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Appeal No. 155 of 1971. (Appeal by Special Leave from the Judgment and Order dated 24 3 1975 of the Andhra Pradesh High Court in Appeal No. 19/72). B.V. Subrahmanyam and A. Subba Rao, for the Appellant. A. K. Sen, K.R. Chaudhary, Miss Nihar Saha and Mrs. Veena Devi Khanna, for the ReSpondent. The Judgment of the Court was delivered by BEG, J. This is a defendant 's appeal by special leave against the judgment of the High Court of Andhra Pradesh decreeing, with costs, the claim of the plaintiffs respond ents, the Andhra Pradesh State Electricity Board and the Andhra Pradesh State Government for Rs. 3,34,443.77 as arrears of electricity charges said to be due from the Vijayawada Municipal Council in respect of amounts which were shown in its books as payable to it by consumers of electricity. The plaintiff 's claim flowed from the terms of the Andhra Pradesh (Andhra Area) Electricity Supply Undertaking (Acquisition) Act 15 of 1954 (hereinafter refered to as 'the Act '), the provisions of which were applied to the electric ity undertaking of the appellant Municipal Council with effect from 22nd December, 1961,. by the Government of Andhra Pradesh. The rights of the State were transferred to the Andhra Pradesh Electricity Board the co plaintiff re spondent. The amounts claimed were shewn in the books of the Council 's electricity undertaking on the date of its acquisition as due to it from direct consumers of electric ity to whom it used to sell electricity supplied to it in bulk. The "Electricity undertaking" was taken over by the Government by an order under Section 4 (1 ) of the Act. This section provided: "4. Power of Government to take over any undertaking : (1 ) The Government may, in respect of any undertaking not taken over by them before the commencement of this Act, by order in writing, declare that it shall vest in them on the 848 date specified therein, such date not being earlier than four months from the date of the declaration :" The Municipal Council was the licensee from whom the "undertaking", as a commercial concern, was taken over. A licensee is de fined by section 2(j) to mean: " . a person licensed under part II of the Electricity Act to supply electricity energy, or a person who has obtained sanction under section 28 of that Act to engage in the business of supplying electricity and in relation to an undertaking taken over.or an undertaking which has vested in the Government under section 4 the person, who was the licen see at the time the undertaking was taken over or vested in the Government, as the case may be, and includes the successorin interest of any such person;" The State Electricity Board stepped into the shoes of the licensee on behalf of the State, to discharge all the existing obligations of the licensee, arising out of past transactions, and, for this reason, became entitled to the benefits of all contracts, whether they had accrued in the past or were to arise in future, which existed at the time of the taking over of the undertaking. The effect of the "taking over" of an undertaking and the vesting the rights and liabilities of the former licensee in the State, by operation of law, was indicated by sections 5 and 6 of the Act. Section 5 provided for compensation to be paid on one of three alternative bases specified in this provision. The licensee could opt for one of the three bases. The provisions of section 6(2) of the Act give the consequences of vesting. Section 6(2) of the Act enacts: "6(2) (a) If compensation is payable in respect of an undertaking under Basic C, only the property, rights liabilities and obliga tions specified herein shall vest or be deemed to have vested in the Government on the vest ing date : (i) all the fixed assets of the licensee and all the documents relating to the under taking; (ii) all the rights, liabilities and obligations of the licensee under hire pur chase agreements, if any, for the supply of materials or equipment made bonafide before the vesting date; (iii) all the rights, liabilities and obligations of the licensee under any other contract entered into bona fide before the vesting date, not being a contract relating to the borrowing or lending for money. (b) All the assets specified in clause (a) (i) shall vest or shall be deemed to have vested in the Government free from any debts, mortgages or similar obligations of the licen see or attaching to the undertaking. 849 Provided that such debts, mortgages or obligations shall attach or shall be deemed to have attached to the. compensation. payable under this Act for the assets". A glance at clause (2) (a) (iii) of section 6 indicates that it clearly provides for the vesting of "all the rights liabilities and obligations of the licensee" under contracts entered into "before the date of vesting". Therefore, we find no merit in the objection, on behalf of the Municipal Council, that past dues of consumers of electricity, shown in the books of Vijayawada Municipal Council, could not vest in the State Government, in a case in which basis C is applicable for compensation. The compensation provided by Section 5(3)(vi) applicable to basis 'C ' takes in "the book value of all intangible assets to the extent such value has not been written off in the books of the licensee". The result ' is that "the aggregate value" of all items speci fied in section 5(3), including items falling under sub clause (vi), became payable as compensation to the licensee on principle 's specified in the Act. The learned Counsel for the appellant has placed a great deal of reliance on the provi sions of Section 10(2)(b) (iii), which are applicable to cases of compensation payable on basis 'C '. Section 10 gives a list of deduc tions from compensation. One of the items of this ,deduction is found in section 10(2)(b)(iii) which lays down: "all sums paid by consumers by way of security deposit and arrears of interest due thereon on the vesting date, in so far as they have not been paid over by the licensee to the Government, less the amounts which according to the books of the licensee are due from the consumers to the licensee for energy supplied by him before that date;" The provision set out above is sought to be made the corner stone of the arguments of the learned Counsel for the Appel lant Municipal Council, although this very provision was held by the High Court to be decisive against the appel lant 's case that the amounts shown as due from the consumers of the licensee for energy supplied before the vesting date were claims for amounts which the Vijayawada Municipal Council was entitled to appropriate as they must be deemed to be exempted from the effects of vesting of rights and obligations of the undertaking in the State. It is true, as the learned Counsel for the Municipal Council points out, that only those rights and liabilities and obligations which are specified in section 6(2) (a) are to vest in the State Government. But, the contention based on alleged non specification of the claims of the licensee against direct consumers to whom it used to supply electric ity over looks, the sweep of section 6(2) (a) (iii), already indicated above, which will cover all rights and liabilities under contracts entered into bona fide before the date of vesting. It is not possible to assert that the rights of the Municipal Council to realise arrears of dues from the consumers will not be transferred to the State Government when they are covered by the specific language of section 6(2) (a) (iii). The 850 explicitly wide language used dispenses with the need to specify by enumerating all items which are covered by it. That is the very object of such language. We have also indicated how section 5(3)(vi), meant for application to basis 'C ', mentions all intangible rights shewn in the books of the licensee. This also supports the interpretation we place on section 6(2)(a)(iii) and on the wide ambit of the specification here which must, obviously, not conflict with section 5(3)(vi). We are, therefore, completely unimpressed by arguments based on supposed non specification of the claims of the former licensee under taking against consumers to whom it had supplied electricity in the past and against which it had claims which vested, from the specified date, in the State Government. Learned Counsel 's argument, on the meaning of Section 10(b) (iii), is really meant to reinforce the argument indicated above, based on alleged non specification of the claims of the Municipal Council as a licensee for supplying electrici ty to consumers. If the meaning of relevant provisions of section 5 and 6 is clear, we do not think that any assist ance could be derived ' by the appellant Municipal Council from the provisions of section 10(2)(b)(iii) unless these clearly conflicted with the other provisions. If, however, two interpretations were possible of these provisions, we should, we think, prefer the one which is in harmony with the clear meanings of the terms of section 5(3), read with section 6(2) (a) of the Act as indicated above. This is the salutary rule of construction resting upon the doctrine that a statute, like any other document, must be read as a whole to extract its meaning and intendment correctly. Learned Counsel for the appellant submits that the exclu sion by section 10(2)(b)(iii) of the amounts which, accord ing to the books of the licensee, "are due from the consum ers to the licensee for energy supplied by him before that date" (i.e. the date of vesting), from the ambit of deduc tions from compensation, necessarily implies that these amounts can be appropriated by the appellant Municipality. 'We are, quite unable to see how this inference follows from an exclusion from items of deduction from compensation. A deduction from an item of compensation may, if there was nothing else to furnish a clue as to its meaning, imply that it was not being compensated for because the party whose rights were acquired was retaining the item. But, an exclusion from an item of deduction from compensation itself could, according to its natural meaning, only indicate that this was being done because this was an item which is cov ered by the compensation provided for and to be paid. A close examination of section 10(2)(b)(iii) wilt show that it is meant for security deposits and arrears of inter est due on them which are generally held in trust by the licensee so as to be ultimately returned to the consumers, if the dues of the consumers have been met without resorting to the amounts deposited. They are used for a deduction of dues where these have not been paid; We know that these deposits are required so as to cover claims from defaulting consu 851 mers in order to avoid the trouble of litigating to enforce them. If these deposits have not been made over by the licensee to the Government, they will be claimable by the depositors from the licensee. Hence, it seems fair to deduct them from any item of compensation as these deposits are not meant to be kept by the licensee. They do not constitute profits of the business or price for anything supplied or payment for services rendered or an asset out of which liabilities of the licensee may be met. If, howev er, there are any amounts shewn in the books o[ the licensee as due from the consumers of energy supplied before the date of vesting, they would become realisable by the Govt. Hence, the amounts for which deductions from items of compensation will have to be made is reduced by the amounts which are due from consumers to the licensee for energy supplied by the licensee before the date of vesting as they become the claims realisable by the successor in interest of the licensee. Therefore, the High Court 's interpretation was, obviously, correct. This provision supports the case of the respondents rather than that of the former licensee Municipal body. It is very difficult to see how it supports the appellant 's case. It appears that no question was raised before 'the High Court as to the nature of the obligation incurred by the Municipal Council to pay the amount claimed apart from its right to appropriate the amount itself as part of the assets which had, it was asserted, not vested in the State Govern ment. An attempt was, however, made before us to confuse it with the payment made by the Municipal Council itself to the Government for the bulk supply of electricity used, inter alia, for street lighting and other purposes by the Council itself. But, no question was raised in the plead ings to indicate that the plaintiff 's claim included these past dues. We do find that the licensee had set up certain reasons for its inability to realise certain amounts from the consumers. We do not know what all these reasons precisely were or whether the licensee, was really unable to realise them for any of these reasons. But, ground No. 1 of the special leave petition shows that the Municipal Council had Rs. 9 lakhs with it in deposit for the recovery of the claims not realised from which it proposed to deduct the amounts claimable towards dues and to. appropriate them itself. The ground runs as follows: "In the instant; case the learned trial judge found that there was a deposit of 3 lakhs of rupees with the Vijayawada Municipal ity and the Vijayawada Municipality by virtue of section 10(2)(b)(iii) is certainly entitled to adjust and by virtue of section 10(2)(b)(iii) of the Act 15 of 1964, the Government can deduct that security from out of compensation less the amount due to the licensee from its consumers upto the vesting date. " We may also mention that it was not argued on behalf of the Municipal Council that what was vested in the Government was only the right to realise the claims itself and not an amount of money which the Municipal Council had actually realised or could have realised if 852 it took steps to make realisations. On the other hand, ground No. 1 of the grounds of appeal quoted above, shows that the case of the Municipal Council was simply that it is 'entitled to deduct amounts claimed from whatever may be the amounts in deposit be cause. the claims against the consumers had vested in the Municipal Council and not in the Government. We think that legal questions of interpretation of the Act, to which the learned Counsel for the parties rightly con fined their arguments, apart from some at tempts to raise questions outside the plead ings which could not succeed, were rightly answered by the High Court when it held that the relevant provisions, if correctly inter preted, meant that the claims for dues on electricity supplied at enhanced rates, the validity of which had been unsuccessfully challenged by some consumers in certain other proceedings initiated before filing of the suit now before us, had vested in the State Government. Consequently, we affirm the judgment and decree of the High Court and dismiss this appeal with costs. V.P.S. Appeal dismissed.

Section 4 of the Andhra Pradesh (Andhra Area Electricity Supply Undertaking (Acquisition) Act, 1954, empowered the Government to declare that an electricity undertaking of the licensee Municipal Council shall vest in Government on a specified date. Section 5 provides for compensation to be paid on one of three alternative bases, A, B or C set out in the Act. Where compensation is on the basis 'C ',, it in cludes under section 5(3)(vi) the book value of all intangible assets to the extent such value has not been written off in the books of the licensee; and section 6(2)(a) mentions the items that would vest in the State Government. Section 6(2)(a)(iii) relates to all the rights, liabilities and obligations of the licensee under any other contract entered into bona fide, not being a contract relating to the borrowing or lending for money. Section 10(2) (b)(iii) lays down that the Government may deduct from the compensation all sums paid by consumers by way of security deposit and arrears of interest due thereon on the vesting date, in so far as they have not been paid over by the licensee to the Government, less the amounts which according to the books of the licensee are due from the consumers to the licensee for energy supplied to such consumers before that date. In the present case, the State Government made a decla ration regarding the vesting of the Electricity Undertaking of the appellant in the State Government, and transferred its rights to the respondent Electricity Board. Certain amounts were shown in the books of the appellant as due to it from consumers. The respondent claimed those amounts and flied a suit against the appellant for their recovery. The trial court dismissed the suit, but the High Court allowed the appeal. In appeal to this Court, it was contended that past dues from the consumers would not vest in the respondent as they were not specifically mentioned in section 6(2)(a); and that under section 10(2)(b)(iii) the appellant was entitled to deduct and appropriate the amounts due from consumers for supply of electricity from their security deposits. Dismissing the appeal to this Court, HELD: (1) The explicitly wide language used in section 6(2)(a)(iii) dispenses with the need to specify all items which are covered by it; and, arrears of dues from consumers are covered by the wide language of the clause. [850 A] (2)(a) Section 10(2)(b)(iii) is meant for security deposits and arrears of interest due on them which are generally held in trust by the licensee so as to be ulti mately returned to the consumers,. if the dues of the con sumers have been met without resorting to the amounts depos ited. They are used for a deduction of dues from deposits where these have not been paid. If these deposits have not been made over by the licensee to the Government, they will be claimable by the depositors, and, therefore, they are deducted from the compensation. If however, there are any amounts due shown in the books of the licensee as duo from the consumers of energy they would become realisable by the Government under section 6(2)(a)(iii). It is for this reason that the deduction of security 847 deposit from compensation is reduced by the amounts which are due from consumers to the Undertaking for energy sup plied by the Undertaking before the date of vesting as they become the claims realisable by the successor in interest of the Undertaking. An exclusion from an item of deduction from compensation could only indicate that this was being done because this was an item which is covered by the compensation provided for and to be paid. [850 A] (b) In .the present case, the only contention of the appellant was that the right to appropriate the amount of dues did not vest in the respondent but that the amount had vested in the appellant. It was not argued on behalf of the appellant that what was vested in the Government was only the right to realise the dues from the consumers and not to recover from the appellant the amount which the appellant had actually realised or could have realised. (3) The High Court 's interpretation of section 10(2)(b)(iii) must be accepted as a correct interpretation because it is in harmony with the meaning of the terms of section 5(3)(vi) read with section 6(2)(a) of the Act. [851C]

ivil Appeal No. 3195 of 1979 etc. From the Judgment and Order dated 20th June, 1979 of the Kerala High Court in Writ Appeal No. 302 of 1978. F.S. Nariman, M. Chandrasekharan, K.R. Nambiar, C.V. Subba Rao, Ms. A. Subhashini, A.K. Ganguli, Mrs. R. Rangas wamy, Hemant Sharma, K. Swamy and Ms. section Relan for the appearing parties. The Judgment of the Court was delivered by BHAGWATI CJ. 1. The above cases are involving a company known as Madras Rubber Factory Ltd. (popularly known as MRF Ltd.) MRE has four factories; Kottayam (Kerala), Madras (Tamil Nadu), Arkonam (Tamil Nadu) and Goa (Union Territory) engaged in 852 the manufacture of automotive tyres, tubes and other rubber factory products. Each of these factories are under juris diction of different Assistant Collectors. The four proceed ings arising for our consideration are as under: (i) Civil Appeal No. 3195 of 1979 is an appeal by certifi cate filed by the Union of India through the Assistant Collector of Central Excise, Kottayam against the Judgment dated 20th June 1979 of the Division Bench of the High Court of Kerala from Writ Appeal No. 302 of 1978 allowing post manufacturing expenses under the new Section 4 of the Excise Act. This relates to the Kottayam factory. (ii) Civil Appeals Nos. 4731 32 of 1984 are appeals filed by Union of India through the Superintendent of Central Excise, Kottayam against the Judgment dated 1st April 1976 of the Division Bench of the High Court of Kerala allowing post manufacturing expenses under the old Section 4 of the Excise Act. (iii) SLP (Civil) No. 10108 of 1980 is another appeal of the Union of India against the Judgment of the Additional Judi cial Commissioner, Goa, Daman and Diu allowing post manufac turing expenses under the old Section 4 of the Excise Act in respect of the factory at Goa. In respect of new Section 4, the Union of India and MRF were agreed that the decision in Writ Appeal No. 302 of 1978 being the subject matter of Civil Appeal 3195 of 1979 would be applicable to the factory at Goa. (iv) Civil Appeal No. 793 of 1981 is MRF 's Appeal under Section 35L of the Central Excise and Salt Act (as amended) ' against the order and decision dated 1st February 1984 of the Tribunal (CEGAT) deciding that the sale of tyres and other rubber products through their 42 Depots throughout India were not retail sales but were in the nature of whole sale sales and MRF was not entitled to deductions under Rule 6A of the Central Excise (Valuation) Rules, 1975 (hereinaf ter referred to as the "Valuation Rules"). These proceedings are now arising for our considera tion after the pronouncement of the Judgment by this Court in the case of Union of India & Others vs Bombay Tyres International Ltd., [1983] Vol. 14 Excise Law Times 1896) decided on the 7th October 1983 and the clarificatory order passed by this Court in the same case of Union of 853 India & Others vs Bombay Tyres International Ltd., reported in This clarification was given by the Supreme Court on 14th and 15th November 1983. Pursuant to hearings held in this Court in several cases relating to post manu facturing expenses and after the latter clarificatory order in the case of Union of India & Others vs Bombay Tyres International Ltd. (supra), the Tribunal (CEGAT) decided the Review Notice and set aside the order of the Appellate Collector on 1st February 1984 and on 9th February 1984 the Civil Appeal No. 793 of 1984 was admitted. Format orders were passed by this Court in the pending appeals relating to post manufacturing expenses. Even in the present matters format orders were passed on or around 3rd May, 1984. Format orders were also passed in the pending Writ Appeal No. 590 of 1979 pending before the High Court at Madras. In accord ance with the format orders and within the timeframe stipu lated, amendments to price lists were to be filed by MRF Ltd. The present Appeals are now to consider the various deductions claimed by MRF Ltd. and/or disallowed and/or not allowed by the Assistant Collector, or allowed by the As sistant Collector, in the various jurisdictions qua the factories of MRF Ltd. in the cross Appeals of the Union of India and the MRF Ltd. 3. For the sake of convenience, the deductions arising for consideration of this Court can be summarised as under: (i) TAC/Warranty discount (ii) Product discounts (iii) Interest on finished goods and stocks carried by the manufacturer after clearance (iv) Over riding commission to Hindustan Petroleum Corpora tion (v) Cost of distribution incurred at duty paid Sales Depots (vi) Interest on receivables (vii) 1% turnover discount allowed to RCS Dealers (viii) Secondary packing cost on tread rubber (ix) Discount to Government and other Departments 854 4. The Appeals further also raise the issue of whether the price to the Defence Department Ex factory gate (ex factory) is to be considered as the wholesale cash price under old Section 4 as this was disallowed by the Assistant Collector, and further the issue as to the method of compu tation of assessable value where the selling price is a cum duty price. This issue involves the consideration as to how excise duty has to be deducted, whether after deducting permissible deductions or otherwise. We propose to deal with the issues as follows. For the purpose of this Judgment we are not repeating and setting out the text of the un amended Section 4 and the amended Section 4 as the same are exten sively quoted in our Judgment in Union of India vs Bombay Tyres International Ltd., Recapitulating our Judgment in Union of India & Others vs Bombay Tyres International Ltd. (supra) we held that: "broadly speaking both the old s.4(a) and the new s.4(1) (a) speak of the price for sale in the course of wholesale trade of an article for delivery at the time and place of removal, namely, the factory gate. Where the price contemplated under the old s.4(a) or under the new s.4(1) (a) is not ascertain able, the price is determined under the old s.4(b) or the new s.4(1)(b). Now, the price of an article is related to its value (using this term in a general sense), and into that value are poured several components, including those which have enriched its value and given to the article its marketability in the trade. Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequent ly, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on ac count of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after sales service and marketing and selling organisation expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses, marketing and selling organisation expenses and after sales service promote the marketability of the article and enter its value in the trade. Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by 855 the assessee upto the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery. In the clarificatory order in Union of India & Ors. vs Bombay Tyres International Ltd., reported in 1984 Vol. 17 ELT 329 we clarified that discounts allowed in the trade (by whatever name called) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under terms of sale or by established practice. The allowance and the nature of dis count should be known at or prior to the removal of the goods and shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price. In relation to the first head of deduction, namely TAC/ Warranty discount, the petitioners contend that deduc tion on account of TAC/Warranty discount ought to be permit ted as a deduction for determining the assessable value. It is submitted by them that this discount relates to the claims of the customers on account of any defect in the tyre already sold and assessed to duty. Such claims are scruti nised by a committee of technical personnel of the assessee. The Committee decides as to what amount of money should be refunded to the customers on account of the defect in the manufactured tyre already sold to the customers by which defect the tyre does not get its full life tenure. Instead of refunding the amount in cash the customers are permitted to buy a new tyre, the price of which new tyre would be reduced by the amount refundable to customers as per deci sion of the committee. '17he petitioners contend that the TAC/Warranty discount satisfied all the criteria of a trade discount stipulated in our order dated 14th/15th November 1983 in that it is a discount established by practice since 1943, it is a discount given to the consumer of a MRF tyre in respect of a tyre purchased earlier, the factum of allow ance is known is trade prior to removal, the nature of the discount is not arbitrary or ad hoc and easily determinable. The Revenue disputes this claim on the ground that it does not come within Section 4(4)(d)(ii) of the Act since the claim is not in accordance with the normal practice of the wholesale trade at the time 856 of removal of the goods in respect to which the claim is made and also on the ground that this is not normally claim able as trade discount. We are inclined to accept the contention of the department. Even though the giving of TAC/Warranty is estab lished by practice or capable of being decided, what is really relevant is the nature of the transaction. The war ranty is not a discount on the tyre already sold, but relate to the goods which are being subsequently sold to the same customers. It cannot be strictly called as discount on the tyre being sold. It is in the nature of a benefit given to the customers by way of compensation for the loss suffered by them in the previous sale. In our order dated 14 th/15th November 1983 we have said that trade discounts of any nature should be allowed to be deducted provided, however, the discount is known at or prior to the removal of the goods. In the present case this condition precedent is not satisfied as the Committee de cides the claim subsequent to the removal of the tyre. The Petitioners have further contended that the Excise Act and the Rules framed thereunder contemplate such an allowance and an abatement of duty on defective tyres. Counsel for the Petitioners has drawn an attention to Rule 96 which reads as follows: "Rule 96. Abatement of duty on defective tyres: If a manu facturer desires that certain tyres should, in consequence of damage sustained during the course of manufacture, be assessed on a value less than the standard selling price he shall declare in writing on the application for clearance of the goods, that such damage has been sustained and each such tyre shall be clearly legibly embossed or indelibly stamped with the word "Second", "Clearance" or "Defective". There is, however, a distinction between a compensa tion in the nature of warranty allowance on a defective tyre after it has been sold and removed from the factory gate and selling a defective tyre as a "seconds" or "defective". In our view the analogy of Rule 96 is not applicable. A tyre being sold as a "seconds or "defective" would be sold at a discount, such discount being known before the goods were removed/cleared, thereby also satisfying the pre condition of section 4(4)(d)(ii) of the Excise Act. The assessable value and price list submitted would be one relating to "seconds" tyres. We, therefore, 857 disallow the claim in respect of TAC/Warranty discount. The next head of deductions arising for our consid eration is in respect of product discounts. This head com prises of 3 tyres of discounts: (1) Prompt Payment Discount (2) Year Ending Discount (3) Campaign Discount 13. We deal with each of the heads individually as under: (i) Under the prompt payment discount scheme MRF in relation to up country Non RCS Bills in the replacement market except Government and DGS & D accounts, a rate of 0.75% on the total value of the invoice including sales tax, surcharge, etc. is offered if the bill is cleared/paid for within 26 days from the date of invoice. The Union of India disputes this claim on the ground that it is limited to only certain varieties of products as explained in the scheme document and is only for a limited period. We are not in clined to accept the contention of the Union of India in this regard. A prompt payment discount is a trade discount given to the dealers by MRF. It is established under the terms of sale or by established practice and is known at or prior to the removal of the goods. It squarely falls within our order of clarification in the case of Union of India & Ors. vs Bombay Tyres International Ltd. (supra). The MRF is entitled to deduction on this account. (ii) In the Special year end Bonus to Dealers MRF pro poses and claims this deduction as a year end discount. This Bonus of Rs.50 per tyre is for certain specific tyres and is receivable only on those invoices where payments are actual ly receivable within 45 days from the date of the invoice. Under this scheme a declaration is to be received dealerwise and thereafter provision is to be made at the head office of MRF for the Bonus. The allowance of the discount is not known at or prior to the removal of the goods. The calcula tions are made at the end of the year and the Bonus at the said rate is granted only to a particular class of Dealers. This is computed after taking stock of the accounts between MRF and its dealers. It is not in the nature of a discount but is in the nature of a Bonus or an incentive much after the invoice is 858 raised and the removal of the goods is complete. In the circumstances, we are of the opinion that MRF is not enti tled to deduction under this head. (iii) MRF proposed "Superlug Piggy back campaign Bonus" in March/April 1983 for invoices during a particular period whereby bonus of Rs.50 per tyre for every Superlug tyre and/or any other particular variety of tyres is given. The bonus was again applicable only on invoices for which pay ments were received within 45 days. Details of bonus earn ings per dealer were to be computed after taking stock of the accounts between MRF and its dealers and the bonus amount was to be credited after June 1983 or mid July 1983. On the same reasoning as the year ending discount/bonus scheme, the campaign bonus cannot be a permitted deduction to MRF. The allowance of the discount is not known at or prior to the removal of the goods. The quantum is unascer tained at the point of removal. The discount is not on the wholesale cash price of the articles sold but is based on the total sales effected of a particular variety of tyre calculated after the removal. We accordingly reject this claim of MRF. Interest on finished goods from the date the stocks are cleared till the date of the sale was disallowed by the Assistant Collector, Kottayam. This head has again been urged for our consideration as a proper deduction for deter mination of the assessable value. As quoted in our judgment in Union of India and Ors. vs Bombay Tyres International Ltd. (supra), we have held that expenses incurred on account of several factors which have contributed to its value upto the date of sale which apparently would be the date of delivery at the factory gate are liable to be included. The interest on the finished goods until the goods are sold and delivered at the factory gate would therefore necessarily, according to the judgment in Bombay Tyres International case (supra) have to be included but interest on finished goods from the date of delivery at the factory gate up to the date of delivery from the sales depot would be an expense in curred after the date of removal from the factory gate and it would therefore, according to the judgment in Bombay Tyres International case (supra) not be liable to be includ ed since it would add to the value of the goods after the date of removal from the factory gate. We would therefore have to allow the claim of MRF Ltd. as above. 859 15. The next head of deduction relates to over riding commission to the Hindustan Petroleum Corporation which was disallowed. MRF entered into a contract with Hindustan Petroleum Corporation Ltd. for sale of their products through HPC dealer network. An overriding commission was agreed to, in consideration of HPC not agreeing to entering upon agreement with any other tyre manufacturing company vis a vis by reason of MRF undertaking not to enter upon any agreement with any other oil company. The discount proposed was as a percentage of sale effected through the HPC dealers on half yearly basis. On the face of it, the over riding commission payable to HPC is a commission for sales. It is a compensation granted for the sale of MRF products through HPC dealers and is a commission for services rendered by the agent. It is not a discount known at or prior to the removal of the goods and we accordingly reject this claim of MRF Ltd. 16. Another head of deduction disallowed to MRF relates to interest on receivables (sundry debtors for sales). MRF has represented that this cost is inbuilt in the price and is incurred on account of the time factor between the time the goods are delivered and the time the moneys are rea lised. The cost is incurred only where credit terms are given in case of up country and other buyers where payment is made much after the sales are effected. They contend that it is nothing but an extension of the principle underlying Rule 4 of the Central Excise (Valuation) Rules. They contend that this is an adjustment in value required to be made to take into account and provide for the difference in the time of delivery and the realisation of the sale value. As stated in our judgment in Union of India & Ors. vs Bombay Tyres International Ltd. (supra), it is only those expenses incurred on account of factors which have contributed to its value upto the date of sale or the date of delivery which are liable to be included in the assessable value. The interest cost and expenses on sundry debtors or interest on receivables is an expense subsequent to the date of sale and removal or delivery of goods and in our opinion MRF Ltd. would be eligible to claim deduction on this account. The next head which was urged for our consideration relates to the cost of distribution incurred at the duty paid sales depots. In our judgment in Union of India and Others vs Duphar Interfram Ltd. (Civil Appeal No. 569 of 1981) reported in 1984 Excise and Customs Reporter at page 1443, we have held that the cost of distribution is not to be included in the assessable value in case the wholesale dealers take delivery of the goods from outside duty paid godown. The 860 wholesale dealers having taken delivery of the goods manu factured by MRF. Ltd. and there being a removal of the goods from the factory gate, the cost of distribution at duty paid sales depots cannot be taken into account for the purpose of determining the assessable value of the goods. The next head of deduction disallowed to MRF relates to discount to Government and other Departments. In our view the Assistant Collector, Goa has rightly rejected the claim of MRF though the Assistant Collector, Kottayam allowed the claim of MRF. MRF Ltd. sells its products at a lower price as per contract with the Government or its Departments. Separate price lists for the Government and other Depart ments were filed by MRF distinct and different from the price lists in relation to dealers. The position that dif ferent price lists for different classes of dealers or different classes of buyers is specifically recognised under section 4(1), proviso (i), of the Excise Act. Different prices can be declared with reference to different classes of buyers and each price is deemed to be a normal price of such goods. In this view of the matter, merely because the product is sold at a lower price to the Government and its Departments does not enable the MRF to contend that the difference in price with reference to an ordinary dealer and the Government is a discount to the Government. The differ ence in price is not a discount but constitutes a normal price for the Government as a class of buyer and no deduc tion on this head is liable to MRF Ltd. 19. The next question which arises for our consideration relates to special secondary packaging charges for tread rubber. It has been the contention of the MRF that their case is covered by the judgment in Union of India & Ors. vs Godfrey Philips India Ltd., reported in 1985 Vol. The majority judgment in Godfrey Philips India Ltd. (Supra) holds that "on a proper construction of Sec. 4(4)(d)(i) of the Act read with the Explanation, the second ary packaging done for the purpose of facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade cannot be included in the value for the purpose of assessment of excise duty. If a packaging is not necessary for the sale of the product in the wholesale market at the factory gate, the same cannot be included in the value for the purpose of assessment of excise duty. " It has been brought to our notice that in a Judgment delivered by the Bombay High Court in Misc. Petition No. 1534 of 1979 (Judgment dated 7th January 1986) Bharucha J. of Bombay High Court in Bombay Tyres International Ltd. vs Union of India & Ors., has considered the Judgment in 861 Godfrey Philips India Ltd. (supra) with specific reference to the question of secondary packaging for tread rubber. It has been brought to our notice that such packaging consists of cardboard cartons or wooden cases. In that case the tread rubber as packed was produced before Bharucha J. He has described that the tread rubber is a strip of rubber approx imately 6 ' ' wide and about 1 ' ' thick which is tightly wound into a roll. Each roll weighs between 15 Kgs and 40 Kgs. The roll is not held together by any means. The roll is inserted into a loose and open polythene bag. That bag also cannot hold the roll together. The bag is placed in a cardboard carton or a wooden case. The cardboard carton is held to gether by rubber bands. The wooden case is nailed together. Though, it was contended that the cardboard cartons and wooden cases were in the nature of secondary packaging whose cost was not includable in the value of tread rubber, Bharu cha J. held that a roll of tread rubber cannot be sold without the cardboard carton or the wooden case. It is further stated that the secondary packing in which tread rubber is sold is in the course of wholesale trade. The secondary packing is not employed merely for the purpose of facilitating transport or smooth transit and is necessary for selling the tread rubber in the wholesale trade. Bharu cha J. refused to remand the matter to the authorities as the tread rubber as packed had been produced before him and he was of the firm view that the cardboard cartons and the wooden cases are not such secondary packing materials as can be excluded in computing the assessable value of the Peti tioner 's tread rubber. In the circumstances that this very issue has been decided on a visual personal inspection of Bharucha J. in the case of Bombay Tyres International Ltd. (supra) pronounced after the decision in Godfrey Philips India Ltd. (supra) we are of the view that the cost of cardboard cartons and wooden cases or any other special secondary packing charges incurred by the MRF on tread rubber should not be excluded from the assessable value. Tread rubber is a product which if even slightly damaged becomes unfit or un usable. The vital element "cushion compound" which is applied to the bottom of the tread rubber and which helps the tread rubber to stick to the buffed surface of the old tyre which is to be retreaded is very delicate. A polythene sheet is put over the layer of the compound before the same is rolled and put into another polythene bag to avoid sticking to the outer side of the tread rubber and getting contaminated by dust. It is stated that such production cannot be marketed without the poly thene bags and/or cardboard boxes. These are the findings of the Assistant Collector, Goa and in the light of the cumula tive decisions of the Assistant Collector, Goa and of the Bombay High Court, we are of the view that the secondary special packing charges for tread rubber 862 cannot be deducted from the assessable value of tread rub ber. In relation to the determination of wholesale price of tyres on the basis of the ex factory price for Defence supplies, with reference to the old Section 4 in view of our Judgment in Union of India vs Bombay Tyres International Ltd. (supra) also reported in ; at 376E, this Court has held that "in the new Section 4 in supersession of the old Section 4, no material departure was intended from the basic scheme for determining value of excisable arti cles. " It has been contended by the Union of India that even after our format orders referred to above, MRF has not submitted any statement of deductions/amendments in respect of price lists filed nor submitted any fresh prices. It claims several deductions on percentage basis by furnishing calculations vis a vis the entire company but did not fur nish item wise or factory wise break up of such claims. Having held that there is no material departure in the basic scheme for determining the value of excisable articles in the old Section 4 and the new Section 4, there is nothing in the unamended Section 4 to justify an inference that the wholesale cash price of articles of similar description sold cannot be different for different classes of buyers in wholesale. Different prices can be normal prices for the purposes of determination of the assessable value of the article. We accordingly reject the contention of the MRF. Even though the MRF has not filed a separate price list for the factory gate clearances to Defence Department under the old Section 4, in view of our now holding that there is no material schematic difference between old Section 4 and new Section 4, we permit MRF Ltd. to file revised price lists with reference to the class of buyers namely, Defence on a different basis for a different normal price and avail of all the necessary reliefs with reference to lower assessable value, if the same has not already been filed. In so far as the deductions claimed towards excise duty paid on processed tyre cord, the contention of the MRF has been upheld by the Goa Bench in Special Civil Appeal No. 28 of 1983 and the claim has been allowed to MRF for deduc tion from selling price of excise duty on processed tyre cord. This is in accordance with Section 4(4) (d)(ii) of the new Section 4 and we accordingly confirm that MRF is eligi ble to this deduction. The last important issue relates to the method of computation of assessable value in a cum duty price at a factory gate sale. The issue is whether excise duty should be first deducted or the permissible deduction should be first deducted from the selling price for the re 863 assessments before the Assistant Collectors. The assessment of excise duty both in relation to Section 4 and in relation to the Valuation Rules is now subject to the definition contained in Section 4(4)(d) of the Excise Act. The value as defined thereunder is to be arrived at after the cost of packaging of a durable nature or a returnable nature as also amounts of duty of excise, sales tax and other taxes and trade discount allowed in accordance with the normal prac tice of wholesale trade is determined. It is thus implicit that no excise duty is payable on an element of excise duty in the price. The value as contemplated under Section 4 cannot include a component of excise duty. In the circum stances, where the computation of an assessable value has to be made from the factory gate sale price which is a cum duty price, the first question which will have to be addressed is what are the exclusions and permissible deductions from such a sale price. The petitioners have contended that their cum duty price was arrived at after calculating and adding excise duty payable i.e., before actual duty was paid. They contend that their price list for several articles is ap proved much in advance of the removal from the factory. They contend that when the assessable value is to be arrived at, the same amount of excise duty which was pre determined and added to the factory price is naturally to be deducted first and only thereafter the permissible deductions should be deducted to arrive at the value. For the purposes of argu ment, MRF submitted the following example for consideration: They suggested that their selling price should be con sidered (cum duty selling price) as Rs. 3200. They further submitted that the permissible deductions whether on account of trade discount or on account of cost of secondary packag ing or sales tax or other taxes, packaging or sales tax or other taxes should hypothetically be considered at Rs.200. The rate of excise duty chargeable is 60% ad valorem for automotive tyres. Assuming for the sake of argument that the value of the product is actually Rs.2075. In accordance with the provisions of Section 4(4)(d) permissible deductions are made. The assessable value would be Rs. 1875 being the difference of Rs.2075 and Rs.200. The excise duty at the rate of 60% would thereafter be computed on the sum of Rs. 1875 and would aggregate Rs. 1125. The selling price which is a cum duty price would be the sum total of the assessable value, the permissible deductions and the excise duty. Putting this as a mathematical formula the selling price (cum duty price) is equal to assessable value plus permissi ble deductions plus excise duty. Cumduty Paid Selling Price = Assessable Value + Excise Duty + Permissible deductions. Again excise duty is computed as a ratio of the assessable value where duty is ad valorem. For the purposes of ascer 864 taining the assessable value, if three of the components namely, the cum duty selling price, the quantum of permissi ble deductions and the rate of excise duty are known, the proper and appropriate method of determining the assessable value would be the following formula: Assessable value = cum duty selling price permissible deductions divided by ( 1 + Rate of excise duty) Thus in the instant case working backward, if the cum duty selling price is known to be Rs.3200 and the permissi ble deductions are known to be Rs.200 and the rate of excise duty is known to be 60% the assessable value is computed aS under: Selling price permissible deductions = Rs.3200=RS.200 = Rs.3000 Assessable value is equal to difference in selling price and permissible deductions divided by 1 plus 60/100 which is equal to 3000/1.6 which is equal to Rs. 1875. The excise duty at 60% ad valorem rate would be Rs. 1125 on the assessable value of Rs. 1875. The mathematical formula enumerated above balances. For example, if the cum duty paid selling price is equal to Rs.3200, the assessable value is Rs. 1875, excise duty is Rs. 1125 and permissible deductions is Rs.200, the aggregate of the assessable value, the permissible deductions and the excise duty is equal to the selling price (cum duty paid). Any other method of computation of excise duty or assessable value is erroneous. The Petitioner 's basis that the assessable value is to be arrived at by taking into consideration the same amount of excise duty which was hypothetically pre determined and added to the factory price and that this element in an attempt to compute the assessa ble value should naturally be deducted first, is putting the cart before the horse. The excise duty is only known as a ratio of the assessable value when an ad valorem duty is included in the cum duty paid selling price. The quantum of excise duty cannot be pre deducted or predetermined till the assessable value is known. It is only the permissible deduc tions in concrete monetary terms and amount which are 865 known. The cum duty paid sale price being available for computation and a known value of deductions permitted being also known, the assessable value and the excise duty as a ratio of the assessable value can be only decided by first deducting the permissible deductions, from the cum duty paid selling price and thereafter computing the value in accord ance with the equation mentioned above. This has both a legal and a mathematical basis. If the pre determined amount of excise duty as per the illustration given by MRF Ltd. is first deducted, the equation will not tally. For example, if from a hypothetical cumduty price of Rs. 150 (comprised of the value of the product at Rs. 100 and ad valorem excise duty@ 50% at Rs.50) if the excise duty of Rs.50 is first deducted and thereafter the permissible deduction of Rs.5 is deducted, the assessable value arrived at would be Rs.95. The rate of excise duty is 50% and the excise duty @50% of the assessable value of Rs.95 would be Rs.47.50 and not Rs.50 as earlier deducted. There would be a constant differ ence of Rs.2.50 in the computation. It is, therefore, an incorrect method of evaluating the assessable value in instances of cum duty selling price. This interpretation is borne out by the definition contained in Section 4(4)(d) of the Excise Act. MRF 's contention that the excise duty should be deducted first and then the permissible deductions is incorrect. In ordinary cases where the factory price is not a cum duty price, the first step in arriving at the assessa ble value is to deduct the permissible deductions and there after to compute the excise on an ad valorem basis. The excise duty cannot be computed unless the permissible deduc tions are first made. The assessable value is arrived at only after the permissible deductions are made. Excise duty is a ratio of the assessable value. Ad valorem excise duty is computed only on assessable value after arriving at such assessable value by making proper permissible deductions. Excise duty cannot be computed without proper determination of the assessable value, namely assessable value exclusive of permissible deductions. Even in the cum duty sale price, the same principle must be followed to arrive at the assess able value. To compute an excise duty as a pre determined amount without making the permissible deductions for reduc ing the cum duty selling price is a fallacy both legally and mathematically as demonstrated above. The ad valorem excise duty can only be computed after reducing the assessable value by permissible deductions and then applying the tariff rate to the assessable value. To reverse this sequence is to mis interpret the scheme and mode of levy of excise duty on the assessable value. In the light of our aforesaid discussions and keep ing in line with our previous format orders, we direct the assessing authorities to 866 quantify and re determine the permissible deductions in accordance with our present Judgment. The assessee, MRF Ltd. already having been required to file the permissible deduc tions/amendments to the price lists within a period of one month in the last instance in May 1984 is once again re quired by us to file fresh price lists in the light of our present Judgment within one month for all the periods under consideration. The assessing authorities after hearing the assessee would quantify the correct assessable value in the light of our Judgment. In making the assessments for each of the periods, the authorities would include the set off in respect of further refunds, if any, allowable on account of fresh deductions permitted and/or already allowed to the assessee. MRF would be at liberty to obtain suitable direc tions in the pending Writ Appeal No. 590 of 1979 in the High Court of Madras in accordance with our Judgment. We leave the parties to bear their own costs. ORDER In respect of items claimed by the assessee which have been allowed by us in this judgment or where the allowance by Assistant Collector has been upheld the quantum will be adjusted by giving appropriate credit in the personal Ledger Accounts. P.S.S. Appeals dis posed of.

In Union of India vs Bombay Tyres International Ltd., ; , this Court held that under s.4 of the Central Excise and Salt Act, 1944, only those expenses which were incurred on account of factors contributing to the product 's value upto the date of sale or the date of deliv ery at the factory. gate were liable to be included in the assessable value. On November 14/15, 1983 the Court made a clarificatory order wherein it was stated that discounts allowed in the trade (by whatever name called) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under terms of sale or by established practice, and that such allowance and the nature of discount should be known at or prior to the removal of the goods and should not be disallowed only because they were not payable at the time of each invoice or deducted from the invoice price. The respondent Rubber Factory claimed various deductions of the nature of post manufacturing expenses for determining the assessable value of their products under s.4 of the Act which were disallowed 847 by the Excise authorities. Its writ petitions were, however, allowed by the High Court. In appeals by the Union of India for setting aside the High Court judgment it was contended for the respondent: (a) that the TAC/ Warranty discount, which was sought to be deducted for determining the assessable value, satisfied all the criteria of a trade discount stipulated in the clarifi catory order; (b) that the claim for deduction of product discounts prompt payment discount, year ending discount and campaign discount was justified on the same reasoning; (c) that the interest on finished goods from the date the stocks were cleared till the date of sale was a proper deduction for determination of the assessable value; (d) that the claim for deduction of interest on receivables (sundry debtors for sales) was justified on the ground that this cost was inbuilt in the price and was incurred on account of the time factor between the delivery of goods and realisa tion of moneys; (e) that the overriding commission allowed to the Hindustan Petroleum Corporation for exclusive sale of company 's products through their dealer net work was also of the nature of a discount; (f) that the cost of distribution at the duty paid sales depot was a proper deduction; (g) that the difference between the lower price at which the product was sold to the Government and the price charged from ordinary dealer was of the nature of a discount; (h) that the claim for deduction of special secondary packaging charges squarely falls within s.4(4)(d)(i) of the Act, and (i) that the company was entitled to the deduction of excise duty paid on processed typecord under s.4(4)(d)(ii). The respondents also disputed the method of computation of 'assessable value ' in a cure duty price at a factory gate sale and contended that such value was to be arrived at by first deducting the predetermined excise duty added to the factory price and only thereafter the permissible deductions were to be deducted. Disposing of the appeals, the Court, HELD: 1.1 The respondent company is not entitled to the deduction of TAC/Warranty discount for determining assessa ble value of tyres since it does not come within s.4(4)(d)(ii) of the Central Excise and Salt Act, 1944. [856H, 857A, 855H] 1.2 Even though giving of TAC/Warranty is established by practice for the wholesale trade or capable of being decid ed, what is really relevant is the nature of the traction. It is not a discount on the 848 tyres already sold, but relate to the goods which are being subsequently sold to the same customers. It is in the nature of a benefit given to the customers by way of compensation for the loss suffered by them in the previous sale. [8S6B] 1.3 A trade discount of any nature could be allowed to be deducted provided it is known at or prior to the removal of the goods. In the instant case, this condition precedent is not satisfied as the committee decided the claim for TAC/Warranty subsequent to the removal of the tyre. [856C] 1.4 The analogy of Rule 96 of the Central Excise Rules, 1944 relating to abatement of duty of defective tyres cannot be made applicable to justify the claim for deduction of the TAC/Warranty discount. A tyre being sold as a "seconds" or "defective" would be sold at a discount, such discount being known before the goods were removed/cleared, thereby also satisfying the pre condition of s.4(4)(d,(ii) of the Excise Act. The assessable vase and price list submitted would be one relating the 'seconds ' tyres. [856G] Union of India vs Bombay Tyres International Ltd., [1984] 17 ELT 329, referred to. 2.1 The respondent is entitled to deduction of 'prompt payment discount ' which is a 'trade discount ' given to the dealers by the company. It is established under the terms of sale or by established practice and is known at or prior to the removal of the goods [857E F] 2.2 The company is not entitled to deduction of the 'year ending discount '. The allowance of the discount is not known at or prior to the removal of the goods. The calcula tions are made at the end of the year and the bonus at the said rate is granted only to a particular class of dealers. This is computed after taking stock of the accounts between the company and its dealers. It is not in the nature of a discount but in the nature of a bonus or an incentive much after the invoice is raised and the removal of the goods is complete. [857G 858A] 2.3 The campaign bonus cannot be a permitted deduction to the company. The allowance of the discount is not known at or prior to the removal of the goods. The qnantum is unascertained at the point of removal. The discount is not on the wholesale cash price of the articles sold but is based an the total sales effected of a particular variety of tyre calculated after the removal. [858D] 849 3.1 Expenses incurred on account of several factors which have contributed to the product 's value upto the date of sale, which apparently would he the date of delivery at the factory gate, are liable to he included in the assessa ble value. [858F] 3.2 The company was justified in claiming deduction of interest an finished goods until they were sold and deliv ered at the factory gate. But interest on finished goods from the date of delivery at the factory gate up to the date of delivery from the sales depot would be an expense in curred after the date of removal from the factory gate and it would, therefore, not he liable to he included since it would add to the value of the goods after the date of remov al from the factory gate. [858G H] Union of India vs Bombay Tyres International Ltd., ; , referred to. The interest cost and expenses on sundry debtors or interest on receivables is an expense subsequent to the date of sale and removal or delivery of goods and, therefore, the company would not he eligible to claim deduction on this account. [859H] 5. The overriding commission paid by the company to the Hindustan Petroleum Corporation for sale of their products exclusively through HPC dealer network is not deductible. It was agreed to in consideration of the COrporation not agree ing to enter upon agreement with any other tyre manufactur ing company vis a vis by reason of the respondent undertaking not to enter upon any agreement with any other oil company. It is a compensation granted for the sale of company 's products through HPC dealers and is a commission for services rendered by the agent. It is not a discount known at or prior to the removal of the goods. [859A C] 6. The cost of distribution incurred at the duty paid sales depots is not to he included in the assessable value in case the wholesale dealers take delivery of the goods from outside such godown. The wholesale dealers having taken delivery of the goods manufactured by the company and there being a removal of the goods from the factory gate, the cost of distribution at duty paid sales depots cannot he taken into account for the purpose of determining the assessable value of the goods. [859H 860A] Union of India & Ors. vs Duphar Interfram Ltd., , referred to. 850 7. Merely because the product is sold at a lower price to the Government it cannot be said that the difference in price with reference to an ordinary dealer and the Govern ment is a discount to the Government. The position that there can be different price lists of articles of similar description sold to different classes of dealers or differ ent classes of buyers in wholesale is specifically recog nised under s.4(1)(a), proviso (1) of the Act. The lower price for the Government constitutes a normal price for it as a class of buyer and no deduction on this head is liable to the company for the purpose of determination of the assessable value of the article. [860D, C, E] 8.1 Section 4(4)(d)(i) of the Act read with the Explana tion thereto makes it apparent that the 'secondary packag ing ' done for the purpose of facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade cannot be included in the value for the purpose of assessment of excise duty. If a packaging is not necessary for the sale of the product in the wholesale market at the factory gate, the same cannot be included in the value for the purpose of assessment of excise duty. [860 FG] 8.2 In the instant case, the secondary packaging for tread rubber consists of cardboard cartons and wooden cases. This secondary packing is not employed merely for the pur pose of facilitating transport or smooth transit but is necessary for selling the tread rubber in the wholesale trade. The cost of these cardboard cartons and wooden cases or any other special secondary charges incurred by the company on tread rubber could not, therefore, be excluded from its assessable value. [861A, D, E F] Union of India & Ors. vs Godfrey Philips India Ltd., and Bombay Tyres International Ltd. vs Union of India & Ors., Bombay High Court M.P. No. 1534 of 1979 decided an January 7, 1986, referred to. The company is eligible for deduction from selling price of tyre of excise duty paid on processed tyre cord. This is in accord with s.4(4)(d)(ii) of new s.4 of the Act. [862F G] 10.1 The assessment of excise duty both in relation to s.4 and in relation to the Valuation Rules is now subject to the definition contained in s.4(4)(d) of the Act. The 'va lue ' as defined thereunder is to be arrived at after the cost of packaging of a durable nature or a returnable nature as also amounts of duty of excise, sales tax and other taxes and trade 851 discount allowed in accordance with the normal practice of wholesale trade is determined. It is implicit that no excise duty is payable on an element of excise duty in the price. The value as contemplated under s.4 cannot include a compo nent of excise duty. [863AB] 10.2 The aggregate of the assessable value, the permis sible deduction and the excise duty is equal to the selling price (cure duty paid). The excise duty is only known as a ratio of the assessable value when an ad valorem duty is included in the cure duty paid selling price. The quantum of excise duty cannot be pre deducted or pre determined till the assessable value is known. It is only the permissible deductions in concrete monetary terms and amount which are known. The cum duty paid sale price being available for computation and the value of deduction permitted being also known, the assessable value and the excise duty as a ratio of the assessable value can be only found by first deducting the permissible deductions from the cum duty paid selling price and thereafter computing the value by dividing the difference by (1 +rate of excise duty). This method has both a legal and mathematical basis. To reverse this sequence is to mis interpret the scheme and the mode of levy of excise duty on the assessable value. [864E G, 865B, 865G] 10.3 Where the factory price is not a cure duty price, the first step in arriving at the assessable value is to deduct the permissible deductions and thereafter to compute the excise on an ad valorem basis by applying the tariff rate to the assessable value. [865D]

minal Appeal No . 67 of 1952. Appeal by special leave from the Judgment and Order dated the 14th September, 1951, of the High Court of Judicature for the State of Punjab at Simla (Bhandari and Soni JJ.) in Criminal Appeal No. 361 of 1950, arising out of Judgment and Order dated the 13th May, 1960, of the Court of the Sessions Judge, Ferozepore, in Trial No. 28 of 1950 and Case No. 5 of 1950. P. section Safeer for the appellant. Gopal Singh for the respondent. December 10. The Judgment of the Court was delivered by MAHAJAN J. Ajmer Singh, a young man of about 22 years of age was tried for the murder of Bagher Singh, his first cousin, and was acquitted by the Sessions Judge of Ferozepore by his judgment dated 13th May, 1950. On appeal by the State Government, the order of acquittal was set aside by the High Court and the appellant was convicted under section 304, Indian Penal Code, and sentenced to ten years ' rigorous imprisonment. This is an appeal by special leave against that decision. One Nikka Singh had three sons, Bhagwan Singh, Lal Singh and Sunder Singh. Bhagwan Singh died issueless some years ago and disputes arose between Lal Singh and his brother Sundar Singh in regard to the division of the property of Bhagwan Singh. Sunder Singh was in possession of some of his landed 420 properties and Lal Singh obtained a number of decrees against him but Sunder Singh declined to restore possession of the properties to his brother Lal Singh. In view of this litigation the relations between Lal Singh and Sunder Singh were considerably strained and it is said that for some time they were not even on speaking terms. Lal Singh is married to Mst. Dhan Kaur and from her he had two sons. One of them Bagher Singh was murdered and the other, Arjan Singh, is P. W. 5. Accused Ajmer Singh is the son of Sunder Singh and Banta Singh is his real brother. Ajmer Singh is married to Jagir Kaur and Banta Singh to Kartar Kaur. It is alleged by the prosecution that on the evening of the 27th January, 1948, Jagir Kaur complained to her fatherin law that her husband had pawned her ear rings in order to pay off his gambling debts. On the morning of the 28th Banta Singh inquired from Ajmer Singh about this matter and he replied that he had pawned the ear rings to one Banta Singh Mazhbi. Soon after this Ajmer Singh, Banta Singh and one Teja Singh went to Banta Singh Mazhbi and asked him to return the ear rings but the latter replied that no ornaments had been pawned with him and added that he would give a sum of Rs. 30 to them if Ajmer Singh took an oath that the ornaments had in fact been left with him. It is said that Lal Singh was also present when this conversation took place and took up cudgels on behalf of Banta Singh Mazhbi and this led to an exchange of hot words between Lal Singh and the party of Sunder Singh 's two sons and their companion Teja Singh. The parties, however, dispersed after exchanging hot words but without coming to blows. At about sunset the same day Lal Singh and his brother Sunder Singh started abusing each other from their respective houses which open out into a common.courtyard. This wordy warfare between the two brothers attracted the attention of Arjan Singh, Bagher Singh and one Ujagar Singh Mazhbi who on bearing the noise came to the house of Lal Singh. 421 Lal Singh finding himself supported by three others threw out a challenge to Sunder Singh and told him to come out in the open. It is said that Sunder Singh, his two, sons Banta Singh and Ajmer Singh, and Teja Singh, a cousin of theirs, accepted the challenge and rushed out of the house. Teja Singh and Banta Singh were armed with spears and they made an attack on Lal Singh and Dhan Kaur and inflicted on their persons a number of injuries. Ajmer Singh, it is said, was armed with a spear and he plunged his weapon into the chest of Bagher Singh who collapsed and died almost instantaneously. Arjan Singh soon after reported this incident at the police station after travelling a distance of about seven miles at 11 45 p. m. He gave to the police substantially the same version as has now been deposed to by him in the witness box. In this report it was stated by Arjan Singh that it was Ajmer Singh who dealt Bagher Singh a barchha blow on his chest and that Bagher Singh fell down at this blow. The police arrested Sunder Singh, Teja Singh and Banta Singh but the appellant could not be found. Sunder Singh, Teja Singh and Banta Singh were prosecuted under section 302/34 but were convicted under section 324, Indian Penal Code, Banta Singh and Teja Singh were sentenced to two years ' rigorous imprisonment each and Sunder Singh to six months ' rigorous imprisonment. On appeal, Sunder Singh was acquitted and the sentences imposed on Banta Singh and Teja Singh were reduced. A lenient view ' of the affair seems to have been taken because the fight between these near collaterals took place suddenly and ended promptly. Bagher Singh died as a result of one blow and injuries on the person of Lal Singh and Dhan Kaur were not very serious Ajmer Singh was apprehended on 4th December, 1948, and as above stated, was tried by the learned Sessions Judge of Ferozepore and acquitted, but was convicted by the High Court on appeal by the State Government. 422 Lal Singh, P. W. 3, father of the deceased, Dhan Kuar, his mother, and Arjan Singh,his real brother, have given direct evidence about the occurrence. Ujagar Singh Mazhbi whose name is mentioned in the first information report was tendered for cross examination but no question was put to him about the actual fight, and the manner in which it took place or the part that was taken in it by the accused. One Bishandas, whose shop adjoins the shop of Banta Singh Mazhbi, was tendered for cross examination as P.W.7. He deposed that Banta Singh Mazhbi and Lal Singh were the only persons when the quarrel about ear rings took place near his shop. In reexamination he stated that Banta Singh, brother of the accused, and Teja Singh had come on one side and Lal Singh on the other when the quarrel about the ear rings took place. No direct question was put to the witness about the presence of, Ajmer Singh on that occasion. The learned Sessions Judge considered him a wholly independent witness and accepted his evidence about the incident that took place at Banta Singh Mazhbi 's shop on the morning of the 28th. He held that Ajmer Singh was not present at Banta Singh Mazhbi 's shop and that Lal Singh and Arjan Singh had falsely implicated him in the quarrel over the ear rings, and that if the witnesses could falsely involve him in regard to one part of the occurrence, the possibility of his being implicated for the murder of Bagher Singh merely as a matter of vindictiveness could not be outruled. After examining the evidence of the three eye witnesses in detail, the learned Sessions Judge reached the conclusion that they had suppressed the facts in order to absolve themselves of all liability for the happenings of the 28th, and had uttered untruths and that no confidence could be reposed in their statements about the part that they had assigned to Ajmer Singh. In the concluding part of the judgment he observed that " the parties were at logger heads on several issues and in the absence of independent evidence it is difficult to place reliance on the prosecution story 423 in regard to Ajmer Singh. " The High Court on appeal minutely reviewed the evidence of these three eye witnesses and considered that the variations in the statements of witnesses made at , the two trials and which had weighed on the mind of the Sessions Judge were of a minor and trifling character and were quite natural as the Statements at this trial had been made 27 months after the occurrence and that the narration of events by Arjan Singh was substantially the same as had been given by him at the earlier trial and in the first information report. As regards Lal Singh, who had resiled from his earlier statement and bad denied that he was armed with a phaura or that Arjan Singh wag armed with a lathi, it was said that this omission on his part was due to mere lapse of memory and forgetfulness rather than to a deliberate design to improve upon the prosecution story. It was argued by Mr. Pritam Singh Safeer that in this case there were no compelling reasons for setting aside the order of acquittal and that due proper weight had not been given by the High Court to the opinion of the trial judge as regards the credibility of witnesses seen and examined by him. The learned counsel submitted that the High Court was in error in the view that "when a strong prima facie case is made out against an accused person it is his duty to explain the circumstances appearing in evidence against him and` he cannot take shelter behind ' the presumption of innocence and cannot state that the law entitles him to keep his lips sealed. " We think this criticism is well founded. After an order of acquittal has been made the presumption of inno cence is further reinforced by that order, and that being so, the trial court 's decision can be reversed not on the ground that the accused had failed to explain the circumstances appearing against him but only for ,very substantial and compelling reasons. As the courts below expressed divergent opinions on the credibility of the prosecution witnesses, we 35 424 had to read the evidence adduced in the case with great care and after doing so, we are on the whole inclined to agree with the view expressed by the High Court. It is difficult to believe that without there being any truth in the fact that the appellant struck Bagher Singh with a barchha, Arjan Singh selected the appellant and ascribed to him that part soon after the occurrence. There are no material discrepancies in the statements made by Arjan Singh on different occasions and in our view the reasons given by the learned Sessions Judge for rejecting his testimony are not convincing. We agree with the High Court that there are no sufficient reasons for distrusting his evidence. The number of persons who took part in the quarrel was not more than seven or eight and the blows inflicted were few, and in these circumstances Arjan Singh could have made no mistake as to the identity of the person who struck Bagher Singh fatally. This part of his statement is corroborated by the evidence of Lal Singh and Dhan Kaur. No cross examination was directed, against this part of their statements. It seems that the learned Sessions Judge took too exaggerated a view of the minor discrepancies in these statements and read them with a rather hypercritical mind. Bishandas, whose statement considerably impressed him, was only tendered for cross examination and never made a full statement about the happenings of the 28th morning. The statement made by him is somewhat cryptic and from this it cannot be definitely concluded that Ajmer Singh was not present on the morning of the 28th at the shop of Banta Singh Mazhbi. The learned Sessions Judge was not right in rejecting the whole of the prosecution evidence as unreliable merely on the basis of this cryptic statement. Ujagar Singh, the other so called independent witness, was tendered for cross examination but the defence did not ask him a single question about the happenings of the 28th. The argument therefore that the prosecution withheld from court independent witnesses who had witnessed the occurrence is without any substance. The learned Sessions Judge 425 was apparently labouring under some misapprehension when he said that the prosecution had withheld from the court independent witnesses of the occurrence. Apart from Ujagar Singh Mazhbi, no one else appears to have been present when the attack was made on Bagher Singh, Lal Singh and Mst. Dhan Kaur by the party of the accused. All that appears in evidence is that after the fight was over a number of persons arrived on the scene but as they did not witness the attack on Bagher Singh they could give no evidence on this point and their non production as witnesses cannot have any consequence on the case. It is significant that the defence also led no evidence to prove that the fight took place in a manner different from the one described by the prosecution witnesses, or that Ajmer Singh was not present on the occasion. In an appeal under section 417 of the Code of Criminal Procedure the High Court had full power to review the evidence upon which the order of acquittal was founded and we are satisfied that it did not in any way exercise it wrongly The injuries on the person of Kartar Kaur and under Singh were not proved to have been inflicted at the time of the occurrence and were of no consequence. The prosecution was under no obligation to explain how they came about. It was next argued that the trial held by the Sessions Judge was vitiated as the examination of the appellant was not in accordance with the provisions of section 342, Criminal Procedure Code. There is considerable force in the point that the examination of the appellant by the Sessions Judge was detective. All that the Sessions Judge did was, that he read out the examination of the accused in the committal court to him and then recorded the following questions and answers: " Q: Did you make before the Committing Magistrate the statement that has just now been read out to you ? A: Yes. 426 Q:Now that you have heard the entire evidence against yourself and the charge has been explained to you, do you wish to say anything else ? A: I am innocent. Q: Do you wish to produce any evidence indefence ? A: No." In the committal court the 'questions put to the accused and his answers were these : " Q: Did you pawn the, ear ring of your wife with Banta Mazhbi and squander the proceeds on or about 28th January, 1948 ? A: No. Q : Did Lal Singh interfere when you were demanding the ear rings from said Banta Singh on 28th January, 1948, at Nathuwala and remark that the sweeper, i.e., Banta, was speaking truth when he denied the transaction ? A: No. Q: Did you on 28th January , 1948, at Nathuwala along with your father Sunder Singh, Banta Singh, and Teja Singh, you Banta Singh and Teja Singh being armed with spears, attack Lal Singh, his 'son Bagher Singh and Dhan Kaur at their house and in furtherance of the common intention of you all, Banta and Teja caused simple injuries to Lal Singh with spears and you caused fatal injuries with a spear to Bagher Singh deceased? A No. Q Why this case against you ? A Due to enmity. Q Anything else to say? A No." The Sessions Judge did not even take care to ask the accused the routine question whether the statement made by him in the committal court was correct. As if bard pressed for time, be simply asked him whether he had made that statement read out to him in the committal court, and was satisfied with an 427 answer, in the affirmative. The, second question asked, is of a general character and. ' does not satisfy the requirements of section 342, Criminal Procedure Code. We are of the opinion that when the Sessions Judge is required by that section to make the examination of the .accused, his duty is not discharged by merely reading over the questions and answers to the accused put in the committing magistrates court and by asking him whether he has to say anything about them. It is not, sufficient compliance with the section to generally ask the accused that having heard the prosecution evidence, what he has to say about it. The accused must be, questioned separately about each material circumstance which is intended to be used against him. It was pointed out by this Court in Tara Singh vs The State(1) that the whole object of the section, is to afford the accused a fair and proper opportunity of explaining circumstances which appear against him and that the questions must be fair and must be couched in a form which an ignorant or illiterate person will be able to appreciate and understand. In this particular case at one stage of the argument we were inclined to order a retrial of the accused in view of the defective examination of the accused by the Sessions Judge but on further thought we have reached the conclusion that the 'High Court was right in the view that the defective procedure followed by the Sessions Judge in this respect has not occasioned any prejudice to the accused. The facts of the case are free from any complication and the point in issue was a simple one and it cannot be said that the per functory examination of the appellant did any damage. The only point appearing in the evidence against the accused was that he gave a barchha blow to Bagher Singh. The witnesses had stated that fact in his face and had been cross examined on the point by his counsel. He was fully apprised of the part ascribed to him in the quarrel. His answer to this specific question in the committal court was that he was innocent and that he was being implicated owing to (1) ; 428 enmity. He stuck to that reply in the Court of Session after fully understanding what he was asked. It is well settled that every error or omission not in compliance with the provisions of section 342 does not necessarily vitiate a trial. Errors of this type fall within the category of curable irregularities, and, as held in Tara Singh 's case(1), the question, whether the trial is vitiated, in each case depends upon the degree of the error and upon whether prejudice has been or is likely to have been caused to the accused. We are of the opinion that the disregard of the provisions of section 342 in this case is not so gross as would justify our quashing the conviction and ordering a retrial. The result is that we uphold the judgment of the High Court and dismiss the appeal. Appeal dismissed.

