence before the High Court or to remit the case to the trial Court for that purpose. In the circumstances of the case, parties would bear their own costs in this Court. Y.P. Appeal allowed.

The appellant filed a suit for redemption of a mortgage. The lower courts decreed the suit. The High Court held that in view of the provisions of the Madha Bharat Zamindari Abolition Act XIII of 1951 the appellants were entitled to redeem the mortgage but disentitled to get possession of the mortgaged land since under the Act the proprietary rights including the right to possession vested in the State. In appeal to this Court it was urged that High Court did not afford the appellants an opportunity to show that the land in question was Khud kasht and, therefore in according with section 4 they were entitled to remain in possession thereof. HELD : The precise question requiring decision by the High Court in the present case was lost sight of and not properly adverted to. Under the Act the proprietor, notwithstanding any other consequences of the vesting in the State, is entitled to continue to retain possession of his Khud kasht land which is so recorded in the annual village papers before the date of vesting. ' In the present case both the contesting parties claim for themselves actual possession of the land in dispute as Khud kasht and also assert that the relevant entries in the annual village papers before the date of vesting showed them in such possession. On this basis they both claim right to retain possession even against the State. These rival controversial claims pressed by both the parties was the central question involving proper appraisal of the material on the record and this basic dispute had to be first adverted to and judicially determined and thereafter the Court had to consider the applicability of the relevant provisions of Act XIII of 1951 to the facts found. As the question of vesting of title in the State was also of vital importance it was fit and proper for the Courts below to have issued notice to the State as well thereby enabling it to be impleaded as a party, if it so desired. [25D 26B] Haji Sk. Subban vs Madho Rao, [1962] Supp. 1 S.C.R. 123, distinguished. [The case was remitted to the High Court for a fresh decision].

vil Appeal Nos. 5036 39 of 1989. From the Judgment and Order dated 22.10.1984 of the Punjab and Haryana High Court in L.P.A. Nos. 696,695,694 and 697 of 1982. G.L. Sanghi, Dhruv Mehta (NP), Aman Vachher and S.K. Mehta for the Appellant. V.C. Mahajan, Tapash Ray, A. Minocha, K.R. Nagaraja and R.S. Sodhi for the Respondents. The Judgment of the Court was delivered by RAY, J. These appeals on special leave are directed against the judgment and order passed by the Division Bench of the High Court of Punjab and Haryana in Letters Patent Appeal Nos. 694 to 697 of 1982 dismissing the appeals with costs. The salient facts out of which these appeals have arisen, are as follows: The appellant Trust prepared a development scheme under section 24 read with section 28 of the Punjab Town Improve ment Trust Act, 1922 (hereinafter referred to as the Act) in relation to an area of about 60 acres of land at Palani Road. The lands of the respondents fell within the said area. On April 9, 1976 a notice under Section 36 of the Act was published in daily Tribune inviting objections till 5th May, 1976. This notice was published in the three consecu tive weeks of the said newspaper dated 9th April, 15th April and 23rd April, 1976. The very notice of the said scheme was also published under section 36 of the said Act in the Punjab Government Gazette on three consecutive weeks i.e. 7th May, 14th May and 21st May, 1976 inviting objections till May 5, 1976 against the scheme framed. In accordance with the provisions of Section 38 of the said Act the Trust also served notice on every person who was occupier or owner of any immoveable property falling within the area proposed to be acquired in executing the scheme within 30 days from the date of publication of the notice under section 36, in order to enable the owners and occupiers of such pre 230 mises to file objections to such acquisition and to state their reasoning in writing within a period of 60 days of service of the notice. After completion of the acquisition formalities, a notification under section 42 of the said Act was published on March 26, 1979. The respondent No. 2 and ors. assailed the appellant 's scheme notified under the Act in CWP No. 2561 of 1979 and CWP Nos. 4075, 36.15, 3654 of 1981 on the ground that they could not file objections against the scheme in terms of Section 36 of the Act till 5th May; 1976 as the notification was published in the Punjab Government Gazette on 7th May, 14th May and 21st May, 1976. These writ petitions were allowed by order dated 25th February, 1982 and the sanctioned scheme notified under section 42 of the Act was quashed. It was also mentioned in the said order that the appellant may, however, publish the scheme again either amended or unamended under section 36 of the said Act and proceed further in the matter in accordance with law. It is against this order the L.F.A. No. 694 to 697 of 1982 were filed. The Division Bench of the High Court affirmed the judgment and order of the learned single Judge and held that the provisions contained in Section 36 of the Act were mandatory and as it had not been complied with in the present cases, the illegality of non compliance of the mandatory provisions contained in Section 36 would not stand cured under Section 101 (1)(d) of the Act. Hence the Letters Patent Appeals were dismissed. Against this judgment and order the instant appeals on special leave have been filed in this Court. Mr. Mahajan, learned counsel appearing on behalf of the respondent No. 2 and ors. has very strenuously contended that the provisions of Section 36 of the said Act are mandatory inasmuch as it provides for publication of the notice as to the framing of the scheme under the Act in three consecutive weeks in the official Gazette as well as in the newspaper with a state ment inviting objections. Though the notice was duly pub lished in the newspaper Tribune ' for three consecutive weeks on 9th, 16th and 23rd April, 1976 notifying the date for filing objections till 5th May, 1976 yet the notification that was published in the Punjab Government Gazette for three consecutive weeks was admittedly after the expiry of period of filing objections i.e. 5th May, 1976. It has, therefore, been contended by Mr. Mahajan that due to non publication of the scheme in the Government Gazette before the expiry of the period of filing objections against the proposed scheme, the valuable right of the respondents to file objections against the scheme has been done away with. As such the publication of the scheme was rightly quashed by the courts below as this mandatory requirement had not been complied with by the State. In this connection, he has referred to the case of Prof. Jodh 231 Singh & Ors. vs Jullundur Improvement Trust, Jullundur and Ors. , This case was decided by the full bench of the High Court of Punjab and Haryana as to whether issuance of a notification under sub section (1) of Section 42 of the Punjab Town Improvement Act, 1922, would bar a challenge to the validity of the scheme or the govern mental sanction thereto for any reason including the reason that the scheme had been framed and sanctioned without compliance of the mandatory provisions particularly those of Sections 36, 38 and sub section (1) of Section 40 of the Act. It was held that: "Since the given provisions do not merely provide for the framing of the scheme simpliciter but also provide for acquisition of property to enable the execution of the scheme and since no person can be deprived of his property without being heard and one cannot ask for hearing unless he knows that he is being deprived of his property, so, by necessary implication a notice of the intention of the authorities of acquiring a given person 's property is im pliedly necessary to enable him to bring to the notice of the concerned authority his objections against the, acqui sition of his property. Hence such provisions as provide for notice, raising of objections and personal hearing in sup port of the objection would be mandatory in character. " In that case a notice under section 38 of the Act was issued on the petitioner who submitted objections in time. In the return filed on behalf of the Trust it was admitted that due to over sight, the petitioners could not be called for hearing along with other objectors as the objections filed by the petitioners had inadvertently got placed in some other file and that for the same reason their objec tions were neither considered by the Trust nor forwarded to the State Government along with the summary of the objec tions submitted at the time of sanction for the said scheme, It was contended on behalf of the Trust that the infirmity, if any, stemming from the non consideration by the Trust of the objections filed by the petitioners and sanction of the scheme by the Government in ignorance of the said fact stood cured by the provisions of sub section (2) of Section 42 of the Act. It was in that context the above observation was made by the full bench. Mr. Mahajan next contended that though admittedly no tices under section 33 of the said Act were issued on the respondent No. 2 and others who are either owners or occupi ers of the lands falling within the improvement scheme of the appellant and the respondent 232 No. 2 and others had filed objections against the proposed acquisition of their lands, yet on the basis of the said individual notices issued under section 38 of the said Act, the respondent No. 2 and others are debarred from raising objections against the proposed improvement scheme. It is further submitted that under Section 38 the owners and occupiers of the land affected by the said scheme may merely object to the proposed acquisition of their lands but they cannot file objections against the scheme published. The respondent No. 2 and others are therefore, deprived of their right to file objections against the scheme as provided in Section 36 of the said Act and so in view of the noncompli ance of the provisions of Section 36 of the said Act by the State Government, the development scheme cannot be enforced merely because the State Government notified the sanction of the scheme under section 42 of the Act. The learned counsel appearing on behalf of the appellant on the other hand, contended that in compliance of the provisions of Section 36 of the said Act a notice regarding the framing of the development scheme was published in the newspaper 'Tribune ' for three consecutive weeks i.e. on 9th, 16th and 23rd April, 1976 inviting objections till 6th May, 1976. It is only in the Punjab Government Gazette that the notification was published on 7th, 14th and 21st May, 1976 inviting objections till 5th May, 1976 i.e. the notification was made in the Punjab Government Gazette after the period for filing objections had expired. It has also been contend ed that individual notices under section 38 of the said Act were served on the owners and occupiers of the immovable property falling under the development scheme intimating them about the acquisition of the land with particulars of the lands failing within the said scheme and inviting their objections to be filed within a period of 60 days from the date of service of the notice. It has also been submitted that the respondent No. 2 and others i.e. the owners of the lands duly submitted their objections against the acquisi tion of the land as well as against the proposed scheme and the same were heard and considered by the prescribed author ity. After the hearing of the objections, a notification was made by the State Government sanctioning the said scheme and also that this Trust shall proceed forthwith to execute the said scheme. It has, therefore, been submitted that in these circumstances, the objections raised by the counsel for the respondent No. 2 and others are wholly unsustainable being devoid of any merit. It is convenient to mention herein that the award deter mining the compensation was passed in 1980 and the compensa tion to the tune 233 of Rs.32 lakhs had already been paid. A sum of Rs.2,30,465.08 had been spent for the construction of roads and foot paths. Another sum of Rs. 1, 12,2 17.24 had been spent for lighting of the streets. Another sum of Rs.3 lakhs had been paid to the Punjab Water Supply and Sewerage Board for sewerage purposes. Thus, a sum of Rs.38,42,682.35 had already been spent for implementation of the scheme. Several plots had already been sold in open auction. The reference under section 18 of the Act is also pending. In this context we are to consider the contention raised by the learned counsels for the respondent No. 2 and others. Under section 24 and 28 of the Punjab Town Improvement Act, 1922, the impugned development scheme was prepared by the appellant Trust. The scheme was notified as has been referred herein before in accordance with the provisions of Section 36 of the Act. In so far as the publication of the scheme in the newspaper 'Tribune ' in three consecutive weeks in April, 1976 inviting objections thereto till 5th May, 1976 is quite in accordance with the provisions of the said section. The Gazette Notification published in three consecutive weeks was however, made after expiry of the period of filing objections against this scheme. This has been the bone of contention on behalf of the respondent No. 2 and others that this resulted in violation of the provisions of section 36 of the Act as their right to file objections against the scheme was set at naught. This contention in our considered opinion is totally devoid of merit inasmuch as admittedly individual notices under section 38 of the said Act were duly served on all the owners and occupiers of the land falling within the said scheme and purported to be acquired and the respondent No. 2 and others admittedly filed objec tions against the proposed acquisition of their land. The said objections were duly considered after hearing the respondent No. 2 and others and notice was issued sanction ing the scheme by the State Government. In these circum stances, it does not lie in the mouth of respondent No. 2 and others to challenge the scheme on the mere plea that the Gazette Notification was not duly published. The legislative intent of provision of section 36 read with section 38 of the said Act is to afford reasonable opportunity to the owners and occupiers affected by the proposed scheme to file objections not only against the scheme but also against the acquisition of their lands falling within the scheme and to achieve this purpose not only notifications in the Govern ment Gazette and newspaper are to be published but also individual notices on each of the person affected are to be served with details of the plots of land failing within the scheme and proposed to be acquired with a view to giving them adequate opportunity to file objections both against the scheme as well as against the proposed acquisition of their lands. It is, therefore, incomprehensible to contend 234 that non observance of provisions of Section 36 of the said Act by not publishing the notification in the Govern ment Gazette before the expiry of the date for filing the objections renders the publication of the entire development scheme illegal and bad. The above contention, in our consid ered opinion, is not at all sustainable on the simple ground that the respondent No. 2 and others were duly served with the notices under section 38 and they pursuant to that notice duly filed their objections against the acquisition as well as the scheme. The decision of the full bench re ported in Prof. Jodh Singh and Ors. vs Jullundur Improvement Trust, Jullundur & Ors. (supra) is not applicable to this case inasmuch as in that case the objections filed under section 38 of the said Act having been misplaced were not at all considered and thereafter the Government issued a noti fication under section 42 of the said Act giving sanction to the scheme itself. In that view of the matter, the said decision has no application to the instant case. In these circumstances, considering from all aspects we hold that the decision of the courts below is wholly untenable in law and as such they are liable to be set aside. We, therefore, set aside the decision of the learned single Judge as well as to the Division Bench of the High Court of Punjab and Haryana and allow the appeal setting aside the orders of the courts below. There will, however, be no order as to costs. G.N. Appeals allowed.

The appellant Trust prepared a development scheme under the provisions of the Punjab Town Improvement Trust Act, 1922 covering certain lands including that of the respond ents. Notice inviting objections was published in a dally Newspaper on 9th, 16th and 23rd April, 1976. It was also published in the Punjab Government Gazette on the 7th, 14th and 21st May, 1976. The last date for filing objections was 5th May, 1976. Notices were also served on each person whose land was to be acquired in accordance with Section 36 of the Act. After completion of the acquisition formalities, noti fication under section 42 of the Act was published on 26th March, 1979. Respondent No. 2 and others challenged the scheme noti fied under the Act by way of Writ Petitions on the ground that they could not file objections by 5th May, 1976 since the notification was published in the Gazette only thereaf ter. The High Court allowed the Writ Petitions and quashed the notification sanctioning the scheme. However, it ob served that the appellant may publish the scheme again either amended or unamended under section 36 of the Act and proceed further in accordance with law. Against the said order, Letters Patent Appeals were flied, which were dis missed by the Division Bench. Appellant has preferred these appeals by special leave. On behalf of the appellant, it was mainly contended that infirmity, if any, stemming form the non consideration of the objections and the sanction of the scheme by the Govern ment in ignorance of the fact stood cured by the provisions of section 42(2) of the Act. It was also contended that since Respondent No. 2 and others had flied objections in response to individual notices, they are debarred from raising objec tions against the proposed improvement scheme. 228 On behalf of Respondents if was inter alia contended that due to non publication of the scheme in the Government Gazette before the expiry of the period of filing objections against the proposed scheme, the valuable right of the respondents to file objections against the scheme has been done away with, contrary to the mandatory provision con tained in section 36 of the Act. Allowing the appeals, this Court, HELD: 1. It is incomprehensible to say that non observ ance of provisions of Section 36 of the Punjab Town Improve ment Trust Act, 1922 by not publishing the notification in the Government Gazette before the expiry of the date for filing the objections renders the publication of the entire development scheme illegal and bad. [234A] 2. The legislative intent of provision of section 36 read with section 38 of the Act is to afford reasonable opportunity to the owners and occupiers affected by the proposed scheme to file objections not only against the scheme but also against the acquisition of their lands failing within the scheme and to achieve this purpose not only notifications in the Government gazette and newspaper are to be published but also individual notices on each of the person affected are to be served with details of the plots of land failing within the scheme and proposed to be acquired with a view to giving them adequate opportunity to file objections both against the scheme as well as against the proposed acquisition of their lands. [233G H] 3. In the instant case, the development scheme was prepared by the appellant Trust, and was notified in accord ance with the provisions of Section 36 of the Act. In so far as the publication of the scheme in the newspaper 'Tribune ' in three consecutive weeks in April, 1976 inviting objec tions thereto till 5th May, 1976 is quite in accordance with the provisions of the said section. The Gazette Notification published in three consecutive weeks was however, made after expiry of the period of filing objections against this scheme. Admittedly individual notices under section 38 of the said Act were duly served on all the owners and occupi ers of the land falling within the said scheme and purported to be acquired and respondent No. 2 and others admittedly filed objections against the proposed acquisition of their land. The said objections were duly considered after hearing the respondent No. 2 and others and notice was issued sanc tioning the scheme by the State Government. In these circum stances, it does not lie in the mouth of respondent No. 2 and others to challenge the scheme on the mere plea that the Gazette Notification was not duly published. [233C F] 229 Prof. Jodh Singh & Ors. vs Jullundur Improvement Trust, Jullundur and Ors., , distinguished. [This Court set aside the decision of the Single Judge as well as that of the Division Bench of the High Court.] [234D]

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

By a notification under section 4 of the West Bengal Land Deve lopment and Planning Act, 1948, the Government declared that certain plots of land belonging to the respondent were needed for the settlement of immigrants from East Pakistan and for improving living conditions in the locality. Thereafter a second notification was issued by the Government under section 6 read with section 7 of the Act declaring that the plots covered by the previous notification were needed for the same purpose as stated therein. When the Government started to erect structures on the land thus acquired the respondent moved the High Court under article 226 of the Constitution challenging the vires of the Act and impugning the legality of the proceedings taken under tile Act. The petition was heard by a judge of the High Court sitting singly who negatived all the contentions of the petitioner and discharged the rule. On appeal by the respondent under the Letters Patent, a Division Bench of the High Court held that the Act did not infringe the provisions of articles 19(i)(f) and 31(2) of the Constitution. The High Court further held that it was incumbent on the State Government to frame a development scheme after possession of the land had been taken even though the Government was entitled to deal with the land on an emergency basis under section 7 of the Act, which runs thus: " In cases of urgency, if in respect of any notified area the State Government is satisfied that the preparation of a development scheme is likely to be delayed, the State Government may, at any time, make a declaration under section 6, in respect of such notified area or any part thereof though no development scheme has either been prepared or sanctioned under section 5 ". The High Court allowed the respondent 's appeal and directed a writ of mandamus to issue to the Government requiring them to proceed to frame a development scheme in terms of the Act. On appeal by the State of West Bengal on a certificate granted by the High Court, 369 Held, that the High Court was in error in issuing the mandamus against the appellants. Section 7 of the Act com pletely dispensed with the statutory necessity of preparing a scheme of development as envisaged in section 5 of the Act in cases where the Government had taken the decision that it was necessary to proceed further with the acquisition proceedings without waiting for a development scheme. No discrimination was implicit in the provisions of section 7 of the Act and no fundamental right of the appellant was infringed either under article 14 or articles 19(1)(f) and 31(2) of the Constitution.

Civil Appeal Nos. 122 1244 of 1978. Appeal by special leave from the Judgment and order dated 23 11 77 of the Andhra Pradesh High Court in appeals against orders Nos. 236, 237, 241 to 243, 246, 253 to 260, 287, 288, 293, and 294 of 1977. Y. section Chitale, A. A. Khan, J. B. Dadachanji and D. N. Mishra for the appellants. S.V. Gupte, Attorney General of India and Girish Chandra for the Respondent. 83 The order of the Court was delivered by KRISHNA IYER, J. Law is essentially the formal expression of the regulation of economic relations in society. That is the key note thought in this case" where the core question is: who is an employee ? Secondly, to decide the meaning of a welfare measure a feeling for the soul of the measure is a surer guide than meticulous dissection with lexical tools alone. The definitional amplitude of 'employee ' in section 2(9) of the , (hereinafter referred to as the Act), is the sole contentious issue canvassed by counsel at the bar. We have heard Sri Chitale for the appellant and the learned Attorney General for the respondent Corporation at some length, because a decision by this Court as to the width of the definition and consequential fall out of statutory obligations may cover a considerable number of establishments. We have granted leave to appeal on that basis and now proceed to study the anatomy of 'employee ' as defined in section 2(9) of the Act. A brief factual narration may help get a hang of the case. The High Court, before which the present appellants had filed fruitless appeals has summarised the facts succinctly thus: "The appellants are owners of theatres in the twin cities of Hyderabad and Secunderabad, where films are exhibited. Within the same premises as the theatre, in every case, there in a canteen and a cycle stand. The canteen and the cycle stand are leased out to contractors under instruments of lease. The contractors employ their own servants to run the can teen and the cycle stand. In regard to persons so employed by the contractors, the owners of the theatres were treated 'Principal Employers ' and notices of demand were issued to them calling upon them to pay contribution under the employees ' State Insurance Act. Thereupon the owners of theaters filed application under Section 75 of the Employees State Insurance Act before the Employees Insurance Court for a declaration that the provisions of the Act were not applicable to their theaters and that they were not liable to any contribution in respect of the persons employed in the can teens and cycle stands attached to the theaters. The Insurance Court, on a consideration of the relevant lease deeds and other evidence, noticed the following features in regard to the running of the canteens: "(1) All these canteens are within the premisses of the cinema theatres (2) A few of these canteens have access 84 directly from the abutting roads whereas the other canteens can be reached only through the open space inside the cinema theatres. (3) The persons running the canteens are them selves responsible for equipping the canteens with the necessary furniture and for providing the required utensils. (4) The Managements of all these Cinema theaters pay the electricity charges due in respect of these canteens. (5) The persons working in these canteens are employed only by the contractors or tenants who run the canteens and they alone are responsible for the salaries payable to the persons. (6) The managements of the cinema theatres have absolutely no supervisory control over the persons employed in these canteens. (7) These canteens have to be run only during the show hours. This is made abundantly clear by Exhibits P 7 to P 10 and in the, face of the recitals contained in these agreements, I am not prepared to accept P.W. 1 's evidence that the tenants of these canteens are at liberty to run them at other times also. In particular Exhibit P 10 provides that the lessee shall run the business only during the show hours and that it shall be closed as soon as the cinema shows are closed. (8) A few of the persons working in the can teens are allowed inside the auditorium during the interval for vending eatables and beverages. They can enter the auditorium a few minutes before the interval and can remain inside the auditorium for a few minutes after the interval. (9) It is seen Freon Ex P. 10 that the management of the cinema theatre had reserved to itself the right to specify what types of things should be sold in the canteen. The canteens are expected to maintain a high degree of cleanliness and sanitation. (10) In some cases the managements of the theatres reserve the right to enter the canteen premises at all reasonable time for purposes of check and inspection. exhibit P. 9 contains a specific clause in that regard. " These features led the Insurance Court to arrive at the following findings of fact. "From the several circumstance mentioned above it is clear that these canteens are meant primarily for the convenience and comfort of those visiting the cinema theatres though in a few cases the persons in charge of canteens seem to be allowing the general public also to have access to the canteens taking advantage of the fact that the canteens can be recalls directly from the abutting road. But this Circum 85 stance does not by itself indicate that these canteens are A thrown open to the general public as other hotels, restaurants or eating houses. " In regard to cycle stands, the Insurance Court held: "Hence it may safely be concluded that these cycle stands are meant exclusively for the convenience of persons visiting B, the theaters." The Insurance Court found that the owners of theaters where principal employers with reference to the persons employed by contractors in the canteens and the cycle stands attached to the theaters and rejected the applications filed by the owners of theaters under Sec. 75 of the Act. The disappointed theatre owners appealed under Sec. 82, without avail, but undaunted. moved this Court for Special Leave to Appeal which we have granted, as stated earlier, so that we may discuss the facets of the definitional dispute in some detail and lay down the law on the main question. A conspectus of the statute, to the extent relevant, is necessary to appreciate the controversy at the Bar. The statutory personality and the social mission of the Act once projected, the resolution of the conflict of interpretation raised in this case is simple. Although, technically, the Act is a pre Constitution one, it is a post Independence measure and shares the passion of the Constitution for social justice. Articles 38, 39, 41, 42,,43 and 43 A of the Constitution show concern for workers and their welfare. Since Independence, this legislative motivation has found expression in many enactments. We are concerned with one such law designed to confer benefits on this weaker segment in situations of distress as is apparent from the Preamble. The machinery for state insurance is set up in the shape of a Corporation and subsidiary agencies. All employees in Factories or establishments are sought to be insured against sickness and allied disabilities, but the funding, to implement the policy of insurance, is by contributions from the employer and the employee. In view of the complexities of modern business organisation the principal employer is made primarily liable for payment of contribution "in respect of every employee, whether directly employed by him or by or through an immediate employer". Of course, where the employee is not directly employed by him but through another 'immediate employer ', the principal employer is empowered to recoup the contribution paid by him on behalf of the immediate employer (section 41). There is an Inspectorate to supervise the determination and levy of the contributions. 86 There is a chapter prescribing penalties; there is an adjudicating machinery and there are other policing processes for the smooth working of the benign project envisaged by the Act. The benefits belong to the employees and are intended to embrace is extensive a circle as is feasible. In short, the social orientation, protective purpose and human coverage of the Act are important considerations in the statutory construction, more weighty than mere logomachy or grammatical nicety. With this prefatory statement we may go straight to the crucial definition. The essential question is whether a cinema theatre manager who has no statutory obligation to run a canteen or provide a cycle stand but, for the better amenities of his customers and improvement of his business, enters into an arrangement with another to maintain a canteen and a cycle stand and that other employs, on his own, workers in connection with the canteen and the cycle stand, can be held liable for contribution as the principal employer of the workmen although they are engaged independently by the owner of the canteen or the cycle stand. It is common ground that there is no statutory obligation on me part of the appellants to run canteens or keep cycle stands. It is common ground? again. that the workers with whom we are concerned are not directly employed by the appellants and, if we go by the master and servant relationship under the law of contracts, there is no employer employee nexus. Even so, it has been held cone currently by the Insurance Court and the High Court that "canteens are meant primarily for the convenience and comfort of persons visiting the theatres and the cycle stands are meant exclusively for the convenience of the persons visiting theatres" and "that the persons employed in the` canteens and cycle stands are persons employed on work which is ordinarily part of the work of the theatre or incidental to the purpose of the theatres. In relation to the person so employed, therefore, the owners of the theatres are principal employers. ' ' The High Court proceeded further to affirm: "By undertaking to run the canteen or the cycle stand the contractor has undertaken the execution of the whole or part of the work which is ordinarily part of the work of the theatre of the principal employer or is incidental for the purpose of the theatre. We have already held that the running of canteen or cycle stand is work carried on in connection with the work of the theatre, work which may be considered to be either ordinarily part of the work of the theatre or incidental to the purpose of the theatre. If so, there is no reason why the contractor should not come within the definition of 'immediate employer ' ". 87 Before us counsel have mainly focussed on the definition of "employee" since the short proposition which creates or absolves liability of the appellants depends on the canteen workers and the cycle stand attendants being 'employees ' vis a vis the theatre owners. There is no doubt that a cinema theatre is an 'establishment ' and that the appellants, as theatre owners, are principal employers, being persons responsible for the supervision and control of the establishment. Admittedly, the canteens and cycle stands are within the theatre premises. Within this factual metrix let us see if the definition in section 2(9) will fit. We may read the definition of "employee" once again before analysing the components thereof 2(9) "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies, and (i) who is directly employed by the principal employer or any work of, or incidental or preliminary to or connected with the work, of the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or (ii) who is employed by or through an immediate employer on the premises of the factory of establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment, or (iii)whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment; but does not include: (a) any member of the Indian naval, military or air forces; or 88 (b) any person so employed whose wages (excluding remuneration for overtimes work) exceed five hundred rupees a month: Provided that an employee whose wages (excluding remuneration for overtime work) exceed five hundred rupees a month at any time after and not before, the beginning of the contribution period, shall continue to be an employee until the end of that period. The reach and range of the definition is apparently wide and deliberately transcends pure contractual relationships. We are in the field of labour jurisprudence, welfare legislation and statutory construction which must have due regard to Part IV of the Constitution. A teleological approach and social perspective must play upon the interpretative process. Now here is a break up of Sec. The clause contains two substantive parts. Unless the person employed qualifies under both he is not an 'employee '. Firstly he must be employed "in or in connection with the work of an establishment. The expression "in connection with the work of an establishment" ropes in a wide variety of workmen who may not be employed in the establishment but may be engaged only in connection with the work of the establishment. Some nexus must exist between the establishment and the work of the employee but it may be a loose connection. 'in connection with the work of an establishment ' only postulates some connection between what the employee does and the work of the establishment. He may not do anything directly for the establishment; he may not do anything statutorily obligatory in the establishment; he may not even do any thing which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure. It is enough if the employee does some work which is ancillary, incidental or has relevance to or link with the object of the establishment. Surely, an amenity or facility for the customers who frequent the establishment has connection with the work of the establishment. The question is not whether without that amenity or facility the establishment cannot be carried on but whether such amenity or facility, even peripheral may be, has not a link with the establishment. Illustrations may not be exhaustive but may be informative. Taking the present case, an establishment like a cinema theatre is not bound to run a canteen or keep a cycle stand (in Andhra Pradesh) but no one will deny that a can teen service, a toilet service, a car park or cycle stand, a booth foresail of catchy film literature on actors, song hits and the like, surely have connection with the cinema theatre and even further the venture. 89 On the other hand, a book stall where scientific works or tools are A sold or stall where religious propaganda is done, may not have anything to do with the cinema establishment and may, therefore, be excluded on the score that the employees do not do any work in connection with the establishment, that is, the theatre. In the case of a five star hotel, for instance, a barber shop or an arcade, massage parlour, foreign exchange counter or tourist assistance counter may be run by some one other than the owner of the establishment but the employees so engaged do work in connection With the establishment or the hotel even though there is no obligation for a hotel to, maintain such an ancillary attraction. By contrast, not a lawyer 's chamber or architect 's consultancy. Nor indeed, is it a legal ingredient that such adjunct should be exclusively for the establishment, if it is mainly its ancillary. The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment. A narrower construction may be possible but a larger ambit is clearly imported by a purpose oriented interpretation. The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises, whether they are there in the work or are merely in connection with the work of the establishment. Merely being employed in connection with the work of an establishment, in itself, does not entitle a person to be 'employee '. He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in Sec. 2(9) (i) covers only employees who are directly employed by the principal employer. Even here, there are expressions which take in a wider group of employees than traditionally so regarded, but it is imperative that any employee who is not directly employed by the principal employer cannot be eligible under Sec. 2 '(9) (i) . In the present case, the employees concerned are admittedly not directly employed by the cinema proprietors. Therefore, we move down to Sec. 2(9) (ii). Here again, the language used is extensive and diffusive imaginatively embracing all Possible alternatives of employment by or through all independent employer. In such cases, the 'principal employer ' has no direct employment relationship since the 'immediate employer ' of the employee, concerned is some one else. Even so, such an employee, if 7 520SCI/78 90 he works (a) on the premises of the establishment, or (b) under the supervision of the Principal employer or his agent '`on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment", qualifies under Sec. 2(9) (ii). The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable; and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent. Assuming that the last part of Sec. 2(9) (ii) qualifies both these categories, all that is needed to satisfy that requirement is that the work done by the employee must be (a) such as is ordinarily (not necessarily nor statutorily) part of the work of the establishment, or (b) which is merely preliminary to the work carried on in the establishment, or (c) is just incidental to the purpose of the establishment. No one can seriously say that a canteen or cycle stand or cinema magazine booth is not even incidental to the purpose of the theatre. The cinema goers ordinarily find such work an advantage, a facility an amenity and some times a necessity. All that the statute requires is that the work should not be irrelevant to the purpose of the establishment. It is sufficient if it is incidental to it. A thing is incidental to another if it merely appertains to something else as primary. Surely, such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either. Much depends on time and place, habits and appetites, ordinary expectations and social circumstances. In our view, clearly the two operations in the present case, namely, keeping a cycle stand and running canteen are incidental or adjuncts to the primary purpose of the theatre. We are not concerned with Sec. 2(9) (iii) nor with the rest of the definitional provision. Shri Chitale tried to convince us that on a minute dissection of the various clauses of the provision it was possible to exclude canteen employees and cycle stand attendants. May be, punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation. But language is handmaid, not mistress. Maxwell and Fowler move along different streets, sometimes. When, as in Sec. 2(9), the definition has been cast deliberately in the widest terms and the draftsman has endeavoured to cover every possibility so as not to exclude even distant categories of men employed either in the primary work or cognate activities, it will defeat the object of the statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign 91 contemplation of the Act. Salvationary effort, when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect, is permissible judicial exercise. In this view we have no doubt that the findings assailed before us are correct and that the conclusion reached deserves to be affirmed. We do so. Learned counsel for the appellants finally submitted that, in this event of our negativing his legal contention, he should be given the benefit of natural justice. We agree. The assessment of the quantum of the employers ' contribution has now been made on an ad hoc basis because they merely pleaded non viability and made no returns. on the strength of Sec. 45A the contribution was determined without hearing. In the circumstances of the case, and the learned Attorney General has no obiection we think it right to direct the relevant Corporation authorities to give a fresh hearing to the principal employers concerned, if sought within 2 months from to day, to prove any errors or infirmities in the physical determination of the contribution. Such a hearing in tune with the ruling, of this Court in the Central Press case(1) is fair and so we order that the assessment shall be reconsidered in the light of a de novo hearing to the appellants and the quantum of contribution affirmed or modified by fresh orders. Before we formally wind up we think it apt to make a critical remark on the cumbersome definition in Sec. 2(9) of the Act when has promoted considerable argument. This reminds us of the well known dictum or Sir James Fitzjames Stephen "that in drafting it is not enough to gain a degree of precision which a person reading in good faith can understand, hut it is necessary to attain if possible to a degree of precision which a person reading in bad faith cannot misunderstand. "(2) Subject to this direction we dismiss the appeals with costs (one set) . S.R. Appeals dismissed (1)[1977] 3 S.C.R. 35. (2)Lux Gentium Lex Than and Now 1799 1974 p. 7.

The appellants are owners of theaters in the twin cities of Hyderabad and Secunderabad, where fulls are exhibited. Within the same premises as the theaters, in every case, there is a canteen and a cycle stand, leased out to contractors under instruments of lease. The contractors employ their own servants to run the canteen and the cycle stand. In regard to persons so employed by the contractors the owners of the theaters were treated as 'principal employers ' and notices of demands were issued to them calling upon them to pay contribution under the Employees State Insurance Act. Thereupon the appellant filed an application under section 75 of the Act before the Employees Insurance Court for a declaration that the provisions of the Act were not application to their theaters and that they were not liable to any contribution in respect of the persons employed in the canteen and the cycle stands attached to their theaters. The Insurance Court found "that the canteens are meant primarily for the convenience and comfort for those visiting the cinema theaters though in a few cases the persons in charge of the canteens seem to be allowing the general public also to have access to the canteens" and that the cycle stands "are meant exclusively for the convenience of the persons visiting the theaters". The Insurance Court held that the owners of the theaters were, therefore, principal employers with reference to the persons employed by the contractors in the canteens and the cycle stands attached to the theaters and rejected the application filed by the contractors under section 75 of the Act. In appeal the High Court confirmed the said findings and hence the appeal by special leave. Dismissing the appeal, the court ^ HELD: (1) Law is essentially the formal expression of the regulation of. economic relations in society. In view of the complexities of modern business organisations, 'the principal employer ' is made primarily liable for payment of contribution "in respect of every employee, whether directly employed by him or by or through an immediate employer," under the Insurance Act, the main purpose of which is to insure all employees in factories or establishments against sickness and allied disabilities, but the funding. to implement the policy of insurance is by contribution from the employers and the employees. The benefits belong to the employees and are intended to embrace as extensive a circle 81 as is feasible. In short the social orientation, protective purpose and human A coverage of the Act are important considerations in the statutory construction, more weighty than mere logomachy or grammatical nicety. [83A, 85G H, 86A B] (2) In the field of labour jurisprudence, welfare legislation and statutory construction which must have due regard to Part IV of the Constitution, a teleological approach and social perspective must play upon the interpretative process. 'The reach and range of the definition of 'employee ' in section 2(9) of the E.S.I. Act is apparently wide and deliberately transcends pure contractual relationships. [88C] (3) Clause (9) of section 2 contains two substantive parts. Unless the person employed qualifies under both he is not an employee. Firstly he must be employed "in or in connection with" the work of an establishment. The expres sion "in connection with the work of an establishment ' ' ropes in a wide variety of workmen who may not be employed in the establishment. Some nexus must exist between the establishment and the work of the employee but it may be a loose connection. "In connection with the work of an establishment" only postulates some connection between what the employee does and the work of the establishment. He may not do anything directly for the establishment concerned; he may not clo anything statutorily obligatory in the establishment; he may not do anything which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure. It is enough if the employee does some work which is ancillary, incidental or has relevance to or link with the object of the establishment. Surely, the amenity or facility for the customers who frequent the establishment has connection with the work of the establishment. the question is not whether without theat amenity or facility the establishment cannot be carried on but whether such amenity or facility even peripheral may be, has not a link with the establishment. Nor indeed is it legal ingredient that such adjunct should be exclusively for the establishment if it is mainly its ancillary. C] The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment. A narrower constriction may be possible but a larger ambit is clearly imported by a purpose oriented interpretation. The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises, whether they are there in the work or are merely in connection with the work of the establishment. Merely being employed in connection with the work of establishment, in itself, does not entitle a person to be an "employee". He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in section 2(9) (1). [89D F] (4) section 2(9) (i) covers only employees who are directly employed by the 'principal employer '. It is imperative that any employee who is not directly employed by the principal employer cannot be eligible under section 2(9) (i). In the present case the employees concerned are admittedly not directly employed by the cinema proprietors. [89F G] 82 (5) The language of section 2(9) (ii) is extensive and diffusive imaginatively embracing all possible alternatives of employment by or through an independent employer. In such cases the principal employer has no direct employment relationship since the immediate employer of the employee concerned is someone else. Even so such an employee if he works (a) on the premises of the establishment, or (b) under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment", qualifies under section 2(9) (ii). The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent. [89G H, 90A B] (6) A thing is incidental to another if it merely appertains to something else as primary. Surely such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either. such depends upon time and place, habits and appetites, ordinary expectations and social circumstances. Keeping a cycle stand and running a canteen are incidental or adjuncts to the primary purpose of the theatre. [90D E] (7) May be punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation. But language is the handmaid, not mistress. Maxwell and Fowler move along different streets, sometimes. It will defeat the objects of the statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign contemplation of the Act, when, as in section 2(9) the definition has been cast deliberately in the widest terms and the draftsman has endeavoured to cover every possibility so as not exclude even distant categories of men employed either in the primary work or cognate activities. Salvationary effort, when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect, is permissible judicial exercise. The findings, in the instant case, arc correct and the conclusion reached deserves to be affirmed. [90G H, 91A B] [In view of the fact that the contribution was determined without hearing under section 45 A of the ESI Act, the Court directed the Corporation authorities to give a, fresh hearing to the principal employers i.e. the employers in tune with the ruling of this Court in the Central Press case [19771] 3 SCR 351.

Civil Appeal No. 1346 (NL) of 1981. Appeal by Special leave from the Judgment and order dated the 5th February, 1981 of the Patna High Court in C.W.J.C. No. 531 of 1980 (R). A. Minocha and Mrs. Veena Minocha for the Appellant. O.P. Malhotra and P. P. Singh for the Respondent. 547 The Judgment of the Court was delivered by CHANDRACHUD, C.J. The appellant was appointed as a Dresser in the Medical Department of the Steel Authority of India, formerly the Bokaro Steel Plant Ltd. On March 1, 1975 he was dismissed from service as a result of a domestic inquiry on charges of misconduct consisting of absence from duty, falsification of entries in the registers, destruction of records, etc Since an industrial dispute was pending in the Labour Court, Bokaro, between the management and its workmen, and application was filed by the management under section 32(2) (b) of the , seeking approval of the Labour. Court, Chota Nagpur, to the order of dismissal passed against the appellant. The decision of that application was partly in favour of the appellant and partly against him. By a judgment dated November 16, 1976, the Labour Court held that (i) the domestic inquiry was invalid because, the Chief Medical officer of Bokaro Steel Ltd. was neither competent to issue the charge sheet nor to constitute the Enquiry Committee which held the appellant guilty of the charges framed against him; but, that (ii) the management should be given an opportunity to adduce evidence to justify the order of dismissal. The appellant filed a writ petition (No. CWJC 336 of 1976) against the second part of the Labour Court 's order, his contention being that the management should not be allowed to lead evidence to justify the order of dismissal. The High Court issued a Rule on that writ petition and granted stay of further proceedings in the Labour Court. The management filed a writ petition (No. CWJC 27 of 1977) against the first part of the order of the Labour Court by which it was held that the enquiry was vitiated. The High Court of Patna, Ranchi Bench, dismissed both the writ petitions by a judgement dated April 26, 1978. Being aggrieved by the judgment of the High Court which resulted in the dismissal of its writ petition, the management filed Civil Appeal No. 1682 (L) of 1978 in this Court, complaining of the finding of the High Court that it was not competent to the Chief Medical officer to charge sheet the appellant or to constitute the Enquiry Committee. The appeal was dismissed by this Court on July 23, 1980. The finding of the Labour Court and the High Court that the enquiry which resulted in the dismissal of the appellant was vitiated, was upheld by this Court. 548 The appellant did not appeal to this Court against the dismissal of his writ petition by the High Court. Since the order of the Labour Court that the management should be allowed to lead evidence in order to justify the order of dismissal was not stayed by this Court in the appeal which was filed by the management, the Labour Court called upon it to lead its evidence. The appellant filed an application objecting to the management leading the evidence but that application was dismissed by the Labour Court on August 24, 1978. Being aggrieved by that order, the appellant filed a writ petition (No. 531 of 1980) in the High Court of Patna contending that the management should not be allowed to lead evidence, especially, because, instead of leading evidence, in pursuance of the order of the Labour Court, it had chosen to challenge the finding that the inquiry was vitiated. The writ petition having been dismissed on February 5, 1981 by the Ranchi Bench of the High Court, the appellant has filed this appeal by special leave. Section 33(2) (b) of the provides in so far as relevant, that though, during the pendency of a proceeding in respect of an industrial dispute it is open to the employer to discharge or punish a workman for any misconduct not connected with the dispute, no such workman shall be discharged or dismissed unless an application has been made by the employer to the authority before which the proceeding is pending, for approval of the action taken against the employee. It is well known that in such a proceeding, it is open to the employer to lead evidence to justify the order passed against the employee. The question as to the rights and obligations of the employer in that proceeding has come up before this Court in many cases. It would be sufficient for our purpose, and more than that will be fruitless repetition, to notice two important decisions on this question which show that the right of an employer to lead evidence is governed by certain conditions. In Delhi Cloth and General Mills Co. vs Ludh Budh Singh,(1) an employee was dismissed after an enquiry into allegations of misconduct. Since an industrial dispute between the employers and their workmen was pending before the Industrial Tribunal, the employers made an application to the Tribunal under section 33 (2) (b) of the for permission to dismiss the 549 employee. After the arguments in that application were over, the Tribunal reserved its judgment. Thereafter, the employers filed an application praying that if the enquiry was found to be defective, they should be given an opportunity to lead evidence in order to justify the dismissal of the employee The Tribunal did not deal with this latter application, but held in the main proceeding that the findings of the enquiry officer were not in accordance with the evidence and therefore the enquiry was vitiated. Accordingly, it refused permission for the dismissal of the employee. In an appeal filed by the employers, it was held by this Court that in proceedings on a reference under section 10 or by way of an application under section 33 of the , in cases in which a domestic enquiry has been held it is open to the employer to rely upon it in the first instance, and alternatively, and without prejudice to its plea that the enquiry was proper, simultaneously adduce additional evidence before the Tribunal justifying its action. The employer must avail of the opportunity to lead evidence by making a suitable request, before the proceedings are closed. The Court found on the facts of the case that the employers had filed an application for adducing further evidence after the proceedings before the Tribunal had come to an end and the judgment was reserved. Since the employers did not ask for an opportunity to lead evidence while the proceedings were pending, it was held that the Tribunal was justified in not considering the application filed by them for an opportunity to lead evidence to justify the order of dismissal. In Shankar Chakravarti vs Britannia Biscuit Co, Ltd., the application made by the employers under section 33(2) of the Act was rejected by the Tribunal on the ground that the enquiry leading to the termination of the employer 's services was vitiated. A writ petition filed by the employers to challenge the award of the Tribunal was dismissed by a learned single Judge of the Calcutta High Court. In a Letters Patent Appeal filed by them, a Division Bench of the High Court held that after holding that the enquiry was vitiated, it was incumbent upon the Tribunal to given an opportunity to the employers to lead evidence to prove the charges made against the employee. The matter was therefore remanded by the High Court to the Tribunal for giving an opportunity to the employers to lead further evidence, if they so desired Allowing the appeal filed by the employee, it was held by this Court that while adjudicating upon the legality or propriety of an order of termination of service, either under section 10 or under section 33 550 of the Act, no duty is cast on the Industrial Tribunal or the Labour Court to call upon the employer to adduce evidence to substantiate the charge of misconduct against the employee. It is for the employer to avail of an opportunity to lead evidence by a specific pleading or by specific request. If no such opportunity is sought nor is there any pleading to that effect, the Tribunal or the Labour Court is under no obligation to call upon the employer suo motu to adduce evidence to substantiate the charges against the employee. Following the decision in Delhi Cloth and General Mills Co. vs Ludh Budh Singh, the Court held that since, in the case before them, there was neither a pleading nor was any request made at the appropriate time for an opportunity to lead evidence for substantiating the charges against the employee, the High Court was in error in giving that opportunity to the employer. The Court rejected the contention of the employers that the request made by them in that behalf after the proceedings were adjourned for pronouncement of the award, should be taken into consideration and an adequate opportunity should be given to them. The stage for asking for that opportunity, the Court said, had already passed. It is doubtful whether the norms prescribed by these two decisions were followed strictly in this case. The employers, who are respondent 2 to this appeal, filed an application under section 33(2) (b) of the Act, asking for the approval of the Labour Court to the order of dismissal which was passed against the appellant. By that application, they did not ask alternatively for an opportunity to lead evidence to justify the order of dismissal. The tenor of the judgment of the Labour Court dated November 16, 1976 shows that, in all probability, an oral request for permission to adduce evidence was made by the employers to the labour Court when the hearing of the application filed under section 33(2) (b) was coming to a close. The appellant has taken up an extreme stand that the employers did not ask for such an opportunity at all and that the Labour Court gave them that opportunity of its own accord. That contention is far fetched and cannot be accepted in teeth of the facts, both contemporaneous and supervening. We will refer to those facts immediately. In the first place, the judgment of the Labour Court does not support the allegation that the employers had not asked for an opportunity to lead the necessary evidence. These protracted proceedings show that the appellant is a zealouslitigant, fairly well 551 informed as to his rights. He has raised every possible objection under the sum in the proceedings before the Labour Court. Indeed, it is unfortunate that he even went to the length of casting aspersions on the integrity of the Presiding Officer of the Labour Court. It is unlikely that he would not have protested against the Labour Court granting permission to the employers to lead evidence, if no such opportunity was asked for by them. He did raise many protests. The events which supervened the Labour Court 's order strengthen the conclusion that there is no substance in the contention of the appellant that the Labour Court acted on its own initiative in allowing the employers to lead evidence. After the writ petitions filed by the appellant and the employers were dismissed by the Patna High Court, the stay order which was passed by the High Court in the writ petition filed by the appellant was vacated. Thereupon, the appellant himself filed an application in the Labour Court on May 4, 1978 saying that, in view of the fact that the writ petitions were dismissed by the High Court, the employers should be called upon to adduce evidence to justify the order of dismissal. On August 24, 1978 the employers filed an application in the Labour Court to the effect, that the original documents which were kept by them in the custody of the Court may be returned to them, since they wanted to rely on those documents while leading evidence to justify the order of dismissal. The appellant, on his own filed a list of witnesses whom he wanted to examine in the case. On September 1, 1978 the employers examined certain witnesses in the Labour Court and they were cross examined by the appellant. It is at this stage that the appellant made certain uncharitable remarks against the Presiding Officer which delayed the proceedings. And, it is thereafter that the appellant filed an application in the Labour Court contending that the employers should not be allowed to lead evidence. Thus, the order passed by the Labour Court allowing the employers to lead evidence has been accepted and acted upon by the appellant. He has already given a list of his own witnesses and has cross examined the witnesses whose evidence was led by the employers. It would be wrong, at this stage, to undo what has been done in pursuance of the order of the Labour Court. Besides, the challenge made by the appellant to the order of the Labour Court has failed and the order of the Patna High Court dismissing the appellant 's writ petition has become final. 552 In order to get over these difficulties, it is urged by the appellant that there can be no estoppel against law and therefore, it is open to him to argue even at this stage that the Labour Court ought not to have passed the particular order. In support of this contention reliance is placed by the appellant on two judgments of this Court. In Chitturi Subbanna vs Kudapapa Subbanna, it was held by the majority that pure questions of law, not dependent on the determination of any questions of fact, should be allowed to be raised for the first time even at later stages of a litigation. In Mathura Prasad Bajoo Jaiswal vs Dossibai N.B. Jeejeebhoy, this Court held that the question relating to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court. If, by an erroneous decision, the Court assumes jurisdiction which it does not possess its decision cannot operate as res judicata between the parties. In this regard, the Court made a distinction between the decision of a question of fact and the decision of a question as regard the jurisdiction of the Court. In so far as question of fact are concerned, the Court is not concerned with the correctness or otherwise of the earlier judgment while determining the application of the rule of res judicata. Where, however, the question is purely of law and relates to the jurisdiction of the Court or where the decision of the Court sanctions something which is illegal, the party affected by that decision will not be precluded by the rule of res judicata from challenging the validity of the earlier decision. The reason is, that the rule of procedure cannot supersede the law of the land. We do not consider that either of these decisions can help the appellant. A question of law which does not require fresh investigation into facts may be allowed to be raised at a later stage of a proceeding but, that is subject to the qualification that the question is not concluded by a decision between the same parties. In this case, the question as to whether the Labour Court was right in giving an opportunity to the employers to lead evidence, is not being raised by the appellant for the first time in this Court. It was raised by him in the writ petition which he had filed in the Patna High Court and that writ petition was dismissed. In so far as the question of res judicata is concerned, if an erroneous decision on a question 553 of law is rendered by a Court by assuming jurisdiction which it does not possess, it may be possible to argue that the decision cannot operate as res judicata even between the same parties. But, in the case before us, the Labour Court had the jurisdiction to decide whether to allow the employers to lead evidence or not. It may have acted irregularly in the exercise of that jurisdiction but that is to be distinguished from cases in which the Court inherently lacks the jurisdiction to entertain a proceeding or to pass a particular order. Besides, as we have stated earlier, though it would be true to say that the employers did not ask for an opportunity to lead evidence simultaneously with the filing of the application under section 33(2) (b) of the Act, it is not possible to hold on the basis of the data placed before us that they asked for such an opportunity after the proceedings had terminated. What seems to have happened is that the application filed by the employers under section 33 (2) (b) of the Act was taken up for consideration first. When the hearing of that application was nearing completion, but before the final orders were passed therein, the employers asked for an opportunity to lead evidence to justify the order of dismissal. The Labour Court disposed of both the matters together by a common judgment which is dated November 16, 1976. It held by one and the same order that the departmental inquiry was vitiated but that the employers should be allowed to lead evidence to justify the order of dismissal. The appellant 's contention that the employers did not ask for an opportunity to lead evidence at all and that the Labour Court acted gratuitously is not possible to accept. Thus, in passing the order allowing the employers to lead evidence, the Labour Court cannot be said to have acted without jurisdiction. For these reasons, we dismiss this appeal and hold that the employers may lead evidence to justify the order whereby the appellant was dismissed from service on March 1, 1975. There will be no order as to costs. A longtime has gone by since the appellant was dismissed. Nine years is frightful delay. A large part of that period was wasted in dealing with several obstacles raised by the appellant himself in the disposal of the matter, including the allegations which he made against the Presiding Officer of the Labour Court. Twice, he obtained orders staying further proceedings in the Labour Court: once from the High Court in Writ Petition No. 336 of 1976 and then in this appeal. As a result of these stay orders, the evidence has still remained to be recorded. The Labour Court will now 554 complete that process and dispose of this matter as expeditiously as is humanly possible. The employers may consider whether the trauma through which the appellant has gone during the last nine years is not enough punishment for him. The employers are a public sector undertaking and they could lead the way in ensuring industrial peace and harmony. N.V.K. Appeal dismissed.

The appellant was employed in a public sector undertaking. He was dismissed on charges of misconduct consisting of absence from duty, falsification of entries in the registers destruction of records etc. Since an industrial dispute was pending before the Labour Court between the Management and its workman an application was filed by the management under section 33(2) (b) of the seeking approval of the Labour Court to the order of dismissal passed against the appellant. The decision of the application was partly in favour of the appellant and partly against him. The Labour Court held: (1) that the domestic inquiry was invalid because the Chief Medical officer was neither competent to issue the charge sheet nor to constitute the Enquiry Committee which held the appellant guilty of the charges framed against him, and (2) that the management should be given an opportunity to adduce evidence to justify the order of dismissal. The appellant filed a writ petition against the latter part of the Court 's order contending that the management should not be allowed to lead evidence to justify the order of dismissal. The management on the other hand filed a writ petition against the former part of the order of the Labour Court by which it held that the enquiry was vitiated. The High Court dismissed both the writ petitions. 545 The management filed an appeal in this Court complaining of the finding of the High Court that it was not competent for the Chief Medical officer to charge sheet the appellant or to constitute the Enquiry Committee. The appeal was, however, dismissed and the findings of the Labour Court and the High Court that the enquiry which resulted in the dismissal of the appellant was vitiated, was upheld. After the disposal of the above appeal, the Labour Court resumed hearing of the matter and allowed the management to lead evidence in order to justify the order of dismissal. The appellant filed an application objection to the management leading evidence but that application was dismissed. The writ petition filed by the appellant in the High Court was also dismissed. In the appeal to this Court, it was contended on behalf of the appellant workman that the employer did not ask for an opportunity to lead evidence to justify the order of dismissal and that the Labour Court gave that opportunity on its own accord and that it was open to him to argue even at this stage that the Labour Court ought not to have passed the particular order. Dismissing the Appeal, ^ HELD: 1. (i) In a proceeding under section 33(2) (b) of the it is open to the employer to lead evidence to justify the order passed against the employee. [548E] (ii) In passing the order allowing the employers to lead evidence, the Labour Court cannot be said to have acted without jurisdiction. [553E] Delhi Cloth and General Mills Co. vs Ludh Budh Singh ; and Shankar Chakravarti vs Britannia Biscuit Co.Ltd. ; , referred to. In the instant case, the employers who are respondent No. 2 filed an application under section 33(2) (b) of the Act, asking for the approval of the Labour Court to the order of dismissal which was passed against the appellant. By that application, they did not ask alternatively for an opportunity to lead evidence to justify the order of dismissal. The tenor of the judgment of the Labour Court shows that, in all probability an oral request for permission to adduce evidence was made by the employers to the Labour Court when the hearing of the said application was coming to a close. The contention of the appellant that the employers did not ask for such an opportunity and that the Labour Court gave them that opportunity on its own accord, is farfetched and cannot be accepted. [550E G] 2. A question of law which does not require a fresh investigation into facts may be allowed to be raised at a later stage of the proceedings but that is subject to the qualification that question is not concluded by a decision between the same parties. [552F] 546 Chitturi Subbanna vs Kudappapa Subbanna, ; , referred to. In the instant case, the question as to whether the Labour Court was right in giving an opportunity to the employers to lead evidence, is not being raised by the appellant for the first time in this Court. It was raised in the writ petition filed in the High Court.[552G] 3. In so far as questions of facts are concerned, the Court is not concerned with the correctness or otherwise of the earlier judgment while determining the application of the rule of res judicata. Where however, the question is purely of law and relates to the jurisdiction of the Court or where the decision of the Court sanctions something which is illegal the party affected by that decision will not be precluded by the rule of res judicata from challenging the validity of the earlier decision. The reason is, that a rule of procedure cannot supersede the law of the land. [552D E] 4. If an erroneous decision on a question of law is rendered by a Court by assuming jurisdiction which it does not possess, its decision cannot operate as res judicata even between the same parties. [553A] Mathura Prasad Bajoo Jaiwal vs Dassibal N.B. Jeejeebohoy, [1970]3 S.C.R. 830, referred to. In the instant case the Labour Court had the jurisdiction to decide whether to allow the employers to lead evidence or not. It may have acted irregularly in the exercise of that jurisdiction but that is to be distinguished from cases in which the Court inherently lacks the jurisdiction to entertain a proceeding or to pass a particular order. What seems to have happened is that the application filed by the employers under section 33(2) (b) was taken up for consideration first. When the hearing of that Application was nearing completion, but before the final orders were passed therein, the employers asked for an opportunity to lead evidence to justify the order of dismissal. The Labour Court disposed of both the matters together by a common judgment. It held by one and the same order that the departmental inquiry was vitiated but that the employers should be allowed to lead evidence to justify the order of dismissal. [553B; D E]

vil Appeal No. 2 145 of 1988. From the Judgment and Order dated 3.5. 1988 of the Allahabad High COurt in C.M.W.P. No. 13143 of 1985 Avadh Behari Rohatgi section Markandeya, G. Seshagiri Rao and Ms. C. Markandeya for the appellant. Ms., Shobha Dikshit, Pankaj Kalra, Ejaz Maqbool, Dileep Tandon, J.M. Khanna and S.K. Jain for the Respondents. The following Order of the COurt was delivered: This appeal by special leave is against the order of the Allahabad High Court. The subject matter of dispUte is in regard to 11 lady teachers of Saghir Fatima Mohammadia Girls Inter College, Agra. This is claimed to be a minority insti tution but fully financed from the State resources. By interlocutory orders made from time to time the real litigative part of has already been attended to,. We would refer to our order of 2nd May, 1991 where this court ob served "We are happy to find that pursuant to our order made earlier in this case Smt. Kamla 561 Mehra, Smt. Saran Kumari Gaur and Swaliha Begum have been given postings and they have already reported to duty. So far as petitioners Km. Asifa Rizvi, Km. Sayyada Rizwani and Shafiqa Begum are concerned, Ms. Dikshit points out that though there is some possibility of adjusting them in other institutions it is a time taking process inasmuch as under the scheme government have no power to impose teachers from out side on the administration of the institutions. We think it appropriate in the interest;of justice to require the Director of Secondary Education to require such of the colleges where appropriate vacancies are available to adjust these three teachers. To so adjust them the institu tions shall take our present order as a direction to adjust them and as and when called by the Director of Secondary Education it shall be implemented. Failure to comply shall be teated as violation of our direction. So far as Smt. Sudha Dixit is concerned, we gather from the representation made at the Bar ' that a vacancy in the spe ciality is about to arise in the coming month. If that be so, Ms. Dikshit has agreed to see that she is so posted. As far as two remaining teachers are concerned, they do not agree to go out of the institution and Ms. Dikshit points out that in their subjects there is no vacancy. In these circumstances, they have choice to wait indefinitely till vacancy occurs without.claiming salary till employment. If this is not acceptable to them the order of termination already made shall be taken as final and conclusive and their petition shall standdismissed. " We are told that the vacancy which was contemplated in regard to Smt. Sudha Dixit has not worked out for her. She had been offered a posting in Mathura, away from. the insti tution where she had been working and she did not choose to go there. Mr. Markandeya appearing for her, however, does not agree with this statement made by others and says that she volunteered to go but was informed that the institution had not taken a decision to keep her and she was. to be intimated as and when a decision was taken. No intimation has been received by her as yet. Out of the two remaining teachers referred to in our order dated 2nd May, 1991, it appears that one has already been absorbed in Aligarh and the. remaining teacher, Khaliq Jahan, is holding a lower post for the time being and Ms. Dikshit has told us that she has already 562 suggested to the Government that as and when a vacancy arises she should be accommodated in a post according to her entitlement So far as Smt. Sudha Dixit is concerned, we think 'a situation has now arisen where the Director must implement our order. We had clothed him with adequate powers by our order of 2nd May, 199 1 and he must under that authority 'proceed to enforce his order. The Director should provide employment to Smt. Sudha Dixit in terms of the assignment made and the institution where she has been directed to join should accept the teacher. Beyond that we do not intend to say anything at this stage. This leaves the only, remaining question to be dealt. with, i.e., as to how the period during which the seven of the teachers who have been absorbed in that very institution should be dealt with. It is said that during this gap period of seven years another set of teachers had been working who are represented before us by Mr. Kalra in these proceedings, It is the submission of the appellants that the seven teach ers who are substituted did not possess the requisite quali fication and reliance is placed on Section 16(FF) of the Act to support the submission that they are not entitled to salary for the work done. SimultaneouSly the seven ' teachers have contended through their counsel that they had been visiting the institution everyday and had been leaving their attendance with the appropriate authority, therefore, they should be entitled to salary. This is not a proceeding in ,which we have to decide who has to be paid the salary. But as things stand one set of teachers have actually worked while the other set for reasons which are germane to appropriate management has not, We are told that teachers had gone on strike and when they were called back to duty a group of teachers including the seven did not return within time and that led to appointment of alternate teachers. We must point out that this again is not an appropriate matter to be decided by us. We are, however, satisfied from the material placed before us that the 11 teachers who are represented by Mr. Kalra did work during the period. It may not be appropriate, to hold that they are not entitled to remuneration for the work done. The institution had admittedly not received any benefit.of service during the relevant period from the seven teachers on the appellants ' side. On the principle that when work is not done remuneration is not to be paid, we dispose of the present appeal without giving any direction for payment to them. If they are entitled to salary, it is open to them to take appropriate proceeding to claim the same, 563 We do not finally close their claim against the ' State of the institution. But so far as teachers represented by Mr. Kalra are concerned, if they have not been paid, they should be disbursed the salary due to them. There is some contest as to whether they are qualified or not. On the basis of the facts on record we are of the view that they appear to be qualified and that question should not be reopened. We draw support for our view for non payment to the appellants from our ' interim order of 7th February, 1990. In regard to two teachers who were prepared to wait to take their chance, we indicated that they would not be paid any remuneration. Seven teachers who have now been provided jobs under our orders and those who were waiting to take their chance should be equated for the common period of no work. We, are, however, of the view that seven teachers who have got employment should be given their seniority for the period they were out of employment. We accordingly require the Director of Public, Instruction to take our order into account and given them credit for seniority for the period they were out of employment on the deemed situation that they had worked, Our doing so, we again repeat, would not entitle them to salary unless they are otherwise entitled to. This disposes of the appeal. We are sorry that we entertained an appeal of this type by special leave and got dragged into a dispute which should not have been brought upto this court. G.N. Appeal disposed of.

The appellants, teachers in a minority institution fully financed by State, went on a strike and when they were called hack to duty, they did not return within time, lead ing to appointment of alternate teachers. They approached the High Court for their absorption. The High Court having dismissed the matter, the aggrieved teachers have preferred the present appeal by special leave. By interim orders, this Court has already directed the absorption of the teachers in different institutions. Seven teachers have been absorbed in the very same institution. It was contended on behalf of the seven teachers that they should be paid salary for the period of gap before their absorption and that their senior ity should be maintained. The alternate teachers who worked in the interregunum contended that they should be paid salary for the period they worked. Disposing the appeal, this Court, HELD 1. One set of teachers have actually worked while the other set has not. The teachers had gone on strike and when they were called hack to duty a group of teachers including the seven did not return within time and that. led to appointment of alternate teachers. It is clear from the material on record that the alternate teachers did work during the period. It may not be appropriate to hold that they are not entitled to remuneration for the work done. However, the institution has admittedly not received any benefit of service during the relevant period from the other set viz. the seven teachers who were absorbed later. On the principle that. when work is not done remuneration is not to be paid, no direction is given for payment. If they are entitled to salary, it is open to them to take appropriate proceeding to claim the same. It does not 560 finally close their clam against the State or the institu tion. The alternate teachers who have worked and if they have not been paid, they should be disbursed the salary due to them. Then iS some contest as to whether they are quali fied or not. On the basis of the facts on record the teach ers appear to be qualified and that question should not be reopened. In regard to two teachers Who were prepared to walt to take their chance, they would not be paid any remu neration. Seven teachers who have now been provided jobs under the orders of this Court and those who were waiting to take their Chance should be equated for the common period of no Work [562F H, 563A C] 2. However, the seven teachers who have got absorption should be given their seniority for the period they were out of employment. The Director of Public Instruction is re quired to take this order into account and given them credit for seniority for the period they were out of employment on the deemed situation. that they had worked. This would not entitle them to salary unless they are otherwise entitled to the same. [563D]

ivil Appeal No. 2559 of 1988 From the Judgment and Order dated 31.8.1987 of A.P. Adminis trative Tribunal, Hyderabad in R.P. No. 393 i of 1987. K. Madhva Reddy and G. Prabhakar for the Appellants. Y.P. Rao for the Respondent. 561 The Judgment of the Court was delivered by SAWANT, J. The admitted facts in the present case are that the respondent applied for Grade I and Grade II teacher posts (Post Graduate Teacher and Trained Graduate Teacher posts respectively) in September, 1985 pursuant to a news paper 's advertisement calling for applications for the said posts. Admittedly, the qualification prescribed in the advertisement for the said posts was a second class degree in M.A., and the respondent held a third class degree in M.A. However, it appears that on December 27, 1985, an order was issued wrongly by the first appellant appointing her as a Post Graduate Teacher in Hindi. The order stated that her appointment was subject to the production of original cer tificates and to the compliance with the other necessary formalities. When pursuant to the order, the respondent approached the authorities with the certificates, it was noticed that the respondent was not qualified for the post. She was, therefore, not allowed to join the service, and was sent back. The respondent thereafter approached the Andhra Pradesh Administrative Tribunal at Hyderabad representing to the Tribunal that pursuant to the order of December 27, 1985 she had joined her duties on January 2, 1986 and that she should be allowed to continue in service with all the bene fits from that day. The Tribunal passed the impugned order directing the appellants to allow her to join the duties and to pay to her salary from the date she reported for her duties in compliance with the order of December 27, 1985. The Tribunal also awarded costs against the appellants. We are of the view that the Tribunal is clearly in error. The reasons given by the Tribunal in support of its order are, firstly, that the appellants had issued the order of appointment knowing fully well that she was not quali fied, and secondly, that she was selected for the appoint ment because there was no other candidate available with better marks. It has been brought to our notice during the course of the arguments that the original selection was made by mistake on the presumption that the respondent had satisfied the qualification requirements as stated in the advertise ment, without scrutinising the certificates copies of which were sent with her application. The Selection Committee presumed that all those who had applied in response to the advertisement must have had the requisite qualifications needed for the posts. However, the order appointing the respondent had made 562 it clear that the respondent should come along with the original certificates. When the respondent approached the appellants with the originals of the certificates which were scrutinised, it was found that in fact she was short of the qualifications. It is in these circumstances, that she was not allowed to join the service. It cannot, therefore, be said that the appellants had selected the respondent with the knowledge that she was under qualified. According to us, there is a good deal of force in this contention. It is common knowledge that sometimes either by mistake or other wise the notes put up before the Selection Committee contain erroneous data prepared by the office, and sometimes the Selection Committee proceeds on the basis that all those who appear before it, are otherwise qualified. However, the second stage at which the documents are scrutinised is when the higher authorities go through them at the time the candidate concerned approaches them for resuming duties along with the original certificates. It is at that stage that the mistake was discovered in the present case and the respondent was not permitted to resume her duties. We see nothing wrong in this action. The observation of the Tribunal that there were no other candidates available with better marks is, in the circumstances, a halftruth because assuming that she had better mark among those who had applied, it seems that no one with second class had applied or the applications only of the third class candidates were considered. If so, they were the applications of those third class candidates who had applied and not of all those who would have applied had the advertisement given an indication that those with a third class degree could also apply. It must further be realised by all concerned that when an advertisement mentions a particular qualification and an appointment is made in disregard of the same, it is not a matter only between the appointing authority and the appointee concerned. The aggrieved are all those who had similar or even better qualifications than the appointee or appointees but who had applied for the post because they did not possess the qualifications mentioned in the advertise ment. It amounts to a fraud on public to appoint persons with inferior qualifications in such circumstances unless it is clearly stated that the qualifications are relaxable. No court should be a party to the perpetuation of the fraudu lent practice. We are afraid that the Tribunal lost sight of this fact. We are, however, informed that the respondent subsequent ly 563 acquired another degree in M.A. with second class and has qualified herself to be appointed to the said post. Whatever the merits of the decision given by the Tribunal, we cannot forget that she was entitled to rely upon it till this time where she had succeeded. She was not allowed to join service on January 2, 1986 and thereafter she had approached the,Tribunal in January 1987. The decision of the Tribunal was of 31st August, 1987 and thereafter the present Civil Appeal was pending in this Court from December 1987 till this day. Considering the fact that she is compelled to serve, that she has acquired the requisite qualification, that today she may be overaged for the post and the further fact that many who were underqualified were appointed to the post earlier, we feel that it will be unjust to deprive her of the post at this stage. We, therefore, set aside the impugned order of the Tribunal but allow the appeal partial ly and direct that the respondent should be appointed in the post from the beginning of the ensuing academic year 1990 91. Since Shri Madhav Reddy contended that there is no vacant post at present, we further direct that, if neces sary, a post be created to accommodate her. She will, howev er, not be entitled to any benefits including back wages till her appointment. The parties will bear their own costs. N.V.K. Appeal allowed.

