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Civil Appeal No. 47 (N T) of 1975. From the Judgment and Order dated 3.10.1974 of t he Gujarat High Court in I.T. Reference No. 30 of 1973. Bishambar Lal for the Appellant. V.S. Desai, B. Rao and Ms. A. Subhashini for the Responden t. M.B. Lal for the Intervener. (N.P.) 88 The Judgment of the Court was delivered by PATHAK, C.J. This appeal by certificate granted by t he High Court of Gujarat is directed against the judgment of the High Court on the following questions referred to it by the Appellate Tribunal: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was fight in holding that the asse s see cannot be denied the benefit of carry forward of deve l opment rebate? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing that t he Income tax Officer should determine the development reba te and such development rebate should be allowed to be carri ed forward and set off when profits are available and if, in that year, the assessee fulfils the necessary requiremen ts for such allowance like creation of adequate reserve?" The assessee is a limited Company. It has a textile mi ll at Cambay in the State of Gujarat. For the assessment ye ar 1962 63, the previous year being the calendar year 1961, t he assessee claimed that a sum of Rs. 1,26,233 should be a l lowed as development rebate under section 33 of the Income t ax Act, 1961. The Income tax Officer rejected the claim on t he ground that the assessee had not created a reserve as co n templated by sub section (3) of section 34 of the Income tax Ac t, 1961. The Appellate Assistant Commissioner of Income T ax dismissed the appeal filed by the assessee. In second appe al the claim by the assessee found favour with the Income T ax Appellate Tribunal. At the instance of the Revenue t he questions set forth earlier were referred to the High Cou rt for its opinion. The High Court has answered the questio ns in favour of the Revenue and against the assessee. It h as held that the assessee had failed to comply with the cond i tions of sub section (3) of section 34 of the Act. In this appeal by the assessee it is urged that the vi ew taken by the High Court is erroneous and that it is n ot necessary that a reserve should be created in the previo us year during which the machinery or plant was installed. Sub section (1) of section 33 provides that development rebate m ay be claimed as a deduction in respect of a new machinery or plant installed 89 after 31 March, 1954 which is owned by the assessee and is wholly used for the purposes of the business carried on by him, and that the allowance of the deduction is subject to the provisions of section 34. (a) of sub section (3) of section 34 provides that the deduction referred to in section 33 shall n ot be allowed unless an amount equal to 75 per cent of t he development rebate to be actually allowed is debited to t he profit and loss account of the relevant previous year a nd credited to a reserve account to be utilised by the assess ee during a period of eight years next following for the pu r poses of the business of the undertaking, other than f or distribution by way of dividends or profits or for remi t tance outside India as profits or for the creation of a ny asset outside India. The Finance Act, 1966 added an Explan a tion to this clause. The Explanation declared that t he deduction referred to in section 33 could not be denied by reas on only that the amount debited to the profit and loss accou nt of the relevant previous year and credited to the aforesa id reserve account exceeded the amount of the profit of su ch previous year (as arrived at without making the depos it aforesaid) in accordance with the profit and loss accoun t. The Explanation was inserted with retrospective effect fr om the commencement of the Act. Before the Explanation w as enacted a difference of opinion had existed between the Hi gh Courts on the question whether the statute required t he creation of a reserve in the previous year in which the n ew machinery or plant was installed, when the amount of t he profit of that previous year was either nil or insufficie nt for the purposes of enabling the creation of such reserv e. It is not necessary to refer to these cases, for it see ms clear to us that the Explanation, which applied to t he assessment year under consideration before us, removes t he doubt altogether. What is contemplated is the creation of a Reserve Fund in the relevant previous year irrespective of the result of the profit and loss account disclosed by t he books of the assessee. Mere book entries will suffice f or creating such a Reserve Fund. The debit entries and t he entries relating to the Reserve Fund have to be made befo re the profit and loss account is finally drawn up. That is a condition for securing the benefit of development rebate a nd if that condition is not satisfied we fail to see how t he deduction on account of development rebate can be claimed at all. Learned counsel for the assessee relies on West Laikdi hi Coal Co. Ltd., Calcutta vs Commissioner of Income tax, We st Bengal 11, and Commissioner of Income ta x, Delhi Central vs Modi Spinning & Weaving Mills Co. Ltd . , Those were cases decided under the prov i sions of the Indian Income tax Act, 1922 and there was no Explanation such as we have before us. Re 90 ference was made to the decision of this Court in Indi an Overseas Bank Ltd. vs Commissioner of Income tax Madra s, In that case, however, the question w as whether the creation of a reserve in compliance with section 17 of the Banking Companies Act constituted sufficient compl i ance with the requirements of proviso (b) to section 10(2) (vi b) of the Indian Income tax Act, 1922. Reference has also be en made to Additional Commissioner of Income tax vs Vishnu I n dustrial Enterprise, We do not find it possible to agree with the view taken by the Allahabad Hi gh Court in that case that the development reserve need not be created in the relevant previous year during which the n ew machinery or plant is installed, and that a profit must ha ve been earned during the previous year to permit the creati on of a reserve fund. We think that the Explanation is clea r, and that there can be no doubt that it envisages the cre a tion of a Reserve Fund notwithstanding that there is no profit or insufficient profit from which such reserve may be provided. To contemplate otherwise would be to negate t he entire scheme incorporated in section 33 read with section 34 of t he Act. For the same reason we are unable to affirm the vi ew taken by the Allahabad High Court in Commissioner of Income tax vs U.P. Hotel and Restaurants Ltd., [1984] 1 Our attention has been drawn by the learned couns el for the assessee to Dodballapur Spinning Mills Ltd. vs Commissioner of Income tax, Karnataka 2 and Anr., [1980] 1 where reference has been made to a circular issued by the Central Board of Direct Taxes dated 14th October, 19 65 and to a subsequent circular dated 30 January, 1976. We ha ve carefully considered the matter and we do not think that t he circulars affect the true position in law. On behalf of the assessee reliance was placed on Indi an Oil Corporation Ltd. vs section Rajagopalan, Income tax Office r, Companies Circle II (1) Bombay and others, 41 where the Bombay High Court has held that there was no obligation on the assessee to create a reserve in the ye ar of installation if there was no taxable income in the rel e vant year. Some of the submissions addressed in that ca se may be set forth in detail. A powerful argument was a d dressed by learned counsel for the assessee and it w as pointed out that the expression "shall be allowed" in clau se (a) of sub section (1) of section 33 indicated that the developme nt rebate is to be assessed and thereupon it becomes allowabl e, and that sub section (2) of section 33 which provides for the allo w ance of development rebate mentions that the sum "to be allowed" by way of development rebate for the assessme nt year shall be only such amount as shall be sufficient to reduce the total assessable income to nil and the amount of development rebate to the extent to which 91 it has not been allowed shall be carried forward to t he following assessment years for eight subsequent year section Reference was also made to the distinction between t he expressions "to be allowed" and "actually allowed" used in the relevant provisions. It was also argued that the util i sation by the assessee of the development rebate reserve f or the purposes of the business of the undertaking contemplat ed the existence of an actual fund which could be utilised f or the purposes of the business, and that an illusory deb it entry in the profit and loss account and an illusory cred it entry in the development rebate reserve account were n ot contemplated. The High Court accepted the submission a nd concluded that it was not mandatory that the necessary deb it and credit entries must be made in the assessment ye ar following the year of installation in which the developme nt rebate is determined under section 33. Having considered t he matter at some length in the present case, it seems to us clear that in order to claim the deduction on account of development rebate under sub section (1) of section 33 it is obligat o ry that the debit entries in the profit and loss account a nd the credit entry in a reserve account should be made in t he relevant previous year in which the machinery or plant is installed or first put to use. The development rebate co n templated by sub section (1) of section 33 cannot be allowed as a deduction unless a reserve account has been created in t he previous year in which the installation or first use occur section Any doubt in so reading the provisions because of a want or insufficiency of profit in such previous year has be en removed by the Explanation to clause (a) of sub section (3) of section 34. The significance of the words "actually allowed" in clause (a) of sub section (3) of section 34 has been considered by t he High Court in the judgment under appeal, and we are in entire agreement with the view taken by the High Court in that ' regard. A number of other cases have also been placed before us by learned counsel for the assessee, but as they deal wi th the point on the basis of considerations substantially t he same as have been referred to in the cases mentioned earl i er, we think it unnecessary to deal with them specifically . Upon the aforesaid considerations we hold that the Hi gh Court is right in answering the questions in favour of t he Revenue and against the assessee. In the result, the appeal is dismissed but there is no ord er as to costs. H.L.C. Appeal di s missed.

Sub section (1) of section 33 of the Income Tax Act, 1961 provid es that subject to the provisions of section 34 thereof developme nt rebate may be claimed as a deduction in respect of a n ew machinery or plant. Clause (a) of sub section (3) of section 34 stip u lates that the said deduction shall not be allowed unless an amount equal to 75 per cent of the development rebate is debited to the profit and loss account of the releva nt previous year and credited to a reserve account; and t he Explanation thereto provides that the deduction shall not be denied by reason only that the amount so credited to t he reserve account exceeded the amount of the profit of su ch previous year. The appellant assessee which had a textile mill claim ed a sum as development rebate for the assessment year 1962 6 3. The Income Tax Officer rejected the claim on the ground th at the assessee had not created a reserve as contemplated by sub section (3) of section 34 and his order, on appeal, was upheld by the Assistant Commissioner. In second appeal, the claim by the assessee found favour with the Appellate Tribunal; b ut on a reference made by it at the instance of the Revenu e, the High Court held that the assessee had failed to comp ly with the conditions of sub section (3) of section 34. The appella nt contended that the view taken by the High Court was erron e ous and that it was not necessary that a reserve should ha ve been created in the previous year. Dismissing the appeal, HELD: In order to claim the deduction on account of development rebate under sub section (1) of section 33 it is obligat o ry that the debit entries in the profit and loss account a nd the credit entry in a reserve account should be made in t he relevant previous year in which the 87 machinery or plant is installed or first put to use. T he development rebate contemplated by sub section (1) of section 33 cannot be allowed as a deduction unless a reserve accou nt has been created in the previous year in which the install a tion or first use occurs. Any doubt in so reading the prov i sions because of a want or insufficiency of profit in su ch previous year has been removed by the Explanation to clau se (a) of sub section (3) of section 34. [91D E] What is contemplated is the creation of a Reserve Fu nd in the relevant previous year irrespective of the result of the profit and loss account disclosed by the books of t he assessee. Mere book entries will suffice for creating such a Reserve Fund. The debit entries and the entries relating to the Reserve Fund have to be made before the profit and lo ss account is finally drawn up. That is a condition for secu r ing the benefit of development rebate. [89E F] West Laikdihi Coal Co. Ltd., Calcutta vs Commissioner of Income tax, West Bengal 11, ; Commission er of Income tax, Delhi Central vs Modi Spinning & Weavi ng Mills Co. Ltd., and Indian Overseas Ba nk Ltd. vs Commissioner of Income tax, Madras, , distinguished. Additional Commissioner of income tax vs Vishnu Indu s trial Enterprises, and Commissioner of Income tax vs U.P. Hotel and Restaurants Ltd., [1984] 1 , overruled. Dodballapur Spinning Mills Ltd. vs Commissioner of Incometax, Karnataka 2 and Anr., a nd Indian Oil Corporation Ltd. vs section Rajagopalan, Income T ax Officer, Companies Circle H(I) Bombay and Others, , referred to.

Civil Appeal No. 250 of 1955. 495 Appeal by special leave from the judgment and order dated February 11, 1953, of the Calcutta High Court, in Award No. 254 of 1949. H. N. Sanyal, Additional Solicitor General of India,B. Sen, R. H. Dhebar and T. M. Sen, for the appellant. C. B. Aggarwala and Sukumar Ghose, for the respondent. May 21. The judgment of Jafer Imam and Subba Rao, JJ., was delivered by Subba Rao, J. Sarkar, J., delivered a separate judgment. SUBBA RAO J. This appeal by special leave raises the question of survival of an arbitration clause in a contract after the said contract is superseded by a fresh one. The respondent ' firm, styled as " Kishorilal Gupta & Brothers ", entered into the following three contracts with the Governor General in Council through the Director General of Industries and Supplies, hereinafter called the Government: (i) contract dated April 2, 1943, for the supply of 43,000 "Ladles Cook"; (ii) contract dated September 15, 1944, for the supply of 15,500 "Bath Ovals"; and (iii) contract dated September 22, 1944, for the supply of 1,00,000 "Kettles Camp " Each of the said contracts contained an arbitration clause, the material part of which was as follows : " In the event of any question of dispute arising under these conditions or any special conditions of contract or in connection with this contract (except as to any matters the decision of which is specially provided for by these conditions) the same shall be referred to the award of an arbitrator to be nominated by the purchaser and an arbitrator to be nominated by the contractor. . Under the terms of the said three contracts, the Government supplied certain raw materials to the respondents and the latter also delivered some of the goods to the former. On May 21, 1945, the contract dated April 2, 1943, hereinafter called the first contract, was cancelled by the Government. The Government 496 also demanded certain sums towards the price of the ;materials supplied by them to the respondents. On the same day, the Government cancelled the contract dated September 15, 1944, hereinafter called the second contract, and made a claim on the respondents for the price of the raw materials supplied to them. The respondents made a counter claim against the Government for compensation for breach of the contract. On March 9, 1946, the Government cancelled the contract dated September 22, 1944, hereinafter called the third contract. Under that contract there were mutual. claims by the Government for ' the raw material supplied to the contractors and by the latter for compensation for breach of contract. The disputes under the three contracts were amicably settled. 'The outstanding disputes under the first and the second contracts were settled on September 6, 1948, and two separate documents were executed to evidence the said settlement. As the decision, to some extent, turns upon the comparative study of the recitals in the said documents of settlement, it will be convenient to read the material part of the recitals contained therein. The settlement in respect of the first contract contained the following recitals: " (1) The contractor expressly agrees to pay the Government the sum of Rs. 3,164 8 as. only on this contract. (2) The contract on payment of the amount mentioned in clause (1) shall stand finally determined. " The recitals in the settlement of the second contract are as follows: " (1) The contractor expressly agrees to pay to the Government the sum of Rs. 36,276. If D. G. 1. & section has recovered any amount under the contract out of the sum due credit will be given to the contractor. (2) The contract stands finally determined and no party will have any further claim against the other. " One prominent difference in the phraseology used in the two settlements may be noticed at this stage. 497 While under the settlement of the first contract, 'the contract should stand finally determined Only payment of the amount agreed to be paid to the Government by the contractor, under the settlement of the second contract, the contract stood finally determined on the date of the settlement itself. The third contract was settled on February 22, 1949, and the material part of the recitals therein is as follows: " (1) The firm will pay a sum of Rs. 45,000 in full and final settlement of the amount due to the Government in respect of raw materials received against the contract and their claims for compensation for cancellation of the same contract. (2) The firm will retain all surplus partly fabricated and fully fabricated stores lying with them. (3) The firm agrees to pay the abovementioned sum of Rs. 45,000 only together with the sums owing by them to the Government under the settlements reached in two other cases A/T Nos. MP/75762/R 61/ 78 dated 15th September 1944 and MP/50730/8/R I/ 90 dated 2nd April 1943 in monthly instalments for Rs. 5,000 only for the first three months, first instalment being payable on 10th March, 1949, and further instalments of Rs. 9,000 per month till the entire dues payable to Government are paid. (4) In the event of default of any monthly instalments interest will be charged by Government on the amount as defaulted at the rate of 6% per annum from the first day of the month in which the instalment shall be due. If the instalments defaulted exceed two in number the Government will have the right to demand the entire balance of the money payable by the firm together with interest thereon at the rate abovementioned on that balance and take such steps to recover from them from the security to be offered. (5) In order to provide cover for the money pay. able to the Government the firm undertakes to hypothecate their moveable and immoveable property in Bamangachi Engineering Works together with all machinery sheds and leasehold interest in 498 land measuring about 5.75 acres in Mouja Bamungachi in Howrah. The firm further undertakes to execute the necessary stamped documents for the purpose as drafted by the Government Solicitor at Calcutta., (6) The contracts stand finally concluded in terms of the settlement and no party will have further or other claim against the other. " Broadly speaking, this settlement was a comprehensive one including therein the earlier settlements and providing for the recovery of the amounts agreed to be paid under the said two earlier settlements. The concluding paragraph is more analogous to that of the settlement of the second contract rather than that of the first. Under the final settlement, between October 28, 1948, and January 17, 1949, the respond ents paid a, total sum of Rs. 9,000 to the Government under the first two settlements of the contracts. Between March 10, 1949, and October 31, 1949, the respondents paid a total sum of Rs. 1 1,000 in instalments to the Government, though the amounts paid were less than the amount payable in accordance with the agreed instalments. Some correspondence passed between the Government and the respondents, the former demanding the balance of the amount payable under the instalments and the latter putting it off on one ground or other. Finally on August 10, 1949, the Government wrote a letter to the respondents demanding the payment of Rs. 1,51,723 payable to them under the three original contracts, ignoring the three settlements. The Government followed that letter with another one of the same date informing the respondents that they had appointed Bakshi Shiv Charan Singh as their arbitrator and calling upon the respondents to nominate their arbitrator. The respondents did not co operate 'in the scheme of arbitration and instead Kishori Lal Gupta as sole proprietor of the respondent firm made an application under section 33 of the , in the Original Side of the High Court of Calcutta for a declara tion that the arbitration agreement was no longer in existence. That application was dismissed by 499 Banerjee, J., of the said High Court on the ground that it was not maintainable as the two other partners of the respondent firm were not made parties to the said proceeding. But in the course of the judgment, the learned Judge made some observation on the merits of the case. Thereafter the Government filed their statement of facts before the arbitrator and the respondents filed a counter affidavit challenging the arbitrator 's jurisdiction and also the correctness of the claims made by the Government. On July 31, 1951, the arbitrator made an award in favour of the Government for a total sum of Rs. 1,16,446 11 5 in respect of the first and the third contracts and gave liberty to the Government to recover the amount due to them under the second contract in a suit. The award was duly filed in the High Court, and, on receiving the notice, the respondents filed an application in the High Court for setting aside the award and in the alternative for ' declaration that the arbitration clause in the three contracts ceased to have any effect and stood finally determined by the settlement of the disputes between the parties. Bachawat, J., held that the first contract was to be finally determined only on payment in terms of the settlement, and, as such payment was not made, the original contract and its arbitration clause continued to exist. As regards the third contract, the learned Judge came to the conclusion that by the third settlement, there was accord and satisfaction of the original contract and the substituted agreement discharged the existing cause of action and therefore the arbitrator had no jurisdiction to entertain any claim with regard to that contract. As the award on the face of it was a lump sum award, the learned Judge held that it was not severable and therefore the whole award was bad. In the result, he gave the declaration that the arbitration clause contained in the contract dated September 22,1944, for "Kettles Camp" had ceased to exist since the settlement contract dated February 22, 1949, and that the entire award was void and invalid. The present appeal by special leave was filed by the Government against the said order of the High Court. 500 At the outset, a preliminary objection taken by Shri Aggarwal, the learned Counsel for the respondents, may be disposed of The learned Counsel contends that the special leave granted by this Court should be revoked on the ground that an appeal lay against the order of the learned Judge to an appellate bench of the same High Court both under cl. 15 of the Letters Patent and section 39 of the . It is not, and cannot be, contended that this Court has no jurisdiction to entertain an appeal against the order of a Court when an appeal lies from that order to another Court. The provisions of article 136 of the Constitution are not ' circumscribed by any such limitation. But what is argued, in our view legitimately, is that when an appeal lay to the appellate bench of the Calcutta High Court, this Court should not have given special leave and thereby short circuited the legal procedure prescribed. There is much force in this argument. If the application for revoking the special leave had been taken at the earliest point of time and if this Court was satisfied that an appeal lay to an appellate bench of the Calcutta High Court, the leave obtained without mentioning that fact would have been revoked. But in the present case, the special leave was granted on March 29, 1954, and the present application for revoking the leave was made five years after the grant of special leave and the learned Counsel could not give any valid reason to explain this inordinate delay. In the circumstances, if we revoked the special leave, the appellant would be prejudiced, for if this objection had been taken at the earliest point of time, the appellant would have had the opportunity to prefer a Letters Patent appeal to the appellate bench of the Calcutta High Court. The appellant cannot be made to suffer for the default of the respondents. In the circumstances, we did not entertain that application for revoking the special leave and did not express our opinion on the merits of the question raised by the learned Counsel. Now coming to the merits, the main contentions of the parties may be stated at the outset. The argument of the Additional Solicitor General for the 501 appellant may be summarized in the following propositions: (1) The jurisdiction of the arbitrator depends upon the scope of the arbitration agreement or submission; (2) its scope would depend upon the language of the arbitration clause; (3) if the arbitration agreement in question is examined, it indicates that the dispute whether the original contracts have come to an end or not is within its scope; (4) on the facts of the case, there had been no novation or substitution of the original contracts; and (5) if there had been a novation of the original contracts, the non perform ance of the terms of the new contract revived the original contracts and therefore the parties to the original contracts could enforce their terms including the arbitration clause. The submission of Shri Aggarwal, Counsel for the respondents,may be stated thus : (1) Upon the facts of the case, there had been a recession of the old contracts and substitution of a new, legally enforceable and unconditional contract, which came into immediate effect; (2) the new contract can be legally supported either under section 62 or section 63 of the Indian Contract Act or under the general law of contracts; (3) the non performance of the terms of the new contract did not have the effect of reviving the rights and obligations under the old contracts as they did not remain alive for any purpose; and (6) even if the arbitration clause did not remain alive after the new contract, the arbitrator was bound to decide the case in terms of the new contract, and he having not done so, the error is apparent on the face of the record and therefore the award is liable to be set aside. So stated the controversy covers a much wider field than that necessary to solve the problem presented in this case. It would, therefore ' be convenient at this stage to clear the ground. Subtle distinctions sought to be made between the provisions of section 62 and section 63 of the Indian Contract Act need not detain us; nor need we consider the question whether the settlement contract in question falls under section 62 or is covered by section 63 of the Indian Contract Act, or is governed by the general principles of the law of contracts, for the validity of the said contract is not questioned. by either 64 502 party and indeed both rely upon it one to contend ,that it wholly superseded the earlier ones and the other to rely upon its terms to bring out its contingent character. If so, the only two outstanding questions are: (i) what is the legal effect of the contract dated February 22, 1949, on the earlier contracts ? ; and (ii) does the arbitration clause in the earlier contracts survive after the settlement contract ? The law on the first point is well settled. One of the modes by which a contract can be discharged is by the same process which created it, i.e., by mutual agreement; the parties to the original contract may enter into a new contract in substitution of the old one. The legal position was clarified by the Privy Council in Payana Reena Saminathan vs Pana Lana Palaniappa (1). Lord Moulton defined the legal incidents of a substituted contract in the following terms at p. 622: " The 'receipt ' given by the appellants, and accepted by the respondent, and acted on by both parties proves conclusively that all the parties agreed to a settlement of all their existing disputes by the arrangement formulated in the 'receipt '. It is a clear example of what used to be well known in common law plea ding as " accord and satisfaction by a substituted agreement ". No matter what were the respective rights of the parties inter se they are abandoned in consideration of the acceptance by all of a new agreement. The consequence is that when such an accord and satisfaction takes place the prior rights of the parties are extinguished. They have in fact been exchanged for the new rights; and the new agreement becomes a new departure, and the rights of all the parties are fully represented by it. " The House of Lords in Norris vs Baron and Company (2) in the context of a contract for sale of goods brought out clearly the distinction between a contract which varies the terms of the earlier contract and a contract which rescinds the earlier one, in the following passage at p. 26: "In the first case there are no such executory clauses in the second arrangement as would enable (1) 622. (2) 26. 503 you to sue upon that alone if the first did not exist; in the second you could sue on the second arrangement alone, and the first contract is got rid of either 2 by express words to that effect, or because, the second dealing with the same subject matter as the first but in a different way, it is impossible that the two should be both performed. " Scrutton, L.J., in British Russian Gazette and Trade Outlook Limited vs Associated Newspaper, Limited (1), after referring to the authoritative text books on the subject, describes the concept of 11 accord and satisfaction " thus at p. 643: " Accord and satisfaction is the purchase of a ,release from an obligation whether arising under contract or tort by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative. Formerly it was necessary that the consideration should be executed Later it was conceded that the consideration might be executory The consideration on each side might be an executory promise, the two mutual promise making an agreement enforceable in law, a contract I An accord, with mutual promises to perform, is good, though 'the thing be not performed at the time of action; for the party has a remedy to compel the performance ', that is to say, a cross action on the contract of accord if, however, it can be shown that what a creditor accepts in satisfaction is merely his debtor 's promise and not the performance of that promise, the original cause of action is discharged from the date when the promise is made. " The said observations indicate that an original cause of action can be discharged by an executory agreement if the intention to that effect is clear. The modern rule is stated by Cheshire and Fifoot in their Law of Contract, 3rd Edn., at p. 453: "The modern rule is, then, that if what the creditor has accepted in satisfaction is merely his (1) , 643, 644. 504 debtor 's promise to give consideration, and not the performance of that promise, the original cause of action is discharged from the date when the agreement is made. This, therefore, raises a question of construction in each case, for it has to be decided as a fact whether it was the making of the promise itself or the performance of the promise that the creditor consented to take by way of satisfaction. " So too, Chitty in his book on Contracts, 31st Edn., states at p. 286: " The plaintiff may agree to accept the performance of a substituted consideration in satisfaction, or he may agree to accept the promise of such performance. In the former there is no satisfaction until performance, and the debtor remains liable upon the original claim until the satisfaction is executed. In the latter, if the promise be not performed, the plaintiff 's remedy is by action for the breach of the substituted agreement, and he has no right of resort to the original claim. " From the aforesaid authorities it is manifest that a contract may be discharged by the parties thereto by a substituted agreement and thereafter the original cause of action arising under the earlier contract is discharged and the parties are governed only by the terms of the substituted contract. The ascertainment of the intention of the parties is essentially a question of fact to be decided on the facts and circumstances of each case. We have already given the sequence of events that led to the making of the contract dated February 22, 1949. To recapitulate briefly, the original three contracts were cancelled. by the Government on May 21, 1945, May 21, 1945, and March 9, 1946, respectively. Under the first contract, the Government made a claim for the price of the raw materials supplied and there was no counter claim by the respondents. Under the second and third contracts, there were counter claims the Government claiming amounts for the raw materials supplied and the respondents claiming damages for the breach thereof. 505 The disputes under the first two contracts were settled on the same day. As the claim was only on the part of the Government, the amount due to them was ascertained at Rs. 3,164 8 0 and the first contract was expressly agreed to be finally determined on payment of that amount. The express terms of the settlement leave no room to doubt that the contract was to be determined only after the payment of the ascertained amount. But under the second settlement, which was a compromise of disputed claims, a sum of Rs. 36,276 was fixed as the amount due from the respondents to the Government, presumably on taking into consideration the conflicting claims and on adjusting all the, amounts ascertained to be due from one to the other. The parties in express terms agreed that the earlier contract stood finally determined and that no party would have any claim thereunder against the other. A comparative study of the terms of the said two settlement contracts indicates that under the first settlement the original contract continued to govern the rights of the parties till payment, while under the second settlement contract, the original contract was determined and the rights and liabilities of the parties depended thereafter on the substituted contract. Coming to the third settlement, it was in the pattern of the second settlement. On the breach of the third contract, there were mutual claims, the Government claiming a large amount for raw materials supplied to the respondents, and the latter on their side setting up a claim for damages. Further, though the earlier two contracts were settled on September 6, 1948, the amounts payable under the said two settlements were not paid. A comprehensive settlement, therefore, of the outstanding claims was arrived at between the parties, and the rights and liabilities were attempted to be crystallized and a suitable procedure designed for realising the amounts. In full and final settlement of the amounts due to the Government in respect of the raw materials received against the contracts and the respondents ' claim for compensation for cancellation of the contracts, it was agreed that the respondents should pay a sum of Rs. 45,000 to the Government 506 and that the respondents should retain all the material, partly fabricated and fully fabricated stores lying with them. Clauses 3, 4 and 5 provide for the realisation of the entire amounts covered by the three settlements. Under cl. 3 the respondents agreed to pay the total amount payable under the three settlements in monthly instalments for the first three months commencing from March 10, 1949, at a sum of Rs. 5,000 and thereafter at a sum of Rs. 9,000 per month till the entire amount was paid. Clause 4 prescribed that in case of default of any monthly instalment interest would be charged at the rate of 6% per annum and if the instalments defaulted exceeded two in number the Government was given the right to realise the entire amount payable under the three contracts with interest not only from the security but also otherwise. Under cl. 5 it was stipulated that the respondents should hypothecate their moveable and immoveable properties described thereunder to provide cover for the moneys payable to the Government. Clause 6 in express terms declared that the contracts should be finally concluded in terms of the settlement and no party would have any claim against the other. Is there any justification for the contention that the substituted contract should either come into force after the hypothecation bond was executed or that it should cease to be effective if the said bond was not ' executed within a reasonable time from the date of the settlement? We do not find any justification for this contention either in the express terms of the contract or in the surrounding circumstances whereunder the document came to be executed. It was a self contained document; it did not depend upon the earlier contracts for its existence or enforcement. The liability was ascertained and the mode of recovery was provided for. The earlier contracts were superseded and the rights and liabilities of the parties were regulated thereunder. No condition either precedent or subsequent was expressly provided; nor was there any scope for necessarily implying one or either. The only argument in this direction, 507 namely, that it is impossible to attribute any intention to the Government to take a mere promise on. the part of the respondents to hypothecate their properties " ' as satisfaction " and therefore it should be held that the intention of the parties was that there would be no satisfaction till such a document was executed, does not appeal to us. We are concerned with the expressed intention of the parties and when the words are clear and unambiguous they are undoubtedly clear in this case there is no scope for drawing upon hypothetical considerations or supposed intentions of the parties; nor are we attracted by the argument that the description of the properties intended to be hypothecated was not made clear and therefore the presumed intention was to suspend the rights under the new contract till a valid document in respect of a definite and specified property was executed. Apart from the fact that we are not satisfied with the argument that the description was indefinite, we do not think that such a flaw either invalidates a document or suspends its operation till the defect is rectified or the ambiguity clarified. The substituted agreement gave a new cause of action and obliterated the earlier ones and if there was a valid defence against the enforcement of the new contract in whole or in part, the party affected must take the consequences. We have, therefore, no doubt that the contract dated February 22, 1949, was for valid consideration and the common intention of the parties was that it should be in substitution of the earlier ones and the parties thereto should thereafter look to it alone for enforcement of their claims. As the document does not disclose any ambiguity, no scrutiny of the subsequent conduct of the parties is called for to ascertain their intention. If so, the next question is whether the arbitration clause of the original contracts survived after the execution of the settlement contract dated February 22, 1949. The learned Counsel for the appellant contends that the terms of the arbitration clause are wide and comprehensive, and any dispute on the question whether the said contract was discharged by any of the ways known to law came within its fold. 508 Uninfluenced by authorities or case law, the logical outcome of the earlier discussion would be that the arbitration clause perished with the original contract. Whether the said clause was a substantive term or a collateral one, it was none the less an integral part of the contract, which had no existence de hors the contract. It was intended to cover all the disputes arising under the conditions of, or in connection with, the contracts. Though the phraseology was of the widest amplitude, it is inconceivable that the parties intended its survival even after the contract was mutually rescinded and substituted by a new agreement. The fact that the new contract not only did not provide for the survival of the arbitration clause but also the circumstance that it contained both substantive and procedural terms indicates that the parties gave up the terms of the old contracts, including the arbitration clause. The case law referred to by the learned Counsel in this connection does not, in our view, lend support to his broad contention and indeed the principle on which the said decisions are based is a pointer to the contrary. We shall now notice some of the authoritative statements in the text books and a few of the cases bearing on the question raised: In Chitty on Contract, 21st Edn., the scope of an arbitration clause is stated thus, at p. 322: " So that the law must be now taken to be that when an arbitration clause is unqualified such a clause will apply even if the dispute involve an assertion that circumstances had arisen whether before or after the contract had been partly performed which have the effect of discharging one or both parties from liability, e.g., repudiation by one party accepted by the other, or frustration. " In " Russel on Arbitration ", 16th Edn., p. 63, the following test is laid down to ascertain whether an arbitration clause survives after the contract is deter mined: " The test in such cases has been said to be whether the contract is determined by something outside itself, in which case the arbitration clause 509 is determined with it, or by something arising out of the contract, in which case the arbitration clause. remains effective and can be enforced. " The Judicial Committee in Hirji Mulji vs Cheong Yue Steamship Company (1) gives another test at p. 502: "That a person before whom a complaint is brought cannot invest himself with arbitral jurisdiction to decide it is plain. His authority depends on the existence of some submission to him by the parties of the subject matter of the complaint. For this purpose a contract that has determined is in the same position as one that has never been concluded at all. It founds no jurisdiction. " A very interesting discussion on the scope of an arbitration clause in the context of a dispute arising on the question of repudiation of a contract is found in the decision of the House of Lords in Heyman vs Darwine Ltd .(2 ) There a contract was repudiated by one party and accepted as such by the other. The dispute arose in regard to damages under a number of heads covered by the contract. The arbitration clause provided that any dispute between the parties in respect of the agreement or any of the provisions contained therein or anything arising thereout should be referred to arbitration. The House of Lords held that the dispute was one within the arbitration clause. In the speeches of the Law Lords a wider question is discussed and some of the relevant principles have been succinctly stated. Viscount Simon L.C. observed at p. 343 thus: " An arbitration clause is a written submission, agreed to by the parties to the contract, and, like other written submissions to arbitration, must be construed according to its language and in the light of the circumstances in which it is made. If the dispute is as to whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission. Similarly, if one party to (1) ,502. 65 (2) , 343 345, 347, 350. 510 the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself is also void. If, however, the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them as to whether there has been a breach by one side or the other, or as to whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen " in respect of ", or " with regard to ", or " under " the contract, and an arbitration clause which uses these, or similar, expressions, should be construed accordingly. By the law of England (though not, as I understand, by the law of Scotland) such an arbitration clause would also confer authority to assess damages for breach even though it does not confer upon the arbitral body express power to do so. I do not agree that an arbitration clause expressed in such terms as above ceases to have any possible application merely because the contract has "come to an end", as, for example, by frustration. In such cases it is the performance of the contract that has come to an end." The learned Law Lord commented on the view expressed by Lord Dunedin at p. 344 thus: " The reasoning of Lord Dunedin applies equally to both cases. It is, in my opinion, fallacious to say that, because the contract has " come to an end " before performance begins, the situation, so far as the arbitration clause is concerned, is the same as though the contract had never been made. In such case a binding contract was entered into, with a valid submission to arbitration contained in its arbitration clause, and, unless the language of the arbitration clause is such as to exclude its application until performance has begun, there seems no reason why the arbitrator 's jurisdiction should not cover the one case as much as the other. " 511 Lord Macmillan made similar observations at p. 345: " If it appears that the dispute is as to whether, there has ever been a binding contract between the parties, such a dispute cannot be covered by an arbitration clause in the challenged contract. If there has, never been a contract at all, there has never been as part of it an agreement to arbitrate; the greater includes the less. Further, a claim to set aside a contract on such grounds as fraud, duress or essential error cannot be the subject matter of a reference under an arbitration clause in the contract sought to be set aside. Again, an admittedly binding contract containing a general arbitration clause may stipulate that in certain events the contract shall come to an end. If a question arises whether the contract has for any such reason come to an end, I can see no reason why the arbitrator should not decide that question. It is clear, too, that the parties to a contract may agree to bring it to an end to all intents and purposes and to treat it as if it had never existed. In such a case, if there be an arbitration clause in the contract, it perishes with the contract. If the parties substitute a new contract for the contract which they have abrogated, the arbitration clause in the abrogated contract cannot be invoked for the determination of questions under the new agreement. All this is more or less elementary. " These observations throw considerable light on the question whether an arbitration clause can be invoked in the case of a dispute under a superseded contract. The principle is obvious; if the contract is superseded by another, the arbitration clause, being a component part of the earlier contract, falls with it. The learned Law Lord pin points the principle underlying his conclusion at p. 347: " I am accordingly of opinion that what is commonly called repudiation or total breach of a contract, whether acquiesced in by the other party or not, does not abrogate a contract, though it may relieve the injured party of the duty of further fulfilling the obligations which he has by a contract undertaken 512 to the repudiating party. The contract is not put out of existence, though all further performance of the obligations undertaken by each party in favour of the other may cease. It survives for the purpose of measuring the claims arising out of the breach, and the arbitration clause survives for determining the mode of their settlement. The purposes of the contract have failed, but the arbitration clause is not one of the purposes of the contract." Lord Wright, after explaining the scope of the word " repudiation " and the different meanings its bears, proceeded to state at p. 350: " In such a case, if the repudiation is wrongful and the rescission is rightful, the contract is ended by the rescission; but only as far as concerns future performance. It remains alive for the awarding of damages, either for previous breaches, or for the breach which constitutes the repudiation. That is only a particular form of contract breaking and would generally, under an ordinary arbitration clause, involve a dispute under the contract like any other breach of contract. " This decision is not directly in point; but the principles laid down therein are of wider application than the actual decision involved. If an arbitration clause is couched in widest terms as in the present case, the dispute, whether there is frustration or repudiation of the contract, will be covered by it. It is not because the arbitration clause survives, but because, though such repudiation ends the liability of the parties to perform the contract, it does not put an end to their liability to pay damages for any breach of the contract. The contract is still in existence for certain purposes. But where the dispute is whether the said contract is void ab initio, the arbitration clause cannot operate on those disputes, for its operative force depends upon the existence of the contract and its validity. So too, if the dispute is whether the contract is wholly superseded or not by a new contract between the parties, such a dispute must fall outside the arbitration clause, for, if it is superseded, the arbitration clause falls with it. The argument, therefore, that the legal position is 513 the same whether the dispute is in respect of repudiation or frustration or novation is not borne out by these decisions. An equally illuminating judgment of Das, J., as he then was, in Tolaram Nathmull vs Birla Jute Manufacturing Co. Ltd.(1) is strongly relied upon by the learned Counsel for the appellant. There the question was whether an arbitration clause which was expressed in wide terms would take in a dispute raised in that case. It was contended on one side that the contract was void ab intio and on the other side that, even on the allegations in the plaint, the contract was not ab initio void. The learned Judge, on the facts of that case, held that no case had been made out for staying the suit and therefore dismissed the application filed by the defendant for stay of the suit. The learned Judge exhaustively considered the case law oil the subject and deduced the principles and enumerated them at p. 187. The learned Judge was not called upon to decide the present question, namely, whether an arbitration clause survived in spite of substitution of the earlier contract containing the arbitration clause by a fresh one, and therefore we do not think that it is necessary to express our opinion on the principles culled out and enumerated in that decision. The following principles relevant to the present case emerge from the aforesaid discussion: (1) An arbitration clause is a collateral term of a contract as distinguished from its substantive terms; but none the less it is an integral part of it; (2) however comprehensive the terms of an arbitration clause may be, the existence of the contract is a necessary condition for its operation; it perishes with the contract; (3) the contract may be non est in the sense that it never came legally into existence or it was void ab initio; (4) though the contract was validly executed, the parties may put an end to it as if it had never existed and substitute a new contract for it solely governing their rights and liabilities thereunder; (5) in the former case, if the original contract has no legal existence, the arbitration clause also cannot operate, for along with the original contract, it is also void ; in the latter case, as the (1) I.L.R. 514 original contract is extinguished by the substituted one, the arbitration clause of the original contract perishes with it; and (6) between the two falls many categories of disputes in connection with a contract, such as the question of repudiation, frustration, breach etc. In those cases it is the performance of the contract that has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it. As the contract subsists for certain purposes, the arbitration clause operates in respect of these purposes. We have held that the three contracts were settled and the third settlement contract was in substitution of the three contracts; and, after its execution, all the earlier contracts were extinguished and the arbitration clause contained therein also perished along with them. We have also held that the new contract was not a conditional one and after its execution the parties should work out their rights only under its terms. In this view, the judgment of the High Court is correct. This appeal fails and is dismissed with costs. SARKAR J. On different dates in 1943 and 1944, a firm of contractors of the name of Kishorilal Gupta & Brothers entered into three contracts with the appellant to fabricate and supply certain military stores. The first contract was for 43,000 ladles cook, the second for 15,500 bath ovals and the third for 1,00,000 kettles camp. Each of these contracts contained an arbitration clause. The last mentioned contract provided that the appellant would supply materials for the fabrication of the articles to be delivered under it. Before the contracts had been finally executed, disputes arose between the parties. These disputes were settled by mutual agreements which were contained in three separate documents. The settlement in respect of the ladles cook contract which was made on September 6, 1948, provided that the contractors would pay to the appellant a sum of Rs. 3,164 8 0 and on such payment that contract would stand finally determined. Under the settlement in respect of the, bath ovals contract which also was made on 515 September 6, 1948, the contractors agreed to pay to the appellant Rs. 36,276 and it provided that " the contract stands finally determined and no party shall have any further claim against the other ". The terms of the settlement of the kettles camp contract are set out below in full, for, this case depends on them: Dated the 22nd February 1949. Messrs. Kishorilal Gupta & Bros., Calcutta. Subs: A.T. No. MP/75442/R 11397 dated the 22nd September 1944. Dear Sir, Reference discussion held on 5th February 1949 between your Proprietor Mr. Kishorilal Gupta and General Manager J. B. Breiter and the Claims Committee of the Directorate General. I hereby confirm the following terms of settlement arrived at in the meeting. The settlement has received the approval of Director General of Industries and Supplies, New Delhi. The firm will pay a sum of Rs. 45,000 in full and final settlement of the amount due to the Government in respect of raw materials received against the contract and their claims for compensation for cancellation for the same contract. The firm will retain all surplus partly fabricated and fully fabricated stores, lying with them. The firm agree to pay the above mentioned sum of Rs. 45,000 only together with the sums owing by them to the Government under the settlements reached in two other cases A/T Nos. MP/75762/R 61/78 dated 15th September 1944 and MP/50730/8/R 1/90 dated 2nd April 1943 in monthly instalments for Rs. 5,000 only for the first three months, first instalment being payable on 10th March 1949 and further instalments of Rs. 9,000 per month till the entire dues payable to Government are paid. In the event of default of any monthly instalments interest will be charged by Government on the amount as defaulted at the rate of 6% per annum from the first day of the month in which the instalment shall due. If the instalments defaulted 516 exceed two in number, the Government will have the right to demand the entire balance of the money payable by the firm together with interest thereon at the rate abovementioned on that balance and take such steps to recover from the Security to be offered by the firm, in terms of the settlement or otherwise. In order to provide cover for the monies payable to the Government the firm undertakes to hypothecate their movable and immoveable property in Bamangachi Engineering Works, together with all machinery sheds and lease hold interest in land measuring about 5.75 acres at Mouja Bamangachi in Howrah. The firm further undertakes to execute the necessary stamped documents for the purpose as drafted by the Government Solicitor at Calcutta. The contracts stand finally concluded in terms of the settlement and no party will have any further or other claim against the other. Please acknowledge receipt. Yours faithfully, Sd. R. B. L. Mathur Director of Supplies (Claims) for and on behalf of the Governor General. " The contract referred to in cl. (1) of this document is the contract No. MP/75442/R 1/397 mentioned at the top of the letter and concerned the kettles camp. The contracts referred to in cl. (3) are the contracts concerning ladles cook and bath ovals which had been settled earlier but the amounts due in respect of the settlements concerning them had not been paid in full. After the settlement of February 22, 1949, the contractors made certain payments aggregating Rs. 1 1,000, the last payment made being on October 31, 1949. These payments had not been made as provided in el. The contractors also failed to execute the hypothecation deed mentioned in el. Certain correspondence appears to have taken place but with no tangible result. The appellant was unable to obtain payments or the hypothecation deed in terms of the settlement. 517 In these circumstances the appellant made a claim against the contractors under the three original con , tracts amounting to Rs. 1,52,723 and referred it to ' arbitration under the arbitration clauses contained in them. The appellant nominated an arbitrator and called upon the contractors to nominate the other, the arbitration clause providing that the arbitration shall be by two arbitrators, one to be nominated by each party. The contractors did not nominate any arbitrator, contending that the matter had " already been negotiated to a settlement " and that there were " no outstanding disputes to be referred to arbitration ". The appellant then appointed the person nominated by it as the sole arbitrator under the provisions of the and an arbitration was held by him in which the contractors joined. In the arbitration proceedings, for reasons with which we are not concerned, the appellant abandoned its claim in respect of the bath ovals contract. On July 31, 1951, the arbitrator made an award in favour of the appellant in the sum of Rs. 1,16,446 11 5 in respect of its claim on the ladles cook and kettles camp contracts. Being aggrieved by the award, the respondent Kishorilal Gupta, who is a partner of the contractors ' firm, made an application to the High Court at Calcutta in its Original Jurisdiction for a declaration that the arbitration clauses in the original contracts had ceased to have any effect and the contracts stood finally determined as a result of the settlements earlier referred to and for an order setting aside the award as void and a nullity. I wish to draw attention here to the fact that the application was really concerned with the contracts for ladles cook and kettles camp. It had nothing to do with the bath ovals ' contract for the appellant withdrew its claim under it from arbitration and no award was made in respect of it. So in this appeal we are not really concerned with that contract. Bachawat, J., who heard the application held that the contract for ladles cook had not been abrogated by the settlement in respect of it for reasons which it is unnecessary to state here as this part of the decision 518 of the learned Judge has not been challenged before us. a We have therefore to proceed on the basis that the arbitration clause contained in the ladles cook contract continued in force in spite of the settlement in respect of it. The learned Judge however held that the contract for kettles camp including the arbitration clause contained in it had ceased to exist as a result of the settlement of February 22, 1949, and the arbitrator had consequently no jurisdiction to make any award purporting to act under that arbitration clause. He then proceeded to hold that as the award was a single and inseverable award in respect of the claims under the ladles cook as well as the kettles camp contracts, the whole award became invalid. In the result the learned Judge made an order declaring that the arbi tration clause contained in the kettles camp contract had ceased to exist and setting aside the award as a whole. It is against this judgment that the present appeal has been filed with leave granted by this Court. It was contended on behalf of the respondent that the leave should not have been granted as the appellant had a right of appeal to the High Court itself. We were on this basis asked to revoke the leave. It appears that there are some cases of the Calcutta High Court which create a good deal of doubt as to whether an appeal lay to that High Court from an order of the kind made in this case. The appellants therefore were legitimately in difficulty in deciding whether an appeal lay to the High Court. Again, leave was granted by this Court as far back as March 29, 1954, and the respondent at no stage earlier than the hearing of the appeal before us took any objection to that leave. It is too late now to allow him to do that. So to do would leave the appellant entirely without remedy as an appeal to the High Court would in any event be now barred. I feel therefore that no question of revoking the leave should be allowed to be raised. It is useful to remind ourselves before proceeding further that what was referred to arbitration in this case was a claim by the appellant for damages for 519 breach of the contracts said to have been committed by the contractors. That indeed is the respondent 's, case. With regard to the merits of this claim the ' Court has no concern. But it is important to note that those claims were clearly within the arbitration clause in the contracts; about this there does not appear to be any dispute. No question therefore arises in this appeal that the claims referred to arbitration were not within the arbitration clauses. What is in dispute in this case is whether the 'arbitration clause had ceased to exist as a result of settlement. In considering the question it is not necessary however to concern ourselves with the settlements regarding the ladles cook contract or the bath ovals contract. The bath ovals contract is not the subject matter of the award. As regards the ladles cook contract, the Court below has held that settlement did not affect the relative arbitration clause and that decision has not been challenged before us. The real question that we have to consider is whether the settlement of February 22, 1949, altogether put out of existence the arbitration clause in the kettles camp contract. If it did, the arbitration in this case was clearly without jurisdiction and the award resulting from it a nullity, for on that basis there would be no arbitration agreement under which an arbitration could be held. An arbitration agreement, of course, is the creature of an agreement and what is created by agreement may be destroyed by agreement. Lord Macmillan considered it elementary " that the parties to a contract may agree to bring it to an end ' to all intents and purposes and to treat it as if it had never existed " and that " In such a case if there be an arbitration clause in the contract it perishes with the contract " : Heyman vs Darwins (1). Now it is clear that the settlement of February 22, 1949, does not expressly make the arbitration clause nonexistent. It is however said that the settlement of February 22, 1949, operated as an accord and satisfaction and therefore the arbitration clause in the relative original contract was brought to an end by it. (1) , 371. 520 It if; said that such a settlement amounts to a substituted agreement which abrogated the original contract and the arbitration clause contained in it perished with it. I venture to think that this view is wrong and originates from a misapprehension of the real nature of accord and satisfaction and an arbitration clause in a contract. It must here be stated that the appellant disputes that the settlement of February 22, 1949, amounted to an accord and satisfaction. I will examine the appellant 's contention later and shall for the present assume that the settlement constituted an accord and satisfaction. Now what is an accord and satisfaction ? It is only a method of discharge of a contract. It only means that the parties are freed from their mutual obligations under the contract : see Cheshire and Fifoot on Contracts, 3rd edn., p. 433. " It is a good defence to an action for the breach of any contract, whether made by parol or specialty, that the cause of action has been discharged by accord and satisfaction, that is to say, by an agreement after breach whereby some consideration other than his legal remedy is to be accepted by the party not in fault ": Chitty on Contracts, 21st edn., p. 286. In British Russian Gazette and Trade Outlook. Ltd. vs Associated Newspapers Ltd. (1) Scrutton, L.J., said, " Accord and satisfaction is the purchase of the release from an obligation whether arising under contract or tort by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative. " The effect of an accord and satisfaction is therefore to secure a release from an obligation arising under a contract. Now it is difficult to conceive of an obligation arising from a contract unles the contract existed. An accord and satisfaction which secures a release from such an obligation is really based on the existence of the contract instead of treating it as non existent. (1) , 643 4. 521 The contract is not annihilated but the obligations under it cease to be enforceable. Therefore it is that when an action is brought for the appropriate remedy for nonperformance of these obligations, that an accord and satisfaction furnishes a good defence. The defence is not that the contract has come to an end but that its breach has been satisfied by accord and satisfaction and therefore the plaintiff in the action is not entitled to the usual remedy for the breach. It would clearly appear from the terms of the settlement that it dealt with remedies for the breach of the kettles camp contract. Clause (1) shows that the parties were making cross claims against each other for breach of that contract and these were settled by mutual agreement upon the term that the contractors would pay to the appellant Rs. 45,000. Clauses (3), (4) and (5) state how this sum was to be paid and how the payment of it was to be secured. Clause (6) provides that the contract stands finally concluded in terms of the settlement. The parties therefore were only intending to decide the dispute as to cross claims made on the basis of the breach of the contract. So they were assuming the existence of the contract, for there could be no breach of it unless it existed. Now I come to the nature of an arbitration clause. It is well settled that such a clause in a contract stands apart from the rest of the contract. Lord Wright said in Heyman 's case (1) that an arbitration clause " is collateral to the substantial stipulations of the contract. It is merely procedural and ancillary, it is a mode of settling disputes. . . . All this may be said of every agreement to arbitrate, even though not a separate bargain, but one incorporated in the general contract." Lord Macmillan also made some very revealing observations on the nature of an arbitration clause in the same case. He said at pp. 373 4: " I venture to think that not enough attention has been directed to the true nature and function of an arbitration clause in a contract. It is quite distinct from the other clauses. The other clauses (1) , 371. 522 set out the obligations which the parties undertake towards each other hinc inde, but the arbitration clause does not impose on one of the parties an obligation in favour of the other. It embodies the agreement of both the parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by a tribunal of their own constitution. And there is this very material difference, that whereas in an ordinary contract the obligations of the parties to each other cannot in general be specifically enforced and breach of them results only in damages, the arbitration clause can be specifically enforced by the machinery of the Arbitration Act. The appropriate remedy for breach of the agreement to arbitrate is not damages, but its enforcement. " It seems to me that the respective nature of accord and satisfaction and arbitration clause makes it impossible for the former to destroy the latter. An accord and satisfaction only releases the parties from the obligations under a contract but does not affect the arbitration clause in it, for as Lord Macmillan said, the arbitration clause does riot impose on one of the parties an obligation in favour of the other but embodies an agreement that if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by arbitration. A dispute whether the obligations under a contract have been discharged by an accord and satisfaction is no less a dispute regarding the obligations under the contract. Such a dispute has to be settled by arbitration if it is within the scope of arbitration clause and either party wants that to be done. That cannot be unless the ' arbitration clause survives the accord and satisfaction. If that dispute is not within the arbitration clause, there can of course be no arbitration, but the reason for that would not be that the arbitration clause has ceased to exist but that the dispute is outside its scope. I am not saying that it is for the arbitrator to decide whether the arbitration clause is surviving ; that may in many cases have to be decided by the Court. That would 523 depend on the form of the arbitration agreement and on that aspect of the matter it is not necessary to say anything now for the question does not arise. In my view therefore an accord and satisfaction does not destroy the arbitration clause. An examination of what has been called the accord and satisfaction in this case shows this clearly. From what I have earlier said about the terms of the settlement of February 22, 1949, it is manifest that it settled the disputes between the parties concerning the breach of the contract for kettles camp and its consequences. All that it said was that the contract had been broken causing damage and the claim to the damages was to be satisfied " in terms of the settlement ". It did not purport to annihilate the contract or the arbitration clause in it. I feel no doubt therefore that the arbitration clause subsisted and the arbitrator was competent to arbitrate. The award was not, in my view, a nullity. The position is no different if the matter is looked at from the point of view of section 62 of the Contract Act. That section is in these terms: " Section 62. If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. " The settlement cannot be said to have altered the original contract or even to have rescinded it. It only settled the dispute as to the breach of the contract and its consequences. For the same reason it cannot be said to substitute a new contract for the old one. As 1 have earlier stated it postulates the existence of the contract and only decides the incidence of its breach. It remains now to express my views on the question whether the settlement of February 22,1949, amounted to an accord and satisfaction. I have earlier stated that an accord and satisfaction is the purchase of a release from an obligation under a contract. This release is purchased by an agreement which is the accord. But this agreement like all other agreements must be supported by consideration. The satisfaction 524 is that consideration. It was formerly thought that the consideration had to be executed. In other words, the consideration for which the release was granted had to be received by the releaser before the release could become effective. The later view is that the consideration may be executory; that the release may become effective before the consideration has been received by the releaser if he has agreed to accept the promise of the release to give the consideration. Whether it is the one or the other depends on the agreement of the parties. It is a question of intention. And where, as in the present case, the agreement is expressed in writing, the question is one of construction of a document. So much is well settled. The question then is, Is it the proper construction of the settlement of February 22, 1949, that the appellant agreed to accept the promise of the contractors to pay the moneys and create the security in discharge of their obligations ? Or is it the proper construction that the contractors were not to be discharged till they had carried out their promises contained in the settlement. The High Court held, accepting the respondent 's contention, that el. (6) of the settlement showed that the appellant had accepted the promise of the contractors to pay the moneys and to execute a hypothecation bond in full discharge of their obligations under the contract. That clause states that " The contracts stand finally concluded in terms of the settlement. " It is said that these words show that it was intended to accept the promise of the contractors and thereupon to give them a discharge from their obligations under the contract. Now it seems to me that the words " stands finally concluded in terms of the settlement " do not necessarily mean concluded by the promise of the contractors contained in the settlement. It appears to me to be capable of the meaning that the contract is to stand concluded when its terms have been carried out. The words are not, " stand finally concluded by the terms of the settlement" but they are, "stand finally concluded in terms of settlement ". These terms are that the contractors would pay certain 525 moneys by certain instalments and would secure these payments by a hypothecation bond. So it would appear that the contract was not to be concluded till the terms had been carried out, for otherwise it would not be a conclusion " in terms of the settlement. " That seems to me to be also the reasonable interpretation to put on the document in view of the circumstances of the case. The appellant was to receive a substantial sum under the settlement. It gave the contractors quite a long time in which to pay it. It bargained for a security to be furnished to be sure of receiving the payments. The discharge was to be by the payments. The promise to make these payments may conceivably in proper circumstances, itself amount to a discharge. But I wholly fail to see that when there is an additional promise to secure the payments by a hypothecation, the parties could have intended that there would be a discharge before the hypothecation had been made. It does not seem reasonable to hold that the parties so intended. Nor do I think that the words " stand finally concluded in terms of the settlement " are so strong as to impute such an intention to the parties. These words are capable of the meaning that the contract was to stand concluded upon the terms of the settlement being carried out and, for the reasons just mentioned, that is the proper meaning to give to those words. In my view, therefore, the settlement did not amount to an accord and satisfaction. Till the terms of it had been carried out, the appellant retained all its rights under the contract. There was one other point argued on behalf of the respondent which I think I should notice. It was said that the award was in any event liable to be set aside inasmuch as it disclosed an error on the face of it. This error, it was said, consisted in awarding damages larger than those which the appellant had agreed to take by the settlement. Now this depends on whether the settlement amounted to an accord and satisfaction; if it did not, the appellant 's claim for damages could not be confined to the amount mentioned in the settlement, 67 526 I have already said that in my opinion it did not amount to an accord and satisfaction. So there was no error apparent on the face of the award. It further seems to me that it is not open to the respondent to contend that the award is liable to be set aside as disclosing the error mentioned above on the face of it. I do not find that such a case was made in the application out of which this appeal arises. It was said that the case had been made in paragraphs 34 and 35 of the respondent 's petition to the High Court. I do not think it was there made. These paragraphs refer to the arbitrator 's decision that he had jurisdiction to arbitrate as the settlement had not destroyed the arbitration clause and the contention there made was that this decision was erroneous on the face of it. This has nothing to do with the question that the award was wrong on the face of it as it awarded a sum in excess of the amount fixed by the settlement. Whether the arbitrator was right or not in his decision that the arbitration clause had not been superseded is irrelevant for that is the question that the Court was called upon to decide in the application. In my view therefore the appeal should succeed and the order of the High Court set aside. I would order accordingly and award the costs here and below to the appellant. ORDER In accordance with the opinion of the majority this appeal fails and is dismissed with costs.

The respondents entered into three several contracts with the appellant, for the fabrication and supply of diverse military stores, each of which contracts contained an arbitration clause. Before the contracts had been fully executed disputes arose between the parties, one alleging that the other was committing a breach of the contract. The parties then entered into three fresh contracts on successive dates purporting to settle these disputes on the terms therein contained. By the first two of these settlement contracts the respondents agreed to pay to the appellant certain moneys in settlement respectively of the disputes relating to the first two original contracts. By the last of these settlement contracts the respondents agreed to pay to the appellant in specified instalments certain moneys in settlement of the disputes relating to the third original contract as also the moneys which had then become due on the first two settlement contracts and had not been paid and further undertook to hypothecate certain properties to secure the due repayment of these moneys. The third settlement contract provided: " The contracts stand finally concluded in terms of the settlement and no party will have any further or other claim against the other." The respondents paid some of the instalments but failed to pay the rest. They also failed to create the hypothecation. The appellant then referred its claims for breach of the three original contracts to arbitration under the arbitration clauses contained in them. On this reference an award for a total sum of Rs. 1,i6,446 iI 5 was made against the respondents in respect of the appellant 's claim on the first and the third original contracts, the claim in respect of the second original contract having been abandoned by the appellant, and this award was filed in the High Court at Calcutta. The respondents applied to the High Court for a declaration that the arbitration clauses in the original contracts had ceased to have any effect and the contracts stood finally determined as a result of the settlement contracts and for an order setting aside the award as void and nullity. The High Court held that the first original contract had not been abrogated by the settlement in respect of it, but the third original contract and the arbitration clause contained in it had ceased to exist as a result of the last settlement and, the arbitrator had no jurisdiction to arbitrate under that arbitration clause. It further 63 494 held that as the award was a single and inseverable award the whole of it was null and void. In this view the High Court set aside the award. Held (per Imam and Subba Rao, JJ., Sarkar J., dissenting), that the third settlement, properly construed, left no manner of doubt that it was for valid consideration and represented the common intention of the parties to substitute it for the earlier contracts between them. It gave rise to a new cause of action by obliterating the earlier contracts and the parties could look to it alone for the enforcement of their claims. There could, therefore, be no question that the arbitration clause which, whether a substantive or a collateral term, was nevertheless an integral part of the said contracts, must be deemed to exist along with them as a result of the said settlement. Hirji Mulji vs Cheong Yue Steamship Company, [1926] A.C. 502 and Heyman vs Darwin Ltd., , referred to. Tolaram Nathmull vs Birla Jute Manufacturing Co. Ltd., I.L.R. , distinguished. Held, further, that it was well settled that the parties to an original contract could by mutual agreement enter into a new contract In substitution of the old one. Payana Reena Saminathan vs Pana Lana Palaniappa, [19I4] A.C. 618: Norris vs Baron and Company, [1918] A.C. i and British Russian Gazette and Trade Outlook Ltd. vs Associated Newspaper, Limited, , referred to. Per Sarkar, J. The award was valid and could not be set aside as the third settlement neither expressly put an end to the arbitration clause nor, considered as an accord and satisfaction, did it have that effect. An accord and satisfaction is only a method of discharge of a contract. It does not annihilate the contract but only makes the obligation arising from it unenforceable. An arbitration clause stands apart from the rest of the contract in which it is contained. It does not impose on the one party an obligation in favour of the other; it only embodies an agreement that if any dispute arises with regard to any obligation which one party has undertaken to the other, such dispute shall be settled by arbitration. An accord and satisfaction, which is concerned with the obligations arising from the contract, does not affect an arbitration clause contained in it. Heyman vs Darwins and British Russian Gazette and Trade Outlook Ltd. vs Associated Newspapers Ltd. , referred to. The settlement of February 22, 1949, did not, in the circum stances of the case, amount to an accord and satisfaction.

Civil Appeal No. 829 of 1975. From the Judgment and Order dated 11 4 74 of the Calcutta High Court in Appeal from original Order dated 221/70. section C. Manchanda, and Miss A. Subhashini for the Appellant V. section Desai, Sanjay Bhattacharya and Rathin Dass for the Respondent. The Judgment of the Court was delivered by BHAGWATI, J. This appeal by certificate is directed against an order passed by a Division Bench of the High Court of Calcutta allowing an appeal against a decision of a Single Judge dismissing the writ petition of the respondent. The facts giving rise to the appeal may be briefly stated as follows: The respondent was assessed to income tax for the assessment year 1959 60 and certain interest paid by the respondent to creditors from whom it claimed to have borrowed monies on hundis, was allowed as deductible expenditure. The assessment of the respondent was completed on 23rd August, 1960. On or about 25th January, 1968, however, a Notice was issued by the Income Tax Officer under Section 148 of the Income Tax Act, 1961 to re open the assessment of the respondent for the assessment year 1959 60. The Notice was obviously under Section 147(a) since a period of four years had already elapsed from the close of the assessment year 1959 60 and no Notice could be issued under Section 147(b). The Income Tax Officer claimed that the transactions of loan represented by the hundis were bogus and no interest was paid by the respondent to any of the 907 creditors shown in the hundis and it was wrongly allowed as a deduction and hence a part of the income of the respondent had escaped assessment by reason of the failure of the respondent to disclose fully and truly all material facts necessary for its assessment. The respondent challenged the validity of the Notice issued by the Income Tax Officer by filing a writ petition in the Calcutta High Court. The respondent contended that there was no failure on its part to disclose fully and truly all material facts necessary for its assessment and that in any event the Income Tax Officer had no reason to believe that any part of the income of the respondent had escaped assessment by reason of such failure on the part of the respondent. The Income Tax Officer in the affidavit in reply filed by him on 5th December, 1968 declined to disclose the facts which had weighed with him in reaching the belief that the income of the respondent had escaped assessment by reason of its failure to disclose fully and truly all material facts, on the ground that if such facts were disclosed to the respondent, it would cause great prejudice to the interests of the Revenue and would frustrate the object of re opening the assessment. This was obviously an untenable stand because the existence of reason to believe on the part of the Income Tax Officer was a justiceable issue and it was for the court to be satisfied whether in fact the Income Tax Officer had reason to believe that income had escaped assessment by reason of failure of the respondent to make a full and true disclosure. The Income Tax Officer realising this position filed a further affidavit on 27th January, 1970 stating as follows: "In January 1968 I was the Income Tax Officer 'I ' Ward, Hundi Circle, Calcutta. On or about the 25th January 1968 I issued a notice under Section 148 of the Income Tax Act, 1961 on the petitioner. My reasons for issuing such notice were these. In the course of assessment of the petitioner for assessment year 1963 64 it was discovered that various items shown as loans against the security of hundis in the petitioner 's books of account for the previous year relevant to assessment year 1959 60 were in fact fictitious. Credits against the names of certain persons as having advanced loans viz. Amarlal Moolchand, Girdharidas, Reghoomal, Murlidhar, Kanhaiyalal and Deudaram Basdeo in the petitioner 's books were found not to be genuine. It appeared during assessment proceedings for 1963 64 that none of such loans were genuine. In the premises, it appeared to me that the petitioner had failed to disclose fully and truly all material facts necessary for its assessment, and a portion of the petitioner 's income had escaped assessment by reason of such failure". 908 The writ petition was heard by a Single Judge of the High Court and he took the view that the affidavit of the Income Tax Officer dated 27th January, 1970 clearly showed that he had reason to believe that income of the respondent had escaped assessment by reason of its failure to disclose fully and truly all material facts and he accordingly dismissed the writ petition. The respondent preferred an appeal and a Division Bench of the High Court disagreeing with the view taken by the Single Judge held that there was no failure on the part of the respondent to disclose fully and truly all material facts and in any event there was no material on the basis of which it could be said that the Income Tax Officer had reason to believe that any part of the income had escaped assessment by reason of such failure on the part of the respondent. The Division Bench accordingly allowed the writ petition and quashed and set aside the Notice for re opening the assessment. The Income Tax Officer thereupon preferred the present appeal to this Court after obtaining a certificate from the High Court. The present case is clearly covered by the decision of this Court in Commissioner of Income Tax, Calcutta vs Burlop Dealers Ltd. There the assessee in the course of its original assessment to income tax for the assessment year 1949 50 had produced a partnership agreement with one Ratiram Tansukhrai and claimed that the profits earned by it from H. Manory Ltd. had been divided between itself and Ratiram Tansukhrai under the partnership agreement and its one half share of the profit, namely, Rs. 87,937/ was the only amount assessable to tax in respect of this source. The Income Tax Officer accepted the partnership agreement and assessed the assessee only on the profit of Rs. 87,937/ . It appears that while making assessment for the assessment year 1950 51 the Income Tax Officer found that the partnership agreement between the assessee and Ratiram Tansukhrai was a got up device to reduce the profit received from H. Manory Ltd. and the assessee was, therefore, liable to tax on the entire amount of profit coming from H. Manory Ltd. This view taken by the Income Tax Officer was confirmed on appeal by the Appellate Assistant Commissioner and the Income Tax Tribunal. The High Court also on a reference agreed with the view of the Tribunal. The Income Tax Officer thereupon issued a Notice under Section 34(1) (a) of the Income Tax Act to re open the assessment of the assessee for the assessment year 1949 50 in order to bring to tax the further amount of Rs. 87,937/ being the half share of the profit from H. Manory Ltd. alleged to have been paid to Ratiram Tansukhrai under the partnership agreement. The assessee con 909 tended that it had produced all the relevant accounts and documents necessary for completing the assessment and it was under no obligation to inform the Income Tax Officer about the true nature of the transaction and there was accordingly no failure on its part to disclose fully and truly all material facts necessary for its assessment. This contention was negatived by the Income Tax Officer and the income of the assessee was re assessed by adding Rs. 87,937/ to the income returned by the assessee. The Appellate Assistant Commisioner confirmed the order of the Income Tax Officer on appeal, but on further appeal, the Tribunal accepted the contention of the assessee and held that there was no failure on the part of the assessee to make a full and true disclosure of the material facts and hence the Income Tax Officer was not justified in seeking to re open the assessment under Section 34(1) (a) of the Income Tax Act. The Revenue applied to the Tribunal for a reference but the application was rejected and the High Court also dismissed the application of the Revenue for calling for a reference from the Tribunal. The Revenue thereupon preferred an appeal to this Court by special leave. The appeal was rejected by this Court on the ground that the assessee had disclosed all its books of account and evidence from which material facts could be discovered and it was under no obligation to inform the Income Tax Officer about the possible inferences which might be raised against him and hence there was no failure on its part to disclose the preliminary facts relevant to the assessment which would invite the applicability of Section 34(1) (a). It will thus be seen that according to this judgment, there was no obligation on the assessee to disclose that the partnership agreement produced by it was bogus and that the entries made by it in its books of accounts were false. The assessee discharged the obligation which lay upon it by disclosing its books of account and evidence from which material facts could be discovered and it was for the Income Tax Officer to decide whether the documents produced by the assessee were genuine or false. Here also the respondent produced all the hundis on the strength of which it had obtained loans from creditors as also entries in the books of account showing payment of interest and it was for the Income Tax Officer to investigate and determine whether these documents were genuine or not. The respondent could not be said to have failed to make a true and full disclosure of the material facts by not confessing before the Income Tax Officer that the hundis and the entries in the books of account produced by it were bogus. We do not see any distinction at all between Burlop Dealers case (supra) and the present one and the language of Section 147(a) being identical with that of Section 34(1)(a), the ratio of the decision in Burlop Dealers case (supra) must govern the decision of the present case. We 910 must, therefore, hold that there was no failure on the part of the respondent to disclose fully and truly all material facts necessary for its assessment and the condition for the applicability of Section 147(a) was not satisfied. We may also point out that though it was contended in the Writ Petition that the Income Tax Officer could have no reason to believe that any part of the income of the respondent had escaped assessment by reason of its failure to make a full and true disclosure of material facts, the Income Tax Officer did not disclose in his affidavit any material on the basis of which it could be said that he had come to the requisite belief. All that the Income Tax Officer stated in his affidavit was that he discovered that the transactions of loan against security of hundis were not genuine and that the credits against the names of certain persons who were alleged to have advanced loans were bogus. The Income Tax Officer merely stated his belief but did not set out any material on the basis of which he had arrived at such belief so that the Court could decide for itself whether there was any material on the basis of which the Income Tax Officer could reasonably entertain such belief. We are, therefore, not at all satisfied on the affidavit that the Income Tax Officer had reason to believe that a part of the income of the respondent had escaped assessment by reason of its failure to make a true and full disclosure of the material facts. The Notice under Section 147(a) of the Income Tax Act for re opening the assessment must in the circumstances be held to be void. We accordingly dismiss the appeal with costs. P.B.R. Appeal dismissed.

In respect of the assessment year 1959 60 the assessee was allowed deduction of interest paid to creditors from whom it claimed to have borrowed moneys on hundis. In January, 1968 the Income Tax Officer issued a notice to the assessee under section 147(a) of the Income tax Act, 1961 on the ground that the transactions of loans represented by the hundis were bogus and no interest was paid by it to any of the creditors shown in the hundis, that it was wrongly allowed as a deduction and therefore a part of the assessee 's income had escaped assessment by reason of its failure to disclose fully and truly all material facts necessary for the assessment. In the assessee 's writ petition before the High Court the Income Tax Officer at first declined to disclose the facts which had weighed with him in reaching the belief that income had escaped assessment on the ground that if they were disclosed it would cause great prejudice to the interests of revenue and would frustrate the object of reopening the assessment. Later however, realising that this stand was untenable he gave his reasons for issuing the notice. A Single Judge of the High Court dismissed the assessee 's writ petition. On appeal a Division Bench held that there was no failure on the part of the assessee to disclose fully and truly all material facts and that in any event the Income Tax Officer had no reason to believe that any part of the income had escaped assessment by reason of such failure on the assessee 's part. Dismissing the appeal, ^ HELD: There was no failure on the part of the asscssee to disclose fully and truly all material facts necessary for its assessment and the condition for the applicability of section 147(a) was not satisfied. The notice in the circumstances was void. [1910 A] (1) In CIT vs Burlop Dealers Ltd., this Court held that there was no obligation on the part of the assessee to disclose that the documents produced by it were bogus and that the entries made in its books of account were false. The assessee discharged its obligation by disclosing its books of accounts and evidence from which material facts could be discovered and it is for the Income Tax Officer to decide whether the documents were genuine or false. In the instant case the assessee could not be said to have failed to make true and full disclosure of the material facts by not confessing before the Income Tax Officer that the hundis and the entries in the books of account produced before him were bogus. [909 G] CIT vs Burlop Dealers Ltd. ; applied. (2) All that the Income Tax Officer stated in his affidavit was that he discovered that the transactions of loan against security of hundis were not genuine and that the credits against the names of certain persons who were alleged to have advanced the loans were bogus. He merely stated his belief but did not set out any material on the basis of which he had arrived at such belief. [910 C] (3) The existence of reason to believe on the part of the Income Tax Officer is a justiceable issue and it is for the court to be satisfied whether in fact the Income Tax Officer had any material on the basis of which he could reasonably entertain such belief. [907 D]

Appeal No. 130 of 1964. Appeal from the judgment and order dated November 21, 1958 of the Bombay High Court in Appeal No. 31 of 1958. D. N. Mukherjee, for the appellants. G. section Pathak, section N. Andley and Rameshwar Nath, for respon dent No. 1 The Judgment of the Court was delivered by Bachawat, J. Maharaja Sir Rajendra Prakash Bahadur Maharaja of Sirmur, Maharani Mandalsa Kumari Debi Rajmata of Sirmur, Maharani Premlata Debi of Chhota Udaipur, Maiyan Sahiba Sheba Kumari Debi of Jharipani, Major Rao Raja Sirendra Singh, Jagat Pershad, Shib Chander Kumar, Praduman Kumar and Dayawati Rani carried on business in co partnership under the firm name and style of Messrs. Jagatsons International Corporation (hereinafter referred to as the firm) at New Delhi. Respondent No. 1, Ramnarain (Private) Ltd. instituted Summary Suit No. 162 of 1957 against Messrs. Jagatsons International Corporation on the Orginal Side of the Bombay High Court claiming a money decree for Rs. 1,96,831 58 N.P. The suit was instituted on the allegation that respondent No. 1 and the firm had entered into an agreement in writing dated September 26, 1956, whereby respondent No. 1 agreed to provide finance to the firm, as a result of the dealings under the agreement a sum of Rs. 1,96,831.58 N.P. was due to respondent No. 1 from the firm, and in view of the breaches of the agreement by the firm, the agreement has stood terminated. The consent of the Central Government to the institution of the suit was not obtained, though the Maharaja of Sirmur is a Ruler of the former Indian State within the meaning of section 87B of the Code of Civil Procedure. The summons of the suit was served oil Shib Chander Kumar as a partner of the firm and as a person having the control or management of the partnership business. On July 15, 1957, at the hearing of the summons for judgment taken out by respondent No. 1, the firm admitted its liability as claimed in the plaint and applied for installments, and the Court passed a decree for Rs. 1.89,643.98 N.P. and further interest, and directed that the decretal amount would be payable in certain instalments. The firm committed defaults in payment of the instalments payable under the decree. On December 13, 1957. respondent No. 1 filed an application under 0. 21 r. 50(2) of the Code of Civil Procedure for leave to execute the decree against (1) Maharani Mandalsa Kumari Debi, (2) Maharani Premlata Debi, (3) Maiyan Sahiba Sheba Kumari Debi, (4) Major Rao Raja Sirendra Singh, (5) Jagat Pershad. (6) Praduman Kumar and (7) Dayawati Rani claiming that respondent No. 1 was entitled to cause the decree to be executed against them 423 as being partners in the firm. The opposite parties to the application filed an affidavit alleging (1) that the suit and all proceedings therein were incompetent in the absence of the requisite consent of the Central Government under section 86 of the Code of Civil Procedure; (2) Jagat Pershad and Shib Chander Kumar entered into the agreement dated September 26, 1956 and utilised the moneys received under it in fraud of the other partners and without their authority, Shib Chander Kumar dishonestly and fraudulently concealed from the other partners the fact of the institution of the suit and without the authority and knowledge of the other partners submitted to a consent decree in the suit. , By an order dated March 18, 1958, a learned single Judge of the High Court rejected all the contentions in the affidavit, and allowed the application under 0. 21, r. 50(2) of the Code of Civil Procedure. The learned single Judge held that (1) the defect of the absence of the requisite consent under section 86 read with section 87 B did not render the decree a nullity, and the objection could not be taken in execution proceedings; (2) the other defences to the merits of the claim in the suit could not be agitated in a proceeding under 0. 21, r. 50(2) of the Code of Civil Procedure. An appeal preferred by appellants, Maharani Mandalsa Kumari Debi, Maharani Premlata Debi, Major Rao Raja Sirendra Singh and Maiyan Sahiba Sheba Kumari Debi was dismissed by a Bench,of the High Court on November 21, 1958. The appellate Court held that (1) though the decree against the firm was a decree against all its partners including the Maharaja of Sirmur, and though the decree against the Maharaja of Sirmur might be a nullity, the decree against the other partners of the firm was valid, and (2) the appellants were not entitled to raise other defences to the merits of the claim on an application under 0. 21, r. 50(2) of the Code of Civil Procedure. The appellants now appeal to this Court under a certificate granted by the High Court. On behalf of the appellants Mr. D. N. Mukherjee contended that (1) the suit against the firm of Jagatsons International Corporation was a suit against all its partners and in the absence of the requisite consent under section 86 read with section 87 B of the Code of Civil Procedure, the suit was not competent against the Maharaja of Sirmur, and the decree against him was null and void; (2) consequently, the suit against the firm under the provisions of 0. 30 of the Code of Civil Procedure was not competent and the decree passed in the suit was wholly void, the decree not being a decree against the firm could not be executed by recourse to the machinery of 0. 21, r. 50, Code of Civil Procedure, and the application against the appellants under 0. 21, r. 50(2), Code of Civil Procedure was not maintainable; and (3) the appellants were entitled to dispute their liability in an application under 0. 21, r. 50(2) of the Code of Civil Procedure on all the grounds raised in the affidavit field 424 on their behalf and the court ought to have tried and decided all those questions. In answer to the first contention of Mr. D. N. Mukherjee, Mr. Andley argued that for the purposes of a suit under 0. 30, Code of Civil Procedure, the firm of Jagatsons International Corporation is a legal entity separate and distinct from its partners, and no question of obtaining the consent of the Central Government to sue one of its partners under section 86 read with section 87 B of the Code of Civil Procedure to the institution of such a suit arises. Mr. Andley relied upon the observations of Das, J. in Dulichand Lakshminarayan vs The Commissioner of Income tax, Nagpur(1) that for the sake of convenience, 0. 30 of the Code of Civil Proce(lure permits a firm to sue or be sued in the firm name "as if it were a corporate body". Consistently with this legal fiction, R. 3 permits service of the summons on a partner or a person having control or management of the partnership business, R. 4 permits the institution and continuance of the suit in the firm name in spite of the death of a partner before the institution or during the pendency of the suit without joining the legal representatives of the deceased partner as a party to the suit, and R. 9 permits a suit between a firm and one or more of its partners and between firms having one or more common partners. But the legal fiction must Pot be carried too far. For some purposes the law has extended a limited personality to a firm, see Bhagangi Morarji Goculdas vs Alembic Chemicals Works Co.(2 ), but the firm is not a legal entity, see Purushottam Umedbhai &, Co. vs M/s. Manilal & Sons(3), Lindley on Partnership, 12th Edn., pp. 27 28. The persons who arc individually called partners arc collectively called a firm, and the name under which their business is carried on is called the firm name: see section 4 of ' the Indian partnership Act, 1932. Order 30, R. 1 of the Code of Civil Procedure enables two or more persons claiming or being liable as partners and carrying on business in India to sue or be sued in the name of the firm of which they were partners at the time of the accrual of the cause of action. Rule 1 shows that the individual partners sue or are sued in their collective firm name. Rule 2 provides that on disclosure of the names of the partners of the plaintiff firm, the suit proceeds as if they are named as plaintiffs in the plaint. Rule 6 provides that the persons sued in the firm name must appear individually in their own names. A suit by or in the name of a firm is thus really a suit by or in the name of all its partners, see Rodriguez vs Speyer Brothers (4), Purushottam Umedbai & Co. V. M/s Manilal &Sons (3) at pp. 991, 993, 995. So also a suit against the firm is really (1) ,162. (2) [1948] L.R. 75 I.A. 147. (3) ; ,994. (4) 425 a suit against all the partners of the firm. In Western National Bank of City of New York vs Perez, Triana & Co. (1), Lindley, L.J. said: "When a firm 's name is used, it is only a convenient method of denoting those persons who compose the, firm at the time when that name is used, and a plaintiff who sues partners in the name of their firm in truth sues them individually, just is much as if he had set out all their names". The decree passed in the suit. though in form against the firm, is in effect a decree against all the partners. In Lovell & Christmas vs Beauchamp(2) Lord Herschell, L. C. said: "Although the judgment may be pronounced against the firm in the firm 's name, it is in reality a judgment against all the persons who are in fact members of the firm; and it is because such a judgment exists that the right of execution follows". The firm name of Jagatsons International Corporation applies as much to the Maharaja of Sirmur as to the other partners. When respondent No. 1 sued the firm of Jagatsons International Corporation, it sued the Maharaja of Sirmnur and all the other partners as if the plaint had set out their names, and the decree passed in the suit is in reality a decree against all the partners of the firm including the Maharaja of Sirmur. Now, the Maharaja of Sirmur is the Ruler of a former Indian State, and section 86 read with section 87 B of the Code of Civil Procedure barred the institution of a suit against him except with the consent of the Central Government. No such consent was given for the institution of the suit against the Mabaraja of Sirmur. In the absence of the requisite consent of the Central Government, a suit, which is in reality, though not in form, a suit against the Maharaja of Sirmur, is barred by section 86 read with section 87 B. See Gaekwar Baroda State Railway vs Hafiz Habib Ul_Haq(3). Consequently, the suit so far as it was one against the Maharaja of Sirmur was incompetent and the decree against the firm so far as it is a decree against him personally was a nullity. The first contention of Mr. Mukherjee is. therefore, sound and should be accepted. But we think that the second contention of Mr. Mukherjee should be rejected. Beyond doubt, in a normal case where all the partners of a firm are capable of being sued and of being adjudged judgment debtors. a suit may be filed and a decree may be obtained against a firm under 0. 30 of the Code of Civil Procedure. and such a decree may be executed against the property of the partnership and. against all the partners by following the procedure of 0. 21, r., 50. of the Code of Civil Procedure, (1) (2) (3) [1938] L.R. 65 T. A. 182, 196. 426 But there may be abnormal cases where a suit is filed against a firm under the provisions of 0. 30, of the Code of Civil Procedure, and it is found that one of its partners cannot be sued or cannot be adjudged a judgment debtor. Thus, take the case of an infant who under the English law, can be a partner in a firm, but, though a partner, cannot contract debts by trading and cannot be adjudged to be a debtor in respect of such debts. In Lovell & Christmas vs Beauchamp(1), the House of Lords held that a creditor of a firm of which an infant was a partner could issue a writ against the firm in the firm 's name, and in such a suit judgment could be recovered against the defendant firm other than the infant partner, and if a judgment had been improperly signed against the firm simply, such a judgment could be suitably amended so as to make it a judgment against the firm other than the infant partner. The precise point decided in this case cannot arise in this country, because under our law, a minor may not be a partner in a firm, though he may be admitted to the benefits of the partnership. But the case shows that a creditor of a firm of which one of the partner 's cannot be adjudged to be a debtor, may institute a suit against a firm in the firm name under 0. 30 of the Code of Civil Procedure, and may in such a suit obtain a decree against the firm other than the partner who cannot be adjudged a debtor. Again, take a case where the creditor of a firm institutes a suit against a firm and one of its partners at the time of the accrual of the cause of action is dead at the time of the institution of the suit. The suit against the firm is really a suit against all the partners who were its partners at the time of the accrual of the cause of action. including the dead partner. Order 30, R. 4 of a Code of Civil Procedure enables the creditor to institute the suit against the firm in the firm name without joining the legal representative of the deceased partner. The suit is, therefore, competent, but no suit can be instituted nor can a decree be obtained against a dead person. The decree passed in such a suit will, therefore, bind the partnership and all the surviving partner s, but will not affect the separate property of the deceased partner. In Ellis vs Wadeson(2), Romer, L. J. observed: "Now consider the question of death. Suppose a partner dies before action brought, and an action is brought against the firm in the firm 's name. The dead man is not a party to the action, so, far as his private estate is concerned, for a dead man cannot be sued, though the legal personal representative of a dead man can be sued in a proper case. In that case the action would be an action solely against the. surviving partners. If the legal personal representatives of a deceased partner are not added expressly as defendants. (1) (2) [1899]1 Q.B. 714 at 718. 427 and the action is brought against the firm in the firm 's name, then judgment can only be obtained as against the surviving partners and be enforced against them and against the partnership assets". The above illustrations show that a suit may be brought under the provisions of 0. 30 of the Code of Civil Procedure against a firm of which a partner is not capable of being sued or being adjudged a debtor, and in such a suit a decree enforceable against the other partners and the partnership assets may be passed. Now, in the instant case, respondent No. 1 sued the firm of Jagatsons International Corporation under the provisions of 0. 30 of the Code of Civil Procedure. The assets of the firm as also all its partners jointly and severally are liable to satisfy the debts of the firm. Even the Maharaja of Sirmur is jointly and severally liable for the debts of the firm; only the institution of a suit against him without the consent of the Central Government is barred by section 86 read with section 87 B of the Code of Civil Procedure. As the suit was instituted without the requisite consent of the Central Government, no decree could be passed in the suit against the Maharaja of Sirmur. But the suit against the firm other than the Maharaja of Sirmur was competent, and a decree could be passed against the firm other than the Maharaja of Sirmur, and such a decree could be executed against the partnership property and against the other partners by following the procedure of 0. 21, r. 50 of the Code of Civil Procedure. It is true that respondent No. 1 obtained a decree against the firm of Jagatsons International Corporation simply, but the decree should be suitably amended so as to make it a decree against the firm of Jagatsons International Corporation other than the Maharaja of Sirmur, and the decree so read is a valid decree which may be executed against the partnership property and the other partners of the firm by recourse to the machinery of 0. 21, r. 50 of the Code of Civil Procedure. The application of respondent No. 1 under 0. 21, r. 50(2) for leave to execute the decree against the other partners is, therefore maintainable. The second contention of Mr. Mukherjee must, therefore, be rejected. The third contention of Mr. Mukherjee raises the question as to what defences may be raised by a respondent to an appli cation under 0. 21, r. 50(2) of the Code of Civil Procedure. The law on this point is now well settled. In Gambhir Mal Pandiya vs J. K. Jute Mills Co. Ltd., Kanpur(1), Hidayatullah, J. speaking on behalf of the Court observed: ". primarily the question to try would be whether the person against whom the decree is sought to be executed was a partner of the firm, when the cause of action accrued. but he may question the decree on the (1) ; 428 ground of collusion, fraud or the like but so as not to have the suit tried over again or to raise issues between himself and his other partners". The respondent to an application under 0. 21, r. 50(2) of the Code of Civil Procedure is also entitled to raise a plea of special protection under the law, and on this ground, the learned judge at pp. 205 206 of the Report distinguished the case of Chhattoo Lal Misser & Co. vs Naraindas Baijnath Prasad(1). We may add that the respondent may also defend the application on the ground that the decree sought to be executed against him is a nullity. Now, in the instant case, none of the appellant is entitled to any special protection from the institution of the suit under section 86 read with section 87 B, Code of Civil Procedure. The Maharaja of Sirmur was entitled to this special protection, but he was not a party to the application under 0. 21, r. 50(2) of the Code of Civil Procedure. Nor is the decree against the firm other than the Maharaja of Sirmur a nullity. The affidavit filed on behalf of the appellants does not sufficiently raise a plea that the decree was the result of any collusion, fraud or the like. The affidavit incorrectly assumes that the decree passed on admission of the appearing partner, was a consent decree. Allegations of dishonesty and fraudulent concealment of the fact of the institution of the suit are made against Shib Chander Kumar, one of the partners of the firm, but no allegation of fraud or collusion is made against respondent No. 1. It was not alleged that respondent No. 1 was a party to any fraud or collusion or that it obtained the decree by fraud or collusion. The appellants alleged that their partners, Jagat Pershad and Shib Chander Kumar, had entered into the agreement dated September 26, 1956, and had utilised the moneys received under it in fraud of the appellants and without their authority, but the appellants are not entitled to raise these pleas in the application under 0. 21 r. 50(2) of the Code of Civil Procedure. The appellants were admittedly partners of the firm of Jagatsons International Corporation at the time when the cause of action accrued. In the absence of any plea questioning the decree on the ground of collusion, fraud or the like, respondent No. 1 is entitled to an order under 0. 21, r. 50(2) of the Code of Civil Procedure giving it leave to execute the decree against the appellants as partners in the firm. The third contention of Mr. Mukherjee must, therefore, be rejected. In the result, the appeal is dismissed with costs. Appeal dismissed. (1) Cal, 704.

Under Order 30 of the Code of Civil Procedure the respondent No. 1 a firm sued another firm of which the appellants and a Ruler of a former Indian State were partners. The consent of the Central Government to the institution of the suit under section 87 B of the Code of Civil Procedure was not obtained. The firm admitted the liability and the Court passed a decree and directed that the decretal amount would be payable in certain instalments. On the firm 's default in paying the instalments an application was filed under Order 21 Rule 50(2) of the Code of Civil Procedure for leave to execute the decree against the appellants, excepting the Ruler as partners of the firm. The Court allowed the application. The appellants ' appeal was dismissed by the High Court. On appeal by certificate; HELD: (i) The suit so far as it was one against the Ruler was incompetent and the decree against the firm so far as it was a decree against him personally was a nullity. In the absence of the requisite consent of the Central Government a suit against the Ruler was barred by section 87 read with section 87 B. [425 F, G]. (ii) The application of respondent No. 1 under Order 21 Rule 50(2) for leave to execute the decree against the other partners was maintainable. [427 G]. A suit may be brought under the provisions of 0. 30 of the Code against a firm of which a partner is not capable of being sued or being adjudged a debtor, and in such a suit a decree enforceable against the other partner and the partnership assets may be passed. [427 B]. Case law referred to. (iii) In an application under 0. 21 Rule 50(2) the judgmentdebtor could question the decree on the ground of collusion, fraud or the like but so as not to have the suit tried over again or to raise issues between himself and his other partners. [428 A]. The Judgment debtor was also entitled to raise a plea of special protection under the law; and might also defend the application on the ground that the decree sought to be executed against him is a nullity. But in the instant case none of the appellants was entitled to any special protection; nor was it alleged that respondent No. 1 was a party to any fraud or collusion or that it obtained the decree by fraud or collusion. [428 B, C]. Gambhir Mal Pandiya vs J. K, Jute Mills Co. Ltd., Kanpur relied upon. 422

Appeal No. 1648 of 1966. Appeal from the judgment and decree dated July 9, 1964 of the Andhra Pradesh High Court in Writ Appeal No. 116 of 1963. D. Narsaraju, A. Subba Rao and A.V.V. Nair, for the appellants. P. Ram Reddy and .A. V. Rangam, for the respondents. The Judgment of the Court was delivered by Grover J. This is an appeal by certificate from a judgment of the Andhra Pradesh High Court given in a petition filed under article 226 of the Constitution by the appellants. The facts may be stated. The previous Maharajah of the impartible estate of Pithapuram in East Godavari District granted a lease on June 22, 1887 in favour of his third wife late Rani Subbayyamma Bahadur in respect of lands in various villages covering an area of acres 2669.65 cents. The Rani executed a will on November 8, 1914 bequeathing all her property including the lease hold rights to the first appellant and on her death he succeeded to her estate. On December 10, 1956 the first appellant transferred his lease hold rights in acres 2519.63 cents to the second 'appellant and reserved to himself the rights in and over the remaining area of acres 150.52 cents. The third appellant an assignee from the second appellant. L3 Sup. CI/70) 4. 540 On the enactment of the Madras Estates (Abolition & Conversion into Ryotwari) Act, (Act XXVI of 1948), hereinafter called ' the Act, the title of which was changed to the Andhra Pradesh (Andhra Area) Estates (Abolition and Conversion into Ryotwari) Act, 1948, XXVI of 1948, the Pithapuram Estate was notified and abolished with effect from September 7, 1949. The lands in question were taken over by the Government under the provisions of the Act and the Manager who had been ,appointed ordered that the rent should be collected direct from the tenants in possession of the lease hold lands under section 55(1) of the Act from the fasli year 1357 onwards on the reduced rates notified under the Madras Estates Land (Reduction of Rent) Act later called Andhra Pradesh (Andhra Area) Estates Land (Reduction of Rent) Act, Act XXX of 1947. The first appellant filed a petition before the Estates Abolition Tribunal Vizianagram for payment of the proportionate share of compensation out of compensation payable for the estate of Pithapuram. That petition was opposed by the Government and the principal land holder, according to whom, the claim of the first appellant was governed by section 20 of the Act. This objection was upheld by the Tribunal. On January 8, 1959 the High Court confirmed the order of the Tribunal in appeal holding that the first appellant 's rights were covered by section 20 of the Act. In March 1960 the appellants filed a petition under article 226 of the Constitution praying for Various reliefs. On September 9, 1960 the Government decided that as the lease was covered by section 20 of the Act the Board of Revenue be asked to terminate the same and to pay all the ,amounts collected as also the compensation payable under section 20 to the appellants. On September 17, 1960 the Board of Revenue issued a notice to the appellants calling upon them to show cause as to why the lease hold rights in respect of acres 2669.65 cents should not be terminated. The appellants sent a reply on October 17, 1960 representing that they had ,no objection to the termination of the lease provided the Government paid compensation to the appellants together with all the ,amounts so far collected by the Government from the lease hold lands without deducting any collection charges together with interest accruing thereon till the date of the payment. On November 17, 1960 the Board formally terminated the lease and informed the appellants that compensation and all the amounts collected from the lease hold lands would be paid to them after deducting fist at 4 annas per acre and cesses etc. but that no interest would be paid on the amounts collected by the Government and further that the Government was also entitled to deduct the collection charges. On January 25, 1961 the Board made an order directing that the appellants should be ' paid a sum of Rs. 24,949.20 which was stated to be the net of collection made by the Government on the lease hold lands after deducting the cist at 4 annas per acre, cesses 'at 50% of the total 541 cesses payable and collection charges at 10% of the gross revenue collected. The Board further observed that the actual extent of the lease hold lands came only to acres 2277.82 cents after the survey of which the portion transferred by the first appellant to the second appellant came to acres 2025.91 cents. The amounts sanctioned by the Board represented the amounts collected on account of an area of acres 2025.91 cents. The appellants raised objections to the extent of the land as also the amount of collections determined by the Board. On October 23, 1961 the Board determined that a sum of Rs. 44,351.80 should be paid to the second appellant towards compensation payable under section 20 of the Act. The payment, however, which was made was not for that amount and 'a sum of Rs. 4,000/ was deducted on the plea that some excess collection had been made by the lessee prior to the notified date. Ultimately the second appellant was paid out of these amounts a sum of Rs. 1,499.16. It was held that with regard to the extent of acres 150.52 cents on which the first appellant claimed compensation this area belonged to the Government and was not part of the estate. The appellants raised various objections but without success. A learned single judge of the High Court, who heard the writ petition, held that the proper course for the 'appellants to follow for the determination of the extent of the land was by way of a suit and that such a suit was not barred by section 20(2) of the Act. It was held that there could have been no settlement under section 22 of the Act for Fasli 1369 ' and therefore the settlement rate in respect of that year should not be taken into consideration for computing the rate of compensation. The deduction of 50% of cesses from the gross annual income was upheld. No direction was given regarding payment of interest on the arrears of rent which had been withheld from 1950 to 1961. It was held that the deduction of 10% towards incidental charges out of gross income instead o,f the net income was an error apparent on the face of the record and the order of the Board had to be revised accordingly. The excess collections which had been made by the appellants from their tenants were to be deducted from the amount of rent due to the appellants and not from the compensation payable to them. To a limited extent, therefore, the order of the Board was set aside and the case was remitted to it for disposal. The appellants preferred an appeal to the High Court which was dismissed. The first contention that has been raised on behalf of the 'appellants has a two fold aspect; first is that once there is notification of an estate under section 3 of the Act and the Government took possession of the lease hold lands the lessee ceased to have any rights relating thereto. He was reduced to the position of a land 542 holder and whatever rights were preserved to him subsisted under section 20 of the Act. The Government, from the notified date, became entitled to collect the rent as reduced under Act XXX of 1947. But that was only till the ryotwari settlement was made and thereafter it was the settled rent which was payable. Therefore for the period 1959 60 intervening between the ryotwari settlement and the termination of the lease the appellants were entitled to the rent at the rate at which it had been settled and not at the rate at which the reduced rent was payable under Act XXX of 1947. According to the learned counsel for the appellants this would make a difference of about Rs. 2,200/ to which the appellants should have been found entitled apart from the other amounts which have been determined to be payable by way of rents which have been collected by the Government. This ,contention does not appear to have been raised in this form either before the learned single judge or before the division bench of the High Court nor has it been clearly stated in the statement of case of the appellants. It can be disposed of on the short ground that since it had not been raised before the High Court it is not open to the appellants to agitate it for the first time before this Court. At any rate, there seems to be little force in the submission which has been made. It cannot be disputed that the appellants were entitled to the amount collected by the Government under Act XXX of 1947 because even after the notification of the estate under section 3 of the Act the provisions of that Act including section 3 (4) relating to reduction of rents and the collection of the arrears of rent and the obligation to pay the same to the land holder continued to remain applicable. Under section 16 every person whether land holder or a ryot who became entitled to ryotwari patta was liable to pay to the Government such assessment as might be lawfully imposed on the land. That assessment had to be made by way of a ryotwari settlement under section 22. Till the settlement was made the rent payable under Act XXX of 1947 was to constitute the land revenue payable to the Government from the notified date under section 23 of the Act. But the assessment 'as settled under section 22 was a matter between the Government and the ryot and if, by virtue of the settlement, the Government was entitled to more amount than the rent which was payable under Act XXX of 1947 the appellants had no justification or right for claiming the excess amount. The right of the lessee as land holder till terminated under section 20 of the Act was only to receive the rents collected under section 3(4) of Act XXX of 1947. The other aspect with relates to the rate at which the compensation for termination of the lease hold rights payable to the 'appellants should have been computed was undoubtedly raised before the High Court. What was urged and has now been reiterated is that as soon as a ryotwari settlement was brought into 543 force the provisions of Act XXX of 1947 ceased to be applicable owing to the provisions of section 23 of the Act. Therefore for the purpose of compensation it was the settlement rate which should have been taken into account and not the rent payable under Act XXX of 1947. Sub section (2) of section 20 provides that the person whose right has been terminated by the Government under the third proviso to sub section (1 ) of the said section shall be entitled to compensation from the Government which shall be determined by the Board of Revenue in such manner as may be prescribed having regard to the value of the right and the unexpired portion of the period for which the right was created. Rules have been framed in exercise o,f the power conferred by section 67 read with section 20(2) of the Act. These rules are in the following terms: Rule 1. "The person, whose right has been terminated by the Government under the third proviso to sub section (1) of section 20 of the Andhra Pradesh (Andhra Area) Estates (Abolition and Conversion into Ryotwari) Act, 1948, shall be entitled to compensation from the Government, which shall (i) in the case of 'a perpetual right, be equal to twenty times the net annual income derived by such person by virtue of such right; and (ii) in the case of a fight which was created for a specified number of years, be limited either to twenty times the net annual income derived by such person by virtue of such fight or the net annual income multiplied by the number of years of the unexpired portion of the period of such right, whichever is less. Rule 2. For purposes of rule 1, the net annual income of a person shall be the average net income during the three fasli years preceding the fasli year in which such right is terminated . . " The argument on behalf of the appellants is that the rates of rent prevailing in Fasli years 1367 and 1368 were the rents fixed under Act XXX of 1947 and the rate prevailing in Fasli year 1369 was the one settled under section 22 of the Act. Therefore the average net income should have been computed with reference to the net reduced rate prevailing in Fasli years 1367 and 1368 and the settlement rate fixed in Fasli year 1369. The view of the High Court was that till the determination of the lease under the third proviso to section 20(1 ) of the Act the rights which the appel 544 lants had acquired under the patta were preserved and if the Government had not undertaken to make these collections the tenants would have paid the land holder only the rents as reduced by Act XXX of 1947. The ,fact that the Government had made the collections did not confer higher rights upon the appellants. After referring to the provisions in section 23 that the land revenue payable to the Government with effect from the notified date shall, until the ryotwari settlement effected in pursuance of section 22 had been brought into force in the estate, be calculated in the manner set out in the section the question was examined by the High Court whether the rent that could be collected from the lease hold land would fall within the connotation of the land revenue payable to the Government. Its considered opinion was that the rent payable to the land holder fell outside the range of section 22. Therefore only the rent as fixed under Act XXX of 1947 in the three preceding years could be taken into account. It must be remembered that the settlement rates represent what is payable to the Government as revenue in respect of the land granted on patta by the Government in the ryotwari settlement. They do. not represent what is due to persons like the appellants from their tenants. We consider that it is not possible to equate the rents payable by the tenants to the appellants with the land revenue payable to the Government. No exception could thus be taken to the manner and the measure of computing compensation. The next contention raised is that in determining the compensation payable to the appellants it is the unexpired portion of the period for which lease was created that should have formed the basis and not the period provided by rule 1 (ii). The unexpired portion of the lease, in the present case, was nearly 26 years. It is submitted that rule 1 (ii) itself is contrary to the intendment of section 20(2) of the Act. In this connection it is noteworthy that section 20(2) of the Act simply says that the rules must be framed having regard to the value of the right and the unexpired portion of the period for which the right was created. That did not, in any way, fetter the power of the rule making authority to frame rule 1 (ii) in the manner in which it has been done. Even where the lease creates a perpetual right the compensation payable has to be equal to 20 times the net annual income. Where it is created for a specified number of years it has to be limited either to 20 times the net annual income or the net income multiplied by the number of years of unexpired portion of the period of lease "whichever is less". If the unexpired portion is 26 years, as in the present case, the compensation could not be more than what it would be in the case of a perpetual lease. Section 20(2)does not say that the amount of compensation must be arrived at only by multiplying the net income by the number of years of the un 545 expired portion of the lease. As observed by the High Court it only envisages that this should be taken into account along with the value of the right. We find no repugnancy between rule 1 (ii) and section 20(2) of the Act. The next question on which a good deal of stress has been laid relates to the deduction made on account of the cesses. It has been submitted that owing to section 3 (b) of the Act the estate vested in the Government and after such vesting there would be no land holder and therefore there was none to whom cesses were to be paid. So the lessees even if originally liable to pay the cess ceased to be so Iiable after the vesting of the estate in the Government by virtue of section 3(f) which provides that the relationship of a land holder and a ryot shall, as between them, be extinguished. It is pointed out that by virtue of the provisions of section 16 (1 ) of the Act the land holder or the ryot who became entitled to the 'ryotwari patta would be liable to pay to the Government such assessment as might be lawfully imposed on the land and these cesses were collected from the ryots by the Government. Therefore the appellants were under no liability to pay the cess after the notified date. Now in the patta dated June 22, 1887, there was a provision that the lessees would pay the local cess and other cesses payable by the ryots in accordance with the rules framed by the Government previously and to be framed in the future. The High Court was right in saying that cess could not be excluded from the calculation of the net income because it had to be paid by the lessees along with the rent reserved under the lease. This is substantiated by the definition of "rent" in section 3 (ii) of the Madras Estates Land Act which under section 2( 1 ) of the Act becomes incorporated in it. The High Court referred also to numerous sections in the Act for the purpose of which rent includes any local tax, cess etc. and it was observed that the word "rent" was of a comprehensive nature and there was no warrant for restricting its content. Under rule 2 it was the average net income which had to be taken into consideration. If the word "rent" is to be taken in a comprehensive sense as including taxes and cesses then the net income could only be arrived 'at by taking into account the cesses payable by the lessee. In our judgment cesses had to be deducted from the annual gross income in arriving at the net annual income which could form the basis of compensation. Lastly it has been contended that the appellants are entitled to interest on the amounts of unpaid rents in the hands of the Government for the period 1950 to 1961 as under section 55 of the Act after the notified date the land holder is not entitled to collect any rent which accrued due to him from any ryot before and is outstanding on that date. It is the manager appointed under section 6 546 who alone would be entitled to collect the said 'amounts together with interest. The amounts were collected but no payment was made to the appellants. On the language of section 55 as well as under the general principles of law, it is submitted, the appellants should have been held to be entitled to the payment of interest on the amounts withheld by the Government. Section 55 (1 ) clearly provides that it is the duty of the manager appointed under section 6 to collect not only the rent but also any interest payable thereon together with any cost which might have been decreed and he has to pay the same to the land holder. It would appear that on the analogy of this provision an obligation existed on the part of the Government to pay interest to the land holders in case the amounts collected were not paid as and when collected. In National Insurance Co. Ltd., Calcutta vs Life Insurance Corporation of India(1), the appellant carried on life insurance business in addition to other insurance business. On the passing of the , which was intended to nationalise all life insurance business, "its controlled business" stood vested in the Life Insurance Corporation of India from the appointed date but the company was entitled to compensation. The Life Insurance Tribunal to whom the dispute between the company and the Life Insurance Corporation had been referred awarded certain amount 'as compensation out of which a set off was to be allowed on a sum which was specified. It was held that the company was entitled to interest on the balance at 4% per annum. Reference was made in this case to a number of English and Indian decisions in which the rule has been laid down that though under the statute there is no provision for payment of interest it should, nevertheless, be awarded, the principle being that if the owner of an immovable property loses possession of it he is entitled to claim interest in place of the right to retain possession. It may be mentioned that even under the Interest Act, 1839 the power to award interest on equitable grounds was expressly saved by the proviso to section 1. In our opinion, and this position has not been seriously controverted on behalf of the respondents, the appellants should have been held entitled to interest at the rate of 6% per annum. In the result the appeal is allowed only to the extent that it is declared that the appellants should have been paid interest at the rate of 6% per annum on the amount of rents collected by the manager on behalf of the Government and the final figure of compensation should have been determined after taking into account the amount of interest which accrued due to such of the appellants as were entitled to it. In view of the entire circumstances there will be no order as to costs. V.P.S. Appeal dismissed but interest allowed. (1) [1963] Supp. 2 S.C.R. 971.

The appellants were the transferees of lease hold rights granted by the proprietor of an impartible estate in respect of lands in the estate. The estate was notified and abolished in 1948 under the Andhra Pradesh (Andhra Area) Estates (Abolition and Conversion into Ryotwari) Act, 1948. The Manager who was appointed collected the rent as reduced under the Madras Estates Land (Reduction of Rent) Act. direct from the tenants in possession of the lease hold lands from the fasli year 1357, but did not pay it over to the appellants. Ryotwari settlement was introduced in the lands in 1959 (fasli 1369), and in 1960 (fasli 1370), the lease, which was covered by section 20 of the Abolition Act, was terminated, the unexpired portion of the lease period being 26 years. The appellants were paid in 1961: (1) certain sums towards the amount collected as rent till the termination of the lease, and (2) compensation. No interest was paid on the rent collected by the Manager. On the question regarding the correctness of the basis of the calculations made by the respondent, HELD: (1) The respondent was right in holding that the appellants were entitled only to the rents collected, under section 3(4) of the Rent Reduction Act, and not to the assessment made by way of ryotwari settlement under section 22 of the Abolition Act. That assessment was a matter between the Government and the tenant and if, by virtue of it, the Government was entitled to more amount as land revenue than the rent payable under the Rent Reduction Act, the appellants had no right to such excess amount. [542 F H] (2) (a) Under section 20(2) of the Abolition Act rules for determining compensation had to be framed having regard to the value of the right and the unexpired portion of the period for which the right was created. Rule 1 (ii) framed under the section, provides that in the case of a right which was created for a specified number of years, the compensation shall be limited either to twenty times. the net annual income or the net annual income multiplied by the unexpired portion of the period of such right, whichever is less; and, under r. 2, net annual income is the average net income during 3 lash years preceding the lash year in which the right was terminated. Since the rule is framed having regard to the unexpired period, there is no repugnancy between the section and the rule. [543 B G; 544 E H; 545 A] 539 (b) The settlement rates under the ryotwari settlement represent what is payable to the Government as revenue and do not represent what is due as rent to the appellants from their tenants. Therefore, the respondent was right in determining the net annual income under r. 1 (ii) by taking into account only the rent as fixed under the Rent Reduction Act in the three preceding fasli years 1367 1369 and not the settlement rate for the fasli year 1369. [544 D E] (c) The definition of rent in the Madras Estates Land Act, 1908, incorporated into the Abolition Act, and the sections of the Abolition Act show that 'rent ' includes any local tax, eess etc. The original patta granted by the proprietor of the impartible estate provided that the lessees should pay the cesses. Hence, the net income could only be arrived at by taking into account the eesses payable by the lessee. Therefore, the respondent was justified in deducting from the annual gross income the cesses, for arriving at the net annual income which is the basis of compensation. [54 5 E G] (3) On general principles of equity as well as under the Interest Act, 1839, the appellants were entitled to interest on the amount of rents collected by the Manager on behalf of the Government and not paid to the appellants, even though, under the statute, there is no provision for payment of interest. [546 E G] National Insurance Co. Ltd. Calcutta vs L. I. C. India, [1963] Supp. 2 S.C.R. 971, followed.

iminal Appeal No. 43 of 1952 and Petition No. 173 of 1952. Appeal by Special Leave granted by the Supreme Court on the 11th May, 1951, from the Judgment and Order dated the 11th December, 1950, of the High Court of Judicature at Hyderabad (Manohar Prasad J.) in Criminal Appeal No. 598 of 1950, and Petition under Article 32 of the Constitution. A. A. Peerbhoy (J. B. Dadachanji, with him) for the appellant. V. Rajaram Iyer, Advocate General of Hyderabad (R. Ganapathy Iyer, with him) for the respondent. March 30. The Judgment Of PATANJALI SASTRI C.J., MUKHERJEA, section R. DAS, and BHAGWATI JJ. was delivered by MUKHERJEA J. GHULAM HASAN J delivered a separate but concurring judgment. MUKHERJEA J. The appellant before us, who in the year 1947 was a Revenue Officer in the District of Warangal within the State of Hyderabad, was brought to trial before the Special Judge of Warangal appointed, under Regulation X of 1359F. on charges of murder, attempt to murder, arson, rioting and other offences punishable under various sections of the Hyderabad Penal Code. The offences were alleged to have been committed on or about the 9th of December, 1947, and the First Information Report 664 was lodged, a considerable time afterwards, on 31st January, 1949. On 28th August, 1949, there was an order in terms of section 3 of the Special Tribunal Regulation No. V of 1358 F., which was in force at that time, directing the appellant to be tried by the Special Tribunal (A). The accused being a public officer, the sanction of the Military Governor was necessary to prosecute him and this sanction was given on 20th September, 1949. On 13th December, 1949, a new Regulation, being Regulation No. X of 1359F., was passed by the Hyderabad Government which ended the Special Tribunals created under the previous Regulation on and from 16th December, 1949 ; and consequently upon such termination pro vided for the appointment, power and procedure of Special Judges. Section 4 of the Regulation authorised the Chief Minister to appoint, after consulting the High Court, as many Special Judges as may from time to time be required for the purpose of section 5. Section 5(1) laid down that every Special Judge shall try (a) such offences of which the trial was immediately before the 16th December, 1949, pending before a Special Tribunal deemed to have been dissolved on that date, and are made over to him for trial by the Chief Minister or by a person authorised by the Chief Minister in this behalf; and (b) such offences as are after the commencement of this Regulation made over to him for trial by the Chief Minister or by a person authorised by the Chief Minister in this behalf. On 6th January, 1950, the case against the appellant was made over to Dr. Lakshman Rao, a Special Judge of Warangal, who was appointed under the above Regulation under an order of the Civil Administrator, Warangal, to whom authority under section 5 of the Regulation was delegated by the Chief Minister and on the same date the Special Judge took cognizance of the offences. The trial commenced on and from 11th February, 1950, and altogether 21 witnesses were examined for the prosecution and one for 665 the defence. The Special, Judge, by his judgment dated the 8th of May, 1950, convicted the appellant of all the offences with which he was charged and sentenced him to death under section 243 of the Hyderabad Penal Code (corresponding to section 302 of the Indian Penal Code) and to various terms of imprisonment under sections 248, 368, 282 and 124 of the Code of Hyderabad (which correspond respectively to sections 307, 436,342 and 148 of the Indian Code). Against this judgment the appellant took an appeal to the High Court of Hyderabad and the appeal was first heard by a Division Bench consisting of Shripat Rao and section Ali Khan JJ. On 29th September, 1950, the learned Judges delivered differing judgments, Shripat Rao J. taking the view that the appeal should be dismissed, while the other learned Judge expressed the opinion that the appeal ought to be allowed and the accused acquitted. The case was then referred to Mr. Justice Manohar Prasad, as a third Judge and by his judgment dated the 11th of December, 1960, the learned Judge agreed with the opinion of Shripat Rao J. and dismissed the appeal upholding the conviction and sentences passed by the Special Judge. The appellant then presented an application for leave to appeal to this court. That application was rejected by the High Court of Hyderabad, but special leave to appeal was granted by this court on 11th May, 1951, and it is on the strength of this special leave that the appeal has come before us. The present hearing of the appeal is confined to certain constitutional points which have been raised by the appellant attacking the legality of the entire trial which resulted in his conviction on the ground that the procedure for trial laid down in Regulation X of 1359F. became void after the 26th of January, 1960, by reason of its being in conflict with the equal protection clause embodied in article 14 of the Constitution. These grounds have been set forth in a separate petition filed by the appellant under article 32 of the Constitution and following the procedure adopted in the case of Qasim Razvi [Case No. 276 666 of 1951(1)],we decided to hear arguments on the con stitutional questions as,preliminary points in the appeal itself. Whether the appeal would have to be heard further or not would depend on the decision which we arrive at in the present hearing. The substantial contention put forward by Mr. Peerbhoy, who appeared in support of the appeal, is that as the procedure for trial prescribed by Regulation X of 1359F. deviated to a considerable extent from the normal procedure laid down by the general law and deprived the accused of substantial benefits to which otherwise he would have been entitled, the Regulation became void under article 13(1) of the Constitution on and from the 26th of January, 1950 The conviction and the sentences resulting from the procedure thus adopted must, therefore, be held illegal and inoperative and the judgment of the Special Judge as well as of the High Court should be quashed. The other point raised by the learned counsel is that the making over of the case of the appellant to the Special Judge was illegal as the authority to make over such cases was not properly delegated by the Chief Minister to the Civil Administrator in the manner contemplated by section 5 of the Regulation. As regards the first point, it is to be noted at the out set that the impugned Regulation was a pre Constitution statute. In determining the validity or otherwise of such legislation on the ground of any of its provisions being repugnant to the equal protection clause, two principles would have to be borne in mind, which were enunciated by the majority of this court in the case of Qasim Razvi vs The State of Hyderabad (1), decided on the 19th of January, 1953, where the earlier decision in Lachman Das Kewalram vs The State of Bombay(1) was discussed and explained. Firstly, the Constitution has no retrospective effect and even if the law is in any sense discriminatory, it must be held to be valid for all past transactions and for enforce ment of rights and liabilities accrued before the (1) (2) ; 667 coming into force of the Constitution. Secondly, article 13(1) of the Constitution does not necessarily make the whole statute invalid even after the advent of the Constitution. It invalidates only those provisions which are inconsistent with the fundamental rights guaranteed under Part III of the Constitution. The statute becomes void only to the extent of such inconsistency but otherwise remains valid and operative. As was said in Qasim Razvi 's case(1) the fact that " trial was continued even after 26th January, 1950, under the same Regulation would not neces sarily render the subsequent proceedings invalid. All that the accused could claim is that what remained of the trial must not deviate from the normal standard in material respects, so as to amount to a denial of the equal protection of laws within the meaning of article 14 of the Constitution. For the purpose of determining whether the accused was deprived of such protection, we have to see first of all whether after eliminating the discriminatory provisions in the Regulation, it was still possible to secure to the accused substantially the benefits of a trial under the ordinary law; and if so, whether that was actually done in the particular case. " As has been stated already, the Special Judge took cognizance of this case on the 5th of January, 1950, ' which was prior to the advent of the Constitution. It must be held, therefore, that the Special Judge was lawfully seized of the case, and it is not possible to say that the appointment of a Special Judge was in itself an inequality. in the eye of the law. The trial undoubtedly commenced from the 11th of February, 1950, that is to say, subsequent to the coming into force of the Constitution, and the question that requires consideration is, whether the procedure that was actually followed by the Special Judge acting under the impugned Regulation did give the accused the substance of a normal trial, or, in other words, whether he had been given a fair measure of equality in the matter of procedure ? (1) 668 Mr. Peerbhoy lays stress on two sets of provisions in the impugned Regulation which, according to him, differentiate the procedure prescribed in it from that laid down under the ordinary law. The first set relates to the elimination of the committal proceeding and the substitution of warrant procedure for the sessions procedure in the trial of offences. The other set of provisions consists of those which deny to the accused the rights of revision and transfer and withdraw from him the safeguards relating to confirmation of sentences. The first branch of the contention, in our opinion, is unsustainable having regard to our decision in Qasim Razvi 's case(1). It was pointed out in that case that under the Hyderabad Criminal Procedure Code the committal proceeding,is not an indispensable preliminary to a sessions trial. Under section 267A of the Hyderabad Criminal Procedure Code, the Magistrate is quite competent, either without recording any evidence or after recording only a portion of the evidence, to commit an accused for trial by the sessions court if, in his opinion, there are sufficient grounds for such committal. If the committal proceeding is left out of account as not being compulsory, and its absence did not operate to take away the jurisdiction of the Special Judge to take cognizance of the case before the Constitution, the difference between a warrant procedure prescribed by the impugned Regulation to be followed by the Special Judge after such cognizance was taken and the sessions procedure at that stage applicable under the general law is not at all substantial, and the minor differences would not bring the case within the mischief of article 14 of the Constitution. This question having been already decided in Qasim Razvi 's case(1) it is not open for further arguments in the present one. With regard to the other set of provisions, the contention of Mr. Peerbhoy is based entirely upon the language of section 8 of the Regulation. In our opinion, the interpretation which the learned counsel seeks to put upon the section is not quite correct, (1) 669 and it seems to us that not only the right of an accused to apply for transfer of his case has not been taken away by this section, but the right of revision also has been left unaffected except to a small extent. Section 8 of the Regulation X of 1359 F. is in these terms: "All the provisions of section 7 of the said Regulation shall have effect in relation to sentences passed by a Special Judge as if every reference in the said Regulation to a Special Tribunal included a reference to a Special Judge. " The expression "said Regulation" means and refers to Regulation V of 1358 F. and section 7 of the said Regulation provides inter alia that "there shall save as here in before provided, be no appeal from any order or sentence passed by a Special Tribunal, and no court shall have authority to revise such order or sentence or to transfer any case from Special Tribunal or have any jurisdiction of any kind in respect of any proceeding before a Special Tribunal and no sentence of a Special Tribunal shall be subject to or submitted for confirmation by any authority whatsoever. " It will be noticed that what section 8 of the impugned Regula tion does, is to incorporate, not the whole of section 7 of the previous Regulation, but only such portion of it as relates to sentences passed by a Special Judge. By "sentence" is meant obviously the final or definitive pronouncement of the criminal court which culminates or ends in a sentence as opposed to an "order", interlocutory or otherwise, where no question of infliction ' of any sentence is involved. The scope of section 7 of the earlier Regulation is thus much wider than that of present section 8 and all the limitations of the earlier statute have not been repeated in the present one. The result, therefore, is that revision against any order which has hot ended in a sentence is not interdicted by the present Regulation, nor has the right of applying for transfer, which has no reference to a sentence, been touched at all. These rights are expressly preserved by section 10 of the present 87 670 Regulation, which makes the Code of Criminal 'Procedure applicable in all matters except where the Regulation has provided otherwise. Reading section 8 of the present Regulation with section 7 of the earlier one, it may be held that what has been taken away from an accused is, in the first place, the right of revision against non appealable sentences, and in the second place, the provisions relating to confirmation of sentences. The first one is immaterial for our present purpose, as no question of any non appealable sentence arises in the case before us. The second is undoubtedly a discriminatory feature and naturally Mr. Peerbhoy has laid considerable stress upon it. Section 20 of the Hyderabad Criminal Procedure Code lays down the rule relating to confirmation of sentences in the following manner: Every Sessions Judge may pass any sentence authorised by law, but such sentence shall not be carried into effect until (1) in the case of a sentence of 10 years 'impri sonment or more, the appropriate Bench of the High Court; (2) in the case of life imprisonment, the Government; and (3) in the case of death sentence, H.E.H. the Nizam, shall have assented thereto. Section 302 provides that when a sessions court as passe a sentence of death 'or of life imprisonment or of imprisonment exceeding 10 years, the file of the case shall be forwarded to the High Court and the execution of the sentence stayed until manjuri is given in accordance with section 20. Section 307 further provides that when the High Court has affirmed a death sentence or sentence of life imprisonment, then its opinion together with the file of the case shall be forwarded ' for ratification to the Government within one week and the sentence shall not be carried into effect until after the assent thereon of H.E.H. the Nizam in the case of death sentences and of the Government in the case of 671 sentences of life imprisonment. Mr. Peerbhoy 's complaint is that the sentence imposed upon his client has, in the present case, neither been ' confirmed by the High Court, nor by H.E.H. the Nizam. This, he says, is a discrimination which has vitally prejudiced his client and does afford a ground for setting aside the sentence in its entirety. admits of no dispute that section 8 of Regulation X of 1359F. must be held to be invalid under articles 13(1) and 14 of the Constitution to the I extent that it takes away the provision relating to confirmation of sentences as is contained in the Hyderabad Criminal Procedure Code. This, however, is a severable part of the section and being invalid, the provisions of the Hyderabad Criminal Procedure Code with regard to the confirmation of sentences must be followed. Those provisions, however, do not affect in any way the procedure for trial laid down in the Regulation. All that section 20 of the Hyderabad Criminal Procedure Code lays down is that sentences of particular description should not be executed unless assent of certain authorities to the same is obtained. The proper stage, therefore, when this, section comes into operation. is the stage of the execution of the sentence. The trial or conviction of the accused is not affected in any way by reason of the withdrawal of the provision relating to confirmation of sentences in the Regulation. The withdrawal is certainly inoperative and in spite of such withdrawal the accused can insist on the rights provided 'for under the general law. In the case before us the records show that no reference was made by the Special Judge after he passed the sentence of death upon the appellant in the manner contemplated by section 307 of the Hyderabad Code, which corresponds to section 374 of the Indian Criminal Procedure Code. There was, however, an appeal preferred by the accused and the entire file of the case came up before the High Court in that connection. As said already, the Division Bench, which heard the appeal, was divided in its 672 opinion and consequently no question of confirmation of the death sentence could or did arise before that Bench. The question was, however, specifically raised towards the conclusion of the arguments before the third Judge, to whom it was referred; and it is significant to note that some time before that a Full Bench of the Hyderabad High Court had decided that the provision in the Regulation relating to confirmation of sentences was void and inoperative and consequently in spite of the said provision the sentences were required to be confirmed in accordance with the general law. The question was then raised whether the confirmation was to be made by the third Judge alone or it had to be done by the two Judges who agreed in dismissing the appeal. Mr. Justice Manohar Prasad decided that as the whole case was referred to him, he alone was competent to make the order for confirmation of the death sentence and he did actually confirm it by writing out in his own hand the order passing the sentence of death according to the provision laid down in the Hyderabad Code. Mr. Peerbhoy contends that this confirmation was illegal and altogether invalid as not being made in conformity with the provisions of the Hyderabad Code. We do not want to express any opinion on this point at the present moment. There appears on the face of the record an order for confirmation of the death sentence made by a Judge of the High Court. If this order is not in conformity with the provisions of law, the question may be raised before this court when the appeal comes up for hearing I on its merits. This is, however, not a matter which affects the constitutional question with which only we are concerned at the present stage. Under section 20 of the Hyderabad Code, as mentioned above, a death sentence could not be executed unless the assent of H.E.H. the Nizam was obtained. Mr. Peerbhoy points out that this has not been done in the present case. To that the obvious reply is that consent of H.E.H. the Nizam is necessary only before the sentence is executed, and that stage apparently 673 has, not arrived as yet. The final judgment of the High Court in this case was passed on 11th December, 1950. There was an application for leave to appeal presented by the accused immediately after that date and this application was rejected on 2nd January, 1951. On the 5th of February, 1951, an application for special leave was made to this court and the execution of the death sentence was stayed during this period under orders of the High Court itself. The special leave was granted by this court on 11th May, 1951, and the carrying out of the death sentence has been stayed since then under our orders, pending the disposal of the appeal. The question as to whether any further confirmation by H.E.H. the Nizam is necessary could only arise if and when the death sentence passed by the courts below is upheld by this court. Mr. Peerbhoy points out that since the 1st April, 1951, the Indian Criminal Procedure Code has been introduced in the State of Hyderabad and there is no power in the Nizam now to confirm a sentence of death, although such confirmation was necessary at the time when the sentence was pronounced both by the Special Judge as well as by the High Court on appeal. We do not think that it is at all necessary for us at the present stage to discuss the effect of this change of law. If the assent of the Nizam to the execution of a death sentence is a matter of procedure, it may be argued that the procedural law which obtains at the present moment is the proper law to be applied. On the other hand, if it was a question of substantive right, it may be open to contention that the law which governed the parties at the date when the trial began is still applicable. We are, however, not called upon to express any opinion on this point and we deliberately decline to do so. We also do not express any opinion as to whether the rights which could be exercised by the Nizam under section 20 of the Hyderabad Criminal Procedure Code were appurtenant to his prerogative as a sovereign or were statutory rights exercisable by the person designated in the statute. These matters 674 may be considered when the appeal comes up for final hearing on the merits. Our conclusion is that there has not been any discrimination in matters of procedure in this case which can be said to, have affected f the trial prejudicially against the accused and the accused is not entitled to 'have his conviction and sentence set aside on that ground. The other question raised by the appellant relates to delegation of the authority by the Chief Minister to make over cases for trial by the Special Judge. Mr. Peerbhoy lays 'stress on section 5 (b) of the Regulation which speaks of offences being " made over to the Special Judge for trial by the Chief Minister or by a person authorised by the chief Minister in this behalf ", and it is argued that this section requires that the delegatee is to be mentioned by name. What the Chief Minister has done is that he issued a notification authorising all civil administrators of the districts to exercise within their respective jurisdictions the powers of the Chief Minister under the said section. This, it is argued, is not in compliance with the provisions of the section. We do not think there is any substance in this contention. The delegates can certainly be described by reference to his official designation and the authority may be vested in the holder of a particular office for the time being. This, we think, is quite a proper and convenient way of delegating the powers which are exercisable by the Chief Minister. In our opinion, the constitutional points raised by Mr. Peerbhoy fail. The application under article 32 of the Constitution is thus rejected and the case is directed to be posted in the usual course for being heard on its merits. GHULAM HASAN J. I concur in the order proposed by my learned brother Mr. Justice Mukherjea that the petition under article 32 of the Constitution be dismissed, but I deem it necessary to make a few observations in view of my dissenting judgment in Qasim Razvi 's case(1). The majority judgment delivered by Mr. Justice Mukherjea on the. 19th January, 1953, in (1) [1952] S C R, 710. 675 Qasim Razvi 's case(1) while interpreting the decision in Lachmandas Kewalram Ahuja vs The State of Bombay(1) laid, down the principle that the mere fact that some of the provisions of the impugned Regulation are discriminatory on the face of it, is not sufficient to render the trial and the conviction void under article 14, read with article 13 (1) of the Constitution and that in such cases where the trial is continued after the 26th January, 1950, under the impugned Regulation, it is necessary to see whether the procedure followed after the material date was such as deprived the accused of the equal protection of laws within the meaning of article 14 of the Constitution and that if the accused under such procedure received substantially the benefits of the trial under the ordinary law, the trial and conviction cannot be held as void and illegal. I take it that the majority decision is binding and that the principle enunciated by the majority is no longer open to question. With this preliminary observation I must proceed to express my concurrence generally with the view taken by my learned brother Mr. Justice Mukherjea in the present case. It is to be borne in mind that Regulation V of 1358 F. under which the Tribunal was constituted to try Qasim Razvi 's case was in material respects different from Regulation X of 1359 F. under which the Special Judge tried the petitioner Habeeb Mohammad. I agree with my learned brother in holding that there was no flaw in making over the case of the petitioner for trial to the Special Judge under section 5 (b) of the Regulation. The Special Judge took cognizance of the case before the Constitution came into force, but the entire evidence of the prosecution, unlike Qasim Razvi 's case, was recorded after the 26th of January, 1950. The Regulation in question was challenged before us as being void under article 14 read with article 13(1) of the Constitution on the following grounds: (1) (2) 676 (1) that the Regulation excludes the committal proceedings, (2) that the procedure of the sessions trial is replaced by the warrant procedure, (3) that there is no right of transfer, (4) that there is no revision, (5) that the right of confirmation by the Nizam in case of sentences of death has been negatived. As regards the first two grounds, Mr. Justice Mukherjea, following the view taken in Qasim Razvi 's case(1) has held that under section 267A 'of the Hyderabad Criminal Procedure Code committal proceedings are not compulsory and that there is no substantial difference , between the sessions trial and the warrant procedure which was followed in the petitioner 's case. These two grounds of attack there. fore disappear. So far as grounds Nos. (3) and (4) are concerned, I agree with Mr. Justice Mukherjea in his interpretation of section 8 of the Regulation and hold in concurrence with the view taken by him that the right to apply for transfer has not been taken away and that the right of revision has been denied only in so far as non appealable sentences are concerned. The present is a case of murder and other serious offences which are undoubtedly all appealable. The only discriminatory feature of the Regulation left therefore is that no sentence of a Special Tribunal shall be subject to or submitted for confirmation by any authority whatsoever contained in section 7 (2) of Regulation V of 1358F which is made applicable,under section 8 of Regulation X of 1359 F., in other words, that the right of the Nizam to confirm the death sentence has been taken away. This is un questionably a valuable right available to the accused who is sentenced to death by the Sessions Judge or the High Court as the case may be. We were told by Mr. Peerbhoy, counsel for the petitioner, that no death sentence passed by the ' courts in Hyderabad during the last 50 years or go has ever been carried into effect and that the Nizam has always exercised (1) , 677 this right in favour of commuting the death sentence to.a sentence for life. The denial of this right in the Regulation is discriminatory on the face of it and deprives the petitioner of a valuable right. I concede, however, that this objectionable feature of the Regulation is severable from the other parts. I further agree that the stage for the exercise of that right has not yet arisen, for the appeal of the petitioner is still pending in this court. If the appeal is allowed, or the sentence is reduced, no question of the confirmation of the death sentence by the Nizam will arise. If, however, the appeal is dismissed, it will be open to the petitioner to claim this right. It would not be desirable at this stage to express an opinion whether this right is a substantive right which vests in the petitioner or one relating to a more matter of procedure, as that question will have to be considered and decided when the appropriate stage arrives. I would, therefore, agree in dismissing the petition. Petition dismissed. Agent for the petitioner: Bajinder Narain. Agent for the respondent : G. H. Rajadhyaksha.

In determining the validity or otherwise of a pre Constitution statute on the ground of any of its provisions being repugnant to the equal protection clause of the Constitution, two principles 86 662 have to be borne in mind. Firstly, the clause bag no retrospective effect and even if the law is in any sense discriminatory, it must be held to be valid for all past transactions and for, enforcement of rights and liabilities accrued before the coming into force of the Constitution. Secondly, article 13 (1) of the Constitution does not necessarily make the whole statute invalid even after the advent of the Constitution. It invalidates only those provisions which are inconsistent with the fundamental rights guaranteed under Part III of the Constitution. Further, the fact that trial was continued even after 26th January, 1950, under the earlier Regulation which is in some respects discriminatory would not necessarily render the subsequent proceedings invalid. All that the accused could claim is that what remains of the trial must not deviate from the normal standard in material respects, so as to amount to a denial of the equal protection of laws within the meaning of article 14 of the Constitution. For the purpose. of determining whether the accused was deprived of such protection, the Court has to see first of all whether after eliminating the discriminatory provisions in the Regulation, it was still possible to secure to the accused substantially the benefits of a trial under the ordinary law; and if so, whether that was actually done in the particular case. On the 5th January, 1950, the case of the accused who was charged with murder, arson, rioting and other offences which was pending before a Special Tribunal was made over to a Special Judge in pursuance of the provisions of the Hyderabad Regulation X of 1359 F., which abolished the Special Tribunal Regulation of 1949. The trial commenced on the 11th February, 1950, after the new Constitution came into force and the accused was convicted and sentenced to death. His appeal was dismissed and the sentence of death was ultimately confirmed by the High Court. It was contended that the entire trial was illegal inasmuch as the Regulation under which the accused was tried contained several provisions which were in conflict with the equal protection clause (article 14) of the Constitution and became void after the 26th January 1950. Held, (1) The provisions in the Regulation eliminating committal proceedings and substituting the warrant procedure for sessions procedure in the trial of offences did not render the trial illegal as the committal proceeding was not an indispensable preliminary to a sessions trial under the Hyderabad Criminal Procedure Code. (2) On a proper interpretation of section 8 of the Regulation the right of an accused to apply for transfer of his case was not taken away and the right of revision was taken away only in respect of non appealable sentences. (3)Section 8 of the Regulation was void in so far as it took away the provisions relating to confirmation of sentences but as this part of the Regulation was severable from the remaining 663 portion of the section the provisions of the Hyderabad Criminal Procedure Code relating to confirmation of sentences could be followed, and those provisions did not in any way affect the procedure for trial laid down in the Regulation. (4)The fact that the Nizam 's consent had not been obtained could not vitiate the trial as such consent is necessary only before execution of the sentence. Held also, that the delegation of the authority of the Chief Minister to make over cases for trial to the Special Judge, by a general notification authorising all civil administrators of the districts to exercise within their respective jurisdictions the powers of the Chief Minister under section 5 (b) was not invalid. Section 5 (b) does not require that the delegatee must be mentioned by name. Qasim Bazvi 's case ([1953] S.C.R. 589) applied.

Appeal No. 265, of 1966. Appeal by special leave from the judgment and order dated January 10, 1966 of the Assam and Nagaland High Court in Civil Rule No. 266 of 1965. Naunit Lal, for the appellants. R. Gopalakrishnan, for respondent No. 1. The Judgment of the Court was delivered by Shah, J. Daksha Prasad Deka hereinafter called 'the res pondent ' was appointed Assistant Sub Inspector of Police with 688 effect from January 17, 1929. On a representation made by the respondent the date of his birth was entered in the service record as July 1, 1910. Under F.R. 56(a) the respondent was liable to be compulsorily retired on July 1, 1965. In 1956 the respondent applied that the date of birth entered in his service record 'be showing as August 1 191 1. That application was rejected. The respondent again applied in 1963 for correction of his date of birth. The application was, rejected and by order dated June 26, 1965, the respondent was informed that he win stand superannuated on June 30, 1965. His representation made to the Government of Assam against that order was unsuccessful. The respondent then applied to the High Court of Assam praying for a writ in the nature of mandamus requiring the State ,of Assam to forbear from giving effect to the order dated June 26, 1965. The High Court quashed the order dated June 26, 1965 and directed the State of Assam to give an opportunity to the respondent to show cause against the order directing compulsory retirement and an opportunity to prove his true date of birth. Against that order, this appeal is preferred with special leave. In the opinion of the High Court if the true date of birth of the respondent was August 1, 1 9 1 1, the order compulsorily retiring the respondent on June 30, 1965, without giving him an opportunity to prove his true age, infringed the guarantee of article 311(2) of the Constitution. In our judgment, the High Court was wrong in holding that there was any infringement of article, 311(2) of the Constitution. In the service record of the respondent his date of birth was recorded as July 1, 1910 and under F.R. 56(a) the respondent was liable to be compulsorily retired on the date on which he attained the age of 55 years. The date of compulsory retirement under F.R. 56(a) must in our judgment, be determined on the basis of the service record, and not on what the respondent claimed to be his date of birth, unless the service record is first corrected consistently with the appropriate procedure. A public servant may dispute,.the date of birth as entered, in the service record, and may apply for correction of the record. But until the record is corrected, he cannot, claim that he has been deprived of the guarantee under article 311(2) of the Constitution by being compulsorily retired on attaining the age of ' superannuation on the footing of the date of birth entered in the service record. is true that the State authorities did not give to the respondent an opportunity to support his case that he was born on 689 August 1, 1911, and that the service record was erroneous. But in view of S.R. 8 Note, which governed the employment of the respondent an application for correction of the service record could not be entertained if it was made within three years before the date of "actual supernuation". S,R. 8 Note provides "No alteration in the date of birth of a Government servant should be allowed except in very rare cases where a manifest mistake has been made. Such mistakes should be rectified at the earliest opportunity in the course of (1) periodical re attestation of the entries in the first page of service book, and (2) preparation of the annual detailed statement of a permanent establishment (Financial Rule Form No. 11) in which is noted the date of, incumbent 's birth. In no case the request for change in the date of birth of a Government servant made on a date with three years of the date of ' his actual. superannuation ' should be entertain ed. " Validity of the Rule is not challenged by the respondent. are unable to agree with the view of the High Court that the date of "actual superannuation" within, the meaning. of S.R. 8 Note is the date of superannuation computed with reference to the claim made by the public servant, and not with reference to the date as entered in the service record. If such an interpretation be accepted, S.R. 8 Note would prove in a majority of cases of no practical utility. It is intended by S.R. 8 Note that any error 'in the service record shall be rectified at the, earliest opportunity and in no case should an application for rectification be entertained within three years of the "date of actual super annuation". i.e. the date of superannuation according to the service record. Again, if the contention of the respondent were correct, on the date on which he entered service he was a minor. If on a representation that he had attained the age of majority on the date on which he entered service, it would not be open for him, after being admitted to the service, to contend that under the appropriate service rules he could not have been admitted to the service, but for the misrepresentation made by him. Counsel for the respondent relied upon the judgment of this Court in State of Orissa vs Dr. (Miss) Binapani Dei & Ors. (1) in support of the contention that a public servant must be given an opportunity to prove his true date of birth before he is superannuated, and any order passed without such opportunity is illegal. In our judgment Dr. (Miss) Binapani 's case(1) enunciates no such proposition. In that case in the service record of a pub (1) 1967 2 section C. R. 625 2 L 694 Sup. C.I/171 690 lic servant, April 10, 1910 was entered as the date of 'her An enquiry was, held and the public servant was required to show cause why her date of birth should not be accepted as April 1907. Thereafter the Government of Orissa determined her of birth as April 16, 1907, and declared that she should deemed to have been superannuated on April 16, 1962. order was challenged by the public servant in a petition to High Court of Orissa. The High Court held that the order the State Government amounted to compulsory retirement before she attained the age of superannuation and was contrary to the rules governing her service conditions and amounted to removal within the meaning of article 311 of the Constitution, and since :she was not given a reasonable opportunity of showing cause against the action proposed to ';be taken in regard to her, the order was invalid. This Court confirmed the order passed by the High Court of Orissa. It was observed by this Court that ,even an administrative order which involved civil consequences must be made consistently with the rules of natural justice 'The person concerned must be informed of the case of the State and the evidence in support thereof and must be given a fair opportunity to meet the case before an adverse decision is taken The public servant, according to the service record, could not be superannuated before April 10, 1965. But by an enquiry which was not held in a manner consistent with the rules of natural justice an order was made altering the date of birth as entered in the service record, and declaring that she was born in 1907 That was plainly an order passed to the prejudice of the public servant without giving an opportunity to meet the case of the State. In the present case, however, the State did not seek to modify the service record: it was the respondent who sought modification of the service record and claimed that he declared only on the basis of the rectification prayed for by him. It is true that ordinarily when an application is made for rectification of age by a public servant, the State should give the applicant proper opportunity to prove his case and should give due consideration to the evidence brought before it. But in the present case, since the application for rectification was made within three years of the date of actual superannuation, according to S.R. 8 Note the application could not be, entertained. The principle of Dr. (Miss) Binapani 's case(1) has no application to this case. The appeal is allowed and the order passed by the High Court is set aside. The petition filed by the respondent shall stand dismissed. There will be no order as to costs throughout.

The respondent was appointed Assistant Sub Inspector of Police with effect from January 17, 1929, and on his own representation his date of birth was entered in the service record as July 1, 1910. Under F.R. 56(a) he was liable to be compulsorily retired on July 1, 1965. 'In 1963 he applied that the date of birth in the service record may be corrected as. August 1, 1911. The application was rejected without giving him an opportunity to support his case and he was informed on June 26, 1965. that he would stand superannuated on June 30, 1965. He filed a writ petition in the High Court and the High Court quashed the order dated June 26, 1965. In appeal to this Court HELD : Until the service record of a public servant is corrected he cannot claim that he has been deprived of the guarantee under article 311(2) of the Constitution by being compulsorily retired on attaining the age of superannuation on the basis of the service record. A public servant may dispute the correctness of the date of birth as entered in the service record and may apply for its correction, but in view of S.R. 8 Note, which governed the employment of the respondent, an application for such a correction could not be entertained if it was made within three years before the date of 'actual superannuation '. The words 'actual superannuation ' mean the date of superannuation according to the service record, and not according to the date of birth claimed by the public servant. The respondent represented that he had attained the age of majority on the date on which he entered service. It was not open to him to contend that under the appropriate service rule he could not have been admitted to the service. [688 G H, 689 A B, F G] State of Orissa vs Dr. (Miss) Bimapani Dei, [1967] 2 S.C.R. 625 explained.

Appeal No. 1626 of 1967. Appeal by Special Leave from the Judgment and Decree dated the 14th October, 1966 of the High Court of Mysore at Bangalore in Misc. First Appeal No. 124 of 1966. M. Natesan and Saroja Gopalkrishnan, for the appellant Gobind Das and section P. Nayar, for the respondent. The Judgment of the Court was delivered by GOSAMI, J. The appellant and his brother, Srinivasamurthy are partners of a firm carrying on the business of manufacturing and exporting of polished granite memorial stones in the name and style of Messrs Narayanaswami & Sons. The firm is admittedly a factory both under the Factories Act as well as under the Employees ' State Insurance Act (briefly the Act). The appellant claims to directly employ about 35 persons in his factory and has been paying contri bution under the Act on their account. It is stated that adjacent to his own factory there is another factory situated on the appellant 's land leased out by him to two persons, Chidambarchari and Shankarsubbachari (hereinafter referred to as the contractors). The contractors employ about 50 workers in their factory for purposes of cutting and dressing the granite stones. The lorry drivers bring granite from the surrounding areas and unload them outside the factory ' The contractors get these to their portion of the leased land for cutting them. After cutting these are sent back to the appellant 's factory where these are designed and polished and thereafter exported. The Employees State Insurance Corporation (briefly the Corporation) applied to the Employees ' State Insurance Court at Bangalore (briefly the Court) for recovery of an amount of Rs. 8893/ being the employees ' contribution payable by the appellant for the period commencing from 27 7 1958 to 31 1 1964 on account of the workers employed by the two contractors described as 'immediate employers ' tinder the Act. The court decided against the Corporation holding .that the contractors were not 'immediate employers ' within the meaning of section 2 (13) of the Act and they were independent con tractors and hence the appellant was not the principal employer in respect of the employees working under the contractors. The Corporation appealed to the High Court of Mysore against the aforesaid order under section 82(2) of the Act. The High Court held that the appellant was the principal employer an the contractors were the immediate employers under the Act. The High Court further held that the workers under the contractors were employees within the meaning of section 2 (9) (ii) of the Act. The High Court thus accepted the appeal of the Corporation. Hence this appeal by special leave. Before the court evidence was given by both sides and the following findings of the court are adverted to by the High Court 144 .lm15 "All that can be said to have been proved by the applicant corporation in this case is that RWs 2 and 3 (the con tractors) work at a place belonging to the respondent and execute part of the work which is necessary to manufacture the final finished product for sale. All that can be said to have been proved in this case is that the contractors are doing some work which would be the foundation for the work that is finally done by the respondent". After examining the evidence the High. Court also found as follows "There is evidence to show that these employees (under ,the contractors) are employed in connection with the work of the respondent facory". The respondent in the High Court 's judgment refers to the appellant herein. As stated earlier, the High Court answered both the questions in favour of the Corporation. The same points are raised for consideration in this appeal and Mr. Natesan on behalf of the appellant submits that the contractors owned a separate factory and are independent contractors and cannot be held to be 'immediate employers ' within the meaning of section 2(13) of the Act and hence the appellant is not liable as principal employer to pay the contribution on account of the persons working under the contractors. Before we deal with the questions of law raised in this appeal, it will be appropriate to refer to the material provisions of the Act. The Act, as it appears from the preamble, is passed "to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto". Section 2 contains the definitions. By section 2 (4) "contribution" means the sum of money payable to the Cor poration by the principal employer in respect of an employee and includes any amount payable by or on behalf of the employee in accordance with the provisions of this Act. " By section 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 on 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 or 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; * * * * 145 By section 2(12)"factory "means any premises including the precincts thereof whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on. But does not include a mine subject to the operation of the or a railway running shed". * * * * * By section 2(13) "immediate employer", in relation to employees employed by or through aim, means a person who has undertaken the execution, on the premises of a factory or an establishment to which this Act, applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment. , and includes a person by whom the services of an employee who has entered into a contract of service with him are temporarily tent or let on hire to the principal employer". By section 2(14) "insured person" means a person who is or was an employee in respect of whom contributions are or were payable under this Act and who is, by reason thereof, entitled to any of the benefits provided by this Act". By section 2(17) "principal employer" means (1) in a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as the manager of the factory under the factories Act, 1948, the person so named". * * * * * * Chapter IV deals with contributions. The opening section 38 provides that "subject to. the provisions of this Act, all employees in factories, or establishments to which this Act applies shall be insured in the manner provided by this Act." * * * * * * By Section 39(1) "the contribution payable under this Act in respect of an employee shall comprise contribution payable by the employer (hereinafter referred to as the employer 's contribution) and contribution payable by the employee (hereinafter referred to as the employee 's contribution) and shall be paid to the Corporation". By section 40 (1) "the principal employer shall pay in respect of every employee, whether directly employed by him or by or through an immediate employer, both the employer 's contribution and the employee 's contribution". 146 By section 42(2) "Contribution (both the employer 's contribution and the employee 's contribution), shall be payable by the principal employer for each week in respect of the whole or part of which wages are payable to the employee and not otherwise". Section 43 and section 97 empower the Corporation to make regulations. Under section 44 every principal and immediate employer has to submit returns, to the Corporation and maintain registers and records. Section 68 provides for Corporation 's rights where a principal employer fails or neglects to pay any contribution. By section 72 an employer is barred from reducing wages by reason only of his liability to pay contribution. Chapter VA provides for certain transitory provisions. The opening section 73A provides for employer 's special contribution. Chapter VI deals with adjudication of disputes and claims. Under section 74 (1) Employee 's Insurance Court is constituted. Inter alia under section 75 (1) "If any question or dispute arises as to (a) whether any person is an employee within the meaning of this Act or whether he is liable to pay the employees ' contribution, or * * * * * * (d) the person who is or was the principal employer in respect of any employee; * * * * * * such question or dispute. shall be decided by the Employees ' Insurance Court in accordance with the provisions of this Act." Under section 75(1) (g), inter alia, any dispute between a principal employer and an immediate employer shall also be decided by the court. Under section 75 (2) (b) any claim by principal employer to recover contributions from any immediate employer shall also be decided by the Employees ' Insurance Court. By section 75 (3) jurisdiction of a civil court is barred regarding, amongst others, any question or dispute as specified in the section. Section 82 provides for appeals and under sub section (2) thereof an appeal shall lie to the High Court from an order of the Employees ' Insurance Court if it involves a substantial question of law. Chapter VII provides for different penalties. Under Chapter VIII (Miscellaneous), section 94 provides, interalia, that contributions due to the Corporation shall have priority over all other debts. The Act is thus a beneficial piece of social security legislation in the interest of labour in factories at the first instance and with power to extend to other establishments. Provisions of the Act will have to be construed with that end in view to promote the schemes and avoid 147 the mischief. From some of the material provisions set out above, the underlying aim of the Act is to insure the employees against various risks to their life, health and well being and the charge is upon the principal employer even though he may get his usual work done through an intermediary, who is described in the Act as 'immediate employer. Any dispute between the principal employer and the immediate employer is to be settled between themselves, de hors, the employees and the Act charges the principal employer with the liability to pay the contribution not only of its own but also that of the employees subject to his right to deduct the employees ' contribution. from their wages under section 40 (2) of the Act. There is a quicker mode of recovery as arrears of land revenue under section 45B and 73D. Chapter VA provides for transitory provisions and by section 73A every principal employer shall have to pay a special contribution in lieu of the employer 's contribution payable under Chapter IV. Adjudication of all kinds of specified disputes are also intended to be ex peditiously disposed of by the court constituted under section 74. Such disputes include a dispute between a principal employer and an immediate employer as noticed earlier. Civil courts ' jurisdiction is barred in respect of matters specified in the Act. There is only one special type of appeal to the High Court and that also in a restricted form. The Act insists on compliance with its provisions on pain of penalties and the contributions due to the corporation have priority over other debts. Keeping in view the scheme and the principal object of the Act, we will now examine the questions of law raised in this appeal. The definition of the 'immediate employer ' under section 2 (13), omitting what is not necessary for our purpose, is as follows: " 'immediate employer ', in relation to employees employed by or through him, means a person who his undertaken the execution, on the premises of a factory to which this Act applies of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory. . . ." That the appellant,, who is the principal employer has a factory where granite memorial stones are manufactured for export is beyond question. The finished articles are the dressed and polished granite stones. The raw material is the stone from the quarry brought therefrom, cut to sizes, dressed, polished and then exported. The other factory of the contractors on the leased land of the principal employer, adjoining the latter 's factory. is registered under the Fac tories Act in the year 1963. Although admittedly a factory, there is no evidence on the record that the contractors pay any contribution under the Act or have been even charged separately as principal employers so far as their so called direct employees are concerned. The principal employer, the appellant, is making a claim which, if correct, will make the contractors also, principal employers liable under the Act. But it is easy for the appellant to make such 148 a claim to avoid his personal liability which, in all fairness to labour, should have been settled by impleading the contractors as parties in order to make the entire position clear. It is not necessary for us to examine whether this is a mere device of the principal employer to avoid his liability under the Act. We agree with the High Court that on the findings of fact the work undertaken by the contractors in the adjoining vicinity, even though their factory may have been subsequently registered under the factories Act, is preliminary or incidental to the work in the principal employer factory turning out the finished product for export. The work in the two places has an intimate correlation and is a piece of an integrated whole and the said work by the contractors through their labour is ordinarily part of the work of the principal factory undertaken by the contractors. Their factory is situated in the premises of the appellant 's factory which according to the definition clause includes the precincts thereof. It, therefore, follows that the two contractors are 'immediate employers ' within the meaning of section 2 (13) and the workers employed for cutting and dressing the granite stones by the immediate employers are employees within section 2 (9) (ii) of the Act, being employed through the immediate employers on the premises of the factory including the precincts thereof. The fact that in 1963 the contractors ' factory was separately registered under the Factories Act or that, after meeting the prior requirements of the principal employer, work of some other parties was also permissible, does not, in our opinion, militate against the predominant purposes of the work of the contractors being part and parcel of the main work of the principal employer factory for which the contractors mainly work. A good deal of argument is advanced with regard to the expression on the premises of a factory" in the definition clause of "immediate employer" under section 2 (13). The word "premises" according to the dictionary means house or building with its ground or other apurtenances. The premises include under section 2 (13) the precints thereof The word "precincts" means the environs. This Court in Ardeshir H. Bhiwandiwala vs The State of Bombay(1) dealt with the term "Premises" in the definition of factory under section 2(m) of the Factories Act and after noticing its meaning in various Law Lexicons and dictionaries observed: "The word "premises" has now come to refer to either land or buildings or to both, depending on the context. . It is therefore clear that the word "premises" is a generic term meaning open land or land with buildings or buildings alone." The contention in that 'case that the word "premises" must be restricted to mean buildings and not taken to cover I open lands as well was repelled. In the instant case, on an examination of the site plan (Ext. P 1) and the evidence, it is evident there is a definite environmental as well as functional unity between the two portions, namely, the main (1) 149 factory (Portion A) and the contractors ' factory with the precincts (Portion B) even though separated by a wall in which there was a door which sometimes was closed. The work undertaken by the contractors and carried on in their portion of the area is surely componental to make it a part of the complex whole. The principal requirement of the definition, namely, that the work or the construction is undertaken on the premises of the factory and about which both sides join issue, is satisfied in the present case on the evidence on records and we hold accordingly. We are also satisfied that the workers under the contractors are employees employed by the principal employer through the 'immediate employers ' on the premises of the factory in work which is ordinarily the normal work of the factory or is, at any rate, preliminary to the work or which is certainly incidental to the purpose of the main factory of the appellant. Mr. Natesan laid great stress upon the requirement of a unity of control of the principal employer over the manufacturing process of the work undertaken by the contractors, but it will be obvious from the facts found and the evidence noted below that the work is done on the premises of the factory. We need not examine this aspect in detail in view of the uncontradicted evidence of PW 1 as follows: "The work done in the Factory consisted of manufacture of granite stones for export. I found raw stones lying all over the surrounding area. I found that raw stones were moved to the premises marked B in exhibit P. 1. I found that about 50 persons working at the spot. I learnt from the partners those 50 persons had been employed by two or three con tractors. Cutting and dressing of the stones were done by those fifty men. There were (1) sand blasting machine belonging to the partners and (2) Electric blower. Power was used in these machines. After the stones are cut and dressed, they are removed to p remises A for designing and polishing. Final touches are then given to them in the premises B. They are again brought back to premises A for packing and despatching. The premises A and B belong to the partners. Only a wall separated the two premises. There was a connecting door which appeared to have been closed". Again RW 2 also deposed that "it is since last three years that, I undertook the work of the second party" i.e. the appellant. R W 1 (partner of the appellant) stated as follows in cross examination: "exhibit P. 4 is the copy of the letter dated 19 3 63 written by P.W. 1 to me for copy of the agreement and plan. exhibit P. 5 is my interim reply,. . . By Factory premises in exhibit P. 5, 1 meant both the portions A and B in exhibit p. 1". Mr. Natesan has referred to a decision of the Bombay High Court in Employees ' State Insurance Corporation, Bombay vs Raman (Chittur Harihar Iyer)(1) but the High Court dealt in that case with the definition of "employee" prior to the amendment of the Act in 1966 and is of no (1) (1957) I L.L.J. 267. 150 aid to counsel. This case was also distinguished by this Court in Nagpur Electric Light & Power Co. Ltd. vs Regional Director Employees State Corporation, Etc.(1) Counsel also relied upon a decision of the Delhi High Court in Employees ' State Insurance Corporation vs Peter Sewing Machine Co. etc.(2), dealing with the definition of 'factory ' under section 2 (12) of the Act. The High Court, inter alia, was posing a question in that case as to whether the whole or any part of the work of the contractors there consisted of any work which was ordinarily a part of the work of the factory or establishment of the principal employer and answered it in the negative on the finding of facts in that case "that the contractors, manufacture their goods independently and not as a part of the goods manufactured by the Peter Sewing Machine Company". On the facts of this case that question does not arise and we express no opinion thereon. The decision is therefore, of no aid to the appellant in this case. The learned counsel further draws our attention to M/s Hindustan Construction Co. Ltd. vs Employees ' State Insurance Corporation(3) in which case the High Court remanded the matter to find out "whether the work done at the site can be regarded as a manufacturing process. . We, however, do not fail to notice that the judgment did not take note of the complete definition of " employee" under section 2 (9), the first part of which is joined by a conjunctive 'and ' with two clauses. Further the High Court is not correct in thinking that the definition of the word "factory" under the Factories Act "is same" as that of "factory" under the Employees ' State Insurance Act which is of wider amplitude with an expanding horizon of objectives in the latter Act. It is not necessary, however, to consider. in this case if these factors may have affected the decision in the above case. At any rate, the appellant does not derive any aid from this decision. The next decision in Nagpur Electric Light & Power Co., Ltd. (supra), relied upon by the appellant for the construction of the definition of "employee" under section 2 (9) (i) of the Act is not of assistance to him since we are dealing with a case under section 2(9) (ii). We, of course, notice that the High Court in this case held as follows at page 20 of the judgment : "From the foregoing, it is clear that the contractors have been executing the work which is ordinarily part of the work of the factory and that within the premises of the respondent factory". The definition clauses of "immediate employer" [section 2 (13)] and "employee" [section 2 (9) (11)], contain the expression "on the premises of a factory" and not within it. Even so, as detailed above after examining the evidence ourselves, we are clearly of opinion (1) (2) AIR 1970 Delhi 182. (3) Assam & Nagaland 87. 151 that the work of the contractors was undertaken by them on the premises of the factory which may not be the same thing as in or within the factory. We are further of the view that the entire site of the factory is a composite one containing portions A as well as B and there is no doubt that the contractors are the 'immediate employers ' within the meaning of section 2 (13) of the Act and the workers employed by them are "employees" under the Act. In the result, the appeal fails and is dismissed with costs. P.B.R. Appeal dismissed.

The appellants firm was carrying on the business of manufacturing and exporting polished granite memorial stones. The firm was a factory both under the Factories Act as well as under the Employees ' State Insurance Act. Adjacent to this factory was another factory situated on the appellant 's land leased out to two contractors who employed 50 workers in their factory for the purposes of cutting and dressing the granite stones. The granite stones unloaded outside the factory by the lorries were brought on the portion of the leased land and after cutting them they were sent back to the appellant 's factory where they were designed and polished. The Employees ' State Insurance Corporation claimed from the appellant a certain sum as the firms contribution on account of the workers employed by the two contractors described as 'immediate employers ' under the Act. The Employees ' State Insurance Court held that the contractors were not 'immediate employers ' within the meaning of section 2(13) of the Employees ' State Insurance Act and that they were independent contractors. On appeal the High Court held that the appellant was a principal employer and the contractors were the immediate employers under the Act. The High Court also held that the workers tinder the contractors were employees within the meaning of section 2(9)(ii) of the Act. Dismissing the appeal, to this Court, HELD : (1) The underlying aim of the Act is to insure the employees against ,various risks to their life, health and well being and the charge is upon the principal employer even though he may get his usual work done through an intermediary who is described in the Act as 'immediate employer '. Any dispute between the principal employer and the immediate employer has to be settled between themselves de hors, the employees and the Act charges the principal employer with the liability to pay the contribution not only of its own but also that of the employees subject to his right to deduct the employees ' contribution from their wages under section 40(2) Of the Act. [147A] (2) On the findings of fact the work undertaken by the contractor 's in the adjoining vicinity is preliminary or incidental to the work in the principal employer factory turning out the finished product for export. The work in the two places has intimate correlation and is a niece of an integrated whole and the said work by the contractors through their labour is ordinarily part of the work of the principal factory undertaken by the contractors. Their factory is situated in the premises of the appellant 's factory which, according to the definition clause, includes the precincts thereof. In the instant case on an examination of the site plan and the evidence it is evident that there is a definite environmental as well as functional unity between the two portions, namely, the main factory and the contractors ' factory with the precincts even though separated by a wall in which there was a door which sometimes was closed. The work undertaken by the contractors and carried on in their portion of the area is surely componental to make it a part of the complex whole. The principal requirement of the definition namely, that the work or the ,construction is undertaken on the premises of the factory is satisfied in the present ,case. It therefore follows that the two contractors are 'immediate employers within the meaning of section 2(13) and the workers employed for cutting and dressing the granite stones by the immediate employers are employees within section 2(9)(ii) of the Act. [148B] Employees ' State Insurance Corporation. Bombay vs Raman (Chittur Harihar Iyer),[1957] 1 L.L.J.267,Nagpur Electric Light and Power Co.Ltd. vs Regional Director Employees State Insurancea Corporation, Etc. , Employees '. 143 State Insurance Corporation, vs Peter Sewing Machine Co. etc. A.I.R. 1970 Delhi 182, and M/s Hindustan Construction Co. Ltd. vs Employees ' State Insurance Corporation, Assam & Nagaland 87, referred to.

Appeals Nos. 129 and 130 of 1952. 409 Appeals by Special Leave from the Judgment and Order dated the 26th December, 1951, of the Court of the Judicial Commissioner for the State of Himachal Pradesh at Simla in Civil Misc. Petitions Nos. 12 and 16 of 1951. Achhru Ram, (P. section Safeer and Harbans Singh, with him) for the appellants. C. K. Daphtary, Solicitor General for India (R. Ganapathy Iyer, with him) for respondent No. 1. 1954. April 22. The Judgment of the Court was delivered by MEHR CHAND MAHAJAN C.J. These are two connected appeals by special leave against an order of the Judicial Commissioner. Himachal Pradesh, dated the 26th December, 1951, rejecting two applications for the issue of writs of mandamus and certiorari under article 226 of the Constitution. The facts giving rise to the two petitions, out of which these two connected appeals arise, are these: One Trilok Nath was running a business in Himachal Pradesh under the name and style of "Himachal Drug Nurseries" for the extraction, collection and export of medicinal herbs in the year 1949. He was a partner of Messrs. Prabhu Dayal and Gowri Shanker of Jammu and Kashmir State in timber business carried on in that State under the name and style of "The Kashmir Woods". It was alleged by him that the business in Chamba was his exclusive business with which the partnership firm "The Kashmir Woods" had no concern whatsoever. Prabhu Dayal 's case was that the firm "The Kashmir Woods" was started by him in 1943 as his sole proprietary concern, that later on he took Trilok Nath Mahajan as a partner in this concern, that in the year 1949 Sardar Bhagwan Singh induced the partners of this firm to take up the line of crude drugs and herbs which was his line, that a new firm "Himachal Drug Nurseries" was started as a child concern of "The Kashmir Woods" with Bhagwan Singh as one of the partners, that after preliminary investigation it was decided to take up this work at Chamba and in pursuance of this decision two leases 53 410 of two forest divisions were taken on behalf of the Jammu firm, one in the name of Bhagwan Singh and another in the name of Trilok Nath but the finance for this undertaking was supplied by the parent firm at Jammu. It was alleged that subsequently Trilok Nath manipulated the Jammu books showing a bogus investment of his elder brother Wazir Chand amount ing to Rs. 30,000 in the firm "Kashmir Woods" and that fraudulently and by manipulating the books and by entering into certain agreements Trilok Nath made Wazir Chand the sole owner of "Himachal Drug Nurseries" and transferred the Chamba concern to him without the knowledge of the other partners. These assertions were not accepted by Wazir Chand or Trilok Nath. Their case was, that Trilok Nath was the sole owner of the Chamba concern, that he obtained the leases in his own name and not for the Jammu firm from the Chamba forest department, first in the year 1949, and then in the year 1950, that as he had no capital of his own, he borrowed a sum of Rs. ,30,000 from his brother and made him a partner with him in this business and that as later on he was unable to contribute his share of the capital, the part nership was dissolved on 31st August, 1950, and in consideration of a sum of Rs. 20,000 he, Trilok Nath, relinquished and transferred by means of a stamped deed of dissolution made on 10th December, 1950, all ,his, rights in the Chamba concern to Wazir Chand who thus became the sole owner of all the goods belonging to this concern in Chamba and came into possession. of the same. On the 3rd April, 1951, Prabhu Dayal lodged a report with the police at Jammu that Trilok Nath had prepared duplicate accounts for production before the income tax authorities, and that he had committed an offence of embezzlement under section 406 of the Indian Penal Code. The Jammu and Kashmir State police took cognizance of the case and appointed Amar Nath, sub inspector of police, to make investigation. During the investigation the Jammu police came to Chamba on 25th and 26th April, 1951, and with the assistance of the Chamba police seized 269 411 bags of medicinal herbs worth about Rs. 35,000 and in actual physical possession of Wazir Chand or his men without reporting to, or obtaining orders from, any ,magistrate or any other competent authority. The goods were handed over to different superduper at different stations in the State of Himachal Pradesh. Wazir Chand vehemently protested against these seizures alleging that the action taken was illegal and without jurisdiction and that the goods should be released but his representations had no effect. In the first week.of July, 1951, the Chamba police again, at the instance of the Jammu police, seized 25 bags of dhup from and in the possession of Wazir Chand and these were also handed over to the some superdars. On the 19th July, 1951, the District Magistrate of Jammu wrote to the District Magistrate of Chamba asking that the goods seized, from the "Himachal Drug Nurseries" be handed over to. the Jammu and Kashmir State police. This request has so far not been complied with. On the 21st August, 1951, Wazir Chand made an application under article 226 of the Constitution of India to the Judicial Commissioner of the State of Himachal Pradesh at Simla praying for the issue of one, or more writs in the, nature of mandamus directing the :respondents to order the release of the seized goods and to refrain from passing any orders about the extradition of these goods. During the pendency of this petition another 45 maunds of medicinal herbs were seized by the Chamba police at the instance of the Jammu police. This seizure was challenged by a second petition on 20th September, 1951, under article 226 of the Constitution. The Judicial Commissioner disposed of both these petitions by a single judgment. He declined to grant any of the reliefs asked for by the appellant. The ground of the decision appears from the following quotation from his judgment: "In order to find whether the, entries in those books of account were genuine or forged, or what the effect of those entries on the alleged right of Wazir 412 Chand was, or whether the agreements set up by Wazir Chand were genuine or for consideration, it would be necessary that all these persons, and such witnesses as they might deem it necessary to produce in support of their respective allegations, should appear in the witness box. A number of affidavits have been filed on behalf of either party those of Wazir Chand and certain alleged employees of the Himachal Drug Nurseries on behalf of the petitioners, and of Prabhu Dayal, Gauri Shankar, Bhagwan Singh and a head constable of the Jammu and Kashmir police on behalf of the respondents; but the truth or falsity of the contents of those affidavits cannot be ascertained without the deponents being subjected to cross examination. I would not go so far as to hold that the petitioners have failed to prove that they, have any right, title or interest in the goods seized. It will not be fair to do so in the present summary proceedings. But this much must certainly be said that it is not possible for this Court, on the material placed before it, or which could possibly be placed in these summary proceedings, to come to a finding whether the petitioners have the right to claim the reliefs prayed for by them The proper remedy for them therefore is not by way of a petition under article 226 of the, Constitution of India, but by any other action, e.g. a civil suit, which may be open to them. " It was contended before us that the learned Judicial Commissioner was in error in thinking that in order to determine the legality of the seizures and to determine the point whether there had been any infringement of the petitioner 's fundamental rights it was necessary to determine the true nature of the title in the goods seized and that the petitioner could not be granted any relief till he was able to establish this. It was argued that the good shaving been seized from the actual possession of the petitioner or his :servants, the Chamba ,concern, being admittedly under the exclusive control of Trilok Nath or Wazir Chand, the determination of the question whether Wazir Chand had obtained possession fraudulently was not relevant to this inquiry, and that the only point that needed consideration was 413 whether the seizures were under authority of law or otherwise, and if they were not supported under any provisions of law, a writ of mandamus should have issued directing the restoration of the goods so seized. It seems to us that these, contentions are well founded. The Solicitor General appearing for the respondents was unable to draw our attention to any provision of the Code of Criminal Procedure or any other law under the authority of which these goods could have been seized by the Chamba police at the instance of the Jammu police. Admittedly these seizures were not made under the orders of any magistrate. The provisions of the Code of Criminal procedure authorizing the Chamba police to make a search and seize the goods are contained in sections 51, 96, 98 and 165. None of these sections however has any application to the facts and circumstances of this case. Section 51 authorizes in certain circumstances the search of arrested persons. In this case no report of the commission of a cognizable offence had been made to the Chamba police and no complaint had been lodged before any magistrate there and no warrant had been issued by a Chamba magistrate for making the search or for the ;arrest of any person. That being so, sections 51, 96 and 98 had no application to the case '. Section 165 again is not attracted to the circumstances of this case because it provides that if an officer in charge of a police station has reasonable grounds for believing that anything necessary for the purposes of an investigation into any offence which he, is authorized to investigate, may be found in any place within the limits of the police station of which he is in charge, or to which he is attached, and that such thing cannot in his opinion be otherwise obtained without undue delay, such officer may, after recording in writing the grounds of his belief and specifying in such writing, so far as possible the thing for which search is to be made, search or cause search to be made, for such thing in any place within the limits of such station. The Chamba police was not authorized to investigate the offence regarding which a report had been made to the Jammu and Kashmir police. It is doubtful whether in view of the provisions of article 370 of the Constitution any offence committed in Jammu and Kashmir could be investigated by 414 an officer in charge of a police station in the Himachal Pradesh. The procedure prescribed by the section was not followed. the Jammu and Kashmir police had no jurisdiction or authority whatsoever to carry out investigation of an offence committed in Jammu and Kashmir in Himachal territory without the authority of any law or under the orders of any magistrate passed under authority of any law. No such authority was cited before us. The whole affair was a hole and corner affair between the officers of the Kashmir police and of the Chamba police without any reference to any magistrate. It is obvious that the procedure adopted by the Kashmir and the Chamba police was in utter violation of the provisions of law and could not be defended under cover of any legal authority. That being so, the seizure of these goods from the possession of the petitioner or his servants amounted to an infringement of his fundamental rights both under article 19 and article 31 of the Constitution and relief should have been granted to him under article 226 of the Constitution. All that the Solicitor General could urge in the case was that on the allegation of Prabhu Dayal, the goods seized in Chamba concerned an offence that had been committed in Jammu and being articles regarding which an offence had been committed, the police was entitled to seize them and that Wazir Chand had no legal title in them. Assuming that that was so, goods in the possession of a person who is not lawfully in possession of them cannot be seized except under authority of law, and in absence of such authority, Wazir Chand could not be deprived of them. On the materials placed on this record it seems clear that unless and until Prabhu Dayal proved his allegations that the Chamba concern was part and parcel of the Jammu partnership firm (which fact has been denied) and that Trilok Nath who was admittedly one of the partners had no right to put Wazir Chand in possession of the property, no offence even under section 406 could be said to have been committed about this property. The Jammu police without having challenged any of the accused before a magistrate in Jammu, and without having obtained any orders of extradition from a magistrate (if the offence was extraditable) could not proceed to Chamba 415 and with the help of the Chamba police seize the goods and attempt to take them to Jammu by a letter of request written by the District Magistrate of Jammu to the District Magistrate of Chamba. Lastly it was argued that the petitioner made an application under section 523, Criminal Procedure Code, to the magistrate and that application was dismissed and that a petition for revision against that order was still pending a and that when another remedy had been taken article 226 could not be availed of. 'This contention cannot be sustained, firstly in view of the fact that section 523 has no application to the facts and circumstances of this case, and the magistrate had no jurisdiction to return these goods to the petitioner. Secondly, the revision application has been dismissed on the ground that there was no jurisdiction in this case to grant relief to the petitioner under section 523. For the reasons given above we allow this appeal, set aside the order of the Judicial Commissioner and direct an appropriate writ to issue directing the restoration to the petitioner of the goods seized by the police. The appellant will have his costs of the appeals and ,those incurred by him in the Court of Judicial Commissioner. Appeal allowed.

The provisions regarding search and seizure by the Indian police are contained in sections 51 , 96, 98 and 165 of the Code of Criminal Procedure, 1898. None of these sections had any application to the facts and circumstances of the case. Any seizure by the Indian police of any property of a citizen not sanctioned under the law stated above or under any other law infringes the fundamental rights of the citizen guaranteed under article 19 and article 31 of the Constitution of India. This position is not affected even if the citizen whose goods are so seized files an application under section 623 of the Code and his application is dismissed by the Magistrate. In view of the provisions of article 370 it is doubtful if an offence committed in Jammu and Kashmir could be investigated by the police in India.

Appeal No. 435 of 1970. Appeal by special leave from the judgment and order dated March 28, 1969 of the Assam and Nagaland High Court in Civil Rule No. 183 of 1965. 932 Naunit Lal, for the appellant. M. C. Chagla, P. K. Goswami and R. Gopalakrishnan,for the respondent. B. Datta, for the intervener. The Judgment of the Court was delivered by Shah J. The Assam Tea Company Ltd owns,teagardens in the village of Nazira in the State of Assam. By a notification dated June 16, 1909, the Government of Bengal (which then had territorial jurisdiction over the territory now within the State of Assam) constituted a Town Committee at Nazira adjacent to the tea garden of the, Company. In 1923 the Legislature enacted the Assam Municipal Act 1 of 1923. Section 328 of the Act provided for the constitution of notified areas. By sub section (1) of section 328 the Provincial Government was authorised by notification, to signify its intention to declare that with respect to some or all of the matters upon which a municipal fund may be expended, improved arrangements are required within a specified area. After issuing such a notification the Government was competent, after six weeks from the date of Publication, and after considering the objections, if any, to declare, by notification. , the specified area or any portion thereof to be a notified area. Section 4 of the Act authorised the Provincial Government by notification, inter alia, to signify its intention to include within a municipality any local area in the vicinity of the same or exclude from a municipality any local area comprised therein. Any inhabitant of any part of a local area defined in a notification published under section 4, was entitled by virtue of section 5 to raise objections to the proposed action. The Government would, after considering the objections, inter alia, include the local area or any part thereof within the municipality or exclude it therefrom. The provisions of sections 4 and, 5 were not of their own force applicable to a notified area constituted under section 328 but by virtue of cl. (d) of, sub section (1) of section 330 it was competent to the Provincial Government to extend to any notified area the provisions of any section of the Act. By sub section (3) of section 330 it was provided : "For the purposes of any section of this Act which may be extended to a notified area, the town committee constituted for such area, under section 329. shall be deemed to be a Municipal Board under this Act and the area to be a municipality. " Notifications were issued from time to time applying certain provisions of the Assam Municipal Act, 1923. In 1951 the Government of the State of Assam issued a notification applying sections 4(1) 933 (b)& (c) and 5(1) &_(2) (b) of the Assam Municipal Act, 1923 to the notified area committee including the Nazira Town Committee. But no notification under section 328 of the Assam Municipal Act, 1923 extending the boundaries of the Nazira Town Committee area was issued. In 1957 the Assam Municipal Act, 1923 was repealed and was replaced by the Assam Municipal Act 15 of 1957. On January 6, 1964 notification was issued under section 4 (1) (b) of Act 15 of 1957 to revise the boundaries of the notified area at Nazira, and thereby included a part of the tea estate belonging to the Assam Tea Co. Ltd. in the Nazira Town Committee area. Objections submitted by the Assam Tea Company Ltd. were, considered and overruled and the Government of Assam by notification dated September 30, 1964, incorporated within the Nazira Town Committee area a part of the area of the tea garden belonging to the Company. The Company then filed a petition in the High Court of Assam challenging the validity of the notification. The High Court was of the view that the Company had provided all amenities and facilities which a municipality may provide, and since it did not appear that any "improved arrangements" could be provided by the Town Committee the notification issued by the Government was "colourable legislation" and was liable to be struck down insofar as it related to the area of the tea estate belonging to the Company. We have considered in appeal No. 2052 of 1969 State of Assam vs The Amalgamated Tea Estates Co. Ltd. & Ors.the, correctness of this decision and we have rejected it. But Mr. Chagla appearing on behalf of the Company contended that the notification dated January 6, 1964 signifying the intention of the State Government to include the area belonging to the Company with in the Nazira Town Committee and the final notification dated September 30, 1964, were unauthorised, because the provisions of sections 4 and 5 of the Assam Municipal Act 15 of 1957 were not extended to the Nazira Town Committee by notification issued under sub section (3) of section 336 of the Assam Municipal Act. Counsel invited our attention to section 2 of the Assam Municipal Act, 15 of 1957 as originally enacted. By section 2 of that Act the Assam Municipal Act, 1923 was repealed; and by cl. (b) of the proviso to that section it was provided " all municipalities constituted, limits defined. regulations and divisions made, licenses an notices issued, taxes, tolls, rates and fees imposed or assessed, budgets passed, assessments made, plans approved, permissions or sanctions granted, under the Assam Municipal Act, 1923, shall so far as they are in force at the commencement of this Act, be deemed to have been respectively constituted, defined, issued, imposed, assessed, passed, made, approved or granted under this Act, and shall 934 remain in force for the period, if any, for which they were so constituted, defined, issued, imposed, assessed, passed, made, approved or granted. " Counsel said that under the proviso, notifications issued under the: Act of 1923 were not saved and it was for the first time by the Amending Act of 1958 that the notifications issued under the Act of 1923 were sought to be saved, notwithstanding the repeal of the Assam Municipal Act of 1923. But no retrospective operation was given to the Amending Act of 1958. Counsel submitted that this attempt on the part of the Legislature to save notifications issued under the Act of 1923 was ineffective. It is true that for the existing cl. (b) of the proviso to section 2 by the new clause substituted "all municipalities constituted, limits defined, regulations and divisions made, all rules and bye laws, notifications, orders, appointments and assessments made, licences and notices issued, taxes, tolls, rates and fees imposed or assessed, budgets passed, plans approved, permissions or sanctions granted, contracts entered into, suits instituted and proceedings taken under the Assam Municipal Act, 1923" are saved from the repeal. But the Amending Act of 1958 came into force on June 13, 1958, when it was published in the Assam Gazette. The attempt to save notifications issued under the Act of 1923 by the Assam Municipal (Amendment) Act 17 of 1958 is therefore ineffective. It is unnecessary to consider whether, as suggested by counsel for the State of Assam, by virtue of section 3 3 6 (3 ) once a notification under section 4 of the Act of 1923 was issued, for all purposes a Town Committee became a municipality and on that account the notification continued to remain in operation. In our judgment, under the provisions of the Assam General Clauses Act, 1915, section 26 saves the notification in question. Section 26 provides, inter alia : "Where any enactment is repealed and re enacted with or without modification, then, unless it is otherwise expressly provided, any appointment, notification, order, scheme, rule, form, or by law, made or issued under the repealed enactment, shall so far as it is not inconsistent with the provisions re enacted, continue in force and be deemed to have been made or issued under the provisions so reenacted. . There is no express provision in the Act 15 of 1957 which supersedes the notification issued in 1995 under the Act of 1923, nor is the continuance of the notification inconsistent with any provision in the new Act. The notification must, therefore, be deemed to have remained in force and the State Government was competent in exercise of the power conferred upon it by section 4 of Act 15 of 1957 935 to include within the area of Town Committee any local area contiguous to the same. We are here dealing only with the validity of the notification issued by the State Government, and not with the validity of the, demand for licence fee or other taxes levied by the notified Town Committee. Nothing in this judgment will affect the right of the Company to challenge the validity of the demand for such taxes in appropriate proceedings. The appeal is allowed and the order passed by the High Court is set aside. The petition is dismissed with costs throughout. In all these three appeals there will be one hearing fee.

Under ss.4 and 5 of the Assam Municipal Act, 1923, the Provincial Government was authorised to signify its intention to include within a municipality any local area in its vicinity, and, after considering. any objections to the proposed action to so include the area. Section 328 provided for the constitution of notified areas. Sections 4 and 5 were not applicable to a notified area but the Provincial Government could extend to any notified area any section of the Act by virtue of section 330(1)(d). Under section 330(3), for the purpose of any section so extended, the town committee constituted for such notified area would be deemed to be a Municipal Board. In 1957, the 1923 Act was repealed and was replaced by the Assam Municipal Act, 1957. The respondent owned tea gardens in the village of Nazira. In 1909, a town committee was constituted at Nazira adjacent to the tea garden. In 1951, by a notification issued by the Government of Assam, s.4(1)(b) and (c), and s.5(1) and (2)(b) of the 1923 Act were extended to the notified area committee including the Nazira Town Committee. On January 6, 1964, a notification was issued under the 1957Act to revise the boundaries of the notified area at Nazira, and after considering the objections of the respondent on September 30, 1964, by a final notification, a part of its tea estate was incorporated within the Nazira Town Committee. On the question whether notifications dated January 6, 1964 and September 30, 1964 were unauthorised, because, sections 4 and 5 of 1957 Act, corresponding to sections 4 and 5 of the 1923 Act, were not extended to the notified area on these dates, HELD : There is no express provision in the 1957 Act which supersedes the notification issued in 1951 under the 1923 Act nor is the continuance of the notification inconsistent with any provision in the 1957 Act. Therefore, under section 26 of the Assam General Clauses Art, 1915, the 1951 notification continues in force and must be deemed to have been issued under the 1957 Act. Hence, the State Government was competent, in exercise of the power conferred upon it by the 1957 Act, to include within the area of the Town Committee any local area contiguous to it. [934 H; 935 A]

Appeal No. 582 of 1961. Appeal from the judgment and decree dated August 25, 1959 of the Bombay High Court in Appeal No. 774 of 1956. section G. Patwardhan, section B. Tarkunde, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. A.Y. Vishwanatha Sastri, M. R. Kotwal and Naunit Lal, for the intervener. May 5, 1964. The Judgment of the Court was delivered by DAS GUPTA J. This appeal is by the defendant, the Municipal Corporation for the City of Poona, in a suit for recovery of money. The Poona Municipality was formerly a Municipality under the Bombay District Municipal Act of 1901 (Act 3 of 1901). In 1925 it became a Municipal Borough under the Bombay Municipal Boroughs Act of 1925 (Act XVIII of 1925). Later, under the Bombay provincial Municipal Corporation Act, 1949, Municipal Authority for the City of Poona became a Corporation known by the name of Municipal Corporation for the City of Poona. It appears that from the time when the City was a Municipality under Act 3 of 1901, an octroi duty was being levied on goods imported within the Municipal limits of the City. When such goods were exported out of the city municipal limits within specified periods, refund used to be given in respect of the duty so recovered. The respondent has for many years been carrying on business of securing refund of octroi duty on behalf of persons who had paid the duty and were entitled to refund. In respect of the period from the 15th February, 1950 to the 14th September, 1950, the respondent made a claim on behalf of his principals, for the refund of Rs. 73,650/ to 181 which, according, to him, they were entitled. The Munici pality however paid to him only 90 per cent of this amount. The remaining 10 per cent was deducted in accordance with Rule 18(3) of the Octroi Rules which had been framed by the Municipal Authorities. The respondent then represented to the Corporation that with effect from the 15th February, 1950, the date from which the Corporation came into existence under the Provincial Municipal Corporation Act, 1949, this deduction of 10 per cent had become invalid in law and claimed that this amount should be paid to him. The Corporation however refused to concede this claim. The respondent then brought this suit for recovery of Rs. 7,364/15/ (being 10 per cent of Rs. 73,650/ the amount alleged to have been illegally withheld) with interest. The main defence raised by the Corporation to the Plaintiff 's claim was that the deduction of 10 per cent was legally valid. It was further urged that, in any case, the plaintiff who was not the person who paid the amount, was not entitled to bring the suit. Lastly, it was contended that the suit was barred by limitation. The trial Court held that the plaintiff was entitled to bring the suit and also that it was not barred by limitation. It held however that the deduction of 10 per cent from what was paid as tax was valid. Accordingly, it dismissed the suit. On appeal by the plaintiff, the District Court, Poona, held, disagreeing with the trial Court, that the deduction of 10 per cent of what had been realised was not valid in law. It was however of opinion that the plaintiff was not entitled to bring such a suit. It was also of opinion that the suit was barred by limitation. In this view, it dismissed the appeal. The plaintiff then appealed to the High Court of Judicature at Bombay. The High Court has found in favour of the plaintiff on all the three points raised. It held that the deduction of 10 per cent was invalid in law, that the plaintiff was entitled to sue, and that the suit was not barred 182 by limitation. Accordingly, the High Court allowed the appeal, and made a decree in favour of the Plaintiff for Rs. 7,364/15/ with interest thereon at 4 per cent from the date of the suit and interest at the same rate from the date of the judgment, with costs throughout. The appellant Corporation challenges the correctness of the High Court 's decision on all the three points. The principal question for decision in this appeal is whether the deduction of 10 per cent as provided for in Rule 18(3) is invalid at least from the 15th February, 1950. The Rule runs thus: "A deduction of ten per cent shall in all cases be made before refunding the amount of octroi duty on exportation of goods either in transit as per rule 13 or otherwise under rule II (2). " It is necessary to mention here that the legality of such a deduction prior to February 15, 1950 is not in controversy before us. We shall proceed on the basis that this provision in Rule18(3) was valid in law prior to the 15th February, 1950. The question is whether even though valid then, it has ceased to be valid in law. To find the correct answer to this question it is necessary to be clear first as to the legal basis on which this levy by way of deduction was being made prior to 15th February, 1950. It appears from exhibit D 72, the copy of the Government resolution dated the 6th March, 1922, that the Poona Municipality started this practice of levying this 10 per cent deduction from February 1921. The question of its legality appears to have been raised quite early. The Legal Remembrancer to the Government of Bombay expressed his view on this question in these words: "The special powers conferred in the last sentence of clause (f) of section 48(1) of the Bombay District Municipal Act seems to negative the power of the Municipality (of Shirpur) to make any deduction from the refunds by means 183 of rules regulating the system, for making refunds referred to in the earlier part of the clause. The charge on refunds appears, how ever, to be a kind of tax which may be imposed under section 59(b) (xi) of the Act. " On this, the Councillors of, the Municipality passed a resolution that a 10 percent tax should be levied on all octroi refund, under section 59 (b) (xi). This proposal was submitted to the Government of Bombay for sanction and was duly approved. It may be mentioned here that section 59 (b) (xi) of Act 3 of 1901 which deals with the question of a Municipality 's powers to impose taxes sets out in the cls. (i) to (x) various taxes which the Municipalities can impose and then mentions in cl. (xi) the words "any other tax". The Government appears to have accepted the view of the Legal Remembrancer that the levy by way of deduction of 10 per cent from; the amount to be refunded should be authorised as a tax on octroi refund,, this being " any other tax" within the meaning of section 59(b)(Xi). It is no longer open to dispute that after Government 's sanction was received, the Municipality could under the old. Act legally levy such tax. It is also not disputed that the deductions that continued to be made under Rule 18(3) were all along made under this authority, as a tax levied under section 59(b) (xi) of the Bombay District Municipal Act, 1901. The levy of the tax continued even after Act 3 of 1901 ' ceased to be applicable to Poona and it became a Municipal Borough under the Bombay Municipal: Boroughs Act, 1925. The validity of such: continuation does not also appear to have been challenged The Bombay Provincial Municipal Corporation Act 1949 was applied to Poona on the 15th February, 1950 From that date therefore the powers of taxation of the municipality, became governed by section 127 of the Act. This section first authorises a Corporation under the Act to impose, (a) property taxes; (b). a tax on vehicles, boats and animals. It then mentions in the second sub section certain other taxes which the Corporation may impose: In cls. (a) to (f) (a) is octroi, (b) a profession tax, (c) a tax on dogs, (d) a theatre tax, (e) a toll on animals and vehicles and (f) mentions "any other 184 tax which the State Legislature has power under the Constitution to impose in the State". Sub section (4) provides: "Nothing in this section shall authorise the imposition of any tax which the State Legislature has no power to impose in the State under the Constitution. " A tax on octroi refund is not thus one of the taxes which the Bombay Municipal Corporation could impose ' It is not one of the specified taxes. Nor is it a tax which the State Legislature has power under the Constitution to impose in the State. Apart from this absence of power to impose such a tax, which is clear from the earlier parts of section 127, we have the categorical prohibition in, sub section 4 against the imposition of any such tax by the Corporation. Mr. Patwardhan next tried to persuade us that even if this levy could not be made under the new Act as a tax, it could be made as a fee. In support of his argument he drew our attention to section 147 and section 466 of the new Act. The first sub section of section 466 provides that the Commissioner of the Corporation may make standing orders consistent with the provisions of the Act and the rules and bye laws in respect of the matters specified. One of the matters specified is "determining the supervision under which, the routes by which and the time within which the goods intended for immediate exportation shall be conveyed out of the City and the fees payable by persons so conveying the goods." [section 466 (1)A(f)]. Section 147 dealing with a controversy, that may arise, whether the importation of some goods into the City has been for the purpose of consumption, use or sale therein, says: "Until the contrary is ,proved any goods imported into the City shall be presumed to have been imported for the purpose of consumption, use or sale therein, unless such goods are conveyed from the place of import to the place of export by such routes, within such time, under such supervision and on payment of such fees therefor as shall be, determined by the standing orders. " It is obvious that reference to fees in this section is to such fees as may be prescribed by standing orders under 185 the provisions of section 466(1)A(f). It is unnecessary for us to decide for the purpose of the present appeal, whether the I provision of section 466 for determination of fess payable by persons conveying goods imported into the City is valid in law or not. Assuming, without deciding, that such a levy can be validly made by way of fees under section 466, what we find is that in fact there has been no standing order prescribing any fees. It may be mentioned in this connec tion that sub section 2 of section 466 lays down that no order made by the Commissioner under cl. A of sub section (1) shall be valid unless it is approved by the Standing Com mittee and confirmed by the State Government. It is not the case of the appellant Corporation that any Standing Order was made at all under section 466 prescribing any fees. It is not possible therefore to justify the deductions that were made in the present case as a levy of fee. The appellant relied next on cl. 5(a) of Appendix IV to the Act read with section 493. Section 493 provides that provisions of Appendix IV shall apply to constitution of the Corporation and other matters specified therein. Appendix IV is headed "Transitory Provisions" and is plainly intended to deal with the position that arose as a result of the repeal of the old Act. (section 490). The relevant portion of cl. 5 (a) is in these words: "Save as expressly provided by the provisions of this Appendix or by a notification issued under paragraph 22 or order made under paragraph 23, (a) any appointment, notification, notice, tax, order, scheme, licence, permission, rule, bye law, or form made, issued, imposed or granted under the Bombay District Municipal Act, 1901 or the Bombay Municipal Boroughs Act, 1925 or any other law in force in any local area constituted to be a City immediately before the appointed day shall, in so far as it is not inconsistent with the provisions of this Act, continue in force until it is superseded by 186 any appointment, notification, notice tax, order, scheme, licence, permission, rule, bye law, or form made, issued, imposed or granted, under this Act or any other law as aforesaid as the case may be;" Mr. Patwardhan readily conceded that the 10 per cent deduction, as a tax on octroi refund could not get the pro tection of el. 5(a) for the simple reason that such taxation is on the face of it inconsistent with section 127(4) of the Act. He asked us, however, to regard this levy as a fee, and on that basis, argued that this should continue in force under cl. (a) of section 5 of Appendix IV since the levy of such a fee is consistent with the provisions of section 466 of the Act. If in fact a fee was being realised ' under the old Act, it may be that levy of such fees could continue in force until superseded by any order under the new Act as coming under an order issued "under the District Municipal Act, 1901, or the Bombay Municipal Boroughs Act, 1925". In fact, however, this was not levied as a fee, but was levied as a tax. The tax did not become a fee merely because the new Act (Act LIX of 1949) prohibited the imposition of such a tax. We are clearly of opinion therefor that cl. 5(a) of Appendix IV furnishes no justification for the levy of the ten per cent deduction ' after the 15th February, 1950 when the Act LIX of 1949 with its categorical prohibition in section 127(4) against the imposition by the Corporation of a tax which the State legislature had no power to impose under the Constitution became applicable. The defence that the deduction of 1 0 per cent of the amount collected as octroi was legally valid has thus been rightly rejected by, the High Court. We also agree with the High Court 's conclusion ' that the plaintiff was entitled to bring the present suit. The Poona City Municipality 's Octroi Rules and Bye laws under which the claim, for refund can be made define "a claimant" as a per son "Who produces the duly receipted import bill and the corresponding, export certificates," [Rule 2, cl. It is not disputed that for the several cases in respect of which this deduction of ten per cent had 'been made, by the Corporation the plaintiff was the person 187 who produced "the duly receipted import bill and the corresponding export certificate." Indeed, it is on that basis that 90 per cent of the amount paid by different exporters was refunded by the Corporation to the claimant. It is difficult to understand how if the plaintiff was entitled ' to claim and obtain refund 'in respect of 90 per cent of the amount paid, he was not entitled to make the claim with respect to the remaining 10 per cent. It may be pointed out that as the receipted import bill and the corresponding export certificates in respect of the goods in question have already been made over by the plaintiff to the defendant Corporation, it will not be possible for the merchants who actually imported the goods and then exported them, to make any fresh claim. For, no claim would be accepted without the receipted import bill and the corresponding export certificates. Mr. Patwardhan faintly argued that the definition of a claimant in the Rules is only in respect of 90 per cent of the octroi refund. There is obviously no substance: in this argument. Rule 1 1 deals with the procedure of claims to refund and requires that claimant should produce a duly receipted import bill and an export certificate relating to such goods. [Rule II (2) (iv)]. These provisions are entirely independent of Rule 18(3) which lays down that a deduction of ten per cent shall in all cases be made before refunding the amount of octroi duty in certain circumstances. It is, in our opinion, clear that the plaintiff having made the claim in accordance with the rules was the person entitled to receive what amount was legally refundable. As we have found that the deduction of ten per cent could not legally be made, in other words, the entire amount paid was refundable, it follows that the plaintiff was the person entitled to obtain the refund and so he was also entitled to bring the suit. There remains for consideration the appellant 's plea of limitation. For this plea, the appellant relies on section 487 of Act LIX of 1949. The material part of the section runs thus: (1) No suit shall be instituted against the Corporation or against the Commissioner, or the 188 Transport Manager, or against any municipal officer or servant in respect of any act done or purported to be done in pursuance or execu tion or intended execution of this Act or in respect of any alleged neglect or default in the execution of this Act: (a) until the expiration of one month next after notice in writing has been, in the case of the Corporation, left at the chief municipal office and, in the case of the Commissioner or of the Transport Manager or of a municipal officer or servant delivered to him or left at his office or place of abode, stating with reasonable particularity the cause of action and the name and place of abode of the intending plaintiff and of his attorney, advocate, pleader or agent, if any, for the purpose of such suit, or (b) unless it is commenced within six months next after the accrual of the cause of action. " The benefit of this section would be available to the Corporation only if it was held that this deduction of ten per cent was "an act done or purported to be done in pursu ance or execution or intended execution of this Act. " We have already held that this levy was not in pursuance or execution of the Act. It is equally clear that in view of the provisions of section 127(4) (to which we have already referred) the levy could not be said to be "purported to be done in pursuance or execution or intended execution of the Act. " For, what is plainly prohibited by the Act cannot be claimed to be purported to be done in pursuance or intended execution of the Act. Our conclusion is that the High Court has rightly held that the suit was not barred by limitation. All the points raised in the appeal fail. The appeal is accordingly dismissed. Anneal dismissed.

The respondent, who had been carrying on the business of securing refund of octroi duty on behalf of persons who had paid duty and were entitled to refund, claimed the refund of money paid as octroi duty by his principals in respect of the period commencing from February 15, 1950, the date from which the appellant became a Municipal Corporation under the Provincial Municipal Corporation Act, 1949. After deducting ten percent of the amount in accordance with r. 18(3) of the Octroi Rules, framed by the Municipal Authorities, the ap pellant Corporation paid the balance to the respondent. The representation of the respondent that from the date from which the Corporation had come into existence, the deduction had become invalid in law. was turned down by the appellant. Thereupon the respondent filed a suit for recovery of the balance with interest. The defence was that the deduction was valid; that in any case, the respondent who was not the person who paid the amount, was not entitled to bring the suit, and that the suit was barred by limitation. The trial court held the respondent was entitled to bring the suit and also that it was not barred by limitation but the deduction was valid and it dismissed the suit. On appeal, the District Court disagreeing with the trial court, held that the deduction was not valid in law, but the plaintiff was not entitled to bring such a suit and that the suit was barred by limitation and it dismissed the appeal. On a further appeal the High Court found in favour of the respondent on all the three points and allowed the appeal. HELD: (i) A tax on octroi refund is not one of the taxes which the Bombay Municipal Corporation could impose. Apart from the absence of power to impose such a tax, which is clear from the earlier parts of section 127 of the Bombay Act of 1949 there is the categorical prohibition in sub section (4) against the imposition of any such tax by the Cor poration. (ii) Assuming, without deciding, that such a levy can be validly made by way of fees under section 466, since no standing order was made under section 466 prescribing any fee, it is not possible to justify the deductions as _ levy of fee. (iii)The tax did not become a fee merely because the new Act (Bom. Act 59 of 1949), prohibited the imposition of such a tax. (iv)Cl. 5(a) of Appendix IV furnishes no justification for the levy often percent deduction after February 15, 1950 when the Act 59 of 1949with its categorical prohibition in section 127(4) against the imposi tion by the Corporation of a tax which the State Legislature had no power to impose under the Constitution became applicable. (v)The respondent having made the claim in accordance with the rules was the person entitled to receive what amount was legally refundable, and so he was also entitled to bring the suit. / 180 (vi)The suit was not barred by limitation. The benefit of section 487 of Act 59 of 1949 would be available to the Corporation only if it was held that this deduction was "an act done or purported to be done in pursuance or execution or intended execution of the Act."

Appeal No. 457 of 1970. Appeals by special leave from the judgment and order dated April 24, 1968 of the Allahabad High Court in Civil Misc. Writ No). 1401 of 1968. J. P. Goyal and V. C. Prashar, for the appellant. C. B. Agarwala and O. P. Rana, for the respondent. The Judgment of the Court was delivered by Shah, J. The appellants held a licence under the U.P. Sugar Dealers ' Licensing Order, 1962, to deal in sugar as "wholesale distributors" they also held a licence under the U.P. Food grains Dealers ' Licensing Order, 1964. By letter dated June 5, 1967 the appellants were called upon to explain certain irregularities detected on inspection of their shop by the Assistant Commissioner of Food and Civil Supplies on April 24, 1967. On the following day the appellants were directed to hand over all their stocks of sugar and flour to the Bindki Co operative Marketing Society. Representations against the order directing the appellants to deliver their stocks made to the District Magistrate, Fatehpur, were not even attended to, and the appellants were obliged to surrender their stocks of sugar and flour. By letter dated June 28, 1967, the appellants were informed that the District Magistrate, Fathpur, had cancelled their licences as dealers in sugar and flour. The appellants applied for a copy of the order, but it was not supplied. Against the order of the District Magistrate, the appellants submitted an appeal under cl. 8 of the Sugar Dealers ' Licensing Order, 1962, on July 19, 1967. By letter dated January 11, 203 1969, the Deputy Secretary to the Government of U.P., Food and Rationing Department, intimated the appellants that their appeal against the cancellation of the licence by the District Magistrate was rejected. The reasons for the order passed by the State Government were also not communicated to the appellants. The appellants then moved a petition in the High Court of Allahabad for a writ quashing the orders of the District Magistrate and the State Government in appeal. The petition was rejected by a Division Bench of the High Court. With special leave, the appellants have appealed to this Court. The proceedings of the authorities exercising power under the Sugar Dealers ' Licensing Order, 1962, and the Foodgrain Dealers ' Licensing Order,, 1964, strike at the very root of the rule of law. The appellants have by a series of official acts which flout the rule of law deprived of even the semblance of protection they may claim in an administration functioning under a democratic Constitution. A day after the date on which the appellants were called upon to submit their explanation regarding the irregularities alleged to be discovered at the inspection,, they were ordered to part with the stocks of sugar and flour in their possession. Objections raised by the appellants before the District Magistrate were never attended to. No attempt is made to disclose the source of the power and the necessity to exercise that power. By the action of the authorities, the appellants were deprived of their right to carry on business in sugar and flour without even an opportunity to explain the alleged irregularities. Their protests addressed to the District Magistrate were ignored; the District Magistrate cancelled their licences without disclosing any reasons, and the State Government rejected the statutory appeal also without recording any reasons. This series of actions and orders passed by the executive authorities require something more than a plea of ignorance of law on the part of the authorities to explain. The appellants were entitled at least to be told the reasons for cancelling their licences. The District Magistrate intimated the cancellation of the licences by an official communication, giving no reasons, and the result of the appeal to the State Government was communicated by a letter from the Deputy Secretary to the Government of U.P., without disclosing even the identity of the officer who considered the objections and the, reasons for rejecting the objections. The case discloses a disturbing state of affiairs. The authorities have disclosed by their conduct a reckless disregard of the rights of the appellants. The order passed by the District Magistrate cancelling the licences was a quasi judicial : it could be made only on a consideration of the charges and the explanation 204 given by the appellants. That necessarily implied that the District Magistrate had to give some reasons why he held the charges proved, and the explanation unacceptable. When the matter was carried in appeal, the State Government could at least have acted with some awareness that citizens have rights which must be protected against possible arbitrary action by subordinate officials. The District Magistrate is not made the final authority in cancelling the licence. The appellants had a right to carry on their business, and they held a licence to carry on their business they could be deprived of their right by an executive order supported by good and adequate reasons. The relevant rules granted a right of appeal to the State. Government against that order, and that implied that the aggrieved party must have an Opportunity to convince the State Government that the order passed by the District Magistrate was erroneous. That right could be effectively exercised if reasons be recorded by the District Magistrate and supplied to the aggrieved party. If the aggrieved party is not supplied the reasons, the right to appeal is an empty formality. From the materials on the record it cannot be determined as to who considered the appeal addressed to the State Government, and what was considered by the authority exercising power on behalf of the State Government. The practice of the executive authority dismissing statutory appeals against orders which prima facie seriously prejudice the rights of the aggrieved party without giving reasons is a negation of the rule of law. This Court had occasion to protest against this practice in several decisions : see Madhya Pradesh Industries Ltd. vs Union of India & Others(1) (per Subba Rao, J.,); Bhagat Raja vs Union of India and Ors(2); State of Madhya Pradesh and Anr. vs Seth Narsinghdas Jankidas Mehta(2). The State of Gujarat vs Patel Raghav Natha and Ors.(4); and Prag Das Umar Vaishya vs The Union of India and Ors.(5). The power of the District Magistrate was quasi judicial : exercise of the power of the State Government was subject to the supervisory power of the High Court under article 227 of the Constitution and of the appellate power of this Court under article 136 of the Constitution. The High Court and this Court would be placed under a great disadvantage if no reasons are given, and the appeal is dismissed without recording and communicating any reasons. Opportunity to a party interested in the dispute to present his case on questions of law as well as fact, ascertainment of facts (1) ; (2) ; (3) C.A. No. 621 of 1966 decided on April 29, 1969. (4) C.A. No. 723 of 1966 decided on April 21, 1969. (5) C.A. No. 657 of 1965 decided on Aug. 17, 1967. 205 from materials before the Tribunal after disclosing the materials to the party against whom it is intended to use them, and adjudication by a reasoned judgment upon a finding of the facts in controversy and application of the law to the facts found, are attributes of even a quasi judicial determination. It must appear not merely that the authority entrusted with quasi judicial authority has reached a conclusion on the problem before him : it must appear that he has reached a conclusion which is according to law and just, and for ensuring that end he must record the ultimate mental process leading from the dispute to its solution. Satisfactory decision of a disputed claim may be reached only if it be, supported by the most cogent reasons that appeal to the authority. Recording of reasons in support of a decision on a disputed claim by a quasi judicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim. If the order is subject to appeal, the necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it may deter mine whether the facts were properly ascertained, the relevant law was correctly applied and the decision was just. The High Court in rejecting the petition filed by the appellants has observed that the District Magistrate in considering the explanation of the appellants has "considered all the materials" and also that "the State Government in considering the appeal had considered all the materials". We have, however, nothing on the record to show what materials, if any, were considered by the District Magistrate and the State Government. The High Court has also observed that cl. 7 of the Sugar Dealers ' Licensing Order does not require "the State Government to pass a reasoned order. All that is required is to give an aggrieved person an opportunity of being heard. " We are of the view that the High Court erred in so holding. The appellants has a right not only to have an opportunity to make a representation, but they are entitled to have their representation considered by an authority unconcerned with the dispute and to be given information which would show the decision was reached on the merits and not on; considerations of policy or expediency. This is a clear implication of the nature of the jurisdiction exercised by the appellate authority : it is not required to be expressly mentioned in the statute. There is nothing on the record which shows that the representations made by the appellants was even considered. The fact that cl. 7 of the Sugar Dealers ' Licensing Order to which the High Court has referred does not "require the State Government to pass a reasoned order" is wholly irrelevant. The nature of 206 the proceeding requires that State Government must give adequate reasons which disclose that an attempt was made to reach a conclusion according to law and just. Counsel appearing on behalf of the State has not attempted to support the reasons given by the High Court. He merely contended that there are in the files of the Government, orders passed by the District Magistrate and also of the State Government which gave reasons in support of the orders. The orders have, however, not been communicated to the appellants, and were not even produced before the High Court. Obviously we cannot consider those orders, if any, at this stage. The orders passed by the District Magistrate and the State Government cancelling the licences of the appellants are quashed. The State will pay the costs of the appellants in this Court and in the High Court. R.K.P.S. Appeal allowed and Orders quashed.

The appellants, who were holders of a licence under the U.P. Sugar Dealers ' Licensing Order, 1962, to deal in sugar and were also licenced to deal in flour, were called upon by a letter dated June 5,1967 to explain certain irregularities detected on inspection of their shop. The next day they were directed to hand over their stocks of sugar and flour to a Cooperative Marketing Society. Their representations against this direction to the District Magistrate were not attended to, and they were therefore obliged to surrender their stocks. By a letter dated June 28, 1967, the appellants were informed that the District Magistrate had cancelled their licences as dealers in sugar and flour but no reasons were given for this order. An appeal under clause 8 of the Order of 1962 to the State Government was rejected but no reasons were communicated to the appellants for this rejection. A writ petition challenging the orders of the District Magistrate and the State Government in appeal was dismissed by the High Court. On appeal to this Court, HELD : The orders passed by the District Magistrate and the State Government cancelling the licences of the appellants must be quashed. The authorities had disclosed by their conduct a reckless disregard of the rights of the appellants. The order passed by the District Magistrate cancelling the licences was quasi judicial; it could be made only on a consideration of the charges and the explanation given by the appellants. That necessarily implied that the District Magistrate had to give some reasons why he held the charges proved, and the explanation unacceptable. The appellants had a right to carry on their business and they could be deprived of their right only by an order supported by good and adequate reasons ' Under the rules appellant had a right of appeal to the State Government. Unless reasons were given in the District Magistrate 's Order the aggrieved party had no opportunity to convince the State Government that the order was erroneous. , if the aggrieved party was not supplied the reasons the right of appeal was an empty formality. [203 H 204 D] There was nothing on the record to show that the representations made by the appellants to the State Government were even considered. The fact that cl. 7 of the Sugar Dealers ' Licensing Order to which the High Court had referred does not "require the State Government to pass a reasoned order" is wholly irrelevant. The nature of the proceeding requires that the State Government must give adequate reasons which disclose that an attempt was made to reach a conclusion, which was according to law and just. [205 H] Opportunity to a party interested in the dispute to present his case on questions of law as well as fact, ascertainment of facts from materials L 11 Sup. C 1 14 20 2 before the Tribunal after disclosing the materials to the party against whom it is intended to use them, and adjudication by a reasoned judgment upon a finding of the facts found, are attributes of even a quasi judicial deter mination. It must appear not merely that the authority entrusted with quasi judicial authority has reached a conclusion on the problem before him: it must appear that he has reached a conclusion which is according to law and just, and for ensuring that he must record the ultimate mental process leading from the dispute to its solution. [204 H] Madhya Pradesh Industries Ltd. vs Union of India & Others (per Subba Rao, J.) ; ; Bhagat Raja vs Union of India and Ors. ; ; State of Madhya Pradesh and Anr. vs Seth Narsinghdas Jankidas Mehta, C.A. No. 621 of 1966 decided on April 29, 1969. The Slate of Gujrat vs Patel Raghav Natha and Ors., C.A. No. 723 of 1966 decided on April 21,1969 and Prag Das Umar Vaishya vs The Union of India and Ors., C.A. No. 657 of 1965 decided on Aug. 17, 1967; referred to.

ivil Appeal No. 269 of 1962. Appeal by special leave from the judgment and decree dated October 5, 1959 of the Bombay High Court in First Appeal No. 712 of 1955. 212 section G. Patwardhan and B.R.G.K. Achar, for the appellant. G. section Pathak and Naunit Lal, for the respondents. The Judgment of the Court was delivered by Gajendragadkar C. J. What is the scope and effect of the provisions contained in section 65 read with section 83 of the Bombay Tenancy and Agricultural Lands Act, 1948 (No. 67 of 1948) (hereinafter called the Act), that is the short question which arises for our decision in this appeal. The four respondents are the owner of certain agricultural lands in Deokhope in Taluka Palghar in Maharashtra. On the 23rd June, 1951, a notice was served by the appellant, State of Bombay (now Maharashtra), inviting the attention of the respondents to the fact that the agricultural lands of which they were the owners had remained fallow since 1948 49, and intimating to them that the appellant State would resume management of the said lands under section 65 of the Act unless the respondents took steps to bring them under cultivation in the following agricultural season. The respondents were told that in case they wanted to bring the said lands into cultivation, they should send intimation of their intention to do so within 15 days from the date of the receipt of the notice. It appears that later, an enquiry was made under the orders of the Dy. Collector as a result of which on the 30th December, 1951, he passed an order under section 65 directing that the lands should be resumed by the Government for cultivation. Thereafter, representations were made by the respondents to the Dy. Collector as a result of which about 8 acres and 30 ghunthas of land were released on the ground that the owners had taken steps to cultivate that portion of the lands in pursuance of the direction given to them by the earlier notice. The order passed 'by the Dy. Collector in respect of other lands remained unaffected. Thereafter, respondent No. 1 approached the Collector by his application dated 24th March, 1952. This application was, however, rejected. The respondents then moved the Revenue Department, but that effort also failed. That is why the present suit was filed by them on the 23rd December, 1953 for a declaration that the order passed by the Dy. Collector on the 30th December, 1951 was illegal and void, and that it could not dispossess them of the lands which belonged to them. As a consequence of the declaration thus claimed by them, the respondents, asked for a decree for possession and mesne profits against the appellant. The appellant disputed the respondents ' claim. It urged that the suit as framed was barred under section 63 (I ) and section 85 of 213 the Act. On the merits, the appellant challenged the correctness of the allegations made by the respondents. It was averred by the appellant that the requisite enquiry had been duly and properly made and the impunged order was passed in accordance with the relevant provisions of the Act. According to the appellant, civil court has no jurisdiction to consider the propriety or reasonableness of the conclusion reached by the Dy. Collector before he passed the impunged order. The learned trial Judge who framed appropriate issues on these pleadings, in the main upheld the contentions raised by the appellant. In his opinion, the present suit was barred by sections 65 (1) and 85 of the Act. He also held that the declaration made by the Dy. Collector was not null and void. The plea raised by the respondents against the validity of the statutory provisions contained in sections 65 & 66 of the Act was rejected by him, because he thought that the said sections did not contravene the provisions of Articles 19 and 31 of the Constitution. The learned Judge also found that the grievance made by the respondents against the propriety or reasonableness of the enquiry made prior to the passing of the impunged order was not justified. In the result, the respondent 's suit was dismissed. The respondents then carried the matter before the High Court by an appeal, and on their behalf three contentions were raised before the High Court. It was first argued that the lands in respect of which the impunged declaration was made were not lands as defined by the Act, and so, the relevant provisions of the Act were inapplicable. It was then urged that before the Government could exercise its powers under section 65 of the Act, a duty was cast on it to be satisfied that the lands had remained uncultivated for a period of two years before their management was assumed; and this condition had not been satisfied, because delegation by the State Government to subordinate officers of its duty to satisfy itself, or its power to make the declaration, was not justified in law. It was also contended that since the satisfaction had to be by the authority who was competent to make the declaration, he could not delegate any part of his function and duty in that behalf and the said authority had to hold the enquiry himself. The High Court has upheld the second of these contentions. It has found that on a fair and reasonable construction of section 65(1) read with section 83, the appellant could delegate its powers prescribed by section 65(1), but could not delegate its duty incidental to the exercise of the said power. That is why the decree passed 214 by the trial Court has been reversed on this ground and the respondents ' suit 'has been decreed. Consistently with this decision, an appropriate order has been passed in regard to the delivery of possession and the payment of mesne profits as claimed by the respondents. It is against this decree that the appellant has come to this Court by special leave; and the only point which is raised on its behalf by Mr. Patwardhan is that the view taken by the High Court in regard to the scope and effect of the provisions contained in section 65(1) read with section 83 is not well founded. Section 65(l) reads thus "If it appears to the State Government that for any two consecutive years, any land has remained uncultivated or the full and efficient use of the land has not been made for the purpose of agriculture, through the default of the holder or any other cause whatsoever not beyond his control the State Government may, after making such enquiry as it thinks fit, declare that the management of such land shall be assumed. The declaration so made shall be conclusive. " Along with this section, it is necessary to refer to section 83 which reads thus: "The State subject to such restrictions and conditions as it may impose, by notification in the Official Gazette, delegate to any of its officers not below the rank of an Assistant or Deputy Collector, all or any of the powers conferred on it by this Act." The High Court appears to have taken the view that though it was competent to the State Government to delegate its powers under section 65(l), it could not delegate its duty or obligation to make an enquiry as a result of which the declaration in question can be made. The State Government, says the High Court, can exercise its authority to make a declaration and this authority or power can be delegated under 9. 83; but before such authority or power can be exercised, there is an obligation imposed on the State Government to make an enquiry as to whether the agricultural land in question has remained uncultivated or fallow for the period prescribed by the statute, and the obligation or duty to hold such an enquiry which is distinct and separate from the power or authority to make a declaration consequent upon the enquiry, cannot be 215 delegated under section 83. It is common ground that the enquiry was not made by the State Government and if the view taken by the High Court is right that the obligation or duty to hold the enquiry cannot be delegated, then the impugned declaration would be open to attack because it had not been preceded by a proper enquiry. Mr. Patwardhan contends that the view taken by the High Court is plainly erroneous and we are satisfied that this contention is well founded. Section 83 in terms authorises delegation by the State Government to any of its officers of the specified status and the delegation can be in respect of all or any of the powers conferred on the State Government by the provisions of the Act. Now, it seems to us that the authority to delegate all or any of the powers which is expressly conferred on the State Government by section 83 would be rendered almost meaningless if the duty to hold an enquiry as a condition precedent for the exercise of the said authority cannot be delegated. In the context, the power which can be delegated is inseparable from the enquiry which must precede the exercise of the power, and so, in order to make section 83 effective it is necessary to hold that the delegation of the power authorised by the said section must necessarily involve the delegation of the discharge of obligations or functions which are necessary for the exercise of the said power. If the view taken by the High Court is right it would mean that whereas the State Government can authorise any of the officers belonging to the specified class to exercise its powers under section 65(l), it must hold the preliminary enquiry itself without delegating the authority to ' hold such an enquiry to any officer. It is hardly necessary to emphasise that this position is so plainly illogical that it would be unreasonable to recognise the validity of the authority to confer powers while insisting that the conditions precedent for the exercise of the powers are of such a separate and distinct character that in order to satisfy the said conditions, the required enquiry must be held not by any delegate of the State Government but by the State Government itself. In coming to the conclusion that the duty, as distinct from the power, cannot be delegated, the High Court was apparently influenced by the fact that there would be no appeal against the enquiry and the conclusion reached at such an enquiry. We do not propose to express any opinion on this part of the reasoning adopted by the High Court; that will depend upon the construction of section 86 of the Act. But whatever may be the position in respect of the competence of an appeal, we are satisfied that on 216 a fair and reasonable construction of section 83 it must be held to authorise the delegation not only of the powers mentioned by it, but also of duties or functions which are incidental to the ,exercise of the powers and are integrally connected with them. In this connection, we may usefully refer to the decision of the Privy Council in Edward Liso Mungoni vs Attorney General of Northern Rhodesia(1). In that case, in dealing with a similar question under regulation 16(1) of the Emergency Powers Regulations, 1956 of Northern Rhodesia, made by the Acting Governor of Northern Rhodesia under his statutory powers, the Privy Council has held that the power and the duty under reg. 16(1) were so interwoven that it was not possible to split the one from the other so as to put the duty on one person and the power in another; the regulation contained not so much a duty, but rather a power coupled with a duty, and he who exercised the power bad to carry out the duty. In the result, the Privy Council took the view that in delegating his functions under reg. 16(41) the Governor could delegate both the power and duty together to ,one and the same person he could not delegate the power to another and keep the duty to himself. It is not difficult to realise what anomalous consequences would follow if it is held that the power can be delegated, but not the duty to hold the incidental enquiry which alone can lead to the exercise of the power. In substance, the view taken by the High Court would make the authority to delegate the power wholly meaningless. In fairness, we ought to add that Mr. Pathak who appeared for the respondents did not seek to support this part of the High Court 's decision. It appears that a result of the decision of the High Court in the present case, the Maharashtra Legislature thought it prudent to make the necessary amendment in section 83 of the Act. Section 29(a) of the Amending Act provides that for the words "powers conferred the words "Powers conferred or duties impose& ' shall be and shall be deemed to have been substituted ,on the 31st day of October, 1949; and accordingly, the delegation or the purported delegation by the State Government under section 83 of any duty imposed shall (notwithstanding the judgment, decree or order of any Court) be deemed always to have been valid, and the discharge of any such duty by any officer shall for all purposes be valid and effective and shall not be called in question in any Court on the ground only that the State Government had no power to delegate the duty; and clause (b) provide that (1) 217 to the marginal note the words "and duties" shall be added. It is not surprising that in view of the serious consequences which would have inevitably followed if the judgment under appeal had remained unchanged, the legislature thought it necessary to make a suitable amendment in order to avoid any interruption in the peaceful and smooth working of the,, relevant provisions of the Act. Realising the infirmity in the view taken by the High Court, Mr. Pathak attempted to support the decision of the High Court on another ground. He argued that since the enquiry was made by the Talathi and the Mamlatdar under section 65 and not by the Dy. Collector, the declaration made by the Dy. Collector was invalid. In other words, the argument is that the State Government may have validly delegated its powers under section 65(l) to the Dy. Collector, but the Dy. Collector who is a delegate of the State Government cannot, in turn, delegate a part of his power or authority to a subordinate of his own, and that is what he has done in the present case. This argument proceeds on the basis that in exercising his powers under section 65 ( 1 ), the Dy. Collector must himself hold the enquiry and cannot delegate the function of holding such an enquiry to any other subordinate revenue officer. There is no doubt that a delegate who has received the authority from the principal cannot, in turn, delegate his own authority to a delegate of his own, but there is hardly any question of delegation by a delegate in the present case. All that section 65(l) requires is that the State Government and therefore its delegate may after making such enquiry as it think,; fit, declare that the management of the land shall be resumed. In other words, in what form the enquiry should be held is a matter left entirely in the discretion of the State Government or its delegate. All that the Dy. Collector has done in the present case is to direct his subordinate officers to collect material relevant to the purpose of the enquiry. The Talathi went on the spot and ascertained as to whether the respondents ' lands were lying fallow for the requisite period. He submitted his report to the Mamlatdar. The Mamlatdar in turn made his report to the Dy. Collector. In other words, all that the Dy. Collector has done is to collect the relevant material, so that he can enquire into the question as to whether the lands are lying fallow or not. This procedure does not, in our opinion, involve the question of any delegation at all. The form of the enquiry and its mode are entirely in the discretion of the Dy. Collector. Section 65(l) does not require that the Dy. Collector must himself go to the agricultural fields and enquire on the spot whether they are lying fallow. He may, if 218 he so desires, record evidence himself, or the recording of the evidence and the actual inspection on the spot can be left to some subordinate officer. The report of such local inspection and the record of the evidence collected in that behalf would be forwarded to the Dy. Collector, and that would be the material on which he would hold the enquiry himself. The enquiry is thus hold by the Dy. Collector, though the mechanical work of collecting material has been entrusted to a subordinate revenue officer. In such a case, we do not see how the principle that a delegate cannot delegate comes into operation. In support of his argument, Mr. Pathak has relied on a decision of the Kings Bench Division in Allingham and anr. vs Minister of Agriculture and Fisheries(1). In that case, the Court held that on the principle of delegatus non potest delegare, the Committee exercising its powers under reg. 62(1) could not delegate its powers to determine the land to be cultivated to its officers and, therefore, the notice issued in that behalf was ineffective and noncompliance with it was not an offence. It, however, appears that the War Agricultural Committee for the County did appoint the Biggleswade district Committee as a sub committee to Act under the instructions of the executive committee and to make recommendations to the executive committee. Apparently, they made some recommendations to the executive officer and the executive officer accordingly made the order. On these facts, Lord Goddard, C.J., observed that he could find nothing in the regulations or the statute which enabled the executive officer to make the order. The appellants had contended before the Court that they were entitled to have the decision of the executive committee and no one else on the matter, and this contention was upheld on the facts of that case. We do not see how this case can assist Mr. Pathak 's argument in the appeal before us, because there has been no delegation to hold an enquiry as such. What the Dy. Collector has done in the present proceedings is not to delegate his authority to hold an enquiry, but to get the material necessary for the enquiry collected by his subordinate officers. After the material was thus collected, he examined the material himself, held the enquiry and came to conclusion that the lands had remained fallow and uncultivated for the requisite period. We are, therefore, satisfied that the English decision on which Mr. Pathak relies does not assist him in the present case. This contention appears to have been raised before the High (1) 219 Court and has been rejected by it and, we think, rightly. In fact, in Nathubhai Gandabhai Desai vs The State of Bombay and Ors.(1), a similar contention was raised before the High Court and had been rejected by it. In that case, the High Court has field that inasmuch as the Legislature has left it entirely to the discretion of the State Government or the delegated authority to hold such enquiry as it thinks proper, if an enquiry Is held the Court cannot consider as to whether the enquiry was a proper one or whether a better enquiry would not have yielded better results. This view has been consistently followed in the Bombay High Court and we see no reason to doubt its correctness. In the result, the appeal succeeds, the decree passed by the High Court is set aside and that of the trial Court restored. There would be no order as to costs throughout. Appeal allowed.

A notice was served by the appellant State inviting the attention of the respondents to the fact that the agricultural lands of which they were the owners had remained fallow, and intimating to them that the appellant would resume management of the said lands under section 65 of the Bombay Tenancy and Agricultural Laws Act unless the respondents took steps to bring them under cultivation in the following agricultural season. It appears that later, an enquiry was made under the orders of the Deputy Collector as a result of which he passed an order under section 65 directing that the lands should be resumed by the State for cultivation. Having failed in their efforts to get the order of the Deputy Collector altered, the respondents filed a suit for a declaration that the order passed by the Deputy Collector was illegal and void and that it could not dispossess them of the lands which belonged to them. 'Me suit was dismissed. The respondents appealed to the High Court and it found that on a fair and reasonable construction of section 65(l) read with section 83, the appellant could delegate its powers prescribed by section 65(l), but could not delegate its duty incidental to the exercise of the said power, and as it reversed the decree passed by the trial Court. On appeal by special leave : HELD : (i) Section 83 authorises the delegation not only of the powers mentioned by it, but also the duties or functions which are incidental to the existence of the powers and are integrally connected with them [216 A B] Edward Liso Mungoni V. Attorney General of Northern Rhodesia, , referred to. (ii) Section 65(l) does not require that the Deputy Collector mini himself go to the agricultural fields and enquire on the spot whether they were lying fallow. He may, if he so desires, record evidence himself, or the recording of the evidence and the actual inspection on the spot can be left to some subordinate officer. The report of such local inspection and the record of the evidence collected in that behalf would be forwarded to the Deputy Collector, and that would be the material oil which he would hold the enquiry himself. This procedure does not involve any delegation at all. [217 H; 218 B; 217 G H]. Allingham V. Minister of Agriculture and Fisheries, [1948] 1 AB. E.R. 780, distinguished. Nathubhai Gandabhai Desai V. State of Bombay & Ors. I.L.R. , referred to.

Civil Appeals Nos. 819 823 of 1975. From the Judgment and order dated 15 3 1975 of the Patna High Court in Civil Writ Nos. 1184 of 1974. AND CIVIL APPEALS Nos. 824 827 and 1105 of 1975. From the Judgment and order dated 2 1 1973 of the Patna High Court in Civil Writ P.C. Nos. 1239 to 1242 of 1971 and 1532/73 respectively. Basudeo Prasad (In CAs. 819 827/75) for the Appellants (in all the appeals). Balbhadra Prasad, A. G. Bihar (In Cas. 819 823), U. P. Singh for Respondents (In all the appeals) The Judgment of the Court was delivered by SHINGHAL, J. , These ten appeals against two judgments of the High Court of Judicature at Patna raise some common questions of law. They have been argued together, and we shall examine them in this common judgment. Civil Appeals Nos 824 827 of 1975 arise out of a common judgment dated January 2, 1975 in a bunch of civil writ petitions; Civil Appeals Nos. 819 823 of 1975 arise out of a common judgment dated March 15, 1975 in another bunch of civil writ petitions; while Civil Appeal No. 1105 of 1975 is directed against the aforesaid judgment dated January 2, 1975 by which the civil writ petition giving rise to it was also disposed of by the High Court along with the other petitions. Certificates of fitness have been granted for all the appeals. There is no controversy in regard to some of the basic facts and they are quite sufficient for the disposal of the appeals. 36 A sale notice was published by the authorities concerned for the auction of licences to open country liquor shops in Singhbhum district with effect from April 1, 1966, including an outstill shop at Bhirbhania. Appellant Ayodhya Prasad gave the highest bid which was knock ed down in his favour, and he deposited two months ' licence fee in advance at the rate of Rs. 3,650/ per month. He applied on March 22, 1966 to the Kolhan Superintendent of Singhbhum to settle a piece of land for establishing an outstill shop at Bharbharia, but the application was rejected on September 27, 1966 because of the objection raised by some members of the District Consultative Committee. The villagers of Bharbharia also opposed the opening of the outstill shop. The shop could not therefore be established there. `The appellant how ever obtained a piece of land in village Chittimitti and applied on July 30, 1966 for permission to open the outstill shop there. This was allowed and the appellant claimed that he began to collect the necessary material but a mob forcibly removed the building and the distillation material. He filed a report with the Police about the incident. The approval for opening the outstill shop at Chittimitti was however withdrawn on October 6, 1966 and the appellant was asked to pay the monthly licence fee for the period April 1, 1966 to January, 1967. He denied his liability to pay the fee and claimed a refund of the money which had been deposited by him. His case was recommended by the Collector for remittance of the licence fee amounting to Rs. 43,800/ for the entire year 1966 67. He also made an application to the Commissioner of Excise for refund of the deposit of Rs. 7,300/ and for payment of compensation for loss of anticipated profits and dam ages, but the application was rejected. It appears that the appellant went on bidding at the bids for the subsequent three years, and laid similar claims for refund and damages, but to no avail. He then filed the bunch of writ petitions referred to above for quashing the demand notices, but they have been dismissed as aforesaid by the High Court 's judgment dated January 2, 1975. Civil Appeal No. 825 relates to the bid for 1966 67, Civil Appeal No. 824 relates to the bid for 1967 68, while Civil Appeals Nos. 826 and 827 relate to the bids for 1968 69 and 1969 70. These may be said to be group 'A ' appeals. Civil Appeals Nos. 819 823 of 1975 relate to the applications of appellants Thakur Prasad Sao and others for reduction of the licence fees for outstill liquor shops at Gua, Noamandi, Kiriburu, Andheri, Goiekara, Patajai and Dangusposi for 1974 75. In these cases the licensees were T. P. Sao or his relations or employees. They claimed that they incurred a loss of Rs. 55,874.79 at Gua, of Rs. 26,651.45 at Noamandi, of Rs. 39,389.53 at Kiriburu of Rs. 35,169.40 at Andheri, of Rs. 11,649.87 at Goekera, of Rs. 11,705.95 at Patajai and of Rs. 11,657.21 at Dengusposi. The appellants claimed that there was rivalry and enmity with Bishwanath Prasad and his brother who made speculative bids at the auction, as a result of which the outstill shops were settled for uneconomic amounts. Their grievance was that the Deputy Commissioner did not discharge his duty of refusing to allow the manifestly speculative bids although the percentage of increase in the licence fees ranged between 37 24 to 130 per cent when for other shops the increase was below 12 percent. The appellants filed application under section 39 of the Bihar and Orissa Excise Act, 1915, hereinafter referred to as the Act, for reduction of the fees for the year 1974 75, but they were rejected by he Board of Revenue. They then filed the aforesaid writ petitions in the High Court and have now filed the present appeals because the petitions have been dismissed by the High Court 's impugned judgment dated March 15, 1975. These will be referred to as group 'B ' appeals. As has been stated, the remaining Civil Appeal No. 1105 of 1975 is also directed against the High Court 's common judgment dated January 2, 1975. It relates to the grant of a licence to the appellant for establishing outstill shops at Mahuadom, Barahi, Asnair, Aksi and Kabri, in Palamau district. The appellant applied for a direction for the refund of Rs. 2,71,340/ which had already been realised from him, and for restraining the realisation of a further sum of Rs. 1,40,680/ on the ground that there was no quid pro quo for the fee, but without success. The High Court has taken the view that the amounts in question were not due on account of fees, but were payable for leases of the exclusive privileges which had been granted to the appellant in respect of the outstills. It is in these circumstances that these appeals have come up for consideration before us. As has been stated, the controversy in these appeals relates to the grant of licences for establishing outstill shops which are also known as "jalti bhattis". That system has been described in paragraph 253 of the Bihar and Orissa Excise Manual, Volume III, hereinafter refer red to as the Manual, as follows: "By this system a certain number of stills for the manufacture of country spirit are allowed within a certain area. The holder of an outstill licence pays a certain sum per men sem for manufacturing country spirit in his outstill and selling it by retail on his premises. No attempt is made to regulate the strengths or the prices at which spirit is manufactured or It has been stated in paragraphs 254 and 255 of the Manual that no . definite area is fixed within which each outstill has the "monopoly of supply of country spirit", but their number is regulated according to rules, and five miles is taken roughly as the minimum distance of one outstill from another. It has been argued on behalf of the appellants, that what was granted to them was not the exclusive privilege of manufacturing and selling country liquor in retail, in the areas for which the licences were granted, and that the High Court erred in holding that such an exclusive privilege had been granted under section 22 of the Act. It has been urged that the licences in question fell within the purview of section 30 of the Act 38 We have described the essential features of the outstill system, and there can be no doubt that the holder of a licence under the system acquires the right to manufacture country spirit in his outstill and sell it by retail "in his premises" without any restriction on the strength or price at which the spirit is manufactured or sold. Moreover he has the monopoly of manufacturing and supplying country liquor within his area. The right is therefore clearly an exclusive privilege within the meaning of section 22(1) (d) of the Act and it is futile to contend that the licences in question were merely licences for the retail sale o f spirit for consumption on the vendor 's premises within the meaning of section 30 of the Act. The High Court was therefore quite correct in taking that view. It may be mentioned that the appellants have not produced their licences in support of the contention that exclusive privilege of the nature referred to above was not granted to them even though the licences were for establishing outstills in the area covered by them. It is however not disputed that the licences were granted in Form 30 (Volume II, Part I, Bihar and Orissa, Excise Manual) on the condition that the appellants would pay to the government, in advance. the monthly fee mentioned therein. It is nobody 's case that the licences were cancelled or suspended under section 42 of the Act for any of the reasons mentioned in the section, or that the licences were withdrawn under section 43 so as to entitle the appellants to remission of the fee payable in respect of them or to payment of compensation in addition to such remission, or to refund of the fee paid in advance. It is also not the case of the appellants that they surrendered their licences within the meaning of sub section (1) of section 44 so as to justify the remittance of the fee payable by them, or paid by them in advance. In fact it has clearly been provided in sub section (2) of section 44 that the provisions of sub section (1) 'shall not apply in the case of a licence for the sale of any country liquor in the exercise of an exclusive privilege granted under section 22. It is true that in its judgment under appeal (in Civil Appeals Nos. 824 827 of 1975) the High Court has observed that the petitioner before it was at liberty to surrender the license, but it appears that in taking that view it did not notice sub section (2) of section 44 even though it had held that what was granted was an exclusive privilege under section 22. The licences of the appellants therefore remained in force for the periods for which they were granted and, by virtue of the express provisions of section 45, they could have no claim to compensation. In such a situation, counsel for the appellants have placed considerable reliance on paragraph 121 of the Manual and have argued that the High Court erred in taking the view that the instructions contained in it had no statutory force and its benefit was not available to the appellants. Reliance in this connection has been placed on Sukhdev Singh and others vs Bhagatram Sardar Singh Raghuvanshi and another(1), Laljee Dubey and others vs Union of India and others(2) Union of India vs K. P. Joseph and others(3). (1) ; (2) (3) 39 Paragraph 121 of the Manual states, inter alia, that a person whose bid has been accepted by the presiding officer at the auction must pay the sum required on account of advance fee immediately. It states further that the purchaser would be liable for any loss that may accrue to government in case it becomes necessary to resell the shops for a lower sum in consequence of his failure to pay the sum at the time of the sale. Then there is the following subparagraph on which reliance has been placed by counsel for the appellants: "Deposits will be returned to a person to whom a licence may be subsequently refused because the Magistrate declines to grant him a certificate, or because he is unable to obtain suitable premises and satisfies the Collector that he has made bona fide endeavor to secure such or if a licence be refused for any other adequate reason. " It would thus appear that the sub paragraph deals with the "deposits" made immediately on account of advance fees, the consequences of the failures to make such payment and the return of those "deposits" to the person to whom the licence may subsequently be refused because (1) the Magistrate declines to grant him a certificate or because he is unable to obtain suitable premises in spite of his bona fide endeavors or (ii) for any other adequate reason. But it was not the case of the appellants that the licences were "subsequently refused" to them for any reason whatsoever. So even if it were assumed, for the sake of argument, that the instructions contained in paragraph 121 were binding on the authorities concerned, that would not matter for purposes of the present controversy as it does not relate to refund of the deposits referred to in paragraph 121. In this view of the matter, it is not necessary for us to examine here the larger question whether the instructions contained in the Manual were made under any provision of the law and created any rights in favour of persons whose bids were accepted at public auctions of the shops. It may be mentioned that counsel for the appellants have not been able to refer to any other provision of the law under which the appellants could claim remission , of the price or the consideration for the exclusive privilege of manufacturing and selling country liquor. It has however. been argued that as appellant Ayodhya Prasad did not succeed in locating the outstill shop at Bharbharia in spite of his best efforts, and he was also not successful in locating it at Chittimitti, he was not liable to pay the fee. It has been pointed that even the approval for locating the shop at Chitimitti was withdrawn by the Superintendent of Excise on October 6, 1966, and Ayodhya Prasad 's case for remitting the sum of Rs. 43,800/ was recommended by the Deputy Commissioner of Singhbhum on May 3, 1967 on the ground that he could not open the shop for reasons beyond his control. It has therefore been urged that there was no lack of bona fides on the part of the appellant and it was a matter of no consequence that he did not surrender his licence. It will be recalled that it was an incident of the outstill system that the holder of an outstill licence was allowed to manufacture country 4 390SCI/76 40 spirit within a "certain area" and he paid a certain sum of money per mensem for manufacturing country spirit in his outstill and "selling it by retail on his premises". It was therefore permissible for appellant Ayodhya Prasad to locate the shop at Bharbharia or at some other suitable place within his area, with the permission of the Collector. The notice which had been issued for the public auction is on the record and condition No. 5 thereof expressly states that the department would not be responsible for providing the place for the location of the outstill. Moreover it was expressly stated that the outstill at Bharbharia would be settled purely as a temporary measure on condition that an undisputed site was made available for it. There is therefore nothing wrong with the view taken by the High Court that the responsibility for finding a suitable site was of the appellant, and there is no justification for the argument that nothing was payable by him because he could not locate the shop in spite of his best efforts. It may be that the Deputy Commissioner recommended his case for remission, but that I would not matter when the appellant was liable to pay the money under the law governing his licence. The appellant in fact retained the 1 licence all through and continued to make the highest bids at the subsequent public auctions for the years 1967 68, 1968 69 and 1969 70 and thereby prevented others from undertaking the responsibility of establishing the outstill and paying the price admissible to the department. As has been stated, the approval for opening the outstill shop at Chittimitti, was withdrawn on October 6, 1966, and the demand for the licence fee was made on January 9, 1967. Even so, the appellant did not take any action to save himself from any such liability in the future and, on the other hand, went on making the highest bids in the subsequent years and incurring similar liability to pay the price even though he was not able to establish his outstill anywhere in any year. It is therefore difficult to reject the contention in the affidavit of the respondents that there must have been some other reason for him to do so, particularly as the location of his shop was to be on the border of l the State. It has also been contended that the High Court erred in holding that the State Government had the power to require the appellants to pay the amounts under demand as they represented consideration for the contracts. It has been argued that this Court 's decision in Nashirvar etc. vs State of Madhya Pradesh and others(1) and Har Shankar and others etc. vs The Deputy Excise and Taxation Commissioner and others etc.(2) related to the Excise laws of other States and did not bear on the present controversy. The argument is however futile for we have given our reasons for holding that what was granted to the appellants was the exclusive privilege of manufacturing and selling country liquor within the meaning of section 22(1) (d) of the Act, and it has been expressly provided in section 29 that it would be permissible for the State Government to accept payment of a sum in "consideration" of the exclusive privilege under section 22. The decisions of this Court in Nashirwar 's case and Har Shankar 's case have set any controversy in (1) ; (2) ; 41 this respect at rest, so that it is well settled that as the State has the exclusive right and privilege of manufacturing and selling liquor, it has the power to hold a public auction for the grant of such a right or privilege and to accept the payment of a sum therefor. It was therefore permissible for the State to frame rules for the grant of licences on payment of fees fixed by auction, for that was only a mode or medium for ascertaining the best price for the grant of the exclusive privilege of manufacturing and selling liquor. As has been stated, Group 'B ' appeals relate to the claim for reduction of the licence fees for the liquor shops concerned. It has been argued by counsel for the appellants that as the Collector did not discharge his duty under the instructions contained in paragraph 130 read with paragraph 93 of the Regulations, the Board acted arbitrarily in refusing the order reduction of the amounts of the fees which were the subject matter of the demands under challenge. It has been urged that the bids were highly speculative and should have been reduced. It has been strenuously argued on behalf of the respondent State of Bihar that the instructions contained in the Regulations were not issued under any provision of the law and could not give rise to any right in favour of the appellants. Reference in this connection has been made to M/s Raman and Raman Ltd. vs The State of Madras and others(1) and R. Abdulla Rowther vs The State Transport Appellate Tribunal, Madras and others(2). It has been pointed out that there are three volumes of the Bihar and Orissa Excise Manual, 1919. It has been stated in the preface to Volume I that it is complete in itself and contains the whole of the law and the rules which have the force of law "relating to excise opium." Volume II contains the "whole of the law and the rules which have the force of law relating to excisable articles other than opium. " It has been stated in the preface to Volume III that it consists of the Board 's "instructions with regard to excisable articles other than opium" and that references have been made to the Government Rules and the Board 's Rules having the force of law. There is however no such reference to any rule in regard to instructions Nos. 130 and 93. But quite apart from the question whether these instructions were legally enforceable, we have examined the question whether they could justify the argument that the appellants were entitled to reduction of the amounts of the fees payable by them. Instruction No. 93 mentions the circumstances when it would be advisable to accept bids other than the highest. It states that it is not an absolute rule that the highest bids must, on every occasion, be accepted. It states further that the presiding officer at an auction "may also refuse bids which he considers to be purely speculative or which are the outcome of private enmity", and that what is desired is not the highest fee obtainable, but a fee that can fairly be paid out of the profits of a shop without recourse to malpractices. There is there fore nothing in the rule which could be said to give rise to a right in favour of the appellants for reduction of the amounts demanded from them. Instruction No. 130 merely states that reduction of licence (1) [1959] Supp. (2) S.C.R. 227. (2) A.I.R. 1959 S.C. 896. 42 fees, during the currency of a licence, can be made by the Board under section 39 of the Act. It does not therefore advance the case of the appellants for, under that section, the Board has been given that power, "if it thinks fit", to order a reduction of the amount of fees payable in respect of a licence, "during the unexpired portion of the grant" which is not the case of the appellants. In fact all that has been argued on behalf of the appellants is that as the instructions contained in the note appended to paragraph 130 of the Regulations have not been complied with, their legal right to claim the benefit of the note has wrongly been denied to them. The note reads as follows, "Note ordinarily it is not the policy of Government to allow reduction in excise settlements. The licensees to a large extent, have only themselves to thank if they exceed in their bidding the figure which should return them a reasonable profit under normal conditions, and they are not therefore entitled to any reduction of fees as of right. The observance of this principle is the more important because it must be remembered that each remission is likely to aggravate the evil and encourage speculative bidding in the hope that should the speculation turn out a failure, Government will not insist on full payment. A remission should not be granted merely because working at a dead loss has . been actually proved. Each case should be dealt with on its own merits. Where, for example, it is proved that the Collector has not fulfilled his duty in refusing to allow manifestly speculative bids and has failed to stop the bidding when a figure has been reached which, under normal conditions, might be expected to return a reasonable rate of profit to the vendor, the question would be whether the action of the Collector was so flagrantly opposed to the principles enunciated from time to time by Government as to necessitate remedial action. Such action should not take the form of any promise of resettlement with the existing licensees. It can only take the form of a reduction in the amount of the existing licensees. It should not be very difficult for an officer in a contract supply area to realise the stage at which bidding becomes purely speculative. He knows the issues of spirit during the previous year and the cost to the vendor including duty, carriage, establishment charges and the like, and should thus be able to estimate the figure beyond which a prudent man would not bid. If after warning the bidder, that this point has been reached, the latter still wishes to take the risk no case for remission can arise. The case is, however, different where exceptional reasons which would not at the time be. foreseen, operate adversely to the interest of the licensee but at the same time it is not the duty of Government to safe guard licensees from the effects of their own imprudence or ignorance. " 43 It would appear that there is nothing in the note to justify the argument that it gave rise to a right in favour of the appellants to obtain a reduction of the fees. As has been pointed out, that was clearly a matter within the discretion of the Board of Revenue under section 39, and the wordings of the note appended to paragraph 130 could not overreach that provision of the law. Moreover, the question whether the circumstances mentioned in the note were at all in existence in the case of the appeals under consideration, was a question of fact which could not be tried in these proceedings. The decision in Rohtas Industries Ltd. vs section D. Agarwal and another(1) to which our attention has been invited on behalf of the appellants, can be of no avail to them. As has been stated, the writ petition which has given rise to Civil Appeal No. 1105 of 1975 raised the question whether the refund of fees claimed by the appellant was permissible on the ground that there was no quid pro quo for the same. The High Court has rightly rejected that contention for the reason that the amounts in question were payable for the licences which had been granted for the exclusive privilege in question and, as has been shown, that argument is no longer available to the appellant in view of this Court 's decisions in Nashirwar 's case (supra) and Har Shankar 's case (supra). There is thus no force in all these appeals and they are hereby dismissed with costs. It is however ordered that, as has been agreed by the Advocate General the authorities concerned would recover the amounts in question in instalments spreading over a period of three years in case of those appellants who are able to furnish security for payment within that period. P.B.R. Appeals dismissed.

Under the Bihar & Orissa Excise Act the holder of an outstill licence for country liquor pays a certain sum per mensem for manufacturing country spirit in his outstill and selling it by retail in his premises. No definite area is fixed within which each outstill has the monopoly to supply country spirit but their number is regulated according to rules and five miles is taken as the minimum distance between one outstill and another. The appellants in all the appeals were the holders of licences for the manufacturing and sale of country liquor. In the first batch of cases the appellant could not open the outsill even after more than six months of its grant despite his best efforts. The approval for opening the outstill was withdrawn and he was asked to pay the monthly licence fee according to the terms of licence. The appellant 's claim for refund of the money deposited by him, together with compensation for loss of anticipated profits and damages, was rejected. Despite this the appellant continued to bid for licences during the subsequent three years and claimed refund and damages, which claim was rejected by the authorities. In the second batch of appeals the appellants claimed reduction of the licence fee for outstill liquor shops on the ground that they incurred losses because of the speculative bids at the auction should have been prevented by the authorities. In the third batch of cases the appellants claimed refund of sums realised from them on the ground that there was no quid pro quo for the fees. In all the cases the High Court dismissed their writ petitions. On appeal it was contended that the High Court was wrong in holding that exclusive privilege had been granted under section 22 of the Bihar & Orissa Excise Act, 1915 but that the licences fell within the purview of section 30 of the Act. Dismissing the appeals, ^ HELD: (1) It is futile to contend that the licences were merely licences for the retail sale of spirit for consumption on the vendor 's premises within the meaning of section 30 of the Act. The essential feature of the outstill system is that the holder of a licence acquires the right to manufacture country spirit in his outstill and sell it by retail "in his premises" without any 'restriction on the strength or prices at which the spirit is manufactured or sold. He has a monopoly of manufacturing and supplying country liquor within his area. The right is, therefore, an exclusive privilege within the meaning of section 22(1)(d) of the Act. [38A C] (2) The licences of the appellants remained in force for the purposes for which they were granted and by virtue of the express provisions of section 45 they could have no claim to compensation. [38 G] (3) Even though the High Court has held that what was granted was an exclusive privilege under section 22, it did not notice section 44(2) while taking the view that the petitioner was at liberty to surrender the licence. Section 44(2) clearly provides that sub section (1) of that section shall not apply in the case of a licence for the sale of any country liquor in exercise of an exclusive privilege granted under section 22(c). [38 F G] (4) There is nothing wrong in the view taken by the High Court that the responsibility for finding a suitable site was that of the appellant. There is no 35 justification for the argument that nothing was payable by the appellant because he could not locate the shop in spite of his best efforts. The appellants retained the licence all through and continued to make higher bids at the subsequent public auctions thereby preventing others from undertaking the responsibility of establishing the outstills. [40 B D] (5) It was permissible for the State to frame rules for the grant of licences on payment of fees fixed by auction, for that was only a mode or medium for ascertaining the best price for the grant of exclusive privilege of manufacturing and selling liquor. [41 A 13] Nashirwar etc. vs State of Madhya Pradesh & Ors. ; and Har Shankar & ors. vs The Deputy Excise & Taxation Commissioner & Ors. etc. ; explained. (6) In the second group of appeals, there is nothing in the rules which could be said to give rise to a right in favour of the appellants for reduction of the amounts demanded from them. [43 A B] (7) Id the third group of appeals the High Court was right in holding that the amounts in question were payable for the licence which had been granted for the exclusive privilege. The argument that there should be refund of fees because there was no quid pro quo is no longer available to the appellants in view of this Court 's decision in Nashirwar 's case and Har Shankar 's case. [43 C D]

Appeal No. 204 of 1958. Appeal from the judgment and decree dated January 6, 1956, of the Calcutta High Court in Income tax Reference No. 74 of 1953. K. N. Rajagopal Sastri, R. H. Dhebar and D. Gupta, for the appellant. Radha Binod Pal, Panchanan Pal and D. N. Mukherjee, for the respondents. March 26. The Judgment of the Court was delivered by SINHA, J. The question for determination in this appeal on a certificate of fitness granted by the High Court of Calcutta, is whether the respondent 's admitted income tinder certain heads, is chargeable to income tax under the provisions of section 10(6) of the Indian Income tax Act, 1922 (XI of 1922) (hereinafter referred to as the Act). The Calcutta High Court, by its judgment dated January 6, 1956, answered the question in the negative, disagreeing with the determination of the Income tax Appellate Tribunal by its order dated April 23, 1949. The facts of this case, upon which the decision of the appeal depends, may shortly be stated as follows: The respondent is a limited liability company incorporated on June 7, 1933, with a view to taking over the assets and liabilities of an unincorporated association called " The Calcutta Stock Exchange Association 461 and to carrying on the affairs of the Stock Exchange which had been founded by that Association. The principal object of the Respondent Company is to facilitate the transaction of business on the Calcutta Stock Exchange. In view of that objective, the Company had to make rules and by laws, regulating the mode and the conditions in, and subject to, which the business of the Stock Exchange had to be transacted. The Company is composed of " members " who may be either individuals or firms, who, except in the case of parties who had been members of the unincorporated Association have to be elected as such, and upon such elections, have to acquire a share of the Company and pay an entrance fee. The members have to pay a monthly subscription according to the by laws of the Company. Under the by laws of the Respondent Company, members with a certain standing, are allowed to have "Authorized Assistants ", upto a maximum of six in number. Such Authorized Assistants are permitted the use of the premises of the Association and to transact business therein in the names and on behalf of the members employing them. The members have to pay an admission fee for such Authorized Assistants according to the following scale : (a) for the first two Assistants Rs.1,000 (b) for the third Assistant Rs.2,000 (c) for the fourth Assistant Rs.3,000 (d) for the fifth Assistant Rs.4,000 (e) for the sixth Assistant Rs.5,000 (f) for replacement Rs.1,000 The last item of replacement fee of Rs. 1,000/ is meant to cover the fee for substituting one Assistant by another. Before these by laws were amended with effect from July 10, 1944, a member could have more than six such Assistants, but the number was limited to six by the new amendment which also provided that " Members who have more than six Assistants, at present, shall not be allowed any replacement unless the number of Assistants in their firms has come down to six (maximum fixed). " Rule (5), as amended, is in these terms: 462 "Every candidate applying for admission as Assistant to a member must serve at least for one year as a probationer in the firm of that member. A probationer must apply to the Committee (through the member in whose office he will serve as probationer) in such form as may be prescribed by the Committee by paying Rs. 100/ as probationer fee which will not be refunded in any circumstances ". It would, thus, appear that the rules relating to the admission of members ' Assistants, confer the benefit upon those members only either individuals or firms who are qualified according to the by laws to have such Assistants, and who have paid admission fees and pay a monthly subscription in respect of each of them, besides their own dues, to the Company. The number of such Assistants has been sought by the by laws to be limited upto a maximum of six, by imposing a progressively enhanced admission fee, apparently, with a view to discouraging the employment of a large crowd of such " Authorized Assistants". The by laws also provide that "an authorized assistant shall not enter into any contracts on his own behalf and all contracts made by him shall be made in the name of the member employing him and such member shall be absolutely responsible for the due fulfilment of all such contracts and for all transactions entered into by the authorized assistant on his behalf" It is also contemplated by the by laws that tickets have to be issued to the Authorized Assistants, besides the members ' tickets. The bylaws also contemplate that a member shall give to the prescribed Authority of the Company an immediate notice in writing, of the termination of the employment by him of any Authorized Assistant, and on such termination, the right of the Assistant to use the rooms of the Association, shall cease, and he shall not be at liberty to transact business in the name and on behalf of his employer. The by laws also make provision for the supervision of the work of the Authorized Assistants to see that they function within the limits of their powers, and do not transact 463 business on behalf of persons or firms other than those employing them. During the accounting year 1944 45 assessment year 1945 46), the Respondent Company received from its members the sum of Rs. 60,750/ as entrance fees, and the sum of Rs. 15,687/ as subscription in ' respect of the Authorized Assistants. The Company also received during the aforesaid year, a sum of Rs. 16,000/ as fees for putting the names of companies on the Quotations List. Unless a particular company 's name is placed on the Quotations List, no dealings in respect of the shares of that company are permitted on the Stock Exchange. An application has to be made by a member to place on the Quotations List any company not already included in that List, and on approval by the prescribed Authority of the Company, the name of the company thus proposed, is included in the List upon payment of a certain fee. The companies themselves cannot apply to the Association for such enlistment. The application has to be made by a member, and has to be accompanied by a fee of Rs. 1,000/ , and it is only after the necessary scrutiny and investigation into the affairs of the proposed company have been made, that the enlistment applied for is granted. That is another source of income to the Respondent Company. It is no more necessary to refer to another item of income, which was admitted, during the course of the assessment proceedings in their appellate stage, to be liable to the payment of tax. We are, thus, concerned in the present controversy with the aforesaid sums of Rs. 60,750/ , Rs. 15,687/ and Rs. 16,000/ which were held by the Income tax Officer, by his order dated March 27, 1946, to be liable to income tax. The Income tax Officer rejected the contention raised on behalf of the assessee Company that the Authorized Assistants aforesaid were themselves members of the Company, and that therefore, the moneys received from them were exempt from taxation. He also held that though the Respondent Company was a mutual Association, each one of the three items of income, referred to above, was remuneration definitely related 464 to specific services performed, and was thus, chargeable to tax within the meaning of section 10(6) of the Act. On appeal, the Appellate Assistant Commissioner, by his order dated June 30, 1947, considered the points at great length, and came to the conclusion that the authorized Assistants were not members or substitute members. He held that the Authorized Assistants were no more than representatives of the members who employ them, and they transact business on their behalf, and that the Association had framed rules and by laws, regulating the admission, supervision and discontinuance of such Authorized Assistants. For coming to this conclusion, he relied upon the decision of the Bombay High Court in the case of Native Share and Stock Brokers ' Association vs The Commissioner of Income tax(1). The case was then taken up in appeal to the Income tax Appellate Tribunal, which dismissed the appeal. The Tribunal agreed with the finding of the taxing authorities that the Authorized Assistants were not members of the Company within the meaning of the Articles of Association of the Company, and that their position was analogous to that of the " authorised clerks in Native Share and Stock Brokers ' Association at Bombay ". In the course of its order, the Tribunal observed as follows: " The provision made in the regulations of the company, by which a member can take advantage of sending his authorised assistants to the company for transacting the business in the member name is nothing but giving extra facilities to the members. By controlling the institution of authorised assistants the company renders specific services to the members and in particular to the member whose assistants work for him. The amounts received by the company from these sources are clearly covered by the provisions of section 10(6) ". At the instance of the assessee, the Tribunal stated a case and referred the following questions of law to the High Court for its decision under section 66(1) of the Act: " (1) Whether on the facts of this case the Incometax Appellate Tribunal was right in holding that, (1) 465 Authorised Assistants were not members of the company and as such the amounts of Rs. 15,687/ and 60,750/ received from them as subscriptions and entrance fees respectively should be included in the assessable income. (2) Were these amounts received for specific services performed by the Association or its members within the meaning of sub section (6) of section 10 of the Indian Income tax Act ? (3)Whether the sums of Rs. 16,000/ and Rs. 600/ were remuneration definitely related to specific services performed by the Association for its members within the meaning of subsection (6) of section 10 ". The reference was heard by a Division Bench consisting of Sir Trevor Harries, C. J., and Banerjee, J., of the Calcutta High Court. Before that Bench, certain concessions were made. It was conceded by Dr. Pal, who also appeared before that Bench, that the Authorised Assistants were not members of the Company. It was also agreed at the bar, on behalf of both the parties, that the two sums of Rs. 60,750 and 15,687 were not received from the Authorized Assistants, as suggested in the question formulated, and that it was common ground that they were received from members of the Association in respect of their Authorized Assistants. Therefore, the High Court took the view that the questions framed by the Tribunal did not arise, and that the Tribunal bad proceeded on a wrong basis of facts. The High Court, therefore, re cast the questions in these terms: " Whether in the facts and circumstances of this case the Income tax Appellate Tribunal was right in holding that (a)the amounts of Rs. 15,687/ and Rs. 60,750/ received from the members of the Association as subscriptions and entrance fees in respect of Authorized Assistants, and (b) the amounts of Rs. 16,000/ and Rs. 600/ received as fees for enlisting names of newly floated companies and for recognition of changes in the styles of firms respectively should be included in the assess. able income of the assessees 59 466 The Tribunal was asked to re state a case upon the questions as re cast, extracted above. Accordingly, the Tribunal drew up a fresh statement of the case and re submitted it to the High Court. On this re statement of the case, the matter was heard by a Bench consisting of Chakravarti, C. J., and Sarkar, J. The High Court considered the terms of section 10(6) of the Act, and came to the conclusion that the case had not been brought within those terms. The High Court, in the course of its opinion, observed that though the assessee is undoubtedly a trade association, it did not perform any specific services for its members for remuneration. It then examined in detail the decision of the Bombay High Court in the case of Native Share and Stock Brokers ' Association vs The Commissioner of Income tax (1), relied upon by the Department, and observed that the differences pointed out between the case in hand and the case decided by the Bombay High Court, were " not vital, though they are not immaterial ", but it was not prepared to take the same view of the facts of this case as had been taken by the Bombay High Court in the case referred to above, or by the Travancore Cochin High Court in the case of Commissioner of Income tax vs Chamber of Commerce, Alleppey (2). The High Court, accepted the argument of Dr. Pal, which is also addressed to us, that the words " performing specific services for " were far stronger and more definite than the words " render service to ", and that those words meant the actual doing of definite acts in the nature of services. The Court further observed that those words meant " execute certain definite tasks in the interests and for the benefit of the latter (that is to say, the members) under an arrangement of a direct character ". It further observed that the words " for remuneration" and " definitely related to those services " meant that " certain specific tasks must be performed or functions of a specific character must be discharged for payment and such payment is to be made to the association as wages for its labour in respect of those tasks or functions ". In this connection, (1) (2) 467 it may be added that the High Court also made the following observations bearing on the construction of the crucial words of section 10(6): " When section 10(6) speaks of a trade, professional or other similar association performing specific services for its members for remuneration, it contemplates, I think, services in regard to matters outside the mutual dealings for which the Association was formed and for the transaction of which it exists as a mutual association. If performance of functions even in regard to matters within the objects of the association as a mutual association be performance of specific service within the meaning of the sub section, dis charge of no function can be outside it and everything done would be specific service performed. That, I do not think, is what the sub section means and intends ". It is manifest that unless the assessee is brought within the terms of sub section (6) of section 10, the three items of income coming into the hands of the Association, would not be chargeable to income tax. That subsection is in these terms: " (6) A trade, professional or similar association performing specific services for its members for remu neration definitely related to those services shall be deemed for the purpose of this section to carry on business in respect of those services ' and the profits and gains therefrom shall be liable to tax accordingly ". It has to be observed at the outset that the performing of the services of the description mentioned in that sub section, may not, but for the words of that section, have amounted to carrying on business in respect of those services. The use of the word " deemed " shows that the legislature was deliberately using the fiction of treating something as business which otherwise it may not have been. It is also noteworthy that the sub section is couched in rather emphatic terms. We have, therefore, to examine the terms of the sub section to see whether the three sums of money in question, or any of them, are or is within the ambit of those terms. The words " performing specific services ", in our opinion, mean, in the context, " conferring particular benefits " on the members. The word 468 " services " is a term of a very wide import, but in the context of section 10 of the Act, its use excludes its theolo gical or artistic usage. With reference to a trade, pro fessional or similar association, the performing of specific services must mean conferring on its members some tangible benefit which otherwise would Dot be available to them as such, except for payment received by the association in respect of those services. The word " remuneration ", though it includes " wages ", may mean payment, which, strictly speaking, may not be called wages ". It is a term of much wider import including recompense ", " reward ", " payment ", etc. It, therefore, appears to us that the learned Chief Justice was not entirely correct in equating " remuneration " with " wages ". The sub section further requires that the remuneration should be " definitely related " to the specific services. In other words, it should be shown that those services would not be available to the members or such of them as wish to avail themselves of those services, but for specific payments charged by the association as a fee for performing those services. After these observations bearing on the interpretation of the crucial words, we shall now examine each of the three items of income, separately, to determine the question whether they answer, or any of them answers, the description of " services " contemplated by the sub section. Firstly, the sum of Rs. 60,750 has been realised from such members as applied for and obtained permission of the Association to have the use of Authorized Assistants within the precincts of the Stock Exchange. There cannot be the least doubt that unless those members paid the prescribed entrance fees for one or more Authorized Assistants upto a maximum of six, they could not have the benefit thus conferred upon such members. Ordinarily, a member has to transact business in the precincts of the Association by himself or by his business partner if there is a firm ; but if that member is a very busy person, and wishes to avail of the services of Authorized Assistants, he has to pay the the prescribed fee. A member of the Association, with the advantage of mutuality, so long as he transacts 469 business within the precincts of the Association, by himself or by his partner in the case of a firm, is not required to pay any such entrance fee but only the fee payable by every member as such. The entrance fee, thus, is clearly chargeable only from such of the members as avail themselves of the benefit conferred by the rules of the Association in that behalf. The entrance fee is, thus, a price paid for the services of the Association in making suitable arrangements for an absentee member to transact business on his behalf and in his name by his representative or agent. The entrance fee in question, therefore, cannot but be ascribed to the specific services rendered by the Association in respect of Authorized Assistants who thus become competent to transact business on behalf of their principal. Coming next to the sum of Rs. 15,687 which was realised from the members by way of subscription in respect of their Authorized Assistants, it is clear that this sum consists of the contributions severally made by the members periodically, so as to continue to have the benefit conferred by the Association of having the use of their representative or agent even during their absence. There cannot be the least doubt that this is a very substantial benefit to those members who found it worth their while to engage the services of Authorized Assistants. A member is not obliged, as indicated above, to have such an Assistant, but the fact that he chooses to have such an Assistant on payment of the prescribed fee or subscription, itself, is proof positive that a businessman, who ordinarily thinks in terms of money, has found it worth while to have the services of an Assistant by making an additional payment to the Association by way of recompense for the benefit, thus conferred upon him. Lastly, the sum of Rs. 16,000 represents fees received from members for allowing their application for enlisting the names of companies not already on the Quotations List, so that the shares and stocks of these companies, may be placed on the Stock Market. As already indicated, it is not the company concerned which has directly to pay this fee, but the fee has to 470 be paid by the member who initiates the proposal and, apparently, finds it worth his while to pay that prescribed fee to the Association. He would not make the payment unless he found it worth his while to do so Apparently, such a member is interested in placing the stocks of that company on the market. It cannot, therefore, be denied that that sum of money is definitely related to the specific services performed by the Association, namely, to permit transactions in respect of the shares of the company concerned, which services would not otherwise be available to the members as a body or to the individual member or members interested in that company. In our opinion, therefore, each one of the three sources of income to the Association, accrues to it on account of its performing those specific services in accordance with its rules and by laws. Each one of the three distinct sources of revenue to the Association, is specifically attributable to the distinct services performed by the Association for its members or such of them as avail themselves of those benefits. And each one of those services is separately charged for, according to the rate or schedule laid down by the rules and by laws of the Association. In our opinion, therefore, the requirements of sub section (6) of section 10, have been fulfilled in the present case. But we have yet to deal with the last argument accepted by the High Court, with reference to the terms of sub section (6) of section 10, namely, that the services contemplated therein, have reference to " matters outside the mutual dealings for which the Association was formed ". In the first place, there is no warrant for limiting the application of the words used by the legislature, in the way suggested. Secondly, the mutuality of the Association extends only to such benefits as accrue to every member on the payment made by him to the Association, but even if additional items of payment have to be made for additional services to be performed by the Association only for such of the members as avail themselves of those benefits, it cannot be said that the mutuality extends to those additional benefits also. It is, in our opinion, 471 equally wrong to suggest that the services in question should have been outside the objects of the Association. If the Association renders services to such of its members as avail themselves of such services as are not within the scope of the business activities of the Association, those benefits, if any, would not be ' conferred by the Association as such, because the Association has to function within the scope of its objects of incorporation. Hence, on a true construction of the provisions of the sub section in question, we have come to the conclusion that the facts and circumstances of the present case, bring the three items of income of the Association within the taxing statute. In our opinion, the decision of the Bench of the Bombay High Court, consisting of Stone, C. J., and Kania, J., (as he then was), in the case of Native Share and Stock Brokers ' Association vs Commissioner of Income tax is correct, and the facts of that case run very parallel to those of the case in band, though there may be minor differences in the rules and by laws of the Association then before the Bombay High Court. In that case, as in the present one, the rules of the Stock Brokers ' Association (the Bombay Stock Exchange) contemplated a definite scheme for allowing members to employ authorized clerks and for the admission, conduct, control and supervision of those clerks, for the benefit primarily of the members who employed them. It was held by the High Court that the income received by the Association by way of fees in respect of those authorized clerks, was within the taxing statute and liable to income tax. After examining in detail the provisions of the rules and the by laws of the Association, Stone, C. J., made the following observations which are equally applicable to the rules and by laws of the Association in the present case : " In my judgment these rules lay down a definite scheme and provide an organised arrangement, controlled and supervised by the Association for the benefit of its members. In my opinion the carrying (1) 472 of their scheme into effect is performing services for its members by the Association. No doubt the benefit of the scheme would redound to the benefit of all members since all would have the advantage of disciplined supervision exercised over the authorised clerks and remisiers of the others. I do not think that because the payment for the carrying of the scheme is provided for only by members who avail themselves of the use of the authorised clerks it makes any difference. " Kania, J., (as he then was), in a separate but concurring judgment, made the following very pertinent observations: " A perusal of the rules referred to in the judgment of the learned Chief Justice shows that the institution of authorised clerks exists for the benefits only of those who pay remuneration of Rs. 100 instead of going to the market and carrying on their business themselves. Individual members are permitted to work through an agent. For that the charge is made. The rules provide for the application and grant for such permission, registration of the authoris ed clerks on the individuals being recognised as clerks of particular members, supervision over the work of such clerks and particularly to prevent them from registering contracts either in their own name or in the name of another member; and a general supervision over their good behaviour is contemplated. . ". A question was raised as to whether these are specific services to be performed for particular members or whether the rules amount to performance of duties towards members in general. It is true that several of the services to be rendered may be helpful to the other members for their business. Taken as a whole I consider that as a performance of services by the Association for, the benefit of members who pay the remuneration. " We have made these copious quotations from the judgment of the Bombay High Court, because, in our 473 opinion, they truly apply the provisions of sub section (6) of section 10 to associations like the one before us. The other case to which our attention was drawn, is Commissioner of Income tax vs Chamber of Commerce, Alleppey (1). The facts of that case are not similar to those of the case before us, but the ratio decidendi of that case are relevant. That case referred to the Alleppey Chamber of Commerce. The Chamber inaugurated a produce section with the object of promoting the interests of merchants in general, and of those engaged in the produce trade, in particular, of acting as arbitrators and collecting and publishing information relating to the produce trade. Members were admitted to the produce section on payment of admission fees, monthly fees and contributions at certain prescribed rates. The question which was referred to the High Court, was whether the receipts by way of fees and contributions, could be chargeable under section 10(6) of the Act, and it was answered in the affirmative. Though cases in England, by way of precedent for the decision of the case in hand, have not been cited at the Bar, apparently because the scheme of the Income tax law in England is different and the words of the statute are not in parti material yet there are some cases which throw some light on the controversy before us. For example, the case of The Carlisle and Silloth Golf Club vs Smith (Surveyor of Taxes) (2 ) related to a golf club which was not incorporated. It was admittedly a bonafide members ' club, but under one of the terms of its lease, it had to admit non members to play on its course on payment of " green fees " at certain prescribed rates. Those fees were paid by non members. Receipts from those fees were entered in the general accounts of the Club, thus, showing an annual excess of receipts over expenditure of the Club as a whole. It was held by Hamilton, J., (as he then was), that the Club carried on a concern or business in respect of which it received remuneration which was assessable to 'income tax. He pointed out that the (1) (2) 60 474 receipts from non members went to augment the funds of the Club, and the revenue thus received was applied for the purposes of the Club towards its general expenditure. The case was taken up to the Court of Appeal, and the decision of that Court is reported in the same Volume at p. 198. The Court of appeal affirmed the decision and dismissed the appeal. The Judgment of the King 's Bench Division in The Liverpool Corn Trade Association, Limited vs Monks (H. M. Inspector of Taxes) (1) was based on facts which are similar to the facts of the present case. In that case, the Liverpool Corn Trade Association, Limited, was an incorporated body under the Companies Act, with the object, inter alia, of protecting the interests of the corn trade, and of providing a clearing house, a market, an exchange, and arbitration and other facilities to the trade. Membership of the Association was confined to persons engaged in the corn trade. Each member was required to have one share in the company, and had to pay an entrance fee and an annual subscription. Non members could also become subscribers. Payments were made to the Association by members and others for services rendered through the clearing house, etc. The assessee was taxed on the excess of its receipts over expenditure. On appeal to the Special Commissioners, they upheld the assessment. One of the points raised before the Special Commissioners, was that transactions with its members were mutual ones, and that any surplus arising from such transactions, was not a profit assessable to income tax. On appeal, the High Court agreed with the determination of the Special Commissioners, and held that any profit arising from the Association 's transactions with members, was assessable to income tax as part of the profits of its business, and that the entrance fees and subscriptions received from members must be included in the computation of such profits. It was suggested that the service in this case, if any, was extremely trivial and the remuneration which was large was for that reason not definitely related to the (1) 475 service. It was held by Upjohn, J., in Bradbury (H. M. Inspector of Taxes) vs Arnold (1) that the extent of the services was of no materiality. There, the question was being dealt with under Case VI of Schedule D of the Income tax Act, 1918. The learned Judge observed : " There is no doubt that a contract for services may, and clearly does, form a matter for assessment under Case VI of Schedule D, and not the less so that the services to be rendered are trivial or that they are to be rendered once and for all so that the remuneration may be regarded as a casual profit arising, out of a single and isolated transaction". The same view was expressed by Harman, J., in Housden (Inspector of Taxes) vs Marshall (2). In that case, a well known jockey 'contracted with a newspaper company to make available to its nominee " reminiscences of his life and experiences on the turf for the purpose of writing a series of four articles ", and to provide photographs, press cuttings, etc. He was paid pound 750. The question was whether this amounted to sale of property, or was a payment for services rendered. It was held that it was the latter, and that it did not matter if the service rendered was trivial. In view of what we have said above as to the nature of the service which the Association performed in respect of the Assistants, the payment of the fee was definitely related to that service. It is, therefore, plain that the case fell within section 10(6) of the Act. It must, therefore, be held that the question referred to the High Court should have been answered in the affirmative, and that the High Court was in error in giving its opinion to the contrary. The appeal must, accordingly, be allowed with costs here and below. (1) , 669. Appeal allowed.

By sub section 6 of section 10 of the Indian Income tax Act, 1922: "A trade, professional or similar association performing specific services for its members for remuneration definitely related to those services shall be deemed for the purpose of this section to carry on business in respect of those services, and the profits and gains therefrom shall be liable to tax accordingly. " The members of the respondent company, whose principal object was to facilitate the transaction of business on the Stock Exchange, were enabled under the by laws to have a certain number of Authorised Assistants so that the latter could use the premises of the company and transact business therein in the names and on behalf of the members who, for that purpose, were required to pay admission fees and monthly subscriptions in respect of each of them. The by laws of the company also provided that no dealings in respect of the shares of any particular company should be permitted on the Stock Exchange, unless an application made by a member of the respondent company and accompanied by a fee of Rs. 1000, for putting the name of that company on the Quotations List was approved by the prescribed Authority of the respondent company. During the accounting year in question the company received from its members admission fees and subscriptions in respect of the Authorized Assistants and fees for putting the names of companies on the Quotations List. The question was whether the aforesaid amount was liable to be taxed under section 10(6) of the Indian Income tax Act, 1922. Held, that with reference to a trade, professional or similar association, the performing of specific services under section 10(6) of the Indian Income tax Act, 1922, mean conferring on its members some tangible benefit which otherwise would not be available to them as such, except for payment received by the association in respect of those services. 460 Accordingly, the income received by the respondent company towards the admission fees and the subscriptions in respect of the Authorized Assistants, being the price paid for the services of the respondent company in making suitable arrangements for an absentee member to transact business on his behalf and in his name by his representative or agent within the Stock Exchange, as well as the fees received from members for enlisting the names of companies not already on the Quotations List so as to permit transactions in respect of the shares of the companies concerned, was remuneration definitely related to specific services performed by the respondent for its members within the meaning of s.10(6) of the Indian Income tax Act, 1922, and was assessable to income tax. Native Share and Stock Brokers ' Association vs The Commissioner of Income tax, Bombay , approved.