After an order of acquittal has been made the presumption of innocence is further reinforced by that order, and that being so, the trial court 's decision cannot be reversed merely on the ground that the accused had failed to explain the circumstances appearing against him but only for very substantial and compelling reasons. In an appeal under section 487, Criminal Procedure Code, the High Court has full power to review the evidence upon which the order of acquittal was founded. The duty of a Sessions Judge under section 342, Criminal Pro cedure Code, to examine the accused is not discharged by merely reading over the questions put to the accused in the Magistrate 's Court and his answers, and by asking him whether he has to say anything about them. It is also not a sufficient compliance with the section to generally ask the accused t hat, having heard the prosecution evidence what he has to say about it. He must be questioned separately about each material circumstance which is intended to be used against him. The, whole object of the section 419 is to afford the accused a fair and proper opportunity of explaining circumstances which appear against him and the questions must be fair and must be couched in a form which an ignorant or illiterate person may be able to appreciate and understand. It is, however, well settled that every error or omission complying with section 342 does not necessarily vitiate the trial. Errors of this type fall within the category of curable irregularities and the question whether the trial has been vitiated depends in each case upon the degree of error and upon whether prejudice has been or is likely to have been caused to the accused. Tara Singh vs The State ([1951] S.C.,R. 729) referred to.

Appeal No. 1283 of 1967. Appeal by special leave from the Order dated April 2/3, 1967, of the Court of Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur in Appeal No. D.F.78 of 1966. J. P. Goyal and Sobhag Mal Jain, for the appellant. O. P. Rana, for the respondents. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by special leave against an order 2/3 April, 1967, of the Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur by which the Assistant Commissioner rejected as defective the memorandum of appeal filed by the present appellant against the assessment order passed by the Sales Tax Officer (S 1) Kanpur. The defect, according to the Assistant Commissioner, was that the memorandum of appeal (which had been filed well within time) was not accompanied by the challan showing the deposit of admitted tax under section 9 of the Uttar Pradesh Sales Tax Act, 1948. The appellant did not file an application for revision and did not also invite a reference to the High Court of Allahabad but came direct to this Court by special leave which was granted by us on August 23, 1967. At the first hearing of the petition, the State of Uttar Pradesh represented by Mr. O.P. Rana objected to the grant of special leave inasmuch as the other provisions under which remedy could be obtained under the Sales tax Act had been bypassed. At that time, we overruled the objection and in the course of this judgment, we shall briefly indicate the reasons which had then prevailed with us. The facts of the case are as follows: The appellant had declared his turnover for the year 1964 65 at Rs. 3,70,941.7 P. on which the admitted tax under the Act came to Rs. 11,135,58p. The Sales tax authorities, however, assessed his turnover at Rs. 30 lakhs on which tax was calculated at Rs. 90.000. The appellant appealed to the Assistant Commissioner (Judicial) 1, Sales tax, Kanpur Range, Kanpur. His appeal was filed on May 16, 1966, the order of assessment and the demand notice having been served on him on April 16, 1966. The appeal was therefore filed within time. Section 9 of the Act provides that no appeal against an ,assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due or of such instalments thereof as may have become payable. As is stated earlier, the admitted tax came to 507 Rs. 11,135.58 P. The appellant was required under this provisions of law to give satisfactory proof, at the time of the entertainment of the appeal, that this tax was duly paid. It appears that the appellant had paid a greater portion of the tax even before the assessment order had been made, and a balance of Rs. 99.99 P. was due from him from the amount of admitted tax. This amount was deposited on April 26, 1966 before the appeal was filed by him. He did not however present any proof of such deposit, because there is a dispute in the case whether the assessee bad shown proof of it to the mumarim or not. As the finding is that he had not shown it we shall proceed on the assumption that the assessee had not furnished proof at the time of the filing of the appeal that the balance of tax had been paid, It is on this premise that the present appeal has proceeded before us. On August 16, 1966 the assessee addressed a letter to the Sales tax Officer and asked for a certificate of payment of tax and this certificate having been furnished he filed it on January 24, 1967 before the Assistant Commissioner. He also, as a matter of abundant caution, filed an application for condonation of delay under section 9(6) of the Act read with section 5 of the Indian Limitation Act. The order against which the present appeal has been brought before us was made on 2/3 April, 1967 and the appeal of the assessee was rejected,. because in the opinion of the Assistant Commissioner section 9 of the Act read with r. 66(2) had not been complied with since no proof had been given along with the memorandum of appeal that the tax had been paid. Simultaneously, the application for condonation of delay was also dismissed. Against this order the assessee has filed the present appeal. The short question in this case is whether having made the deposit even before the appeal was filed and well within the period of limitation, the assessee could be deprived of his right of appeal under section 9 of the Act. Alternatively, it is to be considered whether the proof of the payment of the admitted tax had to accompany the memorandum of appeal as required by r. 66(2) and on failure to furnish such proof, the appeal itself became incompetent. In support of his order the Assistant Commissioner relied on a decision of the Allahabad High Court reported in Swastika Tannery of Jaimau vs Commissioner of Sales tax, U.P. Lucknow(1) in which the learned Chief Justice of that Court and another learned Judge have laid down that the proof of payment must be as required by the rules and, therefore. the memorandum of appeal ouaht to be accompanied by the Challan showing payment of tax before the appeal can be said to be competent. We shall refer to that ruling presently. in this appeal, learned counsel for the assessee has relied upon a number of authorities in which the interpretation runs (1) (1963) 14 S.T.C. 518. 508 counter to the decision of the learned Chief Justice just adverted to and had contended that section 9 of the Act does not create the bar which the ruling and the Assistant Commissioner 's reliance on that ruling has created in the way of the appeal. His contention is that if satisfactory proof is given before the appeal is heard or at any rate before it is admitted, the requirement of law under section 9 is satisfied and that it is not always incumbent to produce a challan with the memorandum of appeal, r. 66(2) notwithstanding. It is this point which has given rise to the great controversy before us and the matter was argued at great length both at the time of grant of special leave and today. To consider the matter, we may begin by quoting section 9 of the Act. Section 9 which gives the power of appeal provides as follows: (1) Any dealer objecting to an order allowing 'or refusing an application for exemption certificate under cl. (b) of sub section (1) of section 4 or to an order refusing an application under section .30 or to an order imposing a penalty under section 15 A or to an assessment made under section 7, 7 A, 7 B, 18 or 21, may within 30 days from the date of service of the copy of the order or notice of assessment, as the case may be, appeal to such authority as may be prescribed; Provided that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due, or of such instalments thereof as may have become payable: Under section 24 of the Act power has been conferred upon the State ,"Government to make rules to carry out the purposes of the Act and in particular, to provide for all matters expressly required or allowed by this Act to be prescribed. Under sub section (4) of that section, it is provided that all rules made under the section shall be published in the Gazette and upon such publication, shall have effect immediately as if enacted in the Act and under the 5th sub section, it is further provided that all rules made under the Act shall be laid for fourteen days before the Legislature as soon as possible after they are made and shall be subject to such modifications as the Legislature may make during the session in which . they are so laid. In exercise of this power, the State Government has framed the U.P. Sales tax Rules, 1948. Rules 66 and 67 of these rules bear, among others, upon appeals. Sub r. 1 of r. 66 provides for the content of the appeal by stating what the memorandum of appeal shall specify in relation to the name and address of the appellant etc. We are not concerned with it. Sub r. 509 2 then states that "the memorandum of appeal shall be accom panied by. . a challan showing deposit in the Treasury of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable. " Rule 67 days down how the appeals have to be presented. Sub r. 1 provides that the memorandum of appeal shall be presented by the appellant or his lawyer or duly authorised agent to the Assistant Commissioner (Judicial) or may be sent by registered post addressed to the Assistant Commissioner,(Judicial).Sub r 2 provides that if the memorandum of appealis in order. the Assistant Commissioner, (Judicial) shall admitit and on admission. the Reader of the Assistant Commissioner (Judicial) shall endorse thereon the date of its presentation and shall register it in a book to be known as Register of Appeals. The third sub rule says that if the memorandum of appeal is not in order. it may be rejected or returned after the necessary endorsement on its back about the presentation and return to the applicant for correction and representation within the time to be fixed by the Assistant Commissioner (Judicial) or be amended then and there. Lastly sub r. 4 provides that on admission of an appeal. the Assistant Commissioner (Judicial) shall fix a date for hearing of the appeal and may send for the record,. if necessary. The contention of counsel for the assessee is that he had fully complied with the requirements of section 9 although not strictly as laid down in r. 66 which he characterised as directory. The contention on the other side is that the rule lays down the only manner of compliance with the provisions of the Section and in support Counsel for the State refers to the provisions of section 24(4) and (5) in which it is stated that the rules on being framed become part of the Statute. From this, counsel for the State infers that there is no other modeof compliance except the one stated in the rules and as in thiscase that mode of compliance was not followed, the appeal is rightly considered to be incompetent and properly rejected. This in main represents the essence of the controversy between the parties. To begin with it must be noticed that the proviso merely requires that the appeal shall not be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due. A question thus arises what is the meaning of the word 'entertained ' in this context? Does it mean that no appeal shall be received or filed or does it mean that no appeal shall be admitted or heard and disposed of unless satisfactory proof is available ' The dictionary meaning of the word 'entertain ' was brought to our notice by the parties, and both sides agreed that it means either "to deal with or admit to consideration". We are also of the same opinion. The question, therefore, is at what stage can the appeal be said to be entertained for the purpose of the appllication of the proviso? Is it 510 entertained when it is tiled or is it 'entertained ' when it is admitted and the date is fixed for hearing or is it finally 'entertained ' when it is heard and disposed of? Numerous cases exist in the law reports in which the word 'entertained ' or similar cognate expressions have been interpreted by the courts. Some of them from the Allahabad High Court itself have been brought to our notice and we shall deal with them in due course. For the present we must say that if the legislature intended that the word 'file ' or 'receive ' was to be used, there was no difficulty in using those words. In some of the statutes which were brought to our .notice such expressions have in fact been used. For example. under Order 41. rule I of the Code of Civil Procedure it is stated 'that a memorandum shall not be filed or presented unless it is accompanied etc. ; in section 17 of the Small Causes Courts Act, the expression is 'at the time of presenting the application '. In sec. 6 .of the Court Fees Act, the words are 'file ' or 'shall be received '. It would appear from this that the legislature was not at a loss for words if it had wanted to express itself in such forceful manner as is now suggested by counsel for the State. It has used the word 'e entertain ' and it must be accepted that it has used it advisedly. This word has come in for examination in some of the cases of the Allahabad High Court and we shall now refer to them. In Kundan Lal vs Jagannath Sharma(1) the Court was concerned with Order 21, rule 90, of the Code of Civil Procedure which bad been amended by the High Court by changing the pro visions of the original Code. The changed rule is as follows: "Provided that no application to set aside the sale shall be entertained: (a) upon any ground which should have been taken by the applicant on or before the date on which the sale proclamation was drawn up: (b) Unless the applicant deposits such amount not exceeding 12 1/2 " of the sum realised by the sale or furnishes such security as the court may in its discretion fix, except when for reasons to be recorded it dispenses with the requirements of this clause. . " The word 'entertain ' is explained by a Divisional Bench of the Allahabad High Court as denoting the point of time at which an application to set aside the sale is heard by the court. The expression 'entertain ', it is stated. does not mean. the same thing as the filing of the application or admission of the application by the court. A similar view was again taken in Dhoom Chand Jain vs Chamanlal Gupta & Anr.(2) in which the learned Chief (1) A.I.R. 1962 All. 547. (2) A.LR. 1962 AU. 511 Justice Desai and Mr. Justice Dwivedi gave the same meaning to the expression 'entertain '. It is observed by Dwivedi J. that the word 'entertain ' in its application bears the meaning 'admitting to consideration ', and therefore when the court cannot refuse to take an application which is backed by deposit or security, it cannot refuse judicially to consider it. In a single bench decision of the same court reported in Bawan Ram & Anr. vs Kunj Beharilal(1) one of us (Bhargava, J.) bad to consider the same rule. There the deposit had not been made within the period of limitation and the question had arisen whether the court could entertain the application or not. It was decided that the application could not be entertained because proviso (b) debarred the court from entertaining an objection unless the requirement of depositing the amount or furnishing security was complied with within the time prescribed. In that case the word 'entertain ' is not interpreted but it is held that the Court cannot proceed to consider the application in the absence of deposit made within the time allowed by law. This case turned on the fact that the deposit was made out of time. In yet another case of the Allahabad High Court reported in Haji Rahim Bux & Sons and Ors. vs Firm Samiullah & Sons(2) a division bench consisting of Cheif Justice Desai and Mr. Justice section D. Singh interpreted the words of 0. 21, r. 90, by saying that the word 'entertain ' meant not"receive ' or 'accept ' but 'proceed to consider on merits ' or 'adjudicate upon '. In our opinion these cases have taken a correct view of the word 'entertain ' which according to dictionary also means 'admit to consideration '. It would therefore appear that the direction to the court in the proviso to section 9 is that the court shall not proceed to admit to consideration an appeal which is not accompanied by satisfactory proof of the payment of the admitted tax. This will be when the case is taken up by the court for, the first time. In the decision on which the Assistant Commissioner relied, the learned Chief Justice (Desai C.J.) holds that the words 'accompanied by ' showed that something tangible had to accompany the memorandum of appeal. If the memorandum of appeal had to be accompanied by satisfactory proof, it had to be in the shape of something tangible, because no intangible thing can accompany a document like the memorandum of appeal. In our opinion, making 'an appeal ' the equivalent of the memorandum of appeal is not sound. Even under 0. 41 of the Code of Civil Procedure. the expressions "appeal" and "memorandum of appeal" are used to denote two distinct things. In Wharton 's Law Lexicon, the word "appeal" is defined as the judicial examination of the decisions by a hi her Court of the decision of an inferior court. The appeal is the judicial examination; the memorandum of appeal contains the rounds on which the judicial examination is invited. (1) A.I.R. 1961 All. 42. (2) A.I.R. 1963 All. 512 For purposes of limitation and for purposes of the rules of the Court it is required that a written memorandum of appeal shall be filed. When the proviso speaks of the entertainment of the appeal, it means that the appeal such as was filed will not be admitted to consideration unless there is satisfactory proof available of the making of the deposit of admitted tax. Now the complicating factor is the existence of the rule, and here, the divergence of submission arises on whether the rules can be regarded as mandatory or merely directory. It is quite obvious that the section as it stands only requires that at the time of the consideration of the appeal, There should be satisfactory proof that the admitted tax has been deposited. It only says that no appeal shall be entertained unless accompanied by satisfactory proof of the payment of the tax. This satisfactory proof may take any form; in fact in the present case satisfactory proof was tendered in the shape of a certificate from the Sales tax Officer that the admitted tax had been deposited and well within time. Under section 9 and its proviso as they stand, it is quite obvious that 'entertainment ' means the point of time when the appeal is being considered. There was thus satisfactory proof in the present case. No doubt, proof was not tendered following the method required by the rules but the question is whether the rules can make the section narrower by prescribing a particular mode. The section is general; it provides that the court should accept satisfactory proof. The rule requires that the memorandum of appeal shall be accompanied by the challan showing payment of tax. The rule lays down one uncontestable mode of proof which the Court will always accept but it does not exclude the operation of the proviso when equally satisfactory proof is made available to the officer hearing the appeal and it is proved to his satisfaction that the payment of the tax has been duly made and in time. In this sense, the rule can be regarded as directory since it lays down one of those modes which will be unquestioned for its validity. The other modes of proof are not necessarily shut out. It is to be remembered that all rules of procedure are intended to advance justice and not to defeat it. Here the right of appeal has been made subservient to the payment of the admitted tax. If the admitted tax is paid and there is proof available that it has been so paid, there exists no reason to create a second impediment in the way of the appeal. No doubt, rule makes it easy for the assessee to bring satisfactory proof in an uncontestable manner, but the provision of the rule is not to the exclusion of other satisfactory modes of proof. Suppose for instance that the I challan was lost and the time for the filing of the appeal was expiring, could or could not the person concerned say that he had the certificate but had lost it and that he would produce a copy of the challan from the Treasury or obtain a certificate from the 513 Treasury Officer. Could he not obtain from the bank the discharged cheque by which the amount of tax was deposited by him and produce it as the discharged counterfoil of payment. All those modes of proof will be equally, irrefutable. In the present case the,, assessee had in his petition of appeal 'stated that the amount of tax had been paid and had fortified the 'Statement by an affidavit. Before the hearing he produced, a certificate from the. Sales tax Officer that the tax had, been paid. The Assistant Commissioner ought therefore to have proceeded: with the appeal because it was accompanied by satisfactory proof of,; the payment of the tax. To hold otherwise would put a premium upon a technicality which we do not see will advance the case either for the collection of the tax or,, for the: administration of justice. , The rule, as we have stated, indicate& what :is the best and easiest method of achieving satisfactory proof. The certificate from the Sales tax Officer, however, is as good proof as the challan from the Treasury and if such certificate was produced at the admission of the appeal, how the memorandum of appeal can be said to be defective under the section as it stands. In these circumstances, we hold that the rule is merely directory and indicates only one of the modes of satisfactory proof. The distinction made by the learned Chief Justice between the tangible and intangible objects does not in our opinion fall for consideration in the present case. If one holds that by 'entertainment ' is meant the time of admission of the appeal, satisfactory proof may be furnished at the time of admission of the appeal. We are of opinion that by the word "entertain" here is meant the first occasion on which the court takes up the matter for consideration. It may be at the admission stage or if by the rules of that Tribunal the appeals are automatically admitted, it will be the time of hearing of the appeal. But on the first occasion when the court takes up the matter for consideration, satisfactory proof must be presented that the tax was paid within the period by limitation available for the appeal. , In the present case when the Assistant Commissioner took up the appeal for consideration, satisfactory proof was available in the shape of a certificate which even today is not denied. In our opinion the Assistant Commissioner was wrong in declining to consider the appeal in the presence of such uncontestable proof. It remains to point out why we did not insist upon the assessee exhausting his other remedies under the Act before coming to this Court. It was made to appear to us that there is a right of revision and right of reference to the High Court ' in all such cases and that this remedy was not resorted to by the assessee before making a petition for special leave in this Court. We were taken through a number of cases in which it has been laid down by this Court that this Court will not ordinarily grant special leave to appeal against an order when other remedies are available and L/JN)6 SCI No 7 514 have not been exhausted. But there is no inflexible rule that 'this Court will never entertain an appeal and numerous instances have occurred in, this Court where such appeals have been admitted. It would have been ,futile in this. case for the assessee to have gone to the court , of revision which was bound by the ruling of :the Allahabad High, Court reported in Swastika Tannery of Jaimau v Commissioner of . Sales tax U.P. Lucknow (1 ') and ' it would have been equally futile to, have. gone to the High Court; on a reference. The matter was more easily disposed of by giving special leave in this Court and we therefore felt that this was one of those extraordinary cases, in which the ends of justice would be better served, by avoiding a circuity of action and by dealing with this matter in this Court directly. It is for this reason that we granted special leave to appeal. The appeal shall therefore be allowed and the appeal shall be remitted to the Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur, for disposal in accordance with law. There shall be no order as to costs. Y.P. Appeal allowed and remitted. (1) (1963) 14 S.T.C. 518.

The appellant assessee filed a memorandum of appeal to the Assistant Commissioner, Sales Tax, stating therein that the amount of admitted tax had been paid and forfeited the statement by an affidavit. Before the hearing, he produced a certificate from the Sales Tax Officer that the tax had been paid. The Assistant Commissioner relying on the Allahabad High Court 's decision in Swastika Tannery, Jaimau vs Commissioner of Sales tax, U.P. rejected as defective the memorandum of appeal, holding that it was not accompanied by the challan showing the deposit of admitted tax under section 9 of the Uttar Pradesh Sales Tax Act, 1948 and r. 66 of the U.P. Sales tax Rules. Against this order the assessee directly filed special leave to appeal to this Court without exhausting the remedies of revision and reference provided in the Act. This Court granted Special Leave and; HELD:The appeal must be allowed. (i) By the word "entertain" in the proviso to section 9 is meant the first occasion on which the Court take up the matter for consideration. It may be at the admission stage or if by the rules of that Tribunal, the appeals are automatically admitted, it will be the time of hearing of the appeal. But on the first occasion when the court takes up the matter for consideration, satisfactory proof must be presented that the tax was paid within the period of limitation available for the appeal. Rule 66(2) lays down one uncontestable mode of proof which the Court will always accept but it does not exclude the operation of the proviso when equally satisfactory proof is made available to the officer hearing the appeal and it is proved to his satisfaction that the payment of the tax has been duly made and in time. [512E F; 513E G] In the present case, when the Assistant Commissioner took tip the appeal for consideration, satisfactory proof was available in the shape of a certificate. Swastika Tannery of Jaimau vs Commissioner of Sales tax, U.P. Lucknow, (1963) 14 S.T.C. 518, disapproved. Kundan Lal vs Jagannath Sharma, A.I.R. 1962 All. 547; Dhoom Chand Jain vs Chaman Lal Gupta and Anr. A.I.R. 1962 All. 42: Haji Rahim Bux & Sons & Ors. vs Firm Samiullah & Sons, A.I.R. 1963 All. 320, approved. (ii) Though this Court would not ordinarily grant special leave to appeal against an order when other remedies were available and had not been exhausted, there is no inflexible rule that this Court will never entertain such an appeal. It would have been futile in this case for the assessee to have gone to the court of revision which was bound by the decision in Swastika Tannery of Jaimau vs Commissioner of Sales tax, U.P. and it would have been equally 506 futile to have gone to the High Court on a reference. The matter was more easily disposed of by giving special leave in this Court and this was one of those extra ordinary cases in which the ends of justice would be better served, by avoiding a circuity of action and by dealing with this matter in this Court directly. [513H 514C]

N: Criminal Appeal No. 144 of 1972. Appeal by Special Leave from the Judgment and order dated 1 2 1972 of the Madhya Pradesh High Court in Criminal Revision No. 709/71. R. Nagarathnam for the Appellant. section K. Gambhir, Miss B. Ramrakhiani and J. M. Khanna for the Respondent. The Judgment of the Court was delivered by KAILASAM, J. This appeal is preferred by Dr. section L. Goswami by special leave granted by this Court against the judgment of the High Court of Madhya Pradesh at Jabalpur in Criminal Revision No. 709 of 1971. Criminal Revision No. 709 of 1971 was filed by the appellant 387 before the High Court for quashing the order of the Magistrate, 1st , Class, Jabalpur committing the appellant to Sessions for trial under section 466 read with section 120 B of the Indian Penal Code. The appellant was prosecuted before the Special Judge, Jabalpur, in Criminal Case No. S of 1967 for an offence under section 5 (1) (d) of the Prevention of Corruption Act, 1947, in connection with the defalcations of Government funds. In that case one Dr. section C. Barat was examined as a defence witness. The appellant was convicted and an appeal against his conviction before the High Court failed. The appellant obtained special leave from this Court to appeal against the order of the High Court. During the pendency of the appeal before the Supreme Court the High Court was required to prepare a paper book for use in the Supreme Court. It is alleged that when the paper book was being prepared in the Supreme Court section of the High Court the appellant Dr. Goswami entered into a conspiracy with two of the translators and tampered with the original deposition of Dr. section C. Barat, D.W. 1. The Additional Registrar of the High Court field a complaint before the First Class Magistrate, Jabalpur, against the appellant for an offence under section 466 read with section 120 B of the Indian Penal Code. The case was taken on file by the Magistrate as Criminal Case No. 1924 of 1971. Against the two persons who were alleged to have conspired with the appellant in tampering with the deposition of Dr. Barat a challan was filed by the police before the same First Class Magistrate. The Magistrate by a common order on 15th November, 1971 committed the appellant as well as two others to the Sessions Court to take their trial for offences under section 466 read with section 120 B of the Indian Penal Code. The appellant and another with whom we are not concerned preferred a revision petition against the order of his committal before the High Court. The High Court dismissed the Fr revision filed by the appellant and hence this appeal. The main contentions that are raised in this appeal are: (i) The Magistrate erred in taking cognizance of an offence under section 466 of the Indian Penal Code read with section 120 B, Indian Penal Code. without sanction of the Government under section 196 A (2) of the Criminal Procedure Code; and (2) the offence, if any, was not committed in any court in respect of a document produced or given in evidence in such proceeding as required under section 195(i) (c) of the Code of Criminal Procedure. We will take up the first contention urged by the learned counsel for 11 the appellant, namely that the trial court was in error in taking cognizance of the offence without a complaint by the State Government when the 388 offence charged is one of conspiracy under section 120 B of the Indian Penal Code as required under section 196 A(2) of the Criminal Procedure Code. Section 196 A(2) reads as follows: "196 A. No court shall take cognizance of the offence! of criminal conspiracy punishable under section 120 B of the Indian Penal Code. (1) * * * * (2) in a case where the object of the conspiracy is to commit any non cognizable offence, or a cognizable offence not punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards unless the State Government, or a Chief Presidency Magistrate or District Magistrate empowered in this behalf by the State Government had by order in writing consented to the initiation of the proceedings; Provided that where the Criminal Conspiracy is one to which the provisions of sub section (4) of section 195 apply no such consent shall be necessary. " Section 466 deals with a non cognizable offence and the sub clause (2) to section 196A provides that where the object of the conspiracy is to commit a non cognizable offence an order in writing consenting to the initiation of proceedings is necessary by the State Government or the Chief Presidency Magistrate or the District Magistrate empowered in this behalf by the State Government. No such consent in writing was obtained in this case. An exception to this requirement is Made by the Proviso which states that if the criminal conspiracy is one to which the provisions of sub section (4) of section 195 apply no such consent shall be necessary. It is, therefore, necessary to determine whether the offence complained of is one that falls under section 195(4) in which case consent for initiation of the proceedings is not necessary. Section 195(1) (c) and section 195(4) which are necessary for the discussion may be extracted. "195. (1) No Court shall take cognizance (a) * * * * (b) * * * * (c) of any offence described in Section 463 or punishable under Section 471, Section 475 or Section 476 of the same Code, when such offence is alleged to have been 389 committed by a party to any proceeding in any Court in respect of a document produced or given in evidence in such proceeding, except on the complaint in writing of such Court, or of some other Court to which such Court is subordinate. (2) * * * * (3) * * * * (4) The provisions of sub section (1), with reference to the offences named therein, apply also to criminal conspiracies to commit such offences and to the abetment of such offences, and attempts to commit. (5) * * * * Sub section (4) makes the provisions of sub section (1) with reference to the offences named applicable to criminal conspiracy to commit such offences also. If the offence falls under provisions of subsection (1) to Section 195 then criminal conspiracy to commit such offences would also fall under section 195(1) and require the complaint in writing by the court before the offence can be taken cognizance of. The requirements of section 195(1)(C) are: (1) The offence must be one as described in section 463 or punishable under sections 471, 475 or 476 of the I.P.C. (2) Such offences Should be alleged to have been committed by a party to any proceeding in any court; (3) Such offence should be in respect of a document produced or given in evidence in such proceeding. The offence for which the appellant is committed to take his trial is that there was consent of the appellant also in committing the conspiracy for committing forgery of the record by tampering the evidence of Dr. Barat while the records were being prepared by the High Court for being sent to the Supreme Court for use in the appeal pending before the Supreme Court. The first requirement is that the offence should be one as described in section 463 or punishable under section 471, section 475 or section 476 of the Indian Penal Code. It was submitted that as section 466, Indian Penal Code, is not one of the sections mentioned, the offence will not fall under the provisions of section 195(1) (c) 390 and the section will not apply. In support of this view a decision of his Court in Govind Mehta vs State of Bihar(1), was relied on. In that case, on a complaint by the District Public Prosecutor the appellant before this Court was committed to the Sessions to take trial under sections 167, 466 and 467 of the Indian Penal Code. One of the contentions raised before this Court was that the offence under section 466, Indian Penal Code, is not covered by clauses (b) and (c) of section 195(1) and therefore section 195 does not operate as a bar to taking cognizance of an offence under section 466, Indian Penal Code. this Court after agreeing with the view of the High Court that section 195(1) (b) or (c) is no bar to the Magistrate taking cognizance for an offence under section 167 observed: "The offence under section 466 of the Penal Code is, admittedly, not covered by clause (b) or clause (c) of section 195(1) of the Code. therefore, that section does not operate as a bar in respect of this office. " Again at p. 785 this Court observed: "Section 463 of the Penal Code is, no doubt, taken in by Clause (c) of Section 195(1) of the Code. Even on the basis that Section 465 of the Penal Code will also be covered by Clause (c) as the offence, under Section 463 is dealt with therein, nevertheless, Clause (c) will not operate as a bar to the jurisdiction of the Magistrate in taking cognizance of the said offence is not alleged to have been committed 'by a party to any proceeding in any court. ' We have also referred to the fact that the appellant has been committed only for the offence under Sections 167, 466 and 471 of the Penal Code. Section 465 of the Penal Code is not the subject of the committal order. " We have given our careful consideration to the view expressed in the above decision that section 466 of the Indian Penal Code is not covered by clause (c) of section 195(1) of the Criminal Procedure Code. We regret our inability to subscribe to this view. At p.785 of the Report the Court took the view that the section 465 of the Indian Penal Code is not specifically mentioned in section 195(1) (c) of the Criminal Procedure Code as the offence under section 463 Indian Penal Code is dealt with in section 465, Indian Penal Code, clause (c) of section 195(1) will not operate as a bar to the Magistrate taking cognizance the offence. The Court, though section 465 is not specifically mentioned in section ;195(1) (c), held that section 195(1) (c) Is applicable as an offence under section 463 is dealt with under section 465, Indian Penal Code. On the same reasoning section 466 should also be held to come within the purview of section 195(1)(c), Criminal Procedure Code, as the offence under section 463 is dealt with in section 466. Section 463, Indian Penal Code, defines forgery. The elements of (1) [1971] Supp. S.C.R. 777. 391 forgery are: (1) The making of a false document or part of it; (2) Such making should be with such intention as is specified in the section. Section 464 states when a person is said to make a false document which is one of the requirements under section 463. Section 465 provides the punishment for an offence under section 463. Section 466 is an aggravated form of forgery in that the forgery should relate to a document specified in the section. One of the documents specified is a document purporting to be a record or proceeding of or in a Court of Justice. Section 466, Indian Penal Code, is therefore an offence as described in section 463 which is committed in relation to a record or proceeding of or in a court of justice. The offences that fall within the purview of section 195(1)(c) are offences described in section 463 and offences punishable under sections 471, 475 or 476 of the Indian Penal Code. The language of section 195(1)(c) is very significant for while referring to sections 474, 475 or 476, Indian Penal Code, it uses the word publishable, in the case of section 463 the words used are the 'offences described in section 463 '. An offence under section 466 is an offence which falls within the description of section 463 as the offence under section 463 is dealt with therein. Section 195(1)(a) of the Criminal Procedure Code uses the words "of any offence punishable under section 172" while in clause (b) the words used are "offence punishable under any of the following sections" mentioned therein. In clause (c) as already pointed out the words used are "of any offence described in section 463 or punishable under section 471, section 475 or section 476 of the same Code". Thus a clear distinction is maintained in the section between offences punishable under various sections mentioned and the offences described in section 463. Even on the test laid down by this Court in Govind Mehta vs State of Bihar (supra) section 466 would be included within the purview of section 195(1) (c). We are, therefore, of the view that the decision that section 466 of the Indian Penal Code is not covered by clause (b) or clause (c) of section 195(1) is erroneous and not good law. The question of law was not considered and the decision was reached on an admission made by the parties. We will now deal with the other requirements of section 195 (1) (c) namely that The offence should be alleged to have been committed by a party to any proceeding and that it should be in respect cf a document produced or given in evidence in such proceeding. It is admitted that the appellant was a party in the appeal that he preferred against his conviction before the High Court but the appeal was decided against him and the conviction confirmed. Special leave was granted against his conviction and for hearing of the appeal before the 392 Supreme Court the paper book was being prepared by the High Court. It was during that time that it is alleged that the appellant entered into a conspiracy and tampered with the evidence of one of the defence witnesses which is a record of the court. The appellant was a party to a proceeding in the High Court when the appeal was heard but the document complained of as having been tampered with i.e. the evidence of the defence witness, was not produced or giver in evidence in the appeal before the High Court. The document was certainly not produced or given in evidence in the High Court proceedings. The alleged tampering was after the hearing of the appeal was concluded. No doubt, the tampering was in a proceeding in relation to the preparation of the record whether such tampering would be in relation to a proceeding in Supreme Court in respect of a document produced or given in evidence before it does not arise for consideration before us as the complaint in the case is filed only by the High Court. In Abdul Khader and ors. vs Meera Saheb(1) a Bench of the Madras High Court held that where a decree against Certain defendants had been passed upon the oath of the plaintiffs and where 'the documents alleged to be forgeries have been put into Court but were not given in evidence it would not be an offence committed by a party lo any proceeding in any court in respect of a document given in evidence in such proceeding though the documents were put in court in a suit pending before it but were not given in evidence Subsequent to this decision section 195(1)(c) was amended so as to include documents "produced" in addition to documents given in evidence. In Pendyala Subbarayudu vs (Gudivada) Gopayya(2) if was held that it was indispensable that the offence committed must in some manner have affected the proceedings or had been designed to effect them or come to light in the course of them but an offence committed after their close is wholly outside the scope of the provision. We agree with the view expressed in the decision. In Nirmaljit Singh Hoon vs The State of West Bengal and Anr.(3) it was held that a document produced in a proceeding before the court during the investigation by the police ordered under section 156(3) of the Criminal Procedure Code would not be a document produced ill a proceeding before the court so as to attract the ban under section 195(1) (c) of the Criminal Procedure Code. This Court in a recent decision in Legal Remembrancer of Government of West Bengal vs Haridas Mundra(4) held that the requirement of section 195(1) (c) is that the document in question should be produced or given in evidence in the (1) I.L.R. 15 M d. 224. (2) A.l. R. (3) ; (4) ; 393 proceeding before the court. We find on the facts of the case that it has not been established that the document was produced or given in evidence in a proceeding before the court. The requirements of section 195(1)(c) having not been satisfied a complaint by the court in writing is not necessary. Equally, under sub section (4) to section 195 relating to criminal conspiracy to commit such offence a complaint by the court is not necessary. Therefore, section 196 A(2) is attracted and a complaint by the State Government or the Chief Presidency Magistrate or a District Magistrate compowered in this behalf by the State Government in writing consenting to the initiation of the proceedings for an offence under section 120 B, Indian Penal Code is necessary. As in this case no such order consenting to the initiation of proceedings was passed we accept the contention of the learned counsel for the appellant that the Magistrate had no jurisdiction to take cognizance of the offence against the appellant. In the result, we allow the appeal, reverse the judgment of the High Court and quash the order of committal passed by the Magistrate. First Class, Jabalpur. S.R. Appeal allowed.

On a complaint by the Additional Registrar of the Madhya Pradesh High Court alleging that, while the Paper Book in the Supreme Court appeal was being prepared, the appellant entered, into a conspiracy with two of the translators of the Court and tampered with the of original deposition of one Dr. section C. Barat (D.W. 1) in an earlier criminal case against the appellant which was under appeal in the Supreme Court for which the aforesaid paper book was being prepared, the First Class Magistrate committed the appellant and two others to the Sessions Court to take their trial for offences under section 466 read with section 120 B of the Penal Code. The appellant and another preferred a revision petition before the High Court against the said order of committal. The High Court dismissed the revision petition. Allowing the appeal by special leave, the Court ^ HELD : 1. An offence under section 466 I.P.C is covered by clause (c) of section 195(1) of the Criminal Procedure Code and comes within the purview of that section, as the offence under section 463 I.P.C. is dealt within section 466 I.P.C. Section 466 I.P.C. is on aggravated form of forgery in that the forgery should relate to a document specified in that section. Section 466 I.P.C., is therefore an offence as described in section 463 I.P.C. which is committed in relation to a record or proceeding of or in a court of justice. [390F, H, 391 A B] The offences that fall within the purview of section 195(1)(c) Criminal P C. are offences described in section 463 I.P.C. and offences punishable under section 471, 475 or 476 of the Penal Code. The language of section 195(1) (c) of the Crl. P.C. is very significant for while referring to sections 471, 475 or 476 I.P.C., it uses the word punishable in the case of section 463 I.P.C. the words are 'the offences described in section 463 '. An offence under section 466 I.P.C. is an offence which falls within the description of section 463 I.P.C., as the offence under section 463 I.P.C. is dealt with therein. [391B D] Section 195(1)(a) of the Criminal Procedure Code uses the words "of any offences punishable under section 172. " while in clause (b), the words used are "offences punishable under any of the following sections mentioned therein". In clause (e) the words are "of any offence described in section 463 or punishable under section 471, section 475 or section 476 of the same code". Thus a clear distinction is maintained in the section between offences 386 punishable under various sections mentioned and the offence described in section 463. Even on the test laid down in Govind Mehta vs State of Bihar , section 466 I.P.C. would be included within the purview of section 195(1)(c) of the Criminal Procedure Code. [391D E] Govind Mehta vs State of Bihar ; explained and over ruled. The requirement; of section 195 (1)(c) is that the document in question should be produced or given in evidence in the proceeding before the Court. The offence committed must in some manner have affected the proceedings or had been designed to affect them or come to light in the course of them, but an offence committed after their conclusion is wholly outside the scope of the provision. [392F H, 393A] Legal Remembrancer of Govt. Of West Bengal vs Hari Das. Mundra ; , applied. Pendyala Suhbarayudu vs Gudivada Gopayya A.I.R. 1932 Madras 290; approved. Nirmal Jit Singh Hoon vs State of West Bengal and Anr. ; and Abdul Khadar and ors. vs Meera Saheb I.L.R. ; referred to. In the instant case (a) section 196A(2) of the Criminal Procedure Code is attracted and a complaint by the State Government or the Chief Presidency Magistrate empowered in this behalf by the State Government in writing consenting to the initiation of the proceedings for an offence under section 120 l. P.C. is necessary. [393B] (b) The requirement of section 195(1)(c) having not been satisfied a complaint by the Court in writing is not necessary. [393A] (c) Equally under sub section (4) to section 195 relating to criminal conspiracy to commit such offence a complaint by the Court is not necessary. [393A]

Appeal No. 405 of 1957. Appeal from the judgment and order dated May 15, 1956, of the Calcutta High Court in I.T.R. No. 20 of 1953. section Mitra, B. Das and section N. Mukherjee, for appellants Nos. 2 to 41. A. N. Kripal and D. Gupta, for the respondent. November 23. The Judgment of the Court was delivered by HIDAYATULLAH, J. The point involved in this appeal is a very short one; but it requires a long narration of facts to reach it. The appeal is against the judgment and order of the High Court of Calcutta dated May 15, 1956, arising out of an Income tax Reference. By the Calcutta Municipal Act VI of 1863, there was established a Corporation under the name of "The Justices of the Peace for the Town of Calcutta". By a notification issued on November 2, 1864, one square mile of land forming part of the Panchannagram Estate was acquired by the Government of Bengal at the instance of the Justices. Section CXII of the Municipal Act provided that the Justices might "agree with the owners of any land for the absolute purchase thereof. . for any other purpose whatever connected with the conservancy of the Town". Under section CXIII, it was provided that if there was any hindrance to acquisition by private treaty, the Government of Bengal upon the representation of the Justices would compulsorily acquire the land and vest 600 such land in the Justices on their paying compensation awarded to the proprietor. The action which was taken by the notification was under section CXIII of the Municipal Act, and the acquisition was under Act VI of 1857, an Act for the acquisition of land for public purposes. The Panchannagram Estate was permanently settled under Regulation 1 of 1793. After the acquisition, the proprietor of Panchannagram Estate was granted abatement of land revenue assessed on the Estate to the extent of Rs. 386 7 1. This represented the proportionate land revenue on the land acquired. In August, 1865, the Justices were required to pay Rs. 54,685 2 10 as compensation payable to the proprietor and to other persons holding interest in the land. Another piece of land which is described as an open level sewer, was also acquired about the same time, and separate compensation was paid for it. With the amount of conveyance charges, the total compensation thus paid by the Justices was Rs. 57,965 8 10. On October 27,1865, the Government called upon the Justices to pay a further sum of Rs. 7,728 13 8. This order has not been produced in the case; but from other correspondence, it is easy to see that the amount represented an amount capitalized at 20 years ' purchase of land revenue attributed to the area acquired, which, as has been stated above, came to Rs. 386 7 1. This payment was made on or about January 12, 1866. Similarly, another amount was paid in July of the same year for redemption of the land revenue in respect of the strip of land for the open sewer. On December 5, 1870, a conveyance was executed by the Secretary of State in favour of the Justices of the Peace. It was there stated, inter alia: "Whereas the Honourable the Lieutenant Governor of Bengal hath thought fit that the said land so acquired as aforesaid would be vested in the said Justices of the Peace for the Town of Calcutta a Corporation created by and authorised to hold land under the said Act No. VI of 1863 of the Council of the Lieutenant Governor of Bengal to the end and intent 601 that the said land may be held by the said Justices for a public purpose, namely, for the conservancy of the Town. . and subject in every way to the same ' Act but free and discharged from all payment of land revenue, land tax and all and every tax or imposition in the nature of revenue derivable from land payable to Government in respect thereof; NOW THIS IN DENTURE WITNESSETH. .to hold the saidpieces of land, hereditaments and premises intended to be conveyed with the appurtenances except as aforesaid unto the said Justices of the Peace for the Town of Calcutta and their successors for ever free and clear and for ever discharged from all Government land revenue whatever or any payment or charge in the nature thereof to the end and intent that the said land may be used for a public purpose namely for the conservancy of the town upon the trusts and subject to the powers, provisions, terms and conditions contained in the said Act No. VI of 1863 of the Council of the Lieutenant Governor of Bengal and to the rules heretofore passed or hereafter to be passed by the Government of Bengal under the the said last mentioned Act;". On January 23, 1880, a temporary lease of the land known as the 'Square Mile ' was granted by the Justices of the Peace to the predecessors in title of the appellant (assessee), Srish Chandra Sen who has, since the filing of the appeal, died, leaving behind 40 legal representatives who have been shown in the cause title of the appeal. The lease was renewed for further periods, and the rent was also progressively increased. The conservancy arrangements for which the land 'was held were carried out, but, the lessee had the right to carry on cultivation with the aid of sewage. The assessee derived from this land various kinds of income, some being purely agricultural and some, non agricultural. For the assessment year 1942 43, the total agricultural income was computed at Rs. 99,987 9 6, and non agricultural income, at Rs. 12,503 8 0. Agricultural income tax was charged by the State of Bengal under the Agricultural Income 602 tax Act, on the agricultural income less expenses. For the assessment years, 1943 44, 1944 45, 1945 46 and 1946 47, the assessments were made along similar lines. In 1947, the Income tax Officer reassessed the income for the assessment year, 1942 43 after reopening the assessment under section 34 of the Income tax Act on the ground that the so called agricultural income had escaped assessment to income tax under the Indian Income tax Act. Assessments for the other years, 1943 44, 1944 45, 1945 46 and 1946 47 were also reopened, and the income in those years wag also similarly reassessed. The assessee appealed to the Appellate Assistant Commissioner against all these orders of the Income tax Officer, but his appeals failed. Against the orders of the Appellate Assistant Commissioner, appeals were filed before the Income tax Appellate Tribunal (Calcutta Bench). The Tribunal dealt with the assessment for 1942 43 separately, and allowed the appeal as regards assessment for that year. It held that the reassessment was improper under section 34 of the Income tax Act, because the Income tax Officer had not proceeded on any definite information but in the course of a "roving enquiry". The Tribunal also held that the income was exempt from taxation to income tax under section 4(3)(viii) of the Act, inasmuch as this income was derived from land used for agricultural purposes, which continued to be assessed to land revenue. In the appeals arising out of assessments for the subsequent years, a common order was passed by the Tribunal, remanding the appeals to the Appellate Assistant Commissioner for a rehearing. The Tribunal stated that the appellants had filed a number of documents to establish that land revenue was assessed on the land which, the Department contended, proved the contrary. The Tribunal felt that the matter should be reconsidered by the Appellate Assistant Commissioner, and hence remanded the cases. The Appellate Assistant Commissioner in the rehearing held that the land in question continued subject to land revenue, and that the lump sum payment was merely payment of revenue in advance. He accordingly allowed the appeals, and ordered exclusion of the income 603 from the assessments for the four years in question. On appeal by the Department, the Tribunal changed its opinion, and came to the conclusion that the ' payment of a lump sum was not a payment in advance of the land revenue due from year to year but was land revenue capitalised. It referred to the deed by which the proprietorship in the land was ves ted in the Corporation by the Secretary of State, and stated that by the document and the capitalisation of land revenue, the demand for land revenue was extinguished for ever. It accordingly allowed the appeals, and restored the orders of assessment made by the Income tax Officer. The assessee next moved the Tribunal for a reference setting out a number of questions which, he contended, arose out of the Tribunal 's order. The Tribunal referred the following question of law for the opinion of the High Court: "Whether on the facts and in the circumstances of this case the Tribunal 's conclusion that the land was not assessed to land revenue within the meaning of section 2(1)(a) of the Indian Income tax Act is justified?" The reference was heard by Chakravarti, C. J., and Sarkar, J., (as he then was). In an elaborate judgment, the learned Chief Justice upheld the conclusions of the Tribunal, and answered the question in the affirmative. Sarkar, J., in an equally elaborate order expressed his doubts about the correctness of the Chief Justice 's reasons, but declined to disagree with him. The question that arises in this case, as we have stated in the opening of this judgment, is a very short one. It is an admitted fact that by payment of ' a lump sum the liability to pay land revenue was redeemed and no land revenue was de manded or was ever demandable from the Justices or their assigns in perpetuity. The contention of the assessee is that this redemption saved the Justices from the liability for payment but did not affect the assessability of the land to revenue under Regulation I of 1793. Unless, it is contended,. there was a cancellation of the assessment, a,% is to be found in the 604 Land Tax and Tithe Redemption Acts in England, the liability must be deemed% to continue and land would still be assessed to land revenue for purposes of section 2(1)(a) of the Indian Income tax Act. That section reads as follows: "2(1) 'Agricultural income ' means (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in (the taxable territories) or subject to a local rate assessed and collected by Officers of (the Government) as such". It is not denied that both the conditions, namely, "used for agricultural purposes" and "is either assessed to land revenue or subject to a local rate. . . have to co exist. It is admitted by the Department that there is no question of subjection to a local rate assessed and collected, in this case. The income derived from the land was from its use for agricultural purposes, and the first condition is thus satisfied. The dispute centres round the point whether the land .can be said to be assessed to land revenue, in spite of the lump sum payment in 1865. In the High Court, the matter was examined from three different points of view. The first was the effect of acquisition of the land by Government upon the continued assessability of the land to land revenue. The learned Chief Justice held that by the acquisition the assessment ceased to subsist. The second was the effect of the redemption of land revenue by the Justices by a lump sum payment. The learned Chief Justice was of opinion that it had the effect of cancelling the assessment. The last was the effect of the grant free from land revenue, about which the learned Chief Justice was of opinion that it freed the land from assessment to land revenue. Sarkar, J., agreed as to the first, but expressed doubts about the second and third propositions. According to the learned Judge, the acceptance of a lump sum payment in lieu of recurring annual payments was more a matter of agreement than a cancellation of assessment to land revenue. The matter has been argued before us from the 605 argument about the interpretation to be placed on the, conveyance by the Secretary of State which, according to him, only freed the Justices from 'payment ' of the assessed land revenue but did not cancel the assessment. No Act of Legislature bearing upon the power of Government to accept a Iump sum payment in lieu of the annual demands for land revenue has been brought to our notice. Counsel admitted that they were unable to find any such legislative provision. We have thus to proceed, as did the High Court, without having before us the authority of a legislative enactment. The only materials to which reference was made are: an extract from the explanatory notes in the Revenue Roll of the Touzi which shows that an abatement of land revenue pro tanto was granted to the proprietor of Panchannagram Estate, and a despatch from the Secretary of State for India (Lord Stanley) No. 2 (Revenue) dated December 31, 1858 recommending redemption of land revenue by an immediate payment of a sum of equivalent value, together with a Resolution of Government (Home Department No. 3264 (Rev) dated October 17, 1861) on permission to redeem the existing land revenue by the immediate payment of one sum equal in value to the revenue redeemed. By the resolution, it was provided that such redemption would be limited to 10 per cent of the total revenue in the Collectorate and the price to be paid was to be fixed at 20 years ' purchase of the existing assessment. It may be mentioned that in Despatch No. 14 dated July 9, 1862, the Secretary of State for India (Sir Charles Wood) did not agree with the earlier policy, but did not cancel it. It may thus be assumed that what was done was under the authority of the Crown, which was then paramount, which paramountcy included the prerogative to free land from the demand of land revenue with or without conditions. We have, therefore, to examine three things: the effect of acquisition on the continuance of the assessment to land revenue, the effect of redemption by a down payment on the same, 77 606 and the effect of the grant, free from land revenue, to the Justices. The acquistion was under Act VI of 1857. That Act provided in B. XXVI as follows: "When any land taken under this Act forms part of an estate paying revenue to Government, the award shall specify the net rent of the land including the Government Revenue, and the computed value of such rent: and it shall be at the discretion of the Revenue authorities either to pay over the whole of such value to the owner of the estate on the condition of his continuing to pay the jumma thereof without abatement; or to determine what proportion of the net rent shall be allowed as a remission of revenue, in which case a deduction shall be made from the said value proportionate to the value of such remission. " This provision only saved the Estate assessed to land revenue from liability to pay land revenue proportionately falling upon the land acquired compulsorily, subject to a like proportionate reduction in the amount of compensation payable to the proprietor of the estate, but the provision cannot be stretched to mean that the liability of the land actually acquired, to land revenue in the hands of grantees from the Government also ceased. Be that as it may, it is hardly necessary to view the present case from this angle at all, because, whether the land acquired continued to be subject to an assessment or must be deemed to be reassessed as a separate estate, the result would be the same if Government demand still subsisted on it, as, in fact, it did. There could have been no redemption of the liability by a down payment if no land revenue could have been demanded. The fact that the recurring liability was redeemed by a lump sum payment itself shows that in the view of Government as well as of the Justices, the 'Square Mile ' was still subject to the recurring demand and was thus still assessed to land revenue. It is, therefore, not profitable to investigate the effect of acquisition on the continued liability of the land to land revenue between the time there was acquisition and the vesting of the land in the Justices. For the above reason, we need not examine at 607 length the case in Lord Colchester vs Kewnoy where the acquisition by the Crown was held not to make, the area acquired immune from land tax, because the burden of the tax would then have fallen upon the remaining land situated in the unit from which it was acquired and on which unit a quota of the land tax was chargeable. Such a position does not arise here, because the Panchannagram Estate was given abatement and a lump sum was paid to free the land acquired from the liability to land revenue. Similarly, the decision of this Court in The Collector of Bombay vs Nusserwanji Rattanji Mistri and Others (2), where on the acquisition of some Foras lands held under Foras Land Act (Bombay Act VI of 1851) the Foras tenure was declared to have come to an end and on the same lands being resold by Government as freehold, they were declared not to be subject to assessment to which they were previously subject, is not very helpful. There do not appear to be any rules prior to 1875, which were framed under the Land Acquisition Act of 1870 (Act X of 1870) and which are to be found in the Calcutta Gazette of July 7, 1875, p. 818. If there were, they have not been brought to our notice. But a practice similar to the rules seems to have obtained under section XXVI of the Act of 1857. That Act also did not contain any provision for making rules, as are to be found in the subsequent Acts for compulsory acquisition of land. In the absence of any statutory law or rules, we must take the facts to be that after acquisition the Panchannagram Estate was given abatement of land revenue, and the demand for land revenue was transferred to the land acquired and granted to the Justices. At that stage, the liability to assessment remained, and it was that liability which was redeemed by a down payment. We next consider the effect of redemption. Learned counsel for the appellant contends that redemption in this connection means that by a single payment, the liability for periodical payments is saved but the assessment on the land remains uncancelled. He has cited Wharton 's Law Lexicon to show the meaning of (1) (2) ; 608 the word "redemption", which is "commutation or the substitution of one lump payment for a succession of annual ones: e.g. See the Land Tax and the Tithe Redemption Acts and many other statutes". Redemption is the act of redeeming which in its ordinary meaning is equal to bringing off a charge or obligation by payment. To what extent this redemption freed the land or its holder from the obligation depends not so much upon what the obligation was before redemption as what remained of that obligation after it. Here, the payment itself was meant to be "an immediate payment of one sum equal in value to the revenue redeemed" (vide the Resolution of Government dated October 17, 1861). By the down payment, the entire land revenue to be recovered from that land was redeemed. The payment was equal to the capitalised value of the land revenue. When such a payment took place, it cannot be said that the assessment for land revenue remained. The land was freed from that assessment as completely as if there was no assessment. Thenceforward, the land would be classed as revenue free, in fact and in law. In The Land Law of Bengal (Tagore Law Lectures, 1895) p. 81 section C. Mitra described these revenue free lands as follows: "There is another class of revenue free lands which comes within these rules laid down in the Registration and Tenancy Acts, namely, lands of which Government has, in consideration of the payment of a capitalised sum, granted proprietary title free in perpetuity from any demand of land revenue. " That this is what had happened here is quite apparent from the conveyance by the Secretary of State vesting the land in the Justices. It is significant that there is no mention of the payment of Rs. 7,728 13 8, nor of the assessability of the lands to land revenue. On the other hand, the deed of conveyance merely reaffirmed the position, which existed before by stating: ". to hold the said pieces of land, hereditaments and premises intended to be conveyed with the appurtenances except as aforesaid unto the said Justices of the Peace for the Town of Calcutta and their successors for ever free and clear and for ever discharged 609 from all Government land revenue whatever or any payment or charge in the nature thereof. " There can be no doubt that the land revenue was for ever extinguished and the land became free from land revenue, assessment in perpetuity. It cannot thereafter be said that the land was still assessed to land revenue. Mr. Mitra made a great effort to construe the operative part quoted above with the aid of the recital in the deed, where it was stated: ". but free and discharged from all payment of land revenue, land tax and all and every tax or imposition in the nature of revenue derivable from land payable to Government. He drew attention to the word 'payment ', and contended that what was saved was payment of land revenue. He argued that in case of ambiguity it was permissible to construe the operative portion of a deed in the light of the recitals, and cited Halsbury 's Laws of England, 3rd Edn., Vol. XI, p. 421, para. 680, Gwyn vs Neath Canal Co. (1) and Orr vs Mitchell (2). If there was any ambiguity in the operative portion of the deed, we may have taken the aid of the recitals. But there is no ambiguity in the deed. The history of redemption is a matter of record, and it is plain that Government was accepting a down payment and freeing land from land revenue. This is precisely what was done, and the result of the down payment is set out with great clarity in the deed itself, and it is that there was no land revenue assessed on or demandable from that land. In fact, no demand or payment or charge in the nature of land revenue could ever be made on it. In view of this, it is, in our judgment, quite satisfactorily established that this land was not assessed to land revenue and the income from it did not fall within section 2(1)(a) of the Income tax Act. The answer given by the High Court was thus correct. In the result, the appeal fails, and will be dismissed with costs. (1868) L R. Appeal dismissed (2) , 254.

By a notification dated November 2, 1864, a piece of land forming part of the Panchannagram Estate which was permanently settled under Regulation 1 of 1793, was acquired by the Government of Bengal at the instance of the justices of the Peace for the Town of Calcutta, which was a corporation established under the provisions of the Calcutta Municipal Act, 1863, and the justices were required to pay the compensation payable to the proprietor of the Estate. After the acquisition, the proprietor of the Estate was granted abatement of land revenue assessed on the Estate to the extent of Rs. 386 7 1, being the proportionate land revenue on the land acquired. On October 27, i865, the Government called upon the justices to pay a sum of Rs. 7,728 13 8, which represented the amount capitalised at 20 years ' purchase of land revenue attributed to the area acquired. On December 5, i870, the Secretary of State executed in favour of the justices of the Peace a conveyance of the land acquired, which stated, inter alia, that it was "ever free and clear and for ever discharged from all Government land revenue whatever or any payment or charge in the nature thereof to the end and intent that the said land may be used for a public purpose, namely, for the conservancy of the town." On January 23, 1880, a lease of the land was granted by the Justices to the predecessors in title of the appellant, under which the lessee had the right to carry on cultivation with the aid of sewage. Before the income tax authorities the appellant claimed that the agricultural income derived by him from the land was not liable to income tax, but the claim was rejected on the ground that on the payment of a lump sum in 1865 the liability to pay land revenue was redeemed and no land revenue was demanded thereafter; consequently, the income derived from the land was not agricultural income within the meaning of section 2(1) of the Indian Income tax Act, 1922, and was not, therefore, exempt from tax. The appellant 's contention was that the redemption only saved the justices from liability for payment but did not affect the assessability of the land to revenue under Regulation 1 of 1793. 599 Held, that by the down payment of a lump sum in 1865 the entire land revenue to be recovered from the land was redeemed and the land became free from land revenue assessment in perpetuity, as completely as if there was no assessment. Thereafter, the land could not be said to be assessed to land revenue within the meaning of section 2(1) of the Indian Income tax Act, 1922, and, consequently, the income derived therefrom could not be considered to be agricultural income under that section. The Collector of Bombay vs Nusserwanji Rattanji Mistri and others; , , distinguished.