Pursuant to a newspaper advertisement by the State Government calling for applications for Grade I and Grade II teacher posts (Post Graduate Teacher and Trained Graduate Teachers) the respondent in the appeal applied for the same. The qualification prescribed in the advertisement was a second class degree in M.A. However, the respondent who held a third class degree in M.A. was selected, and an order was issued appointing her as a Post Graduate Teacher in Hindi, subject to the production of original certificates, and compliance with the other necessary formalities. When the respondent approached the authorities with her certificates, it was noticed that she was not qualified for the post, and was, therefore, not allowed to join service. The respondent approached the State Administrative Tribunal for relief, which held that the appellants had issued the order of appointment knowing fully well that she was not qualified, and that she was selected for appointment because there was no other candidate available with better marks, and passed an Order directing the appellants to allow the respondent to join duty and pay her salary from the date she reported for duty. The appellants appealed to this Court. Allowing the appeal, HELD: 1. When an advertisement mentions a particular quali fi 560 cation and an appointment is made in disregard of the same, it is not a matter only between the appointing authority and the appointee concerned. The aggrieved are all those who had similar or even better qualifications than the appointee or appointees but who had not applied for the post because they did not possess the qualifications mentioned in the adver tisement. [562F] 2. It amount to a fraud on the public to appoint persons with inferior qualifications unless it is clearly stated in the advertisement that the qualifications are relaxable. [562G] 3. No Court should be a party to the perpetuation of the fraudulent practice. The State Administrative Tribunal lost sight of this fact in the instant case. [562G] 4. It is common knowledge that sometimes either by mistake or otherwise the notes put up before the Selection Committee contain erroneous data prepared by the office and sometimes the Selection Committee proceeds on the basis that all those who appear before it, are otherwise qualified. However, the second stage at which the documents are scruti nised is when the higher authorities go through them at the time the candidate concerned approaches them for resuming duties alongwith the original certificates. It is at that stage that the mistake in the instant case was discovered, and the respondent was not permitted to resume her duties. There is nothing wrong in such action. [562B C] [The Court felt it would be unjust to deprive the re spondent of the post at this stage, as she had subsequently acquired another degree in M.A. with second class and there by qualified herself to be appointed, that she may be over aged for the post and many who were underqualified were appointed to the post earlier, and directed that she be appointed in the post from the beginning of the academic year 1990 1991.] [563B C]

ition Nos. 5670 and 6216 of 1980. (Under Article 32 of the Constitution) Mrs. K. Hingorani, Mr. Hingorani, Mukul Mudgal and Damodar Prakash for the Petitioners. K G. Bhagat and D. Goburdhan for the Respondent. Miss A. Subhashini for the Union of India. The Order of the Court was delivered by, BHAGWATI, J. The question which arises before us for consideration is whether certain documents called for by the Court by its order dated 16th February, 1981 are liable to be produced by the State or their production is barred under some provision of law. The documents called for are set out in the order dated 16th February, 1981 and they are as follows: 1. the CID report submitted by L.V. Singh, DIG, CID Anti Dacoity) on December 9, 1980; 2. the CID reports on all the 24 cases submitted by L.V. Singh and his associates between January 10 and January 20, 1981; 3. the letters number 4/R dated 3rd January, 1981 and number 20/R dated 7th January 1981 from L.V. Singh to the IG, Police; 4. the files containing all correspondence and notings exchanged between L.V. Singh, DIG and M.K. Jha, Additional IG, regarding the CID inquiry into the blindings, and 5. the file (presently in the office of the IG, S.K. Chatterjee containing the reports submitted by Inspector and Sub Inspector of CID to Gajendra Narain, DIG, Bhagalpur on 18th July or thereabouts and his letter to K.D. Singh, SP, CID, Patna which has the hand written observations of M.K. Jha. The State has objected to the production of these documents on the ground that they are protected from disclosure under Sections 162 and 172 of the Code of Criminal Procedure 1973 and the petitioners are not entitled to see them or to make any use of them in the present 150 proceeding. This contention raises a question of some importance and it has been debated with great fervour on both sides but we do not think it presents any serious difficulty in its resolution, if we have regard to the terms of Sections 162 and 172 of the Criminal Procedure Code on which reliance has been placed on behalf of the State. We will first consider the question in regard to the reports submitted by Sh. L.V. Singh, Deputy Inspector General CID (Anti Dacoity) on 9th December, 1980 and the reports submitted by him and his associates Sh. R.R. Prasad, S.P. (Anti Dacoity) and Smt. Manjuri Jaurahar, S.P. (Anti Dacoity) between 10th and 20th January, 1981. These reports have been handed over to us for our perusal by Mr. K.G.Bhagat learned advocate appearing on behalf of the State and it is clear from these reports, and that has also been stated before us on behalf of the State, that by an order dated 28 29th November, 1980 made by the State Government under Section 3 of the Indian , Sh. L.V. Singh was directed by the State Government to investigate into 24 cases of blinding of under trial prisoners and it was in discharge of this official duty entrusted to him that he with the assistance of his associates Sh. R.R. Prasad and Smt. Manjuri Jaurahar investigated these cases and made these reports. These reports set out the conclusions reached by him as a result of his investigation into these cases. The question is whether the production of these reports is hit by Sections 162 and 172 of the Criminal Procedure Code. It may be pointed out that these are the only provisions of law under which the State resists production of these reports. The State has not claimed privilege in regard to these reports under Section 123 or Section 124 of the Indian Evidence Act. All that is necessary therefore is to examine the applicability of Sections 162 and 172 of the Criminal Procedure Code in the present case. Before we refer to the provisions of Sections 162 and 172 of the Criminal Procedure Code, it would be convenient to set out briefly a few relevant provisions of that Code. Section 2 is the definition Section and clause (g) of that Section defines 'Inquiry ' to mean "every inquiry other than a trial conducted under this Code by a Magistrate or Court". Clause (h) of Section 2 gives the definition of 'investigation ' and it says that investigation includes "all the proceedings under this Code for the collection of evidence conducted by a police officer or by any person (other than a Magistrate) who is authorised by a Magistrate in this behalf". Section (4) provides: 151 "4 (1) All offences under the Indian Penal Code shall be investigated, inquired into, tried, and otherwise dealt with according to the provisions hereinafter contained. (2) All offences under any other law shall be investigated, inquired into, tried, and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating inquiring into, trying or otherwise dealing with such offences. It is apparent from this Section that the provisions of the Criminal Procedure Code are applicable where an offence under the Indian Penal Code or under any other law is being investigated, inquired into tried or otherwise dealt with. Then we come straight to Section 162 which occurs in chapter XII dealing with the powers of the Police to investigate into offences. That Section, so far as material, reads as under: "162 (1) No statement made by any person to a police officer in the course of an investigation under this chapter, shall, if reduced to writing be signed by the person making it, nor shall any such statement or any record thereof, whether in a police diary or otherwise, or any part of such statement or record be used for any purpose, save as hereinafter provided, at any inquiry or trial in respect of any offence under investigation at the time when such statement was made: Provided that when any witness is called for the prosecution in such inquiry or trial whose statement has been reduced into writing as aforesaid, any part of his statement, if duly proved, may be used by the accused and with the permission of the Court, by the prosecution, to contradict such witness in the manner provided by section 145 of the ; and when any part of such statement is so used, any part thereof may also be used in the re examination of such witness, but for the purpose only of explaining any matter referred to in his cross examination. (2) Nothing in this section shall be deemed to apply to any statement falling within the provisions of claues(1) 152 of section 32 of the , or to affect the provisions of section 27 of that Act. " It bars the use of any statement made before a police officer in the course of an investigation under chapter XII, whether recorded in a police diary or otherwise, but by the express terms of the Section this bar is applicable only where such statement is sought, to be used 'at any inquiry or trial in respect of any offence under investigation at the time when such statement was made '. If the statement made before a police officer in the course of an investigation under chapter XII is sought to be used in any proceeding other than an inquiry or trial or even at an inquiry or trial but in respect of an offence other than that which was under investigation at the time when such statement was made, the bar of Section 162 would not be attracted. This section has been enacted for the benefit of the accused, as pointed out by this Court in Tehsildar Singh and Another vs The State of Uttar Pradesh(1) it is intended "to protect the accused against the user of statements of witnesses made before the police during investigation, at the trial presumably on the assumption that the said statements were not made under circumstances inspiring confidence." This Court, in Tehsildar Singh 's case approved the following observations of Braund, J. in Emperor vs Aftab Mohd. Khan(2) "As it seems to us it is to protect accused persons from being prejudiced by statements made to police officers who by reason of the fact that an investigation is known to be on foot at the time the statement is made, may be in a position to influence the maker of it, and, on the other hand, to protect accused persons from the prejudice at the hands of persons who in the knowledge that an investigation has already started, are prepared to tell untruths." and expressed its agreement with the view taken by the Division Bench of the Nagpur High Court in Baliram Tikaram Marathe vs Emperor(3) that "the object of the section is to protect the accused both against overzealous police officers and untruthful witnesses. " Protection against the use of statement made before police during investigation is, therefore, granted to the accused by providing that such statement shall not be allowed to be used except for the limited purpose set out in the proviso to the section, at any inquiry or trial in respect of the offence which was under in 153 vestigation at the time when such statement was made. But this protection is unnecessary in any proceeding other than an inquiry or trial in respect of the offence under investigation and hence the bar created by the section is a limited bar. It has no application, for example in a civil proceeding or in a proceeding under Article 32 or 226 of the Constitution and a statement made before a police officer in the course of investigation can be used as evidence in such proceeding, provided it is otherwise relevant under the . There are a number of decisions of various High Courts which have taken this view and amongst them may be mentioned the decision of Jaganmohan Reddy J. in Malakalaya Surya Rao vs Janakamma(1) The present proceeding before us is a writ petition under Article 32 of the Constitution filed by the petitioners for enforcing their Fundamental Rights under Article 21 and it is neither an "inquiry" nor a "trial" in respect of any offence and hence it is difficult to see how section 162 can be invoked by the State in the present case. The procedure to be followed in a writ petition under Article 32 of the Constitution is prescribed in order XXXV of the Supreme Court Rules, 1966, and sub rule (9) of Rule 10 lays down that at the hearing of the rule nisi, if the court is of the opinion that an opportunity be given to the parties to establish their respective cause by leading further evidence the court may take such evidence or cause such evidence to be taken in such manner as it may deem fit and proper and obviously the reception of such evidence will be governed by the provisions of the . It is obvious, therefore, that even a statement made before a police officer during investigation can be produced and used in evidence in a writ petition under Article 32 provided it is relevant under the and section 162 cannot be urged as a bar against its production or use. The reports submitted by Shri L.V. Singh setting forth the result of his investigation cannot, in the circumstances, be shut out from being produced and considered in evidence under section 162, even if they refer to any statements made before him and his associates during investigation, provided they are otherwise relevant under some provision of the . We now turn to section 172 which is the other section relied upon by the State. That section reads as follows: "172. Diary of proceedings in investigation (1) Every police officer making an investigation under this Chapter shall day by day enter his proceedings in the investi 154 gation in a diary, setting forth the time at which the information reached him, the time at which he began and closed his investigation, the place or places visited by him, and a statement of the circumstances ascertained through his investigation. (2) Any Criminal Court may send for the police diaries of a case under inquiry or trial in such Court, and may use such diaries, not as evidence in the case, but to aid it in such inquiry or trial. (3) Neither the accused nor his agents shall be entitled to call for such diaries, nor shall he or they be entitled to see them merely because they are referred to by the court; but, if they are used by the police officer who made them to refresh his memory, or if the court uses them for the purpose of contradicting such police officer, the provisions of section 161 or section 145, as the case may be, of the (1 of 1872) shall apply. The first question which arises for consideration under this section is whether the reports made by Shri L.V. Singh as a result of the investigation carried out by him and his associates could be said to form part of case diary within the meaning of this section. The argument of Mrs. Hingorani and Dr. Chitale was that these reports did not form part of case diary as contemplated in this section, since the investigation which was carried out by Shri L.V. Singh was pursuant to a direction given to him by the State Government under section, 3 of the Indian , and it was not an investigation under Chapter XII of the Criminal Procedure Code which alone would attract the applicability of section 172. Mrs. Hingorani sought to support this proposition by relying upon the decision of this Court in State of Bihar vs J.A.C. Saldhana(1) Mr. K.G. Bhagat, learned counsel appearing on behalf of the State however, submitted that even though Shri L.V. Singh carried out the investigation under the direction given by the State Government in exercise of the power conferred under section 3 of the Indian , the investigation carried out by him was one under Chapter XII and section 172 was therefore applicable in respect of the reports made by him setting out the result of the investigation. He conceded that it was undoubtedly laid down by this Court in State of Bihar vs J.A.C. Saldhana (supra) that the State Government has power to direct investigation or further investigation under section 3 of the 155 Indian , but contended that it was equally clear from the decision in that case that "power to direct investigation or further investigation is entirely different from the method and procedure of investigation and the competence of the person who investigates." He urged that section 36 of the Criminal Procedure Code provides that police officers superior in rank to an officer in charge of a police station may exercise the same powers throughout the local area to which they are appointed as may be exercised by such officer within the limits of his station and Shri L.V. Singh being the Deputy Inspector General of Police, was superior in rank to an officer incharge of a police station and was, therefore, competent to investigate the offences arising from the blinding of the under trial prisoners and the State Government acted within its powers under section 3 of the Indian in directing Shri L.V. Singh to investigate into these offences. But, "the method and procedure of investigation" was to be the same as that prescribed for investigation by an officer in charge of a police station under Chapter XII and therefore the investigation made by Shri L.V. Singh was an investigation under that Chapter so as to bring in the applicability of section 172. These rival contentions raise two interesting questions, first, whether an investigation carried out by a superior officer by virtue of a direction given to him by the State Government under section 3 of the Indian is an investigation under Chapter XII so as to attract the applicability of section 172 to a diary maintained by him in the course of such investigation and secondly, whether the report made by such officer as a result of the investigation carried out by him forms part of case diary within the meaning of section 172. We do not, however think it necessary to enter upon a consideration of these two questions and we shall assume for the purpose of our discussion that Mr. K.G. Bhagat, learned counsel appearing on behalf of the State, is right in his submission in regard to both these questions and that the reports made by Shri L.V. Singh setting out the result of his investigation form part of case diary so as to invite the applicability of section 172. But, even if that be so, the question is whether these reports are protected from disclosure under section 172 and that depends upon a consideration of the terms of this section. The object of section 172 in providing for the maintenance of a diary of his proceedings by the police officer making an investigation under Chapter XII has been admirably stated by Edge, C.J. in Queen Empress vs Mannu(1) in the following words: 156 "The early stages of the investigation which follows on the commission of a crime must necessarily in the vast majority of cases be left to the police, and until the honesty, the capacity, the discretion and the judgment of the police can be thoroughly trusted, it is necessary, for the protection of the public against criminals, for the vindication of the law and for the protection of those who are charged with having committed a criminal offence that the Magistrate or Judge before whom the case is for investigation or for trial should have the means of ascertaining what was the information, true, false, or misleading which was obtained from day to day by the police officer who was investigating the case and what such police officer acted. " The criminal court holding an inquiry or trial of a case is therefore empowered by sub section (2) of section 172 to send for the police diary of the case and the criminal court can use such dairy, not as evidence in the case, but to aid it in such inquiry or trial. But, by reason of sub section (3) of section 172, merely because the case, diary is referred to by criminal court, neither the accused nor his agents are entitled to call for such diary nor are they entitled to see it. If however the case diary is used by the police officer who has made it to refresh his memory or if the criminal court uses it for the purpose of contradicting such police officer in the inquiry or trial, the provisions of section 161 or section 145, as the case may be, of the would apply and the accused would be entitled to see the particular entry in the case diary which has been referred to so far either of these purposes and so much of the diary as in the opinion of the Court is necessary to a full understanding of the particular entry so used. It will thus be seen that the bar against production and use of case diary enacted in section 172 is intended to operate only in an inquiry or trial, for an offence and even this bar is a limited bar, because in an inquiry or trial, the bar does not operate if the case dairy is used by the police officer for refreshing his memory or the criminal court uses it for the purpose of contradicting such police officer. This bar can obviously have no application where a case diary is sought to be produced and used in evidence in a civil proceeding or in a proceeding under Article 32 or 226 of the Constitution and particularly when the party calling for the case diary is neither an accused nor his agent in respect of the offence to which the case diary relates. Now plainly and unquestionably the present writ petition which has been filed under Article 32 of the Constitution to enforce the fundamental right guaranteed under Article 32 is neither an 'inquiry ' nor a 'trial ' for an offence 157 nor is this Court hearing the writ petition a criminal court nor are the petitioners, accused or their agents so far as the offences arising out of their blinding are concerned. Therefore, even if the reports submitted by Shri L. V. Singh as a result of his investigation could be said to form part of 'case diary ', it is difficult to see how their production and use in the present writ petition under Article 32 of the Constitution could be said to be barred under section 172. Realising this difficulty created in his way by the specific language of section 172, Mr. K.G. Bhagat, learned advocate appearing on behalf of the State, made a valiant attempt to invoke the principle behind section 172 for the purpose of excluding the reports of investigation submitted by Sh. L.V. Singh. He contended that if, under the terms of section 172, the accused in an inquiry or trial is not entitled to call for the case diary or to look at it, save for a limited purpose, it is difficult to believe that the Legislature could have ever intended that the complainant or a third party should be entitled to call for or look at the case diary in some other proceeding, for that would jeopardise the secrecy of investigation and defeat the object and purpose of section 172 and therefore, applying the principle of that section, we should hold that the case diary is totally protected from disclosure and even the complainant or a third party cannot call for it or look at in a civil proceeding. This contention is in our opinion wholly unfounded. It is based on what may be called an appeal to the spirit of section 172 which is totally impermissible under any recognised canon of construction. Either production and use of case diary in a proceeding is barred under the terms of section 172 or it is not it is difficult to see how it can be said to be barred on an extended or analogical application of the principle supposed to be underlying that section, if it is not covered by its express terms. It must be remembered that we have adopted the adversary system of justice and in order that truth may emerge from the clash between contesting parties under this system, it is necessary that all facts relevant to the inquiry must be brought before the Court and no relevant fact must be shut out, for otherwise the Court may get a distorted or incomplete picture of the facts and that might result in miscarriage of justice. To quote the words of the Supreme Court of United States in United States vs Nixon(1) "The need to develop all relevant fact in the adversary system is both fundamental and comprehensive. The ends of . justice would be defeated if judgments were to be founded on a partial or speculative presentation of the facts. The very integrity 158 of the judicial system and public confidence in the system depend on full disclosure of all the facts within the frame work of the rules of evidence. ", it is imperative to the proper functioning of the judicial process and satisfactory and certain ascertainment of truth that all relevant facts must be made available to the Court. But the law may, in exceptional cases, in order to protect more weighty, compelling and competing interests, provide that a particular piece of evidence, though relevant, shall not be liable to be produced or called in evidence. Such exceptions are to be found, inter alia in sections 122, 123, 124, 126 and 129 of the and sections 162 and 172 of the Criminal Procedure Code. But being exceptions to the legitimate demand for reception of all relevant evidence in the interest of justice, they must be strictly interpreted and not expansively construed, "for they are in derogation of the search for truth". It would not, therefore, be right to extend the prohibition of section 172 to cases not falling strictly within the terms of the section, by appealing to what may be regarded as the principle or spirit of the section. That is a feeble reed which cannot sustain the argument of the learned advocate appearing on behalf of the State. It would in fact be inconsistent with the Constitutional commitment of this Court to the rule of law. That takes us to the question whether the reports made by Sh. L.V. Singh as a result of the investigation carried by him and his associates are relevant under any provision of the so as to be liable to be produced and received in evidence. It is necessary, in order to answer this question, to consider what is the nature of the proceeding before us and what are the issues which arise in it. The proceeding is a writ petition under Article 32 for enforcing the fundamental right of the petitioners enshrined in Article 21. The petitioners complain that after arrest, whilst under police custody, they were blinded by the members of the police force, acting not in their private capacity, but as police officials and their fundamental right to life guaranteed under Article 21 was therefore violated and for this violation, the State is liable to pay compensation to them. The learned Attorney General who at one stage appeared on behalf of the State at the hearing of the writ petition contended that the inquiry upon which the Court was embarking in order to find out whether or not the petitioners were blinded by the police officials whilst in police custody was irrelevant, since, in his submission, even if the petitioners were so blinded, the State was not liable to pay compensation to the petitioners first, because the state was not constitutionally or legally responsible for the acts of the police officers outside the scope of 159 their power or authority and the blindings of the under trial prisoners effected by the police could not therefore be said to constitute violation of their fundamental right under Article 21 by the State and secondly, even if there was violation of the fundamental right of the petitioners under Article 21 by reason of the blindings effected by the police officials, there was, on a true construction of that Article, no liability on the State to pay compensation to the petitioners. The attempt of the learned Attorney General in advancing this contention was obviously to preempt the inquiry which was being made by this Court, so that the Court may not proceed to probe further in the matter. But we do not think we can accede to this contention of the learned Attorney General. The two questions raised by the learned Attorney General are undoubtedly important but the arguments urged by him in regard to these two questions are not prima facie so strong and appealing as to persuade us to decide them as preliminary objections without first inquiring into the facts. Some serious doubts arise when we consider the argument of the learned Attorney General. If an officer of the State acting in his official capacity threatens to deprive a person of his life or personal liberty without the authority of law, can such person not approach the Court for injuncting the State from such officer in violation of his fundamental right under Article 21 ? Can the State urge in defence in such a case that it is not infringing the fundamental right of the petitioner under Article 21, because the officer who is threatening to do so is acting outside the law and therefore beyond the scope of his authority and hence the State is not responsible for his action ? Would this not make a mockery of Article 21 and reduce it to nullity, a mere rope of sand, for, on this view, if the officer is acting according to law there would ex concession is be no breach of Article 21 and if he is acting without the authority of law, the State would be able to contend that it is not responsible for his action and therefore there is no violation of Article 21. So also if there is any threatened invasion by the State of the Fundamental Right guaranteed under Article 21, the petitioner who is aggrieved can move the Court under Article 32 for a writ injuncting such threatened invasion and if there is any continuing action of the State which is violative of the Fundamental Right under Article 21, the petitioner can approach the court under Article 32 and ask for a writ striking down the continuance of such action, but where the action taken by the State has already resulted in breach of the Fundamental Right under Article 21 by deprivation of some limb of the petitioner, would the petitioner have no remedy under Article 32 for breach of the Fundamental Right guaranteed to him ? 160 Would the court permit itself to become helpless spectator of the violation of the Fundamental Right of the petitioner by the State and tell the petitioner that though the Constitution has guaranteed the Fundamental Right to him and has also given him the Fundamental Right of moving the court for enforcement of his Fundamental Right, the court cannot give him any relief. These are some of the doubts which arise in our mind even in a prima facie consideration of the contention of the learned Attorney General and we do not, therefore, think it would be right to entertain this contention as a preliminary objection without inquiring into the facts of the case. If we look at the averments made in the writ petition, it is obvious that the petitioners cannot succeed in claiming relief under Article 32 unless they establish that their Fundamental Right under Article 21 was violated and in order to establish such violation, they must show that they were blinded by the police officials at the time of arrest or whilst in police custody. This is the foundational fact which must be established before the petitioners can claim relief under Article 32 and logically therefore the first issue to which we must address ourselves is whether this foundational fact is shown to exist by the petitioners. It is only if the petitioners can establish that they were blinded by the members of the police force at the time of arrest or whilst in police custody that the other questions raised by the learned Attorney General would arise for consideration and it would be wholly academic to consider them if the petitioners fail to establish this foundational fact. We are, therefore, of the view, as at present advised, that we should first inquire whether the petitioners were blinded by the police officials at the time of arrest or after arrest, whilst in police custody, and it is in the context of this inquiry that we must consider whether the reports made by Sh. L.V. Singh are relevant under the so as to be receivable in evidence. We may at this stage refer to one other contention raised by Mr. K.G. Bhagat on behalf of the State that if the Court proceeds to hold an inquiry and comes to the conclusion that the petitioners were blinded by the members of the police force at the time of arrest or whilst in police custody, it would be tantamount to adjudicating upon the guilt of the police officers without their being parties to the present writ petition and that would be grossly unfair and hence this inquiry should not be held by the Court until the investigation is completed and the guilt or innocence of the police officers is established. We cannot accept this contention of Mr. K.G. Bhagat. When the Court trying the writ petition proceeds to inquire into the issue whether the petitioners were blinded by police officials at the time of arrest or whilst in police custody, it does so, 161 not for the purpose of adjudicating upon the guilt of any particular officer with a view to punishing him but for the purpose of deciding whether the fundamental right of the petitioners under Article 21 has been violated and the State is liable to pay compensation to them for such violation. The nature and object of the inquiry is altogether different from that in a criminal case and any decision arrived at in the with petition on this issue cannot have any relevance much less any binding effect, in any criminal proceeding which may be taken against a particular police officer. A situation of this kind sometimes arises when a claim for compensation for accident caused by negligent driving of a motor vehicle is made in a civil Court or Tribunal and in such a proceeding, it has to be determined by the Court, for the purpose of awarding compensation to the claimant, whether the driver of the motor vehicle was negligent in driving, even though a criminal case for rash and negligent driving may be pending against the driver. The pendency of a criminal proceeding cannot be urged as a bar against the Court trying a civil proceeding or a writ petition where a similar issue is involved. The two are entirely distinct and separate proceedings and neither is a bar against the other. It may be that in a given case, if the investigation is still proceeding, the Court may defer the inquiry before it until the investigation is completed or if the Court considers it necessary in the interests of Justice, it may postpone its inquiry even until after the prosecution following upon the investigation is terminated, but that is a matter entirely for the exercise of the discretion of the Court and there is no bar precluding the Court from proceeding with the inquiry before it merely because the investigation or prosecution is pending. It is clear from the aforesaid discussion that the fact in issue in the inquiry before the Court in the present writ petition is whether the petitioners were blinded by the members of the police force at the time of the arrest or whilst in police custody. Now in order to determine whether the reports made by Shah L.V. Singh as a result of the investigation carried out by him and his associates are relevant, it is necessary to consider whether they have any bearing on the fact in issue required to be decided by the Court. It is common ground that Sh. L.V. Singh was directed by the State Government under Section 3 of the Indian to investigate into twenty four cases of blinding of under trial prisoners where allegations were made by the undertrial prisoners and First Information Reports were lodged that they were blinded by the police officers whilst in police custody. L.V. Singh through his associates carried out this inves 162 tigation and submitted his reports in the discharge of the official duty entrusted to him by the State Government. These reports clearly relate to the issue as to how, in what manner and by whom the twenty four undertrial prisoners were blinded, for that is the matter which Shri L.V. Singh was directed, by the State Government to investigate. If that be so, it is difficult to see how the State can resist the production of these reports and their use as evidence in the present proceeding. These reports are clearly relevant under section 35 of the which reads as follows: "35. An entry in any public or other official book, register or record, stating a fact in issue or relevant fact, and made by a public servant in the discharge of his official duty, or by any other person in performance of a duty specially enjoined by the law of the country in which such book, register or record is kept, is itself a relevant fact. " These reports are part of official record and they relate to the fact in issue as to how, and by whom the twenty four under trial prisoners were blinded and they are admittedly made by Sh. L.V. Singh, a public servant, in the discharge of his official duty and hence they are plainly and indubitably covered by Section 35. The language of section 35 is so clear that it is not necessary to refer to any decided cases on the interpretation of that section, but we may cite two decisions to illustrate the applicability of this section in the present case. The first is the decision of this Court in Kanwar Lal Gupta vs Amar Nath Chawla(1). There the question was whether reports made by officers of the CID (Special Branch) relating to public meetings covered by them at the time of the election were relevant under section 35 and this Court held that they were, on the ground that they were" made by public servants in discharge of their official duty and they were relevant under the first part of section 35 of the Evidence Act, since they contained statement showing what were the public meetings held by the first respondent. "This Court in fact followed an earlier decision of the Court in P.C.P. Reddiar vs section Perumal(2)also in Jagdat vs Sheopal(3) Wazirhasan J. Held that the result of an inquiry by a Kanungo under section 202 of the Code of Criminal Procedure 1898 embodied in the report is an entry in a public record stating a fact in issue and made by a public servant in the discharge of his official duties and the report is therefore admis 163 sible in evidence under section 35. We find that a similar view was taken by a Division Bench of the Nagpur High Court in Chandulal vs Pushkar Rai(1) where the learned Judges held that repots made by Revenue Officers, though not regarded as having judicial authority where they express opinions on the private rights of the parties are relevant under section 35 as reports made by public officers in the discharge of their official duties, in so far as they supply information of official proceedings and historical facts. The Calcutta High Court also held in Lionell Edwerds Limited vs State of West Bengal(1) that official correspondence from the Forest officer to his superior, the conservator of Forests, carried on by the Forest Officer in the discharge of his official duty would be admissible in evidence under section 35. There is therefore no doubt in our mind that the reports made by Sh. L.V. Singh setting forth the result of the investigation carried on by him and his associates are clearly relevant under section 35 since they relate to a fact in issue and are made by a public servant in the discharge of his official duty. It is indeed difficult to see how in a writ petition against the State Government where the complaint is that the police officials of the State Government blinded the petitioners at the time of arrest or whilst in police custody, the State Government can resist production of a report in regard to the truth or otherwise of the complaint, made by a highly placed officer persuant to the direction issued by the State Government. We are clearly of the view that the reports made by Shri L.V. Singh as a result of the investigation carried out by him and his associates are relevant under section 35 and they are liable to be produced by the State Government and used in evidence in the present writ petition. Of course, what evidentially value must attach to the statements contained in these reports is a matter which would have to be decided by the Court after considering these reports. It may ultimately be found that these reports have not much evidentially value and even if they contain any statements adverse to the State Government it may possible for the State Government to dispute their correctness or to explain them away, but it cannot be said that these reports are not relevant. These reports must therefore be produced by the State and taken on record of the present writ petition. We may point out that though in our order dated 16th February 1981, we have referred to these reports as having been made by Shri L.V. Singh and his associates between January 10 and January 20, 1981, it seems that there has been some error on our part in mentioning the outer date as January 20, 1981, 164 for we find that some of these reports were submitted by Shri L.V. Singh even after January 20, 1981 and the last of them was submitted on 27th January 1981. All these reports including the report submitted on 9th December, 1980 must therefore be filed by the State and taken as forming part of the record to be considered by the Court in deciding the question at issue between the parties. What we have said above must apply equally in regard to the correspondence and notings referred to as items three and four in the Order dated 16th February 1981 made by us. These notings and correspondence would throw light on the extent of involvement, whether by acts of commission or acts of omission, of the State in the blinding episode and having been made by Shri L.V. Singh and Shri M.K. Jha in discharge of their officials duties, they are clearly relevant under section 35 and they must therefore be produced and taken on record in the writ petition, so also the reports submitted by Inspector and Sub Inspector of CID to Gajendra Narain, DIG, Bhagalpur on 18th July and his letter to Shri K.D. Singh, Superintendent of Police, CID, Patna containing hand written endorsement of Shri M.K. Jha must for the same reasons be held to be relevant under section 35 and must be produced by the State and be taken as forming part of the record of the writ petition. Since all these documents are required by the Central Bureau of Investigation for the purpose of carrying out the investigation which has been commenced by them pursuant to the approval given by the State Government under section 6 of the Delhi Special Police Establishment Act, we would direct that five sets of photostat copies of these documents may be prepared by the office, one for Mrs. Hingorani, learned advocate appearing on behalf of the petitioners, one for Mr. K.G. Bhagat, learned advocate appearing on behalf of the State one for Dr. Chitale who is appearing amcius curiae at our request and two for the Court, and after taking such photostat copies, these documents along with the other documents which have been handed over to the Court by the State shall be returned immediately to Mr. K.G. Bhagat, learned advocate appearing on behalf of the State, for being immediately made available to the Central Bureau of Investigation for carrying out its investigation so that the investigation by Central Bureau of Investigation may not be impeded or delayed. We hope and trust that the Central Bureau of Investigation will complete its investigation expeditiously without any avoidable delay. S.R. Application allowed.

The petitioners are certain under trials in the State of Bihar. In the Writ Petitions filed by them under Article 32 of the Constitution they complained that after their arrest, whilst under police custody they were blinded by the members of the police force, acting not in their private capacity but as police officials and their fundamental right to life guaranteed under Article 21 was therefore, violated and for this violation the State is liable to pay compensation to them. On an application made by the petitioners, several documents including C.I.D. Reports submitted by Shri L.V. Singh, D.I.G., C.I.D, (Anti Dacoity) on December 9,1980 and other dates were called for by the Court. The State raised an objection to the production of these documents on the ground that they are protected from disclosure under sections 162 to 172 of the Code of Criminal Procedure, 1973 and that the petitioners are not entitled to see them or to make any use of them in the present proceedings. Overruling the State objection and directing the Registry to supply copies of these documents produced before the Court, to the petitioner 's advocate and the advocate appearing as amicus curiae, the Court ^ HELD: 1:1. The reports submitted by Shri L.V. Singh setting forth the results of his investigation cannot be shut out from being produced and considered in evidence either under section 162 or 172 of the Criminal Procedure Code, even if they refer to any statements made before him and his associates during investigation, provided they are otherwise relevant under the provisions of the Indian Evidence Act. In a writ petition against the State Government where the complaint is that the police officials of the State Government blinded the petitioners at the time of arrest or whilst in custody, the State Government cannot resist production of a report in regard to the truth or otherwise of the complaint, made by a highly placed officer pursuant to the direction issued by the State Government. [163 B D] 1:2. All the other reports covered by Items 2 to 5 of the Court 's order dated 16th February, 1981 are equally relevant and must, therefore, be produced and taken on record in the writ petition. [164 B C] 146 2:1. The procedure to be followed in a writ petition under Article 32 of the Constitution is prescribed under order XXXV of the Supreme Court Rules, 1966, and sub rule (9) of Rule 10 lays down that at the hearing of the rule nisi if the court is of the opinion that an opportunity be given to the parties to establish their respective cases by leading further evidence, the court may take such evidence or cause such evidence to be taken in such manner as it may deem fit and proper and obviously the reception of such evidence will be governed by the provisions of the Indian Evidence Act. It is obvious, therefore, that even a statement made before a police officer during investigation can be produced and used in evidence in a writ petition under Article 32 of the Constitution provided it is relevant under the Indian Evidence Act and neither section 162 nor section 172 can be urged as a bar against its production or use. [153 C E] 3:1. When the Court trying the writ petition proceeds to inquire into the issue whether the petitioners were blinded by police officials at the time of arrest or whilst in police custody, it does so, not for the purpose of adjudicating upon the guilt of any particular officer with a view to punishing him but for the purpose of deciding whether the fundamental right of the petitioners under Article 21 has been violated and the State is liable to pay compensation to them for such violation. The nature and object of the inquiry is altogether different from that in a criminal case and any decision arrived at in the writ petition on this issue cannot have any relevance much less any binding effect, in criminal proceeding which may be taken against a particular police officer. [160 G H, 161 A B] 4. The pendency of a criminal proceeding cannot be urged as a bar against the Court trying a civil proceeding or a writ petition where a similar issue is involved. The two are entirely distinct and separate proceedings and neither is a bar against the other. It may be that in a given case, if the investigation is still proceeding, the Court may defer the inquiry before it until the investigation is completed or if the Court considers it necessary in the interests of Justice, it may postpone its inquiry even after the prosecution following upon the investigation is terminated, but that is a matter entirely for the exercise of the discretion of the Court and there is no bar precluding the Court from proceeding with the inquiry before it merely because the investigation or prosecution is pending. [161 D E] 5. The fact in issue in the inquiry before the Court in the present writ petition is whether the petitioners were blinded by the members of the police force at the time of the arrest or whilst in police custody. The several reports called for by the Court clearly relate to the issue as to how, in what manner and by whom the twenty four undertrial prisoners were blinded, for that is the matter which Shri L.V. Singh was directed by the State Government to investigate. If that be so, the State cannot resist the production of these reports and their use as evidence in the present proceeding. These reports are clearly relevant under section 35 of the Indian Evidence Act since they relate to a fact in issue and are made by a public servant in the discharge of his official duty. A D] P.C.P. Reddiar vs section Perumal, ; ; Kanwar Lal Gupta vs Amar Nath Chawla, ; ; followed. Jagdat vs Sheopal, A.I.R. 1927 Oudh 323; Chandulal vs Pushkar Rai, A.I.R. 1952 Nagpur 271; Lionell Edwards Limited vs State of West Bengal, A.I.R, , quoted with approval. 147 6. Section 4 of the Criminal Procedure Code, 1973 makes it clear that the provisions of the Criminal Procedure Code are applicable where an offence under the Indian Penal Code or under any other law is being investigated, inquired into tried or otherwise dealt with. [151 B C] 7. Section 162 bars the use of any statement made before a police officer in the course of an investigation under Chapter XII, whether recorded in a police diary or otherwise, but, by the express terms of the Section, this bar is applicable only where such statement is sought to be used "at any inquiry or trial in respect of any offence under investigation at the time when such statement was made. " If the statement made before the police officer in the course of an investigation under chapter XII is sought to be used in any proceeding other than an inquiry or trial or even at an inquiry or trial but in respect of an offence other than that which was under investigation at the time when such statement was made, the bar of section 162 would not be attracted. [152 A C] 7:2. Section 162 has been enacted for benefit of the accused and to protect him against overzealous police officers and untruthful witnesses. But, this protection is unnecessary in any proceeding other than an inquiry or trial in respect of the offence under investigation and hence the bar created by the section is a limited bar. It has no application in a civil proceeding or in a proceeding under Article 32 or 226 of the Constitution and a statement made before a police officer in the course of investigation can be used as evidence in such proceeding, provided it is otherwise relevant under the Indian Evidence Act. [152 D, H, 153 A B] Tehsildar Singh and Another vs The State of Uttar Pradesh, [1959] Supp. 2 S.C.R. 875 at 890, applied. Emperor vs Aftab Mohd. Khan, A.I.R. 1940 All. 291; Baliram Tikaram Maratha vs Emperor, A.I.R. 1945 Nagpur 1; Malakalaya Surya Rao vs Janakamma, A.I.R. 1964 A.P. 198; approved. Sub section (2) of section 172 of the Criminal Procedure Code empowers the criminal court holding an inquiry or trial of a case to send for the police diary of the case and the criminal court can use such diary, not as evidence in the case, but to aid it in such inquiry or trial. But, by reason of sub section (3) of section 172, merely because the case diary is referred to by the criminal court, neither the accused nor his agents are entitled to call for such diary nor are they entitled to see it. If however the case diary is used by the police officer who has made it to refresh his memory or if the criminal court uses it for the purpose of contradicting such police officer in the inquiry or trial, the provisions of section 161 or section 145, as the case may be of the Indian Evidence Act would apply and the accused would be entitled to see the particular entry in the case diary which has been referred to for either of these purposes and so much of the diary as in the opinion of the Court is necessary to a full understanding of the particular entry so used. [156 C D] Queen Empress vs Mannu, [1897] 19 All. 390, quoted with approval. State of Bihar vs J.A.C. Saldhana, ; , referred to. The bar against production and use of case diary enacted in section 172 is intended to operate only in an inquiry or trial for an offence and even this 148 bar is a limited bar, because in an inquiry or trial, the bar does not operate if the case diary is used by the police officer for refreshing his memory or the criminal court uses it for the purpose of contradicting such police officer. This bar can obviously have no application where a case diary is sought to be produced and used in evidence in a civil proceeding or in a proceeding under Article 32 or 226 of the Constitution and particularly when the party calling for the case diary is neither an accused nor his agent in respect of the offence to which the case diary relates. The present writ petition which has been filed under Article 32 of the Constitution to enforce the fundamental right guaranteed under Article 21 is neither an "inquiry" nor a "trial" for an offence nor is this court hearing the writ petition a criminal court nor are the petitioners, accused or their agents so far as the offences arising out of their blinding are concerned. Therefore, even if the reports submitted by Shri L.V. Singh as a result of his investigation could be said to form part of "case diary" their production and use in the present writ petition under Article 32 of the Constitution cannot be said to be barred under section 172 of the Criminal Procedure Code. [156 D G, 157 A B] 9:1. It would not be right to extend the prohibition of section 172 to cases not falling strictly within the terms of the section, by appealing to what may be regarded as the principle or spirit of the section. In fact to do so would be inconsistent with the constitutional commitment of the Supreme Court to the rule of law. Either production and use of case diary in a proceeding is barred under the terms of section 172 or it is not, it cannot be said to be barred on an extended or analogical application of the principle supposed to be underlying that section, if it is not covered by its express terms. In order that truth may emerge from the clash between contesting parties under the adversary system, it is necessary that all facts relevant to the inquiry must be brought before the Court and no relevant fact must be shut out, for otherwise the Court may get a distorted or incomplete picture of the facts and that might result in mis carriage of justice. It is imperative to the proper functioning of the judicial process and satisfactory and certain ascertainment of truth that all relevant facts must be made available to the Court. But the law may, in exceptional cases, in order to protect more weighty and compelling competing interests, provide that a particular piece of evidence, though relevant, shall not be liable to be produced or called in evidence. Such exceptions are to be found, inter alia, in sections 122, 123 124, 126 and 129 of the Indian Evidence Act and sections 162 and 172 of the Criminal Procedure Code But being exceptions to the legitimate demand for reception of all relevant evidence in the interest of justice, they must be strictly interpreted and not expansively construed, "for they are in derogation of the search for truth". [157 E H, 158 A C] United States vs Nixon, ; 41 Lawyers Edition (2nd series) 1039, quoted with approval. The Court did not express any opinion regarding the two interesting questions, (i) whether an investigation carried out by a superior officer by virtue of a direction given to him by the State Government under section 3 of the Indian is an investigation under Chapter XII so as to attract the applicability of section 172 to a diary maintained by him in the course of such investigation and (ii) whether the report made by such officer as a result of the investigation carried out by him forms part of case diary within the meaning of section 172 of the Criminal Procedure Code. [155 D G] 149

vil Appeal No. 2089 of 1985. (with C.A. Nos. 99 100 of 1986 & 3340 46 of 1984). From the Judgment and Order dated 24.11.1983 of the Excise & Gold (Control) Appellate Tribunal in Appeal No. ED (SB) 1255/83 D. 1227 Hemant Sharma, C.V. Subba Rao and K. Swamy for the Appellant. R.N. Banerjee and K.J. John for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, J. Each of these appeals under Section 35 L (b) of the Central Excise and Salt Act, 1944 is direct ed against the decision of the Customs, Excise and Gold (Control) Appellate Tribunal. The short question arising in each of them is as to whether P.V.C. Conveyor Belting manu factured by the different respondents in these appeals comes within the purview of Item 22(3) or would be governed by the residuary entry 68 for purposes of excise duty under the Central Excise Tariff. According to the respondents the appropriate Item is 68 while according to the Revenue Item 22 squarely covers the commodity. The Tribunal has accepted the stand of manufacturers. That is how all these appeals have been carried by the Collector of Central Excise. The Assistant Collector who initiated the proceeding in the show cause notice reproduced the Departmental Chemical Examiner 's Certificate. Therein it was stated: "The sample is in the form of cut piece of black coloured Belting of width 10 c.ms. and thickness 9 m.m. It is composed of synthetic resin of P.V.C. type, reinforced with textile fabric containing 42.3% by weight of cotton and rest viscose (man made filament yarns of cellulosic origin). Percentage of textile fabric = 43.3. Percentage of P.V.C. Compound = 56.7%". This position has not been disputed at any stage nor even before us. The Tribunal has recorded a finding that P.V.C. compounding was done simultaneously with the weaving of the fabric from yarn which clearly indicated that the process of manufacture was conversion from yarn to fabric as also the application of the P.V.C. Compound carried on at the same point of time. Learned counsel for the appellants who ini tially attempted to challenge this fact was ultimately obliged to accept the situation as a finding of fact. In fact before the Tribunal the departmental representative had relied upon this position as would appear from the judgment of the Tribunal. 1228 It is not disputed that if the commodity would not be covered by item 22, residuary Item 68 of the Schedule would be applicable. Item 22 provides thus: "MAN MADE FABRICS "Man made fabrics" means all varieties of fabrics manufactured either wholly or partly from man made fibres or yarn and includes embroidery in the piece, in strips or in mo tifs, fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials and fabrics covered partially or fully with tex tile flocks or with preparation containing textile flocks, in each of which man made (i) cellulosic fibre or yarn, or (ii) non cellu losic fibre or yaru, predominates in weight: Explanation I: "Base fabrics" means fabrics failing under sub item (1) of this Item which are subjected to the process of embroidery or which arc imprignated ' coated or laminated with preparations of cellulose derivatives or of other plastic materials or which are cov ered partially or fully with textile flocks or with preparations containing textile flocks. Explanation II: . . . . . . . Explanation III: Explanation II under Item No. 19 shall, so far as may be, apply in relation to this Item as it applies in relation to that item. " It is accepted that yarn is woven into fabric. Item 19 deals with cotton fabrics while Item 22 deals with man made fabrics. On the footing recorded by the Tribunal, it is claimed that there was no preexisting base fabric and the manufacturing process simultaneously brought into existence the commodity by weaving yarn into fabric and application of P.V.C. Compound. In view of the higher percentage of P.V.C. Compound in commodity, it becomes difficult to treat the ultimate goods as man made fabrics for holding that it is covered by Item 22. Upon this analysis it follows that the Tribunal came to the correct conclusion when it held that the goods were not covered by Item 22 and, therefore, the residuary item 68 applied. All these appeals are without any merit and are dismissed. Each of the respondents should be entitled to its costs. N.P.V. Appeals dismissed.

The respondents, manufacturers of P.V.C. Conveyor Belt ing, contended before the Customs, Excise and Gold (Control) Tribunal that for purposes of excise duty under the Central Excise Tariff this item fell under Item 68. The Revenue submitted that the commodity was governed by Item 22. The Tribunal recorded a finding of fact that P.V.C. compounding was done simultaneously with the weaving of the fabric from yarn and held that this item should be governed by the residuary Entry 68 for the purposes of excise duty. Dismissing the appeals by the Revenue, the Court, HELD: It is accepted that yarn is woven into fabric. Item 19 deals with cotton fabrics while Item 22 deals with man made fabrics. The Tribunal recorded a finding that P.V.C. compounding was done simultaneously with the weaving of the fabric from yarn, which clearly indicated that the process of manufacture was conversion from yarn to fabric as also the application of the P.V.C. Compound carried on at the same point. [1228F; 1227FG] In view of the higher percentage of P.V.C. Compound in the commodity, it becomes difficult to treat the ultimate goods as manmade fabrics for holding that it is covered by Item 22. Upon this analysis, the Tribunal was correct in holding that the goods were not covered by Item 22 and, therefore, the residuary Item 68 applied. [ 1228G ]

Appeal No. 4 of 1960. Appeal by special leave from the Judgment and Order dated January 28, 1959 of the Punjab High Court in Letters Patent Appeal No. 52 of 1958 arising out of the Judgment and Order dated February 17, 1958 of the said High Court in Civil Writ Application No. 124 of 1957. C. B. Aggarwala, Daya Swarup Mehra and R. section Gheba, for the appellants. section M. Sikri, Advocate General for the State of Punjab, N.S. Bindra and D. Gupta, for respondent No. 1. C.K. Daphtary, Solicitor General of India and section N. Andley, for Respondent No. 2. C.K. Daphtary, Solicitor General of India and T.M. Sen, for the Attorney General for India (Intervener). 1960. November 16. The Judgment of the Court was delivered by SINHA, C. J. This appeal, by special leave granted on May 29, 1959, is directed against the decision of the Letters Patent Bench (G. D. Khosla, C. J., and Dulat, J.) dated January 28, 1959, affirming that of the learned single Judge (Bishan Narain, J.) dated February 17, 1958, whereby he dismissed the 461 appellants ' Writ Petition under article 226 of the Constitution. It appears that the appellants are the owners of, what is said to be, agricultural land, measuring about 86 bighas odd, in village Munda Majra, Tehsil Jagadhari, in the district of Ambala. On October 27, 1954, the Additional District Magistrate of Ambala ordered the land aforesaid to be requisitioned under the Punjab Requisitioning & Acquisition of Immoveable Property Act (XI of 1953) for the construction of houses by members of the Thapar Industries Co operative Housing Society Ltd., Yamuna Nagar. Possession of the land was taken on November 5, 1954. The appellants, at once, instituted a suit on November 14, 1954, in the Court of the Subordinate Judge, Jagadhari, challenging the requisition proceedings. The suit was ultimately decreed by the Court on June 21, 1955, and the possession of the property in question was restored to the petitioners. On May 27, 1955, the first respondent, i. e., the State of Punjab, through the Secretary, Labour Department, issued a notification under section 4 of the Land Acquisition Act (1 of 1894) (which hereinafter will be referred to as the Act). The notification, under section 4 is in these terms. "No. 4850 S LP 55/14144. Whereas it appears to the Governor of Punjab that land in the locality hereunder specified is likely to be needed by the Government for a public purpose, namely, for the construction of a Labour Colony under the Government sponsored Housing Scheme for the Industrial Workers of the Thapar Industrial Workers ' Co operative Housing Society Limited, Jamna Nagar (District Ambala), it is hereby notified that the land described in the specifi cations below is likely to be required for the above purpose. This notification is made under the provisions of Section 4 read with section 17 of the Land Acquisition Act, 1894, as amended by the Land Acquisition (Punjab Amendment) Act, 1953, to all to whom it may concern and the Collector shall cause public notice of the substance of this notification to be given at convenient places in the said locality; 462 In exercise of the powers conferred by the aforesaid sections, the Governor of the Punjab is pleased to authorise the President of the above said Society with the members and servants to enter upon and survey any land in the locality and do all other acts required or permitted by that section. Further in exercise of the powers conferred by sub section (4) of Section 17 of the said Act the Governor of Punjab is pleased to direct that, on the grounds of urgency, the provisions of Section 5(a) of the said Act, shall not apply in regard to this Acquisition". Later, the same day, another notification, under section 6 of the Act, was issued. This notification, under section 6, states that it appeared to the Governor of Punjab that the land is required to be taken by Government for a public purpose, namely, for the construction of a Labour Colony under the Government sponsored Housing Scheme for the ' Industrial Workers of the Thapar Industrial Workers ' Co operative Housing Society Limited (which is the second respondent in this case). It also says that under the provisions of section 7 of the Act, the Collector, Ambala, is directed to take order for the acquisition of the land. The Patwari effected delivery of possession of the lands in question to the second respondent on August 21, 1955. Even before the delivery of possession had been effected, the appellants promptly instituted their suit on August 20, 1955, in the Court of the Subordinate Judge Class 1, Jagadhari, for a perpetual injunction restraining the second respondent from entering upon or taking possession of the land in question, or making any construction thereon. The trial Court dismissed the suit on June 25, 1956, on the preliminary ground that the suit was not competent in the absence of a previous notice under section 59 of the Punjab Co operative Societies Act, 1955 (XIV of 1955). The appellants appealed to the Senior Sub Judge, Ambala, who dismissed their appeal, upholding the decision of the trial Court that the notice was a condition precedent to the institution of the suit. Their second appeal was dismissed by the Punjab High Court on February 6,1957. During the pendency of the civil litigation aforesaid, in spite of the fact that the second respondent had 463 obtained delivery of possession through Government agency, by an Order of Injunction issued by the Court, construction had been stayed. As soon as the High Court decided the suit in favour of the respondents, the second respondent "started making huge constructions on the land in dispute in a very speedy manner", as alleged by the appellants in their petition under article 226 of the Constitution, which they filed on February 13, 1957. From the High Court also, they obtained similar Stay Orders whereby building operations were stopped. In their Writ Petition, the appellants, as petitioners in the High Court, challenged the acquisition proceedings on a number of grounds, of which it is only necessary to notice the one which has formed the subject matter of decision in the High Court, namely, that the proceedings were void for want of compliance with the procedure laid down in Chapter VII (mistake for Part VII) of the Act. It is not necessary to refer to the other contentions raised in the Writ Petition, because it is common ground before us that the whole controversy must be determined by the answer to the question, 'whether or not the proceedings were vitiated by reason of the admitted fact that no proceedings under Part VII of the Act had been taken in making the acquisition '. The matter was heard, in the first instance, by Bishan Narain, J. The learned Judge dismissed the petition, holding that the acquisition was by the Government for a public purpose, namely, of construction of tenements for industrial workers, under a schempeal against the order to the Collector of the district or such other officer as may, by notification, be authorised in this behalf by the State Government. 629 Section 6 imposes a restriction on the transport of agricultural cattle for slaughter and reads: "section 6. No person shall transport or offer for trans port or cause to be transported any agricultural cattle from any place within the State to any place outside the State, for the purpose of its slaughter in contra. vention of the provisions of this Act or with the knowledge that it will be or is likely to be, so slaugh tered. " Section 7 prohibits the sale, purchase or disposal otherwise of certain kinds of animals. It reads . "section 7. No person shall purchase, sell or otherwise dispose of or offer to purchase, sell or otherwise dis pose of or cause to be purchased, sold or otherwise disposed of cows, calves of cows or calves of she buffaloes for slaughter or knowing or having reason to believe that such cattle shall be slaughtered. " Section 8 relates to possession of flesh of agricultu ral cattle and is in these terms: "section 8. Notwithstanding anything contained in any other law for the time being in force, no person shall have in his possession flesh of any agricultural cattle slaughtered in contravention of the provisions of this Act. " Section 10 imposes apenalty for a contravention of section 4(l)(a) and section 11 imposes penalty for a contraven tion of any of the other provisions of the Act. On behalf of the petitioners it has been pointed out, and rightly in our opinion, that cl. (a) of sub section (2) of section 4 of the Act imposes an unreasonable restriction on the right of the petitioners. That clause in its first part lays down that the cattle (other than cows and calves) must be over 20 years of age and must also be unfit for work or breeding; and in the second part it says, "or has become permanently incapacitated from work or breeding due to age, injury, deformity or an incurable disease. " It is a little difficult to understand why the two parts are juxtaposed in the section. In any view the restriction that the animal must be over 20 years of age and also unfit for work or breeding is an excessive or unreasonable restriction as we have 80 630 pointed out with regard to a similar provision in the Uttar Pradesh Act. The second part of the clause would not be open to any objection, if it stood by it self. If, however, it has to be combined with the age limit mentioned in the first part of the clause, it will again be open to the same objection; if the animal is to be over 20 years of age and also permanently in capacitated from work or breeding etc. ,then the age limit is really meaningless. Then, the expression 'due to age ' in the second part of the clause also loses its meaning. It seems to us that cl. (a) of sub section (2) of section 4 of the Act as drafted is bad because it imposes a dis proportionate restriction on the slaughter of bulls, bullocks and buffaloes it is a restriction excessive in nature and not in the interests of the general public. The test laid down is not merely permanent incapa city or unfitness for work or breeding but the test is something more than that, a combination of age and unfitness ' Learned Counsel for the petitioners has plac ed before us an observation contained in a reply made by the Deputy Minister in the course of the debate on the Bill in the Madhya Pradesh Assembly (see Madhya Pradesh Assembly Proceedings, Vol. 5 Serial No. 34 dated April 14, 1959, page 3201). He said that the age fixed was very much higher than the one to which any animal survived. This observation has been placed before us not with a view to an interpre tation of the section, but to show what opinion was held by the Deputy Minister as to the proper age limit. On behalf of the respondent State our atten tion has been drawn to a book called The Miracle of Life (Home Library Club) in which there is a state ment that oxen, given good conditions, live about 40 years. Our attention has also been drawn to certain extracts from a Hindi book called Godhan by Girish Chandra Chakravarti in which there are statements to the effect that cows and bullocks may live up to 20 or 25 years. This is an aspect of the case with which we have already dealt. The question before us is not the maximum age upto which bulls, bullocks and buffaloes may live in rare cases. The question before us is what is their average longevity and at what age 631 they become useless. On this question we think that the opinion is almost unanimous, and the opinion which the Deputy Minister expressed was not wrong. Section 5 in so far as it imposes a restriction as to the time for slaughter is again open to the same ob jection as has been discussed by us with regard to a similar provision in the Uttar Pradesh Act. A right of appeal is given to any person aggrieved by the order. In other words, a member of the public, if he feels aggrieved by the order granting a certificate for slaughter, may prefer an appeal and hold up for a long time the slaughter of the animal. We have pointed out that for all practical purposes such a restriction will really put an end to the trade of the petitioners and we are unable to accept a restriction of this kind as a reasonable restriction within the meaning of cl. (6) of article 19 of the Constitution. Section 6 standing by itself, we think, is not open to any serious objection. It is ancillary in nature and tries to give effect to the provision of the Act prohibiting slaughter of cattle in contravention of the Act. Section 7 relates to the prohibition of sale, purchase etc., of cows and calves and inasmuch as a total ban on the slaughter of cows and calves is valid, no ob jection can be taken to section 7 of the Act. It merely seeks to effectuate the total ban on the slaughter of cows and calves (both of cows and she buffaloes). Sec tion 8 is also ancillary in character and if the other provisions are valid no objection can be taken to the provisions of section 8. Sections 10 and 11 impose penal e subsidised by the Government out of public funds; that Part VII of the Act had no application to the present proceedings, and that, therefore, the noti fication under section 6 was not invalid. The appellants preferred an appeal, under the Letters Patent. The Letters Patent Bench dismissed the appeal, but for different reasons. After an examination of the precedents of the different High Courts, bearing on the controversy in this case, the Bench came to the conclusion, which may better be expressed in its own words: "There is thus considerable authority for the 464 view advanced by the learned counsel for the appellants that compliance with the provisions of Part VII is obligatory in the case of all acquisitions for a company. In the present case the acquisition was undoubtedly for the benefit of a company. I have given this matter my most anxious consideration, and, with great respect to the learned Judges, whose decisions have been noted above, I find myself unable to subscribe to the views expressed by them. It seems to me that their views were coloured by the background of the provisions of the Constitution. Article 31 of the Constitution prohibits compulsory acquisition of property for anything except a public purpose. Therefore, acquisition for anything which is not a public purpose cannot now be done compulsorily, but it has never been disputed that before the Constitution came into force land could have been acquired compulsorily by Government for a purpose which was not public. There is nothing in the Land Acquisition Act to warrant the assumption that the embargo placed by Article 31 of the Constitution found place in the Act. It seems to me that the Land Acquisition Act contem plates two categories of acquisitions". After an examination of the provisions of the Act, the High Court observed that the Land Acquisition Act came into force when there was no bar to compulsory acquisition for private purposes. Such a bar was only imposed, for the first time, by article 31 of the Constitution. After the Constitution came into force, Part VII of the Act became redundant or null and void. But, in its view, the present acquisition proceedings were saved from all attack based on non compliance with the provisions of Part VII of the Act. The reason for this conclusion, according to the High Court, was that as the land was acquired for a public purpose, there was no need to comply with the provisions of Part VII, even though the Company is to bear all the expenses for the acquisition. It is manifest that the main point for determination in this appeal is: Whether or not the acquisition proceedings had been vitiated by reason of the admitted fact that there was no attempt made by the 465 Government to comply with the requirements of Part VII of the Act. It is equally clear that the Letters Patent Bench of the High Court was misled in its conclusions, because all the provisions of article 31 of the Constitution had not been brought to their notice. It is not correct to say that Part VII of the Act had become redundant or null and void, as suggested by the High Court, because that Part provided for acquisition for a private purpose. As held by this Court in a recent decision, in the case of Babu Barkaya Thakur vs The State of Bombay (1), the Act deals with two kinds of acquisitions: (1) for a public purpose, at the cost of the Government, and (2) for a purpose akin to such a purpose, at the cost of a Company, and to the latter class of acquisition, the provisions of Part VII are attracted. It was further held in that case that acquisition of a site for building residential houses for industrial labour was a public purpose, and that the Land Acquisition Act was immune from attack based on the provisions of article 31(2) of the Constitution, in view of the provisions of cl. 5(a) of that Article, which saved an existing law of the nature of the Act in question. As will presently appear, the conclusion of the High Court is entirely correct, but the process of reasoning by which it has reached that conclusion is erroneous. That process suffers from the initial error arising from the fact that the provisions of article 31(5) of the Constitution had not been brought to the notice of that Bench. If the Bench were cognizant of the true legal position that the Land Acquisition Act, in its entirety, including Part VII dealing with the acquisition of Land for Companies, was not subject to any attack under article 31(2) of the Constitution, it would not have based that conclusion on that ratio. Otherwise, there would be no answer to the contention in which the appellants had persisted throughout the long course of litigation in which they have indulged in their vain effort to save the land from being used for the public purpose aforesaid. The Letters Patent Bench has also fallen (1) 59 466 into another error in assuming that "the compensation was paid in its entirety by the Company". It is better to clear the ground by showing that this assumption is not well founded in fact. In their Writ Petition, as originally filed in the High Court, it was not categorically stated by the appellants that the compensation in respect of the land in question was paid, or was to be paid, by the Company. It may be stated here, by the way, that it is common ground that the second respondent is a Company within the meaning of the Act, being a registered society under the Co operative Societies Act. It is also common ground that the purpose for which the land was being acquired was for erecting residential quarters for industrial labour, which had organised itself into the Co operative Housing Society, the second respondent. It was only at a later stage of the proceedings in the High Court, that is to say, in the replication filed on behalf of the appellants to the Written Statement filed by the Government, in answer to the appellant 's Writ Petition, that, for the first time, it was alleged by the appellants that "the entire amount of compensation has been borne by the res pondent society". This allegation has not been either supported or countered by evidence on either side. But it has been pointed out by the learned single Judge that it was clear from the Government Housing Scheme that a substantial amount to be expended on this Scheme comes out of the Revenues, in the form of subsidies and loans. It was stated at the Bar, with reference to the terms and conditions of the Government Housing Scheme, that 25% to 50% of the cost of land and structures to be built upon the land was to be advanced by Government out of public funds, in the shape of subsidy and loan. It would, thus, appear that the High Court was not right in the assumption made as aforesaid. It is clear from the statement of facts on record that the respondent No. 2 is a 'Company ', within the meaning of the Act; that the land is acquired for the. benefit of the Company, and at its instance, and that a large proportion of the compensation money was to 467 come out of public funds, the other portion being supplied by the Company or its members. There is also no doubt that the structures to be made on the land would benefit the members of the Co operative Society. But, the private benefit of a large number of industrial workers becomes public benefit within the meaning of the Land Acquisition Act. In this connection, it may be mentioned that section 17 of the Act was amended by the Land Acquisition (Punjab Amendment) Act (11 of 1954) in these terms "17(2)(b). Whenever in the opinion of the Collector it becomes necessary to acquire the immediate possession of any land for the purpose of any library or educational institution or for the construction, ex. tension or improvement of any building or other structure in any village for the common use of the inhabitants of such village, or any godown for any society registered under the (II of 1912), or any dwelling house for the poor, or the construction of labour colonies under a Government sponsored Housing Scheme, or any irrigation tank, irrigation or drainage channel, or any well, or any public road, the Collector may, immediately after the publication of the notice mentioned in sub section (1), and with the previous sanction of the appropriate Government enter upon and take possession of such land, which shall thereupon vest absolutely in the Government free from all encumbrances". It will appear from the (amended) section 17(2)(b), quoted above, that the construction of labour colonies, under a Government sponsored Housing Scheme, has been included in the category of 'works of public utility '. As already indicated, even apart from the indication given by the (amended) section 17, quoted above, this Court has held, in the recent decision (1) that building of residential quarters for industrial labour is public purpose. Hence, even apart from the amended provisions of section 17, it is clear on the authorities that the purpose for which the land was being acquired was a public purpose. (1) 468 Having cleared the ground, it now remains to consider the terms of section 6, on which great reliance was placed on behalf of the appellants. There is no doubt that, as pointed out in the recent decision of this Court (1), the Act contemplates acquisition for a public purpose and for a Company, thus conveying the idea that acquisition for a Company is not for a public purpose. It has been held by this Court, in that decision, that the purposes of public utility, referred to in sections 40 41 of the Act, are akin to public purpose. Hence, acquisition for a public purpose as also acquisitions for a Company are governed by considerations of public utility. But the procedure for the two kinds of acquisitions is different, in so far as Part VII has made substantive provisions for acquisitions of land for Companies. Where acquisition is made for a public purpose, the cost of acquisition for payment of compensation has to be paid wholly or partly out of Public Revenues, or some fund controlled or managed by a local authority. On the other hand, in the case of an acquisition for a Company, the compensation has to be paid by the Company. But, in such a case, there has to be an agreement, under section 41, for the transfer of the land acquired by the Government to the Company on payment of the cost of acquisition, as also other matters not material to our present purpose. The agreement contemplated by section 41 is to be entered into between the Company and the Appropriate Government only after the latter is satisfied about the purpose of the proposed acquisition, and subject to the condition precedent that the previous consent of the Appropriate Government has been given to the acquisition. The ` previous consent ' itself of the Appropriate Government is made to depend upon the satisfaction of that Government that the purpose of the acquisition was as laid down in section 40. It is, thus, clear that the provisions of sections 39 41 lay down conditions precedent to the application of the machinery of the Land Acquisition Act, if the acquisition is meant for a Company. Now, section 6 itself contains the prohibition to the making of the necessary declaration under that section in these terms (1) (1961] 1 S.C.R. 128. 469 "Provided that no such declaration shall be made unless the compensation to be awarded for such property is to be paid by a Company, or wholly or partly out of public revenues or some fund controlled or managed by a local authority". Section 6 is, in terms, made subject to the provisions of Part VII of the Act. The provisions of Part VII, read with section 6 of the Act, lead to this result that the declaration for the acquisition for a Company shall not be made unless the compensation to be awarded for the property is to be paid by a company. The declaration for the acquisition for a public purpose, similarly, cannot be made unless the compensation, wholly or partly, is to be paid out of public funds. Therefore, in the case of an acquisition for a Company simpliciter, the declaration cannot be made without satisfying the requirements of Part VII. But, that does not necessarily mean that an acquisition for a Company for a public purpose cannot be made otherwise than under the provisions of Part VII, if the cost or a portion of the cost of the acquisition is to come out of public funds. In other words, the essential condition for acquisition for a public purpose is that the cost of the acquisition should be borne, wholly or in part, out of public funds. Hence, an acquisition for a Company may also be made for a public purpose, within the meaning of the Act, if a part or the whole of the cost of acquisition is met by public funds. If, on the other hand, the acquisition for a Company is to be made at the cost entirely of the Company itself, such an acquisition comes under the provisions of Part VII. As in the present instance, it appears that part at any rate of the compensation to be awarded for the acquisition is to come eventually from out of public revenues, it must be held that the acquisition is not for a Company simpliciter. It was not, therefore, necessary to go through the procedure prescribed by Part VII. We, therefore, agree with the conclusion of the High Court, though not for the same reasons. The appeal, accordingly, is dismissed with costs. Appeal dismissed.

The Punjab Government issued notification under sections 4 and 6 of the Land Acquisition Act, 1894, and started proceedings for acquisition of lands for the construction of a labour colony under the Government sponsored Housing Scheme for the workers of the Thapar Industrial Workers ' Co operative Hous ing Society Ltd. The appellants challenged the acquisition proceedings under article 226 of the Constitution on the ground, inter alia, that the procedure prescribed by Part VII of the said Act had not been admittedly complied with. The Division Bench in affirming the order of dismissal passed by the trial judge held that although article 31 of the Constitution by prohibiting compulsory acquisition of property except for a public purpose had made Part VII of the Act redundant, the present proceedings were saved since the acquisition was for a public purpose. Held, that the High Court was in error in holding that the Constitution had rendered Part VII of the Land Acquisition Act, 1894, redundant or null and void, although it was right in dismissing the appeal. That Act, as an existing Act, was saved by article 31(5)(a) from being affected by article 31(2) of the Constitution. Acquisition of building sites for residential houses for industrial labour is for a public purpose even apart from section 17(2) 460 (b)of the Act as amended by ':the Land Acquisition (Punjab Amendment) Act of 1953. Babu Barkava Thakur vs The State of Bombay [1961] 1 S.C.R. 128, referred to. Although in the case of an acquisition for a company simpliciter, no declaration under section 6 of the Act can be made without complying with the provisions of Part VII of the Act, it is not correct to say that no acquisition for a company for a public purpose can be made except under Part VII of the Act. If the cost of the acquisition is borne either wholly or partially by the Government, the purpose would be a public purpose within the meaning of the Act. But if the cost is entirely borne by the company it would be an acquisition for the company simpliciter and Part VII would apply. Since in the instant case a part of the compensation was to be borne by the Government, it was not necessary to comply with the provisions of Part VII of the Act.

Appeals Nos. 344 346 of 1960. Appeals by special leave from the judgment and order dated September 8. 1958, of the Madhya Pradesh High Court (Indore Bench), Indore, in Civil Second Appeals Nos. 11.0 1,12 of, 1952. section T.Desai and J. B. Dadachanjifor the appellant. B. Sen,J. Bhave and 1. N. Shroff,for the respondent. July 17. The Judgment of the Court was delivered by HIDAYATULLAH, J. These three consolidated appeals by special leave are against a common judgment and order of the High Court of Madhya Pradesh, dated September 8, 1958, in three second appeals filed under R. 13 of the Indore Industrial Tax Rules, 1927 of the former Holkar State, which were in force before the State became part of Madhya Bharat State. They concern three assessments relating to the assessment years, 1941,1942 and 1943 respectively. These second appeals were originally filed in the Madhya Bharat High Court as early as 1952 ; but the records of the appeals 'were destroyed by fire and had to be reconstructed. By the time the appeals were ready, Madhya Bharat had merged in the new state of Madhya Pradesh, and the appeals were accordingly heard by a Divisional Bench of that High Court. The appellant is a Textile Mill and a public Joint Stock Company called the Nandlal Bhandari Mills, Ltd. The appellant had appointed a" firm, Messrs Nandlal Bhandari and Sons as agents, secretaries and treasurers of the Mills, and under cl. (6) of the agreement of agency, it agreed to pay to the agents an office allowance, commission on the Company 's net profits and commission on the sale proceeds. of sales of yam, cloth, etc. The 861 remuneration of the agents for the three accounting years was as follows : ___________________________________________________________ Remuneration As per Accounting Years, agree ment. 1941 1912 1943 Rs. Rs. Rs. __________________________________________________________ Clause 6 1500 18,000 18,00018,000 (a) Fixed P.M. for the for the monthly allow year. ance as office allowance. (b) Commission @ 16% 2,68,335 6,15,946 10,52,939 on the Com net on painy 's Net profits Profits. (c) Commission @ 1 9 0 1,10,156 1,10156 1,64,751 2,71,672 on the sale Per Cent, proceeds of on sales sales of yarn, cloth etc. ___________________________________________________________ In computing the tax, the Mills claimed to deduct under R. 3(2)(ix) of the Rules the above amounts paid as remuneration. The Rule reads : "(ix) any expenditure (not being in the nature of capital) incurred solely for the purposes of earning such profits or gains." The Assessing Officer accepted the appellant 's claim for deduction but only as. to a part. We are not required in these appeals to consider the correctness of the quantum of the deduction in view of what transpired later. The Assessing Officer also disallowed certain other claims made by the appellant, which again need 'not be mentioned. The appellant then. appealed to the Appellate Authority, and on December 31, 1951 the Appellate Authority, while accepting some of 862 the appellant 's other contentions upheld the order refusing to deduct the agent,s commission on profits under R. 3(2)(ix). Three second appeals were preferred in the Madhya Bharat High Court under R. 13 of the amended Rules. They were dismissed by the High Court of Madhya Pradesh, and hence the present appeals. The Indore Industrial Tax Rules were first promulgated in 1926 by a Cabinet Resolution (No. 373 dated March 22, 1926). In 1927, by, Cabinet Resolution No. 1991 dated November 23 1927, the Rules were modified, and the new Rules, were made applicable retrospectively from May 1, 1926. These Rules were framed for the levy of the tax and for ascertainment and determination of the income of cotton mills. The taxcalled the "Industrial Tax" was leviable under R. 3, which imposed the charge. It says that the Industrial Tax shall be payable by an assessee in respect of the profits or gains of any Cotton Mill industry carried on by him in the Holkar State. Sub r. (2) of R. 3 provides that such profits or gains are to be computed after making allowances, inter alia, for any expenditure incurred solely for the purpose of earning such profits or gains, R. 6, which is a part of the Rule imposing a charge, lays down the rates which are : (a) on all incomes up to Rs. 50,000, at 1 1/2 annas per rupee, and (b) above, at 2 1/2 annas per rupee. The short question thus was whether in computing the profits and gains of the appellant, the remuneration paid to the agents was deductible under R. 3 (2) (ix). It is necessary At this stage to see the legislative machinery existing in the Holkar State in 1927 and onwards. On February 27, 1926, His Highness Maharaja Tukoji Rao III abdicated, and, his son, H.H. Maharaja Yeshwant Rao Holkar, became the Ruler, whose installation ceremony ' was performed on March 11, 1926. A Regency Council was appointed under the orders of the 863 Government of India for the administration ' of the State during the minority of the Maharaja. This Regency Council, which was called the Cabinet, was entrusted with the administration of the State according to existing rules and practice, under the supervision and with the advice of the Agent to the Governor General in Central India. Prime Minister of the State was the Chairman. H. H. Maharaja Yeshwant Rao Holkar attained majority on September 6, 1929 and resumed sovereign powers on May 9, 1930. It was during the minority of the Ruler that the Cabinet had promulgated the amended Rules of 1927. In 1931, the decision of the Privy Council in the well known case of Pondicherry Railway Co., Ltd. vs Commissioner oF Income tax (1) was rendered. In that case, a Railway Company had agreed to make over to the French Colonial Government half of the Company 's net profits in consideration of a 99 year concession. This was sought to be deducted by the Company from its assessable profits as an expenditure incurred solely for the purpose of earning such profits. The Privy Council disallowed the deduction. Lord Macmillan observed as follows : "A payment out of profits and conditional on profits being earned cannot accurately be described as a payment made to earn profits. It assumes that profits have first come into existence. But profits on their coming into existence attract tax at that point and the revenue is not concerned with the subsequent application of the profits. " It seems that, as a result of this decision, a notification was issued in August, 1931, and another on February 2/3, 1932 by the Commerce. and Industry Department of the Holkar State. The latter notification reads as follows (1) (1931) L.R. 38 I.A. 239. 864 "Commerce and Industry Department Notification. Notification No. 1 dated the 2nd/3rd Feb. 19 32. In continuation of this office Notification No. 4733 dated the 6th December, 1927 (Vide Issue No. 11 dated the 12th December, 1927, of the Holkar Sirkar Gazette) embodying modified rules for the levy of the Industrial Tax the Cabinet,in their Resolution No. 1072 dated the 25th August, 1931, have ordered that the Agents ' Commission on 'Profits ' should not be allowed to be deducted from the assessable profits. " It is, to be noticed that this notification refers to the earlier notification No. 4733 of December 6, 1927, under which were published the amended Industrial Tax Rules, 1927, and to the notification of August 1931. The latter has not been produced before us. This notification led to representations by the persons affected by it. The Maharaja of Holkar thereupon referred the matter for the opinion of the, Full Bench of the High Court of the State. It appears that the opinion of the High Court was in favour of disallowing such deductions. On July 14, 1933, another notification (No. 13) was issued which reads as follows : "In continuation of this office Notification No. 1 dated 3rd February,, 1932, it is hereby published for the information of the mills and factories concerned that on submission of the Prime Minister 's (Legal Department) report No. 25 dated 11th May, 1933, His Highness the Maharaja is please to order (vide Huzur Shri Shankar, Order No. 173 dated 29th June,1933) that the opinion of the Full Bench of the High Court being that the Managing Agent 's Commission an profit 's is 865 not an item of expenditure incurred solely for the purpose of earning the said profit within the meaning of Rule 3(2)(ix) of the said Industrial Tax Rules and this being. also the view of the Cabinet as expressed in their resolution No. 1072 dated 28th August, 1931, the aforesaid Cabinet Resolution be given effect to and the industrial tax due on the amount of the managing agent 's commission on profits be recovered with effect from the date of the said Cabinet Resolution. " This notification, it is contended before this Court had not the force of law and was not enforceable against the appellants, who claim that they are entitled to show that the remuneration paid to the agents was deductible from the profits of the Mills before. computing the Industrial Tax. In this connection, the appellants wish to use the later decisions of the House of Lords in The Union Cold &wage Co., Ltd. vs Adamson(1) and of the Privy Council in The Indian Radio and Cable Communication Co., Ltd. vs Commissioner of I Income tax (2), in which the decision in the Pondicherry Railway Company case (3) was explained. In the case before the Privy Council, Lord Maugham observed: "It is not universally true to say that a, payment the making of which is conditional on profits being earned cannot properly be described as an expenditure incurred for the purpose of earning such profits. The typical exception is that of a payment to a, director or a manager of a commission on the profits of a company '. If a company having made; an apparent net profit, of pound 10,000 has then to pay pound 1,000 to directors, or managers as the contractual recompense for their service during the year, it: is plain that the real net profit is only pound 9,000. " (1) (2) (3) (1931) L.R. 58 (1) A. 239. 866 Lord Macmillan in the former case observed that the Pondicherry Railway Company case (1) must be read in the context of the facts of that case, and the obligation was first to find out the net profits of the company and then to divide them. These two sets of cases proceed upon different principles. If the agreement is to share the profits the expenditure cannot properly be treated as one incurred solely for the purpose of earning such profits; but if a slice of the profits is;to be paid to persons as remuneration to help in the earning of the profits, the deduction can be claimed. All this would of course be pertinent to consider, if there was no legislative enactment on the subject. If the matter was not one concluded by law, then there would be room for judicial interpretation of the Rule. The rival claims in these appeals are thus confined to the legislative force of the notifications issued in 1931, 1932 and 1933 respectively,. The appellant 's contention is that the notifications were not an act of legislation but an interpretation by the Sovereign. Mr. Desai concedes that if they be regarded as legislation, then the later decisions of the Privy Council and some of this Court cannot be called in aid, because where the law itself speaks with clarity, judicial interpretation is out of place. He contends, how ever that the two notifications were not framed as rules and were not expressly stated to be amendments of the rules then existing. He points out that after the first notification which was nothing more than an administrative direction to the assessing officers to include in the profits the remuneration of the agents, the opinion of the High Court was obtained, and the second notification merely pointed out that the earlier notification was to be given effect to, and did no more than add a second administrative direction. On the other side, it is contended that the Cabinet could make laws as often as it pleased and that (1) (1931) L. R. 58 I. A. 239. 867 the notifications must be read either as independent rules or as a legislative explanation of R. 3 (2) (ix). In so far as the legislative supremacy of the Cabinet was concerned, no question was raised before us. When the Indore Industrial Tax Rules, 1926 were framed, they came into existence by virtue of a Cabinet Resolution of that year. When they were modified, they were superseded by yet another Cabinet Resolution of the year 1927, which promulgated the new Rules with retrospective effect from May 1926. The source of the Rules 'was thus a Resolution of the Cabinet on both the occasions, and it is not denied that the Rules thus framed had legislative sanction and were unquestionable. When the Cabinet promulgated its notifications in 1931, 1932 and 1933, it followed the same procedure, and it stated that the notification of 1932 was " 'in continuation of this office Notification No. 4733 dated December 6, 1927. " This has reference to that notification under which the Indore Industrial Tax Rules, 1927 were orginally published. From this, it follows that new Rules were framed by a resolution of the Cabinet and were promulgated by a notification in the Gazette as part of the Rules. The mode followed in 1926 and 1927 was repeated in 1932 and 1933 and also presumably in 1931, though the notification of that year has not been printed in the record of this case. This view was taken by the Full Bench of the ' Madhya Bharat High Court in Raj Kumar Mills Ltd. vs Madhya Bharat State (1). The question which is involved in these appeals also arose in that case. It was observed by the Full Bench : "This Notification makes it abundantly clear that His Highness the Maharaja ordered that the industrial tax due on the amount of the managing agent 's commission on profits be recovered. This being. an order of the (1) A.I.R. 1953 Madbya Bharat 135. 868 ruler, who enjoyed sovereign Powers, that order is not open to challenge. This is a mandate emanating from a sovereign and as such has the force of law. This Court has, therefore, no power to go behind the order and enquire as to whether the managing agent 's commission on profits is an item of expenditure solely incurred for the 'purpose of earning profits or not: In this view of the matter the point at issue is concluded by Huzur Shri Shanker order No. 173 dated 29th June, 1933. " Thus view was affirmed by the High Court of Madhya Pradesh in the judgment under appeal. In our judgment, the two notifications cannot be described as "judicial ,interpretation". If any this, they must be interpreted as legislative exposition of R. 3(2)(ix) and in the nature of an explanation. This Court in Ameer un nissa Begum vs Mahboob Begum in dealing with the 'Firmans" of His Exalted Highness the Nizam of Hyderabad, observed as follows : "It cannot be disputed that prior to the integration of Hyderabad State with the Indian Union and the coming into force of the Indian Constitution, the Nizam of Hyderabad enjoyed uncontrolled sovereign powers. He was the supreme legislature, the supreme judiciary and the, supreme head of the executive, and there were no ;constitutional limitations upon his authority to act in any of these capacities. The 'Firmans ' were expressions of the sovereign will of the Nizam and they were binding in the same way as any other law; nay they would override all other laws which were in conflict with them. so long as a particular 'Firman ' held the field, that alone would govern or regulate (1)A.I.R. 869 the rights of the parties concerned, though it could be annulled or modified by a latter 'Firman ' at any time that the Nizam willed. " The same can be said of the Ruler of the Holkar State. When to the order of the Ruler was added the usual mode of making and promulgating rules, the position which emerges is really unassailable. Mr. Desai in attempting to show that the ruling does not apply to the case, raised two contentions. The first was based upon a more recent decision of this Court in Madhaorao vs State of Madhya Bharat (1), where certain Kalambandis of the Maharaja of Gwalior were considered. This Court in deciding whether the Kalambandis were existing law under article 372 of the Constitution, observed : "In dealing with the question as to whether the orders issued by such an absolute monarch amount to a law or regulation having the force of law, or whether they constitute merely administrative orders, it is important to bear in mind that the distinction between executive orders and legislative commands is likely to be merely academic where the Ruler is the source of all power. There was no constitutional limitation upon the authority of the Ruler to act in any capacity he liked ; he would be the supreme legislature, the supreme judiciary and the supreme head of the executive, and all his orders, however issued, would have the force of law and would govern and regulate the affairs of the State including the rights of its citizens.", It was, however, pointed out in the case that even where an order is issued by the sovereign ruler, one must look to the character of the order and its content to find out whether it enacted a binding rules (1) ; 870 Mr. Desai has constructed his entire argument on the basis of these observations, and has contended that the orders only expressed an opinion and did not bind. He pointed out as the second limb of his argument that these notifications were not expressed as a rule but as an order, and that they did not seek to amend the rules, nor to add to them. He referred to other notifications in which a legislative act was clearly discernible, as for example, Notification No. 22/Com. dated May 17, 1946, by which for the existing Rule 4, a new Rule was substituted. An examination of the Rules, however, shows that there was no set pattern of language. Some of the Rules do not read like rules at all. Notes have been appended to the rules, which are not rules proper, and R. 29 says : "All matters not dealt with in these rules may be submitted to the member incharge., Commerce and Industry Department for decision. " The existence of such a rule seems to obliterate the frontiers between legislative, judicial and executive exercise of the power of a State, such as we understand it. There being no invariable use of a clear cut legislative language, each general order emanating from the sovereign ruler and promulgated in the same manner as any other rule and having its roots in a resolution of the Cabinet must be regarded as one binding upon the subject. This is the purport of the decisions of this Court, and the present case falls in line with those which have been previously decided. There is nothing in the content, the character or the nature of these notifications, which would put them on a level lower than the Rules, which had been earlier promulgated. In our opinion., the judgment of the High Court under appeal is correct, and the appeals are accordingly dismissed with costs, one set. Appeals dismissed.