N: Criminal Appeal No. 273 of 1979. Appeal by special leave from the Judgment and Order dated the 14th August, 1978 of the Punjab & Haryana High Court in Criminal Appeal No. 234 of 1978) WRIT PETITIONS NOS. 564, 165, 179, 168, 434, 89, 754, 756 & 976 of 1979. (Under Article 32 of the Constitution of India) AND Special Leave Petition (Criminal) No. 1732 of 1979 R.K. Jain, R.P. Singh, Shiv Kumar Sharma Suman, Kapoor and Sukumar Sahu for the Petitioner in W.P. 564/79. Dr. Y.S. Chitale, Mukul Mudgal and A.K. Ganguli for the Petitioner in W.P. No. 165 of 1979. Vimal Dave and Miss Kailash Mehta for the Petitioner in W.P. 179 of 1979. 168 & 89 of 1979; Jail Petitions. 162 H.K. Puri, A.C. for the Appellant in Crl. Appeal. S.S. Khanduja and Lalit Kumar Gupta for the Petitioner in W.P. No. 434 of 1979. L.N. Gupta for the Petitioner in S.L.P. L.M. Singhvi and S.K. Jain for the Petitioner in WP. 754/79. Harbans Singh for the Petitioner in W.P. 756/79 N.D. Garg for Mr. S.K. Bisaria and T.L. Garg for the Petitioner in WP. 976 of 1979. Soli J. Sorabjee, Sol. in WP. 564 & 165 U.R. Lalit, in WP. 564; for U.O.I., R.N. Sachthey, for U.O.I., Gujarat, Haryana States, M.L. Shroff for Gujarat, Haryana & Maharashtra, Miss A. Subhashini, and Mr. K.N. Bhatt, for U.O.I. for Respondent No. 1 in WPs. 554, 179, R. 2 in WPs. 434 & 754, R.1 in WP. 165, R. 3 in WP. 756, R. 2 in WPs. 564 & 165. R in 168 & 89, RR 1 & 2 in WP. 756 and RR 1 and 3 in WP. 754 of 1979. D.P. Singh Chauhan, Addl. Advocate General, U.P. and O.P. Rana for R. 2 in WP. R.S. Sodhi and Hardev Singh for R. 1 in WP. 434 & Respondent in Crl. A. 273 of 1979. R.S. Sodhi for Respondent No. 3 in WP. 434/79. R.L. Kohli and R.C. Kohli for the compalinant in WP. 754/79. D.P. Mukherjee for the Intervener No. 1. Dr. LM Singhvi for the Intervener No. 2. Intervener No. 3 in person. V.J. Francis for the intervener No. 4. R.K. Garg and R.K. Jain for the intervener No. 5. FOR THE ADVOCATES GENERAL: 1. Andhra Pradesh : P. Ramachandra Reddy, Advocate General A.P. Rao and G. Narayana 163 2. Gujarat : D.V. Patel, (Maharashtra) 3. Maharashtra : R.N. Sachthey, (Gujarat) M.N. Shroff Gujarat & Maharashtra 4. Jammu & : Altaf Ahmed Kashmir 5. Madhya : S.K. Gambhir Pradesh 6. Punjab : R.S. Sodhi and Hardev Singh 7. Orissa : G.B. Patnaik, Advocate General and R.K. Mehta 8. Tamil Nadu : A.V. Rangam 9. West Bengal : Sukumar Ghosh and G.S. Chatterjee The following Judgments were delivered: SARKARIA, J. This reference to the Constitution Bench raises a question in regard to the constitutional validity of death penalty for murder provided in Section 302, Penal Code, and the sentencing procedure embodied in sub section (3) of Section 354 of the Code of Criminal Procedure, 1973. The reference has arisen in these circumstances: Bachan Singh, appellant in Criminal Appeal No. 273 of 1979, was tried and convicted and sentenced to death under Section 302, Indian Penal Code for the murders of Desa Singh, Durga Bai and Veeran Bai by the Sessions Judge. The High Court confirmed his death sentence and dismissed his appeal. Bachan Singh 's appeal by special leave, came up for hearing before a Bench of this Court (consisting of Sarkaria and Kailasam, JJ.). The only question for consideration in the appeal was, whether the facts found by the Courts below would be "special reasons" for awarding the death sentence as required under Section 354(3) of the Code of Criminal Procedure 1973. Shri H.K. Puri, appearing as Amicus Curiae on behalf of the appellant, Bachan Singh, in Criminal Appeal No. 273 of 1979. 164 contended that in view of the ratio of Rajendra Prasad vs State of U.P.,(1) the Courts below were not competent to impose the extreme penalty of death on the appellant. It was submitted that neither the circumstance that the appellant was previously convicted for murder and committed these murder after he had served out the life sentence in the earlier case, not the fact that these three murders were extremely heinous and inhuman, constitutes a "special reason" for imposing the death sentence within the meaning of Section 354(3) of the Code of Criminal Procedure 1973. Reliance for this argument was placed on Rajendra Prasad (ibid) which according to the counsel, was on facts very similar, if not identical, to that case. Kailasam, J. was of opinion that the majority view in Rajendra Prasad taken by V.R. Krishna Iyer, J, who spoke for himself and D.A. Desai, J., was contrary to the judgment of the Constitution Bench in Jagmohan Singh vs State of Uttar Pradesh(2), inter alia, on these aspects: (i) In Rajendra Prasad, V.R. Krishna Iyer, J. observed : "The main focus of our judgment is on this poignant gap in 'human rights jurisprudence ' within the limits of the Penal Code, impregnated by the Constitution. To put it pithily, a world order voicing the worth of the human person, a cultural legacy charged with compassion, an interpretative liberation from colonial callousness to life and liberty, a concern for social justice as setting the sights of individual justice, interest with the inherited text of the Penal Code to yield the goals desiderated by the Preamble and Articles 14, 19 and 21. " According to Kailasam, J., the challenge to the award of the death sentence as violative of Articles 19, 14 and 21, was repelled by the Constitution Bench in Jagmohan 's case. (ii) In Jagmohan 's case, the Constitution Bench held: "The impossibility of laying down standards (in the matter of sentencing) is at the very core of criminal law as administered in India which invests the judges with a 165 very wide discretion in the matter of fixing the degree of punishment and that this discretion in the matter of sentence in liable to be corrected by superior Courts. The exercise of judicial discretion on well recognised principles is, in the final analysis, the safest possible safeguard for the accused." In Rajendra Prasad, the majority decision characterised the above observations in Jagmohan as: "incidental observations without concentration on the sentencing criteria", and said that they are not the ratio of the decision, adding. "Judgments are not Bible for every line to be venerated." (iii) In Rajendra Prasad, the plurality observed: "It is constitutionally permissible to swing a criminal out of corporeal existence only if the security of State and society, public order and the interests of the general public compel that course as provided in Article 19(2) to (6). " This view again, according to Kailasam, J., is inconsistent with the law laid down by the Constitution Bench in Jagmohan, wherein it was held that deprivation of life is constitutionally permissible if that is done according to "procedure established by law". (iv) In Rajendra Prasad, the majority has further opined: "The only correct approach is to read into Section 302. I.P.C. and Section 354(3) Cr. P.C., the human rights and humane trends in the Constitution. So examined, the rights to life and the fundamental freedoms is deprived when he is hanged to death, his dignity is defiled when his neck is noosed and strangled. " Against the above, Kailasam, J. commented : 'The only change after the Constitution Bench delivered its judgment is the introduction of Section 354(3) which requires special reasons to be given if the Court is to award the death sentence. If without the restriction of stating sufficient reasons death sentence could be constitutionally awarded under the I.P.C. and Cr. P.C. as it stood before the amendment, it is difficult to perceive how by requiring special reasons to 166 be given the amended section would be unconstitutional unless the "sentencing sector is made most restrictive and least vagarious". (v) In Rajendra Prasad, the majority has held that: "Such extraordinary grounds alone constitutionally qualify as special reasons as leave on option to the Court but to execute the offender if State and society are to survive. One stroke of murder hardly qualifies for this drastic requirement, however, gruesome the killing or pathetic the situation, unless the inherent testimony coming from that act is irresistible that the murderous appetite of the convict is too chronic and deadly that ordered life in a given locality or society or in prison itself would be gone if this man were now or later to be at large. If he is an irredeemable, like a bloodthirsty tiger, he has to quit his terrestrial tenancy. " According to Kailasam, J., what is extracted above, runs directly counter to and cannot be reconciled with the following observations in Jagmohan 's case: "But some (murders) at least are diabolical in conception and cruel in execution. In some others where the victim is a person of high standing in the country, society is liable to be recked to its very foundation. Such murders cannot be simply wished away by finding alibis in the social maladjustment of the murderer. Prevalence of such crimes speaks, in the opinion of many, for the inevitability of death penalty not only by way of deterrence but as a token of emphatic disapproval by the society A very responsible body (Law Commission) has come to the conclusion after considering all the relevant factors. On the conclusions thus offered to us, it will be difficult to hold that capital punishment as such is unreasonable or not required in the public interest." (vi) Kailasam, J. was further of the opinion that it is equally beyond the functions of a Court to evolve "working rules for imposition of death sentence bearing the markings of enlightened flexibility and social sensibility" or to make law "by cross fertilisation 167 from sociology, history, cultural anthropology and current national perils and developmental goals and, above all, constitutional currents". This function, in his view, belongs only to Parliament. The Court must administer the law as it stands. (vii) The learned Judge has further expressed that the view taken by V.R. Krishna Iyer, J. in Rajendra Prasad that " 'special reasons ' necessary for imposing death penalty must relate not to the crime as such, but to the criminal" is not warranted by the law as it stands today. Without expressing his own opinion on the various questions raised in that case including the one with regard to the scope, amplification and application of Section 354 (3) of the Code of Criminal Procedure, 1974, Sarkaria, J., in agreement with Kailasam, J., directed the records of the case to be submitted to the Hon 'ble the Chief Justice, for constituting a large Bench "to resolve the doubts, difficulties and inconsistencies pointed out by Kailasam, J." In the meanwhile, several persons convicted of murders and sentenced to death, filed writ petitions (namely, Writ Petitions 564, 165, 179, 434, 89, 754, 756 and 976 of 1979) under Article 32 of the Constitution directly challenging the constitutional validity of the death penalty provided in Section 302 of the Indian Penal Code for the offence of murder, and the sentencing procedure provided in Section 354 (3) of the Code of Criminal Procedure, 1974. That is how, the matter has now come up before this larger Bench of five Judges. At the outset, Shri R.K. Garg submitted with some vehemance and persistence, that Jagmohan 's case needs reconsideration by a larger Bench if not by the Full Court. Reconsideration of Jagmohan, according to the learned counsel, is necessitated because of subsequent events and changes in law. Firstly, it is pointed out that when Jagmohan was decided in 1972, the then extant Code of Criminal Procedure, 1898 left the choice between death and life imprisonment as punishment for murder entirely to the discretion of the Court. This position has since undergone a complete change and under Section 354 (3) of the Code of Criminal Procedure, 1973, death sentence has ceased to be the normal penalty for murder. Secondly, 168 it is argued, the seven Judge decision of this Court in Maneka Gandhi vs Union of India(1) has given a new interpretative dimension of the provisions of Articles 21, 19 and 14 and their inter relationship, and according to this new interpretation every law of punitive detention both in its procedural and substantive aspects must pass the test of all the three Articles. It is stressed that an argument founded on this expansive interpretation of these Articles was not available when Jagmohan was decided. Thirdly, it is submitted that India has since acceded to the international Covenant of Civil and Political Rights adopted by the General Assembly of the United Nations, which came into force in December 16, 1976. By virtue of this Covenant. India and the other 47 countries who are a party to it, stand committed to a policy for abolition of the 'death penalty '. Dr. L.M. Singhvi submitted that the question of death penalty cannot be foreclosed for ever on the abstract doctrine of stare decisis by a previous decision of this Court. It is emphasised that the very nature of the problem is such that it must be the subject of review from time to time so as to be in tune with the evolving standards of decency in a maturing society. The learned Solicitor General, Shri Soli Sorabji opposed the request of Shri Garg for referring the matter to a larger Bench because such a course would only mean avoidable delay in disposal of the matter. At the same time, the learned counsel made it clear that since the constitutionality of the death penalty for murder was now sought to be challenged on additional arguments based on subsequent events and changes in law, he would have no objection on the ground of stare decisis, to a fresh consideration of the whole problem by this very Bench. In view of the concession made by Shri Sorabji, we proceeded to hear the counsel for the parties at length, and to deal afresh with the constitutional questions concerning death penalty raised in these writ petitions. We have heard the arguments of Shri R.K. Garg. appearing for the writ petitioners in Writ Petition No. 564/79 for more than three weeks and also those of Dr. L.M. Singhvi, Dr. Chitaley and 169 S/Shri Mukhoty, Dave and R.K. Jain, appearing for interveners or for the other writ petitioners. We have also heard the arguments of Shri Soli Sorabji, Solicitor General, appearing for the Union of India and Shri Patel appearing for the State of Maharashtra and the other counsel appearing for the respondents. The principal questions that fall to be considered in this case are: (I) Whether death penalty provided for the offence of murder in Section 302, Penal Code is unconstitutional. (II) If the answer to the foregoing question be in the negative, whether the sentencing procedure provided in Section 354 (3) of the Code of Criminal Procedure, 1973 (Act 2 of 1974) is unconstitutional on the ground that it invests the Court with unguided and untrammelled discretion and allows death sentence to be arbitrarily or freakishly imposed on a person found guilty of murder or any other capital offence punishable under the Indian Penal Code with death or, in the alternative, with imprisonment for life. We will first take up Question No. (I) relating to the constitutional validity of Section 302, Penal Code. Question No. (I): Before dealing with the contentions canvassed, it will be useful to have a short survey of the legislative history of the provisions of the Penal Code which permit the imposition of death penalty for certain offences. The Indian Penal Code was drafted by the First Indian Law Commission presided over by Mr. Macaulay. The draft underwent further revision at the hands of well known jurists, like Sir Barnes Peacock, and was completed in 1850. The Indian Penal Code was 170 passed by the then Legislature on October 6, 1860 and was enacted as Act No XLV of 1860. Section 53 of the Penal Code enumerates punishments to which offenders are liable under the provisions of this Code. Clause Firstly of the Section mentions 'Death ' as one of such punishments. Regarding 'death ' as a punishment, the authors of the Code say: "We are convinced that it ought to be very sparingly inflicted, and we propose to employ it only in cases where either murder or the highest offence against the State has been committed." Accordingly, under the Code, death is the punishment that must be awarded for murder by a person under sentence of imprisonment for life (Section 303). This apart, the Penal Code prescribes 'death ' as an alternative punishment to which the offenders may be sentenced, for the following seven offences: (1) Waging war against the Government of India. (section 121) (2) Abetting mutiny actually committed. (section 132) (3) Giving or fabricating false evidence upon which an innocent person suffers death. (section 194) (4) Murder which may be punished with death or life imprisonment. (section 302) (5) Abetment of suicide of a minor or insane, or intoxicated person. (section 305) (6) Dacoity accompanied with murder. (section 396) (7) Attempt to murder by a person under sentence of imprisonment for life if hurt is caused. (section 307) In the instant cases, the impugned provision of the Indian Penal Code is Section 302 which says: "Whoever commits murder shall be punished with death, or imprisonment for life, and also be liable to fine." The related provisions are contained in Sections 299 and 300. Section 299 defines 'culpable homicide '. Section 300 defines 'murder '. Its material part runs as follows: "Except in the cases hereinafter excepted, culpable homicide is murder, if the act by which the death is caused is done with the intention of causing death, or 171 Secondly If it is done with the intention of causing such bodily injury as the offender knows to be likely to cause death of the person to whom the harm is caused, or Thirdly If it is done with the intention of causing bodily injury to any person and the bodily injury intended to be inflicted is sufficient in the ordinary course of nature to cause death, or Fourthly If the person committing the act knows that it is so imminently dangerous that it must, in all probability, cause death, or such bodily injury as is likely to cause death, and commits, such act without any excuse for incurring the risk of causing death or such injury as aforesaid. " The first contention of Shri Garg is that the provision of death penalty in Section 302, Penal Code offends Article 19 of the Constitution. It is submitted that the right to live is basic to the enjoyment of all the six freedoms guaranteed in clauses (a) to (e) and (g) of Article 19 (1) of the Constitution and death penalty puts an end to all these freedoms: that since death penalty serves no social purpose and its value as a deterrent remains unproven and it defiles the dignity of the individual so solemnly vouchsafed in the Preamble of the Constitution, its imposition must be regarded as an 'unreasonable restriction ' amounting to total prohibition, on the six freedoms guaranteed in Article 19 (1). Article 19, as in force today, reads as under: "19 (1). All citizens shall have the right (a) to freedom of speech and expression; (b) to assemble peaceably and without arms; (c) to form associations or unions; (d) to move freely throughout the territory of India; (e) to reside and settle in any part of the territory of India; (f) . . . . ; 172 (g) to practice any profession, or to carry on any occupation, trade or business. (2) Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence. (3) Nothing in sub clause (b) 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 sovereignty and integrity of India or public order, reasonable restrictions on the exercise of the right conferred by the said sub clause. (4) Nothing in sub clause (c) 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 sovereignty and integrity of India or public order or morality, reasonable restrictions on the exercise of the right conferred by the said sub clause. (5) Nothing in sub clauses (d) and (e) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe. (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 prevents the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right con 173 ferred 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, (i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or (ii) the carying 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 seen that the first part of the Article declares the rights in clause (1) comprising of six sub clauses namely, (a) to (e) and (g). The second part of the Article in its five clauses (2) to (6) specifies the limits upto which the abridgement of the rights declared in one or more of the sub clauses of clause (1), may be permitted. Broadly speaking, Article 19 is intended to protect the rights to the freedoms specifically enumerated in the six sub clauses of clause (1) against State action, other than in the legitimate exercise of its power to regulate these rights in the public interest relating to heads specified in clauses (2) to (6). The six fundamental freedoms guaranteed under Article 19 (1) are not absolute rights. Firstly, they are subject to inherent restraints stemming from the reciprocal obligation of one member of a civil society to so use his rights as not to infringe or injure similar rights of another. This is on the principle sic utere tuo ut alienum non laedas. Secondly, under clauses (2) to (6) these rights have been expressly made subject to the power of the State to impose reasonable restrictions, which may even extend to prohibition, on the exercise of those rights. The power, if properly exercised, is itself a safeguard of the freedoms guaranteed in clause (1). The conferment of this power is founded on the fundamental truth that uncontrolled liberty entirely freed from restraint, degenerates into a licence, leading to anarchy and chaos; that libertine pursuit of liberty, absolutely free, and free for all, may mean liberticide for all. "Liberty has, therefore," as 174 Justice Patanjali Sastri put it, "to be limited in order to be effectively possessed." It is important to note that whereas Article 21 expressly deals with the right to life and personal liberty, Article 19 does not. The right to life is not one of the rights mentioned in Article 19 (1). The first point under Question (1) to be considered is whether Article 19 is at all applicable for judging the validity of the impugned provision in Section 302, Penal Code. As rightly pointed out by Shri Soli Sorabji, the condition precedent for the applicability of Article 19 is that the activity which the impugned law prohibits and penalises, must be within the purview and protection of Article 19 (1). Thus considered, can any one say that he has a legal right or fundamental freedom under Article 19 (1) to practise the profession of a hired assassin or to form associations or unions or engage in a conspiracy with the object of committing murders or dacoities. The argument that the provisions of the Penal Code, prescribing death sentence as an alternative penalty for murder have to be tested on the ground of Article 19, appears to proceed on the fallacy that the freedoms guaranteed by Article 19 (1) are absolute freedoms and they cannot be curtailed by law imposing reasonable restrictions, which may amount to total prohibition. Such an argument was advanced before the Constitution Bench in The State of Bombay vs R.M.D. Chamarbaugwala.(1) In that case the constitutional validity of certain provisions of the Bombay Lotteries and Prize Competition Control Act, 1952, as amended by Bombay Act No. XXX of 1952, was challenged on the ground, inter alia, that it infringes the fundamental rights of the promoters of such competitions under Article 19 (1) (g), to carry on their trade or business and that the restrictions imposed by the said Act cannot possibly be supported as reasonable restrictions in the interest of the general public permissible under Article 19 (b). It was contended that the words "trade" or "business" or "commerce" in sub clause (g) of Article 19 (a) should be read in their widest amplitude as any activity which is undertaken or carried on with a view to earning profit since there is nothing in Article 19 (1) (g) which may qualify or cut down the meaning of the critical words; that there is no justification for excluding from the meaning 175 of those words activities which may be looked upon with disfavour by the State or the Court as injurious to public morality or public interest. Speaking for the Constitution Bench, S.R. Das, C.J. repelled this contention, in these terms: "On this argument it will follow that criminal activities undertaken and carried on with a view to earning profit will be protected as fundamental rights until they are restricted by law. Thus there will be a guaranteed right to carry on a business of hiring out goondas to commit assault or even murder, or house breaking, or selling obscene pictures, of trafficking in women and so on until the law curbs or stops such activities. This appears to us to be completely unrealistic and incongruous. We have no doubt that there are certain activities which can under no circumstance be regarded as trade or business or commerce although the usual forms and instruments are employed therein. To exclude those activities from the meaning of those words is not to cut down their meaning at all but to say only that they are not within the true meaning of those words. " This approach to the problem still holds the field. The observations in Chamarbaugwala, extracted above, were recently quoted with approval by V.R. Krishna Iyer., J., while delivering the judgment of the Bench in Fatehchand Himmatlal & Ors. vs State of Maharashtra(1). In A.K. Gopalan vs The State of Madras (2), all the six learned Judges constituting the Bench held that punitive detention or imprisonment awarded as punishment after conviction for an offence under the Indian Penal Code is outside the scope of Article 19, although this conclusion was reached by them by adopting more or less different approaches to the problem. It was contended on behalf of A.K. Gopalan that since the preventive detention order results in the detention of the detenu in a cell, his rights specified in clauses (a) to (e) and (g) of Article 19 (1) have been infringed. 176 Kania, C J. rejected this argument, inter alia, on these grounds: (i) Argument would have been equally applicable to a case of punitive detention, and its acceptance would lead to absurd results. "In spite of the saving clauses (2) to (6), permitting abridgement of the rights connected with each other, punitive detention under several sections of the Penal Code, e.g. for theft, cheating, forgery and even ordinary assault, will be illegal, (because the reasonable restrictions in the interest of "public order" mentioned in clauses (2) to (4) of the Article would not cover these offences and many other crimes under the Penal Code which injure specific individuals and do not affect the community or the public at large). Unless such conclusion necessarily follows from the article, it is obvious that such construction should be avoided. In my opinion, such result is clearly not the outcome of the Constitution." (The underlined words within brackets supplied.) (At page 100 of the Report) (ii) Judged by the test of direct and indirect effect on the rights referred to in article 19 (1), the Penal Code is not a law imposing restrictions on these rights. The test is that "the legislation to be examined must be directly in respect of one of the rights mentioned in the sub clauses. If there is a legislation directly attempting to control a citizen 's freedom of speech or expression or his right to assemble peaceably and without arms, etc., the question whether that legislation is saved by the relevant saving clause of Article 19 will arise. If, however, the legislation is not directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub clauses is abridged, the question of the application of Article 19 does not arise. The true approach is only to consider the directness of the legislation and not what will be the result of the detention otherwise valid, on the mode of the detenu 's life." (Pages 100 101). 177 (iii)"The contents and subject matter of articles 19 and 21 are thus not the same. " (Page 105). "Article 19 (5) cannot apply to a substantive law depriving a citizen of personal liberty." "Article 19 (1) does not purport to cover all aspects of liberty or of personal liberty. Personal liberty would primarily mean liberty of the physical body. The rights given under article 19 (1) do not directly come under that description. In that Article only certain phases of liberty are dealt with". (Page 106) "In my opinion therefore, Article 19 should be read as a separate complete Article". (Page 107). Patanjali Sastri, J., also, opined "that lawful deprivation of personal liberty on conviction and sentence for committing a crime, or by a lawful order of preventive detention is "not within the purview of Article 19 at all, but is dealt with by the succeeding Articles 20 and 21." (Page 192). In tune with Kania, C.J., the learned Judge observed: "A construction which would bring within Article 19 imprisonment in punishment of a crime committed or in prevention of a crime threatened would, as it seems to me, make a reductio ad absurdum of that provision. If imprisonment were to be regarded as a 'restriction ' of the right mentioned in article 19 (1) (d), it would equally be a restriction on the rights mentioned by the other sub clauses of clause (1), with the result that all penal laws providing for imprisonment as a mode of punishment would have to run the gauntlet of clauses (2) to (6) before their validity could be accepted. For instance, the law which imprisons for theft would on that view, fall to be justified under clause (2) as a law sanctioning restriction of freedom of speech and expression." (Page 192). "Article 19 confers the rights therein specified only on the citizens of India, while article 21 extends the protection of life and personal liberty to all persons citizens and non citizens alike. Thus, the two Articles do not operate in a coterminous field." (Page 193). "(Personal liberty) was used in Article 21 as a sense which excludes the freedoms dealt in Article 19 . ." Rejecting the argument of the Attorney General, the learned Judge held that clauses (4) to (7) of Article 22 do not form a complete 178 Code and that "the language of Article 21 is perfectly general and covers deprivation of personal liberty or incarceration, both for punitive and preventive reasons." (Page 207). Mahajan, J., however, adopted a different approach. In his judgment, "an examination of the provisions of Article 22 clearly suggests that the intention was to make it self contained as regards the law of preventive detention and that the validity of a law on the subject of preventive detention cannot be examined or controlled either by the provisions of Article 21 or by the provisions of Article 19(5)." (Page 229). Mukerjee, J. explained the relative scope of the Articles in this group, thus: "To me it seems that Article 19 of the Constitution gives a list of individual liberties and prescribes in the various clauses the restraints that may be placed upon them by law so that they may not conflict with public welfare or general morality. On the other hand, Articles 20, 21 and 22 are primarily concerned with penal enactments or other laws under which personal safety or liberty of persons could be taken away in the interests of the society and they set down the limits within which the State control should be exercised. In my opinion, the group of articles 20 to 22 embody the entire protection guaranteed by the Constitution in relation to deprivation of life and personal liberty both with regard to substantive as well as to procedural law." (Page 255). "The only proper way of avoiding these anomalies is to interpret the two provisions (articles 19 and 21) as applying to different subjects. It is also unnecessary to enter into a discussion on the question. as to whether article 22 by itself is a self contained Code with regard to the law of Preventive Detention." (Page 257). S.R. Das, J., also, rejected the argument that the whole of the Indian Penal Code is a law imposing reasonable restriction on the rights conferred by Article 19 (1), with these observations (at Page 303) : "To say that every crime undermines the security of the State and, therefore, every section of the Indian Penal Code, irrespective of whether it has any reference to speech or expression, is a law within the meaning of this clause is wholly unconvincing and betrays only a vain and forlorn 179 attempt to find an explanation for meeting the argument that any conviction by a Court of law must necessarily infringe article 19 (1) (a). There can be no getting away from the fact that a detention as a result of a conviction impairs the freedom of speech for beyond what is permissible under clause (2) of article 19. Likewise, a detention on lawful conviction impairs each of the other personal rights mentioned in sub clauses (3) to (6). The argument that every section of the Indian Penal Code irrespective of whether it has any reference to any of the rights referred to in sub clauses (b) to (e) and (g) is a law imposing reasonable restriction on those several rights has not even the merit of plausibility. There can be no doubt that a detention as a result of lawful conviction must necessarily impair the fundamental personal rights guaranteed by article 19 (1) far beyond what is permissible under clauses (2) to (6) of that article and yet nobody can think of questioning the validity of the detention or of the section of the Indian Penal Code under which the sentence was passed." (ii) Das, J. then gave an additional reason as to why validity of punitive detention or of the sections of the Penal Code under which the sentence was passed, cannot be challenged on the ground of article 19, thus : "Because the freedom of his person having been lawfully taken away, the convict ceases to be entitled to exercise . any of the . rights protected by clause (1) of article 19." (iii) The learned Judge also held that "article 19 protects some of the important attributes of personal liberty as independent rights and the expression 'personal liberty ' has been used in article 21 as a compendious term including within its meaning all the varieties of rights which go to make up the personal liberties of men." (Page 299). Fazal Ali, J. dissented from the majority. In his opinion: "It cannot be said that articles 19, 20, 21 and 22 do not to some extent overlap each other. The case of a person who is convicted of an 180 offence will come under article 20 and 21 and also under article 22 so far as his arrest and detention in custody before trial are concerned. Preventive detention, which is dealt with in article 22, also amounts to deprivation of personal liberty which is referred to in article 19 (1) (d)." (Page 148). Fazal Ali, J. held that since preventive detention, unlike punitive detention, directly infringes the right under Article 19(1)(d), it must pass the test of clause (5). According to the learned Judge, only those laws are required to be tested on the anvil of Article 19 which directly restrict any of the rights guaranteed in Article 19(1). Applying this test (of direct and indirect effect) to the provisions of the Indian Penal Code, the learned Judge pointed out that the Code "does not primarily or necessarily impose restrictions on the freedom of movement, and it is not correct to say that it is a law imposing restrictions on the right to move freely. Its primary object is to punish crime and not to restrict movement. The punishment may consist in imprisonment or a pecuniary penalty. If it consists in a pecuniary penalty, it obviously involves no restriction on movement, but if it consists in imprisonment, there is a restriction on movement. This restraint is imposed not under a law imposing restrictions on movement but under a law defining crime and making it punishable. The punishment is correlated with the violation of some other person 's right and not with the right of movement possessed by the offender himself. In my opinion, therefore, the Indian Penal Code does not come within the ambit of the words "law imposing restriction on the right to move freely." (Pages 145 146). In applying the above test, which was the same as adopted by Kania, C.J., Fazal Ali, J. reached a conclusion contrary to that reached by the Chief Justice, on the following reasoning ; "Punitive detention is however essentially different from preventive detention. A person is punitively detained only after trial for committing a crime and after his guilt has been established in a competent court of justice. A person so convicted can take his case to the State High Court and sometimes bring it to this Court also; and he can in the course of the proceedings connected with his trial take all pleas available to him including the plea of want of jurisdiction of the Court of trial and the invalidity of the law 181 under which he has been prosecuted. The final judgment in the criminal trial will thus constitute a serious obstacle in his way if he chooses to assert even after his conviction that his right under article 19(1)(d) has been violated. But a person who is preventively detained has not to face such an obstacle whatever other obstacle may be in his way." (Page 146) We have copiously extracted from the judgments in A.K. Gopalan 's case, to show that all the propositions propounded, arguments and reasons employed or approaches adopted by the learned Judges in that case, in reaching the conclusion that the Indian Penal Code, particularly those of its provisions which do not have a direct impact on the rights conferred by Article 19(1), is not a law imposing restrictions on those rights, have not been overruled or rendered bad by the subsequent pronouncements of this Court in Bank Nationalizaton(1) case or in Maneka Gandhi 's case. For instance, the proposition laid down by Kania, C.J., Fazal Ali, Patanjali Sastri, and S.R. Das, J.J. that the Indian Penal Code particularly those of its provisions which cannot be justified on the ground on reasonableness with reference to any of the specified heads, such as "public order" in clauses (2), (3) and (4), is not a law imposing restrictions on any of the rights conferred by Article 19(1), still holds the field. Indeed, the reasoning, explicit, or implicit in the judgments of Kania, C.J., Patanjali Sastri and S.R. Das JJ. that such a construction which treats every section of the Indian Penal Code as a law imposing 'restriction ' on the rights in Article 19(1), will lead to absurdity is unassailable. There are several offences under the Penal Code, such as theft, cheating, ordinary assault, which do not violate or effect 'public order, ' 'but only law and order '. These offences injure only specific individuals as distinguished from the public at large. It is by now settled that 'public order ' means 'even tempo of the life of the community. ' That being so, even all murders do not disturb or affect 'public order '. Some murders may be of purely private significance and the injury or harm resulting therefrom affects only specific individuals and, consequently, such murders may not be covered by "public order" within the contemplation of clauses (2), (3) and (4) of article 19. Such murders do not lead to public disorder but to disorder simpliciter. Yet, no rational being can say (1) ; 182 that punishment of such murders is not in the general public interest. It may be noted that general public interest is not specified as a head in clauses (2) to (4) on which restriction on the rights mentioned in clause (1) of the Article may be justified. It is true, as was pointed out by Hidayatullah, J. (as he then was) in Dr. Ram Manohar Lohia 's(1) case, and in several other decisions that followed it, that the real distinction between the areas of 'law and order ' and 'public order ' lies not merely in the nature or quality of the act, but in the degree and extent. Violent crimes similar in nature, but committed in different contexts and circumstances might cause different reactions. A murder committed in given circumstances may cause only a slight tremor, the wave length of which does not extent beyond the parameters of law and order. Another murder committed in different context and circumstances may unleash a tidal wave of such intensity, gravity and magnitude, that its impact throws out of gear the even flow of life. Nonetheless the fact remains that for such murders which do not affect "public order", even the provision for life imprisonment in Section 302, Indian Penal Code, as as alternative punishment, would not be justifiable under clauses (2), (3) and (4) as a reasonable restriction in the interest of 'Public Order '. Such a construction must, therefore, be avoided. Thus construed, Article 19 will be attracted only to such laws, the provisions of which are capable of being tested under clauses (2) to (5) of Article 19. This proposition was recently (1975) reiterated in Hardhan Saha & Anr. vs State of West Bengal(2). In accord with this line of reasoning in A.K. Gopalan 's case, a Constitution Bench of this Court in Hardhan Saha 's case restated the principle for the applicability of Article 19 by drawing a distinction between a law of preventive detention and a law providing punishment for commission of crimes, thus : "Constitution has conferred rights under Article 19 and also adopted preventive detention to prevent the greater evil of elements imperilling the security, the safety of a State and the welfare of the nation. It is not possible to think that a person who is detained will yet be free to move (1) ; (2) ; at p. 784. 183 for assemble or form association or unions or have the right to reside in any part of India or have the freedom of speech or expression. Suppose a person is convicted of an offence of cheating and prosecuted (and imprisoned) after trial, it is not open to say that the imprisonment should be tested with reference to Article 19 for its reasonableness. A law which attracts Article 19 therefore must be such as is capable of being tested to be reasonable under clauses (2) to 5 of Article 19." (emphasis and parenthesis supplied.) The last sentence which has been underlined by us, appears to lend implicit approval to the rule of construction adopted by the majority of the learned Judges in A.K. Gopalan 's case, whereby they excluded from the purview of Article 19 certain provisions of the Indian Penal Code providing punishment for certain offences which could not be tested on the specific grounds embodied in clauses (2) to (5) of that Article. This proposition enunciated in A.K. Gopalan 's case is only a product of the application of the basic canon that a construction which would lead to absurdity, should be eschewed. In R.C. Cooper vs Union of India (popularly known as Bank Nationalization case), the majority adopted the two fold test for determining as to when a law violated fundamental rights, namely: "(1) It is not the object of the authority making the law impairing the right of a citizen, nor the form of action that determines the protection he can claim. (2) It is the effect of the law and of the action upon the right which attract the jurisdiction of the Court to grant relief. The direct operation of the act upon the rights forms the real test. " In Maneka Gandhi vs Union of India (ibid), Bhagwati, J. explained the scope of the same test by saying that a law or and order made thereunder will be hit by article 19, if the direct and inevitable consequence of such law or order is to abridge or take away any one or more of the freedoms guaranteed by Article 19(1). If the effect and operation of the statute by itself, upon a person 's fundamental rights is remote or dependent upon "factors which may or may not come into play", then such statute is not ultra vires on the ground of its being violative of that fundamental right. Bhag 184 wati J. described this proposition as "the doctrine of intended and real effect" while Chandrachud, J. (as he then was) called it "the test of proximate effect and operation of the statute. " The question is, whether R.C. Cooper & Maneka Gandhi have given a complete go by to the 'test of direct and indirect effect, sometimes described as form and object test ' or 'pith and substance rule ', which was adopted by Kania, C.J. and Fazal Ali, J. in A.K. Gopalan 's case. In our opinion, the answer to this question cannot be in the affirmative. In the first place, there is nothing much in the name. As Varadachariar, J. put it in Subrahmanyan Chettiar 's(1) case, such rules of interpretation were evolved only as a matter of reasonableness and common sense and out of the necessity of satisfactorily solving conflicts from the inevitable overlapping of subjects in any distribution of powers. By the same yardstick of common sense, the 'pith and substance rule ' was applied to resolve the question of the constitutionality of a law assailed on the ground of its being violative of a fundamental right. Secondly, a survey of the decisions of this Court since A.K. Gopalan, shows that the criterion of directness which is the essence of the test of direct and indirect effect, has never been totally abandoned. Only the mode of its application has been modified and its scope amplified by judicial activism to maintain its efficacy for solving new constitutional problems in tune with evolving concepts of rights and obligations in a strident democracy. The test of direct and indirect effect adopted in A.K. Gopalan was approved by the Full Court in Ram Singh vs State of Delhi.(2) Therein, Patanjali Sastri, J. quoted with approval the passages (i) and (ii) (which we have extracted earlier) from the judgment of Kania, C. J. Although Mahajan and Bose, JJ. differed on the merits, there was no dissent on this point among all the learned Judges. The first decision, which, though purporting to follow Kania, C. J 'section enunciation in A.K. Gopalan, imperceptibly added another dimension to the test of directness, was Express Newspapers (Private) Ltd. & Anr. vs The Union of India & Ors.(3) In that case, the cons (1) (2) ; (3) 185 titutional validity of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, and the legality of the decision of the Wage Board, constituted thereunder, were challenged. The impugned Act, which had for its object the regulation of the conditions of service of working journalists and other persons employed in newspaper establishments, provided, inter alia, for the payment of gratuity to a working journalist who had been in continuous service for a certain period. It also regulated hours of work and leave and provided for retrenchment compensation. Section 9 (1) laid down the principles that the Wage Board was to follow in fixing the rates of wages of working journalists. One of the contentions of the petitioners in that case was that impugned Act violated their fundamental rights under Articles 19 (1) (a), 19 (1) (g), 14 and 32 of the Constitution and that the decision of the Wage Board fixing the rates and scales of wages which imposed too heavy a financial burden on the industry and spelled its total ruin, was illegal and void. It was contended by the learned Attorney General in that case that since the impugned legislation was not a direct legislation on the subject of freedom of speech and expression. article 19 (1)(a) would have no application, the test being not the effect or result of legislation but its subject matter. In support of his contention, he relied upon the observations on this point of Kania, C. J. in A. K. Gopalan. It was further urged that the object of the impugned Act was only to regulate certain conditions of service of working journalists and other persons employed in the newspaper establishments and not to take away or abridge the freedom of speech or expression enjoyed by the petitioners and, therefore, the impugned Act could not come within the prohibition of Article 19 (1) (a) read with Article 32 of the Constitution. On the other hand, the petitioners took their stand on a passage in the decision of the Supreme Court of United States in Minnesota Ex Rel. Olson,(1) which was as under : "With respect to these contentions it is enough to say that in passing upon constitutional questions the Court has regard to substance and not to mere matters of form, and that, in accordance with familiar principles, the statute must be tested by its operation and effect." (1) ; at p. 708. 186 It was further submitted that in all such cases, the Court has to look behind the names, forms and appearances to discover the true character and nature of the legislation. Thus considered, proceeded the argument, the Act by laying a direct and preferential burden on the press, would tend to curtail the circulation, narrow the scope of dissemination of information and fetter the petitioners ' freedom to choose the means of exercising their rights of free speech (which includes the freedom of the press). It was further submitted that those newspaper employers who were marginally situated may not be able to bear the strain and have to disappear after closing down their establishments. N.H. Bhagwati, J. who delivered the unanimous Judgment of the Constitution Bench, after noting that the object of the impugned legislation is to provide for the amelioration of the conditions of the workmen in the newspaper industry, overruled this contention of the employers, thus: "That, however would be a consequence which would be extraneous and not within the contemplation of the legislature. It could therefore hardly be urged that the possible effect of the impact of these measures in conceivable cases would vitiate the legislation as such. All the consequences which have been visualized in the behalf by the petitioners, viz., the tendency to curtail circulation and thereby narrow the scope of dissemination of information, fetters on the petitioners ' freedom to choose the means of exercising the right, likelihood of the independence of the press being undermined by having to seek government aid; the imposition of penalty on the petitioners ' right to choose the instruments for exercising the freedom or compelling them to seek alternative media, etc., would be remote and depend upon various factors which may or may not come into play. Unless these were the direct or inevitable consequences of the measures enacted in the impugned Act, it would not be possible to strike down the legislation as having that effect and operation." (emphasis added) The learned Judge further observed that the impugned Act could be "legitimately characterised as a measure which affects the press", but its "intention or the proximate effect and operation" was not such as would take away or abridge the right of freedom of speech and 187 expression guaranteed in Article 19 (1) (a), therefore, it could not be held invalid on that ground. The impugned decision of the Wage Board, however, was held to be ultra vires the Act and contrary to the principles of natural justice. It may be observed at this place that the manner in which the test of direct and indirect effect was applied by N.H. Bhagwati, J., was not very different from the mode in which Fazal Ali, J. applied it to punitive detention as punishment after conviction for an offence under the Indian Penal Code. N.H. Bhagwati, J., did not discard the test adopted by Kania, C.J., in A.K. Gopalan, in its entirety; he merely extended the application of the criterion of directness to the operation and effect of the impugned legislation. Again, in Sakal Papers (P) Ltd. & Ors. vs The Union of India(1) this Court, while considering the constitutional validity of the and Daily Newspaper (Price and Page) Order, 1960, held that the "direct and immediate" effect of the impugned Order would be to restrain a newspaper from publishing any number of pages for carrying its news and views, which it has a fundamental right under Article 19 (1) (a) and, therefore, the Order was violative of the right of the newspapers guaranteed by Article 19 (1) (a), and as such, invalid. In this case, also, the emphasis had shifted from the object and subject matter of the impugned State action to its direct and immediate effect. In Naresh Shridhar Mirajkar & Ors. vs State of Maharashtra & Anr. ,(2) an order prohibiting the publication of the evidence of a witness in a defamation case, passed by a learned Judge (Tarkunde, J.) of the Bombay High Court, was impugned on the ground that it violated the petitioners ' right to free speech and expression guaranteed by Article 19 (1) (a). Gajendragadkar, C.J., (Wanchoo, Mudholkar, Sikri and Ramaswami, JJ., concurring) repelled this contention with these illuminating observations: "The argument that the impugned order affects the fundamental rights of the petitioners under Article 19 (1), is based on a complete misconception about the true nature and (1) ; (2) ; 188 character of judicial process and of judicial decisions. When a Judge deals with matters brought before him for his adjudication, he first decides questions of fact on which the parties are at issue, and then applies the relevant law to the said facts. Whether the findings of fact recorded by the Judge are right or wrong, and whether the conclusion of law drawn by him suffers from any infirmity, can be considered and decided if the party aggrieved by the decision of the Judge takes the matter up before the appellate Court. But it is singularly inappropriate to assume that a judicial decision pronounced by a Judge of competent jurisdiction in or in relation to matter brought before him for adjudication can affect the fundamental rights of the citizens under Article 19 (1). What the judicial decision purports to do is to decide the controversy between the parties brought before the court and nothing more. If this basic and essential aspect of the judicial process is borne in mind, it would be plain that the judicial verdict pronounced by court in or in relation to a matter brought before it for its decision cannot be said to affect the fundamental rights of citizens under Article 19 (1)." "It is well settled that in examining the validity of legislation, it is legitimate to consider whether the impugned legislation is a legislation directly in respect of the subject covered by any particular article of the Constitution, or touches the said article only incidentally or indirectly '. ' "If the test of direct effect and object which is sometimes described as the pith and substance test, is thus applied in considering the validity of legislation, it would not be inappropriate to apply the same test to judicial decisions like the one with which we are concerned in the present proceedings. As we have already indicated, the impugned order was directly concerned with giving such protection to the witness as was thought to be necessary in order to obtain true evidence in the case with a view to do justice between the parties. If, incidentally, as a result of this order, the petitioners were not able to report what they heard in court, that cannot be said to make the impugned order invalid under Article 19 (1) (a). " 189 We have already mentioned briefly how the test of directness was developed and reached its culmination in Bank Nationalization 's case and Maneka Gandhi 's case. From the above conspectus, it is clear that the test of direct and indirect effect was not scrapped. Indeed, there is no dispute that the test of 'pith and substance ' of the subject matter and of direct and of incidental effect of legislation is a very useful test to determine the question of legislative competence i.e., in ascertaining whether an Act falls under one Entry while incidentally encroaching upon another Entry. Even for determining the validity of a legislation on the ground of infringement of fundamental rights, the subject matter and the object of the legislation are not altogether irrelevant. For instance, if the subject matter of the legilation directly covers any of the fundamental freedoms mentioned in Article 19 (1), it must pass the test of reasonableness under the relevant head in clauses (2) to (6) of that Article. If the legislation does not directly deal with any of the rights in Article 19 (1), that may not conclude the enquiry. It will have to be ascertained further whether by its direct and immediate operation, the impugned legislation abridges any of the rights enumerated in Article 19 (1). In Bennett Coleman,(1) Mathew, J. in his dissenting judgment referred with approval to the test as expounded in Express Newspapers. He further observed that "the 'pith and substance ' test, though not strictly appropriate, must serve a useful purpose in the process of deciding whether the provisions in question which work some interference with the freedom of speech, are essentially regulatory in character". From a survey of the cases noticed above, a comprehensive test which can be formulated, may be re stated as under: Does the impugned law, in its pith and substance, whatever may be its form and object, deal with any of the fundamental rights conferred by Article 19 (1)? If it does, does it abridge or abrogate any of those rights? And even if it does not, in its pith and substance, deal with any of the fundamental rights conferred by Article 19(1), is the 190 Direct and inevitable effect of the impugned law such as to abridge or abrogate any of those rights? The mere fact that the impugned law incidentally, remotely or collaterally has the effect of abridging or abrogating those rights, will not satisfy the test. If the answer to the above queries be in the affirmative, the impugned law in order to be valid, must pass the test of reasonableness under Article 19. But if the impact of the law on any of the rights under clause (1) of Article 19 is merely incidental, indirect, remote or collateral and is dependent upon factors which may or may not come into play, the anvil of Article 19 will not be avilable for judging its validity. Now, let us apply this test to the provisions of the Penal Code in question. Section 299 defines 'culpable homicide ' and Section 300 defines culpable homicide amounting to murder. Section 302 prescribes death or imprisonment for life as penalty for murder. It cannot, reasonably or rationally, be contended that any of the rights mentioned in Article 19(1) of the Constitution confers the freedom to commit murder or, for the matter of that, the freedom to commit any offence whatsoever. Therefore, penal laws, that is to say, laws which define offences and prescribe punishment for the commission of offences do not attract the application of Article 19(1). We cannot, of course, say that the object of penal laws is generally such as not to involve any violation of the rights conferred by Article 19(1) because after the decision of this Court in the Bank Nationalization case the theory, that the object and form of the State action alone determine the extent of protection that may be claimed by an individual and that the effect of the State action on the fundamental right of the individual is irrelevant, stands discredited. But the point of the matter is that, in pith and substance, penal laws do not deal with the subject matter of rights enshrined in Article 19(1). That again is not enough for the purpose of deciding upon the applicability of Article 19 because as the test formulated by us above shows, even if a law does not, in its pith and substance, deal with any of the fundamental rights conferred by Article 19(1), if the direct and inevitable effect of the law is such as to abridge or abrogate any of those rights, Article 19(1) shall have been attracted. It would then become necessary to test the validity of even a penal law on the touchstone of that Article. On this latter aspect of the matter, we are of the opinion that the deprivation of freedom consequent upon an order of conviction and sentence is not a direct 191 and inevitable consequence of the penal law but is merely incidental to the order of conviction and sentence which may or may not come into play, that is to say, which may or may not be passed. Considering therefore the test formulated by us in its dual aspect, we are of the opinion that Section 302 of the Penal Code does not have to stand the test of Article 19(1) of the Constitution. This is particularly true of crimes, inherently vicious and pernicious, which under the English Common Law were classified as crimes mala in se as distinguished from crimes mala prohibita crimes mala in se embrace acts immoral or wrong in themselves, such as, murder, rape, arson, burglary, larceny (robbery and dacoity); while crimes mala prohibita embrace things prohibited by statute as infringing on others ' rights, though no moral turpitude attaches to such crimes. Such acts constitute crimes only because they are so prohibited. (See Words and Phrases, Permanent Edition, Vol. 10). While crimes mala in se do not per se, or in operation directly and inevitably impinge on the rights under Article 19(1), cases under the other category of crimes are conceivable where the law relating to them directly restricts or abridges such rights. The illustration given by Shri Sorabji will make the point clear. Suppose, a law is enacted which provides that it shall be an offence to level any criticism, whatever, of the Government established by law and makes a further provision prescribing five years ' imprisonment as punishment for such an offence. Such a law (i.e. its provision defining the offence) will directly and inevitably impinge upon the right guaranteed under clause (a) of Article 19(1). Therefore, to be valid, it must pass the test of reasonableness embodied in clause (2) of the Article. But this cannot be said in regard to the provisions of the Penal Code with which we are concerned. Assuming arguendo, that the provisions of the Penal Code, particularly those providing death penalty as an alternative punishment for murder, have to satisfy the requirements of reasonableness and public interest under Article 19 the golden strand of which according to the ratios of Maneka Gandhi runs through the basic structure of Article 21 also the further questions to be determined, in this connection, will be: On whom will the onus of satisfying the requirements under Article 19, lie ? Will such onus lie on the State or the person challenging its validity ? And what will be the nature of the onus? 192 With regard to onus, no hard and fast rule of universal application in all situations, can be deducted from the decided cases. In some decisions, such as, Saghir Ahmad vs State of Uttar Pradesh(1) and Khyerbari Tea Co. vs State of Assam & Ors. (2) it was laid down by this Court that if the writ petitioner succeeds in showing that the impugned law ex facie abridges or transgresses the rights coming under any of the sub clauses of clause (1) of Article 19, the onus shifts on the respondent state to show that the legislation comes within the permissible limits imposed by any of the clauses (2) to (6) as may be applicable to the case, and, also to place material before the court in support of that contention. If the State does nothing in that respect, it is not for the petitioner to prove negatively that it is not covered by any of the permissive clauses. A contrary trend, however, is discernible in the recent decisions of this Court, which start with the initial presumption in favour of the constitutionality of the statute and throw the burden of rebutting that presumption on the party who challenges its constitutionality on the ground of article 19. In B. Banerjee vs Anita Pan (3) this Court, speaking through V.R. Krishna Iyer, J., reiterated the ratio of Ram Krishna Dalmia 's case,(4) that : "there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attack it to show that there has been a clear transgression of the constitutional principles"; and "that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. " It was emphasised that "Judges act not by hunch but on hard facts properly brought on record and sufficiently strong to rebuff the 193 initial presumption of constitutionality of legislation. Nor is the Court a third Chamber of the House to weigh whether it should draft the clause differently". Referring, inter alia, to the decision of this Court in R.M.D. Chamarbaugwala (ibid), and Seervai 's 'Constitutional Law of India ', Vol. I, page 54, it was recalled, "Some courts have gone to the extent of holding that there is a presumption in favour of constitutionality, and a law will not be declared unconstitutional unless the case is so clear as to be free from doubt; and to doubt the constitutionality of a law is to resolve it in favour of its validity". Similar view was taken by a Bench of seven learned Judges of this Court in Pathumma vs State of Kerala.(1) Behind the view that there is a presumption of constitutionality of a statute and the onus to rebut the same lies on those who challenge the legislation, is the rationale of judicial restraint, a recognition of the limits of judicial review; a respect for the boundaries of legislative and judicial functions, and the judicial responsibility to guard the trespass from one side or the other. The primary function of the courts is to interpret and apply the laws according to the will of those who made them and not to transgress into the legislative domain of policy making. "The job of a Judge is judging and not law making". In Lord Devlin 's words : "Judges are the keepers of the law and the keepers of these boundaries cannot, also, be among out riders. " A similar warning was echoed by the Supreme Court of the United States in Dennis vs United States(2) in these terms : "Courts are not representative bodies. They are not designed to be a good reflex of a democratic society. Their judgment is best informed, and therefore most dependable, within narrow limits. Their essential quality is detachment, founded on independence. History teaches that the independence of the judiciary is jeopardized when courts become embroiled in the passions of the day and assume primary responsibility in choosing between competing political, economic and social pressures. " 194 In Gregg vs Georgia,(1) one of the principal questions for consideration was, whether capital punishment provided in a statute for certain crimes was a "cruel and unusual" punishment. In that context, the nature of the burden which rests on those who attack the constitutionality of the statute was explained by Stewart, J., thus : "We may not require the legislature to select the least severe penalty possible so long as the penalty selected is not cruelly inhumane or disproportionate to the crime involved. And a heavy burden rests on those who would attack the judgment of the representatives of the people. This is true in part because the constitutional test is intertwined with an assessment of contemporary standards and the legislative judgment weighs heavily in ascertaining such standards. In a democratic society legislatures, not courts, are constituted to respond to the will and conse quently the moral values of the people. " Even where the burden is on the State to show that the restriction imposed by the impugned statute is reasonable and in public interest, the extent and the manner of discharge of the burden necessarily depends on the subject matter of the legislation, the nature of the inquiry, and the scope and limits of judicial review. (See the observations of Sastri. J. in State of Madras vs V.C. Rao,(2) reiterated in Jagmohan). In the instant case, the State has discharged its burden primarily by producing for the persual of the Court, the 35th Report of the Law Commission, 1967, and the judgments of this Court in Jagmohan Singh and in several subsequent cases, in which it has been recognised that death penalty serves as a deterrent. It is, therefore, for the petitioners to prove and establish that the death sentence for murder is so outmoded, unusual or excessive as to be devoid of any rational nexus with the purpose and object of the legislation. The Law Commission of India, after making an intensive and extensive study of the subject of death penalty in India, published 195 and submitted its 35th Report in 1967 to the Government. After examining, a wealth of evidential material and considering the arguments for and against its retention, that high powered Body summed up its conclusions at page 354 of its Report, as follows : "The issue of abolition or retention has to be decided on a balancing of the various arguments for and against retention. No single argument for abolition or retention can decide the issue. In arriving at any conclusion on the subject, the need for protecting society in general and individual human beings must be borne in mind. It is difficult to rule out the validity of, of the strength behind, many of the arguments for abolition nor does, the Commission treat lightly the argument based on the irrevocability of the sentence of death, the need for a modern approach, the severity of capital punishment and the strong feeling shown by certain sections of public opinion in stressing deeper questions of human values. Having regard, however, to the conditions in India, to the variety of the social up bringing of its inhabitants, to the disparity in the level of morality and education in the country, to the vastness of its area, to diversity of its population and to the paramount need for maintaining law and order in the country at the present juncture, India cannot risk the experiment of abolition of capital punishment. " This Report was also, considered by the Constitution Bench of this Court in Jagmohan. It was the main piece of evidence on the basis of which the challenge to the constitutional validity of Section 302 of the Penal Code, on the ground of its being violative of Article 19, was repelled. Parliament must be presumed to have considered these views of the Law Commission and the judgment of this Court in Jagmohan, and must also have been aware of the principles crystallised by judicial precedents in the matter of sentencing when it took up revision of the Code of Criminal Procedure in 1973, and inserted in it, Section 354(3) which indicates that death penalty can be awarded in exceptional cases for murder and for some other offences under the Penal Code for special reasons to be recorded. Death penalty has been the subject of an age old debate between Abolitionists and Retentionists, although recently the 196 controversy has come in sharp focus. Both the groups are deeply anchored in their antagonistic views. Both firmly and sincerly believe in the rightcousness of their respective stands, with overtones of sentiment and emotion. Both the camps can claim among them eminent thinkers, penologists, sociologists, jurists; judges, legislators, administrators and law enforcement officials. The chief arguments of the Abolitionists, which have been substantially adopted by the learned counsel for the petitioners, are as under : (a) The death penalty is irreversible. Decided upon according to fallible processes of law by fallible human beings, it can be and actually has been inflicted upon people innocent of any crime. (b) There is no convincing evidence to show that death penalty serves any penological purpose : (i) Its deterrent effect remains unproven. It has not been shown that incidence of murder has increased in countries where death penalty has been abolished, after its abolition. (ii) Retribution in the sense of vengeance, is no longer an acceptable end of punishment. (iii)On the contrary, reformation of the criminal and his rehabilitation is the primary purpose of punishment. Imposition of death penalty nullifies that purpose. (c) Execution by whatever means and for whatever offence is a cruel, inhuman and degrading punishment. It is proposed to deal with these arguments, as far as possible, in their serial order. Regarding (a) : It is true that death penalty is irrevocable and a few instances, can be cited, including some from England, of persons who after their conviction and execution for murder, were discovered to be innocent. But this, according to the Retentionists is not a reason for abolition of the death penalty, but an argument for reform of the judicial system and the sentencing procedure. Theore 197 tically, such errors of judgment cannot be absolutely eliminated from any system of justice, devised and worked by human beings, but their incidence can be infinitesimally reduced by providing adequate safeguards and checks. We will presently see, while dealing with the procedural aspect of the problem, that in India, ample safeguards have been provided by law and the Constitution which almost eliminate the chances of an innocent person being convicted and executed for a capital offence. Regarding (b): Whether death penalty serves any penological purpose. Firstly, in most of the countries in the world, including India, a very large segment of the population, including notable penologists judges, jurists, legislators and other enlightened people still believe that death penalty for murder and certain other capital offences does serve as a deterrent, and a greater deterrent than life imprisonment. We will set out very briefly, by way of sample, opinions of some of these distinguished persons. In the first place, we will notice a few decisions of Courts wherein the deterrent value of death penalty has been judicially recognised. In Paras Ram vs State of Punjab,(1) the facts were that Paras Ram, who was a fanatic devotee of the Devi, used to hold Satsangs at which bhajans were sung in praise of the Goddess. Paras Ram ceremonially beheaded his four year old boy at the crescendo of the morning bhajan. He was tried, convicted and sentenced to death for the murder. His death sentence was confirmed by the High Court. He filed a petition for grant of special leave to appeal to this Court under Article 136 of the Constitution. It was contended on behalf of Paras Ram that the very monstrosity of the crime provided proof of his insanity sufficient to exculpate the offender under Section 84, Indian Penal Code, or material for mitigation of the sentence of death. V. R. Krishna Iyer, J., speaking for the Bench, to which one of us (Sarkaria, J.) was a party, refused to grant special leave and summarily dismissed the petition with these observations : 198 "The poignantly pathological grip of macabre superstitions on some crude Indian minds in the shape of desire to do human and animal sacrifice, in defiance of the scientific ethos of our cultural heritage and the scientific impact of our technological century, shows up in crimes of primitive horror such as the one we are dealing with now, where a blood curdling butehery of one 's own beloved son was perpetrated, aided by other 'pious ' criminals, to propitiate some blood thirsty diety. Secular India, speaking through the Court, must administer shock therepy to such anti social 'piety ' when the manifestation is in terms of inhuman and criminal violence. When the disease is social, deterrence through court sentence must, perforce, operate through the individual culprit coming up before court. Social justice has many facets and Judges have a sensitive, secular and civilising role in suppressing grievous injustice to humanist values by inflicting condign punishment on dangerous deviants. " (emphasis added) In Jagmohan, also, this Court took due note of the fact that for certain types of murders, death penalty alone is considered an adequate deterrent: "A large number of murders is undoubtedly of the common type. But some at least are diabolical in conception and cruel in execution. In some others where the victim is a person of high standing in the country society is liable to be rocked to its very foundation. Such murders cannot simply be wished away by finding alibis in the social maladjustment of the murderer. Prevalence of such crimes speaks, in the opinion of many, for the inevitability of death penalty not only by way of deterrence but as a token of emphatic disapproval of the society. " Examining whether life imprisonment was an adequate substitute for death penalty, the Court observed: "In the context of our criminal law which punishes murder, one cannot ignore the fact that life imprisonment works out in most cases to a dozen years of punishment, and it may be seriously questioned whether that sole alter 199 native will be an adequate substitute for the death penalty." In Ediga Anamma vs State of Andhra Pradesh,(1) V.R. Krishna Iyer, J., speaking for the Bench to which one of us (Sarkaria, J.,) was a party, observed that "deterrence through threat of death may still be a promising strategy in some frightful areas of murderous crime." It was further observed that "horrendous features of the crime and the hapless and helpness state of the victim steel the heart of law for the sterner sentence." In Shiv Mohan Singh vs State (Delhi Administration),(2) the same learned Judge, speaking for the Court, reiterated the deterrent effect of death penalty by referring to his earlier judgment in Ediga Annamma 's case, as follows: "In Ediga Annamma this Court, while noticing the social and personel circumstances possessing an extenuating impact, has equally clearly highlighted that in India under present conditions deterrence through death penalty may not be a time barred punishment in some frightful areas of barbarous murder." Again, in Charles Sobraj vs The Superintendent, Central Jail, Tihar, New Delhi,(3) the same learned Judge, speaking for a Bench of three learned Judges of this Court, reiterated that deterrence was one of the vital considerations of punishment. In Trop vs Dulleh,(4) Brennan, J. of the supreme Court of the United States, concurring with the majority, emphasised the deterrent end of punishment, in these words: "Rehabilitation is but one of the several purposes of the penal law. Among other purposes are deterrents of the wrongful act by the threat of punishment and insulation of society from dangerous individuals by imprisonment or execution. " 200 In Furman vs Georgia, Stewart, J. took the view that death penalty serves a deterrent as well as retributive purpose. In his view, certain criminal conduct is so atrocious that society 's interest in deterrence and retribution wholly outweighs any considerations of reform or rehablitation of the perpetrator, and that, despite the inconclusive empirical evidence, only penalty of death will provide maximum deterrence. Speaking for the majority, in Gregg vs Georgia, Stewart, J. reiterated his views with regard to the deterrent and retributive effect of death penalty. Now, we may notice by way of specimen, the views of some jurists and scholars of note. Sir James Fitzjames Stephen, the great jurist, who was concerned with the drafting of the Indian Penal Code, also, was a strong exponent of the view that capital punishment has the greatest value as a deterrent for murder and other capital offence. To quote his words: "No other punishment deters men so effectually from committing crimes as the punishment of death. This is one of those propositions which it is difficult to prove, simply because they are in themselves more obvious than any proof can make them. It is possible to display ingenuity in arguing against it, but that is all. The whole experience of mankind is in the other direction. The threat of instant death is the one to which resort has always been made when there was an absolute necessity for producing some result. No one goes to certain inevitable death except by compulsion. Put the matter the other the way. Was there ever yet a criminal who, when sentenced to death and brought out to die, would refuse to offer of commutation of his sentence for the severest secondary punishment? Surely not. Why is this ? It can only be because 'All that a man has will he give for his life '. In any secondary punishment, however terrible, there is hope; but death is death; its terrors cannot be described more forcibly." Even Marchese De Cesare Bonesana Beccaria, who can be called the father of the modern Abolitionist movement, concedes in his treatise, "Dei Delitti a della Pana" (1764), that capital punishment would be justified in two instances: Firstly, in an execution 201 would prevent a revolution against popularly established Government; and, secondly, if an execution was the only way to deter others from committing a crime. The adoption of double standards for capital punishment in the realm of conscience is considered by some scholars as the biggest infirmity in the Abolitionists ' case. Thorsten Sallin is one of the penologists who has made a scientific study of the subject of capital punishment and complied the views of various scholars of the 19th and 20th centuries. In his book "Capital Punishment", he has made an attempt to assemble the arguments for and against the death penalty. He has also given extracts from the Debates in the British House of Commons in 1956 and, also, in March and April 1966, in the Candian House of Commons. In the last part of his book, the learned Editor summarises his ideas about capital punishment. In his opinion, Retribution seems to be outdated and unworkable. It is neither efficient nor equitably administered. "Justice is a relative concept that changes with the times". A retributive philosophy alone is not now socially acceptable. "In the last analysis, the only utilitarian argument that has being to be given attention is the one that defends capital punishment as a uniquely powerful means of protecting the community." He ends his book with the observation : "I have attempted to show that, as now used, capital punishment performs none of the utilitarian functions claimed by its supporters, nor can it ever be made to serve such functions. It is an archaic custom of primitive origin that has disappeared in most civilized countries and is withering away in the rest. " In his article appearing in "Criminology Review Year Book" (1979) Vol. 1, complied by Sheldon L. Messinger & Egon Bittner(1), Isaac Ehrlich, after surveying the past literature on the relation between capital punishment and capital crimes, has (at pp. 31 33) pointed out the following shortcomings in the thesis of Sellin : "The principal shortcoming of the work by Sellin and others using his methodology is that the approach taken and the methods applied do not permit a systematic examination of the main implications emanating from the general theory of deterrence. The shortcoming is basic, because the implications following from the general deterrence 202 hypothesis are what Sellin was challenging. Yet his work neither develops nor tests the full range of implications following from the theory he attempts to reject; nor does he develop or test a competing theory. In addition, to my knowledge, Sellin never reported in any of his studies the results of any systematic (parametric or non parametric) statistical tests that could justify his strong and unqualified inferences." . . "Another fundamental shortcoming of Sellin 's studies is their failure to account systematically for other factors that are expected by the deterrence hypothesis to affect the frequency of murder in the population, apart from the relevant risk of execution. These are variables such as the probability of apprehension, the conditional probability of conviction given apprehension, the severity of alternative punishments for murder, the distribution of income, the probability of unemployment, and other indicators of differential gains from criminal activities occurring jointly with murder. Since, as I shall argue later, some of these variables are expected to be highly correlated with the conditional probability of execution given conviction of murder, their exclusion from the statistical analysis can seriously bias estimates of the partial deterrent effect of capital punishment. Aware of the problem, Sellin attempted to compare states that are as alike as possible in all other respects. However, his "matching procedure", based on the assumption that neighbouring states can satisfy such pre requisites without any explicit standardization, is simply insufficient for any valid inferences. Pairs of states, such as New York, and Rhode Island, Massachusetts and Maine, or Illinois and Wisconsin all included in his comparisons, differ in their economic and demographic characteristics, in their law enforcement activities, and in the opportunities they provide for the commission of other crimes. Moreover, the direction of the causal relationship between the murder rate and the overall risk of punishment be it the death penalty or any other sanction is not self evident because, for example, states with high murder rates are expected to and, in fact do devote more 203 resources to apprehend, convict and execute offenders than do states with lower rates. Specifically, variations in the legal or practical status of the death penalty occasionally may be the result of, rather than the cause for, changes in the murder rate, and thus may give rise to an apparent positive association between these two variables. The same general point applies in connection with the identification of the effect of any other variable which is a product of law enforcement activity or private protection against crime. For these reasons, the true deterrent effect of a sanction such as the death penalty cannot be readily inferred from simple comparisons of the sort performed by Sellin. " The learned author then (at page 33) arrives at this conclusion : "If investigations indicate that probability and length of imprisonment do impart significant deterrent effects, then failure of the research to demonstrate specifically the deterrent efficacy of capital punishment may be taken more as evidence for shortcomings in the research design and methodology or in the measures of the theoretically relevant variables used than as a reflection on the validity of the deterrence theory itself. " The scholar then stresses another purpose of capital punishment, namely, incapacitation of the offender, which, in fact, is another aspect of its deterrent effect. To quote his words : "There is an additional point worth stressing. Even if punishment by execution or imprisonment does not have any deterrent effect, surely it must exert some incapacitative effect on punished offenders by reducing or eliminating the possibility of recidivism on their part." This eminent social scientist, Prof. Ehrlich(1) whose views we have extracted, has made intensive studies of the deterrent effect of capital punishment. Then, a result of his study was also published 204 in the American Economic Review in June, 1975. He includes a specific test for the presence of a deterrent effect of capital punishment to the results of earlier studies. He has in his study(1) claimed to identify a significant reduction in the murder rate due to the use of capital punishment. A version of his detailed study is said to have been filed with the United States Supreme Court on March 7, 1975 in the case of Fowler vs North Carolina.(2) In 1975, Robert Martinson, a sociologist, published the results of a study he had made in New York regarding the rehabilitation of of prisoners. Among the conclusions he drew: "The prison which makes every effort at rehabilitation succeeds no better than the prison which leaves its inmates to rot. The certainty of punishment rather than the severity, is the most effective crime deterrent. We should make plain that prisons exist to punish people for crimes committed." (Quoted in Encyclopaedia Britannica 1978 Book of the Year, pp. 593 594) Many judges especially in Britain and the United States, where rising crime rates are the source of much public concern have expressed grave doubts about the wisdom of the view that reform ought to take priority in dealing with offenders. "They have argued that the courts must reflect a public abhorrence of crime and that justice demands that some attempt be made to impose punishment fitting to the crime." (Encyclopaedia Britannica, ibid.) Professor Jean Graven, Judge of the Court of Appeal of Geneva, and a distinguished jurist, maintains in his learned analysis, (see the Postscript in reply to A World View of Capital Punishment by James Avery Joyce), of the views of Camus and Koestler, that neither of these two authors has faced up to the really basic objection to the abolitionist 's case. According to Graven, there are two groups of people, which are not covered by the abolitionist 's case and Camus and Koestler have therefore left their cause open to attack at its _______________________ (1) See Lee section Friedman 's article at pages 61 87, Review Year Book, 1979, compiled by Messinger and Bittner. (2) 428 US 904=49 L. Ed. 1212 (1976). 205 weakest point. "The true problem", as Graven sees it, "is the protection of the organized, civilized community", the legitimate defence of society against criminal attacks made upon it by those anti social elements which can be stopped only by being eliminated, in the "last resort". "For such, the death penalty should be preserved, and only for such". Professors Graven 's second challenge is, which the abolitionist must accept, the existing division between civil and military protection. According to him, in doing so, the abolitionist cannot avoid applying double standard and two mutually destructive criteria to their approach to the death penalty. "For if the death penalty is accepted as protective in principle to society, then it should be so in all cases and in all circumstances in troubled times as well as in peaceful times, in respect of the traitor, the spy, the deserter, or the hostage, as well as of the brigand, the "gangster", or the professional killer. We must be logical and just at the same time. In the realm of conscience and of 'principles ', there cannot be two weights and measures. There cannot be a morality for difficult times and another morality for easy times; one standard for military justice and another for civil justice. What then should be done with those individuals who have always been considered proper subjects for elimination? If the capital sentence is objectionable and illegal. If the death penalty must be absolutely repudiated because it 'degrades man, (quoting Camus) then we accept the position. But, in that case, no right to kill exists any longer. the greatest war criminals, those responsible conscious of what they have done and intended to do for the worst crimes of genocide, who gassed, incinerated in ovens or buried in quicklime a million innocent victims, or allowed them to perish in mines and marshes. Society has not the right then to kill even these "Monsters". (Quoted in A World View of Capital Punishment, by James Avery Joyce). J.J. Maclean, a Parliamentarian, articulated his views with regard to the deterrent, value of capital punishment in the Canadian House of Commons in the March April, Debates 1966, as follows: "Whether it (capital punishment) is a greater or lesser deterrent than life imprisonment. This is an argument that cannot be proven on either side but I would not like to 206 have to try to convince any one that capital punishment is not a deterrent. Statistically this cannot be proven because the deterrent effect on both capital punishment and life imprisonment is obscured by the fact that most criminals plan a crime on the basis that they are going to avoid any penalty. I say, the deterrent value is with respect to people who did not commit crimes, who were deterred from becoming murderers by the fact that capital punishment or some other heavy penalty would be meted outto them if caught." (Quoted in Sellin 's Capital Punishment). The Law Commission of India in its 35th Report, after carefully sifting all the materials collected by them, recorded their views regarding the deterrent effect of capital punishment as follows: "In our view capital punishment does act as a deterrent. We have already discussed in detail several aspects of this topic. We state below, very briefly, the main points that have weighed with us in arriving at this conclusion: (a) Basically, every human being dreads death. (b) Death, as a penalty, stands on a totally different level from imprisonment for life or any otber punishment. The difference is one of quality, and not merely of degree. (c) Those who are specifically qualified to express an opinion on the subject, including particularly the majority of the replies received from State Governments, Judges, Members of Parliament and Legislatures and Members of the Bar and police officers are definitely of the view that the deterrent object of capital punishment is achieved in a fair measure in India. (d) As to conduct of prisoners released from jail (after undergoing imprisonment for life), it would be difficult to come to a conclusion, without studies extending over a long period of years. 207 (e) Whether any other punishment can possess all the advantages of capital punishment is a matter of doubt. (f) Statisties of other countries are inconclusive on the subject. If they are not regarded as proving the deterrent effect; neither can they be regarded as conclusively disproving it. " Views of the British Royal Commission: The British Royal Commission, after making an exhaustive study of the issue of capital punishment and its deterrent value, in their Report (1949 53), concluded: "The general conclusion which we reach, after careful review of all the evidence we have been able to obtain as to the deterrent effect of capital punishment, may be stated as follows. Prima facie the penalty of death is likely to have a stronger effect as a deterrent to normal human beings than any other form of punishment, and there is some evidence (though no convincing statistical evidence) that this is in fact so. But this effect does not operate universally or uniformly, and there are many offenders on whom it is limited and may often be negligible. " We may add that whether or not death penalty in actual practice acts as a deterrent, cannot be statistically proved, either way, because statistics as to how many potentisim murderers were deterred from committing murders, but for the existence of capital punishment for murder, are difficult, if not altogether impossible, to collect. Such statistics of deterred potential murderers are difficult to unravel as they remain hidden in the innermost recesses of their mind. Retribution in the sense of reprobation whether a totally rejected concept of punishment. Even retribution in the sense of society 's reprobation for the worst of crimes, i.e., murder, is not an altogether outmoded concept. This view is held by many distinguished sociologist, jurists and judges. Lord Justice Denning, Master of the Rolls of the Court of 208 Appeal in England, appearing before the British Royal Commission on Capital Punishment, stated his views on this point as under: "Punishment is the way in which society expresses its denunciation of wrong doing, and, in order to maintain respect for law, it is essential that the punishment inflicted for grave crimes should adequately reflect the revulsion felt by the great majority of citizens for them. It is a mistake to consider the objects of punishment as being deterrent or reformative or preventive and nothing else. The truth is that some crimes are so outrageous that society insists on adequate punishment, because the wrong doer deserves it, irrespective of whether it is a deterrent or not." That retribution is still socially acceptable function of punishment, was also the view expressed by Stewart, J., in Furman vs Georgia, at page 389, as follows: ". I would say only that I cannot agree that retribution is a constitutionally impermissible ingredient in the imposition of punishment. The instinct for retribution is part of the nature of man, and channeling that instant, in the administration of criminal justice serves an important purpose in promoting the stability of a society governed by law. When people begin to believe that organized society is unwilling or unable to impose upon criminal offenders the punishment they 'deserve ', then there are sown the seeds of anarchy of self help, vigilant justice, and lynch law. " Patrick Devlin, the eminent jurist and judge, in his book, "The Judge", emphasises the retributive aspect of the purpose of punishment and criminal justice, thus: "I affirm that justice means retribution and nothing else. Vindictiveness is the emotional outflow of retribution and justice has no concern with that. But it is concerned with the measurement of deserts. The point was put lucidly and simply by the Vicar of Longton in a letter to The Times, from which with his permission I quote: Firstly, far from pretending that retribution should have no place in our penal system, Mr. Levin should recognize that it is 209 logically impossible to remove it. If it were removed, all punishments should be rendered unjust. What could be more immoral than to inflict imprisonment on a criminal for the sake of deterring others, if he does not deserve it? Or would it be justified to subject him to a compulsory attempt to reform which includes a denial of liberty unless, again he deserves it?. Retribution and deterrence are not two divergent ends of capital punishment. They are convergent goals which ultimately merge into one. How these ends of punishment coalesce into one was described by the Law Commission of India, thus: "The retributive object of capital punishment has been the subject matter of sharp attack at the hands of the abolitionists. We appreciate that many persons would regard the instinct of revenge as barbarous. How far it should form part of the penal philosophy in modern times will always remain a matter of controversy. No useful purpose will be served by a discussion as to whether the instinct of retribution is or is not commendable. The fact remains, however, that whenever there is a serious crime, the society feels a sense of disapprobation. If there is any element of retribution in the law, as administered now, it is not the instinct of the man of jungle but rather a refined evolution of that instinct the feeling prevails in the public is a fact of which notice is to be taken. The law does not encourage it, or exploit it for any undesirable ends. Rather, by reserving the death penalty for murder, and thus visiting this gravest crime with the gravest punishment, the law helps the element of retribution merge into the element of deterrence." [Para 265 (18), 35th Report] Earlier in 1949 1953, the British Royal Commission in Para 59 of its Report spoke in a somewhat similar strain: "We think it is reasonable to suppose that the deterrent force of capital punishment operates not only by affecting the conscious thoughts of individuals tempted to commit murder, but also by building up in the community, over a 210 long period of time, a deep feeling of peculiar abhorrence for the crime of murder. The fact that men are hung for murder is one great reason why murder is considered so dreadful a crime. This widely diffused effect on the moral consciousness of society is impossible to assess, but it must be at least as important as any direct part which the death penalty may play as a deterrent in the calculations of potential murderers. " According to Dr. Ernest Van Den Haag, a New York psychologist and author, and a leading proponent of death penalty, "a very strong symbolic value" attaches to executions. "The motives for the death penalty may indeed include vengeance. Legal vengeance solidifies social solidarity against law breakers and probably is the only alternative to the disruptive private revenge of those who feel harmed." (See The Voice (USA) June 4, 1979) The views of Lloyd George, who was the Prime Minister of England during the First World War, have been referred to in the book "Capital Punishment" (1967) by Thorsten Sellin at page 65, as below: "The first function of capital punishment is to give emphatic expression to society 's peculiar abhorrence of murder. It is important that murder should be regarded with peculiar horror. I believe that capital punishment does, in the present state of society, both express and sustain the sense of moral revulsion for murder. " This view is not without respectable support in the jurisprudential literature of today, despite an opinion to the contrary. (See also the Royal Commission 's Report, 1949 53). In relying, inter alia, upon the evidence before it, including that of Lord Denning, the Royal Commission recognised a strong and widespread demand for retribution. It is a common phenomenon in all the civilized countries that some murders are so shockingly offensive that there is a general outcry from the public for infliction of the ultimate penalty on the criminal. In regard to the retributive aspect of capital punishment, we may cite one recent illustration showing how demand for retribu 211 tion, in the sense of society 's instinctive disapproval of the outrageous conduct of the murderer is indelibly ingrained in contemporary public opinion even in advanced countries. In November 1978, George Moscone (Mayor) and Harvey Milk (Supervising Officer) of San Francisco were cruelly, assassinated by Dan White, a police man. Six months later, on May 22, 1979, a jury of seven men and five women rejected the charge of first degree murder, and in consequence, did not award capital punishment to Dan White for this heinous double murder. Public opinion reacted sharply. Public protest against this decision spontaneously manifested itself in a burst of flame and fury. Thousands of outraged demonstrators rampaged through the Civic Centre, smashing windows, burning police cars, chanting: "We want justice" Writing in 'The Voice ', a local paper from San Franscisco, in its issue of June 4, 1979, Lawrence Mullen, fired at the jury a volley of questions, to which the agitated public would demand answers: "What comment did the jury make on the value of life? Was the tragedy of the execution style murders the central issue, or was the jury only concerned with technicalities, absurdities and loopholes of the law? Was justice considered not revenge but justice? High irony, Dan White 's strong belief in capital punishment has found thousands of new converts. From now on, a lot of people will die because Dan White lives. Are we so insensitive, callous and inhuman that we accept or excuse violence and brutality? Consider White 's defence lawyer, Douglas Schmidt 's reference to that tragic Monday in November: "It was a tragedy. Now it 's behind us." "For those who loved and still miss George Moscone and Harvey Milk, for those who were cast into darkness and cried for justice, for those who still seek answers, the lawyer 's words are a chilling reminder that we must not forget that we must not 'put it behind us '. " The former cop, a law and order and capital punishment advocate driven by his passion, by his lack of reason, to destroy those who he disagreed with, and by doing so 212 demonstrated the greatest human failure the inability to co exist. "Dan White symbolizes the violence and brutality that is undermining civilization. " Dan White 's case and the spontaneous reaction of the public opinion that followed, show that opposition to capital punishment has (to use the words of Raspberry),"(1) much more appeal when the discussion is merely academic than when the community is confronted with a crime, or a series of crimes, so gross, so heinous, so cold blooded that anything short of death seems an inadequate response". The Editor of 'Capital Punishment ', Thorsten Sellin has noted at page 83 of his compilation, the following views of an outstanding Justice of the Ontario Appeal Court: "The irrevocable character of the death penalty is a reason why all possible measures should be taken against injustice not for its abolition. Now a days, with the advent of armed criminals and the substantial increase in armed robberies, criminals of long standing if arrested, must expect long sentences. However, if they run no risk of hanging, when found guilty of murder, they will kill police men and witnesses with the prospect of a future no more unhappy, as one of them put it, than being fed, lodged, and clothed for the rest of their lives. In addition, once in prison, such people who are capable of anything could kill their guards and their fellow inmates with relative impunity. " J.J. Maclean, the Canadian Parliamentarian justifies, from another angle, the right of the State to award capital punishment for murder: "If the State has the right and the duty to defend the community against outside aggression, such as in time of war, and within the country, for instance, in case of treason ______________ (1) Raspberry, Death Sentence, the Washington Post, March 12, 1976, p, 27 cols. 213 crimes against the State, etc., and that to the extent of taking the life of the aggressors and guilty parties, if the citizen wants to protect his own life by killing whoever attacks him without any reason, the State can do the same when a criminal attacks and endangers the life of the community by deciding to eliminate summarily another human being. Capital punishment must be retained to prove the sanctity of that most precious thing which is the gift of life; it embodies the revulsion and horror that we feel for the greatest of crimes. For most people, life is priceless and they will do anything and suffer the worst privations to preserve it, even when life itself does not hold many consolations or bright prospects for the future. As a deterrent, the death penalty is playing its part for which there is no substitute. I suggest that statistics do not prove much, either on one side or the other. There are too many variations, too many changes as regards circumstances, condition between one period and the other, to enable us to make worthy comparisons." (See page 84 of Sellin 's Capital Punishment). Some penologists justify capital penalty and life imprisonment on the 'isolation ' or 'elimination ' theory of crime and punishment. Vernon Rich in his "Law & the administration of justice" (Second Edition, at page 10), says: "The isolation theory of crime and punishment is that the criminal law is a device for identifying persons dangerous to society who are then punished by being isolated from society as a whole, so that they cannot commit other antisocial acts. The isolation theory is used to justify the death penalty and long term imprisonment. Obviously, this theory is effective in preventing criminal acts by those executed or permanently incarcerated. " While the Abolitionists look upon death penalty as something which is per se immoral and inhuman, the Retentionists apprehened that if we surrender even the risk of the last remaining horrifying deterrent by which to frighten the toughts of the underworld, we may 214 easily tip the scales in favour of the anti social hoodlums. They fear that abolition of capital punishment, will result in increase of murders motivated by greed, and in affable "crime passionelle." "It is feared", wrote George A. Floris,(1) "the most devastating effects of the abolition will, however, show themselves in the realm of political murder. An adherent of political extremism is usually convinced that the victory of his cause is just round the corner. So, for him long term imprisonment holds no fear. He is confident that the coming ascendency of his friends will soon liberate him. " To prove this proposition, Floris cites the instance of Von Paper 's Government who in September 1932, reprieved the death sentence passed on two of Hitler 's storm troopers for brutal killing of one of their political opponents. The Retentionists believe that the dismantling of the gallows will almost everywhere enhance the hit and run attacks on political opponents. On this premise, they argue that capital punishment is the most formidable safeguard against terrorism. The argument cannot be rejected out of hand. A number of instances can be cited where abolitionist States feeling the inadequacy of their penological armour to combat politically motivated gangsterism, have retrieved and used their capital weapon which they had once thrown away. Despite their traditional abhorrence of death penalty, the Norwegians executed Major Vedkun Quisling after World War II. The Belgians, too, executed no less than 242 collaborators ' and traitors after the liberation, although in their country, the death penalty was otiose since 1880. In England, death penalty was retained for high treason in the Silverman Bill of 1956. Even at present, for that offence, death penalty is a valid sanction in England. In the aftermath of assassination of Prime Minister Bandernaike in 1959, Ceylon hurriedly reintroduced capital punishment for murder. Owing to similar considerations, Israel sanctioned death penalty for crimes committed against the Jewish people, and executed the notorious Jew baiter, Adolf Eichmann in 1962. Recently, on April 9, 1979, confronted with a wave of violent incidents after the signing of Egypt Israel Peace Treaty. Israel sanctioned the use of death penalty "for acts of inhuman cruelty". ____________ (1) Sunday Tribune, December 8, 1963. 215 In India, very few scientific studies in regard to crime and punishment in general, and capital punishment, in particular, have been made. Counsel for the petitioners referred us to Chapter VI, captioned 'Capital Punishment, in the book, 'Quantum of Punishment in Criminal Law in India, written by Dr. Kripal Singh Chhabra, now on the staff of G.N. University, Amritsar. In this article, which was primarily meant as LL. D. thesis, the learned author concludes: "On the basis of statistics both of India and abroad, U.N.O. findings and other weighty arguments, we can safely conclude that death penalty is not sustainable on merits. Innately it has no reformative element. It has been proved that death penalty as operative carries no deterrent value and crime of murder is governed by factors other than death penalty. Accordingly, I feel that the death penalty should be abolished. " It will be seen, in the first place, that the analysis by Dr. Chhabra in coming to the conclusion, that death penalty is of no penological value, is based on stale, incomplete and inadequate statistics. This is more particularly true of the data relating to India, which does not cover the period subsequent to 1961. Secondly, the approach to the problem adopted by him, like the other Abolitionists referred to by him, is mainly, if not merely, statistical. As already noticed, the proponents of the opposite view of capital punishment, point out that statistics alone are not determinative of the question whether or not death penalty serves any deterent or other penological purpose. Firstly, statistics of deterred potential murderers are hard to obtain. Secondly, the approach adopted by the Abolitionists is oversimplified at the cost of other relevant but imponderable factors, the appreciation of which is essential to assess the true penological value of capital punishment. The number of such factors is infinitude, their character variable duration transient and abstract formulation difficult. Conditions change from country to country and time to time. Due to the inconstancy of social conditions, it is not scientifically possible to assess with any degree of accuracy, as to whether the variation in the incidence of capital crime is attributable to the presence or absence of death penalty in the penal law of that country for such crimes. 216 That is why statistical attempts to assess the true penological value of capital punishment, remain inconclusive. Pursued beyond a certain point, both the Abolitionists and the Retentionists retreat into their own conceptual bunkers firmly entrenched in their respective "faiths". We need not take sides with either of them. There is always a danger in adhering too rigidly to concepts. As Prof. Brett has pointed out "all concepts are abstractions from reality, and that in the process of abstraction something of the reality is bound to be lost ' '(1). We must therefore, view the problem against the perspective of the hard realities of the time and the conditions prevailing in the world, particularly in our own country. A review of the world events of the last seven or eight years, as evident from Encyclopaedia Britannica Year Books and other material referred to by the learned counsel, would show that most countries in the world are in the grip of an ever rising tide of violent crime. Murders for monetary gain or from misdirected political motives, robbery, rape assault are on the increase. India is no exception. The Union of India has produced for our perusal a statement of facts and figures showing the incidence of violent crime, including murder, dacoity and robbery, in the various States of India, during the years 1965 to 1975. Another statement has been furnished showing the number of persons convicted of murder and other capital offences and sentenced to death in some of the States of India during the period 1974 to 1978. This statement however, is incomplete and inadequate. On account of that deficiency and for the general reasons set out above, it cannot, even statistically show conclusively or with any degree of certainty, that capital punishment has no penological worth. But the first statement does bring out clearly the stark reality that the crimes of murder, dacoity and robbery in India are since 1965 increasing. Now, looking around at the world during the last decade, we may recall that in Purman vs Georgia (decided on June 29, 1976), the Supreme Court of the United States held by a majority, that the imposition and carrying out of the death penalty constitutes 'cruel and unusual ' punishment, in violation of the Eighth and Fourteenth ____________ (1) An Enquiry into Criminal Guilt by Prof. Peter Brett, 1963 Edn. Melbourne, page 13. 217 Amendments. Brennan and Marshall, JJ. (differing from the plurality) went to the extent of holding that death penalty was per se unconstitutional as it was a cruel and unusual punishment. In so holding, these learned Justices purported to adopt the contemporary standards of decency prevailing among the enlightened public of the United States. Justice Marshall ruled that "it was morally unacceptable to the people of the United States". This opinion of the learned Justices was sharply rebuffed by the people of the United States through their chosen representatives. Soon after the decision in Furman, bowing to the thrust of public opinion, the Legislatures of not less than 32 States, post haste revised their penal laws and reinstituted death penalty for murder and certain other crimes. Public opinion polls then taken show that approximately 70 per cent of Americans have been in favour of death penalty. (See 'The Voice ', supra). In 1976, a Gallup Poll taken in the Unitted States showed that more than 65 per cent of those polled preferred to have an operative death penalty. Incidently, the rejection by the people of the approach adopted by the two learned Judges in Furman, furnishes proof of the fact that judicial opinion does not necessarily reflect the moral attitudes of the people. At the same time, it is a reminder that Judges should not take upon themselves the responsibility of becoming oracles or spokesmen of public opinion: Not being representatives of the people, it is often better, as a matter of judicial restraint, to leave the function of assessing public opinion to the chosen representatives of the people in the legislature concerned. Coming back to the review of the world crime situation, during the last decade, Saudi Arabia and some other countries have reinstated death penalty or enacted harsher punishments not only for murder but some other crimes, also. In America, apart from 32 States which reinstated death penalty under revised laws after Furman, the legislatures of some of the remaining 15 States have either reinstituted or are considering to reintroduce death penalty. Currently, a federal legislation for reinstituting or prescribing capital punishment for a larger range of offences of homicide is under consideration of United States ' Congress. According to the report of the Amnesty International, in U.S.A., as on May 1, 1979, death penalty can be imposed for aggravated murder in 35 States. Attempts have been made in other countries, also to reintroduce death penalty. In Britain, in 218 the wake of serious violent incidents of terrorism, a Bill was moved in Parliament to reintroduce capital punishment for murder and certain other offences. It was defeated by a free vote on April 19, 1979. Even so, no less than 243 Members of Parliament had voted in favour of this measure. We have noted that Israel has also recently reinstituted death penalty for certain criminal 'acts of in human cruelty '. In People 's Republic of China, a new legislation was adopted on July 1, 1979 by China 's Parliament, according to Article 43 of which, death penalty can be imposed "for the most heinous crimes". In Argentina, the death penalty was reintroduced in 1976. Similarly, Belgium reintroduced death penalty and increased the number of crimes punishable with death. In France, in 1978 a movement in favour of abolition initiated by the French bishops failed to change the law under which death penalty is a valid sanction for murder and certain other offences. In Japan, death penalty is a legal sanction for 13 crimes. In Greece and Turkey, death penalty can be imposed for murder and other capital offences. In Malaysia and the Republic of Singapore under the Drugs Act of May, 1979, misuse of drugs is also punishable with death. Cuba introduced a new penal code in February 1978, which provides punishment of death by shooting for crimes ranging from some types of murder and robbery to hijacking and rape. In the U.S.S.R. (Russia), as many as 18 offences are punishable with death. In Russia, at present, the following offences committed in peacetime are punishable with death under the RSFSR Criminal Code: "Treason (Article 64); espoinage (Article 65); terrorism (if the offence includes the killing of an official (Article 66); terrorism against representative of foreign State (if the offence includes the killing of such a representative "for the purpose of provoking war or international compli cations") (Article 67); sabotage (Article 68); organizing the commission of any of the above named offences (Article 72); commission of any of the above named offences against other Working People 's State (Article 73); banditry (Article 77); actions disrupting the work of corrective labour institutions (Article 77 1); making or passing counterfeit money or securities (when the offence is committed as a form of business) (Article 87); violation of rules for currency transactions (when committed as a form of business or on 219 a large scale, or by a person previously convicted under this Article) (article 88); stealing of State property on an especially large scale, regardless of the manner of stealing (Article 93 1); intentional homicide with aggravating circumstances (Article 102); rape, when committed by a group of persons or by an especially dangerous recidivist, or resulting in especially grave consequences, or the rape of a minor (Article 117); taking a bribe, with especially aggravating circumstances (Article 173); infringing the life of a policeman or People 's Guard, with aggravating circumstances (Article 191 2); hijacking an aircraft, if the offence results in death or serious physical injuries (Article 213 2); resisting a superior or compelling him to violate official duties, an offence applicable only to military personnel, and carrying the death penalty in peace time if committed in conjunction with intentional homicide of a superior or any other person performing military duties (Article 240)." (Vide, Report of Amnesty International, 1979) Our object in making the above survey is to bring out the hard fact that in spite of the Abolitionist movement, only 18 States (as on 30 May 1979) in the world have abolished the death penalty for all offences, while 8 more have retained it for specific offences committed in time of war, only. (See Amnesty International Report (1979) page 92). This means, most of the countries in the modern world still retain death penalty as a legal sanction for certain specified offences. The countries which retain death penalty in their penal laws, such as, Russia, U.S.A., France, Belgium, Malaysia, China and Japan, etc., cannot, by any standard, be called uncivilized nations or immature societies. Surveyors and students of world events and current trends believe that the reversal of the attitudes towards criminals and their judicial punishments in general, and capital punishment in particular in several countries of the world, is partly due to the fact that milder sanctions or corrective processes, or even the alternative of imprisonment, have been found inadequate and wanting to stem the mounting tide of serious crime. Writing in Encyclopaedia Britannica, 1978 Book of the Year under the caption, 'Changing Attitudes Towards Criminals ', Richard Whittingham sums up the cause that has led to the adoption of this New Hard Line, thus : 220 "Horror Story after horror story of dangerous criminals sent back into society on bail or parole from a penitentiary or (in many cases) release from a mental institution to commit further crimes have forced people to say that enough is enough. The consensus seemed to be that there must be no repetition of such situations as the one described by Chicago Sun Times Columnist Roger Simon in a September 4, 1977, article about a man who had just been convicted of a particularly despicable crime. " Faced with the spectre of rising crime, people and sociologists alike, have started questioning the rehabilitation policy. "In California another study from the Rand Cooperation, suggests that keeping habitual criminals locked up would do more to reduce crime than any rehabilitation efforts. Despite treatment or preventive measures, habitual criminals commonly go back to crime after they are released from prison, the study showed. In addition, the study found that deterrence to crime was in direct proportion to the relative certainty of going to jail, after being caught." According to Encyclopaedia Britannica Year Book 1979, in 1978 also penologists were seriously divided in their views about the end of punishment. Some penologists argued that "It is not possible to punish and reform simultaneously": while "others would prefer to strip punishment of its moral overtones", "While many Legislators and most penologists have supported the idea that reform ought to take priority in dealing with offenders, many Judges especially in Britain and the United States, where rising crime rates are the source of much public concern have expressed grave doubts about the wisdom of this view. They have argued that the courts must reflect a public abhorrence of crime and that justice demands that some attempt be made to impose punishment fitting to the crime". India also, as the statistics furnished by the respondent (Union of India) show, is afflicted by a rising rate of violent crime, particularly murder, armed robbery and dacoity etc., and this has been the cause of much public concern. All attempts made by individual members to move Bills in the Parliament for abolition or restriction of the area of death penalty have ended in failure. At least four of such unsuccessful attempts were made after India won Independence, in 1949, 1958, 1961 and 1978. It may be noted that the last of 221 these cttempts was only to restrict the death penalty to a few types of murders specified in the Bill. Though it was passed by the Rajya Sabha after being recast, it has not been passed by Lok Sabha. To sum up, the question whether or not death penalty serves any penological purpose is a difficult, complex and intractable issue. It has evoked strong, divergent views. For the purpose of testing the constitutionality of the impugned provision as to death penalty in Section 302, Penal Code on the ground of reasonableness in the light of Articles 19 and 21 of the Constitution, it is not necessary for us to express any categorical opinion, one way or the other, as to which of these two antithetical views, held by the Abolitionists and Retentionists, is correct. It is sufficient to say that the very fact that persons of reason, learning and light are rationally and deeply divided in their opinion on this issue, is a ground among others, for rejecting the petitioners argument that retention of death penalty in the impugned provision, is totally devoid of reason and purpose. If, notwithstanding the view of the Abolitionists to the contrary, a very large segment of people, the world over, including sociologists, legislators, jurists, judges and administrators still firmly believe in the worth and necessity of capital punishment for the protection of society, if in the perspective of prevailing crime conditions in India, contemporary public opinion chanalised through the people 's representatives in Parliament, has repeatedly in the last three decades, rejected all attempts, including the one made recently to abolish or specifically restrict the area of death penalty, if death penalty is still a recognised legal sanction for murder or some types of murder in most of the civilised countries in the world, if the framers of the Indian Constitution were fully aware as we shall presently show they were of the existence of death penalty as punishment for murder, under the Indian Penal Code, if the 35th Report and subsequent Reports of the Law Commission suggesting retention of death penalty, and recommending revision of the Criminal Procedure Code and the insertion of the new Sections 235 (2) and 354 (3) in that Code providing for pre sentence hearing and sentencing procedure on conviction for murder and other capital offences were before the Parliament and presumably considered by it when in 1972 1973 it took up revision of the Code of 1898 and replaced it by the Code of Criminal Procedure, 1973, it is not possible to hold that the provision of death penalty as an alternative punishment for murder, in Section 302, Penal Code is unreasonable and not in the 222 public interest. We would, therefore, conclude that the impugned provision in Section 302, violates neither the letter nor the ethos of Article 19. We will now consider the issue whether the impugned limb of the provision in Section 302, Penal Code contravenes Article 21 of the Constitution. Before dealing with the contention canvassed on the point, it will be proper to notice briefly the principles which should inform the interpretation of Article 21. In Maneka Gandhi 's case, which was a decision by a Bench of seven learned Judges, it was held by Bhagwati, J. in his concurring judgment, that the expression 'personal liberty ' in Article 21 is of the widest amplitude and it covers a variety of rights which go to constitute the personal liberty of man and some of them have been raised to the status of distinct fundamental rights under Article 19. It was further observed that Articles 14, 19 and 21 are not to be interpreted in water tight compartments, and consequently, a law depriving a person of personal liberty and prescribing a procedure for that purpose within the meaning of Article 21 has to stand the test of one or more of the fundamental rights conferred under Article 19 which may be applicable in a given situation, ex hypothesi it must also be liable to be tested with reference to Article 14. The principle of reasonableness pervades all the three Articles, with the result, that the procedure contemplated by Article 21 must be 'right and just and fair ' and not 'arbitrary ' fancifu or 'oppressive ', otherwise, it should be no procedure at all and the requirement of Article 21 would not be satisfied. Article 21 reads as under: "No person shall be deprived of his life or personal liberty except according to procedure established by law. " If this Article is expanded in accordance with the interpretative principle indicated in Maneka Gandhi, it will read as follows: "No person shall be deprived of his life or personal liberty except according to fair, just and reasonable procedure established by valid law." 223 In the converse positive form, the expanded Article will read as below: "A peron may be deprived of his life or personal liberty in accordance with fair, just and reasonable procedure established by valid law." Thus expanded and read for interpretative purposes, Article 21 clearly brings out the implication, that the Founding Fathers recognised the right of the State to deprive a person of his life or personal liberty in accordance with fair, just and reasonable procedure established by valid law. There are several other indications, also, in the Constitution which show that the Constitution makers were fully cognizant of the existence of death penalty for murder and certain other offences in the Indian Penal Code. Entries 1 and 2 in List III Concurrent List of the Seventh Schedule, specifically refer to the Indian Penal Code and the Code of Criminal Procedure as in force at the commencement of the Constitution. Article 72 (1) (c) specifically invests the President with power to suspend, remit or commute the sentence of any person convicted of any offence, and also "in all cases where the sentence is a sentence of death". Likewise, under Article 161, the Governor of a State has been given power to suspend, remit or commute, inter alia the sentence of death of any person convicted of murder or other capital offence relating to a matter to which the executive power of the State extends. Article 134, in terms, gives a right of appeal to the Supreme Court to a person who, on appeal, is sentenced to death by the High Court, after reversal of his acquittal by the trial Court. Under the successive Criminal Procedure Codes which have been in force for about 100 years, a sentence of death is to be carried out by hanging. In view of the aforesaid constitutional postulates, by no stretch of imagination can it be said that death penalty under Section 302, Penal Code, either per se or because of its execution by hanging, constitutes an unreasonable, cruel or unusual punishment. By reason of the same constitutional postulates, it cannot be said that the framers of the Constitution considered death sentence for murder or the prescribed traditional mode of its execution as a degrading punishment which would defile "the dignity of the individual" within the contemplation of the Preamble to the Constitution. On parity of reasoning, it cannot be said that death penalty for the offence of murder violates the basic structure of the Constitution. 224 Before we pass on to the main Question No. II, we may dispose of another contention convassed by Dr. L.M. Singhvi. It is pointed out that India, as a member of the International Community, was a participating delegate at the international conference that made the Stockholm Declaration on December 11, 1977, that India has also accepted the International Covenant on Civil and Political Rights adopted by the Central Assembly of the United Nations, which came into force on March 23, 1966, and to which some 47 countries, including India, are a party. This being the position, it is stressed, India stands committed to the abolition of the death penalty. It is contended that the constitutional validity and interpretation of the impugned limb of Section 302, Penal Code, and the sentencing procedure for capital cases provided in Section 354 (3) of the Code of Criminal Procedure, 1973, must be considered in the light of the aforesaid Stockholm Declaration and the International Covenant, which represent the evolving attitudes and standards of decency in a maturing world. Let us examine this contention. The European Convention of Human Rights came into force on September 1, 1953, and 18 countries had signed this Convention on November 4, 1950. India acceded to this Resolution of the Convention on March 27, 1979. The International Covenant on Civil and Political Rights, inter alia, provides: "Article 6 (1) Every human being has the inherent right to life. This right shall be protected by law. No one shall be arbitrarily deprived of his life. (2) In countries which have not abolished the death penalty, sentence of death may be imposed only for the most serious crimes in accordance with the law in force at the time of the commission of the crime. It will be seen that clauses (1) and (2) of Article 6 do not abolish or prohibit the imposition of death penalty in all circumstances. All that they require is that, firstly, death penalty shall not be arbitrarily inflicted; secondly, it shall be imposed only for most serious crimes in accordance with a law, which shall not be an ex post facto legislation. Thus, the requirements of these clauses are substantially 225 the same as the guarantees or prohibitions contained in Articles 20 and 21 of our Constitution. India 's commitment therefore does not go beyond what is provided in the Constitution and the Indian Penal Code and the Criminal Procedure Code. The Penal Code prescribes death penalty as an alternative punishment only for heinous crimes which are not more than seven in number. Section 354 (3) of the Criminal Procedure Code, 1973, as we shall presently discuss, in keeping with the spirit of the International Covenant, has further restricted the area of death penalty. India 's penal laws, including the impugned provisions and their application, are thus entirely in accord with its international commitment. It will be pertinent to note that most of the countries including those who have subscribed to this International covenant, retain death penalty for murder and certain other crimes even to the present day in their penal laws. Neither the new interpretative dimensions given to Articles 19 and 21 by this Court in Maneka Gandhi and Charles Sobraj vs The Superintendent Central Jail, Tihar, New Delhi(1) nor the acceptance by India of the International Covenant on Civil and Political Rights, makes any change in the prevailing standards of decency and human dignity by which counsel require us to judge the constitutional validity of the impugned provisions. The International Covenant, as already noticed, does not outlaw capital punishment for murder, altogether. For all the foregoing reasons, we would answer the first main question in the negative. This takes us to Question No. II. Question No.II. Are the provisions of Section 354 (3) of the Code of Criminal Procedure, 1973 unconstitutional ? That is the question. The constitutional validity of section 354 (3) is assailed on these grounds: (i) (a) Section 354 (3) of the Code of Criminal Procedure, 1973, delegates to the Court the duty to legislate the field of 'special reasons ' for choosing between life and death, and ____________________ (1) ; 226 (b) permits imposition of death penalty in an arbitrary and whimsical manner in as much as it does not lay down any rational principies or criteria for invoking this extreme sanction. (Reliance has been placed on Furman vs Georgia (ibid). (ii) If Section 354 (3) is to be saved from the vice of unconstitutionality, the Court should so interpret it and define its scope that the imposition of death penalty comes to be restricted only to those types of grave murders and capital offences which imperil the very existence and security of the State. (Reliance for this argument has been placed on Rajendra Prasad 's case (ibid) ). As against this, the learned Solicitor General submits that the policy of the law in the matter of imposition of death sentence is writ large and clear in Section 354 (3), namely, that life imprisonment is the rule and death sentence an exception; that the correct approach should be to apply this policy to the relevant facts of the particular case, bearing on the question of sentence, and to find out if there are any exceptional reasons justifying imposition of the death penalty, as a departure from the normal rule. It is submitted that conferment of such sentencing discretion on the courts, to be exercised judicially, in no sense, amounts to delegation of the legislative powers by Parliament. Shri Sorabji further submits that there is no inherent impossibility in formulating broad guidelines consistent with the policy indicated by the legislature, for the exercise of the judicial functions under Section 354 (3). He emphasises that only broad guidelines, as distinct from rigid rules, can be laid down by the Court. Since the discretion proceeds the argument is to be exercised judicially after taking into consideration all the aggravating and mitigating circumstances relating to the crime and the criminal in a particular case, and ample safeguards by way of appeal and reference to the superior courts against erroneous or arbitrary exercise of the sentencing discretion have been provided, Section 354 (3) cannot be said to be violative of Articles 14, 19 and 21 or anything else in the Constitution, 227 Before embarking upon a discussion of the arguments advanced on both sides, it is necessary to have a peep into the history and the legislative background of the procedural provisions relating to sentencing in the Code of criminal Procedure. Under the Code of Criminal Procedure, 1898, as it stood before its amendment by Act No. 26 of 1955, even for the seven offences mentioned earlier, which are punishable in the alternative with death, the normal sentence was the death sentence, and if the Court wanted to depart from this rule, it had to give reasons for doing so. This requirement was embodied in subsection (5) of Section 367, which, as it then stood, was as follows: "If the accused is convicted of an offence punishable with death and the Court sentences him to any punishment other than death, the Court shall in its judgment state the reason why sentence of death was not passed. The Law Commission in its 35th Report (Vol. I), made the following comments on this provision: ". a considerable body of opinion is in favour of a provision requiring the court to state its reasons for imposing the punishment either of death or of imprisonment for life. Further, this would be good safeguard to ensure that the lower courts examine the case as elaborately from the point of view of sentence as from the point of view of guilt. It would increase the confidence of the people, in the courts, by showing that the discretion is judicially exercised. It would also facilitate the task of the High Court in appeal or in proceedings for confirmation in respect of the sentence (where the sentence awarded is that of death) or in proceedings in revision for enhancement of the sentence (where the sentence awarded is one of imprisonment of life. " In deferance to this recommendation, section 66 of the Code of Criminal Procedure (Amendment) Act, 1955 (XXVI of 1955) deleted old sub section (5) of Section 367 with effect from January 1, 1956, and thereafter, for such capital offences, it was left to the Court, on the facts of each case, to pass, in its discretion, for reason to be 228 recorded, the sentence of death or the lesser sentence. This led to some difference of opinion whether, even after the Amendment of 1955, in case of murder the normal punishment was death or imprisonment for life (See A.I.R. Commentaries on the Code of Criminal Procedure, Vol. 3, page 565, by D.V. Chitaley and section Appu Rao). Overruling its earlier decision, the Bombay High Court in the State vs Vali Mohammad,(1) held that death is not a normal penalty for murder. As against this, the Division Bench of the Madras High Court in Veluchami Thevar,(2) held that death was the normal punishment where there were no extenuating circumstances. The third set of cases held that both the sentences were normal but the discretion as regards sentence was to be exercised in the light of facts and circumstances of the case. This view appears to be in accord with the decision of this Court in Iman Ali & Anr. vs State of Assam.(3) In that case, there was a clear finding by the Court of Session which had been upheld by the High Court, that each of the two appellants therein, 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 tried to put up any resistence. It was held by this Court (speaking through Bhargava, J.) that in these circumstances where the murders were committed in cold blood with the sole object of committing dacoity, the Sessions Judge had not exercised his discretion judicially in not imposing the death sentence, and the High Court was justified in enhancing the sentence of the appellants from life imprisonment to death. Jagmohan Singh 's case, which we shall notice presently in further detail, proceeds on the hypothesis that even after the deletion of sub section (5) of Section 367 in the Code of 1898, both the alternative sentences provided in Section 302, Penal Code are normal punishment for murder, and the choice of either sentence rests in the discretion of the Court which is to be exercised judicially, after taking into account all the relevant circumstances of the case. __________________ (1) AIR 1959 Bom. 294 (299). (2) A.I.R. 1965 Mad. 48 at p. 49. (3) ; 229 Section 354 (3) of the Code of Criminal Procedure, 1973, marks a significant shift in the legislative policy underlying the Code of 1898, as in force immediately before Apr. 1, 1974, according to which both the alternative sentences of death or imprisonment for life provided for murder and for certain other capital offences under the Penal Code, were normal sentences. Now, according to this changed legislative policy which is patent on the face of Section 354 (3), the normal punishment for murder and six other capital offences under the Penal Code, is imprisonment for life (or imprisonment for a term of years) and death penalty is an exception. The Joint Committee of Parliament in its Report, stated the object and reason of making this change, as follows: "A sentence of death is the extreme penalty of law and it is but fair that when a Court awards that sentence in a case where the alternative sentence of imprisonment for life is also available, it should give special reasons in support of the sentence" Accordingly, sub section (3) of Section 354 of the current Code provides: "When the conviction is for an offence punishable with death or, in the alternative, with imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence awarded, and, in the case of sentence of death, the special reasons for such sentence. " In the context, we may also notice Section 235 (2) of the Code of 1973, because it makes not only explicit, what according to the decision in Jagmohan 's case was implicit in the scheme of the Code, but also bifurcates the trial by providing for two hearings, one at the pre conviction stage and another at the pre sentence stage. It requires that: "If the accused is convicted, the Judge shall, unless he proceeds in accordance with the provisions of Section 360, hear the accused on the question of sentence, and then pass sentence on him according to law. " 230 The Law Commission on its 48th Report had pointed out this deficiency in the sentencing procedure: "45. It is now being increasingly recognised that a rational and consistent sentencing policy requires the removal or several deficiencies in the present system. One such deficiency is the lack of comprehensive information as to characteristics and background of the offender. The aims of sentencing: Themselves obscure become all the more so in the absence of information on which the correctional process is to operate. The public as well so the courts themselves are in the dark about judicial approach in this regard. We are of the view that the taking of evidence as to the circustances relevant to sentencing should be encouraged and both the prosecution and the accused should be allowed to cooperate in the process." By enacting Section 235 (2) of the New Code, Parliament has accepted that recommendation of the Law Commission. Although sub section (2) of Section 235 does not contain a specific provision as to evidence and provides only for hearing of the accused as to sentence, yet it is implicit in this provision that if a request is made in that behalf by either the prosecution or the accused, or by both, the Judge should give the party or parties concerned an opportunity of producing evidence or material relating to the various factors bearing on the question of sentence. "Of course", as was pointed out by this Court in Santa Singh vs State of Punjab,(1) "care would have to be taken by the Court to see that this hearing on the question of sentence is not turned into an instrument for unduly protracting the proceedings. The claim of due and proper hearing would have to be harmonised with the requirement of expeditious disposal of proceedings. " We may also notice Sections 432, 433 and 433A, as they throw light as to whether life imprisonment as currently administered in ______________ (1) A.I.R. 1976 SC. 231 India, can be considered an adequate alternative to the capital sentence even in extremely heinous cases of murder. Sections 432 and 433 of the Code of 1973 continue Sections 401 and 402 of the Code of 1898, with necessary modifications which bring them in tune with Articles 72 and 161 of the Constitution. Section 432 invests the "appropriate Government" (as defined in sub section (7) of that Section) with power to suspend or remit sentences. Section 433 confers on the appropriate Government power to commute sentence, without the consent of the person sentenced. Under clause (a) of the Section, the appropriate Government may commute a sentence of death, for any other punishment provided by the Indian Penal Code. With effect from December 18, 1978, the Code of Criminal Procedure (Amendment) Act, 1978, inserted new Section 433A, which runs as under : "433A. Restriction on powers of remission or commutation in certain cases Notwithstanding anything contained in Section 432, where a sentence of imprisonment for life is imposed on conviction of a person for an offence for which death is one of the punishments provided by law or where a sentence of death imposed on a person has been commuted under Section 433 into one of imprisonment for life, such person shall not be released from prison unless he had served at least fourteen years of imprisonment. " It may be recalled that in Jagmohan this Court had observed that, in practice, life imprisonment amounts to 12 years in prison. Now, Section 433A restricts the power of remission and commutation conferred on the appropriate Government under Sections 432 and 433, so that a person who is sentenced to imprisonment for life or whose death sentence is commuted to imprisonment for life must serve actual imprisonment for a minimum of 14 years. We may next notice other provisions of the extent Code (corresponding to Sections 374, 375, 376 and 377 of the repealed Code) bearing on capital punishment. Section 366 (i) of the Code requires the Court passing a sentence of death to submit the proceedings to the High Court, and further mandates that such a sentence shall not be executed unless it is confirmed by the High Court. On such a 232 reference for confirmation of death sentence, the High Court is required to proceed in accordance with Sections 367 and 368. Section 367 gives power to the High Court to direct further inquiry to be made or additional evidence to be taken. Section 368 empowers the High Court to confirm the sentence of death or pass any other sentence warranted by law or to annul or alter the conviction or order a new trial or acquit the accused. Section 369 enjoins that in every case so submitted, the confirmation of the sentence, or any new sentence or order passed by the High Court, shall, when such court consists of two or more Judges, be made, passed and signed by at least two of them. Section 370 provides that where any such case is heard before a Bench of Judges and such Judges are equally divided in opinion, the case shall be referred to a third Judge. In this fasciculus of Sections relating to confirmation proceedings in the High Court, the Legislature has provided valuable safeguards of the life and liberty of the subject in cases of capital sentences. These provisions seek to ensure that where in a capital case, the life of the convicted person is at stake, the entire evidential material bearing on the innocence or guilt of the accused and the question of sentence must be scrutinised with utmost caution and care by a superior Court. The High Court has been given very wide powers under these provisions to prevent any possible miscarriage of justice. In State of Maharashtra vs Sindhi, (1) this Court reiterated, with emphasis, that while dealing with a reference for confirmation of a sentence of death, the High Court must consider the proceedings in all their aspects reappraise, reassess and reconsider the entire facts and law and, if necessary, after taking additional evidence, come to its own conclusions on the material on record in regard to the conviction of the accused (and the sentence) independently of the view expressed by the Sessions Judge. Similarly, where on appeal, the High Court reverses an acquittal, and convicts the accused person and sentences him to death, Section 379 of the Code of 1973, gives him a right of appeal to the Supreme Court. Finally, there is Article 136 of the Constitution under which the Supreme Court is empowered, in its discretion, to __________ (1) ; 233 entertain an appeal on behalf of a person whose sentence of death awarded by the Sessions Judge is confirmed by the High Court. In the light of the above conspectus, we will now consider the effect of the aforesaid legislative changes on the authority and efficacy of the propositions laid down by this Court in Jagmohan 's case. These propositions may be summed up as under : (i) The general legislative policy that underlines the structure of our criminal law, principally contained in the Indian Penal Code and the Criminal Procedure Code, is to define an offence with sufficient clarity and to prescribe only the maximum punishment therefor, and to allow a very wide discretion to the Judge in the matter of fixing the degree of punishment. With the solitary exception of Section 303, the same policy permeates Section 302 and some other sections of the Penal Code, where the maximum punishment is the death penalty. (ii) (a) No exhaustive enumeration of aggravating or mitigating circumstances which should be considered when sentencing an offender, is possible. "The infinite variety of cases and facts to each case would make general standards either meaningless 'boiler plate ' or a statement of the obvious that no Jury (Judge) would need." (Referred to McGauthe vs California(1) (b) The impossibility of laying down standards is at the very core of the criminal law as administered in India which invests the judges with a very wide discretion in the matter of fixing the degree of punishment. (iii) The view taken by the plurality in Furman vs Georgia decided by the Supreme Court of the United States, to the effect, that a law which gives uncontrolled and un _____________________ (1) ; 234 guided discretion to the Jury (or the Judge) to choose arbitrarily between a sentence of death and imprisonment for a capital offence, violates the Eighth Amendment, is not applicable in India. We do not have in our Constitution any provision like the Eighth Amendment, nor are we at liberty to apply the test of reasonableness with the freedom with which the Judges of the Supreme Court of America are accustomed to apply "the due process" clause. There are grave doubts about the expediency of transplanting western experience in our country. Social conditions are different and so also the general intellectual level. Arguments which would be valid in respect of one area of the world may not hold good in respect of another area. (iv) (a) This discretion in the matter of sentence is to be exercised by the Judge judicially, after balancing all the aggravating and mitigating circumstances of the crime. (b) The discretion is liable to be corrected by superior courts. The exercise of judicial discretion on well recognised principles is, in the final analysis, the safest possible safeguard for the accused. In view of the above, it will be impossible to say that there would be at all any discrimination, since crime as crime may appear to be superficially the same but the facts and circumstances of a crime are widely different. Thus considered the provision in Section 302, Penal Code is not violative of Article 14 of the Constitution on the ground that it confers on the judges an unguided and uncontrolled discretion in the matter of awarding capital punishment of imprisonment for life. (v) (a) Relevant facts and circumstances impinging on the nature and circumstances of the crime can be brought before the Court at the preconviction 235 stage, notwithstanding the fact that no formal procedure for producing evidence regarding such facts and circumstances had been specifically provided. Where counsel addresses the Court with regard to the character and standing of the accused, they are duly considered by the Court unless there is something in the evidence itself which belies him or the Public Prosecutor challenges the facts. (b) It is to be emphasised that in exercising its discretion to choose either of the two alternative sentences provided in Section 302, Penal Code, "the Court is principally concerned with the facts and circumstances whether aggravating or mitigating, which are connected with the particular crime under inquiry. All such facts and circumstances are capable of being proved in accordance with the provisions of the Indian Evidence Act in a trial regulated by the Cr. P.C. The trial does not come to an end until all the relevant facts are proved and the counsel on both sides have an opportunity to address the Court. The only thing that remains is for the Judge to decide on the guilt and punishment and that is what Sections 306(2) and 309(2) Cr. P.C. purport to provide for. These provisions are part of the procedure established by law and unless it is shown that they are invalid for any other reasons they must be regarded as valid. No reasons are offered to show that they are constitutionally invalid and hence the death sentence imposed after trial in accordance with the procedure established by law is not unconstitutional under Article 21." (emphasis added) A study of the propositions set out above, will show that in substance, the authority of none of them has been affected by the legislative changes since the decision in Jagmohan 's case. Of course, two of them require to be adjusted and attuned to the shift in the 236 legislative policy. The first of those propositions is No. (iv) (a) which postulates, that according to the then extant Code of Criminal Procedure both the alternative sentences provided in Section 302, Penal Code are normal sentences, and the Court can, therefore, after weighing the aggravating and mitigating circumstances of the particular case, in its discretion, impose either of those sentences. This postulate has now been modified by Section 354(3) which mandates the Court convicting a person for an offence punishable with death or, in the alternative with imprisonment for life or imprisonment for a term of years, not to impose the sentence of death on that person unless there are "special reasons" to be recorded for such sentence. The expression "special reasons" in the context of this provision, obviously means "exceptional reasons" founded on the exceptionally grave circumstances of the particular case relating to the crime as well as the criminal. Thus, the legislative policy now writ large and clear on the face of Section 354(3) is that on conviction for murder and other capital offences punishable in the alternative with death under the Penal Code, the extreme penalty should be imposed only in extreme cases. In this view we are in accord with the dictum of this Court in Balwant Singh vs State of Punjab (1), wherein the interpretation of Section 354(3) first came up for consideration. After surveying the legislative background, one of us (Untwalia, J,) speaking for the Court, summed up the scope and implications of Section 354 (3), thus : "Under this provision the Court is required to state the reasons for the sentence awarded and in the case of sentence of death, special reasons are required to be stated. It would thus be noticed that awarding of the sentence other than the sentence of death is the general rule now and only special reasons that is to say, special facts and circumstances in a given case, will warrant the passing of the death sentence. It is unnecessary nor is it possible to make a catalogue of the special reasons which may justify the passing of the death sentence in a case. " While applying proposition (iv) (a), therefore, the Court has to bear _____________________ (1) A.I.R.1976 SC 231=[1976] 2 SCR 684. 237 in mind this fundamental principle of policy embodied in Section 354(3). Another proposition, the application of which, to an extent, is affected by the legislative changes, is No. (v). In portion (a) of that proposition, it is said that circumstances impinging on the nature and circumstances of the crime can be brought on record before the pre conviction stage. In portion (b), it is emphasised that while making choice of the sentence under Section 302, Penal Code, the Court is principally concerned with the circumstances connected with the particular crime under inquiry. Now, Section 235(2) provides for a bifurcated trial and specifically gives the accused person a right of pre sentence hearing, at which stage, he can bring on record material or evidence, which may not be strictly relevant to or connected with the particular crime under inquiry, but nevertheless, have, consistently with the policy underlined in Section 354(3), a bearing on the choice of sentence. The present legislative policy discernible from Section 235(2) read with Section 354(3) is that in fixing the degree of punishment or making the choice of sentence for various offences, including one under Section 302, Penal Code, the Court should not confine its consideration principally" or merely to the circumstances connected with the particular crime, but also give due consideration to the circumstances of the criminal. Attuned to the legislative policy delineated in Sections 354(3) and 235(2), propositions (iv) (a) and (v) (b) in Jagmohan, shall have to be recast and may be stated as below : (a) The normal rule is that the offence of muder shall be punished with the sentence of life imprisonment. The court can depart from that rule and impose the sentence of death only if there are special reasons for doing so. Such reasons must be recorded in writing before imposing the death sentence. (b) While considering the question of sentence to be imposed for the offence of murder under Section 302 Penal Code, the court must have regard to every relevant circumstance relating to the crime as well as the criminal. If the court finds, but not otherwise, that the 238 offence is of an exceptionally depraved and heinous character and constitutes, on account of its design and the manner of its execution, a source of grave danger to the society at large, the court may impose the death sentence. The soundness or application of the other propositions in Jagmohan, and the premises on which they rest, are not affected in any way by the legislative changes since effected. On the contrary these changes reinforce the reasons given in Jagmohan, for holding that the impugned provisions of the Penal Code and the Criminal Procedure Code do not offend Articles 14 and 21 of the Constitution. Now, Parliament has in Section 354(3) given a broad and clear guideline which is to serve the purpose of lodestar to the court in the exercise of its sentencing discretion. Parliament has advisedly not restricted this sentencing discretion further, as, in its legislative judgment, it is neither possible nor desirable to do so. Parliament could not but be aware that since the Amending Act 26 of 1955, death penalty has been imposed by courts on an extremely small percentage of persons convicted of murder a fact which demonstrates that courts have generally exercised their discretion in inflicting this extreme penalty with great circumspection, caution and restraint. Cognizant of the past experience of the administration of death penalty in India, Parliament, in its wisdom, thought it best and safe to leave the imposition of this gravest punishment in gravest cases of murder, to the judicial discretion of the courts which are manned by persons of reason, experience and standing in the profession. The exercise of this sentencing discretion cannot be said to be untrammelled and unguided. It is exercised judicially in accordance with well recognised principles crystalised by judicial decisions, directed along the broad contours of legislative policy towards the signposts enacted in Section 354(3). The new Section 235 (2) adds to the number of several other safeguards which were embodied in the Criminal Procedure Code of 1898 and have been re enacted in the Code of 1973. Then, the errors in the exercise of this guided judicial discretion are liable to be corrected by the superior courts. The procedure provided in Criminal Procedure Code for imposing capital punishment for murder and some other capital crimes under the Penal Code cannot, by any reckoning, be said to be unfair unreasonable and unjust, 239 Nor can it be said that this sentencing discretion, with which the courts are invested, amounts to delegation of its power of legislation by Parliament. The argument to that effect is entirely misconceived. We would, therefore, re affirm the view taken by this Court in Jagmohan, and hold that the impgned provisions do not violate Articles 14, 19 and 21 of the Constitution. Now, remains the question whether this Court can lay down standards or norms restricting the area of the imposition of death penalty to a narrow category of murders. Dr. Chitale contends that the wide observations in Jagmohan as to the impossibility of laying down standards or norms in the matter of segtencing are too sweeping. It is submitted that soon after the decision in Furman, several States in U.S.A. amended their penal statutes and brought them in conformity with the requirements of Furman. Support has also been sought for this argument from Gregg vs Georgia, wherein the Supreme Court of the United States held that the concern expressed in Furman decision that death penalty may not be imposed in an arbitrary or capricious manner could be met by a carefully drafted statute ensuring that the sentencing authority was given adequate guidance and information for determining the appropriate sentence, a bifurcated sentencing proceeding being preferable as a general proposition. If by "laying down standards", it is meant that 'murder ' should be categorised before hand according to the degrees of its culpability and all the aggravating and mitigating circumstances should be exhaustively and rigidly enumerated so as to exclude all free play of discretion, the argument merits rejection. As pointed out in Jagmohan, such "standardisation" is well nigh impossible. Firstly, there is little agreement among penologists and jurists as to what information about the crime and criminal is relevant and what is not relevant for fixing the dose of punishment for a person convicted of a particular offence. According to Cessare Beccaria, who is supposed to be the intellectual progenitor of today 's fixed sentencing movement 'crimes are only to be measured by the injnry done to society '. But the 20th Century sociologists do not wholly agree 240 with this view. In the opinion of Von Hirsch, the "seriousness of a crime depends both on the harm done (or risked) by the act and degree of the actor 's culpability". But how is the degree of that culpability to be measured. Can any thermometer be devised to measure its degree ? This is a very baffling, difficult and intricate problem. Secondly, criminal cases do not fall into set behavioristic patterns. Even within a single category offence there are infinite, unpredictable and unforceable variations. No two cases are exactly identical. There are countless permutations and combinations which are beyond the anticipatory capacity of the human calculus. Each case presents its own distinctive features, its peculiar combinations of events and its unique configuration of facts. "Simply in terms of blame worthiness or dessert criminal cases are diferent from one another in ways that legislatures cannot anticipate, and limitations of language prevent the precise description of differences that can be anticipated. "(1) This is particularly true of murder. "There is probably no offence", observed Sir Ernest Growers, Chairman of the Royal Commission, "that varies so widely both in character and in moral guilt as that which falls within the legal definition of murder. " The futility of attempting to lay down exhaustive standards was demonstrated by this Court in Jagmohan by citing the instance of the Model Penal Code which was presented to the American Supreme Court in McGoutha. Thirdly, a standardisation of the sentencing process which leaves little room for judicial discretion to take account of variations in culpability within single offence category ceases to be judicial. It tends to sacrifice justice at the alter of blind uniformity. Indeed, there is a real danger of such mechanical standardisation degenerating into a bed of procrustean cruelty. Fourthly, standardisation or sentencing discretion is a policy matter which belongs to the sphere of legislation. When Parliament as a matter of sound legislative policy, did not deliberately restrict, control or standardise the sentencing discretion any further than that incompassed by the broad contours delineated in Section 354 (3), _____________ (1) Messinger and Bittner 's Crimonology Year Book (Ibid) Albert W, Alcherler 's article at page 421. 241 the Court would not by over leaping its bounds rush to do what Parliament, in its wisdom, varily did not do. We must leave upto the Legislature, the things that are Legislature 'section "The highest judicial duty is to recognise the limits on judicial power and to permit the democratic processes to deal with matters falling outside of those limits". As Judges, we have to resist the temptation to substitute our own value choices for the will of the people. Since substituted judicial 'made to order ' standards, howsoever painstakingly made, do not bear the peoples imprimatur, they may not have the same authenticity and efficacy as the silent zones and green belts designedly marked out and left open by Parliament in its legislative planning for fair play of judicial discretion to take care of the variable, unpredictable circumstances of the individual cases, relevant to individualised sentencing. When judges, acting individually or collectively, in their benign anxiety to do what they think is morally good for the people, take upon themselves, the responsibility of setting down social norms of conduct. There is every danger, despite their effort to make a rational guess of the notions of right and wrong prevailing in the community at large and despite their intention to abide by the dictates of mere reason, that they might write their own peculiar view or personal pre dilection into the law, sincerely mistaking that changeling for what they perceive to be the community ethic. The perception of 'community ' standards or ethics may vary from Judge to Judge. In this sensitive, highly controversial area of death penalty, with all its complexity, vast implications and manifold ramifications, even all the Judges sitting cloistered in this Court and acting unanimously, cannot assume the role which properly belongs to the chosen representatives of the people in Parliament, particularly when Judges have no divining rod to divine accurately the will of the people. In Furman, the Hon 'ble Judges claimed to articulate the contemporary standards of morality among the American people. But speaking through public referenda, Gallup polls and the state legislatures, the American people sharply rebuffed them. We must draw a lesson from the same. What the learned Chief Justice, who is amongst us in this case has said recently in Gurbaksh Singh Sibbia and others vs State of Punjab(1) in the context of laying down standards in the discre ________________________ (1) Criminal Appeals Nos. 335 etc. of 1977 and 81 and 82 of 1978. 242 tionary area of anticipatory bail, comes in as a timely reminder. In principle, these observations aptly apply to the desirability and feasibility of laying down standards in the area of sentencing discretion, also. Let us therefore, hark to the same: "Generalisations on matters which rest on discretion and the attempt to discover formulae of universal application when facts are bound to differ from case to case frustrate the very purpose of conferring discretion. No two cases are alike on facts and, therefore, Courts have to be allowed a little free play in the joints if the conferment of discretionary power is to be meaningful. There is no risk involved in entrusting a wide discretion to the Court of Session and the High Court in granting anticipatory bail because, firstly, these are higher courts manned by experienced persons, secondly, their orders are not final but are open to appellate or revisional scrutiny and above all because, discretion has always to be exercised by courts judicially and not according to whim, caprice or fancy. On the other hand, there is a risk in foreclosing categories of cases in which anticipatory bail may be allowed because life throws up unforeseen possibilities and offers new challenges. Judicial discretion has to be free enough to be able to take these possibilities in its stride and to meet these challenges. While dealing with the necessity for preserving judicial discretion unhampered by rules of general application, Earl Loreburn L.C. said in Hyman and Anr. vs Rose(1). "I desire in the first instance to point out that the discretion given by the section is very wide. Now it seems to me that when the Act is so express to provide a wide discretion. it is not advisable to lay down any rigid rules for guiding that discretion. I do not doubt that the rules enunciated by the Master of the Rolls in the present case are useful maxims in general, and that in general they reflect the point of view from which judges would regard an application for relief. But I think it ought to be distinctly understood that there may be cases in which any or all of them may be disregarded. If it were otherwise, the free discretion given by the statute would be fettered by limitations which have nowhere been enacted. It is one thing to decide what is the true meaning of the language contained ___________________________ (1) , 243 in an Act of Parliament. It is quite a different thing to place conditions upon a free discretion entrusted by statute to the Court where the conditions are not based upon statutory enactment at all. It is not safe. I think, to say that the Court must and will always insist upon certain things when the Act does not require them, and the facts of some unforeseen case may make the Court wish it had kept a free hand." "Judges have to decide cases as they come before them, mindful of the need to keep passions and prejudices out of their decisions. And it will be strange if, by employing judicial artifices and techniques, we cut down the discretion so wisely conferred upon the Courts, by devising a formula which will confine the power to grant anticipatory bail within a strait jacket. While laying down cast iron rules in a matter like granting anticipatory bail, as the High Court has done, it is apt to be overlooked that even Judges can have but an imperfect awareness of the needs of new situations. Life is never static and every situation has to be assessed in the context of emerging concerns as and when it arises. Therefore, even if we were to frame a 'Code for the grant of anticipatory bail ', which really is the business of the legislature, it can at best furnish broad guidelines and cannot compel blind adherence. " From what has been extracted above, it is clear that this Court should not venture to formulate rigid standards in an area in which the Legislature so warily treads. Only broad guidelines consistent with the policy indicated by the Legislature in Section 354(3) can be laid down. Before we come to this aspect of the matter, it will be fair to notice briefly the decisions of the Supreme Court of U.S.A. in Gregg vs Georgia and companion cases. Soon after the decision in Furman, the Georgia Legislature amended its statutory scheme. The amended statute retains the death penalty for six categories of crime: murder, kidnapping for ransom or where victim is harmed, armed robbery, rape, treason, and aircraft hijacking. The statutory aggravating circumstances, the existence of any of which may justify the imposition of the extreme penalty of death, as provided in that statute, are: "(1) The offence of murder, rape, armed robbery, or 244 kidnapping was committed by a person with a prior record of conviction for a capital felony, (or the offence of murder was committed by a person who has a substantial history of serious assaultive criminal convictions). (2) The offence of murder, rape, armed robbery, or kidnapping was committed while the offender was engaged in the commission of another capital felony, or aggravated battery, or the offence of murder was committed while the offender was engaged in the commission of burglary or arson in the first degree. (3) The offender by his act of murder, armed robbery, or kidnapping knowingly created a great risk of death to more than one person in a public place by means of a weapon or device which would normally be hazaradous to the lives of more than one person. (4) The offender committed the offence of murder for himself or another, for the purpose of receiving money or any other thing of monetary value. (5) The murder of a judicial officer, former judicial officer, district attorney or solicitor or former district attorney or solicitor during or because of the exercise of his official duty. (6) The offender caused or directed another to committed murder as an agent or employee of another person. (7) The offence of murder, rape, armed robbery, or kidnapping was outrageiously or want only vile horrible or inhuman in that it involved torture, depravity of mind, or an aggravated battery to the victim. (8) The offence of murder was committed against any peace officer, corrections employee or fireman while engaged in the performance or his official duties. (9) The offence of murder was committed by a person in, or who has escaped from, the lawful custody of a peace officer or place of lawful confinement. 245 (10) The murder was committed for the purpose of avoiding, interfering with, or preventing a lawful arrest or custody in a place of lawful confinement, of himself or another. " The Supreme Court of Georgia in Arnold vs State(1), held unconstitutional the portion (within brackets) of the first circumstances encompassing persons who have a "substantial history of serious assaultive criminal convictions" but did not set clear and objective standards. The amended statute, also, provided for a bifurcated trial and a pre sentence hearing. It also provides for an automatic appeal of death sentence to the Supreme Court of Georgia, which may or may not affirm the death sentence. The appellate court is also required to include reference to similar cases that the court considered. The defendant (accused) in that case was convicted of two counts of armed robbery and two counts of murder. The accused had committed the murders for the purpose of receiving money and an automobile of one of the victims. After reviewing the trial record, the Georgia Supreme Court affirmed the convictions and the imposition of death sentences for murder, only. The constitutional validity of the amended statutory scheme of Georgia was challenged before the Supreme Court of U.S.A. on the ground that the imposition of the death penalty for the crime of murder under the Georgia statute violated the prohibition against the infliction of cruel and unusual punishment under the Eighth and Fourteenth Amendments. Likewise in the companion case Proffitt vs Florida (2), the Florida Legislature adopted new statutes that authorised the imposition of the death penalty on those convicted of first degree murders. Under the new Florida statutes, if a defendant (accused) is found guilty of first degree murder, a separate presentence hearing is held before the jury, where arguments may be presented and where any evidence deemed relevant to sentencing may be admitted and must include matters relating to eight aggravating and seven mitigating circumstances specified in the statutes, the jury is directed to weigh such circumstances and return an advisory verdict as to the sentence. __________________ (1) , 540, , 391 (1976) (2) ; , (1976). 246 The actual sentence is, however, determined by the trial judge, who is also directed to weigh the statutory aggravating and mitigating circumstances. If a death sentence is imposed, the trial court must set forth in writing its fact findings that sufficient statutory aggravating circumstances exist and are not outweighed by statutory mitigating circumstances. Just as in the Georgia statute, a death sentence is to be automatically reviewed by the Supreme Court of Florida. Under this new statutory scheme, the Florida Court found Proffitt (defendant) guilty of first degree murder and sentenced him to death on the finding that these aggravating circumstances were established : "(1) The murder was premeditated and occurred in the course of a felony (burglary); (2) the defendant had the propensity to commit murder; (3) the murder was especially heinous, atrocious, and cruel ; and (4) the defendant knowingly, through his intentional act, had created a great risk of serious bodily harm and death to many persons. " The trial judge also found specifically that none of the statutory mitigating circumstances existed. The Supreme Court of Florida affirmed the death sentence. Before the Supreme Court of U.S.A. the constitutional validity of the imposition of death penalty for the crime of murder under the Florida statutes was challenged on the same ground as in Gregg vs Georgia. The Supreme Court of U.S.A. in both the aforesaid cases negatived the challenge to the statutes and upheld their validity. It may be recalled that in Furman, that Court had held that if clear, definite and articulate standards channeling the sentencing discretion for imposition of the death penalty are not laid down in a statute, it would violate the Eighth and Fourteenth Amendments. It may be noted that the aggravating circumstance No. (7) is couched in a very wide and elastic language. The expressions "outrageously or wantonly vile", "horrible or inhuman" employed therein are of the widest amplitude and give this aggravating circumstance the character of an omnibus clause. Likewise, 247 in the Florida statute, the scope of the words "especially heinous, atrocious and cruel" was equally large and imprecise. It can be seriously questioned whether these extremely elastic standards really exclude the uncontrolled exercise of sentencing discretion so as to meet the requirements of Furman. In Gregg vs Georgia, the petitioner attacked the seventh statutory aggravating circumstance which authorises imposition of the death penalty if the murder was "outrageously, or wantonly vile, horrible or inhuman" on the ground that it was so broad that capital punishment could be imposed by its application in any murder case. Stewart, J., speaking for himself and for Powell and Stevens, JJ., got over this attack, in three ways: Firstly, by reading down the concerns expressed in Furman. In this connection, Stewart, J. said, all that Furman mandates is that discretion in so grave a matter must be suitably directed "so as to minimize the risk of wholly arbitrary and capricious action. " This was, if we may say so with respect, an admission of the fact that a considerable range of sentencing discretion has perforce to be left with the sentencing body to be exercised by it according to its own good sense and reason, and that no standards howsoever meticulously drafted can totally exclude scope for arbitrary and capricious action. The second reason given to parry this attack was of a general nature. It was observed: "As a general proposition these concerns (expressed in Furman) are best met by a system that provides for a bifurcated proceeding at which the sentencing authority is apprised of the information relevant to the imposition of sentence and provided with standards to guide its use of the information. " The third course adopted to foil the attack was: "It is, of course, arguable that any murder involves depravity of mind or an aggravated battery. But this language need not be construed in this way, and there is no reason to assume that the Supreme Court of Georgia will adopt such an open ended construction," 248 White, J. with whom the Chief Justice and Rehnquist, J. joined, negatived the change of these standards being vague and incomplete, with these observations: "The argument is considerably overstated The Georgia Legislature has plainly made an effort to guide the jury in the exercise of its discretion, while at the same time permitting the jury to dispense mercy on the basis of factors too intangible to write into a statute, and I cannot accept the naked assertion that the effort is bound to fail. As the types of murders for which the death penalty may be imposed became more narrowly defined and are limited to those which are particularly serious or for which the death penalty is particularly appropriate as they are in Georgia by reasons of the aggrvating circumstance requirement, it becomes reasonable to expect that Georgia 's current system would escape the infirmities which invalidated its previous system under Furman. Indeed, if the Georgia Supreme Court properly performs the task assigned to it under the Georgia statutes, death sentences imposed wantonly or freakishly for any given category of crime will be set aside." Similarly, in Proffit vs Florida, it was contended that the enumerated aggravating and mitigating circumstances in the Florida statute are so vague and so broad that virtually "any capital defendant becomes a candidate for the death penalty". In particular, the petitioner attacked the eighth and third statutory aggravating circumstances which authorise the death penalty to be imposed if the crime is "especially heinous, atrocious, or cruel" or if "the defendant knowingly created a great risk of death to many persons". Agreeing with the Supreme Court of Florida, the Supreme Court of U.S.A. recognised that "while it is arguable that all killing are atrocious, still we believe that the Legislature intended something especially heinous, atrocious, of cruel" when it authorised the death penalty for first degree murder. As a consequence, the Court has indicated that the eighth statutory provision is directed only at "the conscienceless or pitiless crime which is unnecessarily tortuous to the victim". 249 It appears to us that in Gregg vs Georgia and the companion cases, the Supreme Court of U.S.A. was obliged to read down the requirements of Furman and to accept these broadly worded, looseended and not all inclusive 'standards ' because in the area of sentencing discretion, if it was to retain its judicial character, exhaustive standardisation or perfect regulation was neither feasible nor desirable. Moreover, over standardisation of the sentencing process tends to defeat its very purpose, and may actually produce opposite results. Messinger and Bittner 's Criminology Year Book (ibid) Albert W. Alcherler 's article at page 421 highlights this danger, by taking, inter alia, the example of the guided discretion capital punishment statutes favoured by the Supreme Court in Gregg vs Georgia and its companion cases, as follows: A defendant convicted of capital murder might wish to make the following speech to the jury about to consider whether capital punishment should be imposed: "I am deeply sorry for my crime which I recognize was about as bad as any that can be imagined. I did, in fact, go to the police station shortly after the killing to surrender and make a full confession. Although I have done some terrible things in my life you may wish to know, before deciding whether I should live or die, that I have also done some good. I once risked my life in combat to save five comrades an action for which I was awarded the Silver Star and for the last 10 years I have personally cared for my invalid mother while supporting 5 younger brothers and sisters. "The mitigating factors listed in today 's capital punishment statutes are sometimes quite general, but none that I have seen in any statute would permit a jury to consider any of the circumstances mentioned in this defendant 's speech (or, for that matter any other evidence of pre crime virtue or past crime remorse). Apparently the Florida statute 's upheld in Proffitt vs Florida would not; yet the Supreme Court plurality, seemingly oblivious to the 250 statutes limitations, declared in a companion case, 'A jury must be allowed to consider on the basis of all relevant evidence not only why a death sentence should be imposed, but also why it should not be imposed." (Jurek vs Texas.(1) Critically examined, it is clear that the decisions in Gregg vs Georgia and its companion cases demonstrate the truth of what we have said earlier, that it is neither practicable nor desirable to imprison the sentencing discretion of a judge or jury in the straitjacket of exhaustive and rigid standards, Nevertheless, these decisions do show that it is not impossible to lay down broad guidelines as distinguished from ironcased standards, which will minimise the risk of arbitrary imposition of death penalty for murder and some other offences under the Penal Code. This takes us to the question of indicating the broad criteria which should guide the Courts in the matter of sentencing a person convicted of murder under Section 302, Penal Code. Before we embark on this task, it will be proper to remind ourselves, again that "while we have an obligation to ensure that the constitutional bounds are not over reached, we may not act as judges as we might as legislatures. "(2) In Jagmohan, this Court had held that this sentencing discretion is to be exercised judicially on well recognised principles, after balancing all the aggravating and mitigating circumstances of the crime. By "well recognised principles" the Court obviously meant the principles crystallised by judicial decisions illustrating as to what were regarded as aggravating or mitigating circumstances in those eases. The legislative changes since Jagmohan as we have discussed already do not have the effect of abrogating or nullifying those principles. The only effect is that the application of those principles is now to be guided by the paramount beacons of legislative policy discernible from Sections 354 (3) and 235 (2), namely: (1) The extreme penalty can be inflicted only in gravest cases of extreme culpability; (2) In making choice of the sentence, in addition to the circumstances of the offence, due regard must be paid to the circumstances of the offences, also. __________________________ (1) ; , 271(1976). (2) Per Stewart. J. in Gregg. vs Georgia. 251 We will first notice some of the aggravating circumstances which, in the absence of any mitigating circumstances, have been regarded as an indication for imposition of the extreme penalty. Pre planned, calculated, cold blooded murder has always been regarded as one of an aggravated kind. In Jagmohan, it was reiterated by this Court that if a murder is "diabolically conceived and cruelly executed", it would justify the imposition of the death penalty on the murderer. The same principle was substantially reiterated by V.R. Krishna Iyer, J., speaking for the Bench, in Ediga Anamma, in these terms: "The weapons used and the manner of their use, the horrendous features of the crime and hapless, helpless state of the victim, and the like, steel the heart of the law for a sterner sentence. " It may be noted that this indicator for imposing the death sentence was crystallised in that case after paying due regard to the shift in legislative policy embodied in Section 354(3) of the Code of Criminal Procedure, 1973, although on the date of that decision (February 11, 1974), this provision had not come into force. In Paras Ram 's case, also, to which a reference has been made earlier, it was emphatically stated that a person who in a fit of anti social piety commits "blood curdling butchery" of his child, fully deserves to be punished with death. In Rajendra Prasad, however, the majority (of 2:1) has completely reversed the view that had been taken in Ediga Anamma, regarding the application of Section 354(3) on this point. According to it, after the enactment of Section 354(3) 'murder most foul ' is not the test. The shocking nature of the crime or the number of murders committed is also not the criterion. It was said that the focus has now completely shifted from the crime to the criminal. "Special reasons" necessary for imposing death penalty "must relate not to the crime as such but to the criminal". With great respect, we find ourselves unable to agree to this enunciation. As we read Sections 354(3) and 235(2) and other related provisions of the Code of 1973, it is quite clear to us that for making the choice of punishment or for ascertaining the existence or absence of "special reasons" in that context, the Court must pay due regard both to the crime and the criminal. What is the relative weight to be given to the aggravating and mitigating factors, 252 depends on the facts and circumstances of the particular case. More often than not, these two aspects are so intertwined that it is difficult to give a separate treatment to each of them. This is so because 'style is the man '. In many cases, the extremely cruel or beastly manner of the commission of murder is itself a demonstrated index of the depraved character of the perpetrator. That is why, it is not desirable to consider the circumstances of the crime and the circumstances of the criminal in two separate water tight compartments. In a sense, to kill is to be cruel and, therefore, all murders are cruel. But such cruelty may vary in its degree of culpability. And it is only when the culpability assumes the proportion of extreme depravity that "special reasons" can legitimately be said to exist. Drawing upon the penal statutes of the States in U.S.A. framed after Furman vs Georgia, in general, and clauses (2)(a), (b), (c) and (d) of the Indian Penal Code (Amendment) Bill passed in 1978 by the Rajya Sabha, in particular, Dr. Chitale has suggested these "aggravating circumstances". "Aggravating circumstances: A Court may, however, in the following cases impose the penalty of death in its discretion: (a) if the murder has been committed after previous planning and involves extreme brutality; or (b) if the murder involves exceptional depravity; or (c) if the murder is of a member of any of the armed forces of the Union or of a member of any police force or of any public servant and was committed. (i) while such member or public servant was on duty; or (ii) in consequence of anything done or attempted to be done by such member or public servant in the lawful discharge of his duty as such member or public servant whether at the time of murder he was such member or public 253 servant, as the case may be, or had ceased to be such member or public servant; or (d) if the murder is of a person who had acted in the lawful discharge of his duty under Section 43 of the Code of Criminal Procedure, 1973, or who had rendered assistance to a Magistrate or a police officer demanding his aid or requiring his assistance under Section 37 and Section 129 of the said Code. " Stated broadly, there can be no objection to the acceptance of these indicators but as we have indicated already, we would prefer not to fetter judicial discretion by attempting to make an exhaustive enumeration one way or the other. In Rajendra Prasad, the majority said: "It is constitutionally permissible to swing a criminal out of corporeal existence only if the security of State and society, public order and the interests of the general public compel that course as provided in Article 19(2) to (6). " Our objection is only to the word "only". While it may be conceded that a murder which directly threatens, or has an extreme potentiality to harm or endanger the security of State and society, public order and the interests of the general public, may provide "special reasons" to justify the imposition of the extreme penalty on the person convicted of such a heinous murder, it is not possible to agree that imposition of death penalty on murderers who do not fall within this narrow category is constitutionally impermissible. We have discussed and held above that the impugned provisions in Section 302, Penal Code, being reasonable and in the general public interest, do not offend Article 19, or its 'ethos '; nor do they in any manner violate Articles 21 and 14. All the reasons given by us for upholding the validity of Section 302, Penal Code, fully apply to the case of Section 354(3), Code of Criminal Procedure, also. The same criticism applies to the view taken in Bishnu Deo Shaw vs State of West Bengal, (1) which follows the dictum in Rajendra Prasad (ibid). In several countries which have retained death penalty, preplanned murder for monetary gain, or by an assassin hired for ___________________ (1) 254 monetary reward is, also, considered a capital offence of the first degree which, in the absence of any ameliorating circumstances, is punishable with death. Such rigid categorisation would dangerously overlap the domain of legislative policy. It may necessitate, as it were, a redefinition of 'murder ' or its further classification. Then, in some decisions, murder by fire arm, or an automatic projectile or bomb, or like weapon, the use of which creates a high simultaneous risk of death or injury to more than one person, has also been treated as an aggravated type of offence. No exhaustive enumeration of aggravating circumstances is possible. But this much can be said that in order to qualify for inclusion in the category of "aggravating circumstances" which may form the basis of 'special reasons ' in Section 354(3), circumstances found on the facts of a particular case, must evidence aggravation of an abnormal or special degree. Dr. Chitaley has suggested these mitigating factors: "Mitigating circumstances: In the exercise of its discretion in the above cases, the Court shall take into account the following circumstances: (1) That the offence was committed under the influence of extreme mental or emotional disturbance. (2) The age of the accused. If the accused is young or old, he shall not be sentenced to death. (3) The probability that the accused would not commit criminal acts of violence as would constitute a continuing threat to society. (4) The probability that the accused can be reformed and rehabilitated. The State shall by evidence prove that the accused does not satisfy the conditions 3 and 4 above. (5) That in the facts and circumstances of the case the accused believed that he was morally justified in committing the offence. (6) That the accused acted under the duress or domination of another person. 255 (7) That the condition of the accused showed that he was mentally defective and that the said defect impaired his capacity to appreciate the criminality of his conduct. " We will do no more than to say that these are undoubtedly relevant circumstances and must be given great weight in the determination of sentence. Some of these factors like extreme youth can instead be of compelling importance. In several States of India, there are in force special enactments, according to which a 'child ', that is, 'a person who at the date of murder was less than 16 years of age ', cannot be tried, convicted and sentenced to death or imprisonment for life for murder, nor dealt with according to the same procedure as an adult. The special Acts provide for a reformatory procedure for such juvenile offenders or children. According to some Indian decisions, the post murder remorse, penitance or repentence by the murderer is not a factor which may induce the Court to pass the lesser penalty (e.g. Mominaddi Sardar). But those decisions can no longer be held to be good law in views of the current penological trends and the sentencing policy outlined in Section 235(2) and 354(3). We have already extracted the view of A.W. Alchuler in Cr. Y.E. by Messinger and Bittner (ibid), which are in point. There are numerous other circumstances justifying the passing of the lighter sentence; as there are countervailing circumstances of aggravation. "We cannot obviously feed into a judicial computer all such situations since they are astrological imponderables in an imperfect and undulating society." Nonetheless, it cannot be overemphasised that the scope and concept of mitigating factors in the area of death penalty must receive a liberal and expansive construction by the courts in accord with the sentencing policy writ large in Section 354(3). Judges should never be blood thirsty. Hedging of murderers has never been too good for them. Facts and figures, albeit incomplete, furnished by the Union of India, show that in the past, Courts have inflicted the extreme penalty with extreme infrequency a fact which attests to the caution and compassion which they have always brought to bear on the exercise of their sentencing discretion in so grave a matter. It is, therefore, imperative to voice the concern that courts, aided by the broad illustrative guidelines 256 indicated by us, will discharge the onerous function with evermore scrupulous care and humane concern, directed along the highroad of legislative policy outlined in Section 354(3), viz, that for persons convicted of murder, life imprisonment is the rule and death sentence an exception. A real and abiding concern for the dignity of human life postulates resistance to taking a life through law 's instrumentality. That ought not to be done save in the rarest of rare cases when the alternative option is unquestionably foreclosed. For all the foregoing reasons, we reject the challenge to the constitutionality of the impugned provisions contained in Sections 302, Penal Code, and 354(3) of the Code of Criminal Procedure, 1973. The writ petitions and the connected petitions can now be heard and disposed of, on their individual merits, in the light of the broad guidelines and principles enunciated in this judgment. BHAGWATI, J. These writ petitions challenge the constitutional validity of Section 302 of the Indian Penal Code read with Section 354, sub section (3) of the Code of Criminal Procedure in so far as it provides death sentence as an alternative punishment for the offence of murder. There are several grounds on which the constitutional validity of the death penalty provided in Section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure is assailed before us, but it is not necessary to set them out at this stage, for I propose to deal with them when I examine the arguments advanced on behalf of the parties. Suffice it to state for the present that I find, considerable force in some of these grounds and in my view, the constitutional validity of the death penalty provided as an alternative punishment in section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure cannot be sustained. I am conscious that my learned brethren on the Bench who constitute the majority have taken a different view and upheld the constitutional validity of the death penalty but, with the greatest respect to them and in all humility, I cannot persuade myself to concur with the view taken by them. Mine is unfortunately a solitary dissent and it is therefore, with a certain amount of hesitation that I speak but my initial diffidence is overcome by my deep and abiding faith in the dignity of man and worth of the human person and passionate 257 conviction about the true spiritual nature and dimension of man. I agree with Bernard Shaw that "Criminals do not die by the hands of the law. They die by the hands of other men. Assassination on the scaffold is the worst form of assassination because there it is invested with the approval of the society. .Murder and capital punishment are not opposites that cancel one another but similars that breed their kind. " It was the Father of the nation who said years ago, reaffirming what Prince Satyavan said on capital punishment in Shanti Parva of Mahabharata that "Destruction of individuals can never be a virtuous act" and this sentiment has been echoed by many eminent men such as Leonardo Da Vinci, John Bright, Victor Hugo and Berdyaev. To quote again from Bernard Shaw from Act IV of his play "Caesar and Cleopatra: "And so to the end of history, murder shall breed murder, always in the name of right and honour and peace, until the Gods are tired of blood and create a race that can understand. " I share this sentiment because I regard men as an embodiment of divinity and I am therefore morally against death penalty. But my dissent is based not upon any ground of morality or ethics but is founded on constitutional issues, for as I shall presently show, death penalty does not serve any social purpose or advance any constitutional value and is totally arbitrary and unreasonable so as to be violative of Articles 14, 19 and 21 of the Constitution. Before I proceed to consider the various constitutional issues arising out of the challenge to the validity of the death penalty, I must deal with a preliminary objection raised on behalf of the respondents against our competence to entertain this challenge. The learned counsel appearing on behalf of the respondents urged that the question of constitutional validity of the death penalty stood concluded against the petitioners by the decision of a constitution bench of five Judges of this Court in Jagmohan vs State of U.P.(1) and it could not therefore be allowed to be reagitated before this Bench consisting of the same number of Judges. This Bench, contended the respondents, was bound by the decision in Jagmohan 's case(supra) and the same issue, once decided in Jagmohan 's case (supra), could not be raised again and reconsidered by this Bench. Now it is true that ______________ (1) ; 258 the question of constitutional validity of death penalty was raised in Jagmohan 's case (supra) and this Court by a unanimous judgment held it to be constitutionally valid and, therefore, ordinarily, on the principle of stare decisis, we would hold ourselves bound by the view taken in that case and resist any attempt at reconsideration of the same issue. But there are several weighty considerations which compel us to depart from this precedential rule in the present case. It may be pointed out that the rule of adherence to precedence is not a rigid and inflexible rule of law but it is a rule of practice adopted by the courts for the purpose of ensuring uniformity and stability in the law. Otherwise, every Judge will decide an issue according to his own view and lay down a rule according to his own perception and there will be no certainty and predictability in the law, leading to chaos and confusion and in the process, destroying the rule of law. The labour of the judges would also, as pointed out by Cardozo J. in his lectures of "Nature of Judicial Process" increase" almost to the breaking point if every past decision could be reopened in every case and one could not lay one 's own course of bricks on the secure foundation of the courses laid by others who had gone before him." But this rule of adherence to precedents, though a necessary tool in what Maitland called "the legal smithy", is only a useful servant and cannot be allowed to turn into a tyrannous master. We would do well to recall what Brandies J. said in his dissenting judgment in State of Washington vs Dawson and company,(1) namely; "Stare decisis is ordinarily a wise rule of action. But it is not a universal and inexorable command. " If the Rule of stare decisis were followed blindly and mechanically, it would dwarf and stultify the growth of the law and affect its capacity to adjust itself to the changing needs of the society. That is why Cardozo pointed out in his New York State Bar Address: "That was very well for a time, but now at last the precedents have turned upon us and are engulfing and annihilating us engulfing and annihilating the very devotees that worshipped at their shrine. So the air is full of new cults that disavow the ancient faiths. Some of them tell us that instead of seeking certainty in the word, the outward sign, we are to seek for something deeper, a certainty of ends and aims. Some of them tell us that certainty is merely relative and temporary, a writing on the sands to _________ (1) : 68 Lawyers Edu. 219 259 be effected by the advancing tides. Some of them even go so far as to adjure us to give over the vain quest, to purge ourselves of these yearnings for an unattainable ideal, and to be content with an empiricism that is untroubled by strivings for the absolute. With all their diversities of form and doctrine, they are at one at least in their emphasis upon those aspects of truth that are fundamental and ultimate. They exemplify the method approach, the attitude and outlook, the concern about the substance of things, which in all its phases and disguises is the essence of philosophy. " We must therefore rid stare decisis of something of its petrifying rigidity and warn ourselves with Cardozo that "in many instances the principles and rules and concepts of our own creation are merely apercus and glimpses of reality" and remind oursevels "of the need of reformulating them or at times abandoning them altogether when they stand condemned as mischievous in the social consciousness of the hour,. the social consciousness which it is our business as Judges to interpret as best as we can. " The question at issue in the present writ petitions is one of momentous significance namely, whether the state can take the life of an individual under the cover of judicial process and whether such an act of killing by the State is in accord with the constitutional norms and values and if, on an issue like this, a Judge feels strongly that it is not competent to the State to extinguish the flame of life in an individual by employing the instrumentality of the judicial process, it is his bounden duty, in all conscience, to express his dissent, even if such killing by the State is legitimized by a previous decision of the court. There are certain issues which transcend technical considerations of stare decisis and if such an issue is brought before the court, it would be nothing short of abdication of its constitutional duty for the court to consider such issue by taking refuge under the doctrine of stare decisis. The court may refuse to entertain such an issue like the constitutional validity of death penalty because it is satisfied that the previous decision is correct but it cannot decline to consider it on the ground that it is barred by the rule of adherence to precedents. Moreover, in the present case, there are two other supervening circumstances which justify, nay compel, reconsideration of the decision in Jagmohan 's case (supra). The first is the introduction of the new Code of Criminal Procedure in 1973 which by sec 260 tion 354 sub section (3) has made life sentence the rule in case of offences punishable with death or in the alternative imprisonment for life and provided for imposition of sentence of death only in exceptional cases for special reasons. I shall presently refer to this section enacted in the new Code of Criminal Procedure and show how, in view of that provision, the imposition of death penalty has become still more indefensible from the constitutional point of view. But the more important circumstance which has supervened since the decision in Jagmohan 's case (supra) is the new dimension of Articles 14 and 21 unfolded by this Court in Maneka Gandhi vs Union of India.(1) This new dimension of Articles 14 and 21 renders the death penalty provided in section 302 of the Indian Penal Code read with sec. 354 (3) of the Code of Criminal Procedure vulnerable to attack on a ground not available at the time when Jagmohan 's case (supra) was decided. Furthermore, it may also be noted, and this too is a circumstance not entirely without significance, that since Jagmohan 's case (supra) was decided, India has ratified two international instruments on human rights and particularly the International Convenant on Civil and Political Rights. We cannot therefore consider ourselves bound by the view taken in Jagmohan 's case (supra) and I must proceed to consider the issue as regards the constitutional validity of death penalty afresh, without being in any manner inhibited by the decision in Jagmohan 's case (supra). It must be realised that the question of constitutional validity of death penalty is not just a simple question of application of constitutional standards by adopting a mechanistic approach. It is a difficult problem of constitutional interpretation to which it is not possible to give an objectively correct legal anwer. It is not a mere legalistic problem which can be answered definitively by the application of logical reasoning but it is a problem which raises profound social and moral issues and the answer must therefore necessarily depend on the judicial philosophy of the Judge. This would be so in case of any problem of constitutional interpretation but much more so would it be in a case like the present where the constitutional conundrum is enmeshed in complex social and moral issues defying a formalistic judicial attitude. That is the reason why in some countries like the United States and Canada where _________________ (1) [1978] 2 SCR 663. 261 there is power of judicial review, there has been judicial disagreement on the constitutionality of death penalty. On an issue like this, as pointed out by David Pannick in his book on "Judicial Review of the Death Penalty" judicial conclusions emanate from the judicial philosophy of those who sit in judgment and not from the language of the Constitution. " But even so, in their effort to resolve such an issue of great constitutional significance, the Judges must take care to see that they are guided by "objective factors to the maximum possible extent. " The culture and ethos of the nation as gathered from its history, its tradition and its literature would clearly be relevant factors in adjudging the constitutionality of death penalty and so would the ideals and values embodied in the Constitution which lays down the basic frame work of the social and political structure of the country, and which sets out the objectives and goals to be pursued by the people in a common endeavour to secure happiness and welfare of every member of the society. So also standards or norms set by International organisations and bodies have relevance in determining the constitutional validity of death penalty and equally important in construing and applying the equivocal formulae of the Constitution would be the "wealth of non legal learning and experience that encircles and illuminates" the topic of death penalty. "Judicial dispensers", said Krishna Iyer, J. in Dalbir Singh and Others vs State of Punjab(1) "do not behave like cavemen but breathe the fresh air of finer culture. " There is no reason why, in adjudicating upon the constitutional validity of death penalty. Judges should not obtain assistance from the writings of men like Dickens, Tolstoy, Dostoyevsky, Koestter and Camus or from the investigations of social scientists or moral philosophers in deciding the circumstances in which and the reasons why the death penalty could be seen as arbitrary or a denial of equal protection. It is necessary to bear in mind the wise and felicitous words of Judge Learned Hand in his "Spirit of Liberty" that while passing on question of constitutional interpretation, it is as important to a Judge: ". .to have atleast a bowing acquaintance with Acton and Maitland. With Thucydides, Gibbon and Carlyle, with Homer, Dante Shakespeare and Milton, with Machiavelli, Montaigne and Rabelais, with Plato, Bacon, Hume 262 and Kant, as with the books which have been specifically written on the subject. For in such matters everything turns upon the spirit in which he approaches the question before him. The words he must construe are empty vessels into which he can pour nearly anything he will. Men do not gather figs of thistles, nor supply institutions from judges whose outlook is limited by parish or class. They must be aware that there are before them more than verbal problems; more than final solutions cast in generalisations of universal applicability. " Constitutional law raises, in a legal context, problems of economic, social, moral and political theory and practice to which non lawyers have much to contribute. Non lawyers have not reached unanimity on the answers to the problems posed; nor will they ever do so, But when judges are confronted by issues to which there is no legal answer, there is no reason (other than a desire to maintain a fiction that the law provides the answer) for judicial discretion to be exercised in a vacuum, immune from non legal learning and extra legal dispute. "Quotations from noble minds are not for decoration (in hard constitutional cases) but for adaptation within the framework of the law. " Vide: David Pannick on 'Judicial Review of the Death Penalty. ' The Judges must also consider while deciding an issue of constitutional adjudication as to what would be the moral, social and economic consequences of a decision either way. The consequences of course do not alter the meaning of a constitutional or statutory provision but they certainly help to fix its meaning. With these prefatory observations I shall now proceed to consider the question of constitutional validity of death penalty. I shall presently refer to the constitutional provisions which bear on the question of constitutionality of death penalty, but before I do so, it would be more logical if I first examine what is the international trend of opinion in regard to death penalty. There are quite a large number of countries which have abolished death penalty de jure or in any event, de facto The Addendum to the Report of the Amnesty International on "The Death Penalty" points out that as on 30th May 1979, the following countries have abolished death penalty for all offences : Australia, Brazil, Colombia, Costa Rica, Denmark, Dominican Republic, Ecuador, Fiji, Finland, Federal Republic of Germany, Honduras, Iceland, Luxembourg, Norway, Portugal, Sweden, Uruguay and Venezuela, and according 263 to this Report, Canada, Italy, Malta, Netherlands, Panama, Peru, Spain and Switzerland have abolished death penalty in time of peace, but retained it for specific offences committed in time of war. The Report also states that Algeria, Belgium, Greece, Guyana, Ivory Coast, Seychelles and Upper Volta have retained the death penalty on their statute book but they did not conduct any executions for the period from 1973 to 30th May 1979. Even in the United States of America there are several States which have abolished death penalty and so also in the United Kingdom, death penalty stands abolished from the year 1965 save and except for offences of treason and certain forms of piracy and offences committed by members of the armed forces during war time. It may be pointed out that an attempt was made in the United Kingdom in December 1975 to reintroduce death penalty for terrorist offences involving murder but it was defeated in the House of Commons and once again a similar motion moved by a conservative member of Parliament that "the sentence of capital punishment should again be available to the courts" was defeated in the House of Commons in a free vote on 19th July 1979. So also death penalty has been abolished either formally or in practice in several other countries such as Argentina, Bolivia, most of the federal States of Mexico and Nicaragua, Israel, Turkey and Australia do not use the death penalty in practice. It will thus be seen that there is a definite trend in most of the countries of Europe and America towards abolition of death penalty. It is significant to note that the United Nations has also taken great interest in the abolition of capital punishment. In the Charter of the United Nations signed in 1945, the founding States emphasized the value of individuals 's life, stating their will to "achieve international co operation. in promoting and encouraging respect for human rights and for fundamental freedoms for all without distinction as to race, sex, language or religion." Though the San Francisco Conference did not address itself to the issue of death penalty specifically, the provisions of the charter paved the way for further action by United Nations bodies in the field of human rights, by establishing a Commission on Human Rights and, in effect, charged that body with formulating an International Bill of Human Rights. Meanwhile the Universal Declaration of Human Rights was adopted by the General Assembly in its Resolution 217 A (III) of 10 December 1948. Articles 3 and 5 of the Declaration provided: 264 3. "Everyone has the right to life, liberty and security of person." 5. "No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment. The United Nations ' position on the question of death penalty was expected to be stated more specifically in the International Covenant on Civil and Political Rights, the drafting of which had been under way since the first session of the Commission on Human Rights in 1947. But during the 11 year period of drafting of the relevant provision of the Covenant, two main approaches to the issue of capital punishment became evident: one stressed the need for barring the death penalty and the second placed emphasis on resstricting its application to certain cases. The proponents of the first position suggested either the total abolition of the death penalty or its abolition in time of peace or for political offences. This approach was however regarded as unfeasible, since many countries, including abolitionist ones, felt that the provision for an outright ban on the death penalty would prevent some States from ratifying the Covenant, but at the same time, it was insisted by many countries that the Covenant should not create the impression of supporting or perpetuating death penalty and hence a provision to this effect should be included. The result was that the second approach stressing everyone 's right to life and emphasizing the need for restricting the application of capital punishment with a view to eventual abolition of the death penalty, won greater support and Article 6 of the Covenant as finally adopted by the General Assembly in its resolution 2000(XXX) of 16 December 1966 provided as follows : 1. Every human being has the inherent right to life. This right shall be protected by law. No one shall be arbitrarily deprived of his life. In countries which have not abolished the death penalty, sentence of death may be imposed only for the most serious crimes in accordance with the law in force at the time of the commission of the crime and not contrary to the provisions of the present Covenant and to the Convention on the Prevention and Punishment of the Crime of Genocide. This 265 penalty can only be carried out pursuant to a final judgment rendered by a competent court. When deprivation of life constitutes the crime of genocide, it is understood, that nothing in this article shall authorise any State Party to the present Covenant to derogate in any way from any obligatlon assumed under the provisions of the Convention on the Prevention and Punishment of the Crime of Genocide. Anyone sentenced to death shall have the right to seek, pardon or commutation of the sentence. Amnesty pardon or commutation of the sentence of death may be granted in all cases. Sentence of death shall not be imposed for crimes committed by persons below eighteen years of age and shall not be carried out on pregnant women. Nothing in this article shall be invoked to delay or prevent the abolition of capital punishment by any State Party to the present Covennt. " Article 7 of the Covenant corresponding to Article 5 of the Universal Declaration of Human Rights reaffirmed that no one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment. So deep and profound was the United Nation 's concern with the issue of death penalty that the General Assembly in its resolotion 1396 (XIV) of 20 November, 1959 invited the Economic and Social Council to initiate study of the question of capital punishment, of the laws and practices relating thereto, and of the effects of capital punishment and the abolition thereof on the rate of criminality. Pursuant to this resolution, the Economic and Social Council activised itself on this issue and at its instance a substantive report report was prepared by the noted French jurist Marc Ancel. The report entitled "Capital Punishment" was the first major survey of the problem from an international stand point on the deterrent aspect of the death penalty and in its third chapter, it contained a cautious statement "that the deterrent effect of the death penalty is, to say the least, not demons 266 trated". This view had been expressed not only by abolitionists countries in their replies to the questionaires but also by some retentionist countries. The Ancel report alongwith the Report of the ad hoc Advisory Committee of Experts on the Prevention of Crime and the Treatment of Offenders which examined it in January 1963 was presented to the Economic and Social Council at its 35th Session when its Resolution 934 (XXXV) of 9th April 1963 was adopted. By this Resolution the Economic and Social Council urged member governments inter alia to keep under review the efficacy of capital punishment as a deterrent to crime in their countries and to conduct research into the subject and to remove this punishment from the criminal law concerning any crime to which it is, in fact, not applied or to which there is no intention to apply it. This Resolution clearly shows that there was no evidence supporting the supposed deterrent effect of the death penalty and that is why the Economic and Social Council suggested further research on the topic. Moreover, the urging of the de facto abolitionist countries by this Resolution to translate the position into de jure terms constituted an implicit acceptance of the principle of abolition. The same year, by Resolution 1918 (XVIII) of 5th December 1963, the General Assembly endorsed this action of the Economic and Social Council and requested the Economic and Social Council to invite the Commission on human Rights to study and make recommendations on the Ancel Report and the comments of the ad hoc Advisory Committee of Experts. The General Assembly also requested the Secretary General to present a report on new developments through the Economic and Social Council. Norval Morris, an American professor of criminal law and criminology, accordingly prepared a Report entitled "Capital Punishment; Developments 1961 1965" and amongst other things, this Report pointed out that there was a steady movement towards legislative abolition of capital punishment and observed with regard to the deterrent effect of death penalty, that: "With respect to the influence of the abolition of capital punishment upon the incidence of murder, all of the available data suggest that where the murder rate is increasing, abolition does not appear to hasten the increase where the rate is decreasing abolition does not appear to interrupt the decrease; where the rate is stable, the presence or absence of capital punishment does not appear to affect it." 267 The Commission on Human Rights considered this Report and adopted a draft General Assembly Resolution which was submitted by the Economic and Social Council to the General Assembly and on 26th November 1968, the General Assembly adopted this draft with certain modifications as its Resolution 2393 (XXIII) inviting member governments to take various measures and requesting the Secretary General to invite member governments "to inform him of their present attitude to possible further restricting the use of the death penalty or to its total abolition" and to submit a report to the Economic and Social Council. The Secretary General accordingly submitted his report to the Economic and Social Council at its 50th session in 1971. This Report contained a finding that "most countries are gradually restricting the number of offences for which the death penalty is to be applied and a few have totally abolished capital offences even in war times". The discussion in the Economic and Social Council led to the adoption of Resolution 1574 (L) of 20th May 1971 which was reaffirmed by General Assembly Resolution 2857 (XXVI) of 20th December 1971. This latter resolution clearly affirmed that: "In order to guarantee fully the right to life, provided for in article 3 of the Universal Declaration of Human Rights, the main objective to be pursued is that of progressively restricting the number of offences for which capital punishment may be imposed, with a view to the desirability of abolishing this punishment in all countries". (Emphasais supplied) In 1973 the Secretary General submitted to the Economic and Social Council at its 54th session his third report on capital punishment as requested by the Council and at this session, the Council adopted Resolution 1745 (LIV) in which, inter alia, it invited the Secretary General to submit to it periodic updated reports on capital punishment at five year intervals starting from 1975. A fourth report on capital punishment was accordingly submitted in 1975 and a fifth one in 1980. Meanwhile the General Assembly at its 32nd Session adopted Resolution 32/61 on 8th December 1977 and this Resolution re affirmed "the desirability of abolishing this" that is capital "punishment" in all countries. 268 It will thus be seen that the United Nations has gradually shifted from the position of a neutral observer concerned about but not committed on the question of death penalty, to a position favouring the eventual abolition of the death penalty. The objective of the United Nations has been and that is the standard set by the world body that capital punishment should ultimately be abolished in all countries. This normative standard set by the world body must be taken into account in determining whether the death penalty can be regarded as arbitrary, excessive and unreasonable so as to be constitutionally invalid. I will now proceed to consider the relevant provisions of the Constitution bearing on the question of constitutional validity of death penalty. It may be pointed out that our Constitution is a unique document. It is not a mere pedantic legal text but it embodies certain human values cherished principles and spiritual norms and recognises and upholds the dignity of man. It accepts the individual as the focal point of all development and regards his material, moral and spiritual development as the chief concern of its various provisions. It does not treat the individual as a cog in the mighty all powerful machine of the State but places him at the centre of the constitutional scheme and focuses on the fullest development of his personality. The Preamble makes it clear that the Constitution is intended to secure to every citizen social, economic and political justice and equality of status and opportunity and to promote fraternity assuring the dignity of the individual. The Fundamental Rights lay down limitations on the power of the legislature and the executive with a view to protecting the citizen and confer certain basic human rights which are enforceable against the State in a court of law. The Directive Principles of State Policy also emphasise the dignity of the individual and the worth of the human person by obligating the State to take various measures for the purpose of securing and protecting a social order in which justice social, economic and political, shall inform all the institutions of national life. What is the concept of social and economic justice which the founding fathers had in mind is also elaborated in the various Articles setting out the Directive Principles of State Policy. But all these provisions enacted for the purpose of ensuring the dignity of the individual and providing for his material, moral and spiritual development would be Meaningless and ineffectual unless there is rule of law to invest them with life and force. 269 Now if we look at the various constitutional provisions including the Chapters on Fundamental Rights and Directive Principles of State Policy, it is clear that the rule of law permeates the entire fabric of the Constitution and indeed forms one of its basic features. The rule of law excludes arbitrariness; its postulate is 'intelligence without passion ' and 'reason freed from desire '. Wherever we find arbitrariness or unreasonableness there is denial of the rule of law. That is why Aristotle preferred a government of laws rather than of men. 'Law ', in the context of the rule of law, does not mean any law enacted by the legislative authority, howsoever arbitrary or despotic it may be. Otherwise even under a dictatorship it would be possible to say that there is rule of law, because every law made by the dictator howsoever arbitrary and unreasonable has to be obeyed and every action has to be taken in conformity with such law. In such a case too even where the political set up is dictatorial, it is law that governs the relationship between men and men and between men and the State. But still it is not rule of law as understood in modern jurisprudence, because in jurisprudential terms, the law itself in such a case being an emanation from the absolute will of the dictator it is in effect and substance the rule of man and not of law which prevails in such a situation. What is necessary element of the rule of law is that the law must not be arbitrary or irrational and it must satisfy the test of reason and the democratic form of polity seeks to ensure this element by making the framers of the law accountable to the people. Of course, in a country like the United Kingdom, where there is no written constitution imposing fetters on legislative power and providing for judicial review of legislation, it may be difficult to hold a law to be invalid on the ground that it is arbitrary and irrational and hence violative of an essential element of the rule of law and the only remedy if at all would be an appeal to the electorate at the time when a fresh mandate is sought at the election. But the situation is totally different in a country like India which has a written Constitution enacting Pundamental Rights and conferring power on the courts to enforce them not only against the executive but also against the legislature. The Fundamental Rights erect a protective armour for the individual against arbitrary or unreasonable executive or legislative action. There are three Fundamental Rights in the Constitution which are of prime importance and which breathe vitality in the concept 270 of the rule of law. They are Articles 14, 19 and 21 which, in the words of Chandrachud, C.J. in Minverva Mills case(1) constitute a golden triangle. It is now settled law as a result of the decision of this Court in Maneka Gandhi 's case (supra) that Article 14 enacts primarily a guarantee against arbitrariness and inhibits State action whether legislative or executive, which suffers from the vice of arbitrariness. This interpretation placed on Article 14 by the Court in Maneka Gandhi 's case has opened up a new dimension of that Article which transcends the classificatory principle. For a long time in the evolution of the constitutional law of our country, the courts had construed Article 14 to mean only this, namely, that you can classify persons and things for the application of a law but such classification must be based on intelligible differentia having rational relationship to the object sought to be achieved by the law. But the court pointed out in Maneka Gandhi 's case that Article 14 was not to be equated with the principle of classification. It was primarily a guarantee against arbitrariness in State action and the doctrine of classification was evolved only as a subsidiary rule for testing or determining whether a particular State action was arbitrary or not. The Court said "Equality is antithetical to arbitrariness. In fact, equality and arbitrariness are sworn enemies. One belongs to the rule of law while the other to the whim and caprice of an absolute monarch. Where an act is arbitrary, it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Article 14." The Court thus laid down that every State action must be non arbitrary and reasonable; if it is not, the court would strike it down as invalid. This view was reaffirmed by the Court in another outstanding decision in Ramana Dayaram Shetty International Airport Authority of India & Ors. There tenders were invited by the Airport Authority for giving a contract for running a canteen at the Bombay Airport. The invitation for tender included a condition that the applicant must have at least 5 years ' experience as a registered 2nd class hotelier. Several persons tendered. One was a person who had considerable experience in the catering business but he was not a registered 2nd class hotelier as required by the condition in the invitation to tender. Yet his tender was accepted because it was the highest. The contract given to him was challenged and the court held that the action of the Airport Authority was illegal. The court pointed out that a ______________________ (1) ; 271 new form of property consisting of government largesse in the shape of jobs, cotracts licences, quotas, mineral rights and other benefits and services was emerging in the social welfare State that India was and it was necessary to develop new forms of protection in regard to this new kind of property. The court held that in regard to government largesse, the discretion of the government is not unlimited in that the government cannot give or withhold largesse in its arbitrary discretion or at its sweet will. The government action must be based on standards that are not arbitrary or irrational. This requirement was spelt out from the application of Article 14 as a constitutional requirement, and it was held that having regard to the constitutional mandate of Article 14, the Airport Authority was not entitled to act arbitrarily in accepting the tender but was bound to conform to the standards or norms laid down by it. The Court thus reiterated and reaffirmed its commitment against arbitrariness in State action. It can, therefore, now be taken to be well settled that if a law is arbitrary or irrational, it would fall foul of Article 14 and would be liable to be struck down as invalid. Now a law may contravene Article 14 because it enacts provisions which are arbitrary; as for example, they make discriminatory classification which is not founded on intelligible differentia having rational relation to the object sought to be achieved by the law or they arbitrarily select persons or things for discriminatory treatment. But there is also another category of cases where without enactment of specific provisions which are arbitrary, a law may still offend Article 14 because it confers discretion on an authority to select persons or things for application of the law without laying down any policy or principle to guide the exercise of such discretion. Where such unguided and unstructured discretion is conferred on an authority, the law would be violative of Article 14 because it would enable the authority to exercise such discretion arbitrarily and thus discriminate without reason. Unfettered and uncharted discretion conferred on any authority, even if it be the judiciary, throws the door open for arbitrariness, for after all a judge does not cease to be a human being subject to human limitations when he puts on the judicial robe and the nature of the judicial process being what it is, it cannot be entirely free from judicial subjectivism. Cardozo, J. has frankly pointed this out in his lectures on "Nature of the Judicial Process": 272 "There has been a certain lack of candor in much of the discussion of the theme, or rather perhaps in the refusal to discuss it, as if judges must lose respect and confidence by the reminder that they are subject to human limitations. if there is anything of reality in my analysis of the judicial process, they do not stand aloof on these chill and distant heights; and we shall not help the cause of truth by acting and speaking as if they do. The great tides and currents which engulf the rest of men do not turn aside in their course and pass the judges by. This facet of the judicial process has also been emphasized by Richard B. Brandt in his book on "Judicial Discretion" where he has said : "Much of law is designed to avoid the necessity for the judge to reach what Holmes called his 'can 't helps ', his ultimate convictions or values. The force of precedent, the close applicability of statute law, the separation of powers, legal presumptions, statutes of limitations, rules of pleading and evidence, and above all the pragmatic assessments of fact that point to one result whichever ultimate values be assumed, all enable the judge in most cases to stop short of a resort to his personal standards. When these prove unavailing, as is more likely in the case of courts of last resort at the frontiers of the law, and most likely in a supreme constitutional court, the judge necessarily resorts to his own scheme of values. It may, therefore, be said that the most important thing about a judge is his philosophy; and if it be dangerous for him to have one, it is at all events less dangerous than the self deception of having none. That is why Lord Camden described the discretion of a judge to be "the law of tyrants; it is always unknown; it is different in different men; it is casual and depends on Constitution,Tamper, and Passion. In the best it is often times Caprice, in the worst it is every Vice, Folly and Passion to which human Nature is liable. " Doe d. Hindson vs Kersey (1765) at p. 53 of the pamphlet published in London by J. Wilkes in 1971 entitled "Lord Camden 's Genuine Argument in giving Judgment on the Ejectment between Hindson, and others against Kersey". Megarry J. also points out in his delightful book "Miscellany at Law" that "discretion is indeed a poor substitute for 273 principles, however, great the Judge". Therefore, where discretion is conferred on an authority by a statute, the court always strains to find in the statute the policy or principle laid down by the legislature for the purpose of guiding the exercise of such discretion and, as pointed out by Subba Rao, J. as he then was, the court sometimes even tries to discover the policy or principle in the crevices of the statute in order to save the law from the challenge of Article 14 which would inevitably result in striking down of the law if the discretion conferred were unguided and unfettered. But where after the utmost effort and intense search, no policy or principle to guide the exercise of discretion can be found, the discretion conferred by the law would be unguided and unstructured, like a tumultuous river overflowing its banks and that would render the law open to attack on ground of arbitrariness under Article 14. So also Article 19 strikes against arbitrary legislation in so far as such legislation is violative of one or the other provision of clause (1) of that Article. Sub clauses (a) to (g) of clause (1) of Article 19 enact various Fundamental freedoms; sub clause (1) guarantees freedom of speech and expression, sub clause (b), freedom to assemble peacefully and without arms; sub clause (c), freedom to form associations or unions; sub clause (d), freedom to move freely throughout the territory of India; sub clause (e) to reside and settle in any part of the territory of India and sub clause (g), freedom to practise any profession or to carry on any occupation, trade or business. There was originally sub clause (f) in clause (1) of Article 19 which guaranteed freedom to acquire, hold and dispose of property but that sub clause was deleted by the Constitution (Forty Fourth Amendment) Act 1978. Now the freedoms guaranteed under these various sub clauses of clause (1) of Article 19 are not absolute freedoms but they can be restricted by law, provided such law satisfies the requirement of the applicable provision in one or the other of clauses (2) to (6) of that Article. The common basic requirement of the saving provision enacted in clauses (2) to (6) of Article 19 is that the restriction imposed by the law must be reasonable. If, therefore, any law is enacted by the legislature which violates one or the other provision of clauses (1) of Article 19, it would not be protected by the saving provision enacted in clauses (2) to (6) of that Article, if it is arbitrary or irrational, because in that event the restriction imposed by it would a fortiorari be unreasonable. 274 The third Fundamental Right which strikes against arbitrariness in State action is that embodied in Article 21. This Article is worded in simple language and it guarantees the right to life and personal liberty in the following terms. No person shall be deprived of his life or personal liberty except according to procedure established by law. " This Article also came up for interpretation in Maneka Gandhi 's case (supra). Two questions arose before the Court in that case : one was as to what is the content of the expression "personal liberty" and the other was as to what is the meaning of the expression "except according to procedure established by law". We are not concerned here with the first question and hence I shall not dwell upon it. But so far as second question is concerned, it provoked a decision from the Court which was to mark the beginning of amost astonishing development of the law. It is with this decision that the Court burst forth into un precedented creative activity and gave to the law a new dimenston and a new vitality. Until this decision was given, the view held by this Court was that Article 21 merely embodied a facet of the Diceyian concept of the rule of law that no one can be deprived of his personal liberty by executive action unsupported by law. It was intended to be no more than a protection against executive action which had no authority of law. If there was a law which provided some sort of procedure, it was, enough to deprive a person of his life or personal liberty. Even if, to take an example cited by S.R. Das, J, in his Judgment in A.K. Gopalan vs State of Madras(1) the law provided that the Bishop of Rochester be boiled in old, it would be valid under Article 21. But in Maneka Gandhi 's case (supra) which marks a watershed in the history of development of constitutional law in our country, this Court for the first time took the view that Article 21 affords protection not only against executive action but also against legislation and any law which deprives a person of his life or personal liberty would be invalid unless it prescribes a procedure for such deprivation which is reasonable fair and just. The concept of reasonableness, it was held, runs through the entire fabric of the Constitution and it is not enough for the law merely to provide some semblance of a procedure but the procedure for depriving a ___________ (1) ; 275 person of his life or personal liberty must be rasonable, fair and just. It is for the court to determine whether in a particular case the procedure is reasonable, fair and just and if it is not, the court will strike down the law as invalid. If therefore a law is enacted by the legislature which deprives a person of the life and 'life ' according to the decision of this Court in Francis Coralie Mullen 's vs Administrator, Union Territory of Delhi and Ors.,(1) would include not merely physical existence but also the use of any faculty or limb as also the right to live with human dignity or any aspect of his personal liberty, it would offend against Article 21 if the procedure prescribed for such deprivation is arbitrary and unreasonable. The word 'procedure ' in Article 21 is wide enough to cover the entire process by which deprivation is effected and that would include not only the adjectival but also the substantive part of the law. Take for example, a law of preventive detention which sets out the grounds on which a person may be preventively detained. If a person is preventively detained on a ground other than those set out in the law, the preventive detention would obviously not be according to the procedure prescribed by the law, because the procedure set out in the law for preventively detaining a person prescribes certain specific grounds on which alone a person can be preventively detained, and if he is detained on any other ground, it would be violative of Article 21. Every facet of the law which deprives a person of his life or personal liberty would therefore have to stand the test of reasonableness, fairness and justness in order to be outside the inhibition of Article 21. It will thus be seen that the rule of law has much greater vitality under our Constitution that it has in other countries like the United Kingdom which has no constitutionally enacted Fundamental Rights. The rule of law has really three basic and fundamental assumptions one is that law making must be essentially in the hands of a democratically elected legislature, subject of course to any power in the executive in an emergent situation to promulgate ordinances effective for a short duration while the legislature is not in session as also to enact delegated legislation in accordance with the guidelines laid down by the legislature; the other is that, even in the hands of a democratically elected legislature, there should not be unfettered legislative power, for, as Jefferson said: "Let no man be trusted with power but tie him down from making mischief by the _____________________ (1) ; 276 chains of the Constitution"; and lastly there must be an independent judicially to protect the citizen against excesses of executive and legislative power. Fortunately, whatever uncharitable and irresponsible critics might say when they find a decision of the court going against the view held by them, we can confidently assert that we have in our country all these three elements essential to the rule of law. It is plain and indisputable that under our Constitution law cannot be arbitrary or irrational and if it is, it would be clearly invalid, whether under Article 14 or Article 19 or Article 21 whichever be applicable. It is in the light of these constitutional provisions that I must consider whether death penalty provided under Section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure is constitutionally valid. Now one thing is certain that the Constitution does not in so many terms prohibit capital panishment. In fact, it recognises death sentence as one of the penalties which may be imposed by law. Article 21 provides inter alia that no one shall be deprived of his life except according to procedure established by law and this clearly postulates that a person may be deprived of his life in accordance with the procedure prescribed by law or in other words, law may provide a procedure, which of course according to the decision of this Court in Maneka Gandhi 's case (supra) must be reasonable, fair and just procedure, for inflicting death penalty on a person depriving him of his life. Clause(c) of Article 72 also recognises the possibility of a sentence of death being imposed on a person convicted of an offence inasmuch as it provides that the President shall have the power to suspend, remit or commute the sentence of any person who is convicted of an offence and sentenced to death. It is therefore not possible to contend that the imposition of death sentence for conviction of an offence is in all cases forbidden by the Constitution. But that does not mean that the infliction of death penalty is blessed by the Constitution or that it has the imprimatur or seal of approval of the Constitution. The Constitution is not a transient document but it is meant to endure for a long time to come and during its life, situations may arise where death penalty may be found to serve a social purpose and its prescription may not be liable to be regarded as arbitrary or unreasonable and therefore to meet such situations, the Constitution had to make a provision and this it did in Article 21 and clause (c) of Article 72 so that, even where death penalty is prescribed by any 277 law and it is otherwise not unconstitutional, it must still comply with the requirement of Article 21 and it would be subject to the clemency power of the President under clause (c) of Article 72. The question would however still remain whether the prescription of death penalty by any particular law is violative of any provision of the Constitution and is therefore rendered unconstitutional. This question has to be answered in the present case with reference to section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure. Now in order to answer this question it is necessary first of all to examine the legislative trend in our country so far as the imposition of death penalty is concerned. A "brief survey of the trend of legislative endeavours" will, as pointed out by Krishna Iyer, J. in Rajendra Prasad vs State of U.P.(1) "serve to indicate whether the people 's consciousness has been protected towards narrowing or widening the scope for infliction of death penalty. " If we look at the legislative history of the relevant provisions of the Indian Penal Code and the Code of Criminal Procedure we find that in our country there has been a gradual shift against the imposition of death penalty. "The legislative development, through several successive amendments had shifted the punitive centre of gravity from life taking to life sentence. " Sub section (5) of section 367 of the Code of Criminal Procedure 1898 as it stood prior to its amendment by Act 26 of 1955 provided : "If the accused is convicted of an offence punishable with death, and the court sentences to any punishment other than death, the court shall in its judgment state the reasons why sentence of death was not passed." This provision laid down that if an accused was convicted of an offence punishable with death, the imposition of death sentence was the rule and the awarding of a lesser sentence was an exception and the court had to state the reasons for not passing the sentence of death. In other words, the discretion was directed positively towards death penalty. But, by the Amending Act 26 of 1955 which came into force with effect from 1st January 1956, this provision was deleted with the result that from and after that date, it was left to the discretion of the court on the facts of each case to pass a sen __________________ (1) ; 278 tence of death or to award a lesser sentence. Where the court found in a given case that, on the facts and circumstances of the case, the death sentence was not called for or there were extenuating circumstances to justify the passing of the lesser sentence, the court would award the lesser sentence and not impose the death penalty. Neither death penalty nor life sentence was the rule under the law as it stood after the abolition of sub section (5) of the section 367 by the Amending Act 26 of 1955 and the court was left "equally free to award either sentence". But then again, there was a further shift against death penalty by reason of the abolitionist pressure and when the new Code of Criminal Procedure 1973 was enacted, section 354 sub section (3) provided ; "When the conviction is for a sentence punishable with death or, in the alternative, with imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence awarded and, in the case of sentence of death, special reasons for such sentence. " The court is now required under this provision to state the reasons for the sentence awarded and in case of sentence of death, special reasons are required to be stated. It will thus be seen that life sentence is now the rule and it is only in exceptional cases, for special reasons, that death sentence can be imposed. The legislature has however not indicated what are the special reasons for which departure can be made from the normal rule and death penalty may be inflicted. The legislature has not given any guidance as to what are those exceptional cases in which, deviating from the normal rule, death sentence may be imposed. This is left entirely to the unguided discretion of the court, a feature, which, in my opinion, has lethal consequences so far as the constitutionality of death penalty is concerned. But one thing is clear that through these legislative changes "the disturbed conscience of the State on the question of legal threat to life by way of death sentence has sought to express itself legislatively", the stream of tendency being towards cautions abolition. It is also interesting to note that a further legislative attempt towards restricting and rationalising death penalty was made in the late seventies. A Bill called Indian Penal Code (Amendment) Bill 1972 for amending section 302 was passed by the Rajya Sabha in 1978 and it was pending in the Lok Sabha at the time when Rajendra 279 Prasad 's case was decided and though it ultimately lapsed with the dissolution of the Lok Sabha, it shows how strongly were the minds of the elected representatives of the people agitated against "homicidal exercise of discretion" which is often an "obsession with retributive justice in disguise". This Bill sought to narrow drastically the judicial discretion to impose death penalty and tried to formulate the guidelines which should control the exercise of judicial exercise in this punitive area. But unfortunately the Bill though passed by the Rajya Sabha could not see its way through the Lok Sabha and was not enacted into law. Otherwise perhaps the charge against the present section of 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure that it does not indicate any policy or principle to guide the exercise of judicial discretion in awarding death penalty, would have been considerably diluted, though even then, I doubt very much whether that section could have survived the attack against its constitutionally on the ground that it still leaves the door open for arbitrary exercise of discretion in imposing death penalty. Having traced the legislative history of the relevant provisions in regard to death penalty, I will now turn my attention to what great and eminent men have said in regard to death penalty, for their words serve to bring out in bold relief the utter barbarity and futility of the death penalty. Jaiprakash Narain, the great humanist, said, while speaking on abolition of death penalty ; "To my mind, it is ultimately a question of respect for life and human approach to those who commit grievous hurts to others. Death sentence is no remedy for such crimes. A more humane and constructive remedy is to remove the culprit concerned from the normal milieu and treat him as a mental case. I am sure a large proportion of the murderers could be weaned away from their path and their mental condition sufficiently improved to become useful citizens. In a minority of cases, this may not be possible. They may be kept in prison houses till they die a natural death. This may cast a heavier economic burden on society than hanging. But I have no doubt that a humane treatment even of a murderer will enhance man 's dignity and make society more human. (emphasis added) 280 Andrei Sakharov in a message to the Stockholm Conference on Abolition of death Penalty organised by Amnesty International in 1978 expressed himself firmly against death penalty: "I regard the death penalty as a savage and immoral institution which undermines the moral and legal foundations of a society. A state, in the person of its functionaries who like all people are inclined to making superficial conclusions, who like all people are subject to influence, connections, prejudices and egocentric motivations for their behaviour, takes upon itself the right to the most terrible and irreversible act the deprivation of life. Such a State cannot expect an improvement of the moral atmosphere in its country. I reject the notion that the death penalty has any essential deterrent effect on potential offenders. I am convinced that the contrary is true that savagery begets only savagery. I am convinced that society as a whole and each of its members individually, not just the person who comes before the courts, bears a responsibility for the occurrence of a crime. I believe that the death penalty has no moral or practical justification and represents a survival of barbaric customs of revenge. Blood thirsty and calculated revenge with no temporary insanity on the part of the judges, and therefore, shameful and disgusting. " (emphasis added) Tolstoy also protested against death sentence in an article "I Cannot be Silent": "Twelve of those by whose labour we live, the very men whom we have depraved and are still depraving by every means in our power from the poison of vodka to the terrible falsehood of a creed we impose on them with all our might, but do not ourselves believe in twelve of those men strangled with cords by those whom we feed and clothe and house, and who have depraved and still continue to deprave them. Twelve husbands, fathers, and sons, from among those upon whose kindness, industry and simplicity alone rests the whole of Russian life, are seized, imprisoned, and shackled. Then their hands are tied 281 behind their backs lest they should seize the ropes by which they are to be hung, and they are led to the gallows. " So also said Victor Hugo in the spirit of the Bishop created by him in his 'Les Miserables ' : "We shall look upon crime as a disease. Evil will be treated in charity instead of anger. The change will be simple and sublime. The cross shall displace the scaffold, reason is on our side, feeling is on our side, and experience is on our side." Mahatma Gandhi also wrote to the same effect in his simple but inimitable style : "Destruction of individuals can never be a virtuous act. The evil doers cannot be done to death. Today there is a movement afoot for the abolition of capital punishment and attempts are being made to convert prisons into hospitals as if they are persons suffering from a disease." This Gandhian concept was translated into action with commendable success in the case of Chambal dacoits who laid down their arms in response to the call of Vinobha Bhave and Jaiprakash Narayan. See "Crime and Non violence" by Vasant Nargolkar. There is also the recent instance of surrender of Malkhan Singh, a notorious dacoit of Madhya Pradesh. Have these dacoits not been reformed ? Have they not been redeemed and saved ? What social purpose would have been served by killing them ? I may also at this stage make a few observations in regard to the barbarity and cruelty of death penalty, for the problem of constitutional validity of death penalty cannot be appreciated in its proper perspective without an adequate understanding of the true nature of death penalty and what it involves in terms of human anguish and suffering. In the first place, death penalty is irrevocable; it cannot be recalled. It extinguishes the flame of life for ever and is plainly destructive of the right to life, the most precious right of all, a right without which enjoyment of no other rights is possible. It silences for ever a living being and despatches him to that 'undiscovered country from whose bourn no traveller returns ' nor, 282 once executed, 'can stored urn or animated bust back to its mansion call the fleeting breath '. It is by reason of its cold and cruel finality that death penalty is qualitatively different from all other forms of punishment. If a person is sentenced to imprisonment, even if it be for life, and subsequently it is found that he was innocent and was wrongly convicted, he can be set free. Of course the imprisonment that he has suffered till then cannot be undone and the time he has spent in the prison cannot be given back to him in specie but he can come back and be restored to normal life with his honour vindicated if he is found innocent. But that is not possible where a person has been wrongly convited and sentencted to death and put out of existence in pursuance of the sentence of death. In his case, even if any mistake is subsequently discovered, it will be too late; in every way and for every purpose it will be too late, for he cannot be brought back to life. The execution of the sentence of death in such a case makes miscarriage of justice irrevocable. On whose conscience will this death of an innocent man lie ? The State through its judicial instrumentality would have killed an innocent man. How is it different from a private murder ? That is why Lafayatte said : "I shall ask for the abolition of the penalty of death until I have the infallibility of human judgment demonstrated me. " It is argued on behalf of the retentionists that having regard to the elaborate procedural safeguards enacted by the law in cases involving capital punishment, the possibility of mistake is more imaginary than real and these procedural safeguards virtually make conviction of an innocent person impossible. But I do not think this argument is well founded. It is not supported by factual data. Hugo Bedau in his well known book, "The Death Penalty in America" has individually documented seventy four cases since 1893 in which it has been responsibly charged and in most of them proved beyond doubt, that persons were wrongly convicted of criminal homicide in America. Eight out of these seventy four, though innocent, were executed. Redin, Gardener, Frank and others have specifically identified many more additional cases. These are cases in which it has been possible to show from discovery of subsequent facts that the convictions were erroneous and innocent persons were put to death, but there may be many more cases where by reason of the difficulty of uncovering the facts after conviction, let alone after execution, it may not be possible to establish that there was miscarriage of justice. The jurist Olivecroix, applying a calculus of probabilities to the chance of judicial error, concluded as far back 283 as in 1860 that approximately one innocent man was condemned out of every 257 cases. The proportion seems low but only in relation to moderate punishment. In relation to capital punishment, the proportion is infinitivelly high. When Hugo wrote that he preferred to call the guillotine Lesurques (the name of an innocent man guillotined in the Carrier de Lyon case) he did not mean that every man who was decapitated was a Lesurques, but that one Lesurques was enough to wipe out the value of capital punishment for ever. It is interesting to note that where cases of wrongful execution have come to public attention, they have been a major force responsible for bringing about abolition of death penalty. The Evans case in England in which an innocent man was hanged in 1949 played a large role in the abolition of capital punishment in that country. Belgium also abjured capital punishment on account of one such judicial error and so did Wisconsin, Rhode Island and Maine in the United States of America. Howsoever careful may be the procedural safeguards erected by the law before death penalty can be imposed, it is impossible to eliminate the chance of judicial error. No possible judicial safeguards can prevent conviction of the innocent. Students of the criminal process have identified several reasons why innocent men may be convicted of crime. In the first place, our methods of investigation are crude and archaic. We are, by and large, ignorant of modern methods of investigation based on scientific and technological advances. Our convictions are based largely on oral evidence of witnesses. Often, witnesses perjure themselves as they are motivated by caste, communal and factional considerations. Some times they are even got up by the police to prove what the police believes to be a true case. Sometimes there is also mistaken eye witness identification and this evidence is almost always difficult to shake in cross examination. Then there is also the possibility of a frame up of innocent men by their enemies. There are also cases where an over zealous prosecutor may fail to disclose evidence of innocence known to him but not known to the defence. The possibility of error in judgment cannot therefore be ruled out on any theoretical considerations. It is indeed a very live possibility and it is not at all unlikely that so long as death penalty remains a constitutionally valid alternative, the court or the State acting through the instrumentality of the court may have on its conscience the blood of an innocent man. 284 Then again it is sometimes argued that, on this reasoning, every criminal trial must necessarily raise the possibility of wrongful conviction and if that be so, are we going to invalidate every form of punishment ? But this argument, I am afraid, is an argument of despair. There is a qualitative difference between death penalty and other forms of punishment. I have already pointed out that the former extinguishes the flame of life altogether and is irrevocable and beyond recall while the latter can, at least to some extent be set right, if found mistaken. This vital difference between death penalty and imprisonment was emphasized by Mahatma Gandhi when he said in reply to a German writer : "I would draw distinction between killing and detention and even corporal punishment. I think there is a difference not merely in quantity but also in quality. I can recall the punishment of detention. I can make reparation to the man upon whom I inflict corporal punishment. But once a man is killed, the punishment is beyond recall or reparation. " The same point was made by the distinguished criminologist Leon Radzinowicz when he said : "The likelihood of error in a capital sentence case stands on a different footing altogether. " Judicial error in imposition of death penalty would indeed be a crime beyond punishment. This is the drastic nature of death penalty, terrifying in its consequences, which has to be taken into account in determining in constitutional validity. It is also necessary to point out that death penalty is barbaric and inhuman in its effect, mental and physical upon the condemned man and is positively cruel. Its psychological effect on the prisoner in the Death Row is disastrous. One Psychiatrist has described Death Row as a "grisly laboratory" "the ultimate experiment alstress in which the condemned prisoner 's personality is incredibly brutalised." He points out that "the strain of existence on Death Row is very likely to produce. . acute psychotic breaks." Vide the article of "West on Medicine and Capital Punishment. " Some inmates are driven to ravings or delusions but the majority sink into a sort of catatonic numbness under the over whelming stress. " Vide "The Case against Capital Punishment" by the Washington Research Project. Intense mental suffering is inevitably associated with confinement under sentence of death. Anticipation of approaching 285 death can and does produce stark terror. Vide article on "Mental Suffering under Sentence of Death". Justice Brennan in his opinion in Furman vs Georgia(1) gave it as a reason for holding the capital punishment to be unconstitutional that mental pain is an inseparable part of our practice of punishing criminals by death, for the prospect of pending execution exacts a frightful toll during the inevitable long wait between the imposition of sentence and the actual infliction of death. " Krishna Iyer, J. also pointed out in Rajendra Prasad 's case (supra) that because the condemned prisoner had "the hanging agony hanging over his head since 1973 (i.e. for six years). "he must by now be more a vegetable than a person." He added that "the excruciation of long pendency of the death sentence with the prisoner languishing near solitary suffering all the time, may make the death sentence unconstitutionally cruel and agonising." The California Supreme Court also, in finding the death penalty per se unconstitutional remarked with a sense of poignancy : "The cruelty of capital punishment lies not only in the execution itself and the pain incident thereto, but also in the dehumanising effects of the lengthy imprisonment prior to execution during which the judicial and administrative procedures essential to due process of law are carried out. Penologists and medical experts agree that the process of carrying out a verdict of death is often so degrading and brutalizing to the human spirit as to constitute psychological torture. " In Re Kemmler(2) the Supreme Court of the United States accepted that "punishments are cruel when they involve a lingering death, something more than the mere extinguishment of life. " Now a death would be as lingering if a man spends several years in a death cell avaiting execution as it would be if the method of execution takes an unacceptably long time to kill the victim. The pain of mental lingering can be as intense as the agony of physical lingering. See David Pannick on "Judicial Review of the Death Penalty." Justice Miller also pointed out in Re Medley(3) that "when a prisoner sentenced by a court to death is confined to the ______________ (1) ; (2) ; (3) ; 286 penitentiary awaiting the execution of the sentence, one of the most horrible feelings to which he can be subjected during that time is the uncertainty during the whole of it. . as to the precise time when his execution shall take place. " We acknowledged that such uncertainty is inevitably 'accompanied by an immense mental anxiety amounting to a great increase of the offender 's punishment. ' But quite apart from this excruciating mental anguish and severe psychological strain which the condemned prisoner has to undergo on account of the long wait from the date when the sentence of death is initially passed by the sessions court until it is confirmed by the High Court and then the appeal against the death sentence is disposed of by the Supreme Court and if the appeal is dismissed, then until the clemency petition is considered by the Pesident and if it is turned down, then until the time appointed for actual execution of the sentence of death arrives, the worst time for most of the condemned prisoners would be the last few hours when all certainty is gone and the moment of death is known. Dostoyevsky who actually faced a firing squad only to be reprieved at the last instant, described this experience in the following words : ". the chief and the worst pain is perhaps not inflicted by wounds, but by your certain knowledge that in an hour, in ten minutes, in half a minute, now this moment your soul will fly out of your body, and that you will be a human being no longer, and that that 's certain the main thing is that it is certain . Take a soldier and put him in front of a cannon in battle and fire at him and he will still hope, but read the same soldier his death sentence for certain, and he will go mad or burst out crying. Who says that human nature is capable of bearing this without madness ? Why this cruel, hideous, unnecessary and useless mockery ? Possibly there are men who have sentences of death read out to them and have been given time to go through this torture, and have then been told, You can go now, you 've been reprieved. Such men could perhaps tell us. It was of agony like this and of such horror that Christ spoke. No you can 't treat a man like that. " 287 We have also accounts of execution of several prisoners in the United States which show how in these last moment condemned prisoners often simply disintegrate. Canns has in frank and brutal language bared the terrible psychological cruelty of capital punishment : "Execution is not simply death. It is just as different in essence, from the privation of life as a concentration camp is from prison. . It adds to death a rule, a public premeditation known to the future victim, an organisation, in short, which is in itself a source of moral sufferings more terrible than death. For there to be equivalence, the death penalty would have to punish a criminal who had warned his victim of the date at which he would inflict a horrible death on him and who, from that moment onward, had confined him at his mercy for months. Such a monster is not encountered in private life. " There can be no stronger words to describe the utter depravity and inhumanity of death sentence. The physical pain and suffering which the execution of the sentence of death involves is also no less cruel and inhuman. In India, the method of execution followed is hanging by the rope. Electrocution or application of lethal gas has not yet taken its place as in some of the western countries. It is therefore with reference to execution by hanging that I must consider whether the sentence of death is barbaric and inhuman as entailing physical pain and agony. It is no doubt true that the Royal Commission on Capital Punishment 1949 53 found that hanging is the most humane method of execution and so also in Ichikawa vs Japan,(1) the Japanese Supreme Court held that execution by hanging does not corrospond to 'cruel punishment ' inhibited by Article 36 of the Japanese Constituion. But whether amongst all the methods of execution, hanging is the most humane or in the view of the Japanese Supreme Court, hanging is not cruel punishment within the meaning of Article 36, one thing is clear that hanging is undoubtedly accompanied by intense physical torture and pain. Warden Duffy of San Quentin, a high security __________ (1) Vide : David Pannick on "Judicial Review of Death Penalty, page 73, 288 prison in the United States of America, describes the hanging process with brutal frankness in lurid details : "The day before an execution the prisoner goes through a harrowing experience of being weighed, measured for length of drop to assure breaking of the neck, the size of the neck, body measurement et cetera. When the trap springs he dangles at the end of the rope. There are times when the neck has not been broken and the prisoner strangles to death. His eyes pop almost out of his head, his tongue swells and protrudes from his mouth, his neck may be broken, and the rope many times takes large portions of skin and flesh from the side of the face and that the noose is on. He urinates, he defecates, and droppings fall to the floor while witnesses look on, and at almost all executions one or more faint or have to be helped out of the witness room. The prisoner remains dangling from the end of the rope for from 8 to 14 minutes before the doctor, who has climbed up a small ladder and listens to his heart beat with a stethoscope, pronounces him dead. A prison guard stands at the feet of the hanged person and holds the body steady, because during the first few minutes there is usually considerables struggling in an effort to breathe. " If the drop is too short, there will be a slow and agonising death by strangulation. On the other hand, if the drop is too long, the head will be torn off. In England centuries of practice have produced a detailed chart relating a man 's weight and physical condition to the proper length of drop, but even there mistakes have been made. In 1927, a surgeon who witnessed a double execution wrote : "The bodies were cut down after fifteen minutes and placed in an antechamber, when I was horrified to hear one of the supposed corpses give a gasp and find him making respiratory efforts, evidently a prelude to revival. The two bodies were quickly suspended again for a quarter of an hour longer. Dislocation of the neck is the ideal aimed at, but, out of all my post mortem findings, that has proved rather an exception, which in the majority of 289 instances the cause of death was strangulation and asphyxin. " These passages clearly establish beyond doubt that the execution of sentence of death by hanging does involve intense physical pain and suffering, though it may be regarded by some as more humane than electrocution or application of lethal gas. If this be the true mental and physical effect of death sentence on the condemned prisoner and if it causes such mental anguish, psychological strain and physical agony and suffering, it is difficult to see how it can be regarded as anything but cruel and inhuman. The only answer which can be given for justifying this infliction of mental and physical pain and suffering is that the condemned prisoner having killed a human being does not merit any sympathy and must suffer this punishment because he 'deserves ' it. No mercy can be shown to one who did not show any mercy to others. But, as I shall presently point out, this justificatory reason cannot commend itself to any civilised society because it is based on the theory of retribution or retaliation and at the bottom of it lies the desire of the society to avenge itself against the wrong doer. That is not a permissible penological goal. It is in the context of this background that the question has to be considered whether death penalty provided under section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure is arbitrary and irrational for if it is, it would be clearly violative of Articles 14 and 21. I am leaving aside for the moment challenge to death penalty under Article 19 and confining myself only to the challenge under Article 14 and 21. So far as this challenge is concerned the learned counsel appearing on behalf of the petitioner contended that the imposition of death penalty under section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure was arbitrary and unreasonable, firstly because it was cruel and inhuman, disproportionate and excessive, secondly because it was totally unnecessary and did not serve any social purpose or advance any constitutional value and lastly because the discretion conferred on the court to award death penalty was not guided by any policy or principle laid down by the legislature but was wholly arbitrary. The Union of India as also the States supporting it sought to counter this argu 290 ment of the petitioners by submitting first that death penalty is neither cruel nor inhuman, neither disproportionate nor excessive, secondly, that it does serve a social purpose inasmuch as it fulfils two penological goals namely, denunciation by the community and deterrence and lastly, that the judicial discretion in awarding death penalty is not arbitrary and the court can always evolve standards or norms for the purpose of guiding the exercise of its discretion in this punitive area. These were broadly the rival contentions urged on behalf of the parties and I shall now proceed to examine them in the light of the observations made in the preceding paragraphs. The first question that arises for consideration on these contentions is and that is a vital question which may well determine the fate of this challenge to the constitutional validity of death penalty on whom does the burden of proof lie in a case like this ? Does it lie on the petitioners to show that death penalty is arbitrary and unreasonable on the various grounds urged by them or does it rest on the State to show that death penalty is not arbitrary or unreasonable and serves a legitimate social purpose. This question was debated before us at great length and various decisions were cited supporting one view or the other. The earliest decision relied on was that of Saghir Ahmed vs State of Uttar Pradesh(1) where it was held by this Court that if the petitioner succeeds in showing that the impugned law ex facie abridges or transgresses the rights coming under any of the sub clauses of clause (1) of Article 19, the onus shifts on the respondent State to show that the legislation comes within the permissible limits authorised by any of clauses (2) to (6) as may be applicable to the case, and also to place material before the court in support of that contention. If the State fails to discharge this burden, there is no obligation on the petitioner to prove negatively that the impugned law is not covered by any of the permissive clauses. This view as to the onus of proof was reiterated by this Court in Khyerbari Tea Company vs State of Assam(2). But contended the respondents, a contrary trend was noticeable in some of the subsequent decisions of this Court and the respondents relied principally on the decision in B. Banerjee vs Anita Pan(3) where Krishna Iyer, J. speaking on behalf of himself and Beg, J. as he then was, _________________________ (1) ; (2) ; (3) ; 291 recalled the following statement of the law from the Judgment of this Court in Ram Krishna Dalmia vs S.R. Tendolkar & others: (1) "there is always a presu mption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles." and "that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds." and added that "if nothing is placed on record by the challengers, the verdict ordinarily goes against them. " Relying inter alia on the decision of this Court in State of Bombay vs R.M.D. Chamarbaugwala(2) the learned Judge again emphasized: "Some courts have gone to the extent of holding that there is a presumption in favour of constitutionality, a law will not be declared unconstitutional unless the case is so clear as to be free from doubt." These observations of Krishna Iyer, J. undoubtedly seem to support the contention, of the respondents, but it may be pointed out that what was said by this Court in the passage quoted above from the judgment in Ram Krishna Dalmia 's case (supra) on which reliance was placed by Krishna Iyer, J. was only with reference to the challenge under Article 14 and the Court was not considering there the challenge under Articles 19 or 21. This statement of the law contained in Ram Krishna Dalmia 's case (supra) could not therefore be applied straightaway without anything more in a case where a law was challenged under Articles 19 or 21. The fact, however, remains that Krishna Iyer, J. relied on this statement of the law even though the case before him involved a challenge under Article 19(1) (f) and not under Article 14. Unfortunately, it seems that the attention of the learned Judge was not invited to the decisions of this Court in Saghir Ahmed 's case and Khyerbari Tea Company 's case _______________________ (1) (2) ; 292 (supra) which were cases directly involving challenge under Article 19. These decisions were binding on the learned Judge and if his attention had been drawn to them, I am sure that he would not have made the observations that he did casting on the petitioners the onus of establishing "excessiveness or perversity in the restrictions imposed by the statute" in a case alleging violation of Article 19. These observations are clearly contrary to the law laid down in Saghir Ahmed and Khyerbari Tea Company cases (supra) The respondents also relied on the observations of Fazal Ali, J. in Pathumma vs State of Kerala (1). There the constitutional validity of the Kerala Agriculturists ' Debt Relief Act 1970 was challenged on the ground of violation of both Articles 14 and 19(1) (f). Before entering upon a discussion of the arguments bearing on the validity of this challenge, Fazal Ali. J. speaking on behalf of himself, Beg, C.J., Krishna Iyer and Jaswant Singh. observed that the court will interfere with a statute only "when the statute is clearly violative of the right conferred on the citizen under Part III of the Constitution" and proceeded to add that it is on account of this reason "that courts have recognised that there is always a presumption in favour of the constitutionality of a statute and the onus to prove its invalidity lies on the party which assails the same. " The learned Judge then quoted with approval the following passage from the Judgment of S.R. Das, C.J. in Mohd. Hanif vs State of Bihar (2) "The pronouncements of this Court further establish, amongst other things, that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional principles. The Courts, it is accepted, must presume that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. " It is difficult to see how these observations can be pressed into service on behalf of the respondents. The passage from the judgment of _______________________ (1) (2) ; 293 S.R. Das, C.J. in Mohd. Hanif 's case (supra) relied upon by Fazal Ali, J. occurs in the discussion relating to the challenge under Article 14 and obviously it was not intended to have any application in a case involving challenge under Article 19 or 21. In fact, while discussing the challenge to the prevention of cow slaughter statutes under Article 19(1)(g), S.R. Das, C.J. proceeded to consider whether the restrictions imposed by the impugned statutes on the Fundamental Rights of the petitioners under Article 19(1)(g) were reasonable in the interest of the general public so as to be saved by clause (6) of Article 19. Moreover, the observations made by Fazal Ali, J. were general in nature and they were not directed towards consideration of the question as to the burden of proof in cases involving violation of Article 19. What the learned Judge said was that there is always a presumption in favour of the constitutionality of a statute and the court will not interfere unless the statute is clearly violative of the Fundamental Rights conferred by Part III of the Constitution. This is a perfectly valid statement of the law and no exception can be taken to it. There must obviously be a presumption in favour of the constitutionality of a statute and initially it would be for the petitioners to show that it violates a Fundamental Right conferred under one or the other sub clauses of clause (1) of Article 19 and is therefore unconstitutional, but when that is done, the question arises, on whom does the burden of showing whether the restrictions are permissible or not, lie? That was not a question dealt with by Fazal Ali, J. and I cannot therefore read the observations of the learned Judge as, in any manner, casting doubt on the validity of the statement of law contained in Saghir Ahmed and Khyerbari Tea Company 's cases (supra). It is clear on first principle that subclauses (a) to (g) of clause (1) of Article 19 enact certain fundamental freedoms and if sub clauses (2) to (6) were not there, any law contravening one or more of these fundamental freedoms would have been unconstitutional. But clauses (2) to (6) of Article 19 save laws restricting these fundamental freedoms, provided the restrictions imposed by them fall within certain permissible categories. Obviously therefore, when a law is challenged on the ground that it imposes restrictions on the freedom guaranteed by one or the other subclause of clause (1) of Article 19 and the restrictions are shown to exist by the petitioner, the burden of establishing that the restrictions fall within any of the permissive clauses (2) to (6) which may be applicable, must rest upon the State. The State would have to produce material for satisfying the court that the restrictions imposed 294 by the impugned law fall within the appropriate permissive clause from out of clauses (2) to (6) of Article 19. Of course there may be cases where the nature of the legislation and the restrictions imposed by it may be such that the court may, without more, even in the absence of any positive material produced by the State, conclude that the restrictions fall within the permissible category, as for example, where a law is enacted by the legislature for giving effect to one of the Directive Principles of State Policy and prima facie, the restrictions imposed by it do not appear to be arbitrary or excessive. Where such is the position, the burden would again shift and it would be for the petitioner to show that the restrictions are arbitrary or excessive and go beyond what is required in public interest. But, once it is shown by the petitioner that the impugned law imposes restrictions which infringe one or the other sub clause of clause (1) of Article 19, the burden of showing that such restrictions are reasonable and fall within the permissible category must be on the State and this burden the State may discharge either by producing socio economic data before the court or on consideration of the provisions in the impugned law read in the light of the constitutional goals set out in the Directive Principles of State Policy. The test to be applied for the purpose of determining whether the restrictions imposed by the impugned law are reasonable or not cannot be cast in a rigid formula of universal application, for, as pointed out by Patanjali Shastri, J. in State of Madras vs V.J. Row (1) "no abstract standard or general pattern of reasonableness can be laid down as applicable to all cases". The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied, the value of human life, the disproportion of the imposition, the social philosophy of the Constitution and the prevailing conditions at the time would all enter into the judicial verdict. And we would do well to bear in mind that in evaluating such elusive factors and forming his own conception of what is reasonable in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judge participating in the decision would play a very important part. Before I proceed to consider the question of burden of proof in case of challenge under Article 14, it would be convenient first to (1) ; 295 deal with the question as to where does the burden of proof lie when the challenge to a law enacted by the legislature is based on violation of Article 21. The position in regard to onus of proof in a case where the challenge is under Article 21 is in my opinion much clearer and much more free from doubt or debate than in a case where the complaint is of violation of clause (1) of Article 19. Wherever there is deprivation of life, and by life I mean not only physical existence, but also use of any faculty or limb through which life is enjoyed and basic human dignity, or of any aspect of personal liberty, the burden must rest on the State to establish by producing adequate material or otherwise that the procedure prescribed for such deprivation is not arbitrary but is reasonable, fair and just. I have already discussed various circumstances bearing upon the true nature and character of death penalty and these circumstances clearly indicate that it is reasonable to place on the State the onus to prove that death penalty is not arbitrary or unreasonable and serves a compelling State interest. In the first place, death penalty destroys the most fundamental right of all, namely, the right to life which is the foundation of all other fundamental rights. The right to life stands on a higher footing than even personal liberty, because personal liberty too postulates a sentient human being who can enjoy it. Where therefore a law authorises deprivation of the right to life the reasonableness, fairness and justness of the procedure prescribed by it for such deprivation must be established by the State. Such a law would be 'suspect ' in the eyes of the court just as certain kinds of classification are regarded as 'suspect ' in the United States of America. Throwing the burden of proof of reasonableness, fairness and justness on the State in such a case is a homage which the Constitution and the courts must pay to the righ to life. It is significant to point out that even in case of State action depriving a person of his personal liberty, this Court has always cast the burden of proving the validity of such action on the State, when it has been challenged on behalf of the person deprived of his personal liberty. It has been consistently held by this Court that when detention of a person is challenged in a habeas corpus petition, the burden of proving the legality of the detention always rests on the State and it is for the State to justify the legality of the detention. This Court has shown the most zealous regard for personal liberty and treated even letters addressed by prisoners and detenus as writ petitions and taken action upon them and called upon the State to show how the detention is justified. If this be the anxiety and concern shown by 296 the court for personal liberty, how much more should be the judicial anxiety and concern for the right to life which indisputably stands on a higher pedestal. Moreover, as already pointed out above, the international standard or norm set by the United Nations is in favour of abolition of death penalty and that is the ultimate objective towards which the world body is moving. The trend of our national legislation is also towards abolition and it is only in exceptional cases for special reasons that death sentence is permitted to be given. There can be no doubt that even under our national legislation death penalty is looked upon with great disfavour. The drastic nature of death penalty involving as it does the possibility of error resulting in judicial murder of an innocent man as also its brutality in inflicting excruciating mental anguish severe psychological strain and agonising physical pain and suffering on the condemned prisoner are strong circumstances which must compel the State to justify imposition of death penalty. The burden must lie upon the State show that death penalty is not arbitrary and unreasonable and serves a legitimate social purpose, despite the possibility of judicial error in convicting and sentencing an innocent man and the brutality and pain, mental as well as physical, which death sentence invariably inflicts upon the condemned prisoner. The State must place the necessary material on record for the purpose of discharging this burden which lies upon it and if it fails to show by presenting adequate evidence before the court or otherwise that death penalty is not arbitrary and unreasonable and does serve a legitimate social purpose, the imposition of death penalty under section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure would have to be struck down as violative of the protection of Article 21. So far as the question of burden of proof in a case involving challenge under Article 14 is concerned, I must concede that the decisions in Ram Krishan Dalmia 's case (supra) and Mohd. Hannif Qureshi 's case (supra) and several other subsequent decisions of the Court have clearly laid down that there is a presumption in favour of constitutionality of a statute and the burden of showing that it is arbitrary or discriminary lies upon the petitioner, because it must be presumed "that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. " Sarkaria, J. has pointed out in the majority judgment that underlying this presumption of constitu 297 tionality "is the rationale of judicial restraint, a recognition of the limits of judicial review, a respect for the boundaries of legislative and judicial functions and the judicial responsibility to guard the tresspass from one side or the other." The learned Judge with a belief firmly rooted in the tenets of mechanical jurisprudence, has taken the view that "the primary function of the Courts is to interpret and apply the laws according to the will of those who made them and not to transgress into the legislative domain of policy making. " Now there can be no doubt that in adjudicating upon the constitutional validity of a statute, the Judge should show deference to the legislative judgment and should not be anxious to strike it down as invalid. He does owe to the legislature a margin of tolerance and he must constantly bear in mind that he is not the legislator nor is the court a representative body. But I do not agree with Sarkaria, J. when he seems to suggest that the judicial role is, as it was for Francis Bacon, 'jus dicere and not jus dare; to interpret law and not to make law or give law. ' The function of the Court undoubtedly is to interpret the law but the interpretative process is highly creative function and in this process, the Judge, as pointed out by Justice Holmes, does and must legislate. Lord Reid ridiculed as 'a fairytale ' the theory that in some Aladdin 's cave is hidden the key to correct judicial interpretation of the law 's demands and even Lord Diplock acknowledged that "The court may describe what it is doing in tax appeals as interpretation. So did the priestess of the Delphic Oracle. But whoever has final authority to explain what Parliament meant by the words that it used, makes law as if the explanation it has given were contained in a new Act of Parliament. It will need a new Act of Parliament to reverse it. " Unfortunately we are so much obsessed with the simplicities of judicial formalism which presents the judicial role as jus dicere, that, as pointed out by David Pannick in his "Judicial Review of the Death Penalty", "we have, to a substatial extent, ignored the Judge in administering the judicial process. So heavy a preoccupation we have made with the law, its discovery and its agents who play no creative role, that we have paid little, if any, regard to the appointment, training, qualities, demeanour and performance of the individuals selected to act as the mouth of the legal oracle. " It is now acknowledged by leading jurists all over the world that judges are not descusitized and passionless instruments which weigh on inanimate and impartial scales of legal judgment, the evidence and the arguments presented on each side of the case. They are not political 298 and moral enuchs able and willing to avoid impregnating the law with their own ideas and judgment. The judicial exercise in constitutional adjudication is bound to be influenced, consciously or subconsciouly, by the social philosophy and scale of values of those who sit in judgment. However, I agree with Sarkaria, J. that ordinarily the judicial function must be characterised by deference to legislative judgment because the legislature represents the voice of the people and it might be dangerous for the court to trespass into the sphere demarcated by the Constitution for the legislature unless the legislative judgment suffers from a constitutional infirmity. It is a trite saying that the Court has "neither force nor will but merely judgment" and in the exercise of this judgment, it would be a wise rule to adopt to presume the constitutionality of a statute unless it is shown to be invalid. But even here it is necessary to point out that this rule is not a rigid inexorable rule applicable at all times and in all situations. There may conceivably be cases where having regard to the nature and character of the legislation, the importance of the right affected and the gravity the injury caused by it and the moral and social issues involved in the determination, the court may refuse to proceed on the basis of presumption of constitutionality and demand from the State justification of the legislation with a view to establishing that it is not arbitrary or discriminatory. There are times when commitment to the values of the Constitution and performance of the constitutional role as guardian of fundamental rights demands dismissal of the usual judicial deference to legislative judgment. The death penalty, of which the constitutionality is assailed in the present writ petitions, is a fundamental issue to which ordinary standards of judicial review are inappropriate. The question here is one of the most fundamental which has arisen under the Constitution, namely, whether the State is entitled to take the life of a citizen under cover of judicial authority. It is a question so vital to the identity and culture of the society and so appropriate for judicial statement of the standards of a civilised community often because of legislative apathy that "passivity and activism become platitudes through which judicial articulation of moral and social values provides a light to guide an uncertain community. " The same reasons which have weighed with me in holding that the burden must lie on the State to prove that the death penalty provided under section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure is not arbitrary and unreasonable and serves a legitimate penological purpose where 299 the challenge is under Article 21 must apply equally to cast the burden of the proof upon the State where the challenge is under Article 14. Now it is an essential element of the rule of law that the sentence imposed must be proportionate to the offence. If a law provides for imposition of a sentence which is disproportionate to the offence, it would be arbitrary and irrational, for it would not pass the test of reason and would be contrary to the rule of law and void under Articles 14, 19 and 21. The principle of proportionality is implicit in these three Articles of the Constitution. If, for example, death penalty was prescribed for the simple offence of theft as indeed it was at one time in the seventeenth century England it would be clearly excessive and wholly disproportionate to the offence and hence arbitrary and irrational by any standards of human decency and it would be impossible to sustain it against the challenge of these three Articles of the Constitution. It must therefore be taken to be clear beyond doubt that the proportionality principle constitutes an important constitutional criterion for adjudging the validity of a sentence imposed by law. The Courts in the United States have also recognised the validity of the proportionality principle. In Gregg vs Goergia (1) Stewart, J. speaking for the plurality of the American Supreme Court said that "to satisfy constitutional requirements, the punishment must not be excessive. the punishment must not be out of proportion to the severity of the crime. This constitutional criterion was also applied in Coker vs Georgia (2) to invalidate the death penalty for rape of an adult woman. While, J. with whom Stewarts and Blackmun, JJ. agreed, said, with regard to the offence of rape committed against an adult woman : "a sentence of death is grossly disproportionate and excessive punishment for the crime of rape and is therefore forbidden by the Eighth Amendment as cruel and unusual punishment". Likewise in Lockette vs Ohio (3) where the defendant sat outside the scene of robbery waiting to drive her accomplices away and contrary to plan, the robbers murdered three victims in the course of their robbery and she was convicted and sentenced to death by resort to the doctrine of vicarious liability, 300 the Supreme Court of the United States applying the same principle of proportionality held the death sentence unconstitutional. Marshall, J. pointed out that because the appellant was convicted under a theory of vicarious liability, the death penalty imposed on her "violates the principle of proportionality embodied in the Eighth Amendment 's prohibition" and White J. also subscribed to the same reasoning when he said, "the infliction of death upon those who had no intent to bring about the death of the victim is . .grossly out of proportion to the severity of the crime". Of course, the Supreme Court of the United States relied upon the Eighth Amendment which prohibits cruel and unusual treatment or punishment and we have no such express prohibition in our Constitution, but this Court has held in Francis Mullen 's case (supra) that protection against torture or cruel and inhuman treatment or punishment is implicit in the guarantee of Article 21 and therefore even on the basic of the reasoning in these three American decisions, the principle of proportionallty would have relevance under our Constitution. But, quite apart from this, it is clear and we need not reiterate what we have already said earlier, that the principle of proportionality flows directly as a necessary element from Articles 14, 19 and 21 of the Constitution. We find that in Canada too, in the case of Rex vs Miller and Cockriell (1) the principle of proportionality has been recognised by Laskin C.J. speaking on behalf of Canadian Supreme Court as "one of the constitutional criteria of 'cruel and unusual treatment or punishment ' prohited under the Canadian Bill of Rights. Laskin C.J. pointed out in that case "It would be patent to me, for example, that death as a mandatory penalty today for theft would be offensive to section 2(b). That is because there are social and moral considerations that enter into the scope and application of section 2(b). Harshness of punishment and its severity in consequences are relative to the offence involved but, that being said, there may still be a question (to which history too may be called in aid of its resolution) whether the punishment prescribed is so excessive as to outrage standards of decency. That is not a precise formula for section 2(b) but I doubt whether a more precise one can be found. " Similarly, as pointed out by Mr. David Pannick in his book on "Judicial Review of the Death Penalty" international charters of rights express or imply the principle of proportionality. Article 7 of the International Covenant on Civil and Political Rights forbids torture and cruel 301 inhuman or degrading treatment or punishment and so does Article A 3 of the European Convention on Human Rights. It has been suggested by Francis Jacobs, a commentator on the European Convention that "among the factors to be considered in deciding whether the death penalty, in particular circumstances, was contrary to Article 3, would be whether it was disproportionate to the offence. It is necessary to point out at this stage that death penalty cannot be said to be proportionate to the offence merely because it may be or is believed to be an effective deterrent against the commission of the offence. In Coker vs Georgia (supra) the Supreme Court of the United States held that capital punishment is disproportionate to rape "even though it may measurably serve the legitimate ends of punishment and therefore is not invalid for its failure to do so. " The absence of any rational purpose to the punishment inflicted is a separate ground for attacking its constitutionality. The existence of a rational legislative purpose for imposing the sentence of death is a necessary condition of its constitutionality but nota sufficient one. The death penalty for theft would, for example, deter most potential thieves and may have a unique deterrent effect in preventing the commission of the offence; still it would be wholly disproportionate and excessive, for the social effect of the penalty is not decisive of the proportionality to the offence. The European Court of Human Rights also observed in Tyrer vs United Kingdom (1) that "a punishment does not lose its degrading character just because it is believed to be, or actually is, an effective deterrent or aid to crime control. Above all, as the court must emphasize, it is never permissible to have recourse to punishments which are contrary to Article 3, whatever their deterrent effect may be." The utilitarian value of the punishment has nothing to do with its proportionality to the offence. It would therefore be no answer in the present case for the respondents to say that death penalty has a unique deterrent effect in preventing the crime of murder and therefore it is proportionate to the offence. The proportionality between the offence and death penalty has to be judged by reference to objective factors such as international standards or norms or the climate of international opinion, modern penological theories and evolving standards of human decency. I have already pointed out and I need not repeat that the international standard or norm which 302 is being evolved by the United Nations is against death penalty and so is the climate of opinion in most of the civilized countries of the world. I will presently show that penological goals also do not justify the imposition of death penalty for the offence of murder. The prevailing standards of human decency are also incompatible with death penalty. The standards of human decency with reference to which the proportionality of the punishment to the offence is required to be judged vary from society to society depending on the cultural and spiritual tradition of the society, its history and philosophy and its sense of moral and ethical values. To take an example, if a sentence of cutting off the arm for the offence of theft or a sentence of stoning to death for the offence of adultery were prescribed by law, there can be no doubt that such punishment would be condemned as barbaric and cruel in our country, even though it may be regarded as proportionate to the offence and hence reasonable and just in some other countries. So also the standards of human decency vary from time to time even within the same society. In an evolutionary society, the standards of human decency are progressively evolving to higher levels and what was regarded as legitimate and reasonable punishment proportionate to the offence at one time may now according to the envolving standards of human decency, be regarded as barbaric and inhuman punishment wholly disproportionate to the offence. There was a time when in the United Kingdom a sentence of death for the offence of theft or shop lifting was regarded as proportionate to the offence and therefore quite legitimate and reasonable according to the standards of human decency then prevailing, but today such punishment would be regarded as totally disproportionate to the offence and hence arbitrary and unreasonable. The question, therefore, is whether having regard to the international standard or norm set by the United Nations in favour of abolition of death penalty, the climate of opinion against death penalty in many civilized countries of the world and the prevailing standards of human decency, a sentence of death for the offence of murder can be regarded as satisfying the test of proportionality and hence reasonable and just. I may make it clear that the question to which I am addressing myself is only in regard to the proportionality of death sentence to the offence of murder and nothing that I say here may be taken as an expression of opinion on the question whether a sentence of death can be said to be proportionate to the offence of treason or any other offence involving the security of the State. 303 Now in order to determine what are the prevailing standards of human decency, one cannot ignore the cultural ethos and spiritual tradition of the country. To quote the words of Krishna Iyer, J. in Raiendra Prasad 's case "The values of a nation and ethos of a generation mould concepts of crime and punishment. So viewed, the lode star of penal policy today, shining through the finer culture of former centuries, strengthens the plea against death penalty. The Indian cultural current also counts and so does our spiritual chemistry, based on divinity in everyone, catalysed by the Buddha Gandhi compassion. Many humane movements and sublime souls have cultured the higher consciousness of mankind. " In this land of Buddha and Gandhi, where from times immemorial, since over 5000 years ago, every human being is regarded as embodiment of Brahman and where it is a firm conviction based not only on faith but also on experience that "every saint has a past and every sinner a future", the standards of human decency set by our ancient culture and nourished by our constitutional values and spiritual norms frown upon imposition of death penalty for the offence of murder. It is indisputable that the Constitution of a nation reflects its culture and ethos and gives expression to its sense of moral and ethical values. It affords the surest indication of the standards of human decency cherished by the people and sets out the socio cultural objectives and goals towards which the nation aspires to move. There can be no better index of the ideals and aspirations of a nation than its Constitution. When we turn to our Constitution, we find that it is a humane document which respects the dignity of the individual and The worth of the human person and directs every organ of the State to strive for the fullest development of the per sonality of every individual. Undoubtedly, as already pointed out above, our Constitution does contemplate death penalty, and at the time when the Constitution came to be enacted, death penalty for the offence of murder was on the statute book, but the entire thrust of the Constitution is in the direction of development of the full potential of every citizen and the right to life alonggwith basic human dignity is highly prized and cherished and torture and cruel or in human treatment or punishment which would be degrading and destructive of human dignity are constitutionally forbidden. Moreover, apart from the humanistic quintessence of the Constitution, the thoughts, deeds and words of the great men of this country provide the clearest indication of the prevailing standards of human 304 decency. They represent the conscience of the nation and are the most authentic spokesmen of its culture and ethos. Mahatma Gandhi, the Father of the Nation wrote long ago in the Harijan. "God alone can take life because He alone gives it. He also said and this I may be permitted to emphasize even at the cost of repetition: "Destruction of individuals can never be a virtuous act. The evil doers cannot be done to death . Therefore all crimes including murder will have to be treated as a disease. " I have also quoted above what Jai Prakash Narain said in his message to the Delhi Conference against Death Penalty. The same humanistic approach we find in the utterances of Vinoba Bhave. His approach to the problem of dacoits in Chambal Valley and the manner in which he brought about their surrender through soulforce bear eloquent testimony to the futility of death penalty and shows how even dacoits who have committed countless murders can be reclaimed by the society. But, the more important point is that this action of Vinoba Bhave was applauded by the whole nation and Dr. Rajendra Prasad who was then the President of India, sent the following telegram to Binoba Bhave when he came to know that about 20 dacoits from the Chambal region had responded to the Saint 's appeal to surrender . "The whole nation looks with hope and admiration upon the manner in which you have been able to rouse the better instincts and moral sense, and thereby inspire faith in dacoits which has led to their voluntary surrender. Your efforts, to most of us, come as a refreshing proof of the efficacy of the moral approach for reforming the misguided and drawing the best out of them. I can only pray for the complete success of your mission and offer you my regards and best wishes. " These words coming from the President of India who is the Head of the nation reflect not only his own admiration for the manner in which Vinoba Bhave redeemed the dacoits but also the admiration of the entire nation and that shows that what Vinoba Bhave did, had the approval of the people of the country and the standards of human decency prevailing amongst the people commended an approach favouring reformation and rehabilitation of the dacoits rather than their conviction for the various offences of murder com mitted by them and the imposition of death penalty on them. More over, it is difficult to see bow death penalty can be regarded as pro 305 portionate to the offence of murder when legislatively it has been A ordained that life sentence shall be the rule and it is only in exceptional cases for special reasons that death penalty may be imposed. It is obvious from the provision enacted in section 354(3) of the Code of Criminal Procedure that death sentence is legislatively regarded as disproportionate and excessive in most cases of murder and it is only in exceptional cases what Sarkaria, J. speaking on . behalf of the majority, describes as "the rarest of rare" cases, that it can at all be contended that death sentence is proportionate to the offence of murder. But, then the legislature does not indicate as to what are those exceptional cases in which death sentence may be regarded as proportionate to the offence and, therefore, reasonable and just. Merely because a murder is heinous or horrifying, it cannot be said that death penalty is proportionate to the offence when it is not so for a simple murder. How does it become proportionate to the offence merely because it is a 'murder most foul '. I fail to appreciate how it should make any difference to the penalty whether the murder is a simple murder or a brutal one. A murder is a murder all the same whether it is carried out quickly and inoffensively or in a gory and gruesome manner. If death penalty is not proportionate to the offence in the former case, it is difficult to see how it can be so in the latter. I may usefully quote in this connection the words of Krishna Iyer, J. in Rajendra Prasad 's case where the learned Judge said; "Speaking illustratively, is shocking crime, without more, good to justify the lethal verdict ? Most murders are horrifying, and an adjective adds but sentiment, not argument. The personal story of an actor in a shocking murder, if considered, may bring tears and soften the sentence. He P . might have been a tortured child, an ill treated orphan, a jobless starveling, a badgered brother, a wounded son, a tragic person hardened by societal cruelty or vengeful justice, even a Hemlet or Parasurarna. He might have been an angelic boy but thrown into mafia company or inducted into dopes and drugs by parental neglect or morally ment ally retarded or disordered. Imagine a harijan village hacked out of existence by the genocidal fury of a kulak ' group and one survivor, days later, cutting to pieces the villain of the earlier outrage. Is the court in error in reckoning the prior provocative barbarity as a sentencing factor ? 306 Another facet. May be, the convict 's poverty had disabled his presentation of the social milieu or other circumstances of extenuation in defence. When life is at stake, can such frolics of fortune play with judicial , verdicts ? "The nature of the crime too terrible to contemplate has often been regarded a traditional peg on which to hang a death penalty. Even Ediga Anamma (supra) has hardened here. But 'murder most foul ' is not the test, speaking J scientifically. The doer may be a patriot, a revolutionary, a weak victim of an overpowering passion who, given better a environment, may be a good citizen, a good administrator, a good husband, a great saint. What was Valmiki once ? And that sublime spiritual star, Shri Aurobindo tried once for murder but by history 's fortune acquitted. " I agree with these observations of the learned Judge which clearly show that death penalty cannot be regarded as proportionate to the offence of murder, merely because the murder is brutal, heinous or shocking. The nature and magnitude of the offence or the motive and purposes underlying it or the manner and extent of its commission cannot have any relevance to the proportionality of death penalty to the offence. It may be argued that though these factors may not of themselves be relevant,. they may go to show that the murderer is such a social monster, a psychopath, that he cannot be reformed and he should therefore be regarded as human refuse, dangerous to society, and deserving to be hanged and in such a case death penalty may legitimately be regarded as proportionate to the offence. But I do not think this is a valid argument. It is for reasons which I shall presently state, wholly untenable and it has dangerous implications. I do not think it is possible to hold that death penalty is, in any circumstances, proportionate to the offence of murder. Moreover, when death penalty does not serve any legitimate social purpose, and this is a proportion which I shall proceed to establish in the succeeding paragraphs, infliction of mental and physical pain and suffering on the condemned prisoner by sentencing him to death penalty cannot but be regarded as cruel and inhuman and therefore arbitrary and unreasonable. I will now examine whether death penalty for the offence of murder serves any legitimate social purpose. There are three justi 307 fications traditionally advanced in support of punishment in general, namely, (1) reformation; (2) denunciation by the community or retribution and (3) deterrence. These are the three ends of punishment, its three penological goals, with reference to which any punishment prescribed by law must be justified. If it cannot be justified with reference to one or the other of these three penological purposes, it would have to be condemned as arbitrary and irrational, for in a civilised society governed by the rule of law, no punishment can be inflicted on an individual unless it serves some social purpose. It is a condition of legality of a punishment that it should serve a rational legislative purpose or in other words, it should have a measurable social effect. Let us therefore examine whether death penalty for the offence of murder serves any legitimate and of punishment. It would be convenient first to examine the examine the constutionality of death penalty with reference to the reform tory end of punishment. The civilised goal of criminal justice is the reformation of the criminal and death penalty means abandonment of this goal for those who suffer it. Obviously death penalty cannot serve the reformatory goal because it extinguishes life and puts an end to any possibility of reformation. In fact, it defeats the reformatory end of punishment. But the answer given by the protagonists of death penalty to this argument is that though there may be a few murderers whom it may be possible to reform and rehabilitate, what about those killers who cannot be reformed and rehabilitated ? Why should the death penalty be not awarded to them ? But even in their cases, I am afraid, the argument cannot be sustained. There is no way of accurately predicting or knowing with any degree of moral certainty that a murderer will not be reformed or is incapable of reformation. All we know is that there have been many many successes even with the most vicious of cases. Was Jean Valjean of Les Miserbles not reformed by the kindness and magnanimity of the Bishop ? Was Valmiki a sinner not reformed and did he not become the author of one of the world 's greatest epics ? Were the dacoits of Chambal not transformed by the saintliness of Vinoba Bhave and Jai Prakash Narain ? We have also the examples of Nathan Leopold, Paul Crump and Edger Smith who were guilty of the most terrible and gruesome murders but who, having escaped the gallows, became decent and productive human beings. These and many other examples clearly 308 show that it is not possible to know before hand with any degree of cartainty that a murderer is beyond reformation. Then would it be right to extinguish the life of a human being merely on the basis of speculation and it can only be speculation and not any definitive inference that he cannot be reformed. There is divinity in every man and to my mind no one is beyond redemption. It was Ramakrishna Paramhansa, one of the greatest saints of the last century, who said, "Each soul is potentially divine". There is Brahman in every living being, serve khalu idan bramh, as the Upanishad says and to the same effect we find a remarkable utterance in the Brahmasukta of Atharvaveda where a sage exclaims: "Indeed these killers are Brahman; these servants (or slaves) are Brahmaa; these cheats and rogues are also manifestation of one and the same Brahman itself." Therefore once the dross of Tamas is removed and satva is brought forth by methods of rehabilitation such as community service, yoga, meditation and sat sang or holy influence, a change definitely takes place and the man is reformed. This . is not just a fancy or idealised view taken by Indian philosophical thought, but it also finds Support from the report of the Royal Commission on Capital Punishment set up in the United Kingdom where it has been said: "Not that murderers in general are incapable of reformation, the evidence plainly shows the contrary. Indeed, as we shall see later" (in paragraphs 651 652) "the experience of countries without capital punishment indicates that the prospects of reformation are at least as favourable with murderers as with those who have committed other kinds of serious crimes. " The hope of reforming even the worst killer is based on exeperience as well as faith and to legitimate the death penalty even in the so called exceptional cases where a killer is said to be beyond reformation, would be to destroy this hope by sacrificing it at the altar of superstition and irrationality. I would not therefore, speaking for myself, be inclined to recognise any exception, though Justice Krishna Iyer has done so in Rajendra Prasad 's case, that death panalty may be legally permissible where it is found that a killer is such a monster or beast that he can never be reformed. Moreover, it may be noted, as pointed out by Albert Camus, that in resorting to this philosophy of elimination of social monsters, we would be approaching some of the worst ideas of totalitarianism or the selective racism which the Hitler regime propounded. Sir Ernest Gowers, Chairman of the Royal Commission on Capital Punishment also emphasized the disturbing implications of this argument favouring elimination of 309 a killer who is a social monster and uttered the following warning A "If it is right to eliminate useless and dangerous members of the community why should the accident of having committed a capital offence determine who should be selected. These ar. Only a tiny proportion and not necessarily the most dangerous. It can lead to Nazism. " This theory that a killer who is believed to be a social monster or beast should be eliminated in defence of the society cannot therefore be accepted and it cannot provide a justification for imposition of death penalty even in this narrow class of cases. I will now turn to examine the constiutional validity of death penalty with reference to the second goal of punishment, namely, denunciation by the community or retribution. The argument which is sometimes advanced in support of the death penalty is that every punishment is to some exetent intended to express the revulsion felt by the society against the wrong doer and the punishment must, therefore, be commensurate with the crime and since murder is one of the gravest crimes against society, death penalty is the only punishment which fits such crime and hence it must he held to be reasonable. This argument is founded on the denunciatory theory of punishment which apparently claiming to justify punishment, as the expression of the moral indignation of the society against the wrong doer, represents in truth and reality an attempt to legitimise the feeling of revenge entertained by the society against him. The denunciatory theory was put forward as an argument in favour of death penalty by Lord Denning before the Royal Commission on Capital Punishment: "The punishment inflicted for grave crimes should adequately reflect the revulsion felt by the great majority of citizens for them. It is a mistake to consider the objects of punishment as being deterrent or reformative or preventive and nothing else. The ultimate justification of any punishment is not that it is a deterrent but that it is the emphatic denunciation by the community of a crime, and from this point of view there are some murders which in the present state of opinion demand the most emphatic denunciation of all, namely, the death penalty. The truth is that some crimes are so outrageous that it, irrespective of whether it is a deterrent or not." 310 The Royal Commission on Capital Punishment seemed to agree with Lord Denning 's view about this justification for the death penalty and observed.". the law cannot ignore the public demand for retribution which heinous crimes undoubtedly provoke; it would be generally agreed that, though reform of the criminal law ought sometimes, to give a lead to public opinion, it is dangerous to move too far in advance of it." Though garbed in highly euphemistic language by labelling the sentiment underlying this observation as reprobation and not revenge, its implication can hardly be disguised that the death penalty is considered necessary not because the preservation of the society demands it, but because the society wishes to avenge itself for the wrong done to it. Despite its high moral tone and phrase, the denunciatory theory is nothing but an echo of what Stephen said in rather strong language: "The criminal law stands to the passion of revenge in much the same relation as marriage to the sexual appetite. " The denunciatory theory is a remnant of a primitive society which has no respect for the dignity of man and the worth of the human person and seeks to assuage its injured conscience by taking revenge on the wrong doer. Revenge is an elementary passion of a brute and betrays lack of culture and refinement. The manner in which a society treats crime and criminals affords the surest index of its cultural growth and development. Long ago in the year 1910 Sir Winston Churchill gave expression to this social truth when he said in his inimitable language: "The mood and temper of the public with regad to the treatment of crime and the criminals is one of the most unfailing tests of civilization of any country. A calm dispassionate recognition of the right of accused, and even of the convicted, criminal against the State, a constant heart searching by all charged with the duty of punishment tireless efforts towards the discovery of curative and , regenerative processes, unfailing faith that there is a treasure if you can only find it in the heart of every man these are the symbols, which, in treatment of crime and the criminals, mark and measure the stored up strength of a nation and are sign and proof of the living virtue in it. A society which is truly cultured a society which is reared on a spiritual foundation like the Indian society can never harbour a 311 feeling of revenge against a wrong doer. On the contrary, it would A try to reclaim the wrong doer and find the treasure that is in his heart. The wrong doer is as much as part of the society as anyone else and by exterminating him, would the society not injure itself ? If a limb of the human body becomes diseased, should we not try to cure it instead of amputating it ? Would the human body not be partially disabled: would it not be rendered imperfect by the . amputation ? Would the amputation not leave a scar on the human body ? Would the human body not cease to be what it was intended by its maker? But if the diseased limb can be cured, would it not be so much better that the human body remains intact in all its perfection. Similarly the society also would benefit if one of its members who has gone astray and done some wrong can be reformed and regenerated. It will strengthen the fabric of the society and increase its inner strength and vitality. Let it not be forgotten that no human being is beyond redemption. There is divinity in every human being, if only we can create conditions in which it can blossom forth in its full glory, and effulgence. It can dissolve the dross of criminality and make God out of man. "Each soul", said Shri Ramakrishna Paramhansa, "is potentially divine" and it should be the endeavour of the society to reclaim the wrong doer and bring out the divinity J in him and not to destroy him in a fit of anger or revenge. Retaliation can have no place in a civilised society and particularly in the Land of Buddha and Gandhi. The law of Jesus must prevail over the lex tallionis of Moses, "Thou shalt not kill" must penologically over power "eye for an eye and tooth for a tooth. " The society has made tremendous advance in the last few decades and today the concept of human rights has taken firm root in our soil and there is a tremendous wave of consciousness in regard to the dignity and divinity of man. To take human life even with the sanction of the law and under the cover of judicial authority, is retributive barbarity and violent futility: travesty of dignity and violation of the divinity of man. So lang as the offender can be reformed through the rehabilitatory therapy which may be administered to him in the prison or other correctional institute and he can be reclaimed as a useful citizen and made conscious of the divinity within him by techniques such as meditation, how can there be any moral justification for liquidating him out of existence ? In such a case, it would be most unreasonable and arbitrary to extinguish the flame of life within him, for no social purpose would be served and no consti 312 tutional value advanced by doing so. I have already pointed out that death penalty runs counter to the reformatory theory of punishment and I shall presently discuss the deterrent aspect of death penalty and show that death penalty has not greater deterrent effect than life imprisonment. The only ground on which the death penalty may therefore be sought to be justified is reprobation which as already pointed out, is nothing but a different name for revenge and retaliation. But in a civilised society which believes in the dignity and worth of the human person, which acknowledges and protects the right to life as the most precious possession of mankind, which recognises the divinity in man and describes a his kind as "Amaratsaya Putra" that is "children of Immortality", it is difficult to appreciate now retaliatory motivation can ever be countenanced as a justificatory reason. This reason is wholly inadequate since it does not justify punishment by its results, but it merely satisfies the passion for revenge masquerading as righteousness. I may point that in holding this view I am not alone, for I find that most philosophers have rejected retribution as a proper goal of punishment. Plato wrote: "He who desires to inflict rational punishment does not retaliate for a past wrong which cannot be undone; he has regard to the future, and is desirous that the man who is punished, and he who sees him punished, may be deterred from doing wrong again. He punishes for the sake of prevention. " Even in contemporary America, it is firmly settled that retribution has no proper place in our criminal system. The New York Court of Appeals pointed out in a leading judgment in People vs Oliver: "The punishment or treatment of offenders is directed toward one or more of three ends: (I) to discourage and act as a deterrent upon future criminal activity. (2) to confine the offender so that he may not harm society; and (3) to correct and rehabilitate the offender. There is no 313 place in the scheme for punishment for its own sake, the product simply of vengeance or retribution. " Similarly, the California Supreme Court has held that "to conclude that the Legislature was motivated by a desire for vengeance" would be "a conclusion not permitted in view of modern theories of penology." The same view has been adopted in official studies of capital punishment. The British Royal Commission on Capital Punishment concluded that "modern penological thought discounts retribution in the sense of vengeance. "The Florida Special Commission on capital punishment, which recommended retention of the death penalty on other grounds, rejected "vengeance or retaliation" as justification for the official taking of life. " The reason for the general rejection of retribution as a purpose of the criminal system has been stated concisely by Professors Michael and Wechsler: "Since punishment consists in the infliction of pain it is, apart from its consequence, an evil: consequently it is good and therefore just only if and to the degree that it serves the common good by advancing the welfare of the person punished or of the rest of the population Retribution is itself unjust since it requires some human beings to inflict pain upon others, regardless of its effect upon them or upon the social welfare. " The Prime Minister of Canada Mr. Pierre Trudeaux, addressing the Canadian Parliament, pleading for abolition of death penalty, posed a question in the same strain: "Are we as a society so lacking in respect for ourselves, so lacking in hope for human betterment, so socially bankrupt that we are ready to accept state vengeance as our penal philosophy" It is difficult to appreciate how a feeling of vengeance whether on the individual wronged or the society can ever be regarded as a healthy sentiment which the State should foster. It is true that when a heinous offence is committed not only the individual who suffers 314 as a result of the crime but the entire society is oppressed with a feeling of revulsion, but as Arthur Koestler has put it in his inimitable style in his "Reflections on Hanging": "Though easy to dismiss in reasoned argument on both moral and logical grounds, the desire for vengeance has deep, unconscious roots and is roused when we feel strong indignation or revulsion whether the reasoning mind approves or not. This psychological fact is largely ignored in abolitionist propaganda yet it has to be accepted as a fact. The admission that even confirmed abolitionists are not proof against occasional vindictive impulses does not mean that such impulses should be legally sanctioned by society, any more than we sanction some other unpalatable instincts of our biological inheritance. Deep inside every civilized being there lurks a tiny Stone Age man, dangling a club to robe and rape, and screaming an eye for an eye. But we would rather not have that little fur clad figure dictate the law of the land. " I have no doubt in my mind that if the only justification for the death penalty is to be found in revenge and retaliation, it would be clearly arbitrary and unreasonable punishment falling foul of Articles 14 and 21. I must then turn to consider the deterrent effect of death penalty, for deterrence is undoubtedly an important goal of punishment. The common justification which has been put forward on behalf of the protagonists in support of capital punishment is that it acts as a deterrent against potential murderers. This is, to my mind, a myth, which has been carefully nurtured by a society which is actuated not so much by logic or reason as by a sense of retribution. It is really the belief in retributive justice that makes the death penalty attractive but those supporting it are not inclined to confess to their instinct for retribution but they try to bolster with reasons their unwillingness to abandon this retributive instinct and seek to justify the death penalty by attribution to it a deterrent effect. The question whether the death penalty has really and truly 315 a deterrent effect is an important issue which has received careful attention over the last 40 years in several countries including the United States of America. Probably no single subject in criminology has been studied more. Obviously, no penalty will deter all murders and probably any severe penalty will deter many. The key question therefore is not whether death penalty has a deterrent effect but whether death penalty has a greater deterrent effect than life sentence. Does death penalty deter potential murderers better than life imprisonment ? I shall presently consider this question but before I do so let me repeat that the burden of showing that death penalty is not arbitrary and unreasonable and serves a legitimate penological goal is on the State. I have already given my reasons for taking this view on principle but I find that the same view has also been taken by the Supreme Judicial Court of Massachusettes in "Commonwealth vs O 'Neal (No.2)(1) where it has been held that because death penalty impinges on the right to life itself, the onus lies on the State to show a compelling State interest to justify capital punishment and since in that case the State was unable to satisfy this onus, the Court ruled that death penalty for murder committed in the course of rape or attempted rape was unconstitutional. The Supreme Judicial Court of Massachusttes also reiterated the same view in opinion of the Justices while giving its opinion whether a Bill before the House of Representatives was compatible with Article 26 of the Constitution which prohibits cruel or unusual punishment. The majority Judges stated hat Article 26 "forbids the imposition of a death penalty in this Commonwealth in the absence of a showing on the part of the Commonwealth that the availability of that penalty contributes more to the achievement of a legitimate State purpose for example, the purpose of deterring criminal conduct than the availability in like cases of the penalty of life imprisonment. " It is therefore clear that the burden rests on the State to establish by producing material before the Court or otherwise, that death penalty has greater deterrent effect than life sentence in order to justify its imposition under the law. If the State fails to discharge this burden which rests upon it, the Court would have to hold that death penalty has not been shown to have greater deterrent effect and it does not therefore serve a rational legislative purpose. 316 The historical course through which death penalty has passed in the last 150 years shows that the theory that death penalty acts as a greater deterrent than life imprisonment is wholly unfounded. Not more than a century and a half ago, in a civilised country like England, death penalty was awardable even for offences like shop lifting, cattle stealing and cutting down of trees. It is interesting to note that when Sir Samuel Romully brought proposals for abolition of death penalty for such offences, there was a hue and cry from lawyers, judges, Parliamentarians and other so called protectors of social order and they opposed the proposals on the grounds that death penalty acted as a deterrent against commission of such offences and if this deterrent was removed, the consequences would be disastrous. The Chief Justice said while opposing abolition of capital punishment for shop lifting: "Where terror of death which now, as the law stood, threatened the depredator to be removed, it was his opinion the consequence would be that shops would be liable to unavoidable losses from depredations and, in many instances, bankruptcy and ruin must become the lot of honest and laborious tradesmen. After all that had been said in favour of this speculative humanity, they must all agree that the prevention of crime should be the chief object of the law; and terror alone would prevent the com mission of that crime under their consideration." and on a similar Bill, the Lord Chancellor remarked: "So long as human nature remained what it was, the apprehension of death would have the most powerful co operation in deterring from the commission of crimes; and he thought it unwise to withdraw the salutary influence of that terror. " The Bill for abolition of death penalty for cutting down a tree was opposed by the Lord Chancellor in these terms: "It did undoubtedly seem a hardship that so heavy a punishment as that of death should be affixed to the cutting down of a single tree, or the killing or wounding of a cow. 317 But if the Bill passed in its present state a person might root up or cut down whole acres of plantations or destroy the whole of the stock of cattle of a farmer without being subject to capital punishment. " Six times the House of Commons passed the Bill to abolish capital punishment for shop lifting and six times the House of Lords threw out the Bill, the majority of one occasion including all the judicial members, one Arch Bishop and six Bishops. It was firmly believed by these opponents of abolition that death penalty acted as a deterrent and if it was abolished, offences of shop lifting etc would increase. But it is a matter of common knowledge that this belief was wholly unjustified and the abolition of death penalty did not have any adverse effect on the incidence of such offences. So also it is with death penalty for the offence of murder. It is an irrational belief unsubstantiated by any factual data or empirical research that death penalty acts as a greater deterrent than life sentence and equally unfounded is the impression that the removal of death penalty will result in increase of homicide. The argument that the rate of homicide will increase if death penalty is removed from the statute book has always been advanced by the established order out of fear psychosis, because the established order has always been apprehensive that if there is any change and death penalty is abolished, its existence would be imperilled. This argument has in my opinion no validity because, beyond a superstitious belief for which there is no foundation in fact and which is based solely on unreason and fear, there is nothing at all to show that death penalty has any additionally deterrent effect not possessed by life sentence. Arthur Koestler tells us an interesting story that in the period when pick pockets were punished by hanging in England, other thieves exercised their talents in the crowds sorrounding the scaffold where the convicted pick pocket was being hanged. Statistics compiled during the last 50 years in England show that out of 250 men hanged, 170 had previously attended one or even two public executions and yet they were not deterred from committing the offence of murder which ultimately led to their conviction and hanging. It is a myth nurtured by superstition and fear that death penalty has some special terror for the criminal which acts as a deterrent against the commission of the crime. Even an eminent judge like Justice Frank Furter of the Supreme Court of the United States expressed the same opinion when he said in the course of his 318 examination before the Royal Commission on Capital Punishment: "I think scientifically the claim of deterrence is not worth much." The Royal Commission on Capital Punishment, after four years of investigation which took it throughout the continent and even to the United States, also came to the same conclusion: "Whether the death penalty is used or not and whether executions are frequent or not, both death penalty states and abolition states show rates which suggests that these rates are conditioned by other factors than the death penalty. " and then again, it observed in support of this conclusion: "The general conclusion which we have reached is that there is no clear evidence in any of the figures we have examined that the abolition of capital punishment has led to an increasing homicide rate or that its reintroduction has led to a fall. " Several studies have been carried out in the United States of America for the purpose of exploring the deterrent effect of death penalty and two different methods have been adopted. The first and by far the more important method seeks to prove the case of the abolitionists by showing that the abolition of capital punishment in other countries has not led to an increase in the incidence of homicide. This is attempted to be shown either by comparing the homicide statistics of countries where capital punishment has been abolished with the statistics for the same period of countries where it has been retained or by comparing statistics of a single country in which capital punishment has been abolished, for periods before and after abolition or where capital punishment has been reintroduced, then for the period before and after its reintroduction. The second method relates to comparison of the number of executions in a country in particular years with the homicide rate in the years succeeding. Now, so far as the comparison of homicide statistics of countries which have abolished capital punishment with the statistics of countries which have retained it, is concerned, it may not yield any definitive inference, because in most cases abolition or retention of death 319 penalty may not be the only differentiating factor but there may be other divergent social, cultural or economic factors which may affect the homicide rates. It is only if all other factors are equal and the only variable is the existence or non existence of death penalty that a proper comparison can be made for the purpose of determining whether death penalty has an additional deterrent effect which life sentence does not possess, but that would be an almost impossible controlled experiment. It may however be possible to find for comparison a small group of countries or States, preferably contiguous and closely similar in composition of population and social and economic conditions generally, in some of which capital punishment has been abolished and in others not. Comparison of homicide rates in these countries or States may afford a fairly reliable indication whether death penalty has a unique deterrent effect greater than that of life sentence. Such groups of States have been identified by Professor Sellin in the United States of America and similar conditions perhaps exist also in Newzealand and the Australian States. The figures of homicide rate in these States do not show any higher incidence of homicide in States which have abolished death penalty than in those which have not. Professor Sellin points out that the only conclusion which can be drawn from these figures is that there is no clear evidence . Of any influence of death penalty on the homicide rates of these States. In one of the best known studies conducted by him, Professor Sellin compared homicide rates between 1920 and 1963 in abolition States with the rates in neighboring and similar retention States. He found that on the basis of the rates alone, it was impossible to identify the abolition States within each group. A similar study comparing homicide rates in States recently abolishing the death penalty and neighboring retention States during the 1960 's reached the same results. Michigan was the first State in the United States to abolish capital punishment and comparisons between Michigan and the bordering retention states of Ohio and Indiana States with comparable demographic characteristics did not show any significant differences in homicide rates. Professor Sellin therefore concluded: "You cannot tell from . the homicide rates alone, in contiguous, which are abolition and which are retention states; this indicates that capital crimes are dependent upon factors other than the mode of punishment." Students of capital punishment have also studied the effect of abolition and reintroduction of death penalty upon the homicide 320 rate in a single state. If death penalty has a significant deterrent effect? abolition should produce a rise in homicides apart from the general trend and reintroduction should produce a decline. After examining statistics from 11 states, Professor Sellin concluded that "there is no evidence that the abolition of capital punishment generally causes an increase in criminal homicides, or that its reintroduction is followed by a decline. The explanation of changes in homicide rates must be sought elsewhere. " Some criminologists have also examined the short term deterrent effects of capital punishment. One study compared the number of homicides during short periods before and after several well publicized executions during the twenties and thirties in Philadelphia. It was found that there were significantly more homicides in the period after the executions than before the opposite of what the deterrence theory would suggest other studies have also shown that in those localities where capital punishment is carried out, the incidence of homicide does not show any decline in the period immediately following well publicized executions when, if death penalty had any special deterrent effect, such effect would be greatest. Sometimes, as Bowers points out in his book on "Executions in America" the incidence of homicide is higher. In short, there is no correlation between the ups and downs of the homicide rate on the one hand and the presence or absence of the death penalty on the other. I may also refer to numerous other studies made by jurists and sociologists in regard to the deterrent effect of death penalty Barring only one study made by Ehrlich to which I shall presently refer, all the other studies are almost unanimous that death penalty has no greater deterrent effect than life imprisonment. Dogan D. Akman, a Canadian Criminologist, in a study made by him on the basis of data obtained from the records of all Canadian penitentiaries for the years 1964 and 1965 observed that the threat of capital punishment has little influence on potential assaulters. So also on the basis of comparison of homicide and execution rates between Queensland and other Australian States for the period 1860 1920, Barber and Wilson concluded that the suspension of capital punishment from 1915 and its abolition from 1922 in Qneensland did not have any significant effect on the murder rate. Chambliss, another Criminologist, also reached the same conclusion in his Article on "Types of Deviance and the Effectiveness of Legal Sanctions" (1967) Wisconsin namely, that "given the preponderance of evi dence, it seems safe to conclude that capital punishment does not act as an effective deterrent to murder. " Then we have the opinion of Fred J. Cook who says in his Article on "Capital Punishment: Does it Prevent Crime ?" that "abolition of the death penalty may actually reduce rather than encourage murder. " The European Committee on Crime Problems of the Council of Europe gave its opinion on the basis of data obtained from various countries who are Members of the Council of Europe that these data did not give any "positive indication regarding the value of capital punishment as a deterrent". I do not wish to burden this judgment with reference to all the studies which have been conducted at different times in different parts of the world but I may refer to a few of them, namely "Capital Punishment as a Deterrent to Crime in Georgia" by Frank Gibson, "The Death Penalty in Washington State" by Hayner and Crannor, Report of the Massachusett Special Commission Relative to the Abolition of the Death Penalty in Capital Cases, "The use of the Death Penalty Factual Statement" by Walter Reckless, "Why was Capital Punishment resorted in Delaware" by Glenn W. Samuelson, "A Study in Capital Punishment" by Leonard o. Savitz, "The Deterrent Influence of the Death Penalty" by Karl F. Schuessler, "Murder and the Death Penalty" by E.H. Sutherland, "Capital Punishment: A case for Abolition" by Tidmarsh, Halloran and Connolly, "Can the Death Penalty Prevent Crime" by George B. Vold and "Findings on Deterrence with Regard to Homicide" by Wilkens and Feyerherm. Those studies, one and all, have taken the view that "statistical findings and case studies converge to disprove the claim that the death penalty has any special deterrent value" and that death penalty "fails as a deterrent measure". Arthur Koestler also observes in his book on "Reflections on Hanging" that the figures obtained by him from various jurisdictions which have abolished capital punishment showed a decline in the homicide rate following abolition. The Report made by the Department of Economic and Social Affairs of the United Nations also reaches the conclusion that "the information assembled confirms the now generally held opinion that the abolition or . suspension of death penalty does not have the immediate effect of appreciably increasing the incidence of crime." These various studies to which I have referred clearly establish beyond doubt that death penalty does not have any special deterrent effect which life sentence does not posses and that in any event there is no evidence at all to suggest that death penalty has any such special deterrent effect. 322 There is unfortunately no empirical study made in India to assess, howsoever imperfectly, the deterrent effect of death penalty. But we have the statistics of the crime of murder in the former States of Travancore and Cochin during the period when the capital punishment was on the statute book as also during the period when it was kept in abeyance. These figures have been taken by me from the Introduction of Shri Mohan Kumar Mangalam to the book entitled "Can the State Kill its Citizen" brought out by Shri Subramaniam: Statistics of murder cases during the period when Capi tal Punishment was kept in abeyance. Year Travancore Cochin Total for Travan core & Cochin 1945 111 cases 22 133 1946 135 cases 13 148 1947 148 cases 26 174 1948 160 cases 43 203 1949 114 cases 26 140 1950 125 cases 39 164 Total 793 169 962 Statistics of murder cases during the period when capi tal punishment was in vogue. 1951 141 cases 47 188 1952 133 cases 32 165 1953 146 cases 54 200 1954 114 cases 57 171 1955 99 cases 30 129 1956 97 cases 17 114 Total 730 237 967 323 These figures show that the incidence of the crime murder did not A increase at all during the period of six years when the capital punishment was in abeyance. This is in line with the experience of ether countries where death penalty has been abolished. I must at this stage refer to the study carried out by Ehrlich on which the strongest reliance has been placed by Sarkaria, J. in the majority judgment. Ehrlich was the first to introduce regression analysis in an effort to isolate the death penalty effect, if it should exist, uncontaminated by other influences on the capital crirme rate. His paper was catapulated into the centre of legal attention even before it was published, when the Solicitor General of the United States cited it in laudatory terms in his brief in Fowler vs North Cerolina(l) and delivered copies of it to the court. The Solicitor General called it an "important empirical support for the a priori logical belief that use of the death penalty decrease the number of murders. " In view of the evidence available upto that time, Ehrlich 's claim was indeed formidable both in substance and precision. The conclusion he reached was: "an additional execution per year. may have resulted in . seven or eight fewer murders. " The basic data from which he derived this conclusion were the executions and the homicide rates as recorded in the United States during the years 1933 to 1969, the former generally decreasing, the latter, especially during the sixties, sharply increasing. Ehrlich considered simultaneously with the execution and homicide rates, other variables that could affect the capital crime rate and sought to isolate the effect of these variables through the process of regression analysis. It is not necessary for the purpose of the present judgment to explain this process of mathematical purification or the various technical refinements of this process, but it is sufficient to point out that the conclusion reached by Ehrlich was that death penalty had a greater deterrent effect than the fear of life imprisonment. Ehrlich 's study because it went against all the hitherto available evidence, received extra ordinary attention from the scholarly community. First, Peter Passell and John Taylor attempted to replicate Ehrlich 's findings and found that they stood scrutiny only under an unusually restrictive set of circumstances. They found, for example that the appearance of deterrence is produced only when 324 the regression equation is in logarathmic form and in the more conventional linear regression frame work, the deterrent effect disappeared. They also found that no such effect emerged when data for the years after 1962 were omitted from the analysis and only the years 1953 61 were considered. Kenneth Avio of the University of Victoria made an effort to replicate Ehrlich 's findings from Canadian experience but that effort also failed and the conclusion reached by the learned jurist was that "the evidence would appear to indicate that Canadian offenders over the period 1926 60 did not behave in a manner consistent with an effective deterrent effect of capital punishment. " William Bowers and Glenn Pierce also made an attempt to replicate Ehrlich 's results and in replicating Ehrlich 's work they confirmed the Passel Taylor findings that Ehrlich 's results were extremely sensitive as to whether the logarithmic specification was used and whether the data for the latter part of 1960 's were included. During 1975 the Yale Law Journal published a series of Articles reviewing the evidence on the deterrent effect of death penalty and in the course of an Article in this series, Ehrlich defended his work by addressing himself to some of the criticism raised against his study. Hans Zeisel, Professor Emeritus of Law and Sociology in the University of Chicago points out in his article on The deterrent effect of death penalty; Facts vs Faith that in this article contributed by him to the Yale Law Journal, Ehrlich did refute some criticisms but the crucial ones were not met. Ehrlich in this Article referred to a second study made by him, basing it this time on a comparison by States for the years 1940 and 1950. He claimed that this study bolstered his original thesis but conceded that his findings were "tentative and inconclusive". In the mean time Passell made a State by State comparison for the years 1950 and 1960 and as a result of his findings, concluded that "we know of no reasonable way of interpreting the cross sections (i.e. State by State) data that would lend support to the deterrence hypothesis." A particularly extensive review of Ehrlich 's time series analysis was made by a team led by Lawrence Klein, President of the American Economic Association. The authors found serious methodological problems with Ehrlich 's analysis. They raised questions about his failure to consider the feedback effect of crime on the economic variables in his model, although he did consider other feedback effects in his analysis. They found some of Ehrlich 's technical manipulations to be superfluous and tending to obscure the accuracy of his estimates. They, too, raised questions about 325 variables omitted from the analysis, and the effects of these omissions on the findings. Like Passell Taylor and Bowers Pierce, Klein and his collaborators replicated Ehrlich 's results, using Ehrlich 's own data which by that time he had made available. As in previous replications, Ehrlich 's results were found to be quite sensitive to the mathematical specification of the model and the inclusion of data at the recent end of the time series. By this time, Ehrlich 's model had been demonstrated to be peculiar enough. Klein went on to reveal further difficulties. One was that Ehrlich 's deterrence finding disappeared after the introduction of a variable rejecting the factors that caused other crimes to increase during the latter part of the period of analysis. The inclusion of such a variable would seem obligatory not only to substitute for the factors that had obviously been omitted but also to account for interactions between the crime rate and the demographic characteristics of the population. Klein also found Ehrlich 's results to be affected by an unusual construction of the execution rate variable, the central determinant of the analysis. Ehrlich constructed this variable by using three other variables that appeared elsewhere in his regression model: the estimated homicide arrest rate the estimated homicide conviction rate, and the estimated number of homicides. Klein showed that with this construction of the execution rate, a very small error in the estimates of any of these three variables produced unusually strong spurious appearances of a deterrent effect. He went on to show that the combined effect of such slight errors in all three variables was likely to be considerable, and that in view of all these considerations, Ehrlich 's estimates of the deterrent effect were so weak that they "could be regarded as evidence. (of) a counter deterrent effect of capital punishment. " In view of these serious problems with Ehrlich 's analysis, Klein concluded: "We see too many plausible explanations for his finding a deterrent effect other than the theory that capital punishment deters murder" and further observed: "Ehrlich 's results cannot be used at this time to pass judgment on the use of the death penalty." This is the analysis of the subsequent studies of Passell and Taylor, Bowers and Pierce and Klein and his colleagues made by Hans 326 Zeisel in his Article on "The deterrent effect of the Death Penalty: Facts vs Faith". These studies which were definitely more scientific and refined than Ehrlich 's demolish to a large extent the validity of the conclusion reached by Ehrlich and establish that death penalty does not possess an additional deterrent effect which life sentence does not. But, according to Hans Zeisel, the final blow to the work of Ehrlich came from a study of Brian Forst, one of Klein 's collaborators on the earlier study. Since it had been firmly established that the Ehrlich phenomenon, if it existed emerged from developments during the sixties, Forst concentrated on that decade. He found a rigorous way of investigating whether the ending of executions and the sharp increase in homicides during this period was casual or coincidental. The power of Forst 's study derives from his having analysed changes both over time and across jurisdictions. The aggregate United States time series data Ehrlich used were unable to capture important regional differences. Moreover, they did not vary as much as cross state observations, hence they did not provide as rich an opportunity to infer the effect of changes in executions on homicides. Forst 's analysis, according to Hans Zeisel, was superior to Ehrlich 's and it led to a conclusion that went beyond that of Klein. "The findings" observed Forst "give no support to the hypothesis that capital punishment deters homicide" and added: "our finding that capital punishment does not deter homicide is remarkably robust with respect to a wide range of alternative constructions. " It will thus be seen that The validity of Ehrlich 's study which has been relied upon very strongly by Sarkaria J. in the majority judgment is considerably eroded by the studies carried out by leading criminologists such as Passell and Taylor, Bowers and Pierce, Klein and his colleagues and Forst and with the greatest respect, I do not think that Sarkaria, J. speaking on behalf of the majority was right in placing reliance on that study. The validity, design and findings of that study have been thoroughly discredited by the subsequent studies made by these other econometricians and particularly by the very scientific and careful study carried out by Forst. I may point out that apart from Ehrlich 's study there is not one published econometric analysis which supports Ehrlich 's results. I may also at this stage refer once again to the opinion expressed ed by Professor Sellin. The learned Professor after a serious and thorough study of the entire subject in the United States on behalf 327 of the American Law Institute stated his conclusion in these terms: "Any one who carefully examines the above data is bound to arrive at the conclusion that the death penalty as we use it exercises no influence on the extent or fluctuating rate of capital crime. It has failed as a deterrent. (Emphasis supplied.) So also in another part of the world very close to our country, a Commission of Inquiry on capital punishment was appointed by late Prime Minister Bhandarnaike of Shri Lanka and it reported: "If the experience of the many countries which have suspended or abolished capital punishment is taken into account, there is in our view cogent evidence of the unlikelihood of this 'hidden protection '. It is, therefore, our view that the statistics of homicide in Ceylon when related to the social changes since the suspension of the death penalty in Ceylon and when related to the experience of other countries tend to disprove the assumption of the uniquely deterrent effect of the death penalty, and that in deciding on the question of reintroduction or abolition of the capital punishment reintroduction cannot be justified on the argument that it is a more effective deterrent to potential killers than the alternative or protracted imprisonment. " It is a strange irony of fate that Prime Minister Bhandarnaike who suspended the death penalty in Sri Lanka was himself murdered by a fanatic and in the panic that ensued death penalty was reintroduced in Sri Lanka. The evidence on whether the threat of death penalty has a deterrent effect beyond the threat of life sentence is therefore overwhelmingly on one side. Whatever be the measurement yardstick adopted and howsoever sharpened may be the analytical instruments they have not been able to discover any special deterrent effect. Even regression analysis, the most sophisticated of these instruments after careful application by the scholarly community, has failed to detect special deterrent effect in death penalty which is not to be found in life imprisonment. One answer which the protagonists of 328 capital punishment try to offer to combat the inference arising from these studies is that one cannot prove that capital punishment does not deter murder because people who are deterred by it do not report good news to their police departments. They argue that there are potential murderers in our midst who would be deterred from killing by the death penalty, but would not be deterred by life imprisonment and there is no possible way of knowing about them since these persons do not commit murder and hence are not identified. Or to use the words of Sarkaria, J. "Statistics of deterred potential murderers are difficult to unravel as they remain hidden in the innermost recesses of their mind. " But this argument is plainly a unsound and cannot be sustained. It is like saying, for example, that we have no way of knowing about traffic safety because motorists do not report when they are saved from accidents by traffic safety programmes or devices. That however cannot stop us from evaluating the effectiveness of those programmes and devices by studying their effect on the accident rates where they are used for a reasonable time. Why use a different standard for evaluating the death penalty, especially when we can measure its effectiveness by comparing homicide rates between countries with similar social and economic conditions in some of which capital punishment has been abolished and in others not or homicide rates in the same country where death penalty has been abolished or subsequently reintroduced. There is no doubt that if death penalty has a special deterrent effect not possessed by life imprisonment, the number of those deterred by capital punishment would appear statistically in the homicide rates of abolitionist jurisdictions but according to all the evidence gathered by different studies made by jurists and criminologists, this is just not to be found. The majority speaking through Sarkaria, J. has observed that "in most of the countries of the world including India, a very large segment of the population including noteable penologists, Judges, jurists, legislators and other enlightened people believe that death penalty for murder and certain other capital offences does serve as a deterrent and a greater deterrent than life imprisonment. " I do not think this statement represents the correct factual position. It is of course true that there are some penologists, judges, jurists, legislators and other people who believe that death penalty acts as a greater deterrent but it would not be correct to say that they form a large segment of the population. The enlightened opinion in the world, 329 as pointed out by me, is definitely veering round in favour of A abolition of death penalty. Moreover, it is not a rational conviction but merely an unreasoned belief which is entertained by some people including a few penologists, judges, jurists and legislators that death penalty has a uniquely deterrent effect. When you ask these persons as to what is the reason why they entertain this belief, they will not be able to give any convincing answer beyond stating that basically every human being dreads death and therefore death would naturally act as a greater deterrent than life imprisonment. That is the same argument advanced by Sir James Fitz James Stephen, the draftsman of the Indian Penal Code in support of the deterrent effect of capital punishment. That great Judge and author said in his Essay on Capital Punishment: "No other punishment deters men so effectually from committing crimes as the punishment of death. This is one of those propositions which it is difficult to prove simply because they are in themselves more obvious than any proof can make them. It is possible to display ingenuity in arguing against it, but that is all. The whole experience of mankind is in the other direction. The threat of instant death is the one to which resort has always been made when there was an absolute necessity of producing some results. No one goes to certain inevitable death except by compulsion. Put the matter the other way, was there ever yet a criminal who when sentenced to death and brought out to die would refuse the offer of a commutation of a sentence for a severest secondary punishment ? Surely not. Why is this ? It can only be because 'all that a man has will be given for his life '. In any secondary punishment, however terrible, there is hope, but death is death; its terrors cannot be described more forcibly. " The Law Commission in its thirty fifth report also relied largely on this argument for taking the view that "capital punishment does act as a deterrent. " It set out the main points that weighed with it in arriving at this conclusion and the first and foremost amongst them was that: "Basically every human being dreads death", suggesting that death penalty has therefore a greater deterrent effect than any other punishment. But this argument is not valid and a little scrutiny will reveal that it is wholly unfounded. In the first place, 330 even Sir James Fitz James Stephen concedes that the proposition that death penalty has a uniquely deterrent effect not possessed by any other punishment, is one which is difficult to prove, though according to him it is Self evident. Secondly, there is a great fallacy underlying the argument of Sir James Stephen and the Law Commission. This argument makes no distinction between a threat of certain and imminent punishment which faces the convicted murderer and the threat of a different problematic punishment which may or may not influence a potential murderer Murder may be unpremeditated under the stress of some sudden outburst of emotion or it may be premeditated after planning and deliberation. Where the murder is unpremeditated, as for example, where it is the outcome of a sudden argument or quarrel or provocation leading to uncontrollable anger or temporary imbalance of the mind and most murders fall within this category any thought of possibility of punishment is obliterated by deep emotional disturbance and the penalty of death can no more deter than any other penalty. Where murder is premeditated it may either be the result of lust, passion, jealousy hatred frenzy of frustration or it may be a cold calculated murder for monetary or other consideration. The former category of murder would conclude any possibility of deliberation or a weighing of consequences, the thought of the likelihood of execution after capture, trial and sentence would hardly enter the mind of the killer. So far as the latter category of murder is concerned, several considerations make it unlikely that the death penalty would play any significant part in his thought. Since both the penalties for murder, death as well as life sentence, are so severe as to destroy the future of any one subjected to them, the crime would not be committed by a rational man unless he thinks that there is little chance of detection. What would weigh with him in such a case is the uncertainty of detection and consequent punishment rather than the nature of punishment. It is not the harshness or severity of death penalty which acts as a deterrent. A life sentence of twenty years would act as an equally strong deterrent against crime as death penalty, provided the killer feels that the crime would not go unpunished. More than the severity of the sentence, it is the certainty of detection and punishment that acts as a deterrent. The Advisory Council on the Treatment of offenders appointed by the Government of Great Britain stated in its report in 1960 "We were impressed by the argument that the greatest deterrent to crime is not the fear of punishment but the 331 certainty Of detection." Professor Hart emphasized the same point, refuting the argument of Sir James Fitz James Stephen in these words: "This (Stephen 's) estimate of the paramount place in human motivation of the fear of death reads impressively but surely contains a suggestio falsi and once this is detected its cogency as an argument in favour of the death penalty for murder vanishes for there is really no parallel between the situation of a convicted murderer over the alternative of life imprisonment in the shadow of the gallows and the situation of the murderer contemplating his crime. The certainty of death is one thing, perhaps for normal people nothing can be compared with it. But the existence of the death penalty does not mean for the murderer certainty of death now. It means not very high probability of death in the future. And, futurity and uncertainty, the hope of an escape, rational or irrational, vastly diminishes the difference between death and imprisonment as , deterrent and may diminish to vanishing point. The way in which the convicted murderer may view the immediate prospect of the gallows after he has been caught, must be a poor guide to the effect of this prospect upon him when he is contemplating committing his crime. " It is also a circumstance of no less significance bearing on the question of detection effect of death penalty, that, even after detection and arrest, the likelihood of execution for the murderer is almost nil. In the first place, the machinery of investigation of offences being what it is and the criminal law of our country having a tilt in favour of the accused, the killer and look forward to a chance of acquittal at the trial. Secondly, even if the trial results in a conviction, it would not, in all probability, be followed by a sentence of . , death. Whatever may have been the position prior to the enactment of the Code of Criminal Procedure, 1973, it is now clear that under section 354 sub section (3), life sentence is the rule and it is only in exceptional cases for special reasons that death sentence may be awarded. The entire drift of the legislation is against infliction of death penalty and the courts are most reluctant to impose it save in the rarest of rare cases. It is interesting to note that in the last 2 years, almost every case where death penalty is confirmed by the High Court has come up before this Court by way of petition for 332 special leave, and, barring the case of Ranga and Billa, I do not think there is a single case in which death penalty has been affirmed by this Court. There have been numerous cases where even after special leave petitions against sentence of death were dismissed, review petitions have been entertained and death sentence commuted by this Court. Then there is also the clemency power of the President under Article 72 and of the Governor under Article 161 of the Constitution and in exercise of this power, death sentence has been commuted by the President or the Governor, as the case may be, in a number of cases. The chances of imposition of death sentence following upon a conviction for the offence of murder are therefore extremely slender. This is also evident from the figures supplied to a us by the Government of India for the years 1974 to 1978 pursuant to the inquiry made by us. During the course of the hearing, we called upon the Government of India to furnish us statistical information in regard to following three matters, namely, (i) the number of cases in which and the number of persons on whom death sentence was imposed and whose death sentence was confirmed by various High Courts in India; (ii) the number of cases in which death sentence was executed in the various States and the various Union Territories; and (iii) the number of cases in which death sentence was commuted by the President of India under Article 72 or by the Governors under Article 161 of the Constitution. The statistical information sought by us was supplied by the Government of India and our attention was also drawn to the figures showing the total number of offences of murder committed inter alia during the years 1974 77. These figures showed that on an average about 17,000 offences of murder were committed in India every year during the period 1974 to 1977, and if we calculate on the basis of this average, the total number of offences of murder during the period of five years from 1974 to 1978 would come to about 85,000. Now, according to the statistical information supplied by the Government of India, out of these approximately 85,000 case of murder, there were only 288 in which death sentence was imposed by the sessions court and confirmed by the High Courts and out of them, in 12 cases death sentence was commuted by the President and in 40 cases, by the Governors and death sentence was executed in only 29 cases. It will thus be seen that during the period of five years from 1974 to 1978, there was an infinitesingly small number of cases, only 29 out of an aggregate number of approximately 85,000 cases of murder, in which death sentence was executed. Of course, the figures supplied by the 333 Government of India did not include the figures from the States of A Bihar, Jammu and Kashmir, West Bengal and Delhi Administration but the figures from these three States and from the Union Territory of Delhi would not make any appreciable difference. It is obvious therefore that even after conviction in a trial, there is high degree of probability that death sentence may not be imposed by the sessions court and even If death sentence is imposed by the sessions court, it may not be confirmed by the High Court and even after confirmation by the High Court, it may not be affirmed by this Court and lastly, even if affirmed by this Court, it may be commuted by the President of India under Article 72 or by the Governor under Article 161 of the Constitution in exercise of the power of clemency. The possibility of execution pursuant to a sentence of death is therefore almost negligible, particularly after the enactment of section 354 sub section (3) of the Code of Criminal Procedure 1973 and it is difficult to see how in these circumstances death penalty can ever act as a deterrent. The knowledge that . death penalty is rarely imposed and almost certainly, it will not be imposed takes away whatever deterrent value death penalty might otherwise have. The expectation, bordering almost on certainty, that death sentence is, extremely unlikely to be imposed is a factor that would condition the behaviour of the offender and death penalty cannot in such a situation have any deterrent effect. The risk of death penalty being remote and improvable, it cannot operate as a greater deterrent than the threat of life imprisonment. Justice Brennan and Justice White have also expressed the same view in Furman vs Georgia (supra), namely, that, when infrequently and arbitrarily imposed, death penalty is not a greater deterrent to murder than is life imprisonment. The majority speaking through Sarkaria, J. has referred to a few decisions of this Court in which, according to majority Judges, the deterrent value of death penalty has been judicially recognised. But I do not think any reliance can be placed on the observations in these decisions in support of the view that death penalty has a uniquely deterrent effect. The learned Judges who made these observations did not have any socio legal data before them on the basis of which they could logically come to the conclusion that death penalty serves as a deterrent. They merely proceeded upon an impressionistic in view which is entertained by quite a few lawyers, judges and legislators without any scientific investigation or empiri 334 cal research to support it. It appears to have been assumed by these learned judges that death penalty has an additional deterrent effect which life sentence does not possess. In fact, the learned judges were not concerned in these decisions to enquire and determine whether death penalty has any special deterrent effect and therefore if they proceeded on any such assumption, it cannot be said that by doing so they judicially recognised the deterrent value of death penalty. It is true that in Jagmohan 's case (supra) Palekar J. speaking on behalf of the court did take the view that death penalty has a uniquely deterrent effect but I do Dot think that beyond a mere traditional belief the validity of which cannot be demonstrated either by logic or by reason, there is any cogent and valid argument put forward by the learned Judge in support of the view that death sentence has greater deterrent effect than life sentence. The majority judges have relied on some of the observations of Krishna Iyer, J. but it must not be forgotten that Krishna Iyer, J. has been one of the strongest opponents of death penalty and he has pleaded with passionate conviction for 'death sentence on death sentence '. In Dalbir Singh & Ors. vs State of Punjab (supra) he emphatically rejected the claim of deterrence in most unequivocal terms: ". the humanity of our Constitution historically viewed (does not) subscribe to the hysterical assumption or facile illusion that a crime free society will dawn if hangmen and firing squads were kept feverishly busy. " It would not be right to rely on stray or casual observations of Krishna Iyer, J. in support of the thesis that death penalty has a uniquely deterrent effect. It would be doing grave injustice to him and to the ideology for which he stands. In fact, the entire basis of the judgment of Krishna Iyer, J. in Rajendra Prasad 's is that death penalty has not deterrent value and that is only where the killer is found to be a social monster or a beast incapable of reformation that he can be liquidated out of existence. Chinnappa Reddy, J. has also in Bishnu Deo Shaw 's case (supra) taken the view that "there is no positive indication that the death penalty has been deterrent" or in other words, "the efficacy of the death penalty as a deterrent is unproven." Then reliance has been placed by Sarkaria, J. speaking on behalf of the majority on the observations of Stewart, J. in Furman vs Georgia (supra) where the learned Judge took the view that death penalty serves a deterrent as well as retributive purpose. In his view, certain criminal conduct is so atrocious that society 's interest in deterrence and retribution wholly outweighs any considerations 335 of reform or rehabilitation of the perpetrator and that, despite the on conclusive empirical evidence, only penalty of death will provide maximum deterrence. It has also been pointed out by Sarkaria, J. that in Gregg vs Georgia (supra) Stewart, J. reiterated the same view in regard to the deterrent and retributive effect of death penalty. But the view taken by Stewart, J. cannot be regarded as decisive of the present question as to the deterrent effect of death penalty. It is just one view like any other and its validity has to be tested on the touchstone of logic and reason. It cannot be accepted merely because it is the view of an eminent judge, I find that as against the view taken by him, there is a contrary view taken by at least two judges of the United States Supreme Court, namely. Brennan J. and Marshall J. who were convinced in Gregg vs Georgia (supra) that "capital punishment is not necessary as a deterrent to crime in our society. " It is natural differing judicial observations supporting one view or the other that these should be particularly on a sensitive issue like this, but what is necessary is to examine objectively and critically the logic and rationale behind these observations and to determine for ourselves which observations represent the correct view that should find acceptance with us. The majority Judges speaking through Sarkaria, J. have relied upon the observations of Stewart, J. as also on the observations made by various other Judges and authors for the purpose of concluding that when so many eminent persons have expressed the view that capital punishment is necessary for the protection of society, how can it be said that it is arbitrary and unreasonable and does not serve any rational penological purpose. It has been observed by Sarkaria, J: "It is sufficient to say that the very fact that persons of reason, learning and light are rationally and deeply divided in their opinion on this issue, is a ground among others, for rejecting the petitioners ' argument that retention of death penalty in the impugned provision, is totally devoid of reason and purpose. If, notwithstanding the view of the Abolitionists to the contrary, a very large segment of people, the world over, including sociologists legislators, jurists, judges and administrators still firmly believe in the worth and necessity of capital punishment for the protection of society. it is not possible to hold that the provision of death penalty as an alternative punishment for murder is unreasonable and not in the public interest. I find it difficult to accept this argument which proceeds upon the hypothesis that merely because some lawyers, judges and jurists are of the opinion that death penalty 336 sub serves a penological goal and is therefore in public interest, the court must shut its eyes in respectful deference to the views expressed by these scholars and refuse to examine whether their views are correct or not. It is difficult to understand how the court, when called upon to determine a vital issue of fact, can surrender its judgment to the views of a few lawyers, judges and jurists and hold that because such eminent persons have expressed these views, there must be some substance in what they say and the provision of death penalty as an alternative punishment for murder cannot therefore be regarded as arbitrary and unreasonable. It is to my mind inconceivable that a properly informed judiciary concerned to uphold Fundamental Rights should decline to come to its own determination of a factual dispute relevant to the issue whether death penalty serves a legitimate penological purpose and rest its decision only on the circumstance that there are sociologists, legislators, judges and jurists who firmly believe in the worth and necessity of capital punishment. The court must on the material before it find whether the views expressed by lawyers, judges, jurists and criminologists on one side or the other are well founded in logic and reason and accept those which appear to it to be correct and sound. The Court must always remember that it is charged by the Constitution to act as a sentinel on the qui vive guarding the fundamental rights guaranteed by the Constitution and it cannot shirk its responsibility by observing that since there are strong divergent views on the subject, the court need not express any categorical opinion one way or the other as to which of these two views is correct. Hence it is that, in the discharge of my constitutional duty of protecting and upholding the right to life which is perhaps the most basic of all human rights, I have examined the rival views and come to the p conclusion, for reasons which I have already discussed, that death penalty has no uniquely deterrent effect and does not serve a penological purpose. But even if we proceed on the hypothesis that the opinion in regard to the deterrent effect of death penalty is divided and it is not possible to say which opinion is right and which opinion is wrong, it is obvious that, in this state of affairs, it cannot be said to be proved that death penalty has an additional deterrent effect not possessed by life sentence and if that be so, the legislative provision for imposition of death penalty as alternative punishment for murder fail, since, as already pointed out above, the burden of showing that death penalty has a uniquely deterrent effect and therefore serves a penological goal is on the State and 337 if the State fails to discharge this burden which lies upon it, death penalty as alternative punishment for murder must be held to be arbitrary and unreasonable. The majority Judges have, in the Judgment of Sarkaria, J. placed considerable reliance on the 35th Report of the Law Commission and I must therefore briefly refer to that Report before I part with this point. The Law Commission set out in their Report the following main points that weighed with them in arriving at the conclusion that capital punishment does act as a deterrent: (a) Basically, every human being dreads death. (b) Death, as a penalty, stands on a totally different level from imprisonment for life or any other punishment. The difference is one of quality, and not merely of degree. (c) Those who are specifically qualified to express an opinion on the subject, including particularly the majority of the replies received from State Governments, Judges, Members of Parliament and legislatures and Members of the Bar and police officers are definitely of the view that the deterrent object of capital punishment is achieved in a fair measure in India. (d) As to conduct of prisoners released from jail (after under going imprisonment for life), it would be difficult lo come to a conclusion, without studies extending over a long period of years. (e) Whether any other punishment can possess all the advantages of capital punishment is a matter of doubt. (f) Statistics of other countries are inconclusive on the subject. If they are not regarded as proving the deterrent effect, neither can they be regarded as conclusively disproving it. So far as the first argument set out in clause (a) is concerned, I have already shown that the circumstance that every human being dreads 338 death cannot lead to the inference that death penalty act as a deterrent. The statement made in clause (b) is perfectly correct and I agree with they Law Commission that death as a penalty stands on a totally different level from life imprisonment and the difference between them is one of quality and not merely of degree, but I fail to see how from this circumstance an inference can necessarily follow that death penalty has a uniquely deterrent effect. Clause (c) sets out that those who are specially qualified to express an opinion on the subject have in their replies to the questionnaire stated their definite view that the deterrent effect of capital punishment is achieved in a fair measure in India. It may be that a large number of persons who sent replies to the questionnaire issued by the Law Commission might have expressed the view that death penalty does act as a deterrent in our country, but mere expression of opinion in reply to the questionnaire, unsupported by reasons, cannot have any evidenciary value. There are quite a number of people in this country who still nurture the superstitions and irrational belief, ingrained in their minds by a century old practice of imposition of capital punishment and fostered, though not consciously, by the instinct for retribution, that death penalty alone can act as an effective deterrent against the crime of murder. I have already demonstrated how this belief entertained by lawyers, judges, legislators and police officers is a myth and it has no basis in logic or reason. In fact, the statistical research to which I have referred completely falsifies this belief. Then, there are the arguments in clauses (d) and (e) but these arguments even according to the Law Commission itself are inconclusive and it is difficult to see how they can be relied upon to support the thesis that capital punishment acts as a deterrent. The Law Commission states in clause (f) that statistics of other countries are inconclusive on the subject. I do not agree. I have already dealt with this argument and shown that the statistical studies carried out by various jurists and criminologists clearly disclose That there is no evidence at all to suggest that death penalty acts as a deterrent and it must therefore be held on the basis of the available material that death penalty does not act as a deterrent. But even if we accept the proposition that the statistical studies are inconclusive and they cannot be regarded as proving that death penalty has no deterrent effect, it is clear that at the same time they also do not establish that death penalty has a uniquely deterrent effect and in this situation, the burden of establishing that death penalty has an additional deterrent effect which life sentence does not have and therefore serves a penological purpose 339 being on the State, it must held that the State has failed to discharge the burden which rests upon it and death penalty must therefore be held to be arbitrary and unreasonable. There was also one other argument put forward by the Law Commission in its 35th Report and that argument was that having regard to the conditions in India to the variety of social up bringing of its inhabitants, to the disparity in the level of morality and education in the country, to the vastness of its area, to the diversity of its population and to the paramount Deed to maintain law and order in the country at the present juncture, India cannot risk the experiment of abolition of capital punishment. This argument does not commend itself to me as it is based more on fear psychosis than on reason. It is difficult to see how any of the factors referred to by the Law Commission, barring the factor relating to the need to maintain law and order, can have any relevance to the question of deterrent effect of capital punishment. I cannot subscribe to the opinion that, because the social upbringing of the people varies from place to place or from class to class or there are demographic diversities and variations, they tend to increase the incidence of homicide and even if they do, I fail to see how death penalty can counter act the effect of these factors. It is true that the level of education in our country is low, because our developmental process started only after we became politically free, but it would be grossly unjust to say that uneducated people are more prone to crime than the educated ones. I also cannot agree that the level of morality which prevails amongst our people is low. I firmly hold the view that the large bulk of the people in our country, barring only a few who occupy positions of political, administrative or economic power, are actuated by a high sense of moral and ethical values. In fact, if we compare the rate of homicide in India with that in the United States, where there is greater homogeneity in population and the level of education is fairly high, we find that India compares very favourably with the United States. The rate of homicide for the year 1952 was 4.7 in the United States as against the rate of only 2.9 in India per 1,00,000 population and the figures for the year 1960 show that the rate of homicide in the United States was 5.1 as against the rate of only 2.5 in India per 1,00,000 population. The comparative figures for the year 1967 also confirm that the rate of homicide per 1,00,000 population in the United States was definitely higher than that in India because in the United States it was 6.1 340 while in India it was only 2.6. It is therefore obvious that, despite the existence of the factors referred to by the Law Commission, the conditions in India, in so far as the rate of homicide is concerned, are definitely better than in the United States and I do not see how these factors can possibly justify an apprehension that it may be risky to abolish capital punishment. There is in fact statistical evidence to show that the attenuation of the area in which death penalty may be imposed and the remoteness and infrequency of abolition of death penalty have not resulted in increase in the rate of homicide. The figures which were placed before us on behalf of the Union clearly show that there was no increase in the rate of homicide even though death sentence was made awardable only in exceptional cases under section 354 sub section (3) of the new Code of Criminal Procedure 1973. I must therefore express my respectful dissent from the view taken by the Law Commission that the experiment of abolition of capital punishment, would involve a certain element of risk to the law and order situation. It will thus be seen that death penalty as provided under section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure, 1973 does not subserve any legitimate end of punishment, since by killing the murderer it totally rejects the reformative purpose and it has no additional deterrent effect which life sentence does not possess and it is therefore not justified by the deterrence theory of punishment. Though retribution or denunciation is regarded by some as a proper end of punishment. I do not think, for reasons I have already discussed, that it can have any legitimate place in an enlightened philosophy of punishment. It must therefore be held that death penalty has no rational nexus with any legitimate penological goal or any rational penological purpose and it is arbitrary and irrational and hence violative of Articles 14 and 21 of the Constitution. I must now turn to consider the attack against the constitutional validity of death penalty provided under section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure, 1973 on the ground that these sections confer an unguided and standardless discretion on the court whether to liquidate an accused out of existence or to let him continue to live and the vesting of such discretion in the court renders the death penalty arbitrary and freakish. This ground of challenge is in my opinion well founded and it furnishes one additional reason 341 why the death penalty must be struck down as violative of Articles A 14 and 21. It is obvious on a plain reading of section 302 of the Indian Penal Code which provides death penalty as alternative punishment for murder that it leaves it entirely to the discretion of Court whether to impose death sentence or to award only life imprisonment to an accused convicted of the offence of murder. This section does not lay down any standards or principles to guide the discretion of the Court in the matter of imposition of death penalty. The critical choice between physical liquidation and life long incarceration is left to the discretion of the court and no legislative light is shed as to how this deadly discretion is to be exercised. The court is left free to navigate in an uncharted sea without any com pass or directional guidance. The respondents sought to find some guidance in section 354 sub section (3) of the Code of Criminal Procedure 1973 but I fail to see how that section can be of any help at all in providing guidance in the exercise of discretion. On the contrary it makes the exercise of discretion more difficult and uncertain. Section 354 sub section (3) provides that in case of offence of murder, life sentence shall be the rule and it is only in exceptional cases for special reasons that death penalty may be awarded. But what are the special reasons for which the court may award death penalty is a matter on which section 354 sub section (3) is silent nor is any guidance in that behalf provided by any other provision of law. It is left to the Judge to grope in the dark for himself and in the exercise of his unguided and unfettered discretion decide what reasons may be considered as 'special reasons ' justifying award of death penalty and whether in a given case any such special reasons exist which should persuade the court to depart from the normal rule and inflict death penalty on the accused. There being no legislative policy or principle to guide the court in exercising its discretion in this delicate and sensitive area of life and death, the exercise of discretion of the Court is bound to vary from judge to judge. What may appear as special reasons to one judge may not so appear to another and the decision in a given case whether to impose the death sentence or to let off the offender only with life imprisonment would, to a large extent, depend upon who is the judge called upon to make the decision. The reason for this uncertainty in the sentencing process is two fold. Firstly, the nature of the sentencing process is such that it involves a highly delicate task calling for skills and talents very much different from those ordinarily expected of lawyers. This was pointed out clearly 342 and emphatically by Mr. Justice Frankfurter in the course of the evidence he gave before the Royal Commission on Capital Punishment: "I myself think that the bench we lawyers who be come Judges are not very competent, are not qualified by experience, to impose sentence where any discretion is to be exercised. I do not think it is in the domain of the training of lawyers to know what to do with a fellow after you find out he is a thief. I do not think legal training has given you any special competence. I, myself, hope that one of these days, and before long, we will divide the functions of criminal justice. I think the lawyers are people who are competent to ascertain whether or not a crime has been committed. The whole scheme of common law judicial machinery the rule of evidence, the ascertainment of what is relevant and what is irrelevant and what is fair, the whole question of whether you can introduce prior crimes in order to prove intent I think lawyers are peculiarly fitted for that task. But all the questions that follow upon ascertainment of guilt, I think require very different and much more diversified talents than the lawyers and judges are normally likely to possess. " Even if considerations relevant to capital sentencing were provided by the legislature, it would be a difficult exercise for the judges to decide whether to impose the death penalty or to award the life sentence. But without any such guidelines given By the legislature, the task of the judges becomes much more arbitrary and the sentencing decision is bound to vary with each judge. Secondly, when unguided discretion is conferred upon the Court to choose between life and death, by providing a totally vague and indefinite criterion of 'special reasons ' without laying down any principles or guidelines for determining what should be considered To be 'special reasons ', the choice is bound to be influenced by the subjective philosophy of the judge called upon to pass the sentence and on his value system and social philosophy will depend whether the accused shall live or die. No doubt the judge will have to give 'special reasons ' if he opts in favour of inflicting the death penalty, H but that does not eliminate arbitrariness and caprice, firstly because there being no guidelines provided by the legislature, the reasons 343 which may appeal to one judge as 'special reasons ' may not appeal to another, and secondly, because reasons can always be found for a conclusion that the judge instinctively wishes to reach and the judge can bonafide and conscientiously find such reason to be 'special reasons '. It is now recognised on all hands that judicial conscience is not a fixed conscience; it varies from judge to judge depen ding upon his attitudes and approaches, his predilections and prejudices, his habits of mind and thought and in short all that goes with the expression "social philosophy". We lawyers and judges like to cling to the myth that every decision which we make in the exercise of our judicial discretion is guided exclusively by legal principles and we refuse to admit the subjective element in judicial decision making. But that myth now stands exploded and it is acknowledged by jurists that the social philosophy of the judge plays a not inconsiderable part in moulding his judicial decision and particularly the exercise of judicial discretion. There is nothing like complete objectivity in the decision making process and especially so, when this process involves making of decision in the exercise of judicial discretion. Every judgment necessarily bears the impact of the attitude and approach of the judge and his social value system. It would be pertinent here to quote Justice Cardozo 's analysis of the mind of a Judge in his famous lectures on "Nature of Judicial Process": "We are reminded by William James in a telling page of his lectures on Pragmatism that every one of us has in truth an underlying philosophy of life, even those of us to whom the names and the notions of philosophy are unknown or anathema. There is in each of us a stream of y tendency, whether you choose to call it philosophy or not, which gives coherence and direction to thought and ' t action. Judges cannot escape that current any more than other mortals. All their lives, forces which they do not recognize and cannot name, have been tugging at them inherited instincts, traditional beliefs, acquired convictions; and the resultant is an outlook on life, a conception of ' social needs, a sense in Jame 's phrase of 'the total push and pressure of the cosmos, ' which when reasons are nicely balanced, must determine where choice shall fall. In this mental background every problem finds its setting. We l may try to see things as objectively as we please. None 344 theless, we can never see them with any eyes except our own. " It may be noted that the human mind, even at infancy, is no blank sheet of paper. We are born with predisposition and the process of education, formal and informal, and, our own subjective experiences create attitudes which effect us in judging situations and coming to decisions. Jerome Frank says in his book; "Law and the Modern Mind", in an observation with which I find myself in entire agreement: "Without acquired 'slants ' preconceptions, life could not go on. Every habit constitutes a pre judgment; were those pre judgments which we call habits absent in any person, were he obliged to treat every event as an unprecedented crisis presenting a wholly new problem, he would go mad. Interests, points of view, preferences, are the essence of living. Only death yields complete dispassionateness, for such dispassionateness signifies utter indifference. An 'open mind ' in the sense of a mind containing no pre conceptions whatever, would be a mind incapable of learning anything, would be that of an utterly emotion less human being. " It must be remembered that "a Judge does not shed the attributes of common humanity when be assumes the ermine." The ordinary human mind is a mass of pre conceptions inherited and acquired, often unrecognised by their possessor. "Few minds are as neutral as a sheet of plain glass and indeed a mind of that quality may actually fail in judicial efficiency, for the warmer tints of imagination and sympathy are needed to temper the cold light of reason, if human justice is to be done. " It is, therefore, obvious that when a Judge is called upon to exercise his discretion as to whether the accused shall be killed or shall be permitted to live, his conclusion would depend to a large extent on his approach and attitude, his predilections and pre conceptions, his value system and social philosophy and his response to the evolving norms of decency and newly developing concepts and ideas in penological jurisprudence. One Judge may have faith in the Upanishad doctrine that every human being is an embodiment of the Divine and he may believe with Mahatma Gandhi that every offender can be reclaimed 345 and transformed by love and it is immoral and unethical to kill him, while another Judge may believe that it is necessary for social defence that the offender should be put out of way and that no mercy should be shown to him who did not show mercy to another. One Judge may feel that the Naxalites, though guilty of murders, . are dedicated souls totally different from ordinary criminals as they are motivated not by any self interest but by a burning desire to bring about a revolution by eliminating vested interests and should not therefore be put out of corporeal existence while another Judge may take the view that the Naxalities being guilty of cold premeditated murders are a menace to the society and to innocent men and women and therefore deserve to be liquidated. The views of Judges as to what may be regarded as 'special reasons ' are bound to differ from Judge to Judge depending upon his value system and social philosophy with the result that whether a person shall live or die depends very much upon the composition of the bench. which tries his case and this renders the imposition of death penalty arbitrary and capricious. Now this conclusion reached by me is not based merely on theoretical or a priori considerations. On an analysis of decisions given over a period of years we find that in fact there is no uniform pattern of judicial behaviour in the imposition of death penalty and the judicial practice does not disclose any coherent guidelines for ' the award of capital punishment. The Judges have been awarding death penalty or refusing to award it according to their own scale of values and social philosophy and it is not possible to discern any consistent approach to the problem in the judicial decisions. It is p apparent from a study of the judicial decisions that some Judges are readily and regularly inclined to sustain death sentences, other are . similarly disinclined and the remaining waver from case to case. Even in the Supreme Court there are divergent attitudes and opinions in regard to the imposition of capital punishment. If a case comes before one Bench consisting of Judges who believe in the social efficacy of capital punishment, the death sentence would in all probability be confirmed but if the same case comes before another Bench consisting of Judges who are morally and ethically against the death penalty, the death sentence would most likely be commuted to life imprisonment. The former would find and I say this not in any derogatory or disparaging sense, but as a consequence of psychological and attitudinal factors operating on the 346 minds of the Judges constituting the Bench 'special reasons ' in the case to justify award of death penalty while the latter would reject any such reasons as special reasons. It is also quite possible that one Bench may, having regard to its perceptions, think that there are special reasons in the case for which death penalty should be awarded while another Bench may bonafide and conscientiously take a different view and hold that there are no special reasons and that only life sentence should be imposed and it may not be possible to assert objectively and logically as to who is right and who is wrong, because the exercise of discretion in a case of this kind, where no broad standards or guidelines are supplied by the legislature, is bound to be influenced by the subjective attitude and approach of the Judges constituting the Bench, their value system, individual tone of their mind, the colour of their experience and the character and variety of their interests and their predispositions. This arbitrariness in the imposition of death penalty is considerably accentuated by the fragmented bench structure of our Courts where benches are inevitably formed with different permutations and combinations from time to time and cases relating to the offence of murder come up for hearing sometimes before one Bench, sometimes before another sometimes before a third and so on. Prof. Blackshield has in his Article on 'Capital Punishment in India ' published in Volume 21 of the Journal of the Indian Law Institute pointed out how the practice of bench formation contributes to arbitrariness in the imposition of death penalty. It is well known that so far as the Supreme Court is concerned, while the number of Judges has increased over the years, the number of Judges on Benches which hear capital punishment cases has actually decreased. Most cases are now heard by two judge Benches. Prof. Blackshield has abstracted 70 cases in which the Supreme Court had to choose between life and death while sentencing an accused for the offence of murder and analysing these 70 cases he has pointed out that during the period 28th April 1972 to 8th March 1976 only eleven Judges of the Supreme Court participated in 10% or more of the cases. He has listed these eleven Judges in an ascending order of leniency based on the proportion for each Judge of plus votes (i.e. votes for the death sentence) to total votes and pointed out that these statistics show how the judicial response to the question of life and death varies for judge to judge. " It is significant to note that out of 70 cases analysed by Prof. Blackshield, 37 related to the period subsequent to the coming into force of section 354 sub section (3) of the Code of Criminal Procedure 1973. If a similar 347 exercise is performed with reference to cases decided by the Supreme A Court after 8th March 1976, that being the date upto which the survey carried out by Prof. Blackshield was limited, the analysis will x reveal the same pattern of incoherence and arbitrariness, the decision to kill or not to kill being guided to a large extent by the com position of the Bench. Take for example Rajendra Prasad 's case (supra) decided on 9th February 1979. In this case, the death sentence imposed on Rajendra Prasad was commuted to life imprisonment by a majority consisting of Krishna Iyer, J. and Desai, J.A.P. Sen, J. dissented and was of the view that the death sentence should be confirmed. Similarly in one of the cases before us, namely, Bachan Singh vs State of Punjab,(l) when it was first heard by a Bench consisting of Kailasam and Sarkaria, JJ., Kailasam, J. was definitely of the view that the majority decision in . Rajendra Prasad 's case was wrong and that is why 'he referred that case to the Constitution Bench. So also in Dalbir Singh vs State of Punjab (supra), the majority consisting of Krishna Iyer, J. and Desai, J. took the view that the death sentence imposed on Dalbir Singh should be commuted to life imprisonment while A.P. Sen, J. struck to the original view taken by him in Rajendra Prasad 's case and was inclined to confirm the death sentence. It will thus be seen that the exercise of discretion whether to inflict death penalty or not depends to a considerable extent on the value system and social philosophy of the Judges constituting the Bench. The most striking example of freakishness in imposition of death penalty is provided by a recent case which involved three accused, namely, Jeeta Singh, Kashmira Singh and Harbans Singh. These three persons were sentenced to death by the Allahabad High Court by a judgment and order dated 20th October 1975 for playing an equal part in jointly murdering a family of four persons. Each of these three persons preferred a separate petition in the Supreme Court for special leave to appeal against the common judgment sentencing them all to death penalty. The special leave petition of Jeeta Singh came up for hearing before a bench consisting of Chandrachud, J. (as he then was) Krishna Iyer, J. and N.L. Untwalia, J. and it was dismissed on 15th April 1976. Then came the special leave petition preferred by Kashmira Singh from jail and this petition was placed for hearing before another bench consisting of Fazal Ali, J. and myself. We granted leave to Kashmira Singh limited to 348 the question of sentence and by an order dated 10th April 1977 we allowed his appeal and commuted his sentence of death into one of imprisonment for life. The result was that while Kashmira Singh 's death sentence was commuted to life imprisonment by one Bench, the death sentence imposed on Jeeta Singh was confirmed by another bench and he was executed on 6th October 1981, though both had played equal part in the murder of the family and there was nothing to distinguish the case of one from that of the other. The special leave petition of Harbans Singh then came up for hearing and this time, it was still another bench which heard his special leave petition. The Bench consisted of Sarkaria and Singhal, JJ. and they rejected the special leave petition of Harbans Singh on 1 6th October, 1978. Harbans Singh applied for review of this decision, but the review petition was dismissed by Sarkaria, J. and A.P. Sen, J. On 9th May 1980. It appears that though the registry of this court had mentioned in its office report that Kashmira Singh 's death sentence was already commuted, that fact was not brought to the notice of the court specifically when the special leave petition of Harbans Singh and his review petition were dismissed. Now since his special leave petition as also his review petition were dismissed by this Court, Harbans Singh would have been executed on 6th October 1981 along with Jeeta Singh, but fortunately for him he filed a writ petition in this Court and on that writ petition, the court passed an order staying the execution of his death sentence. When this writ petition came up for hearing before a still another bench consisting of Chandrachud, C.J., D.A. Desai and AN. Sen. JJ. , it was pointed out to the court that the death sentence imposed on Kashmira Singh had been commuted by a bench consisting of Fazal Ali, J. and myself and when this fact was pointed out, the Bench directed that the case be sent back to the President for reconsideration of the clemency petition filed by Harbans Singh. This is a classic case which illustrates the judicial vagaries in the imposition Of death penalty and demonstrates vividly, in all its cruel and stark reality, how the infliction of death penalty is influenced by the composition of the bench, even in cases governed by section 354 sub section (3) of the Code of Criminal Procedure 1973. The question may well be asked by the accused: Am I to live or die depending upon the way in which the Benches are constituted from time to time ? Is that not clearly violative of the fundamental guarantees enshrined in Articles 14 and 21 ? 349 If we study the judicial decisions given by the courts over a number of years, we find Judges resorting to a wide variety of factors in justification of confirmation or commutation of death sentence and these factors when analysed fail to reveal any coherent pattern. This is the inevitable consequence of the failure of the legislature to supply broad standards or guidelines which would structure and channelise the discretion of the court in the matter of imposition of death penalty. Of course, I may make it clear that when I say this I do not wish to suggest that if broad standards or guidelines are supplied by the legislature, they would necessarily cure death penalty of the vice of arbitrariness or freakishness. Mr. Justice Harlan pointed out in Mc Gautha vs California(l) the difficulty of formulating standards or guidelines for channelising or regulating the discretion of the court in these words ": "Those who have come to grips with the hard task of actually attempting to draft means of channeling capital sentencing discretion have confirmed the lesson taught by history. To identify before the fact those characteristics of criminal homicides and their perpetrators which call for the death penalty, and to express these characteristics in language which can be fairly understood and applied by the sentencing authority, appear to be tasks which are beyond present human ability." But whether adequate standards or guidelines can be formulated or not which would cure the aspects of arbitrariness and capriciousness, the fact remains that no such standards or guidelines are provided by the legislature in the present case, with the result that the court has unguided and untrammelled discretion in choosing between death and life imprisonment as penalty for the crime of murder and this has led to considerable arbitrariness and uncertainty. This is evident from a study of the decided cases which clearly shows that the reasons for confirmation or commutation of death sentence relied upon by the court in different cases defy coherent analysis. Dr. Raizada has, in his monumental doctoral study entitled "Trends in sentencing; a study of the important penal statutes and judicial pronouncements of the High Courts and the Supreme Court" identified a large number of decisions of this Court where inconsis 350 tent awards of punishment have been made and the judges have frequently articulated their inability to prescribe or follow consistently any standards or guidelines. He has classified cases upto 1976 in terms of the reasons given by the court for awarding or refusing to award death sentence. The analysis made by him is quite rewarding and illuminating. (i) one of the reasons given by the courts in a number of cases for imposing death penalty is that the murder is "brutal", "cold blooded", "deliberate", "unprovoked", "fatal", "gruesome", "wicked", "callous", "heinous" or "violent". But the use of these labels for describing the nature of the murder is indicative only of the degree of the court 's aversion for the nature or the manner of commission of the crime and it is possible that different judges may react differently to these situations and moreover, some judges may not regard this factor as having any relevance to the imposition of death penalty and may therefore decline to accord to it the status of "special reasons". In fact, there are numerous cases, where despite the murder being one falling within these categories, the court has refused to award death sentence. For example, Janardharan whose appeal was decided along with the appeal of Rajendra Prasad had killed his innocent wife and children in the secrecy of night and the murder was deliberate and cold blooded, attended as it was with considerable brutality, and yet the majority consisting of Krishna Iyer, J. and D.A. Desai, J. commuted his death sentence to life imprisonment. So also Dube had committed triple murder and still his death sentence was commuted to life imprisonment by the same two learned Judges, namely, Krishna Iyer, J. and D.A. Desai, J. It is therefore clear that the epithets mentioned above do not indicate any clearcut well defined categories but are merely expressive of the intensity of judicial reaction to the murder, which may not be uniform in all Judges and even if the murder falls within one of these categories, that factor has been regarded by some judges as relevant and by others, as irrelevant and it has not been uniformly applied as a salient factor in determining whether or not death penalty should be imposed. 351 (ii) There have been cases where death sentence has been A . awarded on the basis of constructive or joint liability arising under sections 34 and 149. Vide: Babu vs State of U.P.,(1) Mukhtiar Singh vs State of Punjab,(2) Masalt vs State of U.P.,(3) Gurcharan Singh vs State of Punjab.(4) But, there are equally a large number of cases whether death sentence has not been awarded because the criminal liability of the accused was only . under section 34 or Section 149. There are no establi shed criteria for awarding or refusing to award death sentence to an accused who himself did not give the fatal blow but was involved in the commission of murder along with other assailants under section 34 or section 149. (iii)The position as regards mitigating factors also shows the same incoherence. One mitigating factor which , has often been relied upon for the purpose of com muting the death sentence to life imprisonment is the youth of the offender. But this too has been quite arbitrarily applied by the Supreme Court. There are . cases such as State of U.P. vs Suman Das,(5) Raghubir Singh vs Sate of Haryana(6) and Gurudas Singh vs State of Rajasthan(7) where the Supreme Court took into account the young age of the appellant and refused to award death sentence to him. Equally there are cases such as Bhagwan Swarup vs State of U.P.( ') and Raghomani vs State of U.P.(9) where the Supreme Court took the view that youth is no ground for extenuation of sentence. Moreover there is also divergence of opinion as to what should be the age at which an offender may be regarded as a young man deserving i of commutation. The result is that as pointed out 352 by Dr. Raizada, in some situations young offenders who have committed multiple murders get reduction in life sentence whereas in others, "where neither the loss of as many human lives nor of higher valued properly" is involved, the accused are awarded death sentence. (iv) one other mitigating factor which is often taken into account is delay in final sentencing. This factor of delay after sentence received great emphasis in Ediga Annamma vs State of Andhra Pradesh,(1) Chawla vs State of Haryana,(2) Raghubir Singh vs State of Haryana (supra) Bhur Singh vs State of Punjab,(3) State of Punjab v Hari Singh(4) and Gurudas Singh vs State of Rajasthan(5) and in these cases delay was taken into account for the purpose of awarding the lesser punishment of life imprisonment. In fact, in Raghubir Singh vs State of Haryana (supra) the fact that for 20 months the spectre of death penalty must have been tormenting his soul was held sufficient to entitle the accused to reduction in sentence. But equally there are a large number of cases where death sentences have been confirmed, even when two or more years were taken in finally disposing of the appeal; Vide: Rishdeo vs State of U.P.,(6) Bharmal Mapa vs State of Bombay(7) and other cases given by Dr. Raizada in foot note 186 to chapter III. These decided cases show that there is no way of predicting. the exact period of prolonged proceeding which may favour an accused. Whether any im portance should be given to the factor of delay and if so to what extent are matters entirely within the dis cretion of the court and it is not possible to assert with any definitiveness that a particular period of delay after sentencing will earn for the accused immunity 353 from death penalty. It follows as a necessary corrolary from these vagaries in sentencing arising from the factor of delay, that the imposition of capital punishment becomes more or less a kind of cruel judicial lottery. If the case of the accused is handled expeditiously by the prosecution, defence lawyer, sessions court, High Court and the Supreme Court, then this mitigating factor of delay is not available to him for reduction to life sentence. If, on the other hand, there has been lack of despatch, engineered or natural, then the accused may escape the gallows, subject of course to the judicial vagaries arising from other causes. In other words, the more efficient the proceeding, the more certain the death sentence and vice versa. (v) The embroilment of the accused in an immoral relationship has been condoned and in effect, treated as an extenuating factor in Raghubir Singh vs State of Haryana (supra) and Basant Laxman More vs State of Maharashtra(l) while in Lajar Masih vs State of U.P.,(2) it has been condemed and in effect treated as an aggravating factor. There is thus no uniformity l of approach even so far as this factor is concerned. All these facors singly and cumulatively indicate not merely that there is an enormous potential of arbitrary award of . death penalty by the High Courts and the Supreme Court but that, .; in fact, death sentences have been awarded arbitrarily and freakishly. Vide: Dr. Upendra Baxi 's note on "Arbitrariness of Judicial Imposition of Capital Punishment. Professor Blackshield has also in his article on "Capital Punishment in India" commented on the arbitrary and capricious nature of imposition of death penalty and demonstrated forcibly and almost conclusively, that arbitrariness and uneven incidence are inherent and inevitable in a system of capital punishment. He has taken the decision of this Court in Ediga Anamma vs State of Andhra Pradesh (supra) as the dividing line and examined the judicial decisions given by this Court subsequent to the decision in Ediga 354 Anamma 's case, where this Court had to choose between life and death under section 302 of the Indian Renal Code. The cases sub sequent to the decision in Ediga Anamma 's case have been chosen for study and analysis presumbly because that was the decision in which the court for the first time set down some working formula whereby a synthesis could be reached between death sentence and life imprisonment and Krishna Iyer, J. speaking on behalf of the court, formulated various grounds which in his opinion, might warrant death sentence as an exceptional measure. But, despite this attempt made in Ediga Anamma 's case to evolve some broad standards or guidelines for imposition of death penalty, the subsequent decisions, as pointed out by Professor Blackshield, display the same pattern of confusion, contradictions and aberrations as the decisions before that case. The learned author has taken 45 reported decisions given after Ediga Anamma 's case and shown that it is not possible to discern any coherent pattern in these decisions and they reveal con tradictions and inconsistencies in the matter of imposition of death penalty. This is how the learned author has summed up his conclusion after an examination of these judicial decisions: "But where life and death are at stake, inconsistencies which are understandable may not be acceptable. The hard evidence of the accompanying "kit of cases" compels the conclusion that, at least in contemporary India, Mr. Justice Douglas ' argument in Furman vs Georgia is correct: that arbitrariness and uneven incidence are inherent and inevitable in a system of capital punishment and that therefore in Indian constitutional terms, and in spite of Jagmohan Singh the retention of such a system necessarily violates Article 14 's guarantee of "equality before the law". It is clear from a study of the decisions of the higher courts on the life or death choice that judicial adhocism or judicial impressionism dominates the sentencing exercise and the infliction of death penalty suffers from the vice of arbitrariness and caprice. I may point out that Krishna Iyer, J. has also come to the the same conclusion on the basis of his long experience of the sentencing process. He has analysed the different factors which have prevailed with the Judges from time to time in awarding or refusing 355 to award death penalty and shown how some factors have weighed A with one Judge, some with another, some with a third and so on, resulting in chaotic arbitrariness in the imposition of death penalty. I can do no better than quote his own words in Rajendra Prasad 's case (supra): "Law must be honest to itself. Is it not true that some judges count the number of fatal wounds, some the nature of the weapon used, others count the corpses or the degree of horror and yet others look into the age or sex of the offendar and even the lapse of time between the trial Court 's award of death sentence and the final disposal. Of the appeal ? With some judges, motives, provocations, primary or constructive guilt, mental disturbance and old feuds, the savagery of the murderous moment or the plan which has preceded the killing; the social milieu, the sublimated class complex and other odd factors enter the sentencing calculas. Stranger still, a good sentence of death by the trial Court is sometimes upset by the Supreme Court I; because of law 's delays. Courts have been directed execution of murderers who are mental cases, who do not fall within the McNaghten rules, because of the insane fury of the slaughter. A big margin of subjectivism, a preference for old English precedents, theories of modern penology, behavioral emphasis or social antecedents, judicial hubris or human rights perspectives, criminological literacy . or fanatical reverence for outworn social philosophers burried in the debris of time except as part of history this h plurality of forces plays a part in swinging the pendulum of sentencing justice erratically. " This passage from the judgment of the learned Judge exposes, in language remarkable for its succinctness as well as eloquence, the vagarious nature of the imposition of death penalty and highlights a few of the causes responsible for its erratic operation. I find myself totally in agreement with these observations of the learned Judge. But when it was contended that sentencing discretion is inherent in our legal system, and, in fact, it is desirable, because no two cases or criminals are identical and if no discretion is left to the 356 court and sentencing is to be done according to a rigid predetermined formula leaving no room for judicial discretion, the sentencing process would cease to be judicial and would de generate into a bed of procrustean cruelty. The argument was that having regard to the nature of the sentencing process, it is impossible to lay down any standards or guidelines which will provide for the endless and often unforeseeable variations in fact situations and sentencing discretion his necessarily to be left to the court and the vesting of such discretion in the court, even if no standards or guidelines are provided by the legislature for structuring or challenging such discretion, cannot be regarded as arbitrary or unreasonable. This argument, plausible though it may seem, is in my opinion not well a founded and must be rejected. It is true that criminal cases do not fall into set behaviouristic patterns and it is almost impossible to find two cases which are exactly identical. There are, as pointed out by Sarkaria, J. in the majority judgment, "countless permutations and combinations which are beyond the anticipatory capacity of the human calculus". Each case presents its own distinctive features, its peculiar combinations of events and its unique configuration of facts. That is why, in the interest of individualised justice, it is necessary to vest sentencing discretion in the court so that appropriate sentence may be imposed by the court in the exercise of its judicial discretion, having regard to the peculiar facts and circumstances of a given case, or else the. sentencing process would cease to be just and rational and justice would be sacrificed at the altar of blind uniformity. But at the same time, the sentencing discretion conferred upon the court cannot be altogether uncontrolled or unfettered. The strategem which is therefore followed by the legislatures while creating and defining offences is to prescribe the maximum punishment and in some cases, even the minimum and leave it to the discretion of the court to decide upon the actual term of imprisonment. This cannot be regarded as arbitrary or unreasonable since the discretion that is left to the court is to choose an appropriate term of punishment between the limits laid down by the legislature, having regard to the distinctive features and the peculiar facts and circumstances of the case. The conferment of such sentencing discretion is plainly and indubitably essential for rendering individualised justice. But where the discretion granted to the court is to choose between life and death without any standards or guidelines provided by the legislature, the death penalty does become arbitrary and unreasonable. The death penalty is 357 qualitatively different from a sentence of imprisonment. Whether Ia sentence of imprisonment is for two years or five years or for life, it is qualitatively the same, namely, a sentence of imprisonment, but the death penalty is totally different. It is irreversible; it is beyond recall or reparation; it extinguishes life. It is the choice between life and death which the court is required to make and this is left to its sole discretion unaided and unguided by any legislative yardstick to determine the choice. The only yardstick which may be said to have been provided by the legislature is that life sentence shall be the rule and it is only in exceptional cases for special reasons that death penalty may be awarded. but it is nowhere indicated by legislature as to what should be regarded as f 'special reasons ' justifying imposition of death penalty. The awesome and fearful discretion whether to kill a man or to let him live is vested in the court and the court is called upon to exercise . this discretion guided only by its own perception of what may be regarded as 'special reasons ' without any light shed by the legislature. It is difficult to appreciate how a law which confers such unguided discretion on the court without any standards or guidelines on so vital an issue as the choice between life and death can be regarded as constitutionally valid. If I may quote the words of Harlan, J.: "our scheme of ordered liberty is based, like the common law, on enlightened and uniformly applied legal principles, not on ad hoc notions of what is right or wrong in a particular case" There must be standards or principles to guide the court in making the choice between life and death and it cannot be left to the court to decide upon the choice on an ad hoc notion of what it conceives to be "special reasons ' in a particular case. That is exactly what we mean when we say that the government should be of laws and not y of men and it makes no difference in the application of this princi ple, whether 'men ' belong to the administration or to the judiciary. It is a basic requirement of the equality clause contained in Article 14 that the exercise of discretion must always be guided by standards or norms so that it does not degenerate into arbitrariness and operate unequally on persons similarly situate. Where unguided and unfettered discretion is conferred on any authority, whether it be the executive or the judiciary, it can be exercised arbitrarily or 358 capriciously by such authority, because there would be no standards k or principles provided by the legislature with reference to which the exercise of the discretion can be tested. Every form of arbitrariness, whether it be executive waywardness or judicial adhocism is anathema in our constitutional scheme. There can be no equal protection without equal principles in exercise of discretion. Therefore. the equality clause of the Constitution obligate that whenever death sentence is imposed it must be a principled sentence, a sentence based on some standard or principle and not arbitrary or indignant capital punishment It has been said that 'a Judge untethered by a text is a dangerous instrument, and I may well add that Judge power, uncanalised by clear principles, may be equally dangerous when the consequence of the exercise of discretion may result in the hanging of a human being It is obvious that if judicial discretion is not guided by any standard or norms, it would degenerate into judicial caprice, which, as is evident from the foregoing discussion, has in fact happened and in such a situation, unregulated and un principled sentencing discretion in a highly sensitive area involving a question of life and death would clearly be arbitrary and hence violative of the equal protection clause contained in Article 14. It would also militate against Article 21 as interpreted in Maneka Gandhi 's case (supra) because no procedure for depriving a person of his life can be regarded as reasonable, fair and just, if it vests uncontrolled and unregulated discretion in the court whether to award death sentence or to inflict only the punishment of life im prisonment. The need for well recognised principles to govern the 'deadly ' discretion is so interlaced with fair procedure that unregulated power not structured or guided by any standards or principles would fall foul of Article 21. The respondents however contendent that the absence of any standards or guidelines in the legislation did not affect the constitutional validity of the death penalty, since the sentencing discretion being vested in the court, standards or principles for regulating the exercise of such discretion could always be evolved by the court and the court could by a judicial fiat lay down standards or norms which would guide the Judge in exercising his discretion to award the death penalty. Now it is true that there are cases where the court lays down principles and standards for guidance in the exercise of the discretion conferred upon it by a statute, but that is done by the court only in those cases where 359 the principles or standards are gatherable from the provisions of the statute Where a statute confers discretion upon a court, the statute may lay down the broad standards or principles which should guide the court in the exercise of such discretion or such standards or principles may be discovered from the object and purpose of the statute, its underlying policy and the scheme of its provisions and some times, even from the surrounding circumstances. When the court lays down standards or principles which should guide it in the exercise of its discretion, the court does not evolve any new standards or principles of its own but merely discovers them from the statute. The standards or principles laid down by the court in such a case are not standards or principles created or evolved by l ' the court but they are standards or principles enunciated by the Iegislature in the statute and are merely discovered by the court as a matter of statutory interpretation. It is not legitimate for the court to create or evolve any standards or principles which are not found in the statute, because enunciation of such standards or principles is a legislative function which belongs to the legislative and not to the judicial department. Moreover, it is difficult to see how any standards or principles which would adequately guide the exercise of discretion in the matter of imposition of death penalty can be evolved by the court. Sarkaria, J. himself has lamented the impossibility of formulating standards or guidelines in this highly ' sensitive area and pointed out in the majority judgment: ". there is little agreement among penologists and jurists as to what information about the crime and criminal is relevant and what is not relevant for fixing the dose of punishment for a person convicted of a particular offence. According to Cessare Beccaria, who is supposed to be the intellectual progenitor of today 's fixed sentencing movement, 'crime are only to be measured by the injury done to society. ' But the 20th Century sociologists do not wholly agree with this view. In the opinion of Von Hirsch, the "seriousness of a crime depends both on the harm done (or risked) by the act and degree of actor 's culpability. " But how is the degree of that culpability to be measured. Can any thermometer be devised to measure its degree ? This passage from the majority judgment provides a most complete and conclusive answer to the contention of the respon 360 dents that the court may evolve its own standards or principles for guiding the exercise of its discretion. This is not a function which can be satisfactorily and adequately performed by the court more particularly when the judicial perception of what may be regarded as proper and relevant standards or guidelines is bound to vary from judge having regards to his attitude and approach, his predilections and prejudices and his scale of values and social philosophy. I am fortified in this view by the decision of the Supreme Court of the United States in Furman vs Georgia (supra). The question which was brought before the court for consideration in that Case was whether the imposition and execution of death penalty constituted "cruel and unusual punishment" within the meaning of the Eighth Amendment as applied to the States by the Fourteenth. The court, by a majority of five against four, held that the death penalty as then administered in the United States was unconstitutional, because it was being used in an arbitrary manner and such arbitrariness in capital punishment was a violation of the Eighth Amendment prohibition against "cruel and unusual punishment" which was made applicable to the States by the Fourteenth Amendment. Brennan J. and Marshall, J. took the view that the death penalty was per se unconstitutional as violative of the prohibition of the Eighth Amendment. Brennan, J. held that the death penalty constituted cruel and unusual punishment as it did not comport with human dignity and it was a denial of human dignity for a State arbitrarily to subject a person to an unusually severe punishment which society indicated that it did not regard as acceptable and which could not be shown to serve any penal purpose more effectively than a significantly less drastic punishment. Marshall, J. stated that the death penalty violated the Eighth Amendment because it was an excessive and unnecessary punishment and also because it was morally unacceptable to the people of the United States. The other three learned Judges namely, Douglas, J. Stewart, J. and White, J. did not subscribe to the view that the death penalty was per se unconstitutional in all circumstances but rested their judgment on the limited ground that the death penalty as applied in the United States was unconstitutional. Douglas, J. argued that "we deal with a system of law and of justice that leaves to the uncontrolled discretion of judges or juries the determination whether defendants committing these crimes should die or be imprisoned. Under these laws no standards govern the selection of the penalty. People live or die dependent on the whim of one man or of twelve," 361 Stewart, J. also voiced his concern about the unguided and unregulated discretion in the sentencing process and observed: ". the Eighth and Fourteenth Amendments cannot tolerate the infliction of a sentence of death under legal systems that permit this unique penalty to be so wantonly and so freakishly imposed. " The remaining four Judges, namely, Burger, C.J. Blackmun, J. Powell, J. and Rehnquist, J. took the opposite view and upheld the constitutional validity of the death penalty in its entirety. It will thus be seen that the view taken by the majority decision in this case was that a law which gives uncontrolled and unguided discretion to the Judge (or the jury) to choose arbitrarily between death sentence and life imprisonment for a capital offence violates the Eighth Amendment which inhibits cruel and unusual punishment. Now Sarkaria, J. speaking on behalf of the majority, has brushed aside this decision as inapplicable in India on the ground that we "do not have in our Constitution any provision like the Eighth Amendment nor are we at liberty to apply the test of reasonableness with the freedom with which the Judges of the Supreme Court of America are accustomed to apply the 'due process ' clause. " I am unable to agree with this reasoning put forward in the majority judgment. I have already pointed out that though there is no explicit provision in our Constitution prohibiting cruel and unusual punishment, this Court has in Francis Mullin 's case (supra) held that immunity against torture or cruel and unusual punishment or treatment is implicit in Article 21 and therefore, if any punishment is cruel and unusual, it would be violative of basic human dignity which is guaranteed under Article 21. Moreover, in Maneka Gandhi 's case (supra) this court has by a process of judicial interpretation brought in the procedural due process clause of the American Constitution by reading in Article 21 the requirement that the procedure by which a person may be deprived of his life or personal liberty must be reasonable, fair and just. Douglas, J. has also pointed out in Furman 's case (supra) that "there is increasing recognition of the fact that the basic theme of equal protection is implicit in 'cruel and unusual ' punishment. A penalty . should be considered 'unusually ' imposed. if it is administered arbitrarily or discriminatorily" and thus brought in the equal protection clause for invalidating the death penalty. It is also significant to note that despite the absence of provisions like the American Due Process Clause and the Eighth Amendment, this Court speaking through Desai, J. said in 362 Sunil Batra vs Delhi Administration.(1) "Treatment of a human being which offends human dignity, imposes avoidable torture and reduces the man to the level of a beast would certainly be arbitrary and can be questioned under Article 14. " Krishna Iyer, J. was more emphatic and he observed in the same case. "True, our Constitution has no 'due process ' clause or the VIII Amendment; but, in this branch of law, after Cooper. and Maneka Gandhi. . . the consequence is the same. For what is punitively outrageous, scandalizing unusual or cruel or rehabilitatively counter productive is unarguably unreasonable and arbitrary and is shot down by Article 14 and 19 " It should be clear from these observations in Sunil Batra 's case to which Cbandrachud, C.J. was also a party, that Sarkaria, J. speaking on behalf of the majority Judges, was in error in relying on the absence of the American due process clause and the Eighth Amendment for distinguishing the decision in Furman 's case (supra) and upholding death penalty. The decision in Furman 's case cannot, therefore, be rejected as inapplicable in India. This decision clearly supports the view that where uncontrolled and unregulated discretion is conferred on the court without any standards or guidelines provided by the legislature, so as to permit arbitrary and uneven imposition of death penalty, it would be violative of both Articles 14 and 21. It may be pointed out that subsequent to the decision in Furman 's case (supra) and as a reaction to it the legislatures of several States in the United States passed statutes limiting or controlling the exercise of discretion by means of explicit standards to be followed in the sentencing process. These 'guided discretion ' statutes provided standards typically in the form of specific aggravating and mitigating circumstances that must be taken into account before death sentence can be handed down. They also provided for separate phases of the trial to determine guilt and punishment (I) A.l. R. 363 and for automatic appellate review of death sentences. The constitutional validity of some of these 'guided discretion ' statutes was challenged in Gregg vs Georgia (supra) and companion cases and the Supreme Court of the United States upheld these statutes on the ground that providing specific sentencing guidelines to be followed in a separate post conviction phase of the trial would free the sentencing decision of arbitrariness and discrimination. There is considerable doubt expressed by leading jurists in the United States in regard to correctness of this decision, because in their view the guide lines provided by these statutes in the form of specific aggravating and/or mitigating circumstances are too broad and too vague to serve as an effective guide to discretion. In fact, while dealing with the challenge to the constitutional validity of a 'guided discretion ' statute enacted by the Legislature of Massachusettes, the Supreme Court of Massachusettes by a majority held in District Attorney for the Suffolk District vs Watson (1) that the statute providing for imposition of death penalty was unconstitutional on the ground that it was violative of Article 26 of the Declaration of Rights of the Massachusettes Constitution which prohibits infliction of cruel or unusual punishment. Henneseey, C.J. pointed out that in enacting the impugned statute the Legislature of Massachusettes had clearly attempted to follow the mandate of the Furman opinion and its progeny by promulgating a law of guided and channelled jury discretion, but even so it transgressed the prohibition of Article 26 of the Declaration of Rights of the State Constitution. The learned Chief Justice observed: " . it follows that we accept the wisdom of Furman that arbitrary and capricious infliction of death penalty is unconstitutional. However, we add that such arbitrariness and discrimination, which inevitably persists even under a statute which meets the demands of Furman, offends Article 26 of the Massachusettes Declaration of Rights. " But we are not concerned here with the question as to whether the decision in Gregg 's case represents the correct law or the decision of the Massachusettes Supreme Court in Watson 's case. That controversy does not arise here because admittedly neither the Indian Penal Code nor any other provision of law sets out any aggravating or mitigating circumstance or any other considerations which must be taken into account in determining whether death sentence should be 364 awarded or not. Here the sentencing discretion conferred upon the court is totally uncontrolled and unregulated or if I may borrow an expression from Furman 's decision, it is 'standardless ' and unprincipled '. It is true that there are certain safeguards provided in the Code of Criminal Procedure, 1973 which are designed to obviate errors in the exercise of judicial discretion in the matter of imposition of death penalty. Section 235 sub section (2) bifurcates the trial by providing two hearings one at the pre conviction stage and another at the pre sentence stage so that at the second stage following upon conviction, the court can gather relevant information bearing on the question of punishment and decide, on the basis of such information, what would be the appropriate punishment to be imposed on the offender. Section 366 sub section (1) requires the court passing a sentence of death to submit the proceedings to the High Court and when such reference is made to the High Court for confirmation of the death sentence, the High Court may under section 367 direct further inquiry to be made or additional evidence to be taken and under section 368, confirm the sentence of death or pass any other sentence warranted by law or annual or alter the conviction or order a new trial or acquit the accused. Section 369 enjoins that in every reference so made, the confirmation of the sentence or any new sentence or order passed by the High Court, shall, when such court consists of two or more judges, be made, passed and signed by at least two of them. Then there is also a proviso in section 379 which says that when the High Court on appeal reverses an order of acquittal and convicts the accused and sentences him to death, the accused shall have a right to appeal to the Supreme Court. Lastly there is an over riding power conferred on the Supreme Court under Article 136 to grant, in its discretion, special leave to appeal to an accused who has been sentenced to death. These are undoubtedly some safeguards provided by the legislature, but in the absence of any standards or principles provided by the legislature to guide the exercise of the sentencing discretion and in view of the fragmented bench structure of the High Courts and the Supreme Court, these safeguards cannot be of any help in eliminating arbitrariness and freakishness in imposition of death penalty. Judicial ad hocism or waywardliness would continue to characterise the exercise of sentencing discretion whether the Bench be of two judges of the High Court or of two or three judges of the Supreme Court and arbitrary and uneven incidence of death 365 penalty would continue to afflict the sentencing process despite these procedural safeguards. The reason is that these safeguards are merely peripheral and do not attack the main problem which stems from lack of standards or principles to guide the exercise of the sentencing discretion. Stewart, J. pointed out in Gregg 's case (supra), ". the concerns expressed in Furman that the penalty of death not be imposed in an arbitrary or capricious manner can be met by a carefully drafted statute that ensures that the sentencing authority is given adequate information and guidance. As a general proposition these concerns are best met by a system that provides for a bifurcated proceeding at which the sentencing authority is apprised of the information relevant to the imposition of sentence and provided with standards to guide its use of the information. " The first requirement that there should be a bifurcated proceeding at which the sentencing authority is apprised of the information relevant to the imposition of sentence is met by the enactment of section 235 sub section (2), but the second requirement that the sentencing authority should be provided with standards to guide its use of the information is not satisfied and the imposition of death penalty under section 302 of the Indian Penal "ode read with section 354 sub section (3) of the Code of Criminal Procedure, 1973 must therefore be held to be arbitrary and capricious and hence violative of Articles 14 and 21. There is also one other characteristic of death penalty that is revealed by a study of the decided cases and it is that death sentence has a certain class complexion or class bias in as much as it is largely the poor and the down trodden who are the victims of this extreme penalty. We would hardly find a rich or affluent person going to the gallows. Capital punishment, as pointed out by Warden Duffy is "a privilege of the poor." Justice Douglas also observed in a famous death penalty case "Former Attorney Pamsey Clark has said: 'it is the poor, the sick, the ignorant, the powerless and the hated who are executed '. "So also Governor Disalle of Ohio State speaking from his personal experience with the death penalty said: "During my experience as Governor of Ohio, I found the men in death row had one thing in common; they were penniless. There were other common denominators, low mental capacity, little or no education, few friends, broken 366 homes but the fact that they had no money was a principal factor in their being condemned to death. " The same point was stressed by Krishna Iyer, J. in Rajendra Prasad 's case (supra) with his usual punch and vigour and in hard hitting language distinctive of his inimitable style: "Who, by and large, are the men whom the gallows swallow. The white collar criminals and the corporate criminals whose wilful economic and environmental crimes inflict mass deaths or who hire assassins and murder by remote control? Rarely. With a few exceptions, they hardly fear the halter. The feuding villager, heady with country liquor, the striking workers desperate with defeat, the political dissenter and sacrificing liberator intent on changing the social order from satanic misrule, the waifs and strays whom society has hardened by neglect into street toughs, or the poor householder husband or wife driven by dire necessity or burst of tantrums it is this person who is the morning meal of the macabre executioner." "Historically speaking, capital sentence perhaps has a class bias and colour bar, even as criminal law barks at both but bites the proletariat to defend the proprietariat a reason which, incidentally, explains why corporate criminals including top executives whom by subtle processes, account for slow or sudden killing of large members by adulteration, smuggling, cornering, pollution and other invisible operations, are not on the wanted list and their offending operations which directly derive profit from mafia and white collar crimes are not visited with death penalty, while relatively lesser delinquencies have, in statutory and forensic rhetoric, deserved the extreme penalty." There can be no doubt that death penalty in its actual operation is discriminatory, for it strikes mostly against the poor and deprived sections of the community and the rich and the affluent usually escape from its clutches. This circumstance also adds to the arbitrary and capricious nature of the death penalty and renders it unconstitutional as being violative of Articles 14 and 21. 367 Before I part with this topic I may point out that only way in which the vice of arbitrariness in the imposition of death penalty can be removed is by the law providing that in every case where the death sentence is confirmed by the High Court there shall be an automatic review of the death sentence by the Supreme Court sitting as a whole and the death sentence shall not be affirmed or imposed by the Supreme Court unless it is approved unanimously by the entire court sitting enbanc and the only exceptional cases in which death sentence may be affirmed or imposed should be legislatively limited to those where the offender is found to be so depraved that it is not possible to reform him by any curative or rehabilitative therapy and even after his release he would be a serious menace to the society and therefore in the interest of the society he is required to be eliminated. Of course, for reasons I have already discussed such exceptional cases would be practically nil because it is almost impossible to predicate of any person that he is beyond reformation or redemption and therefore, from a practical point of view death penalty would be almost nor existent But theoretically it may be possible to say that if the State is in a position to establish positively that the offender is such a social monster that even after suffering life imprisonment and undergoing reformative and rehabilitative therapy, he can never be reclaimed for the society, then he may be awarded death penalty. If this test is legislatively adopted and applied by following the procedure mentioned above, the imposition of death penalty may be rescued from the vice of arbitrariness and caprice. But that is not so under the law as it stands to day. This view taken by me in regard to the constitutional validity of the death penalty under Articles 14 and 21 renders it unnecessary for me to consider the challenge under Article 19 and I do not therefore propose to express any opinion on that question. But since certain observations have been made in the majority judgment of Sarkaria, J. which seem to run counter to the decisions of this Court in R.C Cooper vs Union of India (1) and Maneka Gandhi 's case (supra). I am constrained to add a few words voicing my respectful dissent from those observations. Sarkaria, J. speaking on behalf of the majority judges has observed in the present case that the 'form and object test or 'pith and substance rule ' adopted by 368 Kania, C.J. and Fazal Ali, J. in A.K. Gopalan vs State of Madras (supra) is the same as the 'test of direct and inevitable effect ' enunciated in R.C. Cooper 's case and Maneka Gandhi 's case and it has not been discarded or jettisoned by these two decisions. I cannot look with equimanity on this attempt to resucitate the obsolute 'form and object test ' or 'pith and substance rule ' which was evolved in A.R. Gopalan 's case and which for a considerable number of years dwarfed the growth and development of fundamental rights and cut down their operational amplitude. This view proceeded on the assumption that certain articles in the Constitution exclusively deal with specific matters and where the requirement of an Article dealing with a particular matter in question is satisfied and there is no infringement of the fundamental right guaranteed by that Article, no recourse can be had to a fundamental right conferred by another Article and furthermore, in order to determine which is the fundamental right violated, the court must consider the pith and substance of the legislation and ask the question: what is the object of the legislature in enacting the legislation; what is the subject matter of the legislation and to which fundamental right does it relate. But this doctrine of exclusivity of fundamental rights was clearly and unequivocally over ruled in R.C. Cooper 's case by a majority of the Full Court, Ray, J. alone dissenting and so was the 'object and form test ' or 'pith and substance rule ' laid down in A.K. Gopalan 's case. Shah, J. speaking on behalf of the majority Judges said in R.C. Copper 's case (supra) ". it is not the object of the authority making the law impairing the right of a citizen, nor the form of action that determines the protection he can claim; it is the effect of the law and of the action upon the right which attract the jurisdiction of the Court to grant relief. If this be the true view, and we think it is, in determining the impact of State action upon constitutional guarantees which are fundamental, it follows that the extent of protection against impairment of a fundamental right is determined not by the object of the Legislature nor by the form of the action, but by its direct operation upon the individual 's rights." "We are of the view that the theory that the object and form of the State action determine the extent of pro 369 tection which the aggrieved party may claim is not consistent with the constitutional scheme. " "In our judgment, the assumption in A.K Gopalan 's case that certain articles in the Constitution exclusively deal with specific matters and in determining whether there is infringement of the individual 's guaranteed rights, the object and the form of the State action alone need be considered and effect of the laws on fundamental rights of the individuals in general will be ignored cannot be accepted as correct." This view taken in R.C. Cooper 's case has since then been consistently followed in several decisions of which I may mention only a few, namely, Shambhu Nath Sarkar vs State of West Bengal (1); Haradhan Saha vs State of West Bengal;(2) Khudiram Das vs State of West Bengal (3) and Maneka Gandhi 's case (supra). I cannot therefore assent to the proposition in the majority judgment that R.C. Cooper 's case and Maneka Gandhi 's case have not given a complete go by to the test of direct and indirect effect, some times described as 'form and object test ' or 'pith and substance rule ' evolved by Kania, C.J. and Fazal Ali, J. in A.K. Gopalan 's case and that the 'pith and substance rule ' still remains a valid rule for resolving the question of the constitutionality of a law assailed on the ground of its being violative of a fundamental right. Nor can I agree with the majority judgment when it says that it is Article 21 which deals with the right to life and not Article 19 and section 302 of the Indian Penal Code is therefore not required to be tested on the touchstone of any one or more of the clauses of Article 19. This approach of the majority judgment not only runs counter to the decision in R.C. Cooper 's case and other subsequent decisions of this Court including Maneka Gandhi 's case but is also fraught with grave danger inasmuch as it seeks to put the clock back and reverse the direction in which the law is moving towards realisation of the full potential of fundamental rights as laid down in R.C. Cooper 's ease and Maneka Gandhi 's case. It is significant to note that the doctrine of exclusi 370 vity enunciated in A.K. Gopalan 's case led to the property rights under Article 19(1)(f) and 31 being treated as distinct and different rights traversing separate grounds, but this view was over turned in Kochune 's case (1) where this Court by a majority held that a law seeking to deprive a person of his property under Article 31 must be a valid law and it must therefore meet the challenge of other fundamental rights including Article 19(1)(f). This Court over ruled the proposition laid down in State of Bombay vs Bhanji Munji(2) that Article 19(1)(f) read with clause (5) postulates the existence of property which can be enjoyed and therefore if the owner is deprived of his property by a valid law under Article 31, there can be no question of exercising any rights ' under Article 19(1)(f) in respect of such property. The court ruled that even io a law seeks to deprive a person of his property under Article 31, it must still, in order to be valid, satisfy the requirement of Article 19 (1)(f) read with clause (5). If this be the true position in regard to the inter relation between Article 19 (1) (f) and Article 31, it is difficult to see why a law authorising deprivation of the right to life under Article 21 should not have to meet the test of other fundamental rights including those set out in the different clauses of Article 19. But even if section 302 in so far as it provides for imposition of death penalty as alternative punishment has to meet the challenge of Article 19. the question would still remain whether the 'direct and inevitable consequence ' of that provision is to affect any of the rights guaranteed under the Article. That is a question on which I do not wish to express any definite opinion. It is sufficient for me to state that the 'object and form test ' or the 'pith and substance rule ' has been completely discarded by the decision in R.C. Cooper 's case and Maneka Gandhi 's case and it is now settled law that in order to locate the fundamental right violated by a statute, the court must consider what is the direct and inevitable consequence of the statute. The impugned statute may in its direct and inevitable effect invade more than one fundamental right and merely because it satisfies the requirement of one fundamental right, it is not freed from the obligation to meet the challenge of another applicable fundamental right. These are the reasons for which I made my order dated May 9, 1980 declaring the death penalty provided under section 302 of the 371 Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure, 1973 is unconstitutional and void as being 5 violative of Articles 14 and 21. I must express my profound regret at the long delay in delivering this judgment but. the reason is that there was a considerable mass of material which had to be collected from various sources and then examined and analysed and this took a large amount of time. B S.R. Appeal dismissed.

Upholding the constitutionality of section 302, Penal Code, and section 354 (3) of the Code of Criminal Procedure Code. the Court. ^ HELD: Per majority. Sarkaria, J. [On behalf of Chandrachud, C.J., A.C. Gupta, N.L. Untwalia, JJ. and on his own behalf]. The right to life is not one of the rights mentioned in Article 19 (1) of the Constitution and the six fundamental freedoms guaranteed under Article 19(1) are not absolute rights. The condition precedent for the applicability of Article 19 is that the activity which the impugned law prohibits and penalises, must be within the purview of and protection of Article 19 (1). [173 E, 174 A, B C] 146 State of Bombay vs R.M.D. Chamarbaugwala, ; @ 920; Fatechand Himmatlal and Ors. vs State of Maharashtra, ; @ 840; A.K. Gopalan vs The State of Madras, ; , followed. The Indian Penal Code, particularly those of its provisions which cannot be justified on the ground of unreasonableness with reference to any of the specified heads, such as "public order" in clauses (2), (3) and (4) is not a law imposing restrictions on any of the rights conferred by Article 19 (1). There are several offences under the Penal Code, such as, theft, cheating, ordinary assault, which do not violate or affect "public order", but only "law and order". These offences injure only specific individuals as distinguished from the public at large. It is now settled that "public order" means "even tempo of the life of the community". That being so, even all murders do not disturb or affect "public order". Some murders may be of purely private significance and the injury or harm resulting therefrom affects only specific individuals, and, consequently, such murders may not be covered by "public order" within the contemplation of clauses (2), (3) and (4) of Article 19. Such murders do not lead to public disorder but to disorder simpliciter. Yet, no rational being can say that punishment of such murderers is not in the general public interest. It may be noted that general public interest is not specified as a head in clauses (2) to (4) on which restriction on the rights mentioned in clause (i) of the Article may be justified. [181 D H, 182 A B] The real distinction between the areas of "law and order" and "public order" lies not merely in the nature or quality of the act, but in the degree and extent. Violent crimes similar in nature, but committed in different contexts and circumstances might cause different reactions. A murder committed in given circumstances may cause only a slight tremor, the wave length of which does not extend beyond the parameters of law and order. Another murder committed in different context and circumstances may unleash a tidal wave of such intensity, gravity and magnitude, that its impact throws out of gear the even flow of life. Nonetheless, the fact remains that for such murders which do not affect "public order", even the provision for life imprisonment in section 302, Indian Penal Code, as an alternative punishment, would not be justifiable under clauses (2), (3) and (4) as a reasonable restriction in the interest of "public order". Such a construction must, therefore, be avoided. Thus construed, Article 19 will be attracted only to such laws, the provisions of which are capable of being tested under clauses (2) to (5) of Article 19. [182 B E] R.S. Cooper vs Union of India, ; ; Maneka Gandhi vs Union of India, [1978] 2 SCR 621; Dr. Ram Manohar Lohia 's case, [1966]1 SCR 709; Hardhan Saha and Anr. vs State of West Bengal; , 784, followed. From the decided cases of the Supreme Court, it is clear that the test of direct and indirect effect was not scrapped. Indeed there is no dispute that the test of "pith and substance" of the subject matter and of direct and of incidental effect of legislation is a very useful test to determine the question of legislative competence, i.e., in ascertaining whether an Act falls under one Entry 147 while incidentally encroaching upon another Entry. Even for determining the validity of a legislation on the ground of infringement of fundamental rights, the subject matter and the object of the legislation are not altogether irrelevant. For instance, if the subject matter of the legislation directly covers any of the fundamental freedoms mentioned in Article 19 (1). It must pass the test of reasonable ness under the relevant head in clauses (2) to (6) of that Article. If the legislation does not directly deal with any of the rights in Article 19 (1), that may not conclude the enquiry. It will have to be ascertained further whether by its direct and immediate operation, the impugned legislation abridges any of the rights enumerated in Article 19 (1). [189 B D] The mere fact that the impugned law incidentally, remotely or collaterally has the effect of abridging or abrogating those rights, will not satisfy the test. If the answer to the above queries be in the affirmative, the impugned law in order to be valid must pass the test of reasonableness under Article 19. But if the impact of the law on any of the rights under clause (1) of Article 19 is merely incidental, indirect, remote or collateral and is dependent upon factors which may or may not come into play, the anvil of Article 19 will not be available for judging its validity. [190 A C] R.C. Cooper vs Union of India, ; ; Maneka Gandhi vs Union of India, [1978] 2 SCR 621; Subrahmanyam Chattiar 's case, ; Ram Singh vs State of Delhi, ; ; Express Newspapers (P) Ltd. and Anr vs The Union of India & Ors., ; Minnesota exhibit Rel. Olson; , @ 698; Sakal Papers (P) Ltd. and Ors. vs The Union of India, ; ; Naresh Shridhar Mirajkar and Ors. vs State of Maharashtra and Anr. , ; ; Bennett Coleman 's case; , , referred to. Section 299 defines "culpable homicide" and section 300 defines culpable homicide amounting to murder. Section 302 prescribes death or imprisonment for life as penalty for murder. It cannot, reasonably or rationally, be contended that any of the rights mentioned in Article 19 (1) of the Constitution confers the freedom to commit murder or, for the matter of that, the freedom to commit any offence whatsoever. Therefore, penal laws, that is to say laws which define offences and prescribe punishment for the commission of offences do not attract the application of Article 19 (1). It cannot be said that the object of the penal laws is generally such as not to involve any violation of the rights conferred by Article 19 (1) because after the decision of this Court in the Bank Nationalisation case the theory, that the object and form of the State action alone determine the extent of protection that may be claimed by an individual and that the effect of the State action on the fundamental right of the individual is irrelevant, stands discredited. But the point of the matter is that, in pith and substance, penal laws do not deal with the subject matter of rights enshrined in Article 19 (1). That again is not enough for the purpose of deciding upon the applicability of Article 19, because even if a law does not, in its pith and substance, deal with any of the fundamental rights conferred by Article 19 (1), if the direct and inevitable effect of the law is such as to abridge or abrogate any of those rights, Article 19 (1) shall have to be attracted. It would then become necessary to test the 148 validity of even a penal law on the touchstone of that Article. On this latter aspect of the matter, it is clear that the deprivation of freedom consequent upon an order of conviction and sentence is not a direct and inevitable consequence of the penal law but is merely incidental to the order of conviction and sentence which may or may not come into play, that is to say, which may or may not be passed. Section 302 of the Penal Code, therefore, does not have to stand the test of Article 19 (1) of the Constitution. [190 C H, 191 A B] The onus of satisfying the requirements of Article 19, assuming that the Article applies. lies on the person challenging its validity. There is initial presumption in favour of the constitutionality of the state and the burden of rebutting that presumption is thrown on the party who challenges the constitutionality on the ground of Article 19. Behind the view that there is a presumption of constitutionality of a statute and the onus to rebut the same lies on those who challenge the legislation, is the rationale of judicial restraint, a recognition of the limits of judicial review, a respect for the boundaries of legislative and judicial functions, and the judicial responsibility to guard the trespass from one side or the other. The primary function of the courts is to interpret and apply the laws according to the will of those who made them and not to transgress into the legislative domain of policy making. Even where the burden is on the State to show that the restriction imposed by the impugned statute is reasonable and in public interest, the extent and the manner of discharge of the burden necessarily depends on the subject matter of the legislation, the nature of the inquiry, and the scope and limits of judicial review. [192 C D, 193 A, C D, 194 D E] Saghir Ahmad vs State of Uttar Pradesh, ; ; Khyerbari Tea Co. vs State of Assam & Ors., ; ; B. Banerjee vs Anita Pan, ; @ 787; Pathumma vs State of Kerala, ; ; Dennis vs United States, 341 US 494, 525: 95 L.Ed. 1137: 71 section Ct. 857; Gregg vs Georgia, ; 859; State of Madras vs V.G. Rao, ; @ 607; Jagmohan Singh vs State of U.P., ; , referred to. Statistical attempts to assess the true penological value of capital punishment remain inconclusive. Firstly, statistics of deterred potential murderers are hard to obtain. Secondly, the approach adopted by the Abolitionists is over simplified at the cost of other relevant but imponderable factors, the appreciation of which is essential to assess the true penological value of capital punishment. The number of such factors is infinitude, their character variable, duration transient and abstract formulation difficult. Conditions change from country to country and time to time. Due to the inconsistancy of social conditions, it is not scientifically possible to assess with any degree of accuracy, as to whether the variation in the incidence of capital crime is attributable to the presence or absence of death penalty in the penal law of that country for such crimes. [215 E H, 216 A] 149 6. To sum up, the question whether or not death penalty serves any penological purpose is a difficult, complex and intractable issue. It has evoked strong, divergent views. For the purpose of testing the constitutionality of the impugned provision as to death penalty in section 302, Penal Code, on the ground of reasonableness in the light of Articles 19 and 21 of the Constitution, it is not necessary to express any categorical opinion, one way or the other, as to which of these two antithetical views, held by the Abolitionists and Retentionists, is correct. It is sufficient to say that the very fact that persons of reason, learning and light are rationally and deeply divided in their opinion on this issue, is a ground among others, for rejecting the petitioners ' argument that retention of death penalty in the impugned provision, is totally devoid of reason and purpose. If, notwithstanding the view of the Abolitionists to the contrary, a very large segment of people the world over, including sociologists, legislators, jurists, judes and administrators still firmly believe in the worth and necessity of capital punishment for the protection of society, if in the perspective of prevailing crime conditions in India, contemporary public opinion chanalised through the people 's representatives in Parliament, has repeatedly in the last three decades, rejected all attempts, including the one made recently, to abolish or specifically restrict the area of death penalty, if death penalty is still a recognised legal sanction for murder or some types of murder in most of the civilised countries in the world, if the framers of the Indian Constitution were fully aware of the existence of death penalty as punishment for murder, under the Indian Penal Code, if the 35th Report and subsequent Reports of the Law Commission suggesting retention of death penalty, and recommending revision of the Criminal Procedure Code and the insertion of the new sections 235 (2) and 354 (3) in that Code providing for pre sentence hearing and sentencing procedure on conviction for murder another capital offences were before the Parliament and presumably considered by it when in 1972 73 it took up revision of the Code of 1898, and replaced it by the Code of Criminal Procedure, 1973, it cannot be said that the provision of death penalty as an alternative punishment for murder, in section 302, Penal Code, is unreasonable and not in public interest. Therefore, the impugned provision in section 302, violates neither the letter nor the ethos of Article 19. [221 B H, 222 A] 7. (i) Neither the new interpretative dimensions given to Articles 19 and 21 by the Supreme Court in Maneka Gandhi, [1978] 2 SCR 621, and Charles Sobraj vs The Superintendent, Central Jail, Tihar, New Delhi, ; , nor the acceptance by India of the International Covenant on Civil and Political Rights, makes any change in the prevailing standards of decency and human dignity. The International Covenant does not outlaw capital punishment for murder altogether. [225 C E] (ii) In accordance with the interpretative principle indicated by the Supreme Court in Maneka 's case, Article 21 will read as "No person shall be deprived of his life or personal liberty except according to fair, just and reasonable procedure established by valid law" or in its converse positive form as "A person may be deprived of his life or personal liberty in accordance with fair, just and reasonable procedure established by valid law. " Article 21, thus, clearly 150 brings out the implication, that the Founding Fathers recognised the right of the State to deprive a person of his life or personal liberty in accordance with fair, just and reasonable procedure established by valid law. In view of the constitutional provisions Entries 1 and 2 in List III Concurrent List of Seventh Schedule Articles 72 (1) (c), 161 and 134 it cannot be said that death penalty under section 302, Penal Code, per se or because of its execution by hanging, constitutes an unreasonable, cruel or unusual punishment. By reason of the same constitutional postulates, it cannot be said that the framers of the Constitution considered death sentence for murder or the prescribed traditional mode of its execution as a degrading punishment which would defile "the dignity of the individual" within the contemplation of the Preamble to the Constitution. On parity of reasoning, it cannot be said that death penalty for the offence of murder violates the basic structure of the Constitution. [222 E H, 223 A B, F H] (iii) Clauses (1) and (2) of Article 6 of the International Covenant on Civil and Political Rights do not abolish or prohibit the imposition of death penalty in all circumstances. All that they require is that, firstly, death penalty shall not be arbitrarily inflicted; secondly, it shall be imposed only for most serious crimes in accordance with a law which shall not be an ex post facto legislation. Thus, the requirements of these clauses are substantially the same as the guarantees or prohibitions contained in Articles 20 and 21 of our Constitution. India 's commitment, therefore, does not go beyond what is provided in the Constitution and the Indian Penal Code and the Criminal Procedure Code. The Penal Code prescribes death penalty as an alternative punishment only for heinous crimes which are not more than seven in number. Section 354 (3) of the Criminal Procedure Code, 1973 in keeping with the spirit of the International Covenant, has further restricted the area of death penalty. India 's penal laws, including the impugned provisions and their application, are thus entirely in accord with its international commitment. [224 G H, 225 A C] 8. The procedure provided in Criminal Procedure Code for imposing capital punishment for murder and some other capital crimes under the Penal Code cannot, by any reckoning, be said to be unfair, unreasonable or unjust. Nor can it be said that this sentencing discretion, with which the Courts are invested, amounts to delegation of its power of legislation by Parliament. The impugned provisions do not violate Articles 14, 19 and 21 of the Constitution. [238 B, G H, 239 A B] Section 235 (2) of the Code of Criminal Procedure makes not only explicit what according to the decision in Jagmohan 's case was implicit in the scheme of the Code, but also bifurcates the trial by providing two hearings, one at the preconviction stage and another at the pre sentence stage. And, section 354 (3) of the Code marks a significant shift in the legislative policy underlying the Code, 1898, as in force immediately before April 1, 1974, according to which both the alternative sentences of death or imprisonment for life provided for murder and for certain other capital offences under the Penal Code, were normal sentences. Now, according to this changed legislative policy which is patent on the face of section 354 (3), the normal punishment for murder and six other capital offences under the Penal Code is imprisonment for life (or imprisonment for a term of years) and death penalty is an exception. [229 F G, A B] 151 Although sub section (2) of section 235 of the Code does not contain a specific provision as to evidence and provides only for hearing of the accused as to sentence, yet it is implicit in this provision that if a request is made in that behalf by either the prosecution or the accused, or by both, the Judge should give the party or parties concerned an opportunity of producing evidence or material relating to the various factors bearing on the question of sentence. [230 E F] Jagmohan Singh vs State of U.P., ; , reiterated. Santa Singh vs State of Punjab, AIR 1973 SC 2385, referred to. The expression "special reasons" in the context of section 354 (3) obviously means "exceptional reasons" founded on the exceptionally grave circumstances of the particular case relating to crime as well as criminal. Thus, the legislative policy now writ large and clear on the face of section 354 (3) is that on conviction of murder and other capital offences punishable in the alternative with death under the Penal Code, the extreme penalty should be imposed only in extreme cases. [236 C D] Balwant Singh vs State of Punjab, , referred to. Section 235 (2) of the Code provides for a bifurcated trial and specifically gives the accused person a right of pre sentence hearing, at which stage, he can bring on record material or evidence, which may not be strictly relevant to or connected with the particular crime under inquiry, but nevertheless have, consistently with the policy underlined in section 354 (3), a bearing on the choice of sentence. The present legislative policy discernible from section 235(2) read with section 354(3) is that in fixing the degree of punishment or making the choice of sentence for various offences, including one under section 302, Penal Code, the Court should not confine its consideration "principally" or "merely" to the circumstances connected with the particular crime, but also give due consideration to the circumstances of the criminal. [237 C E] 11. The Supreme Court should not venture to formulate rigid standards in an area in which the Legislature so warily treads. Only broad guidelines consistent with the policy indicated by the Legislature can be laid down. But this much can be said that in order to qualify for inclusion in the category of "aggravating circumstances" which may form the basis of "special reasons" in section 354(3), circumstances found on the facts of a particular case, must evidence aggravation of an abnormal or special degree. [243 E F, 254 B C] Gurbakash Singh Sibbia and Ors. vs State of Punjab, [1980] 3 SCR p. 383, applied. Hyman and Anr. vs Rose, , referred to. Sections 354 (3) and 235 (2) and other related provisions of the Code of 1973 make it clear that for making the choice of punishment or for ascertaining 152 the existence or absence of "special reasons" in that context, the Court must pay due regard both to the crime and the criminal. What is the relative weight to be given to the aggravating and mitigating factors, depends on the facts and circumstances of the particular case. More often than not, these two aspects are so intertwined that it is difficult to give a separate treatment to each of them. This is so because "style is the man. " In many cases, the extremely cruel or beastly manner of the commission of murder is itself a demonstrated index of the depraved character of the perpetrator. That is why, it is not desirable to consider the circumstances of the crime and the circumstances of the criminal in two separate water tight compartments. In a sense, to kill is to be cruel and therefore all murders are cruel. But such cruelty may vary in its degree of culpability. And it is only when the culpability assumes the proportion of extreme depravity that "special reasons" can legitimately be said to exist. [251 G H, 252 A C] Rajendra Prasad vs State of U.P. [1979] 3 SCR p. 78, Bishnu Deo Shaw vs State of West Bengal, [1979] 3 SCR p. 355, overruled. There are numerous other circumstances justifying the passing of the lighter sentence, as there are countervailing circumstances of aggravation. "We cannot obviously feed into a judicial computer all such situations since they are astrological imponderables in an imperfect and undulating society." Nonetheless, it cannot be over emphasised that the scope and concept of mitigating factors in the area of death penalty must receive a liberal and expansive construction by the courts in accord with the sentencing policy writ large in section 354 (3). Judges should never be blood thirsty. Hanging of murderers has never been too good for them. Facts and figures, albeit incomplete, furnished by the Union of India, show that in the past, Courts have inflicted the extreme penalty with extreme infrequency a fact which attests to the caution and compassion which they have always brought to bear on the exercise of their sentencing discretion in so grave a matter. It is, therefore, imperative to voice the concern that Courts, aided by the broad illustrative guidelines indicated by the Supreme Court, will discharge the onerous function with evermore scrupulous care and humane concern, directed along the highroad of legislative policy outlined in section 354 (3), viz., that for persons convicted of murder life imprisonment is the rule and death sentence an exception. A real and abiding concern for the dignity of human life postulates resistance to taking a life through law 's instrumentality. That ought Lot to be done save in the rarest of rare cases when the alternative option is unquestionably foreclosed. [255 E H, 256 A C] Per Bhagwati J. (Dissenting) 1:1. Ordinarily, on the principle of stare decisis, Judges would hold themselves bound by the view taken in an earlier case and resist any attempt at reconsideration of the same issue. But, for several weighty and given considerations, the Court can depart from this precedential rule in any particular case. [258 A B] 1:2. The rule of adherence to precedence is not a rigid and inflexible rule of law, but it is a rule of practice adopted by the Courts for the purpose of ensuring uniformity and stability in the law. Otherwise there will be no certainty and predictability in the law, leading to chaos and confusion and in the process 153 destroying the rule of law, and increasing the labour of judges. But this rule of adherence to precedents; though a necessary tool "in the legal smithy," is only a useful servant and can not be allowed to turn into a tyrannous master. If the rule of stare decisis were followed blindly and mechanically, it would dwarf and stultify the growth of the law and affect its capacity to adjust itself to the changing needs of the society. [258 B C, D,E,F] 1:3 There are certain issues which transcend technical considerations of stare decisis and if such an issue is brought before the Court, it would be nothing short of abdication of its constitutional duty for the Court to refuse to consider such issue by taking refuge under the doctrine of stare decisis. The Court may refuse to entertain such an issue like the constitutional validity of death penalty because it is satisfied that the previous decision is correct but it cannot decline to consider it on the ground that it is barred by the rule of adherence to precedents. [259 E G] In the present case, there are two other supervening circumstances which justify, may compel, re consideration of the decision in Jagmohan 's case. The first is the introduction of the new Code of Criminal Procedure in 1973, which by section 354, sub section (3) has made life sentence the rule, in case of offences punishable with death or in the alternative imprisonment for life and provided for imposition of sentence of death only in exceptional cases for special reasons. The second and the still more important circumstance which has supervened since the decision in Jagmohan 's case is the new dimension of Articles 14 and 21 unfolded by the Supreme Court in Maneka Gandhi vs Union of India (1978) 2 SCR 663. This new dimension of Articles 14 and 21 renders the death penalty provided in section 302 of the Indian Penal Code read with section 354(3) of the Code of Criminal Procedure vulnerable to attack on a ground not available at the time when Jagmohan 's case was decided. Furthermore, since Jagmohan 's case was decided, India has ratified two international instruments on Human Rights and particularly the International Covenant on civil and political rights. [259 G H, 260 A D] Jagmohan vs State of U.P. ; , dissented from. State of Washington vs Dawson and Company ; 68 L. Edn. 219 dissenting judgment quoted with approval. Maneka Gandhi vs Union of India, [1978] 2 SCR 663 applied. The constitutional validity of the death penalty provided as an alternative punishment in section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure cannot be sustained. Death penalty does not serve any social purpose or advance any constitutional value and is totally arbitrary and unreasonable so as be violative of Articles 14, 19, and 21 of the Constitution, E] Jagmohan Singh vs State of Uttar Pradesh, ; not followed. 154 2:2 The culture and ethos of the nation as gathered from its history, its tradition and its literature would clearly be relevant factors in adjudging the constitutionality of death penalty and so would the ideals and values embodied in the Constitution which lays down the basic frame work of the social and political structure of the country, and which sets out the objectives and goals to be pursued by the people in a common endeavour to secure happiness and welfare of every member of the society. So also standards or norms set by International organisations and bodies have relevance in determining the constitutional validity of death penalty and equally important in construing and applying the equivocal formulae of the Constitution would be the "wealth of non legal learning and experience that encircles and illuminates" the topic of death penalty. [261 B E] 2:3. The objective of the United Nations has been and that is the standard set by the world body that capital punishment should be abolished in all countries. This normative standard set by the world body must be taken into account in determining whether the death penalty can be regarded as arbitrary, excessive and unreasonable so as to be constitutionally invalid. [268 B C] 2:4. The Constitution of India is a unique document. It is not a mere pedantic legal text but it embodies certain human values, cherished principles, and spiritual norms and recognises and upholds the dignity of man. It accepts the individual as the focal point of all development and regards his material, moral and spiritual development as the chief concern of its various provisions. It does not treat the individual as a cog in the mighty all powerful machine of the State but places him at the centre of the constitutional scheme and focuses on the fullest development of his personality. The several provisions enacted in the constitutions for the purpose of ensuring the dignity of the individual and providing for his material, moral and spiritual development would be meaningless and ineffectual unless there is rule of law to invest them with life and force. [268 C D, G H] 2:5. The rule of law permeates the entire fabric of the Constitution and indeed forms one of its basic features. The rule of law excludes arbitrariness; its postulate is 'intelligence without passion ' and 'reason freed from desire '. Wherever we find arbitrariness or unreasonableness there is denial of the rule of law. "Law" in the context of the rule of law, does not mean any law enacted by the legislative authority, howsoever arbitrary or despotic it may be. Otherwise even under a dictatorship it would be possible to say that there is rule of law, because every law made by the dictator howsoever arbitrary and unreasonable has to be obeyed and every action has to be taken in conformity with such law. In such a case too even where the political set up is dictatorial, it is law that governs the relationship between men and men and between men and the State. But still it is not a rule of law as understood in modern jurisprudence because in jurisprudential terms, the law itself in such a case being an emanation from the absolute will of the dictator, it is in effect and substance the rule of man and not of law which prevails in such a situation. What is a necessary element of the rule of law is that the law must not be arbitrary and irrational and it must satisfy the test of reason and the democratic form of polity seeks to ensure this element by making the framers of the law accountable to the people. [269 A E] 155 2:6. The rule of law has much greater vitality under our Constitution than it has in other countries like the United Kingdom which has no constitutionally enacted Fundamental Rights. The rule of law has really three basic and fundamental assumptions; one is that law making must be essentially in the hands of a democratically elected legislature, subject of course to any power in the executive in an emergent situation to promulgate ordinance effective for a short duration while the legislation is not in session as also to enact delegated legislation in accordance with the guidelines laid down by the legislature; the other is that, even in the hands of a democratically elected legislature, there should not be unfettered legislative power; and lastly there must be an independent judiciary to protect the citizen against excesses of executive and legislative power and we have in our country all these three elements essential to the rule of law. It is plain and indisputable that under our Constitution law cannot be arbitrary or irrational and if it is, it would be clearly invalid, whether under Article 14 or Article 19 or Article 21, whichever be applicable. [275 E H. 276 A B] Minerva Mill 's case ; ; Maneka Gandhi 's case [1978] 2 SCR 621; Airport Authority of India 's case ; ; A.K. Gopalan 's case ; F.C. Mullen 's case ; referred to. The Constitution does not in so many terms prohibit capital punishment. In fact, it recognises death sentence as one of the penalties which may be imposed by law. Apart from Article 21, Clause (C) of Article 72 also recognises the possibility of a sentence of death being imposed on a person convicted of an offence inasmuch as it provides that the President shall have the power to suspend, remit or commute the sentence of any person who is convicted of an offence and sentenced to death. Therefore, the imposition of death sentence for conviction of an offence is not in all cases forbidden by the Constitution. But that does not mean that the infliction of death penalty is blessed by the Constitution or that it has the imprimatur or seal of approval of the Constitution. The Constitution is not a transient document but it is meant to endure for a long time to come and during its life, situations may arise where death penalty may be found to serve a social purpose and its prescription may not be liable to be regarded as arbitrary or unreasonable and therefore to meet such situations, the Constitution had to make a provision and this it did in Article 21 and clause (c) of Article 72 so that, even where death penalty is prescribed by any law and it is otherwise not unconstitutional, it must still comply with the requirement of Article 21 and it would be subject to the clemency power of the President under clause (c) of Article 72. [276 D H, 277 A B] 2:8. From the legislative history of the relevant provisions of the Indian Penal Code and the Code of Criminal Procedure, it is clear that in our country there has been a gradual shift against the imposition of death penalty. Life sentence is now the rule and it is only in exceptional cases, for special reasons, that death sentence can be imposed. The legislature has however not indicated what are the special reasons for which departure can be made from the normal rule and death penalty may be inflicted. The legislature has not given any guidance as to what are those exceptional cases in which, deviating from the normal 156 rule, death sentence may be imposed. This is left entirely to the unguided discretion of the court, a feature, which has lethal consequences so far as the constitutionality of death penalty is concerned. [277 C D, 278 E G] Rajendra Prasad vs State of U.P. , referred to. The problem of constitutional validity of death penalty cannot be appreciated in its proper perspective without an adequate understanding of the true nature of death penalty and what it involves in terms of human anguish and suffering. In the first place, death penalty is irrevocable; it cannot be recalled. It extinguishes the flame of life for ever and is plainly destructive of the right to life, the most precious right of all, a right without which enjoyment of no other rights is possible. If a person is sentenced to imprisonment, even if it be for life, and subsequently it is found that he was innocent and was wrongly convicted, he can be set free. Of course, the imprisonment that he has suffered till then cannot be undone and the time he has spent in the prison cannot be given back to him in specie but he can come back and be restored to normal life with his honour vindicated, if he is found innocent. But that is not possible where a person has been wrongly convicted and sentenced to death and put out of existence in pursuance of the sentence of death. In his case, even if any mistake is subsequently discovered, it will be too late, in every way and for every purpose it will be too late, for he cannot be brought back to life. The execution of the sentence of death in such a case makes miscarriage of justice irrevocable. [281 F H, 282 A D] 2:10. Howsoever careful may be the procedural safeguards, erected by the law before death penalty can be imposed, it is impossible to eliminate the chance of judicial error. No possible judicial safeguards can prevent conviction of the innocent. It is indeed a very live possibility and it is not at all unlikely that so long as death penalty remains a constitutionaly valid alternative, the Court or the State acting through the instrumentality of the Court may have on its conscience the blood of an innocent man. [283 D E. G H] 2:11. Judicial error in imposition of death penalty would indeed be a crime beyond punishment. This is the drastic nature of death penalty, terrifying in its consequences, which has to be taken into account in determining its constitutional validity. Death penalty is barbaric and inhuman in its effect, mental and physical upon the condemned man and is positively cruel. Its psychological effect on the prisoner in the Death Row is disastrous. [284 E F] Furman vs Georgia ; ; In Re Kemmler ; ; In Re Medley ; ; quoted with approval. Penological goals also do not justify the imposition of death penalty for the offence of murder. The prevailing standards of human decency are also incompatible with death penalty. The standards of human decency with reference to which the proportionality of the punishment to the offence is required to be judged vary from society to society depending on the cultural and spiritual 157 tradition of the society, its history and philosophy and its sense of moral and ethical values. [302 A B] Moreover, it is difficult to see how death penalty can be regarded as proportionate to the offence of murder when legislatively it has been ordained that life sentence shall be the rule and it is only in exceptional cases for special reasons that death penalty may be imposed. It is obvious from the provision enacted in section 354 (3) of the Code of Criminal Procedure that death sentence is legislatively regarded as disproportionate and excessive in most cases of murder and it is only in exceptional cases that it can at all be contended that death sentence is proportionate to the offence of murder. But, then the legislature does not indicate as to what are those exceptional cases in which death sentence may be regarded as proportionate to the offence and, therefore, reasonble and just. Death penalty cannot be regarded as proportionate to the offence of murder, merely because the murder is brutal, heinous or shocking. The nature and magnitude of the offence or the motive and purposes underlying it or the manner and extent of its commission cannot have any relevance to the proportionality of death penalty to the offence. [304 H, 305 A D, 306 D E] 2:13 The historical course through which death penalty has passed in the last 150 years shows that the theory that death penalty acts as a greater deterrent than life imprisonment is wholly unfounded. Even the various studies carried out clearly establish beyond doubt that death penalty does not have any special deterrent effect which life sentence does not possess and that in any event there is no evidence at all to suggest that death penalty has any such special deterrent effect. [316 A, 321 G H] 2:14. Death penalty as provided under section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure, 1973 does not sub serve any legitimate end of punishment, since by killing the murderer it totally rejects the reformation purpose and it has no additional deterrent effect which life sentence does not possess and it is therefore not justified by the deterrence theory of punishment. Though retribution or denunciation is regarded by some as a proper end of punishment, it cannot have any legitimate place in an enlightened philosophy of punishment. Therefore, death penalty has no rational penological purpose and it is arbitrary and irrational and hence violative of Articles 14 and 21 of the Constitution. [340 D F] 2:15. On a plain reading of section 302 of the Indian Penal Code which provides death penalty as alternative punishment of murder it is clear that it leaves it entirely to the discretion of the Court whether to impose death sentence or to award only life imprisonment to an accused convicted of the offence of murder. Section 302 does not lay down any standards or principles to guide the discretion of the Court in the matter of imposition of death penalty. The critical choice between physical liquidation and life long incarceration is left to the discretion of the Court and no legislative light is shed as to how this 158 deadly discretion is to be exercised. The court is left free to navigate in an unchartered sea without any compass or directional guidance. [341 A C] 2:16. Actually section 354 (3) of the Criminal Procedure Code makes the exercise of discretion more difficult and uncertain. It is left to the Judge to grope in the dark for himself and in the exercise of his unguided and unfettered discretion decide what reasons may be considered as 'special reasons ' justifying award of death penalty and whether in a given case any such special reasons exist which should persuade the Court to depart from the normal rule and inflict death penalty on the accused. There being no legislative policy or principle to guide the Court in exercising its discretion in this delicate and sensitive area of life and death, the exercise of discretion of the Court is bound to vary from judge to judge. What may appear as special reasons to one judge may not so appear to another and the decision in a given case whether to impose the death sentence or to let off the offender only with life imprisonment would, to a large extent, depend upon who is the judge called upon to make the decision. The reason for his uncertainty in the sentencing process is two fold. Firstly, the nature of the sentencing process is such that it involves a highly delicate task calling for skills and talents very much different from those ordinarily expected of lawyers. Even if considerations relevant to capital sentencing were provided by the legislature, it would be a difficult exercise for the judges to decide whether to impose the death penalty or to award the life sentence. But without any such guidelines given by the legislature, the task of the judges becomes much more arbitrary and the sentencing decision is bound to vary with each judge. Secondly, when unguided discretion is conferred upon the Court to choose between life and death, by providing a totally vague and indefinite criterion of 'special reasons ' without laying down any principles or guidelines for determining what should be considered to be 'special reasons ', the choice is bound to be influenced by the subjective philosophy of the judge called upon to pass the sentence and on his value system and social philosophy will depend whether the accused shall live or die. No doubt the judge will have to give 'special reasons ' if he opts in favour of inflicting the death penalty, but that does not eliminate arbitrariness and caprice, firstly because there being no guidelines provided by the legislature, the reasons which may appeal to one judge as 'special reasons ' may not appeal to another, and secondly, because reasons can always be found for a conclusion that the judge instinctively wishes to reach and the judge can bona fide and conscientiously find such reasons to be 'special reasons '. It is now recognised on all hands that judicial conscience is not a fixed conscience; it varies from judge to judge depending upon his attitudes and approaches, his predilections and prejudices, his habits of mind and thought and in short all that goes with the expression "social philosophy". Further, the various decisions in which special reasons have been given singly and cumulatively indicate not merely that there is an enormous potential of arbitrary award of death penalty by the High Court and the Supreme Court but that, in fact, death sentence have been awarded arbitrarily and freakishly. [341 G, E H, 342 E H. 343 A B, 353 E F] 2:17. But where the discretion granted to the Court is to choose between life and death without any standards or guide lines provided by the legislature, 159 the death penalty does become arbitrary and unreasonable. The death penalty is qualitatively different from a sentence of imprisonment. Whether a sentence of imprisonment is for two yeaes or five years or for life, it is qualitatively the same, namely, a sentence of imprisonment, but the death penalty is totally of different. It is irreversible; it is beyond recall or reparation; it extinguishes life. It is the choice between life and death which the court is required to make and this is left to its sole discretion unaided and unguided by any legislative yardstick to determine the choice. [356 G H. 357 A B] 2:18. The only yardstick which may be said to have been provided by the legislature is that life sentence shall be the rule and it is only in exceptional cases for special reasons that death penalty may be awarded, but it is no where indicated by the legislature as to what should be regarded as 'special reasons ' justifying imposition of death penalty. The awesome and fearful discretion whether to kill a man or to let him live is vested in the Court and the Court is called upon to exercise this discretion guided only by its own perception of what may be regarded as 'special reasons ' without any light shed by the legislature. It is difficult to appreciate how a law which confers such unguided discretion on the Court without any standards or guidelines on so vital an issue as the choice between life and death can be regarded as constitutionally valid. [357B D] 2:19. Death penalty in its actual operation is discriminatory, for it strikes mostly against the poor and deprived sections of the community and the rich and the affluent usually escape from its clutches. This circumstance also adds to the arbitrary and capricious nature of the death penalty and renders it unconstitutional as being violative of Articles 14 and 21. [366G H] 3:1. When a law is challenged on the ground that it imposes restrictions on the freedom guaranteed by one or the other sub clause of clause (1) of Article 19 and the restrictions are shown to exist by the petitioner, the burden of estabilshing that the restrictions fall within any of the permissive clauses (2) to (6) which may be applicable, must rest upon the State. The State would have to produce material for satisfying the Court that the restrictions imposed by the impugned law fall with the appropriate permissive clause from out of clauses (2) to (6) of Article 19 Of course there may be cases where the nature of the legislation and the restrictions imposed by it may be such that the Court may, without more, even in the absence of any positive material produced by the State, conclude that the restrictions fall within the permissible category, as for example, where a law is enacted by the legislature for giving effect to one of the Directive Principles of State Policy and prima facie, the restrictions imposed by it do not appear to be arbitrary or excessive. Where such is the position, the burden would again shift and it would be for the petitioner to show that the restrictions are arbitrary or excessive and go beyond what is required in public interest. But once it is shown by the petitioner that the impugned law imposes restrictions which infringe one or the other sub clause of clause (1) of Article 19, the burden of showing that such restrictions are reasonable and fall within the permissible category must be on the State and this burden the State may discharge either by producing socio economic data before the Court or on consideration of the provisions in the impugned 160 law read in the light of the constitutional goals set out in the Directive Principles of State Policy. The test to be applied for the purpose of determining whether the restrictions imposed by the impugned law are reasonable or not cannot be cast in a rigid formula of universal application. 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, the value of human life. the disproportion of the imposition, the social philosophy of the Constitution and the prevailing conditions at the time would all enter into the judicial verdict. And in evaluating such elusive factors and forming his own conception of what is reasonable in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judge participating in the decision would play a very important part. [293 G H, 294 A G] State of Madras vs V.J. Row ; Shagir Ahmed vs State of U.P. ; followed. Khyerbari Tea Co. vs State of Assam ; ; B. Banerjee vs Anita Pan ; ; Ram Krishna Dalmia vs S.R. Tandolkar & Ors. ; ; State of Bombay vs R.M.D. Chamarbaugwala ; ; Mohd. Hanif vs State of Bihar ; ; discussed and distinguished. Pathumma vs State of Kerala ; referred to. The position in regard to onus of proof in a case where the challenge is under Article 21 is much clearer and much more free from or doubt or debate than in a case where the complaint is of violation of clause (1) of Article 19. Wherever there is deprivation of life, i.e. not only physical existence, but also use of any faculty or limb through which life is enjoyed and basic human dignity, or of any aspect of personal liberty, the burden must rest on the State to establish by producing adequate material or otherwise that the procedure prescribed for such deprivation is not arbitrary but is reasonable, fair and just. Where therefore a law authorises deprivation of the right to life, the reasonableness, fairness and justness of the procedure prescribed by it for such deprivation must be established by the State. The burden must lie upon the State to show that death penalty is not arbitrary and unreasonable and serves a legitimate social purpose, despite the possibility of judicial error in convicting and sentencing an innocent man and the brutality and pain, mental as well as physical, which death sentence invariably inflicts upon the condemned prisoner. The State must place the necesary material on record for the purpose of discharging this burden which lies upon it and if it fails to show by presenting adequate evidence before the Court or otherwise that death penalty is not arbitrary and unreasonable and does serve a legitimate social purpose, the imposition of death penalty under section 302 of the Indian Penal Code read with section 354 sub section (3) of the Code of Criminal Procedure would have to be struck down as violative of the protection of Article 21. [295 A C, 296 D E] 3:3. There is a presumption in favour of the constitutionality of a statute and the burden of showing that it is arbitrary or discriminatory lies upon the petitioner, because it must be presumed that the legislature understands and 161 correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It would be a wise rule to adopt to presume the constitutionality of a statute unless it is shown to be invalid. But this rule is not a rigid inexorable rule applicable at all times and in all situations. There may conceivably be cases where having regard to the nature and character of the legislation. the importance of the right affected and the gravity the injury caused by it and the moral and social issue involved in the determination, the Court may refuse to proceed on the basis of presumption of constitutionality and demand from the State justification of the legislation with a view to establishing that it is not arbitrary or discriminatory. [296 G H, 298 C E] The burden rests on the State to establish by producing material before the Court or authorities, that death penalty has greater deterrent effect than life sentence in order to justify its imposition under the law. If the State fails to discharge this burden which rests upon it, the Court would have to hold that death penalty has not been shown to have greater deterrent effect and it does not therefore serve a rational legislative purpose. [315 F H]

: Criminal Appeal No. 126 of 1977. Appeal by Special Leave from the Judgment and Order dated the 12 1 1976 of the Punjab and Haryana High Court in Crl. A. No. 583/ 72 R.N. Sachthey and H.S. Marwah for the Appellant. 595 Hardyal Hardy and S.K. Sabbarwal for Respondent. The Judgment of the Court was delivered by SARKARIA, J. This appeal by the State is directed against a judgment of the Punjab and Haryana High Court setting aside the conviction of the respondent herein in respect of offences under ss.5(2) read with s.5(1)(d) of the Prevention of Corruption Act, 1947 and 161, Penal Code on the sole ground that the sanction for his prosecution had not been accorded by a competent authority. N.C. Tandon, respondent Was a civilian in the defence service in the rank of temporary Superintendent Building and Roads, Grade I. It was alleged that he had accepted illegal gratification of Rs. 300/ from one Brij Bhushan Lal, Con tractor on 11 3 1971 as a motive or reward for doing an official act. The Contractor was at the material time doing the construction of main sewers in Chandigarh Cantonment near Panchkula. The respondent 's duty was to supervise that construction. The respondent, it is alleged, demanded the bribe as a reward for recording correct measurements. Brij Bhushan Lal did not, in fact, want to pay the gratifi cation. He therefore informed the Special Police Establish ment authorities who on 10 11 1971 trapped the accused and allegedly recovered the tainted money from his possession. The sanction for the prosecution of the accused was accorded by Brig. Naresh Prasad, Chief Engineer, North Western Zone, Chandigarh on 24 6 1971. The Special Judge, Ambala tried and convicted the accused on the aforesaid charges and sentenced him to one year 's rigorous imprison ment and a fine of Rs. 1,000/ . Tandon appealed to the High Court. The appeal was heard by a learned Single Judge who held that on 24 6 1971, when Brig. Naresh Prasad Chief Engineer, North Western Zone passed the order of sanction for prosecution, he had under the relevant Rules, no plenary or delegated power to appoint to a post in Class III Service and that such a power was delegated to Chief Engineers of Zones for the first time on 14 1 1972. The learned Judge noted that the authority competent to appoint the accused respondent on 24 6 71, was the Chief Engineer Western Command, Simla, and not the Zonal Chief Engineer. He therefore concluded that the sanction for prosecution of the accused had not been given by the compe tent authority. On this short ground, the High Court al lowed Tandon 's appeal, without going into the merits of the case. At the outset, we may notice the general principles which govern the sanction for prosecution in such cases. Sub section(1) of section 6 of the Prevention of Corruption Act says: "No court shall take cognizance of an offence punishable under section 161 (or sec. 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 of the authorities enumerat ed in clauses (a) (b) and (c) of that section. " 596 Sub section (2) of the section provides: "Where for any reason whatsoever any doubt arises whether the previous sanction as required under sub section (1) should be given by the Central or State Government or any other authority, such sanction ' shall be given by that Government or authority "which would have been competent to remove the public servant from his office at the time when the Offence was alleged.to have been committed." (emphasis added) Thus the test as indicated in this sub section, for judging the competency of the authority giving the sanction is, whether at the time of the alleged commission of the offence, it had the power to remove the public servant from his office. Another principle to be borne in mind is, that unless a different intention appears, the power to appoint to an office includes the power to dismiss or remove from that office (vide section 16, General Clauses Act). We may further clear the ground and have a short, swift look at the relevant statutory rules. It is common ground that the post of Superintendent, Grade I (B & R) which the accused was temporarily holding, is a post of Class Iii Services, and the members of this Service are governed by Central Civil Services (Classification, Control and Appeal) Rules, 1965 (for short, hereinafter called 1965 Rules). The 1965 Rules were promulgated on November 20, 1965. Rule 34 of the 1965 Rules repealed the earlier Rules of 1952 and any notification or orders issued thereunder "in so far as they are inconsistent with (the 1965 Rules)". One of the provisions of the 1952 Rules, which is relevant for our purpose, and which has substantially been repro duced in the 1965 Rules, is Rule 10. It reads as under: "10. All first appointments to Class I and Class II Services shall be made by the Govern ment. All first appointments to Class III and Class IV services shall be made by the author ities specified in column 3 of Schedule IV in respect of posts mentioned against them or by officers empowered in this behalf by such authorities." (emphasis added). schedule IV reffered to in the rule ran as follows: "Schedule IV (Vide Rules, 10, 11, 12, 14 and 19). Posts Appointing Auth Authority em No. orities in respect powered to im of Class III and pose penalties Class IV posts (i),(ii),(iv) (vide rule 10) and (v) of rule 13 for Class II officers (Vide r. 14) 1 to 7 . . Posts in lower for E in C C. Es. of the mation under E in C 's Commands. Branch X X X." 597 The former Rule 10 as recast into Rule 9 of the 1965 Rules reads as below: "9(1) All appointments to Central Civil Services (other than General Civil Service) Class II, Class. III and Class IV shall be made by the authorities specified in this behalf in the Schedule. Provided that in respect of Class III and Class IV Civilian Services, or civil ian posts in the Defence Services appointments may be made by officers powered in this behalf by the aforesaid authorities. (emphasis added) (2) All appointments to the Central Civil Posts,Class II, Class III and Class IV includ ed in the General Central Civil Service shall be made by the authorities specified in this behalf by a general or special order made, by the authorities specified in this behalf in the Schedule. " It may be noted that both under the old Rule 10 and the Proviso to new Rule 9(1), the appointing authority is compe tent to delegate the power of appointment in respect of Class III Service. Rule 13 enumerated these penalties which could be im posed upon the servants subject to the Rules: (i) Censure. (ii) Withholding of increments or promotion. (iii) Reduction to a lower post or time scale or to a lower stage in a time scale. (iv) Recovery from pay of the whole or part of any pecuniary loss caused to Government by negligence or breach of orders (v) Suspension. (vi) Removal from the civil service of the Government, which does not disqualify from future employment. (Vii) Dismissal from the civil service of the Government which ordinarily disqualifies from future employment. (viii) Compulsory retirement . " Rule 14 of 1952 Rules specified who could impose these penalties. It provided : "14(1) Any of the penalties specified in rule 13 may be imposed on any person subject to these rules by the Government or by the appointing authority. 598 (2) Without prejudice to the provisions of sub rule (1), any of the penalties specified in clauses (i), (ii), (iv) or (v) of rule 13 may be imposed. (a) . . (b) in the case of members of Class III and IV services by the authority empowered in this behalf by the appointing authority. Explanation. In this rule the expression "appointing authority" includes an officer empowered under Rule 10 to make first appoint ments to Class III and Class IV Services. " Rules 11 and 12 of the 1965 Rules correspond to Rules 13 and 14 of 1952 in all material aspects, excepting two, namely, (1) Suspension has been taken out of the category of penalties, and (2) the Explanation appended to Rule 14 has been omitted because in the 1965 Rules, the subject matter of that Explanation has been made a part of the definition of "Appointing Authority" given in Rule 2(a). The main submission of Mr. Sachthey learned Counsel for the appellant is that by an order communicated per letter, dated 27 4 1956, made under Rule 10 of the 1956 Rules, (.subsequently reiterated in letter dated 23 1 1963) the Engineer in Chief had empowered all Chief Engineers in Military Engineering Service to make first appointments, inter alia, to posts in Class III Service, and that the operation of the aforesaid order was preserved and contin ued by the saving clause in Rule 34(1) of the 1965 Rules. On these premises, it is maintained, that the High Court was wrong in holding that the Chief Engineer of the North Western Zone, Chandigarh. was not the 'appointing authority competent to remove the accused from service. As against this, Mr. Hardyal Hardy, learned Counsel for the respondent submits that the order, dated 27 4 56, ex pressly delegates the power of making first appointments. only to the Chief Engineers of the three Commands, then in existence, and to the other authorities specified therein. It is pointed out that in 1956 when this order was made, there were no Zonal Chief Engineers which came into exist ence on reorganization in December 1962, as a class apart, working under the orerail administrative control of the Chief Engineers of Commands. The point pressed into argu ments is that a general delegation of the power in favour of Chief Engineers of Commands, as a class, cannot, by any reckoning, amount to a delegation in favour of the Zonal Chief Engineers, also, working under the control of the Chief Engineers of Commands. Mr. Hardy has further submitted that the letter dated 23 1 1963 has not been issued under the signature of the Engineer in Chief, nor can it, by any stretch of language, be construed as a delegation of the power of appointment under Rule 10. In the alternative, it is submitted the power delegated by the Engineer in Chief to the Chief Engineers was a qualified one inasmuch as no power was given to them to dismiss 599 or remove a Government servant of Class III Service. It is maintained that by the aforesaid letter, the Chief Engineers were empowered to impose only minor penalties other than that of dismissal and removal. It is urged, in view of this restricted delegation in the matter of inflicting. penalties, it cannot be said that on the principle underly ing Sec. 16 of the General Clauses Act power of appointment will automatically include the power to remove the person appointed from his office. In reply, Mr. Sachthey has pointed out that the fetter placed on the power given to the Chief Engineers by the letter dated 27 4 56, in the matter of removal or dismissal of Class III servants, operates only in case of persons appointed by the Engineer in Chief, and not where he was appointed by the Chief Engineer of a Command. It is pointed out that in the instant case, the accused was appointed not by E in C but by the Chief Engineer, Western Command, Simla. The main question that falls to be considered is whether the E in C 's order communicated through letter, dated 27 4 1956, can be construed as a valid delegation of the power of appointment tO posts in Class III Service to Zonal Chief Engineers, which came into existence on re organization in December, 1962 ? The material part of this letter reads as under: "TO The Chief Engineer, Southern Command, Poona Eastern Command, Lucknow Western Command, Simla X X X Subject: Civilians in DefenCe Services (Classification, Control and Appeal Rules, 1962). With reference to Rule 10 of the Civilians in Defence Services (Classification, Control and Appeal) Rules, 1962, I hereby authorise the authorities mentioned hereunder to make first appointments to Class III and IV Services to the extent indicated below: Authority Posts (a) Chief Engineers . . All posts with the excepetion of per (b) CWO, NDES . . manent appointments to the following categories: (i) Superintendent, B/R Grade I. * * * 2. Under Rule 14(b) of CDS (CC&A) Rules, 1952 the under mentioned authorities are empowered to impose penalties referred to in Rule 13 ibid, to the extent indicated below : (a) Chief Engineers and Penalties at (i), (ii), (iv) and (v) of Rule 13 on Class III employees in respect of whom E in C is the appoint ing authority," 600 A perusal of this letter will show that it is (among others) addressed to the Chief Engineers, Southern Command, Eastern Command, Lucknow, and Western Command, Simla. On the date of this letter there were only three Commands; two commands were created subsequently. There were no Zones or Zonal Chief Engineers at that time. Therefore, the Chief Engineers to whom the powers have been delegated under this letter could only be the Chief Engineers of the Commands, as a class. Since the delegation has been to the Chief Engi neers of the Commands, as a class, it will cover the Chief Engineers of these Commands, also, which were subsequently created. But, the question is will it take in Chief Engi neer of Zones and amount to a delegation of power in their favour, too, on their creation six years later in 1962 ? Answer to this question will depend on whether the Chief Engineers of Zones belong to the same class holding the same rank and exercising same administrative powers and control as the Chief Engineers of Commands ? At the final hearing, we had asked Shri Sachthey, to make available to us the official order, regulations and like material throwing light on this aspect of the problem From the material furnished by him, it appears that the decision to reorganize the Military Engineering Service was taken by the Government in December, 1962. Pursuant to that deci sion, the Zones were created and Engineering Services in each Zone were placed under the charge of a Chief Engineer, of that Zone. Chandigarh area was also made North Western Zone, for this purpose. This reorganisation took effect from January 1, 1963. The main object of creation of Zonal Chief Engineers as stated in C in C 's letter No. 66161/II/E2A, dated 13 12 1962, was to "effect maximum possible decentralisation and thereby achieve speed and efficiency in the planning and execution of work services. " As is apparent from the letter dated 22/26 12 1962 from the Engineer in Chief, the Zonal Chief Engineers have to work "under the command and technical control of CEs Com mands for the planning and execution of works. " E in C 's letter, No. 6161/II/E2A, dated December 13, 1962 addressed to the Chief Engineers, Commands and others, also, makes it clear that under the re organized set up, "C.E. located at each Command H.Q. will be responsible for all engineer matters in the Command, administration and training of engineer troops and for the coordination of works. Under the Command and technical control of this Chief Engineer there will be number of CEs/CSWE. on zonal basis. " These two letters unmistakably show that the zonal Chief Engineers are a class apart from the Chief Engineers of Com mands. Although extensive financial powers have been dele gated to the Zonal Chief Engineers, which are almost the same as that of the Chief Engineers of the Commands, the fact remains that they are under the overall administrative control of the Chief Engineer of the Commands concerned. 601 In this view of the matter the scope of the delegation of the powers made under the letter dated 27 4 1956, must be construed as a delegation only to the Chief Engineers of Commands, as distinguished from the Chief Engineers of Zones which were then not even in embryo. This takes us to the letter dated January 23, 1963 from the Army H.Qrs., E in C 's Branch. In the first place, this letter is not signed by the E in C. It appears to have been signed by some other person "for E in Chief"; secondly it does not purport to have been issued pursuant to any sepa rately passed order of the E in C expressly delegating under Rule 10, the powers of appointment to posts in Class III Service. The opening sentence of this letter, no doubt, refers to HQ Letters No. 66161/II E2A, dated 8 Dec. 1962, para 4 and even No. of 22 Dec. 1962, which we have already noticed. There is nothing in them which delegates the powers of appointment to any posts to the Zonal Chief Engi neers. On the contrary, para 8 of this letter says "All Class III and IV personnel will be provided by the Command CE and will continue to be borne on the strength of that Command for purposes of (a) All documentation (b) Temporary promotion (c) Permanency (d) Retrenchment and reversion (e) Pension progress by the Unit but overall control by the Command CE." (Emphasis added) Mr. Sachthey has placed great stress on para 12 of this letter which says: "The normal powers of Chief Engineer in all matters relating to appointments, punish ments etc. vest with each Zonal Chief Engi neer in accordance with this HQ letter No. 27304/ELD(2) dated 27th April 1956. In exer cising these powers it will be necessary to consult CE Command prior to recruitment and replacements. " The argument advanced on behalf of the appellant is that the very authority that had issued the letter dated April 27, 1956 has construed it as delegating the powers of ap pointment, punishment etc. to the Zonal CEs. also, and therefore, the Court should accept that interpretation. We are unable to accept this argument. We have already pointed out that this letter, dated 23 1 63, has not been issued under the signature of the same authority from which the order, dated 27 4 56, had emanated. It does not ex facie show that any order, apart from that dated 27 4 56, had been passed by the Engineer in Chief under Rule 10. For reasons given earlier, we have no hesitation in holding that the assumption made in Paragraph 12 of this letter ex tracted above, to the effect that the Zonal Chief Engineers were vested with powers of appointments, punishments etc. in accordance with H.Q. letter dated 27 April 1956 was clearly incorrect, Perhaps, that was why on 14 1 1972, the necessity of making a proper order delegating such powers to Zonal Chief Engineers and others, under Rule 9 was felt by the Engineer in Chief. 602 No other order of the Engineer in Chief made prior to 24 6 1971 under Rule 10 of 1952 Rules or under Rule 9(1) of the 1965 Rules delegating the power of appointment to posts in Class III Services, has been placed before us. We have therefore no alternative but to hold that on 24 6 1971, Brig. Naresh Prasad, Zonal Chief Engineer, North Western Zone, Chandigarh, was not competent to remove the accused respondent, Tandon, from the post of Superintendent, B&R Grade I, Chandigarh and as such, the order sanctioning the prosecution of the respondent was bad in law. In view of this finding, we do not think it necessary to examine the alternative contention advanced by Shri Hardy. The case fails because there is no valid sanction, as re quired by the law. Obviously, this does not preclude a fresh prosecution for the same offence but it is a matter for the State, in the circumstances of the case, to consider whether prosecution should be launched against the respond ent or not. We make this observation only to remove a possible misapprehension. In the result, the appeal fails and is dismissed. P.H.P. Appeal dismissed.