Appeals Nos. 1661 68 of 1959. Appeals by special leave from the judgment and decree dated April 15, 1955, of the former Hyderabad (now Andhra Pradesh) High Court in Reference Nos. 198 and 199 of 1953 and 19 of 1954. A.V. Viswanatha Sastri and K. R. Choudhri, for the appellant. K.N. Rajagopal Sastri and D. Gupta,, for the respondent. July 17. The Judgment of the Court was delivered by HIDAYATULLAH, J. The appellant, Rajah Hid section V. Jagannath Rao, was the Jagirdar of Jatprole Samasthan in the former Hyderabad State. In the year 1357 Fasli, the Income tax Act (1357 Fasli) was passed by the Legislature, to come into force on Azur 1, 1357 Fasli. The present appeals, with special leave, concern the assessment of the appellant 's income to income tax and super tax under the Act of 1357 Fasli for the assessment years, 1357 Fasli and 1358 Fasli, corresponding to 850 the years, 1948 49 and 1949 50. They are directed against a common judgment of the High Court of Hyderabad, by which certain questions of law referred by the Income tax Appellate Tribunal, Bombay, in the assessment of the present appellant and some others, were answered by the High Court of Hyderabad against the present appellant. The appellant had submitted returns of his income for the two accounting years under protest. According to him, the Income tax Act, 1357 Fasli was ultra vires the by legislature. For the account year 1356 Fasli, corresponding to the assessment year, 1357 Fash, the appellant had urged that the Act could not affect the income of that year, because it came into force only from Azur 1, 1357 Fasli. The appellant also claimed to deduct certain expenses (details of which will be given later) under as. 14(5)(a) and (b) of the Act. These were the three matters on which the Income tax Appellate Tribunal framed the following three questions for the decision of the High Court : "1. Whether the Hyderabad Income tax Act is ultra vires in so far as it seems to levy a tax on Jagirs and Samasthans ? 2.Whether the provision relating to the taxation of income of 1356 F in the Hyderabad Income tax Act is intra vires ? 3.Whether the sum of Rs. 14,390 and Rs. 38, 079 or a part thereof, could be allowed as revenue deduction under section 14(5)(a) or 14(5)(b) of the Hyderabad Income tax Act ?" As stated already, all the three questions were answered by the High Court against the appellant. He obtained special leave from this Court on three separate petitions for special leave, on December 17, 1966, and April 9, 1957, and filed the present appeals. 851 The second question mentioned above is covered by the decisions of this Court in Union of India vs Madan Gopal Kabra (1) and Rajputana Mining Agencies Ltd. vs The Union of India and another (2) and was, therefore, rightly answered against the appellant. Mr. A. V. Viswanatha Sastri, counsel for the appellant, conceded frankly that he had nothing to urge against the decision of the High Court on that question. We shall, therefore, confine ourselves to the two remaining questions in these appeals. It may be mentioned that the ,first question also arises in Civil Appeal No. 17 of 1961, and what we say here will govern the disposal pro tanto of that appeal also. The contention of the appellant on the validity of the Act is this : The Act was passed by the Hyderabad Legislative Assembly and was assented to by His Exalted Highness, the Nizam. Under the Hyderabad Legislative Assembly Ain, there was a prohibition on the introduction of certain kinds of bills in the Assembly. The appellant relies upon sub sections (8) and (9) of section 18 of the Ain, which in their English translation read as follows "18. There shall not be introduced into, or moved in the Assembly,, any bill, or motion, or resolution, or question, or other proceedings relating, to or affecting the following matter: (8)The relation of His Exalted e Highness with the holders of Samasthanis and Jagirdars and with such other grantees as derive grants from sanads. (9)The powers of His Exalted Highness over the present or future grants, whether they be in the form of land or cash.". (1) ; (2) ; 852 These two sub sections deal with laws affecting the relations between the holders of Samasthans and JaGirs on the one hand, and His Exalted Highness the Nizam, on the other. The Act in question imposes a tax and does not seek to affect the relations aforesaid. It is a little difficult to read into the Income tax Act any encroachment upon the relations between the holders of Samasthans and Jagirs and the Nizam. Even if the Income tax Act can be said to affect indirectly those relations, it is manifest that it was passed with the assent of the Ruler, which admittedly was given. There have been a number of rulings of this Court on the powers of Rulers of Indian States to promulgate laws in their States in the exercise of their sovereignty and on the nature of their sovereignty. Two such cases of this Court 'Considered the legislative powers of His Exalted Highness the Nizam, and in those cases, it was held that the legislative power of the Nizam was not subject to any limitations or control of any kind whatever. The first of these cases, Ameer un Nissa Begum vs Mahboob Begum (1) dealt with a Firman issued by His Exalted Highness the Nizam, and. in dealing with his powers, in general and his legislative powers, in particular, it was observed by this Court as follow: "It cannot be disputed that prior to the integration of Hyderabad State with the Indian Union and the coming into force of the Indian Constitution, the Nizam of Hyderabad enjoyed uncontrolled sovereign powers. He was the supreme legislature, the supreme judiciary and the supreme head of the executive, and there were no constitutional limitations upon his authority to act in any of these capacities. The 'Firmans ' were expressions of the sovereign will of the Nizam and they were binding in the same way as (1) A.I.R. 1955 &C. 352. 853 any other law; nay, they would override all other laws which were in conflict with them. So long as a particular 'Firman ' held the field, that alone would govern or regulate the rights of the parties concerned though it could be annulled or modified by a later 'Firman ' at any time that the Nizam willed. " The same view was reaffirmed in the second case reported in Director of Endowments, Government of Hyderabad vs A kram Ali (1). It is contended that a limitation on the powers of the Legislative Assembly in Hyderabad State was created by the Ain, which was, in essence the supreme law, and any bill introduced in contravention of the Ain was void ab initio. According to the learned counsel for the appellant, a law which was void at its inception remained so, even if subsequently assented to by the Nizam. If one were to think in terms of a legislature of limited jurisdiction, this might be true. Laws are really commands embodying rules of conduct emanating from one whose will is sovereign, or, in other words, supreme. Legislative Sovereignty must be found to uphold the laws. It depends upon the ' Constitution of a particular State, where it resides. It may not reside in a Ruler but in a legislature where the Ruler has surrendered or been made" to surrender his powers, as, for example, the King in Parliament in England, or it may reside in ' an absolute and sovereign Ruler, who has not parted with it, the legislature being merely his amanuensis. In the latter case, the will of the Ruler expressed as a rule of conduct is the law, whether made by him directly or through his legislature. The Ain itself derived its authority from the Nizam only, and the Nizam, as the supreme legislator, could frame a law in derogation of the Ain, which was his own creation. The Ain was (1) A. I. R. 854 not a supreme law such as a Constitution, the limits imposed by which could not be exceeded even by the Nizam. The Ain prohibited the, introduction of laws of a particular kind in the Assembly, and the Nizam could reject them as being in contravention of the Ain even if passed by the Assembly. The position, however, was not the same when a law which the Nizam could refuse to accept was accepted by him. As a supreme legislator, the Nizam could have written out the entire Income tax Act in his own hand writing and signed it; and it would have been as valid and binding as the Ain itself. It made no difference if the law was passed by a body of men and was sent to the Nizam for his assent, because on his assent, the law was as effective as if made by the Nizam himself. The Nizam could withhold his assent to a law contrary to the Ain if he chose; but once he assented to it. , the law derived its vitality, not from the act of the Legislative Assembly but from the act of the Nizam. It could not be questioned any more than a Firman issued by the Nizam. The Income tax Act must, therefore, be regarded as binding upon those affected by its terms, and the question whether it could be introduced in the Legislative Assembly hardly arises. It must be regarded as a law emanating from His Exalted Highness the Nizam, the supreme legislator in the State, whose laws promulgated in any manner were binding upon the subject. See Madhaorao vs State of Madhya Bharat (1). The first question was thus answered correctly by the High Court. It remains to consider the third question. in the assessment year 1357 Fasli, a sum of Rs. 14,390 was claimed as expenses under a. Act (5) (a) or s.14(5)(b) of the Hyderabad Income tax Act. A sum of Rs. 38,079 was similarly claimed for the assessment year 1358 Fasli. The sum of Rs. 14,390 has been (1) ; , 855, ,shown in the assessment year as spent on account of "domestic servants, drummers and other paraphernalia", which the Income tax, Officer treated as personal expenditure. The sum 'of Rs. 38,079 for the following year consisted of these items (a) Stables and elephants Rs. 16,907 (b) Festivals and Jatras Rs. 789 (c) Charity and subscriptions Rs. 11,233 (d) Body guards Rs. 9,150 _______________ Rs. 38,079 _______________ The Income tax Appellate Tribunal allowed these expenses as being admissible under cls. (a) and (b) of section 14(5). No reasons were given by the Tribunal for coming to this conclusion. The High Court answered the question against the assessee without advertence to the two clauses. The reason given by the High Court was as follows : "The jagirdar, however anxious he be to maintain his dignity, cannot claim deductions of money so spent professedly unless there be orders in exercise of prerogative powers of the grantor authorising such expenditures. For example, he may be authorised by the Sanad creating his tenure to maintain elephants or bodyguards. These expenditures would then though personal, be necessary and legal, because of the constitutional position of the grantor when the tenure was created and con tinued. But the statement of the case should show the legal basis upon which deductions are allowed. If the assessee was entitled to maintain elephants, stables, paraphernalia etc. , under the grants, he should have filed them before the Income tax authorities. Evidently this has not been done; at any rate there is no mention of the fact in the statement of the case. In the result, the answer to the question is in the negative," 856 The relevant provisions of the law may now be read. Section 14 (5) as translated by Messrs Ramchandra Rao Kurtadikar and B. V. Subbarayudu reads as follows : "In respect of income from land revenue paid to the Jagirdar by the holder of any non Khalsa land in lieu of the use or possession thereof and in respect of any income derived by giving over Abkari trees for extracting sendhi or toddy and from "Baitbak 'which under proviso 2 and Explanation respectively of clause (4) of section 2, is deemed to be non agricultural income, such income, profits and gains shall be computed after making the following allowances : (a)All such expenses not being his private or personal expenses which the assessee may incur in relation to such land or the inhabitants thereof towards management or superintendence or on works of public welfare. (b)Such necessary expenditure as the assessee may incur under any law. (c)Five per cent of the income chargeable to tax towards necessary expenses. " The Tribunal, however, pointed out that the English text published by Government Press, Hyderabad, was slightly different. It reads as follows : "14 (5) The income from land revenue paid to jagirdar by the occupier of non Khalsa land for its use or possession, the income that arises from renting of trees for extraction of sendhi or toddy, the income from Abkari rental$ and the income which under the provi sions of Section 2 (4) is deemed to be ,non agricultural ' income, all such incomes, profits 857 and gains shall be computed after making the following allowances namely: (a)all such expenditure,, not being, in the natureof capital, private or personal expenditure, incurred by the assessee in connection with land or its inhabitants for administration or on works of general improvement and benefit ; (b)any compulsory expenditure incurred by such assessee under any law in force and (c)in respect of compulsory expenditure five per cent of the income subjected to tax." A literal translation of cl. (a) made by us reads as follows " 'All such expenditure which the assessee makes in connection with such land or its inhabitants on administration or works of public welfare, which expenses. do not include, his private or personal expenses. " This shows that the official translation is accurate., and we shall refer to it only. The question thus is whether the expenditure in respect of which deduction is, claimed can be described to be private or personal expenditure of the assessee, or in connection with land and its administration. The High Court apparently thought that unless it ' was incumbent upon the jagirdar by reason of his Sanad to maintain bodyguards. , elephants, etc., the expenses could not but be regarded as private or personal. In our opinion the High Court put the burden of proof somewhat strictly upon the assessee. The Tribunal, though it gave no reasons. , held that the expenses were incurred in relation to the management. The conclusion is based on some evidence. The maintenance 858 of elephants, $tables, bodyguards, etc., is not entirely for the Jagirdar 's personal or private ends, and cannot be said to be wholly unrelated to the management of the Estate. Such equipage is considered part and parcel of the administration of an estate, such as jagir. Elephants, drummers and bodyguards are used on occasions for administ rative purposes, and even if these might be few and far between, the expenditure must be regarded as one incurred in connection with land and its administration. The expenses over drummers (but not over domestic servants) in the first year, and over stables, elephants and bodyguards (but not over festivals and jatras or on charities and subscriptions) in the second year, were deductible. These expenses fall within c 1. (a) of section 14 (5) as expenditure in connection with land or its administration, and they amounted to Rs. 26,057 in the year 1358 Fasli. For the year 1357 Fasli, the amount debatable to these items from Rs. 14,390 will have to be determined. ' The evidence before us is not sufficient to state the exact amount. We set aside the answer of the High Court, and answer the third question in the affirmative, to the extent indicated here. In view of the partial success in these appeals, the parties shall bear their own costs in this Court. A appeals allowed in part.

The appellant who was a jagirdar in the former Hyderabad State was assessed to income tax and super tax for the assessment years, 1337 Fasli and 1358 Fasli, corresponding to the years, 1948 49 and 1949 50, under the provisions of the Hyderabad Income tax Act, 1357 Fasli, which was passed by the Hyderabad Legislative Assembly and came into force on Azur 1, 1357 Fasli. The appellant challenged the validity of the assessment on the grounds(1) that under the Hyderabad Legislative Assembly Ain the Assembly was prohibited from introducing bills which dealt with laws affecting the relations between the holders of jagirs on the one hand and the Nizam on the other, that the provisions of the Act in so far as they seemed to levy a tax on jagirs amounted to an encroachment upon the relations between the jagirdars and the Nizam, and that the bill introduced in contravention of the Ain was, void ab initio, even though it had been assented to by the Nizam, (2)that the Act could not affect, in any case, the income for the account year 1356 Fasli, corresponding to the assessment year 1357 Fasli, because the Act came into ' force only from Aur 1,1357 Fasli, and (3) that the Income tax Officer erred in disallowing the claim for deduction of the amount spent on account of maintenance of elephants, stables, drummers,, bodyguards, etc., in connection with management of the jagir Estate, and in treating the amount as personal expenditure. Held, (1) that the Hyderabad Income tax Act, 1357 Fasli, did not affect the relations between the holders of Jagirs and the Nizam, and that even if it could be said to affect indirectly these relations, the Act having been passed with the assent of the Nizam, was valid, and the question whether it could be introduced in the Legislative Assembly did not arise as it must be regarded as a law emanating from the Nizam, the supreme legislator in the State, whose laws promulgated in any manner binding upon the subject,. 849 Ameer un Nissa Begam vs Mahboob Begum, A. I. R. 1955 section C. 352, Director of Endowments, Government of Hyderabad vs Akram Ali, A. 1. R. and Madhaorao vs State of Madhya Bharat, ; , applied. (2)that the income for the 1356 Fasli was rightly assessed tinder the provisions of the Act for the assessment year 1357 Fasli. Union of India vs Madan Gopal Kabra, ; and Rajputana Mining Agencies Ltd. vs The Union of India, ; , followed. (3)that the maintenance of elephants, stables, drummers, and bodyguards by the jagirdar was not entirely for his personal or private ends but must be considered part and parcel of the administration of the estate, and the expenditure for such maintenance must be regarded as one incurred in connection with land and its administration within the meaning of section 14(5)(a) of the Act. It was accordingly deductible for purposes of income tax.

vil Appeal No. 683 of 1968. Appeal under section 116 A of the Representation of the People Act, 1951 from the Judgment and order dated January 10, 1968 of the Judicial Commissioner of Manipur in Election Petition Case No. 2 of 1967. D. Goburdhun, for the appellant. K.R. Chaudhuri, K. Rajendra Chaudhuri and C.S. Sreenivasa Rao, for respondent No. 1. The Judgment of the Court was delivered by Hidayatullah, C.J. This is an appeal from the Court of the Judicial Commissioner for Manipur at Imphal under section 116A of the Representation of People Act. The appeal arises 'from an election to the Outer Mareput Parliamentary Constituency at which the appellant, who was the returned candidate, and five others were the contesting candidates. This Outer Mareput Constituency comprised 14 Assembly constituencies. The dates of poll were 15th, 20th, 24th, 28th February, and 6th March, 1967 and the time of poll was from 7 30 A.M. to 4 30 P.M. This constituency had 2,19,554 registered voters. The total number of votes polled was 1,20,008. Of these 4,166 votes were declared invalid. The returned candidate received 30,403 votes as against the next candidate who received 28,862 votes. There was thus a majority of 1,541 votes in favour of the returned candidate. The result of the poll was declared on March 10, 1967. The candidate who secured the second largest number of votes filed this election petition on April 20, 1967. The main ground of attack, which succeeded in the Judicial Commissioner 's Court, was that the poll was disturbed because of numerous circumstances. These were that the polling centres were in some cases changed from the original buildings to other buildings of which due notification was not issued earlier with the result that many of the ' voters who went to vote at the old polling booths found no arrangement for poll and rather than go to the new polling station, went away without casting their votes. 'The second ground was that owing to firing by the Naga Hostiles, the voting at some of the polling stations was disturbed and almost no votes were cast. It was lasfly contended that the polling hours at some stations were reduced with the result that some of the voters who went to the polling station were unable to cast their votes. 639 It is hardly necessary to set down here the names of the polling stations at which these things happened. In any event, these pelting stations carry rather strange names and it would not help to state them here. The net result may be stated. It was this there were 12 polling centres, at 4 of which the venue for the poll was altered. There were 6 others at which the firing disturbed the poll and In 2 of the polling. centres not a single vote was cast and lastly in one of the polling centres out of 513 voters only one voted. The following chart discloses the break up of the figures at these polling centres: SR. No. of No. of No. Name of the polling stations voters votes (as notified) attached actually to the cast station 1.Tungam Khullen High School . . 1,242 522 2.ChandelJunior Basic School . . 1,060 172 3. Purum Pantha L.P. School . . 654 338 4. Litan L.P. School . . 449 347 5. Toupokpi M.E. School . 584 128 6.Chakpikarong M.E School. . 715 67 7.Bolyang Tampak L.P. School. . . 868 249 8.Oklu L.P.School . . . . 725 17 9.Lorong Khullen J.B.School. . 581 53 10.Lakhmei M.E.School. . . 665 11.Nagri Khullen M.E.School . . 564 12.Karong Dak Bumgalow. . . 513 1 It will be noticed from this chart that out of 8,620 votes which could have been polled, only 1,894 votes were actually received. In other words, 6,726 voters did not vote or could not vote. The election petitioner who ran a deficit of 1,541 votes claimed in the election petition that the result of the poll was prejudicial to him in particular and friar by the non compliance with the provisions of the Act and its rules, the result of the election in so, far as the returned candidate was concerned had been materially affected. The Judicial Commissioner after examining a large number of witnesses on both sides, came to the conclusion that there was this flaw in the election for this constituency. He went further and held that the result of the election in so far as it concerned the returned candidate had been materially affected. He, therefore, avoided the election and ordered fresh poll in the 12 polling stations. In this appeal, the returned candidate attempted to establish that polling was not so disorganised that it could be said that 340 it did not take place. He attempted to show that even where the polling station was shifted, it was a matter of few hundred yards and the people went to vote knew the new location of the polling booths. He also submitted that, in any event, this had, affected all the contesting candidates equally and the election. petitioner could not, therefore, be said to have suffered more ' than the other candidates. Lastly, the returned candidate contended that it had not been established in accordance with the ruling of this Court in Vashist ,Narain Sharma vs Dev Chandra and others(1) that the result of the election had been materially affected so far as his election was concerned. In this connection, the returned candidate relies upon the majority which he had already obtained and refers to the votes which had not been cast, pointing out that on the general pattern of the voting as disclosed in the case it cannot possibly be said that the election petitioner would have carried such a majority from those votes as to neutralise the successful lead he had already established. The election petitioner as the answering respondent tried to establish that the pattern of the voting clearly showed that the returned candidate had obtained a fortuitous lead which was capable of being wiped off if the voting had proceeded according to the Act and the Rules. Both sides relied upon statistics to establish their cases. The election petitioner in addition relied upon the evidence of witnesses which he pointed out had been accepted by the Juclicial Commissioner and upon the observations of this Court contended that we should not lightly depart from the findings given by the learned Judicial Commissioner. This case without entering into the numerous details, is confined to the above contentions of the rival parties. To begin with, it is hardly necessary for us to go over the evidence with a view to ascertaining whether there had been or not a breach of the Act and the rules in the conduct of the election at this constituency. We may say at once that having read the evidence we are in entire agreement with the decision of the learned Judicial Commissioner that by the change of venue and owing to the firing, a number of voters probably failed to record their votes which they would have gone if the poll had gone on smoothly and according to rules. This shows that the matter is governed by section 100(1) (d) (iv). The question remains still whether the condition precedent to the avoidance of the election of the returned candidate which requires proof from the election petitioner 'that the result of the election had been materially affected in so far as the returned candidate was concerned, has been established in the present case. This part of the case depends upon the ruling of this Court in (1) [1955] 1 section C.R. 509. 641 Vashist Narain Sharmas case(1). In that case there was a difference of 111 votes between the returned candidate and the candidate who had obtained the next higher number of votes. One candidate, by name Dudh Nath Singh, was found not competent to stand and the question arose whether the votes wasted on Dudh Nath Singh, if they had been polled in favour of the remaining candidates, would have materially affected the fate of the election. Certain principles were stated as to how the probable effect upon the election of the successful candidate of votes which were. wasted (in this case not cast) must be worked out. Two witnesses were brought to depose that if Dudh Nath Singh had not, been a candidate for whom no voting had to be done, the voters would have voted for the next successful candidate. Ghulam Hasan, J. did not accept this kind of evidence. It is observed as follows: "It is impossible to accept the ipse dixit of witnesses coming from one side or the other to say that all or some of the votes would have gone to one or the other on some supposed or imaginary ground. The question is one of fact and has to be proved by positive evidence. If the petitioner. is unable to adduce evidence in a case such as the present, the only inescapable conclusion to which the Tribunal can come is that the burden is not discharged and that the election must stand. " In another passage, it is observed: "It will not do merely to say that all or a majority of the wasted votes might have gone to the next highest candidate. The casting of votes at an election depends upon a variety of factors and ' it is not possible for any one to predicate how many or which proportion of the votes will go to one or the other of the candidates. While it must be recognised that the petitioner in such a case is confronted with a difficult situation, it is not possible to relieve him of the duty imposed upon him by section 100(1)(c) and hold without evidence that the. duty has been discharged. " Further it is pointed out that the burden of proof in England the exact reverse of that laid down by the Indian statutes. There, the returned candidate has to prove that the non compliance or mistake does not affect the result of the election. In our country, the burden is upon the election petitioner to 'show affirmatively that the result of the 'election has been materially ' affected. (1) ; 642 Therefore, what we have to see is whether this burden has been successfully discharged by the election petitioner by demonstrating to the court either positively or even reasonably that the. poll would have gone against the returned candidate if the breach the rules had not occurred and proper poll had taken place at ' all the polling stations including those at which it did not. The evidence in tiffs case which led by the election petitioner is the kind of evidence which was criticised by this Court. Witnesses have stated that a number of voters did not vote because of the change of venue or because of firing and that they had decided to vote en bloc for the election petitioner. This kind of evidence is merely an assertion on the part of each witness, and he cannot speak for 500 voters for the simple reason that as this Court said the casting of votes at an election depends upon a variety of factors and it is not possible for anyone to predicate how many or which proportion of votes will go to one or the other of the candidates. We cannot therefore accept the statement even of a Headman that the whole village would have voted in favour of one candidate to the exclusion of the others. This conclusion is further fortified if one examines the polling pattern in this election. To begin with, it is wrong for the election petitioner to contend that of the 6,726 votes which were not cast, he would have received all of them. The general pattern of poll not only in this constituency but in the whole of India is that a11 the voters do not always go to the polls. In fact, in this case, out of 2,19,554 voters, only 1,20,008 cast their votes. Even if we were to add to them the 6,726 votes, it is obvious that not more than 5 5 % of the voters would have gone to the polls. This immediately cuts down the figure of 6,726 to a little over half and the margin from which the election petitioner could claim additional votes therefore. becomes exceedingly small. When we turn to the pattern of voting, as is disclosed at the various polling booths at which the voters had in fact gone, we get reasonably clear picture. At 9 polling centers, 1893 votes were actually polled. Of these, 524 votes were received by the election petitioner and 413 by the returned candidate and 1,097 votes went to the other candidates. In other words, out of 20 votes, 11 went to other candidates, 5 to the election petitioner and 4 to the returned candidate. If one goes by the law of averages and applies these figures reasonably to half of the votes which were not cast, it is demonstrated at once that the election petitioner could not expect to wipe off the large arrears under which he labored and that he could not have therefore made a successful bid for the seat even with the assistance of the voters who did not cast their votes. It is pointed out that at Tungam Khullen High 643 School, he received 401 out of 522 votes. If this had been the general pattern, one could say that he would have got almost the votes that had not been cast. But look at the other polling stations. At Litan L.P. School, he obtained 41 out of 347, at Chandel Junior Basic School he got 34 out of 172, at Purum Pantha L.P. School he got 11 out of 338, at Toupokpi M.E. School 18 out of 128, at Oklu L.P. School 8 out o.f 17, at Chakpi Karong M.E. School 2 out of 67, at Larong Khullen L.P. School 1 out of 53 and at Bolyang Tampak L.P. School 8 out of 249. While we do not think that statistics can be called in aid to prove such facts, because it is notorious that statistics can prove anything and made to lie for either case, it is open to us in reaching our conclusion to pay attention to the demonstrated pattern of voting. Having done so, we are quite satisfied that 1,541 votes could not, by any reasonable guess, have been taken off from the lead of the returned candidate so as to make the election petitioner successful. In so far as the other contesting candidates are concerned, they had received so few votes that even if they had received all the votes that had not been cast, it would not have mattered little to the result of the election. The learned Judicial Commissioner reached his conclusion by conrefitting the same error which was criticised in Vashist Narain Sharing 's(1)) case. He took the statement of the witnesses at their word and held on the basis of those statements that all the votes that had not been cast would have gone to the election petitioner. For this, there is no foundation in fact; it is a surmise and it is anybody 's guess as to how these people, who did not vote, would have actually voted. In our opinion, the decision of the learned Judicial Commissioner that the election was to contravention of the Act and the Rules was correct in the circumstances of this case; but that does not alter the position with regard to section 100( 1 )(d)(iv) of the Act. That section requires that the election petitioner must go a little further and prove that the result of the election had been materially affected. How he has to prove it has already been stated by this Court and applying that test, we find that he has significantly failed in his attempt and therefore the election of the returned candidate could not be avoided. It is no doubt true that the burden which is placed by law is very strict; even if it. is strict it is for the courts to apply it. It is for the Legislature to consider whether it should be altered. If there is another way of determining the burden, the law should say it and not the courts. It is only in given instances that, taking the law as it is, the courts can reach the conclusion whether the burden of proof has been successfully discharged by the election petitioner or not. We are satisfied that in this case this burden has not been discharged. The result is Sup. Cl/69 10 644 that the appeal must succeed and it is allowed. The election of the returned candidate will stand. The costs in the Judicial Com.missioner 's Court will be as ordered. The election petitioner who apparently was not so much at fault as the Government in changing the polling stations, shall bear only half the costs of the appellant in this Court. Y.P. lippeal allowed.

In an election to a Parliamentary constituency, having 2,19,554 voters 1,20,008 votes were polled. of these 4,168 votes were declared invalid. The appellant won by securing 1,541 votes more than the next candidate the respondent. The respondent filed an election petition on the ground that the polling was disturbed as the polling centres were in some cases changed without due notification, at some polling stations almost no votes were cast because of fi 'ring at rioters and at some polling stations the polling hours were reduced. Only 1,894 votes were polled at these polling booths, in which the total number of voters attached were 8,620. so 6,726 voters could not vote. The Judicial Commissioner ordered fresh poll in these polling stations. In appeal by the returned candidate, this Court. HELD: The appeal must succeed. The decision of the Judicial Commissioner that the election was in contravention of the Act and the Rules was correct in the circumstances this case but that did not alter the position with regard to section 100(1)(d) (iv) of the Representation of the People Act. That section requires that the election petitioner must go a little further and prove that the result of the election had been materially affected. And in this case this burden had not been discharged. [643 F] The evidence in this case which had been brought by the election 'petitioner was the kind of evidence which was criticised by this Court. Witnesses were brought forward to state that a number of voters did not vote because of the change of venue or because of firing and that they had already decided to vote en bloc for the election petitioner. This kind of evidence was merely an assertion on the part of a witness, who could not speak 'for 500 voters for the simple reason that as this Court said the casting of votes at an election depends upon a variety of factors and it is not possible for anyone to predicate how many or which proportion of votes wilt go to one or the other candidates. This conclusion is further forified if one examines the polling pattern in this election. Not more than 55% of the voters cast their votes. !This immediately cut down the ' figure of 6,726 to a little over half and the margin from which the election petitioner could claim additional votes therefore becomes exceedingly small. From the pattern of voting as was disclosed at the various polling booths to which the voters had gone, it was clear, that 1,541 votes could not. by any reasonable guess, have been taken off from the lead of the returned candidates so as to make the election petitioner successful. 'In ,so far as the other contesting candidates were concerned, they had received so few votes that even if they had received all the votes that had not been cast, it would have mattered little to the result of the election. The Judicial Commissioner reached his conclusion by committing the same error which was criticised in Vashist Narain Sharmas case. He took the statement of witnesses at their word and held on the basis of 638 these statements that all the votes that had not been cast would have gone to the election petitioner. [642 B 643 E] Vashist Narain Sharma V. Der Chandra and Ors. ; , followed.

vil Appeal No. 1598 (NT) of 1974. From the Judgment and Order dated 26.2.1971 of the Allahabad High Court in I.T. Reference No. 92 of 1966. C.M. Lodha, N.M. Tandon and Miss A. Subhashini for the Appellant. Dhananjoy Chandrachud (Amicus Curiae) for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal from the judgment and order of the High Court of Allahabad dated 26th February, 1971. The assessee is a partnership firm which at the relevant time enjoyed the status of a registered firm for the assessment years 1960 61, 1961 62 and 1962 63. In the assessment proceedings for the assessment year 1960 61, the assessee suffered a loss of Rs.60,054 in the speculation business which was to be carried forward for adjustment against speculation profits of future years. For the assess ment year 1961 62 also, the assessee had suffered a loss amounting to Rs.6,839 in 945 speculation business and this was also to be carried forward for adjustment against speculation profits of future years. For the assessment year 1962 63 which is the year with which this appeal is concerned, the assessee made a profit of Rs.58,102 from speculation business. In the assessment proceedings for that year the assessee claimed that a loss of Rs.60,054 suffered in respect of the assessment year 1960 61 and the loss of Rs.6,839 suffered in respect 0" the assessment year 1961 62 should be set off against this speculation profit of Rs.59,102 for this year. If that had been done, the speculation profits of the year under consid eration would have been absorbed completely by the losses brought forward from the preceding years. The Income tax Officer, however, rejected the assessee 's claim. He held that as the assessee was a registered firm, the losses could be carried forward and set off only by the partners and not by the firm. The appeal by the assessee before the Assistant Appellate Commissioner was dismissed. The assessee went up in appeal to the Tribunal. The Tribunal held that the right to carry forward the losses relating to the assessment years 1960 61 and 1961 62 was governed by the Indian Income tax Act, 1922 (hereinafter called the '1922 Act ') and the section 75(2) of the Income tax Act, 1961 which was applicable to the assessment year 1960 61 had no application in the facts of this case. The Tribunal was of the view that when an Act was passed repealing an earlier enactment, it could not be said to supersede any right already accrued under the repealed enactment unless there was something in the repealing Act to indicate that clearly. The Tribunal, therefore, held that the assessee was entitled to have the losses brought forward from the preceding two years and set off against the profits earned for the year 1962 63 and accordingly allowed the appeal. The revenue sought for reference to the High Court of Allahabad on the following question: "Whether, the assessee is, in law, entitled to set off of the speculation losses suffered in the assessment years 1960 61 and 1961 62 against the speculation profits of the previous year?" The High Court considering the provisions of section 75 of 1961 Act came to the conclusion that a right had accrued to the assessee by virtue of 1922 Act which entitled him to have the losses from speculation business in respect of the assessment year 1960 61 and 1961 62 to be carried forward and set off against the profits in speculation busi 946 ness of future years. The High Court was of the view that that was a right which had accrued to it before the 1961 Act was brought into force. The High Court came to the conclusion that by virtue of section 6 of the that right continued to subsist. The High Court, therefore, was of the view that the Tribunal was fight in holding that the assessee was entitled to set off the specu lation losses suffered in the assessment years 1960 61 and 1961 62 against the speculation profits of the previous year 1962 63. In appeal on behalf of the revenue before us, it was contended that the High Court was in error. Our attention was drawn to the provisions of section 24(2) of 1922 Act which, inter alia, provided that where any assessee sus tained any 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 31st day of March, 1940, in any business, profession or vocation, and the loss could not be wholly set off under sub section (1) of section 24 of the said Act, so much of the loss as was not so set off or the whole loss where the assessee had no other head of income would have been carried forward in the manner indicated therein. So, therefore, the 1922 Act 'gave a right to set off speculation losses against speculation profits and to the extent it was unabsorbed, it had a fight to carry for ward the losses for the future years to be set off against speculation profits for future years. It was submitted that in a way it was vested right a fight on assessment to set off the losses against the profits of the year in question and if not fully absorbed to carry forward to be set off against the profits of future years. It was submitted on behalf of the revenue that it therefore continued so long as the Act permitted the setting off in that manner. It was, however, urged that in view of the coming into operation of 1961 Act which came into operation on 1st of April, 1962, that fight no longer was there with the assessee. Section 75 of 1961 Act provided an entirely new scheme. It was as follows: "75. Losses of registered firms. (1) Where the assessee is a regis tered firm, any loss which cannot be set off against any other income of the firm shall be apportioned between the partners of the firm, and they alone shall be entitled to have the amount of the loss set off and carried forward for set off under sections 70, 71, 72, 73, 74 and 74A. (2) Nothing contained in sub section (1) of section 72, sub section (2) of section 73, sub section (1) of section 947 74 or sub section (3) of section 74A shall entitle any assessee, being a registered firm, to have its loss carried forward and set off under the provisions of the aforesaid sec tions. " As a result of sub section (2) of section 75 of the said Act, there is prohibition, according to the revenue, enti tling the assessee being registered firm to have its loss carried forward and set off under the provisions except in the manner indicated in sub section (2) of section 75 of the Act. It was submitted that as the assessment for the year 1962 63 had to be made under the provisions of 1961 Act, the assessee could not have the benefit of set off of the car ried forward loss. In support of this contention reliance was placed on the decision of the Allahabad High Court in Commissioner of Income tax, Kanpur vs Mangiram Gopi Chand, where it was held that a registered firm could, so long as the 1922 Act was in force, carry forward speculation loss, if it could not be set off against specu lation income of the year in question. However, the Court observed after coming into force of 1961 Act, specific provisions had been made in respect of losses of registered firms and such right of set off of speculation losses was no longer available. The High Court was of the view that the right of a registered firm to set off and carry forward losses under section 24(2) of the 1922 Act was a substantive right. However, where a repealing provision indicated the effect of the repeal on previous matters and provided for the operation of the previous law in part as also the opera tion of the new law in the other part in positive terms, the repealing and saving provision could be said to be self contained and excluded the applicability of section 6, according to the Allahabad High Court, of the . Section 297(2) of 1961 Act, according to the Allahabad High Court, must be taken to be a self contained code in respect of the operation of 1922 Act and the rights which might have been created under it. Inasmuch as section 297(2) of the 1961 Act did not save, said the Allahabad High Court, the right, if any, of a registered firm to set off its speculation losses, which have been carried forward, against the speculation profits of the firm, the right, if any, created by section 24(2) could not be said to remain intact after the repeal of the 1922 Act. Speculation losses of years anterior to 1962 63 could not, therefore, be car ried forward and set off against speculation profits of a registered firm. The Allahabad High Court considering the decision of this Court in State of Punjab vs Mohar Singh, ; observed that the principle laid down by this Court was that where the repealing provision indicated the effect of repeal on previ 948 ous matters and provided for the operation of the previous law in part and in negative terms as also for the operation of the new law in other part in positive terms, the repeal ing and the saving provision could be said to be self con tained Act. While we respectfully agree with the principle applicable in interpreting the application of the Act, we are of the opinion that the Allahabad High Court was not fight in the application of that principle in the light of section 297(2) of 1961 Act in the aforesaid decision. There is nothing in any of the clauses of subsection (2) of sec tion 297 of the Act which indicates that accrued rights under 1922 Act lapsed in respect of the assessment to be made after coming into operation of 1961 Act. According to the Allahabad High Court in that decision, section 297(2)(a) provided for completion of assessment in accordance with the old Act where the return was filed before the commencement of the 1961 Act but section 297(2)(b) of the Act provided for completion of assessment in accordance with the provi sion of the new Act where the return was filed even in respect of years covered by the 1922 Act, after 31st March, 1962. Reading section 297 in the manner it did, the Allaha bad High Court was of the view that where the provisions of the previous Act stood repealed, the set off cannot be given. The Allahabad High Court had, it appears, no occasion to notice the judgment under appeal. On behalf of the revenue, reliance was also placed on a decision of the Calcutta High Court in the case of Reliance Jute Mills Co. Ltd. vs Commissioner of Income tax, West Bengal 1, on the question of carry forward of the loss after the coming into operation of the Finance Act, 1955. The principle enunciated therein, in our opinion, will have no application to the controversy in the present case. Our attention was also drawn by the revenue to the decision of the Kerala High Court in the case of Helen Rubber Indus tries Ltd. vs Commissioner of Income Tax, Mysore, Travan core Cochin and Coorg, The Kerala High Court observed that the loss incurred in Travancore (in a Part B State) by the assessee during M.E. 1123 which could only have been carried forward for two years in accordance with the provisions of section 32(2) of the Travancore Income tax Act, 1121, could be carried forward beyond those two years for a period of six years in accordance with sections 24(2) of the Indian Income tax Act, 1922 for the assessment year 195 1 52, as the Indian Income tax Act, 1922 was applicable for that assessment year and the assessee had the right to carry forward losses in accordance with the provisions of that Act. The High Court had to construe section 3 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950. This case must also be understood in the back ground of 949 the facts of that case which are different from the instant case with the provisions with which we are concerned. That was not a case of deciding whether the vested right was curtailed and if so to what extent. This Court in Karimtharuvi Tea Estate Ltd. vs State of Kerala, ; observed that it was well settled that the Income tax Act as it stands amended on the first day of April of any financial year must apply to the assessment of the year. Any amendments in that Act which came into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assess ment was actually made after the amendments came into force. There, the Kerala Surcharge on Taxes Act, 1957, having come into force on 1st September, 1957, being the date appointed by the Kerala Government under section 1(3) of the Act, and not being retrospective in operation, by express intendment or necessary implication, could not be made applicable from 1st April, 1957. Since the Act was not the law in force on 1st April, 1957, no surcharge on agricultural income tax could be levied under that Act in respect of the assessment year 1957 58. That decision had also not dealt with the question of affecting vested rights. In our opinion the right given to the assessee for the assessment year 1961 62 under section 24(2) of 1922 Act was an accrued right and a vested right. It could have been taken away expressly or by necessary implication. It has not been so done. Neither section 297(2)(b) nor any other sub clauses of sub section (2) of section 297 indicates contrary intention of the legislature regarding any vested right of the assessee under the 1922 Act. On the contrary section 6(c) of the indicates that right should be preserved. Reliance may be placed on the observations of this Court in T.S. Baliah vs T.S. Rangachari, Income tax Officer, Cen tral Circle VI, Madras, This Court observed that the provisions of section 52 of the Indian Income tax Act, 1922, do not alter the nature or quality of the offence enacted in section 177 of the Indian Penal Code, 1860. They merely provide a new course of procedure for what was al ready an offence. There is no repugnancy or inconsistency; the two enactments can stand together and they must be treated as cumulative in effect. This Court, however, ob served that in enacting section 297(2) of the Income tax Act, 1961, it was not the intention of the Parliament to take away the right of instituting prosecutions in respect of proceedings which were pending at the commencement of the Act. Parliament had not made any detailed provision for the 950 institution of prosecutions in respect of offences under the 1922 Act. Section 6(e) of the General Clauses Act, 1987 applied for the continuation of such proceedings after the repeal of the Indian Income tax Act, 1922, and a legal proceeding in respect of an offence committed under the 1922 Act may be instituted after the repeal of the 1922 Act by the 1961 Act. The Court reiterated that before coming to the conclusion that there is a repeal of an earlier enactment by a later enactment by implication, the court must be satis fied that the two enactments are so inconsistent or repug nant that these could not stand together and the repeal of the express prior enactment must flow from necessary impli cation of the language of the later enactment. In Commissioner of Income Tax (Central), Calcutta vs B.P. (India) Ltd., the Calcutta High Court was concerned with section 25(3) of the 1922 Act. It is not necessary to set out in extenso the facts of that case. It suffices to say that the discontinuance of the assessee 's business in that case took place on 28th February, 1962. It could not be disputed that if the 1961 Act had not come into effect, the assessee would have been entitled to get the relief as granted by virtue of section 25(3) of the 1922 Act. It was observed that on a reading of section 6 of the , it was clear that unless a con trary intention appears, the repeal of an Act does not affect any existing right, privilege, obligation or liabili ty. It is, therefore, necessary to find out from the provi sions of section 297 of the 1961 Act which.repeals the 1922 Act, whether the old rights and liabilities have been in tended to be destroyed. There was no corresponding provision under the 1961 Act dealing with the type of claims mentioned in sub section (3) or (4) of section 25 of the 1922 Act. It was contended by the revenue that what was not said was destroyed and such intention would be apparent in that case from section 297(2)(h) of the 1961 Act. The High Court referred to the 12th Report of the Law Commission, and Speaking for the Court, one of us (Sabyasachi Mukharji,J.) said that it was not possible to accept the submission for the revenue that whatever was not said was destroyed. The Court reiterated that there must be a manifest intention of Parliament to destroy a right or privilege under the old Act. There is no such provision in the new Act. In the instant case also, section 75(2) dealt with a different scheme of carrying forward of loss but it did not speak of any accrued right. It did not destroy either by express words or by necessary implication the vested right given to an assessee under section 24 (2) of the Act of 1922. There fore, unless one finds in section 297 or within the four corners of the any intendment express or implied of destroying the rights created by section 24(2) of 951 carrying forward the losses to set off in subsequent years in case of speculation business that right cannot be said to be destroyed. The fact that the fight created by the operation of section 24(2) is a vested right cannot in our opinion be disputed. See in this connection the observations of this Court in Gujarat Electricity Board vs Shantilal R. Desai, ; at 587 and Isha Valimohamad & Anr. vs Haji Gulam Mohamad & Haii Dada Trust, [1975] 1 S.C.R. 720 at 723. Under the Income Tax Act of 1922, the assessee was entitled to carry forward the losses of the speculation business and set off such losses against profits made from that business in future years. The fight of carrying forward and set off accrued to the assessee under the Act of 1922. A right which had accrued and had become vested continued to be capable of being enforced notwithstanding the repeal of the statute under which that fight accrued unless the re pealing statute took away such right expressly or by neces sary implication. This is the effect of section 6 of the . In this case the 'savings ' provision in the repealing statute is not exhaustive of the rights which are saved or which survive the repeal of the statute under which such rights had accrued. In other words, whatever fights are expressly saved by the 'savings ' provision stand saved. But, that does not mean that fights which are not saved by the 'savings ' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they are taken away expressly. This is the principle behind section 6(c) of the . The right to carry forward losses which had accrued under the repealed Income tax Act of 1922 is not saved expressly by section 297 of the Income tax Act, 1961. But, it is not necessary to save a right expressly in order to keep it alive after the repeal of the Old Act of 1922. Section 6(c) saves accrued rights unless they are taken away by the repealing statute. We do not find any such taking away of the rights by section 297 either expressly or by implica tion. We are, therefore, of the opinion that the Allahabad High Court was in error in the view it took in the decision in Commissioner of Income tax, Kanpur vs Mangiram Gopi Chand (supra) but the High Court of Allahabad was fight in the judgment under appeal and the question was properly an swered. The assessee in person did not appear at the time of the heating 952 of this appeal. We requested Shri Chandrachud to assist us as amicus curiae. We record that Shri Chandrachud has ren dered very able assistance to us in disposing of this ap peal. This Court records its appreciation of the help ren dered by him. The appeal in the premises fails and is dismissed with costs assessed at Rs.2,500 which amount should be paid to the amicus curiae. A.P.J. Appeal dis missed.

The assessee, a partnership firm, enjoyed the status of a registered firm for the assessment years 1960 61, 1961 62 and 1962 63. In the assessment proceedings for the year 1962 63 the assessee claimed that a loss of Rs.60,054 suf fered in the speculation business in the assessment year 1960 61 and the loss of Rs.6,839 suffered in the assessment year 1961 62 should be set off against the speculation profit of Rs.58,102 for the assessment year 1962 63. The Income Tax Officer rejected the assessee 's claim holding that as the assessee was a registered firm, the losses could be carried forward and set off only by the partners and not by the firm. The appeal by the assessee before the Assistant Appellate Commissioner was dismissed. In the appeal to the Tribunal, the Tribunal held that the right to carry forward the losses relating to the as sessment years 1960 61 and 1961 62 was governed by the Indian Income Tax Act, 1922 and that section 75(2) of the Income Tax Act, 1961 which was applicable to the assessment year 1960 61 had no application in the facts of this case; that when an Act was passed repealing an earlier enactment, it could not be said to supersede any right already accrued under the repealed enactment unless there was something in the repealing Act to indicate that clearly and, therefore, the assessee was entitled to have the losses brought forward from the preceding two years and set off against the profits earned for the year 1962 63. In the Reference, the High Court held: (1) that a right had 943 accrued to the assessee by virtue of 1922 Act which entitled him to have the losses from speculation business in respect of the assessment year 1960 61 and 1961 62 to be carried forward and set off against the profits in speculation business of future years; (2) that was a right which had accrued to it before the 1961 Act was brought into force; (3) that by virtue of section 6 of the General Clauses Act that right continued to subsist and (4) that the Tribunal was right in holding that the assessee was entitled to set off the speculation losses suffered in the assessment years 1960 61 and 1961 62 against the speculation profits of the assessment year 1962 63. Dismissing the Appeal of the Revenue, HELD: 1. The Allahabad High Court was in error in the view it took in the decision in Commissioner of Income Tax, Kanpur vs Mangi Ram Gopichand, but it was right in the judgment under appeal and the question was properly answered. [951 G H] 2. The right created by the operation of section 24(2) of 1922 Act is a vested right. [951 A B] Gujarat Electricity Board vs Shantilal R. Desai, ; at 587 and Isha Valimohamad & Anr. vs Haji Gulam Mohamad & Haji Dada Trust, [1975] 1 S.C.R. 720 at 723, referred to. Under the Income Tax Act of 1922, the assessee was entitled to carry forward the losses of the speculation business and set off such losses against profits made from that business in future years. The right of carrying forward and set off accrued to the assessee under the Act of 1922. A right which had accrued and had become vested continued to be capable of being enforced notwithstanding the repeal of the statute under which that right accrued unless the re pealing statute took away such right expressly or by neces sary implication. This is the effect of section 6 of the . [951B D] 4. Whatever rights are expressly saved by the 'savings ' provision stand saved. But, that does not mean that rights which are not saved by the 'saving ' provision are extin guished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they are taken away expressly. This is the principle behind section 6(c) of the . [951E F] 944 5. The right to carry forward losses which had ac crued under the repealed Income Tax Act of 1922 is not saved expressly by section 297 of the Income Tax Act, 1961. But it is not necessary to save a right expressly in order to keep it alive after the repeal of the Old Act of 1922. Section 6(c) of the saves accrued rights unless they are taken away by the repealing statute. Taking away of any such rights by section 297 either expressly or by implication is not found. [951 F] Commissioner of Income tax Kanpur vs Mangiram Gopi Chand, , overruled. State of Punjab vs Mohar Singh, ; ; Reliance Jute Mills Co. Ltd. vs Commissioner of Income tax, ; Helen Rubber Industries Ltd. vs Commissioner of Income Tax, Mysore Travancore Cochin and Coorg., and Karimtharuvi Tea Estate Ltd. vs State of Kerala, ; , referred to. T.S. Baliah vs T.S. Rangachari, Income tax Officer, Central Circle VI. Madras, and Commissioner of Income tax (Central), Calcutta vs B.P. (India) Ltd., , followed.

ivil Appeal No. 672 of 1962. Appeal by special leave from the judgment and order dated December 10, 1958, of the Patna High Court in Appeal from Appellate Decree No. 716 of 1954. S.P. Varma, for the appellants. Sarjoo Prasad and Mohan Behari Lai, for the respondents. 107 October 10, 1963. The Judgment of P.B. Gajendragadkar, K. Subba Rao, K.N. Wanchoo and J.C. Shah JJ., was delivered by Subba Rao J. Raghubar Dayal J. delivered a separate Opinion. SUBBA RAO J. This appeal by special leave is directed against the judgment of the High Court of ' Judicature at Patna and raises mainly the question of the scope of the right of pre emption under the Mohamedan law as applied by custom in Bihar. The facts lie in a small compass. On June 17, 1930, Chathilal Sah of Sahebganj, who was the owner of a house and two golas bearing holdings Nos. 184 and 185 situated in mahalla Sahebganj, executed a will bequeathing the said property to his daughter Parbati Kuer and nephew Ram Swarup in equal shares. Under the said will Ram Swarup was to get the entire property in case Parbati Kuer died unmarried or issueless. On July 18, 1940, Ram Swarup sold one half of the said property to the plaintiff respondent 1. On July 27, 1942, the plaintiff respondent 1 acquired under a patta some lands adjoining the said property. On October 10, 1949, defendant 3 (respondent 3 herein), alleging to be the husband of the said Parbati Kuer, sold the remaining half of the disputed property to defendants 1 and 2. It may be mentioned at this stage that the land on which the said house and golas stand is Dih Basgit Lagani (rent paying) land. On December 10, 1949, respondent 1 filed Title Suit No. 214 of 1949 in the First Court of the Munsif at Chapra for a declaration that he has a right to pre empt the property purchased by appellants 1 and 2 and for directing them to transfer the said property to him. To that suit, the first appellant and his two sons were made defendants 1, 2 and 2A and their vendor was made defendant 3. The defendants contested the suit, inter alia, on the ground that the ceremonies of pre emption were not performed and that under the Mohamedan, law the plaintiff was not entitled to pre emption, as the land on which the said house and golas stood was "rent paying" land. The learned Munsif dismissed the suit. But, on appeal the Subordinate 108 Judge of Chapra allowed the appeal and granted a decree for pre emption in favour of the plaintiff respondent 1. On appeal, the High Court agreed with the Subordinate Judge and dismissed the appeal. Defendants 1, 2 and 2A have preferred the present appeal by 'special leave against the Judgment of the High Court. Mr. Varma, learned counsel for the appellants, raised before us the following four points: (1) the right of pre emption infringes the fundamental right of a citizen under article 19(1) (f) of the Constitution and it is not saved by cl. (5) thereof: (2) the first respondent failed to establish his title and, therefore, his suit should have been dismissed on that ground; (3) the ceremonies of pre emption were performed only on October 11, 1949 whereas the sale deed in favour of the appellants was executed and registered on October 20, 1949 and, as the said performance of the ceremonies was premature, they having been performed before the sale was completed, the right of pre emption could not be enforced; and (4) there is no right of pre emption in respect of leasehold interest and, therefore, there cannot be a right of pre emption in respect of a house standing on such land, as Mohamedan law does not recognize a right of pre emption in mere super structure. Mr. Sarjoo Prasad, learned counsel for the respondents controverts the correctness of the said propositions. We shall deal with his arguments in the course of the judgment. To appreciate the first contention, some dates may be recapitulated. Respondent 1 purchased one half share of the property by a sale deed dated July 18, 1940. Appellants 1 and 2 purchased the other half of the property on October 10, 1949. The suit was filed on December 10, 1949. The Munsif dismissed the suit on April 14, 1953. The Constitution came into force on January 26, 1950. The appellants had no fundamental right on the date when they purchased the property. But it is said that under the law of pre emption a person who seeks the assistance of a court with a view to enforce the right of pre emption is bound to establish that the 109 right existed on the date of the sale, on the date of the institution of the suit, and also on the date of the decree of the primary court See Nuri Mian vs Ambica Singh(1) and, therefore, the restriction on the appellants ' fundamental right to acquire the property was not finally imposed before the Constitution, but became crystallized into an irrevocable restriction only at the time of the passing of the decree which was subsequent to the coming into force of the Constitution. We need not express our opinion on this question, as it has been held by this Court in Bhau Ram vs Baij Nath(2) that a right of pre emption vis a vis co sharers was not an unreasonable restriction on the fundamental right of a person to acquire, hold and dispose of property. But learned counsel contends that decision should be confined to a case of co sharers who are related to each other, and should not be extended to co sharers who are not related to each other. Reliance is placed upon the following observations in that judgment found at p. 1483: "If an outsider is introduced as a co sharer in a property it will make common management extremely difficult and destroy the benefits of ownership in common. " This sentence does not, in our view, sustain the distinction sought to be made by the learned counsel between co sharers who are relatives and co sharers, who are not relatives. The word "outsider" in the said passage can only mean a person who is not a co sharer. The judgment of this Court finally settled the question as between co sharers. Following the decision we hold that the law of pre emption vis a vis co sharers does not infringe the fundamental right conferred under article 19 (1) (f) of the Constitution. The second question, namely, that of the plaintiff 's title does not call for consideration by us. It was not raised in the courts below, and it being a pure question of fact, we cannot allow it to be raised for the first time before us. We, therefore, disallow it. (1) Cal. (2) ; 110 The next point raised by the learned counsel is that the ceremonies of pre emption performed in this case were premature, as the sale was completed only on October 20, 1949 whereas the ceremonies were performed on October 11, 1949. This Court, by a majority, held in Ram Saran vs Domini Kuer(1) that the registration under the Registration Act is not complete till the document to be registered has been copied out in the records of the Registration Office as provided in section 61 of that Act. Learned counsel contends that a perusal of the sale deed dated October 10, 1949, ex facie shows that it was copied only on October 20, 1949. The question as to when a document was copied out in the concerned register is certainly a question of fact. The argument was not raised either before the trial court or before the first appellate court. No issue was framed on the point. It was raised for the first time before the High Court. The learned Judges of the High Court pointed out that if the appellants wanted to take advantage of the said point, it was their duty to have raised it either in the trial court or in the first appellate court and to have adduced evidence by calling for the register from the registration department to show on what date the actual copying of the record was made under section 61 of the Registration Act. In the circumstances, the learned Judges refused to allow the appellants to raise the point. The High Court, in our opinion, was certainly right in disallowing the appellants from raising the question of fact for the first time in second appeal. If the plea had been taken at the earliest point of time, the respondents might have had many defences and might have explained the various dates found on the documents. We cannot allow the appellants to raise the said plea. Now we come to the substantial point raised in the appeal. The right of pre emption is sought to be enforced in respect of a rent paying land with a house thereon. Learned counsel for the appellants contends that the right of pre emption does not arise (1) ; 111 on the sale of a leasehold interest in land and that in the absence of such a right there cannot be a right of pre emption in respect of the super structure alone. Learned counsel for the respondents, on the other hand, contends that under Mohamedan law the right of pre emption exists in the case of akar i.e., a house or mansion, to enable the co sharer to have peaceful enjoyment thereof and that the fact that there is no right of pre emption in respect of a leasehold interest in land does not in any way detract from that right. He further contends that whatever might have been the strict incidents of the right of pre emption under Mohamedan law, this Court cannot ignore the modern evolution of law recognizing the transferability and heritability of leasehold interest in land. Before we consider the problem thus presented for our decision, it would be convenient at the outset to notice certain general principles relevant to the present enquiry. It has not been disputed that Hindus in the Province of Bihar came to adopt the Mohamedan law of pre emption as a custom. This was because under the Muslim rule the law of pre emption under the Mohamedan law was administered as a rule of common law of the land in those parts of the country which came under their domination. We must, therefore,. look to Mohamedan law to ascertain the incidents of the right of pre emption unless it is established in a particular case that by custom the said law has been modified to any extent. Being a customary law, it is not permissible for courts to extend the custom beyond the limits within which upto now it has been recognized. The concept of rationalization is out of place in the ascertainment of the customary incidents of the right of pre emption. This Court in Bishan Singh vs Khazan Singh(1) considered the law on the subject and laid down the propositions flowing from the discussion. The following propositions are relevant to the present enquiry: (1) The right of pre emption is simply a right of sub (1) 78. 112 situation, but not of re purchase i.e., the pre emptor takes the entire bargain and steps into the shoes of the original vendee; (2) it is a right to acquire the whole of the property sold and not a share of it; and (3) the right being a very weak right, it can be defeated by all legitimate methods, such a.s the vendee allowing the claimant of a superior or equal right being substituted in his place. It is, therefore, settled law that the pre emptor must take the entire bargain: he cannot split up the bargain and claim to be substituted in respect of a portion of it either on the ground that he does not require a part of it or for the reason that he is entitled to claim pre emption only in respect of a part of it. Further, the right being a weak one, a court need not be astute to rationalize the doctrine so as to make it fit into modern trends of property law. Indeed, it should be reluctant to extend it beyond the incidents clearly recognized by Mohamedan law or by custom. With this background let us now turn to the question that arises in this case. The subject can conveniently be considered under three heads: the pre emptor; (ii) the vendor; and (iii) the property in respect of which the right is claimed. In Baillie 's "Digest of Moohummudan Law" the following passage appears at p. 478: "When it is said that akar (such as mansions, vine yards and other kinds of land) are proper objects of the right of pre emption, it is by virtue of a right of milk, or ownership, that they are so. " Mahmood 3. in Gobind Dayal vs Inayatullah(1) observed at p. 779 thus: "pre emption is a right which the owner of certain immovable property possesses, as such, for the quiet enjoyment of that immovable property, to obtain, in substitution for the buyer, proprietary possession of certain other immovable property, not his own, on such terms as these 113 on which such latter immovable property is sold to another person. " The same learned Judge in Sakina Bibi vs Amiran(1) states that in the pre emptive tenement (the tenement by the ownership of which the pre emptor wants to exercise his right of pre emption ), the pre emptor should have vested ownership and not a mere expectancy of inheritance or a reversionary right, or any other kind of contingent right, or any interest which falls short of full ownership. Beaumont C.J. in Dashrathlal vs Bai Dhondubai(2), after considering the law on the subject, accepted the view that the custom of preemption only exists as between free holders, that is to say neighbouring lands in respect whereof the custom is claimed to apply must be freehold and that the land sought to be pre empted must also be free hold. This Court, in Shri Audh Bihari Singh vs Gajadhar Jaipuria(3), has laid down the correct legal position thus: ". . the benefit as well as the burden of the right of pre emption run with the land and can be enforced by or against the owner of the land for the time being although the right of the pre emptor does not amount to an interest in the land itself." This legal requirement of the full ownership of the pre emptor may be traced either to the fact that "in ancient times Mohamedan law did hot recognize leases although it recognized hire of|and for the purpose of user, or to the circumstance that the right was conferred to enable the pre emptor to prevent an undesirable person from becoming his neighbour" which would not be the case if he was only a temporary occupant of the property in respect whereof the right arose. Whatever may be the reason, it may safely be held now that the pre emptor must be the owner of the property in respect whereof he claims the right of pre emption. (1) (1888)I.L.R.10 All. 472, 477. (2) A.I.R. 1941 Bom.262. (3) ; , 80. 1 SCI/64 8 114 The next question, namely, the quantum of interest which the vender shall possess in the land sought to be pre empted depends upon the doctrine of reciprocity. Unless the land in respect of which the custom is claimed and the land sought to be pre empted are freeholds, the principle of reciprocity will be defeated. To illustrate: "A" has full ownership in a land in respect of which he claims the right of pre emption;the co sharer vendor has only a leasehold interest in respect of the land sought to be pre empted; if the pre emptor had sold the land earlier, the vendor having only a leasehold interest in his land, could not have claimed the right of pre emption in respect of his land, for he had no full ownership in the land. The absence of this reciprocity gives an advantage to one of the sharers which the Mohamedan law does not permit. This doctrine of reciprocity has been succinctly stated by Mahmood J. in Gobind Dayal vs Inavatullah(1) in the passage we have extracted earlier. In Mt. Bibi Saleha vs Amiruddin(2) the said doctrine was restated. It was held therein that a mukarraridar holding under a co sharer had no right to pre empt as against another co sharer and as a mukarraridar could not claim pre emption, the co sharer on the doctrine of reciprocity, which is well understood in the Mohamedan law, could not claim pre emption against the mukarraridar. A Full Bench of the Bombay High Court in Deshrathlal vs Bai Dhondubai(3) has given its approval to the said principle. This Court in Shri Audh Behari Singh vs Gajadhar Jaipuria(4) succinctly put the legal position in the following words: "The crux of the whole thing is that the benefit as well as the burden of the right of pre emption run with the land and can be enforced by or against the owner of the land for the time being although the right of the pre emptor does not amount to an interest in the land itself. " That leasehold interest is not subject to the law of pre emption has been well settled: see Baboo Ram (1) All. (2) [1929] I.S.R. 8 pat 251. (2) A.I.R. 1941 Bom. (4) ; ,80. 115 Golam Singh vs Nursingh Sabey(1), Mohammad Jamil vs Khub Lal Raut(2); Sakina Bibi vs Amiran(3); Phul Mohammad Khan vs Qazi Kutubuddin(4); Moorooly Ram vs Baboo Hari Ram(5); Rameshwar Lal vs Ramdeo Jha(6); and Nathuni Ram vs Gopinath(7). Indeed this legal position has not been controverted by learned counsel for the respondents. Now let us address ourselves to the main contention of the respondents, namely, that the right of pre emption exists in the Mohamedan law in respect of akar which includes a building, that the main purpose intended to be served by the said right is to prevent an undesirable person from becoming the sharer of the house and that, therefore, it would be unrealistic to negative that right in the case of a house on the ground that the land on which the house stands is a leasehold interest. Reliance is placed upon the following passage in Charles Hamilton 's "The Hedaya", 2nd Edn., at p. 558: "It is observed, in the abridgment of Kadooree, that Shaffa does not affect even a house or trees when sold separately from the ground on which they stand. This opinion (which is also mentioned in the Mabsoot) is approved; for as buildings and trees are not of a permanent nature, they are therefore of the class of movables. " Relying upon this passage it is contended that, as in the present case the house was sold along with the ground, the doctrine of "Shaffa" applies to the house. But this passage must be understood on the assumption that the right of pre emption exists in respect of the land on which the house stands. In Baillie 's "Digest of Moohummudan Law", the legal position is made clear. Therein the author says at pp. 479 480: "When a person has purchased a palm tree to cut it down, or when he has purchased it absolutely, there is no right of pre emption in it. But (1) (2) [1921] 5 Pat. L.J. 740. (3)[1888] I.L.R. 10 All. 472, 477. (4) A.I.R. 1937 Pat. (5) [1867] 8 W.R.106. (6) A.I.R. 1957 Pat. (7) A.I.R. 1962 Pat. 226 (F.B.) 116 if it be purchased with its roots and the ground on which it stands, it is liable to the right. The rule is the same with regard to buildings purchased for removal, and the same buildings purchased with their foundations; and there is no preemption in the former case, while there is in the latter. " This passage indicates that a building sold as a superstructure is not subject to the right of pre emption, for it would be in effect a sale of a movable. Unless the house is sold with its foundations, that is to say with the land on which it stands, there is no right of pre emption in regard thereto. Though it may be said that in the present case the house was sold with its foundations, the same principle will have to be applied, for the right of pre emption cannot be invoked in the case of a leasehold interest. In effect and substance the right is sought to be invoked in the case of the building decors the foundations which the law does not permit. Reliance is placed upon the proposition found in para. 370 of Wilson 's Anglo Muhammadan Law, which reads: "If a house is sold apart from the ground on which it stands with a view to being pulled down, so that it is in fact a sale of the materials, no right of pre emption arises with respect to it. If it is sold for occupation as a house, then preemption can be claimed on the ground of vicinage by the owner of any adjoining land or house (and perhaps by the owner of the site itself, supposing him to be a different person from the vendor of the house, even though he should happen to own no land except that covered by the house). " It is said that the words in the brackets conceding the right of the owner of a site to pre empt the house sold as a house indicates that the real principle is whether the house is sold as a habitate or only as materials and that in the former case irrespective of the ownership of the land or the existence of the right of pre emption in respect thereof, the sale of the house can be pre empted. The opening word 117 of the passage, namely, "perhaps", shows that the author himself is not sure of the legal position. That apart, the illustration only deals with a land in respect of which there can be a right of pre emption, i.e., the owner of the land has a freehold interest therein. Strong reliance is placed upon the decision of a Division Bench of the Allahabad High Court in Zahur vs Nur Ali(1). There, a dwelling house was sold as a house to be inhabited as it stood with the same right of occupation as the vendor had enjoyed, but without the ownership of the site. It was held that the right of pre emption under the Mohamedan law attached to such house. The judgment is not a considered one. The learned Judges observed at p. 100 thus: "The seller not only sold the materials of the house, but such interest as he possessed as an occupier of the soil. The house was sold as a house to be inhabited on the spot with the same right of occupation as the seller had enjoyed. ' ' The learned Judges distinguished the texts cited on the ground that they applied only to the sale of the materials of a house or a house capable of and intended to be removed from its site. This judgment no doubt supports the contention of learned counsel for the respondents; but the learned Judges have not considered the well settled principle that there cannot be a right of pre emption in respect of a land over which the vendor has no full ownership. The decision suffers from the infirmity that the said well settled principle has escaped the attention of the court. Reliance is also placed on the decision of a Division Bench of the Patna High Court in Chariter Dusadh vs Bhagwati Pandey(2). There, the question was whether the pre emptor had the milkiyat or ownership in the property on account of which he claimed the right of pre emption. The pre emptor was birtdar though he was described as a tenant in the Record of Rights for a particular purpose. The court held (1) (1880)I.L.R. 2 All. (2) A.I.R. 1934 Pat. 596. 118 that he was a full owner. This decision does not really support the respondents. There is a direct decision of a Full Bench of the Patna High Court on the question now raised, in Nathuni Ram vs Gopinath(1). There, as here, a right of pre emption was claimed in respect of a house which stood on a leasehold land. After a full discussion of the subject, Choudhary J., speaking for the Full Bench, came to the following decision, at p. 229: "On a careful consideration of the authorities and the principle of law involved in the case, my concluded opinion is that,in case of a sale of different properties, the. right of pre emption cannot be exercised with respect to one or some of them only if the enjoyment thereof is dependent on the property over which that right is not and cannot be exercised in law and consequently, where the land is sold with a house thereon, pre emption cannot be allowed. with respect to the house only apart from the land over which the right could not be exercised on account of its being a leasehold property. The sale of a house for inhabitation or occupation, without the sale of its foundations and the land over which the foundations stand, is inconceivable, except, as pointed out in Hedaya, in case of the sale of the upper story of a house. " We agree with the conclusion. As this judgment has considered the earlier decisions on the subject, we need not again refer to them. To summarize: A right of pre emption is annexed to full ownership of property of co sharers. It is not attached to property held on subordinate tenure, such as leases etc. It is an incident of the co sharer 's property operating both as a right and as a burden in different situations. It is a right of substitution taking in the entire bargain. It must take the whole or nothing. It does not matter if the inability to take the whole arises out of a voluntary act or out of a legal limitation inherent in the nature of the (1) A.I.R. 1962 Pat. 226 (F.B.) 119 property transferred. It is reciprocal in operation, that is, if the situation was reversed and the vendor became the pre emptor, he should be in a position to pre empt the co sharer 's whole bargain. The two doctrines which may, for convenience, be referred to as "entire bargain" and "reciprocity" cannot ' operate unless both the co sharers are full owners of their respective properties. Akar or a house standing on a freehold land is subject to the right of preemption, but a house on a leasehold land stands on a different footing. As there is no right of preemption in respect of a land held on a subordinate tenure, the right of pre emption cannot be enforced against the house either, as the pre emptor cannot be substituted for the entire bargain. The right must fall also on the ground that the super structure disannexed from the land would be movable property and it is well settled that the right of pre emption cannot be enforced in respect of movables. We, therefore, hold that the first respondent has no right to pre empt the sale executed in favour of the appellants. In the result, the appeal is allowed, the decrees of the Subordinate Judge 's Court and the High Court are set aside and that of the trial Court is restored. The appellants will have their costs throughout. RAGHUBAR DAYAL J. I agree that the law of pre emption regarding co sharers does not infringe the fundamental right conferred under article 19(1)(g), that the pre emptor must be the owner of the property in respect whereof he claims the right of pre emption, that the vendor must have proprietary right in the property sold and sought to be pre empted, that the sale of lease hold interest is not subject to the law of pre emption and that the sale of the super structure of a house is not pre emptible. I also agree that the pre emptor must pre empt for the entire property sold if that be pre emptible. I would, however, not like to express an opinion upon the point whether, in certain circumstances, the pre emptor can or cannot 120 pre empt part of the property sold. There have been cases where partial pre emption has been allowed. Some of the exceptional cases have been referred to at p. 778 of 'Muslim Law as Administered in India & Pakistan ' by K.P. Saksena, IV Edition. In Zainab Bibi vs Umar Havat Khan(1) the preemptor was allowed to pre empt that part of the property sold which was pre emptible and in support of the decision it was stated at p. 457: "So far as the Mohammedan Law is concerned, there is no doubt that where several properties are sold in portions of which a pre emptor has the right of pre emption, he is entitled to preempt that portion only on payment of a proportionate price. On this point there was a consensus of opinion among the three Imams as quoted in the Fatawa Alamgiri, referred to in Omur Khan vs Mooras Khan (1865 N.W.P. H.C.R. 173, 174)" This Court did express an opinion in Bishan Singh vs Khazan Singh(2): "The general law of pre emption does not recognize any right to claim a share in the property sold when there are rival claimants. It is well established that the right of pre emption is a right to acquire the whole of the property sold in preference to other persons (See Mool Chand vs Ganga Jal: ILR 11 Lah. 258, 273) " In that case the dispute lay between two rival preemptors and arose in these circumstances. One preemptor pre empted the entire sale and obtained the decree on condition that he would deposit a certain amount within a certain time. But, before he could deposit the amount, the rival pre emptor instituted another suit for the pre emption of the entire property sold and impleaded in that suit the first pre emptor. The rights of the two pre emptors were found to be equal. The entire property sold was clearly pre emptible. It was, in this context, that the observation (1) (2) ; ,884. 121 was made. It would be a matter for consideration at the appropriate time whether there can be any exception to this general rule that the entire property sold must be pre emptor by the pre emptor in his suit. I would therefore rest my decision on the facts that the sale of the lease hold interest in land is not pre emptible and that the super structure of the house is also not pre emptible and that therefore the plaintiff pre emptor cannot pre empt the sale of the property sold. I therefore agree that the appeal be allowed, the decrees of the Subordinate Judge and the High Court be set aside and that of the trial Court be restored and that the appellants would have their costs throughout. Appeal allowed.