By a Cabinet Resolution of the Holkar State certain Rules known as The Indore Industrial Tax Rules were framed for the purpose of levying industrial tax. After the decision of the Privy Council in cherry Railway Go. , Ltd. vs Commissioner Income, tax, (1931) L. R. 58 1. A. 239, disallowing deduction , of Commission paid out of profits to agents from the assessable profits; the Government of Holkar State of which the Maharaja was the Supreme Ruler; issued certain Notifications ordering that the Agents ' Commission on profits should not be allowed to be deducted from the assessable profits. The appellants who under an agreement paid commission to their agents out of the company 's net profits contended, inter alia, that the Notifications in question did not have the force of law and was not enforceable against the appellants. Held, that every general order emanating from the sovereign ruler having its roots in a resolution of the cabinet must be regarded as a law binding on the subject and the Notifications disallowing commission paid to, agents to be deducted from the assessable profits were therefore binding on the appellants, because that was the normal mode by which laws were made in the Holkar State. Rajkumar Mills Ltd. vs Madhya Bharat State, A. I. R. 1953 Madhya Bharat 135, approved. Ameer un nissa Begum vs Mahboob Begum, A. I. R. , followed. The Union Cold Storage Co., Ltd. vs Anderson, (1931) 16 T. C. 293 and The Indian Radio and Cable Communications Co., Ltd. vs Commissioner of Income tax, , discussed. Madharao vs State of Madhya Bharat, ; , referred to. 860

Appeal No. 4568 of 1991. From the Judgment and Order dated 30.1.89 of the Punjab & Haryana High Court in LPA No. 1251 of 1987. WITH CA Nos 4569 4686/91 482 M. Chandra Sekhar, Additional Solicitor General, G.L. Sanghi, Hatbans Lal, Har Dev Singh, S.P. Goyal, Harinder Pal Singh, Ms. Naresh Bakshi, S.M. Sarin, P.N. Puff, M.K. Dua, Ms. Madhu Moolchandani, Manoj Swamp, Dr.(Ms.) Meera Agarwal, R.C. Mishra, M.N. Krislmamam, K.P. Sunder Rao, Attar Singh, S.N. Terdal, Hemant Sharma, T.C. Sharma, N.D. Garg, Ms. Kusum Chowdhary and S.P. Sarin for the appearing parties. The Judgment of the Court was delivered by KANIA, J. Leave granted. Counsel heard. As the controversy before us is a limited one and relates only to the question of granting of benefit of the provisions of Section 23(1 A) introduced into the Land Acquisition Act, 1894 (hereinafter referred to as "the said Act") by the Land Acquisition (Amendment) Act, 1984, (referred to hereinafter as "the Amendment Act of 1984") only a few facts are necessary for the appreciation of the submissions made before us. This appeal, arising out of S.L.P. (Civil) No, 14297 of 1990 by Special Leave, is directed against the judgment of a Division Bench of the Punjab and Haryana High Court in Letters Patent Appeal No.1251 of 1987. The other appeals before us are connected appeals filed by the Union of India or the claimants. The respondent was the owner of a piece of land in one of the villages in District Bhatinda in Punjab. Land admeasuring 74375 acres situated in various villages in Bhatinda District including the land of the respondent was acquired by the appellants under the said Act. The Notifications under Sections 4 and 6 of the said Act were published on May 10,1979 and March 27, 1981, re spectively. The Special Land Collector made and declared his award of compensation in respect of the acquisition of the said land and several other plots of land on March 31,1981. Being aggrieved by the said award, the respondent and other landowners filed Reference applications under Section 18 of the said Act which were decided by the learned District Judge concerned in 1985 and 1986. The land acquired was classified into various grades and compensation awarded accordingly. In the case before us and several other similar cases the benefits under Section 23(1 A) of the said Act were granted to the land owners. The State appealed to the High Court. In several other cases where the land owners were not satisfied with the compensation awarded, including the cases where the benefits conferred by Section 23(1 A) were not awarded the land owners filed appeals before the High Court. 483 What is relevant for our purpose is that a learned Single Judge of the High Court confirmed the grant of bene fits under Section 23(1 A)of the said Act where such bene fits had been granted by the learned District Judge and awarded the same where that had not been done by the learned District Judge. Letters Patent Appeals were filed by the State being dissatisfied with the judgment of the learned Single Judge. It was submitted on behalf of the Union of India before the Division Bench deciding the Letters Patent Ap peals that the claimants/land owners were not entitled to the benefit of Section 23(1 A) of the said Act introduced by the said Amendment Act, 1984 as aforestated. It was submit ted on behalf of the appellants that the right to get addi tional amount at the rate of 12% per annum on the enhanced amount of compensation from the date of Notification under Section 4 of the said Act and till the date of the award of the Collector or the date of taking possession whichever is earlier conferred under the provisions of Section 23(1 A) of the said Act was available only in cases where the Collector made his award after 30th day of April, 1982, being the date of the introduction of the Land Acquisition (Amendment) Bill, 1982 in the House of the People, whereas in the present case, the Collector had made his award on March 31, 1981. Reliance was placed on the Judgment of a Full Bench of the Punjab and Haryana High Court in State of Punjab vs Krishan Lal, AIR (1987) Punjab and Haryana, 222. The Divi sion Bench repelled this contention and pointed out that the learned Chief Justice H.N. Seth, who spoke for the Full Bench in Krishan Lal 's case (supra) had explained that judgment in the subsequent decision rendered in Maya Devi and Others vs The Union Territory of Chandigarh, Punjab Law Journal (1988) 189. and pointed out that the land owner was entitled to the additional amount in terms of Section 23(1 A) of the Amendment Act of 1984 if the proceedings for determination of compensation were decided after September 24, 1984, and since the Regular First Appeal in respect of the proceedings for determination of the compensation was decided after September 24, 1984, the Court while adjudi cating upon the amount of compensation payable to the claim ant was bound to grant the additional amount in terms of Section 23(1 A) of the said Act. The Division Bench in its impugned judgment gave to the claimant the benefit of the added amount referred to in Section 23(1 A) of the said Act. The same submissions have been made on behalf of the respective parties before us. Before discussing the submissions of the respective parties, it would not be out of place to set out the rele vant provisions of the said Act. The said Act, namely, the Land Acquisition Act, 1894, provides for compulsory acquisition of land. The term 'Award ' has not been defined in 484 the said Act. Sub clause (d) of Section 3, the definition section, defines the expression 'Court ' as follows: "(d)the expression 'Court ' means a principal Civil Court of original jurisdiction, unless the appropriate Government has appointed, as it is hereby empowered to do, a special judi cial officer within any specified local limits to perform the function of the Court under this Act. ' Part II of the said Act deals with the question of acquisition of land. Section 11 of the said Act deals with the enquiry and award of compensation by the Collector. Section 11 A which was introduced into the said Act by the Land Acquisition (Amendment) Act, 1984 (Act No.68 of 1984) provides for the period within which the award shall be made. Generally speaking, it prescribes that the period for making the award is limited to two years, and the section provides that, if the award is not made within that period, the entire proceedings for acquisition of land shall lapse. There is a proviso to the said section and an Explanation, but it is not necessary to consider the same for the purpose of this case. Sub section (1) of Section 18 which is includ ed in Part III of the said Act runs as follows: "18. Reference to Court (1) Any person interested who has not accepted the award may, by written application to the Collector, require that the matter be referred by the Collector for the determina tion of the Court, whether his objection be to the measurement of the land, the amount of compensation, the person to whom it is pay able, or the apportionment of the compensation among the persons interested." Section 23 deals with the matters to be considered by the Court for determining the compensation to be awarded for the land acquired under the said Act. We may mention here that under the general scheme of the said Act, the landowner whose land has been acquired is entitled to be paid the market value of the land acquired as prevailing at the time of the publication of the notification under Section 4 issued together with the solatium at the prescribed rate in consideration of the compulsory nature of the acquisition. Prior to the coming into effect of the Amendment Act of 1984 solatium was fixed at the rate of 15 per centum. Sub section (1 A) which was introduced into Section 23 of the said Act by the Amendment Act of 1984 runs as follows: "In addition to the market value of the land, as above provided, the Court shall in every case award an amount calcu 485 lated at the rate of twelve per centum per annum on such market value for the period commencing on and from the date of the publi cation of the notification under Section 4, subsection (1), in respect of such land to the date of the award of the Collector or the date of taking possession of the land, whichever is earlier. " By the said Amendment Act of 1984 the expression "thirty per centum" was substituted in place of the expression "fifteen per centum" in sub section (2) of Section 23 of the said Act. Sub section (2) of Section 23 now runs as follows: "(2) In addition to the market value of the land, as above provided, the Court shall in every case award a sum of thirty per centum on such market value, in consideration of the compulsory nature of the acquisition." .lmo These amendments were effected in the Land Acquisition Act (the said Act) by the Land Acquisition (Amendment) Act, 1984, ("the Amendment Act of 1984") as set out earlier. Sub sections (1) and (2) of Section 30 of the Amendment Act of 1984 run as follows: "30 Transitional Provisions: (1) The provisions of sub section (1 A) of Section 23 of the principal Act, as inserted by Clause (a) of Section 15 of this Act, shall apply, and shall be deemed to have applied, also to, and in relation to, (a) every proceedings for the acquisition of any land under the principal Act pending on the 30th day of April, 1982 the date of intro duction of the Land Acquisition (Amendment) Bill, 1982, in the House of the People, in which no award has been made by the Collector before that date; (b) every proceeding for the acquisition of any land under the principal Act commenced after that date, whether or not an award has been made by the Collector before the com mencement of this Act. (2) The provisions of sub section (2) of Section 23 and Section 28 of the principal Act, as amended by Clause (b) of Section 15 and Section 18 of this Act respectively shall apply, and shall be deemed to have applied, also to, and in relation to, any award made by the Collector or Court or to any order passed by the High Court or Supreme Court in appeal against 486 any such award under the provisions of the principal Act later the 30th day of April, 1982, the date of introduction of the Land Acquisition (Amendment) Bill. 1982, in the House of the People and before the commence ment of this Act. " (emphasis supplied by us) On behalf of the appellants reliance was placed by learned Counsel on the decision of this Court in Union of India and Others vs Filip Tiago De Gama of Vedem Vasco De Gama, [1990] 1 SCC 277. The respondent, on the other hand, placed strong reliance on the decision of a Full Bench of the Bombay High Court in Jaiwant Laxman P. Sardesai and etc. vs Government of Goa, Daman Diu and Another etc, AIR 1987 Bombay 214. On the basis of the aforesaid judgment of the Bombay High Court it was submitted by the respondent/claim ant that a wide and liberal interpretation should be given to the provisions of sub section (1 A) of section 23 and the amount calculated as set out in the said sub section awarded in all cases where any proceeding was pending in any court including the High Court or this Court in connection with the determination of compensation for the land acquired. We may mention that both the parties referred us to the deci sion of a Constitution Bench of this Court in Union of India and Another etc:. vs Raghuvir Singh (dead) by Lrs etc; , We propose to discuss these decisions a little later but before doing so, we propose to analyse the relevant provisions of the said Act and the effect thereof. A perusal of the provisions of sub section (1 A) of Section 23 makes it clear that the said sub section deals with substantive rights and it confers a substantive right to claim the additional amount calculated as set out in the said sub section in the circumstances set out therein. Similarly, sub section (2) of Section 23 also confers a substantive right on the claimant to a higher solatium. Under the well settled rules of interpretation, the said provisions of the said Act, being substantive in nature, can have only prospective application unless the language in which the provisions are couched, read in the context, shows that the intention of the legislature was to give retrospec tive effect to them. The language of sub section (lA) of Section 23 shows that a duty is cast on the court tO award an amount calculated as stated therein in addition to the market value of the land acquired for the period commencing from the date of the publication of the Section 4 Notifica tion to the date of the award of the Collector or the date of taking possession, whichever is earlier. (Emphasis supplied) The expression "award" used in section 23 (I A) suggests that the 487 intention of the legislature was to make the provisions of the said subsection applicable to cases where the Collector had yet to make his award or the Trial Court heating the Reference under Section 18 of the Land Acquisition Act had still to make its award after the coming into force of the said sub section on September 30, 1984. The expression "award" is to be distinguished from the expression "decree" and hence, it appears that in the absence of any contrary or inconsistent provision in the said Act the provisions of sub section would not come into play where the award had been made by the Collector earlier as well as by the Refer ence Court but ton the date of coming into effect of the said sub section, an appeal from the said award might have been pending in a court. In that case, the Court would not be "awarding" any amount but would be making a "decree" for an amount. By reason of the provision of section 30(1)(a) of the Amendment Act of 1984 the provisions of section 23(1 A) of the said Act were, by a deeming provision, made also ap plicable to every proceeding for the acquisition of land under the said Act where the Collector had not made his award by April 30,1982. On a correct interpretation of the provisions of section 23 (1 A) read with section 30(1)(a) of the Amendment Act of 1984, an additional amount calculated in the manner indicated in section 23(1 A) is also payable in those cases where the Collector had not made his award on or before April 30, 1982, even in cases where the court might have made its award before September 24, 1984. It is true that the aforesaid construction we are giving to the provisions of Section 23(1 A) and Section 30(1)(a) will, in a sense, limit the benefits strictly conferred by Section 30(1)(a) to only those cases where the Collector as well as the Court have made their respective awards between April 30, 1982 and September 24, 1984 but, in our view, that cannot be helped as that is the result of the plain grammatical construction of the clear language used in the relevant provisions. We are of the opinion that we would not be justified in giving an unduly restricted meaning to the provisions of Section 23(1 A) unwarranted by the plain language of that sub section as appears to have been done in the case of Union of India and Others vs Filip Tiago De Gama of Vedem Vasco De Gama discussed more particularly hereinaf ter, in order to give a wider meaning of the provisions of Section 30(1)(a). Section 23(1 A) refers clearly to the duties of the Court. As we have already pointed out, the court is defined by Section 3(d) as the principal court of original jurisdiction, except in the circumstances set out in the said sub section, which would be the court having jurisdiction to decide the reference under Section 18 of the said Act. There, is therefore, no warrant to read in the place of the word 488 "Court" in Section 23(1 A) the word "Collector". Moreover, the decision of such a court determining compensation is regarded as an award under the said Act. In the light of these provisions, there is no warrant to give an unduly restricted meaning to Section 23(1 A) of the said Act, as pointed out above. Coming now to the decisions cited before us we find that in the case before the Full Bench of the Bench of the Bombay High Court in Jaiwant Laxman P. Sardesai and etc. vs Govern ment of Goa, Daman and Diu and Another etc. (AIR 1987 Bombay 214) the facts were that the Notification under Section 4 of the said Act was published on October 3, 1969, in the Gov ernment Gazette of the Government of Goa. The Notification under Section 6 was published on June 10, 1971 The Land Acquisition Officer declared his award on August 2, 1972. All these events undoubtedly occurred prior to April 30, 1982. However, on a Reference made under Section 18 of the said Act on December 24, 1973, the Civil Court investigated the claim and gave its award on June 24, 1985. The award was, therefore, made by the Court not before April 30, 1982, but after September 30, 1984, when the provisions of the Land Acquisition (Amendment) Act, 1984, had already come into effect. It was, therefore, strictly speaking, not necessary for the court to make any observation regarding the legal position in a case where both the Collector as well as the Court in a Reference under Section 18 had made their respective awards before April 30,1982. Moreover, we find that the judgment appears to proceed on a somewhat unwarranted assumption. This is clear from the following observations which appear at paragraph 5 of the aforesaid Report (p 217): "It is not in dispute that where on the date of the commencement of the amending Act any proceedings for determination of compensation were pending before the Collector under Sec tion 11 of the Act or before the Court under reference under Section 18 of the Act or before the High Court in appeal under Section 54 of the Act, then the amended section 23 (I A) would be applicable to such proceedings, in absence of subsection (1) of Section 30. " In our view, it was erroneously taken as undisputed that had the provisions of sub section (1) of Section 30 not been in existence, the provisions of the amended section 23(1 A) would have applied to a case where the Collector as well as the Court had already made their award before April 30, 1982, but an appeal was pending in the High Court on April 30, 1982, or on the commencement of the Land Acquisition (Amendment) Act. As we have already pointed out, the cor rectness of this as 489 sumption is very much in dispute before us. In these circum stances, we find ourselves unable to accept as correct the view taken by the Full Bench of the Bombay High Court to the extent that it extends the operation of the provisions of section 23(1 A) even to cases where the Collector as well as the Reference Court had made their awards before April 30, 11982, in the case before the Full Bench of the Bombay High Court in Jaiwant Laxman P. Sardesai and etc. vs Government of Goa, Daman and Diu and Another etc., AIR 1987 Bombay 214. As far as the decision of a Division Bench comprising two learned Judges of this Court in Union of India and Others vs Filip Tiago De Gama of Vedem Vasco De Gama [1990] 1 S.C.C. 277 strongly relied upon by the appellants is concerned, we find that in that case the Land Acquisition Officer made his award determining the compensation on March 5, 1969. On a reference under Section 18 the Civil Court made its award on May 28, 1985, that is, even after Septem ber 24,1984, when the Amendment Act of 1984 came into ef fect. The view taken by the Division Bench is that, as the Collector had made his award before April 30, 1982, then the additional amount referred to in section 23 (1 A) could not be awarded. This view has been taken on the basis that sub section (1)(b) of Section 30 of the said Act provides that the provisions of section 23(1 A) shall be applicable to every acquisition proceeding commenced after April 3 O, 1982, irrespective of the fact whether the Collector has made the award on or before September 24, 1984, and that sub section (1) of Section 30 does not refer to court award and the court award is used only in sub section (2) of Section 30. (See para 21 of the said report). We find that on the plain language of section 23(1 A) itself, which we have set out earlier, the duty was cast on the Court to award an additional amount calculated as prescribed therein which would mean that it is directed to be awarded by the court, namely, the Reference Court, in all cases which are pending before that court on September 1,1984. Sub section (1)(a) of Section 30 undoubtedly lays down that the provi sions of section 23(1 A) of the Act are also made applicable to all proceedings for the acquisition of any land under the said Act pending on April 30, 1982, where no award had been made by the Collector before that date. At first glance this would appear to suggest that the additional amount referred to in section 23 (1 A) could not be awarded where the Col lector had made his award before April 30, 1982. But this provision cannot be allowed to cut down the benefits avail able to the claimants on a plain reading of section 23(1 A). This is clear from the use of the word "also" in the opening pan of section 30(1). In our opinion, the view taken by the Bench comprising two learned Judges of this Court in that case cannot be accepted as correct as it is too narrow and unduly cuts down the operation of the benefit conferred under the 490 plain language of section 23 (1 A) of the said Act. As far as the provisions of section 30(2) are concerned, we do not feel that we are called upon to interpret the same in this decision. In our view, therefore, the said decision cannot be accepted as good law in so far as it lays down that in order to bring the provisions of section 23(1 A) of the said Act into play the Collector must have made his award after April 30, 1982. Coming to the decision in Union of India and Another vs Raghuvir Singh (dead) by Lrs. (Supra) referred to earlier, we find that it mainly concerned itself with the provisions of section 30(2) of the said Amendment Act with which we are not directly concerned here and in that connection, the Constitution Bench of this Court has made the following observations (p. 779): "In construing section 30(2), it is just as well to be clear that the award made by the Collector referred to here is the award made by the Collector under Section 11 of the parent Act, and the award made by the Court is the award made by Principal Civil Court of Original Jurisdiction under Section 23 of the parent Act on a reference made to it by the Collector under Section 19 of the parent Act. There can be no doubt that the benefit of the enhanced solatium is intended by section 30(2) in respect of an award made by the collector between April 30, 1982, and September 24, 1984, Likewise the benefit of the enhanced solatium is extended by section 30(2) to the case of an award made by the Court between April 30, 1982, and September 24, 1984, even though it be upon reference from an award made before April 30, 1982. " The Court went on to point out that (p.780): "Section 30(2) of the Amendment Act extends the benefit c. the enhanced solatium to cases where the award by the Collector or by the Court is made between April 30, 1982, and September 24, 1984, or to appeals against such awards decided by the High Court and the Supreme Court whether the decisions of the High Court or the Supreme Court are rendered before September 24, 1984, or after that date. All that is material is that the award (empha sis supplied) by the Collector or by the Court should have been made between April 30, 1982, and September 24, 1984. We find ourselves in agreement with the conclusion reached by this Court in K. Kamalajammanniavaru vs Special Land Acquisition Officer, and 491 find ourselves unable to agree with the view taken in Bhag Singh vs Union Territory of Chandigarh ; The expanded meaning given to section 30 (2) in the latter case does not, in our opinion, flow reasonably from the language of that sub section. It seems to us that the learned Judges in that case missed the significance of the word 'such ' in the collocation 'any such award ' in section 30(2). Due significance must be at tached to that word, and to our mind it must necessarily intended that the appeal to the High Court or the Supreme Court, in which the benefit of the enhanced solatium is to be given, must be confined to an appeal against an award of the Collector or of the Court rendered between April 30, 1982, and September 24, 1984. " We find that this decision which was rendered by a Constitution Bench of this Court comprising 5 learned Judges runs in no way counter to the view which we have taken and, in fact, it leads some support to the view which we are taking. In the case before us, as the Reference Court has made its award after September 24, 1984 the benefit of the provisions of section 23(1 A) was clearly available to the claimant as held in the impugned judgment. In the result, the appeal arising out of Special Leave Petition (Civil) No.14297 of 1990 in Union of India vs Zora Singh must be dismissed with costs. As far as the other appeals filed by the Union of India which have been heard together with the Zora Singh 's case are concerned, learned Counsel for the Union of India has not drawn our attention to any material difference in the relevant facts therein from the facts in Zora Singh 's case. In fact, the arguments proceeded on the footing that all the relevant facts were the same as in the case of Zora Singh. In a result, all these appeals must also be dismissed, however, with no order as to costs. As far as the appeals before us which have been filed by the claimants are concerned, the same will have to be placed before appropriate Benches of this Court for disposal in the light of this decision. V.P.R. Appeals dis missed.

The lands of the respondent and other land owners were acquired under the Land Acquisition Act, 1894. Notifications under sections 4 and 6 of the Act were published on 10.5.1979 and 27.3.1981 respectively. The respondent and other land owners filed Reference Applications u/s 18 of the Act against the award before the District Judge. The District Judge classifying the acquired land into various grades awarded compensation and also granted bene fits u/s 23(1 A) of the Act to the respondent and other land Owners. Hence, the State appealed to the High Court. Those land owners, who were not satisfied with the compensation awarded and those to whom benefit u/s 23(1 A) were not granted, also appealed to the High Court. The Single Judge of the High Court confirmed the grant of benefits u/s 23(1 A) of the Act and also granted such benefits to those cases, where such benefits were not given by the District Judge. The State preferred the Letters Patent Appeals before the Division Bench of the High Court, contending that the respondent and 479 other land owners were not entitled to the benefit of sec tion 23(1 A) of the Act; that the section 23(1 A) was intro duced by the Land Acquisition(Amendment) Act, 1984; that as the Collector had made his award on 31.3.1981 the provisions of section 23(1 A) of the Act was not applicable to the cases of the respondent and other land owners. The Division Bench of the High Court dismissed the Letters Patent Appeals of the State. Hence the present appeals by special leave were filed by the State before this Court. The parties before this Court made the same submissions which were made before the High Court. Dismissing the appeal, (CA No.4568 of 1991) this Court, HELD: 1. A perusal of the provisions of sub section(1 A) of section 23 makes it clear that the said sub section deals with substantive rights and it confers a substantive right to claim the additional amount calculated as set out in the said sub section in the circumstances set out therein. Similarly, sub section(2) of Section 23 also confers a substantive right on the claimant to a higher solatium. [486 E F] 2. The provisions of the Act, being substantive in nature, can have only prospective application unless the language in which the provisions are couched, read in the context, shows that the intention of the legislature was to give retrospective effect to them. The language of sub section(1 A) of section 23 shows that a duty is cast on the court to award an amount calculated as stated therein in addition to the market value of the land acquired for the period commencing from the date of the publication of sec tion 4 of the Notification to the date of the award of the Collector or the date of taking possession, whichever is earlier. [486 F G] 3. The expression "award" used in section 23(1 A) suggests that the intention of the legislature was to make the provisions of the said sub section applicable to cases where the Collector had yet to make his award or the Trial Court hearing the Reference under Section 18 of the Land acquisition Act has still to make its award after the coming into force of the said sub section on September 30, 1984. [486 H 487 A] 480 4. The expression "award" is to be distinguished from the expression "decree" and hence, it appears that in the absence of any contrary or inconsistent provision in the Act the provisions of subsection(1 A) of section 23 would not come into play where the awards had been made by the Collec tor earlier as well as by the Reference Court but on the date of coming into effect of the said sub section, an appeal from the said award might have been pending in a court. In that case, the court would not be "awarding" any amount but would be making a "decree" for an amount. [487 B C] 5. By reason of the provision of section 30(1)(a) of the Amendment Act of 1984 the provisions of section 23(1 A) of the Act were, by a deeming provision, made also applica ble to every proceeding for the acquisition of land under the Act where the Collector had not made his award by. April, 30,1982. On a correct interpretation of the provisions of section 23(1 A) read with section 30(1)(a) of the Amendment Act of 1984, an additional amount calculated in the manner indicated in section 23(1 A) is also payable in those cases where the Collector had not made his award on or before April 30,1982, but the Court might have made its award before September 24,1984. [487 D E] 6. The construction that is being given to the provi sions of section 23(1 A) and section 30(1)(a) will, in a sense, limit the benefits strictly conferred by section 30(1)(a) to only those cases, where the Collector as well as the Court have made their respective awards between April 30,1982 and September 24, 1984. That cannot be helped, as that is the result of the plain grammatical construction of the clear language used in the relevant provisions. [487 E F] 7. The Court would not be justified in giving an unduly restricted meaning to the provisions of section 23(1 A) unwarranted by the plain language of the sub section. [487 F] 8. Section 23(1 A) refers clearly to the duties of the court. The court is defined by section 3(d) as the principal court of original jurisdiction, except in the circumstances set out in the said subsection, which would be the court having jurisdiction to decide the reference under section 18 of the Act. There, is therefore, no warrant to read in the place of the word "Court" in Section 23(1 A) the word "Collector". Moreover, the decision of such a court deter mining compensation is regarded as an award under the Act. In the light of the provisions, there is no warrant to give an unduly restricted meaning to section 23(1 A) of the Act. [487 G 488 A] 481 9. On the plain language of section 23(1 A) itself, the duty was cast on the court to award an additional amount calculated as prescribed therein which would mean that such amount is directed to be awarded by the court, namely, the Reference court, in all cases which are pending before that court on September 1, 1984. Sub section (1)(a) of Section 30 lays down that the provisions of section 23(1 A) of the Act are also made applicable to all proceedings for the acquisi tion of any land under the said Act pending on April 30,1982, where no award had been made by the Collector before that date. At first glance this would appear to suggest that the additional amount referred to in section 23(1 A) could not be awarded where the Collector had made his award before April 30,1982. But this provision cannot be allowed to cut down the benefits available to the claimants on a plain reading of section 23(t A). This is clear from the use of the word "also" in the opening part of section 30(1). [489 E H] 10. In the present case as the Reference court has made its award after September 24,1984 the benefit of the provi sions of Section 23(1 A) was clearly available to the claim ant. [491 D] Jaiwant Laxman P.Sardesai etc. vs Government of Goa, Daman and Diu and Another etc., AIR 1987 Bombay 214(F.B.) and Union of India & Others vs Filip Tiago De Gama of lied era Vasco De Gains, [1990] 1 SCC 277, overruled. State of Punjab vs Krishan Lal, AIR 1987 Punjab and Haryana 222(F.B.); and Maya Devi and Others vs The Union Territory of Chandigarh, , ap proved. Union of India and ,Another etc. vs Raghuvir Singh (dead) by Lrs. ; , ; K. Kamala Jammannia varu vs Special Land Acquisition Officer, [1985] I SCC 582 and Bhag Singh vs Union Territory of Chandigarh, ; , referred to.

ontempt Petition No. 71 of 1990. AND Interlocutory Application No. 1 of 1990. IN Writ Petition (Civil) No. 1 1222 of 1983. (Under Article 32 of the Constitution of India). Shanti Bhushan, Bashant Bhushan, Bohla Prasad Singh for the Petitioner. Kapil Sibal, Additional Solicitor General, Ashok H. Desai, Solicitor General, Tapas Roy, Ratin Das and D.K. Sinha for the Respondent. The Judgment of the Court was delivered by KANIA, J. Seth Mannalal Surana Memorial Trust is the owner of a building situate at 7/ID, Lindsay Street, Calcut ta, one of the busiest streets in Calcutta where the New Market is situated. The petitioner is the lessee of the said building from the said Trust. On February 25, 1958, a por tion of the ground floor premises in the said building admeasuring 4198 Sq. (referred to hereinafter as "the said premises") was requisitioned by the Government of West Bengal under the West Bengal Premises Requisition and Con trol (Temporary Provisions) Act, 1947, (hereinafter referred to as "the West Bengal Act"). The purpose for which the said premises were requisitioned was establishing the main show room of West Bengal Handicraft Development Corporation Limited, a West Bengal Government Undertaking. The said show room is called "Manjusha" and has become a landmark in Calcutta. In H.D. Vora vs State of Maharashtra and Others, ; this Court held that the provisions for, 248 requisition could be resorted to only where premises were required for a temporary purpose but not where they were required for a permanent purpose. If premises were required for a permanent purpose, they have to be acquired in accord ance with law. Following upon this decision, the petitioner filed the aforesaid Writ Petition No. 1 1222 of 1983 in this Court praying for a mandatory order directing that the premises should be derequisitioned and handed over to the petitioner. Certain interim applications were made in this Court and orders were passed thereon to which it is not necessary to refer in this Judgment. By an order dated January 16, 1990, certain directions were given to respondent No. 4 in the writ petition. The relevant portion of the said order runs as follows: "In view of the earlier orders, we direct respondent No. 4 to hand over the possession of the premises in question to the petitioner within nine weeks from today subject to their obtaining any order from the Calcutta High Court in the appeal pending in that Court against the decision of a learned Single Judge in W.P. No. 2063 of 1987 or acquiring any independent right to retain possession of the suit premises within that period. It is contended by Shri Shanti Bhushan, learned coun sel for the petitioner that as the respondents have not succeeded in obtaining any order from the Calcutta High Court in the said appeal or in acquiring any independent right to retain possession of the said premises within the period of nine weeks from January 16, 1990, as set out in the said order, they were bound to hand over the possession of the said premises to the petitioner and have committed contempt as they have deliberately failed to do so. We find that it is not possible to accept the submis sion set out hereinabove. On February 21, 1990, the Govern ment of West Bengal issued a notification under section 4 of the Land Acquisition Act as applicable to the State of West 'Bengal, declaring its intention to acquire the said prem ises. On February 27, 1990, the said declaration was duly published. By the beginning of March 1990 the declaration under section 6 of the Land Acquisition Act in respect of the said premises was duly made and published and on 1st of March. 1990 the Government of West Bengal authorised the First Lanisition Collector to take possession of the said premises under section 17(1) of the Land Acquisition Act. Public notices were given on 9th March, 249 1990. A few days later, the trustees of the said trust which owned the said building filed a writ petition in the Calcut ta High Court challenging the validity of the acquisition proceedings in respect of the said premises which had been initiated consequent upon the amendment of the Land Acquisi tion Act as applicable to the State of West Bengal and on 20th March, 1990, the Calcutta High Court directed the status quo to be maintained regarding possession. It is clear that unless the said order dated March 20, 1990, is vacated, it is not possible for the respondents to proceed with the acquisition and acquire title to the prem ises. The contention of the learned counsel for the peti tioner is that the acquisition is patently bad in law as it is not open to the Government to acquire the said premises on the ground floor of the said building without acquiring the corresponding area on the upper floors. It was submitted by him that such acquisition would be clearly bad in law in spite of the amendment carried out to the provisions of Land Acquisition Act as applicable to the State of West Bengal by the insertion of Section 49 A therein by Land Acquisition (West Bengal Amendment) Act, 1986, which came into force on February 14, 1990, after obtaining the consent of the Presi dent of India. Section 49A permits acquisition of a part of a house. In our view, the question whether the acquisition is valid or not is pending for decision in the Calcutta High Court in the said writ petition filed by the said trust as owner of the building challenging the validity of the said amendment. In our opinion, before a party can be committed for contempt, there must be a wilful or deliberate disobedience of the orders of the Court. In the present case, we do not find that any such wilful or deliberate or reckless disobe dience of our order dated January. 16, 1990, has been com mitted by the respondent to the contempt petition. Hence, the contempt petition is dismissed. There will be no order as to costs. We hope that the Calcutta High Court will be able to dispose of the said writ petition challenging the validity of the said amendment as early as possible. Interlocutory Application No. 1 of 1990 in writ petition No. 11222 of 1983 is not pressed and is allowed to be with drawn with liberty to renew the same if any occasion arises. Although we are of the view that the respondent has not commit 250 ted contempt, we do realise that in case the petitioner succeeds in the writ petition, the respondent would have remained in possession of the said premises for a long time after they should have handed over the possession of the same to the petitioner. We find that the respondent has already been directed to pay compensation for the use of the said premises at the rate of Rs. 15,000 per month by an order of this Court passed over two years earlier. We direct that the respondent shall deposit, in addition, an amount of Rs. 10,000 per month commencing from 1st October, 1990, in the Court, the first of such deposits to be made on or before 20th October, 1990, and deposits for each succeeding month to be made by 15th day of each succeeding month. The amounts deposited shall be invested by the Registrar General at suitable intervals in a nationalised bank in fixed depos it after consulting the parties.

By its order dated January 16, 1990 in the writ petition, the Court had directed respondent No. 4 to band over possession of the premises requisitioned under the West Bengal Premises Requisition and Control (Temporary Provi sions) Act, 1947, within nine weeks subject to their obtain ing any order from the High Court or acquiring any independ ent right within that period to retain possession. In the meantime, the Land Acquisition (West, Bengal Amendment) Act, 1986, which inserted section 49A in the Land Acquisition Act, 1894 as applicable to the State, came into force on February 14, 1990 permitting acqusition of a part of a house. A week thereafter the State Government initiated acquisition process in respect of the said premises. Notifi cations under sections 4 and 6 of the Land Acquisition Act were issued, and the Land Acquisition Collector authorised to take possession under section 17(1) of the Act. However, on March 20, 1990 in a writ challenging the validity of the acquisi tion proceedings the High Court directed the status quo to be maintained regarding possession. In this contempt petition, the petitioner alleged that the respondent had deliberately failed to hand over possession in terms of the order dated January 16, 1990. The acquisition was also assailed as being patently bad in law. HELD: 1. Before a party can be committed for con tempt, then must be a wilful or deliberate disobedience of the orders of the Court In the instant case, no such wilful or deliberate or reckless disobedient, of the order dated January 16, 1990 has been committed by the respondent to the contempt petition. [249F] 2. The question whether the acquisition is valid or not is pending 247 for decision in the High Court. In case the petitioner succeeds the respondent would have remained in possession of the said premises for a long time after they should have handed over the possession. They are, therefore, directed to deposit an amount of Rs. I0,000 per month commencing from 1st October, 1990 in the Court in addition to Rs.15,000 per month they are already paying under the earlier directions. [250A C]

Civil Appeal No. 2008 of 1969. From the Judgment and Order dated 7 4 1965 of the Rajasthan High Court in D. B. Civil Regular Appeal No. 67/53. section M. Jain for the Appellant. B. D. Sharma, Ramesh Chandra and B. P. Maheshwari for the Respondent. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. The State of Rajasthan, defendant in Civil Suit No. 9 of 1963 in the Court of the Senior Civil Judge, Udaipur, is the appellant in this appeal filed pursuant to a certificate granted under Article 133(1) (a) of the Constitution of India (as it stood prior to the 30th amendment). The plaintiff respondent took a building work on contract from the erstwhile Government of the State of Udaipur. He completed the work on 6th June, 1950. Despite demands and notices issued by the plaintiff a considerable amount due to him remained unpaid. He, therefore, filed the suit out of which the appeal arises to recover a sum of Rs. 3,19,458/11/ together with interest at the rate of 12%. The suit was contested by the State of Rajasthan. An interim decree for a sum of Rs. 66,517/ was passed on 7th November, 1955. After full trial a decree for Rs. 1,67,619/ (including the sum of Rs. 66,517/ for which a preliminary decree had already been passed) was passed on 11 6 1958/30 6 1958. The decree also awarded interest at the rate of 4 1/2% on the amount decreed from the date of suit till the date of realisation. The plaintiff and the defendant preferred appeals to the High Court of Rajasthan. The High Court reduced the decreetal amount by a sum of Rs. 9,991/ . The High Court, however, held that the plaintiff was entitled to interest from 1st January, 1951, and not merely from the date of suit. The High Court also enhanced the rate of interest pendente lite from 4 1/2 to 6%. The High Court having varied the decree of the Trial Court, the State of Rajasthan 8 sought and obtained a certificate under Article 133(1)(a) of the Constitution and has filed this appeal. The controversy in the High Court related primarily to (i) conveyance and lift charges; (ii) alleged double benefit in regard to bond stones, lintels and sills; (iii) use of Jodhpur slabs and their high cost; (iv) charge for C. P. Teak wood at the same rates as for Burma Teak. In regard to conveyance and lift charges the High Court pointed out that no question was raised in the Memorandum of grounds of appeal and there was, therefore, no justification for permitting the learned Counsel for the State to assail the finding of the Trial Court relating to those charges. We do not see any reason either why the learned Counsel should be permitted to agitate this question in this appeal. Regarding double charge for bond stone, lintels and sills, the complaint of the appellant was that while separate payment was being made for them, they had also been included in the measurements of the walls in which they happened to be fixed. From the office circular issued by the Chief Engineer of the Public Works Department of the United State of Rajasthan on 12th July, 1948, it appears that it was the practice uptill then to allow payment for bond stones, lintels and sills separately without deducting their cubic contents from the general wall masonry. This had always been the practice and this was never objected to by the Accountant General. In view of the practice obtaining till then it could not be said that the contractor had wrongfully claimed double payment for bond stones, lintels and sills. The use of Jodhpur slabs was not questioned in the written statement. All that was said was that the rate was high but at the trial there was no evidence worth the name, as observed by the High Court to show that the charge was excessive. Again there was no objection to the use of C.P.Teak wood instead of Burma teak wood as the latter was not available. According to the letter of the Superintending Engineer dated 6th February, 1950, where Burma teak wood was not available and C. P. Teak wood was used, the rates specified for Burma teak wood should be taken for C.P. Teak wood. It could not, therefore, be said that the contractor had charged more than what he should for C.P. Teak wood. The last question which was argued before us by Shri Jain, learned Counsel for the State of Rajasthan was that no interest should have been awarded for the period before the filing of the suit and that the rate of interest should not have been enhanced by the High Court for the period subsequent to the filing of the suit. It was 9 submitted that the Interest Act, 1839, was not applicable as no sum A certain was payable and there was no demand for payment of interest. It was argued that what was demanded by the plaintiff was damages and not interest. It was also contended that the Trial Court having, in exercise of its discretion, awarded interest at the rate of 4 1/2 % pendente lite, the High Court ought not to have interfered with the discretion of the Trial Court. Reliance was placed upon the decision in Mahabir Prasad Rungta vs Durga Datt(1) and Union of India vs A. L. Rallia Ram(2). We are unable to agree with the submission of the learned Counsel for the appellant. Under the Interest Act, 1839, "upon all debts or sums certain payable at a certain time or otherwise, the Court before which such debts or sums may be recovered may, if it shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time; or if payable otherwise, then D from the time when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand until the term of payment: provided that interest shall be payable in all cases in which it is now payable by law". The claim of the present plaintiff was not for the payment of any unliquidated damages or for the payment of any amount arising out of an inchoate or contingent obligation. It was for the payment of a sum which was ascertainable on a calculation made in accordance with the terms of the agreement. It was clearly a "sum certain" within the meaning of the Interest Act. In any case it would be a debt, i.e., "a sum of money which is now payable or will become payable in the future by reason of a present obligation". The further question for consideration is whether the plaintiff had made a demand of payment, "so as such demand shall give notice that interest will be claimed from the date of such demand until the term of payment". The plaintiff issued two notices to the defendant demanding payment. The first was on 21st December, 1950, and the second was on 5th April, 1953. There is no dispute that in the second notice of demand of payment of definite claim for interest had been made. In the first notice it was said "by with holding payment of his bills absolutely, the Government has put my client to enormous loss by way of interest also . I intimate to you (1)[1961] 3 S.C.R. 639. (2)[1964] 3 S.C.R. 164. 2 196SCI/79 10 through this notice that the said Shri Ramsingh claims a sum of Rs. 2,50,519/ from the Rajasthan State as under: 1. Unpaid bills for work done: Rs. 1,37,177/ 2. lnterest on the above. 11,511/ 3. . . . 4. . . 5. . . . 6. . . Total: Rs. 2,50,519/ The learned counsel submitted that what was claimed by the plaintiff in this notice was damages and not interest and that too for the past, without any indication that future interest was also being claimed. It is true that the plaintiff mentioned "loss by way of interest", suggesting that what he was claiming was compensation for the damage suffered by him. We are, however, not prepared to construe the notice so literally or technically. The mention of loss was only explanatory. The plaintiff was, without any manner of doubt claiming interest as such. Nor are we impressed with the argument that there was no claim for future interest. In our opinion a claim for past interest would necessarily imply a claim for future interest, vide Kuppuswami Pillai vs Madras Electric Tramway Co. Ltd.(1) and Sita Ram & Ors. vs Mrs. section Sullivan(2). In Mahabir Prasad Rungta vs Durga Datt(3) interest was disallow ed on the ground that the notice which was given did not specify the sum which was demanded and therefore, the Interest Act did not apply. On the question whether interest could be awarded on grounds of equity it was held that what was claimed by Durga Datt was interest as damages and that it could not, therefore, be awarded. The suit itself was one for damages for breach of contract. We do not think that this case is of any assistance to the appellant. In Union of India vs A. L. Rallia Ram, (supra) the Arbitrator had awarded interest by way of compensation since the party had to borrow a large amount of money from its banker to meet its obligation under the contract. The Supreme Court pointed out that interest could not be awarded by way of damages. The Supreme Court also noticed that an Arbitrator was not a Court within the meaning of the Interest Act. No question arose before the Supreme Court whether interest could not be awarded under the Interest Act merely because the notice demanding payment (1) I.L.R. (2) (3) ; 11 mentioned that the plaintiff had suffered loss of interest also. In our view the condition prescribed by the Interest Act that such demand shall give notice to the debtor that interest shall be claimed is fulfilled if interest is claimed, notwithstanding the fact that the notice of demand explains that loss by way of loss of interest has been suffered. Ta take any other view would be to be over technical in the construction of pleadings, including notices preceeding the action. We must notice here an argument advanced by the learned counsel for the appellant that the contract prohibited the award of interest. He relied upon the following sentence occurring in paragraph 16 of the Contract dated 11th May, 1947: "Neither the earnest money deposit nor the with held amount shall bear any interest". This sentence far from supporting the case of the appellant appears to support the case of the plaintiff. The reference to "the with held amounts" is to the amounts represening five per cent of the running bills which are required to be with held at the time of payment of the running bills. The provision that the contractor is not entitled to interest on these with held amounts appears to imply that interest is claimable on other amounts due to the contractor. While awarding interest pendente lite the Trial Court adopted the rate of 4 ' % but the Trial Court gave no reasons for so doing. The High Court considered the matter in some detail and having regard to the various continuous defaults committed by the defendant and its Officers, the High Court enhanced the rate of interest to 6%. The High Court was justified in doing sol and we see no reason to interfere with the discretion exercised by the High Court. In the result the appeal is dismissed with costs. N.V.K. Appeal dismissed.

The Interest Act, 1839 (32 of 1839) empowers the Court to allow interest to the plaintiff if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument at la rate not exceeding the current rate of interest from the time when such amounts were payable and if the amount is payable otherwise, then from the time when the demand of payment shall have been made in writing. As the amounts due in respect of a building works contract remained unpaid despite demands and notices, the respondent (plaintiff) filed a suit for its recovery together with interest. Decreeing the suit, the trial court award ed interest at 4 1/2 per cent. But in appeal, the High Court enhanced the rate of interest pendente life from 4 1/2 per cent to 6 per cent. In the further appeal to this Court it was contended that the Interest Act 1839, was not applicable as no sum certain was payable and there was no demand for payment of interest. Dismissing the appeal, ^ HELD: 1. The claim was for a "sum certain" within the meaning of the Act. [9F] The claim was ascertainable on a calculation made in terms of the agreement and was therefore a sum certain within the meaning of the Act. It is "a sum of money which is now playable or will become payable in the future by reason of a present obligation" and in any case it was not for the payment of any unliquidated damages or for the payment of any amount arising out of an inchoate obligation. [9E F] 2. The respondent issued two notices. In the second notice a definite claim of interest had been made by them. The term "loss by way of interest" mentioned in the first notice suggested that what was being claimed was compensation for the damages suffered by them. The notice should not be construed literally or technically. The mention of loss was only explanatory. Without any manner of doubt the respondents were claiming interest as such. [9G 10D] 3. Nor again can it be said that there was no claim for future interest. A claim for past interest would necessarily imply a claim for future interest. [10E] 7 Kuppusami Pillai vs Madras Electric Tramway Co. Ltd., ILR ; Sita Ram & Ors. vs Mrs. section Sullivan, [1901] 2 Punjab Law Reporter 464; referred to. Mahabir Prashad Rungta vs Durga Datt, ; and Union of India vs A. L. Rallia Ram, ; ; distinguished. Having regard to the various continuous defaults committed by the appellant and its officers the High court was justified in enhancing the rate of interest to 6 per cent.

ions Nos, 95 and 96 of 1957. 311 Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. N. C. Chatterjee, Charan Das Puri and Naunit Lal, for the petitioners (in both the petitions). C. K. Daphtary, Solicitor General of India, Lachman Das Kaushal, Deputy Advocate General for the State of Punjab and T. M. Sen, for the respondents. September 6. The following Judgment of the Court was delivered by DAS C.J. In these two petitions under article 32 of the Constitution of India the petitioners call in question the validity of the Punjab Special Powers (Press) Act, 1956 (being Act No. 38 of 1956), hereinafter referred to as " the impugned Act ", and pray for an appropriate writ or order directing the respondents to withdraw the Notifications issued by them on the two petitioners as the editors, printers and publishers of two newspapers, Pratap and Vir Arjun. The Daily Pratap was started about 38 years back in Lahore, the capital of the united Punjab. It is a daily newspaper printed in the Urdu language and ,script. Since the partition of the country the Daily Pratap is being published simultaneously from Jullundur and from New Delhi Vir Arjun is a Hindi daily newspaper also published simultaneously from Jullundur and from New Delhi. Virendra, the petitioner, in Petition No. 95 of 1957 is the editor, printer and publisher of the two papers published from Jullundur and K. Narendra is the editor, printer and publisher of the two papers published from New Delhi. The petitioners allege that after the appointment of the States Reorganisation Commission on December 29, 1953, the Akali party in the Punjab started a campaign for the partition of the State of Punjab on communal and linguistic basis. According to the petitioners this agitation soon degenerated into a campaign of hatred which threatened the peace of the State. The petitioners maintain that the Hindu inhabitants of the State belonging to all shades of opinion and also a section of the Sikh community and 312 the Congress Party were strongly opposed to that proposal. It is in the circumstances reasonable to infer that the Hindus would also indulge in a counter propaganda in the Press and from the platform against the agitation started by the Akali party. It is admitted that the policy of these two papers, the Daily Pratap and Vir Arjun, has been to oppose the Akali demand for partition of the State of Punjab. Obviously a good deal of tension was generated in the State by reason of the two bitterly opposing parties trying to propagate their respective ideologies. About a year back the Congress Party, which is the ruling party, is said to have surrendered to the communal pressure of the Akalies and accepted what has since come to be known as the regional formula. It was amidst the din and bustle of this ideological war and to prevent and combat any possible activity prejudicial to the maintenance of communal harmony that the Legislature of the State of Punjab found it necessary to pass the impugned Act which received the assent of the President on October 19, 1956, and came into force on the 25th of the same month. The provisions of the impugned Act, in so far as they are material, may now be referred to. Section 2 (1) (a) runs as follows: " 2(1) The State Government or any authority so authorised in this behalf if satisfied that such action is necessary for the purpose of preventing or combating any activity prejudicial to the maintenance of communal harmony affecting or likely to affect public order, may, by order in writing addressed to a printer publisher or editor, (a) prohibit the printing or publication in any document or any class of documents of any matter relating to a particular subject or class of subjects for a specified period or in a particular issue or issues of a newspaper or periodical; Provided that no such order shall remain in force for more than two months from the making thereof; Provided further that the person against whom the order has been made may within ten days of the 313 passing of this order make a representation to the State Government which may on consideration thereof modify, confirm or rescind the order;" Section 2(1)(b) authorises the State Government or any authority so authorised in this behalf to require that any matter covering not more than two columns be published in any particular issue or issues of a newspaper or periodical on payment of adequate remuneration and to specify the period (not exceeding one week) during which and the manner in which such publication shall take place. Clause (c) of section 2(1) authorises the State Government or the delegated authority to impose pre censorship. Sub section (2) of section 2 enables the State Government or the authority issuing the order in the event of any disobedience of an order made under section 2 to order the seizure of all copies of any publication and of the printing press or other instrument or apparatus used in the publication. Section 3(1) runs as follows: " The State Government or any authority authorised by it in this behalf, if satisfied that such action is necessary for the purpose of preventing or combating any activity prejudical to the maintenance of communal harmony affecting or likely to affect public order, may, by notification, prohibit the bringing into Punjab of any newspaper, periodical, leaflet or other publication. " Sub section (2) of section 3 gives power to the State Government or the authority issuing the order, in the event of any disobedience of an order made under section 3, to order the seizure of all copies of any newspaper, periodical, leaflet or other publication concerned. Section 4 provides punishment for the contravention of any of the provisions of the Act by imprisonment of either description which may extend to one year or with fine up to one thousand rupees or with both. It appears that on or about May 30, 1957, a movement known as the "save Hindi agitation " was started by a Samiti which goes by the name of Hindi Raksha Samiti. The Arya Samaj, which claims to be a cultural and religious society, joined this campaign 314 for changing what they conceive to be the objectionable features of the regional formula and the Sachar formula on language. According to the petitioners the Hindi Raksha Samiti, the sponsor of the " save Hindi agitation " claims that it has the support of practically all sections of the Hindus of the State. The petitioners who are the editors, printers and publishers of the two newspapers published simultaneously from Jullunder and New Delhi respectively consider that the objectionable clauses of those formulae are not only unjust and unfair to the cause of propagating that national language in the country, but are also a contrivance to secure the political domination of the minority community over the majority. Admittedly the petitioners have been publishing criticisms and news concerning the agitation which, according to them, are quite fair and legitimate, but they allege that newspapers like Prabhat and Ajit, which support the Akali party in the State have been publishing articles and news couched in a strong and violent language against the " save Hindi agitation " and the Hindu community. The agitation apparently followed the usual course and pattern of all political agitation of this kind with its attendant demonstrations, slogans and satyagraha by the volunteers and lathi charge by the police. Eventually on July 10, 1957, the agitation culminated in the " save Hindi agitation " volunteers ' forcible entry into the Secretariat of the Punjab Government at Chandigarh. It was in these circumstances that the four Notifications complained of were issued. On July 13, 1957, a Notification under section 2(1)(a) of the impugned Act was issued against the petitioner Virendra, as the editor, printer and publisher of the Daily Pratap published from Jullundar. It was in the following terms: " Whereas 1, Ranbir Singh, Home Secretary, Punjab Government, authorised by the said Government under section 2(1) of the Punjab Special Powers (Press) Act, 1956, on examination of the publications enumerated in the annexure relating to the " save Hindi agitation " have satisfied myself that action is 315 necessary for combating the calculated and persistent propaganda carried on in the newspaper the Pratap ' published at Jullundar to disturb communal harmony in the State of Punjab; And whereas the said propaganda by making an appeal to communal sentiments has created a situation which is likely to affect public order and tranquillity in the State ; And therefore in pursuance of the powers conferred under sub clause (a) of clause (1) of section 2 of the said Act, 1 prohibit Shri Virendra, the printer, publisher and the editor of 'Pratap ' from printing and publishing any article, report, news item, letter or any other material of any character whatso ever relating to or connected with "save Hindi agitation" for a period of two months from this date. Sd./ Rome Secretary to Government Punjab. No: 8472 C(H) 57/14679 " The annexure referred to in the Notifications sets out the headings of fifteen several articles published in this paper between May 30, 1957, to July 8, 1957. Another Notification in identical terms with an annexure setting forth the heading of sixteen articles published during the same period in Vir Arjun was issued on the same day against Virendra as the editor, printer and publisher of Vir Arjun published from Jullundar. On July 14, 1957, two Notifications in identical terms were issued under section 3 of the impugned Act against K. Narendra as the editor, printer and publisher of Daily Pratap and Vir Arjun published from New Delhi. It will suffice to set out the Notification in respect of Daily Pratap which ran as follows: Punjab Government Gazette Extraordinary Published by Authority Chandigarh, Sunday, July 14, 1957. Home Department Notification The 14th July, 1957, 41 316 No. 8453 C(H) 57/14580: Whereas 1, Ranbir Singh, Home Secretary to Government, Punjab, authorised by the said Government under section 3 of the Punjab Special Powers (Press) Act, 1956, have satisfied myself that it is necessary to combat and prevent the propaganda relating to " save Hindi agitation " carried on in the Pratap with the object of disturbing communal harmony in the State of Punjab and thereby affecting public order; Now, therefore, in exercise of the powers conferred by section 3(1) of the said Act, I do hereby prohibit the bringing into Punjab of the newspaper printed and published at Delhi, from the date of publication of this notification. " The petitioners contend that both sections 2 and 3 of the impugned Act are ultra vires the State Legislature, because they infringe the fundamental rights of the petitioners guaranteed by articles 19(1)(a) and 19(1)(g) of the Constitution and are not saved by the protecting provisions embodied in article 19(2) or article 19(6). In the first place it is contended that these sections impose not merely restrictions on but total prohibition against the exercise of the said fundamental rights, for in the case of the Notifications under section 2 there is a total prohibition against the publication of all matters ' relating to or in connection with the " save Hindi agitation " and in the case of the Notifications made under section 3 there is a complete prohibition against the entry and the circulation of the papers published from New Delhi in the whole of Punjab. There is and can be no dispute that the right to freedom of speech and expression carries with it the right to propagate and circulate one 's views and opinions subject to reasonable restrictions. The point to be kept in view is that the several rights of freedom guaranteed to the citizens by article 19(1) are exercisable by them throughout and in all parts of the territory of India. The Notifications under section 2(1)(a) prohibiting the printing and publishing of any article, report, news item, letter or any other material of any character whatsoever relating to or connected with " save Hindi agitation " or those under section 3(1) imposing a ban against the entry 317 and the circulation of the said papers published from New Delhi in the State of Punjab do not obviously take away the entire right, for the petitioners are yet at liberty to print and publish all other matters and are free to circulate the papers in all other parts of the territory of India. The restrictions, so far as they extend, are certainly complete but whether they amount to a total prohibition of the exercise of the fundamental rights must be judged by reference to the ambit of the rights and, so judged, there can be no question that the entire rights under articles 19(1)(a) and 19(1)(g) have not been completely taken away, but restrictions have been imposed upon the exercise of those rights with reference to the publication of only articles etc.relating to a particular topic and with reference to the circulation of the papers only in a particular territory and, therefore, it is not right to say that these sections have imposed a total prohibition upon the exercise of those fundamental rights. Learned counsel then urges that assuming these sections impose only restrictions they are, nevertheless, void as being repugnant to the Constitution, because the restrictions are not reasonable. As regards the right to freedom of speech and expression guaranteed by article 19(1)(a) it is qualified by article 19(2) which protects a law in so far as it imposes reasonable restriction on the exercise of the right conferred by article 19(1)(a) "in the interests of. . . . . . . public order. . . Likewise the right to carry on any occupation, trade or business guaranteed by article 19(1)(g) is out down by article 19(6) which protects a law imposing "in the interests of the general public" reasonable restrictions on the exercise of the right conferred by article 19(1)(g). As has been explained by this Court in Ramji Lal Modi vs The State of U. P. (1) the words " in the interests of " are words of great amplitude and are much wider than the words " for the maintenance of ". The expression " in the interest of " makes the ambit of the protection very wide, for a law may not have been designed to directly maintain the public order or to directly protect the general public against any particular evil and yet it (1) Petition No. 252 of 1955 decided on April 5, 1957. 318 may have been enacted "in the interests of " the public order or the general public as the case may be. It is against this background, therefore, that we are to see whether the restrictions imposed by sections 2 and 3 can be said to be reasonable restrictions within the meaning of articles 19(2) and 19(6). The test of reasonableness has been laid down by this Court in The State of Madras vs V. G. Row (1) in the following words: " It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard or general pattern, of reason ableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. This dictum has been adopted and applied by this Court in several subsequent cases. The surrounding circumstances in which the impugned law came to be enacted, the underlying purpose of the enactment and the extent and the urgency of the evil sought to be remedied have already been adverted to. It cannot be overlooked that the Press is a mighty institution wielding enormous powers which are expected to be exercised for the protection and the good of the people but which may conceivably be abused and exercised for anti social purposes by exciting the passions and prejudices of a section of the people against another section and thereby disturbing the public order and tranquillity or in support of a policy which may be of a subversive character. The powerful influence of the newspapers, for good or evil, on the minds of the readers, the wide sweep of their reach, the modern facilities for their swift circulation to territories, distant and near, must all enter into the judicial verdict and the reasonableness of the restrictions imposed upon (1) ; ,607. 319 the Press has to be tested against this background. It is certainly a serious encroachment on the valuable and cherished right to freedom of speech and expression if a newspaper is prevented from publishing its own views or the views of its correspondent& relating to or concerning what may be the burning topic of the day. Our social interest ordinarily demands the free propagation and interchange of views but circumstances may arise when the social interest in public order may require a reasonable subordination of the social interest in free speech and expression to the needs of our social interest in public order. Our Constitution recognises this necessity and has attempted to strike a balance between the two social interests. It permits the imposition of reasonable restrictions on the freedom of speech and expression in the interest of public order and on the freedom of carrying on trade or business in the interest of the general public. Therefore, the crucial question must always be : Are the restrictions imposed on the exercise of the rights under articles 19 (1) (a) and 19 (1) (g) reasonable in view of all the surrounding circumstances ? In other words are the restrictions reasonably necessary in the interest of public order under article 19(2) or in the interest of the general public under article 19(6) ? It is conceded that a serious tension had arisen between the Hindus and the Akalis over the question of the partition of the State on linguistic and communal basis. The people were divided into two warring groups, one supporting the agitation and the other opposing it. The agitation and the counter agitation were being carried on in the Press and from the platforms. Quite conceivably this agitation might at any time assume a nasty communal turn and flare up into a communal frenzy and factious fight disturbing the public order of the State which is on the border of a foreign State and where consequently the public order and tranquillity were and are essential in the interest of the safety of the State. It was for preserving the safety of the State and for maintaining the public order that the Legislature enacted this impugned Statute. Legislature had to ask itself the question, who will be 320 the appropriate authority to determine at any given point of time as to whether the prevailing cicumstances require some restriction to be placed on the right to freedom of speech and expression and the right to carry on any occupation, trade or business and to what extent? The answer was obvious, namely, that as the State Government was charged with the preservation of law and order in the State, as it alone was in possession of all material facts it would be the beat authority to investigate the circumstances and assess the urgency of the situation that might arise and to make up its mind whether any and, if so. , what anticipatory action must be taken for the prevention of the threatened or anticipated breach of the peace The court is wholly unsuited to gauge the seriousness of the situation, for it cannot be in possession of materials which are available only to the executive Government. Therefore, the determination of the time when and the extent to which restrictions should be imposed on the Press must of necessity be left to the judgment and discretion of the State Government and that is exactly what the Legislature did by passing the statute. It gave wide powers to the State Government, or the authority to whom it might delegate the same, to be exercised only if it were satisfied as to the things mentioned in the two sections. The conferment of such wide powers to be exercised on the subjective satisfaction of the Government or its delegate as to the necessity for its exercise for the purpose of preventing or combating any activity prejudicial to the maintenance of communal harmony affecting or likely to affect public order cannot, in view of the surrounding circumstances and tension brought about or aided by the agitation in the Press, be regarded as anything but the imposition of permissible reasonable restrictions on the two fundamental rights. Quick decision and swift and effective action must be of the essence of those powers and the exercise of it must, therefore, be left to the subjective satisfaction of the Government charged with the duty of maintaining law and order. To make the exercise of these powers justiciable and subject to the judicial scrutiny will defeat the very purpose of the enactment. Even in his dissenting judgment in Dr. N. B. Khare vs The State of Delhi (1) Mukherjea, J., conceded that in cases of this description certain authorities could be invested with power to make initial orders on their own satisfaction and not on materials which satisfy certain objective tests. It is said that the sections give unfettered and uncontrolled discretion to the State Government or to the officer authorised by it in the exercise of the drastic powers given by the sections. We are referred to the observations of Mukherjea, J., in Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh (2). That case does not seem to us to have any application to the facts of this case. ' In the first place, the discretion is given in the first instance to the State Government itself and not to a very subordinate officer like the licensing officer as was done in Dwaraka Prasad 's case (supra). It is true that the State Government may delegate the power to any officer or person but the fact that the power of delegation is to be exercised by the State Government itself is some safeguard against the abuse of this power of delegation. That apart, it will be remembered that the Uttar Pradesh Coal Control Order, 1953, with reference to which the observations were made, prescribed no principles and gave no guidance in the matter of the exercise of the power. There was nothing in that order to indicate the purpose for which and the circumstances under which the licensing authority could grant or refuse to grant, renew or refuse to renew, or suspend, revoke, cancel or modify any license under that order and, therefore, the power could be exercised by any person to whom the State Coal Controller might have chosen to delegate the same. No rules had been framed and no directions had been given on the relevant matters to regulate or to guide the exercise of the discretion of the licensing officer. That cannot, in our judgment, be said about section 2 or section 3 of the impugned Act, for the exercise of the power under either of these two sections is conditioned by the State Government or the authority authorised by the said Government being satisfied that such (1) (2) ; ,813. 322 action was necessary for the purpose of preventing or combating any activity prejudicial to the maintenance of communal harmony affecting or likely to affect the public order. As explained by this Court in Harishankar Bagla vs The State of Madhya Pradesh(1), the dictum of Mukherjea, J., can have no application to a law which sets out its underlying policy so that the order to be made under the law is to be governed by that policy and the discretion given to the authority is to be exercised in such a way as to effectuate that policy, and the conferment of such a discretion so regulated cannot be called invalid. The two sections before us lay down the principle that the State Government or the delegated authority can exercise the power only if it is satisfied that its exercise is necessary for the purposes mentioned in the sections. It cannot, be exercised for any other purposes. In this view of the matter neither of these sections can be questioned on the ground that they give unfettered and uncontrolled discretion to the State Government or one executive officer in the exercise of discretionary powers given by the section. It is next said that an executive officer may untruthfully say, as a matter of form, that he has been satisfied and there is nothing in the section which may prevent him from abusing the power so conferred by these sections. But, as pointed out in Khare 's case (supra), the, exercise of a discretionary preventive power to be exercised in anticipation for preventing a breach of public order must necessarily be left to the State Government or its officers to whom the State Government may delegate the authority. No assumption ought to be made that the State Government or the authority will abuse its power. To make the exercise of the power justiciable will defeat the very purpose for which the power is given. Further, even if the officer may conceivably abuse the power, what will be struck down is not the statute but the abuse of power. Reference has been made to the principles enunciated by this Court in Ramesh Thappar vs The, State Of (1) , 386, 387. 323 Madras (1), and applied in Chintaman Rao vs The State of Madhya Pradesh(2), namely, that if the language employed in the impugned law is wide enough to cover restriction both within and outside the limits of constitutionally permissible legislative action affecting the guaranteed fundamental rights and so long as the possibility of the statute being applied for purposes not sanctioned by the Constitution cannot be ruled out, the sections must be struck down as ultra vires the Constitution. We do not think those principles have any applications the instant case. It will be remembered that Art.19(2), as it was then worded, gave protection to a law relating to any matter which under mined the security of or tended to overthrow the State. Section 9(1 A) of the Madras Maintenance of Public Order was made "for the purpose of securing public safety and the maintenance of public order". It was pointed out that whatever end the impugned Act might have been intended to subserve and whatever aim its framers might have had in view, its application and scope could not, in the absence of limiting words in the statute itself, be restricted to the aggravated form of activities which were calculated to endanger the security of the State. Nor was there any guarantee that those officers who exercised the power under the Act would, in using them, discriminate between those who acted prejudicially to the security of the State and those who did not. This consideration cannot apply to the case now under consideration. Article 19(2) has been amended so as to extend its protection to a law imposing reasonable restrictions in the interests of public order and the language used in the two sections of the impugned Act quite clearly and explicitly limits the exercise of the powers conferred by them to the purposes specifically mentioned in the sections and to no other purpose. Apart from the limitations and conditions for the exercise of the powers contained in the body of the two sections as hereinbefore mentioned, there are two provisos to section 2(1)(a) which are important. Under the first proviso the orders made under section 2(1)(a) can only remain (1) ; 42 (2) ; 324 in force for two months from the making thereof. Further, there is another proviso permitting the aggrieved person to make a representation to the State Government which may, on consideration thereof, modify, confirm or rescind the order. A power the exercise of which is conditioned by the positive requirement of the existence of the satisfaction of the authority as to the necessity for making the order for the specific purposes mentioned in the section and the effect of the exercise of which is to remain in operation for a limited period only and is liable to be modified or rescinded upon a representation being made cannot, in our opinion, in view of the attending circumstances, be characterised as unreasonable and outside the protection given by article 19(2) or article 19(6). Under el.(b) of sub section(1) of section 2 also there are several conditions, namely, that the matter required to be published must not be more than two columns, that adquate remuneration must be paid for such publication and that such requirement cannot prevail for more than one week. A consideration of these safeguards must, in our opinion, have an important bearing in determining the reasonableness of the restrictions imposed by section 2. The prevailing circumstances which led to the passing of the statute, the urgency and extent of the evil of communal antagonism and hatred which must be combated and prevented, the facility with which the evil might be aggravated by partisan news and views published in daily newspapers having large circulation and the conditions imposed by the section itself on the exercise of the power conferred by it must all be taken into consideration in judging the reasonableness or otherwise of the law and, so judged, section 2 must be held to have imposed reasonable restrictions on the exercise of the rights guaranteed by articles 19(1)(a) and 19(1)(g) in the interest of public order and of the general public and is protected by articles 19(2) and 19(6). Learned counsel appearing for the petitioner Virendra also maintains that assuming that section 2(1)(a) is valid, the Notifications actually issued thereunder are much too wide in language and cannot be supported. The 325 operative part of the Notification prevents the petitioner from publishing any article, news item, letter or any other matter of any character whatsoever relating to or connected with the "save Hindi agitation". It is said that the petitioner cannot even publish a report or a letter from a correspondent against the it save Hindi agitation ". It cannot publish a report of the statement made on the floor of the House by the Prime Minister deprecating the " save Hindi agitation ". This argument appears to us to have no real substance. If the section is good and that is what we hold it to be and that is what, for the purposes of this part of the argument, learned counsel is prepared to assume then the section has conferred on the State Government this power to be exercised if it is satisfied as to the necessity for its exercise for the purposes mentioned in the section. In other words the exercise of the power is made dependent on the subjective satisfaction of the State Government or its delegate. If the State Government or its delegate is satisfied that for the purposes of achieving the specified objects it is necessary to prohibit the publication of any matter relating to the " save Hindi agitation " then for the court to say that so much restriction is not necessary to achieve those objects is only to substitute its own satisfaction for that of the State Government or its delegate. The authority before making the order had applied its mind and had made its estimate of the general trend of the policy of these papers and their possible reactions and had formed its satisfaction as to the necessity for making the orders founded on the several articles published in these papers between May 30, 1957, and July 8, 1957, wherein the petitioner had systematically published matters in support of the agitation and its disapproval of everything which might run counter to that agitation. It is admitted that the policy of the papers is to support the " save Hindi agitation ". Therefore, a grievance that the papers are not allowed even to publish anything against the agitation sounds hollow, wholly unconvincing and of no substance at all. It may not be unreasonable for the Government to hold the opinion, in 326 view of the antecedents and policy of these papers that they will not publish any news or views running counter to their policy without adverse comments. Further, if there happens to be a change in their policy there will be nothing to prevent the petitioner from making a representation to the State Government asking it to modify its Notifications. In our view, having regard to the body of section 2(1)(a) and the two provisos thereto, namely, the conditions as to the satisfaction of the authority in respect of certain matters specified in the section, the time limit as to the efficacy of the Notifications and the right to make a representation given to the aggrieved party makes this grievance wholly illusory. It is said that the Notifications should have been qualified so as to prohibit the publication of any matter relating to the " save Hindi agitation " which was likely to prejudicially affect the public order. Suppose such a qualification had been super added, then there should be somebody who would have to judge whether any given publication did or did not affect the public order. If the editor claimed that it did not but the State held that it did who would decide and when ? It would obviously be the court then which would have to decide whether the publication was likely to prejudicially affect the public order. If the Government exercised the power of seizure to stop the circulation of the offending issue then it would do so at the risk of having to satisfy the court that for preventing the public order being prejudicially affected it was necessary to stop such circulation. That would be the issue before the court. Likewise if the Government launched a prosecution under section 4 then also the issue would be the same. That would obviously defeat the very purpose of the section itself which, for this argument, is accepted as valid. Thequestion of the necessity for the exercise of the power for the purpose of achieving the specified objects is, having regard to the very nature of the thing and the surrounding circumstances, left by the section entirely to the subjective satisfaction of the Government and if the Government exercises that power after being 327 satisfied that it is necessary so to do for the purposes mentioned in the section and if the Notification is within the section, in the sense that it directs or prohibits the doing of something which the section itself authorises the Government to direct or prohibit, then nothing further remains to be considered. The ' only issue that can then arise will be whether the Notification has been complied with and the court will only have to decide whether there has been a contravention of the Notification. To introduce the suggested qualification in the Notification will be to make the exercise of the power which is by the section left to the subjective satisfaction of the Government dependent on an objective test subject to judicial scrutiny. That, as we have explained, will defeat the very purpose of the section itself. It is lastly contended that the impugned Notifications have been made mala fide in order only to suppress legitimate criticisms and fair comments on public affairs. We have perused the articles annexed to the affidavit in opposition and referred to in the Notifications themselves and we are not satisfied that no reasonable person reading those articles could entertain the opinion and feel satisfied that it was necessary to make the order for the purposes mentioned in the section. We are unable to hold, on the materials before us, that the Notifications issued under s.2 were mala fide. The observations hereinbefore made as to the safeguards set forth in the provisions of section 2(1)(a) and (b) cannot, however, apply to the provisions of section 3. Although the exercise of the powers under section 3(1) is subject to the same condition as to the satisfaction of the State Government or its delegate as is mentioned in section 2(1)(a), there is, however, no time limit for the operation of an order made under this section nor is there any provision made for any representation being made to the State Government. The absence of these safeguards in section 3 clearly makes its provisions unreasonable and the learned Solicitor General obviously felt some difficulty in supporting the validity of this 328 section. It is surprising how in the same statute the two sections came to be worded differently. For reasons stated above petition No. 95 of 1957 (Virendra vs The State of Punjab) which impugns the Notifications issued under section 2(1)(a) must be dismissed and petition No. 96 of 1957 (K. Narendra vs The State of Pun ab) which challenges section 3 must be allowed. In the circumstances of these cases we make no order as to the costs of these applications. Petition No. 95 of 1957 dismissed. Petition No. 96 of 1957 allowed.