The respondent was convicted for an offence under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act, 1947 and section 161 of the I.P.C. The conviction was set aside by the High Court on the sole ground that the sanction for his prosecution was not accorded by a competent authority. The respondent was a Civilian in the Defence Services in the rank of temporary Superintendent, Building and oRads Grade I. The prosecution case was that he had accepted illegal gratification of Rs. 300/ from one Brij Bhushan Lal,Contractor, as a motive or reward for doing an official act. The sanction for the prosecution of the re spondent was accorded by Brig. Naresh Prasad Chief Engineer, North Western Zone, Chandigarh. The High Court held that Brig. Naresh Prasad had no authority under the relevant rules either plenary or dele gated to appoint a person to a post in class III service at the time when he passed the order for sanction of prose cution. That such a power was delegated to him subsequent ly. The learned Judge held that the authority was the Chief Engineer, Western Command and not the Zonal Chief Engineer. Section 6(1) of the Prevention of Corruption Act pro vides that no Court shall take cognizance of the offence in question alleged to have been committed by a public servant except with the previous sanction of the officer enumerated in clauses (a), (b) and (c) of that section. Sub section 2 of section 6 further provides that where for any reason whatsoever any doubt arises whether the previous sanction as required under sub section (1) should be given by the Central or State Government or any other authority such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed. The appellant contended that by an order communicated by letter dated 27 4 1956 (subsequently reiterated in letter dr. 23 1 1963) made under rule 10 the Engineer in Chief had empowered all Chief Engineers in Military Engg. Service to make first appointments and that the operation of the said order was preserved by the saving clause in rule 34(1) of the 1965 Rules. The appellant further contended that the fetter placed on the power given to the Chief Engineers in the matter of removal or dismissal of Class III servants operates only in case of persons appointed by the Engineer in Chief and not where he was appointed by the Chief Engi neer of a Command. In the present case, the respondent was appointed not by Engineer in Chief but by the Chief Engi neer, Western Command. The respondent contended that the order dated 27 4 1956 expressly delegates the power of making first appointments only to the Chief Engineers of the three commands then in existence and of the 'other departments specified therein. In 1956, when the order was made there were no zonal Chief Enginers, which 594 came into existence in December, 1962 as a class apart working under the overall administrative control of the Chief Engineers of Commands. A general delegation of the power in favour of the Chief Engineers of Commands as a class cannot by any reckoning amount to a delegation in favour of the Zonal Engineers also working under the control of the Chief Engineers of Commands. Secondly, the letter dated 23 1 1963 was not issued under the signature of the Engineer in Chief nor can it be construed as a delegation of the power of appointment under rule 10. Alternatively, the power delegated by the Engineer in Chief to the Chief Engi neers was a qualified one inasmuch as no power was given to them to dismiss or remove a Government servant of Class III service. Dismissing the appeal, HELD: (1 ) Unless a different intention appears the power to appoint to an office includes the power to dis miss or remove from that office as provided in section 16 of General Clauses Act. The post which the respondent was holding is a post of Class III service and the members of the service are governed by Central CiVil Services (Classi fication, Control and Appeal) Rules, 1965. 1965 Rules repeal the earlier 1952 Rules and any notification or orders issued thereunder in so far as they were inconsistent with the 1965 rules. Under rule 10, appointments to Class III and Class IV Civilian Service are to be made by the officers empowered by the Engineer in Chief. Thus the appointing authority is competent to delegate the power of appointment. [596 B, C, G H, 597D] (2) A perusal of the letter dated 27 4 1956 communicat ing the order of the Engineer in Chief shows that it is addressed to the Chief Engineers, Southern Command, Eastern Command and Western Command. On the date of this letter there were only 3 Commands; two Commands were created subse quently. There were no Zones or Zonal Chief Engineers at that time. Therefore, the Chief Engineers to whom the powers have been delegated under this letter could only be the Chief Engineers of the Commands as a class and it would cover Chief Engineers of the Commands which were subsequent ly created. But it would not include the Chief Engineers of Zone. Zonal Chief Engineers have, to work under the Command and technical control of Chief Engineers of Com mands. Zonal Chief Engineers are a class apart from the Chief Engineers of Commands. They are under the administra tive control of the Chief Engineers of Command. Thus the delegation is to the Chief Engineers of Commands and not to the Zonal Chief Engineers. [600 A B, F H 601 A B] (3) The letter dated 23 1 1963 is not signed by the Engineer in Chief. It appears to have been signed by some other person for Engineer in Chief. Nor does it purport to have been issued pursuant to any separately passed order of the Engineer in Chief expressly delegating the powers of appointment to posts in Class III service under Rule 10. There is nothing in the letter to show that the delegation was to the Zonal Chief Engineers. On the contrary, para 8 of the letter talks of the Command Chief Engineers. The way in which the Engineer in Chief has construed the letter is not relevant. [601 G H, 602AB] (4) Brig. Naresh Prasad, Zonal Chief Engineer was not competent to remove the respondent and as such, the order sanctioning the prosecution of the respondent was bad in law. [602 C]

ivil Appeal No. 1466 of 1987. From the Judgment and Order dated 8.12.1986 of the Calcutta High Court in Matter No. 1636 of 1985. A.K. Sen, Shanker Kumar Ghosh and D.P. Mukherjee for the Appellant. S.N. Kacker and G.S. Chatterjee for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Special leave granted. this is an application challenging the order of the learned single judge dated the 8th December, 1986 of the High Court of Calcutta. By the impugned judgment the said learned Judge has set aside the order dated the 19th April, 1983 of anoth er learned single judge on the ground, inter alia, that the first learned Judge, when she passed the order, acted with out 571 jurisdiction. There was an arbitration agreement. Clause 25 of the said Agreement, inter alia, was as follows: "except where otherwise provided in the contract all questions of disputes relating to the granting of specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship and materials used in the work or as to any question claims, rights, matters, or things whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions orders or these conditions or otherwise concerning the work or execution or failure to execute the same where arising during the progress of the work or after completion or abandonment thereof was to be referred to sole arbitration of the Director/Unit Head, C.M.D.A. not connected with the particular work as may be appointed by the authority. The award of the arbitrator shall be final, conclusive and binding on all the parties to the contract. " On that basis the appellant had moved an application for removal of the named arbitrator before the first learned Judge which came up for hearing on 19th April, 1983 and this was by filing of an application under Section 20 of the for an order for filing the arbitration agreement, for appointment of an arbitrator and for other consequential reliefs. By the order,dated 19.4.83 the said learned Judge has recorded the facts of this case and fur ther recorded that by virtue of the Clause 25 of the agree ment the appellant herein and prayed for appointment of an arbitrator for determination of the dispute that had arisen which had been set out in paragraph 15 of the petition. Inasmuch as according to the appellant the directors of all the units of Calcutta Metropolitan Development Authority had already expressed their opinion in respect of the disputes that had arisen between the appellant and the respondent and inasmuch as by the Central Tender Committee, the directors were members. Under the circumstances the appellant appre hended that the appellant might not get justice or proper relief under such circumstances. There was reasonable basis of the apprehension against the unnamed arbitrator, and it was urged that instead of appointing any officer of the respondent as arbitrator an independent member of the Bar be appointed as arbitrator. The learned Judge passed such order on 19th April, 1983 while recording these facts as alleged by the petitioner. These appear to have been reasons for appointing Sri Amitav Guha as the arbitrator in this case in terms of prayer (c) of the said petition. 572 The learned judge in the impugned order has observed that the Court was bound to enforce the particular agreement with which the parties came to the Court, and the parties were not entitled to have any fresh opportunity to appoint a new arbitrator as that would amount to a new agreement between the parties. This position is good in so far as it goes. But that does not solve the problem in all situations. The learned Judge also observed that no appointment can be made by the Court on the ground of disqualification of the arbitrator without having proper materials on record and without coming to a definite finding on this point. The learned Judge further observed that the Court either should have given effect to the agreed machinery for appointment of the arbitrator or it could have appointed afresh after coming to a clear finding that all directors of the Unit of C.M.D.A. were biased against the appellant herein as well as they had rendered themselves disqualified from being ap pointed as arbitrators. Until all of them were found dis qualified, the Court did not have the jurisdiction to ap point any new one and had to follow the correct machinery. It appears that the first learned Judge has in fact held that the arbitrator named had disqualified himself on the ground of bias and on that basis, appointed an outside Advocate, Shri Amitav Guha as the arbitrator. If the re spondents were not satisfied they could have moved an appeal against the order; instead respondents participated in the arbitration proceedings and acquiesced in such appointment. The order was made on 19.4.83 appointing Shri Amitav Guha an advocate of the Calcutta High Court as sole Arbitrator. The arbitrator appointed, started arbitration proceedings in which both the parties submitted to his jurisdiction and filed their respective claims and other documents in support thereof. It appears from the List of Dates submitted before us that respondent No. 1 moved three interlocutory applica tions at different points of time which were, however, disposed of with orders in favour of the appellant. Both parties got extention of the arbitration proceedings even by Hon 'ble Mrs. Justice Pratibha Bonnerjea at least 14 times and the last extention was granted upto November, 1985 by Justice Mrs. Bonnerjea. In the meantime the said Arbitrator had held 74 sittings which were attended by the parties of both sides and their counsel. A large amount of time and money, same at the cost of public have been spent on these. In the year 1985 the respondent No. 1 challenged the validity of the order of appointment of arbitrator passed by first learned judge Where she acted on the basis of the findings mentioned hereinbefore. Can a party be permitted to do that? In Arbn. Jupiter Gener al 573 Insce. Co. Ltd. vs Corporation of Calcutta, at 472) P.B. Mukherji, J. as the learned Chief Justice then was observed: "It is necessary to state at the outset that Courts do not favour this kind of contention and conduct of an applicant who participates in arbitration proceedings without protest and fully avails of the entire arbitration proceedings and then when he sees that the award has gone against him he comes forward to challenge the whole of the arbitration proceedings and without jurisdiction on the ground of a known disability of a party. That view of the Court is ably stated by the Editor of the 15th Edition of Russell on the Law of Arbitration at page 295 in the following terms: 'Although a party may by reason of some disability be legally incapable of submitting matters to arbitration that fact is not one that can be raised as a ground for disputing the award by other parties to a reference who were aware of the disability. If one of the parties is incapable the objection should be taken to the submission. A party will not be permitted to lie by & join in the submission and then if it suits its purpose attack the award on the ground. The presumption in the absence of proof to the contrary will be that the party complaining was aware of the disability when the submission was made. '" Mr. Kacker submitted that this principle could be in voked only in a situation where the challenge is made only after the making of an award, and not before. We are unable to accept this differentiation. The principle is that a party shall not be allowed to blow hot and cold simultane ously. Long participation and acquiescence in the proceeding preclude such a party from contending that the proceedings were without jurisdiction. Russell on Arbitration, 18th Edition,page 105 explains the position as follows: "If the parties to the reference either agree beforehand to the method of appointment, or afterwards acquiescence in the appointment made, with full knowledge of all the circum stances, they will be precluded from objecting to such appointment as invalidating subsequent proceedings. 574 Attending and taking part in the proceedings with full knowledge of the relevant, fact will amount to such acquiescence." The Judicial Committee in decision in Chowdhury Murtaza Hossein vs Mussumat Bibi Bechunnissa, (31.A. 209) observed at page 220: "On the whole, therefore, their Lordships think that the appellant, having a clear knowledge of the circumstances on which he might have founded an objection to the arbitrators proceedings to make their awards, did submit to the arbitration going on; that he allowed the arbitrators to deal with the case as is stood before them, taking his chance of the decision being more or less favourable to himself; and that is too late for him, after the award has been made, and on the application to file the award, to insist on this objection to the filing of the award. " Relying on the aforesaid observations this Court in N. Chellappan vs Secretary, Kerala State Electricity Board and Another, ; , acted upon the principle that acquiescence defeated the right of the applicant at a later stage. In that case the facts were similar. It was held by conduct there was acquiscence. Even in a case where initial order was not passed by consent of the parties a party by participation and acquiescence can preclude future chal lenges. In the grounds of appeal no prejudice has been indicated by the appointment of the second arbitrator. Mr. S.N. Kacker, learned counsel for the respondents drew our attention to the fact that the decision in the Chowdhuri Murtaza Hossein 's case was where the party chal lenged the appointment of the receiver after the award was made. He also submits that in this case the respondents herein had challenged the order of appointment of the arbi trator on 19.4.83 and not after the arbitrator had made the award. We are unable to accept this distinction. Basically the principle of waiver and estoppel is not only applicable where the award had been made but also where a party to the proceeding challenges the proceedings in which he partici pated. In the facts of this case, there was no demur but something which can be called acquiescence on the part of the respondents which precludes them from challenging the participation. 575 In that view of the matter, we are of the opinion that the judgment and impugned order cannot be sustained. In the premises the appeal is allowed. The order and judgment of the High Court dated the 8th December, 1986 are set aside. The arbitration proceedings will go on before the Arbitrator appointed by order dated 19th April, 1983. Time for making the award is extended for four months from today. For fur ther extention of time the party may apply to the High Court of Calcutta. The appeal is disposed of accordingly. The parties will bear their respective costs. P.S.S. Appeal allowed.

Clause 24 of the arbitration agreement between the parties provided for reference of all questions of dispute arising under the contract to the sole arbitration of the Director/Unit Heads of the respondent Authority, not con nected with the particular work. All such officers having already expressed their opinion in respect of the disputes that had arisen, the appellant apprehended that he may not get justice or proper relief. He, therefore, moved an appli cation under section 20 of the for appointment of an independent member of the bar as arbitrator instead of the named officer of the respondent Authority. A Single Judge of the High Court held that the arbitra tor named had disqualified himself on the ground of bias and appointed an outside advocate as the sole arbitrator on April 19, 1983. When arbitration proceedings commenced both the parties submitted to his jurisdiction and filed their respective claims and documents. Upto November 1985 the said arbitrator held 74 sittings which were attended by the parties of both sides and their counsel. Respondent No. 1 had moved three interlocutory applications. Both the parties got extension of arbitration proceedings at least 4 times upto November 1985. Respondent No. 1 challenged the validity of the order of appointment of arbitrator dated April 19, 1983 in the year 1985, when another Single Judge took the view that if the court was bound to enforce the particular agreement with which the parties came to the court, the parties were not entitled to have any fresh opportunity to appoint a new arbitrator as that would amount to a new agreement between the parties. He further observed that no appointment can be made by the Court on the ground of disqualification of the arbitrator without having proper materials on record and without coming to a definite finding on this point. Until then the Court did not have the jurisdiction to appoint 570 any new arbitrator and had to follow the correct machinery. This order of the Single Judge dated December 8, 1986 set ting aside the earlier order dated April 19, 1983 was as sailed in the appeal by special leave. Allowing the appeal, this Court, HELD: Long participation and acquiescence in arbitration proceedings preclude a party from contending that the pro ceedings were without jurisdiction. The principle is that a party shall not be allowed to blow hot and cold simultane ously. [573F] Basically the principle of Waiver and estoppel is not only applicable where the award had been made but also where a party challenges the proceedings in which he participated. In the instant case, there was no demur but something which can be called acquiescence on the part of the respondents or which precludes them from challenging the participation. [574G H] Arbn. Jupiter General Insce. Co. Ltd. vs Corporation of Calcutta, at 472; Chowdhury Murtaza Hossein vs Mussumat Bibi Bechunnissa, 3 I.A. 209; N. Chel lappan vs Secretary, Kerala State Electricity Board & Anr., ; and Russel on Arbitration, 18th Edn. p. 105, referred to.

al from the order dated October 20, 1965 of the Punjab, High Court in Letters Patent Appeal No. 262 of 1965. V. C. Mahajan and R. N. Sachthey, for the appellant. Sobhag Mal Jain and B. P. Maheshwari, for the respondent. The Judgment of the Court was delivered by Shah, J. Sant Singh Kanwarjit Singh hereinafter called the assessee is registered as a dealer under the Punjab General Salestax Act, 1948. The assessee filed returns of the turnover of its business for the quarters ending 30th June, 1962 and 30th September, 1962, but without appending thereto the list of sales to registered dealers as required by rule 30 framed under the Act. The Sales tax Officer proceeded to make "exparte assessments" for the two quarters. The assessee then moved a petition in the High Court of Punjab for a writ quashing the orders of assessment. A single 312 Judge following the Judgment of the Punjab High Court in Mansa Ram Sushil Kumar V. The Assessing Authority, Ludhiana,( ') quashed the orders of assessment. An appeal by the State of Punjab was summarily dismissed by a Division Bench of the High Court. The scheme of levy and assessment of tax under the Act may be briefly noticed. Every dealer whose gross turnover during the year proceeding commencement to the Act exceeded the taxable turnover is liable to pay tax on all sales effected after the quarter after the commencement of the Act. Tax is to be levied on the taxable turnover at such rates as the State Government may direct. Tax is payable under the Act in the manner provided and at such intervals as may be prescribed. section [10(l)]. A registered dealer furnishing a return has to pay the amount of tax due according to the return into the Government Treasury. The assessing authority may without requiring the presence of the registered dealer or production by him of any evidence hold that the returns furnished are correct and complete, and proceed to assess the amount of tax due from the dealer on the basis of these returns; if the assessing authority is not satisfied with the return he may require the registered dealer to remain present in person or by pleader and to produce evidence on which he may rely upon in support of the return. The Assessing authority may after hearing the evidence as the dealer may produce and such other evidence as the Assessing authority may require, assess the amount of tax due from the dealer. The scheme is plain. A registered dealer must file return of the turnover in the manner prescribed and at such intervals as may be prescribed. The dealer while submitting the return has also to pay tax according to the return. The Assessing Officer may accept the return or he may call upon the tax payer to explain the.turnover, and support it by evidence. Under the Act sales tax is a yearly tax, but the provisions relating to assessment contemplate assessments for periods shorter than a complete year, and for that purpose the tax payers are required by the Act to submit periodical returns of their turnover and to pay tax due thereon. In Mansa Ram Sushil Kumar vs The Assessing Authority Ludhiana (1), a Division Bench of the Punjab High Court held that the tax imposed under the Punjab General Sales Tax Act may be assessed only at the end of the year and not during the pendency of the year as and when, the return is filed, and in the absence of machinery in the Act for making Assessment for (1) (1964) 16 S.T.C. 857. 313 period shorter than the year of assessment, the order of assesment of tax for a quarter before the expiry of the assessment year is illegal. In reaching that conclusion the High Court relied upon the judgment of this Court in M/s. Mathura Prasad & Sons vs State of Punjab (1). But in Mathura Prashad 's case( ') this Court considered whether an exemption granted by the State, Government during the course of the year was applicable to the whole or only a part of the year of assessment. This Court held(Mr. Justice Kapur dissenting) that the exemption operated for the entire financial year. The Court observed that the tax was a yearly tax levied on the taxable turnover of a dealer for the year; it was collected in some cases quarterly, some, cases yearly; and proceeded to hold that whenever the exemption came in, in the year for which the tax was payable, it exempted sales throughout the year unless notification fixed the date of commencement of the tax. In our judgment the principle, of that case has no, bearing on the question arising in this case. :The Court in Mathura Prasad 's case( ') merely emphasised that the tax was an annual tax but that did not imply that assessment of tax quarterly was illegal. Adjustment may possibly have to be made when the .assessment of the final quarter is made, but the taxing authorities are not debarred from determining and assessing the quarterly turnover of tax. Mansa Ram 's case (2) has since been over ruled by a full Bench of the Punjab High Court in M/s. Om Parkash Rajinder Kumar vs K. K. Opal (3). The Court in that case held that Sales tax may be assessed under section 1 1 of the Act on the basis of quarterly returns submitted by the dealer pursuant to the notice served on him under sec. 10(3) before the close of the relevant financial year. In our judgment the High Court was right in holding in Mis. Om Parkash Rajinder Kumar 's case (3) that the, assessment proceeding under the Punjab General Sale tax may be started even before the expiry of the year where provision is made for submission of periodical returns, and that such assessments are not provisional. The appeal is allowed and the order passed by the High Court set aside and the petition is dismissed. There will be no order to cost throughout. V.P.S. Petition dismissed. (1) [1962] Supp. 1 S.C.R. 913. (2) {1964] 15 S.T.C. 857. (3) I.L.R. (1967) Vol. & Har, 155.

The assessee, a dealer registered under the Punjab General Sales Tax Act, 1948, filed returns of the turnover of its business for the quarters ending 30th June, 1962 and 30th September, 1962 and the Sales Tax Officer assessed the tax for the two quarters. On the question whether the tax could be assessed only at the end of the year and not during the year, HELD : Under the Act, sales tax is a yearly tax, but that does not imply that assessment of tax quarterly is illegal if provision is made in the Act for quarterly returns and assessment. Since the provisions relating to returns and assessment, namely, sections 10 and I 1, and rule 20, contemplate submission of quarterly returns, assessment of tax due thereon and payment of the tax by the taxpayers, the tax was validly assessed. [313 D, F G] Mathura Prashad & Sons vs State of Punjab, [1962] Supp. 1 S.C.R. 913, explained. Om Prakash Rajinder Kumar vs K. K. Opal, I.L.R. [1967] Vol. 1 Punjab & Haryana 155, approved.

N: Criminal Appeal No. 194 of 1973. Appeal by Special Leave from the Judgment and Order dated 3 4 1973 of the Andhra Pradesh High Court in Criminal Appeal No. 703/71. A. N. Mulla and A. Subba Rao for the Appellant. G. Narayana Rao for the Respondent. The Judgment of the Court was delivered by FAZAL ALL, J. In this appeal by special leave the appellant has been convicted under section 161 I.P.C. and section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act and sentenced to rigorous imprisonment for one year and a fine of Rs. 250/ on each count. 1009 The appellant had been convicted by Special Judge but on appeal by the State to the High Court the High Court reversed the judgment of acquittal and convicted the appellant as indicated above. According to the prosecution the appellant is said to have struck a bargain for taking a bribe of Rs. 125/ which he received on the 15th of July, 1968 in the presence of P.Ws. 1 and 3. On receiving the signal the raiding party appeared on the scene and the hand of the accused was dipped in water containing phenopthelien solution which showed that he touched the notes. The defence of the appellant was that he never demanded any bribe and that the notes were thrust into his pocket. It is not necessary for us to dwell on the merits of the case because, in our opinion, the appeal must succeed on a short point of law, raised by Mr. A. N. Mulla, learned counsel for the appellant. It was argued that the sanction under section 6 of the Prevention of Corruption Act produced in this case does not reveal the facts constituting the offence and, therefore, there is no evidence to show on what materials the sanctioning authority applied its mind and granted the sanction. The Resolution of the Standing Committee granting the sanction is Exh. P 16 and is dated 31 3 1969, and runs as follows: "As per note of the Commissioner, M.C.H. the Standing Committee unanimously accords sanction for prosecution of Sri Mohd. Iqbal Ahmed (in the scale of 110 180) Section Officer of Town Planning Section (Under suspensions) in a competent Court for the offence mentioned in the note of the Commissioner M.C.H., dated 18 1 1969 so as to enable the Commissioner to sign the prosecution order and send it to the Director, Anti Corruption Bureau for taking further action at the earliest". A perusal of the Resolution of the Sanctioning Authority clearly shows that no facts on the basis of which the prosecution was to be sanctioned against the appellant are mentioned in the sanction nor does this document contain any ground on which the satisfaction of the Sanctioning Authority was based and its mind applied. This document merely mentions that the sanction has been given on the basis of a note of the Commissioner, Municipal Corporation which appears to have been placed before the Committee. It is obvious, therefore, that this note, if any, must have come into existence either on 31 3 1969 or at any date prior to this. The prosecution could have proved the facts constituting the offence which were placed before the Sanctioning Authority by producing the note at 1010 the trial. But no such thing has been done. What the prosecution did was merely to examine two witnesses P.Ws. 2 and 7. P.W. 2 has produced the order implementing the Resolution of the Sanction ing Authority which is Exhibit P 10 and is dated 21st April, 1969, that is to say after the sanction was given. This document no doubt contains the facts constituting the offence but that does not solve the legal issues that arise in this case. It is incumbent on the prosecution to prove that a valid sanction has been granted by the Sanctioning Authority after it was satisfied that a case for sanction has been made out constituting the offence. This should be done in two ways; either (1) by producing the original sanction which itself contains the facts constituting the offence and the grounds of satisfaction and (2) by adducing evidence aliunde to show that the facts placed before the Sanctioning Authority and the satisfaction arrived at by it. It is well settled that any case instituted without a proper sanction must fail because this being a manifest difficulty in the prosecution, the entire proceedings are rendered void ab initio. In the instant case no evidence has been led either primary or secondary to prove as to what were the contents of the note mentioned in Exhibit P 16 which was placed before the Sanctioning Authority. The evidence of P.W. 2 or P.W. 7 is wholly irrelevant because they were not in a position to say as to what were the contents of the note which formed the subject matter of the sanction by the Standing Committee of the Corporation. The note referred to above was the only primary evidence for this purpose. Mr. Rao vehemently argued that although the Resolution, Exh. P 16 does not mention the facts, the Court should presume the facts on the basis of the evidence given by P.W. 2 and the order implementing sanction which mentions these facts. This argument is wholly untenable because what the Court has to see is whether or not the Sanctioning Authority at the time of giving sanction was aware of the facts constituting the offence and applied its mind for the same and any subsequent fact which may come into existence after the resolution granting sanction has been passed, is wholly irrelevant. The grant of sanction is not an idle formality or an acrimonious exercise but a solemn and sacrosanct act which affords protection to government servants against frivolous prosecutions and must therefore be strictly complied with before any prosecution can be launched against the public servant concerned. It was next contended by Mr. Rao that in view of the presumption which is to be drawn under section 4 of the Prevention of Corruption Act, even if, no facts are mentioned in the Resolution of 1011 the Sanctioning Authority it must be presumed that the Sanctioning Authority was satisfied that the prosecution against the appellant should be launched on the basis of the presumpion that the accused had received a bribe. With due respects to the learned counsel, this argument seems to be wholly mis conceived. In the first place, there is no question of the presumption being available to the Sanctioning Authority because at that stage the occasion for drawing a presumption never arises since there is no case in the Court. Secondly, the presumption does not arise automatically but only on proof of certain circumstances, that is to say, where it is proved by evidence in the Court that the money said to have been paid to the accused was actually recovered from his possession. It is only then that the Court may presume the amount received would be deemed to be an illegal gratification. So far as the question of sanction is concerned this arises before the proceedings come to the Court and the question of drawing the presumption, therefore, does not arise at this stage. Lastly, it was submitted by Mr. Rao that he should be given a chance to produce the materials before the Court to satisfy that the Sanctioning Authority had duly applied its mind to the facts constituting the offence. We are, however, unable to accede to this prayer which has been made at a very late stage. The prosecution had been afforded a full and complete opportunity at the trial stage to produce whatever material it liked and it had chosen to examine two witnesses but for reasons best known to it did not produce the note which formed the subject matter of the Resolution of the Sanctioning Authority Exh. It is well settled that in a criminal case this Court or for that matter any court should not ordinarily direct fresh evidence to fill up a lacuna delibrately left by the prosecution. The liberty of the subject was put in jeopardy and it cannot be allowed to put in jeopardy again at the instance of the prosecution which failed to avail of the opportunity afforded to it. For these reasons, therefore, we are satisfied that the present prosecution was launched without any valid sanction and, therefore, the cognizance taken by the Special Judge was completely without jurisdiction. The appeal is accordingly allowed. The judgment of the High Court is set aside and convictions and sentences passed on the appellant are quashed. The appellant will now be discharged from his bail bonds. P.B.R. Appeal allowed.

The appellant who was charged with an offence under section 5(2) read with s.5(1)(d) of the Prevention of Corruption Act was acquitted by the Special Judge. But the High Court on appeal by the State, reversed the judgment of he Special Judge and convicted him. In appeal to this Court it was contended on behalf of the appellant that there was no evidence to show on what materials the sanctioning authority applied its mind before granting the sanction under s.6 of the Act. The entire proceedings are void ab initio. Allowing the appeal. ^ HELD: 1 (a). The prosecution of the appellant was without valid sanction and, therefore, cognizance taken by the Special Judge was without jurisdiction. [1011 G] (b) Any case instituted without proper sanction must fail because this being a manifest defect in the prosecution, the entire proceedings are rendered void ab initio. It is incumbent on the prosecution to prove that a valid sanction had been granted by the sanctioning authority after it was satisfied that a case had been made out constituting the offence. This should be done in two ways: either (i) by producing the original sanction which itself contains the facts constituting the offence and the grounds of sutisfaction or (ii) by adducing evidence aliunde showing the facts placed before the authority and the satisfaction arrived at by it. [1010 B D] In the present case no evidence, either primay or secondary, had been led to prove the contents of the note placed before the sanctioning authority nor were the witnesses examined in a position to state the contents of the note. The grant of sanction is not an idle formality but a solemn and sacrosanct act which affords protection to government servanats against frivolous prosecutions and must therefore be strictly complied with before any prosecution could be launched against public servants. [1010G] (b) There is no force in the argument of the State that the Court should presume the facts on the basis of evidence given by one of the witnesses and the order implementing the sanction mentioning those facts. What the Court 1008 has to see is whether or not the sanctioning authority at the time of giving the sanction was aware of the facts constituting the offence and applied its mind for the same. Any subsequent fact coming into existence after the resolution had been passed is wholly irrelevant. [1010 F] (c) There is equally no force in the State 's contention that even if no facts were mentioned in the resolution it must be presumed that the sanctioning authority was satisfied that the accused had received a bribe. There is no question of a presumption being available .o the sactioning authority because at that stage the occasion for drawing a presumption never arises since there is no case in the Court. [1011 B] (d) The presumption does not arise automatically but only on proof of certain circumstances that is to say, where it is proved by evidence in Court that the money said to have been paid to the accused was actually recovered from his possession. It is only then that the Court may presume the amount received would be deemed to be an illegal gratification. The question of sanction arises before the proceedings come to the Court and the question of drawing a presumption does not arise at this stage. [1011 C] (e) The prosecution cannot be given a chance to produce any material before the court at the appellate stage to satisfy that the sanctioninf authority had duly applied its mind before giving the sanction. The prosecution had been afforded a full and complete opportunity at the trial stage to produce whatever material it liked and it had chosen to examine two witnesses; but for reasons best known to it, it did not produce the note which formed the subject matter of resolution of the sanctioning authority. [1011 E] (f) In a criminal case this Court would not ordinarily direct fresh evidence to fill up a lacuna deliberately left by the prosecution. The liberty of the subject was in jeopardy and it cannot be allowed to put in jeopardy again at the instance of the prosecution which failed to avail of the opportunity afforded to it. [1011 J]

Appeal No. 1207 of 1968. Appeal by special leave from the judgment and order dated May 10, 1967 of the Punjab and Haryana High Court in Letters Patent Appeal No. 159 of 1966. V. C. Mahajan and R. N. Sachthey, for the appellants. M. C. Setalvad, M. C. Bhandare, Rameshwar Nath, T. R. Bhasin and Lalit Bhasin, for the respondent. The Judgment of the Court was delivered by Shelat, J. The respondent company carries on business as hoteliers and conducts several hotels including the 'Cecil Hotel ' at Simla. Besides conducting hotels, it also carries on restaurant business. As part of its business as hoteliers, the company receives guests in its several hotels to whom, besides furnishing lodging, it also serves several other amenities, such as public and private room, bath with hot and cold running water, linen, meals during stated hours etc. The bill tendered to the guest is an all inclusive one, that is to say, a fixed amount for the stay in the hotel for each day and does not contain different items of each of the aforesaid amenities. That is, however, not the case in its restaurant business where a customer takes his meal consisting either of items of food of his choice or a fixed menu. The primary function of such a restaurant is to serve meals desired by a customer, although along with the food, the customer gets certain other amenities also, such as service, linen etc. The bill which 939 the customer pays is for the various food items which he consumes or at a definite rate for the fixed menu, as the case may be, which presumably takes into account service and other related amenities. The respondent company, as such hoteliers, has been registered as a dealer under the Punjab General Sales Tax Act, XLVI of 1948 and has been filing quarterly returns and paying sales tax under that Act. On September 2, 1958 the company applied for a declaration that it was not liable to pay sales tax in respect of meals served in the said Cecil Hotel to the guests coming there for stay. In support of its plea, the company raised the following contentions : (1) that the, hotel receives guests primarily for the purpose of lodging, (2) that when so received, the management provides him with a number of amenities incidental to such lodging and with a view to render his stay in the hotel comfortable including meals at fixed hours, (3) that the transaction between the company and such a guest is one for the latter to stay and not one of sale of food stuffs supplied as one of the incidental amenities, (4) that the bill given by the company and paid by the guest is one and indivisible, that is, a fixed amount per day during his stay in the hotel and does not consist of separate items in respect of the several amenities furnished to him including meals served to him, and (5) that the transaction so entered into does not envisage any sale of food since the guest cannot demand a rebate or deduction if he were to miss a meal or meals, nor is he entitled to carry away or deal with in any manner the food served at his table, if a part of it remains unconsumed. It is, on the other hand, the management which has the right to deal with such unconsumed remainder as it likes. Such a position, therefore, is inconsistent with a sale under which the property in the whole must pass to the purchaser, and who can deal with the remainder in any manner he likes. The Sales Tax Officer rejected the company 's application on the ground that the transaction Which takes place between the management and a resident guest takes in both lodging and boarding and the hotel charges include consideration for both. A revision under section 21 of the Act by the company to the Commissioner met the same fate. The company then filed a writ petition for an order quashing the said decision as also the notices issued by the Sales Tax authorities under the Act. The grounds put forward in the writ petition were almost the same which the company had previously urged in its application for declaration. There was no dispute regarding the facts stated in the writ petition and particularly with regard to the fact that the transac 940 tion which a visiting resident enters into with the management is one and indivisible, that the bill charged on him is likewise one and indivisible, that the charges are for each day of stay, and that that being so, the bill was incapable of being split up into separate charges for each of the amenities furnished and availed of by such a visiting resident. The dispute was as to the nature of the transaction and whether such transaction included sale of food stuff supplied at various meals supplied to such a customer. The High Court, on a consideration of the arguments urged before it and relying mainly upon the decision of this Court in Madras vs Gannon Dunkerley and Co. Ltd.(, '), to the effect that where a transaction is one and indivisible it cannot be split up so as to attract the Sales Tax Act to a part of it , allowed the writ petition. It held that a transaction between a hotelier and his resident visitor did not involve a sale of food when the former supplied meals to the latter as one of the amenities during his residence, and that if there was one inclusive bill, it was incapable of being split up in the absence of any rates for the meals agreed to between the parties as part of the transaction between the two. The High Court also held that the transaction was primarily one for lodging, that the board supplied by the management amounted to an amenity considered essential in these days in all properly conducted hotels, and that when so supplied, it could not be said to constitute a sale every time a meal was served to such a resident visitor. This appeal, by special leave, is filed against this view of the High Court. The question in this appeal, it would appear, arises in the present form for the first time. There are, therefore, no previous decisions to guide its determination. It would, however, be helpful to consider certain decisions both of this Court as also of the High Courts, in which different types of transactions which came up before them for consideration in sales tax cases have been dealt with and which might throw some light upon the problem before us. In a case arising under the Assam Sales Tax Act, 1947 though there was no express sale in respect of gunny bags in which rice, an exempted commodity, was supplied to Government, they were held to form assessable turnover. There was, however, in that case evidence that the assessees had charged the Government for those bags (Mohanlal Jogani Rice & Atta Mills V. Assam) (2). In D. Masanda and Co. vs Commissioner of Sales Tax(3), the question was whether photographic materials imported and (1) ; (3) [1957] 8 S.T.C. 370. (2) [1953] 4 S.T.C. 129. 941 used in the process of manufacturing photographic work, copies of which were supplied by the assessee to a customer, was a transaction involving sale of those materials. The High Court held that such a transaction did not cease to be a sale merely because the materials were not sold directly in their original form but in another form, forming the, components of the finished product, namely, the copies of the photograph, and that the transaction was not merely the performance of skilled services but the supply of finished goods. This was, however, a border line case. The transaction might well be considered as one of service, during performance of which, a transfer of certain materials, in respect of which there was no contract for sale, either express or implied, may be said to have taken place. An illustration of such a kind is furnished by the case of United Bleachers Ltd. vs Madras(1). In that case the assessee bleached and dyed, calendered, pressed and folded unbleached yarn and cloth manufactured by his custo mer textile mills. The bills issued by the assessee contained, (a) bleaching charges, and (b) charges for stitching, folding, stamping, baling etc., but did not contain separately charges for the materials used for those ' purposes. The Revenue contended that there was transfer of those materials and separately assessed the charges of those materials holding that though the assessee did not specifically deal in those materials, a portion of the profit earned in the business of bleaching and calendering could legitimately be attributed to the packing materials and the transaction involved a sale of them for consideration. On a reference, the High Court held that the case was one of contract of service as distinguished from a sale of a principal commodity, such as rice in Assam case (supra) and salt in Varasuki and Co. vs Madras(1) On the other hand, where a contract is to supply such commodity in a packed condition, it could be inferred, though the contract might not be express that the intention of the parties was to give and accept delivery of the goods in a packed condition and not to take the principal commodity alone so that in the contract of sale of such a commodity there was implicit the sale of packing material as well. Even in a contract of service such as bleaching and calendering where the goods after such processing are delivered packed a sale of packing, materials is possible, quite apart from the contract of service. The question in such cases would be one of evidence, whether there is such a contract beside the one of service. Where however there are no such distinct contracts and the contract is one and indivisible, the essential part of which is one of service, packing would be part of or incidental to the service, and unless an intention to charge for the materials used in the packing can be spelt out, the Revenue would not be (1) [1960] 9 S.T.C. 278. (2) [1950] 2 S.T.C. 1. 942 entitled to split up the contract, estimate approximately the charges for such materials and treat them as chargeable on the mere ground that the transaction involved transfer of packing materials, whose value must have been taken into consideration while fixing charges for the service. Such an implied contract of supply of packing materials was inferred in a contract of service, namely, drying raw tobacco in Krishna and Co. Ltd. vs Andhra Pradesh But the decision in that case did not rest on there being a transfer of packing materials in favour of the customer. There was evidence that such a transfer was for consideration, inasmuch as the amounts charged as remuneration for service also contained charges for the packing materials though such charges were not separately shown in the assessee 's accounts. In such a state of evidence it would be possible for the Court to infer a separate implied contract of sale of packing materials and not as part of the service of drying raw tobacco and delivering it in packed condition. The difficulty which the Courts have often to meet with in construing a contract of work and labour, on the one hand, and a contract for sale, on the other, arises because the distinction between the two is very often a fine one. This is particularly so when the contract is a composite one involving both a contract of work and labour and a contract of sale. Nevertheless, the distinction between the two rests on a clear principle. A contract of sale is one whose main object is the transfer of property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where the principal object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one of work and labour. The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale; neither the ownership of materials, nor the value of the skill and labour as compared with the value of the materials, is conclusive, although such matters may be taken into consideration in determining, in the circumstances of a particular case, whether the contract is in substance one for work and labour or one for the sale of a chattel(1). In Patnaik and Co. vs Orissa (3), a difference of opinion arose because of the fine distinction between the two types of contract. The contract there was for constructing and fixing bus bodies on the chassis supplied by the Orissa Government. The contract, infer alia, provide that the appellants were to construct the bus bodies in the most substantial and workmanlike manner (1) [1956] 7 S.T.C. 26. (2) Halsbury 's Laws of England, 3rd Ed. 34, 6 7. (3) [1965] 16 S.T.C. 364. 943 both as regards materials and otherwise in every respect in strict compliance with the specifications and should deliver them to the Governor on or before the dates specified therein. The majority rejected the contention that that was a contract of work and labour and held that the transaction was one of sale. The question primarily was one of construction of the contract, and the majority held that both the agreement and the sale related to one kind of property, namely, the bus bodies. The reason for so. holding was stated to be that it was clear from the contract that the property in the bus bodies did not pass on their being constructed on the chassis, but only when the vehicles including the bus bodies were delivered. Such a contract was unlike a building contract or a contract under which a movable is to be fixed on to another chattel or on the land, where the intention plainly is not to sell that article but to improve the land or the other, chattel and the consideration is not for the transfer of the chattel but for the work and labour done and the materials furnished. The contract in question was to manufacture a bus body and fix it on the chassis supplied and transfer the bus body so constructed for consideration. In Madras vs Gannon Dunkerley and Co. Ltd.(1) the main question was as regards the vires of the Madras General Sales. Tax Act, 1939, as amended by Madras Act XXV of 1947 which widened the definition of 'sale ' by including, inter alia, in it a transfer of property in the goods involved in the execution of a works contract. Under this definition, the Sales Tax authority brought into chargeable turnover the materials used in the constructiOn works carried out by the company. This Court held that a power to enact a law with respect to tax on sale of goods under entry 48 of List 11 in the 1935 Constitution Act must, to be intra vires, be one relating in fact to a sale of goods and that a Provincial Legislature could not, in the purported exercise of its power, tax transactions which were not sales, by enacting that they should be deemed to sales, that to construe a transaction as sale there should be an agreement relating to goods to be supplied by passing title in those goods, and that it was of the essence of such a concept that both the, agreement and the sale should relate to one and the same subject matter. The conclusion arrived at was that in a building contract, even if it were to be disintegrated, there was no passing of title in the materials as movables in favour of the other party of the contract. The contract was one and indivisible, there was no sale of materials, and consequently, there was no question of title to the materials used by the builders passing to the other party to the contract. Even where the thing produced under a contract is movable property, the materials in (1) ; 944 corporated into it might pass as a movable. But there would be no taxable sale if there was no agreement to sell the materials as such. In arriving at this conclusion, the Court relied upon Appleby vs Myres(1) and the observations of Blackburn, J., at 659 660 of the report to show that thread stitched into a coat which is under repair becomes part of the coat, but in a contract for repairing the coat the parties surely did not enter into an agreement of sale of that thread. In Andhra Pradesh vs Guntur Tobaccos Ltd.(2), the transaction was for redrying tobacco entrusted to the respondent company by its customers. The process involved the keeping of the moisture content of tobacco leaf at a particular level and for that purpose the leaf had to be packed in bales, in water proof packing material, as it emerged from the reconditioning plant. The tobacco was then returned to the customer packed in costly packing material. In the, company 's charges for redrying there was no separate charge for the value of such packing material. It was held that the redrying process could not be completed without the use of the packing material, that packing formed an integral part of that process, and that although the redried tobacco was returned together with the packing materials there was no sale of those materials as there was no intention on the part of the parties to enter into any transaction of sale as regards those materials. The mere fact that in such a contract of work or service property in goods which belonged to the party performing service or executing the work stands transferred to the other party is not enough. To constitute a taxable sale, the Revenue has to establish that there was a sale, distinct from the contract of work or service, of the property so passing to the other party. Thus, in consider whether a transaction falls within the purview of sales tax it becomes necessary at the threshold to determine the nature of the contract involved in such a transaction for the purpose of ascertaining whether it constitutes a contract of sale or a contract of work or service. If it is of the latter kind it obviously would not attract the tax. From the decisions earlier cited it clearly emerges that such determination depends in each case upon its facts and circumstances. Mere passing of property in an article or commodity during the course of the performance of the transaction in question does not render it a transaction of sale. For, even in a contract purely of work or service, it is possible that articles may have to be used by the person executing the work and property in such articles or materials may pass to the other party. That would not necessarily ,convert the contract into one of sale of these materials. in ,every case the Court would have to find out what was the primary (1) [1867] L.R.2C.P.651. (2) ; 945 object of the transaction and the intention of the parties while entering into it. It may in some cases be that even while entering into a contract of work or even service, parties might enter into separate agreements, one of work and service and the other of sale and purchase of materials to be used in the course of executing the work or performing the service. But, then in such cases the transaction would not be one and indivisible, but would fall into two separate agreements, one of work or service and the other of sale. What precisely then is the nature of the transaction and the intention of the parties when a hotelier receives a guest in his hotel ? Is there in that transaction an intention to sell him food contained in the meals served to him during his stay in the hotel ? It stands to reason that during such stay a well equipped hotel Would have to furnish a number of amenities to render the customer 's stay comfortable. In the supply of such amenities do the hotelier and his customer enter into several contracts every time an amenity is furnished ? When a traveler, by plane or by steam ship, purchases his passage ticket, the transaction is one for his passage from one place to another. If, in the course of carrying out that transaction, the traveler is supplied with drinks or meals or cigarettes, no one would think that the transaction involves separate sales each time any of those things is supplied. The transaction is essentially one of carrying the passenger to his destination and if in performance of the contract of carriage something is supplied to him, such supply is only incidental to that services, not changing either the pattern or the nature of the contract. Similarly, when clothes are given for washing to a laundry, there is a transaction which essentially involves work or service, and if the laundery man stitches a button to a garment which has fallen off, there is no sale of the button or the thread. A number of such cases involving incidental uses of materials can be cited. none of which can be said to involve a sale as part of the main transaction. The transaction in question is essentially one and indivisible. namely, one of receiving a customer in the hotel to stay. Even if the transaction is to be disintegrated, there is no question of the supply of meals during such stay constituting a separate contract of sale. since no intention on the part of the parties to sell and purchase food stuff supplied during meal times can be realistically spelt out. No doubt, the customer, during his stay, consumes a number of food stuffs. It may be possible to say that the property in those food stuffs passes from the hotelier to the customer at least to the extent of the food stuffs consumed by him. Even if that be so, mere transfer of property, as aforesaid, is not conclusive and does not render the event of such supply and con 946 sumption a sale, since there is no intention to sell and purchase. The transaction essentially is one of service by the hotelier in the performance of which meals are served as part of and incidental to that service, such amenities being regarded as essential in all well conducted modem hotels. The bill prepared by the hotelier is one and indivisible, not being capable by approximation of being split up into one for residence and the other for meals. No doubt, such a bill would be prepared after consideration of the costs of meals, but that would be so for all the other amenities given to the customer. For example, when the customer uses a fan in the room allotted to him, there is surely no sale of electricity, nor a hire of the fan. Such amenities, including that of meals, are part and parcel of service which is in reality the transaction between the parties. Even in the case of restaurants and other such places where customers go to be served with food and drink for immediate consumption at the premises, two conflicting views appear to prevail in the American courts. According to one view, an implied warranty of wholesomeness and fitness for human consumption arises in the case of food served by a public eating place. The transaction, in this view, constitutes a sale within the rules giving rise to such a warranty. The nature of the contract in the sale of food by a restaurant to customers implies a reliance, it is said, on the skill and judgment of the restaurant keeper to furnish food fit for human consumption. The other view is that such an implied warranty does not arise in such transactions. This view is based on the theory that the transaction does not constitute a sale inasmuch as the proprietor of an eating place does not sell but "utters" provisions, and that it is the service that is predominant, the passing of title being merely incidental( ', '). The two conflicting views present a choice between liability arising from a contract of implied warranty and for negligence in tort, a choice indicative of a conflict, in the words of Dean Pound, between social interest in the safety of an individual and the individual interest of the supplier of food. The principle accepted in cases where warranty has been spelt out was that even though the transaction is not a sale, the basis for an implied warranty is the justifiable reliance on the judgment or skill of the warrant or and that a sale is not the only transaction in which such a warranty can be implied. The relationship between the dispenser of food and one who consumes it on the premises is one of contractual relationship, a relationship of such a nature that an implied warranty of wholesomeness reflects the reality of the transaction involved and an express obligation understood by the parties in the sense that the customer does, in fact, rely upon such dispenser (1) Corputs Juris Section, Vol 77,1215 1216. 947 of food for more than the use of due care. (see Cushing v Rodman(1). A representative case propounding the opposite view is the case of F. W. Woolworth Co. vs Wilson(2), citing Nisky vs Childs Co.(3), wherein the principle accepted was that such cases involved no sales but only service and that the dispenser of food, such as a restaurant or a drug store keeper serving food for consumption at the premises did not sell and warrant food but uttered and served it and was liable in negligence, the rule in such cases being caveat emptor. In England, a hotel under the Hotel Proprietors Act, 1956 is an establishment held out by the proprietor as offering food, drink, and if so required, sleeping accommodation, without special contract, to any traveller presenting himself and who appears able and willing to pay a reasonable sum for the services and facilities provided. This definition, which is also the definition, of an inn, still excludes, as formerly, boarding houses, lodging houses and public houses which are merely alehouses and in none of which there is the obligation to receive and entertain guests. An innkeeper, that is to say, in the present days a hotel proprietor, in his capacity as an in keeper is, on the other hand, bound by the common law or the custom of the realm to receive and lodge in his inn all comers who are travellers and to entertain them at reasonable prices without any special or previous contract unless he has some reasonable ground of refusal (4) . The rights and obligations of hotel proprietors are governed by statute which has more or less incorporated the common law. The contract between such a hotel proprietor and a traveller presenting himself to him for lodging is one which is essentially a contract of service and facilities provided at reasonable price. The transaction between a hotelier and a visitor to his hotel is thus one essentially of service in the performance of which and as part of the amenities incidental to that service, the hotelier serves meals at stated hours. The Revenue, therefore, was not entitled to split up the transaction into two parts, one of service and the other of sale of food stuffs and to split up also the bill charged by the hotelier as consisting of charges for lodging and charges for food stuffs served to him with a view to bring the latter under the Act. The conclusion arrived at by the High Court is one with which we agree. Consequently, the appeal fails and is dismissed with costs. V.P.S. Appeal dismissed. (1) 104 American L.R. 1023; Srs. 864, 868. (2) Srs. (3) 103 N.J. Law 464. (4) Halsbury 's Laws of England, 3rd Ed., Vol. 21, 445 446.

The respondent company was running the business of a hotelier and was registered as a dealer under the Punjab General Sales Tax Act, 1948. It applied for a declaration that it was not liable to sales tax in respect of meals served to the guests staying in the hotel on the grounds that : (1) the hotel receives guests primarily for the purpose of lodging; (2) when so received the management provides him with a number of amenities including meals at fixed hours, incidental to such lodging and with a view to render hi , stay comfortable; (3) the transaction between the respondent and the guests is one for the latter to stay and not one of sale of food stuffs supplied; (4) the bill given by the respondent and paid by the guest is one and indivisible, being a fixed amount per day during his stay in the hotel and does not consist of separate items in respect of the several amenities furnished to him, and (5) the transaction does not envisage any sale of food since the guest cannot demand a rebate or deduction if he were to miss a meal or meals nor is he entitled to carry away or deal with, in any manner, the food served on his table if a part of it is not consumed. The department rejected the company 's application but the High Court allowed its writ petition. Dismissing the appeal to this Court, HELD : The transaction is one essentially of service in the performance of which and as part of the amenities incidental to that service, the hotelier serves meals at stated hours. The Revenue, therefore, was not entitled to split up the transaction into two parts one of service and the other of sale of food stuffs and to split up the bill charged as consisting of charges for lodging and charges for food stuffs served with a view to bring the latter under the Act. [947 F G] The distinction between a contract of sale and a contract of work and service is fine especially when the contract is a composite one involving both. In considering whether a transaction is a sale falling within the purview of sales tax it is necessary to determine the nature of the contract involved on the facts of each case. A contract of sale is one whose main object is the transfer of property and delivery of possession of a chattel to the buyer; but the mere passing of property in an article or commodity during the course of the performance of a transaction does not render it a transaction of sale when there is no intention to sell and purchase. When the principal object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel the contract is one of work and labour. The test is whether or not the work or labour bestowed ends in anything that can properly become the subject of sale; neither the ownership of the materials nor the value of the skill 938 and labour as compared with the value of materials is conclusive, although such matters may be taken into consideration. In every case the court would have to find out what is the primary object of the transaction and the intention of the parties while entering into it. [942 D G: 944 F G. H] The transaction in the present case is one and indivisible, namely, one of receiving a customer in the hotel to stay. The bill is not capable of being split up into one for residence and another for sale of meals. Amenities including meals, are part and parcel of the service which, in reality, is the transaction between the parties. Even if it was to be disintegrated the supply of meals during such stay does not constitute a separate contract of sale, since no intention on the part of the parties to sell and purchase the food stuffs supplied during meal time can be spelt out. [945 G H; 946 A C] Madras vs Gannon Dunkerley & Co. Ltd., ; , Mohanlal Jogani Rice & Atta Mills. vs Assam [1953] 4 S.T.C. 129, Masanda & Co. vs Commissioner of Sales tax, [1957] 8 S.T.C. 370, United Bleachers Ltd. vs Madras, (1960) 9 S.T.C. 278, Krishna & Co. Ltd. vs Andhra Pradesh, [1956] 7 S.T.C. 26, Patnaik & Co. vs Orissa, [1965] 16 S.T.C. 364, Andhra Pradesh vs Guntur Tobaccos Ltd. ; and English Law and United States Law, referred to.

Appeal No. 352 of 1958. Appeal by special leave from the judgment and order dated July 27, 1956, of the Labour Appellate Tribunal of India, Bombay, in Appeal (Bom.) No. 72 of 1956. G. section Pathak, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant. D. section Nargoulkar and K. R. Choudhuri, for the respondent No. 1. B. P. Maheshwari, for the Interveners. December 16. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave in an industrial matter. The appellant owns two sugar mills. There was a dispute between the appellant and its workmen with respect to the employment of contract labour in the two mills. Consequently, a notice of change under section 42 (2) of the Bombay Industrial Relations Act, No. XI of 1947, (hereinafter called the Act) was given to the appellant by the union re. presenting the workmen. Thereafter the union, which is the respondent in the present appeal, made two references to the industrial court, one with respect to each mill, under section 73A of the Act, and the main demand in the references was that "the system of employing contractors ' labour should be abolished and the strength of the employees of the respective departments should be permanently increased sufficiently 344 and accordingly". The appellant raised two main contentions before the industrial court, namely, (i) that the industrial court had no jurisdiction to decide the dispute as the matter was covered by item (6) of Sch. III of the Act, which is within the exclusive jurisdiction of a labour court; and (ii) that any award directing abolition of contract labour would contravene the fundamental right of the appellant to carry on business under article 19(1)(g) of the Constitution. The industrial court decided both the points against the appellant; on the question of jurisdiction it held that the matter was covered by item (2) of Sch. 11 of the Act and therefore the industrial court would have jurisdiction, and on the second point it held that there was no contravention of the fundamental right conferred on the appellant under article 19(1)(g). It may be mentioned that the second point arose on the stand taken by the appellant that the workmen of the contractors were not the workmen of the appellant. The industrial court then dealt with the merits of the case and passed certain orders, with which we are however not concerned in the present appeal. It may be mentioned that there were cases relating to a number of other sugar mills raising the same points, which were decided at the same time by the industrial court. In consequence, there were a number of appeals to the Labour Appellate Tribunal by the mills and one by one of the unions (though not by the respondent union). All these appeals were heard together by the appellate tribunal, where also the same two points relating to jurisdiction and contra vention of the fundamental right guaranteed by article 19(1)(g) were raised. The Appellate Tribunal did not agree with the industrial court that the references were covered by item (2) of Sch. 11 to the Act. It, however, held that the word "employment" in item (6) of Sch. III to the Act had to be given a restricted meaning. It pointed out that the three Schedules did not exhaust the comprehensive provisions of section 42(2) and the subject matter of dispute, namely, the abolition of contract labour was a question of far reaching and important change which could not have 345 been intended to be dealt with in a summary way by a labour court, which is the lowest in the hierarchy of courts established under the Act. It therefore held that the industrial court had jurisdiction to decide the matter. On the question of contravention of the, fundamental right, the appellate tribunal took the view that the question whether the restriction imposed was reasonable depended upon the facts of each case and therefore was a matter outside its power as a court of appeal It then considered the merits of the matter and came to the conclusion that the approach of the industrial court to the questions raised before it was not correct and therefore it found it difficult to support the award. Eventually it set aside the award and remanded the matter for early hearing in the light of the observations made by it. Further, it decided that in the interest of justice the entire award should be set aside, even though there was no appeal before it by the unions in most of the cases. The appellant then came to this Court and was granted special leave; and that is how the matter has come up before us. Mr. Pathak on behalf of the appellant has raised the same two points before us. We shall first deal with the question of jurisdiction. Reliance in this connection is placed on item (6) of Sch. III of the Act, which is in these terms: "Employment including (i) reinstatement and recruitment; (ii) unemployment of persons previously employed in the industry concerned. " It is not in dispute that matters contained in Sch. III are within the jurisdiction of a labour court and an industrial court has no jurisdiction to decide any matter in a reference under section 73A of the Act which is within the jurisdiction of a labour court. Mr. Pathak contends that item (6) of Sch. III speaks of "employment" and includes in it two matters which might otherwise not have been thought to be included in it. Therefore, according to him, employment as used in item (6) is wider than the two matters included in it 44 346 and the question whether contract labour should be employed or not would be a matter of employment within the meaning of that word in item (6) of Sch. We do not think it necessary for purposes of this appeal to consider what would be the ambit of employment as used in item (6) of Sch. 111. The scheme of the Act shows that under sections 71 and 72 the jurisdiction of a labour court and an industrial court is concurrent with respect to any matters which the State Government may deem fit to refer to them; but under section 73A reference by a registered union which is a representative of employees and which is also an approved union, can only be made to an industrial court, subject to the proviso that no such dispute can be referred to an industrial court where under the provisions of the Act it is required to be referred to the labour court for its decision. 78 of the Act provides for jurisdiction of labour courts and matters specified in Sch. 11 are not within their ordinary jurisdiction. Therefore, when a registered union wishes to refer any matter which is contained in Sch. 11 of the Act such reference can be made by it only to the industrial court. It follows in consequence that whatever may be the ambit of the word "employment" used in item (6) of Sch. III, if any matter is covered by Sch. 11 it can only be referred to the industrial court under section 73A. Now the question whether contract labour should be abolished (on the assumption that contract labour is not in the employ of the mills) immediately raises questions relating to permanent increase in the number of persons employed, their wages including the period and mode of payment, hours of work and rest intervals, which are items (2), (9) and (10) of Sch. Therefore, a question relating to abolition of contract labour is so inextricably mixed up with the question of permanent increase in the number of persons employed, their wages, hours of work and rest intervals that any dispute relating to contract labour would inevitably raise questions covered by Sch. Therefore, a dispute relating to contract labour if it is to be referred under section 73A by a registered union can only be referred to an industrial court as it immediately 347 raises matters contained in items (2), (9) and (10) of Sch. Mr. Pathak urges however that matters relating to permanent increase in the number of persons employed due to the abolition of contract labour, their wages, hours of work and rest intervals were not really disputed at all by the appellant. It appears that in the written statements of the appellant, these points were not raised; but the decision of the appellate tribunal shows that one of the contentions raised before it by the sugar mills was that the workmen concerned were not employees of the sugar mills. Therefore, as soon as this contention is raised a dispute as to permanent increase in the number of persons employed, their wages, hours of work and rest intervals would immediately arise. It must therefore be held that a question relating to the abolition of contract labour inevitably raises a dispute with respect to these three items contained in Sch. In the circumstances we are of opinion that the industrial court had jurisdiction to deal with the matter. In particular, we may point out that in their petitions the unions had raised at least the question as to the permanent increase in the number of persons employed and that would immediately bring in item (2) of Sch. It is true that the question of permanent increase in the number of persons employed, their wages, hours of work and rest intervals would only arise if contract labour is to be abolished; but in our opinion these are matters so inextricably mixed up with the question relating to abolition of contract labour that they must be held to be in dispute as soon as the dis pute is raised about the abolition of contract labour, (assuming always that the employer does not accept contract labour as part of its labour force). The contention about jurisdiction must therefore be rejected. This brings us to the second contention raised by Mr. Pathak. He bases his argument in this behalf on section 3(18), which defines an " industrial matter " as meaning any matter relating to employment, work, wages, hours of work, privileges, rights or duties of employers or employees, or the mode, terms and 348 conditions of employment. Mr. Pathak urges that the definition of " industrial matter " contravenes the fundamental right guaranteed under article 19(1)(g), when it provides that the mode of employment is also included within it. Reference is also made to section 3(17) which defines an "industrial dispute" as any dispute or difference which is connected with any industrial matter. Mr. Pathak therefore urges that reading the two definitions together the industrial court is given the power to decide disputes as to the mode of employment and that contravenes the fundamental right guaranteed under article 19(1)(g), for it enables an industrial court to adjudicate on the mode of employment and thus interfere with the right of the employer to carry on his trade as he likes subject to reasonable restrictions. Now assuming that the mode of employment used in section 3(18) includes such questions as abolition of contract labour, the question would still be whether a provision which enables an industrial court to adjudicate on the question whether con tract labour should or should not be abolished is an unreasonable restriction on the employer 's right to carry on his trade. We cannot see how the fact that power is given to the industrial court, which is a quasi judicial tribunal to decide whether contract labour should be abolished or not would make the definition of "industrial matter" in so far as it refers to the mode of employment, an unreasonable restriction on the fundamental, right of the employer to carry on trade. The matter being entrusted to a quasi judicial tribunal would be decided after giving both parties full opportunity of presenting their case and after considering whether in the circumstances of a particular case the restriction on the mode of employment is a reasonable restriction or not. The tribunal would always go into the reasonableness of the matter and if it comes to the conclusion that the mode of employment desired by labour is not reasonable it will not allow it; it is only when it comes to the conclusion that the mode of employment desired by labour in a particular case is a reasonable restriction 349 that it will insist on that particular mode of employment being used. Take, for example, the case of contract labour itself. The tribunal will have to go into the facts of each case. If it comes to the conclusion that on the facts the employment of contract labour is reasonable and thus doing away with it would be an unreasonable restriction on the right of the employer to carry on trade, it will permit contract labour to be carried on. On the other hand if it comes to the conclusion that employment of contract labour is unreasonable in the circumstances of the case before it it will hold that it should be abolished, the reason being that its abolition would be a reasonable restriction in the circumstances. Therefore the decision whether the mode of employment in a particular case is a reasonable restriction or unreasonable one is in the hands of a quasi judicial tribunal. In the circumstances it cannot be said that by providing in section 3(18) that an "industrial matter" includes also the mode of employment, there is any contravention of the fundamental right of the employer to carry on trade. If the argument on behalf of the appellant were to be accepted it would mean that judicial and quasi judicial decisions could be unreasonable restrictions on fundamental rights and this the Constitution does not envisage at all. We are therefore of opinion that this contention also fails. Finally, Mr. Pathak draws our attention to sections 3(13) and 3(14) of the Act and submits that the appellant never said that contract labour employed in its mills was not in its employment. 3(13) defines the word "employee" and includes in it any person employed by a contractor to do any work for him in the execution of a contract with an employer within the meaning of sub cl. (e) of cl. 3(14) defines the word "employer" in an inclusive manner and in cludes "where the owner of any undertaking in the course of or for the purpose of conducting the undertaking contracts with any person for the execution by or under the contractor of the whole or any part of any work which is ordinarily part of the undertaking, the owner of the undertaking". It is urged that in view 350 of these definitions, the employees of the contractors are the employees of the mills and the mills are the employers of these employees of the contractors. Therefore, Mr. Pathak urges that there is no necessity of abolishing contract labour and that the industrial court may, if it so chooses, give the same wages and hours of work and rest intervals and other terms and conditions of employment to the employees of the contractors as are provided for comparable direct employees of the appellant and in such circumstances it would not be necessary to abolish the contract system so long as the employees of contractors are to be in the same position as the direct employees of the appellant as to their terms and conditions of service. This was not however the manner in which the case was contested before the industrial court or the appellate tribunal. All that we need therefore say is that when the matter goes back before the industrial court as directed by the appellate tribunal, the industrial court may take this submission of the appellant into account and may consider whether it is necessary to abolish the contract system, provided the appellant is able to assure the industrial court that employees of the contractors who are deemed to be its employees within the meaning of section 3(13) and section 3(14) would have the full benefit of the same terms and conditions of service as its comparable direct employees. The appeal fails and is hereby dismissed with costs. Appeal dismissed.

A dispute having arisen between the appellant employer and its workmen regarding the employment of contract labour in the appellant 's mills, the union representing the workmen which is the respondent in the present case after serving notice on the appellant under section 42(2) of the Bombay Industrial Relations Act made reference to the Industrial Court under section 73A of the Act demanding the abolition of the system of employing contractors ' labour and the permanent increment of employees in the respective departments. The contention of the appellant, inter alia, was that the Industrial Court had no jurisdiction to decide the dispute which was within the exclusive jurisdiction of a Labour Court under item (6) of Sch. III of the Act, and that any award directing the abolition of contract labour would contravene the appellant 's fundamental right to carry on business under article 19(1)(g) of the Constitution. The Industrial Court decided that the Industrial Court would have jurisdiction as the matter was covered by item (2) of Sch. 11 of the Act and that there was no contravention of the fundamental rights of the appellants. On appeal the Labour Appellate Tribunal, held, that the Industrial Court had jurisdiction to decide the matter although it was not covered by item (2) of Sch. 11 of the Act. As regards the question of contravention of the fundamental right it held that the question whether the restriction imposed was reasonable depended upon the facts of each case and the matter was outside the powers of a court of appeal. Eventually it set aside the entire award on the merits. On appeal 'by the appellant by special leave, Held, that the Industrial Court had jurisdiction to deal with the matter. Whatever might be the ambit of the word "employment" used in item (6) of Sch. III, if a matter was covered by Sch. 11 it could only be referred to the Industrial Court under section 73A. A question relating to the abolition of contract labour inevitably raised a dispute relating to matters contained in items (2), (9) and (10) of Sch. 11, namely, permanent increase in the number of 343 persons employed, the employees ' wages, hours of work and rest intervals and could, therefore, be referred only to an Industrial Court. The power given to the Industrial Court which was a quasi judicial tribunal to decide whether contract labour should be abolished or not would not make the definition of "industrial " matter" in so far as it referred to the mode of employment an section unreasonable restriction on the fundamental right of the employer to carry on his trade and as such there was no contravention of his fundamental right by providing in section 3(18) that an "industrial matter" included also the mode of employment of the employees.

Civil Appeal No. 1572 of 1970. From the Judgment and Order dated 8 11 1968 of the Bombay High Court in S.C.A. No. 2087/68. M. C. Bhandare, C. K. Sucharita and M. N. Shroff for the Appellant. Nemo for the Respondent. The Judgment of the Court was delivered by KOSHAL J. , This is an appeal by special leave against the judgment dated November 8, 1968 of a Division Bench of the High Court of Bombay allowing a petition under articles 226 and 227 of the Constitution of India and declaring that sub section (5) of section 17 of the Maharashtra Medical Practitioners Act, 1961 (hereinafter referred to as the Act) is ultra vires of article 14 of the Constitution of India. The facts are not in dispute and may be shortly stated. The respondent hails from Uttar Pradesh. In 1940 he obtained the degree of "Ayurved Shastri" from the All India Adarsh Vidwat Parishad, Kanpur. On November 12, 1940 his name was listed by the Board of Indian Medicine, Uttar Pradesh, in the register of Vaids and Hakims. He practised as a Vaid in Agra thereafter upto 1955 when he migrated to Bhopal where he was registered as an Ayurvedic Doctor by the Medical Council of the Government of Bhopal under the Bhopal Medical Practitioners Registration Act, 1935. He migrated to Bombay in 1962 and started practising there as an Ayurvedic Doctor. However, in the meantime, i.e., on November 23, 1961, the Act came into force, except for Chapter VI thereof which came into operation on November 1, 1966. The respondent 's application for registration as a medical practitioner made to the Committee of the Medical Board of Unani System of Medicine under sub section (5) of section 17 of the Act (although none of the clauses of that sub section had anything to do with it) was rejected and his appeal filed to the Board was also dismissed on September 30, 1964. Clause (ii) of the said sub section (5) with which we are concerned provides that any person not being a person qualified for registration under sub sections (3) or (4) who proves to the satisfaction of the Committee appointed under sub section (6) "that he was on the 4th day of November 1941 regularly practising the Ayurvedic or the Unani System of Medicine in the Bombay area of the State, but his name was not entered in the register maintained under the Bombay Medical 400 Practitioners Act, 1938" shall be entitled to have his name entered in the register on making an application on the prescribed form, on payment of a fee of Rs. 10/ and production of such documents as may be prescribed by the rules. The expression "Bombay area of the State of Maharashtra" is defined in sub section (6) of section 3 of the Bombay General Clauses Act to mean "the area of the State of Maharashtra excluding the Vidarbha region and the Hyderabad area of that State." A contention was raised before the High Court on the strength of Rukmani Hoondraj Hingorani vs The Appellate Authority under the Maharashtra Medical Practitioners Act, 1961 that sub section (5) of section 17 of the Act fell foul of article 14 of the Constitution, and that contention was accepted. We may usefully refer to the following observations made in the decision just above cited: "Confining our attention, however, to medical practitioners practising in the Bombay area of the State, we find it difficult to appreciate why the right of enlistment should have been restricted to those who were regularly practising on 4th November 1951, `in the Bombay area of the State '. Since the object of the Legislature was to allow medical practice by those less qualified persons who were too old to choose alternative means of livelihood, it was clearly open to the Legislature to provide that a person must have been practising for a certain number of years, or from before a particular date, in order that his name may be included in the list. It was thus open to the Legislature to provide that, out of unregistered and unlisted medical practitioners who were practising in the Bombay area of the State, only those would be entitled to have their names included in the list who were practising regularly from before the 4th of November, 1951. It is, however, not possible to find any rational basis for the provision that medical practitioners in the Bombay area of the State, in order to be entitled to enlistment, must not only have been practising regularly from 4th November, 1951, but must have been practising on that day `in the Bombay area of the State '. The provision that medical practitioners must have been practising on 4th November, 1951 in the Bombay area of the State has no rational nexus with the object of the Legislature which was to ensure that medical practitioners, who were not fully qualified but who were too old to choose alternative means of livelihood, should not be deprived of their practice. 401 In order to illustrate the discriminatory nature of the provision contained in section 18(2)(b)(ii), we shall take imaginary instances of five persons who were all practising in the Bombay area of the State at the time of their applications under section 18 (i.e., on or before 31st March, 1965) and who were not already enlisted and were not entitled to registration under the Act. Let us suppose that one of them, A, was practising continuously in Bombay City from 1950 to 1963, when he applied under section 18 of the Act. Since on 4th November, 1951 he was practising regularly 'in the Bombay area of the State ', he is clearly entitled to have his name included in the list. Let us take another person B who practised in Poona from 1950 to 1954 and in Bombay City from 1954 to 1963 when he applied under section 18. He is also entitled to enlistment because Poona falls in the Bombay area of the State. We may then take the instance of C who practised in Nagpur from 1950 to 1954 and in Bombay City from 1954 to 1963. He would not be entitled to have his name included in the list, because on 4th November, 1951 he was regularly practising in Nagpur which, though situated in Maharashtra, is not included in the Bombay area of the State. We will next take the instance of D who practised in Baroda, then a part of the Bombay State, from 1950 to 1954 and thereafter in Bombay City from 1954 to 1963. He is also not entitled to enlistment, since Baroda in out side the State of Maharashtra. Similar would be the position of another person E who practised in Bhopal from 1950 to 1954 and then in Bombay City from 1954 to 1963. No rational explanation can be given of why A and B should receive the said concession from the Legislature and should be able to continue their practice and why C, D and E should not receive the concession and should be deprived of their practice. " We find ourselves in complete agreement with these observations which were made in relation to sub clause (ii) of clause (b) of sub section (2) of section 18 of the Act. The provisions of that sub clause being in pari materia with sub section (5) of section 17 of the Act, they apply fully to that sub section which must therefor be held to be violative of article 14 of the Constitution. Accordingly we have no hesitation in upholding the impugned judgment and dismiss this appeal, but with no order as to costs as the respondent has not appeared before us to contest it. N.V.K. Appeal dismissed.

The Maharashtra Medical Practitioners Act 1961, contains provisions for registration and enlistment of medical practitioners. Clause (ii) of sub section (5) of section 17 of the Act provides that any person not being a person qualified for registration under sub sections (3) or (4) who proves to the satisfaction of the Committee appointed under sub section (6), "that he was on the 4th day of November 1941 regularly practising the Ayurvedic or the Unani System of Medicine in the Bombay area of the State, but his name was not entered in the register maintained under the Bombay Medical Practitioners Act, 1938" shall be entitled to have his name entered in the register on making an application and on payment of the prescribed fee. The respondent whose name was listed by the Board of Indian Medicine, Uttar Pradesh in the register of Vaids and Hakims practised as a Vaid and as an Ayurvedic Doctor in Agra and Bhopal respectively. He migrated to Bombay in 1962 where he started practice as an Ayurvedic Doctor. He applied for registration as a medical practitioner to the Committee of the Medical Board of Unani system of Medicine under sub section (5) of section 17 of the Act. His application was rejected, and his appeal filed to the Board was also dismissed. The High Court, however, allowed the respondent 's writ petition, relying on its earlier decision in Rukmani Hoondraj Hingorani vs The Appellate Authority under the Maharashtra Medical Practitioner Act, 1961 (1969) 71 Bom. L.R. 71 (77), held section 17(5) of the Act as unconstitutional and set aside the orders passed by the Board. Dismissing the appeal to this Court, ^ HELD: 1. In Rukmani Hoondraj Hingorani vs The Appellate Authority under the Maharashtra Medical Practitioners Act, 1961 the validity of section 18(2)(b)(ii) fell for consideration and was rightly held to be unconstitutional as it offends the provisions of Article 14. It was observed in that case that the provision, by restricting the right of enlistment to those medical practitioners 'who have been regularly practising on 4th November, 1951 in the Bombay area of the State ' had no rational nexus with the object of the Legislature which was to allow medical practice by those less qualified persons who were too old to choose alternative means of livelihood, and that while it was clearly open to the Legislature to provide that a person must have been practising for a certain number of years, or from before a particular date, in order that his name may be included in the list, no distinction on the basis of the area in which he had been practising could be made. [400C H] 399 2. The provisions of section 18(2)(b)(ii) being in pari materia with subsection (5) of section 17, the observations made in the above case apply also to this sub section. This sub section is, therefore, violative of Article 14 of the Constitution. [401G]

Appeal No. 108 of 1964. Appeal by special leave from the Award dated May 11, 1962, of the Industrial Tribunal, Bihar, Patna in Reference No. 4 of 1961. Ranen Roy, Jai Krishan, G.S. Chatterjee, E. Udayarathnam for A.K. Nag, for the appellants. Niren De, Addl.Solicitor General and Naunit Lal, for the respondent. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the award of the Industrial Tribunal, Bihar. It relates to the discharge of 119 workmen of the respondent who were employed as cane carrier mazdoors or as cane carrier supervisors or jamadars. All these were seasonal workmen. It is necessary to set out in some detail the circumstances leading to the discharge. The respondent is a sugar factory and the crushing season starts usually in the first half of November each year. We are concerned in the present appeal with November and December 1960. It appears that from the season 1956 57, the respondent introduced an incentive bonus scheme in the factory. The scheme continued thereafter from season to season with certain changes. It also appears that in the beginning of each season, the respondent used to put forward the incentive bonus scheme and consult the workmen. The same thing was done when the season 1960 61 was about to start in November 1960. But the scheme for this season proposed by the respondent contained certain changes which were apparently not acceptable to the workmen. One of the features in the scheme was that the crushing of sugar cane per day should be 32,000 maunds. The general secretary of the union of the workmen suggested certain alterations for the consideration of the respondent on November 7, 1960, and one of the main alterations suggested was that the norm for per day 's crushing should be 125,000 maunds of cane and thereafter incentive bonus should be given at a certain rate. No agreement seems to have reached on the incentive bonus scheme, and the complaint of the respondent was that the secretary incited the workmen to go slow in consequence of the change in the scheme. Consequently mild go slow in cane the carrier department which is the basic department in a sugar mill began from the very start of the season on November 10, 1960. The L/P(N)4SCI 590 respondent 's case further was that on November 27, 1960, the workmen in the cane carrier department started in combination with one another to go slow deliberately and wilfully and in a planned manner and thus reduced the average daily crushing to 26,000 maunds cane which was much less than the average crushing in previous seasons. This conduct of the workmen was said to be highly prejudicial to the respondent and besides being technically unsafe, had brought into existence an acute shortage in the fuel position which might have resulted in the complete stoppage of the mill and a major breakdown of the machinery. When the position became serious the respondent issued a general notice on December 15, 1960 inviting the attention of the workmen concerned to this state of affairs which had been continuing of any rate since November 27, 1960. This notice was in the following terms: "At the instigation of Shri J. Krishna, the General Secretary of your Union, you since the very beginning of this season, have been failing in your duty to ensure adequate and regular loading of the cane carrier, and with effect from the 27th November, 1960, you, in combination with each other, have deliberately and wilfully resorted to a clear 'go slow ' tactics, a fact openly admitted by the above named General Secretary of your Union in presence of the Labour Superintendent and Labour Officer Muzzffarpur, in course of discussions held on the subject in the office of the Assistant Labour Commissioner on the 6th December, 1960. You have deliberately reduced the average daily crushing to more or less 26,000 maunds out of which more than 2,000 maunds is due to the newly introduced device of direct feeding of the cane carrier by cane carts weighed during nights and not attributable to any effort on your part. Thus the actual crushing given by you is practically something between 23,000 and 24,000 maunds only which is highly uneconomical and technically unsafe for this factory with the installed crushing capacity of more than 1,200 tons a day." About 14,000 bales of extra bagasse kept in stock as reserve have already been consumed in the past 12 days or so and now the factory is faced with a situation when at any moment its boilers may go out of steam for want of bagasse fuel leading to an abrupt stoppage of the mills and finally resulting into a major breakdown of machineries. "It is therefore hereby notified that unless you voluntarily record your willingness individually to discharge your duties faithfully and diligently by feeding the cane carrier so as to give a minimum average daily crush of 32,000 maunds, excluding stoppages other than those 591 due to overloading or under loading of the cane carrier, you will be considered to be no longer employed by the company. You must record your willingness in the office of the Factory Manager on or before 4 P.M. of Saturday the 17th December, 1960, failing which you shall stand discharged from the service of the company without any further notice with effect from 18 12 1960 and your place will be filled by recruiting other labour to man the cane carrier station." This notice was put on the notice board along with translations in Hindi and Urdu and it was also sent individually to the workmen in cane carrier department. A copy was also sent to the Secretary of the union with the workmen concerned to submit their willingness as desired by the respondent in the notice in question either individually or even collectively through the union. The secretary of the union replied to this notice on the same day and said that it was "full of maliciously false and mischievous statements". The secretary also denied that the workmen had adopted go slow tactics or that he had advised the workmen to adopt such tactics. Finally the secretary said that it was simply fantastic to ask a worker to give an undertaking to crush at least 32,000 maunds per day and if the service of any workman was terminated on his not giving the undertaking, the responsibility would be that of the respondent itself. The respondent 's case was that three workmen gave undertakings as required in the notice while the rest did not. Thereafter the situation in the factory deteriorated and the workmen grew more and more unruly and even started entering the factory without taking their attendance token. In consequence of this attitude of the workmen, the respondent issued a notice at 5 p.m. on December 17, 1960 which was in the following terms: "The following workers of the cane carrier station who failed to record their willingness in factory manager 's office by 4 p.m. this day the 17th December, 1960, to work faithfully and diligently in accordance with the management 's notice dated 15 12 1960, stand discharged from the company 's service and their names have been struck off the rolls with effect from 18th December 1960. From now on, the workers concerned have forfeited their right to go to and occupy their former place of work and any action contrary to this on their part will make them liable to prosecution for criminal trespass. "Their final account will be ready for payment by 4 p.m. on the 19th December 1960, when, or whereafter, they may present themselves at the company 's Office for receiving payment of their wages and other dues, if any, during working hours", and then mentions the names of 119 workmen of the cane carriers department. 592 Thus the services of the workmen concerned stood discharged from December 18, 1960 under this notice. This was followed by a general strike in pursuance of the notice served on the respondent by the union on December 17, 1960. The strike continued upto December 22, 1960 when as a result of an agreement it was decided that the case of the discharged workmen and the question of wages for the strike period be referred to adjudication. Consequently a joint application by both parties was made to Government on December 21, 1960. The Government then made a reference of the following two questions to the tribunal on January 25, 1961: 1. Whether the discharge of workmen mentioned in the Appendix was justified. If not, whether they should be re instated and/or they are entitled to any other relief? 2. Whether the workmen be paid wages for the period 16 00 hrs on December 18, 1960 to 8 00 hours on December 22, 1960? It may be mentioned that the respondent had held no enquiry as required by the standing Orders before dispensing with the services of the workmen concerned. Therefore, when the matter went before the tribunal, the question that was tried was whether there was go slow between November 27, 1960 and December. 15, 1960. The respondent led evidence, which was mainly documentary and based on the past performance of the factory to show that there was in fact go slow by the workmen concerned during this period. The appellants on the other hand also relying on the record of the respondent tried to prove that the cane carrier department had been giving normal work in accordance with what had happened in the past in connection with cane crushing. That is how the tribunal considered the question on the basis of the relevant statistics supplied by both parties and also oral evidence whether there was go slow during this period or not. After considering all the evidence it came to the conclusion that there was go slow during this period. Consequently it held that the discharge of the workmen was fully justified. It therefore answered the first question referred to it in favour of the respondent. The second question with respect to wages for the strike period was not pressed 9n behalf of the appellants and was therefore decided against them. Thereafter the appellants came to this Court and obtained special leave; and that is how the matter has come up before us. We are concerned in the present appeal only with the first question which was referred to the tribunal. Learned counsel for the appellants has raised three main contentions before us in support of the appeal. In the first place it is contended that the tribunal misdirected itself as to the Scope of the reference and that all that the tribunal was concerned with was to decide whether the discharge of the workmen for not giving an undertaking was justified 593 or not, and that it was no part of the duty of the tribunal to decide whether there was go slow between the relevant dates which would justify the order of discharge. Secondly, it is urged that the respondent had given no charge sheets to the workmen concerned and had held no enquiry as required by the Standing Orders. Therefore, it was not ' open to the respondent to justify the discharge before the tribunal, and the tribunal had no jurisdiction to go into the merits of the question relating to go slow. Lastly it is urged that the finding of the tribunal that go slow had been proved was perverse and the tribunal had ignored relevant evidence in coming to that conclusion. We shall deal with these contentions seriatim. We have already set out the relevant term of reference and it will be seen that 'it is wide and general in terms and asks the tribunal to decide whether the discharge of the workmen concerned was justified or not. It does not mention the grounds on which the discharge was based and it is for the tribunal to investigate the grounds and decide whether those grounds justify discharge or not. So if the tribunal finds that the discharge was due to the use of go slow tactics by the workmen concerned it will be entitled to investigate the question whether the use of go slow tactics by the workmen had been proved or not. But the argument on behalf of the appellants is that the notice of December 17 gives the reason for the discharge and the tribunal confined only to that notice and has to consider whether the reason given in that notice for discharge is justified. We have already set out that,notice and it certainly says that the workmen mentioned at the foot of the notice had failed to record their willingness to work faithfully and diligently in accordance with the respondent 's notice of December 15, 1960, and therefore they stood discharged from the respondent 's services and their names had been struck off the rolls from December 18, 1960. So it is argued that the reason for the discharge of the workmen concerned was not go slow but their failure to record their willingness to work faithfully and diligently. The tribunal had therefore to see whether this reason for the discharge of the workmen was justifiable, and that it had no jurisdiction to go beyond this and to investigate the question of go slow. We are of opinion that there is no force in this argument. Apart from the question that both parties before the tribunal went into the question of go slow and voluminous evidence was led from both sides either to prove that there was go slow or to disprove the same, it appears to us that it would be taking much too technical a view to hold that the discharge was due merely to the failure of the workmen to give the undertaking and that the go slow had nothing to do with the discharge. We are of opinion that the two notices of December 15 and December 17 have to be read together and it may be pointed out that the notice of December 17th does refer to the earlier notice of December 15th. If we read the two notices together, there can be in our opinion be no doubt that though the discharge is worded as if it was due to the failure to record their willingness to work faithfully and diligently, it was really due to the workmen concerned using go slow tactics. Notice of December 15, is in two parts. The first part sets out the facts and states what the workmen had been doing from the very beginning of the season and particularly from November 27, 1960. It states that on the instigation of the secretary of the union, the workmen had been failing in their duty to ensure adequate and regular loading of the cane carrier from the very beginning of the season. It further charges that with effect from November 27 they had in combination with one another deliberately and wilfully resorted to a clear go slow, a fact said to have been openly admitted by the secretary in the presence of the Labour Superintendent and Labour Officer, Muzaffarpur, in course of discussions held in the office of the Assistant Labour Commissioner on December 6, 1960. The notice then says that the average daily crushing is 26,000 maunds out of which more than 2,000 was due to the newly introduced device of direct feeding of the cane carrier by cane carts weighed during nights and not attributable to any effort on the workmen 's parts; thus the actual crushing had been practically reduced to something between 23,000 to 24,000 maunds per day, which was highly uneconomical and technically unsafe for the factory which had an installed crushing capacity of more than 1,200 tons a day i.e. over 32,000 maunds a day. The notice also says that about 14,000 bales of extra bagasse kept in stock as reserve and already been consumed in the last twelve days and the factory was faced with a situation when at any moment its boilers might go out of steam for want of bagasse fuel leading to an abrupt stoppage of the mill and finally resulting in a major break down of machinery. These facts which were given in the first part of the notice dated December 15, 1960 really show the charge which the respondent was making against the workmen concerned. Having made this charge of go slow in the manner indicated in the first part of the notice (and it may be mentioned that this notice was not only put on the notice board but was given to each workmen individually), the respondent then indicated in the second part what action it intended to take. In this part the respondent told the workmen concerned that unless they voluntarily recorded their willingness individually to discharge their duties faithfully and diligently by feeding the cane carrier so as to give a minimum average daily crush of 32,000 maunds, excluding stoppages other than those due to over loading or under loading of the cane carrier, they would be considered to be no longer employed by the respondent. They were given time up to 4 p.m. on December 17, 1960 to record their willingness failing which they would stand discharged from the respondent 's service without any further notice with effect from December 18, 1960. The second part of the notice thus indicated to the workmen concerned how much they had to crush every 595 day to avoid the charge of go slow. It further indicated that the respondent was prepared to let bygones be bygones if the workmen concerned were prepared to give an undertaking in the manner desired. Assuming that this course adopted by the respondent was unjust and even improper, reading of the two parts of the notice of December 15, 1960 shows that in the opinion of the respondent was the normal cane crushing per day and what was the charge of the respondent against the workmen concerned in the matter of go slow and what the respondent was prepared to accept if the workmen were agreeable to the claim of the respondent. It is clear therefore from the notice which was given on December 15, 1960 that the respondent thought that 32,000 maunds should be the normal crush every day excluding stoppages other than those due to over loading or under loading of the cane carrier. It also charged the workmen with producing much less than this for the period from November 27, 1960 to December 15, 1960, though it was prepared to 1st bygones be bygones, provided the workmen in future undertook to give normal production. It is in the background of this charge contained in the notice of December 15, 1960 that we have to read the notice of December 17, 1960. That notice says that the workmen had failed to record their willingness to work faithfully and diligently in accordance with the notice of December 15, 1960 and therefore they stood discharged, meaning thereby that the respondent was charging the workmen with go slow as indicated in the notice of December 15, 1960 and that as they were not prepared to give normal production even in future they were being discharged. Therefore, though in form the notice of December 17, 1960 reads as if the workmen were being discharged for not giving the undertaking as desired, the real basis of the notice of discharge of December 17, 1960 is the use of goslow which had already been indicated in the notice of December 15 given to each workman individually also. The reference was made on the joint application of both parties. If all that the workmen desired in their joint application for reference was that it should only be considered whether the discharge of the workmen for refusing to give an undertaking was justified, there was nothing to prevent the workmen to insist that in the joint application this matter should be specifically mentioned. In the joint application the first matter which was specified was in these terms: "Whether the discharge of workmen mentioned in the appendix was justified? If not, whether they should be reinstated and/or they are entitled to any other relief?" Now if all that was desired was that the tribunal should go into the question whether the discharge of the workmen on the ground that they had failed to give the undertaking should be investigated, it would have been easy to put this term only in the reference in the joint application thus; "Whether the discharges of the workmen mentioned in the appendix on the 596 ground of their failure to give an undertaking was justified?" The very fact that the matter specified as in dispute was put in the wide words already quoted above shows that the parties did not wish to confine their dispute only to the question whether the discharge on the ground of failure to give an undertaking was justified. Further we have already indicated that both parties understood the dispute to be whether go slow was justified or not and that is why voluminous evidence was led before the tribunal. The wide terms in which the reference was made along with the notice of December 17th read with the notice of December 15th leave no doubt in our mind that the reference included investigation of any cause which might have led to the discharge of the workmen. There is no doubt in this case that even though notice of discharge was pharsed as if the discharge was being made on account of the failure to give an undertaking the real reason for the discharge was that the workmen had been guilty of go slow between November 27 and December 15 and were not prepared in spite of the respondent 's giving them a chance to improve to show better results. Therefore taking into account the wide terms of reference, the manner in which it was understood before the tribunal, and the fact that it must be read along with the two notices of December 15 and 17, 1960, particularly because it was made soon thereafter at the joint application of the parties, we have no doubt that the tribunal was entitled to go into the real dispute between the parties, namely whether the discharge was justified on the ground that there was misconduct in the form of go slow by the workmen concerned between November 27, 1950 workmen therefore on this head must be rejected. Then we come to the question whether it was open to the tribunal when there was no enquiry whatsoever by the respondent to hold an enquiry itself into the question of go slow. It was urged on behalf of the appellants that not only there was no enquiry in the present case but there was no charge either. We do not agree that there was no charge by the respondent against the workmen concerned. The first part of the notice of December 15, 1960 which was served on each individual workmen was certainly a charge by the respondent telling the workmen concerned that they were guilty of go slow for the period between November 27 and December 15, 1960. It is true that the notice was not headed as a charge and it did not specify that an enquiry would follow, which is the usual procedure when a formal charge is given. Even so, there can be no doubt that the workmen concerned knew what was the charge against them which was really responsible for their discharge from December 18, 1960. It is now well settled by a number of decisions of this Court that where an employer has failed to make an enquiry before dismissing or discharging a workman it is open to him to justify the action before the tribunal by leading all relevant evidence before it, 597 In such a case the employer would not have the benefit which he had in cases where domestic inquiries have been held. The entire matter would be open before the tribunal which will have jurisdiction not only to go into the limited questions open to a tribunal where domestic inquiry has been properly held (see Indian Iron & Steel Co. vs Their workmen(1) but also to satisfy itself on the facts adduced before it by the employer whether the dismissal or discharge was justified, We may in this connection refer to M/s Sasa Musa Sugar Works (P) Limited vs Shobrati Khan(2), Phulbari Tea Estate vs Its Workmen(3) and the Punjab National Bank Limited vs Its Workman(4) There three cases were further considered by this court in Bharat Sugar Mills Limited.vs Shri Jai Singh(5), and reference was also made to the decision of the Labour Appellate Tribunal in Shri Ram Swarath Sinha vs Belaund Sugar Co. (6) It was pointed out that "the import effect of commission to hold an enquiry was merely this: that the tribunal would not have to consider only whether there was a prima facie case but would decide for itself on the evidence adduced whether the charges have really been made out". It is true that three of these cases, except Phulbari Tea Estate 's case(3), were on applications under section 33 of the . But in principle we see no difference whether the matter comes before the tribunal for approval under section 33 or on a reference under section 10 of the . In either case if the enquiry is defective or if no enquiry has been held as required by Standing Orders, the entire case would be open before the tribunal and the employer would have to justify on facts as well that its order of dismissal or discharge was proper. Phulbari Tea Estate 's(9) was on: a reference under section 10, and the same principle was applied there also, the only difference being that in that case, there was an enquiry though it was defective. A defective enquiry in our opinion stands on the same footing as no enquiry and in either case the tribunal would have jurisdiction to go into the facts and the employer would have to satisfy the tribunal that on facts the order of dismissal or discharge was proper. If it is held that in cases where the employer dismisses his employee without holding an enquiry, the dismissal must be set aside by the industrial tribunal only on that ground, it would inevitably mean that the employer will immediately proceed to hold the enquiry and pass an order dismissing the employee once again. In that case, another industrial dispute would arise and the employer would be entitled to rely upon the enquiry which he had held in the mean time. This course would mean delay and on the second occasion it will entitle the employer to claim the benefit of the domestic enquiry given. On the other hand, if in such cases the employer is given an opportunity to justify the (1) ; (2) [1959] Supp.S.C.R. 836.(3) [1960] IS.C.R. 32.(4) [1960] I.S.C.R.806.(5) [1962] 3 S.C.R.684.(6) [1954] L.A.C.697.598 impugned dismissal on the merits of his case being considered by the tribunal for itself and that clearly would be to the benefit of the employee. That is why this Court has consistently held that if the domestic enquiry is irregular, invalid or improper, the tribunal give an opportunity to the employer to prove his case and in doing so the tribunal tries the merits itself. This view is consistent with the approach which industrial adjudication generally adopts with a view to do justice between the parties without relying too much on technical considerations and with the object of avoiding delay in the disposal of industrial disputes. Therefore, we are satisfied that no distinction can be made between cases where the domestic enquiry is invalid and those where no enquiry has in fact been held. We must therefore reject the contention that as there was no enquiry in this case it was not open to the respondent to justify the discharge before the tribunal. (iii) The question whether there was go slow during the period from November 27 to December 15, 1960 is a question of fact and the tribunal has come to the conclusion that there was go slow during this period. Ordinarily this Court does not go into findings of fact recorded by a tribunal unless there are special reasons, as, for example, where the finding is based on no evidence, which of course is not the case here. Learned counsel for the appellants however urges that the finding of the tribunal that the workmen concerned were guilty of go slow is perverse and that evidence which was relevant and material has been ignored. As the case involves the discharge of as many as 119 workmen we have decided to go broadly into the evidence to see whether the finding of the tribunal is patently wrong. For this purpose we may first refer to the past history of the working of the respondent factory. It appears that till this court condemned the practice of go slow in the case of Bharat Sugar Mills(1). It was not unusual in the State of Bihar for workmen to give notice of go slow to employers as if it was a legitimate weapon to be used in matters of dispute between the employers and the workmen. In the present case the respondent had complained as far back at 1950 that go slow was being resorted to. In 1950 a court of enquiry was constituted to enquire into this question and it made a report that there was a slow down on the part of the workman for several days in February March 1950. It also came to the conclusion that the slow down was instigated and sponsored by union leaders. In 1951, the workmen gave notice of go slow in case their demands were not fulfilled (vide exhibit A 1) Similar notices were given in 1952 (vide exhibit A 2), In 1954 (vide exhibit A 3 and A 4) and in 1955 (vide Exs. A 5, A 6 and A 7 and on some occasions threats of go slow did actually materialise. Besides these notices the management had occasion to complain in 1955.1957, and 1958 more than once that go slow was being (x) [1962] 3 S.C.R,.599 resorted to at the cane carrier. Thus it appears that resorting to go slow was a common practice in this factory. It is in the background of this persistent attitude of the workmen that we have to see what happened in November 1960. We have already referred to the fact that the workmen were dissatisfied with the new incentive bonus scheme proposed by the respondent. It is not necessary to go into the merits of this new scheme which was proposed in September 1960. But it appears that when there was dispute in the 1959 60 season on the question of how much cane should be crushed, the secretary of the union had accepted in a conference with the Assistant Labour Commissioner that there had been a drop in the amount of cane crushed, though he maintained that it was still the average crush. He had also stated then that the workmen were dissatisfied with the incentive bonus scheme in that season and had withdrawn the extra efforts they were putting in after the introduction of the incentive scheme for the first time in 1956 57. Further it was admitted by the secretary in his evidence that when the bonus scheme was proposed in 1960 61, it was considered by the workmen in a meeting and it was decided that if the new system was introduced without the consent of the workmen they would not put in any extra effort for giving more than what was the normal crush in the mill. The evidence also shows that there were conferences about the new scheme and at one stage the respondent suggested that the norm should be 30,000 maunds crush per day while the union was agreeable to 29,500 maunds per day. But there was no agreement in this behalf and so that workmen carried out their resolve not to put in extra efforts to give more than the average normal crushing per day. Thus the season which began in November 1960 started with the withdrawal of extra efforts by the workmen which in plain terms means that the workman were not prepared to do what they had been doing in this previous season 1959 60 and were slowing down production as compared to what it was in 1959 60. It is in the background of this history and this admission that we have to look broadly into the evidence to see whether the tribunal 's conclusion that there was go slow is justified. The main contention on behalf of the respondent in this connection is that one has to see is that is called crushing speed for a day of 24 hours and it is this crushing speed which would determine whether there was go slow during the period in dispute. It has been urged that crushing speed per 24 hours is different from the actual crushing per day or the average crushing for a period, for the actual crushing per day from which the crushing speed is arrived at depends on a number of factors, particularly it depends on the amount of stoppages that take place during the day and if there are more stoppages the actual crushing on a particular day would necessarily go down. Crushing speed per twenty four hours on the other hand is arrived at by excluding the stoppages and then working out what would be the amount of cane 600 crushed in 24 hours if there had been no stoppages. The case of the respondent further is that when it gave the notice on December 15, 1960 asking for a crush of 32,000 maunds per day it really meant that the workmen should work in such a way as to give a crushing speed of 32,000 maunds per day, though the words "crushing speed" were not actually used in the notice. It is however pointed out that the notice when it mentions 32,000 maunds as the normal crush expected per day excluded stoppages other than those due to over loading or under loading of the cane carrier. Therefore, the respondent wanted the workmen to give a crushing speed of 32,000 maunds per day which would exclude stoppages, the only exception being stoppages due to over loading or underloading, which, according to the respondent, is due to the deliberate action of the cane carrier workmen to cause stoppages, We think that this explanation of what the respondent meant when it gave the notice of average daily crush of 32.000 maunds is reasonable, for it is impossible to accept that 32,000 maunds were required to be crushed irrespective of stoppages, beyond the control of the workmen. Further it is not in dispute that the labour force was more or less the same throughout these years, and therefore we have to see whether during the period from November 27 to December 15, 1960 there was any significant drop in the crushing speed. If there was such a significant drop that could only be due to go slow tactics which have been euphemistically called withdrawal of extra efforts. It is necessary therefore to took at the charts produced in this case to determine this question. The appellants mainly relay on chart exhibit W 3. That is however a chart of actual crushing per day during the period from 1954 55 to 1960 61 and has nothing to do with crushing speed which in our opinion would be the determining factor in finding out whether there was go slow. The actual crush may vary as we have already said due to so many factors, particularly due to stoppages for one reason or the other. The respondent produced another chart exhibit W 4 which shows the crushing speed for the entire season from 1954 55 to 1959 60. We consider that it would not be proper to take the figures for the years 1956 57 to 1959 60 in which years incentive bonus schemes were in force and which according to the workmen resulted in extra efforts on their part. But the figures of 1954 55 and 1955 56 would be relevant because in these years there was no incentive bonus scheme and no night weighment 'of carts. The workmen have also produced a chart showing cane crushed, actual crushing days and crushing per day; but this chart does not show the crushing speed and does not take into account the stoppages. It merely shows the actual number of working days and the average per day. That however would not be an accurate way of finding out whether in fact there was go slow during the period with which we are concerned. The respondent 's chart exhibit W 4 while showing the same amount of actual crushing also shows what would be the crushing 601 speed per 24 hours after excluding stoppages. This chart in our opinion is the proper chart for determining whether there was go slow during the revelant period. Now according to this chart (exhibit W 4) the daily average crushing speed in 1954 55 was 29,784 maunds and in 1955 56, 30,520 maunds without incentive bonus and without night weighment of carts. It appears that from the middle of 1959 60 season night weighment of carts started and it is not in dispute that resulted in an increase in the daily crushing and this increase is put at over 2,000 ' maunds per day by the respondent; the secretary of the union admitted that this would result in an increase of about 2,500 maunds per day. We have already said that in the years 1954 and 1955 there was no incentive bonus and if these figures are accepted as giving the average crushing speed per day (when there was no incentive bonus and no weighment of carts at night) it would in our opinion be not improper to accept that the crushing speed with night weighment of carts would be in the neighbourhood of 32,000 maunds per day in view of the admission that night weighment of carts resulted in an increase of crushing by about 2,000 maunds to 2,500 maunds per day. Therefore, when the respondent gave notice on December 15, 1960 that the average crushing per day should be 32,000 maunds excluding stoppages (except those due to over loading or underloading of the cane carrier, for which the workmen would be responsible) it Cannot be said that the respondent had fixed something which was abnormal. It is true that when negotiations were taking place in connection with the incentive bonus scheme for the year 1960 61, the respondent was prepared to accept a crushing speed of 30,000 maunds per day above which the incentive bonus scheme would apply. That is however easily understood for a proper incentive bonus scheme always fixes a norm which is slightly lower than the average in order that there may be greater incentive to labour to produce more than the average. Even so, when the incentive bonus scheme for 1960 61, was not acceptable to the workmen and they had already decided to withdraw what they called extra effort, the respondent would not be unjustified in asking for the full average crushing speed based on the production of the years 1954 55 and 1955 56, when there was no incentive bonus scheme and no night weighment of carts. It has been urged on behalf of the appellants that the crushing speed of 32,000 maunds per 24 hours is not correctly arrived at for it does not take into account half hour 's rest per shift which is permissible under section 55(1) of the Factories Act, No. 63 of 1948. Thus, according to the appellants, crushing speed should be worked out on 22 1/2 hours per day and the crushing will then be less by 1/16th and will only come to 30,000 maunds per day. Reliance in this connection is placed on section 55(2) of the Factories Act, which lays down that "the State Government . may by written order and for the reasons specified therein, exempt any factory from the provisions of sub section (1) so however that the total number of hours worked by a worker without an interval does not exceed 602 six. It is therefore urged that the workmen were entitled to half an hour 's rest per shift in any case because the shift was for eight hours. The respondent on the other hand relies on section 64(2) (d) for the Factories Act and its case is that the State Government had made rules under that provision in connection with sugar factories, which apply to it. Section 64(2) (d) is in these terms: "The State Government may make rules in respect of adult workers in factories providing for the exemption, to such extent and subject to such conditions as may be prescribed (d) of workers engaged in any work which for technical reasons must be carried on continuously from the provisions of sections 51, 52, 54, 55 and 56; We are of opinion that this provision in section 64(2) (d) being a special provision will over ride both sub sections(1) and (2) of section 55, for it gives power to the State Government by making rules to exempt certain types of factories from the application of the whole of section 55, subject to such conditions and to such extent as the rules may provide. It appears that rules were framed in this behalf by the Government of Bihar in 1950 by which sugar factories were exempted from the application of section 55 for purposes of handling and crushing of cane, among others subject to the condition that the workers concerned shall be allowed to take light refreshment or meals at the place of their employment, or in a room specially reserved for the purposes or in a canteen provided in the factory, once during any period exceeding four hours. Thus cane crushing operations are exempt from section 55(1) and section 55(2) subject to the condition mentioned above. We may also refer to section 64(5) which lays down that the rules made under this section shall remain in force for not more than three years. The rules to which reference has been made are of 1950; but there is nothing to show that these rules were not continued after every interval of three years and the position that the exemption applies to sugar factories even now as provided in these rules was not disputed. We shall therefore proceed on the basis that the exemption applied to sugar factories in Bihar. In view of this, the workmen cannot claim half an hour 's rest per shift as urged on their behalf, though sometime must be allowed for refreshment or light meals as provided in the provision granting exemption. This means that a few minutes would be allowed to each individual in turn in each shift for light refreshment or meals in such a way that the work does not stop. If we make a total allowance of half an hour or so in this connection the average crushing speed would be reduced to slightly over 31,000 maunds per day and that is all the adjustment that the appellants can claim in view of the exemption under section 64(2) (d). Let us now turn to the actual position between November 27 and December 15, 1960. This will appear from chart exhibit W 7. 603 That chart shows a crushing speed of 29,859 maunds per day from November 10 to 26, when, according to the respondent, there was only mild go slow. We are however concerned with the period from November 27 to December 15, 1960 and the crushing speed for 24 hours during that period was 27,830. Now if we take the average crushing speed as 32,000 maunds per 24 hours without any adjustment or even a little over 31,000 maunds with adjustment following upon the rule relating to exemption from section 55, there is certainly a significant drop in average crushing speed during this period. Further we find that there is a significant drop even as compared to the period between November 10 to 26, 1960, inasmuch as the drop was over 2,000 maunds per day. Therefore it cannot be said that the tribunal was incorrect in its conclusion that there had been go slow during the period from November 27 to December 15. It may be added that when comparisons are made on the basis of crushing speed and labour force is more or less constant, as is the ease here, other minor factors to which our attention was drawn on behalf of the appellants during argument do not matter at all. Even if we take the figure of 30,000 maunds as the crushing speed which the respondent had put forward at the time of the discussion on the incentive bonus scheme, we find that though there was not much difference during the period from November 10 to November 26, there was a significant drop of over 2,000 maunds per day from November 27 to December 15. Looking at the matter in this broad way and that is all that we are prepared to do, for we are examining a finding of fact of the tribunal we cannot say that its conclusion that there was go slow between November 27 and December 15 is not justified. Finally, it is urged that notice was given to the workmen on December 15 and they were discharged on December 17, 1960 without giving them a change to give the necessary production as desired in the notice. But as we have already indicated, the charge in the notice of December 15 was that the workmen had been going slow from November 27 and they were asked to give an undertaking to improve and the respondent was apparently willing to overlook the earlier lapse. Even assuming that the demand of an undertaking was unjustified, it does appear that the attitude of the workmen was that they would do no better; and in those circumstances they were discharged on December 17, 1960 on the basis of misconduct consisting of go slow between November 27 and December 16, 1960. That misconduct has been held proved by the tribunal and in our opinion that decision of the tribunal cannot be said to be wrong. In the circumstances the tribunal was justified in coming to the conclusion that the discharge was fully justified In this view of the matter, the appeal fails and is hereby dismissed. In the circumstances we order parties to bear their own costs. Appeal dismissed.

The workers of the respondent started a go slow in its sugar factory. Therefore, the respondent issued a general notice to those workmen and individually to each workman notifying that unless he recorded his willingness to discharge his duties faithfully and diligently so as to give a certain minimum output, he will be no longer employed; and that he must record his willingness in the office by a certain time, failing which he shall stand discharged from the service of the respondent without any further notice. Because the appellants, who were 119 of such workmen. failed to record their willingness, the respondent issued a notice discharging their services. The respondent held no enquiry as required by the Standing Orders before dispensing with the, services of the appellants. A general strike followed resulting in a joint application by both the parties to the Government and the Government referred the question to the Tribunal, whether the discharge of the workmen was justified. The Tribunal came to the conclusion that there was go slow during the period, and consequently held that the discharge of the workmen was fully justified. In appeal by Special Leave the appellant contended that (i) all that the Tribunal was concerned with was to decide whether the discharge of the workmen for not giving an undertaking was justified or not, and that it was no part of the duty of the Tribunal to decide whether there was go slow which would justify the order of discharge; (ii) Since the respondent held no enquiry as required by the Standing Orders, it could not justify the discharge before the Tribunal and (iii) the finding of the Tribunal that go slow, had been proved was perverse and the Tribunal had ignored relevant evidence in coming to the conclusion. HELD: The contentions must be rejected. (i) Taking into account the wide terms of reference, the manner in which it was understood before the Tribunal, and the fact that it must b.e read alongwith the two notices, particularly because it was made soon thereafter at the joint application of the parties, the Tribunal was entitled to go into the real dispute between the parties, namely whether the discharge was justified on the ground that there was misconduct in the form of go slow by the workmen concerned. [596D] (ii) No distinction can be made between cases when the domestic enquiry is invalid and those where no enquiry has in fact been held. This Court has consistently held that if the domestic enquiry is irregular, invalid or improper, the Tribunal may give an opportunity 589 to the employer to prove his case and in doing so the Tribunal tries the merits itself. [598A C] Case law referred to. (iii) As the case involved the discharge of 119 workmen, this Court went into the evidence, and the evidence showed that the decision of the Tribunal was not wrong that there Was go slow and that the discharge was fully justified. [598E]

(C) No. 1237 of 1988. (Under Article 32 of the Constitution of India). P.P. Rao and Ms. K Amreshwari, B. Rajeshwar Rao and Vimal Dave for the Petitioners. V.R. Reddy, Addl. Solicitor General, K. Madhaya Reddy, G. Prabhakar, B. Kanta Rao, A. Ranganathan and A.V. Rangam for the Respondents. The Judgment of the Court was delivered by KULDIP SINGH, J. The petitioners and respondents 4 to 16 are District and Sessions Judges in the State of Andhra Pradesh. The petitioners are direct recruits whereas the respondents were promoted from the Subordinate judiciary. The respondents were initially appointed on temporary basis in the year 1978/1979 but they were made substantive in the year 1983. The petitioners who were appointed substantively in the year 1981 claim seniority over the respondents by way of this petition under Article 32 of the Constitution of India. The recruitment to the Andhra Pradesh Higher Judicial Service (the Service) is governed by the Rules called "The Andhra Pradesh State Higher Judicial Service Special Rules" (the Special Rules). Rules 1, 2, 4 and 6 of the Special Rules which are relevant are as under: "Rule 1. Constitution: The service shall consist of the following categories: 550 Category 1 : District and Sessions Judges 1st Grade. Category II : District and Sessions Judges, Second Grade including Chairman, Andhra Pradesh Sales Tax Appellate Tribunal, Chief Judge, City Civil Court, Additional Chief Judge, City Civil Court, Chief Judge, Court of small Causes, Chief City Magistrate, Chairman, Tribunal for Disciplinary Proceedings, Presiding Officers, Labour Courts and Addl. District and Sessions Judges. Rules 2. Appointment : (a) Appointment to Category 1 shall be made by promotion from Category II and appointment to Category II shall be made: (i) by transfer from among: (a) Sub Judges in the Andhra State Judicial Service; or in the Hyderabad State Judicial Service; and (ii) by direct recruitment from the Bar: Provided that 33 1/3% of the total number of permanent posts shall be filed or reserved to be filled by direct recruitment. Explanation: In the determination of 33 1/3% of the total number of permanent posts, fractions exceeding one half shall be counted as one and other fractions shall be disregarded. (b) All promotions shall be made on grounds of merit and ability, seniority being considered only when merit and ability are approximately equal. Rule 4. Probation: Every person appointed to Category II otherwise than by transfer, shall, from the date on which he joins duty be on probation for a total period of one year on duty. Rule 6. Seniority: The seniority of a person appointed to Category 1 or Category 2 shall be determined with refer 551 ence to the date from which he was continuously on duty in that category. " We may briefly notice the scheme of the Special Rules. Rule 1 constitutes the Service. Category 1 consists of District and Sessions Judges ' 1st grade and Category II consists of District and Sessions Judges Second grade. Rule 1 does not say that Service shall consist of only permanent posts. All the posts designated as District and Sessions Judges Second grade under Category II are part of the service under Rule 1. In other words, as and when a post of District and Sessions Judge Second grade is created permanent or temporary it becomes part of the Service under Rule 1 of the special Rules. Rule 2 provides the method of appointment. Appointment to Category 1 is from Category II. Appointment to Category II is from two sources. By transfer from amongst the Subordinate Judges and by direct recruitment from the Bar. Proviso to Rule 2 states that 33 1/3% of the total number of permanent posts shall be filled or reserved to be filled by direct recruitment. All the posts of District and Sessions Judges Second grade are part of the Service but quota for the direct recruits is provided only in the permanent posts. Rule 6 of the Rules provides for the fixation of seniority. Under Rule 6 the seniority of persons appointed to Category 1 or Category II posts is fixed on the basis of continuous length of service in their respective posts. On the plain reading of the Special Rules the salient features of the Service can be culled out as under: 1. Rule 1 provides for the constitution of the Service. All the posts of District and Sessions Judges Second grade created from time to time are part of the Service. The natural corollary is that the Service consists of permanent as well as temporary posts. The recruitment to Category II of the service is by transfer from amongst the Subordinate Judges and also by direct recruits from the Bar. 33 1/3% of the total number of permanent posts in Category II of the Service are to be filled by way of direct recruitment. The seniority under Rule 6 is to be determined with reference to the date from which a person is continuously on duty. Whether the person 552 is continuously on duty against a temporary post or permanent post is of no consequence. A person is entitled to the fixation of his seniority on the basis of continuous length of service rendered either against permanent post or temporary post. The three petitioners were appointed as District and Sessions Judges Second grade by direct recruitment on October 12, 1981. Petitioners 1 and 2 joined service on October 23, 1981 and petitioner 3 on October 30, 1981. Respondents 4 to 16 were appointed District and Sessions Judges Second grade by transfer from amongst the Subordinate Judges during the years 1978/79. It is not disputed that permanent vacancies in their quota became available in the year 1983. We, therefore, proceed on the basis that the petitioners were appointed substantive members of the Service earlier to respondents 4 to 16. We may at this stage notice Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules (the State Rules). The State Rules are general rules which are applicable to all the services in the State of Andhra Pradesh. Needless to say that to the extent the Special Rules are applicable to the Service the State Rules are excluded. Rule 10(a)(i) of the State Rules is as under: "10. Temporary appointment. (a)(i) Where it is necessary in the public interest to fill emergently a vacancy in the post borne on the cadre of a service, class or category and if the filling of such vacancy in accordance with the rules is likely to result in undue delay, the appointing authority may appoint a person temporarily otherwise than in accordance with the said rules. " Mr. P.P. Rao, learned counsel for the petitioners has raised the following contentions for our consideration: 1. That the Service consists of only permanent posts under the Special Rules. There is no provision under the Special Rules for adding temporary posts to the cadre. The appointment of respondents to the posts of District and Sessions Judges Second grade on temporary basis can at best be treated under rule 10(a)(i) of the State Rules. 553 2. The temporary service rendered by respondents.4 to 16 being outside the cadre cannot be counted towards seniority. Proviso to Rule 2 and Rule 6 of the Special Rules have to be read together and doing so the permanent vacancies having been made available for respondents 4 to 16 in the year 1983 their service prior to that date cannot be counted towards seniority. Before dealing with Mr. Rao 's contentions, we may notice two preliminary contentions raised by Mr. K. Madava Reddy, learned counsel for the respondents. Mr. Madava Reddy has invited our attention to the judgment of a Division Bench of Andhra Pradesh High Court in T.H.B. Chalapathi and others vs High Court of Andhra Pradesh and others, Writ Petition Nos. 1968/82, 52/83 and 12282/85 decided on December 28, 1985. Those writ petitions were filed before the Andhra Pradesh High Court by the direct recruits to Category II of the Service claiming seniority over the persons who were appointed to category 11 on temporary basis earlier to them. Similar questions were raised as are being raised by Mr. P.P. Rao before us. By a well reasoned judgment the High Court rejected all the contentions of the direct recruits and dismissed the writ petitions. It is not disputed that Special Leave Petition No.1035 of 1986 against the said judgment was dismissed by this Court on January 30, 1988. Mr. Madava Reddy plausibly contends that all the contentions which are being raised by the petitioners in this Court, having been rejected by the High Court and special leave petition against the judgment of the High Court having been dismissed by this Court the same cannot be agitated once over again. Mr. Madava Reddy then contended that the petitioners were appointed in the years 1981 and since then till the year 1988 twelve seniority lists have been published showing the petitioners below respondents 4 to 16. At no point of time they challenged the seniority lists in the Court. Even when the writ petitions filed by Chalapathi and others were pending they did not intervene before the High Court. The petitioners, according to Mr. Madava Reddy, are guilty of gross delay and latches and as such are not entitled to get relief by way of this petition under Article 32 of the Constitution of India. 554 We see considerable force in both the contentions raised by Mr. Madava Reddy. We are, however, of the view that it would be in the larger interest of the Service to dispose of this petition on merits. We see no force. in the contention of Mr. Rao that the Service consists of only permanent posts under the Special Rules. We have already interpreted Rule 1 to mean that the Service under the Special Rules consists of all the posts permanent and temporary which have been designated as District and Sessions Judges Second grade. Even otherwise in the absence of any prohibition under the Special Rules the State Government can always create temporary posts as additions to the cadre. Rule 10(a)(i) of the State Rules has no application to the Service which is governed by the Special Rules. Rule 10(a)(i) provides for emergency appointments made on stop gap basis to meet a temporary exigency. Apart from that the temporary appointments under the said Rules are made without following the procedure prescribed under the Rules governing the relevant service. The appointments of respondents 4 to 16, on the other hand, Were made under Rule 2 of the Special Rules by the State Government in consultation with the High Court. We are of the view that the Special Rules provide a complete scheme for the appointment and seniority of the members of the Service. Rule 10(a)(i) of the State Rules has no application to the Service Constituted under the Special Rules. We, therefore, reject the contention raised by Mr. Rao. Having taken the view that the Service under the Special Rules consists of permanent as well as temporary posts the second contention of Mr. Rao looses its ground. Temporary, posts of District and Sessions Judges Second grade being part of the Service the seniority has to be counted on the basis of length of service including the service against a temporary post. The third contention of Mr. Rao is mentioned to be rejected in view of Rule 6 of the Special Rules. Rule 6 of the Special Rules is in no way dependent on proviso to Rule 2 of the Special Rules. Both are to be operative independently. In the scheme of the rules the seniority rule is not dependent on the quota Rule. Quota has been provided for the direct recruits only against permanent posts. The seniority rule permits the counting of total period of service from the date a person is on duty against a 555 post in the category. Even though, the petitioners were appointed substantively to the service earlier to respondents 4 to 16 but in view of Rule 6 they cannot be declared senior on the basis of continuous length of service against temp orary as well as permanent posts respondents 4 to 16 have been rightly given seniority above the petitioners. We, therefore, find no force in any of the contentions raised by Mr. Rao. The writ petition is consequently dismissed. No costs. N.V.K. Petition dismissed.

Recruitment to the Andhra Pradesh Higher Judicial Service is governed by "The Andhra Pradesh State Higher Judicial Service Special Rules". Rule 1 constitutes the service. Category 1 consists of District and Sessions Judges 1st grade and Category 11 consists of District and Sessions Judges, Second Grade. Appointment to Category 1 is from Category 11. Appointment to Category 11 is from two sources by transfer from amongst the Subordinate Judges and by direct recruitment from the Bar. The petitioner were direct recruits whereas respondents 4 to 16 were promoted from the Subordinate judiciary. The respondents were Initially appointed on temporary basis in the yew 1978/1979 but they were made substantive in the year 1983. The petitioners who were appointed substantively in the year 1981 claimed seniority over the said respondents, and riled the Writ Petition under Article 32 of the Constitution of India for relief. It was contended on their behalf that: (1) The Service consists of only permanent posts, there is no provision under the Special Rules for adding temporary posts to the cadre, consequently the appointment of respondents 4 to 16 to the post of District and Sessions Judges, Second Grade on temporary basis can at best be treated under Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules. (2) The temporary service rendered by the respondents 4 to 16 being outside the cadre cannot be counted towards seniority. (3) Porviso to Rule 2 and Rule 6 of the Special Rules have to be read together, and as such the permanent vacancies having been made available for them in the year 1983 their service 548 prior to that date cannot be counted towards seniority. The respondents constested the writ petition by contending that the petitioners were appointed in the year 1981 and since then till the year 1988, twelve seniority lists have been published showing the petitioners below respondents 4 to 16, and at no point of time they challenged the seniority lists in the Court. Even when the Writ Petition T.H.B. Chalapathi & Ors. vs High Court of Andhra Pradesh & Ors., was pending in the High Court they did not intervene. The petitioners were thus guilty of gross delay and latches and as such are not entitled to get relief in the Writ Petition. Dismissing the writ petition, this Court, HELD: 1. (i) Rule 1 has to be interpreted to mean that the service under the Special Rules consists of all the posts permanent and temporary which have been designated as District and Sessions Judge Second Grade. Even otherwise in the absence of any prohibition under the Special Rules, the State Government can always create temporary posts as addi tions to the cadre. [554 B] (ii) Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules has no application to the Andhra Pradesh Higher Judicial Service which is governed by the Special Rules. Rule 10(a)(i) provides for emergency appointments made on stop gap basis to meet a temporary exigency. Apart from that the temporary appointments under the said Rules are made without following the procedure prescribed under the Rules governing the relevant Service. [554 C D] In the instant case, the appointments of respondents 4 to 16 were made under Rule 2 of the Special Rules by the State Government in consultation with the High Court. The Special Rules provide a complete scheme for the appointment and seniority of the members of the Service. [554 D] 2. Temporary posts of District and Sessions Judges Second Grade being part of the Service, the seniority has to be counted on the basis of length of service including the service against the temporary posts. [554 F] 3. Rule 6 of the Special Rules is in no way dependent on the proviso to Rule 2 of the Special Rules. Both are to be operative independently. In 549 the scheme of the rules, the seniority rule is not dependent on the quota Rule. Quota has been provided for the direct recruits only against permanent posts. The seniority rule permits the counting of total period of service from the date a person is on duty against a post in the category. [554 G H] In the instant case, even though the petitioners were appointed substantively to the service earlier to respondents 4 to 16 but in view of Rule 6 they cannot be declared senior on the basis of continuous length of service. Respondents 4 to 16 have been rightly given seniority above the petitioners. [555 A]

Appeal No. 257 of 1964. Appeal by special leave from the judgment and order dated February 19, 1963 of the Government of India, Ministry of Mines and Fuel, New Delhi on an application for review under rule 54 of the Mineral Concession Rules 1960. section N. Andley, Rameshwar Nath, P. L. Vohra and Mahinder Narain, for the appellant. C. K. Daphtary, Attorney General, R. Ganapathy lyer and B. R. G. K. Achar, for respondent No. 1. R. N. Sachthey, for respondent No. 2. The Judgment of the Court was delivered by Hidayatullah, J. The appellant Messrs. Nandram Hunatram of Calcutta, a firm consisting of four partners including one Kishan Lal Aggarwal, held a mining lease for coal in respect of Handidhua Colliery for a period of 30 years commencing on April 6, 1959. Under Part VII of the lease, which contained the covenants of the lessee, the firm had undertaken to commence mining operations within one year from the date of the execution of the lease and then to continue the work of searching and winning minerals without voluntary intermission in a skillful and workman like manner. The firm had appointed one M. L. Goel as the Manager and Kishan Lal Aggarwal as the occupier of the colliery. It appears (and in fact it is not denied) that the partners fell out among themselves and as none of them was willing to spend money on the colliery, work deteriorated and came to a standstill in May 1962. Goel reported to the State Government that the wages of the labourers had not been paid for weeks, that work had stopped at the colliery and that even the essential services were not being maintained owing to non payment of wages. He wrote to the firm and Government early in the first week of May, bringing to their notice that the colliery was in danger of being flooded if the essential services stopped working. On May 9, 1962 the essential services stopped working as their wages had not been paid for several weeks. The colliery began to get flooded when the pumps stopped and it was apprehended that within the next few hours the pumps would be drowned and the colliery lost. Government, however, stepped in and made a promise to the essential workmen that their wages would be paid and this saved the colliery. On May 14, the Chief Inspector of Mines was informed by Kishan Lal Aggarwal that he was restrained by the other 106 Partners of the firm from making payment for running expenses of the colliery and that he was not in a position to perform his duties as an occupier. He accordingly resigned his office. Goel also resigned and on May 16, 1962 the Sub divisional Officer, Talchar informed Government that the situation had become very alarming and that some action was absolutely necessary. Government thereupon gave a notice on May 19, 1962 asking the firm to remedy the defect within sixty days of the receipt of the notice failing which Government threatened to take over the colliery from the firm. As the firm did nothing to remove the defects and did not request for extension of time, Government took over the colliery and terminated the lease. The firm thereupon filed an application for revision before the Central Government under Rule 54 of the Mineral Concession Rules 1960. The Central Government asked for the comments of the State Government on the application and invited the firm to make its own comments upon the reply of the State Government. Taking the entire matter into consideration the Central Government by order, February 19, 1963, rejected the application for revision. The present appeal is against the order of the Central Government by special leave of this Court. It was admitted in the application for revision and it is not denied before us that the partners were quarrelling among themselves and the work at the colliery had therefore stopped. It is admitted that the wages of the labourers were not paid for about five weeks before Government sent its notice on May 19, 1,962. It is further admitted that the essential services had also stopped working and that but for the timely action of the Government, the colliery would have been flooded in a matter of hours and probably rendered unworkable till dewatered. With this background in mind we have to consider the objections of the firm to the order of the Central Government in the first instance and of the State Government in the final analysis. Clause (3) of Part VII of the lease is one of the covenants by the lessee and under it the lessee undertook to continue work, without voluntary intermission, in a skilful and workman like manner. Under cls. (i) to (x) of Rule 41 of the Mineral Concession Rules, 1949 and under Rule 27(5) of the Mineral Concession Rules, 1960 power is conferred on the State Government to require the lessee by notice to remove a breach within 60 days of the receipt of notice and in default to determine the lease and forfeit the whole or part of the security in deposit. Under Rule 27(1)(f) the lessee is also required to conduct operations in a proper, skilful and workmanlike manner. It is abvious that there was a breach by the lessee of the covenants and the Mineral Concession Rules when the firm stopped working the colliery. Even if the firm did not order the stoppage of the work at the colliery it is clear from the complaints 107 of Goel and Kishan Lal Aggarwal that no payment was being made to the labourers and they stopped work. On record there are many telegrams and letters sent by the Workers ' Association to Government complaining of the failure of the firm to pay their wages for weeks. It is thus clear that action was absolutely necessary to save the colliery from being ruined. It is contended, however, that the wages were paid in full on the 17th of July but that obviously cannot do away with voluntary intermission which had already taken place for a few weeks. The firm in its representation to the Central Government said that it had plans to raise as much as 240,000 tons of coal per year but their performance shows that in April, 1962 they had raised less than 2,000 tons and nothing in May, June and July. In these circumstances, there is no merit whatever in the submission of the firm that the action by the State Government was arbitrary and high handed. It is plain that the firm did not fulfil its obligations under the lease and, whatever the reason, it was guilty of voluntary intermission in the working of the colliery and of endangering it by neglect. This entitled the State Government to step in and determine the lease under the terms of the lease and the provisions of the Mineral Concession Rules. It is, however, argued before us that the Central Government did not give a hearing to the firm and also did not give any reasons in its order dismissing the application for revision. Reliance is placed upon two recent decisions of this Court which, following the earlier decision reported in Harinagar Sugar Mills Ltd. vs Shyam Sundar Jhunjhunwala(1) have laid down that Government should give reasons when it performs quasi judicial functions such as hearin appeals and revisions. The two cases are Madhya Pradesh Industries Ltd. vs Union of India and Ors.(2) and Aluminium Corporation of India Ltd. vs Union of India and Ors(3) In Harinagar Sugar Mills(1) the order was reversed on the ground that reasons for the decision should have appeared. In the Aluminium case there was dispute as to how much scrap was remelted and Government gave its decision on a report received behind the back of the aggrieved party again without stating why a part of the assessee 's case was rejected. In the Madhya Pradesh Industries case it was pointed out that an order affirming an earlier decision need not fail because it does not repeat the same reasons over again. The Mineral Concession Rules make it incumbent on the Central Government to obtain the comments of the State Government upon the application for revision and cast a duty on the Central Government to afford an opportunity to the applicant to make representations in respect of the comments of the State Government. This procedure was correctly followed and the Central Government thus had a detailed discussion of the pros and cons of the case before it. The facts in the case were quite clear and spoke (1) ; , (2) ; (3) C.A. No.635 of 1964 decided on September 23,1965. 108 for themselves. The belated attempt to pay the back wages of the workmen did not undo the voluntary intermission for a significantly long period and did not wipe off the dereliction on the part of the firm by which the existence of the colliery was gravely endangered. The documents on the record quite clearly establish that the colliery was being flooded as the essential services had stopped functioning and but for the timely intervention of the State Government the colliery would have been lost. In these circumstances, it is quite clear that the action of the State Government was not only right but proper and this is hardly a case in which any action other than rejecting the application for revision was called for and a detailed order was really not required because after all the Central Government was merely approving of the action taken in the case by the State Government, which stood completely vindicated. The order of the Central Government is clearly sustainable on the ma terial and it is not said that anything has been withheld from us. The action of the State Government far from being arbitrary or capricious was perhaps the only one to take and all that the Central Government has done is to approve of it. The appeal fails and is dismissed with costs. Appeal dismissed.

The appellant firm held mining lease of a colliery on the condition to continue the work, without voluntary intermission, in a skillful and workman like manner. The partners fell out amongst, themselves, the work of the colliery stopped, wages of the labourers were not paid, the essential services stopped working, and the colliery began to get flooded. The State Government stepped in and made a promise to the essential workmen that their wages would be paid and this saved the colliery. The State Government gave a notice asking the firm to remedy the defect within sixty days failing which it would take over the colliery. As the firm did nothing to remove the defects and did not request for extension of time, the State Government took over the colliery and terminated the lease. The firm filed a revision before the Central Government. The Central Govern ment asked for the comments of the State Government and invited the firm to make its own comment upon the reply of the State Government. Taking the entire matter into consideration, the Central Government rejected the revision. In appeal to this Court, the firm contended that the action by the State Government was arbitrary and highhanded and that the Central Government did not give a hearing to the firm and also did not give any reasons in its order dismissing the revision. HELD:The action of the State Government far from being arbi trary or capricious was not only right but proper. This$ was hardly a case in which any act ion other than rejecting the application for revision was called for and a detailed order was really not required because after all the Central Government was merely approving the action taken in the case by the State Government, which stood completely vindicated. [108 B C] The Mineral Concession Rules make it incumbent on the Central Government to obtain the comments of the State Government upon the application for revision and cast a duty on the Central Government to afford an opportunity to the applicant to make representations in respect of the comments of the State Government. This procedure was correctly followed and the Central Government thus had a detailed discussion of the pros and cons of the case before it. [107 G]. Harinagar Sugar Mills Ltd. vs Shyam Sundar Jhunjhunwala, [ ; , Madhya Pradesh Industries Ltd. vs Union of India. [1966] J.S.C.R. 466 and Aluminium Corporation of India Ltd. vs Union of India and Ors., C.A. No. 635/64, dated 22 1965] referred to. 105 The firm did not fulfil its obligations under the lease and, whatever the reason, it was guilty of voluntary intermission in the working of the colliery and of endangering it by neglect. This entitled the State Government to step in and determine the lease under the terms of the lease and the provisions of the Mineral Concession Rules. [107 C D].

l Appeal No. 897 of 1963. Appeal from the judgment and order dated October 4, 1962 of the Kerala High Court, Ernakulam, in Writ Appeal No. 17 of 1962. 188 A.V. Viswanatha Sastri, Arun B. Saharaya and Sardar Bahadur, for the appellant. V.P. Gopalan Nambiar, Advocate General for the State Kerala and V.A. Seyid Muhammad, for the respondent. The Judgment of the Court was delivered by Bachswat, J. The short question in this appeal is whether the proposed acquisition of the electrical supply undertaking of the appellant by the State of Kerala in pursuance of the notice exhibit G, dated November 20, 1959 is authorised by section 6 of the . The appellant is the holder of a license for the supply of electrical energy in Ernakulam and other places in Cochin. The license was originally granted to the managing agents of the appellant under the Cochin Electricity Regulation III of 1902 then in force in Cochin and subsequently assigned to the appellant with the permission of the Cochin Government. On the merger of Travancore Cochin with the Union of India, the was made applicable by the Part B States Laws Act, 1951 (Act III of 1951) to the Travancore Cochin area, and the Cochin Electricity Regulation stood repealed. The (Act 54 of 1948) was also made applicable to the Travancore Cochin area by the Part B States Laws Act, 1951. On March 31, 1957 the Kerala Electricity Board was constituted, and by s.71 of Act 54 of 1948, any right and option to purchase the undertaking of the licensee under the was transferred to and vested in the Board. Now, the right or option to purchase the undertaking of a licensee under s.7(1) of the then in force was exercisable "on the expiration of such period, not exceeding fifty years, and of every such subsequent period, not exceeding twenty years as shall be specified in this behalf in the license. " Sub section (4) of s.7 provided: "Not less than two years ' notice in writing of any election to purchase under this section shall be served upon the licensee by the local authority or the State Government, as the case may be." Clause 15(a) of the license held by the appellant provides: "The option of purchase given by Section 7, sub section (i) of the Regulation shall first be exercisable on the expiration of 25 years from the commencement of this license and on the expiration of every subsequent period of ten years during the continuance of this license." Section 7(1) of the corresponds to section 7(i) of the Regulation, that is to say, of the Cochin Electricity. Regulation. The date of the commencement of the license is December 3, 1935. The period of 25 years mentioned in el. 15(a) of the license expired on December 2, 1930. The last date for giving the two years notice of the election to purchase on, the try of ' December 2, 1960 required under section 7(4) of the Indian e electricity Act, 1910 expired on December 2. 1958. On February 11, 1959, the State Electricity Board served on the appellant a notice, exhibit B, of its election to purchase the undertaking of, the appellant on the expiry of December 2, 1960, but this notice was not being in accordance with section 7,(4) was of no legal effect. By the Indian Electricity (Amendment) Act, 1959 (Act 32 1959), s.6 now in force was substituted for the old s.7 of the , with effect from September 5, 1959. Section 6 of the now in force reads: "6. (1) Where a license has been granted to any person not being a local authority, the State Electricity Board shall, (a) in 'the case of a license granted ' before the commencement of the Indian Electricity (Amendment) Act, 1959, on the expiration of each such period as is specified in the license; and (b) in the case of a. license granted on or after the commencement of the said Act, on the expiration of such period not exceeding twenty years and of every such subsequent period, not exceeding ten years, as shall be specified in this behalf in the license; have the option of purchasing the undertaking and such opt:on shall be exercised by the State Electricity Board serving upon the license a notice in writing of not less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period referred to in this sub section. (2) Where a State Electricity Board has not been constituted, or if constituted, does not elect to purchase the undertaking, the State Government shall have the like option to be exercised in the like manner of purchasing the undertaking. (3)Where neither the State Electricity Board nor the Government elects to purchase the undertaking, any authority constituted for an area within which the area of supply is included shall have the like option to be exercised in the like manner of purchasing the undertaking. (4) If the State Electricity Board intends to exercise the option of purchasing the undertaking under this it shall send an intimation in writing of such intention to the State Government at least eighteen months before the expiry of the relevant period referred to in subsection (1) and if no such intimation as aforesaid is receiv 190 ed by the State Government the State Electricity Board shall be deemed to have. elected not to purchase the undertaking. (5) If the State GoVernment intends to exercise the option of purchasing the undertaking under this section. shall send an intimation in writing of such intention to the local authority, if any, referred to in sub section (3) at least fifteen months before the expiry of the relevant period referred to in sub section (1) and if no such intimation as aforesaid is received by the local authority. the State Government shall be deemed to have elected not to purchase the undertaking. (6) Where a notice exercising the option of purchasing the undertaking has been served upon the licensee under this sect:on, the licensee shall deliver the undertaking to the State Electricity Board, the State Government or the local authority, as the case may be, on the expiration of the relevant period referred to in sub section (1) pending the determination and payment of the purchase price. (7) Where an undertaking is purchased under this section, the purchaser shall pay to the licensee the purchase price determined in accordance with the provisions of sub section (4) of section 7A." On October 24, 1959, the State Electricity Board served upon the appellant a notice exhibit D, of its election to purchase the undertaking on the expiry of December 2, 1960. On October 29, 1959, the State Electricity Board served upon the appellant another notice, exhibit E, of its election. On November 20, 1959, the State Government served upon the appellant a notice, exhibit G, of its election to purchase the undertaking on the expiry of December 2. 1960. On November 14, 1960, the appellant filed a writ petition in the High Court of Kerala impleading the State of Kerala and the Kerala State Electricity Board and asking for the issue of appropriate writs and orders restraining them from taking any action pursuant to the notices. B,D,E and G. On December 20. 1961, a learned single Judge of the High Court passed the following order : "In view of the representation made before me by both the learned Advocate General appearing for the State, the I st respondent, and Mr. Krishnaswami lIyengar, learned counsel appearing for the Kerala State Electricity Board. the second respondent. that for the purpose of this writ petition. the notices issued by the Kerala State Electricity Board, Exs. B. D and E can be ignored, it follows that neither the 1st respondent nor the 2nd respondent has any jurisdiction or power to take any action on the basis Exs. B. D or E. In view of the fact that I am uphold 191 ing the action of the State Government, who had issued the notice exhibit G, it follows that the 1st respondent alone is entitled to take further action under the Act. in pursuance of the notice, exhibit G, issued and sent along with the covering letter, exhibit F on 20 1 1 1959. It follows, subject to what is stated about Exs. B, D and E, that the writ petition has to be dismissed. There will be no order as to costs. " The effect of this order was that the State Electricity Board waived and abandoned all its rights of purchase of the undertaking under the notices, Exs. B, D and E, and neither the Kerala State Electricity Board nor the State of Kerala had any jurisdiction or power to take any action on the basis of those notices, and save as aforesaid, the writ petition was dismissed, and it was held that State Government was entitled to take further action under its notice, exhibit G. Aggrieved by this order, the appellant filed an peal in the Kerala High Court impleading the State Government only as the party respondent. The State Electricity Board did not file any appeal from the order of the learned single Judge. By its judgment dated October 4, 1962, a Division Bench of the High Court dismissed the appeal. In paragraph 15 of its judgment, Bench observed: "In its petition the appellant asked for reliefs both against the State Government and the State Electricity Board. However, in the course of the hearing of the petition, the Board gave up its claims under Exts. B. D and E, and only the claim of the State Government under Ext. G was canvassed. The petition was, in effect, allowed: against the Board. The Baord has not appealed and is not a party to the present appeal; and its notices may therefore be ignored except to the extent that they may affect the rights of the State Government. " The appellant now appeals to this Court under a certificate granted by the High Court under articles 133(1)(a) and 133(1)(c) of the Constitution. On half of the appellant, Mr. Vishwanath Sastry contended that (1) as the two years ' notice in writing of. the election to purchase the undertaking on the expiry of December, 2, 1960 was not served on the appellant as required by the old section 7(4) of the . 1910. the appellant acquired a vested right to hold the license until the expiry of a further period of ten years.that is to say, until December, 2, 1970. and this vested right was not taken away either expressly or by necessary implication by the new s.6 of the introduced by the amending Act 32 of 1958; (2) the expression "on the expiration of each such period as is specified in the license" in the new s.6(1)(a) means a period which has not expired and on the expiry of which the option may be legally exercised. and since in the absence of the two years ' notice required under the old s.7(4), the option of purchase on the expiry of December 2, 1960 could not be legally 192 exercised, the new s.6(1) did not confer any option of purchase on the expiry of December 2, 1960 and the first option exercisable under the new s.6(1) would be on the expiry of December 2, 1970; (3) sub sections (4) and (5) of the new s.6 show that the period on the expiry of which the option under sub s(1)of s.6 is exercisable, is a period which would expire at least 18 months after the coming into force of the new s.6, that is to say, after September 5, 1959, and since the period expiring on December 2, 1960 is not such a period, the new s.6(1) did not confer any option of purchase on the expiry of December 2, 1960; and (4) in any event, the State Electricity Board having duly elected to purchase the undertaking on the expiry of December 2, 1960, the State Government acquired no option of purchase under sub s(2) of s.7 of the . On behalf of the respondent. Mr. V.P. Gopalan Nambiar, the Advocate General of Kerala, contended (1) that the absence of two years ' notice under the old s.7(4) of the did not confer upon the appellant a vested right to hold the license until the expiry of December 2, 1970, and the immunity from compulsory purchase under the old s.7 arising from the non service of the requisite two years ' notice could be, and, in fact, was taken away by the new s.6, which required only one year 's notice of intention to purchase the undertaking; (2) assuming that the appellant acquired under the old s.7 a vested right to hold .the license until December 2, 1970, such vested right was taken away by the new s.6, which expressly applies to licenses granted before its commencement, and the period of 25 years is a period specified in as the license on the expiry of which the option of purchase was legally exercisable; (3) sub sections (4) and (5) of the new s.6 did not cut down the plain meaning of sub s(1) of the section and the option on the expiry of the period of 25 years was vested 'under sub s(1) of s.6, though this period did not expire 18 months after September 5. 1959; and (4) as the State Electricity Board did not send to the State Government any intimation in 'writing 'of ' its intention to exercise the option on the expiry of December 2, 1960 as required by sub s(4) of s.6, the Board must be deemed to have elected not to exercise this option, and consequently by sub S(2) of s.6. the State Government is vested with the option We think that the fourth contention of Mr. Viswanatha Sastry is sound, and should be accepted. Assuming, without deciding, that the option of purchasing the undertaking on the expiry of the period of 25 years specified in the license was available under sub s(1) of s.6, such option vested in the State Electricity Board, and as the Board duly elected to purchase the undertaking, the State Government acquired no right or option of purchasing the undertaking under s.6. On this ground alone, the appeal should be allowed, and in this view of the matter, we do not think it necessary to express any opinion on the other contentions urged 193 before us. As far as the State Electricity Board is concerned,. it has abandoned and waived its option of purchase on the expiry of 25 years. Sub section (1) of s.6 expressly vests in the State Electricity Board the option of purchase on the expiry of the relevant period specified in the license. But the State Government claims that under sub s(2) of s.6 it is now vested with the option. Now, under sub s(2) of s.6, the State Government would be vested with the option only "where a State Electricity Board has not been constituted, or if constituted, does not elect to purchase the undertaking. " It is common case that the State Electricity Board was duly constituted. But the State Government claims that the State Electricity Board did not elect to purchase the undertaking. For this purpose, the State Government relies upon the deeming provisions of sub s(4) of s.6, and contends that as the Board did not send to the State Government any intimation in writing of its intention to exercise the option as required by the sub section, the Board must be deemed to have elected not to purchase the undertaking. Now, the effect of sub s(4) read with sub s(2) of s.6 is that on failure of the Board to give the notice prescribed by sub s(4), the option vested in the Board under sub s(1) of s.6 was liable to be divested. Sub section (4) of s.6 imposed upon the Board the duty of giving after the coming into force of s.6 a notice in writing of its intention to exercise the option at least 18 months before the expiry of the relevant period. Section 6 came into force on September 5, 1959, and the relevant period expired on December 3. 1960. In the circumstances, the giving of the requisite notice of 18 months in respect of the option of purchase on the expiry of December 2, 1960, was impossible from the very commencement of s.6. The performance of this impossible duty must be excused in accordance with the maxim, lex non cogitate ad impossible (the law does not compel the doing of impossibilities), and sub s(4) of s.6 must be construed as not being applicable to a case where compliance with it is impossible. We must therefore, hold that the State Electricity Board was not required to give the notice under sub s(4) of s.6 in respect of its option of purchase on the expiry of 25 years. It must follow that the Board cannot be deemed to have elected not to purchase the undertaking under sub s(4) of s.6. By the notice served upon the appellant, the Board duly elected to purchase the undertaking on the expiry of 25 years. Consequently, the State Government never became vested with the option of purchasing the undertaking under sub s(2) of s.6. The State Government must, therefore, be restrained from taking further action under its notice, exhibit G, dated November 20, 1959. In the result, the appeal is allowed, and the respondent State of Kerala is restrained from taking any action under the notice, exhibit G, dated November 20, 1959. The respondent shall pay to the appellant the costs in this Court. We direct the parties to pay and bear their own costs in the Courts below. Appeal allowed.

The appellant held a licence for the supply of electrical energy in Kerala which was granted for a period of 25 years, and was subject to continuation for ten year terms in the absence of a notice by the local authority or State Government of an election to purchase the undertaking. The first 25 year term of the licence expired on December 2, 1960, and prior to that, on October 24 and again on October 29, 1959, the State Electricity Board gave notice to the appellant under s.6(1) of the , to purchase the under taking on the expiry of the licence. On November 20, 1959,the State Government also served notice on the appellant of its election to purchase the undertaking on December 2, 1960. In November 1960, the appellant filed a writ petition in the High Court seeking orders restraining the State Electricity Board and the respondent State Government from taking any action pursuant to the notices given by them. In the course of the hearing the petition the State Electricity Board waived and abandoned all its rights of purchase of the Undertaking. The writ petition thereafter dismissed and it was held that the State Government was entitled to take further steps under its notice dated November 20, 1959. An appeal against this decision to a Division Bench of the High Court was dismissed. In the appeal to the Supreme Court, the appellant contended,inter alia, that the State Electricity Board having duly elected under 6(1) to purchase the undertaking on the expiry. of the licence, the State Government acquired no option of purchase under section 6(2) the 1910 Act. HELD: Any option of purchasing the undertaking on the expiry of the period of 25 years specified in the licence under section 6(1) vested in the State Electricity Board, and as the Board duly elected to purchase the undertaking by the notice served on the appellants, the State Government acquired no right or option of purchasing the undertaking under section 6. [193 G H] As section 6 came into force less than eighteen months before December 2, 1960, it was impossible for the Board to have given notice to the State Government as required by section 6(4) of its intention to exercise the option. On the principle of lex non cogit ad impossibil must therefore ' be construed as not being applicable in the that the Board could not be deemed circumstances of the case, so elected not to purchase the undertaking under section 6(4).[193 E F]

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

The United Provinces Agricultural Income tax Act, 1949, authorised imposition of a tax on agricultural income within the State, and the agricultural income tax and super tax were charged on the total agricultural income of the previous year of the assessee. For the purposes of the Act the Collector and the Assistant Collector were declared to be the assessing authorities within their respective revenue jurisdiction and the expression " Collector " was to have the same meaning as in the United Provinces Land Revenue Act, 1901. Under the rules framed by the government under section 44 of the Act an assessee having agricultural income in the jurisdiction of more than one assessing authority was to be assessed by the Collector of the district in which he permanently resided. The State Government of Uttar Pradesh appointed Mr. K. C. Chaudhry under subS. 1 of section 14(A) of the United Provinces Land Revenue Act, 1901 to be the Additional Collector in District Bahraich and authorised him to exercise all the powers and perform all the duties of a Collector in all classes of cases ". Claiming to exercise the 83 powers of a Collector under section 14 of the United Provinces Agricultural Income tax Act of 1949 he assessed the net agricultural income of the assessee who owned landed property in two districts, namely, Bahraich and Kheri in the State of Uttar Pradesh, at 12,81,110 10 0 and ordered him to pay Rs. 1,36,390 2 0 as agricultural income tax and super tax. The validity of this order was challenged by the assessee in the High Court by an application under article 226 of the Constitution and the High Court quashed the order of the Additional Collector holding that he had no " extra territorial " jurisdiction which was exercised by the Collector as the assessing authority in cases where the property of the assessee was situate in several districts and as such the proceeding taken by him for assessing agricultural income tax was unauthorised. After the judgment of the High Court was delivered the State Legislature amended the United Provinces Agricultural Income tax Act, 1949, by Act XIV of 1956, giving retrospective operation to the amending provisions. The Amendment Act enacted that the assessment proceedings held by an Additional Collector who was invested with the powers of a Collector under Act III of 1901 should be deemed always to have been properly taken. The State Government submitted before the High Court an application under section 11 of the amending Act for review of its judgment but it was dismiss ed. On appeal by the State Government by special leave, Held, that the Additional Collector was competent to assess the liability of the assessee to pay agricultural income .tax and super tax under the United Provinces Agricultural Income tax Act, 1949. A Court of appeal must give effect to the law as it stood at the time of hearing of the appeal if at any stage anterior to the hearing the law had been amended with retrospective effect conferring on an authority or tribunal from the order whereof the appeal is filed, jurisdiction which it originally lacked. The power of the appellate court to deal with the appeal in accordance of the amended law is not affected by a provision for review as contained in section 11 of the Amending Act.

Civil Appeal Nos. 1768 1769/ 72. Appeals by Special Leave from the Judgment and order dated 15 7 1971 of the Delhi High Court in Sales Tax Reference No. 8 of 1969. F. section Nariman, (In CA 1768/72), V. section Desai (in C.A. 1769). M. C. Bhandare (C.A. 1768/72) and Mrs. section Bhandare and Miss M. Poduval for the Appellants. P. A. Francis, R. N. Sachthey and Miss A. Subhashini for the Respondent. Y. section Chitale, Vinay. Bhasin, A. K. Srivastava and Vineet Kumar for the Interveners. The Judgment of the Court was delivered by PATHAK, J. This and the connected appeal are directed against the judgment of the High Court of Delhi disposing of a reference made to it under section 21(3) of the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi on the following question: "Whether the service of meals to casual visitors in the Restaurant is taxable as a sale: (i) when charges are lumpsum per meal or (ii) when they are calculated per dish ?" The High Court has answered the question in the affirmative. The appellant runs a hotel in which lodging and meals are provided on "inclusive terms" to residents. Meals are served to non residents also in the restaurant located in the hotel. In the assessment proceedings for the assessment years 1957 58 and 1958 59 under the Bengal Finance (Sales Tax) Act, 1941, the appellant contended that the service of meals to residents and non residents could not be regarded as a sale and therefore sales tax could not be levied in respect thereof. The contention was rejected by the Sales Tax authorities, who treated a portion of the receipts from the residents and nonresidents as representing the price of the foodstuffs served. At the instance of the appellant, the High Court called for a statement of the case on two questions. One was whether the supply of meals to residents, who paid a single all inclusive charge for all services in the 559 hotel, including board, was exigible to sales tax. The second was the A question set forth above. The High Court answered the first question in favour of the appellant and the second against it. And now these appeals by special leave. Tax is payable by a dealer under section 4 of the Bengal Finance (Sales Tax) Act, 1941 on sales effected by him, and the expression "sale ' has been defined by section 2 (g) of the Act to mean "any transfer of property in goods for cash or deferred payment or other valuable consideration including a transfer of property in goods involved in the execution of a contract. ". The question is whether in the case of non residents the service of meals by the appellant in the restaurant constitutes a sale of foodstuffs. It appears to us that after the view taken by this Court in State of Punjab vs M/s Associated Hotels of India Ltd.,(1) the approach to the question before us is clearly indicated. This is a case where the origin and historical development of an institution as profoundly influenced the nature and incidents it possesses in law. In the case of an hotelier this Court proceeded on the footing that his position in law was assimilable to that of an inn keeper. At common law an innkeeper was a person who received travellers and provided lodging and necessaries for them and their attendants and employed servants for this purpose and for the protection of travellers lodging in his inn and of their goods(2). It was hospitality that he offered, and the many facilities that constituted the components of that hospitality determined the legal character of the transactions flowing from them. Long ago, in Crisp vs Pratt(3) it was pointed out that innkeepers do not get their living by buying and selling and that although they buy provisions to be spent in their house, they do not sell them but what they do is to "utter" them. "Their gain", it was added, "is not only by uttering of their commodities, but for the attendance of their servants, and for the furniture of their house, rooms, lodgings, for their guests. '`. This test went to the root and we find it repeated in Parker vs Flint.(4) In Newton vs Trigg(5) Holt, C.J., defined the true status of an inn keeper by reference to the services afforded by him? that he was an "hospitator", and was "not paid upon the account of the intrinsic value of his provisions, but for other reasons: the recompence he receives, is for care and pains and for protection and security. . but the end of an inn keeper in (1) ; (2) Halsbury 's Laws of England, 3rd Edn. 21 p. 442 paras 932. (3) [1639] Cro. Car. 549. (4) [1699] 12 Mod 254. (5) 3 Mod . 2 549SCI/78 560 his buying, is not to sell, but only a part of the accommodation he is bound to prepare for his guests. " And for the purpose of the question before us is would be relevant to quote Professor Beale(1): As an inn keeper does not lease his rooms, so he does not sell the food he supplies to the guest. It is his duty to supply such food as the guest needs, and the corresponding right of the guest is to consume the food he needs, and to take no more. Having finished his meal, he has no right to take food from the table, even the uneaten portion of food supplied to him, nor can he claim a certain portion of good as his own to be handed over to another in case he chooses not to consume it himself. The title to food never passes as a result of an ordinary transaction of supplying food to a guest." Having proper regard to those particular considerations, it is not surprising that the principle was extended in England to the service OF food at eating places or restaurants. The keeper of an eating house, or victualler, was regarded fundamentally as providing sustenance to those who ordered food to eat in the premises. That eminent and learned Judge, Lord Mansfield, saw no distinction, in Saunderson vs Rowles(2), between an innkeeper and a victualler. He observed: '. The analogy between the two cases of an inn keeper and a victualler is so strong that it cannot be got over. And we are all clear that this man (victualler) is not within these laws; upon the authority of a determined case of an inn keeper, and also upon the reason of the thing. He buys only to spend in his house, and when he utters it again it is attended with many circumstances additional to the mere selling price. " Like the hotelier, a restaurateur provides many services in addition to the supply of food. He provides furniture and furnishings, linen, crockery and cutlery, and in the eating places of today he may add music and a specially provided area for floor dancing and in some cases a floor show. The view taken by the English law found acceptance on American soil, and after some desultory dissent initially in certain states it very soon became firmly established as the general view of the law. The first edition of American Jurisprudence sets(3) forth the statement of the law in that regard, but we may go to the case itself, Electa B. Merrill vs James W. Hodson(4), from which the (1) Innkeepers & Hotels, para 169. (2) (3) Vol. 46 p. 207 para 13. (4) 561 statement has been derived. Holding that the supply of food or drink A to customers did not partake of the character of a sale of goods, the Court commented: "The essence of it is not an agreement for the transfer of the general property of the food or drink placed at the com command of the customer for the satisfaction of his desires, or actually appropriated by him in the process of appeasing his appetite or thirst. The customer does not become the owner of the food set before him, or of that portion which is carved for his use, or of that which finds a place upon his plate, or in side dishes set about it. No designated portion becomes his. He is privileged to eat, and that is all. The uneaten food is not his. He cannot do what he pleases with it. That which is set before him or placed at his command is provided tc enable him to satisfy his immediate wants, and for no other purpose. He may satisfy those wants; but there he must stop. He may not turn over unconsumed portions to others at his pleasure, or carry away such portions. The true essence of the transaction is service in the satisfaction of a human need or desire, ministry to a bodily want. A necessary incident of this service or ministry is the consumption of the food required. This consumption involves destruction, and nothing remains of what is consumed to which the right of property can be said to attach. Before consumption title does not pass; after consumption there remains nothing to become the subject of title. What the customer pays for is a right to satisfy his appetite by the process of destruction. What he thus pays for includes more than the price of the food as such. It includes all that enters into the conception of service, and with it no small factor of direct personal service. It does not contemplate the transfer of the general property in the food supplied as a factor in the service rendered. " Subsequent cases drew on these observations, notably Mary Nisky vs Childs Company. (1) The position was radically altered in the United States by the enactment of the Uniform Commercial Code, which provides in effect that the serving for value of food or drink to be consumed either on the premises or elsewhere constitutes a sale. Nonetheless it is affirmed in the second edition of American Jurisprudence(2) that where the Code does not operate, "in general the pre Code distinction between a contract for sale and one for the giving of services should continue. " (l) (2) Vol. 67 p. 142 para 33. 562 It has already been noticed that in regard to hotels this Court has in M/s. Associated Hotels of India Limited (supra) adopted the concept of the English law that there is no sale when food and drink are supplied to guests residing in the hotel. The Court pointed out that the supply of meals was essentially in the nature of a service provided to them and could not be identified as a transaction of sale. The Court declined to accept the proposition that the Revenue was entitled to split up the transaction into two parts, one of service and the other of sale of foodstuffs. If that be true in respect of hotels, a similar approach seems to be called for on principle in the case of restaurants. No reason has been shown to us for preferring any other. The classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need. What has been said in Electa B. Merrill (supra) appears to be as much applicable to restaurants in India as it does elsewhere. It has not been proved that any different view should be taken, either at common law, in usage or under statute. It was urged for the respondent that in Associated Hotels of India Ltd. (supra) this Court drew a distinction between the case of meals supplied to a resident in a hotel and those served to a customer in a restaurant. We are unable to find any proposition of law laid down by the court there which could lead to that inference. We may point 13 out that in the view which appeals to us we find ourselves unable to agree with the observations to the contrary made by the Punjab High Court in M/s. Associated Hotels of India Ltd., Simla vs Excise and Taxation officer, Simla(1) and by the Delhi High Court in Municipal Corporation of Delhi vs Laxmi Narain Tandon and another. (2), In the result, we hold that the service of meals to visitors in the restaurant of the appellant is not taxable under the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi, and this is so whether a charge is imposed for the meal as a whole or according to the dishes separately ordered. In the circumstances of the case, we make no order as to costs. N.V.K. Appeals allowed (1) A. I. R. 1966 Punjab 449. (2) A, I. R. 1970 Delhi 244.

The appellant runs a hotel in which meals are served to non residents also in the restaurant located in the hotel. The sales tax authorities treated a portion of the receipts as representing the price of foodstuffs served and levied tax. The High Court affirmed the view of the sales tax authorities. On the question whether the transaction constituted sale of foodstuffs. Allowing the appeals ^ HELD. 1. Service of meals to non residents in the restaurant of 'the appellant is not taxable under the Bengal Finance (Sales Ta%) Act 1941, as extended to the Union Territory of Delhi. This is so whether a charge is imposed for the meal as a whole or according to the dishes separately ordered. [562 F; 2. In State of Punjab vs M/s. Associated Hotels of India ; this Court held that there was no sale when food and drink were supplied to guests residing in the hotel. The Court pointed out that the supply of meals was essentially in the nature of a service provided to the guests and could not be identified as a transaction of sale. This Court declined to accept the position that the Revenue was entitled to split up the transaction into two parts, one of service and the other of sale of foodstuffs. If that be true in respect of hotels, a, similar approach seems to be called for on principle in the case of restaurants. Like the hotelier, a restaurateur provides many services in addition to the supply of food. He provides furniture and furnishings, linen, crockery and cutlery, and he may add music, an area for floor dancing and in some cases a floor show. The classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need. No reason has been shown for preferring any other view. [562 B, 560 F G, 562 C] State of Punjab vs M/s. Associated Hotels of India Ltd. ; applied. M/s. Associated Hotels of India Ltd., Simla vs Excise and Taxation Officer Simla not approved. Municipal Corporation of Delhi vs Laxmi Narain Tandon and Another not approved. Crisp vs Pratt [1639] Cro. Car 549, Parker vs Flint [1699] 12 Mod. 254 Newton v . Trigg 3 Mod. 327, Saunderson vs Rowles Electa B. 558 Merrill vs James W. Hodson , and Mary Nisky vs Child Company SO A.L.R. 227 referred.

ivil Appeal No. 1314 of 1980. From the Judgment and Order dated 28.9.1978 of the Madras High Court in Civil Revision Petition No. 782 of 1977. A.T.M. Sampath for the Appellant. section Padmanabhan and M. Raghuraman for the Respondents. The Judgment of the Court was delivered by NATARAJAN, J. This appeal by special leave is by a tenant against whom an order of eviction passed under Sec tion 10(3)(c) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, hereinafter referred to as the "Act", by the Rent Controller was restored by the High Court of Madras after setting aside the dismissal of the eviction petition by the Appellate Authority. The facts are not in controversy and may briefly be set out as under. A one storeyed building in Wall Tax Road, Madras was originally owned by one Unnamalai Ammal. She was using the first floor for her residence and had leased out the ground floor to the appellant herein to be used as a godown for storing his business ware. It is common ground the appellant 's shop is situate in an adjoining building. The tease was for a period of 10 years with an option for renewal for a further period of 5 years. Unnamalai Ammal however refused to renew the lease and filed a suit against the appellant for eviction on the ground she bona fide. required the ground floor also for her residential use. The suit did not meet with success. Unnamalai Ammal bequeathed the property to her son in law and grand son who are the respondents herein. As legatees of the premises the respond ents filed a petition under Section 10(3)(c) of the Act praying for eviction of the appellant on the ground they bona fide required additional accommodation for their resi dential needs. The Rent Controller upheld their claim, after finding the relevant factors of bona fide need and com 1178 parative hardship in their favour and ordered eviction. On appeal by the appellant, the Appellant Authority reversed the findings of the Rent Controller and further held that the respondent were not entitled to recover possession of non residential premises for their residential requirements and dismissed the petition for eviction. On further revision to the High Court by the respondents Remaprasada Rao, C.J. set aside the order of the Appellant Authority and resorted the order of eviction passed by the Rent Controller. The aggrieved tenant has preferred this appeal. The judgment under appeal is assailed by the appellant on four grounds viz. (1) Since the ground floor constitutes a building by itself within the meaning of Section 2(2) of the Act, the respondents can seek eviction of the appellant only under Section 10(3)(a)(i) of the Act and not under Section 10(3)(c); (2) Even if the respondents are entitled to invoke Section 10(3)(c) they can seek eviction only if they require the ground floor for non residential purposes and not for residential purposes; (3) In any event the factors of relative hardship be tween the parties weigh more in favour of the appellant than the respondent; and (4) The High Court was in error in interfering with the findings of fact rendered by the Appellate Authority while exercising its revisional powers under Section 25 of the Act. Before proceeding to examine the merits of the conten tions, it will be relevant to state a few facts. The ground floor, though used as a godown, is of a residential pattern and consists of two rooms and a hall besides a kitchen and toilet rooms. The first floor is being used as their resi dence by the respondents, the other members of the family being the wife and daughter of the second respondent. The first floor consists of only two rooms and it is the case of the respondents that the accommodation in the first floor has become inadequate for their growing residential needs. It is also their case that the first respondent who is over 65 years of age finds it difficult to climb the stairs on account of his old age and frail health. Their further plea is that the water supply to the first floor is inadequate in spite of the electric motor and pump set installed in the ground floor to pump up water. In contrast the appellant is said to have a spacious three storeyed building in Door No. 39 adjoining the leased premises and also to have another godown close by. 1179 One of the contentions of the appellant was that the eviction proceedings were a continuation of the unsuccessful attempt by Unnamalai Ammal herself to get the tenant evicted and, therefore, the eviction petition lacked bona fides. The High Court has rejected his contention and in our opinion, rightly too, because the respondents who are the legatees of the building cannot be attributed mala fides because of the earlier eviction suit filed by their predecessor in title. We may also dispose of another contention of the appellant at this juncture itself which had found favour with the Appellate Authority. The contention was that with the death of Unnamalai Ammal the family had become smaller and hence there was no need for additional accommodation. This argu ment overlooks the fact that additional accommodation is sought for because of the difficulty experienced by the first respondent in climbing the stairs in his old age and the need for the second respondent 's daughter, growing in years, to have a room all for herself for keeping her books and reading at home. We will now proceed to consider the legal contentions of the appellant in seriatim. The first and foremost contention was that under the Act the ground floor constitutes a sepa rate building and as such the respondents can seek recovery of possession of the ground floor only under Section 10(3)(a)(i) and not under Section 10(3)(c). For dealing with this contention, the relevant provisions of the Act need setting out. Section 2 which is the definition Section reads as under: "Definitions: In this Act, unless the context otherwise requires (2) "building" means any building or hut or part of a building or hut, let or to be let separately for residential or non residen tial purpose and includes (a) . . (b) . . Section 10 sets out the grounds on which the eviction of a tenant can be ordered. For our purpose it is enough to refer to the following provisions alone: "Section 10(3)(a): A landlord may, subject to the 1180 provisions of clause (d), apply to the Con troller for an order directing the tenant to put the landlord in possession of the build ing (i) in case it is a residential building, if the landlord requires it for his own occupation or for the occupation of any member of his family and if he or any member of his family is not occupying a residential building of his own in the city, town or village concerned; (ii) ommitted (iii) in case it is any other non residential building if the landlord or any member of his family is not occupying for purposes of a business which he or any member of his family is carrying on, non residential building in the city, town or village concerned which is his own: (b) ommitted. (c) A landlord who is occupying only a part of a building, whether residential or non resi dential, may, notwithstanding anything con tained in clause (a), apply to the Controller for an order directing any tenant occupying the whole or any portion of the remaining part of the building to put the landlord in posses sion thereof, it he requires additional accom modation for residential purposes or for purposes of a business which he is carrying on, as the case may be. Provided that, in the case of an application under clause (c), the Controller, shall reject the application if he is satisfied that the hardship which may be caused to the tenant by granting it will outweigh the advantage to the landlord: Provided further that the Controller may give the tenant a reasonable time for putting the landlord in possession of the building and may extend such time so as not to exceed three months in the aggregate. " It is no doubt true that under Section 2(2) a building has been. defined as not building or hut but also part of a building or hut let separately for residential or non resi dential purpose. That would, however, only mean that a part of a building which has been let out or which is to be let out separately can also be construed as a separate and 1181 independent building without reference to the other portion or portions of the building where it is not necessary to treat the entire building as one Whole and inseparable unit. A limitation on the definition has been placed by the Legis lature itself by providing that the application of the definition is subject to the contextual position. Therefore, it follows that where the context warrants the entire build ing being construed as one integral unit, it would be inap propriate to view the building as consisting of several disintegerated units and not as one integerated structure. Secondly there is vast difference between the words "resi dential building" and "non residential building" used in Section 10(3)(a)(i) and (iii) on the one hand and Section 10(3)(c) on the other. While Section 10(3)(a)(i) and (iii) refer to a building only as residential or non residential Section 10(3)(c) refers to a landlord occupying a pan of a building, 'whether residential or non residential. (Emphasis supplied). Further more, Section 10(3)(c) states that a landlord may apply to the Controller for an order of evic tion being passed against the tenant "occupying the whole or any portion of the remaining pan of the building" (Emphasis supplied). If as contended by the appellant each portion of a building let out separately should always be construed as an independent unit by itself then there is no scope for a landlord occupying "a part of a building" seeking eviction of a tenant "occupying the whole or any portion of the remaining part of the building". It is, therefore, obvious that in so far as Section 10(3)(c) is concerned the Legisla ture has intended that the entire building, irrespective of one portion being occupied by the landlord and the other portion or portions being occupied by a tenant or tenants should be viewed as one whole and integrated unit and not as different entities. To import the expansive definition of the word "building" in Section 2(2) into section 10(3)(c) would result in rendering meaningless the words "part of a building" occupied by the landlord and a tenant "occupying the whole or any portion of the remaining part of the build ing". The third factor militating against the contention of the appellant is that if a portion of a building let out to a tenant is to be treated in all situations as a separate and independent building then Section 10(3)(c) will be rendered otiose because the landlord can never then ask for additional accommodation since Section 10(3)(a) does not provide for eviction of tenants on the ground of additional accommodation for the landlord either for residential or non residential purposes. It is a well settled rule of interpretation of statutes that the provisions of the Act should be interpreted in such a manner as not to render any of its provisions otiose unless there are compelling reasons for the Court to resort to that extreme contingency. 1182 Yet another noteworthy feature to be borne in mind is that Section 10(3)(c) is governed by two provisos which is not the case when eviction orders are made under any of the sub clauses of Section 10(3)(a). The first proviso enjoins the Controller to reject the application of a landlord under Section. 10(3)(c) for additional accommodation, even where the need of the landlord is found to be genuine, if the hardship caused to the tenant by an order of eviction will outweigh the advantage to the landlord by the said order. The second proviso empowers the Controller to give the tenant a reasonable time not exceeding three months in the aggregate to vacate the portion in his occupation and put the landlord in possession thereof. Obviously the second proviso has been made to facilitate the tenant to find alternate residential or non residential accommodation elsewhere, since the landlord who is already in possession of a portion of the building can put up with the hardship of inadequate accommodation for a period of three months at the most. The above analytical consideration of the relevant provisions bring out clearly the fallacy contained in and the untenability of the contention that the ground floor occupied by the appellant is a distinct and separate unit and as such the respondents cannot seek his eviction under Section 10(3)(c) of the Act. This aspect of the matter has been considered in varying degrees in the following decisions and interpreted in ac cordance with our conclusion; vide Saraswathi Sriraman vs P.C.R. Chetty 's Charities, ; Mohammed Jarfar vs Palaniappa Chettiar, and Chellammal vs Accommodation Controller, Even the Division Bench ruling relied on by Mr. Sampath concedes this position and has observed as follows: "Therefore, if the context in a particular provision requires that the word building should not be understood as defined in Section 22, certainly it is open to the Court to give the normal, natural and ordinary meaning which it is capable of and for that purpose, it is not necessary to rely upon any decision. (vide page 153 of the report). " Taking up now for consideration the second contention, there were conflicting decisions in the Madras High Court and this led to a reference of the case in Thirupathi vs Kanta Rao, [1981] Vol. 1 ILR Madras 128 to a Division Bench. While the Division Bench has taken one view. a Division Bench of the Andhra Pradesh High Court has 1183 taken a contrary view on the identical issue. It is perti nent to state here that the provisions of the Andhra Pradesh Buildings (Lease, Rent and Eviction Control) Act are in pari tnetria with the provisions of the Madras Act in so far as Sections 10(3)(a) and (c) are concerned. The conflict was with reference to the interpretation of Section 10(3)(c) viz. whether a landlord occupying a part of a building for residential purposes is entitled to seek eviction of a tenant occupying the whole or any portion of the remaining part of the building for non residential purposes for his (landlord 's) residential use and vice versa. While it was held in Govindan vs Rajagopal Nadar, that a landlord can seek eviction of a tenant under Section 10(3)(c) for additional residential purposes only if the tenant also is putting the building to residential use and likewise a landlord can seek additional accommodation for business purposes only if the tenant is also putting the building to non residential use, it was held to the contrary in Premchand Motichand vs Hatneed Sultan, ; P.I. Kurian vs Government of Tamil Nadu, 85 L.W. 364 and Saraswathi Sriraman vs P.C.R. Chetty 's Charities (supra). The latter view was taken by Ismail, J., also, as he then was, in an unreported case viz. Rangaswami Reddiar vs Minor N. Jayaraj (C.R.P. No. 2380 of 1977). Subsequently in the referred case, the Division Bench consisting of Ismail, C.J. and Rathnam J. rendered judgment in Thirupathi vs Kanta Rao, (supra). (Ismail, C.J., changing his earlier view) holding that a landlord will be entitled under Section 10(3)(c) to seek additional accommodation for residential purposes only if it is a residential building in the occupa tion Of a tenant and likewise a landlord can seek additional accommodation for non residential purposes only if the building is a non residential one. The Division Bench has further taken the view that the non obstante clause is only to entitle a landlord to seek eviction even when he is in possession of a portion of a building .belonging to him and nothing more. In a later decision G.N. Rajaram vs Mukunthu N. Venkata rama Iyer. MLJ 1985(2) 173 the Division Bench ruling has been followed and eviction was ordered of a tenant occupying a room in the ground floor of a residential building for his business purposes. On the other hand a Division Bench of the Andhra Pradesh High Court in K. Parasuramaiah vs Lakshmamma, AIR 1965 220 has held that if a landlord satisfies the Controller that he wants additional accommodation in the same building for his residential or non residential re quirements then notwithstanding the user to which the tenant was putting the 1184 leased portion. the landord is entitled to an order of eviction so that he can re adjust the additional accommoda tion in the manner convenient to him and it is not necessary that the additional accommodation sought for should be used by the landlord for the same purpose for which the tenant sought to be evicted was using it. In the words of the Division Bench: "Clause (c) makes it twice clear that a land lord who occupies a part of a building, wheth er residential or nonresidential can ask for eviction of a tenant occupying another portion whatever may be his requirements, whether residential or non residential". For holding so, the Andhra Pradesh High Court has taken the words "notwithstanding anything in clause (a)" as having over riding effect over both the conditions laid down in Section 10(3)(a) and (iii) viz. a landlord (1) not having a building of his own for residential or nonresidential pur poses; and (2) seeking the eviction of a tenant from resi dential premises only for residential purposes; and (3) seeking eviction of a tenant from non residential premises only for nonresidential purposes. We will now examine for ourselves the interpretation to be given to Section 10(3)(c). In so doing we will first see the legislative intent behind Section 10(3)(c) before con sidering the thrust given by nonobstante clause in it. Since Section 10(3)(c) provides for both situations viz. a land lord occupying a part of a building which is residential or non residential, the sub clause can be read separately so as to have reference exclusively to a residential building or a non residential building. In Thirupathy vs Kanta Rao, (supra) the learned Judges have noticed this position and set out Section 10(3)(c) distinctively. But in so doing they have restricted the relief of additional accommodation to the landlord for residential purposes to residential build ings alone and the relief of additional accommodation for business purposes to nonresidential buildings alone and therein the error has crept in. In our view. this restric tion is not envisaged by Section 10(3)(c). The proper way of distinctively viewing the Section should be as under: "A landlord who is occupying only a part of a residential building may notwithstanding anything contained in clause (a), apply to the Controller for an order directing any tenant occupying the whole or any portion of the remaining part of the building to put the landlord in possession 1185 thereof. if he requires additional accommoda tion for residential purposes or for purposes of a business which he is carrying on, as the case may be." "A landlord who is occupying only a part of a non residential building may notwithstanding anything contained in clause (a), apply to the Controller for an order directing any tenant occupying the whole or any portion of the remaining part of the building to put the landlord in possession thereof, if he requires additional accommodation for residential purposes or for purposes of a business which he is carrying on, as the case may be. " If clause (3) is construed in this manner there can be no scope for a contention that a landlord cab seek addition al accommodation for residence only if the building is a residential one and likewise he can seek additional accommo dation for business purposes only if the building is a non residential one. There are several reasons which persuade us to take this view. In the first place it has to be noted that Section 10(3)(c) stands on a different footing from Section 10(3)(a)(i) and Section 10(3)(a)(iii). It is not a case of a landlord not occupying a residential or non residential building of his own but a case of a landlord occupying a part of a residential or non residential building of his own and putting it to such user as deemed fit by him. Since the requirement of additional accommodation by the landlord is with reference to the manner of his user of that part of the building which is in his occupation it is the nature of that requirement that should prevail over the manner of user of the tenant of the portion leased out to him. In other words, the additional accommodation is for extending the user of the building by the landlord to the leased portion for the same purpose for which the portion not leased out is being put to. Such being the case which the landlord is genuinely in need of additional accommodation for residential or non residential requirements, as the case may be, he can be given relief only it the tenant occupying the other portion of the building is asked to vacate. If it is to be held that Section 10(3)(c) can be invoked only if the nature of the requirement of the landlord and the nature of user of the leased portion by the tenant coalesce then the landlord will be left without any remedy when the nature of his need and the nature of the user of the leased portion by the tenant do not tally. Take for example, a case where a landlord has got grown up sons and daughters or there is a married son and growing daughters or there 1186 are old parents who cannot climb stairs etc. If the landlord is to be refused additional accommodation for residential purposes merely because the tenant is making use of the leased portion for nonresidential purposes the landlord would be placed in an awful predicament. Similarly. if a landlord bona fide requires additional accommodation for his business and his business would suffer serious detriment if he cannot secure additional accommodation, it would cause great hardship and gave injustice to the landlord if he is to be denied accommodation merely because the tenant is making use of the leased portion for residential purposes. It is, therefore, that the Legislature has provided Section 10(3)(c) in its present form so that a landlord bona fide requiring additional accommodation is not confronted with a permanently irremediable situation. In its anxiety that Section 10(3)(c) should fully serve the purpose for which it has been enacted the Legislature has also added the non obstante clause. Having regard to the object of Section 10(3)(c) and the terms in which it is worded there is war rant and justification for holding that the non obstante clause has been provided to have overriding effect over both the restrictions placed by Section 10(3)(a)(i) and (iii) viz. landlord seeking eviction of a tenant should not be occupying a building of his own and secondly the nature of user of the leased property by the tenant must correspond to the nature of the requirement of the landlord. In construing Section 10(3)(c) it is pertinent to note that the words used are "any tenant" and not "a tenant" who can be called upon to vacate the portion in his occupation. The word "any" has the following meaning: "Some; one out of many; an indefinite number. One indiscriminately of whatever kind or quantity. " Word "any" has a diversity of mean ing and may be employed to indicate "all" or "every" as well as "some" or "one" and its meaning in a given statute depends upon the context and the subject matter of the statute. It is often synonymous with "either", "every" or "all". Its generality may be restricted by context; (Black 's Law Dic tionary; Fifth Edition). Unless the legislature had intended that both classes of tenants can be asked to vacate by the Rent Controller for providing the. landlord additional accommodation. be it for residential or non residential 1187 purposes. it would not have used the word "any" instead of using the letter "a" to denote a tenant. Thirdly it is significant to note that there is no reference in clause (c) to the nature of the user of the tenant occupying the leased portion of the building viz. whether he is using it for residential or nonresidential purposes. If it was the intention of the legislature that only a tenant occupying a residential portion of a building can be asked to vacate for providing additional residential accommodation to the landlord and correspondingly a tenant occupying a portion of a building for non residential pur poses alone being asked to vacate for the nonresidential requirements of the landlord, the legislature would have provided specific stipulations to that effect in clause (c). On that ground also it must be construed that clause (c) has been provided. in order to enable a landlord to seek the eviction of any tenant occupying the whole or any portion of the remaining part of the building for residential or non residential purposes for satisfying the additional needs of the landlord irrespective of whether the need is for resi dential or business purposes. The words "as the case may be" in sub clause (c) have been construed by the Division Bench of the Madras High Court to mean that they restrict the landlord 's right to secure additional accommodation for residential purposes only in respect of a residential building and in the case of additional accommodation for business purpose only to a non residential building. We are of the view that in the context of sub clause (c). the words "as the case may be" would only mean "whichever the case may be" i.e. either residential or non residential. To sum up, the requirement of additional accommodation pertains to the need of the landlord and the manner of user of the portion of the building already in his occupation and consequently the bona fides of his requirement will outweigh all the restrictions imposed by Section 10(3)(a) i.e. nature of the building. nature of user of the leased portion by the tenant etc. Even so, the Legislature has taken care to safeguard the interests of the tenant by means of the provi sos to the sub clause. The first proviso enjoins the Con troller to balance the interests of the landlord and the tenant and to refuse eviction if the hardship caused to the tenant will outweight the advantage to the landlord by reason of the evicton. The second proviso empowers the Controller to grant adequate time to the tenant upto a maximum of three months to vacate the building and secure accommodation elsewhere. there.fore. follows that once a landlord is able to satisfy the 1188 Controller that he is bona fide in need of additional accom modation for residential or non residential purposes and that the advantage derived by him by an order of eviction will outweigh the hardship caused to the tenant, then he is entitled to an order of eviction irrespective of any other consideration. In the light of our conclusion we approve the ratio in K. Prasuramaiah vs Lakshmamma, (supra) and disapprove the ratio in Thirupathy vs Kanta Rao. (supra). The third and fourth question posed for consideration do not present any difficulty. The Rent Controller has gone into the question of comparative hardship and rendered a finding in favour of the respondents. The High Court has observed that the Appellate Authority. while reversing the order. has failed to take due note of relevant materials placed by the respondents. The High Court has, therefore, held that the Appellate Authority 's findings have been vitiated because of its non advertance to the evidence and the apparent errors noticed in its assessment of the compar ative hardship between the parties. In so far as the High Court interfering with the findings of the Appellate Author ity is concerned, the High Court has justified its action by pointing out that Appellate Authority had applied wrong tests and had also failed to give effect to unchallenged findings of the Rent Controller and hence the order of the Appellate Authority suffered from manifest errors in the exercise of its jurisdiction. The High Court was, therefore. entitled to allow the revision and consequently the third and fourth contentions also fail. In the result we find no merit in the appeal and accord ingly it will stand dismissed. Mr. Sampath, learned counsel for the appellant made a request that in the event of the appeal being dismissed, the appellant should be given suffi ciently long time to secure another godown and shift his stock of goods to that place. Mr. Padmanabhan learned coun sel for the respondents very fairly stated that the respond ents are agreeable to give time to the appellant till 31.12.87 to vacate the leased portion. Accordingly we order that in spite of the dismissal of the appeal the appellant will have time till 31.12.87 to vacate the ground floor premises in his occupation and deliver peaceful and vacant possession to the respondents subject however to the appel lant filing an under taking in the usual terms in this behalf within 4 weeks from today failing which the respond ents will be entitled to recover possession of the building forthwith. The parties will bear their respective costs. P.S. S Appeal dis missed.

Clause (c) of sub section (3) of section 10 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, enables a landlord occupying only a part of a building, whether resi dential or non residential, to seek eviction of a tenant occupying the whole or any portion of the remaining part of the building, notwithstanding anything contained in cl. (a), for bona fide requirement of additional accommodation. The first proviso thereto enjoins the Rent Controller to reject the application of the landlord under that clause even where the need is found to be genuine, if the hardship caused to the tenant would outweigh the advantage to the landlord. Sub clause (i) of cl. (a) of section 10(3) enables eviction from residential building if the landlord or any member of his family is not occupying a residential building of his own in the city, while sub cl. (iii) enable eviction from non residential building if the landlord or any member of his family is not occupying for purposes of a business a non residential building in the city. A 'building ' is defined in section 2(2) to mean any building or hut or part of a building or hut, let or to be let separately for residential or non residential purposes. The respondent legatees of the landlady, using the first floor of the building for residence sought eviction of the appellant tenant from the ground floor used by him as a godown for storing his business wares on the ground that they bona fide required additional accommodation 1174 for their residential needs. The Rein Controller upheld their claim. The Appellate Authority reversed the findings of the Rent Controller but in revision the High Court re stored the order of eviction passed by the Rent Controller. In this Appeal by Special leave it was contended that since the ground floor constituted a building by itself within the meaning of section 2(2) of the Act. the respondents could seek eviction of the appellant only under section 10(3)(a)(i) of the Act and not under section 10(3)(c), that even if the respondents were entitled to invoke section 10(3)(c) they could seek eviction only if they required the ground floor for non residential purposes and not for residential pur poses, that the factors of relative hardship between the parties weighed more in favour of the appellant than the respondents, and that the High Court was in error in inter fering with the findings of fact rendered by the Appellate Authority while exercising its revisional powers under section 25 of the Act. Dismissing the Appeal, the Court, HELD: 1.1 The ground floor of the building in occupation of the appellant did not constitute a distinct and separate unit. The respondent landlords could. therefore seek evic tion under section 10(3)(c) of the Act. 1.2 A 'building ' has been defined in section 2(2) of the Act as not only a building or hut but also part of a building or hut, let separately for residential or non residential purposes, which could only means that a part of a building that has been let out or that has to be let out separately can also be construed as a separate and independent building without reference to the other portion or portions of the building where it is not necessary to treat the entire building as one whole and inseparable unit. A limitation has thereby been placed by the Legislature itself, by providing that the application of the definition is subject to the contextual position. It follows therefrom that where the context warrants. the entire building being construed as one integral unit. It would be inappropriate to view the build ing as consisting of several disintegrated units and not as one integrated structure. 1.3 In enacting section 10(3)(c) the Legislature has intended that the entire building. irrespective of one portion being occupied by the landlord and the other portion or portions being occupied by a tenant or tenants should be viewed as one whole and integrated unit and not as different entities. 1175 1.4 There is vast difference between the words "residen tial building" and "non residential building" used in section 10(3)(a)(i) and (iii) on the one hand and section 10(3)(c) on the other. While section 10(3)(a)(i) and (iii) refer to a building only as residential or non residential, section 10(3)(c) refers to a landlord occupying a part of a building, whether resi dential or non residential. Furthermore, section 10(3)(c) states that a landlord may apply to the Controller for an order of eviction being passed against the tenant occupying the whole or any portion of the remaining part of the building. 1.5 TO import the expansive definition of the word "building" in section 2(2) into section 10(3)(c) would result in rendering meaningless the words "part of a building" occu pied by the landlord and a tenant "occupying the whole or any portion of the remaining part of the building", leaving no scope for such a landlord to seek eviction. 1.6 The provisions of an Act should be interpreted in such a manner as pot to render any of its provisions otiose unless there are compelling reasons for the Court to resort to the extreme contingency. If a portion of a building let out to a tenant is to be treated in all situations as a separate and independent building then section 10(3)(c) will be rendered otiose because the landlord can never then ask for additional accommodation since section 10(3)(a) does not provide for eviction of tenants on the ground of additional accommo dation for the landlord either for residential or non resi dential purposes. Saraswathi Sriraman vs P.C.R. Chetty 's Charities, ; Mohammed Jaffar vs Palaniappa Chettiar, [1964] 1 M .L.J. 112 and Cheilaromal vs Accommodation Controller, , approved. 2.1 It cannot be said that a landlord can seek addition al accommodation for residence only if the building is a residential one and likewise he can seek additional accommo dation for business purposes only if the building is a non residential one. 2.2 Section 10(3)(c) provides for both situations, viz. a landlord occupying a part of a building which is residen tial or non residential. The words used in it arc "any tenant" and not "a tenant" who can be called upon to vacate the portion in his occupation. Unless the legislature had intended that both classes of tenant i.e. residential or nonresidential, can be asked to vacate by the Rent Control ler for providing landlord the additional accommodation it would not have used the 1176 words "any" instead of using the letter "a" to denote a tenant. Further, the words "as the case may be" in cl. (0) only mean "whichever the case may be", i.e. either residen tial or non residential. They do not restrict the landlord 's right to secure additional accommodation for residential purposes only in respect of a residential building and in the case of additional accommodation for business purposes only to a non residential building. 2.3 Section 10(3)(c) stands on a different footing from section 10(3)(a) (i) and section 10(3)(a)(iii). The non obstante clause has been added to cl. (c) to give it an overriding effect over both the restrictions placed by cls. (a)(i) and (a)(iii), viz., landlord seeking eviction of a tenant should not be occupying a building of his own and secondly the nature of user of the leased property by the tenant must correspond to the nature of the requirement of the landlord. Thus, the requirement of additional accommodation under cl. (c) is not a case of a landlord not occupying a residential or non residential building of his own but a case of a landlord occupying a part of a residential or non residen tial building of his own and putting it to such user as deemed fit by him. If it was the intention of the legisla ture that only a tenant occupying a residential portion of a building can be asked to vacate for providing additional residential accommodation to the landlord and corresponding ly a tenant occupying a portion of a building for non resi dential purposes alone being asked to vacate for the non residential requirements of the landlord. it would have provided specific stipulation to that effect in cl. In the instant case. the requirement of additional accommodation pertains to the need of the landlord and the manner of user of the portion of the building already in his occupation and consequently the bona fides of his require ment will outweigh all the restrictions imposed by section 10(3)(a). K. Parasuramaiah vs Lakshmamma, (AIR 1965: 220). approved. Thirupathi vs Kanta Rao. [1981] Vol. 1 ILR Madras 128 overruled. Once a landlord is able to satisfy the Controller that he is bona fide in need of additional accommodation for residential or nonresidential purposes and that the advan tage derived by him by an order of eviction will outweigh the hardship caused to the tenant. then he is entitled to an order of eviction irrespective of any other consideration. 1177 4. The Rent Controller has gone into the question of comparative hardship and rendered a finding in favour or the respondents. The Appellate Authority 's findings have been vitiated because of its non advertance to the evidence and application of wrong tests in assessing the comparative hardship between the parties. The High Court, was. there fore, entitled to allow the revision.

Appeals Nos. 459 and 460 of 1957. Appeals by special leave from the judgment and order dated the 30th November, 1956, of the Industrial Tribunal, Bombay, in Reference 1. T. Nos. 10 and 13 of 1956. R.H. Kolah, Dadachanji and section N. Andley, for the appellant. 930 C.L. Dudhia and I. N. Shroff, for the respondents in C. A. No. 459 of 1957. A.S. R. Chari and 1. N. Shroff, for the respondents in C. A. No. 460 of 1957. May 5. The Judgment of the Court was delivered by GAJENDRAGADKAR J. These two appeals arise out of a demand for bonus made against the appellants by their workmen for the year 1953 54. The Associated Cement Companies Ltd., Bombay, the Cement Marketing Company of India Ltd., Bombay and the Concrete Association of India, Bombay, were faced with a demand of their workmen employed in their offices at Bombay for bonus equivalent to seven months ' basic wages with dearness allowance. The industrial dispute arising out of this demand was referred by the Government of Bombay for adjudication before the Industrial Tribunal, Bombay, under section 10 of the Industrial Disputes Act and it was numbered I. T. No. 10 of 1956. The Associated Cement Companies Ltd., Dwarka Cement Works, Dwarka, was similarly faced with a demand of its workmen for bonus equivalent to 50% of total earnings or six months ' total earnings. This dispute was referred to the same tribunal and was numbered 1. T. No. 13 of 1956. By consent of parties both the references were heard together and evidence was recorded and documents tendered in the first reference. By its award delivered on November 30, 1956, the tribunal directed the companies to pay their workmen drawing a basic pay or wages up to Rs. 500 per month bonus equivalent to 1/3 of their basic wages or pay (less bonus already paid for the year 1953 54) subject to the conditions specified in the award. It is against this award that the respective companies have preferred the two appeals by special leave. In this judgment the said companies will hereafter be described as the appellant and their workmen as respondents. The A. C. C. is the principal company concerned in the dispute. The Cement Marketing Company of 931 India Ltd., (hereafter called the C. M. I.) has been separately registered under the Indian Companies Act as a Joint Stock Company; but it is a hundred per cent. subsidiary of the A. C. C. The C. M. I. are the Sales Managers of the A. C. C. while the Concrete Association of India (hereafter called the C. A. I.) is merely a department of the C. M. 1. As a result of the agreement which came into operation from ' August 1, 1953, all financial transactions of the C. M. 1. in relation to sales now find a place in the accounts of the A. C. C. Similarly all of its fixed assets have been taken over and appear in the balance sheets of the A. C. C. All the three concerns have a common staff in Bombay. The A. C. C. had already paid to its employees bonus equivalent to three months ' basic wages for the year 1953 54 and so had the C. M. I. to its workmen. It appears that the C. M. I., including the C. A. I., undertakes to pay to its employees the same amount of bonus as has been paid or awarded to the employees of the A. C. C. There is no dispute that the A. C. C. is the biggest amongst the companies in India which manufacture cement. It owns 15 cement factories at different places in India and 2 in Pakistan. Out of the total quantity of cement despatched by all the cement factories in India in 1953 54 the A. C. C. despatched 55.46 %. The A. C. C. came into existence in 1936 as a result of the merger of four important groups of companies engaged in the manufacture of cement. These were F. E. Dinshaw, Tatas, Killick Nixon and Khatau, groups. It appears that 11 companies in all merged with the A. C. C. Before the tribunal the case for the respondents was that the appellant held a position of monopoly in the cement industry and was easily in a position to pay the bonus claimed by them. Their allegation was that the appellant had inflated the capital invested by the merging companies while taking them over in 1936; it had set up new factories out of the profits earned by it without raising fresh capital and thereby had used profits for the purpose of expansion. In the year 195354 the appellant had capitalised the full amount 932 standing to the credit of the premium on shares account and had transferred a part of the reserves for taxation to the capital account thus increasing the aggregate capital. The emoluments of the workers were inadequate and so they were entitled to the bonus claimed by them in order to fill up the gap between the actual wage paid to them and the living wage due to them. The respondents also contended that the claim made by the appellant for rehabilitation and replacement in the dispute for the year 195152 included not only the amount required for rehabilitation and replacement but also expansion; and so, according to them, the appellant was not entitled to any amount for rehabilitation purposes in the year in dispute. They also alleged that the appellant was not entitled to claim. interest at more than 4% on paid up capital and 2 % on working capital. Thus the respondents urged that if all the relevant facts are taken into account it would be found that the claim for bonus made by them in the two respective references was just and proper. In support of their case the respondents filed several statements which, they claimed, had been prepared in accordance with the Full Bench formula, and they also cross examined Mr. Tongaonkar who gave evidence on behalf of the appellant. This claim was resisted by the appellant. It was urged on its behalf that the points raised by the respondents in the present references bad been heard and finally decided in the previous adjudication (Ref. I. T. No. 115 of 1953) which dealt with their claim for bonus for the preceding year; and it was alleged that the respondents were barred from raising the same questions over again in the present adjudication. The cement machinery, though heavy, is subject to rigours of extremely tough and heavy duties and the machinery has to run ceaselessly day and night throughout the year. The appellant contended that, having regard to the special features of the cement industry, the machinery had to be kept on the highest standards of maintenance and needed frequent replacement and rehabilitation. A cement factory is a very expensive industrial proposition. The appellant denied that 933 it was in a monopolistic position and pleaded that its object was to deliver cement as cheaply as possible to the consumers. The respondents ' allegation that there was " puffing up of block capital at the time of the merger in 1936 " was denied by the appellant and it was not admitted that ever since its inception it had steadily made huge profits. The appellant also denied the allegation of the respondents that the profits, coming out of the business had been used in expanding its factories. It had used all available resources including premium on issue of shares and depreciation fund for replacement, rehabilitation and modernisation. It was not true that the appellant had built huge reserves and that the wages paid by the appellant to its employees were inadequate; on the contrary they compared very favourably with those in other comparable industries. The appellant denied the statement of the respondents that no plant reinstatement reserve over and above the deprecia tion allowance was necessary in the current year and it urged that the calculations made by the respondents alleged to be in terms of the Labour Appellate Tribunal formula were inaccurate. In its turn the appellant claimed more than 6% interest on paid up capital and more than 4% interest on working capital. The appellant also emphasised that it had already paid to the respondents bonus for three months though the strict working out of the formula would show that there was no available surplus for the relevant year and so the respondents would not be entitled to any bonus at all. In support of its case the appellant examined Mr. G. R. Tongaonkar, its controller of planning and development, and produced a statement (exhibit C 2) showing the original cost of the blocks to be replaced and the approximate replacement cost. It also produced amongst other documents a statement (exhibit C 10) showing the cost of the assets of the merging companies on July 31, 1936, as taken over by the appellant and the statement (exhibit C 29) showing the capital expenditure from 1936 37 to 1953 54 on expansion, modernisation, rehabilitation, replacement, sundry capital jobs, etc. 934 In addition a statement was filed by the appellant (exhibit C 23) showing that the calculations made under the Full Bench formula would show a substantial deficit and that would support its case that there was no available surplus for the relevant year from which any bonus could be claimed by the respondents. exhibit C 2 is a statement prepared by Mr. Tongaonkar showing the original cost of the block to be replaced and the approximate replacement cost. This statement has been prepared on the basis that the approximate cost to the merging companies of their assets as on 31 7 1936 was 5.73 crores. It is admitted that this statement has lumped together all the properties of the appellant including plant and machinery, as well as buildings, roads, bridges and railway sidings and has classified them into four categories. The statement contains 9 columns. The first column gives the year or years of purchase of machinery. This could classifies the four categories of the blocks according to their respective years of purchase. The first category consists of blocks purchased up to 1939, the second purchased between 1940 44, the third purchased between 1945 47 and the last purchased between 1949 54. Column 2 gives the original cost of the said categories as on 31 7 1954. Column 3 gives particulars of such portions of the blocks as have been discarded, scrapped or sold. In this column the years in which the blocks were discarded, scrapped or sold are indicated and their original cost is me 935 figures mentioned in col. 5 for 1939 and 1940 44 blocks have been arrived at by reducing the corresponding figures given in col. 4 by 20%. Column 6 gives the approximate present life of the machinery and plant mentioned in col. 4; col. 7 sets out the breakdown value of the machinery referred to in col. 4, whilst col. 8 gives the approximate cost of rehabilitation of machinery as shown in col. 5 less breakdown value as shown in col. 7. The last column works out the annual requirements of the appellant in respect of the rehabilatation of the four categories of blocks. The figures in this column are arrived at by dividing the amounts mentioned in col. 8 by the respective divisors mentioned in col. 6. The total annual requirement of the appellant in respect of rehabilitation is shown as of the order of Rs. 3,29,61,752. exhibit C 23 is a statement prepared by Mr. Tongaonkar to show the deficiency in profits in relation to payment of additional bonus claimed by the respondents for the accounting year 1953 54. This statement has been prepared alternatively on the basis of statutory depreciation allowable by income tax authorities and also on the basis of straight computation at ordinary rates. The first method results in a deficit of Its. 107.20 lakhs, while the second in a deficit of 97.86 lakhs. In working out the provision for rehabilitation, this statement first takes the replacement cost of block up to 1939 as per exhibit C 2 to be Rs. 1601.19 lakhs. From this amount the available reserves as on 1 8 1953 which are of tile order of Rs. 311 lakhs are deducted, leaving a balance of Rs. 1290.19 lakhs. Then the replacement costs of the three remaining categories of blocks are taken into account and all the said amounts are divided by the appropriate divisors mentioned in col. 6 of exhibit C 2. The result is the sum of Rs. 284.48 lakhs, and that is claimed by the appellant as the provision for rehabilitation under the formula. In his evidence Mr. Tongaonkar has given reasons in support of the respective multipliers and divisors adopted by him in making his calculations in exhibit C 2. 119 119 936 He has also given several details on all the relevant and material points in support of the appellant 's case. Naturally the respondents have cross examined him at length. One of the questions in controversy between the parties in the present appeals centres round the appreciation of Mr. Tongaonkar 's evidence and the value to be attached to the statements prepared by him. On the contentions raised by the parties before it the tribunal framed ten issues for determination and it has made its findings on them in the light of the evidence adduced before it. It has held that the appellant had not inflated the capital invested by the merging companies while taking them over in 1936. It has allowed 6% interest on the entire paid up capital of Rs. 1267.59 lakhs, and 4% interest on the working capital. In regard to the claim for depreciation the tribunal has held that it was normal depreciation calculated according to the straight line method which should be allowed. On the question of income tax, the tribunal has allowed the same at 83.4 pies in a rupee as claimed by the appellant on its net profits. It has, however, rejected the appellant 's case that the income from investments in shares and securities received by it should be excluded for the purpose of bonus; while it has allowed the sum of Rs. 10 lakhs provided by the appellant as annual contribution to the reserve for gratuity, as also the expenditure on the cost of dismantling buildings, prospecting expenses, etc. It did not accept the respondents ' case that the bonus paid by the appellant to its officers should be reduced or wholly disallowed for the purpose of calculations under the formula; and, on the question as to whether overtime payment should be included in the payment of bonus, it has upheld the respondents ' contention and allowed the inclusion of the said payment. Having disposed of these minor issues, the tribunal examined at length the claim made by the appellant in regard to the provision for rehabilitation, replacement and modernisation. Indeed this was the most controversial and the most important issue raised 937 before it. The tribunal examined the evidence of Mr. Tongaonkar as well as exhibit C 2 and other documents produced by him, and came to the conclusion that " exhibit C 2 presents an incorrect and exaggerated picture of the A.C.C. 's requirements of rehabilitation and replacement" and so it cannot be relied upon. According to the tribunal the multiplier 4.28 adopted by Mr. Tongaonkar was itself an inflationary figure; and it thought that " the consequence of applying it not to the original price but to its increased price paid by the A.C.C. would be to obtain an inflationary result. It appears that the tribunal wag inclined to hold that 2.7 was a fair multiplier representing the price increase over the pre war base. The tribunal was also not satisfied with Mr. Tongaonkar 's evidence in regard to the life of plant and machinery ; and so it held that the period of life given in col. 6 of exhibit C 2 cannot be accepted as correct. While dealing with the question about the rise in prices, the tribunal has held that it was usual to take the average level of prices prevailing in a period of about five years in preference to the prices prevailing in a particular year as was done by Mr. Tongaonkar. The tribunal subjected Mr. Tongaonkar 's evidence on the question of replacement, rehabilitation and modernisation to a close examination and held that the method adopted by Mr. Tongaonkar in distinguishing between modernisation and expansion was of a purely subjective estimate " which does not bear the scrutiny of an objective test ". On the whole the tribunal was not prepared to accept Mr. Tongaonkar 's evidence at its face value and it was not prepared to treat exhibit C 2 and consequently exhibit C 23 as reliable. It is relevant to point out at this stage that the tribunal has not made any finding about the life of the machinery nor has it recorded any conclusion as to a proper divisor. In fact it has completely left out of consideration Exs. C 2 and C 23 while determining the amount which should be allowed for the appellant 's claim for rehabilitation for the relevant year. The tribunal then examined the principle underlying the Full Bench formula and held that, it was not 938 intended to be worked out as a rigid mathematical formula. " We must make it ", says the tribunal, " as flexible as possible so as to do justice to everybody concerned in the earning of profits". The general question, which it has considered in this connection, is how far and to what extent profits of a concern should contribute to the satisfaction of the claims of industry for replacement; rehabilitation and modernisation. It was impressed by the argument that, where the requirements under these items are so huge as to be out of tune with the profits, it would be open to an industrial adjudicator to allow only a reasonable provision to be made out of the profits for the said items and leave the industry concerned to tap other resources to make up the balance. In support of this conclusion it has referred to the observations made by F.R.M. de Paula in his "Principles of Auditing", the report of the Taxation Enquiry Commission and of the working party for the Cotton Textile Industry. It has also relied on a part of the speech delivered by Mr. J. R.D. Tata in addressing the annual general meeting of the shareholders of the Tata Iron and Steel Company in August 1950. In this connection the tribunal has expressed its apprehension that if all the money required for a continuous process of modernisation and expansion is to come out of the profits made by the concern, labour will rarely see a day when they will enjoy bonus granted to them out of profits; though it has hastened to add that it was far from its mind that a progressive concern like the A.C.C. should not keep pace with time and modernise its machinery; but it only wished that it should give a fair deal to the workers in the distribution of the profits. Having hold that, if the claims for rehabilitation turn out to be huge and out of tune with the profits made by the industry, it would be open to the tribunal to grant the claim of the industry in that behalf only to the extent that it deems to be reasonable and fair, it proceeded to consider how far and to what extent the appellant 's claim should be allowed in the present proceedings. It is necessary to mention that in dealing with this 939 question the tribunal was considerably influenced by the past conduct of the appellant. It thought that for rehabilitation the appellant had claimed no more than Rs. 192 or 193 lakhs in the previous adjudication proceedings where the dispute for bonus had reference to the year 1951 52. If the claim then made by the appellant was no more than Rs. 192 or 193 lakhs, the present claim for Rs. 284 lakhs, the tribunal thought, ' was obviously inflated and unreal. Similarly the tribunal emphasised the fact that the programme earlier submitted by the appellant to the Tariff Commission was in turn more modest than the claim made in the said adjudication proceedings. It appears that in the said programme the appellant had made out a case for the estimated expenditure of Rs. 18.36 crores to be spread over a period of ten years from 1 8 1952 to 31 7 1962 and that works out approximately at the figure of Rs. 184 lakhs per year. It was on these facts that the tribunal held that " if the A.C.C. estimated its annual requirements of rehabilitation, replacement and modernisation at Rs. 192 lakhs per year during the period of ten years commencing from 1 8 1952, 1 do not think that it should be allowed to depart from it now". In substance, according to the tribunal, the present claim for rehabilitation was very much inflated, it had no relation to realities, and so the appellant should not be allowed to make such a claim. That is why it did not think it necessary to record any finding as to the proper divisor, and to determine, in the light of Mr. Tongaonkar 's evidence, what approximately would be a fair or reasonable amount for rehabilitation under the formula. It is thus clear that in making its final calculations the tribunal has assumed that the claim made by the appellant for rehabilitation, replacement and modernisation must be taken to be no more than Rs. 192 or 193 lakhs, and on that assumption it has considered to what extent the claim should be allowed. Ultimately the tribunal came to the conclusion that in the circumstances of the case it would be fair to allow the appellant about Rs. 165 to 170 lakhs as annual provision for the said items. In support of this conclusion 940 the tribunal has relied on the fact that for the two years 1952 53 and 1953 54 the appellant had spent about Rs. 339.76 lakhs for the purpose of rehabilitation, replacement land modernisation and that works at the average of Rs. 170 lakhs per year. The tribunal has then taken into account the fact that the appellant had a plant reinstatement reserve of Rs. 235 lakhs and a general reserve of Rs. 76 lakhs in the beginning of the year 1953 54. If these amounts which would be available for rehabilitation are spread over the ten year period of the tentative programme planned by the appellant, the annual figure would come to Rs. 31 lakhs; and this amount would have to be deducted from Rs. 165 lakhs which the tribunal was inclined to grant in respect of the relevant item. That is how the tribunal has made the appropriate calculations under the formula, and has shown that, even after the payment of one month 's additional bonus as directed by it, the appellant would still be left with a surplus of Rs. 23.48 lakhs. That in brief is the nature and effect of the findings made by the tribunal. Before dealing with the merits of the points raised in these appeals it would be convenient to refer to the genesis and the terms of the formula which has been evolved by the Full Bench of the Labour Appellate Tribunal in the case of The Mill Owners Association, Bombay vs The Rashtriya Mill Mazdoor Sangh, Bombay (1) in 1950. It appears that from 1940 A. D. onwards the claims for bonus made by the employees against their employers in different industries were dealt with on an ad hoe basis from case to case. Sometimes the employers voluntarily paid bonus to their workmen; and where disputes arose they were decided by the tribunals in the light of the circumstances of each case without relying on any broad consideration of policy or without attempting to lay down any general principles. In 1948 a bonus dispute arose between the Mill Owners Association, Bombay and its employees, and it was referred for adjudication to the Industrial Court. In considering this dispute the Industrial Court went (1)(1950) L.L.J. 1247. 941 elaborately into the matter, laid down certain principles and awarded to the workmen bonus equivalent in amount to 3/8 of the total basic earnings of each workman subject to certain conditions. In the subsequent year a similar dispute arose between the same parties; and it was again referred to the Industrial Court for adjudication. The Court made its award on July 7, 1950, directing 55 mills of the Association to pay to their workmen, whether permanent or temporary, 1/6 of the basic earnings of each of them as bonus. This award was challenged by the Association before the Labour Appellate Tribunal. It was urged on behalf of the Association that the wage structure in the textile industry had been settled by standardisation and so bonus must be regarded as a gratuitous payment; and it was argued that at any rate grant of bonus cannot be made for the purpose of making up the deficiency between the actual and living wages. These contentions were rejected by the Labour Appellate Tribunal and the question about the grant of bonus was considered on general principles on the basis of which a formula,, often described as the First Full Bench Formula, was ultimately evolved. "As both capital and labour contribute to the earnings of the industrial concern ", observed the appellate tribunal, " it is fair that labour should derive some benefit if there is a surplus after meeting prior or necessary charges ". The appellate tribunal was also of the view that where the goal of living wages had been attained, bonus, like profit sharing, would represent more as the cash incentive to better efficiency and production; but where the industry had not the capacity to pay a living wage bonus must be looked upon as the temporary satisfaction wholly or in part of the needs of the employee. In other words, according to this decision, the award of bonus is based on a two fold consideration. It is made in recognition of the fact that labour has made some contribution to the profit earned by the industry, and so it is entitled to claim a share in it; and it is also intended to help labour to bridge or narrow down the gap, as far as may be reasonably possible, between the living wage to which labour is entitled and the actual wage received by it. 942 Dealing with the problem from this point of view the appellate tribunal conceded that investment necessarily implies the legitimate expectation of the investor to secure recurring returns on the money invested by him in the industrial undertaking, and so it held that it was essential that the plant and machinery should be kept continuously in good working order for the purpose of ensuring that return. Such maintenance of the plant and machinery would necessarily be to the advantage of labour because the better the machinery the larger the earnings and the brighter the chance of securing a good bonus. On this consideration it was held that the amount of money that would be necessary for rehabilitation, replacement and modernisation of the machinery would be a prior charge on the gross profits of the year. Since the depreciation allowed by the income tax authorities is only a percentage on the written down value the depreciation fund set apart on that basis would not be sufficient for the purposes of rehabilitation and an extra amount would have to be annually set apart nationally under the heading of 'reserves ' to make up the deficit. This position was apparently not disputed by the employees. The claim made by the industry that a fair return on the paid up capital must be secured and that ordinarily it should be paid at the rate of 6% per annum was also not disputed. The employees, however, challenged the claim of the industry that reserves employed as working capital should carry any interest; but their objection was overruled and it was held that working capital also would be entitled to interest though at a much lower rate than that on the paid up capital. Then the question of taxes was considered and it was agreed that a provision had to be made for taxes which would be payable on the amount determined after deducting depreciation from the gross profits less any bonus which may be awarded. In the result the appellate tribunal laid down the manner and method in which the available surplus should be determined. The notional accounting for this purpose starts with the figure of the gross profits which are 943 arrived at after payment of wages and dearness allowance, to the employees and other relevant items of expenditure. Then a deduction for depreciation is made, and on the notional balance thus derived a provision for taxes payable is allowed. Then follow the provisions for reserves for rehabilitation, return on paid up capital and return on reserves employed as working capital. That gives the amount of surplus if ' any. Whenever the working of this formula leaves an amount of available surplus, labour was held entitled to claim a reasonable share in this amount by way of bonus for the current year. This formula is based on considerations of social justice and is intended to satisfy the legitimate claims of both capital and labour in respect of the profits made by the industry in a particular year. It takes the particular year ' as a unit and makes all its notional calculations on the basis of the gross profits usually taken from the profit and loss account; in this particular case the available surplus determined by the application of the formula was found to be 2.61 crores; and out of this surplus 0.30 crores were awarded as bonus to clerks and other staff and 1.86 crores was awarded as bonus to the employees leaving a net notional balance of 0.45 crores. This Court had occasion to consider the said formula in Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur (1). The judgment in that case indicates that without committing itself to the acceptance of the formula in its entirety, this Court in general accepted as sound the view that since labour and capital both contribute to the earnings of the industrial concern, it is fair that labour should derive some benefit if there is a surplus after meeting the four prior or necessary charges specified in the formula. It is relevant to add that in dealing with the concept of bonus this Court ruled that bonus is neither a gratuitous payment made by the employer to his workmen nor can it be regarded as a deferred wage. According to this decision, where wages fall short of the living (1) ; 120 944 standard and the industry makes profit part of which is due to the contribution of labour, a claim for bonus can be legitimately made. However, neither the propriety nor the order of priority as between the four prior charges and their relative importance nor their content was examined by this Court in that case; and though the formula has subsequently been generally accepted by this Court in several reported decisions (Baroda Borough Municipality vs Its Workmen (1), Sree Meenakshi Mills, Ltd. vs Their Workmen (2) and The State of Mysore vs The Workers of Kolar Gold Mines (3) ) the question about the adequacy, propriety, or validity of its provisions has not been examined nor has the general problem as to whether the formula needs any variation, change or addition been argued and considered. It is for the first time since 1950 that, in the present appeals, we are called upon to examine the formula carefully and express our decision on the merits of its specific provisions. As we have already indicated, in dealing with the present dispute the tribunal has held that, in working out the formula, it could relax its provisions even though the proposed relaxation may mean a material variation of the formula itself. On behalf of the appellant Mr. Kolah has taken strong exception to this approach. He has argued that, in the last eight years and more, on the whole the formula has worked fairly well in the interest of both capital and labour, and so the tribunal was not justified in departing from it in the present case. This argument undoubtedly raises a question of considerable importance. Before examining this argument, however, it is necessary to consider one preliminary point: Was the tribunal justified in holding that the appellant could not be allowed to add to its previous claim for rehabilitation ? The decision of the tribunal on this point seems to indicate that the tribunal thought that the appellant was estopped from making any such claim; and the correctness of this conclusion is challenged by the appellant. (1)[1957] S.C.R. 33, 39. (2) ; , 884. (3) ; 945 It is true that, in the report submitted by the appellant before the Tariff Commission in April 1953, it had set out the details of its ten year programme which included, besides replacement, rehabilitation, modernisation and expansion, mechanisation of quarries as well as construction and improvement of houses for its labour staff. The report of the Tariff Commission (p. 30) shows that the cost of the programme was ' estimated at Rs. 18.36 crores, excluding the cost of a new plant at Sindri, or about Rs. 184 lakhs per annum. Subsequently in January 1954, when Mr. Tongaonkar gave evidence in the previous adjudication proceedings, he produced a statement (exhibit U 8) according to which the appellant 's annual requirements for rehabilitation would be of the order of Rs. 192 or 193 lakhs, whereas in the present proceedings the said claim is made at Rs. 284 lakhs. A bare statement of these facts prima facie suggests that the appellant 's present claim for rehabilitation has been growing from stage to stage, and in its present form it is very much inflated; and that is what the tribunal has also assumed. In our opinion this assumption is not wholly correct. Mr. Tongaonkar 's evidence shows that in the report of the jobs submitted to the Tariff Commission the appellant had not included all relevant items of rehabilitation, replacement and modernisation. The report merely gave a list of the jobs which the appellant had proposed to undertake during the ten year period ending July 31, 1962. It was in no sense an exhaustive statement about the appellant 's requirements in regard to the rehabilitation of all its blocks. In fact, having regard to the nature and scope of the enquiry before the Tariff Commission, the report made by the appellant had to be restricted to the urgent jobs which it wanted to undertake during the execu tion of its ten year programme; and so it would not be reasonable to hold that the figure of annual rehabilitation expenses which can be deduced from the said report has any relation to the claim for rehabilitation made by the appellant in terms of the working of the formula. Then again the appellant 's claim for rehabilitation 946 in the earlier proceedings has also been satisfactorily explained by Mr. Tongaonkar. The respondents have placed considerable reliance on the statement filed by Mr. Tongaonkar in the said proceedings (exhibit U 8). This document has been produced by the respondents in support of their contention that it purports to make a claim for Rs. 192 lakhs per year 'for rehabilitation. That no doubt is true ; but in terms the document purports to show the estimated expenditure required during the ten year period there specified; and as Mr. Tongaonkar has stated, it does not include a full statement of the claim in regard to the rehabilitation of all the blocks belonging to the appellant. In considering the respondents ' argument on this point, it is necessary to bear in mind that in the earlier proceedings the appellant had filed a separate statement showing the amount to which it was entitled by way of rehabilitation under the formula; this statement was exhibit C 3 and it has been produced in the present case and exhibited as U 5. It appears that in the earlier proceedings the tribunal did not attach any importance to the said document and virtually ignored it because, like the present tribunal, it held that " it does not appear to be necessary to plan further ahead than ten years and it is desirable to base calculations of rehabilitation on realities "(1). Even so the Labour Appellate Tribunal found that the appellant 's contention that its workmen were not entitled to any additional bonus was not well founded even if its claim for rehabilitation was confined to Rs. 192 or Rs. 193 lakhs. Besides, Mr. Tongaonkar has stated on oath that exhibit U 8 was not among the documents originally submitted by the appellant to the tribunal in 1954. it was in fact prepared and submitted at a later stage at the instance of the tribunal itself. It is, therefore, clear that exhibit U 8 was not intended to, and did not supply, the basis of the appellant 's claim in the earlier proceedings in accordance with the formula. A study of the items contained in exhibit U 8 also supports the same conclusion. Mr. Tongaonkar has (1) ,592. 947 stated that the total amount of the estimated expenditure shown in this document included only a small portion of the expenditure required for rehabilitation of the post 1944 block. It is true that Mr. Tongaonkar 's statement that in the said total amount nearly Rs. 50 lakhs represent the amount for replacement or rehabilitation of post 1944 block is inaccurate. The Chaibasa Cement Factory and the Sevalia Cement Factory for the rehabilitation of which Rs. 64.98 and 85.15 lakhs have been claimed in exhibit U 8 are undoubtedly parts of the post 1944 block and the amounts claimed for them are very much more than Rs. 50 lakhs. It is nevertheless clear that 'the items in exhibit U 8 do not include a claim for rehabilitation for all the blocks of the appellant, and it is not surprising either, because a claim for the rehabilitation of all the blocks had been separately made by the appellant in the earlier proceedings under exhibit C 3. Thus there can be no doubt that neither the report submitted by the appellant before the Tariff Commission nor the estimate given by exhibit U 8 was prepared under the formula; and so any disparity in the amounts claimed in the two earlier documents cannot be seriously pressed into service against the appellant when it seeks to make a claim for rehabilitation strictly in accordance with the formula. We must, therefore, hold that the tribunal was in error in coming to the conclusion that by reason of its previous conduct the appellant could not be allowed to place its claim for rehabilitation at a figure higher than Rs. 192 lakhs in the relevant year. In this connection it would be pertinent to remember that in dealing with the employer 's claim for rehabilitation the tribunal is called upon to assess respective values of the relevant factors on hypothetical and empirical considerations, and so it may generally not be useful or wise to take recourse to strict legalistic principles like estoppel in deciding this question and indeed all material questions in industrial adjudications. Does the formula need to be revised, and should it be revised and reconstructed ? That is the question 948 which we must now consider. It appears that some tribunals have taken the view that the rigid working of the formula may defeat its object of recognising the social justice of labour 's claim for bonus and so they have made suitable adjustments in its operation. It is this approach which has raised the larger issue of principle in the group of appeals which have been placed for disposal before the Constitution Bench. So we must examine this question in its broad aspects and if we decide not to change the formula we must state what, in our opinion is the content of the different items mentioned in the formula and how they should be calculated and mutually adjusted. Let us first set out the case as it has been made for changing the formula. It is 'urged that though the formula purports to recognise the principle of social justice on which labour 's claim for bonus is based, it does not accord to the said claim the high priority it deserves. Social justice has been given a place of pride in the preamble to the Constitution and it has been enshrined in the Directive Principles under articles 38 and 43. Since 1950, ideas about social and economic justice have made an appreciable progress and they require the readjustment of priorities prescribed by the formula in favour of the claim for bonus. It is also contended that experience in industrial adjudication during the last eight years and more shows that employers are becoming increasingly more rehabilitation conscious and their appetite for the provision of rehabilitation is fast growing from year to year. In the present case, for instance, though the appellant occupies a dominant position in its line of trade and though it makes large profits, it has made such a tall claim for rehabilitation that if the said claim is allowed the working of the formula leaves no available surplus from which bonus can be granted to labour. The appellant has no doubt paid bonus for three months and it is unlikely that the appellant would depart from its practice of paying the said bonus even in future; but that does not affect the 949 position that in the light of the appellant 's claim for rehabilitation the working of the formula would not justify the grant of any bonus to labour. This shows that the notional claim for rehabilitation which an employer can make under the formula tends to be completely divorced from the reality or actuality of the need of rehabilitation; and that needs to be corrected. Besides, it is said, that the theory that the trading profits of the industry must provide for the whole of the rehabilitation expenses is not universall accepted by enlightened and progressive businessmen and economists. In this connection reliance is placed on the observations of F. R. M. de Paula in his " Principles of Auditing " that " the object of depreciation is the replacement of original investment capital and that an increase in replacement cost is an important matter and means that additional capital is required in order to maintain the original earning capacity ". It is also pointed out that the Institute of Chartered Accountants in England and Wales, in its recommendations made in 1949 under the heading " Rising price levels in relation to accounts " has pointed out that " the gap between historical and replacement costs might be too big to be bridged by a provision made for replacement spread over a period of years either by way of supplementing the depreciation charges or by setting up in lieu of depreciation a provision for renewals based on estimated replacement costs ". It is therefore suggested that in revising the formula the claims for rehabilitation should be fixed at a reasonable amount and industry should be required to find the balance from other sources and if necessary from its share in the available surplus. In this connection it is pointed out that when the Labour Appellate Tribunal evolved the formula it was dealing directly with the needs of the textile industry and there was no dispute that the plant and machinery of the textile industry had become old and obsolescent and needed immediate replacement, rehabilitation and modernisation. It is doubtful whether, in giving priority to the claim for rehabilitation in the 950 context of the needs of the textile industry with which the appellate tribunal was concerned, it really intended that rehabilitation should be claimed 'by every industry on theoretical considerations whether or not the said claim was justified by its actual or practical need for rehabilitation. In substance the argument is that the Full Bench of the Labour Appellate Tribunal evolved its formula in order that labour may get a reasonable share in the available surplus and may thereby receive assistance in filling up the gap between its actual wage and the living wage which it looks forward to receive in due course; and if it is found that, in working out the items which are treated as prior charges, in a majority of cases the formula leaves no available surplus, then its main object is frustrated and that is the justification for revising it and readjusting its priorities. In support of this view reliance has also been placed on the recommendations of the Committee on 'Profit sharing '. This Committee had been appointed in 1948 to advise the Government of India " on the principles to be followed for the determination of (a) fair wages to labour, (b) fair return to capital employed in the industry, (e) reasonable reserves for the maintenance and expansion of the undertaking, and (d) labour 's share of the surplus profits, calculated on a sliding scale normally varying with production, after provision has been made for (b) and (c) above ". The Committee viewed its problem from three im portant angles, viz., " profit sharing as an incentive to production, profit sharing as a method of securing industrial peace, and profit sharing as a step in the participation of labour in management ". The Committee recognised that putting back profits into the industry is one of the most useful forms of capital investment and this should be encouraged and it recommended that a figure of 20% for reserves should be generally aimed at, though it considered that, as a first charge, 10% of the net profits should be compulsorily set aside for reserves, leaving it to the good sense of the management to allocate the balance or more out of their own share of surplus profits. In regard 951 to the labour 's share in the surplus profits, the Committee stated that, having due regard to the conditions prevailing in the industry selected for an experiment in profit sharing, it had come to the conclusion that labour 's share should be 50% of the surplus profits of the undertakings. It is a matter of common knowledge that so far Government have not thought it desirable, expedient or possible to legislate in this matter in the light of the recommendations made by this Committee; but it is suggested that these recommendations afford a rational basis for reconstructing the formula. It may be conceded that there is some force in some of the arguments urged in support of the plea that the formula should be revised and its priorities should be readjusted and redefined; but, on the other hand, we cannot ignore the fact that on the whole the formula has worked satisfactorily in a large number of industries all over the country. Except for a few cases, particularly in Bombay, where some of the tribunals have taken the view that, in its rigid form, the formula has become unworkable from the point of view of labour, in a majority of cases industrial disputes arising between employers and their workmen in regard to bonus have been settled by tribunals on the basis of this formula; and it would not be unreasonable or inaccurate to say that by and large labour 's claim for bonus has been fairly and satisfactorily dealt with. The main source of contest in the working of the formula centres round the industry 's claim for rehabilitation; but, as we shall presently point out, if this claim is carefully scrutinised and examined in the light of evidence which the employer has to produce in support of his claim, even the settlement of this item would, as it is intended to, invest the tribunal with sufficient discretion to make the working of the formula elastic enough to meet its two fold object of doing justice both to industry and labour. It is true that in the working of the formula employers sometimes make an attempt to add items to the list of prior claims. In The State of Mysore vs The 121 952 workers of Kolar Gold Mines (1), it was urged before this Court by the industry that it was a wasting industry and as such it needed special consideration. The contention was that for the prosperity and longevity of the industry a special provision for the prospecting of new ore has to be made and that should be added as an additional item in the list of prior charges. This argument was, however, rejected and it was held that the special features of the industry would be taken into account in determining the amount which could be reasonably claimed under rehabilitation. This decision shows the reluctance of this court to vary or add to the formula which oil the whole has so far worked fairly satisfactorily. The theory that the whole of the rehabilitation charges need not come out of the trading profits of the industry does not appear to be generally accepted. As has been observed by Paula himself: " In the past the accepted principle has been that the main object of providing for the depreciation of wasting assets is to recoup the original capital invested in the purchase of such assets. As part of the capital of the concern has been invested in the purchase of these assets, therefore, when their working life comes to an end, the earning capacity of these assets ceases. Thus they will become valueless for the purposes of the business, and the original capital sunk in their acquisition, less any scrap value, will have been lost. Hence, in order to keep the original capital of a business intact, if any part thereof is invested in the purchase of ' wasting assets, revenue must be held back by means of depreciation charges to profit and loss account, in order to replace the capital that is being lost by reason of the fact that it is represented by assets that are being consumed or exhausted in the course of trading or seeking to earn income It is also stated by the same author that " in all cases where One of the direct causes of earning revenue is gradually to consume fixed assets of wasting nature, the depreciation of such assets should be provided for out of revenue " (3). It is true (1) ; (2) F.R.M. de Paula 's Principles of Auditing ', 1957, P. 136. (3) Ibid, p. 138. 953 that the author recognises that " owing to the very considerable increase in the price level since the termination of the 1939 45 war, industry is finding its original money capital insufficient for its needs. Thus the cost of replacement of fixed assets has greatly increased and in addition, further working capital is required to finance a given volume of production. Many economists, industrialists, and accountants contend that provision should be made, in arriving at profits, for this increased capital requirement ". Having noticed this view the author adds that " at the time of writing this matter is still being debated and final decisions have not yet been reached ", and he concludes that " until a final solution of this complex problem is reached it would be inadvisable for the auditor to act on any principle other than that recommended by the Institute "(1); and that principle appears to be that depreciation should be provided for out of revenue. Besides, it must be borne in mind that, in adjusting the claims of industry and labour to share in the profits on a notional basis, it would be difficult to repel the claim of the industry that a provision should be made for the rehabilitation of its plant and machinery from the trading profits. On principle the guaranteed continuance of the industry is as much for the benefit of the employer as for that of labour; and so reasonable provision made in that behalf must be regarded as justified. The recommendations made by the Committee on Profit sharing ' cannot be of much assistance because they raise questions of policy and principle which Legislature can more appropriately consider. If the Legislature feels that the claims for social and economic justice made by labour should be redefined on a clearer basis it can step in and legislate in that behalf. It may also be possible to have the question comprehensively considered by a high powered commission which may be asked to examine the pros and cons of the problem in all its aspects by taking evidence from all industries and all bodies of workmen. The plea for the revision of the formula raises an issue (1)F.R.M. de Paula 's Principles of Auditing ', 1957, P 80. 954 which affects all industries; and before any change is made in it, all industries and their workmen would have to be heard and their pleas carefully considered. It is obvious that while dealing with the present group of appeals it would be difficult, unreasonable and inexpedient to attempt such a task. That is why we think that labour 's claim for bonus should be decided by tribunals on the basis of the formula without attempting to revise it. Whilst we are not prepared to accede to the argument that the formula should be revised, we wish to emphasise that the formula is elastic enough to meet reasonably the claims of the industry and labour for fairplay and justice. In its broad features it recognises the claims of the industry and tabulates them under different items as prior charges, and then provides for the distribution of available surplus between the labour, the industry and the shareholders. The items specified in the formula have to be worked out notion ally on theoretical grounds; in determining the content of each one of the items it is therefore essential to scrutinise and weigh carefully all the relevant and material facts. If the content of each item is determined objectively in the light of all relevant and material facts, the tribunals would generally find it possible to make reasonable adjustments between the rival claims and provide for a fair distribution of the available surplus. In this sense it is necessary to treat the formula as elastic and not rigid in working out detailed calculations under it. We have no doubt that if the industry and labour genuinely desire to settle the disputes as to bonus without the intervention of the conciliator or the adjudicator, the formula would help them to arrive at a reasonable settlement. If the employer does not make an unduly inflated claim under the items which safeguard industry 's interests, and if workmen do not make an exaggerated demand for bonus, it would normally not be beyond the co operative effort of the parties to arrive at a reasonable figure which should be paid to labour by way of bonus from year to year. It is unnecessary to emphasise that industrial disputes 955 settled amicably are in the interest of both capital and labour. Amicable settlements of such disputes lead to ' peace, harmony and co operation between capital and labour and that invariably helps more production which is a matter of great national importance at present. But unfortunately, in many cases, both the industry and labour do not appear to be too keen on settling ' these disputes amicably, with the result that claims for bonus give rise to disputes year after year and inevitably the machinery under the Industrial Disputes Act is set in motion. Conciliation efforts are made but they do not succeed; then reference is made under section 10 of the Act and the dispute is taken before the tribunal; since both the parties are not in a mood to co operate with each other, over statements are made on both sides, allegations are met by counter allegations and they are sought to be supported by evidence. In such a case the tribunals must examine the rival contentions and scrutinise the evidence adduced by the parties objectively and in a judicial manner. If proper evidence is led and it is judicially weighed, the tribunal would be able to work the formula in a reasonable manner and arrive at a result which would be substantially in conformity with the object underlying the formula. It is obvious that, in making the relevant calculations under the items of prior charges specified in the formula, the tribunals should have a clear idea as to the content of each one of the said prior charges; and so it is necessary to examine carefully this aspect of the matter. We have already noticed that the formula for awarding bonus to workmen is based on two considerations; first that labour is entitled to claim a share in the ' trading profits of the industry because it has partially contributed to the same; and second that labour is entitled to claim that the gap between its actual wage and the living wage should within reasonable limits be filled up. The concept of labour 's contribution to the profits of the industry has reference to the contribution made by the employer and the workmen taken together as a class; and so it would 956 not be relevant to, inquire which sectionof labour has contributed to what share of the profits. The board idea underlying this concept is that the capital invested by the employer and labour contributed by workmen jointly produce the profits of an industry. This does not necessarily mean that, in theindustry in question, labour must actually manufacture or produce goods, though, in the case of manufacture and,production of goods contribution of labour. is patent and obvious. In the Burma Shell Oil Storage and Distributing Co., of India Pd. vs Their, Workmen(1) the Labour Appellate Tribunal rejected the employers ' claim that, since workmen employed by them did not manufacture or produce any goods but merely assisted them in the distribution Of oil, they were not. entitled to claim any bonus under the formula. It is wrong to say ", observed the labour Appellate, Tribunal, that because the employees of these oil companies merely market the oil they have not earned the right to any bonus". It was also Pointed out that the workmen had to perform :duties of various intensity for marketing an article of public. utility,. and in that sense they contribute to, production according to the concept of economists". So were the clerks held entitled to bonus for,their duties in the, general business of the concern though, they had nothing to do with the physical act of marketing the commodity it was also emphasised that the other object of granting the bonus was to help the workmen to fill up the gap between their actual wages and the living wage. Thus in dealing with the claim for bonus made by workmen the two fold basis of the formula must always be kept in mind. The working of the formula begins with the figure of gross profits taken from the profit and loss account which are arrived at after,payment of wages and dearness allowance to the employees and other items of expenditure. As a general rule the amount of gross profits thus ascertained is. accepted without submitting the statement of the ' profit and loss 'account to a close scrutiny. If, however, it appears that (1)(1953) 957 entries have, been made on the debit side, deliberately and mala fide to reduce the amount of gross profits, it would be open to the tribunal to examine the question and if it is satisfied that the impugned entries have been made mala fide it may disallow them. This principle has been recognised by the Labour Appellate Tribunal when it observed, for instance, in M/s. J. K. Cotton Manufacturers Ltd., Kanpur vs Their Workmen (1) that if managing agents deliberately divert profits to the selling, agents with a view to deprive labour of their bonus and pay commission to the selling. agents at high rates then certainly the matter must be taken into consideration in the determination of available surplus balance " It would likewise be open to the parties to claim the exclusion of items either on the credit or on the debit side on the ground that the impugned items are. wholly extraneous and entirely unrelated to the trading profits of the year. In considering such a plea the tribunal must resist the temptation of dissecting the balance sheet too minutely or of attempting to reconstruct it in any manner. It is only glaring cases, where the impugned item may be plently and obviously extraneous that a plea for its exclusion should be entertained. Where the employer makes profits in the course of carrying on his trade or business, it would be unreasonable to inquire whether each one of the, items of the said profit is related to the contribution made by labour. In such matters, the tribunal must take an overall, practical and commonsense view. Thus it ma be stated that as a rule the gross profits appearing at the foot of the statement of the profit, and loss account should be taken a,% the basic figure while working out the formula. In, working out the formula the other important fact which should not be ignored is, that the formula proceed 's to deal with the labour 's claim for bonus on the basis that the relevant year for which bonus is claimed is a self sufficient unit and the appropriate accounts have, to. be made on the notional basis in respect of the said, It is substantially because (1)[1954] L.A.C. 716, 745. (Also vide , 421.) 958 of this basic assumption that if an employer receives during the bonus year a refund with respect to the excess profits tax paid by him in a previous year the amount of refund is not included on the credit side. In Model Mills etc. ' Textile Mills, Nagpur vs The Rashtriya Mill Mazdoor Sangh (1) the Labour Appellate Tribunal observed that according to the. formula, the income tax is to be deducted as a prior charge on trading results of the year just as much as the bonus is to be ascertained upon the trading results of the year. The concession made by the income tax authorities in making a refund of the excess profits tax already paid by the employer is intended to aid a concern on account of past losses and so it has nothing to do with the formula. The same principle governs cases where owing to a loss incurred in the previous year or years the employer is entitled to claim allowance for adjustment under section 24 (2) of the Income tax Act during the bonus year; and so it is held that the allowance for adjustment which the employer claims cannot be taken into account in determining the amount of income tax payable on the profits of the bonus year under the formula. In Bennett Coleman and co., Ltd. vs Their Workmen (2) the Labour Appellate Tribunal rejected the contention raised by labour that since under section 24 (2) the employer would not be liable to pay tax during the bonus year no provision for payment of tax should be made in working out the formula. The Labour Appellate Tribunal pointed out that the fact that the employer was not required to pay tax during the bonus year was the result of the adjustment of the previous year 's unabsorbed depreciation and losses against current year 's profit, and that had no relevance in determining the available surplus from the trading profits of the bonus year. The same view has been taken in several other decisions to which the Labour Appellate Tribunal has referred. In our opinion, once it is realised that in working out the formula the bonus year is taken as a unit self sufficient by itself, the decisions of the Labour Appellate Tribunal in regard (1) (1955) I J. 534, 540. (2) (1955) I J. 60. 959 to the refund of excess profits tax and the adjustment of the previous year 's depreciation and losses against the bonus year 's profits must be treated as logical and sound. Having ascertained the amount of gross profits, the first item of deduction relates to depreciation. The propriety of this deduction was not questioned before the Labour Appellate Tribunal which evolved the formula; but the content of the item of depreciation became a matter of controversy subsequent to 1950. After 1948, section 10 (2) (vi) of the Income tax Act has provided for initial and additional depreciation besides the statutory depreciation which was already admissible. In other words, depreciation allowed under the Income tax Act now consists of what may be called the statutory normal depreciation calculated under r. 8 as well as initial depreciation and additional depreciation. The allowance of these depreciations is an exception to the general rule that the income has to be taxed without reference to the diminution in the value of the capital. Under the amended provision of section 10 (2) (vi) of the Income tax Act the employers began to claim that from the gross profits all the depreciations admissible under the Income tax Act should be debited; and this claim was upheld by some tribunals and rejected by others. This conflict of decisions led to confusion; and so a Full Bench of the Labour Appellate Tribunal was constituted to decide this and other points in the case of the U. P. Electric Supply Co., Ltd., etc. Electricity Supply Undertakings vs Their Workmen(1). The Full Bench held that " the depreciation which should be deducted from the gross profits in working the formula is annual depreciation allowable under the provisions of the Income tax Act including the multiple shift depreciation; it also held that the initial depreciation and additional depreciation which were also allowed under the Income tax Act are abnormal additions to the income tax depreciation designed to meet particular contingencies and for a limited period; (1) (1955) II J. 431. 122 960 and so it would not be fair to the workmen that these two depreciations should be rated as prior charges before the available surplus is ascertained ". Apparently some doubt arose as to what exactly was allowed to be deducted under this Full Bench decision; and two of the members of the Full Bench took occasion to clarify the position in Surat Electricity Co. 's Staff Union vs Surat Electricity Co., Ltd. (1). This decision shows that what the Full Bench intended to treat as depreciation for the purpose of the formula was a notional amount of normal depreciation; in order to avoid any future doubt or confusion, the judgment in the case has set out the manner in which this notional normal depreciation has to be worked out. Since this decision was pronounced it is the notional normal depreciation that is deducted from the gross profits in working the formula. It seems to us that the view taken by the Full Bench is wholly consistent with the basic idea of social justice on which the original formula is founded. The relevant provisions of the Income tax Act allowing further depreciation are based on considerations which have no relevance to the original formula; indeed, as the Full Bench has pointed out, if the said two items of depreciations are allowed to be deducted from the gross profits it would in a majority of cases defeat the object of the formula itself. We would accordingly hold that the depreciation which has to be deducted from the gross profits should be the notional normal depreciation as explained in the case of Surat Electric Co., Ltd. (1). The balance obtained after deducting depreciation from the gross profits is then taken as the amount on which calculations have to be made about the income tax payable for the bonus year. This item gives rise to a controversy between the parties. It is urged for the employers that in determining the amount payable by way of income tax on this balance the tribunal should not take into consideration allowances which are made under the relevant provisions of the Income tax Act. There is no doubt that in taxing the employer for the bonus year the Income tax Act would (1)(1957) II L. L. J. 648. 961 make allowance not only for the normal depreciation but also for the initial and additional depreciations; but the argument is that the income tax should be determined nationally without reference to the said allowances. In support of this argument it is further urged that though the employer may obtain credit for the two further depreciations for some years, later on the said allowances will not be made and his liability ' to pay tax would be correspondingly increased. It is but fair, so the argument runs, that the employer should be allowed to create a fund of income tax reserve from which he would be able to bear his tax liability in future as and when it is bound to increase. On the other hand it is contended on behalf of workmen that while determining the amount of tax payable for the bonus year the tribunal cannot ignore the concession given to the employer by the Income tax Act by making the allowance of two further depreciations. What the employer claims is not the amount of tax payable during the bonus year but much more in addition in order to build up a reserve and this notion of building up a tax reserve for meeting future, though certain, increased tax liability is foreign to the basic idea of the formula. For making calculations under the formula the bonus year is taken as a unit and all items specified in the formula should be worked out on that basis. That is why the refund of the excess profits tax received in the bonus year is excluded from consideration and the right of the employer to adjust his previous year 's losses and depreciation against the trading profits of the bonus year is likewise ignored. So too the fact that the employer may have to pay increased taxes in future years must be treated as irrelevant. That in brief is the case for workmen. In our opinion, having regard to the basis of the formula and the manner in which the other items of the formula are required to be worked out, it would not be reasonable to allow the employer to claim under the item of income tax an additional amount is respect of the two further depreciations which are expressly allowed to him under section 10(2)(vi) of the Income tax 962 Act. It is clear that the amount determined under this item would not represent the actual tax which the income tax department will recover from the employer. In that sense it would always be a notional amount ; but in calculating even this notional amount it would be unfair and unjust to ignore the concessions allowed to the employer by section 10(2)(vi). The creation of a fund of income tax reserve may conceivably lead to unnecessary complications. Besides, if on principle the further depreciations allowed by the Income tax Act are treated as inadmissible under the formula and so are excluded from consideration, it would be substantially inconsistent with the object of such exclusion to allow the employer to claim tax in respect of the said amounts of the two depreciations. It is clear that even if the amount of income tax is determined after taking into account the concession given to the employer by section 10(2)(vi) it would work no hardship to the employer, for the simple reason that in future years when these concessions cease to be operative and his liability to pay the tax correspondingly increases, he would be entitled to claim the amount of income tax which would then be payable by him. This method of calculating income tax is thus fair to both the parties and it has besides the merit of being consistent with the basic character of the formula. It would be relevant in this connection to remember that, though in most of the industries workmen continue to be employed from year to year, nationally and on principle, the claim for bonus for a particular year is made on behalf of workmen employed during the said year; and in that sense, the relevant calculations have to be made with the bonus year as a unit. That is why considerations of future tax liability of the employer are foreign to the calculation under the formula. We would, therefore, bold that in calculating the amount of tax payable for the bonus year the tribunals should not take into account the concessions given by the Income tax Act to the employers under the two more depreciations allowed under section 10(2)(vi) of the Income tax Act. This point has been considered by this Court in 963 Sree Meenakshi Mills, Ltd. vs Their Workmen (1) where has upheld the view taken by the Full Bench the Labour Appellate Tribunal in the case of the U. Electric Co., Ltd., etc., Electricity Supply Undertakings (2) and has directed that in determining amount of income tax payable during the bonus yea the further depreciations permissible under the income tax Act should be taken into account. We would only like to add that in that case this Court had occasion to say what exactly the normal depreciation meant; but it is clear that the normal depreciation mentioned in the judgment was not intended to mean anything other than the notional normal depreciation as explained by the Labour Appellate Tribunal in the case of the Surat Electric Co., Ltd. (3 ). The amount income tax thus determined has then to be deduct( as a prior charge. The next step in the working of the formula related to the deduction of an appropriate amount in respect of the return on paid up capital as well as working capital. We have already noticed that the formula provides generally for the payment of interest at 69 per annum on the paid up capital and at 2% on worldling capital. Subsequent decisions show that the tribunals do not regard the said rates as inflexible and they have suitably modified them in the light of the relevant circumstances in each case. We think that this is a correct approach and that it is necessary to fix the rates of interest on the two items of paid up capital and working capital according to the circumstances of each case. In this connection it may be added that ordinarily industrial tribunals awards interest at the rate of 6% per annum on paid up capital. In Workmen of Assam Co., Ltd. vs Assam Co., Ltd. this Court held that interest allowed by the tribunal a 7% on paid up capital and confirmed by the Labour Appellate Tribunal was justified because " an industry connected with agriculture like the tea industry is exposed to greater risks than any other industry such (1) ; (3) (2) (1955) II L.L.J. 431. (4) 964 weather, pests in the plants and gradual deterioration of the soil ". On the other hand, in Ruston and ornsby (India) Ltd. vs Their Workmen (1) the Labour appellate Tribunal allowed only 4% return on the art of paid up capital represented by bonus shares for the year in which such shares were issued and ,)served that ,for subsequent years no distinction between it and other paid up capital represented by paid up shares should be made ". Similarly, in regard reserves or depreciation used as working capital interest has been allowed either at 4% or at 3% or ,Ten at 2% according to the relevant circumstances. in the Mill Owners Association, Bombay vs The Rashtriya Mill Mazdoor Sangh (2) the Labour Appellate Tribunal has observed that " as we have said before, there is no fixed rule as to the rates of such return (on capital) and each case must depend on its individual acts. We have in appropriate cases given as high as % but in case of the mills the Full Bench has considered that the equivalent of 2% would be reasonable nd we propose to retain it at that level for the present ". In Tea and Coffee Workers Union vs Brooke Bond (India) (Private) Ltd. (3) the Industrial Tribunal as considered the previous decisions on the question of the return on working capital and held that, in the case before it, it would be an adequate return on the working capital if 3% interest is allowed because there were no special reasons existing for allowing a higher ate. In dealing with this aspect of the matter it is relevant to point out that no distinction has been made )y tribunals between reserves used as working capital and depreciation fund similarly used. In the Mill Owners Association, Bombay vs The Rashtriya Mill Mazdoor Sangh (2) (page 523) when labour objected to the depreciation fund earning any return even if it was utilised in or about the business of the year, the labour Appellate Tribunal overruled the objection and observed that " no essential difference could be made between the depreciation fund and any other (1) (2) 522. (3)(1958) 965 fund belonging to the company which could be invested so as to earn a return ". It is thus clear that what is material is not the origin of the fund. It is the fact that the fund in the hands of the concern has been used as working capital that justifies the claim for art adequate return on it. We think it is commonsense that if the concern utilises liquid funds available in its hands for the purpose of meeting its working expenses rather than borrow the necessary amounts it is entitled to claim some reasonable return on the funds thus used. It is of course necessary that the employer must show that the amount under the depreciation fund was in fact available and that it has actually been used as working capital during the relevant year. What return should be allowed on such funds must inevitably be a question of fact to be decided by the tribunal in its discretion in each case in the light of the relevant circumstances. It would thus be noticed that in working out these two items under the formula there is no fixed or rigid rule about the rate of interest which can be claimed and awarded. It is also clear that if any fund is used by the employer for the purpose of expanding his business he is not entitled to claim any return on such fund under those items. In the case of the U. P. Electric Supply Co., Ltd. etc. Electricity Supply Undertakings (1) the Full Bench of the Labour Appellate Tribunal held that " considering all the factors presented to them they did not think that a case had been made out for giving a special prior charge in the shape of return on the reserves utilised for expansion ". When the amounts awardable to the employer under these two items are determined they have to be treated as prior charges in the calculation of available surplus under the formula. The original formula referred to replacement, rehabilitation and modernisation of the plant and machinery. Soon after the formula was evolved a dispute arose as to whether the industry was entitled to claim rehabilitation for its buildings as well and it was held that " a claim for rehabilitation for buildings had to (1) (1955) II L.L.J. 431. 966 be treated as a prior charge just like the claim for the rehabilitation of plant and machinery " (1). :This position is not disputed before us, and we think rightly. That takes us to the item of rehabilitation and it is this item which poses a very difficult problem. We have already noticed that the object of providing depreciation of wasting assets in commercial accounting is to recoup the original capital invested in the purchase of such assets; but the amount of depreciation which is allowed under the formula can hardly cover the probable cost of replacement. That is why the formula has recognised the industry 's claim for rehabilitation in addition to the admissible depreciation. Since the Second World War prices of industrial plant and machinery have registered a continuous upward rise and its inevitable consequence has been a proportionate rise in the claim for rehabilitation. In considering the claim for rehabilitation it is first necessary to divide the blocks into plant and machinery on the one hand and other assets like buildings, roads, railway sidings, etc., on the other. Then the cost of these separate blocks has to be ascertained and their probable future life has to be estimated. Once this estimate is made it becomes possible to anticipate approximately the year when the plant or machinery would need replacement; and it is the probable price of such replacement on a future date that ultimately decides the amount to which the employer is entitled by way of replacement cost. This problem can be considered item wise where the industry does not own too many factories and item wise study of the plant and machinery is reasonably possible; but if the industry owns several factories and the number of plants and machines is very large it would be difficult to make a study of the replacement costs item wise, and in such a case the study has to be blockwise. In either case what the tribunal has to estimate is the probable cost of replacement of plant and machinery at the time when such replacement would become due. It would be clear that the decision of this question would inevitably depend upon several uncertain (11) , 522. 967 factors. The estimate about the probable life of the plant and machinery is itself to some extent a matter of guess work and any anticipation, however intelligently made, about the probable trend of prices during the intervening period would be nothing but a guess. That is how, in the determination of this problem, several imponderables face the tribunals. One of the points which raises a controversy in this ' connection is: What level of prices should the tribunal consider in making its calculations about the probable cost of replacement ? Would it be the price level prevailing during the bonus year or that prevailing at the time when the tribunal holds its enquiry ? Prima facie it may appear that it is the price level prevailing in the bonus year that should be treated as relevant; but if the relevance of the evidence about the price level is limited only to the bonus year, it may hinder rather than help the process of a satisfactory determination of the probable cost of replacement. What the tribunal has to do in determining such cost is to project the price level into the future and this can be more satisfactorily done if the price level which has to be projected into the future is determined not only in the light of the prices prevailing during the bonus year but also in the light of subsequent price levels. It seems to us that in order to enable the tribunal to make an estimate in this matter as near actualities or realities as possible it is necessary that the tribunal should be given full discretion to admit all relevant evidence about the trend in price levels. The price level during the bonus year would no doubt be admissible; but that alone should not be taken as the basis for decision. That is the view which the tribunals have taken in a majority of cases in dealing with the question of rehabilitation and we do not think that there is any justification for disturbing the usual practice in that behalf. The problem of determining the probable cost of replacement itself is very difficult; but the difficulty is immeasurably increased when it is remembered that the claim for rehabilitation covers not only cases of 123 968 replacement pure and simple but of rehabilitation and modernisation. In the context rehabilitation is distin guished from ordinary repairs which go into the working expenses of the industry. It is also distinguished from replacement. It is quite conceivable that certain parts of machines which constitute a block may need rehabilitation though the block itself can carry on for a number of years; and this process of rehabilitation is in a sense a continual process. Unlike replacement, its date cannot always be fixed or anticipated. So with modernisation; and all these three items are included in the claim for rehabilitation. That is why we think it is necessary that the tribunals should exercise their discretion in admitting all relevant evidence which would enable them to determine this vexed question satisfactorily. At this stage it is relevant to remember that the claim under this item is confined to rehabilitation, replacement and modernisation. It is common ground that expansion of the plant and machinery is not included in this item; but in several cases it is not easy to distinguish between modernisation of the plant and machinery and its expansion. It is urged that an expert can, if he so chooses, make an attempt to include expansion within what he may describe as modernisation by clever use of technical words and details, and that it is precisely this aspect of the matter which has to be carefully examined by the tribunal. The industry sometimes claims that a plant may become obsolescent because it has become out of date and has to be substituted by a new modern plant. Is the introduction of the new modern plant in such circumstances an item of expansion or mere modern isation ? It is difficult to lay down any general tests which would govern the decision of this question. If it appears fairly on the evidence that the introduction of the modern plant or machine is in substance an item of expansion of the industry, expenses incurred in that behalf have to be excluded. On the other hand, if the employer had to introduce the new plant essentially because the use of the old plant though capable of giving service was uneconomic and other 969 wise wholly inexpedient, it may be a case of modernisation. Similarly, if by the introduction of a modern plant or machine the production capacity of the industry has appreciably increased, it would be relevant for the tribunal to consider in an appropriate case whether it would be possible to apportion expenses on the basis that it is a case of partial modernisation and partial expansion. If, however, the increased production is not of a significant order it may be regarded as incidental to replacement or modernisation and the question of apportionment may not arise. We have set out these considerations in order to emphasise the fact that in dealing with the problem of rehabilitation the tribunal must carefully examine the evidence and consider the employer 's claim in all its aspects before determining the amount which should be allowed by way of rehabilitation as a prior charge in the relevant year. The decision on the question of the probable cost of rehabilitation is always reached by adopting a suitable multiplier. This multiplier is based on the ratio between the cost price of the plant and machinery and the probable price which may have to be paid for its rehabilitation, replacement or modernisation. Since there has been a continuous rise in the prices of industrial plant and machinery the older the plant which needs rehabilitation the higher is the multiplier. That is why there is always a competition between industry and workmen on this point. Industry is sometimes tempted to keep its old pre 1939 block alive with a view to claim a higher multiplier which gives it a larger amount of rehabilitation expenditure; whereas workmen urge that the old pre 1939 block has been nominally kept alive as a device and so press for a lower multiplier which would reduce the claim for rehabilitation. Once a proper multiplier is adopted in respect of each one of the blocks the first step in determining the probable cost of rehabilitation can be easily taken. It then becomes a matter of mere arithmetical calculation. At this stage the divisor steps in. The total amount required for rehabilitation which is determined by the 970 application of a suitable multiplier in respect. of each block has to be divided by a suitable divisor in respect of each block in order to ascertain the annual requirement of the employer in that behalf year by year. In the case of the divisor the employer seeks for a lower divisor whereas workmen claim a higher divisor and this contest has to be decided by the tribunal by reaching a fair conclusion on the evidence before it about the probable future life of the block in question. It would thus be noticed that the adoption of a suitable multiplier and divisor plays a very important part in the decision of the vexed question about the employer 's rehabilitation claim. Before actually awarding an appropriate amount in respect of rehabilitation for the bonus year certain deductions have to be made. The first deduction is made on account of the breakdown value of the plant and machinery which is usually calculated at the rate of 5% of the cost price of the block in question. Then the depreciation and general liquid reserves available to the employer are deducted. The reserves which have already been reasonably earmarked for specific purposes of the industry are, however, not taken into account in this connection. Last of all the rehabilitation amount which may have been allowed to the employer in previous years would also have to be deducted if it appears that the amount was available at the time when it was awarded in the past and that it had not been used for rehabilitation purposes in the meanwhile. These are the broad features of the steps which have to be taken in deciding the employer 's claim for rehabilitation under the working of the formula. " It would thus be clear that the decision of this major item in the working of the formula presents many difficulties; and in the last analysis its decision depends upon several hypothetical and empirical considerations. It is, therefore, not surprising that in the case of Metal Box Co. of India, Ltd. vs Its Workmen (1) the Labour Appellate Tribunal has observed that " It is unfortunately too true that all (1) , 321. 971 our calculations as to rehabilitation may be disproved by subsequent events; it is impossible to say what the trend of world prices would be in the next fifteen years or which circumstances will intervene before that period to upset such calculations one way or the other, and no calculations of this kind are capable of mathematical accuracy. We have to take a commonsense view of these matters and make an allowance ' for rehabilitation to the best of our ability and in accordance with our formula ". It has also been observed by the Labour Appellate Tribunal that if an appropriate multiplier and divisor are determined " they are generally used because the tribunals take the view that the reconsideration of the said multiplier and divisor should not be hastily undertaken and could be justified only on the basis of a substantial change of a stable character extending or likely to extend over a sufficient number of years so as to make a definite and appreciable difference in the cost of replacement ". (Vide: The Mill Owners Association Bombay vs The Rashtriya Mill Mazdoor Sangh (1) In dealing with the employer 's claim for rehabilitation tribunals have always placed the onus of proof on the employer. He has to prove the price of the plant and machinery, its age, the period during which it requires replacement, the cost of replacement, the amount standing in the depreciation and reserve fund, and to what extent the funds at his disposal would meet the cost of replacement. If the employer fails to lead satisfactory evidence on these points tribunals have on occasions totally rejected his claim for rehabilitation. (Vide: Ganesh Flour Mills Co. Ltd., Kanpur vs Ganesh Flour Mills Staff Union, Kanpur (2); Bombay Gas Co. Ltd. vs Their Workmen (3); Dharangadhra Chemical Works Ltd. vs Its Workmen (4)). If the tribunals are satisfied that the employer is deliberately and without a sufficient cause not taking any steps to rehabilitate, replace or modernise his machinery even though an appropriate allowance is made in that behalf from year to year, they may take into (1)(1952) (3)(1955) (2) (4) 972 account this conduct in determining the extent of such allowance in the bonus year in question. Similarly if it appears that the employer has deliberately or mala fide refrained from rehabilitating or replacing his old machinery with a view to claim a higher multiplier in calculating the rehabilitating amount, the tribunals may take his conduct into account in determining the actual allowance of rehabilitation to him. The main difficulty in deciding questions about reha bilitation arises from the fact that satisfactory evidence is not always placed before the tribunals and it is urged that the evidence given by the employers ' experts is interested and the workmen with their limited resources are not able to test the said evidence by adequate or effective cross examination. In such a case the tribunal may, if it so desires and if it is possible, secure the assistance of assessors (vide section 38 of the Industrial Disputes Act). It is therefore necessary that the tribunal should require the employer to give clear and satisfactory evidence about all the relevant facts on which it can make the requisite estimate. The questions which the tribunal has to consider under this item are essentially questions of fact and its final decision on them is bound to be hypothetical, since it would be based on a fair evaluation of several circumstances which are by no means certain and which cannot be predicated with any amount of precision or even definiteness. That is why it is of the utmost importance that all relevant and material evidence should be adduced by the employer and it should be properly tested by cross examination. When that is done the tribunal must do its best to consider the said evidence objectively and reach its final decision in a judicial manner. Once the amount of rehabilitation is thus determined the available surplus for the bonus year is ascertained and the final stage is reached when the tribunal has to give directions for the distribution of the said available surplus. It is not seriously disputed that three parties are entitled to claim a share in this available surplus; labour claims bonus from it, the industry claims a share for the purpose of its expansion 973 and other needs, and share holders claim a share by way of additional return on the capital invested by them. In the case of the Mill Owners Association, Bombay (1) where the formula was evolved, out of the available surplus of Rs. 2.61 crores 2.16 crores was distributed by way of bonus leaving a balance of 0.45 crores with the industry. In the Trichinopoly Mills Ltd. vs National Cotton Mills Workers ' Union (2) the available surplus was found to be Rs. 34,660 and out of it Rs. 30,000 was ordered to be distributed as bonus to the workmen. These two and other similar in stances, however, cannot be pressed into service for the purpose of evolving any general rule as to the ratio or proportion in which the available surplus should be distributed. The ratio of distribution would obviously depend upon several facts: What are the wages paid to the workmen and what is the extent of the gap between the same and a living wage? Has the employer set apart any gratuity fund ? If yes, what is the amount that should be allowed for the bonus year ? What is the extent of the available surplus ? What are the dividends actually paid by the employer and what are the probabilities of the industry entering upon an immediate programme of expansion? What dividends are usually paid by comparable concerns ? What is the general financial position of the employer? Has the employer to meet any urgent liability such as redemption of debenture bonds ? These and similar considerations will naturally determine the actual mode of distribution of the available surplus. In this connection labour 's claim to fill up the gap between the wage actually paid to it and the living wage has an important bearing on the decision of this point. Industry 's claim for paying additional return on capital and for making additional provision for expansion would also have to be considered. The fact that the employer would be entitled to a rebate of income tax on the amount of bonus paid to his workmen has to be taken into account and in many cases it plays a significant part in the final distribution. Therefore, in our opinion once the (1) (2) 974 available surplus is determined, the tribunal should, in the light of all relevant circumstances, proceed to make an award directing the payment of a fair and just amount to labour by way of bonus. If the formula is thus worked reasonably it would in a large majority of cases succeed in achieving its principal object of doing justice both to labour and industry. Before we part with the question of working the formula it is necessary to observe that the practice adopted by some tribunals in giving the amount of bonus a priority in the calculations is not justified. Logically it is only after all the prior charges have been determined and deducted from the gross profits that available surplus can be ascertained; and it is only after the available surplus is ascertained that the question of awarding bonus can be considered. Some tribunals seem to work out nationally the amount of bonus which they think can be awarded and place that amount higher up in the process of making calculations before the income tax payable is determined. The inevitable consequence of this procedure is to make the amount of tax proportionately less. We wish to make it clear that this procedure should not be followed. As we have already pointed out, in directing the distribution of the available surplus the tribunal has to take into account the rebate of income tax to which the employer is entitled on the amount of bonus paid to his workmen but that on principle is different from placing the amount of bonus immediately after depreciation in the working of the formula. It has been urged before us by the respondents that the amount of rehabilitation as well as the amount of depreciation should be deducted from the gross profits before income tax payable is ascertained. In this connection reliance is placed on the fact that in its judgment which evolved the formula the Labour Appellate Tribunal has at one place described rehabilitation as the first charge in priorities. Having regard to the context in which the said statement is made it is clear that all that the Labour Appellate Tribunal wanted to emphasise was that the textile industry 975 with which it was directly concerned in the said case needed rehabilitation very urgently. The final calculations made in the judgment give a clear indication as to how the formula has to be worked out. We are, therefore, satisfied that rehabilitation cannot be given the high priority claimed for it by the respondents, We must now consider whether the tribunal was right in directing that overtime payment should be ' included in the calculation of the bonus which it has directed the appellant to pay. Mr. Kolah contends that the direction to include overtime wages is contrary to the usual practice followed by industrial tribunals and it is also unsound on principle. This dispute arises between the employer and the workmen in this acute form because the total amount of bonus is not determined logically after ascertaining the available surplus. If the said amount is logically determined as indicated by us, then the question as to whether overtime wages should be included or not would really be a matter of dispute between workmen inter se because once the amount of bonus is determined, how it should be distributed between workmen inter se would cease to be a matter of direct concern to the employer. Therefore we think that there would be no occasion for such a dispute between the employer and his workmen if the tribunals follow the logical method of determining the amount of bonus in the manner indicated by us. On principle we do not think it would be fair to the workmen as a whole that overtime should be included in calculating the bonus which each workman should receive. Workmen who do overtime get additional payment for such overwork. If in addition to such payment they are allowed to include the said payment in their wages in calculating bonus to which they are entitled, obviously the gap between their actual wage and the living wage would be filled up to a larger extent than in the case of other workmen who do not receive such additional overtime payment. Besides, if the payment of bonus proceeds on the broad consideration that it is due to the workmen for their contribution to the profits it would be unreasonable to make 124 976 a distinction between workmen and workmen on the ground that some have contributed more to the profit than others; and that is exactly what would follow if overtime workers are allowed to claim a larger amount of bonus than their other colleagues. That is why we think that the tribunal was not justified in directing that the calculations of bonus should be made on the basis that overtime payments constituted a part of the basic wages of the employees. The next point to consider relates to the return on paid up capital to which the appellant is entitled. The tribunal has awarded to the appellant return at the rate of 6% on paid up capital and at 4% on the working capital. The appellant claims a return at a higher rate on paid up capital whereas the respondents contend that the return should be paid on the paid up capital at a lower rate. In support of its claim for a higher return the appellant has relied on the fact that it has consistently paid dividends at a reasonably low rate and it did not seek to make undue profits even during the years of war. In this connection Mr. Kolah has invited our attention to a statement, exhibit C 1, showing the percentage of dividend to paid up capital and invested capital for the eighteen financial years 1936 37 to 1953 54 and he has asked us to contrast the low rates of dividend evidenced by it with dividends paid by other companies as shown by another document exhibit C 12. He has also asked us to take into account the highest and the lowest quotation for the company 's shares in the Bombay Stock Exchange during the period 1949 55. On the other hand Mr. Dudhia has urged that during the relevant year the appellant has capitalised Rs. 35.85 lakhs from the reserve fund and 175.45 lakhs from Premium on Shares Account by issuing one bonus share for every five shares held by the shareholders; and he argues that the tribunal was in error in allowing 6% on the paidup capital during the bonus year. Incidentally Mr. Dudhia also relied, though halfheartedly, on the finding of the tribunal that the appellant had paid an inflated price for the pre 1939 block. It is true that in one place the tribunal has made an observation to 977 this effect ; but it is clear that the said observation is inconsistent with its definite finding recorded earlier in the course of its judgment that it was not prepared to hold that the A. C. C. had inflated the capital invested by the merging companies by taking them over in 1936. Therefore this part of Mr. Dudhia 's argument is invalid. In our opinion, the question as to what return should be allowed to paid up capital in ' a given case must be left to be determined by the tribunal in its discretion having regard to all the relevant facts; and if the tribunal has in its discretion awarded 6% interest on the paid up capital we see no reason to interfere with its decisions It is clear that no question of principle or law is involved in the matter. There is one more point which we must consider before we proceed to deal with the facts in the present case. This point relates to the employer 's claim to treat the amount in the gratuity fund as a prior charge; and this claim has been allowed by the tribunal. It appears that in M/S. Metro Motors vs Their Workmen (1) the Labour Appellate Tribunal observed that it was desirable in all cases to create a separate reserve fund for the payment of gratuity and it directed that the modest fund claimed by the employer for the year in question was a proper deduction from its profits. The question which we have to decide is whether the allowance on this account should be treated as a prior charge in making the calculations under the formula. There can be no doubt that, in a sense, the gratuity fund is created for the benefit of workmen and there should be no difficulty in recognising the appellant 's claim for the deduction of an appropriate amount on this account; but we think on principle it is desirable that no addition should be made to the list of prior charges recognised by the formula. Even so when the available surplus is determined the tribunal ought to take into account the employer 's claim on account of the gratuity fund created for the benefit of his workmen and the amount which the tribunal may regard as a reasonable (1)(1952) II L.L.J. 205. 978 allowance in that behalf should be definitely borne in mind in finally deciding the amount which should be paid to the workmen by way of bonus. This method will meet the employer 's claim adequately without making any addition to the list of priorities specified in the formula. Mr. Dudhia contended that the tribunal should not have allowed Rs. 10 lakhs under this item but we do not think there is any substance in this contention. Incidentally Mr. Dudhia has pointed out that in dealing with the appellant 's claim for a return on working capital the tribunal has made a mistake by including a further sum of 0.66 lakhs as return on investments. Mr. Kolah has conceded that this is a mistake and so the return on the working capital would stand at 26.10 lakhs only. It is now necessary to consider the evidence of Mr. Tongaonkar and decide the most controversial point of fact in dispute between the parties about the appellant 's requirements for rehabilitation. Mr. Tongaonkar holds the Degree of Bachelor of Science of the London University, and he is also a Member of the Institution of Electrical Engineers, London. He joined the appellant in November 1934, but before that he had nearly three years ' practical experience in England in various engineering firms; and on his return to India, he had joined the Dinshaw group of cement factories. He continued to work with the said group until its merger with the appellant in 1936, when he was appointed by the appellant. Mr. Tongaonkar is in charge of the department which deals with the construction of new cement factories, modernisation and extension of the existing cement factories, design and manufacture of cement machinery for A. C. C., and major engineering problems of the A.C.C. Since April 1956 he has been appointed the Controller of Planning and Development of the A. C. C. He visits the A. C. C. factories very frequently and claims to be acquainted with the condition of the plant and machinery at all the A. C. C. factories. There is no doubt that Mr. Tongaonkar is qualified to give evidence on the technical points which are relevant in 979 dealing with the question of rehabilitation. Even so, in appreciating 'his evidence, it would not be unreasonable to bear in mind the fact that he is an officer employed by the appellant, and as such he is likely to be interested in supporting the claim for rehabilitation which the appellant has decided to make. According to Mr. Tongaonkar, the average future life of the plant and machinery existing in 1939 would ' be approximately seven years from 1 8 1954. Similarly, the approximate future life of the three other categories of blocks would be 13, 15 and 20 years respectively. He has stated that in calculating the life of machinery, it is necessary to take into consideration, first the mechanical condition of the machinery, second whether it is efficient or has been rendered obsolete because new machinery of modern design with a considerably better efficiency has come into the market. In other words, the probable useful life of the machinery may be prematurely determined by the emergence of more efficient machinery. In support of this statement he has given some instances where the appellant 's plant or machinery had to be changed mainly for the reason that a new corresponding plant or machinery was more efficient and gave more satisfactory results. However, stated generally,in the opinion of the witness, the average life of a cement plant taken as a whole would be 25 years if it is properly main tained. Mr. Tongaonkar then gave evidence about the rise in prices of plant and machinery and he produced exhibit C 36 which is a statement showing the progressive increase in prices from pre war days up to 1955 56 of major items of machinery, gear boxes, motors and power plant used in cement factories. He has stated that the said statement had been prepared on the basis of actual quotations which he had in his possession. His evidence shows that between 1951 54 there has been a rise of 11%, whereas between 1954 56 there has been a rise of 7% in the prices of the relevant items of machinery. He then sought to corroborate his evidence on this point by the expenditure actually incurred by the appellant while putting into commission 980 a new cement factory at Sindri in about 1955. The calculations made by him in this behalf show that the cost of construction of a new factory is approximately 4.3 times the cost of construction of similar factory in 1939. In regard to the life of buildings, Mr. Tongaonkar stated that first class buildings lived approximately for 40 years provided they are properly maintained and provided they are not in earthquake zone; but he added, that for the main unit of the cement plant it is usual to take the life of buildings at 25 years. He also stated that in many cases the existing buildings have got to be either demolished or considerably modified when the main machinery whose life is 25 years has to be replaced by modern machinery which is of a different design and which would require buildings and foundations of different size and type. Thus, for this special circumstance also, he was not prepared to give the buildings of the appellant an average life longer than 25 years. In regard to the increase in the cost of constructing buildings, he produced two statements, C 6 and C 14. exhibit C 6 shows the increase in prices of building materials since 1938 1954, whereas exhibit C 14 shows the continually increasing amount of expenditure incurred by the appellant for construction of labour quarters, etc. It is on this evidence that Mr. Tongaonkar has adopted the respective multipliers and divisors in arriving at the figure of the amount required for rehabilitation. As we have already pointed out, for the pre 1939 block he has taken 4.28 as the multiplier, whereas for the block purchased between 1940 44 he has taken 2.8 as the multiplier. He has explained that the multiplier of 4.28 is really made up of two multipliers. Certain portion of the plant and equipment which is obtained from abroad is estimated at 60% of the total cost and the expenditure on the remaining items is estimated at 40% of the total cost. The multipliers of these two groups are estimated at 4.8 and 3.5 respectively, and by calculations it has been noticed that the average ratio comes to 4.28. This is the 981 genesis of, and the justification for, the adoption of 4.28 as the multiplier. He has also added that the proportion of 60% and 40% which he had mentioned was based on his experience of building a number of cement factories and of carrying out extension and modernisation of existing cement factories. The multiplier was based, said the witness, on the state, of comparative quotations of plant and machinery received in 1939 and quotations received of similar machinery recently. It would thus be clear that in devising the multiplier and divisor, Mr. Tongaonkar has drawn very largely on his experience and has drawn inferences which he thought were reasonable. Besides in making the relevant calculations he has not dealt with the plant and machinery and the buildings and other assets separately, but has lumped them together under the respective blocks. The approximate cost of the merging companies of their assets as on July 31, 1936, was 5.73 crores of rupees. exhibit C 3 which is a certificate issued by the Chartered Accountants shows that " according to the blocks, the original cost of the block of fixed assets excluding goodwill and purchase of rights and land as at 31st July, 1954, of the appellant under the groups of years of acquisition", amounted to Rs. 19,41,38, 100. Similarly, exhibit C 28 which is also a certificate issued by the Chartered Accountants, shows that the original cost of such portion of fixed assets excluding goodwill and purchase of rights and lands as have been discarded, scrapped or sold as on July 31, 1954, of the appellant companies under the groups of years of acquisition noted in the certificate, amounted to Rs. 1,70,91, 296. The figures supplied by these two certificates are mentioned in cols. 2 and 3 respectively in exhibit C 2. Under the method adopted by Mr. Tongaonkar the cost of discards is shown in the respective years when the portions of blocks were discarded; and the amounts spent on rehabilitation from year to year have gone with the blocks of the said respective years shown in col. 2. The amount of rehabilitation has thus been calculated by the adoption of the multiplier and divisor selected by Mr. Tongaonkar. The question 982 which calls for our decision is whether the multipliers and divisors adopted by Mr. Tongaonkar can be said to be appropriate. As we have already mentioned, it is the multipliers and divisors that play a decisive part in the determination of the employer 's claim for rehabilitation in all bonus proceedings, Mr. Tongaonkar 's evidence has been severely criticised by the respondents and in fact, the tribunal does not appear to have been favourably impressed by it. Before dealing with the criticism made against his evidence, it would be pertinent to observe that the witness has given exhaustive details on the points put to him in examination in chief, and his evidence, read as a whole, does make an imposing reading. But sometimes the wealth of details given by experts is Apt to complicate the narrow points of dispute between the parties and to create doubt and confusion; the large number of technical details expressed in technical language may, in some cases, tend to cloud rather than clarify the points which the tribunal has to consider. We feel inclined to hold that is what has happened to some extent in the present case. But that by itself cannot obviously be said to introduce any infirmity in the evidence given by the expert or affect its credibility. It only means the tribunal has to analyse his statements, examine them carefully in the light of his cross examination and decide how far it would be justified in acting on them. It has been urged before us by the respondents that the claim made by Mr. Tongaonkar in regard to the rehabilitation of the pre 1939 block should be rejected. The contention is that, this block must have been completely replaced before 1953 and no claim for its rehabilitation can be entertained. This argument was based substantially on the assumption that a part of Rs. 997.42 lakhs must have been utilised for the purpose of replacing the said block. Mr. Tongaonkar has stated that prior to 1 8 1954 the total amount spent on modernisation, replacement and rehabilitation and other sundry jobs, but excluding ' expansion, was approximately Rs. 9.97"crores, and in support of this 'statement he produced exhibit C 29, 983 which shows the said expenditure year by year. According to this statement 78 lakhs had been spent on the construction of Rohri Works and Kistna Works, and Rs. 622 13 lakhs had been spent on the expansion during the post war period. This gives the figure of Rs. 700.13 lakhs. Deducting this amount from the total expenditure of Rs. 1697 55 lakhs, the balance of, Rs. 997.42 lakhs is shown as expenditure on modernisation, rehabilitation, replacement and other sundry capital jobs. It is in respect of this amount of Rs. 997.42 lakhs that Mr. Tongaonkar was severely cross examined. In cross examination he stated that he was not in a position to say whether out of the total expenditure of Rs. 997.42 lakhs shown in exhibit C 29 a major portion had been spent on rehabilitation and replacement of the pre 1939 block and 1940 44 block. He admitted that the figures in exhibit C 29 had been prepared by the Accounts Department from the Financial Books so far as year to year total expenditure was concerned and he also stated that it was not possible for him to give details about the said expenditure. These answers indicated that the amount of Rs. 997.42 lakhs had been ascertained mechanically by deducting from the total expenditure of Rs. 1697.55 lakhs incurred on all jobs up to 31 7 1954 the estimated expenditure of Rs. 700.13 lakhs which was treated as expenditure for expansion during the said period. It is on these statements that the respondents placed reliance in support of their argument that the amount of Rs. 997.42 lakhs must have been utilised for completely replacing the pre 1939 block. Thus presented, the argument no doubt appeared very plausible, and so we asked Mr. Kolah to give us a satisfactory explanation about the items of this expenditure. Accordingly Mr. Kolah has filed a statement, exhibit I which gives a rough classification of the total capital expenditure of about Rs. 997 lakhs incurred up to 31 7 1954 on modernisation, replacement, rehabilitation and other sundry and miscellaneous jobs. The several items of this expenditure are broadly indicated under eight heads, the last of which covering an 125 984 amount of Rs. 160 lakhs has in its turn been split up into five separate items by the statement 1(a). There was some dispute before us about the admissibility of some of the said items under cl. 5 of this document 1(a). But Mr. Kolah contends, and it is not disputed by the respondents either, that even if the whole of the disputed item 5 is excluded, the remaining items on exhibit 1 give a fairly satisfactory explanation about the work of rehabilitation, replacement and modernisation on which the bulk of Rs. 997.42 lakhs must have been spent. In view of this statement we must hold that the assumption made by the respondents that the said amount of Rs. 997.42 lakhs must have been utilised for replacing the pre 1939 block is not well founded. It is then contended that there is no justification for keeping the pre 1939 block still alive in view of the estimate made by Mr. Tongaonkar about the life of the cement plant and machinery. The suggestion is that the oldest block is deliberately kept alive in order to enable the appellant to claim a higher multiplier in calculating the rehabilitation amount. It cannot be said that there is no force at all in this criticism. In fact Mr. Tongaonkar himself has admitted that a given portion of this block could have been discarded earlier, but he added, that a part of it had been rehabilitated as a temporary measure in order to carry on. That is why that particular portion of the block had not been discarded so far. According to him the pre 1939 block contains a portion whose useful life is already over, but the appellant would have to carry on with it until finances could be found for modernisation or reconstruction or entire replacement of the said block. In our opinion, this explanation cannot be said to be wholly satisfactory. If the useful life of the whole block had really expired, the appellant would have easily found it possible to replace the said block in due time having regard to its general financial position. The next criticism made against Mr. Tongaonkar 's evidence is that admittedly he has not calculated the average life of the said block. He stated that he had assessed the pre 1939 block by his personal visits to 985 the factory by observing to what extent it had been rehabilitated as a temporary measure and by considering what its present condition was. It is possible that with his knowledge and experience Mr. Tongaonkar may be able to form a proper assessment about the life of the machinery in the manner deposed to by him. But unfortunately, effective cross examination on this point has been stifled to some extent because ' we find that on some material points questions put to the witness were objected to by Mr. Kolah and the objection was upheld by the tribunal. The witness was asked whether he could tell the tribunal with his wide experience, how many years on the average 1939 block had spent prior to 1939. This question was clearly relevant and from the respondents ' point of view it was important. If the witness was able to predicate about the future useful life of the machinery from his examination of the plant, it was suggested to him that it should be possible for him to give an estimate about the life already spent by it by the same process. The object of this question obviously was to show that the machinery in question had lived much longer than its estimated life as deposed to by the witness. This question having been disallowed, any further cross examination to test the claim of the witness that from the inspection and examination of the machinery he can predicate the period of its future useful life became impossible. The witness was further asked to state whether it would be correct to assume that the said pre 1939 block had on an average spent more than 15 years of its life. This question also was disallowed, and the respondents naturally make a serious grievance that they were not given an opportunity to show that Mr. Tongaonkar 's estimate about the life of the plant and machinery was a gross under statement. The respondents have then objected to the inclusion of several items in the approximate cost of rehabilitation mentioned in col. 8 of exhibit C 2. The new additional packing machine in regard to the factory at Banmore as well as the crane storage are, it is urged, not items of rehabilitation, but of expansion. Similar 986 criticism is made in regard to the dust collector plants, coal handling plants, items in regard to the fluidification system, diesel engine shunting locomotive and similar other items. The respondents ' grievance is that by including these items which are really matters of expansion, the amount of approximate cost of rehabilitation has been unduly increased. We are unable to say if the grievance is justified. In regard to the multiplier adopted by Mr. Tongaonkar, the criticism is that it is based on hypothetical considerations determined by him in a subjective manner. It is also pointed out that the failure of the witness to take out the present day replacement cost of individual items of the pre 1939 block has introduced an additional element of uncertainty in the final calculations made by him in regard to the multiplier. No doubt, the witness has stated that he has used the multiplier of 4.8 on a comparative study of the quotations received between 1939 and the present day, but dealing with the machinery blockwise is not a very satisfactory way of determining such a multiplier. In support of this argument, reference is made to the statements made by the witness to the cost of 180 ton per day kiln, if manufactured by the appellant, would be lower than that of a 300 ton a day kiln. The witness then added that the appellant does not manufacture a 180 ton a day kiln, and if such a kiln is imported from abroad its cost would be somewhat higher than that of a 300 ton a day kiln manufactured by the appellant under present day conditions. He was then asked whether he had got a quotation of a 180 ton a day kiln, and he admitted that he had none, and that he had estimated it approximately at Rs. 11 1/2 lakhs. The respondents urged that this estimate about the cost of an imported 180 ton a day kiln is purely notional and is not based on any material at all. This part of the criticism is justified. The next argument urged against the statements prepared by Mr. Tongaonkar is that he appears to have taken into account the prices prevailing in 1956 and has completely ignored the prices as they obtained in the previous years. We have already observed that 987 in deciding the amount of rehabilitation by the adoption of an appropriate multiplier, the tribunal should take into account all relevant facts and these would not be confined to the price level prevailing in any one particular year. When deciding the hypothetical question as to what would be the price in future when the plant and machinery would have to be replaced or rehabilitated, the tribunal has to take an overall picture of prices into account, and the argument is that concentration on the price level of 1956 alone has introduced an infirmity in the calculations made by the witness. There is another infirmity in these calculations which has been criticised by the respondents. Mr. Tongaonkar has lumped together the plant and machinery as well as buildings and other properties belonging to the appellant in col. 2 of exhibit C 2. The more scientific and satisfactory method of dealing with the question of rehabilitation is to treat the plant and machinery separately from the buildings and other assets that need rehabilitation. In fact we asked Mr. Kolah to give us a statement showing the cost of the plant and machinery and the buildings and other assets separately in order to enable us to have a clearer picture about the extent of the rehabilitation needs of the appellant. He has accordingly filed a statement, exhibit F (a). There is yet another point on which Mr. Tongaonkar 's evidence has been criticised by the respondents. It is argued that this evidence shows that under his concept of modernisation several items of expansion can be included. Mr. Tongaonkar has stated that by ' modernisation ' he meant 'a composite scheme comprising replacement of the part of the old machinery by new machinery, installation of additional machinery because the layout of the composite modernisation scheme is different from the previous layout and rehabilitation of the remaining machinery as a short term measure '. By ' rehabilitation ' he ment 'alterations to a machine or machinery, installation for improving its mechanical performance, its technical efficiency or to extend its life by a further span '. This would also 988 include what he compendiously describes as the removal of weak links. According to him expansion can be divided into two groups, viz., Group No. 1 construction of the completely new factory solely for obtaining additional production; and Group No. 2 would cover the specific additional machines which are installed not for modernisation purposes as such, but with the primary object of obtaining additional production. He concedes that in the 'modernisation of an existing factory ' expansion is only a part of the scheme. This means that in the modernisation scheme ' there would be an element of ' expansion '. It would thus be clear that the very broad and wide description of modernisation ' given by the witness would justifiably give rise to an apprehension in the minds of workmen that under the heading of 'modern isation ' items of expansion ' pure and simple are likely to creep in. That is why evidence given by experts in such proceedings needs to be scrutinised carefully, with a view to exclude items of 'expansion ' properly so called from the relevant calculations. Mr. Tongaonkar has stated that when plant or machinery is rehabilitated or replaced it may lead to increase in production. But such an in Crease is purely incidental. But what would be the position where, for instance, a 180 ton a day kiln is substituted by a 300 ton a day kiln by way of rehabilitation or replacement ? The employer is entitled to say that the first category of kilns is not available in the market or that the later category of kilns is more profitable Ind economically more useful. That being so, if the first kiln is discarded and is substituted by the latter, that is an item of rehabilitation or replacement and not of expansion. On the other hand, by the substitution of the latter kiln there would be such an appreciable increase in production that the workmen may be entitled to contend that some apportionment should be made and the rehabilitation part of the machinery should be separated from the expansion part which has crept into the transaction. We confess that it would be very difficult to undertake the task of making any such apportionment. 989 Even so, tribunals may have to consider the workmen 's plea if they are satisfied that the steps taken by the employer by way of rehabilitation have led to a very large increase in production. In this connection the respondents have relied on exhibit H. 0. C 2 which, according to them, shows considerable increase in production, and that, it is urged, is the result of expansion and not of rehabilitation. Mr. Tongaonkar has suggested in his evidence that it is the intention of the employer that decides the character of the transaction. If the employer wants to instal new machinery solely with the object of expanding his business, that is expansion; but if he purchases new machinery for business reasons and not for the purposes of expansion, it would be rehabilitation notwithstanding the fact that the new machinery gives rise to increased production. This approach, in our opinion, gives undue importance to the intention of the employer and we think that, on a proper occasion, the question may have to be considered by the application of some objective tests. In this connection it would be relevant to bear in mind the fact that the steps taken by the appellant for rehabilitating, replacing or modernising its machinery are a part of its plan of expanding its business so as to meet the growing demand for cement in our country. In deciding the question as to whether the claim as disclosed by the statements prepared by Mr. Tongaonkar is inflated or not, the respondents have asked us to consider the estimate made by the appellant 's Chairman in that behalf. In his speech delivered on January 24, 1951, at the Fourteenth Annual General Meeting of the appellant company, the Chairman stated that most of the company 's pre war plant would be due for replacement in the course of the next ten years and he added that " at the present price levels, replacement will cost on an average 2 1/2 times the original cost. This will involve an expenditure of about Rs. 8 crores over and above the provision already made for depreciation ". The contention is that, considered in the light of this estimate, the pre,sent claim for rehabilitation is very much inflated. 990 When Mr. Tongaonkar was asked about this estimate he stated that the Chairman had not consulted him while drafting the annual report or while drafting the portion of the speech in regard to 'rehabilitation ' and he also added that he did not agree with the figures given by the Chairman regarding the replacement cost of plant and machinery in his report dated January 24, 1951. This explanation may not be very satisfactory. But we cannot ignore the fact that when the Chairman made his statement he did not purport to calculate the claim for rehabilitation in terms of the formula and so it would not be fair to test the evidence of the witness in the light of the estimate given by the Chairman in his speech. We have so far considered the broad arguments urged against Mr. Tongaonkar 's evidence. Unfortunately, the tribunal has contented itself merely with the observation that the multiplier of 2.7 would be adequate; and it has given no finding as to the suitable divisor. That is why we must now proceed to adopt a suitable multiplier and divisor for deciding the question of rehabilitation. We have already stated our conclusions in regard to some of the infirmities in the evidence of Mr. Tongaonkar and the statements prepared by him. He has lumped together all assets of the appellant that need rehabilitation. He has taken into account the prices prevailing only in 1956, and in the selection of an average multiplier he has probably been slightly generous to the appellant. His estimate about the life of the plant and machinery has not been allowed to be sufficiently tested in crossexamination and, on the whole, it appears to err a little too much on the side of a conservative estimate ; and if that is so his divisor may need revision; it is also probable that in the items included by him under rehabilitation may have been included some which are more of the character of expansion than rehabilitation, replacement or modernisation. Besides, it is not unlikely that the steps taken by the appellant ostensibly for rehabilitation, replacement and modernisation of the machinery have appreciably increased its production, and that may partly be due to the fact that the 991 general plan of expansion adopted by the appellant has been in operation for some time past. It is in the light of these facts that we have to examine the appellant 's claim for rehabilitation. In doing so, we have taken exhibit C 2, exhibit C 23 and exhibit F (a) as a basis for our calculations. It is somewhat unfortunate that in making its claim for rehabilitation Mr. Tongaonkar did not make calculations separately in respect of plant and machinery as distinct from buildings, roads, bridges and railway sidings. It is true that at our instance a statement exhibit F (a) has been filed before us; but if such a statement had been filed before the tribunal, the respondents would have had a better opportunity of testing the accuracy of the calculations made in it and the basis on which the respective multipliers and divisors are sought to be deduced from it. We would, therefore, like to make it clear that the calculations which we now propose to make in regard to the item of rehabilitation should not be ,taken to be binding on the parties in subsequent years. If, in the light of our decision on the principal points raised before us in the present appeals, the parties decide to settle their disputes about bonus for subsequent years there would be no occasion for the tribunal to deal with them on the merits. If, however, these disputes have to be, settled by the tribunal, it would be open to the parties to lead evidence in support of their respective contentions. The tribunal also would be at liberty to consider the matter afresh and come to its own conclusion on the merits. Let us now proceed to make the relevant calculations. The first step to take is to correct the figures in exhibit C 2 by excluding the cost of buildings, roads, ,bridges and railway sidings from the total cost mentioned in it against the several blocks. This cost has been supplied to us by the appellant in exhibit F (a). This is how the corrections work out. In our calculations all figures are expressed in 'lakhs ': 126 992 Chart I. Period Original cost Less cost of Balance of block buildings etc. (1) (2) (3) (4) Up to 1939 486.89 132.98 353.91 1940 44 59.91 22.38 37.53 1945 47 208.93 68.15 140.78 1948 54 1144.81 333.47 811.34 In exhibit F (a) the appellant has shown the respective average ratios in col. 5 in regard to items of property mentioned in col. 2. We think, in making our calculations, it would on the whole be fair to adopt 3.5 as a suitable multiplier up to 1939, 2 from 1940.47 and 1 from 1948 54 (as in C 2) for replacement by part A.C.C. machinery. We have not disturbed the divisors taken by C 2 though we feel inclined to hold that Mr. Tongaonkar has underestimated the probable life of machinery. The amount of yearly requirement for rehabilitation for the total block minus buildings, etc., would then work out at Rs. 229.39. This does not take into account the available reserves; that aspect is considered later on: Chart II. Period Original cost of Multiplier Total Less Balance Life Yearly break of require down as machi ment in exhibit C 2 nery (in Yrs.) (1) (2) (3) (4) (5) (6) (7) (8) (approx.) UP to 1939 353.91 x3.5 1238.68 65.921172.767 167.54 1940 44 37.53 x2 75.06 4.66 70.40135.41 1945 47 140.78 x2 281.56 11.19 270.371518.02 1948 54 811.34 x1 811.34 42.84 768.502038.42 . . Total 229.39 . . Then we would deal with the buildings, roads, bridges and railway sidings. , These may be given an average life of 30 years for all blocks in order to compensate for cases where they have to be demolished on account of modernisation. According to the previous statements of the appellant the life of factory buildings was about 35 years and residential 993 areas 50 years. Even so we propose to take the average life of 30 years in making our calculations in respect of these blocks. The multipliers may be taken as 2.25 for pre 1939 blocks, 1.5 for 1940 47 blocks, 1 for 1948 54 blocks. The Bombay block has been taken as in exhibit C 2: Chart III. Period Cost Multi Total Less Balancelife Yearly plier break down require valued at 5% ment of cost (1) (2) (3) (4) (5) (6) (7) (8) UP to 1939 132.98 X 2.25 299.20 6.65 292.55 20 144.63 1940 44 22.38 x 1.5 33.57 1.12 32.45 25 1.29 1945 47 68.15 x 1.5 102.22 3.40 98.82 25 3.95 1948 54 333.47 x 1 333.47 16.67 316.80 30 10.56 Bombay office 40.83 50.28 .73 49.55 69 .71 block . . . Total 31.14 . . . Thus the total yearly requirement for rehabilitation of this block would come to 31.14 lakhs. The appellant 's claim for rehabilitation can now be calculated on the basis of exhibit C 23 as corrected in the light of the three charts prepared by us. As, the calculations in the chart show, we would hold that the appellant is entitled to an allowance of 216.10 lakhs for rehabilitation in the relevant year: Chart IV. Replacement of pre 1939 block: Cost of machinery (Chart II) 1172.76 Deduct reserves 311.00 Balance 861.76 divided by 7: 123.11 Add for buildings (Chart III) 14.63 . . . Total 137.74 Replacement cost of 1940 44 block Including buildings etc. (5.41 plus 1.29) . 6.70 do for 1945 47 (18.02 plus 3.95) . 21.97 do for 1948 54 (38.42 plus 10.56) . 48.98 do for Bombay Office . 71 . . . . total . 216.10 994 Having decided that the total claim for rehabilitation admissible to the appellant is 216.10 lakhs for the relevant year, we must now proceed to determine whether on the working of the formula any surplus profit is available. We have made the following calculations in the light of the principles laid down by us in this judgment: Chart V. Total profit excluding Bhupendra factory 428.71 Less notional normal depreciation (p. 428, Pt. 1) 100.22 Less income tax payable @ 7 as. in the Rupee as per Note A below 115.16 Less 6% on paid up capital 76.06 Less 4% on working capital 26.10 . . . Total. 317.54 317.54 Balance. 111.17 Less provision for rehabilitation. 115.88** . . . Balance. 4.71 This is how we have calculated theincome tax payable for the relevant year: Note A. Gross profits 428.71 Less statutory depreciation 165.49 Balance 263.22 Income tax @ 7 as. in the Rupee 115.16 **Provision for rehabilitation (vide Chart V): Total from Chart IV. 216.10 Less notional normal depreciation. 100.22 Balance. **115.88 995 We ought to add that in our calculations we have not taken into account the Bhupendra Factory because the relevant material for working out the figures in regard to this factory is not adequate or satisfactory. However from such material as is available it appears that if the profits made by the said factory are included in the calculations and rehabilitation required by it is worked out, it would not materially affect the ' figure of rehabilitation amount determined by us. The result is that there is no available surplus from which the respondents can claim any bonus for the relevant year. It is true that the appellant has already paid the respondents 20.65 lakhs as bonus for the relevant year, and it is likely that it may continue to do so in future ; but that is a matter which is not governed by the formula. In view of the fact that the working of the formula leaves no available surplus the appeal must be allowed and the award made by the tribunal set aside. Since the appellant had come to this Court for the decision of the larger and more important question about the revision of the formula, we would direct that there should be no order as to costs. Appeal allowed.

For the year 1953 54, the employers paid bonus to the workmen equal to three months ' wages, but the workmen demanded bonus equivalent to seven months and six months basic wages with dearness allowance. The employers contended that after making deductions for the prior charges from the gross profits in accordance with the formula evolved by the Full Bench of the Labour Appellate Tribunal in Mill Owners Association, Bombay vs The Rashtriya Mill Mazdoor Sangh, , there was no available surplus left and consequently the 926 workmen could claim no bonus. The workmen countered that the formula required revision as the employers were becoming increasingly more rehabilitation conscious and their appetite for the provision for rehabilitation was fast growing with the result that in most cases, after allowing for rehabilitation, there was no surplus left for the payment of bonus and the main object of the formula was thus frustrated. The workmen further contended that the whole of the rehabilitation expenses should not be provided for out of trading profits and that the claim for rehabilitation should be fixed at a reasonable amount and the industry should be required to find the balance from other sources: Held, that though there may be some force in the plea made for the revision of the Full Bench formula, the problem raised by the said plea is of such a character that it can be appropriately considered only by a high powered commission and not by this Court while hearing the present group of appeals. Besides the Full Bench formula had on the whole worked fairly satisfactorily in a large number of industries all over the country, and the claim for bonus should be decided by Tribunals on the basis of this formula without attempting to revise it. The formula was elastic enough to meet reasonably the claims of the industry and labour for fair play and justice. If the content of each item specified in the formula was determined objectively in the light of all relevant and material facts, the Tribunals would generally find it possible to make reasonable adjustments between the rival claims and provide for a fair distribution of the available surplus. Muir Mills Co. Ltd. vs Suti Mills Mazdoor Union, Kanpur, ; , Baroda Borough Municipality vs Its Workmen, ; , Sree Meenakshi Mills Ltd. vs Their Workmen; , and The State of Mysore vs The Workers of Kolar Gold Mines; , , referred to. The formula was based on two considerations: first, that labour was entitled to claim a share in the trading profits of the industry, because it had partially contributed to the same; and second, that labour was entitled to claim that the gap between its actual wage and the living wage should, within reasonable limits, be filled up. In dealing with the claims for bonus, the two fold basis of the formula must always be kept in mind. Further, it was not necessary that the workmen must actually manufacture or produce the goods before they become entitled to claim any bonus. Burma Shell Oil Storage & Distributing Co. of India Ltd. vs Their Workmen, , applied. The working of the formula begins with the figure of gross profits, taken from the profit and loss account, which are arrived at after payment of wages and dearness allowance to employees 927 and other items of admissible expenditure. It would be open to the Tribunal to examine the accounts and to disallow deliberate and mala fide debit entries made to reduce the amount of gross profits. It would likewise be open to the parties to claim the exclusion of items, credit or debit, on the ground that they were patently and obviously extraneous and entirely unrelated to the trading profits of the year. But the Tribunal must resist the temptation of dissecting the balance sheet too minutely or attempting to reconstruct it. K. Cottton Manufacturers Ltd., Kanpur vs Their Workmen, , applied. The formula deals with the claims for bonus on the basis that the relevant year is a self sufficient unit and the appropriate accounts have to be made on the notional basis in respect of the said year. Hence, the refund of excess profits and the adjustment of the previous year 's depreciation and losses cannot be made against the bonus year 's profits. Model Mills etc. Textile Mills, Nagpur vs The Rashtriya Mills Mazdoor Sangh ; Bennett Coleman and Co. Ltd. vs Their Workmen, , referred to. After ascertaining the amount of gross profits, the first item of deduction therefrom relates to depreciation. The depreciation which has to be deducted from the gross profits should be the notional normal depreciation as explained in the case of Surat Electricity Co. Ltd., , and should not include the initial and additional depreciation allowable under the Income tax Act. U.P. Electric Supply Co. Ltd. vs Their Workmen, ; Surat Electricity Co 'section Staff Union vs Surat Electricity Co. Ltd., , referred to. The second item of deduction is on account of income tax. On the balance obtained after deducting the depreciation from the gross profits the tribunal has to calculate the amount of income tax payable for the bonus year. In making this calculation it would not be reasonable to allow the employer to claim under the item of income tax an additional amount in respect of the two further depreciations which are expressly authorised under section 10(2)(vi) of the Income tax Act. Therefore the two concessions thus given by the Income tax Act should not be taken into account in determining the amount of income tax under the formula. Sree Meenakshi Mills Ltd. vs Their Workmen, [1958] S.C.R. 878, explained and followed. The third item of deduction under the formula relates to the return on paid up capital as well as working capital. The formula provides generally for the payment of interest at 6% 118 928 per annum on the paid up capital and at 2% on working capital. These rates are not inflexible and will vary according to the circumstances of each case. Workmen of Assam Co. Ltd. vs Assaam Co. Ltd., [1959] S.C.R. 327 ; Rustom and Hoynsby (India) Ltd. vs Their Workmen (1955):I L.L.J. 73, Mill Owners Association, Bombay vs The Rashtriya Mill Mazdoor Sangh, , Tea and Coffee Workers Union vs Brooke Bond (India) (Private) Ltd., , U. P. Elcctric Supply Co. Ltd. vs Their Workmen, , referred to. The fourth item of deduction is on account of rehabilitation which includes replacement and modernisation but not expansion. Rehabilitation has to be calculated for the plant and machinery as well as the buildings. The whole of the rehabilitation charges have to come out of the trading profits as this guarantees the continuance of the industry to the benefit both of the employer and labour. The Tribunal has to estimate the probable cost of replacement of plant and machinery at the time when such replacement would become due. In determining such cost, the Tribunal has to project the price level into the future, determined not only in the light of the prices prevailing during the bonus year, but also of subsequent price levels. The decision on the question of the probable cost of rehabilitation is always reached by adopting a suitable multiplier. This multiplier is based on the ratio between the cost price of the plant and machinery and the probable price which may have to be paid for its rehabilitation, replacement or modernisation. As there has been a continuous rise in the price of industrial plant and machinery, the older the plant which needs rehabilitation, the higher is the multiplier. If the employer has deliberately or mala fide refrained from rehabilitating his old machinery with a view to claim a higher multiplier, his conduct may be taken into account in determining the multiplier and the amount of rehabilitation payable to him. Once a proper multiplier is adopted, the probable cost of rehabilitation can be easily determined by multiplying the original cost by the multiplier. At this stage the divisor steps in. The total amount required for rehabilitation has to be divided by a suitable divisor in order to ascertain the annual requirement of the employer in that behalf year by year. Before awarding an appropriate amount in respect of rehabilitation for the bonus year, deductions have to be made, first on account of the break down value of the plant and machinery which is usually calculated at the rate Of 5% Of the cost price, secondly the depreciation and general liquid resources available to the employer other than those earmarked for specific purposes, thirdly all the rehabilitation amounts which may have been allowed to the employers in the previous years, but had remained unused in the meanwhile. 929 It is only after all the prior charges have thus been deter mined and deducted from the gross profits that the available surplus can be ascertained for payment of bonus. The procedure adopted by some Tribunals of nationally working out the amount of bonus and then giving it priority in the calculations before the determination of the income tax payable inevitably lessens the amount of tax proportionately, and should be deprecated. Rehabilitation cannot be given priority before the income tax payable is ascertained and deducted from the gross profits. No addition should be made to the list of prior charges re cognised by the formula even with respect to the employers claim for deductions on account of gratuity fund created for the benefit of the workmen. But the Tribunal ought to, when the available surplus is determined, take into account such a claim and reasonable amount of allowance should be definitely borne in mind in finally fixing the amount of bonus. M/s. Metro Motors vs Their Workmen, , referred to. When the available surplus has been ascertained, three parties are entitled to claim shares therein : labour 's claim for bonus, the industry 's claim for the purpose of expansion and other needs and the share holders ' claim for additional return on the capital invested by them. The ratio of distribution would obviously depend on several factors: such as the gap between the actual wages and the living wages, the setting apart of a gratuity fund by the employer and the amount thereof, the extent of the available surplus, the dividends actually paid by the employer and those paid by comparable concerns, the probabilities of expansion, the general financial condition of the employer and his necessity to meet urgent liabilities. It would be wrong on principle to take overtime payment into account in calculating the bonus payable to each workman. Once the total amount payable as bonus is determined on the principles as indicated, the question of overtime payment being taken into account can no longer be a dispute between the employer and his workmen but one between the workmen inter se.

Criminal Appeal No. 303 of 1984. From the Judgment dated 19.5.1984 of the Rajasthan High Court in D.B. Criminal Appeal No. 129 of 1983. R.K. Jain, R.P. Singh and R.K. Khanna for the Appellants. Sushil Kumar and AruneShwar Gupta for the Respondent. The Judgment of the Court was delivered by 824 K. JAYACHANDRA REDDY, J. There are two appellants. They are father and son respectively and they figured as A 1 and A 2 before the trial court. They were tried for offences punishable ' under Sections 302, 201 and 120 B I.P.C. for causing murder of Madhu Saxena, wife of A 2 and daughter in law of A 1, the deceased in the case. They were acquitted by the trial court. The State preferred an appeal before the Division Bench of the High Court and the Division Bench of the High Court convicted them under Section 120 B and Section 302 read with 34 of the I.P.C. and sentenced each of them to undergo imprisonment for life. They have preferred this appeal under Section 2(a) of the Supreme Court (Enlargement of General Appellate Jurisdiction) Act. The deceased was married to A 2 in the year 1961. Two sons and one daughter were born to them. A 1, father of A 2, was a practising lawyer after retiring from the Government Service. The matrimonial life of the deceased and A 2 was not smooth. There were frequent quarrels. The accused lived in their own house alongwith the deceased. It is in the evidence that the deceased was not healthy both physically and mentally. She was also admitted in mental hospital once. She used to confine herself to her room and she appeared to be somewhat mentally deranged. The daughter of the deceased, who was examined as D.W. 2, aged 13 years was studying in 1Oth Class and she was also living in the same house. On 18.3.82 the dead body of the deceased was found in her room in the house of the accused. At that time admittedly A 2 was not in the house and he was at Suratgarh. On 'being informed about the death A 1 sent for Dr. Madan Lal Arora, who exam ined the deceased and declared her to be dead. Thereafter A 1 informed P.W. 5, Jagmohan Prasad, the father of the de ceased. P.W. 5 went there and enquired. A 1 told P.W. 5 that the deceased be cremated at 9 A.M. The brother of the de ceased told P.W. 5 that he has .seen the dead body lying in the room and that it was giving rotten smell. P.W. 6 lodged a report before the Police. P.W. 22 took up the investiga tion, held the inquest, examined the witnesses and sent the dead body for post mortem. The Doctor P.W. 2 conducted the postmortem. He found that the body was giving rotten smell and the skin here and there was peeled off, nails were loose and the tongue was found in between the teeth. He found an injury on the head. He also found that some of the organs were decomposed and noticed greenishbrown discolouration on the neck. He opined that the death was due to head injury and pressure in the neck region. He, however, sent the tissues of the trachea though decomposed and a piece of neck skin and also viscera for histopathology and for chemical analysis, but the 825 pathologist could not give opinion regarding the piece of skin and the tissues of the trachea. The pathologist noted that the skin was discoloured and that the tissues and the mussle attached to the trachea showed no abnormality. The Doctor P.W. 2 opined that the head injury was caused by blunt weapon: and that death is. result of neck injury. The pressure on the left and front of the neck was apparent. After completion of the investigation, the charge sheet was laid. 22 witnesses were examined on behalf of the prosecu tion. The accused dented the offences. A 1 stated that he was away from 14.3. 1982 onwards and was at Jodhpur in his daughter 's house. In support of his plea D.W. 1, Dr. Ram Krishna Mehta, the neighbour of A 1 's daughter, was exam ined. He also examined his grand daughter D.W. 2, namely the daughter of A 2 and the deceased. A 2 stated that he was at Suratgarh from 11.3.1982 onwards. Both of them denied the allegations of the prosecution. The case registered rests on circumstantial evidence: The trial court held that there was no evidence of conspira cy between the A 1 and A 2 for murdering the deceased. It further held that there is no legal proof also that the Circumstances relied upon by the prosecution are hardly sufficient to connect them with the murder. The trial court. however, severely criticised about the iII treatment and hard behaviour of A 1 and A 2 towards the deceased. The High Court, however, took a different view. The High Court mainly relied on the evidence regarding the ill treat ment of the deceased by A 1 and A 2 and held that the ac cused had strong motive. The High Court has also referred to the earlier incidents in some of the letters. The High Court accepted the medical evidence in to and reached the con clusion that the death was homicidal and due to asphyxia due to head injury and pressure on the neck. Finally, the High Court, relying on the conduct of the accused after coming to know about the death of the deceased, reached the conclusion that the two accused conspired and got .the deceased mur dered and accordingly convicted them under Sections 302 read with 34 I.P.C. and 120 B I.P.C. Shri R.K.Jain, the learned counsel for the appellants submitted that the High Court has merely acted on prejudice and suspicion and that there is absoluteIy no material to prove the conspiracy and muchless to connect the two accused in any manner with themurder The prosecution examined 22 witnesses. P.W. 1 an Assistant 826 School teacher in Jaipur and related to the deceased deposed that she attended a dinner in the house of the deceased and A 2 and in the year 1978 when the deceased came to her house she was having some spots ' of beating by sticks on her back and the deceased told PW. 1 that she was beaten by her hus band. On 18.3.82 P.W. 1 's neighbour told her that there was a telephone message fxom A 1 that the deceasd was about to die. On that P.W. 1 and others went to the house of the deceased. They opened the room from where bad smell was coming and in that room they saw the dead body of the de ceased which was decomposed. A 1 who was present there told them that they would cremate the dead body that night. On that P.W. 5, the husband of P.W. 1 and the brother of the deceased objected to. P.W. 1 has also mentioned about other incidents of cruel treatment meted out to the deceased. P.W. 2 is the Doctor, who conducted the post mortem and we shaft advert to his evidence later. P.W. 3 is the eider sister of the deceased. She only stated that she got the information about the death of the deceased. P.W. 4 is the son of the deceased and A 2. He deposed that on 11th March, 1982 his father A 2 came with him to the bus stand to see him off. P.W. 4 met the deceased before leaving on the evening of 11th March, 1982 and talked to her. At that time the condi tion of the deceased was very weak and she was unhealthy. P.W. 4 also deposed that his father A 2 was to go to Surat garh by the evening of 11.3.82. This witness was treated hostile. In the crossexamination by the defence this witness stated that his sister Gianwati who was examined as D.W. 2 told him that she went regularly to the room of the deceased to give food from 11.3.82 to 15.3.82 and that on 16.3.82 D.W. 2 did not meet the deceased due to headache and on 17th and 18th March the deceased did not respond when D.W. 2 called her. P.W. 4 further deposed that D.W. 2 also told the same to her grand mother. P.W. 5 is the father of the de ceased. He also deposed about the iII treatment of the deceased by the accused and their demand for dowry. He further deposed that the neighbour told them that he re ceived a telephone message from A 1 that the deceased was ' about to die. Thereupon P.W. 5 sent his son P.W. 6 to A 1 s house. Later he was told by A 1 who came to his house that the deceased died and the Doctor has declared her dead. ThereUpon P.W. 5 wanted to know the name of the Doctor. Thereupon A 1 told him that the deceased would be cremated. A little later P.W. 6 also came and told him that the de ceased had died before many days and her dead body was giving rotten smell. P.W. 6 is brother of the deceased and son of P.W. 5. He also.deposed about the ill treatment meted out to the deceased. He further stated that on 18.3.82 on receiving the information about the serious condition of the deceased he went to house of 827 the deceased and he found that the deceased had already died and the A 1 told him that the dead body would be cremated, whereupon he informed his father P.W. 5 and then lodged a report before the police. The police arrived and prepared a panchnama. P.W. 7 is the neighbour of the accused. He only attested the site plan prepared by the police. P.W. 8 is a practising Doctor and he deposed that on 18.3.82 A 1 came to him ' at about 5.30. P.M. and told him that his daughter in law namely the deceased was in serious condition. Thereupon he went to the house and saw the deceased. He examined the deceased and declared her to be dead. P.W. 9 also was exam ined to speak about the cruelty but he was treated hostile. P.W. 10 also belongs to the same locality. He only deposed that the body was emitting foul smell and he signed the inventory prepared by the police. P.W 11 is a photographer who took the photographs of the room and the dead body. P.W. 12 is Gurubux Saxena who got the telephonic message from A 1 that the deceased was seriously ill and thereupon he in formed P.Ws 1, 5 and 6. P.W. 13 is the cousin of the de ceased. He also deposed about the cruelty meted out to the deceased. He further deposed that on 18.3,82 the deceased died and he was asked by P.W. 5 to go to the house of the deceased. He was informed by A 1 that the body would be cremated. Thereupon he and P.W. 6 went and .gave a report to the police. P.Ws 14 to 21 are the formal official witnesses. Out of them P.Ws 17, 18, 19 and 20 are examined who spoke about the movements of A 2. The sum and substance of their evidence is that A 2 was posted as expert of plant protec tion in Suratgarh and that leave was granted to him on 11.3.82. This evidence may not be very much relevant because it is not the prosecution case that A 2 was present in the house at the time of the death of the deceased. P.W. 22 is the Sub inspector who investigated the case. He deposed that on receipt of the report he went to the place of occurrence, held the inquest and sent the dead body for postmortem. He also speaks the seizure of some letters. In the examination under Section 313 Cr. P.C. both the accused stated that they are innocent. A 1 's case was that he was away at Jodhpur from 15th March, 1982 onwards and was staying in her daughter 's house and he ' came to Jaipur only on 18th March, 1982 and then he was told about 'the death of the deceased. Thereupon he called the Doctor P.W. 8 who examined and pronounced the deceased to be dead. He denied about the allegations of iii treatment of the deceased. A 2 stated that he married the deceased in the year 1961 and they were blessed with two sons land one daughter. He also stated that he was a Gazetted Officer in Agriculture Depart ment and he was transferred to various places and he also took the deceased with him. He further 828 stated that the deceased was sick and unhealthy and was staying at Jaipur. He also stated that his daughter used to give food to the deceased. On 11.3.82 he left for Suratgarh and later he came to know about the death of the deceased. The accused examined D .Ws 1 to 3 on their behalf. D .W. 1 is a Doctor at Jodhpur. He deposed that he knew A 1 and that he was staying in his daughter 's house in Jodhpur from 15th March, 1982 to 17th March, 1982. D.W. 2 is the daughter of A 2 and the deceased aged about 13 years. She in general stated that her mother was sick and unhealthy and used to confine herself to the room and she used to give food to her. She also stated that she gave food to the deceased on 15.3.82 and that she could not give food on 16.3.82 due to her own sickness. Then on 17th and 18th March, 1982 her mother did not talk to her, therefore she returned with the food. She also stated that A 1 went to Jodhpur on the evening of 14th March and returned from Jodhpur on 18th March, 1982. On that day they found that the deceased was not talking and two ladies who came to meet the deceased, told that there was something wrong. When her grand father A 1 returned from Jodhpur he sent for a Doctor and the Doctor after examining pronounced the deceased to be dead. D.W.2 further stated that the relations between the deceased namely her mother and grand mother were not good. In the cross examination she affirmed that she fell ill on 16.3.82 after coming from school and therefore could not give food to her mother. She denied the suggestion that the body was decomposed even on 16th and 17th March, 1982. D.W. 3 is the son of A 1 and brother of A 2 residing at Jodhpur. He also deposed that A 1 came to Jodhpur and stayed from 15th on wards upto 17th March, 1982. From the above resume of evidence it is clear that the case rests entirely on circumstantial evidence. The dead body was found in the house of A 1 and A 2, where admittedly the deceased ' was also living but she used to confine her self to that room where the dead body was found She was sick and unhealthy and that she was not even coming out of the room. From the evidence it is also clear that the food was given to her in the room itself and she was not even going out to answer the calls of nature. Some of the wit nesses, no doubt, have deposed that the accused used to ill treat the deceased. But the main question is whether A 1 and A 2 conspired, as held by the High Court and got the murder committed. From the record it is clear and it is also not disputed thatA 2 was not in the house and that A i also left Jaipur and was staying at Jodhpur with his daughter upto 17th March, 1982 and came to Jaipur only on 18th March, 1982. Therefore he was also not in the house at the time of death. There is no other evidence to 829 show that as to who could have caused the death of the deceased if it is held to be homicidal. The trial court has doubted the prosecution case that the death was homicidal. The High Court after having elaborately examined the medical evidence reached the conclusion that it was homicidal. But .even assuming that it was homicidal, there is absolute paucity of evidence, suggesting even remotely as to who could have caused the death. Though, in our view, it is not strictly necessary in this case to decide the nature of death because even assuming it 'to be homicidal, the accused A 1 'and A 2 cannot be convicted unless there is other material to connect them with the crime either ,directly or indirectly. However, we shall first consider the medical evidence regarding the cause of the death. P.W. 2 Dr. M.R. Goel examined the dead body on 19.3.82 and found 10 injuries which were ante mortem. Many of them were in the shape of bruises and swellings. He found the dead body as highly decomposed and had reached an advanced stage of putrefaction. In his opinion the death was due to the injury on the head and pressure on the neck due to asphyxia. He was cross examined at length. He admitted that since the brain was decomposed and was in semi liquid condi tion no injury therein could be traced. He also admitted that the swelling of the eye was not due to the injury.on the forehead. Coming to the injury on the neck, the Doctor stated that no injury was found on the bones of wind pipe and that portion also was decomposed. In further cross examination he admitted that he did not make the culture of the maggots crawling on the head. He also stated that he could not say definitely whether the death in the circum stances should ' have occurred before four days. He, however, denied the suggestion that he could not form a definite opinion. As far as this medical evidence is concerned, the trial court also considered the same at length. The learned Sessions Judge noted the details in the post mortem certifi cate exhibit P, 1,. There he found against the column cause of death, the Doctor has put only a question mark. It is also noted in the postmortem certificate that P.W. 2 sent a part of the neck and viscera for chemical and histopathological examination. After considering the whole evidence of the Doctor, the trial court was of the opinion that it was very difficult to say that the injuries on the head were antemor tem. In nature and at any rate P.W. 2 's evidence has not proved beyond reasonable doubt that the death of the de ceased was due to injuries causing asphyxia and that the death was homicidal. The High Court, on the other hand, has also noted that the death of the deceased was 4 to 8 days ' earlier ,as shown in the post mortem certificate. The learned Judges observed thus: 830 "It is to be noticed that Dr. M.R. Goyal, who conducted the post mortem examination, is not a novice but a 'senior Medical Jurist of the S.M.S. Hospital. According to him there was ' sub dural hammatoma over occipital region. Bruises were found on the forehead left side . . We have carefully examined the reasons given by the Sessions Judge for holding that the posecution has failed to prove thatit was homicidal death . . . . In 'our considered opinion, all these injuries wereanti mortem in nature." The learned Judges thereafter explained away the dis crepancies between the post mortem and the medical evidence. We may observe that the learned Judges of the High Court have bestowed considerable part of the judgment on the aspect of medical evidence and ultimately held thus: "In substance, we are convinced that it was a case of homicidal death. We cannot accept the finding of the trial court on this aspect of the case and have got no hesitation in revers ing it and holding that the finding is not based on just and proper appreciation of the evidence. " We have also gone through the medical evidence carefully and we may observe that 'we are unable to hold that the view taken by the learned Sessions Judge is altogether unreasona ble. However, for the purpose of this appeal it may not be necessary for us to go through the details of the medical evidence. Even accepting that the death was homicidal, we cannot on that ground alone hold the appellants guilty. The proSecution has to, satisfactorily and beyond reasonable doubt, establish that the two accused conspired and pursuant to that conspiracy, the offence was committed. We ,have already given a brief resume of the evidence ' adduced on behalf Of the prosecution. We have ,noticed that both the accused were not in the house on the day the occur rence is said 'to have taken place even assuming that, the same took place on 14.3.82. the evidence of D.W. 2 who is the only inmate of the house that was examined and whose evidence cannot be brushed aside establishes that the occur rence probably took place on 15th or 16th March, 1982. It is only on 18.3.82 that the dead body was discovered and it is only on that day the A 1 Came to his house, at Jaipur .from Jodhpur and A 2 admittedly was 831 away on official duty The D.W. 2 also speaks to the same. The High Court, however, drew some inferences based on the alleged conduct of the accused and held that the two accused conspired to kill the deceased. In the first instance the High Court held that the accused has a strong motive to get rid of the accused. For this reliance is placed on the evidence of some witnesses who spoke about the cruel treat ment meted out to the deceased by the accused. The learned Judges have also relied on some letters written by the deceased. P.W. 6, the brother of the deceased deposed that the two accused used to be angry with the deceased and they did not allow him and his family members to see the de ceased. Reliance is placed on the evidence of P.W. 5 who spoke about the demand of money. The learned Judges of the High Court mainly relied on this evidence to infer that the accused had motive to do away with the deceased. The High Court was not prepared to place reliance on the evidence of P.W. 4 and D.W. 2 who did not support the theory of cruelty. The High Court, after considering the above evidence, ob served as under: "Now the question is whether in these circum stances although there are circumstances of strong motive and of cruelty and of strong desire on the part of accused Bhagwan Swarup and Parmeshwar Swarup to get rid of Madhu, there is any further evidence of other circum stances, by which it can be said that no other hypothesis except the guilt of the accused is possible in the present case. " Then the learned Judges proceeded to consider the evidence of P.W. 8 and others. P.W. 8 is a local Doctor who deposed that A 1 informed him in the evening of 18.3.82 that his daughter in law was serious. He went and examined the de ceased and pronounced her to be dead. P.W. 8 also deposed that the body was giving bad smell and it was also in a decomposed condition. Then the High Court relied on the evidence of P.W. 12 who stated that he received a telephonic message from A 1 stating that his daughter in law was at her last breathing and he must inform P.W. 5, the father. Then the High CoUrt proceeded to consider some other circum stances which took place from 11th March onward namely A 2 leaving on official duty. The High Court suspected that A 2 designedly left Jaipur to Suratgarh and also surmised that A 2 marking his attendance in the register at Suratgarh was with a view to create evidence of alibi. Then there is reference to a letter exhibit P. 15 written by A 1 to A 2 on 18.3.82 and according to the learned Judges, this letter was an effort to show that the deceased was alive even after 11th March and according to learned. Judges exhibit P. 15 a letter of A 1 832 on the alleged death of the deceased, written by him to his son is a significant feature. This letter is dated 18th March, 1982. In that A 1 has simply informed A 2 that the deceased breathed her last and that Doctor, P.W. 8, pro nounced her dead and that on the next day they are going ahead with cremation. This letter which is on a post card, is the most crucial feature, according to the High Court and that its contents show that both A 1 and A 2 were guilty conscious. We think we need not refer to the further sur mises made by the High Court. Suffice it to say that in the rest of the entire judgment only such suspicions and sur mises have been mentioned or drawn to reach a conclusion that A 1 and A 2 conspired. At one stage the learned Judges observed thus: "The more and more we read this letter exhibit P. 15 dated 18.3.82 more and more we are con vinced that it was a case of pre planned, pre determined conspiracy of committing murder of Madhu, which was done on 11th March, 1982 by both accused, who were anxiously waiting the time when they could get rid of her. It is also not Without significance that Suratgath is in Ganganagar District and a far. place from Jaipur and post card would not reach there at least before 24 hours as it reached on 20th March and further even if telephone message is sent one would take at least 12 to 18 hours to reach this place. The fact that cremation was decided for the morning and the information was sent in the night only goes to show that since the death was a result of murder, in which both the accused were in volved, there was no occasion to wait for son, who was husband of the ill fated unfortunate lady Madhu to perform last rite or see her face at least before she is put on fire. The merciless inhuman approach exhibited by this letter is heart beating, hair raising and society lacking and consicious shocking and we are convinced that such a conduct would not have been possible but for the fact that the object of conspiracy of Bhagwan Swarup and Parmeshwar Swarup was achieved by putting an. ,end to the life of Madhu, which was done on 11th and during all this time, all that Par meshwar and Bhagwan Swamp were being Were the unsuccessful effort to conceal the murder of helpless lady and to create a plea of alibi or pretended the natural death. We are, there fore, convinced that these circumstances, if taken as a whole, proves beyond all reasonable doubts that Bhagwan Swarup and Parmeshwar Swarup entered into a criminal conspiracy 833 to commit the murder of Madhu and with this abode intention, common object to fulfill the object of conspiracy they committed the murder of Madhu in their house on 11th March, 1982, by causing 11 injuries on her person after they had made it sure that the son Prakash Swamp leaves for Ajmer in the morning and then Parmeshwar Swarup left for Suratgarh in the evening and Bhagwan Swarup ultimately left for Jodhpur on 14th. These were all preplanned pre determined well calculated steps of the conspiracy to commit the murder and then to avoid its detection by these two accused, who had deep rooted patience and hatred towards the unfortunate lady Madhu, who was being treated with cruelty which started in the beginning with the demand of dowry but contin ued later on account of various other reasons. " We have extracted the main part of the judgment only to show that how the High Court has acted merely on suspicion. We are unable to say as to on what basis the High Court could reach the conclusion that on 11th March, 1982 itself both A 1 and A 2 committed the murder of the deceased and left the dead body. Such a conclusion should be based on acceptable evidence. There is absolutely no material that the deceased was murdered on 11th March, 1982 itself. The medical evi dence simply states that the death could have taken place 4 to 8 days prior to post mortem. D.W. 2, the daughter is categorical that her mother, the deceased, was alive till 16th March, 1982 and that being the nature of the evidence On record, we are unable to appreciate the above conclusion of the High Court purely based on suspicion and surmises. Further, the learned Judges of the High Court have mentioned in the above passage that both the accused conspired to commit the murder of deceased and having conspired they themselves committed the murder. In our view there is no evidence worth men , tioning to establish these offences. Naturally in a case of this nature, the question that arises from a layman 's point of view is then who else could have committed the murder in .the house itself? Perhaps if A 1 and A 2 were present in the house on the day of homicide then the situation would have been different and 'both of them would have been under an obligation to give an explana tion and the absence of a plausible explanation or giving a false explanation could have been very much incriminating against them. The same coupled with other circumstances would have perhaps brought home the guilt to the accused. But the circumstances 834 are different now. A 1 and A 2 were away from the house. The medical evidence does not at all support that the murder, assuming it to be one, could have taken place on 11th March itself as conjectured by, the High Court. If the murder has taken place some time after 11th March, then A 1 and A 2 cannot directly be connected with the murder. That being so unless conspiracy as such is established, they cannot be held liable. Then the other inmates in the house are only the mother in law and the children of the deceased. None of them was suspected and at any rate no one of them was charge sheeted or tried. Therefore the question of any one of them being held responsible for the death does not arise. No doubt a grave suspicion does arise namely that some of the inmates of the house must have been responsible and an accusing finger Can be pointed against A 1 and A 2 but from 11th March onward they were not in the house. D.W. 2 's evidence clinches the .issue that the death must have been taken place only after 16th and before 18th March. It is in this situation the High Court surmised on mere suspicion that A 1 and A 2 conspired and also committed the murder on 11.3.82 itself. If the murder has been committed on 11th March itself the body would have been highly decomposed by 18th March, 1982 and would have been emitting very bad smell. One cannot imagine that the other remaining inmates of the house would have simply and silently suffered in the house without informing anybody. On the other hand D.W. 2 's evidence is different and she categorically stated that the deceased was alive upto 16th March. That appears to be natural and there is no reason whatsoever to doubt the same. As indicated supra we are inclined. to agree with the Sessions 'Court that the medical evidence does not establish the death to be one of homicidal. At any rate there is a grave doubt in this regard. The evidence on record clearly shows that the deceased was not mentally sound. The fact that she was not coming out of the room and used the same for answering the calls of nature also would snow that there was something abnormal about her and she confined her move ments to the four corners of the room. 15th March, 1982 was the last day when D.W. 2 served food to the deceased. There after she did not go inside the room and on 18th March, 1982 the dead body was discovered. The evidence of P.W. 2, the Doctor, also shows that no brain injury could be traced and he also did not find any injury on the bones of wind pipe. In view of these and other admissions the trial court right ly felt that there was a reasonable doubt about the cause of death also and accordingly acquitted the accused. From the above discussion the following important points 835 emerge; It is an undisputed case that the second accused was not present in the scene house were the occurrence took place from 11th to 20th March, 1982 and that the first accused was at Jodhpur in his .daughter 's houseI from 14.3.82 to 17.3.82 and returned to Jaipur on 18.3.82. There fore they were not present in the house when the deceased died The Medical Officer, P.W. 2 could not say definitely as to whether the death has occurred before four days of his examination and there is absolutely no evidence either circumstantial or direct to hold that the death took place on 11.3.82 itself as found by the High Court. The evidence of D.W. 2 who is none other than the daughter of the de ceased and was very much in the house throughout ategorical ly stated that her mother was alive on 15th March also. Apart from D .W. 2 the only other inmate of the house during the crucial period was the mother in law of the deceased who was not even charge sheeted. The letter exhibit P 15 written by the first accused does not in any manner incriminate them and the High Court has grossly erred in holding that A 1 and A 2 entered into conspiracy merely on the basis of conjec tures and surmises drawn from the letter. P.Ws 4, 9 and 10 have not supported the prosecution case and the remaining evidence does not in any manner implicate A 1 and A 2 and the other remaining inmate of the house, the mother ln law of the deceased, was not even suspected. Therefore having given our anxious and careful consideration to the facts and circumstances of the case we feel that the prosecution has miserably failed to bring home the guilt of the appellants and consequently we are inclined to allow the appeal. The accused were tried for offences punishable under Sections 302 read with Section 34, 201 and 120 B I,P.C. only and in our view the trial court rightly held that none of these charges were proved against them. The learned counsel for the respondent State of Rajas than, however, submitted that the accused would atleast be liable of having committed other offences. It may be noted that the question whether they would be liable under Section 498 A or 304 B does not arise for consideration inasmuch as these provisions were not on the statute on the day of occurrence. However, A 1 was atleast under an obligation to give information about the death of the deceased since the same was unnatural. Assuming that the prosecution has not positively proved that the death was homicidal yet from the medical evidence it is clear that it was not a natural death and consequently the death should atleast be noted as one of suicide. Even in the case of suicide an offence of abetment punishable under Section 306 is inherent. There 836 fore, even in the case of a suicide there is an obligation on the person, who knows or has reason to believe that such a suicidal death has occured, to give information. In Kali das Achamma vs The State of A.P., S.H.O. Karimnagar. I Town P.S., it was observed as under: "In the case of every suicide abetment is inherent. Whether ultimately it is proved or not, it is a different aspect. Abetment of suicide is an offence punishable under Section 306 I.P.C. and therefore whenever a case of suicide is there, the body cannot be disposed of without informing the Police and further as provided under Section 174 Cr. P.C. the Police have to hold an inquest Since it is an unnatu ral death. ' ' In the instant case A 1, who reached his house on 18.3.82 knowing fully well that the deceased had already died, informed P.W. 8 that the deceased was in a serious condi tion. Likewise he informed P.W. 12 on telephone without disclosing that the deceased was already dead. However, when P.W. 6, the brother of the deceased, came to the house where the dead body was lying, A 1 told him that the body would be cremated. To the same effect is the evidence of P.W. 13. P.W. 6, the brother of the deceased, on his own went and gave a report to the police. It can thus be seen that A 1 intentionally omitted to give the information in respect of the death of the deceased which he was legally bound to give. Section 202 I.P.C. is in the following .terms: "202. Intentional omission to give information of offence by person bound to inform Whoever, knowing or having reason to believe that an offence has been committed, intentionally omits to give any information respecting that offence which he is legally bound to give, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine, or with both. " This Section punishes the illegal omission of those who under law are bound to give information in respect of an offence which he is legally bound to give particularly being the head of the family. Under this provision it is necessary for the prosecution to prove (1) that the accused had knowl edge or reason to believe that some offence had been commit ted (2) that the accused had intentionally omitted to give information respecting that offence and (3) that the accused was legally bound to give that information. Shri R.K. Jain, however, relied 837 on a judgment of this Court in Harishchandrasing Sajjansinh Rathod and AnOther vs State of Gujarat, [ and contended that the word "Whoever" occurring in the opening part of the Section refers to a person other then the offender and has no application to the person who is alleged to have committed the principal offence In that case the accused were tried for offences punishable under Sections 331 and 304 read with Section 34 I.P.C. in respect of the death of the deceased and were acquitted. On appeal by the State the High Court, however, convicted them under Section 202 I.P.C. A Bench of this Court while reversing the order of High Court observed thus: "We have gone through the entire evidence bearing on the aforesaid offence under Section 202 but have not been able to discern anything therein which may go to establish the afore said ingredients of the offence under Section 202 of the Penal Code. The offence in respect of which the appellants were indicted viz. having intentionally omitted to give informa tion respecting an offence which he is legally bound to give not having been established, the appellants could not have been convicted under Section 202 of the Penal Code. It is well settled that in a prosecution under Section 202 of the Penal Code, it is necessary for the prosecution to establish the main offence before making a person ' liable under this section. The offence under Section 304 (Part II) and the one under Section 33.1 of the Penal Code not having been established on account of several infirmities is difficult to sustain the conviction of the appellants under Section 202 of the Penal Code. The High Court has also missed to notice that the word 'whoever ' occurring at the opening part of Section 202 of the Penal Code refers to a person other than the offender and has no application to the person who is al leged to have committed the principal offence. This is so because there is no law which casts duty on a criminal to give information which would incriminate himseft. That apart the aforementioned ingredients of the offence under Section 202 of the Penal Code do not appear to have been made out against the prosecution There is not an iota of evidence to show that the appellants knew or had reason to believe that the aforesaid main offences had been committed." (emphasis supplied) From these observations it is clear that there was .no evidence to show 838 that the accused therein knew or had reason to believe that the said offences have been committed and on the other hand they were made principal offenders. In such a situation the ingredients of Section 202 can not be said to have been made out. It is in this context that the meaning of the word "whoever" has been considered. But in the instant case A 1 returned to his house where the dead body was lying on 18.3.82 and the circumstances clearly go to show that he had knowledge that the deceased died of an unnatural death. Therefore he had knowledge or atleast had reason to believe that an offence had been committed even if, at that stage; he thought that it was only a suicide. Therefore it was his bounden duty particularly as head of the family to inform the authorities. He omitted to do so. On the other hand, he went about telling that the deceased was still alive and her condition was serious. But when P.W. 6, the brother of the deceased, came to the house and enquired, A 1 told him that the body would be cremated and he intended to do so without informing the authorities. Therefore all the ingredients of Section 202 are made out against him and he clearly commit ted the offence ' punishable under this Section at that stage. The fact that he himself was made an accused in other offences subsequently does not absolve him of his complicity in respect of the offence punishable under Section 202 I.P.C. So far A 2 is concerned, he came to the house only after the investigation commenced. Therefore his case stands on a different footing. In the result the convictions and sentences awarded against A 1 and A 2 are set aside. A 1, however, is convicted under Section 202 I.P.C. and sentenced to undergo six months ' R.I. The appeal is disposed of ac cordingly.

The appellants father and son (A 1 and A 2) were tried under Sections 302, 201 and 120 B I.P.C. for causing murder of the wife of A.2. The deceased was married to A 2 in 1961. Two sons and one daughter were born to them. Their matrimonial fife was not smooth. There were frequent quarrels. It was in the evidence that the deceased was not healthy both physically and mentally. She was also admitted in 821 mental hospital once. She used to confine herself to her room and she appeared to be somewhat mentally deranged. On 18.3.82 the dead body of the deceased was found in her room in the house of the accused. At that time admitted ly A 2 was not in the house and he was at Suratgarh. On being informed about the death, A 1 sent for a doctor, who examined the deceased and declared her to be dead. Thereaf ter A 1 informed P.W. S, the father of the deceased. The brother of the deceased, P.W. 6 told P.W. 5 that he had seen the dead body lying in the room and that it was giving rotten smell. P.W. 6 lodged a report before the Police. The investigation was taken up, held the inquest, exam ined the witnesses and sent the dead body for post mortem. The Doctor P.W. 2, who conducted the post mortem, opined that the death was due to head injury and pressure in the neck region. After completion of the investigation, the charge sheet was laid. 22 witnesses were examined on behalf of the prose cution. The accused denied the offences. A 1 stated that he was away from 14.3.1982 onwards and was at Jodhpur in his daughter 's house. In support of his plea D.W. 1, the neighb out of A 1 's daughter and his grand danghter, D.W. 2, namely the daughter of A 2 and the deceased were examined. A 2 stated that he was at Suratgarh from 11.3.1982 onwards. Both of them 'denied the allegations of the pfrosecution. The trial court held that there was no evidence of conspiracy between the A 1 and A 2 for murdering the de ceased and the circumstances relied upon by the prosecution were hardly sufficient to connect them with the murder and the accused were acquitted by the trial court. The State preferred an appeal before the Division Bonch of the High Court and the High Court convicted them under Section 120 B and Section 302 read with 34 of the I.P.C. and sentenced each of them to undergo imprisonment for life, against which this appeal was preferred under Section 2(a) of the Supreme Court (Enlargement of General Appellate Jurisdiction) Act, 1970. The appellants contended that the High Court acted an prejudice and suspicion and that there was absolutely no material to prove the conspiracy and muchless to connect the two accused in any manner with the murder. 822 The respondent supported the findings of the High Court and also contended that the accused would at least be liable of having committed other offences. Disposing of the appeal by making modification in the sentence, this Court, HELD: 1. The second accused was not present in the scene house, where the occurrence took place from 11th to 20th March, 1982 and that the first accused was at Jodhpur in his daughter 's house from 14.3.82 to 17.3.82 and returned to Jaipur on 18.3.82. Therefore, they were not present in the house when the deceased died. The Medical Officer, P.W. 2 could not say definitely as to whether the death has occurred before four days of his examination and there is absolutely no evidence either circumstantial or direct to hold that the death took place on 11.3.82 itself as found by the High Court. The evidence of D.W. 2 who is none other than the daughter of the deceased and was very much in the house throughout categorically stated that her mother was alive on 15th March, also. Apart from D.W. 2 the only other inmate of the house during the crucial period was the moth er in law of the deceased who was not even charge sheeted. The letter exhibit P 15 written by the first accused does not in any manner incriminate them and the High Court has grossly erred in holding that A 1 and A 2 entered into conspiracy merely on the basis of conjectures and surmises drawn from theletter. P.Ws. 4, 9 and 10 have not supported the prosecu tion case and the remaining evidence does not in any manner implicate A 1 and A 2 and the other remaining inmate of the house, the mother in law of the deceased, was not even suspected. Therefore having given anxious and careful con sideration to the facts and circumstances of the case it is felt by the Court that the prosecution has miserably failed to bring home the guilt of the appellants. [835A E] 2. Section 202 I.P.C. punishes the illegal omission of those who under law are bound to give information in respect of an offence which he is legally bound to give, particular ly being the head of the family. Under this provision it is necessary for the prosecution to prove (1) that the accused had knowledge or reason to believe that some offence had been committed (2) that the accused had intentionally omit ted to give information respecting that offence and (3) that the accused was legally bound to give that information. [836G H] 3. A 1 was at least under an obligation to give infor mation about the death of the deceased since the same was unnatural. From the 823 medical evidence, it is clear that it was not a natural death and consequently the death should at least be noted as one of suicide. Even in the case of suicide an offence of abetment punishable under Section 306 is inherent. Therefore even in the case of a suicide there is an obligation on the person, who knows or has reason to believe 'that such a suicidal death has occured, to give information. [835G 836A] 4. In the instant case A 1 returned to his house where the dead body was lying on 18.3.82 and the circumstances clearly go to show that he had knowledge that the deceased died of an unnatural death. Therefore he had knowledge or at least had reason to believe that an offence had been commit ted even if, at that stage, be thought that it was only a suicide. Therefore it was his bounden duty particularly as head of the family to inform the authorities. He omitted to do so. On the other hand, he went about telling that the deceased was still alive and her condition was serious. But when P.W. 6, the brother of the deceased, came to the house and enquired, A 1 told him that the body would be Cremated and he intended to do so without informing the authorities. Therefore all the ingredients of Section 202 are made out against him and he clearly committed the offence punishable under this Section at. that stage. [838B D] 5. The fact that A 1 himself was made an accused in other offences subsequently does not absolve him of his complicity in respect of the offence punishable under Sec tion 202 I.P.C. [838D] Kalidas Achamma vs The State ofA.P S.H.O. Karimnagar, I Town P.S., , Approved. Harishchandrasing Sajjansingh Rathod and Another vs State of Gujarat, , Distinguished.

Appeal No. 135 of 1951. Appeal by Special Leave granted by the Supreme Court of India by its Order dated the 21st of May, 1951, from the Judgment and Order dated the 19th February, 1951, of the Labour Appellate Tribunal of India, Allahabad in Appeal No. 136 of 1950. C.K. Daphtary, Solicitor General of India (J. B. Dadachanji, Rajinder Narain and Devinder Swarup, with him) for the appellant. S.C. Isaacs (0. P. Lal, with him) for the res. pondent. M.C. Setalvad, Attorney General for India, (Rajin der Narain and Devinder Swarup, with him) for the Intervener (All India Organisation of Industrial Employers). S.C. Isaacs (Mohan Lal Saxena and C. P. Lal, with him) for the Intervener (State of U.P.). November 19. The Judgment of the Court as delivered by BHAGWATI J. This appeal with special leave is directed against the judgment and order of the Labour Appellate Tribunal of India in a dispute regarding the workers ' claim for bonus. During the year 1948 the appellant made a profit of Rs. 11,97,648 11 9. It paid 24 3 per cent. dividend on ordinary shares, being the maximum that could be paid under the Public Companies (Limitation of Dividend) Ordinance of 1948 and also paid to the workers their full share of bonus at annas 4 in a rupee of their basic earnings. During the year 1949 the selling rates for cloth and yarn were controlled by the Government and were approximately 4 per cent. below those obtained in 1948. The basic wages were increased from the 1st December, 1948, by order of the Government of Uttar Pradesh and the total wages paid were therefore higher than those in the previous year. There 994 was moreover indiscipline amongst the workers and production suffered. There was a strike in the month of October and the mills were closed for nearly a month. Further the management were unable to secure cotton which resulted in the curtailment of the working hours. As a result of all these circumstances the appellant suffered a trading loss of Rs. 5,02,563 1 10. A sum of Rs. 2,50,000 being the excess reserve for taxation was written back and a sum of Rs. 10,01,871 13 5 being the amount of reserve transferred from the investment account was also brought in. An aggregate sum of Rs. 12,51,871 13 5 was thus brought into the balance sheet by these two transfers. The trading loss was deducted from this amount leaving a credit balance of Rs. 7,49,308 11 7 and that amount was shown as the profit for the year 1949 in the balance sheet for that year. The balance which had been brought forward from the previous year was added thereto and a dividend of 243/4 per cent. was paid to the ordinary shareholders. The appellant also paid ex gratia to the workmen bonus at the rate of annas 2 per rupee of their basic earnings making it clear by their notification dated the 7th April, 1950, that the directors had sanctioned the payment at that rate in spite of the appellant having suffered a trading loss for the year, that it was being paid entirely at the discretion of the appellant and was not related to or connected with any contract of employment of any worker. On the 4th May, 1950, the Secretary of the respondent Union petitioned to the Provincial Conciliation Officer (Textile) that there was more production in 1949 than in 1948, that there was no reason to hold that the profit in 1949 was less than in the previous year and that the rate of bonus was wrongly reduced and asked that bonus for 1949 should also be paid at the rate of annas 4 per rupee. The industrial dispute which thus arose was referred for enquiry and recording of an award to the Regional Conciliation Board (Textile), Kanpur. The Conciliation Board by a majority decision repelled the contention of the appellant and awarded the payment of bonus at annas 4 per rupee. On an appeal taken by the appellant to the 995 Industrial Court (Textiles and Hosiery), Kanpur, the Industrial Court accepted the contention of the appellant, allowed the appeal and set aside the award. The respondent thereupon appealed to the Labour Appellate Tribunal which substantially agreed with the Industrial Court on questions of fact as well as the general position in law but imported considerations of social justice and treating this as a special case " where social justice would demand that labour should have bonus for the year where for that very year capital had not only a reasonable return but much in excess of that ", allowed the appeal and directed the appellant to pay to the workmen bonus at the rate of annas 4 per rupee within six weeks of their decision. The appellant filed this appeal against that decision after obtaining special leave from this Court. Both the Industrial Court as well as the Labour Appellate Tribunal found as a fact that there was a trading loss of Rs. 5,02,563 1 10 during the year 1949 and also that the dividend of 243/4 per cent. to the ordinary shareholders was distributed after transferring the aggregate sum of Rs. 12,51,871 13 5 from the reserves. The question which therefore arises for our consideration is mainly whether the workers are entitled to the payment of a bonus in spite of the employer having worked at a loss during the year and incidentally whether the workers have any right, title or interest in the reserves and the undistributed profits of the previous years. The primary meaning of the word " bonus " according to the definition given in the New English Dictionary is: " A boon or gift over and above what is nominally due as remuneration to the receiver and which is therefore something wholly to the good ". This definition was adopted by Stirling J. in In re Eddystone Marine Insurance Co. (1). Webster 's International Dictionary defines bonus as "something given in addition to what is ordinarily received by or strictly due to the recipient ". The Oxford Concise Dictionary defines it as " something to the good, into the bargain (and as an example) gratuity to workmen beyond their wages". (1) L. R. (I894) W. N. 30. 996 Corpus Juris Secundum, Volume XI, at page 515 ascribes the following meanings to the word bonus: " An allowance in addition to what is usual current or stipulated ; a sum given or paid beyond what is legally required to be paid to the recipient; something given in addition to what is ordinarily received by or strictly due to the recipient" and adds: It has been said to carry the idea of something uncertain and indefinite, something which may or may not be paid depending on varying circumstances and under particular conditions has been said to imply a benefit accruing to him who offers it and an inducement to the offeree. " This imports the conception of a boon, a gift or a gratuity otherwise described as an ex gratia payment. The word 'bonus ' has however acquired a secondary meaning in the sphere of industrial relations. It is classified amongst the methods of wage payment. It has been used especially in the United States of America to designate an award in addition to the contractual wage. It is usually intended as a stimulus to extra effort but sometimes represents the desire of the employer to share with his workers the fruits of their common enterprise. (Vide Encyclopaedia Britannica, Volume III, page 856). The Pocket Part of the Corpus Juris Secundum, Volume XI, under the heading "As Compensation for Services" quotes the following passage from Attorney General vs City of Woburn(1) : "The word 'bonus ' is commonly used to denote an increase in salary or wages in contracts of employment. The offer of a bonus is the means frequently adopted to secure continuous service from an employee to enhance his efficiency and to augment his loyalty to his employer and the employee 's acceptance of the offer by performing the things called for by the offer binds employer to pay the bonus so called. " It also gives another meaning of the word bonus ', viz., "increased compensation for services already (1) 997 rendered gratuitously or for a prescribed compensation where there is neither express or implied understanding that additional compensation may be granted. " This imports the conception that even though the payment be not strictly due to the recipient nor legally enforceable by him, a claim to the same may be laid by the employee under certain conditions and if such claim is entertained either by an agreement with the employer or by adjudication before a properly constituted Tribunal as on an industrial dispute arising, the same would ripen into a legally enforceable claim. This position was recognised in Sutton vs Attorney General (1), where the Earl of Birkenhead observed "The term 'bonus ' may of course be properly used to describe payments made of grace and not as of right. But it nevertheless may also include, as here, payments made because legally due but which the parties contemplate will not continue indefinitely", and in National Association of Local Government Officers vs Bolton Corporation(2) "This payment, if made, cannot properly in my opinion be regarded as a mere gratuity. Though there is an element of bounty in it the bounty, if granted, is given for good reasons of national policy. . I do not see why this does not fall within the definition of trade dispute just as much as a dispute as to the rate of wages or salary. " To a similar effect are the observations in Kenicott vs Supervisors of Wayne County (1): "But second, the meaning of the word 'bonus ' is not given to it by the objection. It is thus defined by Webster. 'A premium given for a loan or a charter or other privilege granted to a company; as, the bank paid a bonus for its charter; a sum paid in addition to a stated compensation '. It is not a gift or gratuity, but a sum paid for services, or upon a consideration in addition to or in excess of that which would ordinarily be given", (1) , 297, (3) ; (2) , I87. 127 998 and also in Great Western Garment Co. Ltd. vs Minister of National Revenue (1): "A bonus may be a mere gift or gratuity as a gesture of goodwill and not enforceable, or it may be something which an employee is entitled to on the happening of a condition precedent and is enforceable when the condition is fulfilled. But in both cases it is something in addition to or in excess of that which is ordinarily received. " The Textile Labour Inquiry Committee defined 'bonus ' as follows : "The term bonus is applied to a cash payment made in addition to wages. It generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained. " There are however two conditions which have to be satisfied before a demand for bonus can be justified and they are, (1) when wages fall short of the living standard and (2) the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production. The demand for bonus becomes an industrial claim when either or both these conditions are satisfied. The principles for the grant of bonus were discussed and a formula was evolved by the Full Bench of the Labour Appellate Tribunal in Millowners ' Association, Bombay vs Rashtreeya Mill Mazdoor Sangh, Bombay (2) "As both labour and capital contribute to the earnings of the industrial concern, it is fair that labour should derive some benefit, if there is a surplus after meeting prior or necessary charges" and the following were prescribed as the first charges on gross profits, viz., (1) Provision for depreciation, (2) Reserves for rehabilitation, (3) A return at 6 per cent. on the paid up capital. (4) A return on the working capital at a lesser rate than the return on paid up capital. The surplus that remained after meeting the aforesaid deductions would be available for distribution as bonus. (1) , 233. (2) 999 It is therefore clear that the claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits. If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus. Bonus is not a deferred wage. Because if it were so it would necessarily rank for precedence before dividends ' The dividends can only be paid out of profits and unless and until profits are made no occasion or question can also arise for distribution of any sum as bonus amongst the employees. If the industrial concern has resulted in a trading loss, there would be no profits of the particular year available for distribution of dividends, much less could the employees claim the distribution of bonus during that year. This has been clearly recognised even in the various decisions of the Labour Appellate Tribunal, e.g., Nizam Sugar Factory Ltd., Hyderabad vs Their Workmen(1), Textile Mills, Madhya Pradesh vs Their Workmen (2) and Famous Cine Laboratory vs Their Workmen (3). This was also the basis of the demand of the respondent in the case before us, its case being that the appellant had reaped substantial profits during the year 1949. This case was negatived by the Industrial Court as well as the Labour Appellate Tribunal, both of whom held that the working of the appellant during the year 1949 had resulted in a loss. Whereas the Industrial Court declined to grant the respondent any relief because the working of the appellant during the year had resulted in a loss, the Labour Appellate Tribunal made a special case for the respondent in spite of its concurrence with that finding of the Industrial Court. It is significant to observe that this principle was accepted by the Labour Appellate Tribunal itself. "As at present advised a claim for bonus which had been rested on profits earned should ordinarily be determined on the basis of the profits earned in the year under claim and that the scale of bonus should be determined on the quantum of profits earned in the (1) (1952) I L.L.J. 386. (2) (3) (1953) I L.L.J. 466. 1000 year. So, it would follow that if there is trading loss in the year under claim, bonus should not ordinarily be awarded. It however observed: " But, in our opinion, that should not be the universal rule. Considerations of social justice cannot be disregarded altogether, in relations between capital and labour. There may be special cases, and we consider the case before us to be one, where social justice would demand that labour should have bonus for the year where for that very year capital had not only a. reasonable return but much in excess of that. " The Labour Appellate Tribunal did not accept the contention of the respondent that bonus should be linked to dividends nor did it rest its decision on the respondent having a right, title and interest in the reserves and the undistributed profits of the appellant. Linking of bonus to dividend would obviously create difficulties. Because if that theory was accepted a company would not declare any dividends but accumulate the profits, build up reserves and distribute those profits in the shape of bonus shares or reduce the capital in which event the workers would not be entitled to claim anything as and by way of bonus. The workers not being members of the company would also not have any right, title and interest in the reserves or the undistributed profits which would form part of the assets of the company. Even on a winding up of a company the property of the company would be applied in satisfaction of its liabilities pari passu and, unless the articles of association of the company otherwise provided, in distribution amongst the members according to their rights and interest in the company. The employees would in no event be entitled to any share or interest in the assets and the capital of the company. A transfer of moneys from these reserves or the undistributed profits would therefore not enure for the benefit of the workers. The shareholders only would be entitled to such benefit and the mere fact that dividends were declared and paid to the shareholders out of such reserves and undistributed profits would 1001 not entitle the workers to demand bonus when in fact the working of the industrial concern during the particular year had showed a loss. It has also got to be remembered that the labour force employed in an industrial concern is a fluctuating body and it cannot be predicated of the labour force in a particular year that it represents the past and the present workers, so that it can claim to demand bonus out of the reserves or undistributed profits of the Previous years. On the accounts of each year being made up and the profits of the industrial concern being ascertained the workers during the particular year have their demand for bonus fully satisfied out of the surplus profits and the balance of profits is allocated and carried over in the accounts. No further claimed payment of bonus out of those reserves or undistributed profits can therefore survive. To admit the claim for bonus out of the reserves transferred to the profit and loss account would tantamount to allowing a second bonus on the same profits in respect of which the workers had already received their full bonus in the previous year. The labour force which earns the profits of a particular year by collaborating with the employers is distinct from the one which contributed to the profits of the previous years and there is no continuity between the labour forces which are employed in the industrial concern during the several years. The ratio which applies in the case of the shareholders who acquire the right, title and interest of their predecessorsin interest does not apply to the labour force and the fact that the shareholders get a dividend by transfer of funds from the reserves and undistributed profits of the previous years would not entitle the workers to demand bonus out of those funds if the working of the industrial concern during the particular year has resulted in a trading loss. The considerations of social justice imported by the Labour Appellate Tribunal in arriving at the decision in favour of the respondent were not only irrelevant but untenable. Social justice is a very vague and indeterminate expression and no clear cut definition can be laid down which will cover all the situations. 1002 Mr. Isaacs, the learned counsel for the respondent,. attempted to give a definition in the following terms : "social justice connotes the balance of adjustments of the various interests concerned in the social and economic structure of the State, in order to promote harmony upon an ethical and economic basis" and he stated that there were three parties concerned here, viz., the employers, the labour and the State itself, and the conception of social justice had to be worked out in this context. Without embarking upon a discussion as to the exact connotation of the expression "social justice" we may only observe that the concept of social justice does not emanate from the fanciful notions of any particular adjudicator but must be founded on a more solid foundation. Indeed the Full Bench of the Labour Appellate Tribunal evolved the abovequoted formula with a view to dispensing social justice between the various parties concerned. It adopted the following method of approach at page 1258 of that judgment : " Our approach to this problem is motivated by the requirement that we should ensure and achieve industrial peace which is essential for the development and expansion of industry. This can be achieved by having a contented labour force on the one hand, and on the other hand an investing public who would be attracted to the industry by a steady and progressive return on capital which the, industry may be able to offer. " This formula was reiterated in Textile Mills, M. P. Their Workmen(1), and Famous Cine Laboratory vs ,Their Workmen( 2 ), and in the latter case it deprecated the idea of adjudicators importing considerations of social justice which were not comprised in that formula : " And what is social justice ? Social 'justice is not the fancy of any individual adjudicator; if it were so then ideas of social justice might vary from adjudicator to adjudicator over all parts of India. In our Full Bench decision (See 1950,2 L.L.J., p. 1247), we care. fully considered the question of social justice in relation (1) (2) 1003 to bonus, and there we equated the rights and liabilities of employers and workmen with a view to achieving a just formula for the computation of bonus. That Full Bench decision stands, and this tribunal and all other tribunals are bound by it. " Without committing ourselves to the acceptance of the above formula in its entirety we may point out that the Labour Appellate Tribunal did not apply its own formula to the facts of the present case. It is also significant to note that even while importing considerations of social justice the Labour Appellate Tribunal was oblivious of the fact that it was by their own acts of indiscipline and strike that the workers of the appellant company themselves contributed, to the trading losses incurred by the appellant and it hardly lay in their mouth then to contend that they were none the less entitled to a payment of bonus commensurate with the dividend paid to the shareholders out of the undistributed profits of the previous years. The Labour Appellate Tribunal also overlooked the fact that but for the Public Companies (Limitation of Dividend) Ordinance of 1948 the whole of the profits of 1948 could have been distributed after paying the workers bonus in that year of four annas in the rupee. We may before concluding refer to an argument which was addressed to us by Mr. Isaacs, the learned counsel for the respondent, that this Court under article 136 should not interfere with the decisions of the tribunals set up by the . This contention can be shortly answered by referring to our decision in Bharat Bank Ltd., Delhi vs Employees of the Bharat Bank Ltd., Delhi(1), where we held that the Industrial Tribunals were tribunals within the meaning of article 136 and further that article 136 has vested in this, Court exceptional and overriding power to interfere where it reaches the conclusion that a person has been dealt with arbitrarily or that a Court or tribunal within the territory of India has not given a fair deal to a litigant. (Vide (1) (1950] S.C.R. 459. 1004 Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax, West Bengal(1). The result therefore is that the decision of the Labour Appellate Tribunal appealed against must be reversed and that of the Industrial Court (Textiles and Hosiery), Kanpur, restored. The appeal will accordingly be allowed with costs. Appeal allowed.