One Chathilal Sah of Sahebganj, Bihar, was the owner of a house and two golas which stood on a rent paying land and he executed a will bequeathing the said property to his daughter and nephew in equal shares. In 1940 the nephew sold one half of the property to respondent No. 1 who two years later acquired under a patta some adjoining lands. In 1949 respondent No. 3 alleging to be the husband of the daughter sold the remaining half of the property to appellants 1 and 2. In December 1949 respondent filed a title suit for declaration that he has a right to pre empt the property purchased by appellants 1 and 2 and for directing them to transfer the same to him. The trial court dismissed the suit but in the appeal before the Subordinate Judge he succeeded and the High Court dismissed the appeal presented by the appellant. The present appeal is by special leave granted by this Court. Before this Court four contentions were raised by the appellants, two of which being pure questions of fact and not having been raised in the courts below were not considered by this Court. The questions of law raised were (a) the right of pre emption infringes the fundamental right of a citizen under article 19 (1) (f) of the Constitution and (b) there is no right of pre emption in respect of leasehold interest and therefore there cannot be a right of pre emption in respect of a house standing on such land. Held: (i) The law of pre emption vis a vis co sharers does not infringe the fundamental right conferred under article 19(1) (f) of the Constitution. Bahu Ram vs Baij Nath, [1962] Supp. 3 S.C.R. 724 and Nuri Mian vs Ambica Singh, Cal. (ii) A right of pre emption is annexed to full ownership of property of co sharers. It is not attached to property held on subordinate tenure, such as lease etc. It is an incident of the co sharer 's property operating both as a right and as a burden in different situations. It is a right of substitution taking in the entire bargain. It must take the whole or nothing. It does not matter if the inability to take the house arises out of a voluntary act or out of a legal limitation inherent in the nature of the property transferred. It is reciprocal in operation, that is, if the situation was reversed and the vendor became the pre emptor, he should 106 be in a position to pre empt the co sharers ' whole bargains. The two doctrines which may, for convenience be referred to as "entire bargain" and "reciprocity" cannot operate unless both the co sharers are full owners of their respective properties. Akar or a house standing on a freehold land is subject to the right of preemption, but a house on a leasehold land stands on a different footing. As there is no right of pre emption in respect of a land on subordinate tenure the right of pre emption cannot be enforced against the house either, as the pre emptor cannot be substituted for the entire bargain. The right must fail also on the ground that the super structure disannexed from the land would be movable property and it is well settled that the right of pre emption cannot be enforced in respect of movables. Case law reviewed. Bishan Singh vs Khazan Singh, ; , Goblad Dayal vs Inayatullah, All 775, Sakina Bibi vs Amiran, All 472, Dashrathlal vs Bai Dhondubai, A.I.R. (1941) Bom. 262, Shri Audh Behari Singh vs Gajadhar Jaipuria; , , Mr. Bibi Saleha vs Amiruddin(1929)I.L.R. 8 Pat. 251, Baboo Ram Golam Singh vs Nursingh Sabey, Mohammad Jamil vs Khub Lal Raut, , Phul Mohammad Khan vs Qazi Kutubuddin, A.I.R. 1937 Pat. 578, Mooroof ly Ram vs Baboo Hari Ram, , Rameshwar Lal vs Ramdeo Jha, A.I.R. 1957 Pat. 695, Nathuni Ram vs Gopinath, A.I.R. 1962 Pat. 226 (F.B), Zahur vs Nur Ali, All 99 and Chariter Dusadh vs Bhagwati Pandey A.I.R. 1934 Pat. Per Raghubar Dayal J While agreeing with the majority judgment on other points, no opinion is expressed on the point whether in certain circumstances the pre emptor can or cannot pre empt part of the property sold. There have been cases where partial pre emption has been allowed. Zainab Bibi vs Umar Hayat Khan, (1936) All. L.J. 456 and Bishan Singh vs Khazan Singh, ; Sale of leasehold interest in land is not pre emptible and that the super structure of the house is also not pre emptible and therefore the plaintiff pre emptor cannot pre empt the property sold. The appeal should be allowed.

minal Appeal No.70 of 1968. Appeal by special leave from the judgment and order dated October 6, 1967 of the Allahabad High Court, Lucknow Bench in Criminal Appeal No. 164 of 1966. R.K. Garg, S.C. Agarwal and Uma Dutta, for the appellants. O.P. Rana, for the respondent. 238 The Judgment of the Court was delivered by Jaganmohan Reddy, J. This appeal by special leave is directed against the judgment of the Allahabad High Court setting aside the conviction of Hori Lal and Bisram under section 307 read with section 34 of the I.P.C. and instead convicting them under section 326 read with section 34 I.P.C. and sentencing each of them to rigorous imprisonment for 5 years. The appellants. who are the residents of Bhitwa Gadan Khera are friends belonging to the same party. It was alleged that on June 14, 1964 Bisram 's cattle strayed into the field and damaged the crop of Deo Dutt who is the nephew of Sagar Singh and Jeer Bahadur. In respect of this damage Deo Dutt and his partner Ram Bharose. complained to Bisram who along with some other persons went to the house of Deo Dutt and threatened him and the members of his family including Jeet Bahadur and Sagar Singh. Thereupon Deo Dutt lodged a complaint in the police station. Because of this complaint relations between the parties became strained as a result of which the accused stopped working for Jeet Bahadur and Sagar Singh and even asked the other members of his beradari to follow suit. On March 29, 1965 at about 5.30 p.m. Jeet Bahadur P.W. 2 along with his laborer Sri Pal deceased was reaping the harvest. The field of Sagar Singh P.W. 1 is situate just adjacent to the field of Jeer Bahadur with only a chak road between their fields. It is the prosecution case that on that day both the accused armed with kantas went to the field of Jeet BahAdur and challenged him. Immediately thereafter they began to deal kanta blows on Jeet Bahadur. Jeer Bahadur P.W. 2 cried out whereupon Sagar Singh P.W. 1 hearing the shouts rushed to his aid. Maya Ram P.W. 3 and Himachal and Ram Pal who were nearby also rushed to the aid of Jeet Bahadur. Accused Bisram is said to have fired a revolver at Sagar Singh but he did not receive any inquiry. Thereafter the accused ran away towards the village. As Jeet Bahadur was injured, Sagar Singh P.W. 1 took him to the police station and there lodged a report exhibit Ka 1 at about 9.55 p.m. on March 29, 1965. The investigation officer Bhanu Prakash Sharma, P.W. 5 investigated the crime,. prepared site plan, recorded statements of the witnesses and seized blood stained mud. Jeet Bahadur was admitted to the District hospital at Unnao. Dr. Srivastava examined him on March 30, 1965 at 8.30 a.m. and found as many as 10 injuries of which injuries 2 to 7 were incised wounds, injuries 1 and 9 contusions and injuries 8 and 10 abrasions. All the incised injuries except No. 7 showed that the bones had been cut. These injuries are as follows : "2. Incised wound .13" X 1" X bone vertically on the right half forehead just above the right eye brow. 239 3. Incised wound 1 1/4" ><1/2">( bone cutting the underlying bone lower p art left humerus just above the left elbow on the back of left arm. Incised wound obliquely 5" X 2" X bone cutting the underlying radius and above left in the middle of the left forearm back. Incised wound 5"X I"X bone on the back of the left forearm lower I/3rd. Slightly obliquely cutting both the bones of left forearm. Incised wound 4 1/2"X 1" bone on the left leg middle back and laterally cutting the underlying tibia bone shaft. " The defence of the accused is that they had been falsely implicated. The prosecution examined Sagar Singh P.W. 1, Jeet Bahadur P.W. 2 and Maya Ram P.W. 3 as eye witnesses and since Sri Pal one of the eye witnesses died after his evidence was recorded by the committing magistrate, his deposition was admitted and treated as evidence under section 33 of the Evidence Act (exhibit Ka 11). The learned Sessions Judge. believed the eye witnesses and relying upon exhibit Ka 3 convicted the accused under section 307 read with section 34. The learned Judge however acquitted them of the second charge of attempting to murder P.W. 1 with pistol. In this appeal Mr. S.C. Agarwala learned counsel for the appellants contends firstly, that the injuries as found by the doctor do not justify the conviction of the appellants of grievous hurt inasmuch as there is no evidence that any of the bones was fractured or that the injured person was disabled for 20 days or more; secondly, that the contusions found on P.W. 2 would clearly belie the evidence of the eye witnesses that the injuries were inflicted by a kanta, and thirdly, that the deposition of Sri Pal ought not to have been admitted in evidence under section 33 because the death of Sri Pal has not been strictly proved. The main question which requires to be determined in this case is whether there is sufficient evidence to establish that ,he appellant had caused the injuries found on P.W. 2, and if so, having regard to the injuries what is the offence which the appellants have ' committed. It appears to us that there is sufficient credible evidence of the eye witnesses to prove beyond doubt that the appellants had caused injuries to P.W. 2. Even if the evidence of P.W. 1 and P.W. 2 who. are brothers, of whom P.W. 2 is the victim, is for the moment not considered, there is no reason why the evidence of P.W. 3 Maya Ram ought not 240 to be relied upon. According to Maya Ram, he was in the Kallian when he heard the cries of Jeet Bahadur and rushed. He says, "it was the time of about 5 or 5.30 ' p.m. I heard an .alarm raised in the field of Jeet Bahadur. I and Himachal ran to that side. Ram Pal was coming up running from the western side. In the field of Jeet Bahadur, I saw Bisram and Hori Lal accused present in court beating Jeet Bahadur with kantas. We raised alarm. After assaulting Jeet Bahadur Hori Lal and Bisram accused went away towards the east. Sagar Singh was coming up running from his chak. Sagar Singh was raising alarm. Bisram accused fired the pistol at Sagar Singh, but Sagar did not sustain any injury. I saw injuries on the body of Jeet Bahadur. After it we took Jeer Bahadur to Hasanganj on a cot. " The witness was cross examined at length but now here has it been suggested that he is an interested witness or he is speaking untruth. Both the Sessions Court as well as the High Court relied upon his evidence which according to them fully corroborated the evidence of P.Ws. 1 and 2. The fact that some contusions and abrasions were found on P.W. 2 does not impair the evidence of these witnesses because the doctor was not asked whether the injuries were possible if kanta blows are given. It is quite possible to find contusions where two persons are giving blows with kantas which have also blunt asides. Unless definite suggestions are made and the impossibility of finding any such injuries with kanta blows is elicited, we will not be justified merely on a submission from the bar to accept it and discard the evidence of the eye witnesses. We, therefore, find no valid reason in not accepting the concurrent findings of both the courts that the appellants had caused injuries to P.W. 2 as spoken to by the witnesses. these circumstance.s, it is unnecessary for us to express any view on the question whether the evidence of the investigating officer Bhanu Prakash Sharma that 'it has been learnt that Sri Pal has died ' is sufficient to prove the death of Sri Pal in order to admit the deposition of Sri Pal in the Committal Court under section 33 of the Evidence Act. It now remains to consider whether the conviction of the appellants under section 326 for grievous hurt is justified. The answer to this question would depend on the nature of the injuries which have been found on P.W. 2, namely, whether they are simple or grievous. In order to justify conviction under section 326. injuries on P.W. 2 must satisfy the requirements of cl. 7 or cl. 8 of section 320 of the Indian Panel Code, otherwise they will be treated as simple injuries. Clauses 7 and 8 of section 320 I.P.C. provide that an injury could only be designated as grievous if it is (l) a fracture or dislocation of a bone or tooth, or (2) any hurt which 241 endangers life or which causes the sufferer to. be ,during the space of twenty days in severe bodily pain, or unable to follow his ordinary pursuits. It is contended by the learned counsel for the appellant that none of the injuries 2 to 6 which were inflicted on P.W. 2 discloses that there is a fracture or dislocation of any bone. These injuries, it is said, at the most show that the particular bones on which the injuries were inflicted were cut which however does not amount to a fracture. It is true that fracture has not been defined in the penal code. It is sometimes thought as in the case of Po Yi Maung vs Ma E Tin(1) that the meaning of the word fracture would imply that there should be a break in the bone and that in the case of a skull bone it is not merely sufficient that there is a crack but that the crack must extend from the. outer surface of the skull to the inter surface. In Mutukdhar Singh vs Emperor(2) it was observed that if the evidence is merely that a bone has been cut and there is nothing whatever to indicate the extent of the cut, whether a deep one or a mere scratch on the: surface of the bone, it will be difficult to infer that the injury is a grievous hurt within the meaning of section 320 of the Panel Code. In our view, both these assumptions are misleading. It is not necessary that a bone should be cut through and through or that the crack must extend from the. outer to the inner surface or that there should be displacement of any fragment of the bone. If there is a break by cutting or ,splintering of the bone or there is a rupture or fissure in it, would amount to. a fracture within the meaning of el. 7 of section 320. What we have to see is whether the. cuts in the bones noticed in the injury report are only superficial or do they effect a break in them. The nature of the injuries as spoken to by the doctor in his evidence, discloses the length, breadth and depth of each injury. far as the depth of the injuries Nos. 3, 4, 5 and 6 is concerned, each one of the injuries shows that it is bone deep and they are described as cutting the underlying bone. in injury 3 left humerus, in injury 4 radius, in injury 5 both the bones of the left forearm and in injury 6 the tibia bone shaft have been cut which would show that they are fractures. Apart from this the doctor as noticed earlier has in his evidence said that these injuries are grievous. It is contended that the doctor has not disclosed the reason why he thinks that the injuries were grievous. But in our view the doctor would not be unaware of what injuries are grievous or what are simple. At any rate, the nature of the injuries considered with the evidence of the doctor would undoubtedly establish that all the aforesaid" ' (1) A.I.R. (1937 ') Rang 253. (2) A.I.R. (1942) Pat. 242 injuries were grievous. these injuries were inflicted by kantas which are dangerous weapons and hence the conviction under section 326 is fully justified. The appeal fails and it is dismissed. Y.P. Appeal dismissed.

The appellants gave kanta blows resulting in a number of injuries to a person. Some of injuries were incised wounds, some contusions, and some abrasions. All the incised4 injuries except one showed that the bones had been cut. On the question whether the conviction of the appellants under section 326, I.P.C. for grievous hurt was justified or not; HELD: The conviction under section 326 was fully justified. In order to. justify conviction under section 326, the injuries must satisfy the requirements of cl. 7 Dr cl. 8 of section 320 of the Indian Penal Code, otherwise they will be treated as simple injuries. Clauses 7 'and 8 of section 320 I.P.C., provide that an injury could only be designated as grievous if it is (1) a fracture or dislocation of a bone or tooth, or (2) any hurt which endangers life or which causes the sufferer to be during the space of twenty days in severe bodily pain, or unable to follow his ordinary pursuits. Fracture has not been defined in the Penal Code. It is not necessary that a bone should be cut through and through or that the crack must extend from the outer to the inner surface or that there should be displacement of any fragment of the bone. If there is a break by cutting or splintering of the bone or there is a rupture or fissure in it, would amount to a fracture within the. meaning of cl. 7 of section 320. What has to be seen is whether the cuts in the bones noticed in the injury report are only superficial or do they effect a break in them. [242 H; 243 D F] In the present case, some of the incised injuries show that they were bone deep and were described as cutting the underlying bone, which would show that they were fractures. Apart from this the doctor said that the injuries were grievous. These injuries were inflicted by Kantas which are dangerous weapons. Observations contra in Po Yi Maung vs Ma E Tin, A.I.R. (1937) Rang. 253 and Mutukdhar Singh vs Emperor, A.I.R. (1942) Pat. 376, disapproved.

Special Leave Petition (Civil) No. 7883 of 1985. From the Judgment and Order dated 24.5.1985 of the Bombay High Court in Appeal No. 461 of 1985. M.C. Bhandare, G.S. Chatterjee and Ms. C.K. Sucharita for the Petitioners. B. Datta, G. Ramaswamy, Additional Solicitor Generals, A.S. Bhasme, Praveen Kumar, R.P. Srivastava, Mrs. Sushma Suri, U.J. Makhija, B.S. Bhasania, Mrs. A.K. Verma, and Turn Bangs for the Respondents. The Judgment of the Court was delivered by KANIA, J. Heard Counsel. This is a Petition under Article 136 of the Constitution for special leave to appeal against a judgment and order of a Division Bench of the Bombay High Court dated May 24, 1985. Original Petitioner No. 1 who is dead was a hutment dweller and Petitioner No. 2 is a Union representing hutment dwellers having their hutments in lands belonging to the Bombay Port Trust. Respondents Nos. 1 to 3 to the petition are the Chairman of the Bombay Port Trust, Union of India and the State of Maharashtra respectively. Some of the hutments in the Bombay Port Trust lands were cleared by the Bombay Port Trust in the first part of May 1985 and these hutments were demolished. The Petitioners filed a Writ Petition No. 992 of 1985 on the Original Side of the Bombay High Court inter alia for restraining the Bombay Port Trust from carrying out any further demolition of hutments and asking for several other reliefs. A learned Single Judge of the Bombay High Court in his judgment and order dated May 15, 1985 disposing of the petition pointed out that the Petitioners ' Counsel was unable to point out any legal 176 fight in the petitioners. The property admittedly belongs to the Bombay Port Trust and the provisions of the Bombay Rents, Hotels and Lodging House Rates (Control) Act, 1947 are not applicable to the said property. The learned Judge further pointed out that although the petitioners claimed that there was some policy of the State Government for providing alternative accommodation before the hutments on public lands were demolished, no statement of any such policy was brought to the attention of the Court and the learned Counsel for the State denied that there was any such policy for the Bombay Port Trust lands. The learned Judge dismissed the writ petition but directed that status quo should be maintained till and inclusive of 30th May, 1985 on certain conditions. The Petitioners preferred an appeal against the said order which was dismissed by a Division Bench of the Bombay High Court by the order sought to be impugned before us. Certain interim orders were passed in the said Petition from time to time with which we are not concerned. By an order dated January 27, 1986 a Division Bench of this Court comprising Bhagwati, C.J. and Oza, J. observed that as far as they gathered, about 406 families were involved in the operation relating to the removal of unauthorised hutments on the lands of Bombay Port Trust. They also observed that it was fair and just that some alternative land sites be provided to those who have been continuously in occupation since at least two years prior to a cut off date, fixed by them as January 1, 1981 should be provided with alternative sites before being thrown out of the said land and directed that those hutment dwellers who have been in occupation of the Bombay Port Trust lands along with their families for the said period, shall not be thrown out unless and until, as a condition precedent, alternative sites are provided to them for occupation. The Division Bench appointed a Commis sion for the purposes of inquiring and determining as to which of the persons whose names and addresses were given in the affidavit filed on behalf of the petitioners were in occupation of hutments in the Bombay Port Trust lands for at least two years prior to January 1, 1981. A plain reading of the said order makes it clear that the State Government was directed to provide alternative sites only to those hutment dwellers who were ultimately found entitled to protection as being in occupation for the period set out earlier i.e. two years prior to the cut off date. The Commission appointed by this Court submitted its Report on November 4, 1986. The Commission pointed out that out of 411 families mentioned in the affidavit filed on behalf of the Petitioners, the Com mission could make an inquiry in regard to 302 hutment 177 dwellers. 59 of them had already left for Govandi a place in Bombay where alternative sites were presumably allotted to them and the Commission held that these persons were not staying on the Bombay Port Trust lands. The Report makes it clear that inquiry could not be made with certain persons mentioned in the affidavit as they were not available for inquiry despite the fact that the Commission visited the sites at least six times and spent considerable time there. Out of the persons concerned, the Commission found that, on the evidence, only 50 hutment dwellers with their families could satisfy the Commission that they were living on the site for a period of two years prior to the cut off date, namely, 1.1.1981. The other hutment dwellers were unable to satisfy the Commission with their evidence. The commission er, however, stated that it was possible that some of these persons, who had been unable to establish their residence for the aforesaid period, might have been unable to do so because of their poverty, lack of literacy and want of documentary proof. It is after that making of this Report that the matter has come up before us. As far as we can see, in view of the aforesaid order of this Court, the main task before us is to implement that order. It was contended by Mr. Bhandare, learned Counsel for the Petitioners that although the cut off date was fixed as 1.1.1981, we should extended the cut off date in view of the time which has gone by. He further contended that there was a policy of the State of Maharashtra not to evict unautho rised occupants on the public lands except after providing them alternative accommodation. We are unable to accept the submissions of Mr. Bhandare. Once the cut off date has been fixed by this Court by the aforesaid order, there is no basis for extending the cut off date merely because time has gone by since that order because that would render the entire task given to the Commission futile. Moreover, doing so would run counter to the intention of this Court in making the aforesaid order which was to protect only those hutment dwellers who had been in occupation for at least two years prior to 1.1.1981. Although the policy of the Govern ment of the State of Maharashtra was referred to, no policy statement was pointed out to us and the learned Counsel for the State of Maharashtra made it clear that no such policy would be applicable to the Bombay Port Trust lands. In view of this, we are unable to take into account any alleged policy of the State. Moreover, the Port Trust land cannot be regarded as public land as being in the occupation of the Government, either the Central Government or the State Government. Under the circumstances, we direct that the said 50 hutment 178 dwellers along with their families who had been identified by the Commission as having occupied the said hutments for two years or more prior to the cut off date, namely, 1.1.1981, shall not be removed from their hutments and their hutments shall not be demolished except after provision of alternative sites for them. As already directed by the earlier order, the duty of carrying out this task is imposed on the State of Maharashtra but, even if either the Central Government or the Port Trust is able to give alternative sites to these hutment dwellers, the Port Trust will be at liberty to remove these hutments. We realise that the problem of hutment dwellers is a human problem and the removal of hutments is bound to cause an untold hardship and misery to the occupants. However, on that consideration, we cannot prevent Bombay Port Trust, from putting its land to its own use. It is not possible for this Court to say that whether there would be a greater injury to public interest by the removal of the unauthorised hutment dwellers or by preventing the Port Trust from put ting its own land to a proper use. In order to obviate the hardship referred to earlier, although to a limited extent, we direct that even the hutments on the said lands which are not entitled to protection, will not be demolished for a period of six months from the date of signing of this order. We only hope and trust that it will be possible for the State Government or the Central Government or even the Bombay Port Trust to make some provision for providing alternative sites at least to some of these hutment dwell ers, if not all. However, we make it clear that the provi sion of such alternative sites is not made a condition precedent to the removal of the hutment dwellers or the hutments in question other than those who are entitled to protection on the basis set out earlier. The Special Leave Petition is disposed of by this order. There will be no order as to costs. T.N.A. Petition disposed of.

In May 1985, some of the hutments in the Bombay Port Trust lands were cleared by the Port Trust and these hut ments were demolished. The petitioners filed a writ petition in the Bombay High Court for restraining the Bombay Port Trust from carrying out any further demolition of the hut ments. The writ petition was dismissed by a Single Judge of the High court. An appeal preferred against the order of the Single Judge was dismissed by a Division Bench. Hence the appeal by special leave to this Court. By an interim order dated 27th January 1986 a Division Bench of this Court fixed a cut off date as January 1, 1981 for the purpose of granting relief in the form of providing alternative sites to the hutment dwellers and directed that those hutment dwellers who have been continuously in occupa tion for at least two years prior to January 1, 1981 shall not be thrown out unless and until, alternative sites are provided to them for occupation. A Commission was also appointed to identify the persons who were eligible for alternative sites in terms of the aforesaid interim order. In its report submitted on 4th November 1986, the Commission pointed out that only 50 hutment dwellers could satisfy the Commission that they were living on the site for a period of two years prior to the cut off date. The other hutment dwellers were unable to do so. 174 It was contended on behalf of the petitioners that (i) in view of the time which has gone by, cut off date fixed by this Court should be extended, and (ii) the policy of the State of Maharashtra was not to evict unauthorised occupants on public lands except after providing them alternative accommodation. Disposing of the special leave petition, it was, HELD: 1. The problem of hutment dwellers is a human problem and the removal of hutments is bound to cause an untold hardship and misery to the occupants. However, on that consideration, the Bombay Port Trust cannot be prevent ed from putting its land to its own use. [178C] 2. Once the cut off date has been fixed by this Court, there is no basis for extending the cut off date merely because time has gone by since that would render the entire task given to the Commission futile. Moreover, doing so would run counter to the intention of this Court in making the aforesaid order which was to protect only those hutment dwellers who had been in occupation for at least two years prior to 1.1.1981. In view of the fact that no policy state ment of the Government of the State of Maharashtra was pointed out it cannot be taken into account. Moreover, the Port Trust land cannot be regarded as public land in occupa tion of the Government, either the Central Government or the State Government. [177E H] 2.1. Under the circumstances, directed that the said 50 hutment dwellers along with their families who had been identified by the Commission as having occupied the said hutments for two years or more prior to the cut off date, namely, 1.1.1981, shall not, be removed from their hutments and their hutments shall not be demolished except after provision of alternative sites for them. The Port Trust will be at liberty to remove these hutments after giving alterna tive sites to these hutment dwellers. [177H; 178A B] 3. It is not possible for this Court to say whether there would be a greater injury to public interest by the removal of the unauthorised hutment dwellers or by prevent ing the Port Trust from putting its own land to a proper use. [178C D] 4. The State Government or the Central Government or even the Bombay Port Trust may make some provision for providing alternative sites at least to some of these hut ment dwellers. However, 175 the provision of such alternative sites is not made a condi tion precedent to the removal of the hutment dwellers or the hutments in question other than those who are entitled to protection on the basis set out earlier.

Appeals Nos. 2116, 2217, 2218, 2126 to 2128 of 1970 , 33, 144 ,157, 159 to 163 and 164 to 166 of 1971. Appeals from the judgments and orders dated the September 5, 1970 of the Andhra Pradesh High Court in Writ Petitions Nos. 2720 of 1970 etc. section V. Gupte and G. Narayana Rao for the appellants (in 2116 of 1970). C.A. No. M. Natesan and G. Narayana Rao for the appellants (in C.A. No. 2217 of 1970). G. Narayana Rao for the appellants (in C. As. 2218 of 1970, 144, 157, 159 to 163 and 164 to 166 of 1971). M. C. Setalvad and W. C. Chopra, for the appellants (in C.As. No. 2126, of 1970). Polesseti Ramachandra Rao and W. C. Chopra for the appel lants (in C.As. 2127 and 2128 of 1970). section T. Desai and K. Rajendra Chowdhary, for the appellants, (in C.A. No. 33 of 1971). P. Ram Reddy and P. Parameshwara Rao, for the respon dents (in all the appeals). 369 The Judgment of the Court was delivered by p. Jaganmohan Reddy, J. This batch of Appeals is by Cer tificate against a common Judgment of the Andhra Pradesh High Court dismissing the Writ Petitions filed by several dealers in jaggery who challenged the vires and constitutionality of Sections 2, 5, 8 and 9 of the Andhra Pradesh, General Sales Tax Amendment Act 9 of 1970 (hereinafter called the "Amendment Act"). The Appellants are Commission Agents carrying on trade in jaggery. Agriculturists who prepare jaggery out of surplus sugarcane which they are unable to sell to the Sugar factories employ the Appellants as their Commission Agents to sell that jaggery. We will take the facts in Civil Appeal No. 2116 of 1970 as typical of the common question arising in all these Appeals. The Appellants carry on business of Commission Agent in jaggery in Anakapalli, Visakhapatnam and at varies places in West Godavari. In the course of their business the Appellants arrange, for the sale of jaggery charging a small commission for their services and renders an account to the respective principals in respect of these sales. In the pattis issued to the Agriculture the name of the persons to whom jaggery is sold is specifically mentioned. The baskets of each principal are separately marked. The stock register also indicates the number of baskets of jaggery held in the name of the Commission Agents. Every buyer is fully ap prised of the fact that he is purchasing the jaggery of specified agriculturist principals and not that of the Appellants. This procedure it is said has been in vogue for a long time. Till about 1963 under Section 11 of Madras General Sales Tax Act as well as under the Andhra Pradesh General Sales Tax Act 1957 (hereinafter called the "Principal Act") Commission Agents were required to obtain and were being issued licences and if they conformed to the conditions of those licences they were not subjected to tax. In 1963 the Principal Act was amended by Andhra Pradesh General Sales Tax Amendment Act 16 of 1963 which substituted a new Section II for that which was in force fill then. The new Section II changed the preexisting structure of assessment in that, the Agents of Resident Principals were made liable for assessment and collection of Tax through the liability of the Agent was made co extensive with that of the Principal. The Sales Tax authorities however were making assessments of the turn over of the Agents in respect of the purchase and sales of jaggery of several principals notwithstanding the fact that the turnover upto Rs. 10000/ of each was not exigible to tax. These assessments were challenged in a batch of writ petitions in Irri Raju & Ors. vs The Commercial Tax Officer, Tedeplalligudem & Anr.(1) in which the, High Court of Andhra Pradesh hold that the (1) Sales Tax Cases Vol. XX (1967) p. 501. 24 1 SC India/71 370 provisions of the principal Act indicated that the Agent is a dealer in respect of each of the principals, that he is deemed to be as many dealers as there are principals and therefore the total turn over of the Agent in respect of the several principals could not be computed for assessing him when in fact the turnover of each of the principals was below the limit i.e. Rs. 10.000/ . As a consequence of this. decision, the Andhra Pradesh General Sales Tax Amendment Act 5 of 1968 was enacted and a new Section 1 1 was substituted for the then existing Section. This Section II was given retrospective effect from the 1st August 1963. The object of this Amendment was to enable the 'Taxing authorities to assess, levy and collect tax or penalty under the Sales Tax Act from the Agent irrespective of the fact that such principal is not liable to pay the tax or penalty in respect of that transaction on account of the turn over of the principal being less than the minimum turnover specified in sub section of section 5. The proviso to the new Section II however authorised the Tax or penalty assessed or levied on or due from the Agent to, be, recovered by the Assessing authorities from the Principals instead of from the Agents, only if the principal is liable to pay tax or penalty. This new Section was also challenged on various grounds in a batch of writ petitions in Sri Konathala Venkata Ramana & Budha Apparao vs State of Andhra Pradesh & Anr.(1). The High Court held that even after the amendment the liability of the Agent continues to be based on the principal of representation and whether he is a dealer in respect of an the principals or only one principal, his liability is co extensive with that of the principal. It also held that while there is no conflict between Section 5 and Section II of the Act, Section II which authorises the imposition of a tax independently of the liability of the principal or which takes away or limits the rights of the Agent to reimburse himself or withhold moneys due to the principal only where the principal is liable is discriminatory and is hit by Article 14. In view of this Judgment, which in fact restored the legal position to that prevailing prior to the Amendment, large sums of money in which assessments had been made and tax collected became refundable To meet this situation the Legislature enacted the Andhra Pradesh General Sales Tax Amendment Act 9 of 1970. The effect of the. Amendments made by Sec. 2. 5, 8 and 9 of the Amendment Act is that a proviso was added to Section 5(1), a new Section II was substituted for the old Section II with retrospective effect from 1 8 63. The, amended Section 11 it may be noticed (1) Sales Tax Cases Vol. 371 was identical with Section 1 1 as it stood on 1 8 1963. The first schedule to the principal Act was also amended by adding jaggery as item 77 which was made taxable at the point of first sale at 5 paise in the Rupee. It was further provided that as soon as this entry came into force on the date fixed by a Notification the proviso to Section 5 (A) added by Section 2 of the Amending Act would cease to have effect. Section 8 of the Amending Act purported to validate the assessments already made while Section 9 granted exemption from liability to pay tax in certain cases. We have already noticed that jaggery was being taxed at the point of the first purchase of its sale between 1 2 6o and 31 7 63 but by reason of the Amendment introduced by Act 16 of ' 1963 a multiple point tax on safe subject to an exemption of a turn over of Rs. 10000/ became leviable at 2 paise pet Rupee from 1 8 63 which rate was enhanced to 3 paise from 1 4 1966 by Amendment Act 7 of 1966. A single point taxation was however levied on items in Schedule 1 and 2 of the Act which became chargeable as such under Section 5(2). We are not concerned with schedule 3 which deals with declared goods but schedule 4 specified the goods which are exempt in terms of Section 8. All other sales which do not fall within the schedules are as earlier stated exigible to multiple point tax under Section 5(1) of the Act subject to the minimum of Rs. 10,000/ . The Appellants had before the High Court of Andhra Pradesh raised several contentions but the principal attack was confined to 3 aspects of the Amendment Act. Firstly that Section II read with the new proviso to Section 5 (1) makes an invidious distinction between dealers in jaggery on the one hand and dealers in other commodities on the other by perpetuating an unreasonable classification which is based on no intelligible differentia nor can any reasonable nexus be discerned with the object that the Amendment seeks to achieve. Secondly that Section 9 has to be read as part of Section 2 of the Amendment Act by which a new proviso is added to Section 5(1) of the Principal Act and is a part of Section 11 substituted by the Amendment Act. If so read the new proviso to Section 5(1) and the new Section II would be violative of article 14 inasmuch as the dealers in jaggery similarly situated have been invidiously discriminated by levying tax from those, dealers who have collected the tax and the dealers who have not collected the tax. Thirdly that the basis of the amendment is an imposition of a tax not on the transaction of sale or purchase of jaggery but on the, collection or non collection of the tax by the dealers, as such it is also bit by Article 14 of the Constitution. The High Court rejected all these contentions except the one relating, to the validity of Section, 9. the State of Andhra Pradesh as well as the Appellants in Civil Appeal No. 33 of 1971 had 372 contended that that provision which granted an, exemption from. payment of tax to, dealers who bad not, in fact collected the tax from their principal was, valid and did, not suffer from the vice of discrimination under article 14 because not only was the classification reasonable but that it was based on an intelligible differentia having a nexus with the object of the impugned Act. We shall however deal with last mentioned aspect presently but before we do so on the threshold of the argument of them Appellants there is a valid objection to the maintainability of the Writ Petitions filed by the dealers who as Agents of the Principals had collected tax from the purchasers which as a consequence of the two decisions, of the High Court referred to earlier was illegal. After the, amendment Act the levy and collection by the dealers became prima facie legal. In so, far as jaggery is concerned there was also no question of any, exemption of the minimum turnover of the principal of Rs. 10,000, so That the hardship which a Corn mission Agent dealer had to undergo in trying to determine whether the, turn over of each of his principals was below Rs. 10,000 before he could collect Sales Tax was no longer there. After the Amendment by removing the exemption of Rs 10,000 on sale of jaggery which was given retrospective effect, the dealer agents could not now complain, which complaint had been held by the High Court to be justified, that while the principals were exempted from tax upto Rs. 10,000 the tax is being levied on the agents turn over irrespective of that exemption. In any case whatever objections the principals may have to the constitutional validity of the provisions introduced by the amending Act under Article 14 the Agent dealers certainly have no locus standi to complain about discrimination between Principals inter se. That apart the dealers are not expected to and in fact do not pay any money of their own towards the tax which is levied. The tax so levied and paid to the assessing authorities by the dealer agent is, under the provisions of the Act, not returnable nor can the principal under the provisions of the Act make any claim against such dealer Agents. Shiri Gupte on behalf of the Appellants was unable to tell us that there were among the Appellants any principals who had a direct interest in challenging the validity of the provisions on the ground of discrimination. Shri Motilal Setalvad on behalf of the Appellants in Civil Appeals Nos. 2126 to 2128 of 1970 strenuously contended that the Appellants have an interest and can maintain the Writ Petitions because they were dealers within the meaning of Section 2(e) and are persons who are aggrieved because of the assessment made or likely to be made and tax recovered from them. He has further contended that this Court has in several cases hold that even a notice issued to any person under the provisions of an impugned Act which is likely to cause prejudice will 373 entitle him to challenge the Constitutional Validity of the law under which the notice is given. If so, where an assessment has been made the assessee has a right to challenge the provisions of the Amendment Act under which the levy and Collection of tax have been given retrospective validity. Apart from the question that 'this argument does not take into account the distinction between an at tack under article 14 and an attack under article 19 it overlooks the fact that what is sought to be recovered from the Appellant is in respect of a tax collected on the past dealings and not with respect to the future transactions. We had pointed ' out that tax had already been collected no doubt at first illegally but due to the amendment Act that collection has become legal and has also dealer be is liable to pay that amount to the State la. respect of the Asses sments made. As there is nothing to show that what is sought to be recovered from the dealer is more than what he hits collected, he 'has not suffered any loss nor any disadvantage which would entitle him to seek a remedy under article 226 of the Constitution. Shri P. RamchandraTao in Civil Appeal No. 2127 of 1970 had nothing now to add to the arguments advanced by the learned Advocates for the Appellants. On this short ground alone we dismiss all the Appeals except Civil Appeal No. 33 of 1971 but in the circumstances without costs. Appeal in Civil Appeal No. 33 of 1971: In this Appeal Shri section T. Desai contends that the High Court had erroneously struck down Sec. 9 of the Amendment Act. of the Amendment Act is as follows: "9(1) where any sale of jaggery has been effected during the period between the 1st August 1963 and the commencement of Section 5 of this Act in so far as it relates to item 77, and the dealer effecting such sale has not collected ally amount by way of tax under the principal Act ,on the ground that no such tax could have been levied or collected in respect of such sale, or any portion of the turnover relating to such sale, and where no such tax could also have been levied or collected if the amendments made in the principal Act by this Act had not been made, then, notwithstanding anything contained in Section 8 or the said amendments, the dealer shall not be liable to pay any tax under the principal Act, as amended by this Act, in respect of such sale or such part of the turnover relating to such sale. (2)For the purposes of sub section (1), the burden of proving that no amount by way of tax was collected under the principal Act in respect of any sale referred to in sub section (1) or in respect of any portion of the 374 turnover relating to such sale, shall be on the dealer effecting such sale". This Section is enacted by the legislature with the object of removing short comings in the principal Act which were found wanting by judicial interpretation. The interregnum between the declaration by the High Court of certain provision of the Act as being unconstitutional and the attempt of the legislature to remedy the defects and to give retrospective effect thereto created two distinct categories between the same class of dealers namely those who had collected the tax whether they were assessed or not and those who had not collected the tax. This classification is certainly reasonable and is related to the object which the Amendment Act seeks to achieve. The dealers who had not collected the tax could not have collected it as the law stood and therefore the legislature did not think it just or proper to collect tax from those who were not liable. Even this exemption as can be seen is given to only those persons who can establish that they have not in fact collected it, the burden of which is upon those who claim the exemption. It is unnecessary to deal with hypothetical cases. The mere fact that in many cases it was not collected because the assessment could not be completed cannot be a valid ground nor can it even now be made in regard to those assessments which are now pending (a matter upon which we do not pronounce) cannot be valid grounds to declare the classification as arbitrary or unreasonable, which reason seems to have weighed with the High Court. We think not only the classification reasonable but there is an intelligible differentia furnishing a nexus with the object the Amendment Act seeks to achieve. In this view we set aside the Judgment of the High Court declaring Section 9 as unconstitutional and allow the appeal, but in the circumstances without costs. G. C. Appeal allowed.

The appellants carried on the business of Commission Agents in Jaggery in Andhra Pradesh. They arranged for the sale of jaggery charging a small commission for their service and rendering an account to their Principals in respect of those sales. Every buyer was fully apprised of the fact that he was purchasing jaggery of specified agriculturist Principals and not that of the appellants. Till about 1963 under section II of the Andhra Pradesh General Sales Tax Act, 1957, commission agents were required to obtain and were being issued licences and if they conformed to the conditions of those licences, they were not subjected to tax. In 1963 the principal Act was amended by Andhra Pradesh General Sales Tax Amendment Act 16of 1963. By the new section I I introduced by the Amending Act the Agentsof resident Principals were made liable for assessment and collection of tax though the liability of the Agent was made co extensive with that of the principal. The High Court held that in assessing the Agent the turnover of those Principals whose turnover was below the taxable limit of Rs. 10,000 could not be taken into account. As a consequence of this decision the Andhra Pradesh General Sales Tax Amendment Act 5 of 1968 was enacted and a new section I 1 substituted for the existing section. This section II was given retrospective effect from 1st August 1963. The object of this amendment was to enable the taxing authorities to assess levy and collect tax or penalty under the Sales Tax Act from the Agent irrespective of the fact that the Principal was not liable to tax. This new section was also struck down by the High Court, on the ground that it was violative of article 14 of the Constitution. In view of this judgment which restored the legal position to that prevailing before the Amendment, large sums of money which bad been collected as tax from the Agents became refundable. To meet this situation the Andhra Pradesh Legislature enacted the Andhra Pradesh General gales Tax Amendment Act 9 of 1970, Section 8 of which validated the assessments already made. Under section 9 Agents who had not collected the tax from their Principals were exempted from tax. Under section I I Agents who had collected the tax were made liable to pay the same. In writ petitions under article 226 filed by Agents it was contended that section II as amended and section 9 of the Amending Act were violative of article 14. The High Court held that section 1 1 was valid but section 9 violated article 14. In appeal filed against the High Court 's judgment by certificate, HELD:(i) The appeals filed by the agents were not maintainable. What was sought to be recovered from the appellants was in respect of a tax collected on past dealings and not with respect to the future transactions. The tax had already been collected, no doubt at first illegally, but 368 due to the Amendment Act, that collection had become legal and as dealers, the appellants were liable to pay that amount to the State. As there was nothing to show that what was sought to be recovered from the dealer was more than what he had collected he had not suffered any loss nor any disadvantage which would entitle him to seek a remedy under article 226 of the Constitution [373B C] (ii) Section 9 had been wrongly struck down by the High Court as invalid. This section was enacted by the legislature with the object of removing shortcomings in the principal Act which were found wanting by judicial interpretation. The interregnum between the declaration by the High Court of certain provisions of the Act as being unconstitutional and the attempt of the legislature to remedy the defects and to give retrospective effect thereto created two distinct categories between the same class of dealers namely those who had collected the tax whether they were assessed or not and those who had not collected the tax. This classification was certainly reasonable and was related to the object which the Amendment Act sought to achieve. The dealers who had not collected the tax could not have collected it as the law stood and therefore the legislature thought it just or proper to collect the tax from those who were not liable. Even this exemption was given to those who could establish that they had not in fact collected it, the burden of which was upon those who claimed the exemption. [374D E],

Civil Appeal No. 3045 of 1980 etc. From the Judgment and order dated 3.6.1980 of the Kerala High (Court in C.R.P. No. 2711 of 19178 section Padmanabhan and N. Sudhakaran for the Appellant. Abdul Khader and K.M.K. Nair for the Respondents. The Judgment of the Court was delivered by 665 NATARAJAN, J. The appeals by special leave and the special leave petitions raise a common question of law regarding the scope and effect of Explanation II A to Clause (25) of Section 2 of the Kerala Land Reforms Act. 1964, (for short the Act hereafter) as amended by Act. 17 of 1972. It is, however, necessary to mention two matters even at the outset of the judgment. Had the judgments in the two appeals been pronounced after the decision in Velayudhan vs Aishabi, AIR 1981 Kerala 185 by a Full Bench of the Kerala High Court, the results would have been different and there would have been no necessity for these appeals being filed. Secondly, the decision in Velayudhan vs Aishabi. has become final since no appeal has been preferred to this Court against the judgment therein. What falls for consideration in all these cases is whether by reason of Explanation IIA to Section 2(25) of the Act, a person in occupation of a homestead or a hut belonging to another during the period stipulated in the Explanation would become a Kudikidappuka ran and be entitled to Kudikidappu rights under the Act. For a proper understanding of the issue. we may make a brief reference to the history of the Legislation and to some of the earlier decision of the High Court. Originally. the occupants of dwelling houses or huts on homestead land belonging to others were only given a right to remove the materials of the super structure put up by them or alternately to seek monetary compensation thereof. The restricted conferment of rights exposed the occupants of huts belonging to others to indiscriminate eviction. To afford protection to them, the erstwhile Cochin State and the Travancore State passed suitable enactments to safeguard their possession. Eventually, when the Travancore Cochin State came to be formed, an Act known as the Travancore Cochin Prevention of Eviction of Kudikidappukars Act, 1950 was passed. Even under that Act, protection was given only to those persons who had put up the super structures themselves and not to persons who were occupying huts put up by the land owners. Protection was extended to that class of persons also under the Kerala Stay of Eviction Proceedings Act. The said Act was amended by the Kerala Stay of Eviction Proceedings Act, 1958. This was followed by the Kerala Land Reforms Act, 1964 (the Act). Clause (25) of Section 2 of the Act defined a Kudikidappukaran and Kudikidappu as under: "25. 'Kudikidappukaran means a person who has neither a homestead nor any land exceeding in extent three cents in any city or major municipality or five cents in any other 666 municipality or ten cents in any panchayat area or town ship, in possession either as owner or as tenant, on which he could erect a homestead and: (a) who has been permitted with or without an obligation to pay rent by a person in lawful possession of any land to have the use and occupation of a portion of such land for the purpose of erecting a homestead; or (b) who has been permitted by a person in lawful possession of any land to occupy, with or without an obligation to pay rent, a hut belonging to such person and situate in the said land; and 'Kudikidappu ' means the land and the homestead or the hut so permitted to be erected or occupied together with the easement attached thereto. " There were two Explanation to Section 2(25). For our purpose, it is enough if we set out Explanation II alone. It read as under: "Explanation II". "Any person who was in occupation of a Kudikidappu on the 11th day of April, 1957, and who continued to be in such occupation at the commencement of this Act, shall be deemed to be in occupation of such Kudikidappu with permission as required under the clause. (Emphasis supplied). In Gopalan vs Chellamma, Madhavan Nair, J. of the Kerala High Court held, without noticing a contrary view taken in an earlier case in Second Appeal No. 558 of 1961, that to be a Kudikidappukaran, the occupancy must have commenced with the permission of the owner of the land, that the permission given should not have been withdrawn or terminated subsequently but must have continued to be effective till the relevant time, that Explanation II would only have the effect of extending the permission initially granted to the date of the commencement of the Act and that a trespasser forcibly entering upon the land will not be entitled to claim rights as a Kudikidappukaran. Subsequent to this decision, the Act underwent several amendments under the Kerala Land Reforms (Amendment) Act, 1969. One of the changes effected was the substitution of Explanation II 667 (extracted above) by a proviso which read as under: A "Provided that a person who, on the 16th August, 1968 was in occupation of any land and the homestead thereon, or in occupation of a hut belonging to any other person, and who continued to be in such occupation at the commencement of the Kerala Land Reforms (Amendment) Act, 1969, shall be deemed to be in occupation of such land and homestead, or hut, as the case may be, with permission as required under this clause." (Emphasis supplied). The proviso came to be construed by Krishna Iyer, J. (as he then was) in Mariam and others vs Ouseph Xavier, [19711 K.L.T. 709 and the learned Judge differed only partly from the view taken in Gopalan vs Chellamma (supra) and held that "the initial leave to occupy is obligatory to make the dweller a Kudikidappukaran" and that the proviso operates only at the next stage and hence such protection was afforded only to persons who had initially obtained permission to occupy the homestead or hut and continued to be in occupation till the commencement of the Act but without reference to any further question as to whether the permission initially granted continued to subsist or had been subsequently revoked. After this decision was rendered, the Legislature once again brought about certain amendments to the Act by means of the Kerala Land Reforms (Amendment) Act, 1972. The Legislature omitted the proviso to Section 2(25) (extracted above) and introduced Explanation II A with retrospective effect. Explanation II A is to the following effect: Explanation Il A "Notwithstanding any judgment, decree or order of any court, a person, who on the 16th day of August, 1968, was in occupation of any land and the dwelling house thereon (whether constructed by him or by any of his predecessors in interest or belonging to any other person) and continued to be in such occupation till the 1st day of January, 1970, shall be deemed to be a Kudikidappukaran: (emphasis supplied). Provided that no such person shall be deemed to be a Kudikidappukaran (a) in cases where the dwelling house had not been 668 constructed by such person or by any or his predecessors in interest, if (i) such dwelling house was constructed at a cost, at the time of construction, exceeding seven hundred and fifty rupees; or (ii) such dwelling house could have, at the time of construction, yielded a monthly rent exceeding five rupees; or (b) if he has a building or is in possession of any land exceeding in extent three cents in any city or major municipality or five cents in any other municipality or ten cents in any panchayat area or township, either as owner or as ten ant, on which he could erect a building. The scope and effect of Explanation II A introduced by the Amending Act of 1972 came to be construed by a Division Bench of the Kerala High Court in Achuthan vs Narayani Amma, [1980] K.L.T. 160: AIR 1980 NOC 90. The Bench held that the effect of Explanation II A is to dispense with proof of permissive occupation, either in sup port or rebuttal thereof, and that even in the absence of such proof and without any enquiry as regards the original occupation, a person who satisfies the conditions mentioned therein and does not fall within the ambit of the proviso thereto has to be deemed a Kudikidappukaran. However, in Moideenkuktty vs Gopalan, another Division Bench took a contrary view and held that the legal fiction which had all along existed right from 1955 under Section 4(2) of the Travancore Cochin Act, 1955, Explanation II to Section 2(20) of the Agrarian Relations Act, 1961, Explanation II To Section 2(25) of the Kerala Land Reforms Act, 1964 and the proviso thereto as inserted by the Amending Act, 1969 was only intended to protect a Kudikidappukaran who began his occupation of a Kudikidappu with permission by providing for the statutory continuance of the permission initially given till the commencement of each of the above mentioned Statutes and the Explanation II A introduced by Act 17 of 1972 had not altered or widened the legal fiction so as to cover a case of initial permission also. The Bench, therefore, held that unless initial permission for occupation of a homestead or hut is established, Explanation II A will not be attracted. It was on account of the conflicting views taken by the two Division Benches in Achuthan 's case (supra) and Moideenkukutty 's case (supra), a reference was made to a Full Bench for decision 669 of the case in Velayudhan & Ors. vs Aishabi & Ors. (supra) The Full Bench, after elaborately tracing the history of the Legislation and considering the changes brought about periodically by the Legislature to confer Kudikidappu rights on occupants of homesteads and huts and reviewing the earlier decisions, came to the conclusion that Explanation II A could be treated as an addendum to Section 2(25) in order to widen the definition or alternately Section 2(25) can be treated as the main provision and Explanation II A as an exception thereto. In that view of the matter, the Full Bench held that the decision in Achuthan 's case (supra) laid down the correct law and the view taken in Moideenkukutty 's case was not sustainable. It is in the conspectus of the several amendments made by the Legislature to Section 2(25) of the Act and the decisions rendered by the Kerala High Court, we have to examine the contentions of the counsel for the appellants and the respondents in the respective appeals. The Full Bench of the Kerala High Court has analysed the position and summed up its view in the following manner regarding the purpose underlying the changes brought about in the Act and the new dimension that has now been given by Explanation II A to Section 2(25). The relevant passage in Velayudkan 's case (supra) occurs in para 24 at page 192 of the report (AIR 1981 Kerala 192) and is as follows: "When the words 'in occupation of a Kudikidappu ' in Explanation II to Sec. 2(25) in the K.L.R. Act as originally enacted was held by this Court to be suggestive of the need for the person claiming Kudikidappu right thereunder to prove permissive occupation as on the relevant date (11.4.1957) thereunder, the legislature omitted the word "Kudikidappu", and resorted to the terminology of 'in occupation of any land and the homestead thereon, or in occupation of a hut . . ' in the proviso to Section 2(25) as amended by the Amending Act, 1969. When this Court pointed out that still the emphasis of the fiction is on the permissive aspect of occupation and not on the status of the person as Kudikidappukaran, and that the words 'homestead ' and 'hut ' are indicative of the requirement that permissive occupation as on the relevant date (16.8.1968) has to be established, the legislature reacted by omitting the words 'homestead ' and 'hut ' from the fiction and laying stress on the status as Kudikidappukaran by enacting Explanation II A to Section 2(25) of the K.L.R. Act as per the. K.L.R. (Amending) Act, 1972. " 670 At the outset it has to be pointed out that Explanation II A has been made a non obstante provision in order to give over riding effect to the Explanation over any judgment, decree or order of any Court passed against a person who was, on 16.8.1968 in occupation of a homestead or hut thereon and who continued to be in such occupation till the 1st day of January 1970. Now, if we look at Explanation II to Section 2(25) as it originally stood and the proviso which replaced it under the 1969 (Amendment) Act and Explanation II A which was introduced by the amending Act 1972, we may notice the significant changes made by the Legislature and the underlying reasons therefor. In Explanation II, it was laid down that any person in occupation of a Kudikidappu during the prescribed period viz. 11.4.1957 to the date of commencement of the Act "shall be deemed to be in occupation of such Kudikidappu with permission as required under this clause". Since it was held in Gopalan 's case (supra) that the use of the words "in occupation of a Kudikidappu with permission", obligated an occupant of a Kudikidappu to prove initial permission to enter a homestead or occupy a hut on the land of another and further prove continuance of such permission till the relevant date, the Legislature omitted the word "kudikidappu" in the proviso that was substituted for Explanation II under the 1969 Amendment Act. Even then, it was held in Mariam 's case (supra) that initial leave to occupy was obligatory to make an occupant a Kudikidappukaran because of the use of the words "with permission as required under the clause" in the proviso. Therefore, what the Legislature has done while introducing Explanation by the 1972 Amendment Act is to do away with any reference to occupation being referable to any permission granted by the owner of the land or the hut as the case may be. Not only has the Legislature eschewed any reference to permissive occupation but has also given a mandate that everyone in actual occupation of any land and the dwelling house thereon, between the dates 16.8.1968 to 1.1.1970, irrespective of who built the dwelling place, shall be granted recognition as a Kudikidappukaran. The words used are "the person . in occupation . shall be deemed to be a Kudikidappukaran. " By reason of this explicit provision, there is no scope whatever for restricting the class of persons entitled to the benefit of Explanation II A to only those who are able to prove obtainment of initial permission to occupy a homestead or a hut thereon. Explanation II A equates an occupant of a homestead or a hut thereon during the relevant period with a Kudikidappukaran as defined under the main clause. Such being the case, anyone satisfying the requirements of Explanation II A would automatically be entitled to have the status of a Kudikidappukaran and to all the benefits flowing therefrom. In other 671 words, a person falling under Explanation II A has to be statutorily deemed as one permitted to occupy a homestead or the hut thereon as envisaged in Sub Clauses (a) and (b) of Clause(25) to Section 2. The only limitation placed by Explanation II A is that a person falling within the terms of the definition should satisfy the conditions laid down by the proviso to the Explanation viz. that if he or his predecessor had not constructed the dwelling house, the house should not costwise exceed Rs.750 or rentwise exceed a monthly rent of Rs.5 and the occupant should not be in possession of land exceeding three cents in extent in any city or major municipality or five cents in any other municipality or ten cents in any panchayat area or township either as owner or as a tenant on which he could erect a building. viewed in the proper perspective, Explanation II A constitutes a second limb of Clause (25) of Section 2 devised by the Legislature to give full effect to its intendment viz. entitling a person to claim Kudikidappu rights under Section 2(25) if he proves initial permission to occupy the land and the dwelling house without the need of proving continuous possession during a prescribed period of time or in the alternative to claim Kudikidappu rights under Explanation II A by proving continuous occupation during the period of time prescribed by the Explanation without the necessity of proving obtainment of initial permission to occupy the land and the dwelling house thereon. Explanation II A has got operative force of its own and this may be seen from the fact that Clause (25) of Section 2 as well as Sub Clause (b) of the proviso to Explanation II A lay down identical conditions which are to be satisfied by an applicant under the main clause or the Explanation for claiming rights as a Kudikidappukaran. Both the provisions lay down that any claimant for Kudikidappu rights should not have a homestead or any land exceeding in extent three cents in any city or major municipality or five cents in any other municipality or ten cents in any panchayat area or township in his possession either as owner or tenant on which he could erect a homestead. If the Explanation is subservient to Section 2(25), there was no need for the Legislature to have provided Sub Clause (b) to the proviso to Explanation II A. There is no repugnancy between the two provisions because Section 2(25) pertains to occupants of homestead of one category while Explanation II A pertains to homestead occupants of a different category. By introducing Explanation II A, the Legislature has created a statutory fiction. As to how statutory fictions are to be interpreted is by now well settled. The approach formulated by Lord Asquith in East End Dwelling Co. Ltd. vs Finsbary Borough Council, has been approved by this Court in a number of cases. The line of 672 approach set out by Lord Asquith is as under: "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanies it. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. " This line of approach has been adopted by this Court in a number of cases and we may refer only to some of them. See M.K. Venkatachalam v Bombay Dyeing and manufacturing Co. Ltd.; , ; Commissioner of Income Tax, Delhi vs Teja Singh, AIR 1959 SC 355 In Commissioner of Income Tax, Delhi vs Teja Singh (supra), this Court pointed out that "it is a rule of interpretation well settled that in construying the scope of a legal fiction it would be proper and even necessary to assume all those facts on which alone the fiction can operate." In Industrial supplies Pvt. Ltd. vs Union of India, [1980] IV SCC 341, this Court observed as follows: "It is now axiomatic that when a legal fiction is incorporated in a statute, the court has to ascertain for what purpose the fiction is created. After ascertaining the purpose, full effect must be given to the statutory fiction and it should be carried to its logical conclusion. The court has to assume all the facts and consequences which are incidental or inevitable corollaries to giving effect to the fiction. The legal effect of the words 'as if he were ' in the definition of owner in Section 3(n) of the Nationalisation Act read with Section 2(1) of the Mines Act is that although the petitioners were not the owners, they being the contractors for the working of the mine in question, were to be treated as such though, in fact, they were not so. " It has also to be borne in mind that the Kerala Land Reforms Act is a beneficial enactment intended to secure occupancy rights to farmers and agricultural labourers who do not have homestead lands and dwelling places of their own for their occupation. Incidentally, we may mention that Act 17 of 72 has been subsequently included in the 9th Schedule to the Constitution and this would reflect in fuller mea 673 sure the anxiety of the Legislature to protect the rights of occupants of homestead and huts thereon. In the case of beneficial enactments the courts should follow a policy of benevolent and liberal construction. In Jeewanlal & Ors. vs Appellate Authority; , it was observed as follows: "In construing a social welfare legislation, the court should adopt a beneficent rule of construction; and if a section is capable of two constructions, that construction should be preferred which fulfils the policy of the Act, and is more beneficial to the persons in whose interest the Act has been passed. When, however, the language is plain and unambiguous, the Court must give effect to it whatever may be the consequence, for, in that case, the words of the statute speak the intention of the Legislature. When the language is explicit, its consequences are for the Legislature and not for the courts to consider. The argument of inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the status is obscure and there are two methods of construction. In their anxiety to advance beneficent purpose of legislation, the courts must not yield to the temptation of seeking ambiguity when there is none. In Bharat Singh vs Management of New Delhi Tuberculosis Centre, New Delhi & Ors., ; , the abovesaid policy was reiterated in the following words: "Now it is trite to say that acts aimed at social amelioration giving benefits for the have nots should receive liberal construction. It is always the duty of the court to give such a construction to a statute as would promote the purpose or object of the Act. A construction that promotes the purpose of the legislation should be preferred to a literal construction. A construction which would defeat the rights of the have not and the underdog and which would lead to injustice should always be avoided. " Therefore, even if there is any little room for doubt whether Explanation II A can go to the extent of conferring Kudikidappu rights on persons who are not able to prove their lawful entry upon the land on the occupation of the dwelling house, it has to be held that the Explanation has been specifically provided for giving greater thrust to 674 the intendment of the legislature and, therefore, the Explanation warrants a liberal and purposive interpretation so as to fulfil the object of the legislation and comply with the legislative intent. Mr. Abdul Khader, learned counsel for the respondent however sought to contend, that whichever way Explanation II A is construed i.e. whether as a legal fiction or as a re enacted provision of substantive law the Explanation would still be trammelled by the basic prescription contained in the main clause regarding permissive occupation. The counsel argued that so long as clause (25) of Section 2 continued to define a Kudikidappukaran as a person "who has been permitted . by a person in lawful possession . to have the use and occupation of a portion of the land for the purposes of erecting a homestead/hut belonging to him in the said land", the Explanation would necessarily be governed and controlled by the words in Clause (25) of Section 2 and as such even if a person was in occupation of a homestead or hut between the period 16.8.1968 to 1.1.1970 he will not be entitled to claim rights as a Kudikidappukaran unless he is able to prove grant of initial permission by the owner of the land or the hut, as the case may be. It was argued that it was not the intention of the legislature to confer Kudikidappukaran rights on trespassers and unauthorised occupants. Our attention was drawn to the decisions in Sonawati & Ors. vs Shri Ram & Anr., [1968] 1 SCR 617, and Azad Singh & Others vs Barkat Ullah Khan & others; , In these decisions the words "Cultivatory possession" occurring in the U.P. Zamindari abolition & Land Reforms Act and the U.P. Land Reforms (Supplementary) Act have been held to refer to lawful possession and as such they would not, cover the case of a trespasser upon the land. These decisions can be of no avail in this case because Explanation II A has avoided any reference to permissive occupation and has straight away equated an occupant of a homestead during the prescribed period with a Kudikidappukaran as defined in the main clause. The Explanation has to be interpreted in the light of the words used by the legislature and having in mind the object sought to be achieved and the evil sought to be remedied by the Act Mr. Abdul Khader alteratively contended that Explanation II A should be construed as a validating provision introduced by the legislature to overcome the limitations noticed by the Courts in the corresponding provisions in the previous enactments and as such the validation exercise cannot be given acceptance unless the validating law satisfied the tests prescribed therefor. The learned counsel referred to certain decisions in this behalf. viz. Shri Prithvi Cotton Mills 675 Ltd. & Anr. vs Broach Borough Municipality & Ors., ; Hari Singh & Ors. vs The Military Estate officer and Anr.; , and D. Cawassi & Co. Mysore vs The State of Mysore & Anr., ; AIR 1984 SC 1980 and argued that a validating law can be upheld only if the legislature has competence to legislate over the subject matter and secondly, only if the legislature has removed the defects noticed by the Courts in the previous law. This argument fails to take note of the significant change the legislature has made in the wording of Explanation II A. It is therefore futile to contend that Explanation II A suffers from the same limitations the earlier provisions were thought to suffer from. After the arguments were concluded, learned counsel for the respondents have circulated a copy of the judgment of this Court in C.A. No. 165 of 1974 etc. Palayi Kizhakkekara Mathaiy 's son K.M. Mathew & Anr. v Pothiyill Mommutty 's son Hamsa Haji & Ors. , JT delivered on 29.4.1987 wherein Section 7D of the Kerala Land Reforms Act, 1963 as amended by the Kerala Land Reforms (Amendment) Act, 1969 has been interpreted as conferring benefit thereunder only on persons whose occupation of the private forests or unsurveyed lands had a lawful origin and not on persons in unlawful occupation based on trespass or forcible and unlawful entry. We have carefully considered the judgment and find that the pronouncement therein does not in any way lend support to the contentions of the respondents herein. The scheme of Sections 7A, 7B, 7C, 7D, 8 & 9 of the Kerala Land Reforms Act, 1963 is entirely different and this position is succinctly brought out by the following passage in the decision referred to above. The Court had summed up the scheme of the Act in the following words: "On a careful scrutiny of the aforesaid provisions, it becomes abundantly clear that the intention of the legislature was to grant protection only to persons whose possession had a lawful origin in the sense that they had either bona fide believed the lands to be Government 's land of which they could later seek assignment or had taken the lands on lease from person whom they bona fide believed to be competent to grant such leases or had come into possession with the intention of attorning to the lawful owners or on the basis of arrangements like varam etc. which were only in the nature of licences and fell short of a leasehold right. It was not within the contemplation of the legislature to confer the benefit of protection on persons 676 who had wilfully trespassed upon lands belonging to others and whose occupation was unlawful in its origin. The expression "in occupation" occurring in Section 7D must be construed as meaning "in lawful occupation. " The clear finding in that case was that the appellant had claimed title on the basis of adverse possession and his own plea was that he had come into possession of the lands by trespass. He was therefore, far removed from the class of persons whom the Legislature wanted to provide for viz. persons who had entered upon land under a bona fide mistaken belief that the land belongs to Government and is capable of assignment or that the land belongs to the person who had granted them lease etc. The entry was, therefore, linked with a bona fide belief though mistaken, about the character of the land and hence a trespasser is not entitled to claim any benefit. But in so far as Section 2(25) and Explanation II A of the Act are concerned the occupant of the homestead or hut is not enjoined to prove that he occupied the homestead or hut under a bona fide mistaken belief and that he was not a trespasser. He need only prove under the main clause that he had been permitted to occupy the homestead or hut and under Explanation II A that he had been in continuous occupation from 16.8.1968 to 1.1.1970. Presumably the Legislature has thought that an occupant of a homestead or a hut would not have been allowed to remain in occupation for so long if he was a trespasser. There is therefore, no conflict between the view taken by us in these appeals and the view taken by this Court in CA No. 165/74 etc. (supra) Having settled the question of law we will now deal with the appeals and the Special Leave Petitions on their merits. In C.A. No. 3045 of 1980 it was found that the appellant was in possession of a hut from 1962 onwards. Nevertheless his claim for Kudikidappu rights under Explanation II A was rejected as he was not able to prove grant of permission to him by the respondent for occupying the hut. Since we have held that a claimant for Kudikidappu rights under Explanation II A, who does not suffer any disqualification under the proviso, need only prove the factum of possession between the prescribed dates for being placed on par with a Kudikidappukaran as defined in Section 2(25) of the Act, the appeal has to succeed and will accordingly stand allowed. Consequently, the order of the Land Tribunal Telicherry in O.A. No. 22 of 1973 will stand restored but having regard to the lapse of time, the appellant is directed to pay the entire amount towards the value of the hut and the land, as fixed by the Land Tribunal, within three months from today. 677 As regards C.A. No. 2505 of 1977, the appellant claimed Kudikidappu rights in respect of two sheds set out in plaint A & schedules. In so far as A schedule property is concerned, the appellant is not entitled to any relief because it has been concurrently found by all the Courts that he had taken the shed on lease in the year 1954 under a rent chit for running a tea shop and that the shed continued to be in existence and it had not been rebuilt by the appellant. However, in so far as the shed comprised in schedule is concerned, the appellant has been denied relief solely on the ground that he had failed to prove grant of permission by the respondent and his predecessors in title to occupy the homestead and put up the shed. Having regard to the factum of occupation of the schedule property during the period envisaged by Explanation II A, it follows that the appellant is entitled to a decree in respect of the schedule property. The appeal is, therefore, partly allowed in so far as the schedule property is concerned. The matter will stand remitted to the Land Tribunal Telicherry for determining the price of the schedule property for the directions regarding the manner in which the purchase price should be paid by the appellant Special Leave Petitions 204 & 205 have to fail because it has been concurrently found that the sheds occupied by the respondent in each case were included in the property leased to the petitioner though possession was allowed to be retained by the respondents, and as such the respondents are entitled to claim Kudikidappu rights under Explanation II A of Section 2(25) of the Act As the respondents had been inducted into possession of the huts by the owner of the land and as the lease granted to the petitioner comprised the sheds occupied by the respondents also, the petitioner cannot contend that the respondents are not entitled to seek the sale of ten cents of land adjoining each hut under Section 80B of the Act. Hence the Special Leave Petitions are dismissed. There will be no order as to costs in the appeals as well as the special leave petitions.