These two petitions challenged the constitutional validity of the Punjab Special Powers (Press) Act, 1956 (No. 38 of 1956) passed by the State Legislature in the wake of the serious communal tension that had arisen between the Hindus and the Akali Sikhs over the question of the partition of the State on a linguistic and communal basis. The petitioners were the editors, printers and publishers, respectively, of the two daily newspapers, Pratap and Vir Arjun, printed and published simultaneously from jullundur and New Delhi, whose admitted policy was to support the "Save Hindi agitation". Two notifications under section 2(1)(a) of the impugned Act were issued against the editor, printer and publisher of the two papers published from Jullundur by the Home Secretary prohibiting him from printing and publishing any matter relating to the 'Save Hindi agitation ' in the two papers for a period of two months. Two other notifications in identical terms were issued under section 3(1) of the impugned Act against the other petitioner, the editor, printer and publisher of the two papers in New Delhi prohibiting him from bringing into the Punjab the newspapers printed and published in. New Delhi from the date of the publication of the notifications. Unlike section 2(1) of the impugned Act which provided a time limit for the operation of an order made thereunder as also for a representation to be made by the aggrieved person, section 3 of the Act made no such provision. It was contended on behalf of the petitioners that both the sections were ultra vires the State Legislature inasmuch as they infringed articles 19(1)(a) and 19(1)(g) of the Constitution and were not saved by articles 19(2) and 19(6) of the Constitution. It was urged that the sections imposed not merely restrictions but a total prohibition against the exercise of the said fundamental rights by prohibiting the publication of all matters relating to the 'Save Hindi agitation ' under section 2(1)(a) and by a complete prohibition of the entry of the two papers into the whole of the Punjab under section 3(1) of the Act, that even supposing 309 that the sections merely imposed restrictions and not a total prohibition, the restrictions were not reasonable, that the sections gave unfettered and uncontrolled discretion to the State Government and its delegate, that the Act did not provide for any safeguard against an abuse of the power, that the language of the sections being wide enough to cover restrictions both within and cutside the limits of constitutionally permissible legislative action they were ultra vires the Constitution and that the notification under section 2(1)(a) of the Act as made would prevent even the publication of anything against the 'Save Hindi agitation ' and should have been restricted to such matters alone as were likely to prejudicially affect the public order. Held, that the restrictions imposed by section 2(1)(a) of the impugned Act were reasonable restrictions within the meaning of article 19(2) of the Constitution and the petition directed against the notifications issued thereunder must fail, but since section 3 Of the Act did not provide for any time limit for the operation of an order made thereunder nor for a representation by the aggrieved party to the State Government, the restrictions imposed by it were not reasonable restrictions under article 19(6) of the Constitution and the petition directed against the notifications made thereunder must succeed. Held further, that there can be no doubt that the right of freedom of speech and expression carries with it the right to propagate one 's views and the several rights of freedom guaranteed by article 19(1) of the Constitution are exercisable throughout India but whether or not any restrictions put on those rights amount to a total prohibition of the exercise of such rights must be judged by reference to their ambit. So judged, the restrictions imposed in the instant cases with regard to the publications relating to only one topic and the circulation of the papers only in a particular territory could not amount to a total prohibition of the exercise of the fundamental rights. The expression "in the interest of" in articles 19(2) and 19(6) of the Constitution makes the protection they afford very wide and although free propagation and interchange of views are ordinarily in social interest, circumstances may arise when social interest in public order is greater and the imposition of reasonable restrictions on the freedom of speech and expression and on the freedom of carrying on trade or business becomes imperative. Regard being had to the surrounding circumstances in which the impugned Act was passed, its object, the extent and urgency of the evil it sought to remedy, and the enormous power wielded by the Press, with modern facilities of quick circulation, and the consequence that any abuse of it might lead to, the restrictions imposed by the impugned Act must be held to be reasonable restrictions under the Articles. The State of Madras vs V. G. Row, ; , followed. 310 It was only in the fitness of things that the State Legislature should have left the wide preventive powers under the sections to the discretion of the State Government, charged with the maintenance of law and order, or to its delegate, to be exercised on their subjective satisfaction. To make the exercise of these powers justiciable and subject to judicial scrutiny would be to defeat the purpose of the enactment. Dr. N. B. Khare vs The State of Delhi, ; , referred to. But such discretion was by no means unfettered and uncontrolled. The two sections laid down the principle that the State Government or its delegate could exercise such powers only if they were satisfied that such exercise was necessary for the purpose mentioned in the sections and not otherwise. Where there was any abuse of such powers, therefore, what could be struck down was the abuse itself but not the statute. Dwaraka Prasad Laxmi Nayain vs The State of Uttar Pradesh, ; , held inapplicable. Harishankar Bagla vs The State of Madhya Pradesh, , relied on. In view of the amended provisions of article 19(2) of the Constitution and the language of the two sections limiting the exercise of the powers to the purposes specifically mentioned therein, the principles enunciated by this Court in Ramesh Thappay 's case and applied to Chintaman Rao 's case could have no application to the instant cases. Ramesh Thappay vs The State of Madras, ; and Chintaman Rao vs The State of Madhya Pradesh, (1950) S.C. R. 759, held inapplicable. The two provisos to section 2(1)(a) and cl. (b) of section 2(1) clearly show that the restrictions imposed by section 2 are reasonable restrictions on the exercise of the rights guaranteed by articles 19(1)(a) and 19(1)(g) and are, therefore, protected by articles 9(2) and 19(6) of the Constitution. There could be no basis for the grievance that the notifica tion under section 2(1)(a) prevented the publication even of matters against the 'Save Hindi agitation '. If there was a change in the policy of the papers, the time limit provided for the operation of the notifications and the right to make a representation provided ample remedies for the petitioner. To introduce into the notifications the suggested qualification would be to make the exercise of the powers conferred by the section dependent on an objective test subject to judicial scrutiny and defeat the very purpose of the section.

Appeal No. 458 of 1969. Appeal from the judgment and order dated July 1, 1968 of the Gujarat, High Court in Special Civil Application No. 1499 of 1966. 517 M. C. Chagla, section K. Dholakia, Vineet Kumar and J. R. Nana vati, for the appellants. section T. Desai, B. D. Sharma and section P. Nayar, foe respondent No. 1. section section Shukla, for respondents Nos. 2 to 148. The Judgment of the Court was delivered by Shah, J. Certain officers in the ministerial branch of the Secretariat Service of the State of Gujarat moved a petition in the High Court of Gujarat for an order directing the State Government to treat its order dated August 19, 1966 as "illegal, void and of no effect" and to forbear from enforcing its order treating the persons whose names were specified in the annexure to the order as servants of the "Secretariat cadre". The High Court of Gujarat granted the petition and declared the order dated August 19, 1966, invalid. With certificate granted by the High Court this appeal has been filed. Prior to November 1, 1956, the appellants were holding permanent posts in the ministerial service of the Secretariats of the Part B State of Saurashtra and the State of Kutch. By virtue of section 8 of the States Reorganization Act 37 of 1956 the new State of Bombay, which included the territories of the States of Saurashtra and Kutch, was formed. Section 115 of the made provisions relating to services other than All India Services. By sub section (1) of section 115 it was enacted, inter alia, that every person who immediately before the appointed day was serving in connection, with the affairs of any of the existing States specified therein shall, as from that day, be deemed to have been allotted to serve in connection with the affairs of the successor State to that existing State. By the proviso to sub section (7) it was provided that conditions of service applicable immediately before the appointed day to the case of any person allotted to another State shall not be varied to his disadvantage except with the previous approval of the Central Government. Section 116 provided for the continuance of officers in the same posts. By section 117 power was conferred upon the Central Government to give directions to Any State Government that may appear to be necessary for the purpose of giving effect to the provisions of sections 114,115 and 116 of the Act. Under the , the appellants were allotted to serve in connection with the affairs of the new State of Bombay. In exercise of the powers under article 309 of the Constitution, the Government of Bombay sanctioned certain rules called "The Allocated Government Servants ' (Absorption, Seniority, Pay & Allowances) Rules, 1957". Those rules governed the servants who were allotted to the State of Bombay on reorganisa 518 tion. A large majority of the members of the ministerial branch of the Secretariat of the States of Saurashtra and Kutch were, it appears, unwilling to be posted in the Secretariat of the new State of Bombay. They were accordingly posted in the districts of the former States of Saurashtra and Kutch. Under Act 11 of 1960 called "The Bombay Reorganisation Act" the States of Gujarat and Maharashtra were carved out of the territory of the new State of Bombay. Under section 81 provisions relating to services other than All India Services were made and by section 82 provisions as to the continuance of officers in the same posts was made. By section 83 power was given to the Central Government to give directions to the States. Those provisions were substan tially the same as the provisions of sections 115, 116 and 117 of the . The appellants were allotted to serve in connection with the affairs of the State of Gujarat under section 81 of the Bombay Reorganisation Act. The newly constituted State of Gujarat finding a dearth of experienced officers in the Secretariat transferred the appellants at ,diverse times between the years 1961, 1962 and 1963 to the Secretariat of the State of Gujarat and 'assigned them duties in connection with the Secretariat Service. Orders were issued from time to time fixing their scales of pay and seniority. Apparently the Public Service Commission raised some objections about an attempted integration between the officers who were originally serving in the Secretariat Service, and those who were posted from the districts. Ultimately on August 19, 1966, the State Government issued the order to the following effect : "The question of regularising the appointment to various posts in the Secretariat Department on and after 1st May 1960 of the drafted persons was under the consideration of Government for some time. Government is now pleased to direct, in consultation with the Gujarat Public Service Commission, that the persons shown in the accompanying statement should be treated to have been regularly appointed in the posts shown against their names in column 4 of the statement with effect from the date shown in column 5 in the Departments mentioned in column 3 of the statement. As regards fixation of their pay and seniority orders have already been issued in Government Resolution General Administration Department No. SCT 1161 F, dated 25th April, 1961 and Government Reso lution General Administration Department No. SCT1162 KH, dated 14th March 1964. The Departments are requested to fix their pay and seniority accordingly. " 519 Appended to the order was a list of 90 persons designating the departments in which they were posted, posts to which appointed and the dates from which they were appointed. The officers of the Secretariat who before the date of the order constituted the ministerial service then filed the petition out of which this appeal arises challenging the validity of the order of the Government. The petition was ,founded on three grounds : (1) that the order violated r. 138 of the Recruitment Rules framed by the Government of Bombay in 1957; (2) that the order violated the proviso to cl. (6) of section 81 in that it altered the conditions of service of the applicants; and (3) that it violated the provisions of the Allocated Government Servants ' (Absorption, Seniority, Pay & Allowances) Rules, 1957. Counsel for the applicants conceded before the High Court that the transfer of the former Saurashtra and Kutch States Secretariat personnel to the Gujarat Secretariat per se was not open to objection. The High Court did not consider whether the Saurashtra and Kutch States secretariat personnel had "any rights flowing on account of absorption and integration of service under the or the Allocated Government Servants ' Rules,, 1957. " But the High Court held that since the impugned order purported to amalgamate the former Saurashtra and Kutch States personnel with the Gujarat Secretariat Service contrary to the terms of r. 138 of the Recruitment Rules, and the Government had no authority to vary the method of recruitment provided by the statutory r. 138 of the Recruitment Rules which was mandatory, the orders of transfer to the Secretariat which was not made in the process of integration could not operate as absorption under the Allocated Government Servants ' (Absorption, Seniority, Pay & Allowances) Rules, 1957. The High Court also observed that when the ministerial service employees of the former Saurashtra and Kutch States Secretariats were absorbed in the districts, integration of the services was complete and any transfer thereafter to the Secretariat could not and did not amount to absorption in equivalent posts. It is necessary first to examine the scheme of sections 115 & 116 of the . Section 115 was intended to provide for the conditions of service of employees who immediately before November 1, 1956 were serving in connection with the affairs of a State and were allotted to serve in connection with the affairs of another State. Power to fix the conditions of service was reserved exclusively to the Central Government. For that purpose the Central Government was authorised to establish one or more Advisory Committees to 'advise the Government on the division and integration of the services in the new States and for ensuring fair and equitable treatment to all persons affected by the 520 provisions of section 115 and for proper consideration of any representation made by those persons. By the proviso to sub section (7) section 115 a guarantee was given to every allotted public servant that his conditions of service shall not be varied to his disadvantage except with the previous approval of the Central Government. Section 116 provided for the continuance of officers in equivalent posts. This Court in N. Raghavendra Rao vs Deputy Commissioner, South Kanara, Mangalore(1) held that the effect of sub section (7) of section 115 is to preserve the power of the State to make rules under article 309 of the Constitution, but the proviso imposes a limitation on the exercise of that power; the limitation is that the State cannot vary the conditions of service applicable immediately before November 1, 1956, to the disadvantage of persons mentioned in sub sections (1) & (2) of section 115. In the view of the Court the broad purpose underlying the proviso to section 115 (7) of the Act was to ensure that the conditions of service shall not be changed except with the prior approval of the Central Government, that is, before embarking on varying the conditions of service, the State Governments should obtain the concurrence of the Central Government. In Union of India & Anr. vs P. K. Roy & Ors. (2) this Court held that it is the duty of the Central Government to integrate the services, but the State may be asked to prepare a provisional gradation list provided. the Central Government maintains its control over it. It is clear that the conditions of service applicable immediately before the appointed day in the case of any person who is allotted to another State cannot be varied to his disadvantage except with the previous approval of the Central Government. This protection could not be removed by the rules made by the State subsequent to November 1, 1956, unless the previous approval of the Central Government was obtained thereto. It is true that the ministerial service personnel in the States of Saurashtra and Kutch, after they were allotted to the State of Bombay were posted and assigned duties in various districts in Saurashtra and Kutch. But in the absence of evidence to show that the previous approval of the Central Government was obtained, their right to be absorbed in equivalent posts in the new State of Bombay and later in the State of Gujarat was not thereby affected. It appears that there has riot been any equivalence established between the posts in the Secretariats. of the States of Saurashtra and Kutch and the posts in the new State of Bombay and: later in the State of Gujarat to which the members of the ministerial service of the Secretariats of former Saurashtra and Kutch States were allotted. The mere fact that they were posted (1) ; (2) ; 521 and continued to render service in the Districts will not, in our judgment, affect the right of the personnel to be absorbed in the equivalent posts in the Secretariat and on terms not disadvanta geous to those they were already entitled except with the previous, approval of the Central Government. It was conceded, and rightly, that the State has the authority to transfer, subject to the Constitution and the rules made under article 309 any public servant to render service which by his training and aptitude he was competent to do. Transfer of the personnel from the States of Saurashtra and Kutch to the Secretariat in the State of Gujarat and assignment of duties performable by the ministerial staff in the Secretariat cannot be challenged, and that because they were posted between 1956 and 1960 in the Districts they will not be deprived of their statutory right under section 115(7) proviso. Posting in the districts was and must remain purely provisional, until final integration is made by the Central Government. It is common ground that no such final integration had been made by the Central Government. Two grounds appealed to the High Court in deciding the case against the appellants : (1) that the appellants were transferred to the Secretariat of the State of Gujarat, but they were not absorbed in the ministerial service of the Secretariat of the State of Gujarat. In the view of the High Court there was merely "regularisation" of the appointment of those persons for the purpose of performing service in the Secretariat; and (2) that the order dated August 19,. 1966 was contrary to the Recruitment Rules, 1957. If it be granted that the State was competent 'to transfer and did transfer the appellants to perform service in connection with the affairs of the State in the Secretariat, it is difficult to hold that when the State "regularised" the service of the appellants in the Secretariat with the consent of the Public Service Commission there was no absorption under the Absorption Rules. It is true that the expression "absorption" has not been used in the order, but that will not justify an inference that there was no intention to absorb the former Saurashtra and Kutch States personnel in the Secretariat. In the absence of determination of equivalent posts under the orders of the Central Government, the State of Gujarat was competent, as a matter of provisional arrangement to absorb the former Saurashtra and Kutch States personnel in the ministerial establishment of the Gujarat State Secretariat. In terms the order says that the persons named therein "should be treated to have been regularly appointed in the posts shown against their names in column 4 of the statement" appended to the order. That, in our judgment, amounted to absorption. 522 Original r. 138 of the Bombay Civil Services Classification and Recruitment Rules, 1939, was deleted and the following rule was substituted on May 22, 1957. The relevant part of the rule reads "138. The ministerial staff in the Secretariat and attached offices is divided into two Divisions. (a) Upper; and (b) Lower. (i) Superintendents : Appointments shall be made by promotion from among Senior Assistants. (ii) Senior Assistants : Appointments shall be made by promotion from among Junior Assistants. (iii) Junior Assistants : Appointments shall be made either : (a) by nomination on the results of a competitive examination held by the Bombay Public Service Commission, or (b) by promotion from among members of the Lower Division. Provided that ,not more than one out of every four vacancies in the posts of Junior Assistants shall ordinarily be filled by promotion. (2) To be eligible for appointment by nomination a candidate must (i) hold a degree in Arts, law, science, Agriculture or commerce of a recognised University or possess an equivalent qualification; (ii) have attained the age of 18 years; and (iii) not have attained the age of 30 years in the case of members of the Lower Division appointed on the recommendation of the commission and who have graduated while in service and in any other case 24 years on the first day of the month immediately following month in which the posts are advertised by the Commission. B. Lower Division (b) Clerks, clerk typists, typists : Appointments shall be made by nomination on the results of a competitive examination held by the Commission. 523 Provided that suitable members of Class IV services who while in that service, have passed the Secondary School Certificate Examination or an examination recognised by Government as equivalent to that examination, shall be eligible for appointment to the posts of clerks by promotion. (2) To be eligible for appointment by nomination, a candidate must . (i) have passed the secondary school certificate exa mination or an examination recognised by Government as equivalent to that examination; (ii) have attained the age of 18 years; and (iii) not have attained the age of 23 years on the first day of the month immediately following the month in which the posts are advertised by the Commission. A candidate for the post of clerk typist or typist must, also be able to type neatly and accurately at a minimum speed of 40 words per minute. The High Court held that recruitment to the ministerial staff in the Secretariat could only be by nomination or by promotion from among members of the Lower Division, nomination being on the result of a competitive examination held by the Public Service Commission and promotion being from the subordinate staff. In view of this rule, according to the High Court, it was not open to the State Government to adopt any other method of recruitment of the members of the ministerial staff. Counsel for the appellants contended that r. 138 only dealt with the existing servants and did not prevent any additional members from being amalgamated in the ministerial staff in the Secretariat. He also contended that the recruitment did not amount to admission of an officer for the first time in the service. It is unnecessary for the purpose of this appeal to consider these arguments. Assum ing that r. 138 requires the State to follow a certain method for recruitment to the ministerial service, that rule made under article 309 of the Constitution cannot take away the statutory right vested in the personnel of the former Saurashtra and Kutch States which they acquired under the , to hold posts in the 'new State which were equivalent and on terms which were not, unless the previous approval of the Central Government was 524 obtained, disadvantageous. Since the arrangement which is made by the Government of the State of Gujarat must be regarded as provisional and to enure so long as the Central Government does not make a final decision, it is not open to the officers of the Secretariat to challenge the authority of the Government of Gujarat either to transfer officers from the Districts and to post and assign them duties in the Secretariat or to fix their pay and seniority among the officers in the Secretariat performing ministerial duties. The appeal must therefore be allowed and the order passed by the High Court must be set aside. The petition filed by the respondents Nos. 2 to 148 will stand dismissed. There will be no order as to costs throughout. G.C. Appeal allowed.

Prior to November 1, 1956 the appellants were holding permanent posts in the ministerial service of the Secretariats of the Part B State of Saurashtra and the Part C State of Kutch. By virtue of section 8 of the States Reorganisation Act 37 of 1956 the new State of Bombay which included the territories of the States of Saurashtra and Kutch was formed. Under section 115(1) of the Act the appellants were allotted to serve in connection with the affairs of the new State of Bombay. BY the proviso to, section 115(7) it was provided that 'conditions of service applicable immediately before the appointed day to the case of any person allotted to another State shall not be varied to his disadvantage except with the previous approval of the Central Government '. Section 116 provided for the continuance of officers in equivalent posts. By section 117 power was conferred upon the Central Government to give directions to State Governments for the purposes of sections 114, 115 and 116. The Act authorised the Central Government to establish one or more Advisory Committees to advise the Government on the division and integration of the services in the new States and for ensuring fair and equitable treatment to all persons affected by the provisions of section 115 and for proper consideration of any representation made by those persons. A large majority of the members of the ministerial branch of the Secretariats of the State of Saurashtra and Kutch were unwilling to be posted in the Secretariat of the new State of Bombay. A large majority out of them including the appellants were accordingly posted in the districts of the former States of Saurashtra and Kutch. Under the Bombay Reorganisation Act 11 of 1960 the States of Gujarat and Maharashtra were carved out of the territory of the new State of Bombay. Sections 81, 82 and 83 of the 1960 Act were substantially the same as Ss. 115, 116 and 117 of the 1956 Act. The services of the appellants were under section 81 of the Act allotted to the newly constituted State of Gujarat. The State of Gujarat transferred the appellants from the districts to the Secretariat. After consulting the Public Service Commission it issued on August 19, 1966 an order "regularising" the services of the appellants and fixing their pay and seniority. The officers of the Secretariat who before the, passing of the said order constituted the ministerial service filed a petition in the High Court challenging its validity. The High Court allowed the petition mainly on two grounds, namely : (i) that the appellants were not absorbed in the ministerial services of the Secretariat within the meaning 516 of the Bombay Allocated Servants ' (Absorption, Seniority, Pay and Allowances) Rules, 1957; (ii) that r. 138 of the Bombay Civil Services Classification and Recruitment Rules, 1939 as amended in 1957 allowed recruitment to the Ministerial Staff of the Secretariat by nomination after an examination or by promotion from the Lower Division and it was not open to the Government to adopt any other method. The High Court 's ,,decision was challenged in appeal before this Court. The Court noted that no equivalence had been established between the ,posts in the Secretariats of the States of Saurashtra and Kutch and the posts in the new State of Bombay or later in Gujarat and that there had been no integration of the services by the Central Government. It was conceded before the Court that the State had the authority to transfer, subject to the Constitution and the rules made under article 309, any public servant to render service which by his training and aptitude he was competent to do. HELD : (i) The fact that the expression 'absorption ' had not been used in the impugned order would not justify the inference that there was no intention to absorb the former Saurashtra and Kutch State personnel in the Secretariat. [521 F] In the absence of determination of equivalent posts under the orders of the Central Government, the State of Gujarat was competent, as a matter of provisional arrangement to absorb the former Saurashtra and Kutch States personnel in the ministerial establishment of the Gujarat State Secre tariat. In terms the order said that the persons named therein "should be treated to have been regularly appointed in the posts shown against their names in column 4 of the statement" appended to the order. That clearly amounted to absorption. [521 G H] (ii) The High Court was wrong in holding that the impugned order was bad because it contravened r. 138 of the Recruitment Rules. Assuming that r. 138 requires the State to follow a certain method for recruitment to the ministerial service, that rule made under article 309 of the Constitution cannot take away the statutory right vested in the personnel of the former Saurashtra and Kutch States which they acquired under section 115(7) of the to hold posts in the new State which we re equivalent and on terms which were not, unless previous approval of the Central Government was obtained, disadvantageous. Since the arrangement which was made by the Gujarat Government must be regarded as provisional and to ensure so long as the Central Government did not make a final decision, it was not open to the officers of "the Secretariat to challenge the authority of the Government of Gujarat either to transfer officers from the Districts and to post and assign them duties in the Secretariat or to fix their pay and seniority among the officer of the Secretariat performing ministerial duties. ' [523 G 524 B] N. Raghavendra Rao vs Deputy Commissioner, South Kanara, Mangalore, ; and Union of India & Anr. vs P. K. Roy & Ors. ; , applied.

Appeal No. 63 of 1952. Appeal from the Judgment and Order dated 7th November, 1950, of the High Court of Judicature at Hyderabad (Siddique, Rao and Deshpande JJ.) in Civil Case No. 9 A 5 1 of 1950. M. C. Setalvad, Attorney General for India, and C. K. Daphtary, Solicitor General for India (G. N. Joshi and Ghulam Ahmad Khan, with them) for the appellants. B. Somayya and Akbar Ali Khan (B. V. Subharayudu, with them) for the respondents. December 9. The Judgment of the Court was delivered by MUKHERJEA J. This appeal which has come before us on a certificate granted by the High Court of Hyderabad under article 132 (1) of the Constitution is directed against a judgment of a Full Bench of that Court dated November 7, 1950, passed on a petition under article 226 of , the Constitution. By this judgment the learned Judges of the High Court declared an Act, known as the Waliuddowla Succession Act of 1950, void under article 13(2) of the Constitution to the extent that it affected the 'rights of the present, respondents 1 to 12 who were the petitioners 'in the article 226 proceeding. The object of the impugned Act, which received the assent of H.E.H. the Nizam as Rajpramukh of Hyderabad on April 24, 1950, was to put an end to the disputes that existed at the time regarding succession to the matrooka or personal estate of Nawab Waliuddowla ', 'a wealthy nobleman and a high dignitary of Hyderabad, and what, in substance, the Act provided was to dismiss the claims of succession to the said properties put forward by two of the alleged wives of the late Nawab, named Mahboob Begum and Kadiran Begum, and their children. These two ladies as Well as their 406 children filed a petition before the Hyderabad High Court under article 226 of the Constitution challenging the validity of the Act mentioned aforesaid inter alia on the grounds that it conflicted with the petitioners ' fundamental rights guaranteed under articles 1419(1)(1) and 31(1) of the Constitution and praying for appropriate reliefs by way of declaration and writs of certiorari and prohibition. The claim was resisted by Ameerunnissa Begum, an admitted wife of the late Nawab, and her children, and they are the persons who would primarily be benefited by the provisions of the impugned Act. The High Court ,substantially accepted the contentions of the petitioners and declared the Act to be void so far as it affected them. Against this decision the present appeal has been taken to this court by Ameerunnissa Begum and her children. To appreciate the contentions that have been raised by the parties, a brief resume of the antecedent events leading up to the passing of the disputed legislation would be necessary. Nawab Waliuddowla, who was one of the Paigah noblemen of Hyderabad and was at one time, the President of the Executive Council of the State, died at Medina on February 22, 1935, while on a pilgrimage to Hedjaz. Besides extensive jagir properties appertaining to the Paigah which fetched him an annual income of nearly Rs. 1,36,000 he left behind him matrooka or personal estate of considerable value. As regards the surviving relations of the Nawab, who could claim rights by inheritance to his estate, it is not disputed that Ameerunnissa Begum was one of the legaly wedded wives of the Nawab and that she and the five children which the Nawab had by her are entitled to their legitimate shares in the properties left by the deceased, There is also no dispute that the Nawab went through a legal marriage with a lady named Fatima Begum who is still alive. It appears, however, that she left her husband soon after marriage and did not return to him any time thereafter. During the period, which is material for our present purpose, the 407 only claim which she put forward against the estate of the Nawab was one for recovery of her dower debt &mounting to one lakh of rupees. The whole dispute between the parties to this litigation really centered round the point as to whether the other two ladies, namely Mahoob Begum and Kadiran Begum,who are respectively respondents I and 5 in this appeal, were, the lawfully married wives of the late Nawab or were they merely in his keeping as. kavases or permanent concubines? If there was no legal marriage between them and the Nawab, it is not disputed that their children, though admittedly begotten on them by the Nawab, would not be entitled to any share in the matrooka or personal estate left by the deceased. , This dispute first arose before the Paigah Trust Committee whose duty it was to distribute the income of the Paigah estate amongst the heirs of the late Nawab. In April, 1935, shortly after Ameerunnissa Begum, who had accompanied her husband to Mecca, returned to Hyderabad after the death of the latter, the Committee addressed letters to Ameerunnissa Begum, Fatima Begum and also to Mahboob Begum enquiring about the wives and children left, by the Nawab. No letter, it seems, was sent to Kadiran Bi. On a consideration of the replies given by the several addressees and also of the statements made on their behalf at the hearings before the Committee, the latter submitted a report to the Executive Council of the Nizam. The Paigah Committee proceeded on the footing that the Nawab 's marriage with Ameerunnissa Begum was beyond dispute, but as Mahboob Begum did not produce her marriage certificate even after repeated demands by the Committee, she as well as Kadiran Bi were treated as concubines. The Committee recommended that the annual income of the Paigah should be divided in the proportion of 60 to 40 amongst the legitimate and illegitimate relations of the Nawab 60% of the income was to go to Ameerunnissa Begum and her issues and the remaining 40% was to be paid to Mahboob and Kadiran as well as to 53 408 their children. These recommendations were approved by the Nizam in a Firman dated 9th July, 1936. Previous to this, express intimations were given to the surviving relations of Waliuddowla under orders of the Nizam that whatever disputes might exist among them regarding the matrooka or personal estate of the Nawab, should be decided by proper proceedings in a court of law and pending such decision the estate might be kept ' under the supervision of the Paigah Committee. On the 8th February, 1938, Mahboob Begum and her children filed a suit in the Dar ul Quaza, which was a court established under the law for deciding rights of succession, marriage, divorce etc. of the Muslims in the Hyderabad State, praying for a declaration that Mahboob Begum was the legally married wife of the Nawab and the children were his legitimate children and for other consequential reliefs in the shape of participation in the matrooka and recovery of the dower debt payable to Mahboob Begum. Both Ameerunnissa Begum and Kadiran Bibi as well as their children were among the defendants impleaded in the suit. During the pendency of the suit and before it came on for actual hearing, there was a Firman issued by the Nizara on the 9th February, 1937, on the application of Ameerunnissa Begum, directing the withdrawal of the suit from the Dar ul Quaza court and the appointment of a Special Commission consisting of Nawab Jiwan Yar Jung, the then Chief Justice of Hyderabad and the Judge of Dar ul Quaza before whom the suit was pending, to investigate the matter and submit a report to the Nizam through the Executive Council. Proceedings before the Special Commission commenced on 27th March,1939. Kadiran Bibi filed a plaint before the Commission claiming on behalf of herself and her children the identical reliefs which were claimed by Mahboob Begum and her children, and though this plaint was at first rejected by the Commission it was subsequently entertained under specific orders of the Executive Council. It appears that Fatima Bibi also lodged a plaint in respect of 409 her Mahar against the estate of the Nawab and ,this matter was also directed to be investigated by the Commission. The enquiry before the commission was a long affair in which a large volume of evidence, both oral and documentary, was adduced. The Commission submitted the report on October 16, 1944, and their findings, in substance, were that both Mahboob Begum and Kadiran Begum were legally married wives of Waliuddowla and hence they as well as their children were entitled to have their legitimate shares in the matrooka. Fatima Begum was also held to be a legally wedded wife of the Nawab, and as such entitled to the dower claimed by her. When the report came up for consideration by the Executive Council the Members of the Council were divided in their opinion. A minority was in favour of accepting the findings of the Commission but the majority view was that further expert opinion should be taken in the matter. Eventually on the advice of the Council the Nizam directed by his Firman dated 27th August, 1945, that the report of the Special Commission should be scrutinised by an Advisory Committee consisting of three persons, namely, two Judges of the High Court and the Legal Adviser of the State. This Committee was directed to examine fully the bulky report of the Special Commission and submit their opinion with a view to assist the Executive Council in coming to their decision. They were not to take any fresh evidence or hear any further arguments from the parties. The Advisory Committee submitted their report on 24th November, 1945, and the Committee held differing from the view taken by the Special Commission that neither Mahboob Begum nor Kadiran Begum was the legally wedded wife of Nawab Waliuddowla. Despite this report, the majority of the Executive Council recommended that the findings of the Special Commission should be accepted. The Nizam accepted this recommendation and by his Firman dated 26th June, 1947, directed that the findings of the Special Commission should be implemented at an early date. 410 There was a proposal at the beginning that the members of the Special Commission themselves should be asked to implement their findings, but eventually it was decided by a resolution of the Executive Council dated 22nd September, 1947, that the task of en forcing the recommendations of the Commission should be entrusted to the Chief Justice of the Hyderabad High Court. It appears that in subsequent communications to the Executive Council the Nizam expressed doubt regarding the status of Mahboob Begum and Kadiran Begum and suggested the replacement of the Firman of 26th June, 1947, by now orders in the nature of a compromise. The Executive Council, however, stuck to their decision and on 17th June, 1948, the findings of the Special Commission were transferred to the Chief Justice for executing the same as early as possible. On 2nd July, 1948, another Firman was issued by the Nizam directing that the Chief Justice before making the final distribution of the matrooka should submit his report through the Executive Council to His Exalted Highness for his sanction. This direction was embodied in a resolution of the Executive Council dated 2nd September, 1948. The police action in Hyderabad commenced soon after that and it was on 25th September, 1948, after the police action had terminated and a Military Governor was placed in charge of the Hyderabad State that a formal communication of the resolution mentioned above was made to the Chief Justice. Soon afterwards on the application of Ameerunnissa Begum made to the Military Governor the execution proceedings before the Chief Justice were stayed by an order dated 16th October, 1948. This stay order was again cancelled on 5th November, 1948, and the execution proceedings were allowed to continue. On 5th December, 1948, the Chief Justice submitted his report regarding the distribution of the matrooka to the Executive Council. Strangely, however, by a Firman dated 24th February, 1949, the Nizam purporting to set under the advice of the Military 411 Governor directed that the findings of the three men Advisory Committee, who differed from the views taken by the Special Commission, should be given effect to. In other words, the claims of Mahboob Begum and Kadiran Begum were dismissed and Ameerunissa Begum was directed to pay one lakh of rupees to Fatima, Begum as the dower due to the latter. Protest was lodged against the decision by Mahboob Begum and Kadiran Begum and again a Firman was issued by the Nizam under the advice of the Military Governor on 7th of September, 1949. By this Firman the earlier order of 24th February, 1949, was revoked and the whole case was referred for opinion and report to Sir George Spence, the Legal Adviser to the Military Governor, who was directed to hear the parties and take such further evidence as he considered necessary. The enquiry then began before the Legal Adviser but neither party adduced any evidence. Sir George Spence submitted his report on 7th January, 1950. The material findings and recommendations in his report were as follows: " 76. My finding on the case is that neither Mahboob Begum nor Kadiran Begum was married to the Nawab with the result that these ladies and their children are not entitled to participate in the distribution of the matrooka. 77.If this finding is accepted, the order required for its implementation would be an order dismissing the claims of Mahboob Begum and Kadiran Begum on the matrooka and directing Ameerunnissa Begum to pay one lakh of rupees out of the matrooka to Fatima Begum on account of Haq Mahar. " The Constitution of India came into force on 26th January, 1960. As Hyderabad was integrated with the Indian Union and the Nizam lost the absolute power which he could exercise previously, it was no longer within his competence to issue a Firman on the terms of the report of Sir George Spence and make it legally binding on the parties. Recourse was 412 therefore had to legislation and on April 24, 1950, this impugned Act was passed which purported to give a legislative sanction to the findings in the report of Sir George Spence. The material provision of the Act is contained in section 2, clause (1), which *lays down that " the claims of Mahboob Begum and Kadiran Begum and of their respective children to participate in the distribution of the matrooka of the late Nawab Waliuddowla are hereby dismissed". The second clause of this section provides that a sum of one lakh of rupees shalt be paid to Fatima Begum on account of her Haq Mahar. Under section 3, the decisions affirmed in section 2 cannot be called in question in any court of law and finally section 4 provides that the High Court of Hyderabad shall, on the application of any person interested in the decision affirmed in section 2, execute the said decision as if it were a decree passed by itself and such person was a decree holder. It is this Act which has been pronounced to be invalid by the High Court of Hyderabad to the extent that it dismisses the claims of Mahboob Begum and Kadiran Begum as well as of their children to the personal estate of Nawab Waliuddowla. It may be conceded that before the coming in of the Constitution, the Nizam of Hyderabad practically enjoyed unfettered sovereign authority and however much the various Firmans, which were issued by him in connection with the present dispute, may appear to be capricious and arbitrary, strictly speaking they were not 'unconstitutional in the sense that they were beyond his competence as the supreme legislature in the State. After the Constitution came into force and prior to the setting up of a duly constituted legislature in the Hyderabad State, the legislative authority undoubtedly vested in the Nizam as the Rajpramukh of the State under the provision of article 385 of the Constitution read with article 212 A (2) inserted by the President 's (Removal of Difficulties) Order No. II dated 26th January, 1950; but the legislative power exercisable by the Nizam was a strictly limited power. The Rajpramukh 413 was not only to act in conformity with the provision of article 246 of the Constitution and keep within the bounds of the legislative sphere laid down with reference to the entries in the different legislative lists, but the legislation must not be in conflict with any of the fundamental rights guaranteed under Part&, III of the Constitution. The impugned Act, as its title and preamble show, was passed with the avowed object of terminating the disputes relating to succession to the estate of the late Nawab Waliuddowala. Although in the report of Sir George Spence it was held that Mahboob Begum and Kadiran Begum were not the legally wedded wives of the Nawab and their children were not legitimate, there was no express declaration to that effect in the operative portion of the Act which merely lays down that the claims of these two ladies as well as of their children to participate in the distribution of the matrooka of the late Nawab are dismissed. The legislation may be said to relate to succession and indirectly to marriage also and as such may come within the purview of entry 5, List III of the Seventh Schedule to the Constitution. It has not been argued by Mr. Somayya, who appeared for the respondents, that a legislation on these topics must be a general legislation; but it has not been disputed by either side that no valid legislation could be passed under these heads which is discriminatory in its character and offends against the equal protection clause embodied in article 14 of the Constitution. The contention of the learned Attorney General is that the legislation in the present case does not violate the principles of the equality clause and he has attempted to combat with much force the decision of the High Court on this point. This is the main question in the case which requires to be examined carefully. The nature and scope of the guarantee that is implied in the equal protection clause of the Constitution have been explained and discussed in more than one decision of this court and do not require repetition. It is well settled that a legislature which 414 has to deal with diverse problems arising out of an infinite variety of human relations must, of necessity, have the power of making special laws to attain particular objects ; and for that purpose it must have large powers of selection or classification of persons and ,*things upon which such laws are to operate. Mere differentiation or inequality of treatment does not per so amount to discrimination within the inhibition of the equal protection clause. To attract the operation of the clause it is necessary to show that the selection or differentiation is unreasonable or arbitrary; that it does not rest on any rational basis having regard to the object which the legislature has in view. The learned Attorney General in the course of his argument laid considerable stress upon the decision of this court in Chiranjit Lal vs The Union of India(1) and he attempted to call in his aid the two propositions recognised and relied upon in that decision, namely, (1) that the presumption is always in favour of the constitutionality of an enactment, and (2) a law may be constitutional even though it relates to a single individual, family or corporation. The pro positions themselves may be well founded but whether or not they would apply to a particular case would depend upon the facts and circumstances of that case. In Chiranjit Lal 's case (1), it is to be noted, the circumstances were somewhat exceptional. The legislation in that case related to a company which was engaged in production of a commodity vitally essential to the community, and in judging the reasonableness of the classification in such cases the court has undoubtedly to look to the social, political and economic interest of the community as a whole. In doing so, as Prof Willis observed, the court will assume the existence of any state of facts which can reasonably be conceived of as existing at the time of legislation and capable of sustaining the classification made by it("). In the case before us what the legislature has done is to single out two groups of persons consisting of two (1) ; , (2) Willis on constitutional Law, p. 580, 415 ladies and their respective children out of those who claim to be related to the late Nawab Waliuddowla and prevent them from getting any share in the personal property of the latter to which they might be entitled under the general law of the land. They ' claim to be wives and children of the deceased and, as such entitled to have shares in his personal estate, and no competent court of law has as yet negatived their claims in this respect. On what principle then, it may be asked, was the disability imposed upon these persons alone while the claim of the other claimants was, accepted ? Nay, the legislation goes further than this and denies to these specified individuals a right to enforce their claim in a court of law, in accordance with the personal law that governs the community to which they belong. They, in fact, have been discriminated against from the rest of the community, in respect of a valuable right which the law secures to them all and the question is, on what basis this apparently hostile and discriminatory legislation can be supported. It is not suggested that it was for serving a public purpose or securing some advantage to the community as a whole that the legislature chose in this case to interfere with private rights. The only purpose of the legislation, as appears from the preamble, was to end certain private disputes. It is true that the quarrel between the two rival parties regarding succession to the estate of the deceased Nawab was going on since, 1938; and after several vicissitudes, for which the Nizam himself or his Legal Advisers were prima rily responsible, there was a report prepared by the Legal Adviser to the State in a particular way, which, contrary to the opinion given by an 'earlier ' Special Commission, negatived the claims of these two ladies and their children. It is also true that because of the introduction of the Constitution it was no longer possible for the Nizam to issue a Firman embodying this report. That may be the reason for passing this legislation but it would not furnish any rational basis 54 416 for the discrimination that it made. The continuance of a dispute even for a long period of time between two sets of rival claimants tot he property of a private person is not a circumstance of such unusual nature as would invest a case with special or exceptional features and make it a class by itself justifying its differentiation from all other cases of succession disputes. As appears from the preamble to the Act, the only ground for depriving the two ladies and their children of the benefits of the ordinary law is the fact that there was an adverse report against them made by the State Legal Adviser. This ground is itself arbitrary and unreasonable. The dispute regarding succession to the estate of the Nawab was a legal dispute pure and simple and without, determination of the points in issue by a properly constituted judicial tribunal a legislation based upon the report of a nonjudicial authority and made applicable to specific individuals, who are deprived thereby of valuable rights which are enjoyed by all other persons occupying the same position as themselves, does, in our opinion, plainly come within the constitutional inhibition of Article 14. The analogy of private Acts of the British Parliament, to which reference was made by the learned Attorney General in the course of his arguments, is not at all helpful. The British Parliament enjoys legislative omnipotence and there are no constitutional limitations upon its authority or power. There were indeed a few statutes passed by the Provincial Legislature in India during British days which regulated succession to the estates of certain princely families. The Bijni Succession Act (Act. II of 1931) passed by the 'Assam Legislature is an enactment of this type and it did shut out the rights of certain persons who claimed the Bijni estate under the law of inheritance. But at that time the Governor General of India had express authority under the provisions of the Government of India Act, 1915, to authorize the Provincial Legislatures to make laws regarding subjects of a private nature. Quite apart from this, no 417 question of infraction of the equal protection rule could arise in pre Constitution days. We are not unmindful of the fact that the presumption is in favour of the constitutionality of an enactment ; but when on the ' face of it a piece of legislation is palpably unreasonable and discriminatory and the selection or classification made by it cannot be justified on any conceivable or rational ground, the court has got to invalidate the enactment on the ground of its violating the equal protection clause. The learned Attorney General contended before us that the High Court was wrong in holding that there was a concluded decree in the present case in favour of respondents 1 to 12 on the basis of the recommendations of the Special Commission, and that this decree was a property within the meaning of law of which these respondents have been deprived by the impugned legislation. The point is not free from doubt, and much could be said on both sides. We think, therefore, that it would not be proper on our part to express,any opinion upon it in the present appeal. We understand that the respondents have filed an execution application in the City Civil Court of Hyderabad which has ordered that execution should proceed and that objections have been taken to this application by the present appellants who have raised inter alia the point that there is no final and effective decree which is capable of execution. As the point is still pending hearing by the Civil Court of Hyderabad, we do not desire to influence their decision in any way by expressing any opinion on this matter. We only desire to state that notwithstanding the observations made by the High Court referred to above, the question shall be treated as an open one. The applicability of article 14 of the Constitution in the present case is, however, not at all dependent upon the fact as to whether or not the respondents have already acquired property in the shape of a decree. Their claim to the estate of the late Nawab which they wanted to assert under the general law of the land is itself a valuable right, and 418 the deprivation of that right by a piece of discriminatory legislation would be sufficient to bring the case within the purview of article 14 of the Constitution. Having regard to the view that we have taken, it as unnecessary to consider whether the impugned Legislation violates the provisions of article 31(1) or article 19(1) (f) of the Constitution. The result is that the appeal is dismissed with costs. Appeal dismissed. Agent for respondents Nos. 1 to 12 M. section H. Sastri.

The continuance of a dispute even for a long period of time between two sets of rival claimants to the property of a private person is not a circumstance of such unusual nature as Would invest a case with special or exceptional features and make it a class by itself justifying its differentiation from all other cases of succession disputes, and the fact that a non judicial authority had made a report against one set of the claimants is not a reasonable ground for depriving them by legislation of their ordinary rights under the law and prohibiting them from having resort to courts of law for establishing their rights. A nobleman of Hyderabad died in 1936 when it was under the rule of the Nizam, and disputes as to succession arose between his legally married wife and two ladies, Mahboob Begum and Kadiran Begum, who claimed to be his wives. After protracted proceedings before several non judicial bodies a report adverse to the latter was made in January, 1950, but before the Nizam could issue a firman in accordance with it, Hyderabad became a part of the Indian Union and the Constitution of India came into force. An enactment called the Waliuddowla Succession Act, 1950, was therefore passed by the Hyderabad Legislature which provided that " the claims of Mahboob Begum and Kadiran Begum and of their respective children to participate in the distribution of the matrooka of the late Nawab are hereby dismissed" and that the above decision "cannot be called in question in any court of law Held, that in singling out two groups of persons consisting of two ladies and their children out of those who claimed to be related to the late Nawab and preventing them from establishing their rights under the personal law which governed the community, in Courts of law, the Act was discriminatory ; that there was no rational or reasonable basis for the discrimination, and the Act contravened the provisions of article 14 of the Constitution and was therefore void. The analogy of private Acts of the British 405 Parliament is not helpful as the British Parliament enjoys legislative omnipotence and there are no constitutional limitations on its authority or power.

N: Criminal Appeal No. 602 of 1981. From the judgment and order dated 27th August, 1980 of the Gujarat High Court at Ahmedabad in Cr. Revision Application No. 282 of 1979. N.N. Keshwan and R.N. Keshwani for the Appellant. Vimal Dave and Miss Kailash Mehta for Respondent No. 1. S C. Patel and R.N. Poddar for Respondent No. 2 The Judgment of the Court has delivered by FAZAL ALI, J. This appeal by special leave is directed against a judgment dated August 27, 1980 of the Gujarat High Court accepting the revision application of the Respondent and setting aside the order of the Metropolitan Magistrate, Ahmedabad. The facts of the case lie within a very narrow compass, which may be detailed thus. The respondent who is the wife of the appellant filed an application before the Magistrate under section 125 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the 'Code of 1973 ') for grant of maintenance by the appellant on the ground that her husband appellant was guilty of wilful neglect and was unable to fulfil his primary responsibility of discharging his marital obligations. The parties were married on May 27, 1978 according to Sunni Muslim rites. After the marriage the respondent lived with her husband upto July 1978. The respondent alleged that during this period she found her husband to be physically incapable of carrying on sexual relationship and that her husband frankly told her that he was impotent. The respondent further alleged that she was maltreated and ultimately driven out of the house by her husband on July 11, 1978. On November 17, 1978 the appellant sent a registered notice (Ext. 5) to the respondent informing her that he had no physical disability and was prepared to keep her with him and discharge his marital obligations. On October 28, 1978 the respondent filed an application before the Magistrate for awarding maintenance against the appellant. So far as the facts found are concerned, there is no dispute and the case will have to be decided on the point of law that arises 698 on the contentions raised by the parties before the courts below as also in this Court. Both the High Court and the Metropolitan Magistrate clearly found that the appellant was physically incapable of having sexual relations with the respondent. In other words, the concurrent finding of fact by the courts below is that the appellant was impotent and was, therefore, unable to discharge his marital obligations. The respondent, however, refused to live with her husband on the ground that as he was impotent and unable to discharge his marital obligations, she could not persuade herself to live with him and thus inflict on herself a life of perpetual torture. The Metropolitan Magistrate relying on a decision of the Allahabad High Court in Bundoo vs Smt. Mahrul found that the mere ground that the husband was impotent was not a just cause for the refusal of the wife to live with her husband and accordingly dismissed the application filed by the respondent for maintenance. Thereafter, the matter was taken up in revision before the High Court which differed from the view taken by the Magistrate and held that the husband having been found to be impotent, this should be a just ground for the wife to refuse to live with the husband and hence she was entitled to the grant of maintenance. The High Court after having come to the aforesaid conclusion further held that having regard to the means of the husband he was in a position to pay Rs. 150/ per month by way of maintenance to the respondent. Hence, this appeal by special leave by the appellant husband Mr. Keshwani, learned counsel for the appellant, vehemently contended before us that it is now well settled by a long course of decisions of various High Courts that impotency is no good ground or reason for the wife to refuse to live with her husband and hence the wife is not entitled to maintenance if she refused to live with the husband merely because her husband was impotent. Mr. Keshwani cited a number of decisions in support of his contentions, on the other hand, Mr. Dave, appearing for the respondent, submitted that the various authorities of the High Courts seems to have overlooked the legal effect of the second proviso to sub section (3) of section 125 of the Code of 1973 under which a wife could refuse to live with her husband if there was a just ground for doing so. The said proviso may be extracted thus: "Provided further that if such person offers to maintain his wife on condition of her living with him, and she 699 refused to live with him, such Magistrate may consider any grounds of refusal stated by her, and may make an order under this section notwithstanding such offer, if he is satisfied that there is just ground for so doing. " We are of the opinion that if the husband was impotent and unable to discharge his marital obligations, how could he fulfil the main object of marriage, more particularly, under the Mahomedan law where marriage is a sacrosanct contract and not a purely religious ceremony as in the case of Hindu law. This would certainly be a very just and reasonable ground on the part of the wife for refusing to live with her husband, as also in cases under the Hindu law or other Laws. In Nanak Chand vs Shri Chandra Kishore Agarwala and Ors. this Court held thus: "Section 488 provides a summary remedy and is applicable to all persons belonging to all religions and has no relationship with the personal law of the parties." After having heard counsel for the parties we are clearly of the opinion that the contention of the counsel ' for the respondent is sound and must prevail. It is true that there are several decisions of the High Courts taking a contrary view but they seem to have proceeded on a totally wrong assumption and we are constrained to observe that in taking such a narrow view they have followed a most outmoded and antiquated approach. The learned Magistrate mainly relied on a decision of the Allahabad High Court in Bundoo 's case (supra). It is true that Bakshi, J. in that case seems to have been influenced more by the concept of neglect rather than by the reasonableness of the ground on which the refusal of the wife was based. While dwelling on this aspect of the matter, the learned Judge observed as follows: "Assuming now for the purpose of argument that Bundoo was physically incapable of satisfying the sexual desire of his wife, it cannot be said this inability amounted intentionally to disregarding, slighting, disrespecting or carelessly and heedlessly treating his wife. In this view of the matter, I am of the opinion that the element of neglect as envisaged under Section 488 Cr. P.C., old and under Section 125 Cr. P.C. new, has not been established. " 700 The attention of the learned Judge does not seem to have been drawn to the provisions of second proviso nor has the Judge come to any clear finding that the refusal of the wife could not fall within the ambit of "just ground" as contemplated by the aforesaid proviso. Secondly, the learned Judge mainly relied on an earlier decision of Hidayatullah, J. (as he then was) in Emperor vs Daulat Raibhan and Anr. in which it was held that a wife was not entitled to live apart from her husband and claim maintenance on the ground that her husband was impotent and unable to perform his marital obligations. In fact, a number of decisions of the High Courts which were relied upon by the counsel for the appellant follow the decision of the Nagpur High Court as also the previous decisions of other High Courts replied upon by Hidayatullah, J. in the Nagpur case. We shall consider the legal effect of this decision a little later. So far as the decision of the Allahabad High Court, in which the Magistrate had relied, is concerned, the observations of Bakshi, J. were purely obiter. It would appear that there was a clear finding cf fact by the Magistrate. which had been accepted by the High Court, that the wife failed to prove by convincing evidence that her husband was impotent. In view of this finding of fact, the question of law posed and decided by Bakshi, J. did not fall for decision at all because if the wife failed to prove that her husband was impotent, the question of her refusal to live with him for a just ground did not arise at all. While adverting to this finding of fact, Bakshi, J. in the aforesaid case observed as follows: "I find from the perusal of judgment of the Magistrate that he has taken into consideration the entire evidence on the record led in connection with this question and he was of the opinion that Shrimati Mahrul Nisa failed to prove by convincing evidence that Bundoo was impotent." (Emphasis supplied) In the circumstances, we are not in a position to accept the observations of Bakshi J. which are in the nature of obiter dictum, in support of the argument of Mr. Keshwani. This brings us now to the consideration of the authorities of other High Courts which seem to have taken ' the view that impotency is no ground for grant of maintenance to the wife. We would first deal with the decision of Hidayatullah, J. in Daulat Raibhan 's case 701 (supra). In the first place, the learned Judge thought that the point A raised before him was one of first impression and his decision was, therefore, greatly influenced by the fact that there was no direct decision on the point taking a contrary view. In this connection, the learned Judge observed as follows: "No authority has been cited before me in support of the case of the wife that she is entitled to live separate from her husband on account of his impotence." Subsequently, the learned Judge mainly relied on the following observations made in Arunachala Anandayammal: "I cannot see that section 488, Criminal P.C. has anything to do with ordinary conjugal rights; it deals with maintenance only. " The learned Judge seems to have been under the impression that so far as the provisions of section 488 of the Code of 1898 were concerned they had no bearing on conjugal relations between the husband and the wife. With great respect to the learned Judge we are unable to agree with this process of reasoning. In fact, the fundamental basis of the ground of maintenance under section 488 is conjugal relationship and once conjugal relationship is divorced from the ambit of this special provision, then the very purpose and setting of the statutory provision vanishes. In the matter of the Petition of Din Mohammed, Mahmood, J. very pithily and pointedly observed as follows: "The whole of Chapter XLI, Criminal Procedure Code, so far as it relates to the maintenance of wives, contemplates the existence of the conjugal relations as a condition precedent to an order of maintenance and, on general Principles, it follows that as soon as the conjugal relation ceases, the order of maintenance must also cease to have any enforceable effect." (Emphasis supplied) We find ourselves in complete agreement with the observations made by the eminent Jurist Mahmood, J. which lays down the correct law on the subject. Thus, one of the fundamental premises on which rested the decision of Hidayatullah, J. appears to us to be 702 clearly wrong and directly opposed to the very object of the section (which at the relevant time was section 488). In Arunchala 's case (supra) which was relied upon by Hidayatullah, J., Burn J. Observed thus: "I cannot see that section 488, Criminal P.C. has anything to do with ordinary conjugal rights; it deals with "maintenance" only and I see no reason why maintenance should be supposed to include anything more than appropriate food, clothing and lodging. " It would be seen that here also the learned Judge proceeds on a legally wrong premise, viz., that section 481 had nothing to do with ordinary conjugal rights. Moreover, the Madras decision as also the earlier decision seem to have followed the outmoded and antiquated view that the object of section 488 was to provide an effective and summary remedy to provide for appropriate food, clothing and lodging for a wife. This concept has now become completely out dated and absolutely archaic. After the International Year of Women when all the important countries of the world are trying to give the fair sex their rightful place in society and are working for the complete emancipation of women by breaking the old shackles and bondage in which they were involved, it is difficult to accept a contention that the salutary provisions of the Code are merely meant to provide a wife merely with food, clothing and lodging as if she is only a chattel and has to depend on the sweet will and mercy of the husband. The same line of reasoning was adopted in an earlier decision of the Madras High Court in Jaggavarapu Basawama vs Jaggavarapu Seeta Reddi. Here also, the Judge was of the opinion that food and clothing was sufficient for the maintenance of the wife and even if the husband refused to cohabit that would not provide any cause of action to the wife to claim separate maintenance. In a recent decision in Velayudhan vs Sukmari a Single Judge observed as follows: "Learned magistrate seems to have concentrated solely on the last mentioned ground namely, failure of the husband to perform his marital duties, and has held that it is a sufficient ground entitling the wife to live away from the husband, and claim separate maintenance. But I do not think, in the face of authorities cited before me that this 703 is a sufficient ground justifying the award of separate maintenance to the wife. It was observed by Kumaraswami Sastri, J. in Basawamma vs Seetareddi (AIR 1922 Mad. 209) that there is nothing in the Code which compels the criminal court to award separate maintenance to a wife whom the husband agrees to protect and maintain in a manner suitable to her position in life; refusal to cohabit is no ground. Here also, the Judge while noticing that the ground taken by the wife was that the husband has failed to perform his marital duties, found himself bound by the decisions of the Madras High Court in Jaggavarapu Basawamma 's case (supra). Thus even in this decision though given in 1971 when the entire horizon of the position and status of women had changed, it is rather unfortunate that the Judge chose to stick to the old view. There is however a very formidable circumstance which seems to have been completely overlooked by later decisions while following the previous decisions of the Nagpur or the Madras High Courts. Although the second proviso to sub section (3) of section 125 of the Code of 1973, which was also a proviso to the old section 488, clearly provided that it is incumbent on the Magistrate to consider the grounds of refusal and to make an order of maintenance if he was satisfied that there was just ground for refusing to live with the husband, yet this salutary provision which was introduced with the clear object of arming the wife with a cause of action for refusing to live with the husband as the one which we have in the present case, no legal effect to the legislative will and intent appears to have been given by the aforesaid decisions. Another important event which happened in 1949 also seems to have been completely ignored by the recent decisions while following the previous decisions of the High Courts. It would appear that by the Code of Criminal Procedure (Amendment) Act No. 9 of 1949 an additional provision was added after the proviso which may be extracted thus: "If a husband has contracted marriage with another wife or keeps a mistress it shall be considered to be just ground for his wife 's refusal to live with him. " The object of introducing this provision was clearly to widen the scope and ambit of the term 'just ground ' mentioned in the 704 proviso. This provision is not exhaustive but purely illustrative and self explanatory and takes within its fold not only the two instances mentioned therein but other circumstances also of a like or similar nature which may be regarded by the Magistrate as a just ground by the wife for refusing to live with her husband. Under the Code of 1973, this provision has been incorporated as Explanation to the second proviso to sub section (3) of section 125. The decisions of the High Courts given prior to the Amendment of 1949 would no longer be good law after the introduction of the Amendment which gives, as it were, a completely new complexion to the intendment and colour of the second proviso to section 488 (now Explanation to the second proviso to sub section (3) of section 125) and widens its horizon. It is, therefore, needless to refer to these decisions or to subsequent decisions which have followed the previous cases. A clear perusal of this provision manifestly shows that it was meant to give a clear instance of circumstances which may be treated as a just ground for refusal of the wife to live with her husband. As already indicated, by virtue of this provision, the proviso takes within its sweep all other circumstances similar to the contingencies contemplated in the Amending provision as also other instances of physical, mental or legal cruelty not excluding the impotence of the husband. These, circumstances, therefore, clearly show that the grounds on which the wife refuses to live with her husband should be just and reasonable as contemplated by the proviso. Similarly, where the wife has a reasonable apprehension arising from the conduct of the husband that she is likely to be physically harmed due to persistent demands of dowry from her husband 's parents or relations, such an apprehension also would be manifestly a reasonable justification for the wife 's refusal to live with her husband. Instances of this nature may be multiplied but we have mentioned some of the circumstances to show the real scope and ambit of the proviso and the Amending provision which is, as already indicated, by no means exhaustive. In other words, where a husband contracts a marriage with another woman or keeps a mistress this would be deemed to be a just ground within the meaning of the second proviso so as to make the refusal of the wife to live with her husband fully justified and entitled to maintenance. If this is so, can it be said by any stretch of imagination that where a wife refuses to live with her husband if 705 he is impotent and unable to discharge his marital obligation, this would not be a just ground for refusing to live with her husband when it seems to us that the ground of impotence which had been held by a number of authorities under the civil law to be a good ground not only for restitution of conjugal rights but also for divorce. Indeed, if this could be a ground for divorce or for an action for restitution of conjugal rights, could it be said with any show of force that it would not be a just ground for the wife to refuse to live with her husband. The matter deserves serious attention from the point of view of the wife. Here is a wife who is forced or compelled to live a life of celibacy while staying with her husband who is unable to have sexual relationship with her. Such a life is one of the perpetual torture which is not only mentally or psychologically injurious but even from the medical point of view is detrimental to the health of the woman. Surely, the concept of mental cruelty cannot be different in a civil case and in a criminal case when the attributes of such a cruelty are the same. In Rita Nijhawan vs Balkrshaan Nijhawan (Sachar, J.) while dealing with a case of annulment of marriage under the Hindu Marriage Act on the ground of impotency very poignantly and pithily observed as follows: "Thus the law is well settled that if either of the parties to a marriage being a healthy physical capacity refuses to have sexual intercourse the same would amount to cruelty entitling the other party to a decree. In our opinion it would not make any difference in law whether denial of sexual intercourse is the 'result of sexual weakness of the respondent disabling him from having a sexual union with the appellant, or it is because of any wilful refusal by the respondent. . . Marriage without sex is an anathema. Sex is the foundation of marriage and without a vigorous and harmonious sexual activity it would be impossible for any marriage to continue for long. It cannot be denied that the sexual activity in marriage has an extremely favourable influence on a women 's mind and body. The result being that if she does not get proper sexual satisfaction, it will lead to depression and frustration. " 706 We find ourselves in complete agreement with the very practical and pragmatic view that the learned Judge has taken and the principles adumbrated by the Judge apply fully to proceedings for maintenances because as we have said the concept of cruelty is the same whether it is a criminal case or a civil case. As far back as 1906, the Bombay High Court came out with the concept of cruelty which could be considered for exercising jurisdiction under section 488 of the Code of 1898. In Bhikaji Maneekji vs Maneekji Mancherji a Division Bench of the Bombay High Court observed as follows: "Where it is proved that a husband has not refused or neglected to maintain his wife, a criminal Court, acting under the section, has no jurisdiction to make an order upon the husband for her maintenance on the ground that the husband has been guilty of cruelty to her. But that is a very different thing from holding that no evidence of cruelty can be admitted in a proceeding under the section to prove, not indeed cruelty as a ground for separate maintenance, but the conduct and acts of the husband from which the Court may draw the inference of neglect or refusal to maintain the wife. A neglect or refusal by the husband to maintain his wife may be by words or by conduct. It may be express or implied. If there is evidence of cruelty on the part of the husband towards the wife from which, with other evidence as to surrounding circumstances, the Court can presume neglect or refusal, we do not see why it should be excluded. There is nothing in section 488 to warrant its exclusion, and such has been the practice of the Court. But the section has been altered and now the Court can pass an order for maintenance where neglect or refusal is proved, even if the husband is willing to maintain the wife, provided the Court finds that there are "just grounds" passing such an order. This alteration gives a wider discretion to the Court, which means that in passing such an order it is legitimate for it to take into account the relations between the husband and the wife, and the husband 's conduct towards her." This decision, given as far back as 1907, while construing the proviso appears to be both prophetic and pragmatic in its approach 707 and it is rather unfortunate that subsequent decisions have not noticed this important principle of law decided by the Bombay High Court. We fully endorse this decision as laying down the correct law on the subject and as giving the correct interpretation of the proviso to section 488 particularly the concept of the words 'just ground '. Another decision which had touched the question of 'cruelty ' is the case of Bai Appibai vs Khimji Cooverji where the following observations were made: "If, however, the husband by reason of his misconduct, or cruelty in the sense in which that term is used by the English Matrimonial Courts, or by his refusal to maintain her, or for any other justifying cause, makes it compulsory or necessary for her to live apart from him, he must be deemed to have deserted her, and she will be entitled to separate maintenance and residence. " In Gunni vs Babu Lal Dixit, J. sounded a very pragmatic note on this aspect of the matter and in this connection pointing out the scope of the Amendment of 1949 observed thus: "There is nothing in the Criminal Procedure (Amendment) Act, 1949 to show that it would not be a just ground for the wife 's refusal to live with her husband if the husband has contracted marriage with another wife or taken a mistress before the amendment made in section 488. The amendment is clearly intended to put an end to an unsatisfactory state of law, utterly inconsistent with the progressive ideas of the status and emancipation of women, in which women were subjected to a mental cruelty of living with a husband who had taken a second wife or a mistress on the pain of being deprived to any maintenance if they chose to live separately from such a husband. If my view to hold that the amendment is intended to afford a just ground for the wife 's refusal to live with her husband only in those cases where he has after the amendment, taken a second wife or a mistress is to defeat in a large measure the very object of the amendment. " 708 We find ourselves in complete agreement with the observations made by the learned Judge. In Mst. Biro vs Behari Lal, a decision to which one of us (Fazal Ali, J. as he then was a party, where the importance of the Amendment of 1949 also touched, the following observations were made: "Before the amendment, the fact of the husband 's marrying a second wife or keeping a mistress was not by some High Courts considered a just ground for the first wife 's refusal to live with him, although it was taken into account in considering whether the husband 's offer to maintain his first wife was really 'bona fide ' or not. The amendment is clearly intended to put an end to an unsatisfactory state of law utterly inconsistent with the progressive ideas of the status and emancipation of women, in which women were subjected to a mental cruelty of living with a husband who had taken a second wife or a mistress on the pain of being deprived of any maintenance if they chose to live separately from such a husband." In Sm. Pancho vs Ram Prasad, Roy, J. while dealing with the Hindu Married Women 's Right to Separate Residence and Maintenance Act (19 of 1946) expounded the concept of 'legal cruelty ' and observed thus: "In advancement of a remedial statute, everything is to be done that can be done consistently with a proper construction of it even though it may be necessary to extend enacting words beyond their natural import and effect. . . Conception of legal cruelty undergoes changes according to the changes and advance of social concept and standards of living. With the advancement our social conceptions, this feature has obtained legislative recognition that a second marriage is a sufficient ground for separate residence and separate maintenance. Moreover, to establish legal cruelty, it is not necessary that physical violence should be used. Continuous ill treatment, cessation of marital intercourse, studied neglect, indifference on the part of the 709 husband, and an assertion on the part of the husband that the wife is unchaste are all factors which may undermine the health of a wife. The learned Judge has put his finger on the correct aspect and object of mental cruelty. The fact that this case did not arise out of the proceedings under section 125 makes no difference because we have already observed that the concept of cruelty remains the same whether it is a civil case or a criminal case or a case under any other similar Act. The general principles governing acts constituting cruelty legal or mental ill treatment or indifference cannot vary from case to case though the facts may be different. Similarly, while dealing with a case under the , a Division Bench of the Karnataka High Court in Dr, Srikant Rangacharya Adya vs Smt. Anuradha dwelling on the aspect of impotency and its impact on the wife observed as follows: "In these days it would be an unthinkable proposition to suggest that the wife is not an active participant in the sexual life and therefore, the sexual pleasure to the wife is of no consequence and therefore cannot amount to cruelty. Marriage without sex is an anathema. Sex is the foundation of marriage and without a vigorous and harmonious sexual activity it would be impossible for any marriage to continue for long. It cannot be denied that the sexual activity in marriage has an extremely favourable influence on a woman 's mind and body. The result being that if she does not get proper sexual satisfaction it will lead to depression and frustration. It has been said that the sexual relations when happy and harmonious vivifies woman 's brain, develops her character and trebles her vitality. It must be recognised that nothing is more fatal to marriage than disappointments in sexual intercourse. " We find ourselves in entire agreement with the observations made by the learned Judges of the Karnataka High Court which seems to be the correct position in law. Even the learned Judge who had delivered the judgment in the instant case had very rightly pointed out as follows: 710 "If the maintenance of a wife is supposed to include only food, shelter and clothing having regard to the conjugal rights and if the just cause on which wife can refuse to stay with the husband and yet claim maintenance, can have reference only to the comfort and safe of the wife then it might reduce the wife to the status of a domesticated animal. In the context of the changing status of woman in society such a proposition would seem outdated and obsolete. . In other words, the Courts cannot compel the wife to stay with husband on the ground that the husband though he is forcing her in a situation where her physical and mental well being might be adversely affected, as there is no intention on the part of the husband to inflict that cruelty, she should suffer that predicament without demur and be satisfied with a grab to bite and some rags to clothe her and a roof over her head. " We fully endorse the observations made above. Apart from the various decisions referred to above, there is a direct English decision on the point. In Sheldon vs Sheldon, Lord Denning observed as follows: "I rest my judgment on the ground that he has persistently, without the least excuse, refused her sexual inter course for six years It has broken down her health. I do not think that she was called on to endure it any longer. It has been said that, if abstinence from intercourse causing ill health can be held to be cruelty, so should desertion simpliciter leading to the same result. " Thus, from a conspectus of the various authorities discussed above and the setting, object and interpretation of the second proviso to sub section (3) of section 125 of the Code of 1973, we find ourselves in complete agreement with the view taken by the learned Judge of the High Court. We hold that where it is proved to the satisfaction of the court that a husband is impotent and is unable to discharge his marital obligations, this would amount to both legal and mental cruelty which would undoubtedly be a just ground as contemplated by the aforesaid proviso for the wife 's refusal to live 711 with her husband and the wife would be entitled to maintenance from her husband according to his means. In these circumstances, therefore, it would be pusillanimous to ignore such a valuable safeguard which has been provided by the legislature to a neglected wife. For these reasons, therefore, we find no merit in the appeal which fails and we accordingly dismiss the same without any order as to costs. In view of our decision in this case, it follows that the decisions referred to above in the judgment taking a contrary view must be held to be no longer good law and are hereby overruled. P. B. R. Appeal dismissed.