The term bonus is applied to a cash payment made in addition to wages. it generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained. 992 There are two conditions, which have to be satisfied before a demand for bonus can be justified and they are, (1) when wages fall short of the living standard and (2) the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production. The demand for bonus becomes an industrial claim when either or both these conditions are satisfied. The formula for the grant of bonus is as follows: As both labour and capital contribute to the earnings of the industrial concern, it is fair that labour should derive some benefit, if there is a surplus after meeting prior or necessary charges, The first charges on gross profits are (1) provision for depreciation. (2) reserves for rehabilitation, (3) a return at 6 per cent. on the paid up capital and (4) a return on the working capital at a lesser rate than the return on paid up capital. The surplus that remained after meeting the aforesaid deductions would be available for distribution as bonus. The claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits. If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus. Bonus is not a deferred wage. If it were so, it would necessarily rank for precedence before dividends. The dividends can only be paid out of profits and unless and until profits are made no occasion or question can arise for distribution of any sum as bonus amongst the employees. Social justice is a very vague and indeterminate expression and no clear cut definition can be laid down which will cover all the situations. The concept of social justice does not emanate from the fanciful notions of any particular adjudicator but must be founded on a more solid foundation. Industrial Tribunals are Tribunals within the meaning of article 136 and article 136 has vested in the Supreme Court exceptional and overriding power to interfere where it reaches the conclusion that a person has been dealt with arbitrarily or that a Court or Tribunal within the territory of India has not given a fair deal to a litigant. In re Eddystone Marine Insurance Co. , Sutton vs Attorney General ([19231 , National Association of Local Government Officers vs Bolton Corporation , Kenicott vs Supervisor of Wayne County ([1873] ; , Great 'Western Garment Co. Ltd. vs Minister of National Revenue ([1948] 1 D.L.R. 225), Millowners ' Association, Bombay vs Bashtreya Mills Mazdoor Sangh, Bombay '[1950] 2 L.L.J. 1247), Nizam Sugar Factory Ltd., Hyderabad vs Their Workmen ([1952], , Textile Mills, Madhya Pradesh vs Their Workmen ([1952] , Famous Cine Laboratory vs Their Workmen ([1953] and Bharat Bank Ltd., Delhi 993 vs Employees of the Bharat Bank Ltd., Delhi, ([1960] S.C.R. 469), referred to.

Civil Appeal No. 3121 of 1981. From the Judgment and Order dated 28 9 1979 of the Madhya Pradesh High Court in Misc. Petition No. 408 of 1978. M.K. Ramamurthi and H.S. Parihar for the Appellants. Maheshwari T. V.S.N. Chari and R.N. Poddar for the Respondents. The Judgment of the Court was delivered by KHALID, J. The question involved in this appeal brings to fore how the equality doctrine embodied in the Constitution of India is attempted to be flouted by some authorities under cover of artificial divisions, dividing persons doing the same work into two 103 groups without any justification and denying to one group by way of pay and emoluments what the other group gets. We do not propose to examine the width of the quality provisions contained in article 39(d) in all its manifold aspects but would like to restrict it in its application to the facts of this case, in our attempt to see whether the High Court was justified or not, in declining relief to the petitioners. Now the facts: This appeal by special leave is directed against the Judgment of a Division Bench of the High Court of Madhya Pradesh at Jabalpur in Miscellaneous Petition No. 408 of 1978, dismissing the petition challenging the Order of the Government of India accepting the recommendations of the Third Pay Commission dividing Senior Draughtsmen into two groups with different pay scales, which according to the appellants violated Articles 14 and 16 of the Constitution. The Appellants Nos. 1 to 8 are Senior Draughtsmen in the Ordnance Factories under the Ministry of Defence, Department of Defence Production and the Director General of Ordnance Factories. Appellants Nos. 1 to 5 were promoted on different dates to the post of senior Draughtsman when they were working as Draughtsmen. Appellants Nos. 6, 7 & 8 were directly recruited as Senior Draughtsmen in the Vehicle Factory, Jabalpur on different dates. Appellant No. 9 is a registered Association of the Employees working in the Design/Drawing Office of the Defence Establishments under the Ministry of Defence, etc. There are 33 establishments under the Ministry of Defence Production and Director General of ordnance Factories, Calcutta. In these establishments, there are two categories of Drawing Office Staff; (1) Senior Draughtsman and (2) Draughtsman. Senior Draughtsmen are either directly recruited or promoted from the post of Draughtsmen. At all relevant times, all the Senior Draughtsmen throughout the above establishments, were drawing the same pay scale. The first and the second Pay Commission set up by the Government of India, recommended same scales of pay for all the Senior Draughtsmen. A Third Pay Commission was set up by the Government of India under the Chairmanship of Shri Raghubar Dayal, a retired Judge of the Supreme Court of India and consisting of three other members. One of the recommendations of this Pay Commission, related to the scales of pay of Draughtsmen and Senior Draughtsmen, 104 Draughtsmen were to be in the scale of Rs. 330 560 while the Senior Draughtsmen were divided into two groups with two scales of pay, Rs. 330 560 and Rs. 425 700. It is this division of Senior Draughtsmen that was under challenge before the High Court. Representations were made by the Petitioner against this grouping by the Third Pay Commission, and they pleaded that there should not be any discrimination in the pay scales of Senior Draughtsmen as was recommended by the Third Pay Commission. Similar representations were made by others also like Senior Rate Estimator, Senior Rate Fixer, Senior Planner and Supervisor etc. Some representations were accepted by the Government but not the representations made by the appellants ' Association. Aggrieved by this unhelpful attitude of the Government in not accepting their representation, the appellants moved the High Court under Article 226 of the Constitution, Their case before the High Court was that Senior Draughtsmen discharged identical duties and performed similar work. That being so there was little or no justification in putting 50% of them in a higher scale of pay and 50% others in a lower scale of pay. This grouping was without any intelligible differentia. The High Court referred to a decision of this Court in Kishori Mohanlal Bakshi vs Union of India(1) and sought support from it to deny relief to the petitioners. That was a case where the grouping of Income tax Officers as Class I and class II with different scales of pay and different channel of Promotion was questioned. This Court observed in that Judgment as follows: "It might very well be that "matters relating to employment or appointment to any office" in article 16(1) are wide enough to include the matter of promotion. Inequality of opportunity for promotion as between citizens holding different posts in the same grade may, therefore, be an infringement of article 16. Thus, if of the Income tax Officers of the same grade, some are eligible for promotion to a superior grade, and others are not, the question of contravention of article 16(1) may well arise. But no such question can arise at all when the rules make Income tax Officers of Class I, eligible for appointment as Assistant Commissioner, but make 105 Income tax Officers of Class II eligible for promotion as Income tax Officers of Class I but not for promotion to the post of Assistant Commissioners. There is no denial in such a case of equality of opportunity as among citizens holding posts of the same grade. As between citizens holding posts in different grades in Government service there can be no question of equality of opportunity. article 16 does not forbid the creation of different grades in the Government service. The abstract doctrine of equal pay for equal work has nothing to do with article 14. article 14, therefore, cannot be said to be violated whose the pay scales of Class I and Class II Income tax Officers are different though they do the same kind of work. Incremental scales of pay can be validly fixed dependent on the duration of an officers service. " The High Court also referred to the decisions of this Court in State of Punjab vs Joginder Singh(1), Unikat Saakunni Menon vs State of Rajasthan(2) and State of Mysore & Anr. vs P. Narsingh Rao(3) in which cases also certain grouping of employees were challenged as violative of article 14 & 16, which challenge was repelled by the Supreme Court. The High Court relied upon these decisions and held that "It is therefore evident that it was open to the Government to fix two different pay scales for Senior Draughtsmen," and that "It was for the Government to decide what pay scale should be provided to the different. classes of employees and simply because they have been provided different pay scales that would not amount to discriminations. " The High Court was told that all the Senior Draughtsmen did the same kind of work and discharged same or similar duties and that therefore there was no justification for a distinction being made between the two classes of Senior Draughtsmen, providing two different pay scales on the basis of seniority, Denial of the higher scale of pay to one class of Senior Draughtsmen, only on the ground of length of service was, according to the appellants, wrong. The Government brought in this classification, by its Order dated 1 7 1978, directing that only Senior Draughtsmen, holding that post on 31 12 1972, would be given the Senior scale and not 106 those who did not hold that post on 31 12 1972. This basis, the appellants, contended was unsupportable. These contentions did not appeal to the High Court. While repelling the arguments of the Petitioners, the High Court observed that "The petitioners are unable to show a single authority in support of their contention that all the persons doing the same work are entitled to same scale of pay. " It is the correctness of this decision that falls to be decided in this appeal. Before discussing the factual matrix of the case, we will refer to the Order passed by the Government of India on 27th January, 1978, which brought into effect this difference in the pay scale. The said Order reads as follows: "The undersigned is directed to refer to Sl. No. 32 of Part D, Section I, in the First Schedule to the Civilians in Defence Services (Revised Pay) Rules, 1973 and to say that the President is pleased to decide that, as recommended by the Third Pay Commission in para 81, Chapter 14, of their report, half the number of posts of Draughtsman in the DGOF Organisation on the present pay scale of Rs. 205 7 240 8 280 will be placed in the revised scale of Rs. 425 15 500 EB 15 560 20 700 and the remaining half in the revised scale of Rs. 330 10 380 EB 12 500 EB 15 560. . . . . On their allocation to the revised scale of Rs. 425 700 and Rs. 350 560, the existing Draughtsman in the present pay scale of Rs. 205 280 who are brought on to the revised scale of Rs 330 560 would continue to retain their present designation as a personal to them. The placement of the existing Draughtsman in the higher revised pay scale of Rs. 425 700 will be on the basis of seniority, subject to the rejection of the unfit. Any administrative instruction that may be considered necessary may be issued by you. These orders will take effect from 1 1 73. " It is pursuant to this Order that the change in the emoluments of the petitioners ' group of Draughtsmen was effected. 107 It has to be borne in mind that this differentiation is not based on any intelligible ground. The group of Draughtsmen entitled to the higher scale of pay, is not selected by any process nor is it based on any merit cum seniority basis, but is based only on seniority cum fitness. There is no denial anywhere that both these types of Draughtsmen do the same work and discharge the same functions and duties. According to the recommendations of the Third Pay Commission, a Draughtsman has to get Rs. 330 10 380 EB 12 500 EB 15 560, while Senior Draughtsman, like the appellants, who have become so on promotion, will continue to get the same scale of pay and not the higher scale of pay. In other words, the promoted persons like the appellants, are without any monetary benefit to them. The pay that they would get as Senior Draughtsman, would be the same as a Draughtsman would get under the Third Pay Commission. That is, for the same work and same functions, the appellants would get less pay than the other group of Senior Draughtsmen. The explanation is that this division is based on seniority. This cannot be accepted as sufficient to meet the requirements of law. By seniority, a Senior Draughtsman will get higher pay with the increments that he earns proportionate to the number of years he is in service. Here that is not the case. It is the classification of the Senior Draughtsmen into two groups, that is responsible for the higher pay. For this classification, the Government must be able to satisfy the Court of certain other tests which are non existent, in this case, since it is not in dispute that Senior Draughtsmen, belonging to the two Divisions, do equal and same work. In view of the total absence of any plea on the side of the respondents, that the Senior Draughtsmen who are placed in the advantageous group, do not perform work and duties more onerous or different from the work performed by the appellants group, it will have to be held that this grouping violates Article 14 of the Constitution. The High Court did not have the advantage of a decision of this Court in Randhir Singh vs Union of India & Ors.(1), to which one of us was a party, which evolved the equality doctrine embodied in Article 39(d) and read Article 14 into it; while considering the complaint of a driver who was originally in the Army but later employed as a driver constable in Delhi Police Force under the Delhi Administration and who was denied the same pay as was available to the other drivers in the service of the Delhi Administration. This Court 108 allowed the Writ Petition and directed the concerned authorities to pay the petitioners in that case, salary at least equal to the Drivers of the Railway Protection Force. Disagreeing with the plea, put forward by the Union of India this Court observed as follows: "The Counter Affidavit does not explain how the case of the drivers in the police force is different from that of the drivers in other departments and what special factors weighed in fixing a lower scale of pay for them. Apparently in the view of the respondents, the circumstance that persons belong to different departments of the Government is itself a sufficient circumstance to justify different scales of pay irrespective of their identity of their powers, duties and responsibilities. We cannot accept this view. If this view is to be stretched to its logical conclusion, the scales of pay of officers of the same rank in the Government of India may vary from department to department notwithstanding that their powers duties and responsibilities are identical. We concede that equation of posts and equation of pay are matters, primarily for the Executive Government and expert bodies like the Pay Commission and not for Courts but we must hasten to say that where all things are equal, that is where all relevant considerations are the same, persons holding identical posts may not be treated differentially in the matter of their pay merely because they belong to different departments. Of course, if officers of the same rank perform dissimilar functions and the powers, duties and responsibilities of the posts held by them vary, such officers may not be heard to complain of dissimilar pay merely because the posts are of the same rank and the nomenclature is the same. " This Court however observed that a differential treatment in appropriate cases can be justified, when there are two grades based on reasonable grounds, and stated as follows: "It is well known that there can be and there are different grades in a service, with varying qualification for entry into a particular grade, the higher grade often being a promotional avenue for officers of the lower grade. The higher qualifications for the higher grade, which may be 109 either academic qualifications or experience based on length of service reasonably sustain the classification of the officers into two grades with different scales of pay. The principle of equal pay for equal work would be an abstract doctrine not attracting article 14 if sought to be applied to them." With respect we agree with the conclusion arrived at in the above Judgment, that where all relevant considerations are the same, persons holding identical posts and discharging similar duties should not be treated differently. The case on hand is much stronger than the facts of the Randhir Singh 's case. In that case, the drivers belonged to two different departments. In this case, the Senior Draughtsmen, divided into two groups are in the same department doing identical and same work. It is not a case of different grades created on the ground of higher qualification either academic or otherwise or an entitlement by any other criteria laid down. The justification for this classification is by the mere accident of an earlier entry into service. This cannot be justified. The above decision of this Court has enlarged the doctrine of equal pay for equal work, envisaged in Article 39(d) of the Constitution of India and has exalted it to the position of a fundamental right by reading it alongwith Article 14. This exposition of law had given rise to some whispering dissent in that the doctrine had been extended beyond permissible limits. The observations that the abstract doctrine of equal pay for equal work has nothing to do with article 14, in the Judgment in Kishori Mohanlal Bakshi vs Union of India (supra), rendered by a Constitution Bench of this Court it is contended, may perhaps run counter to the observations in the decision referred above. We do not think it necessary on the facts of this case to dwelve at length upon the effect of this observation on a wider campus of service jurisprudence in the context of equal pay for equal work which will have to be attempted in an appropriate case. For the purposes of the case on hand, it is sufficient to note that the classification between two groups of Senior Draughtsmen is 110 without any basis. They do the same work, they perform the same duties, and as such the ratio of the decision in Randhir Singh 's case applies to this case with greater force. The Order passed by the Government of India on 27th January, 1978, implementing this classification violates article 14 of the Constitution and has to be struck down and we do so. In our opinion, it would be a great injustice to continue the appellants on the scales of pay of Draughtsmen even after promotion as Senior Draughtsmen, which is destructive of all incentive and initiative in the service. In our Judgment, the High Court was in error in declining relief to the appellants. We accordingly, set aside the Judgment of the High Court and allow this appeal and direct the Union of India to fix the scale of pay of appellants at Rs. 425 15 50 EB 15 560 20 640 EB 20 700. The appellants will be entitled to costs from the respondent No. 1. M.L.A. Appeal allowed.

Senior Draughtsmen in the Ordnance Factories under the Ministry of Defence are either directly recruited or promoted from the post Draughtsmen. At all relevant times all the Senior Draughtsmen throughout the above establishments were drawing the same pay scale of Rs. 205 280. While revising the pay scale of various categories of employees, the Third Pay Commission recommended that the Draughtsmen should be placed in the scale of Rs. 330 560. The Pay Commission also recommended that the Senior Draughtsmen should be divided into two groups and half the number of posts of Draughtsmen in the above organisations on the present pay scale of Rs. 205 280 be placed in the revised scale of Rs. 425 700 on the basis of seniority and the remaining half in the revised scale of Rs. 330 560. Pursuant to the aforesaid recommendation, the Government of India by its Order dated 1st July, 1978 directed that only those senior Draughtsmen who were holding that post on 31st December, 1972 would be given the senior scale of pay i.e. Rs. 425 700. The appellants who are senior Draughtsmen made representation to the Government of India against this grouping by the Third Pay Commission. As the representations were not accepted, the appellants challenged the Order of the Government before the High Court in a Writ Petition contending that all the Senior Draughtsmen did the same kind of work and discharged same or similar duties and therefore there was no justification for distinction being made amongst the Senior Draughtsmen, providing two different pay scales on the basis of seniority. The High Court dismissed the petition holding that it was open to the Government to fix two different pay scales for Senior Draughtsmen and that it was for the Government to decide what pay scale should be provided to the different classes of employees. 102 Allowing the appeal, ^ HELD: (1) Where all relevant considerations are the same, persons holding identical posts and discharging similar duties should not be treated differently. Therefore the Order passed by the Government of India implementing the impugned recommendation of the Third Pay Commission dividing the Senior Draughtsmen into two categories with two different pay scales on the basis of seniority violates Article 14 of the Constitution and is struck down. Randhir Singh vs Union of India and Ors. ; , followed. In the instant case the group of Draughtsmen entitled to the higher scale of pay is not selected by any process nor is it based on any merit cum seniority basis, but is based only on seniority cum fitness. Moreover, the Senior Draughtsmen divided into two groups are in the same Department doing identical and same work. It is not a case of different grades created on the ground of higher qualification either academic or otherwise or an entitlement by any other criteria. Thus the classification between the two groups of Senior Draughtsmen is without any basis. In view of the total absence of any plea on the side of the respondents that the Senior Draughtsmen who are placed in the advantageous group, do not perform work and duties more onerous or different from the works performed by the appellants group, it will have to be held that this grouping violates Article 14 of the Constitution. [107 E F] Kishori Mohanlal Bakshi vs Union of India, A.I.R. 1962 S.C. 1139; State of Punjab vs Joginder Singh, ; ; Unikat Sankunni Menon vs State of Rajasthan A.I.R. ; State of Mysore and Anr. vs P. Narsingh Rao ; , distinguished.

Appeal No. 1297 of 1977. Appeal by Special Leave from the Judgment and Order dated 25th of April 1977 of the Delhi High Court in Civil Writ Petition No. 245 of 1977. P. P. Rao, A. K. Ganguli and Ashwani Kumar for the appellant. Soli J. Sorabjee, Additional Solicitor General, E. C. Agarwala, B. N. Kripal and Girish Chandra for Respondent No. 1. M.N. Phadke, section section Bindra, Hardev Singh & R. section Sodhi for Respondent No. 3. The followiug Judgments of the Court were delivered by KRISHNA IYER, J. What troubles us in this appeal, coming before a Bench of 5 Judges on a reference under Article 145(3) of the Constitution, is not the profusion of controversial facts nor the thorny bunch of lesser law, but the possible confusion about a few constitutional fundamentals, finer administrative normae and jurisdictional limitations bearing upon elections. What are those fundamentals and limitations? We will state them, after mentioning briefly what the writ petition, from which this appeal, by special leave, has arisen, is about, 279 The basics Every significant case has an unwritten legend and indelible lesson. This appeal is no exception, whatever its formal result. The message, as we will see at the end of the decision, relates to the pervasive philosophy of democratic elections which Sir Winston ChurchiU vivified in matchless words : "At the bottom of all tributes paid to democracy is the little man, walking into a little booth, with a little pencil, making a little cross on a little bit of paper no amount of rhetoric or voluminous discussion can possibly diminish the overwhelming importance of the point. " If we may add, the little, large Indian shall not be hijacked from the course of free and fair elections by mob muscle methods, or subtle perversion of discretion by men dressed in little, brief authority. For 'be you ever so high, the law is above you. The moral may be stated with telling terseness in the words of William Pitt: 'Where laws end, tyranny begins '. Embracing both these mandates and emphasizing their combined effect is the elemental law and politics of Power best expressed by Benjamin Dizreeli: "I repeat that all power is a trust that we are accountable for its exercise that, from the people and for the people, all springs, and all must exist." (Vivien Grey, BK. 7) Aside from these is yet another, bearings on the, play of natural justice, its nuances, non applications, contours, colour and content. Natural Justice is no mystic testament of judge made juristics but the pragmatic, yet principled, requirement of fairplay in action as the norm of a civilised justice system and minimum of good government crystallised clearly in our jurisprudence by a catena of cases here and elsewhere. The conspectus of facts The historic elections to Parliament, recently held across the ,country, included a constituency in Punjab called 13 Ferozepore Parliamentary constituency. It consisted of nine assembly segments and the polling took place on March 16, 1977. According to the calendar notified by the Election Commission, the counting took place in respect of five assembly segments on March 20, 1977 and the, remaining four on the next day. The appellant and the third respondent were the principal contestants. It is stated by the appellant that when counting in all the assembly segments was completed at the respective segment headquarters, copies of the results were given to the candidates and the local tally telephonically communicated to the returning officer (respondent 2). According to the scheme the postal ballots are to arrive at the returning officer 's headquarters at Ferozepore where they are to be counted. The final tally is made when the ballot boxes 280 and the returns duly reach the Ferozepore headquarters front the various segment headquarters. The poll proceeded as ordained, almost to the very last stages, but the completion of the counting at the constituency headquarters in Ferozepore was aborted at the final hour as the postal ballots were being counted thanks to mob violence allegedly mobilised at the instance of the third respondent. , The appellant 's version is that he had all but won on the total count by a margin of nearly 2000 votes when the panicked opposite party havoced and halted the consummation by muscle tactics. The postal ballot papers were destroyed. The, ballot boxes from the Fazilka segment were also done away with en route, and the returning officer was terrified into postponing the declaration of the result. On account of an earlier complaint that the returning officer was a relation of the appellant, the Election Commission (hereinafter referred to as Commission) had: deputed an officer of the Commission Shri IKK Menon as observer of the poll process in the constituency. He was present as the returning officer who under compulsion had postponed the concluding 3 p.m. onwards. Thus the returning officer had the company of the observer with him during the crucial stages and controversial eruptions in the afternoon of March 21. Shortly after sunset, presumably, the returning officer who under compulsion had postponed the concluding part of the election, reported the happenings by wireless massage to the Election Commission. The observer also reached Delhi and gave a written account and perhaps an oral narration of the untoward events which marred what would otherwise have been a smooth finish Lo, the election. Disturbed by the disruption of the declaratory part of the election, the appellant, along with a former Minister of the State, met the Chief Election Commissioner (i.e. the Commission) at about 10.30 A.M. on March 22nd, with the request that he should direct the returning officer to declare the result of the election. Later in the day, the Commission issued an order which has been characterised by the appellant as a law less and precedentless cancellation, of the whole poll, acting by hasty hunch and without rational appraisal of facts. By the 22nd of_March, when the Election Commission made the impugned order, the bulk of the electoral results in the country bad beamed in. The gravamen of the grievance of the appellant is that while he had, in all probability, won the poll, he has been deprived of this valuable and hard won victory by the arbitrary action of the Commission going contrary to fairplay and in negation of the basic canons of natural justice. Of course the Commission did not stop with the cancellation but followed it up a few days later with a direction to hold a fresh poll_for the whole constituency, involving all the nine segments, although there were no complaints about the polling in any of the constituencies and the ballot papers of eight constituencies were available intact with the returning officer and only Fazilka segment ballot papers were destroyed or demanded on the way, (plus the postal ballots). It must also, be mentioned here that a demand was made, according to the version, of the third respondent, for recount in one segment which was,, 281 unreasonably, turned down. The observer, in his report to the Election Commission, also mentioned that in two polling stations divergent practices were adopted in regard to testing valid and invalid votes. To be more pracise, Shri IKK Menon mentioned ' in his report that at polling station No. 8, the presiding officer 's seal on the tag as well as the paper seal of one box was broken. But the ballot papers contained in that box were below 300 and would not have affected the result in the normal course. In another case in Jalalabad assembly segment, the assistant returning officer had rejected a number of ballot papers of a polling station on the score that they were not signed by the presiding officer. In yet another case it was reported that the ballot papers were neither signed nor stamped but were accepted by the assistant returning officer as valid, al though the factum was not varified by Shri Menon with the assistant returning officer. Shri Menon, in his report, seems to have broadly authenticated the story of the mob creating a tense situation leading to the military being summoned. According to him only the ballot papers of Fazilka assembly segment were destroyed, not of the. other segments. Even regarding Fazilka, the result sheet had arrived. So, far as Zira assembly segment was concerned, some documents (not the, ballot papers) had been snatched away by hooligans. The observer had asked the returning officer to send a detailed report over and above the wireless message. That report, dated March 21, reached the Commission on March 23, but, without waiting for the, report we need not probe the reasons for the hurry the Commission issued the order cancelling the poll. The Chief Election Commissioner has filed a laconic affidavit leaving to the Secretary of the Commission to go into the details of the facts, although the Chief Election Commissioner must himself have had them within his personal ken. This aspect also need not be examined by us and indeed cannot be, for reasons which we will presently set out. Be that as it may, the Chief Election Commissioner admitted in his affidavit that the appellant met him in his office on the morning of March 22, 1977 with the request that the returning officer be directed to declare the result. He agreed to consider and told him him off,, and eventually passed an order as mentioned above. The then Chief Election Commissioner has mentioned in his affidavit that the observer Shri Menon had apprised him of "the various incidents and developments regarding the counting of votes in the constituency" and also had submitted a written report. He has also admitted the receipt of the wireless message, of the returning officer. He concludes his affidavits 'that after taking all these circumstances and information including the oral representation of the 1st petitioner into account on "2nd Much, 1977 itself I passed the order cancelling the poll in the said Parliamentary constituency. In my view this was the only proper course to adopt in the circumstances of the case and with a view to ensuring fair and free elections, particularly when even a recount bad been rendered impossible by reason of the destruction of ballot papers. ' The order of the Election Commission, resulting in the demolition of the poll already held, may be read at this stage. 282 "ELECTION COMMISSION OF INDIA New Delhi Dated 22 March, 1977 Chaitra 1, 1899 (SAKA) NOTIFICATION S.O. Whereas the Election Commission has received reports from the Returning Officer of 13 Ferozepore Parliamentary Constituency that the counting on 21 March, 1977 was seriously disturbed by violence; that the ballot papers of some of the assembly segments of the Parliamentary constituency have been destroyed by violence; that as a consequence it is not possible to complete the counting of the votes in the constituency and the declaration of the result cannot be made with any degree of certainty: And whereas the Commission is satisfied that taking all circumstances into account, the poll in the constituency has been vitiated to such an extent as to effect the result of the election; Now, therefore, the Commission, in exercise of the powers vested in it under Article 324 of the Constitution, Section 153 of the, Representation of the People Act, 1951 and all other powers enabling it so to do, cancels the poll already taken in the constituency and extends the time for the completion of the election up to 30 April, 1977 by amending its notification No. 464/77, dated 25 February, 1977 in respect of the above election as follows : In clause (d) of item (i) of the said notification, relating to the completion of election (a) in the existing item (i), after the words "State of Jammu and Kashmir", the words "and 13 Ferozepur Parliamentary constituency in the State of Punjab" shall be inserted; and (b) The existing item (ii) shall be renumbered as item (iii), and before the item (iii) as so renumbered, the following item shall be inserted, namely : "(iii) 30 April 1977 (Saturday) as the date before which the election shall be completed in "13Ferozepur Parliamentary constituency in the State of Punjab." [464/77] By order Sd/ A. N. Sen, Secretary The Commission declined to reconsider his decision when the appellant pleaded for it. Shocked by the liquidation of the entire poll, the latter moved the High Court under Article 226 and sought to void the order as without jurisdiction and otherwise arbitrary and violative of any vestige of fairness. He was met by the objection, successfully urged by the respondents 1 and 3, that the High Court 283 had no jurisdiction in view of Article 329(b) of the Constitution and the Commission had acted within its wide power under Article 324 and fairly. Holding that it had no jurisdiction to entertain the writ petition. the High Court never the less ]proceeded to enter verdicts on.the merits of all the issues virtually exercising even the entire ,jurisdiction which exclusively belonged to the Election Tribunal. The doubly damnified appellant has come up to this Court in appeal by special leave. Meanwhile, pursuant to the, Commission 's direction, a re poll was held. Although the appellant 's name lingered on the ballot he did not participate in the re poll and respondent 3 won by an easy plurality although numerically those who voted were less than half of the, previous poll. Of course, if the Commission 's order for re poll fails in law, the second electoral exercise has to be dismissed as a stultifying futility. Two things fall to be mentioned at this stage, but, in passing, it may be stated that the third respondent had complained to the Chief Election Commissioner that the assistant returning officer of Fazilka segment had declined the request for recount unreasonably and that an order for re poll of the Fazilka assembly part should be made 'after giving personal hearing '. Meanwhile, runs the request of the third respondents 'direct the returning officer to withhold declaration of result of 13 Ferozepore parliament constituency '. We do not stop to make inference from this document but refer to it as a material factor which may be considered by the tribunal which, eventually, has to decide, the factual controversy. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought ,out. We may here draw attention to the observations of Bose J. in Gordhandas Bhanji (1) "Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in Ms mind, or what he intended to, do. Public orders made by public authorities are meant to have public effect and are intended to effect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself. " Orders are not like old wine becoming better as they grow older: A Caveat. We must, in limine, state that anticipating our decision on the blanket ban on litigative interference during the process of the election, clamped down by Article 329(b) of the Constitution we do not propose to enquire into or pronounce upon the factual complex or the (1) A.I.T. 284 lesser legal tangles, but only narrate the necessary circumstances of the case to get a hang of the major issues which we intend adjudicating. Moreover, the scope of any actual investigation in the event of controversion in any petition under Article 226 is ordinarily limited and we have before us an appeal from the High Court dismissing a petition under Article 226 on the score that such a proceeding is constitutionally out of bounds for any court, having regard to the mandatory embargo. in Article329(b). We should not,except in exceptional circumstances, breach the recognised, though not inflexible, boundaries of Article 226 sitting in appeal, even assuming the maintainability of such a petition. Indeed, we should have expected the High Court to have considered the basic jurisdictional issue first, and not last as it did, and avoided sallying forth into a discussion and decision on the merits, self contra dicting its own holding that it had no jurisdiction even to entertain the petition. The learned Judges observed : "It is true that the submission at serial No. 3 above in fact relates to the preliminary objection urged on behalf of respondents 1 and 3 and should normally have been dealt with & St but since the contentions of the parties on submission No. 1 are inter mixed with the interpretation of Article 329(b) of the Constitution, we thought it proper to deal with them in the order in which they have been made. " This is hardly a convincing alibi for the extensive per incuriam examination of facts and law gratuitously made by the Division Bench of the High Court, thereby generating apprehensions in the appellant 's mind that not only is his petition not maintainable but he has been damned by damaging findings on the merits. We make it unmistakably plain that the election court hearing the dispute on the same subject under section 98 of the R.P. Act, 1951 (for short, the Act) shall not be moved by expressions of opinion on the merits made by the Delhi High Court while dismissing the writ petition. An obiter binds none, not even the author, and obliteration of findings rendered in supererogation must alley the appellant 's apprehensions. This Court is in a better position than the High Court, being competent, under certain circumstances, to declare the law by virtue of its position under Article 141. But, absent such authority or duty, the High Court should have abstained from its generosity. Lest there should be any confusion about possible slants inferred from our synoptic statements, we clarify that nothing projected in this judgment is intended to be an expression of our opinion even indirectly. The facts have been set out only to serve as a peg to hang three primary constitutional issues which we will formulate a little later. Operation Election Before we proceed further, we had better have a full glimpse of tie, constitutional scheme of elections in our system and the legislative follow up regulating the process of election. Shri Justice Mathew in lndira Nehru Gandhi(1) summarised skeletal fashion, this scheme (1) 285 following the pattern adopted by Fazal Ali, J. in Ponnuswami. ; He explained : "The concept of democracy as visualised by the Constitution presupposes the representation of the people in Parliament and state legislatures by the method of election. And, before an election machinery can be brought into operation, there are three requisites which require to be attended to, namely, (1) there should be a set of laws and rules making provisions with respect to all matters relating to, or in connection with, elections, and it should be decided as to how these laws and rules are to be made; (2). there should be an executive charged with the duty of securing the due conduct of elections; and (3) there should be a judicial tribunal to deal with disputes arising out of or in connection with elections. Articles 327 and 328 deal with the first of these requisites, article 324 with the second and article 329 with the third requisite (see N. P. Ponnuswami vs Returning Officer, Nanmakkal Constituency & Ors. ; , 229). Article 329 (b) envisages the challenge to an election by a petition to be presented to such authority as the Parliament may, by law, prescribe. A law relating to election should contain the requisite qualifications for candidates, the method of voting, definition of corrupt practices by the candidates and their election agents, the forum for adjudication of election disputes and other cognate matters. It is on the basis of this law that the question determined by the authority to which the petition is presented. And, when a dispute is raised as regards the validity of the election of a particular candidate, the authority entrusted with the task of resolving the dispute must necessarily exercise, a judicial function, for, the process consists of ascertaining the facts relating to the election and applying the law to the facts so ascertained. " A short description of the legislative project in some more detail may be pertinent, especially touching on the polling process in the booths and the transmission of ballot boxes from the polling stations to the returning officer 's ultimate counting station and the crucial prescriptions regarding annuoncements and recounts and declarations. We do not pronounce upon the issues regarding the stage for and right of recount. the validity of votes or other factual or legal disputes since they fall for decision by the Election Court where the appellant has filed an election petition by way of abundant caution. A free and fair election based on universal adult franchise is the basic; the regulatory procedures vis a vis the repositories of functions and the distribution of legislative, executive and judicative roles in the total scheme, directed towards the holding of free elections, are the specifics. Part XV of the Constitution plus the Representation of the People Act, 1950 (for short, the 1950 Act) and the Representation of the People Act, 1951 (for short, the Act), Rules framed there under, instructions issued and exercises prescribed, constitute the package of 286 electoral law governing the parliamentary and assembly elections in the country. The super authority is the Election Commission, the kingpin is the returning officer, the minions are the presiding officers in the polling stations and the electoral engineering is in conformity with the elaborate legislative provisions. The scheme is this. The President of India (Under Section 14) ignites the general elections across the nation by calling upon the People, divided into several constituencies and registered in the electoral rolls, to choose their representatives to the Lok Sabha. The constitutionally appointed authority, the Election Commission, takes over the whole conduct and supervision of the mammoth enterprise in volving a plethora of details and variety of activities, and starts off with the notification of the time table for the, several stages of the election (Section 30). The assembly line operations then begin. An administrative machinery and technology to execute these enormous and diverse jobs is fabricated by the Act, creating officers, powers and duties, delegation of functions and location of polling stations. The precise exercise following upon the calendar for the poll, commencing from presentation of nomination papers, polling drill and telling of votes,, culminating in the declaration and report of results are covered by specific prescriptions in the Act and the rules. The secrecy of the ballot, the authenticity of the voting paper and its later identifiability with reference to particular polling stations, have been thoughtfully provided for. Myriad other matters necessary for smooth elections have been taken care of by several provisions of the Act. The wide canvas so spread need not engage us sensitively, since such diffusion may weaken concentration on the few essential points concerned in this case. One such aspect relates to repoll. Adjournment of the poll at any polling station in certain emergencies is sanctioned by section 57 and fresh poll in specified vitiating contingencies is authorised by section 58. The rules run into more particulars. After the votes are cast comes their counting. Since the simple plurality of votes clinches the verdict, as the critical moment approaches, the situation is apt to hot up, disturbances erupt and destruction of ballots disrupt. If disturbance or destruction demolishes the prospect of counting the total votes, the number secured by each candidate and the ascertainment of the will of the majority, a re poll confined to disrupted polling stations is provided for. Section 64A chalks out the conditions for and course of such repoll, spells out the power, and repository thereof and provides for kindred matters. At this stage we may make a closer study of the provisions regarding repoll systematically and stagewise arranged in the Act. It is not the case of either side that a total repoll of an entire constituency is specificated in the sections or the rules. Reliance is placed for this wider power upon Article 324 of the Constitution by the Commission in its order, by the first respondent in his affidavit, by the learned Additional Solicitor General in his argument and by the third respondent through his counsel. We may therefore have to study the scheme of. article 324 and the provisions of the, Act together since they are integral to each other. Indeed, if we may mix metaphors for emphasis, the legislation made pursuant to Article 327 and that part of the Constitution specially devoted to elections must be 287 viewed as one whole picture, must be heard as an orchestrated piece and must be interpreted as one package of provisions regulating perhaps the most stressful and strategic aspect of democracy in action so dear to the nation and so essential for its survival. The lis and the issues Two prefatory points need to be mentioned as some reference was made to them at the bar. Firstly, an election dispute is not like an ordinary lis between private parties. The entire electorate is vicariously, not inertly, before the court. (See ; , 616, 622). We may, perhaps, call this species of cases collective litigation where judicial activism assures justice to the constituency, guardians the purity of the system and decides the rights of the candidates. In this class of cases, where the common law tradition is partly departed from, the danger that the active judge may become, to some extent, the prisoner of his own prejudices exists; and so, notwithstanding his powers of initiative, the parties ' role in the formulation of the issues and in the presentation of evidence and argument should be substantially maintained and care has to be taken that the circle does not become a vicious one, as pointed out by J.A. Jolowicz in. 'Public Interest Parties and the Active Role of the Judge in Civil Litigation ' (sections p. 276). Therefore, it is essential that courts, adjudicating upon election controversies, must play a verily active role, conscious all the time that every decision rendered by the Judge transcends private rights and defends the constituency and the democracy of the country. Secondly, the pregnant problem of power and its responsible exercise is one of the perennial riddles of many a modern constitutional order. Similarly, the periodical process of free and fair elections. uninfluenced by the caprice, cowardices or partisanship of hierarchical authority holding it and unintimidated by the threat, tantrum or vandalism of strong arm tactics, exacts the embarrassing price of vigilant monitoring. Democracy digs its grave where passions, tensions and violence, on an overpowering spree, upset results of peaceful polls, and the law of elections is guilty of sharp practice if it hastens to legitimate the fruits of lawlessness. The judicial branch has a sensitive responsibility her to call to order lawless behaviour. Forensic non action may boomerang, for the court and the law are functionally the bodyguards of the People against bumptious power, official or other. We now enter the constitutional zone relating to the controversy in this case. Although both sides have formulated the plural problems with some divergence, we may compress them into three cardinal questions : 1.Is article 329(b) a blanket ban on all manner of questions which may have impact on the ultimate result of the election, arising between two temporal termini viz., the notifi cation by the President calling for the election and the declaration of the result by the returning officer ? Is article 226 also covered by this embargo and. if so, is section 100 broad enough to accommodate every kind of objection, constitutional, legal or factual, which may have the result of invalidation of an 288 election and the declaration of the petitioner as the returned candidate and direct the organisation of any steps necessary to give full relief ? 2.Can the Election Commission, clothed with the comprehensive functions under Article 324 of the Constitution, cancel the whole poll of a constituency after it has been held, but before the formal declaration of the result has been made, and direct a fresh poll without reference to the guidelines under sections 58 and 64(a) of the Act, or other legal prescription or legislative backing. If such plenary power exists, is it exercisable on the basis of his inscrutable 'subjective satisfaction ' or only on a reviewable objective assessment reached on the basis of circumstances vitiating a free and fair election and warranting the stoppage of declaration of the result and directions of a fresh poll not merely of particular polling stations but of the total constituency ? 3.Assuming a constitutionally vested capacity tinder article 324 to direct re poll, is it exercisable only in conformity with natural justice and geared to the sole goal of a free, popular verdict if frustrated on the first occasion ? Or, is the Election Commission immune to the observance of the doctrine of natural justice on account of any recognised exceptions to the application of the said principle and unaccountable for his action even before the Election Court ? The juridical aspect of these triple questions alone can attract judicial jurisdiction. However. even if we confine ourselves to legal problematics, eschewing the political overtones, the words of Justice Holmes will haunt the Court : "We are quiet here, but it is the quiet of a storm centre. " The judicature must, however. be illumined in its approach by a legal sociological guidelines and a princi pled pragmatic insight in resolving, with jural tool and techniques s ,ind techniques. 'the various crises of human affairs ' as they reach the forensic stage and seek dispute resolution in terms of the rule of law. Justice Cordozo felicitously set the perspective "The great generalities of the Constitution have at content and significance that vary from age to age." Chief Justice Hidayatullah perceptively articulated the insight "One must, of course, take note of the synthesized authoritative content or the moral meaning of the underlying ' principle of the, prescriptions of law, but not ignored the historic revolution of the, law itself or how it was connected in its changing moods with social requirements of a particular age. (Judicial Methods, B. N. Rau Memorial Lecture) The old articles of the supreme lex meet new challenges of life, the old legal pillars suffer new stresses. So we have to adopt the law and develop its latent capabilities if novel situations, as here, are encountered. That is why in the reasoning we have adopted and the 289 perspective we have projected, not literal nor lexical but liberal and visional is our interpretation of the Articles of the Constitution and the provisions of the Act. Lord Denning 's words are instructive "Law does not stand still. It moves continually. Once; this is recongnised, then the task of the Judge is put on a higher plane. He must consciously seek to mould the law so as to serve the needs of the time. He must not be a mere, mechanic, a mere working mason, laying brick on brick, without thought to the overall design. He must be an archi tect thinking of the structure as a whole building for society a system of law which is strong, durable and just. It is on his work that civilised society itself depends. " The invulnerable barrier of Art.329 (b). Right at the forefront stands in the way of the appellant 's progress the broad spectrum ban of Article 329(b) which, it is claimed for the respondents, is imperative and goal oriented. Is this Great Wall of China, set up as a preliminary bar, so impregnable that it cannot be by passed even by article 226 ? That, in a sense, is the key question that governs the fate of this appeal. Shri P. P. Rao for the appellant contended that, however, wide article 329(b) may be, it does not debar proceedings challenging, not the steps promoting election but dismantling it, taken by the Commission without the backing of legality. He also urged that his client, who had been nearly successful in the poll and had been deprived of it by an illegal cancellation by the Commission, would be left in the cold without any remedy since the challenge to cancellation of the completed poll in the entire constituency was not covered by section 1 00 of the Act. Many subsidiary pleas also were put forward but we will focus on the two inter related submissions bearing on article 329(b) and section 100 and search for a solution. The problem may seem prickly but an imaginative application of principles and liberal interpretation of the constitution and the Act will avoid anomalies and assure justice. if we may anticipate our view which will presently be explained, section 100 (1 ) (d) (iv) of the Act will take care of the, situation present here, being broad enough, as a residual provision, to accommodate, in expression 'non compliance ', every excess, transgression, breach or omission. And the spen of the, ban under article 329(b) is measured by the sweep of section 100 of the Act. We have to proceed heuristically now. Article 329(b) reads Notwithstanding anything in this Constitution "(b) no election to either House of Parliament or to the House or either House of the Legislature of a State shall be called in question except by an election petition presented to such authority and in such manner as may be Provided for by or under any law made by the appropriate Legislature. " Let us break down the prohibitory provision into its components. The sole remedy for an aggrieved party, if he wants to challenge any election, is an election petition. And this exclusion of all other remedies 290 includes constitutional remedies like article 226 because of the nonobstante clause. If what is impugned is an election the ban operates provided the proceeding 'calls it in question ' or puts it in issue: not otherwise. What is the high policy animating this inhibition '? Is there any interpretative alternative which will obviate irreparable injury and permit legal contests in between? How does section 100 (1) (d) (iv) of the Act integrate into the scheme? Let us read section 100 here : "Subject to the provisions of sub section (2) if the High Court is of opinion x x x (d)that the result of the election, in so far as it concerns a returned candidate, has been materially affected x x x (iv) by any non compliance with the provisions of the Constitution or of the Act or of any rules or orders made under this Act the High Court shall declare the election of the returned candidate to be void. The companion provision, viz., section 98 also may be extracted at this,star, : "At the conclusion of the trial of an election petition the High Court shall make an order (a) dismissing the election petition; or (b) declaring the election all or any of the returned candidates to be void; or (e) declaring the election of all or any of the returned candidates to be void and the petitioner or any other candidate to have been duly elected. " Now arises the need to sketch the scheme of section 1 00 in the setting of Art.329(b). The troublesome word 'non compliance ' holds in its fold a teleologic signification which resolves the riddle of this case in, a way. So we will address, ourselves to the meaning of meanings the values within the words and the 'project unfolded '. This will be taken up one after the other. At the first blush we get the comprehensive impression that every calling in question of an election save, at the end, by an election petition, is forbidden. What, then, is an election ? What is 'calling in question ? Every step from start to finish of the total process constitutes 'election ', not merely the conclusion or culmination. Can the cancella tion of the entire poll be called a step in the process and for the progress of an election, or is it a reverse step of undoing what has been done in the progress of the election, non step or anti step setting at nought the process and, therefore, not a step towards the goal and hence liberated from the coils of article 329(b) ? And, if this act or step were to be shielded by the constitutional provision, what is an aggrieved party to do 9 This takes us to the enquiry about the ambit of section 100 of the Act and the object of article 329 (b) read with article 324. Such is the outline of the complex issue projected before us. 291 'The election philosophy and the principle in Ponnuswami Democracy is government by the people. It is a continual participative operation, not a cataclysmic, periodic exercise. The little man, in his multitude, marking his vote at the poll does a social audit of his Parliament plus political choice of his proxy. Although the full flower of participative Government rarely blossoms, the minimum credential of popular government is appeal to the people after every term for a renewal of confidence. we have adult franchise and general elections as constitutional compulsions. 'The right of election is the very essence of the constitution ' (Junius). It needs little argument to hold that the heart of the Parliamentary system is free, and fair elections periodically held, based on adult franchise, although social and economic democracy may demand much more. Ponnuswami is a landmark case in election laws and deals with the scope, amplitude, rationale and limitations of article 329(b). its ratio has been consistently followed by this Court in several rulings through Durga Shankar Mehta (1) and Hari Vishnu Kamath and Khare (2) down to Indira Gandhi(3). The factual setting in that case may throw some light on the decision itself. The appellant 's nomination for election to the Madras Legislative Assembly was rejected by the Returning Officer and so he hurried to the High Court praying for a writ of certiorari to quash the order of rejection, without waiting for the entire elective process to run its full course and, at the end of it, when the results also were declared, to move the election tribunal for setting aside the result of the election conducted without his participation. He thought that if the election proceeded without him irreparable damage, would have been caused and therefore sought to intercept the progress of the election by filing a writ petition. The High Court dismissed it as unsustainable, thanks to article 329(b) and this court in appeal, affirmed that holding. Fazal Ali, J. virtually spoke for the Court and explained the principle underlying article 329(b). The ambit and spirit of the bar imposed by the Article was elucidated with reference to the principle that 'it does not require much argument to show that in a country with a democratic constitution in which the legislatures have to play a very important role, it will lead to serious consequences if the elections are unduly protracted or obstructed. ' In the view of the, learned Judge, immediate individual relief at an intermediate stage when the process of election is under way has to be sacrificed for the paramount public good of promoting the completion of elections. Fazal Ali, J. ratiocinated on the ineptness of. interlocutory legal bold ups. He posed the issue and answered it thus : "The question now arises whether the law of elections in this country contemplates that there should be two attacks on matters connected with election proceedings, one while they are going on by invoking the extraordinary jurisdiction of the High Court under article 226 of the Constitution (the ordinary (1) [1955] 1 section C. R. 267 (2) ; (3) 6 1114SCI/77 292 jurisdiction of the courts having been expressly excluded), and another after they have been completed by means of an election petition. In my opinion, to affirm such a position would be contrary to the scheme of Part XV of the Constitution and the Representation of the People Act, which, as I shall point out later, seems to. be that any matter which has the effect of vitiating an election should be brought up only at the appropriate stage in an appropriate manner before a special tribunal and should not be brought up at an 'intermediate stage before any court. It seems to me that under the election law, the only significance which the rejection of a nomination paper has consists in the fact that it can be used as a ground to Call the election in question. Article 329(b) was apparently enacted to describe the manner in which end the stage at which this ground, and other grounds which may be raised under the law to call the election in question, could be urged. I think it follows by necessary implication from the language of this provision that those grounds cannot be urged in any other manner, at any other stage and before any other court. If the grounds on which an election can be called in question could be raised at an earlier stage and errors, if any are rectified, there will be no meaning in enacting a provision like Article 329(b) and in setting up a special tribunal. Any other meaning ascribed to the words used in the article would lead to anomalies, which the Constitution could not have contemplated, one of them being that conflicting views may be expressed by the High Court at the pre polling stage and by the election tribunal, which is to be an, independent body, at the stage when the matter is brought before it. Having thus explained the raison d 'etre of the provision, the Court proceeded to interpret the concept of election in the scheme of Part XV of the Constitution and the Representation of the People Act, 1951. Articles 327 and 328 take care of the act of laws and rules making provisions with respect to all matters relating to or in connection with, elections. ' Election disputes were also to be provided for by laws made under Article 327. The Court emphasised that Part XV of the Constitution was really a code in itself, providing the entire ground work for enacting the appropriate laws and setting up suitable machinery for the conduct of elections. The scheme of the Act enacted by Parliament was also set out by Fazal Ali, J. ' "Part VI deals with disputes regarding elections and provides for the manner of presentation of election petitions, the constitution of election tribunals and the trial of election petitions part VII outlines the various corrupt and illegal practises which may affect the elections, and electoral offences. Obviously, the Act is self contained enactment so far as elections are concerned, which means that whenever we have to ascertain the true position in regard to any matter connected made thereunder. The provisions of the Act which are material to the present discussion are sections 60, 100, 105 and with elections, we have only to look at the Act and the rules 293 170, and the provisions of Chapter 11 of Part IV dealing with the form of election petitions , their contents and the reliefs which may be sought in them. Section 80, which is drafted in almost the same language as article 329(b) provides that ,no election shall be called in question except by an election petition presented in accordance with the provisions of this Part '. Section 1 00, as we have already seen, provides for the grounds on which an election may be called in question, one of which is the improper rejection of a nomination paper, Section 105 says that 'every order of the Tribunal made under this Act shall be final and conclusive. Section 170 provides that 'no civil court shall have jurisdiction to question the legality of any action taken or of any decision given by the Returning Officer or by any other person appointed under this Act in connection with an election. " There have been amendments to these provisions but the profile remains substantially the same. After pointing out that the Act, in section 80, and the Constitution, in article 329(b), speak substantially the same language and inhibit other remedies for election grievances except through the election tribunal, the Court observed "That being so, I think it will be a fair inference from the provisions of the Representation of the People Act to state that the Act provides for only one remedy, that remedy being by an election petition to be presented after the election is over, and there is no remedy provided at any intermediate stage. " There is a non obstante clause in Article 329 and, therefore, Article 22.6 stands pushed out where the dispute takes the form of calling in question an election, except in special situations pointed out but left unexplored in Ponnuswami. The heart of the matter is contained in the conclusions summarised by the Court thus : "(1) Having regard to the important functions which the legislatures have to perform in democratic countries, it has always been recognised to be a matter of first importance that elections should be concluded as early as possible according to time schedule and all controversial matters and all disputes arising out of elections should be postponed till after the elections are over, so that the election proceedings may not be unduly retarded or protracted. (2)In conformity with this principle, the scheme of the election law in this country as well as in England is that no significance should be attached to anything which does not affect the "election"; and if any irregularities are committed while it is in progress and they belong to the category or class which, under the law by which elections are governed, would have the effect of vitiating the "election" and enable the person effected to call it in question, they should be brought so before a special tribunal by means of an election petition 294 and not be made the subject of a dispute before any court while the election is in progress. " After elaborately setting out the history in England and in India election legislation vis a vis dispute resolution, Fazal Ali J. stated "If the language used in article 329(b) is considered against this historical background, it should not be difficult to see why the framers of the Constitution framed that provi sion in its present form and chose the language which had been consistently used in certain earlier legislative provisions and which bad stood the test of time." Likewise the Court discussed the, connotation , of the expression election ' in Article 329 and observed : "That word has by long usage in connection with the process of selection of proper representatives in democratic institutions, acquired both a wide and a narrow meaning. In the narrow sense, it is used to mean the final selection of a candidate which may embrace the result of the poll when there is polling or a particular candidate being returned unopposed when there is no poll. In the wide, sense, the word is used to connote the entire process culminating in a candidate being declared elected. it seems to me that the word "election " has been used in Part XV of the Constitution in the wide sense, that to say to connote the entire procedure, to be gone through to return a candidate to the legislature. That the word "election" bears this wide meaning wheneverwe talk of elections in a democratic country, is borne out bythe fact that in most of the books on the subject and in several cases dealing with the matter, one of the questions mooted is, when the election begins The rainbow of operations, covered by the compendious expression election, thus commences from the initial notification and culminates in the declaration of the return of a candidate,. The paramount policy of the Constitution framers in declaring that no election shall be called in question except the way it is provided for in Article 329 (b) and the Representation of the People Act, 1951, compels us to read, as Fazal Ali, J. did in Pannuswami, the Constitution and the Act together as an integral scheme. The reason for postponement of election litigation to. the post election stage is that elections poll not unduly be protracted or obstructed. The speed and promptitude in getting due representation for the electors in the legislative bodies is the real reason suggested in the course of judgment. Thus for everything is clear. No litigative enterprise in the High Court or other court should be allowed to hold up the on going electoral process because the parliamentary representative for the constituence should be chosen promptly. Article 329 therefore covers "electoral matters". One interesting argument, urged without success in Ponnuswami elicited a reasoning from the Court which has some bearing on the question in the present appeal. That argument was that if nomina 295 tion was part of election a dispute as to the validity of the nomination was a dispute relating to election and could be called in question, only after the whole election was over, before the election tribunal. This meant that the Returning Officer could have no jurisdiction to decide the validity of a nomination, although section 36 of the Act conferred on him that jurisdiction. The learned Judge dismissed this argument as without merit, despite the great dailectical ingenuity in the submission. In this connection the learned Judge observed "Under section 36 of the Representation of the People Act, 1951, it is the duty of the Returning Officer to scrutinize the nomination papers to ensure that they comply with the requirements of, the Act and decide all objections which be made to any nomination. It is clear that unless this duty is discharged properly, any number of candidates may stand for election without complying with the provisions of the Act and a great deal of confusion may ensue. In discharging the statutory duty imposed on him, the Returning Officer does not call in question any election. Scrutiny of nomination papers is only a stage, though an important stage, in the election process. It is one of the essential duties to be performed before the election can be completed, and anything done towards the completion of the election proceeding can by no stretch of reasoning be described as questioning the election. The fallacy of the argument lies in treating a single step taken in furtherance of an election as equivalent to election. The decision of this appeal however turns not on the construction of the single word "election", but on the construction of the compendious expression no election shall be called in question" in this context and setting with due regard to the scheme of Part XV of the Constitution and the Representation of the People Act, 1951. Evidently, the argument has no, bearing on this method of approach to the question posed in this appeal, which appears to me the only correct method. " What emerges from this perspicacious reasoning, if we may say so with great respect, is that any decision sought and rendered will not amount to 'calling in question ' an election if it subserves the progress of the election and facilitates the completion of the election. 'Ale should not slur over the quite essential observation " Anything done towards the completion of the election proceeding can by no stretch of reasoning be described as questioning the election. Likewise, it is fallacious to treat 'a single step taken in furtherance of an election as equivalent to election '. Thus, there are two types of decisions, two types of challenges. The first relates to proceedings which interfere with the progress of the election. The second accelerates the completion of the election and acts in furtherance of an election. So, the short question before us, in the light of the illumination derived from Ponnuswami, is as to whether the order for re poll of the Chief Election Commissioner is "anything done towards the completion of the election proceeding ' and whether the proceedings before the High Court facilitated the election process or halted its progress. The question immediately arises as to whether 296 the relief sought in, the writ petition by the present appellant amounted to calling in question the election. This, in turn, revolves round the point as to whether the cancellation of the poll and the reordering of fresh poll is 'part of election ' and challenging it is 'calling it in question. The plenary bar of article 329 (b) rests on two principles : (1) The peremptory urgency of prompt engineering of the whole election process without intermediate interruptions by way of legal proceedings challenging the steps and stages in between the commencement and the conclusion. (2) The provision of a special jurisdiction which can be invoked by an aggrieved party at the end of the election excludes other form, the right and remedy being creatures of statutes and controlled by the Constitution. Durga Shankar Mehta(1) has affirmed this position and supplemented it by holding that, once the Election Tribunal has decided, the prohibition is extinguished and the Supreme Court 's over all power to interfere under article 136 springs into, action. In Hari Vishnu(2) this Court upheld the rule in Ponnuswami excluding any proceeding, including one under article 226, during the on going process of election, understood in the comprehensive sense of notification down to declaration. Beyond the declaration comes the election petition, but beyond the decision of the Tribunal the ban of article 329(b) does not bind. If 'election ' bears the larger connotation, if 'callinng in question ' possesses a semantic sweep in plain English, if policy and principle are tools for interpretation of statutes, language permitting the conclusion is irresistible ' even though the argument contra may have emotional impact and ingenious appeal, that the catch all jurisdiction under article 226 cannot consider the correctness, legality or otherwise of the direction for cancellation integrated with re poll. For, the prima facie purpose of such a re poll was to restore a detailed Poll process and to, complete it through the salvationary effort of a repoll. Whether in fact or law, the order is validly made within his powers or violative of natural justice can be examined later by the appointed instrumentality, viz., the Election Tribunal. That aspect will be explained presently. We proceed on the footing that re poll in one polling station or it many polling stations for good reasons, is lawful. This shows that re poll in many or all segments, all pervasive or isolated, can be lawful. We are not considering whether the act was bad for other reasons. We are concerned only to say that if the regular poll, for some reasons, has failed to reach the goal of choosing by plurality the returned candidate and to achieve this object a fresh poll (not a new election) is needed, it may still be a step in the election. The deliverance of Dunkirk is part of the strategy of counter attack. Wise or valid, is another matter. On the assumption, but leaving the question of the validity of the direction for re poll soon for determination by the Election Tribunal, we hold that a writ petition challenging the cancellation coupled with re poll amounts to calling in question a step in 'election! and is there, fore barred by article 329(b). If no re poll had been directed the legal perspective would have been very different. The mere cancel (1) [1955] 1 S.C.R. 267. (2) ; 297 lation would have then thwarted the course of the election and different considerations would have come into play. We need not chase a hypothetical case. Our conclusion is not a matter of textual interpretation only but a substantial assurance of justice by reading section 100 of the Act as covering the whole basket of grievances of the candidates. Sri P. P. Rao contended that the Court should not deny relief to a party in the area of elections which are the life breath of democracy and people 's power. We agree. This dilemma does not arise in the wider view we take of section 100 (1) (d) (iv) of the Act. Sri Rao 's attack on the order impugned is in substance based on alleged non compliance with a provision of the Constitution viz., article 324 but is neatly covered by the widely worded, residual catch all clause of section 100. knowing the supreme significance of speedy elections in our system the framers of the Constitution have, by implication, postponed all election disputes to election petitions and tribunals. In harmony with this scheme section 100 of the Act has been designedly drafted to embrace all conceivable infirmities which may be urged. To make the project fool proof section 100(1) (d) (iv) has been added to absolve everything left over. The Court has in earlier rulings pointed out that section 100 is exhaustive of all grievances regarding an election. But what is banned is not anything whatsoever done or directed by the Commissioner but everything he does or directs in furtherance of the election, not contrariwise. For example, after the President notifies the nation on the holding of elections under section 15 and the Commissioner publishes the calendar for the poll under section 30, if the latter orders returning officers to accept only one nomination or only those which come from one party as distinguished from other parties or independents, is that order immune from immediate attack. We think not. Because the Commissioner is preventing an election, not promoting it and the courts review of that order will facilitate the flow, not stop the stream. Election, Wide or narrow be its connotation, means choice from a possible plurality monolithic politics not being our genius or reality, and if that concept is crippled by the Commissioner 's act, he holds no election at all. A poll is part a vital part of the election but with the end of the poll the whole election IS not over. Ballots have to be assembled, scrutinised, counted recount claims considered and result declared. The declaration determines the election. The conduct of the election thus ripens into the elector 's choice only when processed, screened and sanctified, every escalatory step upto the formalised finish being unified in purpose, forward in movement, fair and free in its temper. Article 329(b) halts judicial intervention during this period, provided the act possesses the pre requisites of 'election ' in its semantic sweep. That is to say, immunity is conferred only if the act impeached is done for the apparent object of furthering a free and fair election and the protective armour drops down if the act challenged is either unrelated to. or thwarts or taints the course of the election. Having held against the maintainability of the writ petition, we should have parted with the case finally. But counsel for both the 298 candidates and, more particularly, the learned Additional Solicitor General, appearing for the Election Commission, submitted that the breadth, applitude and implications, the direction and depth of Article 324 and, equally important, the question of natural justice raised under Article 324 are of such public importance and largely fallow field going by prior pronouncements, and so strategic for our democracy and itspower process that this Court must decide the issue here and now. Article 141 empowers and obligates this Court to declare the law forthe country when the occasion asks for it. Counsel, otherwise opposing one another, insistently concurred in their request that for the working of the electoral machinery and understanding of the powers and duties vested in the functionaries constituting the infra structure, it is essential to sketch the ambit and import of article 324. This point undoubtedly arises before us even in considering the prohibition under article 329 and has been argued fully. In any view, the Election Triburial will be faced with this issue and the law must be laid down so that there may be no future error while disposing of the, election petition or when the Commission is called upon to act on later occasion. This is the particular reason for our proceeding to decide what the content and parameters of article 324 are, contextually limited to situations analogous to the present. We decide two questions under the relevant article, not argued, but as substantive pronouncements on the subject. They are : (a) What in its comprehensive connotation does the conduct ' of elections mean or, for that matter, the superintendence, direction and control ' of elections ? (b) Since the text of the provision is silent about hearing before acting, is it permissible to import into article 324(1) an obligation to act in accord with natural justice ? Article 324, which we have set out earlier, is a plenary provision vesting the whole responsibility for national and State elections and, therefore, the necessary powers to discharge that function. It is true that article 324 has to be read in the light of the constitutional scheme and the 1950 Act and the 1951 Act. Sri Rao is right to the ex tent be insists that if competent legislative is enacted as visualized in Article 327 the Commission cannot shake himself free from the enacted prescriptions. After all, as Mathew, J. has observed in Indira Gandhi : (supra) "In the opinion of some of the judges constituting the majority in Bharati 's case (supra), Rule of Law is a basic structure of the Constitution apart from democracy. The rule of law postulates the pervasiveness of the spirit of law throughout the whole range of government in the sense of excluding arbitrary official action in any sphere." (p. 523) 299 And the supremacy of valid law over the Commission argues itself. No one is an imperium in imperio in our constitutional order. It is reasonable to hold that the Commissioner cannot defy the law armed by article 324. Likewise, his functions are subject to the norms of fairness and he cannot act arbitrarily. Unchecked power is alien to our system. Even so, situations may arise which enacted law has not provided for. Legislators are not prophets but pragmatists. So it is that the Constitution has made comprehensive provision in article 324 to take care of surprise situations. That power itself has to be exercised, not mindlessly nor mala fide, nor arbitrarily nor with partiality but in keeping with the guidelines of the rule of law and not stultifying the Presidential notification nor existing legislation. More is not necessary to specify; less is insufficient to leave unsaid. Article 324, in our view, operates in areas left unoccupied by legislation and the words 'superintendence, direction and control ' as well as 'conduct of all elections ' are the broadest terms. Myriad maybes, too mystic to be precisely presaged, may call for prompt action to reach the goal of free and fair election. It has been argued that this will create a constitutional despot beyond the pale of accountability; a Frankenstein 's monster who may manipulate the system into elected despotism instances of such phenomena are the tears of history. To that the retort may be that the judicial branch, at the appropriate stage, with the potency of its benignant power and within the leading strings of legal guidelines, can call the bluff, quash the, action and bring order into the process. Whether we make a triumph or travesty of democracy depends on the man as much as on the Great National Parchment. Secondly, When a high functionary like the Commissioner is vested with wide powers the law expects him to act fairly and legally. Article 324 is geared to the accomplishment of free and fair elections expeditiously. Moreover, as held in Virendra(1) and Harishankar(2) discretion vested in a high functionary may be reasonably trusted to be used properly, not. perversely. If it is misused, certainly the Court has power to strike down the act. This is well established and does not it is useful to remem "But the electorate lives in the hope that a sacred power will not so flagrantly be abused and the moving finger of history warns of the consequences that inevitably flow when absolute power has corrupted absolutely. The fear of perversion is no test of power." lndira Nehru Gandhi vs Raj Narain(3). The learned Additional Solicitor General brought to our notice rulings of this Court and of the High Courts which have held that article 324 was a plenary power which enabled the Commission to act even in the absence of specific legislation though not contrary to valid legislation. Ordering a re poll for a whole constituency under compulsion of circumstances may be directed for the conduct of elections (1) ; (2) (3) at 657. 300 and can be saved by Aft. 324 provided it is bona fide necessary for the vindication of the free verdict of the electorate and the abandonment of the previous poll was because it failed to achieve that goal. While we repel Sri Rao 's broadside attack on article 324 as confined to what the Act has conferred, we concede that even article 324 does not exalt the Commission into a law unto itself. Broad authority 3 does not bar scrutiny into specific validity of the particular order. Our conclusion on this limb of the contention is that Art, 324 is wide enough to supplement the powers under the Act, as here, but subject to the several conditions on its exercise we have set out. Now we move on to a close up of the last submission bearing on the Commission 's duty to function within the leading strings of natural justice. Indeed, natural justice is a pervasive facet of secular law where a spiritual touch enlivens legislation, administration and adjudication, to make fairness a creed of life. It has many colours and shades, many forms and shapes and, save where valid law excludes, it applies when people are affected by acts of Authority. It is the bone of healthy government, recognised from earliest times and not a mystic testament of judge made law. Indeed, from the legendary days of Adam and of Kautilya 's Arthasastra the rule of law has had this stamp of natural justice which makes it social justice. We need not go into these deeps for the present except to indicate that the, roots of natural justice and its foliage are noble and not newfangled. Today its application must be sustained by current legislation, case law or other extant principle, not the hoary chords of legend and history. Our jurisprudence has sanctioned its prevalence even like the Anglo American system. The dichotomy between administrative and quasi judicial functions vis a vis the doctrine of natural justice is presumably obsolescent after Kraipak(1) in India and Schmit(2) in England. Kraipak marks the watershed, if we may say so, in the application of natural justice to administrative proceedings. Hegde, J., speaking for a bench of five judges observed, quoting for support Lord Parker in In re : H.K. (an infant) (3) "It is not necessary to examine these decisions as there is a great deal of fresh thinking on the subject. The horizon of natural justice is constantly expanding." (p. 467) "The aim of the rules of natural justice is to secure jus tice or to put it negatively to prevent miscarriage of justice. (1) (2) (3) , 630. 301 These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it." (p. 468) "The validity of that limitation is not questioned. If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative inquiries. Often times it is not easy to draw the line that demarcates administrative enquiries from quasi judicial enquiries. Enquiries which were considered administrative at one time are now being considered as quasi judicial in character. Arriving at a just decision is the aim of both quasi judicial enquiries as well as administrative enquiries. An unjust decision in an administrative enquiry may have more far reaching effect than a de cision in a quasi judicial enquiry. As observed by this Court in Suresh Koshy George vs The University of Kerala(") the rules of natural justice are not embodied rules. What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose. Whenever,. a complaint is made before a court that some principle of natural justice had been contravened the court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case." (p. 469) It is an interesting sidelight that in America it has been held to be 'but fundamental fairness that the tight to an administrative hearing is given. (See Boston University Law Review Vol. 53 p. 899). Natural justice is being given access to the United Nations (See American Journal of International Law Vol. 67 p. 479). It is no table that Mathew, J. observed in Indira Gandhi (supra) "If the amending body really exercised judicial power that power was exercised in violation of the principles of natural justice of audi alteram partem. Even if a power is given to a body without specifying that the rules of natural justice should be, observed in exercising it, the nature of the, power would call for its observance." (p. 513) Lord Morris of Borthy Gest in his address before the Bentham :club concluded : "We can, I think, take pride in what has been done in recent periods and particularly in the field of administrative (1) 11969] 1 S.C.R. 317. 302 law by invoking and by applying those principles which we broadly classify under the designation of natural justice. Many testing problems as to their application yet remain to be solved. But affirm that the area of administrative action is but one area in which the principles are to be deployed. Nor are they to be invoked only when procedural failures are shown. Does natural justice qualify to be described as a "majestic" conception? I believe it does. Is it just a rhetorical but vague phrase which can I be employed, when needed, to give a gloss of assurance ? I believe that it is very much more. If it can be summarised as being fair play in action who could wish that it would ever be out of action ? It denotes that the law is not only to be guided by reason and by logic but that its purpose will not be fulfilled if it lacks more exalted inspiration." (Current Legal Problems 1973, Vol. 26 p. 16) It is fair to hold that subject to certain necessary limitations natural justice is now a brooding omnipresence although varying in its play. Once we understand the soul of the rule as fairplay in action and it is so ' We must hold that it extends to both the fields. After all, administrative power in a democratic set up is not allergic to fairness in action and discretionary executive justice cannot degenerate into unilateral injustice. Nor is there ground to be frightened of delay, inconvenience and expense, if natural justice gains access. For fairness itself is a flexible: pragmatic and relative concept, not a rigid, ritualistic or sophisticated abstraction. It is not a bull in a china shop nor a bee in one 's bonnet. Its essence is good conscience in a given situation: nothing more but nothing less. The 'exceptions ' to the rules of natural justice are a misnomer or rather are but a shorthand form of expressing the idea that in those exclusionary cases nothing unfair can be inferred by not affording an opportunity to present or meet a case. Text book excerpts and ratios from rulings can be heaped, but they all converge to the same point that audi alteram partem is the justice of the law without, of course, making law lifeless, absurd, stultifying, self defeating or plainly contrary to the commonsense of the situation. Let us look at the jurisprudential aspects of natural justice, limited to the needs of the present case, as the doctrine has developed in the Indo Anglian systems. We may state that the question of nullity does not arise here because we are on the construction of a constitutional clause. Even otherwise, the rule of natural justice bears upon construction where a statute is silent save in that category where a legislation is charged with the vice of unreasonableness and consequential voidness. Article 324, on the face of it, vests vast functions which may be powers or duties, essentially administrative and marginally even judicative or legislative. All Party Hill Leaders Conference, Shillong vs Capt. W. A. Satigma Ors.(1). We are not fascinated by the logo (1) ; 303 machic exercise suggested by Sri P. P. Rao, reading 'functions ' in contradistinction to 'powers ' nor by the trichotomy of diversion of powers, fundamentally sound but flawsome in several situations if rigidly applied. These submissions merely serve to draw the red herring across the trial. We will now zero in on the crucial issue of natural justice vis a vis Article 324 where the function is so exercised that a candidate is substantially prejudiced even if be has not acquired a legal right nor suffered 'civil consequence ', whatever that may mean. We proceed on the assumption that even if the cancellation of the poll in this case were an administrative act, that per se does not repel the application of the natural justice principle. Kraipak nails the contrary argument. Nor did the learned Additional Solicitor General contend that way, taking his stand all through, not on technicalities, easy victories or pleas for reconsideration of the good and progressive rules gained through this Court 's rulings in administrative law but on the foundational thesis that any construction that we may adopt must promote and be geared to the great goal of expeditious, unobstructed, despatch of free and fair elections and leaving grievances to Ice fully sorted out and solved later before the election tribunal set out by the Act. To use a telling word familiar in officialese; 'Election Immediate '. So now we are face to face with the naked issue of natural justice and its pro tem exclusion on grounds of necessity and non stultification of the on going election. The Commission claims that a direction for re poll is an 'emergency ' exception. The rules of natural justice are rooted in all legal systems, not any 'new theology ', and are manifested in the twin principles of nemo judes in sua caues and audi alteram partem. We are not concerned here with the former since no case of bias has been urged. The grievance ventilated is that being condemned unheard. Sporadic applications or catalogue of instances cannot make for a scientific statement of the law and so we have to weave consistent criteria for application and principles for carving out exceptions. If the rule is sound and not negatived by statute, we should not devalue it nor hesitate to hold every functionary who effects others ' right to it. The audi alteram partem rule has a few facets two of which are (a) notice of the case to be met; and (b) opportunity to explain. Let us study how far the situation on hand can co exist with canons of natural justice. When natural justice is universally respected, the standards vary with situations, contracting into a brief, even post decisional opportunity, or expanding into trial type trappings. Ridge vs Baldwin(1) is a leading case which restored light to an area 'benighted by the narrow conceptualism of the previous decade to borrow Professor Clark 's expression. (Natural Justice; Substance and Shadow 'Public Law ' Joumal Spring 1975). Good administration demands fairplay in action and this simple desideratum is the fount of natural justice. We have already said that the classification of functions as judicial ' or 'administrative ' is a stultifying shibboleth, discarded in India as in England. Today, in our jurisprudence, the (1) ; 304 advances made by natural justice far exceed old frontiers and if judicial creativity belights penumbral areas it is only for improving the quality of government by injecting fairplay into its wheels. The learned Additional Solicitor General welcomed the dramatic pace of enlargement in the application of natural justice. But he argued for inhibiting its spread into forbidden spaces lost the basic values of article 329 be nullified. In short, his point is that where utmost promp titude is needed and that is the raison d 'etre of exclusion of intermediate legal proceedings in election matters natural justice may be impractical and may paralyse, thus balking the object of expeditious completion. He drew further inspiration from another factor to validate the exclusion of natural justice from the Commission 's actions, except where specifically stipulated by statutes. He pointed out what we have earlier mentioned that an election litigation is one in which the whole constituency of several lakhs of people is involved and, if the Election Commission were under an obligation to hear affected parties it may, logically, have to give notice to lakhs of people and not merely to candidates. This will make an ass of the law and, therefore, that is not the law. This reductio ad absurdum also has to be examined. Law cannot be divorced from life and so it is that the life of the law is not logic but experience. If, by the experiential test, importing the right to be heard will paralyse the process, law will exclude it. It has been said that no army can be commanded by a debating society, but it is also true that the House of Commons did debate, during the days of debacle and disaster, agony and crisis of the Second World War, the life and death aspects of the supreme command by the then British Prime Minister 'to the distress of all our friends and to the delight of all our foes ' too historic to be lost on jurisprudence. Law lives not in a world of abstractions but in a cosmos of concreteness and to give up something good must be limited to extreme cases. If to condemn unheard is wrong, it is wrong except where it is overbome by dire social or haphazardsolutions should be eschewed. Normally, natural justice involves the irritating inconvenience for men in authority, of having to hear both sides since notice and opportunity are its very marrow. And this principle is so integral to good government, the onus is on him who urges exclusion to make out why. Lord Denning expressed the paramout policy consideratlon behind this rule of public law (while dealing with the nemo judex aspect) with expressiveness. "Justice must be rooted in confidence: and confidence is destroyed when right minded people go away thinking 'the judge was biased '."We may adapt it to the audi alteram situation by the altered statement : "Justice must be felt to be just by the community if democratic legality is to animate the rule of law. And if the invisible audience sees a man 's case disposed of unheard, a chorus of 'noconfidence ' will be heard to say, 'that man had no chance to defend his stance '. " That is why Tuckor LJ in Russol vs Duke of Norfolk(1) (1) ,118. 305 emphasised that 'whatever standard of natural justice is adopted, one A, essential is that the person concerned should have a reasonable opportunity of presenting his case '. What is reasonable in given circumstances is 'in the domain of practicability; not formalised rigidity. Lord Upjohn in Fernando(1) observed that 'while great urgency may rightly limit such opportunity timeously : perhaps severely there can never be a denial of that opportunity if the principles of natural justice are applicable '. It is untenable heresy, in our view, to look jaw the victim or act behind his back by tempting invocation of urgency, unless the clearest case of public injury flowing from the least delay is selfevident. Even in such cases a remedial hearing as soon as urgent action has been taken is the next best. Our objection is not to circumscription dictated by circumstances, but to annihilation as an easy escape from a benignant, albeit inconvenient obligation. The procedural pre condition of fair hearing, however minimal, even post decisional, has relevance to administrative and judicial gentlemanliness. The Election Commission is an institution of central importance and enjoys far reaching powers and the greater the power to affect others ' right or liabilities the more necessary the need to hear. We may not be taken to say that situational modifications to notice and hearing are altogether impermissible. They are, as the learned Additional Solicitor General rightly stressed. The glory of the law is not that sweeping rules are laid down but that it tailors principles to practical needs, doctors remedies to suit the patient promotes, not freezes. Life 's processes, if we may mix metaphors. Tucker L.J. drove home this point when he observed in the Duke of Norfolk case (supra) "There are no words which are of universal application to very kind of inquiry. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting the subject matter that is being dealth with, and so forth". This circumstantial flexibility of fair bearing has been underscored in Wiseman vs Borneman(1) by Lord Reid when he said he would be "sorry to see this fundamental general principle degenerate into a series of hard and fast rules." Lord Denning, with lovely realism and principled pragmatism, set out the rule in Selvaraien(3) "The fundamental rule is that, if a person may be subjected to pains or penalties, or be exposed to prosecution or proceedings. or deprived of remedies or redress, or in some such way adversely affected by the investigation and report, when he should be told the case made against him and be afforded a fair opportunity of answering it. The investigation body is, however, the master of its own procedure. It need not (2) (3) ,19. 306 hold a hearing. It can do everything in writing. It need not allow lawyers. ,It need not put every detail of the case against a man. Suffice it if the broad grounds are given. It neednot name its informants. It can give the substance only. Moreover it need not do everything itself. It can employ secretaries and assistants to do all the preliminary work and leave much to them. But, in the end, the investigating body itself must come to its own decision and make its own report. " Courts must be tempered by the thought while compromise on principle is unprincipled, applied administrative law in modern complexities of government must realistic, not academic. The myriad maybes and the diverse urgencies are live factors. Natural justice should not destroy administrative order by insisting on the impossible. This general discussion takes its to four specific submissions made by the learned Additional Solicitor General. He argued that the Election Commission, a high constitutional functionary, was charged with conducting elections with celerity to bring the new House into being and the tardy process of notice and hearing would thwart this imperative. So no natural justice. Secondly, be submitted that there was no final determination to the prejudice of any party by directing a re poll since the Election Court had the last word on every objectionable order and so the Commission 's order was more or less provi sional. So no natural justice. Thirdly, he took up the position that no candidate could claim anything more than an expectation or apes and no right having crystallised till official declaration of the result, there was no room for complaint of civil consequence. WI tat was condemned was the poll, not any candidate. So no natural justice. Finally, he reminded us of the far flung futility of giving a hearing to a numerous constituency which too was interested in proper elections like the candidates. So no natural justice. Schmidt was relied on and Wisemen(1) as well as Pearlberg(2) were cited in support of these propositions. We may add to these weighty rulings the decision of the House of Lords in Pearlberg. The decision of this Court in the ruling in Bihar School Examination Board vs Subhas Chandra Sinha & Ors. (3), where a whole university examinations was cancelled without hearing any of the candidates but was up held against the alleged vice of non hearing, was relied on. We must admit that the law, in certain amber areas of natural justice. , has been unclear. Vagueness haunts this zone but that is no argument to shut down. If it is twilit, we must delight. So we will play down the guidelines but guard ourselves against any decision on the facts of this case. That is left for the Election Court in the light of the law applicable. (1) (2) 307 Nobody will deny that the Election Commission in our democratic scheme is a central figure and a high functionary. Discretion vested in him will ordinarily be used wisely, not rashly, although to echo Lord Camden wide discretion is fraught with tyrannical potential even in high personages, absent legal norms and institutional checks, and relaxation of legal canalisation on generous 'VIP ' assumptions may boomrang. Natural justice is one such check on exercise of power. But the chemistry of natural justice is confused in certain aspects. , especially in relation to the fourfold exceptions put forward by the respondents. So let us examine them each. Speed in action versus soundness of judgment is the first dilemma. Ponnuswamy has emphasised what is implicit in Article 329(b) that once the process of election has started, it should not be interrupted since the tempo may slow down and the early constitution of an elected parliament may be halted. Therefore, think twice before obligating a hearing at a critical stage when a quick repoll is the call. The point is well taken. A fair hearing with fun notice to both or others may surely protract; and notice does mean communication of materials since no one can meet an unknown ground. Otherwise hearing becomes hollow, the right becomes a ritual. Should the cardinal principle of 'hearing ' as condition for decision making be martyred for the cause of administrative, immediacy ? We think not. The full panoply may not be there but a manageable minimum may make do. In Wiseman vs Bornenwn(1) there was a hint of the competitive claims of hurry and hearing. Lord Reid said : 'Even where the decision has to be reached by a body acting judicially, there must be a balance between the need for expedition and the need to give fall opportunity to the defendant to see material against him (emphasis added). We agree that the elaborate and sophisticated methodology of a formalised hearing may be injurious to promptitude no essential in ,in election under way. Even so, natural justice is pragmatically flexible and is amenable to capsulation under the compulsive pressure of circumstances. To burke it altogether may not be a stroke of fairness except in very exceptional circumstances. Even in Wiseman where all that was sought to be done was to see if there was a prima facie case to proceed with a tax case where, inevitably, a fuller bearing would be extended at a later stage of the proceedings, Lord Reid. Lord Morris of Borthy Gest and Lord Wilborforce suggested "that there might he exceptional cases where to decide upon it ex parte would be unfair, and it would be the duty of the tribunal to take appropriate steps to eliminate unfairness "(Lord Denning M. R., in Manward vs Bornenam(2) summarised the observations of the law Lords in this form). No doctrinaire approach is desirable but the Court must be anxious to salvage the cardinal rule to the extent permissible in a given case. After all, it is not obligatory that counsel should be allowed to appear nor is it compulsory that oral evidence should be adduced. Indeed, it is not even imperative that written statements should be called for Disclosure of the, prominent circumstances and asking for an immediate (1) [1967] 3 All F.R. 1945. (2) 7 1114 SCI/77 308 explanation orally or otherwise may, in many cases be sufficient compliance. It is even conceivable that an urgent meeting with the concerned parties summoned at an hours notice, or in a crisis even a telephone call, may suffice. If all that is not possible as in the cue of a fleeing person whose passport has to be impounded lest he, should evades the course of justice or a dangerous nuisance needs immediate abatement, the action may be taken followed immediately by a hearing for the purpose of sustaining or setting aside the action to the extent feasible. It is quite on the cards that the Election Commission if pressed by circumstances, may give a short hearing. In any view, it is not easy to appreciate whether before further steps got under may he could not have afforded an opportunity of hearing the parties,and revoke the earlier directions. We do not wish to disclose our mind on what, in the critical circumstances, should have been done, for a fair play of fair hearing. This is a matter pre eminently for the elec tion tribunal to judge, having before him the vivified totality of all the factors. All that we need emphasize is that the content of natural justice is a dependent variable, not an easy casualty. The learned Additional Solicitor General urged that even assuming that under ordinary circumstances hearing should be granted, in the scheme of article 324 and in the situation of urgency confronting the Election Commission it was not necessary. Here we must demur. Reasons follow. It was argued, based on rulings relating to natural justice, that unless civil consequences ensued, hearing was not necessary. A civil right being adversely affected is a sine qua non for the invocation of the audi alteram partem rule. This submission was supported by observations in Rain Gopal(1) and Col. Sinha (2). Of course, we agree that if only spiritual censure is the penalty, temporal laws may not take cognisance of such consequences since human law operates in the material field although its vitality vicariously depends on its morality. But what is a civil consequence, let us ask ourselves,; by passing verbal boobytraps ? 'Civil consequence ' undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non pecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence. Civil is defined by Black (Law Dictionary 4th Edn.)at p.311. "Ordinally, pertaining or appropriate to a member of a civitas of free political community; natural or proper to a citizen. Also, relating to the community, or to the policy and government of the citizens and subjects of a state. The word is derived from the Latin civilie, a citizen. In law, it has various significations." (1) ; (2) [1971] 1 S.C.R. 791. 309 'Civil Rights ' are such as belong to every citizen of the State or country, or, in a wider senes, to all its inhabitants, and are not connected with the organisation or administration of government. They include the rights of property, marriage protection by the laws, freedom of contract, trial by jury, etc. Or, as otherwise defined, civil rights are rights appertaining to a person in virtue of his citizenship in a state or community. Rights capable or being enforced or redressed in a civil action. Also a term applied to certain rights secured to citizens of the United States by the thirteenth and fourteenth amendments to the constitution, and by various act, , of congress made in pursuance thereof. (p. 1487 Blacks Legal Dictionary) The interest of a candidate at an election to Parliament regulated by the Constitution and the laws comes within this gravitational orbit. The most valuable right in a democratic policy is the 'little man 's ' little pencil marking, assenting or dissenting, called his vote. A democratic right, if denied, inflicts civil consequences. Likewise, the little man 's right, in a representative, system of government, to rise to Prime, Ministersbip or Presidentship by use of the right to be candidate, cannot be wished away by calling it of no civil moment. If civics mean anything to a self governing citizenry, if participatory democracy is not to be scuttled by the law, we shall not be, captivated by catchwords. The straightforward conclusion is that every Indian has a right to elect and be elected and this is a constitutional as distinguished from a common law right and is entitled to cognizance by courts subject to statutory regulation. We may also notice the further refinement urged that a right accrues to a candidate only when he is declared returned and until then it is incipient inchoate and intangible for legal assertion in the twilight zone of expectancy, as it were. This too, in our view, is legicidal sophistry. Our system of 'ordered ' rights cannot disclaim cognizance of orderly processes as the right means to a right end. Our jurisprudence is not so jejune as to ignore the concern with the means as with the end with the journey as with the destination. Every candi date, to put it cryptically, has an interest or right to fair and free and legally run election. To draw lots and decide who wins, if announced as the electoral methodology, affects his right, apart from his luckless rejection at the end. A vested interest in the prescribed process is a pro cessual right actionable if breached, the Constitution permitting. What is inchoate, viewed from the end, may be complete, viewed midstream. It is a subtle fallacy to confuse between the two. Victory is still an expectation qua mwde is a right to the statutory procedure. The appel lant has a right to have the election conducted nor according to humour or hubris but according to lay and justice. And so natural justice cannot be stumped out on this score. In the region of public law locus standi and person aggrieved, right and interest have a broader import. in the present case, the Election Commission contends that a hearing has been given although the appellant retorts that a vacuous mecting where nothing was disclosed and he was summarily told off would be strange electoral justice. We express no opinion on the factum or 310 adequacy of the hearing but hold that where a candidate has reached the end of the battle and the whole poll is upset, he has a right to notice and to be heard, the quantum and quality being conditioned by the concatenation of circumstances. The rulings cited, bearing on the touchstone of civil consequences, do not contradict the view we have propounded. Col. Sinha merely holds and we respectfully agree that the lowering of retirement age does not deprive a government servant 's rights, it being clear that every servant has to quit on the prescribed age being attained. Even Binapani(1) concedes that the State has the authority to retire a servant on superannuation. The situation here is different. We are not in the province of substantive rights but procedural rights statutorily regulated. Sometimes processual protections are too precious to be negotiable, temporised with or whittled down. Ram Gopal for the same reason is inapplicable. A tempoary servant has only a temporary tenure terminable legally without injury. Even he, if punished, has procedural rights in the zone of natural justice, but not when the contract of employment is legally extinguished. Interest and right are generous conceptions in this, jurisdiction, not narrow orthodoxies as in traditional systems. We move on to a consideration of the argument prolix plurality making hearing impracticable and therefore expendable. Attractively ingenious and seemingly precedented, but, argumentum ab inconvenienti has its limitations and cannot override established procedure. Maybe, argumentum ab impossibili has greater force,. But here neither applies for it is a misconception to equate candidates who have fought to the bitter finish,with the hundreds of thousands of voters who are interested in electoral proprieties. In law and life,, degrees of difference may, at a substantial stage, spell difference in kind or dimensions. Is there an. impossible plurality which frustrates the feasibility of notice and hearing if candidates alone need be notified ? In Subhash Chander Sinha(2) Hidayatullah, CJ, speaking for the Court repelled the plea of natural justice when a whole examination was cancelled by the concerned university authorities. The reasons given are instructive. The learned Judge said that "the mention of fairplay does not come very well from the respondents who were grossly guilty of breach of fairplay themselves at the examinations. " The court examined the grounds for cancellation of examinations and satisfied itself that there was undoubted abundance of evidence that students generally bad outside assistance in answering questions. The teamed Judge went on further to say : "This is not a case of any particular individual who is being charged with, adoption of unfair means but of the conduct of all the examinees or at least a vast majority of them at a particular centre. If it is not a question of charging anyone individually with unfair means but to condemn the examination as ineffective for the purpose it was hold, must (1) ; (2) ; 311 the Board give an opportunity to all the candidates to represent their cases? We think not. It was not necessary for the Board to give an opportunity to the candidates if the examinations as a whole were being cancelled. The Board had not charged any one with unfair means so that he could claim to defend himself. The examination was vitiated by adoption of unfair means on a mass scale. In these circumstances it would be wrong to insist that the Board must hold a detailed inquiry into the matter and examine each individual case to satisfy itself which of the candidates had not adopted unfair means. The examination as a whole had to, go. " (967 968) x x x x x If at a centre the whole body of students receive assistance and manage to secure success in the neighbourhood of 100% when others at other centres are successful only at an average of 50%, it is obvious that the university or the Board must do something in the matter. It cannot hold a detailed quasi judicial inquiry with, a right to its alumni to plead and lead evidence etc. before the results are withheld or the examinations cancelled. If there is sufficient material on which it can be demonstrated that the university was right in its conclusion that the examinations ought to be cancelled than academic standards require that the university 's appreciation of the problem must be respected. It would not do for the Court to say that he should have examined all the candidates or even their representatives with a view to ascertaining whether they had received assistance or not. To do this would encourage, indiscipline if not also perjury." (968 969) These propositions are relied on by the learned Additional SolicitorGeneral who seeks to approximate the present situation of cancellation of the poll to the cancellation of an examination. His argument is that one has to launch on a public enquiry allowing a large number of people to participate in the hearing if the cancellation of the poll itself is to be subjected to natural justice. He further said that no candidate was condemned but the poll process was condemned. He continued to find a parallel by stating that like the university being responsible for the good conduct of examinations, the Election Commission was responsible for the proper holding of the poll. We do not consider the ratio in Subhash Chander (supra) as applicable. In fact, the candidates concerned stand on a different footing from the electorate in general. They have acquired a very vital stake in polling going on properly to a prompt conclusion. And when that is upset there may be a vicarious concern for the constituency, why, for that matter, for the entire country, since the success of democracy depends on country wide elections being held periodically and properly. Such interest is too remote and recondite, too feeble and attenuated. to be taken note of in a cancellation proceed ing. What really marks the difference is the diffusion and dilution. The 312 candidates. on the other hand, are the spearheads, the combatants, the claimants to victory. They have set themselves up as nominated candidate organised the campaign and galvanised the electorate for the crown in event of polling and counting. Their interest and claim are not indifferent but immediate, not weak but vital. They are more than the members of the public. They are parties to the electoral dispute. In this sense, they stand on a better footing and cannot be denied the right to be heard or noticed. Even in the case of university examinations it is not a universal rule that notice need not be given. Ghanshyam Das Gupta 's(1) case illustrates this aspect. Even there, when an examination result of three candidates was cancelled the, Court imported natural justice. It was said that even if the enquiry involved a large number of persons, the committee should frame proper regulations for the conduct of such enquiries but not deny the opportunity. That case was distinguished in Subhash Chander the differentia being that in one case the right exercised was of the examining body to cancel its own examinations since it was satisfied that the examination was not properly conducted. It may be a parallel in electoral situations if the Election Commission cancels a poll because it is satisfied that the procedure adopted has gone away on a wholesale basis. Supposing wrong ballot papers in large numbers have been supplied or it has come to the notice of the Commission that in the constituency counterfeit ballots had been copiously current and used on a large scale, then without reference to who among the candidates was more prejudiced, the poll might have been set aside. It all depends on the circumstances and is incapable of natural justice to argue that the whole constituency must be given a hearing. That is an ineffectual over kill. Lastly, it was contended by the learned Additional Solicitor General, taking his cue from Wiseman that the Election Commission 's direction for a re poll has only a provisional consequence since the election court was the ultimate matter of the destiny of the poll, having power to review the decision of the Commission. It is true that Wiseman deals with the assessment of the evidence at a preliminary state merely to ascertain whether there is a prima facie case. The proceeding bad still later stages where the effected party would enjoy a full opportunity. Lord Reid said plainly that there was a difference : "It is very unusual for there to be a judicial determination of the question whether there is a prima facie case there is nothing inherently unjust in reaching such a decision (i.e., a prima facie decision) in the absence of the other party." Lord Wilberforce however took the view that there was 'a residual duty of fairness '. Lord Denning in Pealberg vs Party,(2) added in parenthesis "Although the tribunal. in determining whether there is a prima facie case, is itself the custodian of fairness, nevertheless its discretion is open to review." (PP. 737 738) (1) [1962] Supp 3 S.C.R. 236. (2) ,737. 313 Buckley, L.J. made the point about natural justice and administrative action. "I do not forget the fact that it has been said, that the rules of natural justice may apply to cases where the act in question is more properly described as administrative than or quasi judicial : See Ridge vs Baldwin(1) and t vs Secretary of State for Home Affairs." (p. 747) The Indian parallel would be an argument for notice and hearing from a police officer when he investigated and proceeded to lay a chargesheet because he thought that a case to be tried by the court had been made out. The present case stands on a totally different footing. What the Election Commission does is not the ascertain whether a prima facie case exists or an ex parte order, subject to modification by him is to be made. If that were so Pearlberg would have been an effective answer. For, Lord Denning luminously illustrates the effect "I would go so far with him as to say that in reaching a prima facie decision, there is a duty on any tribunal to act fairly; but fairness depends on the task in hand. Take an application to a court by statute, or by the rules, or, as a matter of practice, is made ex parte. The Court itself is a custodian of fairness. If the matter is so urgent that an order should be made forthwith, before hearing the other side, as in the case of an interim injunction or a stay of execution the court will make the order straight away. We do it every day, we are always ready, of course, to hear the other side if they apply to discharge the order. But still the order is made ex parte without bearing them. It is a prima facie decision. I agree that before some other tribunal a prima facie decision may be a little different. The party affected by it may not be able to apply to set it aside,. The case must go forward to a final decision. Here, again, I think the tribunal itself is under what Lord Wilberforce described as a residual duty of fairness." (1971 A C. 297, 320) When Pearlberg(3) reached the House of Lords the Law Lords considered the question again. Lord Hailsham of St. Marylebone L.C. observed : "The third factor which affects mind is the consideration that the decision, once made, does not make any final determination of the rights of the taxpayer. It simply enables the inspector to, raise an assessment, by satisfying the commissioner that there are reasonable grounds for suspecting loss of tax resulting from neglect, fraud, or wilful default, that is (1) ; (2) (3) 314 that there is a prima facie probability that there has been neglect, etc., and that the Crown may have lost by it. When the assessment is made,, the taxpayer can appeal against it, and, on the appeal, may raise any question (inter alia) which would have been relevant on the application for leave, except that the leave given should be discharged." (p.539) x x x x x "The doctrine of natural justice has come in for increasing consideration in recent years, and the courts generally, and your Lordships ' House in particular, have, I think rightly, advanced its frontiers considerably. But at the same time they have taken an increasingly sophisticated view of what it requires in individual cases." (p. 540) Viscount Dilhorne observed in that case "I agree with Lord Donovan 's view (Wiseman vs Borneman , 316) that it cannot be said that the rules of natural justice do not apply to a judicial determination of the question whether there is a prima facie case, but I do not think they apply with the same force or as much force as they do to decide decisions which determine the rights of persons." (p. 546) Lord Pearson 's comment ran thus "A tribunal to whom judicial or quasi judicial functions are entrusted is held to be required, to apply those principles in performing those functions unless there is a provision to the contrary. But where some person or body is entrusted by Parliament with administrative or executive functions there is no presumption that compliance with the principles of natural justice is required, although, as 'Parliament ' not to be presumed to act unfairly ', the courts, may be able in suitable cases (perhaps always) to imply an obligation to act with fairness. Fairness, however, does not necessarily require a plurality of bearings or representations and counter representations. If there were too much elaboration of procedural safeguards, nothing could be done simply and quickly and cheaply. Administrative or executive efficiency and economy should not be too readily sacrificed. The disadvantage of a plurality of hearings even in the judicial sphere was cogently pointed out in the majority judgment in Cozens vs North Doven Hospital Management Committee(1). (p. 547) (1) , 343, 346 347. 315 Lord Salmon put the matter pithily "No one suggests that it is unfair to launch a criminal prosecution without first hearing the accused." (p. 550) Indeed, in Malloch(1) E. Lord Wilberforce observed : "A limited right of appeal on the merits affords no argument against the existence of a right to a precedent hearing, and, if that is denied, to have the. decision declared void." (Foot note 30, Public Law Spring 1975 Stevens p. 50 from Natural Justice Substance and Shadow by D. H. Clark). After all, the Election Court can exercise only a limited power of review and must give regard to the Commission 's discretion. And the trouble and cost of instituting such proceedings would deter all but the most determined of parties aggrieved, and even the latter could derive no help from legal principle in predicting whether at the end of the day the court would not condone their summary treatment on a subjective appraisal of the demerits of the case they had been denied the opportunity to present. The public interest would be ill served by judicially fostered uncertainty as to the value to be set upon procedural fair play as a canon of good administration. And further the Wiseman law Lords regarded the cutting out of 'hearing ' as quite unpalatable but in the circumstances harmless since most of the assessees know the grounds and their declaration was one mode of explanation. We consider it a valid point to insist on observance of natural justice in the area of administrative decision making so as to avoid devaluation of this principle by 'administrators already alarmingly insensitive to the rationale of audi alteram partem ': "In his lecture on "The Mission of the Law ' Professor H. W. R. Wade takes the principle that no man should suffer 'without being given a hearing as a cardinal example of a principle 'recognised as being indispensable to justice,, but which (has) not yet won complete recognition in the world of administration. . The goal of administrative justice can never be attained by necessarily sporadic and ex post facto judicial review. The essential mission of the law in this field is to win acceptance by administrators of the principle that to hear a men before he is penalised is an integral part of the decision making process. A measure of the importance of resisting the incipient abnegation by the courts of the firm rule that branch of audi alteram partem invalidates, is that if it gains ground the mission of the law is doomed to fail to the detriment of all." (P. 60 : Public Law Spring 1975 Stevens Natural Justice : Substance and shadow) Our constitutional order pays more than lip service to the rule of reasonable administrative process. Our people are not yet conscious of (1) , 1598. 316 their rights; our administrative apparatus has a hard of hearing heritage. Therefore a creative play of fairplay, irksome to some but good in the long run, must be accepted as part of our administrative law. Lord Hailsham L.C. in Pearlbeg presaged : "The doctrine of natural justice has come in for increasing consideration in recent years, and the courts generally, and (the House of Lords) in particular, have advanced its frontiers considerably. But at the same time they have taken an increasingly sophisticated view of what is required in individual cases. (P. 63, Public Law Spring 1975 supra) And in India this case is neither the inaugural nor the valedictory of natural justice. Moreover, Sri Rao 's plea that when the Commission cancels, viz., declares the poll void it is performing more than an administrative function merits, attention, although we do not pause to decide it. We consider that in the vital area of elections where the people 's faith in the democratic process is hypersensitive it is republican realism to keep alive audi alteram even in emergencies, 'even amidst the clash of arms '. Its protsan shades apart we recognise that 'hearing ' need not be an elaborate ritual and may, in situations of quick despatch, be minimal, even formal, nevertheless real. In this light, the Election Court will approach the problem. To scuttle the ship is not to save the cargo; to jettison may be. Fair hearing is thus a postulate of decision making cancelling a poll, although fair abridgement of that process is permissible. It can be fair without the rules of evidence or forms of trial. It cannot be fair if apprising the affected and appraising the representations is absent. The philosophy behind natural justice is, in one sense, participatory justice in the process of democratic rule of law. We have been told that wherever the Parliament has intended a hearing it has said so in the Act and the rules and inferentially where it has not specificated it is otiose. There is no such sequitur. The silence of a statute has no exclusionary effect except where it flows from necessary implication. article 324 vests a wide power and where some direct consequence on candidates emanates from its exercise, we must read this functional obligation. There was much argument about the; guidelines in section 58 and 64A being applicable to an order for constituency wide repoll. It may be wholesome to be guided; but it is not illegal not to do so, provided homage to natural justice is otherwise paid. Likewise, Shri P. P. Rao pressed that the Chief Election Commissioner ' was arbitrary in ordering a re poll beyond Fazilka segment or postal ballots. Even the 3rd respondent had not asked for it; not was there any material to warrant it since all the ballots of all the other segments were still available to be sorted out and recounted. A whole re poll is not a joke. It is almost an irreparable punishment to the constituency and the candidates. The sound and fury, the mammoth campaigns and rallies, the whistle story, 317 speeches and frenzy of slogans, the white heat of tantrums, the expensiveness of the human resources and a hundred other traumatic consequences must be remembered before an easy re poll is directed, urges Shri Rao. We note the point but leave its impact open for the Election Court to assess when judging whether the, impugned orders was scary, arbitrary, whimsical or arrived at by omitting material considerations. Independently of natural justice, judicial review extends to an examination of the order as to its being perverse, irrational, bereft of application of the mind or without any evidentiary backing. If two views are possible, the Court cannot interpose its view. If no view is possible the Court must strike down. We have projected the panorama of administrative law at this length so that the area may not be befogged at the trial before the Election Court and for action in future by the Election Commission. We have held that article 329(b) is a bar for intermediate legal proceedings calling in question the steps in the election outside the machinery for deciding election disputes. We have further held that article 226 also suffers such eclipse. Before the notification under section 14 and beyond the declaration under r. 64 of Conduct of Election Rules, 1961 are not forbidden ground. In between is, provided, the step challenged is taken in furtherance of not to halt or hamper the progress of the election. We have clarified that what may seem to be counter to the match of the election process may in fact be one to clear the way to a free, and fair verdict of the electorate. It depends. Taking the Election Commission at his word (the Election Court has the power to examine the validity of his word), we proceed on the prima facie view that writ petition is not sustainable. If it turned out that the, Election Commission acted bizarre fashion or in indiscreet haste, it forebodes ill for the Republic. For if the salt lose their savour, wherewith shall they be salted ? Alan Barth in his 'Prophets with Honor ', quotes Justice Felix Frankfurter regarding the standard for a judicial decision thus : "Mr. Doolay 's the Supreme Court follows the iliction returns ', expressed the wit of cynicism, not the demand of principle. A Court which yields to the popular will thereby licensee itself to practice despotism, for there can be no assurance that it will not on another occasion indulge its own will. Courts can fulfil their responsibility in a democratic society only to the extent that they succeed in shaping their judgments by rational standards, and rational standards are both impersonal and communicable." (Quotation from American Federation of Labour vs American Sash and Door Co. '335 U.S. of Alan Berth 's book published by Light & Life Publishers, New Delhi) The above observation would equally apply to the Election Commission. Many incidental points were debated but we have ignored those micro questions and confined ourselves to macro determinations. It is for the Election Court, not for us, to rule on those variegated matters. 318 Certain obvious questions will claim the Election Court 's attention. Did the Commission violate the election, rules or canons of fairness ? Was the play, in short, according to the script or did the dramatis personae act defiantly, contrary to the text ? After all, democratic elections may be likened to a drama, with a solemn script and responsible actors, officials and popular, each playing his part, with roles for heroes but not for villains, save where the text is travestied and unscheduled anti heroes intervene turning the promising project for the smooth registration of the collective will of the people into a tragic plot against it. Every corrupt practice, partisan official action, basic breach of rules or deviance from the fundamental of electoral fairplay is a danger signal for the nation 's democratic destiny. We view this case with the seriousness of John Adams ' warning : " 'Remember ', said John Adams, 'remember ', democracy never lasts long. It soon wastes, exhausts and murders itself. There never was a democracy that did not commit suicide." (Quoted from M. Hidayatullah in "Democracy in India and the Judicial Process" Lajpat Rai Memorial Lectures : P. 16) Only one issue remains. Is, the provision in section 100 read with section 90 sufficient to afford full relief to the appellant if the finding is in violation or mat exercise of, powers under article 324 ? Sri Rao says 'NO ' while the opposition says 'YES '. Lot us follow the appellant 's apprehension for a while to test its tenability. He says that the Commissioner has no power to cancel the election to a whole constituency. Therefore, the impugned order is beyond his authority and in excess of his functions under article 324. Moreover, even if such power exists it has been exercised illegally, arbitrarily and in violation of the implied obligation of audi alteran partem. In substance, his complaint is that under guise of article 324 the Commissioner has acted beyond its boundaries, in breach of its content and oblivious of its underlying duties. Such a mal exercise clearly tantamounts to non adherence to the norms and limitations of article 324 and, if true, it is a noncompliance with that provision of the Constitution. It falls within section 100(1) (d) (iv). A generous, purposeoriented, literally informed statutory interpretation spreads the wings of 'non compliance ' wide enough to bring in all contraventions, excesses, breaches and subversions. We derive support for this approach from Durga Mehta. The Court there considered the same words, in the same sections, in the same statute. Section 100(2) (c) interpreted in that case re incamates as s,. 100(1) (d) (iv) later. Everything is identical. And Mukherjee, J. explained. "It is argued on behalf of the respondent that the expression "non compliance ' as used in sub section (2)(c) would suggest the idea of not acting according to any rule or command and that the expression is not quite appropriate in describing a mere lack of qualification. This, we think, would 319 be a narrow way of looking at the thing. When a person is incapable of being chosen as a member of a State Assembly under the provisions of the Constitution itself but has nevertheless been returned as such at an election, it can be said without impropriety that there has been non compliance with the provisions of the Constitution materially affecting the result of the election. There is no material difference between "non compliance" and "non observance" or "breach" and this item in clause (c) of sub section (2) may be taken as a residuary provision contemplating cases where there has been infraction of the provisions of the Constitution or of the Act but which have not been specifically enumerated in the other portions of the clause. " Lexical significations are not the last work in statutory construction. We hold that it is perfectly permissible for the Election Court to decide the question as one falling under section 1 00 ( 1 ) (d) (iv) A presumatic view of the Act and article 324 helps discern an organic synthesis. Law sustains, not fails. A kindred matter viz., the scope of sec. 100 and sec. 98 has to be examined, parties having expressed anxious difference on the implied powers of the Election Court. Indeed, it is a necessary part of our decision but we may deal with it even here. Sri Rao 's consternation is that, if his writ petition is dismissed as not maintainable and his election petition is dismissed on the ground that the Election Court had no power to examine the cancellation of poll now that a fresh poll has taken place, he will be in the unhappy position of having to forfeit a nearvictory because a gross illegality triumphs irremediably. If this were true the hopes of the rule of law turn into dupes of the people. We have given careful thought to this tragic possibility and are convincedindeed, the learned Solicitor General has argued for upholding, not subverting the rule of law and agrees that the Election Court has all the powers necessary to grant all or any of the reliefs set out in sec. 98 and to direct the Commissioner to take such ancillary steps as will render complete justice to the appellant. Section 98, which we have read earlier, contemplates three possibilities when an election petition is tried. Part VI of the Act deals with the complex of provisions calculated to resolve election disputes. A match past this Part discloses the need to file an election petition (section 60) the jurisdiction to try which is vested in the High Court (80A). Regulatory of the further processes on presentation of a petition are sees. 81 to 96. If a candidate whose return is challenged has a case invalidating the challenger 's election he may set it up subject to the provision in sec. Then comes the finale in sec. The High Court has three options by way of conclusive determinations. It may (a) dismiss the petition (b) declare the election void; and (c) go further to declare the petitioner duly elected. Side stepping certain species of orders that may be passed under section 99 we have to explore the gamut of implied powers when the grant of power is wide and needs incidental exercises to execute the substantive power. 320 A few more sections exist which we may omit as being not germane to the present controversy. What is that controversy ? Let us project it with special reference to the present case,. Hero the, poll proceeded peacefully, the counting was almost complete, the, ballots of most stations are available and postal votes plus the votes of one, or two polling stations may alone be missing. Sri P. P. Rao asks and whenever counsel in court or speaker on a podium asks rhetorical questions be sure he is ready with an answer in his favour : If the court holds that the cancellation by the Commissioner of the whole poll is illegal what relief can it give me since a fresh election based on that demolition has been already held '? If the court holds that since most of the ballots are intact, repoll at one or two places is enough how can even the court hold such limited repoll. If the Court wants to grant the appellant the relief that lie is duly elected how can the intervening processes lying within the competence of the Commissioner be commandered by the Court ? The solution to this disturbing string of interrogations is simple given a creative reading of implied powers writ invisibly yet viably into the larger jurisdiction under sec. Law transcends legalism when life is baffled by surprise situations. In this larger view end in accordance with the well established doctrine of implied powers we think the Court contend if justified, shall do, by its command, all that is necessary to repair the injury and make the remedy realisable. Courts are not luminous angels beating by their golden wings in the void but operational authority sanctioning everything to fulfil the trust of the rule of law. That the less is the inarticulate part of the larger is the jurisprudence of power. Both Sri Sorabjee and Sri Phadke agree to this proposition and Sri Rao, in the light of the election petition filed and is pending, cannot but assent to it. By way of abundant caution or otherwise, the appellant has challenged, in his election petition, the declaration of the 3rd respondent as the returned candidate. He has also rayed for his being declared the duly elected candidate. There is no dispute there cannot be. that the cornerstone of the second constituency wide poll High Court for any good reason then the second poll falls and the 3rd respondent too with it. This question of the soundness of the cancellation of the entire poll is within the court,s power under section 98 of the Act. All are agreed on this. In that eventuality, what are the follow up steps? Everything necessary to resurrect reconstruct and lead on to a consummation of the originalprocess. Maybe, to give effective relief by way of completion of the broken election the Commissioner may have to be directed to hold fresh poll and report back together with the ballots. A recount of all or some may perhaps be required. Other steps suggested by other developments may be desired. If anything integrally linked up with and necessitated by the obligation to grant full relief has to be undertaken or ordered to be done by the election machinery, all that is within the orbit of the Election Court 's power. Black 's Law Dictionary explains the proposition thus "Implied powers are such as are necessary to make available and carry into effect those powers which are expressly 321 granted or conferred, and which must therefore be presumed to have been within the intention of the constitutional or legislative grant. (p. 1334 Black 's Legal Dictionary 4th Edn.) This understanding accords with justice and reason and has the support of Sutherland. The learned Additional Solicitor General also cited the case in Metajog Dobey vs H. C. Bhari ; at p. 937 and Commissioner of Commercial taxes,& Ors vs R. section Jhaver & ors. ; at p. 154/155 to substantiate his thesis that the doctrine of implied powers clothes the Commissioner with vast incidental powers. Hi illustrated his point by quoting from Sutherland (Frank E. Horack Jr., Vol. 3) "Necessary implications. Where a statute confers powers or duties in general terms, all powers and duties incidental and necessary to make such legislation effective are included by implication. Thus it has been stated, "An express statutory grant of power or the imposition of a definite duty carries with it by implication, in the absence of a limitation, authority to employ all the means that are usually employed and that are necessary to the exercise of the power or the performance of the duty. . That which is clearly implied is as much a part of a law as that which is expressed. " The reason behind the rule is to be found in the fact that legislation is enacted to establish broad or general standards. Matters of minor detail are frequently omitted from legislative enactments, and "if these could not be supplied by implication the drafting of legislation would be an interminable process and the true intent of the legislature likely to be defeated. The rule whereby a statute,, is by necessary implication extended has been most frequently applied in the construction of laws relegating powers to public officers and administrative agencies. The powers thus granted involve a multitude of functions that are discoverable only through practical experience. x x x A municipality, empowered, by statute to construct sewers for the preservation of the public health, interest and convenience, was permitted to construct a protecting wall and pumping plant which were necessary for the proper working of the sewer. but were essential to public health. A country school superintendent, who was by statute given general supervisory power over a special election, was permitted to issue absentee, ballots. The power to arrest has been held to include the power to take finger prints, and take into custody non residents who were exempted from the provisions of a licensing statute. " 322 Having regard to statutory setting and comprehensive jurisdiction of the Election Court we are satisfied that it is within its powers to, direct a re poll of particular polling stations to be conducted by the specialised agency under the Election Commission and report the results and ballots to the Court. Even a re poll of postal ballots, since those names are known, can be ordered taking care to preserve the secrecy of the vote. The Court may, if necessary, after setting aside the election of R. 3 (if there are good grounds therefore keep the case pending, issue directions for getting available votes, order recount and or partial re poll, keep the election petition pending and pass final orders holding the appellant elected if only if valid grounds are established. Such being the wide ranging scope of implied powers we are in agreement with the learned Additional Solicitor General that all the reliefs the appellant claims are within the Court 's powers to grant and Sri Rao 's alarm is unfounded. Diffusion, even more elaborate discussion, tends to blur the precision of the conclusion in a judgment and so it is meet that we, synopsize the formulations. Of course, the condensed statement we make is for convenience, not for exclusion of the relevance or attenuation of the binding impact of the detailed argumentation. For this limited purpose, we set down our holdings 1 (a) article 329(b) is a blanket ban on litigative challenges to electoral steps taken by the Election Commission and its officers for carrying forward the process of election to its culmination in the formal declaration of the result. (b) Election, in this context, has a very wide connotation commencing from the Presidential notification calling upon the electorate to elect and culminating in the final declaration of the returned candidate. (a) The Constitution, contemplates a free and fair election and vests comprehensive responsibilities of superintendence, direction and control of the conduct of elections in the Election Commission. This responsibility may cover powers, duties and functions of many sorts, administrative or other, depending on the circumstances. (b) Two limitations at least are laid on its plenary character in the exercise thereof. Firstly, when Parliament or any State Legislature has made valid law, relating to or in connection with elections, the Commission shall act in conformity with, not in violation of such provisions but where such law is silent article 324 is a reservoir of power to, act for the avowed purpose of, not divorced from pushing forward a free and fair election with expedition. Secondly, the Commission shall be responsible to the rule of law, act bona fide and be amenable to the norms of natural justice in so far as conformance to such canons can reasonably and realistically be required of it as fairplay in action in a most important area of the constitutional order, viz., elections. Fairness does import an obligation to see that no 323 wrongdoer candidate benefits by his own wrong. To put the matter beyond doubt, natural justice enlivens and applies to the specific case of order for total repoll, although. not in full penoply but in full penoply but in flexible practicability. Whether it has been compiled with is left open for the Tribunal 's adjudication. The conspectus of provisions bearing on the subject of elections clearly expresses the rule that there is a remedy for every wrong done during the election in progress although it is postponed to the post election stage and procedure as predicated in article 329(b) and the 1951 Act. The Election Tribunal has, under the various provisions of the Act, large enough powers to give relief to an injured candidates if he makes out a case and such processual amplitude of power extends to directions to the Election Commission or other appropriate agency to hold a poll, to bring up the ballots or do other thing necessary for fulfilment of the jurisdiction to undo illegality and injustice and do complete justice within the parameters set by the "existing law. In sum, a pragmatic modus vivendi between the Commission 's paramount constitutional responsibility vis a vis elections and the rule of law vibrant with fair acting by every authority and remedy for every right breached, is reached. We conclude stating that the bar of article 329(b) is as wide as the door of. section 100 read with section 98. The writ petition is dismissible but every relief (given factual proof) now prayed for in the pending election petition is within reach. On this view of the law ubi jus ibi remeditum is vindicated, election injustice is avoided, and the constituency is allowed to speak effectively. In the light of and conditioned by the law we have laid down, we dismiss the appeal. Where the dispute which spirals to this Court is calculated to get a clarification of tile legal calculus in an area of national moment, the parties are the occasion but the people are the beneficiaries, and so costs must not be visited on t particular person. Each party Will bear his own costs. A word of mood for counsel. Shri Soli Sorabjee, did, with imaginative, yet emphatic, clarity and pragmatic, yet persuasive, advocacy, belight the twilit yet sensitive, zones of the electoral law; Shri P. P. Rao did, with feeling for justice and wrestling with law, drive home the calamities of our system if right did not speak to remedy; and Shri Phadke did, without overlapping argument, but with unsparing vigour, bringing out the, legal dynamics of quick elections and comprehensive corrections. We record our appreciation to the bar whose help goes a long way for the bench to do justice, GOSWAMI, J. This appeal by special leave is directed against the judgment of the Delhi High Court dismissing the writ application of the appellant under Article 226 of the Constitution. 8 1114SCI/77 324 By a notification of February 10, 1977, made under section 14 of the Representation of the People Act, 1951, (briefly the Act), the President called upon the Parliamentary Constituencies to elect members to the House of the People, in accordance with the provisions of the Act and the rules and orders made thereunder. Simultaneously, a notification was issued by the Chief Election Commissioner with a calendar of dates for different Parliamentary Constituencies in the country. In this appeal we are concerned with No. 13 Ferozepore Parliamentary Constituency in the State of Punjab where the poll was scheduled to be held on March 16, 1977, and March 23 was fixed as the date before which the election shall be completed. Counting, according to the schedule, was to commence on March , 20, 1977 and it actually continued on March 21, 1977. This Parliamentary Constituency consisted of nine Assembly Constituencies including the Fazilka and Zira Assembly segments. We may now briefly state the appellants ' case so far as it is material : The poll in the entire Parliamentary Constituency was peacefully over on March 16, 1977. Counting in five Assembly segments was completed on March 20, 1977, and in the remaining four it was completed on March 21. The Assistant Returning Officers made entries in the result sheets in form 20 and announced the number of votes received by each candidate in the Assembly segments. No recounting was asked for by any candidate or his polling agent in any segment. Copies of the result sheets in Form 20 were handed over to the candidates or to their polling agents. The ballot papers and the result sheets of all the nine Assembly segments were transmitted by the Assistant Returning Officers concerned to the Returning Officer at the Headquarters. According to the result sheets the appellant, who was the Congress candidate, secured 1,96,016 votes, excluding postal ballots, as 'against his nearest rival candidate respondent No. 3, belonging to the Akali Party, who secured 1,94,095 votes, excluding postal ballots. The margin of votes between the appellant and respondent No. 3 at that stage was 1921. There were 769 postal ballots,. As per programme, counting of postal ballot papers was started by the Returning Officer (respondent No. 2) at 3.00 P.M. on March 21. 248 ballot papers out of 769 were rejected in the counting. At this stage, it is said, respondent No. 3 and his son incited an unruly mob of his supporters to raid the office of the Returning Officer as a result of which a grave situation was created in which many officers received injuries. 'The Returning Officer was abused and was threatened that his son and other members of his family would be murdered. All the postal ballot papers, except those which had been rejected, were destroyed by the mob. Some ballot papers of Fazilka Assembly segment are also said to have been destroyed by the mob in the course of their transit to the office of the Returning Officer. The Assistant Returning Officer of the Zira Assembly segment, on his way to the office of the Returning Officer, was attacked by the mob and some of the envelopes containing ballot papers, paper seal accounts and presiding Officers ' diaries were snatched away from him. However the result sheets in Form 20 of all the Assembly segments in which the 325 counting had been completed by March 21, 1977, could be preserved and were deposited in Gorvernment Treasury, Ferozepore. In view of the violent situation created in the office of the Returning Officer, be was prevented from ascertaining the result of the postal ballot papers and declaring the result of the election. He was made to sign a written report about the happenings to the Chief Election Commissioner (respondent No. 1). The above, briefly, is the version of the appellant. Deputy Commissioners are usually appointed 'as Returning Officers and originally Shri G. B. section Gosal, who was the Deputy Commissioner, was nominated as the Returning Officer of the aforesaid constituency, as per notification dated January 29, 1977. It appear s on February 8, 1977, Shri Gosal was transferred and Shri Gurbachan Singh, a close relation of the appellant, was appointed as the Deputy Commissioner in place of Shri Gosal. Shri Gurbachan Singh (respondent No. 2) thus became the Returning Officer. There were complaints and allegations against him and after being apprised of the same the Chief Election Commissioner of (respondent No. 1) appointed Shri I. K. K. Menon, Under Secretary, Election Commission, as an Observer to be present at Ferozepore from March 16 till March 21 on which date the result was expected to be declared. On March 22, 1977, the Chief Election Commissioner received a wireless message from the Returning Officer which may be quoted "Mob about sixteen thousand by over powering the police attacked the counting hall where postal ballot papers were being counted. Police could not control the mob being out numbered. Part of postal ballot papers excepting partly rejected ballot papers and other election material destroyed by the mob. Lot of damage to property done. 'The undersigned was forced under duress to give in writing the following : 'The counting of 13 Parliamentary Ferozepore Constituency has been adjourned due to certain circumstances which have been mentioned in the application presented by Shri Mohinder Singh Sayanwala regarding repoll of the constituency and on the polling station in which the ballot boxes have been r to be tampered with. This will be finally decided on receipt of instructions from the Election Commission 'and the result will be announced thereafter '. Counting adjourned and result postponed till receipt of further instructions from Election Commission. Incident happened in the presence of Observer at Ferozepore. Mob also destroyed the ballot papers and other election material and steel trunks of Fazilka Assembly segment at Ferozepore after the counting part of election material of Zira Assembly segment was also snatched and destroyed by the mob at Ferozepore". On the same day the Chief Election Commissioner received a written report from the Observer. The Observer also "orally apprised the Chief Election Commissioner of the various incidents at the time of 326 poll and counting in various Assembly segments". No other report from the Returning Officer was, however, received on that day. On the materials mentioned above which he could gather on March 22, 1977, the Chief Election Commissioner passed the impugned order on the same day. It may even be appropriate to quote the same : "Election Commission of India New Delhi Dated 22 March, 1977 Chaitra, 1, 1899 (SAKA) NOTIFICATION S.O. Whereas the Election Commission has received reports from the Returning Officer of 13 Ferozepur Parliamentary Constituency that the counting on 21 March, 1977 was seriously disturbed by violence; that the ballot papers of some of the assembly segments of the parliamentary constituency have been destroyed by violence, that as a consequence it is not possible to complete the counting of the votes in the constituency and the declaration of the result cannot be made with any degree of certainty; And whereas the Commission is satisfied that taking all circum 'stances into account, the poll in the constituency has been vitiated to such an extent as to effect the result of the election; Now, therefore, the Commission, in exercise of the powers vested in it under article 324 of the Constitution, Section 153 of the Representation of the People Act, 1951 and all other powers enabling it so. to do, cancels poll already taken in the constituency and extends the time for the completion of the election upto 30 April, 1977. x x x x x The appellant approached the Chief Election Commissioner to revoke the impugned order and to declare the result of the election, but without success. That led to the writ application in the High Court with prayer to issue (1) a writ of certiorari calling forth the records for the purpose of quashing the impugned order; and (2) 'a writ of mandamus directing the Chief Election Commissioner and the Returning Officer to declare the result of the election; (3) alternatively, a writ of mandamus directing the Chief Election Commissioner to act strictly in accordance with the provision of section 64A(2) thus confining its directions in regard to postal ballot papers only. The appellant made three contentions before the High Court. Firstly, that the Election Commission had no jurisdiction to order 327 re poll of the entire Parliamentary Constituency. Secondly, the impugned order was violative of the principles of natural justice as no opportunity of a hearing was afforded to the appellant before passing the order. Thirdly, 'that the High Court under Article 226 of the Constitution was competent to go into the matter notwithstanding the provisions of Article 329(b) of the Constitution. The application was resisted by the Chief Election Commissioner (respondent No. 1) and respondent No 3, the rival candidate. A preliminary objection was raised by respondents 1 to 3 with regard to the maintainability of the writ 'application on the ground that Article 329(b) of the Constitution was a bar to the High Courts entertaining it. Another objection was taken that the writ petition was not maintainable in view of the amended provisions of Article 226 of the Constitution. The High Court dismissed the writ application. The High Court held that Article 324 confers "plenary executive powers" on the Election Commission and there were no limitations on the functions contemplated in Article 324. The High Court observed that the law framed under Article 327 or Article 328 was in aid of the plenary powers already conferred on the Election Commission under Article 324, and where the law so made under Article 327 or Article 328 omitted to provide for a contingency or a situation, the said plenary executive power relating to conduct of elections conferred upon the Election Commission by Article 324(1) of the Constitution would become available to it and the, Election Commission would be entitled to pass necessary orders in the interest of free and fair elections. The High Court also held that the Returning Officer could not deprive the candidates of the rights of recount available to them tinder rule 63 of the Conduct of Election Rules, 1961, and after going into the facts observed that "it became impossible for the Returning Officer to comply with the provisions of rules 63(2) to 63(6)". Repelling the contention of the appellant that the Commission could not travel beyond the Act and the rules by simply relying on its powers under the Constitution, the High Court observed "that calling upon of the parliamentary constituencies to elect members has to be in accordance with the provisions of the Act and the Rules but it does not mean that the conduct of elections by the Commission has to be held only under the Act or the Rules. The Election Commission who is vested with the power of conducting the elections has still to hold the elections in accordance with the Act and the Rules as well as under the Constitution". The High Court further held that the principles of natural justice were not specifically provided for in Article 324 but were "totally excluded while passing the impugned order". The High Court further observed that even if the principles of natural justice were impliedly to be observed before passing the impugned order the appellant was "heard not only before the issue of the notification but in any case after the notification". The High Court also 'held that it bad no jurisdiction to entertain the writ petition in view. of the bar contained in Article 329(b) of the Constitution. This appeal has come up for hearing before this ' Constitution Bench on a reference by a Two Judge Bench as substantial questions of 328 law have arisen as to the, interpretation of the Constitution, in particular Article 324 and Article 329(b) of the Constitution. We should,. therefore, immediately address ourselves to that aspect of the matter. What is the scope and ambit of Article 324 of the Constitution ? The Constitution of our country ushered in a Democratic Republic for the free people of India. The founders of the Constitution took solemn care to devote a special chapter to Elections niched safely in Part XV of the Constitution. Originally there were only six articles in this Part opening with Article 324. The penultimate Article in the chapter, as it stands, is Article 329 which puts a ban on interference by courts in electoral matters. We are not concerned in this appeal with the newly added Article 329A which is the last Article to close the ' chapter. Elections supply the visa viva to a democracy. It was, therefore, deliberately and advisedly thought to be of paramount importance that the high 'and independent office of the Election Commission should be created under the Constitution to be in complete charge of the entire electoral process commencing with the issue of the notification, by the 'President to the final declaration of the result. We are not concerned with the other duties of the Election Commission in this appeal. Article 324 came to the notice of this Court for the first time in N. P. Ponnuswami vs Returning Officer, Namakkal Constituency and Others(1). This Court observed "Broadly speaking, before an election machinery can be brought into operation, there are three requisites which require to be attended to, namely, (1) there should be 'a set of laws and rules making provisions with respect to all matters relating to, or in connection with,, elections, and it should be decided as to how these laws and rules are to be made; (2) there should be an executive charged with the duty of securing the due conduct of elections; and (3) there should be a judical tribunal to deal with disputes arising out of or in connection with elections. Articles 327 and 328 deal with the first of these requisites, article 324 with the second and article 329 with the third requisite". Further below this Court observed as follows "Obviously, the Act is a self contained enactment so far as elections are concerned, which means that whenever we have to ascertain the true position in regard to any matter connected with elections, we have only to look at the Act and the rules made thereunder". Lower down this Court further observed "It is now well recognised that there a right or liability is created by a statute which gives a special remedy for (1)[1952] S.C.R. 218. 329 enforcing it, the remedy provided by that statute only must be availed of". x x x x the Representation of the People Act to state that the Act provides for only one remedy, that remedy being by an election petition to be presented after the election is over, and there is no remedy provided at any intermediate stage". Ponnuswami 's case (supra) had to deal with a matter arising out of rejection of a nomination paper which was the subject matter of a writ application under Article 226 of the Constitution which the High Court bad dismissed. With regard to the construction of Article 329(b) it was held that "the more reasonable view seems to be that article 329 covers all electoral matters" '. This Court put forth its conclusions in that decision as follows : "(1) Having regard to the important functions which the legislatures have to perform in democratic countries, it has always been recognised to be a matter of first importance that elections should be concluded as early as possible according to time schedule and all controversial matters and all disputes arising out of elections should be postponed till after the elections are over, so that the election proceedings may not be unduly retarded or protracted. (2) In conformity with this principle, the scheme of the election law in this country as well as in England is that no significance should be attached to anything which does not affect the 'election '; and if any irregu larities are committed while it is in progress and they belong to the category or class which, under the law by which elections are governed, would have the effect of vitiating the 'election ' and enable the person affected to call it in question, they should be brought up before a special tribunal by means of an election petition and not be made the subject of a dispute before any court while the election is in progress". This Court also explained the connotation of the word "election" in very wide terms as follows: " It seems to me that the word 'election ' has been used in Part XV of the Constitution in the wide sense, that is to say, to connote the entire procedure to be gone through to return a candidate to the legislature. The use of the expression 'conduct of election ' in article 324 specifically points to the wide meaning, and that meaning can also be read consistently into the other provisions which occur in Part XV including article 328(b)". 330 This Court further observed that been appropriately used with reference to the entire process which consists of several stages and embraces many steps. some of which may have an important bearing on the result of the process. x x x x x If the grounds on which an election can be called in question could be raised at an earlier stage and efforts, if any, are rectified, there will be no meaning in enacting a provision like article 329 (b) and in setting up a special tribunal. Any other meaning ascribed to the words used in the article would lead to anomalies, which the Constitution could not have contemplated, one of them being that conflicting views may be expressed by the High Court at the pre polling stage and by the election tribunal, which is to be an independent body, at the stage when the matter is brought up before it. " The above decision in locus classicus on the subject and the parties before us seek to derives support from it for their contentions. The important question that arises for consideration is as to the amplitude of powers and the width of the functions which the Election Commission may exercise under Article 324 of the Constitution. According to Mr. Rao, appearing on behalf of the appellants, there is no question of exercising any powers under Article 324 of the Constitution which, in terms, refers to "functions ' under sub Article (6),. We are however, unable to accept this submission since functions include powers as well as duties (see Stroud 's Judicial Dictionary, p. 1196). It is incomprehensible, that a person or body can discharge any functions without exercising powers. Powers and duties are integrated with function. Article 324(1) vests in the Election Commission the superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, all elections to Parliament and to the Legislature of every State and of elections to the offices of the President and Vice President held under the Constitution. Article 324(1) is thus pattern of our polity, isto be exercised in accordance with law. That is why Articles 327 and328 provide for making of provisions with respect to all matters relating to or in connected with elections for the Union Legislatures and for the State Legislatures respectively. When appropriate laws are made under Article 327 by Parliament as well as under Article 328 by the State Legislatures, the Commission has to act in conformity with those laws and the other legal provisions made thereunder. Even so, both Articles 327 and 328 are " subject to the provisions" of the Constitution which include Article 324 and Article 329. Since the conduct of all elections to the various legislative bodies and to the offices of the President and the Vice President is vestedunder Article 324(1) in the Election Commission, the framers 331 of the Constitution took care to leaving scope for exercise of residuary power by the Commission, in its own right, as a creature of the Constitution, in the infinite variety of situations that may emerge from time to time in such a large democracy as ours. Every contingency could not be foreseen, or anticipated with precision. That is why there is no hedging in Article 324. The Commission may be required to cope with some situation which may not be provided for in the enacted laws and the rules. That to be the raison d 'etre for the opening clause in Articles 327 and 328 which leaves the exercise of powers under Article 324 operative and effective when it is reasonably called for in a vacuous area. There is, however, no doubt whatsoever that the Election Commission will have to conform to the existing laws and rules in exercising its powers and performing its manifold duties for the conduct of free and fair elections. The Election Commission is a high powered and independent body which is irremovable from office except in accordance with the provisions of the Constitution relating to the removal of Judges of the Supreme Court and is intended by the framers of the Constitution to be kept completely free from any pulls and pressures that may be brought through political influence in a democracy run on party system. Once the appointment is made by the President. the Election Commission remains insulated from extraneous influences, and that cannot be achieved unless it has an amplitude of powers in the conduct of elections of course in accordance with the exising laws. But where these are absent, and yet a situation has to be tackled, the Chief Election Commissioner has not to fold his hands and pray to God for divine inspiration to enable him to exercise his functions and to perform his duties or to look to any external authority for the grant of powers to deal with the situation. He must lawfully exercise his power independently, in all matters relating to the conduct of elections, and see, that the election process is completed properly, in a free and fair manner. "An express statutory grant of power or the imposition of a definite duty carries with it by implica tion, in the absence of a limitation, authority to employ all the means that are usually employed and that are necessary to the exercise of the power or the performance of the duty. That which is clearly implied is as much a part of a law as that which is expressed. "(1) The Chief Election commissioner has thus to pass appropriate orders on receipt of reports from the returning officer with regard to any situation arising in the course of an election and power cannot be denied to him to pass appropriate orders. Moreover, the power has to be exercised with promptitude. Whether an order passed is wrong. arbitrary or is otherwise invalid, relates to the mode of exercising the power and does not touch upon the existence of the power in him if it is there either under the Act or the rules made in that behalf, or under Article 324(1). Apart from the several functions envisaged by the two Acts and the rules made thereunder, where the Election Commission is required to make necessary orders or directions, are there any other functions or the Commission ? Even if the answer to the question may be found 332 elsewhere, reference may be, made to section 19A of the Act which, in terms, refers to functions not only under the Representation of the People Act, 1950 and the Representation of the People Act, 1951, or under the rules made thereunder, but also under the Constitution. The Commission is, therefore, entitled to exercise certain powers under Article 324 itself, on its own right, in an area not covered by the Acts and the rules. Whether the power is exercised in an arbitrary or capricious manner is a completely different question. Mr. Rao submits, referring to sections 58 and 64A of the Act, that the Chief Election Commissioner has no power to cancel the poll in the entire constituency. He submits that this is a case of complete lack of power and not merely illegal or irregular exercise of power. He points out that there is a clear provision under section 58 of the Act for reordering of poll at a polling station. Similarly under section 64A there is provision for declaring the poll at a polling station void when the Election Commission is satisfied that there is destruction or loss etc. of ballet papers before counting. Counsel submits that while law has provided for situations specified in section 58 with regard to loss or destruction of ballot boxes and under section 64A with regard to loss and destruction of ballot papers before counting of votes, no provision has been made for such an unusual exercise of power as the cancellation of the poll in the entire constituency after it has already been completed peacefully. It is therefore has argued that this is a case of complete lack of power of the Commission to pass the impugned order. It is clear even from section 58 and section 64A that the legislature envisaged the necessity for the cancellation of poll and ordering of repoll in particular polling stations where situation may warrant such a course. When provision is made in the Act to deal with situations arising in a particular polling stage it cannot be said that if a general situation arises whereby numerous polling stations may wit ness serious mal practices affecting the purity of the electoral process, that power can be denied to the Election Commission to take an appropriate decision. The fact that a particular Chief Election Commissioner may take certain decisions unlawfully, arbitrarily or with ulterior motive or in mala fide exercise of power, is not the test in such a case. The question always relates to the existence of power and not the mode of exercise of power. Although section 58 and section 64A mention "a polling station" or "a place fixed for the poll" it may, where necessary, embrace multiple polling stations. Both under section 58 and under section 64A the poll that was taken at a particular polling station can be voided and fresh poll can be ordered by the Commission. These two sections naturally envisage a particular situation in a polling station or a place fixed for the poll and cannot be said to be exhaustive. The provisions in sections 5 8 and 64A cannot therefore be said to rule out the making of an order to deal with a similar situation if it arises in several polling stations or even sometimes as a general feature in a substantially large area. It is, therefore, not possible to accept the contention that the Election Commission has no power to make the impugned order for a repoll in the entire constituency. 333 Mr. Rao submits that once the Presidential notification has been made, it is left to the President alone to amend or alter the notification and power, in an appropriate case, may be exercised by the President in which case the action of the President wilt be on the advice of the Cabinet which will be responsible to the Legislature. He submits that it was not the intention of the Constitution makers in the entire scheme of the electoral provisions to entrust such an extraordinary power to the Election Commission. He, further submits that in an appropriate case the President may also promulgate an ordinance under Article 123(i) of the Constitution cancelling the poll in the entire constituency. The contention that the President can revoke, alter or amend the notification under section 14 of the Act or that he can promulgate an ordinance in an appropriate case does not however answer the question. The question will have to be decided on the scope and ambit of power under Article 324(1) of the Constitution which vests the conduct of elections in the Election Commission. It is true that in exercise of powers under Article 324(1) the Election Commission cannot do something impinging upon the power of the President in making the notification under section 14 of the Act. But after the notification has been issued by the President, the entire electoral process is in the charge of the Election Commission and the Commission is exclusively responsible for the conduct of the, election without reference to any outside agency. We do not find any limitation in Article 324(1) from which it can be held that where the law made under Article 32 / or the relevant rules made thereunder do not provide for the mechanism of dealing with a certain extraordinary situation, the hands of the Election Commission are tied and it cannot independently decide for itself what to do in a matter relating to an election. We are clearly of opinion that the Election Commission is competent in an appropriate case to order repoll of an entire constituency where necessary. it will be an exercise of power within the ambit of its functions tinder Article 324, The submission that there is complete lack of power to make the impugned order under Article 324 is devoid of substance. The ancillary question which arises for consideration is that when the Election Commission amended its notification and extended the time for completion of the election by ordering a fresh poll, is it an order during the course of the process of 'election ' as that term is understood ? As already pointed out, it is well settled that election covers the entire process from the issue of the notification under section 14 to the declaration of the result under section 66 of the Act. When a Poll that has already taken place has been cancelled and a fresh poll has been ordered, the order therefor, with the amended date is passed as an integral part of the electoral process. We are not concerned with the question whether the impugned order is right or wrong or invalid on any account. Even if it is a wrong order it does not cease to be an order passed by a competent authority charged with the conduct of elections with the aim and object of completing the elections. Although that is not always decisive, the impugned order itself shows that it has been passed in the exercise of power under Article 324 (1) and 334 section 153 of the Act. That is also the correct position. Such an order, relating, as it does, to election within the width of the expression as interpreted by this Court, cannot be questioned except by an election petition under the Act. What do the appellants seek in the writ application ? Oneof their prayers is for declaration of the result on the basis of thePoll which has been cancelled. This is nothing short of seeking to establish the validity of a very important stage in the election process, namely, the poll which has taken place, and which was countermanded by the impugned order. If the appellants succeed, the result may, if possible, be declared on the basis of that poll, or some other suitable orders may be passed. If they fail, a fresh poll will take place and the election will be declared on the basis of the fresh poll. This is, in effect, a vital issue which relates to questioning of the election since the election will be complete only after the fresh poll on the basis of which the declaration of the result will be made. In other words, there are no two elections as there is only one continuing process of election. If, therefore, during the process of election, at an intermediate or final stage, the entire poll has been wrongly cancelled and a fresh poll has been wrongly ordered, that is a matter which may be agitated after declaration of the result on the basis of the fresh poll, by questioning the election in the appropriate forum by means of an election petition in accordance with law. The appellants, then, will not be without a remedy to question every step in the electoral process and every order that has been passed in the process of the election includ ing the countermanding of the earlier poll. In other words, when the appellants question the election after declaration of the result on the basis of the fresh poll, the election court will be able to entertain their objection with regard to the order of the Election Commission countermanding the earlier poll, and the whole matter will be at large. If, for example, the election court comes to the conclusion that the earlier poll has been wrongly cancelled, or the impugned order of the Election Commission is otherwise invalid, it will be entitled to set aside the election on the basis of the fresh Poll and will have power to breathe life into the countermanded poll and to make appropriate directions and orders in accordance with law. There is, therefore, no foundation for a grievance that the appellants will be without any remedy if their writ application is dismissed. It has in fact been fairly conceded by counsel for the other side that the election court will be able to grant all appropriate reliefs and that the dismissal of the writ petition will not prejudice the appellants. Indeed it has been brought to our notice that an election petition has been filed by the appellants, ex abundanti cautela, in the High Court of Punjab and Haryana, challenging the election which has since been completed on the basis of a fresh poll ordered by the Election Commis sion. The High Court of Punjab and Haryana will therefore be free to decide that petition in accordance with law. It is submitted by Mr. Rao that in Ponnuswami (supra) the question was of improper rejection of nomination paper which is clearly covered by section 100(1)(c) of the Act. Counsel submits ' that 335 the only ground which can be said to be raised in the election petition, in the, present case, is section 100(1) (d) (iv), namely, non compliance with the provisions of the Constitution or of the Representation of the People Act, 1951, or of any rules or orders made under that Act. Ac cording to counsel, there is no non compliance with Article 324 of the Constitution as the Election Commission has no power whatsoever to pass the impugned order under Article 324 of the Constitution. That, according to him, is not "non compliance with the provisions of the Constitution" within the meaning of section 100(1)(d)(iv). We are unable to accept this submission for the reasons already given. We Election Commission has passed the order professedly under Article 324 and section 153 of the Act. We have already held that the order is within the scope and ambit of Article 324 of the Constitution. It, therefore. necessarily follows that if there is any illegality intile exercise of the power under Article 324 or under any provision ofthe Act, there is no reason why section 100(1)(d)(iv) should not be attracted to it. If exercise of a power is competent either underthe provisions of ' the Constitution or under any other provision of law, any infirmity in the exercise of that power is, in truth and substance, on account of noncompliance with the provisions of law, since law demands of exercise of power by its repository, as in a faithful trust, in a proper. regular, fair reasonable manner. (See also Durga Shankar Mehta vs Thakur Raghueraj Singh and Others) (1). The above being the legal position, Article 329(b) rules out the maintainability of the writ application. Article 329(b) provides that ,.notwithstanding anything in this Constitution. no election to either house of Parliament. shall be called in question except by an election petition presented to such authority and in such manner as may be provided for by or under any law made by the appropriate Legislature. " It is undisputed that an election can be challenged only under the provisions of the Act. Indeed section 80 of the Act provides that "no election shall be called in question except by an election petition presented in accordance with the provisions of" Part VI of the Act. We find that all the substantial reliefs which the appellants seek in the writ application, including the declaration of the election to be void and the declaration of appellant No. 1 to be duly elected, can be claimed in the election petition. It will be within the power of the High Court. as the election court, to give all appropriate reliefs to do complete justice between the parties. In doing so it will be open to the High Court to pass any ancillary or consequential order to enable it to grant the necessary relief provided under the Act. The writ application is therefore barred under Article 329(b) of the Constitution and the High Court rightly dismissed it on that ground. In view of our conclusion that the High Court had no jurisdiction to entertain the writ application under Article 226 of the Constitution ' it will not be correct for us, in an appeal against the order of the High Court in that proceeding, to enter into any other controversy, on the merits, either on law or on facts, and to pronounce finally on the same. The pre eminent position conferred by the Constitution on 336 this Court under Article 141 of the Constitution does not envisage that this Court should lay down the law, in an appeal like this, on any matter which is required to be decided by the election court on a full trial of the election petition, without the benefit of the opinion of the Punjab and Haryana, High Court which has the exclusive jurisdiction under section 80A of the Act to try the election petition. Moreover, a statutory right to appeal to this Court has been provided under section 1 1 6A, on any question, whether of law or fact, from every order made by the High Court in the dispute. So, in view of the scheme, of Part VI of the Act, the Delhi High Court could not haveembarked upon an enquiry on any part of the merits of the dispute. Thus it could not have examined the question whether the impugnedorder was made by the Election Commission in breach of a rule of natural justice. That is a matter relating to the merits of the controversy and it is appropriately for the election court to try and decide it after recording any evidence that may be led at the trial. It may be that if we pronounce on the question of the applicability of the rule of natural justice, the High Court will be relieved of its duty to that extent. But it has to be remembered that even for the purpose of deciding that question, the parties may choose to produce evidence, oral or documentary, in the, trial court. We therefore refrain from expressing any opinion in this appeal on the question of the violation of any rule of natural justice by the Election Commission in passing the impugned order. At the same time we would like to make it quite clear that any observation, on a question of law or fact made 'in the impugned judgment of the Delhi High Court, bearing on the trial of the election petition pending in the Punjab and Haryana High Court, will stand vacatted and will not come in the way of that trial. That High Court will thus be free to decide the petition according to the law. We would also like to make it quite clear, with all respect to the learned Judges who have delivered a separate judgment, that we may not be taken to have agreed with the views expressed therein about the applicability of audi alteram partem or on the applicability of the guidelines in sections 58 and 64A to the facts and circumstances of this case, or the desirabi lity of ordering a repoll in the whole constituency, or the ordering of a repoll of postal ballots etc. Election, is a long, elaborate and complicated process and, as far as we can see, the rule of audi alteram partem, which is in itself a fluid rule, cannot be placed in a strait jacket for purposes of the instant case. It has also to be remembered that the impugned order of the Election Commission could not be said to be a final pronouncement on the rights of the parties as it was in the nature of an order covering an unforeseen eventuality which bad arisen at one stage of the election. The aggrieved party had all along a statutory right to call the entire election in question, including the Commission 's order, by an election petition under section 80 of the Act, for the trial of which an elaborate procedure has been laid down in the Act. Then, as has been stated, there is also a right of appeal under the scales in considering at the trial of the election petition whether there may not be sufficient justification to negative the existence of 337 any implied duty on the part of the Commission, at that stage, to hear any party before taking its decision to order or not to order a report. We do not therefore think it necessary or desirable to foreclose a controversy like this by any general observations and will leave any issue that may arise from it for trial and adjudication by the election court. Being not altogether certain of all the facts and circumstances that may be made available, in the appropriate forum, it may be a premature exercise by this Court even to lay down guidelines when there is no hide boand formula of rules of natural justice to operate in all cases and at all times when a decision has to be made. Justice and fair play have often to be harmonised with exigencies of situations in the light of accumulated totality of circumstances in a given case having regard to the question of prejudice not to the mere combatants in an electoral contest but to the real and larger issue of completion of free and fair election with rigorous promptitude. Not being adequately informed of all the facts and circumstances, this Court will not make the task of the election court difficult and embarrassing by suggesting guidelines in a rather twilight zone. As we find no merit in this appeal, it is dismissed but, in the circumstances of the case, there will be no order as to the costs in this Court. P.B. R. Appeal dismissed.

Article 329(b) of the Constitution provides that notwithstanding anything in the Constitution no election to either House of Parliament or to the House, or either House of the Legislature of a State shall be called in question except by an election petition presented to such authority and in such manner as may be provided for by or under any law made by the appropriate legislature. Section 100(1)(d)(iv) of the Representation of the People Act, 1951 provides that if the High Court is of the opinion that the result of the election so far as it concerns a returned candidate has been materially affected by any non compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act the High Court shall declare the election of the returned candidate to be void. The appellant and the third respondent were candidates for election in a Parliamentary constituency. The appellant alleged that when at the last hour of counting it appeared that he had all but won the election, at the instance of respondent No. 3 mob violence broke out and postal ballot papers and ballot boxes from certain Assembly segments, while being brought for counting, were destroyed and the Returning officer was forced to postpone the declaration of the result. The Returning Officer reported the happening by wireless to the Chief Election Commissioner. An officer of the Election Commission who was deputed to be an observer at the counting stage gave a written report to the Commission in addition to an oral report about the incidents which marred the last stages of the counting. The appellant met the Chief Election Commissioner and requested him to declare the result. Eventually, however, the Chief Election Commissioner issued a notification stating that the counting in the constituency was seriously disturbed by violence and that ballot papers of some of the assembly segments had been destroyed by violence, as a consequence of which it was not possible to complete the counting of votes in the constituency and declare the result with any degree of certainty. The notification further stated that taking all circumstances into account, the Commission was satisfied that the poll had been vitiated to such an extent as to affect the result of the election. In exercise of the powers under article 324 of the Constitution it cancelled the poll already held and ordered a re poll in the entire constituency. In a petition under article 226 of the Constitution the appellant alleged that the action of the Chief Election Commissioner in ordering repoll in the whole constituency was arbitrary and violative of any vestige of fairness. The respondents in reply urged that the High Court had no Jurisdiction to entertain the writ petition in view of article 329(b) and that the Commission 's action was well within its powers under article 324. 273 The High Court dismissed the writ petition holding that it had no jurisdiction to entertain the writ petition. Yet on merits it held that article 324 does not impose any limitation on the function contemplated under that article; that principles of natural justice were not specifically provided for in that article but were totally excluded while passing the impugned order and that even if the principles of natural justice were impliedly to be observed before passing the impugned order the appellant was heard not only before the issue of the notification but in any case after the notification. In the repoll the appellant did not participate though his name appeared on the ballot and respondent No. 3 was declared elected. On the question of application of principles of natural justice it was contended on behalf of the respondents that the tardy process of notice and hearing would thwart the conducting of elections with speed that unless civil consequences ensued, hearing was not necessary and that the right accrues to a candidate only when he is declared elected and lastly the decision of the Election Commission is only provisional and that it is he the election court which is the final authority on the subject. HELD: The catch alljurisdiction under article 226 cannot consider the correctness, legality or otherwiseof the direction for cancellation integrated with repoll. [269 D] 1(a) Article 329(b) is a blanket ban on litigative challenge to electoral steps taken by the Election Commission for carrying forward the process of election to its culmination in the formal declaration of the result. [322 D] (b) The sole remedy for an aggrieved party, if he wants to challenge any election, is an election petition. This exclusion of all other remedies includes constitutional remedies like article 226 because of the non obstante clause in article 329(b). If what is impugned is an election the ban operates provided the proceeding "calls it in question" or puts it 'm issue : not otherwise. [289 E F] (c)Part XV of the Constitution is a Code in itself, providing the entire groundwork for enacting the appropriate laws and setting up suitable machine for the conduct of elections. Articles 327 and 328 take care of the set of laws and rules making provisions with respect to all matters relating to or in connection with elections. Election disputes are also to be provided for by laws made under article 327. 'Be Representation of the People Act, 1951 is a self contained enactment so far as elections are concerned. Section 80 which speaks substantially the same language as article 329(b) provides that no election shall be called in question except by an election petition presented in accordance with the provisions of Part IV of the Act. The Act provides for only one remedy and that remedy being by an election petition to be presented after the election is over, there is no remedy provided at any of the intermediate stages. [292 C D; F G 293 B C] Smt. Indira Gandhi vs Raj Narain , 504 505 referred to. (d)The compendious expression "election" commences from the initial notification and culminates in the declaration of the return of a candidate. The paramount policy of the Constitution framers in declaring that no election shall be called in question except the way it is provided for in article 329(b) and the Representation of the People Act, 1951 necessitates the reading of the Constitution and the Act together as an integral scheme. The reason for postponment of election litigation to the post election stage is that elections shall not unduly be protracted or obstructed. [294 D E] (e)No litigative enterprise in the High Court or other court should be allowed to hold up the on going electoral process because the parliamentary representative for the constituency should be chosen promptly. Article 329 therefore covers "electoral matters". [294 F] (f)The plenary bar of article 329(b) rests on two principles : (1) the peremptory urgency of prompt engineering of the whole election process without intermediate interruptions by way of legal Proceedings challenging the 274 steps and stages in between the commencement and the conclusion; and (2) the provision of a special jurisdiction which can be invoked by an aggrieved party at the end of the election excludes other forms, the right and remedy being creatures of statutes and controlled by the Constitution. [295 H, 296 ] Durga Shankar Mehta [1955] 1 SCR 267 referred to. (g)If the regular poll for some reasons has failed to reach the goal of choosing by plurality the returned candidates and to achieve this object a fresh poll (not a new election) is needed, it may still be a step in the election.[296 E F] (h)A writ petition challenging the cancellation coupled with repoll amounts to calling in question a step in 'election ' and is, therefore, barred by article 329(b). [296 G] (i)Knowing the supreme significance of speedy elections in our system the framers of the Constitution have, by implication, postponed all election disputes to election petitions and tribunals. In harmony with this scheme section 100 has been designedly drafted to embrace all conceivable infirmities which may be urged. To make the project fool proof section 100(1)(d)(iv) has been added to absolve everything left over. Section 100 is exhaustive of all grievances regarding an election. What is banned is not anything whatsoever ,done or directed by the Election Commissioner but everything he does or directs in furtherance of the election, not contrarywise. [297 B, C, D] (j)It is perfectly permissible for the Election Court to decide the question as one falling under section 100(1)(d)(iv). The Election Court has all the powers necessary to grant all or only any of the reliefs set out in section 98 and to direct the Commissioner to take such ancillary steps as will render complete justice to the appellant. [319 C, E] (k)It is within the powers of the Election Court to direct a repoll of particular polling stations to be conducted by the specialised agency under the Election Commission and report the results and ballots to the Court. Even a repoll of postal ballots can be ordered In view of the wide ranging scope of implied powers of the Court, the appellant 's claims are within the Courts powers to grant. [322 A B] 2(a) Article 324 does not exalt the Election Commission into a law unto itself. The Article is wide enough to supplement the powers under the Act subject to the several conditions on its exercise. [300 A B] (b)The Election Commissioner 's functions are subject to the norms of fairness and he cannot act arbitrarily. The Constitution has made comprehensive provision in article 324 to take care of surprise situations. That power has to be exercised in keeping with the guidelines of the rule of law without stultifying the Presidential notification or existing legislation. It operates in areas left unoccupied by legislation and the words "Superintendence, direction and control" as well as "conduct of all elections" are in the broadest terms.[299 A, B C] (c)If imparting the right to be heard will paralyse the process, the law will exclude it. In any case it is untenable heresy to lockjaw the victim or act behind his back by invoking urgency, unless the clearest case of public injury flowing from the least delay is evident. The Election Commission is an institution of central importance and enjoys far reaching powers and the greater the power to affect other 's rights or liabilities the more necessary is the need to hear. [304 D, G H, 305 B C] (d)It is well established that when a high functionary like the Commissioner is vested with wide powers, the law expects him to act fairly and legally. Discretion vested in a high functionary may be reasonably trusted to be used properly, not perversely. If it is misused certainly the Court has power to strike down the act. [299 D E] Virendra ; and Harishankar [1955] 1 1104 SCR referred to. (e)Article 324 vests vast functions which may be powers or duties, essentially administrative and marginally even judicative or legislative. _ [302 H] 275 (f)The dichotomy between administrative and quasi judicial functions vis a vis the doctrine of natural justice is presumably obsolescent after Kraipak which marks the water shed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal sys tems, and are not any 'new theology. They are manifested in the twin principles of nemo index in sua causa and audi alteram partem. It has been pointed out that the aim of natural justice is to secure justice, or, to put it negatively to prevent miscarriage of justice. These rights can operate only in areas not covered by any law validly made; they do not supplant the law of the land but supplement it. The rules of natural justice are not embodied rules. What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the inquiry is held and the constitution of the tribunal or body of per sons appointed for that purpose. Whenever a complaint is made before a court that some principle of natural justice has been contravened, the court has to decide whether the observation of that rule was necessary for a just decision on the facts of that case. Further, even if a power is given to a body without Specifying that rules of natural justice should be observed in exercising it, the nature of the power would call for its observance. [300 F G, 301 B D, 303 D] Kraipak , In re: H.K. (an infant) and Ridge vs Baldwin ; referred to. (g)Even where the decision has to be reached by a body acting judicially, there must be a balance between the need for expedition and the need to give full opportunity to the defendant to see the material against him. There might be exceptional cases where to decide a case exparte would be unfair and it would be the duty of the Tribunal to take appropriate steps to eliminate unfairness. Even so no doctrinaire approach is desirable but the court must be anxious to salvage the cardinal rule to the extent permissible in a given case. [307 D, E] 3(a) Civil consequences cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non peciiniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence. The interest of a candidate at an election to Parliament regulated by the Constitution and the laws comes within its gravitational orbit. A democratic right, if denied inflicts civil consequences. Every Indian has a right to elect and he elected and this is a constitutional as distinguished from a common law right, and is entitled to cognizance by courts subject to statutory regulation. C, E] (b)A vested interest in the prescribed process is a processual right, actionable if breached. The appellant has a right to have the election conducted not according to humour or hubris but according to law and justice. So natural justice cannot be stumped out on the score. In the region of public, law locus standi and person aggrieved, right and interest have a broader import. [309 G, H] (c)In the instant case the Election Commission claims that a hearing had. been given but the appellant retorts that all that he had was vacuous meeting where nothing was disclosed. But in law degrees of difference may at a, substantial stage spell difference in kind or dimensions. [309 H, 310 A] (d)The case of Subhash Chander in which this Court held that it was not necessary to give an opportunity to the candidates for an examination as to why the whole examination should not be cancelled because the examination was vitiated by adoption of unfair means on a mass scale. But the ratio of that decision has no application to this case. The candidates in an election who have acquired a very vital stake in the polling going on properly stand on a different footing from the electorate in general. The interest of the electorate is too remote and recondite, too feeble and attenuate to be taken note of in a cancellation proceeding. What really marks the difference is the diffusion and dilution. The candidates in an election are really the spearheads, the combatants. They have set themselves up as nominated candidates organised the campaign and galvanised the electorate for the polling and counting. Their interest and claim are not indifferent but immediate. They are the 5 1114SCI 77 276 parties in the electoral dispute. In this sense they stand on a better footing and cannot be deniedthe right to be heard. In Ghanshyamdas Gupta in which the examinationresult of three candidates was cancelled this Court imported principles ofnatural justice. This case may have a parallel in electoral situations. if the Election Commission cancelled the poll it was because it was satsfied that the procedure adopted had gone awry on a wholesale basis. Therefore, it all depends on the circumstances and is incapable of generalisation. In a situation like the present it is a far cry from natural justice to argue that the whole constituency must be given a hearing. [310 F, H, 311 G H, 312 A, D, E,] Col. Singhi [1971] 1 SCR 791, Binapani ; , Ram Gopal ; ; Subhash Chander Singh ; field inapplicable. Ghanshyam Das Gupta [1962] Supp. 3 SCR 36 followed. 4(a) Whether the action of the Election Commission in ordering repoll beyond certain segments of the constituency where the ballot boxes were destroyed was really necessary or not is for the Election Court to assess when judging whether the impugned order was arbitrary, whimsical or was arrived at by extraneous considerations. [316 H, 317 A B] (b) Independently of natural justice, judicial review extends to an examination of the order as to its being perverse, irrational, bereft of application of the mind or without any evidentiary backing. If two views are possible, the Court cannot interpose its view. If no view is possible the Court must strike down. [317 B] (c)The philosophy behind natural justice is participatory justice in the process of democratic rule of law. In the vital area of election where people 's faith in the, democratic process is hypersensitive it is realism to keep alive audi alteram even in emergencies. Hearing need not be an elaborate ritual. In situations of quick despatch, it may be minimal, even formal. Fair hearing is a postulate of decision making, although fair abridgement of that process is permissible. It can be fair without the rules of evidence or forms of trial. [316 D F] (d)The silence of a statute has no exclusionary effect except where it flows from necessary implication. Article 324 vests a wide power and where some direct consequence on candidates emanates from its exercise this functional obligation must be read into it. [316 F] Observations (a)When a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, gets validated by additional grounds later brought out. [283 B C] (b)An obiter binds none, not even the author and obliteration of findings rendered in supererogation must allay the appellant 's apprehensions. The High Court should have abstained from its generosity. [284 C] (Per Goswami and Shinghal, JJ. concurring) (1) The appellants ' argument that since article 324(6) refers to "functions" and not "powers", there can be no question of the Election Commission exerrising any power under that Article, is without force. The term "functions" includes powers as well as duties. It is incomprehensible that a person or body can discharge any functions without exercising powers. Powers and duties are integrated with functions. [330 D E] 2(a) It is well established that an express statutory grant of power or the imposition of a definite duty carrie with it by implication, in the absence of a limitation, authority to employ all the means that are usually employed and that are necessary to the exercise of the power or the performance of the duty. That which is clearly implied is as much a part of a law as that which is expressed. [331 E F] 277 (b)In a democratic set up power has to be exercised in accordance with law. Since the conduct of all elections is vested under article 324(1) in the Election Commission, the framers of the Constitution took care to leaving scope for exercise of residuary power by the Election Commission, in the infinite variety of situations that may emerge from time to time. Yet, every contingency could not be foreseen and provided for with precision. The Commission may be required to cope with some situation, which may not be provided for in the enacted laws and rules. The Election Commission, which is a high powered and independent body, cannot exercise its functions or perform its duties unless it has an amplitude of powers. Where a law is absent, the Commission is not to look to any external authority for the grant of powers to deal with the situation but must exercise its power independently and see that the election process is completed in a free and fair manner. Moreover, the power has to be exercised with promptitude.[330 G, H, 331 A B, C E, G] N.P. Ponnuswami vs Returning Officer, Nanakkal Constituency and Others, ; followed. (c) Section 19A of the Act, in terms, refers to the functions not only under the Representation of the People Act, 1950 and representation of the People Act, 1951 or the rules made thereunder, but also under the Constitution. Apart from the several functions envisaged by the two Acts and the rules, the Commission is entitled to exercise certain powers under article 324 itself on its own right in an area not covered by the Acts and rules. [332 A B] (d)Whether an order passed is wrong, arbitrary or is otherwise invalid, relates to the mode of exercising the power and does not touch upon the existence of the power in an authority if it is there either under the Act or the rules or under article 324(1). [331 G] 3(a) The contention that the Election Commission had no power to make the impugned order for a repoll in the entire constituency. is without substance. [332 H] (b) Both under s.58 and under section 64A the poll that was taken on a particular polling station can be voided and a fresh poll can be ordered, by the Commission. These sections cannot be said to be exhaustive. It cannot be said that they rule out the making of an order to deal with a similar situation if it arises in several polling stations or sometimes as a general feature in a substantially large area. Although these two sections mention "a polling station" or "a place fixed for the poll" it may, where necessary embrace multiple polling stations. [332 G H] (c)The Election Commission is competent, in an appropriate case, to order repoll of an entire constituency. If it does that it will be an exercise of power within the ambit of its functions under article 324. Although in cxercise of powers under article 324(1) the Election Commission cannot do some thing impinging upon the power of the President in making a notification under section 14 of the Act, after the notification has been issued by the President, the entire electoral process is in the charge of the Commission. The Commission is exclusively responsible for the conduct of the election without reference to any outside agency. There are no limitations under article 324(1). J333 C E] 4.The writ petition is not maintainable. Since the election covers the entireprocess from the issue of the notification under section 14 to the declaration of theresult under s.66 of the Act, when a poll that has already taken place has been cancelled and a fresh poll has been ordered, the order is passed as an integral part of the electoral process. The impugned order has been passed in exercise of the power under article 324(1) and section 153 of the Act. Such an order cannot be questioned except by an election petition under the Act. [333 G H, 334 A] 5(a) There is no foundation for a grievance that the appellants will be without any remedy, if their writ application is dismissed. If during the process of election at an intermediate or final stage. the entire poll has been wrongly cancelled and a fresh poll has been wrongly ordered, that is a matter which can be agitated after the declaration of the result on the basis of the 278 fresh poll, by questioning the election in the appropriate, forum. The appellants will not be without a remedy to question every step in the electoral process and every order that has been passed in the process of the election includ ing the countermanding of the earlier poll. The Court will be able to entertain their objection with regard to the order of the Election Commission countermanding the earlier poll and the whole matter will be at large. [334 B F] (b)The Election Commission has passed the order professedly under article 324 and section 153 of the Act. If there is any illegality in the exercise of the power under this Article or under any provision of the Act, there is no reason why section 100(1)(d)(iv) should not be attracted. If exercise of power is competent either under the provisions of the Constitution or under any other provision of law, any infirmity in the exercise of that power is on account of noncompliance with the provisions of law, since law demands exercise, of power by its repository in a proper, regular, fair and reasonable manner. [335 B D] Durga Shankar Mehra vs Thakur Raghuraj Singh and others, [1955] 1 SCR 267 referred to. (c)The writ petition is barred under article 329 (b) of the Constitution and the High Court has rightly dismissed it on that ground. Both article 329(b) and section 80 of the Act provide that no election shall be called in question except by an election petition. All reliefs claimed by the appellant in the writ petition can be claimed in the election petition and the High Court is competent to give all appropriate reliefs to do complete justice between the parties. It will be open to the High Court to pass any ancillary or conse quential order to enable it to grant the necessary relief provided under the Act. [335 D G] 6.It will not be correct for this Court, in this appeal, to pronounce its judgment finally on merits either on law or on facts. The pre eminent position conferred by the Constitution on this Court under Article 141 of the Constitution does not envisage that this Court should lay down the law, in an appeal like this, on any matter which is required to be decided by ' the election court on a full trial of the election petition, without the benefit of the opinion of the Punjab and Haryana High Court which has the exclusive jurisdiction under section 80A of the Act to try the election petition. [335 H, 363 A]

Civil Appeal No. 80 of 1977. Appeal by Special Leave from the Judgment and order dated 4 11 1976 of the Punjab and Haryana High Court in Civil Rev. No. 226 of 1971. Suresh Sethi (Amicus Curiae) for the Appellant. Yogeshwar Prasad and Mrs. Rani Chhabra for the Respondent. The Judgment of the Court was delivered by FAZAL ALI, J. This appeal by special leave is directed against the judgment of the Punjab and Haryana High Court dated 4th November, 1976 dismissing the revision petition filed by the appellant before the High Court. This case has rather a chequered career and travelled through various stages and finally when it came to the High Court the case was remanded and after remand another re vision petition was filed before the High Court which was heard by a Single Judge who referred it to a Division Bench as in his opinion a substantial question of law was involved in the case. When the case went before the Division Bench consisting of Pandit and B. section Dhillon, JJ. the two Judges differed from each other and the case was referred to a third Judge, namely, Mittal, J. who agreed with Pandit, J. and dismissed the petition. Hence this appeal. In order to understand the point of law involved in this case, it may be necessary to give a brief resume of the facts leading to the appeal. It appears that the appellant defendant was a tenant of a shop belonging to one Sher Singh and was situated in Gurgaon Cantonment. Sher Singh gave an application on 21 3 1967 under the provisions of the East Punjab Urban Rent Restriction Act 1949 (hereinafter referred to as the Act) against the defendant appellant for eviction from the shop on the ground that he had defaulted in payment of the rent and arrears for the period 9 11 1965 to 8 3 1967. Notice of this application for 11th May 1967 was issued on the 22nd March, 1967 and was actually served on the defendant appellant on 22nd April, 1967. on the 29th April, 1967 the defendant appellant made an application before the Senior Sub Judge who was also the Rent Controller for depositing a sum of Rs. 179.48 being the rent along with interest due. The amount was however deposited before the Rent Controller on the 4th May, 1967. It appears that the first date of the hearing of the 839 application was 11th May, 1967 on which date the Rent Controller made the following order: "Present: Mr. Vijay Pal Singh for the petitioner Mr. P. L. Kakkar for the respondent The respondent 's counsel Sh. P. L. Kakkar has been informed that the petitioner has deposited Rs. 179.48 paise on 4 5 67. Papers are filed. " Even before this date when the amount was actually deposited by the appellant, the Rent Controller had passed the following order: "Present: Sh. Shiv Narain Petitioner . The rent be deposited at the responsibility of the petitioner and after that notice be issued on payment of P.F. for the respondent for 11 5 67. " It is, therefore, manifest that in the instant case a deposit of the rent and the arrears along with interest had actually been made before the first date of hearing to the knowledge of the Court and the Court had acknowledged the fact of the deposit of the amount. Again, on the first date of hearing i.e. 11th May, 1967 the Rent Controller informed counsel for the applicant respondent that a sum of Rs. 179.48 had been deposited. It is, therefore, clear that the applicant respondent 1 ' was apprised clearly of the fact that the amount in question had actually been deposited and was at his disposal and he could withdraw the same from the Court of the Rent Controller whenever he liked. Despite these facts, the Rent Controller held in its order dated the 2nd December, 1967 that the deposit was not made in accordance with the proviso to section 13(2) (i) of the Act, and, therefore, the appellant being a defaulter the application was allowed and ejectment was ordered. Thereafter, the appellant went up in appeal to the District Judge who was the Appellate Authority under the Act which differed from the view taken by the Rent Controller and by his order dated 22nd February, 1968 having held that the deposit was valid dismissed the application filed by the respondent for evicting the appellant. Thereafter a revision was filed to the High Court which was remanded to the District Judge for deciding the case afresh, and particularly having regard to the decision of this Court in the case of Shri Vidya Prachar Trust vs Pandit Basant Ram(l). On remand the District Judge accepted the application of the respondent and affirmed the order of the Rent Controller directing ejectment of the appellant. Thereafter the 840 appellant filed a revision before the High Court which, as already indicated, had a varied career before the High Court and was ultimately decided against the appellant and in favour of the applicant respondent The three Judges of the High Court who heard the case have been greatly influenced by the decision of this Court in Shri Vidya Prachar Trust case (supra). It appears that the previous Division Bench of the Punjab and Haryana High Court in the case of Mehnga Singh & Ors. vs Dewan Dilbagh Rai & ors had followed the Supreme Court decision and taken the view that the deposit in the circumstances was not valid. We have gone through the judgment of the Judges of the High Court and we are unable to agree with the interpretation placed by them oh the proviso to section 13(2)(i) of the Act. We are also constrained to observe that the High Court has misapplied the decision of this Court in Vidya Prachar Trust case (supra) which is clearly distinguishable from the facts and circumstances of this case. Before dealing with the point of law involved it may be necessary to extract portions of the Act with which we are concerned. In the instant case, we are mainly concerned with section 13 of the Act which may be extracted thus: "13. (1) x x x (2) A landlord who seeks to evict his tenant shall apply to. the Controller for a direction in that behalf. If the Con troller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i) that the tenant has not paid or tendered the rent due by him in respect of the building or rented land within fifteen days after the expiry of the time fixed in the . agreement of tenancy with his landlord or in the absence of any such agreement, by the last day of the month next following that for which the rent is payable: Provided that if the tenant on the first hearing of the application for ejectment after the due service pays or tenders the arrears of rent and interest at six per cent per annum on such arrears together with the cost of application assessed by the Controller, the tenant shall be deemed to have duly paid or tendered the rent within the time aforesaid. X X X X X 841 The Controller may make an order directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application. " The decision of the case mainly turns upon the interpretation of the proviso to section 13, which requires three essential conditions: (1) that there must be an application for ejectment before the Court, (2) that even after due service the tenant does not pay or tender the arrears of rent and interest at 6 per cent per annum together with costs assessed by the Controller, (3) that if the payment as required by the aforesaid two conditions is made then the tenant shall be deemed to have paid rent within the time required by law. The last part of section 13 enjoins that where the conditions of the proviso are not fulfilled the Controller shall make an order directing the tenant to put the landlord in possession and where he is satisfied that the rent has been paid, the application of the landlord must be rejected. Thus, the sole question which has to be determined in the instant case is as to whether or not the deposit made by the appellant was legally valid. The grounds on which the High Court held the deposit to b invalid were (1) that the rent was deposited in the Court of the Rent Controller without there being any express provision in the Act requiring the tenant to deposit the rent in Court, (2) that even if the deposit be held to be valid since it was made not on the date of the first hearing but before that date, the deposit did not conform to the conditions required in the proviso. Thirdly, the High Court relied mainly on the decision of this Court in Vidya Prachar Trust case (supra) and held that the deposit was not valid. Before examining the case of this Court in the case of Vidya Prachar Trust case (supra) it may be necessary to comment on the reasons given by the High Court in rejecting the case of the appellant. We have already indicated above that tho appellant first moved the Rent Controller for making a deposit of Rs. 179.48 and then made the actual deposit on the 4th May, 1967 i.e. to say a week before the date of the first hearing fixed by the Rent Controller. It is also not disputed before us or for that matter also, also before the courts below that the amount deposited by the appellant consisted of not only the arrears of rent but also costs and interest as required by the proviso to section 13 of the Act. Fourthly, it is also established that after the deposit was made before the Rent Controller he did not return the same to the appellant on the ground that he had no jurisdiction to receive it but oh the other hand directed that notice of the deposit may be given to the respondent 842 for 11 5 1967. Furthermore, the trial court on 11 5 1967 that is the first date of hearing recorded an order that the respondent 's counsel had been informed that the amount had been deposited. There is magical formula or prescribed manner in which rent can be deposited by the tenant with the landlord. The rent can be deposited by placing the money in the hands of the landlord which would amount to actual tender. The second mode of payment is to deposit the amount in the court where a case is pending in such a manner so as to make the amount available to the landlord without any hitch or hindrance whenever he wants it. Even the Act does not prescribe any particular mode of deposit. In fact, the use of the words "tender or deposit" in the proviso clearly postulate that the rent can be given to the landlord in either of the two modes. (1) It may be tendered to the landlord personally or to his authorised agent or it may be deposited in Court which is. dealing with the case of the landlord to this knowledge so that the landlord may withdraw the deposit whenever he likes. In the instant case the appellant tenant chose the second course. How can it be said that a deposit before the Rent Controller where the case of the landlord was sub judice would not be a valid deposit if it was in fact in existence on the date of the first hearing to the knowledge of the landlord. The reasoning of the High Court that the rent was deposited earlier than 11 S 1967 and is therefore, invalid does not appear to us at all. In fact, if the tenant deposits the rent even before the first date of hearing it is a solid proof of his bonafides in the matter and the Legal position would be that if the rent is deposited before the first date of hearing, it will be deemed to have been deposited on the date of the hearing also because the deposit continues to remain in the court on that date and the position would be as if the tenant has deposited the rent in court for payment to the landlord. This is ' more particularly so when the Controller gave notice to counsel for the respondent on the first date of hearing that the amount had been deposited with the Controller. In these circumstances, we ar, satisfied that all the conditions necessary for the application of the proviso have been completely fulfilled in this case and the High Court was not at all justified in allowing the application of the landlord and directing ejectment of the appellant. Coming now to the case of Vidya Prachar Trust case (supra) which is the sheet anchor of the judgment of the High Court we think that it is clearly distinguishable from the facts of this case. In the first place, although in that case also an application under section 13 of the Act had been made by the applicant for the eviction of the respondent on the ground that rent was not paid, the tenant on the first date of hearing did not tender the rent, cost and interest as required 843 by the proviso but only a part of the rent. It is, therefore, manifest A that in the case which was being dealt with by the Supreme Court the first condition enjoined by the proviso was not fulfilled at all and on that ground alone it could be held that the deposit was not valid. Secondly, the deposit in that case was made not before the Rent Controller under the proviso to section 13 of the Act but was made before the Judge under section 31 of the Punjab Relief of Indebtedness Act which had absolutely no application to proceedings for eviction taken under the Act. Thus, a deposit made before some other court had no nexus with the arrears of rent for which an application for ejectment was filed before the Rent Controller. Thirdly, it was pointed out by this Court that the tenant had deposited even on. month 's rent in advance which under the provisions of section 19 read with section 6 of the Act was an offence if the landlord had withdrawn the rent. Thus, the tenant in that case had deposited the rent in a manner and under circumstances under which it could not be made available to the landlord even if he wanted to withdraw it because the landlord may have entailed a criminal penalty. These are the facts on the basis of which this Court held that the deposit was not valid. In this connection this Court observed as follows: "There is only one saving for the tenant and that is when he tenders the full rent in Court before the Rent Controller together with interest and costs. In the present case, the tenant did tender rent but only for a portion of the period and he relied on his deposit under the Relief of Indebtedness Act as due discharge of his liability for the earlier period. It may be stated that the deposit before the Senior Sub Judge was made not only of arrears of rent but prospectively for some future period for which the rent was then not due. " It appears from the observations of this Court extracted above that the deposit was prima facie invalid. This Court further observed as follows: It is impossible to think that the landlords would be required to go to the Court of the Senior Sub Judge with a view to finding out whether their tenants have deposited rent due to them or not. on the whole, therefore, we are of opinion that the deposit under section 31 of the Relief of Indebtedness Act did not save the tenant from the consequences of the default as contemplated by section 13 of the Urban Rent Restriction Act. " 844 The effect of this observation is that the deposit was made in a wrong court and under such circumstances that the deposit could not be available to the landlord whenever he wanted. It was against the background of these special facts and circumstances that this Court in the Vidya Prachar Trust case (supra) held that the deposit was not valid. In the instant case we find that the deposit made by the appellant does not suffer from any such infirmities as were present in Vidya Prachar Trust case (supra). Finally, we would like to observe that the Rent Control Act is a piece of social legislation designed to protect the tenant from eviction by landlords on frivolous, insufficient or purely technical grounds. Even as the Act allows eviction of the tenant on the ground of non payment of arrears of rent the proviso affords sufficient protection to the tenant against eviction if the tenant deposits the rent in accordance with the proviso. Vidya Prachar Trust case (supra) was reconsidered by this Court in a recent decision in the case of Duli Chand vs Maman Chand by a Bench of three Hon 'ble Judges of which one of us (Kailasam, J.) was a party and while distinguishing the case this Court made the following observations: "We need not deal with all the contents that have been canvassed on both sides. Nor do we feel the necessity of reconsidering the decision in Vidya Prachar Trust vs Basant Ram because on facts, the instant case is clearly distinguish able from that case. Here, before us, the rent for the months of February, March and April 1964 was deposited by the tenant to the credit of the landlord in the very court of the Rent Controller in which the landlord subsequently filed the eviction petition. The deposit lying in the Treasury was in the legal custody and control of the court of the Rent Controller, and at the first hearing, if not earlier, the landlord was informed that he was entitled to withdraw that deposit. Thus, even if the tenant had obtained the order of the Rent Controller for making the deposit, by referring to section 31 of the Relief Act, the fact remained that the money was in custodia legis and could be ordered to be paid to the land lord there and then by the Court at the first hearing. " It was further held by this Court that where the tenant makes the deposit of the arrears of rent and interest informing the landlord at the 845 first hearing then the requirement of the law has been sufficiently complied with. In this connection, the Court observed thus: "The tenant by making deposit of the arrears of rent and interest and costs and informing the landlord at the first hearing that he could receive the same from the Court, had substantially complied with the requirement of the said. proviso. " In the instant case w, have already pointed out that the appellant had fulfilled all the conditions of the proviso and had deposited the rent arrears, costs and interest on the first date of hearing and he, therefore, complied with all the requirements of the proviso and was, therefore, entitled to the protection given by the statute. In view of the legal opinion we have formed regarding the interpretation of proviso to section 13 of the Act it is manifest that the judgment of the High Court is legally erroneous and the case of Mehnga Singh (supra) is hereby overruled, as it had wrongly applied and misconstrued the decision of this Court in Vidya Prachar Trust case (supra). For these reasons, therefore, we allow this appeal, set aside the judgment of the High Court and dismiss the application of the respondent for ejectment of the appellant. In the peculiar facts and circumstances of this case the parties will pay and bear their own costs throughout. S.R. Appeal allowed.

The proviso to clause (1) of sub section (2) of section 13 of the East Punjab Urban Rent Restriction Act, 1949, states that "if the tenant on the first hearing of the application for ejectment after due service pays or tenders the arrears of rent and interest @ 65% per annum or such arrears together with the cost of application assessed by the Controller, the tenant shall be deemed to have duly paid or tendered the rent within the time showed in clause (i) of sub section (2) of section 13 of the Act, 1949". In such circumstances, an order for eviction against the tenant cannot be passed. The appellant was a tenant under the respondent landlord Sher Singh. On 21 3 67, Sher Singh tiled an application under Section 13 of the East Punjab Urban Rent Restrictions Act, 1949 for ejectment of the appellant tenant from the tenanted shop situate in Gurgaon Cantonment, on the ground of arrears of rent for the period from 9 11 65 to 8 3 67 at the agreed rate @ Rs. 15/ pm. The notice of the application for ejectment with the first date of hearing as 11 5 67 was served on the appellant tenant on 22 4 67. On 29 4 1967 the appellant tenant made an application before the very same Rent Controller praying for payment of arrears of rent i.e. Rs. 178.48 for the above period computed @ Rs. 10.62 p.m., being the fair rent fixed by that Court on 20 4 67 in an earlier application for fixation of fair rent. The said amount was actually deposited on the court of the Rent Controller on 4 5 67. On 11 5 67 the appellant tenant tendered in the court to the landlord a further sum of Rs. 25/ being the costs and Rs. 2/ being the interest. This was not accepted on the ground that the lender was not a valid one within the meaning of section 13(2)(i) of the Act. This objection was accepted by the Rent Controller and an ejectment order was passed. On first appeal the District Judge reversed the said order. In the Revision before the High Court, the High Court remanded the matter to the first Appellate Court for fresh orders in view of this Court 's ruling in Vidya Prachar Trust vs Basant Ram [1970] 1 S.C.R. 66. The First Appellate Court affirmed the ejectment order. In the further revision to the High Court, the learned single Judge referred it to the Division Bench which in turn referred it to a third Judge. The third Judge agreed with the single Judge that the payment of fair rent fixed on 4 5 67 was not a valid tender within the meaning of section 13(2)(i) of the Act. The single Judge, therefore, dismissed the revision petition and confirmed the orders of ejectment of the courts below. Allowing the appeal by special leave, the Court. 837 ^ HELD : 1. Proviso to section 13(2)(i) of the East Punjab Urban Rent Restrictions Act, 1949 requires three essential conditions: (1) that there must be an application for ejectment before the Court, (2) that even after due service the tenant does not pay or tender the arrears of rent and interest at 6 per cent per annum together with costs assessed by the Controller, (3 ) that if the payment as required by the aforesaid two conditions is made then the tenant shall be deemed to have paid rent within the time required by law. The last part of section 13 enjoins that where the conditions of the proviso are not fulfilled the Controller shall make an order directing the tenant to put the landlord in possession and where he is satisfied that the rent has been paid, the application of the Landlord must be rejected. [841 A C] 2. There is no magical formula or any prescribed manner in which rent can be deposited by the tenant with the landlord. The rent can be deposited by placing the money in the hands of the landlord which could amount to actual tender. The second mode of payment is to deposit the amount in the court where a case is pending in such a manner so as to make the amount available to the landlord without any hitch or hindrance whenever he wants it. Even the Act does not prescribe any particular mode of deposit. In fact, the use of the words "tender or deposit" in the proviso clearly postulate that the rent can be given to the landlord in either of the two modes. (I) It may be tendered to the landlord personally or to his authorised agent or it may be deposited in Court which is dealing with the case of the landlord to his Knowledge so that the landlord may withdraw the deposit whenever he likes. In the instant case the appellant tenant chose the second course. [842 A C] 3. A deposit before the Rent Controller where the case of the landlord was subjudice would be a valid deposit, if it was in fact in. existence on the date of the first hearing to the knowledge of the landlord. In fact, if the tenant deposits the rent even before the first date of hearing it is a solid proof of his bonafides in the matter and the legal position would be that if the lent is deposited before the first date of hearing, it will be deemed to have been deposited on the date of the hearing also because the deposit continues to remain in the court on that date and the position would be as if the tenant had deposited the rent in court for payment to the landlord. [842 D E] In the instant case, all the conditions necessary for the application of the proviso have been completely fulfilled. This is more particularly so when the Controller gave notice to the counsel for the respondent on the first date of hearing that the amount had been deposited with the Controller. [842 E F] Vidya Prachar Trust vs Pandit Basant Ram, [1970] 1 S.C.R. explained and distinguished. Dulichand vs Maman Chand, C.A. 1744/69 dated 27 3 79 followed Mehnga Singh & Ors. vs Dewan Dilbagh Rai & Ors., overruled. Observation: The Rent Control Act is a piece of social legislation designed to project the tenant from eviction by landlords on frivolous, insufficient or purely technical ground. Even as the Act allows eviction of the tenant on the ground of 838 non payment of arrears of rent the proviso affords sufficient protection to the tenant against eviction if the tenant deposits the rent in accordance with the proviso. [844 B C]

ivil Appeal No. 55A of 1987. From the Judgment and Order dated 8.10. 1985 of the Allahabad High Court in Civil Misc. No. 2278 of 1981. S.N. Kacker, R.N. Sharma, J.K Jain and N.N. Sharma for the Appellant. Gopal Singh and L.R. Singh for the Respondent. The Judgment of the Court was delivered by NATARAJAN, J. The question failing for consideration in this appeal by special leave is whether the High Court has erred in law in quashing the order of eviction passed against the respondent by the Judge, Small Cause Court as confirmed by the Additional District Judge and remitting the suit to the trial court for fresh consideration in the event of the trial court allowing an application by the appellant under Order I Rule 10 Civil Procedure Code for correcting the name of the plaintiff in the plaint. The background of events to this Appeal may briefly be stated. The appellant Bal Niketan Nursery School is a recog nised institution under the U.P. Basic Education Act, 1972, and is run and managed by a Society, "Smt. Chandramukhi Ram Saran Shiksha Samiti", registered under the Societies Regis tration Act. Dr. Om Prakash is the Manager of the appellant school and also the Secretary of the registered Society mentioned above. On 10.3.1977 the Society purchased a plot of the land adjoining the school together with four super structures (Khaprails) standing thereon in the name of the appellant school through its Manager Om Prakash Gupta. The super structures were in 514 the occupation of four tenants. The entire rental income derived from the tenants is being utilised for the purpose of running the school. Under the U.P. Urban Building Regula tion of Letting, Rent and Eviction Act, 1972 (for short the Rent Act) the provisions of the Act would not apply to a property owned by a recognised educational institution if the whole of the income from the property is utilised for the purposes of the institution. Section 2(1)(b) which provides for the exemption is in the following terms: "Nothing in this Act shall apply to any building belonging to or vested in a recognised institution, the whole of the income from which is utilised for the purpose of such institution. " As the appellant was in dire need of additional area for the growing needs of the school and as the property acquired by the school attracted the 'Exemption Clause ' in the Rent Act, the Manager of the school issued notices of termination of tenancy to the tenants on 30.5. 1977 under Section 106 of the Transfer of Property Act and demanded surrender of possession. As the tenants failed to surrender possession, the appellant filed separate suits against the four tenants for ejectment and payment of arrears of rent. The suits were filed in the name of the appellant school through its Manag er Dr. Om Prakash. The Cause Title of the plaintiff in the plaint was given as under: "BaI Niketan Nursery School, Near Ganj Gurhatti, Moradabad through Dr. Om Prakash, Manager of the School. " All the four tenants including the respondent herein raised only two defences in the suit, namely, that the appellant school is not a recognised educational institution so as to be entitled to the benefit of Section 2(1)(b) of the Rent Act and secondly, that the notice of termination of tenancy was not a valid notice because it had not been issued by an institution having juristic status. The Small Cause Court consolidated all the four suits and held a joint trial and rejected both the contentions of the tenants and decreed the suits in favour of the school. The tenants preferred revisions against the judgment to the District Judge and the learned Judge confirmed the judgment and decree of the Small Cause Court and dismissed all the revisions. 515 Thereafter the tenants filed writ petitions under Arti cles 226/227 of the Constitution before the High Court ,of Allahabad. Before the High Court it was contended for the first time that the appellant school was not a juristic person and was not, therefore, entitled to file the suits through its Manager and as such the judgments of the Small Cause Court and the District Judge were ineffective and the decrees unenforceable. The counter argument of the school was that as a recognised institution under the U.P. Basic Education Act, 1972 it has juristic status and furthermore it is the registered owner of the suit property, having obtained the sale deed in its own name and over and above all these the suit had been instituted by Dr. Om Prakash who was not only the Manager of the school but also the Secre tary of the Registered Society and as such, the suits were fully maintainable under law and consequently the judgments and decrees of the Small Cause Court and the District Judge were perfectly valid and enforceable. Besides putting forth such contentions, the appellant school, by way of abundant caution also filed a petition under Order 1 Rule 10 Civil Procedure Code for amending the plaint by correcting the name of the plaintiff into Smt. Chandramukhi Ram Saran Shiksha Samiti by Secretary Om Prakash in place of the name of the Bal Niketan Nursery School by Manager Dr. Om Prakash. The High Court declined to uphold the contentions of the appellant school as in its view Clause (14) of the Constitu tion of the Registered Society contained a specific provi sion to the following effect. "All the legal proceedings by the Society and against the Society will be done either by the Manager or by the Secretary or by a person authorised by them" and as such, the appellant school was not a juristic person and only the registered society.had the authority and competence to file the suits. The High Court, therefore, held that the suits filed by the appellant school were not maintainable and consequently the judgments and decrees passed by the Small Cause Court and the District Judge were liable to the set aside and accordingly quashed them in three suits alone since the 4th suit (SCC Case No. 259/1977) had been compromised after the filing of the Writ Petition. In so far as the application under Order 1 Rule 10 is con cerned, the High Court observed that the proper course for the appellant school was to move the Small Cause Court for getting the description of the plaintiff corrected and then pursue the proceedings for eviction. The High Court also gave directions to the Small Cause Court as to how the suits were to be dealt with after amendment of the plaint in the following terms: 516 "It is made clear that in case the Judge Small Cause Court exercises the powers under Order 1 Rule 10, C.P.C. by correcting the description of the plaintiff, i.e. by getting the juristic person the Society substituted as plaintiff in the suit the defendant would be entitled to file additional written statement and the parties shall be afforded opportunity to lead fresh evidence in the case. " Aggrieved by the judgment of the High Court the appel lant school has preferred this appeal by special leave. Mr. Kacker, learned counsel for the appellant advanced five contentions set out below to impugn the judgment of the High Court. The contentions are as follows: (1) The appellant school being a recognised institution under the U.P. Basic Education Act, 1972 is a legal entity and is, therefore, entitled to file the suits in its own name. (2) Besides, the suit property has been purchased in the name of the appellant school and as the owner of the property the appellant is by itself entitled under law to file suits for seeking ejectment of the tenants. (3) Consequent upon the purchase of the land and super structures and the vesting of possession in it, the appellant became the landlord of the tenants and the entire rental income is being used for running the school. Therefore, in its capacity as the landlord of the tenants the appellant school is entitled to file the suits for ejectment notwithstanding clause 14 of the Constitution of the Registered Society. (4) Even if it is viewed that the Registered Society is alone entitled to file the suit Dr. Om Prakash who is competent to file the suit on behalf of the Registered Society has filed the suits on behalf of the school and as such the Society is fully represented by Dr. Om Prakash and thereby Clause (14) of the Constitution of the Soceity stands satisfied. (5) Even if a hyper technical view is to prevail requiring the suits to be filed only in the name of the Registered Society through its Secretary/Manager, the High Court should have allowed the petition under Order 1 Rule 10 C.P.C. and disposed of the Writ Petitions on merits instead of quashing the concurrent findings of 517 the courts below and remitting the suits to the Small Cause Court for fresh disposal after dealing with the petition under Order 1 Rule 10 C.P.C. Learned counsel for the respondent refuted the conten tions of Mr. Kacker and strenuously argued that the appel lant is not a recognised school but even if it is treated as a recognised institution under the U.P. Basic Education Act and even if the sale deed pertaining to the land and super structures has been obtained in the name of the school, it is only the Registered Society which can lawfully institute suits on behalf of the school or defend actions against it and that Clause (14) of the Constitution of the Society has overriding effect, and hence the suits filed by the appel lant school are not maintainable. Having given our careful consideration to the arguments of the learned counsel and the view taken by the High Court we are of the opinion that the High Court was in error in sustaining the belated objection taken by the tenants re garding the competence of the appellant to file the suits and quashing the decrees for eviction passed against the tenants and remanding the suits to the Small Cause Court for fresh disposal after first considering whether the suits had been instituted in the name of the wrong plaintiff due to a bona fide mistake and whether the mistake calls for rectifi cation by allowing the petition filed under Order 1 Rule 10 C.P.C. The reasons which have prompted us to come to this conclusion are manifold and may be enunciated in the follow ing paragraphs. Under the U.P. Basic Education Act, the appellant school has been granted recognition as a recognised institution and by reason of such recognition the school is conferred cer tain rights and obliged to perform certain duties. One of the rights flowing from the recognition granted to the school is an exemption from the provisions of the Rent Act. Consequently, the appellant school has acquired rights by reason of the statutory recognition given to it under the U.P. Basic Education Act and to that extent the appellant school stands clothed with legal status. It is not, there fore, a non entity in the eye of law. Viewed from that perspective the appellant is entitled to file the suits through its Manager to seek the eviction of the tenants occupying the superstructures. Of course, the learned coun sel for the respondent tried to contend that certain pro ceedings have been initiated for impugning the recognition granted to the appellant school under the U.P. Basic Educa tion Act and as such the appellant 's status as a recognised institution cannot be taken for granted. We cannot counte nance this argument 518 because any proceedings instituted to impugn the recognition of the school subsequent to the filing of the suits cannot affect the status of the school at the time the suits were filed. Furthermore, the respondent has not produced any material to show that the recognition granted to the school has been subsequently withdrawn. Secondly, apart from the legal status acquired by the school as a recognised institution, it is admittedly the registered owner of the suit property even though the pur chase price may have been provided by the society. It is not in dispute that the sale deed pertaining to the land and the super structures has been obtained in the name of the school. Even as a benami owner of the property, the appel lant is entitled in law to preserve and protect it and to institute actions in that behalf so long as they do not conflict with the rights of the society. As a corollary to this proposition it follows that the appellant constitutes the landlord of the tenants after the property was purchased in its name and rents from the tenants became to be collect ed. Once a jural relationship of landlord and tenants was formed between the appellant and the tenants by operation of law the appellant 's right to initiate actions against the tenants for recovery of arrears of rent or recovery of possession of the leased property cannot be questioned or disputed. Even if we are to close our eyes to the right of the appellant to file suits against the tenants in its capacity as a recognised institution or as the ostensible owner of the property or as the landlord of the tenants and are to judge the status of the appellant solely with reference to Clause (14) of the Constitution of the Society it may be noticed that Dr. Om Prakash is not only the Manager of the School but also the Secretary of the Registered Society. The suits against the tenants have admittedly been filed by Dr. Om Prakash and even as per Clause (14) of the Constitution of the Society he is competent to file suits on behalf of the Society. The school as well as the Registered Society, being institutions, they can file suits or defend suits only through a competent office bearer managing the affairs of the school or the Registered Society. Inasmuch as the suits have been instituted by Dr. Om Prakash albeit as Manager of the school he has not ceased to be the Secretary of the Society and it can, therefore, will be taken that the suits have not been instituted by an incompetent person who is not empowered under the Constitution of the Society to file suits on behalf of the Society. There is, therefore, no merit in the belated objection raised by the tenants that the suits are not maintainable in view of Clause (14) of the Constitution of the Society. The suits, even if not insti tuted in the name of the Registered Society, are neverthe less competent actions 519 because they have been filed by Dr. Om Prakash who is compe tent to file suits on behalf of the Society also for recov ering possession of the leased property to the school. The last and final ground which needs setting out in some detail is that even if a rigid view is taken and it is to be held that the suits have not been instituted in the name of the proper person viz. the Society, the High Court should have seen that Order 1 Rule 10 has been expressly provided in the Civil Procedure Code to meet with such situations so that the rendering of justice is not hampered. The Rule provides that if a suit has been instituted in the name of a wrong person as plaintiff or if there is a doubt as to whether the suit has been instituted in the name of the right plaintiff the court may, at any stage of the suit, if it is satisfied that the suit has been instituted due to a bona fide mistake and that is necessary for the determina tion of the real matter in dispute so to do, order any other person to be substituted or added as plaintiff upon such terms as the court thinks just. The scope and effect of Order 1 Rule 10 has been considered in numerous cases and there is a plethora of decisions laying down the ratio that if the court is satisfied that a bona fide mistake has occurred in the filing of the suit in the name of the wrong person then the court should set right matters in exercise of its powers under Order 1 Rule 10 and promote the cause of justice. The courts have gone so far as to hold that even if the suit had been instituted in the name of a person who had no competence to file the suit, the courts should set right matters by ordering the addition or substitution of the proper plaintiff for ensuring the due dispensation of jus tice. We may only refer to a few decisions in this behalf. In Hughes vs The Pump House Hotel Company Limited (No. 2), [1902] 2 Kings Bench 485) a dispute was raised regarding the competence of the plaintiff to file a suit because doubts were cast as to whether the plaintiff had made an absolute assignment of his claim against the defendants, or only an assignment by way of charge. Thereupon an applica tion was made under Order XVI Rule 2 (corresponding to Order 1 Rule 10 CPC) for substitution of another person as plain tiff. The application was allowed and that was upheld by the Court of Appeal and it was pointed out that the fact that the original plaintiff had no cause of action would not take away the jurisdiction of the court to order the substitution of another person as plaintiff. In Krishna Bai vs The Collector and Government Agent, Tanjore & Others, (ILR 30 Madras 419) when it was found that a suit for ejectment of a defendant had been brought by the Collector and 520 Government Agent due to a bona fide mistake instead of the beneficiaries of the estate, the court allowed an applica tion for substitution of the correct plaintiff and it was further held that the fact that the Collector had no right to institute the suit would not stand in the way of the court ordering the substitution of the correct plaintiff. In Sitla Bux Singh vs Mahabir Prasad, (AIR 1936 Oudh 275) it was held that where a person prohibited from dealing in actionable claim under Section 136 Transfer of Property Act obtained an assignment of a bond through a bona fide mistake and instituted a suit on the basis of the same, the provisions of Order 1 Rule 10 would apply and the assignor can be substituted in place of the assignee as plaintiff and allowed to continue the suit. In Dinanath Kumar vs Nishi Kanta Kumar and Others, (A.I.R. 1952 Calcutta 102) the court allowed an application under Order 1 Rule 10 CPC and permitted a person who claimed that he was the real owner of the property and the original plaintiff was only a benamidar to be added as plaintiff in order to avoid multiplicity of proceedings and that he was a necessary party to the proceedings. In Laxmikumar Srinivas Das vs Krishnaram Baldev Bank, Lashkar and another, (A.I.R. 1954 M.B. 156) it was held that the words "where a suit has been instituted in the name of the wrong person as plaintiff" must be construed to include those suits which the instituted by persons who had no right to do so and that the fact that the person instituting the suit had no cause of action would not take away the court 's jurisdiction to order substitution of another as plaintiff. In Karri Somalu vs Thimmalapalli Venkataswamy and oth ers, it was held that the expression "wrong person" in Order 1 Rule 10 cannot be confined merely to a person wrongly described but would also extend to include a person whose name ought not to have figures as plaintiff for want of right to file the suit and that the object of the Rule is to save suits instituted honestly although in the name of the wrong person as plaintiff and to ensure that honest plaintiffs do not suffer. In Udit Narain Singh Malpaharia vs Additional Member Board of Revenue, Bihar and another; , it was held that in proceedings for a writ of certiorari it is not only the Tribunal or Authority whose order is sought to be quashed but also the parties in whose favour the said order is issued who are necessary parties and 521 that it is in the discretion of the court to add or implead proper parties for completely settling all the questions that may be involved in the controversy either suo motu or on the application of a party to the writ or on application filed at the instance of such proper party. In Murari Mohan Deo vs Secretary to Government of India, ; the dismissal of a petition under Article 226 of the Constitution by the Judicial Commissioner was challenged by the appellant therein. The Judicial Commis sioner found that the appellant who was a forester in the employment of Tripura Government had been wrongly removed from service by an order of compulsory retirement but never theless refused to grant relief to the appellant because he had failed to implead the Government of India which was a necessary party to the proceedings. This Court disapproved the dismissal of the writ petition on the technical ground and observed as follows: "Respondent 1 is shown to be the Secretary to the Government of India, Ministry of Home Affairs. If there was technical error in the draftsmanship of the petition by a lawyer, a Forester a Class IV low grade servant should not have been made to suffer. An oral request to correct the description of the first respondent would have satisfied the procedural requirement. By raising and accepting such a contention, after a lapse of six years, the law is brought into ridicule. The court could have conveniently read the cause title as Government of India which means Union of India through the Secretary, Ministry of Home Affairs instead of the description set out in the writ petition and this very petition would be competent by any standard. The contention is all the more objectionable for the additional reason that the appointing authority of the appellant, the Chief Commis sioner of the Government of Tripura as well the Chief Forest Officer who passed the impugned order were impleaded and they represented the administration of Tripura Government as well as the concerned officers. Therefore, not only the petition as drawn up was competent but no bone of contention could be taken about its incompetence." Having regard to this settled position of law the High Court ought not to have sustained the objection raised by the tenants regarding the competency of the appellant to file the suits and quashed the orders of eviction concur rently passed by the Small Cause Court and 522 the Appellate Judge and remitted the suits for fresh consid eration with directions to consider the merits of the appli cation under Order 1 Rule 10 CPC but should have itself allowed the petition and added the Registered Society repre sented by its Secretary Dr. Om Prakash who is already on record, also as a party and disposed of the writ petitions on their merits. We, therefore, allow the appeal and remit the matter to the High Court for disposal on merits after allowing the application filed under Order 1 Rule 10 CPC by the appellant and ordering Smt. Chandramukhi Ram Saran Shiksha Samiti through its Secretary Dr. Om Prakash to be also added as a plaintiff in the suits so as to make it clear that Dr. Om Prakash is representing not only the appellant 's school but also the Registered Society and dispose of the writ peti tions on merits after the formal amendments have been car ried out in the pleadings. The parties are directed to bear their respective costs. N.P.V. Appeal allowed.

Section 2(1)(b) of the U.P. Urban Building Regulation of Letting, Rent and Eviction Act, 1972 lays down that "nothing in this Act shall apply to any building belonging to or Vested in a recognised institution, the whole of the income from which is utilised for the purpose of such institution. " The manager of the appellant school, a recognised insti tution under the U.P. Basic Education Act, 1972, run and managed by a Registered Society issued notice of termination of tenancy to the four tenants of the super structures (Khaprails) purchased by it, under Section 106 of the Trans fer of Property Act and demanded surrender of possession. As the tenants failed to surrender possession, he filed sepa rate suits against the four tenants for ejectment and pay ment of arrears of rent. The respondent and the other ten ants contended that the school was not a recognised educa tional institution entitled to the benefit of Section 2(1)(b) of the U.P. Urban Building Regulation of Letting, Rent and Eviction Act, 1972 and that the notice of termina tion of tenancy was not valid. The trial court rejected the contentions of the tenants and decreed the suits in favour of the school. The revisional court confirmed the judgment and decree of the trial court and dismissed all the revision petitions. 511 In the writ petitions before the High Court, it was contended for the first time that the appellant school was not a juristic person and was not, therefore, entitled to file the suits through its manager. It was submitted on behalf of the school that as a recognised institution under the U.P. Basic Education Act, 1972, it has juristic status, that the suit had been instituted by a person who was not only the manager of the school but also the secretary of the Registered Society and as such the suits were fully main tainable under law. The appellant school, also filed a petition under Order 1 Rule 10 of Code of Civil Procedure for amending the plaint by correcting the name of the plain tiff into the name of the Society by its secretary in place of the name of the school by its manager. The High Court held that in view of the specific provi sion in Clause (14) of the Constitution of the Registered Society to the effect that "all the legal proceedings by the Society and against the Society will be done either by the Manager or by the Secretary or by a person authorised by them", the appellant school was not a juristic person and only the Registered Society had the authority and competence to file the suits and that the suits filed by the appellant school were not maintainable. It quashed the judgments and decrees passed by the courts below in three suits since the fourth suit had been compromised after the filing of the writ petition. Insofar as the application under Order 1 Rule 10 was concerned the High Court held that the proper course for the appellant school was to move the trial court for getting the description of the appellant corrected and then pursue the proceedings for eviction. Allowing the appeal by special leave, this Court, HELD: 1. It is well settled that if the court is satis fied that a bona fide mistake has occurred in the filing of the suits in the name of the wrong person, then the court should set right matters in exercise of its powers under Order 1 Rule 10 and promote the cause of justice. The Courts have also held that even if the suit had been instituted in the name of a person who had no competence to file the suit, the courts should set right matters by ordering the addition or substitution of the proper plaintiff for ensuring the due dispensation of justice. [519D E] 2.1 By reason of recognition granted under U.P. Basic Education Act, 1972, the appellant school stands clothed with legal status, and is not a non entity in the eye of law. [517G] 512 2.2 Any proceedings instituted to impugn the recognition of the school subsequent to the filing of the suits cannot affect the status of the school at the time the suits were filed. [518A] 2.3 The appellant constitutes the landlord of the ten ants after the property was purchased in its name and rents from the tenants came to be collected. Once a jural rela tionship between landlord and tenants was formed between the appellant and the tenants by operation of law, the appel lant 's right to initiate actions against the tenants for recovery of arrears of rent or recovery of possession of the leased property cannot be questioned or disputed. [518C D] 2.4 Even if the status of the appellant is to be judged solely with reference to clause (14) of the Constitution of the Society, the person who filed the suits is not only the manager of the school but also the Secretary of the Society and even as per this clause he is competent to file suits on behalf of the Society. The suits, even if not instituted in the name of Registered Society, are nevertheless competent actions because they have been filed by the Manager of the school who is competent to file suits on behalf of the Society also for recovering possession of the leased proper ty. [518E H; 519A] 2.5 The appellant is, therefore, entitled to file the suits through its Manager to seek the eviction of the ten ants occupying the superstructure. [517] 3. The High Court was in error in sustaining the belated objection. taken by the tenants regarding the competence of the appellant to file the suits and quashing the decrees for eviction passed against the tenants and remanding the suits to the trial court for fresh disposal, after first consider ing whether the suits had been instituted in the name of the wrong plaintiff due to a bona fide mistake and whether the mistake called for rectification by allowing the petition filed under Order 1 Rule 10 Code of Civil Procedure. [517D E] 4. Appeal allowed and the matter remitted to the High Court for disposal on merits after allowing the application filed under Order 1 Rule 10 Code of Civil Procedure by the appellant and ordering the Society through its Secretary to be also added as a plaintiff in the suits so as to make it clear that the person who has filed the suits is represent ing not only the appellant school but also the Registered Society. [522A B] Hughes vs The Pump House Hotel Company Limited (No. 2), 513 [1902] 2 Kings Bench 485; Krishna Bai vs The Collector and Government Agent, Tanjore & Others, ILR 30 Madras 419; Sitla Bux Singh vs Mahabir Prasad, AIR 1936 Oudh 275; Dinanath Kumar vs Nishi Kanta Kumar and Others, A.I.R. 1952 Calcutta 102; Laxmi Kumar Srinivas Das vs Krishnaram Baldev Bank, Lashkar and another, A.I.R. 1954 M.B. 156; Karri Somalu vs Thimmalapalli Venkataswamy and others, ; Udit Narain Singh Malpaharia vs Additional Member Board of Revenue, Bihar and another; , and Murari Mohan Deb vs Secretary to Government of India, ; , referred to.

Appeal No. 635 of 1965. Appeal by special leave from the Award dated January 8. 1963 of the First Industrial Tribunal, West Bengal in Case No. VIH 354 of 1961. B. Sen, Janardan Sharma, P.K. Ghosh and S.K. Nandy, for the appellants. Niren De, Solicitor General, M. Mukherjee and Sardar Bahadur. for respondent No. 1. The JUdgment of the Court was delivered by Bhargava, J. This appeal by special leave has been filed by ' the workmen of Messrs Hindustan Motors Ltd. against the decision of the First Industrial Tribunal, West Bengal in a dispute relating to payment of bonus for the year 1960 61. The respondent, M/s Hindustan Motors Ltd., (hereinafter referred to as 315 "the Company") was established in the year 1942 and, initially, the work taken up by the Company was that of assembling of motor cars from components imported from foreign countries. Later on, manufacture of components of motor cars was started and gradually the Company developed this work of manufacture of components by increasing the number of components manufactured by it until, at the present time, the Company is manufacturing more than 70% of the components utilised in the cars put on the market by the Company. The work of manufacturing components was taken in hand for the first time in the year 1949, according to the reply of the Company filed on 10th January, 1962, to the statement filed on behalf of the workmen. before the Tribunal. At the initial stages of its existence, the Company was running at a loss and even, as late as the year 1956. the Tariff Commission 's Report on the Automobile Industry mentioned that this Company was making a loss of Rs. 833 per car on the Hindustan Landmaster which was the car put on the market by the Company at that time. Even Subsequently, for several years. no profit was shown in the profit and loss account and, consequently, no bonus was paid to the workmen until the dispute about it was raised for the first time in respect of the year 1959 60. We were informed that the dispute relating to the payment of bonus for the year l 959 60 is still pending before the Industrial Tribunal, while the dispute with respect to bonus for the next year 1960 61 has been decided and is now before us in this appeal. In this year 1960 61, the profit and loss account of the Company showed a net profit of Rs. 249.71 lacs. Out of this, a sum of Rs. 59.53 lacs was allocated for payment of dividend on ordinary shares @ 12% and a sum of Rs. 27.55 lacs for dividend on preference shares @8.57%. The total amount allocated for payment of dividends was thus Rs. 87.08 lacs. In view of the fact that, in this year, the Company had earned a net profit of over Rs. 249 lacs. the workmen demanded bonus equivalent to six months ' wages. The monthly wage bill of the workmen is about Rs. 4 lacs, so that the total amount claimed towards bonus by the workmen came to Rs. 24 lacs. It was also stated on behalf of the workmen that, if this bonus to the extent of Rs. 24 lacs is awarded, the actual amount which the Company would have to pay will only be 55% of this amount, because 45% representing income tax on this amount would be refundable to the Company from the Government. Before the Tribunal, there was no dispute between the parties that, in order to find out whether any surplus was available for distribution of bonus, calculations must be made on the basis of the Full Bench Formula approved by this Court in The Associated Cement Companies Ltd., Dwarka Cement Works, Dwarka vs Its 316 Workmen & Another(1). The Tribunal, after making all other deductions from the surplus which have to be made in accordance with the Full Bench Formula and without taking into account provision for rehabilitation, arrived at a figure of Rs. 87.80 lacs as the amount of surplus available. Thereafter, the Tribunal held that a sum of Rs. 373.62 lacs every year was needed for rehabilitation purposes and, since this amount very much exceeded the surplus otherwise available, there was no scope for granting, any bonus at all. Consequently, the Tribunal decided the reference against the workmen and held that no bonus was payable for this year. The workmen have come up to this Court against this decision of the Tribunal. In this appeal also, there is no dispute that the principles to be applied for working out the surplus available for distribution of bonus must be those approved by this Court in the case of Associated Cement Companies Ltd.(1). On behalf of the workmen, however, it was urged that the Tribunal committed an error in applying the Formula in respect of five different items involved in the calculation. These are: (1) Rehabilitation, (2) Return on reserves used as working capital, (3) Return on paid up capital, (4) Interest on fixed deposits, and (5) Home delivery commission. Of these items, the most controversial is the first item of rehabilitation and that is also the most material one, because, if the figure of annual rehabilitation arrived at by the Tribunal is accepted, it is clear that no surplus can possibly remain out of the profits earned during the year for distribution of bonus. In the calculation of rehabilitation, various factors are involved which have been indicated by this Court in the case of Associated Cement Companies(1). The factors in calculation of rehabilitation accepted by the Tribunal which have been challenged by the workmen are: (i) the divisor, which depends upon the life of the plant, machinery and buildings, the year of their installation or erection, and the residuary life which must be taken into account when working out the divisor, (ii) the calculation of the multiplier for arriving at the replacement cost of the old machinery which requires rehabilitation. and (1) 317 WORKMEN V. HINDUSTAN MOTORS LTD. (Bhargava, 1.) 317 (iii) the deductions which should be made when working out the annual rehabilitation. We shall now proceed to deal with these points. When the dispute was taken up for adjudication by the Tribunal, the Company, on 3 l st May, 1962 filed statements showing calculations of rehabilitation provision required for rehabilitating the plant, machinery and buildings. Amongst these statements was a statement described as Schedule IA (hereinafter referred to as "the first Schedule IA") and in that statement it was claimed on behalf of the Company that the average total life of its machinery was 6 years. On behalf of the workmen, it was urged that the life of the machinery should be taken to be 30 years and on this basis, ,after the arguments were over a rehabilitation cost calculation was filed on 21st November, 1962. Thereafter, in the course of arguments on 22nd November, 1962, some fresh statements were filed by the Company. These statements in respect of the machinery had two new Schedules, both marked as Schedule IA. In one of these Schedules IA filed on 22nd November. 1962, the multiplier taken for replacement of the machines installed in various years was higher than the multiplier in the first Schedule 1A. This Schedule shall be referred to. as "the second Schedule 1A". At the same time, as mentioned earlier, another Schedule IA was filed and, in this Schedule IA, the multipliers were the same as in the first Schedule 1A. This shall be referred to hereinafter as "the third Schedule 1A". In none of these Schedules filed, either on behalf of the Company or on behalf of the workmen, was there any classification of plant and machinery into precision or non precision machinery. Some statements for the purpose of calculation of rehabilitation were again filed on behalf of the Company on 28th December, 1962 under the directions of the Tribunal and it appears that, taking into account the evidence which had been led before the Tribunal, the Tribunal at this stage asked the Company to give separate Charts for precision machinery and non precision machinery. Consequently, the statements flied on 28th December. 1962 classified the machinery into precision and non preCision machinery. It seems that the Tribunal, in making this direction was also influenced by the circumstance that, under the Income tax Law, the depreciation allowed in respect of precision and non precision machinery is different, from which the Tribunal. inferred that precision machinery will have a shorter life than non precision machinery. In fact, the Tribunal was of the view that the proportion between the life of precision and non precision machinery can be safely taken to be the same as the proportion between the depreciation allowed in respect of the two. Proceeding on this basis, the Tribunal, in the statements prepared for and annexed as. part of the LISup. C.I./68 6 318 Award, classified the machinery into precision and non precision machinery and worked out different life for the two kinds of machinery. In the course of arguments before us, it was urged on behalf of the workmen that the Company not having claimed that machinery classified as precision had a shorter life than machinery classified as non precision either in the written statements or at the stage of filing the first Schedule 1A or even the second or third Schedule IA, there was no justification for the Tribunal to. accept this. classification and work out different periods of life for different classes. of machinery. Mr. Niren De, counsel appearing on behalf o.f the Company, in his argument before us also urged that the Company at No. stage put forward the Case that the machinery should be classified into precision and non precision machinery and different life should be attributed to the two classes of machinery. According to him, the Company 'section case throughout has been that all machinery installed m the. factory of the Company has an economic life of 6 years only, so that the Company is not prepared to justify the decision given by the Tribunal on the basis of this classification. Since both parties before us challenge the adoption of this classification by the Tribunal, we consider that it will be right to ignore this. classification and to proceed on the basis that the total life of the machinery must be worked out on an average for all the machines installed in the factory of the Company, without making any distinction between precision machinery and non precision machinery. As we have mentioned earlier, the contention on behalf of the workmen was that the life of the whole machinery should be taken to be 30 years. Mr. B. Sen, counsel appearing on behalf of the workmen, drew our attention to a number of cases, in which the life of the machinery came up for consideration either before the Labour Appellate Tribunal or before this Court in connection with calculation of rehabilitation provision. first case brought to our notice was Saxby & Farmer Mazdoor Union, Calcutta vs M/s. Saxby & Farmer (India) Ltd., Calcutta(1), in which, for purposes. of calculation of rehabilitation, the life of machinery was taken to be 30 years. Another case between the Workmen of M/s. Saxby & Farmer (India) Pvt. Ltd. vs M/s. Saxby & Farmer (India) Private Ltd.(2) in respect of a subsequent year came up before this Court. In that case, the Tribunal, in its Award, fixed the life of the machinery at 20 years and on behalf of the, workmen it was urged that it should have been 30 years as accepted by the Labour. Appellate Tribunal in respect of the earlier year in the of Saxby & Farmer Mazdoor Union, Calcutta(1). This Court held that the life of 30 years. had been taken at a time when (1) (2) Civil Appeal No. 152 of 1964 decided on 12 4 1965. 319 the machinery was. being worked in two, shifts, while, in the subsequent case, it was shown that the machinery was working in three shifts, so that it could not be said that the Tribunal was wrong in fixing the life in this subsequent case at 20 years. Relying on these cases, Mr. Sen urged that, in the present case also, we should take the life of the machinery to be 30 years. In The Millowners Association, Bombay vs The Rashtriya Mill Mazdoor Sangh,Bombay(1), the Full Bench of the Labour Appellate Tribunal, when laying down the formula that was later approved by this Court, appears to. have accepted the life of textile machinery as 25 years, while this Court, in the case of the Associated Cement Companies Ltd. (2), proceeded on the basis that the life of the machinery was 30 years. In the Honorary Secretary, South India Millowners Association and Others vs The Secretary, Coimbatore District Textile Workers ' Union(1), this Court confirmed the finding of the Tribunal that the estimated life of the textile machinery of the Company concerned in that case should be taken. to be 25 years. It is on the basis of these decisions that the claim was put forward that the life of the machinery in the present case should also. be taken to be 30 years or at least 25 years. In our opinion.this argument proceeds on an entirely incorrect basis. The life of a machinery of one particular factory need not necessarily be the same as that of another factory. Various factors come in that affect the useful life of a machinery. There is, first, the consideration of the quality of machinery installed. If the machinery is purchased from a country producing higher quality of machines,it will naturally have longer life, than the machinery purchased from another country where the quality of production is lower. Again, the articles on which the machinery operate.s may very markedly vary the life of a machine. If, for example, a machine is utilised for grinding of cement, the strain on the machine will necessarily not be the same as on a machine which operates on steel o.r iron. We are, therefore, unable to accept the suggestion that the: life of the machinery in the present case should have been fixed on the basis of the life accepted in other cases in which decisions were given on bonus disputes either by the Labour Appellate Tribunal or by this Court. The Tribunal, in its decision, worked. out the life of the machinery on 'the basis of the percentage of depreciation allowed under the Income tax Act. The application of this principle has been attacked before us by both the parties. It is urged that the artificial rule laid down in the Income tax Act for calculation of notional depreciation can provide no criterion at all for determining the life of the machinery. We think that the parties are (1) (2) (3) [1962] 2 Supp. S.C.R. 926. 320 correct and that the Tribunal committed an error in proceeding on this basis. Though, in the case of the Honorary Secretary, South India Millowners ' Association(1), this Court, on the facts of that case, accepted the life of the textile machinery as 25 years; the Court also laid down the principle for.finding out the life of machinery in the following words : "We are not prepared to accept either argument because, in our opinion, the life of the machinery in every case has to be. determined in the light of evidence adduced by the parties." (p. 933) Obviously, this is the correct principle, because it is only when the life of machinery is determined in the light of evidence adduced by the parties in a particular case that the authority determining the life can take into account all the factors applicable to the particular machinery in question. As we have indicated earlier, when determining the life of a machinery, factors, such as the quality of the material used in the machines and the nature of the material on which the machines are to operate, very materially affect their life. Further, the life of a machine will also depend on the. manner in which it is handled in a particular factory. We, consequently, in this case proceed to examine the evidence given by the parties. in this behalf. In order to prove the life of machinery, one method usually adopted by the Companies is to tender evidence of experts. In the. present case, the Company tendered in evidence the statement of an expert, Gerald Waplington, which was recorded earlier on 5th November, 1961 by the Fifth Industrial Tribunal in a dispute pending before it. That dispute was also between this very Company and its workmen. In giving the life of machinery, Waplington first classified the machines into two classes general purpose machine tools and special or single purpose machine tools and expressed the opinion that a general purpose machine tool used for one single operation is likely to have a shorter economic life than special or single purpose machine tool. According to him, a general purpose machine carrying on work of high accuracy will have an economic life of the: order of 2 to 3 years only, while a special purpose machine doing similar work of high accuracy working 400 hours a month will have an economic life of 5 to 6 years. If the work taken. from the machines is of less accuracy. then, in his opinion, a general purpose machine may have an,economic life up to 5 years, and a special purpose machine an econoevidence available in this case. It may however, be noted that (1) [1962] 2 Supp. S.C.R. 926. 321 tinction between economic life and useful life. He twice stated that economic life of a machine would be only 1/3rd of the useful life of the machine, so that if, on the basis of his evidence, the useful life of various classes of machines mentioned by him is to be worked out, the member of years given for each class by him above will have to be multiplied by 3. Thus, according to his evidence, the economic life of a machine will vary from 2 to 3 years as a minimum to 7 to 10 years at the maximum, and working out the useful life on the basis of his statement that economic life is only 1/3rd of the useful life, the machines would have a minimum of 6 to 9 years and a maximum of 21 to 30 years useful life. We shall consider what inferences can be drawn from his statement at a later stage when we have discussed the other evidence available in tiffs case. It may, however, be noted that Waplington is the only expert who can be held to. be entirely disinterested, because the other two experts examined are employed as Engineers by the Company itself. This independent witness, Waplington, was not asked whether he had seen the various machines in the factory of the Company, nor was he at any tune requested to indicate how many different machines in the factory of the Company would fail in the various classifications mentioned by him for which he has given different periods in respect of economic life. The Other two witnesses examined are Joseph Joyce, General Master Mechanic, and Girish Chandra Bansal, Master Mechanic, employed by the Company. Both of them have, in their statements given out their qualifications and experience which they. have in dealing with automobile manufacturing machinery. According to Joyce, the economic life of the machinery of the Company cannot go beyond 6 years, and this statement was. made on the basis of the machines working 16 hours a. day in two shifts of 8 hours each. Later on, he added that, applying American standard, the life of the machines can only be 6 to 10 years. In giving the life, he qualified that word with "economic" or "economic useful", so that he equated economic life with economic useful life and gave the figures on this basis. In cross examination, he, however, admitted that useful life of a machine is longer than its economic life. Thus, if various, statements of his are taken into account and it is kept in view that he is. an employee. of the Company, it may be accepted that, according to him, the maximum ,economic life of the machinery of the Company will be between 6 to 10 years and the useful life will be longer how much longer, he has not indicated. If we were to assume that he is using the expressions "economic life" and "useful life" in the same: sense in which they were used by Waplington, economic life would be 1/3rd of the useful life, with the result that, on his evidence, useful life of the machinery of the Company would work out to be 322 anywhere between 18 to 30 years. The third witness, Girish Chandra Bansal, estimated the efficient economic life, based on 16 hours per day working, at 6 to 10 years, which Coincides with the ' estimate by Joyce. In his case, however, no questions were put to. elicit from him whether he would make any distinction between efficient economic life and useful life, so. that his evidence does not appear to carry us any farther than the evidence of Joyce. It may be added that both these witnesses in their evidence stated that the workmen employed by the Company were not very skilled workers and this was a factor that had to be taken into account in considering the life of ' the machines in this company. It is obvious that, if a machine is handled by a more skilful worker, it will last longer and have a longer life. A Statement was also made by Joyce that machine.s running at high speed will have shorter life than those running at lower speeds; but this general statement made by him offers no assistance to us in this case, because he has not indicated in his evidence how many and which of the machines of the Company run at high speed and which at lower speed. Apart from this evidence of experts, the Company has attempted to provide some other data which can be of assistance in assessing the life ' of the machinery. In this connection, Mr. Niren De, arguing the case on behalf of the Company; drew our attention to the history of this Company which showed that, initially, this Company started the work of assembly of cars from parts imported from foreign countries. some time in the year 1942 43, but, later, the policy was. altered and manufacture of components was taken up and progressively increased so as to minimise foreign. import. He also pointed out that this policy of progressive production of indigenous parts was pressed Upon the Company by the Government and, for this purpose, drew our attention to the: first and the Second reports of the Tariff Commission in the years 1953 and 1956, as well as the report of the lid Hoc Committee on Automobile Industry known as the Report of the Jha Committee, because Sri L.K. Jha was its Chairman. This report came out in the year 1960. It was Urged by Mr. De that, due to. this policy of progressive increase in manufacture of new components, it was not possible for the Company to find money to rehabilitate old machinery and, consequently, the fact that the Company continued to use old machinery for a number of years should not be taken as indicating that machinery 'still had economic or useful life. It was argued. that the Company per force had to continue use of these 'old machines, because it was under pressure to expand its activities. by taking up manufacture of components and the Company was running at a loss. It has already been mentioned earlier ' that in the second report of the Tariff Commission in 1956 it was clearly stated that this Company was selling cars at a loss of 323 Rs. 833 per car. It is in this background that the evidence given by the Company should be judged to find out what is the life of the machinery possessed by the Company. He also drew our attention to the principles laid down in this connection by the Full Bench of the Labour Appellate Tribunal in the Millowners ' Association 's case (1), and by this Court in the Associated Cement Companies ' case(2). In the former case, when laying down the principle that provision should be ' made for rehabilitation replacement and modernization of the machinery, the Tribunal held that: "It is essential that the plant and machinery should be kept continuously in good working Order for the purpose of ensuring good return. and such maintenance of plant and machinery would also be to the advantage of labour, for. the better the machinery the larger the earnings, and the better the chance of securing a good bonus. " In the latter case, this Court, when examining the scope of claim for rehabilitation. held that: "this claim covers not only cases of replacement pure and Simple but of rehabilitation and modernisation. In the context, rehabilitation is distinguished from ordinary repairs which go into the working expenses of the industry. It is also distinguished from replacement. It is quite/conceivable that certain parts of machines which constitute a block may need rehabilitation though the block itself can carry on for a number of years; and this process of rehabilitation is in a sense a continual process. Unlike replacement, its date cannot always be fixed or anticipated. So with modernisation and all these three items are included in the claim for rehabilitation. That is why we think it is necessary that the Tribunals should exercise their discretion in admitting all relevant evidence which would enable them to ' determine this vexed question satisfactorily." Proceeding further to. distinguish between cases of replacement. modernisation and expansion, the Court held: "If it appears fairly 'on the evidence that the introduction of the modern plant or machine is in substance an item of expansion of the industry, expenses incurred in that behalf have to be excluded. On the other hand, if the employer had to introduce the. new plant essentially because the use of the old plant. though capable (1) (2) 324 of giving service was uneconomic and otherwise wholly inexpedient, it may be a case of modernisation. Similarly; if by the introduction of a modern plant or machine the production capacity of the industry has. appreciably increased, it would be relevant for the Tribunal to consider in an appropriate case whether it would be possible to apportion expenses on the basis that it is a case of partial modernisation and partial expansion. " It will thus. be seen that, when considering the question of rehabilitation, what is essentially to be taken into. account is that the old plant, though capable of giving service, was uneconomic and otherwise wholly inexpedient when provision for its replacement and rehabilitation, even though it will include modernisation would be fully justified. In this context, it may be worthwhile examining at this stage the difference between economic life and useful life on which emphasis has been laid by Mr. Sen on behalf of the workmen. We have already indicated earlier that even the expert examined behalf of the Company, Gerald Waplington, made a distinction between economic life of machinery and its useful life, Further, in giving the life, he applied American standards which may not be applicable in India. Court, in various cases where the question of rehabilitation has been discussed, has laid emphasis on useful life rather than on economic life and, oven in the Associated Cement Companies ' case(1) in the extract quoted above, the Court held that modernisation is justified when the use of the old plant becomes uneconomic and otherwise wholly inexpedient. Thus, two tests were laid down, first, that it should be uneconomic and, second, that it should be also otherwise wholly inexpedient. The economic life, as envisaged by Waplington, was not, therefore, considered the appropriate. test for determining when rehabilitation of the plant and machinery would be justified. In fact, one of the very major considerations, that should be taken into account is the actual practice of the manufacturers using the machinery and if evidence be available, to find out how long the manufacturers continue to use the machinery as a rule. It may be that, during the last few years of use, the machinery may.be continued to. be utilised because of want of resources and compulsion to retain the machinery, because replacement is not possible at all. It is in the light of this. situation that we proceed to examine the evidence given by the Company about the behaviour of its machinery and the steps taken by the Company to have the old machinery rehabilitated. (1) 325 In this connection, two statements filed on behalf of the Company are of significance. One of these is a list of obsolete and/or discarded machines prepared on 26th October, 1962 and marked as Ext. It is to be. noticed that, though 40 different machines were discarded by 26th October, 1962 when this statement was prepared, none of the machinery discarded was that installed up to. the year 1947 48. In fact, this situation is also borne out by the three Schedules IA which have been referred to earlier by us. In those Schedules 1 A, the machinery discarded and written off from books is shown as being worth Rs. 35,000/ out of machinery of the value of Rs. 89.75 lacs installed in the year 1947 48. Thus, the machinery of that year discarded was nominal in value. None of the machinery installed between 'the years 1948 49 to 1951 52 was discarded. Again, the machinery installed in 1952 53 was discarded to the extent of the nominal value of Rs. 39,000/ out of Rs. 11.06 lacs, and no machinery installed in 1953 54 was discarded. The machinery discarded was primarily that installed in the years 1954 55 to 1957 58, and its value was in the region of Rs. 46 lacs. Thus, right up to 1962, the old machinery purchased up to the year 1954 was almost all continued in use and was not discarded, even though machinery installed in the next four years was considered unfit for further use and. was discarded or written off, The second statement is Ext. 21 which bears the heading "replacement programme condition of machine tools" and which was prepared in March, 1960 in order to claim foreign exchange from the Government for replacement of machinery. That list contains more than 200 machines, but, again, the machines installed during the year 1947 48 or earlier included in it are only 5 in number, whereas the majority of machines. included in that list are those installed in later years,. Significance attaches to this factor, because the machines ins.tailed in the year 1947 48 were of very large value, their cost being. in excess of Rs. 89 lakhs. In fact, that is the year in which the investment on installation of machinery was highest, barring the year of bonus and the year immediately preceding it. This statement thus shows that, even though the Company wanted replacement of a number of machines which had been installed even in the year 1949 50 and some machines installed in later years, the replacement of those machines was given preference over the replacement of machines installed earlier in the year 1947 48. In this statement, in the remarks column,. it was mentioned that these machines are to be scrapped. but there was no statement that machines which had been installed in the year 1947 48 were also in such a condition that they required scrapping. Thus, these statements provide some indication of the life of machinery which point both ways. The fact that old machinery of 1947 48, though of large value, was not 326 considered to be in such a condition as to require immediate replacement in preference to machinery installed later would point towards that machinery having a fairly long life. On the other hand, there is the factor that machinery installed in later years was actually scrapped or was sought to be scrapped, and this necessarily means that later machinery was considered as having shorter life. In this connection, another statement of which notice may be taken is Ext. 29 which shows prices of certain machines originally purchased by. the Company which is to be rehabilitated, and the prices of the same machines, which were purchased in the two years preceding the time when Girish Chandra Bansal was examined before the Tribunal. Girish Chandra Bansal 's ,evidence was recorded on 14th November, 1962 'and in his statement before the Tribunal he stated that Ext. 29 was prepared to compare the prices of same machines in earlier years when they were purchased originally and again when similar machines were purchased a second time in the past two years. This statement has the significance that, though in the past two years the Company took the step of purchasing machines which would perform the identical functions which the old machines were performing, the Company chose to add these machines as new ones, as a part of its scheme of expansion rather than replace those old machines. In the year 1961 62, therefore, the Company was still of the opinion that it was preferable to add a new machine of the same type rather than replace an old machine doing the same work, and an inference would necessarily follow that old machine must have been considered to be sufficiently serviceable. This is the view that the Company appears to have held in respect of machinery which was installed 14 or 15 years earlier. On behalf of the Company, some statements were also. filed to show that there were very frequent break downs in the machinery of the Company and. as an illustration, our attention was drawn to the statement for the period January, 1960 to September, 1960. It is true that, if there are very frequent break downs in machinery, this would give an indication of the condition of the machinery and lead to the inference that their useful life is coming to an end. There is, however, one great difficulty in drawing any conclusion from the statistics of number of break downs of the machinery put forward on behalf of the Company. The Company has. no doubt, shown us statements that a number of machines had break downs during the last few years preceding the year of bonus. but no material was brought to our notice from which it might have been possible to compare how the same machinery was behaving in earlier years or within the first few years after it was installed. Unless it be possible to compare the number of 327 break downs. when their life is claimed to be over with the number of break downs when the machine was almost new ' or 'was running its economic or Useful life, no assistance is available for assessing the. life of the machinery from a mere table showing the number of break downs. Further, it was not possible from these statements ' to find out which of the machines installed in which year were subject to the break downs, nor did these statements give us any picture about the percentage of machines installed in different years which ' were included in these 'statements. Consequently, we have felt handicapped in drawing any inference from these statements. Reliance was also placed on some statements showing that, for purposes of granting incentive bonus, a rated time was prescribed for various machines and progressively this rated time in respect of a large number of machines has had to be increased in order to enable the workmen to earn bonus, because the machines themselves are not working efficiently and. if the rated time is not increased, the workmen would fail to qualify for incentive bonus for no fault of their own and simply because the machines on which they were required to work had deteriorated in condition. It is true that the statement given of increase of rated time gives some indication that the condition of the machinery in this factory has been going down and though this. factor is relevant in determining the useful life of machinery, it cannot carry us very far, because there is no evidence ' which would enable us to lay down a correlation between the increase in the rated time and the expiry of the useful life of the machinery. It is not possible on the evidence to discover how much the rated time is expected to increase before it can be said that the machinery has completely run out its useful life. Mr. De also drew our attention to the statements of some of the witnesses who. deposed that machinery running at high speed has a shorter life than that running at low speed. This general statement, however, is of no assistance, because the Company did not attempt to classify its machines between high speed and low speed ones and ' to give evidence in that behalf. Lastly, it was urged by Mr. Sen on behalf of the workmen that another factor which should be taken into account is that, according to the Full Bench Formula, for calculation of rehabilitation the machinery is treated as scrapped when its value is reduced to 5%, because the break down value of 5% is all that is deducted when calculating the requirements for rehabilitation. The argument was that the fact that the. break down value is taken at 5% indicates that the machinery 'for purposes of rehabilitation is treated as still useful unless its value is reduced to that low figure. 328 This is, no doubt, another aspect that must be taken into. account, though we are unable to accept the submission that a machinery should be deemed to have useful life until it reaches the stage of having a break down value of 5%. No such absolute rule can be inferred. In this case, the Tribunal, in fixing the life of the machinery, as we have mentioned earlier, proceeded to calculate it on the basis of the depreciation rate permitted under the Income tax Act. That basis was not acceptable to either of the parties before us. On behalf of the workmen, it was urged that it was an entirely wrong principle of calculating the life, and even o.n behalf of the Company no attempt was made to support this method adopted by the Tribunal. In the Honorary Secretary, South India Millowners, Association 's case(1), this Court also rejected the argument that the calculation of the life may be based on the depreciation rate permitted by the income tax Act. In these circumstances, we have to consider the cumulative effect of the various pieces of evidence and circumstances which we have discussed above and, on its basis, to estimate what should be considered to be the useful life of the machinery of this Company. Reference may briefly be made to the various conclusions arrived at. The evidence of the independent expert and of the engineer employees of the Company gives a figure. for useful life. of machinery which may be anywhere between 6 years to. 30 years. The lower figures given by them cannot be, accepted as they relate to economic life in the strict sense of that expression and are based on American standards. At the same time, the maximum life worked out from their evidence is on the hypothesis that the useful life stated by Waplington to be three times that of economic life is also the useful life in the same proportion to economic life as given in the evidence of Joyce. Then, there is the evidence that this Company itself has been running its old machinery for quite a large number of years and even after 13 or 14 years of use, the Company in quite a large number of cases preferred, when buying similar machines, to utilise them for expansion rather than for rehabilitation. On the face of it, replacement of old machinery would have been preferred to expansion, if the old machinery had really completed its useful life. In some cases, however, machinery purchased in later years had to be rehabilitated after much shorter periods, but no detailed information is available. why such early replacement became necessary. No. ' material was provided to show the comparative quality of machines which have been run for a long time and machines which were replaced or sought to be replaced after shorter periods of us. After tak (1) [1962] 2 supp. S.C.R. 926. 329 ing into consideration the various factors mentioned by us above, and on the evidence before us, we think that in this case, it would. be appropriate to hold that the average life of the machinery of this. Company in respect of different kinds of machines obtained from different sources may be appropriately taken as 15 years. This life of 15 years arrived at by us, it may be mentioned is on the basis that the machines of the Company have been running during most of the. period, to which the evidence relates, in two shifts only. Girish Chandra Bansal, one of the Engineers of the Company, examined as a witness, stated that the machines in this Company were working in two shifts only, until, for the first time in 1959 60, the factory started to run round the clock, i.e., in three shifts. He added that the factory had been working in two shifts from the time it was founded. It is also clear that; if the. factory had been working in only one shift, the life of the machinery would have been longer, and we think that in that case lit. would have been appropriate to take the life of the machinery as 25 years. On the other hand, after the machines are being worked in three shifts, the Life of the machinery is bound to be lower and, consequently, if the machines be worked in three shifts, it would be appropriate to take the life of the machinery at 10 years. In the present case, however, we are accepting the; average life as 15 years for all the machines requiring rehabilitation, because the evidence, as mentioned above, shows that the machines have been. working in two shifts only from the time when the factory started functioning, with the exception that, in the first few years, they were worked in only one shift while, from the year preceding the year of bonus, they have been worked in three shifts. Consequently, it may be taken that, up to the year of bonus, the machines have been worked on the average, in two shifts. In working out the divisor, however, it will have to be kept in view that future life of the machinery will have to be calculated on the basis of three shifts and, consequently, on the basis of the figure of 10 years as the useful life of the machinery. We may also incidentally mention that this Court, in the case of National Engineering 'Industries Ltd. vs The Workmen & Vice Versa(1), accepted the life of the precision machinery of the Company concerned in that case as 15 years, so that the conclusion arrived at by us on the evidence in the present case happens to coincide with the figure of life accepted in that case. In this connection, we may also take notice of one point urged by Mr. De on behalf of the Company. It appears that, when working out the divisor and finding out what machinery required rehabilitation, the Tribunal did not take into account machinery installed during the bonus year itself for making provision for mic life of 7 to 10 years. In his evidence, further, he made a dis (1) Civil Appeals Nos. 356 357 of 1966 decided on 6 10 1967. 330 any machinery is installed in bonus1 year, the Company would be justified in claiming that it must immediately start making provision for its rehabilitation, though the period for rehabilitation of that machinery would only start at the end of the bonus year. Once machinery has been installed and is in existence. in the bonus year, the Company is entitled. to say that it will require= rehabilitation in future and that provision should be made for rehabilitation of that machinery also and the Company should start keeping reserves. for that purpose from the year of bonus itself. Thus, in the present case, the machinery installed in the year 1960 61 should have been included in the rehabilitation statement, though the divisor in respect of that machinery will, on our decision given above, be 15 on the basis of two shifts and 10 on the basis. of three shifts, as the machines will still have a residuary life of 15 or 10 years, computing the period from the bonus year which is also the year of installation. The second factor entering the calculation of rehabilitation requirement about which there was controversy between the parties is the multiplier. We have already mentioned the fact that, in the first and the third Schedules 1A, the Company gave one set of multipliers, while in ' the second Schedule 1A higher multipliers were given. The Tribunal took both sets of multipliers into. account and worked out the average and accepted that as the correct multiplier, representing the rise in the price: rate of the machinery requiring rehabilitation. Thereafter, the Tribunal held that the machinery which was to replace the old one would have a larger production and proceeded to work out figures for reducing the multipliers on that account. The Tribunal held that it would be justified to reduce the average multipliers arrived at by 75 for machinery installed up to ' 1951 52, by 55 for machinery installed during the years 1952 53 to 1955 56, and by 35 for that installed during the years 1956 57 to 1960 61. Before us, this method adopted by the Tribunal was criticised by counsel ' for both parties. On behalf of the workmen, it was contended that there was no justification for the Tribunal to take the average of the multipliers in the first and the second Schedules IA and that the Tribunal should only have proceeded on the basis that the multipliers given in the first Schedule IA were proved and were correct ones. On behalf of the Company, it was urged that the Tribunal should have accepted the multipliers given in the second Schedule IA and should not have reduced them by taking into account those given in the first Schedule 1A, and, further, that there was no justification at all for the Tribunal to reduce the figures of the multipliers for the various blocks of machinery by 75, 55 or 35 on the ground that the machinery to be installed in replacement would have a higher production. 331 We were taken by learned counsel for parties into the evidence tendered on behalf of the Company to prove the multipliers. We nave found that the correctness of the multipliers shown in the first Schedule 1A has been very satisfactorily proved. It appears that those figures were arrived at by comparing the prices of the old machinery installed in various years with similar machinery purchased in subsequent years. That comparison was contained m statement Ext. The Company 's witness Bansal not only proved this statement, but also clearly stated that the machines originally purchased and those purchased later shown in, that statement Ext. 29 were the same machines. In cross examination, he further specifically arrested that the production capacity of these new machines mentioned in Ext. 29 was very much the same as that of the original machines which were to be replaced when they were new. It is also, significant that these figures of multipliers included in the first Schedule IA. were not challenged on behalf of the workmen before the Tribunal. So far as the figures contained in the second Schedule 1 A are concerned, it was suggested on behalf of the Company that they were ' based on subsequent quotations received for replacement machinery which formed part of a series Ext. Learned counsel for the Company was, however, unable to point out any statement in the evidence of any witness which would show that the figures for multipliers incorporated in the second Schedule IA were actually calculated from the quotations contained in Ext. In fact, no such evidence was possible, because the second Schedule IA was filed on behalf of the Company after the evidence of parties was over and that second Schedule IA not being a part of the record before the Tribunal when evidence was recorded, it was not possible for any witness to give evidence proving those figures for multipliers. In these circumstances, we must hold that the. Tribunal committed an error in taking into account the multipliers given in the second Schedule IA and that the only figures for multipliers that could have been and should be accepted are those in the first Schedule 1A. At the same time, we must also accept 'the contention on behalf of the Company that the Tribunal had No. justification fox reducing the multipliers by deducting 75, 55, and 35 in respect of the three blocks of machinery sought to be replaced. As we have indicated earlier, the Tribunal proceeded to hold that this deduction was justified on the ground that the new machines which had been purchased and which were being compared with the original machines sought to be replaced must necessarily have more productive capacity. We have not been able to find any evidence on the record of any witness which would support this conclusion. It is true that the statements. made by Company witnesses, particularly Bansal show that the new machines were 332 more efficient and were likely to produce better quality goods. no stage, however, in the cross;examination of Bansal was any statement made admitting that ' these new machines, whose. prices. were being compared with those of the old machines for rehabilitation, had a larger productive capacity than those original machines. In fact, as we have pointed out earlier, in his cross examination Bansal made a definite statement that these new machines will produce exactly the same number of pieces as the original machines when they were new. This Court in the case of the Associated Cement Companies Ltd.(1) had indicated that it is only if, by the introduction of a modern plant or machine, the production capacity of the industry has appreciably increased that it would be relevant for the Tribunal to consider in an appropriate case whether it would be possible to apportion expenses on the basis that it is a case of partial modernisation and partial expansion. If, however, the increased production is not of a significant order. it may be regarded as incidental to replacement or modernisation and the question of apportionment may not arise (p. 969). It is, of course, possible that Bansal, in stating that the new machines, the prices of which formed the basis of calculation of multipliers, have exactly the same capacity as the original machines to be replaced, may not be quite correct; but there was no material at all from which 'the Tribunal could have justifiably inferred that the increase in production would be so material as to attract the principle 'for apportionment laid down by this Court in the case cited above and, consequently, the Tribunal fell into an error in reducing the multipliers merely on the assumption that the new machines must necessarily have a larger production capacity than the original machines. In these circumstances, we hold that the rehabilitation, provision should have been calculated by the Tribunal on the basis of the. multipliers given by the Company in the first Schedule 1A, without taking an average of those multipliers and the multipliers given in the second Schedule IA and without decreasing the multipliers by 75, 55 and 35 in respect of various blocks. The third contested question with regard to rehabilitation relates to the deductions which have to. be made out of the total rehabilitation requirement to arrive at the annual provision for that purpose which must be allowed in working out the available surplus for distribution of bonus. In the Associated Cement Companies Ltd. case (1), when approving the Full Bench Formula this Court indicated how the calculations should be made. It was held : "Before actually awarding an appropriate amount in respect of rehabilitation for the bonus year certain (1) 333 deductions have to be made. The first deduction is made on account of the break down value of the plant and machinery which is usually calculated at the rate of 5 % of the cost price of the block in question. Then the depreciation and general liquid reserves available to the employer are deducted. The reserves which have already been reasonably earmarked for specific purposes of the industry are, however, not taken into account in this connection. Last of all the rehabilitation amount which may have been allowed to the employer in previous years would also have to be deducted if it appears that the amount was available at the time when it was awarded in the past and that it had not been used for rehabilitation purposes in the meanwhile. These are the broad features of the steps which have to be taken in deciding the employer 's claim for rehabilitation under the working of the formula. "(p.970). The dispute in the present case relates to the deduction of the depreciation and general liquid reserves. One aspect in controversy in this behalf raised on behalf of the Company is that even depreciation should not be deducted unless it is available to the employer for purposes of rehabilitation. The argument was that in the sentence "Then the depreciation and general liquid reserves available to the employer are deducted" the word "depreciation" should be read with the words "reserves available to the employer" and, consequently, the deduction should only be made of. depreciation reserves available to the employer. We are unable. to accept this submission, because the very principle on which rehabilitation provision is allowed when making calculations for awarding. bonus militates against this interpretation. This Court, in the:same case, in explaining why rehabilitation is granted, held: "We have already noticed that the object of providing depreciation of wasting assets in commercial "accounting is to recoup the original capital invested in the purchase of such assets; but the amount of depreciation which is allowed under the formula can hardly cover the probable cost of replacement. That is why ' the formula has recognised the industry 's claim for rehabilitation in addition to the admissible depreciation." (p. 966) It will thus be seen that the purpose of providing for rehabilitation charges is to enable the industry to cover the difference between the amount of depreciation which is recouped by making provision for it in accordance with the principles of commercial accounting and the amount that would be required to purchase the new machinery for replacement. Once the price of the new machinery sup. C.1./68 7 334 is known, the rehabilitation amount would, be the difference between that price and the amount provided as depreciation of wasting assets in accordance with the principles of commercial accounting. The deduction of depreciation provision made in ,the accounts is not, therefore, on the basis that amount must be available for purchasing the replacement machinery even in the year when provision for rehabilitation is being made. That amount is deducted from the price of the machinery Which will be required to be purchased in order to determine what amount the industry is going to require for rehabilitation in spite of having been allowed depreciation. In our view, therefore, this Court, when it later held that the depreciation and general liquid reserves available are to be deducted in calculating the rehabilitation amount, did not intend to lay down that the depreciation must also be available in the year of bonus. The words "available to the employer" were intended to qualify the expression "general liquid reserves" only and not the word "depreciation". General liquid reserves are to be deducted on the principle that if such reserves are in the hands of the industry and are not earmarked for binding purposes, the industry must utilise those reserves for rehabilitating the old machinery instead of asking for provision to be made out of profits in the year of bone and in future years. The principle adopted is that provision for rehabilitation is to be made only to the extent of the difference between the price of the machinery which will have to be paid for replacing the old machinery and the amount of depreciation provision shown in the accounts according to the commercial system of accounting and even that rehabilitation requirement must first be met by the industry out of available liquid reserves rather than by asking for provision to be made out of profits. In the present case, the Tribunal, when calculating the provision for rehabilitation, took the entire price of the replacement machinery as required to be provided out of profits and did not take into account that price should have been reduced to the extent of the depreciation provided for in the accounts. The annual report of this Company for the year of bonus 1960 61 was produced before us and at page 24 it showed that at the beginning of the year 1960 61 depreciation to the extent of Rs. 325.48 lacs had been provided in the balance sheet of the Company. This amount has, therefore, to be deducted from the price of the machinery which is to replace the original machinery when rehabilitation is resorted to. The second question on this aspect that arises is whether there were any liquid reserves available which should also have been deducted. In the balance sheet of the Company contained in the Annual Report, various kinds of reserves have been shown. There. was a reserve for contingencies to the extent of Rs. 10.00 lacs on 31 3 1960 and a development rebate reserve of Rs. 39.51 lacs on 335 the same date. On behalf of the workmen, it was urged that this amount of Rs. 39.51 lacs should at least be deducted when calculating the requirement for rehabilitation. From the balance sheet itself an inference was sought to be drawn that this reserve existed in the form of a liquid reserve available for rehabilitation. For this purpose reference was made to the entries on the assets side of the balance sheet which shows a sum of Rs. 220 lacs as lying in fixed deposit account. The argument was that if the Company had such a large sum as Rs. 220 lacs in the fixed deposit account, it could not possibly urge that the sum of Rs. 39.51 lacs in respect of development rebate reserve was not a part of it and was not available as a liquid reserve. It is but natural that in the balance sheet the Company could not show any correlation. between the amounts entered on the two sides, liabilities and ' assets, as that is not required by any principle of commercial accounting. The argument of learned counsel for the company was ,that this development rebate reserve had been used ' as a part of the working capital of the Company represented by various items shown on 'the assets side and this fact was proved by the affidavit of Satya Narayan Murarka, Commercial Manager of the Company, who categorically stated that all the reserves had been utilised as part of the working capital. It seems to us that a mere statement by the Commercial Manager that the reserves have been utilised in the working capital cannot be accepted as conclusive evidence of that fact. When the balance sheet itself shows that cash amounts in the form of fixed deposits were available which were far in excess of the development rebate reserve in question there would be no justification for holding that this development rebate reserve was not available as a liquid asset and had been included by the Company in its working capital. At the stage it is not necessary, therefore, to go into any further details to arrive at the conclusion that this development rebate reserve was a liquid asset available for rehabilitation and, consequently, liable to ' be deducted when calculating the rehabilitation requirement We shall deal in greater detail with the question of what items were included in the working capital at a later stage when dealing with the controversy relating to the claim of the Company for return on working capital which is allowed under the Full Bench Formula, when calculating the surplus available for distribution of bonus. On the question of calculation for provision for rehabilitation, the only point raised on behalf of the workmen with regard to buildings was that the Tribunal, in taking the life of the factory buildings at 25 years and non factory buildings at 40 years, was not correct and that the life of the two types of buildings should have been taken at 40 years and 50 years respectively. At the 336 time of the hearing before the Tribunal, the Company had claimed that factory buildings have a normal life of 25 years only and non factory buildings 30 years, while the claim of the workmen was that the factory buildings had a life of 40 years and the non factory buildings 50 years. In arriving at its decision, the Tribunal primarily took into account the provisions of Rule 9 of the Rules framed under the Income tax Act, 1922 which lays down the principle for calculation of depreciation in respect of buildings. That principle, no doubt, cannot be taken as giving any correct indication of the life of buildings for purposes of calculation of rehabilitation provision, but, in this case, there was the difficulty that the Tribunal did not accept the evidence given by the Company to prove the age of the buildings as claimed by it, while no evidence was given on behalf of the workmen in support of their claim that the life of the buildings should be taken at the figures contended on their behalf. In the course of arguments before us. all that learned counsel did was to refer to the decision of this Court in the Associated Cement Companies Ltd. case(1) at p. 993 where the calculations made in the Chart show that the life of the various buildings concerned in that case were taken to be between 30 and 35 years. We do not think that, in the absence of evidence showing that the buildings of the Company were similar to those buildings whose life came up for consideration in the case cited above, it is possible to derive any assistance from the figures accepted in that case. In these circumstances, the position before us is that neither on behalf of the Company, nor on behalf of the workmen is there any reliable evidence brought to our notice on the basis of which we can arrive at a correct estimate of the life of the buildings of the Company and, consequently, we do not think that there will be any justification for us to vary the decision given by the Tribunal in this behalf. The last controversy in the calculations for rehabilitation provision is on the question whether the depreciation and the liquid reserves available should be deducted from the total amount of rehabilitation requirement or whether it should be taken into account at the very first stage when the machinery or the buildings requiring earliest rehabilitation are taken into consideration and the annual requirement in respect of them is worked out. On behalf of the workmen, we think, it was rightly urged that, if depreciation and liquid reserves available are to be deducted, they must be incorporated in the accounts against the replacement cost of those items which required replacement earliest in time. It is obvious that if funds in the form of depreciation provision and other liquid reserves are available, the Company claiming provision for rehabilitation must utilise them in rehabilitating those (1) 337 machines and buildings which require rehabilitation at the earliest point of time. There is no principle at all that the depreciation in respect of a particular machinery must be deducted when calculating the rehabilitation requirement in respect of that machinery itself. The Full Bench Formula approved by this Court only recognises the industry 's claim to make provision out of profits for rehabilitation of machinery which might require replacement even in future only on the ground that the industry may not be able to meet those replacement cost out of funds available in its hands. The provision for future requirement of rehabilitation must at any time depend upon what is immediately available and what is going to be required in future. If some machines have fully run out their lives, they fast necessarily be replaced out of resources available immediately and there would be no justification for keeping the available resources in reserves for future rehabilitation, while not providing out of those available resources for immediate replacement of the machinery. Then, there is the second aspect that an employer in order to claim more and more rehabilitation provision, will have a tendency to keep old blocks of machinery running and to avoid adoption of such a device it would be fair that he is required to utilise available resources at the very first opportunity when the old blocks of machinery require replacement and claim annual provision for future only in respect of that machinery which will require replacement later on. It appears that this Court in The Associated Cement Companies Ltd. case(1) proceeded on this very basis when calculating the rehabilitation requirement, though without discussing this question in detail. In that case, reserves to the extent of Rs. 311 lacs were found to be available. The machinery which required to be rehabilitated was divided into four blocks, the earliest block consisting of machinery installed up to 1939 in respect of which the rehabilitation requirement was Rs. 1172.76 lacs. In respect of three later blocks, the rehabilitation requirement was Rs. 70.40 lacs, 270.37 lacs and Rs. 768.50 lacs. The total requirements for rehabilitation in respect of all the four blocks was thus Rs. 2282.03 lacs. When calculating the annual requirement the Court did not deduct the sum of Rs. 311 lacs in respect of available reserves 'out of this total of Rs. 2282.03 lacs, but instead deducted this amount from the cost of the machinery required to replace the pre 1939 block for which the amount arrived at was Rs. 1172.76 lacs. After deducting this amount of reserves from the replacement cost of that block, the balance was divided by the divisor 7 which was treated as the remainder life of the machinery falling within that block. This calculation adopted in that case, therefore, fully bears out our view that the depreciation and available reserves must be taken into account when calculating the annual (1) 338 provision in respect of that machinery which requires earliest replacement and should not be deducted out of the total rehabilitation cost as urged by learned counsel for the. Company. Mr. De in this connection drew our attention to a decision of the kabour Appellate Tribunal in Saxby & Farmer Mazdoor Union, Calcutta(1) at pp. 711 712. In that case, the Tribunal first worked out the total rehabilitation and replacement cost of 'the machinery at Rs. 43.81 lacs. From this amount were deducted a sum of Rs. 14.75 lacs in respect of available reserve, a sum of Rs 9, 03 lacs as the total depreciation on the plants and machinery and a sum of Rs. 0.737 lac in respect of the break down value of the machinery at 5 % of the cost price, leaving a balance of Rs. 19.364 lacs as the rehabilitation requirement. Then the Tribunal noticed that, on the basis of total requirement of Rs. 43.81 lacs over the several periods during which rehabilitation and replacement was to take place, the annual requirement was worked out at Rs. 8.04 lacs. Applying the simple arithmetic of ratio, the Tribunal held that the proportionate annual requirement would be Rs. 3.54 lacs, if the total requirements are reduced to Rs. 19.364 lacs. In that case, thus, the Tribunal proceeded on the basis which has been canvassed on behalf of the Company before us. The total rehabilitation requirement was first worked out, while the annual requirement was also worked out on the basis of that requirement,. without taking into account the depreciation, available liquid reserves and the break down value of the machinery to be replaced. Thereafter, the total rehabilitation requirement was reduced. by the amount of depreciation, liquid reserves available and break down value of the machinery, and the annual requirement was reduced in respect of each block of machinery in the same proportion as the proportion between the total requirement and the net amount available arrived at, after deducting depreciation, ,available liquid reserves and break down value. We do not think that the principle adopted by the labour Appellate Tribunal was correct and should be accepted. On the face of it, it introduces a very anomalous position. In a case where some machinery may require immediate replacement in the year of bonus in question and resources may be available for meeting the cost of the entire machinery required to replace it, the principle adopted by the Tribunal would still permit the industry not to replace that machinery, but claim future provision for its replacement on the basis that the available resources are to be proportionately allocated to machinery which may require replacement in much later years. We hold that in approving this course, the Tribunal did not adopt the correct principle according to which calculation should be made, when applying the, Full Bench (1) 339 Formula for calculation of bonus. Learned counsel also referred us. to the decision of this Court in M/s. Titaghur Paper Mills Co. Ltd. vs Its Workmen(1) to show that, in that case, this Court also, when calculating the rehabilitation provision, deducted the entire depreciation and reserves available from the total rehabilitation requirement and did not adopt the course of deducting it from different blocks of machinery requiring rehabilitation. That case, however, does not support the view taken by the Labour Appellate Tribunal, because in that case this Court had accepted the decision of the Tribunal that all the machinery in whichever year it may have been installed had a uniform residuary life of 10 years, so that all the machinery was to be rehabilitated simultaneously during the next 10 years. There was, therefore, no distinction between machinery installed in one year and that installed in other years insofar as the year in which it was to be replaced was concerned. It is true that, in some cases while describing the Full Bench Formula,this Court has mentioned that the total depreciation and liquid reserves available are to be deducted from the total rehabilitation requirement,but we do not think that it was intended to lay down in those cases that the method of deduction to be adopted is that laid down by the Labour Appellate Tribunal in Saxby and Farmer Mazdoor Union, Calcutta(2). On the other hand as we have already indicated this Court, in The Associated Cement Companies Ltd. case(a), very clearly proceeded to apply the principle which we are accepting in this case. Consequently, we hold that the depreciation provision of Rs. 325.48 lacs and available development rebate reserve of Rs. 39.51 lacs must be taken in to account when calculating the annual provision for rehabilitation required for replacement of the earliest installed machinery until it is exhausted, whereafter the annual requirement for the remaining blocks of machinery will have to be calculated, ignoring these available resources. The next contest between the parties in this appeal relates to the claim of the Company to return on reserves and other funds used as working capital during the bonus year when calculating the surplus available for distribution of bonus. That a Company is entitled to return on reserves used as working capital was recognised by the Full Bench of the Labour Appellate Tribunal in The Millowners ' Association 's(4) case, when laying down the formula for calculation of available surplus which was approved by this Court in the case of The Associated Cement Companies Ltd.(a). In the latter case in dealing with this aspect of the matter, the Court pointed out that no distinction has been made by Tribunals between reserves used as working capital and depre (13 [1959] Supp. 2 S.C.R. 1012 at p. 1042. (2) (3) (4) 340 ciation fund similarly used. The Court approved the decision of the Labour Appellate Tribunal in The Millowners ' Association Bombay vs The Rashtriya Mill Mazdoor Sangh(1), where the objection of the labour to depreciation fund earning any return, even if it was utilised for or about the business of the year, was ovre ruled and the Tribunal observed that "no essential difference could be made between the depreciation fund and any other fund belonging to the Company which could be invested so as to earn return. ' The Court further held: "It is thus clear that what is material is not the origin of the fund. It is the fact that the fund in the hands of the concern has been used as working capital that justifies the claim for an adequate return on it. We think it is common sense that if the concern utilises liquid funds available in its hands for the purpose of meeting its working expenses rather than borrow the necessary amounts, it is entitled to claim some reasonable return on the funds thus used." (pp. 964 65). In this appeal, it is not disputed that the Company is entitled to claim a return on reserves which were actually utilised as working capital during the year of bonus, but Mr. Sen on behalf of the workmen urged that this return must be allowed only on reserves used as working capital and not on any other funds used at such, ,On the face of it, this argument cannot be accepted in view of the decision of this Court in the case of The Associated Cement Companies Ltd.,(2) where it has been clearly held that the origin of the fund is immaterial, though with the qualification that the fund should be one which is available for investment before a claim can be made by the employer for a return on it. This principle has been affirmed or followed in a number of cases subsequently decided by this Court, but we do not consider it necessary to refer to them in view of the fact that Mr. De on behalf of the employer conceded that this is the settled law and only contended that, in this case, the Company has in fact discharged the burden of proving that all the reserves shown in the balance sheet for the year of bonus were actually utilised as working capital. Consequently, we proceed to examine this submission made on behalf of the Company. Mr. De, in support of this submission, drew our attention to the affidavit of Satya Narayan Murarka who is the Commercial 'Manager of the Company. In this affidavit, Murarka stated. that all the sums shown as reserves and surpluses in the balance sheet 'were available for being utilised as working capital and were, in (1) [1952] 1.L.L.J. 518, 522. (2) 341 fact, so utilised. Murarka was also tendered for cross examination, so that the workmen hand an opportunity of testing the correctness of his evidence by cross examining him. It was urged by Mr. De that there was nothing in the cross examination of Murarka which would justify rejection of the statements made by him in his affidavit that all the reserves and surpluses available had been employed as part of the working capital of the Company, and, in this connection, drew our attention to some decisions of this Court where the evidence given on behalf of the employer on affidavit has been accepted by this Court as sufficient proof. The first case cited by him is The Tara Oil Mills Co., Ltd. vs IIts Workmen and Others(1). In that case, a question arose whether the Company concerned was entitled to claim return on the amount of depreciation reserves used as working capital. Dealing with this claim, the Court held: "An affidavit was made on behalf of the Company that it had used its reserve funds comprising premium on ordinary shares, general reserve, depreciation reserve, workmen 's compensation reserve, employees ' gratuity reserve, bad and doubtful debt reserves and sales promotion reserve as working capital. The Tribunal, however, allowed return at 4 per centum on a working capital of Rs. 31.88 lacs. This excluded the depreciation reserve but included all other reserves which were claimed by the company and having been used for working capital. " Proceeding further, the Court held : "It is enough to say that the affidavit of the Chief Accountant filed on behalf of the company was not challenged before the Industrial Tribunal on behalf of the respondents. It would, therefore, be impossible for us now to overlook that affidavit, particularly when the Tribunal gave no reason why it treated the working capital as Rs. 31.88 lacs only. " The Court, thus, accepted the evidence of the affidavit, though it was added that it will be open to the workmen in future to show by proper cross examination of the Company 's witnesses or by proper evidence that the amount shown as the depreciation reserve was not available in whole or in part to be used as working capital and that whatever may be available was not in fact so used in the sense explained above. In Anil Starch Products Ltd. vs Ahmedabad Chemical Worker 's Union and Others(2) this Court, dealing with the ques (1) ; at p. 10. (2) A.I.R. 1963 S.C, 1346 at p. 1348. 342 tion of proof that depreciation reserve had been used as working capital, held: "It is enough to say in that connection that an affidavit was filed by the manager of the company to the effect that all its reserves including the depreciation fund had been used as working capital. The manager appeared as a witness for the company before the Tribunal and swore that the affidavit made by him was correct. He was cross examined as to the amount required for rehabilitation, which was also given by him in that affidavit; but No. question was put to him to challenge his statement that the entire depreciation reserve had been used as working capital. The Tribunal also did not go into the question whether any money was available in the depreciation reserve fund and had been actually used as working capital. It dismissed the claim for return on the depreciation reserve on entirely different grounds. In the circumstances, we must accept the affidavit so far as. the present year is concerned and hold that the working capital was Rs. 34 lacs. It will, however, be open to the workmen in future to show by proper cross examination of the company 's witnesses. or by proper evidence that the amount shown as depreciation reserve was not available in whole or in part as explained above to be used as working capital and that whatever was available was not in fact so used." In Khandesh Spg. & Wvg. Mills Co. Ltd. vs The Rashtriya Girni Kamgar Sangh, Jalgaon,(1) this Court, again dealing with the question of proof of working capital, referred to the earlier cases and held: "This judgment again reinforces the view of this Court that proper opportunity should be given to the labour to. test the correctness of the evidence given on affidavit on behalf of the management in regard to the user of the reserves as working capital. " On the basis of these views expressed by this Court, it was urged that, in the present case, the affidavit of Murarka should be accepted as sufficient evidence in proof of the company 's claim that all the reserves and funds mentioned in the affidavit were in fact used as working capital, so that the company is entitled claim a return on them. It appears to us that the affidavit of Murarka in the present case is not such that it can be held to have discharged the burden (1) ; at p. 850. 343 which lay upon the Company to prove that all the reserves and other funds had, in fact, been utilised as working capital. In the affidavit, Murarka referred to the balance sheet and stated that the various funds claimed as having been used as working capital were shown at the beginning of the bonus year as in existence and the further entries indicated that those amounts were still intact at the end of the bonus year and were carried forward to the next year. Such a statement was made by him in respect of reserve for contingencies amounting to Rs. 10 lacs, forfeited dividends amounting to Rs. 450 lacs, profit and loss account balance amount to Rs. 3.63 lacs, provision for depreciation amounting to Rs. 325.48 lacs, and development rebate reserve amounting to Rs. 39.51 lacs. It is to be noticed that the fact that these amounts were shown as in existence at the beginning of the bonus. year as well as at the end of that year can certainly lead to a reasonable inference that these funds were all available to the company for being utilised in its business during the year; but the mere fact of these entries showing the existence of these funds at. the beginning and at the end of the year cannot be the basis for a conclusion that these funds must have been utilised as part of the working capital of the Company. In order to claim a return, it is not enough for a Company to show that the amounts were available during the year for being utilised as working capital. The Company has further to discharge the burden of proving that those funds were in fact so utilised. This principle was clearly indicated by this Court in Bengal Kagazkal Mazdoor Union and Others vs Titagarh Paper Mills Company, Ltd. and Others(1). It was in that case that this Court gave an indication of how the availability of reserves and other funds for use as working capital can be inferred from the balance sheet. It was said: "What is usually done is to take into account the ' liquid assets of various kinds available at the beginning of the relevant year and the total of such assets available at the beginning of the year is considered as working capital for that year, if there is evidence that it has. been actually used during the year. But when we come to the end of the year and look at the balance sheet, we have to find out the liquid assets available at the end of the year from which the amount available as working capital for the next year may be arrived at. But the liquid assets available at the end of the year will usually be of two kinds firstly, there will be cash assets in the various reserves and secondly, there will be assets in the shape of raw materials, etc., and both together become the available working capital for the next year subject (1) at p. 364. 344 to necessary adjustments and also subject to the evidence that they were actually used as working capital. " Proceeding further, the Court, while dealing with the bonus year 1955 56, held : "Now the working capital is generally arrived at by finding the liquid reserves available on 1st April, 1955. These liquid reserves may be in the form of reserves of various kinds, i.e., depreciation reserves, general reserve, renewal reserve, and so on, and also in the form of investments, advances and raw materials, etc. in stock. All these have to be taken into account in arriving at the working capital after necessary adjustments. As we have already pointed out, the amount of working capital thus arrived at, if there is evidence that it was actually used as working capital for the year, may be allowed interest in accordance with the Full Bench Formula." In that case, thus, the two steps necessary for proving the claim were separately indicated. The first step in proving that reserves and other funds have been used as working capital is to show that they were available by proving the balance sheet in which those reserves and funds are shown in existence at the beginning of the year. The second step indicated is that evidence must be given to prove that these reserves and funds were actually utilised as working capital during the year. Obviously, this proof is needed, because, even though the reserves and funds may be available, they may not be utilised as part of the working capital and may form part of cash amounts kept by the Company or may be utilised for purposes other than that of working capital. The mere existence of the reserves and funds at the beginning of the year, even taken together with their existence at the end of the year, cannot lead to. any inference that these reserves and funds must have formed part of the working capital during the year and could not form part of other items such as fixed deposits, investments, etc. Murarka in his affidavit, as we have indicated above, gave his conclusion that the various reserves were used as part of the working capital only on the basis that these reserves and funds were in existence both at the beginning and at the end of the year. The conclusion drawn by Murarka had, therefore, no basis at all. The facts on which he relied could only justify an inference that these reserves and funds were available, but they could not exclude the possibility that they were utilised for purposes other than that of working capital. The affidavit of Murarka in this case cannot thus be held to be sufficient proof of this second ingredient that the reserves and 345 funds were in fact utilised as working capital. So far as the cases referred to by learned counsel are concerned, which we have discussed earlier, they do not, in our opinion, lay down the principle that, if in an affidavit filed on behalf of the employer a broad statement is 'made that all reserves and other funds were used as part of the working capital, that statement must be accepted as. sufficient proof, even when the statement is coupled with an admission that it is based on an inference from the balance sheet only and no other proof is furnished to show that these available reserves and funds were in fact brought in as working capital by the employer during the year in question. In these circumstances, even though in the cross examination of Murarka on behalf ' of the workmen nothing very material was elicited on this question, we have to hold that the affidavit given by Murarka is not sufficient discharge the burden which lay on the Company to prove that all the reserves and other funds shown in the balance sheet as in existence at the beginning and at the end of the bonus year in question were utilised as working capital. The balance sheet, it appears to us, itself gives an indication. that this claim made on behalf of the Company cannot be fully justified. In the balance sheet, the assets of the Company are shown under various heads and it seems to us that items falling under certain heads only can be treated as working capital of the Company during the year, while others have to be excluded. The items which cannot be treated as part of the working capital are: fixed assets of the value of Rs. 411.08 lacs, investments of the value of Rs. 14.48 lacs, fixed deposit amount of Rs. 220 lacs, loans and advances recoverable in cash or in kind or for value to be received or pending adjustment amounting to Rs. 11.74 lacs, and loans and advances from Trust and other authorities amounting to Rs. 8.09 lacs. On the other hand, the working capital would consist of current assets of the value of Rs. 31.34 lacs, Stock in Trade of the value of Rs. 337 lacs, sundry debts of the value of Rs. 69.82 lacs, bank and cash balances of the value of Rs. 37.98 lacs, loans and advances of the value of Rs. 14.27 laes, and insurance and other claims of the value of Rs. 7.61 lacs. Thus, in the present case, the balance sheet gives an 'indication that a sum of Rs. 498.02 lacs was the amount shown at the beginning of the year against items of assets which can be classified as part of the working capital, whereas the remaining sum of Rs. 665.38 lacs represent fixed assets, fixed deposits, investments and other loans and advances which cannot be classified as part of working capital. Similarly, an examination of the items entered on the side of liabilities in the balance sheet shows what were the sources from which moneys became available for acquisition of these assets. 346 Amongst these, the reserves shown are only Rs. 10 lacs for contingencies and Rs. 39.51 lacs as development rebate reserve. Though the balance sheet does not itself show the depreciation fund, it is also clear from the Schedule attached to the balance sheet that, up to the beginning of the year, a depreciation provision had been made to the extent of Rs. 325.48 lacs. In order not to show it as available development reserve or fund in the balance sheet, what the Company did was to show the depreciated value of the capital assets at Rs. 411.07 Iacs instead of the actual value of Rs. 736.56 lacs which was the amount paid in cash for acquiring those fixed assets. For purposes of dealing with the question whether any reserve was used as working capital, we must, therefore, proceed on the basis that there was a depreciation reserve of Rs. 325.48 lacs, while the investment on the fixed assets was Rs. 736.56 lacs and not merely Rs. 411.07 lacs. Taking this depreciation reserve also into account, it would thus appear that the reserves available at the beginning of the year Were of the amount of Rs. 374.99 lacs. The subscribed capital and capital available from forfeited shares was Rs. 819.57 lacs. Funds available from other resources, such as profit and loss account balance, unsecured loans, current liabilities and provisions, provision for taxation, proposed dividends and contingent liabilities not provided for, amounted to Rs. 294.33 lacs. The question that arises. is how much money from each of these ' sources had gone into the working capital and how much into fixed assets or other items of assets indicated by us above. In examining this position, the value of the fixed assets has to be taken as Rs. 736.56 lacs which was the actual amount spent in acquiring 'those assets and not at the written down value of those assets at Rs. 411.08 lacs. It seems to us that this being the position, there was no justification for Murarka to claim that all the amounts available in reserve had gone towards the working capital and did not represent other assets, such as the fixed deposit of Rs. 220 lacs and similar other items. In these circumstances, we have. to hold that no reliance can be placed on the affidavit of Murarka that all the reserves, including the depreciation reserve and the contingent anti development rebate reserve were actually used as part of the working capital during this year. The question that next arises on this conclusion of ours is whether any return at all should be allowed to the Company on reserves or other funds claimed as having been utilised as working capital during this year. The exact figure on which the Company could claim return has not been proved by it, but it seems to us that at least some part of the reserves must necessarily have been utilised in the working capital. The Company had a paid up capital of Rs. 819.57 lacs and it can safely be assumed that 'this money:was utilised for acquiring the fixed assets, as that will 347 be the primary purpose of obtaining capital from the share holders. A sum of Rs. 736.56 lacs must, therefore, have gone in cash into the fixed assets out of this sum of Rs. 819.57 lacs, leaving a balance of Rs. 83.01 lacs. The sum available from other resources was Rs. 294.33 lacs which, together with the balance of the subscribed capital left over, gives a figure of Rs. 377.34 lacs. Consequently, for purposes of the working capital, a maximum amount of Rs. 377.34 lacs could have been available from the subscribed capital or other resources and the balance of the amount must necessarily come out of the reserves. The items of assets classified as representing the working capital, as we have indicated above, have a total value of Rs. 498.02 lacs. Deducting from this amount the sum of Rs. 377.34 lacs available from subscribed capital or other resources, there remains a balance of Rs. 120.68 lacs which must have necessarily come out of the various reserves, including the depreciation reserve, and this amount at least must be held to represent reserves acually used as working capital during the year by the Company. We think that,since the information available from the balance sheet itself shows that at least Rs. 120.68 lacs out of the reserves did form part of the working capital of the Company, it would be fair to allow the Company 4% return on this amount, even though we are not inclined to accept the evidence of Murarka and have to hold that the Company on its part failed to prove that this amount or the whole of the amount of reserves had been utilised as part of them working capital during this year. Consequently, the amount which the Company has to be allowed as return on reserves utilised as working capital comes to Rs. 4.83 lacs. In this connection, we may also take notice of the claim made by the Company that return should also be allowed on certain other sums. used as working capital which have been described as working income. The Company claimed that it had money available from four different sources. The details given were Rs. 249.71 lacs from profit as worked out in the Profit and Loss Account at the end of the year, Rs. 63.07 lacs as reserve for depreciation for the year. Rs. 36.00 lacs as development rebate for this year and Rs. 4.71 lacs as value of discarded fixed assets written off. The claim was that at least half the amount represented by these figures should be treated as a fund which was available during the bonus year for being utilised as working capital. This submission, in our opinion, cannot be accepted. There is nothing to show whether any of these amounts became available to the Company during the year and if so, when they became available. In fact, the profit as worked out in the Profit and Loss. Account can be held to have accrued to the Company only when the Profit and Loss Account was worked out at the end of the year. We have already referred to the decision of this Court in 348 Bengal Kagazkal Mazdoor Union and Others(1) where it was held that amounts shown as liquid assets at the beginning of the year are the only amounts which can be held to be available for utilisation as working capital in that year. Amounts which accrue during the year or at the end of the year cannot be held to be available, unless evidence is led on the basis of which a positive finding can 'be recorded that those amounts became available on a particular date during the year and were thereafter actually utilised as part of the working capital. Profit for the year and reserve or development rebate for the year in question cannot be proved to have accrued on any particular date during the year and, therefore, it is also not possible to hold that they were utilised as part of the working capital during that very year. This claim which is a novel one put forward on behalf of the Company for the first time in applying the Full Bench Formula for calculation of available surplus for distribution of bonus, must, therefore, be rejected. A point that was raised on behalf of the workmen, but which was not seriously argued before us, was that the return on paid up capital should not be allowed at least to the extent to which money had been invested in the subsidiary or other companies. The amount in question is Rs. 14.48 lacs already noticed by us earlier when dealing with the question of proof of utilisation of reserves as working capital. In dealing with that question, we have already proceeded on the basis that the paid up capital was either invested in fixed assets, or must have been utilised as part of the working capital, and have not accepted the plea that this sum of Rs. 14.48 lacs of investment came out of the paid up capital. Consequently, no question can arise of reducing this amount from the paid up capital when allowing 6% return on it in accordance with the Full Bench Formula. Another deduction, while calculating the surplus out of the profits available for distribution of bonus, which has been challenged on behalf of the workmen relates to the income from home delivery commission. From the facts, it appears that this Company was manufacturing cars in collaboration with a foreign concern and the arrangement was that,if that foreign concern sold any of its goods in India, the Company would be entitled to its commission on those sales, even though the Company may not be a party to the transactions of those sales. This arrangement thus recognised the exclusive right of the Company in respect of sale of its cars and to reimbursement in case the foreign collaborator entered into transactions infringing that right. It seems to us that the income thus accruing to the Company has to be treated as extraneous income which was earned by the Company without (1) 349 any activities in which the workmen participated or contributed their labour. Learned counsel for the workmen referred us to the decisions of this Court in the Tata Oil Mills Co. Lid. Q) and Voltas Limited vs Its workmen(1). The situations that were discussed in those cases were different. In those cases, the principle laid down was that, if any income was earned in the course of the normal business of the Company in which the workmen were also engaged, that income must be included in the profits for calculation of surplus available for distribution of bonus. None of the instances that came up for consideration were similar to the one before us. The home delivery commission earned in the present case did not require any contribution of work or labour on the part of the workmen, and accrued to the Company simply because of its agreement with the foreign collaborator ' which entitled the Company to claim the commission without going through any process of manufacturing or selling the cars or their components. In the circumstances, the deduction of the home delivery commission from the profits was fully justified. The last point urged related to the interest on fixed deposits earned by the Company during the bonus year. We have already indicated earlier that a sum of Rs. 220 lacs was in fixed deposit account and the profit and loss account shows that a sum of Rs. 5.17 lacs was received as interest on it by the Company. This has also to be excluded when calculating the available surplus, because this income also accrued to the Company without any contribution on the part of the workmen. It was not the regular business of the Company to keep money in fixed deposits and earn interest thereon. ' At the same time, however, we feel that on equitable grounds, the Company should not be entitled to claim the sum of Rs. 2.16 lacs as an expenditure of the business of the Company in respect of interest paid to bank and others. When the Company was receiving interest on fixed deposits, it would be proper to hold that at least the interest paid by the. Company should come out of the interest earned by it. There seems to be no justification for permitting a Company to keep money in a fixed deposit and treat the interest accruing on it as extraneous income, while, at the same time permitting the Company to take loans, pay interest and treat that interest as business expenditure. Consequently, in this case, when calculating the available surplus, a sum of Rs. 5.17 lacs minus Rs. 2.16 lacs Rs. 3.01 lacs only will be deducted as extraneous income which was earned without any contribution from the workmen and which cannot therefore, be taken into account when calculating available surplus. On the basis of these decisions, we have worked out Charts bowing the amount of annual rehabilitation provision which (1) ; (2) ; LISupCl/688 350(a) CHART Year Original Cost Discarded Price Replace and Factor ment Cost written or Multi off from plier books 1 2 3 4 5 1942 43 to 1946 47 2.17 . 2.80 6.08 1947 48 89.75 0.35 2.80 250.32 1948 49 44.77 . 2.50 111.93 1949 50 37.60 . 2.30 86.48 1950 51 5.29 . 2.40 12.70 1951 52 14.63 . 2.70 39.50 1952 53 11.06 0.39 2.50 26.68 1953 54 9.09 . 1.50 13.64 1954 55 38.65 24.33 1.90 27.23 1955 56 30.05 8 01 1.80 39.69 1956 57 34.47 5.95 1.60 45 63 1957 58 75.32 7.79 2.00 135.06 ]958 59 53.74 . 1.25 67.17 1959 60 140.15 . 1.15 161.17 1960 61 98.52 . 1.10 108.37 350(b) (All figures in lacs of rupees) Less 5 % Balance Deduct Balance Resi Annual Cost deprecia require duary Rehabili tion & other ment Age tation reserve require available ment 6 7 8 9 10 11 0. 11 5.97 364.99 Nil Immaterial . 4.47 245.85 359.02 Nil " . 2.24 169.69 113.17 Nil " . 1.88 84 60 3.48 81.12 3 27.04 0.27 12.43 12.43 3 4.14 0 45 13.19 . 13.19 5 2.64 0 72 26.51 26.51 6 4.42 1.43 44.20 44.20 7 6.31 3.37 131.69 . 131.69 8 16.46 2.69 64.48 64 48 9 7.16 7.01 154.16 154.16 9 17.13 4.93 103.44 103.44 10 10.34 116.70 351 CHART II (All figures in lacs of rupees) Annual Requirement for Rehabilitation for all the Machinery 116.07 Less Depreciation Provision for the Year of Bonus 1960 61 63.07 Net Requirement for Rehabilitation of Machinery in the Year 1960 61 53.00 Requirement for Rehabilitation of Buildings 11.97 Total Rehabilitation Requirement 64,97 CHART III (All figures in lacs of rupees) Profit as per Profit&Loss Account 249 '71 Add : Provision for Depreciation 63.07 Reserve for Development Rebate 36.00 Charity and Donation 0.35 Expenses pertaining to previous years (Sales tax) 0,01 99 43 99,43 349,14 Less: Income pertaining to previous years and Provisions no longer required 5.70 Surplus on Sale of Fixed Assets 0,09 Home Delivery Commission 1.03 Interest on Fixed Deposits 3,01 Normal Notional Depreciation 69,26 Income tax Liability for the year 112,37* 6% Return on Ordinary Share Capital 29,77* 8.57% Return on Preference Share Capital 27,55 4%Return on Working Capital 4,83 Provision for Rehabilitation 64,97 318.58 318,58 Net Surplus Available for Payment of Bonus 30.56 *These figures have been corrected by us. In the statement filed by the Company they were wrongly entered as 12.18 lacs and 129 ' 89 lacs respectively. 359. must be allowed to the Company and, taking that into account, the amount of surplus available out of the profits for distribution as bonus. Chart 1 shows the annual rehabilitation requirement for machinery which works out at Rs. 116.07 lacs. Chart II gives the calculation, on the basis of this figure, of the net amount required for rehabilitation during the year of bonus for the machinery and buildings, after taking into account the depreciation provision for the year of bonus. This net amount is Rs. 64.97 lacs. Chart 111, based on these figures and on other figures arrived at by us in our judgment, shows that a net amount of Rs. 30.56, lacs would be available as surplus for payment of bonus during this year. The Tribunal was, therefore, not right in arriving at its decision that this Company was not in a position to pay bonus at all. As we have indicated earlier, the workmen have claimed bonus equivalent to 6 months ' wages which would amount to a sum of Rs. 24 lacs. We do not find any justification for granting bonus at such a high rate. Though the Company has earned a large amount of profit during the year of bonus, it is to be noticed that, for quite a large number of years, the Company has been running at a loss. The Company has an expanding business and the total amount of surplus available for allocation between the capital and the labour is Rs. 30.56 lacs. In all these circumstances, we consider it just and proper that bonus should be paid to the workmen. 20% of their annual wages, so that a total sum of Rs. 9.60 lacs out of this surplus will be paid out as bonus, leaving the balance of Rs. 21.03 lacs with the Company for being utilised for other purposes. The appeal is, consequently, allowed, the decision of the Tribunal is set aside and it is hereby ordered that the Company shall pay to the workmen a total amount of Rs. 9.60 lacs as bonus, representing 20% of the annual wage of the workmen. In the circumstances of this case, we direct parties to bear their own costs of this appeal. G.C. Appeal allowed.

The workmen of the respondent company raised an industrial dispute about bonus claimed by them for the year 1960 61. The Industrial Tribunal applying the Full Bench Formula held that the sum needed for rehabilitation of machinery exceeded the surplus otherwise available and therefore no bonus was payable. Against this decision of the Tribunal the workmen appealed to this Court and raised various objections as to the manner in which the available surplus was calculated by the Tribunal. HELD: (i) On the facts and the evidence produced in the case the life of the respondent company 's machinery should be taken at an average of 15 years if the machinery is worked in two shifts. and 10 years if it is worked in three shifts. The artificial rule laid down in the Income tax Act for calculation of notional depreciation can provide no criterion at all for determining the life of the machinery, and the Tribunal committed an error in proceeding on that basis. [319 H] The life of machinery taken in other cases is also not a correct basis for fixing the life of machinery in a particular case. Various factory come in that affect the useful life of a machinery. Factors such as the quality of the material used in the machines, and the nature of the material on which the machines are to operate, very materially affect their life. Further the life of a machine will also depend on the manner in which it is handled in a particular factory. Consequently the correct principle is to determine the life of machinery in each case on the evidence adduced by the parties. [319 E F; 320 D] Further what has to be determined is the useful life of the machinery rather than its economic life. In fact one of the very major considerations which should be taken into account is the actual practice of the manufacturers using the machinery and, if the evidence be available, to find out how long the manufacturers continue to use the machinery as a rule. [324 D H] The fact that in the Full Bench Formula the breakdown value of machinery is taken at 5% is certainly an aspect to be taken into account. but it cannot be accepted that a machinery should be deemed to have useful life until it reaches the stage of having a breakdown value of 5% No such absolute rule can be inferred. [328 A] The Tribunal was wrong in not taking into account machinery installed during the bonus year itself for making provision for rehabilitation. If any machinery is installed in. the bonus year, the company would be 312 justified in claiming that it must immediately Start making provision for its rehabilitation, though the period for rehabilitation of that machinery would only start at the end of the bonus year. [330 A C] ' (ii) The multipliers given by the company in the schedule originally submitted by the company which were not objected to by the workers were the correct basis for Calculation of the rehabilitation cost and the Tribunal should not have departed from them. There was no justification for taking an average of the multipliers submitted at first and those submitted thereafter in a second schedule. The Tribunal also was not justified in reducing the multipliers on the ground that the new machines which would be purchased to replace the original ones would necessarily have more ' productive capacity. There was no material at all from which the Tribunal could justifiably have inferred that the increase in production would be so. material as to, attract the principle of apportionment laid down by this Court in the case of the Associated Cement Companies Ltd. 1331 A F; 332 (iii) In calculating the rehabilitation requirement for the machinery the depreciation provision made in accordance with the principles of commercial accounting has to be deducted from the amount that would be required to purchase the new machinery for replacement. The contention that deduction should be made only of depreciation reserves available to the employer cannot be accepted. SUch an interpretation militates against the very purpose for which rehabilitation provision is allowed, namely, to enable the industry to cover the difference between the amount of depreciation which is recouped by making provision for it in accoromance with the, principles of commercial accounting and the amount that would be required to purchase the new machinery for replacement. Therefore, in the present case, the Tribunal erred when in calculating the provision for rehabilitation it took the entire price of the replacement machinery as required to be provided, entirely out of profits without reducing the price to the extent of the depreciation provided for in the accounts. [333 E 334 B F] (iv) The claim of the workmen that the sum shown in the balance sheet of the company as development rebate reserve should be deducted from the available surplus must be allowed. The mere statement of the General Manager on affidavit to. the effect that the reserves had been utilised as part of the working capital could not be aceepted as evidence of the fact. When the balance sheet itself showed that cash amounts in the form of fixed deposits were available which were far in excess of the development rebate reserve in question, there would be No. justification for holding that this development. rebate reserve was not available as a liquid asset and had been included by the company in the working capital. This development rebate reserve was a liquid asset available for rehabilitation and consequently liable to be deducted when calculating the rehabilitation requirement. [335 A G] (v) If some. machines have fully run out their lives, they must necessarily be replaced out of resources available immediately and there would be no justification for keeping the available resources in reserve for future rehabilitation while not providing out of those available resources for immediate. replacement of machinery. There is also the aspect that an employer in order to claim more and, more rehabilitation provision will have a tendency to keep old blocks of machinery running and to avoid adoption of such a device it would be fair that he is required to utilise available resources at the very first opportunity when the old blocks of machinery require replacement and claim annual provision for future only in respect of that machinery which will require replacement later 313 on. Consequently, in the present case the depreciation provision and the available development rebate reserve must be taken into account when calculating the annual provision for rehabilitation required for replacement of the earliest installed machinery until it was exhausted, whereafter 'the annual requirement for the remaining blocks of machinery would have to be calculated, ignoring these available resources. [336 G H; 337 C D] (vi) For the purpose of working 'out return on working capital in the year of bonus the origin of the fund used as working capital is immaterial and it cannot be said that the return must be allowed only on reserves used as working capital and not on any other funds used as such. However the fund must be available for investment before a claim can be made by the employer for a return on it. [340 E F] But, the mere existence of reserves and funds at the beginning of the year, even taken together with their existence at the end of the year cannot lead to any inference that these reserves and funds must have formed part of the working capital during the year and could not form part of other items such as fixed deposits, investments etc. The affidavit filed by the company in this connection did not exclude the possibility that they were utilised for purposes other than that of working capital. in the balance sheet the amounts which represented fixed assets, fixed deposits, investments and other loans and. advances could not be classified as part of the working capital. The items representing working capital were current assets, stock in trade, sundry debts, bank and cash. balances, certain loans and advances and insurance and other claims. The items representing working capital had a total value of Rs. 498.02 lacs. Deducting from this the sum of Rs. 377.34 lacs available from subscribed capital or other sources. there remained a balance of Rs. 120.68 lacs which must have necessarily come out of the various reserves including the depreciation, and this amount at least must be held to represent resources actually used as working capital during the year by the company. On this amount it would be fair to allow a 4% return to the company. [344 F H; 347 D E] (vii) The company 's claim that half the amount from the following sources, namely, (1) the profit in the profit and loss account worked out at the end of the year, (2) depreciation reserve for the year, (3) development rebate for the year, (4) value of discarded fixed. assets written off should be treated as 'a fund which was available during the bonus year for being available for being utilised as working capital, could not be accepted. There was nothing to show whether any of these amounts became available to the company during the year and if so when they came available. [347 F] (viii) In allowing 6% return on paid up capital in accordance with the Full Bench Formula no question could arise of deducting the amounts invested in subsidiary companies from the paid up capital because the said investment had not been held to have come out of paid up capital [348 [348 F] (ix) The income of the company from interest on fixed deposits was its extraneous income which accrued to the company without any contribution by the workmen. this income had therefore to be excluded in calculating the available surplus. At the same time the company could not on equitable grounds be permitted to claim the interest paid by it on its borrowings as business expenditure. Therefore the interest on fixed deposits was to be treated as extraneous income only after deducting from it the interest paid on the borrowings. [349 D F] 314 (x) The income received by the company from its foreign collaborators as commission on sales effected by the said collaborators of their own cars in India was extraneous income to which the company 's wOrkmen made no contribution. It was not therefore to be taken into account in calculating the available surplus. [349 C] (xi) Calculated in the above manner the available surplus came 10 Rs. 30.56 lacs. The Tribunal was not right in its decision that the company was not in a position to pay bonus at all. However, though the company had earned a large amount of profit in the year of bonus it had for quite a large number of years been running at a loss. The available surplus being only Rs. 30.56 lacs, the workmen 's demand of bonus equivalent to six months ' wages amounting to Rs. 24 lacs was too high. It would be just and proper to allow bonus at 20% of their annual wages which would come to Rs. 8.60 lacs. [352 A E] Associated Cement Companies Ltd. Dwarka Cement Works, Dwarka vs Its Workmen & Anr. , Saxby & Farmer Mazdoor Union, Calcutta vs M/s. Saxby & Farmer (India) Ltd. , Workmen M/s. Saxby & Farmer (India) Pvt. Ltd. vs M/s. Saxby & Farmer (India) Private Ltd. C.A. 152/64 dr. 12 4 1965, The Millowners ' Association, Bombay vs The Rashuriya Mill Mazdoor Sangh, Bombay, The Honorary Secretary South India Millowners ' Association & Ors. vs The Secretary, Coimbatore District Textile Workers ' Union. [1962] 2 Supp. S.C.R. 926, National Engineering Industries Ltd. vs The Workmen & Vice Versa, [1968] 1 S.C.R. M/s. Titaghar Paper Mills Co. Ltd. vs Its Workmen, [1959] Supp. 2 S.C.R. 1012, Millowners, Association, Bombay vs The Rashtriya Mill Mazdoor Sangh, , Tata Oil Mills Co. Ltd. vs It 's Workmen & Ors. ; , Anil Starch Products Ltd. vs Ahmedabad Chemical Workers ' Union & Ors., , Khandesh Spg & Wvg. Mills Co. Ltd. vs The Rashtriya Girni Karogat Sangh, Jalgaon, ; , Bengal Kagazkal Mazdoor Union & Ors. vs Titagarh Paper Mills Company, Ltd., [1963] II L.L.J. 358 and Voltas Limited vs Its Workmen, ; , considered.

Civil Appeal No. 1664 of 1974. Appeal by Special Leave from the judgment and order dated the 18th December, 1973 of the Kerala High Court in original Petition No.860 of 1973 and Civil Appeals Nos. 891 892 of 1975 Appeal by special leave from the judgment and order dated the 25th January, 1974 of the Rajasthan High Court in S.B. Civil Writ Petitions Nos. 352 & 1826 of 1971 respectively. section N. Prasad, for the appellants (in all the appeals). section M. Jain, V. section Dave and Inder Makwana, for the respondent (In C.A. No. 891/75) The Judgment of the Court was delivered by FAZAL ALI, J. Civil Appeal Nos. 1664 of 1974 and 891 of 1975 are appeals by special leave directed against the judgments of the Kerala High Court dated December 18, 1973 and the Rajasthan High Court dated January 25, 1974, respectively allowing the writ petitions filed before the High Courts by the respondents concerned. Civil Appeal No. 892 of 1975 has also been filed against the judgment of the Rajasthan High Court dated January 25, 1974 with respect to the respondent Abdul Hamid whose petition was allowed by the same judgment of the High Court dated January 25, 1974, which was decided in favour of the respondent Narsing. It would thus appear that the cases of the respondents Narsingh and Abdul Hamid had been decided by one common judgment of the High Court of Rajasthan. It was agreed at the Bar that as the points involved in all the three cases arc the same, they may be disposed of by one common judgment. We, therefore, propose to dispose of all the three cases by one common judgment indicating, however, the facts of each individual case, wherever necessary. As regards Civil Appeal No. 1664 of 1974 the respondent T.R. Challappan was a Railway Pointsman working at Irimpanam on Olavakkot Division of the Southern Railway. On August 12, 1972 at about 3 30 P.M. he was arrested at the olavakkot railway station platform for disorderly drunken and indecent behavior and a criminal case under section 51(A) of the Kerala Police Act was registered against him After due investigations the challan was presented before the Sub Magistrate, Palghat who after finding the respondent guilty instead of sentencing him released him on Probation under section 3 of the Probation of offenders Act. After the respondent was released the Disciplinary Authority of the Department by its order dated January 3, 1973 removed him from service in view of the misconduct which led to the conviction of the respondent on a criminal charge under section 51(A) of the Police Act. The order removing the respondent from service merely shows that it proceeded on the basis of the 786 conviction of the accused in the criminal case and there is nothing A to show that the respondent was heard before passing the order. The Kerala High Court held that as the respondent was released by the criminal court and no penalty was imposed on him, therefore, r. 14(1) under which the respondent was removed from service did not in terms apply. The High Court accordingly quashed the order passed by the Disciplinary Authority and allowed the writ petition. In Civil Appeal No. 891 of 1975 the respondent Narsingh was working as a Railway Khallasi working at the Railway Workshop at Jodhpur and was found to be in possession of stolen copper weighing 4 Kilos and 600 Grammes. The respondent was prosecuted and was ultimately,. convicted by the Trial Magistrate under section 3 of the Indian Railway Property (Unlawful Possession) Act, 1966. On appeal the learned Additional Sessions Judge, Jodhpur, while maintaining the conviction of the respondent set aside the sentence and released him on probation under the provisions of the Probation of offenders Act. On the basis of the order of conviction passed by the Criminal Court the Assistant Personnel officer (W), who was the Disciplinary Authority removed the respondent from service by his order dated February 26, 1971 and the departmental appeal against this order was eventually rejected. Thereafter the respondent moved the High Court in its writ jurisdiction and the petition was allowed by the High Court and the order of removal from service was quashed by the High Court of Rajasthan. In Civil Appeal No. 892 of 1975 the respondent Abdul Hamid was a second fireman at the Railway Workshop at Jodhpur and he was prosecuted and ultimately convicted under section 420 of the Indian Panel Code by the Special Magistrate, Jaipur by his order dated September 9, 1970. The Magistrate, however, instead of sentencing him ordered him to be released on probation under the provisions of the Probation of offenders Act. The Assistant Mechanical Engineer by his order dated February 3, 1971, removed the respondent from service on the ground of his conviction by a criminal court and the departmental appeal against this order filed by the respondent was rejected on March 2, 1971. Thereafter the respondent moved the Rajasthan High Court under article 226 of the Constitution and the High Court quashed the order by which the respondent was removed from service hence the appeal by special leave by the Union of India against the judgment of the Rajasthan High Court. A close analysis of the facts of the cases of each of the respondents would doubtless reveal that the points involved in the three cases are almost identical, though the grounds on which the respective High Courts leave proceeded may be slightly different. Mr. section N. Prasad appearing for the appellants in all the three cases raised three points before us: H (1) That section 12 of the Probation of offenders Act con templates an automatic disqualification attached to the conviction and not an obliteration of the misconduct 787 of the accused so as to debar the Disciplinary Authority from imposing penalties under the Rules against an employee who has been convicted for misconduct. (2) Rule 14 of the Railway Servants (Discipline and Appeal) Rules, 1968, is in terms similar to proviso (a) to article 311(2) of the Constitution and confers power on the appointing authority to pass an order of dismissal against an employee who is found guilty of a criminal offence without giving any further notice to the delinquent employee. further, r. 14 does not in terms contemplate that the appointing authority will consider the penalty after either hearing the accused or after ordering special inquiry. (3) That in the absence of any provision similar to r. 14 the Government is entitled. in the exercise of its executive power, to terminate the services of. the employee who has been convicted of a criminal charge without any further departmental inquiry. Learned counsel appearing for the respondents in Civil Appeal No. 891 of 1975 as also Civil Appeal No. 892 of 1975 contested the contentions raised by the counsel for the appellants and submitted that the judgment of the High Court laid down the correct law and that the mere fact that the delinquent employee has been convicted of a criminal charge cannot ipso facto result in his automatic dismissal from service. We have given our earnest consideration to the arguments advanced before us by counsel for the parties. To begin with, the Kerala High Court appears to have allowed the writ petition solely on the ground that the order of the Magistrate releasing the respondent T. R. Challappan on probation did not amount to imposition of penalty as contemplated by r. 14 of the Railway Servants (Discipline and Appeal) Rules, 1968 hereinafter called 'the Rules of 1968 ', and therefore the order passed by the Disciplinary Authority was illegal. In order to understand it, it may be necessary to examine the scope and object of r. 14 of the Rules of 1968 which will also throw a great light on the second point which has been dealt with at great length by the Rajasthan High Court, namely the import of the closing part of r. 14 where the disciplinary authority has to consider the circumstances of the case before making any order In the instant case we are concerned only with clause (1) of r. 14 of the Rules of 1968 which runs thus: "Notwithstanding anything contained in rules 9 to 13 . (1) where any penalty is imposed on a railway servant on the ground of conduct which has led to his conviction on a criminal charge, 788 the disciplinary authority may consider the circumstances of the case and make such orders thereon as it deems fit. " The word penalty imposed on a railway servant, in, our opinion, does not refer to a sentence awarded by the Court to the accused on his conviction, but, though not happily worded it merely indicates the nature of the penalty impossible by the disciplinary authority if the delinquent employee has been found guilty of conduct which has led to his conviction of a criminal charge. Rule 14 of the Rules of 1968 appears in Part IV which expressly contains the procedure for imposing penalties. Further more, r. 14 itself refers to rr. 9 to 13 which contain the entire procedure for holding a departmental inquiry. Rule 6 of Part III gives the details regarding the major and minor penalties. Finally r. 14(1) merely seeks to incorporate the principle contained in proviso (a) to article 311(2) of the Constitution which runs: thus "(2) No such person as aforesaid shall be dismissed or removed or reduced in rank except after an inquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of o, those charges and where it is proposed, after such inquiry, to impose on him any such penalty, until he has been given reasonable opportunity of making representation of the penalty proposed, but only on the basis of the evidence adduced during such inquiry: Provided that this clause shall not apply (a) where a person is dismissed or removed or reduced in. rank on the ground of conduct which has led to his conviction on a criminal charge; " An analysis of the provisions of article 311(2) extracted above would clearly show that this constitutional guarantee contemplates three stages of departmental inquiry before an order of dismissal, removal or reduction can be passed, namely, (1) that on receipt of a complaint against a delinquent employee charges should be framed against him and a departmental inquiry should be held against him in his presence; (ii) that after the report of the departmental inquiry is received he appointing authority must come to a tentative conclusion regarding the penalty to be imposed on the delinquent employee; and (iii) that before actually imposing the penalty a final notice to the delinquent employee should be given to show cause why the penalty proposed against him be not imposed on him. Proviso (a) to article 311(2), however, completely dispenses with all the three states of departmental inquiry when an employee is convicted on a criminal charge. The reason for the proviso is that in a criminal trial the employee has already had a full and complete opportunity to contest the allegations against him and to make out his defence. In the criminal trial charges are framed to give clear notice regarding the allegations made against the accused, secondly, the witnesses are examined and cross examined in his presence and by him; and thirdly, the accused is given full opportunity 789 to produce his defence and it is only after hearing the arguments that the Court passes the final order of conviction or acquittal. in these circumstances, therefore, if after conviction by the Court a fresh departmental inquiry is not dispensed with, it will lead to unnecessary waste of time and expense and a fruitless duplication of the same proceedings all over again. it was for this reason that the founders of the Constitution thought that where once a delinquent employee has been convicted of a criminal offence that should be treated as a sufficient proof of his misconduct and the disciplinary authority may be given the discretion to impose the penalties referred to in article 311(2), namely, dismissal, removal or reduction in rank. It appears to us that proviso (a) to article 311(2) is merely an enabling provision and it does not enjoin or confer a mandatory duty on the disciplinary authority to pass an order of dismissal, removal or reduction in rank the moment an employee is convicted. This matter is left completely to the discretion of the disciplinary authority and the only reservation made is that departmental inquiry contemplated by this provision as also by the Departmental Rules is dispensed with. In these circumstances, therefore, we think that r. 14(1) of the Rules of 1968 only incorporates the principles enshrined in proviso (a) to article 311(2) of the Constitution. The words 'where any penalty is imposed ' in r. 14(1) should actually be read as 'where any penalty is impossible ', because so far as the disciplinary authority is concerned it cannot impose a sentence. it could only impose a penalty on the basis of conviction and sentence passed against the delinquent employee by a competent court. Furthermore the rule empowering the disciplinary authority to consider circumstances of the case and make such orders as it deems fit clearly indicates that it is open to the disciplinary authority to impose any penalty as it likes. In this sense, therefore, the word 'penalty ' used in r. 14(1) of the Rules of 1968 is relatable to. the penalties to be imposed under the Rules rather than a penalty given by a criminal court. Another important aspect of the matter is that a criminal court after. conviction does not impose any penalty but passes a sentence whether it is one of fine, or imprisonment or whipping or the like. The Penal Code has been on the statute book for a large number of years and the rule making authority was fully aware of the significance of the words 'conviction ' and 'sentence ' and if it really intended to use the word 'penalty ' as an equivalent for 'sentence ' then it should have used the word 'sentence ' and not 'penalty. In these circumstances we are satisfied that the word 'penalty ' has. been used in juxtaposition to the other connected provisions of the Rules appearing in the same Part The view of the Kerala High Court, there fore. that as the Magistrate released the delinquent employee on probation no penalty was imposed as contemplated by r. 14(1) of the Rules of 1968 does not appear to us to be legally correct and must be overruled Nevertheless we would uphold the order of the Kerala High Court. On the ground. that the last Dart of r. 14 of the Rules of 1968 which requires the` consideration of the circumstances 790 not having been complied with by the disciplinary authority, the A order of removal from service of the delinquent employee was rightly quashed. This brings us to the consideration of two inter connected questions, namely, as to what is the effect of the order of the Magistrate releasing the accused on probation and the effect of section 12 of the Probation of Offenders Act. It was suggested by the respondents that if the Magistrate does not choose, after convicting the accused to pass any sentence on him, but releases him on probation then the stigma of conviction is completely washed out and obliterated and, therefore, r. 14(1) of the Rules of 1968 will not apply in terms. We are, however, unable to agree with this somewhat broad proposition. A perusal of the provisions of the Probation of offenders Act, 1958, clearly shows that the mere fact that the accused is released on probation does not obliterate the stigma of conviction. The relevant portion of the Probation of offenders Act, 1958, hereinafter referred to as 'the Act ' runs thus . " . notwithstanding anything contained in any other law for the time being in force the Court may, instead of sentencing him to any punishment or releasing him on probation of good conduct under section 4, release him after due admonition. " Similarly the relevant part of section 4(1) of the Act runs thus: " . notwithstanding anything contained in any other law for the time being in force, the Court may, instead of sentencing him at once to any punishment, direct that he be released on his entering into a bond, with or without sureties, to appear and receive sentence when called upon during such period, not exceeding three years, as the Court may direct, and in the mean, time to keep the peace and be of good behaviour." Sections 9(3) & (4) of the Act read as under: "9. (3) If the Court, after hearing the case is satisfied that the offender has failed to observe any of the conditions of the bond or bonds entered into by him, it may forthwith (a) sentence him for the original offence; or (b) where the failure is for the first time, then, without prejudice` to the continuance in force of the bond, impose upon him a penalty not exceeding fifty rupees. (4)If a penalty imposed under clause (b) of sub section (3) is not paid within such period as the Court may fix, the Court may sentence the offender for the original offence :" These provisions would clearly show that an order of release on probation comes into existence only after the accused is found guilty 791 and is convicted of the offence. Thus the conviction of the accused or the finding, of the Court that he is guilty cannot be washed out at all because that is the sine qua non for the order of release on probation of the offender. The order of release on probation is merely in substitution of the sentence to be imposed by the Court. This has been made permissible by the statute with a humanist point of view in order to reform youthful offenders and to prevent them from becoming hardened criminals. The provisions of section 9(3) of the Act extracted above would clearly show that the control of the offender is retained by the criminal court and where it is satisfied that the conditions of the bond have been broken by the offender who has been released on probation, the Court can sentence the offender for the original offence. This clearly shows that the factum of guilt on the criminal charge is not swept away merely by passing the order releasing the offender on probation. Under sections 3, 4 or 6 of the Act, the stigma continues and the finding of the misconduct resulting in conviction must be treated to be, a conclusive proof. In these circumstances, therefore we are unable to accept the argument of the respondents that the order of the Magistrate releasing the offender on probation obliterates the stigma of conviction. Another point which is closely connected with this question is as to the effect of section 12 of the Act which runs thus: "Notwithstanding anything contained in any other law, person found guilty of an offence and dealt with under he provisions of section 3 or section 4 shall not suffer disqualification, if any, attaching to a conviction of an offence under such law. " It was suggested that section 12 of the Act completely obliterates the effect of any conviction and wipes out the disqualification attached to a conviction of an offence under such law. This argument, in our opinion, is based on a gross misreading of the provisions of section 12 of the Act. The words "attaching to a conviction of an offence under such law" refer to two contingencies: (1) that there must be a disqualification resulting from a conviction; and (ii) that such disqualification must be provided by some law other than the Probation of offenders Act. The Penal Code does not contain any such disqualification. Therefore, it cannot be said that section 12 of the Act contemplates an automatic disqualification attaching to a conviction and obliteration of the criminal misconduct of the accused. it is also manifest that disqualification is essentially different in its connotation from the word 'misconduct '. Disqualification cannot be an automatic consequence of misconduct unless the statute so requires. Proof of misconduct may or may not lead to disqualification, because this matter rests on the facts and circumstances of a particular case or the language in which the particular statute is covered. In the instant case neither article 311(2) proviso (a) nor r. 14(1) of the Rules of 1968 contain any express provision that the moment a 792 person is found guilty of a misconduct on a criminal charge he will have to be automatically dismissed from service. Article 311 (2) proviso (a) is an enabling provision which merely dispenses with the various stages of the departmental inquiry and the show cause notice. Rule 14 despite incorporating the principle of proviso (a) to article 311(2) enjoins on the discriplinary authority to consider the circumstances of the case before passing any order. Thus, in our opinion, it is a fallacy to presume that the conviction of a delinquent employee simpliciter without any thing more will result in his automatic dismissal or removal from service. It was, however, suggested that r. 14(1) of the Rules of 1968 is the provision which contains the disqualification by dispensing with the departmental inquiries contemplated under rr. 9 to 13 of the said Rules. This cannot be the position. because as we have already said r. 14(1) only incorporates the principle of proviso (a) to article 311(2). If section 12 of the Probation of offenders Act completely wipe out the disqualification contained in article 311(2) proviso (a) then it would have become ultra vires as it would have come into direct conflict with the provisions of the proviso (a) to article 311(2). In our opinion, however, section 12 of the Act refers to only such disqualifications as are expressly mentioned in other statutes regarding holding of offices or standing for elections and so on. This matter was considered by a number of High Courts and there is a consensus of judicial opinion on this point that section 12 of the Act is not an automatic disqualification attached to the conviction itself. In R. Kumaraswami Aiyar vs The Commissioner Municipal Council, Tiruvannamalai and another(1) Rajagopala Ayyangar, J., as he then was, observed as follows. "If for instance the petitioner is dismissed from service because he has been found guilty of an offence involving moral turpitude it cannot be said that he is suffering from a disqualification attaching to a conviction. What section 12 A has in view is an automatic disqualification flowing from a conviction and not an obliteration of the misconduct of the accused. In my judgment the possibility of disciplinary, proceedings being taken against a Person found guilty is not a disqualification attaching to the conviction within the meaning of section 12 A of the Probation of offenders Act. " The same view was endorsed by the Full Bench of the Punjab and Haryana High Court in Om Prakash vs The Director Postal Services (Posts and Telegraphs Deptt.) Punjab Circle, Ambala and other(2) where it was observed: "What Section 12 removes is a disqualification attaching to a conviction. In my opinion neither liability to be departmentally punished for misconduct is a disqualifica (1) , 256. (2) A. T. R. 1973 Punjab 1, 4 793 tion, nor it attaches to the conviction. "Disqualification" its ordinary dictionary meaning connotes something that disqualifies or incapacitates. To disqualify a person for a particular purpose means to deprive that person of the qualities or conditions necessary to make him fit for that purpose. " It was further observed by the High Court: " The other reason why Section 12 of the Act does not help the petitioner is that the departmental proceedings are not attached to the conviction of the offence. Departmental proceedings are not taken because the man has been convicted. The proceedings are directed against the original misconduct of the Government servant. No part of Section 12 is intended to exonerate a Government servant of his liability to departmental punishment for misconduct. This provision does not afford immunity against disciplinary proceedings for the original misconduct. What forms basis of the punishment is the misconduct and not the conviction. A Full Bench of the Delhi High Court in Director of Postal Services and Anr. vs Daya Nand(1) held the same view and observed thus: " Firstly, the ordinary meaning of 'qualification ' is the possession of some merit or quality which makes the possessors eligible to apply for or to get some benefit. The word 'disqualification ' used in section 12 has the opposite meaning It imposes a disability on the person to whom the disqualification is attached in applying for or getting such benefit. The disqualification contemplated by section 12 is something attached to the conviction, namely, something which is a consequence or the result thereof. Instances of such disqualification may be found in a statute statutory rule or in administrative practice. Under section 108 of the Representation of People Act, 1951, a person is disqualified to he a member of Parliament or State Legislature if he is convicted of certain offences. It would also be an administrative consideration in entertaining applications for jobs or for grant of licences to disfavour an applicant a convict. Such a disqualification is removed by section 12. This meaning of disqualification does not include the reason who a hearing prior to punishment is dispensed with by proviso (a) to Article 311(2) of the Constitution. Secondly the object of section 12 is to remove a disqualification attached to conviction. It does not 'go beyond it ' (1) 794 The decision in R. Kumaraswami Aiyar 's case (supra) was followed in a later case in Embaru vs Chairman, Madras Port Trust.(1) The Andhra Pradesh High Court in Akella Satyanarayana Murthy vs Zonal Manager, Life Insurance Corporation of India, Madras(2) appears to have taken the same view where it was observed thus: " . we are of the view that what Section 12 of the Central Act has in view is an automatic disqualification flowing from a conviction and not an obliteration of the misconduct of the official concerned. The disciplinary authority is not precluded from proceeding under Regulation 89(4) . " The Madhya Pradesh High Court also took the same view in Premkumar vs Union of India and others(3) where it was observed: " We have heard the learned counsel at some length but we find ourselves unable to agree with the above contention. The relevant words of the section are 'shall not suffer disqualification, if any, attaching to a conviction of an offence under such law '. The words can only be read so as to remove the disqualification which under some law may attach to a person on account of his conviction. For instance, if a person is convicted of an offence, he is disqualified from standing for election to the Central or State Legislatures. But if such a person is given benefit under the Probation of offenders Act then by virtue of Section 12 of that Act the disqualification for that purpose (standing for election) will stand removed. " A Division Bench of the Delhi High Court in Iqbal Singh vs Inspector General of Police, Delhi & Ors.(4) took a contrary view but that decision has been overruled by a later decision of the Full Bench of the same High Court in Director of Postal Services vs Daya Nand (Supra) to which we have already referred to. Even the Rajasthan High Court in its judgment concerning Civil Appeal No. 891 of 1975 has endorsed the view taken by the Madras High Court and followed by the other High Courts. We find ourselves in complete agreement with the view taken by the Madras High Court as referred to above and as endorsed by the Delhi, Rajasthan, Punjab, Andhra Pradesh and Madhya Pradesh High Courts. We now come to the third point that is involved in this case, namely, the extent and ambit of the last part of r. 14 of the Rules of 1968. The concerned portion runs thus: "The disciplinary authority may consider the circumstances of the case and make such orders thereon as it deems fit: " (1) [1963] I L. L.J.49. (2) AIR. 1969 A.P. 371,373 (3) [1971] Lab. & Ind. Cases 823,824 (4) A.1. R.1970 M.P. 240(1971) 2 S.L.R 257 795 In this connection it was contended by the learned counsel for the appellants that this provision does not contemplate a full dress or a fresh inquiry after hearing the accused but only requires the disciplinary authority to impose a suitable penalty once it is proved that the delinquent employee has been convicted on a criminal charge. The Rajasthan High Court in (civil Writ Petition No. 352 of 1971 concerning Civil Appeal No. 891 of 1975 has given a very wide connotation to the word 'consider ' as appearing in r. 14 and has held that the word 'consider ' is wide enough to require the disciplinary authority to hold a detailed determination of the matter. We feel that we are not in a position to go to the extreme limit to which the Rajasthan High Court has, gone. The word 'consider ' has been used in contradistinction to the word 'determine '. The rule making authority deliberately used the world 'consider ' and not 'determine ' because the word 'determine ' has a much wider scope. The word 'consider ' merely connotes that there could be active application of the mind by the disciplinary authority after considering the entire circumstances of the case in order to decide the nature and extent of the penalty to be imposed on the delinquent employee on his conviction on a criminal charge. This matter can be objectively determined only if the delinquent employee is heard and is given a chance to satisfy the authority regarding the final orders that may be passed by the said authority. In other words, the term 'consider ' postulates consideration of all the aspects, the pros and cons of the matter after hearing the aggrieved person. Such an inquiry would be a summary inquiry to be held by the disciplinary authority after hearing the delinquent employee. It is not at all necessary for the disciplinary authority to order a fresh departmental inquiry which is dispensed with under r. 14 of the Rules of 1968 which incorporates the principle contained in article 311(2) proviso (a). This provision confers power on the disciplinary authority to decide whether in the facts and circumstances of a particular case what penalty if at all, should be imposed on the delinquent employee. It is obvious that in considering this matter the disciplinary authority will have to take into account the entire conduct of the delinquent employee, the gravity of the misconduct committed by him, the impact which his misconduct is likely to have on the administration and other extenuating circumstances or redeeming features if any present in the case and so on and so forth. It may be that the conviction of an accused may be for a trivial offence as in the case of the respondent T. R. Challappan in Civil Appeal No. 1664 of 1974 where a stern warning or a fine would have been sufficient to meet the exigencies of service. It is possible that the delinquent employee may be found guilty of some technical offence, for instance, violation of the transport rules or the rules under the Motor Vehicles Act and so on, where to major penalty may be attracted. It is difficult to lay down any hard and fast rules as to the factors which the disciplinary authority would have to consider, but I have mentioned some of these factors by way of instances which are merely illustrative and not exhaustive. In other words, the position is that the conviction of the delinquent employee would be taken as sufficient proof of misconduct and then 796 the authority will have to embark upon a summary inquiry as to the nature and extent of the penalty to be imposed on the delinquent employee and in the course of the inquiry if the authority is of the opinion that the offence is too trivial or of a technical nature it may refuse to impose any penalty in spite of the conviction. This is very salutary provision which has been enshrined in these Rules and one of the purposes for conferring this power is that in cases where the disciplinary authority is satisfied that the delinquent employee is a youthful offender who is not convicted of any serious offence and shows poignant penitence or real repentence he may be dealt with as lightly as possible. This appears to us to be the scope and ambit of this provision. We must, however, hasten to add that we should not be understood as laying down that the last part of r. 14 of the Rules of 1968 contains a licence to employees convicted of serious offences to insist on reinstatement. The statutory provision referred to above merely imports a rule of natural justice in enjoining that before taking final action in the matter the delinquent employee should be heard and the circumstances of the case may be objectively considered. This is in keeping with the sense of justice and fair play. The disciplinary authority has the undoubted power after hearing the delinquent employee and considering the circumstances of the case to inflict any major penalty on the delinquent employee without any further departmental inquiry if the authority is of the opinion that the employee has been guilty of a serious offence involving moral turpitude and, therefore, it is not desirable or conducive in the interests of administration to retain such a person in service. Mr. section N. Prasad appearing for the appellants submitted that it may not be necessary for the disciplinary authority to hear the accused and consider the matter where no provision like r. 14 exists. because in such cases the Government can, in the exercise of its executive powers, dismiss, remove or reduce in rank any employee who has been convicted of a criminal charge by force of proviso (a) to Art 311(2) of the Constitution. In other words, the argument was that to cases where proviso (a) to article 311(2) applies a departmental inquiry is completely dispensed with and the disciplinary authority can on the doctrine ' of pleasure terminate the services of the delinquent employee. We however refrain from expressing any opinion on this aspect of the matter because the cases of all the three` respondents before us are cases which clearly fall within r. 14 of the Rules of 1968 where they have been removed from service without complying with the last part of r. 14 of the Rules of 1968 as indicated above. In none of the cases has the disciplinary authority either 797 considered the circumstances or heard the delinquent employees on the limited point as to the nature and extent of the penalty to be imposed if at all. On the other hand in all these cases the disciplinary authority has proceeded to pass the order of removal from service straightaway on the basis of the conviction of the delinquent employees by the criminal courts. For the reasons given above the High Courts of Kerala and Rajasthan were, in the Circumstances, fully justified in quashing the orders of the disciplinary authorities removing the respondents from service. The appeals therefore fail and are accordingly dismissed but in view of somewhat unsettled position of law on the question involved we leave the parties to bear their own costs. V.P.S. Appeals dismissed.

Rule 14(1) of the Railway Servants (Discipline and Appeal) Rules, 1968 provides that not withstanding anything contained in rr.9 to 13, where any penalty is imposed on a railway servant on the ground of conduct which has led to his conviction on a criminal charge, the disciplinary authority may consider he circumstances of the case ' and make such orders thereon as it deems fit, Section 12 of the Probation of ' Offenders Act, 1958, provides that not with standing anything contained in any other law a person found guilty of an offence and dealt with under the provisions of s.3 or s.4 shall not suffer a disqualification, if any, attached to a conviction of an offence under such law. The respondents were found guilty of certain minor offences and instead of being sentenced, were released on probation under the provisions of the Probation of offenders Act. The concerned Disciplinary Authorities however, re moved them from service on the ground of their conviction without any further opportunity to the respondents. The respondents challenged the orders of removal and the High Court quashed the orders. Dismissing the appeals to this Court, ^ HELD: (1) The conviction of the delinquent employee would be taken as sufficient proof of misconduct, and then, the authority will have to hold a summary inquiry as to the nature and extent of the penalty to be imposed If the authority is of the opinion that the offence is too trivial or of a technical nature it may not impose any penalty in spite of the conviction. If the authority is of the opinion that the employee has been guilty of a serious offence involving moral turpitude, and therefore it was not desirable or conducive in the interests of administration to retain such a person in service, the disciplinary authority has the undoubted power, after hearing the employee and considering the circumstances of the case, to inflict any penalty without any further departmental inquiry. As there was no such application of mind and consideration of circumstances the orders of removal are rightly quashed [795H 796E, H] (2) The view of the Kerala High Court, that as the Magistrate released the 7 delinquent employee on probation, no penalty was imposed and that therefore r.14 (1) did not apply, is not correct. The word 'penalty ' in the rule is relatable to the penalties to be imposed by the Disciplinary Authorities under the Rules and not to the sentence passed by a criminal court. Because, so far as the disciplinary authority is concerned it could only impose a penalty and not a sentence, just as a criminal court, after conviction, does not impose a penalty but passes a sentence. Hence, the words "where any penalty is imposed" in r.14 (1) should be read as 'where any penalty is impossible ' by the Disciplinary Authority. [787E F; 788A R; 789D H] 2 L1127SCI/75 784 (3) If the Magistrate did not choose, after convicting the accused, to pass any sentence on him but released him on probation it could not be said that, the stigma of conviction is completely washed out or obliterated or that no disciplinary action could be taken under r. 14(1). [790B C] Sections 3, 4 and 9 of the Probation of offenders Act show that an order of ' release on probation comes into existence only after the accused is found guilty and is convicted of the offence. Such an order is merely in substitution of the sentence from a humanist point of view. The control over the offender is retained by the criminal court and where it is satisfied that the conditions of the bond had been broken by the offender, who has been released on probation the Court can sentence on the basis of the original conviction, showing that the guilt is not obliterated. [790H 791D] (4) The words disqualification, if any attaching to a conviction of an offence under such law, in section 12 mean (1) that there must be a disqualification resulting from a conviction; and (ii) that such disqualification must be provided by some law other than the Probation of offenders Act. It could not be contended that the `disqualification ' referred to is the 'liability under r. 14(1) to disciplinary action without a departmental enquiry ', and that such disqualification is removed by release on probation. The disqualification must he an automatic disqualification; such as regarding holding of officer or standing for elections, as a consequence of ' the conviction. Rule 14(1) incorporates the principle contained in proviso (a) to article 311(2). But neither of these provisions contain any express provision that the moment a person is found guilty of misconduct of a criminal charge he will have to be automatically dismissed from service. These provisions are merely enabling and do not enjoin or confer a mandatory duty on the disciplinary authority to pass an order of dismissal, removal or reduction in rank the moment an employee is convicted. The proviso to article 311(2) was enacted because, when once a delinquent employee has been convicted of a criminal offence at a trial, where he had a full and complete opportunity to contest the allegations, that should be treated as a sufficient proof of his misconduct, and the disciplinary authority may be given the discretion to impose the penalties referred to in article 311(2), without holding a fresh full dress departmental inquiry. If r. I ' ' of the Probation of offenders. Act completely wipes out this liability to disciplinary action on the basis that it is a 'disqualification ' under the section then it would be ultra vires as it would be in direct conflict with the Constitutional provision. [788G H; 789C D, 791F 792F] R. Kumaraswami Aiyar v The Commissioner Municipal council, Tiruvannamai and another [1957] Cri. L. J. 255, 256 Om Prakash vs The Director Postal Services (posts and Telegraphs Deptt.) Punjab Circle, Ambala and others, A.I. R. 1973 Punjab 1, 4; Director of Postal Services and Anr. vs Daya Nand, , 341, Embaru vs Chairman Madras Port Trust Akella Satyanarayana Murthy vs Zonal Manager. Life Insurance Corporation of India, Madras. A.I.R. 1969 A.P. 371, 373 and Premkumar vs Union of India and others, [1971] Lab. & Ind. Cases 823, 824. approved. (5) Therefore the Rajasthan High Court was wrong in giving 1 wide connotation to the word 'consider ' in r. 14 and holding that it requires the disciplinary authority to hold a detailed determination of the matter once again. The rule making authority deliberately used the word 'consider ' and not 'determine ' because, the latter word has a much wider scope. the word 'consider ' merely connotes that there should be active application of mind by the disciplinary authority after considering the entire circumstances of to case in order to decide the nature and the extent of the penalty to be imposed on the delinquent employee on his conviction on a criminal charge. This could only be objectively determined if the delinquent employee is heard and given a chance to satisfy the authority regarding the final orders that may be passed The provision merely imports the rule of natural justice that before taking final action the delinquent employee should be heard and the circumstances objectively considered. [795B 795D]

Appeals Nos. 2269 and 2270 of 1966. Appeals by special leave from the judgment and order dated ' May 17, 1966 of the Commissioner of Wealth Tax, Andhra. Pradesh in J. No. Wt. 3(4) and 3(5) of 1959 60. A. K. Sen, B. P. Maheshwari and N. R. Kaitan, for the appellant (in both the appeals). section Mitra, G. Das, R. N. Sachthey and B. D. Sharma, for the respondent (in both the appeals). The Judgement of the Court was delivered by Shah, J. In proceedings for determination of wealth tax for the assesment years 1957 58 and 1958 59 the appellant Com pany claimed depreciation allowance on plant, building and machinery at the rates prescribed under the Income Tax Act and the Rules framed thereunder. The Wealth Tax Officer adopted the method prescribed by section 7 sub section (2) of the Wealth Tax Act and ' admitted the value of the assets as shown in the certified balance sheets on the respective valuation dates. In appeal, the Appellate Assistant Commissioner of Wealth Tax confirmed the order passed by the Wealth Tax Officer. The, Company then moved revision applications before the Commissioner of Wealth Tax under section 25 of the Wealth Tax Act. Against the order passed by the Commissioner of Wealth Tax rejecting the applications, the. Company has filed these appeals under article 136 of the Constitution. Against the orders of the Appellate Assistant Commissioner appeals lay to the Income tax Appellate Tribunal, but the Company preferred revision applications before the Commissioner. We do not ordinarily encourage an aggrieved party to appeal directly to this Court against the order of a Tribunal exercising judicial functions under a taxing statute, and thereby to bypass the normal procedure of appeal and reference to the High Court, but in the present case, it appears to us that a question of principle of great importance arises. We have entertained these appeals because in our judgment the, Commissioner of Wealth Tax has surrendered his authority and judgment to the Board of Revenue in deciding the questions which were sought to be raised by the Company in its revision applications. Section 25 of the Wealth Tax Act provides insofar as it is, material "(1) The Commissioner may, either of his own ,notion or on application made by an assessee in this 306 behalf, call for the record of any proceeding under this Act in which an order has been passed by any authority subordinate to him, and may make such inquiry, or cause such inquiry to be made, and, subject to the provi sions of this Act, pass such order thereon, not being order prejudicial to the assessee, as the Commissioner thinks fit The power conferred by section 25 is not administrative it is quasi_judicial. The expression "may make such inquiry and pass such order thereon" does not confer any absolute discretion on the Commissioner. In exercise of the power the Commissioner must bring to bear an unbiased mind, consider impartially the objections raised by the aggrieved party, and decide the dispute according to procedure consistent with the principles of natural justice : he cannot permit his judgment to be influenced by matters not disclosed to the assessee, nor by dictation of another authority. Section 13 of the Wealth Tax Act provides that all officers and other persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the Board. These instructions may control the exercise of the power of the officers of the Department in matters administrative but not quasi judicial. The proviso to section 13 is somewhat obscure in its import. It enacts that no orders, instructions or directions shall be given by the Board so as to interfere with the discretion of the Appellate Assistant Commissioner of Wealth Tax in the exercise of his appellate functions. It does not, however, imply that the Board may give any directions or instructions to the Wealth Tax Officer or to the Commissioner in exercise of his quasi judicial function. Such an interpretation would be plainly contrary to the scheme of the Act and the nature of the power conferred upon the authorities 'invested with quasi judicial power. The Commissioner appears, in our judgment, ' to have wholly misapprehended the true character of the jurisdiction with which he is by the Act entrusted and has surrendered his judgment to the directions of the Board of Revenue. The order sheet of the Commissioner (at pp. 10 36 of the printed Paper Book) bears,eloquent testimony to the manner in which the Commissioner has merely carried out the directions of the Board of Revenue, instead of deciding the case according to his own judgment. In entry dated December 31, 1959, there is a reference to the instructions contained in the Board 's Circular No. 7 D (WT) of 59 dated November 12, 1959 received on November 30, 1959. Under entry dated April 28, 1960 there is again a reference to the Board 's Circular No. 7 D of 1959 suggesting the manner in 307 which depreciation has to be worked out for the purpose of determining wealth tax. Again in the entry dated June 17, 1960 under item No. 4 it is stated that the Board 's instructions were, "specific on the point that no adjustment to depreciation relating to the period prior to March 31, 1957 should be made while determining the total wealth of an assessee on the basis of global valuation '. Under entry dated August 7, 1963, recorded by the Inspector, it is stated that "upon reference to the Board for instructions, it was recommended that the petitions be kept pending decision of the matter till" it was decided by the High Court in which the same question was raised. When on January 27, 1966, the Company requested that the applications be kept pending till the disposal of the reference application by the High Court for the assessment year 1959 60 in which a similar point was involved, the Commissioner was of the view that ' the application need not be kept pending, but still directed "write to the Board '. A letter was written to the Board and the Commissioner acted according to the directions of the Board, There is another entry dated March 14, 1966 which refers to the letter of the Board agreeing that the revision applications for the two years may be rejected, It is unnecessary to refer to any more entries made in the case sheet maintained by the Commissioner of Wealth Tax. From the inception of the proceedings the Commissioner of Wealth Tax put himself in communication with the Board of Central Revenue and sought instructions from that authority as to how the revision applications filed before him should be decided. He exercised no independent judgment. The Commissioner also recorded that the case did not require a personal hearing but since the Director of the Company had made a personal request for an interview it was "thought desirable" from "the point of view of public relations to give an interview. " Here also the Commissioner misconceived the nature and extent of his jurisdiction. Counsel appearing on behalf of the Commissioner of Wealth Tax in these appeals has not attempted to support the order under appeal. We set aside the order passed by the Commissioner and direct that the revision applications be heard and disposed of according to law and uninfluenced by any instructions or directions given by the Board of Revenue. The Company will get its costs in this Court. One hearing fee. R.K.P.S. Appeal allowed.

The Appellate Assistant Commissioner of Wealth Tax confirmed an orde Passed by the Wealth Tax Officer as regards the method adopted by the latter in dealing with a claim for depreciation allowance made by the appellant company in the course of its assessment to wealth tax. The appellant company thereafter moved revision applications before the Com, missioner under section 25 of the Wealth Tax Act and the Commissioner rejected these applications on the basis of certain directions issued by the Board of Revenue. On appeal to this Court by special Leave, HELD : The order passed by the Commissioner must be, set aside and 'the revision applications must be heard and disposed of according to law and uninfluenced by any instructions or directions given by the Board of Revenue. [307 G H] It Was clear, on the facts, that from the inception of the proceedings, the Commissioner put himself in communication with the Board of Central Revenue and sought instructions from that authority 'as to bow the, revision applications filed before him should be decided. He had exercised no independent judgment. The Commissioner appeared to have misapprehended the true character of the jurisdiction with which he is by the Act entrusted and surrendered his judgment to the directions of the Board of Revenue. [306 F G; 307 E G] The power conferred by section 25 is not administrative : it is quasi judicial. In exercise of this power the Commissioner must bring to bear an unbiased mind. consider impartially the objections raised by the aggrieved party. and decide the dispute according to procedure consistent with the principles of natural justice; he cannot permit his judgement to be influenced by matters not disclosed to the assesseee, nor by dictation of another authority. Any orders or instructions given by the Board and required to be followed under section 13 by officers employed in the, execution of the Act may control the exercise of their power in matters administralive but not quasi judicial. Although the proviso to section 13, which. is somewhat obscure in its import, enacts that no orders shall be given by the Board so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate functions, it does not thereby imply that the Board may give such orders to the Wealth Tax Officer or to the Commissioner in exercise of his quasi judicial function, Such an interpretation would be plainly contrary to the scheme of the Act and the nature of the power conferred upon the authorities invested with quasijudicial power. [306 B F] 305

ivil Appeal No. 1160 of 1978 From the Judgment and Order dated 9.12. 1977 of the Calcutta High Court in Appeal from Appellate Decree No.782 of 1973 S.N. Kacker and Sukumar Ghosh for the Appellant. Shankar Ghosh and D.K. Sinha and K.R. Nambiar for the Respondent. The Judgment of the Court was delivered by DUTT, J. The only question that is involved in this appeal by special leave is whether the High Court was justi fied in decreeing the suit for ejectment on the ground under clause (j) of section 13(1) of the West Bengal Premises Tenancy Act, 1956, hereinafter referred to as "the Act". One of the grounds for ejectment is that contained in clause (j) of section 13(1) of the act and reads as follows: "section 13(1). Notwithstanding anything to the contrary in any other law, no order or decree for the recovery of possession of any premises shall be made by any Court in favour of the landlord against a tenant except on one or more of the following grounds, namely: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1111 (j) Where the tenant has given notice to quit but has failed to deliver vacant possession of the premises to the landlord in accordance with such notice. " It appears that while remitting by postal money order the rents for the months of November and December, 1968, the appellant stated in writing in the money order coupon "we shall vacate the premises within next 6/8 months. " It is not disputed before us that the said statement was made in the money order coupon by the appellant 's brother under his specific instruction. After the respondent had received the said money order coupon, he by his letter dated April 19, 1969 sent to the appellant by registered post, inter alia, wrote as follows: "I also take note of your notice to vacate the said premises within 6/8 months ' time. I shall be obliged if you kindly let me know precisely the date on which you will vacate the said premises, so that I may arrange my occupation of the said premises accordingly." The said letter of the respondent was not replied to by the appellant. Thereafter, on May 11, 1970 the respondent insti tuted a suit for ejectment on the ground that the appellant had failed to deliver vacant possession of the premises in accordance with the said statement in the money order coupon which was treated as the notice to quit. In other words, the suit was instituted by the respondent on the ground of clause (j) of section 13(1) of the Act. The appellant con tested the suit. His plea was that it was never intended by him to vacate the premises in question, and that the said statement in the money order coupon was not made by him but by his brother without any authority from him in that be half. The trial court dismissed the suit holding that the said statement in the money order coupon was neither written by the appellant nor by his authorised agent and, accordingly, it did not amount to a notice to quit within the meaning of clause (j) of section 13(1) of the Act. On appeal by the respondent, the lower appellate court affirmed the finding of the trial court that the statement in the money order coupon did not constitute a notice to quit. It was, however, found by the lower appellate court that the said statement in the money order coupon was made by the brother of the appellant under his specific instruction. The appeal pre ferred by the respondent was, consequently, dismissed. 1112 The respondent filed a second appeal in the High Court. The learned Single Judge of the High Court took the view that the said statement in the money order coupon constitut ed a valid notice to quit within the meaning of clause (j) of section 13(1) of the Act and as the appellant had failed to vacate the premises in accordance with the said notice to quit, the respondent 's suit for eviction should be decreed. In that view of the matter, the learned Judge set aside the judgments and decrees of the Courts below dismissing the suit and decreed the respondent 's suit for eviction. Hence this appeal by special leave. The Act provides for the protection of tenants against eviction. Under section 13(1), no order or decree for recov ery of possession of any premises shall be made by any Court in favour of the landlord against a tenant except on one or more of the grounds as mentioned thereunder. One of the grounds of eviction is that contained in clause (j) of section 13(1) of the Act. The tenant may relinquish the protection under the Act by giving a notice to quit. On the failure of the tenant to vacate the premises in accordance with the notice to quit, the landlord would be entitled to a decree for ejectment. The notice to quit, however, must not be vague and uncertain. There must be a clear indication in the notice to quit of the tenant 's intention to vacate the premises. It is however, urged by Mr. Kackar, learned Counsel appearing `n behalf of the appellant, that the notice to quit is vague and uncertain and the suit should have been dismissed on that ground. In support of his contention, he has placed reliance upon a statement in "A Concise Law Dictionary" by Osborn at page 224 that a notice to quit must specify the correct date or time for the termination of tenancy. The learned Counsel has also placed reliance upon a statement from Corpus Juris, Vol. 51 Landlord & Tenant paragraph 142 at 745, "It must, however be definite and unequivocal and unconditional. " COunsel submits that in the instant case, the notice to quit does not mention any spe cific date or time of vacating the premises by the appel lant. Instead, it suffers from uncertainty and vagueness as it states that the appellant proposes to vacate within next 6/8 months, that is to say, either within 6 months or within 8 months. Our attention has been drawn by the learned Coun sel to the letter written by the respondent enquiring of the appellant as to the date when he would vacate. It is submit ted that the respondent himself was not sure as to when the appellant would vacate the premises. It is true that the notice does not specifically mention the date 1113 when the appellant would vacate the premises, but it was certain that the appellant 's stay in the premises would not be beyond eight months, that is to say, the appellant would vacate the premises positively after the expiry of eight months from the date of the notice. All that is necessary is a clear intention to vacate and such intention will be apparent when it is stated in the notice to quit that the tenant will vacate on a particular date or after a certain period of time. A tenant may say that he will vacate by a certain date and that will simply mean that he would vacate on or before that date. Indeed, in Joseph vs Joseph, , the tenants agreed to give up possession "by July 31". It was observed by Lord Denning M.R., "The commonsense meaning is that the tenants were to give up possession by July 31, 1960, but that, if they chose to give it up by an earlier date, the landlord would accept possession earlier, that is just the way in which this Court construed a notice to quit 'on or before ' a fixed date. It was construed as meaning to quit on a fixed date, but gave the tenant the option of quitting earlier. " In Matthewson vs Wrightman, , the notice to quit by the landlord to the tenant asked the tenant to quit possession on the 25th day of March or the 8th day of April next ensuing. It was held to be a good notice. In the instant case, the notice to quit reserved to the appellant an option of vacating the premises earlier than 8 months and that is apparent from the words "within next 6/8 months". At the same time, as noticed already, the statement contains a clear intention of the appellant to vacate in any event after eight months from the date of the statement. There is,. therefore, no substance in the contention of the appellant that the notice to quit was vague and uncertain. It is next urged by Mr. Kacker that the notice to quit referred to in clause (j) should conform to the provisions of section 106 of the Transfer of Property Act. It is sub mitted that the expression "notice to quit" is a well known technical expression and whenever it is used in any statute relating to landlord and tenant, it would mean a notice under section 106 of the Transfer of Property Act. COunsel submits that as the notice in this case does not comply with the requirement of the provision of section 106 of the Transfer of Property Act, it is defective and cannot be treated as a notice to quit within the meaning of clause (j) of section 13(1) of the Act read with section 106 of the Transfer of Property Act. Clause (j) uses the expression "notice to quit" and does not lay down the particulars to be mentioned in such notice. It does not also 1114 refer to the provision of section 106 of the Transfer of Property Act. There can be no doubt that if the notice to quit as mentioned in clause (j). refers to a notice under section 106 of the Transfer of Property Act, the present notice to quit with which we are concerned must be held to be bad. We do not think that we are called upon to consider whether a notice to quit under clause (j) is really a notice as contemplated by section 106 of the Transfer of Property Act. Even assuming that it is a notice under section 106 of the Transfer of Property Act and, accordingly, the instant notice to quit is bad, yet the respondent having accepted the notice to quit, it will not be open to the appellant to contend that it is invalid and cannot be relied upon by the respondent as a ground for eviction. A notice to quit even if it is defective can be accepted by the landlord, and after such acceptance the tenant will be estopped from challenging the validity of the notice given by him. Indeed, the question came up for consideration before this Court in the Calcutta Credit Corporation Ltd. & Anr., vs Happy Homes (P) Ltd., ; It has been held by this Court that a notice which does not comply with 'the requirements of section 106 of the Transfer of Property Act in that it does not expire with the end of the month of the tenancy, or the end of the year of the tenancy, as the case may be or of which the duration is shorter than the duration contemplated by section 106, may still be accepted by the party served with the notice and if that party accepts ' and acts upon it, the party serving the notice will be estopped from denying its validity. It is, however, urged on behalf of the appellant that the respondent had not accepted the notice to quit. This contention is also without any substance. It has been earli er noticed that the respondent by his letter dated April 9, 1969 enquired of the appellant as to the date on which the appellant would vacate the premises so as to enable the respondent to arrange his occupation of the premises accord ingly. If the respondent had not accepted the notice to quit, there was no necessity for him to enquire of the appellant as to the precise date of his vacating the prem ises. Thus, the notice having been accepted by the respond ent, the appellant is precluded from challenging the validi ty thereof. The High Court was, therefore, in our opinion, justified in decreeing the suit for eviction on the ground as contained in clause (j) of section 13(1) of the Act. In the result, the judgment and decree of the High Court is affirmed and the appeal is dismissed. There will, howev er, be no order as to costs. 1115 The appellant is, however, granted time to vacate the premises till the end of April, 1987 which will stand ex tended up to August 31, 1987 provided the appellant files within four weeks from the date an undertaking in writing to the effect that he will vacate and deliver up vacant and peaceful possession of the premises to the respondent on or before August 31, 1987. The appellant shall also go on depositing in the trial court an amount calculated at the rate of rent, month by month, by fifteenth of the next month following that for which it is due. In default of such deposit for any two months, the respondent will be at liber ty to execute the decree at once notwithstanding the time, be it the initial or the extended one, granted to the appel lant. The respondent will be entitled to withdraw any amount that may be deposited by the appellant in terms of this judgment without furnishing any security. P.S.S. Appeal dismissed.