% These appeals and Petitions for Special Leave raised a common question of law regarding the scope and effect of Explanation 11 A to clause (25) of section 2 of the Kerala Land Reforms Act, 1964, as amended by Act 17 of 1972. What fell for consideration was whether by reason of Explanation Il A to section 2(25) of the Act, a person in occupation of a homestead or a hut belonging to another during the period stipulated in the Explanation would become a Kudikidappukaran and be entitled to Kudikidappu rights under the Act. Allowing Civil Appeal No. 3045 of 1980, allowing C.A. No. 2505 of 1977 partly and dismissing the Petitions for Special leave, the Court, ^ HELD: The contentions of the parties in these cases had to be examined in the conspectus of the several amendments made by the legislature to section 2(25) of the Act and the decisions rendered by the Kerala High Court.[669C] Explanation Il A has been made a non obstante provision in order to give over riding effect to the Explanation over any judgment. decree or order of any court, passed against a person who was on 16.8.68 in occupation of a homestead or hut thereon and who continued to be in such occupation till the 1st day of January, 1970. The Legislature has by introducing Explanation II A done away with any reference to occupation being referable to any permission granted by the owner of the land or the hut as the case may be. Not only had the Legislature eschewed any reference to permissive occupation but had also given a mandate that every one in actual occupation of any land and the dwelling house thereon between 16.8.68 and 1.1.70, irrespective of who built the dwelling place, should be granted recognition as a Kudikidappukaran. By reason of this explicit provision, there was no scope whatever restricting the class of person entitled to the benefit of Explanation Il A to only those who were able to prove obtainment of initial permission to 662 occupy a homestead or a hut thereon. Explanation II A equates an occupant of a homestead or a hut thereon during the relevant period with a Kudikidappukaran as defined under the main clause. Such being the case, anyone satisfying the requirements of Explanation II A would automatically be entitled to have the status of a Kudikidappukaran and to all the benefits flowing therefrom. In other words, a person falling under Explanation II A has to be statutorily deemed as one permitted to occupy a homestead or the hut thereon as envisaged in sub clauses (a) and (b) of clause (25) of section 2. The only limitation placed by explanation Il A is that a person falling within the terms of the definition should satisfy the conditions laid down by the proviso to the Explanation, viz. that if he or his predecessor had not constructed the dwelling house, the house should not costwise exceed Rs.750 or rentwise exceed a monthly rent of Rs.5 and the occupant should not be in possession of land exceeding three cents in extent in any city or major municipality or five cents in any other municipality or ten cents in any panchayat area or township either as owner or as a tenant on which he could erect a building. Viewed in the proper perspective, Explanation II A constitutes a second limb of clause (25) of section 2 to give full effect to its intendment, viz., entitling a person to Kudikidappu rights under section 2(25) if he proves initial permission to occupy the land and the dwelling house without the need of proving continuous possession during a prescribed period of time or in the alternative to claim Kudikidappu rights under Explanation lI A by proving continuous occupation during the period of time prescribed by the Explanation without the necessity of proving obtainment of initial permission to occupy the land and the dwelling house thereon. Explanation II A has got operative force of its own, which may be seen from the fact that clause (25) of section 2 as well as sub clause (b) of the proviso to Explanation II A lay down identical conditions which are to be satisfied by an applicant under the main clause or the Explanation for claiming rights as a Kudikidappukaran. If the Explanation was sub servient to section 2(25), there was no need for the Legislature to have provided sub clause (b) of the proviso to Explanation II A. There was no repugnancy between the two provisions because section 2(25) pertains to occupants of homesteads of one category while Explanation II A pertains to homestead occupants of a different category. [670A H; 671A G] The Kerala Land Reforms Act was a beneficial enactment intended to secure occupancy rights to farmers and agricultural labourers who did not have homestead lands and dwelling places of their own for their occupation. In the case of beneficial enactments, the courts should follow a policy of benevolent and liberal construction. Even if 663 there was any little room for doubt whether Explanation II A could go to the extent of conferring Kudikidappu rights on persons who were not able to prove their lawful entry upon the land and the occupation of the dwelling house, it had to be held that the Explanation had been specifically provided for giving greater thrust to the intendment of the legislature, and, therefore, the Explanation warranted a liberal and purposive interpretation so as to fulfil the object of the legislation and comply with the legislative intent. [1672G H; 673G H; 674A] The attention of the Court was drawn to a judgment of this Court in Palayi Kizhakkekara Methai 's son K. M. Mathew and anr. vs Pothiyill Mommutty 's son Hamsa Haji & Ors., C.A. No. 165 of 1974, etc. J.T. , but the Court found no conflict between the view taken by the Court in these appeals and the view taken by this court in C.A. No. 165 of 1974, etc. [675C; 676E] In C.A. No. 3045 of 1980, the appellant was in possession of a hut from 1982 onwards; nevertheless his claim for Kudikidappu rights under Explanation II A was rejected as he was not able to prove grant of permission to him by the respondent for occupying the hut. Since it has been held by the Court that a claimant for Kudikidappu rights under Explanation II A, who did not suffer any disqualification under the proviso, needed only to prove the factum of possession between the prescribed dates for being placed on par with a Kudikidappukaran as defined in section 2(25) of the Act, the appeal had to succeed, with order of the Land Tribunal, restored. [676F H] In the C.A. No. 2505 of 1977, the appellant claimed Kudikidappu rights in respect of two sheds set out in A & B Schedules. The appellant was not entitled to any relief in respect of the A schedule property because it had been concurrently found by all the courts that he had taken the shed on lease in the year 1954 under rent chit and that the shed continued to be in existence and it had not been rebuilt by the appellant. In respect of the schedule shed, the appellant had been denied relief solely on the ground that he had failed to prove grant of permission by the respondent and his predecessor in title to occupy the homestead and put up the shed. In view of the factum of occupation of the schedule property during the period envisaged by Explanation II A, the appellant was entitled to a decree in respect of the schedule property. Appeal was partly allowed in respect of the schedule property and the case, remitted to the Land Tribunal for determining the price of the schedule property and for directions, etc.[677A D] 664 The Petitions for Special Leave failed, because it had been concurrently found that the sheds occupied by the respondent in each case were included in the property leased to the petitioner though possession was allowed to be retained by the respondents and as such, the respondents were entitled to claim Kudikidappu rights under Explanation II A. As the respondents had been inducted into possession of the huts by the owner of the land and as the lease granted to the petitioner comprised the sheds occupied by the respondents also, the petitioner could not contend that the respondents were not entitled to seek the sale of ten cents of land adjoining each hut under section 80 of the Act. [677E F] Velayudhan vs Aishabi, A.I.R. 1981 Kerala 185; Gopalan vs Chellamma, ; Mariam and others vs Ouseph Xavier, ; Achutan vs Narayani Amma, [1980] K.L.T. 160, A.I.R. 1980 NOC 90; Moideen Kuktty vs Gopalan, ; East End Dwelling Co. Ltd. vs Finsbary Borough Council, M. K. Venkatachalam vs Bombay Dyeing and Manufacturing Co. Ltd., ; ; Commissioner of Income Tax, Delhi vs Teja Singh, A.I.R. 1959 S.C. 355; Industrial Supplies Pvt. Ltd. vs Union of India, [1980] IV S.C.C. 341; Jeewanlal & Ors. vs Appellate Authority, 119841 4 S.C.C. 356; Bharat Singh vs Management of New Delhi Tuberculosis Centre, New Delhi, & Ors., ; ; Sonawari & Ors. vs Shri Ram & Anr., [1968] 1 SCR 617; Azad Singh & Ors. vs Barkat Ullah Khan & ors. ; , ; Shri Prithvi (Cotton Mills Ltd. & Anr. vs Broach Borough Municipality & Ors., [19701] 1 SCR 388; Hari Singh & Ors. vs The Military Estate Officer & Anr., ; ; D. Cawassi & Co. Mysore vs State of Mysore & Anr., ; and Palavi Kizhakkekara Mathaiy 's son K. M. Mathew & Anr. vs Pothiyill Mommitty 's son Hamsa Haji & Ors., J.T. , referred to.

Civil Appeal No. 2691 of 1979. Appeal by Special Leave from the Judgment and order dated 7 8 1979 of the Delhi High Court in Civil Revision No. 49/1979. Yogesh Kumar jain and Mukul Rohtagi for the Appeal. B. P. Bhandari, R. C. Bhatia and P. C. Kapoor for the Respondent. The Judgment of the Court was delivered by KOSHAL, J. This appeal by special leave is directed against the judgment dated August 7, 1979, of a Single Judge of the High Court of Delhi accepting a petition made by the landlady for revision of the order of an Additional Rent Controller (hereinafter called the Controller) of Delhi refusing to direct eviction of the tenant. The landlady had sought eviction of the tenant from the premises in dispute on the ground covered by clause (e) of the proviso to sub section (1) of section 14 of the Delhi Rent Control Act, 1958 (hereinafter referred to as the Act), namely, that she required them bona fide for occupation as a residence for herself. Her application being triable in accordance with the procedure laid down in section 25B of the Act, the tenant sought the Controller 's leave to contest it on grounds which were stated in his affidavit. The leave was granted and thereafter the tenant filed a written statement contesting his eviction which was ultimately disallowed. The learned Controller held that although the landlady had proved that she required the premises bona fide for her own occupation, she was disentitled to the relief claimed by her for two reasons which were (1) that she had not proved service on the tenant of a notice under section 106 of the Transfer of Property Act, and, (2) that her application claimed eviction only in respect of a part of the premises let out which was not legally permissible. The landlady went up in revision to the High Court and the learned Single Judge reversed both the findings which had been decided by the Controller against her. Two other points were raised before the High Court on behalf of the tenant. It was contended, firstly, that the petition for revision was incompetent in view of the provisions of sub section (8) of section 25B of the Act and that only an appeal as contemplated by section 38 thereof should have been instituted before the Rent Control Tribunal (hereinafter called the Tribunal). The contention was negatived with the observation that a petition for revision as envisaged by sub section (8) above mentioned lay against an order accepting or rejecting an eviction appli 749 cation, and against such an order alone, as laid down in Devi Singh vs Chaman Lal(1), R. K. Parikh vs Uma Verma(2), Bhagwati Pershad vs Om Perkash(3) and Mahavir Singh vs Kamala Narain(4). The second contention was that the lease deed on which the landlady relied in support of the alleged tenancy was unstamped and therefore inadmissible in evidence. This contention was repelled for the reason that although the said deed was taken on the file subject to the objection made on behalf of the tenant, the objection was never pressed at the time of argument before the Controller. It was also observed by the learned Single Judge that the contention was practically meaningless as the tenant had never denied the tenancy in question. In the result the learned Single Judge passed the impugned order directing the eviction of the tenant and, as already stated, that is the order impugned before us. It has been vehemently contended before us on behalf of the tenant appellant that the opinion of the High Court about the maintainability of the petition for revision of the order of the Controller is erroneous and that the only remedy open to the landlady against that order was by way of appeal to the Tribunal under section 38 of the Act. In order to determine the acceptability of the contention it is necessary to undertake a somewhat detailed examination of some of the provisions of the Act, especially those which were introduced by a 1976 amendment with effect from 1st of December, 1975. The Act as originally framed provided for the control of rents and of eviction of tenants. Various safeguards were created by it to ensure security of tenure to tenants residing in the urban area of Delhi and the right of the landlord to evict his tenant was restricted in ambit so as to be available only if the existence of certain specified grounds was proved. Those grounds are enumerated in clauses (a) to (1) of the proviso to sub section (1) of section 14 of the Act. The ground contained in clause (e) runs thus: "(e) 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 upon him, if he is the owner thereof, or for any person 750 for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable residential accommodation;" The jurisdiction to decide disputes arising under the Act was vested in Controllers and civil courts were divested thereof. Chapter VI of the Act made provision for appointment of Controllers, their powers and functions and appeals from their orders. Out of the sections appearing in that Chapter there are three with which we are here concerned. They are sections 37, 38 and 39. Section 37 lays down the procedure to be followed by the Controller and subsection (2) thereof states: "Subject to any rules that may be made under this Act, the Controller shall, while holding an inquiry in any proceeding before him, follow as far as may be the practice and procedure of a Court of Small Causes, including the recording of evidence. " Section 38 lays down that from every order of the Controller made under the Act an appeal shall lie to the Tribunal who shall have all the powers of a court under the Code of Civil Procedure when hearing an appeal. Section 39 provides for an appeal to the High Court against an appellate order passed by the Tribunal but, makes it clear that such a second appeal shall lie only if it involves some substantial question of law. On the 9th of September, 1975, the Central Government took a decision that Government employees owning houses within the Union Territory of Delhi shall be required to vacate accommodation allotted to them by the Government within a period of three months beginning with the 1st of October, 1975, and that in case they failed to vacate such accommodation before the 1st of January 1976, they would have to pay therefor licence fee equivalent to rent at the market rate. In view of that decision it became necessary to make special provision for enabling such Government employees to evict their respective tenants and to shift to their own houses. It was also felt that procedural delays required to be cut down in the case of disputes between the landlord and the tenant when the landlord bona fide required the demised premises for his own occupation. The Act was therefore amended by Ordinance No. 24 of 1975 which was eventually replaced by the Delhi Rent Control (Amendment) Act (being Act No. 18 of 1976 and hereinafter referred to as the Amending Act). The Amending Act introduced in Chapter III of the Act section 14A which provided for a right to a person in occupation of any residential premises allotted to him by the Central Government 751 or any local authority to recover immediate possession of premises let out by him in case he was required by the Government or the authority to vacate the residential premises allotted to him. The only other change effected by the Amending Act was to add a new chapter, viz, Chapter IIIA, to the Act. The chapter is headed "Summary Trial Of Certain Applications" and consists of three sections, viz., sections 25A, 25B and 25C, the first two of which may be reproduced in extenso: "25A. The provisions of this Chapter or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained elsewhere in this Act or in any other law for the time being in force." "25B. (1) Every application by a landlord for the recovery of possession of any premises on the ground specified in clause (e) of the proviso to sub section (1) of section 14, or under section 14A, shall be dealt with in accordance with the procedure specified in this section. "(2) The Controller shall issue summons, in relation to every application referred to in sub section (1), in the form specified in the Third Schedule. "(3) (a) the Controller shall, in addition to, and simultaneously with, the issue of summons for service on the tenant, also direct the summons to be served by registered post, acknowledgment due, addressed to the tenant or his agent empowered to accept the service at the place where the tenant or his agent actually and voluntarily resides or carries on business or personally works for gain and may, if the circumstances of the case so require, also direct the publication of the summons in a newspaper circulating in the locality in which the tenant is last known to have resided or carried on business or personally worked for gain. (b) When an acknowledgment purporting to be signed by the tenant or his agent is received by the Controller or the registered article containing the summons is received back with an endorsement purporting to have been made by a postal employee to the effect that the tenant or his agent had refused to take delivery of the registered article, the Controller may declare that there has been a valid service of summons. 752 "(4) The tenant on whom the summons is duly served (whether in the ordinary way or by registered post) in the form specified in the Third Schedule shall not contest the prayer for eviction from the premises unless he files and affidavit stating the ground on which he seeks to contest the application for eviction and obtains leave from the Controller as hereinafter provided; and in default of his appearance in pursuance of the summons or his obtaining such leave, the statement made by the landlord in the application for eviction shall be deemed to be admitted by the tenant and the applicant shall be entitled to an order for eviction on the ground aforesaid. "(5) The Controller shall give to the tenant leave to contest the application if the affidavit filed by the tenant discloses such facts as would disentitle the landlord from obtaining an order for the recovery of possession of the premises on the ground specified in clause (e) of the proviso to sub section (1) of section 14, or under section 14A. "(6) Where leave is granted to the tenant to contest the application, the Controller shall commence the hearing of the application as early as practicable. "(7) Notwithstanding anything contained in sub section (2) of section 37, the Controller shall, while holding an inquiry in a proceeding to which this Chapter applies, follow the practice and procedure of a Court of Small Causes, including the recording of evidence. "(8) No appeal or second appeal shall lie against an order for the recovery of possession of any premises made by the Controller in accordance with the procedure specified in this section: Provided that the High Court may, for the purpose of satisfying itself that an order made by the Controller under this section is according to law, call for the records of the case and pass such order in respect thereto as it thinks fit. "(9) Where no application has been made to the High Court on revision, the Controller may exercise, the powers of review in accordance with the provisions of Order XLVII of the Fist Schedule to the Code of Civil Procedure, 1908. 753 "(10) Save as otherwise provided in this Chapter, the procedure for the disposal of an application for eviction on the ground specified in clause (e) of the proviso to sub section (1) of section 14, or under section 14A, shall be the same as the procedure for the disposal of applications by Controllers. The non obstante clause occurring in section 25A makes it quite clear that whenever there is a conflict between the provisions of Chapter IIIA on the one hand and those of the rest of the Act or of any other law for the time being in force on the other, the former shall prevail. Section 25B provides a special procedure for the determination of an application by a landlord claiming recovery of possession from his tenant of the premises let out to the latter on either of two grounds, viz., those specified in clause (e) of the proviso to sub section (1) of section 14 and in section 14A. Thus if such an application is based on the ground that the landlord requires the demised premises bona fide for his own occupation as a residential accommodation it has to be dealt with in accordance with the procedure specified in section 25B and not under the provisions contained in chapters other than Chapter IIIA, in so far as the latter are inconsistent with the former. This follows directly from the provisions of section 25A read with those of sub section (1) of Section 25B. That procedure envisages a short cut to the conclusion of the proceedings before the Controller and for that purpose makes the right of the tenant to contest the application of the landlord subject to the Controller 's leave obtained on grounds specified in an affidavit. If no such affidavit is filed, the question of leave does not arise nor that of a contest by the tenant. Furthermore, if the affidavit is filed but leave is refused, a contest by the defendant is again barred. In either case the proceedings immediately come to a termination by the passage of an order of eviction of the tenant. In case, however, the required affidavit is filed and leave to contest is granted, the Controller has to embark on the usual inquiry but the same has again to be conducted in conformity with the practice and procedure of a Court of Small Causes, including the recording of evidence. This is the mandate of sub section (7) of section 25B, which makes a slight departure in the matter of practice and procedure from that to be followed in other applications under the Act as laid down in sub section (2) of section 37. Sub section (8) of section 25B makes another variation in the procedure and states that when an order for the recovery of possession of any premises has been made by the Controller on an appli 754 cation covered by sub section (1) no appeal or second appeal shall lie therefrom. In the case of such an order therefore the provisions of sections 38 and 39 are specifically made inapplicable. The subsection further provides however for the remedy of revision by the High Court of any order made by the Controller under section 25B, a remedy which is not available to a party in a dispute not covered by Chapter IIIA. Reference may also be made here to sub section (10) of section 25B pointedly. That sub section makes it clear that even in the case of applications falling under sub section (1) of that section the procedure for their disposal by Controllers shall be the same as in the case of other applications, except as is provided in Chapter IIIA. The combined effect of section 25A and sub section (1) and (10) of section 25B is that in whatever respect section 25B makes a departure from the procedure prescribed in other chapters of the Act, the provisions of Chapter IIIA shall prevail but that where that Chapter does not provide for a variation, applications covered by subsection (1) of section 25B shall be treated at par with all other applications for the purposes of procedure. It is in the above background that the question as to whether an appeal to the Tribunal or a revision to the High Court was competent against the order passed in the instant case by the Controller has to be decided, and that brings us directly to the meaning of subsection (8) of section 25B. The proviso to that sub section gives power to the High Court to revise "an order made by the Controller under this section" which expression is no doubt capable of being construed as any order of whatsoever, nature passed by the Controller while acting in accordance with the procedure laid down in section 25B. The proviso, however, has to be read as a legislative measure carved out of the sub section to which it is appended and the order mentioned therein has to be regarded as an order of the type which the sub section speaks of, i.e. "an order for the recovery of possession of any premises made by the Controller in accordance with the procedure specified in this section. " Thus, the order covered by sub section (8) (and therefore, by the proviso also) would be a final order disposing of an application on a conclusion of the proceedings under sub section (4) or sub section (7) of section 25B. This line of reasoning does not present any difficulty. Learned counsel for the tenant however argued that for an order to be covered by sub section (8) of section 25B it must be an order for the recovery of possession of any premises made by the Controller. According to him, if an order does not direct recovery 755 of possession by the landlord from the tenant, it is not an order which sub section (8) would embrace. This contention, though not wholly implausible, runs counter to the decision in Devi Singh vs Chaman Lal (supra) which was followed in Bhagwati Prasad vs Om Prakash (supra) and Mahavir Singh vs Kamal Narain (supra) and does not find favour with us. Sub section(8) no doubt in terms speaks only of an order "for the recovery of possession of any premises" and does not mention one which refuses the relief of eviction to the landlord; but then it appears to us that the expression "order for the recovery of possession of any premises" has to be construed, in the context in which it appears, as an order deciding application for the recovery of the possession of any premises. Our reasons in this behalf are two fold. Firstly, if an order in favour of the landlord alone was meant to be covered by sub section (8), an order refusing such relief would be liable to be called in question by way of an appeal or second appeal under section 38 so that there would be two procedures for the end product of the Controller 's proceedings being called in question; one when the same is in favour of the landlord, and another when it goes against him, which would obviously entail discrimination and make the sub section suffer from a constitutional invalidity. It is an accepted rule of interpretation that if a provision can be construed in a manner which upholds its legal or constitutional validity it should if possible be so construed rather than the other way round. We do feel that the language used is not happy but then it would not be doing violence to it if it is construed as just above stated. Secondly, the scheme of the Act and the object of the introduction of section 14A and Chapter IIIA into it by the Amending Act make us form the opinion that sub section (8) of section 25B is exhaustive of the rights of appeal and revision in relation to the proceedings held under that Chapter. Before the enforcement of the Amending Act, all disputes between a landlord and his tenant were liable to be dealt with according to a uniform procedure before the Controller as also in appeal and second appeal. No distinction was made between one kind of dispute and another. When it was felt that the procedure prescribed in the Act defeated, by reason of the delay involved, the very purpose of an application made under clause (e) of the proviso to sub section (1) of section 14, especially in the case of landlords who themselves held accommodation allotted by the Government or a local authority which they were required to vacate, section 14A and Chapter IIIA were introduced by the Amending Act so as to cut down the time factor drastically, so much 756 so that a tenant was required to obtain leave from the Controller for contesting an application for his eviction before he could put up his defence, and the Controller was given the power to refuse leave and straightway pass an order of eviction if he found that the grounds disclosed by the tenant in support of his right to dispute the landlord 's claim were not such as would disentitle the landlord from obtaining an order of eviction. Sub section (7) further simplified the procedure on contest being allowed, even though sub section (2) of section 37 itself provided for a procedure far simpler than ordinarily obtains in proceedings before a civil court. Then there is sub section (8) which provides for the abolition of the right of appeal and second appeal and replaces it by a power in the High Court to revise an order passed by the Controller. That provision, as a part of the overall picture painted, must necessarily be construed as laying down procedure exclusive of that provided in sections 38 and 39, and we hold that the four cases relied upon by the High Court in rejecting the contention raised on behalf of the tenant were correctly decided. In the way of the above interpretation of sub section (8) of section 25B, the provisions of sub section (10) thereof do not pose a hurdle. All that sub section (10) states is that the procedure for the disposal of an application for eviction covered by sub section (1) shall be the same as the procedure for disposal of other applications by Controllers, except as provided in Chapter IIIA. Sub section (8) as interpreted by us governs an application covered by sub section (1) of section 25B and expressly takes away the right of appeal or second appeal, while providing the remedy of revision instead. As we have held the provisions of sub section (8) to be exhaustive of the remedies available to a person aggrieved by an order passed by the Controller in applications triable under Chapter IIIA. such applications fall outside the category of those which can be disposed of like other applications under sub section (10) read with the provisions contained in other chapters of the Act. As a result of the above discussion we hold that the remedy of the landlady against the order of the Controller in the present case was by way of revision (and revision only) of that order by the High Court as laid down in the proviso to sub section (8) of section 25B, even though it was an order not directing, but refusing recovery of possession of the premises in dispute. Another contention raised on behalf of the tenant was that the order passed by the High Court while revising that of the Controller was illegal inasmuch as it did not specifically contain a direc 757 tion that the landlady would not be entitled to obtain possession of the premises in dispute before the expiration of a period of six months from the date of the order. The contention seeks support from the provisions of sub section (7) of section 14 of the Act which states: : "Where an order for the recovery of possession of any premises is made on the ground specified in clause (e) of the proviso to sub section (1), the landlord shall not be entitled to obtain possession thereof before the expiration of a period of six months from the date of the order. " Now this sub section does not at all require that an order for the recovery of possession of any premises should contain a direction of the type above mentioned. On the other hand, the sub section itself declares that such an order would not be executable before a certain period has expired. The declaration is part of the law of the land and would be operative as such so that the landlady would not be entitled to execute the order made by the High Court in her favour before the expiry of six months from the date thereof notwithstanding the fact that the terms of sub section (7) have not been made a part of that order. The only other ground urged in support of the appeal was that the landlady had prayed for the tenant 's eviction from only a part of the premises and that such eviction could not legally be granted to her. The contention embraces a question of fact which has been decided against the tenant by the High Court and for reconsidering which we do not find any reason. In the result the appeal fails and is dismissed but with no order as to costs. P.B.R. Appeal dismissed.

Clause (e) of the proviso to section 14(1) of the Delhi Rent Control Act provides that a landlord can evict a tenant of premises let for residential purposes on the ground that the same were required by him bona fide for occupation as a residence for himself and that he has no other reasonably suitable residential accommodation. An appeal from the order of the Controller lies to the tribunal and a further appeal to the High Court. In September, 1975, the Government of India took a decision that Government employees owning houses in Delhi shall be required to vacate accommodation allotted to them by the Government within a period of three months from 1st October, 1975. To avoid procedural delays in the matter of eviction of tenants from houses let out by Government servants who were required to shift to their own houses, Chapter III A was introduced by an Amending Act. Section 14A which was added in Chapter III provided a right to a person in occupation of any residential premises allotted to him by the Central Government to recover immediate possession of the premises let out by him in case he was required by the Government to vacate the residential premises allotted to him. The non obstante clause contained in section 25A provides that "the provisions of this Chapter or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained elsewhere in this Act or any other law for the time being in force. " Section 25B(8) provides that when "an order for the recovery of possession of any premises" has been made by the Controller on an application covered by section 25B no appeal or second appeal shall lie therefrom. The respondent 's application under clause (e) of the proviso to section 14(1) of the Act was rejected by the Rent Controller on the ground that it was not legally permissible for her to obtain possession of the premises under the section because she had sought eviction only in respect of a part of the premises. In the respondent 's revision petition before the High Court the tenant contended that the petition was incompetent because in view of the provisions of section 25b(8) the only remedy available to the respondent was by way of appeal under section 38. Rejecting this contention the High Court held that a, petition for revision as envisaged by section 25B(8) lay against the order accepting or rejecting an eviction application and against such an order alone. Dismissing the tenant 's appeal. ^ HELD: The remedy of the land lady against the order of the Controller in the present case was by way of revision (and revision only) of that order by the High Court under the proviso to section 25B(8), even though it was 747 an order not directing but by refusing recovery of possession of the premises in dispute. [756 G H] The non obstante clause in section 25A provides that whenever there is a conflict between the provisions of Chapter IIIA and those of the rest of the Act or of any other law in force the former shall prevail. If an application is made under clause (e) of the proviso to section 14(1) it has to be dealt with in accordance with the procedure specified in section 25B and not under the provisions contained in Chapters other than Chapter IIIA. Therefore, the procedure laid down in section 25A read with section 25B(1) envisages a shortcut to the conclusion of the proceedings before the Controller. Section 25B(8) further provides that when an order for the recovery of possession of any premises has been made no appeal under section 38 or second appeal under section 39 shall lie. The combined effect of section 25A and section 25B(1) and (10) is that in whatever respect section 25B makes a departure from the procedure prescribed in other chapters of the Act, the provisions of Chapter IIIA shall prevail. [753 B D; 754 D] The expression "order for the recovery of possession of any premises" has to be construed, in the context in which it appears, as an order deciding an application for the recovery of possession of any premises; because, firstly, if an order in favour of the landlord alone was meant to be covered by sub section (8) an order refusing such relief would be liable to be called in question by way of an appeal or second appeal under section 38 so that there would be two procedures for the end product of the Controller 's proceedings being called in question, one when the same is in favour of the landlord and another when it goes against him, which would obviously entail discrimination and make the sub section invalid. But if a provision can be construed in a manner which upholds its legal or constitutional validity it should, if possible, be so construed rather than the other way round. [755 B E] All that sub section (10) of section 25B states is that the procedure for the disposal of an application for eviction covered by sub section (1) shall be the same as the procedure for disposal of other applications by Controllers except as provided in Chapter IIIA. Sub section (8) expressly takes away the right of appeal or second appeal while providing the remedy of revision instead. [747 E F] Section 14(7) does not require that an order for the recovery of possession of any premises should contain a direction that the landlord would not be entitled to obtain possession of the premises in dispute before the expiry of a period of six months from the date of the order. The sub section itself declares that such an order would not be executable before a certain period has expired. The declaration is part of the law of the land and would be operative as such so that the landlady would not be entitled to execute the order before the expiry of six months from the date thereof notwithstanding the fact that the terms of sub section (7) have not been made part of the order. [757 C D] Devi Singh vs Chaman Lal (1977) Rajdhani Law Reporter 566; R. K. Parikh vs Uma Verma I.L.R. (1978) II Delhi 78; Bhagwati Pershad vs Om Perkhash (1979) Rajdhani Law Reporter 26; Mahavir Singh vs Kamal Narain (1979) Rajdhani Law Reporter 159 approved.

ivil Appeal No. 414 of 1965. Appeal from the judgment and order dated February 21, 1962, of the Punjab High Court in I.T. Reference No. 9 of 1959. N.C. Chatterjee and R.V. Pillai, for the appellant. C.K. Daphtary, Attorney General, R. Ganapathy lyer, R.N. Sachthey for R.H. Dhebar, for the respondent. The Judgment of SUBBA RAO, MUDHOLKAR and RAMASWAMI JJ. was .delivered by SUBBA RAO, J. The dissenting Opinion of DAYAL and BACHAWAT JJ. was delivered by BACHAWAT J. Subba Rao, J. This appeal by certificate raises the main question whether section 2(6A)(d) of the Indian Income tax Act, 1922, hereinafter called the Act, is ultra vires the Central Legislature. The assessee, a public limited company, was incorporated on May 23, 1945, under the Indian Companies Act, 1913, with a share capital of Rs. 50 lakhs. On December 15, 1947, at the instance of the appellant the High Court sanctioned the reduction of the capital of the company from Rs. 50 lakhs to Rs. 25 lakhs. On December 16, 1953, the High Court sanctioned a further reduction of the share capital from Rs. 25 lakhs to Rs. 15 lakhs. On November 4, 1954, the Registrar of Companies granted the requisite certificate under section 61(4) of the Indian Companies Act. On November 5, 1954, the appellant issued notices to the shareholders inviting applications for the refund of share capital so reduced. On the receipt of the applications, appropriate debit entries were made in the accounts of the shareholders and the amounts were actually paid to them during the previous year, i.e., December 1, 1954, to November 30, 1955. Under section 2(6A)(d) of the Act, "dividend" includes any distribution by a company on the reduction of its capital to the extent to which the company possesses accumulated profits, whether such accumulated profits have been capitalised or not. In assessing the income of the appellant company for the assessment year 1956 57, the Income tax Officer held that the said dividends were distributed during the accounting year and on that finding he calculated the rebate on super tax in terms of el. (i)(b) of the second proviso tO paragraph D of Part I1 of the first schedule to the Finance Act, 1956. If the dividends were distributed during the accounting year. i.e., December I, 1953, to November 30, 1954, the appellant would be entitled to a higher rate of rebate on super tax under el. (ii) of the first proviso to paragraph D of Part II of the first schedule to the Finance Act, 1956. The Income tax Officer further held that the 4 assessee 's accumulated profits at the time of the reduction of the Capital from Rs. 25 lakhs to Rs. 15 lakhs were Rs. 8,42,337. On appeal the Appellate Assistant Commissioner accepted the said figure arrived at the Income tax Officer. On further appeal, the Income tax Appellate Tribunal, for the reasons recorded by it in its order, reduced the figure under the said head by a sum of Rs. 3.61,40.5. It was contended on behalf of the assessee that in as much as the certificate from the Registrar for the reduction of the capital from Rs. 25 lakhs to Rs. 15 lakhs was obtained on November 4, 1954, the distribution of the dividends should be deemed to have taken place during the year 1953 54 and, therefore, the said dividends were not exigible to tax for the assessment year. The Incometax Officer, the Appellate Assistant Commissioner and the Tribunal concurrently rejected that plea and held that, as the actual payment to the shareholders of the refund of the capital and the debit in the accounts of the shareholders were effected in the accounting year, the said dividends must be held to have been distributed in the accounting year. There is another sum of Rs. 11,687 3 0 received by the appellant as security deposit on account of empty bottles. A question was raised whether the said amount could be considered as capital gains and, therefore, should be excluded from the accumulated profits. The Appellate Tribunal held in favour of the assessee. The assessee and the Commissioner of Income tax filed two applications before the Tribunal for referring questions of law arising out of the Tribunal 's order to the High Court. The Tribunal referred the following questions of law to the High Court for its opinion. (1) Whether the provisions of section 2(6A)(d) of the Indian Income tax Act are ultra vires of the Central Legislature. (2) Whether the accumulated profits amounting to Rs. 4,69,244 13 0 could be deemed to have been distributed on the reduction of the capital from Rs. 25 lakhs to Rs. 15 lakhs within the meaning of Section 2(6A)(d) of the indian Income tax Act. (3) Whether the amount of Rs. 11.687 3 0 received by the assessee us security deposit on account of empty bottles could be considered as Capital Gains. (4) Whether the accumulated profits could be considered as dividend deemed to have been distributed in the assessment year 1955 56 in view of the certificate granted by the Registrar of Companies under Section 61(4) of the Indian Companies Act, 1913, or could be considered us dividend deemed to have been distributed in the assessment year 1956 57 because the debits of refunds were actually made in the accounts of the shareholders during the accounting period of the assessment year 1956 57. 5 The High Court answered all the questions against the assessee. Hence the appeal. Mr. N.C. Chatterjee, learned ,counsel for the assessee, did not contest the correctness of the answer given by the High Court in 'regard to the third question and, therefore, nothing further ' need be said about it. The first question is whether section 2(6A)(d) of the Act is ultra vires the Central Legislature. Sub.section (6A) was inserted in section 2 of the Act by section 2 of the Indian Income tax (Amendment) Act,. 1939 (Act VII of 1939). Section 2(6A)(d) of the Act reads: " 'Dividend ' includes any distribution by a company on the reduction of its capital to the extent to which the company possesses accumulated profits which arose after the end of the previous year ending next before the 1st day of April, 1933, whether such accumulated profits have been capitalised or not." The said Act VII of 1939 was passed by the Central Legislature in exercise of its powers conferred under section 100 of the Government of India Act, 1935, read with entry 54 of List I of the. Seventh Schedule thereof. Entry 54 reads: "Tax on income other than agricultural income." Mr. Chatterjee contends that while the said entry 54 enables the appropriate Legislature to impose a tax on "income", the Legislature by enlarging the definition of dividend so as to include the amount received by a shareholder towards the share capital contributed by him, which cannot possibly be income, seeks to tax a capital receipt, and, therefore, the said clause is ultra vires the Central Legislature. Mr. R. Ganapathy lyer, learned counsel for the Revenue, contends that a legislative entry must receive the widest connotation and should not be interpreted in any narrow or restricted sense, and if so construed the said entry enables the Legislature to make a law to prevent evasion of tax on income by devious methods and that the Legislature in the instant case seeks to prevent the growing evil of tax evasion by companies distributing profits under the guise of reduction of capital. It is well settled rule of construction that entries in the legislative lists cannot be read in a narrow or restricted sense: they should be construed most liberally and in their widest amplitude. In the words of Gwyer, C.J., in The United Provinces vs Atiqa Begum(1) "each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended by it. " This Court in a number of decisions held that the expression "income" in entry 54 of List I of the Seventh Schedule to the Government of India Act, 1935, and the (1) 6 corresponding entry 82 of List 1 of the Seventh Schedule to the Constitution of India, shall be widely and liberally construed so as to enable a Legislature to provide by law for the prevention of evasion of income tax. In Sardar Baldev Singh vs Commissioner Income tax, Delhi and Ajmer (1) this Court maintained the constitutional validity of section 23A(1) of the Income tax Act, which empowered the Income tax Officer to impose super tax in a case where a private limited company distributed less than sixty per cent. of the total income of the company as dividends on the ground that the object of the section was to prevent avoidance of super tax by shareholders of a company in which the public were not substantially interested. In Balaji vs Income tax Officer, Special Investigation Circle (2) this Court ruled that section 16(3)(a)(i) and (ii) of the Income tax Act, which enabled the Income tax Officer in computing the total income of a person to include the share of the income of his wife and minor sons therein, was constitutionally valid for the reason that it was intended to prevent evasion of tax by persons putting the properties in the names of their wives or minor children, as the case may be. This Court again in Navnitlal C. Javeri vs K.K. Sen, Appellate Assistant Commissioner Income tax, "D" Range, Bombay (3) sustained the validity of section 2(6A)(e) of the Indian Income tax Act, 1922, which included the definition of "dividend", inter alia, payment made by the company by way of advance or loan to a shareholder to the extent to which the company possessed accumulated profits on the ground that it was a measure to prevent private controlled companies adopting the device of making advances or giving loans to their shareholders with the object of evading payment of tax. The question in the instant case, therefore, is whether the constitutional validity of section 2(6A)(d) of the Act can be supported on the ground that it was enacted to prevent evasion of income tax. While an entry delineating a legislative field must be widely and liberally construed, there must be a reasonable nexus between the item taxed and the field so delineated. The said clause deals with the distribution by a company on the reduction of its capital to the extent to which the company possesses accumulated profits. Accumulated profits of a company may be utilised in the following 3 ways: (1) for increasing the capital stocks; (2) for distributing the same among the shareholders by way of dividends; and (3) for reducing the capital. Ordinarily a company reduces the capital when there is loss or depreciation of assets; in that event there is no question of distribution of profits to the shareholders but the shares are only devaluated. But a company may, on the pretext of reducing its capital, utilise its accumulated profits to pay back to the shareholders the whole or part of the paid up amounts on the shares. A shareholder though in form gets back the whole (1) ; (2) [1962]2 S.C.R. 983. (3)[1965] 1 S.C.R. 909. 7 or a part of the capital contributed by him, in effect he gets a share of the accumulated profits, which, if a straightforward course was followed, he should have received as dividend. This is a division of profits under the guise of division of capital; a distribution of profits under the colour of reduction of capital. If this was permitted, there would be evasion of super tax, the extent of the evasion depending upon the prevalence of the evil. The Legislature, presumably in the interest of the exchequer, enlarged the definition of "dividend" to catch the said payments within the net of taxation. By doing so, it is really taxing the profits in the hands of the shareholders, though they are receiving the said profits under the cloak of capital. Learned counsel for the appellant contends that under the Companies Act a company can lawful1y reduce the share capital with the sanction of the Court, that there is no prohibition thereunder against such a reduction being made by way of distribution of accumulated profits to the shareholders, that the amounts so paid to them would be in law capital receipts and that, therefore, there could not be in law or in fact any evasion of tax on income. Reliance is placed upon sections 100 to 103 of the Companies Act. This argument mixes up two aspects the legal and fiscal. Under Company Law the question of reducing capital is a domestic one for the decision of the majority of shareholders. The Court comes into the picture only to see that the reduction is fair and equitable and that the interests of the minority and the creditors do not suffer. It may not also be concerned with the motive of the general body in resolving to reduce the capital; but the Income tax law is concerned with tax evasion. Tax can be evaded by breaking the law, or avoided in terms of the law. When there is a factual avoidance of tax in terms of law, the Legislature steps in to amend the Income tax law so that it can catch such an income within the net of taxation. There is, therefore, no inconsistency between a receipt being a capital one under the Company law, and by fiction being treated as taxable income under the Income tax Act. Therefore, as section 2(6A)(d) of the Act embodies a law to prevent evasion of tax, it falls within the ken of entry 54 of List I of Schedule Seven to Government of India Act, 1935. The next question is whether the said dividends were distributed in the year 1953 54, as the appellant contends, or in the accounting year 1954 55, as the respondent argues. The relevant sections of the Act in this context are section 2(6A)(c1) and section 16(2). Section 2(6A)(d) has been already extracted. The relevant part of l 6(2) reads: "For the purposes of inclusion in the total income of an assessee any dividend shall be deemed to be income of the previous year in which it is paid, credited or di i b u t e d . . . . . . . . . 8 "Dividend", with which we are now concerned, is not that which we ordinarily understand by that expression, but dividend by definition. Under section 2(6A)(d) of the Act it is one of the ingredients of the definition that it shall have been distributed by a company on reduction of the capital to the extent to which the company possesses accumulated profits. Under section 16(2) of the Act such a dividend shall be deemed to be an income of the previous year in which it is paid, credited or distributed. Unless such a distribution as is mentioned in cl. (d) of section 2(6A) of the Act had taken place, it would not be a dividend. If it was not so distributed, section 16(2) of the Act would not be attracted. To put it in other words, if the accumulated profits were distributed, it would satisfy not only the definition of "dividend" in cl. (d) but also would fix the year in which it would be deemed to be income. What then is the meaning of the expression "distribution"? The dictionary meaning of the expression "distribution" is "to give each a share, to give to several persons". The expression "distribution" connotes something actual and not notional. It can be physical; it can also be constructive. One may distribute amounts between different shareholders either by crediting the amount due to each one of them in their respective accounts or by actually paying to each one of them the amount due to him. This Court had to construe the scope of the word "paid" in section 16(2) of the Act in J. Dalmia vs Commissioner of I.T. Delhi(1). Shah, J., speaking for the Court observed: "The expression "paid" in section 16(2), it is true, does not contemplate actual receipt of the dividend by the member. In general, dividend may be said to be paid within the meaning of section 16(2) when the company discharges its liability and makes the amount of dividend unconditionally available to the member entitled thereto." This Court again reaffirmed the said principle in Mrs. P.R. Saraiya vs Commissioner of Income tax, Bombay City 1, Bombay(2) and held that where dividend was not credited to any separate account of the assessee so that he could, if he wished, draw it, it was not "credited or paid" within the meaning of section 16(2) of the Act. The same meaning must be given to the word "distribution". The only difference between the expression "paid" and the expression "distribution" is that the latter necessarily involves the idea of division between several persons which is the same as payment to several persons. At this stage the anomaly that is alleged to flow from our view may conveniently be noticed. It is said that there will bedifferent points of time for ascertaining the extent of the accumu lated profits. With the result section 2(6A)(d) of the .Act becomes un workable in practice or at any rate leads to unnecessary complications. We do not see any justification for this comment. 9 Distribution is a culmination of a process. Firstly, there will bea resolution by the General Body of a company for reduction of capital by distribution of the accumulated profits amongst the shareholders; secondly, the company will file an application in the Court for an order confirming the reduction of capital; thirdly, after it is confirmed, it will be registered by the Registrar of Joint Stock Companies; fourthly, after the registration the company issues notices to the shareholders inviting applications for refund of the share capital; and fifthly, on receiving the applications the company will distribute the said profits either by crediting the proportionate share capital to each of the shareholders in their respective, accounts or by paying the said amounts in cash. Out of the said 5 steps, the first 4 are only necessary preliminary steps which entitle the company to distribute the accumulated profits. Credits or payments are related to the said declaration; that is to say, distribution is from and out of the accumulated profits resolved to be distributed by the company. In this view, the accumulated profits to be distributed are fixed by the resolution and the figure does not change with the date of payment or credit. Indeed, a similar process is to be followed in the case of declaration of ordinary dividends; firstly, there will be a resolution by the General Body of the company declaring the dividends; secondly, thereafter the amounts payable to each of the shareholders are distributed by appropriate credits or payments. Dividends may be paid or credited to different shareholders during. different accounting years; and the shareholders may be assessed in respect of the said payments in different years. Even so, the payments are referable only to the declaration of the dividends out of the profits of a particular year. This Court, as we have noticed earlier, in the decisions cited supra held that the year of credit or payment to a shareholder was crucial for the purpose of assessment and not the date of declaration. Let us see whether this view introduces any complication in the matter of reduction of rebate on super tax payable by the company. The appellant Company set up a claim for a rebate on super tax under el. (ii) of the first proviso to paragraph D of Part II of the first schedule to the Finance Act, 1956. The Company based its claim on the contention that the distribution of dividends on reduction of capital took place during the year ending November 30, 1954, and not during the year ending November 30, 1955, and, therefore, el. (i)(b) of the second proviso to paragraph D of Part II of the first schedule to the Finance Act, 1956, read with Explanation (ii) to paragraph D, which provides for reduction of rebate allowable under cl. (ii) of the first proviso by an amount computed at certain slab rates on the amount of dividends distributed to the shareholders during the previous year. could not be invoked. To put it in other words, the assessee claimed that as the dividents were not distributed in the accounting year, there could not be any reduction of the rebates under 10 cl. (i)(b) of the said proviso. If, as we have held, the distribution was made during the year ending November 30, 1955, i.e., the accounting year when the amounts were paid, the Revenue would be entitled to reduce the rebate by the amount computed at the prescribed rates on the amount of dividends. Some complication may arise only 'if we accept the argument that the date of payment fixes the date for ascertaining the quantum of accumulated profits. But we have rejected that contention. In this view, the claim of reduction of rebate on super tax provided by the first schedule to the Finance Act, 1956, can be worked out without any confusion or complication. We, therefore, hold that the dividends must be deemed to have been paid or distributed in the year when it was actually, whether physically or constructively, paid to the different shareholders, that is to say when the amount was credited to the separate accounts of the shareholders or paid to them. What are the facts in the present case? The High Court, on August 6, 1954, sanctioned the reduction of the capital from Rs. 25 lakhs to Rs. 15 lakhs. On November 4, 1954, the Registrar of Companies issued the certificate under section 61(4) of the Companies Act. On November 5, 1954, the Company issued notices to the shareholders inviting applications for refunds. In the notice sent to the shareholders they were informed that the share transfer register of the Company would remain dosed from November 16, to November 30, 1954 (both days inclusive) and refund would be made to those shareholders whose names stood on November 15, 1954, in the books of the Company. After the applications were received, the amounts payable to the shareholders were debited in the accounts and refunds were actually granted during the accounting year, i.e., between December 1, 1954, and November 30, 1955. It is clear from the said facts that the amounts were distributed only during the accounting year, when the amounts were both debited and paid. We, therefore, agree with the High Court that the dividends were distributed to the shareholders during the accounting year, i.e., 1954 55. In the result, the appeal fails and is dismissed with costs. Bachawat J;. For the reasons given by brother Subba Rao J, we agree that section 2(6A)(d) of the Indian Income tax Act, 1922 is not ultra vires the Central Legislature, but we are unable to agree with his conclusion with regard to the fourth question of law referred for the opinion of the High Court. The fourth question arose because of the claim of the appellant company to a rebate of super tax under cl. (ii) of the first proviso to paragraph D of part II of the first schedule to the Finance Act, 1956 and its contention that the distribution of dividends on reduction of capital contemplated by section 2(6A)(d) of the Indian Income tax Act, 1922 took place during the year ending November 30, 1954, and not during the year ending November 30, 1955, and consequently there could be no reduction of the rebate under cl. (i)(b) of the second proviso to paragraph D of part II of the first schedule to the Finance Act, 1956 read with explanation (ii) to paragraph D. 11 Now, el. (i)(b) of the second proviso to paragraph D of part II of the first schedule to the Finance Act, 1956 provides for reduction of the rebate allowable under cl. (ii) of the preceding proviso by an amount computed at certain slab rates on the amount of dividends "in the case of a company referred to in el. (ii) of the preceding proviso which has distributed to its shareholders during the previous year dividends in excess of 6 per cent of its paid up capital not being dividends payable at a fixed rate", and the explanation (ii) to paragraph D provides that for purpose of paragraph D "the expression 'dividend ' shall be deemed to include any distribution included in the expression 'dividend ' as defined in el. (6A) of section 2 of the Indian Income tax Act". Section 2(6A)(d) of the Indian Income tax Act, 1922 provides that "dividend" includes "any distribution by a company on the reduction of its capital to the extent to which the company possesses accumulated profits which arose after the end of the previous year ending next before the lst day of April, 1933, whether such accumulated profits have been capitalised or not. " Obviously, section 2(6A)(d) contemplates a distribution on reduction of capital under section 55(1)(c) of the Indian Companies Act, 1913,under which subject to confirmation by the Court, a limited company, if so authorised by its articles, may by special resolution reduce the share capital in any way, and in particular may "either with or without extinguishing or reducing liability on any of its shares, pay off any paid up capital which is in excess of the wants of the company", and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly. Section 56 of the Act enables the company to apply to the Court for an order confirming the reduction, and under section 60 of the Act, the Court may make an order confirming,the reduction on such terms and conditions as it thinks fit. Upon compliance with certain formalities, the Registrar of Joint Stock Companies is required under section 61 of the Act to register the order and a minute approved by the Court, and on such registration, and not before, the resolution for reducing share capital as confirmed by the order so registered shall take effect. Under section 62,the minute when registered shall be deemed to be substituted for the corresponding part of the memorandum of the company. In the instant ease, the issued, subscribed and paid up capital the company was Rs. 25 lakhs, consisting of 5 lakhs shares of Rs. 5 each. On December 16, 1953, the company passed a special resolution for reducing its share capital from Rs. 25 lakhs to Rs. 15 lakhs and for payment of Rs. 2 per share to the existing share holders under section 55(1)(c) of the Indian Companies Act, 1913.On May 10. 1954, the company applied to the Court for an order confirming the reduction. On August 6, 1954, the High Court made an order confirming the reduction. On November 4, 1954,the order and the minute approved by the Court were duly registered with the Registrar, and on the same date, the Registrar 12 issued a certificate of registration. On November 5, 1954, the notice of registration was duly published. On the same day, the company issued a circular notice to its shareholders stating that the refund of Rs. 2 per share will be made on receiving confirmation of the registration and requesting the shareholders to send their share certificates to the company at an early date for necessary endorsement and refund of share capital and stating that the refund would be made to the shareholders, whose names stood on November 15, 1954 in the books of the company, the share transfer register would remain closed from November 16 to November 30, 1954, and the refunds would be made to the shareholders whose names stood on November 15, 1954 in the books of the company. The balance ,sheet for the year ending November 30, 1954 did not show the reduction, and the capital of the company in this balance sheet was shown to be Rs. 25 lakhs. The necessary book entries and the payments of dividends to the shareholders were not made during the year ending November 30, 1954. The book entries with regard to the reduction and refund were made, and the refunds were given to the shareholders during the year ending November 30. 1955 and the reduction was shown in the balance sheet for the year ending November 30, 1955. The point in issue is when does the distribution contemplated by section 2(6A)(d) of the Income tax Act. 1922 take place? Section 2(6A)(d) speaks of dividend in the shape of any distribution by a company amongst its shareholders on reduction on its capital to the extent of accumulated profits possessed by it. We reject the contention that this distribution takes place when the dividend is paid or credited to the shareholders. The distribution contemplated section 2(6A)(d) is a distribution by a company "on the reduction of its capital". The word "on" has no fixed meaning, but in the context of the sub section, it must be given the meaning "at the time of". as "on entering", "on the 1st of the month". The distribution contemplated by the sub section is therefore, distribution at the time of the reduction of its capital, that is to say, when the resolution for reduction of its capital under section 55(1)(c) of the Indian Companies Act, 1913 takes effect. As soon as the resolution for reduction of capital and consequential refund of the surplus capital to the shareholders takes effect, the capital stands reduced, the surplus ceases to be capital and stands allotted to the shareholders, each shareholder obtains a vested right to the refund of his share of the surplus, and a liability arises on the part of the company to make the refund. This liability arises as soon as the reduction of capital takes effect, and it matters not that the company has not made the necessary book entries showing the reduction of capital and the transfer of the surplus to the account of the shareholders. The word "distribution" has several dictionary meanings. In the context of section 2(6A)(d), it means allotment or apportionment of the surplus amongst the shareholders; this allotment takes place and each shareholder gets a vested right to his portion of the surplus as soon as the capital stands reduced. 13 A close scrutiny of section 2(6A)(d) reveals that (a) the distribution takes place on a single date and (b) the expression "accumulated profits" means profits accumulated up to the date of the distribution. These two basic ideas which are implicit in section 2(6A)(d) are forcibly brought out in the explanation to the corresponding section 2(22) of the Income tax Act, 1961. We thus find firstly that the entire distribution of the surplus amongst the shareholders takes place on a single date. Now if the distribution is to have a certain date, that date can only be the date when the reduction of capital becomes effective. The payments to the shareholders either actual or notional by credit entries in the books of account are made subsequently. The payments need not be made on one date; they may be and often are made on several dates. The successive payments cannot be the distribution contemplated by section 2(6A)(d). We find secondly that the accumulated profits are to be ascertained on the date of the distribution. But we find independently for reasons mentioned hereafter. that the accumulated profits must be ascertained on the date of the reduction of capital. Thus the two events, namely, the distribution and the reduction of capital must synchronise, and the accumulated profits must also be ascertained at the same point of time. The synchronisation is also obvious on a plain reading of the abridged text "any distribution on the reduction of capital to the extent of accumulated profits". The artificial dividend under section 2(6A)(d) must be fixed by reference to the accumulated profits on the date of the reduction of capital and not by reference to the accumulated profits on the successive dates of the payments. If the amount of the dividend were to be fixed by reference to the accumulated profits on the several dates of the payments, the result might well be that some payments would be dividends to their full extent, some would be dividends to a limited extent and some would not be dividends at all. Take a case where the accounting year of the company ends on November 30, a resolution for the reduction of its capital to the extent of Rs. 10 lakhs and for refund of Rs. 2 for each share of Rs. 5 takes effect on June 30, 1954 and payments of rupees one, six and three lakhs are made respectively on October 30, 1954, October 30, 1955 and October 30, 1956; and assume that the extent of the accumulated profits is rupees ten lakhs on June 30, 1954 and on October 30, 1954, rupees two Iakhs on October 30, 1955 and rupees two lakhs on October 30, 1956. If the amount of the dividend were ' to be fixed by reference to the accumulated profits on the dates of the payments, the result would be that the payment of rupees one lakh would be dividend to the full extent, the payment of rupees six lakhs would be dividend to the extent of one third and the payment of rupees three lakhs would not be dividend at all. It is reasonable to think that the legislature did not contemplate such a result. The character of the distribution is determined by the extent of the accumulated profits on the date when the reduction /B(D)2SCI 3 14 of capital becomes effective and is not altered by any subsequent increase or decrease of the accumulated profits, and all subsequent payment of the capital so distributed share alike the original character of the distribution. It is argued that in the case of a normal dividend, a comparable distribution takes place, a declaration of dividend out of the profits of a particular year is made, and is followed by payment of the dividend, and decided cases under section 16(2) show that the distribution takes place on payment and not on the declaration of a dividend. We think this comparison of the normal dividend with the artificial dividend in section 2(6A)(d) in the shape of distribution to the extent of the accumulated profits is misleading, and the assumptions on which this comparison is made are not correct. The declaration of a normal dividend may be made out of accumulated profits, and need not necessarily be made out of the profits of any particular year. Section 2(6A)(d) does not contain any definition of a normal dividend. In the case of a normal dividend, the question of ascertaining the accumulated ' profits to the extent of which the distribution amounts to dividend does not arise. This problem would have arisen, had section 2(6A) defined normal dividend as "any distribution by a company on the declaration of dividend to the extent to which the company possesses accumulated profits". On such a definition, the only possible interpretation would have been that the accumulated profits are ascertained and the distribution takes place on the date of the declaration of the dividend. The argument based upon the decided cases under section 16(2) is misconceived. Section 16(2) dealt with the question when the dividend shall be deemed to be the income of the shareholders. By section 16(2) the dividend was deemed to be the income of the shareholders when it was paid, credited or distributed. An artificial dividend ' under section 2(6A)(d) is either distributed or paid, whereas the normal dividend is either paid or credited, and in the case of J. Dalmia vs Commissioner of Income tax(1) and Padmavati R. Suraiya vs Commissioner of Income tax(2) it was held that the normal dividend is neither paid nor credited by reason of the fact that the dividend is declared. In this case, we are not concerned with the problem of construction of section 16(2) or the interpretation of the word "paid" or "credited". The word "distributed" is not synonymous with the word "paid" or "credited". The three words are used in the Act in different senses. Moreover, the policy of the legislature on the question of the taxability of the dividend in the hands of the shareholders has varied from time to time. Subsection (2) of section 16 was repealed and in its place, sub section (IA) of section 12 was introduced by the Finance Act, 1959 with effect from April 1, 1960, and the corresponding provision is to be found in section 8 of the Income tax Act, 1961. Under section 12(IA) of the Incometax Act, 1922 and section 8 of the Income tax Act the declaration of , 90. (2) [1965] 1 S.C.R. 307. 15 dividend is crucial even for purposes of assessment of the shareholders. The legislature thus recognises now that the distribution of the normal dividend takes place on the declaration of the dividend. In the instant case, the resolution for the reduction of the capital of the company and the consequential refund of the surplus capital to its shareholders took effect on November 4, 1954. Consequently. the distribution of the dividend as defined by section 2(6A)(d) took place on November 4. 1954, i.e. during the previous year corresponding to the assessment year 1955 56. It is true that during the accounting year ending November 30, 1954. the company did not pay any dividends, nor make any book entries with regard to reduction of capital or with regard to refund or payment of surplus capital. But the company incurred on November 4, 1954 the legal liability to make the refunds and the distribution must be deemed to have taken place on November 4, 1954, though n0 book entries were made and no payments were made on that date. In view of the fact that the distribution took effect on November 4, 1954, the company was bound to make necessary entries in their books on November 4, 1954 showing the reduction of capital, and was also bound to show the reduction in its balance sheet for the year ending November 30, 1954. Irrespective of its method of book keeping, the company incurred on November 4, 1954, the legal liability to make the refunds. The method of bookkeeping is not relevant, but, were it so, it is pertinent to remember that the accounts of the company were kept on the mercantile basis. That system of accounting brings into debit an expenditure the amount for which a legal liability has been incurred before it is actually disbursed. See Keshav Mills Ltd. vs Commissioner of Income tax, Bombay(1). In conclusion, we must point out that the revenue authorities should have, but in fact have not fixed the amount of the dividend by reference to the accumulated profits on November 4, 1954. when the resolution for reduction of capital became effective, or by reference to the accumulated profits brought forward on December 1, 1953 at the commencement of the accounting year during which the reduction of capital took effect. Instead, the revenue authorities took into account the accumulated profits on December 1, 1954, that is to say, the date of the commencement of the subsequent accounting year during which the dividends were paid. The amount of the accumulated profits as on December 1, 1954 was fixed by the Income tax Officer at Rs. 8,42,337, and was subsequently reduced by the Tribunal to Rs. 4,69,244 13 0. The revenue authorities rightly assumed that the distribution and the ascertainment of the accumulated profits to the extent of which the distribution is deemed to be dividend under section 2(6A)(d) took place 16 during the same accounting year, but they erred in holding that the accounting year commencing on December 1, 1954 is the relevant year. In our opinion, the High Court was in error in holding that dividends under section 2(6A)(d) were distributed during the previous year corresponding to the assessment year, 1956 57. We think that the dividends, if any, under section 2(6A)(d) were distributed in the previous year corresponding to the assessment year 1955 56. and the fourth question should be answered accordingly. The appeal is allowed in part to this extent. In view of the divided success, we direct that the parties will pay and bear their own costs in this Court and in the Court below. ORDER BY COURT In accordance with the majority Judgment, the appeal fails and is dismissed with costs.