The respondent was the appellant 's wife. In her petition under section 125(3) Criminal Procedure Code, 1973 for grant of maintenance, the Metropolitan Magistrate, upheld her allegation that the appellant was impotent and was incapable of having sexual relations with his wife. But the Magistrate refused to grant maintenance to her on the ground that the husband 's impotence was not a just cause for her refusal to live with the husband. Holding that impotence of the husband was a just ground for the wife to refuse to live with the husband, the High Court granted her maintenance. In appeal to this Court while the husband contended that impotence was not a good ground for the wife 's refusal to live with him, the wife contended that the second proviso to section 125(3) 1973 Code enabled the wife to refuse to live with the husband if there was a suit ground for doing so and in this case the husband 's impotence was a just ground for such refusal. Dismissing the appeal, ^ HELD: Proved impotence of the husband and his inability to discharge his marital obligations amount to both legal and mental cruelty make it a just ground for the wife to refuse to live with the husband. The wife would be entitled to maintenance from him according to his means. [710G 711A] The second proviso to section 125(3) of the 1973 Code was a proviso to section 488 of the 1898 Code which provides that it is incumbent on the Magistrate to consider the grounds of refusal and to make an order of maintenance, if he is satisfied that there is a just ground for the wife to refuse to live with the husband. Decision of High Courts that section 488 of the 1898 Code had nothing to do with the ordinary conjugal rights were directly opposed. to the very object of the section. [703 D F] Bundoo vs Smt. Mahrul , Emperor vs Daulat Raibhan & Anr., A.I.R. 1948 Nagpur 69, Arunachala vs Anandayammal, A.I.R. 1933 Mad. 668, Jaggavarapu Basawamma vs Japgavarapu Seeta Reddi, A.l.R, & Vedayudhan vs Sukmari overruled. 696 In the Matter of the Petition of Din Muhammad ILR [1883] 5 Allahabad 226 approved. By an amendment made in 1949 the scope and ambit of the term "just ground" had been widened by adding a second proviso to section 488 of the 1898 Code. The object of introducing this provision was to widen the scope and ambit of the term "just ground". This provision is not exhaustive but purely illustrative and self explanatory and takes within its fold not only the two instances mentioned Therein but other circumstances also of a like nature which may be regarded by the Magistrate as a just ground by the wife for refusing to live with her husband. In the present Code this provision has been incorporated as explanation to the second proviso to section 125(3). [703 G 704 B] A perusal of this provision shows that it was meant to give a clear instance of circumstances which may be treated as a just ground for refusal of the wife to live with her husband. By virtue of this provision, the proviso takes within its sweep all other circumstances similar to the contingencies contemplated in the Amending provision as also other instances of physical, mental or legal cruelty not excluding the impotence of the husband. These circumstances clearly show that the grounds on which the wife refuses to live with her husband should be just and reasonable as contemplated by the proviso. Similarly, where the wife has a reasonable apprehension arising from the conduct of the husband that she is likely to be physically harmed due to persistent demands of dowry from her husband 's parents or relations, such an apprehension also would be manifestly a reasonable justification for the wife 's refusal lo live with her husband. [704 D F] Where a husband had contracted a married with another woman or kept a mistress, it was considered to be a just ground for the wife 's refusal to live with the husband Similarly where a wife refuses to live with an impotent husband who is unable to discharge his marital obligations that would be a just ground. Moreover when impotence under the civil law is a good ground for granting divorce or for refusing restitution of conjugal rights there is no reason to hold that it would not be a just ground under section 125. The concept of cruelty remains the same whether it is a civil case or a criminal case or a case under similar Acts. The general principles governing acts constituting cruelty legal or mental ill treatment or indifference cannot vary from case to case, though the facts may be different. [704 H 705 C, 709 C] It is well recognized that sex is the foundation of marriage and without a vigorous and harmonious sexual activity it would be impossible for any marriage to continue for long. Abstinence from intercourse effecting ill health of the wife can be held to be cruelty. [709 E, 710 F] Rita Nijhawan vs Balkishan Nijhawan, AIR 1973 Delhi 200, Bhikaji Maneckji vs Maneckji Mancherji, , Bai Appibai vs Khimji Cooverji, AIR 1936 Bom. 138, Gunni vs Babu Lal, AIR 1952 Madnya Bharat 131, Biro vs Behari Lal, AIR 1958 J & K. 47, Smt. Panchoo vs Ram Prasad, AIR 1956 All. 41 and Dr. Srikant Rangacharya Adya. vs Smt. Anuradha, AIR 1980 Karnataka 8, approved. Sheldon vs Sheldon referred to.

o. 1067 of 1971. Appeal by special leave from the judgment and order dated October 30, 1970 of the: Delhi High Court in F.A.0. (O.S.) No. 40 of 1970. N. A. Palkhivala, D. Mukherjee, R. H. Dhebar and A. J. Rane, for the appellants. V. M. Tarkunde, G. L. Sanghi, B. R. Agarwala and Janendra Lal, for respondent No. 1. A. K. Sen, G. L. Sanghi and B. R. Agarwala, for respondent No. 2. The Judgment of the Court was delivered by P. Jagammohan Reddy, J. This appeal is by special leave. The question for consideration is whether there is a binding, valid and concluded contract between the appellants and the respondents. On an application filed by the respondents under section 20 of the Arbitration Act a single Judge of the Delhi High Court directed the appellants to file the arbitration agreement to refer the disputes between the parties arising under the contract to arbitrators. An appeal against that order to a Division Bench was dismissed. In order to understand the scope of the controversy, a few facts may be stated. On the 21st March 1968, a notice of Global Tender No. 1 of 1968 was issued by the President of India, therein referred to as the Government of India, Ministry of Railways (Railway Board) proposing to sell 80,000 tones of surplus released serviceable and scrap rails, as per details given in the schedule thereto, to established buyers abroad or their accredited agents. It invited offers in respect thereof to be addressed to the President of India and sent to Shri R. No. Mubayi, Director, Railway Stores, Railway Board. With this notice were enclosed the general conditions of tender, special conditions of tender, instructions to tenderers, including proforma for performance guarantee and deed bonds as in clauses 4A and 4B, shipping terms and schedule of stocks available as on 1st March 1968. In the general conditions the seller was defined to mean the President of India acting through the Director, Railway Stores, Railway Board, unless the context otherwise provided. The delivery F.O.B. (Free an Board /F.A.S. (Free Alongside Ship) invoices and freight were dealt with in clause 9. The default clause in clause 11 provided that where a buyer fails to execute the contract the seller was to have power under the hand of the Director, Railway Stores, Railway Board, to declare the contract at an end 439 at the risk and cost of the buyer. The special conditions of tender dealt with prices, quotations, payments, terms of shipment, weighment, basis of sales and handling at ports, force majeure, arbitration, legal jurisdiction, acceptance of offers and title and risk. In the instructions to tenderers, the tenderers were requested to quote their highest offer indicating the price per metric tonne inclusive of export incentive of 5% of F.O.B. value currently applicable as guarantee by the Government of India which will always be to, the sellers benefit for handing over of the rails F.O.B. docks/F.A.S./F.O.B. Indian Port or C.I.F. destination port. The tenderer was required to offer comments clause by clause on the 'general conditions of tender ' and the 'special conditions of tender ' either confirming acceptance of the clauses or indicating deviation therefrom, if any. It was further provided that the contract will come into force from the date the buyers ' letter of credit is accepted by the sellers ' nominee. In 4A of these instructions the proforma deed bond was given which was to be signed by the tenderer and the acceptance was to be signed for and on behalf of the President of India by the person designated for that purpose. Similarly, para 4B. gave the proforma performance guarantee bond to be addressed to the President of India executed by the tenderer and accepted for and on behalf of the President of India by the ,person so designated. The terms and conditions also set out the shipping terms in detail, though a few of them were also mentioned in the special conditions under the headings Shipment, Terms of Shipping and Receiving Notice. It appears that the terms and conditions enclosed with the tender notice annexed to the petition filed in court were not full and complete. Consequently the appellant has annexed a true copy of the enclosures with the special leave petition and prayed that this may be admitted in evidence. As there was no dispute in respect of the contents thereof, we have allowed this prayer because without them it is not possible to arrive at a just conclusion. Pursuant to this tender notice, the respondents, by their letter, exhibit 'B ', dated 21 5 1968, offered to buy 80,000 tonnes of rails at $45.1 per tonne F.O.B. Indian Ports on the term and conditions set out therein. In reply thereto, by a letter dated 25 5 1968, the Dy. Director, Railway Stores, Railway Board, P.C. Oak in para 1 (6) categorically. stated by reference to para 14 of the conditions of the letter of the respondents that as shipping terms have finan cial implications they were requested to indicate with reference to the tender which particular clauses they desire to re negotiate and settle. In para 2 it was stated that the offer of the respondents was not addressed to the President of India as required under clause 1(3) of the Instructions to the Tenderers and, therefore, the Respondents were required to confirm that their offer was deemed to 'nave been addressed to the President of India and ' is 440 open for acceptance on behalf of the President, it was further stated in para 4 that they should send the reply addressed to the President of India through the Director of Railway Stores, Railway Board covering all the points indicated therein, to reach them not later than 28 5 1968. No reply was, however, received by the time indicated in the letter of the appellants and while so stating another letter was addressed to the Respondents on 3 6 68 by C. Parasuraman for Secretary, Railway Board, seeking further clarification in respect of items Nos. 26 and 27 of the offer contained in the aforesaid letter of the Respondents dated 21 5 1968. There were also two other clarifications in respect of the weight of the tonne for which $45.1 was quoted and the option to transfer the contract in the name of the foreign principles which it was stated, could not be agreed to straightaway unless and until they knew the names of the foreign principles and their willingness to enter into a legal binding guarantee of all the terms and conditions of the contract. The Respondents wrote subsequently to the Director, Railway Stores on the 15th June, 29th June, 8th July and the three letters on 10th July and one on the 15th July 1968, some of which were written after a discussion with the Director of Railway Stores in the presence of the Director of Finance, Mr. Datta. On the same day as the letter of 15th July was sent by the Respondents, P. C. Oak signing for the Secretary of the Railway Board, addressed the following letter of acceptance, No. 68/RS(G)/709/10 to the Respondents "Subject: Tender No. 1 of 1968 for Export sale of used re rollable and repayable steel rails. Reference: Your letter Nos. Nil dated 21 5 68, 15 6 68, 29 6 68, 8 7 68, 10 7 68 and 15 7 68. Kindly be advised that your offer (at $39 per long ton F.O.B. Indian Port for export and Rs. 458/ per long ton for indigenous consumption) with terms and conditions referred to in your above letters is hereby accepted. Formal contract will be issued shortly. Kindly acknowledge receipt. Yours faithfully, Sd./ P. C. Oak. for Secretary, Railway Board". Thereafter, it is alleged that several draft agreements were. exchanged regarding which there is a dispute but ultimately be, fore us it is not contested that a draft agreement, which the appellants say is the 5th draft, but according to the Respondents is 441 the final draft, was handed over to the Respondents by P. C. Oak on 27 8 68 but this, however, was not signed. Clause 2 of this draft agreement states. that the contract has been concluded by the issue of seller 's letter No. 68/RS(G)/709/10 dated 15 7 68 to the buyers; that the term of the contract shall be three years from 1 11 1968 to 31 10 1971; that the buyers reserve the right to act upon the contract any time before 1 1 1 68 and start inspection and take delivery of the goods but this will not in any manner effect the terms of the contract. Even thereafter there was further correspondence between the parties. By letter dated 18 9 68 the Respondents wrote to the Director, Railway Stores, agreeing to several other matters to be included in the final draft and requested him to issue the 'final. contract ' without delay. On the 21st September 1968 the Respondents again wrote to the Director, Railway Stores, complaining that the information provided by the various Railways was not complete and requested him to contact the various Railways and obtain the required information as soon a , possible. After the receipt of this letter the Joint Director, Railway Stores (G), wrote to the general Manager (S), All Indian Railways with a copy to the respondents calling for the required information. In that letter the Joint Director stated thus : ". the Board have finalized an export cum internal sale contract with M/s. N. K. (p) Ltd., New Delhi for a period of 3 years, entitling them to export stock of such surplus rails available with the Railways. The de tailed terms and conditions of the contract will be apprised to you when finalized". On the 23rd October 1968, C. Parasuraman, for Secretary. , Railway Board, replied to the letter of the Respondents of the 21st September 1968, stating that it was not correct that their officehas assured them that it would arrange to get the missing details from the concerned C.O.Ss. After this letter two other letters were written by the Respondents to the Director, Railway Stores, dated 7th and 23rd November 1968. In the first letter it was stated thus "In pursuance of your invitation we submitted our tender for purchase of used relayable and re rollable steel rails on 21 5 68. After some negotiations the terms of the contract were finalized and the Secretary, Railway Board by his letter No. 68/RS(G)70910 dated 15 7 68,. accepted our offer and concluded the contract. We were informed that the formal contract will be issued shortly. A draft of the formal contract was handed over to us on 27 8 68. In our letter of 18 9 68, some agreed terms were set out which had to be incorporated in the formal contract. Since the acceptance of our 442 offer we have made all arrangement for the sale of the material We beg to inform you that out of the total quantity of 88,936 tonnes of Rails already offered to us for our approval we approve and shall take delivery of 53,807 Tonnes as per list enclosed herewith. The above quantity may kindly be reserved for us and arrangement be made for their delivery in terms of the contract. " In the second letter, the respondents complained that though the contract for sale of used rerollable and relayable steel rails was concluded on 15 7 68 they regretted that they had not received the formal contract so far and requested that it should be sent without any further delay. In the last paragraph of that letter, the Respondents complained that they came to know that some of the Railways who were. holding storks are selling the steel rails which they have no right to do and requested them to stop such sales. To this, P. C. Oak for Secretary, Railway Board, replied "Kindly refer to correspondence resting with your letters dated July 26, 1968, 18th September 1968 and No. RB/Rails/68/1/114, dated 2nd December 1968. Your contention contained in your letter No. RB/Rails/ 68/1 dated 23 11 68 that the Railway Board is not authorized to sell rails ' to other parties because of their having concluded a contract with you is factually incorrect. No doubt, letter No. 68/RS(G)/709/10 dated 15 7 68 indicated an intention to enter into a con tract with you, but subsequent to this, discussions had been held with you over a number of sittings on 20 7 68, 12 8 68, 26 8 68, 27 8 67 culminating in your letter dated 18 9 68. This would amply indicate that no agreement had been reached on vital terms and conditions, and the question of the existence of a concluded contract does not arise '. . " The Respondents replied to this letter by their letter dated 25 1 1969 expressing surprise and contesting the stand taken by the Railway Board. In the petition of the Respondents filed in Court after setting out the relevant correspondence leading upto the letter of acceptance of P. C. Oak dated 15th July 1968, 'it was stated that that letter was a definite acceptance of the offer and constitutes a binding and valid contract between the parties. With respect to the draft agreement of the 27th August 1968 handed over to the Respondents embodying the agreement between the parties, the averment was that the then Acting Director of Railway Stores desired certain additional terms to be embodied in the terms that were agreed to. The additional terms were agreed to by the plaintiffs (Respondents) by their letter to the 443 Director, Railway Stores, dated 18 9 1968. In para 16 it was further alleged that after the letter of acceptance by the appellants the then Acting Director of Railway Stores and the Director of Finance proposed to the plaintiffs that the price offered by them should be increased or in the alternative certain alterations be made in the agreed terms, but the plaintiffs having justly refused to do so, the 2nd defendant (C. Parasuraman) falsely wrote to the plaintiffs on 15 1 1969 that no concluded contract had taken place and that the Railway Board was, therefore, not precluded from selling rails to other parties. The appellants in their written statement, raised a prelimi nary objection, namely, that the petition was misconceived as there was no arbitration agreement between the parties and so the question of enforcing the arbitration clause in the alleged contract did not arise. It also reiterated its stand earlier taken that the letter dated 15 7 68 written by Oak on behalf of the Secretary, Railway Board, was not a letter of acceptance of the offer of the Respondents so as to amount to a concluded contract binding on the Union of India nor could it be construed as such in view of the mandatory provisions of Article 299 of the Constitution of India. The contention was that unless and until a formal instrument of contract was executed in the manner required by Article 299 of the Constitution and by the relevant notifications, there would not be a contract binding on the Union of India and at any rate no such agreement was entered into as it was. alleged that though interviews had taken place at various times between the plaintiffs and the several officers of the Railway Board, no agreement had been reached on vital terms and conditions. Two submissions were urged on behalf of the appellants, namely : (1) that apart from the contention relating to article 299 of the Constitution, there was no concluded contract between the parties, because (a) the essential terms were not agreed to between them on the date when the acceptance letter was issued by P. C. Oak on 15 7 68, and (b) even it there was an acceptance as alleged, that acceptance was conditional upon a formal contract being executed by the appellants; (2) that the three mandatory requirements of article 299 of the Constitution for a valid and binding contract made in exercise of the executive power of the Union have not been complied with namely, (a) that the contract was not expressed to be in the name of the President, nor (b) was 444 it executed on behalf of the President, or (c) by a person authorized to execute it on his behalf. The crucial question which arises for determination is whether there was a concluded contract, and if there was one, whether the mandatory requirements of Article 299 of the Constitution for entering into a valid and binding contract have been satisfied? It is now settled by this Court that though the words 'expressed ' and 'executed ' in Article 299(1) might suggest that it should be by a deed or by a formal written contract, a binding contract by tender and acceptance can also come into existence if the accept ance is by a person duly authorized on this behalf by the President of India. A contract whether by a formal deed or otherwise by persons not authorized by the President cannot be binding and is absolutely void. We do not for the present consider it necessary to go into the question whether and to what extent the requirements of article 299 have been complied with in this case. What we have to first ascertain is whether apart from the contention relating to Article 299, a concluded contract has come into existence as alleged by the Respondents. Before us detailed arguments were addressed on behalf of the appellants to show that notwithstanding the letter of acceptance of 15th July 1968, no concluded contract had in fact come into existence and though that letter accepted certain terms, there were other essential terms of the contract which had to be agreed to and were the subject matter of further negotiations between the parties; that it was the intention of the parties that all those terms were to be embodied in a formal contract to be executed which contract alone was to be binding between the parties; and that in any case the letter of acceptance and the subsequent letters were not by the Director of Railway Stores but by the Secretary to the Railway Board who was not a person authorized to enter into the agreement between the President of India represented by the Ministry of Railways and the Respondents. On the other hand, the stand taken by the Respondents was that all the essential terms of the contract were agreed to and the contract was concluded on 15th July 1968, though at the ins tance of the Director, Railway Stores further terms with respect to the execution of the contract were the subject matter of negotiations between the parties and in any case these did not pertain to the essential terms and could not on that account detract from the binding nature of a concluded contract. It was also contended that the letter of acceptance by P. C. Oak though signed on behalf of the Secretary, Railway Board was in fact on behalf of the said Board which was authorized to enter into such a contract. It is in our view unnecessary to consider the several contentions as to whether all the essential terms of the contract had been agreed to or that the contract was concluded by the acceptance 445 letter of 15th July 1968 or whether the parties intended it to be a term of the contract that a formal contract should be entered into between them in order to bind the parties. In this case, we are of the view that the Secretary to the Railway Board, on whose behalf the offer of the Respondents was accepted, was not the person authorized to enter into a contract on behalf of the President of India. As can be seen from the various documents already extracted that the tender notice invited offers to be addressed to the President of India through the Director of Railway Stores, Railway Board. Under the general conditions the seller was defined to mean the President of India acting through the Director, Railway Stores and in the default clause it was provided that where the buyer fails to execute the contract, the seller shall have power under the hand of the Director, Railway Stores, Railway Board, to declare the contract at an end. In the letter written by Oak on 25 5 68, as earlier noticed, it was pointed out to the Respondents that their offer was not addressed to the President of India as required under clause 1(3) of the Instructions to the Tenderers and, therefore, the Respondents were required to confirm that their offer can be deemed to have been addressed to the President and is open for acceptance on behalf of the President and their reply should be addressed to the President of India, through the Director of Railway Stores, Railway Board. Even the draft contract dated 27 8 68 in terms of which the Respondents were insisting on a final contract to be issued to them by the appellants was to be executed by the Respondents as buyers on ,the one part and the President of India acting through the Director, Railway Stores, Ministry of Railways (Railway Board) as the sellers, on the other. There is little doubt that the only person authorized to enter into the contract on behalf of the President is the Director, Railway Stores. It is true that the notification of the Ministry of Law issued in exercise of the powers under clause 1 of Article 299 of the Constitution shows that the President directed the 'authorities named therein to execute on his behalf the contracts and assurances of property specified therein. But notwithstanding this, the President is fully empowered to direct the execution of any specified contract or class of contracts on ad hoc basis by authorities other than those specified in the said notification. This Court had in Seth Bikhraj Jaipuria vs Union of India, (1) earlier held that the authority to execute contracts may be conferred on a person not only by rules expressly framed and by formal notifications issued in this behalf but may also be specifically conferred. In this case the letter of ac ceptance dated 15 7 1968 was on behalf of the Secretary, Railway Board, who is not authorized to enter into a contract on behalf of the President. (1) ; 446 It is contended that clause 43 of part XVIII and Part XII empower the Secretary, Railway Board to enter into such con tracts. Clause 43 of Part XVIII provides that all deeds and instruments other than those specified in that part may be executed by the Secretary or the Joint Secretary or the Deputy Secretary or the Under, Secretary in the Railway Board or a Director, Joint Director, Deputy Director or Assistant Director in the Railway Board. It is submitted that as nothing has been specified in Part XVIII relating to the contract of the type we are considering, the Secretary, Railway Board is authorized to enter into a contract on behalf of the President. This submission is untenable because clause 9 specifically provides for the contracts connected with the sale of scrap, ashes, coal, dust, empty containers and stores. The tender, it will be observed, is for rails which are scrap as well as rerollable and relayable but it is urged that relayable rails are not stores nor can they be considered as scrap and as these are not covered by clause 9, the Secretary, Railway Board is fully empowered by the President to enter into a contract on his behalf. We cannot accept this argument because in our view relayable rails are part of the stores. It may be that some of these rails which are part of the stores may be considered to be in a condition which the authorities concerned think should be disposed of. The contracts relating to the goods of the nature specified in the tender notice are, therefore, dealt with by clause 9, as such clause 43 will have no application. Part XLI empowers the Secretaries to the Central Government in the appropriate Ministries or Departments to execute any contract or assurances of property relating to any matter whatsoever and is in these terms : "Notwithstanding anything hereinbefore contained any contract or assurance of property relating to any matter whatsoever may be executed by the Secretary or the Special Secretary or the Additional Secretary or a Joint Secretary or a Director or where there is no Additional Secretary or a Joint Secretary or a Director, a Deputy Secretary to the Central Government in the appropriate Ministry or Department and in the case of. " The contention on behalf of the Respondents is that since Railway Board is a Department of the Government, the Secretary to the Department is authorized to enter into a contract under the above provision. This submission in our view, is equally misconceived because reading the above requirement carefully it will appear that the persons there mentioned should be Secretary. Special Secretary etc., to the Central Government in the appropriate Ministry or Department and not that the Secretary to any Department or office of the Government of India is empowered thereunder. It is however contended that the Secretary to the 447 Railway Board is a Joint Secretary to the Government of India and as such under the above Provision the acceptance letter should be considered to have been executed on behalf of the president Even this submission lacks validity because as pointed out on behalf of the appellant, at the relevant time the Secretary to the Railway Board did not have any status as Secretary to the Central Government. The status of a Joint Secretary was only conferred on him by a notification by the Government of India in the Ministry of Railways for the first time on 15 9 1969 with effect from that date. An affidavit of the Deputy Secretary to the Railway Board (Ministry of Railways) has been filed before us setting out the above fact and enclosing the said notification. Then again it was urged that the members of the Railway Board were Secretaries to the Central Government and hence the Board on whose behalf the Secretary communicated the acceptance could enter into a binding contract. This submission also is without force because there is no material before us to conclude that the Board was so authorized. In these circumstances, even if the correspondence shows that the formalities necessary for a concluded contract have been satisfied and the parties were ad item by the time the letter of acceptance of the 15th July 1968 was written, about which we do not wish to express any opinion, there is no valid or binding contact because the letter of acceptance, on the evidence before us, is not by a person authorized to execute the contracts for and on behalf of the President of India. On the evening before the day the judgment in the case was due to be delivered, an application dated 7 2 72 was filed enclosing an affidavit of R. N. Mubayi who was Director, Railway Stores, between 18 12 1965 to 30 9 1969 as also an affidavit of R. B. Lal, Managing Director of the Respondent No. 1 to take them in evidence and consider the facts stated therein before judgment is delivered, and if necessary, to call for the file and give a re hearing. The affidavit of Mubayi states that only after he recorded on the relevant file and issued instructions to his Deputy Director, Shri P. C. Oak to convey the acceptance of the offer of M/s. N. K. Private Limited, that the acceptance was conveyed by Shri P. C. Oak to the said company. The affidavit of R. B. Lal says that though the affidavit filed by P. Lal, Deputy Secretary, Railway Board stating that the Secretary, Railway Board, did not have the status of Secretary, Special Secretary, Additional Secretary, Joint Secretary or Deputy Secretary to the Government of India in the Ministry of Railway, he has not denied that the Secretary did not have the status of a Director. It is further submitted in that affidavit that the Secretary of the Board had the status of a Director at the relevant time and as mentioned in Part XLI of the Notification of the Ministry of Law, 'a Director ' is authorized to accept offers. 448 Apart from the question whether we should admit additional evidence at this stage in this case and though we had rejected an earlier submission to call for the files, having regard to the facts stated by R. N. Mubayi, Director of Railway Stores during the relevant period that it was he who had asked P.C. Oak to accept the offer and had so endorsed it on the file, as also the affidavit of R. B. Lal that the Secretary to the Board was the Director of Railway Stores, we withheld the judgment and called for the file to satisfy ourselves. The file has been submitted to us by the appellants along with an affidavit of R. Srinivasan, Joint Director, Railway Board in which it is categorically averred that at the relevant time, namely, 15 7 68, the Secretary Railway Board did not have the status of the Director under Para XLI of the Notification of the Ministry of Law or at all. A perusal of the relevant file relating to the letter of acceptance would show that on 15 7 68, Shri Oak made the following endorsement: "Reference to Board 's orders at page 38/N, draft letter accepting M/s. N.K. (P) Ltd., offer is being issued today. D.R.S. may kindly see before issue", and this endorsement was merely signed by R.N. Mubayi. We are not here referring to the other proceedings on the file as to whether the execution of a formal contract was a condition precedent and as one of the terms of the contract but even the above endorsement does not show that the letter of acceptance of 15 7 68 was issued on the orders and directions of Mubayi as alleged by him in the affidavit. What it in fact shows is that it is the Board that issued the orders of acceptance and that the acceptance letter was only to be seen by him. Even the draft letter issued does not contain his initials or his signature in token of his having seen or approved it. The letter of acceptance not having been issued on the orders of the Director, Railway Stores, there was no concluded contract as on that date, by a person authorized to enter into a contract. There is also nothing to show that the Secretary to the Board was the Director, Railway Board as further alleged in the affidavit of R. B. Lal. In this view the appeal is allowed and the application under section 20 of the Arbitration Act is dismissed but there will be no order as to costs of the appellants. On the other hand, we direct the appellants to pay the costs of the Respondents because special leave was granted on condition that the petitioner will pay the costs of the Respondents in this appeal in any event. S.C. Appeal allowed.

A global tender to sell surplus serviceable and scrap rails was issued to established buyers by the Government of India and pursuant to this tender notice, the respondents by their letter dated 21 5 68 offered to buy the rails at a particular price and Shri P. C. Oak, Deputy Director, Railway Stores, Railway Board, on behalf of the Secretary, Railway Board,, accepted the respondents ' offer with the terms and conditions mentioned in the letters sent by the respondent on 15 7 68. Negotiations for the final contract, however, took place between the parties and on 15 7 68, the respondents complained that some of the Railways who were holding stocks are selling the steel rails which they have no right to sell in view of the concluded contract; but Shri P. C. Oak for Secretary, Railway Board, replied that subsequent to 15 7 68, there were negotiations for the vital terms and conditions of the contract and so the question of the existence of a concluded contract did not arise. At this, the respondents filed a petition in Court under section 20 of the Arbitration Act, after setting out the relevant correspondence leading upto the letter of acceptance of 15th July 1968 and it was stated that, the letter was a definite acceptance of the offer and constitute a valid and binding contract between the parties. In the written statement, the appellants raised a preliminary objection that the petition was misconceived as there was no arbitration agreement between the parties and so the question of enforcing the arbitration clause in the alleged contract did not arise. Further, it was contended by the appellants that the letter of acceptance and the subsequent letters were not by the Director of Railway Stores, but by the Secretary to the Railway Board, who was not a person authorized to enter into the agreement between the President of India represented by the Ministry of Rail ways and the respondents as required under article 299 of the Constitution. Allowing the appeal. BELD : The Secretary to the Railway Board, on whose behalf the offer of the respondents was accepted, was not the person authorized to enter into a contract on behalf of the President of India, as required under article 299, and therefore, the contract, if any, was not binding on the appellants. Further, it was not correct to say that Clause 43 of Part XVIII and Part XLI empowered the Secretary, Railway Board to enter into such contracts; because Clause 9 specifically provided for the contracts connected with the sale of scrap; ashes coal, dust, empty containers and stores; and repayable rails, being part of the stores, it was covered by Clause 9 and the Secretary, Railway Board, was not empowered by the President to enter into a contract on his behalf. [445 B] Seth Bikhraj Jaipuria vs Union of India, [1962] 2 S.C.R. 880, referred to. 438

iminal Appeal No. 314315 of 1976. Appeals by special leave from the Judgment and order dated 4 1975 of the Bombay High Court in Criminal Revision Appln. No. 1115/73. M.C. Bhandare, (Mrs.) Sunanda Bhandare, M.S. Narasimhan, 7 3 . K. Mathur and A.K. Sharma, for the Appellants. M.N. Phadke and M.N. Shroff, for the Respondents. The Judgment of the Court was delivered by KRISHNA IYER, J. Judicial fluctuations in sentencing and societal seriousness in punishing have combined to persuade Parliament to prescribe inflexible, judge proof, sentencing minima in the Food Adulteration law. This depri vatory punitive strategy sometimes inflicts harsher than deserved compulsory imprisonment on lighter offenders, the situation being beyond judicial discretion even if prosecu tion and accused consent to an ameliorative course. The two appeals, by special leave, partially illustrate this proposition. Khurasani oil is an edible oil extracted by crushing oil seeds in mills. Groundnut oil, also edible, is expressed likewise. A firm by name almukand Hiralal Loya & Co., in a minor town in Maharashtra, ms an oil mill where Khurasani oil and groundnut oil are manufactured by the firm. Sometimes they crush oil seeds for others on ire who pay milling charges. The appellants in Criminal Appeal No. 314 are the manag ing partner and the manager of the mill and the appellant in Criminal appeal No. 315 is the operator of the expeller in the mill who actual sold the offending commodity. On Febru ary 16, 1972 the Food inspector of Bhagur Municipality walked into the sales section of the Mill, asked for 375 grams of khurasani oil from accused No. 8, appellant in Criminal Appeal No. 315. The quantity required was applied and, thereafter, the Food Inspector went through the statu tory exercises preparatory to an analysis by the Public Ana lyst. After receiving the report of the Analyst to the effect that the sample of hurasani oil sent for analysis contained 30% of groundnut oil which amounted to a contra vention of rule 44(e) of the Prevention of Food Adultera tion Rules (for short, the rules), a complaint was lodged for selling adulterated food within the meaning of section 2(i) of he Prevention of Food Adulteration Act (hereinafter called the Act) read with sections 7(1) and 16 (1)(a) and r.44(e). Evidence was led to make out a prima facie case. The accused were questioned under section 342 Cr. P.C., and the appellants confidently pleaded guilty to the charge where upon the trial Magistrate, perhaps agreeably to expecta tions, sentenced them each to a piffling fine of 3 Rs. 250. Although the whole process in court is strongly suggestive of a tripartite consensual arrangement and re minds one of pie, bargaining procedures in the United States of America, the State Government appears to have taken a 7 3 trate 's adroit avoidance of the penal provisions which obligate him to inflict a minimum prison sentence, viz., section 2(i)(a) and section 16(1) with a view to apply the proviso to section 16(1). This is, at best, a conjecture about the Magistrate and might as well be imputed to the prosecutor and the food inspector. However, the State filed a revision to the High Court against the illegal and ultra lenient impost. The revisional Judge converted the offence into one under section 2(i)(a) read with section 16(1 and enhanced the sentence to the minimum of six months an Rs. 1,000 by way of fine on the ground that the offence committee by the accused squarely fell within section 16(1)(a) and did not face within the proviso of that provision which vests a guarded discretion in the Court to soften the sentence to special cases. The appel lants, shocked by this drastic reversal of fortune at the High Court 's hand: have sought restoration of the Magis trate 's conviction and sentence If this aggravated convic tion is correct, the enhanced punishment is inescapable. The circumstances leading up to and constituting the offence hay 'been briefly set out already and the divergence between the trial court and the High Court turns on the legal inferance to be drawn from the factual matrix. Has there been adulteration of food, in the sens imputed to that expression by section 2(i)(a)? Assuming it fails under section 2(i) (1) of the definition, does that factor exclude it from section 2(i) (a) Even if section 2(i)(a) does apply, is the benigrant proviso to section 16(1 attracted on the score that the crime in this case constitutes a violation of r. 44(e) prescribing minimum standards? These questions agricultural to the submission made by Shri Bhandare for the appellants. his argument being that the scheme of s.2 is to erect separate corn apartments for the many types of adulteration so that if a food article is adulterated within the meaning of s.2(i)(1) more appropriately it falls outside the ambit of s.2(i)(a). Otherwise, he argues, there is no point in itemising the various sub divisions even though he con cedes that marginally there may be overlapping among the sub clauses He further contends that even assuming that s.2(i)(a) is all corn prehensive, it must be read as the genus and thereafter sub clause (b) to (1) fall under two. broad categories, viz., adulteration where injurious sub stances have been admixed and adulteration where innocent additions have been made or the substances sold merely violate a standard or degree of purity prescribed. If there were force in this submission, the culpa, according to counsel, could reasonably 'fall under the non injurious type of adulteration covered by s.2(i)(1) The statute, says Shri Bhandare, sensibly dichotomises the senreno. and invests a discretion in the court in the second category to reduce the sentence below the minimum stipulated, if special reasons exist for such clemency. Of course, counsel concedes that if the adulteration is of the injurious brand, judicial sympathy is statutorily supplanted 73 4 this, he reasons, fits into and explains the scheme of s.16 which is a penal provision with dual limbs. We wilt examine the validity of this interpretative dissection. Indeed, if this somewhat strained argument fails,. everything fails because, otherwise, the appellants have glibly convicted themselves, but of their own mouth, by an unusually obliging 'yes ' to every material question under s.342 Cr. P. Code. Thus, on the merits, the sole question is about the proper offence made out on the facts admitted. This, in turn, depends on the acceptability of the interpre tative dexterity displayed by counsel for the appellants. It is trite that the social mission of Food Laws should inform the interpretative process so that the legal blow may fail .on every adulterator. Any narrow and pedantic, liter al and lexical construction likely to leave loopholes for this dangerous criminal tribe to sneak out of the meshes of the law should be discouraged. For the new criminal juris prudence must depart from the old canons, which make indul gent presumptions and favoured constructions benefiting accused persons and defeating criminal statutes Calculated to protect the public health and the nation 's wealth. This humanist approach and cute construction persuades us to reject Shri Bhandare 's analysis of s.2(1). Sub clause (a) of s.2(i) has a wide sweep and loyalty to the intendment of the statute forbids truncating its ambit. There cannot be any doubt that if the article asked for is 100% khurasani oil and the article sold is 70% khurasani oil and 30% groundnut oil, the supply 'is not of the nature, substance or quality which it purports or is represented to be ' The suggestion that there is no format evidence of representa tion or prejudice as stated in the section does not merit consideration being a quibble over a trifle. If we read s.2(i)(a) spaciously and if the facts alleged are accommodated by the definition of 'adulteration ' under that sub clause,. section 16 ( 1 ) is attracted. The first proviso to section 16 ( 1 ) will be attracted if and only if s.2(i)(1) applies. In the present case the facts disclose that the offence is both under s.2(i)(a) and under section 7(v) for breach of r.44(e). Section 2(i)(1) is repelled on the facts and it is obvious that this is not a case where either s.2(i)(1) or r. A 17.12 urged by Shri Bhandare applies. In this view it is not possible to invoke the amelioratory proviso to s.16(1) and the High Court is legally right in its conversion of the provision for conviction and enhance ment of the sentence. We unhesitatingly hold that if s.2(i)(a) adequately fits in, adulteration under that provision must be found. 73 Once this position is made plain, the penalty that the appellants must suffer is fool proof. Section 16 lays down the penalties and classifies them. We are particularly concerned with s,16(1) of the Act which itself clubs togeth er many categories out of which we have to pick out only two for the purposes of this case, viz., (i) sale of any article of food which is adulterated; and (ii) sale of any article of 5 food other than one which is adulterated 'in contravention of any of the provisions of this Act or of any rule made thereunder '. Ordinarily, both these clauses. of offences are punishable with the minimum prescribed 'of not less ,than six months ' imprisonment, together with fine which shall not be less than Rs. 1,000/ '. However, there is a kindly proviso which confers on the court a power to be exercised for any adequate and special reasons to be men tioned in the judgment whereby a sentence of imprisonment for a lesser term than six months or of fine smaller than Rs. 1,000/ or of both may be imposed, but this more moder ate punitive net is conditioned by the proviso itself. We may read the proviso: "Provided that (i) if the offence is under sub clause (i) of clause (a) and is with respect to an article of food which is adulterated under sub clause (1) of clause (i) of sec. 2 or misbranded under sub clause (k) of clause (ix) of that section; or (ii) if the offence is under sub clause (ii) of clause (a). the court may for any adequate and special reasons to be mentioned in the judgment, impose a sentence of imprisonment for a terms of less than six months or of fine of less than one thousand rupees or of both imprisonment for a term of less than six months and fine of less than one thousand rupees. " Judicial compassion can play upon the situation only if the offence is under sub cl. (i) of cl. (a) of s.16(1) and the adulteration is one which fails under sub cl. (1) of el. (i) of s.2. Secondly, the proviso also applies if the offence is under sub cl. (ii) of el. (a), that is to say, the offence is not one of adulteration but is made up of a contravention of any of the other provisions of the Act or 7 3 already found that the accused is guilty of an offence of adulteration of food under s.2(i)(a). Therefore, proviso (ii) is out. Proviso (i) will be attracted, according to Shri Bhandare, if s.2(i)(1) applies to the species of adul teration committed. In our view, the only sensible under standing of proviso (i) is that judicial jurisdiction to soften the sentence arises if the offence of adulteration fails only under sub cl. (1) of cl. (i) of s.2 and we have held that it does not. We cannot but deplore the clumsy draftsmanship displayed in a statute which affects the common man in his daily bread. It is unfortunate that easy comprehensibility and simplicity for the laity. are discard ed sometimes through oversophisticated scholarship in the art of drawing up legislative bills. It cannot be over stressed that a new orientation for drafting methodology adopting directness of language and avoiding involved refer ence and obscurity is overdue. Be that as it may, in the present case s.2(i) (a) applies and s.16(1)(a) has been breached. Therefore the proviso cannot be applied in exten uation and the conviction of the High Court has to be up held. 6 The possibility of long argument in a case where the accused has pleaded guilty arises because the provision lends itself to adroit exercises. The court has to look at the interpretative problem in the social setting of the statute, visualising the rough and tumble of the market place, the finesse with which clever victuallers fob off adulterated edibles and gullible buyers goofily fall victim. Viewed this way, chasing recondite semantics or niceties of classification or chopping of logic has no scope for play. The appeals must fail, without more. But we have to take note of a few circumstances of significance brought to our notice by counsel for the appellant .with which the State 's counsel could not express serious disagreement, although he made no concessions. , We now proceed to refer to these factors which do not deflect us from confirming the conviction. The curtain has been drawn thereon. To begin with, we are free to confess to a hunch that the appellants had hastened with their pleas of guilty hopefully, induced by an informal, tripartite understanding of light sentence in lieu of nolo contendere stance. Many economic offenders resort to practices the American call 'plea bargaining ', 'plea negotiation ', 'trading out ' and 'compromise in criminal cases ' and the trial magistrate drowned by a docket burden nods assent to the sub rosa ante room settlement. The business man culprit, confronted by a sure prospect of the agony and ignominy of tenancy of a 7 3 being a plea of guilt, coupled with a promise of 'no jail '. These advance arrangements please everyone except the dis tant victim, the silent society. The prosecutor is relieved of the long process of proof, legal technicalities and long arguments, punctuated by revisional excursions to. higher courts, the court sighs relief that its ordeal, surrounded by a crowd of papers and persons, is avoided by one case less and the accused is happy that even if legalistic bat tles might have held out some astrological hope of abstract acquittal in the expensive hierarchy of the justice system he is free early in the day to pursue his old professions. It is idle to speculate on the virtue of negotiated settle ments of criminal cases, as obtains in the United States but in our jurisdiction, especially in the area of dangerous economic crimes and food offences, this practice intrudes on society 's interests by opposing society 's decision expressed through pre determined legislative fixation of minimum sentences and by subtly subverting the mandate of the law. The jurists across the Atlantic partly condemn the bad odour of purchased pleas of guilt and partly justify it philosoph ically as a sentence concession to a defendant who has, by his plea 'aided in ensuring the prompt and certain applica tion of correctional measures to him ', "In civil cases we find compromises actually encouraged as a more satisfactory method of set tling disputes between individuals than an actual trial. However, if the dispute . finds itself in the field of criminal law, "Law Enforcement" repu diates the idea of compromise as immoral, or at best a necessary evil. The "State" can never com promise. It must 7 enforce the law. " Therefore open methods of com promise are impossible." (Arnold, Law Enforcement An Attempt at Social Dissec tion, , 19 (1932). We have no sanction, except surreptitious practice in some courts, for 'trading out ' of punitive severity although this aspect of the criminal system deserves Indian jurists ' consideration. The sole relevance of this digression in this judgment is to highlight the fact that the appellants perhaps acted on an expectation which came to pass at the trial level but was reversed at the appellate level and this touch of 'immorality ' in the harsh morality of the punish ment is a factor counsel wants us to take note of. But we can do nothing about it when the minimum is set by the 7 3 justice to the citizen and relieve over worked courts by more judicial agencies and streamlined procedures instead of leaving the uninformed public blindly to censure delayed disposals. One real reason for long litigation is inaction or ineffective action of the legislature. All knowledgeable law men may concede that the procedures in municipal and higher courts are ossified to the point, priced to the level, and slow to the degree where they cannot flexibly assist disputants in early resolution of their everyday disputes. This, we hope, will change and the source of the evil eliminated. The next draft on the court 's commiseration, made by counsel, is based on the milling operation realities sur rounding the commission of the crime. It is asserted by the appellant 's advocate and not seriously controverted by his opponent that the small town milling practice is multi purpose, in the sense that whoever brings any edible oil seed for extraction of oil gets it done so that ground nut crushing may be followed by Khurasani seed or some other oil seed may chance to take turns by rotation. Even the mill er 's own oil seeds may be sometimes khurasani; at other times, some other. This process may result in the residue of one getting mixed up with the next. May be, innocently some groundnut oil, in the present case, got into the khu rasani oil by the same expeller handling both. Even so, the presence of 30% groundnut oil is, perhaps too high an admix ture to be explained away this easy way. While we appreci ate the situation we must adhere to the provision. Where the law lays down an absolute liability, alibis cancelling mens tea are out of bounds. The last plea, urged ex mesericordium, ameliorative in appeal and unavailing against conviction, is that actually groundnut oil costs more and so profit motive stands nega tived, that the mixture of these edible oils, though techni cally forbidden, is in fact non injurious and a terrifying term of six months ' rigorous imprisonment is unjust. The facts are probably right but ex necessitate legis the court has to inflict the heavy minimum sentence. While in stray cases a jail term even in a trivial food offence may. look harsh, Parliament, in its wider wisdom, and having regard .to social defence in a sensitive area standardised the sentence by insisting on a minimum, ignoring exceptional 2 1003SC1/76 8 cases where leniency is needed. Individual hardships deserv ing of lighter sentence are sometimes exploited by counsel 's 7 3 offenders milder punishments. It is worthy of note though that in the present case the mixing of the two oils is a motiveless act. May be. And the circumstances above men tioned add up to a plea for paring down the sentence and Shri Bhandare, for the appellants, sought to wheedle us into lending evedence to these circumstances and bring down. the offence to a lesser one. Logically and sociologically and, above all, legally, such a course is impermissible. Never theless, there is one circumstance which has impressed us not to the extent of undoing the sentence imposed by the High Court but of drawing the attention of the top executive to what may justly be done by way of remission of sentence. The appellants have sworn an affidavit in this Court stating that khurasam oil is the same as nigar seed oil. This is backed by a certificate from the Maharashtra Chamber of Commerce and is evidently correct. What is more important is that the appellants, when surprised by a modification of their sentence to a heavier one for what they thought was undeserving, moved in the matter of cases generally of adulteration of khurasani oil with groundnut oil. They drew the attention of the authorities to punishment of innocents and it appears that the. State Government was satisfied about this grievance and has since withdrawn a substantial number of cases against dealers of khurasani oil whose sales were contaminated with presence of groundnut oil. The affi davit on behalf of the appellants states: "I further say that various cases filed by the respondents against the dealers of khurasani oil are now being withdrawn as invariably groundnut oil is observed in khurasani oil. I crave leave to refer to and rely on the Journal of Maharashtra Chumher Patrika dated 21st September, 1975, when produced. " Probably, had the present case survived till the government took action, it might have been withdrawn. Moreover, there are circumstances suggesting of innocent admixture although it is beyond us to pronounce definitely on this aspect and it is not for us to enquire into the matter when section 16( 1 ) is clear and the sentence is legal. Nevertheless, it may be appropriate for government to consider whether in the cir cumstances of this case and in the light of the observa tions made by us in this judgment it is not a matter for exercise of commutation powers. Sentencing policy has a punitive and a correctional role and we are sure that what is the need of the appellants will be meted out to them if they deserve any activist administrative empathy at all. accordingly dismiss the appeals.

An analysis of a sample of khurasani oil from the appel lants ' mill collected by the Food Inspector showed 30% groundnut oil content amounting to contravention of r. 44(a) of the Rules which prohibits sale of a mixture of two or more edible oils as an edible oil. The appellants were charged with an offence under section 2(i) of the Act read with sections 7 and 16(1)(a) and r. 44(a). The appellants having pleaded guilty, each of them was sentenced to pay a small fine. On revision, the High Court converted the offence into one under section 2(i) (a) read with section 16(1) and enhanced the sentence to a minimum of six month, imprisonment and fine of rupees one thousand on the ground that the offence committed by them fell within section 16(1)(a) and did not fall within the proviso to that section. On appeal to this Court it was contended that even assuming section 2(i)(a) is all comprehensive it must be read as the genus and thereafter sub clauses (b) to (e) fall under two broad categories namely adulteration with injurious substances and adulteration with innocent additions or the substance sold merely violates a standard or degree of purity prescribed and in this case the offence would fall under the non injurious type covered by section 2(i)(1). Dismissing the appeal, HELD: 1. (a) Sub clause (a) of section 2(1) has a wide sweep. There causes be any doubt that if the article asked for is 100% khurasani oil and the article sold is 70% khurasani oil and 30% groundnut oil, the supply 'is not of the nature, substance and quality which it purports or is represented to be. [4 E] (b) It is not possible to invoke the proviso to section 16(1) and the High Court is legally right in its conversion of the provision for conviction and enhancement of the sentence. Though section 2(i)(a) is read speciously and if the facts al leged are accommodated by the definition of adulteration under that sub clause, section 16.(1) is attracted. The first proviso to section 16(1) will be attracted if and only if section 2(i)(1) applies. [4 F G] In the present case the facts disclose that the offence is both under section 2(i)(a) and under section 7(v) for breach of r. 44(e). Section 2(i)(1) is repelled on the facts and this is not a case. where either section 2(i)(1) or r. A17.12 applies. 2.(a) The proviso cannot apply in extenuation and the High Court was right in convicting the appellants. Judicial compassion can play upon the situation only if the offence is under section 16(1)(a)(i) and the adulteration is one under section 2(i)(1). The proviso applies if the offence is under cl. (a)(ii), that is to say, the offence is not one of adultera tion but is made up of a contravention of the other provi sions of the Act or of any rule made thereunder. Since in this case the offence falls under section 2(i)(a) proviso (ii) has no application. [5 E F] (b) The judicial jurisdiction to soften the sentence arises if the offence of adulteration falls only under section 2(i)(1). This case does not fall under this sub clause. [5 G] [The Court drew attention to (a) the propriety of ac cepting by the prosecution and the Courts the accused 's plea of guilty of a lesser offence in dangerous economic crimes and food offences and (b) in view of the fact that a sub stantial number of cases of the kind were withdrawn by the Government because 2 variably groundnut oil is observed in Khurasani oil, the Government may consider whether in the circumstances of this case it is not a matter for exercise its commutation powers].

Appeal No. 6120 of 1983. From the Judgment and Order dated 25.4.1983 of the Disciplinary Committee of the Bar Council of India in B.C.I. Tr. Case No. 32 of 1982. Bharat Sangal for the Appellant. V.R. Reddy, Addl. Solicitor General, T. Ratnam and D.N. Goburdhan for the Respondents. by MOHAN, J. This is a statutory appeal under Section 38 of the Advocates Act of 1961. The brief facts are as under: The respondent engaged the appellant as a counsel in suit No. 510 of 1964, this was in April, 1976. The suit was ultimately compromised on 14.6.77. It was ordered that out of the total amount lying with the court receiver, a sum of Rs. 64,000 shall be paid over to the plaintiff; the balance was to be paid to the respondent and possession of suit property was to be handed over to the respondent by the court receiver. During the pendency of the suit the court receiver inducted one Usman Ghani Haji Mohamed as a tenant. He filed CS No. 7 of 1978 praying for an interim injunction restraining the court receiver from handing over possession to the respondent. That suit was continued. After the compromise decree was passed on 14.6.77 the appellant who was the counsel for the respondent was requested to withdraw the amount lying with the court receiver and hand over the same to the 1009 respondent. For this purpose a, letter of authorisation to enable the appellant to receive the amount was also issued, Pursuant to the letter of authorisation and instructions, a total amount of Rs. 50,379 was withdrawn by the appellant from the court receiver. Out of this, he paid only Rs. 18,000 and the rest was not paid. Therefore, the respondent preferred a. complaint before the Bar Council of India on 9.1.81. The appellant was issued a notice by the Bar Council to which he submitted his reply. On consideration of his reply and hearing the arguments, the Disciplinary Committee of the Bar Council of India, was of the view that the burden of proving the fact that the respondent had paid a sum of Rs. 50,379 lay on the appellant. Certain receipts produced to evidence payment to the respondent were not accepted. The plea of the appellant that the account books had been lost was held to be untrue. Ultimately the appellant was suspended for a period of two years and further directed to pay a sum of Rs. 500 to the complainant (the respondent herein). It is against this order the present appeal has been preferred. Learned counsel for the appellant took us through the impugned order and urged that the Committee had not properly appreciated the evidence especially the receipts which were produced by the appellant to evidence the payment. It is incorrect to hold that the receipt dated 8.8.77 was a suspicious document merely because the account books were not produced, it would not follow that the payments made by the appellant could be disbelieved. We pointed out to the learned counsel for the appellant that the order under appeal is unexceptional and there was no case for interference. We felt that the order of suspension of two years was not commensurate with the charges of misappropriation. Therefore, we directed the issue notice to the appellant which came to be accepted by the learned counsel Mr. Bharat Sangal. Inspite of the fact that the appellant has not chosen to appear, in order to make over the payment of the amount voluntarily. Therefore, we are left with no option then to decide the case ourselves on merits. The Disciplinary Committee of the Bar Council on a proper appreciation of the evidence disbelieved the so called receipts evidencing the payment. It has come to the correct conclusion that the receipt dated 8th of August, 1979 was got up on a blank signed paper. Hence, the due 1010 execution of the receipt had not been proved by the appellant. Besides, the statement of the appellant that the account books had been lost in transit had been rightly disbelieved. Under these circumstances this is a clear case wherein the misappropriation by the appellant has been fully established. Once this conclusion is arrived at, the question is what is the punishment to be imposed? Advocacy is not a craft but a calling; a profession wherein devotion to duty constitutes the hall mark. Sincerity of performance and the earnestness of endeavor are the two wings that will bare aloft the advocate to the tower of success. Given these virtues other qualifications will follow of their own account. This is the reason why legal profession is regarded to be a noble one. But it cannot be allowed to become a sorriest of trades. It will be useful to quote what Sharaswood said of this profession: A lower, without the most sterling integrity, may shine for a while with meteoric splendor; but his light will soon go out in blackness of darkness. It is not in every man 's power to rise to eminence by distinguished abilities. It is not in every man 's power, with fe w exceptions, to attain respectability, competence, and usefulness. The temptations, which beset a young man in the outset of his professional life, especially if he is in absolute dependence upon business for his subsistence, are very great. The strictest principles of integrity and honour are his only safety. Let him begin by swerving from truth or fairness, in small particulars, he will find his character gone whispered away, before he knows it. Such a one may not indeed be irrecoverably lost; but it will be years before he will be able to regain a firm foothold. There is no profession in which moral character is so soon fixed as in that of the law; there is none in which it is subjected to severer scrutiny by the public. It is well that it is so. The things we hold dearest on earth, out fortunes, reputations, domestic peace, the future of those dearest to us, nay, our liberty and life itself, we confide to the integrity of our legal counselors and advocates. Their character must be not only without a stain, but without suspicion. From the very commencement of a lawyer 's career, let him cultivate 1011 above all things, truth, simplicity and candor. They are cardinal virtues of a lawyer. Let him always seek to have a clear understanding of his object: be sure it is honest and right and then march directly to it. The covert, indirect and insidious way of doing anything, is always the wrong way. It gradually hardens the moral faculties, renders obtuse the perception of right and wrong in human actions, weighs everything in the balance of worldly policy, and ends most generally, in the practical adoption of the vile maxim, "that the end sanctifies the means. " Therefore an exacting standard is what is expected of an advocate. This court has taken the view in M. Veerabhadra Rao vs Tek Chand, [1984] Supp. SCC 571 as to how in such a case professional misconduct has to be dealt with. In that case, the advocate committed forgery by attesting false affidavits which was held to be a serious misconduct. This court pointed out the duties of the members of the bar in the following passage: "Legal profession is monopolistic in character and this monopoly itself inheres certain high traditions which its members are expected to upkeep and uphold. Members of the profession claimed that they are the leaders of thought and society. In the words of Justice Krishna Iyer in Bar Council of Maharashtra vs M.V Dabholkar, [19751 2 SCC 702 the role of the members of the Bar can be appreciated. He said at page 718: The bar is not a private guild, like that of 'barbers, butchers and candlestick makers ' but, by bold contrast, a public institution committed to public justice and pro bono public service. The grant of a monopoly licence to practice law is based on three assumptions: (1) There is a socially useful function for the lawyer to perform, (2) The lawyer is a professional person who will perform that function, and (3) His performance a,, a professional person is regulated by himself and more formally, by the profession as a whole. The central function that the legal profession must perform is nothing less than the ad 1012 ministration of justice ( 'The Practice of Law is a Public Utility ' 'The Lawyer, the Public and Professional Responsibility ' by F. Raymond Marks et al Chicago American Bar Foundation, 1972, pp. 288 289). A glance at the functions of the Bar Council, and it will be apparent that a rainbow of public utility duties, including legal aid to the poor, is cast on these bodies in the national hope that the members of this monopoly will serve society and keep to canons of ethics befitting an honorable order. If pathological cases of member misbehavior occur, the reputation and credibility of the Bar suffer a mayhem and who, but the Bar Council, is more concerned with and sensitive to this potential disrepute the few black sheep bring about? The official heads of the Bar, i.e. the Attorney General and the Advocates General too are distressed if a lawyer 'stoops to conquer ' by resort to soliciting, touting and other corrupt practices. If these are the high expectations of what is describes as a noble profession, its members must set an example of conduct worthy of emulation. If any of them falls from that high expectation, the punishment has to be commensurate with the degree and gravity of the misconduct". Accordingly, the punishment was increased to one of suspension for a period of five years, having regard to the gravity of the misconduct and keeping in view the motto that the punishment must be commensurate with the gravity of the misconduct. In the case on hand admittedly the complainant (respondent) does not know English. It is equally admitted that the appellant had withdrawn the money from the Court Receiver. None of the correspondence addressed to the respondent mentioned about the receipt dated 8th of August, 1977. The plea taken by the appellant based on the receipt is clearly false. The appellant has been withdrawing the money over 14 years and he has illegally retained the amount. Out of a sum of Rs. 50,379 which was admittedly withdrawn from the court receiver only Rs. 18,000 was paid on different occasions. The said amount was also spread over and paid on 1013 different occasions. On a direction of this court a sum of Rs. 10,000 had been deposited by the appellant which has been withdrawn by the respondent as per order dated 3rd September, 1991. Still a sum of Rs. 22,379 is due. In view of the established finding of misappropriation, we think the proper punishment will be the name of the Advocate must be struck off the rolls. We order accordingly. In addition to this the question arises, whether we can direct the refund of the sum of Rs. 22,379 which still is pending for the appellant. Section 38 of the Advocates Act says as follows. "Appeal to the Supreme Court: Any person aggrieved by an order made by the disciplinary committee of the Bar Council of India under Section 36 or Section 37 [or the Attorney General of India or the Advocate General of the State concerned, as the case may be], may within sixty days of the date on which the order is communicated to him, prefer an appeal to the Supreme Court and the Supreme Court may pass such order [including an order varying the punishment awarded by the disciplinary committee of the Bar Council of India] thereon as it deems fit: [Provided that no order of the disciplinary committee of the Bar Council of India shall be varied by the Supreme Court so as to Prejudicially affect the person aggrieved without giving him a reasonable opportunity of being heard]." "when it says, ' deems fit, it must be construed as to meet the ends of justice. We feel the respondent should not be driven to a civil court for recovery of this amount even when the appellant has been found guilty by his own peers which we have also confirmed. Therefore, we direct that there shall be a decree in favour of the respondent (complainant) for a sum of Rs. 22,379 together with interest at 9% per annum from the date of the complaint till the date of payment. The appeal is dismissed in the above terms with costs of the respondent which is quantified at Rs. 3000 (Rs. three thousand only). Before we part with the case we may usefully quote Harry R. Blythe 1014 (cited in "Great God the hour has come when we must clear The legal fields from poison and from fear; We must remould our standards build them higher, And clear the air as though by cleansing fire, Weed out the damning traitors to the law, Restore her to her ancient place of awe." V.P.R. Appeal dismissed.

The respondent was defendant in a suit. He engaged the appellant as an Advocate. The suit was compromised on 14.6.77 ordering that out of the amount lying with the Court receiver, plaintiff was to be paid a sum of Rs. 64,000 and the balance to be paid to the defendant respondent and possession of suit property to be handed over to the respondent. During the tendency of the suit the Court Receiver inducted a tenant in a suit property. The tenant filed a suit praying for an interim injunction restraining the court receiver from handing over possession to the respondent. Tenant 's suit was continued. After the compromise decree was passed on 14.6.77, the appellant withdrew a total amount of Rs. 50,379 from the Court receiver. Out of the amount, appellant paid only Rs. 18,000 to the respondent. On 9.1.81 the respondent filed a complaint against the appellant before the Bar Council of India. On receiving a notice, the appellant submitted reply. The Disciplinary Committee of the Bar Council rejected certain receipts produced to evidence payment to the respondent and also the plea of the appellant that the account books were lost. The Committee suspended the appellant for a period of two years and further directed to pay a sum of Rs. 500 to the respondent. Before this Court the order of the Disciplinary Committee of the Bar Council of India was challenged contending that the Committee did not properly appreciate the evidence and that it was incorrect to hold that the 1007 receipt dated 8.8.77 was a suspicious document merely because the account books were not produced. Dismissing the appeal, this Court, HELD : 1.01. Advocacy is not a craft but a calling , a profession wherein devotion to duty constitutes the hall mark. Sincerity of performance and the earnestness of endeavor are the two wings that will bare aloft the advocate to the tower of success. Given these virtues other qualifications will follow of their own account. This is the reason why legal profession is regarded to be a noble one. But it cannot be allowed to become a sorriest of trades. Therefore. an exacting standard is what is expected of an advocate. [1010 C D, 1011 C] 1.02. The members of the noble profession must set an example of conduct worthy of emulation. If any of them falls from the high expectations, the punishment has to be commensurate with the degree and gravity of the misconduct. [1012 E] Sharasawood on legal profession, Harry R. Blythe cited if? , referred to. M. Veerabhadra Rao vs Tek Chand, [1984] Supp. SCC 571, referred to.[1011 C] 2.01. The appellant had withdrawn the money from the Court Receiver. None of the correspondence addressed to the respondent mentioned about the receipt dated 8th of August, 1977. The plea taken by the appellant based on the receipt is clearly false. The statement of the appellant that the account books had been lost in transit cannot be believed. Under these circumstances this is a clear case wherein the misappropriation by the appellant has been fully established. [1012 F] 2.02. The appellant has been withdrawing the money over 14 years and lit has illegally retained the amount. Out of a sum of Rs. 50,379 which was admittedly withdrawn from the court receiver only Rs. 18,000 was paid on different occasions. Still a sum of Rs. 22,379 is due. [1012 H, 1013 A] 2.03. In view of the established finding of misappropriation the proper punishment will be the name of the Advocate must be struck off the rolls. [1013 B] 1008 2.04. When Section 38 of the Advocates Act says, 'deems fit", it must be construed as to meet the ends of justice. The respondent should not be driven to a civil court for recovery of this amount even when the appellant has been found guilty. Therefore, it is directed that there shall be a decree in favour of the respondent (complainant) for a sum of Rs. 22,379 together with interest at 9% per annum from the date of the complaint till the date of payment 11013 F G]

ivil Appeal No. 3175 of 1986. From the Judgment and Order dated 17.8.1985 of the Rajasthan High Court in D.B.S.A. No. 161 of 1985. Satish Chandra and A.V. Rangam for the Appellants. V.M. Tarkunde and section K. Jain for the Respondent. The Judgment of the Court was delivered by PG NO 1028 JAGANNATHA SHETTY, J. By obtaining special leave, the State Bank of Bikaner & Jaipur ("Bank") has appealed to this Court against the judgment dated September 17, 1985 of the Division Bench of Rajasthan High Court in Special Civil Appeal No. 161 of 1985. The question raised in this appeal is as to the nature of right of the respondent to get an extension of service beyond the age of superannuation. The respondent was an officer of the Bank. His service conditions were regulated by what is termed as State Bank of Bikaner & Jaipur (Officers ') Service Regulations, 1979. The regulations came into force with effect from October 1, 1979. Regulation No. 19 provides for the age of retirement. It also preserves discretion to the Bank . to extend the period of service of any officer beyond the age of retire ment. The relevant portion of Regulation 19 reads: "Age of Retirement: 19(1) An officer shall retire from the service of the Bank on attaining the age of fifty eight years or up to the completion of thirty years ' service, whichever occurs first. Note: However, the existing practice of utilising the service of officers beyond the age of 58 years by considering individual cases for grant of extension will continue only in respect of employees who joined the service as workmen or as officers before the 19th July, 1969. Further, such employees may be granted extension in service instead of re employment as is the case in the State Bank of Mysore and State Bank of Saurashtra. A suitable diary note should be made in this regard and carried over looked at the time when the case of emplotees who joined on or after 19th July, 1969 come up for consideration (RER/32/80 dated 20.5.1980). Provided that the competent authority may, at its discretion, extend the period of service of an officer who has attained the age of fifty eight years or has completed thirty years ' service as the case may be, should such extension be deemed desirable in the interest of the Bank. The aforesaid 'note ' to Regulation 19 refers to the existing practice in the Bank and that 'note ' was added by notification dated May 20, 1980. PG NO 1029 By letter dated June 14, 1979, the Bank intimated the respondent that he was granted extension of service up to September 28, 1982 that is, till he completed 58 years of age. By further letter dated July l, 1982 the respondent was informed that he would be attaining superannuation age of 58 years on September 30, 1982 and would stand retired on that date. Accordingly, he was retired from service with effect from September 30, 1982. After an unsuccessful attempt for reconsideration of the case. the respondent took up the matter before Managing Director of the Bank. There also he could not succeed. He was informed that his case did not fit in the guidelines of the Bank. The respondent moved the High Court for relief under Article 226 of the Constitution. The Bank resisted the petition contending inter alia: "The extension is considered on three parameters (i) continued utility; (ii) good health, and (iii) integrity beyond reproach. since, in the case of the officials whose names have been submitted in the list D, all the three tests have been fulfilled, their services were extended. In the case of the petitioner? his services were not extended because in the view of the competent authority, his continued utility in the service of the Bank was found to be restricted. It is submitted that it is not open to the petitioner to claim that he should be granted extension in the service as a matter of right. In this context, it is submitted that when orders were issued to the petitioner on the 4th February, 1981 posting him as Branch Manager of a local branch at Jaipur. the petitioner instead of acting in a responsible manner and taking over charge of the branch, immediately proceeded on leave and went on extending it from time to time. Ultimately, the respondent Bank had to cancel the posting on the 1st May, 1981. Moreover, the guidelines for granting extension stipulated that continuance of the officer 's service in his existing grade/capacity would be PG NO 1030 useful to the Bank in all its field of activities in a manner that the Bank is not restricted in continuing to entrust him with the responsibilities relating to the normal placement commensurate with his seniority and grade and as the petitioner did not satisfy this criteria, the Bank did not grant him extension in service. " But by the time the petition came up for consideration, the Respondent attained 60 years of age. The learned single Judge without going into the merits of the matter dismissed the petition. He observed that it would be unnecessary to enter into the merits since the respondent has completed 60 years. The matter was taken up in appeal before a Division Bench of the High Court. The Division Bench accepted the appeal and gave relief to the respondent. It was commented: "The order of refusing to give extension to the petitioner appellant was because the extension was not deemed desirable in the interest of the Bank vide Annex. letter dated July 29, 1982. Hence it is obvious that while considering the case of the petitioner the Bank took into consideration the criteria whether his extension shall be desirable in the interest of the bank and the 13ank did not apply its mind as to whether his services were found unsuitable on the ground of continued utility and health or integrity. It appears that the Bank keeping in mind the note which was added to sec. 19(1) and only relying on the first proviso Resolution 19(1) they have decided the case of petitioner for extension of service This clearly shows that there was no serious application of mind while dealing with the case of extension of the petitioner is based on collateral grounds and it also arbitrary as the Bank has applied different criteria which ought not to have been applied in the case of the petitioner. The Bank has not formed the opinion for not extending the services of the petitioner on any material or relevant consideration, but has applied in the different criteria altogether and, therefore. the order is based on collateral and arbitrary grounds. The extension of the petitioner could have been refused only if he was found unsuitable on the ground of continued utility or good health or integrity and not whether it was desirable in the interest of the Bank. ' And observed: PG NO 1031 "It is true that the right of extension of service is not a legal right, but it is a benefit. However, this benefit is not a concession, but is a privilege to which an officer is entitled after years of hard work in the Bank. " It seems to us that the High Court has misconstrued the legal right claimed by the respondent. The right to get extension of service beyond the age of superannuation has received consideration of this Court in several cases. In State of Assam vs Basanta Kumar Das, [l973] 3 SCR 158, after reviewing almost all the earlier decisions Kailash Chandra vs Union of India, ; ; B.N. Misra vs State, ; and State of Assam vs Pramadhar, ; this Court said (at 165): "A Government servant has no right to continue in service beyond the age of superannuation and if he is retained beyond that age, it is only in exercise of the discretion of the Government. xxxx xxxxx xxxxx xxxx xxxx xxxxx xxxxx the fact that certain persons were found fit to be continued in service does not mean that others who were not so found fit had been discriminated against. Otherwise, the whole idea of continuing only efficient people in service even after they had completed 55 years becomes only meaningless. " What do we have here in this case to distinguish those principles or not to apply those principles? In our opinion, there is none. In the scheme provided herein the respondent or any other officer of the Bank has a legitimate right to remain in service till he attains the age of superannuation. But beyond that age, he has no such right unless his service is extended by the Bank. The further rights of parties are regulated by the proviso to Regulation 19(1). It reads: "Provided that the competent authority may at its discretion, extend the period of service ot an officer who has attained the age of fifty eight years or has completed thirty years ' service as the case may be, should such extension be deemed desirable in the interest of the Bank. " (Emphasis supplied) PG NO 1132 Look at the language of proviso and the purpose underlying. The Bank may in its discretion extend the service of any officer. On what ground? For what purpose? That has been also made clear in the proviso itself. It states "should such extension be deemed desirable in the interest of the Bank". The sole purpose of giving extension of service is, therefore, to promote the interest of the Bank and not to confer any benefit on the retiring officers. Incidentally the extension may benefit retired officials. But it is incorrect to state that it is a conferment of benefit or privilege on officers. The officers upon attaining the age of superannuation or putting the required number of years of service do not earn that benefit or privilege. The High Court has completely misunderstood the nature of right and purpose of the proviso. The proviso preserves discretion to the Bank. It is a discretion available with every employer, every management, State or otherwise. If the Bank considers that the service of an officer is desirable in the interest of the Bank, i~ may allow him to continue in service beyond the age of superannuation. If the Bank considers that the service of an officer is not required beyond superannuation, it is an end of the matter. It is no reflection on the officer. It carries no stigma. The Bank, however, is required to consider the case of individual officers with due regard to (i) continued utility; (ii) good health; and (iii) integrity beyond reproach of the officer. If the officer lacks one or the other, the Bank is not bound to give him extension of service. In this case, the Bank has shown to the High Court that the case of Respondent was considered and he did not fit in the said guidelines. The High Court does not sit in an appeal against the decision. The High Court under Article 226 cannot review that decision. It was however, argued for the respondent that the Bank falls within the concept of State ' for the purpose ot enforcement of fundamental rights. The Bank, therefore, cannot extend the service of some and reject the case of others similarly situated. The concept of Article 14 of the Constitution is relied upon. The argument in our opinion, proceeds on a wrong premise. 'The Bank has no obligation to extend the services of all officers even if they are found suitable in every respect. The interest of the Bank is the primary consideration for giving extension of ' service. With due regard to exigencies of service, the Bank in one year may give extension to all suitable retiring officers. In another year, it may give extension to some and not to all. In a subsequent year, it may not give extension to any One of the officers. The Bank may have a lot of fresh recruits in One year. The Bank may not need the services of all retired persons in another year. The Bank may have lesser PG NO 1033 work load in a succeeding year. The retiring persons cannot in any year demand that "extension to all or none". If we concede that right to retiring persons, then the very purpose of giving extension in the interest of the Bank would be defeated. We are, therefore, of opinion that there is no scope for complaining arbitrariness in the matter of giving extension of service to retiring persons. In the result, we allow the appeal and set aside the judgment of the High Court. In the circumstances of the case, we make no order as to costs. P.S.S. Appeal allowed.