Clause (.i) of s.13(1) of the West Bengal Premises Tenancy Act, 1956 empowers the court to order recovery of possession of any premises in favour of the landlord where the tenant has given notice to quit but has failed to deliv er possession in accordance with such notice. The appellant tenant while remitting monthly rent by postal money order stated in the coupon that they shall vacate the premises within the next 6/8 months. This was taken note of by the respondent landlord in his subsequent letter. When the tenant failed to deliver vacant possession of the premises the respondent filed a suit for ejectment under s.13( 1 )(j), which was contested by the tenant con tending that it was never intended by him to vacate the premises and that the said statement in the money order coupon was not made by him but by his brother without any authority from him. The trial court dismissed the suit holding that the statement in the money order was neither written by the appellant nor by his authorised agent and accordingly it did not amount to a notice to quit within the provision of s.13(1)(j) of the Act. The lower appellate court affirmed the finding of the trial court, but held that the said statement in the money order coupon was made by the brother of the appellant under his specific instruction. Respondent 's second appeal was allowed by the High Court, which took the view that the statement in the money order coupon constituted a valid notice to quit within the meaning of section 13( I )(j). In this appeal by special leave it was contended for the appellant that the notice to quit was vague and uncertain and as it did not comply 1109 with the provisions of section 106 of the Transfer of Property Act it was defective and could not be treated as a notice to quit within the meaning of cl.(j) ors.13(1) of the Act. Dismissing the appeal, the Court, HELD: 1. The High Court was justified in decreeing the suit for eviction on the ground contained in clause (.i) of section 13(1) of the West Bengal Premises Tenancy Act, 1956. That clause reserves an option to the tenant to relinquish the protection under the Act by giving a notice to quit. On failure of the tenant to vacate the premises in accordance with the notice to quit, the landlord would be entitled to a decree for ejectment. [1114 ; 1112C D] 2. The notice to quit must not be vague and uncertain. There must be a clear indication in it of the tenant 's intention to vacate the premises. Such an intention will be apparent when it is stated in the notice to quit that the tenant will vacate on a particular date or after a certain period of time. When the tenant says that he will vacate by a certain date that will simply mean that he would vacate on or before that date. [1112D; 1113B C] In the instant case, the notice to quit could not be said to be vague and uncertain. Though it did not specifi cally mention the date when the appellant would vecate the premises, it was apparent from the statement "we shall vacate the premises within the next 6/8 months" that the appellant 's stay in the premises would not be beyond eight months. It contains a clear intention to vacate the premises positively after the expiry of eight months from the date of the notice. [1113C] Joseph vs Joseph, and Matthewson vs Wright man, , referred to. The respondent had by his letter dated April 9, 1969 enquired of the appellant as to the date on which the appel lant would vacate the premises so as to enable the respond ent to arrange his occupation of the premises accordingly. If the respondent had not accepted the notice to quit, there was no necessity for him to enquire of the appellant as to the precise date of his vacating the premises. The notice having thus been accepted by the respondent, the appellant was precluded from challenging the validity thereof. [1114E G] 4.1 A notice to quit even if it is defective can be accepted by the 1110 landlord, and after such acceptance the tenant will be estopped from challenging the validity of the notice given by him. [1114C] 4.2. Clause(j)of s.13(1) of the Act uses the expression "notice to quit" and does not lay down the particulars to be mentioned in such notice. It does not also refer to the provision of section 106 of the Transfer of Property Act. Even assuming that it is a notice under s.106 of the Transfer of Property Act and, accordingly the instant notice to quit was bad, yet the respondent having accepted the notice to quit, it was not open to the appellant to contend that it was invalid and could not be relied upon by the respondent as a ground for eviction. [1113G; 1114A C] Calcutta Credit Corporation Ltd. & Anr. vs Happy Homes (P) Ltd., , referred to.

ivil Appeal No. 2847 of 1986 290 From the Judgment and Order dated 1.8.1986 of the Delhi High Court in F.A.O. No. 146 of 1986. Soli J. Sorabjee, E.C. Agarwala and Lalit for the Appel lants. T.S.K. Iyer, B.P. Maheshwari, V.N. Ganpule, S.K. Agniho tri and J. Singh for the Respondent. The Judgment of the Court was delivered by OZA, J. This appeal arises as a result of leave granted by this Court against the summary dismissal of the first appeal by the appellant before the High Court of Delhi. The first appeal was filed against an order passed by Sub Judge 1st Class, Delhi rejecting the review petition filed by the petitioner. The facts necessary for disposal of this case are that in a suit filed against the present appellant in the Court of Sub Judge 1st Class, Delhi when the matter was fixed for evidence of the defendant as the plaintiff 's evidence was over and defendant present appellant 's evidence was to begin when the case was taken up on 24th January, 1985. The order sheet of the Court shows that no DW is present and at the request of the counsel of the defendant the case was adjourned to 7th May, 1985. It is stated that on this date for some reason, the. case was transferred to another board and in the transferee court, the order sheet showed presence of the counsel for parties and it further shows that as the case was received on transfer it was ordered to be put up on 21st August, 1985. Learned counsel for the appellant disputed the mention in these proceedings about the presence of the counsel of the defendantappellant. But in any event as it is not impor tant for the decision of this appeal it is not necessary to go into that question. On 21st, August, 1985 it appears that there was a holi day and therefore the case was put up before the learned Judge on 22nd August, 1985 and it was postponed to 30th October, 1985 for the evidence of the defendant. On 30th October, 1985 the order sheet showed that the counsel for plaintiff was present but no one was present for the defend ant. The Court therefore directed the case to be taken up at 1 P.M. At 1 P.M. again the situation remained the same as it is clear from the order sheet. It also shows that none of the witnesses for defendant was also present and therefore the Court passed the order: "the case was called but none has appeared on behalf of the defendant and no DWs present. The evidence of defendant closed. 291 Now to come up for arguments. " The next date fixed was 1st November, 1985. On this date also nobody appeared for the defendant and counsel for the plaintiff who was present sought adjournment and the case was adjourned to 8th Novem ber, 1985. On 8th November, 1985 arguments of the plaintiffs counsel were heard and as none was present for the defendant the case was fixed for judgment on 11th November, 1985. On this date also counsel for the plaintiff was present. Nobody was present for the defendant and order sheet shows that as judgment was not ready it was postponed to 21st November, 1985. On 21st November, the judgment was dictated and pro nounced and the order sheet also shows that the learned Judge ordered decree to be prepared. It appears that after this the defendant claimed that they came to know about the decree on 18th January, 1986 as on that day the plaintiff came to take possession and therefore filed an application under Order 9 Rule 13 for setting aside the exparte decree which was dismissed by the trial court holding that the case was disposed of not in accordance with Order 17 Rule 2 but in accordance with Order 17 Rule 3 and therefore the appli cation under Order 9 Rule 13 was not maintainable. The appellant defendant thereafter filed an application for review but that application also was dismissed by the trial court. Thereafter the first appeal Was filed before the High Court of Delhi which was dismissed summarily by the impugned order. Learned counsel for parties submitted at length the controversy that existed before the amendment of Code of Civil Procedure in 1976 about the interpretation of Order 17 Rule 2 and Order 17 Rule 3. Apparently there were two views. one was that Order 17 Rule 3 could be used for deciding the matter on merits if the party is present but has failed to do what was expected of that party to do and this rule could not be used against a party who was present whereas the other view was that even if a party is absent but has failed to do what was expected of him then it was the discretion of the Court either to proceed under Order 17 Rule 2 or under Order 17 Rule 3. In some decisions, the High Courts have gone to the extent of saying that even if the trail court disposes of the matter as if it was disposing it on merits under Order 17 Rule 3 still if the party against whom the decision was pronounced was absent it could not be treated to be a dis posal in accordance with Order 17 Rule 3 and provisions of Order 9 will be available to such a party either for resto ration or for setting aside an exparte decree. Learned counsel placed before us a 292 number of decisions of various High Courts on this aspect of the matter. But in our opinion in view of the amendment to these two rules which have been made by 1976 amendment of the Code of Civil Procedure it is not disputed that to the facts of this case, Code of Civil Procedure as amended will be applicable and therefore it is not necessary for us to go into that question. Order 17 Rule 2 and Rule 3 as they now stand reads: "Order 17, Rule 2: Procedure if parties fail to appear on day fixed: Where, on any day to which the beating of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf of Order IX or make such other order as it thinks fit. (Explanation Where the evidence or a substantial portion of the evidence of any party has already been recorded and such party fails to appear on any day to which the hearing of the suit is adjourned, the Court may, in its discretion proceed with the case as if such party were present. Order 17 Rule 3: Court may proceed notwith standing either party fails to produce evi dence, etc. Where any party to a suit to whom time has been granted fails to produce his evidence, or to cause the attendance of his witnesses, or to perform any other act neces sary to the further progress of the suit, for which time has been allowed, the Court may, notwithstanding, such default, (a) if the parties are present, proceed to decide the suit forthwith, or (b) if the parties are, or any of them is absent, proceed under Rule 2. " It is clear that in cases where a party is absent only course is as mentioned in Order 17(3)(b) to proceed under Rule 2. It is therefore clear that in absence of the defend ant, the Court had no option but to 293 proceed under Rule 2, Similarly the language of Rule 2 as now stands also clearly lays down that if any one of the parties fail to appear, the Court has to proceed to dispose of the suit in one of the modes directed under Order 9. The explanation to Rule 2 gives a discretion to the Court to proceed under Rule 3 even if a party is absent but that discretion is limited only in cases where a party which is absent has led some evidence or has examined substantial part of their evidence. It is therefore clear that if on a date fixed, one of the parties remain absent and for that party no evidence has been examined upto that date the Court has no option but to proceed to dispose of the matter in accordance with Order 17 Rule 2 in any one of the modes prescribed under Order 9 of the Code of Civil Procedure. It is therefore clear that after this amendment in Order 17 Rules 2 and 3 of the Code of Civil Procedure there remains no doubt and therefore there is no possibility of any con troversy. In this view of the matter it is clear that when in the present case on 30th October 1985 when the case was called nobody was present for the defendant. It is also clear that till that date the plaintiffs evidence has been recorded but no evidence for defendant was recorded. The defendant was only to begin on this date or an earlier date when the case was adjourned. It is therefore clear that upto the date i.e. 30th October, 1985 when the trial court closed the case of defendant there was no evidence on record on behalf of the defendant. In this view of the matter there fore the explanation to Order 17 Rule 2 was not applicable at all. Apparently when the defendant was absent Order 17 Rule 2 only permitted the Court to proceed to dispose of the matter in any one of the modes provided under Order 9. It is also clear that Order 17 Rule 3 as it stands was not applicable to the facts of this case as admittedly on the date when the evidence of defendant was closed nobody appeared for the defendant. In this view of the matter it could not ' be disputed that the Court when proceeded to dispose of the suit on merits had committed an error. Unfor tunately even on the review application, the learned trial Court went on in the controversy about Order 17 Rules 2 and 3 which existed before the amendment and rejected the review application and on appeal, the High Court also unfortunately dismissed the appeal in limine by one word. The learned counsel for the respondent attempted to contend that in this view of law as it now stands an appli cation under Order 9 Rule 13 will be maintainable. However it was suggested that there was also an objection of limita tion about the acceptance of that applica 294 tion. It is apparent that the learned trial Court has not considered the application on merits but has only rejected it as not maintainable and that order has been maintained. This objection of the learned counsel for the respondent is not necessary for us to go into at this stage as in view of the law discussed above, the order rejecting the application as not maintainable, has to be set aside and it will be open to the learned trial Court to consider the application under Order 9 Rule 13 and dispose it of in accordance with that law and while so doing, it may even examine the objections that may be raised by the respondent. The appeal is therefore allowed with costs. The order passed by Hon 'ble the High Court and also the trial court rejecting the application of the appellant under Order 9 Rule 13 is set aside and it is directed that the learned trial court will proceed to hear and dispose of the applica tion under Order 9 Rule 13 filed by the appellant in accord ance with law. A.P.J. Appeal al lowed.

In a suit in which the appellant was defendant, after the plaintiff 's evidence was over, the defendant was to begin his evidence on 24th January, 1985. As no witness was present, at the request of defendant 's counsel the case was adjourned to 7th May, 1985. On that day, the case was trans ferred to another Court and the transferee Court ordered the case to be put up on 21st August, 1985. It being a holiday, the case was put up on 22nd August, 1985 when it was ad journed to 30th October, 1985. On that day, no one was present for the defendant. The case was again taken up at 1 p.m. but the situation remained the same. Since none of the witnesses for defendant was also present, evidence was closed and case fixed for arguments for 1st November 1985. On this date also nobody appeared for the defendant and the case was adjourned to 8th November, 1985. On that day, arguments of the plaintiff 's counsel were heard and as none was present for defendant, the case was fixed for judgment on 11th November, 1985. On this date also nobody was present for defendant and since judgment was not ready it was post poned to 21st November, 1985. On this date the judgment was dictated, pronounced and decree was ordered to be prepared. The defendant filed an application under Order 9 Rule 13 of the Code of Civil Procedure, 1908 for setting aside ex parte decree urging that he came to know about decree on 18th January, 1986 when the plaintiff came to take posses sion. The trial Court dismissed the application holding that it was not maintainable because the case was disposed of not in accordance with Order 17 Rule 2, but in accordance with Order 17 Rule 3. An application for review was also dis missed by the Trial Court. The first appeal too was summari ly dismissed by the High Court. Allowing the appeal, 289 Held: 1. The order passed by the High Court and also the trial Court rejecting the application of the appellant under Order 9 Rule 13 of the Civil Procedure Code 1908 are set aside and the trial Court is directed to dispose of the application in accordance with law. [294C] 2. In cases where a party is absent, only course is as mentioned in Order 17(3)(b) to proceed under Rule 2. The language of amended Rule 2 also lays down that if any one of the parties fails to appear, the Court has to proceed to dispose of the suit in one of the modes directed under Order 9. The Explanation to Rule 2 gives a discretion to the Court to proceed under Rule 3 even if a party is absent but that discretion is limited only in case where a party which is absent has led some evidence or has examined substantial part of their evidence. Therefore, if on a date fixed, one of the parties remains absent and for that party no evidence has been examined upto that date the court has no option but to proceed to dispose of the matter in accordance with Order 17 Rule 2 in any one of the modes prescribed under Order 9 of the Code of Civil Procedure. After this amendment in Order 17 Rules 2 and 3 in 1976 there remains no doubt, and therefore, there is no possibility of any controversy. [292H 293C] 3. In the present case, on 30th October 1985 when the case was called nobody was present for the defendant, and till that date the plaintiff 's evidence had been recorded but no evidence for defendant was recorded. The defendant was only to begin on this date or an earlier date when the case was adjourned. It is, therefore, clear that upto 30th October 1985 when the trial Court closed the case of defend ant there was no evidence on record on his behalf. There fore, the Explanation to Order 17 Rule 2 was not applicable at all. Apparently when the defendant was absent Order 17 Rule 2 only permitted the Court to proceed to dispose of the matter in any one of the modes provided under Order 9. [293D E] 4. Order 17 Rule 3 as it stands was not applicable to the facts of this case as admittedly on the date when the evidence of the defendant was closed nobody appeared for the defendant and, therefore, the Court when it proceeded to dispose of the suit on merits had committed an error. Even on the review application, the trial Court went on in the controversy about Order 17 Rules 2 and 3 which existed before the amendment and rejected the review application and on appeal, the High Court also unfortunately dismissed the appeal in limine by one word. [293F G]

ivil Appeal No. 5 19521 of 1975. From the Judgment and Order dated 9.5.1974 of the Punjab and Haryana High Court in I.T. Reference Nos. 30 to 32 of 1973. G.C. Sharma, Ms. A. Subhashini and K.C. Dua for the Appellant. Dr. Y.S. Chitale, R.K. Jain, Rakesh Khanna and Ms. Abha Jain for the Respondent. The Judgment of the Court was delivered by PATHAK, CJ. These appeals by special leave are directed against a judgment of the High Court of Punjab and Haryana disposing of an Income tax Reference in favour of the re spondent assessee. The assessee manufactures strawboard. For the assessment years 1965 66, 1966 67 and 1967 68 (the relevant previous years being the respective calendar years 1964, 1965 and 1966), the assessee claimed concessional rates of income tax, development rebate at higher rate and deduction under section 80 E of the Income Tax Act, 1961 on the 774 ground that the manufacture of strawboard was a priority industry. For the assessment year 1965 66 the total income assessed was Rs. 17,71,334 and against the basic rate of 80 per cent the assessee claimed rebate at the rate of 35 per cent up to Rs. 10,00,000 and on the balance at 26 per cent. The Income Tax Officer allowed the rebate at 30 per cent up to Rs. 10,00,000 and at 20 per cent on the balance. For the assessment year 1966 67 the assessee claimed development rebate under section 33 of the Income Tax Act at the rate of 25 per cent on the value of the machinery installed after 1 April, 1965 worth Rs.34,287, but rebate was allowed at 20 per 'cent only. The assessee also claimed benefit under section 80 E (inserted by the Finance Act, 1966 with effect from 1 April, 1966) to the extent of the income determined by the Income Tax Officer at Rs.8, 17,485 received from the manu facture of strawboard. This industry is mentioned at item No. 16 in the Fifth Schedule to the Income Tax Act as sub stituted by the Finance Act, 1965. The claim of the assessee was. rejected by the Income Tax Officer. For the assessment year 1967 68 the total income of the assessee was determined at Rs. 11,00,885. The assessee claimed relief under section 80 E to the extent of Rs.7,50,316 received as income from the manufacture of strawboard. This claim was similarly rejected by the Income Tax Officer on the ground that the assessee could not be described as a priority industry. The Income Tax Officer took the view that the manufacture of Strawboard was not covered by the words 'paper and pulp ' in the rele vant Schedules pertaining to the assessment 1966 67 and 1967 68. The assessee appeared to the Appellate Assistant Commis sioner of Income Tax in respect of the three assessments, but the appeals were dismissed. In second appeals filed in all the three cases, the assessee 's plea that the manufac ture of strawboard was a priority industry was accepted and the Appellate Tribunal held that the assessee was entitled to the statutory rebates claimed by it. At the instance of the Revenue, the Tribunal referred the following questions to the High Court for its opinion: "Assessment year 1965 66 Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that 'strawboard ' is covered by the term 'paper and pulp ' appearing in paragraph F of Part I read with Part III of the First Schedule to the Finance Act, 1965 (Act No. X of 1965)? 775 Assessment years 1966 67 and 1967 68 Whether on the facts and in the circumstances of the case, the Appellate Tribunal was fight in law in holding that 'strawboard ' is covered by the term 'paper and pulp ' appearing at item 16 of the Fifth Schedule to the Income Tax Act, 1961 and in allowing the assessee 's claim under section 80 E of the Act?" The High Court has held that the strawboard industry is covered within the expression 'paper and pulp ' appearing in the relevant Schedules of the Income Tax Act and has, there fore, answered the questions referred to it in the affirma tive, in favour of the assessee and against the Revenue. The sole question before us is whether strawboard can be said to fall within the expression 'paper and pulp ' men tioned in the Schedules relevant to the respective assess ment years. To resolve the question it is necessary, first to examine the significance and scope of the Schedules. The provision for rebate has been made for the purpose of en couraging the setting up of new industries, and the indus tries are those described in the relevant Schedules. It seems to us clear that when the Schedules refer to 'paper and pulp ' they in fact intend to refer to the paper and pulp industry. That being so, the next question is whether the strawboard industry can be described as forming part of the paper and pulp industry. We have no doubt in our mind that it does. The expression has been used comprehensively. It is necessary to remember that when a provision is made in the context of a law providing for concessional rates of tax for the purpose of encouraging an industrial activity a liberal construction should be put upon the language of the statute. From the material before us, which we have carefully consid ered, that is the only reasonable conclusion to be reached in. these case. The High Court has referred to the licence dated 31 May, 1954 issued to the assessee that the undertak ing of the assessee was registered in terms of section 10 of the Industries (Development and Regulation) Act, 195 1, and the details given in the licence declare that it relates to a Schedule industry which includes newsprint, paperboard and strawboard. The High Court has also referred to the circum stances that the process of manufacturing strawboard is identical with that of manufacturing paper. The expression 'paper and pulp ' in the Industries (Development and Regula tion) Act includes paperboard; and strawboard. Our attention has been drawn to the Entry relevant to the assessment year 1964 65 which speaks of 'paper and pulp including 776 paper products ' and, it is said, strawboard is evidently not within the natural meaning of the word 'paper '. We do not think that the submission merits serious consideration. Newsprint, paperboard and strawboard have been specifically mentioned in the entry in order to make it clear that they are included within the meaning of the word 'paper '. In our judgment, the High Court is fight in taking the view which it has, and therefore, the appeals must be dis missed. The appeals are dismissed with costs. N.P.V. Appeals dismissed.

The assessee, manufacturer of strawboard, claimed con cessional rates of income tax, development rebate at higher rate under section 33 and deduction under section 80 E of the Income Tax Act, 1961, for the assessment years 1965 66, 1966 67 and 1967 68, on the ground that the manufacture of strawboard was a priority industry. The claim was rejected by the Income Tax Officer on the ground that the assessee could not be described as a priority industry and that the manufacture of strawboard was not covered by the words 'paper and pulp ' in the relevant Schedules pertaining to the assessment years 1966 67 and 1967 68. The assessee 's appeals were dismissed by the Appellate Assistant Commissioner. In second appeals, the Appellate Tribunal accepted the assessee 's plea that the manufacture of strawboard was a priority industry and held that the assessee was entitled to the statutory rebates claimed by it. On a reference made at the instance of the Revenue, the High Court held that the strawboard industry was covered within the expression 'paper and pulp ' appearing in the relevant Schedules of the income Tax Act. Dismissing the appeals by the Revenue, this Court, HELD: When provision is made in the context of a law providing for concessional rates of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon the language of the statute. [775E F] 773 The provision for rebate has been made for the purpose of encouraging the setting up of new industries, and the industries are those described in the Schedules relevant to the respective assessment years. When the Schedules refer to 'paper and pulp ', they, in fact, intend to refer to the paper and pulp industry. The expression has been used com prehensively. [775D E] The expression 'paper and pulp ' in the Industries (Development and Regulation) Act, 1951 includes paperboard and strawboard. Newsprint, paperboard and strawboard have been specifically mentioned in the relevant entry in order to make it clear that they are included within the meaning of the word 'paper '. The process or ' manufacturing straw board is identical with the process of manufacturing paper. [775G H; 776A] In the circumstances, there is no doubt that the straw board industry is part of the paper and pulp industry and the assessee, whose undertaking was registered in terms of section 10 of the Industries (Development and Regulation), 1951 is entitled to the rebates claimed by it. [775E]

ivil Appeal No. 18 of 1966. Appeal by special leave from the judgment and decree, dated October 9, 1962 of the Madhya Pradesh High Court in First Appeal No 94 of 1959. G.L. Sanghi and A.G. Ratnaparkhi, for the appellant. I. N. Shroff, for respondent No. 1. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment and decree of the Madhya Pradesh High Court allowing tile appeal of the State of Madhya Pradesh and dismissing the suit brought by the appellant, Badri Prasad hereinafter referred to as the plaintiff. , The relevant facts for determining the points raised before us are these. On December 27, 1950, a contract was entered into between Kumar Bharat Shah, minor, through iris guardian, and the plaintiff, in respect of forests in Mouza Sunderpani Jagir. The terms were reduced to writing and an agreement was signed on January 21, 1951. It is necessary to reproduce the agreement in extenso as it would be necessary to interpret it carefully. "Deed of agreement executed by Shri Kumar Bharat Shah minor, guardian Shrimati Rani Umakuar Sahiba, Jagirdar of Mouza Sunderpani. Conditions of contract, area, forest Mouza Sunderpani 1. Out of the area of 1704.46 acres of Mouza Sunderpani Jagir contract of all the teak trees of more than 12 inches girth standing in the 1,000 acres of the forest of big trees and excluding those teak trees which have girth upto 12 inches is given to contractor Badri Prasad Moolchand firm of Timarni for a sum of Rs. 17,006 (seventeen thousand rupees), on payment of the amount in a lump sum. In respect of the teak trees mentioned in paragraph No. 1 contractor Shri Badri Prasad deposited with me the total mount of Rs. 17,000 (seventeen thousand rupees), as under : Rs. 6,000 (Six thousand rupees) on 27 12 1950. Rs. 11,000 (Eleven thousand rupees) on 21 1 1951. Receipts have been passed for depositing the above amount. 382 3. The transfer of the forest shall not be done without consent of the owner. The contractor shall have to pay Rs. 100 (One hundred rupees), for transfer. For the proper execution of work of the forest the felling of the forest shall have to be done from one side. Excluding the teak trees upto the girth of 12 inches the cutting of those teak trees which are above that girth shall have to be serially done. After felling, the stumps of teak trees should be 3 inches high from the ground and slanting so as to. drain the water off. It shall be necessary to prepare the stumps within a week. Till the stumps are passed the wood cannot be removed. Only the paring can be done. The coupe guard shall make a hammer mark of passing on the stump and end of the pared wood. The contractor shall have to get the transit of goods done by the coupe guard. The contractor shall have to do. the transit of goods through the license book and submit the monthly accounts. Without licence no goods shall be transported out of the forest. The contractor shall have to take care of the teak trees of 12 inches girth standing in the forest. If damage is caused proper penalty shall be charged. The contractor can appoint an agent with permission. The contractor shall have to deposit Rs. 100 (One hundred rupees)for properly preparing the stumps of the teak trees of the forest before starting the work. This amount shall be returned on completion of the work if the stumps are properly prepared; otherwise the expenses, which may be incurred shall be deducted. The contractor shall be responsible for any damage caused to the forest by the contractor or his agent and he shall have to pay the penalty. The period of the contract shall be 3 years, i.e., from 27 12 1950 to 27 12 1953. Hence the agreement in execution and the same is The contractor and the owner of the forest On January 22, 1951, the Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (Madhya Pradesh Act 1 of 1951 ) hereinafter referred to as the Act received the assent of the President and was published in the Gazette on 383 January 26, 1951. The plaintiff started working under the. contract in March 1951. On March 31, 1951, a notification was issued vesting the estates in the State and the State Government prohibited the plaintiff from cutting timber in exercise of the rights under the contract. Apparently negotiations took place between the State Government and the plaintiff, and on February 1, 1955, ' the Divisional Forest Officer wrote to the plaintiff as follows: Subject : Contract of big trees of Sunderpani village of Makrai State. Reference : Memo No. 5424 4339 11, dated 21st October, 1954 of the Forest Department of Madhya Pradesh Government. Kindly inform whether you are ready to any further Rs. 17,000 (seventeen thousand rupees), for the contract of big trees of Sunderpani village of Makrai Circle which (contract) is under dispute at present. This contract can be given to you on this compromise only. If you do not wish to pay this amount you may, in future, take any action you deem fit. You may express your desire within seven days of the receipt of this letter. If you fail to do. this it will be presumed that you are not inclined to make a mutual compromise. On receipt of your reply the State Government will be informed. " It is this letter which the plaintiff contends was an offer and which he accepted by the following letter, dated February 5, 1955: "Subject: Contract of sale of teak trees in Sunderpani Forest in Makrai Range. Reference : Your letter No. 180, dated 1st Feb. 1955 . Dear Sir, I am ready to pay Rs. 17,000 provided my claim to have the refund of Rs. 17,000 already paid, from Shri Bharat Shah, the owner of the village or any other relief consequential to the judgment of that case remains unaffected. I reserve my right to claim the said or like amount. Subject to these conditions I shall pay Rs.17,000 as required in your above referred letter. " By memorandum, dated October 24, 1956, the Government wrote to the plaintiff as follows: 384 "Reference : .Your application, dated 12th September, 1956, addressed to the Minister for Forests, Madhya Pradesh. Government regret that the request made in your application under reference cannot be acceded to. Your application has, therefore, been rejected. " The application, dated September 12, 1956, is not included in the printed record but the plaintiff states that it is by this memorandum that the Government finally repudiated its obligations under the contract. Thereupon the plaintiff filed the suit praying for a declaration that the rights granted to the plaintiff under the licence, dated January 21, 1951, had not been affected by the vesting of the estates in the State under the Act. In the alternative he prayed that he was entitled to specific performance and delivery of the contract which was completed on February 5, 1955. He further prayed that in case he was not entitled to these reliefs, Rs. 50,000 damages be awarded against the State. Three points have been raised before us: (1) that the 'forest and trees did not vest in the State under the Act; (2) that even if they vested, the standing timber having been sold to the plaintiff did not vest in the State under the Act; (3) that a new contract was completed on February 5, 1955, and the plaintiff was entitled to specific performance of the contract. The Act and the rights of persons holding contracts to cut and take away timber and fruits of the trees have been the subjectmatter of consideration by this Court on several occasions. But the learned counsel for the plaintiff contends that none of those cases cover the case of the plaintiff because, according to him, none of those cases dealt with standing timber. He says that the plaintiffs contract is a contract for the sale of goods and the property in the goods had vested in him and, therefore, it stands on a different basis from the contracts construed in the earlier cases. The learned counsel for the respondents, on the other hand, maintains that the plaintiffs case is covered by the earlier decisions and all the arguments which he has advanced have been rejected by this Court in those cases. The relevant statutory provisions of the Act are these: "Section 3. Vesting of proprietary rights in the State. ( 1 ) Save as otherwise provided in this Act, on 385 and from a date to be specified by a notification by the State Government in this behalf, all proprietary rights in an estate, mahal, alienated village or alienated land, as the case may be, in the area specified in the notification, vesting in a proprietor of such estate, mahal, alienated village, alienated land, or in a person having interest in such proprietary right through the proprietor, shall pass from such proprietor or such other person to and vest in the State for the purposes of the State free of all encumbrances. (2) After the 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 grant or contract in writing made or entered into by or on behalf of the State; and no fresh clearing 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 State Government in this behalf Section 4. Consequences of the vesting. ( 1 ) When the notification under sec. 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 and save as otherwise provided in this Act, the consequences as hereinafter setforth 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 vesting in the proprietor or any person having interest in such proprietary right through the proprietor in such area including land ' (cultivable or barren), grass land, shrub jungle, forest, trees, fisheries, wells, tanks, ponds, water channels, ferries, pathways, village sites, hats, bazars and melas; 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 for purposes of the State free. of all encumbrances; and the mortgage debt or charge on any proprietary right shall be a charge on the amount of compensation payable for such proprietary right to the proprietor under the provisions of this Act . . Section 5. Certain properties to continue in possession of proprietor or other person. Subject to the provisions in Sections 47 and 63 (a) all open enclosures used for agricultural or domestic purposes and in continuous possession for twelve ' 386 years immediately before 1948 49; all open house sites purchased for consideration; all buildings, places of worship; wells situated in and trees standing on lands included in such enclosures or house sites or land appertaining to such buildings or places of ownership; within the limits of a village site belonging to or held by the outgoing proprietor or any other person shall continue to belong to or be held by such proprietor or other person, as the case may be, and the land thereof with the areas ' appurtenant thereto. shall be settled with him by the State Government on such terms and conditions as it may determine; (b) all private wells and buildings on occupied land belonging to or held by the outgoing proprietor or any other person shall continue to belong to or be held by such proprietor or other person; (c) all trees standing on land comprised in a homefarm or homestead and belonging to or held by the outgoing proprietor or any other person shall continue to belong to or held by such proprietor or other person; (d) all trees standing on occupied land other than land comprised in home farm or homestead and belonging to or held by a person other than the outgoing proprietor shall continue to belong to or be held by such person; (e) all tanks situate on occupied land and belonging to or held by the outgoing proprietor or any other person shah continue to belong to or held by such proprietor or other person; (f) all tanks, belonging to or held by the outgoing proprietor which are situate on land other than village site or occup ied land and in which no person other than such proprietor has any rights of irrigation, shall belong. to or be held by such proprietor. (g) all tanks and embankments (bandhans) belonging to or held by the outgoing proprietor or any other person which are situate on land other than village site occupied land and the beds of which are under cultivation of such proprietor or such other person shah "belong to or be held by such proprietor or such other person and the land under such tanks and embankments shall be settled with such proprietor or such other person on such terms and conditions as the State Government may determine; (h) all groves wherever situate and recorded in village papers in the name of the outgoing proprietor or any other person shall continue to belong to or be held 387 by such proprietor or such other person and the land under such groves shall be settled with such proprietor or such other person by the State Government on such terms and conditions as it may determine. Section 6. Certain transfers to be void. (1) Except as provided in sub section (2), the transfer of any right in the property which is liable to vest in the State under this Act made by the proprietor at any time after the 16th March, 1950, shall, as from the date. of vesting, be void. " Let us now look at the decisions of thiS Court and see what has been laid down therein. In Chhotabhai jethabai Patel vs The State of Madhya Pradesh,(1) which we may mention has since been overruled, the contract was in respect of the right to pluck, collect and carry away tendu leaves, to cultivate, culture and acquire lac, and to cut and carry away teak and timber and other species of tree and bamboos. The Court observed: "It is clear from the provisions in the impugned Act that only those rights of the proprietor vest in the State which the proprietor had on the specified date . . The scheme of the Act as can be gathered from the proviSions referred to above makes it reasonably clear that whatever was done before 16th March, 1950, by the proprietors by way of transfer of rights is not to be disturbed or affected, and that what vests in the State iS what the proprietors had on the vesting date. If the proprietor had any rights after the date of vesting which he could enforce against the transferee such as a lessee or a licensee, those rights would no doubt vest in the State. In all these petitions, the several contracts and agreements were before the date of vesting, and many of them were prior even to the 16th March, 1950. The petitioners had taken possession of the subject matter of the contracts, namely, tendu leaves, lac palsadies, teak, timber and hardwood, bamboos and miscellaneous forest produce. " The Court construed the contracts in that case thus: "The contracts and agreements appear to be in essence and effect licences granted to the transferees to cut, gather and carry away the produce in the shape of tendu leaves, or lac, or timber, or wood." The Court further held that the rights of the petitioners were not encumbrances within the meaning of the expression "free from encumbrances" in section 3 ( 1 ) of the Act. The Court accordingly issued a writ prohibiting the State from interfering in any manner with (1) ; , 479, 481,483. 388 the enjoyment of those rights by the petitioner. It may be mentioned that in that case the Court was dealing with an application under article 32 of the Constitution. Chhotabhai 's(1) case was distinguished in Ananda Behera vs The State of Orissa(2) which again dealt with a petition under article 32 of the Constitution. In Anand Behara vs The State of Orissa(2) the subject matter of licence was fishery rights and the Act which was construed was the Orissa Estates Abolition Act, 1951. The Court held that the right sought to be acquired by the petitioners by their several purchases was not in respect of any future goods as claimed by them but was a license to enter on the land coupled with a grant to catch and carry away the fish, in other words, a profit a prendre which is immovable property within the meaning of the Transfer of Property Act read with section 3(25) of the General Clauses Act. The Court further held that as it was an oral licence it contravened section 54 of the Transfer of Property Act, and therefore, no title or interest therein passed to the petitioners in that case. The Court distinguished Chhotabhai 's(1) case on the following grounds: "It is necessary to advert to Firm Chhotabhai jethabai Patel & Co. vs The State of Madhya Pradesh(1) and explain it because it was held there that a right to 'pluck, collect and carry away ' tendu leaves does not give the owner of the right any proprietary interest in the land and so that sort of right was not an 'encumbrance ' within the meaning of the Madhya Pradesh Abolition of Proprietary Rights Act. But the contract there was to 'pluck, collect and carry away ' the leaves. The only kind of leaves that can be 'plucked ' are those that are growing on trees and it is evident that there must be a fresh crop of leaves at periodic intervals. That would make it a growing crop and a growing crop is expressly exempted from the definition of 'immovable property ' in the Transfer of Property Act. That case is distinguishable and does not apply here." In Mahadeo vs The State of Bombay,(a) which was again a petition under article 32 of the Constitution, Chhotabhai 's(1) case was not followed. In flus case some of the proprietors had granted to the several petitioners rights to take forest produce, mainly tendu leaves, from the forests included in the Zamindaris belonging to the proprietors. The agreements conveyed to the petitioners in addition to the tendu leaves other forest produce like timber, bamboos, etc., the soil for making bricks, and the right to build on and occupy land for the purpose of their business. These rights (1) ; (2) ; (3) [1959] Supp. 2 S.C.R. 339. 389 were spread over many years but in the case of a few the period during which the agreements were to operate expired in 1955. This Court held that the agreements required registration and pointed out that some aspects had not been brought to the notice of the Court in Chhotabhai 's(1) case. Hidayatullah, J., as he then was, speaking for the Court observed: "But what was the nature of those rights, of the petitioners ? It is plain, that if they were merely contractual right then as pointed out in the two later decisions, in Ananda Behera vs The State of Orissa(2), Shantabai 's case(a) the State has not acquired or taken possession of those rights but has only declined to be bound by the agreements to which they were not a.party. If, on the other hand, the petitioners were mere hcensees, then also, as pointed out in the second of the two cases cited, the licences came to an end on the extinction of the title of the licensers. In either case there was no question of the breach of any fundamental rights of the petitioners which could support the petitions which were presented under article 32 of the Constitution. " The Court then construed the agreements in question and came co the conclusion that the agreements could not be said to be contracts of sale of goods simply. Then the Court examined the provisions of the Central Provinces I and Revenue Act and came to the following conclusion: "From this, it is quite clear that forests and trees belonged to the proprietors, and they were items of proprietary rights. The first of the two questions posed by us, therefore, admits of none but an affirmative answer. If then the forest and the trees belonged to the proprietors as items in their 'proprietary fights ', it is quite clear that these items of proprietary rights have been transferred to the petitioners. The answer to the second question is also in the 'affirmative. Being a 'proprietary right ', it vests in the State under sections 3 and 4 of the Act. The decision in Chhotabhai 's(1) treated these rights as bare licences, and it was apparently given per incuriam and cannot therefore be followed. " It seems to us that this decision concludes the controversy before us. This decision was followed in State of Madhya Pradesh vs Yakinuddin(4) Various agreements were construed in that case; one agreement was to propagate lac, another agreement was to (1) ; (2) ; (3) ; (4) ; 390 collect tendu leaves, and another agreement was with respect to a right to collect fruits and flowers of Mahua leaves. It was contended that these rights were saved in view of the provisions of the Act, but this contention was negatived. Sinha, C.J., speaking for the Court, observed that the distinction between a bare licence and a licence coupled with grant or profit a prendre was irrelevant because "whatever may have been the nature of the grant by the outgoing proprietors in favour of the respondents, those grants had no legal effect as against the State, except in so. far as the State may have recognised them. But the provisions of the Act leave no manner of doubt that the rights 'claimed by the respondents could not have been enforced against the State, if tiao latter was not prepared to respect those rights and the rights created by the transactions between the respondents and their grantors did not come within any of the saving clauses of section 5. " Earlier he had observed that "any person claiming some interest as a proprietor or as holding through a proprietor in respect of any proprietary interest in an estate has got to bring his interest within section 5, because on the date of vesting of the estate, the Deputy Commissioner takes charge of all lands other than occupied lands and homestead, and of all interests vesting in the State under section 3. Upon such taking over of possession, the State becomes liable to pay the compensation provided for in section 8 and,the succeeding sections. The respondents have not been able to show that their interest comes under any of the clauses aforesaid of section 5." The last case in which this Act was construed was Mulamchand vs State of Madhya Pradesh(1). In that case Mulamchand had purchased a right to pluck, collect and remove forest produce like lac, tendu leaves, etc., from the proprietors of the different Malguzari jungles. This Court followed State of Madhya Pradesh vs Yakinuddin(2) and negatived the claim of Mulamchand to exercise his rights under the agreement. In view of .these cases it is too late in the day to contend that the forest and the trees did not vest in the State under the Act. There is no force in the contention of the learned counsel that under the contract the plaintiff had become owner of trees as goods. It is true that trees which are agreed to be severed before sale or under the contract of sale are "goods" for the purposes of the . But before they cease to be "proprietary" rights or interest in proprietary rights within the meaning of sections 3 and 4(a) of the Act they must be felled under 1 the contract. It will be noticed that under cl. 1 of the contract (1) Civil Appeal No. 393 of 1965 dated February 20, 1968. (2) ; 391 the plaintiff was entitled to cut teak trees of more than 12 inches girth. It had to be ascertained which trees fell within that description. Till this was. ascertained, they were not "ascertained goods" within section 19 of the . Clause 5 of the contract contemplated that stumps of trees, after cutting, had to be 3 inches high. In other words, the contract was not to sell the whole of the trees. In these circumstances property in the cut timber would only pass to the plaintiff under the contract at the earliest when the trees are felled. But before that happened the trees had vested in the State. This brings us.to the last point, namely, whether a new contract was concluded between the Government and the plaintiff. It is extremely doubtful whether the letter, dated February 1, 1955, is an offer. It seems to be an invitation to the plaintiff to make an offer. Be that as it may, even if it is treated as an offer there was no unconditional acceptance by the letter, dated February 5, 1955. The plaintiff expressly reserved his right to claim a refund of Rs. 17,000. .According to the letter of the Divisional Forest Officer, dated February 1, 1955, the plaintiff had to give up his claim to Rs, 17,000 which he had already paid and had to pay a further sum of Rs. 17,000. The High Court, in our opinion, rightly held that the alleged acceptance of the offer made on February 1, 1955, was conditional and qualified. In the result the appeal fails and is dismissed with costs. V.P.S. Appeal dismissed.

The appellant entered into a contract in respect of certain forests in a Jagir in Madhya Pradesh. Under el. 1 of the contract, he was entitled to cut teak trees of more than 12 inches girth. Under cl. 5, the stumps of trees after cutting, had to be 3 inches high. After the passing of the Abolition of Proprietary Rights (Estates, Mahals. Alienated Lands) Act, 1950 a notification was issued vesting the estate in the State. and the appellant was prohibited from cutting timber in exercise of his rights under the contract. After some negotiations, a letter was written on February 1, 1955, to the appellant, on behalf of the State, that the appellant 's claim to cut trees under the contract would be considered only if he gave up his claim to a sum of Rs. 17,000 which he had already paid under the contract and was willing to pay a further sum of Rs. 17,000. The appellant, by his letter dated February 5, 1955 expressed his willingness to pay the additional sum but reserved his right to claim a refund of the first sum. The State Government rejected the appellant 's right to cut trees. He then filed a Suit claiming specific performance of the contract on the grounds: (1) The forest and trees did not vest in the State under the Act; (2) Even if they vested, the standing timber, having been sold to the appellant, did .not vest in the State; and (3) In any event a new contract was completed on February 5, 1955, and the appellant was entitled to its specific performance. In appeal to this Court, HELD: (1) The forest and trees vested in the State under the Act.360 F G] Mahadeo vs State of Bombay, [1959] Supp. 2 S.C.R. 339; State of M.P.v. Yakinuddin; , and Mulamchand vs State of M.P., C.A No 393 of 1965 dated February 20, 1968, followed. (2) Under the contract the appellant had not become the owner of the trees as goods. The property in the timber could pass to the appellant only when the trees are felled, but before they were felled, the trees had vested in the State. [391 B] Under el. 5 of the contract there was no sale of the whole of the trees, and, under cl. 1 it had to be ascertained which trees fell within the description of trees which the appellant was entitled to cut. Till that was done they were not 'ascertained goods ' within section 19 of the . [391 A B] (3) Even if the letter of ist February could be treated as an offer, there was no unconditional acceptance of the offer, because, there was 381 a reservation by the appellant of his right to claim refund in his letter dated 5th February and hence there was no concluded contract. [391 C D]

Petitions Nos. 5637 41,5643 45, 5646 47,5649 51, 5597 98,5553 67,5609 11,5516 20,5623 28,5657, 5673 74,5702 23,5668, 5659 67,5733, 5740 42, 5782 84, 5763 64, 5762,5747 52,5779 81,5745, 5785, 5737 39, 5841 43, 5786 5797, 5861 62 and 5863 64 of 1980. (Under Article 32 of the Constitution.) AND Civil Appeal No. 2734 of 1980. Appeal by special leave from the Judgment and Order dated 12.11.1980 of the Allahabad High Court in W.P.No. 3115/80. R.A. Gupta for the Petitioners in WPs.5637 41/80, 5797,5733/80 and CA No.2734/80. A.P.S. Chauhan, Roopendra Singh Gajraj Singh, and C.K. Ratnaparkhi for the Petitioners in WP 5762/80. B.S. Chauhan, Birj Bihari Singh Sridhar for the Petitioner in WP 5745/80. Rameshwar Dial and Sarwa Mitter for the Petitioners in WPs 5782 84/80 R.K. Garg, S.N. Kacker, R.K. Jain and R.P. Singh for the Petitioners in WPs 5553 5567, 5616 5620, 5646, 5647, 5750 52, 5779 81,5623 28,5646 47, 5649 5651,5643 45,5702 to 5723, 5673 5674,5659 to 5667,5740 42, 5737 39 and 5841 43/80. R.P. Singh for the Petitioners in WPs 5609 11 & 5597 98/80. Soli J.Sorabjee, Arvind Minocha and Mrs. Veena Minocha for the Petitioners in WP 5661/70. Mohan Behari Lal for the Petitioners in WPs 5785/80, 5786/80, and 5657/80. A.K. Gupta for the Petitioners in WPs 5763 64/80. Lal Narain Sinha Att. , S.C. Maheshwari Addl. Advocate General (U.P.), O.P. Rana, Mrs.Shobha Dikshit for the Respondents in all the matters. The Judgment of the Court was delivered by, FAZAL ALI, J. Inspired by the objective of removing nation wide shortage of sugar and for the purpose of enhancing sugar production 99 in order to achieve an equitable distribution of the commodity so as to make it available to consumers at reasonable rates and thereby relieving the sugar famine, the Cane Commissioner, Government of Uttar Pradesh by virtue of a Notification dated 9th October, 1980, acting under clause 8 of the Sugarcane (Control) Order, 1966 (hereinafter referred to as the 'Control Order ') directed that no power crusher, with certain exceptions, of a khandsari unit or any agent of such owner in the reserved area of a mill could be worked until December 1, 1980. The exact contents of the Notification may be extracted thus: "Lucknow, Thursday 9th October 1980 In exercise of the powers under clause 8 of the Sugarcane (Control) Order, 1966 read with the Central Government, Ministry of Food & Agriculture, Community Development and Cooperation (Department of Food), Government of India Order No. GSR 122/Ess. Comm/Sugarcane dated July 16, 1966, I, Bhola Nath Tiwari, Cane Commissioner, Uttar Pradesh hereby direct that no owner of power Crusher (other than those vertical power crushers which manufacture Gur or Rab from Sugarcane grown on their own fields) or a Khandsari Unit or any agent of such owner shall in any reserved area, of any Sugar Mill work the Power Crusher, or the Khandsari Unit prior to December 1, 1980 during the Year 1980 81. By Order Bhola Nath Tiwari Cane Commissioner Uttar Pradesh" The Control Order was passed by the Central Government in exercise of the powers conferred on it by s.3 of the (hereinafter referred to as the 'Act of 1955 '). In order to understand the contentions raised by the parties it may be necessary to analyse the prominent features of the above Notification with reference to the situation it was intended to meet. It is not disputed that sugar was being produced in the State of U.P. by the sugar mills through hydraulic process and by the power crushers through what is known as the 'open pan process '. Both the mills as also the crushers drew their raw material, namely, sugarcane, from the sugarcane growers. In order to facilitate production by the sugar mills, most of whom were controlled by the State, a reserved area of the fields growing sugarcane was fixed throughout the State 100 The Notification applied only to the reserved areas of a mill and not to any other areas. In other words, any area which fell outside the reserved area was not affected by the Notification and the power crushers situated in that area could still manufacture Khandsari by the open pan process. Thus, it would be seen that the ban imposed by the notification was confined only to a particular area in the State of U.P. Secondly, the Notification limited the ban to work power crushers only to a short period of one month and a half i.e., from October 9, 1980 to December 1, 1980. Thirdly, (and it has also not been disputed) the owners of power crushers of khandsari units, who are the petitioners in these cases, had taken out regular licences under the U.P. Khandsari Sugar Manufacturers Licensing Order of 1967 (hereinafter referred to as the 'Licensing Order '). It, therefore, logically follows that the power crushers owned or worked by the conditions of the licences under which they were working the crushers. Fourthly, what was prohibited by the Notification was only the manufacture of khandsari while the production of gur or rab from sugarcane grown in the fields belonging to the owners of the crushers was left out of the ambit of the Notification. We have mentioned these essential features of the Notification because the most important argument put forward before us by the counsel for the petitioners has been that it imposes unreasonable restrictions on the right of the petitioners under article 19(1)(g) of the Constitution to carry on their trade namely, production of khandsari. A subsidiary argument buttressing the main contention was that the Notification intends to create a monopoly in favour of the sugar mills at the cost of the crushers owned by the petitioners and is, therefore, clearly violative not only of article 19(1)(g) but also of article 14 of the Constitution. We would, however, deal with this aspect of the matter when we examine the contentions raised by the counsel for the parties. The Attorney General, appearing for the Union of India, and Mr. Maheshwari, Additional Advocate General appearing for the State of U.P., contended that, decision to ban the power crushers of the petitioners was taken as a part of a high powered policy to boost the production of sugar which had fallen during the year 1979 80 with the result that in the current year the country faced a great sugar famine. As the situation called for some positive action to increase the production, the matter having been discussed at the 34th Annual Convention of 101 Sugar Technologists of India, it was decided to ban the production of khandsari by the power crushers for a limited period. A large number of documents in the nature of affidavits, counter affidavits, reports and books have been filed by the counsel for both the parties in support of their respective contentions. We might also mention here that the Notification has since spent its force and, in fact, was not carried into effect because immediately after it was issued the present writ petitions were filed in this Court and the petitioners obtained stay of the operation of the Notification from this Court. The Attorney General, however, insisted that the matter should be finally decided so that if the Central Government wants to take any steps of this kind in future it may be aware of the correct constitutional or legal position. The petitioners also insisted that the constitutional and legal questions involved in these cases may be decided even though our decision may be more or less of an academic value. This brings us now to the various contentions raised by counsel for the petitioners and the respondents. As the Notification has already spent its force, we propose to deal only with the important and relevant contentions that have been advanced before us. The counsel for the petitioners headed by Mr. Garg, Mr. Mridul and others raised the following constitutional points before us : (1) The Notification, as also the Control Order under which it was passed are clearly violative of of article 19(1)(g) and the restrictions purported to be placed on the right of the petitioners not do contain the quality of reasonableness. (2) Clause 8 of the Control Order under which the impugned Notification has been issued suffers from the vice of excessive delegation of powers and is, therefore, violative of Article 14 of the Constitution. By the same token, as the impugned Notification seeks to establish a monopoly in favour of the sugar mills at the cost of the petitioners, invidious discrimination is writ large on the very face of the Notification which must be struck down as being violative of article 14. (3) There is absolutely no rational nexus between the prohibition contained in the Notification preventing the crushers of the petitioners from working them and the object sought to be achieved by it. Thus, the State had selected the petitioners for hostile discrimination between one segment 102 and another of persons engaged in the purchase of sugarcane, its sale and production of sugar without striking a just balance between the manufacturers of gur, khandsari and sugar. India lives in villages and it was not understandable why the Central Government was bent on reducing the support price of sugarcane which was adversely affecting the sugarcane growers because while the mills were not able to pay a reasonable price the crushers were able to pay a handsome price for the sugarcane supplied to them by the growers. When tested for reasonableness, therefore, the Notification completely fails. (4) Clause 8 of the Control Order does not contemplate a complete prohibition of the production of an article but envisages only a regulation of the period or hours of working. (5) The Notification violates the principles of natural justice inasmuch as it was passed without hearing the petitioners whose valuable rights were curtailed as they were put completely out of production even though for a short period. (6) The impugned Notification violative of clause 11 of the Control Order itself inasmuch as the prohibition against the working of the power crushers amounts to partial revocation of the licences of the petitioners granted to them under clause 3 of the Licensing Order. Clause 11 of the Control Order clearly provides that no adverse orders could be passed against any manufacturer without hearing him. (7) Even though the impugned Notification purports to have been passed under the Control Order which itself was passed under section 3 of the Act of 1955 yet if the notification is properly considered and the mischief it causes is borne in mind, it goes against the very spirt and object of the Act of 1955 and, in fact, frustrates the equal distribution and production of sugar which apparently seems to be the objective of the impugned notification. The Attorney General and the Additional Advocate General appearing for the Union of India and the State of U.P. respectively countered the submissions made by the petitioners on the following grounds: (1) An order passed under clause 8 of the Control Order is of a legislative character and therefore the question of the 103 application of the principles of natural justice to it does not arise. (2) The Notification does not violate article 14 or 19 because it is in great public interest and is aimed at maintaining and securing proper and equitable distribution of sugar in view of the nation wide shortage of the commodity. (3) The Notification is justified by the fact that recovery of sugar from sugarcane in case of khandsari units run by power crushers is between 4 to 6 per cent whereas in the case of sugar factories it ranges between 9 1/2 to 11 1/2 per cent, so that utilisation of sugarcane in the case of mills is double that of the power crushers. In these circumstances, khandsari units and mills belong to two different classes which cannot be said to be similarly situate so as to attract article 14 (vide pp. 69 70 of W.P .5565 5567 of 1980 Bhagwati Sugar Industry 's case). (4) The khandsari produced by the crushers has got a very narrow sphere of consumption as it is used mostly by halwais or villagers, whereas sugar produced by the sugar mills is consumed in far larger quantities by the public in India generally and in foreign countries after export. Therefore, the sugar mills fall within a special class and the question of hostile discrimination does not arise. Similarly, the action taken in order to protect national interests and distribution of sugar to the entire country on a rational basis cannot be said to be an unreasonable restriction. (5) There is a marked difference between the quality of khandsari and that of sugar produced by the mills in their character, specification, etc., which is evident from the various reports filed by the State. (6) The question of natural justice does not arise because the crusher owners were fully aware of the situation and had also knowledge of the considerations which prevailed with the Government in stopping crushers for a short period in order to boost production by the sugar mills and fix support price for the sugarcane supplied to the mills. However, as the Notification has expired, if proper guidelines are laid down by the Court, before passing a fresh order the State will certainly hear the petitioners in order to know their point of view. 104 (7) Clause 8 of the Control Order uses the words `period ' or working hours ' which are wide enough to embrace within their ambit a fixed period of time covering more than a day as also hours of work on any working day. We might also mention that some of the sugarcane growers have supported the arguments advanced by the petitioners. We now proceed to scrutinise and examine the contentions of the counsel for the petitioners. On the contention according to which the impugned notification is violative of article 19(1)(g), it may be necessary to dwell in some detail. It is no doubt well settled that where a citizen complains of the violation of fundamental rights contained in sub clause (g) of clause (1) of Art 19 or for that matter in any of sub clauses (a) to (g) thereof, the onus is on the State to prove or justify that the restraint or restrictions imposed on the fundamental rights under clauses 2 to 6 of the Article are reasonable. In the instant case, we are mainly concerned with sub clauses 4, 5 and 6 of Art.19. As far back as 1955 this Court in Saghir Ahmad vs The State of U.P, and Ors.(1) made this position very clear and observed as follows : "There is undoubtedly a presumption in favour of the constitutionality of a legislation. But when the enactment on the face of it is found to violate a fundamental right guaranteed under article 19(1) (g) of the Constitution, it must be held to be invalid unless those who support the legislation can bring it within the purview of the exception laid down in clause (5) of the article. If the respondents do not place any materials before the Court to establish that the legislation comes within the permissible limits of clause (6), it is surely not for the appellants to prove negatively that the legislation was not reasonable and was not conducive to the welfare of the community. " A similar view was taken in Mohammed Faruk vs State of Madhya Pradesh and Ors.(2) where this Court, speaking through Shah, J. reiterated the position mentioned above in the following words: "When the validity of a law placing restriction upon the exercise of fundamental rights in Article 19(1) is challenged, the onus of proving to the satisfaction of the Court that the restriction is reasonable lies upon the State." 105 We, therefore fully agree with the contention advanced by the petitioners that where there is a clear violation of article 19(1)(g), the State has to justify by acceptable evidence, inevitable consequences or sufficient materials that the restriction, whether partial or complete, is in public interest and contains the quality of reasonableness. This proposition has not been disputed by the counsel for the respondents, who have, however, submitted that from the circumstances and materials produced by them the onus of proving that the restrictions are in public interest and are reasonable has been amply discharged by them. This brings us to the main question as to the circumstances under which restriction imposed by the State can be said to contain the quality of reasonableness. For this purpose, almost all the decisions of this Court on the subject have been placed before us and it may be necessary to notice those of them which have a close bearing on the point at issue. It is abundantly clear that fundamental rights enshrined in Part III of the Constitution are neither absolute nor unlimited but are subject to reasonable restrictions which may be imposed by the State in public interest under clauses 2 to 6 of Art.19. As to what are reasonable restrictions would naturally depend on the nature and circumstances of the case, the character of the statute, the object which it seeks to serve, the existing circumstances, the extent of the evil sought to be remedied as also the nature of restraint or restriction placed on the rights of the citizen. It is difficult to lay down any hard or fast rule of universal application but this Court has consistently held that in imposing such restrictions the State must adopt an objective standard amounting to a social control by restricting the rights of the citizens where the necessities of the situation demand. It is manifest that in adopting the social control one of the primary considerations which should weigh with the Court is that as the directive principles contained in the Constitution aim at the establishment of an egalitarian society so as to bring about a welfare state within the frame work of the Constitution, these principles also should be kept in mind in judging the question as to whether or not the restrictions are reasonable. If the restrictions imposed appear to be consistent with the directive principles of State policy they would have to be upheld as the same would be in public interest and manifestly reasonable. Further, restrictions may by partial, complete, permanent or temporary but they must bear a close nexus with the object in the 106 interest of which they are imposed. Sometimes even a complete prohibition of the fundamental right to trade may be upheld if the commodity in which the trade is carried on is essential to the life of the community and the said restriction has been imposed for a limited period in order to achieve the desired goal. Another important consideration is that the restrictions must be in public interest and are imposed by striking a just balance between the deprivation of right and the danger or evil sought to be avoided. Thus freezing of stocks of food grains in order to secure equitable distribution and availability on fair prices have been held to be a reasonable restriction in the cases of Narendra Kumar and Ors. vs The Union of India and Ors.(1) M/s. Diwan Sugar and General Mills (P) Ltd. and Ors vs The Union of India and The State of Rajasthan vs Nath Mal and Mitha Mal(3). These are some of the general principles on the basis of which the quality of reasonableness of a particular restriction can be judged and have been lucidly adumbrated in State of Madras vs V.G. Row 's(4) case. Another important test that has been laid down by this Court is that restrictions should not be excessive or arbitrary and the Court must examine the direct and immediate impact of the restrictions on the rights of the citizens and determine if the restrictions are in larger public interest while deciding the question that they contain the quality of reasonableness. In such cases a doctrinaire approach should not be made but care should be taken to see that the real purpose which is sought to be achieved by restricting the rights of the citizens is subserved. This can be done only by examining the nature of the social control, the interest of the general public which is subserved by the restrictions, the existing circumstances which necessitated the imposition of the restrictions, the degree and urgency of the evil sought to be mitigated by the restrictions and the period during which the restrictions are to remain in force. At the same time the possibility of an alternative scheme which might have been but has not been enforced would not expose the restrictions to challenge on the ground that they are not reasonable. 107 Finally, in determining the reasonableness of restrictions imposed by law in the field of industry, trade or commerce, the mere fact that some of the persons engaged in a particular trade may incur loss due to the imposition of restrictions will not render them unreasonable because it is manifest that trade and industry pass through periods of prosperity and adversity on account of economic, social or political factors. In a free economy controls have be introduced to ensure availability of consumer goods like food stuffs, cloth or the like at a fair price and the fixation of such a price cannot be said to be an unreasonable restriction in the circumstances. Thus, apart from the various other factors which we have referred to above where restrictions are imposed on a citizen carrying on a trade or commerce in an essential commodity, the aspect of controlled economy and fair and equitable distribution to the consumer at a reasonable price leaving an appreciable margin of profit to the producer is undoubtedly a consideration which does not make the restriction unreasonable. In fact, the leading case decided by this Court which may justly be regarded as the locus classicus on the questions as to what are reasonable restrictions is V.G. Row 's case (supra) where Patanjali Sastri, C.J., speaking for the Court observed as follows: "It is important in this context to bear in mind that the test of reasonableness, where ever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby the disproportion of the imposition the prevailing conditions at the time, should all enter into the judicial verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should play an important part, and the limit to their interference with legislative judgment in such cases can only be dictated by their sense of responsibility and self restraint and the sobering reflection that the Constitution is meant not only for people of their way of thinking but for all, and that the majority of the elected representatives of the people have, in 108 authorising the imposition of the restrictions, considered them to be reasonable." This case was followed in a later decision of this Court in Mineral Development Ltd. vs The State of Bihar and Anr.(1) where after quoting the observations of Patanjali Sastri, C.J., as extracted above, Subba Rao, J., speaking for the Court observed as follows: "These observations, if we may say so with great respect, lay down the correct principle. It follows that it is the duty of this Court to decide, having regard to the aforesaid considerations and such others whether a particular statute satisfies the objective test of `reasonableness '." In the case of Collector of Customs, Madras vs Nathella Sampathu Chetty and Anr.(2) the observations of Patanjali Sastri, C.J., were endorsed by this Court when Ayyangar, J., speaking for the Court, made the following observations: "There are several decisions of this Court in which the relevant criteria have been laid down but we consider it sufficient to refer to a passage in the judgment of Patanjali Sastri, C.J., in State of Madras vs V.G. Row." In M/s. Diwan Sugar and General Mills (Private) Ltd. and Ors. vs U.O.I.(3) which was also a case arising out of the Act of 1955 and the Sugar Control Order of 1955 promulgated by the Central Government under section 3 of the said Act, a Constitution Bench of this Court while examining the nature of the restrictions imposed in that case took into account the various circumstances and observed : "Clause 5 of the Order lays down the factors which have to be taken into consideration in fixing prices. These factors include among other things a reasonable margin of profit for the producer and/or trade and any incidential charges. This was kept in mind when prices were fixed by the impugned notification. The prices were prevalent in the free market and must certainly have taken account of a fair margin of profit for the producer, though in the case of an individual factory due to factors for which the producer might 109 himself be responsible, the cost of production might have been a little more. Therefore, the prices fixed by the Government by the impugned notification can on no circumstances be said to have been proved to be below the cost of production." . . "In these circumstances if price is fixed in this area, price all over India is practically fixed, and it is not necessary to fix prices separately so far as factories in other States which are said to be mainly deficit, are concerned. There is, therefore, in our opinion, no discrimination in effect by the fixation of prices in these three regions. " It will be noticed that even though clause 5 had fixed prices, the Court upheld the restrictions because a reasonable margin of profit for the producer was left and did not insist that the producer should be allowed to have full sway in the production of sugar to the maximum capacity possible. Similarly one of the important tests laid down by this Court was that the price prevailing in the free market must be taken into account in the formula of fixation of price for essential commodities secondly while dealing with the price control imposed on factories in various States, this Court held that the policy of fixation of price could not be challenged because States where they were fixed were deficit areas. We might mention here that the sheet anchor of the argument of the Attorney General is that the impugned Notification was passed in order to relieve the sugar famine by boosting the production of sugar by mills. Similarly, in Nath Mal and Mitha Mal 's case (supra), which was also a case dealing with food grains, an order freezing the stocks of the commodity in order to secure its equitable distribution so as to make it available at a fair price to consumers was upheld by the Court with the following observations: "The clause authorises the Commissioner and various others authorities mentioned therein and such other officers as may be authorised by the Commissioner to frreeze any stock of foodgrains held by a person. Nor do we think that the power to freeze the stocks of foodgrains is arbitrary or based on no reasonable basis. . We are clear, therefore, that the freezing of stocks of food grains is reasonably related to the object which the Act was in 110 tended to achieve, namely, to secure the equitable distribution and availability at fair prices and to regulate transport, distribution, disposal and acquisition of an essential commodity such as foodgrains. " The most material ratio of this case is that even the freezing of stocks of foodgrains, with a view to securing their equitable distribution and availability was held to be a reasonable restriction. Even if by seizing the food stocks the right of a citizen to trade in food grains was seriously impaired and hampered yet such a State action was justified on the ground of public interest. On a parity of reasoning, therefore, a restriction (on the right of a trader dealing in essential commodities) like the ban in the instant case or fixation of prices aimed at bringing about distribution of essential commodities keeping the consumers interests as the prime consideration, cannot be regarded as unreasonable. We are fortified in our view by a decision of this Court in Prag Ice and Oil Mills and Anr. vs Union of India(1) where Beg, C.J. observed as follows : "All the tests of validity of the impugned price control or fixation order are, therefore, to be found in section 3 of the Act. Section 3 makes necessity or expediency of a control order for the purpose of maintaining or increasing supplies of an Essential Commodity or for securing its equitable distribution at fair prices the criteria of validity. It is evident that an assessment of either the expediency necessity of a measure, in the light of all the facts and circumstances which have a bearings on the subjects of price fixation, is essentially a subjectives matter. It is true that objective criteria may enter into determinations of particular selling prices of each kilogram of mustard oil at various time. But, there is no obligation to have to fix the price in such a way as to ensure reasonable profits to the producer or manufacturer. It has also to be remembered that the objective is to secure equitable distribution and availability at fair prices so that it is the interest of the consumer and not of the producer which is the determining factor in applying any objective tests at any particular time. " The observations extracted above, furnish a complete answer to the contentions raised by the petitioners on contention No. 1. 111 Furthermore, we would like to reiterate what Chandrachud, C.J,, observed in that case regarding the history and the manner in which the petitioners rushed to this Court : "Before closing, we would like to mention that the petitioners rushed to this Court too precipitately on the heels of the Price Control Order. Thereby they deprived themselves of an opportunity to show that in actual fact, the Order causes them irreparable prejudice. Instead they were driven through their ill thought haste to rely on speculative hypotheses in order to buttress their grievance that their right to property and the right to do trade was gone or was substantially affected. A little more patience, which could have been utilised to observe how the experiment functioned, might have paid better dividends. " This is exactly what the petitioners have done in this case by rushing to this Court the moment the notification was issued and thus depriving the State as also themselves of the actual consequences of the issuing of the notification and the prejudice which it really may have caused. They did not at all show any patience in waiting for a while to find out if the experiment functioned successfully and in the long run paid good dividends. As the petitioners obtained stay orders from this Court on filing these petitions, the experiment died a natural death and the notification remained ineffective. It was vehemently contended by Mr. Garg that the Notification or the Control Order is in direct contravention of the Directive Principles of State policy contained in article 39 in part IV of the Constitution inasmuch as instead of developing small scale industries like the crushers the Notification has curbed the rights of their owners in order to benefit the mills. It is true that one of the important considerations which must weigh with the Court in determining the reasonableness of a restriction is that it should not contravene the Directive Principles contained in Part IV of the Constitution which undoubtedly has a direct bearing on the question as held by this Court in the cases of Saghir Ahmad vs State of U.P. and Ors.(1) and The State of Bombay and Anr. vs F. N. Balsara(2) where this Court made the following observations : 112 "The new clause in Article 19(6) has no doubt been introduced with a view to provide that a State can create a monopoly in its own favour in respect of any trade or business, but the amendment does not make the establishment of such monopoly a reasonable restriction within the meaning of the first clause of Article 19(6). The result of the amendment is that the State would not have to justify such action as reasonable at all in a Court of law and no objection could be taken to it on the ground that it is an infringement of the right guaranteed under Article 19(1) (g) of the Constitution" (Saghir Ahmed 's case) "In judging the reasonableness of the restrictions imposed by the Act, one has to bear in mind the directive principles of State policy set forth in Article 47 of the Constitution." (Balsara 's case) In the instant case, however, if the argument of the Attorney General is to be accepted, there is no violation of the Directive Principles because the main object sought to be achieved by a temporary suspension of the business of the petitioners is to ensure large scale production of white sugar and to make it available to the consumers at reasonable rates which is an implementation rather than a contravention of the Directive Principles particularly clauses (b) and (c) of article 39. Whether the State has been able to prove this fact or not would be considered when we deal with the facts and materials placed before us by the parties. Another important aspect to which we may advert at this stage is the test which should be laid down to determine the reasonableness of a restriction involving a citizen carrying on trade or business in an essential commodity. We have already seen that this Court has held that fixation of price of sugar or freezing of stock of foodgrains does not amount to an unreasonable restriction on the fundamental right to trade enshrined under article 19(1)(g). There are other cases in which this Court has clearly held that in the case of essential commodities like sugar the question of the economic production and distribution thereof must enter the verdict of the Courts in deciding the reasonableness of the restrictions. In such cases even if the margin of profit left to the producer is slashed that would not make the restriction unreasonable. The reason for this view is that such a trade or commerce is subject to rise and fall in prices and other diverse factors which may destroy or prohibit one industry or the other so as to affect the general body of the consumers and if any measure is taken to strike a just 113 balance between the danger sought to be averted and the temporary deprivation of the right of a citizen to carry on his trade, it will have to be upheld as a reasonable restriction. In Shree Meenakshi Mills vs U.O.I. (1) Ray C.J., speaking for the Court observed as follows: "If fair price is to be fixed leaving a reasonable margin of profit, there is never any question of infringement of fundamental right to carry on business by imposing reasonable restrictions. The question of fair price to the consumer with reference to the dominant object and purpose of the legislation claiming equitable distribution and availability at fair price is completely lost sight of if profit and the producer 's return are kept in the fore front. In determining the reasonableness of a restriction imposed by law in the field of industry, trade or commerce, it has to be remembered that the mere fact that some of those who are engaged in these are alleging loss after the imposition of law will not render the law unreasonable. By its very nature, industry or trade or commerce goes through periods of prosperity and adversity on account of economic and sometimes social and political factors. In a largely free economy when control have to be introduced to ensure availability of consumer goods like foodstuff, cloth and the like at a fair price it is an impracticable proposition to require the Government to go through the exercise like that of a Commission to fix the prices. " According to the Attorney General by virtue of the impugned Notification this is exactly what the Central Government wants to achieve by banning the working of power crushers for a short period. This case was followed in another decision of this Court in Saraswati Industrial Syndicate Ltd. vs U.O.I.(2) which was also a case of a notification issued under clause 7 of the Control Order of 1966, where the following observations were made: "It is a well known fact that rationalisation of industry by the use of modern methods, reduces the amount of labour needed in more mechanised modes of manufacture. Therefore, we do not think that these assertions could prove any inequitable treatment meted out to the Haryana manufacturers of sugar. In any case no breach of a mandatory duty, which could justify the issue of writ of mandamus, was established. ' 114 In the light of the principles enunciated and the decisions discused above, we now proceed to examine the facts and circumstances placed before us by the Union of India to prove that the restrictions imposed under the impugned Notification contain the quality of reasonableness and are not violative of article 19(1)(g). The main pleas of the State of U.P. which have been adopted by the Union of India, are to be found in paragraphs 6 to 11 of the counter affidavit filed by the respondents in writ petition Nos. 5565 5567 of 1980. The respondents have taken the stand that there has been a very steep rise in the prices of sugar which is doubtless an essential commodity. It has further been alleged that one of the major factors responsible for the present rise in the prices of sugar is that there is a sharp rise in the demand for consumption of sugar whereas its production has slumped to a very low level. In order to illustrate the point it has been averred that the demand of sugar in the country has increased to over 60 lakh tonnes whereas production of the commodity in the preceding year (1979 80) was only about 39.5 lakh tonnes. In order to meet the demand the Central Government had to import for the first time after several years 2 lakh tonnes of sugar at a cost of about one hundred crores of rupees. One reason for the shortfall in production during 1979 80 was the poor availability of cane to the sugar factories. This in turn resulted from the worst drought conditions faced by our country particularly the State of U.P. which is one of the main suppliers of sugarcane. Yet another cause of the shortage was that the sugar famine led to the large scale diversion of cane to gur and khandsari manufacturers. The counter affidavit then proceeds to give a chart of the production of sugar by the crushers and the mills. It was further averred that unless the position was set right the stocks of 1979 80 would have been exhausted completely by the middle of November 1980. To meet this national crisis, the Government of India took various steps to increase the production of sugar in the country during the current season (1980 81). In the first place, the Government of India allowed rebate in the basic excise duty on excess sugar production in order to serve as an incentive to the sugar mills to start early cane crushing operation. This step however, could not possibly have the desired effect unless the sugar factories got the raw material, viz., constant supply of sugarcane. Indisputably sugarcane is utilised for manufacture of sugar, gur, rab and khandsari and some of the quantity is also utilised for seed, feed and chewing. It was further alleged that the crushers particularly those producing gur were in an advantageous position so as to be able to purchase cane at a very high rate and outcompete the sugar 115 factories. It was possible for the crushers to pay a higher price because no excise duty or compulsory levy was imposed on them, on the other hand, the factories suffered from certain disabilities, namely, sixty five per cent of the sugar production was taken by the Government of India on levy process and excise duty on free sale sugar was very high as compared to khandsari sugar. Further, the Government required distribution of molasses at a fixed price of Rs.6/ per quintal to the mills whereas there was no such obligation on the power crushers. Finally, because of the monthly release system the factories could sell only released quantity during a particular month whereas there was no such restriction on khandsari units owned by the petitioners. These steps taken by the then Government resulted in an unhealthy competition causing diversion of cane from the sugar factories with the result that sugar factories could get only 61.5% of the bonded cane. It was further pointed out in the counter affidavit that keeping in view the fact that the sugar stocks of 1979 80 were likely to be exhausted by the middle of November 1980, it was considered necessary to maintain an adequate supply of sugarcane to the sugar factories which would have started production earlier because of the incentives given to them by the Government of India. In an additional affidavit filed by the respondents, sworn by Karan Singh, Joint Cane Commissioner, Government of U.P, it was pointed out that khandsari sugar could never be a substitute for sugar produced by sugar mills because khandsari sugar is not used for domestic purpose in preference to mill sugar as the former has higher molasses content and has unpleasant smell and taste. Further, there is no gradation of khandsari sugar as its grain is not regular and bold. It was further alleged that in public distribution it is only the mill sugar which is supplied at fair price to the consumers at large and which also forms the bulk of the export. The khandsari sugar, according to the respondents, was generally consumed for preparation of sweets, boora and batasha and was consumed mostly by the halwais. There is no reliable evidence to rebut the aforesaid facts detailed in the counter affidavit of the respondents. Thus, in view of the factors detailed above, it was contended by the Union of India that it was in public interest that with a view to remove shortage of sugar and achieve equal distribution of sugarcane to the mills the impugned notification was passed which seems to strike a just balance between the requirements of the country and those of the khandsari units. The Attorney General contended that since the ban was imposed only for a very short period of about 116 one month and a half, there could be no appreciable loss to the khandsari units, and even if there was some loss it could be recouped after the ban was lifted because the working cost of the khandsari units was much less than that of the mills. In other words, by virtue of the policy adopted by the Government in passing the impugned notification, a fair margin of profit was left to the khandsari units which were not completely closed. It was further stated that out of 89 sugar mills in the entire State of U.P., 18 sugar mills are owned by the U.P. State Sugar Corporation which is a Government company and controlled by the State. Sixteen sugar mills are under the cooperative sector in which the Government Investment is considerable and these mill are run by cooperative societies of which cane growers are shareholders. Thus, the ultimate benefit did undoubtedly go to the sugarcane growers also through the profits made by the cooperative societies. The learned counsel, Mr. Garg, appearing for the petitioners countered the inferences drawn by the respondents with the submission that although the above facts may not be disputed yet it was not correct to say that the khandsari units had put the mills completely out of competition. It was suggested that the khandsari units were also, apart from paying a higher price to the sugarcane growers, prepared to be subjected to compulsory levies or excise duty levied on the mills or to such terms as the Government may like to put on the owners of the crushers. The argument is, no doubt, attractive but we are not sure if and when these harsher terms are imposed on the petitioners, it would be possible for them to run the crushers and make the huge profits which they are making without the aforesaid impositions. At any rate, since the impugned notification has expired, the Government will certainly consider the desirability of a reappraisal of the situation after taking into account this aspect of the matter. It was further pointed out by the Union of India that only 39 sugar mills are in the private sector and ensuring actual availability of sugar at reasonable rates to the sugar mills was the prime consideration which formed the basis of impugned notification in conformity with the object of the Act of 1955 and the Control Order so as to maintain a fair price for the general public. Learning a lesson from the performance of the sugar market in the preceding year, the Government thought it more desirable to channelise the production of sugarcane so that the interests of neither the sugar mill owners nor of the khandsari units nor those of the cane growers suffered. It was then contended that the impugned notification far from causing any appreciable damage or loss to the petitioners serve a 117 two fold purpose which ensures equitable production and distribution of sugar. Another important argument advanced by the Attorney General which has impressed us most is one resulting from the use by the mills of the hydraulic process as distinguished from the open pan process employed by khandsari units for the production of sugar. The consequence is the recovery of sugar from sugarcane in the case of khandsari units run by power crushers is between 4 to 6 per cent whereas in the case of sugar factories it ranges between 9 1/2 to 11 1/2 per cent. Thus, the overall position is that the utilisation of sugarcane by the mills is double that by the crushers and if the crushers are not able to produce more than the existing 4 to 6 per cent, half of the total quantity of sugarcane supplied to them goes waste which, if utilised by the factories, would have served for production of more sugar. This solid distinction between the two processes of manufacture followed by the mills and the crushers is, in our opinion, a very rational distinction which puts the mills in a different class and which also provides a reasonable nexus between the restrictions imposed on the crushers and the object sought to be achieved. The petitioner sought to falsify the figures quoted by the Union of India regarding the percentage of recovery of sugar by reference to a book written by Mr. Bepin Behari, and entitled `Rural Industrialization in India '. On page 100 of the book, the author has observed as follows : "Originally, the percentage of recovery in traditional khandsari units did not go beyond 6.5 per cent, but recent innovations have raised the recovery ratio to almost 9.5 per cent. Thereby the two processes have become almost commutative. In inversion loss, however, there is some difference. In the large scale sugar mills, only ten per cent of the sugar is lost while in small khandsari plants the loss can be as much as 30 per cent." and great reliance has been placed on these observations of the author. It may be noted, however, that the author has not cited any expert opinion as the foundation for his conclusion nor has he referred to any experiment carried out by him personally. In fact he has not even disclosed the source of his information. Apart from that the book fully supports the averments of the respondents that the percentage of recovery in traditional khandsari units did not go beyond 6.5 per cent. Besides, there is no evidence or allegation in any of the affidavits filed by the petitioners to the effect that any new methodo 118 logy or innovation was adopted by any of the petitioners. In these circumstances, the extract from the book does not appear to be of any assistance to the petitioners. On the other hand, the facts detailed by the respondents in the various counter affidavits filed by them are based on the statistics maintained by the Government from year to year and reports of experts. One such report entitled `studies on Specific Conductances of Indian Sugar ' has been filed by the State before us and it gives the entire history and economics of sugar production. After a careful consideration of the arguments and documents produced by both the parties we are satisfied that the restriction imposed by the impugned notification in stopping the crushers for the period 10th October to 1st December 1980 is in public interest and bears a reasonable nexus to the object which is sought to be achieved, namely, to reduce shortage of sugar and ensure a more equitable distribution of this commodity. One of the tests that has been laid down to determine the reasonableness of a restriction is to find out if the restraint is more excessive than that warranted by the situation. In the instant case, taken an overall picture of the history of sugar production it cannot be said that the stoppage of sugar crushers for a short period is more excessive than the situation demanded. In Madhya Bharat Cotton Association Ltd. vs Union of India & Anr.(1) while considering a restriction imposed for a short time, this Court observed as follows : "Further, cotton being a commodity essential to the life of the community, it is reasonable to have restriction which may, in certain circumstances, extend to total prohibition for a time, of all normal trading in the commodity. Accordingly, we are of opinion that Clause 4 of the Cotton Control Order of 1950 does not offend article 19 (1) (g) of the Constitution because sub clause (5) validates it." (Emphasis supplied) In that case the restriction imposed on cotton was for a short period of one month in February 1954 and for another month in May 1954; and was held to be justified and a reasonable restraint so 119 as not to be violative of Art 19 (1) (g). The situation here is similar. Afterall, the petitioners were working their crushers under a licence granted to them under the Licensing Order and the impugned notification merely seeks to regulate the right and not to abolish the same. For the above reasons the first contention put forward by the petitioners that the restrictions imposed by the impugned notification are unreasonable is hereby overruled and it is held that such restrictions clearly contain the quality of reasonableness and when tested on the touchstone of the principles laid down by the various authorities referred to above, they fully satisfy all the requirements of a reasonable restriction. This takes us to contention No. 2 raised by the petitioners. It was submitted before us that clause 8 of the Control Order under which the impugned notification has been issued suffers from the vice of excessive delegation of powers and is, therefore, violative of article 14 of the Constitution. It was argued that as the notification seeks to establish a monopoly in favour of the sugar mills at the cost of the petitioners it seeks to make per se an invidious discrimination which is writ large on the very face of the notification which is, therefore violative of article 14. As regards first limb of the argument it may be necessary to state that the Control Order itself has been passed under the authority of s.3 of the Act of 1955 which has been held by this Court to be constitutionally valid and is not in any way discriminatory so as to attract article 14. The Control Order itself having been passed under s.3 contains sufficient guidelines, checks and balances to prevent any misuse or abuse of the power conferred on the authorities concerned under clause 8. Clause 8 runs thus: "8. Power to issue directions to producers of khandsari, sugar, power crushers, khandsari units, crushers and cooperative societies. The Central Government may, from time to time, by general or special order, issue directions to any producer of khandsari sugar or owner of a power crusher, khandsari unit or crusher or the agent of such producer or owner or a cooperative society regarding the purchase of sugar or sugarcane juice, production, maintenance of stocks, storage, price, packing, payment disposal, delivery and distribution of sugar cane, gur gul, jaggery and rab or khandsari sugar or the period or hours to be worked. " 120 To begin with it may be noticed that the power to issue orders or directions from time to time is conferred on the Central Government which is undoubtedly a very high authority and must be presumed to act in a just and reasonable manner. This point is well settled and concluded by several decisions of this Court as detailed below. In Chinta Lingam & Ors. vs Government of India Ors. , (1) this Court made the following observations: "At any rate, it has been pointed out in more than one decision of this Court that when the power has to exercised by one of the of the highest officers the fact that no appeal has been provided for is a matter of no moment. .It was said that though the power was discretionary but it was not necessarily discriminatory and abuse of power could not be easily assumed. There was moreover a presumption that public officials would discharge their duties honestly and in accordance with rules of law. " This case was followed in V. C. Shukla vs State (Delhi Admn.)(2) where one of us (Fazal Ali, J.) speaking for the Court observed as follows : "Furthermore, as the power is vested in a very high authority, it cannot be assumed that it is likely to be abused. On the other hand, where the power is conferred on such a high authority as the Central Government, the presumption will be that the power will be exercised in a bona fide manner and according to law." Moreover, the power cannot be said to be arbitrary or unguided because the impugned notification derives its source from section 3 of the Act of 1955 which clearly lays down sufficient guidelines and the existence of certain conditions for proper distribution of an essential commodity. The said guidelines therefore, govern the authority passing the impugned notification. Secondly, clause 8 merely seeks to regulate and guide the conditions and the circumstances under which the manufacturers may exercise their rights. In other words, any order passed under clause 8 is prima facie purely of a regulatory nature. It was, however, submitted that the Notification has been passed by the Cane Commissioner, Government of U.P. and it does not contain any materials 121 or reasons why the ban was imposed on the crushers owned by the petitioners. As the Notification itself has been passed under clause 8 of the Control Order read with Government of India G.S.R. No. 1122 dated July 16, 1966 and under the it was not necessary for the Cane Commissioner to have stated or detailed the reasons why the Notification was issued. In fact, the Notification and the Control Order have to be read in the light of the main Act, viz., the Act of 1955, which itself provides the necessary guide lines, namely, that it is essential in public interest and to secure proper distribution of an essential commodity to pass orders by various authorities from time to time. This is the scheme of section 3 of the Act of 1955 which has not been challenged before us by the petitioners. It was further argued in the same token that the impugned notification seeks to establish a monopoly in favour of the sugar mills at the cost of the petitioners who have been selected for hostile discrimination as against the mills. While detailing and narrating the facts and the history of sugar production we have already shown that the State has placed cogent materials before us to show why the sugar mills had to be given a special treatment by temporarily stopping the production of sugar by the crushers. We have already dealt with the various factors while examining contention No. 1 of the petitioners and it is not necessary for us to repeat the same here. There was no question of creating any monopoly to benefit the mills particularly when a very large majority of the mills were controlled by the State or cooperative societies and only a small fraction of them were working in the private sector. In view of the low working cost of the crushers they sought to outcompete the mills and deprive them of the requisite amount of sugarcane which they should have got. It was not only just but also essential to boost the production of the factories so that white sugar may be produced on a large scale and sugarcane may not be wasted which would have been the case if most of the sugar cane went to the crushers. We have pointed out that the recovery of sugarcane juice by the mills is double that by crushers, and if the latter were allowed to operate the wastage of the sugarcane would have been almost 50 per cent which could have been avoided if sugar cane was allowed to be utilised by the mills. The third limb of the argument on this point was that there was was no rational nexus between the prohibition contained in the Notification preventing the petitioners from working their crushers, even though for a short period, and the object sought to be achieved by it. This contention also must necessarily fail as we have already shown that such nexus existed. 122 It was argued by Mr. Garg that as India lives in villages it was not understandable why the Central Government was bent on reducing the support price of sugarcane and thus causing loss to the sugarcane growers. It was true that the mills were not in a position to pay as high a price for sugarcane as the crushers but that was for so many reasons which we have discussed above, namely, the various liabilities which were imposed on the mills, e.g., the excise duties, the levy, etc. Once a certain amount of stability was achieved in the sugarcane industry, the ultimate benefit would undoubtedly go to the sugarcane grower even though he may have to be paid a lesser support for supply of sugarcane to the mills. It was, therefore, in public interest that a lesser support price for sugarcane had been fixed. Moreover, it was for the Central Government who was in the know of the circumstances prevailing in the State or for that matter in the country to determine the support price of sugarcane. Even though the crushers may have paid a higher price, in the long run, the sufferers would be the sugarcane growers as also the consumers who would be deprived of the sugar produced by the mills which was undoubtedly superior to the khandsari sugar and has a vaster area of consumption in the country and is also meant for purposes of export. The report entitled 'Studies on Specific Conductances of Indian Sugar ' referred to above, details the distinctive features of the white sugar produced by the mills and the khandsari sugar where the various features of the nature and character of sugar are pointed out thus. "This plantation sugar is crystalline, white lustrous and has a purity of 99.8 per cent. The size of the crystal of this sugar varies from 0.3 to 2.5mm. This sugar is graded according to the Indian sugar standards: Sugar corresponding to 30A is very white sugar with grain size of about 2.5mm. While 27 E refers to less white sugar with grain size of about 0.4 mm. The numeral 30, 29 and 27 indicate the decreasing order of the whiteness of the sugars and the letters A E to the grade of the grain size Apart from these sugars produced in well established commercial factories, the similar type of which are known in other countries, another kind of sugar produced perhaps only in India and nowhere else, is the khandsari sugar which is being manufactured in small scale industrial units While, in the sulphitation factories the classified sugar syrups are boiled under vacuum, in Khandsari units the same is carried out in the open pans. This sugar used to be palish yellow in colour 123 Nagaranjars and his co workers studied the conductivity of plantation white sugars and refined sugars and found distinctive difference in conductivity of plantation white sugar and refined sugar. " It has been clearly averred in para 15 of the counter affidavit filed by Mr. Bhola Nath Tiwari, Cane Commissioner, Government of U.P. (who issued the impugned notification) that in year 1978 79 the production in the reserved areas was 578.78 lakh tonnes out of which the percentage of cane utilised by the sugar mills was 27.24 whereas it was 9.73% in the case of the khandsari manufactured by power crushers. It is also stated that out of the total quantity of sugarcane only 45.23 per cent was utilised by gur manufacturers and the remaining 17.5 per cent was used for seed, feed and chewing purposes etc. Similarly, in the year 1979 80 there was a steep fall in the production of sugarcane from 578.78 lakh tonnes in the previous year to 471.11 lakh tonnes. Owing to this loss of production, there was keen competition for purchase of sugarcane between the sugar mill owners and the khandsari units. As a result of this unhealthy competition sugar mills had to close down prematurely resulting in the loss of production of sugar. A very attractive argument was submitted before us by Mr. Gupta, appearing for some of the owners of power crushers. It was submitted that so far as the petitioners represented by him were concerned, they were growing sugarcane in their own fields and had installed power crushers in their own land though the said land fell within the reserved area. It was argued that these petitioners fell in a separate category and the Government could not compel them to supply sugarcane to the mills instead of using the sugarcane grown by them in their own crushers. An apparent snag in this argument is that if in the larger public interest it becomes necessary to compel the sugarcane growers to supply sugarcane to the mills at a particular rate in order to meet a national crisis, no person can be heard to say that his rights are taken away in an unjust or discriminatory fashion. Personal or individual interests must yield to the larger interests of the community. This is exactly the philosophy behind the passing of the Act of 1955. Merely because the petitioners are growing sugarcane in their own fields and own power crushers, therefore, they cannot be treated as a class separate from the others owners of power crushers situated within the reserved area of the the mills. 124 Secondly, it was argued by Mr. Gupta and, in our opinion, rightly that the impugned notification is ex facie discriminatory inasmuch as it differentiates between vertical and horizontal power crushers without any rhyme or reason. He submitted that no rational basis has been suggested by the State for making the distinction when both types of crushers produce almost the same quantity of khandsari and apply the same mechanical process (open pan process). What difference does it make, says Mr. Gupta, if a power crusher is vertical or horizontal ? In the case of a horizontal power crusher rollers are in a horizontal line situated on the surface whereas in the vertical power crusher the rollers instead of being on the surface are in a vertical position without there being any difference in the working of the two crushers. We are of the opinion that this argument of Mr. Gupta is sound and must prevail. The Additional Advocate General, U.P. sought to draw several distinctions between a vertical power crusher and a horizontal one, namely, (1) a vertical power crusher can crush 1500 quintals of sugarcane per month whereas a horizontal one crushes 5600 quintals of the commodity in the same period; (2) vertical power crushers are non commercial and fall within the category of cottage industry whereas horizontal power crushers are included in the category of small scale industry; (3) vertical power crushers are run by their owners them selves and draw supplies from sugarcane growers and (4) vertical power crusher do not require any licence. So far as the last part of the argument of the Additional Advocate General of U.P. that vertical power crushers do not require a licence is concerned, it is factually wrong because all such crushers require a licence by virtue of the Orders passed by the Central Government under s.3 of the Act of 1955. Regarding the other distinctive features the mere ipse dixit of deponent Gupta who has sworn an affidavit, there is absolutely no documentary evidence to support the features pointed out or relied upon by the Additional Advocate General. In these circumstances, it has not been proved to our satisfaction that there is any real distinction between a vertical and a horizontal power crusher, and we regard both as falling in the same class. The notification by exempting vertical power crushers and prohibiting horizontal power crushers is clearly discriminatory and the discrimination is not justified by any rational nexus between the prohibition and the object sought to de achieved. In these circumstances, therefore, we hold that in so far as the word 'vertical ' used in the impugned Notification is concerned it must be struck down as being violative of article 14. This, however, 125 does not render the entire notification void because the word 'vertical ' used in the notification is clearly severable from the other portions of the notification. All that has to be done is to read the notification without the the word 'Vertical ' as a result of which the exemptions from ban will include all owners of power crushers (whether vertical or horizontal) which manufacture gur or rab from sugarcane grown on their fields. Again, as the notification has al ready spent its force, if any order is passed in future, the Government will see to it that such an invidious discrimination is not repeated. We now come to contention No.4 by which it was urged that the express language of clause 8 of the Control Order does not contemplate a complete prohibition of the production of an article but envisages mere regulation of the period or hours of working. It was argued that the words 'period or hours ' used in clause 8 are relatable only to the number of actual hours in a day for which the crushers may be permitted to work from time to time and not a complete stoppage or prohibition of the crushers for a period of a month or two. Clause 8, as extracted supra, uses the words 'period or hours to be worked. ' A plain reading of this expression clearly reveals that the words 'period ' and 'hours ' have been used to connote two different aspects of the matter. In other words, clause 8 contemplates regulation of working of the sugar by two separate methods (1) where only hours of work per day are to be regulated or fixed, for instance, where a crusher normally works for 10 hours, a notification under this clause may provide that it should work only for 8 hours or 6 hours or 10 hours a day or for a number of days. (2) The word 'period ' however, has nothing to do with the hours to be worked but it refers to another category of regulation viz., whether a crusher is to run or not for a particular period of time. We are unable to agree with the contention of Mr. Garg that the two words must be taken to have been used in clause 8 in the same sense. In fact, this interpretation of the words will cause violence to the language of the statutory provision and instead of advancing its object it would frustrate the purpose which clause 8 seeks to subserve. In the instant case, the notification has resorted to the first category, viz., the period of the working of the crushers, that is to say, about one and a half month, and has not at all touched or impinged upon the working hours of the crushers. If, however, the notification had fixed certain hours of the day during which only the crushers could work, then the notification would have resorted to the alternative mode of regulation, which obviously has not been done in this case We are unable to agree with the contention put forward by Mr. 126 Garg and hold that the impugned notification is wholly consistent with the provisions contained in clause 8 of the Control Order. Contention Nos. 5, 6 and 7 relate to the objection taken by the petitioners to the validity of the impugned notification on several grounds. In regard to contention No. 5, the notification has been attacked on the ground that the Central Order violates the principles of natural justice inasmuch as it was passed without hearing the petitioners whose valuable rights were involved and their trade was stopped and they were put completely out of production even though for a short period of about one and a half month. It was contended that though clause 8 does not expressly provide for a hearing yet even if it be considered to be an administrative order, the rule of audi alteram partem fully applies and the Cane Commissioner should have passed the impugned notification only after hearing the petitioners. Reliance was placed for this proposition on a large number of authorities. It is true that with the growth of law in our country, this Court has consistently held for the last few years that the rules of natural justice must apply even to an administrative order unless the same are expressly excluded. Mr. Garg as also other counsel for the petitioners submitted that the mere fact that there is no express provision in clause 8 for hearing the petitioners before imposing any restrictions on their business provides good reason to hold that the right to be heard was inherent in the very act of prohibition since the stoppage of the business of the petitioners would entail civil consequences. Thus, they argued, as no hearing was given to the petitioners, the notification was void and inoperative. Reliance was placed on the observations of Krishna Iyer, J., in Mohinder Singh Gill & Anr. vs The Chief Election Commissioner, New Delhi & Ors. ( ') which may be extracted thus: "Indeed, natural justice is a pervasive facet of secular law where a spiritual touch enlivens legislation administration and adjudication, to make fairness a creed of life. It has many colours and shades, many forms and shapes and, save where valid law excludes, it applies when people are affected by acts of Authority. It is the bone of healthy government, recognised from earliest times and not a mystic testament of judge made law The dichotomy between administrative and quasi judicial functions vis a vis the doctrine of natural justice is presumably 127 Obsolescent after Kraipak in India and Schmidt in England. . The procedural pre condition of fair hearing, however minimal, even post decisional, has relevance to administrative and judicial gentlemanliness. The Election Commission is an institution of central importance and enjoys far reaching powers and the greater the power to affect others ' right or liabilities the more necessary the need to hear. . We consider it a valid point to insist on observance of natural justice in the area of administrative decision making so as to avoid the devaluation of this principle by administrators already alarmingly insensitive to the rationale of audi alteram partem !" Strong reliance was also placed on the observations of this Court in Maneka Gandhi vs U. O. I.( ') where Bhagwati, J., after full discussion of the entire subject, observed thus: "The law must, therefore now be taken to be well settled that even in an administrative proceeding which involves civil consequences, the doctrine of natural justice must be held to be applicable. " Similarly, in a very recent case section L. Kapoor vs Jagmohan(2) this Court had taken an opportunity to emphasis the importance of rules of natural justice and reiterated as follows: "The old distinction between a judicial act and an administrative act has withered away and we have been liberated from the psittacine incantation of "administrative action". Now from the time of the decision of this Court in State of Orissa vs Dr. (Miss) Binapani Dei ; , even an administrative order which involves civil consequences. must be made consistently with the rules of natural justice. " A number of other decisions were also cited on the question of natural justice and we agree with the propositions adumbrated by 128 Mr. Garg that normally where an administrative order adversely affects the valuable rights of the party affected, a reasonable opportunity of hearing must be given to the person affected. The instant case, however, contains two prominent features which exclude the rules of natural justice. Section 3 of the Act of 1955 under which the Control Order was passed really covers an emergent situation so as to meet a national crisis involving the availability or distribution of any essential commodity which may make it necessary to restrict or control the business carried on by a citizen. It has already been pointed out by us while discussing the case of the respondent that there was an acute shortage of sugar which was not made available to consumers at reasonable rates and the situation caused serious dissatisfaction among the people. Nothing short of immediate and emergent measures taken to solve this crisis would have eased out the situation. We are fortified in this opinion by a Constitution Bench decision of this Court in Prag Ice and Oil Mills and Anr. vs U. O. I.( ') where Chandrachud, C. J. observed as follows: "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 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 in 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. " If hearing was to be given to so many owners of power crushers, it would have completely defeated and frustrated the very object not only of the Notification but also of the Act of 1955 and created complications which may have resulted in a further deterioration of an already serious situation. If the rules of natural justice were not applied in such an emergent case, the petitioners cannot be heard to complain. Afterall the notification directed stoppage of operation of the petitioners ' crushers only for a very short period and they would have had an opportunity of recouping their loss after they were allowed to function because the proportion of consumption of khandsari sugar was limited as indicated 129 above. The petitioners were, therefore, not seriously prejudiced and have rushed to this Court rather prematurely. The Attorney General had, however, a much more effective answer to the contention raised by Mr. Garg on this point. It was submitted by the Attorney General that having regard to the circumstances, the background and the situation in which the impugned notification was issued under clause 8 of the Control Order, it had a statutory complexion and should be regarded as purely legislative in character. He added that no one had ever argued that before passing a legislation, the persons affected by the legislation should he heard, and that therefore, the question of hearing or complying with the rules of natural justice would not arise. The Attorney General placed reliance on a decision of this Court in Saraswati Industrial Syndicate Ltd. etc. (supra) and particularly on the following observations made by Beg, J., "Price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material. It could not, therefore, give rise to a complaint that a rule of natural justice has not been followed in fixing the price. Nevertheless, the criterion adopted must be reasonable. Reasonableness, for purposes of judging whether there was an "excess of power" or an "arbitrary" exercise of it, is really the demonstration of a reasonable nexus between the matters which are taken into account in exercising a power and the purposes of exercise of that power. (Emphasis ours) Having regard to the facts in the instant case, a temporary ban on power crushers of a particular type was a measure governed by same, if not higher, considerations as an order of fixation of price. The las tmentioned case is an authority for the proposition that an order like the impugned notification is a legislative measure. That being the position, the rules of natural justice stand completely excluded and no question of hearing arises. Mr. Garg, however, submitted that in that case the petitioner did not urge that the price fixation required a quasi judicial procedure. Even so, the Court clearly decided that a measure like the one we have in the instant case is purely of a legislative character and there is no question of complying with the rules of natural justice in such cases. 130 In Chairman Board of Mining Examination and Anr. vs Ramjee( ') Krishna Iyer, J. speaking for the Court, pointed out that there may be cases where rules of natural justice can be dispensed with. In this connection he observed as follows: "Natural justice is no unruly horse, no lurking land mine nor a judicial cure all. If fairness is shown by the decision maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice, can be complained of. Unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating." (Emphasis supplied) In Joseph Beauharnais vs People of the State of IIIinois(2) the following observations were made which are apposite to the facts of the present case : "This being so, it would be out of bounds for the judiciary to deny the legislature a choice of policy, provided it is not unrelated to the problem and not forbidden by some explicit limitation on the State 's power. That the legislative remedy might not in practice mitigate the evil, or might itself raise new problems, would only manifest once more the paradox of reform. It is the price to be paid for the trial and error inherent in legislative efforts to deal with obstinate social issues. " The passing of the notification in the instant case was an act of a legislative character and was really a trial and error method adopted to deal with a very serious social problem. In Bates vs Lord Halsham of St. Marlebone and Ors.(3) under similar circumstances a statutory committee had made an order in relation to powers to licence hackney carriages. Commenting on this provision Megarry, J. Observed as follows: "In the present case, the committee in question has an entirely different function: it is legislative rather than administrative or executive. The function of the committee is to make or refuse 131 to make a legislative instrument under delegated powers. The order, when made, will lay down the remuneration for solicitors generally; and the terms of the order will have to be considered and construed and applied in number less cases in the future. Many of those affected by delegated legislation, and affected very substantially are never consulted in the process of enacting that legislation, and yet they have no remedy. " For the reasons aforesaid we find ourselves in complete agreement with the argument of the Attorney General that the impugned notification having been passed to effectuate the object or ideal to be achieved in order to solve a national crisis cannot but be considered a legislative measure so as to exclude rules of natural justice. The contention raised by the petitioners on this ground is, therefore, overruled. In contention No. 6 another infirmity pointed out by the learned counsel for the petitioners was that the impugned notification is clearly violative of clause 11 of the Control Order itself because the prohibition against the working of the power crushers even for a short period amounted to a partial revocation of the licences granted to the petitioners under clause 3 of the Licensing Order. In order to appreciate this contention it is necessary to extract clause 11 (2) of the Control Order which runs: "(2) Where all or any of the powers conferred upon the Central Government by this Order have been delegated in pursuance of sub clause (I) (b) to any officer or any authority of a State Government, every Order or direction issued by such officer or authority in exercise of that power may be amended, varied or rescinded by the State Government to whom the officer or authority is subordinate either suo motu, or on an application made within a period of thirty days from the date of the order or direction. Provided that no order revoking a licence or permit issued to a person shall be made without giving such person an opportunity to make representation. " Reliance was particularly placed on the proviso extracted above. It was contended that even a temporary suspension of the operation of power crushers amounted to a partial revocation of the licence granted to the petitioners and that therefore it was incumbent on the authorities concerned to give the petitioners an opportunity of being 132 heard and making a representation before such revocation took effect. The Attorney General rightly pointed out that neither subclause (2) nor the proviso thereto is attracted in the instant case. It is true that the petitioners got licences under the Licensing Order which was also passed under the Act of 1955. A revocation of a licence means that the licence has not been suspended but cancelled for all times to come entailing civil consequences and complete abolition of the right for the exercise of which the licence was granted. A temporary suspension of the working of the crushers owned by the petitioners cannot amount to a revocation, either complete or partial. In fact, in our opinion, the proviso to sub clause (2) of clause 11 of the Control Order does not at all envisage a partial or periodical revocation of a licence. The proviso would come into play only if a licence is revoked or cancelled once for all. Since a revocation or cancellation of the licence would operate to the serious prejudice of the licensee and affect him adversely, it was considered necessary and expedient to give him a hearing. We are fully satisfied that the impugned notification does not attract the conditions laid down in the proviso so as to confer upon the petitioners a right of hearing. The proviso is, therefore, wholly inapplicable to the facts of the present case. It was further submitted by the counsel for the petitioners that even if clause 11 did not apply because the notification is of a legislative character a hearing would have removed the apprehensions of the petitioners. This argument has no substance because once it is held that the notification is impressed with a legislative character, the question of hearing does not arise. It may be true that despite the fact that there is no necessity of hearing, the Government could have evolved some method of giving a very short notice to the Association and taking its views. But the omission to do so would not vitiate the notification impugned. It is well settled that possibility of an alternative scheme which might have been but has not been designed, would not be sufficient to make a restriction unreasonable. In State of Maharashtra vs Mumbai Upnagar Gramodyog Sangh(1) this Court observed as follows: "The legislature has designed a scheme by which reasonable restrictions are placed upon the right of a citizen to dispose of his property: possibility of an alternative scheme which might have been but has not been designed, will not justifiably expose 133 the first scheme to the attack that it imposes unreasonable restrictions. " Lastly, on contention No. 7 it was urged that the impugned notification, which purports to have been passed under the Control Order (which itself was a subordinate legislation passed under s.3 of the Act of 1955) if properly considered along with the serious mis chief it causes to the citizens, goes against the very spirit and object of the Act of 1955 and frustrates the equitable distribution and production of sugar which apparently seems to be the main object sought to be achieved. This argument has already been considered by us when we dealt with the various facts and materials produced before us to justify the impugned notification. We have already pointed out that in view of an extraordinary situation viz., the sugar famine and the increasing demand of sugar by the consumers, the interests of the consumers had to rank above all considerations. The notification, as stated by us earlier strikes a just balance between the needs of the consumers and the harm which may be done to the owners of the crushers. The degree and urgency of the evil sought to be remedied by a social control is the purport and the central theme of the impugned notification. Having regard to the various aspects which we have indicated above, it cannot be argued with any show of force that the remedy sought by the notification is in any way arbitrary or excessive. On the other hand, the report of the experts, stoppage of the production of sugar by the factories, the drought conditions and other factors have to enter into the decision of the Government in passing the impugned notification. The notification ex facie cannot be said to have been passed without due care and deliberation. Relevant portion of Section 3 of the Act of 1955 runs thus: "3. (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. " The impugned notification having been passed under s.3 of the Act, it fulfils all the conditions contained therein, viz., it is expedient for maintaining or increasing the supply of an essential commodity namely, sugar, which is included in clause (e) of s.2 of the Act of 134 1955 and it regulates the supply and distribution of that essential commodity and the trade and commerce therein. Having regard, therefore, to the facts and circumstances proved in this case, it cannot be said that either the Control Order or the the impugned notification is against the tenor and spirit of section 3. On the other hand, it is manifestly clear from the circumstances disclosed above that it is in pursuance of the aim and object for which s.3 was enshrined in the Act of 1955 that the Control Order and the notification were promulgated. The contention of the learned counsel for the petitioners on this score is accordingly overruled. Mr. Rameshwar Dayal, appearing for some of the petitioners raised a novel argument which was to the effect that not only the notification impugned but also the Control Order was violative of article 14 of the Constitution. It was contended that since the State had already fixed reserved areas for the factories, the selection of khandsari units for banning or stopping their production amounted to a mini classification without any rational basis. We are, however, unable to accept this contention because in view of the various circumstances discussed above, the classification, if at all, was based on a reasonable nexus with the object sought to be achieved by the notification. Certain other aspects were also raised by Mr. Dayal which amount to almost a repetition of the main arguments placed before us by Mr. Garg and the counsel following him. Thus, on an overall consideration of the various aspects of the matter we are fully satisfied that applying the well established tests of reasonableness, the impugned notification cannot be said to contain the quality of unreasonableness but is per se fair and reasonable and fully satisfies the conditions laid down by this Court in determining whether or not a restriction is reasonable. Before closing the judgment we would like to lay down certain guidelines for any future policy that the Government may consider fit to shape in the light of the discussion on the points raised before us in this case. In fact, both counsel for the petitioners and the Attorney General had requested us to lay down certain guidelines so that the Government may benefit from the same. Although we have upheld the impugned notification but having regard to the special features of the present case we are not quite satisfied that a better policy to control sugar or increase its production could not be followed which may satisfy the parties concerned, viz., the crushers, the mills, the sugarcane growers and the consumers. 135 In case the Government decides to impose a ban in future on the power crushers or other units, it may consider the desirability of giving a bare minimum hearing not to all the owners of khandsari units but to only one representative of the Association representing them all, and getting their views on the subject. It is possible that they might give some suggestions which the Government would like to incorporate in formulating its policy. Even if the Government thinks that an emergent situation has arisen and it may not be possible to give a hearing, atleast a representation against the proposed action may be called for from such Association and considered after giving the shortest possible notice. Not that such action is a legal requirement but it will generate greater confidence of the persons who may be affected by any order to be passed against them. In the same token, we may mention that when in passing an order like the impugned one, the Government has adopted the trial and error method, it would be in the fitness of things if the matter is carried to its logical end so that any future order passed contains the colour and quality of objectivity. Secondly, could it not be possible for the Government to allow the crushers to function by regulating the working hours or to fix a quota of sugarcane to be delivered to the mills and the crushers in the ratio of 60:40 or 70:30, as may be advised by the experts and to insist that both the crushers and the mills should pay a uniform price to the cane growers ? The counsel for the petitioners have brought to our notice a disturbing element in the entire case which is that in the past although the sugarcane growers supplied sugarcane on condition of payment to them of the support price fixed. by the Government yet the mills did not pay the price to the cane growers for a long time with the result that arrears accumulate running into lakhs of rupees. It would indeed be extremely desirable for the Government to take steps to see that payment of the price of the quantity of the cane supplied to the mills or the crushers is paid against delivery or, at any rate, within a reasonable time thereafter so as to provide a strong incentive to the farmers to increase their production and earn substantial profits by supplying the sugarcane to mills or crushers during the crushing season (October to May). Lastly, it was represented to us by the petitioners that the crushers are used for the twin purpose of production of khandsari sugar and gur, rab, etc., but as the crushers are sealed by the officers of the Government, the owners are not in a position to produce 136 even gur or rab on the production of which not only no ban has been imposed by the impugned notification but the same has been completely exempted from the purview of the notification. Thus it was asserted that the owners of crushers who want to switch over to production of gur or rab, because of the ban imposed by the Government on the production of khandsari may be allowed to do so. The Attorney General, however, pointed out that if this course is adopted it will be difficult to detect as to how many crushers are producing khandsari sugar in the garb of gur or rab. Wherever any step for banning production is taken, the Government has to evolve some procedure to detect the defaulters and with the resources at its command, we cannot understand why a special staff cannot be appointed on a temporary basis for looking after the compliance of the order by the "crushers and making surprise checks periodically. Another method to prevent the abuse of the privilege of production of gur or rab by producing khandsari in a clandestine fashion may be to insert a condition in the licences of the manufacturers of khandsari sugar that if they produce khandsari during the period of the ban their licences would be cancelled. The result is that all the contentions raised by the petitioners except the one raised by Mr. Gupta that the introduction of the word 'vertical ' was violative of article 14 of the Constitution are rejected. The word 'vertical ' must be considered to have been deleted from the impugned notification. Since the impugned notification has already spent its force. no relief can be given even to the petitioners represented by Mr. Gupta. But, in future the Government will bear in mind the infirmity pointed out. The petitions, along with the Civil Appeal, are accordingly dismissed but in the circumstances without any order as to costs. N.V.K. Petitions and Appeal dismissed.

In the State of Uttar Pradesh, sugarcane was produced by the sugar mills through the 'hydraulic process ' and by the power crushers through the 'open pan process '. Both the mills as also the crushers drew their raw material, namely sugarcane from sugarcane growers. In order to facilitate production by the sugar mills, most of which were controlled by the State, reserved area of the fields growing sugarcane was fixed through out the State. With a view to removing nation wide shortage of sugar, enhancing sugar production and achieving an equitable distribution of the commodity so as to make it available to consumers at reasonable rates, the Cane Commissioner in exercise of the powers conferred under clause (8) of the Sugarcane (Control) Order, 1966 issued a notification dated 9th October, 1980 which directed that no power crusher other than vertical power crushers manufacturing gur or rab from sugarcane grown on their own fields or a Khandsari unit or any agent of such owner in the reserved area of a mill could be worked until December 1, 1980. The petitioners who were owners of power crushers of Khandsari units and had taken out regular licences under the Uttar Pradesh Khandsari Sugar Manufacturers Licensing Order 1967, assailed the notification which limited the ban to work power crushers for a period of one month and a half i.e. from October 9. 1980 to December 1, 1980 in writ petitions to this Court. They contended: (1) The notification, as also the Control Order under which it was passed are violative of Article 19(1)(g) and the restrictions contained therein do not contain the quality of reasonableness. (2) Clause 8 of the Control Order under which the notification had been issued suffers from the vice of excessive delegation of powers and is, therefore, violative of Article 14 of the Constitution. The Notification seeks to establish a monopoly in favour of the sugar mills at the cost of the petitioners, and must be struck down as being violative of Article 14. (3) There is no rational nexus between the prohibition contained in the Notification preventing the crushers of petitioners from working them and the object sought to be achieved by it. (4) Clause 8 of the Control Order does not contemplate a complete prohibition of the production of an article but envisages only a regulation of the period of hours of working. (5) The Notification violates the principles of natural justice inasmuch as it was passed without hearing the petitioners whose rights were curtailed as they were put completely out of production. (6) The impugned Notification by imposing a prohibition against the working of the power crushers amounts to a partial revocation of the licences granted to the petitioners under clause 3 of the 93 Licensing Order and is, therefore violative of clause 11. (7) The impugned Notification goes against the very spirit and object of the Act of 1955 and in fact, frustrates the equal distribution and production of sugar which was the objective of the Notification. On behalf of the respondent State it was submitted that: (1) An order passed under clause 8 of the Control Order is of a legislative character and therefore the question of the application of the principles of natural justice, does not arise. (2) The notification does not violate Article 14 or Article 19 because it is in public interest and aimed at maintaining and securing proper and equitable distribution of sugar. (3) The Notification is justified by the fact that the recovery of sugar from sugarcane in case of Khandsari units run by power crushers is between 4 to 6 per cent whereas in the case of sugar factories it ranges between 9 1/2 to 11 1/2 per cent, so that utilisation of sugarcane in the case of mills is double of that of the power crusher. (4) The Khandsari produced by the crushers has got a very narrow sphere of consumption as it is used mostly by halwais or villagers, whereas sugar produced by the sugar mills is consumed in far larger quantities by the public. The action taken in order to protect national interest and distribution of sugar to the entire country on rational basis cannot be said to be an unreasonable restriction. (5) There is a marked difference between the quality of Khandsari and that of sugar produced by the mills in their character, specification, etc. (6) The question of natural justice does not arise because the crusher owners were fully aware of the situation and had also knowledge of the considerations which prevailed with the Government in stopping crushers for a short period in order to boost production by the sugar mills and fix support price for the sugarcane supplied to the mills. (7) Clause 8 of the Control Order uses the words period or working hours ' which are wide enough to embrace within their ambit a fixed period of time covering more than a day as also hours of work on any working day. Dismissing the writ petitions and appeals, ^ HELD: The impugned Notification cannot be said to contain the quality of unreasonableness but is per se fair and reasonable. In so far as the word 'vertical ' used in the Notification is concerned, it must be struck down as being violative of Article 14. This, however, does not render the entire Notification void because the word 'vertical ' is clearly severable from the other portions of the Notification. All that has to be done is to read the Notification void because the word 'vertical ' as a result of which the exemptions from the ban will include all owners of power crushers whether vertical or horizontal which manufacture Gur or rab from sugarcane grown on their fields. As the Notification has already spent its force, if any order is passed in future, the Government will see that such an invidious discrimination is not repeated. [134F; 124H 125B] 1(i) Where a citizen complains of the violation of fundamental rights contained in any of sub clauses (a) to (g) of Article 19 the onus is on the State to prove or justify that the restraint or restrictions imposed on the fundamental rights under clauses 2 to 6 of the Article are reasonable. [104 C] Saghir Ahmed vs The State of U.P. and Ors. ; and Mohammed Faruk vs State of Madhya Pradesh and Ors. 94 (ii) Fundamental rights enshrined in Part III of the Constitution are neither absolute nor unlimited but are subject to reasonable restrictions which may be imposed by the State in public interest under clauses 2 to 6 of Article 19. What are reasonable restrictions would naturally depend on the nature and circumstances of the case, the character of the statute, the object which it seeks to serve, the existing circumstances, the extent of the evil sought to be remedied as also the nature of restraint or restriction placed on the rights of the citizen. No hard or fast rule of universal application can be laid down, but if the restriction imposed appear to be consistent with the Directive Principles of State Policy they would have to be upheld as the same would be in public interest and manifestly reasonable. [105D E, G] (iii) Restrictions may be partial, complete, permanent or temporary but they must bear a close nexus with the object in the interest of which they are imposed. Sometimes even a complete prohibition of the fundamental right to trade may be upheld if the commodity in which the trade is carried on is essential to the life of the community and the said restriction has been imposed for limited period in order to achieve the goal. Freezing of stocks of food grains in order to secure equitable distribution and availability on fair prices have been held to be a reasonable restriction. [105 106A, C] Narendra Kumar and Ors. vs The Union of India and Ors. ; , M/s. Diwan Sugar and General Mills (P) Ltd. and Ors. vs The Union of India, [1959] 2 Supp. S.C.R.123 and The State of Rajsthan vs Nath Mal and Mitha Mal, ; referred to. (iv) In determining the reasonableness of restrictions imposed by law in the field of industry, trade or commerce, the mere fact that some of the persons engaged in a particular trade may incur loss due to the imposition of restrictions will not render them unreasonable because it is manifest that trade and industry pass through periods of prosperity and adversity on account of economic, social or political factors. In a free economy, controls have to be introduced to ensure availability of consumer goods, like food stuffs, cloth or the like at a fair price and the fixation of such a price cannot be said to be an unreasonable restriction. [107 A B] (v) Where restrictions are imposed on a citizen carrying on a trade or commerce in an essential commodity, the aspect of controlled economy and fair and equitable distribution to the consumer at a reasonable price leaving an appreciable margin of profit to the producer is undoubtedly a consideration which does not make the restriction unreasonable. [107 C] State of Madras vs V.G. Row, ; , Mineral Development Ltd. vs The State of Bihar and Anr. , , Collector of Customs, Madras vs Nathella Sampathu Chetty and Anr. [1962]3 S.C.R. 786 and M/s. Diwan Sugar and General Mills (P.) Ltd. and Ors. vs U.O.I. [1959] 2 Supp. S.C.R. 123 referred to. (vi) A restriction on the right of a trader dealing in essential commodities, or fixation of prices aimed at bringing about distribution of essential commodities keeping the consumers interests as the prime consideration cannot be regarded as unreasonable. [110 C] In the instant case, the Petitioners by rushing to Court the moment the Notification was issued, deprived the State as also themselves of the actual con 95 sequences of the notification and the prejudice which it really may have caused. They did not at all show any patience in waiting for a while to find out if the experiment functioned successfully and in the long run paid good dividends. As the petitioners obtained stay orders the experiment died a natural death and the Notification remained ineffective. [111D E] Prag Ice and Oil Mills and Anr. vs Union of India; , , referred to. (vii) In the case of essential commodities like sugar the question of the economic production and distribution thereof must enter the verdict of the Court in deciding the reasonableness of the restrictions. In such cases even if the margin of profit left to the procedure is slashed that would not make the restriction unreasonable. The reason is that such a trade or commerce is subject to rise and fall in prices and other diverse factors, and if any measure is taken to strike a just balance between the danger sought to be averted and the temporary deprivation of the right of a citizen to carry on his trade, it will have to be upheld as reasonable restriction. [112 G 113A] Shree Meenakshi Mills Ltd. vs U.O.I. [1974] 2 S.C.R. 398 and Saraswati Industrial Syndicate Ltd. vs U.O.I.[1975] 1 S.C.R. 956 referred to. (viii) The restriction imposed by the Notification in stopping the crushers for the period 10th October to 1st December, 1980 is in public interest and bears a reasonable nexus to the object which is sought to be achieved, namely, to reduce shortage of sugar and ensure a more equitable distribution of this commodity. Taking an overall picture of the history of sugar production it cannot be said that the stoppage of sugar crushers for a short period is more excessive than the situation demanded. Madhya Bharat Cotton Association Ltd. vs Union of India and Anr. A.I.R. 1954 S.C. 634 referred to. 2(i) The Control Order has been passed under the authority of section 3 of the Act of 1955 which has been held to be constitutionally valid and not in any way discriminatory so as to attract Article 14. The Control Order itself contains sufficient guidelines, checks and balances to prevent any misuse or abuse of the power. The Central Government under clause 8 on whom the power is conferred is undoubtedly a very high authority who must be presumed to act in a just and reasonable manner. [119 E F] Chinta Lingam and Ors. vs Government of India and Ors. ; and V.C. Shukla vs State (Delhi Admn.), ; (ii) There was no question of creating any monopoly to benefit the mills. A very large majority of the mills were controlled by the State or co operative societies and only a small fraction of them were working in the private sector. In view of the low working cost of the crushers they sought to outcompete the mills and deprive them of the requisite amount of sugarcane which they should have got. It was not only just but also essential to boost the production of the factories so that while sugar may be produced on a large scale and sugarcane may not be wasted which would have been the case if most of the sugarcane went 96 to the crusher. The recovery of sugarcane juice by the mills is double that by the crushers and if the latter were allowed to operate the wastage would have been almost 50 per cent which could have been avoided if sugarcane was allowed to be utilised by the mills. [121 E G] (iii) If in the larger public interest it becomes necessary to compel the sugarcane growers to supply sugarcane to the mills at a particular rate in order to meet a national crisis, no person can be heard to say that his rights are taken away in an unjust or discriminatory fashion. Personal or individual interests must yield to the larger interests of community. This was the philosophy behind the passing of the Act of 1955. [123 F G] 3. It has not been proved that there is any real distinction between a vertical and a horizontal power crusher. Both are regarded as falling in the same class. The Notification by exempting vertical power crushers and prohibiting horizontal power crushers is clearly discriminatory and the discrimination is not justified by any rational nexus between the prohibition and the object sought to be achieved. [124 G] 4. (i) Clause 8 used the words 'period or hours to be worked '. A plain reading of this expression reveals that the words 'period ' and 'hours ' have been used to connote to different aspects. Clause 8 contemplates regulation of working of the sugar by two separate methods (1) Where only hours of work per day are to be regulated or fixed, and (2) the word 'period ' which has nothing to do with the hours to be worked but it refers to another category of regulation, namely, whether a crusher is to run or not for a particular period of time. [125 D E] In the instant case, the Notification has resorted to the first category, viz. the 'period ' of the working of the crushers, that is about one and a half month, and has not at all touched or impinged upon the working hours of the crushers. If, however, the notification had fixed certain hours of the day during which only the crushers could work, then the Notification would have resorted to the alternative mode of regulation, which obviously has not been done. The impugned Notification is, therefore, wholly consistent with the provisions contained in clause 8 of the Control Order. [125 G 126A] 5. (i) Two prominent features exclude the rules of natural justice in the instant case. Section 3 of the Act of 1955 under which the Control Order was passed really covers an emergent situation so as to meet a national crisis, involving the availability or distribution of any essential commodity which may make it necessary to restrict or control the business carried on by a citizen. There was an acute shortage of sugar which was not made available to consumers at reasonable rates and the situation caused serious dissatisfaction among the people. Nothing short of immediate and emergent measures taken to solve this crisis would have eased out the situation. If hearing was to be given to so may owners of power crushers, it would have completely defeated and frustrated the very object not only of the Notification but also of the Act of 1955 and created complications which may have resulted in a further deterioration of an already serious situation. If the rules of natural justice were not applied in such an emergent case, the petitioners cannot be heard to complain. Afterall, the Notification directed stoppage of operation only for a very short period and the petitioners would have had an opportunity of recouping their loss after they were allowed to function because the proportion of consumption of Khandsari Sugar was limited. 97 The petitioners were, therefore, not seriously prejudiced but have rushed to this Court rather prematurely. [128 B C; F 129 A] Mohinder Singh Gill and Anr. vs The Chief Election Commissioner, New Delhi and Ors. , Maneka Gandhi vs U.O.I. [1978] 2 S.C.R. 621, S.L. Kapoor vs Jagmohan; , and Prag Ice and Oil Mills and Anr. vs U.O.I. ; , referred to. (ii) The impugned Notification is a legislative measure. The rules of natural justice therefore stand completely excluded and no question of hearing arises. The passing of the notification was a trial and error method adopted to deal with a very serious problem. [129 G H, 130 F] Chairman, Board of Mining Examination and Anr. vs Ramjee; , , Joseph Beauhernais vs People of the State of Illinois, ; at 930 and Bates vs Lord Hailsham of St. Marylebone and Ors. ; at 1378 referred to. A revocation of licence means that the licence has not been suspended but cancelled for all times to come entailing civil consequences and complete abolition of the right for the exercise of which the licence was granted. A temporary suspension of the working of the crushers owned by the petitioners cannot amount to a revocation, either complete or partial. The proviso to sub clause (2) of clause 11 of the Control Order does not at all envisage a partial or periodical revocation of a licence. The proviso comes into play only if a licence is revoked or cancelled once for all. The proviso is wholly inapplicable to the facts of the instant case. [132 C D] State of Maharashtra vs Mumbai Upnagar Gramodyog Sangh, ; 7. The Notification ex facie cannot be said to have been passed without due care and deliberation. The impugned Notification having been passed under section 3 of the Act it fulfils all the conditions contained therein, viz. it is expedient for maintaining or increasing the supply of an essential commodity, namely sugar which is included in clause (e) of the section 3 of the Act of 1955 and it regulates the supply and distribution of the essential commodities of the trade and commerce. Neither the Control Order nor the impugned Notification is against the tenor and spirit of section 3. It is manifestly clear from the circumstances disclosed that it is in pursuance of the aim and object for which section 3 was enshrined in the Act of 1955 that the Control Order and the Notification were promulgated. [133E; H 134 C] 8. In case Government decides to impose a ban in future on the power crushers or other units, a bare minimum hearing not to all the owners of Khandsari units but to only one representative of the Association representing them, and getting their views, would help the Government in formulating its policy. Even if an emergent situation arises, a representation against the proposed action may be called for from such Association and considered after giving the shortest possible notice. [135A B] 9. Whenever any steps for banning production is taken, the Government has to evolve some procedure to detect the defaulters and ensure compliance of the baning order. [136 C] 98

Appeal No. 848 of 1971. Appeal by special leave from the judgment and order dated December 7, 1970 of the Delhi High Court in S.A.O. No. 110 D of 1966, Hardev Singh, K. P. Kapur and H. L. Kapur, for the appel lant. S.K. Mehta, K. L. Mehta and K. R. Nagaraja, for the res pondent. 936 The Judgment of the Court was delivered by Vaidialingam, J. In this appeal, Mr. Hardev Singh, learned counsel on behalf of the tenant appellant, challenges the judgment and order dated December 7, 1970 of the Delhi High Court in S.A.O. No. 110 D of 1966. Special leave has been granted by this Court limited to the question whether the High Court was justified, in view of section 39(2) of the Delhi Rent Control Act, 1958 (hereinafter called the Act) in setting aside the decisions of the two subordinate authorities, dismissing the application filed by the respondent landlord for evicting the appellant. The facts leading up to this appeal may be briefly stated. The appellant took on lease, the first floor of the premises in question from the respondent on January 22, 1964 on a monthly rent of Rs. 250. The respondent who was the owner of the entire premises was then occupying the ground floor. The landlord filed an application, before the Rent Controller on November 26.1964 for eviction of the appellant from the portion in his occupation as lessee, on two grounds; (a) that the tenant has sub let a part of the premises, and (b) that he required the premises bona fide for his occupation as a residence himself and his family members. The latter claim was based under cl. (e) of the proviso to sub section (1) of section 14 of the Act, which is as follows: "that the premises let for residential purposes are required bona fide by the landlord for occupation as a residence for himself or for any member of his family dependent on him, if he is the owner thereof, or for any person for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable residential accommodation;" The tenant opposed the claim of the landlord on both the grounds. He denied the allegation of sub letting. He also contended that the landlord 's requirement for his occupation was not bonafide. The tenant 's plea was that the portion of the premises in his occupation was sufficient for his purpose. The Rent Controller accepted the plea of the tenant that there was no subletting. He also accepted his plea that the requirement of the landlord for his occupation was not bona fide. On these findings, the landlord 's application was dismissed. These two findings were also confirmed in the appeal filed by the landlord before the Rent Control Tribunal. The question. regarding sub letting, having been decided against the landlord by both the Tribunals, no longer survives and it was also not agitated before the High Court. It may be stated at this stage that the findings of both the tribunals on the question of bonafide requirement were recorded against the landlord, on the sole ground that the landlord must 937 have foreseen his requirement for additional accommodation even at the time when he let out a part of the premises on January 22, 1964 to the appellant and therefore he was not entitled to ask for eviction under cl. (e) of the proviso to sub section (1) of section 14 of the Act. It is the view of both the Tribunals that when eviction is asked for within about I I months of the letting, the claim of the landlord cannot be considered to be bonafide. The landlord carried the matter in appeal before the High Court under section 39 of the Act. That section runs as follows : "39(1) Subject to the provisions of sub section (2), an appeal shall lie to the High Court from an order made by the Tribunal within sixty days from the date of such order ; Provided that the High Court may entertain the appeal after the expiry of the said period of sixty days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. (2)No appeal shall lie under sub section (1), unless the appeal involves some substantial question of law. Before the High Court, counsel for both parties made a representation that the Rent Control Tribunal has not recorded a finding on the question whether the premises avaiable with the landlord can be considered to be "reasonably suitable residential accommodation" as contemplated by cl. (e) of the proviso to section 14 (1). Hence they made a joint request to remand the case to the Tribunal for a finding on the said question on the basis of the evidence already on record. Accepting this joint request, the learned Judge remanded the case to the Tribunal. The latter, after a consideration of the materials on record as well as the extent of the premises in the occupation of the landlord and also having due regard to the number of family members living with the latter, held, in his report dated May 4, 1970, that the portion of the premises in the occupation of the landlord was not reaso nably sufficient for a family consisting of the landlord, his wife, his son, son 's wife and their children. On this basis, he recorded a finding that the premises in the occupation of the respondent were not reasonably suitable for his residence. So far as we could see, the correctness of these findings recorded by the Rent Control Tribunal, in favour of the landlord, do not appear to have been challenged by the tenant before the High Court when the appeal came up for final hearing. On the other band, we find that the same contentions that were raised regarding the bonafide requirement of the landlord and which found 938 acceptance at the hands of the Rent Controller and the Tribunal before remand were again raised by the tenant appellant before the High Court. That is, in short, the appellant herein was contesting before the High Court, the appeal of the landlord, ignoring the findings of the Tribunal dated May 4, 1970. The main point that was urged by the appellant before the High Court was that as the two subordinate Tribunals have recorded concurrent findings negativing the claim of the landlord regarding his bonafide requirement of the premises, the appeal filed by the landlord did not involve any substantial question of law. On this basis the appellant pressed for the dismissal of the landlord 's appeal. On the other hand, the respondent urged that both the subordinate Tribunals have not properly considered the question of the landlord 's requirement; and that the findings recorded against him were on irrelevant consideration. According to the landlord the various material factors which have to be taken into account for adjudicating upon such a claim, have not been properly borne in mind by both the Tribunals. Quite naturally the landlord placed considerable reliance on the findings recorded on May 4, 1970 in his favour by the Tribunal. The High Court rejected the contention of the appellant that it has no jurisdiction to consider the correctness of the findings. recorded by the two subordinate authorities especially when the relevant matters to be taken into account for deciding such a question have not been borne in mind by those authorities. The High Court is of the view that the rejection by the Rent Controller and the Tribunal of the claim of the landlord on the sole ground that he should have anticipated his requirement for the, next 10 or II months when he let out the premises on lease on January 22, 1964, was erroneous. The High Court has further observed that none of the subordinate authorities have held that after letting out the premises on January 22, 1964 and before filing the application for eviction on November 26, 1964, the landlord has made any demand from the tenant for payment of higher rent. Finally, the High Court having due regard to the above circumstances and the size of the family of the landlord and the findings recorded by the Tribunal on May 4, 1970 held that the, decision of the two subordinate authorities dismissing the landlord 's application was erroneous. On the other hand, the learned Judge held that the landlord has made out his claim under cl. (e) of the proviso to section 14(1) of the Act. On this reasoning the learned Judge reversed the decision of the Rent Controller and the Tribunal and allowed the application of the landlord for eviction of the appellant. The appellant was given six months ' time for vacating the premises. Mr. Hardev Singh, learned counsel for the appellant, has very strenously urged that in view of the concurrent findings" 939 recorded by the two subordinate tribunals, there was no question of law, much less a substantial question of law arising for consideration before the High Court in the appeal filed by the landlord. Hence he urged that the interference by the High Court with the concurrent findings so recorded was not justified. Learned counsel further pointed out that the landlord has not made out his claim under cl. (e) of the proviso to section 14(1) of the Act. Mr. Hardev Singh referred us to certain decisions of this Court dealing with the question, under what circumstances it can be con sidered that a substantial question of law arises. We do not think it necessary, in the circumstances of this case, to refer to those decisions, as in our opinion they have no bearing on the short question that arises for consideration before us, namely, the power of the High Court under section 39, to consider the correctness of a finding regarding bonafide requirement under cl. (e) of the proviso to section 14(1) of the Act. As we have already pointed out, the sole question that has to be decided by us is whether the High Court in reversing the decisions of the Rent Controller and the Tribunal, in the circumstances of this case, can be considered to have exceeded its jurisdiction under section 39(2). We are satisfied that the High Court has not exceeded its jurisdiction in any manner. The argument of Mr. Hardev Singh that the High Court has exceeded its jurisdiction under section 39(2) of the Act when it reversed the finding of the two subordinate authorities on the question of bonafide requirement has, in our opinion, no substance. In Smt. Kamla Soni vs Rup Lal Mehra(1), this Court observed as follows: ". Whether on the facts proved the requirement of the landlord is bona fide, within the meaning of section 14(1)(e) is a finding on a mixed question of law and fact. . From the above observations it is clear that an inference drawn by the subordinate authorities that the requirement of the respondent was not bonafide, could not be regarded as conclusive. The High Court, in proper cases, has ample jurisdiction to interfere with that finding and record its own conclusions on the basis of the materials on record. We may also point out that in the case before us the position is made worse for the appellant in view of the finding recorded by the Tribunal in favour of the landlord on May 4, 1970. We have already pointed out the circumstances under which a finding was called for by the High, Court. The High Court has accepted those findings and held in favour of the landlord that he has (1) C. A. No. 2150 of 1966 decided on 26 9 1969. 940 made out a case under cl. (e) of the proviso to section 14(1) of the Act. Mr. Hardev Singh referred us to the decision of this Court reported in Bhagwan Dass and another vs section Rajdev Singh and another(1), wherein it has been observed : "A second appeal lies to the High Court against the decision of the Rent Control Tribunal under Section 39(2) of the Delhi Rent Control Act, 1958, only if the appeal involves some substantial question of law. The Rent Controller and the Rent Control Tribunal, on a consideration of the relevant terms of the agreement and oral evidence and the circumstances found that a clear case of sub letting was established. On that finding no question of law, much less a substantial question of law, arose. " The first part of the above extract lays down the nature of the jurisdiction exercised by the High Court under section 39(2) of the Act. In that decision, on facts, it was found both by the Rent Controller and the Tribunal, on a relevant consideration of the materials on record, that a case of sub letting was established. On such a finding concurrently arrived at by both the authorities, it was held by this Court that no question of law, much less a substantial question of law arose for consideration before the High Court. But the facts in the case before us are entirely different. We have already pointed out that the question that fell to be considered by the High Court was whether the claim made by the landlord under cl. (e) of the proviso to section 14(1) of the Act was bonafide. As already pointed out, this Court, in Smt. Kamla Soni vs Rup Lal Mehra(1), has held that a finding on such an issue is not one of fact alone but is a finding of mixed question of law and fact, and that it was open to the High Court when exercising its jurisdiction under section 39(2) of the Act, to consider the correctness or otherwise of such, a finding. The findings recorded on such an issue by the subordinate tribunals are not conclusive. From the above discussion, it follows that the High Court has not exceeded its jurisdiction under section 39(2) of the Act. In consequence, the appeal fails and is dismissed. In the circumstances of the case, parties will bear their own costs. V.P.S. Appeal dismissed. (1) A. I. R. (2) C. A. No 2150 of 1966 decided on 26 9 1969.

The respondent, who was the landlord of certain premises, filed an application under section 14(1)(e) of the Delhi Rent Control Act, 1958, for the eviction of the appellant, who was the lessee, on the ground inter alia, that the respondent required the premises bonafide for his occupation as a residence for himself and his family members. The Rent Controller found that the requirement of the landlord was not bonafide and dismissed the application. The order was confirmed in appeal by the Rent Control Tribunal. The respondent filed an appeal to the High Court under section 39(2) of the Act. Before the High Court both parties agreed that the case should be remanded to the Tribunal for a finding on the question whether the premises available with the respondent could be considered to be 'reasonably suitable residential accommodation ' as contemplated by section 14(1)(e). On remand, the Tribunal reported that the premises in the occupation of the respondent were not reasonably sufficient for the respondent and his family. The appellant however contended before the High Court, ignoring this finding of the Tribunal that on the concurrent findings of the two sub ordinate authorities that the landlord 's requirement was not bonafide, there was no question of law involved and so the High Court had no jurisdiction under section 39(2) to consider the correctness of those findings. The High Court rejected the contention and held, that, in view of the finding on remand the decision of the subordinate authorities dismissing the respondent 's application was erroneous. In appeal to this Court, HELD:This Court in Kamla Soni vs Rup Lal Mehra, C.A. No. 2150 of 1966 dated 26 9 1969 held that a finding on the issue whether the requirement of a landlord is bonafide is a finding on mixed questions of law and fact and not on facts only. Therefore, it was open to the High Court, when exercising jurisdiction under section 39(2), to consider in proper cases the correctness of such a finding. [939E G]

N: Civil Appeal No. 2114 (N) of 1972. From the Judgment and decree dated 16.7.1971 of the Kerala High Court in Appeal Suit Nos. 183, 195 and 249 of 1966. G. Viswanatha Iyer, P.K. Pillai and N. Sudhakaran for the Appellant. T.S. Krishnamoorthy Iyer, T.S. Padmanabhan, T.T. Kunhi kannan, section Balakrishnan, Irfan Ahmed and Ms. Lily Thomas for the Respondents. The Judgment of the Court was delivered by JAGANNATHA SHETTY, J. This appeal by Special Leave is against the judgment and decree dated July 16, 1971 passed by the High Court of Kerala in Appeal Suit Nos. 183, 195 and 249 of 1966. 618 The Appellant is the plaintiff and respondents are defendants 1 to 34 in Original Suit No. 35 of 1961 of the Sub Court, Alleppey, Kerala State. It is a suit for parti tion in which the plaintiff claims 1/33 share in the plaint properties. The plaintiff and defendants 1 to 33 are members of an undivided Malayala Brahmin illom. They are the de scendants of one Vishnu Embran. (referred to hereinafter as Vishnu (Senior)). The relationship of the parties with Vishnu (Senior) is set out in geneological table annexed to the common judgment of the High Court. Suffice it to state here that Vishnu (Senior) had three sons: Kesavan, Krishnan and Narayanan. The plaintiff is the grandson of Kesavan. One of the sons of Kesavan was given the name of his grand father. To avoid confusion, we may call him as Vishnu (Junior). Vishnu (Senior) did not remain with the members of his illom. When he was 17, he took some properties of his illom for maintenance and moved out of his native village. He settled at a place called Chambakulam. There he was earning by performing Iswara Sevas like Santhi ceremonies and Pari karmam works in temples. In the course of time he acquired some properties. Vishnu (Senior) who went out to eke his livelihood at 17, reached 71. He then thought of peacefully retiring. He wanted that his children after his death should not quarrel over the properties. With their full consent, he executed exhibit P. 1, a partition deed dated October 3, 1074 M.E. corre sponding May 15, 1889 A.D. Thereunder the properties ac quired by him were divided into four shares described in the deed as Schedules A, B, C & D. He gave schedule A to Kesa van, Schedule B to Krishnan, Schedule C to Narayanan and Schedule D to his grandson Vishnu (Junior). These schedules should not be confused with the plaint Schedule properties. Plaint A Schedule consists of property given to Vishnu (Senior) from his original illom for the purpose of his maintenance. Plaint B Schedule consists of properties under A and D Schedules in exhibit P. 1. The other schedules in the plaint are not much relevant for this case. So they are not referred to. The case of the plaintiff, to put it shortly is that plaint B schedule properties have been acquired out of the income from Plaint A Schedule and hence they are also the illom properties in which he is entitled to a share on Per Capita basis. Defendants 1 to 10, 24 to 26 and 29 to 33, supported the plaintiff. Defendants 11, 13, 16 to 21, 22 and 27 contested the suit. The case of the contesting defendant is that Vishnu (Senior) had no surplus in 619 come from plaint A Schedule properties and the acquisitions made by him which were the subject matter of division under exhibit P. 1 were his separate properties. The trial court accepted the case of the plaintiff. It held that parties are governed by Marumakkathayam Law. Plaint A Schedule properties are illom properties. Vishnu (SeniOr) could get surplus income therefrom. That available surplus was utilised for purchasing properties dealt with under exhibit P. 1. The said properties are, therefore, the illom properties which are available for partition. The Court also said that in any event, the parties by their subsequent conduct appear to have treated the properties as illom properties. Accordingly, it passed a preliminary decree for partition on Per Capita basis. Against the said decree there were appeals and Cross Objection before the High Court. The main question urged before the High Court related to the nature of the Plaint B Schedule properties. The High Court on appraisal of the oral and documentary evidence held as follows: There is no acceptable evidence to show what were the properties allotted to Vishnu (Senior) for his maintenance when he left his illom, or the income therefrom. There is no material to prove that the Plaint A Schedule properties were given to Vishnu (Senior) for his maintenance. Nor there is evidence to establish that the Plaint B Schedule properties were acquired with the aid of surplus income from Plaint A Schedule properties. With regard to properties allotted to Vishnu (Junior) under exhibit P. 1 and his subsequent conduct to treat the properties as joint family properties, the High Court ob served: "The point is, whether there was any intention on the part of Vishnu (Junior) to treat the properties as illom properties. It is no doubt, a principle of Hindu Law that where a co parcener throws his self acquisitions into the common hotchpotch with the volition that the self acquisition should become joint family properties they will assume the charac ter of joint family properties. It is doubtful whether this principle of Hindu Law can be applied to the parties here. As already stat ed, there is no evidence that Vishnu (Junior) had the volition to throw D Schedule proper ties into the common hotchpotch." 620 In other words, it was observed firstly, there was no intention on the part of Vishnu (Junior) to treat his properties as illom properties; Secondly, even if he had such an intention it would be doubtful whether the principle of Hindu Law could be applied to the parties. With these conclusions, the High Court reversed the decree of the trial court but it passed a preliminary decree in regard to plaint A Schedule and some other properties as under: "As plaint A Schedule was allotted only for the maintenance of Vishnu (Senior) the posses sory interest in the properties comprised therein and attributable to the share of Kesavan would devolve on the sons of Kesavan. As regards B Schedule properties excluding the properties comprised in the D Schedule in exhibit P. 1 they being the self acquisitions of Vishnu (Senior) will be divided equally among the sons of Kesavan. The D Schedule properties in Ext. P. 1 comprised in the Plaint B Sched ule being the absolute properties of Vishnu (Junior), namely defendants 11 to 21. The income from plaint A Schedule which is at tributable to the share of Kesavan and the Plaint B Schedule properties except the income from D Schedule in Ext. P. 1 will be distrib uted among the sons of Kesavan equally. The income from the D Schedule properties in Ext. P. 1 and included in the Plaint B Schedule will be given to the legal representatives of Vishnu (Junior). " Before we consider the contentions urged before us, it will be better to clear the mental cobweb as to the law applicable to Malayala Brahmins. The trial Court said that they are governed by Marumakkathayam Law. The High Court did not say anything specific. It appears to have doubted the applicability of the principles of Hindu Law to them. A question of this nature should not have been kept in doubt. As a matter of fact no point that comes for consideration should be kept in doubt by Courts. The litigants come to Courts for decisions and not for obtaining doubtful opin ions. The Court, therefore, should not be a prisoner of indecision. The clarity and promptness in decision making are the need of the hour. That would go a long way to reduce the docket explosion. Fortunately, for us the problem presents little diffi culty, in view of the stand taken by Counsel on both sides. Our attention has been drawn to the decision of the Kerala High Court in Kunji Amma 621 Narayani Amma vs Dhathri Antherjanan, There it was observed at page 158: "On behalf of the plaintiff respondent, the learned Advocate General argued that the principles of Hindu Law are not applicable and that the case should be guided by rules of Maramakkathayam Law. In Travancore it has been held from very early times that the Malabar Brahmins are governed by principles of Hindu Law as modified by local custom (6 T.L.R. 143, 19 T.L.R. 241, 34 T.L.R. 262, 19 T.L.J. 441) in Parmeswaran Narayanan vs Nangeli Antharaja nam a decision of the Royal Court of Appeal of Travancore, and Narayanan Narayan roo vs Kunjikutty Kutty and Others, 20 T.L.R. 65 F.B. it was held that unless Malayala Brahmins can be shown to have deviated in any respect from the interpretation put upon old texts by modern Hindu Sages and adopted dif ferent practices, they should be held bound by Hindu Law as now understood and acted upon elsewhere. The main object of the Malayala Brahmin Act III of 1106 was to make provision for better management of tarwards, to define and limit the power of Karnavan, to improve the rights of the junior members and to lay down the rules of intestate succession in respect of their self acquired properties. Appropriate provisions were made in the Act to achieve these objects. We do not feel justi fied in holding that the plaintiff and 1st defendant are governed by principles of Maru makkathayam law, merely because such safe guards as are found in Marumakkathayam law have been incorporated in the Malayala Brahmin Act. " No argument has been addressed before us that the view taken in the above case is incorrect. It can, therefore, be stated and indeed not disputed that Malayala Brahmins are governed by Hindu Law, unless they can be shown to have deviated in any respect and adopted different practices, like local customs, if any. Some of their rights have now been regulated by the Kerala Nambudiri Act, 1958 (Act 27 of 1958). The Act provides for the family management and parti tion of illom properties among Nambudiri Brahmin Community. Section 13 of the Act confers right on a member of illom to claim partition on Per Capita basis. The law being thus clarified, we may now turn to the conten tions 622 urged by Shri Vishwanatha, learned counsel for the appel lant. He urged that the High Court proceeded on the wrong assumption that there is no proof that the plaint A Schedule properties are illom properties that were given to Vishnu (Senior) for his maintenance. We think the Counsel is right. That also seems obvious and causes no difficulty. In fact, it was admitted by all the defendants (see para 19 of the trial court judgment) that the Plaint A Schedule is common illom properties which were in possession of Vishnu (Senior) under a maintenance arrangement. There can, therefore, be no doubt or dispute on this aspect of the matter. The question next to be considered is whether plaint B Schedule or the properties dealt with under Ext. P. 1 are also illom properties. They are undisputedly the acquisi tions made by Vishnu (Senior) from time to time. They could be regarded as illom properties provided it is established that they have been acquired with the aid of illom proper ties. That of course is the case put forward by the plain tiff. But the relevant evidence on record is scanty. The High Court was, therefore, justified in stating that there is no acceptable evidence produced in the case to support the plea of the plaintiff. The matter also becomes plain if we turn to the terms of Ext. P. 1 on which Shri Krishna Murthy Iyer for the contest ing respondents mainly depended. It is an ancient deed, executed at an undisputed point of time. The deed at the beginning states that all the properties divided thereunder were acquired in the name of the father "with the assets obtained by the personal efforts and improvements of mine and my children. " It means out of the personal exertions of the father and sons. The plaintiff himself has stated that Vishnu (Senior) was doing Iswara Sevas in temples like Santhi Ceremony and Parikarmam works. It is said to be the hereditary profession of Malayala Brahmins and the illom to which the parties belong. But the income earned by any member of a illom from such practice would not become the joint family property. It would be separate property of the individual. So too the properties purchased out of such income. It cannot become joint family property. The posi tion, however, may be different if a member earns from such practices which exclusively belong to the joint family. Another significant recital in Ext. P. 1 may now be noticed. It provides that the properties were divided into four shares after taking into consideration the efforts made by each party to acquire the movable and immovable proper ties. It means the division was as per 623 contributions made by each party. If the properties were illom properties, this recital has no place in the deed. The deed does not refer to undisputed illom properties, that is the plaint A Schedule. It is a deed of partition. If the properties acquired by Vishnu (Senior) were also regard ed as illore properties, there was no good reason for him to remain silent in respect of the possessory right of the plaint A Schedule. He ought to have, in the context, re ferred to it as to who should be in possession and what he should do about the income therefrom. Above all the deed finally provides that the parties shall enjoy with absolute rights the properties allotted in the respective shares. These indications clearly go to show that the properties dealt with under exhibit P. 1 were the self acquisitions of Vishnu (Senior). We thus agree with the conclusions of the High Court though not for all the reasons stated. In the result, the appeal fails and is dismissed with costs. N.P.V. Appeal dis missed.

The plaintiffs great grandfather executed a partition deed exhibit P. 1 under which the properties acquired by him were divided into four shares as described in Schedules A, B, C & D and distributed to his sons and grandsons. The plaintiff claimed in a suit for partition that plaint B schedule properties consisting of properties in Schedules A plaint A schedule and hence they were also the illom proper ties in which he was entitled to share on per capita basis. Defendants 1 to 10, 24 to 26 and 29 to 33 supported his case. Defendants 11, 13, 16 to 21, 22 and 27 contended that the plaintif 's great grandfather had no surplus income from plaint A schedule properties and the acquisitions made by him which were the subject matter of division under exhibit P. 1 were the separate properties. The trial Court decreed the suit and held that parties were governed by marumakkathayam Law and Plaint A schedule properties were illom properties, that the plaintiff 's great grandfather could get surplus income therefrom which was utilised for purchasing properties dealt with under exhibit P. 1 and, therefore, the illom properties were available for partition, and that, in any event, the parties by their subsequent conduct appeared to have treated the properties as illom properties and passed a preliminary decree for partition on per capita basis. The matter was taken in appeal to the High Court. Cross Objection was also filed. The High Court held that there was no acceptable evidence to show as to what were the proper ties allotted to the original testator for his maintenance when he left his illom or the income there 616 from and that there was no material to prove that the plaint A schedule properties were given to him for maintenance; nor was there evidence to establish that the plaint B schedule properties were acquired with the aid of surplus income from plaint A schedule properties. With regard to properties allotted to the testator 's grandson under exhibit P. 1 and his subsequent conduct to treat the properties as joint family properties, it held that firstly, there was no intention on the part of the testator 's grandson to treat his properties as illom properties, and secondly, even if he had such an intention it would be doubtful whether the principle of Hindu Law could be applied to the properties. In appeal before this Court, it was urged that the High Court proceeded on the wrong assumption that there was no proof that the plaint A schedule properties were illom properties that were given to the plaintiffs great grandfa ther for his maintenance. Dismissing the appeal by special leave, this Court, HELD: 1. Malayala Brahmins are governed by Hindu Law unless they can be shown to have deviated in any respect and adopted different practices, like local customs, if any. Some of their rights have now been regulated by the Kerala Nambudiri Act, 1958 (Act 27 of 1958) which provides for the family management and partition of illom properties among Nambudiri Brahmin Community and Section 13 confers right on a members of illom to claim partition on per capita basis. [621F G] 2. Iswara Sevas in temples like Santhi Ceremony and Parikarmam works are said to be the hereditary profession of Malayala Brahmins and the illom to which the parties belong. But the income earned by any member of an illom from such practice would not become the joint family property. It would be separate property of the individual. It cannot become joint family property. The position, however, may be different if a member earns from such practices which exclu sively belong to the joint family. [622F G] 3.1 In the instant case, there is no doubt that the plaint A schedule properties are common illom properties which were in possession of the testator under a maintenance arrangement. The plaint B Schedule properties or properties dealt with under exhibit P. 1 are illom properties and they are acquisitions made by the testator from time to time. They could be regarded as illom properties provided it is estab lished that they have been acquired with the aid of illom properties. But 617 the relevant evidence on record is scanty. The High Court was, therefore, justified in stating that there was no acceptable evidence produced in the case to support the plea of the plaintiff. [622B, C D] 3.2 exhibit P. 1 is an ancient deed executed at an undisput ed point of time. The terms of the deed indicate that all the properties divided thereunder were acquired in the name of the father out of the personal exertions of the father and his sons, that the properties were divided into four shares taking into consideration the efforts made by each party to acquire the movable and immovable properties, and that the parties shall enjoy with absolute rights the properties allotted in the respective shares, which clearly go to show that the properties dealt with under exhibit P. 1 were the self acquisitions of the testator. [622E, H, 623C] 4. Litigants come to Courts for decisions and not for obtaining doubtful opinions. The Court, therefore, should not be a prisoner of indecision. Clarity and promptness in decision making are the need of the hour. That would go a long way to reduce the docket explosion. [620G] Kunji Amma Narayani Amma vs Dhathri Antherjanan, , referred to.

Appeals Nos. 1594 and 1595 of 1968. Appeals from the judgment and order dated August 29, 1963 of the Calcutta High Court in Income Tax Reference No. 38 of 1960. Sachin Chaudhuri, T. A. Ramachandran and D. N. Gupta, the appellant (in both the appeals). D. Narsaraju, section K. Aiyar, R. N. Sachthey and B. D. Sharma for the respondent (in both the appeals). The Judgment of the Court was delivered by Shah, J. In respect of assessment years 1949 50 and 1950 51 the Income tax Appellate Tribunal referred five questions to the High Court of Calcutta under section 66(1) of the Indian Income tax Act, 1922. Three of those questions which are canvassed in these appeals need be set out : Assessment year 1949 50 "(1) Whether on the facts and in the circumstances of the case, the sum of Rs. 51,550/ was A profit in the nature of revenue and therefore liable to tax under the Indian Income tax Act ?" Assessment year 1950 51 "(3) Whether, on the facts and in the circumstances of the case, the sum of Rs. 8,756/ was a profit 798 in the nature of revenue 'and was subject to tax under the Indian Income tax Act ? (4) Whether, on the facts and in the circumstances of the case, the loss of Rs. 34,891/ was allowable as a deduction against the business income of the assessee for the assessment year 1950 51?" The appellant a limited Company incorporated under the Indian Companies Act, 1913 carries on business as managing agents, dealers in shares and stocks, stores and spare parts of machinery and acts as insurance agents and manufacturers of carbon dioxide. It also works certain coal mines. The Company obtained a prospecting licence from the State of Korea for the Chirimiri Colliery in 1944 and after prospecting for coal sold the colliery, and thereby earned a profit of Rs. 51,550 in the account year 1948 49 and Rs. 8,756 in the account year 1949 50. The Income tax Officer brought the profits arising out of the sale of the colliery to tax as business profits. The order was confirmed in appeal by the Appellate Assistant Commissioner and the Income tax Appellate Tribunal. The Company conducted a Dry Ice Factory at Lahore. The factory was sold in September 1948 to the Indo Pakistan Corporation Ltd. The purchaser took over the factory on October 1, 1948, but the price was finally settled in December, 1949. By the sale the Company suffered a loss of Rs. 34,891. The Company claimed to deduct this loss from its income assessable to tax in the assessment year 1950 51. The Income tax Officer disallowed, the claim. The Appellate Assistant Commissioner agreed with that view, and the Tribunal confirmed the order. In answering questions (1) & (3) the High Court observed "The Chirimiri Colliery was sold after prospecting and proving coal. The sale in such 'a case was a part of the trading activities of the assessee and such activity could be gathered from the surrounding circum stances as also from the manner in which it was sold, that is, within a very short time after its acquisition and after it was made fit for obtaining a reasonably higher price at the sale. . The profit thus acquired can not be treated as a capital asset. " In answering question (4) the High Court observed "The loss of Rs. 34,891 sustained by the assessee after the sale of Dry Ice Factory at Lahore in September 1948 cannot be treated as a loss of the business of sale, inasmuch as the Tribunal found as a fact that the loss not having occurred in the relevant accounting 799 year, was referable to the transaction of business during a period when the business completely ceased before the commencement of the accounting year. Counsel for the Company urges that prospecting for coal under a licence obtained from the State of Korea was not, part of the business operations of the Company and that by selling the rights in the mine, the Company disposed of its assets and made gains of a capital nature. In any event, it was urged, this was a single transaction and in the absence of evidence that the Company carried on the business of obtaining prospecting licences and of selling the mines if "coal was proved", the profit arising out of sale of the mine which was a capital asset acquired by that transaction was not taxable. Where a person disposes of a part or the whole of his assets the general rule is that the mere change or realisation of an investment does not attract liability to income tax but where such a realisation is an act which in itself is a trading transaction, profit earned by sale or conversion is taxable : Commissioner of Taxes vs Melbourne Trust Ltd.(1) The cases which illustrate this distinction fall broadly into two categories those where the sales formed part of trading activity, and, those in which the sale or realisation was not an act of trading. As observed in Californian Copper Syndicate (Limited and Reduced) vs Harris (Surveyor of Taxes) (2) the test is Is the sum of gain that has been made a mere enhancement of value by realising a security, or, is it a gain made in an operation of business in carrying out a scheme for profit making ?" In determining whether the gain is realization of mere en hancement of value or is a gain made in an operation of business in carrying out a scheme for profit making, do uniform rule ran be evolved. It was observed by this Court in Janki Ram Bahadur Ram vs Commissioner of Income tax(3) : ". . no single fact has decisive significance, and the question whether a transaction is an adventure in the nature of trade must depend upon the collective effect of all the relevant materials brought on the record. But general criteria indicating that certain facts have dominant significance in the context of other facts have been adopted in the decided cases. if, for instance, a transaction is related to the business which is normally carried on by the assessee, though not directly part of it, an intention to launch upon an, adventure in the nature of trade may readily be inferred. (1) , 1010 (P.C.) (2) ,166. (3) , 25. 800 A similar inference would arise where a commodity is purchased and sub divided, altered, treated or repaired and sold, or is converted into a different commodity and then sold. Magnitude of the transaction of pur chase, the nature of the commodity, subsequent dealings and the manner of disposal may be such that the transaction may be stamped with the character of a trading venture: . " A transaction of sale may in a given case be isolated : in another it may be intimately related to the normal business of the tax payer. In the latter class profit arising from the transaction will probably arise out of the tax payer 's business and will be assessable as business profits. An instructive case of this class is Imperial Tobacco Co. (of Great Britain and Ireland) Ltd. vs Kelly(1). In that case the Company carried on the business of tobacco manufacture, for which large quantities of tobacco leaf were purchased in the United States, where the Company maintained a large buying Organisation. To finance the purchases and the expenses of this Organisation the Company bought dollars in the United Kingdom through its bankers who remitted them to the banking accounts of the Company in the United States, and it was the practice of the Company to accumulate a large holding of dollars each year before the leaf season commenced. The Company never bought dollars for the purpose of resale as a speculation. On the outbreak of war, in September 1939. the appellant Company, at the request of the Treasury, stopped all further purchases of tobacco leaf in the United States, and, as a result, the Company had on hand, a holding of dollars accumulated between January and August, 1939. On September 30, 1939, the Company was ordered under the Defence (Finance) Regulations, 1939, to sell its surplus dollars to the Treasury, and, owing to the rise in the rate of exchange, the sale resulted in a profit to the Company. It was held by the Court of Appeal that the profit was liable to be included as profits of its trade under Sch. D Case 1. The tax payer was not carrying on business in dollars, but the transactions in dollars were intimately related to their principal business and the profits earned by sale of dollars were treated as profits taxable as business profits. In T. Beynon & Co. Limited V. Ogg (Surveyor of TaxeS(2) the tax payer carrying on business as Coal Merchants, Ship and Insurance Brokers, and as sole selling agent for various Colliery Companies, in which latter capacity it was part of its duty to purchase wagons on behalf of its clients, bought a large number of wagons on his own account with the intention of reselling them (1) (2) 801 at profit. The contention of the tax payer that the transaction being an isolated one, the profit was in the nature of a capital profit on the realisation of an investment was negatived. The profits realised in this transaction were held to result from the operation of the Company 's business and properly includable in the computation of the Company 's profits for assessment under Sch. D. In Gloucester Railway Carriage and Wagon Co. Ltd. vs The Commissioners of Inland Revenue(1) the tax payer carried on the business of manufacturing wagons for sale or hire. The tax payer sold some of the wagons which were formerly hired out. The tax payer contended that the profit realized by sale was an isolated transaction resulting in a capital profit. The House of Lords held that the "business was all one ', namely, to make profit out of wagons and on that account the profits realized by sale of wagons were taxable. The Tribunal in the present case recorded the following findings : "It is no doubt true that this was a single transaction ' But we were told by the assessee 's counsel that the assessee obtained prospecting licence in the colliery, developed the colliery and then sold out. What was the purpose of obtaining the prospecting licence has not been told to us. The assessee was carrying on business of coal mining. The prospecting of coal is a part of the coal mining business. Therefore, in our opinion, the transaction of prospecting, developing and selling the colliery is a transaction in the nature of a business. Therefore, the profit arising from the sale is a profit in the nature of revenue and has been rightly brought to tax. " Our task would have been lightened if the Tribunal had stated the findings in greater detail. Nevertheless the Tribunal has found that the Company was carrying on the business, of coal mining and prospecting of coal was a part of the coal mining business and on that account the transaction of prospecting, developing and selling the colliery was a transaction in the nature of a business. On the findings recorded by the Tribunal it follows that the prospecting for, coal being a part of the coal mining business, the income was properly regarded as taxable. The answer recorded by the High Court on questions (1) & (3) must be upheld. Turning to the fourth question : the sale transaction of the Dry Ice Factory, was completed on October 1, 1948, but the price was finally settled in December 1949. In the settlement, the Company suffered a loss of Rs. 34,891. The loss was suffered in the (1) 802 business transaction and the only dispute raised before the Tribunal related to the year in which the loss was liable to be taken into account. The Tribunal disallowed the loss in the assessment of income for the year 1950 51. The Tribunal held that the business of the Dry Ice Factory was not carried on in the year of account April 1, 1949 to March 31, 1950, and on that account the loss was hot admissible as a permissible deduction in computing the taxable income of the Company for the assessment year 1950 51. The High Court agreed with the Tribunal. In our judgment, the High Court was in error in holding that the loss was not a permissible deduction. Section 24 of the Income tax Act, 1922, in the relevant year of assessment read as follows : "(1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against as income, profits or gains under any other head in that year Provided that (2) Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, under the head profits of business, profession or vocation, and the loss cannot be wholly set off under sub section (1) the portion not so set off shall be carried forward to the following year and set off against the profits or gains, if any, of the assessee from the same business, profession or vocation for that year Provided that By sub section ( 1 ) the loss or profits or gains suffered under any head in any year was liable to be set off against the income, profits or gains under any other head, and by sub section (2) where the loss suffered in any business, profession or vocation could not be wholly set off under sub section ( 1 ) the loss not so set off had to be carried forward to the following year and set off against the profits and gains of the same business in the subsequent years. The Tribunal and the High Court applied sub section (2) of section 24 in computing the taxable income of the Company for the assessment year 1950 51. But in so proceeding, in our judgment, they were in error. The business of Dry Ice Factory was sold in October, 1948. We will assume that the Dry Ice Factory was 'a separate business of the Company and was not a part of the other business carried on by the Company. But the price for which the business was sold was settled in December 1949. Until the price was 803 settled, loss did not accrue or arise to the Company. The loss was suffered in the account year 1949 50 and could be allowed against the income of that year under section 24(1). The assumption that the loss was suffered in the previous year i.e., 1948 49 was, in our judgment, not warranted. The case was plainly governed by sub section (1) of section 24. The answer to the fourth question recorded by the High Court must be discharged. The answers to questions (1) & (3) recorded by the High Court are affirmed. Question (4) Will be answered in the affirmative and in favour of the Company. In view of the divided success, there will be no order as to costs in this Court. The order as to costs in the High Court is maintained. V.P.S. Appeals allowed in part.

The assessee company was carrying on the business of coal mining and of a Dry Ice Factory, in addition to various other kinds of business. It obtained a prospecting licence, and after prospecting for coal sold it within a short time of its acquisition and thereby earned profits in the accoun ting years 1948 49 and 1949 50. It sold the Ice Factory in 1948. Though the purchaser took possession of the ice factory in 1948, the price was finally settled in December 1949. By that sale the assessee company suffered a loss. The assessee claimed (1) that the 'profits were gains of a capital nature and hence not liable to tax; and (2) that the loss was deductible from its income in the assessment year 1950 51. (1) The department, Tribunal and High Court held that the profits from the sale of colliery were in the nature of revenue and were liable to tax under the Income Tax Act, in the two corresponding assessment years, namely, 1949 50 and 1950 51; and (2) It was held that loss in the ice factory transaction was suffered in the accounting year 1948 49 and assessee 's claim could be sustained only under section 24(2), of the Income tax Act, 1922, but that the subsection was not applicable, because, the business ceased completely before the commencement of the following accounting year 1949 50 (assessment year 1950 51). In appeal to this Court, HELD : (1) Where a person disposes of a part or the whole of his assets the general 'rule is that the mere change or realization of an investment does not attract liability to income tax, but, where such a realisation is an act which in itself is a trading transaction, profit earned by sale or conversion is taxable. In determining whether the gain is realization of a mere enhancement of value (capital gain) or is again made in an operation of business in carrying out a scheme for profit making (revenue) no uniform rule can be evolved. Though a transaction is an isolated one, it may be intimately related to the normal business of the tax payer. in such a case, the profit arising from the transaction will be out of the tax payer 's business and will be assessable as business profits. [799 C D. F) 800 B C] Prospecting of coal was a part of the mining business which the assessee was carrying on. Therefore, the transaction of prospecting, developing and selling the colliery was one in the nature of business. 797 Hence, the profit arising from the sale, though it was an isolated transaction, was in the nature of revenue and liable to tax. [801 F H] Janki Ram Bahadur Ram vs Commissioner of Income tax, , 25(S.C.), followed. Commissioner of Taxes vs Melbourne Trust Ltd. [1914] A.C. 1001, 1010 (P.C.), Californian Copper Syndicate (Limited and Reduced) V. Harris (Surveyor of Taxes) , 166, Imperial Tobacco Co. vs Kelly, , Beynon & Co. Ltd. vs Ogg (Surveyor of Taxes) and Gloucester Railway Carriage and Wagon Co. Ltd. vs Commissioners of inland Revenue, , referred to. (2) By section 24(1) the loss or profits or gains suffered under any head in any year was liable to be set off in that year against the income, profits or gains under any other head; but by section 24(2) where the loss suffered in any business, profession or vocation could not be wholly set off under sub section (1) the loss not so set off has to be carried forward to the following year and set off against the profits and gains of the same business in the subsequent year. L802 F G] In the present case, loss was suffered in the accounting year 1949 50 when the price was settled and not in 1948 49 when the sale took place. Therefore, under section 24(1) the loss was allowable against the business income of the assessee for the accounting year 1949 50, that is, in proceedings for the assessment year 1950 51. [803 A B]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2152 of 1968. Appeal by special leave from the _judgment and decree dated July 19, 1968 of the Madras High Court in Second Appeal No. 1173 of 1964. M. C. Chagla, R. Gapalakrishnan and T. L. Garg, for the appellant. M. K. Ramamurthi, Ramamurthy and Vineet Kumar, for res pondents Nos. 1 and 6 to 9. The Judgment of A. N. RAY and M. H. BEG was delivered by BEG J. SIKRI C.J. gave a separate Opinion. Beg, J. Jayaram Mudaliar, the Appellant before us by Special Leave, purchased some lease hold land for Rs. 10,500/ from Munisami Mudaliar and others under a sale deed of 7 7 1958 (Exhibit B 7) and some other lands shown in a sales certificate dated 15 7 1960, (Exhibit B 51) sold to him for Rs. 6,550/ at a public auction of immovable property held to realise the dues in respect of loans taken by Munisami Mudaliar under the Land Improvement Loans ' Act 19 of 1883. Both Jayaram and Munisami, mentioned above, were impleaded as co defendants in a 142 Partition suit, in Vellore, Madras,, now before us in appeal, commenced by a pauper application dated 23 6 1958 filed by the plaintiff respondent Ayyaswami Mudaliar so that the suit must be deemed to have been, filed on that date. The plaintiff respondent before us had challenged, by an amendment of his plaint on 18 9 1961, the validity of the sales of land mentioned above, consisting of items given in schedule 'B ' to the plaint, on the ground, inter alia, that these sales, of joint property in suit, were struck by the doctrine of lis pendens embodied in section 52 of the Indian Transfer of Property Act. As this is the sole question, on merits, raised by the appellant before us for consideration, we will only mention those facts which are relevant for its decision. Before, however, dealing with the above mentioned question, a preliminary objection to the hearing of this appeal may be disposed of. The Trial Court and the Court of first appeal having held that the rule of lis pendens applied to the sales mentioned above, the appellant purchaser had filed a second appeal in the High Court of Madras, which was substantially dismissed by a learned Judge of that Court, on 19 7 1968, after a modification of the decree. Leave to file a Letters Patent appeal was not asked for in the manner required by Rule 28, Order IV of the Rules of Madras High Court, which runs as follows "28.When an appeal against an appellate decree or order has been heard and disposed of by a single Judge, any application for a certificate that the case is a fit one for further appeal under clause 15 of the Letters Patent shall be made orally and immediately after the judgment has been delivered. " But, the appellant, after obtaining certified copies of the judgment and decree of the High Court, sent a letter to the Registry that the case be listed again for obtaining, a certificate of fitness to file a Letters ' Patent appeal. The case was, therefore, listed before the learned Judge and an oral application which was then made for grant of a certificate, was rejected on 6 9 1968 on the ground that it had not been made at the proper time. It was contended, on behalf of the respondent, that, in the circumstances stated above, the appellant must be deemed to have been satisfied with the Judgment of the High Court as his Counsel did not ask for leave to file a Letters ' Patent appeal as required by Order IV Rule 28 of the Rules of the Madras High Court (that is to say, immediately after the judgment has been delivered). The following observations of this Court in Penu Balakrishna Iyer & Ors.vs Sri Ariva M. Ramaswami lyer & Ors.(1) were cited to contend that, the appeal before us should be rejected in limine : (1) ; @ 52 53 143 .lm15 "Normally, an application for special leave against a second appellate decision would not be granted unless the remedy of a Letters Patent Appeal has been availd of. In fact, no appeal against second appellate decisions appears to be contemplated by the Constitution .as is evident from the, fact that article 133(3) expressly provides that normally an appeal will not lie to this Court from the judgment, decree, or final order of one Judge of the High Court. It is only where an application for special leave against a second appellate judgment raises issues of law of general importance that the Court would grant the application and proceed to deal with the merits of the contentions raised by the appellant. But even in such cases, it is necessary that the remedy by way of a Letters ' Patent Appeal must resorted to before a party comes to this Court". In reply to the preliminary objection, Mr. Chagla, appearing for appellant, has assailed the validity of the above mentioned Rule 28 of Order IV itself. It is submitted that the rule conflicts with the provisions of clause 15 of the Letters ' Patent of the Madras High Court requiring only that the Judge who passed the Judgment should declare that the case is fit one for appeal as a condition for appealing. It was urged that the period of limitation for filing an appeal should not, in effect, be cut down by a rule such as the one found in Rule 28, Order IV of the Rules of Madras High Court. It was urged that, before article 117 of the of 1963 introduced a period of thirty days from a decree or order for filing a Letters Patent appeal, the period of limitation for such appeals fell under the residuary article 181 of the old . As applications for certification fen outside the provisions of the Civil Procedure Code and there was no specific provision for them in the the High Court could frame its own rule prescribing the mode and time for making such applications. Rule 28 of Order IV of the Madras High Court does not purport to affect the power to give the declaration contemplated by clause 15 of the Letters ' Patent,. In some High Courts, there is no rule of the Court laying down that the application should be oral and made immediately after the judgment has been delivered. It is, however, evident that a rule such as Rule 28 of Order IV the Madras High Court is most useful and necessary particularly when a period of thirty days only for filing an appeal has been prescribed in 1963. The Judge pronouncing the judgment can decide then and there, in the presence of parties or their counsel, whether the case calls for a certificate. In a suitable case, where a party is able to prove that it was prevented due to some cause beyond its control from asking for leave at the proper time, the Judge concerned may condone non compliance 144 by a party with Rule 28, Order IV, of the Madras High Court, or extend time by applying Section 5 of the . This salutary rule could not, therefore, be held to be ultra vires or invalid. There is, however, another answer to the preliminary objec tion. It was contended that the case before us is covered by what was laid down by this Court in Penu Balakrishna Iyer 's case (Supra) when it said (at page 53) ". we do not think it would be possible to lay down an unqualified rule that leave should not be granted if the party has not moved for leave under the Letters Patent and it cannot be so granted, nor is it possible to lay down an inflexible rule that if in such a case leave has been granted it must always and necessarily be revoked. Having regard to the wide scope of the powers conferred on this Court under article 136, it is not possible and, indeed, it would not be expedient, to lay down any general rule which would govern all cases. The question as to whether the jurisdiction of this Court under article 136 should be exercised or not, and if yes, on what terms and conditions, is a matter which this Court has to decide on the facts of each case". In that particular case, this Court had actually heard and allowed the appeal by Special leave because it held that there was no general inflexible rule that special leave should be refused where the appellant has not exhausted his rights by asking for a certificate of fitness of a case and because that case called for interference. It is urged before us that the appellant had done whatever he possibly could, in the circumstances of the case, to apply for and obtain a certificate of fitness after going through the judgment of the High Court, so that the rule that alternative modes of redress should be exhausted before coming to this Court had been really complied with case must, we think, be decided upon its own facts. In the case before us, although the appellant was not shown to have attempted any explanation of failure to apply for the certificate at the proper time, yet, +,he special leave petition having been granted, and the case having passed, without objection, beyond the stage of interim orders and printing of the records, we have heard arguments on merits, also. The merits may now be considered. The challenge on the ground of lis pendens, which had been accepted by the Courts in Madras, right up to the High Court, was directed against two kinds of sales : firstly,% there was the ostensibly voluntary sale of 7 7 1958 under a sale deed by the defendant Munisami Mudaliar and his major son Subramanian Mudaliar and three minor sons Jagannathan, Duraisami alias 145 Thanikachalam, and Vijayarangam in favour of the defendant appellant; and, secondly, there was the sale evidenced by the sale certificate (Exhibit B. 51) of 15 7 1960 showing that the auction sale was held in order to realise certain, "arrears under hire purchase system due to Shri O. D. Munisami Mudaliar. The words "due to" must in the context, be read as "due from" ' because "falsa demostration non nocet". The deed of the voluntary sale for Rs. 10,5001/ showed that Rs. 7375.11 Ans were to be set off against the money due on a. decree obtained by the purchaser against the sellers in original suit 2/56 of the Vellore Sub Court , Rs. 538.5 Ans.were left to liquidate the amount due for principal and interest due to the purchaser on a bond dated 14 10 1957, by Munisami Mudaliar, Rs. 662.9 Ans.was to be set off to liquidate another amount due to the purchaser from Munisami on account of the principal and, interest on another bond executed by Munisami, Rs. 1250.0.0 was left to pay off and liquidate the balance of a debt due to one Thiruvenkata Pillai from Munisami, Rs. 100.0.0 were meant to settle a liability to the Government in respect of a purchase of cattle and for digging of some well, Rs. 51.13 Ans.were to go, towards settling a similar liability, and only Rs. 521.11 Ans.were paid in cash to the seller after deducting other amounts for meeting liabilities most of which were shown as debts to the purchaser himself. It may be mentioned here that, on 17 1 1944, Munisami had executed a mortgage of some of the property in Schedule 'B ' of the plaint for Rs. 7,500/ in favour of Kannayiram, and he had executed a second mortgage in respect of one item of property of Schedule 'B ' in favour of Patta Mal, who had assigned his rights to T. Pillai. A third mortgage of the first item of Schedule 'B ' properties was executed on 27 5 1952 by Munisami, in favour of the appellant Jayaram, was said to be necessitated by the need to pay arrears of Rs. 3,000/ incometax and for discharging a debt and a promote in favour of a man called Mudali. In 1955, an original suit No. 124/1955 had been filed by T. Pillai who had obtained orders for the sale of the first item of Schedule 'B ' properties shown in the plaint. The original suit No. 2 of 1956 had been filed for principal and interest due on 27 5 1952 to the appellant who had obtained an attachment on 5 1 1956 of some schedule 'B ' properties. The appellant had obtained a preliminary decree on 25 1 1956 in his suit and a final decree on 14 9 1957. All these events had taken Place before the institution of the partition suit on 23 6 1968. But, the voluntary sale to satisfy decretal amounts was executed after this date. The second sale was an involuntary sale for realisation of dues under the provisions of section 7 of the Land Improvement Loans Act 19 of 1883 which could be realised as arrears of land revenue. There was nothing in the sale certificate to show that the due for 146 which properties were sold were of anyone other than Munisami individually. On the facts stated above, the appellant Jayaram claims that both kinds of sales were outside the purview of the doctrine of lis pendens inasmuch as both the sales were for the discharge of preexisting liabilities of the Hindu joint family of which Munisami was the karta. The liabilities incurred by Munisami, it was submitted, as karta of the family, had to be met, in any case, out of the properties which were the subject matter of the partition suit. It was urged that where properties are liable to be sold for, pay ment of such debts as have to be discharged by the whole family, ,only those properties would be available for partition in the pending suit which are left after taking away the properties sold for meeting the pre existing liabilities of the joint family. In the case of the sale for discharging dues under the Land Improvement Loans Act it was also contended that they obtained priority .,over other claims, and, for this additional reason, fell outside, the scope of the principle of lis pendens. The defendant respondent Munisami and the defendant appellant Jayaram had both pleaded that the properties in suit were acquired by Munisami with his own funds obtained by separate business in partnership with a stranger and that Ayyaswami, plaintiff, had no share in these properties. The plaintiff respondent 's case was that although the properties were joint, the liabilities sought to be created and alienations made by Munisami were fraudulent and not for any legal necessity, and, therefore, not binding on the family. ' The Trial Court had found that the properties given in Schedule 'B ' were joint family properties of which the defendant respondent Munisami was the karta in possession. This finding was affirmed by the first Appellate Court and was not touched in the High Court. It did not follow from this finding that all dealings of Munisami with joint family properties, on the wrong assumption that he was entitled to alienate them as owner and not as karta, would automatically become binding on the joint family. A karta is only authorised to make alienations on behalf of the whole family where these are supported by legal necessity. It was no party 's case that the alienations were made on behalf of, and, therefore, were legally binding on the joint family of which plaintiff respondent Ayyaswami was a member., The Trial Court recorded a finding on which the learned Counsel for the appellant relies strongly : "There is over whelming documentary and oral evidence to show that the sale deed Exhibit B.7 and the revenue sale are all true and supported by consideration and that the 12th Defendant would be entitled to them, if these sales were not affected by the rule of lis pendens 'Within the meaning of Section 52 of the Transfer of Property Act. " 147 It may be mentioned here that the 12th Defendant is no other than, the appellant Jayaram Mudaliar, the son in law of defendant respondent Munisami Mudaliar, who had purchased the properties covered by both the impugned sales. The plea of the plaintiff respondent Ayyaswami that the sales in favour of Jayaram, the 12th defendant appellant, were fraudulent and fictitious and the trial Court 's decree for the partition included the, properties covered by the two impugned sales evidenced by exhibit B.7 and B.5 1, yet, the Commissioner who was to divide the properties by metes and bounds, was directed to allot to Munisami 's share, so far as possible, properties which were covered by Exhibit B.7, and B.51. This implied that the liabilities created by the decrees for whose satisfaction the sale deed dated 7 7 58 (Exhibit B 7) was executed and the revenue sale of 16 3 1960 for loans under an agreement were treated as the separate liabilities of the defendant Munisami and not those of the joint family. The Trial Court as well as the First Appellate Court had also rejected the plea that the revenue sale of 16 3 1960 to satisfy pre existing liabilities of Munisami had any priority over the rights of the plaintiff respondent may get in the partition suit. The result was that the partition suit was decreed subject to a direction for the allotment of the Properties covered by Exhibit B. 7 and B. 51 so that the purchaser may retain these properties if they were allotted to Munisami. The High Court of Madras had described the sale of 7 7 1958 as a "voluntary alienation", and, thereby, placed it on a footing different from an involuntary sale in execution of a decree in a mortgage suit. The obligations incurred before the sale of 7 7 1958, by reason of the decrees in the mortgaged suits, were not on this view, liabilities which could be equated with either transfers prior to the institution of the partition suit or with sales in execution of mortgage decrees which are involuntary. So far as the revenue sale was concerned, the High Court, after setting out the terms of Section 7 of the Land Improvement Loans Act 19 of 1883, held that only that land sold was to be excluded from the purview of the principle of lis pendens for the improvement of which some loan was taken. This meant that only that part of the loan was treated as a liability of the joint family as could be said to be taken for the joint land. It, therefore, modified the decrees of the Courts below by giving a direction that further evidence should be taken before passing a final decree to show what land could be thus excluded from partition. The plaintiff appellant has relied upon certain authorities laying down that the doctrine of lis pendens is not to be extended to cover involuntary sales in execution of a decree in a mortgage suit where the mortgage was, prior to the institution of the suit in which 148 the plea of lis pendens is taken, because the rights of the purchaser in execution of a mortgage decree date back to the mortgage itself. They are: Chinnaswami Paddayachi vs Darmalinga Paddyachi(1) Gulam Rasool Sahib vs Hamida Bibi(2 ) , Baldeo Das Bajoria & Ors.vs Sarojini Dasi & Ors.,(3) Har Prashad Lal vs Dalmardan Singh(4). Reliance was also placed on the principle laid down in Sityam Lal & Anr vs Sohan Lal & Ors.,(5) to contend that, since Section 52 of the Transfer of Property Act does not protect transferors, a transfer on behalf of the whole joint Hindu family would be outside the purview of the principle in a partition suit. The contention advanced on the strength of the last mentioned case erroneously assumes that the impugned sales were on behalf of the joint family. Learned Counsel for the plaintiff respondent has, in reply, drawn our attention to the following observations of Sulaiman, Ag.C.J., expressing the majority opinion in Ram Sanehi Lal & Anr.vs Janki Prasad & Ors.(6) (FB) : "the language of section 52 has been held to be applicable not only to private transfers but also to Court sales held in execution of decrees. section 2 (d) does not make section 52 inapplicable to Ch. 4, which deals with mortgages. This is now well settled : vide Radhama 'dhub Holdar vs Manohar Mukerji (A) and Moti Lal vs Kharrabuldin (B) followed in numerous cases out of which mention may be made of Sukhadeo Prasad V. Jamna (C) ". But, as we have no actual sale in execution of a mortgage decree, this question need not be decided here. Another decision to which our attention was drawn was : Maulabax vs Sardarmal & Anr. The suggestion made on behalf of the appellant, that attach ment of some schedule 'B ' property before judgment in the purchaser 's mortgage suit could remove it from the ambit of lis pendens, is quit, , unacceptable. A contention of this kind was, repelled, in K. N. Lal vs Ganeshi Ram, (8) by this Court as clearly of no avail against the embargo imposed by Section 52 of the Transfer of Property Act. (1) AIR 1932 Madras 566. (3) AIR 1929 Calcutta 697. (5) AIR 1928 All. (7) AIR 1952 Nag. 341, (2) AIR 1950 Madras 189. (4) ILR 32 Calcutta 891. (6) AIR 1931 All. P. 466 @ 480. (8) ; at 21 149 The High Court had rightly distinguished cases cited on behalf of the appellant before it by holding that exemption from the scope of As pendens cannot be extended to voluntary sales in any case. Obviously, its view was that, even where a voluntary sale takes place in order to satisfy the decretal amount in a mortgage suit, the result of such a sale was not the same as that of an involuntary sale in the course of execution proceedings where land is sold to satisfy the decree on the strength of a mortgage which creates an interest in the property mortgaged. The High Court had observed that, as regards the satisfaction of the mortgage decree in his favour, which was part of the consideration for the sale of 7 7 1958, the appellant purchaser decree holder could get the benefit of Section 14 and still execute his decree if it remained unsatisfied due to failure of consideration. An examination of the sale deed of 7 7 1958 discloses that it is not confined to the satisfaction of the decretal amounts. Other items are also found in it. The sale deed does not purport to be on behalf of the Hindu joint family of which Ayyaswami the plaintiff and Munisami Defendant No. 1 could be said to be members. It no doubt mentions the sons of Munisami Mudaliar but not Ayyaswami, plaintiff, among the sellers. As already indicated, Munisami, Defendant Respondent, as well as Jayaram Defendant Appellant, having denied that the, properties in dispute were joint, could not take up the position that the sales were binding on the whole family. Therefore, we are unable to hold that the assumption of the Madras High Court that the voluntary sale could not bind the whole family, of which Munisami was the karta, was incorrect. Learned Counsel for the appellant had also relied on Bishan Singh vs Khazan Singh.(1) That was a case in which, before the deposit of money by the pre emptors in a suit to enforce their rights to pre emption, the vendee had sold his rights to the appellant who had an equal right of pre emption. It was held there that the claim for pre emption could be defeated by such a device which fell outside the purview of the principle of lis pendens. We think that this decision turns Upon its own facts and on the nature of the right of pre emption which, as was observed there, is a weak right. This Court had held that this weak right could be defeated by a sale which a vendee is compelled to make for the purpose of defeating the 'night, provided the purchaser 's superior or equal right to Pre emption had not been barred by limitation. On the question considered there the view of the East Punjab High Court in Wazir Ali Khan vs Zahir Ahmad Khan(2) was preferred ,to the view of the Allahabad High Court in Kundan Lal vs Amar (1) ; (2) A.T.R. 1949 East Punj.150 Singh.(1) The observations made by this Court with regard to the doctrine of lis pendens when a plaintiff is enforcing a right of preemption must, we think, be confined to cases of sales which could defeat preemptors claims. It has to be remembered that a technical rule of the law of preemption is that the preemptor, to succeed in his suit, must continue to possess the right to preempt until the decree for possession is passed in his favour. As regards the revenue sale of 16 3 1960 (Exhibit 0.51) we find that the, sale certificate is even less informative than the voluntary sale deed considered above. Nevertheless, the view taken by: the Madras High Court was that any land for to improvement of which loan is shown to have been taken by Munisami Mudaliar would be excluded from the purview of the doctrine of lis pendens. It is, however, urged that the High Court had given effect to clause, (c) of Section 7 of the Land improvement Loans Act of 1883, but had overlooked clause (a). 1 Here, the relevant part of Section 7, sub section(1) of this Apt may be, set out. It reads as follows "7.Recovery of loans. (1) Subject to such rules as may be made under Section 10, all loans granted under this Act, all interest (if any) chargeable thereon, and 'Costs (if any) incurred in making the same shall, when they become be ' recoverable by the, Collector in all or any of the following modes, name (a) from the borrower as if they were arrears of land revenue due by him; (b) from his surety (if any) as if they were arrears of land revenue due by him;, (c) out of the land for the benefit of which the loan has been granted as if they were arrears of land revenue due in respect of that land; (d) out of the property comprised in the collateral security (if any) according to the procedure for the realization of land revenue by the sale of immovable property other than the land on which that revenue is due : Provided that no proceeding in respect of any land under clause (c) shall affect any interest in that land which existed before the date of the order granting the loan, other than the interest of the borrower, and of mortgages of, or persons having charges on, that interest and where the loan is ' granted under Section 4 with the consent of another person, the interest of that person, and of mortgagees of, or persons having charges on, that interest. " Reliance was also placed on Sec.42 of the Madras Revenue Recovery Act of 1864 which reads as follows: "All lands brought: to sale on account of arrears of revenue shall be sold free of all incumbrances, and if any balance shall remain after liquidating the arrears with interest and the expences of attachment and sale and other costs due in respect to such arrears, it shall be paid over to the defaulter unless such payment be ' prohibited by the injunction of a Court of competent jurisdiction. " It will be seen that the assumption that the dues could be realised as arrears of land revenue would only apply to the interest of the borrower so far as clause (7) (1) (a) ls concerned. The proviso enacts that even recoveries falling under Sec 7 ( 1 ) (c) do not affect prior interests of, persons other than the borrower or of the party which consents to certain loans. In the case before us, the borrower had himself taken up the case that the loan was taken by him individually for the purpose of purchasing a pumping set installed on the land. It did not, therefore, follow that this liability was incurred on behalf of the joint family unless it amounted to an unprovement of the joint land. Every transaction of Munisami or in respect of joint property in his possession could not affect rights of other members. It was for this reason that Section 7 (1) (a) was not specifically applied by the High Court,. But, at the same time, the direction that the properties sold should, so far as possible, be allotted to Munisami meant that the purchaser could enforce his rights to them if they came to the share of Munisami. The question of paramount claims or rights of the Government for the realisation of its taxes or of dues which are equated with taxes was also raised on behalf of the appellant on the strength of Builders Supply Corporation vs The Union of India(1) In that case, the origin of the paramount right of the State to realise taxes due, which could obtain priority over other claims, was traced to the prerogatives of the British crown in India. Apart of the fact that there is no claim by, the State before us, we may observe that, where a statutory provision is relied upon for recovery of dues, the effect of it must be confined to what the statute en acts. Even under the English law, the terms of the statute displace any claim based on prerogatives of the Crown (1) 152 vide Attorney General v. De Keyser 's Royal hotel Ltd. (1) And, in no case, can the,claim whatever its basis, justify a sale of that property which doesnot belong to the person against whom the claim exists. As already observed a claim under Section7(1)(a) of the Land Improvement Loans Act of 1883 could only be made from the borrower. This meat that, unless it was proved that Munisami, in taking a loan under the Act, was acting as the, karta of the, joint Hindu family of which Ayyaswamy was a member, recovery of arrears could only be made from Munisami 's share in the, 1and. That this could be done was, in our opinion implied in the direction that the properties sold should, so far as possible, be allotted to the share of Munisami. As some argument has been advanced on the supposed in applicability of the general doctrine of lis pendem to the impugned sales, the nature, the basis, and the, scope of this doctrine may be ,considered here. It has been pointed out, in Bennet "On lis pendens", that, even before Sir Francis Bacon framed his ordinances in 1816 " 'for the better and more regular administration of justice in the chancery, to be daily observed" stating the doctrine of lis pendens in the 12th ordinance, the doctrine was already recognized and enforced by Common law Courts. Bacon 's ordinance on the ,Subject said : "No decree bindeth any that commeth in bona fide, by conveyance from the, defendant before the bill exhibited, and is made no party, neither by bill, nor the order; but, where he comes in pendente life, and, while the suit is in full prosecution. and without any colour of allowance or privity of the court, there regularly the decree bindeth; but, if there were any intermissions of suit, or the court made acquainted with the conveyance, the court is to give order upon the special matter according to justice. " The doctrine, however, as would be evident from Bennet 's work mentioned above, is derived from the rules of jus gentium which became embodied in the Roman Law where we find the maxim: "Rem dequa controversia prohibemur in acrum dedicate" (a thing concerning which there is a controversy is prohibited, during the suit from being alienated). Bell, in his commentaries on the lows of Scotland(1) said that it was grounded on the,maxim: "Pendente lite nibil innovandum". He observed "It is a general rule which seems to have been recognized in all regular systems of jurisprudence, that during the pendence of an action., of which the object is to (1) ; (2) 2 Bell 's Com. on laws of Scotland, p. 144.153 vest the property or obtain the possession of real estate, a purchaser shall be held to take that estate as it stands in the person of the seller, and to be bound by the claims which shall ultimately be pronounced. " In the Corpus Juris Secundum (Vol.LIV P. 570), we find the following definition : "Lis pendens literally means a pending suit; and the doctrine of lis pendens has been defined as the jurisdiction, power, or control which a court acquires over property involved in suit, pending the continuance of the action, and until final judgment therein. " Expositions of the doctrine indicate that the need for it arises from the very nature of the jurisdiction of Courts and their control over the subject matter of litigation so that parties litigating before it may not remove any part of the subject matter outside the power of the court to deal with it and thus make the proceedings infructuous. It is useful to remember this background of Section 52 of our Transfer of Property Act which lays down : "During the pendency in any Court. of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made there,in, except under the authority of the Court and on such terms as it may impose. " It is evident that the doctrine, as stated in Section 52, applies not merely to actual transfers of rights which are subject matter of litigation but to other dealings with it "by any party to the suit or proceeding, so as to affect the right of any other party thereto". Hence, it could be urged that where it is not a party to the litigation but an outside agency, such as the tax Collecting authorities of the Government, which proceeds against the subject matter of litigation, without anything done by a litigating party, the resulting transaction will not be hit by Section 52. Again, where all the parties which could be affected by a pending litigation are, themselves parties to a transfer or dealings with property in such a way that they cannot resile from or disown the transaction impugned before the Court dealing with the litigation, the Court may bind them to their own acts. All these are matters which the Court could have properly considered. The purpose of Section 52 of the Transfer of Property Act is not to defeat any just and equitable claim but only to subject them to the authority of the Court which is dealing with the property to, which claims are put forward. 11 1208S ipCT/72 154 In the case before US, the Courts had given directions to safeguard such just and equitable claims as the purchaser appellant may have obtained without trespassing on the rights of the plaintiff respondent in the joint Property involved in the partition suit before the Court. Hence, the doctrine of lis pendens was correctly applied. For the reasons given above, there is no force in this appeal which is dismissed with costs. Sikri, C. J. I have had the advantage of perusing the judg ment prepared by my brother, Beg J., but as I arrive at the same conclusion by a slightly different route I am writing a separate judgment. I may give a few facts to, make the judgment self sufficient. The following pedigree may enable us to appreciate the facts Muniappa Mudaliar Doraiswamy Mudaliar ChidambaraGovindaswamy Muda (died on 4 9 1937) Mudaliarliar (died 1940) wife 6th Def.(died pendingAnnammal 10th Def.suit) Muniswami Ayyaswami Def.7 Def8 Def. 9 Mudaliar (1st Def.Mudaliar died pending suit) (Plaintiff) Def./ 2 Def.3 Def. 4 Def. / 5 12th Def.(Jayaram Mudaliar) alinee of Def.No. 1. On June 23, 1956 Ayyaswami (Plaintiff) filed a pauper petition No. 137/1958. In the plaint he claimed a partition of B Schedule properties which, according to him belonged to Joint Hindu Family consisting of himself and the defendants. While this suit was pending, defendant No. 1 Muniswami Mudaliar and four of his sons executed a sale deed (exhibit B7) in respect of some lands in Ozhaiyathur village in favour of Jayaram Mudaliar on July 7, 1958. These properties comprised items 5, 15 to 19, 24 and 28 of Schedule B. On July 15, 1960 a certificate of sale (exhibit B51) was issued stating that Jayaram Mudaliar had purchased at public auction immoveable property (described in the certificate) for Rs. 6,500/ . The property is stated to have been sold for " pumpset arrears under Hire Purchase System due by Muniswami Mudaliar". Exhibit B 51 covered items 4, 18, 20, 23 to 27 and 155 31.It is common ground that these properties were included in the B Schedule mentioned in the plaint. It is stated in the judgment of the Trial Court that Jayaram Mudaliar got himself impleaded as 12th defendant. He filed a written statement inter alia alleging that the Plaint B Schedule properties were the sole and absolute properties of the 1st defendant. Additional issues were framed in the suit. It appears that by virtue of order dated September 18, 1961, the plaint was amended and paras 24(a) and 24(b) inserted. They read : "24(a) The 12th defendant is a close agnate of the son in law of the 1st defendant. He executed the sham and nominal sale deed dated 7 7 1958 in favour of the 12th defendant to defeat the plaintiff 's rights and to secrete the properties. It was not acted upon. It is the 1st defendant that continues to be in possession even now. The alleged sale deed is not supported by consideration. The mortgage itself was brought about to defeat any rights. In any event on the date of the alleged sale deed dated 7 7 1958 the mortgage decree debt was, not subsisting. The plaint was filed in forma pauperis as O.P. 137 of 1958 on the file of this Hon 'ble Court on 23 6 1958. Thus in any event the sale is, hit by the rule of lis pendens and the sale deed dated 7 7 1958 cannot and does not confer any rights on the 12th defendant. 24(b) The revenue sale is brought about collusively and fraudulently. There was no publication. The 12th defendant never got into possession of any property. The possession still continues to be with the 1st defendant on behalf of the joint family. The sale is also hit by the rule of lis pendens. It also does not and cannot confer any rights on the 12th defendant. " Following additional issues were raised out of the pleadings of the 12th defendant : (1) Whether the plaint B Schedule properties are joint family properties ? (2) Whether the plaintiff is entitled to question the, alienations in favour of the 12th defendant ? (3) Whether the sale deed dated 7 7 1958 by the 1st defendant in favour of the 12th defendant true, valid and binding on the plaintiff and is affected by LIS PENDENS ? 156 (4) Whether the Revenue sale by the Collector dated 16 3 1960 is liable to be questioned by the plaintiff ? (5) Is the suit without impleading the Government liable to be questioned by the plaintiff ? (6) Is the sale of pump set by the 1st defendant to the 12th defendant true, valid and binding on the plaintiff ? (7) Whether the plaintiff and other members became divided from the 1st defendant after 1939 ? (8) To what equities, if any, is the 12th defendant entitled ? (9) Is the plaintiff estopped from questioning the alienations and claiming any right in the B Schedule properties ? We are only concerned with issues 3 and 4 above. The Trial Court held that the sale deed, exhibit B7, and the revenue sale "are all true and supported by consideration and that the 12th defendant would be entitled to them, if these sales were not affected by the rule of 'lis pendens ' within the meaning of section 52 of the Transfer of Property Act". Regarding lis pendens he held that the purchases under both exhibit B7 and exhibit B51 were affected by the rule of lis pendens. The Trial Court passed a preliminary decree for partition of B Schedule properties (items 2 to 31) into six equal shares. It protected the interest of the 12th defendant by stating that "as far as possible the Commissioner appointed in the suit for division of the properties will allot to the plaintiff 's share such of the properties which are not covered by Exs.B 7 and B 51". The District Judge confirmed the decree. Before the High Court, in appeal by defendant No. 12, the only point considered was that of lis pendens. The High Court held that exhibit B7 was a case of voluntary alienation and was hit by lis pendens, as the sale was not in execution of a mortgage decree. Regarding exhibit B51 the High Court, relying on Ponnuswami vs Obul Reddy(1) held that exhibit B51 would not be affected by lis pendens, as the loans were granted under the Land Improvement Loam Act to the extent that the loans were taken for the improvement of the properties. As it had not been considered whether all the properties which were sold in revenue sale and conveyed under exhibit B51 were, lands for the improvement of which loans were taken, the High Court directed (1) A.I.R. 1939 Mad.157 "In the final decree proceedings, the trial court were to consider what were the properties for the improvement of which the loans under the Land Improvement Loans Act were taken by the first defendant, in respect of those properties alone the doctrine of lis pendens will not apply. In respect of other properties, the doctrine of lis, pendens will apply. The trial court take evidence for the purpose of deciding the properties in respect of which the loans under the Land Improvement Loans Act were taken." With this modification the High Court dismissed the appeal. Defendant No. 12 applied for a certified copy of the Judgment and Decree on July 22, 1968, and these were made ready on August 9, 1968 and delivered on August 12, 1968. Defendant No. 12 moved the High Court by letter dated August 22, 1968 "requesting the posting of the appeal for being mentioned for the purpose of the issue of the Certificate for leave to appeal under the Letter Patent". The learned Judge who heard the appeal by his order dated September 6, 1968 refused the leave on the ground that the leave was not asked for immediately on delivery of judgment and that it could not be asked for afterwards. Rule 28 of Order 4 of the Rules of the High Court of Madras Appellate Side, 1965 under which the leave asked for was refused reads "28. When an appeal against an appellate, decree or order has been heard and disposed of by a single judge, any application for a certificate that the case is a fit one for further appeal under clause 15 of the Letters Patent shall be made orally and immediately after the judgment has been delivered." This Court granted special leave. At the outset, Mr. Chagla raised the preliminary objection that the appeal was incompetent as Defendant No. 12 failed to ask for certificate orally and immediately after the judgment was delivered. The learned counsel for Defendant No. 12 urged that Rule 28 of Order 4 was ultra vires. Two points thus arise out of the contentions of the parties : (1) Is Rule 28 of Order 4 of the Rules of the High Court of Madras Appellate Side ultra vires ? (2) Are the Sales by exhibit B7 and exhibit B51 hit by the rule of lis pendens ? Clause 15 of the Letters Patent inter alia provides for an appeal to the High Court from a judgment of one judge made in 158 exercise of the appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a court subject to its superintendence, where the Judge who passed the judgment declares that the case is a fit one for appeal. Clause 37 ,of the Letters Patent confers powers on the High Court to make rules and orders for the purpose of regulating all proceedings in civil cases. This Court held in The Union of India vs Ram Kanwar(1) that under el.27 of the Letters Patent which is in similar terms as el. 37 mentioned above, the High Court of Judicature at Lahore had the power to make a rule prescribing the period of limitation in respect of appeals from Orders made by that Court in exercise of its original jurisdiction to a Division Bench ,of that Court. It seems to me that the High Court can equally frame a rule regulating, the 'time at which and the manner in which the application for a certificate shall be made. Rule 28 of Order 4 does not take away any right conferred by el. 15 of the Letters Patent. It only regulates the manner of the exercise of that right. It was said that the rule unduly restricts the right of the litigant to peruse the judgment and make, up his mind whether to appeal or not. But if the declaration is made immediately by the Judge that the case is fit one for appeal there is nothing to prevent the litigant ;from not filing the appeal if he considers it inadvisable to do so. I need not discuss the point whether the Judge will have the right to condone a breach of the Rule because no application seems to have been made to condone the breach of the Rule. But this conclusion does not render the appeal before us incompetent. Leave was given by this Court after hearing the respondents on October 14, 1968. On April 22, 1969 the respondents obtained an order from this Court for expediting the hearing. No application was made at that stage to raise the point of incompetency of appeal. In the circumstances I consider that the appeal should be disposed of on merits. Coming to the second point, this Court has considered the 7scope of section 52 of the Transfer of Property Act and the rule of lis pendens in a number of cases. There is no difficulty in holding that exhibit B7 falls within the provisions of section 52 of the Transfer of Property Act. But exhibit B51 stands in a different position. It was held in Samarendra Nath Sinha & Anr.vs Krishna Kumar Nag(1) that the principle of lis pendens applies even to involuntary alienations like court sales. Shelat J., observed : "The purchaser pendente lite under this doctrine is bound by the result of the litigation on the principle that since the result must bind the party to, it so must it bind the person deriving his right, title and interest from or through him. This principle is well illustrated in Radhamabhub Holder vs Monohar(1) where the facts were almost similar to those in the instant case. It is true that section 52 strictly speaking does not apply to involuntary alienations such as court sales. But it is well established that the principle of lis pendens applies to such alienations. [See Nilkant vs Suresh Chandra(2) and Motilal vs Karrabuldin (3).] These observations were referred to with approval by this Court in Kedar Nath Lal vs Ganesh Ram(1). If the principle of lis pendens applies to court auctions there is no reason why it should not apply to revenue sales. But the effect of the application of the principle ' may vary according to the nature of the provisions under which the revenue sale is held. The principle of lis pendens does not affect pre existing rights. If there is a valid charge or mortgage on a property, this does not vanish because the property becomes the subject matter of a partition suit. In this case according to defendant No. 12 a valid charge subsisted on the lands by virtue of the provisions of the Land Improvement Loans Act. Under section 7 of the Land Improvement Loans Act loans are recoverable by the Collector in all or any of the following modes, namely: (a) from the borrower as if they were arrears of land revenue due by him; (b). . (c) out of the land for the benefit of which the loan has been granted as if they were arrears of land revenue due in respect of that land; The proviso to section 7 reads "Provided that no proceeding in respect of any land under clause (c) shall affect any interest in that land which existed before the date of the order granting the loan, other than the interest of the borrower, and of mortgagees of, or persons having charges on, that interest, and where the loan is granted under Section 4 with the consent of another persons, the interest of that person, and of mortgagees of, or persons having charges on, that interest. " Section 42 of the Madras Revenue Recovery Act provides that all lands brought to sale on account of arrears of revenue shall be sold free of all encumbrances. The liability of the land to be sold under section 7 (c) of the Act was a pre existing charge and that subsisted as from the date of the loan. This was not affected by the institution of the suit for partition. This charge could be enforced by the State, notwithstanding the pendency of the partition suit. No decree in the Partition suit could have effaced the charge. Therefore, if the State has sold only the property in respect of which loan was taken, the purchaser defendant No. 12 is not prejudiced by the, principle of lis pendens. Therefore, the direction of the High Court was right insofar as it directed the Trial Court to separate the properties for the improvement of which the loans under the Land Improvement Loans Act were taken, from the other properties. In the result the appeal fails and is dismissed. G C. Appeal dismissed.

The plaintiff respondent filed a suit for partition of properties men the first defendant (plaintiff 's brother) was the Karta. After the filing of the suit the first defendant and his sons made a voluntary sale of some of the properties in suit by sale deed exhibit B7, to the appellant. Certain other suit properties mentioned in exhibit, B51 were sold at a public auction under the provisions of the Land Improvement Loans Act 19 of 1883 in connection with arrears of a loan taken by the first defendant for the purchase of a pump set. These properties were also purchased .by the, appellant. The plaintiff respondent challenged the validity of the sales under exhibit B7 and exhibit B51 relying on the doctrine of lis pendens embodied in section 52 of the Transfer of Property Act. The .trial court held that the sales were genuine and that the proper ties sold were joint family properties, negativing the claim of the first defendant that they were his individual properties. The doctrine of his pendens held to be applicable to the properties sold. In the decree for part however the trial court directed the Commissioner who was to divide the properties by metes and bounds to allot to the share of the first defendant, so far as possible, properties which were covered by exhibit B7 and B51. The High Court in second appeal held that although the sale under exhibit B7 was made to satisfy the decree in certain mortgage suits it was a voluntary sale and could not be equated with sales in execution of mortgage decrees which are involuntary. So far as the revenue sale under exhibit B51 was concerned the High Court after setting out the terms of section 7 of Act 19 of 1883 held that only that land sold was to be excluded from the purview of the principle of lis pendens for the improvement of which some loan was taken. It therefore modified the decrees of the Courts below by giving a direction that further evidence should be taken before ' passing a final decree to show what land could be thus excluded from partition. The High Court rejected the application of the appellant for leave to appeal to the Division Bench on 'the ground that no oral request immediately after delivery of judgment was made as provided in Rule 28 Order 4 of the Madras High Court Appellate Side Rules 1965. This Court however allowed special leave to appeal under article 136 of the Constitution. Apart from the writs the Court had to consider a preliminary objection requiring the appeal to be dismissed in limine. In this connection the validity of Rule 28 Order 4 also fell for consideration HELD : (i) Per Ray and Beg, JJ. Rule 28 of Order 4 of the Madras High Court Rules does not purport to affect the power to give the declaration contemplated by clause 15 of the Letters Patent. It is evident that the rule is most useful and necessary particularly when a period of thirty days only for filing an appeal has been prescribed by the . The judge pronouncing the judgment can decide then and there, in the presence of the parties or their counsel, whether the case calls for a certificate. In a suitable case, where a party is able to prove that it 140 was prevented due to some cause beyond its control from asking for leave at the proper time, the judge concerned may condone the delay or extend the time by applying section 5 of the . This salutary rule could not therefore be held to be ultra vires or invalid. [143 F H] Penu Balakrishna Iyer & Ors, vs Sri Ariya M. Ramaswami Iyer In the present ease although the appellant was not shown to have attempted any explanation of failure to apply for the certificate at the proper time, yet, the, special leave petition having been granted and the case having passed without objection, beyond the stage of interim orders and printing of records, the Court heard arguments on merits also. [144 F G] Per Sikri, C.J. (concurring) The High Court can regulate the time at which and the manner in which the application for certificate & WI be made. Rule 28 Order 4 does not take away any right conferred by cl. 15 of the Letters Patent. It only regulates the manner of the exercise of that right. Union of India vs Ram Kanwar, ; , referred to. (ii) Per Ray & Beg, JJ. Expositions of the doctrine of lis pendens indicate that the need for it arises from the very nature of the jurisdiction of Courts and their control over the subject matter of litigation so that the parties litigating before them may not remove any part of the subject matter outside the power of courts to deal with it and thus make proceedings infructuous. [153C] The purpose of section 52 of the Transfer of Property Act is not to defeat any just and equitable claim but only to subject them to the authority of the Court which is dealing with the property to which claims are put forward. In the present case the Courts had given directions to safeguard such just and equitable claims as the purchaser may have obtained without trespassing on the rights of the plaintiff respondent in the joint property involved in the partition suit before the Court. Hence, the doctrine of lis pendens was correctly applied. [153H, 154A] In regard to the sale under exhibit B7 the High Court had rightly distinguished cases cited on behalf of the appellant before it by holding that exemption from the scope of lis pendens cannot be extended to voluntary sales in any case. [149 A] An examination of the sale deed exhibit B7 disclosed that it was not confined to the satisfaction of decretal amounts. Other items were also found in it. The sale deed did not purport to be on behalf of the Hindu joint family of which the plaintiff and the first defendant could be said to be members. The sons of the first defendant were among the sellers but not the plaintiff. At most it could be a sale binding on the shares of the sellers. The first defendant as well as the appellant having denied that the properties in dispute were joint, could not take up the position that the sales were binding on the whole family. Therefore it could not be held that the assumption of the High Court that the voluntary sale could not bind the whole family, of which the first defendant was the Karta, was incorrect. Bishan Singh vs Khazan Singh, [1959] S.C.R . 878, distinguished. As regards the revenue sale under exhibit B51 the assumption that the dues could be realised as arrears of land revenue would only apply to the interest of the borrower so, far as clause 7(1)(a) of Act 19 of 1883 is concerned. The proviso enacts that even recoveries falling under section 7(1) (C) do not affect prior interests of persons other than the borrower or of the party which consents to certain loans. In the present case the borrower had himself taken up the case that the loan was taken by him individually, for the purpose of purchasing a pumping set installed. on the 141 land. It did not therefore follow that this liability was incurred On behalf of the joint family unless it amounted to an improvement of the joint land. Every transaction of the first defendant or in respect of joint property in his possession could not affect rights of other members. it was for this reason that section 7(1) (a) was not specifically applied by the High Court. But at the same time, the direction, that the properties sold should, so far as possible, be allotted to the first defendant meant that the purchaser could enforce his rights to them if they came to the share of the first defendant. [151D F] Where a statutory provision is relied upon for recovery of dues, the effect of it must be confined to what the statute enacts. Even under the English law the terms of the statute displace any claim based on the prerogatives of the Crown. And in no case can the claim whatever its basis, justify a sale of that property which does not belong to the person against whom the claim exists. [151H] Builders Supply Corporation vs The Union of India, and Attorney General vs Dekerysis Royal Hotel., Ltd., ; , referred to. Per Sikri C.J. (concurring) Section 42 of the Madras Revenue Recovery Act provides that all lands brought to sale on account of arrears of revenue shall be sold free of all encumbrances. The liability of the land to be sold under section

ition No. 3053 of 1980. Under article 32 of the Constitution of India. Dr. L.M. Singhvi, S.K Sinha, S.K Verma, A.M. Singhvi and Laxmi Kant Pandey for the Appellant. D. Goburdhan for the Respondent. The Judgment of the Court was delivered by DESAI, J. A pensioner since 16 years is knocking at the doors of the court of justice and the executive in search of his hard earned pension and is being rebuffed by those who would meet the same fate by the passage of time and yet with his meagre resources, he has been dragged to the apex court for the second time after a lapse of 12 years during which abominably long period the mandamus of this Court has been treated as a scrap of paper. What a pity, and what helplessness ? The facts relevant to the disposal or this petition under article 32 of the Constitution are set out in details in Deokinandan Prasad vs State of Bihar & Ors (1) and therefore, need not be recapitulated here. A Constitution Bench presided over by the then Chief Justice Mr. Sikri issued a mandamus in the writ petition filed by the present petitioner which reads as under: "The order dated August 5, 1966 declaring under r. 76 of the Service Code that the petitioner has ceased to be in government employ is set aside and quashed. The order dated June 12 1968 stating that under r. 46 of the Pension Rules, the Department is unable to grant the petitioner pension is also set aside and quashed. As the petitioner himself claims that he has been retired from service on superannuation, a writ of mandamus will be issued to the respondents directing them to consider the claim of the petitioner for payment of pension according to law. " 923 The opinion of the Court was rendered on May 4, 1971 and since then petitioner is being pushed from pillar to post by various departments of the State of Bihar ultimately compelling him to knock at the door of this Court. It may be mentioned in passing that the petitioner joined service on September 1, 1928 and admittedly he has retired on superannuation on January 10, 1967. He is entitled to pension under the Bihar Pension Rules, 1950. The dispute is whether the petitioner is a member of the Bihar Education Service and what ought to be the method of computation of his pension ? on the first point, the matter is no more res integra because the Constitution Bench held that a reference to r. S of the Pension Rules shows that the officers mentioned therein are entitled to pension. It was further held that there is no controversy that the petitioner is an officer in the Education Department of the Bihar Education Service, and this department is shown at item No. 3 of the Schedule to r. section Therefore, the controversy is concluded by decision between the parties that the petitioner is a member of Bihar Education Service and that under r. 5 of the Pension Rules, he is entitled to pension. After the mandamus was issued by this Court, the petitioner approached amongst others the then Chief Minister of Bihar late Shri Kedar Pandey for implementing and giving effect to the mandamus, issued by the Supreme Court. The Chief Minister directed that even though more than two years have elapsed since the issuance of the mandamus of the Chief Minister himself directed ten months prior to June 25, 1973 for payment of the claim of the petitioner as soon as possible and had insisted upon a weekly progress report on the processing of the file to be submitted to him, yet even the Chief Minister recorded his helplessness that he neither received the weekly report nor the mandamus has been implemented nor even the file was submitted to the Chief Minister for his perusal. If this be plight of the Chief Minister of a popularly elected government what to talk of the lesser fly and what tears can be shed for a man in position of the petitioner who having rendered service for nearly 40 years was chasing the mirage for a paltry pension. The Chief Minister apprehended that it is quite likely that not only the officers responsible for this mess but even the State Government may be called upon by the Supreme Court to explain the disregard of the mandamus. He then made a peremptory order that the file be submitted to him for order. 924 Nothing moved as is the sad experience that nothing moves A unless like the law of inertia some outside force acts upon it and puts the file in motion. What that outside force is we need not dilate. Ultimately, the file reached the Chief Minister in 1974 on being called by him. There is the long preamble setting out the history of litigation, the injustice done to the petitioner, the utter lethargy and aptly of the officers concerned and then the Chief Minister proceeded to dispose of the claim of the petitioner consistent with the mandamus issued by this Court. The material portion which would help us in disposing of the present petition recites that the petitioner shall be treated in Class II posts of Bihar Education Service since his promotion and since 1.1.1952 he should be deemed to belong to Class I post of Selection Grade according to his seniority or from the date of direct appointment which derived the petitioner of equal opportunity, he was fully entitled to. But the note is overgrowing with the courtesy of the Chief Minister in that he proceeded to request the Education Minister that for the ends of justice, a phraseology to which the courts are accustomed, the petitioner should be paid off his claim within a month for which any senior officer of the Education Department he made responsible. Undue delay has been made in the implementation of the direction of the Hon 'ble Supreme Court and I would never like that Shri prasad be compelled again to go to Court. ' What a wishful thinking. In that Mr. Prasad has been forced to come back to this Court and since then the then Chief Minister has left this world. The resume the narration, petitioner received a letter dated February 6, 1976 3 years after the direction given by the Chief Minister that his pension case has been finalised and pension payment order of Rs. 156.55 p.m. and gratuity payment order of Rs. 5,850 are under issue. It would appear at a glance that officers dealing with the pension case appears to have scant regard for the decision of the Supreme Court in that both the promotion to Class II and further promotion to Class I from deemed dates were ignored and pension was computed on the basis as if petitioner retired in Class III. All the representation of the petitioner thereafter failed to evoke both a sympathetic response and a just decision and therefore the petitioner is back to square one. The respondent State and all its officers are bound to compute pension of the petitioner not only on the footing that he is a member 925 Of the Bihar Education Service but also on the footing that he was promoted to Class II by the date mentioned in the earlier judgment A and from 1.1.1952 to Class I as rightly held by the Chief Minister. Nothing was pointed out to us by Mr. Goburdhan to hold to the contrary nor can the State be permitted to play ducks and drakes with a solemn decision of the Constitution Bench of this Court. To give effect to the mandamus of this Court, the respondent State shall proceed to compute the salary payable to the petitioner from the date he was promoted, to Class II Service and on the assumption that he was functioning in Class II in the salary scale then admissible to him equivalent to Class II Grade in Bihar Education Service. This must commence from the date from which he was promoted as set out in the earlier judgment as Deputy Inspector of Schools at Seraikela. In computing the salary for the purpose of computation Class II salary scale then prevalent for the post shall be taken up and the petitioner is deemed to have been put in that scale. Yearly increments are added till 1.1.1952 when he must be deemed to have been promoted as admitted by the Chief Minister to Class I post in Bihar Education Service. Same process is to be repeated by the respondent State in that the then prevalent Class I scale must be held admissible to the petitioner from January 1, 1952. He must be 15 deemed to have been put in the scale and his annual increments to be worked out. If in the process he is entitled to Selection Grade, the same must be worked out and this computation must be brought down to 10.1.1967 when the petitioner retired on superannuation from service. On this computation of salary his pension shall be computed under the relevant rules of the Bihar Pension Rules as liberalised from time to time till 1967 and his pension must be determined as on 10.1.1967 on the aforementioned computation chart. The State and the subordinate officers responsible for this work are directed by a writ of mandamus to complete this computation by July 31, 1983 and by that date pension payment order correct and consistent with the direction herein given shall be issued without fail to the petitioner. The State is also directed by a mandamus of this Court to pay the arrears of pension on the afore mentioned computation within the same period with interest at 6% from 10.1.67. As the officers of the State have harassed the petitioner which we 926 feel is intentional, deliberate and motivated, therefore, we are constrained to award exemplary costs quantified at Rs. 25,000 to be paid to the petitioner before July 31, 1983. We propose to leave no one in doubt that the slightest failure or deviation in the time schedule in carrying out this mandamus will be unquestionably visited with contempt action. H.L.C. Petition allowed.

In Deokinandan Prasad vs State of Bihar & Ors., [1971] Supp. S.C.R. 634 decided on May 4,1971 the Court had, after coming to the conclusion that the petitioner herein was a member of the Bihar Education Service entitled to pension under r. 5 of the Bihar Pension Rules, issued a writ of mandamus directing the State Government to consider the claim of the petitioner for payment of pension according to law. Inspite of the petitioner having approached the Chief Minister for implementation of the mandamus it was not until 1974 that the concerned file reached the Chief Minister and orders were passed by him that the petitioner should be deemed to belong to Class I post of Selection Grade from January 1, 1952 and that his claims should be settled within a month. Three years after this direction of the Chief Minister the petitioner received intimation that his pension had been computed on the basis that he had retired from Class III service. Further representations having failed to evoke any response from the State Government, the petitioner approached the Court once again. Allowing the petition ^ HELD: The respondent State and all its officers are bound to compute pension of the petitioner not only on the footing that he is a member of the Bihar Education Service but also on the footing he was promoted to Class II by the date mentioned in the earlier judgment and from January 1, 1952 to Class I as rightly held by the Chief Minister. Officers dealing with the pension case of the petitioner appear to have scant regard for the decision of tho Supreme Court in that both the promotion to Class II and further promotion to Class I from deemed dates were ignored and pension was computed on the basis that the petitioner retired from Class III service. The State cannot be permitted to play ducks and drakes with a solemn decision of this Court. The State and the subordinate officers responsible for computation of pension of the petitioner are directed to complete this computation by July 31, 1983 and by that date pension payment order correct and consistent with the direction herein given shall be issued without fail. The State is also directed to pay the arrears of pension on the aforesaid computation within the same period with interest at 6 per Cent from January 10, 1967. As the officers of the State have harassed the petitioner which is intentional, deliberate and motivated, exemplary costs quantified at Rs. 25,000 shall be paid. to the petitioner before July 922 31,1983. The slightest failure or deviation from the time schedule in carrying A out this mandamus will be unquestionably visited with contempt action. [924 H: 925 A: 925 C H: 926 A:]

Civil Appeal No. 1825 of 1970. From the Judgment an order dated the 28th August, 1969 of the Rajasthan High Court in D. B. Civil Writ No. 365 of 1962. S.N. Kacker, K. K. Jain, P. Dayal & section K. Gupta for the Appellant. Badri Das Sharma for the Respondent. The Judgment of the Court was delivered by MISRA, J. The present appeal by certificate granted under Article 133 (1) (a) of the Constitution is directed against the judgment of the High Court of Rajasthan dated 28th of August, 1969 dismissing writ petition No. 365 of 1962. Thakur Sangram Singh, the father of the appellant was a jagirdar of Thikana Diggi in the erstwhile State of Jaipur. His jagir was resumed on Ist of July, 1954 under section 21 of the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952, hereinafter referred to as 'the Jagirs Act, 1952 '. The Jagirdar became entitled to compensation on the date of resumption of his jagir under section 26 of the Jagirs Act. The compensation was to be determined according to the principles laid down in the second schedule attached to that Act. He filed his claim for compensation in August, 1954. He claimed compensation on the basis of rent rates which were in force on the date of resumption. It appears that settlement operations were going on under the Jaipur State Grants Land Tenures Act, 1947. The rent rates proposed by the Settlement Officer were published in the Rajasthan Gazette dated 23rd of August, 1952. The final proposals of the Settlement Officer were sanctioned by the Government on 25th of November, 1953. The rent rates fixed were made applicable with effect from 1st of July, 1953. Obviously, therefore, on the date of resumption, namely, Ist of July, 1954, rent rates assessed by the Settlement Officer and approved by the Government on 25th November, 1953 were in force. Sangram Singh, however, challenged the validity of the rent rates fixed under the settlement by means of writ petition No. 308 of 477 1953, which was allowed by the High Court on 23rd of November, 1954, quashing the rent rates as they were in flagrant violation of section 82 (1) (a) and (b) of the Jaipur State Grants Land Tenures Act, 1947. The High Court gave a direction for fresh rates to be proposed in accordance with the said provisions. Pursuant to the order of the High Court dated 23rd November, 1954 the rent rates were revised and fresh rent rates were fixed by the Settlement Officer on 6th of June, 1955 and they were applied retrospectively from 1st of July, 1953. The revised rent rates were substantially lower than the rent rates assessed in 1953. According to the rent rates of 1953 the total rental income from the jagir was Rs.131,657.48 while according to the revised rent rates the rental income was reduced to Rs. 82,501.50. The jagirder again filed a writ petition No. 135 of 1955 for a direction to the State Government not to apply the rent rates assessed in 1955 retrospectively with effect from 1st of July, 1953. The High Court, however, held that it was open to the Settlement Officer to apply rent rates retrospectively under section 86 of the Jaipur State Grants Land Tenures Act, 1947. But the High Court specifically left open the question whether or not the rent rates assessed in 1955 and applied retrospectively from 1st July, 1953 could form the basis for determining compensation payable to the jagirdar under the Act. When the jagirdar filed his claim for compensation in August, 1954 his writ petition challenging the rent rates enforced by the Government order dated 25th of November, 1953 was pending. The jagirdar, therefore, based his claim for compensation alternatively under sections 6 and 7 respectively of the Jagirs Act. As pointed out earlier, on the basis of the settlement of 1953 the rental income from the jagir came to Rs. 1,31,657.48. If on the other hand the jagir was taken to be unsettled, he was entitled to compensation on the basis of actual rental income for three years which came to about Rs. 3 lakhs. The Jagir Commissioner by his order dated 25th of November, 1960 granted compensation on the basis of rent rates assessed in 1955. The jagirdar preferred an appeal before the Board of Revenue but the same was dismissed. Sangram Singh died in December 1961 and the order of the Board of Revenue was challenged by his son the petitioner appellant in the High Court of Rajasthan. Two alternative contentions were 478 raised before the High Court on behalf of the petitioner: (1) that the compensation should have been assessed on the basis of rent rates determined in 1953 as they were the rent rates assessed on the jagir lands as entered in the revenue records of the village within the meaning of section 6 (3) (a) (i) read with the definition of 'settled village ' contained in section 2 (n) as it stood on the date of resumption; (2) that in the absence of a valid settlement on the date of resumption the jagir should be treated as not being a 'settled village ' and compensation should be assessed on the actual income from rents during the three agricultural years; 1949 50, 1950 51 and 1951 52, as provided in section 7 of the Act. The High Court declined to accept either of the contentions. The first contention was rejected by the High Court on the ground that the petitioner was estopped from taking up the position by his own conduct inasmuch as his father had challenged the rent rates assessed in 1953 by means of a writ petition which was allowed and the rent rates assessed in 1953 were quashed, and secondly because the rent rates assessed in 1953 were a nullity and in the eyes of law there were no valid rent rates assessed and entered in the revenue records on the basis of which compensation could have been determined. The second contention was also negatived on the ground that fresh rent rates in accordance with the directions of the High Court were assessed in 1955 and were applied retrospectively with effect from 1st July, 1953 and, therefore, the jagir could not be taken to be an unsettled village. The petitioner has now come to challenge the order of the High Court by the present appeal. It may be pointed out that if the jagir was a settled one the compensation would be assessed on the basis of the rent rates as settled in settlement operations, which were prevalent on the date of resumption and as entered in the revenue records of the village within the meaning of section 6 (3) (a) (i) read with the definition of 'settled village ' contained in section 2 (n). If on the other hand, the jagir was an unsettled one the compensation would have to be assessed on the actual income from the rents during the three agricultural years: 1949 50, 1950 51 and 1951 52 as provided in section 7 of the Act. Shri S.N. Kacker has contended on behalf of the appellant that the rent rates settled in 1953 having been quashed by the High 479 Court, the jagir would be deemed to be an unsettled village and, therefore, the compensation should be determined in accordance with the provisions of section 7 of the Act and not in accordance with the rent rates determined in 1953. From the observations made by the High Court itself it is evident that the rent rates notified in 1953 were quashed as invalid. After the quashing of rent rates determined in 1953 it can by no stretch of imagination be said that the settlement made in 1953 still stood for the purpose of determining the compensation for the jagir in question. Shri Badri Das Sharma appearing for the State on the other hand has contended that it is true that the determination of rent rates in 1953 had been quashed, but the High Court had directed re determination of the rent rates in accordance with the provisions of section 82 and, therefore, the direction of the High Court was for rectifying the mistake that had cropped in the determination of the rent rates of 1953 and if this be so, the rent rates determined in 1953 were still there and the compensation could be determined on that basis. Having given our anxious consideration to the contentions raised on behalf of the parties we are of the positive view that after the quashing of the settlement made in 1953 it cannot be said that the settlement of the jagir still existed. It is to be noted at this stage that the settlement of 1953 was quashed by the High Court on the ground that the procedure laid down in the statute had not been followed. The quashing of such an order only means tabula rasa (clean slate) as if there was no determination of rent rates in 1953. In this view of the matter the jagir would be taken to be an unsettled village on the date of resumption. Shri Badri Das Sharma, however, contended that pursuant to the direction of the High Court in Writ No. 308 of 1953 fresh rent rates were assessed in 1955 which were made applicable with retrospective effect from 1st of July, 1953 and that, therefore, the rent rates assessed in 1955 will be taken to be the rent rates prevalent on the date of resumption and as such the Board of Revenue as well as the High Court were fully justified in taking the view that compensation was to be determined on the basis of the rent rates assessed in 1955. In support of his contention Shri Sharma referred to the definition of the 'settled village ' in section 2 (n), which reads: 480 "(n) 'Settled ' when used with reference to a village or any other area, means the village or other area to which the rent rates determined during settlement operations have been made applicable whether prospectively or retrospectively, and the whole of such village or other area shall be deemed, for the purposes of this Act and the rules and orders made thereunder, to be so settled if such rates have been made so applicable to not less than three fourths of such village or other area. " On the strength of this definition it is sought to be contended that the jagir in question would be deemed to be a settled village as it is open to the authorities to apply the settlement either prospectively or retrospectively, and it was made applicable by the Settlement Officer retrospectively. We are afraid, the argument cannot be accepted. The criterion to determine whether a particular jagir is a settled one or not is to see whether the rent rates determined in settlement operations have been made applicable. It is only from the date of effectuation of a valid settlement of rent rates in respect of a particular jagir which makes the jagir a settled one. Reliance was also placed on section 86 of the Jaipur State Grants Land Tenures Act, 1947, which runs thus: "86. Any rent fixed by order of the Settlement Officer under this Act shall be payable from the first day of July next following the date of such order, unless the Settlement Officer thinks fit, for any reason to direct that it shall be payable from some earlier date. " A plain reading of this section indicates that the rent fixed by the Settlement Officer shall normally be payable from 1st of July next following the date of such order. The section, however, further authorises the Settlement Officer to direct that the same shall be payable from some earlier date. The realisation of rent from a retrospective date will not make the jagir in question a settled one as from that date. The settlement of rent rates is one thing and the realisation of rent on the basis of the settlement is quite another. In case of a settled village the compensation would be determined on the basis of the rent rates settled during a settlement operation recorded in the revenue papers on the date of resumption. Thus, it is the applicability of the rent rates determined during a settlement made prior to the date of resumption which would make the village a settled village as on that date. 481 There is yet another aspect from which the matter can be looked into. The jagirdar became entitled to compensation on the date of resumption and, therefore, we have to examine the position as it stood on the date of resumption. If the village was an unsettled village on the date of resumption he would be entitled to compensation on the basis of the village being unsettled. The right of compensation vested in the jagirdar on the date of resumption and he could not be deprived of his right by a subsequent amendment unless the amendment in law specifically or by necessary implication provided or depriving the jagirdar of his vested right. We do not find anything in the definition of the term 'settled ' under section 2 (n) of the Act or in section 86 of the Jaipur State Grants Land Tenures Act to indicate that the legislature intended to affect the vested right. In this view of the legal position, the jagir Commissioner was not justified in assessing the compensation on the basis of the assessment of rent rates in 1955. The only correct basis will be to treat the jagir in question as an unsettled one and determine the compensation in accordance with section 7 of the Act. In the result the appeal is allowed with costs. The orders of the High Court, the Board of Revenue and that of the Jagir Commissioner are set aside and the case is sent back to the Jagir Commissioner to determine the compensation afresh treating the jagir in question to be unsettled one and in accordance with the provisions of section 7 of the Act. The appellant will also be entitled to interest at the rate of ten per cent per annum on the amount of compensation so determined, from the date of resumption till the date of payment of the compensation. S.R. Appeal allowed.

Thakur Sangram Singh, the father of the appellant was a jagirdar of Thikana Diggi in the erstwhile State of Jaipur. His jagir was resumed on 1st of July, 1954 under section 21 of the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952 entitling him to compensation on the date of resumption of his jagir under section 26 of the Jagirs Act. The compensation was to be determined according to the principles laid down in the Second Schedule attached to the Act. If the jagir was a settled one the compensation would be assessed on the basis of the rent rates as settled in settlement operation which were prevalent on the date of resumption and as entered in the Revenue records of the village within the meaning of section 6(3) (a)(i) read with the definition of "settled village" contained in section 2(n). If on the other hand, the jagir was an unsettled one the compensation would have to be assessed on the actual income from the rents during the three agricultural years: 1949 50, 1950 51 and 1951 52 as provided in section 7 of the Act. Prior to the date of resumption settlement operation were going on under the Jaipur State Grants Land Tenures Act, 1947 in respect of the jagir. The rent rates proposed by the Settlement Officer were published in the Rajasthan Gazette dated 23rd of August, 1952. The rent rates fixed were made applicable with effect from Ist of July 1953 and, therefore, on the date of resumption, namely, on Ist July, 1955, rent rates assessed by the Settlement Officer and approved by the Government were in force, for the purpose of payment of compensation under the Jagirs Act. Sangram Singh challenged the validity of the rent rates fixed under the settlement operation by means of a writ petition No. 308 of 1953. The High Court quashed the order settling the rent rates being in flagrant violations of sec. 82 (1) (a) and (b) of the Jaipur State Grants Land Tenures Act, 1947 with a direction to settle fresh rent rates in accordance with the said provision. Pursuant to the order of the High Court fresh rent rates were settled by the Settlement Officer on 6th of June, 1955 with retrospective operation from Ist July, 1953. According to the new settlement the total rental income from the jagir was reduced from Rs. 1,31,657.48 to Rs. 82,501 50. 475 The Jagir Commissioner by his order dated 25th November, 1960 granted compensation on the basis of the rent rates assessed in 1955. The Jagirdar unsuccessfully preferred an appeal before the Board of Revenue. Sangram Singh died in the mean time so his son the appellant challenged the order of the Board of Revenue on two grounds: (1) that the compensation should have been assessed on the basis of rent rates determined in 1953 as it stood on the date of resumption. (2) or in the absence of a valid settlement on the basis of actual income from rents during the three agricultural years. Treating the Jagir as unsettled, the High Court rejected both the grounds. Hence the appeal by certificate under Article 133 (1) (a) of the Constitution. Allowing the appeal and remanding the case, the Court ^ HELD: 1. As a result of the quashing of the order of Settlement of rent rates of 1953 by the High Court, the jagir would be taken as an unsettled one on the date of resumption. The quashing of the order of Settlement only means tabula rasa (clean slate) as if there was no determination of rent rates in 1953. [479 E F] 2. The criterion to determine whether a particular jagir is a settled one or not is to see whether the rent rates determined in settlement operations have been made applicable. It is only from the date of effectuation of a valid settlement of rent rates in respect of a particular jagir which makes the jagir a settled one. [480 C D] 3. Section 86 of the Jaipur State Grants Land Tenures Act, 1947 clearly indicates that the rent fixed by the Settlement Officer shall normally be payable from the first of July next following the date of such order and further authorises the Settlement Officer to make the same shall be payable from some earlier date. The realisation of rent from a retrospective date will not make the jagir in question a settled one as from that date. The settlement of rent rates is one thing and the realisation of rent on the basis of the settlement is quite another. In the case of a settled village the compensation would be determined on the basis of the rent rates settled during the settlement operation recorded in the Revenue Papers on the date of resumption. Thus it is the effectuation of the rent rates determined during the settlement made prior to the date of resumption which would make the village a settled village as on that date. [480 F H] In the instant case, the jagirdar became entitled to compensation on the date of resumption. If the village was an unsettled village on the date of resumption he would be entitled to compensation on the basis of the village being unsettled. The right of compensation vested in the jagirdar on the date of resumption and he could not be deprived of his right by a subsequent amendment unless the amendment in law specifically or by necessary implication provided for depriving the jagirdar of his vested right. There is nothing in the definition of the term "settled" under sec 2 (n) of the Act or in sec. 86 of the Jaipur State Grants Land Tenures Act to indicate that the Legislature intended to affect the vested right. [481 A D]

Civil Appeal No. 2526 of 1972. Appeal from the Judgment and Order dated the 13th January, 1972 of the Calcutta High Court in Matter No. 326 of 1967. G. C. Sharma and section P. Nayar, for the Appellant. D. Pal, B. Sen, (Mrs.) Leila Seth, P. K. Pal, section R. Agarwala and Parveen Kumar for the Respondent. The Judgment of the Court was delivered by KHANNA, J. This appeal on certificate is against the Full Bench judgment of the Calcutta High Court whereby on petition under article 226 of the Constitution of India filed by the respondent that court by majority quashed notice under section 148 of the Income tax Act, 1961 (hereinafter referred to as the Act) issued by appeallant No. 2 (Income tax Officer E Ward, Hundi Circle, Calcutta) (hereinafter referred to 958 as the appellant) for the purpose of reopening assessment of the income of the respondent for the assessment year 1958 59. The respondent was assessed for the assessment year 1958 59 under section 23(3) of the Indian Income tax Act, 1922 on June 14, 1960. His total income was assessed to be Rs. 37,872. While making the assessment the Income tax Officer allowed deduction of a sum of Rs. 15,991 by way of expenses claimed by the respondent. The expenses included Rs. 10,494/4 As/3 Pies by way of interest. According to the respondent, he produced through his authorised representative all books of accounts, bank statements and other necessary documents in connection with the return. On March 14, 1967 the respondent received notice dated March 8, 1967 issued by the appellant under section 148 of the Act stating that the appellant had reason to believe that the respondent 's income which was chargeable to tax for the assessment year 1958 59 had escaped assessment within the meaning of section 147 of the Act and that the notice was being issued after obtaining the necessary satisfaction of the Commissioner of Income tax. The respondent was called upon to submit within 30 days from the date of the service of the notice a return in the prescribed form of his income for the assessment year 1958 59. On May 2, 1967 the respondent through his lawyer stated that there was no material on which the appellant had reason to believe that the respondent 's income had escaped assessment and, therefore, the condition precedent for the assumption of jurisdiction by the appellant had not been satisfied. The appellant was said to have no competence or jurisdiction to re open the assessment under section 147 of the Act on a mere change of opinion. The appellant was also called upon to furnish all the materials on which he had reason to believe that income had escaped assessment. As, according to the respondent, there was no satisfactory response from the appellant, he filed petition under article 226 of the Constitution for quashing the impugned notice. It was denied in the affidavit on behalf of the appellant that all materials relevant and necessary for the assessment of the respondent 's income for the assessment year 1958 59 had been produced before the Income tax Officer at the time of the original assessment. It was further stated: "Subsequent to the assessment for the assessment year 1958 59, it was discovered, inter alia, that some of the loans shown to have been taken and interests alleged to have been paid thereon by the petitioner during the relevant assessment year were not genuine. The Income tax Officer had reason to believe and bona fide believed that the said alleged loans and the interest alleged to have been paid thereon are not genuine. If necessary, I crave leave to produce before the hon 'ble Judge hearing the application, the relevant records on the basis of which the said Income tax Officer had reason to believe that the income of the petitioner escaped assessment as aforesaid at the hearing of the application. " During the pendency of the proceedings the High Court directed that a copy of the report made by the appellant to the Commissioner of 959 Income tax for obtaining latter 's sanction under section 147 be produced. The report was accordingly produced, and the same reads as under: "There are hundi loan credits in the name of Narayan singh Nandalal, D. K. Naraindas, Bhagwandas Srichand, etc., who are known name lenders, and also hundi loan credit in the name, Mohansingh Kanayalal, who has since confessed he was doing only name lending. In the original assessment these credits were not investigated in detail. As the information regarding the bogus nature of these credits is since known, action under section 147 (a) is called for to reopen the assessment and assess these credits as the undisclosed income of the assessee. The assessee is still claiming that the credits are genuine in the assessment proceedings for 1962 63. Commissioner 's sanction is solicited to reopen the assessment for 1958 59, under section 147(a). " All the three Judges who constituted the Full Bench found that the assessee was not being charged with omission to disclose all facts: he was charged for having made an untrue disclosure because the assessee had stated that he had received certain sums of money from certain persons as loans when, in fact, he had not received any sum at all from these persons. It was also stated by the assessee at the time of the original assessment that he had paid interest to certain persons when, in fact, he had not, if the information received later was true. The duty of the assessee, it was held, was not only to make a full disclosure of all material facts, his duty was also to make a true disclosure of facts and not to mislead the assessing officer by disclosing certain things which did not represent facts. The High Court accordingly held that once an assessee infringes this rule, any subsequent discovery of fact by the assessing officer which would raise a resonable belief in his mind that the assessee had not made a true and correct disclosure of the facts and had thereby been responsible for escapement of his income from assessment would attract section 147 of the Act. Two of the learned Judges, A. K. Mukherjea and section K. Mukherjea JJ., however, took the view that the conditions precedent for the exercise of jurisdiction by the Income tax Officer under section 147 of the Income tax Act were not fulfilled in the case as the report submitted by the Income tax Officer to the Commissioner for sanction under section 147(a) was defective. The defects in the report, in the opinion of the High Court, were the same as had been pointed out by this Court in the case of Chhugamal Rajpal vs section P. Chaliha.(1) The Commissioner, while according permission for taking action under section 147, it was observed, acted mechanically because the Commissioner had not expressly stated that he was satisfied that this was a fit case for the issue of notice under section 148. As against the majority, Sabyasachi Mukherji J. held that notice under section 148 of the Act was valid and did not suffer from any infirmity. It was 960 also observed that the Commissioner of Income tax had not acted improperly in giving sanction. In the result, by majority the High Court quashed the notice issued by the appellant to the respondent. In appeal before us Mr. Sharma on behalf of the appellants has assailed the judgment of the majority of the learned Judges in so far as they have held that the report submitted by the Income tax Officer to the Commissioner of Income tax for sanction was defective. As against that, Dr. Pal on behalf of the assessee respondent has canvassed for the correctness of the view taken by the majority regarding the defective nature of the report. Dr. Pal has in his own turn assailed the finding of all the three learned Judges of the High Court in so far as they have held that the assessee was being charged with omission to disclose true facts. Contention has also been advanced by Dr. Pal that the material on the basis of which the Income tax Officer initiated these proceedings for reopening the assessment did not have a rational connection with the formation of the belief that the assessee had not made a true disclosure of the facts at the time of the original assessment. Before dealing with the points of controversy, it would be useful to reproduce the relevant provisions of the Act. Sections 147 and 148 which deal with income escaping assessment and issue of notice where income has escaped assessment read as under: "147. Income escaping assessment. If (a) the Income tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income tax officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of section 148 to 153, assess or ressess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereinafter in sections 148 to 153 referred to as the relevant assessment year). Explanation 1. For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely: (a) where income chargeable to tax has been under assessed; or 961 (b) where such income has been assessed at too low a rate; or (c) where such income has been made the subject of excessive relief under this Act or under the Indian Income tax Act, 1922 (XI of 1922); or (d) where excessive loss or depreciation allowance has been computed. Explanation 2. Production before the Income tax Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Income tax Officer will not necessarily amount to disclosure within the meaning of this section. Issue of notice where income has escaped assessment. (1) Before making the assessment, reassessment or recomputation under section 147, the Income tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section. (2) The Income tax Officer shall, before issuing any notice under this section, record his reason for doing so. " Sub section (1) of section 149 prescribes the time limit for notice and reads as under: "(1) No notice under section 148 shall be issued" (a) in cases falling under clause (a) of section 147 (i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the case falls under sub clause (ii); (ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year; (b) in cases falling under clause (b) of section 147, at any time after the expiry of four years from the end of the relevant assessment year. " Section 151 pertains to the sanction for issue of notice and reads as under: "151. Sanction for issue of notice. (1) No notice shall be issued under section 148 after the expiry of eight years from the end of the relevant assessment year, unless the Board is satisfied on the reasons recorded by the Income tax Officer that it is a fit case for the issue of such notice. 962 (2) No notice shall be issued under section 148 after the expiry of four years from the end of the relevant assessment year, unless the Commissioner is satisfied on the reasons recorded by the Income tax Officer that it is a fit case for the issue of such notice. " The provisions of sections 147 to 153 of the Act correspond to those of section 34 of the Indian Income tax Act, 1922. There have been some points of departure from the old law, but it is not necessary for the purpose of the present case to refer to them. It would appear from the perusal of the provisions reproduced above that two conditions have to be satisfied before an Income tax Officer acquires jurisdiction to issue notice under section 148 in respect of an assessment beyond the period of four years but within a period of eight years from the end of the relevant year, viz., (1) the Income tax Officer must have reason to believe that income chargeable to tax has escaped assessment, and (2) he must have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee (a) to make a return under section 139 for the assessment year to the Income tax Officer, or (b) to disclose fully and truly material facts necessary for his assessment for that year. Both these conditions must co exist in order to confer jurisdiction on the Income tax Officer. It is also imperative for the Income tax Officer to record his reasons before initiating proceedings as required by section 148(2). Another requirement is that before notice is issued after the expiry of four years from the end of the relevant assessment years, the Commissioner should be satisfied on the reasons recorded by the Income tax Officer that it is a fit case for the issue of such notice. We may add that the duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the Income tax Officer of the account books or other evidence from which material evidence could with due diligence have been discovered by the Income tax Officer will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the Income tax Officer to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the Income tax Officer with regard to the inference which he should draw from the primary facts. If an Income tax Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. The grounds or reasons which lead to the formation of the belief contemplated by section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the court to investigate. The 963 sufficiency of grounds which induce the Income tax Officer to act is, therefore, not a justiciable issue. It is, of course, open to the assessee to contend that the Income tax Officer did not hold the belief that there had been such non disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of reasons for the belief. The expression "reason to believe" does not mean a purely subjective satisfaction on the part of the Income tax Officer. The reason must be held in good faith. It cannot be merely a pretence. It is open to the court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. To this limited extent, the action of the Income tax Officer in starting proceedings in respect of income escaping assessment is open to challenge in a court of law [see observations of this Court in the cases of Calcutta Discount Co. Ltd. vs Income tax Officer and section Narayanappa & Ors. vs Commissioner of Income tax while dealing with corresponding provisions of the Indian Income tax Act, 1922]. Keeping the above principles in view, we may now turn our attention to the facts of the present case. Two grounds were mentioned in the report made by the Income tax Officer for reopening the assessment of the assessee respondent with a view to show that his income had been under assessed because of his failure to disclose fully and truly material facts necessary for the assessment. One was that Mohansingh Kanayalal, who was shown to be one of the creditors of the assessee, had since confessed that he was doing only name lending. The other ground was that Narayansingh Nandalal, D. K. Naraindas, Bhagwandas Srichand, etc., whose names too were mentioned in the list of the creditors of the assessee, were known name lenders. So far as the second ground is concerned, neither the majority of the Judges of the High Court nor the learned Judge who was in the minority relied upon that ground. Regarding that ground, the learned Judge who was in the minority observed that no basis had been indicated as to how it became known that those creditors were known namelenders and when it was known. The majority while not relying upon that ground placed reliance upon the case of Chhugamal Rajpal (supra). In that case the Income tax Officer while submitting a report to the Commissioner of Income tax for obtaining his sanction with a view to issue notice under section 148 of the Act stated: "During the year the assessee has shown to have taken loans from various parties of Calcutta. From D.I. 's Inv. No. A/P/Misc. (5) D.I./63 64/5623 dated August 13, 1965, forwarded to this office under C.I.T., Bihar and Orissa, Patna 's letter No. Inv. (Inv.) 15/65 66/1953 2017 dated Patna September 24, 1965 it appears that these persons are name lenders and the transactions are bogus. Hence, proper investigation regarding these loans is necessary. The names of some of the persons from whom money is alleged to have been taken on loan on hundis are: 1. Seth Bhagwan Singh Sricharan 964 2. Lakha Singh Lal Singh 3. Radhakissen Shyam Sunder The amount of escapement involved amounts to Rs. 1,00,000. " In dealing with that report this Court observed: "From the report submitted by the Income tax Officer to the Commissioner, it is clear that he could not have had reasons to believe that by reason of the assessee 's omission to disclose fully and truly all material facts necessary for his assessment for the accounting year in question, income chargeable to tax has escaped assessment for that year, nor could it be said that he, as a consequence of information in his possession, had reasons to believe that the income chargeable to tax has escaped assessment for that year. We are not satisfied that the Income tax Officer had any material before him which could satisfy the requirements of either clause (a) or clause (b) of section 147. Therefore he could not have issued a notice under section 148". Reference to the names of Narayansingh Nandalal, D. K. Naraindas, Bhagwandas Srichand, etc., in the report of the Income tax Officer to the Commissioner of Income tax in the instant case does not stand on a better footing than the reference to the three names in the report made by the Income tax Officer in the case of Chuugamal Rajpal. We would, therefore, hold that the second ground mentioned by the Income tax Officer, i.e., reference to the names of Narayansingh Nandalal, D. K. Naraindas, Bhagwandas Srichand, etc., could not have led to the formation of the belief that the income of the respondent assessee chargeable to tax had escaped assessment for that year because of the failure or omission of the assessee to disclose fully and truly all material facts. All the three learned Judges of the High Court, in our opinion, were justified in excluding the second ground from consideration. We may now deal with the first ground mentioned in the report of the Income tax Officer to the Commissioner of Income tax. This ground relates to Mohansingh Kanayalal, against whose name there was an entry about the payment of Rs. 74 Annas 3 as interest in the books of the assessee, having made a confession that he was doing only name lending. There is nothing to show that the above confession related to a loan to the assessee and not to someone else, much less to the loan of Rs. 2,500 which was shown to have been advanced by that person to the assessee respondent. There is also no indication as to when that confession was made and whether it relates to the period from April 1, 1957 to March 31, 1958 which is the subject matter of the assessment sought to be reopened. The report was made on February 13, 1967. In the absence of the date of the alleged confession, it would not be unreasonable to assume that the confession was made a few weeks or months before the report. To infer from that confession that it relates to the period from April 1, 1957 to March 965 31, 1958 and that it pertains to the loan shown to have been advanced to the assessee, in our opinion, would be rather far fetched. As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The fact that the words "definite information" which were there in section 34 of the Act of 1922 at one time before its amendment in 1948 are not there in section 147 of the Act of 1961 would not lead to the conclusion that action cannot be taken for reopening assessment even if the information is wholly vague, indefinite, far fetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. The powers of the Income tax Officer to reopen assessment though wide are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income tax authorities after the assessment has been completed. The provisions of the Act in this respect depart from the normal rule that there should be, subject to right of appeal and revision, finality about orders made in judicial and quasi judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied. The live link or close nexus which should be there between the material before the Income tax Officer in the present case and the belief which he was to form regarding the escapement of the income of the assessee from assessment because of the latter 's failure or omission to disclose fully and truly all material facts was missing in the case. In any event, the link was too tenuous to provide a legally sound basis for reopening the assessment. The majority of the learned Judges in the High Court, in our opinion, were not in error in holding that the said material could not have led to the formation of the belief that the income of the assessee respondent had escaped assessment because of his failure or omission to disclose fully and truly all material facts. We would, therefore, uphold the view of the majority and dismiss the appeal with costs. P.B.R. Appeal dismissed.

In March 1967, after obtaining the satisfaction of the Commissioner the appellant issued a notice under section 148 of the Income Tax Act, 1961 stating that he had reason to believe that the respondent 's income chargeable to tax for the assessment year 1958 59 had escaped assessment. The respondent replied that the I.T.O. had no competence or jurisdiction to reopen the assessment under section 147 of the Act on a mere change of opinion. Since there was no reply from the appellant, the respondent moved the High Court for a writ. The High Court held that the conditions precedent for the exercise of jurisdiction by the Income Tax Officer were not fulfilled because the report submitted by the Income Tax Officer to the Commissioner under section 147(a) was defective. On appeal to this Court it was contended that the High Court was not right in holding that the Income Tax Officer 's report was defective. Dismissing the appeal, ^ HELD: The High Court was right in holding that the material before the Income Tax Officer could not have led to the formation of the belief that the income of the assessee had escaped assessment because of his failure or omission to disclose fully and truly all material facts. [965H] 1. (a) The two conditions required to be satisfied before the Income Tax Officer issued a notice under section 148 of the Income Tax Act are that he must have reason to believe (i) that the income chargeable to tax had escaped assessment and (ii) that such income had escaped assessment by reason of the omission or failure on the part of assessee, to disclose fully and truly material facts necessary for assessment for that year. Both these conditions must co exist in order to confer jurisdiction on the Income Tax Officer. Further the Income Tax Officer should record his reasons before initiating proceedings under section 148(2); before issuing the notice after the expiry of four years from the end of the relevant assessment year, the Commissioner should be satisfied on the reasons recorded by the Income Tax Officer that it was a fit case for the issue of such notice. [962C D] (b) The duty cast upon the assessee does not extend beyond making a true and full disclosure of the primary facts. It is then for the Income Tax Officer to draw the correct inference from the primary facts. Where his inference subsequently appears to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening the assessment. [962F G] (c) The grounds or reasons leading to the formation of the belief under section 147(a) must have a material bearing on the question of escapement of income. Once there exist reasonable grounds for the Income Tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. While the sufficiency of grounds which induce the Income Tax Officer to act is not justiciable, it is open to the assessee to contend that the Income Tax Officer did not hold the belief that there was such non disclosure. The expression "reason to believe" does not mean a purely subjective satisfaction on the part of the Income Tax Officer. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. [962H] 957 Chhugamal Rajpal vs section P. Chaliha , Calcutta Discount Co. Ltd. vs Income Tax Officer, 41 I.T.R. 191 and section Narayanappa & Ors. vs Commissioner of Income Tax followed. In the instant case the grounds given by the Income Tax Officer for reopening the assessment were (i) that the three persons whose names were mentioned in the list of creditors, were known name lenders and (ii) that another person shown as a creditor of the assessee had since confessed that he was doing only name lending. The first ground mentioned by the Income Tax Officer could not have led to the formation of the belief that the income of the respondent had escaped assessment for that year because of his failure or omission to disclose fully and truly all material facts. The High Court was justified in excluding that ground from consideration. [963D E] As regards the second ground there is nothing to show that the confession of another person related to a loan to the assessee and not to someone else. There is no indication as to when the confession was made and whether it related to the assessment year sought to be re opened. To infer from that confession that it related to the period of assessment and that it pertained to the loan shown to have been advanced to the assessee would be far fetched. [964G] 2(a). Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and the formation of his belief that there had been escapement of income of the assessee from assessment in the particular year. It is not any and every material, howsoever vague and indefinite or distant, remote and far fetched which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The fact that the words "definite information" in section 34 of 1922 Act before its amendment in 1948 do not find a place in section 147 would not lead to the conclusion that action could now be taken for reopening assessment even if the information was wholly vague, indefinite, far fetched and remote. [965B D] (b) The powers of the Income Tax Officer to reopen assessment, though wide, are not plenary. The words are "reason to believe" and not "reason to suspect". The provisions of the Act depart from the normal rule that there should be finality about orders made in judicial and quasi judicial proceedings. It is, therefore, essential that before such action is taken the requirement of the law should be satisfied. [965E F] In the instant case the live link or close nexus between the material before the Income Tax Officer and the belief which he was to form regarding the escapement of the income was missing or at any rate the link was too tenuous to provide a legally sound basis for reopening the assessment.

t Petition (Civil) Nos. 1239 of 1979, 974 of 1978 & 1756 of 86. (Under Article 32 of the Constitution of India.) P.Rama Reddy, R.K. Jain and R.P. Gupta for the Petitioners in W.P. No. 1239 of 1979 and W.P. No. 1756 of 1986. M.K. Ramamurthy, J. Ramamurthy and B. Parthasarathy for the Petitioner in W.P. No. 974 of 1978. G. Ramaswamy Additional Solicitor General, A.K. Ganguli, Miss A. Subhashini and K. Swamy for the Respondents in W.P. No.1239 of 1979. Miss A. Subhashini for the Respondents. The Judgment of the Court was delivered by DUTT, J. In these writ petitions, three categories of Staff Artists of Doordarshan under the Ministry of Information and Broadcasting, namely, Cameraman Grade II, Sound Recordist and Lighting Assistant/Lightman, have claimed that they should be declared as Government servants and should be given the same pay scales as given to their respective counterparts in the Film Division under the same Ministry. The Staff Artists were originally appointed on renewable contracts for 3 4 years ' duration, but that practice has since undergone a change and they are now appointed up to the age of 55 6O years on a time scale. They are, however, employed on contract basis till the age of 55 60 years, that is, the contract runs till the age of retirement as in regular Government service. In 1973, the Third Central Pay Commission considered the pay scales of the employees in the Film Division including those of the Staff Artists. The Commission, however, excluded the cases of Staff Artists from its consideration on the ground that they were not Government servants but contract employees. It may be stated at this stage that the emoluments that are paid to the Staff Artists are termed as `fees ' and the scales of pay are termed as 'Fee Scales ', the reason being that they are contract employees and not Government servants. PG NO 607 By an order dated March 9, 1977, the Government revised the Fee Scales of the Staff Artists in Doordarshan on the analogy of the recommendations of the Third Central Pay Commission made in respect of regular Government servants. The revised Fee Scales came into force with effect from January 1, 1973. It appears that up to the post of Cameraman Grade II in Doordarshan, the same scales of pay of equivalent posts in the Film Division as per the recommendation of the Third Pay Commission were given, but from the stage of Cameraman Grade II or Sound Recordist up to the post of Lighting Assistant/Lightman, the same pay scales of equivalent posts in the Film Division were not given. The pay scale of Cameraman under the Film Division is Rs.650 96O, while the pay scale of the equivalent post of Cameraman Grade II in Doordarshan was fixed at Rs.550 900. Similarly, the pay scale of Sound Recordist in Doordarshan was fixed at Rs.425 750 instead of Rs.550 900 as fixed in the case of the Sound Recordist in the Film Division. The pay scale of Lighting Assistant/Lightman was fixed at Rs.330 480, while the pay scale of equivalent post in the Film Division, namely, Assistant Cameraman, was fixed at Rs.425 750. It is the case of the petitioners that the nature of work performed by them is similar to that performed by their counterparts in the Film Division. The qualifications required for appointment to these categories of Staff Artists, are the same as required in the cases of their counterparts in the Film Division. In the circumstances, it is submitted by the petitioners that the said Government order dated March 9, 1977 is discriminatory and violative of Articles 14 and 16(1) of the Constitution. Accordingly, in these writ petition it has been prayed that the petitioners should be declared as Government servants and paid the same scales of pay as paid to their counterparts in the Film Division with effect from the respective dates of their appointments. The respondents have opposed the writ petitions by filling counter affidavits. It has been averred in the counter affidavits that the Staff Artists of Doordarshan are not Government servants, but they are engaged on contract basis. It is submitted that as they are not of the same class as of the employees in the Film Division, they are not entitled to the same scales of pay. With regard to the Sound Recordists, petitioners in Writ Petition (C) No. 974 of 1978, it is the case of the respondents that there is no such post in the Film Division as "Sound Recordist". It is averred that in the Film Division, there are three posts, namely, the Chief Sound Recordist, the Recordist and the Assistant Recordist. It is, accordingly, contended that in Doordarshan, the organisational structure is entirely different and consists of only one category of post, that is, the Sound Recordist. PG NO 608 The first question as to whether the Staff Artists of Doordarshan are Government servants or not, need not detain us long. It was already been noticed that although initially their appointments were made on contract basis, subsequently the Staff Artists were being appointed up to the age of 55 60 years on a time scale like a regular Government servant. Indeed, they possess all the criteria of a Government servant. The question once came up before us in Union of India vs M.A. Chowdhary, AlR , which was disposed of by the following order: "Shri A.K. Ganguli, learned counsel for the Union of India submits that article 311 of the Constitution is applicable to the Staff Artists of the All India Radio. We are of the view that the statement made on behalf of the Government represents the true legal position because the Staff Artists are holding civil posts under the Government. In view of the above statement, this appeal filed against the judgment of the High Court of Allahabad in Special Appeal No. 258 of 1974 which has also taken the view that article 311 is applicable to those Staff Artists has to be dismissed. This appeal is accordingly dismissed. No costs. " It will appear from the order extracted above that we took the view that the Staff Artists of All India Radio were holding civil posts under the Government. There is no distinction between the Staff Artists of All India Radio and those in the Doordarshan. Accordingly, we hold that having regard to the service conditions of the Staff Artists of Doordarshan and in view of the said decision, the Staff Artists of Doordarshan including the petitioners are Government servants. The contention of the respondents that the category of Staff Artists designated as `Sound Recordist ' has no counterpart in the Film Division is without any substance. It may be that in the Film Division, the designation is `Recordist ' and not `Sound Recordist ' but, in our opinion, it is quite immaterial. It is not the case of the respondents that the nature of duty of the Recordist in the Film Division is something else than that of the Sound Recordist in Doordarshan. Indeed, it is the case of the petitioners in Writ Petition (C) No. 974 of 1978, who are all Sound Recordists of Doordarshan, that they peform the same duties as performed by their counterparts in the Film Division, that is, the `Recordists ' or `Sound Recordists ' as PG NO 609 the case may be. At this stage, it is significant to notice that the last sentence of paragraph 6 of the Reply Affidavit of the respondents to the Rejoinder of the petitioners in Writ Petition (C) No. 974 of 1978, affirmed by Shri Sailendra Shankar, the Director General of Doordarshan, reads as follows: "I reiterate that the petitioners cannot be compared with the Sound Recordist of the Film Division, who are regular civil servants. " The above statement is an admission of the fact that there is the post of `Sound Recordist ' in the Film Division. It may be that really the designation in the Film Division is `Recordist ', but the use of the designation as `Sound Recordist ' in the statement extracted above suggests that the `Recordists ' in the Film Division and the `Sound Recordists ' in Doordarshan are counterparts of each other. The contention of the respondents is, accordingly, rejected. We have gone through the averments in the writ petitions and those made in the counter affidavits filed by the Director General of Doordarshan and we have no hesitation in holding that the petitioners perform the same duties as those performed by their counterparts in the Film Division. When two posts under two different wings of the same Ministry are not only identical, but also involve the performance of the same nature of duties, it will be unreasonable and unjust to discriminate between the two, in the matter of pay. One of the directive principles of State Policy, as embodied in clause (d) of Article 39 of the Constitution, is equal pay for equal work for both men and women. The provision of Article 39(d) has been relied upon by the petitioners. The Directive Principles contained in Part IV of the Constitution, though not enforceable by any court, are intended to be implemented by the State of its own accord so as to promote the welfare of the people. Indeed, Article 37 provides, inter alia, that it shall be the duty of the State to apply these principles in making laws. Even leaving out of our consideration Article 39(d), the principle of "equal pay for equal work", if not given effect to in the case of one set of Government servants holding same or similar posts, possessing same qualifications and doing the same kind of work, as another set of Government servants, it would be discriminatory and violative of Articles 14 and 16 of the Constitution. Such discrimination has been made in respect of the petitioners, who are the Staff Artists of Doordarshan, by not giving them the same scales of pay as provided to their counterparts in PG NO 610 the Film Division under the same Ministry of Information and Broadcasting. The petitioners are. therefore, entitled to the same scales of pay as their counterparts in the Film Division. But the question is as to from which date they will be entitled to the scales of pay as prescribed for their counterparts in the Film Division. The petitioners have claimed that such scales of pay should be admitted to them with effect from their respective dates of appointments. After having given a careful thought to this aspect, we are of the view that ends of justice will be met sufficiently, if such scales of pay are given to the petitioners with effect from the first day of the month of the year in which each writ petition was filed in this Court except that in the case of Writ Petition (C) No. l756 of 1986 such scales of pay shall be given to the petitioners with effect from December 1, 1983. In the circumstances, all these writ petitions are allowed. The Sound Recordists, who are the petitioners in Writ Petition (C) No. 974 of 1978, shall be given the pay scale of the Recordist/Sound Recordist in the Film Division i.e., Rs.550 900 with effect from January 1, 1978. The Cameramen Grade II, who are the petitioners in Writ Petition (C) No. 1239 of 1979, shall be given the pay scale of the Cameraman of the Film Division i.e., Rs.650 960 with effect from August 1, 1979. The Lighting Assistants/Lightmen, who are the petitioners in Writ Petition (C) No. 1756 of 1986, shall be given the scale of Pay of Assistant Cameraman in the Film Division i.e., Rs.425 700 with effect from December 1, 1983. The petitioners in all these writ petitions will also be entitled to the substituted scales of pay and consequential benefits. The respondents are directed to disburse to the petitioners the arrear amounts being the difference in the pay scales within four months from today. There will, however, be no order as to costs. P.S.S. Petitions allowed.

The Government by an order dated March 9,1979 revised the fee scales of certain categories of Staff Artists in Doordarshan with retrospective effect from January 1, 1973 on the analogy of the recommendations of the Third Pay Commission made in respect of regular Government servants but the categories of the petitioners were denied the benefit by giving them junior scales. In these writ petitions they assailed the said order as discriminatory and violative of articles 14 and 16(1) of the constitution. Their case is that the nature of work performed by them is similar to that performed by their counterparts in the Film Division and the qualifications required For appointment to these categories of Staff Artists are also the same as required in the cases of their counterparts in the Film Division. They, therefore, claimed that they should be declared Government servants and given the same pay scales as given to their respective counterparts in the Film Division of the same .Ministry of lnformation and Broadcasting with effect from the respective dates of their appointments. The petitioners ' claim was contested by the respondents by contending that the Staff Artists of Doordarshan were not Government servants but were engaged on contract basis, that they were not of the same class as the employees of the Film Division and that they were therefore not entitled to the same scales of pay. PG NO 604 PG NO 605 Allowing the writ petitions, HELD: 1. The Staff Artists of Doordarshan including the petitioners are Government servants. They possess all the criteria of a Government servant. They are holding civil posts under the Government. They are being appointed up to the age of 55 6O years on a time scale like a regular Government servant. Their contract runs till the age of retirement as in regular government service. 608E, B, 606F] Union oflndia vs M.A. Chowdhary, AIR 1987 SC l526, applied. 2.1 The petitioners perform the same duties as those performed by their counterparts in the Film Division, under the same Ministry of Information and Broadcasting. When two posts under two different wings of the same Ministry are not only identical, but also involve the performance of the same nature of duties, it would be unreasonable and unjust to discriminate between them in the matter of pay. [609D] 2.2 One of the Directive Principles of State Policy as embodied in clause (d) of article 39 of the Constitution is equal pay for equal work for both men and women. The Directive Principles contained in Part IV of the Constitution though not enforceable by any court, are intended to be implemented by the State of its own accord so as to promote the welfare of the people. Article 37 provides, inter alia, that it shall be the duty of the State to apply these principles in making law. [609E F] 2.3 The principle of "equal pay for equal work", if not given effect to in the case of one set of Government servants holding same or similar posts, possessing same qualifications and doing the same kind of work as another set of Government servants it would be discriminatory and violative of articles 14 and 16 of the Constitution.[609G] Such discrimination has been made in respect of the petitioners. They are, therefore, entitled to same scales of pay as their counterparts in the Film Division.[609H 6l0A] [The petitioners to be given the new scales of pay with effect from the first day of the month of the year in which each writ petition was filed, except the petitioners in writ Petition Civil No. 1756 of 1986 who are to be given such scales of pay With effect from December 1,1983. They would also be entitled to the substituted scales of pay and consequential benefits. The respondents to disburse to the petitioners the arrear amounts being the difference in the pay scales within four months.][610B C,E F] PG NO 606

Civil Appeal No. 2137 of 1984. From the Judgment and Order dated 24.2.83 of the Punjab and Haryana High Court in Civil Writ No.1086/83. WITH Writ Petition No. 11238 of 1983 Under Article 32 of the Constitution K.G. Bhagat, Additional Solicitor General and Vimal Dave for the appellant in CA. No. 2137/84. K.G. Bhagat, Additional Solicitor General and Ms. Asha Rani Jain for the petitioner in WP. N o. 11238/83. Prithvi Raj and R.C. Pathak for the respondents. The Judgment of the Court was delivered by 482 DESAI, J. Guru Nanak Khalsa High School ( ' School ' for short) an aided school and hence governed by The Punjab Aided Schools (Security of Service) Act, 1969 ( '1969 Act ' for short) in its application to the Union territory of Chandigarh dispensed with the service of the Headmaster of the School, appellant Shri Manmohan Singh Jaitla, and the drawing teacher Amir Singh claiming to exercise power under an agreement executed by each of them with the management of the school. Admittedly, the school receives 95% of its expenses as grant from the Government and for contribution 5% of the expenses claims thoroughly arbitrary powers to be presently pointed out which appears to be anachronistic. The action of the Managing Committee of the school in dispensing with the services of both the aforementioned persons is questioned in these two matters on more or less identical grounds and therefore they were heard together and are being disposed of by this judgment. In Re: C.A. No. 2137/84: Pursuant to an advertisement inviting application for the post of Headmaster of the School, appellant Shri Manmohan Singh Jaitla applied for the same. He was interviewed on March 28, 1976 and on the same day by the order of the same date, he was offered the post of Headmaster in the school in the prescribed scale with usual allowances sanctioned by the Education Department, Chandi garh Administration for grant in aid Schools. The order of appointment provided that the appointee will be on probation for a period of one year and that he will be required to enter into an agreement with the school. The appellant accepted the appointment order and joined service. As required by the regulations of the Education Department of Chandigarh Administration, his appointment was subject to confirmation by the Director of Public Instruction. The confirmation was granted as per the order dated August 11, 1976. By the resolution of the Managing Committee of the School dated June 2, 1977, the appellant was confirmed with effect from May 1, 1977 in post as the Headmaster. In token of the appreciation of the outstanding performance of the appellant as Headmaster in the field of academic work/co curricular activities and administration during the session 1980 81, he was awarded a certificate of honour by the Finance and Education Secretary, Union Territory of Chandigarh, on August 10, 1981. It appears that the term of the earlier Managing Committee expired and a new Managing Committee took over with effect from March 24,1982. On January 31,1983, the Education Managing Committee of ' the school informed the appellant that his 483 services were no longer required with effect from that very day i.e. January 1983 and in terms of Condition No. (iii) of the agreement entered into by him, he would cease to be in the employment of the school and was directed to hand over charge to Mrs. Gurcharan Kaur. The appellants application for relief to the Deputy Commissioner under sub sec. (2) of Sec. 3 of the 1969 Act was turned down. After an unsuccessful appeal to the Commissioner, the appellant approached the High Court of Punjab and Haryana at Chandigarh under article 227 of the Constitution. The High Court rejected the writ petition in limine but by a speaking order observing that as the school] cannot be said to be 'other authority ' under article 12 of the Constitution, it was not amenable to the writ , jurisdiction of the High Court. Hence this appeal by special leave. In Re W. P. No. 11238/83: Petitioner Amir Singh was appointed by the Managing Committee of the School on March 21, 1976 as a Drawing Teacher as per the appointment order No.1265 dated March 21, 1976. This appointment was made upon an application made by the petitioner and after he was interviewed by the concerned committee of the school. The appointment order spells out some of the conditions of appointment, one of them may be noticed. The appointee had to enter into an agreement with the management of the school. The petitioner was informed by a letter dated February 28, 1983 that as per the resolution adopted by the Managing Committee of the school, it was resolved to terminate the service of the petitioner as no longer required with effect from the fore noon of March 4, 1983 in terms of first part of clause (6) of the agreement entered into between the petitioner and the Management. The petitioner approached the Deputy Commissioner and the Commissioner without success. Thereupon he filed present petition under article 32 of the Constitution. It is not in dispute that the school is governed by the 1969 Act. It is an aided school receiving aid from the State Government to the tune of 95% of its expenses. 3 of the 1969 Act provides that no employee shall be dismissed or removed or reduced in rank except after an inquiry to be held in the manner prescribed therein. Sub sec. (2) provides that no order of dismissal or removal or reduction in rank of an employee shall take effect unless it has been confirmed by the Deputy Commissioner who may refuse to do so, if in his opinion, the provisions of sub sec. (1) have not been complied with. Sub sec. (5) permits an aggrieved person to prefer an appeal 484 against any decision or order of the Deputy Commissioner under the section within a period of thirty days to the Commissioner. Sub sec. (6) provides that the order of the Commissioner shall be Final and binding between the parties. The Deputy Commissioner and the Commissioner in terms held in both the cases that because of the terms of the agreement entered into by each of the teachers with the management of the school, it would not be open to them to go behind the order and to find out the true nature of the order. It was also submitted on behalf of the respondent that under the relevant regulations of the Education Department of the Chandigarh Administration every employee of an aided school has to enter into an agreement with the management of the school. Now if the management of the school intends to circumvent the mandatory provisions of Sec. 3 of the 1969 Act, it has merely to terminate the service by giving one month 's notice as provided in the agreement and the provisions controlling the arbitrary powers of the management to hire and fire can be rendered nugatory. The Deputy Commissioner cannot take an easy recourse becoming oblivious to his duties merely to pay lip sympathy to the order made by the management and decline even to examine the allegation of malafide as also the true nature and character of the impugned order. In the garb of enforcing a term of the agreement what was sought to be done in this case was to impose the penalty of removal. And there is sufficient material on record to show that the action was malafide. Turning to the case of Manmohan Singh Jaitla, the Headmaster, the facts herein above narrated would affirmatively show that he was fully qualified and that he was appointed after interview and selection. He was confirmed. He received a certificate of merit from the Chandigarh Administration. The moment the Managing Committee changed exposing the inter se squabbles amongst persons trying to usurp control of the management of the school, almost wholly financed by the public exchequer, to wreck vengeance against those who were appointed by the outgoing management which may have been defeated at the hustings, the agreement was invoked and the services terminated. Throwing out persons appointed by out going management is only one side of the coin. The moment the vacancy occurs, nepotism or corruption will have field day. Since the new management took, over quietly within a few months, service of the Headmaster was terminated on the ground that his service was no longer required. We repeatedly asked Mr. Prithvi Raj, 485 learned counsel for the respondent school management as to how it would run a school without a Headmaster. We naggingly persisted with the question as to why it became necessary, obviously in the middle of the term or session on January 31, 1983, to dispense with the service of a Head Master and a Drawing teacher on the ground that they were no longer required. We waited for the answer in vain. Obviously, there could be none and that provides proof, if any was needed, to expose the chink in the cupboard revealing the malafides of the newly elected Managing Committee. We cannot efface the feeling that ignoring the meritorious service for a period of seven years the service of the appellant was dispensed with for a reason wholly untenable but only because he was appointed by the outgoing Managing Committee ignoring that his appointment was confirmed by the competent authority of the Chandigarh Administration. Coupled with this is the fact that a charge sheet was served on the appellant on April 9, 1979 and a disciplinary enquiry was commenced by the school management. But the same was withdrawn and the power to terminate the service under the agreement was invoked and exercised. This gives a clear indication as to the punitive character of the order namely punishment for a possible misconduct and also colourable exercise of power by resorting to the agreement. Any agreement, not in consonance with the statutory provisions beneficial to a class in need of protection cannot be given effect to if it stands in derogation of the mandatory provisions of the statute. 3 makes it obligatory to hold a disciplinary enquiry before an employee of an aided school can be either dismissed, removed or reduced in rank. In order to circumvent this mandatory provision, a resort to the provisions of the agreement in the context of the fact that an enquiry was commenced and given up clearly indicates the true nature of the order as well as colourable exercise of power. And this was done by the new Managing Committee which appeared to be keen to dispense with the service of persons appointed by the outgoing Managing Committee . This smacks of malafide. For all these reasons the order of termination of service of the appellant is bad and ab initio void. The High Court declined to grant any relief on the ground that an aided school is not 'other authority ' under article 12 of the Constitution and is therefore not amenable to the writ jurisdiction of the High Court. The High Court clearly overlooked the point that Deputy Commissioner and Commissioner are statutory authorities operating under the 1969 Act. They are quasi judicial authorities and that was not disputed. Therefore, they will be comprehen 486 ded in the expression 'Tribunal ' as used in article 227 of the which confers power of superintendance over all courts and tribunals by the High Court throughout the territory in relation to which it exercises jurisdiction. Obviously, therefore, the decision of the statutory quasi judicial authorities which can be appropriately described as tribunal will be subject to judicial review namely a writ of certiorari by the High Court under article 227 of the Constitution. The decision questioned before the High Court was of the Deputy Commissioner and the Commissioner exercising powers under Sec. 3 of the 1969 Act. And these statutory authorities are certainly amenable to the writ jurisdiction of the High Court. The matter can be viewed from a slightly different angle as well. After the decision of the Constitution Bench of this Court in Ajay Hasia etc.v. Khalid Mujib Sehrvardi & Ors. etc (l) the aided school receiving 95% of expenses by way of grant from the public exchequer and whose employees have received the statutory protection under the 1969 Act and who is subject to the regulations made the Education Department of the Union Territory of Chandigarh as also the appointment of Head Master to be valid must be approved by the Director of public Instructions, would certainly be amenable to the writ jurisdiction of the High Court. The High Court unfortunately, did not even refer to the decision of the Constitution Bench in Ajay Hasia 's case rendered on November 13, 1980 while disposing of the writ petition in 1983. In Ajay Hasia 's case, Bhagwati, J. speaking for the Constitution Bench inter alia observed that 'the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character. ' Add to this the existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality Substituting the words 'public trust ' in place of the 'corporation ' and the reasons will mutatis mutandis apply to the school. Therefore, also the High Court was in error in holding that the third respondent school was not amenable to the writ jurisdiction of the High Court. It would thus appear that the order of termination of service is unsustainable for more than one reason and therefore, the order of termination of service No. 58/83/20 dated January 31,1983 is quashed and set aside and the appellant Manmohan Singh Jaitla is reinstated in service as the Headmaster of the school with continuity (1)[1981] 2 S.C.R. 79. 487 in service and full backwages. If under the orders of this Court A dated March 2, 1983, May 2, 1983 and subsequent orders, the appellant Headmaster is paid his monthly salary, credit shall be taken for the same. Amir Singh, the Drawing Teacher has met with the same fate. He was appointed pursuant to his application for a vacant post of a Drawing Teacher. Right from the inception, he was a confirmed hand in the sense that he was not put on probation. Suddenly, after the new Managing Committee got into saddle, his service was terminated with effect from March 4, 1983 on the ground that it was no longer required. No attempt was made before us to sustain the order on this untenable ground. Therefore, the only distinguishable feature of this case with the case of the Headmaster Manmohan singh Jaitla is that no charge sheet was served upon the petitioner teacher. Save and except this difference, all the reasons which weighed with us in quashing the order of termination of service of Headmaster Mr Jaitla would mutatis mutandis apply to the case of this Drawing Teacher. To restate these reasons would merely add to the length of this judgment. As a corollary, the rule will have to be made absolute after quashing and setting aside the order of termination of service dated February 28, 1983 and directing reinstatment of Drawing Teacher Amir Singh in service with continuity in service with full backwages. Accordingly, C. A. No. 2137/84 is allowed and the order terminating the service of Headmaster Manmohan Singh Jaitla is quashed and set aside as also the decisions of the Deputy Commissioner and the Commissioner and the Judgment of the High Court are quashed and set aside. The appellant Headmaster Shri Manmohan Singh Jaitla is reinstated in service with continuity in service and full backwages subject to the fact that if backwages have been paid under the orders of this Court, credit may be given for the same. Rule is made absolute in the writ petition filed by Drawing Teacher Amir Singh and the order terminating his service dated February 28, 1913 is quashed and set aside as also the orders of the Deputy Commissioner and Commissioner and he is reinstated in service with continuity in service with back wages. The respondent School management shall pay the costs to both the employees separately quantified in each case at Rs 1, 500. H.S.K. Petition and appeal allowed.

Section 3 of the Punjab Aided Schools (Security of Service) Act, 1969 ( '1969 Act ' for short) provides that no employee shall be dismissed or removed or reduced in rank except after an inquiry to be held in the manner prescribed therein. Sub sec. (2) provides that no order of dismissal or removal or reduction in rank of an employee shall take effect unless it has been confirmed by the Deputy Commissioner who may refuse to do so. if in his opinion, the provisions of sub sec. (I) have not been complied with. Sub sec. (S) permits an aggrieved person to prefer an appeal against any decision or order of the Deputy Commissioner under the section to the Commissioner. The appellant in the civil appeal was appointed as Headmaster of an aided school which received 95 percent of its expenses as grant from the Government. As required by the conditions of his appointment, the appellant entered into an agreement with the management of the school. The appellant 's appointment was confirmed by the concerned authority. The appellant was confirmed in his post as the Headmaster. The appellant was 480 awarded a certificate of honour by the Chandigarh administration in token of appreciation of the outstanding performance of the appellant. After the term of the Managing Committee which appointed the appellant expired and the new Managing Committee took over, the services of the appellant were terminated invoking the conditions of the agreement entered into by the appellant. The appellant 's appeal to the Deputy Commissioner and the Commissioner were turned down. The appellant 's writ petition was dismissed by the High Court in limine. The High Court observed that as the school cannot be said to be 'other authority ' under article 12 of the Constitution, it was not amenable to the writ jurisdiction of the High Court. Hence this appeal by Special Leave. The petitioner in the writ petition was appointed as a Drawing Teacher in 1976. As required by the conditions of his appointment the petitioner entered into an agreement with the management. In 1983 the petitioner 's services were terminated invoking the conditions of the agreement. The petitioner approached the Deputy Commissioner and the Commissioner without success. Thereupon he field the present writ petition under article 32 of the Constitution. Allowing both the appeal and the writ petition, ^ HELD: Any agreement not in consonance with the statutory provisions beneficial to a class in need of protection cannot be given effect to if it stands in derogation of the mandatory provisions of the statute. Section 3 of the 1969 Act makes it obligatory to hold a disciplinary inquiry before an employee of an aided school can be either dismissed removed or reduced in rank. In order to circumvent this mandatory provision, a resort to the provisions of the agreement in the context of the fact that an inquiry was commenced and given up clearly indicates the true nature of the order as well as colourable exercise of power. And this was done by the new Managing Committee which appeared to be keen to dispense with the service of persons appointed by the outgoing Managing Committee. This smacks of malafide. For these reasons the order of termination of service of the appellant is bad and ab initio void. [485E G] The High Court declined to grant any relief on the ground that an aided school is not 'other authority ' under Act. 12 of the Constitution and is therefore not amenable to the writ jurisdiction of the High Court. The High Court clearly overlooked the point that Deputy Commissioner and Commissioner are statutory authorities operating under the 969, Act. They are quasi judicial authorities and that was not disputed. Therefore, they will be comprehended in the expression 'Tribunal ' as used in article 227 of the Constitution which confers power of superintendence over all courts and tribunals by the High Court throughout the territory in relation to which it exercises jurisdiction. Obviously, therefore, the decision of the statutory quasi judicial authorities which can be appropriately described as tribunal will be subject to judicial review namely a writ of certiorari by the High Court under article 227 of the Constitution. The decision questioned before the High Court was of the Deputy Commissioner and the Commissioner exercising power under Sec. 3 of the 1969 Act. And these statutory 481 authorities are certainly amenable to the writ jurisdiction of the High Court. [485G H; 486A C] After the decision of the Constitution Bench of this Court in Ajay Hasia etc. vs Khalid Mujib Sehravardi and Ors. etc. the aided school receiving 95% of expenses by way of grant from the public exchequer and whose employees have received the statutory protection under the 1969 Act and who are subject to the relations made by the Education Department of the Union Territory of Chandigarh as also the appointment of Headmaster to be valid must be approved by the Director of Public Instructions , would certainly be amenable to the writ jurisdiction of the High Court. [486C D] Ajay Hasia etc. vs Khalid Mujib Sehravardi and Ors. etc. ; , , referred to. The Deputy Commissioner and the Commissioner in terms held in both the cases that because of the terms of the agreement entered into by each of the teachers with the management of the school, it would not be open to them to go behind the order and to find out the true nature of the order. Now if the management of the school intends to circumvent the mandatory provisions of Sec. 3 of the 1969 Act, it has merely to terminate the service by giving one month 's notice as provided in the agreement and the provisions controlling the arbitrary powers of the management to hire and fire can be rendered nugatory. The Deputy Commissioner cannot take an easy recourse becoming oblivious to his duties merely to pay lip sympathy to the order made by the management and decline even to examine the allegation of malafide as also the true nature and character of the impugned order. [484B D]

Civil Appeal No. 3191 of 1983. WITH S.L.P. (CIVIL) No. 4311 of 1983. From the Judgment and Order dated the 30th November, 1982 passed by the Govt. of India u/s.22 of the Monopolies & Restrictive Trade Practices Act, 1969 bearing No.2/18/80 M II. Anil B. Divan and B.V. Desai for the Appellant. B. V. Desai for the petitioner. P. R. Mridul, Ravindra Narain, D. N. Misra and Ashok Sagar for the respondent in C. A. No. 3191/83. M. L. Talukdar, C.V. Subba Rao and R. N. Poddar for the respondent. D.N. Misra and R. N. Poddar for the respondent in S.L.P. No.4311/83. 816 The Order of the Court was delivered by CHANDRACHUD, C. J. The order of the Government dated November 30, 1982 which is impugned in these proceeding leaves much to be desired. But we do not propose to admit the appeal since after hearing a longish argument from Shri Anil B. Divan on behalf of the appellant, we are satisfied on the material produced before us and on perusal of the counter affidavit of the Government that, there were good reasons for passing the impugned order. We must, however, impress upon the Government that while disposing of applications under Sections 21, 22 and 23 of the it must give good reasons in support of its order and not merely state its bald conclusion. The faith of the people in administrative tribunals can be sustained only if the tribunals act fairly and dispose of the matters before them by well considered orders. The relevant material must be made available to be objectors because with out it, they cannot possibly must the claim or contentions of the applicants under Sections 21, 22 and 23 of the MRTP Act. The refusal of the Government to furnish such material to the objectors can amount to a denial of a reasonable opportunity to the objectors to meet the applicant 's case. And denial of a reasonable opportunity to meet the other man 's case is denial of natural justice. On the question of the need to give reasons in support of the conclusions to which the Government has come, the authorities concerned may, with profit, see the Judgments of this Court in Union of India vs Mohan Lal Capoor & Ors., Siemens Engineering & Manufacturing Co. of India Limited vs Union of India & Ans. and Uma Charan vs State of Madhya Pradesh & Anr. With these observations we dismiss the special leave petition and the appeal. H.L.C. Petition dismissed.

HELD: The faith of the people in administrative tribunals can be sustained only if the tribunals act fairly and dispose of the matters before them by well considered orders. Refusal to furnish relevant materials to the objectors can amount to denial of reasonable opportunity and violation of natural justice. [816 C & E]

Appeals Nos. 484 to 489 of 1958. Appeals by special leave from the judgement and order dated August 6, 1954, of the U.P. Board of Revenue, Allahabad, in petitions Nos. 203 to 208 of 1947 48. G. C. Mathur, for the appellants. M. L.Agarwala, for the respondents (in. C. As. 484 &485 of 1958) and respondent No.3 (In C.A No. 488. of 1958). August 31. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J. These appeals, by special leave, against the orders of the Board of Revenue, Utter Pradesh, arise in the following circumstances : The appellants presented applications against each set of the respondents in these six appeals under s.175, U.P. Tenancy Act, 1939 U.P. XVII of 1939, hereinafter called the Act, for ejectment stating that they were the sir bolders of the land occupied by the respondents as non occupancy tenants and that the period of five years during which the respondents were entitled to retain possession under s.20 of the Act had expired. The respondents contested the notice of ejectment alleging that the land in suit was not air, that the appellants were not sir holders, that appellants paid local rate exceeding Rs. 25/ in the United Provinces, Agra and Oudh, and held more than 50 acres of sir land. They claimed to be hereditary tenants of the land in dispute, in accordance with sections 14, 15 and 16 of the Act. The paper were thereafter forwarded by the Tehsilder to the Assistant Collector in charge of the sub division, in accordance with the provisions of section 179 of the Act 907 The applications which were presented for the ejectment of the respondents were deemed to be plaints and the proceedings continued as suits, in view of sub section (2) of a. 179 of the Act. The Court called upon the appellants to file necessary extracts of papers and to join all tenants of air as parties. The sub Divisional Officer did not accept the contention of the respondents and decreed the suits on February 28, 1946, holding that the land in suit was air, that the appellants were air holders, that each of them did not pay a local rate exceeding Rs. 25/ either in 1938 or in 1940, that he did not hold more than fifty acres of air land or more than fifty acres of air and khudkasht land which had not been sublet in 1317 F., corresponding to the period from July 1, 1939 to June 30,1940. The respondents appealed against the decree to the Additional Commissioner, Benaras, and repeated their contentions which had not found favour in the Trial Court. They also contended that the appellants had not complied with the requirements of s, 19 of the Act as amended by the U.P. Tenancy (Amendment) Act, 1947 (U.P. X of 1947) which came in to force on June 14. 1947 after the appeals had been instituted. The Additional Commissioner confirmed the findings of the Sub Divisional Officer and further hold that there had been substantial compliance with the spiritof the law as laid down in the amended a. 19 of the Act. He accordingly dismissed the appeals. The respondents then instituted second appeals in the Board of Revenue. The Board of Revenue did not agree with the additional Commissioner about there having been sufficient compliance with the provisions of amended a. 19 of 908 the Act and of the rules framed thereunder. It therefore set aside the decree against the respondents and remanded the cases for fresh disposal in accordance with law and further directed the Trial Court to decide the further contention raised by the respondents before the Board to the effect that they had acquired adivasi rights in the land in suit after the coming into force of the U. P. Zamindari Abolition and Land Reforms Act, 1950 (U. P. 1 of 1951). It is against these orders of the Board of Revenue that these six appeals have been filed after obtaining special leave from this Court. It appears that there was no particular procedure laid down for the progress of the proceedings in the suit before the Sub Divisional Officer after the papers had been sent to him in accordance with the provisions of section 179 of the Act. The ordinary procedure for the conduct of suits was followed. The Sub Divisional Officer therefore called upon the appellants to file necessary extracts of documents. Naturally evidence had to be led, documentary or oral, to substantiate the allegations made by the parties and, especially by the appellants, who bad to prove their right to eject the respondents. They had to prove that the land in suit was sir and that they were sir holders. Section 6 of the Act defines `sir '. This section reads: "Sir" means (a) land which immediately before the commencement of this Act was air under the provisions of the Agra Tenancy Act, 1926, or the Oudh Rent Act, 1886: Provided that if at the commencement of this Act, the sir holder is assessed in the United Provinces to a local rate of more than 909 twenty five rupees, land which was sir, under the provisions of clause (d) or clause (e) of Section 4 of the Agra Tenancy Act, 1926, or of clause (c) or clause (d) of sub Section (17) of Section 3 of the Oudh Rent Act, 1886, ,shall on this Act coming into force cease to be sir unless it was (i)before the first day of July, 1938, received otherwise than in accordance with the provisions of Section 122 of the United Provinces Land Revenue Act, 1901, or (ii)before the commencement of this Act, received in accordance with the provisions of that section, in exchange for land which was sir under the provisions of clause (a) or clause (b) or clause (c) of Section 4 of the Agra Tenancy Act, 1926, or of clause (a) or clause (b) of sub Section (17) of Section 3 of the Oudh Rent Act, 1886. Provided further that the provisions of the first proviso shall apply to a sir holder who was not at the commencement of this Act assessed in the United Provinces to a local rate of more than twenty five rupees if be or his predecessor in interest was so assessed on the 30th June, 1938 unless the local rate assessed on him has been decreased by resettlement or by revision of settlement or unless since that day he obtained his sir rights by succession or survivorship Provided also that if the land to which the provisions of the first proviso apply was joint air of several air holders and all, such joint air holders are not air holders to whom such provisions apply, such land shall not 910 cease to be sir at the commencement of this Act, but shall remain sir until that portion of it which is the sir of those joint holders to whom such provisions apply is demarcated under the provisions of this Act; (b) land which was khudkasht and which is demarcated as sir under the provisions of this Act. Explanation If any portion of the land revenue assessed on the sir holder 's land has been remitted owing to a fall in the price of agricultural produce, the local rate payable by him shall, for the purposes of this section, be deemed to have been reduced in the same proportion. " It follows from these provisions that the appellants bad to establish the following facts : (i) The land in suit was `sir ' on January 1, 1940, when the Act came into force. (ii) Each sir holder was not assessed in the United Provinces to a local rate of more than Rs. 25/ . (iii) The sir holder or his predecessor in interest was not assessed to a local rate exceeding Rs. 25/ on June 30, 1938. The appellants proved these facts and the trial Court held that the land in suit did not cease to be 'sir '. Further, if the finding had been that the first proviso to section 6 applied, section 16 would have come into play and it would have been necessary for the Court to determine whether each of the sir holders possessed more than fifty acres of sir or of sir and khudkasht land which had not been let. On this point too, the finding of the Trial Court, however, is that each sir holder bad less than fifty acres of sir and khudkasht land. Section 19 of the Act, before its amendment, in 1947, provided that if a sir bolder could apply under the provisions of B. 15 or 16 of the Act, the 911 Court was to take action under those sections. The amended section also repeated these provisions in its sub section Its sub sections (1) and (2) were, however new and read as follows. "(1) In a suit or proceeding for the ejectment of a tenant of sir the sir holder shall before the first date fixed for recording evidence,furnish to the court such particulars as the Board may by rule made in this behalf prescribe for ascertaining ' (a) whether the sir holder is a person to whom the provisions of the first proviso to clause (a) of Section 6 apply; and (b) the total area and nature of the sir holder 's air and. khudkasht: Provided that if the sir holder satisfied the Court that he had sufficient cause for not filing the particulars before the date fixed, it way, subject to the payment of costs to the opposite party, extend the time. (2)If the. sir holder does not file the particulars mentioned in sub Section (1) within the time fixed thereunder, or deliberately furnishes inaccurate particulars, the Court shall dismiss the suit or proceeding, as the case may be, and shall declareare the tenant to be hereditary tenant. " It is tobe noticed I that sub section (1) requires a air holder tofurnish particulars prescribed by the Board and ' that the purpose of furnishing those particulars 'is to assist the Court in ascertaining whether the provisions of the first proviso to clause (a) of section 6 apply to the sir holder and what is the total area and nature of the sir holder 's sir and khudkasht. Section 19 ' therefore, did not bring 912 about any real change in the substantive law affecting the question whether certain land is `sir ' or not, according to the definition of 'sir ' in section 6 of the Act. After the amendment, a sir holder, in order to succeed in his suit, had to establish the same facts which he had to establish prior to the amendment, What proof he had to lead to support his case, he has to give even after the amendment. The only difference brought about by the amendment is in the procedural conduct of the suit and is that prior to the amendment the sir holder had simply to lead evidence to prove his case, without informing the Court before hand about the material on which he would rely to establish that the provisions of the proviso (a) of section 6 did not apply to him and in case they applied how effect would be given to the provisions of s 16. The amended Section made it incumbent on the sir bolder to furnish such information to the Court and thereby to the tenant before the parties proceeded to lead evidence. Such information has to be furnished according to sub section (1) of amended section 19, before the first date fixed for recording evidence. The time for furnishing such information can be extended under the proviso to that sub section. Great importance however, has been attached to the new provision as sub section (2) of amended s.19 provides that the consequences of not filing those particulars, or filing those particulars inaccurately, would be that the Court shall dismiss the suit or proceeding and also declare the tenant to be a hereditary tenant. Now, it is contended for the appellants, that the provisions of amended s.19 do not apply to the facts of this case as the amended section was enacted long after the first date of recording evidence and that therefore it could not have been possible for the appellant to furnish the necessary particulars in accordance with its provisions and that if its provisions apply to the facts of this case 913 the appellants have substantially complied with those provisions inasmuch as they had actually filed in Court documents which gave the necessary particulars required under rr. 239A and 239B made by the Boara of Revenue under s 19. The contention for the respondents is that amended section 19 is retrospective in view of the provisions of section 31 of the Amendment Act of 197 and that the appellants had not complied with requirements of section 19 (1) and rules framed thereunder. The aforesaid section 31 reads : "Disposal of pending suits and appeals (1)All proceedings, suits; appeals and revisions pending under the said Act on the date of the commencement of this Act and all appeals and revisions filed after that date against orders or decrees passed under that Act and all decrees and 'orders passed there under which have not been satisfied in full, shall be decided or executed, as the case may be, and where necessary such decrees and orders shall be amended, in accordance with the provisions of the said Act as amended by this Act: Provided firstly that if such a decree or order cannot be so amended, or the execution of or the appeal or revision from such an amended decree or order cannot be proceeded with, it shall be quashed. In such a case the aggrieved party shall, notwithstanding any law of limitation be entitled to claim, within six months from the date on which such decree or order is quashed such rights and remedies as he had on the date of the institution of the suit or proceedings in which such decree or order was passed, except in so far as such rights or remedies are, inconsistent with 914 the provisions of the said Act as amended by this Act: Provided secondly that the proceedings under Section 53 between a landlord and his tenant and all proceedings under section 54 shall be quashed: Provided thirdly that appeals and revisions arising out of the proceedings under Section 53 between a landholder and his tenant or out of those under section 54 shall be so decided as to place the parties in the same position in which th ey were immediately before the institution of such proceedings Provided fourthly that all suits, appeals and revisions pending under Section 180 of the said Act, on the date of the commencement of this Act for the ejectment of any person who was recorded as an occupant on or after the first day of January, 1938, in a record revised under Chapter IV of the United Provinces Land Revenue Act, 1901, or corrected by an officer specialty appointed for the correction of annual registers in any tract shall be dismissed, and all decrees and orders for the ejectment of such persons, which have not been satisfied in full on the date of the commencement of this Act shall be quashed . Provided fifthly that nothing in this subsection shall affect the forum of appeal or revision from a decree or order passed by a Civil Court under the said Act. (2)In counting the period of limitation in respect of an application for the execution of a decree or order which was passed under the said Act and the execution of which was 915 stayed pending the enactment of this Act, the period during which execution was so stayed shall be excluded. " In view of this section, the appeals which. were pending before the additional Commissioner when the amendment Act came into force bad to be decided in accordance with the provisions of the Act as amended. It has been stated above that no change in the substantive law affecting the rights of the parties has been brought about by the Amendment Act. The only provision which could affect the rights of the parties is contained in sub s.(2) of amended s.19 and provides the consequences of the failure of the sir holder to furnish the necessary particulars. It follows therefore that if the necessary particulars had been furnished in this case even prior to the Amendment Act coming into force, there could be no difficulty in deciding the appeals by the Additional Commissioner in accordance with the provisions of the Act as amended by the Amending Act. This is exactly what the Additional Commissioner did. He held that subs tantial compliance has been made with the provisions of the amended section and the rules framed thereunder. The Board of Revenue is itself of the opinion that if substantial compliance bad been made of those provisions that would have been sufficient. It however did riot agree with the Additional Commissioner 's view that the appellants had sufficiently complied with the provisions of amended s.19 aid the rules framed thereunder. We are of opinion that in this the Board of Revenue was wrong. Rules 239A and 239B framed by the Board are: "239A. In a suit or proceeding for the ejectment of a tenant of sir, the sir holder shall before the first date fixed for recording 916 evidence, furnish to the Court the following particulars: (1)The amount of local rate to which the sir holder was assessed on 1st January, 1940, in the United Provinces. (2) If the amount shown under the preceding subclause (1) is Rs. 25, or less, then (a) the amount of local rate to which the sir holder or his predecessor in interest was assessed on June 30, 1938. (b)Whether the local rate assessed on 30th June, 1938, was decreased before 1st January, 1940, as a result of resettlement or revision 'of settlement, and if so, the amount by which it was decreased; (c)Whether the sir holder obtained his sir rights by succession or survivorship between 30th June, 1938, and 1st January, 1940. (1)The area and khasra numbers of the plots, if any, held by him in severally or jointly with others, on 31st December, 1939, as sir in the United Provinces under the provisions of clause (d) or clause (e) of section 4 of the Agra Tenancy Act 1926, or of clause (c) or clause (d) of sub section (17) of section 3 of the Avadh Rent Act, 1886. (2) Such of the plots, if any shown under the preceding sub clause (1) along with their areas, as were received by him in exchange for the land which was his sir under the provi sions of clause (a) or clause (b) or 917 clause (c) of Section 4 of the Agra Tenancy Act, 1926, or clause (a) or clause (b) of, subsection (17) of the Avadh Rent Act, 1886 (a) before the first day of July 1938 otherwise than in accordance with the provisions of Section 122 of the United Provinces Land Revenue Act, 1901, or (b) before the first day of January, 1940, in accordance with the provisions of that section. (3) The area and: khasra numbers of the plots, if any, held by him in severally or jointly with others and khudkasht in the United Provinces, along with the period of cultivation and nature of khudkasht of each such plot. (4) The extent of his share in the joint air and khudkasht, if any shown under the preceding sub clauses (1) and (3). The particulars furnished in accordance with rule 239A shall be accompanied by the following documents: (1) If the local rate payable by the sir holder in the United Provinces is claimed to be Rs.25 or less, copies of the khewat khatas of 1345 Fasli and of 1347 Fasli, in which he was recorded as a co sharer; 918 (2) a certified copy of the khatauni khatas of his air and khudkasht; (3) a certified copy of the khewat to which such sir or khudkasht appertains, unless such copy is filed under sub rule (1); (4) a list giving the amount of local rate to which each co sharer of the sir holder in the joint sir and khudkasht, if any, is assessed; (5) in the case of sir or khudkasht of a joint Hindu family, a genealogical table and a list showing the share of each living member of the family having an interest in such sir or khudkasht and the share of local rate which each member would be liable to pay on ratable distribution. " The documents filed by the appellants in the Trial Court consisted of (1) khewats of the various villages for the years 1345, 1346 and 1347 Fasli, i.e. for the periods between July 1, 1937 to June 30, 1940 (2) khatauni jamabandis of the various villages for the years 1345 and 1347 Fasli, corresponding to July 1, 1937 to June 30, 1938 and July 1, 1939 to June 30, 1940, respectively; (3) (a) a statement showing the shares of the appellants as recorded in the khewats and khataunis of 1347 Fasli, this statement showed the total of the air area held by the appellants to be 152.33 acres, their khudkasht area to be 19.93 acres and the total of the local rate payable by them to be Rs. 75.5.11; (b) a statement showing the air, khudkasht and local rate of each plain in 1317 Fasli. This shows that none of them held sir or sir and khudkasht in excess of 50 919 acres, or was assessed to local rate exceeding Rs. 25/ (4) Copy of the pedigree. These documents clearly furnish the particulars required by the rules as the periods covered by these documents include June 30, 1938, December 31, 1939 and January 1, 1940. Rule 239AI required particulars regarding the amount of local rates on June 30, 1938 and January 1, 1940 and also about sir holders ' obtaining sir rights by succession or survivorship during the period. The particulars required under sub rules (3) and (4) of rule 239AII were available from these documents. Rule 239B required copies of the khewat khatas of 1345 Fasli and of 1347 Fasli; certified copies of khatauni khatas of sir and khudkasht; certified copies of the khewats to which that sir or khudkasht appertained; a list giving the amount of local rate to which each co sharer of the sir holder was assessed and a genealogical table in the case of sir or khudkasht of a joint Hindu family showing the share of each living member of the family. The only particulars which can possibly be not had directly from the documents on record are those required by sub rules (1) and (2) of rule 239AII. These require particulars about such sir which was the sir of the appellants under the provisions of cls. (d) and (e) of s.4 of the Agra Tenancy Act, 1926 i.e., land which became sir on account of the landlord 's cultivation at the commencement of that Act, i.e., on September 7, 1926, and had been recorded as khudkasht in the previous agricultural year, i.e, in 1333 Fasli, or land which became air on account of the landlord 's continuously cultivating it for a period of ten years subsequent to the enforcement of the Agra Tenancy Act. It is clear from the findings of the Trial Court that the land in suit had been sir from the time of 920 the settlement, presumably, the first settlement, which took place in the Nineties of the last Century. This seems to be based on the fact that khatauni jamabandhis of 1345 and 1347 Fasli did not record a period of cultivation against the sir entry, indicating thereby that the sir is not of the kind mentioned in cls. (d) and (e) of s.4 of the Agra Tenancy Act, 1926. The Trial Court could and did record findings on all the facts which had to be proved by the appellants to establish their case. The first Appellate Court confirmed them. The particulars required by sub section (1) of amended section 19 of the Act and the rules framed thereunder, were for the purpose of ascertaining those facts. In the circumstances it is reasonable to hold that there had been substantial compliance with the provisions of amended section 19 and the rules framed thereunder. The Board of Revenue was therefore in error in stating that the appellants had not given the amount of local rate to which they were assessed in U.P. on January 1, 1940, and that compliance did not appear to have been made of rule 239AII of the Revenue Court Manual and that there had not been sufficient compliance with the mandatory provisions of rules 239A and 239B. From the judgment of the Board it is clear that its attention was not drawn to the several relevant documents filed by the appellants in the trial Court. We have no doubt that if the Board had considered the said document it would not have held that section 19 had not been substantially complied with. We therefore hold that the Board of Revenue was in error in setting aside the decree of the Additional Commissioner and remanding the case for fresh trial on the ground that there had not been compliance with the provisions of amended section 19 of the Act and the rules framed thereunder. 921 We accordingly allow the appeals, set aside the order of the Board of Revenue and remand the cases to it for decision in accordance with law. We further direct it to decide itself the contention raised by the respondents about their having acquired adivasi rights under the U.P. Zamindari Abolition and Reforms Act. In case the Board takes the view that for deciding the said issue any finding of fact is necessary, it. may call for the said finding from the Trial Court and, on receiving it, proceed to deal with the appeals on the merits. In the circumstances of these cases, we direct that the parties on either side bear their own costs. Appeals allowed.

The appellants filed suit under the U.P Tenancy Act, 1939. for the ejectment of the respondents who were tenants of sir. The appellants filed the necessary extracts of papers in support of their case. The trial court decreed the suits 905 holding the land in suit was sir, that the appellants were sirholders, that each of them did not pay a local rate exceeding Rs 25, that he did not hold more then 50 acres of sir land or more than 50 acres of sir and khudkast land which had not been sublet and that the respondents had not become hereditary tenants. The respondents preferred appeals before the Commissioner. During the pendency of the appeals the U.P Tenancy (Amendment) Act.1947, amended s.19 of the Act Amended section 19 provided that in suits for ejectment of tenants of sir the sir holder shall, before the first day fixed for recording evidence, furnish such particulars as may be prescribed and further provided that for failure to file such particulars the suit shall be dismissed. Section 31 of the Amending Act provided that its provision shall apply to pending suits, appeals etc. The respondents contended that the appellants had failed to comply with the provisions of amended section 19 and that the suits should be dismissed. The Commissioner confirmed all the findings of the trial court and held that there had been sufficient compliance with the provisions of amended section 19 and according dismissed the appeals. The respondents preferred second appeals before the Board of Revenue. The Board held that the provisions of amended section 19 and of the rules framed thereunder had not been complied with and remanded the case to the trial court for compliance therewith and retrial. Held, that there had been sufficient compliance with the provisions of amended section 19 and the rules framed thereunder and that the Board was riot justified in remanding the cases for retrial. Section 19 did not bring about any real change in the substantive law affecting the question whether land was sir or not. Even after the amendment, a sir holder, in order to succeed in his suit, had to establish the same facts which he had to establish prior to the amendment. The only difference brought about by the amendment was in procedure and whereas prior to the amendment a sir holder could lead his evidence without informing the Court before hand about the material he would produce, after the amendment it was incumbent upon him to furnish such information to the Court before the date fixed for recording evidence, The necessary particulars had been furnished even prior to the amendment and the Commissioner could decide the appeals in accordance with the provisions of the Act as amended by the amending Act. The attention of the Board was not drawn to the relevant documents filed by the appellants and it erred in stating that there had been no substantial compliance with the provisions of amended section 19 and of the rules framed thereunder.

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

The assesses firm which was doing business in Bombay was served with a notice on January 21, 1953, by the Income tax Officer under section 11(1) of the Business Profits Tax Act, 1947, in respect of the chargeable accounting period from November 13, 1947, to October 31, 1948, calling upon it to submit its return. It filed the return under protest stating that the notice was barred under section 14 of the Act as it was served beyond the period of four 989 years. The question was whether in section 11 of the Act a limitation corresponding to the limitation contained in section 14 must be necessarily read and whether in a case where the profits were not brought to assessment because notice under section 11 was not issued in time, they must be deemed to have escaped assessment and action could only be taken under section 14 within the time specified therein : Held (per section K. Das and Kapur, JJ., Hidayatullah, J., dissenting), (1) that the words " profits escaping assessment " in section 14 of the Business Profits Tax Act, 1947, apply equally to cases where a notice was received by the assessee but `resulted in no assessment, under assessment or excessive relief, and to cases where due to any reason no notice was issued to the assessee and therefore there was no assessment of his income; (2)that sections 11 and 14 Of the Act have to be read together and that a notice under section 11 cannot be issued against an assessee beyond the period of four years indicated in section 14. Kamal Singh vs Commissioner of Income tax, [1959] Supp. 1 S.C.R. 10 and Mahayajadhiraj Sir Kameshwar Singh vs State Of Bihar, ; , relied on. Gokuldas Ratanji Mandavia vs Commissioner of Income tax, , distinguished. Per Hidayatullah, J. Section 11 of the Business Profits Tax Act, 1947, is confined to cases where there has been no prior assessment, while section 14 is applicable to cases where after an assessment there is discovery that profits have escaped assessment due to one reason or another. The use of the words " escaped assessment " in the context of the Act has reference only to those cases where profits of a business were brought to process once but for some reason some profits escaped assessment or were under assessed or received excessive relief. For the subsequent and re opened assessment there is a limit of four years, but for the assessment for the first time there is no limit.

ition Nos. 9222 to 9226 of 1981. (Under Article 32 of the Constitution of India). N.N. Keshwani, R.N. Keshwani and Raj Kumar Gupta for the Petitioners in W.P. Nos. 9222 25 of 1981. Petitioner in person (Inder Mohan Lal Tandon) in W.P. No. 9226 of 1981. V.C. Mahajan, G.L. Sanghi, C.V.S. Rao, Kitty Kumaraman glam, Randhir Jain and S.K. Bhattacharya for the Respond ents. The Judgment of the Court was delivered by SINGH, J. By means of these petitions under Article 32 of the Constitution the petitioners claim relief for quash ing Railway Board 's circular/letter No. E (NG) 1/69/PMI 180 dated 2nd July, 1970 and No. E (NG) I 80 SR6 39 dated 28th November, 1981. They further claim relief for the issue of writ in the nature of mandamus restraining the respondent, Railway Authorities, from altering or issuing seniority list in pursuance of the Railway Board 's circular dated 28th November, 1023 1981 and to maintain the previous seniority list issued in 1968 for the purpose of promotions, confirmation and further advancement. In the Indian Railways, initial recruitment of Train Examiners, used to be made in the entry Grade D in the pay scale of Rs. 100 185. Prior to 1st April, 1966 recruitment to Grade D of Train Examiners was made from two sources (1) by promotion of skilled artisans working in the lower grade, (2) by direct recruitment of apprentices having completed prescribed four years ' training. 50 per cent of the vacan cies were filled by apprentices while the remaining 50% of the vacancies used to be filled by promotion of skilled artisans. Promotion from entry Grade D was made to next higher Grade C of Train Examiners in the pay scale of Rs. 150 225 and later these grades were revised and the scale of D grade was raised to Rs. 180 240 and that of C Grade to Rs.205280. Promotion to Grade C used to be made on the basis of senioritycum suitability without any distinction of promotee or direct recruits. Because there was increase in the work load of Train Examiners the Railway Board took steps to re organise the cadre of Train Examiners. With that end in view, it issued a notification on 27.10.1965 which directed that vacancies in the entry grade of Train Examin ers in the scale of Rs. 120 140 should not be filled from apprentice Train Examiners upto 50 per cent as hitherto, but should exclusively be, filled by promotion of skilled arti sans. It further provided that vacancies in the next higher grade C (in the scale of Rs.205 280) should be filled from amongst the Train Examiners working in the grade of Rs. 180 240 to the extent of 20%. The remaining 80 per cent vacancies were to be filled by direct recruitment of appren tice Train Examiners who may have successfully completed prescribed training. Paragraph 2 of the notification provid ed .that the apprentice Train Examiners recruited on or from 1.4.1966 shall be given training for a period of 5 years and from the same date artisans recruited in the lower grade as apprentice Train Examiners shall be given 'in service ' training for a period of three years. The circular upgraded 50% of the existing posts of Train Examiners from Grade D to Grade C in the scale of Rs.205 280 which were earlier ear marked for Apprentice Train Examiners. The notification further directed that with effect from 1.4.1966 all the apprentice Train Examiners on successful completion of their training should be straightaway brought to the scale Rs.205 280 instead of being first absorbed in the scale of Rs. 180 240 as was being done prior to the issue of the notification. Apprentice Train Examiners who were undergoing training on the date of the issue of notification, were directed to be brought to the working posts before 1.4.1966 and they were allowed stipend in the scale of Rs. 180 240 during the period of their training 1024 and their period of training was increased from four years to five years. On the completion of the training they were straightaway posted in Grade C in the scale of Rs.205 280. Those apprentice Train Examiners who had already been or may be absorbed in the scale of Rs. 180 240 upto 31.3.1966 were directed to be accommodated first in the scale of Rs.205 280 in Grade C against the quota of 80% vacancies reserved for them, and they were not required to undergo selection before being absorbed in that grade. The effect of the Railway Board 's circular dated October 27, 1965 was that the existing apprentice Train Examiners who had already been absorbed in Grade D by March 31, 1966 were first accommodated in Grade C against 80% of the vacan cies reserved for them without undergoing any selection, while 20% of the vacancies reserved for the departmental Train Examiners, were to be filled by artisan promotees by selection and not on the basis of seniority cum suitability. Although apprentices as well as artisan promotees constitut ed one integrated class in Grade D but promotee artisans ,were treated differently for promotion to Grade C. Roshan Lal Tandon who was promoted from artisan class to Grade D, filed a writ petition in 'this Court challenging the validi ty of the notification dated 27 10 1965 on the ground that a part of the notification which gave favourable treatment to apprentice Train Examiners was violative of Articles 14 and 16 of the Constitution. In that writ petition a Consti tution Bench of this Court on August 14, 1967 in Roshan Lal Tandon vs Union of India, ; held that artisans and apprentices recruited from two sources to Grade D were integrated into one class and no discrimination could thereafter be made in favour of recruits from one source as against the recruits from the other source in the matter of promotion to Grade C. Apprentice Train Examiners who were recruited directly to Grade D as Train Examiners formed one common class with the skilled artisans who were promoted to Grade D as Train Examiners and thereafter no favoured treat ment could be given to the apprentice Train Examiners merely because they were directly recruited as Train Examiners, no discrimination could be made against the latter merely because they were promotees. The Court emphasised that once the direct recruits and promotees are absorbed into one cadre, they formed one class and they could not be discrimi nated for the purpose of further promotion to higher Grade C. On these findings the Court allowed the writ petition and issued a mandamus directing the Railway Board not to give effect to the impugned part of the circular which was as under: 1025 "The Apprentice T.X. Rs. who have already been or will be absorbed in scale Rs. 180 240 upto 31.3. 1966 should first be accommodated in scale Rs.205 280 against the quota of 80% vacancies reserved for them. Such staff should not be required to undergo a 'Selection ' before being absorbed in that grade. The upgraded vacancies in scale Rs.205 280 left over after earmarking those for the appren tices under training on 2.4.66 should be filled by promotion of T.X. Rs. in scale Rs. 180 240 on a selection basis. While computing the number of posts available for promotion of T.X. Rs. in scale of Rs. 180 240 the vacancies likely to occur during the period of appren ticeship of the apprentices under training as on 1.4.1966 should also be taken into account. In other words, it would be necessary to keep in reserve only the number of posts equal to the number of apprentices under training as on 1.4.1966, who cannot be absorbed in the antic ipated vacancies which will arise by the time they qualify. " The Railway Board with a view to implement the decision of this Court and to remove the anomaly which had been pointed out by this Court issued circular/letter No. N (NG) 65 PMI/86 dated 13.9.1968 annexures III to the affidavit filed on behalf of Respondent Railway Administration. Para graph 1 of the letter refers to this Court 's judgment in Roshan Lal Tandon 's case and also to that portion of the Railway Board 's circular dated October 27, 1965 which had been struck down by the Court and the interim orders issued by the Court restraining the Railway authorities from imple menting the Circular dated October 27, 1965 during the pendency of the writ petition. Paragraph 2 and 3 of the Circular dated September 13, 1968 stated that in view of the judgment of the Supreme Court the Board have decided that vacancies in the grade of Rs.205 280 (after taking into account the upgrading of 50 per cent of posts in the scale of Rs. 180 240 to 205 280 less the number of posts required for absorbing Apprentice Train Examiners undergoing the enhanced period of training of five years on April 1, 1966, should be filled by selection from amongst Train Examiners in the scale Rs. 180 240 as on March 31, 1966 irrespective of whether they were initially recruited as Apprentice Train Examiners or were promoted from lower grades. The Board desired that Railway Administrations should take immediate steps to ensure that proper selections are held for which all TXRs in scale of Rs. 180 240 are considered. It had come to Board 's notice that prior to the issue of the stay order, persons originally recruited as Apprentice Train Examiners who were in the 1026 scale of Rs. 180 240 have been promoted to the grade Rs.205 280 in pursuance of Board 's letter dated 27.10. The Board decided that in view of the Supreme Court 's judg ment, such promotions should be treated as null and void and the vacancies should be properly filled as mentioned in para 2 of the circular. The Railway Board issued another circular No. E.(NG)i/69/PMI180 dated 2nd July 1970 laying down procedure for filling of posts of Train Examiners and upgradation of posts. It directed that vacancies arising in Grade C after 1.4.1966 to the extent of 50% shall be maintained in that grade and the remaining 50% shall be down graded to the scale of Rs. 180 240 to be filled by promotion of skilled artisans. It further directed that 50% of the vacancies in Grade C should be filled by direct recruitment of apprentice Train Examiners with five years ' training to the extent of 80% thereof and the remaining 20% by promotees from Grade D as laid down in paragraph 1 of the Railway Board 's circular dated 27.10.1965. This procedure was directed to be followed till the cadre position was normalised ' and the excess in the Grade of Rs.205 280 were eliminated. Paragraph 2 of the circular further directed that those promoted to Grade C in the scale of Rs.205280 as on April 1, 1966 will be assigned seniority amongst themselves in the order of their inter se seniority in Grade of Rs. 180 240 for the purposes of con firmation in that grade and also for further advancement and they will rank senior to those recruited as apprentice Train Examiners with five years training and appointed after 1.4.1966 in the Grade of Rs. 205 280. The result of the circular was that all those promotees who had been appointed to Grade D prior to 1.4. 1966 stood absorbed in Grade C and they were granted seniority in that Grade with retrospective effect viz. with effect from April 1, 1966. Later the Railway Board took a policy decision to abol ish the entry Grade D of Train Examiners in the pay scale of Rs. 180 240, and in order to implement that decision it issued circular/letter No. PC 69 PS 5 TR 1, New Delhi dated 30th October, 1972, abolishing the entry Grade D of Train Examiners and placing the incumbents of that Grade en masse in Grade C in the scale of Rs.205 280 with effect from 1.11.1972. Paragraph 2 of the circular directed that the pay of the staff brought from Grade D (Rs. 180~240) to Grade C (205 280) will be fixed under Rule 2017 A(III) read with Rule 2019 II. As all the incumbents of Grade D in the scale of Rs. 180 240 were placed en masse in the higher grade C in the scale of Rs.205 280, a provisional seniority list of Grade C Train Examiners working in Delhi Division was pre pared on 16th November 1981. In that seniority list peti tioners 1027 were shown senior to some of the respondents as the seniori ty was not determined in accordance with Rule 302 of the Railway Establishment Manual. This seniority list was not prepared in accordance with the prescribed criteria as had been done in other divisions. The Railway Board issued a circular No. E(NG) 1 80 SR6 39 dated 28.11. 1981 directing that Delhi Division should also fall in line with other divisions of Northern Railway and the seniority of the Train Examiners appointed between 1.4.1966 to 1.11.1972 should be prepared in accordance with the existing practice viz. on the basis of the date of appointment in particular grade. In pursuance to that direction seniority of Train Examiners of Grade C placed in that Grade between 1.4. 1966 to 1.11. 1972 was published in 1981 by the authorities of the Delhi Divi sion of Northern Railway. After inviting objections, the seniority list was finally published in December, 1982. In that seniority list the petitioners were shown junior to Respondents Nos. 5 to 10, who were placed above the peti tioners. Aggrieved the petitioners have challenged the validity of the seniority list also by raising additional grounds in the writ petitions. Before we consider the submissions made on behalf of petitioners it would be appropriate to refer to comparative position of petitioners and the respondents Nos. 5 to 10 with regard to their date of entry in service as Train Examiners in Grade D and Grade C. The relevant position is as under: Name Date of entry Grade D Grade C Rs. 180 240 Rs.205 280 1. Yashbir Singh, Petitioner. 29.4.1986 1.11. 1972 2. I.M. Lal Tandon, Petitioner. 19.6.1966 1.11. 1972 3. Hira Lal Kapoor, Petitioner. 29.4.1966 1.11. 1972 4. Harbhaj an Singh, Petitioner. 16.8.1966 1.11.1972 5. Som Dutt Sharma, Petitioner. 29.4.1966 1.11.1972 6. A.K. Sharma, Respondent 5, 5. 9.1967 7. V.K. Chandhok, Respondent 6, 25. 2.1968 8. R.N. Verma, Respondent 7, 10. 8.1968 9. Maglani, Respondent 8, 22. 4.1969 10. Dev Raj Sharma, Respondent 9, 21. 5. 1970 11. K.N.Sharma, Respondent 10, 9. 2.1971 The above chart shows that Respondents Nos. 5 to 10 who be 1028 long to group of apprentice Train Examiners were directly placed to working posts in Grade C after completion of five years training in accordance with the Railway Board 's circu lar dated 2nd July, 1970, on the respective dates shown in Column 3, which indicates that each one of them had been placed in Grade C prior to 1.11. 1972, while the petitioners were placed in Grade C with effect from 1.11. 1972, in pursuance of the Railway Board 's circular dated 30.10. Since the Respondents Nos. 5 to 10 were appointed to Grade C earlier in time and as the petitioners were placed in Grade C later, they. were shown junior to the Respondents in the seniority list. No valid objection can be raised against respondents ' seniority. Further in the seniority list all those promotees who had been placed in Grade C with effect from April 1, 1966 under the Railway Board 's circular dated July 2, 1970 were shown senior to the petitioners. Since the petitioners were not granted seniority with retrospective effect in Grade C as was done in the case of those who were promoted under the Circular dated July 2, 1970 they have assailed the Constitutional validity of Railway Board 's circular dated July 2, 1970. Learned counsel for the petitioners contended that the Railway Board 's circular dated July 2, 1970 was illegal and unconstitutional for variety of reasons. Firstly, the Rail way Board had no authority in law to grant seniority with retrospective effect to all those promotees who had been placed in Grade C with effect from April 1, 1966 in pursu ance of the circular dated July 2, 1970. Secondly, the Railway Board practised discrimination between the promotees forming the same class of Grade D with regard to seniority in Grade C. He contended that under the circular dated July 2, 1970 promotees belonging to Grade D (like the petition ers) were granted seniority in Grade C on their promotion to that grade with retrospective effect from the date of their appointment in Grade D and not from the date of their ap pointment or placement in Grade C whereas the petitioners who form the same class have not been granted the same benefit, instead their seniority has been determined with effect from the date of their entry in Grade C. The peti tioners and all those who had been appointed in Grade D prior to April 1, 1966 and promoted to Grade C formed the same class and yet they have been treated differently with out any rational basis. The petitioners were also recruited in 1966 and they all had completed service of more than 4 years approximately as Train Examiners in Grade D on Novem ber 30, 1972 when the circular was issued but they have not been given seniority in Grade C with retrospective effect as was done under the circular dated July 2, 1970. 1029 We have given our anxious consideration to these submis sions but we do not find any merit in the same. The peti tioners have challenged validity of the Railway Board 's circular dated July 2, 1970 in 198 1 after 11 years. All the petitioners were in service on the date that circular was issued and they were aware that their colleagues (promotees belonging to Grade D) were placed in Grade C and they had been granted seniority with retrospective effect but none of them challenged the validity of the circular. Now petition ers cannot be permitted to challenge the validity of that circular after 11 years. If the petitioners were aggrieved by the Railway Board 's circular dated July 2, 1970 they should have challenged the same within a reasonable period of time which they did not do so. It is well settled that anyone who may feel aggrieved with an administrative order or decision affecting his right should act with due dili gence and promptitude and not sleep over the matter. Raking of old matters after a long time is likely to result in administrative complications and difficulties and it would create insecurity and instability in the service which would affect its efficiency. The petitioners are therefore not entitled to challenge the validity of the Railway Board 's circular dated July 2, 1970 after 11 years and their chal lenge is bound to fail on this ground alone. We have considered the merit of the submission also but we find no legal or constitutional infirmity in the Circular dated July 2, 1970. There was increase in the work of car riage and wagons examination, as more complicated type of rolling stock was available with the Indian Railways. In order to reorganise the cadre of Train Examiners and to cope with the increased work load the Railway Board by its noti fication dated 27th October, 1965 reorganised the cadre. It directed that vacancies in Grade D were to be exclusively filled by promotion from amongst skilled artisans and direct recruits were to be appointed straightaway to Grade C after completion of training of five years. Validity of the noti fication was challenged before this Court in Roshan Lal Tandon 's case and the implementation of the circular was stayed. This Court struck down only a portion of the notifi cation which has been extracted in the earlier part of this judgment but the rest of the directions contained in the notification remained unaffected, including the direction that with effect from April 1, 1966 all the Train Examiners on successful completion of their training should be straightaway brought on to the scale of Rs.205 280 instead of being first absorbed in Grade D. Similarly further direc tion that those apprentices who were undergoing training on April 1, 1966 shall undergo five years ' training instead of four years and during their training they would receive 1030 stipend in the scale of Rs. 180 2 10 and after completion of their training they will straightaway be appointed to Grade C. After the judgment of this Court, the Railway Board reconsidered the matter and with a view to implement the decision of this Court and to further carry out its policy of reorganisation as initiated under its circular dated October 27, 1965 it issued directions under its circular dated July 2, 1970, which is as under: "GOVERNMENT OF INDIA MINISTRY OF RAILWAY (RAILWAY BOARD) No. E(NG) i/69/PMI 180 New Delhi Dated 2nd July 1970 The GMs. All India Railways. Sub: Procedure for filling up posts of TXRs upgra dation of. Boards letter No. E (NG) 165 PMI 86 dated 27.10.1965 and 13.9.1968. The Board have been receiving representations from the staff working in the category of TXRs in scale Rs. 180 240 (AS) against the procedure prescribed for filling vacancies arising out of upgradation of 50% of posts in scale Rs. 180 240 (AS) to Rs.205280 w.e.f. 1.4.1966. It has been decided in modification of previous orders that all the TXRs working in Grade 180240 consisting of both App. of 4 years Trg. and promotees from ranks as on 1.4.1966 should be promoted en masse to the grade Rs.205 280 irrespective of the quota of vacancies reserved for promotees, the excess to the permissible re organised cadre strength in the grade Rs.205 280 being worked off gradually by wastage such as retirement etc. in grade Rs.205 280 (AS). After 1.4.1966 50% of the vacancies arising in grade Rs.205 280 should be main tained in that grade and the remaining 50% will be down graded to the scale of Rs. 190240 to be filled by promotion of skilled artisans. The 50% of the vacancies in grade Rs.205 280 (AS) should be filled by direct recruitment of App. TXRs with 5 years training to the extent of 80% thereof and the remaining 20% by pro 1031 motees from grade Rs. 180 240 as laid down in paragraph 1 (ii)(a) of Board 's letter No. E(NG) 165 PMI 86 dated 27.10.1965. This proce dure will continue to be followed till the cadre position is normalised and the excess in the grade of Rs. 205 280 eliminated. (2) The staff promoted to the grade Rs.205 280 as on 1.4.1966 will be assigned seniority amongst themselves in the order of their inter se seniority in the grade Rs. 180 240 for the purpose of confirmation in that grade and also for further advancement. They will all rank senior to those recruited as App. TXRs with 5 years Trg. and appointed after 1.4.1966 to the grade Rs.205 280. (3) The above instructions may please be implemented immediately and a report submitted to the Board in due course. receipt Sd (O.D.S harma) Asstt. Director(E) Rly Board" The circular issued three directions, firstly, it directed that all the Train Examiners working in Grade 180 240 con sisting of both apprentice Train Examiners and promotees from rank as on April 1, 1966 should be promoted en masse to Grade C irrespective of quota reserved for promotees. Sec ondly, it directed that after April 1, 1966 vacancies in Grade C to the extent of 50 per cent should be maintained in that Grade while the remaining 50 per cant should be down graded to Grade D to be exclusively filled by promotion of skilled artisans, it further directed that 50 per cent of the vacancies in Grade C should be filled up by direct recruitment of apprentices with five years training to the extent of 80 per cent thereof and remaining 20 per cent of vacancies from Grade D. Thirdly, it issued direction with regard to assigning seniority to the staff promoted to Grade C on April 1, 1966. They were to carry their inter se sen iority in Grade D for the confirmation and also for further advancement. It further directed that the promotees will rank senior to the direct recruits in Grade C appointed after April 1, 1966. These directions were issued with the object and purpose of achieving the reorganisation which had been initiated by Railway 1032 Board under its circular dated October 27, 1965. The scheme of reorganisation of cadre as contemplated by the circular dated October 27, 1965 was to be carried out with effect from April 1, 1966 and that date was followed by the Railway Board in its circular dated January 2, 1970. The petition ers ' submission that the date April 1, 1966 was fixed in arbitrary manner without any basis is untenable. The promo tees who were placed in the higher Grade C with effect from April 1, 1966 were undoubtedly senior to the petitioners in Grade D, none of the petitioners ' rights were affected by their promotion. The reorganisation of the cadre of Train Examiners and the promotion to Grade C could not be complet ed on account of the pendency of Roshan Lal Tandon 's case in this Court and the stay orders issued therein. After the decision of this Court the Railway Board implemented the scheme and it made promotion with retrospective effect. As the promotion to Grade C had been stayed, during the penden cy of the writ petition in this Court the Railway Board was justified in granting promotion with effect from April 1, 1966 as initially reorganisation was proposed to be imple mented with effect from that date as is clear from Railway Board 's notification dated October 27, 1965. The Railway Board promoted the staff with retrospective effect because on account of stay orders issued by the Court those entitled to be promoted with effect from April 1, 1966 could not be promoted. The petitioners cannot claim parity with those who had been promoted to Grade C under the Railway Board 's circular dated July 2, 1970 as they do not belong to that class. Equality can be claimed among equals and not with unequals. Those persons who had acquired right of promotion under the Railway Board 's notification dated October 27, 1965 could not be promoted on account of litigation, they formed a distinct class and the petitioners cannot equate themselves with them as they were not entitled to promotion under the notification dated October 27, 1965. The petition ers have no right in law to claim similar treatment. There is therefore no merit in the petitioners ' plea of discrimi nation. Validity of the Railway Board 's circular dated July 2, 1970 on the ground of it being discriminatory was raised before the Delhi High Court in writ petition No. 1147 of 1971, Chaman Lal and others vs Union of India and others decided on May 20, 1980. A Division Bench of that Court upheld its validity. In another writ petition No. 2834 of 198 1 Kewal Krishan vs Union of India and others again the validity of Railway Board 's circular dated July 2, 1970 as well as the validity of Railway Board 's circular dated January 28, 1981 was upheld by a Division Bench of the Delhi High Court on December 15, 1981. Learned counsel for the petitioners challenged the validity of the 1033 Railway Board 's circular dated November 1, 1981 which di rected the. Delhi Division to fall in line with other divi sions of Northern Railways for determining the seniority of Train Examiners. It appears that seniority of Train Examin ers in Grade C working in other Divisions of Northern Rail way was determined, from the date of appointment in that Grade, in accordance with Rule 302 of the Railway Establish ment Manual but in Delhi Division that practice was not followed. The Railway Board directed the Delhi Division to fall in line with other divisions in determining the senior ity of Train Examiners. Learned counsel for the petitioners urged that since under the Railway Board 's circular dated October 30, 1972 the petitioners were placed en masse in Grade C in the scale of Rs.205 280 they are entitled to seniority with effect from the date of their appointment in Grade D and if that be so, they would rank senior to Re spondents Nos. 5 to 10 who were appointed later in time. At this stage it would be profitable to have a glance at Rail way Board 's circular dated October 30, 1972 which is as under: "GOVERNMENT OF INDIA MINISTRY OF RAILWAYS (RAILWAY BOARD) No. PC 69/PS 5/TR 1 New Delhi dated 30.10. 1972 The General Managers, All India Railways. Sub: Upgrading of the initial scale of pay of Train Examiners on Railways. Ref: Board 's letters No. (1) E(NG) 65 PMI '86 dated 27.10. (ii) No. E (NG) 165 PMI 86 dated 13.9. (iii) No. E(NG) 1 69 .PM/ 1/130 dated 2.7. The Board have considered the commu nications received from the National Federa tion of Indian Railwaymen and the All India Railwaymen 's Federation regarding the proce dure prescribed for filling and maintenance of vacancies in the Train Examiners ' cadre as envisaged in the above mentioned letters and more particularly their demand for abolition of the grade of Rs. 180 240. It has now been decided in modification of existing orders that the 1034 initial grade of TXRs, viz. Rs. 180 240 should be abolished and all the TXRs working in that grade should be placed en masse in the grade Rs.205 280 w.e.f. 1.11. It has been decided that vacancies in grade Rs.205 280 should hereafter be filled in the following manner: (i) 40% of vacancies to be filled by promotion or Artisans; (ii) 20% of vacancies to be reserved for existing Artisans going as Apprentice TXRs, with age relaxation upto 35 years; and (iii) 40% of vacancies to be filled by direct recruitment of Apprentices TXRs from the open market through Railway Service Com missions. Pay of the staff brought on from grade Rs. 180 240 (AS) to Grade Rs.205 280(AS) will be fixed under Rule 2017(a)(ii) read with rule 2019 PII. This has the approval of the President. Sd/ (R.S. Bharal) Dy. Director, Establishment (P & A) Railway Board No. PC 69/PS 5/TP 1 New Delhi dated 30.10.72 Copy of the FA & CAOS, and Chief Auditors of All Indian Railways. Sd/ (R.S. Bharal) Dy. Director, Establishment (P & A) Railway Board. " By the aforesaid circular the entry grade of Train Examiners in the scald of Rs. 180 240 was abolished and all the Train Examiners working in that Grade were placed in the scale of Rs.205 280 with effect from November 1, 1972. In pursuance to that decision, petitioners were included in Grade C with effect from November 1, 1972 and 1035 therefore they are entitled to seniority with effect from that date in Grade C. In the absence of any statutory rule or directions petitioners are, not entitled to claim senior ity in Grade C with reference to the date of their appoint ment in Grade D. The chart indicating respective dates of entry of petitioners and the Respondents 5 to 10 in Grade C. as extracted in the earlier part of the judgment would show that Respondents Nos. 5 to 10 were appointed in Grade C earlier in time than the petitioners, therefore they are entitled to be senior to the petitioners. It is not disputed that Rule 302 of the Railway Establishment Manual lays down a general rule for determining seniority from the date of appointment in a particular grade and the petitioners have not placed any rule or instruction before us to support their case. Seniority ordinarily reflects length of service in a particular cadre or grade. It is generally regulated by service rules or in the absence of Rules by executive in structions. By and large, such rules provide for determining seniority with reference to the date of appointment but there are instances where rules provide for determining seniority with reference to date of confirmation. Normally, when a person is promoted or placed in a higher grade his seniority is determined with reference to the date of such promotion or placement unless the relevant rules provide to the contrary. Seniority in the lower grade has no meaning for determining seniority in the higher grade except for determining inter se seniority of promotees. Rule 302 con tains a general Rule and there is no exception to it. In the absence of any contrary provision in the Rules, the general rule of seniority as laid down by Rule 302 must prevail. Learned counsel then urged that the seniority list of Grade D had been prepared in 1968 and in that seniority list petitioners were shown senior to some of the respondents and that seniority could not legally be disturbed. It appears that in the seniority list prepared in 1968 the names of some of the respondents was shown in Grade D on the assump tion that they held posts of Train Examiners in that Grade. It was done on a wrong assumption. Admittedly, the Respond ents Nos. 5 to 10 were apprentices who were undergoing training, and in accordance with the directions contained in the Railway Board notification dated October 27, 1965 they were entitled to appointment in Grade C straightaway on completion of their training. They were no doubt drawing stipend at the rate of Rs. 180 240 which was the scale prescribed for Grade D but nonetheless they did not belong to Grade D as they were not appointed to any of the posts in that Grade. Their names therefore could not be included in the seniority list of Grade D. Petitioners cannot draw any advantage from the mistake committed in 1036 including the Respondents name in the seniority list of 1968. Learned counsel then urged that Hira Lal Kapoor, one of the petitioners was promoted on June 23, 1981 on the basis of his seniority in Grade D, therefore, other petitioners are also entitled to their seniority with effect from the date of their appointment in Grade D. In the written submis sion filed on behalf of Respondents it is stated that the Deputy Regional Manager of Delhi had granted promotion to H.L. Kapoor on June 2, 1981 on ad hoc and temporary basis. On receipt of representations and. protests from Respondent No. 5 Ashok Kumar Sharma and the General Secretary. Northern Railway Men 's Union, order of promotion issued in favour of H.L. Kapoor was cancelled and Sh. A.K. Sharma, Respondent No. 5 was promoted. Since the petitioners were placed in higher Grade C with effect from November 1, 1972 they are entitled to seniority with reference to date of their place ment in that Grade and they have no legal right to claim seniority in that Grade against those who were appointed to that Grade before November 1, 1972. Learned counsel for the petitioners referred to Lok Sabha questions asked by Sh. Suraj Bhan, M.P. and the an swers given to those questions with regard to seniority of direct recruits and promotees, (Annexures K of the petition). The petitioners have asserted that in reply to the Lok Sabha questions, it was clearly stated by the Rail way Administration that direct recruit Train Examiners posted on working posts before November 1, 1972 in Grade C in the scale of Rs.205 280 will not be treated senior to the Train Examiners promoted en masse with effect from November 1, 1972. In the counter affidavit filed by the respondents it is stated that the reply to the Lok Sabha questions as contained in Annexure K to the petition is of no relevance as the said questions were not admitted at all and no reply was given by the Railway Board. It appears that the General Manager had prepared a draft reply to the Lok Sabha ques tions but the reply had not been finalised by the Railway Board which is the competent authority. The Railway Board could have modified the draft of the reply as prepared by the General Manager but since the question was not admitted no reply was sent to the Lok Sabha. The petitioner can therefore draw no support from Annexure K to the petition. Learned counsel for the petitioners then urged that the petitioners were not promoted to Grade C instead they were placed en masse in Grade C on the abolition of Grade D therefore the date of their seniority should not be deter mined from the date of their placement in 1037 Grade C instead they are entitled to their seniority with reference to the date of their appointment in Grade D. He placed reliance on the directions, contained in paragraph 2 of the Railway Board 's circular dated October 30, 1972 that the petitioners ' salary in Grade C shall be fixed in accord ance with Rule 2017 R II read with rule 2019 II. He urged that if the petitioners were treated to have been promoted to Grade C with effect from November 1, 1972 in that case their salary could have been fixed in accordance with Rule 2018 (R II) (PR 22/C). It is true that the petitioners were not promoted from Grade D to Grade C instead Grade D was abolished and the petitioners and all other incumbents holding posts in Grade D were placed en masse in Grade C and the Railway Board issued directions that their salary shall be fixed in accordance with the Rule 2017 read with Rule 2018 (R II) (PR 22/C). Whether petitioners were promoted to Grade C or whether they were placed en masse in that Grade does not make any difference so far as their entry to Grade C is concerned, in either case, they entered Grade C with effect from November 1, 1972. Reference to a particular rule for determining their pay in the higher grade cannot change the criteria for determining seniority. The Railway Board had never issued any direction for determining the petition ers seniority with reference to their date of appointment in the initial entry grade. The petitioners have failed to show that any person junior to them has been made senior to them. Their grievance is without any substance. In view of the above discussion we find no merit in the petitions. We accordingly dismiss the same with costs. All interim orders stand discharged. S.L. Petitions dismissed.