The appellant .company reduced its capital and the reduction was confirmed by the High Court. On November 4 , 1954, i.e. during the course of the appellant 's accounting year ending November 30, 1954, the Registrar of Companies issued the requisite certificate under section 61(4) of the Indian Companies Act. The surplus share capital consequent on reduction was, however, not refunded to the shareholders during the said accounting year. It was refunded by actual payment or by credit entries in the next accounting year which ended on November 30, 1955. The Income tax Officer held that the said distribution to the extent of accumulated profits was 'dividend ' under section 2(6A)(d) of the Indian Income tax Act, 1922. He further held that the distribution took place in the accounting year ending November 30, 1955, relevant for the assessment year 1956 57. On these findings he calculated the rebate on super tax in the terms of cl. (i)(b) of the second proviso to paragraph D of Part II of the first schedule to the Finance Act, 1956. The findings of the Income tax Officer were upheld by the Appellate Assistant Commissioner and the Appellate Tribunal, and also, in reference, by the High Court. The appellant came to the Supremen Court by certificate. It was contended on behalf of the appellant: (1) In defining 'dividend ' to include capital receipts resulting from distribution of capital on reduction, the legislature went beyond the ambit of entry 54 List I, Seventh Schedule, Government of India Act, 1935, and section 2(6A)(d) of the Indian Income tax Act, 1922 was therefore, ultra vires. (2) The certificate of the Registrar under section 61(4) of the Indian Companies Act was issued on November 4, 1954 and therefore the 'distribution ' under section 2(6A)(d) took place in the previous year relevant to the assessment year 11955 56. HELD ': The expression 'income ' in entry 54 List I of the Seventh Schedule to the Government of India Act, 1935, and the corresponding entry 82 of List I of the Seventh Schedule to the Constitution of India must be widely and liberally construed so as to enable the Legislature to provide by law for the prevention of evasion of Income tax, [5H; 6A] 2 United Provinces vs Atiqa Begum, , Sardar Baldev Singh vs Commissioner of Income tax, Delhi and Ajmer, ; , Balaji vs Income tax Officer Special Investigation Circle, ; and Navnittal C. Javeri vs K.K. Sen, Appellate Assistant Commissioner of Income tax 'D ' Range, Bombay; , , referred to. A company may on the pretext of reducing its capital, utilise its accumulated profits to pay back to the shareholders the whole or part of the paid up amounts on the shares. This is a division of profits under the guise of division of capital. If this were permitted there would be evasion of super tax. Section 2(6A)(d) embodies a law to prevent such evasion and hence it falls within the ken of entry 54 of List I of Schedule Seven to the Government of India Act, 1935. [6H; 7A, G] There is no inconsistency between a receipt being a capital one under the company law and by fiction being treated as taxable under the Income tax Act. [7F G] Per Subba Rao. Mudholkar and Ramaswami, JJ. The expression 'distribution ' connotes something actual and not notional. Like 'paid ' or 'credited ' in section 16(2), distribution ' signifies 'the discharge of the company 's liability and making the dividend available to the members entitled thereto. [8D, F, G] J. Dalmia vs Commissioner of I.T. Delhi, and Mrs. P.R. Saraiya vs Commissioner of Income tax, Bombay City 1, Bombay; , , relied on. Distribution can ke physical, it can be constructive. One may distribute assets between different shareholders either by crediting the amount due to each one of them in their respective accounts, or by actually paying to each one of them the amount due to him. [8D] Distribution in the above manner may take place partly in one year and partly in another. But the amount of accumulated profits is fixed by the resolution of the company reducing its capital, and the figure does not change with the date of payment or credit. [9D, E] In the present case the payments and credits were actually given during the accounting year ending November 30, 1955. The dividend under section 2(6A)(d) must be deemed to have been distributed in the said year. The relevant assessment year therefore was 1956 57.[10F] Per Raghubar Dayal and Bachawat, JJ. The word distributed ', in section 2(6A)(d) does not mean 'paid ' or credited '. Cases under section 16(2) are not relevant to the issue. [14G H] The 'distribution ' contemplated by section 2(6A)(d) is distribution at the time of reduction of capital, that is to say, when the resolution of the company reducing the capital takes effect. It means allotment or apportionment of the surplus among the shareholders; this allotment takes place and each shareholder gets a vested right to his portion of the surplus as soon as the capital stands reduced. [12F H] While the distribution as above takes place on a single date i.e. the date of the reduction of capital, the payments to the shareholders either actual or by credit entries in books of account may be made subsequently and on different dates. The successive payments cannot be 'distribution ' contemplated by section 2(6A) (d). [13A C] 3 In the instant case the resolution for the reduction of the capital of the company and the consequential refund of the surplus capital to the shareholder took effect on November 4, 1954. Consequently the distribution of the 'dividend ' as defined by section 2(6A)(d) took place on that date i.e. during the previous year corresponding to the assessment year 1955 56.

: Criminal Appeal No. 17 of 1975. Appeal by Special Leave from the Judgment and Order dated 7 6 1974 of the Himachal Pradesh High Court in Criminal Appeal No. 40/73. Hardyal Hardy and P.P. Juneja for the Appellants. Badri Das Sharma and Miss A. Subhashini for the Respondent. The Judgment of the Court was delivered by SARKARIA, J. This appeal by special leave is directed against a judgment, dated June. 7. 1974, of the High Court of Himachal Pradesh, whereby it upheld the conviction of Rama Nand accused under Section 302, Penal Code, and that of the co accused Shish Ram and Kali Datt under Section 201, Penal Code, and also the sentences awarded to each of them by the learned Sessions Judge, 446 Mandi. The prosecution story, as it emerged from the record, was as follows: Sumitra deceased, aged 19 years, was the daughter of Som Krishan (P.W. 33). Rama Nand, appellant is her husband and Shish Ram, appellant 2, is her father in law while Kali Datt appellant 3, is the younger brother of Rama Nand. Sumitra 's father wished to see his daughter highly educated, and employed in Government service and married to a suitable, highly educated person, settled in life. Sumitra had passed Higher Secondary Examination and wanted to pursue her studies further according to the wishes of her father. About two years before Sumitra 's reported death, Shish Ram appellant approached Som Krishan (P.W. 33) and persuaded him to give Sumitra in marriage to his son, Rama Nand. While negotiating this matrimonial alliance, Shish Rama told Som Krishan that his son was suitably employed on a Government job in the Office of the Deputy Commissioner, Kasumpti. He further falsely represented to Som Krishan that his son, Rama Nand was a graduate. Believing this representation to be true, Som Krishan about 1 1/2 or 2 years before Sumitra 's murder in question, married her to Rama Nand; Before this marriage it was settled by Som Krishan with Shish Ram and Rama Nand accused that even after her marriage, Sumitra would continue to pursue further studies and take up employment as a teacher. After the marriage, her father got his daughter, Sumitra, employed as a teacher in Village Nursery School at Chanyana which was situated near her parents ' village. While teaching at Chnayana, she continued to reside with her parents. She used to visit village Jherwin occasionally to be in the society of her husband who also used to come to Jherwin from Kasumpti. The accused persistently demanded that Sumitra should give up her employment at Chanyana, and start residing permanently and continuously in her matrimonial home at Jherwin. Sumitra tenaciously refused to do so. Rama Nand wrote several letters to Sumitra urging her to give up her adamant attitude. These letters furnished evidence of a strong motive for Rama Nand to put an end to the life of Sumitra. Rama Nand was employed as a Clerk in the Office of the Deputy Commissioner Kasumpti. On May 12, 1972, he came to Jherwin from Kasumpti. He had earlier written to his wife, Sumitra, strongly urging her to come to village Jherwin. On May 13, 1972, Sumitra came to Rama Nand 's house at Jherwin and stayed with him in his room on the night between 13th and 14th May, 1972. The other 447 rooms of the house were in occupation of the other members of Shish Ram 's family. Thereafter, on May 14, 1972, she disappeared from the house of the accused. The accused gave out that Sumitra had gone towards the Sutlej river on the pretext of attending to the call of nature; that thereafter her Salwar and shoes were found on the bank of the river, which indicated that she had jumped into the river and committed suicide. After pretending to make a search for her body in the river and nearabout, Shish Ram on May 16, 1972, went to Police Station Karsog at 5.30 p.m. and lodged a report (exhibit PAQ). It was recorded by Head Constable Nand Lal. After recording it in the Roznamacha, the Head Constable read it in the presence of one Inder Pal to the informant, who, after hearing the same to be correct, signed it in Hindi and his companion Inder Lal signed it in English. As this report, according to the prosecution, shows that an attempt was made by Shish Ram accused to lay a false trail and manufacture false clues as to the cause of the death of Sumitra and to screen the offence, it is necessary to reproduce the material parts of that report (rendered into English), hereunder: . "my daughter in law Smt. Sumitra Devi aged about 18/19 years, was married about 1 1/2 years ago, to my son Rama Nand who is employed in the office of D.C. Kasumpti as a clerk. Sumitra Devi herself was employed as a Mistress in Nursery School, Chanyana and was residing with her parents. Whenever my son used to come home on leave, she also used to visit her house at such time. Similarly my son Rama Nand had come on leave to his house on 12 5 72 and in the evening of 13 5 72, my daughter in law, Smt. Sumitra Devi had also come to his house. As usual, because of Sunday holiday, in the morning on 14 5 72, myself, my daughter in law and other members of the family were planting chilly seedlings in the fields near our house. My son (Rama Nand) was lying in bed on account of stomach trouble. After plantation work, at about 9/10 a.m. my daughter in law, Smt. Sumitra Devi along with Sheela Devi aged about 7 years, who is daughter of my brother, had gone downward on the pretext of easing herself. After some time, Sheela returned home and reported that she had been turned back from the way by her aunt. Sumitra Devi, who had gone ahead towards the river side. For some time it was believed that she might have gone to answer the call of nature. The river is about 2 furlongs from my house towards downside. When sufficient time passed and she did 448 not return home, then calls were given hither and thither and search was also started but her whereabouts could not be known. After a thorough search on the Sutlej river bank, the Salwar and shoes of Smt. Sumitra were found which Smt. Sumitra was wearing at the time of her going that side. This created a suspicion that she might have committed suicide by jumping into the river. She was searched at the river bank as also in the nearby villages. but her dead body was not found, nor any clue of her going is available. Sumitra was married in a good family and her character was also good, her relations with her husband were cordial. No quarrel on that day or prior to that, took place between her and my son, nor is there any reason for her disappearance. I have come to report, which may be recorded. After locating her alive or dead, separate report will be lodged. " Daulat Ram, Station House Officer (P.W. 38) then visited the scene of occurrence on May 13, 1972. He was not satisfied about the correctness of the information given by Shish Ram accused. He, therefore, got a case under Section 364, Penal Code, registered. Shis Ram accused produced before him the Salwar (exhibit P 14) and shoes (exhibit P 15/12) which, according to Shish Ram 's report, belonged to Sumitra deceased and were found lying on the river bank. The investigator also prepared a rough sketch of the spot where these clothes and shoes were stated to have been found. Som Krishan upon receiving the information, suspected that her daughter had been murdered at the instance of Rama Nand and others. Som Krishan reached the spot and made enquiries. Rama Nand and Shish Ram accused were arrested by the Investigating Officer on June 5, 1972. The Investigating Officer took into possession the Locket chain (exhibit P 1) and the watch (exhibit P 2) belonging to the deceased from the room which was in the occupation of Rama Nand, in the deceased from the room which was in the occupation of Rama Nand, in the presence of Kanshi Ram and Hira Mani and prepared the Memo (exhibit P A) in this behalf. Rama Nand accused, whilst in police custody, produced Sumitra 's clothes (exhibit P 5 to exhibit P 10) which were taken into possession by the Investigator in the presence of Mastu and Hari Ram, witnesses (vide exhibit P Y). These clothes, according to the prosecution, were the same which Sumitra was wearing when she arrived at the house of Rama Nand accused on May 13, 1972. 449 On June 5, 1972, a legless and armless dead body in a highly decomposed state was found at a distance of four kilometers down stream on the bank of the river Sutlej near village Randaul. Kali Datt appellant was found near that skeleton in the early hours or June 5,1972. He dragged the skeleton from the river upto some distance. It appeared that dogs etc. had eaten away the flesh. A part of the skull was found in tact, while the remaining part of it was lying at some distance. On receiving information, Som Krishan (P.W.33) and his brother 's wife, Laxmi (P.W. 2), came and identified the skeleton to be that of Sumitra. There was some flesh on the buttock portion and there was a mark on it. According to these identifying witnesses, this mark was that of a burn which Sumitra had received during her infancy. One of the teeth found in the inaudible was carious, while another tooth was jutting out. Daulat Ram got the dead body measured from shoulder to the cut portion of the thies by Mehar Chand. The measurement came to 2 ' 4". Daulat Ram prepared the inquest report (exhibit P/F) which was attested by Kundan witness. He sent the dead body along with the inquest report (exhibit PF) to Simla for post mortem examination. The dead body reached the Hospital at 1 p.m on June 7, 1972. There, they directed the police to take the dead body to Ripon Hospital. The post mortem examination. was conducted by Dr. J. R. Sharma (P.W. 14) on the following day. The post mortem report was handed over to the police by the Doctor on June 21, 1972. A few components of the skeleton, including the mandible, were sent to the Dental Surgeon, Dr. R. section Pathania (P.W. 15) and Radiologist, Dr. M. L. Ahuja (P.W. 16) for examination and opinion. These Doctors, however, opined that the mandible belonged to a child of not more than 10 years of age. The components of the skeleton were, also, sent to Dr. O. P. Bhargave (P.W. 31), Professor of Anatomy in the Medical College of simila. His opinion about the age of the deceased was also the same. The Doctor could not determine the sex of the skeleton. On August 24, 1972, a Paranda (cotton headtail), alleged to be of Sumitra deceased was recovered from the jungle of Ghangar. Some human hair were found entangled in the Paranda. These hair were sent for comparison with the hair of the deceased found embedded in her Dupatta. The forensic expert opined that the two sets of hair belonged to one and the same person. After investigation, the four accused, namely, Rama Nand, his father Shish Ram, his brother Kali Datt and Shish Ram 's brother Kesar Chand, were sent up before a Magistrate who committed them 450 for trial to the Court of Session. At the trial, in his examination under Section 342, Rama Nand admitted that after her marriage, Sumitra got employment as a teacher. He, however, denied the prosecution allegation that he and his father were opposed to her employment as a teacher. He expressed ignorance as to whether there was any settlement between his father, Shish Ram, and Som Krishan Shastri, father of Sumitra that she would continue her studies even after the marriage and would be free to take up service as her career. He added that his matrimonial alliance with Sumitra was not negotiated and settled in his presence. He admitted that the letters dated December 13, 1971, December 16, 1971 and May 9, 1972 (the English rendering of which is marked exhibit PAH, exhibit PAB, and exhibit PC, respectively) were written by him to Sumitra, and that the letter (exhibit PAJ) dated October 14, 1971, was written by him to his father in law. Som Krishan Shastri (P.W. 33). He further admitted that on May 13, 1972, Sumitra came to his house in village Jherwin from her parents ' place, and that she was then wearing the golden chain (exhibit P 1), wrist watch (exhibit P 2), Dupatta (exhibit P 5), suit (exhibit P 6 and exhibit P 7), socks (Ex. P 8 and 9), banian (Ex. P 10) and was carrying the basket (exhibit P 11) and umbrella (exhibit P 12). He, however, added that when she (Sumitra) reached home on May 13, 1972 with the articles mentioned above, she was wearing pink ribbon on her head and not any threadbunch like exhibit Question No.9 put to him was: "It is in prosecution evidence that on May 14, 1972 Sumitra was not seen at your house or in the village at Jherwin at all or thereafter. What have you to say?" He replied: "On 14 5 72 morning at about, say upto 11 a.m., she was working in the field at Jherwin and thereafter she was not seen there and later on I was arrested and so I cannot say about her whereabouts." He admitted that his father Shish Ram had lodged the report (exhibit PAQ) in the Police Station, Karsog. When the circumstance appearing in the prosecution evidence, "that after the occurrence on May 16, 1972, he (Rama Nand) went away to Simla from Jherwin and returned home three or four days thereafter" was put to Ramanand, he replied: "It is wrong. I went to Simla on 17 5 72 evening and returned on 19th morning". He denied that he and his father implored Som Krishan Shastri that he should save them from the police at Jherwin. When the negative circumstance appearing in evidence, to the effect that the Salwar (exhibit P 14) was not of Sumitra, was put to him, he asserted that the Salwar (exhibit P 14) was that of Sumitra; and that his father had shown the Salwar (exhibit P 14) indicating that his daughter in law, Sumitra had gone in the river when the (Ramanand) was weeping. In reply to the last question, Rama Nand narrated more or less the same story which was given by them (accused) to 451 the police in the Report, PAQ. Among other things, he stated: "It was found on the river side that her Salwar (exhibit P 14) and shoes (exhibit P 15) were lying by the river bank giving indication that she had jumped into the river. Then we were in mourning and the villagers also verified that Sumitra was seen going to the river". Shish Ram accused admitted that Sumitra had come to their house at Jherwin on May 13, 1972 and had disappeared on May 14, 1972. He admitted having lodged the report (exhibit PAQ) in the Police Station, Karsog. He admitted that he had produced the Salwar (Ex. P 14) and shoes (exhibit P 15) before the police during investigation. He also maintained that the Salwar (exhibit P 14) belonged to Sumitra. He denied that he and his co accused were threatening to teach Sumitra and her father the lesson of life for keeping Sumitra employed against their wishes at Chanayana. He repeated the substance of the story which he had earlier stated in the report (exhibit PAQ), and reiterated that since Sumitra 's Salwar and shoes were found on the river bank, she had either jumped into the river or run away somewhere. The learned Additional Sessions Judge by his judgment, dated December 1, 1973, convicted Rama Nand under Section 302, Penal Code, and sentenced him to rigorous imprisonment for life. He further convicted Kali Datt and Shish Ram accused under Section 201, Penal Code, and sentenced each of them to one year 's rigorous imprisonment and a fine of Rs. 500/ . Keshar Chand accused was given the benefit of doubt and acquitted. The appeal by the convicted persons was dismissed by the High Court as per its judgment, dated June 7, 1974. Hence this appeal by special leave. The conviction of the appellants is based entirely on circumstantial evidence. In convicting Rama Nand, appellant under Section 302, Penal Code, for the murder of his wife, Sumitra, the courts below have concurrently relied upon these circumstances which, according to them, had been established by the prosecution. (1) Rama Nand accused had a strong motive to murder his wife, Sumitra. (2) Sumitra was last seen alive with Rama Nand, appellant in the family house at Jherwin on the night between 13th and 14th May, 1972. The other two co accused were also present in the same house (3) (a) Rama Nand and the other co accused falsely gave out that she had committed suicide by jumping into the river. They 'planted ' a Salwar and a pair of shoes on the bank of the Sutlej and gave out that they belonged to the deceased, and Shish Ram lodged 452 a false report with the police to the effect that she had committed suicide by jumping into the river. The Salwar and the shoes, which had been 'planted ' there to manufacture false clues by the accused, did not belong to Sumitra, and the accused have falsely asserted that these articles belong to the deceased. (b) The story given out by the accused persons that upto 11 a.m. on May 14, 1972, Sumitra was planting chillies along with Sheela and other members of the family of the accused, was false. (4) The gold chain (exhibit P 1) and the watch (exhibit P 2) which Sumitra used to wear on her person all the 24 hours, and the clothes (exhibit P 5 to P 10) which she had on the person and the basket (exhibit P 11) and umbrella (exhibit P 12) which she was carrying when on the evening of May 13, 1972 she came to the house of the accused at Jherwin, were recovered from the house of the accused. (5) Some days after the occurrence, one Paranda was found from the jungle near this village. There was a bunch of hair in the plaited tail of this Paranda. The tail appeared to have been cut. These hair sticking in the Paranda and those found entangled in the Dupatta of the deceased were according to the Forensic Expert of one and the same person. (6) A legless decomposed corpse was recovered from the Sutlej near village Randol in a mutilated condition. From a burnt mark on the flesh sticking to the buttock of the corpse it was identified as that of Sumitra, deceased. The High Court further held that even if any doubt remained with regard to the identity or recovery of the corpus delicti, the telling circumstances otherwise complete the chain of evidence to establish beyond doubt that Sumitra had been murdered and the charges had been established against the accused as held by the trial court. In the result it dismissed the appeal of the accused respondents. Shri Hardayal Hardy, learned counsel appearing for the appellants contents that these circumstances have not been satisfactorily established. He has placed great emphasis on the evidence of the medical experts, according to which the mutilated corpse found at Randol was that of a child, aged about 8 or 9 years. It is submitted that the dead body found was not that of Sumitra deceased, and as a result, the courts below were not justified in holding that the death of Sumitra had been established by the prosecution. On the other hand, the learned counsel for the State has argued in support of the judgment of the High Court. 453 It is well settled that where the inference of guilt of an accused person is to be drawn from circumstantial evidence only, those circumstances must, in the first place, be cogently established. Further, those circumstances should be of a definite tendency pointing towards the guilt of the accused, and in their totality, must unerringly lead to the conclusion that within all human probability, the offence was committed by the accused and none else. The first circumstance which has been found to be established by the courts below against the appellant is that he had "a very strong motive" to commit the murder of Sumitra. To substantiate this fact, the prosecution produced four letters written by Rama Nand appellant. There are: exhibit PAJ, exhibit PAH, exhibit PAB/1 and exhibit PC. The accused also tendered in evidence the letter (exhibit DA) dated November 14, 1971 written by Som Krishan to Sumitra. As already mentioned, Rama Nand accused has admitted that the letters (exhibit PAJ, PAH, PAB/1 and P.C.) were written by him. exhibit PAJ purports to have been written by him from village Jherwin on October 14, 1971. In this letter, Rama Nand very clearly informed his father in law that his father Shish Ram was not in favour of Sumitra taking up service and residing away from the accused 's house at Jherwin. In this letter, Rama Nand urged his father in law that the latter should either come to Jherwin along with Sumitra or send her alone. This letter also indicates that Sumitra was persisting in taking up service elsewhere against the wishes of the accused persons. Chronologically, the next letter is exhibit DA dated November 14, 1971. It is addressed by Som Krishan to his daughter, Sumitra. In this letter, the father informs the daughter that he had obtained her appointment letter and she would be required to join by the 17th to start the Nursing School at Balwari. He wanted her to come to his house to take up the appointment. In this letter, he also wishes her daughter to convey to Rama Nand appellant and his brother, Kesar Chand (acquitted accused) that they should agree to Sumitra 's taking up this employment and that they should further bring round Shish Ram by reminding him that they had earlier consented to her taking up Service. This letter further indicates that Sumitra was much distressed because of the hostile attitude adopted by her in laws towards her. To console her, the father wrote: "Don 't worry. Whatever God does is good. Have self confidence and do not repent on any failure". The third letter, dated December 13, 1971, (exhibit PAH), written by Rama Nand to Sumitra, shows that the opposition of the appellant, 454 his father Shish Ram and brothers to Sumitra 's taking up service away from the matrimonial home, had passed from the serious to the sardonic stage. It starts with the words: "Wish you happy luxury !" Read in accord with the tenor of the letter, it conveys a biting ironical taunt. These words were capable of being construed as conveying an innuendo that she was merry making de hors the matrimonial home in an extra marital way. May be, the appellant was doubting her fidelity. He informs her that he had visited Jherwin in the hope that he would join her there, but this hope did not materialise. He complains against this attitude of neglect on the part of his wife when he says: "Today you have not seen to my condition, and have defamed me. To whom should I blame ? It is the wind and to which side it blows it must do something. I was thinking to save (you) from this wind. " He further reproaches and upbraids her: "You did not think over it seriously and you did not care for it nor others. You have taken it as a prestige issue. I cannot do anything so long I am not heartily happy and I weep to my fate. " He then warns her in a contemptuous and peremptory tone: "It would be better that you should resign your job now and come down here . If you intend to reside with me, then you should agree to my words. otherwise it will be a dog 's life. You should either come to this place or to village Jherwin after resigning the job and from there you may come to Simla on any day. As you know, a friend in need is a friend in deed. When this is lost, one cannot take the shelter of others. " He reminds her that her marriage had been solemnised with him. "To do service entirely depends upon you and me and not upon (your) father. It is time to resign the Service. " He repeats: "It is against the respect of my family, yourself and myself that I should allow you to serve at a monthly pay of Rs. 120/ and only for a tenure of six months and myself to stay at Simla in the Hotel." He then in stronger language demanded her to resign her job within 24 hours and come to his house direct without waiting for her resignation to be accepted. He closes the letter with an ominous threat veiled as a warning: "If you do not resign the job, our relations will become strained." In the next letter (exhibit PC), dated December 16, 1971, Rama Nand wrote to Sumitra that he did not understand why she did not "improve his (?) life ' and why she was acting at the beck and call of others. He urged her that it would be better to 'live for a more '. He added: "You obey me or not, you yourself will understand the significance of this when you give place to it in your mind". He sternly repeated the warning: "I once again request you to keep in mind your as also my honour, what you have to do, as the time has come. There is no example in the history of world that a girl after marriage 455 should act on the advice of her father, which may be harmful." He again urged her: "Do not think this letter as a mere piece of paper, but each and every line in it will decide our future career. you should resign your post. " He again administered a warning, coupled with a threat of resorting to violence in case she did not resign her job to live with the accused permanently: "The present is the condition of China 's wall as Lt. General Mr. Kaul was saying that on China Border there is no firing, no firing, no firing. But what was the result in the end, you know better. . If you honour me, your husband, then you should tender your resignation from the job forthwith". He further sternly warned her: "If you still do not come round, what would happen in future, will entirely be your responsibility and I may not be blamed for that". He ended the letter with a hostile note, repeating the threat: "I may write, what will happen in future. Entire responsibility of future solely depends upon you. It is the question of life and not of service. . This is time of your test. Reply this letter. " The sentence, 'It is the question of life and not of service ' read in the context, clearly conveys to the wife a threat that the choice open to her was between 'life ' and 'service ', that is to say, she would not be left alive if she did not give up the 'service '. This letter unmistakably reveals that Rama Nand had worked his feelings at his wife 's persistent refusal to give up service and live with him, into such a frenzied resolve that if his wife did not, as he desired, 'mend ' her ways, he would 'end ' her life. Even after this letter, there appears to have been no alleviation or change in this revengeful attitude of the husband towards his wife. This is discernible from Rama Nand 's last letter dated May 9, 1972 (exhibit PAB) addressed to Sumitra. In this letter also, he cannot conceal his feeling of being "sick of you". He writes, ". the difference in views can make life troubleful or as well can lead towards downfall as I already told you", that "to deceive any true person can only be a sin and nothing else". He appears to be giving her a last warning, a last chance to come round and come home when he writes that "time is short I will again request you that if you try to come home on Saturday, it will be good . I do not feel good. you definitely try to come, if you cannot come on Saturday then come on Sunday, otherwise. " These letters vividly reveal that despite the repeated persuasions, warnings and threats proceeding from Rama Nand accused, Sumitra intransigently and persistently refused to give up her service at Chanyana, and residence with her parents, and declined to come and live permanently in the matrimonial home at Jherwin, and as a result, how the husband 's feelings of tenderness towards his wife progressively 456 changing into regret, persecution complex, resentment, exasperation and smouldering hostility, ultimately hardened into a revengeful resolve in the mind of Rama Nand to end what he calls "a dog 's life" by putting an end to the life of his spouse. We agree with the High Court that these letters reveal that Rama Nand appellant had a strong motive to murder the deceased. The second circumstance was also well established. It had been admitted even by the appellant and his co accused. The courts below have found, and rightly so, that both the limbs of circumstance No. (3) had also been established by evidence produced by the prosecution. Som Krishan (P.W. 33), father of Sumitra, had testified that when he went to Jherwin on receiving a message from the accused about the disappearance of his daughter, he was shown the Salwar (exhibit P 14) and shoes (exhibit P 15/1 2) and told that these clothes were left behind on the bank of the Sutlej river when she disappeared. P.W. 33 further stated that this shabby Salwar (exhibit P 14) which had patches on it, did not belong to Sumitra and she never wore such a Salwar; nor did the pair of shoes (exhibit P 15) belong to her. P.W. 33 further testified: "Then Rama Nand, Shish Ram and Kesar Chand accused implored me that they may be saved from police remand. To this I said that I was not conversant with law but you may tell the truth". This testimony of P.W. 33 has been accepted by the courts below. We have no reason to take a different view. As rightly held by the courts below Sumitra was a sophisticated and educated girl. It was difficult to believe that she would do chilly plantation and wear such a patched and dirty Salwar as exhibit P 14. The very story given out by the accused persons and narrated by Shish Ram in the report (exhibit PAQ) made by him to the Police, and repeated by him and Rama Nand in their examination under Section 342, Cr. P.C., to effect that Sumitra had after undressing and leaving behind her shoes (exhibit P 15) and Salwar (exhibit P 14) on the bank of the Sutlej, committed suicide by jumping into the river was improbable, incredible and false. Thus, circumstance 3(a) and (b) had also been clearly and cogently established. This piece of evidence was relevant under Section 8, Evidence Act and was a definite pointer towards the guilt of the accused. Circumstance (4) appearing in the prosecution evidence, was admitted by the accused persons. Circumstance (5) also stood established. Though a feeble pointer towards the guilt of the accused, by itself it was not of a conclusive character. Circumstance (6) has been seriously controverted. The burden of the arguments of the learned counsel for the appellants is that the prosecution had miserably failed to establish that the legless decomposed 457 body found in the river was that of Smt. Sumitra, and in such a situation, the possibility of her being alive cannot be reasonably ruled out. Although the High Court has held that the body recovered was that of Sumitra deceased and that the bones sent to the medical experts were not parts of the decomposed body found, but appeared to have been fraudulently replaced with the bones of a child during transmission to the medical experts, we would assume that the identity of the body found in the river was not established beyond reasonable doubt. In other words, we would take it that the corpus delicti, i.e., the dead body of the victim was not found in this case. But even on that assumption, the question remains whether the other circumstances established on record were sufficient to lead to the conclusion that within all human probability, she had been murdered by Rama Nand appellant ? It is true that one of the essential ingredients of the offence of culpable homicide required to be proved by the prosecution is that the accused "caused the death" of the person alleged to have been killed. This means that before seeking to prove that the accused is the perpetrator of the murder, it must be established that homicidal death has been caused. Ordinarily, the recovery of the dead body of the victim or a vital part of it, bearing marks of violence, is sufficient proof of homicidal death of the victim. There was a time when under the old English Law, the finding of the body of the deceased was held to be essential before a person was convicted of committing his culpable homicide. "I would never convict", said Sir Mathew Hale, "a person of murder or manslaughter unless the fact were proved to be done, or at least the body was found dead". This was merely a rule of caution, and not of law. But in those times when execution was the only punishment for murder, the need for adhering to this cautionary rule was greater. Discovery of the dead body of the victim bearing physical evidence of violence, has never been considered as the only mode of proving the corpus delicti in murder. Indeed, very many cases are of such a nature where the discovery of the dead body is impossible. A blind adherence to this old "body" doctrine would open the door wide open for many a heinous murderer to escape with impunity simply because they were cunning and clever enough to destroy the body of their victim. In the context of our law, Hale 's enunciation has to be interpreted no more than emphasising that where the dead body of the victim in a murder case is not found, other cogent and satisfactory proof of homicidal death of the victim must be adduced by the prosecution. Such proof may be by the direct ocular 458 account of an eye witness, or by circumstantial evidence, or by both. But where the fact of corpus delicti, i.e. 'homicidal death ' is sought to be established by circumstantial evidence alone, the circumstances must be of a clinching and definitive character unerringly leading to the inference that the victim concerned has met a homicidal death. Even so, this principle of caution cannot be pushed too far as requiring absolute proof. Perfect proof is seldom to be had in this imperfect world, and absolute certainty is a myth. That is why under Section 3, Evidence Act, a fact is said to be "proved", if the Court considering the matters before it, considers its existence so probable that a prudent man ought, under the circumstances of the particular case to act upon the supposition that it exists. The corpus delicti or the fact of homicidal death, therefore, can be proved by telling and inculpating circumstances which definitely lead to the conclusion that within all human probability, the victim has been murdered by the accused concerned. In the instant case, Circumstances (1) to (5), in their cumulative effect, are not only inconsistent with the innocence of Rama Nand appellant, but ineluctably and rationally compel the conclusion that Sumitra has died and it is Rama Nand appellant who has intentionally caused her death. Circumstance (3) involves an admission by Rama Nand and Shish Ram accused that Sumitra has met an unnatural death. The only difference between the prosecution version and the defence version is as to whether Sumitra committed suicide or had been killed by Rama Nand appellant. It has been found that the story of the suicide set up by the accused is false. The articles Salwar (exhibit P.14) and the shoes (exhibit P 15) do not belong to her. They were planted by the accused to lay a false trail and to mis direct the investigation. This circumstance taken in conjunction with the others, irresistibly and rationally leads to the conclusion that she has been murdered by Rama Nand appellant and her dead body has been disposed of by the appellants Shish Ram and Kali Datt. For the foregoing reasons, we dismiss this appeal and maintain the convictions and sentences of the appellants. S.R. Appeal dismissed.

Dismissing the appeal and maintaining the conviction and sentences of the appellants, the Court ^ HELD:(1) It is well settled that where the inference of guilt of an accused person is to be drawn from circumstantial evidence only, those circumstances must, in the first place, be cogently established. Further, those circumstances should be of a definite tendency pointing towards the guilt of the accused, and in their totality, must unerringly lead to the conclusion that within all human probability, the offence was committed by the accused and none else. In the instant case, the following circumstances had been correctly found to have been established by the prosecution: (i) Rama Nand accused had a strong motive to murder his wife, Sumitra. (ii) Sumitra was last seen alive with Rama Nand, appellant in the family house at Jherwin on the night between 13th and 14th May, 1972. (iii) (a) Rama Nand and the other co accused falsely gave out that she had committed suicide by jumping into the river. They 'planted ' a Salwar and a pair of shoes on the bank of the Sutlaj and gave out that they belonged to the deceased, and Shish Ram lodged a false report with the police to the effect that she had committed suicide by jumping into the river. The Salwar and the shoes, which had been 'planted ' there to manufacture false clues by the accused, did not belong to Sumitra, and the accused falsely asserted that whose articles belong to the deceased. (b) The story given out by the accused persons that upto 11 a.m. on May 14, 1972, Sumitra was planting chillies along with Sheela and other members of the family of the accused, was false. (iv) The gold chain (exhibit P 1) and the watch (exhibit P 2) which Sumitra used to wear on her person all the 24 hours, and the clothes (exhibit P 5 to P 10) which she had on her person and the basket (exhibit P 11) and umbrella (exhibit P 12) which she was carrying when on the evening of May 13, 1972 she came to house of the accused at Jherwin, were recovered from the house of the accused. (v) Some days after the occurrence, one Paranda was found from the jungle near this village. There was a bunch of hair in the plated tail of this Paranda. The tail appeared to have been cut. These hair sticking in the paranda and those found entangled in the Dupatta of the deceased were according to the Forensic Expert of one and the same person. (vi) A legless decomposed corpse was recovered from the Sutlej near village Randol in a mutilated condition. But its identity [451G H, 452A E, 453A B] (2) Even on the assumption that the dead body of the victim was not found, circumstances (i) to (v) mentioned above in their cumulative effect includably and rationally compel the conclusion that Sumitra had died and it was Rama 445 Nand accused who had intentionally caused her death. Ordinarily, the recovery of the dead body of the victim or a vital part of it, bearing marks of violence is sufficient proof of homicidal death of the victim. Even so, discovery of the dead body of the victim bearing physical evidence of violence, has never been considered as the only mode of proving the corpus delicti in murder. Indeed very many cases are of such a nature where the discovery of the dead body is impossible. A blind adherence to this old doctrine of Sir Mathew Hale that "for a conviction of murder atleast the body was found dead" would open the door wide open for many a heinous murderer to escape with impunity simply because they were a cunning and clever enough to destroy the body of their victim. In the context of our law, Hale 's enunciation has to be interpreted no more than emphasising that where the dead body of the victim in a murder case is not found, other cogent and satisfactory proof of homicidal death of the victim must be adduced by the prosecution. Such proof may be the direct ocular account of an eye witness, or by circumstantial evidence, or by both. But where the fact of corpus delicti, i.e. 'homicidal death ' is sought to be established by circumstantial evidence alone, the circumstances must be of a clinching and definitive character unerringly leading to the inference that the victim concerned has met a homicidal death. Even so, this principle of caution cannot be pushed too far as requiring absolute proof. Perfect proof is seldom to be had in this imperfect world, and absolute certainty is a myth. That is why under Section 3, Evidence Act, a fact is said to be "proved", if the Court considering the matters before it, considers its existence so probable that a prudent man ought. under the circumstances of the particular case, to act upon the supposition that it exists. The corpus delicti or the fact of homicidal death, therefore, can be proved by telling and inculpating circumstances which definitely lead to the conclusion that within all human probability, the victim has been murdered by the accused concerned. [457 D H, 458A D]

Appeal No. 370 of 1959. Appeal by special leave from the judgment and order dated August 6, 1957, of the Bombay High Court, Nagpur, in Misc. Petition No. 512 of 1956. M. N. Phadke and Naunit Lal, for the appellant. Shankar Anand and A. G. Ratnaparkhi, for the respondents Nos. 2 4. N.P. Nathvahi, K. L. Hathi and R. H. Dhebar, for the Intervener (State of Bombay). December 9. The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave in an industrial matter. The appellant is the manager of a biri factory in Nagpur. Respondents 2 to 4 are working in that factory. They applied for leave for fifteen days from December 18, 1955, to January 1, 1956, and did not go to work during that period. The appellant did not pay their wages for these days and in consequence they applied to the Payment of Wages Authority (hereinafter called the Authority) for payment to them of wages which had been withheld. Their claim was that they were entitled to fifteen days ' leave in the year under sections 79 and 80 of the . The Authority allowed the claim and granted them a sum of Rs. 90/16/ in all as wages which had been withheld for the period of leave. Thereupon, the appellant filed an application under article 226 of the Constitution before the High Court at Nagpur. His main contention was that respondents 2 to 4 were not workers within the meaning of the and could not therefore claim the benefit 163 of a. 79 thereof The respondents contended that they were workers within the meaning of the and were entitled to the sum awarded to them by the Authority. The High Court on a consideration of the circumstances came to the conclusion that respondents Fir2 to 4 were workers under section 2(1) of the and therefore the order of the Authority was correct and dismissed the petition. The appellant then applied for a certificate to appeal to this Court which was refused. He then obtained special leave from this Court and that is how the matter has come up before US. 2(1) defines a worker to mean a person employed, directly or through any agency, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process. The main contention of the appellant is that respondents 2 to 4 are not employed in the factory within the meaning of that word in section 2(1). Reliance in this connection is placed on two decisions of this Court, namely, Dharangadhara Chemical Works Ltd. vs State of Saurashtra (1) and Shri Chintaman Rao vs The State of Madhya Pradesh (2). In Dharangadhara Chemical Works (1), this Court held with reference to section 2 (s) of the Industrial Disputes Act, which defined "workman" that the word "employed" used therein implied a relationship of master and servant or employer and employee and it was not enough that a person was merely working in the premises belonging to another person. A distinCtion was also drawn between a workman and an independent contractor. The prima facie test whether the relationship of master and servant or employer and employee existed was laid down as the existence of the right in the employer not merely to direct what work was to be done but also to control the manner in which it was to be done, the nature or extent of such control varying in different industries and being (1) ; (2) ; 164 by its nature incapable of being precisely defined. The correct approach therefore to the question was held to be whether having regard to the nature of the work, there was due control and supervision of the employer. The matter came up again for consideration in Chintaman Rao 's case (1) which also happened to relate to biri workers, and section 2(1) of the had to be considered in it. It was held that the test laid down in Dharangadhara Chemical Works (2) with respect to section 2(s) of the Industrial Disputes Act would also apply to section 2(1) of the . Finally, it was pointed out that the question whether a particular person working in a factory was an independent contractor or a worker would depend upon the terms of the contract entered into between him and the employer and no general proposition could be laid down, which would apply to all cases. Thus in order to arrive at the conclusion whether a person working in a factory (like respondents 2 to 4 in this case) is an independent contractor or a worker the matter would depend upon the facts of each case. Let us then turn to the facts which have been found in this case. It has been found that the respondents work at the factory and are not at liberty to work at their homes. Further they work within certain hours which are the factory hours, though it appears that they are not bound to work for the entire period and can go away whenever they like; their attendance is noted in the factory; and they can come and go away at any time they like, but if any worker comes after midday he is not supplied with tobacco and is thus not allowed to work, even though the factory closes at 7 p.m. in accordance with the provisions of the and when it is said that they can return at any time, it is subject to the condition that they cannot remain later than 7 p.m. There are standing orders in the factory and according to those standing orders a worker who remains absent for eight days (presumably without leave) can be removed. The payment is made on piece rates according to the amount of work done but the management has the (1) ; (2) ; 165 right to reject such biris as do not come up to the proper standard. It is on these facts that we have to decide the question whether respondents 2 to 4 were employed by the appellant. It will be immediately noticed that the facts in this case are substantially different from the facts in Shri Chintaman Rao 's case (1). In that case the factory entered into contracts with independent contractors, namely, the Sattedars, for the supply of biris. The Sattedars were supplied tobacco by the factories and in some cases biri leaves also. The Sattedars were not bound to work in the factory nor were they bound to prepare the biris themselves but could get them prepared by others. The Sattedars also employed some coolies to work for them and payment to the coolies was made by the Sattedars and not by the factory. The Sattedars in their turn collected the biris prepared by the coolies and took them to the factory where they were sorted and checked by the workers of the factory and such of them as were rejected were taken back by the Sattedars to be remade. The payment by the factory was to the Sattedars and not to the coolies. In these circumstances it was held that the Sattedars were independent contractors and the coolies who worked for them were not the workers of the factory. The facts of the present case, however, are different. Respondents 2 to 4 have to work at the factory and that in itself implies a certain amount of supervision by the management. Their attendance is noted and they cannot get the Work done by others but must do it themselves. Even though they are not bound to work for the entire period during which the factory is open it is not in dispute that if they come after midday, they are not given any work and thus lose wages for that day, the payment being at piece rates. Further though they can stay away without asking for leave, the management has the right to remove them if they so stay away for a continuous period of eight days. Lastly, there is some amount of supervision inasmuch as the management has the right of rejection of the biris prepared if they do not come up to the proper standard. (1) ; 166 The question therefore that arises is whether in these circumstances it can be said whether the appellant merely directs what work is to be done but cannot control the manner in which it has to be done; of course, the nature or extent of control varies in different industries and cannot by its very nature be precisely defined. Taking the nature of the work in the present case it can hardly be said that there must be supervision all the time when biris are being prepared and unless there is such supervision there can be no direction as to the manner of work. In the present case the operation being a simple one, the control of the manner in which the work is done is exercised at the end of the day, when biris are ready, by the method of rejecting those which do not come up to the proper standard. In such a case it is the right to supervise and not so much the mode in which it is exercised which is important. In these circumstances, we are of opinion that respondents 2 to 4 who work in this factory cannot be said to be independent con tractors. The limited freedom which respondents 2 to 4 have of coming and going away whenever they like or of absenting themselves (presumably without leave) is due to the fact that they are piece rate workers; but the mere fact that a worker is a piece rate worker would not necessarily take him out of the category of a worker within the meaning of section 2(1) of the . Considering the entire circumstances and particularly the facts that if the worker does not reach the factory before midday he is given no work, he is to work at the factory and cannot work else where, he can be removed if lie is absent for eight days continuously and finally his attendance is noted and biris prepared by him are liable to rejection if they do not come up to the standard, there can be no doubt that respondents 2 to 4 are workers within the meaning of section 2(1) of the . This is also the view taken by the Bombay High Court in State vs Shankar Balaji Waje (1) in similar circumstances and that we think is the right view. Then it was urged that even if the respondents are (1) A.I.R. 1960 Bom. 167 workers under section 2(1), section 79 should not be applied to them as they can absent themselves whenever they like. In this very case it is said that the respondents remained absent for a longer period than that provided in the Act and therefore they do not need any leave. This argument has in our opinion no force. The leave provided under section 79 arises as a matter of right when a worker has put in a minimum number of working days and he is entitled to it. The fact that the respondents remained absent for a longer period than that provided in s, 79 has no bearing on their right to leave, for if they so remained absent for such period they lost the wages for that period which they would have otherwise earned. That however does not mean that they should also lose the leave earned by them under section 79. In the circumstances they were entitled under section 79 of the to proportionate leave during the subsequent calendar year if they had worked during the previous calendar year for 240 days or more in the factory. There is nothing on the record to show that this was not so. In the circumstances the appeal fails and is hereby dismissed with costs. One set of hearing costs. Appeal dismissed.

The appellant employed workmen in his bidi factory who had to work at the factory and were not at liberty to work at their houses; their attendance were noted in the factory and they had to work within the factory hours, though they were not bound to work for the entire period and could come and go away when they liked; but if they came after midday they were not supplied with tobacco and thus not allowed to work even though the factory closed at 7 p.m.; further they could be removed from service if absent for 8 days. Payment was made on piece rates according to the amount of work done, and the bidis which did not come upto the proper standard could be rejected. The respondent workmen applied for leave for 15 days and did not go to work, for which period the appellants did not pay their wages; in consequence the concerned workmen applied to the Payment of Wages Authority for payment of wages to them. The appellant 's contention that the respondent workmen were not his workmen within the meaning of the , was rejected and the claim for payment of wages was allowed. The question therefore was whether the appellants were workmen within the meaning of the . Held, that the nature of extent of control varies in different industries and cannot by its very nature be precisely defined. When the operation was of a simple nature and could not be supervised all the time and the control was at the end of day by the method of rejecting the work done which did not come up to proper standard, then, it was the right to supervise and not so much the mode in which it was exercised which would determine whether a person was a workman or an independent contractor. The mere fact that a worker was a piece rate worker would not necessarily take him out of the category of a worker within the meaning of section 2(1) Of the . In the instant case the respondent workmen could not be said to be independent contractors and were workmen within the meaning of section 2(1) of the . Held, further, that the leave provided for under section 79 of the arose as a matter of right when a worker had put 21 162 in a minimum number of working days and he was entitled to it. The fact that the workman remained absent for a longer period had no bearing on his right to leave. State vs Shankar Balaji Waje, A.I.R. 1960 Bom. 296, approved. Dharangadhara Chemical Works Ltd. vs State of Saurashtra, ; and Shri Chintaman Rao vs The State of Madhya Pradesh, ; , referred to.

Criminal Appeal No. 477 of 1978. From the Judgment and Order dated 23.11.1977 of the Punjab and Haryana High Court in Criminal Revision No. 880 of 1976. WITH Criminal Appeal No. 288 of 1989. From the Judgment and Order dated 23.11. 1977 of the Punjab and Haryana High Court in Crl. A. No. 670 of 1976. S.K. Bisaria and J.K. Nayyar for the Appellant in Crl. Appeal No. 477 of 1978. R.C. Kohli and R.S. Suri for the Appellant in Criminal Appeal No. 288 of 1989. S.K. Mehta, Dhuru Mehta and Atul Handa for the Respondent. The Judgment of the Court was delivered by: NATARAJAN, J. Appeal No. 477 of 1978 by Special Leave and Appeal No. 288 of 1989 by Special Leave arising out of Special Leave (Crl.) Petition No. 250 of 1980 are directed against a judgment of the High Court of Punjab and Haryana in Criminal Appeal No. 670 of 1976 616 whereunder a learned single Judge of the High Court had set aside the conviction of respondent Prem Chand and acquitted him of the charge under Section 306 I.P.C. The former appeal has been filed by the father of the deceased Veena Rani while the latter appeal has been filed by the State of Punjab. The facts of the case are in brief as under: Deceased Veena Rani who died of burn injuries on 15.9. 1975 was married to the respondent Prem Chand (hereinafter referred to as accused) in the year 1973. Veena Rani, who had passed the M.A. and B .Ed. degree examinations was employed in the State Bank of Patiala and was earning about Rs. 600 to 700 per month. The accused, who had obtained a degree in law was a prosecuting Sub Inspector and soon after marriage he resigned his job and set up practice in his native place Sangrur. When the accused resigned his job and set up practice in Sangrut, Veena Rani obtained a transfer to Sangrur from Patiala and the couple set up house in a building owned by PW 5 Krishan Dutt. From the very beginning Veena Rani had an unhappy married life because of the ac cused constantly demanding her to get more money from her parent 's house. Even though the accused had joined the office of a senior advocate by name Shri O.P. Singhal, his earnings were meager and consequently the house hold ex penses were borne by her from out of her salary. Besides tormenting Veena Rani to get more money from her parents, the accused was also given to beating her frequently. Veena Rani complained to her parents, brother and brother in law about the cruel treatment meted out to her by the accused. PW 4 Shanti Devi and PW 14 Khem Chand, the mother and broth er respectively of Veena Rani and PW 17 Kuldip Rai, her brother in law have deposed about Veena Rani telling them about the accused iII treating her and physically assaulting her. Apart from them, PW 5 Krishan Dutt, the landlord has also testified that the accused was in the habit of beating Veena Rani and that on hearing her cries he used to inter vene and advise the accused to stop beating her. Since the accused did not mend his ways and continued his beatings of Veena Rani. PW 5 Krishan Dutt asked the accused to vacate his house. Veena Rani conceived and gave birth to a male child. But even after the child birth, the accused did not stop iII treating her. Unable to bear the iII treatment, Veena Rani took leave on loss of pay and went away to her parent 's house at Patiala. The separation had no effect on the ac cused and hence Veena Rani filed an application under Sec tion 9 of the Hindu Marriage Act in the Court at Patiala for restitution of conjugal rights. As a counter move, the accused also filed a 617 similar petition in the Court at Sangrur. However, the enquiry of that petition was stayed by the Senior Sub Judge, Sangfur till the disposal of the earlier petition filed by Veena Rani at Patiala. At that stage of matters, Shri O.P. Singhal, who was acting as the counsel for the accused and PW 9 Shri Hari Om, another advocate at Sangrut who was appearing for Veena Rani brought about a compromise between the parties and in terms thereof Veena Rani came back to Sangrur to live with the accused. The re union, however, took place only after the accused 's counsel Shri O.P. Sing hal had personally assured that their would be no danger to Veena Rani 's life at the hands of the accused. This time, the parties set up residence in a house belonging to PW 12 Nathu Ram. Nothing changed, however because the accused started tormenting Veena Rani almost from the day of re union for money and continued beating her. PW 12 Nathu Ram was a witness to the accused quarrel ling with Veena Rani and beating her. The immediate provoca tion for the accused stepping up his iII treatment of Veena Rani was his purchase of a scooter for Rs.3,500 from one A.N. Jindal. The accused was able to obtain only Rs.2,500 from his father for buying the scooter and for the balance amount of Rs. 1,000 he asked Veena Rani to get tile same from her parents. Veena Rani had no funds of her own because she had been on leave on loss of pay for several months and had joined duty at the Bank only on 13.8.1975. She was in a fix and therefore she wrote a letter on 10.9.75 to her brother PW 14 Khem Chand as under: "Dear brother, the day I came here he is asking for Rs. one thousand from the same day to repay the loan of the scooter. He does not pay any expenses which are required by me. Because I will receive my pay only on 26th September and all things are as they were before. " Again just one day before her death i.e. 14.9.1975, she wrote to her mother PW 4 Shanti Devi a pathetic letter as follows: "Yesterday I was to come to see Saroj in the evening but there is a quarrel in the house. I have no money, if I have any require ment I must fulfil myself, otherwise no alter native than to go on weeping and crying. Because he is saying that I am to repay the loan of Rs. 1,000 and I am to pay Rs. 100 for the house rent. Dear mother, you know it very well that I have not received my pay. It is therefore I am unable to pay anything for the household expenses. It is therefore, I am in a very bad condition at my house. I do not understand what to do. Whenever I talk to go to any 618 place, the same day there is an uproar in the house and he does not turn up till 12.00 in the night and unhealthy atmosphere develops in the house. Dear mother, please send me Rs. 1,000 immediately through Bhupinder. Dear mother, I am very sad on this account and unhappy. The whole day I remain weaping. Manish (the child) is alright. You do not worry but please send me Rs. 1,000 immediate ly. " In spite of Veena Rani, writing to her brother and mother for a sum of Rs. 1,000 being sent immediately, the accused did not relent in his insistence for immediate compliance of his demand. This led to a quarrel between the husband and wife on the 15th morning and thereupon both of them went to the house of PW 9 Shri Hari Om at 6.30 a.m. itself. After PW 9 Shri Hari Om woke up, he made enquiries and Veena Rani told him that the accused was "demanding money from her and annoying her on that account" in spite of her telling him that she had written letters to her brother and mother. He advised the accused not to torment Veena Rani for money but in spite of it the accused said he wanted immediate payment of the sum of Rs. 1,000. The accused went to the extent of saying that Veena Rani can go to hell but he should get his sum of Rs. 1,000 forthwith. Veena Rani reacted by saying that because of the accused quarrelling with her every day over the payment of money, she preferred death to life in this world. The accused, far from express ing regret for his conduct, drove her to despair by further saying that she can provide him relief quicker by dying on the very same day and that she need not postpone her death to the next day. PW 9 Shri Hari Om then sent the parties home saying that the matter can be talked over in the evening. After things had gone to such a pitch the accused and Veena Rani left the house of PW 9 Hari Om at about 9.00 a.m. and went back to their house. After leaving Veena Rani in the house, the accused went to the Court. At about 10.15 a.m. PW 12 Nathu Ram was informed by one Keemat Rai, advo cate that shrieks were heard coming from the house occupied by the accused and .Veena Rani. Both of them rushed to the house and saw Veena Rani lying on the ground with extensive burn injuries on her body. At once PW 12 Nathu Ram rushed on his bicycle to the Court and informed the accused and 11 D.K. Jindal, about Veena Rani having sustained burn injuries Thereupon all of them came to the house and the accused with the help of PW 11 D.K. Jindal removed Veena Rani to the Civil Hospital at Sangrut. FW 9 Hari Om on coming to know of Veena Rani having 619 sustained burn injuries, had information sent to PW 17 Kuldip Rai and also made arrangements for a phone message being given to the parents of Veena Rani at Patiala. There after he went to the hospital but by then Veena Rani had died. Veena Rani was seen by Dr. B.R. Dular at the hospital at 10.45 a.m. and the doctor found her to have sustained severe burns and to be in a state of shock. Veena Rani who was given treatment by PW 19 Dr. J.K. Sharma told him that she had been tortured at home and that she wanted to die as early as possible. At 11.30 a.m. Veena Rani died. At the autopsy, it was noticed that she had sustained 19 burn injuries. Her death was certified to be due to shock result ing from the burn injuries. On receipt of an intimation from the hospital entries were made in the general diary and subsequently a case was registered on the basis of representations made to PW 18, the Deputy Superintendent of Police by PW 16 Kuldip Rai and another relation. Investigation of the case resulted in a chargesheet being laid against the accused under Section 306 I.P.C. In his statement under Section 313 Cr. P.C. the accused denied having iII treated Veena Rani but admitted that he had asked her to give him a sum of Rs. 1,000 for payment of the balance money for the scooter purchased by him. He however stated that he had offered to repay the amount as soon as he received his G.P.F., amount. He denied having told Veena Rani at the house of PW 9 Shri Hari Om that she may go to hell and that she can put at an end to her life the same day without waiting for the morrow. He has also stated that Veena Rani was of an irritable nature and would get agitated for no reason whatever. Lastly, he has stated that on coming to know of her having sustained burn in juries, he had rushed home and taken her to the hospital to save her life but unfortunately she could not be saved. After a detailed consideration of the prosecution evi dence and the statement of the accused, the Additional Sessions Judge, Sangrur, found the accused guilty under Section 306 I.P.C. and sentenced him undergo R.I. for four years. The learned Addl. Sessions Judge held that the ac cused had been tormenting and also physically assaulting Veena Rani and that Veena Rani had committed suicide by reason of the accused 's instigation. The accused preferred an appeal to the High Court and a learned 620 single judge of the High Court has acquitted the accused holding that even though Veena Rani had committed suicide on account of her unhappy married life "there is nothing on the record to show that the appellant in any manner instigated the deceased to commit suicide. " Aggrieved by the judgment of the High Court the father of Veena ' Rani and the State have preferred the two appeals under consideration. Shri R.S. Suri, learned counsel for the State and Mr. S.K. Bisaria, learned counsel for the father of Veena Rani took us through the evidence in the case and the judgments of the Addl. Sessions Judge and the High Court and argued that the High Court has completely erred in its appreciation of the evidence and in its application of the law and there fore the appeals should be allowed and the conviction and sentence awarded to the accused should be restored. Shri S.K. Mehta, learned counsel for the accused contended that even if the prosecution evidence is accepted in full, there is no material to show that the suicidal death of Veena Rani was abetted in any manner by the accused and hence the judgment of the High Court does not call for any interfer ence. We have considered the evidence and the arguments of the counsel in great detail. The evidence brings out with tell ing effect the distressed life that Veena Rani was leading almost from the day of her marriage with the accused. Since the accused had resigned his job and set up practice as an advocate at Sangrur, she got herself transferred from Patia la to a branch of the Bank at Sangrur. The parties lived as tenants in a portion of the house of PW 5 Krishan Dutt and Veena Rani was meeting the household expenses from out of her salary because the accused had no income as a lawyer. In spite of Veena Rani spending her entire salary on the house hold, the accused was constantly demanding her for money and made her life miserable by frequently beating her. These matters have been spoken to by PW 4 Shanti Devi, PW 14 Khem Chand and PW 17 Kuldip Rai. Besides them, independent wit nesses viz. PW 5 Krishan Dutt, PW 9 Shri Hari Om and PW 12 Nathu Ram have also spoken about the iII treatment of Veena Rani and their evidence has gone unchallenged. There is thus overwhelming evidence in the case to establish that Veena Rani 's life was made intolerable by the accused by constant ly demanding her to get him money and also beating her frequently. Before considering the question whether the accused had abetted Veena Rani in her committing suicide, we must point out that 621 Veena Rani 's death was undoubtedly due to suicide and not due to any accident or homicide. When Veena Rani had set fire to herself no one else except her one and half year old son was in the house. Hearing her shouts PW 12 Nathu Ram and Keemet Rai rushed to the house and found her lying on the ground with burn injuries. The accused was at once informed in the court and he removed her to the hospital along with others. Despite treatment, she succumbed to her injuries by about 11.30 a.m. The autopsy revealed that her death was due to severe shock resulting from the burn injuries sustained by her. In such circumstance, the suicidal death of Veena Rani is an incontrovertible factor. The crucial question for consideration is whether Veena Rani put an end to her life of her own will and volition or whether her committing suicide had been abetted in any manner by the accused. To determine this question, we must see the plight of Veena Rani during the few days preceding her death and the events which had taken place on the morning of 15.9.75 itself. It is an admitted fact that the accused was wanting a sum of Rs. 1,000 for paying the balance of sale price for the scooter purchased by him and that he was demanding Veena Rani to get him the amount from her parents. The accused has himself admitted in his statement under Section 313 Cr. P.C. this fact but has stated that he wanted it only as a loan and not as a gift. Besides the letter, (annexure 3) written by Veena Rani to her brother and mother respectively throw considerable light on the matter. In the letter to the brother dated 10.9.75, Veena Rani has stated that even on the day she came to Sangrur the accused began demanding a sum of Rs. 1,000 for being paid for the scooter purchased by him. The accused would not wait and hence she had again to write a letter to her mother on 14.9.75. Therein she has stated that she was in a very bad condition and that her mother should send her Rs. 1,000 immediately. These two letters written in quick succession reveal fully the amount of pressure the accused must have been applying on Veena Rani to get him a sum of Rs. 1,000. So constant should have been his demand for money that on the morning of 15 9 75 even at about 6.30 or 7 a.m. the accused and Veena Rani had to go to the house of PW 9 Shri Hari Om to seek a solution. Even in front of PW 9 Shri Hari Om, the accused had insisted that Veena Rani should get him a sum of Rs. 1,000 forthwith. When Veena Rani pleaded inability to make immediate payment, the accused told her that he did not care even if she went to hell but he wanted immediate payment. When Veena Rani stated in despair that she had enough of torment and that she preferred death to living, the 622 accused added fuel to fire by saying that she may put an end to her life the very same day and she need not wait till the next day to quit this world. Such an utterance by the ac cused would have certainly been seen by Veena Rani as an. instigation to her to commit suicide. Otherwise, she would not have set fire to herself within a short time after she reached home. One significant factor to be noticed is that but for being spurred to action, Veena Rani would not have ,easily reconciled herself to forsaking her one and a half year old son and commit suicide. No mother, however dis tressed and frustrated. would easily make up her mind to leave her young child in the lurch and commit suicide unless she had been goaded to do so by someone close to her. Yet another factor to be borne in mind is that there is no evidence as to what transpired between the accused and Veena Rani after they had left the house of PW 9 Shri Hari Om. The only two persons who could speak about it are the accused and Veena Rani and since she is dead it is only the accused who can throw some light on the matter. Strangely enough, the accused has not said anything about it in his statement under Section 313 Cr. P.C. He has not said a word that he had assuaged the wounded feelings of Veena Rani before he left for Court. His silence on this aspect of the matter would therefore mean that he had not changed his stand subsequently. We may now look to the relevant provisions of the law. Section 306 I.P.C. under which the accused was charged reads as under: "306 I.P.C. If any person commits suicide, whoever abets the commission of such suicide, shall be punished with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine. " Section 107 I.P.C. sets out as to what constitutes abetment. The Section reads as follows: "107. A person abets the doing of a thing, who First. Instigates any person to do that thing; or Secondly. Engages with one or more other person or persons in any conspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that conspiracy, and in order to the doing of that thing; or Thirdly. Intentionally aids, by any act or illegal omission, the doing of that thing. 623 Explanation I. A person who, by wilful mis representation, or by wilful concealment of a material fact which he is bound to disclose, voluntarily causes or procures, or attempts to cause or procure, a thing to be done, is said to instigate the doing of that thing. Illustration (omitted) Explanation Il Whoever, either prior to or at the time of the commission of an act, does anything in order to facilitate the commission of that act, and thereby facilitates the commission thereof, is said to aid the doing of that act. " The learned Additional Sessions Judge has in the course of his judgment observed that Explanation II to Section 107 I.P.C. would also be attracted to the facts of the case. The relevant portion in the judgment reads as under: "Thus when the circumstances attending this case are read alongwith the aforesaid Explana tion No. II given under Section 107 I.P.C., it is clear that the accused prior to the commis sion of the suicide by Veena Rani, had con stantly committed certain acts and that has facilitated the commission of suicide and thus he had aided in the committing of that said act by Veena Rani. " A few lines below the Sessions Judge has given his finding as under: "The question of abetment actually depends upon the nature of the act abetted and the manner in which the abetment was made. The offence of abetment is complete when the alleged abettor has instigated another to commit the offence. It is not necessary for the offence of abetment that the offence must be committed. It is only, in the case of a person abetting an offence by intentionally aiding another to commit that offence and the uttering of hot words by the accused to his wife in the presence of Shri Hari Om PW 9 clearly indicates that the accused had abetted an act complained of." From the portion extracted above, it may be seen that though the Addl. Sessions Judge has observed that Explana tion II would have 624 relevance to the case, he has in fact awarded conviction to the accused on the basis that the accused had instigated Veena Rani to commit suicide and had thereby abetted the commission of suicide by Veena Rani. Having regard to the evidence in the case, there can be no doubt whatever that the Addl. Sessions Judge was perfect ly right in holding that the accused had instigated Veena Rani to commit suicide and therefore he would be guilty under Section 306 I.P.C. A person can abet the commission of an offence in any one of the three ways set out in Section 107. The case of the accused would squarely fall under the first category, viz. instigating a person to do a thing. In such circumstances, the need to invoke Explanation I1 does not arise. Mr. Mehta contended that since Explanation II to Section 107 I.P.C. has no application to the facts of the case and since the Addl. Sessions Judge has convicted the accused on the premise that Explanation H is attracted, the High Court was right in setting aside the conviction of the accused. We are unable to accept this argument because the Addl. Sessions Judge: though he has referred to Explanation II, has actually found the accused guilty only on the ground he had abetted the commission of the offence by instigation. When the evidence is of so compulsive and telling a nature against the accused, the High Court, we regret to say, has dealt with the matter in a somewhat superficial manner and acquitted the accused on the basis of imaginary premises. The High Court has failed to comprehend the evi dence in its full conspectus and instead it has whittled down the evidence by specious reasoning. To mention a few, the High Court has failed to give due weight to the letter Veena Rani wrote to her brother on 10.9.1975 merely because in the last line she has written "in any way there is noth ing to worry. This time everything will be alright. " This one sentence in the letter cannot efface the frantic nature of Veena Rani 's appeal for money to satisfy the demand of the accused. As regards the last letter dated 14.9.75, the High Court has totally lost sight of it. The High Court has failed to see that unless Veena Rani was very desperate, she would not have written to her mother for money within four days of the letter to her brother. As regards the happenings on the morning of 15.9.75, the High Court has failed to grasp their gravity. Unless a serious quarrel had taken place, the accused and Veena Rani would not have gone to the house of PW 9 Shri Hari Om in the early hours of the morning itself to seek a solution to the problem. Despite PW 9 Shri Hari Om counselling patience, the accused refused to relent and insisted upon immediate payment of 625 Rs. 1,000 and made it clear that the money was more impor tant to him than Veena Rani 's life and that if Veena Rani wanted to die, she may put an end to her life the very same day and give him relief forthwith. The High Court has viewed the accused 's conduct and utterances as of no consequence because PW. 9 Shri Hari Om has stated in crossexamination that he thought it was "an ordinary quarrel between the husband and wife as they had been doing so previously also. " The High Court has failed to realise that the effect of the accused 's utterances on Veena Rani 's mind should be assessed in the context of the overall evidence in the case and not on the basis of the opinion of PW 9 Shri Hari Om about the nature of the quarrel. PW 9 Shri Hari Om despite his having been the counsel for Veena Rani, could not have realised the effect of the utterances of the accused on the mind of Veena Rani. Furthermore the High Court has failed to notice that the accused has not thrown any light as to what transpired between him and Veena Rani after they had left the house of PW 9 Shri Hari Om. The fact that Veena Rani had forsaken her young son and had set fire to herself within a short time after reaching home will go to show that she would not have acted in that manner unless she had felt instigated to commit suicide by the utterances of the accused. The High Court, besides unfortunately failing to give due weight to the evidence in the case, has drawn certain inferences which are not at all warranted. For example, the High Court has stated that since Veena Rani was an earning member, the accused would not have stood to gain by instigating her to commit suicide. This inference is totally wrong because the clear evidence in the case is that the accused had placed greater value on the payment of the money demanded by him than upon the life of his wife. Then again, the High Court has remarked that Veena Rani was suffering from depression and a diseased mind and hence she would have committed suicide. We are at a loss to know wherefrom the High Court derived material to draw this conclusion. Far from there being any evidence, to show that Veena Rani was having a diseased mind, PW 5 Krishan Dutt and PW 12 Nathu Ram, have stated that Veena Rani was a woman of gentle and amiable disposition. She was working in the Bank without any com plaint whatever about her mental condition. Even the accused has not stated that she was of diseased mind. We are, there fore, more than satisfied that the judgment of the High Court suffers from serious errors and infirmities and is therefore manifestly unsustainable. Mr. Mehta relied upon the observations in Sri Ram vs U.P. State, to contend that even if the accused had told Veena Rani that money was more important to him than her life and that she 626 can put an end to her life the very same day instead of waiting for the morrow, it cannot be construed that the accused had done anything to facilitate the commission of suicide by Veena Rani as would attract Explanation II to Section 107 I.P.C. We do not find any merit in the conten tion. The facts in Shri Ram 's case were entirely different. The question in that case was whether by shouting that "the Vakil has come", Violet, one of the accused, had abetted the commission of the offence of murder of one Kunwar Singh by the other accused persons who were hiding behind a shisham tree and coming out of their place of concealment and one of them shooting Kunwar Singh with a gun carried by him. Though the Sessions Judge and the High Court had held that Violet 's act would amount to abetment of the commission of the of fence of murder in terms of Explanation II to Section 107 I.P.C., this Court held that "apart from the words attribut ed to Violet, there is nothing at all to show that she was aware of the nefarious design of Sia Ram and his associates. " It was in that context this Court observed as follows. "Thus in order to constitute abetment, the abettor must be shown to have "intentionally" aided the commission of the crime. Mere proof that the crime charged could not have been committed without the interposition of the alleged abettor is not enough compliance with the requirements of Section 107. " In the instant case, we have already seen that the committing of suicide by Veena Rani was due to the accused 's instigation. It is not a case where Veena Rani had wanted to commit suicide for reasons of her own and the accused had facilitated her in the commission of suicide. It was then urged by Mr. Mehta that since two views could be taken of the evidence we should not allow the appeals and set aside the acquittal of the accused solely on the ground that the view taken by the High Court does not commend itself for our acceptance. We are fully alive to the position in law that where two views could reasonably be taken of the prosecution evidence in a case, the Appellate Court should not interfere with the acquittal of an accused merely because the view taken by the Trial Court and/or the High Court was less acceptable than the other view which could have been taken on the evidence. This principle will however have no application where the evidence does not afford scope for two plausible views being taken but still the Trial Court or the High Court acquits an accused for reasons 627 which are patently wrong and the error leads to an element of perversity pervading the judgment. As to what would constitute instigation for the commis sion of an offence would depend upon the facts of each case. Therefore in order to decide whether a person has abetted by instigation the commission of an offence or not, the act of abetment has to be judged in the conspectus of the entire evidence in the case. The act of abetment attributed to an accused is not to be viewed or tested in isolation. Such being the case, the instigative effect of the words used by the accused must be judged on the basis of the distraught condition to which the accused had driven Veena Rani. Full well knowing her helpless state and frustration, if the accused had told her that he set greater store on the sum of Rs. 1,000 required by him than her life and that she can die the very same day and afford him early relief, it is not surprising that Veena Rani committed suicide a little later on account of the accused 's instigation. It would not be out of place for us to refer here to the addition of Sections 113A and 113B to the Indian Evidence Act and Sections 498A and 304B to the Indian Penal Code by subsequent amendments. Section 113A Evidence Act and 498A Indian Penal Code have been introduced in the respective enactments by the Criminal Law (Second amendment) Act, 1983 (Act 46 of 1983) and Section 113B of the Evidence Act and 304B Indian Penal Code have been introduced by Act No. 43 of 1986. The degradation of society due to the pernicious system of dowry and the unconscionable demands made by greedy and unscrupulous husbands and their parents and relatives resulting in an alarming number of suicidal and dowry deaths by women has shocked the Legislative conscience to such an extent that the Legislature has deemed it neces sary to provide additional provisions of law, procedural as well as substantive, to combat the evil and has consequently introduced Sections 113A and 113B in the Indian Evidence Act and Sections 498A and 304B in the Indian Penal Code. By reason of Section 113A, the Courts can presume that the commission of suicide by a woman has been abetted by her husband or relation if two factors are present viz. (1) that the woman had committed suicide within a period of seven years from her marriage, and (2) that the husband or rela tion had subjected her to cruelty. We are referring to these provisions only to show that the Legislature has realised the need to provide for additional provisions in the Indian Penal Code and the Indian Evidence Act to check the growing menace of dowry deaths. In the present case, however, the abetment of the commission of suicide by Veena Rani is 628 clearly due to instigation and would therefore fail under the first clause of Section 107 I.P.C. In the light of our conclusions, the appeals have to be allowed and the conviction of the appellant under Section 306 I.P.C. has to be restored. The question however arises as to whether the sentence of 4 years R.I. awarded by the Sessions Judge should also be restored. Mr. Mehta, learned counsel made a fervent plea for leniency on the ground that more than 11 years have elapsed since the High Court acquit ted the accused and the accused is now leading a settled life and that he and his family members would be ruined if he is to be sent back to prison to serve any further term of sentence. Learned counsel also stated that the accused has undergone imprisonment in connection with the case for a period of about 10 months and, therefore, even if we are to restore the conviction, we may reduce the sentence to the period of imprisonment already undergone. Shri Suri. learned counsel appearing for the State submitted that the State was only anxious that the error committed by the High Court in acquitting the accused should be set right. He also added that in the event of the substantive sentence being reduced, the accused should be called upon to pay a heavy fine. Taking all factors into consideration, we think that the ends of justice would be met if we substitute the sentence awarded to the accused with the sentence of imprisonment for the period already undergone by him and enhance the sentence of fine from Rs.500 to Rs.20,000 with a direction that out of the fine amount, if paid, a sum of Rs. 18,000 should be paid to the father of Veena Rani for bringing up Veena Rani 's minor son Manish. The High Court judgment is accordingly set aside and the appeals are allowed and the conviction of the accused under Section 306 I.P.C. is restored but the sentence is modified to the period of imprisonment already undergone and fine of Rs.20,000 in default thereof to suffer R.I. for two years. Out of the fine amount if paid, Rs. 18,000 will be given to the appellant in Crl. Appeal No. 477 of 1978 for being utilised for the maintenance of Veena Rani 's son, Manish. One month 's time from today is given to the accused to pay the fine. R.S.S. Appeals allowed.