Regulation 19(1) of the State Bank of Bikaner & Jaipur (Officers ') Service Regulations 1979 requires the officers to retire from the service of the Bank on attaining the age of fifty eight years or on completion of thirty years of service whichever occurs first. A note added below that regulation states that the existing practice of utilising the service of officers beyond 58 years will continue in respect of those who joined service before l9th July, 1969. The proviso thereto, however, confers discretion on the competent authority to extend the period of service of such retiring officers in the interest of the bank. The respondent, an officer of the said Bank, who retired from service on September 30, 1982 on attaining the age of superannuation of 58 years was not granted extension of service. The sought relief from the High Court under Article 226 of the Constitution. The Bank resisted the Petition on the ground that his continued utility in the service of the Bank was found restricted By the time the petition came up for consideration the respondent had attained 60 years of age. The single Judge. therefore, dismissed the petition without going into the merits. The Division Bench, however, accepted the appeal and gave relief to the respondent on the view that the extension of the petitioner could have been refused only if he was found unsuitable on the ground of continued utility or good health or integrity and not whether it was desirable in the interest of the Bank. Since the Bank applied a different criteria altogether it held the order arbitrary and based on collateral grounds. Allowing the appeal of the Bank by Special leave, HELD: 1.1 The High Court has misconstrued the legal right claimed by the respondent. [1031B] 1.2 In the scheme provided in Regulation 19(1) an officer of the Bank has a legitimate right to remain in PG NO 1026 PG NO 1027 service till he attains the age of superannuation. But beyond that age, he has no such right unless his service is extended by the Bank. The further rights of parties are regulated by the proviso thereto. [1031F G] 1.3 The proviso preserves discretion to the Bank. It is a discretion available with every employer, every management, State or otherwise. If the Bank considers that the service of an officer is desirable in the interest of the Bank, it may allow him to continue in service beyond the age of superannuation. If the Bank considers that the service of an officer is not required beyond superannuation, it is an end of the matter. It is no reflection on the officer. It carries no stigma. [1032C D] State of Assam v Basanta Kumar Das, [1973] 3 SCR l58; Kailash Chandra vs Union of India, [1962] I SCR 374; B.N. Mishra vs State [1965] l SCR 693 and State of Assam v Pramadhar, [1971] l SCR 503,referred to. 2. The Bank, however, is required to consider the case of individual officers with due regard to (i) continued utility, (ii) good health, and (iii) integrity beyond reproach of the officer. If the officer lacks one or the other, the bank is not bound to give him extension of service. 11032D E] In the instant case the Bank had shown to the High Court that the case of the respondent was considered and he did not fit in the said guidelines. The High Court does not sit in an appeal against that decision. The High Court under Article 226 cannot review that decision.11032E]

Civil Appeals Nos. 2567, 2818 20, 2648, 3277, 2817, 2918, 3079 83, 3001 04, 3543 48, 2810 16, 3375, 2864 2917, 2989 3000, 3084 3088, 3268 71, 3253 54, 3399 3400 of 1982. Appeals by special leave from the Judgments and orders dated the 30th April, 1982, 5th, 6th, 7th, 10th, 11th, 12th, 13th, 15th, May, 1982, 3rd, 17th, 23rd, August, 1982 of the Patna High Court in C.W.J.C Nos. 1788, 3726, 3727, 4529 of 1981, 253, 688, 1473 of 1982, 2771/81, 96/82, 1233, 1498, 1907, 1986 of 81, 1042, 1043, 1121, 1044 of 1982, 3198, 3197, 3195, 3147, 3146, 3148, 1573, 1377, 1802, 1852, 1800, 1950, 1776 of 1981, 1038 of 1982, 1300, 1301, 1303, 1329, 1334, 1383, 1648 of 1981, 255 of 1982, 1193, 1198, 1204, 1206, 1209, 1211, 1213, 1214, 1262 64, 1273, 1282, 1283, 1287, 1331, 1355 1382, 1384, 1386, 1431, 1432, 1484, 1488, 1489, 1548, 1645, 1734, 1833 of 1981, 78 of 1982, 1154, 1160, 1168, 1169. 1186, 1187, 1191, 1549, 1556, 1557 58, 1415, 1461, 1465, 1487 of 1981, 251 of 1982, 228, 1321 of 1981, 394, 1478 of 1982, 1320/81, 902, 565/82, 1775, 1177, 1801 of 1981, 503/82, 1804/81, 1, 3, 4, 6 & 7 of 1982, 3079, 3528 of 1981, 1947/82, 1254/82, 2922/81, 1372/82, 1408 & 1482 of 1981. AND Special Leave Petitions Nos. 10744 53, 9554 58, 9788, 9821 22, 10907, 9095, 1202 05, 9886 88, 9500 02, 9753, 9523, 10912, 11069, 10754 56, 10797 10812, 10891, 9702, 9782, 9561, 14001, 14364 66 of 1982, 1393 96, 1422 23, 1472 73 of 1983. From the Judgments and orders dated the 30th April, 1982, 3rd May, 5th, 6th, 7th, 10th, 11th, 12th, 13th May, 19th August 9th & 15th September, 8th & 18th October 1982, 20th & 21st January, 1983 of the Patna High Court in C.W.J.C. Nos. 1176, 1516 139 1435, 1177, 1618, 1469 & 1252 of 1982, 3398/81, 1355/82, 525182, 3640, 3641, 3642, 3743 & 3745 of 1982, 1326, 1784, 1405, 1854, 3337, A 1656 of 1981, 349, 1108, 1148, 4073, 4074, 4075 of 1982, 3118, 3080, 1161, 1374, 2804, 3035 of 1981, 4213/82, 1517/82, 1278, 1414, 1290, 1291, 1292, 1297, 1306, 1200, 1212, 1256, 1276, 1277, 1485 of 1981, 484, 509/82, 1517, 1578, 1450, 4037, 2944, 1788, 2889 of 1981, 1547, 506, 507, 508, 4931, 1253, 1431, 1432, 207 & 214 of 1982 & 182 & 203 of 1983. WITH Writ Petitions Nos. 9266, 10055 56, 7002 09, 7019 23, 7024, 7921 22, 7996.97, 8508 10, 9680 92, 9322, 7647 53, 8005, 8067, 7160 of 1982, 415 76 78, 640 41, 652 of 1983 (Under article 32 of the Constitution of India) A.B. Divan, A.K. Sen, Shankar Ghose, P.R. Mridul, Hardev Singh & S.T. Deasi, Talat Ansari, Ashok Sagar, Sandeep Thakore, Ms. Rainu Walia, D.N. Misra, D.P. Mukherjee, B.R. Agarwala, Miss Vijayalakshmi Menon, U.P. Singh, B.B. Singh. B.S. Chauhan, Anil Kumar Sharma, Praveen Kumar, A.T. Patra, Vineet Kumar, A.K. Jha, M.P. Jha, R.S. Sodhi, A. Minocha, Mrs. Indu Goswamy, S.K. Sinha, Vinoo Bhagat, P.N. Misra, KK. Jain and Pramod Dayal for the Appellants. K Parasaran, Solicitor General, R.B. Mahto, Addl. Advocate General. Bihar. Pramod Swarup and U.S. Prasad for the Respondents. The Judgment of the Court was delivered by SEN, J. These are appeals by special leave from a judgment and order of the High Court of Patna dated April 30, 1982 by which the High Court upheld the constitutional validity of sub section (I) of s.5 of the Bihar Finance Act, 1981 ("Act ' for short) which provides for the levy of a surcharge on every dealer whose gross turnover during a year exceeds Rs. 5 lakhs, in addition to the tax payable by him, at such rate not exceeding 10 per centum of the total amount of tax, and of sub section (3) of section 5 of the Act which prohibits such dealer from collecting the amount of surcharge payable by him from the purchasers. 140 The Bihar Finance Act 1981, is not only an Act for the levy A of a tax on the sale or purchase of goods but also is an Act to consolidate and amend various other laws. We are here concerned with section S of the Act which finds place in Part I of the Act which bears the heading "Levy of tax on the sale and, purchase of goods in Bihar and is relatable to Entry 54 of List II of the Seventh Schedule. By two separate notifications dated January 15, 1981 the State Government of Bihar in exercise of the powers conferred by sub section (I) section S of the Act appointed January, IS; 1981 to be the date from which surcharge under section 5 shall be leviable and fixed the rate of surcharge at 10 per centum of the total amount of the tax payable by a dealer whose gross turnover during a year exceeds Rs. 5 lakhs, in addition to the tax payable by him. The Act was reserved for the previous assent of the President and received his assent on April 20, 1981. There is no point raised as regards the validity of the notifications in question and therefore there is no need for us to deal with it. The principal contention advanced by the appellants in these appeals is that the field of price fixation of essential commodities in general, and drugs and formulations in particular, is an occupied field by virtue of various control orders issued by the Central Government from time to time under sub section (I) of section 3 of the which allows the manufacturer of producer of goods to pass on the tax liability to the consumer and therefore the State Legislature of Bihar had no legislative competence to enact sub section (3) of section S of the Act which interdicts that no dealer liable to pay a surcharge, in addition to the tax payable by him, shall be entitled to collect the amount of surcharge, and thereby trenches upon a field occupied by a law made by Parliament. Alternatively, the submission is that if sub s (3) of section 5 of the Act were to cover all sales including sales of essential commodities whose prices are fixed by the Central Government by various control orders issued under the Essential commodities Act, then there will be repugnancy between the State law and the various control orders which according to section 6 of the must prevail. There is also a subsidiary contention put forward on behalf of the appellants that sub section (I) of section S of the Act is ultra vires the State Legislature in as much as the liability to pay surcharge is on a dealer whose gross turnover during a year exceeds Rs. 5 lakhes or more i.e. inclusive of transactions relating to Sale or purchase of goods which have taken place in the course of inter state trade or commerce or outside the State or in the course of import into, or 141 export of goods outside the territory of India. The submission is that such transactions are covered by article 286 of the Constitution and A therefore are outside the purview of the Act and thus they cannot be taken into consideration for computation of the gross turnover as defined in section 2 (j) of the Act for the purpose of bearing the incidence of surcharge under sub section (1) of section 5 of the Act. It will be convenient, having regard to the course taken in the arguments, to briefly refer to the facts as are discernible from the records in Civil Appeal No. 2567 of 1982 Messrs Hoechst Pharmaceuticals Limited & Another vs The State of Bihar & others, and Civil Appeal No. 3277 of 1982 Messrs Glaxo laboratories (India) Limited vs The State of Bihar & others. Messrs Hoechst Pharmaceuticals Limited and Messrs Glaxo Laboratories (India) Limited are companies incorporated under the engaged in the manufacture and sale of various medicines and life saving drugs throughout India including the State of Bihar. They have their branch or sales depot at Patna registered as a dealer under section 14 of the Act and effect sales of their manufactured products through wholesale distributors or stockists appointed in almost all the districts of Bihar who, in their turn, sell them to retailers through whom the medicines and drugs reach the consumers. Almost 94% of the medicines and drugs sold by them are at the controlled price exclusive of local taxes under the Drugs (Price Control) order, 1979 issued by the Central Government under sub section (1) of section 3 of the and they are expressly prohibited from selling these medicines and drugs in excess of the controlled price so fixed by the Central Government from time to time which allows the manufacturer or producer to pass on the tax liability to the consumer. The appellants have placed on record their printed price lists of their well known medicines and drugs manufactured by them showing the price at which they sell to the retailers as also the retail price, both inclusive of excise duty. It appears therefrom that one of the terms of their contract is that sales tax and local taxes will be charged wherever applicable. These appellants have also placed on record their orders of assessment together with notices of demand, for the assessment years 1980 81 and 1981 82. For the assessment year 1980 81, the Commercial Taxes officer, Patna Circle, Patna determined the gross turnover of sales in the State of Bihar through their branch office at Patna of Messrs Hoechst Pharmaceuticals Limited on the basis of the return 142 filed by them at Rs. 3,13,69,598,12p. and the tax payable thereon at Rs. 19,65,137.52.p. The tax liability for the period from January 15, 1981 to March 31, 1981 comes to Rs. 3,85,023.33.p. and the surcharge thereon at 10% amounts to Rs. 38,503.33p. Thus the total tax assessed of Messrs Hoechst Pharmaceuticals Limited including surcharge for the assessment year 1980 81 amounts to Rs. 20,03,640.85p. The figures for the assessment year 1981 82 are not available. Foe the assessment years 1980 81 and 1981 82 the annual returns filed by Messrs Glaxo Laboratories (India) Limited show the gross turnover of their sales in the State of Bihar through their branch at Patna at Rs. 5,17,83,985.76p. and Rs. 5,89,22,346.64p. respectively. They have paid tax along with the return amounting to Rs. 34,06,809.80p. and Rs. 40,13,057.28p. inclusive of surcharge at 10% of the tax for the period from January 15, 1981 to March 31, 1981 and April 1981 to January 19, 1982 amounting to Rs. 34,877.62p. and Rs. 3,09,955.86p. respectively. There is excess payment of Rs. 55,383.98p. in the assessment year 1980 81 and Rs. 13,112.35p. in the year 1981 82. These figures show the magnitude of the business carried on by these appellants in the State of Bihar alone and their capacity to bear the additional burden of surcharge levied under sub section (I) of section 5 of the Act. The High Court referred to the decision in section Kodar vs State of Kerala(1) where this Court upheld the constitutional validity of sub section (2) of section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 which is in pari materia with sub section 3 of section S of the Act and which interdicts that no dealer referred to in sub section (l) shall be entitled to collect the additional tax payable by him. It held that the surcharge levied under sub section (1) of section 5 is in reality an additional tax on the aggregate of sales effected by a dealer during a year and that it was not necessary that the dealer should be enabled to pass on the incidence of tax on sale to the purchaser in order that it night be a tax on the sale of goods. Merely because the dealer is prevented by sub section (3) of section 5 of the Act from collecting the surcharge, it does not cease to be a surcharge on sales tax. It held relying on Kodar 's case, supra, that the charge under sub section (I) of section 5 of the Act falls at a uniform rate of 10 per centum of the tax on all dealers falling within the class specified therein i. e. whose gross turnover during a year exceeds Rs. 5 lakhs, and is therefore not discriminatory and violative of article 14 of the Constitution, nor is it possible to say that 143 because a dealer is disabled from passing on the incidence of surcharge to the purchaser, sub section (3) of section 5 imposes an unreasonable A restriction on the fundamental right guaranteed under article 19 (1) (g). As regards the manufacturers and producers of medicines and drugs, the High Court held that there was no irreconcilable conflict between sub section (3) of section 5 of the Act and paragraph 21 of the Drugs (Price Control) order 1979 and both the laws are capable of being obeyed. Undeterred by the decision of this Court in Kodar 's case, supra, the appellants have challenged the constitutional validity of sub section (3) of section 5 of the Act in these appeals on the ground that the Court in that case did not consider the effect of price fixation of essential commodities by the Central Government under sub s (I) of section 3 of the which, by reason of section 6 of that Act, has an overriding effect notwithstanding any other law inconsistent therewith. These appeals were argued with much learning and resource particularly with respect to federal supremacy and conflict of powers between the Union and State Legislatures and as to how if there is such conflict, their respective powers can be fairly reconciled. In support of these appeals, learned counsel for the appellants have advanced the following contentions viz: (1) The opening words of article 246 (3) of the Constitution "Subject to clauses (1) and (2)" make the power of the Legislature of any State to make laws for such State or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule subject to the Union power to legislate with respect to any of the matters enumerated in List I or List III. That is to say, sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the surcharge levied on him must therefore yield to section 6 of the which provides that any order made under section 3 of the Act shall have effect notwithstanding anything inconsistent therewith contained in any enactment other then the Act or any instrument having effect by virtue of any enactment other than the Act. The entire submission proceeds on the doctrine of occupied field and the concept of federal supremacy. In short, the contention is that the Union power shall prevail in a case of conflict between List II and List III. (2) sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the amount of surcharge levied on him, clearly falls within Entry 54 of List II of the Seventh Schedule and it collides with, and or is inconsistent with, or repugnant to, the scheme of Drugs (Price Control) order? 1979 generally so far as 144 price fixation of drugs is concerned and particularly with paragraph 21 which enables the manufacturer or producer of drugs to pass on the liability to pay sales tax to the consumer. If that be so, then there will be repugnancy between the State law and the Control order which according to section 6 of the , must prevail. It is the duty of the Court to adopt the rule of harmonious construction to prevent a conflict between both the laws and care should be taken to see that both can operate in different fields without encroachment. It is therefore submitted that there is no question of repugnancy and it can be avoided by the principle of reconciliation. That is only possible by giving full effect to the non obstante clause in section 6 of the . (3) The provisions contained in sub section (3) of section 5 of the Act is ex facie and patently discriminatory. The treats certain controlled commodities and their sellers in a special manner by fixing controlled prices. The sellers so treated by this Central law are so circumstanced that they cannot be equated with other sellers not effected by any control orders. The class of dealers who can raise their sale prices and absorb the surcharge levied under sub section (1) of section 5 and a class of dealers like the manufacturers andproducers of medicines and drugs who cannot raise their sale prices beyond the controlled price are treated similarly. Once the fact of different classes being separate is taken, than a State law which treats both classes equally and visits them with different burdens, would be violative of article 14. The State cannot by treating unequals as equals impose different burden on different classes. (4) The restriction imposed by sub section (3) of section 5 of the Act which prevents the manufacturers of producers of medicines and drugs from passing on the liability to pay surcharge is confiscatory and casts a disproportionate burden on such manufacturers and producers and constitutes an unreasonable restriction on the freedom to carry on their business guaranteed under article 19 (1) (g). (5) Sub s (1) section 5 of the Act is ultra vires the State Legislature of Bihar insofar as for the purpose of the levy of surcharge on a certain class of dealers, it takes into account his gross turnover as defined in section 2 (j) of the Act. It is urged that the State Legislature was not competent under Entry 54 of List II of the Seventh Schedule to enact a provision like sub section (1) of section S of the Act which makes the grass turnover of a dealer as defined in section 2 (j) to be the basis for the levy of a surcharge i. e. inclusive of transactions relating to sale or purchase of goods which have taken place in the course of inter state trade or commerce or outside the territory of India. Such transactions are outside the purview of the Act and therefore they cannot be taken 145 into consideration for computation of the gross turnover as defined in section 2 (j) of the Act for the purpose of bearing the incidence of surcharge. The contention to the contrary advanced by the learned Solicitor General appearing on behalf of the State of Bihar is that there is no inconsistency between sub section (3) of section 5 of the Act and paragraph 21 of the Control order and both the laws are capable of being obeyed. According to him, the question of repugnancy under article 254(1) between a law made by Parliament and a IdW made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent list, and there is direct conflict between the two laws. It is only when both these requirements are fulfilled that the State law will to the extent of repugnancy, become void. The learned Solicitor General contends that the question has to be determined not by the application of the doctrine of occupied field but by the rule of 'pith and substance '. He further contends that the appellants being manufacturers or producers of drugs are not governed by paragraph 21 of the Control order which relates to retail sale but by paragraph 24 thereof which deals with sale by a manufacturer or producer to wholesale distributor. Under paragraph 24 of the Control order, the manufacturer or producer is not entitled to pass on the liability to pay sales tax and the price that he charges to the wholesaler or distributor is inclusive of sales tax. He also contends that the controlled price of an essential commodity particularly of medicines and drugs fixed by a control order issued by the Central Government under sub section (1) of s: 3 of the is only the maximum price thereof and there is nothing to prevent a manufacturer or producer of medicines and drugs to sell it at a price lower than the controlled price. All that will happen, the learned Solicitor General reasons, is that the levy of surcharge under sub section (1) of section 5 of the Act will cut into the profits of the manufacturer or producer but that will not make the State law inconsistent with the Central law. As regards medicines and drugs, the surcharge being borne by the manufacturers or producers under sub section (3) of section 5 of the Act, the controlled price of such medicines and drug to the consumer will remain the same. Lastly, the Solicitor General submits that there is no material placed by the, appellants to show that the levy of surcharge under sub section (I) of section 5 of the act would impose a burden disproportionate to the profits 146 earned by them or that it is confiscatory in nature. There is, our opinion, considerable force in these submissions. Before proceeding further it is necessary to mention that the contentions raised on behalf of manufacturers and producers of medicines and drugs can govern only those appellants who are dealers in essential commodities, the controlled price of which is exclusive of sales tax as filed by control orders issued by the Central Government under sub section (1) of section 3 of the , but cannot be availed of by the other appellants who are dealers in other commodities. The case of such appellants would be squarely governed by the decision of this Court in Kodar 's case, supra, and their liability to pay surcharge under sub section (1) of section 5 of the Act must be upheld, irrespective of the contentions raised in these appeals, on based on the opening words "Subject to clauses (1) and (2)" in article 246(3) of the Constitution and on section 6 of the . It is therefore necessary to first deal with the principle laid down in Kodar 's case, supra. In Kodar 's case, supra, this Court upheld tho Constitution validity of the Tamil Nadu Additional Sales Tax Act, 1970 which imposes additional sales tax at 5% on a dealer whose annual gross turnover exceeds Rs. 10 lakhs. The charging provision in sub section (1) of section 2 of that Act is in terms similar to sub section (1) of section 5 of the Act, and provides that the tax payable by a dealer whose turnover for a year exceeds Rs. 10 lakhs shall be increased by an additional tax 5% of the tax payable by him. Sub section (2) of that Act is in pari materia with sub section (3) of section 5 of the Act and provides that no dealer referred to in sub section (I) shall be entitled to collect the additional tax payable by him. The Court laid down that: (l) The additional tax levied under sub section (I) of section 2 of that Act was in reality a tax on the aggregate of sales effected by a dealer during a year and therefore the additional tax was really a tax on the sale of goods and not a tax on the income of a dealer and therefore falls within the scope of Entry 54 of List II of the Seventh Schedule. (2) Generally Speaking, the amount or rate of tax is a matter exclusively within the legislative judgment and so long as a tax retains its avowed character and does not confiscate property to the State under the guise of a tax, its reasonableness cannot be questioned by the Court The imposition of additional tax on a dealer whose annual turnover exceeds Rs. 10 lakhs is not an unreasonable restriction on the fundamental rights guaranteed under article 19(1)(g) or (f) as the tax 147 is upon the sale of goods and was not shown to be confiscatory. (3) It is not an essential chracteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for seller to collect the tax from the purchasers. Merely because sub section (2) of section 2 of that Act prevented a dealer from passing on the incidence of additional tax to the purchaser, it cannot be said that the Act imposes an unreasonable restriction upon the fundamental rights under article 19(1)(g) or (f). The Act was not violative of article 14 of the Constitution as classification of dealers on the basis of their turnover for the purpose of levy of additional tax was passed on the capacity of dealers who occupy position of economic superiority by reason of their greater volume of businesses i.e. On capacity to pay and such classification for purposes of the levy was not unreasonable. In order to appreciate the implications of the wide ranging contentions advanced before us, it is necessary to set out the relevant statutory provisions. Sub section (1) of section 5 of the Act provides for the levy of surcharge on every dealer whose gross turnover during a year exceeds Rs. 5 lakhs and, the material provisions of which are in the following terms: "5. Surcharge (I) Every dealer whose gross turnover during a year exceeds rupees five lakhs shall, in addition to the tax payable by him under this Part, also pay a surcharge at such rate not exceeding ten per centum of the total amount of the tax payable by him, as may be fixed by the State Government by a notification published in the official Gazette: Provided that the aggregate of the tax and surcharge payable under this Part shall not exceed, in respect of goods declared to be of special importance in inter State trade or commerce by section 14 of the central Sales Tax Act, 1256 (Act 74 of 1956), the rate fixed by section 15 of the said Act: The expression "gross turnover" as defined in section 2(j) Of the Act insofar as material reads: 148 "2(j) "gross turnover" means (i) for the purposes of levy of sales tax, aggregate of sale prices received and receivable by a dealer, during any given period, in respect of sale of goods (including the sale of goods made outside the State or in the course of inter State trade or commerce or export) but does not include sale prices of goods or class or classes or description of goods which have borne the incidence of purchase tax under section 4. " Sub section (3) of section 5 of the Act, the constitutional validity of which is challenged, provides: "5(3) Notwithstanding anything to the contrary contained in this Part, no dealer mentioned in sub section (1), who is liable to pay surcharge shall be entitled to collect the amount of this surcharge. " It is fairly conceded that not only sub section (1) of section 5 of the Act which provides for the levy of surcharge on dealers whose gross turnover during a year exceeds Rs. 5 lakhs, but also sub section (3) of section 5 of the Act which enjoins that no dealer who is liable to pay a surcharge under sub section (I) shall be entitled to collect the amount of surcharge payable by him, are both relatable to Entry 54 of List II of the Seventh Schedule which reads: "54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I." There can be no doubt that the Central and the State legislations operate in two different and distinct fields. The provides for the regulation, production, a supply distribution and pricing of essential commodities and is relatable to Entry 33 of List III of the Seventh Schedule which reads: "33. Trade and commerce in, and the production, supply and distribution of, . (a) the products of any industry where the control of such industry by the Union is declared by Parliament 149 by law to be expedient in the public interest, and imported goods of the same kind as such products. " The definition of "essential commodities" in section 2(a) of the now includes 'drugs ' by the insertion of cl. (iva) therein by Act 30 of 1974. Sub section (I) of section 3 of the provides: B "3. Powers to control production, supply, distribution, etc., of essential commodities (1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof. and trade and commerce therein. " Sub section (2) lays down without prejudice to the generality of the powers conferred by sub section (1), an order made therein may provide for the matters enumerated in cls. (a) to (f). (c) of sub section (2) provides: "For controlling the price at which an essential com modify may be bought or sold. " section 6 of the which has an important bearing on these appeals is in these terms: "6. Effect of orders inconsistent with other enactments Any order made under section 3 shall have effect not withstanding anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act. " The Drugs (Price Control) order, 1979 issued by the Central Government in exercise of the powers conferred under section 3 of the provides for a comprehensive scheme of price fixation both as regards bulk drugs as well as 150 formulations. The expressions "bulk drug" and "formulation" are A defined in paragraph 2(a) and 2(f ) as: "2. In the order, unless the context otherwise requires, (a) "bulk drug" means any substance including pharmaceutical, chemical, biological or plant product or medicinal gas conforming to pharmacopoeal or other standards accepted under the , which is used as such or as an ingredient in any formulations; (f) "formulations" means a medicine processed out of, or containing one or more bulk drug or drugs, with or without the use of any pharmaceutical aids for internal or external use for, or in the . diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include We are here concerned with the impact of sub section (3) of section 5 of the Act on the price structure of formulation, but non the less much stress was laid on fixation of price of bulk drugs under paragraph 3(2) which allows a reasonable return to the manufacture under sub paragraph (3) thereof. A manufacturer or producer of such bulk drugs is entitled to sell it at a price exceeding the price notified under sub paragraph (1), plus local taxes, if any, payable. What is of essence is the price fixation of formulations and the relevant provisions are contained in paragraph, 10 to 15, 17, 20, 21 and 24. Paragraph 10 provides for a formula according to which the retail price of formulation shall be calculated and it reads: "10. Calculation of retail price of formulations The retail price of a formulation shall be calculated in accordance with the following formula, namely: R.P.=(M.C+C.C+P.M.+P.C) X 1 + MU / 100 + ED Where "R.P." means retail price. 151 "M C." means material cost and includes the cost of drugs and other pharmaceutical aids used including h overages, if any, and process loss thereon in accordance with such norms as may be specified by the Government from time to time by notification in official Gazette in this behalf. "C.C." means conversion cost worked out in accordance with such norms as may be specified by the Government from time to time by notification in the official Gazette in this behalf. "P.M." means the cost of packing material including process loss thereon worked out in accordance with such norms as may be specified by the Government from time to time by notification in the official Gazette in this behalf. "P.C." means packing charges worked out in accordance with such norms as may be specified by the Government from time to time by notification in the official Gazette in this behalf. "M.U." means mark up referred to in paragraph 11. "E.D." means excise duty: Provided that in the case of an imported formulation the landed cost shall from the basis for fixing its price along with such margin as the Government may allow from time to time. Provided further that where an imported formulation is re packed, its landed cost plus the cost of packing materials and packing charges as worked out in accordance with such norms as may be specified by the Government from time to time, by notification in the official Gazette, shall form the basis for fixing its price. Explanation For the purposes of this paragraph, "landed cost" shall mean the cost of import of drug inclusive of customs duty and clearing charges". 152 The expression "mark up" referred to above is dealt within A paragraph 11 and it provides: "11. Mark up referred to in paragraph 10 includes the distribution cost, outward freight, promotional expenses, manufacturers margin and the trade commission and shall not exceed (i) forty percent in the case of formulations specified in Category I of the Third Schedule; (ii) fifty five percent in the case of formulations specified in Category II of the said Schedule: (iii) one hundred per cent in the case of formulations specified in Category III of the said Schedule. " It is unnecessary for our purposes to reproduce the provisions of paragraphs 12 to 14 which formulate a detailed scheme of price fixation. Paragraph 15 confers power of revision of prices and it reads: "15. Power to revise prices of formulations Not withstanding anything contained in this order . (a) The Government may, after obtaining such information as it may consider necessary from a manufacturer or an importer, fix or revise the retail price of one or more formulations marketed by such manufacturer or importer, including a formulation not specified in any of the categories of the Third Schedule in such manner as the pre tax return on the sales turnover of such manufacturer or importer does not exceed the maximum pre tax return specified in the Fifth Schedule; (b) the Government may, if it considers necessary so to do in public interest, by order, revise the retail price of any formulation specified in any of the categories of the Third Schedule. " 153 Paragraph 17 Casts a mandatory duty on the Central Government to maintain 'Drugs Prices Equalisation Account ' to which shall be credited (a) by the manufacturer, importer or distributor, as the case may be (i) the amount determined under sub paragraph (2) of paragraph 7; (ii) the excess of the common selling price or, as the case may be, pooled price over his retention price; (b) such other amount of money as the Central Government may, after due appropriation made by Parliament by law in this behalf, grant from time to time. The amount credited to the Drugs Prices Equalisation Account is meant to compensate a manufacturer, importer or distributor the short fall between his retention price and the common selling price or, as the case may be, the pooled price for the purpose of increasing the production, or securing the equitable distribution and availability at fair prices, of drugs after meeting the expenses incurred by the Government in connection therewith. Every manufacturer, importer or distributor is entitled to make a claim for being compensated for the short fall. Paragraph 19 interdicts that every manufacturer or importer of a formulation intended for sale shall furnish to the dealers, State Drug Controllers and the Government, a price list showing the price at which the formulation is sold t.) a retailer inclusive of excise duty. Every such manufacturer or retailer has to give effect to the change in prices as approved by the Government. Every dealer is required to display the price list at a conspicuous part of the premises. It is, however, necessary to reproduce paragraphs 20, 21 and 24 as they are of considerable importance for our purposes and they read: "20. Retail price to be displayed on label of container Every manufacturer, importer or distributor of a formulation intended for sale shall display in indelible 154 print mark on the label of the container of the formulation or the minimum pack thereof offered for retail sale, the maximum retail price of that formulation with the words "retail price not to exceed" preceding it, and "local taxes extra" succeeding it." "21. Control of sale prices of formulations specified in Third Schedule No retailer shall sell any formulation specified in any of the categories in the Third Schedule to any person at a price exceeding the price specified in the current price list or the price indicated on the label of the container or pack thereof, whichever is less, plus the local taxes, if any, payable. Explanation For the purpose of this paragraph, "local taxes" includes sales tax and octroi actually paid by the retailer under any law in force in a particular area." "24. Price to the wholesaler and retailer (a) No manufacturer, importer or distributor shall sell a formulation to a wholesaler unless otherwise permitted under the provisions of this order or any other order made thereunder at a price higher than: (a) the retail price minus 14 per cent thereof, in the case of ethical drugs, and (b) the retail price minus 12 percent thereof, in the case of non ethical drugs. (2) No manufacturer, importer, distributor or wholesaler shall sell a formulation to a retailer unless otherwise permitted under the provisions of this order or any order made thereunder, at a price higher than: (a) the retail price minus 12 percent thereof, in the case of ethical drugs, and (b) the retail price minus 10 percent thereof, in the case of non ethical drugs. 155 Explanation For the purposes of this paragraph (i) "ethical drugs" shall include all drugs specified in Schedule C, entries Nos. 1, 2, 3, 7, 8 and 9 of Schedule C(l), Schedule E, Schedule G, Schedule and Schedule L, appended to the Drugs and Cosmetics Rules, 1945 made under the , (23 of 1940); and (ii) "non ethical drugs" shall mean all drugs other than ethical drugs. (3) Notwithstanding anything contained in sub para graphs (1) and (2), the Government may, by a general or special order, fix, in public interest, the price to the wholesaler or retailer in respect of any formulation the price which has been fixed or revised under this order. " Much emphasis was laid on fixation of price of bulk drugs under paragraph 3 which provides by sub paragraph (1) that the Government may, with a view to regulating the equitable distribution of an indigenously manufactured bulk drug specified in the First Schedule or the Second Schedule and making it available at a fair price and subject to the provisions of sub paragraph (2) and after making such inquiry as it deems fit, fix from time to time, by notification in the official Gazette, the maximum price at which such bulk drug shall be sold. Sub paragraph (2) enjoins that while filing the price of a bulk drug under sub paragraph (1), the Government may take into account the average cost of production of each bulk drug manufactured by efficient manufacturer and allow a reasonable return on net worth. Explanation thereto defines the expression "efficient manufacturer" to mean a manufacturer (i) whose production of such bulkdrug in relation to the total production of such bulk drug in the country is large, or (ii) who employs efficient technology in the production of such bulk drug. Sub paragraph (3) provides that no person shall sell a bulk drug at a price exceeding the price notified under sub paragraph (1), plus local taxes, if any, payable. It is urged that while fixing the price of bulk drug, the Government has to take into account the average cost of production 156 of that bulk drug by a particular manufacturer, by taking into A consideration the cost to a manufacturer who employs efficient methods and allowing a reasonable return on the net worth of the drug manufactured. Otherwise, every manufacturer will show a figure as cost of production, which may not be acceptable. The average cost of production of an efficient manufacturer is made the standard for fixing the price but such fixation of the price of bulk drug allows a reasonable return to the manufacturer. Under sub paragraph (3) the manufacturer or producer of such bulk drug is entitled to sell it at a price not exceeding the price so fixed plus local tax if any, payable. Much stress is laid that the average cost of an efficient manufacturer allows a reasonable return on net worth of the drug manufactured and the price so fixed is exclusive of local taxes i.e. sales tax. It is further urged that the term "local taxes" in sub paragraph (3) means and includes sales tax leviable in a State and attention is drawn to Explanation to paragraph 21 for that purpose. We fail to appreciate the relevance of sub paragraph (3) of paragraph 3 which relates to a manufacturer or producer of bulk drugs or of paragraph 21 of the Control order which fixes the controlled price of formulations specified in the Third Schedule exclusive of local taxes i.e. sales tax. The appellants are manufacturers or producers of medicines and drugs and are governed by paragraph 24. Under paragraph 24, a manufacturer or producer is not entitled to sell a formulation to a wholesaler at a price higher than the retail price minus 14% thereof in case of ethical drugs and minus 12% in case of non ethical drugs. It is quite clear upon the terms of paragraph 24 that the price chargeable by the appellants as manufacturers or producers is a price inclusive of sales tax. The entire argument built upon sub paragraph (3) of paragraph 3 and paragraph 21 of the Control order showing that the controlled price is exclusive of sales tax and thereof is in conflict with sub s (3) of section S of the Act appears to be wholly misconceived. It is urged that the appellants in their price lists have a term embodied that sales tax would be chargeable from a wholesaler or distributor and therefore they are entitled to recover sales tax on the sale of their medicines and drugs cannot possibly prevail. Such a term would be in clear violation of para graph 24 of the Control order which is an offence punishable under section 7 of the . It cannot be doubted that a surcharge partakes of the nature of sales tax and therefore it was within the competence of the State 157 Legislature to enact sub section (I) of section S of the Act for the purpose of levying surcharge on certain class of dealers in addition to the tax payable by them. When the State Legislature had competence to levy tax on sale or purchase of goods under Entry 54, it was equally competent to select the class of dealers on whom the charge will fall. If that be so, the State Legislature could undoubtedly have enacted sub section (3) of section S of the Act prohibiting the dealers liable to pay a surcharge under sub section (I) thereof from recovering the same from the purchaser. It is fairly conceded that sub section (3) of section S of the Act is also relatable to Entry 54. The contention however is that there is conflict between paragraph 21 of the Control order which allows a manufacturer or producer of drugs to pass on the liability to pay sales tax and sub section (3) of section S of the Act which prohibits such manufacturers or producers from recovering the surcharge and therefore it is constitutionally void. It is said that the Courts should try to adopt the rule of harmonious construction and give effect to paragraph 21 of the Control order as the impact of sub section (3) of section S of the Act is on fixation of price of drugs under the Drugs (Price Control) order and therefore by reason of section 6 of the , paragraph 21 of the Control order which provides for the passing on of tax liability must prevail. The submission rests on a construction of article 246 (3) of the Constitution and it is said that the power of the State Legislature to enact a law with respect to any subject in List II is subject to the power of Parliament to legislate with respect to matters enumerated in Lists I and III. It is convenient at this stage to deal with the contention of the appellants that if sub section (3) of section 5 of the Act were to cover all sales including sales of essential commodities whose prices are controlled by the Central Government under the various control orders issued under sub section (I) of section 3 of the , then there will be repugnancy between the State law and such contral orders which according to section 6 of the must prevail. In such a case, the State law must yield to the extent of the repugnancy. In Hari Shankar Bagla & Anr. vs State of Madhya Pradesh(1) the Court had occasion to deal with the non obstante clause in section 6 of the Essential Supplies (Temporary Powers) Act, 1946 which was in pari materia with section 6 of the and it was observed: 158 "The effect of section 6 certainly is not to repeal any one of these laws or abrogate them. Its object is simply to by pass them where they are inconsistent with the provisions of the Essential Supplies (Temporary Powers) Act, 1946, or the orders made thereunder. In other words, the orders made under section 3 would he operative in regard to the essential commodity covered by the Textile Control order wherever there is repugnancy in this order with the existing laws and to that extent the existing laws with regard to those commodities will not operate. By passing a certain law does not necessarily amount to repeal or abrogation of that law. That law remains unrepealed but during the continuance of the order made under section 3 it does not operate in that field for the time being. " The Court added that after in order is made under section 3 of that Act, section 6 then steps in wherein Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than that Act. Placing reliance on the observations in Hari Shankar Bagla 's case, supra, it is urged that the effect of the non obstante clause in section 6 of the is to give an overriding effect to the provisions of paragraph 21. It is further urged that paragraph 21 of the Control order having been issued by the Central Government under sub section (1) of s 3 of the which permits the manufacturer or producer to pass on the liability to pay sales tax must prevail and sub section (3) of section S of the Act which is inconsistent therewith is by passed. The contention appears to be misconceived. The appellants being manufacturers or producers of formulations are not governed by paragraph 21 of the Control order but by paragraph 24 thereof and therefore the price chargeable by them to a wholesaler or distributor is inclusive of sales tax. There being no conflict between sub section (3) of section S of the Act and paragraph 24 of the Control order, the question of non obstante clause to section 6 of the coming into play does not arise. Even otherwise i. e. if some of the appellants were governed by paragraph 21 of the Control order, that would hardly make any difference. Under the scheme of the Act, a dealer is free to pass 159 on the liability to pay sales tax payable under section 3 and additional sales tax payable under section 6 to the purchasers. Sub section (3) of section S of A the Act however imposes a limitation on dealers liable to pay surcharge under sub section (1) thereof from collecting the amount of surcharge payable by them from the purchasers which only means that surcharge payable by such dealers under sub section (I) of section S of the Act will cut into the profits earned by such dealers. The controlled price or retail price of medicines and drugs under paragraph 21 remains the same, and the consumer interest is taken care of in as much as the liability to pay surcharge sub section (3) of section 5 cannot be passed on. That being so, there is no conflict between sub section (3) of section S of the Act and paragraph 21 of the Control order. The entire sub mission advanced by learned counsel for the appellants proceeds on the hypothesis that the various control orders issued under sub section (1) of section 3 of the are for the protection of the manufacturer or producer. There is an obvious fallacy in the argument which fails to take into account the purpose of the legislation. Where the fixation of price of an essential commodity is necessary to protect the interests of consumers in view of the scarcity of supply, such restriction cannot be challenged as unreasonable on the ground that it would result in the elimination of middleman for whom it would be unprofitable to carry on business at fixed rate or that it does not ensure a reasonable return to the manufacturer or producer on the capital employed in the business of manufacturing or producing such an essential commodity. The contention that in the field of fixation of price by a control order issued under sub section (1) of section 3 of the , the Central Government must have due regard to the securing of a reasonable return on the capital employed in the business of manufacturing or producing an essential commodity is entirely misconceived. The predominant object of issuing a control order under sub section (1) of section 3 of the Act is to secure the equitable distribution and availability of essential commodities at fair prices to the consumers, and the mere circumstance that some of those engaged in the field of industry, trade and commerce may suffer a loss is no ground for treating such a regulatory law to be unreasonable, unless the basis adopted for price fixation is so unreasonable as to be in excess of the power to fix the price, or there is a statutory obligation to ensure a fair return to the industry. In Shree Meenakshi Mills 160 Ltd. vs Union of India(l) Ray, J speaking for the Court rejected the A contention that the controlled price must ensure a reasonable return on the capital employed in the business of manufacturing or producing essential commodities in these words : "In fixing the prices, a price line has to be held in order to give preference or predominant consideration to the interests of the consumers or the general public over that of the producers in respect of essential commodities. The aspect of ensuring availability of the essential commodities to the consumer equitably and at fair price is the most important consideration." In Prag Ice & Oil Mills & Anr. etc. vs Union of India(a) Chandrachud, J. (as he then was) negatived a similar contention that fixation of a price without ensuring a reasonable return to the producers or dealers was unconstitutional. In repelling the contention, Chandrachud J. speaking for the Court referred to the two earlier b decisions in Panipat Cooperative Sugar Mills vs Union of India(3) and Anakapalle Cooperative Agricultural & Industrial Society Ltd. vs Union of India(4) and observed: "The infirmity of this argument, as pointed out in Meenakshi Mills 's case, is that these two decisions turned on the language of s 3 (3C) of the under which it is statutorily obligatory to the industry a reasonable return on the capital employed in the business of manufacturing sugar. These decisions can therefore have no application to cases of price fixation under section 3 (1) read with section 3 (2) (c) of the Act. Cases falling under sub sections (3A), (3B) and (3C) of section 3 of the Act belong to a different category altogether. " The learned Chief Justice then observed: "The dominant purpose of these provisions is to ensure the availability of essential commodities to the consumers at a fair price. And though patent injustice to 161 the producer is not to be encouraged, a reasonable return on investment or a reasonable rate of profit is not the sine qua non of the validity of action taken in furtherance of the powers conferred by section 3 (1) and section 3 (2) (c) of the . The interest of the consumer has to be kept ill the forefront and the prime consideration that an essential commodity ought to be made available to the common man at a fair price must rank in priority over every other consideration. " The contention advanced does not take note of the distinction between the controlled price fixed under cl. (c) of sub section (2) of section 3 of the Act read with sub section (I) thereof and the procurement price fixed under sub sections (3A), (3B) and (3C). In fixing a procurement price under sub sections (3A), (3B) and (3C), there is a statutory obligation cast on the Central Government to ensure a fair return to the producers or dealers of essential commodities. while in fixing the controlled price under c]. (c) of sub section (2) of section 3 read with sub section (1) thereof, the predominant factor is the basis to secure the equitable distribution and availability of essential commodities at fair prices to the consumers and a reasonable return on investment or a reasonable rate of profit to the manufacturer or producer i. not a relevant criterion although it should not ordinarily work patent injustice to a manufacturer or producer. Just as the industry cannot complain of rise and fall of prices due to economic factors in open market, it cannot similarly complain of some increase in, or reduction of, prices as a result of an order issued under sub section (I) of section 3 of the essential commodities Act, or a cut in the margin of profits brought about by a provision like sub section (3) of section 5 of the Act which provides that a manufacture or producer shall not be entitled to recover the surcharge levied on him under sub section (I) of section S of the Act because such increase or reduction is also based on economic factors. The principal point in controversy is: Whether there is repugnancy between sub section (3) of section 5 of the Act and paragraph 21 of the Control order and therefore sub section (3) of section 5 must yield to that extent. The submission is that if Parliament chooses to occupy the field and there is price fixation of an essential commodity with liberty to pass on the burden of tax to the consumer by a law made by Parliament under Entry 33 of List III of the Seventh Schedule, then it is not competent for the State Legislature to enact a provision 162 like sub section (3) of section S of the Act while enacting a law under Entry 54 of List II prohibiting the passing on of liability of tax to the purchaser. The true principle applicable in judging the constitutional validity of sub section (3) of section S of the Act is to determine whether in its pith and substance it is a law relatable to Entry 54 of List II of the Seventh Schedule and not whether there is repugnancy between sub section (3) of section S of the Act and paragraph 21 of the Drugs {Price Control) order made under sub section (1) of section 3 of the , is therefore void. In dealing with the question, we must set out article 246 of the Constitution which is based on section 100 of the Government of India Act, 1935 and it reads: "246(1) Notwithstanding anything in clauses (2) and t (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 any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List"). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not 9 included in a State notwithstanding that such matter is a matter enumerated in the State List. " It is obvious that article 246 imposes limitations on the legislative powers of the Union and State Legislatures and its ultimate analysis would reveal the following essentials: 1. Parliament has exclusive power to legislate with respect to any of the matters enumerated in List I 163 notwithstanding anything contained in cls. (2) and (3). The non obstante clause in article 246(1 ) provides for predominance or supremacy of Union Legislature. This power is not encumbered by anything contained in cls. (2) and (3) for these causes them selves are expressly limited and made subject to the non obstante clause in article 246(1). The combined effect of the different clauses contained in article 246 is no more and no less than this: that in respect of any matter falling within List I, Parliament has exclusive power of legislation. The State Legislature has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule and it also has the power to make laws with respect to any matters enumerated in List III. The exclusive power of the State Legislature to . legislate with respect to any of the matters enumerated in List II has to be exercised subject to cl. (l) i.e. the exclusive power of Parliament to legislate with respect to matters enumerated in List I. As a con sequence, if there is a conflict between an entry in List I and an entry in List II which is not capable of reconciliation, the power of Parliament to legislate with respect to a matter enumerated in List TI must supersede pro tanto the exercise of power of the State Legislature. Both Parliament and the State Legislature have con current powers of legislation with respect to any of the matters enumerated in List III. article 254 provides for the method of resolving conflicts between a law made by Parliament and a law made by the Legislature of a State with respect to a matter falling in the Concurrent List and it reads: "254(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, 164 subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (2) 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. " We find it difficult to subscribe to the proposition advanced on behalf of the appellants that merely because of the opening words of article 246(3) of the Constitution "Subject to clauses (I) and (2)" and the non obstante clause in article . 246(1) ' 'Notwithstanding . anything in clauses (2) and (3)", sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the amount of surcharge must be struck down as ultra vires the State Legislature inasmuch as it is in consistent with paragraph 21 of the drugs (Price Control) order issued by the Central Government under sub section (I) of section 3 of the which enables the manufacturer or producer of drugs to pass on the liability to pay sales tax to the consumer. The submission is that sub section (3) of section 5 of the Act enacted by the State Legislature while making a law under Entry 54 of List II of the Seventh Schedule which interdicts that a dealer liable to pay surcharge under sub section (1) of section 5 of the Act shall not be entitled to collect it from the purchaser, directly trenches upon Union power to legislate with respect to fixation of price of essential commodities under Entry 33 of List Ill. It is said that if both are valid, then ex hypothesi the law made by Parliament must prevail and the State law pro tanto must yield. We are afraid, the contention cannot prevail in view of the well accepted principles, 165 The words "Notwithstanding anything contained in clauses (2) and (3) ' in article 246 (l) and the words "Subject to clauses A (I.) and (2)" in article 246(3) lay down the principle of Federal supremacy viz. that in case of inevitable conflict between Union and State powers, the Union power as enumerated in List T shall prevail over the State power as enumerated in List II and III. and in case of overlapping between List 11 and III, the 13 former shall prevail. But the principle of Federal supremacy laid down in article 246 of the Constitution cannot be resorted to unless there is an "irreconcilable" conflict between the Entries in the Union and State Lists. In the case of a seeming conflict between the Entries in the two lists, the Entries should be read together without giving a narrow and restricted sense to either of them. Secondly, an attempt should be made to see whether the two Entries cannot be reconciled so as to avoid a conflict of jurisdiction. lt should be considered whether a fair reconciliation can be achieved by giving to the language or the Union Legislative List a meaning which, if less wide than it night in another context bear, is yet one that can properly be given to it and equally giving to the language of the State Legislative List a meaning which it can properly bear. The non obstante clause in article 246(l) must operate only if such reconciliation should prove impossible. Thirdly, no question of conflict between the two lists will arise if the impugned legislation, by the application of the doctrine of "pith and substance" appears to fall exclusively under one list, and the encroachment upon another list is only incidental. Union and State Legislatures have concurrent power with respect to subjects enumerated in List III, subject only to the pro vision contained in cl. (2) of article 254 i.e. provided the provisions of the State Act do not conflict with those of any (Central Act on the subject. However, in case of repugnancy between a State Act and a Union Law on a subject enumerated in List III, the State law must yield to the Central law unless it has been reserved for the assent of the President and has received his assent under article 254(2). The question of repugnancy arises only when both the Legislatures are competent to legislate in the same field i.e. when both the Union and the State laws relate to a subject specified in List III and occupy the same field. As regards the distribution of legislative powers between the Union and the States, article 246 adopts with immaterial alterations the 166 scheme for the distribution of legislative powers contained in section 100 A of the Government of India Act, 1935. Our Constitution was not written on a clean slate because a Federal Constitution had been established by the Government of India Act, 1935 and it still remains the framework on which the present Constitution is built. The provisions of the Constitution must accordingly be read in the light of the provisions of the Government of India Act, 1935 and the principles laid down in connection with the nature and interpretation of legislative power contained in the Government of India Act, 1935 are applicable, and have in fact been applied, to the interpretation of the Constitution. In the matter of the Central Provinces & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938(1) Gwyer, C.J. referred to the two decision of the Privy Council in Citizen Insurance Company vs Wiliam Parsons(2) and Attorney General for the Province of Ontario vs Attorney General for the Dominion of Canada(3) which in his opinion had laid down 'most clearly the principles which should be applied by Courts in the matter of deciding upon the competence of the two rival Legislatures that have been set up under the Indian Federal system. With regard to the interpretation of the non obstante clause in section 100(l) of the Government of India Act, 1935 Gwyer, C.J. observed: "It is a fundamental assumption that the legislative powers of the Centre and Provinces could not have been intended to be in conflict with one another and, therefore, we must read them together, and interpret or modify the language in which one is expressed by the language of the other." "In all cases of this kind the question before the Court", according to the learned Chief Justice is not "how the two legislative powers are theoretically capable of being construed, but how they are to be construed here and now." The general scheme of the British North America Act, 1867 with regard to the distribution of legislative powers, and the general 167 scope and effect of sections 91 and 92, and their relations to each other were fully considered and commented upon in the case of Citizen Insurance Company 's case, supra. Sir Montague Smith delivering the judgment for the Board evolved the rule of reconciliation observing: "In these cases it is the duty of the Courts, however difficult it may be, to ascertain in what degree and to what extent, authority to deal with matters Falling within these classes of subjects exists in each legislature, and to define in the particular case before them the limits of their respective power. It could not have been the intention that a conflict should exist; and, in order to prevent such a result, the two sections must be read together and the language of one interpreted and, where necessary, modified by that of the other. In this way it may, in most cases, be found possible to arrive at a reasonable and practical construction of the language of the Section, so as to reconcile the respective powers they contain and give effect to all of them. Earl Loreburn, L.C. delivering the judgment of the Judicial Committee in Attorney General for the Province of Ontario 's case, (supra) observed that in the interpretation of sections 91 and 92 of the E: British North America Act: "If the text is explicit, the text is conclusive alike for what it directs and what it forbids. " When the text is ambiguous, as for example when the words establishing two mutually exclusive jurisdictions are wide enough to bring a particular power within either, recourse must be had to the context and scheme of the Act. In A.L.S.P.P. Subrahmanyan Chettiar vs Muttuswami Goundan(l) Gwyer, C.J. reiterated that the principles laid down by the Privy Council in a long line of decisions in the interpretation of sections 91 and 92 of the British North America Act, 1867 must be accepted as a guide for the interpretation of section 100 of the Government of India Act, 1935: 168 "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 build adherence 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 its true nature and character for the purpose of determining whether it is legislation in respect of matters in this list or in that. " It has already been stated that where the two lists appear to conflict with each other, an endeavour should be made to reconcile them by reading them together and applying the doctrine of pith and substance. It is only when such attempt to reconcile fails that the non obstante clause in article 246(1) should be applied as a matter of last resort. For, in the words of Gwyer, C.J. in C.P. & Berar Taxation Act 's case, supra: "For the clause ought to be regarded as a last re source, a witness to the imperfections of human expression and the fallibility of legal draftsmanship. " The observations made by the Privy Council in the Citizen 's Insurance Company 's case, supra, were quoted with approval by Gwyer, C.J. in C.P. & Berar Taxation Act 's case, supra, and he observed that an endeavour should be made to reconcile apparently conflicting provisions and that the general power ought not to be construed as to make a nullity of a particular power operating in the same field. The same duty of reconciling apparently conflicting provisions was reiterated by Lord Simonds in delivering the judgment of the Privy Council in Governor General in Council vs Province of Madras(1): "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 169 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. " B Their Lordships approved of the decision of the Federal Court in The Province of Madras vs Messrs Boddu Paidanna & Sons(l) where it was held that when there were apparently conflicting entries the correct approach to the question was to see whether it was possible to effect a reconciliation between the two entries so as to avoid a conflict and overlapping. In Prafulla Kumar Mukherjee & Ors. vs Bank of Commerce Ltd., Khulna(1) Lord Porter delivering the judgment of the Board laid down that in distinguishing between the powers of the divided jurisdictions under list I, II and III of the Seventh Schedule to the Government of India Act, 1935 it is not possible to make a clean cut between the powers of the various Legislatures. They are bound to overlap from time to time, and the rule which has. been evolved by the Judicial Committee whereby an impugned statute is examined to ascertain its pith and substance or its true character for the purpose of determining in which particular list the legislation falls, applies to Indian as well as to Dominion legislation. In laying down that principle, the Privy Council observed: "Moreover, the British Parliament when enacting the Indian Constitution had a long experience of the working of the British North America Act and the Australian Commonwealth Act and must have known that it is not in practice possible to ensure that the powers entrusted to the several legislatures will never overlap." The Privy Council quoted with approval the observations of Gwyer, C.J in Subramanyan Chettiar 's case, supra, quoted above, and observed: 170 "No doubt experience of past difficulties has made A the provisions of the Indian Act more exact in some particulars, and the existence of the Concurrent List has made it easier to distinguish between. those matters which are essential in determining to which list particular provision should be attributed and those which are merely incidental. But the overlapping of subject matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. Subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth. and many of the subjects entrusted to provincial legislation could never effectively be dealt with. " It would therefore appear that apparent conflict with the Federal power had to be resolved by application of the doctrine of pith and substance and incidental encroachment. Once it is found that a law made by the Provincial Legislature was with respect to one of the matters enumerated in the Provincial List, the degree or extent of the invasion into the forbidden field was immaterial. "The invasion of the provinces into subjects in the Federal List", in the words of Lord Porter, "was important": " . not . because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining as to what is the pith and substance of the impugned Act. Its pro visions may advance so far into federal territory as to show that its true nature is not covered 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. " The passage quoted above places the precedence according to the three lists in its proper perspective. In answering the objection that 171 view does not give sufficient effect to the non obstante clause in section 100(1) of the Government of India Act, 1935, as between the three lists, the Privy Council observed: "Where they come in conflict, List I has priority over Lists III and II and List III has priority over List II." But added: "The priority of the Federal Legislature would not prevent the Provincial Legislature from dealing with any matter within List II though it may incidentally affect any item in List I." It would therefore appear that the constitutionality of the law is to be judged by its real subject matter and not by its incidental effect on any topic of legislation in another field. The decision of the Privy Council in Prafulla Kumar Mukherjee 's case, supra, has been repeatedly approved by the Federal Court and this Court as laying down the correct rule to be applied in resolving conflicts which arise from overlapping powers in mutually exclusive lists. It may be added as a corollary of the pith and substance rule that once it is found that in pith and substance an impugned Act is a law on a permitted field any incidental encroachment on a forbidden field does not affect the competence of the legislature to enact that Act; Ralla Ram vs Province of East Punjab(2), State of Bombay vs Nerothamdas Jethabai & Anr(2), State of Bombay vs F. N. Balsara(3), A. section Krishna vs State of Madras(4), M. Karunanidhi vs Union of India(5), Union of India vs H.S. Dhillon(6) and Southern Pharmaceuticals & Chemicals Trichur & Ors. etc. vs State of Kerala & Ors. etc.(7) In Laskin 's Canadian Constitutional Law, 4th edn. , it is observed at p. 24 that the doctrine of paramountcy Is tied up with 172 the "trenching" doctrine in the first of the four propositions formulated by Lord Tomlin in Attorney General for Canada vs Attorney General for Britain Columbia & Ors.(1) case, and then he goes into the question,: "What is the basis of the paramountcy doctrine ?" Laskin quotes from Lefroy 's Canada 's Federal System at p. 126: "But the rule as to predominance of Dominion legislation it may be confidently said, can only be invoked in cases of absolutely conflicting legislations in pari materia, when it would be an impossibility to give effect to both the Dominion and the provincial enactments. " The learned author refers two the two decisions of the Privy Council in Attorney General of Ontario vs Attorney General of Canada(2) and City of Montreal vs Montreal Street Railway(3) laying down that: "There must be a real conflict between the two Acts, that is, the two enactments 'must come into collision '. . or 'comes into conflict . over a field of jurisdiction common to both '. " Laskin observes that the "conflict" test espoused by these authorities seems clear enough in principle even if it raises problems in application. He then at p. 26 notices that there is a recent trend in the decisions of the Supreme Court of Canada to the strict view of paramountcy reflected in the conflict or collision test, which he describes as the test of operating incompatibility and observes at p. 27 : . "It is necessary to be reminded at all times that no issue of paramountcy can arise unless there is in existence federal and provincial legislation which, independently considered, is in each case valid. If either piece of legislation, standing alone, is invalid there is no occasion to consider whether the field has been occupied. The issue that will have been resolved in such case would be the anterior one of the "matter embraced by the legislation, whether of Parliament or of the provincial legislature, as the case may be. " 173 At p. 28, he states: "The doctrine of occupied field applies only where there is a clash between Dominion legislation and provincial legislation within an area common to both. " Here there is no such conflict. The Union and the State laws operate on two different and distinct fields and both the laws are capable of being obeyed. Questions of conflict between the jurisdiction of Parliament of the Dominion and of the Provincial Legislature have frequently come up before the Privy Council and we may briefly refer to the decisions relied upon though they are of little assistance to the appellants. In Grand Trunk Railway Company of Canada vs Attorney General of Canada(1), Lord Dunedin observed: The construction of the provisions of the British North America Act has been frequently before their Lordships. It does not seem necessary to recapitulate the decisions. But a comparison of two cases decided in the year 1894 viz. , Attorney General of Ontario vs Attorney General of Canada(2) and Tennant vs Union Bank of Canada(3) seem to establish these two propositions First, that there can be a domain in which provincial and Dominion legislation may overlap, in which case neither legislation will be ultra vires, if the field is clear; and secondly, that if the field it not clear, and in such a domain the two legislations meet, then the Dominion legislation must prevail. " In a later decision of the Privy Council in Attorney General for Canada vs Attorney General for British Columbia & Ors. case, supra, Lord Tomlin summarized in four propositions the result of the earlier decisions of the Board on the question of conflict between the Dominion and Provincial Legislatures. The third proposition is to the effect that it is within the competence of the Dominion Parliament to provide for matters which, though otherwise within the 174 legislative competence of the Provincial Legislature, are necessarily incidental to effective legislation by Parliament of the Dominion upon a subject of legislation expressly enumerated in section 91. The fourth proposition on which the entire argument of learned counsel for the appellants proceeds is based upon the dictum of Lord Dunedin in Grand Trunk Railway Company 's case, supra, set out above. It is well settled that the validity of an Act is not affected if lt incidentally trenches upon matters outside the authorized field and therefore it is necessary to inquire in each case what is the pith and substance of the Act impugned. If the Act, when so viewed, substantially falls within the powers expressly conferred upon the legislature which enacted it, then it cannot be held to be invalid merely because it incidentally encroaches on matters which have been assigned to another Legislature. In Board of Trustees of the Lethbrige Northern Irrigation District & Anr. vs Independent order of Foresters(1), Viscount, Caldecote, L.C. Observed: "These sections have been the subject of repeated examination in the Judicial Committee, and there can no longer be any doubt as to the proper principles to their interpretation, difficult though they may be in application. Lord Haldane, in delivering the judgment of the Judicial Committee in, Great West Saddlary Co. vs The King(2) said "The rule of constraction is that general language in the heads of section 92 yields to particular expressions in section 91, where the latter are unambiguous. " In a later decision of the Judicial Committee, Attorney General for Canada vs Attorney General for British Columbia, supra, Lord Tomlin summarized in four propositions the result of the earlier decisions of the Board on questions of conflict between the Dominion and the Provincial Legislatures. The first proposition is to the effect that the legislation of the Provincial Parliament of the Dominion, so long as it strictly relates to subjects of legislation expressly enumerated in section 91, is of paramount authority, even though it trenches upon matters assigned to the Provincial 175 Legislatures by section 92, Lord Tomlin referred to Tennant vs Union Bank of Canada, supra, as the authority for this statement." Viscount Caldecote then observed: "In applying these principles, as their Lordships propose to do, an inquiry must first be made as to the "true nature and character of the enactment in question" Citizen Insurance Co. Of Canada vs Wiliam Parsons) (supra) or, to use Lord Watson 's words in delivering the judgment of the Judicial Committee in Union Colliery Company of British Columbia vs Bryden(1) as to their "pith and substance". Their Lordships now address themselves to that inquiry." "Legislation", said Lord Maugham in delivering the judgment of the Privy Council in Attorney General for Alberta vs Attorney General for Canada,(2) "given in pith and substance within one of the classes specially enumerated in section 91 is beyond the legislative competence of the Provincial Legislature under section 91". At p. 370 of the Report, Lord Maugham laid down on behalf of the Privy Council: "Since 1894 it has been a settled principle that if a subject of legislation by the Province is only incidental or ancillary to one of the classes of subjects enumerated in section 91 and is properly within one of the subjects enumerated in section 92, then legislation by the Province is competent unless and until the Dominion Parliament chooses to occupy the field by legislation." (Emphasis supplied.) Lord Maugham 's reference to the year 1894 points to the decision of the Privy Council in Attorney General for Ontario vs Attorney General for Canada, supra. In Attorney General for Canada vs Attorney General for the Province of Quebed,(3) Lord Porter in delivering the judgment of the Board drew attention to these principles and then observed: 176 "In calling attention to these principles their Lordships are but repeating what has many times been set forth in the judgments of the Board, and it only remains to apply them to the individual case under consideration. ' The rule of pith and substance laid down by the Privy Council was reaffirmed by Viscount Simon in Attorney General of Sasketchewan vs Attorney General of Canada & Ors (1) This was emphasized very clearly by Lord Atkin while dealing with the validity of the Milk and Milk Products Act (Northern Ireland) which was impugned as violating section 4 of the Government of Ireland Act, 1920 in Gallahagher vs Lynn(2) in his own terse language: "It is well established that you are to look at the "true nature and character" of the legislation; Russell vs The Queen(3) "the pith and substance of the legislation". If on the view of the statute a, whole, you find that the substance of the legislation is within the express powers, then it is now invalidated if incidentally it affects matters which are outside the authorized field. " Much stress is laid on the fourth propositions formulated by Lord Tomlin in Attorney General for Canada vs Attorney General for British Columbia & Ors., (supra) based on the dictum of Lord Dunedin in Grand Trunk Railway Company of Canada 's case, supra, which, even at the cost of repetition, we may set out below: "4. There can be a domain in which provincial and Dominion legislation may overlap, in which case neither legislation will be ultra vires if the field is clear, but if the field is not clear and the two legislations meet, the Dominion legislation must prevail: see Grand Trunk R. of Canada vs Attorney General of Canada, (supra). " The question is whether the field is not clear and the two legislations meet and therefore on the doctrine of Federal supremacy sub s (3) 177 of section S of the Act must be struck down as ultra vires The principle deducible from the dictum of Lord Dunedin as applied to the distribution of legislative powers under Art 246 of the Constitution, is that when the validity of an Act is challenged as ultra vires, the answer lies to the question, what is the pith and substance of the impugned Act ? No doubt, in many cases it can be said that the enactment which is under consideration may be regarded from more than one angle and as operating in more than one field. If however, the matter dealt with comes within any of the classes of subjects enumerated in List II, then it is under the terms of article 246 (3) not to be deemed to come within the classes of subjects assigned exclusively to Parliament under article 246 (1) even though the classes of subjects looked at signly overlap in many respects. The whole distri bution of powers must be looked at as Gwyer, C. J. Observed in C.P. & Berar Taxation Act 's case, supra, in determining the question of validity of the Act in question. Moreover, as Gwyer, C.J. Laid down in Subrahmaniyan Chettiar 's case, (supra), and affirmed by their Lordships of the Privy Council in Prafulla Kumar Mukherjee 's case, (supra) it is within the competence of the State Legislature under article 246 (3) to provide for matters which, though within the competence of Parliament, are necessarily incidental to effective legislation by the State Legislature on the subject of legislation expressly enumerated in List II. We must then pass on to the contention advanced by learned counsel for the appellants that there is repugnancy between sub s (3) of section S of the Act and paragraph 21 of the Drugs (Price Control) order and therefore sub section (3) of section 5 of the Act is void to that extent. Ordinarily, the laws could be said to be repugnant when they involve impossibility of obedience to them simultaneously but there may be cases in which enactments may be inconsistent although obedience to each of them may be possible without disobeying the other. The question of "repugnancy" arises only with reference to a legislation falling in the Concurrent List but it can be cured by resort to article 254 (2). As we have endeavoured so far, the question raised as to the constitutional validity of sub section (3) of section S of the Act has to be determined by application of the rule of the pith and substance whether or not the subject matter of the impugned legislation was competently enacted under article 246, and therefore tho question of repugnancy under article 254 was not a matter in issue. The submission 178 put forward on behalf of the appellants however is that there is direct collision and/or irreconciliable conflict between sub section (3) of section 5 of the Act which is relatable to Entry 54 of List II of the Seventh Schedule and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the which is relatable to Entry 33 of List III. It is sought to be argued that the words "a law made by Parliament which Parliament is competent to enact" must be construed to mean not only a law made by Parliament with respect to one of the matters enumerated in the Concurrent List but they are wide enough to include a law made by Parliament with respect to any of the matters enumerated in the Union List. The argument was put in this form. In considering whether a State law is repugnant to a law made by Parliament, two questions arise: First, is the law made by Parliament viz. the , a valid law ? For, if it is not, no question of repugnancy to a State law can arise. If however it is a valid law, the question as to what constitutes repugnancy directly arises. The Second question turns on a construction of the words "a law made by Parliament which Parliament is competent to enact" in article 254 (1). Strong reliance is placed on the judgment of the High Court of Australia in Clyde Engineering Company Limited vs Cowburn(1) and to a passage in Australian Federal Constitutional Law by Colin Howard, 2nd edn. at pp. 34 35. Our attention is also drawn to two other decisions of the High Court of Australia: Ex parte Mc Lean(2) and Stock Motor Ploughs Limited vs Forsyth.(3) The decision in Clyde Engineering Company 's cases, supra, is an authority for the proposition that two enactments may be inconsistent where one statute takes away the rights conferred by the other although obedience to each one of them may be possible without disobeying the other. The contention is that paragraph 21 of the Control order confers a right on the manufacturers and producers of medicines and drugs to pass on the liability for sales tax while sub section (3) of section 5 of the Act prohibits such manufacturers or producers from passing on such liability. The argument cannot prevail for two obvious reasons viz (1) Entry 54 of List II is a tax entry and therefore there is no question of repugnancy between sub section (3) of section 5 of the Act which is a 179 law made by the State Legislature for the imposition of tax on sale or purchase of goods relatable to Entry 54 and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the which is a law made by Parliament relatable to Entry 33 of List III. And (2). The question of 'repugnancy ' can only arise in connection with the subjects enumerated in the Concurrent List as regards which both the Union and the State Legislatures have concurrent powers so that the question af conflict between laws made by both Legislatures relating to the same subject may arise. This Court has considered the question of repugnancy in several cases and in Deep Chand vs The State of Uttar Pradesh & Ors.(1) the result of the authorities was thus stated by Subba Rao, J.: "Nicholas in his Australian Constitution, 2nd edn., p. 303, refers to three tests of inconsistency or repugnancy: 1. There may be inconsistency in the actual terms of the competing statutes; 2. Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court, is intended to be a complete exhaustive Code; and 3. Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter." In Ch. Tika Ramji & Ors. vs The State of Uttar Pradesh & Ors.(2) the Court accepted the above three rules evolved by Nicholas, among others, as useful guides to test the question of repugnancy. article 254 of the Constitution makes provision first, as to what would happen in the case of conflict between a Central and State 180 law with regard to the subjects enumerated in the Concurrent List, and secondly, for resolving such conflict. article 254(1) enunciates the normal rule that in the event of a conflict between a Union and a State law in the concurrent field, the former prevails over the latter. (1) lays down that if a State law relating to a concurrent subject is 'repugnant ' to a Union law relating to that subject, then, whether the Union law is prior or later in time, the Union law will prevail and the State law shall, to the extent of such repugnancy, be void. To the general rule laid down in cl. (1), cl. (2) engrafts an exception, viz., that if the President assents to a State law which has been reserved for his consideration, it will prevail notwithstanding its repugnancy to an earlier law of the Union, both laws dealing with a concurrent subject. In such a case, the Central Act will give way to the State Act only to the extent of inconsistency between the two, and no more. In short, the result of obtaining the assent of the President to a State Act which is inconsistent with a previous Union law relating to a concurrent subject would be that the State Act will prevail in that State and override the provisions of the Central Act in their applicability to that State only. The predominance of the State law may however be taken away if Parliament legislates under the proviso to cl. The proviso to article 254(2) empowers the Union Parliament to repeal or amend a repugnant State law, either directly, or by itself enacting a law repugnant to the State law with respect to the 'same matter '. Even though the subsequent law made by Parliament does not expressly repeal a State law, even then, the State law will become void as soon as the subsequent law of Parliament creating repugnancy is made. A State law would be repugnant to the Union law when there is direct conflict between the two laws. Such repugnancy may also arise where both laws operate in the same field and the two cannot possibly stand together. : See: Zaverbhai Amaidas vs State of Bombay(1), M. Karunanidhi vs Union of India(2) and T. Barai vs Henry Ah Hoe d: Anr.(2) We may briefly refer to the three Australian decisions relied upon. As stated above, the decision in Clyde Engineering Company 's case (supra), lays down that inconsistency is also created when one statute takes away rights conferred by the other. In Ex Parte McLean 's case, supra, Dixon J. laid down another test viz., two 181 statutes could be said to be inconsistent if they, in respect of an identical subject matter, imposed identical duty upon the subject, but provided for different sanctions for enforcing those duties. In Stock Motor Ploughs Limited 's case, supra, Evatt, J. held that even in respect of cases where two laws impose one and the same duty of obedience there may be inconsistency. As already stated the controversy in these appeals falls to be determined by the true nature and character of the impugned enactment, its pith and substance, as to whether it falls within the legislative competence of the State Legislature under article 246(3) and does not involve any question of repugnancy under article 254(1). We fail to comprehend the basis for the submission put forward on behalf of the appellants that there is repugnancy between sub section (3) of section 5 of the Act which is relatable to Entry 54 of List II of the Seventh Schedule and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the relatable to Entry 33 of List III and therefore sub section (3) of section 5 of the Act which is a law made by the State Legislature is void under article 254(1). The question of repugnancy under article 254(1) between a law made by Parliament and a law made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent List, and there is direct conflict between the two laws. It is only when both these requirements are fulfilled that the State law will, to the extent of repugnancy become void. article 254(1) has no application to cases of repugnancy due to overlapping found between List II on the one hand and List I and List III on the other. If such overlapping exists in any particular case, the State law will be ultra vires because of the non obstante clause in article 246(1) read with the opening words "Subject to" in article 246(3). In such a case, the State law will fail not because of repugnance to the Union law but due to want of legislative competence. It is no doubt true that the expression "a law made by Parliament which Parliament is competent to enact" in article 254(1) is susceptible of a construction that repugnance between a State law and a law made by Parliament may take place outside the concurrent sphere because Parliament is competent to enact law with respect to subjects included in List III as well as 'List I" But if article 254(1) is read as a whole, it will be seen that it is expressly made subject to cl. (2) which makes reference to repugnancy in the field of Concurrent List in other words, if cl. (2) is to be the guide in the determination of scope of cl. (1), the 182 repugnancy between Union and State law must be taken to refer only to the Concurrent field. article 254(1) speaks of a State law being repugnant to (a) a law made by Parliament or (b) an existing law. There was a controversy at one time as to whether the succeeding words "with respect to one of the matters enumerated in the Concurrent List" govern both (a) and (b) or (b) alone. It is now settled that the words "with respect to" qualify both the clauses in article 254(1) viz. a law made by Parliament which Parliament is competent to enact as well as any provision of an existing law. The under lying principle is that the question of repugnancy arises only when both the Legislatures are competent to legislate in the same field i.e. with respect to one of the matters enumerated in the Con current List. Hence, article 254(1) can not apply unless both the Union and the State laws relate to a subject specified in the Con current List, and they occupy the same field. This construction of ours is supported by the observations of Venkatarama Ayyar, J. speaking for the Court in A. section Krishna 's case, supra, while dealing with section 107(1) of the Government of India Act, 1935 to the effect: "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." In Ch. Tika Ramji 's case, supra, the Court observed that no question of repugnancy under article 254 of the Constitution could arise where parliamentary legislation and State legislation occupy different fields and deal with separate and distinct matters even though of a cognate and allied character and that where, as in that case, there was no inconsistency in the actual terms of the Acts enacted by Parliament and the State Legislature relatable to Entry 33 of List III, the test of repugnancy would be whether Parliament and State Legislature, in legislating on an entry in the Concurrent List, exercised their powers over the same subject matter or whether the laws enacted by Parliament were intended to be exhausted as to cover the entire field, and added: 183 "The pith and substance argument cannot be imported here for the simple reason that, when both the Centre as well as the State Legislatures were operating in the con current field, there was no question of any trespass upon the exclusive jurisdiction of the Centre under Entry 52 of List I, the only question which survived being whether put in both the pieces of legislation enacted by the Centre and the State Legislature, there was any such repugnancy. " This observation lends support to the view that in cases of overlapping between List II on the one hand and Lists I and III on the other, there is no question of repugnancy under article 254(1). Subba Rao. J. speaking for the Court in Deep Chand 's case, supra, interpreted article 254(1) in these terms: "article 254(1) lays down a general rule. Clause (2) is an exception to that Article and the proviso qualified the said exception. If there is repugnancy between the law made by the State and that made by the Parliament with respect to one of the matters enumerated in the Con current List, the law made by Parliament shall prevail to the extent of the repugnancy and law made by the State shall, to the extent of such repugnancy, be void. " In all fairness to learned counsel for the appellants, it must be stated that they did not pursue the point any further in view of these pronouncements. We are unable to appreciate the contention that sub section (3) of section 5 of the Act being a State law must be struck down as ultra vires as the field of fixation of price of essential commodities is an occupied field covered by a central legislation. It is axiomatic that the power of the State Legislature to make a law with respect to the levy and imposition of a tax on sale or purchase of goods relatable to Entry 54 of List 11 of the Seventh Schedule and to make ancillary provisions in that behalf, is plenary and is not subject to the power of Parliament to make a law under Entry 33 of List III. There is no warrant for projecting the power of Parliament to make a law under. Entry 33 of List III into the State 's power of taxation under Entry 54 of List II. Otherwise, Entry 54 will have to be read as: 'Taxes on the sale or purchase of goods other than essential commodities etc 184 cetra '. When one entry is made 'subject to ' another entry, all that it means is that out of the scope of the former entry, a field of legislation covered by the latter entry has been reserved to be specially dealt with by the appropriate Legislature. Entry 54 of List II of the Seventh Schedule is only subject to Entry 92A of List I and there can be no further curtailment of the State 's power of taxation. It is a well established rule of construction that the entries in the three lists must be read in a broad and liberal sense and must be given the widest scope which their meaning is fairly capable of because they set up a machinery of Government. The controversy which is now raised is of serious moment to the States, and a matter apparently of deep interest of the Union. But in its legal aspect, the question lies within a very narrow compass. The duty of the Court is simply to determine as a matter of law, according to the true construction of article 246(3) of the Constitution, whether the State 's power of taxation of sale of goods under Entry 54 of List II and to make ancillary provisions in regard thereto, is capable of being encroached upon by a law made by Parliament with respect to one of the matters enumerated in the Concurrent List. The contention fails to take into account that the Constitution effects a complete separation of the taxing power of the Union and of the States under article 246. It is equally well settled that the various entries in the three lists are not 'powers of legislation, but 'fields ' of legislation. The power to legislate is given by article 246 and other Articles of the Constitution. Taxation is considered to be a distinct matter for purposes of legisla tive competence. Hence, the power to tax cannot be deduced from a general legislative entry as an ancillary power. Further, the element of tax does not directly flow from the power to regulate trade or commerce in, and the production, supply and distribution of essential commodities under Entry 33 of List III, although the liability to pay tax may be a matter incidental to the Centre 's power of price control. "Legislative relations between the Union and the States inter se with reference to the three lists in Schedule VII cannot be under stood fully without examining the general features disclosed by the entries contained in those Lists: "Seervai in his Constitutional Law of India, 3rd edn. 1 at pp. 81 82. A scrutiny of Lists I and II of the Seventh Schedule would show that there is no overlapping 185 anywhere in the taxing power and the Constitution gives independent sources of taxation to the Union and the States. Following the scheme of the Government of India Act, 1935, the Constitution has made the taxing power of the Union and of the States mutually exclusive and thus avoided the difficulties which have arisen in some other Federal Constitutions from overlapping powers of taxation. It would therefore appear that there is a distinction made between general subjects of legislation and taxation. The general subjects of legislation are dealt with in one group of entries and power of taxation ill a separate group. In M.P. Sundararamier & Co. vs The State of Andhra Pradesh & Anr.(1) This Court dealt with the scheme of the separation of taxation powers between the Union and the States by mutually exclusive lists. In List I, Entries 1 to 81 deal with general subjects of legislation; Entries 82 to 92A deal with taxes. In List 11, Entries 1 to 44 deal with general subjects of legislation; Entries 45 to 63 deal With taxes. This mutual exclusiveness is also brought out by the fact that in List Ill, the Concurrent Legislative List, there is no entry relating to a tax, but it only contains an entry relating to levy of fees in respect of matters given in that list other then court fees. Thus, in our Constitution, a conflict of the taxing power of the Union and of the States cannot arise. That being so, it is difficult to comprehend the submission that there can be intrusion by a law made by Parliament under Entry 33 of List III into a forbidden field viz. the State s exclusive power to make a law with respect to the levy and imposition of a tax on sale or purchase of goods relatable to Entry 54 of List II of the Seventh Schedule. It follows that the two laws viz. sub section (3) of section 5 of the Act and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the , operate on two separate and distinct fields and both are capable of being obeyed. There is no question of any clash between the two laws and the question of repugnancy does not come into play. The remaining part of the case presents little difficulty. It would be convenient to deal with the contention based on articles 14 and 19 (1) (g) of the Constitution together as the submissions more or less proceed on the similar lines. It is urged that the provision contained in sub section (3) of section 5 of the act is violative of article 14 of the Constitution inasmuch as it is wholly arbitrary and irrational and it 186 treats "unequals as equals". It is urged that the treats certain controlled commodities and their sellers in a special manner by fixing controlled prices. The dealers so treated by this Central law are so circumstanced that they cannot be equated with other dealers who can raise their sale prices and absorb the surcharge levied under sub section (1) of section 5 of the act and a class of dealers like manufacturers and producers of medicines and drugs and other dealers of essential commodities who cannot raise their sale prices beyond the controlled price are being treated similarly without any rational basis. Once the fact of different classes being separate is taken, then a State law which treats both classes equally and visits them with different burdens would be violative of article 14. The State cannot by treating 'equals as unequals ' impose different burdens on different classes. It is submitted that the restriction imposed by sub section 3 of section 5 of the act which prevents the manufacturers and producers of medicines and drugs and other essential commodities from passing on the liability to pay surcharge is confiscatory and imposes a disproportionate burden on such manufacturers and producers or other dealers. These two abstract questions have been convassed on the basis that each of the appellants was a dealer having a gross turnover of Rs. 5 lakhs or more in a year and therefore liable to pay surcharge, in addition to the tax payable by him, under sub section (1) of section 5 of the Act. It is lamentable that there is no factual foundation laid to support the contention that the levy of surcharge under sub section (1) of section 5 of the Act imposes a disproportionate burden on a certain class of dealers such as manufacturers or producers of drugs and pharmaceuticals or dealers engaged in the business of distribution and sale of motor trucks etc. to support the assertion that sub section (3) of section 5 of the Act which prohibits such persons from passing on the liability to pay surcharge is arbitrary or irrational, or that it treats 'unequals as equals ' and thus infringes article 14 of the Constitution or is confiscatory in nature. There is no ground whatever for holding that sub section (3) of section 5 of the Act is arbitrary or irrational or that it treats 'unequals as equals ', or that it imposes a disproportionate burden on a certain class of dealers. It must be remembered that sub section (1) of section 5 of the Act provides for the levy of a surcharge having a gross turnover of Rs 5 lakhs or more in a year at a uniform rate of 10 per centum of the tax payable by them, irrespective whether they are dealers in essential 187 commodities or not. A surcharge in its true nature and character is nothing but a higher rate of tax to raise revenue for general purposes. The levy of surcharge under sub section (1) of section 5 of the Act falls uniformly on a certain class of dealers depending upon their capacity to bear the additional burden. From a fiscal point of view, a sales tax on a manufacturer or producer involves the complication of price structure. It is apt to increase the price of the commodity, and tends to be shifted forward to the consumer. The manufacturers or producers often formulate their prices in terms of certain profit targets. Their initial response would be to raise prices by the full amount of the tax. Where the conventional mark up leaves substantial unrealized profits, successful tax shifting is possible regardless of the nature of the tax. If, on the other hand, the tax cannot be passed on to the consumer, it must be shifted backwards to owners inputs. Despite theoretical approach of economists, businessmen always Regard the tax as a cost and make adjustments accordingly, and this is brought out by John C. Winfrey on Public Finance at p. 402 in the following passage: "The businessman . . has been skeptical regarding the entire approach of marginal cost pricing. His position has been that taxes are treated as a cost when determining prices, be it as part of a full cost pricing" rule? by application of a conventional mark up rate defined net of tax, or by pricing to meet a net of tax target rate of return. According to these formulas, a change in tax rate leads to an adjustment in price. The profits tax becomes a quasi sales tax. The fact that such a price policy is not consistent with the usual concepts of profit maximization does not disprove its existence. " Pausing here for a moment, we may observe that a surcharge being borne by the manufacturers and producers of medicines and drugs under sub section (3) of section 5 of the Act, the controlled price of such medicines and drugs to the consumer will remain the same. From the figures set out above, it will be seen that the business carried on by the appellants in the State of Bihar alone is of such magnitude that they have the capacity to bear the additional burden of surcharge levied under sub section (1) of section 5 of the Act. It roughly works out to one paisa per rupee of the sale price of the manufactured commodity. There is no material placed on record that the surcharge levied under sub section (1) of section 5 of the Act imposes a 188 disproportionate burden on the appellants or that it is confiscatory in nature. The argument of arbitrariness is an argument of despair. Sub section (1) of section Of the Act levies surcharge on dealers whose gross turnover in a year exceeds Rs. 5 lakhs irrespective of whether such dealers deal in essential commodities or not. lt is a general tax and all dealers falling within the class defined under sub section (1) of section 5 of the Act have been levied the surcharge at a uniform rate of 10 per centum of the tax. It will be noticed that first proviso to sub section (1) of section 5 enjoins that the aggregate of the tax and surcharge payable under the Act shall not exceed, in respect of goods declared to be of special importance in inter State trade or commerce by section 14 of the , the rate fixed by section 15 thereof. Under section 14 of the Act, almost all commodities which are essential to the life of the community are declared to be goods of special importance in inter State trade or commerce and therefore the maximum sales tax leviable on sale or purchase of such goods cannot exceed 4 per cent. It would therefore appear that generally dealers having a gross turnover of Rs. 5 lakhs in a year dealing in commodities covered by section 14 will not have to bear the burden of surcharge under sub section (1) of section 5 of the Act. It is the misfortune of these appellants that medicines and drugs are not declared to be of special importance in respect of inter State trade or commerce by section 14 of the . That apart, the appellants as manufacturers or producers of drugs under paragraph 24(1) have to bear the burden of sales tax on the controlled price that they cannot charge to a wholesaler a price higher than (a) the retail price minus 14 per cent thereof, in the case of ethical drugs; and (b) the retail price minus 12 per cent thereof, in the case of non ethical drugs. Under paragraph 24(2) they cannot sell to a retailer at a price higher than (a) the retail price minus 12 per cent thereof, in the case of ethical drugs; and (b) the retail price minus 10 per cent thereof, in the case of non ethical drugs. These provisions merely indicate that there is a margin of 14 per cent to the wholesaler in the case of ethical drugs and of 12 per cent in the case of non ethical drugs,. and the wholesaler has a margin of 2 per cent in either case when he sells to the retailer. In contrast, the profit margins of manufacturers and producers of medicines and drugs is considerably higher. Under the scheme of the Drugs (Price Control) order, the calculation of the retail price of formulations under paragraph 10 has to be accordance with the formula set out therein. One of the elements that enters 189 into the price structure is the 'mark up ' which is defined in paragraph 11 to include distribution cost, outward freight, promotional expenses, manufacturers margin and trade commission. Clauses (1) to (3) of the Third Schedule show that the mark up ranges from 40% in the case formulations specified in category (i), 55% in the case of formulations specified in category (ii) and 100% in the case of formulations specified in category (iii). This gives an indication of the extent of profits earned by the manufacturers and producers of formulations. In Market situations where uncertainty about demand prevails and mark up pricing is practised, the usual response is to attempt to shift taxes to the consumer. Musgrave in his Public Finance in Theory and Practice observes that economists like to think of business behaviour as being rational, in the sense of following a maximising rule, but businessmen may not act rationally. They regard the tax as a cost and make adjustments accordingly: "One of these is the practice of markup or margin pricing. Under this rule, costs are "marked up" to allow for a customary ratio of profits to costs, or price is set such as to leave profits (i.e., sales minus cost) a customary fraction of sales. Whether this gives rise to shifting depends on how costs and margins are defined. Shifting occurs if the tax is included as a cost, or if the margin if defined net of tax. " It would therefore appear that businessmen are skeptical regarding the entire approach of marginal cost pricing. their position is that taxes are treated as a cost when determining prices, be it as part of a "full cost pricing" rule, by application of a conventional mark up rate defined net of tax, or by pricing to meet a net of tax target rate of return. According to these formulae, a change in tax rate leads to an adjustment in price. If the appellants find that the levy of surcharge under sub section Of section 5 of the Act cannot be borne within the present price structure of medicines and drugs, they have the right to apply to the Central Government for revision of the retail price of formulations under paragraph 15 of the Control order. It was a startling proposition advanced by learned counsel for the appellants that the Court was wrong in Kodar 's case in 190 justifying on the basis of economic superiority the burden of additional sales tax on a certain class of dealers. It was held by the Court relying upon the dissenting opinion of Cardozo, J. in Stewart Dry Goods Co. vs Lewis ; that a gross sales tax graduated at increasing rates with the volume of sales on a certain class of dealers does not offend against article 14 of the Constitution. The contention that ability to pay is not a relevant criterion for upholding the validity of sub section (3) of section 5. Of the Act cannot be accepted. To say the least, there is no basis for this submission. It is beyond the scope of this judgment to enter into intricacies of public finance viz. Objectives and criteria of a tax, problems of shifting et cetera. Nor is it necessary for us to enter into a discussion of the so called benefit principle, or the alternative approach of ability to pay. There is probably widespread agreement now that taxes that fall on the 'better off ' rather than the worse off ' and are progressive rather tean proportional, are to be preferred. The concept of 'ability to pay ' implies both equal treatment of people with equal ability, however measured, and the progressive rate structure. The 'ability to pay ' doctrine has strong affinities to egalitarian social philosophy, both support measures designed to reduce inequalities of wealth and income. On questions of economic regulations and related matters, the Court must defer to the legislative judgment. When the power to tax exists, the extent of the burden is a matter for discretion of the law makers. It is not the function of the Court to consider the propriety or justness of the tax, or enter upon the realm of legislative policy. If the evident intent and general operation of the tax legislation is to adjust the burden with a fair and reasonable degree of equality, the constitutional requirement is satisfied. The equality clause in article 14 does not take from the State power to classify a class of persons who must bear the heavier burden of tax. The classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequalities. In Kodar 's case, supra, the constitutional validity of a similar levy was upheld on the capacity to pay. It was observed: "The large dealer occupies a possition of economic superiority by reason of his greater volume of his business. And to make his tax heavier, both absolutely and relatively, is Dot arbitrary discrimination,, but an attempt 191 to proportion the payment to capacity to pay and thus to arrive in the end at more genuine equality. " The economic wisdom of a tax is within the exclusive province of the Legislature. The only question for the Court to consider is whether there is rationality in the belief of the Legislature that capacity to pay the tax increases by and large with an increase of receipts. The view taken by the Court in Kodar 's case, supra, is in consonance with social justice in an egalitarian State and therefore the contention based on article 14 of the Constitution must fail. The contention that sub section (3) of section 5 of the Act imposes an unreasonable restriction upon the freedom of trade guaranteed under article 19 (1) (g) of the Constitution proceeds on the basis that sales tax being essentially an indirect tax, it was not competent for the Legislature to make a provision prohibiting the dealer from collecting the amount of surcharge cannot prevail. It is urged that the surcharge does not retain its avowed character as sales tax but in its true gature and character is virtually a tax on income, by reason of the limitation contained in sub section (3) of section 5 of the Act. We are not impressed with the argument. Merely because a dealer falling within the class defined under sub section (1) of section 5 of the Act is prevented from collecting the surcharge recovered from him, does not affect the competence of the State Legislature to make a provision like sub section (3) of section 5 of the Act nor does it become a tax on his income. It is not doubt true that a sales tax is, according to the accepted notions, intended to be passed on to the buyer, and the provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. But it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not effect the competence of the legislature: see: The Tata Iron & Steel Co. Ltd. vs The State of Bihar(1): M/s. J.K. Jute Mills Co. Ltd. vs The State of Uttar Pradesh & Anr.(2) 5. Kodar vs State of Kerala.(3) The contention based on the article 19 (1) (g) cannot therefore be sustained. 192 There was quite some discussion at the Bar as to whether the assent of the President is justiciable. rt was submitted that since not only sub section (1) of section 5 of the Act which provides for the levy of a surcharge on dealers having a gross turnover of Rs. 5 lakhs in a year but also sub section (3) thereof which interdicts that no such dealer shall be entitled to recover the amount of surcharge collected from him, are both relatable to Entry 54 of List II of the Seventh Schedule, there was no occasion for the Governor to have referred the Bill under article 200 to the President for his assent. It is some what strange that this argument should be advanced for the first time after a lapse of 30 years of the inauguration of the Constitution. Immediate provocation for this argument appears to be an obiter dictum of Lord Diplock while delivering the judgment of the Judicial Committee in Teh Cheng Poh @, Char Meh vs Public Prosecutor, Malaysia(1) that "the Courts are not powerless when there is a failure to exercise the power of revocation of a Proclamation of Emergency "issued by the Ruler of Malaysia under section 47 (2) of the Internal Security Act. The ultimate decision of the Privy Council was that since by virtue of s 47 (2) of that Act the security area proclamation remained lawful until revoked by resolutions of both Houses of Parliament or by the Ruler, it could not be deemed to lapse because the conditions upon which the Ruler had exercised his discretion to make the Proclamation were no longer in existence. That being so, the decision in Teh Cheng Poh 's case, supra, is not an authority for the proposition that the assent of the President is justiciable nor can it be spelled out that that Court can enquire into the reasons why the Bill was reserved by the Governor under article 200 for the assent of the President nor whether the President applied his mind to the question whether there was repugnancy between the Bill reserved for his consideration and received his assent under article 254 (2). The constitutional position of a Governor is clearly defined. The Governor is made a component part of the Legislature of a State under article 168 because every Bill passed by the State Legislation has to be reserved for the assent of the Governor under article 200. Under that Article, the Governor can adopt one of the three courses, namely: (1) He may give his assent to it, in which case the Bill becomes a law; or (2) He may except in the case of a 'Money Bill ' withhold his assent therefrom, in which cases the Bill falls through unless the procedure indicated in the first proviso is followed 193 i. e. return the Bill to the Assembly for consideration with a message, or (3) He may "on the advice of the Council of Ministers" reserve the Bill for the consideration of the President, in which case the President will adopt the procedure laid down in article 201. The first proviso to article 200 deals with a situation where the Governor is bound to give his assent and the Bill is reconsidered and passed by the Assembly. The second proviso to that Article makes the reservation for the Consideration of the President obligatory where the Bill would, "if it becomes law, dergoate from the powers of the High Court". Under article 201, when a Bill is reserved by the Governor for the consideration of the President, the President can adopt two courses, namely: (1) He may give his assent to it in which case again the Bill becomes a law; or (2) He may except where the Bill is not a 'Money Bill ', direct the Governor to return the Bill to the House or, as the case may be, the Houses of the Legislature of the State together with such message as is mentioned in the first proviso to article 200. When a Bill is so reserved by the President, the House or Houses shall reconsider it accordingly within a period of six months from the date of receipt of such message and if it is again passed by the House or Houses with or without amendment, it shall be presented again to the President for his consideration. Thus, it is clear that a Bill passed by the State Assembly may become law if the Governor gives his assent to it or if, having been reserved by the Governor for the consideration of the President, it is assented to by the President There is no provision in the Constitution which lays down that a Bill which has been assented to by the President would be ineffective as an Act if there was no compelling necessity for the Governor to reserve it for the assent of the President. A Bill which attracts article 254 (2) or article 304 (b) where it is introduced or moved in the Legislative Assembly of a State without the previous sanction of the President or which attracted article 31 (3) as it was then in force, or falling under the second proviso to article 200 has necessarily to be reserved for the consideration of the President. There may also be a Bill passed by the State legislature where there may be a genuine doubt about the applicability of any of the provisions of the Constitution which require the assent of the President to be given to it in order that it may be effective as an Act. In such a case, it is for the Governor to exercise his discretion and to decide whether he should assent to the Bill or should reserve it for consideration of the President to avoid any furture complication Even if it ultimately turns out that there was no necessity for the Governor to have 194 reserved a Bill for the consideration of the President, still he having done so and obtained the assent of the President, the Act so passed cannot be held to be unconstitutional on the ground of want of proper assent. This aspect of the matter, as the law now stands, is not open to scrutiny by the courts. In the instant case, the Finance Bill which ultimately became the Act in question was a consolidating Act relating to different subjects and perhaps the Governor felt that it was necessary to reserve it for the assent of the President. We have no hesitation in holding that the assent of the President is not justiciable, and we cannot spell out any infirmity arising out of his decision to give such assent. There still remains the contention that for the purpose of levying surcharge it is impermissible to take into account the method of computation of gross turnover, the turnover representing sales in the course of inter State trade and outside the State and sales in the course of export out of India. It is urged that the non obstante clause in section 7 of the Act has the effect of taking these transactions out of the purview of the Act with the result that a dealer is not required nor is he entitled to include them in the calculations of his turnover liable to tax thereunder. The submission is that sub section (1) of section 5 of the Act is ultra vires the State Legislature in so far as for purposes of levying the charge, the incidence of liability of a dealer to pay such surcharge depends on his gross turnover as defined in section 2 (j) of the Act. In support of the contention, reliance was placed on the following passage in the judgment of this Court in A. V. Fernandez vs State of Kerala(1): "There is a broad distinction between the provisions contained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the non liability to tax or non imposition of tax on the other. In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed. In the latter case, the 195 sales or purchases are exempted from taxation altogether. The legislature cannot enact a law imposing or authorising the imposition of a tax thereupon and they are not liable to any such imposition of tax. If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the act at all. The very fact of their non liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed. The submission appears to proceed on a misapprehension of the principles laid down in Fernandez 's case, supra. To understand the ratio deducible in Fernandez 's case, supra, a few facts have to be stated. The business of the assessee in that case consisted in the purchase of copra, manufacture of coconut oil and cake therefrom and sale of oil and cake to parties inside the State and sale of oil to parties outside the State. In 1951, the Travancore Cochin General Sales Tax Act, 1125 was amended by addition of section 26 which incorporated the ban of article 286 of the Constitution and was in pari materia with section 7 of the Act. For the year 1951 52, the Sales Tax officer assessed the assessee to sales tax on a net assessable turnover by taking the value of the whole of the copra purchased by him, adding thereto the respective values of the oil and cake sold inside the State and. deducting only the value of the copra relatable to the oil sold inside the State. It was contended by the assessee that in the calculation of the net turnover, he was entitled to include the total value of the oil sold by him, both inside and outside the State, and deduct therefrom the total value of the copra purchased by him and further, under the overriding provision of section 26 of the Act, he was entitled to have the value of the oil sold outside the State deducted. The main controversy between the parties centered around the method of computation of the net turnover. The contention advanced by the assessee was rejected by the High Court, which limited the deduction to purchase of copra relatable to the sales inside the State. In affirming that decision, this Court observed that so far as sales of coconut oil outside the State were concerned, they were, as it were, by reason of section 26 of the Act read in conjunction with article 286, taken out of the purview of the Act, and that they had the effect of setting at naught and obliterating in regard thereto the provisions contained in the Act relating to the imposition of tax on the sale or purchase of such goods and in 196 particular the provision contained in the charging section, section 3, and the provisions contained in r. 20(2) and other provisions which were incidental to the process of levying such tax. The aforementioned passage relied upon cannot be read out of context in which it appears and if so read, it is hardly of any assistance to the appellants. In the penultimate paragraph in Fernandez 's case, supra, the Court after laying down that the non obstante clause in section 26 had the effect of taking sales in the course of inter State trade and outside the State out of the purview of the Act with the result that the dealer was not required nor entitled to include them in computation e of the turnover liable to tax thereunder, observed: "This position is not at all affected by the provision with regard to registration and submissions of returns of the sales tax by the dealers under the Act. The legislature, in spite of its disability in the matter of the imposition of sales tax by virtue of the provisions of article 286 of the Constitution, may for the purposes of the registration of a dealer and submission of the returns of sales tax include these transactions in the dealer 's turnover. Such inclusion, however, for the purposes aforesaid would not affect the non liability of these transactions to levy or imposition of sales tax by virtue of the provisions of article 286 of the Constitution and the corresponding pro vision enacted in the Act, as above. " The decision in Fernandez 's case, supra, is therefore clearly an authority for the proposition that the State Legislature notwithstanding article 286 of the Constitution while making a law under Entry 54 of List II of the Seventh Schedule can, for purposes of the registration of a dealer and submission of returns of sales tax, include the transactions covered by article 286 of the Constitution That being so, the constitutional validity of sub section (1) of section 5 of the Act which provides for the classification of dealers whose gross turnover during a year exceeds Rs. 5 lakhs for the purpose of levy of surcharge, in addition to the tax payable by him, is not assailable. So long as sales in the course of inter State trade and commerce or sales outside the State and sales in the course of import into, or export out of the territory of India are not taxed, there is nothing to prevent the State Legislature while making a law for the levy of a surcharge under Entry 54 of List II of the Seventh 197 Schedule to take into account the total turnover of the dealer within the State and provide, as has been done by sub section (1) of section 5 of the Act, that if the gross turnover of such dealer exceeds Rs. 5 lakhs in a year, he shall, in addition to the tax, also pay a surcharge at such rate not exceeding 10 per centum of the tax as may be provided. The liability to pay a surcharge is not on the gross turnover including the transactions covered by article 286 but is only on inside sales and the surcharge is sought to be levied on dealers who have a position of economic superiority. The definition of gross turnover in section 2(j) of the Act is adopted not for the purpose of bringing to surcharge inter State sales or outside sales or sales in the course of import into, or export of goods out of the territory of India, but is only for the purpose of classifying dealers within the State and to identify the class of dealers liable to pay such surcharge. The underlying object is to classify dealers into those who are economically superior and those who are not. That is to say, the imposition of surcharge is on those who have the capacity to bear the burden of additional tax. There is sufficient territorial nexus between the persons sought to be charged and the State seeking to tax them. Sufficiency of territorial nexus involves a consideration of two elements viz.: (a) the connection must be real and not illusory, and (b) the liability sought to be imposed must be pertinent to that territorial connection: State of Bombay vs R.M.D. Chamarbaugwala(1), The Tata Iron & Steel Co. Ltd. vs State of Bihar(2), and International Tourist Corporation etc. vs State of Haryana & Ors.(3) The gross turnover of a dealer is taken into account in sub section (1) of section 5 of the Act for the purpose of identifying the class of dealers liable to pay a surcharge not on the gross turnover but on the tax payable by them. For these reasons, these appeals and the connected writ petitions and special leave petitions are dismissed with no order as to costs. H.L.C. Appeals dismissed.