The petitioners were railway employees. The Railway Board issued a circular dated July 2, 1970, laying down procedure for filling up posts of train examiners and upgra dation of posts. It directed that vacancies arising in Grade C after 1.4.1966 to the extent of 50 per cent would be maintained in that grade and the remaining 50 per cent would be down graded to be filled by promotion of skilled arti sans. It further directed that 50 per cent of the vacancies in Grade C should be filled by direct recruitment of appren tice Train Examiners with five years ' training to the extent of 80 per cent thereof and the remaining 20 per cent by promotees from Grade D as laid down in paragraph 1 of the Circular dated 27.10.1965 of the Board. This procedure was directed to be followed till the cadre position was norma lised and the excess in the Grade of Rs.205 280 were elimi nated. Paragraph 2 of the circular further directed that those promoted to Grade C in the scale of Rs.205280 as on April 1, 1966 would be assigned seniority amongst themselves in the order of their inter se seniority in the Grade of Rs. 180 240 for the purposes of confirmation, etc., in that grade and they would rank senior to those recruited as apprentice train examiners with five years ' training and appointed after 1.4.66 in the grade of Rs.205 280. The result of the circular was that all those promotees, who had been appointed to Grade D prior to 1.4.66 stood absorbed in Grade C and they were granted seniority in that grade with retrospective effect, that is, with effect from April 1, 1966. The Railway Board later took a policy decision to abol ish the entry grade D of train examiners in the pay scale of Rs. 180 240, and in order to implement that decision issued a circular dated October 30, 1972, abolishing the entry Grade D of the train examiners and placing the incumbents of that grade en masse in grade C in the scale of Rs.205280 with effect from 1.11.72. Paragraph 2 of the circular di rected that the pay of the staff brought from Grade D (Rs.180 240) to grade C 1019 (Rs.205 280) would be fixed under Rule 2017 A (III) read with rule 2019 II. As all the incumbents of grade D in the scale of Rs. 180 240 were placed en masse in the higher grade C in the scale of Rs.205 280, a provisional seniority list of grade C Train Examiners working in Delhi Division was prepared on November 16, 1981. In that seniority list, the petitioners were shown senior to some of the respondents as the seniority was not determined in accordance with Rule 302 of the Railway Establishment Manual. This seniority list was not prepared in accordance with the prescribed criteria, as had been done in the other Divisions. The Board issued a circular dated 28.11.81, directing that the Delhi Division should also fail in line with the other Divisions of the Northern Railway, and the seniority of the train examiners appointed between 1.4.66 and 1.11.72 should be prepared in accordance with the existing practice. viz. on the basis of the date of appointment in the particular grade. In pursuance of that direction, seniority of the train examiners of grade C placed in that grade between 1.4.66 and 1.11.72, was published in 1981 by the authorities of the Delhi Division of the Northern Railway. After inviting objections, the seniority list was finally published in December, 1982. In that seniority list, the petitioners were shown junior to respondents 5 to 10. Aggrieved, the peti tioners moved this Court by writ petitions, challenging the validity of the seniority list and for quashing the circu lars dated July 2, 1970 and November 28, 1981 of the Railway Board, and restraining the respondent Railway authorities from altering or issuing the seniority list in pursuance of the circular dated November 28, 1981 of the Railway Board and for maintaining the seniority list issued in 1968. Dismissing the petitions, the Court, HELD: The Respondents Nos. 5 to 10, who belonged to the group of apprentice train examiners were directly placed to working posts in grade C after completion of 5 years ' train ing in accordance with the circular dated July 2, 1970 of the Railway Board, and each one of them had been placed in grade C prior to 1.11.72, while the petitioners were placed in grade C with effect from 1.11.72, in pursuance of the circular dated 30.10.72 of the Railway Board. Since the respondents 5 to 10 were appointed to grade C earlier and the petitioners were placed in that grade later, the peti tioners were shown in the seniority list junior to the respondents concerned. No valid objection can be raised against respondents ' seniority. [1027H; 1028A C] 1020 The petitioners challenged the validity of the Railway Board 's circular dated July 12, 1970, in 1981 after 11 years. All the petitioners were in service on the date that circular was issued and they were aware that their col leagues (promotees belonging to grade D) were placed in grade C and they had been granted seniority with retrospec tive effect, but none of them challenged the validity of the circular. Now, the petitioners cannot be permitted to chal lenge the validity of that circular after 11 years. The petitioners should have challenged the circular within a reasonable period of time which they did not do. It is wellsettled that anyone, who may feel aggrieved by an admin istrative order or decision affecting his right, should act with due diligence and promptitude and not sleep over the matter. Taking up old matters after a long time is likely to result in administrative complications and difficulties and would create insecurity and instability in the service which would affect its efficiency. The petitioners are, therefore, not entitled to challenge the validity of the Railway Board 's circular dated July 2, 1970, after 11 years. Even otherwise, on merits. there is no legal and constitutional infirmity in the circular. In order to reorganise the cadre of the train examiners to cope with the increased work load, the Railway Board issued a Notification dated October 27, 1965, reorganising the cadre. The validity of the notifica tion was challenged before this Court in Roshan Lal Tandon 's case. The Court struck down only a portion of the notifica tion and the rest of the directions contained in the notifi cation remained unaffected. After the judgment of the Court, the Railway Board reconsidered the matter, and, with a view to implementing the decision of this Court and further carrying out its policy of reorganisation as initiated under its circular dated October 27, 1965, issued the circular dated July 2, 1970 [1029A H; 1030A B] The scheme of reorganisation of the cadre as contemplat ed by the circular dated October 27, 1965, was to be opera tive with effect from April 1, 1966. The Petitioners ' sub mission that the date April 1, 1966, was fixed in an arbi trary manner without any basis, is untenable. The promotees, who were placed in the higher grade C with effect from April 1, 1966, were undoubtedly senior to the petitioners in grade D, and none of the petitioners ' rights were affected by their promotions. The Railway Board implemented the reorgan isation scheme after the decision of this Court in Roshan Lal Tandon 's case. As promotion to grade C had been stayed during the pendency of Tandon 's case in this Court, the Railway Board was justified in granting promotion with retrospective effect from April 1, 1966, as initially, the reorganisation was proposed to be implemented from that date, which could not be done on account of stay orders issued by this Court. The petitioners 1021 cannot claim parity with those who had been promoted to grade C under the Railway Board 's circular dated July 2, 1970, as they do not belong to that class. Equality can be claimed amongst equals and not with unequals. The persons, who had acquired the right of promotion under the Railway Board 's notification dated October 27, 1965, but could not be promoted on account of litigation, formed a separate class, and the petitioners could not equate themselves with them, as they were not entitled to promotion under the notification dated October 27, 1965. There is no merit in the petitioners ' plea of discrimination. [103AF H] The validity of the Railway Board 's circular dated July 2, 1970, was challenged by a writ petition before the Delhi High Court, which upheld the same. Again, the validity of that circular as well as the circular dated January 28, 1981 of the Railway Board was challenged by a writ petition before the Delhi High Court, which upheld the same. [1032F H] By the Circular dated October 30, 1972, of the Railway Board, the entry grade of train examiners in the scale of Rs. 180 240, was abolished and all the train examiners in that grade were placed in the scale of Rs.205 280 with effect from November 1, 1972. The petitioners were included in grade C with effect from November 1, 1972, and, there fore, they are entitled to seniority with effect from that date in Grade C. The petitioners are not entitled to claim seniority in grade C with reference to the date of their appointment in grade D. The respondents 5 to 10 were ap pointed in grade C earlier than the petitioners and, there fore, they are senior to the petitioners. Rule 302 of the Railway Establishment Manual lays down a general rule for determining seniority from the date of appointment in a particular grade when a person is promoted to or placed in a higher grade, his seniority is determined with reference to the date of such promotion or placement unless the relevant rules provide to the contrary. Seniority in lower grade has no meaning for determining seniority in the higher grade except for determining inter se seniority of the promotees. In the absence of any contrary provision in the Rules, the general rule of seniority laid down by Rule 302 must pre vail. [1034G H; 1035A E] It appears that in the seniority list prepared in 1968, the names of some of the respondents were shown in grade D on a wrong assumption. The respondents 5 to 10 were appren tices undergoing training, and in accordance with the direc tions contained in the Railway Board 's notification dated October 27, 1965. they were entitled to appointment 1022 straightaway on completion of their training. They were drawing stipend at a rate which was the scale prescribed for grade D, but they did not belong to grade D and could not be included in the seniority list of grade D. The petitioners cannot draw advantage from the mistake committed in includ ing the names of the respondents in the seniority list of 1968. [1035F H; 1036A] The petitioners were placed in higher grade C with effect from November 1, 1972, and they are entitled to seniority with reference to their placement in that grade and they have no legal right to claim seniority in that grade as against those who were appointed to that grade before November 1, 1972. [1036C D] Whether the petitioners were promoted to grade C or were placed en masse in that grade, does not make any difference in so far their entry to grade C is concerned; in either case, they entered grade C with effect from November 1, 1972. The petitioners have failed to show that any person junior to them has been made senior to them. Their grievance is without any substance. [1037C E]

ON: Criminal Appeal No. 392 of 1974 Appeal by Special Leave from the Judgment and order dated the 25th April, 1974 of the Andhra Pradesh High Court in Criminal Appeal No. 701 of 1972. P. Basi Reddy and G. Narasimhulu, for the appellant, A, section Mulla, T. V. section N. Chari and P. P. Rao, for the respondent. The Judgment of the Court was delivered by SARKARIA J. This appeal is directed against a judgment of the High Court of Andhra Pradesh, converting on appeal by the State the acquittal of the appellants into conviction. Appellant No. 1 (for short A 1) was an arrack contractor doing liquor business inter alia within the territorial jurisdiction of Police Station Indukurpet, District Nellore, while Appellant No. 2 (for short, A 2) was a Sub Inspector of Police in charge of this Police Station, The appellants and one other person were tried by the Firs Additional Sessions Judge Nellore on charges under ss.120 B, 366, 376, 302/34., 201, 218, 468/34, 324, Penal Code relating to the abduction, rape and murder etc. Of two sisters, named Kalarani and Chandrika Rani of Nellore. The Sessions Judge acquitted the three accused of all the charges. Against the acquittal of the appellants only the State preferred an appeal. The High Court partly allowed the appeal, set aside the acquittal on charges 7, 8, 9 and convicted A 2 and A I. under ss, 201, 201b34, Penal Code and sentenced each of them to five years rigorous imprisonment. A 2 and A 1 were further Convicted under section 218 and 218/109, Penal Code and sentenced to two years rigorous imprisonment, each. They were also convicted under 605 section 468 and 468/34, Penal Code and sentenced to two years rigorous imprisonment each. The sentences on all the counts were directed to run concurrently. Their acquittal on the remaining charges, including those of abduction, rape and murder, was upheld. The facts of the prosecution case, as they emerge from the record" arc as follows: Kalarani and Chandrika Rani deceased were two of the six daughters of PW1, a legal practitioner of Nellore. Kalarani was aged 21 and a graduate from the local Women 's College, Nellore. She used to be the President of the College Union and as such was well known. Chandrika Rani was, aged 17 and a B.A. student in that very college. on 6 6 1971 in the morning the deceased girls along with their parents and other sisters attended a marriage in the house of a family friend (P.W.2). In the afternoon they went away from the marriage house saying that they were going out to have coca cola. At about 4 p.m. they boarded a bus bound for Mypaud which is a sea shore resort at a distance of 11 miles from Nellore. At about 5.40 p.m. they were seen alighting from the bus as Mypaud and then proceeding towards Sagarvilla, a Travellers ' Bungalow situated near the seashore. They were last seen at about 6 30 p.m. On the seashore by P.Ws. 11, 12, 13 and 14. Shortly there after, P.W. 18, a rickshaw puller was attracted to the seashore by the outcry of a woman. When be proceeded in hat direction, Chandrika Rani came running to him for help. P.W. 18 saw 4 persons including A 1 and A 2 carrying away Kalarani who was groaning. On seeing P.W. 18, A 1 and A 2 turned on him. A 1 first slapped and then stabbed P.W. 18 on his right arm with a pen knife, while A 2 gave blows on his back. Out of fright, P.W. 18 took to his heels while Chandrika Rani was dragged away by the appellants. On 6 6 1971 Chamundeshwari Festival was being celebrated in Gangapatnam and neighbouring areas at about 9 p.m. It was a bright moonlight On learning that the dead body of a girl had been seen on the beach of Pallipalem which is a hamlet o Gangapatnam, many persons went there. P.W. 23, a fisherman of Pallipalem and P.W. 25. an employee of the Electricity Department were also among those persons. It was the body of a girl, aged about 21 or 22 years, of fair complexion and stout built. Blood was oozing from a reddish abrasion on the forehead. There was a gold ring with a red stone on the finger of the body. Next morning, P.W. 23 went to P.W. 26, the Sarpanch of Gangapatnam and informed the later about the corpse on the seashore. P.W. 23 and P.W. 26 then went to the village Karnam (P.W. 27) as they found the village Munsiff absent. The Kamam scribed a report to the dictation of P.W. 23. The Sarpanch signed it and sent it at about 7 30 a.m. through a bus driver (P.W. 29) to the Police Station, Indukurpet. The report was handed over in the Police Station at about 8 30 a.m. to the Head Constable (P.W. 34), as A 2. the Sub Inspector was away. The Head Constable (P.W. 34). read the report and returned it to P.W. 29 with the objection that the bearer should fetch a report drawn up on the printed form and signed by the village Munsiff. Within a few minutes 606 of the return of the report, between 8 30 and 8 45 A.M., A 2 returned to the Police Station. Just at this juncture P.W. 49, a Personal Assistant to P.W. 38, a cine actor of Madras, and A 1, arrived there in Car No. M.S.V. 1539, driven by a motor driver. The car had met an accident on the 4th June within the jurisdiction of this Police Station. The car was therefore at least theoretically in the custody of the Police. A 1 was a mutual friend of A 2 and of the owner of the car. P.W. 49 therefore, had brought A 1 to the Police Station to help the former in getting the car released. A 1 introduced P.W. 49 to A 2. A 1 then asked A 2 if he knew that the dead body of a girl was found floating on the sea shore. A 2 then asked the head Constable (PW 34) if any report regarding the dead body was received. The Head Constable replied that a report from the Sarpanch about the dead body seen on the sea shore at Pallipalem had been received but had been returned, as it was not from the village Munsiff. A 2 said some person might have drowned as it usually happened on the seashore. The Head Constable and A 1 told A 2 that the body found on the shore was said to have been wearing drawers and might be of a person of high class family. A 2 said that he himself would go and enquire about it. A 2 asked P.W.4 to take him in his car to the spot. Thereupon" A 1, A 2, P.W. 49, two constables and two others in addition to the driver, proceeded in the car. After going some distance, the two "others" got down. A 1 and A 2 had a talk with them. The car was then taken to Ramudupalem. There at about 11.30 A.M., A 1 and A 2 met the Sarpanch (P.W. 26) and asked him to follow them to Pallipalem. The car was then taken to Gangapatnam. There the Constables were dropped. They left a message for the Karnam of the village to reach Pallipalem. Thereafter, they proceeded to the sea shore of Pallipalem. The car was left at the canal before the sea. A 2, A 1, P.W. 49 and P.W. 26; then at about Noon, went to the beach where the dead body lay. P.W. 23 and P.W. 25 were guarding the deadbody. It was the body of a fair, stout girl aged about 20 years, who was wearing brassiers, blouse, striped drawers and a white petticoat. P.W. 23 handed over the ring M.O.9 to A 2 after removing the same from the body. On being directed by A 2, P.W. 23 washed ' the face of the corpse. There was a mark on the forehead from which blood was oozing out. There was a reddish abrasion on the thigh and blood marks on the drawer of the dead body. On seeing the blood marks on the drawer, A 2 said that she might be in menses. A 2 further remarked that the body appeared to be of a girl from a high class family who had been out of doors. A 2 did not hold any inquest there on the dead body. He did not prepare any record there. He directed the village vettis (menials) to bury the dead body forthwith while he himself proceeded along with his companions towards the village. In the distance they saw the Constables coming towards them. A 2 signalled them not to come near the dead body but to proceed to the Travellers ' Bungalow at Mypad, while A 2 and party went to Mahalaxamma Tample in village Pallipalem. There A 2 607 secured the signature of P.W. 25, P.W. 26, P.W. 28 and A 1 on a blank sheet of paper. A 2 and his companions then went to the car. The Karnam (P.W. 27) was there. A 2 reproached the Karnam for coming late and added that he had finished all the work for which he (Karnam) had been sent for. He further told the Karnam that he had got the body buried. The karnam asked as to why A 2 did not send the body for post mortem examination A 2 replied that the body was of a prostitute who had committed suicide and that he did not suspect any foul play and so he ordered burial The Karnam then enquired if any relation of the deceased had come. A 1 replied "yes", while A 2 pointed towards P.W. 49 and said that he was the person connected with the deceased. A 1, A 2, P.W. 26, P.W. 27 and P W. 49 then got into the car and proceeded. P.Ws. 26 and 27 were dropped near their houses. On the way P.W. 49 asked A 2 as to why he had represented him (P.W. 49) as a relation of the deceased. A 2 assured P.W. 49 that there was nothing to worry. According to the prosecution, this dead body found ashore near Pallipalem which is about 2 miles from Mypad was of Kala Rani deceased who was well known to A 2. Inspite of it in the inquest report (Ex P 11) which was not prepared on the spot but sometime later, A 2 wrote That the body was of a prostitute, named Koppolo Vijaya, daughter of Crhandravya, Baliya by caste of Ongole Town who had on 6.6.71, come to Mypad along with her prostitute friend Nirmala by Bus A.P.N. 1400 at 5.45 P.M. and thereafter both these girls committed suicide by entering sea at about 6.30 P.M. A 2 ended the report with an emphatic note: "It is conclusive that the deceased (Koppulu Vijaya) died due to drowning". Despite the presence of injuries noticed on the dead body A 2 recorded: "There are no injuries on the dead body". In order to support his version as; to the cause of death A 2, according to the prosecution falsely noted that the "stomach is bloated due to drinking of water". The prosecution case further is that A 2 fabricated some time after the burial of the deadbody, a false report (Ex. P 25) purporting to have been made to him on 7.6.1971 by one Nuthalapati Subba Rao who despite the best efforts of the investigators has remained untraced and is believed to be a fictitious person. As this report has an important bearing on the points for determination, we will reproduce it in extenso: "Statement of Nuthalapati Subbarao, son of Venkateswarlu, aged about 30 years" Vysya of Patha Guntur: Being an orphan for about 1 years, I have been doing brokerage in supplying extras in the cine field. Day before yesterday i.e. On Friday at Chirala near Lodges two girls Koppulu Vijaya d/o Sundrayya of Ongole and Paranjapi Nirmala d/o Raghavayya of Chilakaluripeta were met by me. I came to know that they live by prostitution. When I told them that I would join them in Cinema they believed me 608 and came with me. On Sunday i.e. On 6 6 1971, in the morning we came to Nellore and stayed in Venkateswara Lodge till 3.30 p.m. Their demand came for the girls. I booked two males for these two girls. Afterwards dispute arose between me and the girls in respect of my broekerage, sharing of the money got by such prostitution out of the money collected. They scolded me in an angry tone and went away crying and weeping and saying that I took them away from their places promising to join them in Cinema, cheated them and committed rowdyism without giving them money due to them. They had only wearing apparel with them. Vijaya is short, stout and fair. Nirmala is lean, tall and fair. They did not come back. I waited for a long time. 1 searched for them at the railway station, bus stand and lodges. When I was inquiring at Atmakur Bus Stand I came to know that the girls went by Mypaud bus at 4.30 p.m. I went to Mypaud and enquired. It was learnt that the two girls went towards north of Pattapulalem and entered the sea at 6 p.m. Having learnt that the body of Vijaya was washed ashore I went and saw the dead body. She had died and appears to have committed suicide. It was also learnt that the second girl also committed suicide but her dead body was not washed ashore. Other facts about them are not known. Sd/ N. Subbarao Taken down by me, read over to the person and admitted by him to be correct. On this 7th day of June 1971 at 11 30. Sd/ B. Manoharan S.I., E 3, dt. 7 6 1971. H.C. 1212 Issue F.I.R. u/s 174, Cr. P.C. and send copy to me for investigation. Sd/ B. Manoharan, S.I. E 3, Camp Mypaud dt. 7 6 1971. " The dead body of the other girl, Chandrika Rani was not washed ashore. But in the morning of 7 6 1971, P.W. 36, a fisherman saw the dead body of a girl agled 16 or 17 years floating in the sea at a distance of about 21 or 3 mils from Pallipalem, P.W. 36 saw a piercing wound on the left arm and black marks indicating throttling, on the neck of the deadbody. P.W. 36 removed a wrist watch, a ring and an ear ring from the deadbody and allowed it to drift away. These articles were later handed over by P.W. 36 to the investigating officer and were identified to be of Chandrika Rani. The disappearance of the deceased girls caused a sensation. The local newspapers took up the matter. Representations were made to the Home Minister to get the matter investigated by the C.I.D. The Superintendent of Police directed P.W. 59, a Probationer D.S.P., to investigate the matter. On 18 6 1971, at the request of P.W. 59, the Tehsildar (P.W. 40) proceeded to exhume the deadbody of Kalarani. The place was pointed out by P.W. 33. A 2 was also present there. On digging the bit only some clothes were found in it. But close to 609 it, was found a skeleton. No marks of violence were detected on the skeleton by the Medical officer, P.W. 45, who examined it at the spot. The skeleton was sent to P.W. 44, Professor of Forensic Medicine. Who opined that it was of a female aged between 18 to 25 years. Further investigation of the case was taken over by P.W. 60, the C.I.D. Inspector who, after completing it laid the charge sheet against A 1, A 2 and one other person in the court of the Magistrate. A 1 pleaded that he had been falsely implicated. He stated that he knew nothing about the deceased girls. He added that on 7 6 1971, he was in the Travellers ' Bungalow at Mypad and went away from that place in the afternoon. He admitted that he had accompanied, P.W. 49, to the Police Station on 7 6 1971 to assist the latter in getting the car release, and from the Police Station both of them (A 1 and P.W. 49) on being asked by A 2, went with the latter in the car to the spot. He further admitted that he had slab signed on a sheet of paper like others but he expressed ignorance if any inquest was held by A 2. The plea of A 2 was that he had duly made an inquiry as to the cause of the death and prepared the inquest report exhibit P l 1. He denied that there were injuries on the dead body. Pleading alibi for the 5th and 6th June 1971, he said that on these dates he was away on casual leave to attend the marriage of a cousin at Chiraja which at a distance of about 100 miles from Indukurpet. He said that he had proceeded to Chiraja in a car on the 5th morning., and after attending the marriage returned to Nellore on the 6th by 5 30 p.m. and then on the morning of the 7th June, resumed duty at Indukurpet Police Station. On receiving information about the corpse of a female washed ashore, he went to Mypad and enquired about a person named Nathalapati Subba Rao. The latter gave the information, exhibit P.25, which he (A 2) reduced into writing and then held the inquest in the presence of this Subba Rao and other Panchaitdars at the spot. He did not know if Vijaya and Nirmala mentioned in exhibit P. 25 and exhibit P. 11 were fictitious persons. He further admitted that he was unable to produce this Subba Rao in response to the memo dated 15 6 1971, issued by the D.S.P. (P.W. 59) during the stipulated time of 48 hours. The Additional Sessions Judge held that the dead bodies found floating near the sea shore were of Kala Rani and Chandrika Rani. He further found that PW 18, who claimed to be an eye witness of the occurrence, was not worthy of credit, and consequently, the charges of abduction, rape and murder had not been proved against the accused. Regarding the charge under section 201, Penal Code, the trial Judge held that the prosecution had failed to`prove that an offence had been committed in respect of the deceased. While holding that the identity of the deceased was wrongly mentioned in exhibit P. 25 and exhibit P. 11 as Vijaya and Nirmala, prostitutes he did not rule out the possibility of suicide. In the result? he acquitted the accused of all the charges. In appeal by the State, the learned Judge of the High Court, after an exhaustive survey of the evidence, upheld the acquittal of the 610 accused in respect of the charge of abduction, rap and murder, but reversed the findings of the trial Judge in regard to the charges under sections 201, 218 and 468, Penal Code against Al and A2. In order to bring home an offence under section 201, Penal Code the prosecution has to prove: (1) that an offence has been committed; (2) that the accused knew or had reason to believe the com mission of such offence (3) that with such knowledge or belief he (a) caused any evidence of the commission of that offence to disappear, or (b) gave any information respecting that offence which he then knew or believed to be false; (4) that he did so as aforesaid, with the intention of screening the offender from legal punishment (5) If the charge be of an aggravated form, as in the present case, it must be proved further that the offence in respect of which the accused did as in (3) and (4), was punish able with death, or with imprisonment for life or imprisonment extending to ten years. The High Court has found that all these ingredients of section 201, were established in the present case. Mr. Basi Reddy, learned Counsel for the appellant assails the finding of the High Court with particular reference to the first and the last ingredients enumerated above. Counsel contends that the conviction under section 201 cannot be sustained as there is no credible evidence on record to show that an offence had been committed. It is maintained that the prosecution has been unable to prove that the two girls met a homicidal death. In all probability, proceeds the argument, the deceased girls committed suicide by jumping into the sea and were drowned. For reasons that follow we are unable to accept these contetions. The concurrent finding of the courts below that the dead body washed ashore near Pallipalem was of Kala Rani deceased and that seer. floating in the sea, two miles away was of Chandrika Rani deceased, has not been disputed before us. It is also not controverted that these two girls died an unnatural death on the night between the 6th and 7th of June, 1971 sometime after 6.30 P.M. at Mypad. Only the cause of their death is in issue. In regard to such cause, there could be only three possibilities, the choice of any of which would lead to the exclusion of the other two. First, the girls committed suicide by drowning. Second, that their deaths were accidental. Third, that they were done to death by some person or persons. 611 After a careful consideration of these alternatives in the light of ' evidence on record, the learned Judges of the High Court firmly ruled out the first and the second possibilities, and concluded in favour of the third. In our opinion, the credible circumstantial evidence on record reinforced by the inferences available from the incriminating conduct o ' ' the appellants, particularly of A2 in deliberately preparing false records to suppress the identity and cause of the deaths of the deceased girls, fully justifies the conclusion reached by the learned judges. We, therefore, do not feel the necessity of embarking upon a reappraisal of the entire evidence. It would be sufficient to survey and consider the salient circumstances bearing on the alternatives posed above First, we take up the possibility of suicide. Mr. Reddy submits with reference to the statement of PW1, the father of the deceased girls. that on a previous occasion both these girls had without the permission of their parents, run away from home and were ultimately traced to the Rescue Home in Madras. that Kala Rani deceased had about 4 or 5 years before the occurrence taken an overdone of tranquilizers presumably to end her life that they did not feel happy in their parental house and once attempted to join the Ashram. This background, according to the learned Counsel, shows that the deceased had a predisposition to commit suicide. In the alternative, suggests Mr. Reddy, something might have happened at Mypad on the 6th June, 1971, which impelled them to commit suicide. Might be the girls got themselves into such a situation that they thought suicide was the only course left to them to get out of the same. We are not impressed by these arguments. It is wrong to assume that these girls were very unhappy in their parental house, or their relations with their parents were estranged. Kala Rani, particularly, was a mature graduate girl of 22 years. She used to be the leader of the College Union. On the day of occurrence, the deceased girls along with their parents and sisters had participated in the festivities of a marriage in the house of a family friend. They took their meals in the marriage house. From Nellore, these girls brought change of clothes for two or three days ' stay. Thereafter, they came happily to Mypad. They first went to the Travellers ' Bungalow and were then last seen together at about 6 30 p.m. On the sea shore. It is in evidence that the evening of the 6th June, was an occasion of Channdamma Festival. Procession of the deity accompanied by festivities was being taken out by the devotees of the neighbouring villages. These circumstances unmistakably show that the diseased girls had come to enjoy and stay at the sea side resort of Mypad for 2 or 3 days. They were not suffering from any mental depression or schizophrenia with suicidal tendencies . Another circumstance in the case of Kala Rani which is contraindicative of suicide, is that her dead body though seen within an hour or two of the occurrence on the beach, was in a semi nude condition. 612 The sari was not on her dead body, which she was wearing when last seen at about 6 3 P.M. It can be argued that the sari was washed off her body by the sea waves. But considering that her dead body was detected only within a couple of hours of the occurrence and the fact that it is customary for women living in or near the coastal towns to tie their series tightly, the possibility of the sari having been swept off by the sea waves was remote. The inference is that in all probability, she was not wearing this sari when her body was immersed in water. Ordinarily, no Indian woman would commit suicide by jumping into the sea by getting into such a near nude condition and thereby expose her body to the risk of post mortem indignity. Another important circumstance which militates against the suggestion of the death of Kala Rani from drowning is that when the body was first seen at 9 P.M., its stomach was not in a bloated condition, for was any froth seen coming out of the mouth of the corpse. the fact was vouched by PW 23, a fisherman, who was rightly found worthy of credence by the High Court. It may be added that contrary to what PW 23 has testified A 2 has in the inquest report said that the stomach was bloated with water and froth was coming out of the mouth. But as shall be presently discussed, these notes regarding the condition of the dead body, were invented by A2 to support his false report that the deceased had committed suicide and her death was from drowning. Medical jurisprudence tells us that in a case of death from drowning, the stomach is ordinarily found bloated with air and water which is instinctively swallowed by the drowning person during the struggle for life (see Taylor 's Medical Jurisprudence, 12th Edn. 374 375). The facts that the stomach was not filled with water and bloated and no froth was coming out of the mouth of the deceased, are important symptoms which to a long way to exclude the possibility of death being as a result of suicide by drowning. Then there were injuries and blood marks on the dead body. PWs 23, 25, 26 and 27, all testified with one voice that they had seen one injury, from which blood was oozing out on the forehead, another on the thigh and blood marks on the drawer (under garment) of the deceased. In examination in chief, even PW 49, who in cross examination tried to dilute his version in a possible attempt to favour A2, stated that he had seen a reddish strain (stain ?) on the forehead and blood marks on the drawer of the deceased. Out of these PWs, 23, 25 and 26 were present near the dead body when A2, accompanied by Al and P.W. 49, went there to hold the presence of an inquest. PW 23 was a fisherman of Pallipalem, PW 25 was also a resident of the same hamlet. He was an employee of the Electricity Department. PW 27 was the Karnam of Gangapatnam. PWs 23 and 25 were among those villagers who had seen the deadbody washed ashore at about 9 P.M. On 6 6 71. The High Court found that the version of these witnesses in regard to the injuries and blood marks on the deadbody was entirely reliable. No reason has been shown why we should take a different view of their evidence. 613 It is further in the evidence of PWs. 23, 25, 26 and 49 that when the blood marks on the drawer pointed out to A2, the latter ignored it saying that the girl had been out of doors and was in menstruation. Contrary to what he and the PWs. had observed at the spot, A2 wrote in the inquest report, P 11, Col. VII: "There are no injuries on the dead body". Having excluded the possibility of suicide, we may now consider,. whether the deaths of these girls were accidental. It is no body 's case that on the 6th June, 1971, any sea craft, vessel or boat met with an accident off or near about Mypad resulting in loss of human life. No suggestion of accidental death of any person, much less a women, off or. On the sea share near or far from Pallipalem was put to any of the prosecution witnesses. Nor such a plea has been put forward by the accused in their statements recorded under section 342, Cr. P.C Indeed, tie learned Counsel for the appellants has not pursued any such line of argument. We have, therefore, no hesitation in negating the possibility of accidental death. This process of elimination inevitably leads us to the conclusion that in all probability the death of these girls, at any rate of Kala Rani, was due to culpable homicide. Now we come to the last but the most telling circumstance which not only confirms this conclusion and puts it beyond doubt, but also. unerringly establishes, by inference, the other ingredients of the offence, including that the accused knew or had reason to believe that culpable homicide of Kala Rani had been committed. This circumstance is the conduct of A2, in intentionally preparing false records and its abetment by A1. From its very start the investigation conducted by A2 was dishonest and fraudulent. He intentionally indulged in suppressio veri and suggestio falsi at every step. He had been informed by the Head Constable (PW 34) at about 8 or 8 45 A.M. in the Police Station that a report from the Sarpanch had been received about the dead body of a girl bearing injuries, found washed ashore near Pallipalem. This in formation which was passed on to A 2 and on receiving which he proceeded from the Police Station for investigation, was the real I.R. It was the duty of A 2 to enter faithfully and truly the substance of this information in the Station Diary and to record further that he was proceeding for investigation on the basis thereof. Instead of doing so, he intentionally suppressed the factum and substance of this first information and the real purpose of his departure from the Police Station in the records prepared by him or by his subordinates in his immediate presence or under his supervision. Instead of retrieving the written report that had been first received at 8 A.M. in the Police Station and was, returned by the Head Constable to the Sarpanch, he fabricated the document exhibit P. 25, purporting to be the F.I.R. given to him at Mypad by one N. Subba Rao. The false story contained in this document has been substantially repeated in the inquest report, exhibit P. 25. 614 P.Ws. 23, 25, 27 and 49 discount the presence of any such person, named N. Subba Rao either at the inspection of the dead body in the sea shore by A 2 or at the 'Temple, where according to A 2, he prepared the inquest report. None of these PWs has sworn that a statement of any N. Subba Rao was recorded in their presence by A 2. No specific question was put by the defense to PW 49 in cross examination to establish that the report exhibit P 25 was scribed by A2 at Mypad at about 11.30, to the dictation of N. Subba Rao or any other person although the witness was generally questioned as to the number of persons carried in the car. P. W. 27, the Karnam, has definitely excluded the presence of any informant named Subba Rao. P.W. 27 testified that after the inquest, Al" A2, P.W. 26 and "a new person" implying PW 49, met him and thereafter all the five (including PW 27) got into the car and proceeded to the village. P.W. 27 did not vouch the presence of a sixth man in the car. Only PW 26 has stated that R2 had recorded the statements of witnesses including that of a per son named N. Subba Rao. PW 26 had reason to tell a lie on this point. PW 26 admitted that at the time of the inquest, he was an accused in a criminal case of Indukurpet Police Station. A2 was at the material time In charge of that Police Station and was presumably concerned with the investigation of that case against PW 26. PW 26 therefore appears to have deviated from truth in regard to the presence of N. Subba Rao, under the influence of the accused. In any case, the evidence of PW 26 on this point stands contradicted by the reliable testimony of PWs 23, 25, 27 and 49. In the inquest report, as also in exhibit P 25, the address of this mysterious person is recorded as "Nuthalapatti Subba Rao son of Venkateswarlu, aged about 37 years, Vysya of Patha Guntur." Despite efforts, the investigating officers, PWs 59 and 60, could not trace on the basis of this address, any person bearing the said particulars at Pata Guntur or anywhere else in the District. In response to the memo issued by the D.S.P. (PW 59) A 2 could neither produce this N. Subba Rao, nor give any indication about his existence, though A2 claimed to have known him. For these reasons, the High Court was right in holding that this Nathalapatti Subba Rao was a fictitious person of A2 's imagination. Similarly, during investigation all efforts made by PWs 59 and 60 to trace and find if Vijay and Nirmala prostitutes, represented in exhibit P 25 and exhibit P 11 as the deceased persons ever existed in flesh and blood, remained futile. In these premises, the High Court was right in concluding that Vijaya and Nirmala prostitutes were also the coinage of the brain of A2. It is necessary to say something more about exhibit P 25 because the entire story was spun around it by A 2. It did not see the light of the day till the 11th June. A 2 did not send it to the Police Station for registration before that date. It is in the evidence of P. W. 55, who at the material time was a Head Constable posted in this Police Station, that after his departure in the morning of the 7th, A 2 returned to the Police Station on the 10th evening and it was then that he handed over this document to the witness with the direction that the latter should enter that report in the relevant register, dating it as the 7th June, 1971. The Head Constable after slight hesitation 615 agreed and inserted this report in the blank space meant for the entries of the 7th June, and thereafter, as required by A2, handed over to the latter, a copy of that report. A 2 also made an entry (exhibit P 34) in the General Diary of the Police Station, dated 10.6.1971 on 11.6.1971 at 2 A.M. It reads: "Returned to P.S. after leaving it on 7.6.71 at 9.30 a.m. visited Mypadu en route to Gangapatnam at 11 00 hours at 11 30 a.m., recorded statement of N. Subba Rao, sent to Police Station for issuing First Information Report u. sec. 174 Cr. P.C. then visited Pallipalem at 12 30 p.m. investigated, held inquest over dead body of K. Vijaya. At 20 30 p.m., left village reached Mypadu at 21.30 hours, made enquiries in Cr. 48/71 and halted. On 9.6.71 visited Gangapatnam detailed duties for bandobust and visited Ravur, investigated into Cr. 47/71, visited Nellore at 12 30 hours" did bandobust for festival and halted for the night. On 9.6.71 visited Mypadu for petition enquiry and investigated into Cr. 48/71, 41,42 and 44/71 and hailed. On 10 6 71 visited Gangapatnam, supervised and did bandobust for car festival at 00. 30 hours, received First Information Reports in Cr. 49 to 51/71 at 00 45 hours, left the village with men and reached Police Station. " A mere glance at this report betrays its falsity. This shows how in his anxiety to suppress the truth he tried to reinforce and cover up one falsehood with another. In this connection, it may be noted that the D.S.P. persistently pressed A 2 to send the copies of the F.I.R. and the Inquest Report. A 2 was unable to supply any copy of the F.I.R. before the 12th of June, when the D.S.P. himself came to the Police Station and collected it. The D.S.P. (P.W. 59) testified that on the 11th June, 1971, he had questioned A 2 about the First Information Report and the inquest report. As a result he received a copy of the F.I.R. On the 12th but did not receive any copy of the inquest report. Consequently on 14.6.71, he telephoned to A2 to send the case diaries and inquest report without further delay. Despite these efforts, the D.S.P. did not receive whose records on that day. on 15.6.71, he issued a memo. to A 2 directing the latter to produce immediately the complaint of N. Subba Rao, the inquest report and the case diaries. It was only then that A2 produced the persistently requisitioned records. These inordinate delays in sending the records prepared by A2, confirm the testimony of PWs 23, 25 and 49 that no inquest on the dead body was held at the spot, nor was the inquest report or any other record prepared there and then, and that their signatures were obtained by A2 on a blank sheet of paper. Of course PW 26 stated that A2 had recorded statements of witnesses and had prepared the inquest report at the Temple. As already noticed, it is not prudent to accept this version of PW 26. He had a motive to favour A2. Moreover, his version stands inferentially falsified by the circumstances including the unusual delay in registering the report exhibit P 25 in the Police Station and in sending the copies of the records to the D.S.P. 616 Section 174, Cr.P.C peremptorily requires that the officer holding an inquest on a deadbody should do so at the spot. This mandate is conveyed by the word "there" occurring in sec. 174(1). Sub section (3) of the Section further requires the officer holding the inquest to forward the body with a view to its being examined, by the medical man appointed by the State Government in this behalf, if the state of the weather and the distance admit of its being so forwarded without risk of such purification on the road as would render such examination useless. The sub section gives a discretion to the Police officer not to send the body for post mortem examination by the medical officer only in. One case, namely, where there can be no doubt as to the cause of the death. This discretion however is to be exercised prudently and honestly. Could it be said in the circumstances of the case, that there was no doubt as to the death of Kala Rani being from drowning ? In this connection it is important to note that Kala Rani was not a total stranger to A 2. It is in evidence that A 2 used to go to Nellore for Bandobust and there he had sufficient opportunity to come across Kala Rani who was a prominent student leader. The testimony of P.W. 47 is to the effect that when on 17.7.1971, A2 came to him and requested the witness to dissuade the father of the deceased from getting the dead body exhumed, he (A2) admitted that Kala Rani deceased was well known to him The body was not in an unidentifiable condition. A 2 therefore could he under no mistake that it was the body of Kalarani deceased particularly when he inspected it after its face had been washed by PW. 23 under the orders of A 2. Despite such knowledge, he laid a false trail and prepared false record mentioning that the deadbody was of a prostitute named Vijaya. Medical jurists have warned that in the case of a deadbody found floating in water, the medical man from a mere observance of the external condition of the body should not jump to the conclusion that the death was from drowning. Only internal examination of the body can reveal symptoms which may indicate with certainty as to whether the death was from drowning or from. unlawful violence before the body was immersed in water. That is what Taylor the renowned medical jurist, has said on the point: "When a deadbody is thrown into the water. and has remained there sometimes water. fine particles of sand, mud. weeds etc. may pass through the windpipe into the large air tubes. In these circumstances, however, water rarely penetrates into the smaller bronchi and alveoli as it may by aspiration, and even the amount which passes through the glottis is small. If immersed after death the water is found only in the larger air tubes and is unaccompanied by mucous froth. Water with suspended matters can penetrate even to the distant air tubes in the very smallest quantity even when not actively inhaled by respiratory efforts during life The quality, or nature of the suspended matter may be of critical importance.***When decomposition is advanced the lungs 617 may be so putrefied as to preclude any opinion as to drowning but the demonstration of diatoms in distant parts of the body inaccessible except to circulatory blood, provides strong evidence of immersion in life if not of death from drowning." (emphasis supplied) A2 was a Police officer of standing and experience. He knew the deceased. He saw injuries on her deadbody. He must have known if he were honest that in the circumstances of the case autopsy of the deadbody by a medical officer was a must to ascertain the cause of her death. Instead of sending the deadbody for post mortem examination, he in indecent haste, purposely got it buried without holding, any inquest at the spot. He did not send for the relations of the deceased. Even a layman like the Karnam (PW 27) felt something strangely amiss in this conduct of A2. In response to the queries made by the Karnam, A2 made false excuses. He intentionally misrepresented (in concert with A1) that PW 49 was a relation of the deceased. He flouted all the salutary requirements of section conduct in distorting and suppressing material evidence and in preparing false records (exhibit P 11 and P 25) as to the identity of the deadbody, the cause of the death and the falsification of the data bearing on that cause, could not be explained on any reasonable hypothesis save that of his guilt. The circumstances established in this case unmistakably and irresistably point to the conclusion that within all human probability, accused No. 2 knew or had reasons to believe that Kala Rani had been done to death by some person or persons. All the elements of the charge under section 201 had thus been proved to the hilt against him. Before considering the case of Al, we may notice here the decision of this Court in Palvinder Kaur, vs State of Punjab(1). This decision was cited by the learned Counsel for the appellants in support of his argument that the circumstances: that the deceased died, that the appellant prepared false record regarding the cause of her death or caused post haste disposal of the dead body without any autopsy or its identification by the relations of the deceased, do not establish the cause of Kalarani 's death or the manner and the circumstances in which it came about. Counsel laid particular stress on the observation of this Court in that case that in cases depending on circumstantial evidence courts should safeguard themselves against the danger of basing their conclusions on suspicions howsoever strong. The decision in Palvinder Kaur 's case (supra) is a precedent on its own facts. The observations of this Court to the effect, that "Jaspal died, that his body was found in a trunk and was discovered from a well and that the appellant took part in the disposal of the body do not establish the cause of his death or the manner and circumstances in which it came about" cannot be construed as an enunciation of a rule of law of general application. Whether the circumstantial evidence in a particular case is sufficient and safe enough to warrant a finding that an offence has been committed. is (1) 9 L925SupCI/75 618 a question which belongs to the realm of facts and not of law. So is the question whether the accused knew or had reasons to believe that such an offence has been committed. It is true that this question further depends on an assessment of the accused 's mind. Nevertheless, it is a question of fact "The state of a man 's mind", quoth Lord Bowen, "is as much a fact as the state of his digesion". In Palvinder Kaur 's case (supra) there was, in the first place, no material, direct or indirect, justifying a finding that the death of Jaspal was caused by the administration of potassium cyanide and if the defence version was believed his death would be the result of an accident. In that version was disbelieved then there was absolutely no proof of the cause of his death. In the method and the manner in which the deadbody of Jaspal was dealt with and disposed of by the accused did raise some suspicion but from these facts, the Court found it unsafe to draw a positive conclusion that he necessarily died an unnatural death. Nor could the possibility of the commission of suicide by Jaspal be totally ruled out. The position of A2 in the present case was very different. He was a Police officer and as such was expected to discharge the duties entrusted to him by law with fidelity and accuracy. He was required to ascertain the cause of the death and to investigate the circumstances and the manner in which it was brought about. His duty it was to make honest efforts to reach at the truth. But he flagrantly abused the trust reposed in him by law. He intentionally fabricated false clues, laid false trails, drew many a red herring across the net, smothered the truth, burked the inquest, falsified official records and short circuited the procedural safeguards. In short, he did everything against public justice which is penalised by s 201, Penal Code. The other circumstantial evidence apart, the series of these designed acts of omission and commission on the part of A2, were eloquent enough to indicate in no uncertain terms that A2 knew or had reasons to believe that Kalarani 's death was homicidal. It is not disputed that A1 was a friend of A 2. It was A l who had supported A 2 's idea that the latter should himself go to the spot to investigate as the deceased girl appeared to be from a high class family. Standing alone, this circumstance is not of a conclusive tendency. But in the context of his subsequent conduct it assumes significance. He wilfully conducted himself in such a manner that there could be no doubt that he was a guilty associate of A 2. When in the context of the burial of the deadbody ordered by A 2 without sending the body for post mortem, the Karnam (PW 27) asked whether any relation of the deceased had come, A 2 pointed towards PW 4 saying that he was related to the deceased. Simultaneously, A 1 said . "Yes". This concerted conduct of A 1 in fraudulently representing PW 49 to be a relation or the deceased, when he knew that PW 49 was not such a relation, clearly marks him out as an intentional abettor and a guilty partner in the commission of the offence under sec. 201, Penal Code. 619 There can be no doubt that on the basis of the facts found, the charges under sections 218, 468, Penal Code had been fully established against the appellant; A 2 being a public servant charged with the preparation of official record relating to the investigation of the cause of the death of Kalarani, framed that record in a manner which he knew to be, incorrect with intent to save or knowing to be likely that he will thereby save the true offender or offenders from legal punishment. obviously, he prepared this false and forged record with the fraudulent and dishonest intention of misleading his, superior officers and in during them to do or omit to do anything which they would not do or omit if they were not so deceived or induced. A l, as discussed already, facilitated and intentionally aided A 2, in the preparation of the false and forged record. For the foregoing reasons we uphold the convictions and sentences of the appellants, on all the counts, as recorded by the High Court, and dismiss the appeal. V.P.S. Appeal dismissed.

On a report given by the father, regarding the disappearance of his two daughters, investigation was taken up by the D.S.P. because of certain special circumstances. After completing the investigation, A 2, a sub inspector of police, A 1, his friend, and another were charged with offenses under sections 120B, 366, 376. 302/34, 201, 218, 468/34, and 324 I.P.C. for conspiracy, abduction, rape, murder, calling evidence of crime to disappear, fabricating reports, forgery and causing hurt. The trial court acquitted all the accused. On appeal by the State, the High Court convicted A.1 and A.2 for offences under sections 201, 218 and 468 I.P.C. Dismissing the appeal to this Court, ^ HELD: (1) In order to bring home an offence under section 201, I.P.C., the prosecution has to prove; (a) that an offence has been committed; (b) that the accused knew or had reason to believe that the offence has been committed; (c) that with such knowledge or belief he, (1) caused any evidence of the commission of that offence to disappear, or, (ii) gave any information`respecting that offence which he then knew or believed to be false; (d) that he did so with the intention of screening the offender from legal punishment; and (e ) if the charge be of an aggravated form, as in the present case, that the offence in respect of which the accused caused evidence to disappear was punishable with death or with imprisonment for life or with imprisonment extending to 10 years. [610A E] Whether the circumstantial evidence in a particular case is sufficient and safe enough to warrant a finding that an offence has been committed, is a question which belongs to the realm of facts and not of law. So is the question whether the accused knew or had reason to believe that such an offence has been committed. [617H 618B] F Palvinder Kaur vs State of Punjab , explained. (2) In the present case the two girls died an unnatural death. The corpse of one was found on a beach having been washed ashore and the Corpse of the other was seen floating in the sea. A fisherman who noticed the second body saw marks indicating throttling. He removed a wrist watch and ornament, from it and allowed the body to drift away. The wrist watch and ornaments were identified as belonging to the younger sister of the first victim. The 3 possibilities are, that they committed suicide by drowning, or that their deaths were accidental, or that they were done to death by some person or persons. The choice of any of these possibilities would lead to the exclusion of the other two. [610G H] 3(a) The elder sister was a graduate and a nature girl of 22 who used to be the leader of the College Union. On the day of the occurrence the deceased girls along with their parents had participated in certain festivities. They were cheerful and there was no evidence to show that they were suffering from any mental depression with suicidal tendencies. [611E H] 603 (b) The body on the sea shore was in a semi nude condition. It had on only blouse, brassiere, petticoat and drawers but no sari. From the fact that it is customary for women of the locality to tie their series, tightly the possibility of the sari having been swept off be waves was remote. This shows that she was not wearing her sari when her body was immersed in water, but no Indian woman would commit suicide by jumping into sea in such a near nude condition because. ii would expose her body to post mortem. indignity. [611 H 162 C] (c) When the body was first seen there were, an injury on the forehead from which blood was oozing, a reddish abrasion on the thigh and blood marks on the drawers. the stomach, however, was not in a bloated condition. These circumstances show that death was not due to drowning. [612 G; E F] (4) It was nobody s case that any boat met with an accident off or near the sea shore resulting in loss of human life. No suggestion of accidental death of any person or woman was put to and prosecution witness. Such a plea had not ever been put forward by the accused in their statements recorded under s, 342, Cr. P.C. Therefore, the possibility of accidental death must also be excluded. [613 B D] (5) This process of elimination of suicide and accidental death inevitably leads to the conclusion that the death of these two girls, or at any rate of the first victim, was due to culpable homicide. [613 D] (6) From the very start, the investigation conducted by A. 2 was dishonest and fraudulent. He intentionally indulged in suppessio veri and suggestio falsi. [613 E F] (a) The morning after the night when the dead body was seen on the beach, a report was handed at the Police Station but the Head Constable returned it saying that it should be drawn up in the printed form and signed by the village Munsuff. A little later, A 2, the sub inspector incharge of the police station, came there and the Head Constable told him about the report. At that time A.1 and P. W. 49, also came to the Police Station, and A.1 also referred to the finding of the dead body on the seashore. Thereafter, A.1` A 2 and P.W. 49 and others went to the seashore at about noon. A 2 did not hold any inquest on the dead body, but instead, directed the body to be buried. When the Karnam questioned A 2 why he did not send the body for post mortem examination, A 2 replied that the body was that of a prostitute though the body was in an identifiable condition and he new the victim personally. He also said that it was a case of suicide and that P.W, 49 was a relation of the victim. A.1, who heard this, also said that P.W. 49 was a relation of the victim. Thereafter, A 2 fabricated an Inquest Report in which he stated falsely that there were no injuries on the dead body and that the stomach was bloated due to drinking of water, suggesting that it was a case of death by drowning. He also fabricated a false report as if given to him by one who knew the victim and the other girl to be prostitutes. That report was handed over by A 2 at the Police Station only 5 days later and he asked the Head Constable to note the date as if given 3 days before. The Head Constable did so after some hesitation. Inspire of persistent requests by the D.S.P., A.2 sent the copies of the F.I.R. and Inquest Report prepared by him only after an inordinate delay. A 2 also made false entries in the General Diary of the Police Station to corroborate the false Inquest Report and the fictitious complaint. He even tried to dissuaded the father from getting the body, which was buried, exhumed. [605 G 607 C; 614 G 616 E] (b) It was A 2 s duty to enter faithfully and truly the substance of the information in the station diary and to record further that he was proceeding for investigation on the basis thereof when he received information from the Head Constable about the reports regarding the finding of a dead body on the seashore. Instead of retrieving the written report that had been first received at the police station and returned by the head constable, he fabricated another document purporting to be the first information. All the reliable witnesses for the prosecution have deposed that no such person as the one who gave the first information was present at the scene of occurrence. When the D.S.P. was investigating into the matter, A 2 was not able to produce or give any indication about that informant though he claimed to have known him. Efforts to trace the existence of the two prostitutes mentioned in that report were also futile leading to the inference that they were also fictitious persons. [613 F 614 F] 604 The credible circumstantial evidence on record re inforced by the inference available from the incriminating conduct of the appellants, particularly A 2, in deliberately preparing false records to suppress the identity and the cause of death of the deceased girls fully justifies the conclusion reached by the High Court. [611 B C] (c) Section 174, Cr. P.C. peremptorily requires that the officer should hold an inquest on a dead body at the spot. This mandate is conveyed by the word there occurring in section 174(1). Section 174(3) gives a discretion to the Police officer not to sent the body for post mortem examination only in one case, namely, where there can be no doubt as to the cause of the death. This discretion has to be exercised prudently and honestly. [616 A C] (d) A 2 is a police officer of standing and experience, who was expected; to discharge the duties entrusted to him by law with fidelity and accuracy. He was required to ascertain the cause of death and investigate the circumstances and the efforts in which it was brought about. His duty was to make honest efforts to reach at the truth. He knew the deceased and saw the injuries on her dead body and must have known that in the circumstances of the case autopsy of the dead body was necessary to ascertain the cause or her death. He flouted all the salutary requirements of section 174. P.C. and his conduct in distoring and suppressing material evidence and preparing false records as to the identity of the dead body the cause of death and the falsification of the data bearing on that cause, could not be explained on any reasonable hypothesis save that of his guilt. [617 B E; 618 D F] (7) As regards A 1, his concerted conduct, including that in supporting the fraudulent misrepresentation made by A 2 to the Karnam. regarding PW 49 being a relation of the deceased, shows that he was a guilty associate of A 2.

vil Appeal No. 4395 of 1986. From the Judgment and Order dated 10.8.1984 of the Punjab and Haryana High Court in L.P.A. No. 748 of 1983. F.S. Nariman, S.S. Shroff and Mrs. P.S. Shroff for the Appellant. Respondent in person. R.K. Garg, and A. Saran for the Intervener. The Judgment of the Court was delivered by DUTT, J. This appeal by special leave has been preferred by the State of Haryana against the judgment of the Division Bench of the High Court of Punjab & Haryana whereby the Division Bench has set aside the judgment of a learned Single Judge of the High Court dismissing the writ petition of the respondent Shri P.C. Wadhwa, a member of the Indian Police Service. who was the Inspector General of Police, Haryana, from June 30, 1979 to July 25, 1980. It appears that certain adverse remarks were made by the Home Secretary to the Govern ment of Haryana against Shri Wadhwa, the Inspector General of Police for the said period. The adverse remarks were duly accepted by the competent authority under the All India Services (Confidential Rolls) Rules, 1970, hereinafter referred to as 'the Rules '. After such acceptance, the adverse remarks were communicated to Shri Wadhwa by the Home Secre tary by his letter dated May 4, 1982, about two years three months after the close of the relevant period of March 31, 1980. The re spondent did not make any representation against the adverse remarks to the reviewing authority under the Rules. Instead, he chose to file a writ petition before the Punjab & Haryana High Court challenging the authority of the Home Secretary to write a confidential report assessing the performances, character, conduct and qualities of the respondent as the Inspector General of Police and prayed for the quashing of such report or adverse remarks. 1034 A learned Single Judge of the High Court took the view that as the Home Secretary was specifically empowered by the State Government as the reporting authority under Rule 2(e) of the Rules, he had the authority to write the report or to make adverse remarks against the performances of the Inspector General of Police, Haryana. In that view of the matter, the learned Single Judge dismissed the writ petition. Being aggrieved by the judgment of the learned Single Judge, the respondent filed an appeal against the same to the Division Bench of the High Court and, as stated al ready, the Division Bench set aside the judg ment of the learned Single Judge and allowed the writ petition holding inter alia, that the Home Secretary had no authority to submit any report against the performance of the respond ent for the aforesaid period during which he was the Inspector General of Police, Haryana. Hence this appeal by special leave by the State of Haryana. The only point that is involved in this appeal is whether the State Government was justified in specifically empowering the Home Secretary as the reporting authority for the purpose of writing a confidential report in respect of the Inspector General of Police. Section 3 of the empowers the Central Government to make rules for the regulation of recruitment, and the conditions of services of persons appointed to an All India Service. By virtue of section 3, the Central Government framed the Rules. Under Rule 1(3), the Rules shall apply to the writ ing and the maintenance of the confidential reports on the members of the Service. Clauses (e), (f) and (a) of Rule 2 of the Rules are as follows: "2. Definitions In these rules, unless the context otherwise requires: (e) 'reporting authority ' means the authority who was, during the period for which the confidential report is written, immediate ly superior to the member of the Service and such other authority as may be specifically empowered in this behalf by the Government; (f) 'reviewing authority ' means the authority who was, 1035 during the period for which the confidential report is written, immediately superior to the reporting authority and such other authority as may be specifically empowered in this behalf by the Government; (a) 'accepting authority ' means the authority who was, during the period for which the confidential report is written, immediate ly superior to the reviewing authority and such other authority as may be specifically empowered in this behalf by the Government;" In this connection, it may be pointed out that it is not disputed that the conjunction 'and ' occurring in clauses (e), (f) and (a) should be read as 'or '. Under clause (e), the 'reporting authority ' may be either immediately superior to the member of the Service or such other authority as may be specifically empowered in this behalf by the Government. The expression 'immediately superior ' obviously indicates that the reporting authority should be the immediate superi or officer in the same Service to which the member of the Service belongs. The position is the same as in the cases of 'reviewing authority ' and 'accepting authority '. So, under the first part of clause (e), the reporting authority of the respondent could be a person who is immediately superior to him in the Police Service. At this stage, it is necessary to refer to sections 3 and 4 of the . Sections 3 and 4 are as follows: "Section 3. The superintendence of the police throughout a general police district shall vest in and shall be exercised by the State Government to which such district is subordi nate; and except as authorized under the provisions of this Act, no person, officer, or Court shall be empowered by the State Govern ment to supersede, or control any police func tionary.". "Section 4. The administration of the police throughout a general police district shall be vested in an officer to be styled the Inspec tor General of Police, and in such Deputy Inspectors General and Assistant Inspectors General as to the State Government shall seem fit. The administration of the Police throughout the local jurisdiction of the Magistrate of the district shall, under the general control and direction of such Magis trate, be vested 1036 in a District Superintendent and such Assist ant District Superintendents as the State Government shall consider necessary," It is clear from sections 3 and 4 that the administra tion of the police throughout a general police district shall be vested in the Inspector General of Police. The position and status of the Inspector General of Police have been described in Rule 1.2 of the Punjab Police Rules, 1934, Volume I. Rule 1.2 provides as follows: "Rule 1.2. The responsibility for the command of the police force, its recruitment, disci pline, internal economy and administration throughout the general police district vests in the Inspector General of Police. He is head of the Police Department, and is responsible for its direction and control and for advising the Provincial Government in all matters connected with It. In the discharge of his duties as Inspector General arid in the execu tion of order of Government he is bound to act in conformity with the system and regulations regarding the functions, discipline and admin istration of the Force contained, in the (V of 1861) and in these rules. Orders of the Provincial Government affecting the Police force, in whole or in part, will be issued through him. Inspector General is assisted in the control and administration of the Police force by such number of Deputy Inspectors General and Assistant Inspectors General as the Pro vincial (Government may from time to time appoint. " Under Rule 1.2, the Inspector General of Police is the head of the Police Department and is responsible for its direction and control and for advising the Provincial Gov ernment in all matters connected with it. Thus, the Inspec tor General of Police being the head of the Police Depart ment, there is no immediately superior officer to him in the Police Service. Consequently, the first part of clause (e) will not have any application to the respondent. Now the question is whether the State Government can specifically empower any authority to be the reporting authority of the Inspector General of Police under the second part of clause (e). Apart from any legal provision, it is just and proper that a reporting authority 1037 must be a person to whom the member of the Service is an swerable for his performances. In other words, the reporting authority should be a person higher in rank than the member of the Service. Indeed, that is apparent from the first part of clause (e). It is true that under the second part of clause (e), there is no indication as to the status and position of the authority who may be specifically empowered by the Government as the reporting authority, but from the point of view of propriety and reasonableness and having regard to the intention behind the rule which is manifest, such an authority must be one superior in rank to the member of the Service concerned. If that be not so, there will be an apparent conflict between the first part and second part of clause (e). We are, therefore of the view that the State Government can specifically empower only such authority as the reporting authority as is superior in rank to the In spector General of Police. It is, however, submitted by Mr. Nariman, learned Coun sel appearing on behalf of the State of Haryana, that the Home Secretary is the head of the Police Department under the Business of the Haryana Government (Allocation) Rules, 1974, hereinafter referred to as the Business Rules. The Business Rules have been framed by the Haryana Government in exercise of the power conferred by clauses (2) and (3) of Article 166 of the Constitution of India. Rules 1 to 4 of the Business Rules are as follows: "1. These rules may be called the Busi ness of the Haryana Government (Allocation) Rules, 1974. The Business of the Government of the State of Haryana shall be transacted in the Departments specified in the Schedule annexed to these rules and shall be classified and distributed among those Departments as laid down therein. The Governor shall, on the advice of the Chief Minister, allot among the Ministers the business of the Government by assigning one or more Departments to the Charge of a Minister. Provided that nothing in this rule shall prevent the assigning of one Department to the charge of more than one Minister. Each Department of the Secretariat shall consist of the 1038 Secretary to the Government, who shall be the official head of that Department, and of such other officers and servants subordinate to him as the State Government may determine: Provided that: (a) more than one Department may be placed in charge of the same Secretary; and (b) the work of a Department may be divided between two or more Secretaries. " Rule 2 provides inter alia that the Business of the Government of the State of Haryana shall be transacted in the Departments specified in the Schedule. Under rule 4 each Department of the Secretariat shall consist of the Secretary to the Government, who shall be official head of that De partment. In the Schedule to the Business Rules, Item No. 17 under the Home Department inter alia relates to "Police, Railway Police and P.A.P." Much reliance has been placed by the learned Counsel for the State of Haryana on Rule 4 read with Item No. 17. It is submitted by him that the Home Secretary being the head of the Home Department and as the Police Department has been placed under the Home Department, the Home Secretary must necessarily be the head of the Police Department. We are unable to accept this contention. The Business Rules have been framed under clauses (2) and (3) of Article 166 of the Constitution for the more conven ient transaction of the business of the Government of Har yana and for the allocation of business among the Ministers. Under Rule 4, the Secretary of each Department of the Secre tariat is the head of that Department. Thus, the Secretary of the Home Department is the head of the Home Department being a Department of the Secretariat, but merely because he has to conduct the business, on behalf of the Government, of the Police Department, he does not thereby become the head of the Police Department. Item No. 37 under the General Administration Department in the Schedule relates to Judges of the High Court and officers of the Superior Judicial Service. The Chief Secretary of the Government of Haryana is the head of the General Administration Department by virtue of Rule 4 of the Business Rules. But that does not mean that the Chief Secretary is also the head of the Administration relating to the Judges of the High Court and officers of the Superior Judicial Service. Similarly, Item No. 21 of the General Administration Department relates to Council of Ministers and its 1039 Committees. Surely, the Chief Secretary has no authority whatsoever on the Council of Ministers and its Committees. There is, therefore, no substance in the contention made on behalf of the appellant that as Police, Railway Police and P.A.P. have been placed under the Home Department, the Secretary of the Home Department is the head of the Police Department by virtue of Rule 4 of the Business Rules. The Rules of Business that have been framed under Article 166 cannot override the provisions of the Act or any statutory rules. Indeed, the Business Rules also do not attempt to override Rule 1.2 of the Punjab Police Rules, for it cannot. There is much substance in the contention made by the re spondent appearing in person and Mr. Garg, learned Counsel appearing on behalf of the intervener, the IPS Officers ' Association, that the Business Rules framed under Article 166 cannot be relied upon for the purpose of interpretating the provision of clause (e) of Rule 2 of the Rules. In view of sections 3 and 4 of the read with Rule 1.2 of the Punjab Police Rules, the Inspector General of Police, Haryana, is the head of the Police Department. The immediate authority superior to the Inspector General of Police is the Minister in Charge of the Police Department. The only authority who could be specifically empowered as the reporting authority in regard to the Inspector General of Police under clause (e) of Rule 2 of the ' Rules is the Minister in Charge and the Chief Minister, being superior to the Minister in Charge, may be the reviewing authority under clause (f) of Rule 2. In acting as the reporting authority the Minister in Charge may be assisted by the Home Secre tary, but the confidential report relating to the perform ance of the Inspector General of Police has to be written by the Minister in Charge. The Minister in Charge of the Police Department is supposed to be aware of the performance of the Inspector General of Police. As the Chief Minister is the reviewing authority, he will also act as the accepting authority on the basis of the principle as laid down under Rule 6B of the Rules providing that where the accepting authority writes or reviews the confidential report of any member of the Service, it shall not be further necessary to review or accept any such report. In other words, the Chief Minister will act both as the reviewing authority and the accepting authority. In this connection, we may notice the statements made in the writ petition filed by the respondent in the High court of Punjab & Haryana. It has been stated in paragraph 14 that reports of the work and conduct of the various Secretaries to the Government are written and recorded by the Minister in Charge of the Departments concerned 1040 and not even by the Chief Secretary so that the Minister in Charge of the Departments concerned are the 'immediate superior ' authorities to the Secretaries concerned within the meaning of Rule 2(e) of the Rules. Further, it has been stated that before independence the report on the work and conduct of the Inspector General of Police, Punjab, was being recorded by the Minister in Charge of the Department and such a position continued even after the independence till 1974 when the Haryana State Government passed the order dated May 3, 1974 under clause (e) of Rule 2 of the Rules, inter alia, specifically empowering the Home Secretary as the reporting authority for writing out the confidential reports in regard to the Inspector General of Police, Har yana. The statements made in paragraph 14 have not been denied by the State of Haryana in its counter affidavit filed in the High Court. The Division Bench of the High Court was, therefore, perfectly justified in quashing the confidential report written by the then Home Secretary on the work and conduct of the respondent Shri Wadhwa. Before we part with this appeal, we may dispose of another contention of the respondent about the delay in communicating to him the impugned adverse remarks. Under Rule 5 of the Rules, a confidential report assessing the performances, character, conduct and qualities of every member of the service shall be written for each financial year, or calendar year, as may be specified by the Govern ment, ordinarily within two months of the close of the said year. Rule 6 provides that the confidential report shall be reviewed by the reviewing authority ordinarily within one month of its being written. Under Rule 6A, the confidential report, after review, shall be accepted with such modifica tions as may be considered necessary, and countersigned by the accepting authority, ordinarily within one month of its review. Thus, the whole process from the writing of the confidential report to the acceptance thereof has to be completed ordinarily within a maximum period of four months. Further, under Rule 7 the adverse remarks, if any, in a confidential report shall be communicated to the officer concerned within three months of the receipt of the confi dential report. Thus, a total period of seven months has been laid down as the maximum period within which adverse remarks, if any, has to be communicated to the officer concerned. It has been already noticed that the adverse remarks were sent to the respondent after two years three months, that is, after twenty seven months of the close of the year. It is submitted by the respondent that in view of the delayed communication. the adverse remarks lost all importance and should be struk down on that ground. 1041 The whole object of the making and communication of adverse remarks is to give to the officer concerned an opportunity to improve his performance, conduct or charac ter, as the case may. The adverse remarks should not be understood in terms of punishment, but really it should be taken as an advice to the officer concerned, so that he can act in accordance with the advice and improve his service career. The whole object of the making of adverse remarks would be lost if they are communicated to the officer con cerned after an inordinate delay. In the instant case, it was communicated to the respondent after twenty seven months. It is true that the provisions of Rules 5, 6, 6A and 7 are directory and not mandatory, but that does not mean that the directory provisions need not be complied with even substantially. Such provisions may not be complied with strictly, and substantial compliance will be sufficient. But, where compliance after an inordinate delay would be against the spirit and object of the directory provision, such compliance would not be substantial compliance. In the instant case, while the provisions of Rules 5, 6, 6A and 7 require that everything including the communication of the adverse remarks should be completed within a period of seven months, this period cannot be stretched to twenty seven months, simply because these Rules are directory, without serving any purpose consistent with the spirit and objec tives of these Rules. We need not, however, dilate upon the question any more and consider whether on the ground of inordinate and unreasonable delay, the adverse remarks against the respondent should be struck down or not, and suffice it to say that we do not approve of the inordinate delay made in communicating the adverse remarks to the respondent. For the reasons aforesaid, this appeal is dismissed. There will, however, be no order as to costs. N.P.V. Appeal dis missed.

The respondent, a member of the Indian Police Service was the Inspector General of Police, Haryana from June 30, 1979 to July 25, 1980. The Home Secretary to the Government of Haryana made certain adverse remarks against the respondent which after acceptance were communicated to the respondent on May 4, 1982, about two years and three months after the close of the relevant period on March 31, 1980. The respondent filed a writ petition challenging the authority of the Home Secre tary to write a confidential report assessing the per 1031 formance, character, conduct and qualities of the respondent as Inspector General of Police and for the quashing of such report or adverse remarks, which was dismissed by a Single Judge of the High Court. The respondent filed an appeal and the Division Bench set aside the judgment of the Single Judge and allowed the writ petition holding that the Home Secretary had no authority to submit any report against the performance of the respondent for the aforesaid period during which he was the Inspector General of Police, Haryana. In the appeal by special leave by the State of Haryana it was submitted that as the Police Department has been placed under the Home Department and the Home Secretary being the head of the Department, the Home Secretary must necessarily be the Head of the Police Department under the Business of the Haryana Government (Allocation) Rules, 1974. It was also stated that the provisions of Rules 5, 6, 6A and 7 of the All India Services (Confiden tial Rolls) Rules 1970 are directory and not mandatory. It was urged by the respondent that the Business Rules framed under Article 166 cannot be relied upon for the purpose of interpreting the provisions of clause (e) of Rule 2 of the Rules, and in view of the delay in communica tion, the adverse remarks lost all importance and should be struck down on that ground. Dismissing the appeal, HELD: 1. A reporting authority must be a person to whom the member of the Service is answerable for his performances. Such an authority must be one superior in rank to the member of the Service concerned. The State Government can specifically empower only such authority as the reporting authority as is superior in rank to the Inspector General of Police. [1036H; 1037A B] 2.1 The Business Rules have been framed under clauses (2) and (3) of Article 166 of the Constitution for the more convenient transaction of the business of the Government of Haryana and for the allocation of business among the Ministers. [1038E F] 2.2 Under Rule 4 of the Business Rules, the Secretary of each Department of the Secre tariat is the head of the Department. Thus, the Secretary of the Home Department is the head of the Home Department being a Department of the Secretariat, but merely because he has to conduct the business. on behalf of the Government, of the Police 1032 Department, he does not thereby become the Head of the Police Department. [1038F G] 2.3 The Rules of Business that have been framed under Article 166 cannot override the provisions of the Act, or any statutory rules. In view of Section 3 and 4 of the read with Rule 1.2 to the Punjab Police Rules, the Inspector General of Police, Haryana is the Head of the Police Department. The immediate authority superior to Inspector General of Police is the Minister in Charge of the Police Department. The only authority who could be specifically empowered as the report ing authority in regard to the Inspector General of Police under clause (e) of Rule 2 of the All India Services (Confidential Rolls) Rules is the Minister in Charge and the Chief Minister being superior to the Minister in Charge may be the reviewing authority under clause (f) of Rule 2. [1039D E] 4.1 Rules 5, 6, 6A and 7 of the All India Services (Confidential Rolls) Rules require that the whole process from the writing of the confidential reports assessing the perform ance, character conduct and qualities of every member of the service, to the communication of the adverse remarks should be completed within a period of seven months. In the instant case, the adverse remarks were communicated after 27 months. [1040F G] 4.2 The whole subject of the making and communication of adverse remarks is to give to the officer concerned an opportunity to im prove his performance, conduct or character, as the case may be, and this object would be lost if they are communicated to the officer concerned after an inordinate delay. Adverse remarks should not be understood in terms of punishment, but really should be taken as an advice to the officer concerned, so that he can act in accordance with the advice and improve his service career. [1041A B] 4.3 Rules 5, 6, 6A and 7 are directory and not mandatory, but that does not mean that the directory provisions need not be complied with even substantially. But, where compliance after an inordinate delay would be against the spirit and object of the directory provision, such compliance would not be substantial compliance. [1041C D] 4.4 While the provisions of Rules 5, 6, 6A and 7 require that everything including the communication of the adverse remarks should be completed within a period of seven months, this period cannot be 1033 stretched to twenty seven months, simply because these rules are directory, without serving any purpose consistent with the spirit and objective of these Rules. [1041D E]

Appeal No. 185 of 1966. Appeal by special leave from the judgment and order dated March 20, 1962 of the Mysore High Court in Writ Petition No. 109 of 1960. A.K. Sen, R. Ganapathy Iyer and R. Gopalakrishnan, for the appellants. D.Narsaraju, T. A. Ramachandran and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgement of the Mysore High Court dated March 20, 1962 dismissing writ petition No. 109 of 1960. The appellants had prayed therein for the grant of writ for quashing a. notice dated January 16, 1960 issued by the respondent under section 15 of the Excess Profits Tax Act, 1940 (Act XV of 1940), hereinafter called the 'Act ', calling upon the appellants to submit a return of the standard profits and the profits actually made during the chargeable accounting period from October 30, 1943 to October 30, 1944 on the ground that the profits had been under assessed. The appellants carried on a business constituting themselves into a partnership called 'Guduthur Thimmappa & Brothers in 1934. On the date of commencement of the business the part ners were G. Thimmappa, G. Ekambarappa, and G. Padmanabhan, each of the partners representing their respective joint families. The business of the firm was in Bellary town and the partners of the firm were residents of Bellary town during the period the firm was carrying on business. The, firm was dissolved on October 16, 1944. Thimmappa, one of the partners, died on April 13, 1955. For the chargeable accounting period from October 30, 1943 to April 30, 1944, the Excess Profits Tax Officer had taken steps to assess the "escaped" profits of the firm. He issued the necessary notices to G. Padmanabhan and G. Ekambarappa as the partners of the dissolved firm. He also issued notice to G. M. Prabhu and G. Lakshmidevamma as the representatives of G. Thimmappa. The contention of the appellants, before the High Court was that as from November 1, 1956 the Act must be 866 deemed to have been repealed so far as Bellary district is concerned and therefore the respondent was not competent to take any proceedings for determining the escaped income under section 15 of that Act. The High Court rejected the contention on the ground that, though the Act stood repealed by reason of the inclusion of Bellary district in Mysore State, the liability to pay tax on the escaped profits continued by virtue of section 6 of the General Clauses Act. The question to be considered in this appeal is whether the appellants continued to be liable to be proceeded against under section 15 of the Act on the profits which had escaped taxation. The present Bellary district was a part of the old Madras State which was a Part "A" State under the Constitution of India till its merger with the Mysore State on October 1, 1953 which was a Part "B" State. The Mysore State continued to be a Part "B" State till November 1, 1956. The Act extended, when first promulgated, to. the territory of former British India. After the Constitution came into force, section 1(2) of the Act was adapted so as to extend the operation of the Act "to the whole of India except Part 'B ' States" by the Adaptation of Laws Order, 1950. After the formation of new States in pursuance of the States Reorgani sation Act, 1956 (Act 37 of 1956), sub section (2) of section 1 of the Act was adapted by the President by Adaptation of Laws (No. 3) Order, 1956 dated December 31, 1956. Section 1(2) of the Act as adapted read as follows : "It extends to the whole of India except the territories which immediately before the 1st November, 1956 were comprised in part 'B ' state." The result of the adaptation was that all the provisions of the Act stood repealed so far as the district of Bellary was concerned with effect from December 31, 1956. It was contended on behalf of the appellants that it is not a case of repeal of the Act and so the provisions of section 6 of the General Clauses Act could not be invoked to sustain the validity of the notices issued by the respondent under section 15 of the Act. It was argued that so far as the Act was con cerned, the Adaptation of the Laws Order, 1956 only modified the provisions of section 1 (2) of the Act and did not repeal the Act as such and the effect of the modification was that the provisions of the Act were no longer applicable to the Bellary district which was comprised in the territory of Part 'B ' State of Mysore immediately before November 1, 1956. In our opinion there is no justification for the argument put forward on behalf of the appellants. The result of the Adaptation of Laws Order, 1956 so far as the Act was concerned, was that the provisions of that Act were no longer applicable or in force in Bellary district. To put it differently, the Act was repealed so far as the area of Bellary 8 6 7 district was concerned. Repeal of an Act means revocation or abrogation of the Act and, in our opinion, section 6 of the General Clauses Act applies even in the case of a partial repeal or repeal of part of an Act. Section 6 of the General Clauses Act 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 (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or Section 3(19) of the General Clauses Act defines an "enactment" as including "a Regulation and also as including any provision contained in any Act or in any such Regulation as aforesaid". The argument was also stressed on behalf of the appellants that even if section 6(c) of the General Clauses Act was applicable there was no "liability incurred or accrued" as there was no assessment of escaped profits before November 1, 1956 when the adaptation was made. We do not think there is any substance in this argument. The liability of the appellants to tax arose immediately at the end of the chargeable accounting period and not merely at the time when it is quantified by assessment proceedings. It follows therefore that the notice issued under section 15 of the Act was legally valid and the appellants representing the original partners of the firm continued to be liable to be proceeded against under that section for the profits which had escaped taxation. In Wallace Brothers and Co. Ltd. vs Commissioner of income tax(1), the Judicial Committee expounded in clear terms the scope of a tax liability under the Income tax Act. It was observed by the Judicial Committee as follows : ". . the rate of tax for the year of assessment may be fixed after the close of the previous year and the assessment will necessarily be made after the close of that year. But the liability to tax arises by virtue of the charging section alone, and it arises not later than the close of the previous year, though quantification of the amount payable is postponed. " The same view has been expressed by this Court in Chatturam Horilram Ltd. vs C.I.T. (2) in which the legal position was reviewed (1) , 244. (P.C.) (2) 868 with regard to the question of charge to income tax. In that case, the assessee company carrying on business in Chota Nagpur was assessed to tax for the year 1939 40, but the assessment was set aside by the Income tax Appellate Tribunal on March 28, 1942, on the ground that the Indian Finance Act, 1939, was not in force during the assessment year 1939 40, in Chota Nagpur which was a partially excluded area. On June 30, 1942, a Regulation was promulgated by which the Indian Finance Act of 1939 was brought into force in Chota Nagpur retrospectively as from March 30, 1939. Thereupon the Income tax Officer made an order holding that the income of the assessee for the year 1939 40 had escaped assessment and issued to the assessee a notice under section 34 of the Income tax Act. The validity of the notice was questioned. It was held by th Court that though the Finance Act was not in force in that area in 1939 40, the income of the assessee wasliable to tax in that year and, therefore, it had escapdently of the passing of the Finance Act but until the Finance Act It was pointed out that the income was chargeable to tax independing dently of the passing of the Finance Act but until the Finance Act was passed no tax could be actually levied. The same principle was reiterated by this Court in Kalwa Devadattam vs Union of India(l). The question in that case was whether the liability of a Hindu undivided family arose before or after partition of the family. In that case, this Court speaking through Shah, J. stated in clear terms thus : "Under the Indian Income tax Act liability to pay income tax arises on the accrual of the income, and not from the computation made by the taxing authorities in the course of assessment proceedings; it arises at a point of time not later than the close of the year of account. " The same view has been taken in a recent case by this Court in State of Kerala vs N. Sami lyer (2 ) . In view of the principle expressed in these authorities we are of the opinion that the liability to pay excess profits tax accrued immediately at the end of the chargeable accounting period and that liability was preserved under section 6 (c) of the General Clauses Act even though the Act stood repealed so far as Bellary district was concerned with effect from November 1, 1956. Mr. Narsaraju contended in the alternative that on the combined operation of section 53 of the Andhra Pradesh Act (Act 30 of 1953) and s ' 119 of the State Reorganisation Act (Act 37 of 1956) all the provisions of the Excess Profits Tax Act, 1940 remained in operation in Bellary district in spite of the Adaptation of Laws Order, 1956. Section 53 of the Andhra Pradesh Act states as follows: (1) (2) A.I.R. 1966 S.C. 1415. 8 69 .lm15 "The provisions of Part 11 shall not be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to the State of Madras or of Mysore shall, until otherwise provided by a competent Legislature or other competent authority, continue to have the same meaning. " .lm0 Section 119 of the State Reorganisation Act reads as follows "The provisions of Part It shall not be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to an existing State shall, until otherwise provided by a competent Legislature or other competent authority, be construed as meaning the territories within that State immediately before the appointed day. " Section 120 of this Act states : "For the purpose of facilitating the application of any law in relation to any of the States formed or territorially altered by the provisions of Part II, the appropriate Government may, before the expiration of one year from the appointed day, by order make such adaptations and modifications of the law, whether by way of repeal or amendment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent Legislature or other competent authority. Explanation. In this section, the expression "appropriate Government" means (a) as respect any law relating to a matter enumerated in the Union List, the Central Government; and (b) as respects any other law, (i) in its application to a Part A State, the State Government, and (ii) in its application to a Part C State, the Central Government. " it was pointed out that the Act was in force in Bellary district When the Constitution came into force and the effect of section 53 of the Andhra Pradesh Act was to continue the operation of that Act so far as Bellary district was concerned. The effect of section 119 870 of the State Reorganisation Act was to preserve the territorial operation of the law which was immediately in force before the date of the promulgation of that Act until such law was repealed by the competent legislature or a competent legislative authority. There is great force in. the argument advanced by Mr. Narsaraju on this point. But it is not necessary for us to express any concluded opinion on this aspect of the case because we have already given reasons for holding that the appeal must be dismissed on the ground that the Act stood repealed by reason of the Adaptation of Laws Order, 1956 and the liability to pay tax on escaped profits continued under section 6 of the General Clauses Act. We accordingly affirm the judgment of the Mysore High Court dated March 20, 1962 and dismiss this appeal with costs. G.C. Appeal dismissed.

The District of Bellary originally belonged to the Part 'A ' State of Madras in British India. On October 1. 1953 it merged in the Part 'B ' '.State of Mysore. The Excess Profits Act, 1940 applied only to British India. When Bellary District went to the Part 'B ' State of Mysore the Act ceased to apply to it. After the , Mysore also became a Part 'A ' State. But according to section 1(2) of the Adaptation of Laws (No. 3) Order dated December 31, 1956. the aforesaid Excess Profits Tax Act was to extend "to the whole of India ,except the territories which immediately before November 1, 1956 were comprised in a Part 'B ' State. " In 1960 the Excess Profits Tax Officer, Bellary gave a notice to the appellants under section 15 of the Act in respect of the period October 30, 1943 to October 30, 1944. The appellants objected that the Act did not apply to Bellary district as immediately before November 1, 1956 it was in a Part 'B ' State. The plea was rejected by the departmental authorities as well as by the High Court in a writ petition under article 226 of the Constitution. In appeal. by special leave, to this Court it was contended that so far as Bellary District was concerned it was not a case of repeal but only of non application of the Act, and thus section 6 of the General Clauses Act was not attracted. It was further urged that even if section 6 applied no liability bad accrued or been incurred in terms of cl. (e) of the section as there was no assessment of escaped profits before November 1, 1956 when the adaptation was made. HELD : (i) The result of the Adaptation of Laws Order 1956 so far as the Act was concerned, was that the provisions of the Act were no longer applicable or in force in Bellary district. To put it differently, the Act was repealed so far as the area of Bellary district was concerned. Repeal of the Act means revocation or abrogation of the Act and section 6 of the General Clauses Act applies even in the case of a partial repeal, or repeal of part of an Act. [866H; 867A] (ii)The case was covered by section 6(e) of the General Clauses Act. The liability of an assessee to tax arises immediately at the end of the chargeable accounting period and not merely at the time when it is quantified. by assessment proceedings. It followed therefore that the 865 notice issued under section 15 of the Act was legally valid and the appellants representing the original partners of the firm continued to be liable to be proceeded against under that section for the profits which had escaped taxation. [867 E F] Wallace Brothers & Co. vs Commissioner of Income tax, , Chatturam Horilram Ltd. vs C.I.T., ; Kalwa Devaduttam vs Union of India, and State of Kerala V. N. Same lyer, A.I.R. 1966 S.C. 1415, relied on.

ON: Criminal Appeal No. 22 of 1950. Appeal from the judgment and order dated 29th June, 1950, of the High Court of Judicature at Simla (Weston C.J. and Khosla J.) in Criminal Appeal No. 432 of 1949 arising out of a judgment dated 5th August, 1949, of the Court of the Additional Sessions Judge, Amritsar, in Ses sions Trial No. 7 of 1949 and Case ' No. 8 of 1949. Jai Gopal Sethi (R. L. Kohli, with him) for the appel lants. Gopal Singh for the State. March 21. The Judgment of the Court was delivered by FAZL ALl J. The three appellants were tried by the Additional Sessions Judge at Amritsar and found guilty of having murdered two persons named Darshan Singh and Achhar Singh and sentenced to transportation for life. The High Court of Punjab upheld their 841 conviction and sentence and granted them a certificate under article 134(1)(c)of the Constitution that the case is a fit one for appeal to this Court. Hence this appeal. The facts of the case may be briefly stated as follows. On the evening of 16th December, 1948, a little before sunset, Achhar Singh, one of the murdered persons, went to the house of one Inder Singh in village Dalam for getting paddy husked. Achhar Singh 's brother, Darshan Singh, who was working as a driver at Amritsar, came to Dalam from Amritsar the same evening, and, on coming to know from his father that Achhar Singh had gone to Inder Singh 's house, he also went there. while the two brothers were returning home, they were attacked by the three appellants and two of their relatives in a lane adjoining Inder Singh 's house. The five assailants, who were armed with deadly weapons, in flicted a number of injuries on the two victims, as a result of which they died then and there. After the murder, the appellants and their companions tied the two dead bodies in two kheses (wrappers) and took them to village Saleempura where two other persons, named Ajaib Singh and Banta Singh, joined them, and the dead bodies after being dismembered were thrown into a stream known as Sakinala at a place about five miles from village Dalam. Bela Singh, father of the deceased persons, who was one of the persons who claims to have witnessed the occurrence, did not leave the village at night on account of fear, but he started about two hours before sunrise on the next morning and lodged the first information report at 10 A.M. at the nearest police station. A police officer arrived in village Dalam shortly after wards, and after investigation a charge sheet was submitted against seven persons including the present appellants. At the trial, five of the accused were charged with offences under section 302 read with section 149 and under section 201 read with section 149 of the Indian Penal Code. and the remaining two accused were charged with the offence under section 201 read with section 149 of that Code. The learned Judge who tried 842 the accused, convicted the appellants and two other persons under section 302 read with section 149 of the Penal Code and sentenced them to transportation for life, and convicted Ajaib Singh under section 201 read with section 149 and sentenced him to three years ' R.I. Bantu Singh, accused, was acquitted. On appeal, the Punjab High Court upheld the conviction of the present appellants and acquitted the remaining three persons. Before proceeding to discuss the evidence in the case, it is necessary to refer to what has been. described as the motive for the murder. It appears that in June, 1947, Natha Singh, father of the third appellant, Swaran Singh, was murdered, and Darshan Singh and Achhar Singh, the two mur dered persons in the case before us, and their third broth er, Sulakhan Singh, were charged with the murder of that person. As a result of the trial, Darshan Singh was acquit ted and Achhar Singh was sentenced to 11/2 years ' R.I., while Sulakhan Singh was sentenced to 7 years ' R.I. The judgment of the Sessions Judge in that case was delivered shortly before the date of the present occurrence, and it is common ground that Achhar Singh had been released on bail by the appellate court and was at large at that time. It is said that the appellants and their relatives felt aggrieved by the acquittal of Darshan Singh and by the light sentence passed on Achhar Singh, and therefore committed this murder in a spirit of frustration and revenge. It was conceded before us by the learned counsel for the appellants that the facts stated above constituted a strong motive for the murder, but he also contended that they constituted an equally strong motive for the appellants being falsely implicated in case the murder was committed, as was suggest ed by him, in circumstances under which the murderers could not be seen or identified. It therefore becomes necessary to set out the evidence adduced by the prosecution in support of the murder. The evidence led by the prosecution may be divided under two main heads : (1) Direct evidence, and(2) Circumstantial evidence. The direct evidence consists 843 of the testimony of four eye witnesses, namely, Bela Singh, father of the deceased, who claims to have gone to the scene of occurrence on hearing an outcry and to have witnessed the murderous assault on his sons; Inder Singh and his wife, Mst. Taro, to whom the murdered persons had gone for getting paddy husked and who lived in a house adjoining the lane where the murder took place; and Gurcharan Singh, a resident of a different village, who states that he saw the occur rence when he was going towards village Dhadar on a cycle. The circumstantial evidence in the case, on which the High Court has relied, may be briefly summarised as follows : (1) The second appellant, Massa Singh, who was arrested on the 18th December, 1948, was wearing a pyjama stained with human blood. (2) The third appellant, Swaran Singh, who was arrested on the 18th December, 1948, took the police on the 19th December to his haveli which was locked, and, on opening it two kheses (wrappers) which were stained with human blood were recovered. (3) Swaran Singh pointed out a spot on the way to Saki nala, where the two dead bodies were placed for a short time while they were being taken to Sakinala, and the police scrapped blood stained earth from that spot. He also led the police to the bank of Sakinala and pointed out the trunk of the body of Darshan Singh which was lying in the nala. (4) Lachhman Singh, who was arrested on the 28th Decem ber, 1948, pointed out a dilapidated khola near Sakinala where 3 spears, one kirpan and a datar, all stained with human blood, were recovered. The learned Sessions Judge, who heard the evidence, seems to have been impressed by the evidence of the eye witnesses, and he has summed up his conclusion in these words : "This evidence was so consistent, so reliable, and of such nature that in my opinion it is definitely established that the five accused Lachhman Singh, Katha 844 Singh, Massa, Singh, Charan Singh and Swaran Singh are proved to have actually murdered both Darshan Singh and Achhar Singh. This fact is further proved from subsequent events as deposed by P.W. 8 Bahadur Singh and P.W. 9 Gian Singh and P.W. 11 Bhagwan Singh. These witnesses had wit nessed the various recoveries in this case which were made at the instance of all the accused. " The learned Judges of the High Court, though they re pelled most of the criticisms levelled against the witness es, ultimately came to the conclusion that "in all the circumstances (of the case) it would be proper not to rely upon the oral evidence implicating particular accused unless there is some circumstantial evidence to support it". Having laid down this standard, they examined the circum stantial evidence against each of the accused persons and upheld the conviction of the three appellants on the ground that the circumstantial evidence, to which reference has been made, was sufficient corroboration of the oral evi dence. The case of the appellants was argued at great length by Mr. Sethi, who appeared for them, and everything that could possibly be said in their favour was urged by him with great force and clarity. Proceeding, however, upon the principles laid down by this court, circumscribing the scope of a criminal appeal after the case has been sifted by the trial court and the High Court, it seems to us that the question involved in the present appeal is a short and simple one. According to our reading of the judgment of the High Court, the learned Judges, who dealt with the case, did not condemn the oral evidence outright, but, as a matter of prudence and caution, they decided not to convict an accused person unless there were some circumstances to lend support to the evidence of the eye witnesses with regard to him. It is quite clear on reading the judgment that the corroboration which the learned judges required to satisfy themselves was not that kind of corroboration which one requires in the case of the evidence of an approver or an accomplice, 845 but corroboration by some circumstances which would lend assurance to the evidence before them and satisfy them that the particular accused persons were really concerned in the murder of the deceased. Judged by this standard, which it was open to them to prescribe, it seems to us that the case of each of the appellants clearly fell within the rule which they had laid down for their own guidance. The comment of the learned counsel for the appellants with regard to the blood stained pyjama which was recovered from Massa Singh was, firstly, that it was not possible to gather from the evidence the extent of the blood stains, and secondly that it would be highly improbable that this ac cused person would be so reckless as to continue to wear a blood stained pyjama after having perpetrated the crime. This criticism has been considered by the courts below, and it does not appear to us to be of such a nature as to affect the conclusion arrived at by them. As to the recovery of blood stained weapons at the instance of Lachhman Singh, it was urged that the entire evidence with regard to this recovery should be discarded, as the police investigation in the case was not a straightforward one but was conducted in such a way as to raise suspicion that the police were delib erately trying to create some evidence of recovery against each of the accused persons. It is sufficient to say that it is not the function of this court to reassess evidence and an argument on a point of fact which did not prevail with the courts below cannot avail the appellants in this court. The comment against the discoveries made at the instance of Swaran Singh was that they are not admissible in evidence under section 27 of the Indian Evidence Act, which provides "When any fact is deposed to as discovered in conse quence of information received from a person accused of an offence in the custody of a police officer, so much of such information, whether it amounts to a confession or not, as ' relates distinctly to the fact there. by discovered, may be proved," 846 The main facts which it is necessary to state to under stand the argument on this point, may be summed up as fol lows : According to the prosecution, all the three accused, namely, Katba Singh, Massa Singh and Swaran Singh, were interrogated by the police on the morning of the 19th Decem ber, 1948, and they made certain statements which were duly recorded by the police. In these statements, it was disclosed that the dead bodies were thrown in the Sakinala. Thereafter, the police party with the three accused went to Sakinala where each of them pointed out a place where dif ferent parts of the dead bodies were discovered. The learned counsel for the appellants cited a number of rulings in which section 27 has been construed to mean that it is only the information which is first given that is admissible and once a fact has been discovered in conse quence of information received from a person accused of an offence, it cannot be said to be re discovered in conse quence of information received from another accused person. It was urged before us that the prosecution was bound to adduce evidence to prove as to which of the three accused gave the information first. The head constable, who record ed the statements of the three accused has not stated which of them gave the information first to him, but Bahadur Singh, one of the witnesses who attested the recovery memos, was specifically asked in cross examination about it and stated: "I cannot say from whom information was got first". In the circumstances, it was contended that since it cannot be ascertained which of the accused first gave the informa tion, the alleged discoveries cannot be proved against any of the accused persons. It seems to us that if the evidence adduced by the prosecution is found to be open to suspicion and it appears that the police have deliberately attributed similar confessional statements relating to facts discovered to different accused persons, in order to create evidence against all of them, the case Undoubtedly demands a most cautious approach. 847 But as to what should be the rule when there is clear and unimpeachable evidence as to independent and authentic statements of the nature referred to in section 27 of the Evidence Act, having been made by several accused persons, either simultaneously or otherwise, all that we wish to say is that as at present advised we are inclined to think that some of the eases relied upon by the learned counsel for the appellants have perhaps gone farther than is warranted by the language of section 27, and it may be that on a suitable occasion in future those cases may have to be reviewed. For the purpose of this appeal, however, it is sufficient to state that even if the argument put forward on behalf of the appellants. which apparently found favour with the High Court, is correct, the discoveries made at the instance of Swaran Singh cannot be ruled out of consideration. It may be that several of the accused gave information to the police that the dead bodies could be recovered in the Sakinala, which is a stream running over several miles, but such an indefinite information could not lead to any discov ery unless the accused followed it up by conducting the police to the actual spot where parts of the two bodies were recovered. From the evidence of the head constable as well as that of Bahadur Singh, it is quite clear that Swaran Singh led the police via Salimpura to a particular spot on Sakinala, and it was at his instance that blood stained earth was recovered from a place outside the village, and he also pointed out the trunk of the body of Darshan Singh. The learned judges of the High Court were satisfied, as appears from their judgment, that his was "the initial pointing out" and therefore the case was covered even by the rule which, according to the counsel for the appellants, is the rule to be applied in the present case. The learned counsel for the appellants pointed out that the doctor who performed the post mortem examination of the corpses, found partially digested rice in the stomach of the two deceased persons, and he 110 848 urged that from this it would be inferred that the occurrence must have taken place sometime at night after the deceased persons had taken their evening meals together. This argument again raises a question of fact which the High Court has not omitted to consider. It may however be stated that a reference to books on medical jurisprudence shows that there are many factors affecting one 's digestion, and cases were cited before us in which rice was not fully digested even though considerable time had elapsed since the last meal was taken. There are also no data before us to show when the two deceased persons took their last meal, and what article of food, if any, was taken by them along with rice. The finding of the doctor therefore does not neces sarily affect the prosecution case as to the time of occur rence. It was also contended that there being no charge under section 302 read with section 34 of the Indian Penal Code, the conviction of the appellants under section 302 read with section 149 could not have been altered by the High Court to one under section 302 read with section 34, upon the acquit tal of the remaining accused persons. The facts of the case are however such that the accused could have been charged alternatively, either under section 302 read with section 149 or under section 302 read with section 34. The point has therefore no force. In our opinion, there is no ground for interfering with the judgment of the courts below, and we accordingly dismiss this appeal and uphold the conviction and sentence of the appellants. We however wish to endorse the opinion of the High Court that having regard to the gruesome nature of the crime, the sentence imposed by the Additional Sessions Judge was inappropriate and his reasons for imposing the lighter penalty are wholly inadequate. Appeal dismissed. Agent for the appellant : R.N. Sachthey.

Three persons K, M and S, who were accused of murder made statements to the police which disclosed that the dead bodies after being dismembered were thrown into a stream and the police party thereafter went with the three accused to the stream where each of them pointed out a place where different 109 840 parts of the dead bodies were discovered. It was contended on behalf of the accused that it was only the information which was first given that was admissible under sec. 27 of the Evidence Act, that once a fact has been discovered in consequence of information received from a person accused of an offence, it cannot be said to be re discovered in consequence of information received from another accused person, and that in the absence of evidence to show which of the accused first gave the information the discoveries alleged cannot be proved against any of the accused persons: Held, that, even assuming that this argument was correct, as it appeared from the evidence that S led the police to a particular spot on the stream and it was at his instance that some blood stained earth was recovered from a place outside the village and he had also pointed out the trunk of one of the dead bodies, and the High Court was satisfied that there was an "initial pointing out" by S, the case was covered by the rule and the evidence as to the discoveries was admissible. With regard to the rule applicable to cases where there is clear and unimpeachable evidence as to independent and authentic statements of the nature referred to in sec. 27 of the Evidence Act having been made by several accused persons either simultaneously or otherwise, some of the decided cases have gone further than is warranted by the language of sec. 27 of the Evidence Act and may have to be reviewed on a future occasion.

ppeals from" judgments and decrees of the High Court of Judicature at Calcutta dated 25th August, 1943, in First Appeals Nos. 20 and 173 of 1939 which arose out of a decision of the President of the Calcutta Improvement Tribunal in Case No. 95 of 1935. Civil Appeals Nos. 95 and 96 of 1949. Panchanan Ghose (Upendra Chandra Mullick, with him) for the appellant in Civil Appeal No. 95 and respondent in Civil Appeal No. 96. S.P. Sinha (Nagendra Nath Bose, with him) for respond ents Nos. 1 to 3 in Civil Appeal No. 95 and appellants Nos. 1 to 3 in Civil Appeal No. 96. S.N. Mukherjee, for respondent No. 4 in Civil Appeal No. 95. March 14. The judgment of the Court was delivered by FAZL ALl J. These appeals are directed against the judgment and decree of the High Court of Judicature at Fort William in West Bengal, confirming a decision of the Presi dent of the Calcutta Improvement Tribunal, which modified an award of the First Land Acquisition Collector of Calcutta, made under the Land Acquisition Act in respect of the acquisition of two premises, which may conveniently be referred to as Nos. 140 and 141, Cotton Street. In order to understand the points of contest between the various claimants to the compensation awarded in the case, it seems necessary to refer to certain facts showing how they came to be interested in the premises which are the subject matter of the land acquisition proceedings. These premises belonged at one time to one Sewanarayan Kalia, and afterwards they became the property of a deity, Sree Sree Iswar Gopal Jieu Thakur, installed by Sewanarayan Kalia at Chinsurah in the district of Hoogly. Sewanarayan, who had three wives, died in 1836, leaving behind him his third wife, Muni Bibi, two daughters by his 334 predeceased wives, these being Jiban Kumari and Amrit Ku mari, and a mistress named Kissen Dasi. On the 23rd August, 1836, these persons executed a deed of solenama which was in the nature of a family arrangement, by which the remainder of the estate of Sewanarayan (i.e., what was left after excluding the dedicated properties) was divided in the terms of his will, with the result that Muni Bibi got subject to certain conditions, among other properties, the premises described as 140, Cotton Street, and Jiban Kumari got the contiguous premises, No. 141, Cotton Street. Muni Bibi and Jiban Kumari also became the she baits of the Thakur or deity with power to appoint their successors. On the 20th January, 1848, Muni Bibi by an arpannama dedicated 140, Cotton Street, to the Thakur. It is recited in this deed, among other things, that on account of annual droughts and inundation and consequent diminution in the produce of the lands, certain properties dedicated to the sewa of the deity had been sold for arrears of revenue, that "Jiban Kumari had been making advances from her private funds for the expenses of jatra, mahotsob etc. , of the deity, when the amount fell short, this being against the provisions laid down by her late husband", that the house known as 140, Cotton Street, having been let out, was yielding a rent of Rs. 30 p.m., that after deducting the necessary expenses the surplus income left was Rs. 20 p.m., and that "if this amount was included in the expenses for the sheba etc., of the deity every month, the provision made by her deceased husband may remain in force. " After reciting these facts, it is stated that the rental of the house "shall be permanently and perpetually included in the expenses of the sheba. " About 20 years later, on the 30th September, 1869, Muni Bibi created a permanent (maurasi mokrari) lease of the premises bearing No. 140, Cotton Street, in her capacity as a shebait in favour of one Nehal Chand Panday (who was admittedly a benamidar for one Bhairodas Johurry), at a rental of Rs. 25 p.m. (See exhibit L a kabuliyat executed by Nehal Chand in favour of Muni Bibi). In the same year, on the 8th 335 December, Jiban Kumari granted a permanent lease to Bhairo das Johurry, in respect of the premises known as 141, Cotton Street at a rental of Rs. 90 p.m. (See exhibit K a kabuliy at executed by Johurry in favour of Jiban Kumari). The main question which has been raised in this case is whether the two ladies were competent to give debutter properties by way of permanent lease to another person. In 1870, Muni Bibi died, and, on the 15th January, 1872, Jiban Kumari ap pointed Gourimoni Devi a shebait by a registered deed and dedicated the premises known as 141, Cotton Street, to the deity. Both Jiban Kumari and Gourimoni Debi died shortly afterwards, and Gopal Das, a minor son of Gourimoni, became the shebait of the idol. During his minority, his father, Raghubar Dayal, became his certificated guardian, and, in that capacity, he executed a usufructuary mortgage deed in respect of the Cotton Street properties to one Lal Behari Dutt, on the 31 August, 1878. After the death of Raghubar Dayal one Ajodhya Debi and after her one Kalicharan Dutta became the certificated guardian of Gopal Das, and, on the 17th August, 1890, the latter mortgaged some debutter properties including 140and 141, Cotton Street, to Lal Behari Dutt for a sum of Rs. 2,230. On attaining majority, Gopaldas executed on the 17th January, 1896, a usufructuary mortgage deed in respect of all debutter properties includ ing the Cotton Street houses in favour of Lal Behari Dutt for paying the previous mortgage dues which amounted on that date to Rs. 4,955 and odd. This deed provided among ' other things that the mortgagee was to collect rents, outgoings, carry on the sheba of the deity, and that whatever balance was left out of the income of the property was to go towards the satisfaction of the mortgage dues. Gopaldas died in 1900, leaving behind him surviving his widow, Annapuma, who also died in 1905. By 1918, Lal Behari Dutt also was dead, and his interest in the mortgaged properties, to which reference has been made, was sold to one Naba Kishor Dutt on the 12th December, 1918. On the 17th November, 1933, Naba Kishor assigned the mortgagee 's 336 interest in the mortgaged properties to two of the Bagarias, respondents 1 and 2 in appeal No. 95, and m the same year the three respondents (1 to 3) also acquired the lessee 's interest in the Cotton Street houses. The land acquisition proceedings, which have given rise to these appeals, were started about the year 1934 in respect of the premises bearing Nos. 140 and 141, Cotton Street, as well as two adjoining premises with which we are not concerned in this case. In these proceedings, the following claims were put forward by three sets of persons: 1. The Bagarias (respondents 1 to 3 in appeal No. 95) at first claimed the entire amount of compensation on the allegation that they were the absolute owners of the prem ises in question, but later on they claimed only as mortga gees and permanent lessees of those premises. On behalf of the deity, the entire amount of compen sation money was claimed by Deosaran Singh and Ram Lakshman Singh, who alleged themselves to be shebaits, on the basis that the premises in question were debutter properties of the deity, and the Bagarias had acquired no interest therein either by the assignment of the usufructuary mortgage or the alleged purchase of the tenant 's rights in the properties. Respondent No. 4 claimed compensation as a lessee for 99 years on the basis of a lease alleged to have been given to him by the original landlords. In the present appeals, we are concerned with the first two claims only, and we shall briefly state how they were dealt with by the Collector and the courts below. On the 22nd May, 1935, the Collector awarded Rs. 31,740 as compen sation for landlord 's interests, to be shared by the deity as owner and two of the Bagarias, respondents Nos. 1 and 2 in appeal No. 95 in their capacity of usufructuary mortga gee, and awarded a sum of Rs. 1,58,000 to the respondents Nos. 1, 2 and a as compensation for their rights as perma nent tenants of the premises in question. Subsequently, 3 separate petitions of reference were filed 337 by the a claimants against the Collector 's award and the reference made by the Collector in pursuance thereof was registered as apportionment case No. 95 of 1935 in the Court of the Calcutta Improvement Tribunal. Meanwhile, Deosaran Singh and Ram Lakshman Singh, who had put in claims as shebaits, retired from the contest, and the President of the Tribunal appointed one Narendra Nath Rudra as the next friend of the deity to represent and protect its interests. On the 31st August, 1938, the President of the Tribunal gave his decision, by which he substantially upheld the award of the Collector, but modified it in one respect only. He held that the usufructuary mortgage, on the basis of which re spondents 1 and 2 had put in a claim, had been paid off and therefore they were not entitled to any compensation, and the whole sum of Rs. 31,740 should be paid to the deity. Respondents 1 to 3 however were held entitled to the sum of Rs. 1,58,000 as permanent tenants, on the ground that leases had been created for legal necessity and therefore were binding on the deity, He also held that the deity was not entitled to question the leases by virtue of article 134 (a) of the Limitation Act. Regarding costs, he directed that all costs incurred on behalf of the deity should be paid out of the compensation money lying in deposit in court. Two appeals were thereafter preferred to the High Court by the two main contesting parties and ultimately both these ap peals were dismissed, and the High Court upheld the decision of the Tribunal. Subsequently, the present appeals were preferred to this Court, the deity having obtained a certif icate granting leave to appeal from the High Court, and the Bagaria respondents having obtained special leave from the Privy Council to prefer a cross appeal. The main questions which arise in these appeals are : (1) whether the two mourasi mokrari leases, to which reference has been made were justified by legal necessity; and 44 338 (2) whether the mortgages on the basis of which the Bagarias had laid their claim to compensation had been satisfied. The first question arises in Appeal No. 05, and the second question arises in Appeal No. 96. So far as the question of legal necessity is concerned, there are concurrent findings of the Tribunal and the High Court against the appellant in appeal No. 95, but we allowed his counsel to argue the question at some length, because it was urged before us that on the facts of the case the point in issue was not a question of fact but one of mixed fact and law, especially as the decision of the High Court turned upon the construction of the leases and the inference drawn from the fact that the permanent nature of the tenancy had remained unquestioned for a very long period. The tenancy in question came into existence as long ago as 1869, and it is not surprising that no direct evidence bearing on the issue of legal necessity is available now. We have therefore to fall back upon the recitals in the documents, to ascertain the circumstances under which the documents, exhibits L and K, were executed, because it is well settled that if all the original parties to the trans action and those who could have given evidence on the rele vant points have passed away, a recital consisting of the principal circumstances of the case assumes greater impor tance and cannot be lightly set aside. [See Banga Chandra Dhar Biswas vs Jagat Kisore Chowdhuri(1) 1 It appears to us that the recitals in the documents afford valuable evidence, because the tenancies were created by two pious ladies who were keenly interested in the sheba of the deity and with regard to whom it was not suggested that they expected to derive any personal advantage from the transactions in question. It seems to us most unlikely that they would be parties to any untrue recitals merely to support the trans action. It may be recalled here that in 1848, certain properties belonging to the deity had been sold for arrears of rent, and Jiban Kumari (1) 43 I.A. 249. 339 had been supplementing the income of the residue from her own properties for meeting the expenses of performing cer tain essential services to the deity, such as jatra, mahot sob, etc. We also find from the arpannama that the value of the property which is the subject matter of the mokrari kabuliyat dated the 30th September, 1869 (exhibit L) was Rs. 2,000 in 1848, that it was not in the khas possession of Muni Bibi but had been let out to a tenant and that its net income was Rs. 20 p.m. At the time when the arpannama was executed, Muni Bibi clearly thought that the sum of _Rs. 20 p.m., if included in the expenses for the sheba of the deity, would enable the sheba to be carried on without any extraneous help. From the recitals in exhibit L, it appears that the house bearing No. 140, Cotton Street, was in a dilapidated condition and had collapsed in the rains of 1270 B.S. (1868 A.D.), and Muni Bibi was unable to bear the expenses of constructing a new building at the place. The problem before her therefore was whether the deity should go without any income from this property, or she should enter into such an arrangement as would secure a permanent income for the expenses of the deity, which should not in any case be less than the income which the property had theretofore yielded. She decided to choose what must have appeared to her to be the better and more prudent course, with the result that she got a sum of Rs. 500 cash for the deity as the price of the materials which were sold to the lessee, and also secured a regular monthly income of Rs. 25. There can be no doubt that the transaction was in the best inter ests of the deity and clearly beneficial to it. A reference to the arpannama shows that the house was in the possession of a, tenant even in 1848, and from the recitals in the document it is clear that what Muni Bibi contemplated was that the house should continue to remain in the possession of a tenant, and the rent of the house should be used for the sheba of the deity. At that time, she did not contemplate any other mode of using the property she was going to dedicate. We do not know who was the tenant of the 340 house in 1848 and what were the commitments of Muni Bibi at that time, but, even apart from these facts, it is difficult to believe that a devout person like her, who was not only a shebait but also the widow of the founder of the deity and who had shown such keen interest for the upkeep of the worship of the deity, should have entered into the transac tion in question unless she considered it absolutely neces sary to do so. The contention put forward before us is that it has not been shown that there was no other course open to Muni Bibi than to. grant a permanent lease in respect of the property, but it is manifest that at this distance of time no evidence can be available to show the actual pressure or necessity which impelled Muni Bibi to adopt the course she did. It is now well settled that where the validity of a permanent lease granted by a shebait is called into question a long time after the grant, although it is not possible to ascertainfully what the circumstances were in which it was made, the court should assume that the grant was made for necessity so as to be valid beyond the life of the grantor. [See Bava Magniram Sitgram vs Kasturbhai Manibhai(1)]. In the present case, the circumstances which can be gathered from the recitals together with the fact that the document has remained unquestioned for more than half a century, seem to us to be quite sufficient to support the conclusion that the grant was made for legal necessity and is binding on the deity. On the facts narrated, it would appear that there were several shebaits between the death of Muni Bibi and the commencement of the present litigation, but the lease was never impugned as being beyond the power of the shebait who granted it. On the other hand, we find that the permanent character of the lease was recognized in a deed executed by Gourimoni on the 18th October, 1873 (exhibit Y), and in a mortgage deed executed by Raghubar Dayal, the guardian of Gopaldas, on the 31st August, 1878. The properties in question were subsequently mortgaged by Kali Charan Dutt and Gopaldas, but neither of these persons nor (1) 41 I. A. 54. 341 the mortgagees ever came forward to question the permanent nature of the tenancy. The counsel for the appellant relied upon exhibit VI, which is a copy of the judgment of the High Court in a suit instituted by Nabakishore Dutt in 1995 against the Adminis trator General of Bengal for the rent of the house in ques tion. It appears from this judgment that the tenancy was admitted by the defendant and it was also admitted by him that rent was due, but he claimed that he was entitled to insist upon a receipt specifying the money to have been paid as mourasi mokrari rent. The learned Judge, who dealt with the case, however, thought that the point raised by the defendant did not strictly speaking arise in a suit for rent, which according to him could not be converted into a suit for declaration of title, and on that basis, he passed a decree in favour of the plaintiff. The judgment does not say in so many words that Nabakishore resisted the claim as to the tenancy being mourasi mokrari, but, however that may be, assuming that such an assertion was really made by him, it cannot affect the character of a tenancy which had re mained unquestioned for nearly half a century. The legal position with regard to 141, Cotton Street, is almost identical with that of the adjoining premises with which we have already dealt. As has been already stated, a mourasi mokrari tenancy was created by Jiban Kumari on the 8th December, 1869, as is evidenced by exhibit K. This document recites among other things that the house which was the subject of the lease, "stands in need of repairs and for want of such repairs there is chance of some portion thereof breaking down during the year. " It also recites that whatever income was derived till then from that house was derived by letting it out on rent and that the mourasi tenancy was being created for the purpose of repair ing the house and keeping it in existence. At the end of the document, it is stated that "the shebait shall keep the kabuliyat and patta in force and shall on taking the sum of Rs. 90 as rent, defray the expenses of the sheba of the deity. " It is 342 noteworthy that the actual dedication of this property took place on the 15th January, 1872, more than 2 years after the kabuliyat. On that date, a registered deed of gift was executed by Jiban Kumari in favour of Srimathi Gourimoni Debi and it was recited therein that the income of the house was being dedicated by the former to the sheba of the deity. There was also a further clause in that deed to the follow ing effect : "In accordance with the terms of the solenama the ex penses of the Iswar seba shall be met from the income of those properties which have been dedicated for the perform ance of the work of the said seba and the amount by which the expenses for the festivals would fall short and the expenses which would be incurred for repairs to house for sheba of the said Thakur shall be met and the Tahailia (attendant) and the Brahman cook and the Brahman priest (now) employed and to be employed hereafter shall get (their) salaries, from the income of the said property." On reading this document along with the solenama and the mok rari lease granted by Jiban Kumari, it appears that she dedicated the property after having created a mokrari lease, that what she purported to dedicate was the income derived by way of rent from the mourasi mokrari tenancy, and that she had dedicated this income for specific purposes with the object of making up the deficit in the income received from other debutter properties. If it is held that Jiban Kumari was an absolute owner of the property at the time the moura si mokrari lease was granted and afterwards she dedicated only the income of the property then the permanent lease cannot be assailed. If, on the other hand, it is held on reading the solenama that Jiban Kumari had only a life estate in the house and it was one of the terms of the solenama that after her death the expenses of the deity were to be borne out of the income from the house, then in that case the question may arise as to whether she was entitled to create a lease beyond her lifetime. Such a question however does not need an elaborate answer, because the same considerations which apply to 140, Cotton Street. will 343 apply to this house, and the presumption as to necessity which is raised by the long lapse of time, would arise here also. This presumption is considerably strengthened here as well as in the case of the lease granted by Muni Bibi, by the fact that the grantor of the lease was so devoted to the object of the endowment that it does not seem likely that she would have granted a permanent lease unless she was impelled to do so by absolute necessity. It seems to us therefore that the view taken by the High Court is substan tially correct and the respondents Nos. 1 and 2 are entitled to compensation as permanent lessees. In this view, Appeal No. 95 must fail, and it is dismissed. As to Appeal No. 96, it has been concurrently found by the President of the Tribunal and the High Court that the appellants have failed to prove by proper evidence that there is any money still due to them on the usufructuary mortgage executed by Gopaldas in 1886. In arriving at this finding, they have dealt with every possible argument that could be urged and was urged on behalf of the appellants to show that the mortgage had not been satisfied. This court has repeatedly held that it will not generally interfere with concurrent findings on a pure question of fact, and nothing has been shown on behalf of the appellants to induce us to depart from this rule. In the result Appeal No. 96 also is dismissed. Having regard to the circumstances of the case, we shall make no order as to costs in either of these appeals. Appeals dismissed. Agent for the appellant in Civil Appeal No. 95 and respondent in Civil Appeal No. 96: Sukumar Ghose. Agent for respondents Nos. 1 to 3 in Civil Appeal No. 95 and appellants Nos. 1 to 3 in Civil Appeal No. 96:S. C. Banerjee. Agent for respondent No. 4 in Civil Appeal No. 95: P.K. Chatterjee.

Where the issue is whether there was legal necessity for a particular transaction, if all the original parties to the transaction and those who could have given evidence on the relevant points have passed away, a recital consisting of the principal circumstances of the case assumes greater importance and cannot be lightly set aside. Banga Chandra Dhar Biswas vs Jagat Kishore Chowdhuri (43 I.A. 249) referred to. Where the validity of a permanent lease granted by a shebait has remained unquestioned for a very long time since the grant, although it is not possible to ascertain fully what the circumstances were in which it was made, the Court should assume that the grant was made for necessity so as to be valid beyond the life time of the grantor. 333 Bawa Magniram Sitaram vs Kasturbhai Manibhai (49 I.A. 54) referred to.

Appeals Nos. 41 44 of 1960. 182 Appeals 'by special leave from the judgment and order dated April 13, 1956, of the former Nagpur High Court in Misc. Civil Case No. 27 of 1954. K. N. Rajagopal Sastri and D. Gupta, for the appel. J. M. Thakar, section N. Andley, Rameshwar Nath, P. L. Vohra and J. B. Dadachanji, for the respondent. March 6. The Judgment of the Court was delivered by KAPUR, J. These are four appeals by the Commissioner of Income tax in Income tax Reference made under section 66 A(2) of the Income tax Act (hereinafter termed the 'Act '). The question for decision is whether the respondent is "an association of persons" within the meaning of section 3 of the Act. The appeals relate to two Income tax assessments and two Excess Profits Tax assessments the former for the year,% 1946 47 and 1947 48 respectively, corresponding to the accounting years February 1, 1945, to September 30,1945, and October 1, 1945, to August 21, 1946, the latter are in regard to chargeable account. ing periods February 1, 1945, to September 30, 1945, and October 22, 1945, to March 31, 1946. The decision of the Excess Profits Tax appeals is consequent upon the decision of the Income tax appeals. The facts may now be stated: In 1945 the Deputy Commissioner of Buldana evolved a scheme for the distribution of cloth in his district and with the sanction of the Government of C. P. appointed four persons, viz., Haji Ahmed Haji Ali & Co., Bhanji Kuwarji, Trimbaklal Tribhovan Das and Deolal Rangulal as sole agents for the import of cloth from mils in various places in India and for distribution of the same to retailers. Two of them Haji Ahmed Haji Ali & Co. and Bhanji Kuwarji carried on the business as from February 1, 1945, to the end of September 1945. The profits of the business in proportion of the capital contributed by these persons were distributed between these two persons. After September 1945 there was a change in the group of importers and some others also joined the group and the profits of 183 the subsequent period were similarly distributed between the members of the group as it was then constituted in proportion to the capital contributed by each of them. On March 12, 1947, the Income tax Officer issued a notice under section 22(2) of the Act to the respondent callinga upon it to submit a return of the income of the group for the assessment year 1946 47. This was served on Haji Ahmed Haji Ali & Co but that firm did not furnish any return contending that there was no privity of contract among members of ;the group. A notice was then issued under section 22(4) of the Act and on the production of the books, the Income tax Officer ascertained the income for the year ending September 1945 and assessed liability for payment of income tax under section 23(4) of the Act. He assessed the 'respondent as "an association of persons" both for purposes of Income tax and Excess Profits tax. An application under section 27 of the Income tax Act was dismissed by the Income tax Officer. Similarly for the year 1947 48 a notice was again issued and served on Haji Ahmed Haji Ali & Co. and similarly the group was assessed as an association of persons to Income tax and it was also assessed to Excess Profits tax for the period October 22, 1945, to March 31, 1946, and an application under section 27 of the Income tax Act was dismissed in regard to this period also. Appeals were taken against the orders of assessments of Income tax and Excess Profits tax but they were dismissed by the Appellate Assistant Commissioner. Appeals were then taken to the Income tax Appellate Tribunal but they also were dismissed by an order dated April 18, 1950. An application for making a reference to the High Court was dismissed by the Tribunal but an order was obtained from the High Court under section 66(2) of the Act and four questions were. ordered to be referred to the High Court. The question relevant for the appeals is the following. ",Whether under the facts and circumstances of the case, the Buldana District Main Cloth Importers ' Group constituted an 'Association of persons ' within the meaning of section 4 of the Income tax Act, 184 1922, and was liable to be assessed to income tax and excess profits tax in that status?" The order of the Tribunal dated April 18, 1950, shows that for different periods the group which imported the cloth was differently constituted but Haji Ahmed Haji Ali & Co. was a common member. The books relating to the business were maintained by Haji Ahmed Haji Ali & Co. and every time there was a change in the constituents of the group separate set of books was maintained by them and the profits from those enterprises were divided between the various persons who formed the group at the material times. It was contended before the Tribunal that there was no "Association of persons" and that the cloth imported was issued to the importers who sold the cloth on their own account. The Tribunal however found: "The accounts themselves show that the import and distribution of cloth was done on joint basis. The purchases were on,joint account, the sales were on joint account, the profit was first ascertained on the joint account and then distributed according to their agreed share of profits. In: our opinion the assessment has been rightly made on the status of an association of persons. " The High Court, when the matter went to it after the statement of the case by the Tribunal, held that before a group of persons could be called an "association of persons" it had to be established that they were in the nature of partners, i.e., the members of the group of their own volition or free will had joined in a venture with a view to earn profits. As the members of the group were appointed by the Deputy Commissioner a,% importers their participation could not be held to be of free will but it was under compulsion and therefore they were not an "association of persons" within the meaning of the Act. The High Court referred to and relied upon various cases to which it is not necessary to make any reference. As to what constitutes an association of persons was laid down by this Court in the Commissioner of Income tax, Bombay North vs Indira Balkrishna (1) and in 185 Mohammad,Noorulla vs Commissioner of Income tax decided on January 18, 1961, where the business was carried on as one unit and by the consent of all the parties who were heirs of deceased Mohammad Omer Sahib and during the period when an administration B suit between them was being fought in courts of law. In the present case the Tribunal has found that the It import and distribution of cloth which was the business carried on by the respondent, was dune on a joint basis. The purchases were joint; so were the sales and the profits were ascertained on a joint basis and then distributed according to the capital contributed by each member of the group. This finding which is one of fact makes the respondent an "association of persons" and it makes no difference that the business was carried on because the Deputy Commissioner of the district had appointed the members constituting the group to import and distribute the cloth in the district. The respondent, it. is not disputed, worked the scheme which was framed by the Deputy Commissioner and the working of the scheme produced profits and it made no difference that the scheme was at the instance of or under the control of the Deputy Commissioner. Dealing with the argument of similar control Sarkar, J., in Commissioner of Income tax, Madhya Pradesh & Bhopal vs Vyas and Dhotiwala (2) observed as follows: "The Tribunal thought that since the scheme was completely under the control of the Deputy Commissioner the assessees could not be said to have carried on business by working the scheme. We are unable to see that the fact of the control of the Deputy Commissioner can prevent the working of the scheme by the assessees from being a business carried on by them. In our view, it only comes to this that the asaessees had agreed to do business in a certain manner. " We are in respectful agreement with this observation. In our view the respondent was an association of (1) [1961] 3 S.C.R.513. (2) [1959] Supp. 1 S.C.R. 39,43 196 persons and was rightly so assessed to Income tax and Excess Profits Tax. The appeals are therefore allowed with costs. One hearing fee. Appeals allowed.

A scheme for the distribution of cloth was evolved by the Deputy Commissioner of the District who appointed a group of persons as sole agents for the import of cloth from Mills and distribution of the same to retailers. Though for different periods the group was differently constituted, one of the members, firm 'H ' remained a common member. The profits of the business were distributed amongst the members of the group in proportion of the capital contributed by them. The Income tax Officer issued notice under section 22(4) Of the Indian Income tax Act, and on production of books of account assessed the respondent as an "Association of Persons". The High Court was of the opinion, inter alia that before a group of persons could be called an "Association of Persons" it had to be established that they were in the "nature of partners", which was not so in the instant case, as the members of the group were appointed by the Deputy Commissioner as importers; the participation of the group could not be held to be of free will but under compulsion and therefore they were not an "Association of Persons" within the meaning Of section 3 Of the Indian Income tax Act. Held, that where a business is carried on and the profits ascertained on a joint basis, and then distributed according to the capital contributed by each. member of the group, the group is an "Association of Persons" and it makes no difference that the scheme which produced profits was at the instance of or under the control of the Deputy Commissioner or that he had appointed the members constituting the group. Commissioner of Income tax, Bombay North vs Indira Bal krishna; , , referred to. Mohamed Noorullah vs Commissioner of Income tax, ; , relied on.

102 of 1958. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. M. K. Nambiar, and section N. Andley, for the petitioners. H. N. Sanyal, Additional Solicitor General of India, M. P. Balagavgadhar Menon and Sardar Bahadur, for the respondents. April 14. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. The Government of Kerala( appointed a Committee in exercise of its powers 948 conferred by cl. (a) of sub section (1) of section 5 of the (Act XI of 1948) (hereafter called the Act), to hold enquiries and advise the Government in fixing minimum rates of wages in respect of employment in the tile industry and nominated eight persons to constitute the said Committee under section 9 of the Act. This notification was published on August 14, 1957. The Committee made its report on March 30, 1958. The Government of Kerala then considered the report and issued a notification on May 12, 1958, prescribing minimum rates of wages as specified in the schedule annexed thereto. This notification was ordered to come into effect on May 26,1958. On that date the present petition was filed under article 32 by the nine petitioners who represent six tile factories in Feroke Kozhikode District, challenging the validity of the 'Act as well as the validity of the notification issued by the Government of Kerala. The State of Kerala is impleaded as respondent to the petition. The petitioners allege that the minimum wage rates fixed by the notification are very much above the level of what may be properly regarded as minimum wages and it was essential that before the impugned wage rates were prescribed the employers ' capacity to pay should have been considered. Since this essential element had not been taken into account at all by the Committee as well as by the respondent the notification is ultra vires and inoperative. According to them the burden imposed by the notification is beyond the financial capacity of the industry in general and of their individual capacity in particular, and this is illustrated by the fact that nearly 62 tile factories in Trichur closed soon after the notification was published. The petitioners seek to challenge the validity of the Act on several grounds set out by them in clauses (a) to (g) of paragraph 21 of the petition. It is urged that the Act does not define what the minimum wage is to comprise or to comprehend and as such confers arbitrary authority on the appropriate Governments to impose unreasonable restrictions on the employers. 'The law conferring such arbitrary power is violative of article 19(1)(g) of the Constitution. Since the Act 949 empowers the fixation of a wage which may disable or destroy the industry it cannot be said to be reasonable and as such is beyond the purview of article 19(1) and (6) of the Constitution. The Act does not lay down any reasonable procedure in the imposition of restrictions by fixation of minimum wage and so authorises any procedure to be adopted which may even violate the principles of natural justice. It is also alleged that the Act is discriminatory in effect inasmuch as it submits some industries to its arbitrary procedure in the matter of fixation of minimum wages and leaves other industries to the more orderly and regulated procedure of the Industrial Disputes Act. It is on these grounds that the validity of the Act is impugned. The petitioners impugn the validity of the notification also for the same reasons. Besides, it is urged that the notification has in effect fixed not minimum wages but fair wages and so it was essential that the capacity of the employers to bear the burden proposed to be imposed ought to have been considered. Failure to consider this essential aspect of the matter has, it is urged, rendered the notification void. That in substance is the nature of the case set out by the petitioners in their present petition. The respondent has traversed all these allegations. It is urged that the validity of the Act is no longer open to challenge since the question is concluded by the decisions of this Court; and it is alleged that what the notification purports to do is to fix the minimum wage and no more and as such the capacity of the employer to pay such a minimum wage is irrelevant. It is further alleged that decisions of this Court have firmly established the principle that in the matter of fixing minimum wages the capacity of the employer to pay need not be considered and that if any employer is unable to pay what can be regarded as minimum wages to his employees he has no right to carry on his industry. It is further pointed out that out of 18 factories in Feroke only six factories have come to this Court and it is suggested that the grievance made by the petitioners that the wage rates fixed are 950 beyond their capacity is not genuine or honest. The respondent also points out that the Committee appointed by it was a representative Committee and its report showed that it had considered the matter very carefully. Alternatively it is urged that the report of the said Committee would show that the capacity to pay had not been ignored by the Committee. The impact of the minimum wage, rate suggested by it had been considered by the Committee and so the Committee made its recommendations area wise. In regard to the closure of factories in Trichur the respondent 's case was that the said closure was not the result of financial inability of the factories to bear the burden but was probably actuated by political motives. The respondent also put in a general plea that in fact all the factories in the Kerala 'State except some of the factories in the Trichur area and one of the petitioners had implemented the notification without any objection or protest; and so it was argued that there was no substance in the grievance made by the petitioners. That in brief is the nature of the contentions raised by the respondent in reply to the petitioner 's case. At this stage it would be relevant to refer briefly to the Committee 's report in the order to find out how the Committee proceeded to discharge its task and what is the nature of its recommendations. The Committee consisted of eight members three of whom were the employers ' representatives and three the employees ' representatives while the Chairman Mr. V. R. Pillai and Mr. G. S.Pillai, the District Labour Officer, were nominated on the Committee as independent members. The Chairman Mr. Pillai is a M.A., M. Sc. in Economics of the London University. He is a Professor of Economics in the University College at Trivandrum and has had considerable experience inasmuch as he has served on several such Committees in the past. The Committee issued a questionnaire to all the tile factories in the State and other persons interested, considered the replies received from them, personally visited certain factories, recorded evidence of various associations representing the 951 tile factories as well as of individuals, and took into account various facts which the Committee thought were relevant. The report of the Committee shows that, subject to minor differences disclosed in the minute of dissent filed by Mr. K. Subramonia Iyer and the reply to it filed by Mr. A. Karunakaran, the recommendations of the Committee were unanimous and so prima facie we start with the fact that the recommendations of the Committee were approved not only by the two independent members but they secured the concurrence of the representatives of the employers as well as the employees. The report of the Committee consists of five chapters. Chapter 1 deals with the development of the tile industry in Kerala, chapter 11 deals with the problem of standardisation in the tile industry, chapter III considers the problem of wage structure area wise, chapter IV discusses the problem of minimum wage fixation, its principles and procedure, and chapter V records the conclusions and recommendations of the Committee. In dealing with the problem of wage structure the Committee has observed that the prevailing wage rates in the tile factories in the State show considerable difference from one centre to another, and that, according to the Committee, is partly due to historical factors and partly to the economic status of the workers in the areas concerned. The Committee formed the opinion that there being very little scope for alternative employment except in low paid agricultural occupations the bargaining position of the workers has all along been very weak and wages too have tended to remain at a relatively low level. It is in the light of this background that the Committee naturally proceeded to consider the problem of the fixation of minimum wage rates. The Committee has accepted the observation of the Fair Wages Committee that the minimum wage "must provide not merely for the bare subsistence of life but for the preservation of the efficiency of the workers. " Then it examined the food requirements of the employee on the basis of three consumption units recognized in Dr. Aykroyd 's formula. It then adopted 952 the assessment made by the Planning Commission in regard to the requirements of the employees in cotton textiles and placed the employee 's requirement at a per capita consumption of 18 yards per unit, then it took into account the requirement of housing and it held that the additional requirements of workers for fuel, lighting and additional miscellaneous items of expenditure should generally be fixed at 20% of the total wage in cases where the actual percentage has not been found out by a family budget enquiry. The Committee was conscious that it had to approach the problem from the point of view of the minimum needs of workers in order to maintain a subsistence standard, and so it enumerated the requirements of workers in that behalf as food, clothing, fuel, lighting and other miscellaneous items in which are also included rent, education, medical aid and entertainment. On this basis the Committee formulated the weekly food budget of the employee, added to it the requirement of clothing and miscellaneous items. According to the Committee the total weekly expen diture on this basis would be food 13.03, clothing 1.15 and miscellaneous 2.84, the total being Rs. 17.02 nP. The Committee then observed "calculating on the basis of six days per week a worker should get a minimum of Rs. 2.67 nP. per day to maintain a 'subsistence plus ' standard." Ultimately the Committee recommended that the minimum basic wage of an unskilled worker in the "A" region, viz., Quilon and Feroke, should be Re. 1. With a cost of living index for the tile Centers at an average figure of 400, and the minimum requirements of the workers at Rs. 2.67 nP. this basic wage corresponds to 150 in the cost of living index number. As to dearness allowance the Committee recommended that it should be related to the cost of living index and that the dearness allowance should be fixed at the rate of 1 nP. for every two points for all points above 200. Thus, when the cost of living index is 400 an unskilled worker will get Re. 1 as basic wage and Re. 1 as dearness allowance making a total of Rs. 2. The Committee added that if the rise in the cost of living had to be completely 953 neutralised he should get Rs. 1.67 nP as dearness allowance, but he gets only Re. 1 that is to say 100/ 167 or 60% of the increase in the cost of living. Therefore, the extent of the neutralisation of the increase in the cost of living is 60%. The Committee recognised regional differences and so introduced five Grades classified as A, B, C, D and E for the purpose of fixing the wage structure. The Committee hoped that the regional differences recommended by it would enable the backward areas to come up by improving the efficiency of production and marketing so that eventually they will be in a position to pay the same wages as advanced areas. The notification issued is substantially on the lines of the recommendations made by the Committee. Employees engaged in the tile industry have been categorised and their minimum wage rates have been classified into clauses A to E. In regard to dearness allowance the notification provides that a flat rate of dearness allowance for all workers irrespective of sex or grade shall be paid at the rate of one naya paisa for every two points in the cost of living index in each year in excess of Rs. 200. Thus the notification purports to prescribe the minimum rates of wages in regard to tile industry in the State; it is the validity of this notification that is impugned before us by the present petition. Before dealing with the points raised by Mr. Nambiar on behalf of the petitioners it is necessary to refer very briefly to the material provisions of the Act. This Act was passed in 1948, because it was thought expedient to provide for fixing minimum rates of wages in certain employments. Under section 3 the appropriate Government is empowered to fix mini. mum rates of wages in regard to employments as therein specified, and review the same at such intervals as specified by section 3(1). Section 3(3) contemplates that in fixing or refixing minimum rates of wages different minimum rates of wages may be fixed for different scheduled employments, different classes of work in the same scheduled employments, adults, 120 954 adolescents, children and apprentices, and different localities. Under section 4 any minimum rate of wages fixed or revised may, inter alia, consist of a basic rate of wages and a special allowance at a rate to be adjusted, or a basic rate of wages with or without the cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rates where so authorised or an all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions if any. Section 5 prescribes the procedure for fixing and revising minimum wages. It is under this section that a Committee was appointed by the respondent in the present case. Section 9 makes provision for the composition of the Committee. Such Committees have to consist of equal number of representatives of employers and employees and of independent persons not exceeding. one third of the total number of members. Section 12(1) imposes on the employer the obligation to pay the minimum rates of wages prescribed under the Act. Section 22 provides for penalties for offences and section 22A makes a general provision for punishment of offences not otherwise expressly provided for. Under section 25 any contract or agreement whether made before or after the commencement of this Act which affects an employee 's right to a minimum rate of wages prescribed under the Act shall be null and void so far as it purports to reduce the said minimum rate of wages. Section 27 empowers the appropriate Government, after giving notification as prescribed, to add to either part of the schedule any employment in respect of which it is of opinion that minimum rates should be fixed, and thereupon the schedule shall be deemed to be amended accordingly in regard to that State. In the case of The Edward Mills Co. Ltd., Beawar & Ors. vs The State of Ajmer (1), the validity of section 27 of the Act was challenged on the ground of excessive delegation. it was urged that the Act prescribed no principles and laid down no standard which could furnish an intelligent guidance to the administrative (1) ; 955 authority in making selection while acting under section 27 and so the matter was left entirely to the discretion of the appropriate Government which can amend the schedule in any way it liked and such delegation virtually amounted to a surrender by the Legislature of its essential legislative function. This contention was rejected by Mukherjea, J., is he then was, who spoke for the Court. The learned Judge observed that the Legislature undoubtedly intended to apply the Act to those industries only where by reason of un organised labour or want of proper arrangements for effective regulation of wages or for other causes the wages of labourers in a particular industry were very low. He also pointed out that conditions of labour vary under different circumstances and from State to State and the expediency of including at particular trade or industry within the schedule depends upon a variety of facts which are by no means uniform and which can best be ascertained by a person who is placed in charge of the administration of a particular State. That is why the Court concluded that in enacting section 27 it could not be said that the Legislature had in any way stripped itself of its essential powers or assigned to the administrative authority anything but an accessory or subordinate power which was deemed necessary to carry out the purpose and the policy of the Act. In the same year another attempt was made to challenge the validity of the Act in Bijay Cotton Mills, Ltd. vs The State of Ajmer (1). This time the crucial sections of the Act, namely, sections 3, 4 and 5 were attacked, and the challenge was based on the ground that the restrictions imposed by them upon the freedom of contract violated the fundamental right guaranteed under article 19(1)(g) of the Constitution. This challenge was repelled by Mukherjea, J., as he then was, who again spoke for the Court. The learned Judge held that the restrictions were imposed in the interest of the general public and with a view to carry out one of the directive principles of State policy as embodied in article 43 and so the impugned sections (1) ; 956 were protected by the terms of cl. (6) of article 19. In repelling the argument of the employers ' inability to meet the burden of the minimum wage rates it was observed that "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, and that if individual employers might find it difficult to carry on business on the basis of minimum wages fixed under the Act that cannot be the reason for striking down the law itself as unreasonable. The inability of the employers may in many cases be due entirely to the economic conditions of those employers. " It would thus be seen that these two decisions have firmly established the validity of the Act, and there can no longer be any doubt that in fixing the minimum wage rates as contemplated by the Act the hardship caused to individual employers or their inability to meet the burden has no relevance. Incidentally, it may be pointed out that in dealing with the minimum wage rate,,; intended to be pre scribed by the Act Mukherjea, J., has in one place observed that the labourers should be secured adequate living wages. In the context it is clear that the learned Judge was not referring to living wages properly so called but to the minimum wages with which alone the Act is concerned. In view of these two decisions we have not allowed Mr. Nambiar to raise any contentions against the validity of the Act. It is true that Mr. Nambiar attempted to argue that certain aspects of the matter on which he wished to rely had not been duly considered by the Court in Bijay Cotton Mills Ltd. 's case (1). In our opinion it is futile to attempt to reopen an issue which is clearly concluded by the decisions of this Court. Therefore, we will proceed to deal with the present petition, as we must, on the basis that the Act under which the Committee " as appointed and the notification was ultimately issued is valid. We have already seen what the Act purports to achieve is to prevent exploitation of labour and for (1) ; 957 that purpose authorises the appropriate Government to take steps to prescribe minimum rates of wages in the scheduled industries. In an under developed country which faces the problem of unemployment on a very large scale it is not unlikely that labour may offer to work even on starvation wages. The policy of the Act is to prevent the employment of such sweated labour in the interest of general public and so in prescribing the minimum wage rates the capacity of the employer need not be considered. What is being prescribed is minimum wage rates which a welfare state assumes every employer must pay before he employs labour. This principle is not disputed (Vide: Messrs. Crown Aluminium Works vs Their Workmen(1) it is, therefore, necessary to consider what are the components of a minimum wage in the context of the Act. The evidence led before the Committee on Fair Wages showed that some witnesses were inclined to take the view that the minimum wage is that wage which is essential to cover the bare physical needs of a worker and his family, whereas the overwhelming majority of witnesses agreed that a minimum wage should also provide for some other essential requirements such as a minimum of education, medical facilities and other amenities. The Committee came to the conclusion that a minimum wage must provide not merely for the bare subsistence of life but for the preservation of the efficiency of the worker, and so it must also provide for some measure of education, medical requirements and amenities. The concept about the components of the minimum wage thus enunciated by the Committee have been generally accepted by industrial adjudication in this country. Sometimes the minimum wage is described as a bare minimum wage in order to distinguish it from the, wage structure which is 'subsistence plus or fair wage, but too much emphasis on the adjective "bare" in relation to the minimum wage is apt to lead to the erroneous assumption that the maintenance wage is a wage which enables the worker to cover his bare (1) ; 958 physical needs and ]Keep himself just above starvation. That clearly is not intended by the concept of minimum wage. On the other hand, since the capacity of the employer to pay is treated as irrelevant, it is but right that no addition should be made to the com ponents of the minimum wage which would take the minimum wage near the lower level of the fair wage, but the contents of this concept must ensure for the employee not only his sustenance and that of his family but must also preserve his efficiency as a worker. The Act contemplates that minimum wage rates should be fixed in the scheduled industries with the dual object of providing sustenance and maintenance of the worker and his family and preserving his efficiency as a worker. Mr. Nambiar contends that when the statute purports to prescribe a minimum wage in effect it directs the fixation of a statutory minimum wage and as such, capacity to pay must be considered before such minimum wage is fixed. His argument is that in any event the impugned notification statutorily prescribes such minimum wage rates for the tile industry in the State of Kerala and as such the rates so recommended do not constitute merely the industrial and economic minimum as understood by industrial adjudication but it constitutes a statutory minimum which can be fixed only after taking into account the employers ' capacity to pay the same. In support of this argument Mr. Nambiar has strongly relied on some observations made by this Court in the case of Express Newspapers (Private) Ltd. vs The Union of India (1). We will presently refer to the said observations but in appreciating the nature and effect of the said observations it is necessary to recall that in that case the Court was dealing with the problem of fixation of wages in regard to Working Journalists as prescribed by section 9 of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (45 of 1955). Section 9 of the said Act required that in fixing rates of wages in respect of working journalists the Board had to have regard to the cost of living, the prevalent (1) 959 rates of wages for comparable employments, the circumstances relating, to newspaper industry in different regions of the country and to any other circumstance which to the Board may deem relevant. It was held that the wage structure contemplated by section 9 was not the structure of minimum wage rates, it was a wage structure permitted to be prescribed by that statute after taking into account several relevant facts and the scheme of that Act showed that the wage structure thus contemplated was very much beyond the minimum wage rates and was nearer the concept of a fair wage. That is why the Court took the view that the expression "any other circumstance" specified by section 9 definitely included the circumstance, namely, the capacity of the industry to bear the burden and so the Board was bound to take that factor into account in fixing the wage structure. It appeared to the Court that this important element had not been considered by the Board at all and that introduced a fatal infirmity in the decisions of the Board. Thus, the wage structure with which the Court was concerned in that case was not the mini. mum wage structure at all. It is essential to remember this aspect of the matter in appreciating the argument urged by Mr. Nambiar on the strength of certain observations made by this Court in the course of its judgment. In the course of his judgment Bhagwati, J., who spoke for the Court, has elaborately considered several aspects of the concept of wage structure including the concept of minimum wage. The conclusion of the Fair Wage Committee as to the content of the minimum wage has been cited with approval (p. 83). Then a distinction has been drawn between a bare subsistence or minimum wage and a statutory minimum wage, and it is observed that the statutory minimum wage is the minimum which is prescribed by the statute and it may be higher than the bare subsistence or minimum wage providing for some measure of education, medical requirements and amenities (p. 84). This observation is followed by a discussion about the concept of fair wage; and in 960 dealing with the said topic the has also been referred to and it is stated that the Act was intended to provide for fixing minimum rates of wages in certain employments and the appropriate Government was thereby empowered to fix different minimum rates of wages as contemplated by section 3(3). Then it is stated that whereas the bare minimum or subsistence wage would have to be fixed irrespective of the capacity of the industry to pay the minimum wage thus contemplated postulates the capacity of the industry to pay and no fixation of wages which ignores this essential factor of the capacity of the industry to pay could ever be supported. Mr. Nambiar contends that the last part of the observation refers to the minimum wage prescribed by the Act and it requires that before prescribing the said wage the capacity of the industry must be considered. We do not think that this argument is well founded. It would be noticed that in considering the distinction drawn between the minimum wage fixed by industrial adjudication and the minimum wage prescribed by a statute which is called statutory minimum it has been made clear that the latter can be higher than the bare subsistence or minimum wage and as such is different in kind from the industrial minimum wage. We do not think that the observation in question was intended to lay down the principle that whereas a minimum wage can be laid down by an industrial adjudication without reference to an employer 's capacity to pay the same it cannot be fixed by a statute without considering the employer 's capacity to pay. Such a conclusion would be plainly illogical and unreasonable. The observations on which Mr. Nambiar relies do not support the assumption made by him and were not intended to lay down any such rule. Cases are not unknown where statutes prescribe a minimum and it is plain from the relevant statutory provisions themselves that the minimum thus prescribed is not the economic or industrial minimum but contains several components which take the statutorily prescribed minimum near the level of the fair wage,and when that is the effect of the statutory provision capacity to pay may no doubt have to be 961 considered. It was a statutory wage structure of this kind with which the Court was dealing in the case of Express Newspapers (Private) Ltd. (1), because section 9 authorised the imposition of a wage structure very much above the level of the minimum wage and it is obvious that the observations made in the judgment cannot, and should not, be divorced from the context of the provisions with respect to which it was pronounced. Therefore, we feel no hesitation in reject ing the argument that because the Act prescribes minimum wage rates it is necessary that the capacity of the employer to bear the burden of the said wage structure must be considered. The attack against the validity of the notification made on this ground must therefore fail. It still remains to consider whether in fact the noti. fication has prescribed a wage structure which is above the level of the minimum wage properly socalled. If the notification has in fact prescribed a wage structure which is nearer the fair wage level and is above the minimum wage structure that no doubt would introduce an infirmity in the notification since it does appear that the capacity of the employer to bear the burden has not been considered either by the Committee or by the Government. This part of the attack against the notification is based on two grounds. Mr. Nambiar contends that in making its calculations about the minimum wage rates the Committee has taken into account an item of entertainment, and that, says Mr. Nambiar, is clearly inadmissible. He also points out that the Committee has described the daily minimum of Rs. 2.67 nP. ultimately deduced by it as intended to maintain the employee 's subsistence plus ' standard and that again shows that the wage structure is above the minimum, standard and goes towards the lower level of the fair wage. We are not impressed by this argument. It would be recalled that amongst the miscellaneous items in respect of which Rs. 2.84 nP. are added by the Committee in its calculations are rent, education, (1) 121 962 medical aid and entertainment. The first three are not inadmissible, and so the attack is against the inclusion of the last item alone. Even assuming that the last item is inadmissible it is not difficult to imagine that the addition of this last item could not have meant much in the calculations of the Committee, and so the grievance made on account of the inclusion of the said item cannot be exaggerated. There are, however, two other factors which are relevant in this connection. What the Committee has described as the subsistence plus ' standard should on its own calculations represent the daily minimum of Rs. 2.84 nP., not Rs. 2.67 nP. Rs. 2.67 nP. is plainly the result of miscalculation so that it can be safely assumed that the said sum which is taken to represent the daily minimum to maintain a 'subsistence plus ' standard in fact does not include an amount which may be attributed to entertainment. Besides, it is necessary to remember that what the Committee has ultimately recommended is not the award of Rs. 2.67 nP. which according to it represents 'subsistence. plus ' standard but only Rs. 2 and that itself shows that what is re. commended is below the 'subsistence plus ' standard. There is yet another point which leads to the same conclusion. Even if the whole of the miscellaneous item is excluded and calculations are made on the basis that the total permissible items amount to Rs. 14.18 nP. we would still reach the figure for the daily minimum which is more than Rs. 2. Therefore, look at it how we may, it is impossible to accept the argument that the wage structure ultimately recommended by the Committee is anything higher than what the Committee thought to be the minimum wage structure. Therefore, we are not prepared to hold that the notification which is in conformity with the recommendations of the Committee has prescribed wage rates which are higher than the minimum wage structure. If that be so, failure to take into account the capacity of the industry to bear the burden can introduce no infirmity either in the recommendations of ' the Committee or in the notification following upon them. 963 Mr. Nambiar no doubt wanted to attack the merits of the notification on the ground that the wage rates fixed by it are unduly high. In that connection he relied on the fact that the minimum wage rates prescribed by the Madras Government by its notification published on February 25, 1952, as well as the wage rates prevailing in other industries in Kerala were slightly lower. He also pointed out that the wage rates awarded by industrial adjudication and even the claims made by the employees themselves would tend to show that what has been awarded by the notification is higher than the prescribed minimum wages. It is not possible for us to entertain this contention. The determination of minimum wages must inevitably take into account several relevant factors and the decision of this question has been left by the Legislature to the Committee which has to be appointed under the Act. We have already referred to the composition of the Committee and have reviewed very briefly its report. When a Committee consisting of the representatives of the industry and the employees considers the problem and makes its recommendations and when the said recommendations are accepted by the Government it would ordinarily not be possible for us to examine the merits of the recommendations as well as the merits of the wage structure finally notified by the Government. The notification has accepted the recommendations of the Committee to categorise the workers and that obviously was overdue. The fact that wages paid in other industries in Kerala, or in other States in comparable concerns, are lower would have been relevant for the Com mittee to consider when it made its recommendations. In appreciating the effect of the prevalence of lower rates it may also be relevant to bear in mind that in some places and in some industries labour is still employed on wages much below the standard of minimum rates. In fact, in its report the Committee has pointed out that in Kerala. the bargaining position of the workers has all along been very weak and wages have tended to remain in a deplorably low level. Therefore, the fact that lower wages are paid in other 964 industries or in some other places may not necessarily show that the rates prescribed by the notification are unduly high. In any event these are considerations Which ordinarily cannot be entertained by us because obviously we are not sitting in appeal over the recommendations of the Committee or the notification following upon them. That is why the grievance made by Mr. Nambiar on the merits of the wage structure prescribed by the notification cannot succeed. There is, however, one aspect of this problem to which we must refer before we part with this case. It appears that soon after the notification was issued as many as 62 tile factories in Trichur closed their works and that led to unemployment of nearly 6,000 employees. In order to resolve the deadlock thus created the respondent referred the industrial dispute arising between the Trichur factories and their employees for industrial adjudication (I.D. 45 of 1958). On this reference an interim award was made and it was followed by a final award on September 26, 1960. Both the interim and the final awards were the result of settlement between the parties and the order passed by the tribunal shows that the respondent, acting, through its Labour Minister, "left aside the prestige of the Government, came to the scene and effected a settlement." Mr. Nambiar has strongly criticised the conduct of the respondent in permitting a departure from the notification in respect of 62 tile factories at Trichur contrary to the provisions of the Act, and in insisting upon its implementation in respect of the other parts of the State. His argument is two fold. He suggests that the settlement reached between the parties in Trichur shows that the minimum prescribed by the notification was above the legally permissible minimum and beyond the capacity of the Trichur factories, and that would support his grievance that the rates prescribed are not the minimum but they are such above that level. We are not im pressed by this argument. As we have already observed we would ordinarily refuse to consider the merits of the wage structure prescribed by the notification. Besides, the closure of the factories in Trichur may 965 either be because the factories there found it difficult to pay the wage structure or may be for reasons other than industrial. We propose to express no opinion on that point because that is not a point in issue before us, and so the settlement can have no bearing on the fate of the present petition; but the other argument urged by Mr. Nambiar raises a serious question. Under the Act the notification has to apply to all the tile factories in the State and breach of the provisions of the notification is rendered penal under section 22 of the Act. An agreement or contract contrary to the notification would be void under section 25 of the Act. It is to be regretted that the respondent, acting through its Labour Minister, appears to have assisted in bringing about a settlement contrary to the terms of the Act. If the respon dent thought that such a settlement was necessary in respect of Trichur factories it may consider the question of withdrawing the notification in respect of that area and in fairness may also reconsider the problem in respect of all the other areas and decide whether any modification. in the notification is required. It is not appropriate that the respondent should be associated, though indirectly, with the settlement which is in breach of the provisions of the Act. We would, therefore, suggest that the respondent should seriously consider this aspect of the matter and should not hesitate to do what may appear to be just, reasonable and fair on an objective consideration of the whole problem. In the result, the petition fails and is dismissed. There would be no order as to costs. Petition dismissed.

The petitioners, representing certain tile factories, challenged the validity of the , as also the notification issued by the Kerala Government prescribing minimum rates of wages in respect of employment in the tile industry on the report of a committee constituted under the Act and consisting of the representatives both of the employers and employees who agreed with its recommendations. The case of the petitioners was that the notification had in effect fixed not minimum wages but fair wages and since neither the committee nor the Government in fixing them had considered the capacity of the employers to pay, the notification was void. Held, that in view of the decisions of this Court the con stitutional validity of the Act could no longer be in doubt and any hardship that may be caused to employers by the wages fixed under the Act or their incapacity to pay the same are irrelevant considerations in fixing such wages. 947 The Edward Mills Co. Ltd. vs The State of Ajmer, ; , Bijay Cotton Mills Ltd. vs State of Ajmer, ; and M/s. Crown Aluminium Works vs Their Workmen; , , referred to. While, therefore, in fixing the minimum wage nothing can be added to its components that may take it near the lower level of the fair wage, the minimum wage must ensure not only the sustenance of the employee and his family but also preserve his efficiency as a worker and that is what is contemplated by the Act. It is an error to think that the minimum wage is just what a worker requires to cover his physical needs and to keep himself above starvation. There can be no analogy between the which prescribes the economic and industrial minimum and a statute which prescribes its own minimum that approximates more or less to the fair wage standard and so makes it necessary to consider the employer 's capacity to pay. Express Newspapers (P.) Ltd. vs The Union of India, , explained and distinguished. This Court would ordinarily refuse to consider the merits of the wage structure set up by the Notification on the recommendations of the committee, agreed to by the representatives of the employers and the employees. The fact that wages paid in other industries in the State or in other States in comparable concerns are lower does not necessarily show that the rates prescribed by the Notification are unduly high. A notification under the Act must apply to all the factories in the State and the State cannot permit or be associated with a departure from it for that would amount to a contravention of SS. 22 and 25 of the Act. If a departure is considered necessary, the proper course would be to withdraw the notification in respect of the area concerned or to reconsider and modify it if necessary.

ivil Appeal No. 1319 of 1990. 717 From the Judgment and Order dated 7.9.1987 of Delhi High Court in S.A.O. No. 99/1987. Dr. L.M. Singhvi and Dalveer Bhandari for the Appellant. Dr. Y.S. Chitale and A.K. Sangal for the Respondent. The Judgment of the Court was delivered by RANGANATH MISRA, J. Special Leave granted. This is an appeal by the landlady whose application for being put in possession of the premises on the expiry of a limited tenancy of two years under section 21 of the Delhi Rent Control Act (hereinafter referred to as 'the Act ') has been dismissed by the Rent Controller, the Rent Control Tribunal and the High Court. On 30th September, 1976, the appellant landlady and the respondent tenant appeared before Shri M.A. Khan, Additional Rent Controller for creation of a tenancy under section 21 of the Act. The Additional Rent Controller recorded the statements of both the landlady and the prospective tenant and made the following order: "Having regard to the facts stated in the petition and the statement of the parties made above permission under section 21 of the Delhi Rent Control Act is granted to Yamuna Maloo applicant to let out ground floor of her premises No. B 2/104, Safderjung Enclave, New Delhi comprising of drawing cum dining hall, two bed rooms with attached bath room, kitchen, parking place and a small ' lawn delineated in the enclosed plan exhibit AI, to Mr. Anand Swarup respondent for residential purposes for a limited period of two years with effect from 1.10.76. " After the expiry of the two year period, when the re spondent did not vacate the premises, the landlady moved the Rent controller for issuance of warrant of possession to which the tenant filed his objection. The Additional Rent Controller entertained the objection and dismissed the landlady 's petition for being put into possession. There upon the landlady moved the Rent Control Tribunal in appeal and when she failed before it, a second appeal was filed before the High Court which was dismissed in limine. 718 The Controller relied upon the judgment of this Court in S.B.Noronah vs Prem Kumari Khanna[1980] 1 SCR 281 and came to hold: "I have carefully gone through the execution appli cation, the objections, the evidence on record, the original file in which the permission was granted and have heard the learned counsel for parties. I am of the view that the order dated 30.9.75 granting permission was not in accordance with law and that the applicant/petitioner is not entitled to obtain possession of the premises in dispute under section 21 of the Delhi Rent Control Act. " Noronah 's case had stated: "Of course, there will be presumption in favour of the sanction being regular, but it will Still be open to a party to make out his case that in fact and in truth the conditions which make for a valid sanction were not present. " It is interesting to note that by the time the appel lant 's appeal came up for hearing before the Tribunal, Shri M.A. Khan who as an Additional Rent Controller had approved the tenancy by his order dated 30th September, 1976, on being judicially satisfied that the tenancy under section 21 of the Act could be created had become the Rent Control Tribu nal. He noticed this fact in his appellate order dated 11th April, 1986, by stating "In this appeal, the validity and executability of the order dr. 30.9.76 is disputed which was passed by me as Addl. Rent Controller. Since there is no other Rent Control Tribunal, therefore, in exigency of the situation I have no option but to proceed to decide this appeal. " He concluded "The appellant in the application and in her statement did not give the reason for letting out the premises for two years only. She even did not give the reason in application for recovery or ' possession. In reply to the objection of the respondent, she states that she was residing in Vasant Vihar at a house which was allotted to her husband by the employer. There was no possibility of her vacating the said 719 house and shifting to the disputed premises. The first floor of the disputed premises was also let out by her to another tenant for a limited period. She did not disclose that she intended to create a limited tenancy in respect of the first floor also. Further the premises were let after an adver tisement of 'to let ' in Hindustan Times dt. 25.9.76. It is conceded that in the advertisement it was not specified that the premises were available for letting for two years only. All these facts proved that the appellant did not require the premises for occupation after two years and that these premises could have been let out for an indefinite period. She made a wrong statement before the court. She also con cealed the material facts from the court. She obtained the permission from the court under section 21 by playing fraud. The order passed under section 21 is therefore invalid and in execution thereof, the respondent cannot be evicted. " We have already said that the second appeal was dis missed in limine. Lengthy arguments were advanced at the hearing in support of the respective stands. Counsel for the landlady argued that the Additional Rent Controller should not have entertained the objection of the tenant to the execution of the eviction order as the same had not been filed during the currency of the tenancy; it was further argued that some of the considerations which weighed with the Rent Control Tribunal were ) not at all relevant for judging the bona fides and genu ineness of actions taken on 30th of September, 1976, at the time of creation of the tenancy. On the/side of the tenant, the contentions which had prevailed with the 'Additional Rent Controller and the Rent Control Tribunal were reiterated. Section 14 of the Act deals with a normal tenancy and protects the tenant against unreasonable eviction. Section 21 of the Act, on the other hand, places tile tenant outside the purview of section 14 and provides for an order of eviction at the time of creation of the tenancy. There is a purpose behind enacting section 21 of the Act. The Legislature considered it appropriate that should a landlord not need his residen tial premises for a period, instead of keeping the same vacant the same could be available for a tenant 's use on being let out for a limited period condi 720 tional upon the tenant 's surrendering possession as soon as the tenancy terminates by efflux of time and the need of the landlord revives. The conditions to be fulfilled at the time of creation of such a tenancy are three, namely, (i) the landlord would not require the premises for a particular period, (ii) the Controller must be satisfied about that position, and (iii) the tenant agrees to vacate at the end of the period. In Noronah 's case supra two Judge Bench dealt with this question. This Court then said. "We must notice that section 21 runs counter to the general scheme and, therefore, must be restricted severely to its narrow sphere. Secondly, we must place accent on every condition which attracts the section and if any one of them is absent the section cannot apply and, therefore, cannot arm the landlord with a resistless eviction process. Third ly, we must realise that the whole effect of section 14 can be subverted by ritualistic enforcement of the conditions of sanction under section 21 or mechanical grant of sanction therein. Section 21 overrides section 14 precisely because it is otherwise hedged in with drastic limitations and safeguards itself against landlords ' abuses. It is true that the judgment of this Court which is dated August 16, 1979, was not in existence when Sri Khan sanctioned the tenancy but the law then in force was not different. In fact, the orders out of which that appeal arose had also taken the same view. This Court Noronah 's case further said: "When an application under section 21 is filed by the land lord and/or tenant, the Controller must satisfy himself by such inquiry as he may make, about the compulsive require ments of that provision. If he makes a mindless order, the Court, when challenged at the time of execution, will go into the question as to whether the twin conditions for sanction have really been fulfilled. " A three Judge Bench of this Court in J.R. Vohra vs India Export House Pvt. Ltd. & Anr., ; was examin ing the requirement of notice to the tenant when at the expiry of the period of tenancy the landlord had applied for being put in possession. While so examining that question this Court approved the following observations in Noronah 's case: 721 "Parliament was presumably keen on maximising accommodation available for letting, realising the scarcity crises. One source of such spare accommodation which is usually shy is potentially vacant building or part thereof which the land lord is able to let out for a strictly limited period pro vided he has some credible assurance that when he needs he will get it back. If an officer is going on other assignment for a particular period, or the owner has official quarters so that he can let out if he is confident that on his re tirement he will be able to re occupy, such accommodation may add to the total lease worthy houses. The problem is felt most for residential uses. But no one will part with possession because the lessee will become a statutory tenant and, even if bona fide requirement is made out, the litiga tive tiers are so many and the law 's delays so tantalising that no realist in his sense will trust the sweet promises of a tenant that he will return the building after the stipulated period. So the law has to make itself credit worthy. The long distance between institution of recovery proceedings and actual dispossession runs often into a decade or more a factor of despair which can be obviated only by a special procedure. Section 21 is the answer. The law seeks to persuade the owner of premises available for letting for a particular or limited period by giving him the special assurance that at the expiry of that period the appointed agency will place the landlord in vacant possession. " Noronah 's judgment was approved to this extent. In the three succeeding paragraphs in Vohra 's decision. Noronah 's case was also referred to. Dealing with the contentions relied upon in Noronah 's case, Tulzapurkar, J. who delivered the judgment of the Court, observed: "At the outset we would like to observe that in Noronah 's case the question whether a prior notice is required to be served upon the tenant before issuance of warrant of posses sion in favour of the landlord under section 21 did not arise for consideration. It was a case where upon receipt of landlord 's application for recovery of possession under the section the tenant raised pleas that the premises had been let out for non residential purposes and that the sanction or permission granted for the creation of the limited tenan cy was vitiated by fraud and collusion and the question that 722 arose for consideration was whether at that stage the Rent Controller could go into and consider such pleas and this court has ruled that the Controller should consider those pleas even when raised at that stage. " A little later Justice Tulzapurkar further observed: "In fact even in Noronah 's case this Court has observed,that there will be a presumption in favour of the sanction or permission being regular and if that be so, we fail to appreciate as to why the Rent Controller should invite such pleas of fraud, collusion etc. at the instance of the tenant by being required to serve a notice upon him before issuing the warrant of possession in favour of the landlord espe cially when the scheme of sec. 21 and the connected relevant provisions do not require it. " The three Judge Bench thereafter went to consider the remedy available to the tenant in a case where the objec tions were as in the present case: "What then is the remedy available to the tenant in a case where there was in fact a mere ritualistic observance of the procedure while granting permission for the creation of a limited tenancy or where such permission was procured by fraud practised by the landlord or was a result of collusion between the strong and the weak? Must the tenant in such cases be unceremoniously evicted without his plea being inquired into? The answer is obviously in the negative. At the same time must he be permitted to protract the delivery of possession of the leased premises to the landlord on a false plea of fraud or collusion or that there was a mechan ical grant of permission and thus defeat the very subject of the special procedure provided for the benefit of the land lord in section 217 The answer must again be in the nega tive. In our view these two competing claims must be harmo nised and the solution lies not in insisting upon service of a prior notice on the tenant before the issuance of the warrant of possession to evict him but by insisting upon his approach the Rent Controller during the currency of the limited tenancy for adjudication of his pleas no sooner he discovers facts and circumstances that tend to vitiate ab initio the initial grant of permission. Either it is a 723 mechancial grant of permission or it is procured by fraud practised by the landlord or it is the result of collusion between two unequals but in each case there is no reason for the tenant to wait till the landlord makes his application for recovery of possession after the expiry of the fixed period under section 21 but there is every reason why the tenant should make an immediate approach to the Rent Con troller to have his pleas adjudicated by him as soon facts and circumstances giving rise to such pleas come to knowledge or are discovered by him with the diligence. The special procedure provided for the benefit of the landlord in section 21 warrants such immediate approach on the part of the tenant. " What followed thereafter perhaps is more in the nature of an obiter than a part of the decision proper, namely: "Of course if the tenant alliunde comes to know about land lord 's application for recovery of possession and puts forth his plea of fraud or collusion etc. at that stage the Rent Controller would inquire into such plea but he may run the risk of getting it rejected as an afterthought. " It may be pointed out that in Vohra 's case the objec tions on the ground of fraud and collusion were raised after the claim by the landlord for being put in possession but were rejected as belated. The question that came for consid eration before the three Judge Bench was whether notice was necessary when the landlord applied to be put in possession after the termination of the tenancy. In that context, the observation that tenant 's objections could be enquired into if the tenant aliunde came to know of the landlord 's move and objected was not relevant for the decision. There are certain observations in Inder Mohan Lal vs Ramesh Khanna; , which are relevant: "An analysis of this judgment (Noronah 's case) which has been applied in the various cases would indicate that sec tion 21 only gives sanction if the landlord makes a state ment to the satisfaction of the court and the tenant accepts that the landlord does not require the premises for a limit ed period; this statement of the landlord must be bona fide. The purpose must be residence. There must not be 724 any fraud or collusion. There is a presumption of regulari ty. But it is open in particular facts and circumstances of the case to prove to the satisfaction of the executing court that there was no collusion or conspiracy between the land lord and the tenant and the landlord did not mean what he said or that it was a fraud or that the tenant agreed be cause the tenant was wholly unequal to the landlord. In the instant case none of these conditions were fulfilled. There is no evidence in this case that when the landlord stated that he did not require the premises in question for a particular period, he did not mean what he stated or that he made a false statement. There was no evidence in this case at any stage that the tenant did not understand what the landlord was stating or that he did not accept what the landlord stated. There was no evidence that either the tenant was in collusion or perpetrating any fraud with the landlord or the tenant was unequal to the landlord in bar gaining powers. It is manifest that there is no evidence to show that the Controller did not apply his mind. If that is so then on the principle enunciated by this Court in Noro nah 's case, this sanction cannot be challenged. It is not necessary to state under section 21 the reasons why the landlord did not require the premises in question for any particular period. Nor is there any presumption that in all cases the tenants are the weaker sections. The presumption is, on the contrary, in favour of sanction, it is he who challenges the statement and the admission of the landlord or the tenant who has to establish facts as indicated in Nagindas case. " In paragraph 22 of the judgment Mukharji, J. (as he then was) speaking for the Court held out a caution that the residue must be understood in its proper perspective. We may point out that the respondent apart from being highly quali fied held the position of a Deputy Secretary to Government and, therefore, was not a tenant of the type in Noronah 's case. As has been stated in Inder Mohan Lal 's case, the rule in Noronah 's case has to be confined to a particular set of facts and should not be freely extended so as to take away the effect of section 21. Fraud is an allegation which can easily be made but unless the allegations are clearly pleaded and some evidence, either direct or circumstantial, is avail able, a charge of fraud would not succeed. We may refer to another judgment of this Court in the case of Shiv Chander Kapoor. vs Amar Bose, JT where the 725 validity of the permission under section 21 of the Act came up for consideration. Noronah 's case was also referred to. In paragraph 15 of the judgment this Court pointed out that there is nothing in this decision to support the respondent tenant 's contention in that appeal that the scope of enquiry is wider permitting determination of the land lord 's bona fide need of the premises as if such a ground for eviction specified in section 14 of the Act was required to be proved. Extending the enquiry to that field would indeed be against the express prohibition enacted in section 21 of the Act. Referring to Vohra 's case, the latest judgment indi cates: "It is obvious from the decision in J.R. Vohra 's case that the tenant is expected to raise such a plea during currency of the limited tenancy and on such a plea being raised by the tenant enquiry into it is contemplated. Even though it is not expressly said in Vohra 's case, it is implicit that on such an application being made by the tenant requiting adjudication by the Controller, it is the Controller 's obligation to issue notice of the same to the landlord and then to make the adjudication with opportunity to both sides to prove their respective contentions. Both in Vohra 's case and in Shiv Chander Kapoor 's case though not arising for determination in either, it has been stated while laying down the rule that proceeding to chal lenge limited tenancy has to be taken during the cunency of the tenancy, an objection filed by the tenant could be looked into is indeed an obiter. We would like to make it clear that the rule having been stated to the contrary in Vohra 's case, there was indeed no warrant to indicate the contra situation. Perhaps to meet the eventuality which might arise in a particular case, neither of the two Benches of this Court wanted to close the avenue of enquiry totally, and that is why in both the cases decided by coordinate Benches the exception has also been indicated. It must be understood on the authority of the said two decisions and our judgment now that if the tenant has objection to raise to the validity of the limited tenancy it has to be done prior to the lapse of the lease and not as a defence to the landlord 's application for being put into possession. We would like to reiterate that even if such an exercise is available that must be taken to be very limited and made applicable to exceptional situations. Unless the tenant is able to satisfy the Controller that he had no opportunity at all to know the facts earlier and had come to be aware of them only then, should such an objection be entertained. 726 On the application of those tests to the present facts we must hold that the belated objections of the tenant should not have been entertained and prayer for possession made by the landlady after the limited tenancy ran out should have been granted. The appeal is allowed; the decisions of the Controller, Rent Control Tribunal and the High Court are reversed and the landlady is directed to be put into possession of the premises by 31st of March, 1990. The appellant would be entitled to her costs in the proceedings throughout. Hearing fee is assessed at Rs.2,000. G.N. Appeal al lowed.

The appellant landlady and the respendent tenant ap peared before the Rent Controller for creation of a tenancy under Section 21 of the Delhi Rent Control Act, 1958. Ac cordingly, the authority passed an order creating tenancy for a limited period of two years. Since the respondent did not vacate the premises on the expiry of two years, the appellant moved the Rent Controller for issuance of warrant of possession. The Respondent filed his objection. Enter taining the objection the Rent Controller dismissed the petition, holding that the order granting permission for the tenancy under section 21 of the Act was not in accordance with law. The appellant 's first appeal before the Rent Control Tribunal, as also her second appeal before the High Court met the same fate. This appeal, by special leave, is against the High Court 's order dismissing the second appeal in limine. On behalf of the appellant, it was contended that the Rent Controller should not have entertained the objection of the respondent as the same has not been filed during the currency of the tenancy. It was also contended that some of the considerations which weighed with the Rent Control Tribunal were not relevant for judging the bona fides and genuineness of actions taken at the time of creating the tenancy. Allowing the appeal, this Court, HELD: 1. Section 14 of the Delhi Rent Control Act, 1958 deals with a normal tenancy and protects the tenant against unreasonable eviction. Section 21 of the Act, on the other hand, places the tenant outside the purview of section 14 and provides for an order of eviction at the time of creation of the tenancy. There is a purpose behind enacting section 21 of the Act. The Legislature considered it appropriate that should a 716 landlord not need his residential premises for a period, instead of keeping it vacant the same could be available for a tenant 's use on being let out for a limited period condi tional upon the tenant 's surrendering possession as soon as the tenancy terminates by efflux of time and the need of the landlord revives. [719G H; 720A] 2.1. The rule in Noronah 's case has to be confined to a particular set of facts and should not be freely extended so as to take away the effect ors. [724F G] 2.2. In Vohra 's case and in Shiv Chander Kapoor 's case, though not arising for determination in either, it has been stated while laying down the rule that proceeding to chal lenge limited tenancy has to be taken during the currency of the tenancy, an objection filed by the tenant could be looked into, is indeed an obiter. The rule having been stated to the contrary in Vohra 's case, there was indeed no warrant to indicate the contra situation. Perhaps to meet the eventuality which might arise in a particular case, the exception has also been indicated. If, the tenant has an objection to raise to the validity of the limited tenancy it has to be done prior to the lapse of the lease and not as a defence to the landlord 's application for being put into possession. Even if such an exercise is available that must be taken to be very limited and made applicable to excep tional situations. Unless the tenant is able to satisfy the Controller that he had no opportunity at all to know the facts earlier and had come to be aware of them only then, should such an objection be entertained. [725E H] 2.3. In the facts and circumstances of the present case the belated objections of the tenant should not have been entertained and prayer for possession made by the landlady after the limited tenancy ran out should have been granted. [726A] S.B. Noronah vs Prem Kumari Khanna, ; ; J.R. Vohra vs India Export House Pvt. Ltd. & Anr., ; ; Inder Mohan Lal vs Ramesh Khanna, ; and Shiv Chander Kapoor vs Amar Bose, JT , referred to. [This Court directed that the landlady be put into possession of the premises by 31st March, 1990.]

Civil Appeal No. 1416 of 1981. From the Judgment and Order dated 28.12.1975 of the Central Govt. Labour Court at Calcutta in Application No L.C. 28 of 1976. M.K Ramamurthi and Amlan Ghosh for the Appellants. G.B. Pai, V.S. Desai, D.N. Mukherjee, N.R. Chaudhary and R. Mukherjee for the Respondent. KHALID, J. This appeal, by special leave, by two employees of the United Bank of India at Calcutta, is directed against a decision given by the Central Government Industrial Tribunal 1059 cum Labour Court, Calcutta, on 28th December, 1979, in an application made under Section 31 C (2) of the . The claim made by them related to the bonus paid on the eve of Pooja every year which according to them was customary in nature, irrespective of profit or loss. The Labour Court after considering the evidence placed before it held that the bonus claimed could not be characterised as customary since it did not answer to the requirements of law to be customary bonus and that in the absence of an existing right to customary bonus or bonus founded on an implied agreement as a condition of service, the application made under section 33 C(2) was not maintainable and accordingly dismissed the same 3. The petitioners ' claim was attempted to be Supported by the fact that they were given one month 's pay as bonus for the years 1959 to 1963, one and half months ' for the year 1964 and two months ' pay for the years 1965 to 1974. Their further case was that this bonus was paid every year on the eve of Pooja at the rate of pay as on 1st September of the respective year and was unrelated to any profit made by the company. The payment of such bonus consecutively for 16 years without any break and unrelated to profit or loss, without its sanction either in law or any award or any written settlement, payable on the eve of the Pooja developed into a condition of service giving rise to a right and an expectancy which in law assumed the characteristics of customary bonus. This claim was resisted by the Bank on the ground that the application itself was not maintainable since the alleged right pleaded by the workmen was not a condition of service and that such a right did not exist in fact also. The conditions of service of the employees of the Bank are governed by various awards and settlements. Though there were agreements entered into between the bank and its employees on several matters there was no agreement at any time on the question of payment of bonus. Bonus was paid to its employees every year as a result of demand raised separately by them and in respect of every year there was a separate agreement with regard to bonus. It was further stated that the bonus paid was related to profit and not based on any custom 4. The Labour Court considered the correspondence that passed between the BANK and its employees and came to the con 1060 clusion that a right to customary bonus in favour of the employees of the Bank did not exist. The application was dismissed holding that on the basis of the material on record, there was no existing right to customary bonus and that the Labour Court could not either create or declare a right which was not in existence to stretch its jurisdiction under Section 33 C(2) of the . It is the correctness of this finding that we are called upon to decide in this appeal. The Counsel on both sides took us through the various letters that passed between the employees of the Bank and the Bank and brought to our notice the past history relating to the payment of bonus for a considerably long time. It is seen that the Bank had been paying bonus at the rate of one month 's salary from 1959 to 1963. This is period prior to the Bonus Act which came into force in 1965. The payment continued even after coming into force of the Bonus Act. We find from the materials on record that the above payments were not made by the bank unilaterally without any demand, unrelated to profit or loss as a customary bonus. It is true that payments were made on the eve of the Pooja. The bonus so paid was not called Pooja bonus except in 1972 when the words 'Pooja ' was mentioned at the time when the payment was made. The bonus in question was paid for the years 1958 and 1959 as a result of protracted negotiations. Bonus for the year 1962 was paid at the rate of one month 's pay on the basis of Desai award. This rate continued for the year 1.963 also. In 1964, it was at the rate of 45 days ' pay. This rate was further increased for the year 1965 to two months ' pay and this we find was as a result of the discussions held on the subject between the management and the union from time to time. The two months ' rate continued till the year 1969. In 1969, the Bank was nationalised and till 1971 bonus at the rate of two months ' basic salary was sanctioned by the Ministry of Finance and was accordingly paid to the employees. In 1972, the General Secretary of the Union claimed by a letter that the employees were getting bonus at the rate of two months ' pay at the time of Pooja, irrespective of profits and asked for an enhancement of rate of bonus. Discussions were initiated and ultimately the Bank agreed to pay an additional bonus for the year 1972 of an additional four days pay and for the year 1973 two months and 12 days and for 1974 two months and 271/2 days. We have ourselves gone through the letters which are on 1061 record that passed between the parties. The correspondence shows . that the bonus was paid from year to year pursuant to negotiations that took place between the Union of the employees and the Bank and that the rates of bonus were not uniform, but were fluctuating. The Bank had a definite case that bonus was paid out of the profits made or in anticipation of profits. The claim of the Union that it was customary and unrelated to the profits of the Bank was attempted to be made at a belated stage of the case. Before deciding the case on the above materials, it would be useful to refer to the decision of this Court in Vegetable Products Ltd. vs Their Workmen(l) where this Court has laid down the test to determine what exactly is customary or festival bonus. The tests laid down by this Court are: (I) that the payment has been made over an unbroken series of years; (2) that it has been for a sufficiently long period the period has to be longer than in the case of an implied term of employment; (3) that it has been paid even in years of loss and did not depend on the earning of profits; and (4) that the payment has been made at a uniform rate throughout. From the materials disclosed in the records, reference to which was made by us earlier, it will be evident that the bonus paid in this case does not satisfy the requirements laid down by this Court detailed above. It may be true that the payments were made in the month of September or thereabout every year, but that by itself will not make the bonus paid a customary Pooja bonus. The rate has not been uniform. The management has at all times taken the definite stand that the payment was related to profits and that it was in anticipation of making profit. The payments were made at all times pursuant to demands made by the employees. We would like to refer to only two or three letters to fortify our conclusion that the payment was pursuant to the demands of the employees. In the letter dated 20th September, 1958, addressed to the General Secretary, United Bank of India 's employees Association, the opening sentence reads as follows: "With reference to the several demands as stated in your letter dated we have agreed as follows: (1) 1062 (1) Annual bonus for the year 1958. In the letter dated September 3, 1968, written to the President of the Association and marked as confidential, it is stated that "the Bank tried to impress upon the President through a number of discussions to persuade him to revise the present system of paying bonus in September to a system after the year 's results are available and to pay the minimum as provided for in the Bonus Act then and the balance if any after the year 's profit figures are known and since the Bank did not propose to strain its relationship with the employees and as the request made was not acceptable to the employees, it was decided to pay the bonus at the rate of two months ' basic salary, as existing on 1.9.1968. " In the letter dated December 29, 1972, addressed to the General Secretary of the Association it is stated that in case of this Bank, bonus is paid on the basis of the agreement arrived at between your association and the management equivalent to two months ' basic pay. " Reference may also be made to a letter dated 17th April, 1973, by the Association to the Chairman and Managing Director of the Bank which reads as follows: ". As you know, bonus is being paid at the present rate of two months basic pay as on September 1st each year since 1964, when after a continuous struggle the original pre amalgamation rate. was restored gradually, beginning with 15 days basic pay in 1958. " In the letter addressed to the General Secretary (dated 26th August, 1973) reference is again made to the demands made by the association for additional bonus for 1972 and to the subsequent discussions and agreement for payment of bonus at the rate of two months and 12 days pay as on 1.9.1973. From the above letters it is evident that bonus was paid as a result of long discussion at every stage No bonus was paid for the years 1950 to 1958. From 1959 onwards, the rate has not been uniform. There is no evidence to show that this payment was unrelated to the profits. The letters sent by the management clearly indicated that bonus payment was related to the profits and the Bank always wanted its employees to wait for the financial position for computation of the bonus payable. The 1063 evidence in this case does not also justify inference of an implied agreement on the part of the Bank to pay bonus of a customary nature at the time of Pooja, without any relation to profits as a condition of service. The Labour Court has noted the fact that it was nobody 's case that bonus was ever paid in any year of loss or that there was any year of loss and that the bank had consistently taken the position that bonus was paid out of the year 's profit in anticipation. There is one other aspect of the claim now put forward which cannot be lost sight of, which affords an additional reason to reject the contention of the appellants. The respondent is a nationalised bank. Roughly in all there are 25 nationalised banks. The concept of any customary bonus is unknown to nationalised banks. All the nationalised banks are wholly owned undertakings of the Government of India in the matter of bonus, the employees of the nationalised banks must be dealt with on a common denominator. If therefore the contention of the appellant were to prevai the employees of the respondent, which is only one amongst many nationalised bank, would enjoy an undeserved advantage compared to their counterparts in other nationalised banks and even in the Other branches of the respondent bank and may become a cause of disharmony and inequality. Therefore in larger public interest also, the demand for customary bonus otherwise found to be untenable, must be negatived. On a careful consideration of the facts and circumstances of the case disclosed, we find that the appellants have not succeeded in persuading us to disagree with the findings of the Labour Court or to satisfy us that the bonus that they received had the characteristic of customary bonus as known to law and that therefore they were entitled to the quantification of that amount under Section 33 C (2) of the , on the basis of the existence of a legal right in them. The appeal has, therefore, to fail and is dismissed with out any order as to costs S.R. Appeal dismissed.

Two employees of the respondent Bank preferred a claim on the basis of the existence of legal light in them to the payment of a customary bonus on the eve of pooja. Their case was that the bonus paid to them every year on the eve of pooja at the rate of pay as on 1st September of the respective year was unrelated to any profit or loss made by the company and that the consecutive payment for more than 16 years without any break of such bonus has developed into a condition of service giving rise to a right and an expectancy which in law assumed the characteristics of customary bonus. The claim was resisted by the bank on the grounds, namely, (a) the application itself was not maintainable since the alleged right pleaded by the workmen was not a condition of service and that such a right did not exist in fact also; (b) the conditions of service of the employees of the Bank are governed by various awards and settlements; (c) though there were agreements entered into between the bank and its employees on several matters there was no agreement at any time on the question of payment of bonus; and (d) though the bonus was paid, as a result of the employees demand every year as per separate agreement for the payment thereof the bonus paid was related to profit and not based on any custom. After considering correspondence that passed between the Bank and its employees, the Labour Court dismissed the application holding that on the basis of the material on record, there was no existing right to customary bonus and that the Labour Court could not either create or declare a right which was not in existence to stretch its jurisdiction under section 330(2) of the . Hence the appeal by special leave. ^ HELD: 1. In the facts and circumstances of the case the bonus received by the appellants did not have the characteristic of customary bonus as known to law and therefore they were not entitled to the quantification of that amount under section 33 c(2) of the , on the basis of tho existence of a legal right in them. In Vegetable Products Ltd. vs Their Workmen, , the Supreme Court has laid down the tests to determine what exactly is customary or festival bonus. The tests laid down are; (I) that the payment has been made over an unbroken series of years; (2) that it has been for a sufficiently long period the period has to be longer than in the case of an implied term of employment; (3) that it has been paid even in years of loss and did not depend on the earning of profits; and (4) that the payment has been at a uniform rate throughout. In the instant case, the record shows that the bonus paid does not satisfy the requirements laid down by the Court. The mere fact the payments were made in the month of September or thereabout every year, by itself will not make the bonus paid a customary pooja bonus. The rate has not been uniform. The management has at all times taken the definite stand that the payment was related to profits and that it was in anticipation of making profit. Further the payments were made at all time pursuant to demands made by the employees. 11061 C F Vegetable Products Ltd vs Their Workmen, applied. The concept of any customary bonus is unknown to nationalised banks. All the nationalised banks are wholly owned undertakings of the Government of India. In the matter of bonus, the employees of the nationalised banks must be dealt with on a common denominator. If therefore, the contention of the appellants were to prevail the employees of the respondent. which is only one amongst many Nationalised banks, would enjoy an undeserved advantage compared to their counterpart in other nationalised banks and even in the other branches of the respondent bank and may become a cause of disharmony and inequality. Therefore, in larger public interest also, the demand for customary bonus otherwise found to be untenable, must be negatived. [1063 C E]

XXXVII of 1950. Application under article 32 of the Constitution of India for a writ of certiorari and prohibition. The facts are set out in the judgment. B. Banerji for the petitioner. M.C. Setalvad, Attorney General for India (Gyan Chand, with him) for the opposite party. 522 1950. May 26. The following judgments were delivered: KANIA C.J. This is an application for a writ of 'certiorari and prohibition under article 32 of the Constitution of India. The petitioner who is the President of the All India Hindu Mahasabha since December, 1949, was served with an order of externment dated the gist of March, 1950, that night. By that order he is directed by the District Magis trate, Delhi, not to remain in the Delhi District, and immediately to remove himself from the Delhi District and not to return to the District. The order was to continue in force for three months. By another order of the Madhya Bharat Government he was directed to reside in Nagpur. That order has been recently cancelled. The petitioner disputes the validity of the first order on the ground that the East Punjab Public Safety Act, 1949, under which the order was made, is an infringement of his fundamental right given under article 19 (1) (d) of the Constitution of India. He further contends that the grounds of the order served on him are vague, insufficient and incomplete. According to him the object of the externment order passed by the District Magistrate, Delhi, was to suppress political opposition to the policy of the Government in respect of Pakistan and the Muslim League. It is alleged that because the petitioner and the Hindu Mahasabha are against the Government policy of appeasement this order is served on him. It is therefore mala fide and illegal. In support of his contention about the invalidity of the East Punjab Public Safety Act and its provisions as regards externment, counsel for the petitioner relied on the recent unreported judgments of the Patna High Court in Miscellaneous Judicial Case No. 29 of 1950, Brij nandan vs The State of Bihar, and of the High Court of Bombay in Criminal Application No. 114 of 1950, re Jai singhbhai Ishwarlal Modi. It is necessary first to ascertain the true meaning of article 19 (1) (d) read with clause (5) of the same article. There is no doubt that by the order of extern 523 ment the right of the petitioner to freedom of movement throughout the territory of India is abridged. The only question is whether the limits of permissible legislation under clause (5) are exceeded. That clause provides as follows: "19. (5) Nothing in subclauses (d), (e) and (f) of the said clause shall affect the operation of any exist ing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe. " It is clear that the clause permits imposition of reasonable restrictions on the exercise of the right conferred by sub clause (d)in the interests of the general public. The rest of the provision of clause (5) is not material and neither side relies on it. Two interpretations of the clause are put before the Court. It is argued that grammatically understood the only question before the Court is whether the impugned legislation imposes reasonable restrictions on the exercise of the right. To put it in other words, the only justiciable issue to be decided by the Court is whether the restrictions imposed by the legislation on the exercise of the right are reasonable. If those restrictions on the exercise of the right are reasonable, the Court has not to consider whether the law imposing the restrictions is rea sonable. The other interpretation is that while the Consti tution permits a law laying down reasonable restrictions on the exercise of the rights mentioned in sub clause 19 (1) (d), the reasonableness has to be of the law also. It is submitted that in deciding whether the restrictions, on the exercise of the right are reasonable, the Court has to decide not only on the extent and nature of the restric tions on the exercise of the right but also as to whether the conditions under which the right is restricted are reasonable. The majority judgments of the Patna and the Bombay High Courts, although the impugned Acts of the State Legislatures before them were materially different on cer tain important points, have given clause (5) of article 19 the latter meaning. 524 In my opinion, clause (5) must be given its full mean ing. The question which the Court has to consider is wheth er the restrictions put by the impugned legislation on the exercise of the right are reasonable or not. The question whether the provisions of the Act provide reasonable safe guards against the abuse of the power given to the executive authority tO administer the law is not relevant for the true interpretation of the 'clause. The Court, on either inter pretation, will be entitled to consider whether the re strictions on the right to move throughout India, i.e,, both as regards the territory and the duration, are reasonable or not. The law providing reasonable restrictions on the exercise of the right conferred by article 19 may contain substantive provisions as well as procedural provisions. While the reasonableness of the restrictions has to be considered with regard to the exercise of the right, it does not necessarily exclude from the consideration of the Court the question of reasonableness of the procedural part of the law. It is obvious that if the law prescribes five years externment or ten years externment, the question whether such period of externment is reasonable, being the substan tive part, is necessarily for the consideration of the Court under clause (5). Similarly, if the law provides the proce dure under which the exercise of the right may be restrict ed, the same is also for the consideration of the Court, as it has to determine if the exercise of the right has been reasonably restricted. I do not think by this interpretation the scope and ambit of the word "reasonable" as applied to restrictions on the exercise of the right, is in any way unjustifiably enlarged. it seems that the narrow construc tion sought to be put on the expression, to restrict the Court 's power to consider only the substantive law on the point, is not correct. In my opinion this aspect of the construction of article 19 (5) has escaped the minority judgment in the two matters mentioned above. I am not con cerned with the conclusions of the two Courts about the invalidity of the provisions of the Acts they were asked to consider. To the extent they help in the interpretation of article 19 (5) only they are helpful. 525 The next question is whether the impugned Act contains reasonable restrictions on the exercise of the right given under article 19 (1)(d)or (e). It was argued on behalf of the petitioner that under section 4 the power to make the order of externment was given to the Provincial Government or the District Magistrate, whose satisfaction was final. That decision was not open to review by the Court. On that ground it was contended that there was an unreasonable restriction on the exercise of the citizen 's right. In my opinion, this argument is unsound. This is not legislative delegation. The desirability of passing an individual order of externment against a citizen has to be left to an offi cer. In the Act such a provision cannot be made. The satisfaction of the officer thus does not impose an unrea sonable restriction on the exercise of the citizen 's right. So far as the Bombay High Court is concerned Chagla C.J. appears to have decided this point against the contention of the petitioner. It was next urged that under section 4 (3) the order made by the District Magistrate shall not, unless the Pro vincial Government by special order otherwise direct, remain in force for more than three months. It was argued that the period of three months itself was unreasonable as the ex ternee had no remedy during that time. It was contended that when the Provincial Government directed the renewal of the order no limit of time was prescribed by the legislature for the duration of the order. The order therefore can be in operation for an indefinite period. This was argued to be an unreasonable restriction on the exercise of a citi zen 's right. In this connection it may be pointed out that in respect of preventive detention, which is a more severe restriction on the right of the citizen, the Constitution itself under article 22 (4) to (7) permits preventive deten tion for three months without any remedy. The period of three months therefore prima facie does not appear unreason able. Under the proviso to section 4 (5) the Provincial Government is not permitted to direct the exclusion or removal from the Province of a person ordinarily residing in the Province, and similarly 526 the District Magistrate is not permitted to order the exclu sion or removal of a person ordinarily resident in his district from that district. This is a great safeguard provided under the East Punjab Public Safety Act. The further extension of the externment order beyond three months may be for an indefinite period, but in that connec tion the fact that the whole Act is to remain in force only up to the 14th August, 1951, cannot be overlooked. More over, this whole argument is based on the assumption that the Provincial Government when making the order will not perform its duty and may abuse the provisions of the sec tion. In my opinion, it is improper to start with such an assumption and decide the legality of an Act on that basis. Abuse of the power given by a law sometimes occurs; but the validity of the law cannot be contested because of such an apprehension. In my opinion, therefore, this contention of the petitioner cannot be accepted. was next argued that there is no provision in the Act for furnishing grounds of externment to the citizen. Section 4 (6) provides that when an externment order has been made its grounds may be communicated to the externee by the authority making the order and in any case when the order is to be enforced for more than three months he shall have a right of making a representation which shall be referred to the advisory tribunal constituted under section 3 (4). While the word "may" ordinarily conveys the idea of a discretion and not compulsion, reading it with the last part of the clause it seems that when an externment order has to be enforced for more than three months an absolute right is given to the cxternee to make a representation. He cannot make a representation unless he has been furnished grounds for the order. In no other part of the Act a right to obtain the grouuds for the order in such a case is given to him. Therefore, that right has to be read as given under the first part of section 4 (6). That can be done only by reading the word "may" for that purpose as having the mean ing of "shall" If the word "may" has to be so read for that purpose, it appears to be against the well recognised canons of construction to 527 read the same "may" as having a different meaning when the order is to be in force for less than three months. I do not think in putting the meaning of "shall" on "may" in the clause, I am unduly straining the language used in the clause. So read this argument must fail. It was next argued that there is no provision in the Act showing what the advisory board has to do when it receives a representation. A reference to the advisory board neces sarily implies a consideration of the case by such board. The absence of an express statement to that effect in the impugned Act does not invalidate the Act. It was finally contended on behalf of the petitioner that the grounds for the externment order supplied to him are vague, insufficient and incomplete. The grounds are stated as follows : "Your activities generally and particularly since the recent trouble in East and West Bengal have been of a communal nature tending to excite hatred between communities and whereas in the present composition of the population of Delhi and the recent communal disturbances of Delhi feelings are roused between the majority and minority communities, your presence and activities in Delhi are likely to prove prejudicial to the maintenance of law and order, it is considered necessary to order you to leave Delhi. " These grounds cannot be described as vague, insufficient or incomplete. It is expressly stated that the activities of the petitioner, who is the President of the Hindu Maha sabha, since the recent disturbances between two communities in the East and West Bengal have particularly been of a communal nature which excites hatred between the communi ties. It is further stated that having regard to the recent disturbance in Delhi, the population of which is composed of both these communities, the excitement of such,hatred is likely to be dangerous to the peace and maintenance of law and order. Apart from being vague, I think that these grounds are specific and if honestly be lieved can support the order. The argument that the order 528 was served to stifle opposition to the Government policy of appeasement has little bearing because the District Magis trate of Delhi is not concerned with the policy of the Government of appeasement or otherwise. The order is made because the activities of the petitioner are likely to prove prejudicial to the maintenance of law and order and the grounds specified have a direct bearing on that conclusion of the District Magistrate. I therefore think that this contention of the petitioner must be rejected. The result is that the petition fails and is dismissed. FAZL ALI J. I agree. PATANJALI SASTRI J. I agree that this application must fail. As I share the views expressed by my Lord in.the judgment just delivered by him on the reasonableness of the restrictions imposed by the impugned legislation whichever construction of article 19 (5) of the Constitution is adopt ed, I consider it unnecessary to express any opinion on the true scope of the judicial review permitted under that article, and I hold myself free to deal with that point when it becomes necessary to do so. MAHAJAN J. I concur in the judgment which my brother Mukh erjea is delivering and for the reasons given by him I allow the petition and quash the order of externment. MUKHERJEA J. This is an application under article 32 of the Constitution, praying for quashing of an externment order made by the District Magistrate of Delhi, against the petitioner Dr. N.B. Khare, on 31st March, 1950, by which the latter was directed to remove himself immediately from the Delhi District and not to return to that District so long as the order remained in force. The order is for three months at present. Complaint was also made in the petition in respect of another and a subsequent order passed by the Government of Madhya Bharat which was served on the peti tioner on his way to Nagpur and which 529 directed him to reside within the limits of the Nagpur Municipality and not to leave that area without the permis sion of the District Magistrate of that place. This order of the Government of Madhya Bharat, we are told, has since been withdrawn and we are not concerned with that order or the Act under which it was passed in the present proceeding. The substantial contention raised on behalf of the petitioner is that the particular provision of the East Punjab Public Safety Act, 1949, under which the District Magistrate of Delhi purported to make the externment order, became void and ceased to be operative after the new Consti tution came into force, by reason of these provisions being inconsistent with the fundamental rights guaranteed under article 19 (1) (d) of the Constitution read with clause (5) of the same article. The argument is that any order passed under such void legislative provisions must necessarily be void and of no effect in law. In order to appreciate the merits of this contention, it may be convenient to advert to the material provisions of the East Punjab Public Safety Act which are alleged to have become void as well as to the articles of the Constitution, upon which reliance has been placed by the learned counsel for the petitioner. The East Punjab Public Safety Act came into force on 29th March, 1949, and its object, as stated in the preamble, is to provide for special measures to ensure public safety and maintenance of public order. Section 4 (1) of the Act provides: "The Provincial Government or the District Magistrate, if satisfied with respect to any particular person that with a view to preventing him from acting in any manner prejudi cial to the public safety or the maintenance of public order it is necessary so to do, may, by order in writing, give anyone or more of the following directions, namely that such person . . . . . . . . . (c) shall remove himself from, and shall not return to, any area that may be specified in the order." , 530 Sub section (3) of the section lays down that "An order under sub section (1) made by the District Magistrate shall not, unless the Provincial Government by special order otherwise directs, remain in force for more than three months from the making thereof." The contention of the petitioner is that the restrictive provisions mentioned above, under which a person could be removed from a particular area or prohibited from returning to it are inconsistent with the fundamental right guaranteed by article 19 (1) (d) of the Constitution under which all citizens shall have the right "to move freely throughout the territory of India. " This right indeed is not absolute and the extent to which it could be curtailed by legislation is laid down in clause.(5)of article 19 which runs as follows: "Nothing in sub clauses (d), (e) and (f) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe." Thus the primary question which requires consideration is, whether the impugned legislation which apparently seems to be in conflict with the fundamental right enunciated in article 19 (1) (d) of the Consitution is protected by clause (5) of the article, under which a law would be valid if it imposes reasonable restrictions on the exercise of the right in the interests of the general public. It is not disputed that the question of reasonableness is a justiciable matter which has to be determined by the Court. If the Courts 'hold the restrictions imposed by the law to be reasonable, the petitioner would certainly have no remedy. If, on the other hand, they are held to be unreasonable, article 13 (1)of the Constitution imposes a duty upon the Court to pronounce the law to be invalid to the extent that it is inconsistent with the fundamental rights guaranteed under Part III of the Constitution. 531 It has been urged, though somewhat faintly, by the learned Attorney General that the right of free movement throughout the Indian territory as enunciated in article 19 (1) (d) of the Constitution contemplates nothing else but absence of inter State restrictions, which might prevent citizens of the Indian Union from moving from one State to another. A law which does not impose barriers of this kind, it is said, cannot be inconsistent with the fundamental right secured by this clause. Such a restricted interpreta tion is, in my opinion, not at all warranted by the language of the sub clause. What article 19 (1) (d) of the Constitu tion guarantees is the free right of all citizens to go wherever they like in the Indian territory without any kind of restriction whatsoever. They can move not merely from one State to another but from one place to another within the same State and what the Constitution lays stress upon is that the entire Indian territory is one unit so far as the citizens are concerned. Clause (c) of section 4 (1) of the East Punjab Public Safety Act, 1949, authorises the Provin cial Government or the District Magistrate to direct any person to remove himself from any area and prohibit him from entering the same. On the face of it such provision repre sents an interference with the. fundamental right guaran teed by article 19 (1) (d) of the Constitution. The contro versy, therefore, narrows down to this, whether the impugned legislation is saved by reason of its being within the permissible limits prescribed by clause (5) of article 19. With regard to clause (5), the learned AttorneyGeneral points out at the outset that the word "reasonable" occur ring in the clause qualifies "restrictions" and not "law '". It is argued that in applying the clause, all that we have to see is whether the restrictions that are imposed upon the exercise of the right by law are reasonable or not and we have not to enquire into the reasonableness or otherwise of the law itself. The reasonableness of the restrictions can be judged, ' according to the learned Attorney General, from the nature of the restrictions themselves and not from the manner in which or the authorities by which they are 532 imposed. The question whether the operation of the law produces hardship in individual cases is also a matter which is quite irrelevant to our enquiry. I do agree that in clause (5) the adjective 'reasonable ' is predicated of the restrictions that are imposed by law and not of the law itself; but that does not mean that in deciding the reasonableness or otherwise of the restric tions, we have to confine ourselves to an examination of the restrictions in the abstract with reference merely to their duration or territorial extent, and that it is beyond our province to look up to the circumstances under which or the manner in which the restrictions have been imposed. It is not possible to formulate an effective test which would enable us to pronounce any particular restriction to be reasonable or unreasonable per se. All the attendant cir cumstances must be taken into consideration and one cannot dissociate the actual contents of the restrictions from the manner of their imposition or the mode of putting them into practice. The question of reasonableness of the restric tions imposed by a law may arise as much from the substan tive part of the law as from its procedural portion. Thus, although I agree with the learned Attorney General that the word "reasonable" in clause (5) of article 19 goes with "restrictions" and not with "law," I cannot accept his suggestion as regards the proper way of determining the reasonableness of the restrictions which a legislation might impose upon the exercise of the right of free movement. Coming now to the provisions of the impugned Act, Mr. Baner jee 's main contention is that section 4 (1) (c)of the East Punjab Public Safety Act, which provides for passing of orders removing a person from a particular area, on the satisfaction of the Provincial Government or the District Magistrate, cannot be a reasonable piece of legislation inasmuch as the only pre requisite for imposition of the restrictions is the personal satisfaction of certain indi viduals or authorities, the propriety or reasonableness of which cannot be tested by the application of any external rule or standard. It is said that any law which places the liberty 533 of a subject at the mercy of an executive officer, however high placed he might be and whose action cannot be reviewed by a judicial tribunal, is an arbitrary and not a reasonable exercise of legislative powers. The contention requires careful examination. It is not disputed that under clause (5) of article 19, the reasonableness of a challenged legislation has to be determined by a Court and the Court decides such matters by applying some objective standard which is said to be the standard of an average prudent man. Judged by such standard which is sometimes described as an external yard stick, the vesting of authority in particular officers to take prompt action under emergent circumstances, entirely on their own responsibility or personal satisfaction, is not necessarily unreasonable. One has to take into account the whole scheme of the legislation and the circumstances under which the restrictive orders could be made. The object of the East Punjab Public Safety Act is to pro vide for special measures to ensure public safety and maintenance of public order. Under section 4 (1) (c) of the Act, the Provincial Govern ment or the District Magistrate may make an order directing the removal of a certain person from a particular area, if they are satisfied that such order is necessary to prevent such person from acting in any way prejudicial to public safety or maintenance of public order. Preventive orders by their very nature cannot be made after any judicial enquiry or trial. If emergent steps have got to be taken to prevent apprehended acts which are likely to jeopardise the inter ests or safety of the public, somebody must be given the power of taking the initial steps on his own responsibility; and no reasonable objection could be taken if the authority, who is given the power, is also entrusted with the responsi bility of maintaining order and public peace in any particu lar district or province. The preventive provisions of the Criminal Procedure Code are based on similar principle. In my opinion, therefore, the provision of section 4 (1) (c) of the East Punjab Public Safety Act cannot be pronounced to be unreasonable, simply because the order could be passed by the Provincial Government 534 or the District Magistrate on their own personal satisfac tion and not on materials which satisfy certain objective tests. But though certain authorities can be invested with powers to make the initial orders on their own satisfaction in cases of this description, the position would certainly be different if the order thus made is allowed to continue for any indefinite period of time without giving the ag grieved person an opportunity to say what he has got to say against the order. I have already set out the provisions of sub section (3) of section 4 which deals with duration of the orders made under the various clauses of sub section (1). It will be seen from this sub section that there is absolutely no limit as to the period of time during which an externment order would remain in force if the order is made by the Provincial Government. The Provincial Government has been given unlimited authority in this respect and they can keep the order in force as long as they chose to do so. As regards orders made by a District Magistrate, the period indeed has been fixed at three months, but even here the Provincial Government is competent to extend it to any length of time by means of a special order. The law does not fix any maximum period beyond which the order cannot continue; and the fact that the Act itself would expire in August, 1951, is, in my opinion, not a relevant matter for consideration in this connection at all. I have no hesi tation in holding that the provision of sub section (3) of section 4 is manifestly unreasonable and cannot be supported on any just ground. One could understand that the exigen cies of circumstances might justify the vesting of plenary powers on certain authorities which could pass orders on their ' own personal satisfaction temporarily and for a short period of time; but if these orders are to continue indefi nitely, it is only fair that an opportunity should be given to the person against whom such order is made to say what he has to say in answer to the allegations made against him. There may not be an investigation by a regular Court but it is necessary that the aggrieved person should be given a fair hearing and that by an 535 impartial tribunal. The provision of the impugned Act which has bearing on this point is contained in sub section (6) of section 4 and it runs as follows: "When an order has been made in respect of any person under any of the clauses under section 4, sub section (1), or sub section (2) the grounds of it may be communicated to him by the authority making the order and in any case, when the order is to be in force for more than three months, he shall have a right of making a representation which shall be referred to the Advisory Tribunal, constituted under section 3, sub section (4). " It will be noted that the first part of the subsection makes it entirely optional with the authorities to communi cate the grounds, upon which the order is made, to the person affected by it. The grounds need not be communicated at all if the authorities so desire. As regards the right of representation the latter part of the sub section seems to imply that when the order is to remain in force for more than three months, the right of representation should be given to the aggrieved person and the representation shall be referred for consideration to the advisory tribunal constituted under section 3, sub section (4), of the Act. The right, however, is purely illusory as would appear from the fact that even in cases where the order is to be opera tive for more than three months, there is no obligation on the part of the authorities to communicate to the person the grounds upon which the order was made. The aggrieved person consequently may not at all be apprised of the allegations made against him and it will be impossible for him to make any adequate or proper representation, if he is not told on what grounds the order was passed. In my opinion, this is an equally unreasonable provision and neither sub section (3) nor sub section (6) of section 4 of the Act can be said to have imposed restrictions which are reasonable in the inter ests of the general public. My conclusion, therefore, is that under article 13 (1) of the Indian Constitution, these provisions of the Act became void and inoperative after the Constitution came into 536 force, and consequently the order made by the District Magistrate in the present case cannot stand. I would, therefore, allow the application and quash the externment order that has been passed against the petition er. Petition dismissed. Agent for the petitioner: Ganpat Rai. Agent for the opposite party: P.A. Mehta.

Section 4, sub section (1) (c), of the East Punjab Public Safety Act of 1949 which was passed on the 29th March, 1949, and was to be in force until the 14th August, 1951, provided that "The Provincial Government or the District Magistrate, if satisfied with respect to any particular person that with view to preventing him from acting in any manner prejudicial to the public safety or the maintenance of public order it is necessary to do so, may, by order in writing, give a direction that such person shall remove himself from, and shall not return to, any area that may be specified in the order. " Sub section (3) of section 4 provided that "an order under sub section (1) made by the District Magistrate shall not, unless the Provincial Goverment by special order otherwise directs, remain in force for more than three months from the making thereof," and sub section (6) laid down that "when an order has been made in respect of any person under any of the clauses under section 4, sub section (1) or sub section (9.), the grounds of it may be communicated to him by the authority making the order, and in any case when the order is to be in force for more then three months, he shall have a right of making a representation which shall be referred to the Advisory Tribunal constituted under section 3, sub section " The petitioner, against whom an order under (1) (c) of the Act was passed applied to the Court under article 39, of the Constitution for a writ of certiorari contending that the order was illegal inasmuch as the provisions of the above mentioned Act under which the order was made infringed the fundamental right to move freely throughout the territo ry of India which was guaranteed by article 19 (1) (d) of the Constitution and were accordingly void under article 13 (1) of the Constitution: Held, per KANIA C.J., FAZL ALl and PATANJALI SASTRI, J3. (MAHAJAN and MUKHERJEA, JJ. dissenting) (i) that there was nothing unreasonable in the provision contained in sub section (1) (c) empowering the Provincial Government or the Dis trict Magistrate to make an externment order, and making their satisfaction as to the necessity of making such an order final, or in the provisions contained in sub section (3) of section 4 that an order of a District Magistrate may remain in force for three months and that the Provincial Government may make an order, or keep alive an order made by a District Magistrate, for a period exceeding three months without fixing any time limit; (ii) with regard to sub section (6), the word "may" in the expression "may communicate" must, in the context, be read as meaning "shall" and under the sub sec tion it is obligatory on the authority making an order to communicate the grounds to the externee;.(iii) the restric tions imposed by the above mentioned provisions of the Act upon the fundamental right guaranteed by article (19) (1) (d) were not, therefore, unreasonable restrictions within the meaning 01 article 19 (5) and the provisions of the Act were not void under article 13 (1), and the order of externment was not illegal. Per MUKHERJEA J. (MAHAJAN J. concurring) Though certain authorities can be invested with power to make 521 initial orders on their own satisfaction in cases of this description, and section 4 (1) (c) of the East punjab Public Safety Act cannot be pronounced to be unreasonable simply because an order I could be passed by the Provincial Gov ernment or the District Magistrate on their own personal satisfaction and not on materials, which satisfy certain objective tests, yet, the position would be different if the order thus made is allowed to continue for any indefinite period of time without giving the aggrieved person an oppor tunity to say what he has got to say against the order; and inasmuch as sub section (3) of section 4 prescribes no limit to the period of time during which an externment order would remain in force if it is made by the Provincial Government, and the Provincial Government is also given power to keep an order made by a District Magistrate in force for an indefinite period, the provisions of sub section (3) are manifestly unrea sonable. The provisions of sub section (6)of section 4 are also unreasonable as they make it entirely optional with the authorities to communicate to the person affected, the grounds upon which the order is made. Neither sub section (3) nor sub section (6) of section 4 can, therefore, be said to have imposed restrictions which are reasonable in the interests of the general public within the meaning of article 19 (5) and these provisions of the Act were consequently void and inoperative under article 13 (1)of the Constitution, and the externment order was illegal. Held also, per KANIA C.J., FAZL ALI, MAHAJAN and MUKH ERJEA JJ. Whether the restrictions imposed by a legislative enactment upon the fundamental right guaranteed by article 19 (1) (d) are reasonable within the meaning of article 19 (5) of the Constitution would depend as much on the procedural portion of the law as the substantive part of it] and in considering whether such restrictions are reasonable the Court is not therefore bound to confine itself to an exami nation of the reasonableness of the restrictions in the abstract with reference to their duration and territorial extent. The Court can also consider the reasonableness of the procedural part of the law and the circumstances under which, and the manner in which, the restrictions have been imposed. [PATANJALI SASLUP, I J. did not express any opin ion on this point.]

Civil Appeal No. 212 of 1959. Appeal from the judgment and decree dated March 1, 1957, of the calcutta High Court in appeal from original Decree No. 71 of 1954. G. section Pathak and Naunit Lal, for the appellants. A. V. Viswanatha Sastri, section N. Andley, Rameshwar Nath and P. L. Vohra, for the respondent. October 13. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by a certificate granted by the Calcutta High Court arises out of a suit filed by the three appellants against the respondent to recover Rs. 83,640/ . The three appellants are respectively the Firm Radhakrishan Shivdutt Rai which carries on business at Banaras and RamKumar Lal for himself and as karta of his joint family as well as Madan Gopal for himself and as karta of his joint family, the latter two being 83 the partners in the first mentioned Firm Radhakrishna Sivadutta Rai; for convenience we will refer to the partnership firm hereafter as the appellant. The respondent Tayeballi Dawoodbhai is a partnership firm which carries on business at Calcutta. The appellant 's case was that the appellant and the respondent had entered into a contract in the first instance on December 18, 1980, through brokers named T. N. Mehrotra & co. ,Calcutta. This contract was later confirmed by two letters written respectively on January 3 and 15, 1951, by the appellant to the respondent and replied to by the. respondent. By this contract the respondent agreed to sell 1000 bales of Banaras Hemp particulars of which were set out in the plaint. According to the appellant, by a letter written on March 14, 1951, the appellant in part performance of the said contract accepted delivery of 110 bales of Banaras Hemp No. 1 and 50 bales of Banaras Hemp No. 2; this delivery was Made by the respondent to L. N. Poddar & Co., who acted as the agent of the appellant and Paid the price of the said 160 bales. In they transaction the respondent realised Rs. 3,840 from the said I,. N. Poddar &; Co. in excess of the actual price of the goods delivered to the said company. Inspite of the repeated demands made by the appellant the respondent failed to deliver the balance of the goods contracted for and thus committed breach of the contract. That is how the appellant claimed Rs.(9,80(j as difference between the market rate on March 31, 1951, and the contract rate of the balance deliverable under the contract in suit. This amount was claimed as damages for the breach of contract. In addition an amount of Rs. 3,840 was claimed as having been paid in excess of tho value of 160 bales delivered to L. N. Poddar & Co., on behalf of the appellant. This claim was resisted by the respondent on several grounds. The principal contention urged by the respondent, however, was that in relation to 84 the contract in suit the appellant had acted as agent for its disclosed principal Messrs Khaitan and Sons Ltd., and as such it was not entitled to bring the present suit. The respondent further alleged that the said disclosed principal Messrs. Khaitan and J. Sons had settled all their rights and loams under the suit contract with their agent and so the present claim for damages was not maintainable. In regard to the claim for Rs. 3,840 tho respondent pleaded that the appellant 's case was untrue. Several other pleas were also raised but with the said pleas we are not concerned in the present appeal. Mr. Justice Bose who tried the suit framed twelve issues. On the principal point in controversy between the parties the learned judge found that the appellant had entered into the contract with the respondent on its own account and not on account of the disclosed principal as alleged by the respondent. According to the learned judge the reference to Messrs. Khaitan and Sons Ltd., made in the bought and sold notes on which the respondent 's plea was based had been inserted by the brokers "by mistake or due to some misconception. " The learned judge also found that the respondent had committed a breach of the contract as alleged by the appellant. The appellant 's case with regard to the excess payment of Rs. 3,840 made by L. N. Poddar & co. was, however, held not to have been proved. In the result a decree was passed in favour of the appellant for Rs. 79,800 along with interest as stipulated in the decree. Against this decree the respondent preferred an appeal; and the main point which was urged on its behalf was directed against the finding of the trial judge that the contract had been entered into by the appellant for itself and not on account of the disclosed principal. This contention was based in the Court of Appeal, as in the trial court, on the bought and sold notes; and it was urged that 85 the bought and sold notes clearly showed that the appellant had entered into the contract on account of the disclosed principal Messrs. Khaitan and Sons Ltd. Before the Appellate Court the respondent 's case was that the said bought and sold notes constituted the terms. Of the contract and no other evidence was relevant and admissible in order to determine the said terms. Das Gupta, J., upheld this. In his opinion the bought and sold notes issued by the brokers Constituted the sole basis for the terms. Of the contract and the two letters subsequently written on January 3 and 15, 1951, were inadmissible and irrelevant for the purpose of determining the said terms of the contract. Tho learned judge, however, considered tho matter also on the alternative basis. that the said letters could be considered for ascertaining the terms. Of the contract and came to the conclusion that can reading the said letters and the bought and sold notes together the result was the same, namely, that the contract had been entered into by the appellant on behalf of the disclosed principal. Bachawat, J., differed from Das Gupta, J., on the question about the relevance and admissibility of the two subsequent letters. According to him the two bought and sold notes. and the two letters between them constituted the terms of the contract. He was inclined to take the view that the letters could not be regarded as inadmissible or irrelevant. Reading the four documents together the learned judge. however, agreed with the conclusion alternatively recorded by Das Gupta, J., and held that the four documents supported the respondent 's plea that the appellant had entered into the contract on behalf of the disclosed principal. Both the learned judges agreed in holding that there was no evidence to support the appellants plea that the reference to the principal made in the bought and sold notes was a result of any mistake. On these findings the decree passed by the trial court was reversed and the appellant 's suit Was ordered to be dismissed. 86 In regard to the costs, however, the Appellante Could took the view that the point raised before the Appellate Court about the effect of the bought and field notes had not been specifically mooted before the trial court and that several other pleas raised by the respondent were found by the trial court to be false and so the proper older as to costs would be that each party should bear its costs throughout. After this judgement was delivered the appellant applied for and obtained a certificate from the High Court and it is with the said certificate that the present appeal has been brought before this Court. On its behalf Mr. Pathak has strenuously contended that the Appellate Court was in error in coming to the conclusion that the contracts in suit had been entered into by the appellant on behalf of the disclosed principal Messrs. Khaitan & Sons Ltd., Banaras. For the purpose of deciding this point we propose to assume in favour of the appellant that the terms of the contract may be gathered from the two bought and sold notes on which the respondent relies as well as the two subsequent letters on which the appellant relies. It would be convenient at this stage to set out the said documents. We will first refer to the brokers ' notes and the confirmation slips in respect thereon. This is how the brokers ' notes read: "T. N. Mehrotra and Co. No. 377 Hemp, Oil and Oil Seedh Pollock House Brokers. (3rd Floor) 28 A, Pollock Street. Any dispute in connection with this deal is subject to Arbitration by Bengal Chamber of Commerce. Calcutta, 18 12 1950. 87 Radhakrishna Sivadutta Rai, A/c Khetan and Sons Ltd., Shewpur, Banaras. Dear Sirs, We confirm having purchased on your account and risk under noted goods from Messrs. Tayeballi Dawoodbhai, 20, Zakaria Street, Calcutta. Commodity: 500 (five hundred) bales of Banaras No. 1 only with Agmark Jan/March '51 at K. P. Docks @ Rs. 165 per bale of 400 lbs. each on receipt of the goods. Yours faithfully, For T. N. Mehrotra and Company, Sd. T. N. Mehrotra. Sales Tax number should be furnished by the Buyers otherwise to be charged." "T. N. Mehrotra and Co. No. 378 Hemp, oil and oil Seeds Pollock House Brokers (3rd Floor) Bank 4718 29 A Pollock street Tel: B.K. 1914 Calcutta, 18 12 50. Any dispute in connection with this deal is subject to arbitration by Bengal Chamber of Commerce. To: M/s. Tayeballi Dawoodbhai, 20, Zakaria Street, Calcutta. Dear Sirs, We confirm having sold on your account and risk, the under noted goods, to M/s. Radakrishan Shiv Dutt Rai with A. G. Mark. A/c Khetan and Sons Ltd., Shewpur, Banaras. Commodity: (500) Five hundred Bales of Banaras No. 1 only with A. G. Mark. 88 Delivery: Jan./March 1951 at K. P. Dock. Price: @ Rs. 165 per bale of 400 Ibs. Terms of Payment on receipt of goods. Brokerage 0 8 O per bale. Sales Tax number should be finished by the buyer otherwise to be charged. Yours faithfully, For T. N. Mehrotra & Co., Sd. T. N. Mehrotra "To M/s. T. N. Mehrotra & Co., Calcutta. We acknowledge receipt of your purchase confirmation memo No. 377 dated 18 12 50. Signature: Gopal Lal Gupta For Radhakrishna Shivadutta Rai." "To M/s. T. N. Mehrotra & Co., Calcutta. We acknowledge receipt of your purchase confirmation memo. No. 378 dated 18 12 50. Signature: Gopal Lal Gupta For Radhakrishna Sivadutt Rai". The said confirmation slips were signed by Gopal Lal Gupta for the firm of Radhakrishna Shivdutt Rai. " After the said notes were sent by the brokers to the respective parties Gopal Lal Gupta on behalf of the appellant wrote a letter to the respondent on January 3, 1951, and on January 15. 1951 the respondent wrote a letter to the appellant. These letters read at follows: "Messrs. Tayeballi Dawoodbhai, 3 1 51. 20, Zakaria Street, Calcutta. Dear sirs, We have boughS from you one thousand bales of Banaras Hemp through Messrs. T. N. Mehrotra & Co., 28 A, Pollock Street, Calcutta, on the following terms: 89 1. 500 (Five hundred) bales Banaras No. 1 with agmark @ Rs. 166 (one hundred and sixtyfive) per bale of about 400 lbs. delivery K. P. Docks during January/March 1951. 2. 500 (Five hundred) bales Banaras No. II with agmark @ Rs. 145 (one hundred and fortyfive) per bale of about 400 lbs. delivery E. P. Docks during January/March 1951. Please note and confirm. Yours faithfully, for Radhakrishna Shivdutt Rai Sd. Gopal Lal Gupta." "Tayoballi Dawoodbhai 20, Zakaria Street, Registered. Calcutta 1. Calcutta, 15th January, 1951. Messrs. Radhakrishna Shivadutt Rai, Banaras. Dear Sirs, We confirm having sold to you through Messrs. T. N. Mehrotra & Co., Calcutta, 1000 (one thousand) bales of Banaras Hemp as follows: (i) 500 (Five hundred) bales Banaras Hemp No. I with Agmark at Rs. 165 per bale of about 400 Ibs. delivery K. P. Docks during January/March 1951. (ii) 500 (Five hundred) bales Banaras Hemp No. II with Agmark at Rs. 145 per bale of about 400 lbs. K. P. Docks delivery during January/March 1951. This confirms your letter of 3rd instant. Yours faithfully, for Tayeballi Dawoodbhai. x x Partner. Copy to Messrs. T. N. Mehrotra & Co., Calcutta, and to Gopinath Mehrotra, Banaras." Mr. Pathak contends that in construing the effect of the relevant documents we should not 90 attach any importance to the reference to Khaitan & Sons made in the bought and sold notes for the simple reason that the said reference is the result of a mistake or misconception on the part of the brokers. In that connection he contended that the J. finding recorded by the trial court on the issue of mistake should be accepted by us and not the finding made by the/ Appellate court. We are not impressed by this argument. In regard to these notes we have the evidence of Trilokinath and Gopinath on behalf of the brokers which negatives the theory of mistake or misconception. Trilokinath has stated on oath that when he got the offer from the respondent he telephoned to his brother Gopinath who is a broker in respect of hemp of the firm of Sewnath Gopinath and he told him about the offer. Gopinath then informed Trilokinath that the offer was closed either on the 16th or on the morning of the 17th. This information was received by Trilokinath from Gopinath on the telephone. Trilokinath was then asked about the information that his brother gave him, and he stated that his brother told him that the offer which he had communicated to him in respect of 1000 bales at Rs. 165 and. Rs. 145 had been sold by him to Khaitan Sons & Co., Fibre Ltd. He also added that he received another message from his brother either on the 18th or on the night of the 17th to prepare a contract so that it will be Khaitan & Sons through the appellant; Thus, it is clear that the evidence of Trilokinath, if believed, clearly shows that there could be no mistake or misappreciation on the part of the brokers, when the notes referred to Khaitan & Sons as principal in respect of the transaction. Gopinath substantially corroborated the evidence given by Trilokinath. He stated that when he got the offer from his brother Trilokinath he went to Deokinandan who was working for Khaitan & Sons and it was after discussion with Deokinandan thatthe souda was closed as one on behalf of Khaitan & Sons. Having thus closed this 91 contract with Deokinandan, who represented the principal Khaitan & Sons, Gopinath told Trilokinath to close the offer and asked him to prepare the note showing that the appellant was acting as agent for the disclosed principal Khaitan & Sons. Reading the evidence of the two brothers who worked as brokers in respect of the transaction in suit it is clear that any possibility of a mistake or misappreciation is wholly excluded. On behalf of the appellant Gopal Lal Gupta has given evidence. He attempted to explain away the fact that he did not protest against, or object to, the insertion of the name of Khaitan & Sons in the notes by suggesting that when he signed the confirmation slips after receiving the notes he had not noticed the reference to Khaitan & Sons. His case was that the purchase had been made by the appellant for itself and not for any other firm, and the suggestion he made was that if he had noticed that the notes had made reference to Khaitan & Sons he would either have insisted upon the said name being delete(l or would not have concluded the contract; but when his statement that he did not notice the reference to Khaitan & Sons was tested in cross examination Gopal Lal was shaken, and he had to admit that when he signed the confirmation slip he may have noticed the reference to Khaitan & Sons but he did not read the document attentively. He was, however, forced to concede that he had gone through the note before he signed the confirmation slip. It was under stress of cross examination that Gopal Lal incidentally mentioned that the reference to Khaitan & Sons may have been made by mistake. It is obvious that Gopal Lal 's evidence which otherwiee suffers from the infirmity that it is full of contradictions cannot be accepted on the question of mistake because his explanation about his conduct in signing the confirmation slips considered by itself is wholly unsatisfactory. Therefore, in our opinion, the Appellate Court was fully justified in 92 reversing the finding of the trial court on this point and in coming to the conclusion that the reference to Khaitan & Sons which the notes made was no the result of any mistake or misconception In this connection it may be relevant to refer to the attitude adopted by the appellant when the dispute arising between the parties in the present contract had gone before the Bengal Chamber of Commerce for adjudication. In those proceedings the respondent had raised the same plea that it has raised in the present suit. It was urged on its behalf that the appellant was not entitled to make ally claim on the contract because it had entered into the contract on behalf of a disclosed principal and on its account. Apparently that plea appears to have been accepted and the arbitration proceedings therefore ended as being without jurisdiction. In meeting the plea raised by the respondent it is significant that the appellant thought it fit to urge that the respondent 's allegation that the appellant was the agent of one Khaitan & Co. was not correct and that there is no firm or company known as Khaitan & Co. Or Khaitan & Sons, Ltd., or Khaitan & Sons in Shewpur, Banaras. The appellant therefore pleaded that the jurisdiction of the Chamber to entertain the case could not be disputed on that score. The appellant also alleged that the reference to Khaitan &; Sons was superfluous and no importance should be attached to the said words. In the suit itself a faint attempt was no doubt made to challenge the identity of the firm Khaitan Sc Sons, but Mr. Pathak has very fairly not attempted to raise that point before us. It would thus be noticed that the principal point made by the appellant in the arbitration proceedings before the Chamber in respect of the reference to Khaitan & Sons in the notes was entirely frivolous; no case of mistake appears to have been set out at that state. Besides, as we have already pointed out, there is no evidence on which a finding of mistake can be reasonably made in favour of the appellant. Therefore, we 93 must proceed to consider the question about the construction of the relevant documents on the basis that the reference to Khaitan & Sons which the notes make is not the result of any mistake and has been made in the ordinary course of businesss by the brokers. Let us then consider what the effect of the bought and sold notes is according to the established custom in the mercantile world. Mr. Viswanatha Sastri, for the respondent, contends that, according to the established commercial usage, if there is no variation or disparity in the bought and sold notes, the bought and sold notes issued by the brokers constitute the terms of the contract between the parties for whom the brokers act. We are inclined to accept this contention. The effect of such notes issued by the brokers has been frequently considered by judicial decisions. As early as 1846 the Privy council had occasion to deal with this question in Cowie vs Remfry (1). In that case a. C & Co and H.& Co; were merchants at Calcutta. The latter sold to the former a large quantity of indigo through the medium of a broker who drew up a sold note addressed to H.& Co. and submitted. it to H. for his approval. H. Objected to a particular word appearing in the note whereupon the broker took the sold note to C. and informed him of His objection. C. then struck his pen through the word objected to by H. placed his initials over the erasure and returned the note to the broker. The broker then delivered it in that altered form to H. & Co. Next day the broker delivered to C. & Co. a bought note which differed in certain material terms from the sold note. In an action brought by H. & Co. against C. & Co. for the breach of the contract as contained in the sold note the Supreme Court at Calcutta was of the opinion that the sold note alone formed the contract and so it decreed the plaintiff 's suit. On appeal by the defendant the Privy Council reversed (1) (1846) 3 M.I.A.448 94 the finding of the Supreme Court and held that the transaction was one of bought and sold notes and Rai held that the circumstances attending C. 's alteration of the sold note and affixing his initials were not sufficient to make that note alone a binding contract. According to the Privy Council, there being a material variation in the terms of the bought with the sold note they together did not constitute a binding contract. It would thus be seen that the Judicial Committee was dealing with a case where the bought and sold notes did not tally and so the decision was that where the bought and sold notes do not tally the sold note alone cannot constitute the terms of the contract. In dealing with this question, however, their Lordships referred to the mercantile custom in regard to the bought and sold notes and observed that "the established usage of dealing in the mercantile world should be held in high respect; the very existence of such usage shows that in practice it has been found useful and beneficial; the presumption is in its favour, and no departure from it is to be inferred from doubtful circumstances". That is why the Privy Council reached the conclusion that "this must be considered as a transaction in the contemplation of the parties by bought and sold notes, and that, the contract is contained in both of the notes, and not in one;" inevitably there being a material variation between the two notes "the consequence follows, from all legal principles, that no binding contract has been effected". This decision shows that the mercantile usage of entering into contracts evidenced by the bought and sold notes issued by the brokers was treated by the Privy Council as well recognised. The next decision to which reference may be usefully made is the case of Sievewright vs Archibald(l). In that case again there was a variation in the bought and sold notes and the variation was material, and so it was held that there was no (1) ; , 1228, 1229. 95 sufficient memorandum of a contract to satisfy the Statute of Frauds. In dealing with the question raised for the decision of the Court Lord Campbell, C. J., has made certain general observations which throw considerable light on the genesis of the bought and sold notes and the effect which is ually attributed to the said notes by commercial usage. "If the bought note case be considered a memorandum of the parol agreement", observed Lord Campbell, C. J., "so may the sold note; and which of them is to prevail ? It seems to me, therefore, that we get back to the same point at which we were when the variance was first objected, and the declaration was amended. I by no means say that where there are bought and sold notes they must necessarily be the only evidence of the contract; circumstances may be imagined in which they might be used as a memorandum of a parol agreement. Where there has been an entry of the contract by the broker in his book signed by him, I should hold without hesitation, notwithstanding some dicta, and a supposed ruling of Lord Tenterden in Thornton vs Meux (M. & M. 43), to the contrary, that this entry is the binding contract between tho parties and that a mistake made by him, when sending them a copy of it in the shape of a bought or sold note, would not affect its validity. Being authorised by the one to sel], and the other to buy, in the terms of the contract, when he has reduced it into writing and signed it as their common agent, it binds them both, according to the Statute of Frauds, as if both had signed it with their own hands; the duty of the broker requires him to do so; and till recent times, this duty was scrupulously performed by every broker. What are called the bought and sold notes were sent by him to his principals by way of information that he had acted upon their instructions, but not as the actual contract which was to be binding upon them. This; clearly appears from the practice still followed of sending the bought note to the buyer, and the sold 96 note to the seller; whereas, if these notes had been meant to constitute the contract, the bought note would be put into the hands of the seller, and the sold note into the hands of the buyer, that each might have the engagement of the other party J, and not his own. But the broker, to save himself trouble, now omits to enter and sign any contract in his book, and still sends the bought and sold notes as before. If these agree, they are held the constitute a binding contrat; if there be any material variance between them, they are both nullities, and there is no binding contract. This last proposition, though combated by the plaintiff 's counsel, has been laid down and acted upon in such a long series of oases that I could not venture to contravene it, if I did not assent to it; but, where there is no evidence of the contract unless by the bought and sold notes sent by the broker to the parties, I do not see how there can be a binding contract unless they substantially agree; for contracting parties must consent to the same terms; and where the terms in the two notes differ there can be no reason why faith should be given to the one more than the other". These observations seem to establish two propositions, first that if the bought and sold notes show a material variation neither of them nor both of them taken together can be re. lied upon for the purpose of proving the terms of the contract, and second if the bought and sold notes agree they are held to constitute a binding contract. To the same effect is the observation made by the Privy Council in Ah Shain Shoke vs Moothia Chetty,(l) when Sir Richard Couch observed that "Moothia Chetty, one of the respondents, said in his evidence he did not consider the contract as concluded until bought and sold notes were signed. He was right in this. They were the only evidence of the contract. " It is in the light of this legal position that we must consider the effect of the bought and sold (1) (1899) L. R. 27 I.A. 30 97 notes in the present case. The notes referred to the appellant and added "A/C Khaitan & Sons Ltd." There is no disparity in the notes at all; and so the two notes can be safely taken to evidence the terms of the contract. When along with the name of the appellant the notes specifically refer to a "Khaitan & Sons Ltd." with the preceding words "A/c ' ', there can be no doubt that the appellant is shown by the notes to be acting on account of the disclosed principal. The appellant realised that the effect of the reference to Khaitan & Sons in the notes would inevitably be to support the plea of the respondent that it was not entitled to bring the present action and so it pleaded that the said reference was the result of a mistake. Therefore, there can be no doubt that if the material question had to be considered in the light of the bought and sold notes alone the appellant was acting on behalf of the disclosed principal and, on the contract thus entered into, it had no right to sue end can claim no cause of action in its favour. In Gadd vs Houghton (1), James, L. J. Observed "when a man says that he is making a contract 'on account of ' some one else, it seems to me that he uses the very strongest terms the English language affords to show that he is not binding himself, but is binding his principal". In that case fruit brokers in Liverpool gave a fruit merchant a sold note which read thus: "We have this day sold to you on account of James Morand &; Co., Valentia, 2000 cases Valentia, oranges, of the brand James Morand & Co., at 12s. per case free on board", and the brokers signed the note without any addition. The purchaser brought an action against the broker for non delivery of the oranges. It was held that the words "on account of James Morand & Co." showed the intention to make the foreign principals and not the brokers liable and that the brokers were not liable upon the contract. It would be noticed that (1)(1876) 98 in dealing with the question about the brokers liability two points fell to be Gonsidered. The first point in support of fixing the liability with the brokers was that the brokers had signed this note without describing themselves as acting for the disclosed principals; and the argument was that "when a man signs a contract in his name he is prima facie a contracting party and liable and there must be something very strong on the face of the instrument to show that the liability does not attach to him". This principle was accepted by the learned judge who decided the case; but it was pointed out that there was another fact which had an overriding effect and that was that the note showed that the brokers were acting for the diclosed principal, and that fact clearly repelled the brokers ' liability in regard to the contract. In dealing with the argument about the effect of the signature Mellish, L. J. Observed "when the signature comes at the end you apply it to everything which occurs throughout the contract. If all that appears is that the agent has been making a contract on behalf of some other person, it seems to me to follow of necessity that that other person is the person liable. This is one of the simplest possible case. How can the words 'on account of Morand & Co. '. be inserted merely as a description ? The words mean that Morand & Co. are the people who have sold. It follows that the persons who have signed are merely the brokers and are not liable". We have referred to there observations made by Mellish, L. J., because as we will presently point out they would be of material assistance in deciding the point which Mr. Pathak has raised on the strength of the two subsequent letters. Thus, the bought and sold notes in this case unambiguously indicate that the appellant was acting for a disclosed principal and the contracting party was the disclosed principal and no other. It is, however, urged by Mr. Pathak that before determining the terms of the contract and the 99 parties to it we must read the notes in question along with the two letters. We have already seen the sequence of the documents. First, the notes were delivered by the brokers to the appellant and the respondent. Then the respective parties filed confirmation slips and then followed the two letters exchanged between them. Mr. Pathak contends that in its letter addressed to the respondent the apellant has definitely stated that 'they ' had bought from the respondent 1000 bales in question. Mr. Pathak places considerable emphasis on the use of the word "we" without reference to the principal; and he also relies on the fact that the letter is signed by the appellant without describing itself as acting on behalf of the principal already disclosed. Similarly he relies on the statement of the respondent 's letter to the appellant that the respondent had sold to the appellant "to you" the bales in question. According to Mr. Pathak the significance of these letters should not be underestimated in determining the parties to the contrat. There is no doubt, and indeed it is a matter of common ground before us, that the letters do not constitute all the terms of the contract, and all that is urged by Mr. Pathak is that they should be consider along with the notes. The notes refer to the fact that if any dispute arises in the deal it is subject to the arbitration by the Bengal Chamber of Commerce. They also refer to the sales tax number which is to be furnished by the buyers, otherwise they would be charged. These terms undoubtedly constitute terms of the contract; but the argument is that in the correspondence which took place between the parties there is no reference to the principal and indeed the correspondence proceeds on the basis that the appellant acts for itself and not for a disclosed principal, and that Should be borne in mind in deciding whether the appellant was acting for tho disclosed principal or not. 100 In support of his argument that the signature of the appellant to its letter of January 3, 1951, and the use of the word "we" in the first paragraph of he letter indicate that the appellant was acting for hi itself. Mr. Pathak relies on a decision of the King 'section Bench Division in H. O. Brandt & Co. vs H.N. Morris o. Ltd. (1). In that case the plaintiffs who carried on business in Manchester gave to the defendants a bought note dated September 3, 1914. This note was addressed to the defendants and was headed From Messrs. H.O. Brandt & Co., 63 Granby Row Manchester, For and on behalf of Messrs. Sayles Bleacheries, Salesville, Rhode, Island, U. section A.". The note stated "we have this day bought from you 60 tone pure an line oil" and it was signed "H. O. Brandt & Co.". The plaintiffs sued for non delivery of the oil. Their claim was resisted on the ground that they had entered into the contract on behalf of a disclosed principal and therefore were not entitled to be sued. It was held by Viscount Reading, C. J., and Scranton, L. J., Neville, J., dissenting, that the plaintiffs were the contracting parties and were entitled to sue upon the contract. The majority decision was based on three grounds. The first ground was that the plaintiffs had signed the note without describing themselves as acting on behalf of the principal and so it was held following the language used by Mellish, L. J., in the case of Gadd (2) that prima facie when a man signs a document in his own name and states therein "I have this day bought from you" he is the person liable on the contract. The second consideration was that the reference to the foreign principal was made in the note in order to declare the destination of the goods. There wax evidence adduced in the case to show that during wartime the destination of goods intended for export had to be made known. Therefore the reference to the foreign principal was treated as having been made for the purpose of meeting the said (1) (2) (1876)1 exhibit D. 357. 101 requirement; and the third circumstance was that the plaintiff 's statement at the head of the note that they were acting for and on behalf of a foreign principal could not get rid of the prima facie presumption that a person signing a contract in his own name is personally liable on it. It would thus be seen that the rule of construction which prescribes that if a person signs a contract prima facie he is the contracting party prevailed in that case because the reference to the disclosed principal was otherwise explained as serving another purpose altogether. The said rule of construction prevailed also for the additional reason that the plaintiffs were acting for a foreign principal. It would be remembered that 8. 230 of the Indian Contract Act provides that in the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. There are, however, three cases specified in the section where such a contract would be presumed to exist; one of these cases is where a contract is made by an agent for sale or purchase of goods for a merchant resident abroad. In other words, under section 230 if an agent enters into a contract for a disclosed foreign principal the main provision of section 230 will not apply because there would be a presumption that there is a contract to the contrary under which the agent would be personally bound by the contract notwithstanding the fact that he has entered into it on behalf of a foreign principal. Therefore, we are not prepared to hold that the decision in the case of H. C. Brandt & Co. (1) lays down an unqualified rule of construction on which the appellant can rely. In fact, it may be pointed out that Neville, J., who dissented from the majority view, has significantly observed that "I rather gaudier that I should not have found myself in isolation on this point were it not for the fact that during the war there is an obligation to disclose the destination (1) [1917] 2 K.B.784. 102 of the goods". this observation shows that reference to the disclosed principal was not given its full effect in considering the question about the liability of the agent because it was held by the majority decision that the said reference was primarily, if not exclusively, made for the purposes of disclosing the destination of the goods. In support of his argument that the relevant recitals in the two letters show that the contract had been entered into by the appellant on its own behalf Mr. Pathak has also referred us to the statement of the law made by Bowstead on "Agency". "The question whether the agent is to be deemed to have contracted personally," it is observed, "in the ease of contract in writing other than a bill of exchange, promissory note, or cheque, depends upon the intention of the parties, as appearing from the terms of the written agreement as a whole, the construction whereof is a matter of a law for the Court (a) if the contract be signed by the agent in his own name without qualification, he is deemed to have contracted personally, unless a contrary intention plainly appear from other portions of the document, (b) if the agent add words to his signature, indicating that he signs as an agent, or for or on behalf of a principal, he is deemed not to have contracted personally, unless it plainly appears from other portions of the document, that, notwithstanding such qualified signature, he intended to bind himself. " In conclusion it is added that "effect should be given to every word used and none should be rejected unless it is apparent that they have been introduce per incuriam" (P. 266, article 116). These observations do not carry the appellant 's case very for because all that they show is that in determining the question as to whether the agent has entered into the contract on behalf of the principal or not the way he has signed the document has to be considered along with the other recitals made in the relevant documents. 103 What then would be the effect of the relevant recitals in the letter on which Mr. Pathak relies? In this connection it is necessary to recall that we are reading these letters along with the bought and sold notes, and that the bought and sold notes have unequivocally and clearly indicated that the appellant was acting on behalf and on account of the disclosed principal Khaitan & Sons. If we read the letters in the light of the bought and sold notes it would be clear that the signature of the appellant will not have much significance, nor would the use of the word "we" by the appellant or "you" by the respondent make any difference. Parties knew that the appellant was acting on behalf of the disclosed principal. It is not suggested that in such a case every time the agent has to sign expressly stating that he is acting on behalf of the disclosed principal. Therefore, if the appellant was acting for the disclosed principal the fact that he did not add the relevant description to his signature, or used the word "we" in the operative portion of the letter would not materially alter the fact spoken to by the notes that the appellant was acting on behalf of the disclosed principal. It cannot be suggested that these letters intended to alter the position disclosed by the notes. The letters, like the confirmation slips, are and must be, presumed to be consistent with the notes; and so it would be unreasonable to attach undue importance to the signature and to the use of the relevant words "we" and "you" on which reliance has been placed. In our opinion, therefore, the appellate Court was right in holding that even if the bought and sold notes are read along with the confirmation slips and the two letters of January 3, 1961, and January 15, 1951, the conclusion is inescapable that the appellant entered into the contract on behalf of the disclosed principal Khaitan & Sons Ltd. If that be so, it follows as a matter of law that the appellant is not entitled to bring the present suit. 104 Mr. Pathak faintly attempted to argue in the alternative that even if the appellant was acting on behalf of the disclosed principal it would be entitled to sue because from the subsequent conduct of the parties a contract to the contrary could be reasonably inferred. We have, however, not allowed Mr. Pathak to argue this point. It was conceded by the appellant before the Appellate Court that if it was held that the plaintiff firm was acting as agent for Khaitan & Sons Ltd., the suit was not maintainable. This concession was made in view of the provisions of section 236 of the Contract Act. Besides, the alternative plea which Mr. Pathak wanted to raise does not appear to have been expressly pleaded or considered in the trial court. In the result the appeal fails and is dismmissed. In the circumstances of this case we direct that the parties should bear their own costs in this Court.

The appellant sued the respondent for damages for breach of contract. The respondent pleaded that the appellant had contracted as agent for its disclosed principal and had no right to sue. The bought and sold notes issued by the brokers showed that the appellant had entered into the contract on account of the disclosed principal; but in the confirmation slips and subsequent letters exchanged between the parties no reference was made to the principal nor did the appellants describe themselves as acting or signing on his behalf. ^ Held, that it is well established in commercial usage that the bought and sold notes issued by the brokers, where 82 there is no variation or disparity between them, constitute the contract that must bind the parties. But where the bought and sold notes show material variations, neither of them nor both of them taken together can be relied upon for proving the terms of the contract. Since there was no disparity in the instant case between the two notes which specifically mentioned the appellants as acting on account of the disclosed partner, it must be held that the appellants had entered into the contract on behalf of the disclosed partner and as such was not entitled to sue. Cowie vs Ramfry, (1846) 3 Moo. I. A. 448, sievewright vs Archibald; , , Ah Shain Shoke vs Moothia Chetty (1899) L. R. 27 I. A. 30 and Gadd vs Houghton (1876) I exhibit D. 357, referred to. Held, further, that in deciding whether or not the agent had entered into the contract on behalf of the principal, the way he signed the document must be considered in the light of the recitals in the relevant document. In the instant case, the letters and the confirmation slips must be read in the light of the bought and sold notes and presumed to be consistent with them and it would, therefore, be unreasonable to attach undue importance to the signature or how the parties described themselves.

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

During the pendency of a civil writ petition in the Allahabad High Court, one N moved an application under section 476, Code of criminal Procedure, for making a complaint under section 93, Indian Penal Code, against T. A single judge who was seized of the case rejected the application. Thereupon N presented an appeal against the order of rejection of his application before the Supreme Court under section 476 B, Code of Criminal Procedure. Held, that the appeal did not lie to the Supreme Court but that it lay to the Appellate Bench of the High Court. The decrees of a single judge of the High Court exercising civil jurisdiction were ordinarily appealable to the High Court under cl. 1o of the Letters Patent of the Allahabad High Court read with cl. 13 of the U. P. High Courts (Amalgamation) Order, 1948, and as such the Court constituted by the single judge was a court subordinate to the Appellate Bench of the High Court within the meaning of section 195(3) of the Code. M. section Sheriff vs The State of Madras, [1954] S.C.R. 1144, distinguished.

Civil Appeal No. 1823 of 1969. Apeal by Special Leave from the Judgment and Order dated the 27th/28th/30th January, 1967 of the Gujarat High Court in Special Civil Application No. 163 of 1962. B. R. Agarwala for the Appellant. I. N. Shroff for the Respondents. Dr. L. M. Singhvi, Advocate General, Rajasthan, V. section Dave and section M. Jain for Intervener, Municipal Council, Jodhpur. The Judgment of the Court was delivered by SHINGHAL, J. This appeal by special leave arises from the judgment of the Gujarat High Court dated January 27, 28 and 30, 83 1967. The two petitioners before the High Court were firms trading in certain commodities within the limits of the Municipal Borough of Broach. The grievance in one of the petitions was that the Municipality had collected certain amounts wrongfully, and the grievance in the other petition was that the Municipality had refused some amounts even though they were refundable under its byelaws. Both the petitions concerned goods which were "imported" within the octroi limits of the Municipality but came to be "exported" therefrom. The first petition was in respect of a consignment which was designated as a through consignment, and the second petition concerned goods in transit and goods for export other than those which could be called goods in transit. The amounts in dispute related to the levy of octroi under section 73(i) of the Bombay Municipal Boroughs Act, 1923, hereinafter called the Act, which provides as follows: "73 (i) Subject to any general or special orders which the State Government may make in this behalf and to the provisions of sections 75 and 76, a Municipality may impose for the purposes of this Act any of the following taxes, namely: * * * * * (iv) an octroi on animals or goods or both, brought, within the octroi limits for consumption, use or sale therein;. " The word "sale" was included within the ambit of octroi when the Act was amended in 1954. The High Court took note of the rules and the bye laws and held that it was not possible to take the view that the rules contemplated that no refund was payable in case the goods had undergone a sale during the course of their stay in octroi limits. It accordingly came to the conclusion that in regard to goods meant for export in the sense defined in the rules, refund was claimable even if a sale transaction in the larger sense (i.e. in a sense other than a sale to a consumer or with the intention that the goods must pass into hands of the ultimate consumer) took place in regard thereto, provided that the other conditions were satisfied. The High Court then examined the correct interpretation of the word "sale" in clause (iv) of section 73(i) of the Act and after considering this Court 's judgment in Burmah Shell Oil Storage and Distributing Co. India Ld. vs The Belgaum Borough Municipality,(1) it held that the word "sale" could not be given the narrow meaning of a sale for consumption to the ultimate consumer because, in that sense, the Legislature would be guilty of having introduced a word which it was not necessary for it to introduce. The High Court made a reference to the definition of "sale" in section 4 of the Sale of 84 Goods Act and held that the expression "sale" as used in the definition of 'through consignments" in the rules had the same connotation as in the Sale of Goods Act and therefore "if a consignment is brought within the octroi limits and if the municipal authorities are satisfied that the consignment has been brought in for the purpose of effecting a sale in the aforesaid sense, then the consignment does not become a through consignment." According to the High Court, it was not enough merely to prove that the consignment left the octroi limits within six hours after the goods were imported and that it was necessary to show that the goods were intended only to pass through in the sense that they were not meant for consumption, use or sale, and that in regard to such goods there was no intention of changing hands by way of sale or that there was no intention of breaking their bulk or detaining them beyond six hours or unloading them. In the view it took, the High Court issued some directions for compliance by the authorities concerned. The writ petitioners felt dissatisfied with the view taken by the High Court and applied for a certificate under articles 132(1) and 133(1) (c) of the Constitution. The High Court held that no question arose under article 132, and no certificate could be granted under article 133 as there was no final order. The petitioners however applied to this Court for special leave on the ground, inter alia, that the High Court put a wrong interpretation on the expression "sale" in section 73(i)(iv) of the Act inspite of the decision of this Court in Burmah Shell 's case (supra). As has been stated, they succeeded in obtaining special leave from this Court. When the case came up for hearing before a Division Bench, it noticed the decision in Burmah Shell 's case (supra) and felt that there were "burred areas" of sale within the territory which may attract a tax under entry 52 (List II of Seventh Schedule) left uncertain by the aforesaid decision of this Court so that the matter deserved consideration by a larger Bench. This is how the case has come up before us for hearing. We have allowed Municipal Council, Jodhpur, to intervene in the hearing at its request. The short question before us is whether this Court 's decision in the Burmah Shell 's case (supra) squarely covers the present controversy or whether that decision requires reconsideration. The learned counsel have in fact confined their arguments to this narrow field. In order to appreciate the controversy, it will be desirable to refer to the basic facts of the Burmah Shell 's case (supra). The Burmah Shell Oil Storage and Distribution Co. India Ltd., hereinafter referred to as the Company, was a dealer in petrol and other petroleum products which it manufactured in its refineries situated out side the octroi limits of Belgaum Municipality. It brought these products inside that area either for use or consumption by itself or for sale generally to its dealers and licensees who in their turn sold them to others. According to the Company the goods brought by 85 it within the octroi limits could be divided into four categories as follows: 1. Goods consumed by the Company; 2. Goods sold by the Company through its dealers or by itself and consumed within the octroi limits by persons other than the Company; 3. Goods sold by the Company through its dealers or by itself inside the octroi limits to other persons but consumed by them outside the octroi limits; and 4. Goods sent by the Company from its Depot inside the octroi limits to extra municipal points where they are bought and consumed by persons other than the company. This Court examined the scheme of taxation under the Act and the rules and the bye laws made by the Municipality for the levy of octroi. It also took note of the fact that the words "use or sale" were substituted for the words "or use" by Bombay Act 35 of 1954, which are the subject matter of a fresh controversy before us, and made a reference to the Legislative Lists in the Government of India Act, 1935 and the Constitution. After examining the history of octrois and terminal taxes, this Court held that "octrois were taxes on goods brought into the local area for consumption, use or sale", and that "they were leviable in respect of goods put to some use or other in the area but only if they were meant for such user. " It was specifically clarified that the word "sale" was included only in 1954 in order to bring the description of octroi in the Act in line with the Constitution, and that the expression "consumption" and "use" together "connote the bringing in of goods and animals not with a view to taking them out again but with a view to their retention either for use without using them up or for consumption in a manner which destroys, wastes or uses them up. " Looking to the trade of the Company, this Court held that sale by it directly to consumers or to dealers was "merely the means for putting the goods in the way of use or consumption" and that the word "therein" does not mean that all the act of consumption must take place in the area of the municipality. The Court therefore went to hold as follows. "In other words, a sale of the goods brought inside, even though not expressly mentioned in the description of octroi as it stood formerly, was implicit, provided the goods were not re exported out of the area but were brought inside for use or consumption by buyers inside the area. In this sense the amplification of the description both in the Government of India Act, 1935 and the Constitution did not make any addition to the true concept of 'octroi ' as explained above. That concept included the bringing in of goods in a local area so that the goods come to a repose there. When the Government of India Act, 1935 was enacted, the word 86 'octroi ' was deliberately avoided and a description added to forestall any dispute of the nature which has been raised in this case. In other words, even without the description the tax was on goods brought for 'consumption, use or sale '. The word 'octroi ' was also avoided because terminal taxes are also a kind of octroi and the two were to be allocated to different legislatures. In our opinion, even without the word 'sale ' in the Boroughs Act the position was the same provided the goods were sold in the local area to a consumer who bought them for the purpose of use or consumption or even for resale to others for the purpose of use or consumption by them in the area. It was only when the goods were re exported out of the area that the tax could not legitimately be levied. " This Court categorically held that the Company was liable to pay octroi on goods brought into the local area (a) to be consumed by itself or sold by it to consumers direct, and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it, but it was "not liable to octroi in respect of goods which it brought into the local area and which were re exported. " The law on the subject matter of the present controversy has thus been laid down quite clearly in the Burmah Shell 's case (supra) and the present case squarely falls to be governed by it. We are also in agreement with that interpretation of the law. It may be mentioned that the learned counsel have not been able to advance any new argument justifying a reconsideration of the decision. The appeal is allowed, the impugned judgment of the High Court is set aside and the respondents are directed to examine and determine the claims of the appellant in accordance with the above decision. The appellant will be entitled to costs from the respondents. P.B.R. Appeal allowed.

Section 73(i)(iv) of the Bombay Municipal Boroughs Act 1925 empowers a municipal borough to impose octroi on animals or goods or both brought within the octroi limits for consumption, use of sale therein. The appellant imported certain consignments of goods within the octroi limits of the municipality and exported them, the consignments being termed as "through consignments" or "goods in transit" or "goods for export". Octroi duty was imposed on the goods and the appellant filed a petition before the High Court challenging the levy. The High Court held that the expression 'sale ' used in the definition of "through consignments" in the rules had the same connotation as in the Sale of Goods Act and, therefore, if a consignment was brought within the octroi limits and if the municipal authorities were satisfied that the consignment had been brought in for the purpose of sale, then the consignment did not become a through consignment. Allowing the appeal to this Court, ^ HELD: The law on the subject has been clearly laid down in Burmah Shell Oil Storage and Distributing Company (India) Ltd. vs The Belgaum Borough Municipality and the present case is governed by that decision. It was held in that case that the company was liable to pay octroi on goods brought into the local area, if the goods are: (a) to be consumed by the Company itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area and irrespective of whether such consumer bought them for use in the area or outside it; but it was not liable to octroi in respect of goods which were brought into the local area and were re exported. [86 C D] Buimah Shell Oil Storage and Distributing Co. India Ltd. vs The Belgaum Borough Municipality [1963] Suppl. 2 S.C.R. 216, explained and applied

ivil Appeals Nos. 928 and 929 of 1975. (From the Judgment and Order dated 8 10 1974 of the Allahabad High Court in Civil Writ Nos. 2169 and 2276 of 1974). F.S. Nariman, D.N. Misra and O.C. Mathur, for the appellant. S.C. Manchanda and O.P. Rana, for the respondents. ARGUMENTS APPELLANTS 1. Civil Appeal No. 928 of 1975. In this Appeal three questions arise for determination: (i) Whether in the facts and circumstances of the case the proviso to section 9(1) of the was applicable so as to enable the State of Uttar Pradesh to levy and collect Central Sales Tax in respect of the subsequent sales of coal effected by the Appellants to consum ers in the State of U.P. ? (ii) Whether the Sales Tax Officer, Moradabad had no jurisdiction to rectify the assessment for the year 1966 67 as there was no error apparent on the face of the record of the original assess ment (section 22 of the U.P. Sales Tax Act, 1948)? (iii) Whether the order of rectification passed under section 22 of the U.P. Sales Tax Act on 26th March, 1974 (for the assessment year 1966 67) and communicated to the Appellants on 31st March, 1974 was barred by limitation as it could not be said to be "within. three years from the date of" the original assessment order dated the 27th March, 1971 ? II. Re: Whether in the facts and circumstances of the case the proviso to Section 9(1) of the was applicable so as to enable the State of Uttar Pradesh to levy and collect Central 28 Sales Tax in respect of the subsequent sates of coal ef fected by the Appellants to consumers in the State of U.P. ? (a) The proviso to section 9(1) of the does not apply either : (i) to subsequent sales (in the course of inter State trade or commerce) of declared goods i.e. goods declared in section 14 to be of spe cial importance in inter State trade or commerce; or (ii) to sale of goods to persons other than registered dealers; (b) The argument 'in support of the submission that the proviso to section 9(1 ) does not apply to declared goods is as follows : Section 8(1) and 8(2) of the deals separately with two types of goods, namely, (i) goods of the description referred to in sub section(3) [see section 8(1)(b) and (ii)] declared goods [see section 8(2)(a)]. The rates of tax for the two types of goods have been and are differently prescribed in sub section (1) and sub section (2) of section 8 especially since the Amending Act VIII of 1963. The expression "goods of the description referred to in sub section (3)" in section 8(1) originally in cluded declared goods intended for re sale [see section 8(3)(a)] as originally enacted in the (reproduced in Chaturvedi 's , 4th .Edition, p. 548). Sub section (3) of section 8 then read as follows: "(3) The goods referred to in sub section (1) (a) in the case of declared goods, are goods of the class or classes specified in the certifi cate of registration of the registered dealer purchasing the goods as being intended for resale by him; and (b) in any 'other case, are goods of the class or classes specified in the certificate of regis tration of the registered dealer purchasing the goods as being intended for re sale by him or for use by him in the manufacture of goods for sale or for use by him in the execution of any; contract; and in either case include the containers or other materials used for the packing of goods of the class or classes of goods so specified. " By the Amending Act VIII of 1963 (which raised the rate of tax under section 8(1) to 2 per cent), clause (a) of section 8(3) stood deleted. The effect of this deletion was 29 that since 1963.declared goods fell outside the purview of section 8(3) Section 8(4) only applies to sales of goods of the description referred to in sub section (3), since the provisions of that sub section have express reference to the provisions of section 8( 1 ). For the proviso to section 9( 1 ) being applicable it is necessary that the registered dealer effecting the subsequent sale obtained or could have obtained the form prescribed in section 8(4)(a) i.e. Form 'C ' prescribed under rr. 12 and 13 of the Central Sales Tax (Registration and Turn over) Rules, 1957 (see 'pages 25 and 27 of Chaturvedi 's , Fourth Edition). In the present case, the appellants neither obtained nor could have obtained Form 'C ' from .their purchaser since section 8(4) [read with section 8(1) and (3)] did not (after 1963) apply to declared goods. It is submitted that to accept the arguments urged on behalf of the Respondents that section 8(4)(a) [read with section 8(1) and (3)] dealt with declared goods as well, would be to give no meaning to the provisions contained in section 8(2). Besides, as held by Their Lordships in State of Tamil Nadu vs Sitalakshmi Mills & Others C ; at 412 para 6), section 8 deals with three different classes of cases declared goods do not fall within the class mentioned in section 8 ( 1 ). The argument that the charging section 6 does not make any differentiation between declared and undeclared goods is of no avail. Section 6(1) itself commences with the words "Subject to the other provisions contained in this Act . . ". If the effect of any other provision is to take away liability to pay sales tax, effect would have to be given to that other provision notwithstanding the charging section [see State of Mysore vs L. Setty 16 S.T.C. 231,239 (S.C.)]. Declared ' goods are clearly intended by the framers of Central Tax Act, 1956 to receive preferential treatment not only in respect of local sales tax on local sales (see section 15), but also Central Sales Tax in sales effected during the course of inter State trade or commerce [see section 8(2)]. (c) Even assuming that section 8(4)(a) [read with section 8(1) and (3) include within its purview "declared goods", the proviso to section 9(1) is still inapplicable for the following reason : For the proviso to section 9(1) to be applicable and. for the State of U.P. to have jurisdiction to levy and collect the Central Sales Tax on subsequent sales, it is necessary that the registered dealer effecting the subsequent sales (by endorsement of documents of title like Railway Receipt during the course of the movement of the goods from one State to another) either "obtained or as the case may be 30 could have obtained" the Form prescribed. in section 8(4)(a) in connection with the purchase of such goods involved in the subsequent sale. Such a form could only be obtained under section 8(4)(a) from the appellants ' purchasers if the appellants ' sales were to be "a registered dealer" [see section 8(1) (b)]. Admittedly in the present case the appellants though registered dealer for the rele vant year in question did not sell coal to any registered dealer [see the averments in para 11 of the Writ Petition, page 62 Vol. 2 which have not been denied in the Affidavit in Reply (para 8 page 109 Vol. 2]. Therefore, even assuming that the provisions of section 8(4)(a) [read with section 8(1) and (3)] were applicable to declared goods (even after the Amending Act VIII of 1963), the sales result ing in the turnover of Rs. 5,59,172.38 not being to registered dealers, the provisions of section 8(1)(b) were not attracted. Consequently the form pre scribed under section 8(4)(a) Form 'C ' could not have been obtained by the appellants ' purchaser from the prescribed authority. Consequently the appel lants could not obtain from their purchaser such form under section 2(4)(a). Accordingly the last part of the proviso to section 9(1) not being satisfied, the State of U.P. had not jurisdiction to levy and collect Central Sales Tax from the Appellants. Re: Whether the Sales Tax Officer, Moradabad had no jurisdiction to rectify the assessment for the year 1966 67 as there was no error apparent on the face of the record of the original assessment (Section 22 )of the U.P. Sales Tax Act, 1948) ? It has been stated in the order of rectification dated the 26th March, 1974 passed under section 22 of the U.P. Sales Tax Act, 1948 that (page 96, Vol. 2): "In the present case of the assessee tiffs error is apparent because if this fact that it was registered under the had been placed before the Hon 'ble Allahabad High Court in the case of Karam Chand Thapar & Bros. (Coal Sales) Ltd., Moradabad for the year 1965 66 the decision would have been against them as have been happened in the above mentioned two cases.) The error apparent on the face of the record, which is a condition precedent to invoking the rectification provision (section 22) is that the appellants were treated as unregistered dealers by the High Court in the decision for the earlier assessment year 1965 66 (the judgment of the Hi h Court has been extracted at pages 71 78 of Vol. 2. But in section 22 the error has to be an "error apparent on the face of the re cord" of the assessment i.e. for the assessment year 1966 67. This assessment order is dated 27th March, 1971 and a copy of it is at pages 31 79 83 of VoL 2. In that order it is specifically mentioned (page 79 viz). : "10. Whether registered or not: Yes". Thus it was known to the Sales Tax Officer passing the original assessment order that the appellants were in fact registered dealers. An error apparent on the face of the record must be an error which is "glaring and obvious" [see ; , 150 (S.C.)]. Besides, there is a distinction between a mere erroneous decision and a decision which could be characte rised as vitiated by "error apparent". A rectification is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected. It lies only for patent error (see Thungabhudra Industries Ltd. vs Government of Andhra Pradesh ; , 186) where the expression "error apparent on the face of the record" in 0.47, r i, C.P.C. was interpreted by the Supreme Court). In that case was also said that an error apparent on the face of the record was one where "without any elaborate argument one could point to the error" (page 186). This is also the. view expressed in a Sales Tax Case Master Construction Co. 17 S.T.C. 360, 365 366 (Subba Rao, J.). In the present case, it is submitted that the view of the Sales Tax Officer, Moradabad who passed the original assessment order dated 27th March, 1971 following the deci sion of the Allahabad High Court dated the 24th July, 1970 in Civil Miscellaneous Writ No. 4356 of 1969 (pages 71 to 78) was not patently erroneous. As a matter of fact the correctness of the subsequent decisions of the Allahabad High Court is being doubted in the present Appeal and there is no pronouncement of your Lordships on the question viz., interpretation of the proviso to section 9( 1 ). Besides, it cannot be said that at the time when the original assessment order was passed there was a manifest error. Moreover, even as a result of the subsequent decisions of the Allahabad High Court it cannot be said that what was not an error on 27th March, 1971 became an error on 26th March 1974 (the date of the rectification order under section 22). In any event, even assuming that there was an error, that error is not apparent on the face of the record of the original assess ment it is a matter in which the arguments, to say the least, are evenly balanced and a decision of the Highest Court is now awaited. In the circumstances there was no jurisdiction in the Sales Tax Officer, Moradabad to rectify and set aside the original order of assessment IV. Re: Whether the order of rectification passed under Section 22 of the U.P. Sales Tax Act on 26th March, 1974 (for the assessment year 1966 67) and communicated to the Appellants on 31st March, 1974 was barred by limitation as it could not be said to be "within three years from the date. of" the original assessment order dated the 27th March, 1971 ? It is submitted that the period of limitation under section 22 of the U.P. Sales Tax Act, 1948, runs from the date on which the order of rectification is communicated to the assessee which would enable the assessee to file an appeal under section 9 of the U.P. Sales Tax Act, 1948. The period of limitation for filing an appeal is 30 days from the date of service of the copy of the order appealed against. It is submitted that an order of rectifi cation is not complete as against the assessee unless it is duly communicated to him. The order of rectification af fects the rights and liability of an assessee and it is essentially fair and just that it should be communicated to the party as stated by Your Lordships in a case under the Land Acquisition Act where the phrase "date of the Collec tor 's award" was being considered. Your Lordships observed : " . If the award is treated as an admin istrative decision taken by the Collector in the matter of the valuation of the property sought to be acquired it is clear that the said decision ultimately affects the rights of the owner of the property and in that sense, like all decisions which affect persons, it is essentially fair and just that the said decision should be communi cated to the said party. The knowledge of the party affected by such a decision, either actual or constructive, is an essential element which must be satisfied before the decision can be brought into force. Thus considered the making of the award cannot consist merely in the physical act of writ ing the award or signing it or even filing it in the office of the Collector; it must involve the communication of the said award to the party con cerned either actually or constructively. If the award is. pronounced in the presence of the party whose rights are affected by it it can be said to be made when pronounced. If the date for the pro nouncement of the award is communicated to the party and it is accordingly pronounced on the date previously announced the award is said to be commu nicated to the said party even if the said party is not actually present on the date of its pronounce ment. Similarly if without notice of the date of its pronouncement an award is pronounced and a party is not present the award can be said to be made when it is communicated to the party later. The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fair play and natural justice the expression 'the date of award ' used in the proviso must mean the date when the award is either commu nicated to the party or is known by him either actually or constructively. In our opinion, there fore, it would be unreasonable to construe the words from the date of the Collector 's award used in the proviso to section 18 in a literal or mechanical way." (A.I.R. 1961 S.C. 1500, 1503 [1962] 1 S.C.R. 676, 683684). It is submitted that on an analogy of reasoning the words "the date of any order passed by him" in section 22(1) of the U.P. Sates Tax Act, 1948 must be construed to mean the effective date of an order of rectification viz. the date when it is communicated. In the instant case the order was communicated after three years from the date of the assess ment order and, therefore, the order of rectification is vitiated as being barred by time. 33 V. 1n Civil Appeal No. 929 of 1975 the only question that arises is: Whether in the facts and circumstances of the case the proviso to section 9(1) of the , was applicable so as to enable the State of Uttar Pradesh to levy and collect central sales tax in respect of the subsequent sales of coal effected by the appellants to consumers in the State of U.P. ? The assessment year in question is 1969 70 and the Appellant adopts the arguments urged in Civil Appeal No. 928 of 1975. With regard to whether the sales by the appellants (in 1969 1970) during the course of the movement of the goods from State to State were to registered dealers or to consum ers, there is no indication in the record as to wheth er the sales effected to registered dealers or to con sumers or unregistered dealers. In the event of Your Lord ships holding that declared goods are not covered by the proviso to section 9(1) this would make no difference because it is admitted that the subsequent sales effected by the appel lants were of declared goods namely coal. But in the event of Your Lordships coming to the conclusion that the proviso to section 9 (1 ) may include also subsequent sales of declared goods, then the submission urged is (as in Civil Appeal No. 928 of 1975) that in any view of the matter it is only subsequent sales to registered dealers which would attract jurisdiction of the State authorities under the proviso to section 9( 1 ) and not subsequent sales by the appellants to unregistered dealers or consumers. The fact would be easy of ascertainment by the Sales Tax Officer and it is submit ted that in that event a direction ought to be given that the State of U.P. could levy and collect central sales tax under proviso to section 9 (1 ) in respect of subsequent sales of coal effected by the appellants only to registered dealers and not to unregistered dealers or consumers. short one. It is as to which State has jurisdiction to tax subsequent sales made by a registered dealer. In the instant case, admittedly the appellant is a dealer regis tered in U.P. both under the Central and the U.P. Act. Therefore, the short question which arises for consideration is as to whether in the instant case the State of U.P. would have the jurisdiction to tax such subsequent sales effected by the enforcement of documents t0 parties in U.P. ? There is a specific provision in the Act, which is proviso to section 9 (1 ), to cover cases such as the present case. Section 9(1) reads: "The tax payable by any dealer under this Act on sales of goods effected by him in the course of interstate trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that gov ernment in accordance with the provisions of sub section (2) in the State from which the movement of goods commence: Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subse quent to the first sale in respect of the same goods, the tax 34 shall, where such sale does not fall within sub section (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form pre scribed for the purposes of clause (a) of sub sec tion (4) of section 8 in connection with the pur chase of such goods." Sub section (2) of section 9 merely provides that the appropriate State on behalf of the Government of India shall assess, 'reassess, collect and enforce payment of tax under the Act as if the ' tax under the Act was a tax payable under the general sales tax law of the State. Therefore, it is that the tax to be collected under the Act is by the appro priate State for and on behalf of the Government of India. In the case of at first sales, the substantive provisions of section 9 (1 ) are clear and unequivocal. Section 9 (1 ) selects out of several States one. particular State and empowers it to levy and collect C.S.T. That State alone has the power to levy the tax and all other States by implica tion are debarred. This was a simple device adopted in order to fix the forum and jurisdiction of the particular State to make the assessment in respect of first sales. A simple test was evolved to avoid multiplicity of imposition of tax by more than one State in respect of the same goods and that was to link the tax with the commencement of the physical movement of the goods on their Journey from one State to another. This was simple to comprehend and exe cute. Therefore, the appropriate State was the one from where the. movement of goods started on their interstate journey. That problem does not concern us here as the States of Bihar and Bengal from where the movement of coal commenced have duly assessed the tax u/s 9 (1) of the Act. The question, however, is which is the State which can tax the subsequent sale in the instant case. For this purpose the proviso had to be enacted as admittedly CST is multipoint in nature and there is no provision for a single point tax. The only exemption is to be found in section 6(2) which is the charging section and if the transaction does not satisfy all the three conditions of section 6(2), viz., (a) the purchaser is a registered dealer, (b) who by a certificate of registration is authorised to purchase his goods, and (c) the selling dealer furnishes to his assessing authority : (i) a certificate duly filled and signed by the registered dealer from whom the goods were pur chased containing the prescribed particulars in a prescribed form obtained from the prescribed au thority, and (ii) a declaration in C Form duly filled and signed by the registered dealer to whom the goods were sold. (see Chaturvedi 's 3rd edition, page 383). No attempt has been made by the appellant assessee in the instant case even to allege, what to say of proof, that the aforesaid three conditions were satisfied. Therefore, section 6(2) which provides for exemption in respect of subsequent sales, albeit of declared or undeclared goods, will have no application. The position therefore would be that the 35 subsequent sales in the instant case would not be exempt u/s 6(2). Therefore, the subsequent shies have to be taxed and the only question is which State would have jurisdiction to assess the subsequent sales. It was fairly conceded that the subsequent sales would be assessable u/s 9 ( 1 ), except sales of declared goods. The argument was built up merely On the omission of el. (a) from section 8(3) of the Act with effect from 1 4 1963. Prior to that date section 8(3) ran as follows: "The goods referred to in clause (b) of sub section (1) (a) in the case of declared goods or goods of the class or classes specified in the certifi cate or registration of the registered dealer purchasing the goods as being intended for resale by him. " The above was omitted by section 2(iii) (a) of the C.S.T. Amendment Act (No. 8 of 1963) with effect from 1st April, 1963. From this omission it was assumed that it was no longer necessary for de clared goods to be specified in the declaration prescribed under rule 12 and the Form C. This assumption is wholly unwarranted and is contrary to the provisions of the Amending Act (No. 8 of 1963), The omission of cl. (a) and certain words in cl. (b) of section 8(3) was necessitated as the legislature probably wanted to do away with the distinction between declared goods and undeclared goods for purposes of section 8(3). Hence it deleted clause (a) in its entirety and the words "in the case of goods other than declared goods" from cl. (b) of section 8(3). Thus with effect from 1 4 63 so far as mentioning of goods in the certificate of registration of purchasing dealer for purpose of re sale etc. are concerned they made only one category and specified the same rate of tax as was applicable u/s 8 ( 1 ) both for declared and undeclared goods, provided Form C was duly submit ted. The above interpretation also finds support from Chaturvedi 's Central Sales Tax Law, 3rd edi tion, 1973 at page 325, paras 7 and 8, which read as : "Clause (a) of section 8(3) was omitted by section 2(iii) (a) of the Amendment Act, 1963 with effect from 1 4 63. Before that the rate of tax for sales covered in sub section (1 ) was 1 p.c. and all the sales or purchases of declared goods under the said Act could be subjected to tax at the rate upto 2% by virtue to section 15 of the principal Act. "Sales covered under sub. section (1) could enjoy a concessional rate of 1 p.c. instead of the state rate of 2 p.o. But when by the CST Amendment Act (No. 8 of 1963) the rate of tax for sales covered by sub section (1 ) was enhanced also to 2 p.o. there was no use of cl. (a) of sub section (3) and it was omitted. "In el. (b) of sub section (3), the opening words 'in the case of goods other than declared goods ' were omitted by section 2(iii) (b) of the C.S.T. Amend ment Act, 1963 with effect from 1 4 63. " 36 Thus it is manifest that the argument laboriously built up had no foundation and the omission of sub cl. (a) from section 8(3), if anything, goes against the contention of the assessee and fully supports the contention of the Department as that Vividly demonstrates that if .there was ever any intention of the legislature to make any distinction between declared and undeclared goods insofar as the sale of such goods was made to government or to a regd dealer that was done away with after 1 4 63. The contention for the Department was that there was never any distinction made between declared and undeclared goods even in the Act and the Rules prior to 1963 64 in the matter of specification of the class or classes of goods in the application under Form A, the certificate under From B and the requisite declaration under Forn C under rr. 5 and 12 of the CST Rules. The only place where the words "declared goods" occur is in section 8(2) (a) which merely provides the rate of tax applicable for sales without furnishing Form C ' and not for any other reason. Thus the Act, the Rules and the Forms make no distinction between declared and undeclared goods whatsoever. The main argument, therefore, has no force and in the absence of the condition u/s 6(2) having been satis fied, declared goods are taxable and the assessee being a regd. dealer registered in U.P. both under the Central Act and the U.P. Act and the subsequent sale having been effect ed by such registered dealer in the State of U.P. the provi so to section 9 (1 ) is clearly attracted. To sum up, in the instant case the State of U.P. would have the jurisdiction to assess, levy and collect C.S.T. on subsequent sales effected, by the assessee under the provi so to section 9 (1 ), provided the following conditions are satisfied: (1) The sale is a subsequent sale made during the movement of goods from the States of W. Bengal and ' Bihar to the State of U.P .This condition was fairly conceded by the learned counsel for the assessee to be satisfied. (2) The subsequent sale is in respect of the same goods. Tiffs was also conceded. (3) That the goods do not fail within section 6(2), that is, the sale was to a registered dealer other than Government, if the goods are of the description referred to in Sub section (3) of section 8. Such subsequent sale would be exempt provided the necessary certificate in Form C is produced. (4) The registered dealer effecting the subsequent sale obtained or could have obtained the form prescribed for purposes of el. (a) of sub. section (4) or section 8, that is, Form C. The last two conditions according to the learned couusel do not require to be satisfied in case of declared goods. As already stated there is no express warrant nor does the scheme of the Act support any distinction for C.S.T. be tween declared and undeclared goods except in the conces sional rate applicable. 37 Section 15 only places restrictions and conditions in regard to intra state sales of declared goods. ' This has no application to intexstate sales and, therefore, the single point tax provided in section 15 cannot be imported into the other provisions of the Act. Therefore, C.S.T. is multi point in the absence of any specific provision to make it single point. The relevant sections are section 3 which artificially determines when sale of goods can be said to take place in the course of interstate trade or commerce. Section 6 is the charging section. It is significant that it charges tax on all sales. Therefore unless there is a specific exemption, sales of both declared and undeclared goods would be taxable. It is well settled that the burden of proof lies heavily on the person ,who claims such exemp tion. Section 6(2) deals with the charge to be levied in respect of a subsequent sale effected by transfer of docu ments to a regd. dealer which would be exempt provided the conditions specified in the proviso thereto are satisfied. These conditions undoubtedly have not been satisfied. The case .of the assessee is that they do not require to be satisfied in the case of declared goods. section 7(3) requires in the certificate of registration under r. 5 and for the purposes of section 8 (1 ) the class or classes of goods to be specified and it is only in respect of those goods so specified that to be exemption or conces sional rate is available and not otherwise. section 8 merely provides the rates of tax on inter state sales. There is a concessional rate of 3% for sales to regd. dealers provided the goods are of the description referred to in section 8(3) which refers to section 7(3) and the application in Form A and the certificate in Form B issued under rr. 3 and 5 of the Rules. Section 8(2) refers specif ically to the concessional rate for declared goods vis a vis undeclared goods. For declared goods it is 3 % being the rate in the appropriate State, and 10% for undeclared goods. Beyond this concessional rate there is no other distinction made between declared and undeclared goods. section 8(3) refers back to section 7(3), rr. 3 and 5 and Forms A and B and only those goods, declared and undeclared, which find a place the certificate are entitled to the conces sional rate and none others. The proviso to section 9(1) specifically covers the instant case. The assessee is a regd. dealer, and the sales do not fall within the exemption u/s 6(2) and being a regd. dealer in U.P. he could have obtained the Form C from the Sales Tax Officer of his Circle. It, therefore, follows that in the instant case there can be no doubt whatsoever that the admitted subsequent sales are taxable in the State of U.P. for and on behalf of the Government of India u/s 9(1) of C.S.T. B. Contentions 2 and 3. These .may be dealt with togeth er. The argument of the learned counsel for the assessee in short was that there was no error apparent on the face of the record and, therefore, 38 section 22 of the U.P. Act read with section 9(2) of the Central Act could not be invoked. It must be remembered that this point is taken in a writ under article 226 when there was no possi bility of the appeal or revisional courts going into the facts of the case. In these circumstances the facts as found by the Sales Tax Officer in his order u/s 22 and by the High Court in its judgment dismissing the writ petition will have to be taken as sacrosanct. At page 92 of volume II is the order u/s 22. At page 94, line 4, it is stated "The assessee is registered in this office under C.S.T. Act and their Central regn. No. is 2931 which had been in existence since 4 12 65. In the case of M/s Karam Chand Thapar & Bros. for the year 1965 66.the High Court had held that sales made by them were exempt from C.S.T. or U.P. Sales Tax and the authorities of Bihar or West Bengal only could assess the tax. Thereafter the Hon 'ble High Court of Allahabad in many cases held that if the assessee was registered under the CST the authority of that State had jurisdiction to make assessments. Therefore, the S.T.O. Morada bad has jurisdiction to assess the assessee. In the meanwhile the High Court of Allahabad held in several cases that only dealers who are registered under the C.S.T. are liable to be assessed under the Act as for example . . " At page 96, line 2 "In the present case of the assessee this error is apparent because if this fact that it was registered under the C.S.T. had been placed before the High Court . . for the year 1965 66, the decision would have been against them as hap pened in the above mentioned two cases. " At page 97, line 4 "In the above mentioned case the error of law is clear because u/s 9(1) the jurisdiction of assessment of tax lies only with that State where from the dealer has received their Central Regn. No. and wherefrom the dealer receives C Form. " Similarly, the judgment of the High Court is at page 1, of volume I and at page 2, last paragraph, the finding is: The petitioner claimed that the turnover of Rs. 30.07 lakhs was exempt from tax and that of Rs. 5.59 lakhs could not be taxed in the State of U.P. The S.T.O. relying upon the observations made by the High Court in petitioner 's own assessment case for the year 1965 66 accepted his case that his turnover amounting to Rs. 5.59 lakhs could not be taxed in U.P. Subsequently in a number of cases this Court ruled that in a case where a dealer effecting a second sale in the course of inter state trade is a registered dealer, sales tax on the turnover of such goods is to be realised in the State where the dealer effecting the sale, is registered." , para 2: "In the instant case we find that while making the assessment order of 27 3 71 and holding that petitioner 's turnover amounting to Rs. 5.59 lakhs was not liable to tax in U.P., the S.T.O. relied upon a decision of this Court which, as subsequently clarified in the case of Shinghal Bros. & Co. vs State did . . . . not lay down that even in the case of a registered dealer effecting a subsequent sale in the course of inter state trade or commerce would not be liable to be taxed in the State where he is registered. Accordingly, the S.T.O. applied the law laid down in this Court 's earlier judgment to the facts of the present case under some misapprehension and it is not disputed that in subsequent cases this Court has very clearly laid down that in the case of a subsequent sale effected during the course of interstate trade and commerce by a regd. dealer the turnover of such sale. is to be assessed in the State where the dealer is registered. It is thus clear that there Was a mistake in the assessment order dr. 27 3 71. The mistake was apparent on the face of the record inasmuch as the S.T.O. applied the observations made by this Court in a case which had been decided on the footing that the concerned dealer was an unregistered dealer to a case where the dealer was admittedly a registered dealer. This mistake did not require any elaborate argu ment or prolonged debate on the merits or on the questions of law involved in the case. " In view of these categorical findings by. two courts that there was a clear and obvious mistake resulting from a mistake which had crept into the judgment of the High Court in the assessee 's own case for the A/year 1965 66 which the S.T.O. was bound to follow and could not ignore, the mistake in the subsequent assessments could be rectified u/s 22 within the period of limitation of 3 years. Action could also have been taken u/s 21 under the U.P. Act for a reassessment .where the period of limitation is 4 years. It is well settled that sections 21 and 22 are not mutually exclusive and the same action may be taken under either of the sections provided the conditions specified therein are satisfied. The notice u/s 22 was issued within the period of three years and there was yet another year to run for action u/s 21, and in these circumstances a technical point of this nature raised in a writ petition should not be countenanced. The main point that the sum of Rs. 5.59 lakhs was taxable not being in dispute as stated by the High Court, no assessee has a vested right to the forum or to succeed on mere technicalities. The contention that the notice u/s 22. and the order passed thereunder should have been communicated to the assessee within three years is wholly unsupported by any authority. Section 22 merely requires the order to be made within three years. No rights of the assessee are af fected by the passing of the order and it is only when the additional demand is served upon him under the provisions of 40 section 22(2) of the Act that the period of limitation for any appeal, revision, etc. would begin to run. Authorities Rectification Glaring and obvious mistake of law ; SC 53 Cal Weekly Notes 869 Cal A .P. Date of order meaning of 34 S.T.C. 257 SC 46 ITR 529 All. SC Pb All. The Judgment of the Court was delivered by GUPTA, J. The appellant in Civil Appeal No. 928 of 1975. M/s. Karam Chand Thapar and Brothers, is a limited company incorporated under the Companies Act, (referred to hereinafter as the Company), and the six branches of the Company at Allahabad, Moradabad, Kanpur, Varanasi, Gorakhpur and Lucknow are the appellants in Civil Appeal No. 929 of 1975. The Company carries on business as coal agents and is registered under the Uttar Pradesh Sales Tax Act, 1948 and the with the Sales Tax Officer at Moradabad in Uttar Pradesh. We shall refer to these two statutes as the U.P. Act and the Central Act for the sake of brevity. The Company used to arrange supply of coal from collieries situate in West Bengal and Bihar to consumers in Uttar Pradesh. The collieries used to send the coal by rail and the railway receipts were pre pared either in the name of the Company or in the name of the consumer in Uttar Pradesh on whose behalf the order for supply of. coal was placed. The collieries sent the bills and invoices in respect of the coal despatched to Uttar Pradesh to the Company 's head office in Calcutta; the Compa ny forwarded the railway receipts to the consumers in cases where the receipts were in the names of the consumers and endorsed the receipts that were in the Company 's name in favour of the consumers for whom the coal had been des patched. These two appeals, brought on certificates of fitness granted by the Allahabad High Court, arise out of two writ petitions filed in the High Court respectively by the Company and its aforesaid branches. The petition filed by the Company leading to Civil Appeal 928, is directed against an order made under section 22 of the U.P. Act giving rise to the question whether section 9 (1 ) of the Central Act was applicable to the case enabling the State of Uttar Pradesh to levy and collect Central sales tax in respect of subsequent sales of coal effected by the Company to consumers in Uttar Pradesh by endorsement of the documents of title; in the other writ petition, filed by the Company 's six branches, the applicability of section 9(1) of the Central Act was 41 one of the points raised in the High Court, but this was the only point urged before us in Civil Appeal No. 929. The assessment year in question in Civil Appeal 928 is 1966 67, and that in Civil Appeal 929 is 1969 70. As the Company 's appeal covers the question involved in the other case and raises two additional questions, we shall state only the facts of Civil Appeal 928 to indicate how these questions arise. In the assessment year 1966 67, the Company filed quarterly returns showing its turnover of coal in two cate gories: (a) turnover in cases where the railway receipts had been prepared in the names of the consumers amounting to Rs. 30,07,439/02p. ; and (b) turnover in cases where the railway receipts had been prepared in the name of the Company but subsequently endorsed in favour of the consumers in Uttar Pradesh amounting to Rs. 5,59,172/32p. The dispute in this case relates to the amount of Rs. 5,59,172/32p. which according to the Company could not be taxed in the State of Uttar Pradesh. Before We proceed further, it would. be convenient to set out the relevant provisions of the two Acts. Taking the Central Act first, section 2(c) de fines "declared goods" as the goods declared under section 14 to be of special importance in inter State trade or commerce. SectiOn 14 which declares certain goods to be of special importance in inter State trade or commerce mentions coal as one of them. Under section 3 a sale or.purchase of goods is deemed to take place in the course of inter State trade or commerce if the sale or pur chase, (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods .during their movement from one State to another. The sales we are concerned with in this case were of this second type. Sub section (1) of section 6 provides that subject to the other provisions of the Act, every dealer shall be liable to pay tax under this Act on sales of goods effected by him in the course of inter State trade or commerce. Sub section (2) of section 6 states that notwithstanding what is provided in sub section (1), any subsequent sale of goods effected by a transfer of documents of title to the goods, (A) to the Government, or (B) to a registered dealer other than the Government, if the goods are of the description referred to in sub section (3) of section 8, shall be exempt from tax under this Act. There are two provisos to this sub section, but it is not necessary to refer to them. Section 7(1) requires every dealer liable to pay tax under this Act to apply for registration. Sub section (3) of section 7 provides that if the application is in order, the prescribed authority shall register the applicant and grant to him a certificate of registration in the prescribed form which shall specify the class or classes of goods for the purpose of sub section (1) of section 8. Rule 3 of the Central Sales Tax (Registration and Turnover) Rules, 1957, states that an application for registration under section 7 shall be made in Form A, and Form A requires the purpose or purposes for which the goods or 5 1003 SCI/76 42 casses of goods are purchased by the dealer in the course of interState trade or commerce to be speci fied; as would appear from the Form, 'resale ' is one such purpose. Rule 5 (1 ) of the Rules pro vides that the certificate of registration must be in Form B. Section 8(1) provides that every dealer who in the course of inter State trade or commerce, (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to. in sub sec tion (3) of this section, shall be liable to pay tax under this Act at the rate of three per cent of his turnover. Subsection (2) of section 8 states that the tax payable by any dealer on his turnover relating to the sales of goods in the course of inter State trade or commerce which does not fall within sub section (1) shall be (a) in the case of declared goods, at the rate applicable to the sale or purchase of such goods inside the appropri ate State, and (b) in the case of goods other than declared goods, at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. The goods referred to in clause (b) of sub section (1) are specified in sub section (3) of this section as goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him. Sub section (4) of section 8 says that the "provisions of sub section (1) shall not apply to any sale in the course of inter State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner (a) a declara tion duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority;" rule 12(1) of the Rules states inter alia that the declaration referred to in sub section (4) of section 8 shall be in Form C. Clause (b) of sub section (4) is not relevant to the present purpose. Section 9 (1) reads: "9. (1) Levy and collection of tax and penal ties. The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub section (2), in the State from which the movement of the goods commenced: Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within sub section (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form prescribed the purposes of clause (a) of sub section (4) of section 8 in connection with the purchase of such good 43 The dispute in this case turns on whether the proviso to section 9 (1 ) is applicable to the case. Reference may also be made to section 15 which provides the restrictions and conditions in regard to the tax on sale or purchase of declared goods within a State. The tax on sale or purchase of such goods inside the State. is not to exceed three per cent of the price thereof, and such tax is not to be levied at more than one stage. The only provision of the U.P. Act which is relevant is section 22 which is in these terms: "22. Rectification of mistakes. (1) The assessing, appellate, revising or additional revis ing authority may, at any time within three years from the date of any order passed by it, rectify any mistake apparent on the record; Provided that no such rectification, which has the effect of enhancing the assessment shall be made unless the authority concerned has given notice to the dealer of his intention to do so and has allowed him a reasonable opportunity of being heard. (2) Where such rectification has the effect of enhancing the assessment, the authority con cerned shall serve on the dealer a revised notice of demand in the prescribed form and therefrom all the provisions of the Act and the rules framed thereunder shall apply as if such notice had been served in the first instance." The Sales Tax Officer had accepted the contention that the turnover amounting to Rs. 5,59,172/32p. was not taxable in Uttar Pradesh. In taking this view the Sales Tax Officer appears to have proceeded upon the observations in a Judg ment of the Allahabad High Court in the Company 's own as sessment case for the year 2965 66. However, in several subsequent decisions, the High Court held that m a case where a registered dealer effected a second sale in the course of interState trade and commerce, sales tax on the turnover was to be realised in the State where the dealer effecting the sale was registered. In one of these cases, M/s. Singhal & Co. vs State & Ors(1) it was pointed out that the earlier decision of the High Court had completely overlooked the proviso to section 9(2) of the Central Act. The Company being admittedly a registered dealer under the Central Act and liable to pay tax under that Act, the Sales Tax Officer thought that there was an apparent error in the order of assessment made on March 27, 1972 exempting the turnover amounting to Rs. 5,59,172/32 p. which in view of the proviso to section 9(1) of the Central Act was taxable in Uttar Pradesh. Accordingly, he proposed to rectify the error under section 22 of the U.P. Act, and on March 21, 1974 he issued a notice to the Company requiring it to appear before him on March 25, 1974. In response to the notice a representative (1) (1973) U.P. Tax Cases 466. 44 of the Company appeared. contended against the proposed rectification, and also filed a written objection. The Sales Tax Officer recorded an order on March 26, 197.4 overruling the objections and rectified the order of assess ment dated March 27, 1.971. A copy of the order passed on March 26, 1974 rectifying the mistake in the earlier assess ment order was served on the Company on March 31, 1974. The Company challenged the order dated March 26, 1974 by a writ petition in the Allahabad High Court which, was dismissed giving rise to this appeal. Mr. Nariman appearing for the appellants in these ap peals pressed the following grounds: (1) the proviso to section 9 (1 ) of the Cen tral Act has no application to goods declared to be of special importance in inter State sales or commerce under section 14 of the Central Act; (2) section 22 of the U.P. Act was not applica ble as there was no mistake apparent on the face of the record; and (3) in any event, the order made under section 22 of the. U.P. Act was barred by limitation. The argument. that the proviso to sub section (1) of section 9 does not apply to declared goods proceeds as follows: Sub section (1) (b) and sub section 2(a) of sec tion 8 of the Central Act deal with two different types of goods. Sub section (1)(b) speaks of goods of the descrip tion referred to in sub section (3), and subsection (2) relates to declared goods. Sub section (3) of section 8 only mentions the goods referred to in sub section (1)(b) which are goods of the class or classes specified in the certificate of registration of the dealer purchasing the goods as being intended for resale. Subsection (4) requires a declaration for the purposes of sub section (1) (b), and as sub section (1)(b) does not speak of declared goods, the declaration referred to in sub section (4) would not be necessary in the case of sale ' or purchase of declared goods. We fail to see any valid distinction between declared goods and other goods for the purpose of the applicability of sub section (1 ) of section 8. The .distinction was made by Mr. Nariman inferentially from the Central Sales Tax (Amendment) Act (8 of 1963) which omitted with effect from April 1, 1963, clause (a) from sub section (3) of section 8 as it stood prior to that date. Sub section (3), it may be recalled, specifies the goods referred to in section 8(1)(b). Prior to April 1, 1963, section 8(3)listing such goods, stated in clause (a) "(a) in the case of declared goods, are goods of the class or classes specified in the certificate of registration 45 of the registered dealer purchasing the goods as being intended for resale by him." Clause (b) of section 8(3) then began with the words: "in the case of goods other than declared goods, are . . ". By the same Amendment Act (8 of 1963) the opening words of clause (b), "in the case of goods other than declared goods", were consequentially omitted, also with effect from April 1, 1963. The omission of clause (a) is the basis of the argument that declared goods are altogether outside the purview of sub section (3) and, therefore, of sub section (1) of section 8, and, as the declaration referred to in sub section (4) of section 8 was required where sub section (1) of the section was applicable, it was not possible for the Company to obtain such a declaration. The contention seems to us untenable. Section 9(1) of the Central Act contains a general rule that tax payable by any dealer under this Act shall be levied and collected in the State from which the movement of the goods commenced. The proviso to section 9(1 ) qualifies this rule in the case of a subsequent sale which is not exempt from tax under section 6(2), and states that the tax on such subsequent sale would be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or could have obtained the form prescribed for the pur poses of section 8 (4) (a). No exemption under section 6(2) is claimed in this case. The declaration referred to in section 8 (4) (a) is necessary for the dealer to avail of the benefit of the rate of tax mentioned in section 8(1 ). Under section 7(3) the certificate of registration granted to a dealer has to specify the class or classes of goods for the purposes of section 8 (1 ). Rule 3 of the Central Sales Tax (Registration and Turnover) Rules, 1957 requires an application for registration under section 7 to be made in Form A, and Form A requires the purpose for which the goods or class of goods are purchased by the dealer to be specified; resale is one of the purposes mentioned in Form A. Thus, section 7(3) makes no distinction between declared goods and other goods; it is impossible to argue therefore that declared goods purchased by a dealer for resale need not be specified in his certificate of registration. Reading sub section (1) and sub section (3) of section 8 together, it is clear that all sales to a registered dealer other than the Government, whether of declared goods or other goods, are covered by subsection (1) of section 8. Clause (a) was omitted from sub section (3) of section 8 by the Amendment Act (8 of 1963) presumably because it was considered unnec essary to retain clause (a) to deal with declared goods when clause (b) apparently covered all goods, both declared and other than declared. The Act and the rules and the prescribed forms make No. distinction between declared goods and other goods except for the purpose of the rate of tax. There is no valid reason why the Company could not have obtained a declaration in Form C as required by the proviso to section 9(1). It follows therefore that the order of assessment dated March 27, 1971 was wrong as it held, contrary to the proviso to section 9(1), that the sales in question were not taxable in the State of Uttar Pradesh where the Company was registered as a dealer under this Act. 46 Another point sought to be made against the applicabili ty of the proviso to section 9(1) was tiffs. The proviso refers to the Form prescribed for the purpose of section 8(4)(a) which should contain a declaration duly filled and signed by the registered dealer to. whom the goods were sold. It was argued that as the declaration was required only where the sale was to a registered dealer, and as there was no finding in this case that the sales were to regis tered dealers, the proviso was not attracted. It appears, however, that the Company never claimed before the Sales Tax Officer that the sales were not to registered dealers; in the written objection filed before the Sales Tax Officer pursuant to the notice under section 22 of the U.P. Act, the only ground taken was that no declaration was required to be filed in the case of declared goods. The point was taken for the first time in the writ petitions. We do not think we should allow this question, which is one of fact, to be raised at this stage. The next question is whether this error in the original order of assessment can be called an apparent error within the meaning of section 22 of the U.P. Act. There is no dispute that an apparent error means a patent mistake, an error which one could point out without any elaborate argument. The order of assessment relating to the assess ment year in question, 1966 67, was made on March 27, 1971 by the Sales Tax Officer relying on a Judgment of the Alla habad High Court on a writ petition made by the Company questioning the validity of the assessment in respect of the assessment year 1965 66. In that Judgment the High Court held, referring to the provisions of section 9(1 ) of the Act, that "the Sales tax authorities in the State of U.P. had No. jurisdiction to make any assessment even if there was any inter State sale which could be liable to tax in the hands of the petitioner Company. The only State which could levy tax could be either Bihar or West Bengal. The impugned assessment order passed by the Sales Tax Officer, Moradabad, is therefore clearly without jurisdiction and is liable to be quashed". In this Judgment there is no reference to the proviso to section 9(1 ). It appears from the Judgment under appeal that the High Court in a number of latter decisions held that in view of the proviso, tax on a subsequent sale by a registered dealer in the course of inter State trade or commerce was to be levied and collected in the State where the dealer effecting the subsequent sale was registered. We are of the view that the order of as sessment dated March 27, 1971 was apparently erroneous in that it failed to take into consideration the proviso to. section 9(1). It is not that the order dated March 27, 1971 was in accordance with law when it was made but the subse quent decision of the High Court took a different view of the law. For the reasons we have given above, it was pat ently erroneous when it was made, but in view of the obser vations of the High Court in the case relating to the as sessment of an earlier year, the Sales Tax Officer felt that he had to dispose of the assessment case for the year 1966 67 in the manner he did. The Judgment of the High Court which the Sales Tax Officer followed in making the assess ment for the year in question did not concern itself with the proviso to section 9(1). 47 The next, and the last, question is whether the order dated March 22, 1974 rectifying the assessment order made on March 27, 1971 was barred by limitation. Under section 22( 1 ) of the U.P. Act any mistake apparent on the record may be rectified at any time within three years from the date of the order. It is not disputed that the other requirements of section 22 have been complied with. The Company 's representative appeared before the Sales Tax Officer pursuant to the notice served on them on March 25, 1974, and the objections to the proposed rectification were heard. There is no dispute that the order rectifying the mistake was recorded by the Sales Tax Officer on March 26, 1974, and this order was communicated to the appellant on March 31, 1974 According to Mr. Nariman, the order of rectification must be held to have been made on March 31, 1974 when it was communicated to the assessee which was beyond three years from the date of the order of assessment. Mr. Nariman relied on the well known rule of fairplay that the rights of a party cannot be affected by an order until he has notice of it. In Raja Harish Chandra Rai Singh vs The Deputy Land Acquisition Officer and another,(1) this Court considering the meaning of the words "the date of the award" occurring in section 18 of the Land Acquisition Act, 1894 observed. "The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fairplay and natural justice the expression "the date of the award" used in the proviso must mean the date when the award is either communicated to the party or is known by him either actually or constructively. In our opinion, therefore, it would be unreasonable to construe the words "from the date of the Collector 's award" used in the proviso to section 18 in a literal or me chanical way. . where the rights of a person are affected by any order and limitation is prescribed for the enforcement of the remedy by the person aggrieved against the said order by reference to the making of the order must mean either actual or constructive communication of the said order to the party concerned. " Following this decision, this Court held in a subsequent ease under the , Madan Lal vs State of U.P. and others,(1) that the right of appeal given by section 17 of the Forest Act should be deemed to be the date when the party aggrieved by an order came to know of that order from which an appeal was sought to be preferred. But how have the Company 's rights been affected in this case ? (1) [1962] 1 S.C.R. 676. (2) [1975] 3 S.C.C. 779. 48 Section 9 of the U.P. Act gives a right of appeal to "any dealer objecting to any order made by the assessing authority, other than an order mentioned in section 10 A", within thirty days from the date of service of the copy of the order. In this case the Company was not affected by the order under section 22 being communicated to it after the expiry of three years from the date of the order because the limi tation for an appeal from that order did not begin to run before the communication of the order. The provisions of section 9 of the U.P. Act make that clear. The appeals therefore fail and are dismissed. Considering the circumstances, we direct the par ties to bear their own costs here and in the High Court. V.P.S. Appeals dismissed.

Under section 3(b), , a sale or purchase of goods is deemed to take place in the course of inter State trade or commerce if the sale or purchase is effected by a transfer of documents of rifle to the goods during their movement from one State to another. Section 7(3 ) provides that on the application of the dealer the prescribed authority shall register the applicant and grant him a registration certificate which shall specify the class or classes of goods for the purpose of section 8(1); and the Form prescribed by r. 3, Central Sales Tax (Registration and Turnover) Rules, 1957, for application for registration, requires the purposes for which the goods were purchased by the dealer to be specified, resale being one such purpose. Section 8(1)(b) provides that every dealer who, in the course of inter State trade or commerce sells to a regis tered dealer other than the Government, goods of the de scription referred to in sub section (3) shall be liable to pay 3.%_ of his turnover as.tax under the Act; whereas, under section 8(2), the tax payable with respect to goods which do not fall within sub section (1) shall be, in the case of declared goods, at the rate applicable to to the sale or purchase of such goods inside the appropriate State and in the case of other goods 10%, or the rate applicable in the State, which ever is higher. Prior to April 1, 1963, section 8(3) stated, that the goods referred to in section 8(1)(b), "(a) in the case of declared goods, are goods Of the class or classes speci fied in the certificate of the registered dealer purchasing the goods as being intended for resale by him; and (b) in the case of goods other than declared goods are goods of the class or classes specified in the certificate of registra tion of the registered dealer purchasing the goods, as being intended for resale by him. " By the Amendment Act (8 of 1963), cl. (a) was omitted and the opening words in cl. (b), "in the case of goods other than declared goods" were also omitted; so that, after April 1, 1963, the goods referred to in section 8(1)(b) are specified in sub section (3) as goods of the, class or classes specified in the certificate of registra tion of the registered dealer purchasing the goods as being intended for resale by him. Section 8(4)(a) says that the provisions of section 8(1) shall not apply to any sale in the course of inter State. trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner, a declaration in the prescribed. Form, duly filled and.signed by the registered dealer to whom the goods are sold containing the prescribed particu lars. Section 9(1) contains a general rule that the tax payable by any dealer on sales effected in the course of inter State trade or commerce would be levied by the Govern ment of India and collected in the State from which the movement of the goods commenced. The proviso to the sub section qualifies this rule in the case of a subsequent sale which is not exempted from tax under section 6(2). and states, .that the tax on such subsequent sale would be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained, or could have Obtained, the Form prescribed for the purpose of section 8(4)(a). Coal is one of the declared goods having been declared under section 14 to be of special importance in inter State trade or commerce. The appellant was a Company carrying on business as coal agents and was registered in U.P. under the U.P. Sales Tax Act, 1948, and the . The appellant arranged for the supply of coal from collieries in W. Bengal and Bihar to consumers in U.P. The collieries sent the coal by 4 1003 SCI/76 26 rail, the railway receipts either in the name of the.appel lant or in the name of the consumer in U.P., and sent the bills and invoices to the appellant 's head office in Calcut ta. The appellant forwarded the railway receipts to the consumers in cases where the receipts were in the names of the consumers, and in cases where the receipts were in the appellant 's name also endorsed them in favour of the consum ers. There was thus, in the latter cases, a subsequent sale of goods in the course of inter State trade or commerce by the transfer of documents of title by the appellant to the consumers in U.P. For the assessment year 1966 67 the appellant claimed that the turnover in cases where the railway receipts had been subsequently endorsed in favour of the consumers in U.P. was not taxable in U.P. The Sales tax Officer by order dated March 27, 1971, accepted the conten tion, relying on a decision of the High Court. But, in subsequent decisions, the High Court held that in cases where a regisetred dealer effected a second sale in the course of inter State trade and commerce, sales tax on the turnover was to be realised in the State where the dealer effecting the sale was registered; and in one of the deci sions it was observed that the decision on which the Sales tax Officer relied had overlooked the proviso to section 9(1 ) of the Central Act. The Sales tax Officer accordingly proposed to rectify the error committed by him and after following the procedure prescribed for rectification of errors appar ent on the face of the record in section 22 of the U.P. Act, passed an order on March 26, 1974, rectifying the mistake and served it on the appellant on March 31, 1974. The appellant challenged the order unsuccessfully in the High Court. In appeal to this Court it was contended: (1) That the declaration prescribed under section 8(4)(a) is necessary when section 8(1) was applicable, but that, after the omission in section 8(3), reference to 'declared goods ' is omitted in that section, so that when section 8 (1)(b) refers to the sale of goods mentioned in section 8(3) the reference is only to goods other than declared goods and hence, when a dealer sells declared goods, he could not have obtained the prescribed declaration and so the proviso to section 9(1) did not apply; (2) Section 22 'of the U.P. Act was not ap plicable as there was no mistake apparent on the face of the record; and (3) The order under section 22 was barred by limi tation, because it was effective only when it was served on the appellant. Dismissing the appeal to this Court, HELD: (1) The 1971 assessment order was wrong. [46 G] The Act and the rules and the prescribed Forms make no distinction between declared goods and other goods, except for the purpose of the rate of tax. Under section 7(3) the regis tration certificate granted to a dealer has to specify the class or classes of goods for the purposes of section 8(1) and it makes no distinction between declared goods and other goods. Sub sections 8(1) and (3) also show that all sales to a registered dealer other than the Government, whether of declared goods or other goods, are covered by section 8(1). Clause (a) was omitted from section 8(3) presumably because it was considered unnecessary to retain it when cl. (b) apparently covered all goods both declared and other than declared. The declaration referred to in section 8(4)(a) is necessary for the dealer to avail himself of the benefit of the rate of tax mentioned in section 8(1). There is no valid reason why the appellant could not have obtained the decla ration in the prescribed Form as required by the proviso to section 9(1 ). Since no .claim for exemption under section 6(2) is made by the appellant, the first order of assessment was contrary to the proviso of section 9(1) and the sales in question were taxable within the respondent State, where the appel lant was registered as a dealer. [45 D H] (2) The 1971 order of assessment was patently errone ous in that it failed to take into consideration the proviso to section 9(1). Therefore, it could be rectified under section 22, U.P. Act. [46 G] 27 (3) The order rectifying the mistake was recorded with in 3 years of the date of the original order as required by section 22 of the U.P. Act. The fact that the order was communi cated, to the appellant on March 31, 1974 could not make any difference. The order of rectification is deemed to be made on the date of communication only for the purpose of count ing the period of limitation for filing the appeal, under section 9 of the U.P. Act. Therefore, in the instant case, the appellant was not affected by the order under section 22 being communicated to it after the expiry not of 3 years from the date of the original order. [47 B; 48 B] Raja Harish Chandra Raj Singh vs The Deputy Land Acquisition Officer [1962]. 3 S.C.R. 676 and Madan Lal vs State of U.P. explained & distinguished.

No. 137 of 1962. Petition under article 32 of the Constitution of India for the enforcement of Fundamental Rights. C. B. Agarwala and Naunit Lal, for the petitioner. M. C. Setalvad and C. P. Lal, for respondent No. 1. C. K. Daphtary, Attorney General, N. section Bindra and R. H. Dhebar, for respondent No. 2. M. C. Setalvad, M. section Devendra Swarup and J. P. Goyal, for respondent No. 3. I. M. Nanavati, O. C. Mathur, J. B. Dadachanji and Ravinder Narain. for Intervener No. 1. 788 Rajani Patel and 1. N. Shroff, for Intervener No. 2. February 14, 1964. The Judgment of P. B. Gajendragadkar, C.J., K. N. Wanchoo, Das Gupta and Shah JJ. was delivered by Wanchoo J. Rajagopala Ayyangar J. delivered a dissenting Opinion. WANCHOO J. This petition under article 32 of the Constitution is a sequel to the judgment of this Court in R. L. Arora vs State of U.P. (1). The petitioner is the owner of certain lands in village Nauraiya Khera, in the district of Kanpur. He got information in May 1956 that steps were being taken to acquire nine acres of his land for an industrialist in Kanpur. He therefore wrote to the Collector of Kanpur,in that connection. On June 25, 1956, however, a notification was issued under section 4 of the Land Acquisition Act, No. 1 of 1894 (hereinafter called the Act), stating that the land in dispute was required for a company for the construction of textile machinery parts factory by Lakshmi Ratan Engineering Works Limited, Kanpur. This order was followed on July 5, 1956, by a notification under section 6 of the Act, which was in similar terms. This notification also provided for the Collector to take possession of any waste or parade land forming part of the land in the Schedule to the notification immediately under the powers conferred by section 17(1) of the Act. On July 31, 1956, the Collector took possession of the land and handed it over to the company along with some constructions standing on it. In the meantime, the petitioner filed a writ petition in the High Court on July 31, 1956, praying that the notification under section 6 of July 1956 be quashed and also applied for interim stay. As however possession had already been taken on July 31. 1956, the application for interim stay became in fructuous. One of the main grounds in support of the writ petition of July 31, 1956 was that sections 38 to 42 of the Act had not been complied with. Thereafter steps were taken by the State Government to comply with the provisions of sections 38 to 42 of the Act and an agreement was entered into between the Government and the company in August 1956 and was (1) [1962] Supp. 2 S.C.R. 149. 789 published in the Government gazette on August 11, 1956. This was done without making any enquiry either under section 5 A or section 40 of the Act. Therefore on September 14, 1956 an inquiry was ordered by the Government under section 40. The inquiry was accordingly made and the inquiry officer submitted a report on October 3, 1956. This was followed by a fresh agreement between the Government and the company on December 6, 1956. On December 7, 1956, a fresh notification was issued under section 6 of the Act after the formalities provided under sections 38 to 42 had been complied with. Thereafter a fresh notice was issued under section 9 of the Act and it appears that possession was formally taken again after January 2, 1957. A fresh writ petition was filed by the petitioner before the High Court on January 29, 1957 in view of the fresh action taken by the State Government and the main ground taken in this petition was that the notification was invalid as it was not in compliance with section 40 (1) (b) of the Act read with the fifth clause of the matters to be provided in the agreement under section 41. The petitioner failed in the High Court. Thereafter he came by special leave to this Court. This Court decided on a construction of section 40 (1 ) (b) read with the fifth clause of the matters to be provided in the agreement under section 41 that these provisions had to be read together and required that the work should be directly useful to the public and that the agreement should contain a term as to how the public will have the right to use the work directly. The provision as to access to land or works for those having business with the company or the fact that the product would be useful to public was not considered sufficient to bring the acquisition for a company within the meaning of the relevant words in sections 40 and 41. The appeal therefore was allowed on December 1, 1961 and the last notification under section 6 was quashed: see R. L. Arora 's case(1). On July 20, 1962, the Land Acquisition (Amendment) Ordinance, 1962 (No. 3 of 1962) was promulgated by the President of India. By that Ordinance, sections 40 and 41 of the Act were amended and certain acquisitions of land (1) [1962] Supp. S.C.R. 149. 790 made before the date of the Ordinance were validated notwithstanding any judgment, decree or order of any court. The Ordinance was replaced by the Land Acquisition (Amendment) Act, No. 31 of 1962, (hereinafter referred to as the Amendment Act), which was made retrospective from July 20, 1962, the date on which the Ordinance was promulgated. This Act made certain amendments in sections 40 and 41 of the Act and validated certain acquisitions. The present petition challenges the validity of the amendments to sections 40 and 41 and also the validity of section 7 of the Amendment Act by which certain acquisitions made before July 20, 1962 were validated. It is therefore necessary to read the amendments made in sections 40 and 41 of the Act as well as section 7 of the Amendment Act. In section 40(1) of the Act a new clause was inserted in these terms: "(aa) that such acquisition is needed for the construction of some building or work for a company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose;" Section 41 was amended to read as below: "41. If the appropriate Government is satisfied after considering the report, if any, of the Collector, under section 5A, sub section (2), or on the report of the officer making an inquiry under section 40 that the proposed acquisition is for any of the purposes referred to in clause (a) or clause (aa) or clause (b) of sub section (1) of section 40, it shall require the company to enter into an agreement with the appropriate Government providing to the satisfaction of the appropriate Government for the following matters, namely: (1) (2) (3) (4) (4A) Where the acquisition is for the construction of any building or work for a corn. 791 pany which is engaged or is taking steps for engaging itself 'in any industry or work which is for a public purpose, the time within which, and the conditions on which, the building or work shall be constructed or executed; and (5) section 7 of the Amendment Act, which validated certain acquisitions reads as follows: "Notwithstanding any judgment, decree or order of any court, every acquisition of land for a company made or purporting to have been made under Part VII of the principal Act before 20th day of July 1962, shall, insofar as such acquisition is not for any of the purposes mentioned in clause (a) or clause (b) of sub section (1) of section 40 of the principal Act, be deemed to have been made for the purpose mentioned in clause (aa) of the said sub section. and accordingly every such acquisition and any proceeding, order, agreement or action in connection with such acquisition shall be, and shall be deemed always to have been, as valid as if the provisions of sections 40 and 41 of the principal Act, as amended by this Act, were in force at all material times when such acquisition was made or proceeding was held or order was made or agreement was entered into or action was taken. Explanation Besides these amendments which require consideration in the prese nt petition, sections 44A and 44B were also inserted in the Act providing for restriction on transfer, etc. (section 44A) and making certain provisions forbidding acquisition of land for a private company other than a government company (section 44B). It is however not necessary to set out the terms of these new sections. 792 The present petition challenges the validity of the amendments to sections 40 and 41 of the Act and also of section 7 of the Amendment Act, and the challenge is made in this way. It is submitted that the amendments made to sections 40 and 41 of the Act are ultra vires, as they contravene article 31(2) and article 19(1)(f) of the Constitution. The argu ment is that on a construction of the amendment to section 40 by which cl. (aa) has been introduced therein, it is provided that all acquisitions made for a company for construction of some building or work are permissible even though the building or work for the construction of which the acquisition is made may not be for a public purpose, as the new cl. (aa) merely requires that the company which is applying for acquisition is engaged or is taking steps for engaging itself in any industry or work, which is for a public purpose. It is urged that all that this clause requires is that the company for which the acquisition is being, made should be engaged in any industry or work which is for a public purpose and in that case it can acquire land under this clause even though the particular building or work for the construction of which land is acquired may not be for a public purpose. Therefore the new clause (ad) which permits such acquisition contravenes article 31(2) which lays down that no property shall be compulsorily acquired save for a public purpose, and also article 19(1)(f), as such acquisition would amount ;to an unreasonable restriction on the fundamental right to hold property. The validity of section 7 of the Amendment Act is attacked on the ground that it contravenes article 31(2) and article 14 of the Constitution inasmuch as it makes, acquisition for a company before July 20, 1962 as being for a public purpose even though it may not be so in fact and thus raises an irrebuttable presumption of public purpose by fiction of law and so contravenes article 31(2) which requires that there must be an actual public purpose before land can be compulsorily acquired. And it also contravenes article 14 inasmuch as it makes a discrimination in the matter of acquisitions for a company before July 20, 1962 and after July 20, 1962 insofar as the former acquisitions are validated on the basis of their being deemed to be for a public 793 purpose while the latter acquisitions are not so deemed and have to satisfy the test of public purpose. Besides the attack as to the vires of these provisions in the Amendment Act, it is urged that the rights of the petitioner cannot be affected by the validating provision in the Amendment Act as section 7 of the Amendment Act does not re open decided cases and does not revive notifications or acquisitions struck down by courts. Lastly, it is urged that the, acquisition in the present case cannot be said to be for a public purpose inasmuch as (firstly) the agreement between the company and the Government does not regulate or control the products of the company in the interest of the public, and (secondly) the petitioner 's land which was intended to be used for one public purpose is being taken away for another such purpose. We shall deal with these contentions seriatim. The first question that falls for consideration is the construction of cl. (aa) of sub section (1) of section 40 of the Act. The amendments to section 41 are consequential and will stand or fall with cl. (aa) inserted in section 40(1). It is contended on behalf of the petitioner that on a literal construction of this clause (which, it is urged, is the only possible construction) it requires that the company which is acquir ing :the land should be engaged or should be takincg steps for engaging itself in any industry or work, which is for a public purpose. If a company satisfies that requirement it can acquire land for the construction of some building or work, even though that building or work may not itself subserve such public purpose. Therefore, the argument runs that cl. (aa) permits compulsory acquisition of land for a purpose other than a public purpose and is hit by article 31(2) of the Constitution, whereunder land can be compulsorily acquired only for a public purpose. It may be conceded that on a literal construction the adjectival clause, namely, "which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose", qualifies the word "company" and not the words "building or work" for the construction of which the land is needed, So prima facie it can be argued with some force that all that cl. (aa) requires is that the company for which land, 794 is being acquired should be engaged or about to be engaged in any industry or work which is for a public purpose and it is not required that the building or work, for the construc tion of which land is acquired should be for such public purpose. In approaching the question of construction of this clause, it cannot be forgotten that the amendment was made in consequence of the decision of this Court in R. L. Arora 's case(1) and the intention of Parliament was to fill the lacuna, which, according to that decision, existed in the Act in the matter of acquisitions for a company; nor can it be forgotten that Parliament when it enacted the Amendment Act was aware of article 31(2) of the Constitution which provides that land can only be acquired compulsorily for a public purpose and not otherwise. It could not therefore be the intention of Parliament to make a provision which would be in contravention of article 31(2), though it may be admitted that if the language used is capable of only one construction and fails to carry out the intention of Parliament when making the amendment, the amendment may have to be struck down if it contravenes a constitutional provision. Further, a literal interpretation is not always the only interpretation of a provision in a statute and the court has to look at the setting in which the words are used and the circumstances in which the law came to be passed to decide whether there is something implicit behind the words actually used which would control the literal meaning ,of the words used in a provision of the statute. It is per missible to control the wide language used in a statute if that is possible by the setting in which the words are used and the intention of the law making body which may be apparent from the circumstances in which the particular provision came to be made. Therefore, a literal and mechanical interpretation is not the only interpretation which courts are bound to give to the words of a statute; and it may be possible to control the wide 'language in which a provision is made by taking into account what is implicit in it in view of the setting in which the provision appears and the circumstances in which it might have been enacted. (1) [1962] Supp. 2 S.C.R. 149. 795 We may in this connection, refer to a decision of this Court in 'The Mysore State Electricity Board vs The Bangalore Woollen, Cotton and Silk Mills Ltd.(1), where the wide Words used in section 76(1) of the Electricity (Supply) Act of 1948 fell for interpretation, and this Court held that even though the words used were of wide amplitude, it was implicit in the sub section that the question arising there under was one which arose under the Electricity (Supply) Act. Therefore, we have to see whether the provision in cl. (aa) bears another construction also in the setting in which it appears and in the circumstances in which it was put on the statute book and also in view of the language used in the clause. The circumstances in which the amendment came to be made have already been mentioned by us and the intention of Parliament clearly was to fill up the lacuna in the Act which became evident on the decision of this court in R. L. Arora 's case(2). Parliament must also be well aware of the provision of article 31(2) which lays down that compulsory acquisition of property can only be made for a public purpose. Clause (aa) was inserted between cl. (a) and cl. (b) of section 40(1). Section 40(1) as it stood before the amendment prohibited consent being given to acquisition of land by a company unless the acquisition was for one of the two reasons mentioned in cls. (a) and (b). Those two clauses clearly showed that acquisition for a company was for a public purpose and such acquisition could not be made for any purpose other than public purpose. Between the existing cl. (a) and cl. (b) of section 40 (1), we find cl. (aa) being inserted. We also find that cl. (aa) specifically uses the words "public purpose" and indicates that the company for which land is required should be engaged or about to be engaged in so me industry or work of a public purpose. It was only for such a company that land was to be acquired compulsorily and the acquisition was for the construction of some building or work for such a company, i.e. a company engaged or about to be engaged in so me industry or work which is for a public purpose. In this setting it seems to us reasonable to hold that the intention of Parliament could only have (1) [1963] Supp. 2 S.C.R. 127. (2) (1962) Supp. 2 S.C.R. 149. 796 been that land should be acquired for such building or work for a company as would subserve the public purpose of the company; it could not have been intended, considering the setting in which cl. (aa) was introduced, that land could be acquired for a building or work which would not subserve the public purpose of the company. In the circumstances it seems to us clear that the literal construction of the clause based on rules of grammar is not the only construction of it and it is in our opinion legitimate to hold that the public purpose of the industry of the company, which is imperative under the clause, also attaches to the building or work for the construction of which land is to be acquired. Further, acquisition is for the construction of some building or work for a company and the nature of that company is that it is engaged or is taking steps for encaging itself in any industry or work which is for a public purpose. When therefore the building or work is for such a company it seems to us that it is reasonable to hold that the nature of the building or work to be constructed takes colour from the nature of the company for which it is to be constructed. We are therefore of opinion that the literal and mechanical construction for which the petitioner contends is neither the only nor the true construction of cl. (aa) and that when cl. (aa) provides for acquisition of land needed for construction of some building or work it implicitly intends that the building or work which is to be constructed must be such as to subserve the public purpose of the industry or work in which the company is engaged or is about to be engaged. In short, the words "building or work" used in cl. (aa) take their colour from the adjectival clause which governs the company for which the building or work is being constructed and acquisition under this clause can only be made where the company is engaged or is taking steps to engage itself in any industry or work which is for a public purpose, and the building or work which the company is intending to construct is of the same nature, namely, that it is a building or work which is meant to subserve the public purpose of the industry or work for which it is being constructed. It is only in these cases where the company is engaged in an industry or work of that kind and where the building or work is also constructed for a purpose of 797 that kind, which is a public purpose, that acquisition can be made under cl. As we read the clause we are of opinion that the public purpose of the company for which acquisition is to be made cannot be divorced from the purpose of the building or work and it is not open for such a company to acquire land under cl. (aa) for a building or work which will not subserve the public purpose of the company. We are therefore of opinion that in the setting in which cl, (aa) appears and in the circumstances in which it came to be enacted, a literal and mechanical construction for which the petitioner contends is not the only construction of this clause and that there is another construction which in our opinion is a better construction, and which is that the public purpose of the company is also implicit in the purpose of the building or work which is to be constructed for the company and it is only for such work or building which subserves the public purpose of the company that acquisition under cl. (aa) can be made. Thus there are two possible constructions of this clause, one a mere mechanical and literal construction based on rules of grammar and the other which emerges from the setting in which the clause appears and the circumstances in which it came to be enacted and also from the words used therein, namely, acquisition being for a company which has a public purpose behind it, and therefore the building or work which is to be constructed and for which land is required must also have the same public purpose behind it, that animates the company making the construction. We are therefore clearly of opinion that two constructions are possible of this clause of which the second construction which is other than literal is the better one. It is well settled that if certain provisions of law construed in one way will be consistent with the Constitution, and if another interpreta tion would render them unconstitutional, the Court would lean in favour of the former construction: [see Kedar Nath Singh vs State of Bihar(1)]. We are therefore of opinion that cl. (aa) does not permit acquisition of land for Construction of some building or work for a company ,engaged or to be engaged in an industry or work, which (1) [1962] Supp. 2 S.C.R. 769 798 is for a public purpose unless the building or work for which the land is acquired also subserves the public purpose of the industry or work in which the company is engaged. This is in our opinion the better construction of cl. (aa) taking into account the setting in which it appears and the circumstances in which it came to be enacted and the words used therein. If that is the true construction of cl. (aa) it cannot be said to contravene article 31(2), for the public purpose required therein is present where land is required for the construction of a building or work which must subserve the public purpose of the industry or work in which a company is engaged or is about to be engaged. Nor can it be said that the provision is hit by article 19 (1 ) (f ), for it would in our opinion be a reasonable restriction on the right to hold property. We hold therefore that the clause so interpreted is not unconstitutional. We have already said that the amendments in section 41 are only consequential to the insertion of cl. (aa) in section 40(1) and would therefore be equally valid and constitutional. We now come to the constitutionality of section 7 of the Amendment Act, which is attacked on the ground that it contravenes article 31(2) and article 14 of the Constitution. Let us therefore see what exactly section 7 validates and under what conditions. It first provides that the acquisition to be validated must have been made before July 20, 1962. Secondly it provides where such acquisition is not for any of the purposes mentioned in cl. (a) or cl. (b) of section 40(1) of the Act, it shall be deemed to be for the purpose mentioned in cl. (aa) introduced by the Amendment Act. Thirdly it provides that every such acquisition shall be, and shall be deemed always to have been as valid as if the provisions of sections 40 and 41 of the Act, as amended by the Amendment Act, were in force at all material times when such acquisition was made or proceeding was held or order was made or agreement was entered into or action was taken. Lastly, it provides that such acquisition shall be valid notwithstanding any judgment, decree or order of any court. Terefore before section 7 can validate an acquisition made before July 20, 1962, it must first be shown that the acquisition is complete and the land acquired has vested in Government. This 799 means that the land acquired has vested in Government either under section 16 or section 17(1) of the Act. Thus section 7 of the Amendment Act validates such acquisitions in which property has vested absolutely in Government either under section 16 or section 17 (1). Secondly section 7 of the Amendment Act provides that where acquisition has been made for a company before July 20, 1962 or purported to have been made under cl. (a) or cl. (b) of section 40(1) and those clauses do not apply in view of the interpretation put thereon in R. L. Arora 's case(1), it shall be deemed that the acquisition was for the purpose mentioned in cl. (aa) as inserted in section 40(1) of the Act by the Amendment Act. Thirdly section 7 of the Amendment Act provides that every such acquisition and any proceeding, order, agreement or action in connection with such acquisition shall be, and shall be deemed always to have been, as valid as if the provisions of sections 40 and 41 of the Act as amended by the Amendment Act were in force at all material times when any action was taken for such acquisition. Finally, this validity is given to such acquisitions and to all actions taken in connection therewith notwithstanding any judgment, decree or order of any court. This is what section 7 of the Amendment Act provides. The attack on it on the basis of article 31(2) is that it makes an irrebuttable presumption that the acquisition was for a public purpose, though it may not be actually so and there fore contravenes article 31(2) inasmuch as the result of this irrebuttable presumption is that acquisition which may not have been for a public purpose, is validated. We do not think that there is any force in this contention in view of the interpretation we have given to cl. (aa) introduced in section 40 (1). The first fiction in section 7 is that it shall be presumed that acquisitions before July 20, 1962, if they do not fall within cl. (a) or cl. (b) of section 40(1), shall be deemed to fall within cl. That means that building or work for which acquisition was made was required for a public purpose of the kind indicated in cl. It does not however follow from this that if the purpose was not of the kind indicated in cl. (aa) it will still be presumed that the acquisition was for the purpose mentioned in cl. All (1) (19521 Supp. 2 S.C.R. 149. 800 that the first deeming provision lays down is that where the public purpose does not come within cl. (a) or cl. (b) it should be deemed to come within cl. (aa), provided it is of a kind which can come within this clause. The intention behind this deeming provision clearly is to make the purpose of an acquisition made before July 20, 1962 which does not fall within cl. (a) or cl. (b) of section 40(1) to be judged in accordance with the provisions contained in cl. On a reasonable interpretation, this deeming provision therefore only provides that where the purpose does not fall within cls. (a) and (b), it shall be deemed to fall under cl. (aa) and to be judged in accordance therewith. If in fact the purpose of any acquisition made before July 20, 1962, is such as does not fall within cl. (aa), the deeming provision would be of no avail. Thus the first of the two fictions introduced by section 7 of the Amendment Act merely lays down that where a notification under section 6 of the Act cannot be justified under cl. (a) and cl. (b) of section 40(1), it will be judged in accordance with the provisions contained in cl. (aa) and if it satisfies those provisions, the acquisition will be deemed for the purpose of that clause, as if that clause existed at the relevant time, though in actual fact it did not. The first fiction therefore in our opinion goes no further than this and does not provide that even though the purpose of acquisition does not fall within cl. (aa), it will still be deemed to be a public purpose. In this view of the matter, we are of opinion that the attack on section 7 on the basis of article 31(2) must fail. Next it is urged that section 7 of the Amendment Act is hit by article 14 inasmuch as it discriminates between acquisition for a company before July 20, 1962 and after that date. We do not think that there is any force in this contention either. In the view we have taken of the meaning of cl. (aa) land the meaning of the first fiction introduced in section 7 of the Amendment Act, all that the second fiction in section 7 of the Amendment Act says is that when the first fiction is satisfied the second fiction will come into force and every such acquisition and any proceeding, order, agreement or action in connection with such acquisition shall be, and &hall be deemed always to have been, as valid as if the provisions 801 of sections 40 and 41 of the Act, as amended by the Amendment Act, were in force at all material times. In effect therefore section 7 provides that even though acquisitions made before July 20, 1962 do not satisfy the conditions of cl. (a) and cl. (b) of section 40(1), they will be valid if they satisfy the conditions of cl. (aa) as introduced by the Amendment Act, as if that clause was in existence when the acquisition was made before July 20, 1962. In this view we are of opinion that there is no discrimination in the matter of acquisition for a company before July 20, 1962 and after that date because in either case the conditions of cl. (aa) have to be actually satisfied whether the acquisition was before July 20, 1962 or thereafter, as the validation by section 7 of the Amendment Act is only of such acquisition before July 20, 1962 which actually satisfy the provisions in cl. We may in this connection refer to the words "as valid as if" appearing in section 7 of the Amendment Act, because they are in our opinion the key words for the purpose of interpreting the extent of the validity conferred on acquisitions before July 20, 1962. What the second fiction provides is that an acquisition made before that date shall be as valid as if the provisions of sections 40 and 41 of the Act as amended by the Amendment Act were in force at all material times. The force of the words "as valid as if" clearly is that the validity of acquisitions made before July 20, 1962, has to be judged on the basis that cl. (aa) was in force at the material time and in accordance therewith. The validity therefore is not absolute; it is conditioned by the fact that it will be as valid as if cl. (aa) was in force; so that if it could not be valid even if cl. (aa) was in force and could not be justified under the terms of that clause, the validity conferred by section 7 of the Amendment Act will not attach to it. This in our opinion is the force of the words "as valid as if" and the validity it has conferred is not absolute as contended on behalf of the petitioner and will not apply to those acquisitions which would not be valid if they could not be justified on the basis of cl. (aa) assuming it to be in force at the material time. In this view the attack under article 14 as well as article 31(2) fails, for in neither case can acquisition be valid whether made before July 20, 1962 or thereafter unless the conditions of cl. (aa) are satisfied. 134 159 S.C. 51 802 Next it is urged that even if section 7 is intra vires, it does not reopen decided cases and does not revive notifications and acquisitions actually struck down by courts. We see no force in this contention. Section 7 opens with the words "notwithstanding any judgment, decree or order of any court" and the validity conferred by it on acquisitions made before July 20, 1962 is thus notwithstanding any judgment, decree or order of any court. These are the usual words to be found in validating legislation where the intention is to validate some action which would otherwise be invalid and which may have been declared invalid by any court. The purpose of such words in a validating legislation is to declare valid what has been held invalid by courts and once the legislature declares such action valid all steps taken in connection therewith are validated to the extent of validation. The result of the validation is that notifications or other steps taken which may otherwise have been invalid become valid. Further an acquisition also even though it may have been struck down by a court would be validated if it has been made in the sense that property in the land to be acquired has vested in Government either under section 16 or section 17 (1) of the Act. It is not in dispute in this case that the property has vested in Government under section 17(1) or the Act. It is also not in dispute that the purpose of the company was a public purpose, namely, manufacture of textile machinery parts and that the acquisition was also for the construction of works for that purpose. In the circumstances we fail to see how it can be said that the rights of the petitioner have not been affected at all by the validating provision in section 7 of the Act. The contention under his head also fails. Then it is urged that the acquisition in the present case cannot be said to be for a public purpose inasmuch as the agreement between the company and the Government does not regulate or control the products of the company in the interest of the public. We have not been able to understand exactly what is meant by this. As we have already said, it is not in dispute that the purpose of the company is a public purpose, namely, production of textile machinery parts, and the land is acquired for the construction of works 803 for that purpose. The agreement shows that the land is required for the construction of a work, namely, a factory for the manufacture of textile machinery and parts ' and that such work is likely to prove useful to the public. One term of the agreement is that the company, its successors and assignees will use the said land for the aforesaid purpose and for no other purpose without the previous sanction in writing of the State Government. Another term provides that if the said land or any part or parts thereof shall no longer be required by the company, then the company will forthwith relinquish and restore the same, after removing all buildings and structures, to the Governor at a price equal to the amount paid by it under the Act. It is clear therefore that the land cannot be used for any other purpose and it will have to be restored to the Government if it is not used for the purpose for which it was acquired. In this connection reference may be made to section 44 A introduced by the Amendment Act which lays down that "no company for which any land is acquired under this Part shall be entitled to transfer the said land or any part thereof by sale, mort gage, gift, lease or otherwise except with the previous sanction of the appropriate Government". 'This provision also provides a safeguard that the land will only be used for the public purpose for which it is acquired and not otherwise. The aforesaid terms in the agreement in our opinion satisfy the condition that the land will be used for the public purpose for which it was being acquired and for no other. Therefore the acquisition is for a public purpose as provided in cl. We do not think it is the purpose of the Act that the agreement should provide for regulation or control of the products of a company, which probably means that Government should control the quantum of production and distribution or the price of the produced articles. This in our opinion is foreign to the purpose of the Act. All that the Act requires is that before land is transferred to the company by the Government, the agreement should provide that land would be used for the purpose for which it was acquired and for no other. The Act has nothing to do with the control or regulation of the products of the company and gives no power to Government in that behalf. Nor do we think it was necessary in order that the public purpose 804 mentioned in cl. (aa) is carried out to have any further term in the agreement besides those which have been provided in the agreement in this case. The contention that the acquisition in the present case was not for a public purpose as the agreement does not provide for the control and regulation of the product of the company must therefore fail. Lastly it is urged that the petitioner who was a businessman was intending to use the land for erecting a factory. He could not do so because certain rules did not permit him to build a factory adjacent to the military installations which had been put up by the Defence Department on adjoining land. It is urged that it could not be the purpose of the Act that land which was intended to be used for one public purpose should be acquired for 'another public purpose. We see no force in this contention either. All that the Act requires is that the land should be required for a public purpose. The intention of the previous owner whatever it may be does not in our opinion enter into the question at all, so far as :the validity of the acquisition is concerned provided the acquisition is for a public purpose. Whether the land should be acquired or not is a matter which may be urged under section 5 A of the Act, which gives the owner of the land the right to object to the acquisition, and it is for Government to decide whether the objection should be allowed or rejected. Once the Government decides that the objection should be rejected and that the acquisition is needed for a public purpose the validity of the notification under section 6 and the subsequent action thereafter cannot be challenged on the ground that the previous owner himself intended to use the land for some public purpose. In this connection our attention is invited to the observations of this Court in Province of Bombay vs Kusaldas section Advani(1), where it was observed that "under certain circumstances even securing a house for an individual may be in the interests of the community, but it cannot be to the general interest of the community to requisition the property of one refugee for the benefit of another refugee". These observations in our opinion have no (1) ; 687. 805 relevance to the matter under consideration. We are con cerned here with acquisition for a public purpose, which is undisputed. This is not a case of a house of one person being requisitioned for another; this is a case of constructing some work which will be useful to the public and will subserve the public purpose of the production of textile machinery and its parts for the use of the general public. In these circumstances we are of opinion that there being a definite public purpose behind the acquisition in the present case, the acquisition would be justified under the Act irrespective of the intention of the previous owner of the land to use it for some other public purpose. The contention under this head must also fail. It now remains only to consider the argument on behalf of the intervener that cl. (aa) violates article 14 inasmuch as it permits acquisition of land for a company but not for an individual or a private company, though the individual or the private company may also be engaged in or taking steps to engage himself or itself in an industry or work which is for a public purpose. Reference was also made to section 44 B, introduced by the Amendment Act, which lays down that "notwithstanding anything contained in this Act, no land shall be acquired under this Part, except for the purpose mentioned in clause (a) of sub section (1) of section 40, for a private company which is not a Government company". It is said that there is discrimination between a public company and a Government company for which land can be acquired under cl. (aa) on the one hand and a private company or an individual on the other. It is true that acquisition for the purpose of cl. (aa) can only be made for a Government company or a public company and cannot be made for a private company or an individual; but there is in our opinion a clear classification between a public company and a Government company on the one hand and a private company and an individual on the other, which has a reasonable nexus with the objects to be achieved under the law. The intention of the legislature clearly is that private individuals and private companies which really consist of a few private individuals banded together should not have the advantage of acquiring land even though they 806 may be intending to engage in some industry or work which may be for a public purpose inasmuch as the enrichment consequent on such work goes to private individuals or to a group of them who have formed themselves into a private company. Public companies on the other hand are broad based and Government companies are really in a sense no different from Government, though for convenience of administration a Government company may be formed, which thus becomes a separate legal entity. Thus in one case the acquisition results in private enrichment while in the other it is the public which gains in every way. Therefore a distinction in the matter of acquisition of land between public companies and Government companies on the one hand and private individuals and private companies on the other is in our opinion justified, considering the object behind cl. (aa) as introduced into the Act. The contention under this head must therefore also fail. The petition therefore fails and is hereby dismissed. In the circumstances we pass no order as to costs. AYYANGAR J. I have had the advantage of perusing the judgment prepared by Wanchoo, J. but regret my inability to agree with it. In my opinion this writ petition has to be allowed. The facts of the case and the relevant statutory provisions whose construction is involved in the petition, have been set out in full in the judgment just now pronounced and it is therefore unnecessary for me to recapitulate them. The principal points on which learned counsel for the petitioner rested his case were mainly two: (1) that section 40(1)(aa) introduced by section 3 of the Land Acquisition Amending Act (Act XXXI of 1962) which I shall hereafter refer to as the Act, was unconstitutional, in that it authorised the compulsory acquisition of land for purposes which might not at all be public purposes and was therefore violative of article 31(2) of the Constitution, and (2) that section 7 of the Act by which acquisitions of land made prior to July 20, 1962 for the purposes mentioned in section 40(1)(aa) were purported to be validated did not on its proper construction cover the present case and further, even if it did that the said provision was 807 invalid as ultra vires for the very same reason for which cl. (aa) was. I shall first take up the submission made to us by Mr. Agarwal about the amendment effected to section 40(1) by the introduction of the new clause (aa). That clause reads "that such acquisition is needed for the construction of some building or work for a company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose", so that after the amendment land may be compulsorily acquired by the State for a company for being utilised for the purpose above set out. It was not disputed by Mr. Setalvad who, appearing for the first and 3rd respondents, addressed to us the main arguments on behalf of the respondent, nor by the learned Attorney General appearing for the Union of India that if on a proper construction of cl. (aa) power was reserved to compulsorily acquire land for a purpose other than a public purpose, the same would infringe article 31(2) of the Constitution and would, therefore, be void. The scope of the inquiry in the petition is therefore narrowed down and it would be sufficient to consider merely the construction of this clause and ascertain whether the purpose for which authority is conferred by it for making an acquisition, is a public purpose. The clause starts with the words that the acquisition is needed for the construction of a building or work. It goes without saying that if the power to acquire here conferred is related to the construction of a building or work which is essential for starting an industry or for carrying on an industry which is necessary to be carried on in the public interest. the acquisition would be for a public purpose and undoubtedly the provision would be valid. The question is whether the words of the clause are capable of this construction. The words of the clause may be thus split up: (1) the land is needed for the construction of "a building" or "work", and (2) that "building" or "work" is for a company which is engaged (omitting the immaterial words) in an industry or work which is for a public purpose. Therefore, if a company which is engaged in an industry which industry is invested with a public purpose i.e., if the industry itself serves a public purpose, that the land is needed for the construction of a building or work for such a company is made sufficient 808 to enable the acquisition to be made. In other words, the criterion of the justification for the acquisition is, that it is for a company of a designated nature, not that the land acquired is needed for a building or work which is essential for the carrying on of an industry which serves a public purpose. The company might be engaged in an industry which might be informed by a public purpose or whose products might be essential for the needs of the community. but under the clause as enacted it is not necessary that the land acquired is needed for being used for the purpose of that industry but may be needed for any purpose of the company, the only qualification being that the company answers the description set down in the clause. Thus, to take the present case, the third respondent company intends to start a factory for the manufacture of textile machinery, in the present state of the country 's industrial development. There could be no dispute that the industry in which the third respondent is engaged or would be engaged, would serve a national need and therefore a public purpose. But, as was put during the course of the argument, the land acquired might be needed not for the putting up of the factory premises or essential buildings connected with it for its operational needs, if one might use that expression, but say for a swimming pool or a tennis court in the compound of the Directors ' residence for whom the company might consider it proper to provide accommodation. To take a more extreme case, the company 's factory may be in city A, and if the company wants to provide a guest house, a holiday home or accommodation for its Directors at city B, the clause will enable the acquisition to be made for the purpose. It cannot be contended that the use of the land for such a purpose was invested with a public purpose so as to permit compulsory acquisition of land having regard to the terms of article 31 (2). The question, therefore, arises whether an acquisition for a purpose of this type is or is not permitted on cl. (aa) as it now stands. I am clearly of the opinion that an acquisi tion for such a purpose would be covered, for the only two tests that are prescribed in it as conditions to be satisfied before an acquisition could be made under this clause are (1) that the land is needed for the construction of a building or 809 work for a company i.e., the acquisition of the land and the construction are intra vires of the memorandum of associa tion of the company, and (2) that company for which the acquisition is being made is one engaged or is to be engaged in an industry which is for a public purpose. The first, and I would say the primary submission of Mr. Setalvad was that the words "for a public purpose" at the end of the clause ought to be read as governing and qualifying the words "building or work for a company" which occur earlier, so that under the clause not merely has the company to be one of the type described i.e. engaging in an industry which serves a public purpose but such a company needs the land for the construction of a building or work which is essential for that industry to be commenced or carried on. I feel unable to accept this as a possible construction of the words used. For that construction to be adopted even the transposition of the words "for a public purpose" to an earlier point after the words "for a company" would not be sufficient assuming the rules of grimmer per mitted such a course; for, then it would leave out the des cription or categorisation of the company for which the land is needed, and in such a situation the entire object of the amendment would be frustrated, as it would not be a con dition that the industry in which the company is engaged is one which is required in public interest. Even if the clause were rewritten so as to introduce the words "for a public purpose" earlier and also retain them where it occurs now, the construction for which Mr. Setalvad contends cannot result, for then it would not make much sense, for the words "for a public purpose" if transposed earlier would not convey the meaning which Mr. Setalvad says they convey, because the construction which learned counsel suggests is that the clause means that the land is needed for the con struction of the factory and other essential buildings for a company engaged in an industry which serves the national interest. By no transposition of the words actually used in the clause can such a transformation be achieved. The position as regards the construction of cl. (aa) is not improved when one turns to the consequential amendment effected in section 41 of the Land Acquisition Act where a new cl. 4(a) has been introduced by section 4 of the Act. If in this 810 provision at least, which deals with the agreements which the Government is directed to enter info. it is clear that the acquisition could be made only for a public purpose and not for what one might term "the private purposes" of a company engaged in an industry which is essential for the public, then one could read cl. (aa) together with this provision and use the terms of section 41 for construing the scope and purpose of section 40(1)(aa). Clause 4(a) reads: "Where the acquisition is for the construction of any building or work for a company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose the time within which, and the conditions on which the building or work shall be constructed or executed; If anything, therefore, cl. 4(a) emphasizes that what Parliament considered essential was the nature of the company for whose benefit the acquisition was being made and not the nature of the use to which the property acquired may be put and that it would not matter if a company of the type described used the land acquired for the pleasure of its Directors or for its private purposes unrelated to the purpose of the industry in which it was engaged. Lastly, some attempt was made to show that the rules framed under the Land Acquisition Act themselves threw light on the purpose for which the acquisition was to be made but it was, however, conceded that the rules afforded no assistance either way on the matter. It was then submitted that there is a presumption in favour of constitutionality and that the clause ought to be so read, if that were possible so as to sustain its validity. I quite agree that if the language were flexible in the sense that it could be read so as to make it refer only to cases of acquisition for a public purpose, this could and ought to be done. But this assumes that the clause is reasonably capable of two interpretations: one which would render it unconstitutional and the other which even though it be a little strained, would make it constitutional. then the Court would lean in favour of the latter construction. 811 The question therefore is whether the clause is capable of more than one interpretation. I would be stating only a truism if I said that there is no scope for interpretation here. With profound respect for my learned brethren, I consider that the words are capable only of one meaning. Rules of construction are merely aids to resolving ambiguity. if any exists. The first and primary rule, if those rules have to be invoked, is to take the words themselves and then arrive at their true meaning. for if they disclose an intelligible meaning, then the process of interpretation stops unless the words are reasonably capable of being understood in more than one way and rules of interpretation are then invoked to resolve that ambiguity. It was not suggested that the words do not, as they stand, make sense. They do, only the sense which they convey makes the clause unconstitutional. No doubt, the meaning of a word may vary with the setting or context, but that is not the position here. One asks in vain which is the word which is said to bear a different meaning from the natural normal, dictionary sense, because of the context or setting"? It was, however, urged that it could not have been the intention of Parliament to have intended the clause to mean what appears to be meaning which I have said the words bore. But this argument ignores the basic principle underlying all rules of statutory construction that the intention of the legislature has to be gathered only from the meaning of the words used, for they are the only means by which the intention of the law maker could be gathered. It is only where there is an ambiguity and the words are capable of more than one construction that any extrinsic aid in the shape of the purpose of the legislature, or the object of the legislation come in for consideration. "Were the language of an Act is clear and explicit," said Tindal, C.J. in Warburton vs Loveland(1), "we must give effect to it, whatever be the Consequences, for in that case the words of the statute speak the intention of the legislature". Authority is not needed for the proposition that the intention of the legislature is not a matter to be speculated upon. Interpretation or construction cannot mean that a Court first reaches a conclusion as to what in its opinion the legislature intended, (1) 2 D. & Cl. (H.L.) 480 at p. 489. 812 even though this involves attributing a meaning divorced from the words used, and then adjust the meaning to the conclusion it has reached. As was observed by Lord Watson in an oft quoted passage in Salomon vs A. Salomon & Co. (1): "Intention of the legislature is a common but very slippery phrase, which, popularly understood, may signify anything from intention embodied in positive enactment to speculative opinion as to what the legislature probably would have meant, although there has been an omission to enact it. In a court of law or equity, what the legislature intended to be done or not to be done can only be legitimately ascertained from what it has chosen to enact, either in express words or by reasonable and necessary implication. ' It was the same principle that was explained by Lord Herschell in Cox vs Hakes(2) when he said: ". .It must be admitted that if the language of the legislature interpreted according to the recognised canons of construction involves this result, your Lordships must frankly yield to it even if you should be satisfied that it was not in the contemplation of the legislature. " The only way in which I am able to read the clause is to relate the words "public purpose" to the nature of the industry carried on by the company and by no rule of construction with or without extrinsic aids or with reference to the context, not to speak of rules of grammar, can the reference to public purpose be related to the building or work for which the acquisition is permitted to be made. The learned Attorney General submitted that the provision could and ought to be read down and confined in its operation to acquisition for public purposes as properly understood; in other words, to sever the constitutional from the unconstitutional portions and uphold the former. I do not find it possible to adopt this approach in a clause worded like the one before us. On the construction of the clause which I hold is the only possible one to adopt, it means the (2) 15 A.C. 506 at p. 528. (1) ; at p. 38. 813 State is empowered to compulsorily acquire land for com panies which satisfy the description of being engaged in an industry which is essential for the life of the community whether or not the purpose for which the company proposes to use the land. acquired is a public purpose. Where the purpose for which the acquisition could be made is indicated by the enactment and that purpose is one which is primarily constitutionally permissible, but the words employed for indicating the purposes might possibly include some outside the power of the legislature, an argument about reading down would require consideration. But in the clause now impugned, there is no purpose indicated at all, except that it is needed for a company which falls within a particular category. For such a situation I consider that there is no scope at all for invoking the principle of reading down. Again, where the provision gives a carte blanche to Gov ernment to acquire land for any purpose it is not possible to sustain the validity of such a law and strike down merely the particular acquisition where land is acquired for a purpose which is not a public purpose, for here the vice is in the law itself and not merely in the application. I am, therefore, clearly of the opinion that cl. (aa) intro duced by the Amending Act XXXI of 1962 is unconstitutional as violative of article 31(2). In this view it is unnecessary for me to consider the proper construction of section 7 of the Amending Act. Under the terms of section 7 of the Act, all acquisitions of land made prior to June 20, 1962, even accepting the construction which Mr. Setalvad pressed upon us, are deemed to have been made for a purpose falling within cl. If, as I have held, cl. (aa) is unconstitutional and void, it was not contended that section 7 would of any assistance to the respondents to sustain the acquisition of the petitioner 's land. I would, therefore, allow the petition and grant the reliefs prayed for therein. ORDER In accordance with the opinion of the majority the petition fails and is dismissed. There will be no order at the costs.