Prem Chand, accused respondent, had married Veena Rani, deceased, in the year 1973. Veena Rani was then employed in the State Bank of Patiala. Soon after their marriage the accused resigned his job as Prosecuting Sub inspector and started his practice at Sangrut. Veena Rani got herself transferred to Sangrur and the couple set up house there. From the very beginning Veena Rani had an unhappy married life because the accused constantly tormented her to get more money from her parents. The accused was also given to heating her frequently. Veena Rani gave birth to a male child. Even after child birth the accused did not stop iII treating her. Unable to bear the iII treatment, Veena Rani took leave on loss of pay and went away to her parents. She later filed an application under section 9 of the Hindu Marriage Act in the Court at Patiala for restitution of conjugal rights. At this stage, a compromise was brought about between the parties and Veena Rani came back to live with the accused at San grur. But nothing changed, and the accused continued to torment her for money. The immediate provocation for the accused stepping up his illtreatment of Veena Rani was his demand of Rs. 1,000 to pay the balance amount of the scooter price which he had purchased. Veena Rani had no funds of her own. She, there fore, wrote to her brother and mother narrating her woes and requesting them to send Rs. 1,000. In spite of Veena Rani writing to her brother and mother, the accused did not relent in the immediate compliance of his demand. On 15.9.1975, the day of the tragedy, the accused and Veena Rani had a quarrel and thereupon both of them went to the house of Shri Hari Om, Advocate, who advised the accused not to torment Veena Rani. 613 There, in the presence of Hari Om, the accused went to the extent of saying that Veena Rani may go to hell but he should get the money forthwith. Veena Rani reacted by saying that she preferred death to such life. The accused, far from expressing regret for his conduct, drove her to despair by further saying that she can provide him relief quicker by dying on the very day. Thereafter, the accused left Veena Rani at their house and went to court at about 9.00 a.m. At 10.15 a.m. shrieks were heard from their house, and when people rushed in, they found Veena Rani lying on the ground with extensive burn injuries. Before her death in the hospi tal, Veena Rani told the doctor that she had been tortured at home and that she wanted to die as early as possible. The Additional Sessions Judge found the accused guilty under section 306, I.P.C., and sentenced him to undergo R.I. for four years. The Judge held that the accused had been tormenting and also physically assaulting Veena Rani, and that Veena Rani had committed suicide by reason of the accused 's instigation. The High Court, on appeal, acquitted the accused holding that even though Veena Rani had committed suicide on account of her unhappy married life, there was nothing on the record to show that the appellant in any manner instigated the deceased to commit suicide. In this Court, two special leave petitions have been filed, one by the father of Veena Rani and the other by the State of Punjab. On behalf of the appellants it was contend ed that the High Court had completely erred in its apprecia tion of the evidence and in its application of the law. On behalf of the accused it was contended that even if the prosecution evidence was accepted in full, there was no material to show that the suicidal death of Veena Rani was abetted in any manner by the accused. Allowing the appeals and restoring the conviction of the accused under section 306, this Court, HELD: (1) Veena Rani 's death was undoubtedly due to suicide and not due to any accident or homicide. [621A] (2) There is overwhelming evidence in the case to estab lish that Veena Rani 's life was made intolerable by the accused by constantly demanding her to get him money and also beating her frequently. [620G] 614 (3) Viewed in the background of Veena Rani 's plight during the few days preceding her death and the events that took place on the morning of the tragedy, the utterances by the accused to the effect that she can provide him relief quicker by dying on the very same day would have certainly been seen by Veena Rani as an instigation to her to commit suicide. [621D; 622B] (4) No mother, however distressed and frustrated, would easily make up her mind to leave her young child in the lurch and commit suicide unless she had been goaded to do so by someone close to her [622B C] (5) When the evidence is of so compulsive and telling in nature against the accused, the High Court, it is regretted to say, has dealt with the matter in a somewhat superficial manner and acquitted the accused on the basis of imaginary premises. The High Court has failed to comprehend the evi dence in its full conspectus and instead has whittled down the evidence by specious reasoning. [624E F] (6) As to what constitutes instigation would depend upon the facts of each case. Therefore, in order to decide wheth er a person has abetted by instigation the commission of an offence or not, the act of abetment has to be judged in the conspectus of the entire evidence in the case. The act of abetment attributed to an accused is not to be viewed or tested in isolation. [627A B] (7) Such being the case, the instigative effect of the words used by the accused must be judged on the basis of the distraught condition to which the accused had driven Veena Rani. [627B C] (8) In the instant case, the abetment of the commission of suicide by Veena Rani is clearly due to instigation and would therefore fail under the first clause of section 107, IPC. [626E F] (9) The degradation of society due to the pernicious system of dowry and the unconscionable demands made by greedy and unscrupulous husbands and their parents and relatives resulting in an alarming number of suicidal and dowry deaths of women has shocked the Legislative conscience to such an extent that the Legislature has deemed it neces sary to provide additional provisions of law, procedural as well as substantive, to combat the evil and has consequently introduced Sections 113A and 113B in the Indian Evidence Act, and section 498A and 304B in the Indian Penal Code. [627E G] 615 (10) It is not a case where Veena Rani had wanted to commit suicide for reasons of her own and the accused had facilitated her in the commission of suicide, as would attract Explanation II to Section 107 IPC. [626A] Sri Ram vs State of U.P., ; distin guished. (11) Taking all factors into consideration including the fact that more than 11 years have elapsed since the High Court acquitted the accused and the accused is now leading a settled life, the Court considered the plea of leniency, and while restoring the conviction of the accused under section 306 modified the sentence to the period already undergone and enhanced the fine to Rs.20,000, out of which Rs. 18,000 were to be given to the father of the deceased for being utilised for the maintenance of Veena Rani 's son. [628E]

Appeal No. 1499 of 1971. Appeal from the judgment and order dated August 23, 1971 of the Delhi High Court in Civil Writ Petition No. 517 of 1971. M. C. Chagla and R. Gopalakrishnan, for the appellants. Jagadish Swarup, Solicitor General of India, G. L. Sanghi, B. D. Sharma and section P. Nayar, for respondents Nos. 1 and 2. A. K. Sen and H. K. Puri, for respondents Nos. 15, 39 to 48, 51, 103 and 123. J. D. Jain, for respondent No. 55. The Judgment of the Court was delivered by Ray, J. This in an appeal by certificate from the _judgment dated 23 August, 1971 of the High Court of Delhi dismissing the writ petitions of the appellants. The two appellants were promoted in the years 1958 and 1959 respectively to the Military Engineer Service Class I (hereinafter referred to as the Class I Service). The appellant No. 1 _joined the Military Engineer Service as a temporary overseer on 1 May, 1942. He was promoted to the grade of Superintendent Grade I on 1 May, 1949. In the month of April, 1957 he was selected to be promoted to the grade of temporary Assistant Executive Engineer in Class I Service and he was promoted in fact in the month of April, 1958. Respondents Nos. 4 to 21, 107 to 122 and 124 to 126 were appointed to the said Class I Service after they had appeared at competitive examination while the rest were appointed by direct recruitment after having been interviewed by the Union Public Service Commission. All the respondents were appointed to the said Class I Service in the years 1962, 1963 and 1964. The appellants contended first that the respondents who were directly appointed to Class I Service by interview were not within the purview of recruitment to Class I Service by competitive examination. The Military Engineer Service Class I (Recruitment, 900 Promotion and Seniority) Rules which came into force on 1 April, 1951 speak in rule 3 of recruitment to the Class I Service (,a) by competitive examination in accordance with Part 11 of the Rules and (b) by promotion in accordance with part III of the Rules The appellants contended that appointment to Class I Service by interview was not one of the methods recruitment contemplated in the Rules, and, therefore, the respondents who were appointed by interview could not be said to be validly appointed in accordance with the Rules. The second contention of the appellants was that the respon dents were recruited to Class I Service by interview and competitive examination after the appellant had been promoted to Class I Service and were therefore not to be confirmed in permanent posts before the appellants. Class I Rules mention recruitment by competitive examination and by promotion. In 1961 on the results of the competitive examination no candidates were avail able for allotment to Class I Service against temporary posts. In 1962 there was a state of emergency. Engineers were immediately required to fill the temporary posts in Class I Service. To meet the emergency the Union Government in consultation with the Union Public Service Commission decided to recruit candidates by advertisement and selection by the Union Public Service Commission. The Government with the aid of selection and interview by the Union Public Service Commission directly recruited some respondents to Class I Service in the years 1962, 1963 and 1964. The candidates were selected after viva voce examination. It, therefore, follows that the method of recruitment by interview was adopted to meet the emergency specially when the mode of appointment by competitive exammation failed. The candidates who were selected were put through a period of probation of 2 years. Only on a satisfactory completion of probation the candidates were allowed to continue in service. On completion of 3 years continued service in the grade and after qualifying the necessary departmental test the respective officers were declared quasipermanent in the grade in terms of Central Civil Service (Temporary Service) Rules. During the years 1962, 1963 and 1964 particularly and until the year 1969 the Class I Service Rules were not statutory in character. The Union Government relaxed the Rules both in regard to recruitment by interview and in regard to the quotas fixed by the Rules for direct recruitment and recruitment by promotion to Class I Service. In the year 1967 rule 20 of Part II of Class I Service Rules was amended by introduction of sub rules (h), (i), (i) and (k). 901 Rule 20 referred to the period of probation in the case of recruitment by competitive examination: Sub rule (i) stated that "50 per cent of the permanent vacancies to be filled through the competitive ad hoc recruitment conducted by the Commission after 17 May, 1963, shall be reserved for graduates engineers who are commissioned in the Armed Forces on a temporary basis during the present emergency and later released," subject to certain conditions enumerated therein. Rule 24 was also introduced by way of amendment in the year 1967. Rule 24 occurs in Part IV of the Rules. It may be stated here that Part 11 of the Rules deals with recruitment to Class I Service by competitive examination, Part HI with recruitment to Class I Service by promotion and Part IV deals with miscellaneous Rules. Rule 24 stated that where the Central Government was of opinion that it was necessary or expedient so to do, it might by order, for reasons to be recorded by it in writing and after consultation with the Union Public Service Commission relax all or any of the rules with respect to any class or category of persons or posts. In 1969 the Class I Service Rules were amended. The impor tant amendments were rule 4 and substitution of rule 21 in place of rules 21, 22 and 23. Rule 4 dealt with the quotas fixed for direct recruitment and promotion to Class I Service. The substituted rule 21 stated that appointment by promotion was to be made by selection and promotion was not to be as a matter of right. The real importance of the amendments of the rules in the year 1969 lies in the fact that the amendments were made by the President in exercise of the powers conferred by the proviso to Article 309 ' of the Constitution. As a result of the 1969 amendment it follows that the entire body of rules of Class I Service became statutory rules by incorporation. The appointments to Class I Service by interview were made by the Government in consultation with the Union Public Service Commission. The selection was made by the Union Public Service Commission. The appointments by competitive examination proved fruitless. The country was in a state of emergency. Appointment and selection by interview was the only course possible. It could not be said that all appointments should have been made by promotion. That would be not in the interest of the Service. The Service Rules were administrative in character. The Government relaxed the rules. The amendments of the rules in 1967 recognised the reality of the situation of appointment by interview. That is why the 1967 amendment recognised that 50 per cent of "the direct recruits by competitive/ad hoc appointment were to be reserved for graduate engineers who were commissioned in the Armed Forces on a temporary basis. " 902 on a temporary basis. " Ultimately, when the rules were, amended in 1969 and the rules became statutory in character not only the recruitment by interview but also the relaxation of rules was regularised. The result is that the respondent who were appointed by interview fell within the class of direct recruits. The only other contention on behalf of the appellants was that they were promoted to Class I Service in the years 1958 and 1959 respectively and were thus senior to the respondents who were recruited to the Service subsequently, and, therefore, the appellants should be confirmed in Class I Service in priority to the respondents. The promotion of the appellants was to temporary posts in Class I Service. The appellants were to be confirmed in permanent posts. The respondents who were appointed by competitive examination and by interview were also appointed to temporary posts. They were also to be confirmed in permanent posts after having served the period of probation in accordance with the rules. The recruitment to Class I Service during the years 1951 to 1958 was on the quotas fixed by rule 4 of the Class I Rules on the ratio of 10 per cent for departmental promotion and 90 per cent for direct recruitment. Though rule 4 fixed the quotas on the ratio of 10 per cent for departmental promotion and 90 per cent for direct recruitment the Union Government in consultation with the Union Public Service Commission relaxed the rules and revised as an interim measure the existing quota of 10 per cent of departmental candidates for promotion to 50 per cent in the years 1959 to 1963 inclusive. From 1964 to 1968 the quota fixed by rule 4 was followed again. Finally, in 1969 the rules were amended and the quota for departmental promotion was 25 per cent and for direct recruitment at 75 per cent. In this background the recruitment against temporary posts between the years 1951 and 1971 was indicated by a chart prepared by the Government and accepted to be correct. The recruitment against temporary posts indicated the following features Between 1951 and 1956 the total recruitment against temporary posts was 84 whereof 75 were allocated for direct recruits and 9 for departmental promotees. But in fact the recruitment by interview was for 29 and by departmental examination. During the years 1957 and 1963 the number of vacancies for recruitment to temporary posts was 675 whereof 339 were allocated for direct recruits and 336 for departmental promotees. Only 20 were recruited by competitive examination and 171 by interview and the remaining 484 were instances of departmental promotion. Be tween the years 1964 and 1968 the total recruitment was 264 whereof 238 were allocated for direct recruits and 26 for departmental promotees. In fact, recruitment was of 139 persons by 903 competitive examination and of 98 by interview and 27 'by departmental promotion. Between the years 1969 and 1971 there were 45 vacancies to temporary posts whereof 33 were allocated for direct recruits and 12 for departmental promotees. I were recruited by competitive examination and 34 were promoted departmentally. The recruitment against temporary posts during the years 1951 and 1971 shows that during the relevant years 1959 to 1963 the Union Government relaxed the quota and increased the quota of 10 per cent to 50 per cent for departmental promotion. At cannot therefore be said that any injustice was done to the departmental promotees or that any advantage was gained by the persons who were recruited by interview. It is because of the conditions of emergency that the quota for filling the temporary posts was half for departmental promotees and half for direct recruitment. The confirmation against permanent posts was also in according ance with the quotas fixed by rule 4 for the years 1951 to 1958, namely, 10 per cent for departmental promotion and 90 per cent for direct recruitment. During the years 1959 to 1963 inclusive the Union Government in consultation with the Union Public Service Commission relaxed the quota rule and increased the quota for departmental promotees from 10 per cent to 50 per cent and reduced the quota of direct recruitment from 90 per cent to 50 per cent. In the year 1959 126 permanent posts were available whereof 63 were allocated for direct recruits and the other 63 were for departmental promotees. In 1960 there were 14 permanent posts and 7 were allocated for direct recruits and 7 for departmental promotees. Again, in 1961 there were 23 permanent posts available. 12 were allocated for direct recruits and 11 for departmental promotees. For 1962 there were 20 permanent posts whereof 10 were allocated for direct recruits and the other 10 for departmental promotees. In 1963 there were 11 permanent posts whereof 5 were allocated for direct recruits and 6 for departmental promotees. In 1964 there were 9 permanent posts whereof 8 were allocated for direct recruits and one for departmental promotee. In 1965 there were 15 permanent posts whereof 13 were allocated for direct recruits and two for departmental promotees. In 1966 there were 113 permanent posts whereof 82 were allocated for direct recruits and 11 for departmental promotees and 20 for released officers in accordance with the revised rule in the year 1967. In 1967 there were 45 permanent posts whereof 40 were allocated for direct recruits and 5 for departmental promotees. In 1968 there were 14 permanent posts available whereof 13 were allocated for direct recruits and one for departmental promotee. The position with regard to filling of permanent posts shows that during the years 1951 to 1958 the quota was 10 per cent for 904 departmental promotees and 90 per cent for direct recruitment but during the years 1959 to 1963 the quota was changed with the result that half of the permanent posts were filled by departmental promotion and the other half by direct recruitment. From 1964 to 1968 the old quota of 10 per cent for departmental promotion and the remaining 90 per cent for direct recruitment was resorted to. In 1969 rule 4 was changed 'with the result that there were 25 per cent for departmental promotion and the remaining 75 percent for direct recruitment. In the year 1959 the direct recruits who were confirmed in permanent posts were recruited by the Union Public Service Commission by interview during the years 1951 to 1956. In 1960 the direct recruits through interview who were confirmed had been selected through interview by the Union Public Service Commission between the years 1953 and 1956. In 1961 the direct recruits who were confirmed in permanent posts were those who had been selected by the Union Public Service Commission through interview during the years 1956 to 1957. In 1962 the direct recruits who were confirmed in permanent posts were those who had been selected by the Union Public Service Commission through interview during the years 1956 to 1958. In 1963 the direct recruits who were confirmed in permanent posts were those who had been selected by the Union Public Service Commission through interview between the years 1958 to 1961. In 1964 the direct recruits who were confirmed in permanent posts were those recruited in 1962 by the Union Public Service Commission through interview. In 1965 the direct recruits who were confirmed in permanent posts were those recruited by the Union Public Service Commission through interview in 1962 and 1963. In 1965 13 direct recruits were confirmed and they included some of the respondents. In 1966 82 direct recruits were confirmed against permanent posts and they were persons who had been selected by the Union Public Service Commission through interview during the year 1963 and they included some of the respondents. In the year 1959 when the Government in consultation with the Union Public Service Commission revised as an. interim measure the increase of the quota of departmental promotion of candidates from 10 to 50 per cent and followed that system up to the end of 1963 a question arose as to how the then existing permanent vacancies were to be filled and the Union Public Service Commission advised that the same might be filled by confirmation of direct recruits, namely, those recruited on the basis of competitive examination and by advertisement and selection and promotees in the ratio of 11. The advice of the Union Public Service Commission was accepted and the Departmental Promotion Committee acted on that basis. It is apparent that during those years there was a relaxation in the observance of rules in the case of appellants and the other departmental promotees. The Union Government 905 all throughout acted in consultation with the Union Public Service Commission. The departmental promotees gained considerable advantage by relaxation of the rules. The direct recruits were not shown any preference at all. The proportion of confirmation of departmental promotees and of direct recruits by interview was 1 : 1 In the year 1967, the Government was again faced with the question of confirmation of direct recruits by interview as well as by competitive examination against permanent vacancies in the grade falling in the direct recruitment quota prescribed in the rules. The Union Public Service Commission advised that direct recruits by interview and by competitive examination could be confirmed against permanent vacancies within the fixed quota of direct recruits. The result was that in 1969 the Class I Service Rules were amended and the quota for departmental promotion was raised from 10 to 25 per cent and the quota of direct recruits was reduced from 90 to 75 per cent. The appellants can have no grievance with regard to confirmation. The departmental promotees have been confirmed against permanent posts within their quota in order of seniority. Departmental promotees who have been confirmed up to the year 1970 had been promoted to Class I Service before the appellants. On the other hand, direct recriuts consisting of those recruited by competitive examination as well as by interview have been confirmed against permanent vacancies within their quota. As a matter of fact between the years 1959 and 1963 inclusive the quota fixed for departmental promotees was increased from 10 to.50 per cent and thereby the confirmation of departmental promotees and direct recruits was equally balanced. The direct recruits who were appointed by interview fell within the class of direct recruits. The quota fixed for direct recruits was never infringed by absorbing direct recruits by interview beyond the quota. The confirmation of direct recruits and departmental promotees against permanent vacancies was in accordance with the quota fixed. By reason of relaxation of rules in regard to increase of quota for departmental promotees they gained advantage during the years 1959 to 1963 when because of the emergency direct recruits by interview were selected by the Union Public Service Commission. For the foregoing reasons the appeal fails and is dismissed. In view of the fact that there was no order as to costs in ' the High Court parties will bear their own costs. G.C. Appeal dismissed.

The two appellants were promoted in the years 1958 and 1959 respectively to the Military Engineer Service Class 1. Some of the respondents were appointed to the said class I Service after they had appeared at the competitive examination while the rest were appointed by direct recruitment after having been interviewed by the Union Public Service Commission. All the respondents were appointed to the service in the years 1962, 1963 and 1964. The respondents were confirmed in their posts before the appellants. The appellants filed writ petitions in the High Court which were dismissed. In appeal before this Court the appellants contended (i) that the respondents who were directly appointed to class I service by inter view were not within the purview of recruitment to Class I service by competitive examination under the Military Engineer Service Class I (Recruitment Promotion and Seniority) 'Rules; (ii) that the respondents were recruited to Class I Service by inter view and competitive examination after the appellant had been promoted to Class I service and were therefore not to be confirmed in permanent posts before the appellants. HELD : (i) The appointments to Class I Service by interview were made by the Government in consultation with the Union Public Service Commission. The selection was made by the Union Public Service Commission. The appointment by competitive examination proved fruitless. The country was in a state of emergency. The appointment and selection by interview was the only course possible. It could not be said that all appointments should have been made by promotion; that would not he in the interest of the service. The Service Rules were administrative in character. The Government relaxed the rules. The amendments of the rules in 1967 recognised the reality of the situation of appoint ment by interview. That is why the 1967 amendment recognised that 50% of "the direct recruit by competitive ad hoc appointments were to be reserved for graduate ceneers who were commissioned in the Armed Forces on a temporary basis Ultimately, when the rules were amended in 1969 and the rules became statutory in character, not only the recruitment by interview but also the relaxation of rules was regularised. The result is that the respondents who were appointed by interview fell within the Class I direct recruits. [901 F 902 A] (ii) The appellants should have no grievance with regard to confirmation. Departmental promotees had been confirmed against permanent posts within their quota in order of seniority. The departmental promotees who had been confirmed up to the year 1970 had been promoted to 899 class I Service before the appellants. On the other hand direct recruits consisting of those recruited by competitive examination as well as by inter view had been confirmed against permanent vacancies within their quota. As a matter of fact between the years 1959 and 1963 inclusive the quota fixed for departmental promotees was increased from 10 to 50% and thereby confirmation of departmental promotees and direct recruits was equally balanced.[905 D F] Accordingly, the appeal must fail;

minal Appeal No. 138 of 1970. From the judgment and order dated the 4th May 1970 of the Allahabad High Court at Allahabad in Criminal Revision No. 1649 of 1968. K. L. Arora and M. M. Kshatriya, for the appellant. O. P. Rana, for the respondent. The Judgment of the Court was delivered by BEG, J. This appeal comes up before us by a certificate of fitness of the case for appeal to this Court granted by the Allahabad High Court under Article 134 (1 ) (c) of the Constitution. The appellant was convicted under Section 60 (a) of the U.P. Excise Act and sentenced to six months rigorous imprisonment and a fine of Rs. 1000/ , and, in default of payment of the fine, to undergo imprisonment for a further period of two months. His conviction and sentence were confirmed by the Sessions ' Judge as well as by the High Court of Allahabad. On 27 10 1967, at about 6.45 p.m., he was found by the raiding Excise staff in a room of a bungalow in Meerut apparently preparing something with the aid of materials found there which were seized. These were said to be 1. Five drums, each containing about 20 liters liquor of O.P. strength, the sample whereof was taken in five bottles from each tin. Three empty drums of five gallons capacity. Thirty empty bottles bearing labels. Labels. 120 in number, bearing the words "Khody 's Herecules ". Different types of capsules, 142 in number". His plea was that he had no concern with the bungalow in question and that he was not present at the time when its search was taken. He said that the Excise Inspector came to the liquor shop of Gyan Chand Chander Mohan. situated in Sadar Bazar. Meerut, where he was working as a salesman. According to him, the Excise Inspector wanted to check the stock of spirit and, demanded the register from him. As the register was locked in a drawer the Excise Inspector is alleged to 823 have abused the appellant and implicated him falsely for alleged possession of the objects mentioned above. It may be mentioned here that the search of bungalow No. 243, Circular Road, Meerut Cantonment, from where the recovery was made, was taken after the issue of a regular search warrant (exhibit Ka. 1) under Section 52 of the U.P. Excise Act, 1910, by a First Class Magistrate on 26 10 1967. The very detailed recovery Memo (Exhibit Ka. 2) dated 27 10 1967 was signed by as many as six witnesses, in addition to having been signed by the officer who conducted the search and by the appellant himself. In this Memo, in the column for remarks, the result of the test report of the liquor is given as follows "Test report of the liquor. The contents of all the five (paper torn) of dirty white colour like, (paper torn) characteristics smell of the (paper torn) Hydrometer test is as under (paper torn) Drum No. 1 77 F x 13.2 50.9 O.P. Drum No. 2 77 F x 13.4 50.7 O.P. Drum No. 3 76 F x 13.8 50.6 O.P. Drum No. 4 76 F x 14.2 50.2 O.P. Drum No. 5 77 F x 13.6 50.5 O.P. Hence the contents of each drum are liquor of O.P. strength". Two questions have been raised in this case for our consideration Firstly, whether the smelling test employed by the Excise Inspector together with other circumstances were enough to justify the conclusion that the liquid recovered was illicit liquor of "O.P" strength ? And, secondly, whether the Excise Inspector could be considered an expert whose opinion about the nature of the liquid found was opinion evidence admissible under Section 45 of the. Evidence Act ? It will be seen from the statement of the appellant under Section 342 Criminal Procedure Code that he had professed ignorance about the nature of the liquid recovered from. the room of the house in which he was found. The false defence taken, that he was not present at the house in question when it was searched, could indicate that he wanted to keep his distance from the recoveries made as he was aware of their incriminating nature. Moreover, the appellant, who was an employee in a liquor shop, could not be so ignorant about the nature of the liquid recovered as not to be able to raise the question before the Trial Court that the liquid under consideration was not "liquor" as defined by the Act. In the Trial Court, he examined a number of witnesses to substantiate his plea that he was not present at the house from which the recovery was made but was taken from the shop in Sadar Bazar. And, that was the only question of fact which seems to have been raised and considered in the Trial Court at considerable length. Before the Sessions Judge also the main question raised was whether the at was arrested from the shop in Sadar Bazar or from the Kothi at Cir 824 cular Road, Meerut Cantt. The learned Counsel for the appellant had, however, at the end of his arguments also contended, before the Sessions Judge, that the liquid recovered had not been proved to be illicit liquor even if it was established that the recovery was from the possession of the appellant. He had relied on State of Andhra Pradesh vs Madiga Boosenna & Ors. (1) The learned Sessions Judge, had distinguished Boosenna 's case (supra) on the ground that the Excise Inspector in the case before us, who had the required technical knowledge and training behind him, had tested the contents of the drums with the aid of litmus paper, hydrometer, and thermometer and not confined himself to smelling the contents of the drums. The question of the admissibility of the opinion of the Excise Inspector was, however, not raised before the Sessions Judge. It appears that both the questions formulated above were raised before the High Court when the appellant 's revision application came up before it. The High Court had also distinguished Boosenna 's case (supra) on the ground that there were sufficient number of surrounding circumstances to buttress the, opinion evidence of the Excise Inspector in the case before us. It pointed out that this was not so in Boosenna 's case (supra). The High Court had also held that it appeared, from the Excise Manuals and various rules framed by the U.P. Government which had been placed before it, that the Excise Inspectors have to undergo rigorous training in all branches of knowledge involved in the performance of their duties including knowledge of the process of distillation and that the Excise Inspector C. D. Misra, P.W. 1, was a senior man incharge of raids and detection of important cases so that his opinion evidence was admissible, presumably as "expert" evidence, and could be relied upon. In certifying the case under Article 134(1) (c) of the Constitution, the High Court had observed that it was desirable that this Court may decide the question whether, despite the corroboration facts and circumstances which supported the smelling test employed by the Excise Inspector in the case before us, the test to which liquor was to be subjected in such cases was not to be more scientific and accurate than the one actually employed by the Excise Inspector. Learned Counsel for the appellant had cited State vs Madhukar Gopinath Lalge(2) where it was held in a prosecution under Bombay Prohibition Act, that, although, the circumstances in which an accused was discovered carrying liquid in rubber tubes may raise grave suspicion against him, yet, the Court would not be content with anything less than a chemical or Ido form test to determine the composition of the liquid. It was held that the Sykes ' or the Hydrometer test could not help in determining whether the liquid under consideration there really contained alcohol or not. It, however, also held that, once it is known that the liquid contained alcohol, the percentage of alcohol in it could be found out by employing the hydrometer test. In other words, according to this decision, the Hydrometer test would be enough if the liquid was known to contain alcohol because it would help to determine, the strength of alcoholic contents. (1) ; (2) I.L.R. [1965] Bombay 257. 825 Another case cited was Ram Jus vs State (1), where a Division. Bench of the Allahabad High Court had held that evidence based on chemical analysis was essential in order to establish that a substance alleged to be Ganja, recovered from an accused person, was really Ganja. In that case, reliance was placed upon the judgment of this Court in Boosenna 's case (supra) from which the following passage was cited "Except for a general statement contained in the evidence of the witnesses, particularly P.Ws. 1 and 4 that there was a strong smell of alcohol, emanating from the tins, which were pierced open, there is no other satisfactory evidence to establish that the article is one coming within the definition of the expression 'liquor '. Merely trusting to the smelling sense of the prohibition officers, and basing a conviction, on an opinion expressed by those officers, under the circumstances, cannot justify the conviction of the respondents. In our opinion, better proof by a technical person, who has considered the matter from a scientific point of view, is not only desirable, but even necessary, to establish that the article seized is one coming within the definition of 'liquor '. " We think that it is not desirable to lay down an inflexible rule on questions of fact even though their determination requires the adoption of scientific methods and tests. It is really for the, Court of fact to decide whether upon a consideration of the totality of the facts in a case. it has been satisfactorily established that the objects recovered from the possession of the accused included liquor of prohibited strength. We see no reason why an accused person in the position of the appellant, who could be presumed to have enough knowledge about the composition and strength of the prohibited liquor could not raise this question in the Trial Court so that the prosecution may cure whatever weakness there might be in the evidence on that point. We do not think that he should be allowed to raise it at a stage when it may be difficult or impossible to adopt a conclusive test. Another question before us is whether the Excise Inspector, whose evidence was under consideration, had sufficient knowledge to be deemed to be an expert within the meaning of Section 45 of the Evidence Act so that the tests adopted by him, together with all the attendant circumstances, could establish beyond doubt that the appellant was in possession of illicit liquor. We think that these are also essentially questions of fact. If there is sufficient evidence led by the prosecution o establish its case it becomes the duty of the defence to rebut that, evidence. In the case before us, the appellant 's Counsel cross examined Shri C. D. Misra, P.W. 1, Excise Inspector, at considerable length, but the whole of this cross examination was directed at showing that the recoveries were not made from the possession of the appellant. No question was put to him in cross examination to suggest that the appellant questioned the composition or strength of the liquid recover (1) 826 ed as alcohol of prohibited strength or the competence of the Excise Inspector to give his conclusion on the strength of tests adopted by him. Again, no defence evidence was led to indicate that the liquid could be anything else. These considerations would be sufficient to dispose off the points raised on behalf of the appellant in the case before us. We may, however, observe that we agree with the High Court that the proposition contained in Boosenna 's case (supra) must be confined to its own facts. We find that the Excise Inspector who had deposed, at the very outset of his evidence, that he had put in 21 years service as Excise Inspector and had tested lacs of samples of liquor and illicit liquor. As already pointed out, the competence of C. D. Misra to test the composition and strength of the liquid under consideration was not questioned at all. We, therefore,, think that this particular Excise Inspector could be treated as an expert within the meaning of Section 45 of the Evidence Act. The Excise Inspector had, in addition to employing the smelling test, used all the other tests he could reasonably adopt. If his competence to give his opinion or the sufficiency of the tests adopted by him had been questioned in the Trial Court, the prosecution would have been in a position to lead more evidence on these questions. We also find that the objects recovered from the possession of the appellant almost proclaim the nature of his activity and of the liquid which could be in his possession. On the facts and circumstances of this case, neither Boosenna 's case nor any other case) would, we think, help the appellant. Consequently, we dismiss this appeal and affirm the conviction and sentence of the appellant. The appellant should surrender to his bail and serve out the sentence. P.B.R. Appeal dismissed.

The appellant was found preparing illicit liquor when the raiding excise party searched the room in which he was present. The appellant pleaded that he had no concern with the bungalow searched and that he was not present when the search was taken and that he was falsely implicated in the case. All the materials found in the room were seized. The Excise Inspector had tested the contents of the drums with the aid of litmus paper, hydrometer, and thermometer and did not confine himself to smelling the contents of the drums. The appellant was convicted by the trial court under section 60(a), U.P. Excise Act, 1910 for preparing illicit liquor and was sentenced to imprisonment and fine. His conviction and sentence were confirmed both by the sessions Judge and the High Court. The questions raised in this Court were (i) whether the smelling test employed by the Excise Inspector together with other circumstances were enough to justify the conclusion that the liquid recovered was illicit liquor of O.P. strength and (ii) whether the Excise Inspector could be considered an expert whose opinion about the nature of the liquor found was opinion evidence under section 45 of the Evidence Act. Dismissing the appeal, HELD : (i) It is not desirable to lay down an inflexible rule on questions of fact even though their determination requires the adoption of scientific methods and tests. It is really for the court of fact to decide whether, upon a consideration of the totality of the facts in a case, It has been satisfactorily established that the objects recovered from the possession of the accused included liquor of prohi bited strength Hydrometer test would be enough if the liquid was known to contain alcohol because it would help to determine the strength of alcoholic contents. [825 D] In the instant case the false defence taken, that the appellant was not present at the house in question when it was searched, could indicate that he wanted to keep his distance from the recoveries made as he was aware of their incriminating nature. Secondly, the appellant who was an employee in a liquor shop, could not be so ignorant about the nature of the liquid recovered as not to be able to raise the question before the trial court that the liquid under consideration was not "liquor" as defined in the Act. There was no reason why the accused, who could be presumed to have enough knowledge about the composition and strength of the prohibited liquor, could not raise this question in the trial court so that the prosecution might cure whatever weakness there might be in the evidence on that point. The Excise Inspector was cross examined at considerable length but the whole of it was directed at showing that the recoveries were not made from the possession of the appellant. No question was put to him In cross examination to suggest that the appellant questioned the composition or strength of the liquid recovered as alcohol of prohibited strength or the competence of the Excise Inspector to give his conclusion on the strength of tests ad opted by him. The appellant should not be allowed to raise it at a stage when it may be difficult or impossible to adopt a conclusive test. The objects recovered from the possession of the appellant almost proclaim the nature of his activity and of the liquid which could be in his possession. (ii)The competence of the Excise Inspector to test the composition and strength of the liquid was not questioned at all. Nor was his competence questioned to give his conclusion on the strength of the tests adopted by him. No defence evidence was led to indicate that the liquid could be anything else. [826A] 822 In the instant case, the question of admissibility of the opinion of the Excise Inspector was, however, not raised before the Sessions Judge. The Excise Inspector had deposed that he had put in 21 years ' service as Excise Inspector and had tested lakhs of samples of liquor and illicit liquor. On the facts of this case this particular Excise Inspector could be. treated as an expert within the meaning of section 45 of the Evidence Act. The evidence was sufficient to prove the prosecution case beyond reasonable doubt. [826 C] State of Andhra Pradesh vs Madiga Boosenna & Ors., ; , distinguished. State vs Madhukar Gopinath Lalze, I.L.R. [1965] Bombay 257, and Ram Jus vs State, , referred to.

Appeal No. 582 of 1969. Appeal from the Judgment and Decree dated the 19th March, 1968 of the Bombay High Court at Nagpur in First Appeal No. 72 of 1959. M. N. Phadke, R. A. Gupta and K. B. Rohatgi for the Appellant. B. N. Lokur, Arun Kumar Sanghi and A. G. Ratnaparkhi for the The Judgment of the Court was delivered by CHANDRACHUD, J. This is a plaintiff 's appeal on a certificate granted by the High Court of Bombay, Nagpur Bench, under Article 133(1)(a) of the Constitution On March 24, 1953 defendant 1 executed on behalf of himself and 'his minor son defendant 2, a deed of mortgage in favour of the plaintiff. Defendant 3 is also a son of defendant 1 but he was born, after the mortgage deed, on September 30, 1955. On January 11, 1956 a registered deed of partition was executed amongst the defendants under which the mortgaged property was allotted to the share of defendants 2 and 3. 884 On September 1, 1956 the mortgagee filed Civil Suit No. 3A of 1956 to enforce the mortgage. On September 20, 1958 the trial court passed a preliminary decree for sale of defendant 1 's interest in the mortgaged property. It held that part of the consideration for the mortgage was not supported by legal necessity and the, balance of the debt incurred on the mortgage was tainted with immorality. Though, therefore, defendant 1 had executed the mortgage as a manager of the joint Hindu family consisting of himself and defendant 2, the debt was held not binding on the one half share of defendant 2 in the mortgaged property. On the issue relating to the genuineness of the partition effected by defendant 1 between himself and his suits, the trial court recorded a finding that it wag a sham and colourable transaction and its object was to delay or 1 defeat the creditors. Being aggrieved by. the decree directing the sale of half the mortgaged property only, the plaintiff filed First Appeal No. 40 of 1959 in the High Court of Bombay. Though the suit was dismissed as against defendants 2 and 3, they also filed an appeal in the High Court to challenge the finding of the trial court that the deed of partition was a sham and colourable transaction. That was First Appeal No. 72 of 1959. During the pendency of these two appeals, the preliminary decree was made final by the trial court on October 23, 1958. On March 2, 1960 the plaintiff purchased, with the permission of tile court, a joint half share in the mortgaged property in full satisfaction of his decree. On September 21, 1960 the auction sale was confirmed and on November 25, 1960 the plaintiff was put in joint possession of the property. On March 15, 1966 the appeals filed by the plaintiff and by defendants 2 and 3 came up for hearing before a. Division Bench consisting of Abhyankar and Deshmukh JJ. The hearing of the appeals was adjourned from time to time and while the appeals were part heard, defendants 2 and 3 applied on August 2, 1966 for amendment of their Memorandum of Appeal in First Appeal No, 72 of 1959. By the proposed amendment they sought leave of the High Court to challenge the preliminary decree passed by the trial court. The plaintiff opposed that amendment and applied that she did not desire to prosecute First Appeal No. 40 of 1959 filed by her. The High Court did not pass any orders either on the application for amendment made by defendants 2 and 3 or on the application of the plaintiff asking that her appeal be dismissed for non prosecution. On August 24, 1966 the High Court adjourned the hearing of the appeals for three months to enable defendants to pay the amount due under the preliminary decree. On November 24, 1966 defendants 2 and 3 deposited Rs. 12,500 and applied for an extension of two months for paying the balance. The extension was granted by the High Court and on fabruary 25, 1967 defendants 2 and 3 deposited a further sum of Rs. 25,000 towards the satisfaction of the preliminary decree. On February 14, 1968 another Division Bench of the High Court (Tambe and Badkas, JJ.) allowed the application of defendants 2 and 3 for amendment of their Memorandum of Appeal in First 885 Appeal No. 72 of 1959. On an application made by their counsel, the High Court granted to those defendants time till February 23, 1968 to pay the deficit court fees, which they did. The High Court then took up the two First Appeals. for hearing in March, 1968. As the plaintiff had applied that she did not desire to proceed with First Appeal No. 40 of 1959 filed by her, the High Court dismissed that appeal for non prosecution. As a consequence of this order the High Court observed that the findings recorded by the trial court in favour of the defendants and adverse to the plaintiff would stand confirmed. In First Appeal No. 72 of 1959 filed by defendants 2 and 3 it was urged by the plaintiff that as the appeal was originally filed to challenge the finding of the trial court on the question of genuineness of the partition. defendants 2 and 3 were not entitled to include now grounds in the Memorandum of Appeal and that the Memorandum should not have been permitted to be amended. The High Court hold that in view of the Provisions of Order 41, Rule 2, Civil Procedure Code. it was oven to defendants 2 and 3. with leave of the court, to urge additional grounds in their appeal without amending the Memo randum of appeal and therefore the objection raised by the plaintiff as against the amendment was futile. The High Court further held that the appeal filed by defendants 2 and 3 was competent even though the suit, was wholly dismissed as against them. According to the High Court, defendants 2 and 3 were aggrieved by the adverse finding on the question of partition and further they were denied under the preliminary decree the right to pay the decretal amount and to redeem the mortgage. It was there fore open to them to file an appeal against that decree. On the merits of the appeal the High Court set aside the finding of the trial court and held that the partition was "real and genuine" and that it was not effected in order to defeat :lie creditors. Defendants 2 and 3 bad therefore become owners of the, equity of redemption and they could not be deprived of the right to redeem the mortgage. In the result, the High Court set aside the preliminary decree as also the final decree and with it the auction sale in favour of the plaintiff. The High Court passed a fresh preliminary decree under Order 34, Rule 4, Civil Procedure Code declaring that the plaintiff was entitled to recover Rs. 34, 386 and odd and directing the defendants to pay the entire decretal amount within six months of the date of decree. The plaintiff questions the correctness of that decree in this appeal. It is necessary first to understand the nature of the appeal filed by ,defendants 2 and 3 in the High Court and the relief they sought therein. That appeal was in terms filed only against the finding recorded by the trial court that the partition between defendant 1 and his sons was a sham and colourable transaction intended to defeat or delay the creditors. The Memorandum of Appeal as filed originally contained 886 seven grounds, each of which was directed against the finding given by the trial court on the question of partition. The Memorandum contained a note that as the subject matter in dispute was not capable of being estimated in terms of a money value, a fixed court fee of Rs. 20 was paid thereon. Only one prayer was originally made in the Memorandum of Appeal that the partition deed be declared as genuine. Counsel for defendants 2 and 3, furnished to the registry of the High Court a written explanation as required by Rule 171 of the High Court Rules that as defendants 2 and 3 were only challenging the finding recorded by the trial court on the question of partition and as they were merely seeking a declaration that the partition was genuine, the fixed court fee of Rs. 20 was properly paid. It is thus clear that the appeal filed by defendants 2 and 3 in the High Court was directed originally not against any part of the preliminary decree but against mere finding recorded by the trial court that the partition was not genuine. The main controversy before us centers round the question whether that appeal was maintainable on this question the position seems to us well established. There is a basic distinction between the right of suit and the right of appeal. There is an inherent right in every person to bring suit of a civil nature and unless the suit is barred by statute one may, at one 's peril,_bring a suit of one 's choice. It is no answer to a suit howsoever frivolous the claim, that the law confers no such right to sue. A suit for its maintainability requires no authority of law and it is enough that no statute bars the suit. But the position in regard to appeals is quite the opposite. The right of appeal inheres in no one and therefore an appeal for its maintainability must have the clear authority of law. That explains why the right of appeal is described as a creature of statute. Under section 96(1) of the Code of Civil Procedure, save where otherwise expressly provided by the Code or by any other law for the time being in force, an appeal lies from every decree passed by any court exercising original jurisdiction, to the court authorised to hear appeals from the decisions of such court. Section 100 provides for a second appeal to the High Court from an appellate decree passed by a court subordinate to the High Court. Section 104(1) provides for appeals against orders of the kind therein mentioned and ordains that save as otherwise expressly provided by the Code or by any law for the time being in force an appeal shall lie "from no other orders". Clause (i) of this section provides for an appeal against "any orders made under Rules from which an appeal is expressly allowed by rules". 'Order 43, Rule 1 of the Code, which by reason of clause (i) of section 104(1) forms a part of that section, provides for appeals against orders passed under various rules referred to in clauses (a) to (w) thereof, Finally, section 105(1) of the Code lays down that save as otherwise expressly provided, no appeal shall lie from any order made by a court in exercise of its original or appellate jurisdiction. These provisions show that under the Code of Civil Procedure, an appeal lies only as against a decree or as against an order passed under, rules from which an appeal is expressly allowed by Order 43, Rule 1. 887 No appeal can lie against a mere finding for the simple reason that the Code does not provide for any such appeal. It must follow that First Appeal No. 72 of 1959 filed by defendants 2 and 3 was not maintainable as it was directed against a mere finding recorded by the trial court. The High Court mixed up two distinct issues : one, whether it was competent to defendants 2 and 3, if they were aggrieved by the preliminary decree of file an appeal against that decree; and two, whether the appeal such as was filed by them was maintainable. If it be correct that defendants 2 and 3 could be said to have been aggrieved by the preliminary decree, it was certainly competent for them to challenge that decree in appeal. But they did not file an appeal against the preliminary decree and therefore the question whether they were aggrieved by that decree and could file an appeal therefrom was irrelevant. While deciding whether the appeal filed by defendants 2 and 3 was maintainable ' , the High Court digressed into the question of the competence of defendants 2 and 3 to file an appeal against the preliminary decree and taking the view that it was open to them to challenge that decree even though the suit was wholly dismissed against them, the High Court held that the appeal, which in fact Was directed against a find ing given by the trial court, was maintainable. It the High Court had appreciated that the two questions were distinct and separate, it would not have fallen into the error of deciding the latter question by considering the former. Adverting to the question which the High Court did consider, namely, whether defendants 2 and 3 could be said to be aggrieved by the preliminary decree, there is nothing in the terms of that decree which precluded those defendants from depositing the decretal amount to be able to redeem the mortgage. The trial court had passed the usual preliminary decree for sale in Form No. 5A, under Order 34, Rule 4, Civil Procedure Code. If the amount found due to the appellant under the decree was paid into the court within the stipulated or extended period, the appellant would have been obliged to deliver to the mortgagors all the documents in her possession or power relating to the mortgaged property and to deliver up to the defendants quiet and peaceable possession of the property free from the mortgage. The amount declared to be due to the appellant by the preliminary decree was not paid by the defendants, from which it would appear that they were not interested in paying the amount. It is significant that defendants 2 and 3 were served with the notice of final decree proceedings and they appeared therein. The Code is merciful to mortgagors and perhaps 'rightly, because the mortgagee ought to have no grievance if the loan advanced by him is repaid with permissible interest, costs and expenses. Under Order 21, Rule 89, it was open to defendants 2 and 3 as late as after the appellant purchased the property in the auction sale, to pay the amount due to her. These defendants had interest in the mortgaged property by virtue of a title acquired before the sale, that is, under the registered partition dated January 11, 1956. Under Order 21, Rule 89, where immovable property is sold in execution of a decree, any person owing the property or holding an interest there 888 in by virtue of a title acquired before the sale, can apply to have the sale set aside on his depositing in Court, for payment to the purchaser a sum equal to five per cent of the purchase money and for payment to the decree holder, the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered. Nothing of the kind was done and even the last significant opportunity was not availed of by the defendants. Counsel for the appellant seems right that the defendants were content that only half the mortgaged property was directed to be sold and that it was only because of the later appreciation in prices of real property that defendants 2 and 3 awoke to the exigency of challenging the preliminary decree. That was much too late. So late indeed, that not having any plausible reason to assign for the inordinate delay caused in applying for an amendment of the appeal, they preferred not to file an application for condonation of delay at all. The appeal was filed on January 4, 1959 while, the application for amendment was made on August 2, 1966. Event though no explanation was offered for the long delay of over 7 1/2 years, the High Court allowed the amendment with a laconic order "Application for amendment allowed". Thus, the appeal filed by defendants 2 and 3 being directed against a mere finding given by the trial court was not maintainable; defendants 2 and 3 were not denied by the preliminary decree the right to pay the decretal amount; and the two defendants could even have applied under Order 21, Rule 89, for setting aside the sale in favour of the appellant but they failed to do so as, presumably, they were not interested in paying the amount. The High Court was therefore wholly in error in allowing the amendment of the Memorandum of Appeal, particularly when defendants 2 and 3 had neither explained the long delay nor sought its condonation. The preliminary decree had remained unchallenged since Sep tember 1958 and by lapse of time a valuable right had accrued in favour of the decree holder. The power to allow an amendment is undoubtedly wide and may at any stage be appropriately exercised in the interest of justice, the law of limitation notwithstanding. But the exercise of such far reaching discretionary powers is governed by judicial considerations and wider the discretion, greater ought to be the care and circumspection on the part of the court. The appeal in terms was originally directed against the finding given by the trial court that the partition was sham and colourable. "Being aggrieved by the finding given in the Judgment and the Decree. . . it is humbly prayed that findings given by the learned Judge in Para 34 of his Judgment may kindly be set aside, and instead the partition deed dated 11 1 56 may kindly be declared as genuine" So ran the Memorandum of Appeal. Defendants 2 and 3 reiterated through their counsel by Ming a note to explain the payment of fixed court fees of Rs. 20 that they were "seeking the relief of declaration only" and therefore the court fee paid was proper and sufficient. Long years thereafter, the High Court allowed the Memorandum to be amended not a reason was cited to, explain the delay and not a reason was given to condone it. And it was not appreciated that in granting time to defendants 2 and 3 to 889 make up the deficit of the court fees 71 years after the appeal was filed, an amendment was being allowed which had its impact not only on the preliminary decree but on the final decree which was passed in the meanwhile, the auction sale which was held in pursuance of the final decree and the sale certificate which was granted to _the appellant who, with the leave of the court and in full satisfaction of her decree, had purchased a joint 1/3 share in the mortgaged property. With the striking down of the preliminary decree, these proceedings had to fall but the error really lay in allowing the amendment so as to permit, without good cause shown, a belated challenge to the preliminary decree. One other aspect of the question relating to the maintainability of the appeal yet remains to be examined. Counsel for the respondents. argues that the finding of the trial court on the issue of partition would have operated as res judicata against them and they were therefore entitled to appeal therefrom. In Harchandra Das vs Bholanath Day on which the learned counsel for the respondents relies in support of this submission, a suit for preemption was dismissed by the trial court on the ground of limitation. In an appeal filed by the plaintiff, the District Court reversed that finding but confirmed the decree dismissing the suit on the ground that the sale effected by defendants 4 and 5 in favour of defendants 1, 2 and 3 was not validly registered and there being no "sale", there can be no right of preemption. Defendants 1 to 3 preferred an appeal to the High Court against the finding recorded by the District Court that the sale effected in their favour by defendants 4 and 5 was not valid as it was not lawfully registered. On a preliminary objection raised by the plaintiffs to the maintainability of the appeal, the High Court of Calcutta, held that though under the Code of Civil Procedure there can be no appeal as against a mere finding, "it may be taken to be the view of courts in India generally, that a party to the suit adver sely affected by a finding contained in a judgment, on which a decree, is based, may appeal; and the test applied in some of the, cases for the purpose of determining whether a party has been aggrieved or not was whether the finding would be res judicata in other proceedings". The High Court, however, upheld the preliminary objection on the ground that the issue regarding validity of the sale which was decided against defendants 1 to 3 would not operate as res judicata in any subsequent proceeding and therefore the appeal which was solely directed against the finding on that issue was not maintainable. The position here is similar to that in the Calcutta case. The trial court decreed the mortgagee"s suit only as against defendant 1, the father, and directed the sale of his one half interest in the mortgaged property on the ground that part of the consideration for the mortgage was not supported by legal necessity, the remaining part of the consideration was tainted with immorality and therefore the mortgage was not binding on the interest of the sons, defendants 2 and 3. Whether the partition between the father and sons was sham or real had no (1) I.L.R. 890 impact on the judgment of the trial court and made no material difference to the decree passed by it. The finding recorded by the trial court that the partition was a colourable transaction was unnecessary for the decision of the suit because even if the court were to find that the partition was genuine, the mortgage would only have bound the interest, of the father as the debt was not of a character which, under the .Hindu law, would bind the interest of the sons. There is no substance .in the submission made on behalf of the sons that if the partition was held to be genuine, the property would have been wholly freed from .the mortgage encumbrance. The validity or the binding nature of an .alienation cannot depend on a partition effected after the alienation; or else, a sale or a mortgage effected by the Karta of a joint Hindu family ,can easily be avoided by effecting a partition amongst the members of .the joint family. As the matter relating to the partition was not directly and substantially in issue 'in the suit, the finding that the partition was sham cannot operate as res judicata. Therefore, the appeal filed by defendants 2 and 3 against that finding was not maintainable, even on ,,the assumption that the High Court of Calcutta is right in its vie", that though under the Code there could be no appeal against a finding, ,yet "On grounds of justice" an appeal may lie against a finding provided that it would operate as res judicata so as to preclude a party aggrieved by the finding from agitating the question covered by the .finding in any other proceeding. It is not necessary here to determine ,whether the view of the Calcutta High Court is correct. For these reasons we allow the appeal with costs, set aside the judgment of the High Court and restore that of the trial court. section C. Appeal allowed.