Sub section (l) of section S of the Bihar Finance Act, 1981 provides for the levy of a surcharge in addition to the tax payable, on every dealer whose gross turnover during a year exceeds Rs. 5 lakhs and, sub section (3) thereof prohibits such a dealer from collecting amount of surcharge payable by him from the purchaser. In exercise of the power conferred by this section, the State Government fixed the rate of surcharge at 10 per cent of the total amount of tax payable by a dealer. Two of the appellants in this batch of appeals were companies engaged in the manufacture and sale of the medicines throughout India whose branches sales depots in Bihar were registered as dealers. Their products were sold through wholesale distributors/stockists appointed in almost all the districts of the Slate and their gross turnover within the State during the relevant period ran into crores of rupees. Most of the medicines and drugs sold by them were covered by the Drugs (Price Control) Order, 1919 issued under sub section (l) of 131 section 3 of the Essential Commodities Act in terms of which they were expressly prohibited from selling those medicines and drugs in excess of the controlled A price fixed by the Central Government from time to time but were allowed to pass on the liability to the consumer. During the assessment years 1980 81 and 1981 82 they had to pay the surcharge under section 5(1) of the Bihar Finance Act, 1981 at 10 per cent of the tax payable by them. The appellants challenged the Constitutional validity of sub section (3) of section 5 but the same was repelled by the High Court relying on the decision in section Kodar. vs State of Kerala, [1979]1 S.C.R. 121. It was contended on behalf of the appellants: (i) that sub section (3) of section S of the Act which is a State law relatable to Entry 54 of List 11 of the Seventh Schedule to the Constitution and which provides that no dealer shall be entitled to collect the surcharge levied on him is void in terms of the opening words of article 246(3) of the Constitution as it is in direct conflict with paragraph 21 of the Drugs (Price Control) order 1979, issued under sub section (1) of section 3 of the essential Commodities Act, 1955 which is a Union Law relatable to Entry 33 of List III and which enables the manufacturer or producer of drugs to pass on the liability to pay sales tax to the consumer; (ii) that the words "a law Mads by Parliament which Parliament is competent to enact ' contained in article 254(1) must be construed to mean not only a law made by Parliament with respect to one of the matters enumerated in the Concurrent List but also to include a law made by Parliament with respect to any of the matters enumerated in the Union List and therefore sub section (3) of section 5 of the Act being repugnant to Paragraph 21 of the Control order is void under article 254(iii) that if both sub section (1) and sub section (3) of section 5 were relaxable to Entry 54 of List II, there was no need for the Governor to have referred the Bihar Finance Bill, 1981 to the President for his assent and that the President 's assent is justiciable; (iv) that dealers of essential commodities who cannot raise their sale prices beyond the controlled price cannot be equated with other dealers who can raise their sale prices and absorb the surcharge and since sub section (3) of section S treats "unequals as equals" it is arbitrary and irrational and therefore Violative of article 14 of the Constitution: (v) that sales tax being essentially an indirect tax, the legislature was not competent to make a provision prohibiting the dealer from collecting the amount of surcharge and that the true nature and character of surcharge being virtually a tax on income, sub section (3) of section 5. is unconstitutional as it imposes an unreasonable restriction upon the freedom of trade guaranteed under article 19(1)(g). (vi) that sub section (3) of section S of the Act which is a State law being repugnant to paragraph 21 of the Drugs (Price Control) Order which is issued under a Union law, the latter must prevail in view of the non obstants clause in section 6 of the Essential Commodities Act and the former which is inconsistent therewith should be by passed in terms of the decision in Hari Shankar Bagla and Anr. vs State of Madhya Pradesh, [1955] I S.C.R. 380. and (vii) that in view of the decision in A. V fernandez vs State of Kerala.[1957] S.C.R. 837, sub section (1) of section 5 of the Act which makes the "gross turnover" as defined in section 2(j) of the Act which includes transactions taking place in the course of inter state or International Commerce to be the basis for the levy of surcharge is ultra vires the State Legislature, 132 Dismissing the appeals, ^ HELD: 1. (a) It cannot be doubted that the surcharge partakes of the nature of sales tax and therefore it was within the competence of the State Legislature to enact sub section (1) of section 5 of the Act for the purpose of levying surcharge on certain class of dealers in addition to the tax payable by them. When the State Legislature had competence to levy tax on sale or purchase of goods under Entry 54 of List II of the Seventh Schedule it was equally competent to select the class of dealers on whom the charge would fall. If that be so, the State Legislature could undoubtedly have enacted sub section (3) of section S prohibiting the dealers liable to pay the surcharge under sub s.(l) thereof from recovering the same from the purchaser. [156 H 157 B] (b) The power of the State Legislature to make a law with respect to the levy and imposition of a tax on sale or purchase of goods relatable to Entry 54 of List II and to make ancillary provisions in that behalf is plenary and is not subject to the power of Parliament to make a law under Entry 33 of List III. There is no warrant for projecting the power of Parliament to make a law under Entry 33 of List III into the State s power of taxation under Entry 54 of List II. Otherwise, Entry 54 of List II will have to be read as: "Taxes on sale or purchase of goods other than the essential commodities, etc. " When one entry is made 'subject to ' another entry, all that it means is that out of the scope of the former entry, a field of legislation covered by the latter entry has been reserved to be specially dealt with by the appropriate legislature. Entry 54 of List II is only subject to Entry 92A of List I and there can be no further curtailment of the State 's power of taxation. [183 F H, 184 A B] (c) The Constitution effects a complete separation of the taxing power of the Union and of the States under article 246 The various entries in the three lists are not 'powers of legislation, but 'fields of legislation. The power to legislate is given by article 246 and other Articles of the Constitution. Taxation is considered to be a distinct matter for purposes of legislative competence. Hence, the power to tax cannot be deduced from a general legislative entry as an ancillary power. Further, the element of tax does not directly flow from the power to regulate trade or commerce in, and the production supply and distribution of essential commodities under Entry 33 of List II, although the liability to pay tax may be a matter incidental to the Centre 's power of price control. [184 E G] (d) A scrutiny of Lists I and II would show that there is no overlapping anywhere in the taxing power and that the Constitution gives independent sources of taxation to the Union and the States. There is a distinction made between general subjects of legislation and taxation and these are dealt with in separate groups of entries: in List I, Entries I to 81 deal with general subjects of legislation and entries 82 to 92A deal with taxes; in List II Entries I to 44 deal with general subjects of legislation and Entries 45 to 63 deal with taxes. This mutual exclusiveness is also brought out by the fact that in List III, there is no entry relating to a tax it only 133 contains an entry relating to levy of fees. Thus, in our Constitution, a conflict of taxing power of the Union and of the States cannot arise. The two A laws viz., sub section (3) of section S of the Act and paragraph 21 of the Drugs (Price Control) order issued under sub s (I) of section 3 of the Essential Commodities Act operate on two separate and distinct fields and both are capable of being obeyed. There is no question of any clash between them. [184 H 185 F] M.P. Sundararamier and Co. vs State of Andhra Pradesh and Anr., ; , referred to. Seervai: Constitutional Law of India, 3rd Ed., Vol, I, pp. 81 82, referred to. (e) The words `Notwithstanding anything contained in cls. (2) and (3) in cl. (1) of article 246 and the words "Subject to cls. (1) and (2)" in cl. (3) thereof lay down the principle of Federal Supremacy viz., that in case of inevitable conflict between Union and State powers, the Union power as enumerated in List I shall prevail over the State power as enumerated in Lists ll and III, and in case of overlapping between Lists li and III, the former shall prevail. But the principle of Federal Supremacy laid down in article 246 cannot be resorted to unless there is an 'irreconcilable ' conflict between the Entries in the Union and State Lists. The non obstante clause in cl. (I) of article 246 must operate only if reconciliation should prove impossible. However, no question of conflict between the two Lists will arise is the impugned legislation, by the application of the doctrine of 'pith and substance ' appears to fall exclusively under one List, and encroachment upon another List is only incidental [165 A E] (f ) The true principle applicable in judging the constitutional validity of sub section (3) of section S of the Act is to determine whether in its pith and substance it is a law relatable to Entry 54 of List II and not whether there is repugnancy between it and paragraph 21 of the Drugs (Price Control) order The constitutionality of the law has to be judged by its real subject matter and. not by its incidental effect upon any topic of legislation in another field. Once it is found that in pith and substance the impugned Act is a law on a permitted field any incidental encroachment on a forbidden field does not affect the competence of the legislature to enact that Act. No doubt, in many cases it can be said that the enactment which is under consideration may be regarded from more than one angle and as operating in more than one field. If, however, the matter dealt with comes within any of the classes of subjects enumerated in List II, then, under the terms of article 246(3) it is not to be deemed to come within the classes of subjects assigned exclusively to Parliament under article 246(1) even though the classes of subjects looked at singly overlap in many respects. The whole distribution of powers must be looked at from the point of view of determining the question of validity of the impugned Act. It is within the competence of the State Legislature under article 246(3) to provide for matters which though within the competence of Parliament, are necessarily incidental to effective legislation by the State Legislature on the subject of legislation expressly enumerated in List II. [162 B, 171 D, 177 C E] 134 In the Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938, ; Citizen Insurance Company vs William Parsons, ; Attorney General for the Province of ontario vs Attorney General for the Dominion of Canada, ; A.L.S.P.P.L. Subrahmanyam Chettiar vs Muttuswami Goundan, ; Governor General in Council vs Province of Madras, ; The Province of Madras vs Messers Boddu Paidanna & Sons, , Prafulla Kumar Mukherjee & Ors vs Bank of Commerce Ltd., Khulna, A.I.R. ; and Grand Trunk Railway Company of Canada vs Attorney General of Canada, L R [19071 A.C. 65, referred to. 2.(a) The question of repugnancy under article 254(1) between a law made by Parliament and a law made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent List and there is direct conflict between the two laws. It is only when both these requirements are fulfilled that the State law will, to the extent of repugnancy become void. article 254(1) has no application to cases of repugnancy due to overlapping found between List ll on the one hand and List I and List Ill on the other. If such overlapping exists in any particular case, the State law will be ultra Vires because of the non obstante clause in article 246(1) read with the opening words 'Subject to ' in Art 246(3). In such a case, the State law will fail not because of repugnance to the Union law but due to want of legislative competence. [145 C, 181 F] (b) It is no doubt true that the expression "a law made by Parliament which Parliament is competent to enact" in article 254(1) is susceptible of a construction that repugnance between a State law and a law made by Parliament may take place outside the Concurrent sphere because Parliament is competent to enact law with respect to subjects included in List III as well as List I. But, if article 254(1) is read as a whole, it will be seen that it is expressly made subject to cl. (2) which makes reference to repugnancy in the field o Concurrent List. In other words, if cl. (2) is to be the guide in the determination of the scope of cl. (l), the repugnancy between Union and State law must be taken to refer only to the Concurrent field. article 254(1) speaks of a State law being repugnant to a law made by Parliament or an existing law. The words "with respect to qualify both the clauses in article 254(1) viz., a law made by Parliament which Parliament is competent to enact as well as any provision of an existing law. The underlying principle is that the question of repugnancy arises only when both the legislatures are competent to legislate in the same field, i.e., with respect to one of the matters enumerated the Con current List. [181 G 182 A, R C] Deep Chand vs State of Uttar Pradesh & Ors [1959] Supp. 2 S.C.R. 8 Ch. Tika Ramji & ors vs State of Uttar Pradesh & Ors., ; zaverbhai Amidas vs State of Bombay, [1955] I S.C.R. 799; M. Karunanidhi vs Union of India, ; ; T. Barai vs Henry Ah Hoe, [1983] I S.C.C. 177; A. section Krishna vs State of Madras, [1957] S.C.R. 399; Clyde Engineering C xf8. Ltd. vs Cowburn, [1926] 37 Com. L.R. 465; Ex Parte Mclean, [1930] 43 ; and Stock Motor Ploughs Limited vs Forsyth, , referred to. (c) Entry 54 of List II is a tax entry and therefore there is no question of repugnancy between sub section (3) of section 5 of the Act and paragraph 21 of the Control order. The question of repugnancy can only arise in connection with the subjects enumerated in the Concurrent List as regards which both the Union and the State Legislatures have concurrent powers. [178 G 179 B] B 3. It is clear from articles 200 and 201 that a Bill passed by the State Assembly may become law if the Governor gives his assent to it or if, having been reserved by the Governor for the consideration of the President, it is assented to by the President. There is no provision in the Constitution which lays down that a Bill which has been assented to by the President would be ineffective as an Act if there was no compelling necessity for the Governor to reserve it for the assent of the President. It is for the Governor to exercise his discretion and to decide whether he should assent to the Bill or should reserve it for consideration of the President to avoid any future complication. Even if it ultimately turns out that there was no necessity for the Governor to have reserved a Bill for the consideration of the President still he having done so and obtained the assent of the President, the Act so passed cannot be held to be unconstitutional on the ground of want of proper assent. This aspect of the matter, as the law now stands, is not open to scrutiny by the Courts. In the instant case, the Finance Bill which ultimately became the Act in question was a consolidating Act relating the Different subjects and perhaps the Governor felt that it was necessary to reserve it for the assent of the President The assent of the President is not justifiable and the Court cannot spell out any infirmity arising out of his decision to give such assent. [193 A 194 B] Teh Chang Poh @ Char Meh. vs Public Prosecutor. , Malaysia, referred to. (a) There is no ground for holding that sub section (3) of section 5 of the Act is arbitrary or irrational or that it treats "unequals as equals" or that it imposes a disproportionate burden on a certain class of dealers. A surcharge in its true nature and character is nothing but a higher rate of tax to raise revenue for general purposes. The levy of surcharge under sub section (l) of section S falls uniformly on a certain class of dealers depending upon their capacity to bear the additional burden. The economic wisdom of a tax is within the exclusive province of the legislature. The only question for the Court to consider is whether there is rationality in the behalf of the legislature that capacity to pay the tax increases by and large with an increase of receipts. The view taken by the Court in kodar 's case that, to make the tax of a large dealer heavier is not arbitrary discrimination, but an attempt to proportion the payment to capacity to pay, and thus to arrive at a more genuine equality, is in consonance with social justice in an egalitarian State. [186 H 187 A, 191 B, 191 A] section Kodar vs State of Kerala, [1975] I S.C.R. 121, relied on. 136 (b) There is no basis for the submission that the Court was wrong in Podar 's case. The contention that ability to pay is not a relevant criterion for upholding the validity of sub section (3) of section 5 of the Act in question cannot be accepted. On questions of economic regulations and related matters, the Court must defer to the legislative judgment. When the power to tax exists, the extent of the burden is a matter for the discretion of the law makers It is not the function of the Court to consider the propriety or justness of a tax or enter upon the realm of legislative policy. If the evident intent and general operation of the tax legislation is to adjust the burden with a fair and reasonable degree of equality, the constitutional requirement is satisfied The equality clause in article 14 does not take away from the State the power to classify a class of persons who must bear the heavier burden of tax. The classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequalities. [189 H 190 G] (c) There is no lacteal foundation laid to support the contention that the levy of surcharge imposes a disproportionate burden on a certain class of dealers such as manufacturers or producers of drugs, etc. The business carried on by the appellants in the State of Bihar alone is of such magnitude that they have the capacity to bear the additional burden of surcharge That apart under the scheme of the Control order the profit margins of manufacturers and producers of medicines and drugs is considerably higher than that of wholesalers. If the appellants find that the levy of surcharge cannot be borne within the present price structure of medicines and drugs, they have the right to apply to the Centrals Government for revision as the retail price of 'formulations under paragraph I S of the Control order. G, 189 G] 5. It is no doubt true that a sales tax is, according to the accepted notions, intended to be passed on to the buyer, and the provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. However, it is not an essential characteristic of sales tax that the seller must have the right to pass it on to the consumer; nor is the power of the legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not affect the competence of the legislature. The contention based on article 19(1)(g) cannot therefore be sustained. [191 E H] The Tata Iron & Steel Co., Ltd. vs The State of Bihar, ; ; M/s. J. K Judge Mills Co. Ltd. vs 'The State of Uttar Pradesh; , and section Kodar vs State of Kerla, [1975] I S.C.R. 121, referred to. (a) The appellants being manufacturers or producers of 'formulations ' are not governed by paragraph 21 of the Control order but by paragraph 24 thereof and therefore the price chargeable by them to wholesaler or distributor is inclusive of sales tax. There being no conflict between sub section (3) of 137 section 5 of the Act and paragraph 24 of the Control order, the question of the non obstante clause to section 6 of the Essential Commodities Act coming into play does A not arise. [158 G] Hari Shankar Bagla & Anr. vs State of Madhya Pradesh, , referred to. (b) Even otherwise, i.e., if some of the appellants were governed by paragraph 21 of the Control order, that would hardly make any difference. Under the scheme of the Act, a dealer is free to pass on the liability to pay sales tax payable under section 3 and additional sales tax payable under section 6 to the purchasers. Sub section (3) of section 5 however imposes a limitation on dealers liable to pay surcharge under sub section (I) thereof from collecting the amount of surcharge payable by them from the purchasers which only means that surcharge payable by such dealers under sub section (I) of section 5 will cut into the profits earned by such dealers. The controlled price or retail price of medicines and drugs under paragraph 21 remains the same, and the consumer interest is taken care of inasmuch as the liability to pay surcharge; under sub section (3) of section 5 cannot be passed on. That being so, there is no conflict between sub section (3) of section 5 of the Act and paragraph 21 of the Control order. [158 H 159 C] The predominant object of issuing a control order under sub section (I) of section 3 of the Essential Commodities Act is to secure the equitable distribution and availability of essential commodities at fair prices to the consumers, and the mere circumstance that some of those engaged in the field of industry, trade or commerce may suffer a loss is no ground for treating such a regulatory law to be unreasonable, unrest the basis adopted for price fixation is so unreasonable as to be in excess of the lower to fix the price, or there is a statutory obligation to ensure a fair return to the industry. [159 G H] Shree Meenakshi Mills Ltd. vs Union of India, ; and Prag Ice & oil Mills vs Union of India, ; referred to 7. The decision in Fernandez 's case is an authority for the proposition that the State Legislature, notwithstanding article 286 of the Constitution, while r making a law under Entry 54 of the List II can, for purposes of registration of a dealer and submission of returns of sales tax, include the transactions covered by article 286. That being so, the constitutional validity of sub section (I) of section 5 which provides for the classification of dealers whose gross turnover during a year exceeds Rs. 5 lakhs for the purpose of levy of surcharge in addition to the tax payable by them, is not assailable. So long as sales in the course of inter State trade and Commerce or sales outside the State and sales in the course of import into, or export out of the territory of India are not taxed there is nothing to prevent the State Legislature while making a law for the levy of surcharge under Entry 54 of the List II to take into account the total turnover of the dealer within the State and provide that if the gross turnover of such dealer exceeds Rs. 5 lakhs in a year he shall, in addition to the tax, also pay a surcharge at such rate not exceeding 10% of the tax as may be provided. The liability to pay the surcharge is not on the Gross turnover 138 including the transactions covered by article 286 but is only on inside sales and A the surcharged is sought to be levied on dealers who have a position of economic superiority. The definition of gross turnover in section 2(j) is adopted not for the purpose of bringing to surcharge inter State sales etc., but is only for the purpose or classifying dealers within the State and to identify the class of dealers liable to pay such surcharge. There is sufficient territorial nexus between the persons sought to be charged and the State seeking to tax them. [196 F 197 D] A. V. Fernandez vs State of Kerala, ; ; State of Bombay vs R.M.D. Chamarbaugwala, ; ; The Tata Iron and Steel Company Ltd. vs State of Bihar, ; ; and International Tourist Corporation etc. vs State of Haryana and Ors. , ; , referred to.

Appeal No. 1654 of1967. Appeal from the judgment and. order dated February 1, .1967 of the Mysore High Court in Writ Petition No. 846 of 1965i . B. Sen, R. Gopalakrishnan, R.N. Sachthey and B.D. Bharma for the appellant. K. Srinivasan, M.K. Ramamurthi, Vineet Kumar and Shyamala Pappu, for he respondent. 31 The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought by certificate on behalf of the II1 Income Tax Officer, Mangalore from the judgment of the Mysore High Court dated February 1, 1967 in Writ Petition No. 846 of 1965 holding that the notice under section 226(3) of the Income Tax Act, 1961, hereinafter called the 'new Act ', bearing No. 770 d/60 61, 61 62, 62, 63 and 63 64 issued by the III Income Tax Officer to M/s. Rajarajeswari Motor Service, Mangalore, produced as exhibit VIII with the writ petition was invalid and inoperative in respect of the following items of tax and penalty included therein : 1. Tax for the assessment year 1960 61, Rs. 7,056.50 2. Tax for the assessment year 1961 62, Rs. 485.55 3. Penalty for 1962 63 Rs. 1,890.00 4. Tax for the assessment year 1963 64 Rs. 64,307.00 and quashing the notice to that extent. The impugned notice was issued under section 226( 3 ) of the new Act. The respondent, Sri M. Damodar Bhat was in arrears in respect of income tax and penalty levied on him in respect of three or four assessment years. The total amount shown as due in the notice was Rs. 74,086.02 and was made up as follows: 1. Tax for the assessment year 1960 61; Rs. 7,056.15 2. Tax for the assessment year 1961 62; Rs. 485.55 3. Balance of tax for the assess ment year 1962 63; Rs. 346.42 4. Penalty for assessment year 1962 63 Rs. 1,890.00 5. Tax for the assessment year 1963 64 Rs. 64,307.90 Rs, 74,086;02 It is necessary at this. stage to set out the relevant provisions of the Income Tax Act, 1961 (Act 43 of 1961 ) and of the Income Tax Act, 1922 (Act 11 of 1922), hereinafter referred to as the 'old Act '. Section 156 of the new Act is to.the following effect: "Notice of demand. When any tax, interest, penalty, fine or any other sum is payable in consequence 32 of any order passed under this Act, the Income tax Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. " Sections 220, 221 and 222 of the new Act provide,: "220. When tax payable and when assessee deemed ' in default. ( 1 ) Any amount, otherwise, than by way of advance tax specified as payable in a notice of demand under Section 156 shall be paid within thirty five days of the service of the notice at the place and to the person mentioned in the notice: (2 ) If the amount SpeCified in any notice of demand under Section 156 is not paid within the period limited ' under sub section (1 ), the assessee shall be liable to pay simple interest at nine per cent per annum from the day commencing after the end of the period mentioned in sub section ( 1 ): (4) H the amount is not paid within the time limited under sub section (1 ) or extended ' under subsection (3 ), as the case may be, at the place and to the person mentioned in the said notice the assessee shall be deemed to be in default. (6) Where an assessee has presented an appeal under Section 246 the Income tax Officer may, in his discretion, and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired, as long as such appeal remains undisposed of. 221. Penalty payable when tax in default. ( 1 ) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall ', in addition to the mount of the arrears and the mount of interest payable under sub section (2) of Section 220, be liable to pay ,by way of penalty, an mount which, in the case of a continuing default, may be increased from time to time, so, however, that the total mount of penalty does not exceed the amount of tax in arrears: Provided that before levying any such penalty the. 33 assessee shall be given a reasonable opportunity of being heard. (2 ) Where as a result of any final order the amount of tax, with respect to the default in the payment of which the panalty was levied, has been wholly reduced, the penalty levied shall be cancelled and the amount of penalty paid shall be refunded. Certificate to Tax Recovery Officer. (1) When an assessee is in default or is deemed to be in, default in making.a payment of tax, the Income tax Officer may forward to the Tax Recovery Officer certificate under his signature specifying the amount of arrears due from the assessee, and the Tax Recovery Officer on receipt of such certificate, shall proceed to recover from such assessee the amount specified thereto by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule (a) attachment and sale of the assessee 's movable property; (b) attachment and sale of the assessee 's immovable property; (c) arrest of the assessee and his detention in prison; (d) appointing a receiver for the management of the assessee 's movable and immovable properties. (2) The Income tax Officer may issue a certificate under sub section (1 ), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken. " Section 226 states as follows: "226. Other modes of recovery. ( 1 ) Notwithstanding the issue of a certificate to the Tax Recovery Officer under Section 222, the Income tax Officer may ' recover the tax by any one or more of the modes provided in this section. ( 3 ) ( i ) The Income tax Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may, subsequently hold money for or on account of the assessee, to pay to the Income tax Officer either forthwith upon the 34 money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held), so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that mount. (ii) A notice under this sub section may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and for the purposes of this sub section, the shares of the joint holders in such account shall be presumed, until the contrary is proved to be equal. (iii) A copy of the notice shall we forwarded to the assessee at his last address known to the Income tax Officer, and in the case of a joint account to all the joint holders at their last addresses known to the Income tax Officer. (iv) Save as otherwise provided in this sub section, every person to whom a notice is issued under this sub section shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made withstanding any rule, practice or requirement to the contrary. (v) Any claim respecting any property in relation "to which a notice trader this sub section has been issued rising after the date of the notice shall be void as against any demand contained in the notice. (x) If the person to whom a notice under this subsection is sent fails to make payment in pursuance thereof to the Income tax Officer, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as it were an arrear of tax due from him, in the manner provided in Sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under 'Section 222. 35 Section 297 provides as follows: "297. Repeals and savings. ( 1 ) The Indian Income tax Act, 1922 (11 of 1922), is hereby repealed. (2) Notwithstanding the repeal of the Indian Income tax Act, 1922 ( 11 of 1922 ), (hereinafter referred to as the repealed Act), (g) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March, 1962, or any earlier year, which is completed on or after the 1st day of April, 1962, may be initiated and any such penalty may be imposed under this Act; (j) any sum payable by way of income tax, supertax, interest, penalty or otherwise under the repealed Act may be recovered under this Act, but without prejudice to any action already taken for the recovery of such sum under the repealed Act; . . . . . . Section 29 of the old Act reads: "When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so 'payable. " Section 6 of the General Clauses Act, (Act 10 of 1897) states: "Effect of repeal. Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of. any enactment so repealed or anything duly done or suffered thereunder; or 36 (c ) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so. repealed; or (e) affect any investigation, legal. proceeding or remedy in respect of any such right , privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed. " As regards the second item in the impugned notice, viz., tax in respect of assessment year 1961 62 to the extent of Rs. 485.55 the material facts are as follows: The assessment proceedings were taken and concluded under the old Act and tax of Rs. 2,947.56 was imposed and demanded. Thereafter, the respondent preferred an appeal to the Appellate Assistant Commissioner. In appeal the tax liability was reduced to Rs. 485.55. Thereupon the Income Tax Officer issued a notice to the respondent dated December 11, 1963 purporting to be under section 156 of the new Act. The limit of 35 days for payment of the amount expired on January 22, 1964. The impugned notice under section 226(3) was issued nearly two years thereafter on April 23, 1965. The argument on behalf of the respondent was that both the assessment order as well as the appellate order having been made under the old Act, the provisions of section 226 of the new Act were not applicable. The High Court has. accepted this contention of the respondent and has held that the notice was invalid to the extent it included the tax of Rs. 485.55 for the assessment year 1961 62. The contention of the appellant is that the High Court was in error in holding that action under section 226 of the new Act was possible only in the case of an assessee who was "in default" and that in the case of an assessment under the old Act, no notice under section 156 of the new Act was possible and there was no way of taking advantage of the provisions for recovery and collection of tax contained in sections 220 to 234 of the new Act. In our opinion, the argument on behalf of the appellant is well founded and must be accepted as correct. In the first place, it is necessary to notice that section 220(4) of the new Act mentions in what circumstances the assessee shall be deemed to be in default and section 222 provides that when an assessee is in default or is deemed to be in default in making payment of tax, the Income Tax 'Officer may forward to the Tax RecOvery Officer a certificate under his signature 37 specifying the amount of arrears. due from the assessee, and the Tax Recovery Officer on receipt. of such certificate, shall proceed to. recover from the assessee the amount specified therein by one or more of the modes mentioned in the section. Section 226, however, provides for other methods of recovery and there is no reference in section 226(3) to any default on the part of the assessee. Section 226(3) merely states that the Income Tax Officer may, "at any time or from time to time,"by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may, subsequently hold money for or on account of the assessee, to pay to the Income 'Tax officer either forthwith so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount. In a proceeding under section 226( 3 ) of the new Act therefore it is not necessary that the assessee should be in default or should be deemed to be in default and no such condition or limitation is imposed by the language of that sub section. We are accordingly of the opinion that the Income Tax Officer had authority W issue the notice dated December 11, 1963 under section 156 of the new Act with respect to the tax liability of Rs. 485.55 incurred by the respondent under the old Act. The High Court has expressed the view that "in the case of an assessment under the old Act no notice under section 156 of the new Act was possible", and "there was no way of taking advantage of the provisions for recovery and collection of tax contained in sections 220 to 234 of the new Act". The High Court has based its opinion on the premise that all recoveries are possible "only when the stage mentioned in section 220(4) was reached, namely, that the assessee had become or deemed to have been an assessee in default" and the action under section 226 could be taken only when an assessee was in default. In our opinion, the reasoning adopted by the High Court and the conclusion reached by it is not correct in law. The effect of the judgment of the High Court on this point is that the provisions of section 297(2)(j) of the new Act are nullified and declared to be of no consequence. An interpretation of section 226(3) of the new Act which leads to such a starting result should be avoided as it is opposed to all sound canons of interpretation. As we have already stated, there is nothing in the language of section 226(3 ) of the new Act to warrant the conclusion that the assessee should be in default or should be deemed to be in default before the issue of the notice under that sub section. It is true that the group of sections from section 220 to section 232 of the new Act are placed under the heading "Collection and recovery". But in a case falling within section 297(2)(j) of the new Act, for example in a proceeding for recovery of tax and penalty imposed ,under the old Act, it is not required that all the sections of the new Act relating to recovery and collection should be literally applied but only such 38 of the sections will apply as are appropriate in the particular case and subject, if necessary, to. suitable modifications. In other words, the procedure of the new Act will apply to the cases contemplated by section 297(2)(j) of the new Act mutatis mutandis. In this connection it is relevant to refer to the decision of this Court in Kalawati Devi Harlalka vs C.I.T., West Bengal(1), in which it was pointed out that section 6 of the General Clauses Act will not apply in respect of those matters where Parliament had clearly expressed its intention to, the contrary by making detailed provisions for similar matters mentioned in that section. For these reasons we are of opinion that the Income Tax Officer had authority to issue the notices under section 156 and section 226(3) of the new Act with respect to the liability of the respondent under the old Act. The High Court was therefore in error in holding that the impugned notice was inoperative in regard to the amount of Rs. 485.55 for the assessment year 1961 62. As regards items 4 and 5 for the assessment years 1962 63 and 1963 64 the argument of the respondent is that the impugned notice issued on April 23, 1965 was not legally valid as notices of demand were served on the respondent for payment of these sums and time given in this notice was due to expire on May 21, 1965. The impugned notice was issued on April23, 1965, nearly a month before that date. As the tax and penalty covered by the notice were not due till May 21, 1965 it was ' said that notice of attachment under section 226(3) of the new Act could not legally ., be issued on April 23, 1965. In our opinion, there is no warrant for this argument. As we have already observed, there is nothing in the language of section 226(3 ) of the new Act to suggest that the assessee must be in default before a notice under that subsection could be issued. It is. true that section 220 of the new Act deals with the question as to when the tax is payable and when the assessee is .deemed to be in default but so far as section 226(3) of the new Act is concerned, the question of any default of the assessee is irrelevant. It was argued by Mr. Srinivasan on behalf of the respondent that the amount of tax must be "due to be paid" by the assessee before a notice can be issued under section 226(3) of the new Act. It is not disputed in this case that the notices of demand under section 156 of the new Act were served on the respondent before the issue of the notice under section 226(3) of the new Act. As pointed out by this Court in Kesoram Industries & Cotton Mills Ltd. vs Commissioner of Wealth Tax (Central), Calcutta (a), the liability to pay income tax is a present liability though the tax becomes payable after it is quantified in accordance with ascertainable data 'and therefore the amount of the provision for payment of income tax and super tax in respect of the year of account ending March 31, 1957 in that case, was a "debt owed" within the (1) (2) (1966)2 S.C.R. 688. 39 meaning of section 2(m) of the Wealth Tax Act and was as such deductible in computing the net wealth. It was further observed in that case that there was a perfected debt at any rate on the last date of the accounting year and not a contingent liability. In the present case, there is the additional circumstance that the assessments of tax and penalty have been made against the respondent and demand notices have also been issued under section 156 of the new Act. It is therefore not possible to argue that the amount of tax and penalty for the assessment ' years 1962 63 and 1963 64 were. not "due by the assessee" on April 23, 1965 when the notice under section 226(3) of the new Act was issued. We are accordingly of the opinion that Mr. Srinivasan is unable to make good argument on this aspect of the case. It follows therefore that the impugned notice dated April 23, 1965 was validly issued as regards items 4 & 5, viz., Penalty for assessment year 1962 63 i.e., Rs. 1,890/ and tax for the assessment year 1963 64 i.e. Rs. 64,307.90. We proceed to consider the next question arising in this appeal, viz., whether the High Court was right in taking the view that the Income Tax OffiCer did not properly exercise the statutory discretion in issuing the impugned notice with regard to the first item, viz., tax for the assessment year 1960 61 amounting to ]Rs. 7,056.15. It was argued on behalf of the respondent that there was an appeal pending with the Appellate Assistant Commissioner against the order of assessment and therefore it was incumbent upon the Income Tax Officer to exercise the statutory discretion properly under section 220 (6) of the new Act in treating the assessee as being in default. The finding of the High Court is that the Income Tax Officer "was not shown to have applied his mind to any of the facts relevant to the proper exercise of his discretion". In our opinion, the finding of the High Court cannot be upheld, because the respondent has not alleged in his writ petition any specific particulars in support of his, case that the Income Tax Officer has exercised his discretion in an arbitrary manner. In paragraph 12(b) of the writ petition the respondent had merely said that "the order of the Income Tax Officer made under section 220 was arbitrary and capricious". No other particulars were given by the respondent in his writ petition to show in what way the order was arbitrary or capricious. In the counter affidavit the allegations of the respondent have been denied in this respect. We are of opinion that in the absence of specific particulars by the respondent in his writ petition it is not open to the High Court to go into the question whether the Income Tax Officer has arbitrarily exercised his discretion. In the result we hold that the respondent is unable to substantiate his case that the impugned notice is in any way defective with regard to item No. 1 i.e., tax for the assessment year 1960 61 amounting to Rs. 7,056.15. 40 For the reasons expressed we set aside the judgment of the Mysore High Court dated February 1, 1967 and order that the writ petition No. 846 of 1965 filed by the respondent should be dismissed. We accordingly allow this appeal with costs. R.K.P.S. Appeal allowed.

By a writ petition under Article 226 of the Constitution the respondent challenged the validity of a notice under section 226( 3 ) of the Income tax Act, 1961, in respect of tax due from him for the four assessment years from 1960 61 to 1963 64 and penalty for the assessment year 1962 63. For the assessment year 1961 62 the assessment proceedings against the respondent were taken and concluded under the Income tax Act, 1922, and as a result of an appeal filed by the respondent, the tax liability was reduced by the Appellate Assistant Commissioner. The I.T.O. thereafter issued a notice to the respondent on December 11, 1963, under section 156 of the 1961 Act requiring him to make payment within 35 days. This period expired on January 22, 1964. The impugned notice under section 226(3) was issued much later on April 23, 1965. It was contended on behalf of the respondent that both the assessment order as well as the appellate order having been made under the 1922 Act, the provisions of section 226 of the 1951 'Act were not applicable. As regards the. penalty sought to be recovered under the impugned notice for the assessment year 1962 63 and tax for 1963 64, it was contended by the respondent that as notices of demand had been served on him for payment of the two sums and the time given in the notice was due to expire on May 21, 1965, the impugned notice dated April 23, 1965 issued prior to the expiry of the time given to him was illegally issued; furthermore, the amount of tax must be "due to be paid by the assessee before a notice can be issued under section 225(3)of the 1961 Act. In respect of the assessment for 1960 61, it was contended before the High Court that the I.T.O. did not properly exercise the statutory discretion vested on him in issuing the impugned notice when there was an appeal pending against the order of assessment before the AppeLlate Assistant Commissioner. The High Court allowed the petition and accepted all the respondent 's contentions. It also held that action under section 226 of the 1961 Act was possible only in the case of an assessee who was "in default" and that in the case of an assessment under the 1922 Act, no notice under section 156 of the new Act was possible and there was no way of taking advantage of the provisions for the 'recovery and collection of tax contained in sections 220 to 234 of the new Act. On appeal to this Court, HELD: The impugned notice under s, 226(3) was valid and the writ petition must be dismissed. 30 (i) The Income tax Officer had authority to issue the. notices under section 156 and section 226(3) of the new Act with respect to the liability of the respondent under the old Act. The High Court was therefore in error in holding that the impugned notice was inoperative in regard to the amount to be recovered for the assessment year, 19 '51 62. [37 D] The High Court had wrongly based its opinion on the premise that all recoveries are possible "only when the stage mentioned in section 220(4) was reached, namely, that the assessee had become or deemed to have been an assessee "in default" and the action under section 226 could be taken only when an assessee was in default. The effect of the reasoning adopted by the High Court on this point is that the provisions of section 297(2) of the new Act are nullified and an interpretation of section 226(3 ) of the new Act which leads to such a startling result should be avoided as it is opposed to all sound canons of interpretation. [37 E G] In a case falling within section 297(2)(j) of the new Act, for example in a proceeding for recovery of tax and penalty imposed under the old Act, it not required that all the sections of the new Act relating to recovery and collection should be literally applied but only such of the sections will apply as are appropriate in the particular ease and subject, if necessary, to suitable modifications. In other words, the procedure of the new Act will apply to the cases contemplated by section 297(2)(j) of the new Act routatis mutandis. [37 H 3 8 A] Kalawati Devi Harlalka vs C.I.T. West Bengal, ; referred to. The assessments of tax and penalty for 1962 63 and 1963 64 had been made against the respondent and the demand notices had also been issued under section 156 of the new Act. It was not therefore possible to contend that the amount of tax and penalty were not ',due from the assessee" on April 23, 1965 when the impugned notice under section 226(3) was issued. [38 H, 3,9 B C] Kesoram Industries & Cotton Mills Ltd. vs Commissioner of Wealthtax (Central), Calcutta, ; , referred to. (iii)The finding of the High .Court that the Income tax Officer was not shown to have applied his mind to any of the facts relevant to ' the proper exercise of his discretion in relation to the assessment for the year 1960 61 could not be Upheld as the respondent had. not alleged any specific particulars in his writ petition in support of his case that the I.T.O. had exercised his discretion in an arbitrary manner. [39 F]

Appeal No. 891 of 1963. Appeal by special leave from the judgment and decree dated June 26, 1959 of the Assam High Court in Letter Patent Appeal No. 1 of 1959. N. C. Chatterjee and D. N. Mukherjee, for the appellants. Sarjoo Prasad and K. P. Gupta for respondents. The Judgment of the Court was delivered by Shah, J. Biswambar Roy predecessor interest of the appellants was Granted on February 20, 1928, a lease for ten 115 years 1335 B.S. to 1344 B.S. at an annual rental of Rs. 75/ in respect of a plot of land, part of Dag No. 3615 in the town of Silchar, District Cachar in the State of Assam. Biswambar Roy constructed on the land, buildings, some for residential use, and others as warehouses. On the expiry of the period of the original lease, Biswambar Roy obtained a fresh lease in respect of a part of the land for ten years Baisakh 1345 B.S. to Chaitra a 1354 B.S. at an annual rental of Rs. 70/ under an instrument dated February 22, 1938. The respondents purchased the interest of the landlords the land and instituted on August 3, 1951 an action in the Court of the Sadar Munsiff, Silchar against Biswambar Roy for a decree for vacant possession of the land. The suit was decreed by the Munsiff. Biswambar Roy appealed to the Subordinate Judge, Silchar. During the pendency of the appeal, the Non agricultural Urban Areas Tenancy Act 12 of 1955 enacted by the Assam Legislature was brought into force. Biswambar Roy claimed protection from eviction under section 3 of Act 12 of 1955. The Subordinate Judge held that Biswambar Roy had acquired under section 5(1)(a) of the Act the rights of a permanent tenant, since he had constructed within the period prescribed permanent structures for residential or business purposes. He accordingly reversed the decree passed by the Trial Court and dismissed the suit. Against that decree, an appeal was preferred to the High Court of Assam. Deka, J., held that Biswambar Roy could not claim the protection of section 5(1) (a) of the Act, since he had let out to tenants the buildings constructed on the land. In the view of the learned Judge, by the use of the expression "for residential or business purposes" in section 5(1)(a) it is intended that buildings constructed by the tenant should be utilized by the tenant himself for his own residence or for carrying on business and that it is not the intention of the Legislature that third persons should be protected by section 5 from eviction from those structures. An appeal under the Letters Patent from that judgment was heard by C. P. Sinha, C. J., and Mehrotra, J. The learned Judges differed. Sinha, C. J., was of the view that permanent structures constructed by Biswambar Roy conformed to the descripticon "residential or business purposes" and Biswambar Roy became under Act 12 of 1955 a permanent tenant thereof and was not liable to be evicted except for non payment of rent. With that view Mehrotra, J., did not agree. He held that a tenant who obtains land on lease for erecting a structure thereon not for his own residential or business purposes but for letting out to others does not build "a permanent structure on the land of, the tenancy for residential or business purposes". and may not claim protec tion under section 5(1)(a). Since there was no majority concurring in the judgment agreeing or reversing the decree appealed from, under section 98(2) of the Code of Civil Procedure the appeal was ordered to be dismissed. Against the decree passed by the High Court, with special leave, this appeal is preferred. 116 This Court has held that section 5 of Assam Act 12 of 1955 has retrospective operation: Refiquennessa vs Lal Bahadur Chetri & Others,(1) and the only question to be determined in this appeal is whether a tenant qualifies for protection under section 5 of the Act only after building permanent structures on the land of the tenancy if he occupies them for his own residential or business purposes. The material part of the section reads: "(1) Notwith tanding anything in any contract or in any law for the time being in force (a) Where under the terms of a contract entered into between a landlord and his tenant whether before or after the commencement of this Act, a tenant is entitled to build, and has in pursuance of such terms actually built within the period of five years from the date of such contract, a permanent structure on the land of the tenancy for residential or business purposes, or where a tenant not being so entitled to build, has actually built any such structure on the land of the tenancy for any of the purposes aforesaid with the knowledge and acquiescence of the landlord, the tenant shall not be ejected by the landlord from the tenancy except on the ground of non payment of rent;" Protection under the first part of section 5(1)(a) may be claimed by a tenant if three conditions co exist: (i) under the terms of the contract of tenancy the tenant is entitled to build on the land of the tenancy; (ii) that pursuant to such liberty, he has actually built, within the period of five years from the date of the contract a permanent structure on the land of the tenancy; and (iii) that the permanent structure is for residential or business purposes. The first two conditions are fulfilled in this case. But the learned Judges of the High Court disagreed on the fulfillment of the third condition: they differed as to the true meaning of the expression" a permanent structure. . for residential or business purposes". In the view of Sinha, C. J., under the Act the character of the structure is determinative and not personal use by the ten. ant. Mehrotra, J., held that the permanent structure must be for residential or business purposes of the tenant. We are unable to agree with the view taken by Mehrotra, J., because the Legislature has not, in conferring rights of permanent tenancy, either expressly or by implication enacted any such qualification as is suggested by the learned Judge. The section merely requires that the permanent structure must be one adapted for residential or business purposes. If the structure is not adapted to such purposes, the protection of section 5(1)(a) will not be available. To read the expression "permanent (1) ; 117 structure on the land of the tenancy for residential or business purposes" as meaning permanent structure on the land of the tenancy constructed by the tenant for his own residential or business purposes is to add words which are not found in the section. It was urged on behalf of the landlords that it could not have been the intention of the Legislature to confer by section 5(1)(a) protection upon sub tenants. It was said that a sub tenant is not a tenant within the meaning of section 3(g) of the Act, and he cannot claim protection from eviction under section 5(1)(a). In our judgment, the argument is wholly misconceived. Protection is conferred in terms by section 5 upon the tenant of the land and not upon the tenant of the buildings constructed upon the land. It is not necessary in this case to consider whether by virtue of the definition of "tenant" in section 3(g) of the Act which includes a person who derives his title from a tenant, a sub tenant of the land is entitled to protection of section 5(1)(a). In the present case, the tenant of the land has claimed protection. By merely letting the premises constructed on the land obtained by him on lease, the tenant does not cease to be in possession of the land. The relation between the landlord and the tenant of the land continues to subsist until it is lawfully determined. Possession of the land obtained by the tenant remains his even after he has let out the building constructed by him, and a building constructed by the tenant for use as residential or business purposes does not cease to be one for residential or business purposes, when it is let out. We therefore agree with the view taken by Sinha, C. J., that the protection of section 5(1)(a) extends to a tenant who has constructed on the land obtained on lease permanent structures which are adapted for use for residential or business purposes and by letting out the structures the tenant does not forfeit the protection conferred by the statute. The appeal is therefore allowed and the decree passed by the High Court vacated and the plaintiffs ' suit dismissed. The appellants who are the representatives of the tenant will be entitled to their costs in this Court. There will be no order as to costs in the High Court. Appeal allowed.