The petitioner is the owner of certain land in Kanpur, U.P. On a previous occasion land acquisition proceedings were taken regarding this land for acquiring it for an industrialist. The petitioner questioned ' the validity of these proceedings and this Court by its judgment reported as R. L. Arora vs State of U.P; [1962] Supp. 2 S.C.R. 149, quashed the notification made under section 6 of Land Acquisition Act, 1894. Thereafter certain amendments were made to sections 40 and 41 of that Act by the Land Acquisition (Amendment) Act, 1961. The petitioner thereupon filed before this Court a petition under article 32 of the Constitution challenging the validity of the amended sections 40, 41 and section 7 of the amending Act. The petitioner contended that the said sections violated article 31(2) and article 19(1)(f) of the Constitution inasmuch as cl. (aa) of the amended section 40 provided that all acquisitions made for a company for construction of some building are permissible even though the building may not be for a public purpose. The validity of section 7 of the amending Act was challenged on the ground ' that it contravened article 31(2) inasmuch as it makes acquisition for a company before July 20, 1962 as being for a public purpose even though it may not be so in fact. Section 7 was also challenged on the ground that it contravenes article 14 inasmuch as it makes an unreasonable discrimination in the matter of acquisition for a company before July 20, 1962 and after that date insofar as the former acquisitions are validated on the basis of their being deemed to be for a public purpose while the latter acquisitions are not so deemed and have to satisfy the test of public purpose. Held (per P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. C. DAS GUPTA and J. C. SHAH JJ.): (i) If the language of a provision of law is capable of only one construction and if according to that construction the provision contravenes a constitutional provision it must be struck down. A literal interpretation is not always the only interpretation of a provision in a statute and the court has to look at the setting in which the words are used and the circumstances in which the law came to be passed to decide whether there is something implicit behind the words actually used which would control the literal meaning of the words used. The Mysore State Electricity Board vs Bangalore Woollen, Cotton ,and Silk Mills, [1963] Supp. 2 S.C.R. 127; followed. (ii) It is well settled that if certain provisions of law construed in one way will be consistent with the Constitution and if another interpretation would render them unconstitutional the court would bear in favour of the former construction. Kedar Nath Singh vs State of Bihar, [1962] Supp. 2 S.C.R. 769, followed. 134 159 S.C. 50 786 (iii) Applying the above principles of construction it cannot be paid that section 40(aa) contravenes article 31(2) for the public purpose required therein is present where land is acquired for the construction of a building or work which must subserve the public purpose of the industry or work in which a company is engaged or is about to be engaged. Nor can it be said that the provision is hit by article 19(1)(f) or it would be a reasonable restriction on the right to hold property. The amendments to section 41 are only consequential to the insertion of c.l (aa) in section 40(1) and would therefore be equally valid. (IV) The first of the two fictions introduced by section 7 of the Amendment Act merely lays down that where a notification under section 6 of the Act cannot be justified under cl. (a)1 and cl. (b) of section 40(1) it will be juded in accordance with the provisions contained in cl. (aa) and it satisfies those provisions the acquisition will be deemed for the purpose of that clause as if that clause existed at the relevant time,though in actual fact it did not. The first fiction does not provide that even though the purpose of the acquisition does not fall within cl. (aa) it will still be deemed to be a public purpose. Therefore a. 7 does not violate article 31(2). (v) The acquisition made before July 20, 1962 as well as the acquisitions made thereafter have to satisfy the conditions of cl. (aa) of section 40 and section 7 of the Amendment Act validates only acquisitions before July 20, 1962 which actually satisfy the provisions in cl. Therefore it cannot be said that section 7 violates article 14. (vi) Section 7 specifically validates acquisition made before July 20. 1962 "notwithstanding any judgment, decree or orders of any court ' and therefore the petitioner 's contention that the acquisition of the petitioners land declared to be invalid by reason of the judgment of this Court reported as R. L. Arora vs State of U.P., [1962] Supp. 2 S.C.R. 149 is bad is rejected. (vii) The various provisions in the agreement between the Government and the industrialist for whom the land in question has been acquired conclusively establish that the acquisition is for a public purpose within the meaning of cl. (aa) of section 40. Province of Bombay vs Kusaldas section Advant; , , distinguished. (viii) A distinction in the matter of acquisition of land between public companies and Government companies on the one hand and private individuals and private companies on the other is justified considering the object behind cl. (aa) of section 40 of the Act and therefore It does not violate article 14. Per Ayyangar J. (dissenting) (i) The wording of cl. (aa) of section 40 is not capable of two interpretations and there is no ambiguity in the wording It is a well established principle of construction that it is only when there is an ambiguity and the words are capable of 787 more than one construction that any extrinsic aid in the shape of the purpose of the legislature or the object of the legislation come in for consideration Where the language of an Act is clear and explicit the court must give effect to it whatever may be the consequence for in that case the words of the statute speak the intention of the legislature. The intention of the legislature is not a matter to be speculated upon. Interpretation or construction cannot mean that a court first reaches a conclusion as to what in its opinion the legislature intended, even though this involves attributing a meaning divorced from the words used and then adjust the meaning to the conclusion it has reached. Warburton vs Loveland, 2 D. & Cl. (H.L.) 480. Salomon vs A. Salomon & Co., ; and Cox vs Hakes, 15 App. 506,followed. (iv) The only way cl. (aa) could be read is to relate the words "public purpose" to the nature of the industry carried on by the company and by no rule of construction with or without extrinsic aide or with reference to the context, not to speak of rules of grammer, can the reference to public purpose be related to the building or work for which the acquisition is permitted to be made (v) Where the provisions, as in the present case, gives a case blanche to Government to acquire land for any purpose it Is not possible to sustain the validity of such law and strike down merely the particular acquisition where land is acquired for a purpose which is not a public purpose, for here the vice is in the law itself and not merely in its application. Clause (aa) of section 40 is violative of article 21(2) of the Constitution.

ivil Appeal No. 3488 of 1988. From the Judgment and Order dated 14.7. 1988 of the Madhya Pradesh High Court in Second Appeal No. 17 of 1985. 568 G.L. Sanghi, S.K. Mehta, Aman Vachher and Atul Nanda for the Appellants. Pramod Swarup for the Respondent. The Judgment of the Court was delivered by R.M. SAHAI, J. This tenant 's appeal is directed against order passed by Madhya Pradesh High Court in proceedings arising out of Section 12(1)(f) of the M.P. Accommodation Control Act, 1961. In 1976, the landlady filed an application for eviction under Section 12(1)(f) of the Act as the accommodation in occupation of appellant was required bona fide for continu ing tailoring business of her son who was doing it since 1970 in a small room of the same premises in the lane which was both unsuitable and inadequate. Her claim was accepted by the Trial Court as necessity was valid and the landlady had a right to reside in any part of the house. In appeal various objections raised on behalf of tenant, namely, feasibility of shifting business to one more room in the house or that additional accommodation was available were repelled. It was further found that landlady 's husband had a flourishing tailoring business during British days but it suffered setback and he later became blind. The appeal was, however, allowed and the application was dismissed as in opinion of Appellate Court the Trial Court had incorrectly understood the dimension of the shop. It did not find any merit in the submission that the shop was irregularly built and was unsuitable for doing business. After discussing the evidence it found that the business of landlady 's son was very poor and not growing at all. Therefore, the accommoda tion in his possession was not at all insufficient and unsuitability was also not proved. 1n Second Appeal by the landlady the High Court did not agree with the Appellate Court and found that the need of the landlady was genuine and bona fide as the shop in dispute was not sufficient for four machines and two or three servants. Principal attack was on jurisdiction of High Court to interfere with finding of fact in second appeal. Defence was equally vehement. But it appears unnecessary to examine it as out of various aspects highlighted one was sufficiency of accommodation with tenant even if he vacated the shop in dispute. Since it was not clear from order of any Court time was granted on conclusion of argument to learned counsel for parties to file affidavit explaining the extent of accommo dation and the status of the tenant. Without going into status as that is disputed it 569 is apparent rather undisputed that landlady whose husband at one time had flourishing business is now in dire circum stances. To keep both the ends meet the family depends not only on meagre income from rent and tailoring shop but the landlady had even to part with another room of the same house adjacent to shop in dispute to one Rataley which is now in possession of tenant. Financial difficulty apart the tenant admittedly has not only this shop with 27 '6" on one side and 20 ' on the other, but another shop of approximately the same dimension. May be the wall in between the two rooms has been removed and entire has been converted into a big shop. But the tenant has two shops each with spacious accom modation facing the road and the landlady 's son has one with irregular dimension of 10 '9"in front and 3.8 ' in back in a lane in most unhygienic conditions, in front of which many doors of latrines of other houses open. Therefore, on the one hand is the tenant in occupation of two big rooms in which he is carrying on business luxuriously whereas the landlady 's son is sandwiched in back of her own house in unhealthy surroundings with not enough place for 3 or 4 machines with two or three helpers what to say of trial room or other facilities for customers. The pathetic and pitiable condition of the landlady with no injury to the tenant except that he shall be required to carry on business from one shop only are circumstances which prevent this Court from interfering with the order of the High Court as in our opinion substantial justice has been done between parties. Therefore it appears unnecessary to examine if the High Court committed any error in exercise of jurisdiction under Section 100 Civil Procedure Code. In the result the appeal fails and is dismissed. But there shall be no order as to costs. P.S.S. Appeal dismissed.

The respondent landlady sought eviction of the appellant under section 12(1)(f) of the M.P. Accommodation Control Act, 1961 on the ground of bona fide requirement for continuing tailoring business of her son, being carried on in a small room of the same premises. The trial court accepted the claim. The appellate court, however, allowed the appeal on the ground that the business of the landlady 's son was very poor and not growing at all and, therefore, the accommoda tion in his possession was not at all insufficient. The High Court found that the need of the landlady was genuine and bona fide. Dismissing the tenant 's appeal, this Court, HELD: The landlady whose husband at one time had a flourishing business was now in dire circumstances. To keep both the ends meet the family depended not only on meagre income from rent and tailoring shop but the landlady had even to part with possession of another room of the same house adjacent to the shop in dispute to another tenant. Financial difficulty apart, the tenant admittedly had two shops each with spacious accommodation facing the road while the landlady 's son had one with comparatively small and irregular dimension in a lane in most unhygienic conditions, with not enough place for 3 or 4 machines with two or three helpers, what to say of trial room or other facilities for customers. The pathetic and pitiable condition of the land lady with no injury 40 the tenant except that he shall be required to carry on business from one shop only, do not call for interference with the order of the High Court. [569A E]

Civil Appeal 1277 of 1968. (Appeal by special leave from the order No. 2674 of 1967 of the Ministry of Finance, Government of India) Hardev Singh, Ishwar Chand Jain and R. section Sodhi; for the Appellant. section N. Prasad and section P. Nayar, for respondents. The Judgment of the Court was delivered by BHAGWATI, J. This appeal by special leave raises a short question as to what is the correct amount of import duty chargeable on pot motors when imported separately from Rayon Spinning frames: do they fall within Item 72(3) or Item 73(21) of the First Schedule to the Indian Customs Tariff? The facts giving rise to the appeal are few and may be briefly stated as follows: Some time in 1956 a licence for setting up a plant for manufacture of Rayon was granted to one Kesoram Industries & Cotton Mills Ltd. under the Industries Development and Regulation Act, 1951. Since the machinery and equipment required for setting up the plant were not available in India, Kesoram Industries and Cotton Mills Ltd. applied for an import licence and on the basis of this application, import licence was granted to them for importing "complete continuous filament Rayon plant with spares and accessories" of the CIF value of Rs. 5.50 crores from general currency area excluding South Africa. 491 It appears that Kesoram Industries & Cotton Mills Ltd. imported, on the strength of this import licence, Rayon Spinning frames, excluding pot motors, from Japan, but so far as pot motors were concerned, they authorised the appellants to import from Germany 4000 of these motors for initial installation of the Spinning frames. Pursuant to the authority so given, the appellants placed orders for 4000 pot motors with manufacturers in Germany and imported the same in seven different consignments under the Import licence of Kesoram Industries & Cotton Mills Ltd. These seven consignments arrived at Calcutta port between September and December 1961. The appellants claimed before the Customs authorities at the time of assessment of import duty on these seven consignments that pot motors imported by them fall within Item 72(3) of the First Schedule to the Indian Customs Tariff and were chargeable to import duty under that item at the rate of 15 percent of their accepted value. This claim was accepted by the Customs authorities and these seven consignments were allowed to be cleared on payment of import duty under Item 72(3). However, within a short time thereafter, the Assistant Collector of Customs issued seven separate notices of demand in respect of these seven consignments claiming that customs duty at the rate of 15 per cent had been short levied, because pot motors were assessable at the rate of 20 per cent and requiring the appellants to pay up the difference within 15 days from the date of demand under section 39 of the . The appellants sent representations against these notices pointing out that and we are quoting here from the representation dated 8th December, 1961 which is: "These pot motors are vital component part of the Rayon Spinning machines already imported and are not in excess of the quantity required for the first installation of the said plant. The pot motors are required for 24 Spinning frames having 2 sides each. On each side of these frames, 66 motors are connected. Hence total initial requirement of pot motors for running 24 frames is 3168. In view of general experience with this type of plant approximately 25% additional motors are required for trial runs and commissioning 4000 Nos. Of not motors should, there fore, be supplied for first installation of the Rayon plant. These pot motors are of very high speed and are specially designed for use in spinning frames for manufacturing rayon thread. They run at 7700 RPM and are designed for a rated voltage of 130 V. at 130 cycles per second for use in circuits of less than 10 amps. As such, these motors can in no circumstances be used for any other purpose excepting as stated above. The accessories of these motors are specially designed to suit particular size of spinning pots as well as spinning chambers. The smooth running of these motors is achieved after a great research by using flexible elastic and hollow shaft, special rubber bushings for support as well as specially designed bearings, to take care of severe stresses, 492 which are normally encountered by these motors during operation. Hence, it is inevitable that any deviation in the design of the above component parts would mean defeating the purpose for which these motors are meant. In view of the above, these motors cannot be classified other than an integral part of the Rayon Spinning plant. We, therefore, claimed as assessment of duty under proviso 72(3) at the time of clearing. " The appellants did not receive any reply from the Assistant Collector in regard to these representations for a period of about three years and hence they thought that their representations had been accepted and the demand for differential duty had been dropped. This, however, turned out to be a vain hope, for seven communications dated 19th January, 1965 were received by the appellants from the Assistant Collector stating that the demand for differential duty in respect of each of the seven consignments was confirmed and would be enforced in due course if the differential duty was not paid by the appellants. Each of those seven communications contained an intimation that "an appeal against this decision lies to the Appellate Collector within three months hereof". The appellants, however, did not prefer an appeal to the Collector and instead tried to persuade the Assistant Collector to change his opinion by pointing out the relevant facts. It appears that in the meantime the Assistant Collector recovered the aggregate amount of the differential duty from the deposit account of the appellants. The appellants once again made a representation to the Assistant Collector and requested him to refund the amount of differential duty collected by him but the representation did not meet with any favourable response from the Assistant Collector. The appellants ultimately filed a representation to the Collector on 15th July, 1965 setting out their case in regard to the assessment of customs duty and pointing out that the original assessment of customs duty made under Item 72(3) was correct and that the differential duty had been wrongly recovered from them. This representation was treated by the Collector as a revision application against the orders of the Assistant Collector and on this application, the Collector made an order which was conveyed to the appellants by the Assistant Collector by his letter dated 23rd December, 1965. The Assistant Collector pointed out that the Collector had: " examined the merits of the case in question and it is his consideration that the duty was correctly chargeable because the Spinning Machinery excluding the pot motors were being imported under one contract from Japan and the pot motors were being imported under another contract from Germany. Separate importation under a separate contract from a separate country would not justify treatment of the two consignments as one article, when the goods are not specified 493 in the Tariff as one article. Therefore, he does not see any reason to revise the Assistant Collector 's order concerning the demands. " The appellants thereupon preferred a revision application to the Government of India, but by a short and pithy order dated 23rd September, 1967, the Government of India rejected the revision application stating that they had carefully considered the revision application B but saw no reason to interfere with the order passed by the Collector. This led to the filing of the present appeal against the order of the Government of India with special leave obtained from this Court. Though the appellants, initially, when the hearing of the appeal commenced, raised two or three contentions against the validity of the order of the Government of India confirming the demand for differential duty, they ultimately pressed only one contention and that related to the category in which the pot motors imported by the appellants fell. The Assistant Collector originally assessed these pot motors to customs duty at the rate of 15 per cent of their accepted value under Item 72(3), but later, demanded differential duty from the appellants on the footing that these pot motors were really assessable at the rate of 20 per cent of their accepted value under Item 73(21) D. and this demand was confirmed by the Collector in revision and on further revision, by the Government of India. The appellant disputed the correctness of these orders and contended that the original assessment made by the Assistant Collector was proper and the demand for differential duty was unjustified, because the correct item under which those pot motors were assessable was Item 72(3), and not Item 73(21). Item 72(3), as it stood at the material time, was in the following terms: "72(3) Component parts of machinery as defined in Item Nos. 72, 72 ( 1 ) and 72 (2) and not otherwise specified, essential for the working of the machine or apparatus and have been given for that purpose some special shape or quality which would not be essential for their use for any other purpose but excluding small tools like twist drills and reamers, dies and taps, gear cutters and hacksaw blades: provided that articles which do not satisfy this condition shall also be deemed to be component parts of the machine to which they belong if they are essential to its operation and are imported with it in such quantities as may appear to the Collector of Customs to. be reasonable.", while Item 73(21) comprised "Electric motors, all sorts, and parts thereof. " The competition was between these two Items and the question is which of them covered pot motors imported by the appellant. Now, pot motors imported by the appellants were clearly component parts of Rayon Spinning machines and this was not and indeed could not be disputed on behalf of the respondents. Since Rayon Spinning machines were admittedly textile machinery as defined in Item 72(1), these pot motors were covered by the opening part of 494 Item 72(3), namely, "component parts of machinery as defined in Item Nos. 72 ( 1 ) ". Moreover, these pot motors were clearly and indubitably essential for the working of the Rayon Spinning machines and, as pointed out by the appellants in their representation dated 8th December, 1961, they were "specially designed for use in spinning frames for manufacturing rayon thread" and for the purpose, they were given special shape and quality which was not only not essential for their use for any other purpose but actually rendered them incapable of being used for any other purpose. This position, as pointed out by the appellants in their representation dated 8th December, 1961, was not disputed either by the Assistant Collector in his communication dated 19th January, 1965 or by the Collector in his order dated 23rd December, 1965 rejecting the representation of the appellants and the Government of India also did not controvert this position in its order dated 23rd September, 1967. If the Assistant Collector or the Collector or the Government of India did not accept the facts set out in the representation of the appellants dated 8th December, 1961, we should have expected a clear statement to that effect in the orders of these authorities. The Assistant Collector maintained sphinx like silence and preferred not to give any reasons for confirming the demand for differential duty. The Collector was a little less reticent. He briefly gave a reason for confirming the orders of the Assistant Collector, but that reason had nothing to do with the nature, quality or condition of the pot motors. What it said was this, namely, that the pot motors were imported under a separate contract from Germany while the Spinning machinery excluding pot motors were imported from Japan and that did not "justify the treatment of two consignments as one article. " The Government of India also did not articulate its reasons while rejecting the revision application of the appellants, but since it confirmed the order of the Collector, we may presume that the same reason which prevailed with the Collector appealed to the Government of India. It will, therefore, be seen that at no stage was the factual position in regard to The pot motors, as set out in the representation of the appellants dated 8th December, 1971, disputed by the Assistant Collector of Customs or the Collector or the Government of India. The pot motors, therefore, clearly fell within the description given in Item 72(3), The respondents, however, leaned heavily on the words "not otherwise specified" in item 72(3) and contended that even if the pot motors were component parts of Rayon Spinning machines, they were not covered by Item 72(3), since they were otherwise specified in item 73(21). The argument of the respondents was that if any component parts of machinery were specifically dealt with in any other item, they would go out of Item 72(3) and since pot motors were electric motors within Item 73(21), they were not covered by Item 72(3). This argument is clearly unsustainable. It seeks to read the words "not otherwise specified" as qualifying "component parts" but that is plainly incorrect as a matter of both grammar and language. Structurally, the conjunction 'and ' joins the two clauses "as defined in Item Nos. 72, 72(1) and 72(2)" and "not otherwise specified" and since the former qualifies 'machinery ', the latter also must be read as 495 doing the same duty. What Item 72(3) contemplates are component parts of that machinery which is defined in Item Nos. 72, 72(1) and 72(2) and which is `not otherwise specified. The words 'not otherwise specified ' do not qualify "component parts": they qualify machinery '. Otherwise, the conjunction 'and ' would have no meaning. In fact, the sentence would become ungrammatical if the words "not otherwise specified" were read to govern "component parts". This construction also receives support from the description of the component parts which follows the words 'not otherwise specified '. This description starts with the word `namely ', which shows that it is intended to be a complete description of the component parts covered by this item and that would not contextually fit in with "component parts not otherwise specified". There can be no doubt that on a plain grammatical construction, the words "not otherwise specified" qualify "machinery" and not "component parts" and, there fore, the pot motors imported by the appellants, which satisfied the other requirements of Item 72(3) could not be held to fall outside that Item, because they were otherwise specified in Item 73(21). Item 72(3) is a specific Item which covers these pot motors as against Item 73(21)which is a general item and hence it must be held that these pot motors were assessable under Item 72(3) and not under Item 73(21). The original assessment of these pot motors made by the Assistant Collector was, in the circumstances, correct and the subsequent, demand of differential duty made by the Assistant Collector and confirmed by the Collector in revision and by the Government of India on further revision, was unjustified. The orders made by the Assistant Collector, the Collector and the Government of India confirming the demand for differential duty would, therefore, have to be quashed and set aside and the amount of differential duty recovered from the appellants pursuant to these orders would have to be refunded to the appellants. Before we part with this appeal, we must express our regret at the manner in which the Assistant Collector, the Collector and the Government of India disposed of the proceedings before them. It is incontrovertible that the proceedings before the Assistant Collector arising from the notices demanding differential duty were quasi judicial proceedings and so also were the proceedings in revision before the Collector and the Government of India. Indeed, this was not disputed by the learned counsel appearing on behalf of the respondents. It is now settled law that where an authority makes an order in exercise of a quasi judicial function it must record its reasons in support of the order it makes. Every quasi judicial order must be supported by reasons. That has been laid down by a long line of decisions of this Court ending with N. M. Desai vs The Testeels Ltd. & Anr. ( ') But, unfortunately, the Assistant Collector did not choose to give any reasons in support of the order made by him con firming the demand for differential duty. This was in plain disregard of the requirement of law. The Collector in revision did give some sort of reason but it was hardly satisfactory. He did not deal in his order with the arguments advanced by the appellants in their representa (1) C. A.245 of 1970 decided on 17th December. 496 tion dated 8th December, 1961 which were repeated in the subsequent representation dated 4th June, 1965. It is not suggested that the Collector should have made an elaborate order discussing the arguments of the appellants in the manner of a court of law. But the order of the Collector could have been a little more explicit and articulate so as to lend assurance that the case of the appellants has been properly considered by him. If courts of law are to be replaced by administrative authorities and tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative law, they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. Then alone administrative authorities and tribunals exercising quasi judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. The Government of India also failed to give any reasons in support or its order rejecting the revision application. But we may presume that in rejecting the revision application, it adopted the same reason which prevailed with the Collector. The reason given by the Collector was, as already pointed out, hardly satisfactory and it would, therefore, have been better if the Government of India had given proper and adequate reasons dealing with the arguments advanced on behalf of the appellants while rejecting the revision application. We hope and trust that in future the Customs authorities will be more careful in adjudicating upon the proceedings which come before them and pass properly reasoned orders, so that those who are affected by such orders are assured that their case has received proper consideration at the hands of the Customs authorities and the validity of the adjudication made by the Customs authorities can also be satisfactorily tested in a superior tribunal or court. In fact, it would be desirable that in cases arising under Customs and Excise laws an independent quasi judicial tribunal, like the Income tax Appellate Tribunal or the Foreign Exchange Regulation Appellate Board, is set up which would finally dispose of appeals and revision applications under these laws instead of leaving the determination of such appeals and revision applications to the Government of India. An independent quasi judicial tribunal would definitely inspire greater confidence in the public mind. We accordingly allow the appeal, set aside the orders passed by the Assistant Collector, the Collector and the Government of India demanding differential duty from the appellants and direct the Government of India to refund to the appellants the amount of differential duty recovered from the appellants in respect of the seven consignments of 4000 pot motors imported by them. The respondent will pay the costs of the appeal to the appellant. P.B.R. Appeal allowed.

Under item 72(3) of the First Schedule to the Indian Customs Tariff, component parts of machinery as defined in item nos. 72, 72(1) and 72(2) aand not otherwise specified are chargeable to customs duty. Item 73(21) comprises of "electric motors, all sorts, and parts thereof". On the strength of a licence for importing "complete continuous filament Rayon Plant with spares and accessories" certain spinning frames excluding pot motors were imported from Japan but not motors were imported from Germany by the appellants. The customs authorities accepted the claim of the appellants that the consignment of pot motors fell within item 72(3) and charged import duty accordingly. Sometime later, the Assistant Collector of Customs, claiming that customs duty on pot motors was short levied as they fell within item 73(21) called upon the appellants to pay the difference, against which the appellants made a representation to the Assistant Collector. But the Assistant Collector held against the appellants without giving any reasons. The appellants thereafter filed a representation to the Collector but he held that since the spinning frames and the pot motors were imported under separate contracts from separate countries the two consignments could not be treated as one article and hence rejected the representation. The appellants thereupon applied to the Government of India in revision but the revision application was also rejected. Allowing the appeal to this Court. ^ HELD: (1) (i) Item 72(3) is a specific item covering pot motors as against item 73(21) which is a general item. Pot motors were, therefore, assessable under the former and not under the latter. The original assessment of the Assistant Collector was correct and the subsequent demand of differential duty which was confirmed by the Collector and the Government of India was unjustified (ii) Pot motors fell within the description given in item 72(3). They were specially designed for use in spinning machines for manufacturing rayon thread. and they were indubitably essential for the working of the rayon spinning machines and were incapable of being used for any other purpose. They were, therefore, clearly component parts of the rayon spinning machines. [495 D, 494A] (2 ) The argument of the respondents that if any component parts of machinery were specifically dealt with in any other item, they would go out of item 72(3) and since pot motors were electric motors within item 72(21) they were not covered by item 72(3) was clearly unsustainable. As a matter of both grammar and language the words "not otherwise specified" cannot be read as qualifying "component parts". They qualify "machinery". Otherwise the conjunction "and" would have no meaning. The sentence would become ungrammatical if the words "not otherwise specified" were read to govern "component parts". The description of the component parts which follows the words "not otherwise specified" starts with the words "namely" which shows that it is intended to be a complete description of the component parts covered 490 by this item and that would also not actually fit in with component parts "not otherwise specified". Therefore, pot motors could not be held to fall outside that item because they were otherwise specified in item 73(21). [494H] (3)(a) Where an authority makes an order in exercise of a quasi judicial function it must record its reasons in support of the order it makes. Every quasi judicial order must be supported by reasons. [495G] M. M. Desai vs The Testeels Ltd. & Anr. CA 245 of 1976, decided on 17th Dec. 1975, referred to. (b) If courts of law were to be replaced by administrative authorities and tribunals and with the proliferation of administrative law, they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. The rule requiring reasons to be given in support of an order is like the principal of audi alteram partem, a basic principle of natural justice which must inform every quasi judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. [496B D] In the instant case the Assistant Collector did not give any reasons in support of his order which was in plain disregard of the requirement of law. The reason given by the Collector was hardly satisfactory. His order could have been a little more explicit and articulate so as to lend assurance that the case had been properly considered by him. The Government of India too failed to give any reasons in support of its order rejecting the revision application. [496 H] [The Court expressed the view that it would be desirable that in cases arising under customs and excise laws an independent quasi judicial tribunal is set up which would finally dispose of the appeals and revision applications under these laws instead of leaving the determination of such appeals to the Government of India. An independent quasi judicial tribunal would inspire greater confidence in the public mind.] [496F]

Civil Appeal No. 503 of 1974. From the Judgement and order dated 29/30.8.1973 of the Gujarat High Court in Special Civil Application No. 129 of 1973. Joseph Vellapally and D.N. Mishra for the Appellants. R.N. Sachthey, Anip Sachthey and Ms. Rashmi Dhariwal for the Respondents. 393 The Judgement of the Court was delivered by R.M. SAHAI, J. Validity of demand, under Section 58A of the Bombay Prohibition Act, for maintenance of excise staff for supervision of the manufacture of industrial alcohol was assailed on lack of legiislative competence of the State. Section 58A is extracted below: "58A: The State Government may by general or special order direct that the manufacture, import, export, transport, storage, sale, purchase, use, collection or cultivation of any intoxitant, denatured spirituous preparations, hemp, Mowra flowers, or molasses shall be under the supervision of such Prohibition and Excise or Police Staff as it may deem proper to appoint, and that the cost of such staff shall be paid to the State Govt. by person manufacturing, importing, exporting, transporting, storing, selling, purchasing, using, collecting or cultivating the intoxicant, denatured spirituous preparation, hemp, Mowra flowers or molasses: "Provided that the State Government may exempt any class of persons or institutions from paying the whole or any part of the cost of such staff". Rule 2 of Bombay Prohibition (Manufacture of Spirit) (Gujarat) Rules, 1963, framed by the State of Gujarat empowered the director to grant a licence for working of the distillery for the manufacture of the spirit. Condition Nos.2 and 3 of the licence issued provided for employment of excise staff for supervision of the operations of manufacture and storage of spirit as well as for payment of salary and allowances to staff so posted. Attack was not on power to supervise or even the right to post staff for supervision but on demand of cost of maintenance of such personnel. Levy was upheld, by the High Court, as fee under entry 8 of List II of the VIIth Schedule read with entry 66 of the same list. In Synthetics & Chemicals Ltd. & Ors. vs State of U.P. & Ors. , ; a Constitution Bench after exhaustively reviewing the constitutional entries and various decisions held that industrial alcohol being unfit for human consumption as no levy on it could be made by a State either under Entry 51 or Entry 8 of List II of VIIth Schedule. Nor such levy could be justified on doctrine of privilege or police power. Therefore it was urged that the order of High Court was liable to be set aside and the provision was liable to be struck down as ultra vires. Such understanding of the judgement is not warranted. The Constitu 394 tion Bench while distinguishing between potable and non potable alcohol and holding that the State had no privilege in it upheld the power of State to regulate and ensure that non potable alcohol was not diverted and misued. According to learned counsel since the entire judgment of the High Court proceeded on privilege theory it cannot withstand the principle laid down in Synthetic & Chemical 's case. Levy as a fee under Entry 8 of List II of VIIth Schedule or excise duty under Entry 51 are different than cost of supervision charged under Section 58A. The former has to stand the test of levy being in accordance with law on power derived from one of the constitutional entries. Since Synthetic & Chemical 's case finally brought down the curtain in respect of industrial alcohol by taking it out of the purview of either Entry 8 or 51 of List II of VIIth Schedule of the competency of the State to frame any legislation to levy any tax or duty is excluded. But by that a provision enacted by the State for supervision which is squarely covered under Entry 33 of the concurrent list which deals with production, supply and distribution which includes regulation cannot be assailed. The Bench in Synthetic & Chemical 's case made it clear that even though the power to levy tax or duty on industrial alcohol vested in the Central Government the State was still left with power to lay down regulations to ensure that non potable alcohol,that is, industrial alcohol, was not diverted and misused as substitute for potable alcohol. This is enough to justify a provision like 58A. In paragraph 88 of the decision it was observed that in respect of industrial alcohol the States were not authorised to impose the impost as they have purported to do in that case but that did not effect any imposition of fee where there were circumstances to establish that there was quid pro quo for the fee nor it will affect any regulatory measure. This completely demolishes the argument on behalf of appellant. Principle of occupied field precluded State from trenching on any power which was already covered by central legislation. But in absence of any provision in Industries (Development & Regulation) Act touching upon regulation or ensuring that industrial alcohol was not diverted the state was competent to legislate on it under Entry 3 List III of VIIth Schedule which is extracted below, "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 Union is declared by Parliament by Law to be 395 expedient in the public interest, and imported goods of the same kind as such products. (b). . . . . (c). . . . . (d). . . . . (e). . . . . Trade and commerce and supply and distribution of goods are exclusive state subjects under entry 26 and 27 of List II of VIIth Schedule. But both are subject to entry 33 of List III. That is what is covered in entry 33 is excluded from list II. And the power to legislate in respect of what is covered by list III is enjoyed both by Central and State subject to Article 246 of the Constitution. Since 58A can be traced to regulatory power of the State exercisable under entry 33 the challenge to its validity is liable to fail. It could not therefore be successfully claimed that it was violative of any constitutional provision or the section was invalid in view of the ratio in Synthetic & Chemicals ' case. Failing on the principal submission the learned counsel urged that no cost for supervision could be demanded unless the power to issue licence for production was found to exist in State. Reliance was placed on observations in Synthetic & Chemical 's case. Since it stands answered by the constitution Bench itself it is unnecessary to dilate on it. Suffice it is to extract the following observation, "The position with regard to the control of alcohol industry has undergone material and significant change after the amendement of 1956 to the IDR Act. After the amendment, the State is left with only the following powers to legislate in respect of alcohol: (a). . . . . . (b) It may lay down regulations to ensure that non potable alcohol is not diverted and misued as a substitute for potable alcohol. (c). . . . . . (d) However, in case State is rendering any service, as distinct from its claim of so called grant of privilege, it may charge fees based on quid pro quo". Feeble attempt was made to challenge absence of any quid pro quo. But no serious effort was made in High Court is clear from following observation. : 396 "If any quid pro quo is to be established between the quantum of the levy and the services rendered it must be established between the actual cost of supervision paid by a manufacturer or a businessman and the quantum of profits made by him by lawfully carrying on his business into a prohibited commodity. We have no doubt in our mind that the annual payment of a few thousand rupees by way of cost of supervision under Section 58A brings to each of the three petitioners profits which must be quite disproportionate in size. We need not go into the details of this aspect because it has not been contended before us that if the levy under Section 58A is held to be a fee, there is no sufficient quid pro quo between the quantum of the impost and the services rendered to the manufacturer or businessman. " In the result, this appeal fails and is dismissed with costs. G.N. Appeal dismissed.

Rule 2 of the Bombay Prohibition (Manufacture of Spirit) (Gujarat) Rules, 1963, framed by the State Government in exercise of powers conferred under Section 58A of the Bombay Prohibition Act, dealt with grant of licence for working of distillery for the manufacture of spirit. One of the conditions for grant of licence was that the cost of maintenance of staff, viz. payment of salary and allowances, was to be paid to the Government by the licensees. This was challenged by the appellant and the High Court upheld the levy as being within the legislative competence of the State. Aggrieved against the High Court 's order, the appellant has preferred the present appeal. The appellants contended that since the judgement appealed against proceeded on privilege theory, it cannot withstand the principle laid down in Synthetic & Chemicals, case; and that levy as a fee under Entry 8 of list II of Seventh Schedule or excise duty under Entry 51 is different than the cost of supervision charged under Section 58A of the Bombay Prohibition Act. Dismissing the appeal, this Court, 392 HELD: 1.1 Even though the power to levy tax or duty on industrial alcohol is vested in the Central Government, the State was till left with power to lay down regulations to ensure that non potable alcohol, that is, industrial alcohol, was not diverted and misused as substitute for potable alcohol. This is enough to justify a provision like 58A of the Bombay Prohibition Act. [394 D] 1.2 Principle of occupied field precluded State from trenching on any power which was already covered by Central legislation. But in absence of any provision in Industries (Development & Regulation) Act touching upon regulation or ensuring that industrial alcohol was not divered, the State was competent to legislate on it under Entry 33 list III of VII Schedule. [394 F G] 1.3 Trade and commerce and supply and distribution of goods are exclusive state subject under entries 26 and 27 of List II of VII Schedule. But both are subject to entry 33 of List III. What is covered in entry 33 is excluded from List II. And the power to legislate in respect of what is covered by List III is enjoyed both by Central and State legislatures subject to Article 246 of the Constitution. Since section 58A can be traced to regulatory power of the State exercisable under entry 33 of List III the challenge to its validity is liable to fail. Thus, Section 58A of the Bomaby Prohibition Act is valid and is not violative of any constitutional provision. [395 B C]. 1.4 It cannot be said that no cost for supervision could be demanded unless the power to issue licence for production was found to exist in State. [395 d] Synthetics & Chemicals Ltd. & Ors., vs State of U.P & Ors. ; , followed.

Appeal No. 437 of 1965. 479 Appeal from the judgment and order dated April 15, 1964 of the Madhya Pradesh High Court in Misc. Petition No. 90 of 1964. M. section Gupta, for the appellant. G. section Pathak, Y. section Dharmadhikari and A. G. Ratnaparkhi, for respondent No. 1. The Judgment of the Court was delivered by Hidayatullah, J. This appeal arises from an election petition filed after the last General Election to the Madhya Pradesh Legislative Assembly, in respect of the election from the Kasdol Legislative Assembly constituency held on May 4, 1963. The first respondent was declared elected and the appellant challenged his election alleging several acts of corrupt practices, publication of false statements, filing of false accounts etc. The election petition was supported by an affidavit sworn before K. section Moghe, Officer for Administering Oaths on Affidavits, Jabalpur. Moghe was the Clerk of Court in the District Court, Jabalpur. The first respondent objected that the affidavit was not sworn before the proper authority as required by rule 94 A of the Conduct of Election Rules, 1961, and it was, therefore, prayed that the election petition should be dismissed or the allegations about corrupt practices should be struck out. The Election Tribunal, by an order dated October 31, 1963 accepted the objection but allowed the filing of a proper affidavit and a fresh affidavit was taken on record. No action was taken against that order. It appears that the Election Tribunal had framed two issues for determination. They were: "Issue No. 18 : Whether the affidavit filed by the petitioner in support of his petition is bad in law, as not properly sworn before a competent Officer duly authorised to attest and authenticate an affidavit and does not also comply with the provisions of Section 83 of the Representation of the People Act and the Rules made thereunder. If so, whether the petition is liable to be dismissed on this ground." "Issue No. 20 : Whether the various alleged acts of corrupt practices mentioned in the petition are duly supported by an affidavit as required under Section 81(3) of the Representation of People Act ? If not, what is its effect on this petition?" 480 On February 14, 1964 the first respondent filed an application drawing attention to the latter part of issue No. 20 and asked inter alia for a finding whether the election petition was not liable to be dismissed when the affidavit was not proper The Tribunal by an order passed on February 24, 1964 rejected the last contention and held that as a fresh affidavit was filed the petition could proceed to trial. On March 2, 1964 the first respondent filed a petition under Articles 226 and 227 of the Constitution in the High Court of Madhya Pradesh challenging both the orders and asked that they be quashed. The High Court, by its order now under appeal by certificate, quashed the two orders and the Tribunal was directed to deal further with the petition in the light of the order of the High Court. The High Court in an elaborate order has considered whether the provisions of rule 94 A were mandatory or directory but it did not address itself to the question whether the first affidavit was proper or not. This was, perhaps, due to the fact that the appellant seems to have conceded before the Tribunal that the first affidavit was not proper. This concession was sought to be withdrawn in this appeal by the appellant and on looking into the record we were satisfied that the concession was wrongly made and should be allowed to be withdrawn. We accordingly heard arguments on the question whether the original affidavit did not satisfy the Conduct of Election Rules and the Representation of the People Act. We are satisfied that the first affidavit was proper and the second affidavit was not necessary. Before we give our decision on this point we shall first set down the relevant provisions. Section 83 of the Representation of People Act provided that "83 (1) an election petition (a) Shall contain a concise statement of the material facts on which the petitioner relies; (b) Shall set forth full particulars of any corrupt practice that the petitioner alleges, including as full a statement as possible of the names of the parties alleged to have committed such corrupt practice and the date and place of the commission of such practice; and 481 (c) Shall be signed by the petitioner and verified in the manner laid down in the Code of Civil Procedure, 1908 (5 of 1908) for the verification of pleadings. "Provided that where the petitioner alleges any corrupt practice, the petition shall also be accompanied by an affidavit in the prescribed form in support of the allegation of such corrupt practice and the particulars thereof. (2) Any schedule or annexure to the petition shall also be signed by the petitioner and verified in the same manner as the petition. " Rule 94 A of the Conduct of Election Rules, 1961 next provides: "94 A. The affidavit referred to in the, proviso to Sub section (1) of Section 83 shall be sworn before a Magistrate of the First Class or a Notary or a Commissioner of Oaths and shall be in Form 25. " Form 25 need not be reproduced but the endorsement of the officer before whom the affidavit is sworn may be reproduced "Form 25. Solemnly affirmed/sworn by Shri/Shrimati . . at. thisday. of 196 Before me. .Magistrate. .of. First Class Notary/Commissioner of Oaths". The relevant rules of the High Court and the notifications issued by the Government have been placed in our hands. 'Me High Court has framed Rules relating to the Civil Procedure Code and rule 20 dealing with affidavits reads : "20. All Courts dealing with affidavits should make calls for affidavits at I I a.m. and 2 p.m. every day. If ,the Clerk of Court or other ministerial officer is appointed a Commissioner for administering oath of affidavits, he will discharge that function at such time as may be fixed by the District Judge in this behalf." 482 Rule 34 says : "34. The Officer administering the oath shall make the following endorsement on every affidavit sworn before him and shall date, sign and seal the same. "Sworn before me on the day of . . 19 by son of . . who is personally known to me (or) who has been identified by whose signature is/signatures are hereto appended. SEAL Signature Designation". The affidavit which was sworn before Moghe bore the above endorsement and Moghe described himself as "Officer for Administering Oaths on Affidavits, Jabalpur, Madhya Pradesh". On February 16, 1959 the Government of Madhya Pradesh had issued a notification under District Judges were empowered under section 139(c) of the Code of Civil Procedure to appoint Commissioners to administer oaths on affidavits made under the said Code and the District Judge, Jabalpur in exercise of the powers so conferred appointed, among others, the Clerk of Court attached to his office to be ex Officio Commissioner for the purpose of administration of oaths on affidavits made under the Code of Civil Procedure. It may be pointed out that subsequently in May 1960 the first notification was amended and in place of the words in the first notification "empowers all the District Judges to appoint Commissioners to administer oaths on affidavit made the words "generally empowers the Court of District Judges to appoint officers to administer oaths to deponents in cases of affidavits" where substituted. This change does not affect the present matter because the appointment of Moghe was tinder the first notification and not under the second. The contention of the first respondent is that the affidavit did not comply with the requirements of rule 94 A because Moghe was not a Commissioner of Oaths but was an officer for Administration of Oaths for the purpose of section 139(c) of the Code. We shall refer to that provision presently. The rule does not state before which Commissioner the affi davit must be sworn. It must, therefore, be read as including all Commissioners of Oaths duly appointed. The election petition is verified as a plaint but the affidavit is needed additionally 483 when allegations of a particular type are made. The rule really requires an affidavit so that action for perjury may be based on it if the allegation is found to be false. We enquired whether, in the State of Madhya Pradesh, there was any other provision under which Commissioners of Oaths could be appointed but none was shown. The Indian Oaths Act, no doubt, consolidates the law relating to judicial oaths and for other purposes. Section 4 of that Act gives authority to "all courts and persons having by law or consent of parties authority to receive evidence", "to administer, by themselves or by an officer empowered by them in this behalf, oaths and affirmations in discharge of the duties or in exercise of the powers imposed or conferred upon them respectively by law. " This is a general provision and it mentions generally persons having by law authority to receive evidence. It is difficult to say that the Clerk of Court answers this description. But there are other provisions of law under which oaths may be administered for purposes of affidavits. Section 139 of the Code of Civil Procedure, under which the Clerk of Court was given this jurisdiction, provides : "139. Oath on affidavit by whom to be administered. In the case of any affidavit under this Code (a) any Court or Magistrate, or (b) any officer or other person whom a High Court may appoint in this behalf, or (c) any officer appointed by any other Court which the Provincial Government has generally or specially empowered in this behalf, may administer the oath to the deponent". Similarly, section 539 of the Code of Criminal Procedure provides. Courts and persons before whom affidavits may be sworn. Affidavits and affirmations to be used before any High Court or any officer of such Court may be sworn and affirmed before such Court or the Clerk of the State, or any Commissioner or other person appointed by such Court for that purpose, or any Judge, or any Commissioner for taking affidavits in any Court of Record in India, or any Commissioner to administer oaths in England or Ireland, or any Magistrate authorized to take affidavits or affirmations in Scotland. " 484 It is therefore not necessary that an appointment with reference to the Oaths Act had to be made. The Clerk of Court was appointed a Commissioner of Oaths under section 139(c) quoted above. It is contended that the powers of such a Commissioner were to administer oaths for purposes of affidavits under the Code of Civil Procedure and this meant Or. XIX of the Code. It is pointed out that none of the conditions under which the affidavit is required under that Order applies here. It is argued that Commissioners appointed under one statute cannot swear affidavits prescribed under another statute, and section 539 of the Code of Criminal Procedure is also cited as an instance. This may be so. It may be that an affidavit sworn by a District Clerk of Court may not be good for the purposes of the Code of Criminal Procedure and vice versa but that is because the restriction is to be found in section 139 of the one ,Code and section 539 of the other. Rule 94 A makes no such condition and makes receivable an affidavit sworn before a Commissioner of Oaths without specifying of what kind. In this view of the matter the affidavit sworn before the District Clerk of Court, who undoubtedly is a Commissioner of Oaths can only be excluded by taking an extreme and technical view which, in our ,opinion, is not justified. The appeal must therefore succeed on this short ground and it is not necessary to discuss whether the rule is mandatory or directory for, in any event, its requirements have been met. The appeal is allowed but as the appellant had earlier conceded the point on which the appeal succeeds, there shall be no order about costs. The case will now go back to Tribunal for decision on merits. Appeal allowed.

An election petition was filed by the appellant against the first respondent challenging his election on May 4, 1963 to the Madhya Pradesh Legislative Assembly. A number of allegations including those of corrupt practice were made against the first respondent in the petition. The affidavit filed in support of the allegations of corrupt practice as required by Rule 94A of the Conduct of Election Rules, 1961, was sworn by the petitioner before the Clerk of Court in the District Court of Jabalpur. The first respondent in his objections before the Election Tribunal raised the question whether the affidavit under Rule 94A was sworn before a proper authority. The Election Tribunal accepted the objection but allowed the appellant to file a second affidavit sworn before a proper authority. The orders of the Tribunal were challenged by the first respondent before the High Court under article 226 and article 227 of the Constitution and the High Court, holding that the fresh affidavit could not be called and that there was no proper affidavit, quashed the orders of the Tribunal and directed the Tribunal to pass an order according to law. The appellant appealed to this Court on certificate of fitness granted by the High Court. Although the appellant had conceded before the High Court that his first affidavit was not proper he was allowed to withdraw his concession in this Court. It was contended on behalf of the appellant that the clerk of Court before whom his first affidavit bad been sworn had been duly appointed ex officio Commissioner of Oaths under section 139(c) of the Code of Civil Procedure and an affidavit sworn before him complied with r. 94A. The respondent however contended that a Commissioner of Oaths appointed under section 139(c) was for the purpose of affidavits under the Civil Procedure Code only, just as a Commissioner appointed under section 539 of the Criminal Procedure Code could swear affidavit under that Code only. HELD : There is no analogy between an affidavit sworn under section 539 Cr. P. C. and the affidavit sworn here. An affidavit sworn by a district Clerk of Court may not be good for the purpose of the Code of Criminal Procedure and vice versa but that is because the restriction is to be formed in section 139 of the one Code and section 539 of the other. Rule 94A makes no such condition and makes receivable an affidavit before a Commissioner of Oaths without specifying of what kind. In this view of the matter the affidavit sworn before the District Clerk of Court who undoubtedly was a Commissioner of Oath could only be excluded by taking an extreme and technical view which was not justified. [484 B D]

Civil Appeal No. 3023 of 1980. Appeal by Special leave from the Judgment and Order dated the 21st August, 1980 of the Kerala High Court in M.F.A. No. 409 of 1979. F.S.Nariman, A.N.Haksar, T.Raghvan, R.F.Nariman, V.A.Bobde & K.R.Nambiar, for the Appellant. G.B.Pai, P.K.Kumar, A.K.Sharma, Ashok Mathur and Parveen Kumar for the Respondent. The Judgment of the Court was delivered by DESAI, J. In this appeal by special leave a very interesting question in the field of law of arbitration which honest man dread more than the dreaded law suits ' arises for our consideration. First respondent Cochin Shipyard Limited ( 'respondent ' for short) invited tenders for construction of Building Dock at Cochin. As there was only one tender that of Tarapore & Company, the appellant, the respondent called fresh tenders somewhere in July, 1971. In December, 1971, the respondent invited tenders for construction of a Repair Dock also at Cochin. There were two tenders for Building Dock, namely, one of the appellant and one by M/s National Building Construction Corporation, a Government of India undertaking, the value of the tender of the latter being double that of the appellant. For the construction of the Repair Dock, the only tender was of the appellant. In view of the limited number of tenders received, the appellant was invited to negotiate the terms of tender. The value of the works to be executed was over Rs. 24 crores. In view of the huge investment in the project, the tenders were examined by a committee called the Tender Committee constituted in accordance with the approval of the Ministry of Shipping and Transport for examining and evaluating the tenders received for the Building Dock and the Repair Dock. The Tender Committee taking note of the poor response to the invitation to tender and costly affair decided to accept the tender of the appellant inter alia for the reasons (i) that works of such complexity and magnitude have not been undertaken before by any Indian contractor, (ii) that the plant and equipment required for the work are not available indigenously, (iii) that if the contractor is to procure the 124 specialised equipment required for this work, there is hardly any assurance that after these works are over, he would find any substantial use for the same, (iv) that excavation and subsequent construction involve de watering which introduces considerable amount of uncertainty and that during the discussions, the apprehension of the tenders of this kind was voiced and noticed by the Committee, (v) that RCC Piling also requires highly skilled and complex technical operations and it involves a large element of risk and uncertainty in the work. Both the tenders of the appellant were accepted, and contracts were entered into between the parties. Both the parties while entering into contracts were aware and conscious of the fact that equipment and technical know how would have to be imported involving a huge outlay of foreign exchange. Appellant contractor quoted rates on two alternative basis depending upon whether it had to import equipment and know how at its cost involving Rs. 2 crores in foreign exchange or the equipment and know how were to be imported by the respondent at its cost and made available for use of the appellant in which case the appellant would be liable to pay hire charges for the pile driving plant at the rate of Rs. 23/ per metre of 600 mm dia. RCC cast in situ pipe and Rs. 16/ per metre of 500 mm dia. RCC cast in situ pipe and at the rate of 300 per tonne of steel sheet piles driven to be recovered from the running bills payable to the appellant contractor. The appellant was given to understand by a note in the invitation to tender that foreign exchange in yen credit to the tune of Rs. 38 lacs is earmarked for the purchase of construction equipment, accessories etc. from Japan for works of Building Dock, Repair Dock, the three Quays etc. On January 24,1973, work order for Building Dock and Repair Dock was issued by the respondent in favour of appellant and in this work order as recommended by the Tender Committee, the respondent adopted the alternative B as set out in the tender, namely, that the contractor was to procure the equipment and know how at a cost of about Rs. 2 crores in foreign exchange. In order to make this aspect specific, additional condition No. 31 was incorporated in the works order in order to provide for the expense to be incurred and the amount of foreign exchange needed for importing equipment and technical know how, relevant portion of which reads as under: "Requisite foreign exchange, for importing piling plant and machinery, spares, technical know how and hiring of experts necessary for both the Dock Works vide Work Order No. 13019/1/71 W II dated January 24,1973 for Building 125 Dock etc. and Work Order No. 13012/15/71 W II dated January 24, 1973 for Repair Dock etc, amounting to about Rs. 2.00 crores in all will be made available to the contractor from the 11th Yen Credit subject to his getting indigenous clearance and providing detailed justification. The details of such procurement shall be furnished by the Contractor as soon as they are finalised. " In view of the huge investment, it was agreed that the respondent would make an advance payment of 75% of the value of old machinery and 90% of the value of new machinery brought to site by the Contractor and in order to secure this advance payment, equipment would be hypothecated by the Contractor to the respondent and the advance payment were to carry interest at 9.1/2% p.a. on the outstanding balance of advance. The mode of recovery was also specified. The formal contract was signed on January 29,1973 which included an arbitration clause to which we would turn a little later. It so happened that the required pile driving equipment including the technical know how against 11th Japanese Yen credit were not available. The respondent also made inquires in this behalf but without success. Ultimately, International Foundation Group, Holland agreed to provide the rate of equipment conforming more or less to the same specification for which clearance was sought and received from the Government of India. After the respondent certified that the equipment and know how offered by International Foundation Group. Holland conform to the earlier clearance and that the same equipment being not indigenously available or against 11th Japanese Yen Credit, the respondent requested the Government of India to give necessary clearance to the appellant to import the equipment. This approval was received on September 1, 1973 and the foreign exchange to the extent of Rs. 211.80 lakhs equal to 9,442.700. Dutch Florins was released in favour of the appellant. The entire imported equipment was received in four consignments between March/July 1974. During the intervening period, there were variations in the rate of exchange and therefore the foreign exchange cost of equipment alone in terms of rupees worked out at Rs. 177.50 lakhs and of the technical know how fees payable in 11 instalments worked out at Rs. 105 lakhs. The custom duty went up by Rs. 21 lakhs as a consequence of the increase in rupee value of the imported equipment in terms of Dutch Florin. 126 The appellant made a tentative claim in the amount of Rs. 61.27 lakhs from the respondent on account of increase in cost of pile driving equipment and technical know how fees on the ground that the contractor was entitled to be compensated by the respondent for the same. In the letter dated May 28,1975, the appellant has stated that the 'tendered rates were based on certain total cost of machines which has since gone up considerably rendering the rates no longer workable. The appellant had provided for a cost of 150 lakhs of rupees for the equipment and the life of the equipment was taken as 12,000 hours and its probable period of engagement on this job was taken as 8,000 hours. On this basis two thirds of the cost of the equipment will be written off by way of depreciation on this job. ' It was also stated that there is an increase in the fees for the technical know how. The letter concluded by saying that the loss sustained by the appellant upto May 15,1975 on account of variation in the rate of foreign exchange was Rs. 61,27,317 and requested the respondent to compensate the loss atleast upto the tune of Rs. 45 lakhs which is approximately 75% of the loss suffered by the contractor in this behalf. The respondent responded to this letter as per its letter dated July 2,1975 saying that the letter dated July 14,1972 of the appellant which forms part of the contract documents clearly recites that the total foreign exchange required by the contractor for the equipment, spares, technical know how and hiring of experts, was expected to be about Rs. 2 crores and that the expenditure incurred by the contractor in this behalf so far has been less than Rs. 2 crores and in the circumstances it was found difficult to accept the position that the tender was based on the assumptions indicated in the letter under reply and that the rates for the pile driving should for the future be revised. There ensued further correspondence between the parties. Ultimately, the appellant by its letter dated March 1,1976 informed the respondent that its claim for compensation for increase in the cost of imported pile driving equipment and technical know how fees has not been entertained for over a year. It was further stated that inasmuch as the dispute has thus arisen between us regarding the above claim, we are invoking the provisions for arbitration in our contracts and referring this dispute to arbitration. ' On March 17,1976 Chief Engineer of the respondent replied saying that the matter as set out in the letter dated March 1, 1976, invoking arbitration clause is receiving their immediate attention and the appellant will hear shortly in this behalf. On March 29,1976, the respondent wrote to the appellant denying the claim for compensation of the appellant. Simultaneously the respondent framed three points 127 covering the dispute so raised for reference to and decision by the arbitrator. The letter also sets out as required by Clause 40 a panel of three names from which anyone can be chosen by the appellant as the sole arbitrator. The appellant by its letter dated April 19,1976 while refuting the contention of the respondent that the dispute would not be covered by Clause 40 i.e. arbitration clause in the contract, stated that the proper course would be to refer the dispute that has arisen between the parties to the decision of the arbitrator and not any particular issue or issues. Ultimately from amongst the three names indicated by the respondent the appellant selected Shri C. Srinivasa Rao, Chief Bridge Engineer, Southern Railway, Madras to be the Sole Arbitrator to decide the dispute. On receipt of this letter the respondent referred the dispute to Shri C. Srinivasa Rao as Sole Arbitrator. While referring the dispute to the sole arbitration of Shri C. Srinivasa Rao, the respondent retained the three points of reference set out in the letter dated March 29,1976 but added one more. The Arbitrator entered upon the reference on June 2,1976. On being called upon by the Arbitrator, the appellant filed its statement of claim on June 19,1976. The appellant claimed Rs. 2,03,47,266 as per the Schedule to the Statement of Claim on account of increase in the cost of equipment and technical know how fees. The respondent filed its reply to the Statement of Claim on July 19,1976. The points/disputes referred by the parties to the sole arbitrator read as under: "1. Does the claim of Messrs. Tarapore & Co. on Cochin Shipyard Ltd., for compensation for increase in the cost of imported pile driving equipment and technical know how fees referred to in clauses (2) and (3) hereunder fall within the purview of the first paragraph of Clause 40 of the General Conditions of Contract entered into between the two parties? 2. If the answer to (1) above is in the affirmative, in terms of the provisions of the contract are Messrs. Tarapore & Co. entitled to compensation for increase in the cost of imported pile driving equipment and technical know how fees to be paid to them by Cochin Shipyard Ltd.? If so, what is the amount ? 128 3. The dispute that has arisen between Messrs. Tarapore & Co., and Cochin Shipyard Ltd. regarding the claim of M/s. Tarapore & Co., for compensation for increase in the cost of the imported pile driving equipment and the technical know how fees. "Costs" Parties appeared before the Arbitrator through their respective counsel. The Arbitrator gave its Award on July 6,1977. On Point No. 1, the Arbitrator held as under: "The claim of Messrs. Tarapore and Company on Cochin Shipyard Limited for compensation for increase in the cost of imported pile driving equipment and technical know how fees falls within the purview of the first paragraph of Clause 40 of the General Conditions of Contract entered into between the parties. " On Point No. 2, the Arbitrator held that the appellant Messrs. Tarapore and Company are entitled to compensation by the Cochin Shipyard Limited for the increase in the cost of imported pile driving equipment and the technical know how fees by a sum of Rs. 99 lakhs only which amount shall be payable with interest at 9.1/2% per annum from this date till date of payment or decree, whichever is earlier '. On Point No. 3, the decision recorded was 'that it is covered by the decision on Points (1) and (2) '. On Point No. 4, on the question of costs, the Arbitrator having determined his fees and incidental expenses directed both the parties to bear the same equally. The Award was typed on a stamp paper of the value of Rs. 150/ at Madras. By his letter dated Nil July, 1977, the Sole Arbitrator forwarded the award to both the parties. The appellant moved a petition under Secs. 14 and 17 of the in the Court of the Subordinate Judge, Ernakulam for filing the award and for making it a rule of the court. On October 7,1977 the respondent moved O.P. 81 of 1977 being a combined petition under Secs. 30 and 33 of the before the Subordinate Judge, Ernakulam praying for setting aside the award. The prayer for setting aside the award was founded on two grounds; (1) that the award is insufficiently stamped and (2) that the Arbitrator has exceeded his jurisdiction by misconstruing Clause 40 129 of the General Conditions of Contract (Arbitration clause for short). The learned Subordinate Judge noted the fact that the award was originally engrossed on a stamp paper of Rs. 150/ but before filing the award in the court on August 4,1977, the Arbitrator on August 1,1977 affixed additional stamp of Rs. 14,722.50 p. which would be the requisite stamp under article 12 read with article 14 of the Kerala Stamp Act. The learned Subordinate Judge accordingly negatived the contention of the respondent that the award was insufficiently stamped. On the second point, the learned Judge held that the respondent having submitted the question whether the dispute raised by the appellant was covered by the arbitration clause cannot be permitted to controvert the jurisdiction of the Arbitrator to decide this dispute and accordingly, negatived the contention of the respondent. The learned Judge after modifying the award of the Arbitrator in the matter of interest from 9.1/2% as awarded by the Arbitrator to 6% granted the application of the applicant and made the award a rule of the court. The respondent preferred M.F.A. 409 of 1979 in the High Court of Kerala at Ernakulam. A Division Bench of the High Court agreed with the learned Subordinate Judge on the question of insufficiency of stamp. The Division Bench however, after expressing its displeasure about not making a reasoned award by the Arbitrator proceeded to examine the contention whether the arbitration clause covers the dispute. The court held that the question whether the dispute is arbitrable or not cannot be finally decided by the arbitrator because it is a matter relating to his jurisdiction. It was further held that the arbitrator cannot by an erroneous interpretation or construction of the clause confer jurisdiction on himself and the court can go into the question whether the matter in dispute between the parties is covered by the arbitration clause. The specific contention on behalf of the appellant that once a specific question of law is referred to the arbitrator, the parties are bound by the decision of the arbitrator was negatived by the High Court and it was held that as the respondent has joined arbitration under protest, it was not estopped from contesting the question and the award is not binding on it if it can be shown that the arbitration agreement did not cover the dispute raised by the appellant. The court finally held that even though the arbitration clause was very wide, the dispute as to the compensation for increase in the cost of imported pile driving equipment and technical know how fees would 130 not be covered by the arbitration clause inter alia on the ground that by C1. 26 of the General Conditions of Contract every plant, machinery and equipment had to be provided by the contractor and any rise or escalation in the price of such equipment or machinery cannot be the subject matter of compensation by the respondent. Accordingly, the appeal of the respondent allowed and the judgment and order of the trial court making the award rule of the court was set aside. The court directed that the award be returned to the parties. Hence this appeal by the contractor by special leave. Before we advert to the rival contentions, it would be advantageous to refer to the arbitration clause being Clause 40 of the General Conditions of Tender subject to which the contract was entered into, the relevant portion of which reads as under: "Clause 40. Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the Specifications, Instructions, designs Drawings herein before mentioned and as to the quality or workmanship or materials used on the work or as to any other questions, claim, right, matter or thing whatsoever in any way arising out of or relating to the Contract, Designs, Drawings, Specifications, Estimates, Instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same, whether arising during the progress of the work or after completion or abandonment thereof shall, after written notice by either party to the contract, to the either of them, be referred to the Sole Arbitration of a person appointed by the Chief Project Officer of the Cochin Shipyard Project or the Administrative Head of the Cochin Chipyard Project at the time of such appointment by what ever designation known, from a panel of names given in Annexure II. " Over and above the extracted portion, the clause provides for the manner and method of appointing the sole arbitrator, the continuance of the work during progress of arbitration proceedings, the time and place of holding the arbitration. proceedings, the power to enlarge the period for making the award and finality to be attached to the award of the Arbitrator. 131 When the arbitration clause was invoked by the appellant, the respondent did contend that the dispute raised by the appellant was not covered by the arbitration clause. After specifying its demur, the respondent formulated the points in dispute on which the arbitration was invited to give his award. Undoubtedly, the respondent proceeded to formulate the points in dispute between the parties on which the Arbitrator was to be invited to give his award without prejudice to its right to contend that the dispute is not covered by the arbitration clause and that the appellant is not entitled to any compensation in respect of the increase in the cost of imported pile driving equipment and technical know how fees. What is the effect of referring the specific question of law to arbitration without prejudice to one 's right to contend to the contrary will be presently examined. The fact remains that on the dispute arising out of a claim for compensation on account of the increase in the cost of imported pile driving equipment and technical know how fees, the respondent agreed to refer the dispute under two specific heads to the Arbitrator. The dispute so raised have already been extracted. Briefly stated they are : (1) whether the claim for compensation would fall within the purview of the first para of the arbitration clause and (2) if it does the quantum of compensation, if any, to which the appellant would be entitled. Analysing the disputes, let it be made distinctly clear that the appellant asserted that its claim for compensation, would be governed by the arbitration clause and the same was specifically denied by the respondent saying that the claim would be beyond the purview of the arbitration clause. On these rival positions, the specific issue was framed whether the claim for compensation would fall within the purview of the first part of the arbitration clause. This was the specific dispute referred to the arbitrator inviting him specifically to decide this of dispute. If this issue specifically raises a question as to jurisdiction of the arbitrator to arbitrate upon the dispute set out in Point No. 2, it appears to have been specifically referred to the Arbitrator for his decision. Parties, therefore, agreed to submit the specific question even with regard to the scope, ambit, width and the construction of the arbitration clause so as to define its parameters and contours with a view to ascertaining whether the claim advanced by the appellant and disputed by the respondent would be covered by the arbitration clause. Whether upon its true construction the arbitration clause would include within its compass the dispute thus raised between the parties was specifically put in issue because parties were at variance about it. Appellant asserted that its claim to compensation would form the subject matter of arbitration under Clause 40 132 and the respondent contending to the contrary. While deciding this dispute, as to the scope, width and ambit of arbitration clause vis a vis the dispute raised, it is not necessary to decide whether the claim was tenable justified or had any substance in it. That would fall within the second point of reference to the arbitrator which opens with a specific clause that it needs only to be decided if the answer to the first point of reference, namely jurisdiction of the arbitrator under Clause 40 is in the affirmative meaning thereby that the dispute so raised and subsisting between the parties would be covered by the arbitration agreement. In other words, if the dispute is covered by the arbitration agreement, the arbitrator was further required to decide whether there was any substance in the claim made, and if he found some substance in the disputed claim, to ascertain what amount the appellant would be entitled to recover as and by way of compensation from the respondent. The arbitrator was thus required and called upon first to decide whether the dispute is arbitrable as falling within the width and ambit of the arbitration agreement. If the answer is in the affirmative, then alone the second point need be examined. If the answer to the first point of reference is in the negative in that if the arbitrator were of the opinion that the dispute is not arbitrable as it would not fall within the scope, width and ambit of the arbitration agreement, it would not be necessary for him to determine whether the appellant was entitled to recover anything by way of compensation. This aspect is being analysed in depth to point out that the parties specifically referred the question of construction of arbitration agreement, its width, ambit and parameters vis a vis the dispute raised so as to decide whether the dispute would fall within the purview of the arbitration agreement, in other words the jurisdiction of the arbitrator. Correspondence placed on record would unmistakably show that a specific question as to the jurisdiction of the arbitrator was specifically referred by the parties to the arbitrator. Appellant contractor by his letter dated March 1,1976 to the Chief Engineer of the respondent invited his attention to the claim for compensation for increase in cost of pile driving equipment and technical know how fees raised about a year ago and further invited his attention to the letter dated 6th October, 1975 of the respondent informing the appellant that the claim cannot be entertained. The appellant proceeded further to state as under: "In as much as a dispute has thus arisen between us regarding the above claim, we are invoking the provisions for 133 arbitration in our contracts and referring this dispute to arbitration. " The respondent by his letter dated March 17, 1976 informed the appellant that the matter raised in the letter dated March 1,1976 in the matter of compensation is receiving their immediate attention and the appellant will shortly hear from them in this connection. Thereafter the respondent by his letter dated March 29,1976 informed the appellant as under; "We have dealt with the merits of your claims in the previous correspondence on the subject and we reiterate that no amounts whatever are due to you in respect of these claims. It is also our view that such claim does not fall within the purview of Clause 40 of the General Conditions of Contract and hence does not qualify for arbitration. However, in view of your insistence and without prejudice to our position, we propose that, the following be the issues to be referred to arbitration: 1. Does the claim of M/s Tarapore & Co., on Cochin Shipyard Ltd., for compensation for increase in the cost of imported pile driving equipment and technical know how fees fall within the purview of the first para of Clause 40 of the General Conditions of Contract entered into between the two parties? 2. If the answer to 1 is in the affirmative in terms of the provisions of the concerned contract are Messrs. Tarapore & Co. entitled to compensation for increase in the cost of imported pile driving equipment and technical know how fees to be paid to them by Cochin Shipyard Ltd.? If so, what is the amount? 3. "Costs. " The respondent proceeded to notify the panel of names and invited the appellant to choose the arbitrator as agreed to between the parties and set out in clause 40. The appellant by his letter dated April 19,1976 while reasserting that the claim made by it would be covered by Clause 40 further stated that the proper course would be to refer the dispute that has arisen between the parties on 134 the matter of compensation to the decision of the arbitrator and not any particular issue or issues. It was also suggested that framing of the issues will be the function of the arbitrator after he enters upon the reference and after he has the pleadings of both the parties before him. The appellant also suggested what dispute should be referred to the arbitrator and set it out as under: "The decision of the dispute that has arisen between M/s Tarapore & Co., and the Cochin Shipyard Limited, regarding the claim of M/s Tarapore & Co., for compensation for the increase in the cost of the imported pile driving equipment and of the technical know how fees. " The appellant proceeded to suggest that Shri C. Srinivasa Rao from amongst the panel be appointed as the Sole Arbitrator. The respondent by his letter dated April 27/28, 1976 annexing three earlier letters dated March 1, 1976, March 29, 1976 and April 19, 1976 referred the four points herein before set out for the decision of the arbitrator. This correspondence would unmistakably show that while the appellant wanted a general reference about its claim, it was the respondent who now contests that no specific question of law was specifically referred to the arbitrator for his decision was specific about the points to be referred for the decision of the Arbitrator. The first point extracted hereinabove would clearly show that the specific question about the jurisdiction of the arbitrator to arbitrate upon the dispute set out in points Nos. 2, 3 and 4 was specifically referred to the arbitrator. On the first point, the arbitrator had to decide whether the claim made by the appellant and disputed by the respondent would be covered by Clause 40 i.e. the arbitration clause. In other words, the specific question referred to the Arbitrator was about his jurisdiction to arbitrate upon the disputes covered by points Nos. 2, 3 and 4, if and only if, upon a true construction of the arbitration clause that is first paragraph of Clause 40, would cover the disputed claim for compensation he can enter into the merits of the dispute and decide it. It is upon the decision on point No. 1 that the arbitrator would have jurisdiction to decide the dispute involved in points Nos. 2, 3 and 4. The first point of reference is clearly a specific question of law touching upon the jurisdiction of the arbitrator and this was framed and referred to by none other than, despite the initial objection of the petitioner, the respondent. Therefore, the respondent invited the arbitrator by the specific point of 135 reference which involves a specific question of law touching upon the jurisdiction of the arbitrator to decide the same. This becomes further clear from the fact that both the learned counsel appearing before the arbitrator submitted agreed draft issues for the decision of the arbitrator. The first issue amongst the agreed draft issues reads as under: "Does the claim of the claimant fall within the purview of the purview of the first para of Clause 40 of the General Conditions of Contract entered into between the two parties? This point was not to be incidentally decided while deciding the dispute referred to the arbitrator his jurisdiction to entertain the dispute is questioned. In fact, hereby the reference of the specific point of law touching upon the jurisdiction of the arbitrator the parties invited the arbitrator to decide this specific question. It was he who was asked by the submission or terms of reference to decide his jurisdiction first and then proceed to decide the dispute on merits. We referred to Issue No. 1 in the agreed draft issues only to buttress the conclusion that it was at the instance of the respondent that the arbitrator was called upon to decide the question of the scope, ambit and width of arbitration clause the decision on which would confer jurisdiction upon him to decide the dispute as to compensation. In this context it would be advantageous to refer to paragraphs 11 and 12 of the counter statement filed by the respondent before the arbitrator which reads as under: "11. It is submitted that the claim in question relating to the increase in the cost of machinery and equipment as also technical know how fees payable by the contractors/claimants is fully outside the purview of the contract. There is no liability on the part of the respondent to procure the machinery and equipment or technical know how required by the contractor nor was there any liability to pay any part of the cost, whether it be the original assumed cost or the increased cost. The claim thus is completely outside the purview of the contract and it is submitted, therefore, that the same does not fall within the purview of the first paragraph of Clause 40 of the General Conditions of Contract and thus not arbitrable. It is submitted that the question of arbitrability of the dispute should be decided as a preliminary point before proceeding with the other issues. " 136 The formulation of the specific question of law by the respondent along with its suggestion to decide it as a preliminary issue and becoming a party to the agreed draft issue No. 1 would conclusively establish that the specific question of law touching upon the jurisdiction of the arbitrator was referred to the arbitrator for his decision. Therefore, the conclusion is inescapable that a specific question of law touching upon the jurisdiction of the arbitrator which is indisputably a question construction of Cl. 40 and therefore a question of law was specifically referred by the parties to the arbitrator for his decision and by the terms of Clause 40 agreed to abide by his decision as final and binding. Mr. F.S. Nariman, learned counsel for the appellant urged that Sec. 16(1) (c) may permit the court to remit or set aside the award on the ground that there is an error of law apparent on the face of it, yet where a specific question of law has been referred to the arbitrator for decision, the fact that the decision is erroneous does not make the award bad on its face so as to permit its being set aside. Expanding the submission, it was urged that a decision on a question of law by an arbitrator may be given in two different and distinct situations; firstly where while deciding a dispute referred to him incidentally a question of law may arise which an arbitrator may decide in order to dispose of the reference and if in such a situation any error of law appears on the face of the award, the court can interfere with the award. But there is an altogether an independent and a distinct situation in which a question of law might arise such as where the parties to the dispute may frame the specific question of law and reflect it to the Arbitrator for his decision. In the later situation, it was urged that the decision of the Arbitrator even if erroneous would not permit the court to interfere with the award. Proceeding along it was urged that in this case a specific question of law touching upon the jurisdiction of the arbitrator was specifically referred to the Arbitrator for his decision and therefore, the decision of the Arbitrator is binding on the parties and the court cannot proceed to inquire whether upon a true construction of the arbitration clause. the dispute referred to the Arbitrator for arbitration would be covered by the arbitration clause so as to clothe the arbitrator with the jurisdiction to arbitrate upon the dispute. Mr. Pai, learned counsel for the respondent countered by saying that jurisdiction of the arbitrator cannot be left to the decision of the arbitrator so as to be binding on the parties and it is always for the court to decide whether the arbitrator has jurisdiction to decide 137 the dispute. Alternatively, it was submitted that the arbitrator cannot by a misconstruction of the arbitration agreement clothe himself with or confer upon himself the jurisdiction to decide the dispute. The court it was said has always retains to itself the jurisdiction to look at the arbitration agreement to determine its scope and ambit and if it is found that the dispute referred to the arbitrator does not fall within the arbitration agreement, the court must interfere on the ground that the award disclosed an error of law apparent on the face of it. The contention may be examined both on principle and on the precedents. Complexity of rights and obligations in national and international trade and commerce would certainly generate disputes between the parties and treated as a normal incident of commercial life and till commercial arbitration came to be recognised as a civilised way of resolving such disputes, prolix and time consuming litigation was the only method of resolving such disputes. As an alternative to court proceedings, arbitration as a method of resolving disputes by domestic tribunal constituted by the choice of parties became acceptable. The basic difference between the court proceedings and the arbitration is the choice of the tribunal. Ordinarily, all matters in which relief can be claimed from the court may become subject matter of arbitration. Now if in a law court incidental questions of law arise in the course of proceeding, the court has an obligation to decide those questions of law. But when it came to a tribunal not endowed, with the judicial power of the State but by conferment by the parties to the dispute or which acquires jurisdiction by a submission of the parties to the dispute to invite the decision by the forum of their choice and to be bound by it a question arose whether a pure question of law if at all can be referred to an arbitrator for his decision and even if he decides, can the decision be questioned on the ground that there is an error apparent on the face of the award in deciding the question. Now as stated a short while ago, a question of law may figure before an arbitrator in two ways. It may arise as an incidental point while deciding the main dispute referred to the arbitrator or in a given case parties may refer a specific question of law to the arbitrator for his decision. There is no more gainsaying the fact that a pure question of law may and can be referred to an arbitrator for his decision. Russel on the Law of Arbitration Twentieth Edition at page 22 states as under; 138 "A pure question of law may be referred to an arbitrator; and where such a question is specifically referred his award will not be set aside merely upon the ground that his decision is wrong. " In Halshury 's Laws of England Vol. 2 Para 623 4th Edition the statement of law reads as under: "If a specific question of law is submitted to the arbitrator for his decision and he decide it, the fact that the decision is erroneous does not make the award bad on its face so as to permit its being set aside; and where the question referred for arbitration is a question of construction, which is, generally speaking, a question of law, the arbitrator 's decision cannot be set aside only because the court would itself have come to a different conclusion. " With the ever widenings expansion of international trade and commerce, complex question of private International Law, effect of local laws on contracts between parties belonging to different nations are certainly bound to crop up. Arbitration has been considered a civilised way of resolving such disputes avoiding court proceedings. There is no reason why the parties should be precluded from referring a specific question of law to an arbitrator for his decision and agree to be bound by the same. This approach manifests faith of parties in the capacity of the tribunal of their choice to decide even pure a question of law. If they do so, with eyes wide open, and there is nothing to preclude the parties from doing so, then there is no reason why the court should try to impose its view of law superseding the view of the Tribunal whose decision the parties agreed to abide by. Therefore, on principle it appears distinctly clear that when a specific question of law is referred to an arbitrator for his decision including the one touching upon the jurisdiction of the arbitrator, the decision of the arbitrator would be binding on both the parties and it would not be open to any of the two parties to wriggle out of it by contending that the arbitrator cannot clutch at or confer jurisdiction upon himself by mis construing the arbitration agreement. This conclusion is borne out by a long line of decisions both Indian and foreign to which we would now turn. The earliest case to which we would refer is the decision of the 139 House of Lords in Kelanten Government vs Duff Development Co. Ltd. in which Lord Trevethin in his speech said as under: "If your Lordships should be of opinion that the award is bad in law upon its face, it should be set aside, for this is not in my view, a submission to arbitration of such a nature that, although the law is bad upon the face of the award, the decision cannot be questioned. That happens only when the submission is of a specific question of law and is such that it can be fairly construed to show that the parties intended to give up their rights to resort to the King 's courts and in lieu thereof to submit that question to the decision of a tribunal of their own." Same distinction was also brought out by Lord Parmoor when he said that 'the principle applicable where a specific question of law has been submitted to the decision of arbitration is well expressed by Channel, J., in Re King and Duveen, in which it was said that where a specific question of law is referred to an arbitrator for his decision, the award cannot be set aside on the ground of an error apparent on the face of the award because the question of law was wrongly decided. ' At a later stage, it was observed that if the court, before which it is sought to impeach the award, comes to the conclusion that the alleged error in law even if it can be maintained, arises in the decision of a question of law directly submitted to the arbitrator for his decision, then the principle stated by Channel, J., in Re. King and Duveen applies, is attracted and the parties having chosen their tribunal, and not having applied successfully to the court under either section 4 or section 19 of the Arbitration Act, 1889, are not in a position to question the award or to maintain a claim to set it aside. ' This decision is an authority of the proposition that where a question of construction is the very point referred for arbitration, then the decision of the arbitrator upon that point cannot be set aside by the court only because the court would itself have come to a different conclusion. In F.R. Absalom Ltd. vs Great Western (London) Garden Village Society Ltd. the contention was that the award was bad by reason of an error in law appearing on the face of it. The submission was 140 not before the court and a reference to the pleadings had to be made for the purpose of ascertaining whether any specific question of law was in dispute, and was referred to the arbitrator for his decision. The pleadings disclosed that the whole dispute between parties was as to the amount due to the contractor in respect of the value of the work done and of the materials on the site upto and including a certain date. In the background of this fact, Lord Warrington in his speech said that no specific question of construction arose. In order to decide whether the award was bad by reason of an error of law on the face of it, Lord Russel in his speech pointed out at page 621 that it is essential to keep the case where disputes are referred to an arbitrator in the decision of which a question of law becomes material distinct from the case in which a specific question of law has been referred to him for decision. ' Thereafter he proceeded to state: "The authorities make a clear distinction between these two cases and as they appear to me, they decide that in the former case the court can interfere if and when any error of law appears on the face of the award, but that in the latter case no such interference is possible upon the ground that it so appears that the decision upon the question of law is an erroneous one. In reaching this conclusion, the decision in Kelantan Government vs Duff Development Co. Ltd. was affirmed. On the facts, it was found that no specific question of law was referred to the arbitrator for his decision. In Durga Prasad Chamria and Anr. vs Sewkishendas Bhattar and Ors; the award was sought to be set aside inter alia on the ground that the award was bad on account of an error of law apparent on the face of it. The errors of law relied upon were; (a) the arbitrator had admitted as evidence the family settlement and the partnership arrangement of 1916, neither of which, though each related (it was said) to immoveable property, had been registered as required by the Indian Registration Act, and (b) the arbitrator ought to have held that Anardeyi 's suit was in any event barred by limitation. The Privy Council first noticed the issues settled by Panckridge. J.; amongst them were the two following: 141 "1(b) Is the agreement dated 16th November, 1916, relating to the alleged family settlement valid or admissible in evidence? (9) Is the plaintiff 's claim or any portion thereof barred by limitation?,, After these issues had been settled, the parties agreed to refer to arbitration "the outstanding matters in the suit. " In a motion for setting aside the award it was urged that there was an error of law apparent on the face of the award both with regard as to the admissibility of the alleged family settlement and about the suit of Anardeyi being barred by limitation. Rejecting the motion, the Privy Council observed as under, "However, that may be, their Lordships are satisfied that the two points of law as to which it is said the arbitrators error vitiates the award were specifically referred to him to decide and if this is so, it would be contrary to well established principles such as are laid down in re King and Duveen and F.R. Absalom Ltd. vs Great West (London) Garden Village Society Ltd., for a Court of law to interfere with the award even if the Court itself would have taken a different view of either of the points of law had they been before it. " Turning to the decisions of our Court, reference may first be made to Seth Thawardas Pherumal vs The Union of India 1. In that case, the question was whether the award was bad on account of error of law apparent on the face of it, as provided in Sec. 16(1) (c) of the Arbitration Act. Examining this contention, this Court observed as under: "This covers cases in which in error of law appears on the face of the award. But in determining what such an error is, a distinction must be drawn between cases in which a question of law is specifically referred and those in which a decision on a question of law is incidentally material (however necessary) in order to decide the question actually referred. If a question of law is specifically referred and it is evident that the parties desire to have a decision from the arbitrator about that rather then one from the Courts, then the Courts will not interfere, though even there, there is authority for the view that the courts will interfere if it is apparent that the arbitrator 142 has acted illegally in reaching his decision, that is to say, if he has decided on inadmissible evidence or on principles of construction that the law does not contenance or something of that nature. See the speech of Viscount Cave in Kelantan Government vs Duff Development Co. at page 409. But that is not a matter which arises in this case. The law about this is, in our opinion the same in England as here and the principles that govern this class of case have been reviewed at length and set out with clarity by the House of Lords in F.R. Absalom Ltd. vs Great Western (London) Garden Village Society and in Kelantan Government vs Duff Development Co. In Durga Prasad vs Sewkishendas the Privy Council applied the law expounded in Absalom 's case to India; see also Champsey Bhara & Co. vs Jivraj Balloo Spinning and Weaving Co. and Saleh Mahomed Umer Dossal vs Nathoomal Kessamal. The wider language used by Lord Macnaghten in Ghulam Jilani vs Muhammad Hassan had reference to the revisional powers of the High Court under the Civil Procedure Code and must be confined to the facts of that case where the question of law involved there, namely, limitation, was specifically referred. An arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. He is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow, and apply the law, and if he does not he can be set right by the Courts provided his error appears on the fact of the award. The single exception to this is when the parties choose specifically to refer a question of law as a separate and distinct matter. " The Court further proceeded to examine whether in the facts of that case, the arbitrator was specifically asked to construe clause 6 of the contract or any part of the contract or whether any question of law was specifically referred. The Court emphasised the word 'specifically ' by pointing out that, parties who made a reference to arbitration have the right to insist that the Tribunal of their choice shall decide their dispute according to law, so before the right can be denied to them in any particular matter, the court must be very sure that both sides wanted the decision of the arbitrator on a point of law rather than that of the Courts and that they wanted his decision on that point to be final. The Court then proceeded to examine the various clauses of the contract and held that this is not the kind of specific reference on a point of law that 143 the law of arbitration requires. The Court held that when a question of law is the point at issue, unless both sides specifically agree to refer it and agree to be bound by the arbitrator 's decision, the jurisdiction of the Courts to set an arbitration right when the error is apparent on the face of the award is not ousted. The mere fact that both parties submit incidental arguments about a point of law in the course of the proceedings is not enough. This decision is an authority for the proposition that where the parties specifically agree to refer a specific question of law for the decision of the arbitrator, and agree to be bound by it, the Court cannot set aside the award on the ground of an error of law apparent on the face of it even though the decision of the arbitrator may not accord with the law as understood by the Court. If on the other hand, the question of law is incidentally decided by the arbitrator, it is not enough to oust the jurisdiction of the Court to set aside the award on the ground that there is an error apparent on the face of the award. In M/s Alopi Parshad & Sons Ltd. vs The Union of India 1 the Court reiterated the observation in Seth Thawardas 's case and observed that if a specific question is submitted to the arbitrator and he answers it, the fact that the answer involves an erroneous decision in point of law, does not make the award bad on its face so as to permit of its being set aside. In the facts of the case, this Court agreeing with the High Court held that there is no foundation for the view that a specific reference, submitting a question of law for the adjudication of the arbitrators, was made. It may be stated in passing that a brief reference to the claim put forward before the arbitrator on behalf of the appellants in that case, set out at page 798 of the report, would clearly show that no specific question of law was referred by the parties for the decision of the arbitrator. Mr. Pai learned counsel for the respondent pointed out that the Court has also observed following the decision of the Privy Council in Champsey Bhara and Company vs Jivraj Balloo Spinning and Weaving Company Ltd 2., that the extent of the jurisdiction of the court to set aside an award on the ground of an error in making the award is well defined. The award of an arbitrator may be set aside on the ground of an error on the face thereof only when in the award or in any document incorporated with it, as for instance, a note appended by the arbitrators, stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous. This observation does not help 144 in deciding the point under discussion and just after this statement, there follows the observation about the effect of referring a specific question of law for the decision of the arbitrator and the jurisdiction of the Court to set aside the award on the ground that there is an error of law apparent on the face of it. In Union of India vs A.L. Rallia Ram 1 this Court after referring to the decision in Champsey Bhara and Company reaffirmed that, the rule in that decision does not apply where questions of law are specifically referred to the arbitrator for his decision; the award of the arbitrator on those questions is binding upon the parties, for by referring specific questions the parties desire to have a decision from the arbitrator on those questions rather than from the Court and the Court will not, unless it is satisfied that the arbitrator had proceeded illegally interfere with the decision. After referring to the decision hereinabove examined by us, the Court came to the conclusion that no specific question of law were referred to the arbitrator 's the decision whereof is binding upon the parties. In M/s Kapoor Nilokheri Co op. Dairy Farm Society Ltd. vs Union of India and Others 2 the Court agreed with the submission on behalf of the respondent Government of India that the appellants having specifically stated that their claims are based on the agreement and on nothing else and all that the arbitrator had to decide was as to the effect of the agreement, the arbitrator had really to decide a question of law, i.e. of interpreting the document, the agreement dated May 6, 1953 and therefore the decision is not open to challenge. In fact, this decision is hardly of any assistance and we leave it at that. In N. Chellappan vs Secretary, Kerala State Electricity Board & Anr. by a consent order, the umpire was appointed as the sole arbitrator, and the respondent Board without a demur participated in the proceedings before the umpire and took the chance of an award in its favour, this Court said that it cannot turn round and say that the umpire had no inherent jurisdiction and therefore its participation in the proceedings before the umpire is of no avail. This decision is not of much assistance on the point under discussion. Mr. Pai on the other hand urged that the jurisdiction of the arbitrator could not be determined by him nor can he arrogate jurisdiction to himself 145 by mis construction of the contract and thereby clutch at jurisdiction and in such a situation, the court always retains to itself to set at naught the award on the ground of an error of law apparent on the face of the award. In terms, he stated that the issue about the jurisdiction of the arbitrator has never been parted with by the Court Generally speakings, common law courts were very reluctant to part with its jurisdiction to set at naught an award on the ground that the arbitrator had no jurisdiction to entertain and decide the dispute. The Court went so far as to say that the arbitrator cannot confer jurisdiction upon himself by deciding in its own favour some preliminary points upon which its jurisdiction rests. In fact, that is a non issue. It cannot be disputed that even the question of jurisdiction of an arbitrator can be the subject matter of a specific reference. If the parties agree to refer the specific question whether the dispute raised is covered by the arbitration agreement, it becomes a specific question of law even if it involves the jurisdiction of the arbitrator and if it is so, a decision of the arbitrator on specific question referred to him for decision even if it appears to be erroneous to the Court is binding on the parties. The decisions relied upon by Mr. Pai do not derogate from this legal position. We may briefly refer to those decision In Produce Brokers Co. Ltd. vs Olympia Oil and Cake Co. Ltd., it was held that "if the question which the arbitrator takes upon himself to decide is not in fact within the submission the award is a nullity. The arbitrator cannot make his award binding by holding contrary to the true facts when the question which he affects to determine is within the submission. " Let us emphasise the ratio of the decision that the arbitrator takes upon himself to decide a question not within the submission. This would mean that the question of law was not specifically referred to the arbitrator for his decision but it was incidentally raised. In fact, nowhere it was contended that any specific question of law was referred to the arbitrator and if so what would be its effect on the binding character of the decision was ever raised in that case. In that case after an answer was returned to the Special Case submitted for the opinion of the court, the Committee of Appeal unreservedly accepted the said answers upon the construction of the contract as a matter of law apart from the custom of the trade, but proceeded further to hold that there was a long established and well recognised custom of the trade in cases of re sales that buyers under the form of contract 146 in question impliedly agreed with their sellers that they would accept the original shipper 's appropriation if passed on without delay. On a motion by the buyers to have the award set aside, of which notice was given, the Divisional Court held that the arbitrators had no jurisdiction to find conclusively the existence of a trade custom, and the Court of Appeal on the authority of precedents but against their own opinion, affirmed the decision. The appellant seller 's company appealed to the House of Lords. Lord Loreburn in his speech observed that 'these men of business made contracts and therein agreed to arbitrate upon all disputes arising out of their contracts. Yet there have already been seven distinct stages of argument and decision, four of them in courts of law, upon a dispute arising on those contracts, and the end is not yet. I do not know how many more stages there will be. Parties have a right to prefer what some may consider the imperfect though expeditious wisdom of arbitrators to the slower and more costly justice of His Majesty 's courts. It is to be regretted when they have to encounter the inconveniences of both methods with the advantage of neither. " Approaching the matter from this angle, the appeal was allowed and the decision of the Committee of Appeal, taking note of the custom of the trade, allowed the award to stand. This decision can in no way help the respondent. In Attorney General For Manitoba vs Kelly and Others 1 it was observed that "Whenever there is a difference of opinion between the parties as to the authority conferred on an umpire or arbitrator under an agreed submission the decision rests ultimately with the court and not with the umpire or arbitrator. " This is predicated upon a proposition that common law courts were reluctant to part with their jurisdiction to set at naught an award if the arbitrator confers jurisdiction upon himself by deciding in his own favour some preliminary point upon which his jurisdiction rests. Mr. Pai also referred to the decisions of the Privy Council in Champsey Bhara & Co. and Hirji Mulji vs Cheong Yue Steamship Co. Ltd. Both these decisions are of no assistance on the question about the reference of a specific question of law touching upon the jurisdiction of the arbitrator for his decision and its effect. In fact. the decision in Champsey Bhara 's case clearly turns upon as to what constitutes an error of law apparent on the face of the award. 147 The next case referred to was Heyman & Anrs. vs Darwins Ltd. It reasserts that as a rule the arbitrator cannot clothe himself with jurisdiction. Turning to the decisions of this Court, reference was first made to Jivarajbhai Ujamshi Sheth & Ors. vs Chintamanrao Balaji & Anr. Shah, J. speaking for himself and Justice Sarkar at page 499 observed that 'this is not a case in which the arbitrator has committed a mere error of fact or law in reaching his conclusion on the disputed question submitted for his adjudication. It is a case of assumption of jurisdiction not possessed by him, and that renders the award, to the extent to which it is beyond the arbitrator 's jurisdiction, invalid". It may be pointed out that these observations are in the context of the facts of that case and there was no contention before the court that any specific question of law touching upon the jurisdiction of the arbitrator was referred to for his decision by the parties. The last decision in this context referred to was Dr. S.B. Dutt vs University of Delhi. In that case the arbitrator gave by his award a direction to enforce the contract of personal service. This was stated as an error of law apparent on the face of the award and the award was set aside. Again it may be pointed out that the reference to the point set out in the letter of reference extracted at page 1240 clearly spells out that no specific question of law touching upon the jurisdiction of the arbitrator was referred to the arbitrator for his decision. On a conspectus of these decisions, it clearly transpires that if a question of law is specifically referred and it becomes evident that the parties desired to have a decision on the specific question from the arbitrator about that rather than one from court, then the court will not interfere with the award of the arbitrator on the ground that there is an error of law apparent on the face of the award even if the view of law taken by the arbitrator does not accord with the view of the court. This view of law taken in England was stated by this Court to be the same in this country and since the decision in Seth Thawardas 's case which follows earlier decisions in England and India, it has not been departed from. The view canvassed for by Mr. Pai that common law courts were very reluctant to part with its jurisdiction has hardly any relevance where a specific question of 148 law including the one touching the jurisdiction of the arbitrator is referred to the arbitrator for his decision. Even if the decision of the arbitrator does not accord with the view of the court, the award cannot be set aside on the sole ground that there is an error of law apparent on the face of it. Before we conclude on this point we must take note of a contention of Mr. Pai that the respondent cannot be estopped from contending that the arbitrator had no jurisdiction to entertain the dispute as the respondent agreed to the submission without prejudice to its rights to contend to the contrary. It is undoubtedly true that in the letter dated March 29, 1976 by which the respondent agreed to refer the dispute to the arbitrator, it was in terms stated that the reference is being made without prejudice to the position of the respondent as adopted in the letter meaning thereby without prejudice to its rights to contend that the claim of the appellant is not covered by the arbitration clause. In the context in which the expression 'without prejudice ' is used, it would only mean that the respondent reserved the right to contend before the arbitrator that the dispute is not covered by the arbitration clause. It does not appear that what was reserved was a contention that no specific question of law was specifically referred to the arbitrator. It is difficult to spell out such a contention from the letter. And the respondent did raise the contention before the arbitrator that he had no jurisdiction to entertain the dispute as it would not be covered by the arbitration clause. Apart from the technical meaning which the expression 'without prejudice ' carries depending upon the context in which it is used, in the present case on a proper reading of the correspondence and in the setting in which the term is used, it only means that the respondent reserved to itself the right to contend before the arbitrator that a dispute raised or the claim made by the contractor was not covered by the arbitration clause. No other meaning can be assigned to it. An action taken without prejudice to one 's right cannot necessarily mean that the entire action can be ignored by the party taking the same. In this case, the respondent referred the specific question of law to the arbitrator. This was according to the respondent without prejudice to its right to contend that the claim or the dispute is not covered by the arbitration clause. The contention was to be before the arbitrator. If the respondent wanted to assert that it had reserved to itself the right to contend that no specific question of law was referred to the arbitrator, in the first instance, it should not have made the reference in the terms in which it is made but should have agreed to the proposal of the appellant 149 to make a general reference. If the appellant insisted on the reference of a specific question which error High Court appears to have committed, it could have declined to make the reference of a specific question of law touching his jurisdiction and should have taken recourse to the court by making an application under Sec. 33 of the Arbitration Act to have the effect of the arbitration agreement determined by the court. Not only the respondent did not have recourse to an application under Sec. 33 of the Arbitration Act, but of its own it referred a specific question of law to the arbitrator for his decision, participated in the arbitration proceeding invited the arbitrator to decide the specific question and took a chance of a decision. It connote therefore, now be permitted to turn round and contend to the contrary on the nebulous plea that it had referred the claim/dispute to the sole arbitrator without prejudice to its right to contend to the contrary. Therefore, there is no merit in the contention of Mr. Pai. In this case, as earlier pointed out a specific question as to whether the claim of compensation made by the appellant contractor and demurred and disputed by the respondent would be covered within the scope, ambit and width of the arbitration clause, was specifically referred by the parties for the decision of the arbitrator. Therefore, it is a case where a specific question of law touching upon the jurisdiction of the arbitrator was referred for the decision of the arbitrator by the parties. Even if the view taken by the arbitrator may not accord with the view of the court about the scope, ambit and width of the arbitration clause, the award cannot be set aside on the ground that there is an error of law apparent on the face of the award. The view taken by the High Court is palpably untenable and has to be reversed. On this short point, the appeal can be allowed. However, it was strenuously urged by both the sides that the dispute arising out of the claim for compensation made by the appellant on account of the increase in the cost of the pile driving equipment and technical know how fees would or would not be covered by the first paragraph of Clause 40, we would briefly examine the same to point out that it would be covered. In order to ascertain whether the claim for compensation for increase in the price of pile driving equipment and technical know how fees would be covered by the arbitration clause, it is necessary briefly to refer to the negotiations and discussions leading to the formation of the contract for construction of the Repair Dock and the Building Dock. The value of the works to be executed was 150 over Rs 24 crores. In respect of the construction of Repair Dock, there was only the tender of the appellant and in respect of the Building Dock, there were two tenders: one of the appellant and another by M/s National Building Construction Corporation, the tendered value of the latter being double that of the former. Indisputably, the respondent had a very limited or realistically no choice. In such a situation the Tender Committee took notice of the fact of the poor response to the invitation to tender. The Committee took notice of such salient features of the work being the complexity and magnitude of the works to be undertaken by any Indian Contractor and the non availability of plant and equipment required for the works and more especially that if the contractor was to procure the specialised equipment required for the works, there was hardly any assurance that after the works were over, the machinery would be so much depreciated to have any substantial use or utility to the contractor. In the invitation to tender, it was indicated that requisite foreign exchange for importing pile driving equipment and machinery, spares and technical know how amounting to about Rs 2 crores in all would be made available to the contractor from the 11th Yen Credit from Japan, subject to his getting indigenous clearance and providing detailed justification. Annexure IV to the General Conditions of Contract clearly specifies that the tenderers while quoting shall give separately the full details of the equipment for which they would be requiring foreign exchange assistance. And they shall also indicate the financial implication if any, for providing not providing the foreign exchange assistance indicated for the various equipments. Two things emerge from recital of the facts herein enumerated in the course of formation of the contract: (1) that the pile driving equipment will have to be imported from outside India and technical know how fees will have to be paid both in foreign currency and (2) this would necessitate investment of about Rs 2 crores by the contractor. The contractor in his letter dated July 14,1972 specifically invited the respondent to confirm the modifications in the terms of contract as set out therein. In paragraph 31 (E) (1), the contractor states that all foreign exchange for the equipment, spares, technical know how and hiring of experts shall be provided to the contractor and that the total foreign exchange on all these accounts will be about Rs 2 crores. A sort of an assurance was thus extended to the contractor that the same would be made available to him from the 11th Yen credit from Japan. This is not disputed. It is also an admitted position that the necessary equipment, machinery, spares and technical know how were not available from Japan and the availability of the 11th 151 Yen credit from Japan lost all significance. Further the respondent by its letter dated January 24,1973 to the appellant while accepting the tender of the appellant on behalf of Cochin Shipyard Limited specifically stated as under: "You shall provide at your cost all construction plant and machinery (including that requiring import) for all items of work including RCC piling and Steel Sheel Piling Works. Departmental machinery likely to be made available for issue to the Contractor shall be as in Annexure IV of the General Conditions of Tender. You shall furnish an inventory of all plant and machinery proposed to be used on the works including items of imported machinery with probable date of their availability at site for use on the work. This should match with the Detailed Working Programme indicated as above. " At this stage a reference to the additional Terms and Conditions/Modifications to the General Conditions and Specifications of the Departmental Tender Documents, would be advantageous. It reads as under: "All Piling Equipment shall be procured by the Contractor . . . . . . . . . Selection of equipment will be done by the Contractor in consultation with the Cochin Shipyard authorities. No hire charges for the equipment procured by the Contractor is payable to the Shipyard . . . . . . . . .Requisie foreign exchange, for importing piling plant and machinery, spares, technical know how and hiring of experts necessary for both the Dock Works, vide Work order. for Repair Dock etc., amounting to about Rs 2.00 crores in all will be made available to the Contractor from the 11th Yen credit subject to his getting indigenous clearance and providing detailed justification" It is thus unquestionably established that the appellant whose tender was accepted after negotiations and scrutiny by the Tender Committee was expected to invest Rs 2 crores in importing pile driving equipment and technical know how fees. The tender was accepted and a formal contract was entered into on his basis. In works contract of such magnitude, the value whereof was over Rs. 24 crores, and which was being undertaken by an Indian contractor for 152 the first time negotiations prior to the finalisation of the contract and the correspondence leading to the formation of contract supply the basis on which contract was finally entered into. Undoubtedly, if in the final written contract, there is something contrary to the basic understanding during the formative stage of the contract, the written contract would prevail. But if the contract does not indicate to the contrary and the assumptions appeared to be the foundation of the contract obviously that aspect cannot be overlooked while determining what were the obligation undertaken under the formal contract. It may be recalled that the two alternative rates were quoted by the contractor: (i) the respondent were to import the pile driving equipment and technical know how for its operation, the same would be leased to the contractor at negotiated rates or (ii) the contractor were to import the same the rates be paid to the contractor. The second alternative was accepted by the parties on the fundamental assumption that the investment in this behalf would be Rs 2 crores. This is the agreed position on which contract was entered into. To continue the narrative, it may be pointed out that this fundamental foundation of the contract not left to guess work, but is specifically referred to in the notice inviting tender and in the specifications and modifications as addenda to the General Conditions of Contract. It was clearly understood between the parties that the contractor has to invest roughly Rs. 2 crores in foreign exchange for importing pile driving equipment and technical know how fees without which this work could never have been undertaken and without which it would not have been entrusted to the contractor. The contractor when he quote his terms must obviously have made appropriate calculations, one of which in this case appears to be that it will have to invest Rs. 2 crores in foreign exchange and this fact flies in the face that after the work was over the imported machinery would depreciate to this extent that it would have hardly any use of utility to the contractor as noticed by the Tender Committee. The rates quoted by the contractor were obviously interrelated to the basic assumption. The fact that such was also also the understanding of the respondent may now be pointed out. The respondent by its letter dated July 31, 1973 to Industrial Adviser (HME), Directorate General of Technical Development requested him to issue necessary clearance to the appellant for import of the equipment set out in the Annexure to the letter on the ground that the appellant tried its level best to get the equipment from the Japanese sources, but they could not get positive restive 153 response for such equipments. They had also tried their best to get suitable offers from U. K., U. section A. USSR, Canada, West Germany and Holland. It was also pointed out that the respondent itself also made independent enquiries in Japan for getting suitable offers for the above equipment without success. Thus it becomes clear that to the knowledge of the respondent, the 11th Yen Credit became irrelevant. The Government of India by its letter dated September 1,1973 to the respondent conveyed its approval to the release of the foreign exchange in favour of the appellant to the extent of Rs 211.80 lakhs (Rupees two crores eleven lakhs and eighty thousand only) equivalent to DFL 9, 442, 700 at the specified exchange rate. Thereafter the appellant by its letter dated May 28,1975 amongst others requested the respondent to take note of the fact that the tendered rates were based on certain total cost of machines which has since gone up considerably rendering the rates no longer workable. The contractor proceeded to point out the utter irrelevancy of the rates in view of the higher outlay of imported machinery and technical know how. It pointed out the loss sustained by the contractor and requested for compensation in this behalf. This was followed by the letter dated July 1, 1975 by the contractor to the respondent, emphasising the fact that the tendered rates had become unworkable and unrealistic owing to the increase in the. cost of equipment. know how etc. as a result of the increase in the foreign exchange rate of Dutch Guilders as related to the Rupee. In response to the last letter the respondent replied by its letter dated July 2, 1975, relevant portion of which may be extracted: "In this connection, a kind reference is invited to your letter dated the 14th July, 1972 (which forms a part of the contract documents) wherein you had indicated that the total foreign exchange required by you for the equipment, spares, technical know how and hiring of experts, was expected to be about Rs 2 crores. From the data enclosed with your letter under reply, it is seen that the foreign exchange expenditure incurred by you so far in connection with this contract had been less than Rs 2 crores. In the circumstances, it is difficult to accent the position that your tender was based on assumptions indicated by you and that the rates for pile driving should now be revised. " This letter furnishes proof, if one was needed that parties were ad idem that the investment for imported pile driving equipment and foreign exchange know how would be about Rs 2 crores. The 154 respondent does not contest the claim for compensation under this head as is now sought to be done on the ground that as the contractor had to provide imported pile driving equipment and technical know how, the respondent is not entitled to compensation even if the initial estimate has been found to be unrealistic. On the contrary the claim for compensation is disputed and controverted on the ground that the foreign exchange expenditure incurred by the contractor so far in connection with imported pile driving equipment and technical know how has been less than Rs 2 crores. From this correspondence, it would emerge that both the parties were agreed that the contractor would have to invest Rs 2 crores in foreign exchange for importing pile driving equipment and technical know how which could only be used after approval of the same by the respondent. The appellant by its letter August 9, 1975 contended that escalation of expenditure under this head is taken care of in the contract and more specifically in clauses 13 and 16 of the works order. We would have occasion to refer to these clauses a little later. The respondent by its letter dated August 29,1975 reasserted its position that the foreign exchange element of the expenditure incurred by the contractor works out to Rs 1.96 crores, which is less than the figure of Rs. 2 crores that was expected to be invested in foreign exchange which was to be provided by the contractor, The respondent also referred to the assessment of expenditure made by the contractor as per its letter dated July 14,1972. This has already been referred to by us. The respondent further asserted that the estimate so made till that date has not been exceeded and therefore, any argument based on fluctuation in the exchange rate is not valid or tenable. It may be repeated that the refusal to entertain the claim for compensation was predicated upon the estimates having not exceeded the basic minimum of Rs 2 crores by the contractor on which rates were worked out and agreed, and not that such claim cannot be entertained under the contract. By its letter dated September 18,1975, the contractor reiterated its position. In its letter dated October 6, 1975, the respondent when it was faced with the situation that the expenditure incurred under this head in foreign exchange had risen to Rs 214.33 lacs i. e. it had exceeded the expected investment of Rs. 2 crores under this head, took a summer assault and stated that the respondent had at no stage stated that the contractor was 'not entitled to any claim because the amount of foreign exchange has not yet exceeded Rs 200 lakhs '. One has merely to call attention to the two letters dated July 2, 1975 and August 29 1975 to reach the conclusion that the respondent has gone back upon its original position and having found that the expenditure under this head has 155 gone up beyond the estimated expenditure made a volte face, the two positions so adopted being entirely inconsistent with each other Thereafter, the matter was referred to arbitration. From the commencement i.e, from the stage of inviting tenders and through the negotiations and the finalisation of the contract, at every stage, the respondent assured that foreign exchange would be made available from 11th Yen Credit. As the equipment was not available from Japan, the availability of Yen Credit become otiose from the contractor 's point of view. At the instance of and with the active participation of the respondent the contractor made enquiries in various countries and ultimately procured the necessary equipment and technical know how which was approved by the respondent and imported the same. In the time lag, the price as well as the foreign exchange rates in relation to rupee underwent an upward change, with the result that the contractor had to invest, as made out by it and not seriously controverted before the arbitrator in all Rs. 275.40 lakhs for imported pile driving equipment and spares and Rs. 18,64, 337.61 on technical services cum know how fees and a further sum for higher custom duty. Details of the claim have been set out in Annexures 1 and 2 respectively to the statement of claim submitted by the appellant to the arbitrator. The respondent in its counter statement did not controvert the details of the claim and the expenditure involved under the two heads. The whole of the counterclaim was concerned with the denial of its liability to compensate the contractor coupled with the contention that the claim would not be covered by the arbitration agreement and therefore, the arbitrator had no jurisdiction to entertain and adjudicate the claim. It may also be mentioned that at no time since the award, the respondent ever disputed or questioned the amount awarded by the arbitrator. It is thus satisfactorily established that the contractor had to invest something far in excess of Rs. 2 crores which it was expected to invest in foreign exchange for imported pile driving equipment and technical know how fees. The whole contract was concluded on this understanding. Being aware of the fluctuating position in this behalf, the contractor had tendered two alternative rates for completion of the work as pointed earlier; one based on equipment being imported by the respondent and leased to the appellant and alternatively rates on the basis that the contractor would import pile driving equipment and technical know how. In respect of the second alternative, which was ultimately agreed to between the parties, it was clearly and unmistakably understood between the partiest had 156 the contractor would have to invest Rs. 2 crores and the rates were co related to this investment with the knowledge of the fact that when work was completed, the equipment would depreciate to the tune of 75% of its capability and would be hardly of any use to the contractor. The estimated expenditure having far exceeded, a claim for compensation would certainly be tenable at the instance of the contractor. The High Court quoted clauses 16, 26 and 31 in its judgment but did not dilate upon the provisions of the clauses so as to correlate them with its decision. Clause 16 envisaged a situation where since the formation of the contract any fresh law is enacted which has the bearing on the price of materials incorporated in the works and/or wages of labour, the terms of contract shall accordingly be varied. Clause 26 provided for supply of materials, plants, tools, appliances etc. by the contractor. Clause 2 provides for the liability of the contractor to supply construction, plant and machinery including the items to be imported and a further obligation is cast on the contractor to furnish inventory of the same. Clause 31 amongst others, provided that the pile driving equipment shall be procured by the contractor, and the selection of equipment shall be done by the contractor, in consultation with the respondent. These clauses were presumably referred to in the context of an argument that the price escalation clause does not cover the claim for compensation for additional expenditure on imported plant and machinery and technical know how because the contract substantially provides for the same to be supplied by the contractor. In our opinion, this over simplification of the clauses of the contract involving works of such magnitude is impermissible. The whole gamut of discussions, negotiations and correspondence must be taken into consideration to arrive at a true meaning of what was agreed to between the parties. And in this case there is no room for doubt that the parties agreed that the investment of the contractor under this head would be Rs. 2 crores and the tendered rates were predicated upon and co related to this understanding. When an agreement is predicated upon an agreed fact situation, if the latter ceases to exist the agreement to that extent becomes irrelevant or otiose. The rates payable to the contractor were related to the investment of Rs 2 crores under this head by the contractor. Once the rates became irrelevant on account of circumstances beyond the control of the contractor, it was open to the contractor to make a claim for compensation. Therefore, it appears satisfactorily established that the claim arose while implementing the contract and in relation to the contract. 157 The next question is whether this claim made by the contractor and disputed by the respondent would be covered by the arbitration clause. The arbitration clause has already been extracted. Even the High Court admits that clause 40 is very widely worded. It inter alia provides that all questions and disputes relating to the meaning of the Specifications Estimates, Instructions, Designs. Drawings hereinbefore mentioned and as to the quality of the Workmanship or materials used on the work or as to the any other questions claim, right, matter or thing whatsoever in any way arising out of or relating to the contract or otherwise concerning the works or the execution whether arising during the progress of the work or after completion shall be referred to the Sole Arbitrator etc. " The scope, width and the ambit of the Arbitration clause is of widest amplitude and any claim arising out of or relating to the contract or otherwise concerning the works or the execution thereof would be covered by the arbitration clause. The material portion of clause 40 which would assist us in deciding the questions is 'claim ' right matter or thing whatsoever in any way arising out of or relating to the contract estimates or otherwise concerning the works or the execution etc. " Briefly stated any claim arising out of or relating to the contract, estimates or otherwise concerning the works or the execution thereof would be covered by the arbitration clause. The question to be posed is "does the claim made by the contractor arise out of or relates to the contract, estimates, or is otherwise concerning works for execution thereof ? Phrases such as 'claim arising out of contract ' or "relating to the contract ' or 'concerning the contract ' on proper construction would mean that if while entertaining or rejecting the claim or the dispute in relation to claim may be entertained or rejected after reference to the contract, it is a claim arising out of contract. Again the language of cl. 40 shows that any claim arising out of the contract in relation to estimate made in the contract would be covered by the arbitration clause. If it becomes necessary to have recourse to the contract to settle the dispute one way or the other than certainly it can be said that it is a dispute arising out of the contract. And in this case the arbitration clause so widely worded as disputes arising out of the contract or in relation to the contract or execution of the works would comprehend. Within its compass a claim for compensation related to estimates and arising out of the contract. The test is whether it is necessary to have recourse to the contract to settle the dispute that has arisen. 158 We may now turn to some decision to which our attention was drawn. The first case we would like to refer to is A.M. Mair & Co. vs Gordhandass Sagarmull. The Court was concerned with the arbitration clause drawn up as; "all matters, question, disputes, differences and/or claims, arising out of and/or concerning, and/or in connection and/or in consequence of, or relating to, the contract etc. " The question arose whether the due date under the contract was extended within the time, earlier reserved. The arbitrator held that the due date of the contract has been extended by a mutual agreement and the respondents were held liable to pay a sum of Rs. 4,116 together with interest at the rates specified in the award. It was contended that the dispute is not covered by the arbitration clause. This Court while holding that the dispute is covered by the arbitration clause observed that looking to the rival contentions, such a dispute, the determination of which turns on the true construction of the contract, would also seem to be a dispute under or arising out of or concerning the contract. The test formulated was that if in settling a dispute, a reference to the contract is necessary, such a dispute would be covered by the arbitration clause. In Ruby General Insurance Co. Ltd vs Pearey Lal Kumar And Another this Court was concerned with the clause in a policy of insurance which provided that differences arising out of the policy shall be referred to the decision of the arbitrator. In construing this clause, this Court observed as under: "The test is whether recourse to the contract by which the parties are bound is necessary for the purpose of determining the matter in dispute between them. If such recourse to the contract is necessary, them the matter must come within the scope of the arbitrator 's jurisdiction." In Union of India vs Salween Timber Construction (India) & Ors. this Court observed that the test for determining the question is whether recourse to the contract by which both the parties are bound is necessary for the purpose of determining whether the claim of the respondent firm is justified or otherwise. If it is necessary to take recourse to the terms of the contract for the purpose of deciding the matter in dispute, it must be held that the matter is within 159 the scope of the arbitration clause and the arbitrators have jurisdiction to decide the same. In so stating the proportion of law, reliance was placed on Heyman & Anr. vs Darwins Ltd. in which it was held that 'where the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them whether there has been a breach by one side or the other, or whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen in respect of or 'with regard to, or 'under ' the contract, and an arbitration clause which uses these, or similar expressions should be construed accordingly. The Court affirmed the decision in Ruby General Insurance Co. Ltd. case. In Astro Vencedor Compania Naviera section A. of Panama vs Mabanaft G. M. B. H. The Diamianos a question arose whether a claim in tort would be covered by the arbitration clause? It was admitted that the claim for wrongful arrest is a claim in tort. And it was contended that a claim in tort cannot come within the arbitration clause. The Court of Appeal speaking through Lord Denning held that the claim in tort would be covered by the arbitration clause, if the claim or the issue has a sufficiently close connection with the claim under the contract. In Gunter Henck vs Andre & CIE. section A.3 the Court (Queen 's Bench Division (Commercial Court) help that the words 'arising out of clearly extend the meaning than would otherwise be applied to the clause were it limited to 'all disputes arising under the contract. In the facts before us, the respondent in para 4 of its counter statement filed before the arbitrator specifically referred to clause 16 of the General Conditions of Contract and to the Additional Terms and Conditions Modifications forming part of the contract document. In paragraph 11, it was stated that the claim of the appellant was completely outside the purview of the contract and the same does not fall within the purview of the first paragraph of Clause 40 160 it was further stated in paragraph 13 that contract provides for escalation in certain respects and that is the only escalation which is admissible in terms of the contract and the claim made by the appellant does not come within the escalation clause nor in the agreed formula relating to such escalation. The contractor relied upon Clause 13 of the Additional Terms and Conditions Modifications which form part of the contract document to sustain its claim. From the pleadings, it clearly transpires that both the parties had recourse to the contract which is admittedly entered into in support of the rival contentions and therefore, the claim made by the appellant would be covered by the arbitration clause, which is of the widest amplitude, It is thus satisfactorily established that the claim made by the contractor would be covered by the arbitration clause. Mr. Nariman also wanted us to examine whether the claim made by the arbitrator would be admissible on the principle of quantum merit. It is not necessary to examine this aspect at all in the view which we are taking. He also wanted us to adopt an approach that the effort of the court must be to uphold the award and not to reject it. We consider it unnecessary to dilate upon it. The discussion leads to the inescapable conclusion that a specific question of law touching the jurisdiction of the arbitrator was specifically referred to the arbitrator and therefore the arbitrator decision is binding on the parties and the award cannot be set aside on the sole ground that there was an error of law apparent on the face of the award. It is also established that the claim for compensation made by the arbitrator which led to the dispute was covered by the arbitration clause. The quantum of compensation awarded by the arbitrator was never disputed nor questioned. Therefore, the High Court was clearly in error reversing the decision of the trial court. 161 Accordingly this appeal succeeds and is allowed and the Judgment of the High Court is set aside and the Judgment and order of the Subordinate Judge, Ernakulam dated March 30, 1979 is restored with costs throughout N.V.K. Appeal allowed.

The appellant and the respondents entered into a contract for the construction of Building Dock. Clause 40 of the General Conditions of Contract entered into between the parties, provided that "all questions and disputes relating to the meaning of the Specifications Estimates Instructions, Designs, Drawing and the quality of the workmanship or materials used in the work or as to another questions, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract or otherwise concerning the execution whether arising during the progress of the work or after completion shall be referred to the Sole Arbitrator etc," During the implementation of the works contract. disputes arose between the parties in respect of a claim for compensation on account of the increase in the cost of imported pile driving equipment and technical know how fees. Correspondence was exchanged between the Appellant and Respondent No. 1 and the dispute was referred to the Sole Arbitrator. The point referred were: (1) Whether the claim of compensation for increase in the cost of imported pile driving equipment and technical know how fees would fall within the purview of the first para of clause 40 of the General Conditions of Contract; and (2) if it does, the quantum of compensation, if any, to which the appellant would be entitled to. The arbitrator entered upon the reference and after hearing the parties gave his award. The 119 arbitrator held that the appellant was entitled to compensation for the increase in the cost of imported pile drawing equipment and technical know how fees by a sum of Rs. 99 lakhs which amount shall be payable with interest @ 9.1/2% The award was typed on stamp paper of the value of Rs.150/ The arbitrator forwarded the award to both the parties. The appellant moved a petition under sections 14 and 17 of the , in the Court of the Subordinate Judge for filing the award and for making it a rule of the Court, while the respondent moved a petition under sections 30 and 33 for setting aside the award contending that: (1) the award was insufficiently stamped, and (2) the arbitrator had exceeded his jurisdiction by misconstruing clause 40. The Subordinate Judge negatived both the contentions. It was held that the respondent having submitted the question whether the dispute raised by the appellant was covered by the arbitration clause; could not controvert the jurisdiction of the Arbitrator to decide the dispute; and the award of the arbitrator was modified in the matter of interest from 9.1/2 per cent as awarded by the arbitrator to 6 per cent, and the award was made a rule of the Court. The respondent preferred an appeal to the High Court, and a Division Bench, agreed with the Subordinate Judge on the question of insufficiency of stamp. It however held that the question whether the dispute was arbitrable or not could not be finally decided by the arbitrator because it was a matter relating to his jurisdiction, and that the arbitrator cannot by an erroneous interpretation or construction of the clause confer jurisdiction on himself and that the court can go into the question whether the matter in dispute between the parties was covered by the arbitration clause. It finally held that even though the arbitration clause was very wide, the dispute as to compensation for increase in the cost of imported pile driving equipment and technical know how fees could not be covered by the arbitration clause because under clause 26 every plant, machinery and equipment had to be provided by the contractor and any rise or escalation in the price of such equipment or machinery, cannot be the subject matter of compensation by the respondent. The appeal was therefore allowed, and the trial court 's order, making the award a rule of the court was set aside and directed that the award be returned to the parties. In the appeal to this Court it was contended on behalf of the appellant, that though Sec. 16(1)(e) of the may permit the court to remit or set aside the award on the ground that there is an error of law apparent on the face of it, yet where a specific question of law has been referred to the arbitrator for decision, the fact that the decision is erroneous does not make the award bad on its face so as to permit its being set aside. As a specific question of law touching upon the jurisdiction of the arbitrator was speficially referred to the arbitrator for his decision, the decision of the arbitrator is binding on the parties and the court cannot proceed to inquire whether upon a true construction of the arbitration clause, the dispute referred to the arbitrator for arbitration would be covered by the arbitration clause so as to clothe the arbitrator with the jurisdiction to arbitrate upon the dispute. On behalf of the respondent, it was contended that the jurisdiction of the arbitrator cannot be left to the decision of the arbitrator so as to be binding on 120 the parties and it is always for the court to decide whether the arbitrator had jurisdiction to decide the dispute, and that the arbitrator cannot by a misconstruction of the arbitration agreement clothe himself with or confer upon himself the jurisdiction to decide the dispute. Allowing the Appeal; ^ HELD: 1. A specific question of law touching the jurisdiction of the arbitrator was specifically referred to the arbitrator and therefore the arbitrator 's decision is binding on the parties and the award cannot be set aside on the sole ground that there was an error of law apparent on the face of the award. It is also established that the claim for compensation made by the contractor which led to the dispute was covered by the arbitration clause. The quantum of compensation awarded by the arbitrator was never disputed nor questioned. [170E F] 2. A question of law may figure before an arbitrator in two ways. It may arise as an incidental point while deciding the main dispute referred to the arbitrator or in a given case parties may refer a specific question of law to the arbitrator for his decision. [137G H] Russel: Law of Arbitration Twentieth Edition p.22; Halsbury 's Laws of England Vol. 2 Para 623 4th Edition referred to. Arbitration has been considered a civilised way of resolving disputes avoiding court proceedings. There is no reason why the parties should be precluded from referring a specific question of law to an arbitrator for his decision and agree to be bound by the same. This approach manifests faith of parties in the capacity of the tribunal of their choice to decide even a pure question of law. If they do so, with eyes wide open, and there is nothing to preclude the parties from doing so, then there is no reason why the court should try to impose its view of law superseding the view of the Tribunal whose decision the parties agreed to abide by. On Principle it appears distinctly clear that when a specific question of law is referred to an arbitrator for his decision including the one touching upon the jurisdiction of the arbitrator, the decision of the arbitrator would be binding on both the parties and it would not be open to any of the two parties to wriggle out of it by contending that the arbitrator cannot clutch at or confer jurisdiction upon himself by mis construing the arbitration agreement.[138 E G] 4. If a question of law is specifically referred and it becomes evident that the parties desired to have a decision on the specific question from the arbitrator rather than one from the court, then the court will not interfere with the award of the arbitrator on the ground that there is an error or law apparent on the face of the award even if the view of law taken by the arbitrator does not accord with the view of the court. [147F] Kelantan Government vs Duff Development Co. Ltd. Re King and Duveen, F.R. Absalom Ltd. vs Great Western (London) Garden Village Society Ltd., ; Durga Prasad Chamria 121 and Anr. vs Sewkishen das Bhattar and Ors: AIR 1949 Privy Council 334; Seth Thawardas Pherumal vs The Union of India; ; M/s. Alopi Parshad & Sons Ltd. vs The Union of India, ; Champsey Bhara and Company vs Jivraj Balloo Spinning and Weaving Company Ltd . : Law Report ; Union of India vs A.L. Rallia Ram. , ; ; M/s. Kapoor Nilokheri. , Co op. Dairy Farm Society Ltd. vs Union of India and Others. , ; N. Chellappan vs Secretary, Kerala State Electricity Board & Anr., ; ; Produce Brokers Co. Ltd. vs Olympia Oil and Cake Co. Ltd., ; Attorney General For Manitoba vs Kelly and Others. , (1922) H.E.R. 68; Hirji Muulji vs Cheong Yue Steamship Co. Ltd., ; Heyman & Anr. vs Darwins Ltd., ; Jivarajbhai Ujamshi Sheth & Ors. vs Chiniamanrao Balaji & Anr., [1954] 5 S.C.R. 480; Dr. S.B. Dutt vs University of Delhi. , [1958] S.C.R. 1236; referred to. The expression 'without prejudice ' carries a technical meaning depending upon the context in which it is used. An action taken without prejudice to one 's right cannot necessarily mean that the entire action can be ignored by the party taking the same. [148F G] In the instant case, in the context in which the expression 'without prejudice ' is used, it would only mean that the respondent reserved the right to contend before the arbitrator that the dispute is not covered by the arbitration clause. It does not appear that what was a contention that no specific question was specifically referred to the arbitrator, On a proper reading of the correspondence, and in the setting in which the term 'without prejudice ' is used, it only means that the respondent reserved to itself the right to contend before the arbitrator that a dispute raised or the claim made by the contractor was not covered by the arbitration clause. No other meaning can be assigned to it. [148D E] 6. In works contract of such magnitude, and which have been undertaken by an Indian contractor for the first time negotiations prior to the finalisation of the contact and the correspondence leading to the formation of contract supply the basis on which the contract was finally entered into. Undoubtedly, if in the final written contract, there is something contrary to the basic understanding during the formative stage of the contract, the written contract would prevail. But if the contract does not indicate to the contary and the assumptions appeared to be the foundation of the contract, that aspect cannot be overlooked while determining what were the obligations undertaken the formal contract. [151H 152B] 7. Over simplification of the clauses of the contract involving works of large magnitude is impermissible. The whole gamut of discussions, negotiations and correspondence must be taken into consideration to arrive at a true meaning of what was agreed to between the parties. [156F] In the instant case, there is no room for doubt that the parties agreed that the investment of the contractor under this head would be Rs. 2 crores and the tendered rates were predicated upon and co related to this understanding.[156G] 122 8. When an agreement is predicated upon an agreed fact situation, if the latter ceases to exist the agreement to that extent becomes irrelevant of otiose. [156G] 9. Phrases such as 'claim arising out of contract ' or 'relating to the contract ' or 'concerning the contract ' on proper construction would mean that if while entertaining or rejecting the claim or the dispute in relation to claim may be entertained or rejected after reference to the contract, it is a claim arising out of contract. The language of clause 40 shows that any claim arising out of the contract in relation to estimates made in the contract would be covered by the arbitration clause. If it becomes necessary to have recourse to the contract to settle the dispute one way or the other then certainly it can be said that it is a dispute arising out of the contract. [157F G] In the instant case, the arbitration clause is so widely worded as disputes arising out of the contract or in relation to the contract or execution of the works that it would comprehend, within its compass a claim for compensation related to estimates and arising out of the contract. [157H] 10. (i) A dispute, the determination of which turns on the true construction of the contract, would also seem to be a dispute under arising out of or concerning the contract. The test is that if in settling a dispute, a reference to the contract is necessary, such a dispute would be covered by the arbitration clause.[158D E] A.M. Mair & Co. vs Gordhandas Sagarmull., [1950] S.C.R. 792; Ruby General Insurance Co. Ltd. vs Pearey Lal Kumar And Another; ; ; referred to. Where the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them whether there has been a breach by one side or the other, or whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen 'in respect of ' or 'with regard to ' of 'under ' the contract, and an arbitration clause which uses these, or similar expressions should be contoured accordingly. [159B C] Union of India vs Salween Timber Construction (India) & Ors. , ; ; Heyman & Anr. vs Darwins Ltd., at 366; Astro Vencedor Compania Naviora S.A. of Panama vs Mabanaft G.M.B.H. The Diamianos. , [1971] 2 Q.B. 588; Gunter Henck vs Andre & CIE. S.A., [1970] 1 Lloyd 's Law Reports 235; referred to In the instant case, from the pleadings, it clearly transpires that both the parties had recourse to the contract. It is satisfactorily established that the claim made by the contractor would be covered by the arbitration clause. [160B] 123

ivil Appeal No. 1057 of 1987. From the Order dated 29.12.1986 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. ED/SB/ 7 A No. 186/82 BI in Order No. 826/86 BI. D.N. Mehta, R.C. Misra and Dr. Meera Agarwal for the Appellants. V.C. Mahajan and R.P. Srivastava for the Respondent. The Judgment of the Court was delivered by RANGANATHAN, J. Item 26AA(iv) of the Central Excise Tariff reads as follows: "Pipes and tubes (including blanks therefore) all sorts, whether rolled, forged, spun, cast, drawn, annealed, welded or extruded" 62 The appellants are engaged in the manufacture of pipe fittings such as elbows, bends and reducers. They purchase steel pipes on payment of excise duty prom indigenous pro ducers from the open market and they also get steel tubes by way of import. The appellants cut the pipes and tubes into different sizes, give them shape and turn them into pipe fittings in their factories by heating in a furnace (at a temperature between 66 degrees C and 900 degrees C) hammer ing and pressing. The short question in this appeal is whether the pipe fittings so produced by the petitioners also fall under Item 26AA(iv) or whether they should be classified under tariff item 68 which is the residuary entry. The case of the appellants is that the products manufac tured by them are also nothing but pipes and tubes and that they are being virtually asked to pay duty twice over on the same product. According to them the processes undertaken by them do not amount to manufacture and no new product has come into existence as a result of the processes employed in their factories. They say that the pipes and tubes retain their material and original character and use and they can also be had only from dealers dealing in pipes and tubes. This claim of the appellants has not been accepted by the Central Customs Excise and Gold Appellate Tribunal and hence the present appeal under section 35L(b) of the . The question before us is whether the Department is right in claiming that the items in question are dutiable under tariff entry No. 68 This, as mentioned already, is the residuary entry and only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item. We do not think this has been done. Looking at Tariff item 26AA(iv), it encompasses all sorts of pipes and tubes. It is also clear that it is of no conse quence whether the pipes and tubes are manufactured by rolling, forging, spinning, casting, drawing, annealing, welding or extruding. It is true that initially pipes and tubes may be obtained from sheets, billets or bars by var ious processes, but the process of manufacture of pipes and tubes does not end there. In order to achieve fully the purpose for which the pipes and tubes are manufactured, it is necessary to manufacture smaller pieces of pipes and tubes and also to manufacture them in such a shape that they may be able to conduct liquids and gases, passing them through and across angles, turnings, 63 corners and curves or regulating their flow in the manner required. Smaller pieces of pipes and tubes differently shaped are manufactured for this purpose. They are merely intended as accessories or supplements to the larger pipes and tubes. They are pipes and tubes made out of pipes and tubes. There is no change in their basic physical properties and there is no change in their end use. There is no reason why these smaller articles cannot also be described as pipes and tubes. But, it is said, they are known in the market different ly as pipe fittings, a totally different commercial commodi ty. The expression "pipe fittings" merely denotes that it is a pipe or tube of a particular length, size or shape. "Pipe fittings" do not cease to be pipes and tubes; they are only a species thereof. This aspect of the matter can be illus trated by the decision of this Court in Indian Aluminium Cables Ltd. vs Union of India and others, [1985] 3 S.C.C. 284. In that case the question was whether "Properzi Rods" manufactured and cleared by the assessee fell within Entry 27(a)(ii) of the First Schedule to the , I of 1944. That entry read as follows: Aluminium (a) wire bars, wire rods and castings, not otherwise speci fied. It was contended, on behalf of the appellant, inter alia, that, commercially, Properzi Rods are not known as wire rods in the trade and that a person wanting to purchase Properzi Rods asks specifically for Properzi Rods and not for wire rods. Reliance was also placed on the view taken by this Court that words and expressions describing an article in a tariff schedule should be construed in the sense in which they are understood in the trade by the dealer and the consumer. The Court held that Properzi Rods were only a species of wire rods. It pointed out: "To sum up the true position, the process of manufacture of a product and the end use to which it is put, cannot neces sarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad descrip tion of the article fits in with the expression used in the Tariff. The aluminium wire rods, whether obtained by the extrusion process, the conventional process or by Properzi process,, are still aluminium wire rods. The process of 64 manufacture is bound to undergo transformation with the advancement in science and technology. The name of the end product may, by reason of new technological processes, change but, the basic nature and quality of the article may still answer the same description. On the basis of the material before us, it is not possible to record a positive finding that Properzi Rods and wire rods are treated as distinct items in commercial parlance. Properzi Rod is a wire rod subjected to the Properzi process and is used for transmission of high voltage electric current. " The position is somewhat similar in the present case. As explained above, the goods described in the tariff, namely, pipes and tubes are designed to meet various types of re quirements. Normally pipes and tubes are produced as long and straight pieces. But by themselves they cannot fulfil all the needs or the end use for which they are intended. To get the maximum use out of the pipes and tubes, it is neces sary not only to produce long and straight pipes and tubes but also to turn out pipes and tubes of smaller dimensions and of different shapes and curves such as bends, elbows, 'T ' pieces, 'Y ' pieces, plugs, caps, flanges, joints, un ions, collars and so on. This is done by a process of forg ing, welding, hammering and so on applied to the longer tubes but basically the items remain the same and the use also remains the same. The tariff entry calls for no dis tinction between pipes and tubes manufactured out of sheets, rods, bars, plates or billets and those turned out from larger pipes and tubes. In these circumstances it is diffi cult to say that pipe fittings, though they may have a distinctive name or badge of identification in the market, are not pipes and tubes. It is true that all pipes and tubes cannot be described as pipe fittings. But it would not be correct to say that pipe fittings are not pipes and tubes. They are only a species of pipes and tubes. The use of the words "all sorts" and the reference to the various processes by which the excisable item could be manufactured set out in the tariff entry are comprehensive enough to sweep within their fold the goods presently under consideration. A certain amount of reliance has been placed on entries in the Harmonised Code as well as in the Customs Cooperative Council Nomenclature (CCCN). We do not think that these entries and specifications are very helpful. The CCCN con tains a number of entries in Section XV, namely, heading Nos. 73.17 to 73.20. While heading Nos. 73.17 to 73.19 talk of pipes, tubes and conduits, heading No. 73.20 speaks of "tube and pipe fittings (for example, joints, elbows, unions 65 and flanges) of iron and steel". Section XVI also deals with some types of pipes and tubes. The position is similar under the Harmonised Code. In Section XV, there is an equally meticulous sub division. Heading Nos. 73.02 to 06 deal with various types of pipes and tubes. Then comes heading No.73.07 which specifically talks of "tube or pipe fittings (for example, couplings, elbows, sleeves) of iron and steel (including stainless steel)" and proceeds to set out various subdivisions of these items one of which is (7307.23 & 7307.93) "butt welding fittings" which is the item of manu facture in the present case. It is true that "tubes and pipes" and "pipe fittings" fall under different subitems under the above Codes where the two expressions are used in contrast and the sub classification is more detailed. That dichotomy cannot be imported into the present context where there is only one comprehensive and generic entry. We can not, therefore, derive any assistance from those entries. For the above reasons we are of the opinion that the view taken by the Tribunal is not correct and that the assessee 's contention that the goods in question fall under item 26AA(iv) should be accepted. We, therefore, set aside the order of the Tribunal and direct the modification of the assessments accordingly. In the circumstances, however, we make no order as to costs. P.S.S. Appeal allowed.

Steel pipes and tubes (including blanks therefore) all sorts, whether rolled, forged, spun, cast, drawn, annealed, welded or extruded were dutiable under Item 26AA(iv) of the First Schedule to the . The Department, however, sought to classify 'pipe fittings ' such as elbows, bends and reducers, manufactured by the appellants, from out of the steel pipes purchased from the open market on payment of excise duty, under Item 68 which was a residuary entry, on the ground that they were known in the market differently as pipe fittings, a totally different commercial commodity. The appellants ' claim that the process undertaken by them did not amount to manufacture as the products turned out were nothing but pipes and tubes, and that they were being virtually asked to pay duty twice over on the same product, was rejected by the Appellate Tribunal. Allowing the appeal under section 35L(B) of the Act, the Court, HELD: 1. Unless the Department could establish that the goods in question could by no conceivable process of reason ing be brought under any of the tariff items, resort could not be had to the residuary item. This has not been done in the instant case. [62F] 2.1 The use of the words 'all sorts of ' and the refer ence to the various processes by which the excisable items could be manufactured set out in Entry 26AA(iv) are compre hensive enough to encompass all sorts of pipes and tubes. [64F] 2.2 The expression "pipe fittings" merely denotes that it is a pipe or tube of a particular length, size or shape. Pipe fittings do not cease to be pipes and tubes; they are only a species thereof. In order to achieve 61 fully the purpose for which the pipes and tubes are manufac tured, it is necessary to manufacture smaller pieces of pipes and tubes and also to manufacture them in such a shape that they may be able to conduct liquids and gases, passing them through and across angles, turnings, corners and curves or regulating their flow in the manner required. This is done by a process of forging, welding, hammering and so on applied to the longer tubes. There is no change in their basic physical properties and there is no change in their end use. They are merely intended as accessories or supple ments to the larger pipes and tubes. It could not, there fore, be said that pipe fittings, though they may have a distinctive name or badge of identification in the market, were not pipes and tubes. [63B C, 62G 63A, 64E] Indian Aluminium Cables Ltd. vs Union of India & Ors., ; , referred to. No doubt "tubes and pipes" and "pipe fittings" fall under different sub items under the Harmonised Code as well as under the Customs Cooperative Council Nomenclature where two expressions are used in contrast and the sub classifica tion is more detailed. That dichotomy could not be imported into the instant case where there was only one comprehensive and generic entry. [65B C]

Writ Petition (CRL) No. 745 of 1987. (Under Article 32 of the Constitution of India). J.M. Khanna for the Petitioner Ravindra Bana, G. Venkatesh Rao and C.V. Subba Rao for the Respondents. The following order of the Court was delivered: O R D E R The petitioner has been convicted for the offence of murder and sentenced to imprisonment for life. He claims in this application under Article 32 of the Constitution the benefit of the Punjab Borstal Act and has placed reliance on a decision of this Court in the case of Hava Singh vs State of Haryana, AIR 1987 SC 2001. A counter affidavit has been filed disputing the tenability of the claim. In Hava Singh 's case (supra) a two Judge Bench (including one of us) was considering the claim of a convict for an offence of murder to release taking into account the period the prisoner had stayed in the Borstal institution. In that case, it was observed: "It is evident from the averments made in the writ petition as well as in the said counter affidavit that the petitioner was admittedly adolescent at the time of his con 558 viction was sent to Borstal Institute at Hissar. Subsequently, he has been transferred to the District Jail at Rohtak and is undergoing the sentence of imprisonment for life. It appears from the objects and reasons of Punjab Borstal Act, 1926 that the object of the Act is to provide for segregation of adolescent prisoners from those of more mature age, and their subsequent training in separate institutions. These Borstal Institutions meant for detaining adolescent offenders and to impart to them such industrial training and other instructions and subject them to such disciplinary and moral influence as will conduce to their reformation. This is evident from the provisions of section 2(1) of Punjab Borstal Act, 1926. Sub section (2) of section 2 defines detained as detained in and detention as detention in a Borstal Institution. Section 5 of the said Act which is very vital for the purpose of decision of this case is quoted hereinbelow: '5. Powers of courts to pass a sentence of detention in a Borstal Institution in the case of a convict under twenty one years of age in lieu of transportation or rigorous imprisonment (1) When any male person less than twenty one years of age is convicted of an offence by a court of sessions, a Magistrate specially empowered under section 30 of the Code of Criminal Procedure, 1898, or a Judicial Magistrate of the first class, or is ordered to give security for good behaviour and fails to give such security, and when by reason of this criminal habits or tendencies or associations with persons of bad character it is expedient in the opinion of the Judge or Magistrate, that he should be detained, such Judge or Magistrate may, in lieu of passing a sentence of transportation or rigorous imprisonment, pass an order of detention for a term which shall not be less than two years and shall not exceed seven years when the order is passed by a Court of sessions or a Magistrate specially empowered under section 30 of the Code of Criminal Procedure, 1898, and shall not be less than two years nor exceed three years, when the order is passed by a judicial magistrate of the first class not so empowered. (2) . . . . . . . 559 (3). . . . . . . . This court further stated: "The petitioner who was adolescent admittedly being less than twenty one years of age at the time of his conviction though convicted under Section 302/34 I.P.C. and sentenced to imprisonment for life, was sent to the Borstal Institute in accordance with the provisions of Punjab Borstal Act, 1926. On his attaining the age of about twenty one years he was transferred back to the Jail. There is no provision except section 20 under the said Act for transferring back an adolescent convict on his attaining the age of twenty one years from the Borstal Institute to Jail for undergoing the unexpired term of imprisonment. The Court then referred to section 20 of the Act dealing with incorrigibles and observed: n "The section empowers the State Government to commute the residue of the term of detention of an inmate in Borstal Institute to such term of imprisonment of either description not exceeding the residue as the State Government may direct and also to order transfer of the inmate to any jail in Punjab in order to complete the said term of imprisomnent when such an inmate is reported to be incorrigible or is exercising bad influence on the other inmates of the Institution or such an inmate has committed a major Borstal Institution offence as provided in the rules. " The Court then stated: "This Court while considering an indentical case in the State of Andhra Pradesh vs Vallabhapuram Ravi; , has observed that a person detained in a Borstal School under section 10 a has to be released after he has served the full term of 5 years of detention or on his completing 23 years of age. He cannot be retransferred thereafter to prison. Such a retransfer would defeat the very object and purpose of the Act of providing for detention of young offenders in Borstal School for the purpose of reformation and rehabilitation of such offenders '. It is to be 560 noted in this connection that sentence of detention is passed in lieu of sentence of imprisonment which may have been passed. Hence the detention order under section S of the said Act is not imprisonment and Borstal School where the adolescent offender is detained is not a prison. It has also been observed further that section 433 A, Cr. P.C. would not operate where a person is detained by an order under section 10 a of the Act. Section 433 A of the Code was introduced not to set at naught provisions like 10 A of the Act which dealt with a special class of offenders like adolescent offenders but only to regulate capricious and arbitrary decisions under Section 432 of the Code and the remission rules sometimes reducing the sentence of imprisonment for life imposed on persons who had been convicted of capital offences but had been sentenced to imprisonment for life to short periods like five to six years. " Under the Punjab Act, 'offence ' has been defined in section 2(4) to mean "an offence punishable with transportation or rigorous imprisonment under the Indian Penal Code other than (a) an offence punishable with death;." Hava Singh 's case did not refer to the definition of 'offence ' and relied upon the decision in the case of Ravi (supra) though the scheme of the Andhra Act was very different. The Andhra Act known as the Andhra Pradesh Borstal Schools Act, 1925, does not have the definition of 'offence ' and there is no exclusion as provided in the Pun jab Act. What is excepted in the definition is an offence which is punishable with death. Section 302 of the Indian Penal Code provides: "Whoever commits murder shall be punished with death or imprisonment for life and shall also be liable to fine. " One of the punishments for the offence of murder is death and, therefore, the offence of murder would be covered within section 2(4)(i)(a) of the Punjab Act and to such a conviction the Punjab Borstal Act would have no application. Support for such a view is available from 561 several decisions of different High Courts. Section 562(1) of the Code A of Criminal Procedure of 1898 as amended in 1923 brought in the phrase: "Punishable with death or transportation for life". In Emperor vs Mt. Janki & Anr., AIR 1932 Nag. 130 that phrase was interpreted disjunctively and women convicted of an offence for which transportation for life was one of the punishments provided were held ineligible for release on probation under section 562. It was pointed out that the words 'death or transportation for life ' must be read as referring to offences the penalty for which provided by the Penal Code contains either death or transportation for life as one of the punishments awarded and not necessarily both. Reliance was placed on a full Bench decision of the Rangoon High Court in King Emperor vs Nga San Htwa & Ors., AIR 1927 Rangoon 205 which was dealing with a similar phrase occurring in section 497 of the old Code. A Division Bench of the Madhya Pradesh High Court in Chetti vs State of Madhya Pradesh, AIR 1959 MP 241 also took the same view. In Emperor vs Bahawati, AIR 1928 Lahore 920 it was held that as one of the alternative punishments for that offence under section 307 of the Penal Code, is transportation for life, it is obvious that section 562 is not applicable and the accused must be sentenced to rigorous imprisonment and fine. The Allahabad High Court in the case of State vs Sheo Shanker, AIR 1956 All. 326, the Madras High Court in Public Prosecutor of Madras vs Paneswar Rao, AIR 1946 Mad. 178, the Rajasthan High Court in Sarkar vs Jalam Singh, AIR 1950 Raj, 28 and the Bombay High Court in Naranji Premji vs Emperor, AIR 1928 Bom. 244 have taken the same view. In Hava Singh 's case the definition was not placed for consideration before the Court and, therefore, the conclusion which has been reached is not correct. The Punjab Borstal Act does not have application to an offence punishable under section 302 IPC. therefore, the conclusion in Hava Singh 's case is not correct. The petitioner is not entitled to the benefit of the Punjab Borstal Act as he has been sentenced to imprisonment for life for the offence of murder punishable under section 302 IPC for which the sentence of death is prescribed as an alternate. The writ petition is dismissed. P.S.S. Petition dismissed.

% Sectlon 5 of the Punjab Borstal Act, 1926 empowers courts to pass a sentence of detention in a Borstal institution in the case of male persons less than twenty one years of age convicted of an offence, in lieu of transportation or rigorous imprisonment. Section 2(4)(i)(a) of the Act which defines 'offence ' takes in offences other than an offence punishable with death. In his writ petition under Article 32 of the Constitution, the petitioner who has been convicted for the offence of murder and sentenced to imprisonment for life claimed benefit of the Punjab Borstal Act relying on Hava Singh vs State of Haryana, AIR 1987 SC 2001. The State contested his claim Dismissing the writ petition. ^ HELD: l. l The Punjab Borstal Act does not have application to an offence punishable under section 302 I.P.C.[561F G] 1.2 What is excepted in the definition of 'offence ' in section 2(4)(i)(a) of the Act is an offence which is punishable with death. One of the punishments under section 302 I.P.C. for the offence of murder is death, and. therefore, the offence of murder would be covered with section 2(4)(i)(a) of the Act and to such a conviction the Punjab Borstal Act would have no application. [560F G] 1.3 The petitioner is, therefore, not entitled to the benefit of the Punjab Borstal Act as he has been sentenced to imprisonment for life for the offence of murder punishable under section 302 I.P.C. for which the sentence of death is prescribed as an alternate. [561G] 557 1.4 In Hava Singh 's, case the definition of offence was not placed for consideration before the court and, therefore, the conclusion which has been reached is not correct. [561F] Emperor vs Mt. Janki & Anr., AIR 1932 Nag. 130; King Emperor vs Nga San Htwa & Ors., AIR 1927 Rangoon 205; Chetti vs State of Madhya Pradesh, AIR 1959 MP 291; Emperor vs Bahawati, AIR 1928 Lahore 920; State vs Sheo Shankar, AIR 1956 All. 326; Public Prosecutor of Madras vs Paneswar Rao, AIR 1946 Mad. 178; Sarkar vs Jalam Singh, AIR 1950 Raj. 28 and Narauji Premji vs Emperor, AIR 1928 Bom. referred to. Hava Singh vs State of Haryana, AIR 1987 SC 2001 overruled.

' Appeal No. '435 of 1967. Appeal from the judgment and decree dated September 30, 1966 of the Bombay High Court Nagpur Bench in Letters Patent No. 4 of 1964. 22 I S C. India/71 338 section T. Desai and A. G. Ratnaparkhi for the appellant. Rameshwar Dial, Jaishi Ram Goel and A. D. Mathur for the respondent. The Judgment of the Court was delivered by Shelat J. By a deed of lease, dated May 5, 1906, the prede cessor in title of the respondent let out to the appellant 's father an open portion of land measuring 26 ft. x 225 ft. out of a larger plot. The lease was for constructing buildings and for a period of 30 years certain at the annual rate of Rs. 130. The lease contained, iner alia, the following : "Even after the prescribed time limit, I shall have a right to keep my structure on the leased out land, so long as I like, and I shall be paying to you the rent every year as stated above. You will have no right to increase the rent and I shall also not pay it, myself and my heirs shall use this land in whatever manner we please. After the lease period, we shall, if we like, remove our building_ right from the foundation and vacate your land. In case we remove our structure before the stipulated period, we shall be liable to pay to you,, the rent for all the thirty years, as agreed to above. . . In case I were to sell away the buildings, which I shall be constructing on the above land, to anyone else, then, the purchaser shall be bound by all the terms in this lease deed. . . The trouble between the parties started when the respondent commenced construction on the rest of the land in a fashion so as to be in close vicinity to the western boundary of the leased land to house an industry, called Sudha Industries. The appellant filed the suit in 1958, out of which this appeal arises, urging that the said lease was a permanent lease, that buildings had been constructed on the leased land partly in 1906, and the rest in 1909 and 1922, that the said plot of land was subsequently demarcated into two survey numbers, 94 and 93, that a strip of land, 4 ft. in width and measuring 650 sq. immediately to the west of survey No.,94 and forming part of survey No. 93 was covered by the said lease and was in his possession as part of the leased land or was acquired by him as accession. Pending the suit the appellant amended the plaint asserting that the portion let out under the said deed of lease was 5850 sq. in the aggregate, which included the said strip, of land and annexed a new plan showing details of the land which according to him was leased out under the said deed. 339 Out of the structures put up by the appellants father, the central building, as shown in the plan produced by the appellant, has windows on the ground, first and second floors, all opening on the western side. The eaves of that building protrude on that side by about 2 1/2 ft. with the result that the rain water falls over the said strip of land. According to the plaint. there is a drain partly in plot No. 94 and partly over the said strip of land which carries the entire waste, water from the said building. According to the appellant, the said construction made by the respondent shut off light and air which he had been enjoying from the aforesaid windows. He had other complaints also to make and claimed amongst other things a declaration that the said strip of land was part of the leased land covered by the said deed, or in the alternative, that he bad acquired it by way of accession, and prayed for a permanent injunction against shutting off light and air through the said windows and interference with his rights over the said strip of land either as the lessee thereof or as and by way of easements over it. The respondent 's answer to the suit briefly was that the appellant was not entitled to the said strip of land either as failing under the said lease or as accession. The respondent also denied that the appellant was entitled to any of the reliefs claimed by him, that the said lease was not a permanent lease but was for a period of 30 years in the first instance, but being a lease for constructing buildings thereon and being transferable, could at best be for the lifetime of the lessee, the appel lant 's father. He also averred that part of the land comprised in plot No. 93 used to be let out from time to time to persons including the, appellants father, who had executed a separate rent note, dated July 21, 1935, and who had under the said note been in possession thereof as a lessee from 1935 to 1941, and that 'he having been permitted a,% such a lessee the use of the said strip of land to enable him access to the said leased portion of survey No. 93, there was no question of his having acquired any easementary rights by prescription over the said strip of land. The Trial Court partially decreed the appellant 's suit, in that it rejected the appellant 's claim to the said strip of land, but granted a declaration of easement for light and air, through the said windows and for carrying said drain over the decree the appellant filed an appeal before the respondent also filed cross objections. The dismissed the appellant 's appeal with the result that the appellant 's waste and rain water through the said strip of land. Against that judgment and District court District Court and allowed the cross objections suit was dismissed. A second appeal filed by the appellant in the High Court was heard by a Single Judge, who, held that the said lease was a permanent lease, that the appellant had acquired the said strip of land as accession to the leased land and as a consequence of those findings 340 granted a mandatory injunction directing removal of any con struction or projection by the respondent over the said :strip of land. In view; of his finding that the said strip of land had always been in the.possession of the appellant and earlier of his father ever since 1906 and thus had been acquired as an accession, he considered it unnecessary to go into the question of easementary rights claimed by the appellant. The principal ground on which the Single Judge founded his; judgment was that the lease was both, transferable and heritable, and therefore, had to be held as a permanent lease. Aggrieved by the:.judgment and decree passed by the learned Single Judge, the respondent filed a letters patent appeal wherein three principal questions were canvassed , (1) whether the said lease was a permanent lease, (2) whether the strip of land in dispute was covered by the said lease, or in the alternative, acquired as accession, and (3) in. the: alternative;: whether, the appellant had acquired easementary rights over the said strip of land (a) of light and air,. (b) of passage and (c) of draining water, both waste and rain, over, the said strip of land. The Letters Patent Bench answered all the, three questions, against the appellant holding that the said lease being a lease for building purposes and transferable, was a lease for an indefinite period, and therefore, for the lifetime of the: lessee, the said Dhanji, that the said strip. of land was neither,covered. under the said lease, nor acquired as accession through adverse possession, and lastly, that. except for the drain extending upto 32 ft. constructed on the said strip of land. the appellant had not acquired any other easementary, rights over it. As to light and air, ,the Bench held that the appellant failed to establish that the obstruction caused by the respondent 's construction was such as to give him an actionable claim against the res pondent. The result was that except for the said drain,theBench dismissed the appellant 's suit. Mr. Desai for the appellant raised three contentions in sup port of the appeal; (1) that on a proper interpretation of the document of lease. the lease was a permanent lease, (2) that there was an accession in respondent of the said strip of land within the meaning of section 108,(d) of the , and therefore '. the said strip of land must be deemed to be comprised in the lease. and (3) that the appellant had acquired by prescription rights of easement of light and air, of throwing rain water and draining waste water through the said drain and of passage over the said strip of land Under section 15 of the Easements Act, 1882. On the question of interpretation of the document of lease, Mr. Desai supported, the View taken by the Single Judge. The learned Single Judge construed the document to mean (a) that the 'lease was for building purposes, (b) that It was in the first 341 instance for 30 years certain (c) that the lessee was to continue to enjoy all rights as a lessee even after the expiry of 30 years, and (d) that the lesser could not increase the rent even after the expiry of 30 years. The most important: term of the said lease. said the Single Judge, was "the one which provides for the leasehold right continuing to the heirs and successors". The Letter Patent Bench, however, felt that on a proper construction of the document, the lease was for an indefinite period, and though transferable, did not provide for any hereditary rights. , In support of that conclusion the Bench pointed out that the view consistently taken by the High Court of Bombay, right from the decision in Vaman Shripad vs Maki,(1) was that such a lease is to be construed as one for the lifetime of the lessee and not as a permanent lease. The only solitary case where a lease for an indefinite period was construed as permanent was that in Sonabai vs Hiragavri, (2) but subsequent decisions of that High Court had dissented from that decision and had consistently held leases for indefinite periods as leases for the lifetime of the lessee. (see Donkangonda vs Revanshiddappa (3). In Bavasaheb vs West Patent Co.(4) Sonabai 's case (2) was once again dissented from, the High Court reiterating that a lease for an indefinite period is ordinarily to be construed as one for the lifetime of the lessee and that a distinction should be made between a transferable and a. heritable lease. The High Court. there observed (1) that if a lease were to be for a definite period and before that period was over, the lessee died, the leasehold rights during the remainder of the period would enure for the benefit of his heirs, unless the document stipulated that in such an event the rights of the lessee were not to enure for the benefit of his successors, (2) that if the lease was for an indefinite 'period, it would not enure for the benefit of the lessee 's heirs. such a lease would usually be for the lifetime of the lessee himself unless it clearly appeared from the contract that the benefit of the lease was intended to accrue to the lessee 's successors. , Whether a lease was permanent or for the lifetime only of the lessee, even where it was for building structures and was transferable, depended upon the, terms of the lease and the Court must, therefore, look at the substance of it to ascertain whether the parties intended it to be a permanent lease. But the fact that the lease provided that the lessee could continue in possession of the property so long as he. paid 'the stipulated rent did ' hot mean that the 1ease. was for perpetuity. It would usually be regarded as a lease for an indefinite period and as such. for ' the lessee 's lifetime. The High Court also pointed out that the fact that tenancy rights were transferable,, as provided (1) I.L.R. (2) (3) (4) 56 Bom. L.R.61 342 by section 108(j) of the , did not mean that they were also heritable. In two of its decisions, Runge Lail Lobes vs Wilson(1) and Promada Nath Roy vs section Chowdhry(2) the Calcutta High Court took the view that where the purpose of the lease was for constructing buildings, the court could presume, even though the document did not in terms so provide, that the lease was intended to be permanent. To the same effect was also the decision in Navalram vs Javerlial(3). On the other hand in Lekhraj Roy vs Kunhya Singh(4) where the lease was for the period of the continuance of ,the lessors ' mokurruri, the Privy Council held that if it could be ascertained what the term was. the rule of construction that a grant of an indefinite nature enured for the lifetime of the grantee would not apply. But, if the grant was made to, a person for an indefinite period, it enured, generally speaking, for his lifetime and passed no interest to his heirs unless there were words showing an intention to grant a hereditary interest. In Abdul Rahim vs Sarafalli (5) the Bombay High Court adhered to the view consistently taken by it that the lease there was for the lessee 's lifetime. The lease there contained terms similar to those before us. It was for building a factory and although it provided for 25 years certain in the first instance it also provided that after the expiry of that period the lessee would continue to take the agreed rent so long as the lessee remained in possession and further provided for the lessee 's right to remove the factory when he decided to hand over the land to the lessor. The conflict of opinion amongst these decisions has since then been resolved by the decision in Bavasaheb 's case(6) having been expressly approved by this Court in Sivavogeswara Cotton Press vs Panchaksharappa (7) The lease here was for building factories and other structures and was for a period of 20 years certain. It, however, provided that the lessee could continue to remain in possession so long as he desired and observed the terms of the lease which provided for a higher rent for the first 10 years after the expiration of the said 20 years and a still higher rent thereafter. (14) of the lease in addition provided that it was to be binding "on me, my heirs, executors, administrators, successors and assigns, as well as on. your heirs, executors, administrators, successors and assigns. . The question was as to the (1) [1899]I.L.R.26 Cal.204.(2) Cal. (3) (4) [1876 77] L. R. 4 I. A. 223. (5) (6) 56 Bom. L. R. 61. (7) 343 nature of the lease. At page 885 .of the report, the Court remarked that cl. (14) was a very important clause "which though coming as the last clause must govern all the stipulations between the parties. Thus the terms conditions of the km which created the rights and obligations between the lessor and the lessee were specifically declared to be binding on the heirs and successors in interest of the lessor the lessee". The Court then examined various decisions of the different High Courts including Navalram 's case Promnada Nath Roy 's case (2) and lastly, Bavwaheb 's case (3). As to the last case, the Court at page 889 of the report expressed its "complete agreement" with the observations of Gajendragadkar, J. (as he then was), namely, that the nature of the tenancy created by a document must be determined by construing the document as a whole, that if the tenancy is for building purposes, prima facie it might be arguable that it was intended for the life time of the lessee or might in certain cases be even a permanent lease, and lastly, that, whether it was a tenancy for life or a permanent tenancy must ultimately depend upon the terms of the contract itself. As can be seen from an earlier passage on that very same page, the Court distinguished Bavagaheb 's (3) case on the ground that the lease there did not contain a provision similar to cl. (14) in the case before it. Besides, the Court sought an additional support for its conclusion that the lease was permanent in the provision which stipulated that the rent would be Rs. 350 a year for the first 20 years, Rs. 400/ for the next 10 years and Rs. 500/ thereafter until the lessee continued to occupy the land, which provision indicated that the lease was not intended to be only for the life time of the lessee. It is clear from the decision that what clearly weighed with the Court was the fact that the document of lease distinctly indicated that the parties intended that the rights under the lease were to be hereditary. The question. therefore,. is whether the lease under consideration is of the type in the case of Sivayogeswara Cotton Press.(4). Looking at the document (exhibit P 4) as a whole. the lease un doubtedly is for building a residential structure. Though it is for 30 years certain, the lessee was entitled to remain in possession of the land so long as he paid the stipulated rent, which the lessor was not entitled to increase. But, though the lease is for building structure and the period is indefinite there are at any rate no (1) (2) Cut. (3) 56 Bom. L.R. 61. (4) ; 344 express words indicating that the leasehold rights thereunder were intended to be heritable. On the other hand it expressly provides, as was the case in Abdul Rehim(1) for the right of the lessee to remove the structures, meaning thereby vacating the land, if he so desired. The clause providing for such removal is not that the lessee would remove the structures on default in payment of rent, but depends on his own volition, a clause indicative of the parties not having intended the lease to be permanent. For, if it was intended to be permanent, there was no necessity for providing such a right. But the argument was that there are words in the document indicative of the lease having been indented to be heritable as was the case in Sivayogeswara Cotton Press (2). The mere fact, however, that a lease provides for the interests thereunder to pass on to the heirs of the lessee would not always mean that It is a permanent lease. Such a provision can be made in two ways resulting in two different consequences. A lease may provide a fixed period and then include a provision that in the event of the lessee dying before the expiry of such period, his heirs would be entitled to have the benefit of the lease for the remainder of the period. In such a case, although, the lease may provide for the heirs to succeed to the interests in the leased land, it would only mean that such heirs succeed to the rights upto the expiry of the lease period. If the lease, on the other hand, were foran indefinite period, and contain a provisions for the rights thereunder being heritable, then such a lease, though ordinarily for the lifetime of the lessee, would be, construed as permanent. The question, therefore, is to which of these two classes, of leases the present lease belongs. After reciting the purpose for which it was made, the term of 30 years and the rent. the, deed provides: "Even after the prescribed time limit, I shall have a right to keep my structure on the leased out land, so long as I like, and I shall be paying to you the rent every year as stated above." Though the period is 30 years, this part of the document would make the lease for an indefinite period which would ordinarily mean a lease for the lifetime of the lessee. What follows then, however gives, scope for the argument that it is not merely for the lifetime of. the, lessee: "You will have no right to increase the rent and I shall also not pay it, myself and my heirs shall also not pay it, myself and my heirs shall use this land in whatever manner we please. After the lease period, we (1) (2)[1962] 3 S.C.R. 876. 345 shall, if we like, remove our building right from the foundation and vacate your land. In case we remove our structure before the stipulated period, we shall be liable to pay to you, the rent for all the thirty years, as agreed to above." And further: "In case I were to sell away the buildings, which I shall be constructing on the above land, to anyone else, then, the purchaser shall be bound by all the terms in this lease deed. " This part of the document undoubtedly gives the lessee the right to transfer by sale the leasehold interest. But, as already stated, a clause enabling the leasehold interest to be transferred does not render such interest heritable. The effect of these clauses is that the first part of the document ensures that the lessor cannot charge rent higher than the agreed rent even if the lessee were to remain in possession after the period of 30 years. That part is consistent with the lease being for an indefinite period, which means for the lifetime of the lessee. The next part provides for the right to remove the structures "after the lease period". The words "after the lease period" mean either at the end of the 30 years, or on the death of the lessee, because, it also says that if the lessee were to remove the buildings before the expiry of 30 years, he would have to pay the rent for the remainder of that period. This part of the document does not show the intention that the lease was to be a permanent lease. It merely ensures the right to remove the structures if the lessee or his heirs so desired on the expiry of the lease period, i.e., either at the end of 30 years, or after the lifetime of the lessee. The heirs are mentioned here to provide for the contingency of the lessee dying before the expiry of 30 years and also for the contingency of his living beyond that period and continuing to occupy the land. In the event of the first contingency, the lessee 's heirs would continue in possession till the expiry of 30 years and then remove the structures if they wished. In the case of the second contingency, the, heirs of the lessee would have the right to remove the structures on the death of the lessee. In either event the right provided for is the right to remove the structures. It is not a provision for the lease being heritable and its being consequently a permanent lease. Thus, the lease is for a period certain, i.e., 30 years and on the expiry of that period if the lessee still were to continue to pay the rent, for his lifetime. In the event of his dying before that period, the benefit of the lease would enure to his heirs till the completion of 30 years. They would be entitled to remove the structures either 346 at the end of the 30 years if the lessee were to die before the expiry of that pariod or at the end of the lessee 's fife were he to continue to be in possession of the leased property after the expiry of 30 years. But the lease did not create hereditary rights so that on the death of the lessee his heirs could succeed to them. In this connection it is necessary to note that, as translated in English, it would appear as if the document uses the pronoun 'I ', meaning as if the lessee in the earlier part and the pronoun "we", meaning the lessee and his heirs, in the latter part. Such a translation, however, is not correct. We ascertained from Mr. Ratnaparkhi who after looking at the original Marathi assured us that the pronoun used throughout is ami, which means "we,", a term often used in documents written in regional language for the executant instead of the singular 'I '. In our view the lease before us is clearly distinguishable from that in the case of Sivayogeswara Cotton Press(1) where the leasehold rights were in clear terms made heritable and where the Court held that cl. (14), though placed last in the document, governed all its There is no provision in the present cast comparable with such a clause. The lease was undoubtedly for an indefinite period which only means that it was to enure for the lessee 's lifetime. Reference in it of the heirs of the lessee is only for the. limited purposes set out earlier and not for making the leasehold interests heritable. We do not find in the document words such as those in Sivayogeswara Cotton Press (1) would compel us to the conclusion that the lease was intended to be permanent. That leads us to the second contention of Mr. Desai. Under section 108(d) of the , if any accession is made to the leased property during the continuance of a lease, such accession is deemed to be comprised in the lease. If the accession is by encroachment by the lessee, and the lessee acquires title thereto by prescription, he must surrender such accession together with the leased land to the lessor it the expiry of the term. The presumption is that the land so encroached upon is added to the tenure and forms part thereof for the benefit of the tenant go long as the km continues and afterwards for the benefit of the landlord The of the appellant. in the plaint in regard to an accession was vague and confused. Para 2 of the plaint simply stated that the said strip of land was part of plot No. 93, but was used by the appellant as a passage. para 7(a) of the plaint, however,used the word "accession to the leasehold rights of the plaintiff in respect of the nazul plot No. 94", but did not say that such (1) ; 347 accession came about as a result of or by means of adverse possession. In para 8(a), which was inserted in the plaint by an amendment in 1959, an alternative plea was made that the said strip of land was part of the land under the lease. The written statement of the respondent denied the user of the said strip of land by the appellant and also the plea of accession thereof to the leased land. But the appellant 's case was only that the building which his father had constructed extended upto the end of the western boundary of plot No. 94, with the result that (a) the eaves of that building projected over plot No. 93 by about 21 ft., that its windows on that side opened on plot No. 93 and a drain was constructed by the side of the appellant 's western boundary through which waste water flowed from that building. According to the appellant 's case, the said strip of land, which withou t doubt forms part of plot No. 93, was used by the appellant as a passage for going to a well situate in plot No. 93. Plot No. 93, however, was an open plot until recently, except for a small structure on its northern side, so that there was no definite or well marked passage which was used by the appellant in order to reach the said well. The projection of the eaves or the opening of the windows on to the said strip of land were not asserted as acts of adverse possession or encroachment but as easementary rights. The appellant did not claim any right to the said well as admittedly the use of the said well for drawing water was with the consent of the lessor. Therefore, the use of the passage for going to the well would be incidental to the permissive use of the said well As regards the drain, the appellant 's evidence was that it passe partially through the said strip of land. Originally a kachha drain, it was made pucca upto a distance of 32 ft. in 1923. No width of it, however, was shown. Obviously, there can, therefore, be no adverse possession over the whole of the 4 ft wide strip of land. The Letters Patent Bench has pointed out three circumstances as emerging from the evidence which clearly negative the case of accession by adverse possession: (1) that the original plot was given two numbers, 94 and 93 in 1929, plot No. 93 being shown as commencing from the western wall of the appellant 's building, (2) that no protest was ever made against such a demarcation by the appellant or his father, and (3) a clear admission by the appellant in cross examination that according to him the said strip of land was covered by the lease deed add was 'not an acquisition over and above the leased land under that deed. Parties to a suit are, it is true, entitled to make contradictory pleas in the alternative in their pleadings. But at the stage of the evidence, no serious attempt was made by the appellant to establish accession by adverse possession. On the contrary, the appel 348 lant sought to make out a case of easementary rights by prescription, a case incompatible with the claim of, adverse possession where a party claims title over the land of another as his own and therefore there would be no dominant tenement claiming a right by prescription over a servient tenement. In this state of the evidence the Letters Patent Bench, in our judgment, was right in rejecting the claim of accession which the learned Single Judge had erroneously accepted. As regards the appellant 's claim to the easementary rights, assuming that a lessee can claim such rights over an adjacent property belonging to his lessor, section 15 of the Easements Act requires that the access and use, on the basis of which an easement is claimed, must be as and by way of easement and without interruption for a period of 20 years. The enjoyment must be, in other words, as of right and not permissive either under a licence or an agreement. In Abdul Rashid vs Brahman Saran(1) a Full Bench of the Allahabad High Court held, on the principle embodied in section 12, that the possession of a tenant being in law the possession of his landlord, the tenant cannot acquire by prescription an easement in favour of his holding except on behalf of his landlord. The Full Bench, however, made a distinction between an easementary right of way and an easementary right of light and air mentioned in the first two paragraphs of section 15, and held that though a lessee of land, who is the owner of the building on such land, cannot acquire by prescription an easement of a right of way or one to flow water over another land of the lessor, so far as the use of light and air or support for his building is concerned he is the owner of the building and may under the first two paragraphs of section 15 acquire such easements as he would not acquire them for any one except himself under section 12. This decision was followed in Haji Abdulla Harron vs Municipal Corporation, Karachi(2). But in Ambaram vs Budhalal(3) the High Court of Bombay differed from the Allahabad High Court holding that the distinction in English law arising from the language of sections 2 and 3 of the Prescription Act, 1832 between an easement of light and air on the one ]hand and of easement of way on the other, did not hold good under the Easements Act as no such distinction is made in sections 4 and 12 of the Act, that it is under section 12 that an easement is acquired and not under section 15 which provides for not the persons who can acquire easementary rights but the method by which they can be acquired, and therefore, the principle laid down in sections 4 and 12 would apply, namely, that if the lessee acquires a right to light and air, he does so on behalf of the owner and therefore he cannot acquire it on behalf of the owner (1) I.L.R. [1938] All. (2) A.T.R. 1939 Sind 39. (3) 349 as against such owner. There is thus clearly a conflict of view between the two High Courts. It is, however, not necessary to resolve this conflict in this case as the question of easements in the present case can be disposed of in another way. IV of the Act deals with the disturbance of easements and section 33, therein provides that the owner of any interest in the dominant heritage or the occupier of such heritage may institute a suit for the disturbance of the easement provided that the disturbance has actually caused substantial damage to the plaintiff. Under Explanation II read with Explanation I to the section, where the disturbance pertains to the right of free passage of light passing through the openings to the house, no damage is substantial unless the interference materially diminishes the value of the dominant heritage. Where the disturbance is to the right of the free passage of air, damage is substantial if it interferes materially with the physical comfort of the plaintiff. In Ravachand vs Maniklal (1), it was held that an easement by prescription under sections 12 and 15 of the Act is in fact an assertion of a hostile claim of certain rights over another man 's property and in order to acquire the easement the person who asserts the hostile claim must prove that he had the consciousness to exercise that hostile claim on a property which is not his own and where no such consciousness is proved he cannot establish a prescriptive acquisition of the fight. Therefore, if the owner of a dominant tenement has, during the period of prescription, exercised rights, on the footing that he is the owner but which he later on claims as an easement over a servient tenement, then, his exercise of those rights is not exercised as an easement and he must fail in a claim for an easement. As already stated, a party to a suit can plead inconsistent pleas in the alternative such as the right of ownership and a right of easement. But, where he has pleaded ownership and has failed, he cannot subsequently turn around and claim that right as an easement by prescription. To prove the latter, it is necessary to establish that it was exercised on some one else property and not as an incident of his own ownership of that property. For that purpose, his consciousness that he was exercising that right on the property treating it as someone else 's property is a necessary ingredient in proof of the establishment of that right as an easement. In his evidence, the appellant did not claim the right of passage or of light and air or of draining his waste and rain water over the said strip of land as rights over the respondent 's property. On the contrary, he made it clear that the said strip of land fell (1) I.L.R. 350 under the document of lease. "I have a right on both, the properties under the lease dead itself". he declared in his. evidence, and added, "whatever rights I have acquired are under the lease deed itself and not afterwards" His claim that the strip of land was included in the leased land could not succeed because he had to admit that although two different municipal numbers, 94 and 93, were given as early as 1929 to the portions of the land, 94 to the portion under his possession, and 93 to that under the possession of the respondent, no complaint was ever made to, the municipality or any other authority that the strip of land which he claimed to be covered under the lease should be included in his plot, namely, No. 94. In 1940, and again in 1955, when transfer deeds in respect of plot No. 94 were executed by him, the area mentioned therein was described as measuring 5182 sq. "ft., which would not include the strip of land forming part of plot No. 93. Having thus failed in his claim that the said strip of land was acquired either as accession or as one covered by the lease deed, he could not turn round and successfully claim that he had during the requisite period exercised rights over it on the footing of an owner of a dominant tenement exercising those rights over a servient tenement of another. Assuming, however, that the said strip of land was used by him as a passage, the evidence clearly showed that it was permissive. There was evidence of a permission having been asked for from the respondent 's father by the appellant for installing a handpump over the respondent 's well in plot No. 93. If the appellant, and previously his father, were permitted to draw water from that well the use of the well for drawing water and of the strip of land as a passage for going to the well was clearly permissive and not as an open hostile use over the lessor 's property. The appellant himself admitted that his father had taken a portion of plot No. 93 on lease paying separate rent therefore at Rs .45/ a year, and had put up thereon a tin shed which stood there from 1935 to 1941. It is clear that the strip of land was allowed to be used as a passage both to the well and the said tin shed. He admitted two letters, dated September 30, 1958 and December 4, 1959, having been written by him to the respondent both relating to rent due, by him in respect of :the said land on which the said tin shed stood. On these facts it is impossible to sustain the right of passage over the said strip of land as an easementary right by prescription for a continuous period of 20 years. As to the light and air through the windows on the western side, it is clear from Explanations II and III to section 33 that to constitute an actionable obstruction of free passage of light or air to the openings in a house it is not enough that the light or air is less than before. There must be a substantial privation of light, enough to render the occupation of the house uncomfortable, 351 according to the ordinary notions of mankind. See Colls vs Home and Colonial Stores(1). The plan produced in evidence shows that the central part of th e appellant 's building has five windows on the ground floor, five in addition to one smaller window on the first floor and four on the second floor. All these windows are in the rear side of the building and open out an to the said strip of land. There can be no doubt and the plan shows clearly that as a consequence of construction by the respondent, there would be a deprivation, partially though it would be, of light and air previously enjoyed 'by the appellant through these windows, especially as they are on the western side. On the ground floor, all the five windows are affected. On the first floor, only three windows are affected, and that too partially. On the second floor, none of the four windows is affected at all. Thus, so far as the ground and first floors are co , the appellant would not have the same amount of light and air. as before. But the evidence shows that there are openings, doors and windows, on each of these floors on the front side, i.e., on the eastern side. There was some evidence also that the ground floor bad so far been used as a godown ,or a store room, though the appellant a that he had been using it also as a living room. No attempt, however, was made on behalf of the appellant to establish that the obstruction caused by the respondent 's construction had been such as to amount to a substantial privation, so as to render occupation of the house by him uncomfortable. In the absence of such proof he was rightly nonsuited by the High Court. As regards the drain, we say nothing, as part of the appel lant 's claim in regard to it has been allowed by the High. Court and there are no cross objections against it by the respondent. In the view that we take, the appellant Cannot succeed on any one of the three questions raised by his counsel. The appeal, therefore, fails and has to be dismissed with costs. V.P.S. Appeal dismissed.

In 1906 the predecessor in title of the respondent leased out an open portion of land to the appellant 's father. The lease was for building a residential structure, and the appellant constructed a house. Though it was for 30 years certain, the lessee was entitled to remain in possession of the land so long as he paid the stipulated rent, which the lessor was not entitled to increase. There were no express words indicating that the leasehold rights were intended to be heritable. The deed provided for the right of the lessee to remove the structures after the lease period, meaning thereby vacating the land, if he so desired. It gave the lessee the right to transfer by sale the leasehold interest. In 1929, the original plot was given two numbers 94 and 93 the latter being the western portion in the possession of the respondent lessor and the former being the eastern portion leased out to the appellant. There was a strip of land, 4 ft. in width, immediately to the west of survey No. 94 and forming part of survey no 93. This strip of land was used by the appellant for passage for going to a well situated in plot No. 93. The appellant 's father had taken a portion of plot No. 93, including the strip, on lease, paying separate rent therefore and put up thereon a tin shed which stood there from 1935 to 1941. Sometime thereafter the respondent commenced construction on survey No. 93 in close vicinity to the appellant 's plot On the questions: (1) Whether the lease was a permanent lease; (2) there was an accession in respect of the strip of land within the meaning of section 108(d) of the , and therefore, the strip of land must be deemed to be comprised in the lease; and (3) whether the appellant had acquired by prescription, rights of easement of light and air and of passage over the strip of land under section 15 of the Easements Act, 1882. HELD: (1) The question as to whether a lease was permanent or for the life time only of the lessee, even where it was for building structures and was transferable, depends upon the terms of the lease. The mere fact that a lease provides for the interests thereunder to pass on to the heirs of the lessee would not always mean that it is a permanent lease. Such a provision can be made in two ways resulting in two different consequences. The lease may provide a fixed period and then include a provision that in the event of the lessee dying before the expiry of such period his heirs would be entitled to have the benefit of the lease for the remainder 336 of the period. In such caes, although the lease may provide for the heirs to succeed to the interests in the leased land it would only mean that such heirs succeed to the rights up. 'to the expiry of the lease period. If the lease provided that the lessee could continue in possession of the property so long as he paid the stipulated rent, it would usually be regarded as lease for an indefinite period and as such for the lessee 's life time. In such a case, if the lease contains a provision for the rights thereunder being heritable, then, such a lease,, though ordinarily for the lifetime of the lessee, would be construed as permanent. [341F H; 344C E] In the present case, since the lessee was entitled to remain in possession even after the lease period it was a lease for an indefinite period. But there was no provision in the deed making the lessee 's right heritable ' and therefore, it was not a permanent lease but only for the lifetime of the lessee. [344A; 346D E] (a) The words, if the lessee were to remove the buildings before the expiry of 30 years he would have to pay rent for the remainder of the period, do not show an intention to create a permanent lease. The clause providing for such removal is not that the lessee would remove the structures on default of payment of rent but on his own volition, a clause indicative of the parties not having intended the lease to be permanent. [344B; 345E F] (b) The words 'after the lease period ' mean either at the end of 30 years or at the death of the lessee. Therefore, the clause that after the lease period we shall, if we like, remove our buildings ', merely ensures the right to remove the structures if the lessee or his heirs so desired on the expiry of the lease period, that is, either at the end of 30 years or after the lifetime of the lessee. The heirs are mentioned here to provide for the contingency of the lessee dying before the expiry of 30 years and also for the contingency of his living beyond that period and continuing to occupy the land. In the event of the first contingency, the lessee 's heirs would continue in possession till expiry of 30 years and then remove the structures if they wished. In the case of the second contingency the heirs of the lessee would have a right to remove the structures on the death of the lessee. In either event the right provided for is the right to remove the structures. It was not a provisions for the lease being heritable and its being consequently a permanent lease. [345D H] (c) The pronoun used in the document is the vernacular equivalent of 'we ' used for the executant instead of the singular 'I ' and does not mean the lessee and his heirs. [346B C] Sivavogeswara Catton Press vs M. Panchaksharappa, ; , Lekhraj Ray vs Kunhya Singh, 1876 77 L.R. 4 I.A. 223 Vaman Shripad vs Maki, I.L.R. , Donkangonda vs Ravanshivappa, , Bavasaheb vs West Patent Co. 56 Bom. L.R. 61 and Abdul Rahim vs Sarafalli, , referred to. Sonabai vs Hiragayri, , Runge Lall Lobes vs Wilson, Cal. 204, Promoda Nath Roy vs section Chowdhry, Cal. 648 and Navalram vs Javerilal, , disapproved. (2) Under section 108(d) of if any accession is made to the leased property during the continuance of a lease, such accession is deemed to be comprised in the lease. [346F] 337 In the present case, the appellant made no serious attempt to establish accession by adverse possession. [347H] (a) When the plots were separately demarcated including the strip in the respondent 's portion no protest was ever made against such a demarcation by the appellant or his father. [347G] (b) The appellant made a categorical statement in evidence, that according to him the said strip of land was covered by the lease deed and was not an acquisition over and above the leased land under the deed, but the evidence showed that strip was not so included. [347G H], (c) The appellant sought to make out a case of easementary right by prescription, a case incompatible with the claim of adverse possession [348A B] (3) Under sections 12 and 15 of the Easements Act an easement by prescription can be acquired by assertion of hostile claim of certain rights over another man 's property. In order to acquire the easement the person who asserts the hostile claim must prove that he had, the consciousness to exercise that hostile claim on a property which is riot his ' own, and where no such consciousness is proved, he cannot establish a prescriptive acquisition of the right. Where he has pleaded ownership and has failed, he cannot subsequently turn round and claim that right as an easement by prescription. To prove the latter it is necessary to establish. that it was exercised on someone else 's property and not as an incident of his own ownership of that property. [349D G] In the present case, the appellant having claimed, though unsuccessfully, that the strip of land was included in the leased land or that there was an accession, he could not successfully claim that during the ' requisite period he exercised rights over it as the owner of a document tenement. Further,. he could not claim any right of passage because his use of the strip as a passage was permissive. [350C E] As to light and air through. the windows on the western side the appellant could succeed only if there was a substantial privation of light, enough lo render the,occupation of his house uncomfortable according to ordinary notions of mankind [350H 351IA] In the present case, the plan showed that as a consequence of construction by the respondent there would be a partial deprivation of light and air. But no attempt was made on behalf 'of the appellant to establish that the obstruction caused by the respondent 's construction had been such as to amount to substantial privation so as to render the occupation of the house by the appellant uncomfortable. [351 C E] Rayachand vs Maniklal, I.L.R. [1946] Boni. 184 (F.B.), approved Colls vs Home and Colonial Stores, ; , applied [The question,whether under sections 4.and,12 of the, Easement Acta lessee can acquire a right to light and air as against the owner, left open] [349A]

iminal Appeals Nos. 208 and 209 of 1963. Appeals by special leave from the judgment and order dated August 17, 1963, of the Patna High Court in Criminal Appeals Nos. 554 and 556 of 1961. T. V. R. Tatachari, for the appellants. D. P. Singh and R. N. Sachthey, for the respondents. February 3, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR C.J. The two appellants Haricharan Kurmi and Jogia Hajam were charged along with four other persons with having committed an offence punishable under section 396 of the Indian Penal Code, in that during the night intervening the 24th and the 25th March, 1960, they committed dacoity in the house of Deokinandan Jaiswal, and during the course of the said dacoity, they committed the murder of Damyanti Devi, wife of the said Deokinandan Jaiswal. The names of the four other accused persons are; Ram Bachan Ram, Joginder Singh, Ram Surat Choudhury and Achheylal Choudhury. The learned Sessions Judge, Muzaffarpur, who tried the case, found all the six accused persons guilty of the offence charged. He accordingly convicted them of the said offence and sentenced them to suffer improvements for life. This order of conviction and sentence was challenged by the said six accused persons by preferring appeals before ,the Patna High Court. The High Court has held that the 625 learned trial Judge was right in convicting five of the six appellants because, in its opinion, the evidence led by the prosecution proved the charge against them beyond reasonable doubt. In regard to Joginder Singh, however, the High Court was not inclined to agree with the conclusion of the trial Judge and gave the benefit of doubt to him. Pending the hearing of ' these appeals, a rule for the enhancement of sentence was issued by the High Court against all the appellants. This rule has been discharged in regard to Joginder Singh who has been acquitted, as well as Ram Bachan Ram, Ram Surat Choudhury and Achheylal Choudhury, and the ' sentence of imprisonment for life imposed on them by 'he trial Judge has been confirmed. In regard to the two appellants, however, the High Court took the view that the ends of justice required that the sentence of imprisonment for life imposed on them should be enhanced to that of death. Accordingly, the rule against them was made absolute and ;they have been ordered to be hanged. It is against this order of conviction and sentence that the present appeals have been brought before us by special leave; and the short question of law which has been raised before us by Mr. Tatachari is that the High Court has erred in law in treating the confession made by the co accused Ram Surat Choudhury as substantive evidence against them. This course adopted by the High Court in dealing with the case of the appellants on the basis of the confession made by the co accused person is, it is urged, inconsistent with the consensus of judicial opinion in regard to the true scope and effect of section 30 of the Indian Evidence Act (hereinafter called 'the Act '). These appeals were argued before a Division Bench of three learned Judges of this Court and it was brought to the notice of the said Bench that in dealing with the case of the appellants in the light of the confession made by a co accused person, the High Court had relied on the observations made by this Court in Ram Prakash vs The State of Punjab.(1) Since these observations, prima facie, supported the view taken by the Patna High Court, the Divi sion Bench thought it necessary to refer this matter to a (1) 134 159 S.C. 40. 626 larger Bench in order that the correctness of the said observations may be examined. That is how these appears have come, before a Constitution Bench. , The facts leading to the prosecution of the appellants lie within a narrow compass, and so far as the point which falls to be considered in the present appeals is concerned, there is no dispute in respect of the said facts. Deokinandan Jaiswal is a fairly wealthy businessman and lives in village Dumarbana within the police station of Bairgania in the district of Muzaffarpur. He has a house of his own. Achheylal and Ram Bachan served under him as minims. Jogender Sinch was Jaiswal 's sepoy and Ram Surat was his personal servant. The appellants are the co villagers of Jogender Singh who was one of the accused persons. It appears that on the 24th March, 1960, Jaiswal had received Rs. 15,000 in currency notes from his partner Nathan Mary in the presence of his minims Achheylal and Ram Bachan; in fact, as the said amount was handed over to Jaiswal in the form of different currency notes, Ram Bachan and Achheylal were asked by him to count the said amount. The said amount was then put in different bundles by Jaiswal and to it was added another amount of Rs. 2,000 which he took out from his iron safe. The two bundles were then put together in a bigger bundle and to it was attached a slip containing his signature and date. According to Jaiswal, he handed over the amount of Rs. 17,000 thus put in two bundles to his wife Damyanti Devi, and in her turn, she put the said bundles into the iron safe which had been kept at the first floor of the house in the room adjoining the bed room. About this time, some functions were organised by the Bharat Sevak Samaj in the village and Jaiswal was the convener in regard to the said functions. Naturally, he had to attend to the delegates who had come to the village for the said functions. During the days of these functions, Jaiswal used to return home by about 10 P.m., but on the night of the 24th March, 1960, the function went on late, and so, Jaiswal slept at the Dharamshala where the function took 'Place and did not return home. That is how Damvanti Devi was left alone in the house on the first floor and her only companion was her 627 child Mina about 3 1/2 years old. Apparently, Damyanti Devi retired to her bed room with her little child and on the ground floor were sleeping three of the accused persons, Achheylal, Ram Bachan and Jogender Singh Ram Surat was on leave, so that out of the four servants employed by Jaiswal, three were sleeping on the premises. Batahu, the cook of the family, was sleeping in a verandah attched to the motor garage. Next day Batahu was awakened by Achheylal who reported to him that the door of the hall was open. Thereupon Achheylal and this witness went on the first floor and found that Damyanti Devi was lying dead in a pool of blood. There were cut injuries in her neck which had presumably caused severe bleeding. The little girl Mina was fast asleep. The bundles of currency notes had been removed by the miscreants who had committed the murder of Damyanti Devi. Thereupon, word was sent to Jaiswal and on his return to the house, steps were taken to report to the police station about the commission of the offence; and that set the investigation machinery into operation. As a result of the investigation, the six accused persons were out up for their trial for the offence under section 396 I.P.C. That, in brief, is the nature of the prosecution case. The prosecution sought to prove its case against the six accused persons by relying on the confessions made by three of them, the recovery of the stolen property and discovery of bloodstained clothes in respect of the two appellants. There is no direct evidence to show how, when, and by whom the offence was committed. Besides the confessions,, the evidence on which the prosecution relies is circumstantial and it is on this evidence that the case has been tried in the courts below. For our purpose in the present appeals it is unnecessary to refer to the details set out by the confessional statements in regard to the commission of the offence rind the part played by each one of the accused persons. Ram Surat, Achheylal and Ram Bachan made confessions and it has been held by the High Court as well as the Jearned Sessions Judge that the charge against them is 628 proved. With the correctness or propriety of the conviction of these accused persons we are not concerned in the present appeals. The only point to which reference must be made at this stage is that there is a concurrent finding of the courts below (that the confession made by Ram Surat is voluntary and true. In fact, both the courts did not feel any hesitation in taking the said confession into account against Ram Surat who made the said confession and con victing him on the said confession read in the light of other evidence adduced against him. The charge against the two appellants has been sought to be proved by the prosecution by the statements contained in the confession made by the three accused persons and certain other discoveries, such as blood stained clothes with both of them and stains of blood in the house of the appellant Haricharan. We will presently refer to this evidence. The High Court took the view that having regard to the decision of this Court in the case of Ram Prakash(1), it was open to the High Court to consider the evidence supplied by the confessional statements made by the co accused persons and enquire whether the said evidence received corroboration from any other evidence adduced by the prosecution. Approaching the question from this point of view, the High Court came to the conclusion that the blood stains on the clothes found with both the appellants and blood stains found in the house of the appellant Haricharan afforded sufficient corroboration to the confession of Ram Surat, and so, it has confirmed the conviction of the two appellants under section 396 I.P.C. The High Court then considered the question about the sentence which should be imposed on the two appellants. It appeared from the confession of Ram Surat as well as the confessional statements of Achheylal and Ram Bacban that the two appellants had played a major part in the commission of the offence. In fact, the injuries which proved fatal are alleged by all the 3 accused persons who confessed to have been caused by the two appellants. It is in the light of these statements that the High Court was persuaded to en hance the sentence imposed by the trial Judge against the appellants and it has directed that instead of imprisonment for life, the sentence of death ought to be imposed on (1) 629 them. That is how the only question which calls for our decision in the present appeals is the approach adopted by the High Court justified by the provisions of section 30 of the Act as it has been consistently interpreted by judicial decisions for more than half a century ? Before we address ourselves to this question of law, we may briefly indicate the nature of the other evidence on which the prosecution relies against the appellants. The appellants were arrested the next day after the commission of the offence on the report made by Jaiswal that he sus pected that the murder of his wife had been committed by his four employees and their accomplices, the two appellants before us. On the 26th March, 1960, at about 3.30 P.m. the investigation officer visited the lane between the southern wall of Jaiswal 's godown and the northern wall of the east facing room of the appellant Haricharan and found some blood stains in the lane and on the walls of the grain godown. Later, a shirt bearing blood stains was also found. Pieces of earth containing blood stains and the shirt were subsequently sent to the Chemical Analyser. The origin of the blood found on the pieces of earth sent to the Chemical Analyser could not be determined by him, but the stains of blood on the shirt which was seized from the person of the appellant Haricharan were found to have traces of human blood. Similarly, the nails of Haricharan 's hands showed traces of blood and they were got cut by a barber and sent to the Chemical Analyser. The report shows that these blood stains were too small for serological test. The High Court thought that "the presence of human blood on the shirt which Haricharan was wearing, his nails and at several places beginning from the lane leading to his house and on so many materials kept in his house is a factor" which had to be taken into account. These discoveries were made about 8 A.M. following the night of the murder. In regard to the appellant Jogia, a red coloured check gamcha which bore blood like stains was recovered from the top of the earthern granary in his house at about 6 A.M. On 27th March, 1960. This gamcha was sent to the Chemical Analyser and it is reported to bear stains of human blood It may be added that when the house of Jogia was searched on the 26th March, 1960 this gaamcha was not found as 630 we have just indicated, the judgment of the High Court shows that it took the view that the confessional statement by the co accused persons of the appellants, particularly Ram Surat was corroborated by the discovery of blood stains and that justified the conviction of the appellants under section 396 of the Indian Panel Code. The question about the part which a confession made by a co accused person can play in a criminal trial, has to be determined in the light of the provisions of section 30 of the Act. Section 30 provides that when more persons than one are being tried jointly for the same offence, and a confession made by one of such persons affecting himself and some other of such persons is proved, the Court may take into consideration such confession as against such other person as well as against the person who makes such confession. The basis on which this provision is found is that if a person makes a confession implicating himself, that may suggest that the maker of the confession is speaking the truth. Normally, if a statement made by an accused person is found to be voluntary and it amounts to 'a confession in the sense that it implicates the maker, it is not likely that the maker would implicate himself untrue, and so, section 30 provides that such a confession may be taken into consideration even against a co accused who is being tried along with the maker of the confession. There is no doubt that a confession made voluntarily by an accused person can be used against the maker of the confession, though as a matter of prudence criminal courts generally require some corroboration to the said confession Particularly if it has been retracted. With that aspect of the problem. however, we are not concerned in the present appeals. When section 30 provides that the confession of a co accused may be taken into consideration, what exactly is the scope and effect of such taking into consideration, is precisely the problem which has been raised in the present appeals. It is clear that the confession mentioned in section 30 is not evidence under section 3 of the Act. 3 defines "evidence" as meaning and including (1) all statements ' which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry; such statements are called oral evidence; 631 (2) all documents produced for the inspection of the Court; Such documents are called documentary evidence. Technically construed. this definition will not apply to a confession. Part (1) of the definition refers to oral statements which the court permits or requires to be made before it; and clearly, a confession made by an accused person is not such a statement. it is not made or permitted to be made before the court that tries the criminal case. Part (2) of the definition refers to documents produced for the inspection of the court; and a confession cannot be said to fall even under this part. Even so, section 30 provides that a confession may be taken into consideration not only against its maker, but also against a co accused person; that is to say, though such a confession may not be evidence as strictly defined by section 3 of the Act, it is an element which may be taken into consideration by the criminal court and in that sense, it may be described as evidence in a non technical way. But it is significant that like other evidence which is produced before the Court, it is not obligatory on the court to take the confession into account. When evidence as defined by the Act is produced before the Court, it is the duty of the Court to consider that evidence. What weight should be attached to such evidence, is a matter in the discretion of the Court. But a Court cannot say in respect of such evidence that it will just not take that evidence into account. Such an approach can, however, be adopted by the Court in dealing with a confession, because section 30 merely enables the Court to take the confession into account. As we have already indicated. this question has been considered on several occasions by judicial decisions and it has been consistently held that a confession cannot be treated as evidence which is substantive evidence against a co accused person. in dealing with a criminal case where the prosecution relies upon the confession of one accused person against another accused person, the proper approach to adopt is to consider the other evidence against such an accused person, and if the said evidence appears to be satisfactory and the court is inclined to hold that the said evidence may sustain the charge framed against the said accused person, the court turns to the confession with a view to assure itself that 632 the conclusion which it is inclined to draw from the other evidence is right. As was observed by Sir Lawrence Jenkins in Emperor vs Lalit Mohan Chuckerbuttv(1) a confession can only be used to "lend assurance to other evidence against a co accused". In In re. Peryaswami Noopan,(2) Reilly J. observed that the provision of section 30 goes not further than this : "where there is evidence against the co accused sufficient, if,. believed, to support his conviction, then the kind of confession described in section 30 may be thrown into the scale as an additional reason for believing that evidence. " In Bhuboni Sahu vs King(1) the Privy Council has expressed the same view. John Beaumont who spoke for the Board observed that a confession of a co accused is obviously evidence of a very weak type. It does not indeed come within the definition of "evidence" contained in section 3 of the Evidence Act. It is not required to be given on oath, nor in the presence of the accused, and it cannot be tested by cross examination. It is a much weaker type of evidence than the evidence of an approver, which is not subject to any of those infirmities. Section 30, however, provides that the Court may take the confession into consideration and thereby, no doubt, makes it evidence on which the court may act; but the section does not say that the confession is to amount to proof. Clearly there must be other evidence. The confession is only one element in the consideration of all the facts proved in the case, it can be put into the scale and weighed with the other evidence. " It would be noticed that as a result of the provisions contained in section 30, the confession has no doubt to be regarded as amounting to evidence in a general way, because whatever is considered by the court is evidence; circumstances which are considered by the court as well as probabilities do amount to evidence in that generic sense. Thus, though confession may be regarded as evidence in that generic sense because of the provisions of section 30, the fact remains that it is not evidence as defined by section 3 of the Act. The result, therefore, is that in dealing with a case against an accused person, the court cannot start with the confession of a co accused person; it must (1) Cal. 559 at p. 588. (2) Mad. 75 at p. 77. (3) (1949) 76 I.A. 147 at p. 155. 633 begin with other evidence adduced by the prosecution and after it has formed its opinion with regard to the quality and effect of the said evidence, then it is permissible to turn to the confession in order to receive assurance to the conclusion of guilt which the judicial mind is about to reach on the said other evidence. That, briefly stated, is the effect of the provisions contained in section 30. The same view has been expressed by this Court in Kashmira Singh vs State of Madhya Pradesh(1) where the decision of the Privy Council in Bhuboni Sahu 's(2) case has been cited with approval. In appreciating the full effect of the provisions contained ,in section 30, it may be useful to refer to the position of the evidence given by an accomplice under section 133 of the Act. Section 133 provides that an accomplice shall be a competent witness against an accused person; and that conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice. Illustration (b) to section 114 of the Act brings out the legal position that an accomplice is unworthy of credit, unless he is corroborated in material particulars. Reading these two provisions together, it follows that though an accomplice is a competent witness, prudence requires that his evidence should not be acted upon unless it is materially corroborated; and that is the effect of judicial decisions dealing with this point. The point of significance is that when the Court deals with the evidence by an accomplice, the Court may treat the said evidence as substantive evidence and enquire whether it is materially corroborated or not. The testimony of the accomplice is evidence under section 3 of the Act and has to be dealt with as such. It is no doubt evidence of a tainted character and ' as such, is very weak; but, nevertheless, it is evidence and may be acted upon, subject to the requirement which has now become virtually a part of the law that it is corroborated in material particulars. The statements contained in the confessions of the co accused persons stand on a different footing. In cases where such confessions are relied upon by the prosecution against an accused person, the Court cannot begin with the examination of the said statements. The stage to consider (1) [19521 S.C.R. 526. (2) (1949) 76 I.A. 147 at p. 155. 634 the said confessional statements arrives only after the other evidence is considered and found to be satisfactory. The difference in the approach which the Court has to adopt in dealing with these two types of evidence is thus clear, well understood and well established. It, however, appears that in Ram Prakash 's case(1), some observations have been made which do not seem to recognize the distinction between the evidence of an accomplice and the statements contained in the confession made by an accused person. "An exa mination of the reported decisions of the various High Courts in India," said Imam J., who spoke for the Court in that case, "indicates that the preponderance of opinion is in favour of the view that the retracted confession of an accused person may be taken into consideration against a co accused by virtue of the provisions of section 30 of the Act, its value was ,extremely weak and there could be no conviction without the fullest and strongest corroboration on material particulars. " The last portion of this observation has been interpreted by the High Court in the present case as supporting the view that like the evidence of an accomplice, a ,confessional statement of a co accused person can be acted upon if it is corroborated in material particulars. In our opinion, the context in which the said observation was made by this Court shows that this Court did not intend to lay down any such proposition. In fact, the other evidence against the appellant Ram Prakash was of such a strong character tnat this Court agreed with the conclusion of the High Court and held that the said evidence was satisfactory and in that connection, the confessional statement of the coaccused person was considered. We are, therefore, satisfied that the High Court was in error in this case in taking the view that the decision in Ram Prakash 's(1) case was intended to strike a discordant note from the well established principles in regard to the admissibility and the effect of confessional statements made by co accused persons. Considering the evidence from this point of view, we must first decide whether the evidence other than the confes sional statements of the co accused persons, particularly Ram Surat, on whose confession the High Court has substan (1) 635 tially relied, is satisfactory and tends to prove the prosecution case. It is only if the said evidence is satisfactory and is treated as sufficient by us to hold the charge proved against the two appellants, that an occasion may arise to seek for an assurance for our conclusion from the said confession. Thus considered, there can be no doubt that the evidence about the discovery of blood stains on which the prosecution relies is entirely insufficient to justify the prosecution charge against both the appellants. In our opinion, it is impossible to accede to the argument urged before us by Mr. Singh that the said evidence can be said to prove the prosecution case. In fact, the judgment of the High Court shows that it made a finding against the appellants substantially because it thought that the confessions of the co accused persons could be first considered and the rest of the evidence could be treated as corroborating the said confessions. We are, therefore, satisfied that the High Court was not right in confirming the conviction of the two appellants under section 396 ,of the Indian Penal Code. It is true that the confession made by Ram Surat is a detailed statement and it attributes to the two appellants a major part in the commission of the offence. It is also true that the said confession has been found to be voluntary, and true so far as the part played by Ram Surat himself is concerned, and so, it is not unlikely that the confessional statement in regard to the part played by the two appellants may also be true; and in that sense, the reading of the said confession may raise a serious suspicion against the accused. But it is precisely in such cases that the true legal approach must be adopted and suspicion. however grave, must not be allowed to take the place of proof. As we have already indicated, it, has been a recognised principle of the administration of criminal law in this country for over half a century that the confession of a co accused person cannot be treated as substantive evidence and can be pressed into service only when the court is inclined to ' accept other evidence and feels the necessity of seeking for an assurance in support of its con clusion deducible, from the said evidence. In criminal trials, there is no scope for applying the principle of moral conviction or grave suspicion. In criminal cases where the other evidence adduced against an accused person is wholly 636 unsatisfactory and the prosecution seeks to rely on the con fession of a co accused person, the presumption of innocence which is the basis of criminal jurisprudence assists the accused person and compels the Court to render the verdict that the charge is not proved against him, and so, he is entitled to the benefit of doubt. That is precisely what has happened in these appeals. In the result, the appeals are allowed and the orders of conviction and sentence passed against the two appellants Haricharan Kurmi and Jogia Hajam are set aside and the accused are ordered to be acquitted. Appeals allowed.

The appellants along with four others were tried and convicted by the Sessions Judge for the offences of dacoity and murder and sentenced to undergo imprisonment for life. On appeal the High Court confirmed the conviction and sentence. Pending that appeal it issued a rule for enhancement of the sentence, and finally the rule was made absolute and they were ordered to be hanged. The appellants thereupon filed the present appeals by special leave granted by this Court, The main point raised before this Court was that the High Court misconceived the ambit and scope of the decision of this Court in Ram Prakash vs State of Punjab [1959] S.C.R. 121 and that the High Court committed an error in law in treating the confession made by the co accused as substantive evidence against the appellants. Held: (i) Though a confession mentioned in section 30 of the Indian Evidence Act is not evidence as defined by section 3 of the _Act, it is an element which may be taken into consideration by the criminal courts and in that sense, it may be described as evidence in a non technical way. But in dealing with a case against an accused person, the court cannot start with the confession of a co accused person, it must begin with other evidence adduced by the prosecution and after it has formed its opinion ,with regard to the quality and effect of the said evidence, then it is per missible to turn to the confession in order to lend assurance to the conclusion of guilt which the judicial mind is about to reach on the said other evidence. Kashmira Singh vs State of Madhya Pradesh, [1952] S.C.R. 526, Emperor vs Lalit Mohan Chukerbutty, Cal. In re: Perivsswami Moopan, Mad. 75 and Bhuboni Sahu vs The King, [1949] 76 I.A. 147, followed. (ii) The distinction between evidence of an accomplice under section 133 and confession tinder section 33 Evidence Act is that the former is evidence under section 3 and the court may treat it as substantive evidence and seek corroboration in other evidence but the latter is not evidence under section 3, and the court should first start from other evidence and then find assurance in the confessional statement for conviction. 624 (iii) The High Court was in error in taking the view that the decision in Ram Prakash 's case was intended to strike a dissenting note from the well established principles in regard to the admissibility and the effect of confessional statement made by accused persons. Ram Prakash vs State of Punjab , explained. (iv) On examining the evidence in the present case on the above principles it is found that there is no sufficient evidence to prove the prosecution case.

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

The property of the respondent was acquired under the U. P. Land Acquisition (Rehabilitation of Refugees) Act, 1948. The respondent challenged the constitutionality of the Act by way of a writ petition and though the High Court dismissed the petition it held that the two provisos to s.11 of the Act were invalid as they offended section 299(2) of the Government of India Act. Subsequently the Constitution (Fourth Amendment) Act, 1955, included the U. P. Act in the Ninth Schedule as item NO. 15. The appellant contended that the inclusion of the Act in the Ninth Schedule protected it under article 31 B of the Constitution from any challenge under section 299(2) of the Government of India Act. Held, that the U. P. Act could not be assailed on the ground of unconstitutionality based on a contravention of section 299 of the Government of India Act. The provisions of the Act having been specifically saved by article 31 B read with the Ninth Schedule, the Act could not be deemed to be void or to ever have become void on the ground of its having contravened the provisions of the Government of India Act. Dhirubha Devisingh Gohil vs The State of Bombay, ; , relied on. Saghir Ahmad vs The State of U. P., ; , not applicable.

(Civil) No. 231 of 1987. (Under Article 32 of the Constitution of India). Soli J. Sorabjee, P.H. Parekh, Rajender Mahapatra and Ms. Ayesha Misra for the Petitioner. K.K. Venugopal, D.R. Dhanuka, Mr. Kapil Sibal, Lalit Bhasin, Vineet Kumar and Ms. Nina Gupta for the Respondents. The following Judgments of the Court were delivered by KHALID, J. In this writ petition, filed by an Air India employee, who at the relevant time was Deputy Chief Air Hostess, notice was taken for the respondents when the matter came up for admission. We directed the respondents to file their Counter Affidavit. Accordingly Counter Affidavit has been filed. The Petitioner has filed her Rejoinder Affidavit also. Heard the learned counsel on both sides at some length. Under the existing rules, namely Regulation 46(1)(c) of the Service Regulation the petitioner was to retire on 28 2 1987 and in fact she retired on that date. The prayer in the writ petition is to quash the letter sent to her retiring her on 28 2 1987, to declare Regulation 46(1)(c) ultra vires, to direct reconsideration of the decision in Air India vs Nargesh Meerza, ; and to declare that the petitioner will retire only on her attaining the age of 58 years. Identical questions were raised before this Court in a few writ 730 petitions earlier by some other employees of Air India and they were considered at length by a bench of three Judges in Air India vs Nargesh Meerza and were considered in favour of Air India. We are bound by this decision. The learned coun sel for the petitioner submits that this decision needs reconsideration and made a fervent appeal to us to refer the matter for that purpose. We do not feel persuaded to accept this request. The main thrust of the submissions by the petitioner 's counsel is based on Article 14 and Article 15 of the Consti tution of India, in that Air India discriminates between the Air Hostesses and the officers like the petitioner of Indian origin and of foreign origin who are employees of Air India. The contention is that while the employees of India origin have to retire at 35 years with extension till 45, those of foreign origin can go beyond 45 years. This contention also was considered by this Court in the decision referred above. The case that Air Hostess recruited outside India can be in the employment of Air India beyond 45 years is met in the Counter Affidavit in the following paragraph: " . . Therefore, I submit that so far as Air India is concerned, it has not fixed any higher retirement age for Air Hostesses who are recruited outside India. In U.K. there are only six Air Hostesses and they are also being phased out. The Senior most Air Hostess in U.K. in terms of age is 41 years old. It is further pertinent to note that there are only six Air Hostesses presently employed in U.K. These Air Hostesses belong to different na tionalities and speak different European languages with a view to dealing with passen gers conversant only with these languages. I say that Air India has been encouraging its Indian Air Hostesses to learn European lan guages. In view of this position Air India is in the process of phasing out the European Air Hostesses employed in U.K. It is also perti nent to note that Air India has appointed a few Air Hostesses in Japan. These Air Hostess es were also appointed for the same reason i.e. their knowledge of the Japanese language. The Air Hostesses employed in Japan would also retire upon reaching the normal age of retire ment applicable to Indian Air Hostesses. I say that the service conditions and terms of appointment of the Air Hostesses appointed abroad are different than the service condi tions 731 of Air Hostesses appointed in India. It is of utmost importance to note that no Air Hostess appointed is promoted to the post of Deputy Chief Air Hostess, Additional Chief Air Host ess or Chief Air Hostess. These promotional avenues are available only to the Air Hostess es appointed in India From the above extract we find that Air India 's policy now is to phase out Air Hostesses recruited outside India and restore uniformity in their retirement age. In U.K., there are only six Air Hostesses, the senior most among whom is only aged 41. The provisions of Sex Discrimination Act, 1975 applicable to United Kingdom was brought to our notice. Part II deals with discrimination in the employment field. Section 6(1)(b) and Section 6(2) make discrimination against a woman in the terms of service, promotion opportunities and termination unlawful. But Section 6(4) protects provisions which relate to death and retirement from the vice of the above sections. We refer this only to reassure ourselves that it would be possible for Air India to phase out U.K. incumbents when they attain the age of 45. Air Hostesses employed in Japan would also retire upon reaching the normal age of retirement applicable to Indian Air Hostesses. It is useful to note that Air Hostesses who are recruited outside India are not entitled to the benefits of promotion to which Indian Air Hostesses are entitled. We are of the view that this should satisfy the petitioner. The case that the petitioner is not an Air Hostess, but belongs to a separate class can also not be accepted. This case did not find favour with this Court in the above deci sion either. The duties and functions of Deputy Chief Air Hostess includes operation service as a regular line Air Hostess and she will be required to perform the same func tions as that of other Air Hostesses. The writ petition thus is devoid of any merit and hence is dismissed. OZA, J. Having gone through the judgment dictated by my learned brother Khalid J. although I agree with the conclu sions arrived at by him but will like to add my own reasons for the conclusions. When this petition came up before us the main ground which moved us to issue notice was that the Air India employ Indian as well as girls coming from different nationalities as air hostesses and in respect of the age of retirement there are different rules for airhostesses recruited from different countries. It was alleged that whereas an Indian recruited as air hostess will normally retire at the 732 age of 35 years which could be extended upto 45, a British girl recruited as air hostess retires at the age of 55 years and this, according to the petitioner, was discrimination on the basis of colour. In return the stand taken by the Air India is that "As a matter of fact the Air Hostess recruited by British Airways in India retire at the age of 36 years in India whereas their counterparts in U.K. retire at the age of 55 years. " It is unfortunate that the second respondent a Corporation which is for all purposes State within the meaning of the term as provided in Article 12 of Constitution of India should follow the British Airways in treating Indians dif ferentially and discriminate against them. Reliance was also placed in return on the decision of this Court in Air India etc. vs Nergesh Meerza & Ors. ; , In return a passage has been quoted which appears at page 472 of the judgment. It is true that this is what has been observed in this judgment by a Bench of three Judges of this Court. It is observed: " . . There is no complaint by the peti tioners that between the separate class of AHs inter se there has been any discrimination regarding any matter. In fact, the only point raised on this aspect was that AHs employed by A.I. in U.K. have different conditions of service from AHs serving A.I. in countries other than U.K. Doubtless this distinction is there but this is really a fortuitous circum stances because A.I. was forced to comply with the local laws of U.K. in order to increase the age of retirement of AHs posted in Eng land. Surely we cannot expect A.I. to commit an offence by violating the laws of U.K . . " It appears as it was also contended that they are bound by the decision of this Court. It is no doubt true that this is the decision which is binding but even in a situation as has been indicated in this judgment that Air India in order to avoid committing an offence in accordance with the law of United Kingdom is choosing to disregard Article 14 of the Constitution. But I have no hesitation that an Indian citi zen in such a situation would prefer to walk off from a State where he may have to flout our Constitution to save himself from commission of an offence. All the more the same is expected of respondent No. 2, a corporation controlled by the Government of India. It is expected that this corpora tion would abide by the requirement of article 14 rather than anything else. If need be, it has to walk out of a country where it may become impossible to act in accordance with the ideals of our Constitution or where it may become necessary to disregard the provisions of our 733 Constitution and it is not something new as we have been keeping away from countries which follow apartheid policies. But I am happy that Shri Venugopal, senior advocate appear ing for respondent No. 2 frankly stated that his colleague learned counsel Shri Lalit Bhasin got the United Kingdom Sex Discrimination Act, 1975 further examined and now it is clear that in view of Section 6 sub clause 4 of that Act it will not be a contravention of that law to have the same age of retirement for an air hostess recruited in U.K. as is provided for an airhostess recruited of Indian origin. It appears that this was the law (United Kingdom Sex Discrimi nation Act, 1975) which was perhaps in the minds of the Judges in Air India 's case. In view of this learned counsel frankly stated that henceforth air hostesses recruited anywhere will be treated in the same manner as air hostesses recruited from India and it is only on this frank admission made by learned counsel for respondent No. 2 that we see no reason to entertain the petition. In this view of the matter I agree with the con clusions reached by my learned brother, Khalid, J. A.P.J. Petition dismissed.

The petitioner, who was employed as Deputy Chief Air Hostess in Air India, flied this petition under Article 32 of the Constitution, alleging that while the employees of Indian origin have to retire at 35 years with extension till 45, those of foreign origin can go beyond 45 years, which is discriminatory and violative of Articles 14 and 15 of the Constitution. Accordingly, prayer was made to quash the letter sent to her retiring her on 28.2.1987, to declare Regulation 46(1)(c) of the Service Regulations ultra vires, to direct reconsideration of the decision in Air India vs Nargesh Meerza; , and to declare that the petitioner will retire only on her attaining the age of 58 years. In the. counter affidavit it was alleged that Air India has not fixed any higher retirement age for Air Hostesses who are recruited outside India, that Air India has appoint ed a few Air Hostesses abroad who belong to different na tionalities and speak different European languages with a view to deal with passengers conversant only with 728 these languages, that Air India has been encouraging its Indian Air Hostesses to learn European languages and in view of this 'position Air India is in the process of phasing out Air Hostesses of foreign origin, that service conditions and terms of appointment of the Air Hostesses appointed abroad are different than the service conditions of Air Hostesses appointed in India and that no Air Hostess of foreign origin is promoted to the post of Deputy Chief Air Hostess, Addi tional Chief Air Hostess or Chief Air Hostess. These promo tional avenues are available only to the Air Hostesses appointed in India. Dismissing the Petition, HELD: (Per Khalid, J) 1. Identical questions were raised and considered at length by this Court in Air India vs Nargesh Meerza (supra) and that decision is binding. [730A B] 2. Air India 's policy now is to phase out Air Hostesses recruited outside India and restore uniformity in their retirement age. [731B C] 3. The petitioner is an Air Hostess and does not belong to a separate class. The duties and functions of Deputy Chief Air Hostess includes operation service as a regular line Air Hostess and she will be required to perform the same functions as that of other Air Hostesses. [731F] 4. Air Hostesses who are recruited outside India are not entitled to the benefits of promotion to which India Air Hostesses are entitled. This should satisfy the petitioner in the instant case. [731E] Per Oza, J.) 1. Air India being a Corporation is for all purposes State within the meaning of Article 12 of the Constitution of India and it cannot follow a foreign Corporation in treating Indians differently and discriminate against them. [732B C] Air India etc. vs Nargesh Meerza & Others etc. ; , , referred to. Air India in order to avoid committing an offence abroad cannot disregard Article 14 of the Indian Constitu tion. An Indian citizen in such a situation should prefer to walk off from a State where he may 729 have to flout Indian Constitution to save himself from committing of an offence. Air India should abide by the requirements of Article 14 rather than anything else. [732F G] 3. It has been conceded that in view of section 6(4) of the United Kingdom Sex Discrimination Act, 1975 it will not be a contravention of that law to have the same age of retirement for an Air Hostess recruited in U.K. as is provided for an Air Hostess recruited of Indian origin. [733B C] 4. In view of the policy of Air India that henceforth Air Hostesses recruited anywhere will be treated in the same manner as Air Hostesses recruited from India no interference is called for. [733C D]

ivil Appeal No. 2969 of 1983 etc. From the Judgment and Order dated 17.5. 1982 of the Delhi High Court in Civil Writ No. 1231 of 1979. G. Ramaswamy, Additional Solicitor General, Govinda Mukhoty, Dr. Y.S. Chitale, V.D. Misra, M.K. Ramamurthi, N.C. Talukdar, Mrs. C.M. Chopra, B.P. Maheshwari, R.S. Rama, M.A. Krishnamurthy, N.L. Kakkar, Dr. Meera Aggarwal and R.C. Misra for the appearing parties. The Judgment of the Court was delivered by NATARAJAN, J. The genesis for these appeals by special leave, the special leave petition and the petition under Article 32 of the Constitution is the grant of pay scales at the rates recommended by the Shiv Shanker Committee for the employees of the Delhi Electricity Supply Undertaking to only a section of the ministerial staff of the New Delhi Municipal Committee who happened to be working in the elec tricity wing of the said Committee at the relevant time. There is a good deal of factual material and historical background to be covered 816 for a full and proper appreciation of the contentions of the appellants and the petitioners on the one hand and the respondents on the other in these appeals and petitions. We will, therefore, concern ourselves with that exercise before taking up the contentions of the parties. In the Union Territory of Delhi there are two main civic bodies viz. the New Delhi Municipal Committee (for short of NDMC) and the Delhi Municipal Corporation (for short the MCD). The NDMC comprises of New Delhi as it existed prior to 1947 and was constituted under the Punjab Municipal Act, 1911. The NDMC discharges all civic functions including supply of water and electricity in the areas falling within its jurisdiction. In 1957 the Delhi Municipal Corporation Act came to be enacted and in pursuance thereof, the Delhi Municipal Corporation was constituted amalgamating within itself a few other smaller civic bodies which existed inde pendent of the NDMC and the resultant position was that the rest of the areas fell within the jurisdiction of the Munic ipal Corporation of Delhi. The NDMC, forming a compact unit, had divided its civic work into various departments. Besides engaging technical staff the NDMC engaged non technical staff such as Municipal staff, clerks etc, for working in the various departments including the electricity and water supply departments. In so far as the non technical staff are concerned, they con stitute one unified cadre and are liable to transfer from one department to another. They are governed by a common channel of seniority. in respect of each class of employees with common seniority list. The set up of the MCD is, however, different since the Delhi Municipal Corporation Act provides for the constitu tion of three separate and independent wings viz. the elec tricity, the general and the water. sewage and disposal wings. The electricity wing came to be designated as the Delhi Electricity Supply Undertaking (hereinafter referred to as DESU) and is governed by an independent budget and headed by a separate and independent General Manager and its employees are governed by a separate cadre and a separate seniority list. The general wing of the MCD performs the other general civic duties and functions. The third wing is concerned with the distribution of water and the disposal of sewage etc. and it is also independent of the general wing. To satisfy the demands of the employees of the MCD, NDMC etc. the Government accepted the report of the Third Pay commission 817 appointed by it and the pay scales, as recommended by the Pay Commission were accepted by the NDMC as well as the general wing of the MCD. The technical staff of DESU claimed higher scales of pay as they were not satisfied with the pay scales recommended by the Pay Commission. The Government, therefore, constituted a Committee known as the Shiv Shanker Committee (hereinafter the S.S. Committee for short) to go into the question of revision of pay scales etc. of the technical staff alone of DESU and the Committee submitted its report in 1973. The non technical or ministerial staff of DESU who were not covered by the report of the S.S. Committee demanded and agitated that they should also be granted pay at the rates recommended by the S.S. Committee. The DESU conceded the demand of the minisiterial staff at its meetings held in May 1973 and decided to revise the pay scales of the non technical staff also working in DESU to the level recommended by the S.S. Committee. Since the technical and ministerial staff working in DESU were granted the SS Committee pay scales by the MCD, the NDMC was of the view that the technical and ministerial staff working in the electricity wing of NDMC should also have the benefit of revised pay scales recommended by the SS Committee. This view was taken on the assumption that the staff working in the electricity wing of the NDMC were performing the same or similar functions and duties as those performed by the staff of DESU and hence parity of pay and allowances should be maintained. Accordingly, the NDMC passed a Resolution No. 154 on 19,10,1973 that the benefits of pay and allowances as per SS Committee Report be given to the staff of the electricity wing of NDMC. By another Reso lution dated 7. 1. 1974 the NDMC decided to give the benefit of the revised pay scales with effect from i.4.72 to fall in line with the actions of the DESU. The grant of SS Committee pay scales to only those members of the ministerial staff working in the electricity wing brought about discontentment amount the staff working in the general wing of the NDMC. They claimed they should also be paid at the rates prescribed by the SS Committee and not as per the scales of pay recommended by the Third Pay Commission. Two of the employees of the general wing filed a writ petition W. No. 307 of 1974 against NDMC and the Delhi. Administration praying for quashing of the Resolution dated 7.1. 1974 for implementing the earlier Resolution passed in favour of the staff 01 the electricity wing. Prakash Narain, J. (as he then was) did not quash the Resolution but instead issued. a writ of prohibition against the NDMC not to imple ment the Resolution. The learned Judge held that 818 the Resolution was discriminatory in nature but since the staff working in the electricity wing had not been made parties and furthermore the petitioners had not filed the petition In a representative capacity, the proper course would be to forbear the implementation of the Resolution by the NDMC till such time the NDMC considered afresh the question of the revision of pay scales for all sections of the ministerial staff in accordance with law. In compliance with the directions of the learned Judge the NDMC considered the matter afresh and taking into con sideration its financial constraints. it passed a revised Resolution on 25.6.75 which resulted in all the non techni cal staff being treated equal and being granted uniform pay scales at the rates recommended by the Third Pay Commission and not at different rates for different wings. This resolu tion lead to discontent amount the ministerial staff of the electricity wing since their pay scales were reduced to the rates recommended by the Third Pay Commission. Consequently, some of the affected members of the electrical wing filed a writ petition CW No. 1388 of 1975 before the Delhi High Court challenging the Resolution of the NDMC dated 25.6.75. The High Court disposed of the writ petition on 18.2.77 on the assurance given by the NDMC that the whole position would be reviewed after giving all the parties including the ministerial staff of the electricity wing due notice of the matter. As against the judgment of Prakash Narain, J. the NDMC also filed a Letters Patent Appeal. However, in view of the subsequent Resolutions that had been passed the NDMC withdrew itself from the appeal. But at the instance of some of the affected employees of the electricity wing who had got themselves impleaded as appellants, the appeal was allowed on the short ground that the judgment of the learned single judge could not be sustained as it bad been rendered without all the necessary parties being before the court. The two staff members of the general wing who had origi nally filed CW No. 307 of 1974 filed a Special Leave Peti tion (SLP No. 3597 of 1978) against the judgment of the Division Bench of the Delhi High Court in LPA No. 78 of 1975. This Court dismissed the special leave petition in limine with an observation that it was hoped that the NDMC would comply with the direction of the Delhi High Court that it should evolve a formula satisfactory to all sections of the ministerial staff working in the different wings of the NDMC and if the revised scheme formulated by the NDMC was not satisfactory to any section of the staff, it would be open to the affected party to seek appropriate reliefs from the High Court once again. 819 The NDMC after giving opportunity to all sections of the employees to make their representations. passed a resolution on 27.6. 1978 constituting the electricity wing with effect from 1.5.78 or such subsequent date as may be fixed with 28 posts of pump drivers, two posts of welders. 3 posts of carpenters and one post of pump mechanic and 496 posts of ministerial staff and to give all of them scales of pay as per SS Committee Report. The NDMC further resolved as fol lows: "D. 496 posts referred to above will be treated as ex cadre posts and will be filled on deputation basis on rotation, the period of deputation in one spell being three years. These posts will be in SS Committee 's scales and will carry the benefit of ex gratia of DESU pattern. E. An equal number of posts may be created in general wing to form deputation reserve. The employees holding the ex cadre posts from the date of constitution of the wing will be entitled to have their pay fixed in the SS Committee scales or would draw deputation allowance as permissible under normal rules. During the period of deputation they will continue to remain as members of the unified cadre and will be eligible for promotion to higher posts on that basis. While the existing vacancies in the ex cadre categories will be filled straightaway on seniority cum option basis, the existing incumbents will hold the ex cadre posts for a period of three years from the date of consti tution of the wing on deputation basis. On expiry of the three years, one third of them with longest stay will be replaced every year by transfer from the general wing on the basis of seniority cum option. Such of the existing incumbents who become due for promotion to higher post will have to forego their deputa tion, if they accept the promotion and will be transferred to general wing. " The above resolution was not to the liking of the ministeri al staff working in the electricity wing and hence one Shri R. Chaudhary and 190 other staff members in the electricity wing filed a Writ Petition CW No. 4072 of 78 under Article 32 of the Constitution before this Court but withdrew the same as the Court was not inclined to grant admission. Thereafter three petitions under Article 226 of the 820 Constitution viz. CW Nos. 1231. 557 & 280 of 1978 came to be filed in the Delhi High Court. In CW No. 1231 of 1979, some of the petitioners were Junior Engineers (Civil) some of the petitioners were Assistant Engineers (Civil) and some of the petitioners were Draftsman (Civil). While the grievance of the ministerial staff among the petitioners was that they should be treated on par with the ministerial staff of the electricity wing in the matter of pay and allowances the grievance of the Junior and Assistant Engineers (Civil) and Draftsman (Civil) was that none of their posts was borne on the cadre of the electricity wing albeit on a transferable basis as there is no difference between the Civil Engineers and the Electrical Engineers as they attend to the civil engineering works in the electricity wing also and it is for that reason the civil engineers in DESU have been equated with the electrical engineers. In so far as CW No. 280 of 1979 is concerned, the peti tion pertained to the grant of ex gratia payment to only a section of the NDMC employees. Ever since 1972, the employ ees and their unions were demanding ex gratia payment on the ground. that since the employees of DESU were being paid ex gratia amount, they should also be paid likewise. The Delhi Administration, by its letter dated 1.2.72 permitted the NDMC to make ex gratia payment to the employees of the electricity wing on the same lines as was being followed in DESU. Similarly, on 7.2.1973, the Delhi Administration permitted the grant of ex gratia payment to the employees working in the Water Supply & Sewage Disposal wing of the NDMC also on the ground their counterparts in the Water Supply & Sewage Disposal undertaking in the MCD were being paid ex gratia amount. The ministerial staff in the general wing who were not granted the ex gratia payment raised a protest. Eventually, the NDMC passed a resolution at its meeting held on 25.7. 1977 that ex gratia payment be made to all employees of common categories such as clerks, superin tendents etc. and that the payment be made subject to the conditions that the employees will refund the amount if the proposal was not approved by the Delhi Administration. Subsequently, it turned out that the Delhi Administration did not approve the proposal of paying ex gratia amount to all the employees as the expenditure would cast a heavy burden on the finances of the NDMC and furthermore it will lead to similar demands being raised by employees in the other local bodies of Delhi. Consequently, the NDMC called upon the staff of the general wing to refund the ad hoc payment of Rs.300 given by way of advance towards ex gratia payment. To challenge the negation of ex gratia payment to them CW No. 280 of 1978 was filed. 821 The High Court rendered a common judgment covering all the three Writ Petitions. The High Court took the view that the contention of the ministerial staff that all of them. irrespective of the department of their work should be paid as per SS Committee Report failing which none should be paid at that rate was an extreme stand and cannot therefore be accepted. The High Court was of the opinion that the im pugned resolution of the NDMC was acceptable to the extent it reflected the desire of the NDMC to grant SS Committee scales of pay to as a large section of the staff as possible and to that extent the resolution was a beneficial measure for the ministerial staff. The High Court also held that since the NDMC wanted to equate the electricity wing with the DESU, it is but proper that only those members of the ministerial staff who were prepared to work in the electric ity wing can be given the SS Committee pay scales and not the others, who preferred to remain in the general wing itself. However, in so far as the decision of the NDMC to introduce a system of deputation on rotational basis to the electricity wing is concerned, the High Court was of the view that the proposal may work hardship to the ministerial staff both ways i.e. in seniority being overlooked at the time of the deputation posting and secondly in the emolu ments getting reduced after the period of deputation was over and as such a more fair and equitable formula in ac cordance with service jurisprudence should be evolved. In accordance with that view, the High Court evolved the fol lowing formula to be adopted by the NDMC: "We, therefore, feel that in accordance with the equality principle the proper approach would be that SSC scale will be given amongst the ministerial staff only to those persons (a) who would opt to work in the electricity department. (b) it would be given strictly in accordance with the seniority, i.e. to say the option will first be asked from the senior persons and if they are agreeable to work in the electricity wing they will be posted there and be eligible to get the higher SSC scale. If and when any vacancy arises either because of promotion or retirement or any other eventual ity the post will be filled up on the same principle of seniority cum option. Thus a unified principle and rule will apply to all the ministerial staff, namely that the senior most person working in the electricity cell will be eligible to get the SSC scale. No question of discrimination will thus arise, because the electricity cell will be automati cally manned by the senior most of the minis terial staff. Thus no 822 ministerial staff is discriminated against because each would be eligible in his own turn of seniority. This would really amount to as if a separate department of the electricity wing has been constituted." The High Court, while therefore upholding the order of the NDMC modified the placement of the ex cadre posts in the over all set up and also suggested the manner in which the posts should be filled up viz. on the basis of seniority cum option. Thereby, the High 'Court has done away with the rotational system every three years and further directed that since the higher scale of pay was linked up with the service rendered in the electricity wing, the SSC scales should be paid to all those who had worked in the electrici ty wing during the period subsequent to June 75 till 30.5.82, that such payment will not amount to discriminatory payment and that after 30.5.82 the postings should be made in accordance with the seniority cum option formula. In so far as the engineers (Civil) and draftsman (Civil) are concerned, the High Court declined to sustain their grievance. The High Court noticed that the Junior Engineers (Civil) have no common seniority with the electrical engi neers in the electricity wing, that the posts are not inter changeable and that they cannot draw comparison from the employment pattern of engineers in DESU because the DESU was a separate and independent entity unlike the electricity wing of the NDMC, that the nature of duties performed by the electrical engineers and civil engineers was different and for all these reasons the High Court held that the civil engineers cannot seek parity with the electrical engineers in the electricity wing in the matter of pay scales. The last question to be dealt with by the High Court pertained to the refusal to grant ex gratia payment to the staff of the general wing. The High Court saw justification in the payment of ex gratia payments to the employees in the electricity wing and the water supply and sewage disposal wing alone because of the nature of their duties and because of the precedent afforded by the MCD in granting such pay ment to the staff of the DESU and the Water Supply and Sewage Disposal Department. However, the High Court took into consideration the long delay that had occurred and the hardship that would result to the employees of the general wing by complying with the order of refund and therefore directed the NDMC to treat the payment of Rs.300 "as one time special ad hoc payment not serving as a precedent" and refrain from recovering the said amount. 823 It is in this situation the appeals and petitions have come to be filed. CA No. 2969 of 1973 has been filed by the members of minisiterial staff in the general wing to contend that instead of restricting the payment of SS Committee pay scales to the 496 ex cadre posts in the electricity wing and directing the NDMC to fill up those posts on the basis of seniority cure option, the High Court should have directed the NDMC to give the SS Committee pay scales to all the members of the ministerial staff. Likewise the appellants would contend that the High Court should have directed the NDMC to pay them also ex gratia payment and should not have directed the NDMC to treat the ad hoe payment "as one time special ad hoc payment" and refrain from recovering the said amount. The NDMC in turn has filed two appeals CA No. 2971 of 1983 and CA No. 2970 of 1983. The former appeal has been filed against that part of the judgment relating to CW 1231 of 1979 wherein the High Court had directed payment at SS Committee 's scales for the period June 1975 to May 1982 and also directed ministerial posts in the electricity wing to be filled up on seniority cum option basis instead of a three years deputation basis on rotational system. Likewise the direction of the High Court to give up the proceedings for recovery of the ad hoc payment towards ex gratia payment is also impugned in the appeal. Civil Appeal No. 2970 Of 1983 is directed against that portion of the judgment relat ing to CW 557 of 1979 which has been filed by the non tech nical staff of the electricity wing praying for payment of arrears of pay for the total period subsequent to the sanc tion. CA No. 6074 of 1983 has been filed by the Assistant Engineers (Civil) & Junior Engineers (Civil) to contend that the High Court should have sustained their claim for parity with the electrical engineers in the electricity wing and directed the NDMC to pay them also at the SS Committee pay scales and also to give them ex gratia payment as in the case of all the persons employed in the electricity wing. SLP NO. 11270 of 1982 has been filed by some of the staff members in the general wing to contend that since the NDMC constituted an integrated unit with common fund, common budget etc., the High Court ought not to have sustained the payment of exgratia amount to only those persons working in the electricity wing and should have made the payment ap plicable for all or to none. As common questions are raised in this petition, special leave is granted and the appeal shall be assigned a number. WP NO. 9256 of 1983 has been filed by the Assistant & Junior Engineers (Civil) to contend that there cannot be any discrimination between Civil Engi neers and Electrical Engineers and as such they are as much entitled as the electrical engineers to be paid according to SS Committee pay scales and also for payment of ex gratia amount. 824 We will now take up for consideration the merit of the contentions of the parties in the appeals and petitions. As we propose to deal with the several contentions of the parties in the course of our discussion in the judgment, we do not think it necessary to set out the contentions of the parties separately. We will first take up for consideration the case of the appellants in CA No. 2969 of 1983 viz. the ministerial staff in the general wing of the NDMC. Mr. Mukhoty learned counsel for the appellants urged before us that the electricity wing of the NDMC is not a distinct and independent unit entitled to have its own scales of pay and secondly the ministerial staff of the NDMC belong to a unified cadre and the staff members are liable to transfer from one branch of the NDMC to another and as such the NDMC cannot create a cadre within a cadre and fix different scales of pay for those in the carved out cadre. It was further urged by him that the nature of the duties performed by the ministerial staff in all the three wings of the NDMC is more or less similar, if not identical, and hence the well established rule of equal pay for equal work should govern the staff members. In support of his argument the learned counsel relied on the decisions of this Court in Randhir Singh vs Union of India, ; ; Dhirendra Chamoli vs State of U.P., and P. Rarnachandra Iyer vs Union of India, ; Controverting the arguments of Mr. Mukhoty, Mr. Misra, learned counsel for the NDMC and Mr. Ramamurthy, learned counsel for the non technical staff working in the electri cal wing, argued that the Government or any State within the meaning of Article 12 of the Constitution has a right under law to create new departments or new cadres with different scales of pay and hence the appellants. cannot impugn the action of the NDMC in treating the ministerial staff in the electrical wing differently and giving them pay scales as per SS Committee Report. In support of their arguments, the learned counsel placed reliance on the decisions in Reserve Bank of India vs N.C. Paliwal, ; & Reserve Bank of India vs C.N. Sahasranaman, [1986] (Suppl.) SCC 143. On a consideration of the matter we find the grievance of the ministerial staff of the general wing to be well founded. Admittedly, the ministerial staff in the NDMC constitute a unified cadre. The recruitment policy for the selection of the ministerial staff is a common one and the recruitment is also done by a common agency. They are gov erned by a common seniority list. The ministerial posts in the three 825 wings of the NDMC viz. the general wing, the electricity wing and the water works wing are interchangeable posts and the postings are made from the common pool according to administrative convenience and exigencies of service and not on the basis of any distinct policy or special qualifica tions. Therefore, it would be futile to say that merely because a member of the ministerial staff had been given a posting in the electricity wing, either due to force of circumstances or due to voluntary preferment, he stands on a better or higher footing.or in a more advantageous position than his counter parts in the general wing. It is not the case of the respondents that the ministerial staff in the electricity wing perform more onerous or more exacting duties than the ministerial staff in the general wing. It therefore follows that all sections of the ministerial staff should be treated alike and all of them held entitled to the same scales of pay for the work of equal nature done by them. This Court has held in Randhir Singh 's case that the mere fact that persons belong to different departments of the Government cannot by itself be a sufficient circumstance to justify different scales of pay and that "where all things are equal, that is, where all relevant considerations are the same, persons holding identical posts may not be treated differentially in the matter of their pay merely because they belong to different departments. " In Dhirendra Chamoli 's case, the principle was reiterated and it was held that when "the persons engaged by the Nehru Yuvak kendras performed the same duties as those performed by class IV employees appointed on regular basis against sanctioned posts, it is difficult to understand how the Central Govern ment can deny to those employees the same salaries and conditions of service as class IV employees regularly ap pointed against sanctioned posts. To the same effect is the decision rendered in P. Ramachandra Iyer 's case which relat ed to discriminatory treatment being meted out to three Professors employed by the Indian Council of Agriculture Research. It is relevant at this juncture to scrutinise the reason which impelled the NDMC to pass the resolution in 1973 for giving the SS Commitee pay scales to the staff of the elec tricity wing alone. The only reason which prompted the NDMC to pass the resolution was that since DESU had implemented the SS Committee pay scales for its technical and non tech nical staff, the NDMC should also follow suit in so far as its electricity wing is concerned. In doing so, the NDMC had failed to bear in mind several distinguishing features between its set up and the set up of the DESU and its staff pattern and the staff pattern of DESU. The NDMC, as already stated, is governed by the Punjab Municipal Act while DESU is governed by the Delhi Municipal 826 Corporation Act, 1957. The set up of the NDMC is that of an integrated unit comprising all the three wings while the set up under the Municipal Corporation Act of the MCD is that its three wings have to function as distinct and independent units. Such being the case, the DESU is a separate and independent unit of MCD and constitutes an independent body. The DESU has its own budget and consequently it has freedom of action without reference to the other units. In contrast, the NDMC 's revenues is the income derived from all the three wings of it and the expenses are governed by a common budg et. Having regard to all these factors, there is no room whatever for treating the electricity wing of the NDMC on part with the DESU and adopting the pattern of pay scales implemented by DESU. Apart from the difference in the set up, it has also to be borne in mind that the ministerial staff in the NDMC are comprised in a unified cadre and the posts in the three wings are transferable and interchange able which is not so in the case of the staff of the DESU. If regard is had to all these factors, the decision taken up the NDMC originally to place the non technical staff in the electricity wing on a higher footing and give them alone the SS Committee pay scales cannot be legally sustained. The action of the NDMC clearly suffered from the vice of arbi trariness and discrimination. That takes us to the validity of the further resolutions passed by the NDMC. When it was directed by the High Court to reconsider the matter in the light of the grievances expressed by the staff of the general wing, the NDMC decided to make 496 posts in the electricity wing ex cadre posts and fill up those posts on deputation basis combined with a rotational system to be enforced once in every three years. By the revised resolution, fair distribution of higher pay benefits was sought to be given to all the ministerial staff, but nevertheless the vice of discrimination as be tween the staff of the electricity wing and the staff of the general wing continued to persist. The resolution only sought to provide all the members of the staff the benefit of the higher scales of pay for a period of three years at some point of time in their service provided they opted to serve in the electricity wing but it did not provide an answer for the criticism that there was no justification to treat the ministerial staff in the electricity wing on a higher footing than the rest of the staff and give them a higher scale of pay. Secondly, the proposal would perpetuate the imbalance in the pay scales between different sections of the staff working in the three wings of the NDMC. Third ly, the system of deputation would lead to a long period of wait for large sections of the staff before getting postings in the electricity wing on deputation basis. Fourthly, the staff members would have to 827 forego the higher scales of pay and come back to the lesser scales when the period of deputation was over. Lastly, the insistence on the staff members being entitled to deputation service in the electricity wing only if they exercised their option to work in that wing introduces an element of compul sion amont the members comprised in a unified cadre. These factors vitiated the revised proposal of the NDMC to make 496 posts as ex cadre posts and to fill them up on deputa tion basis by adopting a rotational cum option system. The High Court realised in some measure the vitiating features present in the revised scheme evolved by the NDMC. However, instead of deprecating the scheme in its entirety, the High Court has tried to formulate a scheme of its own. The High Court has taken the view that the 496 posts ex caderised in the electricity wing can be treated as special or senior posts which can be filled up on the basis of seniority cum option. The High Court, apart from laying itself open to the criticism that it had gone beyond its powers in formulating a new scheme, has failed to provide for equal benefits for all the members of the ministerial staff. If the electricity wing is to be filled up on the basis of seniority cum option, those who had served earlier in the electricity wing would get a distinct advantage over the rest of the ministerial staff including the senior members of the matter of higher pay scales. Besides, the seniority cum option system would give greater benefit to some and lesser benefit to some depending upon their age etc. Moreover, the insertion of the option clause would introduce an element of compulsion and make it appear that the staff working in the electricity wing perform more onerous and more skilled duties and hence they stand on a higher footing. It would also lead to packing all the senior members of the staff in the electricity wing and denuding the other two wings of the services of the senior ministeri al staff. For all these reasons we find the scheme formulat ed by the High Court also cannot be sustained or accepted. The NDMC itself had fully realised at one point of time that its original resolution was not fair to all the members of the ministerial staff and hence it reconsidered the matter and resolved that the benefit of higher pay should either be given to all the staff or to none and as its finances did not permit the former option, it was obliged to adopt the latter option and hence all the staff members would be uniformly paid at pay scales recommended by the Third Pay Commission. The NDMC was however forced by the Delhi Municipal Administration to treat the electricity wing as a different unit and to restrict the grant of higher pay scales only to that unit. In as much as the ground put 828 forward by the NDMC to discriminate between the ministerial staff in the general wing and the electricity wing is lack of funds and not on the ground of any distinction between the two wings, the NDMC has no legal ground to project in justification of its action in making the posts in the electricity wing as ex cadre posts and giving the benefit of SS Committee pay scales only to persons serving in those posts. We are, therefore of the view that the appellants in CA No. 2969 of 1983 are entitled to succeed in their appeal. We will deal with the manner in which they should be given relief, after considering the other appeals and petitions. Our next concern will be to deal with CA No. 6074 of 1983 and WP No. 9266 of 1983 which have been filed by the Junior Engineers (Civil) and Assistant Engineers (Civil). Their grievance is that though they are on par with the Electrical Engineers except that the nature of their techni cal services differ, their services are treated as inferior or as less skillful and they are deprived the benefit of SS Committee pay scales. They would contend that the civil engineering works designed and executed by them constitute an integral part of the work of the electrical wing and hence they cannot be discriminated in the matter of fixation of their scales of pay. The last contention is that since the NDMC has followed the DESU pattern of scales of pay, the Civil Engineers are also entitled to the SS Committee pay scales because the DESU pays its civil engineers according ly. Dr. Chitale appearing for the Civil Engineers strenuous ly argued that since the Civil Engineers have been equated with the Electrical Engineers by DESU, the NDMC also must give parity of treatment for all the Civil Engineers and give them the benefit of the higher scales of pay. We do not feel persuaded to accept the contention of Dr. Chitale. The case of the Civil Engineers does not stand on the same footing as that of the ministerial staff. This is because of several factors adverted to below. As has been pointed out by the High Court the Civil Engineering department is a separate and self contained one and the civil engineers are transferred within the civil engineering unit itself i.e. from one division to another by the Chief Engineer (Civil). The Civil Engineers posted in the water works division are not paid according to the SS Committee pay scales. The Junior Engineers (Civil) do not have any common seniority with the electrical engineers and the posts are not inter transferable. All the engineers, in which ever wing or department they are posted, are paid according to the pay scales recommended by the Third Pay Commission. There is no discrimination in payment of salary as between them. Merely because some of the Civil Engineers 829 are assigned to do civil engineering works in the electrici ty wing they cannot be heard to say that they are not dif ferent from the electrical engineers and that they should be paid higher scales of pay. In the matter of promotions etc. they are governed by the common seniority list maintained for Civil Engineers. As such their posting to the electrici ty wing cannot make them a separate class by themselves. It is of no avail to the Civil Engineers to compare themselves with the Civil Engineers working in DESU because DESU is a separate and distinct unit and all the engineers working therein constitute a single unit. Unlike in the case of the ministerial staff, there is no disparity of scales of pay between Civil Engineers working in the electricity wing and the Civil Engineers working in the other wings. Such being the case the appellants and petitioners herein have no basis to contend that they have been discriminated in the matter of fixation of pay scales. We are therefore of the view that C.A. No. 6074 of 1983 and W.P. No. 9266 of 1983 should fail. We are lastly left with the controversy regarding the payment of ex gratia amount by the NDMC only to those em ployees who are working in the electricity wing and the water works wing. We have already set out the history as to how ex gratia payment was sanctioned to the staff members of the electricity wing and then the water works wing and why it was not extended to the general wing etc. By way of an adhoc arrangement, the NDMC had given an advance of Rs.300 for the period ending with 31.3. 1976 subject to the approv al of the Delhi Administration. As the Delhi Administration declined to give its approval, the NDMC called upon the concerned staff to refund the ad hoc payment of Rs.300 in fifteen monthly instalments. To challenge the denial of ex gratia payment to them, the affected staff had filed CW No. 2807 of 1979. The High Court, it may be remembered, had sustained the stand of the NDMC but nevertheless directed the NDMC to treat the adhoc payment as a special payment and to desist from recovering it. We are unable to appreciate the reasoning of the High Court and sustain its conclusion on this aspect of the matter. The High Court has failed to see that no rational or acceptable reason is put forward for justifying the ex gratia payment only to the ministerial staff working in the electricity wing and the water works wing and denying the same to the staff working in the general wing. The only reason given is that the payment of ex gratia amount is patterned on the lines of the DESU and the Water Supply and Sewage Disposal Undertaking of the MCD. 830 The pattern of payment adopted by the MCD cannot have any binding force on the NDMC because the three units of MCD are different and distinct entities whereas the three wings of the NDMC are interdependent wings of an integrated Municipal Committee. Therefore, in the absence of justifiable reasons of a compulsive nature the payments, whether as salary or as ex gratia amount have to be on the same and equal basis and not differently for the different wings of the NDMC. In fact, what all we have said regarding the payment of uniform pay at the scales recommended by SS Committee would squarely apply to the payment of ex gratia amount also. Hence CA No. 2969 of 1983 and SLP No. 11270 of 1982 (S.C.A. No. 1688 of 1987) deserve to succeed. In the light of our conclusion, the two appeals CA NO. 2971 and 2970 of 1983 filed by the NDMC have to fail in so far as the main issues are concerned. Mr. Misra, learned counsel for the NDMC contended before us that it was open to the NDMC to constitute different cadres among its employees as laid down in Paliwal 's case and furthermore the grant of SS Committee pay scales and ex gratia payments to all the employees would seriously affect the finances of the NDMC. The decisions in Reserve Bank of India vs C. Paliwal (supra) & Reserve Bank of India vs C.N. Sahasranaman (supra) relied on by Mr. Misra are of no assistance in this case because what we are concerned is whether diferent pay scales and allowances can be given to a section of the staff when they belong to a unified cadre and are governed by common re cruitment policy, common seniority list and common transfer policy. It was urged by the learned counsel that the High Court was not justified in directing payment at the SS Committee pay scales for the employees of the electricity wing from June 1975 to May 1982 as that would result in the NDMC paying Rs.51,98,079 and in addition the payment of the arrears calculated on the difference in pay with reference to the SS Committee pay scales for the period between 1.4.1972 to 30.9.1973 would cost another Rs.7,30,062 thus in all casting a financial burden of more than Rs.50 lakhs on the NDMC. In the view we propose taking of the matter in the light of our conclusions, this grievance does not call for discussion. Mr. Ramamurthy, learned counsel appearing for the mem bers of the staff working in the electricity wing voiced forth the grievance of those employees. The straight and simple argument of the learned counsel was that in the controversy between the ministerial staff of the general wing on the one hand and the NDMC on the other, the staff of the electricity wing who had been granted revised pay scales at the SS 831 Committee rates have not been paid their due share of the salary and that they are entitled to be paid salary at the revised rate from 1.4.1972 failing which at least from 1982 onwards. The argument though appealing by itself cannot be accepted because then it would mean that the staff members of the electricity wing would be scoring an advantage over their fellow employees in the general wing merely because they were by accident or by compulsion working in the elec tricity wing at the relevant time the impugned resolutions came to be passed by the NDMC. In the result we hold that all the ministerial staff working in the NDMC are entitled to get pay scales as per SS Committee Report and likewise all of them are entitled to be given ex gratia payment. The grant of SS Committee pay scales to only the staff working in the electricity wing or the grant of ex gratia payment to only the staff working in the electricity wing and the water works wing cannot be legally sustained as it suffers from the vice of discrimina tion. As a consequence of these findings it follows that there should be uniformity not only in the payment of the SS Committee pay scales and the ex gratia amount to the staff working in all the wings or departments of the NDMC but the payment should also be made from a date common to all. However, having regard to the long lapse of time and the financial implications involved in the matter it will not be fair and proper to direct the NDMC to pay all the members of the staff at SS Committee rates from 1.4.72 to 30.9.73 and from June 1975 to May 1982. But at the same time we cannot also totally deprive the staff, particularly those who have been looking forward to receiving higher scales of pay granted by the NDMC, and the benefit of the ex gratia pay ments. We, therefore, direct that the sum of Rs.59, 10,160 and the agreed amount of ex gratia payment be equally dis tributed, among a11 the members of the staff, with such adjustments by deductions as may be required to be made in the case of persons who have received payment in excess of their share under the above said formula. In so far as payment of uniform salary to all the ministerial staff as per SS Committee pay scales and payment of ex gratia amount is concerned, the NDMC will give effect to our judgment with effect from 1st June 1982 since the High Court 's direction for payment extends upto the end of May 1982 and in respect of which payment we have directed the amount involved to be distributed equally among all the ministerial staff and not confine it to the ministerial staff of the electricity wing alone. Taking into consideration the financial commitment involved for the NDMC, it is permitted to pay the difference in the scales of pay and ex gratia amount between the period 1.6.82 to 31.7.87 in three 832 equated instalments within a period of 15 months from the date of our judgment. The Delhi Administration will give the necessary sanction to the NDMC for disbursement of funds and payment of arrears and future pay in accordance with our judgment. In the result CA No. 2969 of 1983 and (SLP No. 1127 of 1982) numbered as CA No. 1688. of 1987 will stand allowed to the extent relief is given. CA Nos. 2970 of 1983 and 2971 of 1983 filed by the NDMC and CA No. 6074 of 1983 and WP No. 9266 of 1983 filed by the engineers (civil) will stand dismissed. There will be no order as to costs in all the appeals and the writ petition.

In the Union Territory of Delhi there are two main civic bodies viz. the New Delhi Municipal Committee and the Delhi Municipal Corporation. The NDMC was constituted under the Punjab Municipal Act, 1913 to discharge all civic functions including supply of water and electricity in the area fall ing within its jurisdiction. The Delhi Municipal Corporation was constituted in pursuance of the Delhi Municipal Corpora tion Act, 1957. The NDMC forming a compact unit, had divided its civic work into various departments. Besides technical staff, it also engaged nontechnical staff such as Municipal staff, clerks etc. The non technical staff constituted one unified cadre, liable to transfer from one department to another with common seniority. The set up of the MCD was, however, different consisting of three separate and independent wings viz. the electrici ty, the general and the water, sewage and disposal wings. The electricity wing was designated as the Delhi Electricity Supply Undertaking and its employees were governed by a separate cadre and seniority list, Similarly, the general wing, performing other general civic duties and functions, and the third wing concerning with distribution of water and disposal of sewage etc. To satisfy the demands of the employees of the MCD, NDMC etc. the Government accepted the recommendations of the Third Pay Commission. The New Delhi Municipal Committee as well as the general wing of the Municipal Corporation, Delhi accepted the pay scales recommended by the Third Pay Commis sion. However, the tech 809 nical staff of Delhi Electric Supply Undertaking were not satisfied and claimed higher scales of pay. The Government, therefore, constituted a Committee known as the Shiv Shankar Committee to go into the question of revision of pay scales etc. of the technical staff of the DESU. The Committee submitted its report in 1973. Subsequently, the DESU agreed to revise the pay scales of the non technical staff also to the level recommended by the S.S. Committee. The New Delhi Municipal Committee, by its Resolution dated 19.10.73, decided to give the benefit of the revised scales to the technical and ministerial staff working in its electricity wing as, in its view, such staff were performing same or similar functions and duties performed by the staff of DESU and hence parity should be maintained, and by Reso lution dated 7.1.1974, it decided to give the benefit with effect from 1.4.72. Two of the employees of the general wing filed a writ petition before the High Court for quashing the Resolution dated 7.1.1974 which sought to implement the earlier Resolu tion of 19.10.1973. The HighCourt held that the Resolution was discriminatory in nature, and restrained the implementa tion of the Resolution till the NDMC considered afresh the question of revision of pay scales for all sections of the ministerial staff after giving an opportunity to them. In compliance with the above directions, the NDMC passed a revised Resolution dated 25.6.1975 treating all the non technical staff as equal and granting uniform pay scales at the rates recommended by the Third Pay Commission and not at different rates for different wings. This Resolution was again challenged by some of the affected members of the electricity wing before the High Court, which disposed it of on the assurance given by the NDMC that the whole position would be reviewed after giving all the parties including the ministerial staff of the electricity wing due notice of the matter. The Letters Patent Appeal, originally filed by the NDMC, and in which some of the affected employees of the electric ity wing had got themselves impleaded as appellants, was allowed and the judgment of the Single Judge was set aside as it had been rendered without all the necessary parties being before the Court. The Special Leave Petition filed in the Supreme Court by two staff members of the general wing was dismissed in limine. The NDMC, after giving opportunity to all sections of the emp 810 loyees to make their representation passed a Resolution on 27.6.78 constituting the electricity wing w.e.f. 1.5.78 composed of pump drivers, welders, carpenters, mechanics and 496 posts of ministerial staff, carrying scales of pay as per the S.S. Committee report and benefit of exgratia on DESU pattern, and treated these as ex cadre posts and to be filled on deputation basis on rotation, for a period of three years in one spell. Three writ petitions were filed in the High Court con tending (a) that the ministerial staff should be treated on par with their counterparts in the electricity wing in the matter of pay and allowances, (b) that, as there was no difference between the civil and electrical engineers, civil engineers should be equated with the electrical engineers on DESU pattern, and (c) that since the employees of DESU were being paid ex gratia amount the staff in the general wing should also be paid likewise. The High Court, while upholding the order of the NDMC, modified the placement of the ex cadre posts in the overall set up. It evolved a Scheme according to which the S.S. Committee scales were to be given only to those who opted to work in the electricity department and the posts were to be filled on the basis of seniority cum option. It further directed that since higher scales of pay was linked with the service rendered in the electricity wing, S.S. Committee scales should be paid to all those who had worked in the electricity wing during the period subsequent to June 1975 till 30th May, 1982, that such payment would not amount to discriminatory payment and that after the 30th May, 1982 the postings should be done in accordance with senioritycum option formula. It also held that the civil engineers could not seek parity with electrical engineers in the electricity wing in the matter of pay scales as the junior engineers (Civil) had no common seniority with the electrical engi neers in the electricity wing, that the posts were not interchangeable and that they could not draw comparison with the employment pattern of DESU because it was a separate and independent entity unlike the electricity wing of the NDMC and that the nature of the duties performed by the electri cal engineers and civil engineers was different. Upholding the refusal of the NDMC to grant ex gratia payment to the staff of the general wing, it directed the NDMC to treat the amount already paid "as one time special ad hoc payment not serving as a precedent." 811 In the appeals before this Court it was contended on behalf of the ministerial staff in the general wing that the electricity wing was not a distinct and indepen`dent unit entitled to have its own scales of pay, that the ministerial staff of the NDMC belonged to a unified cadre and the staff members were liable to transfer from one branch to another and, as such, the NDMC could not create a cadre within a cadre and fix a different scale of pay for those in the carved out cadre, that the nature of duties performed by the ministerial staff in all the three units was more or less similar, if not identical, and hence the well established rule of equal pay for equal work should govern the staff members, that instead of restricting the payment of S.S. Committee pay scales to the 496 ex cadre posts in the elec tricity wing and directing the NDMC to fill up those posts on the basis of seniority cum option, the High Court should have directed the NDMC to give the S.S. Committee pay scales to all the members of the ministerial staff and also pay ex gratia payment and should not have directed the NDMC to treat the adhoc payment as one time special adhoc payment and refrain from recovering the said amount. The NDMC, in turn. filed two appeals against the High Court judgment directing the payment at S.S. Committee scales for the period from June 1975 to May, 1982 and fill ing up the ministerial posts in the electricity wing on seniority cum option basis instead of a three years deputa tion basis on rotational system and payment of arrears of pay etc. and for giving up the proceedings for recovery of the adhoc payment towards ex gratia payment and contending that the Government or any State within the meaning of Article 12 of the Constitution had a right under law to create new departments or new cadres with different scales of pay and hence the appellants could not impugn the action of the NDMC in treating the ministerial staff in the elec trical wing differently and giving them pay scales as per S.S. Committee Report. On behalf of some of the staff members in the general wing, it was contended that since the NDMC constituted an integrated unit with common fund, common budget etc., the High Court ought not to have sustained the payment of ex gratia amount to only those persons working in the electric ity wing and water works wing and should have made the payment applicable to all or to none. In the writ petition and appeal filed on behalf of the Assistant and Junior Engineers (Civil), it was contended that there could not be any discrimination between civil engineers and electrical engineers and since the NDMC fol lowed the pattern of scales of pay adopted by DESU 812 which paid the Civil Engineers according to S.S. Committee pay scales they were as much entitled as the electrical engineers to be paid according to the S.S. Committee pay scales and also for payment of ex gratia amount. Allowing the appeals of the employees in the general wing and dismissing the appeals and WP of NDMC and the engineers (civil), this Court, HELD: 1.1 All sections of the ministerial staff should be treated alike and all of them should be entitled to the same scales of pay for the work of equal nature done by them. [825C] 1.2 Merely because a member of the ministerial staff had been given a posting in the electricity wing either due to force of circumstances or due to voluntary preferment, he cannot stand on a better or higher footing or in a more advantageous position than his counterparts in the general wing. The ministerial staff in the NDMC constitute a unified cadre with a common recruitment policy, a common recruitment agency a common seniority list, and the posts in the three wings are inter changeable and postings are made from the common pool according to administrative convenience and exigencies of service and not on the basis of any distinct policy or special qualification. [825B, 824H, 825A] 1.3 The only reason which prompted the NDMC to pass the resolution was that since DESU had implemented the S.S. Committee pay scales for its technical and non technical staff, the NDMC should also follow suit in so far as its electricity wing is concerned. In doing so, the NDMC had failed to bear in mind several distinguishing features between its set up and the set up of the DESU and its staff pattern and the staff pattern of DESU. [825G] The NDMC is governed by the Punjab Municipal Act, while the DESU is governed by the Delhi Municipal Corporation Act, 1957. The set up of the NDMC is that of an integrated unit comprising all the three wings while the set up under the Municipal Corporation Act of the MCD is that its three wings have to function as distinct and independent units. Such being the case, the DESU is a separate and independent unit of MCD and constituted an independent body. The DESU has its own budget and consequently it has freedom without reference to the other units. In contrast, the NDMC 's revenue is the income derived from all the three wings of it and the ex penses are governed by a common 813 budget. Apart from the diference in the set up, the ministe rial staff in the NDMC are comprised in a unified cadre and the posts in the three wings are transferable and inter changeable which is not so in the case of the staff of the DESU. [825H, 826A] 1.4 There is no room whatsoever for treating the elec tricity wing of the NDMC on par with the DESU and adopting the pattern of pay scales implemented by DESU and the deci sion taken by the NDMC originally to place the non technical staff in the electricity wing on a higher footing and give them alone the S.S. Committee pay scales cannot be legally sustained. The action of the NDMC clearly suffered from the vice of arbitrariness and discrimination. [826B D] 2.1 The NDMC has no legal ground to project any justifi cation of its action in making the posts in the electricity wing as ex cadre posts and giving the benefit of S.S. Com mittee pay scales only to persons serving in those posts. [828A] 2.2 The resolution only sought to provide all the mem bers of the staff the benefit of the higher scales of pay for a period of three years at some point of time in their service provided they opted to serve in the electricity wing but it did not provide an answer for the criticism that there was no justification to treat the ministerial staff in the electricity wing on a higher footing than the rest of the staff and give them a higher scale of pay. [826F G] 2.3 The proposal would perpetuate the imbalance in the pay scales between the different sections of the staff working in the three wings of the NDMC. The system of depu tation would lead to a long period of wait for large sec tions of the staff before getting postings in the electrici ty wing on deputation basis. The staff members would have to forego the higher scales of pay and come back to the lesser scales when the period of deputation was over. The insist ence on the staff members being entitled to deputation service in the electricity wing only if they exercised their option to work in that wing introduces an element of compul sion among the members comprised in a unified cadre. These factors vitiate the revised propsoal of the NDMC to make 496 posts as ex cadre and to fill them up on deputation basis by adopting a rotational cum option system. [826G H, 827A B] 3. The scheme formulated by the High Court cannot be sustained or accepted. The High Court, apart from laying itself open to the criticism that it had gone beyond its power in formulating the scheme, has 814 failed to provide for equal benefits for all the members of the ministerial staff. If the electricity wing is to be filled up on the basis of seniority cum option, those who had served earlier in the electricity wing would get a distinct advantage over the rest of the ministerial staff including the senior members in the matter of higher pay scales. Besides, the seniority cum option system would give grater benefit to some and lesser benefit to some depending upon their age etc. Moreover, the insertion of the option clause would introduce an element of compulsion and make it appear that the staff working in the electricity wing per form more onerous and more skilled duties and hence they stand on a higher footing. It would also lead to packing all the senior members of the staff in the electricity wing and denuding the other two wings of the services of the senior ministerial staff. [827C F] 4. Merely because some of the Civil engineers are as signed to do civil engineers ' work in the electricity wing it cannot be said that they are not different from the electrical engineers and that they should be paid higher scales of pay. In the matter of promotions etc., they are governed by the common seniority list maintained for civil engineers and their posting to the electricity wing cannot make them a separate class by themselves. They cannot com pare themselves with the civil engineers working in DESU because that is a separate and distinct unit, and all the engineers working therein constitute a single unit. There is no disparity of scales of pay between civil engineers work ing in the electricity wing and those working in the other wings. It cannot, therefore, be said that there is discrimi nation in the matter of pay scales. [828H, 829A C] 5. The pattern of payment of ex gratia payment adopted by the MCD cannot have any binding force on the NDMC because the three units of the MCD are different and distinct enti ties whereas the three wings of the NDMC are inter dependent wings of the integrated Municipal Committee. [830A] 6.1 In the absence of justifiable reasons of compulsive nature, the payments whether as salary or as ex gratia amounts have to be on the same and equal basis and not differently for the different wings. All the ministerial staff working in the NDMC are entitled to get pay scales as per S.S. Committee report and are also entitled to be given ex gratia payment likewise. The grant of S.S. Commitee pay scales to only the staff working in the electricity wing or the grant of ex gratia payment to only the staff working in the electricity wing and the water works wing cannot be legally sustained as it suffers from the vice of discrimina tion. [830B, 831C] 815 6.2 There should be uniformity not only in payment of S.S. Committee pay scales and the ex gratia payment to the staff working in all the wings or departments of the NDMC but the payment should also be made from a date common to all. [831D] [In so far as payment of uniform salary to all the ministerial staff as per S.S. Committee pay scales and payment of ex gratia payment is concerned, the NDMC will give effect to this judgment with effect from 1st June, 1982. The amount involved should be distributed equally amongst all the ministerial staff and not confined to the ministerial staff of the electricity wing alone. In view of the financial committment involved the NDMC is permitted to pay the difference in scales of pay and ex gratia amount between June 1, 1982 to July 31, 1987 in three equal instal ments within a period of 15 months.] [831F H] Randhir Singh vs Union of India, ; ; Dhirendra Chamoli vs State of U.P., ; P. Ramachandra Iver vs Union of India, ; , Reserve Bank of India vs N.C. Paliwal; , and Reserve Bank of India vs C.N. Sahasranaman, [1986] (Suppl.) SCC 143, referred to.

minal Appeal No. 177 of 1963. Appeal from the judgment and order dated May 14, 1963 of the Calcutta High Court in Criminal Appeal No. 380 of 1962. section C. Das Gupta and Sukumar Ghose, for appellants. C. K. Daphtary, Attorney General, A. N. Sinha and P. K. Mukherjee, for the respondent. The Judgment of MUDHOLKAR and SATYANARAYANA RAJU JJ. was delivered by MUDHOLKAR J. BACHAWAT J. delivered a separate Judgment. Mudholkar, J. This is an appeal by certificate from a judg ment of the High Court of Calcutta setting aside the acquittal of M/s. Baburally Sardar of Steward Hogg Market, Calcutta, appellant No. 1 and of Abdul Razzak, a partner of that firm, appellant No. 2, in respect of an offence under section 16 (1) (a) (i) of the read with section 7(1) of that act. The facts which are not in dispute are briefly these : On June 1, 1960 a Food Inspector of the Corporation of Calcutta visited the shop of the appellants. At that time Abdul Razzak was in charge. He took samples of Comela Brand condensed milk from the shop, one of which was sent to the Public Analyst. Upon an analysis made by the Public Analyst the milk fat content of the condensed milk was found to be 3.4% which did not conform to the prescribed standard in respect of condensed milk. A complaint was thereupon lodged against the firm before the Municipal Magistrate and Additional Chief Presidency Magistrate, 817 Calcutta. Apart from the firm five other persons, including Abdul ' Razzak were also named as accused persons. One of the accused persons, Mohd. Yasin did not appear but it was represented to the learned Magistrate that the person was not mentally fit. Thereupon the counsel for the Corporation gave him up. The other accused persons pleaded not guilty and were eventually acquitted by the Magistrate. Against that order an appeal was preferred before the High Court under section 417 of the Code of Criminal Procedure. The High Court, however, allowed the appeal only against the appellants but dismissed it against the remaining accused persons. The defence of the appellants was based upon section 19(2) of the Act and was briefly this : The tins of condensed milk were purchased by the firm on May 3, 1960 from Messrs section Choudhury Brothers under a document of sale exhibit A. At that time the firm had demanded a warranty from the traders, that is, Messrs. Choudhury Brothers, but they did not furnish a written guarantee on the ground that a certificate and a warranty had been given on each tin of condensed milk. The appellants further pleaded that the tins were in the same condition in which they were when they were purchased from Messrs Choudhury Brothers and that they had no reason to believe that there was any alteration in their nature, substance or quality subsequent to the purchase of the tins. It may be mentioned that an attempt was made to secure the appearance of section Choudhury of Messrs. Choudhury Brothers, but it failed because he could not be traced at the address given in the cash memo. Section 16(1) (a) (i) of the Act, amongst other things, pro vides that if any person, whether by himself or by any person on his behalf stores or sells any article of food in contravention of any provisions of the Act or of the rules made thereunder he shall 'be punishable for the first offence with imprisonment for a term which may extend to one year and/or with fine which may extend to Rs. 2000 or both. Section 2(i) defines the word "adulterated". According to the definition an article of food shall be deemed to be adulterated in various circumstances, one of which is where the quality or purity of the article falls below the pres cribed standard. In the Act "prescribed" means prescribed by the rules. Rule 5 of the Rules framed by the Central Government under section 23(1) of the Act read with section 4(2) thereof runs thus "Standards of quality of the various articles of food specified in Appendix B to these rules as defined in that appendix. " 818 The definition of standard of quality for condensed milk is give in A. 1 1.07 of Appendix B and runs thus : "Condensed milk means milk which has been con centrated from full cream milk by removal of part of its water with or without the addition of sugar, and includes the article commonly known as 'evaporated milk ' but does not include the article commonly known as 'dried milk ' or 'milk powder '. It shall be free from preservatives other than sugar and contain at least 31 per cent of milk solids of which at least 9 per cent shall be fat. " As already stated, the Public Analyst found that the fat content of the condensed milk was only 3.4% whereas the minimum prescribed in the Appendix is 9%. It is, therefore, clear that the condensed milk stored by the appellants for sale was adulterated and, therefore, there was a breach of the provisions of section 16(1)(a) (i) of the Act. In view of the provisions of section 19(1) it was not open to the appellants to contend that they were ignorant of the nature, substance and quality of the condensed milk sold by them. Subsection (2) of section 19, however, furnishes a defence to a vendor ignorant of the nature, substance and quality of food sold by him provided he satisfies the requirements of that provision. Omitting the second proviso thereto, which is not relevant in the present case, sub section (2) of section 19 reads thus : " (2) A vendor shall not be deemed to have committed an offence if he proves (i) that the article of food was purchased by him as the same in nature, substance and quality as that demanded by the purchaser and with a written warranty in the prescribed form, if any, to the effect that it was of such nature, substance and quality; (ii) that he had no reason to believe at the time when he sold it that the food was not of such nature, substance and quality; and (iii)that he sold it in the same state as he purchased it : Provided that such a defence shall be open to the vendor only if he has submitted to the food inspector or the local authority a copy of the warranty with a written notice stating that he intends to rely on it and 819 specifying the name and address of the person from whom he received it, and has also sent a like notice of his intention to that person. " The aforesaid defence was available to the appellants provided that they showed, in the first place, that what was stored by them for sale to purchasers demanding condensed milk was in fact milk which had been concentrated from full cream milk so as to conform to the standard of quality given in A. 1 1.07 of Appendix B. For, it would be milk which satisfies the standard prescribed therein which can be regarded as 'condensed milk ' under the Act. Upon analysis, however, it was found that the so called condensed milk contained in the samples taken by the Food Inspector from the appellants was far inferior to that prescribed for "condensed milk". It could, therefore, not be regarded as "the same in nature, substance and quality as that demanded by the purchaser". Nor again, had the appellant obtained a warranty in the prescribed form. Rule 12 A provides that every trader selling an article of food to a vendor shall deliver to the vendor a warranty in form 6 A, if required to do so by the vendor. No such warranty was demanded by the appellants, nor given by Messrs. section Chaudhury Brothers. No doubt, under the proviso to the aforesaid sub rule no warranty in the prescribed form is necessary if the label on the article of food or cash memo delivered by the trader to the vendor in respect of that article contains a warranty certifying that the food contained in the container or mentioned in the cash memo is the same in nature, substance and quality as demanded by the vendor. Mr. Das Gupta for the appellants, says that the labels on the tins satisfy the requirements of the proviso and faintly suggested that the cash memo also satisfies the conditions. The contents of the label upon which reliance is placed by him are as follows : " 'Comela ' Full Cream sweetened condensed milk made on formula of Holland Product. 'Comela Brand ' 'The contents of the tin are scientifically preserved, pure and produced from healthy Cow 's milk. Comela full cream condensed milk easily digestable and are ideal food for babies. Special care is taken to maintain freshness Prepared by Kwality Diary. " This label contains no warranty of the kind referred to in the proviso. Moreover, it is not even in the form given for a label 820 prescribed for "Sweetened condensed milk". Under r. 42 B(b) the label prescribed is as follows CONDENSED FULL CREAM MILK (Sweetened) This tin contains the equivalent of . litres of milk with sugar added. It may be that the inscription on the prescribed label "This tin contains an equivalent of. . litres of milk with sugar added" was meant to serve the purpose of a warranty though it is couched in different language. For, it may be possible to ascertain by reference to standard tables the quantity of milk solids and fat from the quantity of milk condensed and from the quantity of condensed milk contained in the tin. It would not be possible even to do this on the basis of the particulars given on the labels borne on the tins which were taken as samples by the Food Inspector from the appellants. Mr. Das Gupta strongly relied upon the words "Full Cream" and said that where condensed milk is said to have been obtained from full cream the requirements of law must be deemed to have been satisfied. For one thing "Full cream" has nowhere been defined in the Act or the rules. Moreover, without knowing the quantity of "Full cream" which was condensed in the milk contained in each tin it is impossible even to calculate the quantity of milk solids and fat in each tin. The label, therefore, is of little assistance to the appellants. Moreover, when a vendor accepts from the trader tins purported to be of condensed milk bearing a label of this kind he cannot be said to have "had no reason to believe" that it was not condensed milk of the prescribed nature, substance and quality. It may be that the appellants sold them in the same state as they purchased them. But this fact is by itself not sufficient to absolve them. As for the so called cash memo it is sufficient to point out that all that it specifies is : Quantity Description Rate Per Amount 1 C/C Comela Milk C 70/ Case Rs. 70 00 There is not a whisper of any warranty on it. In the circumstances, therefore, the High Court was right in setting aside the acquittal of the appellants and convicting them of the offence under section 1 6 (1) (a) of the Act and sentencing them to pay fine of Rs. 2,000 each. The appeal is without merit and is dismissed. 821 Bachawat, J. The defence under section 19(2) of the cannot succeed, as the appellants failed to prove that they purchased the articles of food with a written warranty in the prescribed form. The label on the tin container gave a description of the article of food, but it did not give a warranty certifying that the food is the same in nature, substance and quality as demanded by the vendor. In the absence of such a warranty, the appellants have failed to establish the defence under section 19 (2) read with R. 12 (a) and Form VI A. Had there been such a written warranty on the label, the appellants would have established the defence. I agree that the appeal be dismissed. Appeal dismissed.

Samples of a certain brand of tinned condensed milk were taken from the appellants ' shop by the Food Inspector. The Public Analyst found the fat content of the condensed milk below standard. When prosecuted under section 16(1) (a) (i) of the the appellants took a plea based on section 19(2) of the Act and claimed that the label on the tins was a warranty within the meaning of that section as well as of the proviso to Rule 12 A. The label on the tins described the milk as "Full cream sweetened condensed milk made on formula of Holland product ' and inter alia said : "The contents of the tin are scientifically preserved, pure and produced from healthy cow 's milk." The trial Magistrate accepted the appellants ' plea and acquitted them but on appeal by the State the High Court convicted them. They appealed to this Court with certificate. HELD : (i) Defence under section 19(2) of the Act was available to the appellants provided they showed in the first place, that what was stored by them for sale to the purchasers demanding condensed milk was in fact milk which had been concentrated from full cream milk so as to conform to the standard of quality given in A 11.07 of Appendix B. For, it would be milk which satisfies the standard prescribed therein which can be regarded as 'condensed milk ' under the Act. Since however the milk stored by the appellants was found to be below standard it could not be regarded as 'the same in nature, substance and quality as that demanded by the purchaser '. Nor again had the appellants obtained a warranty in the prescribed form. Thus the requirements of s.19 (2) (i) were not satisfied. [819 B C] (ii) No doubt, under the proviso to Rule 12 A no warranty in the prescribed farm is necessary if the label on the article of food or cash memo delivered by the trader to the vendor in respect of that article contains a warranty certifying that the food contained in the container or mentioned in the cash memo is the same in nature, substance and quality as demanded by the vendor. But the labels on the tins stared by the appellants contained no warranty of the kind referred to in the proviso. The labels were not in the form prescribed under r. 42B(b) and it was not possible from the matter printed thereon to ascertain by reference to standard tables the quantity of milk solids and fat from the quantity of milk condensed and from the quantity of condensed milk contained in the tin. [819 D 820 D] (iii)The words "Full cream" on the tin did not satisfy the requirements of the law either. 'Full cream ' has nowhere been defined in the Act or the rules. Without knowing the quantity of 'full cream ' which 816 was condensed in the milk contained in each tin it was impossible even to calculate the quantity of milk solids and fat in each tin. The label therefore was of little assistance to the appellants. [820 D E] Similarly the cash memos carried no warranty whatsoever. (iv) When a vendor accepts from the trader tins purported to be of condensed milk hearing a label of the above kind he cannot be said to have "had no reason to believe" that it was not condensed milk of the prescribed nature, substance and quality. It may be that the appellants sold the tins in the same state as they purchased them. But this fact was by itself not sufficient to absolve them. [820 F] Per Bachawat, J The defence under section 19(2) of the Act could not succeed as the appellants failed to prove that they purchased the articles of food with a written warranty in the prescribed form. The label on the tin container gave a description of the article of food but it did not give a warranty certifying that the food was the same in nature, substance and quality as demanded by the vendor. In the absence of such a warranty. the appellants had failed to establish the defence under section 19(2) read with r. 12 A and Form VI A. [821 A B.]

Special Leave Petition (Civil) No. 4826 of 1987 etc. From the Judgment and order dated 6.4.1987 of the Allahabad High Court in C.M.A. No. 4555 (W) of 1987 in W.P. No. 2214 of 1987. K. Parasaran, Attorney General, Milon K. Banerjee, Solicitor General, F.S. Nariman, Dr. Y.S. Chitale, H.L. Anand, K.K. Venugopal, A.K. Ganguli, S.N. Kacker, Anil B. Diwan, A.K. Sharma, Harish N. Salve, K.J. John, section Swarup, T.V.S.N. Chari, Vrinda Grover, Miss A. Subhashini, A. Subba Rao, R.B. Mehrotra, B.B. Sawhney, N.K. Sharma, P.V. Kapur, P.P. Malhotra, Miss Annoradha Dutt, P. Parmeshwaran, Navin Prakash and Naresh K. Sharma for the appearing parties. 973 The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. What falls for consideration in all these matters is a common question of law, namely, whether equity shares in the two companies i.e. 10,00,000 shares in Swadeshi Polytex Limited and 17,18,344 shares in Swadeshi Mining and Manufacturing Company Limited, held by the Swadeshi Cotton Mills, vest in the Central Government under Section 3 of the Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986 (hereinafter referred to as 'the Act '). The other subsidiary question is whether the immovable properties, namely, the bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur have also vested in the Government. The question as to one more property known as Shrubbery property whether it has been taken over or not is still to be argued and is not covered by this judgment. In order to appreciate the question in these matters it has to be borne in mind that there were six original proceedings initiated by various parties which gave rise to these civil appeals, special leave petitions and the transferred cases to this Court. These six original proceedings are as follows: (1) On 18th of February, 1987 Suit No. 418 of 1987 was filed before the Delhi High Court by one Naresh Kumar Parti against Dr. Raja Ram Jaipuria, Swadeshi Polytex and others, praying for an order of injunction restraining the company from holding the 17th annual general meeting on the ground that 34% shares in Swadeshi Polytex have vested in National Textile Corporation (briefly referred to as NTC) in view of sections 3 and 4 of the said Act. In this suit an application for grant of interim injunction was also filed praying that in the event the annual general meeting of the company is allowed to be held, an independent Chairman should be appointed to conduct the meeting. Notice in respect of the said application was served upon the respondents on 20th of February, 1987. On 4th March, 1987 the Delhi High Court refused to pass any order in view of the order already passed by the Allahabad High Court mentioned hereinafter. Against this order of the Delhi High Court, two special leave petitions were filed in this Court one by Doypack Systems Pvt. Ltd., which was defendant No. 10 in the Delhi suit. (Consequent upon grant of leave, the special leave petition came to be registered as Civil Appeal No. 577 of 1987). The other special leave petition was filed by the plaintiff in the Delhi suit, Naresh Kumar Parti. (Consequent upon grant of leave, the special leave petition came to be registered as Civil Appeal 974 No. 578 of 1987). On 24th of February, 1987 one Hari Prasad Aggarwal, filed a suit being Case No. 183 of 1987 in the Court of Third Additional Civil Judge, Kanpur praying, inter alia, that Shri Raja Ram Jaipuria should not preside over the 17th annual general meeting of the Company. On 27th of February, 1987, the application for interim injunction filed in the said suit was dismissed by the learned trial Judge. In appeal which is not yet numbered preferred by the plaintiff before the Allahabad High Court an order was passed by the Court on 2nd March, 1987 appointing Shri M.P. Wadhawan as the Chairman of the said annual general meeting. The consenting parties to the said proceedings before the Allahabad High Court were Shri Raja Ram Jaipuria and Swadeshi Polytex Limited. Against this order of 2nd March, 1987 passed by the Allahabad High Court M/s. Doypack Systems Private Limited preferred a special leave petition in this Court. Leave was granted and as mentioned hereinbefore it was registered as Civil Appeal No. 577 of 1987. The three special leave petitions were heard together as Civil Appeals Nos. 577, 578 and 579 of 1987 and were disposed of by a common order on 6th March, 1987 by this Court appointing Shri Jaswant Singh as the Chairman of the said annual general meeting. On 26th of February, 1987 another suit being Suit No. 506 of 1987, was filed in the Delhi High Court by one Mukesh Bhasin praying, inter alia, for a declaration that Swadeshi Cotton and Swadeshi Mining had no right in respect of 34% of the shareholdings in Swadeshi Polytex and that the said shares were vested in NTC by virtue of the said Act. By an order dated 9th March, 1987 the Delhi High Court disposed of that application. The learned Judge in that case was prima facie satisfied that the plaintiff in that case was entitled to an injunction claimed by him in the meeting to be presided over by Shri Jaswant Singh. He granted injunction restraining the defendants Nos.3 and 4 in that suit from exercising any right whatsoever attached to 34% shares of defendant No.2 held by them and particularly any voting rights in the annual general meeting which was scheduled to be held on 9th of March, 1987 till decision of that suit. This order was brought to the notice of this Court by CMP forming part of Civil Appeal Nos. 577 79 of 1987. On 9th of March, 1987 on that CMP this Court passed an order directing that NTC, Swadeshi Cotton and Swadeshi Mining, all shall be entitled to vote at the annual general meeting and the question as to who were the rightful voters would be decided by the Chairman of the meeting. It was further directed that the Chairman would keep these votes separately. This is the Transferred Case No. 14 of 1987 herein. On 7th of March, 1987 one Mukesh Jasnani a shareholder in Swadeshi 975 Polytex filed a writ petition in the Allahabad High Court (Lucknow Bench). The High Court by its order dated 7th of March, 1987 dismissed that writ petition. The High Court in the said order observed that Swadeshi Cotton and Swadeshi Mining would be entitled to vote at the 17th annual general meeting in respect of their shares which, according to NTC had vested in them. Against this order dated 7th March, 1987, Doypack Systems preferred a special leave petition being SLP (Civil) No. 3112 of 1987. On 9th March, 1987 this Court passed orders in this special leave petition directing that the meeting would be held under the Chairmanship of Shri Jaswant Singh notwithstanding any order made by any court, including the order dated 3rd March, 1987 passed by the Division Bench of the Allahabad High Court. This Court also vacated the operative portion of the directions contained in the order dated 7th March, 1987 passed by the Allahabad High Court. On 6th of April, 1987 M/s. Swadeshi Mining and Manufacturing Company filed a civil writ petition No. 2214 of 1987 in the Allahabad High Court (Lucknow Bench) praying, inter alia, for stay of the operation of the letters dated 24/30th March, 1987 addressed by NTC to Swadeshi Mining and Manufacturing and Swadeshi Cotton Mills Company Limited, calling for an Extraordinary General Meeting of the shareholders for removal of the Directors of Swadeshi Mining and Manufacturing Company Limited. The Division Bench of the High Court (Lucknow Bench) passed an order on 6th of April, 1987, staying the operation of the said letters addressed by NTC to the companies. Against that order, M/s. Doypack Systems Pvt. Ltd. filed a Special Leave Petition No. 4826 of 1987. NTC also filed a special leave petition against the said order, being SLP No. 5240 of 1987 in this Court. Both these petitions were heard by this Court on 5th May, 1987. By an order passed on 5th May, 1987 this Court directed that Suit No. 506 of 1987 filed in the Delhi High Court and Writ Petition No. 2214 of 1987 pending in the Allahabad High Court (Lucknow Bench) be transferred to this Court, (subsequently, registered as Transferred Cases Nos. 14 and 13 of 1987 respectively). Consequent upon leave granted by this Court by the order dated 21st of January, 1987 NTC filed a civil suit in the District Court at Kanpur.seeking a declaration of its title in respect of Shrubbery property in Kanpur. The learned Trial Judge refused any interlocutory injunction in the said suit against which an appeal was preferred before the High Court of Allahabad which was also declined and, consequently, NTC filed Special Leave Petition No. 7045 of 1987 in this Court. This application is still pending and is awaiting disposal. In this background these matters will have to be disposed of. 976 Swadeshi Mining and Manufacturing Co. Ltd. and others submitted that these shares did not vest in the Central Government. The main thrust of Shri Nariman 's contention, who appeared on their behalf, was that section 3 of the Act provided that every textile undertaking and right, title and interest of the company, i.e. Swadeshi Cotton Mills Company Limited vested in the Central Government. The "textile undertakings" mentioned in section 3 included all assets 'pertaining ' to the textile undertaking as per section 4 of the Act. It is common ground that whether a particular asset is part of the textile undertaking and vests under section 3 or not, has to be considered in the context of the Act with reference to the language used in section 4 of the Act. Shri Nariman submitted that there are different modes by which Parliament can resort to nationalisation. These modes, according to him, are: (a) acquisition of 100% shares of the Company; (b) all assets under the ownership, possession or control of the company being vested in the Government; (c) only those assets in the ownership, possession or control of the company in relation to the undertakings which are taken over or "all properties pertaining to the undertaking" vest in the Government. According to him, the expressions "pertaining to" or "in relation to" are expressions of limitation and restriction, in the absence of which each and every asset of the company would have vested in the Government. The background and sequence of events leading to the enactment of this Act through which Shri Nariman took us in detail and it is useless to set them up in extenso, he submitted that the shares in question were all along being considered and treated as not comprising part of the textile undertaking. He referred to the order dated 13th of April, 1978 issued by the Central Government under section 18AA of the Industries (Development and Regulation) Act, 1951 (hereinafter referred to as 'the IDR Act '). This order did not purport to take over those shares held in the two companies by the Swadeshi Cotton Mills Company Limited. He also drew our attention to Volume III pages 53 and 54 of the present volumes before us, which is the reply of the Minister of Law, Justice and Company Affairs. It was clarified to the Parliament that the shares were distinct from the undertakings of the company whose management was taken over. On 27th of March, 1979 in answer to a question 977 the Minister stated that apart from the six undertakings taken over and presently run by the National Textile Corporation Limited, the business of the company comprised of: (i) Investments in Swadeshi Polytex Limited, Ghaziabad. (ii) Investments in Swadeshi Mining and Manufacturing Company Limited, a subsidiary company. (iii) Land development business. He drew our attention to the letter dated 9th of April, 1979 from the Chairman, Cotton Mills Ltd. in answer to a letter by the Director, Department of Company Affairs, stating that the shares in question and the voting rights in respect thereof continued to vest in the company, i.e. Swadeshi Cotton Mills Limited in spite of the taken over of the management. Before we proceed further we must deal with the decision of this Court in Balkrishan Gupta and others vs Swadeshi Polytex Ltd. and others; , There it was observed that the fact that 3,50,000 shares had been pledged in favour of the Government of Uttar Pradesh would not make any difference. The contention that was urged on behalf of the appellant therein, namely Balkrishan Gupta related to the effect of an order made by the Central Government on 13th of April, 1978 under section 18AA(1)(a) of the IDR Act taking over the management of Swadeshi Cotton Mills along with five other industrial units belonging to the Company which was the subject matter of dispute in Swadeshi Cotton Mills vs Union of India, ; and the order of extension passed by the Central Government on 26th November, 1983 which was the subject matter of dispute in that case before this Court It was urged in Balkrishan vs Swadeshi Polytex (supra) on behalf of the appellants therein that on the passing of the above orders under Section 18AA(1)(a), the Cotton Mills Company lost its voting rights in respect of the shares in question. This Court held that was not so. This Court emphasised that what was taken over was the management of the six industrial units referred to therein and not all the rights of the Cotton Mills Company. The shares belonged, it was observed, to the company and the orders referred to above could not have any effect on these. In that context, it was observed that the Department of Company Affairs, Government of India rightly expressed its view in the letter written by the Director in the Department of Company Affairs on 9th of April, 1979 to the 978 Chairman of the Cotton Mills Company that the voting rights in respect of these shares continued to vest with the Cotton Mills Company and the manner in which those voting rights were to be exercised was to be determined by the Board of Directors of the Cotton Mills Company. Hence the passing of the orders under section 18AA(1)(a) of the IDR Act had no effect on the voting rights of the Cotton Mills Company. It was further observed that the Polytex Company had in that case rightly treated the registered holder i.e. the Cotton Mills Company as the owner of the shares in question and to call the meeting in accordance with the notice issued under section 169 of the . Therefore, a challenge to the validity of the meeting was negatived. As good deal of reliance was placed on behalf of the petitioners on this decision, it must be emphasised that the decision must, however, be understood in the context of the facts and the language used in the order passed under section 18AA of the IDR Act whereby only the management had been taken over and not the rights of the company therein. But by the present Act in question on the appointed day "every textile undertaking" and "the right, title and interest of the company in relation to every textile mill of such textile undertakings" were transferred to and vested in the Central Government and such textile undertakings would be deemed to include "all assets" and so in the context of this provision the reference and the reliance on the decision of the Balkrishan Gupta & others vs Swadeshi Polytex Ltd. and others (supra) is not, in our opinion, appropriate. It is true by the IDR Act only management was taken over, but a further point was sought to be built up on behalf of the petitioners that the Act in question was passed to regularise what was taken over. So because of this decision shares were not taken over by the Act. In view of the significant difference between the objects of taking over of the assets and the taking over of the management this submission has to be stated to be rejected. Reliance was also placed before us on the decision of the Delhi High Court in Writ Petition No. 408 of 1978. The Delhi High Court held that the shares did not vest in the Government under the order dated 13th of April, 1978 issued under section 18AA of the IDR Act. This judgment of the Delhi High Court was challenged in appeal before this Court. This Court in its judgment in Swadeshi Cotton Mills vs Union of India (supra) set aside the order of take over dated 13th April, 1978 for violation of the principles of natural justice. But this Court did not give any finding or order with regard to the finding of the High Court that the shares were not included in the take over order. 979 It was further urged before us that this Act was preceded by an ordinance namely, Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Ordinance, 1986 which was promulgated on 19th of April, 1986. Section 10 of the ordinance entitled, it was submitted, NTC to exercise control over the business of the undertakings taken over. the NTC passed an order to this effect on 25th April, 1986, but did not purport to take over the shares, according to Shri Nariman. We cannot attach much significance to that fact as Shri Nariman sought us to do. Shri Nariman referred us to the Statement of Objects and Reasons appended to the Bill and urged that it was not intended that the shares were included in the undertaking. He submitted that the Statement of Objects and Reasons showed that the acquisition of the undertaking had to be resorted to since the order of taking over the management of the company issued under section 18AA of the IDR Act could not be continued any further. The preamble to the Act, however, reiterated that the Act provided for the acquisition and transfer of textile undertakings and reiterated only the historical facts that the management of the textile undertakings had been taken over by the Central Government under section 18AA of the IDR Act and further that large sums of money had been invested with a view to making the textile undertakings viable and it was necessary to make further investments and also to acquire the said undertakings in order to ensure that interests of general public are served by the continuance of the undertakings. The Act was passed to give effect to the principles specified in clauses (b) and (c) of Article 39 of the Constitution. In our opinion, this was indicative of the fact that shares were intended to be taken over. Shri Nariman, however, contended that NTC on 17th June, 1986 had issued an order under section 6 of the Ordinance transferring four of the textile undertakings to its subsidiary, the NTC, U.P. Limited. According to him, the shares were not purported to be transferred under this Order. This, however, in our opinion, is non sequitur. It appears from the written statement filed by NTC on 8th of February, 1987 in the suit filed by one G.G. Bakshi in Ghaziabad Court, it was claimed that NTC was entitled to take over company 's shares and investments. On 24/30th March, 1987 NTC issued notice to the petitioners 1 and 2 stating that they were entitled to shares. It was urged by Shri Nariman that this belated assertion indicated that the 980 shares were not intended to be taken over. We are unable to accept this suggestion or to draw that inference. It does not logically follow. On the date of the take over of the undertakings, according to Shri Nariman, 10,00,000 shares in Swadeshi Polytex Limited were attached for recovery of electricity dues of Swadeshi Cotton Mills and 3,50,000 shares were already pledged with the State Government of U.P. for securing the loans and advances made by the State Government for payment of wages. These dues fall in Part II of the Schedule to the Act and are not payable under section 25 of the Act by the Government. Shri Nariman submitted that compensation payable under the Act was not enough to pay all the dues falling in Part I. He drew our attention to the Financial Memorandum of the Bill which showed that the Government would have to pay a further sum of Rs. 15 crores over and above the compensation amount. It could not have been the intention of the Act to discharge these encumbrances, according to him, if they were to vest in the Central Government under section 3 of the Act and the result of which would be that the State of U.P. and the Electricity Board would not get anything towards their large dues. We are unable to accept this submission. This, in our opinion, is not the proper approach to the construction of the Act on the question whether the shares were taken over or not. Shri Nariman submitted that while applying the rules of construction of contemporanea expositio, it must be held that the shares in question did not vest in the Central Government under section 3 of the Act. This contention was to be supported from the external aids, namely, the background and history of the legislation. There were internal aids in the Act itself to support this contention. The internal aids, according to Shri Nariman, were (a) long title of the Act which used the expression "certain textile undertakings" and "ensuring contiuned manufacture, production and distribution of different varieties of cloth and yarn"; (b) the Preamble to the Act also emphasises, according to Shri Nariman, that the textile undertakings which were taken over under section 18AA should be continued for purposes of manufacture, production and distribution of cloth and yarn; (c) He further submitted that the Objects and Reasons appended to the Bill also supported that view; (d) section 2(k) of the Act enumerated only six textile undertakings which alone were taken over by the order issued under section 18AA; (e) sections 7 and 8 also provided an intrinsic aid to the construction of section 4, according to him. Section 7 provided that an amount equal to the value of the assets which will vest in the NTC, would be deemed to be the Central Government 's 981 contribution to the equity capital of NTC and NTC shall issue shares to the Government having a face value equal to the amount specified in section 8. The amount equal to the value of the assets was Rs.24.32 crores, which was the share capital of the Government in NTC. This figure of Rs.24.32 crores does not take into account the value of the shares and hence the shares did not vest under sections 3 and 4 of the Act, according to him. (f) the expression "pertaining to" appearing in section 4(1) means "forming part of". Therefore, only those assets which formed part of the textile undertakings could vest in the Central Government, it was submitted by Shri Nariman. It was for this reason that section 25 of the Act, while dealing with penalties, used the expression "assets forming part of" the textile undertakings. Shri Nariman further submitted that Swadeshi Polytex Limited and Swadeshi Mining and Manufacturing Company Limited were two separate undertakings distinct from the six textile undertakings belonging to Swadeshi Cotton Mills Company Limited. Acquisition of these shares having controlling interests in the said two companies was never intended and could never be said to be within the scope of the Act. The expression "in relation to the six textile undertakings" appearing in sections 3 and 4 of the Act, was an expression of limitation, according to him, indicative of the intention of acquiring of only the textile undertakings and no other. There existed no public purpose, according to Shri Nariman, for acquiring these shares. The public purposes mentioned in the Act with reference to Article 39(b) and (c) related to the acquisition of only the textile undertakings of Swadeshi Cotton Mills and not acquisition of the synthetic fibre undertakings of Swadeshi Polytex or sugar undertakings of Swadeshi Mining and Manufacturing Company Limited. Dr. Chitale appearing on behalf of Swadeshi Mining and Manufacturing Company Limited (as respondent in SLP (Civil) No. 5240 of 1987 in which NTC is the petitioner) supported Shri Nariman and advanced certain arguments. His main arguments were: (1) Swadeshi Polytex Limited and Swadeshi Mining and Manufacturing Company Limited were two distinct undertakings different from the six textile undertakings belonging to Swadeshi Cotton Mills Company Limited. Section 3 of the Act, therefore, according to him, could not be so construed as to enable the Government to indirectly acquire altogether different undertakings belonging to a different company. 982 (2) Swadeshi Mining and Manufacturing Company Limited had also coal mines. When Coal mines (Nationalisation) Act, 1973 was passed with reference to sections 3 and 6 thereof, it were the coal mines belonging to the said company along with the right, title and interest of the owners in relation to the coal mines which vested in the Central Government by operation of the Act, we were reminded. (3) Dr. Chitale submitted that the Act with which we are concerned uses the expression "pertaining to" in section 4, which according to him is narrower than the expression "in relation to" used in section 3 of the Coal mines (Nationalisation) Act, 1973. When the coal mines were nationalised, the sugar undertakings of Swadeshi Mining were not taken over since these constituted separate undertakings distinct from the coal mines. He referred to Entries 655, 656 and 657 of the Schedule to the Coal mines (Nationalisation) Act, 1973. (4) Dr. Chitale submitted that the expression "investment" may belong to a fund which may be created, the interests of which may be used for payment of gratuity or provident fund to the employees. The expression "investment" cannot be applied in the context of the shareholdings of a separate undertaking, according to him. Shri S.B. Mukerjee, appearing on behalf of Swadeshi Cotton Mills had relied on the decision of the Delhi High Court, See Volume III pages 64 to 169, which according to him, clearly held that the shares in question were not part of the textile undertakings and, in fact, the said shares were not taken over along with the six textile undertakings belonging to Swadeshi Cotton Mills Limited, which we have discussed. Shri Mukerjee further relied on the clarification given by the Company Law Board which showed that the voting rights in respect of the shares continued to vest in Swadeshi Cotton Mills and not in NTC. He referred to the decision in Balkrishan Gupta and others vs Swadeshi Polytex Ltd. and another (supra), which has also been discussed. The expression "relating to" and "pertaining to" are words of limitation and they cannot be so construed as to take within their fold shares held by Swadeshi Cotton Mills, an independent company doing its business, according to him. Learned Solicitor General of India appearing on behalf of the National Textile Corporation in all these cases submitted that the facts 983 stated by way of background and the sequence of events up to the date of enactment of the Act were not relevant to the decision as to the scope, ambit and effect of the vesting provisions contained in sections 3 and 4 of the Act. The sequence of events narrated by the petitioners prior to the enactment of the Act all related to the order of take over of the undertakings of Swadeshi Cotton Mills Company issued on 13th April, 1978 by the Central Government in exercise of its powers under section 18AA of the IDR Act. The object and purpose of the said order of take over of management of the textile undertakings was completely different from the object and purpose of the Act which related to acquisition and transfer of the undertakings. We agree. The scope of the vesting provisions contained in section 3 of the Act would have to be determined per force of its own language employed by Parliament and not with reference to what transpired either before or after the order of take over of the management dated 13th April, 1978 passed under section 18AA of the IDR Act. Section 3 of the Act, according to Solicitor General, contained the vesting provisions as was evident from its own language and also from the marginal note appended thereto. For determining the question involved in these matters, it is necessary to bear in mind the relevant provisions of law. The preamble to the Act in question provided as indicated before that this was an Act for the acquisition and transfer of certain textile undertakings of the Swadeshi Cotton Mills Company Limited with a view to securing the proper management of such undertakings so as to subserve the interests of the general public by ensuring the continued manufacture, production and distribution of different varieties of cloth and yarn. The preamble further reiterated that it was to give effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Article 39 of the Constitution. It reiterated that large sums of money had been invested with a view to making the said textile undertakings viable. It further reiterated that large sums of money were necessary for the purpose of securing the optimum utilisation of the available facilities. Section 3 of the said Act provides for transfer and vesting of the textile undertakings. The material portions of sections 3 and 4 are as follows: "3(1) On the appointed day, every textile undertaking and the right, tilte and interest of the Company in relation to every such textile undertaking shall, by virtue of this Act, 984 stand transferred to, and shall vest in the Central Government. (2) Every such textile undertaking which stands vested in the Central Government by virtue of sub section (1) shall, immediately after it has so vested, stand transferred to, and vested in the National Textile Corporation. 4.(1) The textile undertakings referred to in section 3 shall be deemed to include all assets, rights, lease holds, powers, authorities and privileges and all property, movable and immovable, including lands, buildings, workshops, stores, instruments, machinery and equipment, cash balances, cash on hand, reserve funds, investments and book debts pertaining to the textile undertakings and all other rights and interests in, or arising out of such property as were immediately before the appointed day in the ownership, possession, power or control of the Company in relation to the said undertakings, whether within or outside India, and all books of account, registers and all other documents of whatever nature relating thereto. (2)All property as aforesaid which have vested in the Central Government under sub section (1) of section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation mortgage, charge, lien and all other encumbrances affecting it, and any attachment, injunction or decree or order of any court or other authority restricting the use of such property in any manner shall be deemed to have been withdrawn. (3). . . (4). . . (5). . . (6). . . Section 7 deals with the shares to be issued by the National Textile Corporation for the value of the assets transferred to it by the Central Government. It reads as follows: 985 "7. An amount equal to the value of the assets of the textile undertakings transferred to and vested in the National Textile Corporation under sub section (2) of section 3 shall be deemed to be the contribution made by the Central Government to the equity capital of the National Textile Corporation; and for the contribution so made, the National Textile Corporation shall issue (if necessary after amending its memorandum and articles of association) to the Central Government paid up shares, in its equity capital having a face value equal to the amount specified in section 8. " Section 8 which is material provides as follows: "8. For the transfer to, and vesting in, the Central Government, under section 3, of the textile undertakings of the Company, and the right, title and interest of the Company in relation to such undertakings, there shall be given by the Central Government to the Company in cash and in the manner specified in Chapter VI, an amount of rupees twenty four crores and thirty two lakhs. " Section 10 of the Act deals with the management etc. of the textile undertakings. Section 12 of the Act deals with the provisions relating to the employees of the textile undertakings. Section 24 of the Act provides that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law, other than this Act, or in any decree or order of any court, tribunal or other authority. Section 25 provides for the assumption of liability. It is the true effect and purport of these sections that requires consideration and adjudication. It appears to us that section 27 of the Act where the expression "forming part of" is used, would have no bearing on the vesting provisions and its wide language. The expression "forming part of" according to the learned Solicitor General is merely descriptive of what is actually vested under the vesting provision. The properties which, on the appointed day, i.e. with effect from 1.4.1985, became part of the taken over properties which might not be dealt with in any manner contrary to the provisions of the Act. Shri K.K. Venugopal, appearing on behalf of Doypack Systems 986 Private Limited in Transferred Case No. 13 of 1987 submitted that the present case is directly covered by several decisions of this Court. He referred to the following decisions National Textile Corporation vs Sita Ram Mills, ; ; Minerva Mills vs Union of India, ; ; Goverdhan Das Narasingh Das Daga vs Union of India, ; Vidharba Mills Berar Ltd. vs Union of India, and Fine Knitting Co. Ltd. vs Union of India, It was emphasised that section 3 of the Act provided that in addition to the textile undertaking "the right, title and interest of the company in relation to every such textile undertaking is to vest". Therefore, it was urged by Shri Venugopal that so applying the five decisions cited earlier, if the shares were held for the benefit of and/or utilised for the textile undertakings they would vest in the Government under the provisions of section 3 of the Act itself. He emphasised like others that "pertaining to" would mean "in relation to" in the species of properties mentioned in section 4(1) of the Act. He further submitted that if the amount of compensation declared to be payable to the erstwhile owners of the undertakings acquired, was a test for deciding whether a particular piece of property also stood acquired or not, then it was submitted that it may be open to the erstwhile owners to contend that even what is expressly stated to have been vested in the Government, would not vest in the absence of compensation paid. That was untenable. In any event as against the clear words, according to Shri Venugopal, of section 3 and section 4 read with section 2(k), the failure to provide for compensation for three out of the six undertakings would not result in three out of six undertakings being not vested in the Government. Shri Venugopal submitted that the antecedent computation of value by the executive is wholly irrelevant for determining the intention of Parliament. Reference was made to Kumari Sunita Ramachandra vs State of Maharashtra and another; , at 704, c to e and Doctor (Mrs.) Sushma Sharma vs State of Rajasthan; , at 263. Shri Anil B. Diwan on behalf of Mukesh Bhasin, in Suit No. 506 of 1987 (Transferred Case No. 14 of 1987) submitted that the Objects and Reasons of the mover of the Bill are not admissible as aids to construction since it is impossible to contend that the Objects and Reasons in the minds of some officials of the Government before the matter is discussed by the Cabinet, would at all be relevant. Reference 987 may be made to State of West Bengal vs Union of India, [1964] 1 S.C.R. 371 at 379, 380, 381, 382; The Central Bank of India vs Their Workmen, ; at 217. It was further submitted that subsequent documents and/or views of the officers of the Government are not admissible as legitimate aids to the construction of a statute. Reliance placed by the petitioners on the documents at pages 452 456 of Volume II as an aid to the interpretation or construction of sections 3 and 4 of the Act was totally misconceived. See the observations in Babaji Kondaji Garad vs Nasik Merchants Cooperative Bank Ltd., Nasik and others; , paragraphs 14 and 15 and Dr.(Mrs.) Sushma Sharma and others vs State of Rajasthan and others (supra). It was, therefore, urged that the material not availed by the Parliament could never affect or influence the collective intention of the Parliament. The authentic voice is only that of the Parliament. Reference may be made to the observations in Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd. and another; , at 1029. It was submitted that the documents which were prepared for the submission to the Cabinet and which related to the inner working of the Government were not admissible and/or legitimate aids to the construction of statute and therefore not relevant in deciding which assets of SCM vested in the Central Government under sections 3 and 4 of the Act. It was further submitted that etymological and plain meaning of the word "relation" is relation by birth or relation by sacrament like marriage or relation in the form of business connection or dealings. It was further submitted that an asset or investment which is created from the earnings of the undertakings is clearly related to the undertakings by its inception or birth. An asset or investment, according to Shri Anil B. Diwan, which is utilised to preserve and/or give vitality to an undertaking is equally related or pertained to the same. Shri A.K. Ganguli, counsel appearing on behalf of M/s. Doypack Systems Pvt. Ltd. in SLP (Civil) Nos. 4826 and 7045 of 1987 submitted that even assuming (though not admitting) that the expressions "pertaining to" and "in relation to" appearing in sub section (1) of section 4 of the Act have limited or restricted meaning, by the plain language of section 3, which is the vesting provision read with sections 2(k) and 4(1), the shares in question would also vest in the Central Government. Under section 3 of the Act what vests in the Central Government on the appointed day are: (i) every textile undertaking; and (ii) the right, title and interest of the company in relation to every such textile undertaking. The meaning, scope and effect of the expression "textile undertaking" appearing in section 3(1) of the Act would 988 have to be understood by a combined reading of sections 2(k) and 4(1) of the Act. Section 2(k) while defining the expression "textile undertaking", identifies the textile mills concerned while section 4(1), by adoption of deeming provisions, spells out the properties which vest along with the concerned textile mills by reason of their direct nexus with the mills. The expression "forming part of" appearing in section 27, according to Shri Ganguly, is merely descriptive of the properties already vested in the Central Government under section 3. Section 1(2) of the Act provided that the provisions of the Act including sections 3 and 4 shall be deemed to have come into force retrospectively with effect from 1.4.1985 and sections 27 and 28 shall come into force at once. Thus the properties which stood vested in the Central Government with effect from 1.4.1985 already "formed part of" the textile undertakings on the date of the Act when section 27 came into force (i.e. w.e.f. 30.5.1986). The properties which already stood vested and formed part of the textile undertakings could not be dealt with in any manner other than those permissible under the Act. Section 27 containing the penalty provisions could, therefore, validly and justifiably be given effect to after it came into force on 30.5.1986 when the Act was enacted. The meaning of the expression "pertaining to" appearing in the first limb of section 4(1), therefore, cannot be gathered from the language employed in section 27. Shri Ganguli further submitted that the first part of section 7 provided that the amount equal to the value of the assets of the textile undertakings which is vested under section 3 would be the contribution of Central Government made to the equity capital of the National Textile Corporation. The second part of section 7 provided that for the contribution so made by the Central Government, National Textile Corporation shall issue to the Government paid up shares in its equity capital having a face value equal to the amount specified in section 8. If the legislative intention, it was urged by Shri Ganguli, was that the National Textile Corporation shall issue paid up shares (in its equity capital) to the Central Government of the value equal to the value of the assets, which was deemed to be the contribution of the Central Government, then the language of the second part of this section would have been the same as used in the opening words of section 7 itself. Shri S.N. Kacker elaborated the submissions of the petitioner 989 mentioned hereinbefore and submitted that the shares could not have been intended in view of the facts and circumstances of the case, the language used and the data available to take over by sections 3 and 4 of the Act. Before we deal with the main question we have to consider the application made by Shri Nariman for production of certain documents. The production of the documents has been resisted by the learned Attorney General on the ground that these are not relevant and in any event most of these documents are privileged being part of the documents leading to the tendering of the advice by the Cabinet to the President as contemplated by Article 74(2) of the Constitution. The petitioner in Transferred Case No. 13 of 1987, has sought production of certain documents enumerated at page 82, para 85 of Vol. IV, which are as follows: (1) Proposal of the Textile Ministry in respect of Nationalisation of the six textile undertakings including the notes and memorandum specially in respect of calculation and determination of assets and liabilities in respect of six textile undertakings of Petitioner No. 2 in the year 1983 84 and the opinion of the Law Department then obtained. (2) Proposal of the Textile Ministry in respect of nationalisation of the six textile undertakings in the year 1985 86 including all notes and memorandum in respect thereof. (3) Opinion of Law Department as rendered to the Textile Ministry. (4) Proposal of the Textile Ministry in respect of the drafting of the Ordinance and the Act by the Legislative Ministry. (5) Details of properties taken into consideration for the determination of amount under section 8 of the Ordinance/Act. (6) Proposal of the Textile Ministry in the form of Cabinet Notes for the approval of the Cabinet in the matter of promulgation of Ordinance/framing of the Act, and (7) Notes and Memorandum prepared by the Ministry of Textile/Ministry of law at or before framing of the Ordinance/Act and subsequent thereto relating to the acquisition of the textile undertakings. 990 It was contended that production of these was necessary to establish that the shares were never intended to be taken over and these were never considered as part of the textile undertaking. It was urged that the shares were not taken into account in computing the figure of compensation amounting to Rs.24.32 crores referred to in section 8 of the Act. It was submitted that these documents are definitely relevant as they would throw light on the merits of the case. They would advance the case of the petitioners and destroy, according to the petitioners, the case of the respondent. It was submitted that sections 7 and 8 of the said Act, were intrinsic aids to construe section 4. The factual foundation necessary for the argument based on sections 7 and 8 of the said Act, was that the shares etc., were excluded in computing the figures of 24.32 crores. It was submitted that these documents were required to establish this factual foundation. The petitioner alleged that shares had been excluded in the computation of compensation and the petitioner had been so informed by the Hon 'ble Minister. In reply the Central Government asserted that compensation has been computed lumpsum and not itemwise. According to the petitioner, the stand of the Government that the compensation was computed lumpsum, was not borne out by the documents. It was, therefore, necessary to seek production of those documents. It was submitted by Shri Nariman that the submissions of the Solicitor General in so far as these dealt with the balance sheet made it even more important that the Government should be directed to produce these documents. The calculations made by the petitioner had merely been denied by NTC which had in its possession the books of account as also all balance sheets prior to the balance sheet as on April 1, 1985. It is wrongly suggested that the calculations are hypothetical. It was urged by the petitioner that the calculations made by the petitioners were not hypothetical. The correctness or otherwise of the said figure, according to the petitioners, would be demonstrated from the said documents. On behalf of the Union of India, the learned Attorney General submitted that records and documents whose production was sought for, were not relevant for deciding the matters of controversy in the instant case. In our opinion Sections 3 and 4 of the Act interpreted either on their own language or along with sections 7 and 8, are not ambiguous; so documents are not relevant. It was further urged, that even if to consture the language is not clear and there is need to resort to aids of construction, it is clear that such aids can be either internal or external. 991 Internal aids of construction are definitions, exceptions, explanations, fictions, deeming provisions, headings, marginal notes, preamble, provisos, punctuations, saving clauses, non obstante clauses etc. The notings in the files of various officials do not fall in the category of internal aids for consideration. Dictionaries, earlier acts, history of legislation, Parliamentary history, parliamentary proceedings, state of law as it existed when the Act was passed, the mischief sought to be suppressed and the remedy sought to be advanced by the Act are external aids. Documents which have been required to be produced do not, in our view fall within the category of external aids as indicated. Having considered the facts and circumstances of the case, we are unable to accept the prayer of the petitioner to direct disclosure and production of the documents sought for. In our opinion, the language used in section 4 of the Act, is clear enough read with section 3 of the Act. We have set out the provisions of the said two sections. Section 3 states that "on the appointed day every textile undertaking and the right, title and interest of the Company in relation to every textile undertaking shall stand transferred to and shall vest in the Central Government". Section 4 says that "section 3 shall be deemed to include all assets, leaseholds, powers, authorities, privileges and all properties, movable and immovable . pertaining to the textile undertakings and all other rights and interests in or arising out of such property". Francis Bennion in "Statutory Interpretation 1984 Edition page 526 para 238 states that Hansard reports, and other reports of parliamentary proceedings on the Bill which became the Act in question, are of obvious relevance to its meaning. They are often of doubtful reliability however. (emphasis supplied) The documents in question which are sought for do not relate to the enacting history or any past enactment or the present enactment. The notings made in various Departments at various levels by the officers namely, the Under Secretary, Deputy Secretary, Joint Secretary; Secretary etc., whatever their view might be, is not the view of the Cabinet. The ultimate decision is taken by the Cabinet. So the notings cannot and are not guides as to what decision the Cabinet took. See for example the Task Force report referred to in National Textile Corporation Ltd. vs Sitaram Mills Ltd. & others (supra). This Task Force Report demonstrated the irrelevancy of the documents summoned to be produced. The Task Force Report manifested that certain mills were viable. But from the circumstance under which managements of these mills were taken over, it was clear that the Cabinet had taken the decision contrary to what was contained in the Task Force Report. But it appears 992 that the decision of the Cabinet was different from the views of the Officers at various levels. As Bennion has stated at para 261 (page 560 of the same book) that in interpreting an enactment a two stage approach is necessary. Here there is no real doubt on an informed basis as we shall indicate hereafter about the real meaning of the enactment. There is therefore no question of resolving the doubt. The second stage does not arise here. This Court in Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd. and another (supra) held that no one may speak for the Parliament and Parliament is never before the Court. After the Parliament has said what it intends to say, only the Court may say what the Parliament meant to say. None else. See also in this connection Dr. (Mrs.) Sushma Sharma and others vs State of Rajasthan and others (supra). The objects and purposes of the person who initiated the Bill are not admissible as aids to construction since it is impossible to contend that such purposes in the minds of some officials of the Government before the matter is discussed by the Cabinet, would at all be relevant. See in this connection State of West Bengal vs Union of India (supra) where this Court reiterated that the Statement of Objects and Reasons, accompanying when introduced in the Parliament cannot be used to determine the true meaning and effect of the substantive provisions of the statute. Such statement cannot be used to show that the legislature did not intend to take over any particular property. See also The Central Bank of India vs Their Workmen (supra). It has to be reiterated, however that the objects and reasons of the Act should be taken into consideration in interpreting the provisions of the statute in case of doubt. This is the effect of the decision of this Court in K.P. Verghese vs The Income tax Officer, Ernakulam and another; , , where this Court reiterated that the speech made by the Mover of the Bill explaining the reason for the introduction of the Bill could certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation was enacted. It has been reiterated that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible. See in this connection the observations of this Court in Chern Taong Shang & anr. vs Commander S.D. Baijal & Ors., J.T. The documents now sought for by the petitioner do not fall within this category. It is neither the object and scheme of the enactment nor the language used therein, that is 993 sought for in the instant case. It is certainly relevant to know the mischief that was intended to be remedied. But in the documents in question which the petitioner is seeking no such correlation has been established. These are, therefore, not relevant. We reiterate that no officer of the Department can speak for the Parliament even after the Act has been passed. This Court has to interpret the Act on the basis of informed basis by applying external and internal aids if the language is ambiguous. In the words of Lord Scarman "We are to be governed not by Parliament 's intentions but by Parliament 's enactments". See Cross "Statutory Interpretation" 2nd Edition page 22. Blackstone in his "Commentaries on the Laws of England" (Facsimile of 1st edn. 1765, University of Chicago Press 1979) Vol. 1 at 59 suggests "The fairest and most rational method to interpret the will of the legislator is by exploring his intention at the time when the law was made, by signs most natural and probable. And these signs are the words, the context, the subject matter, the effect and consequence, or the spirit and reason of the law. " The documents whose production is sought for are none of these. So in our opinion these are not relevant. We must further reiterate that the Members of Parliament had before them only the Bill. The notings of the various officials in the files were not before the Parliament. Therefore members could not be attributed with the knowledge of the notings in the files. Therefore, the notings made by the officials are not relevant. In this connection reliance may be placed on the principles of interpretation as enunciated by the Federal Court in Auckland Jute Co. Ltd. vs Tulsi Chandra Goswami, at 244. It is trite saying that the interpreter of the statute must take note of the well known historical facts. In conventional language the interpreter must put himself in the arm chair of those who were passing the Act i.e. the Members of the Parliament. It is the collective will of the Parliament with which we are concerned. See in this connection the observations of the Federal Court in RM.AR.AR.R.M.AR. Umayhal Achi vs Lakshmi Achi and others, We are therefore, of the opinion that the documents sought for are not relevant for the purpose for which they were sought for. In this case we are concerned only with the construction of the statute to determine whether the shares vested in the Government or not. As Lord Reid has said in Black Clawson International Ltd. vs Papierwerke Waldhof Achaffenburg A G; , at 613 "We often say that we are looking for the intention of Parliament, but that is not quite accurate. We are seeking the meaning of the words which Parliament used. We are seeking not what Parliament meant but the true meaning of what they said. " See in this connection the discussion in Cross Statutory Interpretation 2nd Edition, pages 20 30. 994 The next question for consideration is that by assuming that these documents are relevant, whether the Union of India is liable to disclose these documents. Privilege in respect of these documents has been sought for under Article 74(2) of the Constitution on behalf of the Government by learned Attorney General. Shri Nariman however, submitted on the authority of the decision of this Court in S.P. Gupta vs Union of India and others, [1982] 2 S.C.R. 365 at page 594 that the documents sought for herein were not privileged. The context and the nature of the documents sought for in S.P. Gupta 's case (supra) were entirely different. In this case these documents as we see are part of the preparation of the documents leading to the formation of the advice tendered to the President of India and as such these are privileged under Article 74(2) of the Constitution which provides that the question whether any, and if so what, advice was tendered by Ministers to the President shall not be enquired into in any court. This Court is precluded from asking for production of these documents. In S.P. Gupta 's case (supra) the question was not actually what advice was tendered to the President on the appointment of Judges. The question was whether there was the factum of effective consultation between the relevant constitutional authorities. In our opinion that is not the problem here. We are conscious that there is no sacrosanct rule about the immunity from production of documents and the privilege should not be allowed in respect of each and every document. We reiterate that the claim of immunity and privilege has to be based on public interest. Learned Attorney General relied on the decision of this Court in the case of State of U.P. vs Raj Narain, ; The principle or ratio of the same is applicable here. We may however, reiterate that the real damage with which we are concerned would be caused by the publication of the actual documents of the Cabinet for consideration and the minutes recorded in its discussions and its conclusions. It is well settled that the privilege cannot be waived. In this connection, learned Attorney General drew our attention to an unreported decision in The Elphinstone Spinning and Weaving Mills Company Ltd. vs Union of India and others, Writ Petition No. 2401 of 1983. This resulted ultimately in Sitaram Mills 's case (supra). The Bombay High Court held that the Task Force Report was withheld deliberately as it would support the petitioner 's case. It is well to remember that in Sitaram Mills 's (supra) this Court reversed the judgment of the Bombay High Court and upheld the take over. Learned Attorney General submitted that the documents there were not tendered voluntarily. It is well to remember that it is duty of this Court to prevent disclosure where Article 74(2) is applicable. We are 995 convinced that the notings of the officials which lead to the Cabinet note leading to the Cabinet decision formed part of the advice tendered to the President as the Act was preceded by an ordinance promulgated by the President. We respectfully follow the observations in S.P. Gupta and others vs Union of India and others (supra) at pages 607, 608 and 609. We may refer to the following observations at page 608 of the report: "It is settled law and it was so clearly recognised in Raj Narain 's case (supra) that there may be classes of documents which public interest requires should not be disclosed, no matter what the individual documents in those classes may contain or in other words, the law recognises that there may be classes of documents which in the public interest should be immune from disclosure. There is one such class of documents which for years has been recognised by the law as entitled in the public interest to be protected against disclosure and that class consists of documents which it is really necessary for the proper functioning of the public service to withhold from disclosure. The documents falling within this class are granted immunity from disclosure not because of their contents but because of the class to which they belong. This class includes cabinet minutes, minutes of discussions between heads of departments, high level inter departmental communications and despatches from ambassadors abroad (vide Conway vs Rimmer, [1969] Appeal Cases 910 at pp. 952, 973, 979, 987 and 993 and Reg vs Lewes J.K. Ex parte Home Secretary, [1973] A.C. 388 at 412. Papers brought into existence for the purpose of preparing a submission to cabinet vide Lanyon Property Ltd. vs Commonwealth, 129 Commonwealth Law Reports 650 and indeed any documents which relate to the framing of government policy at a high level (vide re. Grosvenor Hotel, London Cabinet papers are, therefore, protected from disclosure not by reason of their contents but because of the class to which they belong. It appears to us that Cabinet papers also include papers brought into existence for the purpose of preparing submission to the Cabinet. See Geoffrey Wilson cases and Materials on Constitutional and Administrative Law, 2nd Edition pages 462 to 464. At page 463 para 187, it was observed: 996 "The real damage with which we are concerned would be caused by the publication of the actual documents of the Cabinet for consideration and the minutes recording its discussions and its conclusions. Criminal sanctions should apply to the unauthorised communication of these papers. " See in this Connection State of Bihar vs Kripalu Shankar, ; at page 1559 and also the decision of Bachittar Singh vs State of Punjab [1962] Suppl. 3 S.C.R. 713. Reference may also be made to the observations of Lord Denning in Air Canada and others vs Secretary of State and another, at 180. We therefore, reject the claim for production of these documents. In view of the language used in the relevant provisions, it appears to us that section 3 has two limbs: (i) textile undertakings; and (ii) right, title and interest of the company in relation to every such textile undertaking. The expression "textile undertaking" has been defined in section 2(k) to mean the six textile undertakings of the company specified therein. The definition of the said expression in section 2(k) is, however, subject to the opening words of the section which provide, "In this Act, unless the context otherwise requires". In the context of the expression "textile undertakings" employed in section 3(1) of the Act, section 4(1) provides that the textile undertakings referred to in section 3 shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges and all property, movable and immovable, including lands, buildings, workshops, stores . investments and book debts pertaining to the textile undertakings and all rights and interests in or arising out of such property as are, immediately before the appointed day, in the ownership, possession, power or control of the company in relation to all six undertakings. The expressions "pertaining to", "in relation to" and "arising out of", used in the deeming provision, are used in the expansive sense, as per decisions of courts, meanings found in standard 'dictionaries, and the principles of broad and liberal interpretation in consonance with Article 39(b) and (c) of the Constitution. The words "arising out of" have been used in the sense that it comprises purchase of shares and lands from income arising out of the Kanpur undertaking. We are of the opinion that the words "pertaining to" and "in relation to" have the same wide meaning and have been used interchangeably for among other reasons, which may include 997 avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting. The word "pertain" is synonymous with the word "relate", see Corpus Juris Secundum, Volume 17, page 693. The expression "in relation to" (so also "pertaining to"), is very broad expression which pre supposes another subject matter. These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context, see State Wakf Board vs Abdul Aziz, A.I.R. 1968 Madras 79, 81 paragraphs 8 and 10, following and approving Nitai Charan Bagchi vs Suresh Chandra Paul, , Shyam Lal vs M. Shayamlal, A.I.R. 1933 All 649 and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term "relate" is also defined as meaning to bring into association or connection with. It has been clearly mentioned that "relating to" has been held to be equivalent to or synonymous with as to "concerning with" and "pertaining to". The expression "pertaining to" is an expression of expansion and not of contraction. As to what an undertaking means, has been clarified in R.C. Cooper vs Union of India, ; at pages 567, 568, 635, where the Act of 1969 was challenged. It was held that the meaning of the expression "undertaking" is a going concern as distinct from its assets and liabilities. It was also observed that it covered every corner of property, right, title and interest therein. This Court rejected one of the grounds of challenge as there was no evidence that the named banks held any assets for any distinct non banking business, which finding gives an idea as to what could have been excluded from the acquisition of the undertaking. Reading the provisions of section 3(1), section 4(1) and section 2(k) of the Act, each throwing light on the other, it follows that (a) under the first limb of section 3(1) of the Act every textile undertaking; (b) under the second limb of section 3(2) every right, title and interest of the company in relation to every such undertaking, is transferred and vested. (c) The deeming provision of section 4(1) amplifies and enlarges both the limbs of the vesting section, being section 3(1). (d) The definition of section is read into these provisions, to give a 998 wider meaning and scope to the vesting provision and to what is transferred or vested. Sections 7 and 8 of the Act relied upon by the petitioners, being provisions for payment of amounts and for the issue of shares by NTC respectively, will have no bearing on the scope of the vesting provision. As to what properties have vested cannot proceed on the hypothesis that there is a clear numerical or mathematical link between the quantum of compensation and the items of property vested. This correlation with regard to such legislation is not available. In this connection reference may be made to the decision of this Court in Khajamian Wakf Estates etc. vs State of Madras & another; , at page 796 B E. Section 8 refers to payments of amounts by the Union of India to the company. It has no bearing either on the vesting section or on section 7 except that the figure of Rs.24 crores 32 lakhs mentioned therein was introduced into section 7. The provisions of this section are no different from the provisions of the similar sections in the earlier Act of 1974. For example, under section 8 of the Sick Textile Undertakings Nationalisation Act, 1974 (page 59 of Vol. X), the amount mentioned is specified in the first schedule as there are a number of companies involved. This provision cannot be the starting point for investigation as to which amount relates to which property or as a guide to construction. It appears to us from the Delhi High Court decision (supra) and the decision of this Court in Balkrishan Gupta 's case (supra) as well as the statement of the Minister in December, 1985 that there were legal difficulties, in respect of taking over, under the 1951 IDR Act. The IDR Act was (a) concerned with the management of scheduled industries in, inter alia, running of factories, where there was no deeming provision in such wide terms; (b) it was concerned with setting up of machinery for imposing controls on industrial undertakings, see Harakchand Ratanchand Banthia and others etc. vs Union of India and others; , at page 496 F and G. We are further of the opinion that the decision in Harakchand Ratanchand (supra) would not be applicable. In this case, the Court is concerned with a nationalisation statute. Even with other independent management statutes, in respect of textile undertakings a series of decisions have upheld the view that the shares vest in the Government. See National Textile Corporation Ltd. vs Sitaram Mills (supra); 999 Minerva Mills Ltd. and others etc. vs Union of India and others (supra); Govardhandas Narasinghdas Daga and others vs Union of India and others (supra); Fine Knitting Mills Ltd. & Ors. vs Union of India & Ors. (supra) and Vidharbha Mills Berar Ltd. vs Union of India (supra). The above provide the informed basis on which we make the construction of sections 3 and 4 of the Act. The expression "and all other rights and interests in or arising out of such property, as were immediately before the appointed day, in the ownership, possession, power or control of the company in relation to the said undertakings", appearing in sub section (1) of section 4 of the Act indicates that the shares which have been purchased from out of the funds of the textile undertakings and which have been held for the benefit of the said textile undertakings, would come within the scope of section 4 of the Act and thus would also vest in the Central Government under section 3. The origin of these shares and their connection with the textile undertakings have been fully corroborated. The textile business is the only business of Swadeshi Cotton Mills. There is inter connection and inter relation between all the six undertakings. Investments in Swadeshi Polytex Limited from the funds of Kanpur undertaking have always been made. Investments in Swadeshi Mining and Manufacturing Company Ltd. were always made from the funds of the kanpur undertaking. Assets/investments held and used for the benefit of the textile business of SCM, were carried on in its textile undertakings. The words in the statute must, prima facie, be given their ordinary meaning. Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary. Nothing has been shown to warrant that literal construction should not be given effect to. See Chandavarkar S.R. Rao vs Asha Lata, ; at page 476, approving 44 Halsbury 's Laws of England, 4th Ed. paragraph 856 at page 552, Nokes vs Doncaster Amalgamated Colliery Limited, [1940] Appeal Cases 1014 at 1022. It must be emphasised that interpretation must be in consonance with the Directive Principles of State Policy in Article 39 (b) and (c) of the Constitution. It has to be reiterated that the object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context. That intention, and therefore the meaning 1000 of the statute, is primarily to be sought in the words used in the statute itself, which must, if they are plain and unambiguous, be applied as they stand. In the present case, the words used represent the real intention of the Parliament as we have found not only from the clear words used but also from the very purpose of the vesting of the shares. If we bear in mind the fact that these shares were acquired from out of the investments made by these two companies and furthermore that the assets of the company as such minus the shares were negative and further the Act in question was passed to give effect to the principles enunciated in clauses (b) and (c) of Article 39 of the Constitution, we are left with no doubt that the shares vested in the Central Government by operation of sections 3 and 4 the Act. See in this connection the observations of Halsbury 's Laws of England, 4th Edition, Volume 44, paragraph 856 at page 522 and the cases noted therein. There is no exact correlation between the figure of capital reserve and the figure of investments. That, in our opinion cannot be. These can never be exactly equal. The submission of the petitioner fails to take into account the fact that the undertakings other than the kanpur undertaking, also have capital reserve, even though there is no allegation that these were excluded assets in respect of other undertakings and there were no figures of investments therein. The covering letter for these documents, page 408 of Volume II, itself stated that the provisional balance sheet shows investments which included these shares as part of assets. With regard to the figure of Rs. 11 lakhs taken in the calculation filed by the petitioner, we find that the calculations filed by the petitioner were not supportable. Contemporanea Expositio, is a well settled principle or doctrine which applies only to the construction of ambiguous language in old statutes. Reliance may be placed in this connection on Maxwell 13th Ed. page 269. It is not applicable to modern statutes. Reference may be made to G.P. Singh, Principles of Statutory Interpretation, 3rd Edn. pages 238 and 239. As noted in Maxwell on The Interpretation of Statutes, 12th Edition at page 269 that the leading modern case on contemporanea expositio is the case of Campbell College, Belfast vs Commissioner of Valuation for Northern Ireland, in which House of Lords has made it clear that the doctrine is to be applied only to the construction of ambiguous language in the very old statutes. It is therefore well to remember what Lord Watson said in Clyde Navigation Trustees vs Laird, [1983] 8 A.C. 658 that contemporanea expositio could have no application to a modern Act. We, therefore, reject the attempt on the part of the petitioners to lead us to 1001 this forbidden track by referring to various extraneous matters which we have indicated before. Furthermore those external aids sought before us do not support the petitioners ' approach to this question at all. It appears that the shares held in SPL themselves were the subject matter of both pledge and attachment to secure loans from the U.P. State Government of about Rs.66 lacs for payment of wages to workers of the Kanpur undertaking and Rs.95 lacs being electricity dues of the Kanpur undertaking owing to the U.P. State Electricity Board. From all these, the acceptance of the petitioner 's case, would mean that the State would pump in Rs.15 crores of public money to release the shares from its liabilities and thereafter hand over the shares free from such liability back to the company when the net worth of the company at the time of take over of management was negative and in the teeth of the present financial liabilities built up by the company the shares would inevitably have sold in discharge of its liabilities and in any event the shares stood charged with the very liabilities which related to the undertakings of the company which were taken over by the Government. It appears to us that sections 3 and 4 of the Act evolve a legislative policy and set out the parameters within which it has to be implemented. We cannot find that there was any special intention to exclude the shares in this case as seen from the existence of at least four other Acquisition Acts which used identical phraseology in sections 3 and 4 and in the other sections as well. Reference was made to the Aluminium Corporation of India Limited (Acquisition and Transfer of Aluminium Undertakings) Act, 1984, the Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982, the Britannia Engineering Company Limited (Mohameh Unit) and the Arthur Butler and Company (Muzaffarpore) Limited (Acquisition and Transfer of Undertakings) Act, 1978 and the Ganesh Flour Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1984. In the present case we are satisfied that the shares in question were held and utilised for the benefit of the undertakings for the reasons that (a) the shares in Swadeshi Polytex Limited were acquired from the income of the kanpur Unit. Reference may be made to page 23 of Compilation D III, (b) the shares held in Swadeshi Mining and Manufacturing Company were acquired in 1955. Originally there were four companies and their acquisition has been explained fully in the Compilation D III with index, (c) the shares held in SPL were pledged 1002 or attached for running the Kanpur undertaking, for payment of ESI and Provident Fund dues for the workers of the Kanpur undertaking, for wages and for payment of electricity dues of the Kanpur undertaking, (d) the shares held in SMMC were pledged for raising monies and loans of Rs. 150 lakhs from the Punjab National Bank for running the Kanpur undertaking. These loans fall in category II of Part I of the Schedule which liabilities have been taken over by the Government, (e) the shares held in SPL were offered for sale by SCM from time to time and to utilise the sale proceeds thereof by ploughing them back into the textile business for reviving the textile undertakings acquired under the Act. It appears to us that the expression "forming part of" appearing in section 27 cannot be so read with section 4(1) as would have the effect of restricting or cutting down the scope and ambit of the vesting provisions in section 3(1). The expression "pertaining to" does not mean "forming part of". Even assuming that the expression "pertaining to" appearing in the first limb of section 4(1) means "forming part of", it would mean that only such assets which have a direct nexus with the textile mills as would fall under the first limb of section 4(1). The shares in question would still vest in the Central Government under the second limb of section 4(1) of the Act since the shares were bought out of the income of the textile mills and were held by the company in relation to such mills. The shares would also fall in the second limb of section 3(1) being right and title of the company in relation to the textile mills. On the construction of sections 3 and 4 we have come to the conclusion that the shares vest in the Central Government even if we read sections 3 and 4 in conjunction with sections 7 and 8 of the Act on the well settled principles which we have reiterated before. The expression 'in relation to ' has been interpreted to be the words of widest amplitude. See National Textile Corporation Ltd. and others vs Sitaram Mills Ltd. (supra). Section 4 appears to us to be an expanding section. It introduces a deeming provision. Deeming provision is intended to enlarge the meaning of a particular word or to include matters which otherwise may or may not fall within the main provisions. It is well settled that the word 'includes ' is an inclusive definition and expands the meaning. See The Corporation of the City of Nagpur vs Its Employees, ; and Vasudev Ramchandra Shelat vs Pranlal Javanand Thakarand others, [1975] 1 S.C.R. 534. The words 'all other rights and interests ' are words of widest amplitude. Section 4 also uses the words "ownership, possession, power or control of the Company 1003 in relation to the said undertakings". The words 'pertaining to ' are not restrictive as mentioned hereinbefore. Section 8 provides for payment of compensation in lumpsum and the transfer and vesting of whatever is comprised in section 3. As section 4 expands the scope of section 3, the compensation mentioned in section 8 is for the property mentioned in section 3 read with section 4. The compensation provided in section 8 is not calculated as a total of the value of various individual assets in the Act. It is a lumpsum compensation. See in this connection the principles enunciated by this Court in Khajamian Wakf Estates etc. vs State of Madras and another (supra). There, it was held that even if it was assumed that no compensation was provided for particular item, the acquisition of the 'inam ' is valid. In the instant case section 8 provides for compensation to be paid to the undertakings as a whole and not separately for each of the interests of the company. Therefore, it cannot be said that no compensation was provided for the acquisition of the undertaking as a whole. Section 7 of the Act, in our opinion, neither controls sections 3 and 4 of the Act nor creates any ambiguity. It was highlighted before us and in our opinion rightly that this sum of Rs.24.32 crores paid by way of compensation comes out of the public exchequer. The paid up shares in its equity capital can necessarily have a face value only of the amounts so paid, irrespective of whatever may be contended to be the value of the assets and irrespective of whether any asset or property in relation to the undertakings, was taken into account. After providing for compensation of Rs.24.32 crores to be paid to the Commissioner for payments to discharge part I liabilities, Government has to undertake an additional 15 crores at least for discharging those liabilities. To leave a company, the net wealth of which is negative at the time of take over of the management, with the shares held by it as investment in other company, in our opinion, is not only to defeat the principles of Articles 39(b) and (c) of the Constitution but it will permit the company to reap the fruits of its mismanagement. That would be an absurd situation. It has to be borne in mind that the net wealth of the company at the time of take over, was negative, hence sections 3 and 4 can be meaningfully read if all the assets including the shares are considered to be taken over by the acquisition. That is the only irresistible conclusion that follows from the construction of the documents and the history of this Act. We have to bear in mind the Preamble of the Act which expressly recites that it was to ensure the principles enunciated in clauses (b) and (c) of Article 39 of the Constitution. The Act must be so read that it further ensures such meaning and 1004 secures the ownership and control of the material resources to the community to subserve the common good to see that the operation of economic system does not result in injustice. We therefore, reiterate that the shares vested in the Central Government. Accordingly the shares in question are vested in NTC and it has right over the said 34 per cent of the shareholdings. In the aforesaid view of the matter we hold that the 10,00,000 shares in Swadeshi Polytex Limited and 17,18,344 shares in Swadeshi Mining and Manufacturing Company Limited held by the Swadeshi Cotton Mills vested in the Central Government under sections 3 and 4 of the Act. We are further of the opinion that in view of the amplitude of the language used, the immovable properties, namely, the Bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur have also vested in NTC. In that view of the matter in Transferred Case No. 13 of 1987, we dismiss the Writ Petition No. 2214 of 1987. All interim orders in the said Writ Petition will stand vacated. This will dispose of the various other SLPs and CMPs connected with the Lucknow Writ Petition being SLP (Civil) No. 4826 of 1987 filed by Doypack Systems Pvt. Ltd., against the order dated 6th April, 1987, SLP(Civil) No. 5240 of 1987 filed by NTC against the same order of 6th April, 1987 in the Lucknow Bench and the order dated 6th April, 1987 in CMP No. 4555(W) of 1987 in the Lucknow Bench of the Allahabad High Court. CMPs Nos. 16918 and 16919 of 1987 being CMPs in SLP No. 4826 of 1987 will stand disposed of in the above light. In Transferred Case No. 14 of 1987 in Suit No. 506 of 1987, we hold that 10 lakhs and 17 lakhs equity shares mentioned hereinbefore and the Swadeshi House at Kanpur and all the rights, title and interest attached therewith relate to the textile undertaking of defendant No. 3 and they vest in NTC with effect from 1st of April, 1985 and defendant Nos. 3 and 4 are restrained by a decree of permanent injunction from dealing with them in any manner whatsoever. Defendant No.2 is restrained by permanent injunction from recognising defendant Nos. 3 and 4 as owners of the aforesaid shares and the Swadeshi House. Defendant No.2 'is directed to enter the name of defendant No. 1 namely, NTC in its register of members and to treat the said 1005 defendant No. 1 as its shareholder instead of defendant Nos. 3 and 4 in respect of the shares of defendant No. 2 held by them. In view of the provisions of law under Section 108 of the as there was transmission of shares by operation of law, rectification is not necessary. See in this connection Palmer 's Company Law, 24th Ed. (1987) page 608. See also in this connection Sahadeo Lal Agarwala and another vs The New Darjeeling Union Tea Co. Ltd. and others, A.I.R. 1952 Cal. 58 and Unity Company Pvt. Ltd. vs Diamond Sugar Mills and others, A.I.R. 1971 Cal. Civil Appeals Nos. 577 to 579 of 1987 stand disposed of in the above terms and we direct that the 17th annual general meeting be held in accordance with law after giving proper notice under the Chairmanship of Shri Jaswant Singh. CMP No. 12760 of 1987 in Civil Appeal No. 577 of 1987, shall stand disposed of in terms of the orders in Transferred Case No. 14 of 1987 and it is directed that the Chairman should act in accordance with the aforesaid decision and NTC should be considered to be entitled to vote. CMP No. 16887 of 1987 is rejected, on the grounds indicated in the judgment. CMP No. 16888 of 1987 is an application by Doypack Systems Ltd. to be impleaded as a party respondent in Transferred Case No. 13 of 1987. Doypack Systems has already been permitted to argue and has been heard as a party. No further order is necessary. CMP No. 16889 of 1987 is allowed and delay condoned. CMP No. 17018 of 1987 is allowed. CMP No. 18268 of 1987 is disposed of by directing that no further documents need be inspected. In view of the orders, the other CMPs are no longer necessary to be disposed of. We direct that irrespective of any order passed by any court the 17th annual general meeting should be held in accordance with law to be presided over by Shri Jaswant Singh recognising NTC as the rightful owner of the disputed shares. In all these proceedings National Textile Corporation as well as Union of India wherever they are parties herein will be entitled to their costs from their respective opposite parties. The other parties will pay and bear their own costs in these matters.

% What fell for consideration in all these matters, viz., (i) SLPs. (civil) Nos. 4826 and 7045 of 1987, (ii) SLP (civil) No. 5240 of 1987, (iii) C.M.Ps. Nos. 12029 31/87 (in CAs Nos. 577 79 of 1987), (iv) C.M.Ps. 16635 and 16918/87 (in S.L.P. (c) No. 4826/87) and (v) Transferred Cases Nos. 13 and 14 of 1987 (with CMPs. 16887 89 and 17018/87), was a common question of law whether equity shares in two companies, i.e. 10,00,000 shares in Swadeshi Polytex Ltd. and 17,18,344 shares in Swadeshi Mining and Manufacturing Company Ltd., held by the Swadeshi Cotton Mills, vested in the Central Government under section 3 of the Swadeshi Cotton Mills Company Ltd. (Acquisition and Transfer of Undertakings) Act, 1986. The other subsidiary question was whether the immovable properties, namely, bungalow No. 1 and Administrative Block, Civil Lines, Kanpur, had also vested in the government. There were six original proceedings initiated by various parties which gave rise to these civil appeals, special leave petitions and transferred cases before this Court. These were: On 18th February, 1987, a suit was filed before the Delhi High Court by one Naresh Kumar Barti against Dr. Raja Ram Jaipuria, Swadeshi Polytex and others, for an injunction restraining the company from holding the 17th annual general meeting on the ground that 34% shares in the Swadeshi Polytex vested in the National Textile Corporation (N.T.C.) in view of sections 3 and 4 of the Act. In the suit, an application was also filed praying that in the event of the annual general meeting of the company being allowed to be held, an independent Chairman should be appointed to conduct the meeting. The High Court 963 refused to pass any order (in view of an order already passed by the Allahabad High Court). Against this order of the Delhi High Court, two special leave petitions were filed in this Court one by Doypack Systems Pvt. Ltd. (defendant No. 10 in the Delhi Suit), which came to registered as Civil Appeal No. 577 of 1987 after the grant of special leave, and the other, by Naresh Kumar Barti, the plaintiff in the Delhi Suit, which came to be registered as Civil Appeal No. 578 of 1987 after the grant of special leave. On 24th February, 1987, one Bari Prasad Aggarwal filed a suit in the court of the Third Additional Civil Judge, Kanpur praying inter alia that Shri Raja Ram Jaipuria should not preside over the 17th annual general meeting of the company. The application for an interim injunction filed in the suit was dismissed. In the appeal preferred by the plaintiff before the Allahabad High Court, an order was passed by the High Court on 2nd March, 1987, appointing Shri M.P. Wadhawan as the Chairman of the said annual general meeting. Against this order dated 2nd March, 1987, passed by the Allahabad High Court M/s. Doypack System Pvt. Ltd., preferred a special leave petition in this Court, which after the grant of leave, was registered as Civil Appeal No. 577 of 1987. The three special leave petitions were heard together as Civil Appeals Nos. 577, 578 and 579 of 1987 and disposed of by this Court by a common order on 6th March, 1987, appointing Shri Jaswant Singh as the Chairman of the said annual general meeting. On 26th February, 1987, another suit Suit No. 506 of 1987 was filed in the Delhi High Court by Mukesh Bhasin for a declaration that Swadeshi Cotton and Swadeshi Mining had no right in respect of 34% of the share holdings in Swadeshi Polytex and that the said shares were vested in the N.T.C. by virtue of the said Act. By order dated 9th March, 1987, the High Court disposed of that application and granted injunction restraining defendants Nos. 3 and 4 in that suit from exercising any right whatsoever attached to the 34% shares of defendant No. 2 held by them and particularly any voting right in the annual general meeting scheduled to be held on the 9th March, 1987, till the decision of the suit. This order was brought to the notice of this Court by C.M.P. forming part of the Civil Appeals Nos. 577 579 of 1987. On 9th March, 1987, on that C.M.P. this Court passed an order directing that NTC, Swadeshi Cotton and Swadeshi Mining, all shall be entitled to vote at the annual general meeting and the question as to who were the rightful voters would be decided by the Chairman of the meeting, etc. This was the Transferred Case No. 14 of 1987. 964 One Mukesh Jasmani, a shareholder in Swadeshi Polytex filed a writ petition in the Allahabad High Court. The High Court by its order dt. 7th March, 1987, dismissed that writ petition, observing that Swadeshi Cotton and Swadeshi Mining would be entitled to vote at the 17th annual general meeting in respect of their shares which, according to N.T.C., had vested in them. Against this order, Doypack Systems preferred the Special Leave Petition (civil) No. 3112 of 1987. This Court passed orders on this petition, directing that the meeting would be held under the chairmanship of Shri Jaswant Singh notwithstanding any order made by any Court. This Court also vacated the operative portion of the directions contained in the order dated 7th March, 1987 of the Allahabad High Court. On 6th April, 1987, M/s. Swadeshi Mining and Manufacturing Company filed a civil writ petition Writ Petition No. 2214 of 1987 in the Allahabad High Court (Lucknow Bench) for stay of the operation of the letters dated 24/30 March, 1987, addressed by NTC to Swadeshi Mining and Manufacturing Company and Swadeshi Cotton Mills Company Limited, calling for an Extraordinary General Meeting of the Shareholders for removal of the Directors of Swadeshi Mining and Manufacturing Company Ltd. The High Court passed an order on the 6th April, 1987, staying the operation of the said letters. Against that order, M/s. Doypack Systems Pvt. Ltd. filed Special Leave Petition No. 4826 of 1987 and NTC also filed a Special Leave Petition No. 5240 of 1987 in this Court. By an order dated 5th May, 1987, this Court directed that Suit No. 506 of 1987 in the Delhi High Court and the Writ Petition No. 2214 of 1987 in the Allahabad High Court be transferred to this Court, which were registered in this Court as Transferred cases Nos. 14 and 13 of 1987 respectively. NTC filed a civil suit in the District Court Kanpur seeking declaration of its title in respect of the shrubbery property in Kanpur. The court refused any interlocutory injunction in the suit against which an appeal was preferred before the High Court of Allahabad and the same was dismissed. Consequently, NTC filed a Special Leave Petition No. 7045 of 1987 in this Court. Disposing of the matters, the Court, ^ HELD: Swadeshi Mining and Manufacturing Co. Ltd. and Others submitted that the shares in question did not vest in the Central Government. [976B] 965 By the Act Swadeshi Cotton Mills Company Ltd. (Acquisition and Transfer of Undertakings) Act, 1986 on the appointed day "every textile undertaking" and the "right, title and interest of the company in relation to every textile mill of such textile undertakings" were transferred to and vested in the Central Government and such textile undertakings would be deemed to include "all assets". In the context of this provision, the reliance on the decision of this Court in Balkrishnan Gupta and Others vs Swadeshi Polytex Ltd. and Others, ; , was not appropriate. [978D E] It appears from the written statement filed by NTC on 8th February, 1987, in the suit filed by one G.G. Bakshi in Ghaziabad Court, it was claimed that NTC was entitled to take over company 's shares and investments. On 24/30th March, 1987, NTC issued notice to the petitioners 1 and 2 stating that they were entitled to shares. It was urged by Shri Nariman, counsel for Swadeshi Mining and Manufacturing Co. Ltd. & Ors., that this belated assertion indicated that the shares were not intended to be taken over. The Court was unable to accept this suggestion or to draw that inference. It did not logically follow. [979G H; 980A] Before dealing with the main question, the Court considered an application made by Shri Nariman for the production of certain documents. The petitioner in Transferred Case No. 13 of 1987 had sought production of the documents. It was contended inter alia that the production of those documents was necessary to establish that the shares were never intended to be taken over and these were never considered as part of the textile undertaking, and that the documents were definitely relevant as they would throw light on the merits of the case. The production of the documents was resisted by the Attorney General on behalf of the Union of India on the ground that the documents were not relevant and in any event most of them were privileged being part of the documents leading to the tendering of the advice by the Cabinet to the President, as contemplated by Article 74(2) of the Constitution. [989B, C; 990A] Having considered the facts and circumstances of the case as well as the decisions of this Court in a number of cases, the Court was of the opinion that the documents in question were not relevant, and also that the Cabinet papers are protected from disclosure not by reason of their contents but because of the class to which they belong; the Cabinet papers also include papers brought into existence for the purpose of preparing submission to the Cabinet, and it is the duty of this Court to 966 prevent disclosure where Article 74(2) is applicable. The Court was unable to accept the prayer of the petitioner to direct disclosures and production of the documents sought for. [993F G; 994H] Coming to the main question involved, reading the provisions of section 3(1), section 4(1) and section 2(k) of the Act, each throwing light on the other, it follows that (a) under the first limb of section 3(1) of the Act, every textile undertaking; (b) under the second limb of section 3(2), every right, title and interest of the company in relation to every such undertaking, is transferred and vested, (c) the deeming provision of section 4(1) amplifies and enlarges both the limbs of the vesting section, being section 3(1), (d) the definition of the section is read into these provisions, to give a wider meaning and scope to the vesting provision and to what is transferred or vested. [997G H; 998A] Sections 7 and 8 of the Act relied upon by the petitioners, being provisions for payment of amounts and for the issue of shares by NTC respectively, will have no bearing on the scope of the vesting provision. As to what properties have vested cannot proceed on the hypothesis that there is a clear numerical or mathematical link between the quantum of compensation and the items of property vested. This correlation with regard to such legislation is not available. [998B] Section 8 refers to the payments of the amounts by Union of India to the company. It has no bearing either on the vesting section or on section 7 except that the figure of Rs.24 crores 32 lakhs was introduced into section 7. [998C D] In this case, a nationalisation statute is concerned. Even with other independent management statutes, in respect of textile undertakings a series of decisions have upheld the view that the shares vest in the Government. See National Textile Corporation Ltd. vs Sitaram Mills, [1986] Supp. S.C.C. 117, Minerva Mills vs Union of India, ; , Goverdhan Das Narasingh Das Daga vs Union of India, , Vidharba Mills Berar Ltd. vs Union of India, and Fine Knitting Co. Ltd. vs Union of India, The above provide the informed basis on which the Court makes construction of sections 3 and 4 of the Act. [998G H; 999A B] The expressions "and all other rights and interest in or arising out of such property, as were immediately before the appointed day, in the ownership, possession, power or control of the company in relation to the said undertakings", appearing in sub section (1) of section 4 of the 967 Act indicates that the shares which have been purchased out of the funds of the textile undertakings and which have been held for the benefit of the said textile undertakings, would come within the scope of section 4 of the Act and thus would also vest in the Central Government under section 3. The origin of these shares and their connection with the textile undertakings had been fully corroborated. The textile business was the only business of the Swadeshi Cotton Mills. There was inter connection and inter relation between all the six undertakings. Investments in Swadeshi Polytex Limited from the funds of Kanpur undertaking were always made. Investments in Swadeshi Mining and Manufacturing Company Ltd. were always made from the funds of the Kanpur undertaking. Assets/investments held and used for the benefit of the textile business of SCM were carried on in its textile undertakings. [999B E] The words in the statute must Prima facie be given their ordinary meaning. Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary. Nothing was shown to warrant that literal construction should not be given effect to. See Chandavarkar S.R. Rao vs Asha Lata, ; at 476, approving 44 Halsbury 's Laws of England, 4th ed. paragraph 856, p. 552, Nokes vs Doncaster Amalgamated Colliery Ltd., [1940] Appeal Cases 1014 at 1022. It must be emphasised that interpretation must be in consonance with the Directive Principles of the State Policy in Articles 39(b) and (c) of the Constitution.[999E G] The object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in constructing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context. That intention and, therefore the meaning of the statute are particularly to be sought in the words used in the statute itself, which must, if they are plain and unambiguous, be applied as they stand. In the present case, the words used represented the real intention of the Parliament as the Court found not only from the clear words used but also from the very purpose of the vesting of the shares. If the fact is borne in mind that these shares were acquired from out of the investments made by these two companies and furthermore that the assets of the company as such minus the shares were negative and further the Act in question was passed to give effect to the principles enunciated in clauses (b) and (c) of Article 39 of the Constitution, no doubt was left that the shares vested in the Central Government by operation of sections 3 and 4 of the 968 Act. See in this connection, the observations of Halsbury 's Laws of England, 4th Edition, Volume 44, paragraph 856, p. 522 and the cases noted therein. [999G H; 1000A C] There is no exact correlation between the figure of capital reserve and the figure of investments. That could not be. These could never be equal. The submission of the petitioners failed to take into account the fact the undertakings, other than the Kanpur undertaking, also had capital reserve, even though there was no obligation that these were excluded assets in respect of other undertakings and there were no figures of investments therein. [1000D E] Contemporanea Expositio is a well settled principle or doctrine which applies only to the construction of ambiguous language in old statutes. Reliance might be placed in this connection on Maxwell, 13th Ed. page 269. It is not applicable to modern statutes. Reference may be made to G.P. Singh, Principles of Statutory Interpretation, 3rd Ed. pages 238,239. The leading case on Contemporanea expositio is Comppell College Belfast vs Commissioner of Valuation for Northern Ireland, , in which House of Lords made it clear that the doctrine is to be applied only to the construction of ambiguous language in the very old statutes. Lord Watson said in Clyde Navigation Trustees vs Laird, [1983] 8 A.C. 658 that Contemporanea expositio could have no application to a modern Act. The Court, therefore, rejected the attempt of the petitioners to lead the Court to this forbidden track by referring to various extraneous matters. Furthermore, those external aids sought before the Court did not support the petitioners ' approach to this question at all. [1000F H; 1001A] Sections 3 and 4 of the Act evolve a legislative policy and set out the parameters within which it has to be implemented. The Court could not find that there was any special intention to exclude the shares in this case, as seen from the existence of at least four other Acquisition Acts which used identical phraseology in sections 3 and 4 and the other sections as well Aluminium Corporation of India Ltd. (Acquisition and Transfer of Aluminium Undertakings) Act, 1984, Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982, Britannia Engineering Company (Mohmeh Unit) and the Arthur Butler and Company (Muzaffarpore) Ltd. (Acquisition and Transfer of Undertakings) Act, 1978, and the Ganesh Flour Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1984. [1001E F] 969 It appeared to the Court that the expression "forming part of" appearing in section 27 could not be so read with section 4(1) as would have the effect of restricting or cutting down the scope and ambit of the vesting provisions in section 3(1). The expression "pertaining to" did not mean "forming part of". Even assuming that the expression "pertaining to" appearing in the first limb of section 4(1) means "forming part of", it would mean that only such assets as had a direct nexus with the textile mills, would fall under the first limb of section 4(1). The shares in question would still vest in the Central Government under the second limb of section 4(1) of the Act since the shares were bought out of the income of the textile mills and were held by the company in relation to such mills. The shares would also fall in the second limb of section 3(1) being right and title of the company in relation to the textile mills.[1002C E] On the construction of sections 3 and 4, the Court came to the conclusion that the shares vested in the Central Government even if sections 3 and 4 were read in conjunction with sections 7 and 8 of the Act on the well settled principles. The expression 'in relation to ' has been interpreted to be words of the widest amplitude. See National Textile Corporation Ltd. and Ors. vs Sitaram Mills Ltd. (supra). Section 4 appears to be an expanding section. It introduces a deeming provision, which is intended to enlarge the meaning of a particular word or include matters which otherwise may or may not fall within the main provisions. It is well settled that the word 'includes ' is an inclusive definition and expands the meaning. [1002F G] To leave a company, the net wealth of which was negative at the time of take over of the management, with the shares held by it as investment in the other company, was, in the Court 's opinion, not only to defeat the principles of Articles 39(b) and (c) of the Constitution, but it would permit the company to reap the fruits of its mismanagement. That would be an absurd situation. It had to be borne in mind that the net wealth of the company at the time of take over was negative; hence sections 3 and 4 could be meaningfully read if all the assets including the shares were considered to be taken over by the acquisition. That was the only irresistible conclusion that followed from the construction of the documents and the history of the Act, which expressly recites that it was to ensure the principles enunciated in clauses (b) and (c) of Article 39 of the Constitution. The Act must be so read that it further ensures such meaning and secures the ownership and control of the material resources to the community to subserve the common good to see that the operation of the economic system does not result in injustice. [1003F H; 1004A] 970 The shares vested in the Central Government. Accordingly, the shares in question were vested in the N.T.C. and it had right over the said 34 per cent of the share holdings. [1004B] The 10,00,000 shares in the Swadeshi Polytex Ltd. and 17,18,344 in the Swadeshi Mining and Manufacturing Company Ltd. held by the Swadeshi Cotton Mills vested in the Central Government under sections 3 and 4 of the Act. [1004B C] In view of the amplitude of the language used, the immovable properties, namely, the Bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur, also vested in the NTC. [1004C D] In that view of the matter, in Transferred Case No. 13 of 1987, the Writ Petition No. 2214 of 1987 was dismissed. All interim orders were vacated. This would dispose of the various other SLPs and CMPs connected with the Lucknow writ petition, being SLP (Civil) No. 4826 of 1987 filed by Doypack Systems Pvt. Ltd., SLP (Civil) No. 5240 of 1987 filed by NTC. CMPs 16918 and 16919 of 1987 in SLP No. 4826 of 1987 would stand disposed of in the above light. [1004D F] In the Transferred Case No. 14 of 1987 (in Suit No. 506 of 1987), the Court held that 10 lakhs and 17 lakhs equity shares and the Swadeshi House at Kanpur and all the rights, title and interest attached therewith, related to the textile undertaking of defendant No. 3 and they vested in NTC with effect from 1st April, 1985, and defendants Nos. 3 and 4 were restrained by a decree of permanent injunction from dealing with them in any manner whatsoever. Defendant No. 2 was restrained by permanent injunction from recognising defendants Nos. 3 and 4 as owners of the aforesaid shares and the Swadeshi House. [1004F G] Defendant No. 2 was directed to enter the name of defendant No. 1, namely, NTC in its register of members and to treat the said defendant No. 1 as its share holder instead of defendants Nos. 3 and 4 in respect of the shares of defendant No. 2 held by them. In view of the provisions of law under section 108 of the Companies Act, as there was transmission of shares by operation of law, rectification was not necessary.[1004H; 1005A B] Civil Appeals Nos. 577 to 579 of 1987 were disposed of in the above terms and it was directed that the 17th annual general meeting be held in accordance with law after giving proper notice under the 971 Chairmanship of Shri Jaswant Singh. [1005C] CMPs Nos. 12760 of 1987 in Civil Appeal No. 577 of 1987 would stand disposed of in terms of the orders in the Transferred Case No. 14 of 1987 and it was directed that the Chairman should act in accordance with the aforesaid decision and NTC should be considered to be entitled to vote. CMP 16887 of 1987 was rejected. [1005D] CMP 16888 of 1987 was an application by Doypack Systems Ltd. to be impleaded as a party respondent in the Transferred Case No. 13 of 1987. Doypack Systems was permitted to argue and was heard as a party. No further order was necessary. [1005E] CMPs Nos. 16889 and 17018 of 1987 were allowed. CMP No. 18268 of 1987 was disposed of with the direction that no further documents needed to be inspected. In view of the orders, the other CMPs were no longer necessary to be disposed of. [1005F] Irrespective of any order passed by any court, the 17th annual general meeting should be held in accordance with law, to be presided over by Shri Jaswant Singh, recognising NTC as the rightful owner of the disputed shares. [1005G] Balkrishan Gupta & Ors. vs Swadeshi Polytex Ltd. and Ors., ; ; Swadeshi Cotton Mills vs Union of India, ; ; National Textile Corporation vs Sita Ram Mills; , ; Minerva Mills. vs Union of India; , ; Goverdhan Das Narasingh Das Daga vs Union of India, ; ; Vidharba Mills Berar Ltd. vs Union of India, ; Kumari Sunita Ramachandra vs State of Maharashtra and another; , at 704, c to e; Doctor (Mrs.) Sushma Sharma vs State of Rajasthan, ; at 263; Fine Knitting Co. Ltd. vs Union of India, ; State of West Bengal vs Union of India, [1964] 1 SCR 371 at 379, 380, 381 and 382; The Central Bank of India vs Their Workmen, ; at 217; Babaji Kondaji Garad vs Nasik Merchants Co_operative Bank Ltd., Nasik and Others, ; , Paragraphs 14 and 15; Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd. & another; , at 1029; K.P. Verghese vs The Income tax Officer, Ernakulam and another; , ; Chern Taong Shang & Another, etc. etc. vs Commander S.D. Baijal & Ors., J.T. ; Auckland Jute Co. Ltd. vs Tulsi Chandra Goswami, at 244; RM AR.AR.R.M.AR. Umayhal Achi vs Lakshmi Achi and Others, ; Black_Clawson International Ltd. vs Papierwerke Waldhof Achaffenburg A.G.; , at 613; S.P. Gupta vs Union of India and others, [1982] 2 S.C.R. 365 at 594; State of U.P. vs Raj Narain, ; ; The Elphinstone Spinning and Weaving Mills Company Ltd. vs Union of India and others, writ petition No. 2401 of 1983; State of Bihar vs Kripalu Shankar, ; at 1559; Bachittar Singh vs State of Punjab, [1962] Suppl. 3 SCR 713; Air Canada and others vs Secretary of State and another, at 180; State Wakf Board vs Abdul Aziz, A.I.R. 1968 Madras 79, 81; Nitai Charan Bagchi vs Suresh Chandra Paul, ; Shyam Lal vs M. Shyamlal A.I.R. 1933 All. 649, 76 Corpus Juris Secundum 621; R.C. Cooper vs Union of India, ; at 567, 568, 635; Khajamian Wakf Estates, etc. vs State of Madras & another; , , at 796 B E; Harakchand Ratanchand Banthia and others, etc. vs Union of India and others; , at 496 P & G; Chandavarkar S.R. Rao vs Asha Lata, ; , 476; 44 Halsbury 's Laws of England 4th Ed. paragraph 856 at page 552; Nokes vs Doncaster Amalgamated Colliery Limited, [1940] Appeal Cases 1014, 1022; Campbell College Belfast vs Commissioner of Valuation for Northern Ireland, ; Clyde Navigation Trustees vs Laird, ; The Corporation of the City of Nagpur vs Its Employees, ; ; Vasudev Ramchandra Shelat vs Pranlal Javanand Thakar and others, [1975] 1 SCR 534, Palmer 's Company Law 24th Ed. ; Mahadeo Lal Agarwala and another vs The New Darjeeling Union Tea Co. Ltd. and others, A.I.R. 1952 Cal. 58 and Unity Company Pvt. Ltd. vs Diamond Sugar Mills and others A.I.R.

No. 665 of 1988 (Under Article 32 of the Constitution of India). Sanjay Parikh, M.L. Sachdev, C.S. Vaidyanathan, S.R. Bhat, S.R. Setia, S.C. Dhanda, H.K. Puri, Harish N. Salve, Rajiv Dutta, Anil Kumar and Sultan Singh for the Petition ers. Raja Ram Agarwal, S.C. Manchanda, G.L. Sanghi, A.S. Nambiar, Ashok K. Srivastava, R.S. Rana, P.G. Gokhale, B.R. Agarwala, R.B. Hathikhanawala, C.M. Nayar, P.K. Manohar, P.N. Misra, Ms. Halida Khatoon and Santhanam for the Respondents. G.L. Sanghi, Ms. Vrinda Grover, Miss Seita Vaidialingam, Kailash Vasudev and A.C. Gulathi for the Intervenor. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, CJ. In these several writ petitions, we are concerned with the question of harmonising the power of different States in the Union of India to legislate and/or give 735 appropriate directions within the parameters of the subjects in list II of the 7th Schedule of the Constitution with the principle of economic unity envisaged in Part XIII of the Constitution of India. We are also concerned with the provi sions of exemption, encouragement/incentives given by dif ferent States to boost up or help economic growth and devel opment in those States, and in so doing the attempt of the States to give preferential treatment to the goods manufac tured or produced in those States. The question essentially is the same in all the matters but the question has to be appreciated in the context of the provisions and the fact situation of the different States involved in these writ petitions. It would, therefore, be appropriate to first deal with writ petition No. 803/88 (Niksin Marketing Associate & Ors.vs Union of India & Anr.) which is under article 32 of the Constitution by four petitioners. Petitioner No. 1 in W '.P. No. 803/88 is a partnership firm carrying on business in New Delhi. Petitioner No. 2 is its partner and petitioner No. 3 is another partnership business carrying on business at Kanpur in U.P. consisting of petitioner No. 4 and other partners. The petition chal lenges the constitutional validity of notification No. ST II7558/X 9(208) 1981 U.P. Act XV 48 order 85 dated 26th December, 1985 issued by Uttar Pradesh Govt. u/s 4A of the Uttar Pradesh Sales Tax Act, 1948. A prior notification No. ST II/604 X 9(208) 198 1 U.P. Act XV 48 Order 85 dt. 29th January, 1985 was superseded by the aforesaid notification dt. 26th December, 1985. It also challenges the constitu tional validity of notification No. ST II/8202/X 9(208) 1981 issued by Uttar Pradesh Govt. u/s 8(5) of the which superseded a previous notification. It also challenges the constitutional validity of section 4A of the Uttar Pradesh Sales Tax Act, 1948 as substituted by U.P. Act 22 of 1984 and also section 8(5) of the and consequentially all actions and proceedings taken by the respondent u/s 5A of the said Act. The respondents to this application are the State of Uttar Pradesh, the Union of India, and the Commissioner of Sales Tax, Uttar Pradesh. It is stated that the petitioners carry on the business of selling cinematographic films and other equipments like projectors, sound recording and reproducing equipment, industrial X ray films, graphic art films, Photo films etc. in the State of Uttar Pradesh and in Delhi. The petitioners sell the goods upon receiving these from the manufacturers from outside the State of U.P. They are dealers on behalf of those manufacturers. The petitioners are dealers of Hindu stan Photo Films Mfg. Co. Ltd., a Government of India under taking. In 736 U.P. there is a single point levy of sales taX. The State of U.P. had issued two notifications u/s 4A of the U.P. Sales Tax Act and u/s 8(5) of the exempting new units of manufacturers as defined in the Act in respect of the various goods for different periods ranging from 3 to 7 years as the case may be, from payment of any sales tax. These notifications are annexed and terms thereof are set out in annexures A 1 & B 1 to the writ petition. The notification dated 26th December, 1985 stated, inter alia: "The Governor is pleased to direct that in respect of any goods manufactured in an indus trial unit, which is a new unit as defined in the aforesaid Act of 1948 established in the areas mentioned in column 2 of the Table given below, the date of starting production whereof falls on or after the first day of October, 1982 but not later than 31st March, 1990, no tax under the aforesaid Act of 1956 shall be payable by the manufacturer thereof on the turnover of sales on such goods for the period specified in column 3 against each, which shall be reckoned from the date of first sale if such sale takes place not later than 6 months from the date of starting production subject to certain conditions mentioned. " It is not necessary to set out the conditions. In the annexure several districts have been mentioned. In column 2 categories have been made for exemption and have been divid ed in 2 categories, one in case of units with capital in vestment not exceeding 3 lakhs of rupees and another in cases of the units with capital investment exceeding 3 lakhs of rupees. For one the period of exemption is 5 years while for the latter it is 7 years. Period of exemption various from 3 to 7 years in different districts. More or less similar were the terms of notification dated 29th January 1985. The case of the petitioners is that they did not ini tially feel the adverse effects or discrimination on account of these notifications. Petitioners point out that the manufacturers covered by the said notification are entitled to sell the articles manufactured by them without liability to pay sales tax while the manufacturers in other States and non manufacturers of the same article selling the same goods in the State are liable to pay sales tax under the local Sales Tax Act as well as under the . The petitioners found that they had become liable to pay sales tax on their sales at 12% + 10% surcharge 737 (13.2%) under the U.P. Sales Tax Act on photographic and graphic arts material and @ 8% + 10% surcharge (8.8%) on medical x ray films and chemicals and a minimum of 10% on their inter State turnover whereas the manufacturers in the State of U.P. and their dealers had no tax liability by virtue of the exemption granted under the impugned notifica tions. Thus the petitioners contend that the goods sold by them became costlier by 8.8% to 13.2% depending on the item sold compared to the goods of manufacturers in the State of U.P. They had given a chart illustrating the position. They, hence, contended that they became subject to gross discrimi nation and their business was crippled and wanted to sustain the said contention by referring to a chart showing gross sale prices of the products in diverse States. In the prem ises the petitioners challenge these provisions as ultra vires of the Constitution of India, the rights guaranteed under part XIII as also under articles 14 & 19(l)(g) of the Constitution. The question is, are these notifications valid, proper and sustainable in the light of part XIII of the Constitu tion of India judged in the background of the said articles. Appearing in support of the petition, Mr. Sanjay Parikh in writ petitions Nos. 790,665 and 1939 40/88, Mr. C.S. Vaidy nathan and Mr. S.C. Dhanda in writ petition No. 761/88, Mr. Harish N. Salve for the petitioners in writ petition No. 803/88. Miss Seita Vaidialingam, Mr. G.L. Sanghi, Kailash Vasudev for the intervenors. These petitions have been heard together. Apart from the submission that the provisions impugned violate articles 19(l)(g) and 14 of the Constitution, and are in violation of the principles of natural justice, the main challenge to these provisions by Mr. Salve was that they violated the provisions of articles 301 to 305 of Part XIII of the Constitution of India. The contention of the petitioners was that, subject to other provisions of Part XIII, trade, commerce and intercourse throughout the terri tory of India was enjoined to be free. Article 302 of the Constitution empowers the Parliament by law to impose such restrictions on the freedom of trade, commerce or inter course between one State and another or within any part of the territory of India as may be required in the public interest. Article 303 indicates the restrictions on the legislative powers of the Union and the States with regard to trade and commerce, and stipulates that, notwithstanding anything contained in article 302, neither Parliament nor the legislature of the States shall have power to make any law giving or authorising the giving of any preference to one State 738 over another or making or authorising the making of any discrimination between one State and another by virtue of any entry relating to trade and commerce in any list of the 7th Schedule. Sub clause (2) of article 303 enjoins that nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. Article 304 deals with restrictions on trade, commerce and intercourse among States, which is as follows: "304.Restrictions on trade, commerce and intercourse among States. Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest; Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. " Article 305 saves certain existing laws and laws provid+ing for State monopolies. Our attention was drawn to the decision of this Court in Atiabari Tea Co. Ltd. vs The State of Assam & Ors., ; There this Court was concerned with the Assam Taxation (on goods carried by Roads and Inland Waterways) Act, 1954 which was passed under entry 56 of list II of the 7th Schedule to the Constitution. The appellants therein contended that the Act had violated the freedom of trade guaranteed by article 301 of the Constitution and as it was not passed after obtaining the previous sanction of the President as 739 required by article 304(b), it was ultra vires. The respondent therein had urged that taxing laws governed only by Part XII and not Part XIII (which contained articles 301 & 304) and in the alternative that the provisions of Part XIII applied only to such legislative entries in the 7th Schedule as dealt specifically with trade, commerce and intercourse. Gajendragadkar, Wanchoo and Das Gupta, JJ. held that the Act violated article 301 and since it did not comply with the provisions of article 304(b) it was ultra vires and void. On the contrary, Chief Justice Sinha held that the Assam Act did not contravene article 301 and was not ultra vires. According to the learned Chief Justice, neither the one extreme position that article 301 included freedom from all taxation nor the other that taxation was wholly outside the purview of article 301 was correct; and that the freedom conferred by article 301 did not mean freedom from taxation simpliciter but only from the erection of trade barriers, tariff walls and imposts which had a deleterious effect on the free flow of trade, commerce and intercourse. Justice Shah on the other hand expressed the view that the Assam Act infringed the guarantee of freedom of trade and commerce under article 301 and as the Bill was not moved with the previous sanction of the President as required by article 304(b) nor was it validat ed by the assent of the President under article 255(c), it was ultra vires and void. In construing the provisions with which we are concerned herein, in our opinion, it is instructive to remind our selves, as was said in James vs Commonwealth of Australia, [19361 AC 578 at 613, that the relevant provision of the Constitution has to be read not in vacuo but as occurring in a single complex instrument in which one part may throw light on another, and therefore, Gajendragadkar, J. as the learned Chief Justice then was, at p. 860 of the said re port, rightly in our opinion posed the problem as follows: "In construing article 301 we must, therefore, have regard to the general scheme of our Constitution as well as the particular provi sions in regard to taxing laws. The construction of article 301 should not be determined on a purely academic or doctrinaire considerations; in construing the said Article we must adopt a realistic approach and bear in mind the essen tial features of the separation of powers on which our Constitution rests. It is a federal constitution which we are interpreting, and so the impact of article 30 1 must be judged accordingly. Besides, it is not irrelevant to remem ber in this connection that the Article 23 are construing imposes a constitutional limitation on the power of 740 the Parliament and State Legislatures to levy taxes, and generally, but for such limitation, the power of taxation would be presumed to ,be for public good and would not be subject to judicial review or scrutiny. Thus considered we think it would be reasonable and proper to hold that restrictions freedom from which is guaranteed by article 301, would be such restric tions as directly and immediately restrict or impede the free flow or movement of trade. Taxes may and do amount to restrictions; but it is only such taxes as directly and immedi ately restrict trade that would fall within the purview of article 30 1. The argument that all taxes should be governed by article 301 whether or not their impact on trade is imme diate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld. If the said argument is accepted it would mean, for instance, that even a legisla tive enactment prescribing the minimum wages to industrial employees may fall under Part XIII because in an economic sense an addition al wage bill may indirectly affect trade or commerce. We are, therefore, satisfied that in determining the limits of the width and ampli tude of the freedom guaranteed by article 301 a rational and workable test to apply would be: Does the impugned restriction operate directly or immediately on trade or its movement?" It is in that light we must examine the impugned provision. It is necessary to bear in mind that taxes may and sometimes do amount to restrictions but it is only such taxes as directly and immediately restrict trade that would fall within the mischief of article 301. Mr. Salve, however, rightly reminded us that regulatory measures or measures imposing compensatory taxes for using trading facilities do not come within the purview of restrictions contemplated under article 301. Here, it is necessary to refer to the deci sion of this Court in the Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan & Ors., [1963] 1 SCR 491 which was a decision of a bench of this Court consisting of 7 learned Judges, and was concerned with the Rajasthan Motor Vehicles Taxation Act, 1951. Sub section (1) of section 4 of that Act provided that no motor vehicle shall be used in any public place or kept for use in Rajasthan unless the owner thereof had paid in respect of it, a tax at the appropriate rate specified in the schedules to that Act within the time allowed. The appellants therein were carrying on the busi ness of plying stage carriages in the State of Ajmer. They held permits and plied their buses on diverse routes. There was one route which lay 741 mainly in Ajmer State but it crossed narrow strips of the territory of the State of Rajasthan. Another route, Ajmer to Kishangarh, was substantially in the Ajmer State, but a third of it was in Rajasthan. Formerly, there was an agree ment between the Ajmer State and the former State of Kishan garh, by which neither State charged any tax or fees on vehicles registered in Ajmer or Kishangarh. Later, Kishan garh became a part of Rajasthan. On the passing of the Rajasthan Motor Vehicles Taxation Act, 1951, and the promul gation of the rules made thereunder, the Motor Vehicles Taxation Officer, Jaipur, demanded of the appellants payment of the tax due on their motor vehicles for the period from April 1, 1951 to March 31, 1954. The appellants challenged the legality of the demand on the grounds that section 4 of the Act read with the Schedules constituted a direct and immedi ate restriction on the movement of trade and commerce with and within Rajasthan inasmuch as motor vehicles which car ried passenger and goods within or through Rajasthan had to pay tax which imposed a pecuniary burden on commercial activity and was therefore hit by article 301 of the Constitu tion and was not saved by article 304(b) inasmuch as the provi so to article 304(b) was not complied with, nor was the Act assented to by the President within the meaning of article 255 of the Constitution. It was held by Das, Kapur, Sarkar and Subba Rao, JJ. as the learned Judges then were, that the Rajasthan Motor Vehicles Taxation Act, 1951 did not violate the provisions of article 301 of the Constitution of India and that the taxes imposed under the Act were compensatory or regulatory taxes which did not hinder the freedom or trade, commerce and intercourse assured by that article. Das, Kapur and Sarkar, JJ. held that the concept of freedom of trade, commerce and intercourse postulated by article 301 must be understood in the context of an ordinary society and as part of a Constitution which envisaged a distribution of powers between the States and the Union, and if so understood, the concept must recognise the need and legitimacy of some degree of regulatory control, whether by the Union or the States. Mr. Justice Subba Rao, as the learned Chief Justice then was, observed that the freedom declared under article 30 1 referred to the right of free movement of trade without any obstructions by way of barriers, inter State or intra State, or other impediments operating as such barriers; and the said freedom was not impeded, but on the other hand, promot ed, by regulations creating conditions for the free movement of trade, such as, police regulations, provisions for services, maintenance of roads, provision for aerodromes, wharfs etc., with or without compensation. Parliament may be law impose restrictions, it was stated, on such freedom in the public interest, and the States also, in exercise of their legislative power, may impose similar restrictions, 742 subject to the proviso mentioned therein. Laws of taxation were not outside the freedom enshrined either in article 19 or 301. Mr. Justice Hidayatullah, as the learned Chief Justice then was, and Rajagopala Ayyangar and Mudholkar, JJ. held that section 4(1) of the Rajasthan Motor Vehicles Taxation act, 195 1 offended article 301 of the Constitution, and as resort to the procedure prescribed by article 304(b) was not taken it was ultra vires the Constitution. The pith and substance of the Act was the levy of tax on motor vehicles in Rajasthan or their use in that State irrespective of where the vehi cles came from and not legislation in respect of inter State trade or commerce. A tax which is made the condition prece dent of the right to enter upon and carry on business is a restriction on the right to carry on trade and commerce within article 30 1 of the Constitution. The act was not, in its true character, regulatory. In judging the situation it would be instructive to bear in mind the obser vations of Mr. Justice Das at p. 5 12 of the report, where he observed that in evolving an integrated policy on this subject our Constitution makers seem to have kept in mind three main considerations which may be broadly stated thus: first, in the larger interests of India there must be free flow of trade, commerce and intercourse, both inter State and intra State; second, the regional interests must not be ignored altogether; and third, there must be a power of intervention by the Union in any case of crisis to deal with particular problems that may arise in any part of India. At p. 523 of the report, it was reiterated that for the tax to become a prohibited tax it has to be a direct tax the effect of which is to hinder the movement part of trade. Dealing with wide interpretation Justice Das observed at p. 523 5 of the said report as follows: "The widest view proceeds on the footing that article 301 imposes a general restriction on legislative power and grants a freedom of trade, commerce and intercourse in all its series of operations, from all barriers, from all restrictions, from all regulation, and the only qualification that is to be found in the article is the opening clause, namely, subject to the other provisions of Part XIII. This in actual practice will mean that if the State Legislature wishes to control or regu late trade, commerce and intercourse in such a way as to facilitate its free movement, it must yet proceed to make a law under article 304(b) and no such bill can be introduced or moved in the Legislature of a State without the previous sanction of the President. The practi 743 cal effect would be to stop or delay effective legislation which may be urgently necessary. Take, for example, a case where in the inter ests of public health, it is necessary to introduce urgently legislation stopping trade in goods which are deleterious to health, like the trade in diseased potatoes in Australia. If the State Legislature wishes to introduce such a bill, it must have the sanction of the President. Even such legislation as imposes traffic regulations would require the sanction of the President. The learned Judge reiterated that the Court will have to ascertain whether the impugned law in a given case affects directly the said movement or indirectly and remotely affects it. Mr. Salve, however, sought to contend that as regards the local sales tax, there were broadly two well accepted propositions, namely, sales tax was a tax levied for the purpose of general revenue. Secondly, it was neither a compensatory tax nor a measure regulating any trade. Reli ance was placed on the observations of Mr. Justice Raghubar Dayal, J. in Firm A.T.B. Mehtab Majid & Co. vs State of Madras & Anr., ; but the context in which the said observations were made has to be examined. That case dealt with a petition under article 32 of the Consti tution. The petitioners therein were dealers in hides and skins in the State of Madras. The main contention was that the tanned hides and skins imported from outside and sold inside the State were, under r. 16 of the Madras General Sales Tax Rules, subject to a higher rate of tax than the tax imposed on hides and skins tanned and sold within the State and this discriminatory taxation offended article 304 of the Constitution. The contentions of the respondents therein were that sales tax did not come within the purview of article 304(a) as it was not a tax on the import. of goods at the point of entry, that the impugned rule was not a law made by the State legislature, that the im pugned rule by itself did not impose the tax but fixed the single point at which the tax was imposed by sections 3 & 5 of the Act was to 744 be levied; and that the impugned rule was not made with an eye on the place of origin of the goods. It was held that taxing laws can be restrictions on trade, commerce and intercourse, if they hamper the flow of trade and if they are not what can be termed to be compensatory taxes or regulating measures. Reliance was also placed by Mr. Salve on the observa tions of Justice Raghubar Dayal in A. Hajee Abdul Shakoor & Co. vs State of Madras, 17 at 225. See also the observations in State of Madras vs N.K. Nataraja Mudali ar; , at 847 and Andhra Sugars Ltd. & Anr. vs State of Andhra Pradesh & Ors., ; where at p. 7 18 of the report it was reiterated that a sale tax which discriminates against goods imported from other States may impede the free flow of trade and is then invalid unless protected by article 304(a). It is, however, necessary to bear in mind that in N.K.N. Mudaliar 's, case (supra) at p. 850 Mr. Justice Bachawat after referring to several cases observed as follows: "But, there can be no doubt that a tax on such sales would not normally offend Article 301. That Article makes no distinction between movement from one part of the State to another part of the same State and movement from one State to another. Now, if a tax on intra State sale does not offend Article 301, logically, I do not see how a tax on inter State sale can do so. Neither tax operates directly or imme diately on the free flow of trade or the free movement of the transport of goods from the part of the country to the other. The tax is on the sale. The movement is incidental to and a consequence of the sale. " There was a reference in the said judgment to the obser vations of Jagannathadas, J. in The Bengal Immunity Co. Ltd. vs State of Bihar, at 754 wherein it was stated: "Now it is not disputed that a tax on a purely internal sale which occurs as a result of the transportation of goods from a manufacturing centre within the State to a purchasing market within the same State is clearly permissible and not hit by anything in the Constitution. If a sale in that kind of trade can bear the tax and is not a burden on the freedom of trade, it is difficult to see why a single point tax on the same kind of sale where a State boundary intervenes bet 745 ween the manufacturing centre and the consum ing centres need be treated as a burden, especially where that tax is ultimately to come out of the residents of the very State by which such sale is taxable. Freedom of trade and commerce applies as much within a State as outside it. It appears to me again, with great respect, that there is no warrant for treating such a tax as in any way contrary either to the letter or the spirit of the freedom of trade, commerce and ' intercourse provided under Article 301. " It was contended that the ex hypothesi violates article 301 of the Constitution since it is a tax on inter State movement of goods. Shah, J. in Mudali ar 's case (supra) at p. 84 1 of the report observed that tax under the on interState sales, it must be noticed, is in its essence a tax which encumbers movement of trade or commerce, if it (a) occasions the movement of goods from one State to another; (b) is effected by a trans fer of documents of title to the goods during their movement from one State to another. It was contended by Mr. Salve that by exempting the local manufacturers from both local and central sales tax, the State Govt. has clearly made the imposition of both local and central sales tax discriminato ry and prejudicial to outside goods. The goods of the local manufacturer, when sold by him, do not bear any tax whereas the goods imported from outside the State have to bear the burden of sales tax. It was also contended that similarly, the goods of a 'local manufacturer, when exported from the State of U.P. do not have to bear tax, while goods brought into the State of U.P. and further ex , ported in competi tion with the local goods have to bear the tax, so there is clear discrimination against goods produced by manufacturers situated outside the State. The discrimination within the meaning of article 301 read with article 304 arises where there is a difference in the rates of sales tax levied, it was sought to be emphasised by Mr. Sanjay Parikh for some of the peti tioners. This proposition has been reiterated by this Court in a large number of cases, according to counsel, and we were referred to the observations in State of Madhya Pradesh vs Bhailal Bhai & Ors., ; at 268 9 and Mudal iar 's case (supra) where at p. 847 Shah, J. reiterated that imposition of differential rates of tax by the same State on goods manufactured or produced in the State and similar goods imported in the State is prohibited under article 304(a). It was also reiterated by this Court in Rattan Lal & Co. & Anr. vs The Assessing Authority & Anr. , ; at 557 dealing with the Punjab General Sales Tax Act that when a taxing State was not imposing rates of tax on imported goods different from the rates of 746 tax on goods manufactured or produced, article 304 had no application. So long as the rate was the same, article 304 was satisfied. Reference was made to India Cement & Ors.vs State of Andhra Pradesh & Ors. whereas at p. 759 this Court observed that variation of the rate of inter state sales tax did affect free trade and commerce and created a local preference which was contrary to the scheme of Part XIII of the Constitution. To similar effect are the observations to which Mr. Sanjay Parikh has referred us in Weston Electronics & Anr. vs State of Gujarat & Ors. Mr. Salve strongly relied on the observations of Justice Cardozo in C.A.F. Seeling Inc. vs Charles H. Baldwin, at 1038 where the learned Judge observed while he was dealing with article (1) section 8, clause (3) of the American Constitution which is known as the 'Commerce Clause ' "This part of the Constitution was framed under the dominion of a political philosophy less parochial in range. It was framed upon the theory that the peoples of the several States must sink or swim together and that in the long run prosperity and salvation are in union and not division". This passage has been cited with approval in this Court in Atiabari 's case (supra) by Gajendragadkar, J. as aforesaid. We were referred to the observations of Firm A.T.B. Mehtab Majid & Co.s case ; at 445. It was contended that the acceptance of the petitioner 's case would not conflict with the plenary power of the State to grant exemptions under the Act because statutory powers have to yield to constitutional inhibitions and, therefore, article 304(a) & (b) being envisaged to safeguard the eco nomic unity of the country, these must have precedence. It was also contended that the petitions under article 301 read with 304(a) are clearly maintainable. Reliance was placed in Smt. In light of these, it was contended by the petitioners that the petition under article 32 is clearly maintainable. The question as we see is, how to harmonise the con struction of the several provisions of the Constitution. It is true that if a particular provision being taxing provi sion or otherwise impedes directly or immediately the free flow of trade within the Union of India then it will be violative of article 301 of the Constitution. It has further to be borne in mind that article 301 enjoins that trade, commerce and 747 intercourse throughout the territory of India shall be free. The first question, therefore, which one has to examine in this case is, whether the sales tax provisions (exemption etc.) in these cases directly and immediately restrict the free flow of trade and commerce within the meaning of article 30 1 of the Constitution. We have examined the scheme of article 30 1 of the Constitution read with article 304 and the observations of this Court in Atiabari 's case (supra), as,also the observations made by this Court in Automobile Transport, Rajasthan 's case (supra). In our opinion, Part XIII of the Constitution cannot be read in isolation. It is part and parcel of a single constitutional instrument envis aging a federal scheme and containing general scheme confer ring legislative powers in respect of the matters relating to list II of the 7th Schedule on the State. It also confers plenary powers on States to raise revenue for its purposes and does not require that every legislation of the State must obtain assent of the President. Constitution of India is an organic document. It must be so construed that it lives and adapts itself to the exigencies of the situation, in a growing and evolving society, economically, politically and socially. The meaning of the expressions used there must, therefore, be so interpreted that it attempts to solve the present problem of distribution of power and rights of the different States in the Union of India, and anticipate the future contingencies that might arise in a developing organism. Constitution must be able to comprehend the present at the relevant time and anticipate the future which is natural and necessary corollary for a growing and living organism. That must be part of the constitutional adjudica tion. Hence, the economic development of States to bring these into equality with all other States and thereby devel op the economic unity of India is one of the major commit ments or goals of the constitutional aspirations of this land. For working of an orderly society economic equality of all the States is as much vital as economic unity. The taxes which do not directly or immediately restrict or interfere with trade, commerce and intercourse throughout the territory of India, would therefore be excluded from the ambit of article 301 of the Constitution. It has to be borne in mind that sales tax has only an indirect effect on trade and commerce. Reference may be made to the Constitution bench judgment of this Court in Andhra Sugar Ltd. & Anr.vs State of A. P. & Ors., where this Court observed that normally a tax on sale of goods does not directly impede the free movement of transport. See also the observations in Mudaliar 's case (supra) where at p. 851 it was observed that a tax on sale would not normally offend article 301. That 748 article made nO distinction between movement from one part of State to another part of the same State and movement from one State to another. In this connection, reference may also be made to the observations in Bengal Immunity 's case (supra). Both the preceding cases clearly establish that if a taxing provision in respect of intra State sale does not offend article 30 1, logically it would not affect the freedom of trade in respect of free flow and movement of goods from one part of the country to the other under article 301 as well. It has to be examined whether difference in rates per se discriminates so as to come within articles 301 and 304(a) of the Constitution. It is manifest that free flow of trade between two States does not necessarily or generally depend upon the rate of tax alone. Many factors including the cost of goods play an important role in the movement of goods from one State to another. Hence the mere fact that there is a difference in the rate of tax on goods locally manufac tured and those imported would not amount to hampering of trade between the two States within the meaning of article 301 of the Constitution. As in manifest, article 304 is an excep tion to article 30 1 of the Constitution. The need or taking resort to exception will arise only if the tax impugned is hit by articles 301 and 303 of the Constitution. If it is not then article 304 of the Constitution will not come into picture at all. See the observations in Nataraja Mudaliar 's case (supra) at pp.843 6 of the report. It has to be borne in mind that there may be differentiations based on consid eration of natural or business factors which are more or less in force in different localities. A State might be allowed to impose a higher rate of tax on a commodity either when it is not consumed at all within the State or if it is felt that the burden falling on consumers within the State, will be more than that and large benefit is derived by the revenue. The imposition of rates of sales tax is influenced by various political, economic and social factors. Preva lence of differential rate of tax on sales of the same commodity cannot be regarded in isolation as determinative of the object to discriminate between one State and another. Under the Constitution originally flamed revenue from sales tax was reserved for the States. In V. Guruviah Naidu & Sons.vs State of Tamil Nadu & Anr. The object is to prevent discrimination against imported goods by imposing tax on such goods at a rate higher than that borne by local goods since the difference between the two rates would constitute a tariff wall or fiscal barrier and thus impede the free flow of inter State trade and commerce. The ques tion as to when the 'levy of tax would consti tute discrimination would depend upon a varie ty of factors including the rate of tax and the item of goods in respect of the sale of which it is levied. The scheme of items 7(a) and 7(b) of the Second Schedule to the State Act is that in case of raw hides and skins which are purchased locally in the State, the levy of tax would be at the rate of 3 per cent at the point of last purchase in the State. When those locally purchased raw hides and skins are tanned and are sold locally as dressed hides and skins, no levy would be made on such sales as those hides and skins have already been subjected to local tax at the rate of 3 per cent when they were purchased in raw form. As against that, in the case of hides and skins which have been imported from other States in raw form and are thereafter tanned and then sold inside the State as dressed hides and skins, the levy of tax is at the rate of 1 1/2 per cent at the point of first sale in the State of the dressed hides and skins. This levy cannot be considered to be discriminatory as it takes into account the higher price of dressed hides and skins com pared to the price of raw hides and skins. It also further takes note of the fact that no tax under the State Act has been paid in respect of those hides and skins. The Legisla ture, it seems, calculated the price of hides and skins in dressed condition to be double the price of such hides and skins in raw state. To obviate and prevent any discrimina tion of differential treatment in the matter of levy of tax, the Legislature therefore prescribed a rate of tax for sale of dressed hides and skins which was half of that levied under item 7(a) in respect of raw hides and skins. " The object is to prevent discrimination against the imported goods by imposing tax on such goods at a rate higher than that borne by local goods. The question as to when the levy of tax would constitute discrimination would depend upon a variety of factors including the rate of tax and the item of goods in respect of the sale on which it is levied. Every differentiation is not discrimination. The word 'discrimination ' is not used in article 14 but is used in articles 16, 303 & 304(a). When used in article 304(a), it involves an element of inten tional and purposeful differentiation thereby creating economic barrier and involves an element of an unfavorable bias. Discrimination implies an unfair classification. Reference may be made to the observations of this Court in Kathi Raning Rawat vs The State Of Saurashtra, ; where Chief Justice Shastri at p. 442 of the report reiterated that all legislative differentiation is not necessarily discriminatory. The whole doctrine of classification is based on this and on the well known fact that the circumstances covering one set of provisions or objects may not necessarily be the same as these covering another set of provisions and objects so that the question of unequal treatment does not arise as between the provisions covered by different sets of circumstances. Where the general rate applicable to the goods locally made and on those imported from other States is the same nothing more normally and generally is to be shown by the State to dispel the argument of discrimination under article 304(a), even though the resultant tax amount on imported goods may be different. Here, reference may be made to Ratan Lal 's case (supra). In the instant writ petition, in the State of U.P. those producers or manufacturers who do not come within the ambit of notifications, have to pay tax on their goods at the general rate described and there is no differentiation or discrimination qua the imported goods. The question naturally arises whether the power to grant exemption to specified class of manufacturers for a limited period on certain conditions as provided by section 4A of the U.P. Sales Tax Act is violative of article 304(a). It was contended by the petitioners that Part XIII of the Constitu tion was envisaged for preserving the unity of India as an economic unit and, hence, it guarantees free flow of trade and commerce throughout India including between State and State and as such article 304(a), even though an exception to article 301, yet applies where an exemption is granted by one State to a special class of manufacturers for a limited period on certain conditions. It was so submitted that either a State should grant exemption to all goods irrespec tive of the fact that the goods are locally manufactured or imported from other States, else it would be violative of article 304 and 304(a). It was submitted by the respondents that this is not the correct position. This argument ignores the basic feature of the Constitution and also the fact that the concept of economic unity may not necessa 751 rily be the same as it was at the time of Constitution making for establishing new industries so as to be economically de veloped. It was also submitted that if all the parts of India i.e. to say all the States are economically strong or developed then only can economic unity as a whole be assured and strengthened. Hence, the concept of economic unity is ever changing with very wide horizons and cannot and should not be imprisoned in a strait jacket of the concept and notion as advocated by the petitioner. Economic unity of India is one of the constitutional aspirations of India and safeguarding the attainment and maintenance of that unity are objectives of the Indian Constitution. It would be wrong, however, to assume that India as a whole is already an economic unit. Economic unity can only be achieved if all parts of whole of Union of India develop equally, economi cally. Indeed, in the affidavits of opposition various grounds have been indicated on behalf of the respondents suggesting the need for incentives and exemptions, and these were suggested to be absolutely necessary for economic viability and survival for these industries in these States. These were based on cogent and intelligible reasons of economic encouragement and growth. There was a rationale in these which is discernible. The power to grant exemption is always inherent in all taxing Statutes. If the suggestions/submissions as advanced by the petitioners are accepted, it was averted, and in our opinion rightly, that it will destroy completely or make nugatory the plenary powers of the States. If the exemption is based on natural and business factors and does not involve any intentional bias, the impugned notifications to grant exemption for limited period on certain specific conditions cannot be held to be bad. Judged by that yardstick, the present notifica tions cannot be held to be violative of the constitutional provisions. An examination of article 304(a) would reveal that what is being prohibited by this article which is really an exception to article 30 1 will not apply if article 301 does not apply. In the instant case the general rate applicable to locally made goods is the same as that on imported goods. Even supposing without admitting that sales tax is covered by article 301 as a tax directly and immediately hampering the free flow of trade, it does not follow that it falls within the exemption of article 304 and it would be hit by article 301. Still the general rate of tax which is to be compared under article 304(a) is at par and the same qua the locally made goods and the imported goods. 752 Concept of economic barrier must be adopted in a dynamic sense with changing conditions. What constitutes an economic barrier at one point of time often cease to be so at another point of time. It will be wrong to denude the people of the State of the right to grant exemptions which flow from the plenary powers of legislative heads in list II of the 7th Schedule of the Constitution. In a federal polity, all the States having powers to grant exemption to specified class for limited period, such granting of exemption cannot be held to be contrary to the concept of economic unity. When all the States have such provisions to exempt or reduce rates the question of economic war between the States inter se or economic disintegration of the country as such does not arise. It is not open to any party to say that this should be done and this should not be done by either one way or the other. It cannot be disputed that it is open to the States to realise tax and thereafter remit the same or pay back to the local manufacturers in the shape of subsidies and that would neither discriminate nor be hit by article 304(a) of the Constitution. In this case and as in all constitutional adjudications the substance of the matter has to be looked into to find out whether there is any discrimination in violation of the constitutional mandate. Exercise of power under article 304(a) can be effective only if the tax or duty on goods imported from other States and the tax or duty imposed on similar goods manufactured or produced in that State is such that there is no discrimination. Hidayatullah, J. as the learned Chief Justice then was, observed, at p. 883 of the report, that article 304(a) imposes no ban but lifts the ban imposed by articles 30 1 & 303 subject to one condition. That article is enabling and prospective. Counsel for the respondents drew out attention to articles 38 & 39 of the Constitution. The striving for the attainment of the objects enshrined in these Articles is enjoined. For achieving these objects the States have neces sarily to develop themselves economically so as to 753 secure economic unity and to minimise the inequalities and imbalances between State and State and region and region. If the power to grant exemption has been conferred for achiev ing these objects on all, it is not possible to assail these as violative of article 304 as the latter article has to be interpreted in conjunction with others and not in isolation could validly classify new units producing edible oil as distinct and separate from other units and validly withdraw the exemption in relation to such units only. It is true that the afore said observations were made in the context different from article 304(a) but basically the concept of equality embodied in articles 304(a) & 16 are the same. article 14 enjoins upon the State to treat every person equal before the law while article 304(a) enjoins upon the State not to discriminate with respect to imposition of tax on imported goods and the locally made goods. vs State of Andhra Pradesh & Ors., (supra); Weston Electronics vs State of Gujarat, (supra) and West Bengal Hosiery Assn. & Ors. vs State of Bihar & Anr. , ; wherein it has been reiterated that difference in rate of sales tax is hit by articles 301 & 304 but the said conclusions were arrived at in the context of a controversy not in the present form and the question of exemption as such did not arise in these cases, as explained later. These cases were not at all concerned with granting of exemption to a special class for a limited period on specific conditions of main taining the general rate of tax on the goods manufactured by all those producers in the State who do not fall within the exempted category at par with the rate applicable to import ed goods as we have read these cases. Hence, it was not necessary in those decisions to consider the problem in its present aspect. If, however, the said power is exercised in a colourable manner intentionally or purposely to create unfavorable bias by prescribing a general lower rate on locally manufactured goods either in the shape of general exemption to locally manufactured goods or in the shape of lower rate of tax, such an exercise of power can always be struck down by the courts. That is not the situation in the instant cases. The aforesaid decisions, therefore, are not authorities for the general proposition that while, main taining the general rate at par, special rates for certain industries for a limited period could not be prescribed by the States. 754 There was another subsidiary question in these matters as to whether the legislation in the shape of notification is law within the meaning of article 304 of the Constitution. In The State of U.P. & Ors.vs Babu Ram Upad hya, [196] 12 SCR 679 at 702 this Court relied on a passage from Maxwell "On the Interpretation of Statutes" and held that a rule framed in the absence of any specific provision in the Act shall be deemed to be a part of the Act itself. In the State of Tamil Nadu vs Hind Stone etc.; , at 757 this Court relied upon the aforesaid dictum in the case of Babu Ram Upadhya, (supra) and distinguished the decision in State of Mysore vs H. Sanjeeviah, ; cited on behalf of the petitioner. This Court in Kailash Nath & Anr.vs State of U. P. & Ors., AIR 1957 SC 790 at 791 has held that the notification having been made in accord ance with the power conferred by the Statute has statutory force and validity and, therefore, exemption is as if con tained in the Act itself. The U.P. Sales Tax Act by section 24(4) confers rule making powers on the State Government. Section 25 confers powers on the State Government to issue notifications with retrospective effect. Hence, it cannot be disput ed that the exemption notification is the exercise of the legislative power. This Court in State of U.P. & Ors.vs Renusagar Power Co. & Ors., ; at 100 has held that the power to grant exemption is quasi legislative. In M/s Narinder Chand Hem Raj & Ors.vs Lt. Governor, Adminis trator, U.T., Himachal Pradesh & Ors., at 751 it was held that the exercise of the power is legisla tive whether it is by the legislature or by the delegate. In respect of the decisions aforesaid relied on behalf of the petitioner, on examination of the observations in India Cement 's case (supra) to the contrary to which stated hereinbefore on this aspect must be confined to the facts of that case alone as the said decision had no occasion to consider it in the full light. In the aforesaid view of the matter the challenge in these petitions to the aforesaid exemptions cannot, in our opinion, be upheld. The writ petitions dealing with the U.P. matters on the same conten tions, therefore, fail. Writ petition No. 665/88 being M/s Video Electronics Pvt. Ltd. & Anr. By that notification the State Government has differentiated between the manufacturers of electronics goods outside the State and within the State. Under section 5 of the Punjab General Sales Tax Act (hereinafter referred to as 'the Act '), the State of Punjab had been imposing sales tax @ 10% + 2% surcharge on electronics goods sold within the State irrespective of their manufacture. The State Govt. in pursuance of the powers conferred on it u/s 5 of the Act issued the notification date 11.12.1986 stating that the rate of sales tax payable by an electronic manufac turing unit existing in Punjab in cases of electronic goods specified in Annexure A of the petition within the State will be 1%. Thus the rate of sales tax was brought down from 10% (+ 2% surcharge) to 1% while for similar goods manufac tured outside the State and sold within the respondent State, the rate of sales tax remained 10% (+ 2% surcharge). It was contended that there was differentiation. In support of this contention the petitioners reiterate more or less the same submissions, as indicated before. It is true that there was difference in rate yet there was reason for this differentiation. The State Government in its counter affida vit has stated that a lower rate of tax i.e. to say 1% in the case of new units and 2% in the case of existing units has been levied to boost this industry and to stop the existing industry shifting to neighboring States. The pre vailing peculiar circumstances of Punjab were one of the factors indicated for the same. The lower rate, it was reiterated, was imposed in view of the peculiar circum stances and also to attract new entrepreneurs from other States and from within the State. It was contended that the said notification was issued in public interest in view of the peculiar position; and that while the States of Gujarat and Maharashtra are fully developed States, on the other hand, Punjab is comparatively a backward State in industry. Unless some incentives are given, the industries which have already shifted to other States, will have further deterring effects. Hence, in view of the situation the concessional rate was introduced and was not discriminatory. As mentioned hereinbefore, reliance was placed mainly on H. Anraj vs Govt of Tamil Nadu, (supra) to which one of us was a party. That was a decision dealing with lottery tick ets, and dealt with the question whether lottery tickets amounted to movable property so as to be within the purview of the Sale of Goods Act. But in relation to the question relevant to the present purpose it was reiterated that the real question is, whether direct and immediate result of the impugned notification was to impose an unfavourable and discriminatory tax burden on the imported goods (in those cases lottery tickets of other 756 States) when they are sold within the State of Tamil Nadu as against indigenous goods (Tamil Nadu Government lottery tickets) when these are sold within the State, from the point of view of the purchaser and this question had to be considered from the normal business of commercial point of view. It has to be reiterated that more or less all States used to issue and sell lottery tickets, hence, the lottery tickets from other States were specifically discriminated against in the sense that there was differentiation without any valid or justifiable reason. That would certainly work as deterrent. Trade, commerce and intercourse throughout the territory of India, come within article 301 of the Constitu tion. It prevents imposing on goods imported from other States a tax to which similar goods in the State are not subject so as to discriminate between the goods so imported and goods produced locally. In that light the decision in Anraj 's case has to be understood. The cases of India Cement & Ors. vs State of Andhra Pradesh & Ors., (supra); Weston Electronics vs State of Gujarat & Ors., (supra) and West Bengal Hosiery Assn. & Ors.vs State of Bihar & Anr., (supra) were cases where there was a naked blanket preference in favour of locally manufactured goods as against goods coming from outside the State. These cases, as we read these, dealt with a conferment of exemp tion without any reason or concession in favour of indige nous manufactured goods which was not available in respect of the goods imported into that State. In case, however, of U.P. as well as State of Punjab the provisions which we have examined, proceeded on a different basis. In these cases, it cannot be suggested, in our opinion, that there is discrimi nation against goods manufactured outside the State. In case of Punjab an Overwhelmingly large number of local manufac turers of similar goods are subject to sales tax and, there fore, the general statement that the manufacturers within the State are favoured against the manufacturers outside the State, is incorrect. Under the notifications in case of Punjab, only newly set up units are eligible to claim the benefits thereunder for a limited period of 5 years and that also only if they strictly comply with the terms and condi tions set out in the notification. It has to be reiterated that sales tax laws in all the States provide for exemption. It is well settled that the different entries in lists I, II and III of the 7th Schedule deal with the fields of legislation, and these should be construed widely, liberally and harmoniously. And these entries have been construed to include ancillary or inciden tal power. Power to grant exemption is inherent in all taxing legislations. Economic unity is a desired goal, economic equilibrium and prosperity 757 is also the goal. Development on parity is one of the com mitments of the Constitution. Directive principles enshrined in articles 38 & 39 must be harmonised with economic unity as well as economic development of developed and under developed areas. In that light on article 14 of the Constitu tion, it is necessary that the prohibition in article 301 and the scope of article 304(a) & (b) should be understood and construed. Constitution is a living organism and the latent meaning of the expressions used can be given effect to only if a particular situation arises. It is not that with chang ing times the meaning changes but changing times illustrate and illuminate the meaning of the expressions used. The connotation of the expressions used takes its shape and colour in evolving dynamic situations. A backward State or a disturbed State cannot with parity engage in competition with advanced or developed States. Even within a State, there are often backward areas which can be developed only if some special recentives are granted. If the incentives in the form of subsidies or grant are given to any part of units of a State so that it may come out of its limping or infancy to compete as equals with others, that, in our opinion, does not and cannot contravene the spirit and the letter of Part XIII of the Constitution. If there is none, it will amount to hostile dis crimination. Judge in this light, despite the submissions of Mr. Sanjay Parikh and Mr. Vaidyanathan, we are unable to accept the contentions that the petitioners sought to urge in this application. The next petition is W.P. No. 1124/88 Computer Graphics (P) Ltd. & Anr. vs Union of India & Ors., which challenges the concession given in favour of manufacturers in U.P. and Goa. The same contentions were reiterated for the reasons discussed hereinbefore. We are unable to accept this peti tion. It may be relevant to refer to Associated Tanners Vizianagram, A. P. vs C.T. 0. , Vizianagram, Andhra Pradesh & Ors., ; where it was stated that when a taxing statute was not imposing rates of tax on imported goods different from rates of tax on goods manufactured locally, article 304 had no application. In case an exemption was granted applying the same rate the resulting tax might be somewhat higher but that did not contravene the equality clause contemplated by article 304. In the instant writ petition in view of the terms of the notification impugned and the facts and the circumstances stated in the affidavit of the State Government as well as the interveners, Goa and Pondicherry, being comparatively under developed in electronic industry, in 758 our opinion, it cannot be said that there was violation of either Part XIII of the Constitution or Article 14 of the Constitution. This application must also, therefore, fail. Writ petition No. 70/89 Spartek Ceramics India Ltd. vs Union of India & Ors., under article 32 also challenges the notification under the and the U.P. Act as mentioned hereinbefore. In the state of facts as appearing, this petition also fails. We have considered the submissions and the statements made by the interveners in these matters. Writ Petition No. 761/89 Weston Electronics Ltd. & Anr. vs State of Punjab & Anr., dealing with the notifications issued by the State of Karnataka and writ petition No. 1140/88 M/s Survo Udyog Pvt. Ltd. & Anr. vs State of Bihar & Anr., deal with the same controversy and with similar notification. In view of the averments made which we have examined in detail on behalf of the concerned State Governments in the light of the principles we have reiterated before, we are of the opinion that the notifications impugned cannot be challenged and the petition cannot succeed. We have also considered writ petition No. 10 16/88 M/s Disco Electronics Ltd. & Anr.vs State of U.P. & Others, and in light of the facts and the circumstances and the aver ments made in the background of the principles reiterated, we are unable to sustain the challenge to the impugned notifications. In these matters we had the advantage of having the views of the interveners and we have considered the submissions made on their behalf. In the aforesaid light the intervention applications are allowed, submissions considered and the aforesaid writ petitions are dismissed but in the facts and the circum stances of the case, there will be no order as to costs. Y. Lal Petitions dismissed.

A common question of law having arisen for determination in these petitions filed under Article 32 of the Constitu tion, they are disposed of by a Common Judgment, though the petitioners dealers are different and carry on their busi ness in different states and have challenged the respective provisions of law by which their cases are governed. The petitioners in WP 803/88 carry on the business of selling cinematographic Idms and other equipments like projector, sound recording and reproducing equipments, X Ray films etc. in the State of U.P. and in Delhi. The petition ers receive these goods from their manufacturers outside the State of U.P. In U.P. there is a single point levy of Sales Tax. The State of Uttar Pradesh issued two notifications under section 4A of the Uttar Pradesh Sales Tax Act and under Section 8(5) of the Central Sales Tax Act exempting new units of manufacturers as defined in the Act in respect of the various goods for different periods ranging from 3 to 7 years, from payment of Sales Tax. The petitioners by these petitions challenge the constitutional validity of these Notifications. They have also challenged the constitutional validity of section 4A of the Uttar Pradesh Sales Tax Act and sections 8(5) of the Central Sales Tax Act, and the proceedings taken by the Respondent under section 5A of 732 the said Act. The case of the petitioners is that they are discriminated on account of these notifications as the manufacturers covered by these Notifications are entitled to sell the articles manufactured by them without liability to pay sales tax while the manufacturers in other states and non manufacturers of the same article selling the same goods in the State are liable to pay sales tax under the local Sales Tax Act as well as under the Central Sales Tax Act. Their contention, therefore, is that they became subject to gross discrimination and their business was crippled. In these premises the petitioners challenge the provisions as ultra vires the constitution being violative of the provi sions of Articles 301 to 305 of part III of the Constitution as also Articles 14 and 19 of the Constitution. The Respondents counter the assertion of the petition ers. According to them the contention put forward by the petitioners ignores the basic features of the Constitution and also the fact that the concept of economic unity may not necessarily be the same as it was at the time of the Consti tution making; the state which was technically and economi cally weak in 1950 cannot be allowed to remain in the same state of affairs. The state has to give subsidy and grant exemptions/concessions for the economic development of the state to new industries. It was urged that if all the states are economically strong or developed then only can economic unity as a whole be assured or strengthened. Dismissing the petitions, this Court, HELD: Sales Tax Laws in all the States provide for exemp tion. Power to grant exemption is inherent in all taxing Legislations. Economic unity is a desired goal. Development on parity is one of the commitments of the Constitution. Directive Principles enshrined in Articles 38 and 39 must be harmonised with economic unity as well as economic develop ment of developed and under developed area. [756H; 757A B] Taxes may sometime amount to restrictions but it is only such taxes as directly and immediately restrict trade that would fail within the mischief of article 301. [740E] See Atiabari Tea Co. Ltd. vs The State of Assam & Ors., ; and Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan & Ors., [1963] 1 SCR 491. The taxes which do not directly and immediately restrict or 733 interfere with trade, commerce and intercourse throughout the territory of India would therefore be excluded from the ambit of article 30 1 of the Constitution. It has to be borne in mind that sales tax has only an indirect effect on trade and commerce. [747F] In the instant case, the general rate applicable to locally made goods is the same as that on imported goods. Even supposing without admitting that Sales Tax is covered by article 301 as a tax directly and immediately, hampering the free flow of trade, it does not follow that it fails within the exemption of article 304 and it would be hit by article 30 1. Still the general rate of tax which is to be compared under article 304(a) is at par, and the same qua the locally made goods and the imported goods. [751G H] Concept of economic barrier must be adopted in a dynamic sense with changing conditions. What constitutes an economic barrier at one point of time often ceased to be so at anoth er point of time. It will be wrong to denude the people of the state of the right to grant exemptions which flow from the plenary powers of legislative heads in List III of the 7th Schedule of the Constitution. [752A B] Basically the concept of equality embodied in Articles 304(a) and 16 are the same. Article 14 enjoins upon the state to treat every person equal before the law while Article 304(a) enjoins upon the state not to discriminate with respect to imposition of tax on imported goods and the locally made goods. [753C] It is not that with changing times the meaning changes but changing times illustrate and illuminate the meaning of the expressions used. The connotation of the expressions used takes its shape and colour in evolving dynamic situa tions. [757B C] James vs Commonwealth of Australia, at 613; Firm A.T.B. Mehtab Majid & Co. vs State of Madras & Anr., ; ; A. Hajee Abdul Shakoor & Co. vs State of Madras; , at 225; State of Madras vs N.K. Nataraja Mudaliar, ; at 847; Andhra Sugars Ltd. & Anr. etc vs State of Andhra Pradesh & Ors., ; ; Bengal Immunity Co. Ltd. vs State of Bihar, at 754; State of Madhya Pradesh vs Bhailal Bhai & Ors., ; at 268 9; Rattan Lal & Co. & Anr. vs The Assessing Authority & Anr., ; at 557; India Cement & Ors. vs State of Andhra Pradesh & Ors. , ; ; Weston Electroniks & Anr. vs State of Gujarat & Ors., 568 at 571; C.A.F. Seeling Inc. vs Charles H. Baldwin, at 1038; Smt. Ujjam Bai vs State of U.P., [1963] 1 SCR 778 at 851; Coffee Board, Bangalore vs Joint Commercial Tax Officer, Madras & Anr. , ; at 156; V. Guruviah Naidu & Sons vs State of Tamil Nadu & Anr., ; at 1070; Kathi Raning Rawat vs The State of Saurashtra, ; ; Kalyani Stores vs The State of Orissa & Ors., ; ; Bharat General & Tex tiles Industries Ltd. vs State of Maharashtra, 72 STC 354; H. Anraj vs Government of Tamil Nadu, ; West Bengal Hosiery Assn. & Ors. vs State of Bihar & Anr. , ; ; State of U. P. & Ors. vs Babu Ram Upadhya, ; at 702; State of Tamil Nadu, vs Hind Stone etc.; , at 757; State of Mysore vs H. Sanjeeviah, ; ; Kailash Nath & Anr. vs State of U.P. & Ors. , AIR 1957 SC 790 at 791; State of U.P. & Ors. vs Renu sagar Power Co. & Ors., ; at 100; M/s Narinder Chand Hem Raj & Ors. vs Lt. Governor, Administrator, U.T., Himachal Pradesh & Ors., at 751 and Associ ated Tanners Vizianagram A.P.v. C.T.O., Vizianagram, Andhra Pradesh & Ors., ; , reffered to.

Civil Appeal No.169 of 1958. Appeal by special leave from the decision dated June 29, 1955, of the Labour Appellate Tribunal of India, Bombay, in Appeal (Bombay) No. 245 of 1955, arising out of the Award dated July 14, 1955, of the Industrial Tribunal, Bombay, in Reference (I.T.) No. 100 of 1954. 5 34 C. K. Daphtary, Solicitor General of India, Purshottam Tricumdas and I. N. Shroff, for the appellant. N. V. Phadke and K. R. Chaudhuri, for the respondents. October 16. The Judgment of the Court was delivered by GAJENDRAGADKAR J. Are workmen entitled to the double benefit of a gratuity scheme as well as retrenchment compensation? That is the main question which falls to be considered in the present appeal. The same question along with some other subsidiary points arises in some other appeals and so all of them have been grouped together and placed before us for disposal. We propose to deal with the main point in the present appeal and discuss the other points arising in the other appeals separately. This appeal by special leave arises from an industrial dispute between the Indian Hume Pipe Co. Ltd., Bombay (hereinafter called the appellant) and its workmen monthly rated including canteen boys employed under it (hereinafter called the respondents). The dispute was in regard to the claim for gratuity made by the respondents and it was referred to the tribunal in these words: " Gratuity employees should be paid gratuity on the scale and the conditions prescribed in the industrial tribunal 's award in Ref. (IT) No. 82 of 1950 dated August 13, 1951. It should also be paid to those whose services have been terminated by the management after the termination of the aforesaid award. " It appears that the respondents had raised an industrial dispute in 1950 which covered their claims for scale of pay, dearness allowance, provident fund and gratuity and it was referred to the adjudication of Mr. Thakore. On this reference Mr. Thakore made his award on August 13, 1951, which inter alia provided for a scheme of gratuity. Both the parties had gone in appeal against the said award but the appellate tribunal dismissed both the appeals and confirmed the award. On June 2, 1953, notice was given by the respondents terminating the said award and making a fresh demand for gratuity at 35 a higher rate. Conciliation proceedings were started but they failed; and so on July 1, 1954, the present reference was made. Before the tribunal the employees urged that the State Government had no jurisdiction to confine their demand to the scheme of gratuity as framed by Mr. Thakore, and they urged the tribunal to consider their claim for a revision of the said scheme. The tribunal held that its jurisdiction was limited by the terms of reference and it could not entertain any such plea; it also observed that even if it was open to the respondents to agitate for the revision of the said award there was not much chance of their succeeding in that demand. The appellant opposed the scheme of gratuity framed by the earlier award and contended that no gratuity should be paid to the workmen who would be entitled to receive retrenchment compensation under section 25F of the (hereinafter called the Act). This contention was negatived by the tribunal. It held that the respondents were entitled to claim both gratuity and retrenchment compensation. The tribunal then examined the financial position of the appellant and held that the gratuity scheme framed by the earlier award should be en forced subject to certain modifications specified by it. This award was challenged by the appellant before the Labour Appellate Tribunal; and it was argued that the respondents were not entitled to the double benefit of the gratuity scheme and the statutory retrenchment compensation. The appellate tribunal agreed with the view taken by the tribunal and rejected the appellant 's contention. It also examined the financial position of the appellant and held that it saw no reason to interfere with the discretion exer cised by the tribunal in granting " the same gratuity to the workmen in the case of retrenchment as in other cases ". Then the appellate tribunal considered the merits of the scheme sanctioned by the tribunal and made some changes and added one paragraph which had been included in the earlier award but had been omitted by the tribunal. This paragraph dealt with the cases of persons retrenched after the date of 36 reference but before the award came into operation, and it directed that in the case of such persons no additional gratuity shall be paid if they have already received unemployment or retrenchment compensation in excess of the gratuity awarded above; in other cases the difference alone shall be paid. It is against this award that the present appeal has been preferred. On the contentions raised in the tribunals below, the principal point which calls for our decision is whether a scheme of gratuity can be framed by industrial tribunals for workmen who are entitled to the benefits of 25F of the Act. This question has been frequently raised before industrial tribunals and has generally been answered in favour of the employees. In dealing with this question it is important to bear in mind the true character of gratuity as distinguished from retrenchment compensation. Gratuity is a kind of retirement benefit like the provident fund or pension. At one time it was treated as payment gratuitously made by the employer to his employee at his pleasure, but as a result of a long series of decisions of industrial tribunals gratuity has now come to be regarded as a legitimate claim which workmen can make and which, in a proper case, can give rise to an industrial dispute. Gratuity paid to workmen is intended to help them after retirement, whether the retirement is the result of the rules of superannuation or of physical disability. The general principle underlying such gratuity schemes is that by their length of service workmen are entitled to claim a certain amount as a retrial benefit. On the other hand retrenchment compensation is not a retirement benefit at all. As the expression " retrenchment compensation" indicates it is compensation paid to a workman on his retrenchment and it is intended to give him some relief and to soften the rigor of hardship which retrenchment inevitably causes. The retrenched workman is, suddenly and without his fault, thrown on the street and has to face the grim problem of unemployment. At the com mencement of his employment a workman naturally expects and looks forward to security of service 37 spread over a long period; but retrenchment destroys his hopes and expectations. The object of retrenchment compensation is to give partial protection to the retrenched employee and his family to enable them to tide over the hard period of unemployment. Thus the concept on which grant of retrenchment compensation is based is essentially different from the concept on which gratuity is founded. It is true that a retrenched workmen would by virtue of his retrenchment be entitled to claim retrenchment compensation in addition to gratuity; because industrial adjudication has generally taken the view that the payment of retrenchment compensation cannot affect the workmen 's claim for gratuity. In, fact the whole object of granting retrenchment com pensation is to enable the workman to keep his gratuity safe and unused so that it may be available to him after his retirement. Thus the object of granting retrenchment compensation to the employee is very different from the object which gratuity is intended to serve. That is why on principle the two schemes are not at all irreconcilable nor even inconsistent ; they really complement each other; and so, on considerations of social justice there is no reason why both the claims should not be treated as legitimate. The fact that they appear to constitute a double benefit does not affect their validity. That is the view which industrial tribunals have generally taken in a large number of reported decisions on this point. Let us now refer to some of these decisions and indicate very briefly the broad outlines of the development of industrial law on this subject. Whenever industrial tribunals deal with the employees ' claim for gratuity they consider the financial position of the employer before granting the employees ' demand for framing a gratuity scheme; it is only if they are satisfied that the financial condition of the employer is satisfactory and the burden of the gratuity scheme can be borne by him that they proceed to frame schemes of gratuity and thereby secure for the employees the retirement benefit in the form of gratuity. Though awards framing such schemes had been made for some 38 years before 1951, the question of framing a gratuity scheme was carefully examined by the Labour Appellate Tribunal in the case of The, Army and Navy Stores Ltd., Bombay, And Their Workmen (1). The scheme framed in this case directed the payment of gratuity on the following scale: " (1) On the death of an employee while in the service of the company or on his becoming physically or mentally incapable of further service 'month 's salary or wages for each year of continuous service, to be paid to the disabled employee or, if he has died, to his heirs or legal represen tatives or assigns. (2) On voluntary retirement or resignation of an employee after 15 years continuous service 1/2 month 's salary or wages for each year of continuous service. (3) On termination of service by the company month 's salary or wages for each year of completed service. " Under this scheme gratuity was not, however, payable to any employee dismissed for misconduct. This scheme has been generally treated as a model scheme in all subsequent disputes about gratuity. It also appears that the benefit of gratuity schemes has been generally given even to workmen whose services have been terminated and who have thereby become entitled to retrenchment compensation also. In Bangalore Woollen, Cotton and Silk Mills Co. Ltd., And Binny Mills Labour Association (2) the Labour Appellate Tribunal gave permission to the company to retrench 179 workmen subject to the condition that the workmen sought to be retrenched shall be paid by way of retrenchment relief a sum equivalent to one month 's basic wage for every year of completed service in the company, and the basic wage on which such calculation is to be made shall be the last basic wage prior to the grant of this permission. It also made it clear that the grant of such retrenchment relief shall not in any way tend to prejudice the issue (1) (2) 39 of a gratuity scheme which was before the adjudicator, and to which the adjudicator was directed to apply an altogether independent mind unaffected by the decision of the Labour Appellate Tribunal. It may, however, be conceded that sometimes, though rarely; tribunals have thought it fit not to grant gratuity in cases of workmen whose services have been terminated on the ground that they would be entitled receive compensation under the Act. But it is not disputed that this dissenting note has been struck only in a few cases (Vide Chemical, Industrial and Pharmaceutical Laboratory Ltd., And Their Workmen (1). Speaking generally, subject to the capacity of the employer to pay, workmen have been given the benefit of both retrenchment compensation and gratuity by industrial awards prior to the enactment of section 25F of the Act. This question was elaborately considered by the Labour Appellate Tribunal in the appeals against the award of All India Industrial Tribunal (Bank Disputes) where it has been held that the award of retrenchment compensation cannot adversely affect the claim for gratuity. The two claims are made for entirely different reasons and in a proper case both the claims can be awarded. The measure of compensation, however, varied from case to case, and the awards made in that behalf naturally were not always uniform. But it does appear that the determination of the quantum of retrenchment compensation was generally linked with the period of the past service rendered by the retrenched workman. In Rashtriya Mill Mazdoor Sangh and Gold Mohur Mills (2) the Labour Appellate Tribunal accepted the view that the quantum of compensation payable to retrenched workmen should be calculated at the rate of 10 days ' basic wages plus dearness allowance for each year of service; and it also held that no maximum limit should be put on this quantum, In the Bombay Gas Co. Ltd., And Their Workmen(3) a detailed scheme was framed for the computation of the retrenchment compensation. Those who had completed a year 's service but less than three years ' service (1) (2) , (3) 40 got wages for 26 days with dearness allowance, and those who had completed three years of service or more got 26 days ' wages with dearness allowance for each year of service subject to a maximum of 104 days ' Wages with dearness allowance. In The National Industrial Works And Their Workmen (1) a still more elaborate scheme was framed for. determining the quantum of compensation. Thus it would be seen that the result of industrial decisions was that workmen, were held entitled both to gratuity and compensation on retrenchment and the amount of retrenchment compensation was measured by reference to the period of service rendered by the retrenched employee. It may, however, be stated that industrial decisions on the twin topics of gratuity and retrenchment compensation were not always uniform, and sometimes they disclosed an element of uncertainty and perhaps even ambiguity in their approach. While this was the state of industrial decisions on this point, Ordinance V was promulgated on October 24, 1953. By section 25E the Ordinance prescribed conditions precedent to retrenchment of workmen. One of the conditions thus prescribed by section 25E(b) was that before a workman is retrenched he must be paid at the time of retrenchment, gratuity which shall be equivalent to 15 days ' average pay for every completed year of service or any part thereof in excess of six months. This Ordinance was followed by Act 43 of 1953, which is deemed to have come into force on October 24, 1953. It is by this amending Act that section 25F has been introduced in the Act. Section 25F(b) is in the same terms as section 25E(b) of the Ordinance, except that for the word 'gratuity ' the expression "retrenchment compensation " has been substituted, We may incidentally mention the fact that in the statement of aims and objects of the Act it was observed that " in regard to retrenchment the bill provides that a workman who had been in continuous employment for not less than one year under the employer shall not be retrenched until he has been given one month 's notice in writing or one, (1) 41 month 's wages in lieu of such notice, and also a gratuity calculated at 15 days ' average pay for every completed year of service or any part thereof in excess of six months ". The appellant 's case is that after section 25F was enacted there is no longer any scope for framing gratuity schemes in addition to the statuory retrenchment compensation for retrenched employees. In support of this contention the appellant sought to rely on the fact that both in section 25E(b) of the Ordinance and the statement of aims and objects of the amending Act, the word ' gratuity ' has been used and not retrenchment compensation. It is obvious that for construing section 25F the words used in the statement about the aims and objects of the Act are not relevant; and in regard to the use of the word ' gratuity ' in section 25E(b) of the Ordinance it is significant that the said word has been deliberately omitted and the words "retrenchment compensation" have been used in its place by section 25F. Therefore it would not be possible to determine the character of the payment statutorily prescribed by section 25F by reference to the word 'gratuity ' used either by the Ordinance or in the statement about the aims and objects of the Act. If we have to decide the character of the payment merely by the words used in describing it, then the words used section 25F are retrenchment compensation " and not gratuity. But apart from the mere use of words there can be no doubt that section 25F is intended to provide compensation to retrenched workmen solely on account of the difficulties which they have to face on their retrenchment. It is well known that at the time when the Ordinance was issued the problem of retrenchment had become widespread and acute and Legislature thought it necessary to step in and make a statutory provision for the payment of adequate retrenchment compensation. Legislature knew that retrenchment compensation was being awarded by industrial tribunals; but it must have thought that in determining the amount of compensation the tribunals considered a variety of relevant factors with the result that there was no uniformity or certainty in the matter; and so 6 42 it decided to standardise the payment of compensation by prescribing a statutory rule in that behalf. The enactment of section 25F thus merely standardises the payment of retrenchment compensation and nothing more. If retrenchment compensation could be claimed by the employees in addition to gratuity prior to the enactment of section 25F there is no reason why a similar claim cannot be made by them subsequent to its enactment. It is then urged that in determining the amount of compensation payable to a retrenched workman the length of his past service has been taken into account, and it is pointed out that schemes of gratuity also provide for payment of gratuity on similar considerations and adopt a similar measure. As we have already pointed out, even before section 25F was enacted tribunals were adopting similar methods in determining the amount of retrenchment compensation, and so the mere fact that the length of the past service of the retrenched workman is made the basis for computing retrenchment compensation cannot clothe retrench ment compensation with the character of gratuity. The claims for retrenchment compensation and gratuity proceed on different considerations and it would be impossible to bold that the grant of one excludes the claim or grant of the other. It is true that a retrenched workman would get both the retrenchment compensation and gratuity, and in a sense, on his retrenchment he would get more than what other workmen with corresponding length of service would get on their retirement; but it must be remembered that the retrenched workman gets compensation because involuntarily he has been forced to face unemployment, and it is to enable him to tide over the period of unemployment that retrenchment compensation is paid to him. So, on the general contention raised before us that the employees are not entitled to claim the double benefit of gratuity and retrenchment compensation there can be only one answer,and that is that there is no conflict between the two claims, and industrial tribunals are right in recognising that both claims can be entertained and 43 granted, and reasonable gratuity schemes can and should be framed even after the enactment of section 25F in the Act. In this connection it would be relevant to refer to the definition of wages under section 2(rr) of the Act inasmuch as it excludes any gratuity payable on the termination of the employee 's service. This shows that Legislature was aware that gratuity can be claimed by employees and is often awarded to them. If Legislature had intended that the statutory retrenchment compensation provided for by section 25F should affect the employees ' claim for gratuity it would have expressly made a suitable provision in that behalf. Legislature makes such provisions when it thinks necessary to do so. Section 17 of the Employees ' Provident Funds Act, 1952 (Act 19 of 1952), for instance, confers on the appropriate Government power to exempt from the operation of all or any of the provisions of the scheme, establishments which have already introduced provident fund benefits which, on the whole, are not less favourable to the employees than the benefits provided under this Act. In the absence of any such provision in the it would be unreasonable to hold that the mere enactment of section 25F either ousts the jurisdiction of industrial tribunals to entertain claims for gratuity schemes or makes it improper or unjust to frame such schemes for all employees including those who are retrenched. So far we have dealt with the general question as it arose on the contentions of the parties; but in fairness we must add that the learned Solicitor General conceded that he could not urge that, as a matter of law, the point raised by his client should be answered in his favour. He, however, strenuously urged that in framing gratuity schemes industrial tribunals should make appropriate provision for giving gratuity to retrenched workmen on a basis different from that on which gratuity to other workmen is calculated. The argument is that since the retrenched workmen get statutory compensation on a very liberal scale they should not get gratuity at the rates fixed by the scheme for other workmen. They may and should get gratuity 44 but at a lesser rate and on less generous terms and conditions. Indeed he suggested that we should make suitable amendments in the gratuity scheme framed by the appellate tribunal in that behalf. We do not think we can accede to this request. Whether or not a twofold scheme of gratuity should be framed, one applicable to retrenched workmen and the other to the rest, is a matter which may, if necessary, be raised before the tribunal in a proper case. Besides it may be pertinent to observe that the question as presented in this form is not one of general importance, for in the present state of our economy which has received and is receiving the stimulus of national plans, our industries may not have to face the problem of retrenchment on an appreciable or extensive scale; but apart from this consideration we cannot entertain or decide the point raised by the learned Solicitor General in an appeal under article 136. Before we part with this appeal, we ought to refer to another aspect of the matter which our present decision does not consider or decide. It is likely that gratuity schemes framed by consent or by awards may provide for payment of compensation to retrenched workmen either in lieu of or in addition to gratuity ; in such cases the question as to whether the retrenched workmen can claim the benefit of such a scheme in addition to the retrenchment compensation under section 25F would depend on the construction of the material terms of the relevant scheme considered in the light of the provisions of section 25F of the Act. In the present appeal we are not called upon to consider such a question. Therefore, our decision has and can have no reference to cases which would fall to be decided under section 25F of the Act. In the result the appeal fails and is dismissed with costs. Appeal dismissed.

Section 25F(b) of the , provided: "No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until . (b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days ' average pay for every completed year of service or any part thereof in excess of six months . " The dispute between the appellant company and its workmen related to the claim for gratuity made by the latter and it was the appellant 's contention that in the scheme of gratuity framed by the Tribunal no gratuity should be paid to workmen who would be entitled to receive retrenchment compensation under section 25F of the . Before section 25F was introduced in the Act by Act 43 of 1953, workmen were given the benefit of both retrenchment compensation and gratuity by industrial awards, but the decisions were not always uniform. Ordinance V was promulgated on October 24, 1953, by section 25E(b) of which it was provided that before a workman was retrenched he must be paid at the time of retrenchment gratuity which shall be equivalent to 15 days ' average pay for every completed year of service or any part thereof in excess of six months. The 33 Ordinance was followed by Act 43 of 1953, which was deemed to have come into force on October 24, 1953; and in the statement of aims and objects of the Act it was said " that a workman . shall not be retrenched until he has been given one month 's notice in writing or one month 's wages in lieu of such notice, and also a gratuity . ". Section 25(F)(b) of the Act was in the same terms as section 25E(b) of the Ordinance,, except that for the word CC gratuity " the expression " retrenchment compensation " was substituted. The appellant 's case was that after section 25F was enacted there was no longer any scope for framing gratuity schemes in addition to the statutory retrenchment compensation for retrenched employees on the grounds (1) that both in section 25E(b) of the Ordinance and the statement of aims and objects of the amending Act, the word "gratuity" had been used and not retrenchment compensation, (2) that in determining the amount of compensation payable to a retrenched workman the length of his past service had been taken into account, and schemes of gratuity also provide for payment of gratuity on similar considerations and adopt a similar measure, and (3) that a retrenched workman would get both retrenchment compensation and gratuity and so get more than what other workmen with corresponding length of service would get on their retirement. Held: (1) that for construing S, 25F of the , the words used in the statement about the aims and objects of the Act are not relevant and that the character of the payment prescribed by the section could only be determined by the expression " retrenchment compensation used therein ; and, (2) that in the absence of any provision in the excluding the claim or grant of gratuity the mere enactment of section 25F cannot oust the jurisdiction of industrial tribunals to entertain claims for gratuity schemes or make it improper or unjust to frame such schemes for all employees including those who are retrenched. The object of granting retrenchment compensation is to enable the workman who is given partial protection to tide over the period of unemployment, and to keep his gratuity safe and unused so that it may be available to him after his retirement. The two claims complement each other, and the fact that they appear to constitute a double benefit cannot affect their validity.

Civil Appeal No. 404 of 1984. Appeal by Special leave from the Judgment and Order dated the 11th July, 1983 of the Patna High Court in C.W.J.C. No. 623 of 1983. Dr. L.M. Singhvi, Mrs. Lakshmi Kant Pande & S.K. Sinha, for the Appellant. D. Goverdhan & B.B. Singh for the Respondents. The following Judgments were delivered FAZAL ALI, J. The most difficult and delicate task of our founding fathers while framing the Constitution of the largest democracy in the world was to protect, preserve and safeguard the interests of the minorities and the backward classes in order to retain the secular nature of our Constitution. Perhaps they feared that a time may come when the overwhelming majority may overshadow or dominate, devour of destroy the educational, cultural and social rights of the minorities and wreck their individuality and personality. It was this central theme that runs through the entire Constitution which has provided sufficient safeguards to protect and preserve the minority educational institutions which is the most important and vocal medium through which this section of the society can speak and seek to redress its grievances. In this appeal we are merely concerned with the rights and obligations of the State for the protection of minority institutions and for this avowed purpose article 30 was enshrined in our Constitution so that they may not suffer from a sense of inferiority complex and are able to through themselves into the main stream of the economic and political life of the country so as to march forward with the temper of the times and the needs of the nation Although article 30 is not included in Part II of the Indian Constitution, which guarantee certain fundamental rights. yet this Court starting from the Kerala Education Eill 's case. Which is the locus classicus on the point in issue, right up to the case of The Ahmedabad St. Xaviers College Society & Anr, etc. vs State of Gujarat & Anr. and ending with All Sainis High School, Hyderabad & Ors. vs Government of 415 Andhra Pradesh & Ors. has clearly recognised that running of minority institutions is also as fundamental and important as the rights conferred on the other citizens of the country. Perhaps the only difference is that the rights contained in article 30 have an independent sphere of their own. A close scrutiny and study of the various decisions of this Court reveal that the freedoms guaranteed by article 30 are also elevated to the status of a full fledged fundamental right within the field in which they operate. In other words, any State action which in any way destroys, curbs or interferes with such rights would be violative of article 30. In the instant case we are mainly concerned with the rights, privileges and status of minority institutions. In dwelling on these matters four important aspects or facets have been considered by this Court, viz.: (1) right of the minority institutions to get aid from the Government, (2) right to get affiliation from the Universities, (3) nature and extent of the autonomy which such institutions enjoy in their internal discipline and administration, and (4) right to be protected from undue or repeated interference in the independence of the institutions in the garb of achieving excellence in the standard of education. The first question to be determined is whether the minority institutions have a fundamental right to get aid from the Government or affiliation from the Universities as a matter of course. In other words, the question posed is whether the right to affiliation or to not so as to violate article 30. Technically speaking the answer to this question is in the negatives but it must be stressed that the refusal to give aid or affiliation by the statutory authorities without just and sufficient grounds amounts to violation of the fundamental freedoms enshrined in Art 30 of the Constitution. If the Government withholds giving aid or a university refuses to grant affiliation, the direct consequence would be to destroy the very existence of the Institution itself because there may be a number of minority institutions which may not exist without the Government aid and a large 416 number of students admitted to these institutions, in the absence of affiliation, will be deprived of acquiring higher academic status which will not only be a loss to the institution but a loss to the nation itself. It is for this purpose that Art, 30 was inserted in the Constitution. In the present case, we would like to confine our judgment only to the question of refusal of affiliation to a minority institution by the State and the University. To begin with, in Kerala Education Bill 's case (supra), Das, C.J. speaking for the majority (Venkatarama Aiyar, J. having given his separate judgment) observed thus; "The minorities evidently desire that education should be imparted to the children of their community in an atmosphere congenial to the growth of their culture. Our Constitution makers recognised the validity of their claim and to allay their fears conferred on them the fundamental rights referred to above . They also desire that scholars of their educational institutions should go out in the world well and sufficiently equipped with the qualifications necessary for a useful career in life. But. . the scholars of unrecognised schools are not permitted to avail themselves of the opportunities for higher education in the University and are not eligible for entering the public services. Without recognition, therefore, the educational institutions established or to be established by the minority communities cannot fulfil the real objects of their choice and the rights under Art, 30 (1) cannot be effectively exercised. The right to establish educational institutions of their choice must, therefore, mean the right to establish real institutions which will effectively serve the needs of their community and the scholars who resort to their educational institutions. There is, no doubt, no such thing as fundamental right to recognition by the State but to deny recognition to the Educational institutions except upon terms tantamount to the surrender of their constitutional right of administration of the educational institutions of their choice is in truth and in effect to deprive them of their rights under article 30(1). We repeat that the legislative power is subject to the fundamental rights and the legislature cannot indirectly take away or abridge the fundamental rights which it could not do directly and yet that will be the result if the said Bill containing any offending clause becomes law." (Emphasis ours) The observations and the ratio of this case were fully affirmed 417 and expounded by this Court in a 9 Judge Bench decision in St. Xaviers College case (supra) where all the Judges speaking in the same strain held that withholding of aid or affiliation in such a manner as to destroy or efface the autonomy and individuality of a minority institution violates article 30. In this connection, the Judges by separate judgements made the following observations: "The consistent view of this Court has been that there is no fundamental right of a minority institution to affiliation. An explanation has been put upon that statement of law. It is that affiliation must be a real and meaningful exercise for minority institutions in the matter of imparting secular education. Any law which provides for affiliation on terms which will involve abridgement of the right of linguistic and religious minorities to administer and establish educational institutions. of their choice will offend Article 30 (1). The educational institutions set up by minorities will be robbed of their utility if boys and girls cannot be trained in such institutions for University degrees. Minorities will virtually lose their right to equip their children for ordinary careers if affiliation be on terms which would make them surrender and lose their rights to establish and administer educational institutions of their choice under Article 30. . The establishment of a minority institution is not only ineffective but also unreal unless such institution is affiliated to a University for the purpose of conferment of degrees on students. . . . . . . Affiliation of minority institutions is intended to ensure the growth and excellence of their children and other students in the academic field. Affiliation mainly pertains to the academic and educational character of the institution." (Ray, C.J.) "We agree with the judgment of Hon 'ble the Chief Justice just pronounced and with his conclusions that sections 40, 41, 33A(1) (a), 33A(1)(b), 51A and 52A of the Act violate the fundamental rights of minorities and cannot, therefore, apply to the institutions established and administered by them. . . . . . The right under article 30 cannot be exercised in vacuo. Nor 418 would it be right to refer to affiliation or recognition as privileges granted by the State. In a democratic system of Government with emphasis on education and enlightenment of its citizens, there must be elements which give protection to them. The meaningful exercise of the right under article 30(1) would and must necessarily involve recognition of the secular education imparted by the minority institutions without which the right will be a mere husk. This Court has so far consistently struck down all attempts to make affiliation or recognition on terms tantamount to surrender of its rights under article 30(1) as abridging or taking away those rights. Again as without affiliation there can be no meaningful exercise of the right under article 30(1), the affiliation to be given should be consistent with that right. nor can it indirectly try to achieve what it cannot directly do." (Jaganmohan Reddy, J.) I am of the view that it is permissible for the State to prescribe reasonable regulations like the one to which I have referred earlier and make it a condition precedent to the according of recognition or affiliation to a minority institution. It is not, however, permissible to prescribe conditions for recognition or affiliation which have the effect of impairing the right of the minority to establish and administer their educational institutions. Affiliation and recognition are, no doubt, not mentioned in article 30(1) position all the same remains that refusal to recognize or affiliate minority institutions unless they (the minorities) surrender the right to administer those institutions would have the effect of rendering the right guaranteed by article 30(1) to be wholly illusory and indeed a testing illusion. . . . . . . What is said above with regard to aid or recognition applies equally to affiliation of a college to the University because but for such affiliation the student will not be able to obtain a University degree which is recognized as a passport to several professions and future employment in Public Service. . . . . . If the conversion of affiliated colleges of the minorities 419 into constituent colleges contravenes article 30(1), the fact that such conversion is in pursuance of a scheme which permits the grant of autonomy to an individual college would not prevent the striking down of the impugned provision." (Emphasis ours) (Khanna, J.) "Over the year, this Court has held that without recognition or affiliation, there can be no real or meaningful exercise of the right to establish and administer educational institutions under Article 30(1). . . . . . The heart of the matter is that no educational institution established by a religious or linguistic minority can claim total immunity from regulations by the legislature or the university if it wants affiliation or recognition; but the character of the permissible regulations must depend upon their purpose. As we said, such regulations will be permissible if they are relevant to the purpose of securing or promoting the object of recognition or affiliation." (Mathew, J.) "It is true that, if the object of an enactment is to compel a minority Institution, even indirectly, to give up the exercise of its fundamental rights, the provisions which have this effect will be void or inoperative against the minority Institution, The price of affiliation cannot be a total abandonment of the right to establish and administer a minority Institution conferred by Art, 30(1) of the Constitution. This aspect of the matter, therefore, raises the question whether any of the provisions of the Act are intended to have that effect upon a minority Institution. Even if that intention is not manifest from the express terms of statutory provisions, the provisions may be vitiated if that is their necessary consequence or effect." (Beg, J.) "However, in case of an affiliating University affiliation cannot be denied to a minority institution on the sole ground that it is managed by a minority whether based on religion or language or on arbitrary or irrational basis. Such a denial would be violative of articles 14 and 15(1) and will be struck 420 down by courts. Again, Art, 13(2) prohibits the State from taking away or abridging the right under Art, 30(1). Since the State cannot directly take away or abridge a right conferred under article 30(1), the State cannot also indirectly take away or abridge that right by subjecting the grant affiliation to conditions which would entail the forbidden result." (Diwedi, J.) On a careful and detailed review of the cases cited above, the following position emerges; (1) that while Art, 30 undoubtedly seeks to preserve the religious freedom, autonomy and its individuality; there is no fundamental right under which an institution can claim either aid or affiliation as a matter of right. It is permissible for the State or the University, as the case may be, to lay down reasonable conditions to maintain the excellence of standard of education but in the garb of doing so, refusal to grant affiliation cannot be made a ruse or pretext for destroying the individuality and personality of the said institution. If this is done, then apart from being wholly arbitrary and unreasonable it would amount to a clear infraction of the provisions of Art, 30 because what cannot be done directly is done indirectly. (2) While the State or a University has got an absolute right to insist on certain courses of study to be followed by institutions before they could be considered for affiliation but these conditions should not in any way take away the freedom of management or administration of the institution so as to reduce it to a satellite of the University or the State. This is wholly impermissible because such a course of action directly violates article 30 of the Constitution. (3) While imposing conditions before granting affiliation, as indicated above, the State or the University cannot kill or annihilate the individuality or personality of the institution in question by insisting on following a particular kind of syllabus or a course of study which may be directly opposed to the aims, objects and ideals sought to be achieved by the institutions. 421 (4) There is a very thin line of distinction between withholding of affiliation for a particular purpose on extraneous grounds so as to subject the institution to rigorous orders, edicts or resolutions which may run counter to the dominant purpose for which the institution has been founded, and insisting on genuine and reasonable conditions to be imposed in the larger interest of education. Thus, all the authorities mentioned above clearly laid down that (while affiliation itself may not be a fundamental right but refusal of affiliation on terms and conditions or situations which practically denies the progress and autonomy of the institution is impermissible as being violative of article 30 of the Constitution.) It is not necessary for us to dwell on the other aspects of the matter because we are not concerned with them in this particular case. We now proceed to discuss the facts of the present case which, we are constrained to observe, reveal a most distressing and disturbing attitude exhibited by the University and the Government of Bihar as well. In fact, the reason and the motive for refusing affiliation to the Milli Talimi Mission Bihar, Ranchi are so obvious and manifest that even the Standing Counsel for the State of Bihar, despite his best efforts, found himself unable to support the action of the University. We are indeed amazed how the respondents have behaved in filing their affidavits in the highest court of the land and have violated the express orders of this Court with impunity. In order to buttress what we have said, it may be necessary to give a short history of the Institution in question. The Institution in dispute, Milli Talimi Mission Bihar, Ranchi, was started as a Teachers Training College under a Society which was established as for back as 1972, though the College itself was established and started in July 1977. On 22.9.1977 the Institution made an application to the Government for grant of affiliation or recognition of the same in response to which a most extraordinary order was passed by the Government directing the Universities for refusing affiliation on the strange ground that all proposals for affiliation by the Non Government Teachers Training Colleges be rejected and that no student be allowed to appear as a private candidate. However, in the case of minority institutions the State Government in sub para (3) of paragraph (1) stated thus: 422 "(3) The above decision as described vide decision nos. (1) and (2) above shall not be applicable in cases of colleges run by the minority community. Government decision in this regard to their cases shall be intimated separately. " In view of the above, it was incumbent on an institution to prove that it was a minority institution before it could be granted affiliation. Thereafter, on 24.2.1978 the appellants filed an application before the Ranchi University for grant of affiliation. This was followed by issue of Bihar non Government Teachers Training College Ordinance on June 5, 1978. On June 15, 1978 the Government wrote to the Ranchi University for inspection of the appellant 's College. On 13.8.1979 the Government notified that the decision regarding affiliation would be governed by its circular dated 1.10.1973 (Annexure B), which laid down certain conditions for grant of affiliation, and that with regard to the minority institutions a final decision would be taken later. Thereafter, a writ was filed in the Patna High Court where it was decided that section 2 of the Ordinance, referred to above, would not apply to minority training colleges. On 6.2.1980 Joint Secretary to the Government of Bihar sent letters to the Ranchi University and the Deputy Commissioner, Ranchi for inspection of the appellants ' college. It would appear that although the Institution applied for affiliation in 1977 and claimed to be a minority institution, which was never disputed at any point of time, yet it took three years for the Government to take a decision about affiliation of the appellant 's college. On 5.3.1980, the University authorities inspected the appellants ' college and recommended its affiliation which was followed by a report by the District Development Officer, Ranchi on 30.6.1980 recommending affiliation. But, despite these facts no final decision was taken by the Government as a result of which the appellants had to move the High Court again for directing the Government to grant affiliation and the High Court gave a direction to the Government to decide recognition and affiliation of the appellants ' college within a specified time. On 3.11.80, the Government granted recognition and approval for affiliation for three sessions only, i.e., 1977 78, 1978 79 and 1979 80. On 10.11.1980, the University wrote to the Government recommending grant of affiliation to the appellants ' college. On 22.11.1980, the appellants applied for grant of permanent affiliation. But, somehow or the other, on 27.11.80, for undisclosed reasons, 423 the Government passed a strange order cancelling the recognition and approval for affiliation granted to the appellants ' college vide its letter dated 3.11.80. This order was challenged before the High Court which quashed the same on 18.5.81. Thereafter, on 17.8.81 the State of Bihar filed a special leave petition before this Court which was dismissed on 30.11.81. However, on 7.9.81 three minority colleges, alongwith the appellants ' college, were granted recognition and affiliation by the Government. Ultimately, the High Court had to be moved again which directed the State Government to dispose of the application of the appellants for permanent recognition which was filed by them on 22.11.80. On 16.9.82, the Education Commissioner, Bihar again, made a recommendation for grant of affiliation to the appellants ' college, which may be extracted thus: "In this connection the notings of the Joint Secretary may kindly be seen at pages 62 64. Also the Judgment of the High Court be seen at page 137 according to which the restrictions of the Ordinance is not applicable to Minorities Institutions. In addition to this, this institution has also been got inspected in which the local authorities were present. There is unanimous recommendation that this training institution be affiliated. The recommendation of the University may kindly be seen at p. 150. Accordingly, this college be temporarily granted recognition and affiliation for the sessions 1980 81 to 1982 83 for the present. " A perusal of the above recommendation shows that the Institution in question was inspected in the presence of the local authorities as also the University authorities who unanimously recommended that the Institution was a minority institution and should be granted affiliation and recognition at least for the session 1980 81 to 1982 83 Despite this, nothing tangible seems to have happened which compelled the appellants to file another writ petition in the High Court on 3.5.1983 for examination of the students of the appellants ' college who had passed the 1982 83 session. But the writ petition was dismissed by the High Court in limine. Hence, this appeal by special leave to this Court. After leave was granted we directed the respondents to produce exhibit J. (Education Commissioner 's recommendation) and the data on 424 the basis of which the concerned authorities had recommended that affiliation should be granted to the appellants college but till today no attempt has been made to produce those documents and the learned counsel for the State of Bihar was unable to give any explanation for this most extraordinary action on the part of the State Government. The State has filed an affidavit raising all sorts of pleas which could not be supported by the counsel for the State. It would appear that practically no reasons were given by the State as to why despite the recommendations of several authorities, which were made after a full and proper inspection, the affiliation was refused. In paragraph 7 of one of the affidavits filed by the respondents it is mentioned that before grant of affiliation, the following conditions must be fulfilled by an institution: (a) that there must be full time qualified Principal and Lecturers in proportion of 1: 15; (b) the institution must have a recognised High School attached to it; (c) it must have sufficient land of its own to provide adequate accommodation for classrooms, hostels, play grounds, residences of lecturers, gymnasium, canteen, etc., and the college must run during the day time like the schools; (d) the admission registers, attendance registers to be properly maintained; (e) that in no case it will charge capitation fee or any tuition fee from students. (f) that there should be residential accommodation for at least one fourth of the staff. (g) that hostel accommodation to at least one fifth of the students is provided; (h) that there should be a stable source of income to run the college. " It is manifest that if these conditions were fulfilled then affiliation could be granted as a matter of course on the findings and decision taken by the Government itself. In reply to the affidavit filed by the 425 appellants, the defence of the State was that after inspection of the Institution it was found by a team of Inspectors that the Institute suffered from the following infirmities: "(i) There were no full time qualified Principal or Lecturers. (ii) That there was no recognised school attached to it. (iii) The college runs during evening hours which makes impracticable for practice classes in schools which run during day time. (iv) The college had no building of its own. (v) The library and laboratory were not properly maintained. " It is rather strange that while a previous expert Committee after inspecting the said Institute found it in order but subsequently the Government without referring to the data submitted by the expert Committee, which was the basis of exhibit J. seems to have suddenly given a go bye to the same and taken the defence that in view of the defects and non fulfilment of the conditions it was not possible to grant affiliation without even mentioning in what manner and to what extent the recommendation of Education Commissioner and the materials on which it was based was wrong and why the five new conditions were sought to be imposed. Despite repeated orders of this Court to the respondents to produce the report of the Education Commissioner and the details thereof, the same was not done and a belated attempt was made to show that there were certain defects in the Institution. In view of the non production of the most important and decisive material we are unable to accept the subsequent affidavit of the respondents which is nothing but an afterthought. The State Government in its counter affidavit has stated that it was prepared to grant affiliation to the appellants ' college on fulfilling certain conditions. We are however, satisfied that this is nothing but a pretext or a smoke screen to cloud the real issue. Indeed, if the Government meant business it should have the courage to produce the report on which exhibit J. was based, which has been deliberately suppressed despite our orders to produce the same. We are, therefore, compelled to draw an adverse inference against the State 426 Government to the effect that if the materials on which the report was based had been produced it would have exploded the case of the Government and disclosed the real state of affairs, viz, that the appellants Institute does fulfil all the conditions imposed by the State. Thus, the position is that the State has refused to grant affiliation on purely illusory grounds which do not exist and failed to consider the recommendation of the Education Commissioner which was made after full inspection for grant of affiliation. In other words, the affiliation was refused without giving any sufficient reasons and such a refusal contravenes the provisions of article 30 of the Constitution. For the reasons given above, we find that this is a fit case where this Court should step in to strike down the Government action which is violative of article 30 of the Constitution and which does not fall within the guidelines indicated in the various authorities cited in our judgment. The heart of the matter is that as the Government did not like the recommendation of the Education Commissioner and was not prepared to grant affiliation for undisclosed reasons, the act of the Government was a colourable exercise of jurisdiction which deprived the appellants ' Institution of its constitutional rights. Normally, this Court does not grant costs in such cases but having regard to the manner in which the State Government has behaved and exhibited its reluctance to perform a constitutional duty and has also tried to disobey our orders for production of certain documents, we must impose a heavy cost on the State. We, therefore, allow this appeal with costs quantified at Rs. 5,000 (Rupees five thousand only) to be paid to the appellants within three months from today, set aside the Order of the High Court dismissing the writ petition in limine as also the Order of the Government refusing affiliation and peremptorily direct the Government to grant affiliation to the appellants ' college and allow its students of the 1980 81.1981 82 and 1982 83 sessions to sit in the examination, both written and practical, as the case may be. We would, however, like to add that if there are cogent reasons and sufficient material before the State or the University to show that the appellants ' Institute has not fulfilled the conditions which may be imposed hereafter, it is open to it to withdraw the affiliation provided the conditions imposed are reasonable and justifiable. 427 SABYASACHI MUKHARJI, J. I agree with the order proposed by my learned brother Justice Fazal Ali. For the purpose of disposing of this appeal, it is sufficient to state that on the 5th March, 1980 the university authorities inspected the appellants ' college and recommended its affiliation which was followed by a report by the Government on 30 June. 1980 recommending affiliation. But despite these, no final decision was taken by the Government as a result of which the appellants had to move the High Court for directing the Government to decide recognition and affiliation of appellants ' college within a specified time. On 3rd November, 1980 the Government granted recognition and approval for affiliation for three sessions namely 1977 78, 1978 79 and 1979 80. On the 10th November, 1980, the University wrote to the Government recommending grant of affiliation. On 22nd November, 1980, the appellants applied for grant of permanent affiliation. But the Government on 27th November, 1980 passed an order cancelling the recognition and approval for affiliation granted to the appellants ' college vide its letter dated 3rd November, 1980. This order was challenged before the High Court. The High Court quashed the said order dated 27th November, 1980 on 18th May, 1981. On the 17th August, 1981, the State of Bihar filed a special leave petition before this Court which was dismissed on 30th November, 1981. The High Court was moved again for directing the State Government to dispose of the application of the appellants for permanent recognition which was filed by them on 22nd November, 1980. On the 16th September, 1982 the Education Commissioner Bihar again made a recommendation for grant of affiliation to the appellants ' college the extract from which has been set out in the judgment of my learned brother. In the recommendation, the education Commissioner recommended that the college be temporarily granted recognition and affiliation for the sessions 1981 82 and 1982 83 for the present. Another writ petition thereafter was filed and nothing happened for the examination of the students of the appellants ' college who had passed the 1982 83 session. But this writ petition was dismissed by the High Court in limine. This appeal arises out of the said order. There were certain data which were gathered by the expert committee and were the basis of exhibit J. There was a previous order for the production of exhibit J. That has not been produced and no explanation has been given. I agree with my learned brother that from the affidavits it is clear that practically no reasons have been given by the State as to why despite the recommendations of several authorities which were made after a full and proper inspections, the 428 affiliation was refused. The government had stated that if certain conditions were fulfilled then there was no objection to the granting of affiliation. It is not clear from the records produced and also from the inferences drawn from the non production of the records i.e., from exhibit J. that these conditions have not been substantially fulfilled. It appears, therefore, and I agree respectfully with my learned brother that no cogent or proper reasons have been placed before us to indicate why appellants have not been placed before us to indicate why appellants have not been granted affiliation and why the recommendations and reasons of the Education Commissioner for grant of affiliation to this college were not properly considered. It is manifest from paragraph 7 of the affidavits filed by the respondents that before grant of affiliation, certain conditions were required to be fulfilled by the institution. These conditions have been mentioned in the judgment of my learned brother. It further appears from the affidavits filed by the appellants that the defence of the State was that five conditions were found not fulfilled after Inspection by a team of inspectors. I agree that it is strange that while previous Expert Committee after inspecting the institute found it to be in order but subsequently the government, without referring to the data submitted by the Expert Committee, appears to have taken this view about non fulfilment of certain conditions. No cogent materials or reliable evidence were produced before us that there was any proper inspection and as a fact the five alleged defects were there. I agree that in the context of the facts of this case and further in the context of non production of exhibit J., the alleged plea of non fulfilment of certain conditions was a pretext. In the premises, the government action in not granting affiliation in the background of the facts and circumstances of this case is action based without reason and is an act of arbitrariness. On this ground alone I agree with the order proposed by my learned brother. As I find the action of the respondents is arbitrary and unreasonable, it is not necessary for me to express my views on Article 30 of the Constitutions it this case. Article 30 was engrafted for the High and Nobel purpose of safeguarding and protecting the rights of minorities to establish and administer educational institutions. In this case I do not find that in not granting affiliation to the appellants ' college there was any discrimination as such against any educational institution on the ground that it was under the management of any minority whether based on religion or language. It was inaction or an act of arbitrariness on the part of the authorities. From such unreasonable and arbitrary actions or inactions, institutions 429 educational or otherwise, belonging both to the majority or minority communities often suffer and in appropriate cases, courts should grant relief without aid or recourse to the articles of the Constitution protecting the freedom and rights of the minorities. I do not find in this case any evidence or even any serious allegation that affiliation was being denied to the appellants ' institution on the ground that it was a minority institution. I agree with great respect with the order proposed by my learned brother, Fazil Ali, J. S.R. Appeal allowed.

The appellant Institution was started as a Teachers Training College under a Society which was established as far back as 1972, though the college itself was established and started in July 1977. On 22.9.1977 the institution made an application to the Government for grant of affiliation or recognition of the same in response to which a most extraordinary order was passed by the Government directing the University for refusing affiliation on the strange ground that all proposals for affiliation by the non Government Teachers Training Colleges be rejected and that no student be allowed to appear as a private candidate. How ever, since the above decision was not applicable to minority institutions which was reiterated by a latter ordinance called Bihar non Government Teachers Training College ordinance on June 5, 1978, it was incumbent on the institution to prove that it was a minority institution before it could be granted affiliation, on 24.2.1978 the appellants filed an application before the Ranchi University for grant of affiliation on June 15, 1978, the Government wrote to the Ranchi University for inspection of the appellants college. On 6.2.1980. Joint Secretary to the Government of Bihar sent letter to the Ranchi University and the Deputy Commissioner, Ranchi for inspection of the appellants ' college. Although the institution applied for affiliation in 1978 and claimed to be a minority institution which was never disputed at any point of time the Government took three years to take a decision about affiliation of the appellants ' college. On 5.3.1980, the University Authorities inspected the appellants ' college and recommended its affiliation which was followed by a report by the District Development officer, Ranchi on 30.6.1980 recommending affiliation. But, despite these facts no final decision was taken by the Government as a result of which the appellants had to move the High Court for directing the Government to grant affiliation. On the High Court 's direction to the Government to decide recognition and affiliation 411 the appellants ' college within a specified time, on 3.11.1980, the Government granted recognition and approval for affiliation for three sessions only, i.e. 1977 78, 1978 79 and 1979 80. On 10.11.1980, the University wrote to the Government recommending further grant of affiliation to the appellants ' college. On 22.11.1980 the appellants applied for grant of permanent affiliation. But, somehow or the other, on 27.11.1980 for undisclosed reasons, the Government passed a strange order cancelling the recognition and approval for affiliation granted to the appellants ' college vide its letter dated 3.11.1980. This order was challenged before the High Court which quashed the same on 18.5.1981. Thereafter, on 17.8.1981 the State of Bihar filled a Special Leave Petition before the Supreme Court which was dismissed on 30.11.1981. However. on 7.9.1981. three minority colleges, alongwith the appellants ' college, were granted recognition and affiliation by the Government by virtue of the High Court 's orders. The appellants again wrote to the High Court to direct the State Government to dispose of the application of the appellants for permanent recognition filed by them on 22.11.1980. On 16.9.1982. the Education Commissioner, Bihar again made a recommendation This recommendation was made after inspection by the Educational Commissioner In the presence of the local authorities as also the University authorities and after coming to a conclusion that the institution was a minority institution. Despite this, since no action was taken by the Government the appellants were compelled to file another Writ Petition in the High Court on 3.5.1983 with a prayer to allow the students of the appellants ' college to appear at the University Examination, but the Writ Petition was dismissed by the High Court in limine. Hence, the appeal by Special Leave of this Court Allowing the appeal, the Court ^ HELD: (Per majority) Per Fazal Ali. J 1.1. Although Article 30 of the Constitution is not included in Part III of the Indian Constitution which guarantees certain fundamental rights, yet the Supreme Court starting from the Kerala Education Bill s case, which is the locus classicus on the point in issue, right up to the case of The Ahmedabad St. Xaviers College Society & Anr. vs State of Gujarat and Anr. and ending with All Saints High School, Hydrabad & Ors. vs Government of Andhra Pradesh & Ors. has clearly recognised that running of minority institutions is also as fundamental and important as the rights conferred on the other citizens of the country, with the only difference that the rights contained in Article 30 have as independent sphere of their own The freedoms guaranteed by Article 30 are also elevated to the status of a full fledged fundamental right within the field in which they operate. In other words, any State action which in any way destroys, curbs or interferes with such rights would be violative of Article 30. [414 G H; 415 A B] 1.2. Technically speaking, the right of affiliation or aid from the Government is not a fundamental right so as to violate Article 30, but the refusal to give aid or affiliation by the statutory authorities without just and sufficient grounds amounts to violation of the fundamental freedoms enshrined in Articles 30 of the Constitution. If the Government withholds giving aid or a University 412 refuses to grant affiliation, the direct consequence would be to destroy the very existence of the institution itself because there may be a number of minority institutions which may not exist without the Government aid and a large number of students admitted to these institutions, in the absence of affiliation, will be deprived of acquiring higher academic status which will not only be a loss to the institution but a loss to the nation itself. It is for this purpose that Article 30 was inserted in the Constitution. [415 G H; 416 A] Kerala Education Bill 's Case [1959] SCR 995; The Ahmedabad St Xaviers College Society & Anr. vs State of Gujarat & Anr. ; ; and All Saints High School. Hyderabad & Ors. vs Government of Andhra Pradesh & Ors. referred to. On a careful and detailed review of these cases the following position emerges: (1) that while article 30 undoubtedly seeks to preserve the religious freedom, autonomy and its individuality; there is no fundamental right under which an institution can claim either aid or affiliation as a matter of right. It is permissible for the State of the University, as the case may be, to lay down reasonable conditions to maintain the excellence of standard of education but in the garb of doing so, refusal to grant affiliation cannot be made a ruse or pretext for destroying the individuality and personality of the said institution. If this is done, then apart from being wholly arbitrary and unreasonable it would amount to a clear infraction of the provisions of article 30 because what cannot be done directly is done indirectly. [420 C E] (2) While the State or a University has got an absolute right to insist on certain courses of study to be followed by institutions before they could be considered for affiliation but these conditions should not in any way take away the freedom of management or administration of the institution so as to reduce it to a satellite of the University or the State. This is impermissible because such a course of action directly violate article 30 of the Constitution. [420 F G] (3) While imposing conditions before granting affiliation, as indicated above, the State or the University cannot kill or annihilate the individuality or personality of the institution in question by insisting on following a particular kind of syllabus or a course of study which may be directly opposed to the aims, objects and ideals sought to be achieved by the institutions. [420 H] (4) There is a very thin line of distinction between withholding of affiliation for a particular purpose on extraneous grounds so as to subject the institution to rigorous orders, edicts or resolutions which may run counter to the dominant purpose for which the institution has been founded, and insisting on genuine and reasonable conditions to be imposed in the larger interest of education. [421 A B] While affiliation itself may not be a fundamental right but refusal of affiliation on terms and conditions or situations which practically denies the progress and autonomy of the institution is impermissible as being violative of article 30 of the Constitution. [421 C] 413 2:1. In the instant case, the State has refused to grant affiliation on purely illusory grounds which do not exist and failed to consider the recommendation of the Education Commissioner which was made after full inspection for grant of affiliation. In other words, the affiliation was refused without giving any sufficient reasons and such a refusal contravenes the provisions of article 30 of the Constitution. [426 G] 2:2. The belated attempt through a subsequent affidavit filed by the State Government to show that there were certain defects in the Institution, in view of the non production of the most important and decisive material, is nothing but an after thought. The State Government 's assurance to grant affiliation to the appellants college on fulfilling certain conditions is nothing but a pretext or a smoke screen to cloud the real issue. The Government did not mean business by producing a report on which exhibit J was based, which has been deliberately suppressed despite the Court 's order to produce the same. Therefore, an adverse inference has to be drawn against the State Government to the effect that if the materials on which the report was based had been produced it would have exploded the case of the Government and disclosed the real state of affairs namely that the appellants institute does fulfil all the conditions imposed by the State. [425 G H; 426 A] 3. Normally the Supreme Court does not grant cost in case of refusal of affiliation to institutions but having regard to the manner in which the State Government has behaved and exhibited its reluctance to perform a constitutional duty and has also tried to disobey the Court 's order for production of certain documents the instant case is a fit case for imposing a heavy cost on the State, apart from the directions to the State for granting affiliation to the appellant 's college and to allow its students of the 1980 81, 1981 82 and 1982 83 sessions to sit in the examination. [426 F G] Per Sabyasachi Mukharji, J. (Concurring) In the background of the facts and circumstances of this case, the Government action is not granting affiliation to the appellants college is action based without reason and is an act of arbitrariness. [428 F] (Per contra) 1. Article 30 of the Constitution was engrafted for the high and noble purpose of safeguarding and protecting the rights of minorities to establish and administer educational institutions. In this case, in not granting affiliation to the appellants ' college there was no discrimination against any educational institution on the ground that it was under the management of any minority whether based on religion or language. It was inaction or an act of arbitrariness on the part of the authorities. From such unreasonable and arbitrary actions or inactions institutions, educational or otherwise, belonging both to the majority or minority communities often suffer and in appropriate cases, Court should grant relief without aid or recourse to the articles of the Constitution protecting the freedom and rights of the minorities. In this case there is no evidence or even any serious allegation that affiliation was being denied to the appellants institution on the ground that it was a minority institution. [428 G H; 429 A B] 414

vil Appeal Nos. 1668 and 1669 of 1988. From the Judgment and Order dated 29.4.1988 of the Madras High Court in W.R. Nos. 469 and 488 of 1988. Soli J. Sorabjee, V.C. Mahajan, C.A. Sundaram, U.A. Rana, M. Mudgal, Ms. Indu Malhotra, C.V. Subba Rao, A. Mariar Autham, Aruna Matbur, N.N. Sharma, Jose Varghese, Bhagwan Das, R. Mohan, R.A. Perumal and A.V. Rangam for the appearing parties. The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J. These appeals by leave are from the judgment of the Division Bench of the Madras High Court revoking the 'U Certificate ' issued to a Tamil film called "Ore Oru Gramathile" (In one Village) for public exhibition. Civil Appeal Nos.1668 and 1669 of 1988 are by the producer of the film and the Civil Appeal nos.13667 and 133668 of 1988 are by the Union of India. He apprehends that she would not be able to get admission to college because she belongs to a Brahmin community. He seeks advice from his close friend Devashayam, a Tehsildar. The Tehsildar who otherwise belongs to a very poor family and whose father was working in a local Church responds with gratitude. He divises a method to help Gayathri because it was through Sastry 's father that he got proper education and rose to become a Tahsildar. He prepares a false certificate showing Gayathri as Karuppayee belonging to an Adi Dravida Community and as an orphan. He issues the certificate under the reservation policy of the Government for the benefit of 'backward commu nities ' identified on caste consideration. On the basis of the false certificate, Karuppayee gets admitted to college and enters I.A.S. witness to this arrangement is the brother in law of Tahsildar called Anthony who later turns out to be a villain of the piece. "Years later, Karuppayee, who was working in Delhi is sent to a rural village called Annavayil as a Special Offi cer for flood relief operations. Her father, Shankara Sastry happens to work in the same village as Block Development Officer. However, both of them pretend not to recognise each other. Karuppayee takes her work seriously and improves the living conditions of people to such an extent that she is held by them in high esteem. By a coincidence, after the death of the Tahsildar, Anthony comes to live in the same village and recognises Karuppayee. He starts blackmailing her and threatens to reveal the fraudulent means by which she got the caste certificate. His attempt is to extract money from her frequently. One evening when he visits Karup payee 's house, he is confronted by Shankara Sastry who puts a halt to his blackmailing. Later Anthony dies of sudden heart attack but not before he informs the Government about the facts relating to Karuppayee. Upon preliminary enquiry, the Government suspends both Karuppayee and her father and eventually they are put on trial in the Court. The people of the village resentful of the action taken against Karuppayee rise as one man and demonstrate before the Court in a peace ful manner for her release. They also send petitions to the Government." "Karuppayee and her father admit in the Court the fact of their having obtained the false caste certificate but they attribute it to circumstances resulting by Government reservation policy on caste basis. They say that they are prepared to undergo any punishment. They contend hat some politicians are exploiting the caste consideration and that would be detrimental to national integration. They also argue that the reservation policy should not be based on caste, but could be on economic backwardness. Just about the time when the judgment is to be pronounced the Court re ceives intimation from Government that in the light of petitions received from the public, the case against Karup payee and her father stands withdrawn. Karuppayee goes back to her Government job with jubilent people all round. " 210 This is the theme of the picture presented. As usual, it contains some songs, dance and side attractions to make the film more delectable. On August 7, 1987, the producer applied for certificate for exhibition of the film. The examining committee upon seeing the film unanimously refused to grant certificate. The appellant then sought for review by a Revising Committee which consisted of nine members. This Committee reviewed the film. Eight members were in favour of grant of certificate and one was opposed to it. The Chairman of the Censor Board however, referred the film to Second Revising Committee for review and recommendation. The 'U ' certificate means for unrestricted public exhibition as against 'A ' certificate restricted to adults only. The minority expressed the view that the film is treated in an irresponsible manner. The reservation policy of the Govern ment is projected in a highly biased and distorted fashion. They have also stated that the so called appeal in the film "India is One" is a hollow appeal, which in effect touches caste sensitivity of the Brahmin forward caste. One of the members felt that the impact of the film will create law and order problem. Another member said that the film will hurt the feelings and sentiments of certain sections of the public. But the majority opined that the theme of the film is on the reservation policy of the Government suggesting that the reservation could be made on the basis of economic backwardness. Such a view could be expressed in a free country like India, and it did not violate any guideline. On December 7, 1987, 'U ' certificate was granted for the exhibition of the film which was challenged before the High Court by way of writ petitions. The writ petitions were dismissed by the Single judge, but the Division Bench upon appeal allowed the writ petitions and revoked the certifi cate. The producer of the film and the Government of India by obtaining leave have appealed to this Court. The film has since been given National Award by the Directorate of Film Festival of the Government of India. In these appeals, the fundamental point made by Mr. Soli Sorabjee, learned counsel for the producer is about the freedom of free expression guaranteed under our Constitution even for the medium of 211 movies. The counsel argued that the opinion on the effect of the film should not be rested on isolated passages disre garding the main theme and its message. The Film should be judged in its entirety from the point of its overall impact on the public. The writings of the film must be considered in a free, fair and liberal spirit in the light of the freedom of expression guaranteed under our Constitution. The counsel said that the Court is not concerned with the cor rectness or legality of the views expressed in the film and the Court cannot limit the expression on any general issue even if it is controversial. Mr. Mahajan for the Union of India supported these submissions. Mr. Varghese learned counsel for the contesting respondents did not dispute most of the proposition advanced for the appellants. He was, however, critical about the manner in which the reservation policy of the Government has been condemned and the events and characters shown in the film. He contended that they are depicted in a biased manner and reaction to the film in Tamil Nadu is bound to be volatile. Before examining these rival contentions, a few general observations may be made as to the utility of movies and the object of the film Censors Board. The motion pictures were originally considered as a form of amusement to be allowed to titillate but not to arouse. They were treated as mere entertainment and not an art or a means of expression. This theory was based on the concept that motion picture was a business "pure and simpe originated and conducted for prof it, like other spectacles. " It was considered strictly as an "amusement industry". It was not without significance since there were no talking pictures then. The talking pictures were first produced in 1926, eleven years after the Mutual decision (Encyclopedia Britinnica) (1965 Vol. 15 p. 902). The later decisions of the American Supreme Court have therefore declared that expression by means of motion pictures is included within the free speech and free press guaranty of the First Amend ment. (See Burstyn vs Wilso, ; The First Amend ment to the U.S. Constitution provides: "Congress shall make no law . abridging the freedom of speech, or of the press." This Amendment is absolute in terms and it contains no exception for the exercise of the fight. Heavy burden lies on the State to justify the interference. The judicial decisions, however, limited the scope of restriction which the State could impose in any given circumstances. The danger rule was born in Schenek vs United States, 249 U.S. 47 (1919). Justice Holmes for a unanimous court, evolved the test of "clear and present danger". He used the danger test to 212 determine where discussion ends and incitement or attempt begins. The core of his position was that the First Amend ment protects only utterances that seeks acceptance via the democratic process of discussion and agreement. But "Words that may have all the effect of force" calculated to achieve its goal by circumventing the democratic process are however, not so protected. The framework of our Constitution differs from the First Amendment to the U.S. Constitution. Article 19(1)(a) of our Constitution guarantees to all citizens the right to freedom of speech and expression. The freedom of expression means the right to express one 's opinion by words of mouth, writing, printing, picture or in any other manner. It would thus include the freedom of communication and the right to propagate or publish opinion. The communication of ideas could be made through any medium, newspaper, magazine or movie. But this right is subject to reasonable restrictions on grounds set out under Article 13(2) of the Constitution. The reason able limitations can be put in the interest of sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, deceny or morality or in relation to contempt of court, defamation or incitement to an offence. The Framers deemed it essential to permit imposition of reasonable restrictions on the larger interests of the community and country. They intended to strike a proper balance between the liberty guaranteed and the social interest specified under Article 19(2). (See Santokh Singh vs Delhi Administration, ; This is the difference between the First Amendment to the U.S. Constitution and Article 19(1)(a) of our Constitu tion. The decisions bearing on the First Amendment are, therefore, not useful to us except the broad principles and the purpose of the guaranty. Movie doubtless enjoys the guaranty under Article 19(1)(a) but there is one significant difference between the movie and other modes of communication. The movie cannot function in a free market place like the newspaper, magazine or advertisement. Movie motivates thought and action and assures a high degree of attention and retention. It makes its impact simultaneously arousing the visual and aural senses. The focusing of an intense light on a screen with the dramatizing of facts and opinion makes the ideas more effective. The combination of act and speech, sight and sound in semi darkness of the theatre with elimination of all distracting ideas will have an impact in the minds of spectators. In some cases, it will have a complete and im 213 mediate influence on, and appeal for every one who sees it. In view of the scientific improvements in photography and production the present movie is a powerful means of communi cation. It is said: "as an instrument of education it has unusual power to impart information, to influence specific attitudes towards objects of social value, to affect emo tions either in gross or in microscopic proportions, to affect health in a minor degree through sleep disturbance, and to affect profoundly the patterns of conduct of chil dren." (See Reader in Public Opinion and Communication Second Edition by Bernard Betelson and Morris Janowitz p. 390). The authors of this Book have demonstrated (at 391 to 401) by scientific tests the potential of the motion pic tures in formation of opinion by spectators and also on their attitudes. These tests have also shown that the effect of motion pictures is cumulative. It is proved that even though one movie relating to a social issue may not signifi cantly affect the attitude of an individual or group, con tinual exposure to films of a similar character will produce a change. It can, therefore, be said that the movie has unique capacity to disturb and arouse feelings. It has as much potential for evil as it has for good. It has an equal potential to instil or cultivate violent or good behaviour. With these qualities and since it caters for mass audience who are generally not selective about what they watch, the movie cannot be equated with other modes of communication. It cannot be allowed to function in a free market place just as does the newspapers or magazines. Censorship by prior restraint is, therefore, not only desirable but also neces sary. Here again we find the difference between the First Amendment to the U.S. Constitution and Article 19(1)(a) of our Constitution. The First Amendment does not permit any prior restraint, since the guaranty of free speech is in unqualified terms. This essential difference was recognised by Douglas, J., with whom Black, J., concurred in Kingsley Corporation vs Regents of the University of New York, at 1522. In holding that censorship by "prior restraint" on movies was unconstitutional, the learned Judge said: "If we had a provision in our Consti tution for "reasonable" regulation of the press such India has included in hers, there would be room for argument that censorship in the interests of morality would be permissi ble. But its language, in terms that are absolute is utterly at war with censorship. 214 Different questions may arise as to censorship of some news when the nation is actually at war. But any possible exceptions are extremely limited. " The ("The Act") which permits censorship on movies is a comprehensive enactment. Section 3 of the Act provides for constitution of Board of Film Cen sors. Section 4 speaks of examination of films. A film is examined in the first instance by an Examining Committee. If it is not approved, it is further reviewed by a Revising Committee under Section 5. Section 5A states that if after examining a film or having it examined in the prescribed manner, the Board considers that the film is suitable for unrestricted public exhibition, such a certificate is given which is called 'U ' certificate. Section 5(a) provides principles for guidance in certi fying films. It is significant to note that Article 19(2) has been practically read into Section 5(B)(1). Section 5(C) confers right of appeal to Tribunal against refusal of certificate. Under Section 6, the Central Government has revisional power to call for the record of any proceeding in relation to any film at any stage, where it is not made the subject matter of appeal to the Appellate Tribunal. Under Section 8 of the Act, the Rules called the Cine matograph (Certification) Rules 1983 have been framed. Under Section 5(B)(2) the Central Government has prescribed cer tain guidelines for the Censors Board. Guideline (1) relates to the objectives of film censorship. The Board shall ensure that: (a) the medium of film remains responsible and sensi tive to the values and standards of society; (b) artistic expression and creative freedom are not unduly curbed and (c) censorship is responsive to social change Guideline (2) requires the Board to ensure that: (i) anti social activities such as violence not glorified or justified; (ii) the modus operandi of criminal or other visuals or words likely to incite the commission of any offence are not depicted; (iii) pointless or avoidable scenes of violence, cruelty and horror are not shown; (iv) human sensibilities are not offended by vulgarity, obscenity and depravity; (vi) the sovereignty and integrity of India is not called in question; (vii) the security of the State is not jeopardised or endangered; (viii) friendly relations with foreign states are not strained; and (ix) Public Order is not endangered. Guideline (3) also requires the Board to ensure that the film: (i) 215 is judged in its entirety from the point of view of its overall impact and; (ii) is examined in the light of contem porary standards of the country and the people to whom the film relates. It will be thus seen that censorship is permitted mainly on social interest specified under Article 19(2) of the Constitution with emphasis on maintenance of values and standards of society. Therefore, the censorship by prior restraint must necessarily be reasonable that could be saved by the well accepted principles of judicial review. In K.A. Abbas vs Union of India, ; a Constitution Bench of this court considered important ques tions relating to pre censorship of cinematograph films in relation to the fundamental right of freedom of speech and expression. K.A. Abbas, a noted Indian journalist and film producer produced a short documentary film called "A tale of Four Cities". In that film he sought to contrast the self indulgent life of the rich in Metropolitan cities with the squalor and destitution of labouring masses who helped to construct the imposing buildings and complexes utilised by the rich. The film also goes on to explore the theme of exploitation of women by men, dealing in particular prosti tution. Abbas applied to the Board of Film Censors for a 'U ' certificate, permitting unrestricted exhibition of the film. He was informed by the regional officer that the Examining Committee had provisionally concluded that the film should be restricted to adults. The Revising Committee concurred in this result, whereupon Abbas, after exchanging correspond ence with the Board, appealed to the Central Government. The Government decided to grant 'U ' certificate provided that the scenes in the red light district were deleted from the film. Abbas challenged the action of the Board mainly on four issues out of which two did not survive when the Solic itor General stated before the Court that the Government would set on foot legislation to effectuate the policies at the earliest possible date. The two issues which survived thereupon were: (a) that pre censorship itself cannot be tolerated under the freedom of speech and expression; (b) that even if it were a legitimate restraint on the freedom, it must be exercised on very definite principles which leave no room for arbitrary action The standards that we set out for our censors must make a 216 substantial allowance in favour of freedom thus leaving a vast area for creative art to interpret life and society with some of its foibles along with what is good. We must not look upon such human relationships as banned in toto and for ever from human thought and must give scope for talent to put them before society. The requirements of art and litera ture include within themselves a comprehen sive, view of social life and not only in its ideal form and the line is to be drawn where the average man moral man begins to feel embarassed or disgusted at a naked portrayal of life without the redeeming touch of art or genius of social value. If the depraved begins to see in these things more than what an average person would, in much the same way as it is wrongly said, a Frenchman sees a woman 's legs in everything, it cannot be helped. In our scheme of things ideas having redeeming social or artistic value must also have impor tance and protection for their growth." Recently, Sabyasachi Mukharji, J., in Ramesh vs Union of India, which is popularly called "TAMAS" case laid down the standard of judging the effect of the words or expression used in the movie. The learned Judge quoting with approval of the observation of Vivian Bose, J., as he then was, in the Nagpur High Court in the case of Bhagwati Charun Shukla vs Provincial Govern ment, AIR 1947 Nag 1 (at 676): "That the effect of the words must be judged from the standards of reasonable, strong minded, firm and courageous men, and not those of weak and vacillating. This in our opinion is the correct approach in judging the effect of exhibition of a film or of reading a Book. It is the standard of ordinary reasona ble man or as they say in English law, "the man on the top of a Clampham omnibus. " We affirm and reiterate this principle. The standard to be applied by the Board or courts for judging the film should be that of an ordinary man of common sense and pru dence and not .that of an out of the ordinary or hypersensi tive man. We, however, wish to add a word more. The Censors Board should exercise considerable circumspection on movies affecting the morality or decency of our people and cultural heritage of the country. The moral values in particular, should not be allowed to be sacrificed in the guise of social change or cultural assimilation. Our country has had the distinction of giving birth to a galaxy of great sages and thinkers. The great thinkers and sages through their life and conduct provided principles for people to follow the path of fight conduct. There have been continuous efforts at rediscovery and reiteration of those principles. Adi guru Shankaracharya, Ramanujacharya, Madhwacharya, Chaitanya Maha Prabhu, Swami Ram Krishan Paramhansa, Guru Nanak Sant Kabir and Mahatma Gandhi, have all enlightened our path. If one prefers to go yet further back, he will find "TIRUKKURAL" the ethical code from Tiruv alluvar teaching which is "a general human morality and wisdom. " Besides, we have the concept of "Dharam" (right eousness in every respect) a unique contribution of Indian civilization to humanity of the world. These are the bedrock of our civilization and should not be allowed to be shaken by unethical standards. We do not, however, mean that the Censors should have an orthodox or conservative outlook. Far from it, they must be responsive to social change and they must go with the current climate. All we wish to state is that the Censors may display more sensitivity to movies which will have a markedly deleterious effect to lower the moral standards of those who see it. Krishna Iyer, J., in Rajkapoor vs Laxman, ; in words meaningful expressed similar thought. The learned Judge said (at 5 17): "The ultimate censorious power over the Censors belongs to the people and by indifference, laxity or abetment, pictures which pollute public morals are liberally certified, the legislation, meant by Parlia ment to protect people 's good morals, may be sabotaged by statutory enemies within." With these prefactory remarks, let us now turn to the reasons which weighed with the High Court to revoke the 'U ' certificate and rule out the film altogether. The High Court has found fault with the Constitution of the First Revising Committee. It has held that the Revising Committee was constituted hurriedly and its constitution by "delegate Board Member" was illegal and without authority of law. The Committee also showed unusual favour to the producer by reviewing the film with hot haste. In the absence of a First Revising Committee having come into existence as known to law; the High Court said that the constitution of the Second Revising Committee was invalid and inoperative. We do not think that the High Court was justified in reaching this conclusion. Under the rules, the Regional Officer shall appoint an 218 Examining Committee to examine the film. The Rule 22 inter alia, states that after screening the film, the Examining Officer shall within three working days send the recommendations of all the members of the Examining Committee to the Chairman. Rule 24(1) provides for constitu tion of a Revising Committee. It states that on receipt of the record referred to in rule 22, the Chairman may, of his own motion or on the request of the applicant, refer the movie to a Revising Committee. In the instant case, the Chairman did not constitute the first Revising Committee but a member of the Board did. The question is whether the member of the Board was competent to constitute the Revising Committee. Our attention was drawn to the Government order dated January 21, 1987 made under sec. 7(B) of the Cinemato graph Act. The order reads; "No. 803/1/86 F(C) Government of India Ministry of Human Resource Development Department of Culture. New Delhi, the 21st January, 1987 ORDER In exercise of the powers conferred by Sec. 7B of the Cinamatograph Act, 1952 (37 of 1952) (hereinafter referred to as the said Act), the Central Government hereby directs that any power, authority or jurisdiction exercisable by the Board of film, Certifica tion (hereinafter referred to as the Board) in relation to matters specified in sec.4, sub secs (3) and (4) of sec.5, sec.5 A and sec.7C of the said Act shall also be exercisable subject to the condition given below by the following members of the Board at the Regional Office indicated against each, with immediate effect and until further orders: 1. Shri Samik Banerjee Calcutta 2. Ms. Maithreyi Ramadhurai Madras 3. Dr. B.K. Chandrashekar Bangalore XXX XXXX XXX XXXX" This order clearly states that the power of the Board shall also be exercisable by the specified members within their regional office. For 219 Madras region Ms. Maithrayi Ramadhurai has been constituted to exercise such powers. It cannot be contended that the Central Government has no power to delegate the powers or to issue the said order. 7(B) empowers the Central Government to issue general or special order directing that any power, authority or jurisdiction exercisable by the Board under the Act shall be exercisable also by the Chairman or any other member of the Board. The section further provides that anything done or action taken by the Chairman or other member specified in the order shall be deemed to be a thing done or action taken by the Board. From the provisions of sec.7B read with the Government order dated January 21, 1987, it becomes clear that the constitution of the First Revising Committee by the member at the Madras Regional Office is not vulnerable to any attack. It is legally justified and unassailable. The conclusion to the contrary reached by the High Court is apparently unwarranted. We also do not find any justification for the observa tion of the High Court that there was unusual favour shown to the producer by the First Revising Committee in reviewing the film. It is true that the film was reviewed within 2 3 hours of the presentation of the application. But there is no reason to attribute motives either to members of the Committee or to the producer. In matters of certification of films, it is necessary to take prompt action by the respec tive authorities. The producer who has invested a large capital should not be made to wait needlessly. He has a statutory right to have the validity of ,the film determined in accordance with law. It would be, therefore, proper and indeed appreciative if the film is reviewed as soon as it is submitted. There are two other side issues which may be disposed of at this stage. The scene with song No. 2 in reel No. 3 and the comments by the heroine of looking at the photo of Dr. Ambedkar, have come under serious criticism. It is said that the song has the effect of spreading 'Kulachar ' which is 'Poisonous message ' to the depressed classes not to educate their children. The complaint, if true, is serious. We, therefore, gave our anxious consideration to the grievance. We, as did the High Court, viewed the movie. The cobbler sings the song in question with his grandson who is eager to go to school. The song contains references to Kamaraj, Anna and MGR who without even college education became Chief Ministers. The cobbler asks the grandson: "What are you going to achieve by education? and don 't forsake the profes sion you know and you can educate yourself as a cobbler. " 220 While these and other exchanges are going on between the cobbler and grandson, the heroine comes and insists that the boy should go to school. They agree to her suggestion with "Vanakkam, Vanakkam". The song thus ends with a happy note and the cobbler agrees to send his grandson to school. It is true as pointed out by counsel for the respondents that one or two references in the song are not palatable, but we should not read too much into that writing. It is not proper to form an opinion by dwelling upon stray sentences or isolated passages disgregarding the main theme. What is significant to note is that the cobbler ultimately does not insist that his grandson should continue the family pursuits. He accepts the suggestion made by the heroine. It is, therefore, wrong to conclude that the song was intended to convey poisonous message against the inter ests of depressed classes. The criticism on the alleged comments on Dr. Ambedkar is equally unsustainable. The confusion perhaps is due to the pronounced accent of an English word in the course of Tamil conversation. The matter arises in this way: Sastry shows the photograph of Dr. Ambedkar to heroine and enquires whether she likes it. Then she makes certain comments. According to the High Court, she states, "Dr. Ambedkar worked for the poor. Not for 'par '. If she states like that, it is certainly objectionable since Dr. Ambedkar did everything to have an egalitarian society. But while viewing the film, we could not hear any such word used by the heroine. On the other hand, we distinctly noted her saying, "Dr. Ambedkar worked for the poor, Not for power. " This being the remark there is no basis for the criticism of the High Court. The last complaint and really the nub of the case for the respondent is about the reel No. 14 covering the court scene where Karuppayee and Sastry are prosecuted for offence of obtaining a false caste certificate. The reel No. 14 contains almost a dialogue between the prosecution lawyer and Karuppayee. She criticises the reservation policy of the Government. She states that during the British regime, the people enjoyed educational freedom, and job opportunities which were based on merit criteria and not vote caste in a particular constituency. Then the prosecution lawyer puts a question "why do you regret this Madam? Was not 'Bharat Matha ' under shackles then?" She replies: "You are right. Now "Bharat Matha" is under animals ' hands. " On a further question from the prosecutor she explains that her reference to 'animals ' hands is only to those who incite caste, language and communal fanaticism, thus confusing people and making it their profession. She also states that it is the Government and its laws that have made her and her father to tell a lie. The presiding Judge interrupts with a question: "What is wrong in the Government approach? Can you elaborate?" She replies: "That it is wrong not to give credence to her merit and evaluate the same on the basis of her caste and such evaluation would put a bar on the progress." She goes on to explain "Your laws are the barri ers Sir. You have made propaganda in nook and corner stating "Be an Indian, Be an Indian". And if I proudly say I am an Indian then the Government divides saying 'no, no, no, . . You are a Brahmin, you are Christian, you are a Muslim. It is the Government that divides. " Then she puts a question to herself: "What is the meaning of "Be an Indian?" She explains that it must be without caste, creed and commu nal considerations, from Kashmir to Kanyakumari, the country must be one. She then blames the Government with these words: "The Government in dealing with all has no one face. Take any application form they want to know your caste and religion. When all are Indians where is the necessity for this question. You have divided the people according to caste. Then if you reel off on "National integration" will not the public laugh. " As to the reservation policy to those who are backward she says: "On Gods name, I have no objection in providing all concessions to those who are backward. The list of those belonging to forward sections and backward sections could be prepared on the basis of economic considerations. And those below a specified limit of income be included in the back ward list. " How did the High Court look at it? On the remark of heroine as to the situations that existed during British administration, the High Court observed thus: "It is preposterous and offensive to claim that education was independent when India was under British rule and that, after independ ence it is not there. " The High Court also said: "That any denigration of Rule of law would never 222 bring orderly society. To preach that it is only law that prompted them to utter falsehood and in its absence they would not have done it is a wrong way presenting a view point. " As to the allegations that 'Bharat Matha ' is now in the hands of politicians, who are instigating the masses on the basis of caste and language, etc., the High Court remarked: "If this sort of decrying India for being an independent nation is to be projected in films repeatedly, then in course of time, citizens will loose faith in the integrity and sovereignty of India. With this sort of glori fication made, how could it be claimed that the film stands for national integration. That was why one Member rightly said that it is a hollow claim. Hence Guideline 2(vi) and (vii) are contravened. " On the total impact of the film, the High Court observed: "That certain peculiar factors will have to be taken into account because of guidelines 3(i) and 3(ii). This film is in Tamil. It deals with reservations now extended to large sections of people on a particular basis, and who have suffered for Centuries, and at a time when they have not attained equality and when their valuable rights which are secured under the Constitution is attempt ed to be taken away, they get agitated. This film taken in Tamil for Tamil population on being screened in Tamil Nadu, will certainly be viewed in the background of what had hap pened in Tamil Nadu during the preceding four decades, and the reactions are bound to be volatile. " We find it difficult to appreciate the observations of the High Court. We fail to understand how the expression in the film with criticism of reservation policy or praising the colonial rule will affect the security of the State of sovereignty and integrity of India. There is no utterance in the film threatening to overthrow the Government by unlawful or unconstitutional means. There is no talk for secession either. Nor there is any suggestion for impairing the inte gration of the country. All that the film seems to suggest is that the existing method of reservation on the basis of caste is bad and reservation on the basis of economic back wardness is better. The film also deprecates exploitation of people on caste considerations. This is the range and rigor of the film. The High Court, however, was of opinion that public reaction to the film, which seeks to change the system of reservation is bound to be volatile. The HIgh Court has also stated that people of Tamil Nadu who have suffered for centuries will not allow themselves to be deprived of the benefits extended to them on a particular basis. It seems to us that the reasoning of the High Court runs a foul of the democratic principles to which we have pledged ourselves in the Constitution. In democracy it is not necessary that every one should sing the same song. Freedom of expression is the rule and it is generally taken for granted. Every one has a fundamental right to form his own opinion on any issue of general concern. He can form and inform by any legitimate means. The democracy is a Government by the people via open discussion. The democratic form of government itself demands its citizens an active and intelligent participation in the affairs of the community. The public discussion with people participation is a basic feature and a rational process of democracy which distinguishes it from all other forms of government. The democracy can neither work nor prosper unless people go out to share their views. The truth is that public discussion on issues relating to administration has positive value. When they ignore it, they go inside themselves and find out what is there. They elaborate their prejudice instead of increasing their knowledge. In Maneka Gandhi vs Union of India, [1978] 2 SCR 621 Bhagwati J., observed at 696: "Democracy is based essentially on free debate and open discussion, for that is the only corrective of Government action in a democratic set up. If democracy means government of the people by the people. it is obvious that every citizen must be entitled to participate in the democratic process and in order to enable him to intelligently exercise his right of making a choice, free and general discussion of public matters is absolutely essential." 224 The learned judge in Naraindas vs State of Madhya Pradesh,[1974] 3 SCR 624 while dealing with the power of the State to select text books for obligatory use by students said at 650: "It is our firm belief, nay, a con viction which constitutes one of the basic values of a free society to which we are wedded under our Constitution, that there must be freedom not only for the thought that we cherish, but also for the thought that we hate. As pointed out by Mr. Justice Holmes in Abramson vs United States, ; "The ultimate good desired is better reached by free trade in ideas the best test of truth is the power of the thought to get itself accept ed in the competition of the market. " There must be freedom of thought and the mind must be ready to receive new ideas, to critically analyse and examine them and to accept those which are found to stand the test of scrutiny and to reject the rest. " In Sakal vs Union of India, ; at 866, Mudholkar, J. said: "This Court must be ever vigilent in guarding perhaps the most precious of all the freedoms guaranteed by our Constitution. The reason for this is obvious. The freedom of speech and expression of opinion is of para mount importance under a democratic Constitu tion which envisages changes in the composi tion of legislatures and governments and must be preserved." Movie is the legitimate and the most important medium in which issues of general concern can be treated. The producer may project his own messages which the others may not ap prove of. But he has a right to "think out" and put the counter appeals to reason. It is a part of a democratic give and take to which no one could complain. The State cannot prevent open discussion and open expression, however, hateful to its policies. As Professor Fraund puts it: "The State may not punish open talk, however, hateful, not for hypocritical reason that Hyde Parks are a safety valve, but because a bit of sense may be salvaged from the odious by minds striving to be rational, and this precious bit will enter into the amalgam which we forge." (Paul A. Freund On Understanding the Supreme Court 26 (1950). "When men differ in opinion, both sides ought equally to have 225 the advantage of being heard by the public." (Benjamin Franklin). If one is allowed to say that policy of the government is good, another is with equal freedom entitled to say that it is bad. If one is allowed to support the governmental scheme, the other could as well say, that he will not support it. The different views are allowed to be expressed by proponents and opponents not because they are correct, or valid but because there is freedom in this country for expressing even differing views on any issue. Alexander Meiklejohn perhaps the foremost American philosopher of freedom of expression, in his wise little study neatly explains: "When men govern themselves, it is they and no one else who must pass judgment upon unwisdom and unfairness and danger. And that means that unwise ideas must have a hearing as well as wise ones, unfair as well as fair, dangerous as well as safe, an Ameri can as well . American . . If then, on any occasion in the United States it is allowable, in that situation, to say that the Constitution is a good document it is equally allowable, in that situation, to say that the Constitution is a bad document. If a public building may be used in which to say, in time of war, that the war is justified, then the same building may be used in which to say that it is not justified. If it be publicly argued that conscription for armed service is moral and necessary, it may likewise be publicly argued that it is immoral and unnecessary. If it may be said that American political insti tutions are superior to those of England or Russia or German, it may with equal freedom, be said that those of England or Russia or Germany are superiors to ours. These conflict ing views may be expressed, must be expressed, not because they are valid, but because they are relevant . . To be afraid of ideas, any idea, is to be unfit for self government." (Political Freedom (1960) at 27). He argued, if we may say so correctly, that the guaran tees of freedom of speech and of the press are measures adopted by the people as the ultimate rulers in order to retain control over the Government, the people 's legislative and executive agents. Brandies, J., in Whitney vs California, ; ,375 8 (1927) propounded probably the most attractive free speech theory: 226 " . . that the greatest menace to freedom is an inert people; that public dis cussion is a political duty; . .It is hazardous to discourage thought, hope and imagination; that the path of safety lies in the opportunity to discuss freely supposed grievances and proposed remedies; and that the fitting remedy for evil counsels is good ones. " What Archibald Cox said in his article though on "First Amendment" is equally rele vant here: "Some propositions seem true or false beyond rational debate. Some false and harm ful, political and religious doctrine gain wide public acceptance. Adolf Hitler 's brutal theory of a 'master race ' is sufficient exam ple. The liberty cannot be denied to some ideas and saved for others. The reason is plain enough: no man, no committee, and surely no government, has the infinite wisdom and disinterestedness accurately and unselfishly to separate what is true from what is debata ble, and both from what is false. To license one to impose his truth upon dessenters is to give the same licence to all others who have, but fear to lose, power. The judgment that the risks of suppression are greater than the harm done by bad ideas rests upon faith in the ultimate good sense and decency of free peo ple." (Society Vol. 24 p. 8 No. 1 November/December 1986). The problem of defining the area of freedom of expres sion when it appears to conflict with the various social interests enumerated under Article 19(2) may briefly be touched upon here. There does indeed have to be a compromise between the interest of freedom of expression and social interests. But we cannot simply balance the two interests as if they are of equal weight. Our commitment to freedom of expression demands that it cannot be suppressed unless the situations created by allowing the freedom are pressing and the community interest is endangered. The anticipated danger should not be remote, conjectural or far fetched. It should have proximate and direct nexus with the expression. The expression of thought should be intrinsically dangerous to the public interest. 227 Our remarkable faith in the freedom of speech and ex pression could be seen even from decisions earlier to our Constitution. There the accused was convicted under sec.124(A) of Penal Code for making a speech recommending 'Bolshevik ' form of Government to re place the then existing form of Government in Calcutta. While setting aside the conviction and acquitting the ac cused, Lord Williams, J., who delivered the judgment ob served (at 637): "All that the speakers did was to encourage the youngmen, whom he was addressng, to join the Bengal Youth League and to carry on a propaganda for the purpose of inducing as large a number of people in India as possible to become supporters of the idea of communism as represented by the present Bolshevik system in Russia. It is really absurb to say that speeches of this kind amount to sedition. If such were the case, then every argument against the present form of Government and in favour of some other form of Government might be allowed to lead to hatred of the Government, and it might be suggested that such ideas brought the Govern ment into contempt. To suggest some other form of Government is not necessarily to bring the present Government into hatred or contempt. " To the same effect is the observation by the Bombay High Court in Manohar vs Government of Bombay, AIR 1950 BOM 210. There the writer of an article in a newspaper was convicted for an offence under the Press (Emergency Powers) Act, 1931, for incitement to violence. The writer had suggested the people to follow the example of China by rising against Anglo American Imperialism and their agents. He had also suggested his readers to pursue the path of violence, as the Chinese people did, in order that Anglo American Imperialism should be driven out of this country. Chagla C.J., while quashing the conviction said (at 2 13): "It is true that the article does state that the working class and the coiling masses can get hold of power through the path of revolution alone. The revolution preached is not necessarily a violent revolution. 228 XXX XXX XXX XXX As the writer has not stated in this article that the toiling masses should take up arms and fight for their rights and thus achieve a revolution we refuse to read this expression as inciting the masses to violent methods. " In Niharendu Dutt Majumdar vs Emperor, AIR 1942 FC 23, the Federal Court examined the effects of a vulgar and abusive outburst against the Government made by the accused for which he was convicted under Rule 34 of the Defence of India Rules. Gwyer, C.J., while acquitting the person commented more boldly (at 27): "There is an English saying that hard words break no bones; and the wisdom of the common law has long refused to regard an actionable any words which, though strictly and liberally defamatory, would be regarded by all reasonable men as no more than mere vulgar abuse. XXX XXX XXX XXX XXX The speech now before us is full of them. But we cannot regard the speech, taken as a whole as inciting those who heard it, even though they cried "shame shame" at intervals, to attempt by violence or by public disorder to subvert the Government for the time being established by law in Bengal or elsewhere in India. That the appellant expressed his opin ion about that system of Government is true, but he was entitled to do so,; and his reference to it were, we might almost say, both common place and in common form, and un likely to cause any Government in India a moments uneasyness. His more violent outburst were directed against the then Ministry in Bengal and against the Governor in Bengal in his political capacity but we do not feel able to say that his speech whatever may be thought of the form in which it was expressed, exceed ed the legal limits of comment or criticism." " Even the European Court 's approach in protecting the freedom of expression is not different although they have the extensive list of circumstances for limiting the free dom. Article 10 of the European Convention of Human Rights and Fundamental Freedom provides: 229 "(1) Every one has the right to freedom of expression. (2) The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, condi tions, restrictions or penalties as are pre scribed by law and are necessary in a demo cratic society in the interests of national security, territorial integrity or public safety, for the prevention of health or mor als, for the protection of the reputation or rights of others, for preventing the disclo sure of information received in confidence, or for maintaining the authority and impartiality of the judiciary. However, the European Court in Handyside vs United Kingdom, [1976] EHRR/737 observed at 754; "The court 's supervisory functions oblige it to pay the utmost attention to the principles characterising a 'democratic socie ty '. Freedom of expression constitutes one of the essential foundations of such a society, one of the basic conditions for its progress and for the development of every man. Subject to Article 10(2), it is applicable not only to 'information ' or 'ideas ' that are favourably received or regarded as inoffensive or as a matter of indifference, but also to those that offend shock or disturb the State or any sector of the population. Such are the demands of that pluralism, tolerance and broadminded ness without which there is no 'democratic society '. This means, amongst other things, that every 'formality ', 'condition ', 'restric tion ' or 'penalty ' imposed in this sphere must be proportionate to the legitimate aim pur sued. " This takes us to the validity of the plea put forward by the Tamil Nadu Government. In the affidavit filed on behalf of the State Government, it is alleged that some organisa tions like the Tamil Nadu Scheduled Castes/Scheduled Tribes People 's Protection Committee, Dr. Ambedkar People 's Move ment, the Republican Party of India have been agitating that the film should be banned as it hurt the sentiments of people belonging to Scheduled Caste/Scheduled Tribes. It is stated that the General Secretary of the Republican Party of India has warned that his party would not hesitate to damage the cinema 230 theatres which screen the film. It is further alleged that there were some group meetings by Republican .Party members and Dr. Ambedkar People 's Movement with their demand for banning the film. With these averments it was contended for the State that the exhibition of the film. will create very serious law and order problem in the State. We are amused yet troubled by the stand taken by the State Government with regard to the film which has received the National Award. We want to put the anguished question, what good is the protection of freedom of expression if the State does not take care to protect it? If the film is unobjectionable and cannot constitutionally be restricted under Article 19(2), freedom of expression cannot be sup pressed on account of threat of demonstration and proces sions or threats of violence. That would tentamount to negation of the rule of law and a surrender to black mail and intimidation. It is the duty of the State to protect the freedom of expression since it is a liberty guaranteed against the State. The State cannot plead its inability to handle the hostile audience problem. It is its obligatory duty to prevent it and protect the freedom of expression. In this case, two Revesing Committees have approved the film. The members thereof come from different walks of life with variegated experiences. They represent the cross sec tion of the community. They have judged the film in the light of the objectives of the Act and the guidelines pro vided for the purpose. We do not think that there is any thing wrong or contrary to the Constitution in approving the film for public exhibition. The producer or as a matter of fact any other person has a right to draw attention of the Government and people that the existing method of reserva tion in education institutions overlooks merits. He has a right to state that reservation could be made on the basis of economic backwardness to the benefit of all sections of community. Whether this view is right or wrong is another matter altogether and at any rate we are not concerned with its correctness or usefulness to the people. We are only concerned whether such a view could be advocated in a film. To say that one should not be permitted to advocate that view goes against the first principle of our democracy. We end here as we began on this topic. Freedom of ex pression which is legitimate and constitutionally protected, cannot be held to ransom, by an intolerant group of people. The fundamental freedom 231 under Article 19(1)(a) can be reasonably restricted only for the purposes mentioned in Articles 19(2) and the restriction must be justified on the anvil of necessity and not the quicks and of convenience or expediency. Open criticism of Government policies and operations is not a ground for restricting expression. We must practice tolerance to the views of others. Intolerance is as much dangerous to democracy as to the person himself. In the result, we allow these appeals, reverse the judgment of the High Court and dismiss the writ petitions of the respondents. In the circumstances of the case, however, we make no order as to costs. Y.L. Appeals allowed.

The appellant, section Rangarajan is a film producer. He produced a Tamil film "Ore Oru Gramathile" and applied for certificate for exhibition of the film. The examination committee upon seeing the film refused to grant the Certifi cate but on a reference being made to the 2nd Revising Committee for review and recommendation, the Committee by a majority of 5:4 recommended the grant of a 'U ' certificate subject to deletion of certain scenes. On 7.12.87 'U ' certificate was granted which was chal lenged in the High Court by means of writ petitions. It was contended before the High Court that the film is treated in an irresponsible manner, the reservation policy of the Govt. has been projected in a biased manner and the so called appeal in the film that "India is one" is a hollow appeal which touches caste sensitivity of the Brahmin forward caste. It was also asserted that the film would create law and order problem in Tamil Nadu. The Writ Petitions were dismissed by the Single Judge but upon appeal they were allowed and the 'U ' certificate issued to the appellant producer was revoked. These two appeals, one by the producer of the film and the other by the Union of India have been filed by 205 special leave of challenging the decision of the High Court. The principal contentions raised on behalf of the appel lants were: (i) that the fundamental right of freedom of free expression guaranteed under the Constitution covers even the medium of movies; that the opinion on the film ought not to be rested on the isolated passages disregarding the main theme and its message; (ii) That the Court should not concern itself with the correctness or legality of the views expressed in the film and the Court cannot limit the expression on any general issue even if it is controversial and that the writings of the film must be considered in a free and liberal manner in the light of the freedom of expression guaranteed under the Constitution. It was assert ed that the theme of the film is that reservation could be on the basis of economic backwardness instead of caste. Counsel for the Respondents was critical about the manner in which the reservation policy of the Govt. has been condemned and the events and the characters portrayed in the film, as they are depicted in a biased manner and reaction to the film in Tamil Nadu is bound to be volatile and likely to create law and order problem. Allowing the appeals, this Court, HELD: The motion pictures were originally considered as a form of amusement to be allowed to titillate but not to arouse. They were treated as mere entertainment and not an art or a means of expression. Movie motivates thought and action and assures a high degree of attention and retention. It makes its impact simultaneously arousing the visual and aural senses. The movie had unique capacity to disturb and arouse feelings. It has as much potential for evil as it was for good. It has an equal potential to instil or cultivate violent or good behaviour. [211D E; 212G; 213D] Censorship by prior restraint is, therefore, not only desirable but also necessary. [213E] The Censors Board should exercise considerable circum spection on movies affecting the morality or decency of our people and cultural heritage of the country. The moral values in particular, should not be allowed to be sacrificed in the guise of social change or cultural assimilation. [216G H] The Censors should be responsive to social change and they must go with the current climate. The Censors may display more sensitivity 206 to movies which will have a markedly deleterious effect to lower the moral standards of those who see it. [217C D] If the film is unobjectionable and cannot constitution ally be restricted under Article 19(2), freedom of expres sion cannot be suppressed on account of threat of demonstra tion and processions or threats of violence. That would tantamount to negation of the rule of law and a surrender to black mail and intimidation. It is the duty of the State to protect the freedom of expression since it is a liberty guaranteed against the State. The State cannot plead its inability to handle the hostile audience problem. It is its obligatory duty to prevent it and protect the freedom of expression. [230C D] The Revising Committees have approved the film. The members thereof come from different walks of life with variegated experiences. They represent the cross section of the community. They have judged the film in the light of the objectives of the Act and the guidelines provided for the purpose. There is nothing wrong or contrary to the Constitu tion in approving the film for public exhibition. [230E F] The framework of the Indian Constitution differs from the First Amendment to the U.S. Constitution. Article 19(1)(a) guarantees to all citizens the right to freedom of speech and expression. The freedom of the expression means the right to express one 's opinion by words of mouth, writ ing, printing, picture or in any other manner, it would thus include the freedom of communication and the right to propa gate or publish opinion. The communication of ideas could be made through any medium, newspaper, magazine or movie. But this right is subject to reasonable restrictions on grounds set out under Article 19(2). Reasonable limitations can be put in the interest of sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence. [212B D] In matters of certification of films, it is necessary to take prompt action by the respective authorities. The pro ducer who has invested a large capital should not be made to wait needlessly. He has a statutory right to have the valid ity of the film determined in accordance with law. It would be, therefore, proper and indeed appreciative if the film is reviewed as soon as it is submitted. It is not proper to form an opinion by dwelling upon stray sentences or isolated passages disregarding the main theme. [219E; 220B C] 207 Freedom of expression is the rule and it is generally taken for granted. Every one has a fundamental right to form his own opinion on any issue of general concern. He can form and inform by any legitimate means. [223C] Democracy is Government by the people via open discus sion. The democratic form of government itself demands its citizens an active and intelligent participation is a basic features and a rational process of democracy which distin guishes it from all other forms of govt. Public discussion on issues relating to administration had positive value. [223D E] Our commitment to freedom of expression demands that it cannot be suppressed unless the situations created by allow ing the freedom are pressing and the community interest is endangered. The anticipated danger should not be remote, conjectural or far fetched. It should have proximate and direct nexus with the expression. The expression of thought should be intrinsically dangerous to the public interests. In other words, the expression should be inseparably locked up with the action contemplated like the equivalent of a "spark in a power keg". [226G H] It is difficult to understand how the expression in the film with criticism of reservation policy or praising the colonial rule will affect the security of the State or sovereignty and integrity of India. There is no utterance in the film threatening to overthrow the Govt. by unlawful or unconstitutional means. There is no talk of secession either nor is there any suggestion for impairing the integration of the country. The film seems to suggest that the existing method of reservation on the basis of caste is bad and reservation on the basis of economic backwardness is better. The film also deprecates exploitation of people on caste considerations. [222G H; 223A] The fundamental freedom under article 19(1)(a) can be reasonably restricted only for the purposes mentioned in article 19(2) and the restriction must be justified on the anvil of necessity and not the quicks and of convenience and expediency. Open criticism of Government policies and opera tions is not a ground for restricting expression. We must practice tolerance to the views of others. Intolerance is as much dangerous to democracy as to the person himself. [230H; 231A B] The Court allowed the appeals, set aside the judgment of the High Court and dismissed the writ petitions. [231B C] 208 Mutual Film Corporation vs Industrial Commission, (1915) referred to, Burstyn vs Wilson, ; referred to, Schenek vs United States, ; (1919) referred to, Santosh Singh vs Delhi Administration, ; followed, K.A. Abbas vs Union of India, ; referred to, Ramesh vs Union of India, ; ; Bhagwat Charan Shukla vs Provincial Government, AIR 1947 Nag 1 at 676, Rajkappoor vs Laxman, ; , Maneka Gandhi vs Union of India, [1978] 2 SCR 621; Naraindas vs State of Madhya Pradesh, ; ; Sakal vs Union of India, ; , Whitney vs California, [274] U.S. 357, 375 378, 1927; Manohar vs Govt. of Bombay, AIR 1950 Bombay 210; Niharender Dutt Majumdar vs Emperor, AIR 1942 FC 22 and Handyside vs United Kingdom, [1975I EHRR/737 at p. 754 referred to.

Civil Appeal No. 1577 (NCE) of 1987. From the Judgment and Order dated 24.4. 1987 of the Madras High Court in Election Petition No. 1 of 1986. Ram Jethmalani, Ms. Rani Jethmalani and M.G. Ramachan dran for the Appellant. R.K. Garg, section Padmanabhan, K. Raj. Choudhary, R. Mohan, K. Chandrashekharan, R. Ayyam Perumal, V. Krishnamurthy, section Thananjayan, K.V. Vijaya Kumar, A.V. Rangam and V.R. Kari thi~ kayan for the Respondents. 770 The Judgment of the Court was delivered by KANIA, J. This is an appeal from a judgment and order delivered by a learned Single Judge of the Madras High Court on April 24, 1987 dismissing an election petition filed by the appellant. The appellant herein was the petitioner before the High Court and the respondents nos. 1 to 8 herein were arraigned as respondents in the same order in the election petition. The dispute pertains to the election of six Members to the Rajya Sabha by the elected Members of the Tamil Nadu Legislative Assembly. The election was held, as scheduled, on June 28, 1986. The appellant and respondents nos. 1 to 7 were the eight candidates in the field, all the nominations having been found valid. The 8th respondent was the Returning Officer. The polling took place, as scheduled, on June 28, 1986 and, immediately thereafter, the ballot box was opened and the votes were sorted out. The election was under the preferential system of voting and the particulars of the first preferences votes cast and secured by the candidates are as follows: Candidates First Preference Votes 1. Appellant 33 2. 1st Respondent 35 3. 2nd Respondent 31 4. 3rd Respondent 33 5. 4th Respondent 32 6. 5th Respondent 34 7. 6th Respondent 34 8. 7th Respondent nil Out of the 33 first preference votes cast in favour of the appellant, one ballot paper was rejected by the 8th respondent, the Returning Officer, on the ground that the said ballot paper was marked by the voter otherwise than with the article supplied for that purpose. It may be men tioned here that the first preference was indicated on the said ballot paper by a ball point pen with green ink whereas in the ball point pen kept along with the ballot box had blue ink. The working result sheets of the counting were prepared and announced by the 8th 771 respondent. The particulars of the said working result sheets are as follows: 1. Appellant 3219 2. 1st Respondent 3301 3. 2nd Respondent 3270 4. 3rd Respondent 3300 5. 4th Respondent 3301 6. 5th Respondent 3301 7. 6th Respondent 3301 In consequence, respondents nos. 1 to 6 were declared as duly elected and the appellant was declared as having lost the election. It is submitted by learned counsel for the appellant, that (1) the first preference vote in his favour in which first preference was indicated on the ballot paper in green ink was wrongly rejected. The rejection of the said ballot paper by the Returning Officer was duly objected to by the appellant at the time of counting. The said ballot paper is hereinafter referred to as "the said rejected ballot paper". If the said rejected ballot paper had been received as valid, the appellant would have the proportionate number of preference votes and would have been declared elected. The second contention raised by the appellant was that three ballot papers which did not contain the figure 1 in the space intended for marking the said figure should have been rejected and the same were wrongly accepted. These ballot papers had been used for casting first preference votes in favour of the first respondent and if the same had been rejected, first respondent would not have been elected and in his place the appellant would have been elected. Both the mistakes according to the appellant materially affected the result of the election. Before going into the controversy raised before us, we may note the relevant provisions of the Election Law. The election petition was filed under Chapter II of the Repre sentation of the People Act, 1951 (hereinafter referred to as "the said Act"). Section 59 of the said Act provides that at every election where a poll is taken votes shall be given by ballot in such manner as may be prescribed. We are not 772 concerned here with the special procedure for voting pro vided in certain cases provided for under section 60 said Act. Section leo of the said Act deals with the grounds for during elections to be void. The relevant portion of the said section reads thus: "100(1) Subject to the provisions of sub section (2) if the High Court is of opinion (a) x x x (b) x x x (c) That any nomination has been improperly rejected; or (d) that the result of the election, in so far as it con cerns a returned candidate, has been materially affected (i) by the improper acceptance or any nomination, or (ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent, or (iii) by the improper reception, refusal or rejection of any vote or the reception of any vote which is void, or (iv) by any non compliance with the provisions of the Con stitution or of this Act or of any rules or orders made under this Act, the High Court shall declare the election of the returned candidate to be void". Conduct of Election Rules, 1961 (referred to hereinafter as "the Election Rules") came into force on 25th of April, 1961. Rule 30 of the Election Rules prescribes the form of the ballot papers. Rule 31 of the Election Rules provides for arrangements at polling stations. Sub rule (3) of Rule 31 runs as under: "(3) the returning officer shall provide at each polling station a sufficient number of ballot boxes, copies of the relevant part of the electroal roll, ballot papers, instru ments for stamping the distinguishing mark on ballot 773 papers and articles, necessary for electors to mark the ballot papers. " Rule 39 of the Election Rules deals with the maintenance of secrecy of voting by electors within polling stations and the voting procedure. The material portion of sub rule (2) of that rule runs as follows: "(2) The elector on receiving the ballot paper shall forth with (a) proceed to one of the voting compartments: (b) there make a mark on the ballot paper with the instru ment supplied for the purpose on or near the symbol of the candidate for whom he intends to vote." Rule 70 lays down rules for the conduct of polls. The portion of Rule 70 material for the purposes of the case runs as follows: "(a) x x x x (b) to every election in a council unless voting by postal ballot has been directed in the whole of that constituency under clause (b) of rule 68, subject to the following modifications, namely: (i) clause (a) of sub rule (1) of rule 31 shall not apply to an election by assembly members; (ii) in lieu of rules 37 to 40, the following rules shall apply: 37A. Method of voting. (1) Every elector has only one vote at an election irrespective of the number of seats to be filled. (2) An elector in giving his vote (a) shall place on his ballot paper the figure 1 in the space opposite the name of the candidate for whom he wishes to vote in the first instance; and 774 (b) may, in addition, place on his ballot paper the figure 2 or the figures 2 and 3 or the figures 2, 3 and 4 and so on, in the space opposite the names of the other candidates in the order of his preference. 38A. x x x x 39A. Maintenance of secrecy of voting by electors within polling station and voting procedure (1) Every elector, to whom a ballot paper has been issued under rule 38A or under any other provision of these rules, shall maintain secrecy of voting within the polling station and for that purpose observe the voting procedure hereinafter laid down. (2) The elector on receiving the ballot paper shall forth with (a) proceed to one of the voting compartments; (b) record his vote in accordance with sub rule (2) of rule 37A with the article supplied for the purpose. (c) fold the ballot paper so as to conceal his vote; (d) insert the folded paper in the ballot box; and (e) quit the polling station: (It is not necessary to quote the rest of Rule 39A for the purposes of this Judgment) It was submitted by learned counsel for the appellant that the express on "article supplied for the purpose" used in Rule 39A(2)(b) and Rule 73(2)(e) of the Election Rules was misconstrued by the High Court. It was submitted by him that in the context of the election law and the instructions contained in the hand books to which reference will be made that expression should be interpreted as meaning "actually given" or "handed over". In this regard, reference was made to instructions given to the Presiding Officer in respect of elections to Lok Sabha and State Assemblies. The relevant instructions in the said hand book provide that the proce dure followed in respect of the election to Lok Sabha and State Assemblies is that the Polling Officer or 775 Polling Assistant must give the rubber stamp properly inked to the voter before he proceeds into the voting booth for marking his choice and the Polling Officer or Polling As sistant must take back the said rubber stamp from the voter after he comes out from the voting both having cast his vote and then hand it over to the next voter and so on. It was urged that the same procedure should have been followed mutatis matandis in the case of an election to the Legisla tive Council like the one in question before us, and if this were done, it would imply that the ball point pen for mark ing the preference should have been personally handed over to the voter with instructions to use it for marking his preference. This argument is not worthy of acceptance. As pointed out by the High Court, the nature of the elections to the Lok Sabha and the State Assemblies is different from that of elections to a Legislative Council or Rajya Sabha and this difference has to be taken into account in inter preting the relevant words used in the rules relating to an election. The election to Lok Sabha and the State Assemblies is a direct election on the basis of a single member con stituency where the voter has only one choice whereas in the case of an election to the Rajya Sabha, the said election is by members of the Legislative Assemblies of the States and the election is an indirect election conducted on the prin ciple of proportional representation by means of a single transferable vote. In the case of elections to the Lok Sabha and State Assemblies, a rubber stamp with arrow cross mark is provided with which the voter has to make a mark on the symbol of the candidate of his choice in the ballot paper. Many of the voters are not familiar with the election proce dure and it is in these circumstances that the requirement has been provided that a rubber stamp containing the cross mark properly inked should be handed over to each voter with instructions to use the same for marking his vote or choice. In the case of the election to the Rajya Sabha or a Legisla tive Council, the situation is entirely different. The number of voters is limited. One could assume that they are reasonably familiar with the procedure of voting; and the article supplied for marking the preference is a fountain pen or ball point pen. In these circumstances, there is hardly any warrant for requiring that the procedure of handing over personally to each voter the article for mark ing his preference should be followed and it is quite/ ' adequate if the article for marking the preference, namely, the fountain pen or ball point pen is made available in the voting booth with clear instructions that the same should be used in marking the preference. It must also be borne in mind that there is no express rule or instruction in connec tion with the elections to the RaRajya Sabha by Members of the State Assemblies or elections to the Legislative Coun cils of States which specifically requires that the arti 776 cle for marking the preference should be handed over to each voter personally. In these circumstances, in our view, the High Court was right in interpreting the expression "article supplied for the purpose" in Rule 39A(2)(b) and Rule 73(2)(e) of the Election Rules as meaning "made available for the purpose" or "provided for the purpose". Reliance was placed by learned counsel for the appellant on the decision of this Court in Ram Utar Singh Bhaduria vs Ram Gopal Singh & Ors., ; and particularly, the observations at page 200 of the said report. We are of the view that that decision as well as the other decisions in this connection cited before us are in connection with the elections to the Lok Sabha or the State Assemblies and have no application to an indirect election like the election to the Rajya Sabha by Members of State Assemblies. Rule 56 of the Election Rules deals with counting of votes. The material portion of sub rule (2) of Rule 56 of the Election Rules runs as follows: "56. Counting of Votes. (1) The ballot papers taken out of each ballot box shall be arranged in convenient bundles and scrutinized. (2) The returning officers shall reject a ballot paper (a) x x (b) If it bears no mark at all or, to indicate the vote it bears a mark elsewhere than on or near the symbol of one of the candidates on the face of the ballot paper or, it bears a mark made otherwise than with the instrument supplied for the purpose, or . " Rule 73 deals with the scrutiny of opening of ballot boxes and packets of postal ballot papers. The material portion of sub rule (2) of Rule 73 runs as follows: "(2) a ballot paper shall be invalid on which (a) the figure 1 is not marked; or (b) the figure 1 is set opposite the name or more than one candidate or is so placed as to render it doubtful to which candidate it is intended to apply; or 777 (c) x x x (d) x x x (e) there is any figure marked otherwise than with the article supplied for the purpose. " It would now be convenient to deal with the first con tention of the learned counsel for the appellant. As we have already pointed out, the said rejected ballot paper was rejected on the ground that it was marked otherwise than with an article supplied for the purpose. As we have already pointed out, the figure 1 indicating the first preference in the said ballot paper was marked in green ink whereas in the ball point pen kept in the voting booth with the ballot box, the ink used was blue. The returning officer took the view that the said marking of preference in green ink clearly established that it was done with a bail point pen other than the one which was supplied for marking the preference and hence the vote was invalid. It was urged by Shri Jeth malani in this connection that although the marking of preference was done in green ink, there was no doubt that the intention of the over concerned was to give the first preference vote to the appellant. It was submitted by him that the fundamental rule of election law is that effect should be given to the intention of the voter and this could be done only by treating the vote as valid, as the intention of the voter was quite clear. Mr. Jethmalani may be right when he contends that the intention of the voter could be clearly gathered and it was to cast the first preference vote for the appellant. However, it is not enough for the vote to be valid that it is possible to gather the intention of the voter to vote for a particular candidate as pointed out by the Constitution Bench of this Court in the leading case of Hari Vishnu Kamath vs Syed Ahmad Ishaque and Others, ; at page 1132. This Court held that ( 1132): "But when the law prescribes that the intention should be expressed in a particular manner, it can be taken into account only if it is so expressed. An intention not duly expressed is, in a court of law, in the same position as an intention not expressed at all." In the present case Rule 39(2)(b) which is applicable to the election petition before us clearly prescribes that the vote must be cast by the voter in accordance with the said sub rule (2) of Rule 39 of the Election Rules, with the article supplied for the purpose. Rule 39A(2)(b) read with Rule 37A(2)(a) prescribes that an elector in giv 778 ing his vote shall place on his ballot paper the figure 1 in the space opposite the name of the candidate for whom he wishes to vote in the first instance with the article sup plied for the purpose. Hence, unless the ball point pen kept with the ballot box is not to be regarded as the article supplied for marking the preference, the intention of the elector in the present case cannot be given effect to as it was expressed in a manner inconsistent with the provisions in the rules. Clause (b) of sub rule (2) of Rule 56 of the Election Rules provides inter alia that if a ballot paper contains a mark made on it otherwise than with the instru ment supplied for the purpose, the returning officer shall reject the said ballot paper. Rule 73 is included in Part VII of the Election Rules and that Part applies to the counting of votes at elections by Assembly members. Clause (e) of sub rule (2) of Rule 73 of the Election Rules set out earlier that a ballot paper shall be invalid on which there is any figure marked otherwise than with the article sup plied for the purpose. Rule 73 is directly applicable to the case of the election in question and as aforesaid it pre scribes that if on the ballot paper there is any figure marked otherwise than with the article supplied for the purpose, the ballot paper shall be invalid. Assuming that the voter in this case had expressed his intention clearly by marking the figure 1 in green ink, he did so in violation of the express provisions of the Rules which have a statuto ry force and hence no effect can be given to that intention. It was next argued in this connection that the expres sion "article supplied for the purpose" as used in the said Rules 39A(2)(b) and 73(2)(e) was misconstrued by the Presid ing Officer and the High Court in the present case. It was submitted by learned counsel for the appellant that Rule 56(2)(b) was not complied with by making a ball point pen available in the polling compartment near the ballot box for the use of the electors in marking their preference as law required that the Polling Officer should personally hand over the bali point pen to the voter before he proceeds to the voting booth with instructions to mark his preference with that ball point pen. He referred to the hand book dealing with the procedure prescribed in elections to the Lok Sabha and to the Legislative Assemblies and submitted that the said procedure was applicable mutatis mutandis to elections to the Rajya Sabha and the Legislative Councils. It was urged by him that the second proviso to clause (e) of sub rule (2) of Rule 73 of the Election Rules provides that if the returning officer is satisfied that any such defect as is mentioned in the said clause has been caused by any mistake or fault on the part of the Presiding Officer or Polling Officer, the ballot paper shall not be rejected merely on the ground of the said defect. It was contended by him that the Polling Officer was bound to hand over to 779 each voter individually the ball point pen to be used for marking his preference on the ballot paper. He submitted that the duty of the Polling Officer was to hand over the ball point pen to the voter to use the same for marking his preference and it was also his duty to take back the said pen from the voter after he has cast his vote and given the same to the next voter. He urged that merely providing a bail point pen for voting did not constitute substantial compliance with Rule 39A(2)(b) or Rule 73(2)(e). He urged that the mistake in the present case, namely, marking of the preference with green ink on the ballot paper, had occurred because no bail point pen was handed over as aforesaid to the voter concerned. We are unable to accept this submis sion. The procedure followed in an election to the Lok Sahba or the State Assembly is to give to the voter a rubber stamp for voting with an arrow mark properly inked with instruc tions to use the same for voting before the voter enters the voting compartment to put his mark against the name of the candidate for whom he desires to vote and to take the rubber stamp back from the voter when he comes out of the voting compartment and to repeat this process for every voter. In the first place, it must be noticed that there is no rule or standing order requiring the Presiding Officer or to follow this procedure in the case of an election to the Rajya Sabha or Legislative Council of a State. There is a material difference between an election to Lok Sabha or a Legislative Assembly which is a direct election with one constituency for each seat and only vote is to be cast and an election to Rajya Sabha which is an indirect election with the preferen tial system of voting. Sub rule (2) of Rule 39 which is applicable to such an election to a Legislative Assembly provide that the elector on receiving the ballot paper has to make a mark on the ballot paper with the instrument supplied for the purpose on or near the symbol of the candi date for whom he intends to vote. It is only in the case of an election like this that it becomes necessary to provide a rubber stamp properly inked to the voter to mark his prefer ence. It must be remembered that in such an election case, the number of voters or electors is extremely large and many of them might be unfamiliar with the voting procedure. An election to the Rajya Sabha, on the other hand, is an indi rect election with multiple candidates ' constituency and the system of voting followed is the preferential system of voting. Rule 37A of the Election Rules which is applicable to such an indirect election by virtue of the provisions of Rule 70 provides that an elector in giving his vote shall place on his ballot paper figure 1 in the space opposite the name of the candidate for whom he wishes to vote in the first instance. This difference in the case of an election to the Rajya Sabha makes it wholly unnecessary that the Presiding Officer or the Polling Officer should hand over to 780 every voter individually a bail point pen to mark his vote and it would quite wholly be adequate if the article for marking the preference, namely, a ball point pen, is provid ed to the voter to use the same for marking his preference or if the pen is placed in such a way as to make it clear that the marking of the preference is to be done with that pen and instructions given to use that pen for marking the preference. The evidence of the returning officer, which has been accepted by the High Court is to the effect that there were two voting compartments in the polling booth and in each of them a ball point pen with blue ink was kept as soon as an elector went into the polling booth, one Polling Assistant gave him his identity slip and another Polling Assistant gave to the elector printed copies of Rules 37A and 39A of the Election Rules and a copy of the guidelines. Then the elector went to the first Polling Officer who obtained his signature in the counter foil of the ballot paper and instructed the elector that he should mark his preference on the ballot paper with the article kept for the purpose inside the voting compartment. Another Polling Officer gave the ballot paper to the voter and again in structed him to go into the voting compartment and mark the ballot paper with the article kept there for that purpose, fold the ballot paper before coming out and put in into the ballot box in front of the Polling Officer. In the light of this evidence, we are of the view that the ball point pen with blue ink kept in the voting compartment for marking the preference must be regarded as the article supplied for that purpose, namely, the purpose of the voter marking his pref erence on the ballot paper. It was submitted by learned counsel for the appellant that it was possible that a voter might have used his own pen if the pen kept in the voting compartment was not working and such a vote cannot be re garded as invalid. We are not concerned with a case of that kind here as there is no evidence that in any voting com partment the ball point pen kept there was not working. It was next urged that if a voter had used another ball point pen, that is, other than the one kept in the voting compart ment containing the blue ink, it would not have been possi ble to find out that the preference marked with such a bail point pen had been used for marking the preference and not the pen supplied. This is of no relevance here. The possibility that in a given case a breach of the rules may be difficult to detect cannot lead to the conclusion that the mandatory requirement that preference on the ballot paper must be marked with the article supplied for the purpose should be regarded as not binding in law. We are, therefore, of the view that the said ballot paper was right ly rejected by the returning officer and the arguments urged by learned counsel for the appellant in that contention must be rejected. 781 The next point is regarding the three first preference votes cast in favour of respondent No. 1 which were accepted by the returning officer as stated earlier. In respect of these three votes, the figure 1 is marked, not in the right hand column opposite the name of respondent No. 1, but in the left hand column containing the name of candidate and opposite the name of respondent No. 1. The appellant unsuc cessfully objected to the validity of these three ballot papers on the ground that the first preference had not been marked in the space provided for that purpose opposite the name of the candidate concerned, namely, respondent No. 1, as required by Rule 37A(2). It was submitted by learned counsel for the appellant that the returning officer as well as the High Court were in error in holding that the said three ballot papers were valid. We propose to discuss this controversy very shortly because we are in full agreement with the reasoning and conclusions given by the High Court in its impugned judgment in coming to the conclusion that the returning officer was justified in rejecting the objec tions preferred by the appellant to the said three votes and holding that the same were valid. The relevant portion of Rule 37A(2) of the Election Rules has already been quoted earlier. Clause (a) of sub rule (2) of that Rule only pro vides that the voter shall place on his ballot paper the figure i in the space opposite the name of the candidate for whom he wishes to vote in the first instance. it is signifi cant that this rule does not specifically say that the figure 1 must be placed in the column earmarked for marking the preference but only requires that the figure 1 should be placed opposite the name of the candidate. Sub rule (4) of Rule 71 which is a definition runs as follows: "71(4): 'first preference ' means the figure 1 set opposite the name of a candidate; 'second preference ' means the figure 2 set opposite the name of a candidate; 'third pref erence ' means the figure 3 set opposite the name of a candi date, and so on;" It is significant that in this sub rule also there is nothing to indicate that the preference must be indicated in the column reserved for that purpose, the only requirement being that the figure 1 should be written opposite the name of the candidate. Similarly, sub rule (2)(b) of Rule 73 only lays down that if the figure 1 is set opposite the name of more than one candidate or is so placed as to render it doubtful to which candidate it applied, the ballot paper would be invalid. Sub rule 12) of Rule 73 deals with the invalidity of ballot papers and that subrule nowhere states that merely by reason of the preference being 782 marked in the wrong column, if the marking is opposite the name of the candidate concerned, the ballot paper shall be rendered invalid. It is true that the column in which the preference should have been marked and intended for that purpose was the column on the righthand side of the first column where the name of the candidate was to be put; but there is no express provision to the effect that unless the preference is marked in the correct column, the ballot paper would be invalid. In such a situation, the principle enunci ated by this Court in several judgments and reiterated in section Sivaswami vs V. Malaikannan & Ors., ; that the primary task of the Court in a case where the question is whether the ballot paper is invalid is to ascertain the intention of the voter, must be applied. In that case, the Court held that the ballot paper shall not be rejected as invalid if it is reasonably possible to gather a definite indication from the marking so as to identify the candidate in favour of whom the vote had been intended to be given. This, of course, is subject to the rule that before a ballot paper is accepted as valid the ballot paper must not be invalid under any other express provision and the intention of the voter must not be expressed in a manner which is contrary tO or totally inconsistent with the manner pre scribed under the said Act or the Election Rules for ex pressing the same. In the case of the said, three votes in question, the figure 1 was clearly marked opposite the name of respondent No. 1, being the candidate concerned, as required by the express provision of the said Rule 37A and the intention of the voter was clearly to cast the first preference in favour of respondent No. 1. In these circum stances, the ballot papers were rightly accepted by the returning officer as valid and the High Court was justified in coming to the conclusion to which it has arrived. In the result, the appeal fails and is dismissed. Howev er, considering the facts and circumstances of the case, there will be no order as to costs. R.S.S. Appeal dis missed.

Election of six Members to the Rajya Sabha by the elect ed Members of the Tamil Nadu Legislature Assembly was held in June 1986. The appellant and respondent nos. 1 to 7 were the eight candidates in the field. Respondent Nos. 1 to 6 were declared duly elected and the appellant was declared as having lost the election. The appellant thereupon filed an election petition which was dismissed by the High Court. Before this Court it was contended on behalf of the appellant that: (1) the first preference vote in his favour in which the first preference was marked on the ballot paper in green ink had been wrongly rejected on the ground that it was marked otherwise than with the article supplied for the purpose, i.e., the ball point pen with blue ink which had been kept in the voting booth; and (2) the three ballot papers indicating the first preference in favour of the first respondent, which did not contain the figure 'I ' in the space intended for marking the said figure, had been wrongly accepted. In support of the first contention it was argued that: (1) the expression "article supplied for the purpose" used in Rule 39A(2)(b) and Rule 73(2)(e) of the Conduct of Election Rules, 1961, was misconstrued by the High Court; (2) in the context of the election law, the instructions contained in the hand books, and the procedure followed in respect of the election to Lok Sabha and State Assemblies, the expression "article supplied for the pur pose" should be interpreted as meaning "actually given" or "handed over", and as such the ball point pen for marking the preference should have been personally handed over to the voter with instructions to use it for marking his pref erence; (3) the mistake in the present case, namely, marking 768 of the preference with green ink on the ballot paper, had occurred because no bail point pen was handed over to the voter concerned; and (4) the fundamental rule of election law is that effect should be given to the intention of the voter and this could be done only by treating the vote as valid. Dismissing the appeal, this Court, HELD: (1) There is a material difference between an election to Lok Sabha or a Legislative Assembly which is a direct election with one constituency for each seat and only the vote is to be cast, and an election to Rajya Sabha which is an indirect election with the preferential system of voting. This difference has to be taken into account in interpreting the relevant words used in the Rules relating to an election. [779D E] (2) Rule 39A(2)(b) read with Rule 37A(2)(a) of the Conduct of Election Rules 1961 prescribes that at an elec tion in a council an elector in giving his vote shall place on his ballot paper the figure 'I ' in the space opposite the name of the candidate for whom he wishes to vote in the first instance with the article supplied for the purpose. Further, Rule 73 which is directly applicable to the count ing of votes at elections by Assembly Members, prescribes that if on the ballot paper there is any figure marked otherwise than with the article supplied for the purpose, the ballot paper shall be invalid. [777H; 778A; D] (3) The High Court was right in interpreting the expres sion "article supplied for the purpose" in Rule 39A(2)(b) and Rule 73(2)(e) of the Election Rules as meaning "made available for the purpose" or "provided for the purpose. " [778E] Ram Utar Singh Bhaduria vs Ram Gaopal Singh & Ors., ; distinguished. (4) The difference in the case of an election to the Rajya Sabha makes it wholly unnecessary that the Presiding Officer or the Polling Officer should hand over to every votor individually a hall point pen to mark his vote and it is enough if the article for marking the preference, namely, bail point pen, is provided to the voter to use the same for marking his preference or if the pen is placed in such a way as to make it clear that the marking of the preference is to be done with that pen and instructions given to use that pen for marking the preference. [779H; 780A B] (5) It is not enough for the vote to be valid that it is possible 769 to gather the intention of the voter to vote for a particu lar candidate. When the law prescribes that the intention should be expressed in a particular manner, it can be taken into account only if it is so expressed. [777E G] Hari Vishnu Kamath vs Syed Ahmad Ishaque & Ors., ; , refterred to. (6) Assuming that the voter in this case had expressed his intention clearly by marking the figure 1 in green ink, he did so in violation of the express provisions of the Rules which have a statutory force and hence no effect can be given to that intention. [778D] (7) Clause (a) of sub rule (2) of Rule 37A only provides that the voter shall place on his ballot paper the figure 1 in the space opposite the name of the candidate for whom he wishes to vote in the first instance. It is significant that this rule does not specifically say that the figure 1 must be placed in the column earmarked for marking the preference but only requires that the figure 1 should be placed oppo site the name of the candidate. [781D E] (8) In the case of the three first preference votes cast in favour of respondent No. 1 the figure 1 was clearly marked opposite the name of respondent No. 1, being the candidate concerned, as required by the express provision of the said Rule 37A, and the intention of the voter was clear ly to cast the first preference in favour of respondent No. 1. [782E] section Sivaswami vs V. Malaikannan & Ors., ; , referred to.

Appeal No. 1361 of 1966. Appeal by special leave from the judgment and order dated April 5, 1963 of the Madras High Court in Second Appeal No. 1287 of 1960. Niren De, Attorney General, V. A. Seyid Muhammad, R.N. Sachthey and S.P. Nayar, for the appellant. Lily Thomas, for the respondent. The Judgment of the Court was delivered by Shah, J. A.V. Narasimhalu hereinafter called "the plaintiff" imported 43 reels of newsprint 131/4" width under a bill of Entry dated July 15, 1954. The width of the newsprint being less than 15" no import duty was payable under the Open General Licence The Assistant Collector of Customs held that the commodity imported fell within item 44 of the Customs Tariff and levied a duty of 33 3/8% ad valorem. The plaintiff paid the duty under protest, and applied for refund of the duty relying upon a decision of the High Court o.f Madras in writ petition No. 402 of 1954 in which it was decided that newsprint of width less than 15" was exempt from duty. This application was rejected. An appeal to the Collector of Customs and a revision application to the Central Board of Revenue were unsuccessful. The customs authorities rejected the claim on the ground that the claim not having been made within three months of the date of demand was barred under section 40 of the . The plaintiff then instituted an action in the City Civil Court for a decree for Rs. 2,669 62 against the Union of India. The Trial Court decreed the claim holding that the claim was not barred. In appeal the Principal Judge, City Civil Court held that the City Civil Court had no jurisdiction to entertain the suit. In so holding he relied upon the judgment of the Judicial Committee in Secretary of State for India vs Mask & Co. (1). In Second Appeal, the High Court of Madras reversed the judgment of the Principal Judge, City Civil Court, and restored the decree passed by the trial court. The Union of India has appealed to this Court with special leave. It is unnecessary to consider whether the claim is barred under section 40 of the , for, in our judgment, the Civil Court had no, jurisdiction to. entertain the suit. Section 188 of the , insofar as it is relevant, provides: "Any person deeming himself aggrieved by any decision or order passed b.y an officer of Customs under (1) L.R. 67 I.A. 222. 147 this Act may, within three months from the date of such decision or order, appeal therefrom to the Chief Customs Authority, or in such cases as the Central Government directs, to any officer of Customs not inferior in rank to a Customs Collector and empowered in that behalf by name or in virtue of his office by the Central Government. Every order passed in appeal under this section shall, subject to the power of revision conferred by section 191, be final". Section 191 provides: "The Central Government may, on the application of any person aggrieved by any decision or order passed under this Act by any officer of Customs or Chief Customs Authority, and from which no appeal lies, reverse or modify such decision or order". The Act is a complete code dealing with liability to pay customs duty and for obtaining relief against excessive or erroneous levy and other related matters. The jurisdiction of the Civil Court to entertain a suit on the ground that the duty was improperly or illegally levied is excluded. It is true that the decision or order passed under section 188 of the in appeal to the appellate authority is expressly declared final. But on that account it cannot be held that by refusing to appeal against the decision or by refusing to claim relief in the manner provided by section 188 and section 191 of the , a party aggrieved by the order of a Customs Officer may invest the Civil Court with jurisdiction to entertain a suit. In Mask & Company 's case(1) a firm of merchants imported a quantity of betelnuts into. British India. The Assistant Collector of Customs assessed them for the purposes of duty on a tariff as "boiled", rejecting the contention of the importers, that they Were "raw sliced betel nuts" subject to duty ad valorem. The importers, appealed from the decision of the Assistant Collector to the: Collector of Customs. The appeal was dismissed, and in revision to the Government of India the Collector 's decision was affirmed. A suit was then filed by the importers to recover the excess amount collected from them, by levying duty upon a tariff and not ad valorem. Before the Judicial Committee it was contended that the decision or order passed by the officer of Customs could only be challenged by an appeal under section 188 of the and jurisdiction of the Civil Court was excluded. (1) L.R. 67 I.A. 222. 148 Alternatively it was contended that the right of appeal conferred by section 188 constituted a procedure which was alternative to procedure in the civil courts, and since the importers in that option had chosen to proceed under section 188, they were bound by that election, and were thus excluded from resort to the civil courts. The Judicial Committee observed that adjudication as to confiscations, increased rates of duty or penalties made under the power conferred by section 182 were decisions or orders within the meaning of section 188, and that the decision of the Collector under section 188 was final and excluded the jurisdiction of the Civil Court. The Judicial Committee did not express any opinion on the question whether prior to taking an appeal under section 188 the porters would have been entitled to resort to the civil courts. But in our judgment it would not be open in all situations where a party who had right to appeal to refuse to resort to the procedure prescribed by the statute and to file a suit. The express declaration in section 188 of the that the order of the Collector in appeal shall be final does not imply that a suit will lie against the decision or order of the original authority. In a recent judgment of this Court Dhulabhai etc. vs State Madhya Pradesh and Anr.(1) this Court set out certain principles relating to the exclusion of the jurisdiction of the Civil Court. The propositions (1), (2), (5), (6) & (7) are relevant. It may be observed that it was not the case that the Assistant Collector of Customs had not acted in conformity with the fundamental principles of judicial procedure, nor was it the case that the provisions of the Act were ultra vires or unconstitutional. The Act in terms, creates a special liability and provides for determination of the right of the State to recover duty and the liability of the importer to pay duty and by the clearest implication it is provided that it shall be determined by the Tribunal so constituted. The High Court in the judgment under appeal observed: " . the: question in these. appeals is different, namely, whether the Collector could be said to be acting within his jurisdiction, if he, in direct disregard of the provisions of the Act and the Rules made thereunder, levied a duty upon the goods which were not liable to duty and compelled by duress as it were the importer to pay the same before taking delivery of the goods. The result of his action was that the respective appellants had to part with certain sums of money which were collected from them under the colour of statutory power. In such a case, a suit will undoubtedly (1) ; 149 be maintainable in a civil court by showing that the Customs authorities had excessively charged duty; it will really be a common law right to property being interfered with. It may be that the remedy provided under section 188 of the would be available to the aggrieved importer to challenge the levy on the ground that it was either improperly made or that the duty was collected under a mistake or under duress. But in all such cases, there will also exist a remedy under the common law in a civil Court, for the simple reason that these categories of cases will amount to a levy beyond the jurisdiction of the authority, or one made under duress, or paid by mistake. " But an erroneous decision of the Customs Authority cannot be said to be reached without jurisdiction merely because it may be shown in some collateral proceeding to be wrong. Normally an action of an administrative authority interfering with the right to property may be challanged by resort to a civil court, Yet in the case of a right which depends upon a statute, the jurisdiction of the civil court to grant relief may by express provision or by clear implication of the statute be excluded. Where a statute re enacts a right or a liability existing at common law, and the statute provides a special form of remedy, exclusion of the jurisdiction of the civil court to grant relief in the absence of an express provision, will not be readily inferred. Where, however a statute creates a new right or liability and it provides a complete machinery for obtaining redress against erroneous exercise of authority, jurisdiction of the civil court to grant relief is barred, Liability to pay a duty of custom is not a common law liability: it arises by virtue of the : in respect of any grievance arising in consequence of enforcement of that liability machinery has been provided by the Act. Having regard to the complicated nature of the questions which arise in the determination of liability to pay duty of customs the Legislature has invested the power of determining liability and the manner of enforcement thereof upon a specially authorised hierarchy of tribunals. An appeal lies against the order of the Assistant Collector of Customs against an order imposing duty as well as an order refusing to refund duty, and the grievance may be carried to the Central Board of Revenue. In our judgment, the jurisdiction of the civil court is by clear implication of the statute excluded. We, however, deem it necessary to observe that the civil courts have jurisdiction to examine cases in which the Customs Authority has not complied with the provisions of the statute or the officer of customs has not acted in conformity with the fundamental principles of judicial procedure or the Authority has acted 150 in violation of the fundamental principles of judicial procedure or he has made an order which is not within his competence or the statute which imposes liability is unconstitutional, or where the order is alleged to be mala fide. A civil suit will lie for obtaining appropriate relief in these cases. But the exclusion of the jurisdiction of the civil court to entertain a suit does not exclude the jurisdiction of the High Court to issue high prerogative writs against illegal exercise of authority by administrative or quasi judicial tribunals. The finality which may be declared by the statute qua certain liability either by express exclusion of the jurisdiction of the civil court or by clever implication does not affect the jurisdiction of the High Court to issue high prerogative writs. The jurisdiction of the civil court to entertain a suit challenging the validity of the imposition of the duty of customs being excluded, the plaintiff 's suit must fail. But it must be observed that the present is a fair illustration of the administration not making a serious attempt to avoid futile litigation for small claims. There was a judgment of the High Court of Madras on the identical question which fell to be determined. If the plaintiff had moved the High Court in exercise of its jurisdiction under Article 226 the Union had practically no defence. The Union could without loss of face accede to the request of the plaintiff to refund the amount collected. The learned Attorney General stated that the Union desired to obtain a decision of this Court on the extent of the jurisdiction of the Civil Court to entertain a suit challenging the decision of the Customs Authorities, because in the view of the Law Advisers the High Court had fallen into error in enunciating the principles. But the High Court recorded the judgment under appeal after the claim was resisted by the Union. We are glad to record the assurance given by the Attorney General that whatever may be the decision in the appeal, the Union of India will refund the amount of tax unauthorised recovered by the Assistant Collector of Customs. This was essentially a case in which when notice was served the Central Government should instead of relying upon technicalities have refunded the amount collected. We trust that the Administrative authorities will act in a manner consistent not with technicalities, but with a broader concept of justice if a feeling is to be nurtured in the minds of the citizens that the Government is by and for the people. The appeal is allowed. The suit is ordered to be dismissed. The order of costs passed by the High Court is however maintained. There will be no order as to costs in this appeal. Y.P. Appeal allowed.

Section 188 of the , provides for an appeal against any order of an officer of customs and the order passed in the appeal is made final subject to the. revision under section 191 of the Act. The respondent claimed refund of customs duty paid by him under protest. The claim was rejected. An appeal to the Collector of Customs and a revision to the Central Board of Revenue= were unsuccessful. The respondent instituted an action in the Civil Court for refund of the amount. The trial court decreed the suit but the first appellate court held that the civil court had No. jurisdiction to entertain the suit. The High Court, in further appeal, restored the decree of the trial court. Allowing the appeal, this Court, HELD: The civil court had no jurisdiction to entertain the suit. [146 G H] Where a statute creates a new right or liability and it provides a complete machinery for obtaining redress against erroneous exercise of authority, jurisdiction of the Civil Court. to grant relief is barred. Where however a statute reenacts a right or liability existing at common law, and the statute provides a special form of remedy, exclusion of the jurisdiction of the Civil Court to grant relief in the absence of an express provision will not be readily inferred. [149 ' D F] Liability to pay duty of customs is not a common law liability; it arises by virtue of the . In respect of any grievance arising in consequence of enforcement of that liability, machinery has been provided by the Act. Having regard to the complicated nature of the questions which arise in the determination of liability to. pay duty of customs, the legislature has invested the power of determining liability and the manner of enforcement thereof upon a specially authorised hierarchy of tribunals. [149 ' F G] (ii) A civil suit will lie for obtaining appropriate relief in cases where the customs authority has not complied with the provisions of the statute, or the officer of customs has not acted in conformity with the fundamental principles of judicial procedure or the authority has acted in violation of the fundamental principles of judicial procedure or has made an order which is not within his competence or the statute which imposes liability is unconstitutional or the order is alleged to. be mala fide. [149 F G] (iii) The exclusion of the jurisdiction of the Civil Court to entertain a suit does not exclude the jurisdiction of the High Court to issue high prerogative writs against illegal exercise of authority by administrative or quasi judicial tribunals. [150] Dhulabhai etc. vs State of Madras Pradesh & Anr. A.I.R. , followed. Secretary of State for India vs Mask & Co. L.R. 67 I.A. 222, referred to. 146

Civil Appeal No. 2618 of 1983. From the Judgment and Order dated the 18th January, 1983 of the Patna High Court in Election Petition No. 15 of 1980. section Rangarajan, D. P. Mukherjee, G. section Chatterjee and R. P. Singh for the Appellant. section section Ray, M. P. Jha and Ms. Mridula Ray for the Respondents. 121 The Judgment of the Court was delivered by RANGANATH MISRA, J. This appeal under section 116A of the Representation of the People Act, 1951 ( 'Act ' for short), is directed against the decision of the High Court at Patna setting aside the appellant 's election to the Bihar Legislative Assembly from 115 Jamtara Assembly Constituency polling for which was held on May 31, 1980, and the result of which was declared on June 2,1980. Sixteen candidates being the appellant and the 15 respondents contested the election. The appellant was the candidate of the Communist Party of India and respondent No. 1 was of the Congress (I) Party. At the poll the appellant received 13336 votes while the respondent No. 1 polled 13312 votes. The appellant was, therefore, declared elected on the footing that he had received 24 more votes than the respondent No. 1. Respondent no, 2 had polled 13285 votes. As the election dispute has been confined to the appellant and respondent No. 1 it is not necessary to refer to the other candidates or indicate particulars of their performance at the election. Respondent No. 1 filed an election petition under section 81 of the Act asking for the appellant 's election to be set aside and for a declaration that he should be declared as the successful candidate. In paragraph 9 of the election petition he pleaded the details of the illegalities and irregularities committed in the course of counting of ballot papers. It is not necessary to refer to the other details excepting what was pleaded in paragraph 9(i) as respondent No. 1 did not press the election petition on those grounds. The pleading in the sub paragraph was to the following effect. "On table No. 10 booth No. 10 (Fukbandi Primary School) 74 ballot papers of the petitioner were wrongly rejected on the ground that they did not contain the signature of the Presiding Officer. Similarly 31 ballot papers of the petitioner were rejected on different tables on the ground that they do not contain the signature of the Presiding Officer. The aforesaid ballot papers were rejected by the Assistant Returning Officer inspite of the objections raised by the petitioner and his counting agents. " It is appropriate to indicate here that the High Court did not take into account the plea in regard to 31 ballot papers in the absence of particulars. The appellant in his written statement 122 before the High Court pleaded that the statements contained in paragraph 9 and its sub paragraphs were vague and incorrect. In paragraph 16 of the written statement it was stated: "During course of counting no illegality or irregularity of any kind was committed; rather the same was held in proper, legal and orderly manner, nor any such imaginary illegality was pointed out or any objection was raised on behalf of the petitioner. " In paragraph 17 it was further pleaded that "the statement contained in paragraph No. 9(i) of the election petition is wrong. It is false to say that the ballot papers were rejected only on the ground of want of signature of the Presiding Officer. The fact is that the Assistant Returning Officer, who was duly appointed, after fully applying his mind and finding nearly 95 ballot papers of booth No. 10 to be spurious and not genuine and after giving cogent, legal and satisfactory reasons, rejected the ballot papers. The petitioner has suppressed the fact that besides his 74, 31 ballot papers of other contesting candidates including 3 of the respondent No. 1 were also rejected for not bearing signature of the Presiding Officer and the distinguishing mark of the polling station No. 10. " In paragraph 18 of the written statement the appellant pleaded that: "With reference to the contents of paragraph No. 9(i) of the Election Petition, the respondent no.1 further begs to submit that counting of ballot papers of booth No. 10 was completed before 12 noon in the very first round and the petitioner secured 3160 votes in that round while the respondent No. 1 could get only 484 and one Parmanand Mishra got 1172 votes. Neither the petitioner nor his election agents nor counting agents, all of whom were present in the counting hall, did raise any objection at the time of rejection of the ballot papers or for the whole day rather they accepted the position that those ballot papers were rightly rejected being spurious and not genuine. However, after announcement of the votes of last round and conclusion of counting of the votes and completion and submission of result sheet in Form 20 by the Assistant Returning Officer to the Re 123 turning Officer, the petitioner having lost the election by a small margin lost all his senses and like a drowning man catching the last straw, made out a false case of illegality in counting and thus on 2.6.1980 at 1.50 a.m. for the first time raised an objection by filing a petition which was frivolous in nature to count the rejected ballot papers in his favour". After the evidence of both parties had been recorded, on February 19, 1982, the learned trial Judge made the following order: "Having considered the arguments of learned counsel for the parties and the materials on the record and in view of the decisions referred to above, I am satisfied that the petitioner in his election petition has given adequate statements of material facts on which he relies in support of his case and has made out prima facie case for inspection of the ballot papers which have been cast in his favour and rejected. Without expressing any opinion regarding the merit of the claim of the parties, I am of the view that in order to decide the dispute and to do justice between the parties inspection of ballot papers is necessary. I, therefore, direct that all those ballot papers which have been cast in favour of the petitioner and rejected by the Returning Officer at the time of counting, i.e. 74 of Fukbandi Booth No. 10 and 31 of other booths, should be inspected by learned counsel for the parties in presence of a responsible officer of the Court. " The appellant sought to challenge this order by moving an application under Article 136 of the Constitution before this Court but that was rejected. On April 14, 1982, the learned trial Judge on a petition of the appellant for clarification of the order dated February 19, 1982, made the following direction: "In my opinion, there is no ambiguity in the order passed by this Court on 19.2.82, yet objection has been raised for which there is no basis. However, learned counsel for the petitioner has submitted that he would be quite satisfied if only 74 rejected ballot papers from 124 booth No. 10 Fukbandi booth are inspected. Let inspection of only 74 rejected ballot papers from Booth No. 10 Fukbandi booth be made." The learned trial Judge after inspection of the ballot papers and upon hearing counsel for the parties, came to hold that the rejection of these 74 ballot papers for want of the Presiding Officer 's signature was not justified and gave the election petitioner credit of all those votes. On that basis he came to hold that the respondent No. 1 had received the majority of the valid votes polled at the election (the excess being 50) and while setting aside the election of the appellant, declared the respondent No. 1 to have been duly elected. This decision is assailed in appeal. Mr. Rangarajan in support of the appeal has taken the stand that: (i) the particulars furnished in paragraph 9 of the election petition were inadequate and fall short of the requirements of the law; (ii) inspection of the ballot papers should not have been granted and even on inspection, the 74 ballot papers were not available to be counted in favour of respondent No. 1; (iii) if inspection was to be granted and credit was to be given of rejected ballot papers, all the 954 ballot papers should have been scrutinised and the examination for recount should not have been confined to 74 only; and (iv) the view taken by the learned trial Judge of the High Court that in the absence of a prayer for recrimination under section 97 of the Act, the appellant was precluded from asking for a recount of the other rejected ballot papers is not tenable in law. Before entering into an examination of the tenability of these contentions, it would be proper to take note of the decision in the case of Jagan Nath vs Jaswant Singh & Ors., of a five Judge Bench of this Court. Mahajan, C.J. spoke for the Court thus: "The general rule is well settled that the statutory requirements of election law must be strictly observed and that an election contest is not an action at law or a suit in equity but is a purely statutory proceeding unknown to the common law and that the Court possesses no common law power. " 125 What was said in Jagan Nath 's case continues to be the law binding this Court and in the recent case of Jyoti Basu & Ors. vs Debi Ghosal & Ors, this Court reiterated the position by saying: "A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right. It is pure and simple, a statutory right. So is the right to be elected. So is the right to dispute an election. Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election. Statutory creations they are, and therefore, subject to statutory limitation. An election petition is not an action at Common Law, nor in equity. It is a statutory proceeding to which neither the common law nor the principles of equity apply but only those rules which the statute makes and applies. It is a special jurisdiction, and a special jurisdiction has always to be exercised in accordance with the statute creating it. Concepts familiar to Common Law and Equity must remain strangers to Election Law unless statutorily embodied. A Court has no right to resort to them on considerations of alleged policy because policy in such matters, as those, relating to the trial of election disputes, is what the statute lays down. In the trial of election disputes, Court is put in a straight jacket. Thus the entire election process commencing from the issuance of the notification calling upon a constituency to elect a member or members right up to the final resolution of the dispute, if any, concerning the election is regulated by the Representation of the People Act, 1951, different stages of the process being dealt with by different provisions of the Act. There can be no election to Parliament or the State Legislature except as provided by the Representation of the People Act, 1951, and again, no such election may be questioned except in the manner provided by the Representation of the People Act. So the Representation of the People Act has been held to be a complete and self contained code within which must be found any right claimed in relation to an election or an election dispute. " 126 We are bound by the decision of the larger Bench and we are in agreement with what has been said in Jyoti Basu 's case. The first question to consider is, whether the pleading in paragraph 9(i) of the election petition was adequate in view of the provisions of the Act. Section 94 of the Act provides for secrecy of voting. Detailed provisions have been made in the Conduct of Election Rules, 1961, to give effect to this wholesome provision contained in section 94. An election petition is presented in terms of section 81 of the Act. Section 83 prescribes as to what the petition should contain. Sub section (1) (a) of section 83 states that an election petition shall contain a concise statement of the material facts on which the petitioner relies. Since there is no allegation of any corrupt practice in this case there is no necessity to refer to clause (b) of sub section (1) of section 83. Though initially Mr. Rangarajan had contended that the verification was not in accordance with law, he has abandoned this contention during the hearing in view of the statutory form of verification prescribed and the verification in the instant case conforms to it. According to Mr. Rangarajan the pleading in paragraph 9(i) does not amount to a concise statement of the material facts. Appellant 's learned counsel has placed reliance on the observation in Samant N. Balakrishna etc. vs George Fernandez & Ors. , where, with reference to section 83 of the Act it has been said that the petition must contain a concise statement of the material facts on which the petitioner relies and the fullest possible particulars should be given. Material facts and material particulars may overlap. Balakrishna 's case where Hidayatullah, C.J. made these observations was one where allegations of corrupt practice had been made and the case came under section 83(1) (b) of the Act. Obviously, allegations of corrupt practice being in the nature of a criminal charge, the Act requires full particulars to be given. The scheme in section 83(1) of the Act makes the position very clear. Clause (a) refers to general allegations and requires a concise statement of material facts to be furnished while clause (b) referring to corrupt practice requires all details to be given. Appellant 's counsel, therefore, was not entitled to rely upon the proposition in Balakrishna 's case for the present purpose. So far as averment in paragraph 9(1) of the election petition is concerned, we find that the number of ballot papers alleged to have been wrongly rejected has been furnished, the counting table number has been given, the booth 127 number has also been disclosed and the ground for rejection has even been pleaded. Respondent No. 1 pleaded that the particulars of the ballot papers could not be obtained as during counting they were not shown. His counting agent at table No. 10 has been examined as his witness No. 3. He has stated: "The ballot box of Fukbandi booth No. 10 was brought on my table and it was intact. That ballot box contained some ballot papers which were not bearing signature of the Presiding Officer. I raised objection in respect of those ballot papers that they should not be treated as doubtful ballot papers to be sent to the Returning Officer. Counting Supervisor did not listen to my protest and sent them to the Returning Officer as doubtful ballot papers. There were 74 such ballot papers. " The Assistant Returning Officer was examined as RW. 4 on behalf of the appellant. In his evidence he stated that he had rejected some ballot papers of booth No. 10. He again stated that "counting agents of candidates were not allowed to note down the serial numbers of the ballot papers. In view of the statement of the counting agent of respondent no.1 and the evidence of the Assistant Returning Officer there can be no scope to doubt, and in our view the High Court was right in taking the view, that the particulars of the rejected ballot papers were not available to the counting agents and, therefore, particulars of the numbers of the ballot papers had not been given in the election petition. We agree with the High Court that in the facts and circumstances of the case the pleading in paragraph 9(1) set out the material facts in a proper way and no defect can be found with it. Mr. Rangarajan next canvassed that the High Court went wrong in allowing inspection of the ballot papers. Reliance was placed on the decision of this Court in the case of Bhabhi vs Sheo Govind & Ors. , where it has been held that the following conditions were imperative before the Court could grant inspection or sample inspection of ballot papers: (1) That it is important to maintain the secrecy of the ballot which is sacrosanct and should not be allowed 128 to be violated on frivolous, vague and indefinite allegations; (2) That before inspection is allowed, the allegations made against the elected candidate must be clear and specific and must be supported by adequate statement of material facts; (3) The Court must be prima facie satisfied on the materials produced before the Court regarding the truth of the allegations made for a recount. (4) That the discretion conferred on the Court should not be exercised in such a way so as to enable the applicant to indulge in a roving inquiry with a view to fish materials for declaring the election to be void; and (5) That on the special facts of a given case sample inspection may be ordered to lend further assurance to the prima facie satisfaction of the Court regarding the truth of the allegations made for a recount, and not for the purpose of fishing out materials. " We have already pointed out that the allegations made in paragraph 9(i) of the election petition were clear and definite. On the facts of the case the plea was confined to one aspect, viz., for want of the Presiding Officer 's signature with reference to 74 ballot papers cast at a particular booth and counted on a particular table the same had been rejected. The only specific detail which was wanting was the serial number of the 74 ballot papers. We have, on the evidence recorded in the case, come to the conclusion that this particular was not available to the election petitioner in spite of attempts made on his behalf. While we agree with the view expressed in Bhabi 's case, on the facts before us we are inclined to think that inspection had rightly been ordered. Mr. Ray for respondent no.1 pressed before us the fact that the order of the High Court allowing inspection had been questioned before the Court and no interference was made. Appellant 's counsel on the other hand contended that as the application under Article 136 of the Constitution had not been disposed of on merits, this aspect was open to 129 challenge in regular appeal under section 116A of the Act. It is unnecessary to refer further to the consequences of non interference by this Court on the earlier occasion as on the facts we are satisfied that the action of the High Court in allowing inspection is not open to dispute. A number of authorities were cited by Mr. Rangarajan in support of his contention that inspection should not have been granted. Since Bhabhi 's case has considered most of the cases relied upon by Mr. Rangarajan and tests have been laid down to which reference has been made by us, we see no necessity to independently refer to and deal with the other cases. The 74 ballot papers which had been rejected were placed before us during the hearing. In the election petition it has been contended that the rejection was only on one ground, viz., absence of the signature of the Presiding Officer. The appellant in his written statement had taken the stand that the identifying mark was also wanting. The ballot papers have been scrutinised by us as also by learned counsel for both the parties. Mr. Rangarajan has conceded on seeing the ballot papers that each of them bears the mark. Admittedly none of them contains the signature of the Presiding officer. Rule 56 of the Conduct of Election Rules; 1961, makes detailed provision for counting of votes. Sub rule (2) requires the Returning Officer to reject a ballot paper when any of the seven infirmities indicated therein is found. In view of the contentions advanced before us the relevant infirmities would be as provided in sub clause (e), i.e. the ballot paper is a spurious one and (h), i.e. it does not bear both the mark and the signature which it should have borne under the provisions of sub rule (1) of rule 38. Rule 38(1) provides: "Every ballot paper before it is issued to an elector, and the counterfoil attached thereto shall be stamped on the back with such distinguishing mark as the Election Commission may direct, and every ballot paper, before it is issued, shall be signed in full on its back by the Presiding Officer. " There 74 ballot papers cast in favour of the respondent No. 1 which have been rejected were in two series, 24 in one and 50 in the other. Though the Assistant Returning Officer had stated that according to him these were spurious, he has in his cross examination clarified the position that by spurious ' he meant that the ballot 130 papers did not contain the signature of the Presiding Officer. That these ballot papers were used at the election in booth No. 10 is not open to doubt in view of the ballot paper account for this booth. That shows that 810 ballot papers in all had been received being from serial nos. 006851 to 007660. 424 ballot papers were used and ballot papers of the same number had been found in the ballot box and duly accounted for. The numbers of the ballot papers including the 74 in dispute are covered by the particulars of used ballot papers given in the ballot paper account which is Ext. 2 in the case. The Presiding Officer himself has proved this document. The report made by the Returning Officer to the Election Commission Ext. A also shows that the ballot papers were not spurious. There is sufficient evidence on record from which it can be concluded that the rejection of these 74 ballot papers was on account of the fact that they did not contain the signature of the Presiding Officer as required under rule 38(1). Mr. Rangarajan is right in his submission that if a ballot paper does not contain the signature of the Presiding Officer it has got to be rejected at the counting in view of the mandatory provision in rule 56(2) of the Conduct of Election Rules. The point for consideration now is whether the proviso which reads as follows was applicable: "Provided that where the returning officer is satisfied that any such defect as is mentioned in clause (g) or clause (h) has been caused by any mistake or failure on the part of a presiding officer or polling officer, the ballot paper shall not be rejected merely on the ground of such defect". On the submissions at the Bar, the question of mistake does not arise. It has to be found out whether these 74 ballot papers in dispute did not contain the signature of the Presiding Officer on account of his failure. Rule 38 makes it clear that the distinguishing mark and the signature of the Presiding Officer have to be put on the ballot paper before the same is issued to the voter at the booth. The distinguishing mark can be put by any one but the signature has got to be of the Presiding Officer and obviously he has to personally do that job. There is evidence that the Presiding Officer had been taken ill on the date of poll. He has been examined as PW2. From his evidence it appears that this was his first experience as a Presiding officer of a booth. He has stated: "On the day of poll my bowls was upset and I had visited the pokhra (tank) once on the day of 131 poll and during that period all the ballot papers were kept on the table. I had not put my signature on all the ballot papers. I had deputed one of the polling officers at the booth to watch the ballot papers when I had gone to the pokhra. For 5 to 10 minutes that I was absent from the polling booth on the day of poll, I cannot say what had happened during that period. " The appellant had cross examined this witness and suggested to him that he had gone to attend to the call of nature three or four times. The appellant 's witness No. 2 who was also a candidate at the election (and is a respondent here) has stated: "I found the Presiding Officer at booth No. 10 sleeping under a Neem tree at some distance from the booth when I visited the booth in the noon. " Once it is held that the 74 ballot papers were not spurious, and had been issued to the voters at the booth in the course of the poll, it would be reasonable to presume that the ballot papers had been issued to the voters without signatures of the Presiding Officer though the distinguishing mark had been put. The absence of the Presiding Officer from the place of poll has clearly been established. Whether it was for 5 to 10 minutes as deposed by him or it was no three or four occasions as suggested to him in cross examination or for a good length of time during which he was having a nap under a neem tree as deposed to by RW. 2, it is clear that he was away from the place of polling for quite some time. The polling process must have continued and voters who came during his absence had obviously been issued these unsigned ballot papers. If the facts be these, would it not be a case of failure of the Presiding Officer to put his signatures on the ballot papers is the question for consideration. It was the obligation of the Presiding Officer to put his signature on the ballot papers before they were issued to the voters. Every voter has the right to vote and in the democratic set up prevailing in the country no person entitled to share the franchise can be denied the privilege. Nor can the candidate be made to suffer. Keeping this position in view, we are of the definite view that the present case is one of failure on the part of the Presiding Officer to put his signature on those ballot papers so as to satisfy the requirement of law. The proviso, once it is applicable, has also a mandate that the ballot paper is not to be rejected. We, therefore, hold that the ballot papers were not liable to be rejected as the proviso applied and the High Court, in our opinion, came to the 132 correct conclusion in counting these ballot papers and giving credit thereof to the respondent No. 1. The next question for consideration is as to whether all the ballot papers which were rejected in the constituency should have been allowed to be inspected and recounted on the basis of inspection or should the inspection have been confined to 74 ballot papers as done. This question is connected with the fourth contention of the appellant 's counsel, i.e. whether in the absence of a recrimination the appellant who was the returned candidate, could claim that the election petitioner would not succeed for the additional relief as he had not received the majority of the votes polled at the election. We have already indicated that the appellant as the elected candidate in his written statement had pleaded that the counting was in accordance with law and not objectionable. The effect of such a plea is that the ballot papers which had been cast in his favour but credit had not been given thereof had been validly rejected. In the election petition two reliefs had been claimed, firstly, for setting aside the election of the returned candidate, i.e. the appellant, and secondly, for a declaration that the election petitioner (respondent No. 1) was the duly elected candidate. The relief claimed was in terms of section 100(1) (d) (iii) and section 101 (a) of the Act. The election petitioner had claimed that there was improper rejection of votes cast in his favour and that he had received a majority of the valid votes at the election. The Act makes in section 97 provision for recrimination. Sub section(1) of that section which is material reads thus: "When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election: Provided that the returned candidate or such other party, as aforesaid shall not be entitled to give such evidence unless he has, within fourteen days from the date of commencement of the trial given notice to the High Court of his intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively. " 133 Admittedly no application for recrimination was filed. Mr. Rangarajan has strenuously contended that keeping the scheme and the purpose of the law in view, in a case of this type refusal to count the other rejected ballot papers on the plea of non filing of a recrimination petition would lead to injustice. We have already indicated the pronounced view of this Court in Jagan Nath 's case which has been followed throughout and the last in series is the case of Jyoti Basu to which also we have adverted. There is no scope for equity since the entire gamut of the process of election is covered by statute. Reliefs as are available according to law can only be granted. It is true that in Kum. Shradha Devi vs Krishna Chandra Pant & Ors. , it has been observed: "If the allegation is of improper rejection of valid votes which is covered by the broad spectrum of scrutiny and recount because of miscount, petitioner must furnish prima facie proof of such error. If proof is furnished of some errors in respect of some ballot papers, scrutiny and recount cannot be limited to those ballot papers only. If the recount is limited to those ballot papers in respect of which there is a specific allegation of error and the correlation is established, the approach would work havoc in a parliamentary constituency where more often we find 10,000 or more votes being rejected as invalid. Law does not require that while giving proof of prima facie error in counting each head of error must be tested by only sample examination of some of the ballot papers which answer the error and then take into consideration only those ballot papers and not others. This is not the area of enquiry in a petition for relief of recount on the ground of miscount. " These observations came not in a case to which section 97 of the Act applied. This Court was considering a case of recount simpliciter. The position of law as to the imperative necessity of a recrimination in cases as before us is well settled. A Five Judge Bench in Jabar Singh vs Genda Lal, examined at length the provisions of section 100 and section 97 of the Act. That was a case where the difference was of two votes and as application had been made asking for reliefs both 134 under section 100(1) (d) (iii) as also section 101. In that background the question for consideration was whether in the absence of a petition for recrimination relief could be granted. Gajendragadkar, J. (as the learned Judge then was), spoke for himself and three other learned Judges. In the majority judgment it was held: "Confining ourselves to clause (iii) of section 100(1) (d), what the Tribunal has to consider is whether there has been an improper reception of votes in favour of the returned candidate. It may also enquire whether there has been a refusal or rejection of any vote in regard to any other candidate for whether there has been a reception of any vote which is void and this can only be the reception of a void vote in favour of the returned candidate. In other words, the scope of the enquiry in a case falling under section 100(1) (d) (iii) is to determine whether any votes have been improperly cast in favour of the returned candidate or any votes have been improperly refused or rejected in regard to any other candidate. These are the only two matters which would be relevant in deciding whether the election of the returned candidate has been materially affected or not. At this enquiry, the onus is on the petitioner to show that by reason of the infirmities specified in section 100(1) (d) (iii), the result of the returned candidate 's election has been materially affected, and that, incidentally, helps to determine the scope of the enquiry. Therefore, it seems to us that in the case of a petition where the only claim made is that the election of the returned candidate is void, the scope of the enquiry is clearly limited by the requirement of section 100(1) (d) itself. The enquiry is limited not because the returned candidate has not recriminated under section 97(1); in fact section 97(1) has no application to the case falling under section 100(1) (d) (iii), the scope of the enquiry is limited for the simple reason that what the clause requires to be considered is whether the election of the returned candidate has been materially affected and nothing else. If the result of the enquiry is in favour of the petitioner who challenges the election of the returned candidate, the Tribunal has to make a declaration to that effect, and that declaration brings to an end the proceedings in the election petition. 135 There are, however, cases in which the election petition makes a double claim; it claims that the election of the returned candidate is void, and also asks for a declaration that the petitioner himself or some other person has been duly elected. It is in regard to such a composite case that section 100 as well as section 101 would apply, and it is in respect of the additional claim for a declaration that some other candidate has been duly elected section 97 comes into play. Section 97(1) thus allows the returned candidate to recriminate and raise pleas in support of his case that the other person in whose favour a declaration is claimed by the petition cannot be said to be validly elected, and these would be pleas of attack and it would be open to the returned candidate to take these pleas, because when he recriminates, he really becomes a counter petitioner challenging the validity of the election of the alternative candidate. The result of section 97(1) therefore, is that in dealing with a composite election petition, the Tribunal enquires into not only the case made out by the petitioner, but also the counter claim made by the returned candidate. That being the nature of the proceedings contemplated by section 97(1), it is not surprising that the returned candidate is required to make his recrimination and serve notice in that behalf in the manner and within the time specified by s.97(1) proviso and section 97(2). If the returned candidate does not recriminate as required by section 97, then he cannot make any attack against the alternative claim made by the petition. In such a case, an enquiry would be held under section 100 so far as the validity of the returned candidate 's election is concerned, and if as a result of the said enquiry a declaration is made that the election of the returned candidate is void, then the Tribunal will proceed to deal with alternative claim, but in doing so, the returned candidate will not be allowed to lead any evidence because he is precluded from raising any pleas against the validity of the claim of the alternative candidate. It is true that section 101(a) requires the Tribunal to find that the petitioner or such other candidate for the declaration of whose election a prayer is made in the election petition has in fact received a majority of the valid 136 votes. It is urged by Mr. Kapoor that the Tribunal cannot make a finding that the alternative candidate has in fact received a majority of the valid votes unless all the votes cast at the election are scrutinised and counted. In our opinion, this contention is not well founded. We have already noticed that as a result of rule 57 (now rule 56(6) of Conduct of Election Rules), the Election Tribunal will have to assume that every ballot paper which had not been rejected under r. 56 constituted one valid vote and it is on that basis that the finding will have to be made under section 101(a). Section 97(1) undoubtedly gives an opportunity to the returned candidate to dispute the validity of any of the votes cast in favour of the alternative candidate or to plead for the validity of any vote cast in his favour which has been rejected; but if by his failure to make recrimination within time as required by section 97 the returned candidate is precluded from raising any such plea at the hearing of the election petition, there would be nothing wrong if the Tribunal proceeds to deal with the dispute under section 101(a) on the basis that the other votes counted by the returning officer were valid votes and that votes in favour of the returned, candidate, if any, which were rejected, were invalid. What we have said about the presumed validity of the votes in dealing with a petition under section 101(a) is equally true in dealing with the matter under section 100(1)(d)(iii). We are, therefore, satisfied that even in cases to which section 97 applies, the enquiry necessary while dealing with the dispute under section 101(a) will not be wider if the returned candidate has failed to recriminate. " Ayanagar, J. did take a different view of the matter and it is on the minority view that strong reliance has been placed by Mr. Rangarajan. He has even contended that the proposition in minority view was more appealing and had reminded us that there have been instances where the minority view lays down the law correctly and in due course is accepted to be the law of the country. As we shall presently show, the ratio in the majority opinion is still holding the field and on the plea that the minority view may some day become the law, relief in the present case cannot be granted. We are bound by the decision of the larger Bench. 137 This Court in P. Malaichami vs Mr. Andi Ambalam and Ors., considered this question again. Alagiriswami, J. spoke for the Bench which heard the appeal. There it had been contended by counsel that in view of the facts of that case, recrimination and the requirement of section 97 need not have been insisted upon. This is how that contention was answered: "The question still remains whether the requirements of section 97 have to be satisfied in this case. It is argued by Mr. Venugopal that the gravamen of the respondent 's petition was breach of many of the election rules and that he asked for a total recount, a request to which the appellant had no objection and that there was, therefore, no rule or need for filing a recrimination petition under section 97. This, we are afraid, is a complete misreading of the petition. No doubt the petitioner asked for a recount of votes. It may legitimately be presumed to mean a recount of all the votes, but such a recount is asked for the purpose of obtaining a declaration that the appellant 's election was void and a further declaration that the respondent himself had been elected. This aspect of the matter should not be lost sight of. Now, when the respondent asked for a recount, it was not a mere mechanical process that he was asking for. The very grounds which he urged in support of his petition (to which we have referred at an earlier stage) as well as the application for recount and the various grounds on which the learned Judge felt that a recount should be ordered showed that many mistakes where likely to have arisen in the counting, and as revealed by the instances which the learned Judge himself looked into and decided. ." The ratio of the decision in Jabar Singh 's case was followed and it was stated: "What we have pointed out just now shows that it is not a question of mere pleading, it is a question of jurisdiction. The Election Tribunal had no jurisdiction to go into the question whether any wrong votes had been counted in favour of the election petitioner, who 138 had claimed the seat for himself unless the successful candidate had filed a petition under section 97. The law reports are full of cases where parties have failed because of their failure strictly to conform to the letter of the law in regard to the procedure laid down under the Act and the Rules. " Several decisions were cited before us by Mr. Ray for respondent No. 1 which we think unnecessary to refer to in view of the clear pronouncements and the state of the law as indicated by these decisions. In the absence of a recrimination petition conforming to the requirements of section 97 of the Act the appellant who happens to be an Advocate and is presumed to know the law, was not entitled to combat the claim of the election petitioner on the ground that if the remaining rejected ballot papers had been counted, the election petitioner would not have been found to have polled the majority of the valid votes. For the reasons we have indicated, this appeal has to be dismissed. In the circumstances we direct the parties to bear their respective costs throughout. H.S.K. Appeal dismissed.

The first respondent who lost to the appellant by 24 votes in the Assembly Elections filed an election petition in the High Court under section 81 of the Representation of the People Act, 1951 asking for the appellant 's election to be set aside and for declaration that he should be declared as the successful candidate. In para 9(i) of the petition the respondent pleaded that 74 ballot papers cast in his favour were wrongly rejected on the ground that they did not contain the signature of the Presiding Officer. The High Court ordered inspection of these ballot papers. The High Court held that the rejection of these 74 ballot papers for want of the Presiding Officer 's signature was not justified and gave the respondent No. 1 credit of all those votes and on that basis while setting aside the election of the appellant, declared the first respondent to have been duly elected. Hence this appeal. The appellant urged that the pleading in para 9(i) of the Election petition did not amount to a concise statement of the material facts as required by law; the High Court went wrong in allowing inspection of the ballot papers; the 74 ballot papers in dispute did not contain the signature of the presiding officer and were rightly rejected at the counting in view of the mandatory provision in rule 56(2) of the Conduct of Elections Rules, 1961 and the High Court 's view that in the absence of a prayer for recrimination under section 97 of the Act, the appellant was precluded from asking for a recount of the other rejected ballot papers is not tenable in law. Dismissing the appeal, HELD: An election petition is presented in terms of section 81 of the Act. Section 83 prescribed as to what the petition should contain. Clause (a) of sub section (1) of section 83 states that an election petition shall contain a concise statement of the material facts on which the petitioner relies. In the instant 119 case the number of ballot papers alleged to have been wrongly rejected has been furnished, the counting table number has been given, the booth number has also been disclosed and the ground for rejection has even been pleaded. The only specific detail which was wanting was the serial number of the ballot papers. This particular was not available to the election petitioner in spite of attempts made on his behalf. The Court, therefore, agrees with the High Court that in the facts and circumstances of the case the pleading in paragraph 9(i) set out the material facts in a proper way and no defect can be found with it. The High Court had rightly ordered the inspection of the ballot papers. [126 B C; H; 127 A; 128 F G; 127 F] Samant N. Balakrishan etc., vs George Fernandez and Ors, etc.; , explained and distinguished, Bhabhi vs Sheo Govind and Ors., [1975] Suppl. S.C.R. 202, referred to. Rule 38(1) of the Conduct of Election Rules, 1961 provides inter alia that every ballot paper before it is issued to an elector shall be stamped on the back with a distinguishing mark and shall be signed in full on its back by the presiding officer. The distinguishing mark can be put by anyone but the signature has got to be of the presiding officer and obviously he has to personally do that job. Rule 56(2)(h) provides that the returning officer shall reject a ballot paper if it does not bear both the distinguishing mark and the signature as mentioned in sub rule (1) of rule 38. There is a proviso to sub rule (2) of rule 56 which says that where the returning officer is satisfied that any such defect as is mentioned in clause (h) has been caused by any mistake or failure on the part of a presiding officer or polling officer, the ballot paper shall not be rejected merely on the ground of such defect. The proviso, once it is applicable is a mandate that the ballot paper is not to be rejected. [129 F G; 130 G; 129 E F; 130 E; 131 H] In the instant case the 74 ballot papers in dispute were rejected because they did not contain the signature of the presiding officer as required under rule 38(1). To see whether the proviso to sub rule (2) of rule 56 was applicable, it has to be found out whether the absence of the signature of the presiding officer on these ballot papers was on account of mistake or of his failure. On the submissions at the bar, the question of mistake does not arise. It was the obligation of the presiding officer to put his signature on the ballot papers before they were issued to the voters. Every voter has the right to vote and in the democratic set up prevailing in the country no person entitled to share the franchise can be denied the privilege. Nor can the candidate be made to suffer. Keeping this position in view the Court is of the definite view that the present case is one of the failure on the part of the presiding officer, who had been taken ill on the date of poll and was away from the place of polling for quite some time, to put his signature on those ballot papers so as to satisfy the requirement of law. The ballot papers therefore were not liable to be rejected as the proviso applied and the High Court came to the correct conclusion in counting these ballot papers and giving credit thereof to the respondent No. 1. [130 C; F G; 131 F H; 130 H; 131 E; H; 132 A] 120 In a case in which the election petition claims that the election of the returned candidate is void, and also asks for a declaration that the petitioner himself or some other person has been duly elected, section 100 as well as section 101 of the Act would apply, and it is in respect of the additional claim for such declaration that section 97 comes into play. Section 97(1) thus allows the returned candidate to recriminate and raise pleas in support of his case that the other person in whose favour a declaration is claimed by the petition cannot be said to be validity elected, and these would be pleas of attack and it would be open to the returned candidate to take these pleas, because when he recriminates, he really becomes a counter petitioner challenging the validity of the election of the alternative candidate. The result of section 97(1) therefore is that in dealing with a composite election petition, the Tribunal enquires into not only the case made out by the petitioner, but also the counter claim made by the returned candidate. That being the nature of the proceedings contemplated by section 97(1), it is not surprising that the returned candidate is required to make his recrimination and serve notice in that behalf in the manner and within the time specified by section 97(1) proviso and section 97(2). If the returned candidate does not recriminate as required by section 97, then he cannot make any attack against the alternative claim made by the petition. [135 A F] Kum. Shradha Devi vs Krishna Chandra Pant & Ors. , ; ; Jabar Singh vs Genda Lal, ; and P. Malaichami vs M. Andi Ambalam & Ors. ; referred to. In the instant election petition two reliefs had been claimed, firstly, for setting aside the election of the returned candidate, i.e. the appellant, and secondly, for a declaration that the election petitioner (respondent No. 1) was the duly elected candidate. The relief claimed was in terms of section 100(1)(d) (iii) and section 101(a) of the Act. Admittedly no application for recrimination was filed by the appellant. In the absence of a recrimination petition conforming to the requirement of section 97 of the Act the appellant who happens to be an advocate and is presumed to know the law, was not entitled to combat the claim of the election petitioner on the ground that if the remaining rejected ballot papers had been counted the election petitioner would not have been found to have polled the majority of the valid votes. [132 D E; 133 A; 138 C D]

ivil Appeal No. 1360 of 1974. From the judgment and Order dated 14.12.1973 of the Delhi High Court in suit No. 64 of 1969. Ms. Suruchi Agarwal and T.V.S.N. Chari for the Appellants. H.K. Puri and Mrs. Urmila Sirur for the Respondents. The Judgment of the Court was delivered by DR. A.S.ANAND,J. This appeal, by special leave, is directed against the judgment of the Full Bench of the Delhi High Court, dated 14.12.1973 in Suit No. 64/69, delivered in a reference made by a learned Single Judge for opinion of the Full Bench. The questions referred by the learned Single Judge to the Full Bench revolved around the scope and effect of the provisions of Sections 54 and 59B of the Indian Income Tax Act 1922 (hereinafter referred to as the '1922 Act ') and Sections 137 and 138 of the Income Tax Act 1961 (hereinafter referred to as the '1961 Act ') as amended from time to time in 1964 and 1967 in the context of the claim of privilege by the Income Tax Department for the production of the 551 documents relating to assessment of an assessee summoned by the Civil Court. The following three questions were referred to and considered by the Full Bench: "1. What is the position of law relating to privilege prior to 1964? 2. What is the position of law relating to privilege after 1964 ?; and 3. What is the effect of the production of certified copies relating to income tax assessment records, and how far certified copies can be admitted in evidence ?" The circumstances under which these questions arose, briefly put, are as follows: 2. The plaintiff, Trilok Chand Jain, instituted a suit for recovery of Rs. 1,39,722.86 against the defendants, M/s. Dagi Ram Pindi Lal and Smt. Budh Wanti Gulati, w/o Shri Pindi Lal Gulati, the appellants herein. During the course of proceedings in the suit, when evidence was being recorded, the plaintiff obtained summons from the court requiring the Income Tax Department to produce in the court records relating to the Income Tax Assessment of the defendants, M/s. Dagi Ram Pindi Lal, for the assessment years 1964 65 to 1971 72. The Income tax officer to whom the summons were issued, sent the record in a sealed cover through an Inspector along with a letter, dated November 1,1972, claiming that the said record was privileged under Section 137 of the 1961 Act. The plaintiff also applied for and obtained summons requiring the Income tax Officer to produce the Income tax record relating to M/s Borizeon Industrial Products (P) Ltd. and Bishamber Nath Kaul. That record was also sent by the Income Tax Officer in a sealed cover alongwith a letter in which it was submitted that no disclosure of information regarding income tax pertaining to an income tax assessee could be made. The plaintiffs, it appears, in the meanwhile filed in the court a number of certified copies of the accounts of the defendants, which he had been able to obtain from the income tax authorities and sought permission of the Court to tender the certified copies in evidence. Arguments were addressed by the parties before the learned Single Judge on the question of privilege as claimed by the Income Tax officer. Being of the opinion that the question of privilege, as claimed by the Income Tax officer, was important and likely to arise in 552 the course of trial of suits in future also, a reference was made by the learned Single Judge to the Full Bench. In dealing with the three questions (supra) referred to it, the Full Bench considered different situations. It considered the first question in the following four situations: "(a) Where the documents, records, etc. in respect of which privilege is claimed were filed by an assessee or a third party before April 1,1962, with effect from which date the Indian Income Tax Act, 1922 was repealed, in respect of assessment years up to and including assessment year 1961 62 in proceedings for the said assessment years taking place under the Indian Income tax Act,1922; (b) Where the documents, records, etc. were filed by an assessee or a third party after April 1,1962, but before April 1,1964 in respect of assessment years up to and including assessment year 1961 62 in proceedings for the said assessment years taking place under the Indian Income_tax Act,1922; (c) Where the document, records, etc. were filed by an assessee or a third party after April 1,1962, but before April 1,1964, in respect of assessment years up to and including assessment year 1961 62 in proceedings for the said assessment years taking place under the Income tax Act, 1961;and (d) Where the documents, records, etc. were filed by an assessee or a third party after April 1,1962, but before April 1,1964, in respect of assessment years 1962 63 and 1963 64 in proceedings for the said assessment years taking place under the Income tax Act, 1961." and sustained the claim of privilege by the Income Tax Department in each one of the situations. The Full Bench while considering the second question, dealt with the following situations: (a) Where the documents, records, etc. in respect of which privilege is claimed were filed by an assessee or a third party after April 1, 1964, in respect of assessment years up to and including assessment year 1961 62 in proceedings for the said 553 assessment years taking place under the Indian Income tax Act, 1922; (b) Where the documents, records etc. were filed by an assessee or a third party after April 1, 1964, in respect of assessment years up to and including year 1961 62 in proceedings for the said assessment years taking place under the Indian Income tax Act, 1961; (c) Where the documents, records, etc. were filed by an assessee or a third party after April 1, 1964, in respect of assessment years 1962 63 and 1963 64 in proceedings for the said assessments years taking place under the Income tax Act, 1961; and (d) Where the documents, records, etc. were filed by an assessee or a third party after April 1, 1964, in respect of assessment years 1964 65 onwards. " The claim of privilege was sustained in all above situations also. Dealing with the effect of omission of Section 137 and substitution of section 138 (1) (a) and (b), the High Court opined; ". .that when a party to a proceeding in a Court applies for summoning any documents, records etc. from the income tax authorities, the Court may summon the said documents, records, etc. But on receipt of summons, it is open to the Commissioner of Income tax to consider the matter as provided under section 138 (1) (b), and decide whether it would be (sic) in the public interest to produce or furnish the documents, records, etc. summoned for, and submit his view to the Court in answer to the summons. In case, he is satisfied that the production etc. would not be in the public interest, his decision is final and the Court to which the said decision is communicated cannot question the same." [EMPHASIS SUPPLIED] The Full Bench, however, did not express any opinion on the third question. Learned counsel for the appellant has not questioned the findings of the Full Bench in so far as they relate to the claim of privilege in respect 554 of documents filed prior to the repeal of the 1922 Act or before the omission of Section 137 from the 1961 Act. She has questioned the findings of the Full Bench only as regards the power and jurisdiction of the Court to summon the documents, after the repeal of the 1922 Act and after the deletion of Section 137 from the 1961 Act by the Finance Act, 1964 as also the interpretation placed by the Bench on Section 138 (1) (b) of the Act. The controversy before us has been confined to the finding of the High Court relating to the claim of privilege for the production of documents which were filed after the repeal of Section 137, with effect from 1.4.1964 in respect of assessment years 1964 65 onwards. Thus, it is the finding on situation (d) of the second question as rendered by the Full Bench Which alone has been questioned and debated before us. The precise argument of the learned counsel for the appellant is that after the repeal of Section 137 of the 1961 Act by Act V of 1964, there is no longer any impediment left in the way of a civil court to summon the production of documents filed by an assessee during the assessment proceedings before an Income tax Officer after 1.4.1964 in respect of assessment years 1964 65 onwards, and that the finality attached to an order of the Commissioner with regard to claim of privilege under Section 138 (1) (b) has no relationship to the power of the court to summon that record. For a proper appreciation of the question debated before us, it would be desirable to refer to the relevant provisions of the 1922 Act and 1961 Act, as amended from time to time, and notice the changes brought about in the matter of claim of privilege by the Income Tax Department. Section 54 (1) and (2) of the 1922 Act provided as follows: "54. Disclosure of information by a public servant (1) All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act or in any evidence given, or affidavit or deposition made, in the course of any proceedings under this Act other than proceedings under this Chapter, or in any record of any assessment proceeding, or any proceeding relating to the recovery of a demand, prepared for the purpose of this Act, shall be treated as confidential, and notwithstanding 555 anything contained in the Indian Evidence Act, 1872(1 of 1872) no Court shall save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents or record or any part of any such record, or to give evidence before it in respect thereof. (2) If a public servant discloses any particulars contained in any such statement, return, accounts,documents, evidence, affidavit deposition or record, he shall be punishable with imprisonment which may extend to six months, and shall also be liable to fine. By Section 9 of the Taxation Laws (Amendment) Act of 1960, Section 59 B was inserted in the 1922 Act with effect from April 1, 1960. It provided as under: "59 B Disclosure of information regarding tax payable Where a person makes an application to the Commissioner in the prescribed form and after payment of the prescribed fee for information as to the amount of tax determined as payable by any assessee in respect of any assessment made on or after the 1st day of April, 1960, the Commissioner may, notwithstanding anything contained in section 54, if he is satisfied that there are no circumstances justifying its refusal, furnish or cause to be furnished the information asked for. " Both the aforesaid provisions dealt with the confidential nature of the documents filed, before the Income Tax authorities and the claim of privilege to disclose the same to anyone, including a court of law. Section 54 (1) declared that the various documents referred to therein shall be treated as confidential and prohibited a court from requiring any public servant to produce before it any such document or to give evidence before it in respect thereof, notwithstanding anything contained in the . Sub Section (2) of Section 54 made punishable, the disclosure by a public servant, of any information contained in those documents. the effect of introduction of Section 59 B by Taxation Laws (Amendment) Act 1960 was that it entitled a person to make an application to the Commissioner to obtain information thereafter as to the amount of tax determined, as payable by an assessee in respect of any assessment made 556 on or before April 1, 1960, and authorised the Commissioner to furnish or cause to be furnished the sought for information, if he was satisfied that there were no circumstances justifying its refusal. This legal position continued to prevail till April 1, 1960, when the 1922 Act was repealed by the 1961 Act. In the 1961 Act , provisions were made corresponding to sections 54 and 59 B of the 1922 Act in Sections 137 and 138. The relevant portions of Sections 137 and 138 of the Act provided as follows: "137. Disclosure of information prohibited (1) All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given or affidavit or deposition made in the course of any proceedings under this Act, other than proceedings under Chapter XXII, or in any record of any assessment proceedings, or any proceedings relating to recovery of a demand, prepared for the purposes of this Act, shall be treated as confidential, and notwithstanding anything contained in the , no Court shall, save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents or record or any part of any such record, or to give evidence before it in respect thereof. (2) No public servant shall disclose any particulars contained in any such statement, return, accounts, documents, evidence, affidavit, deposition or record. (3) . . (4) . . (5) . . "138. Disclosure of information respecting tax payable WHERE A person makes an application to the Commissioner in the prescribed form and pays the prescribed fee for information as to the amount of tax determined as payable by an assessee in respect of any assessment made either under this Act or the Indian income tax Act, 1922. On or after the 1st day 557 of April, 1960, the Commissioner may, notwithstanding anything contained in Section 137, if he is satisfied that there are no circumstances justifying its refusal, furnish or cause to be furnished the information asked for. The provisions of Section 137(1) of the 1961 Act were, as is seen, almost identical to the provisions of sub section (1) of Section 54 of the 1922 Act and Section 137 (2) prohibited a public servant from disclosing the particulars contained in any of the documents mentioned in Section 137 (1). The provisions of Section 138 of the 1961 Act were almost identical to the provisions of Section 59 B of the 1922 Act. With effect from April 1, 1964, Section 137 of the 1961 Act was omitted from the Statute vide Section 32 of the Finance Act No. V of 1964, and Section 138 was substituted by a new Section vide Section 33 of the Finance Act No. V of 1964. The substituted Section 138 reads as under: "138. Disclosure of information respecting assessees: (1) Where a person makes an application to the Commissioner in the prescribed form for any information relating to any assessee in respect of any assessment made either under this Act or the Indian Income tax Act, 1922, on or after the 1st day of April, 1960, the Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment only and his decision in this behalf shall be final and shall not be called in question in any Court of law. (2) Notwithstanding anything contained in sub section (1) or any other law for the time being in force, the Central Government may, having regard to the practices and usages customary or any other relevant factors, by order notified in the Official Gazette, direct that no information or document shall be furnished or produced by a public servant in respect of such matters relating to such class of assessees or except to such authorities as may be specified in the order. The scope of Section 138, of the 1961 Act was, as can be seen, enlarged by the substituted provisions of Section 138. Under the original 558 Section 138 a person could make an application for information only as to the amount of tax determined, as payable by an assessee, under sub section (1) of the substituted Section 138, a person could make an application for any information relating to an assessment. Again, under the original Section 138, before the necessary information could be furnished or cause to be furnished to an applicant, the Commissioner was to be satisfied that there were no circumstances justifying refusal to furnish the information asked for; under sub Section (1) of the substituted Section 138, the Commissioner was required to be satisfied that it was in the public interest to furnish the information asked for and "his decision in this behalf shall be final and shall not be called in question in any court of law." Vide sub Section (2) of the substituted Section 138, the Central Government was also empowered to direct, by an order notified in the Official Gazette, that no information or document shall be furnished or produced by a public servant in respect of such matters relating to such class of assessees or except to such authorities as may be specified in the order. 10, The substituted Section 138 was once again amended and substituted vide Section 28 of the Finance Act, 1967 with effect from April 1, 1967. The new sub section (1) of section 138 reads as follows: "(1)(a) The Board or any other income tax authority specified by it by a general or special order in this behalf may furnish or cause to be furnished to (i) any officer, authority or body performing any functions under any law relating to the imposition of any tax, duty of cess, or to dealings in foreign exchange as defined in section 2(d) of the Foreign Exchange Regulation Act, 1947; or (ii)such officer, authority or body performing functions under any other law as the Central Government may, if in its opinion it is necessary so to do in the public interest, specify by notification in the Official Gazette in this behalf, any such information relating to any assessee in respect of any assessment made under this Act or the Indian income tax Act, 1922 as may, in the opinion of the Board or other Income tax authority, be necessary for the purpose of enabling the officer, authority or body to perform his or its functions under that law. 559 (b) Where a person makes an application to the Commissioner in the prescribed form for any information relating to any assessee in respect of any assessment made under this Act or the Indian Income tax Act 1922, on or after the 1st day of April, 1960 the Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment only and his decision in this behalf shall be final and shall not be called in question in any court of law. " The provisions of sub Section (1) of Section 138 as they originally stood were incorporated in clause (b) of the substituted sub Section (1) and a new provision was incorporated in clause (a) of sub Section (1) which empowered the Board or any other income tax authority specified by it by a general or special order in that behalf to furnish or cause to be furnished, information relating to any assessee to such officer, authority or body as is mentioned in the provision to enable him or it to perform its functions under the Act. Vide clause (b)of the substituted sub Section (1) of Section 138, finality has also been attached to an order of the Commissioner, made on an application filed by any person seeking information relating to an assessee in respect of any assessment. The Commissioner, has to make an order, after being satisfied that it is in the public interest so to do, to furnish or cause to be furnished such information and that decision of the Commissioner is immune from challenge in any court of law. The controversy as already noticed, before us is limited to the jurisdiction or lack of it of a civil court to seek production of documents relating to assessments filed after April 1, 1964 in assessment proceedings 1964 65 onwards, after the omission of Section 137 of the Act. The Full Bench, in the impugned judgment, came to the conclusion that the omission of Section 137 did not make any difference and that the ban on the courts as contained in the repealed Section 137 continued to remain in force by virtue of the provisions of Section 138 (1) and after 1967 by Section 138 (1)(b) of the Act even in respect of the documents filed in the assessment proceeding after April 1, 1964 for assessments relating to the period 1964 65 onwards. The Full Bench also pressed into aid the provisions of Section 6 of the General Clauses Act to 560 hold that the repeal of Section 137 did not remove the ban on the courts to summon any documents from the income tax authorities, even in respect of documents which had been filed before the Income tax authorities after the repeal of Section 137 after April 1, 1964. In our opinion the High Court fell in error in coming to that conclusion. It not only ignored the legislative intent manifest in the omission of Section 137 of the 1961 Act, after the repeal of the 1922 Act, but also ignored the powers of a court under the general law, to summon such documents, record etc. as is found relevant to a case pending before the court, in the absence of any specific prohibition, under any law for the time being in force. The High Court assumed that by Section 54 of the 1922 ACt and Section 137 of the 1961 Act, the jurisdiction of the courts to call for documents from the income tax authorities had been taken away for all times to come, notwithstanding the repeal of the 1922 Act or the omission of Section 137 specifically from the 1961 Act. The High Court appears to have lost sight of the position that under the Code of Civil Procedure, the courts of law have always possessed the jurisdiction to call for the production of documents relevant to the case before the court from anybody having custody of those documents. Section 54 of the 1922 Act and after its repeal Section 137 of the 1961 Act had only placed fetters on the exercise of that jurisdiction, in respect of the specified documents, by the courts, notwithstanding anything contained in any other law for the time being in force. The exercise of the jurisdiction to seek production of documents had, thus only been put under a cloud in so far as the record of assessment is concerned. With the repeal of the 1922 Act and omission of Section 137 of the 1961 Act, the fetters on the exercise of that jurisdiction were removed with the result that the exercise of the jurisdiction to call for the production of documents relevant to the case pending before the court, even from the income tax authorities, revived. Neither Section 54 of the 1922 Act nor Section 137 of the 1961 Act had taken away for all times the jurisdiction of the courts to call for the record from the income tax authorities. Those provisions, as already noticed had, only put the exercise of that jurisdiction under a cloud and those fetters were coterminous with the life of Section 54 of the 1922 Act or Section 137 of the 1961 Act. The finality which has been attached to the order if the Commissioner under Section 138 (1) (b) of the Act is applicable only in cases where application is made to the Commissioner by a party or any other person 561 for receiving documents or information. It has nothing to do with the powers of the courts to summon the production of assessment record of an assessee, filed after 1.4.1964. The Privilege as to secrecy, which the assessee had acquired under Section 54 of the 1922 Act remained unimpaired by the repeal of that Act or even by the omission of Section 137 of the 1951 Act in respect of record filed prior to 1.4.1964 and relating to the assessments prior to that date. That privilege did not extend, after April 1, 1964, to record filed before the income tax authorities, for the assessment years 1964 65 onwards. Section 6 of the General Clauses Act as well as Section 138 (1) (b) of the 1961 Act cannot extend the ban on the exercise of the jurisdiction by the courts to summon the production of documents from the income tax authorities after April 1, 1964 relating to assessment year 1964 65 in respect of the record filed after April 1, 1964. Section 6 (C) of the on which reliance was placed by the HIgh Court reads as under: "6. 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 . . . (c) affect any right, privilege, obligation or liability acquired or incurred under any enactment so repealed. " A plain reading of the Section shows that the repeal of any enactment unless a different intention appears, shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed enactment. In respect of the documents filed after the repeal of Section 137 of the 1961 Act, with effect from April 1, 1964, relating to assessments for the period 1964 65 onwards, no right, privilege, obligation or liability can be said to have been acquired, accrued or incurred prior to the omission of section 137 of the Act. Therefore, the ban contained in Section 137 of the 1961 Act on the exercise of the powers of a civil court to call for production of documents etc. could not be said to have continued to exist, in matters arising subsequent to the omission of that Section with effect from April 1, 1964 and that ban came to an end in respect of the period after April 1, 1964. The general principle is that an enactment which is repealed, is to be treated, except as to transactions past and closed, as if it had never existed. The assessee had acquired no right or 562 privilege under the repealed Act, since the provision is only a procedural restriction and did not create any substantive right on the assessee, in respect of assessments for the period after the omission of Section 137 of the 1961 Act. Thus, reliance placed on the provisions of Section 6 of the to hold the continuation of the ban on the exercise of jurisdiction by the courts was misplaced. Dealing with the scope of Section 138 (1) (b) of the Act, the High Court held that the said provisions attached a finality to an order of the Income Tax Commissioner and applied to the cases where the record was summoned even by a court of law. The High Court opined: "The complete omission of the declaration of the confidential nature of the documents, records, etc. and the removal of the ban on courts and public servants no doubt, suggests that the power of a court under the general law to summon such documents, records,etc. relevant to the case before it has been restored. But at the same time, the legislature which empowered the Commissioner of Income tax to furnish the information if he is satisfied that it is in the public interest so to do made the decision of the Commissioner final and un questionable in a Court of law. When two powers are thus vested in two legal authorities, neither of them can be ignored, and both of them have to be reconciled and given effect to . In the case of the two powers under consideration, it has to be noted that the power to summon which vests in a court is under the general law, while the power of the Commissioner has been conferred upon him by a special law and has, therefore, to prevail over the former. In view of the same, it has to be held that while it is open to a court to summon the documents, records etc. from the Income tax Commissioner, it is equally open to the Commissioner on receiving the summons to consider whether the production/furnishing of the documents, records etc. would be in the public interest, and submit the same to the court in answer to the summons. " We are unable to subscribe to the above view. Clause (b) of sub Section (1) of Section 138 is limited in its scope and application. Under it, any person can make an application to the 563 Commissioner for any information relating to an assessee in respect of any assessment made either under the 1922 Act or under the 1961 Act on or after the 1st April 1960 and the Commissioner of Income Tax has the authority to furnish or cause to be furnished the information asked for on being satisfied that it is in the public interest so to do and such an order of the Commissioner is final and cannot be called in question in any court of law. The Commissioner of Income Tax under this clause performs only an administrative function, on his subjective satisfaction as to whether it is in the public interest to furnish the information or not to any person seeking such information and his decision in that behalf is final and the aggrieved person cannot question it in a court of law. By enacting this provision, the legislature could not be said to have intended that the Commissioner of Income Tax would have the authority to sit in judgment over the requisition made by a court of law requiring the production of record of assessment relating to an assessee in a case pending before the court. When a court of law, in any matter pending before it desires the production of record relating to any assessment after applying its judicial mind and hearing the parties and on being prima facie satisfied that the record required to be summoned is relevant for the decision of the controversy before it it passes a judicial order summoning the production of that record from the party having possession of the record. The Commissioner of Income Tax cannot, therefore, refuse to send the record, as he certainly is not authorised to set at naught a judicial order of a court of law. He must obey the order of the court by sending the record to the court concerned indeed it is open to the Commissioner of Income Tax to claim privilege, in respect of any document or record so summoned by a court of law, under Sections 123 and 124 of the and even then it is for the court to decide whether or not to grant that privilege. Had the legislature intended that no document from the assessment record of an assessee should be produced in a court on being summoned by it, without the approval of the Commissioner of Income Tax, it would have said so in Section 138 of the Act itself. The repeal of Section 137 of the Act clearly discloses the legislative intent that it was felt by the legislature that it was no more necessary to keep the records of assessment by the Income Tax Department relating to an assessee as confidential from the courts and the bar with regard to the production of any part of the record was removed in so far as the courts are concerned. The finality which has 564 been attached to the order of the Commissioner under Section 138(1)(b) of the Act is, thus, restricted to the cases where the information etc. as contemplated by the Section is called for by any person, other than a court of law by a judicial order. The High Court, therefore, fell in error in holding that the assessment records of an assessee filed before the income tax authorities, even after April 1, 1964, are immune from production in a court of law on summons for their production being issued by the court and that the disclosure of any information from the record even to the courts is subject to the veto powers of the Commissioner of Income Tax. Section 138(1)(b) does not affect the powers of the courts to require the production of assessment records or the disclosure of any information therefrom to it, in a case pending before the court when the court, by a judicial order, requires the production of the record, considered relevant by it for decision of a case pending before it. As a result of the above discussion, we, therefore, find that the answer given by the Full Bench of the High Court in the impugned judgment, to situation (d) of the second question (supra) as formulated by it, is erroneous and we set it aside. Consequently, we hold that after the repeal of Section 137 of the Act, there is no longer any impediment left in the way of a court to summon the production of documents filed by an assessee before the income tax authorities after April 1, 1964 relating to assessment proceedings for 1964 65 onwards and that the finality attached to an order of the Commissioner under Section 138(1)(b) has no relevance to the exercise of powers by a court to summon the production of documents in a case pending before the Court. Since, the challenge before us had been confined to the answer given by the High Court to situation (d) of the second question as formulated by it and no other finding of the High Court was called in question, we have refrained from expressing any opinion on the other findings recorded by the Full Bench of the High Court. The appeal consequently succeeds to the extent indicated above and is allowed. We, however, make no order as to costs. V.P.R. Appeal allowed.

The Plaintiff respondent instituted a suit for recovery of Rs.1,39,722.86 against the defendants appellants. When evidence was being recorded in the suit proceedings, the plaintiff obtained summons from the court requiring the Income Tax Department to produce in the court records relating to the income tax assessment of the defendants for the assessment years 1964 65 to 1971 72. The Income Tax Officer produced the record in a sealed cover. The plaintiff also obtained summons requiring the Income Tax Officer to produce the income tax record relating to two other assessees, which was produced in the Court by the Department in a sealed cover with a submission that no disclosure of information regarding income tax 546 pertaining to an income tax assessee could be made. The plaintiffs in the meanwhile filed in the court a number of certified copies of the accounts of the defendants, which he had obtained from the Income Tax authorities and sought permission of the Court to tender the certified copies in evidence. Before a Single Judge of the High Court on the question of privilege as claimed by the Income Tax Department, arguments were addressed by the parties. The following three questions were referred to the Full Bench (i) What is the position of law relating to privilege prior to 1964? (ii) What is the position of law relating to privilege after 1964? and (iii) What is the effect of the production of certified copies relating to income tax assessment records, and how far certified copies can be admitted in evidence? The Full Bench answered the first and second questions sustaining the claim of the privilege by the Income Tax Department and the Full Bench did not express any opinion on the third question. Against the judgment of the Full Bench of the High Court, appeal was filed by special leave. The controversy before this Court was confined to the finding of the High Court relating to the claim of privilege for the production of documents which were filed after the repeal of Section 137, with effect from 1.4.1964 in respect of assessment years 1964 65 onwards. The appellants (defendants) contended that after the repeal of Section 137 of the Income Tax Act, 1961 by the Finance Act, 1964 there was no longer any impediment left in the way of a civil court to summon the production of documents filed by an assessee during the assessment proceedings before an Income Tax Officer after 1.4.1964 in respect of assessment years 1964 65 onwards, and that the finality attached to an order of the Commissioner with regard to claim of privilege under Section 138(1)(b) had no relationship to the power of the court to summon that record. Allowing the appeal of the defendants appellants, this Court, 547 HELD:1.01. Section 54 of the Income Tax Act, 1922 and after its repeal, Section 137 of the Income Tax Act, 1961 had only placed fetters on the exercise of the jurisdiction, in respect of the specified documents, by the courts, notwithstanding anything contained in any other law for the time being in force. The exercise of the jurisdiction to seek production of documents had, only been put under a cloud in so far as the record of assessment is concerned. [560E] 1.02. With the repeal of the 1922 Act and omission of Section 137 of the 1961 Act, the fetters on the exercise of the jurisdiction were removed with the result that the exercise of jurisdiction to call for the production of documents relevant to the case pending before the court, even from the income tax authorities, revived. [560E F] 1.03. Neither Section 54 of the 1922 Act nor Section 137 of the 1961 Act had taken away for all times the jurisdiction of the courts to call for the record from the Income Tax authorities. Those provisions had only put the exercise of that jurisdiction under a cloud and those fetters were coterminous with the life of Section 54 of the 1922 Act or Section 137 of the 1961 Act. [560F G] 2.01. Clause (b) of Sub Section (1) of Section 138 is limited in its scope and application. Under it, any person can make an application to the Commissioner for any information relating to an assessee in respect of any assessment made either under the 1922 Act or under the 1961 Act on or after the 1st April 1960 and the Commissioner of Income Tax has the authority to furnish or cause to be furnished the information asked for on being satisfied that it is in the public interest so to do and such an order of the Commissioner is final and cannot be called in question in any court of law. The Commissioner of Income Tax under this clause performs only an administrative function, on his subjective satisfaction as to whether it is in the public interest to furnish the information or not to any person seeking such information and his decision in that behalf is final and the aggrieved person cannot question it in a court of law. By enacting this provision, the legislature could not be said to have intended that the Commissioner of Income Tax would have the authority to sit in judgment over the requisition (Judicial order) made by a court of law requiring the production of record of assessment relating to an assessee in a case pending before the court. [562H 563D] 548 2.02. When a court of law, in any matter pending before it, desires the production of record relating to any assessment after applying its judicial mind and hearing the parties and on being prima facie satisfied that the record required to be summoned is relevant for the decision of the controversy before it it passes a judicial order summoning the production of that record from the Party having possession of the record. The Commissioner of Income Tax cannot, therefore, refuse to send the record, as he certainly is not authorised to set at naught a judicial order of a court law. He must obey the order of the court by sending the record to the court concerned. [563D F] 2.03. It is open to the Commissioner of Income Tax to claim privilege, in respect of any document or record so summoned by a court of law, under Sections 123 and 124 of the and even then it is for the court to decide whether or not to grant that privilege. Had the legislature intended that no document from the assessment record of an assessee should be produced in a court on being summoned by it, without the approval of the Commissioner of Income Tax, it would have said so in Section 138 of the Act itself. [563F G] 2.04. The repeal of Section 137 of the Act clearly discloses the legislative intent that it was felt by the legislature that it was no more necessary to keep the records of assessment by the Income Tax Department relating to an assessee as confidential from the courts and the bar with regard to the production of any part of the record was removed in so far as the courts are concerned. The finality which has been attached to the order of the Commissioner under Section 138(1)(b) of the Act is restricted to the cases where the information etc. as contemplated by the section is called for by any person, other than a court of law by a judicial order. [563G 564A] 2.05 The finality which has been attached to the order of the Commissioner under Section 138(1)(b) of the Act is applicable only in cases where application is made to the Commissioner by a party or any other person for receiving documents or information. It has nothing to do with the powers of the courts to summon the production of assessment record of an assessee, filed after 1.4.1964. The privilege as to secrecy, which the assessee had acquired under Section 54 of the 1922 Act remained unimpaired by the repeal of that Act or even by the omission of Section 549 137 of the 1961 Act in respect of record filed prior to 1.4.1964 and relating to the assessments prior to that date. That privilege did not extend, after April 1,1964. to record filed before the income tax authorities, for the assessment years 1964 65 onwards. [560H 561B] 2.06. Section 138(1)(b) does not effect the powers of the courts to require the production of assessment records or the disclosure of any information therefrom to it, in a case pending before the court when the court, by a judicial order, requires the production of the record, considered relevant by it for decision of a case pending before it. [564B C] 2.07. The High Court, therefore, fell in error in holding that the assessment records of an assessee filed before the income tax authorities, even after April 1,1964, are immune from production in a court of law on summons for their production being issued by the court and that the disclosure of any information from the record even to the courts is subject to the veto powers of the Commissioner of Income Tax. [564B] 3.01. Section 6 of the General Clauses Act as well as Section 138 (1)(b) of the 1961 Act cannot extend the ban on the exercise of the jurisdiction by the courts to summon the production of documents from the income tax authorities after April 1,1964 relating to assessment year 1964 65 in respect of the record filed after April 1,1964. [561B C] 3.02. Section 6 of the General Clauses Act provides that the repeal of any enactment, unless a different intention appears, shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed enactment. [561F] 3.03 The general principle is that an enactment which is repealed, is to be treated, except as to transactions past and closed, as if it had never existed. The assessee had acquired no right or privilege under the repealed Act, since the provision is only a procedural restriction and did not create any substantive right in the assessee, in respect of assessments for the period after the omission of Section 137 of the 1961 Act. Thus, reliance placed on the provisions of Section 6 of the General Clauses Act to hold the continuation of the ban on the exercise of jurisdiction by the courts was misplaced. [561H 562B] 3.04. In respect of the documents filed after the omission of Section 550 137 of the 1961 Act , with effect from April 1,1964, relating to assessments for the period 1964 65 onwards, no right, privilege, obligation or liability can be said to have been acquired accrued or incurred prior to the omission of Section 137 of the Act. [561F G] 3.05 The ban contained in Section 137 of the 1961 Act on the exercise of the powers of a civil court to call for production of documents etc. could not be said to have continued to exist, in matters arising subsequent to the omission of that Section with effect from April 1, 1964 and that ban came to an end in respect of the period after April 1, 1964. [561G] 4. After the repeal of Section 137 of the act, there is no longer any impediment left in the way of a court to summon the production of documents filed by an assessee before the income tax authorities after April 1,1964 relating to assessment proceedings for 1964 65 onwards and that the finality attached to an order of the Commissioner under Section 138 (1)(b) has no relevance to the exercise of powers by a court to summon the production of documents in a case pending before the Court. [564D E]

Civil Appeal No. 1875 of 1988. From the Judgment and order dated l0.12.1987 of the Allahabad High Court in Civil Misc. Writ No. 4434 of 1987. S N. Kacker, Gobind Dass, E.C. Agarwala, Ms. Purnima Bhatt and V.K. Pandita for the Appellant. K. Parasaran, Attorney General (Not Present) Gopal Subramanium and Mrs. section Dikshit for the Respondents. The Judgment of the Court was delivered by DUTT J. After hearing the learned Counsel for the parties, we grant special leave and, as full and complete submissions have been made, we proceed to dispose of the appeal on merits. The only question that is involved in this appeal is whether the 320 appellant D.K. Agarwal, who was a member of the Higher Judicial Service under the State of U.P., to be precise, the District and Sessions Judge, Gonda, and since retired on February 29, 1985, was entitled to the super time scale. The appellant was appointed to the post of District and Sessions Judge on October 31, 1983. In or about December. 1985, the Selection Committee constituted by the Chief Justice of the Allahabad High Court and consisting of three Judges of that Court recommended the grant of selection grade to the appellant on the basis of merit as required under Rule 27 of the U.P. Higher Judicial Service rules, 1975, hereinafter referred to as 'the Rules '. The Full Court approved the recommendation for the grant of the selection grade to the appellant and granted the same to him with retrospective effect from November 1, 1983. In April, 1986 the Selection Committee recommended for the grant of super time scale to the appellant under Rule 27A of the Rules It appears that the said recommendation of the Selection Committee came up for consideration before the Full Court on two occasions, but the Full Court could not take any decision as each time K.N. Misra, J., who was then the Administrative Judge, made certain new allegations against the appellant. On January 17, 1987, again the recommendation of the Selection Committee came up for consideration before the Full Court for the third time. On that day, the Full Court found the appellant unfit for a post in the super time scale as recommended by the Selection Committee. It, however, transpired that just on the eve of the Full Court Meeting held on January 17, 1987, S.K. Dhaon, J., who was then the Administrative Judge, wrote a secret letter to the Chief Justice which will be referred to presently. Being aggrieved by the decision of the Full Court turning down the recommendation of the Selection Committee, the appellant filed a writ petition before a Division Bench of the High Court During the pendency of the writ petition, the appellant made a representation to the High Court on its Administrative Side on April 13, 1987 praying for reconsideration of the resolution of the Full Court dated January 17, 1987. While no decision was taken by the Full Court at the meeting held on May 16. 1987, an adverse entry for the year 1986 87 was recorded by S.K. Dhaon, J. On July, 9 1987 as follows: "He creates trouble. He fomented a conflict between the members of the Bar and the subordinate staff of the courts 321 in Kanpur Nagar which ultimately resulted in the transfer of Sri Arjan Dev Mahajan, the then District Judge, Kanpur Nagar. This was done with an ulterior motive. He also instigated the subordinate staff of the courts in Kanpur Dehat to make agitations from time to time on the question of bifurcation of the staff between the courts at Kanpur Nagar and Kanpur Dehat. His integrity too is highly doubtful, hence not certified. His work and conduct should be kept under constant gaze . It so happened that the Chief Justice enquired into the allegations contained in the adverse entry. After such enquiry, the Chief Justice, as would appear from his minutes dated July 14, 1987, found that the allegations had no foundation whatsoever and observed as follows: "I find from the Character Roll entries that Sri Agarwal had been given remarks and praise, as District Judge, Gonda, in the years 1983 84 and 1984 85 and of course not much expression has been given in the entry of 1985 86 as the Hon 'ble Administrative Judge had no occasion to see his work. The entry doubting the integrity and involvement of Sri Agarwal in the Kanpur dispute that had arisen in 1986 obviously does not find support, more so, because it was given on 9.7.1987 on the eve of Full Court Meeting scheduled to be held on 10.7.1987. I do not agree with the assessment as I regard Sri Agarwal as a very good, able and competent administrator with an unblemished integrity. " In the earlier part of his minutes, the learned Chief Justice stated as follows: "The members of the Bar informed that their view about the integrity and conduct of Sri Agarwal had already been expressed by the President, Kanpur Bar Association, . . A copy of the annual Magazine "Kanpur Bar Association, Kanpur" was given to him wherein I find the following observations: "I will be failing in my pious obligation if I do not extend my heartfelt gratitude and thanks to Mr. K.K. 322 Chaubey, our most affectionate friend, philosopher and guide, and to Mr. D.K. Agarwal, a most compe tent and efficient administrator, who has helped us a lot to create cordial atmosphere between Bar and Bench." The Division Bench of the High Court in its judgment dated December l0, 1987, noticed the remarks of the Chief Justice about the appellant as made by him in his said minutes dated July 14, 1987. The Division Bench quashed the resolution dated January 17, 1987, of the Full Court and directed that an opportunity should be given by the Court to the appellant of explaining the imputations made against him by the Administrative Judge in his letter sent to the Chief Justice just on the eve of the Full Court Meeting held on January 17, 1987. Further, it was directed that the case of the appellant for appointment to a post in super time scale should be reconsidered by the Court at a very early date keeping in view the fact that the appellant was to retire from service in February, 1988. As the Division Bench did not grant the super time scale to the appellant, but referred the matter back to the Full Court for reconsideration of the same, the appellant filed the present appeal. During the pendency of the appeal in this Court, the Full Court at its meeting held on February 20, 1988, again rejected the recommendation of the Selection Committee for the grant of super time scale to the appellant. The question that arises for our consideration is whether the appellant, who has since retired from service, was entitled to the super time scale. There can be no doubt that whether a member of the Higher Judicial Service should be granted the selection grade or the super time scale is a matter exclusively within the administrative jurisdiction of the High Court. This Court will not ordinarily interfere with any decision of the High Court in such a matter. This is, however, subject to the exception that if in considering whether a member of the Higher Judicial Service should be granted the super time scale or not, the High Court acts in violation of any rule framed by it or of the principles of natural justice or comes to any finding not supported by any reliable material, this Court has to examine the matter for ends of justice. But, interference does not mean granting of the relief which the High Court is entrusted to grant in its administrative jurisdiction. All that the Court will ordinarily do is to refer back the matter for 323 reconsideration of the High Court. In the instant case, however, we consider that for ends of justice we should interfere by disposing of the matter finally, that is to say, without referring it again to the High Court for the reasons stated hereafter. The letter of Dhaon, J. referred to above was handed over to the Chief Justice by Dhaon, J. just on the eve of the Full Court Meeting held on January 17, 1987. In that letter, certain serious allegations were made by Dhaon, J. against the appellant solely on the basis of what a retired Judge of the High Court had orally reported to Misra, J. The allegations contained in the said letter were not communicated to the appellant before the Full Court Meeting on January 17, 1987, but the same were communicated to him before the Full Court reconsidered the matter in the meeting held on February 20, 1988 pursuant to the judgment of the Division Bench. The appellant had denied the allegations made in the said letter against him. Upon such denial, no attempt was made by the Full Court to have the comments of the retired Judge, who had orally made the allegations against the appellant. There is, therefore, no material on record to form the foundation in support of the allegations and the Full Court, in our opinion, was not at all justified in acting on the allegations contained in the letter of Dhaon, J. We may now deal with the adverse entry of 1986 87 made by the Administrative Judge on July 9, 1987 against the appellant. It has been already noticed that an enquiry was made by the learned Chief Justice and the allegations contained in the adverse entry have been found to be without foundation. Indeed, the learned Chief Justice recorded that he regarded Sri Agarwal as a very good, able and competent administrator with an unblemished integrity. In view of the minutes of the learned Chief Justice, the Full Court was not justified in depriving the appellant of the grant of super time scale. Apart from that, the adverse entry should not have been communicated to the appellant for his explanation on the face of the minutes of the Chief Justice. In this connection, we may refer to the proviso to Rule 4(B) of the Rules which inter alia. reads as follows: ". . . . . . . . Provided that adverse remarks or strictures made by Administrative Judges about the judicial work and conduct of any officer of subordinate judiciary will be placed before the Chief Justice before issue. 324 The rule requires that before an adverse remark is communicated to the concerned judicial officer, it must be placed before the Chief Justice and, in our opinion, by necessary implication, the rule requires concurrence of the Chief Justice for taking action on the adverse remark by communicating the same to the judicial officer concerned. In the instant case, the adverse entry was communicated to the appellant even on the face of the minutes of the learned Chief Justice. In other words, although the learned Chief Justice did not agree with the adverse remarks, yet action was taken on the same by communicating the same to the appellant. This was done in utter violation of the proviso to Rule 4B and also in disregard of the minutes of enquiry of the learned Chief Justice. In this connection, it may be mentioned that the allegations which were made from time to time against the appellant resulting in the postponement of consideration by the Full Court of the recommendation of the Selection Committee for the grant of super time scale to the appellant, were all found to be untrue. We may mention about one instance when the Full Court could not consider the case of the appellant for the grant of super time scale at its meeting held on May 17, 1986 because an oral accusation was made by the learned Administrative Judge that the appellant and his son were involved in smuggling activity while posted as the District Judge, Gonda, in the year 1985. The matter was referred to the District Magistrate, Gonda, who by his letter dated May 31, 1986, informed the High Court that no such incident, as referred to him, had come to his notice wherein Sri Agarwal or his son might have been apprehended while carrying smuggled goods. Further, it was stated by him that he had verified from the concerned records of different Police Stations which also showed that there was no mention of any incident involving Sri Agarwal or his son in such a matter. Thus, the allegations made against the appellant or his son were baseless. After considering the above facts and circumstances, we are satisfied that the appellant was entitled to a posting in the super time scale. We modify the judgment of the Division Bench and direct that as the appellant has already retired, he shall be paid the monetary benefit of the super time scale with effect from January 1, 1987. His pension shall be suitably altered on that basis. The payment shall be made within two months from today. The appeal is allowed. There will, however, be no order as to costs. N.P.V. Appeal allowed.

In April, 1986, the Selection Committee constituted by the Chief Justice of Allahabad High Court recommended the grant of super time scale to the appellant, a member of the U.P. Higher Judicial Services, under Rule 27A of the U.P. Higher Judicial Services Rules, 1975. The Full Court of the High Court considered the recommendation on two occasions, but no decision could be taken as each time the Administrative Judge made certain new allegations against the appellant. Finally, on January 17, 1987, the Full Court found the appellant unfit for a post in the super time scale. On the eve of the Full Court Meeting the Administrative Judge was stated to have written a secret letter to the Chief Justice. Aggrieved, the appellant filed a writ petition before the Division Bench. Meanwhile, the appellant made a representation to the High Court on its Administrative side for reconsideration of the resolution of the Full Court. While no decision was taken by the Full Court at its meeting held on May 16, 1987, an adverse entry for the year 1986 87 was recorded by the Administrative Judge. The Chief Justice enquired into the allegations contained in the adverse entry and found that the allegations had no foundation whatsoever. He recorded in his minutes that he regarded the appellant as a very good, able and competent administrator with an unblemished integrity. 318 The Division Bench, after noticing the remarks of the Chief Justice, quashed the resolution of the Full Court, and referred back the matter to the Full Court for reconsideration. It also directed that the appellant be given an opportunity of explaining the imputations made against him in the letter written by the Administrative Judge on the eve of the Full Court meeting! of January 17, 1988. Dissatisfied with the above decision, the appellant filed an appeal by special leave in this Court. Meanwhile, the Full Court at its meeting held on February 20, 1988, again rejected the recommendation of the Selection Committee for the grant of super time scale to the appellant. Allowing the appeal by special leave, ^ HELD: 1.1 Whether a member of the Higher Judicial Service should be granted the selection grade or the super time scale is a matter exclusively within the administrative jurisdiction of the High Court. This Court will not ordinarily interfere with any decision of the High Court in such a matter. However, if the High Court acts in violation of any rule framed by it or of the principles of natural justice or comes to any finding not supported by any reliable material, this Court has to examine the matter for ends of justice. But, interference does not mean granting of relief which the High Court is entrusted to grant in its administrative jurisdiction. The Court will ordinarily refer back the matter for reconsideration of the High Court. [322F H] However, in the instant case ends of justice would require interference by disposing of the matter finally, without referring it again to the High Court. [323A] 1.2 Proviso to Rule 4(B) of the U.P. Higher Judicial Service Rules requires that before an adverse remark is communicated to the concerned judicial officer; it must be placed before the Chief Justice. By necessary implication, therefore, the rule requires concurrence of the Chief Justice for taking necessary action on the adverse remark by communicating to the judicial officer concerned. [324A B] In the instant case, although the Chief Justice did not agree with the adverse remarks, action was taken by communicating them to the appellant in utter violation of the proviso to Rule 4B and also in disregard of the minutes of enquiry of the Chief Justice. [324B C] 319 The appellant had denied the allegations contained in the letter of the Administrative Judge but no attempt was made by the Full Court to have the comments of the retired Judge who orally made the allegations. Further, the allegations which were made from time to time against the appellant resulting in the postponement of consideration by the Full Court were all found to be untrue. [324C D] An enquiry was made by the Chief Justice and the allegations contained in the adverse entry for 1986 87 have been found to be without foundation. Indeed, the Chief Justice recorded that he regarded the appellant as a very good, able and competent administrator with an unblemished integrity. [323E F] Therefore, in the absence of any material on record to form the foundation in support of the allegations and in view of the minutes of the Chief Justice, the Full Court was not at all justified in acting on the allegations contained in the letter of the Administrative Judge and depriving the appellant of the grant of super time scale. [323F] The appellant was, therefore, entitled to a posting in the supertime scale. Since the appellant has already retired he shall be paid the monetary benefit with effect from January 1, 1987 and his pension suitably altered. [324F G]

iminal Appeal No. 37 of 1960. Appeal by special leave from the judgment and order dated the April 7, 1958, of the Punjab High Court (Circuit bench) at Delhi in Criminal Writ No. 57 D of 1957. M. C. Setalvad, Attorney General of India, B. Sen and T. M. Sen, for the appellants. H. L. Anand and Janardan Sharma, for respondent. April 4. The Judgment of the Court was delivered by 94 746 SARKAR, J. This is an appeal by the Union of India from a judgment of the High Court of Punjab allowing the respondent 's application under article 226 Of the Constitution for a writ quashing an order made against him on January 29, 1958, under section 3(2)(c) of the . That order was made by the Chief Commissioner of Delhi and was in these terms: "The Chief Commissioner of Delhi is pleased to direct that Mr. Ghaus Mohd. . a Pakistan national shall not remain in India after the expiry of three days from the date on which this notice is served on him. . . The order was served on the respondent on February 3, 1958. The respondent did not comply with that order but instead moved the High Court on February 6, 1958, for a writ to quash it. The High Court observed that "There must be prima facie material on the basis of which the authority can proceed to pass an order under section 3(2)(c) of the . No doubt if there exists such a material and then the order is made which is on the face of it a valid order, then this Court cannot go into the question whether or not a particular person is a foreigner or, in other words, not a citizen of this country because according to Section 9 of the , this question is to be decided by a prescribed authority and under the Citizenship Rules, 1956, that authority is the Central Government. " The High Court then examined the materials before it and held, "in the present case there was no material at all on the basis of which the proper authority could proceed to issue an order under Section, 3(2)(c) of the ." In this view of the matter the High Court quashed the order. It was contended on behalf of the Union of India that section 9 of the , had no application to this case. We think that this contention is correct. That section deals with the termination of citizenship of a citizen of India in certain circumstances. It is not the Union 's case nor that of the respondent that the latter 's citizenship came to an end 747 for any of the reasons mentioned in that section. The reference to that section by the High Court for the decision of the case, was therefore not apposite. That section had no application to the facts of the case. Section 2(a) of the , defines a "foreigner" as "a person who is not a citizen of India Sub section (1) of section 3 of that Act gives power to the Central Government by order to provide for the presence or continued presence of foreigners in India. Sub section (2) of section 3 gives express power to the Government to pass orders directing that a foreigner shall not remain in India. It was under this provision that the order asking the respondent to leave India was made. There is no dispute that if the respondent was a foreigner, then the order cannot be challenged. The question is whether the respondent was a foreigner. Section 8(l) of the to which we were referred, deals with the case of a foreigner who is recognised as its national by more than one foreign country or when it is uncertain what his nationality is. In such a case this section gives certain power to the Government to decide the nationality of the foreigner. Sub section (2) of this section provides that a decision as to nationality given under sub sec. (1) shall be final and shall not be called in question in any court,. We entirely agree with the contention of the Union that this section has no application to this case for that section does not apply when the question is whether a person is a foreigner or an Indian citizen, which is the question before us, and not what the nationality of a person who is not an Indian citizen, is. Section 9 of this Act is the one that is relevant. That section so far as is material is in these terms: Section 9. "If in any case not falling under section 8 any question arises with reference to this Act or any order made or direction given thereunder, whether any person is or is not a foreigner. . the onus of proving that such person is not a foreigner . shall, notwithstanding anything contained in 'the (1 of 1872), lie upon such person. " 748 It is quite clear that this section applies to the present case and the onus of showing that he is not a foreigner was upon the respondent. The High Court entirely overlooked the provisions of this section and misdirected itself as to the question that arose for decision. It does not seem to have realised that the burden of proving that he was not a foreigner, was on the respondent and appears to have placed that burden on the Union. This was a wholly wrong approach to the question. The question whether the respondent is a foreigner is a question of fact on which there is a great deal of dispute which would require a detailed examination of evidence. A proceeding under article 226 of the Constitution would not be appropriate for a decision of the question. In our view, this question is best decided by a suit and to this course neither party seems to have any serious objection. As we propose to leave the respondent free to file such a suit if he is so advised, we have not dealt with the evidence on the record on the question of the respondent 's nationality so as not to prejudice any proceeding that may be brought in the future. We think, for the reasons earlier mentioned, that the judgment of the High Court cannot be sustained and must be set aside and we order accordingly. On behalf of the Union of India the learned Attorney General has stated that the Union will not take immediate steps to enforce the order of January 29, 1958, for the deportation of the respondent so that in the meantime the respondent may if he so chooses, file a suit or take any other proceeding that he thinks fit for the decision of the question as to whether he is a foreigner. In the result the only order that we make is that the order and the judgment of the high Court are set aside. Appeal allowed.

An order had been made under section 3(2)(C) Of the , directing that the respondent, "a Pakistan national 745 shall not remain in India after the expiry of three days". The respondent moved the High Court of Punjab under article 226 of the Constitution to quash the order contending that he was not a Pakistan national. The High Court held that if there was Prima facie material to show that a person was a foreigner, a civil court would not go into the question whether he was a foreigner for under section 9 of the , that question had to be decided by the prescribed authority which under the Rules framed under the Act, was the Central Government. The High Court came to the conclusion that there was no Prima facie material on the basis of which an order under section 3(2)(C) Of the could be passed against the respondent and in that view quashed the order. On appeal by the Union of India by special leave, Held, that section 9 of the dealt with the termi nation of the citizenship of an Indian citizen and had no application to this case as the Union did not contend that the respondent had been an Indian citizen whose citizenship had terminated. Section 8 of the which made the decision` of the Central Government on a question of the nationality of a foreigner who is recognised as its national by more than one foreign country or when it is uncertain what his nationality is final, also did not apply as the only question in this case was whether the respondent was a foreigner or an Indian Citizen. The case was governed by section 9 of the under which when a question arises whether a person is or is not a foreigner, the onus of proving that he is not a foreigner is on that person. The High Court was in error In placing on the Union of India the burden of proving that the respondent was a foreigner.

Appeal No. 1862 of 1967. Appeal under section 116 A of the Representation of the People Act 1951 from the judgment and order dated November 16, 1967 of the Punjab and Haryana High Court in Election Petition No. 19 of 1967. 112 A. K. Sen, B. Dutta, P. C. Bhartari, M. L. Aggarwal and J. B. Dadachanji, for the appellant. section K. Mehta and K. L. Mehta, for respondent No. 1 The Judgment of the Court was delivered by Hidayatullah, J. This appeal is directed against the judgment of the High Court of Punjab and Haryana at Chandigarh, November 16, 1967 by which the election of the appellant to the Vidhan Sabha of Haryana State from the Kaithal constituency has been declared to be void. The election was held on February 19, 1967 and the result of the pool was declared on February 22, 1967. The appellant had a margin of nearly 2000 votes. over the first respondent who was the closest rival. One other candidate had also stood but we are not concerned with him in the present appeal since he has not shown any interest in it. He secured less than 1000 votes and forfeited his security. The election petition was based upon allegations of corrupt practice against the successful candidate. The gravamen of the charge was that she as a minister in the Government of Mr. Bhagwat Dayal Sharma used certain discretionary grants to bribe the voters of her constituency and in particular by paying two sums, of Rs. 2,000 for the construction of two dharamsalas ,for the Kumhar and the Sweeper Colonies at Kaithal. There were other allegations also against her but as they have been found against the election petitioner and have not been brought to our notice we need not say anything about them. The learned Judge who tried the election petition did not accept the evidence tendered by the election petitioner to prove the corrupt practice outlined above but held on a general appraisal of the circumstances of the case that these sums were in fact paid to bargain for votes and to influence the voters in favour of the appellant. We shall now give a few facts of the case before stating our conclusion. The election petition was filed on April 7, 1967. It was later amended and better particulars were supplied on July 29, 1967. In the original election petition as filed by the election petitioner it was stated that a sum of Rs. 2,000 from the discretionary giant of the appellant was paid to the Harijans of Keorak Gate, Kaithal for the construction of a dharamsala. The allegation then was that in the beginning of January 1967 the Harijans were approached by the appellant and were asked to vote for her. They flatly refused to vote for her. Thereupon she promised to provide funds for the construction of a dharamsala in their basti and tempted by this offer they agreed to vote for her. In regard to the other discretionary grant it 'was ' stated in the original petition that the Kumhar voters who reside in Dogran Gate. Kaithal, were also 113 approached,by the appellant in the beginning of January 1967 and were asked to vote for her. When they refused to vote she promised them a sum of Rs. 2,000 for building the dharamsala in their locality. It was further pointed out that the first sum of Rs. 2,000 was paid through the Deputy Commissioner, Kamal, vide his Memo No. 78 BP III/67/335 of January 12, 1967. The second payment was also made on the same date through the Deputy Commissioner, Karnal, vide Development Department Memo No. 47 BAP III 67/326. The affidavit in support of the election petition was sworn by the election petitioner on information supplied by others and believed to be true. It was stated in the verification clause that.this information was received "from my workers and believed to be true". On an objection being raised that the particulars of the corrupt practice were not adequate and on the other hand vague and that the affidavit did not disclose the persons from whom the information was derived the Court ordered that better particulars be supplied and a fresh affidavit filed. The amended election petition was then filed in July, 1967. In this election petition a change was introduced. It was stated that on December 22, 1966 the Harijans were called to a Canal Rest House through one Om Prakash Shorewala. President of the Municipal Committee, Kaithal. Other members of the Municipal Staff including the Executive Officer Bhalla were also present. Among those who came were one Khaki Ram, Banwari Lal and one Harijan Lamberdar whose name was not given. In the presence of these persons request Was made to the Harijans to vote for the appellant, and when they refused to do a sum of Rs. 2,000 was promised from the discretionary grant, and on this offer the Harijan voters consented to .vote for the appellant. It was further alleged that this. amount was ultimately paid to Khaki Rain and Banwari Lal through Shri Om Parkash Shorewala (R.W. 4). As regards the second charge it was stated that on December 29. 1966 the Kumhar voters were summoned to the Canal Rest House and three persons, Thakru, Attra and Lilloo came as the representatives of the Kumhar community. The same procedure, viz., asking them to vote for her candidature was followed by the appellant and on their refusal to do so a sum of Rs. 2,000 was promised to them for the construction of a dharamsala in their basti at Dogran Gate. Kaithal. This induced them to change their views. The affidavit was also corrected. It was stated that the allegation was based upon information received from Pandit Kailash Chander, s/o Pandit Hari Ram of Kaithal and Ch. Inder Rai, ex Municipal Commissioner, Chandena Gate Gamri, Kaithal. 114 In answer to the amended election petition the written statement added that the allegation was a pure concoction. The appellant pointed out that the grant for the construction of the dharamsalas was made by the appellant as far back as December 19, 1966 and that the allegation that it was the result of a bargain either on December 22 or December 29, was a pure fiction. The election petitioner examined fourteen witnesses. We are, however, not concerned with all of them because they are connected with the other allegations in the election petition. Witnesses bearing upon this case were only four. They were Gurbax Singh (P.W. 1), who only proved certain documents, P. N. Bhalla (P.W. 3), the Executive Officer of the Municipality, Thakru (P.W. 8), whose name has already been mentioned by us and Abnash Chander, the election petitioner. In the evidence a change was again introduced. It was attempted to be proved that the bargain which had been referred to in the election petitions actually took place on December 3, 1966. This time it was affirmed that the Kumhars and the Sweepers were called together. An objection was taken before the learned Judge that this evidence could not be considered because the plea was quite different. The learned Judge ruled that the objection would be decided later. It appears that the learned Judge did not put too much emphasis on the change of pleading presumably because he found the evidence to be unsatisfactory and unreliable. On the side of the appellant were examined one R. N. Kapur (R.W. 1), the personal Secretary of the appellant who proved her tour programme to give a lie to some of the allegations in the election petition. Attroo (R.W. 3), who was said to have been present at the conferences, Om Parkash Shorewala (R.W. 4), the Municipal President, Mr. Bhagwat Dayal Sharma (R.W. 5), the Chief Minister in whose Ministry the appellant was working as the Finance Minister and the appellant herself. It is not necessary to go largely into what the witnesses said because the learned Judge himself observed as follows "Whereas according to the respondent the fact of the grant is not disputed, but it is denied that the grant was made in consideration of these communities voting for her. If the matter had remained at this stage and the executing agency (the Sub Divisional Magistrate) had disbursed these grants I would not have been prepared to accept the oral evidence regarding the bargain which led to the grants. But the manner, how the money was realised and disbursed, lends ample support to the evidence that the bargain was struck. " It is clear that the learned Judge was of the opinion that the evidence led to prove the conference and the bargain at the con 115 ference was unacceptable. He, however, accepted it because it was supported by circumstantial details of the withdrawing of the money which was sanctioned; but for this the learned Judge would not have accepted the election petition. We shall glance at this evidence which has been led in the case. As pointed out above the only witnesses from 'the conference are Thakru (P.W. 8) and Bhalla (P.W. 3). With regard to Thakru it is sufficient to point out what the learned Judge himself said at the end of the deposition of Thakru : "The testimony of, this witness has not at all impressed me. I will place no reliance whatsoever on his testimony. " In view of this observation of the learned ' Judge we think we are entitled to ignore his testimony altogether. As regards Bhalla (P.W. 3), he seems to have deposed not only in. respect of these two grants but every allegation made in the election petition. Mr. A. K. Sen, for the appellant, very pertinently described him as an omnibus witness. His evidence is not convincing. It appears on the record of this .case (and it was in fact admitted by Bhalla) that the appellant had taken action against him in respect of a house which fell down owing to the negligence of the Municipal Authorities. It appears to us that Bhalla was hostile to the appellant. There is enough material to show that he was trying to get even with the appellant for her action in putting the blame upon him for the falling down of a house from seepage of water from the municipal mains. The learned Judge did not place any direct reliance upon Bhalla 's testimony. As we have shown above, if it had not been for the circumstances attending the grant the learned Judge himself would have discarded his testimony. We must, therefore, proceed with extreme caution in dealing with Bhalla 's evidence in the case. It may be pointed out here that in the election petition as well as in the evidence it was stated that the Harijans and Kumhars were summoned through Bhalla and the peon was ordered by Om Prakash Shorewala to call the leaders of these two communities to the Canal Rest House: Sat Prakash, the peon was not examined in the case. Of the persons present on the first occasion, viz., Banwari Lal, Khaki Ram, Lilloo and Attra and the Harijan Lamberdar who was not even named, none was examined except Attroo and Thakru. Attroo was examined by the appellant. We have shown above that the learned Judge placed no reliance upon Thakru 's word. He made a similar remark about Attroo also so that the case really comes to this that there is only the evidence of the parties and such other evidence as was furnished by Shore wala and Bhalla. The persons from whom information was derived as stated in the verification of the affidavit were not called as witnesses. We have shown that Bhalla 's testimony must not be taken on its face value. , Om Prakash Shorewala was support 116 ing the election petitioner but even so his evidence goes in favour Of the appellant. The fact, 'however. remains that the . election petitioner himself was fumbling with the facts and was not able to state quite categorically when the conferences took place and on what date and at which place. He changed the dates as more information came to hand. This was not information about the conferences but the date on which the grant was sanctioned and the dates on which the appellant could be expected to have held the conferences. In these circumstances, we are satisfied that in this case the oral evidence is practically non existing. Mr. Mehta, who argued the case on behalf of the answering respondent, stated that it was not necessary at all to give the facts about the conferences and that the charge of bribery could be proved even without the details of how the bribe came to be given. He relied upon the judgment of the Madras High Court in Kandaswami vs section B. Adityan for the proposition that a bribe is a bribe although the date on which it is given may not be capable of being specified if it could be established otherwise that the. money was in: fact paid; and he further relied on a judgment of this Court in Bhagwan Datta Shasri vs Ram Ratanji Gupta & Ors. that even if the full particulars be not given evidence might still be led to determine whether a corrupt practice had in fact taken place or not. We need not decide in this case what the pleadings and the proof should be. The ordinary rule of law is that evidence is to be given only on a plea properly raised and not in contradiction. of: the plea. Here the pleas were made on two different occasions and contradicted each other. The evidence which was tendered contradicted both the pleas. The source of the information was not attempted to 'be proved and the witnesses who were brought were found to be thoroughly unreliable. In these circumstances we do not propose to refer to the evidence in this judgment any more. This brings us to the question whether the circumstances of this case clearly demonstrated that there must have been some kind of bargain before the grant was made and that this bargain was with a view to inducing the voters to support the candidature of the appellant. In Ghasi Ram vs Dal Singh & Ors. (3) in which the judgment of this Court was pronounced today, the law relating to corrupt practice specially in the matter of giving of discretionary grants has been considered and stated. It has been pointed out that a Minister in the discharge of his duties may be required to do. some acts of administration including the granting of money for the uplift of certain communities and this action of the Minister is not to be construed against him unless it can be established (1) (3) ; 2. (2) A.I.R. 1960 S.C. 200. 117 that there 'was a bargain with the voters for getting their assistance at the election. Since the oral evidence in this case is non existing we must now look at the circumstances whether this conclusion which has been drawn by the High Court can be irresistibly reached. The State of Haryana came into existence on November 1,1966. Immediately afterwards the Cabinet placed certain sums of money at the disposal of, the Chief Minister, the Cabinet Ministers, Ministers for State and Deputy Ministers, to be used at their, discretion for the uplift of the communities. A sum of Rs. 50,000 was placed in the discretionary grant of a Minister and the appellant as the Finance Minister in the Ministry of Shri Bhagwat Dayal Sharma was required to spend this money. The money had to be disbursed before the end of the Financial Year, that is to say, before March 31, 1967. It is reasonable to think that there must have been several demands in this State from the various community centres for their own uplift and they must have been clamouring even before for money for the establishment of schools, hospitals, supply of water, and so on. The policy statement attached to the sanction of the discretionary grant stated the purposes for which the money could be utilised. It was stated quite clearly that the money should not be given to any private person 'but should be given through the Development Commissioner for purposes of public utility and for benefit of the general public and that the execution of the works should be through certain named agencies such as Zilla Parishad, Panchayat Samities, the Panchayats concerned, the Public Works Department or any other Government Agencies or Municipality as the Minister may indicate. In the present case money was to be disbursed through the Municipal Committee. It is argued that the money was withdrawn and made available a day before the poll suggesting thereby that this was done to assure the voters that the money had come in as a result of the, bargain. The hurry in reaching the money to these two wards in the Kaithal Municipality is the main reason behind the learned Judge 's conclusion that it must have been a part of a bargain. Evidence, however shows that Bhalla (who was not favourable to the appellant) himself wrote saying that the money should be made available at once; and this money came to the hands of Om Prakash Shorewala, who, as we have already pointed out, was helping the answering respondent in his election. It appears to us that all this hurry which did not emanate from the appellant was the result of and anxiety on the part of the recipients that the money should be made available as soon as possible.

The State of Haryana came into existence On 1st November 1966. The Cabinet placed certain sums of money at the disposal of the ministers, one of whom was the appellant to be used at their discretion for purposes of public utility, for the benefit of the general public and for the uplift of backward communities. The money had to be disbursed before 31st March 1967 through Panchayat, Municipal or Government agencies. The appellant sanctioned certain payments for building two dharmashalas in two wards of a Municipality. Long after the sanction, her candidature for election to the Vidhan Sabha of the State was recognised by her party and she stood for election from a constituency which included these two wards. She was elected, and some time later, the money was made available to the wards though the recipients were writing that the money should be made available at once. The first respondent challenged the election alleging corrupt practices and later amended the petition giving better particulars. The pleas in the petition contradicted each other, the evidence tendered at the trial of the petition contradicted the pleas, and the witnesses were found to be thoroughly unreliable. In spite of this the petition was allowed on the ground that the circumstances showed that the were in fact paid to bargain for votes and to influence the voters in favour of the appellant. In appeal to this Court, HELD : The action of the appellant could not be construed against her. It was done in the ordinary course of her duties as Minister and there was no evidence that it was, directly or indirectly, part of a bargain with the voters. No hurry to make the money available to the recipients emanated from the appellant. It was only the persons who were to benefit by the discretionary grant that were anxious to lay hands on the money, as soon as possible, so that the grant might not be cancelled later by a change of attitude caused by the election going against the particular party. [117 H; 118 A C] Ghasi Ram vs Dal Singh & Ors. ; followed. Bhagwan Dutta Shastri vs Ram Ratanji Gupta, A.I.R. 1960 S.C. 200 and Kandaswami vs Adityan, , referred to.

N: Criminal Appeals Nos. 178 and 248 of 1977. Appeals by Special Leave from the Judgment and order dated 25 1 77, 4 3 77 of the Kerala High Court in Criminal Misc. Petition No. 862/76 and Criminal Appeal No. 416/75. T. C. Raghavan (In Crl. A. 178/77) and P. K. Pillai for the Appellant. K. T. Narindranath (In Crl. A. 178/77) and K. R. Nambiar for the Respondent. The Judgment of the Court was delivered by KOSHAL, J. By this judgment we shall dispose of Criminal Appeals Nos.178 and 248 of 1977, both of which were admitted to a hearing by special leave and in each one of which the sole point for determination is whether a member of an executive committee or a servant of a registered co operative society is a public servant for the purpose of clause (c) of sub section (1) of section 5 of the Prevention of Corruption Act (Central Act No. 2 of 1947, hereinafter referred under the Criminal Law Amendment Act (Central Act No. 46 of to as the 1947 Act) and whether, therefore, a Special Judge appointed 1952, hereinafter called the 1952 Act) has jurisdiction to try him for an offence under that clause. 799 2. The appellant in Criminal Appeal No. 178 of 1977 is M.A. Kochu Devassy who was sent up, alongwith 11 others, for trial in respect of offences under sections 120 B, 408, 465, 467, 477 and 477 A of the Indian Penal Code (hereinafter described as the Code) and clause (c) of sub section (1) read with sub section (2) of section 5 of the 1947 Act to the Special Judge, Trichur by the Deputy Superintendent of Police, Vigilance Department, Trichur. The allegations against the accused were that while being members of the Board of Directors or the servants of Cooperative Society No. R 192, Chalakudy (hereinafter called the Society), they, on the 18th of May 1972, entered into a conspiracy to misappropriate the funds of the Society, that in pursuance of that conspiracy they misappropriated a sum of Rs. 1900/ on the same date and that they prepared false records in order to conceal the misappropriation. Before the trial commenced, however, a petition was made on behalf of the accused to the High Court of Kerala praying that the charge be quashed. That petition came up for hearing before Khalid, J., who doubted the correctness of the dictum of a Division Bench of that Court in Sahadevan vs State of Kerala to the effect that a Special Judge has jurisdiction to try all cases against employees of co operative societies under all or any of the provisions of section 5 of the 1947 Act. He adverted to various provisions of that Act and the Kerala Criminal Law Amendment Act (Kerala Act 27 of 1962 and hereinafter referred to as the Kerala Act) and thought that an important aspect of the amendment promulgated by the Kerala Act was not brought to the notice of the Division Bench and therefore referred the matter to a larger Bench by an order dated the 7th of December 1976. The petition then came up for final hearing before a Full Bench of the Kerala High Court, which has, by the impugned judgment, held that the dictum of the Division Bench mentioned above was correct, that a member of the executive committee or a servant of a registered co operative society was a public servant for the purposes of the 1947 Act as a whole in so far as the State of Kerala was concerned and that, therefore, such a member or servant could be tried by a Special Judge. It is by that judgment that the appellant feels aggrieved. The appellant in Criminal Appeal No. 248 of 1977 is one C.A. Thomas, who was convicted by the Special Judge, Trichur, for offences under clause (c) of sub section (1) read with sub section (2) of section 5 of the 1947 Act and section 408 of the Code and was sentenced to rigorous imprisonment for a year and a fine of Rs. 5000/ on the first count, the sentence in default of payment of fine being rigorous imprisonment for six months. No sentence was awarded for 800 the offence under section 408 of the Code. The allegations on the basis of which he was prosecuted and which were found proved against him were that while being employed as a store keeper at the firewood depot at Punkunnam owned by the Wholesale Co operative Stores Ltd. Trichur, he misappropriated profits accruing to his employers by abusing his official position. He filed an appeal to the High Court of Kerala which was dismissed by a learned Single Judge on the 4th of March 1977 through the judgment impugned before us. The pleas raised before the High Court on his behalf included one that the Special Judge had no jurisdiction to try him inasmuch as he was not a public servant for the purposes of the 1947 Act. The plea was rejected by the High Court in view of the dictum of the Full Bench which is challenged before us in Criminal Appeal No. 178 of 1977. At this stage we may usefully refer to various provisions of the Code, the 1947 Act, the 1952 Act, the Kerala Act and the Criminal Law Amendment Act (Central Act No. 50 of 1955 and hereinafter called the 1955 Act). Section 21 of the Code defines what is a "public servant". In 12 clauses it lists various categories of persons who fall within the definition. Members of the executive committee or servants of a co operative society are not embraced by any of those categories. Chapter IX of the Code headed "Of Offences by or relating to Public Servants" consists of sections 161 to 171. Section 161 states the conditions on the fulfilment of which a public servant would be guilty of bribery and lays down the punishment therefor. Section 2 of the 1947 Act as originally enacted was to the following effect: '2. For the purposes of this Act, "public servant" means a public servant as defined in section 21 of the Indian Penal Code. ' Sub section (1) of section 5 of the 1947 Act states when a public servant can be said to commit the offence of criminal misconduct. It has five clauses of which the first three run as follows: "(a) if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other person, any gratification (other than legal remuneration) as a motive or reward such as is mentioned in section 161 of the Indian Penal Code, or "(b) if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for any other person, any valuable thing without consideration or 801 for a consideration which he knows to be inadequate, from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned, or "(c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do, or" Sub section (2) of section 5 of the 1947 Act provides for punishment in respect of an offence under sub section (1) thereof, while section 6 creates a bar against any court taking cognizance of an offence under sections 161, 164 and 165 of the Code or sub section (2) of section 5 of the 1947 Act unless previous sanction of certain authorities has been obtained in that behalf. Now we come to the provisions of the 1952 Act. Section 3 thereof added to the Code section 165 A which created and laid down the punishment for the offence of abetment of the offences covered by sections 161 and 165 of the Code. Section 6 of the 1952 Act dealt with the appointment of Special Judges to try offences under sections 161, 165 or 165 A of the Code or sub section (2) of section 5 of the 1947 Act, or conspiracy to commit any of those offences. Sub section (1) of section 7 of the 1952 Act barred the jurisdiction of Courts other than those of Special Judges to try the offences mentioned in section 6, while sub section (3) of section 7 provided that a Special Judge trying any of the offences mentioned in section 6 could also try offences with which the accused might be charged at the same trial in accordance with the provisions of the Code of Criminal Procedure. The 1955 Act added offences under sections 162, 163 and 164 of the Code to the range of offences to try which the Special Judge had exclusive jurisdiction, so that such jurisdiction thenceforth extended to the trial of offences under sections 161 to 165 A of the Code and subsection (2) of section 5 of the 1947 Act. Seven years later was promulgated the Kerala Act, section 2 where of amended section 161 of the Code by adding thereto an Explanation, the relevant part of which is extracted below: 802 '"Public Servant" For purposes of this section and sections 162, 163, 164, 165 and 165 A, the words "public servant" shall denote, besides those who are "public servants" within the meaning of that section under any law for the time being in force, persons falling under any of the descriptions hereinafter following, namely: (i). . . . . (ii). . . . . (iii). . . . (iv) Every member of the Board of Directors or the executive or managing committee and every officer or servant of a co operative society registered or deemed to be registered under the law relating to co operative societies for the time being in force; (v) . . . . . (vi) . . . . . (vii) . . . . . (viii) . . . . . Section 3 of the Kerala Act may be reproduced in extenso: 'In the Prevention of Corruption Act, 1947 (Central Act 2 of 1947) (i) for section 2, the following section shall be substituted, namely: "2. Interpretation For the purposes of this Act, "public servant" shall have the meaning assigned to it under the Explanation to section 161 of the Indian Penal Code as amended by the Kerala Criminal Law Amendment Act, 1962"; (ii) in section 5A, for the words, figures and letter, "under section 161, section 165 or section 165A," the words, figures and letter "under sections 161, 162, 163, 164, 165 or 165A" shall be substituted; (iii) in subsection (1) of section 6, after clause (b), the following clause shall be inserted, namely : "(bb) in the case of a person falling under any of the descriptions mentioned in items (i) to (viii) in the Explanation relating to "Public Servant" in section 161 of the Indian Penal Code as amended by the Kerala Criminal Law Amendment Act, 1962, save by or with the sanction of the State Government;" 803 4. The contentions raised on behalf of the appellants may be summarised thus. Section 2 of the Kerala Act brought members of the executive committee or the servants of a registered co operative society within the ambit of the expression "public servant" only for the purposes of sections 161 to 165A of the Code and for no other purpose and therefore the use of the enlarged definition could not be made for the purposes of the 1947 Act. It is true that section 2 of the 1947 Act as substituted by the Kerala Act states that the expression "public servant" shall have the same meaning for the purposes of the 1947 Act as have been assigned to it under the enlarged definition of that expression in the Explanation added to section 161 of the Code, but then the phrase "for the purposes of this Act" occurring in the said section 2 must be deemed to have a limited meaning and should be read down as if they are restricted to only those purposes of the Act which concern sections 161 to 165A of the Code. Had the intention of the framers of the substituted section been not to give such a limited meaning to the said phrase but to use it in its literal sense, there was no point in enlarging the definition of the expression "public servant" by adding an Explanation to section 161 of the Code; for, in that case, the proper and direct method of carrying out the intention would have been to amend section 21 of the Code itself, so as to make the definition therein embrace all the eight categories of persons mentioned in the added Explanation. We find ourselves wholly unable to accept any of the contentions. The terms of section 2 of the 1947 Act as substituted by section 3 of the Kerala Act are absolutely clear and unambiguous and when they lay down that the expression "public servant" shall have a particular meaning for the purposes of the Act, that meaning must be given to the expression wherever it occurs in the Act. "For the purposes of the Act" surely means for the purposes of all and not only some of the provisions of the Act. If the intention was to limit the applicability of the definition of the expression "public servant" as contended, the language used would not have been "for the purposes of the Act" but something like "for the purposes of the Act insofar as they relate to the offences under sections 161 to 165A of the Indian Penal Code. " It may be noted here that section 2 of the 1947 Act as substituted by the Kerala Act does not reproduce the definition of the expression "public servant" as contained in section 161 of the Code, but states in so many words that the expression shall have the meaning assigned to it in the Explanation to the said section 161. It follows that what is brought into section 2 of the 1947 Act is the meaning of the expression as contained in the Explanation and not the entire Ex 804 planation itself, so that the words "for the purposes of this section and sections 162, 163, 164, 165 and 165A" occurring in the Explanation are not transplanted into section 2 of the 1947 Act as substituted. If the contrary were true and the Explanation had to be read word for word into the said section 2, the result would entail an absurdity; for then the section last mentioned would read thus : `For purposes of this Act, for purposes of the section and sections 162, 163, 164, 165 and 165A, the words "public servant" shall denote . . ' So read, the section makes no sense and the method of incorporation of the Explanation into the substituted section 2 cannot be accepted as a correct method of interpretation of the section. Nor do we see any cogent reason why the legislature should have intended to limit the applicability of the enlarged definition as contended. The Kerala Act carried out amendments to the 1947 Act insofar as the State of Kerala was concerned and the 1947 Act deals not only with offences under sections 161 to 165A of the Code but also, and mainly, with those falling under various clauses of sub section (1) of section 5 of the 1947 Act. No reasonable line of distinction between the offences under sections 161 to 165A of the Code on the one hand and those punishable under sub section (2) of section 5 of the 1947 Act on the other appears feasible for the purpose of conferment or exclusive jurisdiction on Special Judges to try them. From this point of view also, the interpretation canvassed on behalf of the appellants is untenable. And the argument that the enlarged definition of the expression "public servant" would not have been adopted in the form of the Explanation to section 161 of the Code but would have been incorporated in section 21 thereof if it was to apply to the 1947 Act as a whole, though attractive at first sight, is really without substance. In our view, the method adopted is not without purpose. Had the definition been enlarged by an amendment of section 21 of the Code, it would have made the eight new categories of persons brought by it within the ambit of the expression "public servant" liable to punishment not only for offences under sections 161 to 165A of the Code but also for numerous other offences specified in the Code relating to public servants, as also to offences so related and created by other Acts wherein the definition of "public servant" occurring in section 21 of the Code has been adopted as such. It was presumably to avoid such a result and to limit the scope of the applicability of the 805 definition to bribery, criminal misconduct and allied offences committed by public servants, that the legislature in its wisdom adopted the device of amending section 161 of the Code by adding the Explanation to it and by providing also that the enlarged definition shall govern all the provisions of the 1947 Act. Not finding any merit in the contentions raised on behalf of the appellants, we hold that the enlarged definition of the expression "public servant" as contained in the Explanation added to section 161 of the Code by section 2 of the Kerala Act governs all the provisions of the 1947 Act, that the appellants are public servants within the meaning of that enlarged definition by reason of the language employed in clause (iv) of the Explanation and that, therefore, the offences under clause (c) of sub section (1) of section 5 of the 1947 Act said to have been committed by them are triable exclusively by Special Judges appointed under the 1952 Act. Both the appeals are accordingly dismissed. P.H.P. Appeals dismissed.

The appellants in the above appeal were tried and convicted in respect of the offences inter alia under section 408, 465, 477 and 477A of the Indian Penal Code, 1860 read with section 5 of the Prevention of Corruption Act, 1947 by a special judge. Both the appellants were members of a registered cooperative society. The conviction of the appellants, was confirmed by the High Court. 21 of the Indian Penal Code defines a public servant "Members of the Executive Committee or servants of a cooperative society are not embraced by the categories mentioned in sec. 21" Chapter 9 of the Penal Code deals with offences by or relating to public servant. Sec. 2 of the Prevention of Corruption Act, 1947 adopts definition of public servant from Sec. 21 of the Penal Code. By the 1952 amendment of the Criminal Procedure Code the provisions of appointment of a Special Judge to try the offences have been provided. The said 1955 amendment adds certain more offences which are to be tried by a special judge. The Kerala Criminal Law Amendment Act, 1962 amended Sec. 161 of the Penal Code by adding an explanation thereto. It provides that for the purpose of the said section and certain other sections a public servant shall denote, besides those who are public servants within the meaning of that section, members of the Board of Directors or the Executive or Managing Committee and other officer or servant of a Co operative Society registered or deemed to be registered under the law relating to co operative societies for the time being in force. Sec. 3 of the Kerala. Act provides that for the purpose of the Preventive of Corruption Act, 1947, public servant shall have the meaning assigned to it under the explanation to sec. 161 of the Indian Penal Code as amended by the Kerala Criminal Law Amendment Act, 1962. (1) The appellants contended that sec. 2 of the Kerala Act brought members of the executive committee or the servants of a registered co operative society within the ambit of the expression "public servant" only for the purpose of Sections 161 to 165A of the Penal Code and for no other purpose. Therefore, the use of the enlarged definition cannot be made for the purpose of 1947 Act. (2) If the intention of the legislature was to enlarge the definition for all purposes, whatever, it would have amended section 21 of the Indian Penal Code itself. Dismissing the appeals the Court, ^ HELD: (1) The terms of sec. 2 of the 1947 Act as substituted by sec. 3 of the Kerala Act are absolutely clear and unambiguous and when they lay down that expression public servant shall have a particular meaning for the 798 purpose of the Act, that meaning must be given to the expression wherever it occurs in the Act. "For the purpose of the Act" surely means for the purpose of all and not only some of the provisions of the Act. [803E] (2) The Kerala Act carried out amendment of the 1947 Act insofar as the State of Kerala was concerned. The 1947 Act deals not only with offences under sec. 161 to 165A of the Penal Code but also and mainly with those falling under various clauses of sub section 1 to 5 of the 1947 Act. No reasonable line of distinction between the offences under sec. 161 to 165A of the Code on the one hand and those punishable under sec. 5 of the 1947 Act on the other appears feasible for the purpose of conferment of exclusive jurisdiction on special judges to try them. From this point of view also interpretation canvassed on behalf of the appellants is untenable. [804C E] (3) The arguments that the legislature would have incorporated the additional definition under sec. 21 if it desired to extend the scope for all purposes is without substance. If the definition had been enlarged by amendment of sec. 21 it would have made the new categories of persons brought by it within the ambit of the expression "public servant" liable to punishment not only for Offences under sec. 161 to 165A of the Code but also for numerous other offences specified in the code relating to public servants as also to offences so related and created by other Acts wherein the definition of public servant occurring in sec. 21 of the Code has been adopted. [804F H]

Civil Appeal No. 2631 of 1982. Appeal by special leave from the judgment and order dated the 3rd October, 1980 of the Delhi High Court in C. (Main) No. 184 of 1980. Miss Lily Thomas, K section Gill and S.K. Arora, for the Appellant. S.T. Desai and Miss A. Subhashini for the Respondent. The following Judgments were delivered; PATHAK J. The appellants, who belong to the Roman Catholic community, were married on December 30, 1967 in 34 Podannur in the State of Tamil Nadu under section 27 of the . On July 26, 1979 they put in a joint petition under section 28 of the Special Marriage Act for a decree of divorce by mutual consent in the Court of the learned District Judge, Delhi. On March 11, 1980 the trial court dismissed the petition on the ground that section 28 of the Special Marriage Act could not be availed of. The appellants filed 'a writ petition in the High Court of Delhi which having been dismissed they proceeded in appeal to this Court. In the appeal they applied for permission to amend the joint petition to enable them to rely upon section 7 of the read with section 1 (2) (d) of the Matrimonial Causes Act, 1973 of England. The amendment was allowed, and the appellants filed an amended joint petition i n the trial court seeking divorce on the ground that they had been living separately for more than two years and had not been able to live together and their marriage had broken down irretrievably and therefore they were entitled to a decree of divorce under the aforesaid provisions. On August 16, 1980 the trial court dismissed the petition holding that the appellants were not entitled to rely on section I (2) (d) of the English statute. The appellants took the matter to the High Court or Delhi and the High Court has affirmed the view taken by the trial court. In this appeal Miss Lily Thomas, appearing for the appellants, contends that the trial court and the High Court are wrong and that in reading section 7 of the the provisions of section I (2) (d) of the Matrimonial Causes Act, 1973 must be deemed to be incorporated therein and therefore the appellants are entitled to the benefit of the ground for divorce set forth in the latter enactment. In deference to Miss Thomas 's vehement submissions and having regard to the importance of the question we heard her at length but we indicated that the point raised by her did not carry conviction, and we reserved judgment in order to give a fully reasoned order Shortly thereafter, Miss Thomas 's put in an application asserting that she had information that the Government of India was proposing to amend the matrimonial law in relation to the Christian community in India and praying that in the circumstances judgment may not be delivered for sometime. There has, however, been no Change in the law since, and it is appropriate, we think, that judgment should be pronounced now without further delay. 35 The main contention raised by Miss Thomas is that the appellants are entitled to the benefit of section 7 of the and therefore, by reason of that provision, to rely on section 1 (2) (d) of the Matrimonial Causes Act, 1973. There is no doubt that if the provisions of section 1 (2) (d) of the English statute can be read in section 7 of the and the appellants can establish that the conditions set forth in section i (2) (d) are made out the appellants will be entitled to claim a decree of divorce. But we are not satisfied that section I (2) (d) of the English statute can be read in section 7 of the Sub sections (l) and (2) of section I of the Matrimonial Causes Act, 1973 provides: "(I) Subject to section 3 below, a petition for divorce may be presented to the court by either party to a marriage on the ground that the marriage has broken down irretrievably. (2) The court hearing a petition for divorce shall not hold the marriage to have broken down irretrievably unless the petitioner satisfies the court of one or more of the following facts, that is to say (a) that the respondent has committed adultery and the petitioner finds it intolerable to live with the respondent; (b) that the respondent has behaved in such a way that the petitioner cannot reasonably be expected to live with the respondent; (c) that the respondent has deserted the petitioner for a continuous period of at least two years immediately preceding the presentation of the petition, (d) that the parties to the marriage have lived apart for a continuous period of at least two years immediately preceding the presentation of the petition (hereafter in this Act referred to as "two years ' separation") and the respondent consents to a decree being granted; 36 (e) that the parties to the marriage have lived apart for a continuous period of at least five years immediately preceding the presentation of the petition (hereafter in this Act referred to. as "five years ' separation). " The circumstances set forth in sub section (2) of section 1 constitute the basis for holding that the marriage has broken down irretrievably. Can these provisions be deemed incorporated in section 7 of the ? section 7 provides: "7. Subject to the provisions contained in this Act, the High Courts and District Courts shall, in all suits and proceedings hereunder, act and give relief on principles and rules which, in the opinion of the said Courts, are as nearly as may be conformable to the principles and rules on which the Court for Divorce and Matrimonial Causes in England for the time being acts and gives relief: Provided that nothing in this section shall deprive the said Courts of jurisdiction in a case where the parties to a marriage professed the Christian religion at the time of the occurrence of the facts on which the claim to relief is founded. " The section requires that in all suits or proceedings under the the High Court and District Courts shall "act and give relief on principles and rules" which conform as nearly as may be to the principles and rules on which the Court for Divorce anc Matrimonial Causes of England acts and gives relief. What is contemplated is the manner in which the court will exercise its jurisdiction for the purpose of disposing of a pending suit or proceeding The expression "principles and rules" does not mean the grounds on which a suit or proceeding may be instituted. The grounds are ordinarily placed in the suit or proceeding when the petitioner comes to court and invokes its jurisdiction. It is after the suit or proceeding is entertained that the question arises of deciding on the norms to be applied by the court for the purpose of disposing of it. If it were otherwise, plainly there would be a conflict with section 10 of the . For section 10 sets fourth the limited grounds on which a petition may be presented by a husband or wife for dissolution of the marriage. 37 It cannot be denied that society is generally interested in maintaining the marriage bond and preserving the matrimonial state with a view to protecting societal stability, the family home and the proper growth and happiness of children of the marriage. Legislation for the purpose of dissolving the marriage constitutes a departure from that primary principle, and the Legislature is extremely, circumspect in setting forth the grounds on which a marriage may be dissolved. The history of all matrimonial legislation will show that at the outset conservative attitudes influenced the grounds on which separation or divorce could be granted. Over the decades, a more liberal attitude has been adopted, fostered by a recognition of the need for the individual happiness of the adult parties directly involved. But although the grounds for divorce have been liberalised, they nevertheless continue to form an exception to the general principle favouring the continution of the marital tie. In our opinion, when a legislative provision specifies the grounds on which divorce may be granted they constitute the only conditions on which the court has jurisdiction to grant divorce. If grounds need to be added to those already specifically set forth in the legislation, that is the business of the Legislature and not of the courts. It is another matter that in construing the language in which the grounds are incorporated the courts should give a liberal construction to it. Indeed, we think that the courts must give the fullest amplitude of meaning to such a provision. But it must be meaning which the language of the section is capable of holding. It cannot ' be extended by adding new grounds not enumerated in the section. When therefore section 10 of the specifically sets forth the grounds on which a marriage may be dissolved, additional grounds cannot be included by the judicial construction of some other section unless that section plainly intends so. That, to our mind, section 7 does not. We may point out that in M. Barnard vs G.H. Barnard(l) the Calcutta High Court repelled a similar contention and held that section 7 could not be construed so as to "import into Indian Divorce Jurisprudence any fresh ground for relief other than those set forth in section I()" and that "the only grounds on which a marriage may be dissolved are those set forth in section 10 of the Act. ". The Punjab High Court in Miss Shireen Mall vs John James Taylor(2) has also taken the view that the grounds set forth in section 10 of the Indian (l) AIR 1928 Cal. (2) AIR 38 Divorce Act cannot be enlarged by reference to section 7 of the Act. So also has a Special Bench of the Madras High Court in T.M. Bashiam vs Victor(l) and a Single Judge of that Court in A. George Cornelius vs Elizabeth Dopti Samadanam.(2) Miss Thomas appeals to us to adopt a policy of "social engineering" and to give to section 7 the content which has been enacted in section 28 of the and section 13B of the , both of which provide for divorce by mutual consent. It is possible to say that the law relating to Hindu marriages and to marriages governed by the presents a more advanced stage of development in this area than the . However, whether a provision for divorce by mutual consent should be included in the is a matter of legislative policy. The courts cannot extend or enlarge legislative policy by adding a provision to the statute which was never enacted there. Reference is made by Miss Thomas to section 2 (ix) of the Dissolution of Muslim Marriage Act, 1939 which empowers the court to dissolve a Muslim marriage on any ground other than those already enumerated in the section "which is recognised as valid for the dissolution of marriages under Muslim law. ' ' No such provision is contained in section 10 of the . Learned counsel of the appellants has referred us to B. Iswarayya vs Swarnam Iswarayya(3) and George Swamidoss Joseph vs Miss Harriet Sundari Edward.(4) Nothing said in those cases helps the appellants. The first case was concerned with the question whether an appellate court can increase the amount of alimony payable by the husband to the wife without an appeal by her. And the second deals with the question whether the Indian Courts can make a decree nisi for nullity absolute within a shorter period than that specifically mentioned in the . (1) A.l. R. (2) A.l. R. (3) A.I.R. 1931 Privy Council 234. (4) A.l. R. 39 We are not satisfied that section 7 of the can be read to include the provisions of section I (2) (d) of the Matrimonial Causes Act, 1973. This contention of the appellant must fail. Learned counsel for the appellants then points out that a Christian marriage can be registered under the and that there is no reason why a marriage registered under the should not enjoy an advantage which is available to a marriage registered under the . Reliance is placed on the constitutional prohibition against discrimination embodied in Article 14 of the Constitution. Assuming that the marriage in this case could have been registered under the , inasmuch as it was solemnised in 1967 it was open to the parties to avail of that Act instead of having resort to the . In the circumstances, it is not open to the appellants to com plain of the disadvantage now suffered by them. It is also urged by the appellants that the Letters Patent jurisdiction enjoyed by the High Court in matrimonial matters is sufficiently extensive to enable the High Court to make a decree for divorce on the ground now pleaded. We have examined the matter carefully and we do not see how that jurisdiction can be construed to include a ground which is not specifically set forth in E section 10 of the . We are not satisfied that this appeal can succeed. It is for Parliament to consider whether the should be amended so as to include a provision for divorce by mutual con sent. The appeal fails and is dismissed but in the circumstances there is no order as to costs. CHINNAPPA REDDY, J. I agree with my brother Pathak, J. that 'mutual consent ' is not a ground for divorce under the and that the provisions of section 1(2)(d) of the British Matrimonal Causes Act, 1973 cannot be read into the merely because of section 7. lt is unthinkable that legislation whenever made by the Parliament of a foreign state may automatically become part of the law of another sovereign State. Legislation by incorporation can never go so far. Whatever interpretation of section 7 was permissible before August 15. 1947 when the British Parliament 40 had plenary powers of legislation over Indian territory, no interpretation is now permissible which would incorporate post 1947 British laws into Indian law. My brother Pathak J. has pointed out that the history of matrimonial legislation has been towards liberalisation of the grounds for divorce. Inevitably so. The history of matrimony itself, in the recent past, has been a movement from ritual and sacrament to reality and contract even as the history of the relationship of the sexes has been from male dominance to equality between the sexes. But the world is still a man 's world and the laws are man made laws, very much so. We have just heard that in an advanced country like the United States of America, the Equal Rights for Women Amendment could not be successfully pushed through for failure to obtain the support of the necessary number of States. Our constitution makers and our Parliament have certainly done better. We have constitutional and legal equality for the sexes. But even so, economic and social equality between the sexes appears to be a very distant goal. One has only to read the daily sickly reports of 'dowry deaths ' and 'atrocities on women ' to realise that women, in our country, are yet treated as commodities and play things. The root cause of the inequality between the sexes, like other class inequalities, is their social and economic inequality. All inequality will end when social and economic inequality ends. It isl therefore, obvious that true equality between the sexes and else where is possible only when economic and social inequalities disappear. Our Constitution proclaims, in the Preamble, the establishment of a socialist State where there will be justice, social, economic and political, as our constitutional goal and this is reiterated in the Fundamental Rights ' and Directive Principles ' Chapters. But, the march towards equality ' and economic and social justice is still a 'long march ' and meanwhile, what of divorce by mutual consent ? Yes, I agree with Miss Lily Thomas that divorce by mutual consent should be available to every married couple, whatever religion they may profess and however, they were married. Let no law compel the union of man and woman who have agreed on separation. If they desire to be two, why should the law insist that they be one ? But I have a qualification, The woman must be protected. Our society still looks askance at a divorced woman. A woman divorcee is yet a suspect. Her chances of survival are diminished by the divorce. So, the law which grants the decree for divorce must secure for her some measure of economic 41 independence. It should be so whatever be the ground for divorce, A whether it is mutual consent, irretrievable break down of the marriage, or even the fault of the woman herself. Every divorce solves a problem and creates another. Both problems need to be solved, no matter who is responsible for the break down of the marriage. If the divorce law is to be a real success, it should make provision for the economic independence of the female spouse. After all, Indian society today is so constituted that a Woman is generally helpless and her position become worse if she is divorced. It is necessary that the law should protect her interest. ; even if she be an erring spouse, lest she become destitute and a dead loss to society. N.V.K. Appeal dismissed.

The appellants, who were husband and wife belonging to the Roman Catholic Community were married under section 27 of the . They filed a joint petition under Section 28 of the Special Marriage Act for a decree of divorce by mutual consent in the District Court. The trial court dismissed the petition on the ground that section 28 of the Special Marriage Act could not be availed of. The Supreme Court allowed the appellants to amend their joint petition to enable them to rely on section 7 of the read with section 1 (2)(d) of the Matrimonial Causes Act 1973 of England and to seek divorce on the ground that they had been living separately for more than two years and had not been able to live together and that the marriage had broken down irretrievably, and that therefore they were entitled to a decree of divorce. The District Court however dismissed the petition holding that they were not entitled to rely on section 1 (2)(d) of the English Statute. In appeal the High Court affirmed the view taken by the trial Court. In the appeal to this court it was contended on behalf of the appellants: (1) that the trial court and the High Court were wrong and that section 7 of the incorporated the provisions of section 1(2)(d) of the Matrimonial Causes Act 1973 and that the appellants were entitled to the benefit of the ground for divorce as set forth in the latter enactment, and (2) that the Letters Patent jurisdiction enjoyed by the High Court in Matrimonial matters is sufficiently extensive to enable the High Court to make a decree for divorce. Dismissing the appeal, ^ HELD: [By the Court] 33 Mutual consent is not a ground for divorce under the . The provisions of section l(2)(d) of the Matrimonial Causes Act 1973 of England cannot be read into section 7 of the . [39 A] [Per Pathak and Baharul Islam, JJ.] 1. Whether a provision for divorce by mutual consent should be included in the is a matter for legislative policy. The courts cannot extend or enlarge legislative policy by adding a provision to the statute which was never enacted there. It is for Parliament to consider whether the should be amended so as to include a provision for divorce by mutual consent. [38 C D; 39 F] 2. The Letters Patent jurisdiction enjoyed by the High Court in matrimonial matters cannot be construed to include a ground for divorce not specifically set forth in section 10 of the . [39 E] M. Barnard vs G.H. Barnard A.I.R. 1928 Cal. 657; Miss Shireen Mall vs John James Taylor A.I.R. T.M. Bashiam vs M. Victor A.I.R. 1970 Mad. 12; aad A. George Cornelius vs Elizabeth Dopti Samadanam A.l. R. 1970, Mad. approved. [Per Chinnappa Reddy and Baharul Islam, JJ.] Legislation whenever made by Parliament of a foreign state cannot automatically become part of the law of another sovereign state. Whatever interpretation of section 7 of the was permissible before August 15, 1947 when the British Parliament had plenary powers of legislation over Indian territory, no interpretation is now permissible which would incorporate post 1947 British laws into the Indian laws. [39 G H; 40 A]