Certain structures for residential and business purposes were raised by a tenant of land in the term of Silchar in Assam. The landlord secured a decree for ejectment against the tenant. During the pendency of the appeal the Non Agricultural Urban Areas Tenancy Act, Assam Act 12 of 1955 was brought into force. The tenant claimed protection from eviction under section The Subordinate Judge held that the tenant had acquired units section 5(1) (a) of the Act the right of a permanent tenant since he had constructed within the pres cribed period structures for residential or business purposes. He accordingly dismissed the suit. The High Court in further appeal held that the protection under section 5(1)(a) was not available to the tenant since he had let out to tenants the buildings constructed on the land. The tenant, by special leave, appealed to this Court. HELD:(i) The section merely requires that the permanent structure must be one adapted for residential or business purposes. If the structure is not adapted to such purposes. the protection of section 5 (1) (a) will not be available. To read the expression "permanent structure on the land of the tenancy for residential or business purposes" as meaning permanent structure on the land of the tenancy constructed by the tenant for his own residential or business purposes is to add words which are not found in the section. [116 H]. (ii) Protection is conferred in terms by section 5 upon the tenant of the land and not upon the tenant of the buildings constructed upon the land. By letting out the structures the tenant of land does not lose the protection given by the statute. [117 C].

vil Appeal Nos. 207 208 (NT) of 1979. From the Judgment and Order dated 10th August, 1977 of the Kerala High Court in T.R.C. Nos. 61 and 62 of 1976. P.S. Poti and K.R. Nambiar for the Appellants. T.S. Krishnamoorthy Iyer, S.B. Sawhney and V.B. Saharya for the Respondents. The Judgment of the Court was delivered by section RANGANATHAN, J. 1. A very interesting question as to the principles of interpretation of legislation by incorporation or references arises for consideration in these appeals arising out of certain assessments to sales tax in Kerala. Section 9 of the Kerala General Sales Tax Act 1963 which came into force on 1.4.1963 granted exemption from sales tax on goods specified in the third Schedule to the said Act. These included the following: 5. Sugar as defined in item 1 of the First Schedule to the : 6. Tobacco as defined in item 4 of the First Schedule to the and 7. Cotton fabrics, silk fabrics woollen fabrics and rayon or artificial silk fabrics as defined in item Nos. 19. 20, 21 and 22 respectively of the First Schedule to the . The question before us is whether, in respect of the assessment years 1971 72 and 1972 73, with which we are concerned, the exemption given to `cotton fabrics ' under item 7 above should be restricted to `cotton fabrics ' as defined in the Central Excises & Salt Act, 1944 (`the 1944 Act ') as it stood on 1.4.1963 or whether it would also cover goods falling under the said definition after its amendment in 1969. Though we are concerned only with the interpretation of the Kerala General Sales Tax Act, 1963, it is necessary PG NO 605 to refer back to the earlier history of some Central as well as State legislations: (i) We start with the 1944 Act. By this Act, excise duty was levied on the manufacture or production of various types of goods enumerated in the First Schedule to the Act. Item 19 (originally item 12) of the First Schedule, as it stood on 1.4.1963, defined `cotton fabrics ' thus: "cotton fabrics `Cotton Fabrics ' mean all varieties of fabrics manufactured either wholly or partly from cotton and include dhoties, sarees, chadars, bed sheets, bed spreads, counter panes and table cloths, but do not include any such fabric xxx xxx xxx xxx Item 19 was amended by the Finance Act, 1969. After amendment, it reads thus: "Cotton Fabrics `Cotton Fabrics ' means all varieties of fabrics manufactured either wholly or partly from cotton and includes dhoties, sarees, chaddars, bed sheets, bed spreads, counter panes, table cloths, embroidery in the piece, in strips or in motifs and fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic materials but does not include xxx xxx" (Underlining ourS ) The question set out earlier assumes importance because the respondents assessees deal in "P.V.C. Cloth", an item of goods which is clearly covered by the amended definition but perhaps, not by the original one. (ii) In 1957, there were certain legislations of Parliament affecting the levy of sales tax and excise duty. The first of these was the (C.S.T. Act) passed in pursuance of Article1e 286 (3) of the Constitution of India which reads thus: "Any law of a State shall, in so far as it imposes or authorises the imposition of, a tax on the sale or purchase PG NO 606 of goods declared by Parliament by law to be of special importance in inter state trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify. " The C.S.T. Act received the assent of the President on 24.12.56. section 14 of the Act declared certain goods to be goods of special importance in inter state trade or commerce. (hereinafter referred to as `declared goods '.) These included, as on 1.4.1963, the following: "(ii a) cotton fabrics, as defined in Item No. 19 of the First Schedule to the Central Excises and Sait Act, 1944; xxx xxx xxx (vii) rayon or artificial silk fabrics, as defined in Item No. 22 of the First Schedule to the Central Excises and Salt Act, 1944(1 0f 1944) (viii) sugar, as defined in Item No. 1 of the First Schedule to the ( 1 of 1944) (ix) tobacco, as defined in Item No. 4 of the First Schedule to the ( 1 of 1944) (x) woollen fabrics, as defined in Item No. 21 of the First Schedule to the (xi) silk fabrics as defined in Item No 20 of the First Schedule to the . The definitions of the above goods were thus related to their definitions under the 1944 Act. section 15 of the Act imposed certain restrictions and conditions in regard to tax on sale or purchase of declared goods within a State. It may be mentioned that this section, as originally enacted in 1956, had been amended w.e.f. 6.6.1957. by Act 16 of 1957 and, again, by Act 31 of 1956, w.e.f. 1.10.1958. (iii) About the same time as the C.S.T. Act, Parliament also enacted the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (`the 1957 Act '). The statement of objects and reasons of this Act reads as follows: PG NO 607 " The object of this legislation is to impose additional duties of excise in replacement of the sales tax levied by the Union and the States on sugar, tobacco and mill made tex tiles and to distribute the net proceeds of these taxes, except the proceeds attributable to Union Territories, to the States. The distribution of the proceeds of the additional duties broadly followed the pattern recommended by the Second Finance Commission. Provision has been made that the States which levy a tax on the sale or purchase of these commodities after 1st April, 1958 to not participate in the distribution of the net proceeds. Provision is made in the Act for including these goods in the category of goods declared to be of special importance in inter state trade or commerce so that, following the imposition of uniform duties of excise on them, the rates of sales tax, if levied by the State are subject from 1st April, 1958 to the restrictions in s 15 of the section 3 of this Act originally levied an additional excise duty on sugar tobacco, cotton fabrics, rayon or artificial silk and woollen fabrics and section 2(c) defined the above goods as having the meanings respectively assigned to them in item Nos. 8, 9, 12, 12A and 12B (subsequently changed as item 1, 4,19,12 and 22 respectively) of the First Schedule to the 1944 Act. It ma be mentioned here that the Finance Act 1961 had amended section 14 of the C.S.T. Act by including, as item (xi): "silk fabrics as defined in item 20 of the First Schedule of the 1944 Act". It also simultaneously amended the 1957 Act by adding a reference to `silk fabrics ' in section 3 (1), in the definition clause section 2 (c) as well in the Schedule. However, in 1968 when the was amended against by deleting the reference to `silk fabrics '; there was no corresponding amendment in the 1957 Act. The Finance (N0. , substituted the word "man made fabrics" for the words "rayon or artificial silk fabrics": w.e.f. 8.8.1977 and included a definition of he new expression in item 22 of the Schedule to the 1944 Act and the 1957 Act. section 7 of the Act, as originally enacted, declared that the goods declared to by of special importance would, from 1.4.1968, be subject to the restrictions and conditions specified in section 15 of the . This section was omitted, w.e.f. 1.10.1958. by Act 31 of 1958 which also amended section 15 of the (iv) The levy of sales tax in Kerala was formerly governed by the (Act XI of 1125) PG NO 608 Malayalam Era 1125 corresponds to 1950 of the Gregorian Calendar. This Act was amended by the General Sales Tax (Amendment) Ordinance, (No. 8 of 1957) w.e.f. 14.12.57, the Ordinance being replaced by the General Sales Tax (Amendment) Act VII of 1958 with retrospective effect from the same date. This amendment Act inserted section 5A in the 1125 Act which exempted certain goods from the levy of sales tax. Sub section (1) of this section read thus: "5A. Exemption of the tax on the sale of mill made textile (other than pure silk), tobacco and sugar: (1) The sale by any dealer of (i) mill made textile, other than pure silk, (ii) tobacco, and (iii) sugar; other than stock of such goods in his possession, custody or control immediately before the 14th day of December, 1957, shall, as from that date, be exempt from taxation under s . 3, sub s . " Thus Act was replaced by the Kerala General Sales Tax Act, 1963 (`the 1963 Act '), as already mentioned w.e.f. 1.4.63. (v) We have already referred to section 9 and item 7 of the Third Schedule to the 1963 Act. The Kerala General Sales Tax (Second Amendment) Act, (Act 16 of 1967) amended item 7 of 1963 Act to reads as follow w.e.f. 1.9.1967; "7. Cotton fabrics, woollen fabrics and rayon or artificial silk fabrics as defined in item nos. 19, 21 and 22 respectively of the First Schedule to the Central Excises & Salt Act, 1944. In other words, the exemption granted to `silk fabrics ' was taken away mention may also be made that by reason of a later amendment, `silk fabrics ' was included as one of the items on which single point tax was leviable under the 1963 Act. This item, in the First Schedule to the Act as it stood on 1.4.1980. read: PG NO 609 "101 `Silk fabrics ', that is to say, all varieties of fabrics manufactured either wholly or partly from silk including embroidery in piece, in strips or in mofits, but not including such fabrics on which duty of excise is leviable under sub section (1) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act (Central Act 58 of 1957)". (vi) Reference may also be made to one more enactment, though it has no direct bearing on the issue before us. This is the (Central Act 40 of 1978). This Act charged an additional duty of excise in respect of various goods specified in the Schedule to the Act over and above the duty chargeable on them under the 1944 Act. These goods included "cotton fabrics" "silk fabrics", "woollen fabrics ,"man made fabrics" and "wool tops" as defined in items 19,320,21,22 and 43 of the First Schedule to the 1944 Act. These are the relevant statutory provisions. On these the question to be considered is: What is the effect of the mention of the definition of "cotton fabrics" given in the 1944 Act in the Schedule to the 1963 Act? Does it attract only the said definition as on 1.4 1963 or also the subsequent amendments thereto? To appreciate the contentions urged, it is necessary to make a brief reference to the principles of interpretation of an enactment which for purposes of convenience. refers to or incorporates a provision of another. These have been discussed in various earlier decision viz, Secretary of State vs Hindustan Cooperative Insurance Society Ltd., [1931] 58 I .A. 259, Collector of Customs vs Nathella Sampathu Chetty & another; , , Ram Sarup vs State, Ram Kirpal vs State. [1970] 3 S.C.R, New Central Jute Mills Co. Ltd. vs The Assistant Collector. ; , State of Madhya Pradesh vs Narasimhan, , Bhajva vs Gopikabai, ; , Mahindra & Mahindra Ltd. vs Union, and Western Coal Fields vs Special Area Development Authority. ; It unnecessary to make a detailed reference to these decisions. It is sufficient to say that they draw a distinction between referential legislation which merely contains a reference to or citation of, a provision of another statue and a piece of referential legislation which incorporates within itself a provision of another statute. In the former case, the provisions of the second statue, along with all its amendments and variations from time to time, should be read into the first statute. In the later case, the position will be as outlined in Narasimhan, [1976] 1 S.C.R. where after PG NO 610 referring to Secretary of State vs Hindustan Cooperative Insurance Society Ltd., [1931] 58 I.A. 259, this Court summed up the position thus: "On a consideration of these authorities, therefore, it seems that the following proposition emerges: Where a subsequent Act incorporates provisions of a previous Act then the borrowed provisions become an integral and independent part of the subsequent Act and are totally unaffected by any repeal or amendment in the previous Act. This principle, however, will not apply in the following cases: (a) where the subsequent Act and the previous Act are supplemental to each other; (b) where the two Acts are in pari materia; (c) where the amendment in the previous Act, if not imported into the subsequent Act also, would render the subsequent Act wholly unworkable and ineffectual; and (d) where the amendment of the previous Act, either expressly or by necessary intendment, applies the said provisions to the subsequent Act." Applying the above principles to the facts of the present case, the High Court in its judgment on a reference made to it under the 1963 Act (and reported in 4 1 S.T.C. 1) observed: "In the light of the principles thus formulated, it seems unnecessary for us to labour the point whether we are confronted in these cases with a "reference" or "citation" on the one hand, or an "incorporation" on the other, of the definition of `cotton fabrics ' in item 19 of the Schedule 1 of the Central Excise and Salt Act, into the provisions of Section 9 read with item No. 7 of the III Schedule of the General Sales Tax Act, 1963. If the definition was merely by way of `reference or 'citation ', the referred or cited provision grows and shrinks with the changes in the parent. Even in the case of an incorporated definition while the general principle is that the incorporated definition PG NO 611 remains static and is unaffected by the developments or fluctuations of the parental source from which it was incorporated, two of the well recognised exceptions formulated by the Supreme Court in State of M.P. vs M. V. Narasimhan; , seem to apply here, that is, exceptions (a) and (c), xxx. The concept of `cotton fabrics ' in the seems to be integrally linked with the provisions of the General Sales Tax Act and we do not think that we would be justified in regarding the latter Act as unaffected by the growing concept of the term `cotton fabrics ' in the . We feel too, that unless the extended definition of the is imported into the Sales Tax Act, the latter Act would become unworkable and ineffectual. Sri Potti, learned counsel for the State of Kerala, submitted that the P.V.C. cloth manufactured by the respondents in this case was not entitled to exemption from sales tax if the earlier definition of the 1944 Act, before the amendment, were to apply. He submitted that the 1963 Act has incorporated in its third schedule the definition of the 1944 Act as it stood at the time of its enactment and that this incorporation is unaffected by subsequent changes in the contested the correctness of the High Court 's observations that the concept of `cotton fabrics in the 1944 and 1963 Acts were integrally linked and that, unless the extended definitions of the former were imported into the latter, the latter Act would become unworkable and ineffectual. According to him, the provisions of the CST Act and the 1957 Act have been unnecessarily brought into the discussion in order to forge a connection between the various enactments and in an attempt to lend strength to an argument that the exemption of an item of goods from the levy of sales tax by the State was correlated to the existence of a levy of additional excise duty in respect of those very goods under the 1957 Act. He submits that this argument is not tenable and that there is no connection between the 1944 Act, the CST Act, the 1957 Act and the 1963 Act. His submissions are these: (a) When the Kerala Act of 1125 M.E. was amended by Act VII of 1958 w.e.f. 14.12.1957, the Kerala State Legislature was fully alive to the proposals to introduce the CST Act and the 1957 Act; nevertheless, the description of items granted exemption from sales tax was worded differently and not correlated to the definitions of the 1944 Act; PG NO 612 (b) Silk fabrics were not eligible for exemption under the 1125 Act as amended in 1957 and remained liable to sales tax till 3 1.3.1963 though additional excise on them had been introduced w.e.f. 1.4.1963. The exemption from sales tax was conferred only on 1.4.1963 by the 1963 Act. Again, this exemption was taken away w.e.f. 1.9.1967 although such fabrics continued to be subject to additional excise duty. Thus, though it is true that, between 14.12.1957 and 31.3.1961 there was sales tax but no additional excise duty on pure silk textiles and between 1.4.1863 and 31.8.1967 there was additional excise duty but no sales tax on silk fabrics, it is equally true that between 1.4.1961 and 31.3.1963 and again after 1.9.1967 they are liable to both sales tax and additional excise duty. It is thus not possible to view the two levies as supplementary to, or inter dependent on, each other. (c) The 1963 Act only incorporates a definition contained in the 1944 Act. The 1957 Act is an independent Act, applicable to some of the goods to which the 1944 Act are applicable. It has its own schedule, the descriptions in which need not be though they generally are identical with those in the schedule to the 1944 Act. The 1944 and 1957 Acts may be somewhat inter linked but there is no justification to import that connection also for the purposes of the 1963 Act. (d) The objects and reasons of the 1957 Act explicitly state that the levy of additional excise duty on goods thereunder does not preclude the State legislatures from levying any sales tax on only, such levy will be subject to the restrictions contained in the CST Act. (e) It should not also be overlooked that the 1963 Act is an enactment of a State legislature. To construe entry in its Schedule as authorising the applicability, not merely of the then current definition of the 1944 Act but its future amendments as well, will render it subject to the vice of excessive delegation. In this context, our attention is drawn to the decisions of the Supreme Court in Shama Rao, Gwalior Rayon, 11974] 2 SCR 345 and International Cotton, To avoid such an infirmity we are asked to place a restrictive interpretation on the 1963 Act. even assuming for purposes of argument that it may be capable of a wider interpretation . PG NO 613 5. There is some force in these contentions, but, after hearing both counsel, we are of opinion that the conclusion of the High Court should be upheld. In the first place, we think it would be correct to say that the 1963 Act brings in the definitions of the 1944 act by way of reference or citation and not by way of incorporation. For, a reading the Act shows that the Act intended to confer exemption on a number of goods set out in the Schedule. Of these, since items 5 to 7 are defined in the 1944 Act, the Act refers to those definitions to ascertain the scope of these items. There are no express words used by the statute which will justify an inference that the intention was to incorporate those definitions, as standing on that date, into the 1963 Act. That apart, as pointed out by the High Court, the question whether it is an instance of reference or citation as contrasted with incorporation pales into significance if all the Central and State enactments referred to at the outset are really part of an integrated scheme evolved to achieve a particular purpose. In this context, Sri Krishnamurthy Iyer, invited our attention to a passage from Hind Engineering Co. vs CST, [1973] 31 STC 115, dealing with an identical entry in regard to `cotton fabrics ' in Schedule of the Bombay Sales Tax Act, 1959, where a deivision bench of the Gujarat High Court traced the genesis of the exemption of `cotton fabrics ' from the liability to sales tax. We do not think it necessary to extract the whole of it here, particularly as the provisions of the Bombay legislations in this context and their history are not identical with those of the Kerala statute. It is clear, however, that the provisions of exemption from sales tax on the items with which we are concerned here and certain others cannot be understood in isolation but should be read in the background of certain historical developments pertaining to sales tax levy. These may now be briefly referred to. Article 286 of the Constitution of India imposed certain restrictions on the legislative powers of the States in the matter of levy of sales tax on sales taking place outside the State, sales in the course of import or export, sales in the course of interstate trade or commerce and sales of declared goods. The Sales Tax Acts in force in several States were not in conformity with the provisions of the Constitution and attempts to bring those laws to be in conformity with these provisions gave rise to a lot of litigation. This led to an amendment of Act. Clause (2) of the article, as it stands, since 11th September, 1956, authorised Parliament to formulate principles for determining when sale or purchase of goods can be said to take place in the course of import or export or in the course of inter State trade or commerce Clause (3) was amended, in terms already set out to restrict the powers of PG NO 614 a State to impose sales or purchase tax on declared goods. The C.S.T. Act, 1956 which came into force on 5:1.1957 formulated the principles referred to in Article 286(2). As already mentioned, this Act was amended, alia, by Act 16 of 1957 w.e.f. 6.6. 1957 and by Act 31 of 1958 w.e.f. 1.10. 1958. section 14 listed the goods which are considered to be of special importance in inter state trade or commerce which included the six items set out earlier. section 15 of the Act, as originally enacted, was brought into force only w.e.f. 1.10.1958. It stipulated that levy of sales tax on declared goods should not be at a rate exceeding 2% or be levied at more than one point in a State. Before this section came into force, it was amended by Act 16 of 1957 which retained the first restriction and, so far as the second is concerned, provided that the tax should be levied only on the last sale or purchase inside the State and even that should not be levied when that last sale or purchase is in the course of inter state trade or commerce as defined. Act 31 of 1958 amended section 15 to impose certain modified restrictions and conditions with the details of which we are not here concerned. These restrictions clearly entailed loss of revenue to the States and it was considered expedient and desirable to compensate the State for the proportionate loss of sales tax incurred by them. Thus, even before section 15 was brought into force, the Central Government decided to pass an Act to provide for the levy and collection of additional duties of excise on certain goods and for the distribution of a part of the net proceeds thereof among the State in pursuance of the principles of distribution recommended by the Second Finance Commission in its report dated 30.9.1957. This proposal to levy additional duties of excise on certain special goods was a part and parcel of an integrated scheme under which sales tax levied at different rates by the States on certain goods was ultimately substituted by the levy of additional duties of excise on such goods and the States were compensated by payment of a part of the net proceeds of the said additional levy on such goods. That this clearly was the genesis and object of the 1957 Act also appears from its objects and reasons set out earlier. Some of the items liable to excise duty were picked out from the Schedule to the 1944 Act. They were listed among the declared goods of section 14 of the CST Act and also made liable to additional excise duty under the 1957 Act. A perusal of the lists under these three enactments show that out of the items listed in the Schedule to the 1944 Act, sugar, tobacco, cotton fabrics, rayon or artificial fabrics and woollen fabrics were categorised as declared goods and subjected to additional excise duty. When the numerical order of these items in the 1944 Act (originally 8, 9, 12, 12A, 12B) came to be changed in 1960 (as 1, 4, 19, 22, 21) a corresponding change was effected in the 1957 Act. PG NO 615 `Silk fabrics ' as defined in item 20 of the 1944 Act was included in 1961 in the CST Act and the 1957 Act. The fact that `cotton fabrics ' though listed as item 12 in the Schedule to the 1944 Act was not brought into the list in section 14 till 1.10.1958 or that `silk fabrics ' was dropped from the list in section 14 w.e.f. 11.6.1968 though it continues in the Schedule to the 1944 Act does not alter the position that these three acts are interconnected and that certain goods taken out from the Schedule to the 1944 Act were to be subjected to the special treatment outlined in the CST Act and the 1957 Act. This may be so, says Sri Potti, but there is no justification to bring the 1963 Act into this group. His short point is that the State legislature is completely free within its domain. Its power to levy sales tax includes a power to levy a tax on sales of declared goods as well. Nor is such power inhibited by the levy of an additional excise duty on certain goods. The 1957 amendment to the 1125 Act made no reference even to the 1944 Act. The 1963 Act makes no reference either to the CST Act or to the 1957 Act. Sri Potti emphasises, pointing out to the practical effects of the two legislations (the 1963 Act and the 1957 Act) to which attention has been invited already, that it was not the policy of the Kerala State legislature to exempt from sales tax goods which suffered additional excise duty. The sales tax exemption is conferred on a totally independent basis. It is not linked to the fluctuations in, or variation of, the treatment under the CST Act and the 1957 Act. The description of items 5, 7 and 8, by simply incorporating the definitions then readily available in the 1944 Act (not the CST Act or the 1957 Act), was not intended to bring about the result that these definitions should be read in the light of the changes that they may undergo for the purposes of the 1944 Act. Sri Potti is certainly correct in saying that the wordings of the Acts do not show an exact correlation between the liability to pay additional excise duty and the exemption from the levy of sales tax under the 1963 Act. But it would not be correct to say that the provisions of the latter can be interpreted without reference to the other two legislations. The CST Act has a definite impact on the manner and extent of sales tax levy, in so far as declared goods are concerned for such levy cannot transgress the limitations and restrictions of section 15 thereof. section 15 applies in respect of goods listed in section 14 which, in turn is linked to the list in the 1944 Act. The 1957 Act also has a bearing on the sales tax levy of various States. By levying sales tax on an item covered by the Schedule to the 1957 Act, the State will have to forego its share on distribution of the proceeds of the additional excise duty levied. Whether it PG NO 616 should impose sales tax on an item of declared goods, limited by the restrictions in section 15 of the CST Act and at the risk of losing a share in the additional excise duty levied in respect of those very items, is for the State to determine. As pointed out by Sri Potti, it was open to the Kerala Legislature to decide and it did so also that on some items there should be one or other of the levies or both of them and to modify these levies depending upon its own financial exigencies. But these factual or periodical variations do not detract from the basic reality that the policy of sales tax levy on declared goods has to keep in view, and be influenced by, the provisions of the CST Act and the 1957 Act. The reference to the 1957 Act definitions for purposes of grant of exemption in the 1963 Act as enacted originally as well as when the latter was amended in 1967 and the specific reference to the 1957 Act when the First Schedule to the 1963 Act was amended in 1980 are quite significant in this context. We therefore, think that, though the 1963 Act referred only to the definitions in the 1944 Act, the entries in the Schedule have to be juxtaposed into the broad pattern or scheme evolved by the 1956 57 enactments set out earlier in the judgment. Doing so, and even assuming that the reference in the items of the Schedule to the definitions in the 1944 Act is by way of incorporation and not reference, one cannot escape the conclusion that the circumstances are covered by the exceptions outlined in Narasimhan; , They certainly fall within the scope of exception (a) mentioned therein and also fall within exception (c) if we read "unworkable and ineffectual" to take in also "unrealistic and impractical". We do not find much substance in arguments of Shri POtti based on Shama Rao This devision really concerned a delegation of power to the executive Government to decide contents of a legislation by allowing it a latitude in fixing a date for its commencement. It cannot be understood as an authority for the proposition that a State legislature can adopt only the existing provisions of a statutes passed by another legislature but not is future amendments and modifications. In the first place, such a proposition will strike at the very root of the concept of referential legislation as explained in the decisions referred to above and the distinction drawn by them between cases of mere reference or citation on the one hand and of incorporation, on the other. Secondly, in Shama Rao only three of the five Judges expressed an opinion about this aspect of the case. Their view point was presented by Shelat J. in the following words: "The question then is whether in extending the Madras Act in the manner and to the extent it did under sec. (2)(1) PG NO 617 of the Principal Act the Pondicherry legislature abdicated its legislative power in favour of the Madras legislature. It is manifest that the Assembly refused to perform its legislative functions entrusted under the Act constituting it. It may be that a mere refusal may not amount to abdication if the legislature instead of going through the full formality of legislation applies its mind to an existing statute enacted by another legislature for another jurisdiction, adopts such an Act and enacts to extend it to the territory under its jurisdiction. In doing so, it may perhaps be said that it has laid down a policy to extend such an Act and directs the executive to apply and implement such an Act. But when it not only adopts such an Act but also provides that the Act applicable to its territory shall be the Act amended in future by the other legislature, there is nothing for it to predicate what the amended Act would be. Such a case would be clearly one of non application of mind and one of refusal to discharge the function entrusted to it by the Instrument constituting it. It is difficult to see how such a case is not one of abdication or effacement in favour of another legislature at least in regard to that particular matter. " This conclusion has been explained and distinguished in the Gwalior Rayon, case ; in which Khanna J and Mathew J delivered separate but concurring judgments. Khanna J. said: It would appear from the above that the reason which prevailed with the majority in striking down the Pondicherry Act was the total surrender in the matter of sales tax legislation by the Pondicherry Legislature in favour of the Madras Legislature. No such surrender is involved in the present case because of the Parliament having adopted in one particular respect the rate of local sales tax for the purpose of central sales tax. Indeed, as mentioned earlier, the adoption of the local sales tax is in pursuance of a legislative policy induced by the desire to prevent evasion of the payment of central sales tax by discouraging inter State sales to unregistered dealers No such policy could be discerned in the Pondicherry Act which was struck down by this Court. PG NO 618 Another distinction, though not very material, is that in the Pondicherry case the provisions of the Madras Act along with the subsequent amendments were made applicable to an area which was within the Union Territory of Pondicherry and not in Madras State. As against that, in the present case we find that the Parliament has adopted the rate of local sales tax for certain purposes of the only for the territory of the State for which the Legislature of that State had prescribed the rate of sales tax. The central sales tax in respect of the territory of a State is ultimately assigned to that State under artcle 269 of the Constitution and is imposed for the benefit of that State. We would, therefore, hold that the appellants cannot derive much assistance from the above mentioned decision of this Court. " Methew J. observed: We think that the principle of the ruling in Shama Rao vs Pondicherry, (supra) must be confined to the facts of the case. It is doubtful whether there is any general principle which precludes either Parliament or a State legislature from adopting a law and the future amendments to the law passed respectively by a State legislature or Parliament and incorporating them in its legislation. At any rate, there can be no such prohibition when the adoption is not of the entire corpus of law on a subject but only of a provision and its future amendments and that for a special reason or purpose . " We think that the principle of the ruling in Shama Rao vs Pondicherry, (supra) must be confined to the facts of the case. It is doubtful whether there is any general principle which precludes either Parliament or a State legislature from adopting a law and the future amendments to the law passed respectively by a State legislature or Parliament and incorporating them in its legislation. At any rate, there can be no such prohibition when the adoption is not of the entire corpus of law on a subject but only of a provision and its future amendments and that for a special reason or purpose . We have attempted to show that the 1963 Act, on a proper construction, does indicate a policy that certain items which are subject to additional excise duty should be left out of sales tax levy except in cases where there is a specific indication or provision of the Act to the contrary. The Kerala State legislature cannot be said to have attracted the 1944 Act definitions with their future amendments blindly and without application of mind. On the other hand. it has been done in pursuance of a scheme, a purpose and a policy. It cannot, therefore, be said that there has been any abdication of its legislative functions by the Kerala legislature. For the above reasons, we are of opinion, that the High Court was right in the view it took viz. that the scope of the exemption available under item 7 of the third PG NO 619 Schedule to the 1963 Act will vary according to the scope of the corresponding entry in the Schedule to the 1944 Act as it stands at the relevant time. So far as assessment years 1971 72 and 1972 73 are concerned, the definition of `cotton fabrics ' in item 19 of the Schedule to the 1944 Act, as amended by the Finance Act 1969 w.e.f. 1.4.1969, will apply. Sri Krishnamurthy Iyyer for the assessees contended that it is possible to spell out, from certain passages in the judgment of the High Court where judicial decisions are discussed, an inference that the High Court was inclined to the view that PVC Cloth would be covered even by the previous unamended definition in the 1944 Act. He also attempted to support this view by citing certain cases. Sri Potti contested the correctness of both these arguments. In the view we have taken on the main issue, we consider it unnecessary to go into this question. In any event, the High Court has returned no specific answer to this issue which was clearly an aspect of the questions posed for its consideration by the Tribunal (at page 42 of the paper book) and, even if we had accepted the contention of Sri Potti that only the definition as on 1.4.1964 works apply, we would have perhaps only left it to the High Court to consider this aspect of the matter afresh. Sri Krishnamurthy Iyer also submitted that the certificate of fitness of appeal granted by the High Court (page l15 of the paper book) is defective inasmuch as it does not specify the substantial questions of law which, in the view of the High Court, needed consideration by this Court. But we do not think we need go into this aspect or reject the appeal as defective. Since the appeal does involve a substantial question of law of great importance (which we have discussed above), we have proceeded to dispose of the appeal on merits. In the result, the appeal fails and is dismissed. We, however make no order as to costs. R.P.D. Appeal dismissed.

Section 9 read with Third Schedule item 7 of the Kerala General Sales Tax Act 1963 granted exemption from sales tax to certain items including cotton fabrics. `Cotton fabrics ' was defined as having the same meaning as assigned to it in item 19 of the first Schedule to the . This definition of `cotton fabrics ' in 1944 Act was amended in 1969 by the Finance Act 1969. In 1957, Parliament enacted the and Additional Duties of Excise ((Goods of Special Importance) Act, 1957 affecting the levy of sales tax and excise duty. Definition of `cotton fabrics ' occurring in the aforesaid Acts was also related to its definition under the 1944 Act. The respondent assessee was manufacturing PVC cloth, an item of goods which was clearly covered by the amended definition but, perhaps, not by the original one. He claimed exemption from sales tax in respect of assessment years 1971 72 and 1972 73. On a reference made to the High Court under the 1963 Act, it observed that the concept of `cotton fabrics ' in the seemed to be integrally linked with the provisions of the (General Sales Tax Act) the Act under which the levy of sales tax was governed, prior to enforcement of the 1963 Act), and that it would not be regarding the latter Act as unaffected by the growing concept of the term `cotton fabrics ' in the Central Excise PG NO 601 PG NO 602 and Salt Act, and that unless the extended definition of the imported into the Sales Tax Act, the latter Act would become unworkable and ineffectual. In the appeals by certificate to this Court, it was submitted on behalf of the State appellant that the PVC cloth manufactured by respondent was not entitled to exemption from sales tax if the earlier definition of the 1944 Act, before the amendment, was to apply, and that the 1963 Act has incorporated in its Third Schedule the definition of the 1944 Act as it stood at the time of its enactment and that this incorporation is unaffected by the subsequent changes made in the 1944 Act, that the concept of `cotton fabrics ' in the 1944 and 1963 Acts were not integrally linked and that it is not appropriate to say that unless the extended definition of the former were imported into the latter, the latter Act would become unworkable and ineffectual. On the question whether the exemption given to `cotton fabrics ' in item 7 should be restricted to `cotton fabrics ' as defined in the 1944 Act as it stood on 1.4.1963 or whether it would also cover goods falling under the said definition after its amendment in 1969. Dismissing the appeals, this Court, HElD: ( 1 ) It would be correct to say that the 1963 Act brings in the definitions of the 1944 Act by way of reference or citation and not by way of incorporation. For a reading of the Act shows that the Act intended to confer exemption on a number of goods set out in the Schedule. Of these, since items 5 to 7 are defined in the 1944, Act, the Act referes to those definitions to ascertain the scope of these items. There are no express words used by the statute which will justify an inference that the intention was to incorporate those definitions, standing on that date into the 1963 Act. [613A C] Secretary of State vs Hindustan Cooperative Insurance Society Ltd., [1931] 58 I.A. 259; Collector of Customs vs Nathella .Sampathu Chetty & another; , ; Ram Sarup y. State; , ; Ram Kirpal vs States [ ; ; Ne Central Jute Mills Co. Ltd. vs the Assistant Collector, ; ; Bhajva vs Gopikabai, ; ; Mahindra & Mahindra Ltd vs Union, ; and Western Coal Fields vs Special Area Development, Authority, ; , referred to. PG NO 603 (2) `Silk fabrics ' as defined in item 20 of the 1944 Act was included in 1961 in the CST Act and the 1957 Act. The fact that `cotton fabrics ' though listed as item 12 in the Schedule to the 1944 Act was not brought into the list in section 14 till 1.10.1958 or that `silk fabrics ' was dropped from the list in section 14 w.e.f. 11.6.1968 though it continues in the Schedule to the 1944 Act does not alter the position that these three Acts are inter connected and that certain goods taken out from the Schedule to the 1944 Act were to be subjected to the special treatment outlined in the CST Act and the 1957 Act.[615A B] (3) Though the 1963 Act referred only to the definitions in the 1944 Act, the entries in the Schedule have to be juxtaposed into the broad pattern or scheme evolved by the 1956 57 enactments. Even assuming that the reference in the items of the Schedule to the definitions in the 1944 Act is by way of incorporation and not reference, one cannot escape the conclusion that the circumstances are covered by the exceptions outlined in the decision of this Court in State of Madhya Pradesh vs Narasimhan! ; They certainly fall within the scope of exception (a) mentioned therein and also fall within exception (c) if `unworkable and ineffectual ' are read to take in also `unrealistic and impractical '. [616D E] (3) The 1963 Act on a proper constructions does indicate a policy that certain; items which arc subject to additional excise duty should be left out of sales tax levy except in cases where there is a specific indication or provision of the Act to the contrary. The Kerala State legislature cannot be said to have attracted the 1944 Act definition with their future amendments blindly and without application of mind. On the other hand, it has been done in pursuance of a scheme, a purpose and a policy. It cannot, therefore. be said that there has been any abdication of its legislative functions by the Kerala Legislature. [618F G] B . Shama Rao vs The Union Territory of Pondicherry ; , distinguished. Gwalior Rayon Silk Mfg. (Wvg.) Co. Lnd. vs The Asslstant Commissioner of Sale 's Tax and Ors., , referred to. (5) The High Court was right in the view it took viz., that the scope of the exemption available under item 7 of the Third Schedule to the 1963 Act will vary according to the scope of the corresponding entry in the Schedule to the 1944 Act as it stands at the relevant time. So far as assessment years 1971 72 and 1972 73 are concerned the definition of cotton fabrics in item 19 of the Schedule to PG NO 604 the 1944 Act, as amended by the Finance Act 1969 w.e.f. 1.4.1969, will apply. [618H; 619A B]

Civil Appeal No 757 of 1988. From the Judgment and Order dated 14.8.1986 of the Allahabad High Court in F.A. No. 448 of 1978. G. Ramaswamy, Additional Solicitor General, Pramod Swarup and P. Parmeshwaran for the Appellants. R.P. Gupta for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Special leave granted. The appeal is disposed of by the judgment hereunder. It appears that on or about 18th September, 1969, four agreements were entered into between M/s. L.K. Ahuja & Co. and Union of India, represented by the Executive Engineer, Northern Railway, Allahabad, for the construction of certain quarters. It was followed by supplementary agreement entered into sometime in 1972. It is stated that all the four contracts were executed and completed by the first respondent on diverse dates. The last one was on 30th May, 1971. Between 29th May, 1972 to 19th June, 1972, the respondent accepted the four final bills and gave no claim declaration in respect of the four contracts. The respondent wrote a letter to the Additional Chief Engineer, R.E.N.R. Allahabad, stating that Rs.1,91,137 were due on account of the work executed and requested him to refer the dispute to the Arbitrator. On 4th June, 1976 a reply was sent to the above letter stating that there was no dispute between the parties and, hence, no question of appointment of any Arbitrator arose. On 13th December, 1976, an application was filed by the respondent in the Court of Civil Judge, Allahabad, for appointment of an Arbitrator under Section 20 of the (hereinafter called `the Act '). That application was dismissed on 10th February, 1978 as being barred by limitation. There was an appeal from the said decision to the High Court of Allahabad and the High Court by its impugned Judgment and Order dated 14th August, 1986 allowed the appeal. Hence, this appeal. The sole question, involved in this appeal, is whether the High Court was right in dismissing the application. In matters of this nature, the main question is whether the application under Section 20 was within time. Though there was some doubt before but now it is well 405 settled in view of the decision of this Court in Kerala State Electricity Board, Trivandrum vs T.P.K.K. Amson & Beson, Kerala, ; that Article 137 would apply to any petition or application filed under any Act to a Civil Court. The Words "any other application" this Court held under Article 137, cannot be read on the principle of ejusdem generis to be applications under the Civil Procedure Code other than those mentioned in part I of the third division. The aforesaid view has to be harmonised with the view of this Court in Wazirchand Mahajan & Anr. vs Union of India, ; There this Court found that the second appellant had purchased from the Himachal Pradesh Government the right to extract and collect certain medicinal herbs from the forests of Chamba District. The period of agreement was one year from September 1, 1960. Under an arbitration clause in the agreement all disputes between the parties were to be referred to the Deputy Commissioner, Mandi District Himachal Pradesh. The second appellant transferred all his rights under the agreement to the first appellant with the consent of the State of Himachal Pradesh. Disputes arose between the parties in October, 1950. On May 30, 1952 the appellants addressed a letter to the Chief Conservator of Forests, Himachal Pradesh requiring that officer to submit the matters in difference to the arbitration of the Deputy Commissioner, Mandi Distt. By a letter dated June 23, 1952, the Chief Conservator declined to agree to a reference contending that the matters desired to be referred were outside the arbitration clause. On June 22, 1955 the appellants applied to the District Court of Chamba for an order that the agreement be filed in Court and the disputes between them and the State be referred to the sole arbitration of the Deputy Commissioner of Mandi Distt. The State of Himachal Pradesh contended, inter alia that the application for filing the arbitration agreement was barred by law of limitation as the right to apply if any arose in 1950 and not in June, 1952 as alleged. The Court of First Instance held in favour of the appellants. In appeal the Judicial Commissioner reversed the order of the Trial Court. In the view of the Judicial Commissioner an application for filing an arbitration agreement under Section 20 of the Act was governed by Article 181 of the Limitation Act, 1908 and since the period of three years prescribed thereby commenced to run from the date on which the differences arose between the parties from the month of September, 1950 and in any case on September 1, 1951, the application of the appellants was held to be barred. The Judicial Commissioner was in error, hence, according to this Court in rejecting the application of the appellants for filing the arbitration agreement as barred under Article 181 of the Limitation 406 Act. It was reiterated that the terms of Article 181, though general and apparently not restricted to applications under the Code of Civil Procedure have always been interpreted as so restricted. In the aforesaid background this Court directed the arbitration agreement to be filed. This question was again considered by this Court in Mohd. Usman Military Contractor, Jhansi vs Union of India, Ministry of Defence, There the appellant had entered into a contract with the Government of India. The contract contained an arbitration clause. For certain supplies made under the contract the appellant made representations to the Government for payment and for arbitration of disputes. On or about July 10, 1958 Government refused to refer the matter for arbitration. On July 11, 1961 the appellant filed an application in the Court of District Judge under Sections 8 & 20 of the Act, for filing the arbitration agreement and for an order of reference of the disputes to an arbitrator appointed by the Court. The respondent contended that the application was barred by Limitation. The learned District Judge allowed the application, holding that there was no limitation for making an application under Sections 8 & 20 of the Act. The defendant 's appeal was dismissed by the High Court as incompetent insofar as it challenged the order under Section 8 but was allowed insofar as it challenged the order under Section 20 of the Act. The High Court held that an application under Section 20 was governed by Article 181 of the Indian Limitation Act, 1908. In coming to this conclusion the High Court took into account the settled judicial view that the operation of Article 181 was limited to applications under the Code of Civil Procedure and reasoned that Article 181 should be construed as if the words `under the Code ' were added in it. The repealed para 17 of the second schedule to the Code and re enacted it in Section 70 with minor modifications. That being so Section 8(1) of the applied and the implied reference in Article 181 to para 17 of the second schedule to the Code should be construed as a reference to Section 20 of the Act. In the appeal by certificate this Court held that by the the Legislature amended Articles 158 and 178 of the Limitation Act and made them applicable to the relevant proceedings under the but no similar change was made in Article 181. It was manifest that save as provided in Articles 158 & 178 there would not be any limitation for other application. In the circumstances the Court found it impossible to construe the implied reference in Article 181 as a reference to the , or to hold that Article 181 applied to applications under that Act. In the premises the Court held that an application under Sections 8 & 20 of 407 the was not governed by Article 181 of the Limitation Act. In that view of the matter the application was held to be barred by limitation. The question is now concluded as mentioned hereinbefore vide this Court 's decision in Kerala State Electricity Board, Trivandrum vs T.P.K.K. Amsom & Besom, (supra). It appears that these questions were discussed in the decision of the Calcutta High Court in Jiwnani Engineering Works P. Ltd. vs Union of India, where (one of us Sabyasachi Mukharji) was a party and which held after discussing all these authorities the question whether the claim sought to be raised was barred by limitation or not, was not relevant for an Order under Section 20 of the Act. Therefore, there are two aspects. One is whether the claim made in the arbitration is barred by limitation under the relevant provisions of the Limitation Act and secondly, whether the claim made for application under Section 20 is barred. In order to be a valid claim for reference under Section 20 of the , it is necessary that there should be an arbitration agreement and secondly differences must arise to which the agreement in question applied and, thirdly, that must be within time as stipulated in Section 20 of the Act. In the instant case it appears that there was an arbitration agreement as found by the High Court covering the disputes. It is also obvious that differences existed. There was an assertion of claim and denial of the same. It is stated in the judgment of the High Court that under the agreement the appellants had claimed a sum of Rs. 1,91,636 and, as such, the dispute was liable to be referred to arbitration in terms of the agreements entered into between the parties. Further, for the purpose of getting an arbitrator appointed, a letter dated June 4, 1976 was sent by the appellant to the Additional Chief Engineer, Allahabad. The respondent did not take any step in time. The appellant filed an application on 4.6.1976 under Section 20 of the Act. It was contended before the learned Trial Judge that the work under all the four contracts had been fully executed by the appellant on different dates and the respondents claimed that the appellant had accepted full and final payment of the agreements which had been executed by it and no claim declaration in respect of the same had been given by the appellant. It was, therefore, submitted that since there was no dispute, the application filed under Section 20 of the Act, was misconceived. The Trial Court held that the Court had no jurisdiction under Section 20 of the Act. The respondent came up in appeal before the High Court. The question, therefore, was whether there was a valid claim under section 20 of the Act to be referred in accordance with law. 408 In view of the well settled principles we are of the view that it will be entirely a wrong to mix up the two aspects, namely, whether there was any valid claim for reference under Section 20 of the Act and, secondly, whether the claim to be adjudicated by the arbitrator, was barred by lapse of time. The second is a matter which the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an Order under Section 20 of the , to be barred by limitation. In order to be entitled to ask for a reference under Section 20 of the Act, there must be an entitlement to money and a difference or dispute in respect of the same. It is true that on completion of the work, right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable. In this case the claim for reference was made within three years commencing from April 16, 1976 and the application was filed on December 18, 1976. We are, therefore, of the view that the High Court was right in this case. See in this connection the observations of this Court in Major (Retd.) Inder Singh Rekhi vs D.D.A., ; In the aforesaid view of the matter this appeal must fail and is accordingly dismissed. The costs of this appeal would be the costs in the arbitration proceedings. S.L. Appeal dismissed.

% Four agreements were entered into between the respondent and the appellant Union of India through the Executive Engineer, Northern Railway, followed by a supplementary agreement. All the four contracts were executed and completed by the respondent on diverse dates. The respondent accepted four final bills and gave no claim declaration in respect of the four contracts. Thereafter, the respondent wrote to the Additional Chief Engineer, R.E.N.R., that Rs.1,91,137 were due on account of work executed and asked for a reference of the dispute to the Arbitrator. A reply was sent to the respondent that there was no dispute between the parties and no question of appointment of any Arbitrator arose. The respondent then filed an application in the Court of Civil Judge for the appointment of an Arbitrator under Section 20 of the (`the Act '). The application was dismissed as being barred by limitation. An appeal from the decision of Civil Judge was allowed by the High Court. The appellants then moved this Court for relief by this appeal. Dismissing the appeal, the Court, ^ HELD: The sole question involved in this appeal was whether the Civil Judge was right in dismissing the application and whether the application under section 20 was within time. [404H] It is well settled in view of the decision of this Court in Kerala State Electricity Board, Trivendrum vs T.P.K.K. Amsom and Besom, Kerala, ; that Article 137 would apply to any petition or application filed under any Act in a Civil Court. The words "any other application", this Court held under Article 137, cannot be read on the principle of ejusdem generis to be applications under the Civil Procedure Code other than those mentioned in Part I of the third division. [405A B] 403 There are two aspects of the matter. One is whether the claim made in the arbitration is barred by limitation under the relevant provisions of the limitation Act, and secondly, whether the claim made for application under section 20 is barred. To be a valid claim for reference under section 20 of the , it is necessary that there should be an arbitration agreement and secondly, differences must arise to which the agreement in question applied, and thirdly, that must be within time as stipulated in section 20 of the Act. In this case, there was an arbitration agreement as found by the High Court, covering the disputes. It was also obvious that differences had existed. There was assertion of claim and denial of it. As such, the dispute was liable to be referred to arbitration in terms of the agreements between the parties. The question was whether there was a valid claim under section 20 of the Act to be referred in accordance with law. [407C E, G H] In view of the well settled principles, it would be entirely wrong to mix up the two aspects, namely, whether there was any valid claim for reference under Section 20 of the Act and, secondly, whether the claim to be adjudicated by the arbitrator was barred by lapse of time. The second is a matter which the arbitrator would decide unless on admitted facts a claim is found at the time of making an order under Section 20 of the Act, to be barred by time. To be entitled to ask for a reference under section 20 of the Act, there must be entitlement to money and a difference or a dispute in respect of the same. It is true that on completion of work the right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists, and whether it does subsist is a matter which is arbitrable. In this case, the claim for reference was made within three years commencing from April 16, 1976, and the application was filed on December 18, 1976. [408A D] The High Court was right in this case. See in this connection the observations of this Court in Major (Retd.) Inder Singh Rekhi vs D.D.A., ; The appeal failed. [408D] Kerala State Electricity Board, Trivandrum vs T.P.K.K. Amsom and Besom, Kerala, ; ; Wazirchand Mahajan & Anr. vs Union of India, ; ; Mohd. Usman Military Contractor, Jhansi vs Union of India, Ministry of Defence, ; Jiwnani Engineering Works P. Ltd. vs Union of India, and Major (Retd.) Inder Singh Rekhi vs D.D.A., ; referred to. 404

Appeal No. 129 of 1986. From the Judgment and Order dated 12.5.1982 of the Allahabad High Court in Civil Misc. Writ Petition No. 13431 of 1981. B.D. Agarwal and Indeever Goodwill for the appellant. A.K. Srivastava for the Respondents. The following Order of the Court was delivered: This appeal by special leave has been filed by the landlady. She laid action under s.21 of the U.P. Urban Building (Regulation of letting, rent and eviction) Act, 1972 (for short 'the Act ') for eviction of the tenant on the ground of bona fide requirement to start business by her son. The prescribed authority and the Appellate Tribunal found as a fact that the appellant required the premises bona fide to start the business. But the High Court allowed the writ petition, set aside the order on the sole ground that the married daughters of the original tenant, Lalu were not impleaded who are the necessary parties and, therefore, the non joinder of the necessary parties disentitle the landlady to have the ejectment of the tenants namely the sons and the widow of the deceased tenant Lalu. The only question that arises in this case is whether the married daughters of the deceased tenant are necessary parties and that non impleading them would disentitle the landlady to maintain the action for ejectment. Admittedly, Lalu the original tenant died in 1%5. Thereafter, the pro ceedings were initiated in 1974. Till then, one of the sons of Lalu, 537 namely, Bhole Nath was in occupation of the premises and did carry on business as admitted by him in affidavit Exhibit SA II "that the deponent is the tenant of a portion of house No. 55, Thatheri Bazar, Allahabad on payment of Rs. 40/ per month as rent including electric charges". It is also not in dispute that the married daughters never participated, nor claimed interest in the business conducted by Bhole Nath. It is also an admitted fact that even before the death of the father they were married and they are living with their husbands elsewhere. Indisputably s.3 (a)(2) postulates that "In this Act, unless the context otherwise requires (a) tenant in relation to a building means a person by whom its rent is payable, and on the tenant 's death (2) in the case of a non residential building, his heirs. " Therefore, as defined under s.3(a)(2) all heirs of the tenants are the tenants who succeeded intestate as per the . Certainly, therefore, they are tenants within the meaning of s.3(a)(2). They are entitled to succeed to the tenant 's lease hold rights under the Act, including not merely to the liabilities to pay rent as contended by the appellant but also to continue the business until duly ejected as per the provisions of the Act. Whether non im pleadment of the married daughters would vitiate maintain ability of the proceedings for ejectment. The finding re corded by the Rent Appellate Tribunal that by necessary implication, the married daughters surrendered their tenancy rights inherited under the Act. After the demise of Lalu, the daughters evinced no interest to assert their rights, is well justified. Once that is found to be so, their nonim pleadment as respondents does not vitiate the action for non joinder of them as necessary parties nor maintainability of the proceedings for ejectment itself. The High Court committed grave errors of law in allowing the writ petition and dismissing the application for ejectment. The order of the High Court is set aside and that of the Prescribed Authority and the Tribunal are restored. It is not in dis pute that the landlady offered a reasonable portion of the premises to the respondent to an extent of 3 1/2 'x 6 ' in the Varanda but respondent had refused to accept that offer but in this Court the learned counsel for the respondents re quested to allow the tenant to retain the portion offered. In fairness, Mr. Agarwal, learned senior counsel for the appellant, has not objected to it. Accordingly it is open to the tenant to occupy the portion offered by the appellant and vacate the other portion which is required by the peti tioner for starting the business of her son. The appellant would carve out the portion in a suitable and convenient manner to run the business by the respondent. The appeal is allowed with the above modifications, but in the circum stances parties are directed to bear their own costs. N.P.V. Appeal Allowed.

The appellant landlady, filed a suit under s.21 of the U.P. Urban Building (Regulation of letting, rent and evic tion) Act, 1972 for eviction of the tenant on the ground of bona fide requirement The prescribed authority and the Appellate Tribunal found as a fact that the appellant 's requirement was bona fide and decreed the suit. But, the High Court set aside the order on the sole ground that the married daughters of the original tenant, who were the necessary parties, were not impleaded and, therefore, the non joinder of the necessary parties disentitled the appel lant landlady to have the ejectment of the tenants, namely, the sons and the widow of the deceased tenant. Allowing the appeal of the landlady, this Court, HELD: 1.1 Section 3(a)(2) of the U.P. Urban Building (Regulation, of letting, rent and eviction) Act, 1972 postulates that tenant in relation to a building means a person by whom rent is payable, and on the tenant 's death, in the case of a non residential building, his heirs. There fore, as defined under s3(a)(2) all heirs of the tenants are the tenants who succeeded intestate as per the Hindu Succes sion Act, 1956. Consequently, the married daughters are tenants within the meaning of section 3(a)(2), and entitled to succeed to the tenant 's lease hold rights under the Act, including not merely to the liabilities to pay rent but also to continue the business until duly ejected as per the provisions of the Act. [537 B C] 1.2 However, in the instant case, the original tenant died in 1965. 536 Thereafter, the proceedings were initiated in 1974. Till then, one of the sons of the deceased tenant. namely, the first respondent was in occupation of the premises and did carry on business. The married daughters never participated, nor claimed interest in the business conducted by the first respondent and even before the death of the father, they were married and they were living with their husbands else where. The Rent Appellate Tribunal has found that by neces sary implication, the married daughters surrendered their tenancy rights inherited under the Act, since after the demise of the original tenant, the daughters evinced no interest to assert their rights. In view of this, their non impleadment as respondents does not vitiate the action for non joinder of them as necessary parties nor maintain ability of the proceedings for ejectment itself. [S36 H, 537 AB, D E]

iminal Appeal No.232 of 1967. Appeal by special leave from the judgment and order dated August 30, 1967 of the Assam and Nagaland High, Court in Criminal Appeal No. 115 of 1964. K. Rajendra Chaudhuri, for the appellants, Naunit Lal, for the respondent, 611 The Judgment of the Court was delivered by Bhargava, J. The appellants, Iman Ali and Jogesh Chandra Arjya, were convicted by the Court of Session for an, offence punishable under section 396 of the Indian Penal Code and sentenced to imprisonment for life. The facts found by the Court of Session for convicting the appellants were that, on the night between 11th and 12th May, 1962, between 1 and 2 a.m., the appellants, along with about 12 or 13 others, committed dacoity in the house of I Tenu Arjya. At the time of committing the dacoity the dacoits broke open the door of the house with the cross bar of a plough. Four dacoits, including the two appellants, entered the house, while the remaining persons remained standing outside. As soon, as the door was broken, Golapi, the wife of Tenu Arjya. was shot at with a gun by Iman Ali appellant, and then the other appellant Jogesh Chandra Arjya shot Tenu Arjya. Both Golapi and her husband Tenu Arjya fell down dead. Thereafter, the dacoits demanded money from Hari Charan Arjya, the son of the two deceased persons. They took away a sum of Rs. 2,500/ which was kept in a quilt and also removed the gold ear rings, one silver necklace and one waist band from the person of Golapi. The commission of this offence in the manner described above was held ' by the Sessions Court to be proved on the basis of the evidence given by the prosecution, and, thereupon, finding both the appellants guilty of the offence punishable under section 396, I.P.C., that court sentenced each of these appellants to imprisonment for life. Iman Ali appellant filed an appeal in the High Court of Assam and Nagaland. The learned Judges of the High Court, on perusing the judgment, were of the prima facie opinion that, if the conviction of Iman Ali was to be upheld, there was no justification for not awarding to him the sentence of death and, consequently, they issued notice to Iman Ali to show cause why the sentence should not be enhanced. At the same time, a notice was also issued to, the other appellant Jogesh Chandra Arjya by the learned Judges suo motu to show cause why his sentence should also not be enhanced to sentence of death. Thereafter, the appeal of Iman Ali was heard and both the appellants were heard in respect of the show cause notices issued to them, Opportunity was, in addition, offered to Jogesh Chandra Arjya to urge whatever could be said on his behalf against his conviction also. The High Court affirmed the findings of fact of the Court of Session and enhanced the sentence of both these appellants, so that the sentence of rigorous imprisonment for life ",as altered to sentence of death, with the direction that they be hanged by the neck till they are dead. Both the appellants Sought leave, from the High Court to appeal to this Court, but leave was refused. Thereupon, both of them sought special leave under Article 136 of the Constitution. By in order dated 8th December, 1967, this Court ranted special leave limit 612 ed to the question whether, in this case, the enhancement of the sentence from life imprisonment to sentence of death was justified. Consequently, in this appeal, the only point that falls for determination is whether the order of the High Court enhancing the sentence of the appellants from life imprisonment to death was justified and should be upheld. Learned counsel for the appellants, in challenging the justification for the order of enhancement of sentence by the High Court, relied on the principle laid down by this Court in Dalip Singh and Others vs State of Punjab (1), which was explained in the following words "In a case of murder, the death sentence should ordinarily be imposed unless the trying Judge for reasons which should normally be recorded considers it proper to award the lesser penalty. But the discretion is his and if he gives reasons on which a judicial mind could properly be found, an appellate court should not interfere. The power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest possible reasons. It is not enough for an appellate court to say, or think, that if left to itself it would have awarded the greater penalty because the discretion does not belong to the appellate court but to the trial Judge and the only ground on which an appellate court can interfere is that the discretion has been improperly exercised, as for example, where no reasons are given and none can be inferred from the circumstances of the case, or where the facts are so gross that no normal judicial mind would have awarded the lesser penalty. " It appears to us, however, that, in the present case, this principle is of no assistance to the appellants for challenging the step taken by the High Court. This Court cautioned the appellate court against interfering if the discretion of the trying Judge is exercised for reasons recorded by him and if it appears from the reasons that he had exercised a judicial mind in not awarding the sentence of death. In the present case, as mentioned by the High Court and as is apparent from the judgment of the Court of Session, the trial court awarded the sentence of imprisonment for life without giving any reasons at all for adopting that course. It is true that the appellants were not convicted in the present case for the offence of murder simpliciter under section 302, I.P.C.; but that, in our opinion, is immaterial. The conviction of the appellants under s ' 396, I.P.C., was not based on constructive liability as members of the gang of dacoits. There was clear finding by the (1) ; at p. 156. 613 Court of Session which has been upheld by the High Court that each of these appellants committed a cold blooded murder by shooting two inmates of the house simply with the object of facilitating commission of dacoity by them. Those persons were shot and killed even though they had not even tried to put up any resistance. The offence under section 396, I.P.C., was therefore, no less heinous than an offence under section 302, I.P.C. In these circumstances, when the Court of Session gave no reason at all for not awarding the sentence of death and for sentencing them to imprisonment for life only, it cannot be held that the High Court was not justified in interfering with that order. Learned counsel in this connection referred us to a decision of a Division Bench of the Allahabad High Court in Lal Singh vs Emperor(1), where it was held : "We do not consider that as a general rule a sentence of death should necessarily follow a conviction under section 396, I.P.C., and this Section differs from section 302, I.P.C., in that respect. The rule is under section 302, that a sentence of death should follow unless reasons are shown for giving a lesser sentence. No such rule applies to section 396, I.P.C." Again, we do not think that the learned Judges of the Allahabad High Court intended to lay down that, even in cases where a person is convicted for the offence under section 396, I.P.C., and there is clear evidence that he himself had committed a cold blooded murder in committing the dacoity, a sentence of death should not follow. Clearly, the view expressed was meant to apply to those cases where there could be no definite finding as to which person committed the murder and all the members of the gang are held constructively guilty of the offence punishable under section 396, I.P.C. A principle enunciated for such a situation cannot be applied to a case where there is direct evidence that a particular accused committed the murder himself, as is the finding in the present case. In these circumstances, the order made by the High Court must be held to be justified and the appeal is dismissed. G.C. Appeal dismissed. (1) A.I.R. 1938 Alld.

The appellants were convicted by the court of sessions for an offence punishable under section 396 of the Indian Penal Code and sentenced to imprisonment for life. They were held to have shot dead two inmates of a house in which along with others they had gone to commit dacoity. One of the appellants filed an appeal in the High Court against his conviction. The High Court thereafter gave notice to both the appellants to show cause why the sentence of imprisonment passed against each of them should not be enhanced to death. After hearing them the High Court sentenced them both to death. The order was challenged in this Court and it was urged that the High Court should not have interfered with the discretion of the Sessions Judge in the matter of passing the appropriate sentence and that the considerations which apply to I sentence under section 302 I.P.C. would not apply to a case under section 396 I.P.C. HELD : (i) The offence committed by the appellants was heinous and committed in cold blood with the sole object of committing dacoity. It was not a case of constructive liability but the appellants had themselves committed the murders and therefore no advantage could be taken of the fact that the conviction was under section 396 and not under section 302. On the above facts the enhancement of sentence by the High Court from life imprisonment to death was justified especially when the trial court had not given any reasons for awarding the lesser sentence. In Dalip Singh 's case this Court only cautioned the appellate court against interfering if the discretion of the trying judge is exercised for reasons recorded by him and if it appears from the reasons that he had exercised a judicial mind in not awarding the sentence of death. [612 F 613B]. Dalip Singh & Ors. vs State of Punjab ; , 156, explained. Lal Singh vs Emperor, A.I.R. 1938 Alld. 625, distinguished.

Civil Appeal No. 1912 (NT) of 1974 From the Judgment and order dated 23rd November. 1973 of the Patna High Court in Tax Case No. 46 of 1969. S.C. Manchanda, K.P. Bhatnagar and Miss A. Subhashini for the Appellant. The Judgment of the Court was delivered by SABYASACHl MUKHARJl, J. This is an appeal from the decision and judgment of the High Court of Patna dated 23rd November, 1973. The appeal is by certificate from the High Court under section 261 of the Income Tax Act, 1961, hereinafter called the 'Act '. The assessee firm was registered in 1945 under the Indian Income Tax Act, 1922. The registration was upto the assessment year 1961 62. There was a change in the constitution of the firm on the last day of the previous year relevant to the assessment year 1962 63 on 8th November. From November 9, 1961, a new instrument of partnership came into existence. On September 29, 1962, the firm applied for registration under the Act in Form 11A. The Income tax officer refused registration on the ground that the case fell under section 184(7) of the Act. The Tribunal, thereafter upheld the order of the Income tax officer. There was a reference to the High Court. It was held by the High Court that the application was filed in September, 1962. On that date the constitution of the firm had changed. The 311 application for registration under the 1961 Act was for registration of the firm which was in existence throughout the length of the previous year in relation to the first assessment year under the Act of 1961. That being so, in accordance with rule 22(4)(ii), Income Tax Rules, the application filed in Form 1 IA was a good and valid application. The High Court, further, observed that the scheme of renewal of registration under the Act of 1961 was different from the one that obtained under 1922 Act. Under the Act of 1922, application for renewal of registration meant application for registration every year and had the effect of registering the firm every year. Under the Act of 1961 when once registration was granted under the Act of 1922 to any firm for any assessment year it enured for subsequent years also unless there was a change in the constitution of the firm. A registration granted under the Act of 1922 would not have the effect of continuing the registration for the assessment year 1962 63 to which the Act of 1961 became applicable. For that year an application for registration had to be made for the purposes of the Act of 1961 in accordance with section 184(1) and the fact that the registration under the Act had got to be noted under sub section (4) of section 185 of the Act. A renewal of registration granted under the Act of 1922 is not a "recognition granted" or "order issued" within the meaning of section 297(2)(k) of the 1961 Act and was, therefore, not saved by the provisions of that section. The question that was referred by the Tribunal to the High Court under section 256(1) of the Act was as follows: "Was the application for registration made in Form No. 11A on 29th September, 1962 validly refused?" The question of registration of the firm under the relevant Income Tax Acts was dealt with under section 26A of 1922 Act. Section 26 of the 1922 Act dealt with the change in the constitution of a firm, as neither the revenue authorities nor the High Court has proceeded on any question of the constitution of the firm, it is not necessary for the present purpose to deal with that. Section 26A of the 1922 Act dealt with the procedure in registration of the firm. Under the provision, application might be made to the Income tax officer on behalf of any firm constituted under an instrument of partnership specifying the individual shares of the partners for registration for the purpose of that 312 Act and of any enactment for the time being in force either relating to income tax or super tax. The application was required to be made by such person or persons and was required to contain such particulars and had to be in such form and was required to be verified in such manner as had been prescribed. It was thereafter required to be dealt with by the Income tax officer in the manner prescribed. The Act of 1922 contained power for the Central Board to make rules under the said Act. Rule 2(a)(i) of said Rules required the filing of an application for registration within a period of six months of the constitution of the firm or before the end of the previous year of the firm whichever was earlier or in any other case before the end of the previous year, as was required by clause (ii). Application for renewal of registration under rule 6 had to be filed before the 30th day of June of a particular assessment year. There were two types of forms given in form I which was the form of application for registration of the firm under section 26A of 1922 Act. One was an application for registration simpliciter where there was no registration but when the firm as constituted on the date of the application was different from the one whose income was under assessment then in schedule (B) of the form particulars of the apportionment of income, profits or gains or loss of the business in the previous years, between the partners who were entitled to shares in such income, profits or gains or loss had to be given. The form of the renewal application was appended to rule (6). It might be noted that the Central Board of Direct Taxes had extended the time for registration during the transitional period after coming into operation of the Act of 1961, upto 30th September, 1962. It would thus be seen that when the application was filed it was in time, it was not necessary to fill up the two schedules but if the application was filed for the first registration of the firm, which was in existence in the previous year at a point of time when the firm was reconstituted then the particulars of both kinds had to be given. But the assessment on the newly constituted firm on the date as it was constituted at the time of assessment could be made when it was found that the firm as constituted was different from the one which had earned the profit in the previous year. It is apparent, therefore, that under the 1922 Act both the forms were meant for the purpose of first registration of the firm and not renewal, but the form of renewal appended to rule 6 was different. Essentially, similar is the position under the 1961 Act. Chapter XVI of the Act deals with that position. Section 182 of the Act deals with assessment of registered firms, and section 184 of the Act deals with application for registration of firm. Sub section (4) of section 184 313 stipulates that the application should be made before the end of the previous year for the assessment in respect of which registration was sought. The Income tax officer had power to entertain application even after the end of the previous year. The basic point that has to be borne in mind in this case is that the scheme for renewal under 1961 Act was different from one under the two Acts in one significant aspect, while under 1922 Act the application for registration meant application for registration for every year and if granted it was valid for one assessment year but under 1961 Act, once registration is granted, such registration enures for every subsequent year, if certain requirements are fulfilled. Such requirements are as provided in sub section (7) of section 184 of the Act. Such procedure, it seems to us. has been substantially complied with. The question which the High Court posed before it was whether the application filed on 29th September, 1961 in Form 11A was a good application in accordance with 1961 Act and the rules framed thereunder or whether ii was a case of continuance of the registration granted under 1922 Act within the meaning of sub section (7) of section 184 of the Act. It is apparent from relevant provisions of the two Acts that registration granted under 1922 Act cannot have effect of continuing the registration for the assessment year 1962 63 where 1961 Act would apply. For that year an application for registration of the firm has to be made under section 184 (1) of 1961 Act, and the fact of such registration noted under sub section (4) of section 185 of the Act. Sub section (7) would not come into effect at that time, it would come into effect for the subsequent assessment year 1963 64. In the instant case, the application was filed in September, 1962 on that date the constitution of the firm had changed the application for registration under 1961 Act was for registration of the firm which was in existence throughout the length of the previous year in relation to the first assessment under 1961 Act. That was in accordance with rule 22(4)(ii) of the Rules and the application filed in Form 11A was a good and valid application. The High Court so held. We agree. The other aspect whether section 297(2)(k) of 1961 Act was applicable, was also discussed by the High Court but it is not necessary to refer to it in the view we have taken. In any view of the matter in the facts of this case and in view of so called alleged detects in the application according to the Income tax officer, the Income tax officer under sub section (2) of section 185 of the Act should have given an opportunity to the firm, and in not having done so, did not act validly and the rejection of the application 314 was invalid. The question referred to the High Court was rightly answered in the negative. The appeal fails and is dismissed. Since the other side was not represented here, there will be no order as to costs. M.L.A. Appeal dismissed.

The respondent assessee firm was registered in 1945 under the Indian Income Tax, 1922. The registration was up to the assessment year 1961 62. On 8th November, 1961, the last day of the previous year relevant to the assessment year 1962 63, there was a change in the constitution of the firm. From November 9, 1961, a new instrument of partnership came into existence. On September 29, 1962 the respondent assessee firm applied for registration in Form 11A under the Income Tax Act, 1961. The Income Tax officer refused registration on the ground that the case fell under section 184(7) of the Act. The Tribunal upheld the order of the Income Tax officer. The High Court in a reference made by the Tribunal under Section 256(1) of the Act. held that on the date of application, the constitution of the assessee firm had changed and that the application was for registration of the firm which was in existence throughout the length of the previous year in relation to the first assessment under the Act of 1961 and that being so, in accordance with Rule 22(4)(ii) of the Income Tax Rules, the application filed in Form 11 A was a good and valid application. Dismissing the appeal by the revenue, this Court, ^ HELD: 1. The High Court was right in holding that the application filed in Form 11 A was a good and valid application. [313C D] 2.1 Section 26A of the 1922 Act dealt with the procedure in registration of the firm. Under the provision, application might be made to the Income tax Officer on behalf of any firm constituted under an instrument of partnership specifying the individual shares of the partners 309 for registration for the purpose of that Act and of any enactment for the A time being in force either relating to income tax or super tax. The application was required to be made by such person or persons and was required to contain such particulars and had to be in such form and was required to be verified in such manner as had been prescribed. It was thereafter required to be dealt with by the Income tax Officer, in the manner prescribed. [311G H; 312A B] The Act of 1922 contained power for the Central Board to make rules under the said Act. Rule 2(a)(i) of said Rules required the filing of an application for registration within a period of six months of the constitution of the firm whichever was earlier or in any other case before the end of the previous year, as was required by clause (ii). Application for renewal of registration under rule 6 had to be filed before the 30th day of June of a particular assessment year. [312B C] 2.2 There were two types of forms given in form I which was the form of application for registration of the firm under section 26A of 1922 Act. One was an application for registration simpliciter where there was no registration but when the firm as constituted on the date of the application was different from the one whose income was under assessment then in schedule (B) of the form particulars of the apportionment of income, profits or gains or loss of the business in the previous year, between the partners who were entitled to shares in such income, profits or gains or loss had to be given. The form of the renewal application was appended to rule (6). [312C E] 2.3 Under the 1922 Act both the forms were meant for the purpose of first registration of the firm and not renewal, but the form of renewal appended to rule 6 was different. Essentially, similar is the position under the 1961 Act. Chapter XVI of the 1961 Act deals with that position. Section 182 of the Act deals with assessment of registered firms, and section 184 of the Act deals with application for registration of firm. Sub section (4) of Section 184 stipulates that the application should be made before the end of the previous year for the assessment in respect of which registration was sought. The Income tax Officer had power to entertain application even after the end of the previous year.[312G H; 313A B] 2.4 The scheme for renewal under 1961 Act was different from the one under the 1922 Act in one significant aspect, while under 1922 Act the application for registration meant application for registration 310 for every year and if granted it was valid for one asesessment year but under 1961 Act once registration is granted, such registration ensures for every subsequent year, if certain requirements are fulfilled. Such requirements are provided in sub section (7) of section 184 of the Act. [313B C] 2.5 It is apparent from relevant provisions of the two Acts that registration granted under 1922 Act cannot have effect of continuing the registration for the assessment year 1962 63 where 1961 Act would apply. For that year an application for registration of the firm has to be made under section 184(1) of the 1961 Act, and the fact of such registration noted under sub section (4) of section 185 of the Act. Sub section (7) would not come into effect at that time. It would come into effect for the subsequent assessment year 1963 64. [313D F]

iminal Appeal No. 23 of 1952. Appeal from an Order dated 18th January, 1952, of the High Court of Judicature at Calcutta (Chunder J.) in Criminal Reference Case No. 110 of 1951. N.C. Talukdar and A. D. Dutt for the appellant. Ajit Kumar Dutta, and section N. Mukherjee for the respondents. March 12. The Judgment of the Court was delivered by BHAGWATI J. This is an appeal under article 134(c) of the Constitution and raises the point whether a single Judge of the High Court of Judicature at Calcutta could bear a reference from an order under sections 431 and 432 of the Bengal Municipal Act XV of 1932. The jurisdiction of a single Judge of the High Court in criminal matters is defined in the proviso to 768 rule 9, Chapter II, Part I of the Rules of the High Court and the relevant portion of the proviso runs as under: "Provided that a single Judge may hear any Ap.peal, Reference, or Application for revision other than the following: (1 )One relating to an order of sentence of death, transportation, penal servitude, forfeiture of property or of imprisonment, not being an order of imprisonment in default of payment of fine. . . . . " A single Judge therefore has no jurisdiction to deal with any reference or application for revision which relates to an order of forfeiture of property, and the question that arises in this appeal is whether the order passed by the learned District Magistrate, Baukura, under sections 431 and 432 of the Bengal Municipal Act, 1932, amounted to an order of forfeiture of property within the meaning of the above proviso. The relevant, facts may be shortly stated as follows. The respondents are the proprietors of several oil mills in the town of Bankura within the Bankura Municipality. The Sanitary Inspector of the Municipality received on 6th March, 1950, information that the Manager of the Sree Gouranga Oil Mill, belonging to the respondents had deposited about 300 bags of rotten, decomposed, unwholesome mustard seeds in the courtyard of the Rice Mill of Sree Hanseswar Maji and about 600 bags of unwholesome mustard seeds in the mill godown of the respondents for sale and for the preparation of oil therefrom for sale. On an application made by him in that behalf the Sub Divisional Officer, Bankura, duly issued a search warrant and the Sanitary Inspector on the same day found in possession of the respondents a huge quantity of mustard seeds which were found to be highly unsound, unwholesome and unfit for human consumption. He seized the said seeds between the 6th March, 1950, and the 8th March, 1950, and after the completion of the seizure asked for written consent of the 769 respondents for destruction of the said mustard seeds which they refused. The Sanitary Inspector therefore kept all the bags thus seized, viz., 951 1/2 bags, in ,the mill godowns of the respondents with their consent. After several proceedings which it is not necessary to mention for the purpose of this appeal, the District Magistrate, Bankura, in M. P. No. 58 of 1950 under sections 431 and 432 of the Bengal Municipal Act on the 14th August, 1951, found that the stock of mustard seeds which was seized on the 6th March, 1950, was on that date and still was unfit for human consumption. But in so far as no oil was coming out of the seeds and the seeds were capable of being used is manure or for cattle food he would not direct their destruction but directed that they should be disposed of by the Commissioners of the Bankura Municipality as manure or as cattle food ensuring before such disposal that the stocks in question bad been rendered incapable of being used as human food. The respondents filed a petition under section 435 of the Criminal Procedure Code before the Additional Sessions Judge, Bankura, against the order of the District Magistrate, for a reference to the High Court. The Additional Sessions Judge held that the seizure of the mustard seeds was illegal and that there was no evidence to show that the seeds in question were deposited in or brought to the places for the purpose of their sale or of preparation of oil for human consumption. He therefore made a reference under section 438 of the Criminal Procedure Code to the High Court for quashing the proceedings. Chunder J. accepted the reference, set aside the order of the District Magistrate and remanded the case for retrial by some other Magistrate, as in the opinion of the learned Judge, the District Magistrate had decided the matter upon his own observations formed during the inspection of the mustard seeds and not on the material in the record. An application was made to a Bench of the High Court and leave was allowed on the point whether Chunder J. had jurisdiction sitting singly to bear the reference in view of the rule cited above. 770 Sri N.C.Taluqdar for the appellants urged that the order made by the District Magistrate, Bankura, under sections 431 and 432 of the Bengal Municipal Act, 1932, was an order for forfeiture of property within the meaning of the proviso to the rule and Chunder J. had no jurisdiction to deal with the reference and his order should be quashed. Section 431 provides: "(1) Where any living thing, article of food, drug seized under section 428 is not destroyed by consent under sub section (1) of section 429, or where an article of food so seized which is perishable is not dealt with under sub section(2) of that section, it shall be taken before a Magistrate as soon as may be after such seizure. (2)If it appears to the Magistrate that any such living thing is diseased or unsound or that any such food or drug is unsound, unwholesome or unfit for human food or for medicine, as the case may be. . . he shall cause the same to be destroyed at the expense of the person in whose possession it was at the time of its seizure, or to be otherwise disposed of by the Commissioners so as not to be capable of being used as human food or medicine Section 432 provides : "When any ' authority directs in exercise of any powers conferred by this chapter, the destruction of any living thing, food or any drug, or the disposal of the same so as to prevent its being used as food or medicine, the same shall thereupon be deemed to be the property of the Commissioners. " The word "forfeiture" is defined in Murray 's Oxford Dictionary: " The fact of losing or becoming liable to deprivation of goods in consequence of a crime, offence, or breach of engagement the penalty of the transgression" or a "punishment for an offence". It was contended that in so far as section 432 provided for the vesting of the condemned food or drug in the Commissioners the owner of the property was divested or deprived of the proprietary 771 rights therein and that the order made by the Magistrate under section 431 (2) was thus an order of forfeiture of the property. This contention in our opinion is unsound. According to the dictionary meaning of the word "forfeiture" the loss or the deprivation of goods has got to be in consequence of a crime, offence or breach of engagement or has to be by way of penalty of the transgression or a punishment for an off once. Unless the loss or deprivation of the goods is by way of a penalty or punishment for a crime, offence or breach of engagement it would not come within the definition of for. feiture. What is provided under section 431(2) is the destruction of the food or drug which is unsound, unwholesome or unfit for human food or medicine or the otherwise disposal of the same by the Commissioners so as not to be capable of being used as human food or medicine. The vesting of such condemned food or drug in the Commissioners which is provided by section 432 is with a view to facilitate the destruction or the otherwise disposal of such food or drug by the Commissioners and is in no way a forfeiture of such food or drug by the Municipality. The condemned food or drug by reason of its being found unsound, unwholesome or unfit for human food or medicine cannot be dealt with by the owner. It must be destroyed or otherwise disposed of so as to prevent its being used as human food or medicine. What the Municipal Commissioners are empowered to do therefore is what the owner himself would be expected to do and what is ordered to be done therefore cannot amount to a forfeiture of the property. The order is not a punishment for a crime but is a measure to ensure that the condemned food or drug is not used as human food or medicine. That this is the true position is clear from the pro visions of Chapter XXIV of the Act which provides for penalties. Sections 501 to 504 prescribe penalties for specific offences and section 500 prescribes generally penalties for the several offences therein mentioned. Section 431 however does not figure therein. 100 772 Forfeiture of property is thus not one of the penalties or punishments for any of the offences mentioned in the Bengal Municipal Act. In the relevant provision in the rule of the ' High Court an order of sentence of death, transportation, penal servitude, forfeiture of property or of imprisonment are grouped together. These orders are purely orders by way of penalty or punishment for the commission of crimes or offences and the forfeiture of property mentioned there is no other than the one which is entailed as a consequence of the commission of a crime or offence. In order that such forfeiture of property would bar the jurisdiction of the single Judge it has to be a forfeiture of property which is provided by way of penalty or punishment for the commission of a crime or offence. In spite of his labours Shri N. C. Taluqdar has not been able to point out to us any provision of the Bengal Municipal Act, 1932, which constitutes what is contemplated under section 431(2), a penalty or punishment for the commission of a crime or offence. The offence that the respondent could be charged with is defined in section 421 of the Act and the punishment for that offence provided in section 500 is fine and not forfeiture. We are therefore of the opinion that the order of the District Magistrate, Bankura, under sections 431 and 432 of the Bengal Municipal Act, 1932, dated 14th August, 1951, was not an order of forfeiture of property within the meaning of the proviso to rule 9, Chapter II, Part I, of the Rules of the High Court, and Chunder J. had the jurisdiction to entertain and decide the reference. The result is that the appeal fails and is dismissed. Appeal dismissed. Agent for the appellant : Sukumar Ghose. Agent for respondent: B. B. Biswas.

An order of a District Magistrate under sections 431 and 432 of the Bengal Municipal Act (XV of 1932) for the disposal of an article of food which has been seized under section 428 of the said Act is not an order of forfeiture of property within the meaning of the proviso to rule 9 of Chap. II of Part II of the Calcutta High Court Rules, and a Single Judge of the said High Court has jurisdiction to hear a reference from such an order. Unless the loss or deprivation of property is by way of penalty or punishment for a crime, offence or breach of engagement it would not amount to a "forfeiture" of property.