In 1953, defendant 1 executed on behalf of himself and his minor son, defendant 2, a deed of mortgage in favour of the plaintiff. Deft. 3 is also a son of deft. I who was born after the mortgage deed. In 1956, a regd. deed of partition was executed amongst the defendants under which the mortgaged property was allotted to the share of defts 2 & 3. Thereafter, the mortgagee filed a civil. suit to enforce the mortgage and the trial court passed a preliminary decree for sale of deft. 1 's interest in the mortgaged property. It held that part of the consideration for the mortgage was not supported by legal necessity and the balance of the debt incurred was tainted with immorality. Therefore, the debt was held not binding on the one half share of deft. 2 in the mortgaged property. As regards the partition, the trial court held that it was a colourable transaction effected to delay or defeat the creditors. Being aggrieved, pltf. filed an appeal (40/59) in the High Court. Deft. 1 & 2 against whom the suit was dismissed, also filed an appeal (72/59) against the finding of the trial court that the partition was a colourable transaction. During the pendency of these 2 appeals, the preliminary decree was made final by the trial court and in 1960, the plaintiff purchased with the permission of the court, a joint half share of the mortgaged property in full satisfaction of his decree. Thereafter, the auction sale was confirmed and the plaintiff was put in joint possession of the property. Thereafter, the appeals filed by the) plaintiff and defendants 2 and 3 came up for hearing and while the appeals were part hard, defts 2 & 3 applied on August 2, 1966 (nearly 7 1/2 years after filing the appeals), applied for amendment of their Memorandum of appeal in first appeal No. 72/59 and sought permission of the High Court to challenge the preliminary decree passed by the trial Court. The plaintiff opposed that amendment and applied that she did not desire to prosecute first appeal No. 40/59 filed by her. The High Court did not pass any orders either on the application for amendment or the plaintiff 's appeal, but adjourned the hearing of the appeals for 3 months to enable defendants to pay the amount due under the preliminary decree. Accordingly the defendants deposited the money towards the satisfaction of the preliminary decree. After about 2 years, another division bench of the High Court, allowed the amendments of the defendants Memo of Appeal in Appeal No. 72/59 and allowed time to the defendants to pay the deficit Court fee, which they paid. The High Court, then took the 2 appeals for hearing and dismissed appeal No. 40/59 for non prosecution and confirmed the findings of the trial court in favour of the defendants. As regards appeal No. 72/59, the High Court held that in view of Order 41, Rule 2 C.P.C., it was open to the defendants. with the leave of the court, to urge additional grounds without amending the Memo of Appeal and therefore, the objection raised. by the plaintiff that amendment should not be allowed, cannot be upheld. The High Court further held that the defendants ' appeal was competent and they had the right to redeem the mortgage. On the merits, the High Court held that the partition was real and genuine. In the result, the High Court set aside the preliminary decree as also the final decree and with it the auction 883 sale in favour of the plaintiff. The High Court passed a fresh preliminary decree under order 34, Rule 4 C.P.C., directing that that the plaintiff was to recover Rs. 34,386/ and 'odd and directed the defendants to pay the entire decretal amount within 6 months of the date of decree. The plaintiff questions the correctness of the decree before this Court. The appeal filed by defendants 2 & 3 Was against the finding recorded by the trial court that the partition between deft. 1 and his sons was a colourable transaction. Therefore, it was clear that the appeal filed by defts. 2 & 3 was directed originally not against any part of the preliminary decree but against a mere finding recorded by the trial court that the partition was not genuine. Before this Court, the main question was whether that appeal was maintainable and secondly, whether it was proper for the High Court to allow the amendment of the Memo of appeal after 7 1/2 years without good cause shown and Without any application for condonation of delay. Allowing the appeal, HELD : (i) There is a basic distinction between the right of suit and the right of appeal. There is an inherent right in every person to bring a suit of at civil nature, but the right of appeal inheres in no one and therefore an appeal for its maintainability must have the clear authority of law. The various provisions in the C.P.C. show that under the Code, an appeal lies only as against a decree or as against an order passed under rates from which an appeal is expressly allowed by Order 43, Rule 1. No appeal can lie against a mere finding for the simple reason that the Codes does not provide for any such appeal. Therefore, the first appeal filed by. defendants 2 and 3 in the High Court was not maintainable as it was directed against a mere finding recorded by the trial court. [886 D H] (ii) The High Court should not have allowed the amendment of the Menlo of Appeal particularly when defendants 2 & 3 had neither explained the long delay nor sought its condonation. Defendants 2 & 3 were not denied by the preliminary decree the right to pay the decretal amount and the two defendants could even have applied under order 21, Rule 89 for setting aside the sale in favour of the appellant; but they failed to do so. The preliminary decree had remained unchallenged since September, 1958 and by lapse of time a valuable right had accrued in favour of the decree holder. Therefore, to allow the amendment after such a long time without a good cause was not a proper exercise of judicial discretion in the circumstances of the case. [888 D E]

Civil Appeal Nos. 2330 2331 of 1969. Appeals by Special Leave from the Judgment and order dated 17/ 18 1 69 of the Gujarat High Court in Second Appeal No. 187 and 857/61. H. section Parihar and I. N. Shroff for the Appellant. K. J. John for the Respondent. The Judgment of the Court was delivered by KAILASAM, J. These two Civil Appeals are by the Kathiawar Industries Ltd. by special leave against the judgment of the Gujarat High Court holding that the appellants are liable to pay octroi duty on uncrushed salt which is brought by the appellant to the factory situate within the octroi limits and crushed there. The appellant is running a salt manufacturing works at Jaffrabad called "Nawabsidi Mohmad Khan Salt Works". The company had constructed salt works, grinding mills, trolly tracks and a jetty at e port site. The major portion of the salt works is situate out of the Municipal limits. The salt is manufactured outside the municipal limits. The grinding mills and the part of the trolly track leading to jetty come within the municipal limits of the respondent Jaffrabad Municipality. The Municipality by a notice dated 3 1 1955 demanded from the appellant Rs. 7289 6 0 as arrears of octroi. The appellant paid under protest and filed the suit out of which this appeal arises before the Civil Judge Gohilwad, District Bhavnagar, against the respondent for a declaration that the salt manufactured by the appellant at its salt works at Jaffrabad and exported uncrushed and/or crushed was not liable to octroi duty and that the goods passing through municipal limits from the salt works are not liable to octroi duty, and for an injunction restraining the respondent from recovering an amount of Rs. 7289 6 0 and for a further injunction restraining the Municipality from hindering or obstructing the free passage of salt and goods and for the refund of Rs. 250. The appellant also filed another suit for the refund of Rs. 1271 14 O paid under protest. These two suits were decreed, the court declaring that the salt manufactured by 246 the appellant company is not liable to octroi duty. The court also granted an injunction as prayed for. The Municipality preferred appeals. The appellate court while dismissing the appeals and confirming the decree of the trial court observed that the perpetual injunction granted by the trial court would not apply to the salt entering the octroi limits for consumption or use for the factory situated within the octroi limits of the municipality. The Municipality preferred two Second Appeals to the High Court of Gujarat at Ahmedabad. A Bench of the High Court allowed the appeals except to the extent of confirming the declaration that uncrushed salt of the appellant company which is directly sent from the stacking ground to the jetty is not liable to octroi provided the plaintiff company followed the prescribed rules and formalities. The other claims in the suits were dismissed. Against the judgment of the High Court the plaintiff company has preferred these two appeals. The only question that falls for consideration in these civil appeals is whether the salt manufactured by the appellant outside the octroi limits of the respondent and brought by the appellant within those limits for the purpose of being crushed into powder in the appellant 's factory situate within those limits and then exported is liable to octroi. The facts as found by the High Court and which cannot be questioned are that the salt works consists of (i) salt pans; (ii) stacking ground for the salt collected from the pans; (iii) trolly track for carrying salt from stacking ground to the factory within the octroi limits of the Municipality and to the jetty which is outside the octroi limits; (iv) jetty; (v) Power house; (vi) store room; (vii) workshop and (viii) grinding mill which is referred to in the evidence as the crushing factory. (f these, the crushing factory and part of the trolly track (about 1400 feet) are within the octroi Limits of the Municipality and the rest outside those limits. Thus it is not in dispute that only the crushing factory and part of the trolly track are within the octroi limits. salt is prepared is the salt pans outside the octroi limit and the salt which is to be crushed is taken to the crushing factory and the salt which is not to be crushed is taken in uncrushed form directly to the jetty over the trolly track part of which passes through the octroi limits of the Municipality. The salt that is crushed in the crushing factory is also after crushing taken by the trolly to the Jetty. From the jetty the salt whether crushed or uncrushed, as the case may be, is exported by steamers. The High Court has found that the salt which is taken to the crushing factory within the octroi limits for the purpose of crushing and is crushed and later taken to the jetty is liable to octroi. The question is whether this levy is sustainable in law. 247 In 1948, on the formation of Saurashtra State, Jaffrabad came with in the territorial limits of the Saurashtra State and the Bombay District Municipal Act, 1901, as adapted and applied to Saurashtra State became applicable to Jaffrabad. The Jaffrabad Municipality, the predecessor of the respondent, was constituted under the Bombay District Municipal Act. 1901 . The State of Saurashtra, within the territorial limits of which the said Municipality was situate, published an ordinance on 31 8 1949 being ordinance, No. 47 of 1949 called the Saurashtra Terminal Tax and octroi ordinance, 1949. The ordinance extended to the whole of The State of Saurashtra and came into force from 31 8 1949. Section 2 clause (2) of the ordinance defines 'octroi ' as including a terminal tax. Section 3 empowers the Government to impose terminal tax and octroi duty. It provided that octroi may be imposed on "animals or goods, or both, within the octroi limits brought for consumption or use therein". Under section 4 Government is empowered to make rules. In exercise of the powers under the ordinance the State Government n made rules relating to octroi known as the Saurashtra octroi and Terminal Tax Rules on 8th December, 1949 which was published in the Saurashtra Gazette on 15th December, 1949. Rule 3 is the charging rule which provides that octroi is payable in respect of goods set out in the Schedule I attached to the Rules and prescribed that octroi shall be payable at the nakas at rates set out therein. Item No. 23 is "Salt for Factory". Schedule II which gives a list of items which are exempt from octroi duty contains in item No. 6, a sub item in Gujarat which means "Salt". Thus under item 23 "Salt for Factory" is liable to octroi duty. The octroi duty may be imposed under section 3 on "animals or goods, or both, within the octroi limits brought for consumption or use therein". Oh the facts found, namely that uncrushed salt was brought into the factory situate within the octroi limits and crushed salt taken away for export from the octroi limits can it be said that the salt thus brought are goods for consumption or use therein. It is the common case that the uncrushed salt as brought into the octroi limits is crushed and in the crushed form sent to the jetty for export. The finding of the High Court is that the crushing of the uncrushed salt and sending the crushed salt to the jetty within the octroi limits will be used therein as required under section 3. In this appeal it is necessary for us to consider the scope of the I words "consumption" and "use". The precise meaning to be given to the words "consumption" and "use will depend upon the context in 17 475 SCI/79 248 which they are used. These words are of wide import. In the Constitution of India, Entry 52 in List II in Seventh Schedule a right to impose tax "on entry of goods into the local area for consumption, use or sale" is conferred. In Burmah Shell oil Storage & Distributing Co. India Ltd. vs The Belgaum Borough Municipality this Court after tracing the history of octroi and terminal tax observed that while terminal tax is a kind or octroi which is concerned only with the entry of goods in a local area irrespective of whether they would be used there or not, octrois were taxes on goods brought into the area for consumption. use or sale. They were leviable in respect of the goods put to some use or the other in the area but only if they were meant for such user. In considering the meaning of the words "consumption" and "use" this Court observed in Burmah Shell case (supra) that the word consumption; its primary sense means the act of consuming and in ordinary parlance means the use of an article in a way which destroys, wastes or uses up that article. But in some legal contexts, the word "consumption '? has a wider meaning. It is not necessary that by the act of consumption the commodity must be destroyed or used up. n M/s. Anwarkhat Mahboob Co. vs The State of Bombay (now Maharashtra) and others, the question that arose was whether conversion of one commodity into another commercially different article would amount to consumption. The facts of the case were that tobacco was purchased and in the Bombay State the stem and dust from the tobacco was removed. It was contended that removing the stem and dust from the tobacco did not amount to consumption of tobacco or had the effect of converting tobacco into an article commercially different. The Court held that when the tobacco was delivered in the State of Bombay for the purchase of changing it into a commercially different article, viz., biddipatti the delivery was for the purpose of consumption. This Court followed the decision in State of Travancore Cochin and ors. v Sanmugha Vilas Cashew Nut Factory and Ors. wherein it was held that the raw cashew nuts were put through a process and new articles of commerce, namely cashew nut oil and edible cashew nut kernels were obtained. The Court expressed the view that the raw cashew nut is consumed in the process. On the facts the High Court found alter referring to the different processes of baking or roasting. Shelling pressing, pealing etc. that although most of the process is done by hand, part of it is also done mechanically by drums. Oil is extracted out of the outer shells as a result of roasting. After roast 249 ing the outer shells are broken and the nuts are obtained. The i J poison is eliminated by pealing oil the inner skin. By this process of manufacture. the respondents really consume the raw cashew and produce new commodities. This Court accepted this finding and observed at p. 113 that the raw cashew nuts, after they reach the respondents, are put through a process and new articles of commerce, namely, cashew nut oil and edible cashew nut kernels, are obtained. In Anwarkhan Mahboob Co. (supra) this Court gave the example of the process through which cotton is put through before ultimately the final product the wearing apparel is consumed by men, women and children. The Court observed: "But before cotton has become a wearing apparel, it passes, through the hands of different producers, each of whom adds some utility to the commodity received by him. There is first the act of ginning; ginned Cotton is spun into yarn by the spinner; the spun yarn is woven into cloth by the weaver; the woven cloth is made into wearing apparel by the tailor. " At each of these stages distinct utilities are produced and what is produced is at the next stage consumed. It is usual, and correct to speak of raw cotton being consumed in ginning. Applying this test the conclusion is irresistible that when uncrushed salt is crushed in the factory it is commercially a different article and the uncrushed salt must be held to have been consumed. The word "use" is of wider import than "consumption". It cannot be denied that the uncrushed salt has been used and by the user a new product crushed salt has come into existence. On a consideration of the facts and circumstances of the case we are satisfied that octroi is leviable on the uncrushed salt which is brought to the octroi area and crushed as the activity would amount to both consumption and use of the uncrushed salt. In the result the appeals fail and are dismissed with costs. N.V.K. Appeals dismissed.

In 1948 on the formation of Saurashtra State, Jaffrabad came within its territorial limits and the Bombay District Municipal Act, 1901 as adapted and applied to the said State became applicable to Jaffrabad. Jaffrabad Municipality the predecessor of the respondent was constituted under the Bombay District Municipal Act, 1901. The State of Saurashtra, within the territorial limits of which the said Municipality was situate, promulgated ordinance No. 47 of 1949 on 31 X 49 called the Saurashtra Terminal octroi ordinance, 1949. Section 2 cl. (2) of the said ordinance defines "octroi" as including a terminal tax. Section 3 empowered the Government to impose terminal tax and octroi duty, and provided that octroi may be imposed on "animals or goods, or both, within the octroi limits brought for consumption or use therein. " Section 4 empowered the Government to make rules in exercise of which the State Government made the Saurashtra octroi and Terminal Tax Rules on 8th December, 1949. Rule 3, the charging rule provided that octroi is payable in respect of goods set out in Schedule I of the Rules and prescribed that it shall be payable at the nakas at rates set out therein. Item No. 23 is "Salt for Factory". Schedule II enumerated a list of items which are exempt from octroi duty and contained in Item No. 6, a sub item in Gujarat which means "salt". The appellant was running a salt manufacturing works at Jaffrabad. The company had constructed salt works, grinding mills, trolly tracks and a jetty at the port site. The major portion of the salt works is situated out of the municipal limits. The salt is manufactured outside the municipal limits. The grinding mills and the part of the trolly track leading to jetty came within the municipal limits of the respondent Jaffrabad Municipality. The salt is prepared in the salt pans outside the octori limit and the salt which is crushed is taken to the crushing factory and the salt which is not to be crushed is taken in uncrushed form. directly to the jetty over the trolly track part of which passes through the octroi limits of the municipality. The salt that is crushed in the crushing factory is also after crushing taken by trolly to the jetty. From the jetty the salt whether crushed or uncrushed, as the case may be is exported by steamers. 244 The Municipality demanded from the appellant octroi in respect of salt manufactured by it. The appellant paid under protest and filed a suit against the respondent for declaration that the salt manufactured by the appellant at its salt works at Jaffrabad and exported uncrushed and/or crushed was not liable to octroi duty and the goods passing through municipal limits from the salt works are not liable to octroi duty and for an injunction restraining the respondent from recovering the amount claimed as octroi. Another suit claiming refund of the octroi paid was also filed. The two suits were decreed, the court declaring that the salt manufactured by the appellant company is not liable to octroi duty. The Municipality being aggrieved preferred appeals and the appellate court while dismissing the appeals and confirming the decrees of the trial court held that the perpetual injunction granted by the trial court would not apply to the salt entering the octroi limits for consumption or use for the factory situated within the octroi limits of the Municipality. The Municipality preferred second appeals to the High Court, which allowed them except to the extent of confirming the declaration that uncrushed salt of the appellant company which is directly sent from the stacking ground to the jetty is not liable to octroi provided the plaintiff company followed the prescribed rules and formalities. The other claims in the suits were however dismissed. On the question whether the salt manufactured by the appellant outside the octroi limits of the respondent and brought within those limits for the purpose of being crushed into powder in the appellant 's factory situated within those limits and then exported is liable to octroi. ^ HELD: 1. Octroi is leviable on the uncrushed salt which is brought to the octroi area and crushed as the activity would amount to both consumption and use of the uncrushed salt. [249 F] Burmah Shell oil Storage Distributing Co. India Ltd. vs The Belgaum Borough Municipality [1963] Supp. 2 SCR 216; M/s. Anwarklan Mahboob Co. vs The State of Bombay (now Maharashtra) [161] 1 SCR 709, State of Travancore Cochin & Ors. vs Shanmugha Vilas Cashew Nut Factory & ors. ; , referred to. In the Constitution of India, Entry 52 in List II in Seventh Schedule a right to impose tax "on entry of goods into the local area for consumption, use or sale" is conferred. The precise meaning to be given to the words "consumption" and "use" will depend upon the context in which they are used. These words are of wide import, the word "use" being of wider import than "consumption". [248A. 247H, 249E]. While terminal tax is a kind of octroi which is concerned only with the entry of goods in a local area irrespective of whether they would be used there or not, octrois were taxes on goods brought into the area for consumption, use or sale. They are leviable in respect of the goods put to some use or the other in the area but only if they were meant for such use. [248B] 4. The word "consumption" in its primary sense means the act of consuming and in ordinary parlance means the use of an article in a way which destroys, wastes or uses up that article. But in some leal contents the word 245 "consumption" has a wider meaning. It is not necessary that by the act of consumption the commodity must be destroyed or used up. [248C D] In the instant case the uncrushed salt is crushed in the factory which is commercially a different article and the uncrushed salt must be held to have been consumed. The uncrushed salt has been used and by the use a new product crushed salt has come into existence. [249E]

Civil Appeal No. 1763 (NT) of 1974 From the Judgment and Order dated 2.2.1973 of the Andhra Pradesh High Court in Case Reference No. 67 of 1971. Y. Ratnakar, Mrs, A.K. Verma and D.N. Misra for the Appellant. S.C. Manchanda, Ms. A. Subhashini and B.B. Ahuja for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This appeal by Special leave arises from the decision of the High Court of Andhra Pradesh and it seeks answers to two questions: 1079 "(i) Whether, on the facts and in the circumstances of the case, the properties in respect of which registered sale deeds had not been executed, but consideration had been received, belonged to the assessee for the purpose of inclusion in his net wealth within the meaning of section 2(m) of the ? (ii) Whether, on the facts and in the circumstances of the case, the assessee 's right to receive the sum of Rs.25 lakhs O.S. from the State Government was an asset for the purposes of inclusion in his net wealth under the ?" The year involved in this case is the assessment year 1957 58 under the (hereinafter called the 'Act '). It may be mentioned that the valuation date is the first valuation date after coming into operation of the Act which came into force on 1st April, 1957. The assessee was the Nizam of Hyderabad, an individual. There were several questions involved in the assessment with all of which the present appeal is not concerned. So far as the first question indicated hereinbefore which was really question No. (ii) in the statement of case before the High Court, it may be mentioned that the Wealth tax Officer had included a total sum of Rs.4,90,775 representing the market value of certain immovable properties in respect of which, although the assessee had received full consideration money, he had not executed any registered sale deeds in favour of the vendees. The Wealth tax Officer held that the assessee still owned those properties and consequently the value of the same was included in his net wealth. On appeal the Appellate Assistant Commissioner sustained the order with certain deductions in value. On further appeal the Tribunal held that the assessee had ceased to be the owner of the properties. The Tribunal was of the opinion that the assessee having received the consideration money from the purchasers and the purchasers having been put into possession were protected in terms of section 53A of the Transfer of Property Act and the term 'owner ' not only included the legal ownership but also the beneficial ownership. The first question arises in the context of that situation. The High Court following the ratio of Commissioner of Income Tax, A.P., Hyderabad vs Nawab Mir Barkat Ali Khan, (infra) answered the question in favour of the revenue. 1080 The second question set out before, which was question No. (v) before the High Court, has to be understood in the context of the facts of this case. The right of the assessee to get the amount in question i.e. Rs.25 lakhs a year, arose in the wake of accession of the Hyderabad State to the Union of India. Several communications followed between the Military Governor of Hyderabad,. Gen. Chaudhuri and the Nizam of Hyderabad as well as other officers. It has to be borne in mind that the assessee was a paramount ruler owning certain private properties called Sarf e khas. He surrendered his paramountcy and acceded to the Union of India. His private properties were taken over by the Government and it was agreed by the Government that in lieu of his income from the said properties, he would be paid Rs.25 lakhs in Osmania currency annually. The communication between Major General Chaudhuri, the Military Governor and the Nizam about this particular sum in contained in the letter dated 1st February, 1949. It stated inter alia as follows: "After this merger H.E.H. will be paid annually a total sum of Rs. 1 crore distributed as follows: (a) Rs.50 lacs as a privy purse, (b) Rs.25 lacs in lieu of his previous income from the Sarf e khas, and (c) Rs.25 lacs and for the upkeep of Palaces etc. " The letter which appears in the Paper Book of this appeal from Military Governor of Hyderabad, Major General Chaudhuri to the Nizam of Hyderabad, states, inter alia, that Nizam 's Sarf e khas estates should not continue as an entirely separate administration independent of the Diwani administrative structure. The Sarf e khas, it was stated in that letter, should therefore be completely taken over by the Diwani, its revenue and expenditure being merged with the revenues and expenditure of the State. Thereafter we have extracted the relevant portion of the letter which stipulated for the payment of Rs.25 lakhs. The other parts of the agreement contained in that letter are not relevant for the present purpose. The Wealth tax Officer treating the said sum as an annuity and secondly as an asset or property, capitalised the same to Rs.99,78,572 1081 and included that amount as an asset of the assessee. The appellate Assistant Commissioner agreed with the view taken by the Wealth tax Officer. The Tribunal, however, refused to call it as an annuity and characterised it as an annual payment for surrender of life interest. The Tribunal therefore held that the capitalised value of such life interest be added to the net wealth and taxed. The High Court in the judgment under appeal agreed with the view taken by the Tribunal that it was only an annual payment made in compensation for the property which had been taken over by the Government. It was, therefore, a part of the wealth, according to the High Court. The High Court was of the view that it was possible to commute the annual payment of Rs.25 lakhs. The High Court found that there was neither any express preclusion nor any circumstances from which legitimately an inference could be drawn precluding commutation of the said amount into a lumpsum grant. The High Court, therefore, was of the view that the Wealth tax Tribunal had rightly rejected the contention of the assessee. The question was accordingly answered by the High Court in the affirmative and against the assessee and in favour of the revenue. The first question involved in this case is whether the properties in respect of which registered sale deeds had not been executed, but full consideration had been received by the assessee, belonged to the assessee for the purposes of inclusion in his net wealth in terms of section 2(m) of the Act. Under section 3 of the Act, the charge of wealth tax is on the net wealth of the assessee on the relevant valuation date. Net wealth is defined under section 2(m) of the Act. The relevant portion of section 2(m) is as follows: "(m) "net wealth" means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date. ." The material expression with which we are concerned in this appeal is 'belonging to the assessee on the valuation date '. Did the assets in the circumstances mentioned hereinbefore namely, the properties in respect of which registered sale deeds had not been 1082 executed but consideration for sale of which had been received and possession in respect of which had been handed over to the purchasers belonged to the assessee for the purpose of inclusion in his net wealth? Section 53A of the Transfer of Property Act gives the party in possession in those circumstances the right to retain possession. Where a contract has been executed in terms mentioned hereinbefore and full consideration has been paid by the purchasers to the vendor and where the purchasers have been put in the possession by the vendor, the vendees have right to retain that possession and resist suit for specific performance. The purchasers can also enforce suit for specific performance for execution of formal registered deed if the vendor was unwilling to do so. But in the eye of law, the purchasers cannot and are not treated as legal owners of the property in question. It is not necessary in our opinion, for the purpose of this case to be tied down with the controversy whether in India there is any concept of legal ownership apart from equitable ownership or not or whether under sections 9 and 10 of the Indian Income tax Act, 1922 and sections 22 to 24 of the Indian Income tax Act, 1961, where 'owner ' is spoken in respect of the house properties, the legal owner is meant and not the equitable or beneficial owner. Salmond On Jurisprudence, Twelfth Edition, discusses the different ingredients of 'ownership ' from pages 246 to 264. 'Ownership ', according to Salmond, denotes the relation between a person and an object forming the subject matter of his ownership. It consists of a complex of rights, all of which are rights in rem, being good against all the world and not merely against specific persons. Firstly, Salmond says, the owner will have a right to possess the thing which he owns. He may not necessarily have possession. Secondly, the owner normally has the right to use and enjoy the thing owned: the right to manage it, i.e., the right to decide how it shall be used; and the right to the income from it. Thirdly, the owner has the right to consume, destroy or alienate the thing. Fourthly, ownership has the characteristic of being indeterminate in duration. The position of an owner differes from that of a non owner in possession in that the latter 's interest is subject to be determined at some future time. Fifthly, ownership has a residuary character. Salmond also notes the distinction between legal and equitable ownership. Legal ownership is that which has its origin in the rules of the common law, while equitable ownership is that which proceeds from rules of equity different from the common law. The courts of common law in England refused to recognize equitable ownership and denied the equitable owner as an owner at all. All the rights embedded in the concept of ownership of Salmond 1083 cannot strictly be applied either to the purchasers or the assessee in the instant case. In the instant appeal, however, we are concerned with the expression 'belonging to ' and not with the expression 'owner '. This question had come up before this Court before a bench of five learned judges in Commissioner of Wealth tax, West Bengal, vs Bishwanath Chatterjee and others, At page 539 of the report, this Court referred to the definition of the expression 'belong ' in the Oxford English Dictionary "To be the property or rightful possession of". So it is the property of a person, or that which is in his possession as of right, which is liable to wealth tax. In other words, the liability to wealth tax arises because of the belonging of the asset, and not otherwise. Mere possession, or joint possession unaccompanied by the right to be in possession, or ownership of property would therefore not bring the property within the definition of "net wealth" for it would not then be an asset "belonging" to the assessee. The first limb of the definition indicated in the Oxford Dictionary may not be applicable to these properties in the instant appeal because these lands were not legally the properties of the vendees and the assessee was the lawful owner of these properties. The vendees were, however, in rightful possession of the properties as against the vendor in view of the provisions of section 53A of the Transfer of Property Act, 1908. The scheme of the Act has to be borne in mind. It has also to be borne in mind that unlike the provisions of Income Tax Act, section 2(m) of the Act uses the expression 'belonging to ' and as such indicates something over which a person has dominion and lawful dominion should be the person assessable to wealth tax for this purpose. In Commissioner of Wealth tax, A.P. vs Trustees of H.E.H. Nizam 's family (Remainder Wealth) Trust, 108 I.T.R. 555, the question as to what is the meaning of the expression 'belonging to ' was raised (page 594 of the report) but this Court did not decide whether the trust property belonged to the trustee and whether the trustee was liable under section 3 of the Act apart from or without reference to section 21 of the Act. The case was disposed of in terms of sections 21 of the Act. In Commissioner of Income tax, A.P. Hyderabad vs Nwab Mir Barkat Ali Khan, , it was held by the Andhra Pradesh High Court that when a vendor had agreed to sell his property as in the instant case and had received consideration thereof but had 1084 not executed a registered sale deed, his liability to pay tax on income from that property did not cease. His position as 'owner ' of the property within the meaning of section 9 of the Indian Income tax Act, 1922 and section 22 of the Income tax Act, 1961 did not thereby change. According to the said decision, the agreement to sell and the receipt of consideration by the assessee, the Nizam of Hyderabad did not create any beneficial ownership according to Indian law in the purchaser neither did it create any equitable ownership in him. The ownership did not change until registered sale deed was executed by the vendor. The term 'owner ' in section 9 of the 1922 Act or section 22 of the 1961 Act did not mean beneficial or equitable owner which concept was not recognised in India. In the instant case as we have noticed the position is different. We are not concerned with the expression 'owner '. We are concerned whether the assets in the facts and circumstances of the case belonged to the assessee any more. This Court had occasion to discuss section 9 of the Income tax Act, 1922 and the meaning of the expression 'owner ' in the case of R.B. Jodha Mal Kuthiala vs Commissioner of Income tax, Punjab, Jammu & Kashmir and Himachal Pradesh, There it was held that for the purpose of section 9 of the Indian Income tax Act, 1922, the owner must be the person who can exercise the rights of the owner, not on behalf of the owner but in his own right. As assessee whose property remained vested in the Custodian of Evacuee Property was not the owner of the property. This again as observed dealt with the expression of section 9 of the Indian Income tax Act, 1922. At page 575 of the report certain observations were relied upon in order to stress the point that these observations were in consonance with the observations of the Gujarat High Court which we shall presently note. We are, however, not concerned in this controversy at the present moment. It has to be borne in mind that in interpreting the liability for wealth tax normally the equitable considerations are irrelevant. But it is well to remember that in the scheme of the administration of justice, tax law like any other laws will have to be interpreted reasonably and whenever possible in consonance with equity and justice. Therefore, specially in view of the fact that the expression used by the legislature has deliberately and significantly not used the expression 'assets owned by the assessee ' but assets 'belonging to the assessee ', in our opinion, is an aspect which has to be borne in mind. The bench decision of the Calcutta High Court in Commissioner 1085 of Income tax, West Bengal II vs Ganga Properties Ltd., rested on the terms of section 9 of the Income tax Act, 1922 and the Court reiterated again that in Indian law beneficial ownership was unknown; there was but one owner, namely, the legal owner, both in respect of vendor and purchaser, and trustee and cestui que trust. The income from house property refers to the legal owner and further that in case of a sale of immovable property a registered document was necessary. But these propositions as noted hereinbefore rested on the use of the expression in section 9 of the Income tax Act, 1922. It used the expression 'owner ' unlike 'belonging to '. The Gujarat High Court in Commissioner of Wealth tax Gujarat I vs Kum Manna G. Sarabhai , held that a spes successionis is a bare and naked possibility such as the chance of a relation obtaining a legacy and that could not form the basis of assessment under section 26 of the Act. At page 174 of the report, the Gujarat High Court referred to the expression 'belonging to ' and referred to the fact that the expression has been the subject matter in a number of judicial decisions. The Court observed that the words 'property ' and 'belonging to ' were not technical words. The Gujarat High Court had occasion to deal with part performance in the case of an agreement of sale in Commissioner of Income tax, Gujarat vs Ashaland Corporation, The Gujarat High Court noted that in case of a person who was a dealer in land, the business transaction would be completed only when the purchase or sale transaction was complete. In order to decide whether the business transaction was complete, the question of vital importance was whether title in the property had passed. It was only on the passing of the title that the transaction became complete and unless the transaction was complete, any advance receipt of money towards the transaction would not form part of income or profit. It was observed by the Gujarat High Court that the doctrine of part performance embodied in section 53A of the , had only a limited application and it afforded only a good defence to the person put in possession under an agreement in writing to protect his possession to the extent provided in section 53A, but an agreement in writing to sell, coupled with the parting of possession would not confer any legal title on the purchaser and take the land out of the stock in trade of the seller if the seller was a dealer in land. The context in which the Gujarat High Court had to deal this question was entirely different. The Gujarat High Court had to proceed on the basis that the assessee 1086 under the Income tax Act was the owner and he was dealing in land and therefore whether the land was stock in trade was the question. In the instant appeal we are concerned with the expression 'belonging to '. Therefore the observations of the Gujarat High Court would not be quite apposite to the problem of the instant appeal. This question was again viewed by the Bombay High Court in a slightly different context in Commissioner of Income tax, Bombay City III vs Smt. T.P. Sidhwa, The Bombay High Court was not concerned with the expression 'belonging to '. Our attention was drawn to another decision of the Gujarat High Court in Commissioner of Wealth tax, Gujarat IV vs H.H. Maharaja F.P. Gaekwad, There the facts were more or less identical with the instant appeal on this aspect of the matter. The assessee owned two properties and had agreed to sell one property to a company. The vendees had paid Rs.30 lakhs in January, 1964 and were put in possession of the property. Thereafter, four instalments of Rs. 17 1/2 lakhs each were paid and the property was conveyed by four deeds executed in 1970 71 and 1972. It was contended that at the relevant time, the property did not belong to the assessee. It was held by the Gujarat High Court that receipt of part of the sale price and parting of possession would not divest the vendor of immovable property of his title to the property. The doctrine of part performance embodied in section 53A of the had limited application and afforded a good defence to the person put in possession. The legal position and the relevant clauses of the agreement of sale showed that the assessee was the owner of the property at the relevant valuation dates. Therefore, according to the Gujarat High Court, the property agreed to be sold which had been parted with was includible as an asset of the assessee. Even in some cases the phrase 'belonging to ' is capable of connoting interest less than absolute perfect legal title. See in this connection the observations of this Court in Raja Mohammad Amir Ahmed Khan vs Municipal Board of Sitapur and another, A.I.R. 1965 S.C. 1923. This Court observed in that case that though the expression 'belonging to ' no doubt was capable of denoting an absolute title was nevertheless not confined to connoting that sense. Full possession of an interest less than that of full ownership could also be signified by that expression. Before concluding this aspect of the matter, there is certain as 1087 pect which has to be borne in mind. Reliance was placed as we have mentioned hereinbefore on the decision of the Gujarat High Court in the case of Commissioner of Wealth tax, Gujarat IV vs H.H. Maharaja F.P. Gaekwad (supra) It was contended that if the Gujarat High Court 's view was correct, then the assessee 's contention on this aspect in the instant appeal cannot be accepted. On behalf of the assessee it was submitted that the decision of the Gujarat High Court in Commissioner of Wealth tax, Gujarat I vs Kum. Manna G. Sarabhai (supra) not having been taken into consideration by the Gujarat High Court in the later decision, the Gujarat High Court the judgment on which revenue relied was not correct. It is not necessary in the view we have taken on the other aspect of the matter, namely, the use of the expression 'belonging to ' to discuss this point any further. It was further submitted before us that from the said decision of the Gujarat High Court in Commissioner of Wealth Tax, Gujarat IV vs H.H. Maharaja F.P. Gaekwad (supra), a special leave petition was filed by the assessee, which was dismissed by this Court on 17th January, 1983. (See in this connection 144 I.T.R. Statute page 23). It is, however, well settled that dismissal of special leave petition in limine does not clothe the decision under appeal in special leave petition with the authority of the decision of this Court. See in this connection the observations in Daryao & Ors. vs State of U.P. & Ors. , ; It may be mentioned as was rightly observed by a full bench of the Allahabad High Court in Sahu Govind Prasad vs Commissioner of Income tax, at 863, special leave is a discretionary jurisdiction and the dismissal of a special leave petition cannot be construed as affirmation by this Court of the decision from which special leave was sought for. On this aspect, it may also be mentioned that our attention was drawn to some decisions which we shall presently note. The Punjab and Haryana High Court in the case of Smt. Kala Rani vs Commissioner of Income tax, Patiala I, had occasion to discuss this aspect of the matter. But the Punjab and Haryana High Court was construing the meaning of the expression 'owner ' under section 22 of the Income tax Act, 1961. There, the division bench of the Punjab & Haryana High Court held that the assessee occupied the property after the execution of the agreement of sale deed in his favour and after completion of the building, he was in a position to earn income from the property sold to him, though the registered sale deed was executed subsequently in April, 1969. It was 1088 held that the assessee was 'owner ' in terms of section 22 of the Income tax Act, 1961. The Madras High Court had occasion to discuss this aspect in Mrs. M.P. Gnanambal vs Commissioner of Income tax, Madras, There the facts were entirely different and the Madras High Court held that the rights with reference to the properties in question in that case could only be described as a delusion and a snare so long as the sons continued to occupy the property which they were entitled to under the will and to describe the assessee 's right as owner of the property would be a complete misnomer. There, the court was construing the will and section 22 of Income tax Act, 1961 as to who were the owners in terms of the will. In all these cases as was reiterated by the Calcutta High Court in S.B. (House & Land) Pvt. Ltd. vs Commissioner of Income tax, West Bengal, the question of ownership had to be considered only in the light of the particular facts of a case. The Patna High Court in Addl. Commissioner of Income tax Bihar vs Sahay Properties and Investment Co. (P) Ltd., was concerned with the construction of the expression 'owner ' in section 22 of the Income tax Act, 1961. There, the assessee had paid the consideration in full and had been in exclusive and absolute possession of the property, and had been empowered to dispose of or even alienate the property. The assessee had the right to get the conveyance duly registered and ex ecuted in its favour, but had not exercised that option. The assessee was not entitled to say that because of its own default in having a deed registered in its name, the assessee was not the owner of the property. In the circumstances, it was held that the assessee must be deemed to be the owner of the property within the meaning of section 22 of Income tax Act, 1961 and was assessable as such on the income from the property. This is only an illustrative point where in certain circumstances without any registered conveyance in favour of a purchaser, a person can be considered to be 'owner '. It may incidentally be mentioned that this Court has granted special leave to appeal against this judgment. See in this connection Salmond 's conception of 'ownership ' has been noted. The meaning of the expression 'belonging to ' has also been noted. We have discussed the cases where the distinction between 'belonging to ' and 'ownership ' has been considered. The following facts emerge here: (1) the assessee has parted with the possession which is one of the essen 1089 tials of ownership, (2) the assessee was disentitled to recover possession from the vendee and assessee alone until the document of title is executed was entitled to sue for possession against others i.e. others than the vendee in possession in this case. The title in rem vested in the assessee, (3) The vendee was in rightful possession against the vendor, (4) the legal title, however, belonged to the vendor. (5) The assessee had not the totality of the rights that constitute title but a mere husk of it and a very important element of the husk. The position is that though all statutes including the statute in question should be equitably interpreted, there is no place of equity as such in taxation laws. The concept of reality in implementing fiscal provision is relevant and the Legislature in this case has not significantly used the expression 'owner ' but used the expression 'belonging to '. The property in question legally, however, cannot be said to belong to the vendee. The vendee is in rightful possession only against the vendor. Speaking for myself, I have deliberated long on the question whether in interpreting the expression 'belonging to ' in the Act, we should not import the maxim that "equity looks upon a thing as done which ought to have been done" and though the conveyance had not been executed in favour of the vendee, and the legal title vested with the vendor, the property should be treated as belonging to the vendee and not to the assessee. I had occasion to discuss thoroughly this aspect of the matter with my learned Brother and in view of the position that legal title still vests with the assessee, the authorities we have noted are preponderantly in favour of the view that the property should be treated as belonging to the assessee in such circumstances, I shall not permit my doubts to prevail upon me to take the view that the property belongs to the vendee and not to the assessee. I am conscious that it will work some amount of injustice in such a situation because the assessees would be made liable to bear the tax burden in such situations without having the enjoyment of the property in question. But times perhaps are yet not ripe to transmute equity on this aspect in the interpretation of law much as I would have personally liked to do that. As Benjamin Cardozo has said, "The judge, even when he be free, is not wholly free". A Judge cannot innovate at pleasure. It may be said that the legislature having designedly used the expression 'belonging to ' and not the expression 'owned by ' had perhaps expected judicial statesmanship in interpretation of this expression as leading to an interpretation that in a situation like this it should not be treated as belonging to the assessee but as said before 1090 times are not yet ripe and in spite of some hesitation I have persuaded myself to come to the conclusion that for all legal purposes the property must be treated as belonging to the assessee and perhaps legislature would remedy the hardship of assessee in such cases if it wants. The assessee had a mere husk of title and as against the vendee the assessee had no reality of title but as against the world, he was still the legal owner and real owner. As has been observed by this Court in Commissioner of Wealth tax, West Bengal vs Bishwanath Chatterjee and Others (supra) the property is owned by one to whom it legally belongs. The property does not legally belong to the vendee as against the vendor, the assessee. In Webstor 's Dictionary 'belonging to ' is explained as meaning, inter alia, to be owned by, be in possession of. The precise sense in which the words were used, therefore, must be gathered only by reading the instrument or the document as a whole. Section 53A of the Transfer of Property Act, 1908 is only a shield and not a sword. In Aiyar 's Law Laxicon of British India, [1940] Edition page 128, it has been said that the property belonging to a person has two meanings (1) ownership; (2) the absolute right of the user. The same view is reiterated in Stroud 's Judicial Dictionary 4th Edn. page 260. The expression: 'property belonging to ' might convey absolute right of the user as well as of the ownership. A road might be said, with perfect propriety, to belong to a man who has the right to use it as of right, although the soil does not belong to him. Under section 53A of the Transfer of Property Act, 1908 where possession has been handed over to the purchasers and the purchasers are in rightfuly possession of the same as against the assessee and the occupation of the property in question, and secondly that the entire consideration has been paid, and thirdly the purchasers were entitled to resist eviction from the property by the assessee in whose favour the legal title vested because conveyance has not yet been executed by him and when the purchasers were in possession had right to call upon the assessee to execute the conveyance, it cannot be said that the property legally belonged to the assessee in terms of section 2(m) of the Act in the facts and circumstances of the case even though the statute must be read justly and equitably and with the object of the section in view. We are conscious that if a person has the user and is in the enjoyment of 1091 the property it is he who should be made liable for the property in question under the Act yet the legal title is important and the legislature might consider the suitability of an amendment if it is so inclined. This question therefore must be answered in favour of the revenue and in the affirmative. The appeal in this aspect must therefore fail. For the second question it is necessary to refer to section 2(e) which provides for the definition of assets by stating that "assets" includes property of every description, movable or immovable, but does not include, ". . . (iv) a right to any annuity in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant;" Therefore, in order to be excluded from the assets of the assessee, the right being the sum which was annually to be paid under the agreement or letter mentioned hereinbefore must be by the terms and conditions precluded commutation of any portion thereof into a lumpsum grant. The question therefore is could this lumpsum grant of Rs.25 lakhs be commuted by the Nizam and the capital value of the commutation be received? Furthermore, the next question that arises was whether that commutation was precluded by the terms and conditions relating to that right. It may be that preclusion might be either by express terms and conditions of the right or as an inference from the terms and conditions of the payment. We need not go into the rights of the erstwhile princes before the abolition of the privy purses whether the privy purses could be commuted or not. The term 'annuity ' is not defined in the Act. According to the Oxford Dictionary, 'annuity ' means sums payable in respect of a particular year; yearly grant. An annuity is a certain sum of money payable. yearly either as a personal obligation of the grantor or out of property. The hall mark of an annuity, according to Jarman On Wills (page 1113) is: (1) it is a money; (2) paid annually; (3) in fixed sum; and (4) usually it is a charge personally on the grantor. 1092 Whether a particular sum is an annuity or not has been considered in various cases. It is not necessary in the facts and circumstances of the case and in view of the terms of the payment indicated to examine all these cases. In Ahmed G.H. Ariff and Others vs Commissioner of Wealth tax, Calcutta, , this Court held that the word 'annuity ' in clause (iv) of section 2(e) of the Act must be given the signification which it has assumed as a legal term owing to judicial interpretation and not its popular and dictionary meaning. In Commissioner of Wealth tax Gujarat vs Arundhati Balkrishna, , there were two deeds of trust. The assessee 's father had settled certain shares in trust for the benefit of the assessee and her two brothers. The trustees were to pay the residue of the income from the trusts in equal shares to the beneficiaries after deducting all costs and expenses. The assessee had a right after she had attained majority and after the birth of her first child to require the trustees to pay her shares out of the corpus of the trust fund absolutely up to one half thereof. Under another trust created by her mother in law of certain sums of money and certain shares the trustees were required to pay the income of the trust funds after deducting expenses to the assessee during her lifetime. It was held that the payments to the assessee under the trust deeds were not 'annuities ' within the meaning of section 2(e) (iv) of the Act. In Commissioner of Wealth tax, Rajasthan vs Her Highness Maharani Gayatri Devi of Jaipur, , this question arose again. The Maharaja of Jaipur had executed a deed of irrevocable trust whereunder the properties mentioned in the schedule thereto stood transferred to the trustee. The trust fund was to include the assets mentioned in the schedule and also such additions thereto and other capital moneys which might be received by the trustee. The assessee was one of the beneficiaries under the trust to whom the trustee was to pay during her lifetime 50 per cent of the income of the trust fund. The question was whether the assessee had a life interest in the corpus of the trust fund and her interest was therefore an 'asset ' liable to wealth tax or whether the assessee had only a right to an annuity and as such her right was exempt from wealth tax in view of section 2(e) (iv) of the Act. It was held by this Court that since neither the trust fund nor the amount payable to the assessee was fixed and the only thing certain was that she was entitled to 50 per cent of the income of the trust fund, 1093 what the assessee was entitled to was not an annuity but an aliquot share in the income of the trust fund. The assessee had a life interest in the trust fund and the right of the assessee under the trust deed was not exempt from wealth tax by virtue of the provisions of section 2(e) (iv). In Commissioner of Wealth tax, Lucknow vs P.K. Banerjee, , it was held that the right of the assessee in the trust fund in that case was not an 'annuity ' and was not exempt from the wealth tax under section 2(e) (iv) of the Act. It was further observed that in order to constitute an 'annuity ' the payment to be made periodically should be a fixed or predetermined one and it should not be liable to variation depending upon or on any ground relating to the general income of the fund or estate which was charged for such payment. In this case, in view of the background of the terms of payment and the circumstances why the payment was made, there cannot be any doubt that Rs.25 lakhs annually was an 'annuity '. It was a fixed sum to be paid out of the property of the Government of India in lieu of the previous income of the assessee from Sarf e khas. Therefore, it was an annuity. The only question that arises, was there any express provision which prevented commutation of this annuity into a lumpsum? Counsel for the revenue contended that there must be an express provision which must preclude commutation. In this case indeed there is no express provision from the document itself. The question is: can, from the circumstances of the case, such an express provision precluding commutation be inferred in the facts and circumstances of this case? The background of the facts and circumstances of the payment has to be kept in mind. The Nizam had certain income. He was being given three sums one was the privy purse which was not commutable; the other was payment of Rs.25 lakhs for the upkeep of palaces etc. and the third of Rs.25 lakhs in lieu of his previous income from the Sarf e khas. Income is normally meant for expenditure. The Nizam had to incur various expenditures. Commutation is often made when one is not certain as to whether the source from which that income comes for example, when a man retires from service, he normally commutes in order to ensure for himself and after his death for his family a certain income which he can ensure by getting the commuted amount invested in his private bank or otherwise which he may not be sure because upon his death the pension will cease. 1094 In this case this being an aggrement between erstwhile ruler and the Government of India, there is no such motivation and this payment of Rs.25 lakhs in lieu of the previous income of Sarf e khas must be read in conjunction with two other sums namely Rs.50 lakhs as privy purse and Rs.25 lakhs for upkeep of palaces. This bears the same character. As privy purses were not commutable, we are of the opinion that from the circumstances and keeping in background of the payment, there was an express provision flowing from the circumstances precluding the commutation of this amount of Rs.25 lakhs. If that is the position, then, in our opinion, it was exempt under section 2(e) (iv) of the Act. There was no right granted and can be gathered from the terms of the grant of payment for the assessee to claim commutation of the amount of Rs.25 lakhs. That would defeat the purpose and the set up of the arrangement under which the payment of the amount was made. The nature of privy purses have been discussed in H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors. vs Union of India, ; We are, however, not concerned with the controversy of the privy purse. But it is quite evident from the nature of the sum stipulated in the letter, the assessee had no right to claim commutation. Taking that fact in conjunction with the circumstances under which the payment of Rs.25 lakhs was agreed to, we are of the opinion that it must be held that from the terms of the agreement, there was an express stipulation precluding commutation. If that is so then it comes within clause (iv) of section 2(e) of the Act and the assessee was entitled to exemption. The question therefore must also be answered in the negative and in favour of the assessee. The appeal is disposed of in the aforesaid terms. The judgment and order of the High Court are modified accordingly. In view of the divided success, there will be no order as to costs. A.P.J. Appeal allowed in part.

In the assessment year 1957 58, the Wealth Tax Officer had included a sum of Rs.4,90,775 representing the market value of certain immovable properties in respect of which, although the assessee had received full consideration money, he had not executed any registered sale deeds in favour of the vendees. The question was whether the properties belonged to the assessee even after such sale for the purpose of inclusion of his net wealth within the meaning of section 2(m) of the Wealth Tax Act, 1957. The Wealth Tax Officer held that the assessee 1073 still owned those properties and consequently the value of the same was included in his net wealth. On appeal, the Appellate Assistant Commissioner sustained the order of the Wealth Tax Officer with certain deductions in value. On further appeal, the Tribunal held that the assessee had ceased to be the owner of the properties because the assessee having received the consideration money from the purchasers and the purchasers having been put into possession were protected in terms of section 53A of the and the term 'owner ' not only included the legal ownership but also the beneficial ownership. The High Court following the ratio of Commissioner of Income Tax, A.P. Hyderabad vs Nawab Mir Barkat Ali Khan, , reversed the order of Tribunal and upheld that of the Wealth Tax Officer and the Assistant Appellate Commissioner. The Assessee Nizam of Hyderabad, was a paramount ruler owning certain private properties called Sarf e khas. On surrendering his paramountcy and acceding to the Union of India, his private properties were taken over by the Government and it was agreed to pay him a sum of Rs. 1 crore annually distributed as follows: (a) Rs.50 lakhs as a privy purse; (b) Rs.25 lakhs in lieu of his previous income from the Sarf e khas, and (c) Rs.25 lakhs for the upkeep of palaces etc. The Government in its letter to the assessee stated that his Sarf e khas estates should not continue as an entirely separate administration independent of the Diwani administrative structure and it should, therefore, be completely taken over by the Diwani, its revenue and expenditure being merged with the revenues and expenditure of the State. Question was whether the assessee 's right to receive the sum of Rs.25 lakhs O.S. from the State Government was an asset for the purposes of inclusion in his net wealth under the Wealth Tax Act, 1957. The Wealth Tax Officer treating the said sum as an annuity and as an asset or property, capitalised the same to Rs.99,78,572 and included that amount as an asset of the assessee. The Appellate Assistant Commissioner agreed with this view. The Tribunal, however, refused to call it as an annuity, characterised it as an annual payment for surrender of life interest and held that the capitalised value of such life interest be added to the net wealth and taxed. The High Court agreed with the view taken by the Tribunal that it was only an annual payment made in compensation for the property which had been taken over by the Govern 1074 ment, therefore, it was a part of the wealth and it was possible to commute the annual payment of Rs.25 lakhs. The High Court found that there was neither any express preclusion nor any circumstances from which legitimately an inference could be drawn precluding commutation of the said amount into a lumpsum grant. Consequently, the High Court upheld the order of the Wealth Tax Tribunal. Partly allowing the Appeal, ^ HELD: (1) Under section 3 of the Wealth Tax Act, 1957 the charge of wealth tax is on the 'net wealth ' of the assessee on the relevant valuation date as defined under section 2(m) of the Act. [1081E F] (2) The material expression for the purposes of this appeal is "belonging to the assessee on the valuation date". The properties in respect of which registered sale deeds had not been executed but consideration for sale of which had been received and possession in respect of which had been handed over to the purchasers belonged to the assessee for the purpose of inclusion of his net wealth. [1081G H; 1082A] (3) It is not necessary for the purpose of section 2(m) to be tied down with the controversy whether in India there is any concept of legal ownership apart from equitable ownership or not or whether under sections 9 and 10 of the Indian Income Tax Act, 1922 and sections 22 to 24 of the Indian Income Tax Act, 1961, where 'owner ' is spoken of in respect of house properties, the legal owner is meant and not the equitable or beneficial owner. All the rights embedded in the concept of ownership of Salmond cannot strictly apply either to the purchasers or the assessee in the instant case. [1082C D; 1082H; 1083A] (4) The liability to wealth tax arises because of the belonging of the asset, and not otherwise. Mere possession, or joint possession unaccompanied by the right to be in possession, or ownership of property would, therefore, not bring the property within the definition of "net wealth" for it would not then be an asset "belonging" to the assessee. Unlike the provisions of Income tax Act, section 2(m) of the Act uses the expression 'belonging to ' to indicate that the person having lawful dominion of the assets would be assessable to wealth tax. [1083C E] (5) Though the expression 'belonging to ' no doubt was capable of denoting an absolute title was neyertheless not confined to connoting that sense. Full possession of an interest less than that of full ownership could also be signified by that expression. [1086G H] 1075 Commissioner of Wealth tax, West Bengal vs Bishwanath Chatterjee and Others, and Raja Mohammad Amir Ahmed Khan vs Municipal Board of Sitapur and another. A.I.R. , relied upon. Webster 's Distionary and Aiyar 's Law Lexicon of British India, [1940] edn., p. 128 and Salmond on Jurisprudence, 12th edn., pp. 246 to 264, referred to. (6) The property is owned by one to whom it legally belongs. The property does not legally belong to the vendee as against the vendor, the assessee. The precise sense in which the words 'belonging to ' were used in section 2(m) of the Act must be gathered only by reading the instrument or the document as a whole. [1090C D] (7) Though all statute including the Wealth Tax Act should be equitably interpreted, there is no place of equity as such in taxation laws. The concept of reality in implementing fiscal provision is relevant and the Legislature in section 2(m) has not significantly used the expression 'owner ' but used the expression 'belonging to '. The Legislature having designedly used the expression 'belonging to ' and not the expression 'owned by ' had perhaps expected Judicial statesmanship in interpretation of this expression. [1089G H] (8) On a distinction being made between 'belonging to ' and 'ownership ' the following facts emerge: (1) the assessee has parted with the possession which is one of the essentials of ownership; (2) the assessee was disentitled to recover possession from the vendee and assessee alone until document of title is executed was entitled to sue for possession against others i.e. others than the vendee in possession in this case. The title in rem vested in the assessee; (3) the vendee was in rightful possession against the vendor; (4) the legal title, however, belonged to the vendor; and (5) the assessee had not the totality of the rights that constitute title but a mere husk of it and a very important element of the husk. [1088H; 1089A B] (9) The property in question legally cannot be said to belong to the vendee. The vendee is in rightful possession only against the world. Since the legal title still vests with the assessee, the property should be treated as belonging to the assessee. It will work some amount of injustice in such a situation because the assessees would be made liable to bear the tax burden in such situations without having the enjoyment of the property in question. But times perhaps are not ripe to transmute equity on this aspect in the interpretation of law. [1089C F] 1076 (10) Under section 53A of the Transfer of Property Act, 1908 where possession had been handed over to the purchasers and the purchasers are in rightful possession of the same as against the assessee, secondly that the entire consideration has been paid, and thirdly the purchasers were entitled to resist eviction from the property by the assessee in whose favour the legal title vested because conveyance has not yet been executed by him and when the purchasers were in possession had right to call upon the assessee to execute the conveyance, it cannot be said that the property legally belonged to the assessee in terms of section 2(m) of the Act in the facts and circumstances of the case, even though the statute must be read justly and equitably and with the object of the section in view. If a person has the user and is in the enjoyment of the property it is he who should be made liable for the property in question under the Act, yet the legal title is important and the Legislature might consider the suitability of an amendment if it is so inclined. [1090F H; 1091A] Commissioner of Wealth tax, Gujarat IV vs H.H. Maharaja F.P. Gaekwad, approved. Commissioner of Income tax, A.P. Hyderabad vs Nwab Mir Barkat Ali Khan, referred to. Commissioner of Wealth tax, A.P. vs Trustees of H.E.H. Nizam 's family (Remainder Wealth) Trust, , R.B. Jodha Mal Kuthiala vs Commissioner of Income tax, Punjab, Jammu & Kashmir and Himachal Pradesh, , Commissioner of Income tax, West Bengal II vs Ganga Properties Ltd., , Commissioner of Wealth tax Gujarat I vs Kum Manna G. Sarabhai, , Commissioner of Income tax, Gujarat vs Ashaland Corporation, , Commissioner of Income tax, Bombay City III vs Smt. T.P. Sidhwa, 133 I.T.R.840, Smt. Kala Rani vs Commissioner of Income Tax, Patiala I, , Mrs. M.P. Gnanambal vs Commissioner of Income tax, Madras, , S.B. (House & Land) Pvt. Ltd. vs Commissioner of Income tax, West Bengal, and Addl. Commissioner of Income tax Bihar vs Sahay Properties and Investment Co. (P) Ltd., distinguished. (11) Special leave is a discretionary jurisdiction and the dismissal of a special leave petition cannot be construed as affirmation by the Supreme Court of the decision from which special leave was sought for. [1087E] Daryao & Ors. vs State of U.P. & Ors. , ; relied upon. 1077 Sahu Govind Prasad vs Commissioner of Income tax, at 863 approved. (12) Section 2(e) (iv) of the Wealth Tax Act, 1957 provides that "assets" includes property of every description, movable or immovable, but does not include a 'right to any annuity ' in any case where the terms and conditions relating thereto preclude the commutation of any portion thereof into a lump sum grant. [1091B D] (13) The term 'annuity ' is not defined in the Act. It must be given the signification which it has assumed as a legal term owing to judicial interpretation and not its popular and dictionary meaning. An 'annuity ' is a certain sum of money payable yearly either as a personal obligation of the grantor or out of property. The hall mark of an annuity is: (1) it is a money; (2) paid annually; (3) in fixed sum; and (4) usually it is a charge personally on the grantor. [1091G H] (14) In this case, in view of the background of the terms of payment and the circumstances why the payment was made, there cannot be any doubt that Rs.25 lakhs annually was an 'annuity '. It was a fixed sum to be paid out of the property of the Government of India in lieu of the previous income of the assessee from Sarf e khas. Therefore, it was an 'annuity '. [1093C D] (15) In the instant case, there is no express provision in the document itself which prevented commutation of this annuity into a lump sum. For inferring whether such as express provision precluding commutation exists, the background of the facts and circumstances of the payment has to be kept in mind. The assessee was given Rs.25 lakhs in lieu of his previous income from the Sarf e khas. Income is normally meant for expenditure. The assessee had to incur various exenditures. Commutation is often made when one is not certain as to whether the source from which that income comes. In this case, this being an agreement between earstwhile ruler and the Government of India, there is no such motivation and this payment of Rs.25 lakhs in lieu of the previous income of Sarf e khas must be read in conjunction with two other sums namely Rs.50 lakhs as privy purse and Rs.25 lakhs for upkeep of palaces. This bears the same character. [1093E H; 1094A B] (16) As privy purses were not commutable, from the circumstances and keeping in background of the payment, there was an express provision flowing from the circumstances precluding the 1078 commutation of this amount of Rs.25 lakhs and, therefore, it was exempt under section 2(e) (iv) of the Act. [1094B C] (17) There was no right granted and can be gathered from the terms of the grant of payment for the assessee to claim commutation of the amount of Rs.25 lakhs. That would defeat the purpose of the set up of the arrangement under which the payment of the amount was made. From the nature of the sum stipulated in the letter written by the Government to the assessee, the assessee had no right to claim commutation. Taking that fact in conjunction with the circumstances under which the payment of Rs.25 lakhs was agreed to, it is held that from the terms of the agreement, there was an express stipulation precluding commutation and, therefore, it comes within cl. (iv) of section 2(e) of the Act and the assessee was entitled to exemption. [1094C F] Oxford Dictionary: Jarman on Wills (P. 1113), relied on and Ahmed G.H. Ariff and Others vs Commissioner of Wealth tax, Calcutta, , Commissioner of Wealth tax Gujarat vs Arundhati Balkrishna, , Commissioner of Wealth tax, Rajasthan vs Her Highness Maharani Gayatri Devi of Jaipur, , Commissioner of Wealth tax, Lucknow vs P.K. Banerjee, and H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors. vs Union of India; , referred to.

eview Petition Nos. 597 to 60 1 of 1987. IN C.A. Nos, 3195/79, 4731 32/84, SLP No. 10108/80 and C.A.No. 793/84. 818 WITH C.A. Nos. 1313 & 388/81, SLPNo. 36/80, W.P. No. 192/77, SLP No. 404 1/81 and C.A. No. 2269/80. A.K. Ganguli, K. Swamy and P. Parmeshwaran for the Petitioners. F.S. Nariman, Anil B. Diwan, R.K. Lukose, K.R. Nambir, A.N. Haksar, D.N. Mishra and P.K. Ram for the Respondent. The Order of the Court was delivered by PATHAK, CJ. After hearing learned counsel for the parties briefly, we are satisfied that the judgment and order dated 20 December, 1986 of which review is sought, should be recalled and the cases be heard again on the merits. It appears to us prima facie that in respect of certain items an inconsistency is present in the impugned judgment when regard is had to the law laid down by this Court in Union of India vs Bombay Tyres International Ltd., ; Inasmuch as the cases are being re opened, we refrain from expressing any opinion at this stage on the merits of the points raised in the cases. Objection was taken by the respondent manufacturers to the Review Petitions on the ground that the finality of the judgment should be maintained and should not be disturbed lightly. In our opinion, the points raised by the petitioners are of substantial public importance, and therefore call for recon sideration. Accordingly, we allow the Review Petitions, and recall the judgment and order dated 20 December, 1986 and restore the cases to their original number and direct that they be listed again for fresh consideration. There is no order as to costs. N.P. V Petitions allowed.

The petitioners revenue filed petitions for review of the judgment and order dated December 20, 1986 passed by this Court. The respondent manufacturers objected to the same on the ground that finality of the judgment should be maintained and not disturbed lightly. Allowing the Review petitions, this Court, HELD: Prima facie an inconsistency is present in the judgment in respect of certain items when regard is had to the law laid down by this Court in Union of India vs Bombay Tyres International Limited, ; Besides, the points raised by the petitioners are of substantial public importance and call for reconsideration [818D] Accordingly, the judgment and order dated December 20, 1986 are recalled and the cases directed to be listed again for fresh consideration. [818D] Union of India vs Bombay Tyres International Limited, ; relied on.

ivil Appeal No. 2378 of 1977. 804 From the Judgment dated 3.2.1977 of the Gujarat High Court in Special Civil Application No. 551 of 1972. B. Datta, L.B. Kolekar, Ms. Chetna Anand and P.H. Parekh (NP) for the Appellant. S.K. Kholakia, R.B. Haribhakti and P.C. Kapoor (NP) for the Respondents. The Judgment of the Court was delivered by K. RAMASWAMY, J. The facts relevant to the controversy are as under: The appellant had taken on lease, about 55 years ago, an extent of 2 acres, 6 gunthas of agricultural lands situated in Akote village from Vishwas Rao. The Bombay Tenancy and Agricultural Lands Act 67 of 1948 for short `the Act ' applies to the lease. By operation of section 32(1) the appellant became a deemed purchaser from tillers ' day i.e., April 1, 1957. Section 32 G provides the procedure to determine purchase price. Since the landlord was insane, the right to purchase was statutorily deferred under section 32 F till date of its cessation or one year after death. Under section 88(1)(b) of the Act certain areas abutting Baroda Municipality were notified as being reserved for non agricultural or industrial purpose with effect from May 2, 1958. By another notification published in the Gujarat State Gazette dated July 2, 1964, certain lands including those situated in Akote and of the appellant 's lease hold lands were reserved for industrial purpose. Consequently Ss. 1 to 87 of the Act do not apply to the exempted area. While the landlord was continuing under disability, his son Vasant Rao sold the land to the respondent under registered sale deed dated August 19, 1964. By another notification under Section 88(1)(b) published in the Gazette dated October 29, 1964, the Government restricted the operation of the exemption to the area originally notified on May , 1958 i.e., Ss. 1 to 87 do not apply to the lands in question. This notification was rescinded by further notification published in the Gazette dated August 23, 1976. The Bombay Tenancy and Agricultural Lands(Gujarat) Amendment Act 36 of 1965, section 18(1) and 18(2) thereof introduced two provisos to section 88(1)(b) of the Act which was published in the Gazette on December 29, 1965 which are relevant for purpose of the case. Section 88(1)(b) with amendments reads thus: "(1) Save as otherwise provided in sub section (2) 805 nothing in the following provisions of this Act shall apply (a) to lands belonging to, or held on lease form the Government; (aa) to lands held or leased by a local authority; (b) to any area which the State Government may, from time to time, by notification in th official Gazette, specify as being reserved for non agricultural or industrial development; Provided that if after a notification in respect of any area specified in the notification is issued under this clause, whether before or after the commencement of the Bombay Tenancy and Agricultural Lands (Gujarat Amendment) Act, 1965, the limits of the area so specified are enlarged on account of the addition of any other area thereto, then merely by reason of such addition, the reservation as made by the notification so issued shall not apply and shall be deemed never to have applied to the area so added, notwithstanding anything to the contrary contained in any judgment, or order of any court, Tribunal or any other authority. Provided further that if any land in the area so added has been transferred or acquired after the issue of notification referred to in the first proviso but before the 9th day of October, 1964, such transfer or acquisition of land shall have effect as if it were made in an area to which this clause applies". Vishwash Rao died in September 1965. The appellant became entitled to purchase the land on and from August 19, 1966. He filed an application before Mamlatdar to fix the price. He fixed on enquiry at Rs.4,925.65 paise which was paid by the appellant. In the enquiry, the respondent contended that he purchased the property from Vasantrao, son of the landlord. By operation of second proviso to section 88(1)(b) the lands stood exempted from operation of Ss. 1 to 87 of the Act. So the Mamlatdar had no jurisdiction to decide the 806 price of the land. The appellant raised the contention that Vasantrao has no right to sell during the life time of the father, the Karta of the Hindu Joint Family. The sale is invalid and does not bind him. He acquired statutory right of deemed purchaser and its exemption under section 88(1)(b) does not divest his statutory right. The Mamlatdar accepted the appellant 's contention and allowed the petition. On appeal to the Collector and revision to the Revenue Tribunal the decision was reversed. The Division Bench of the High Court by order dated February 3, 1977 dismissed the writ petition. The appellant had leave of this Court by article 136. Thus this appeal. From these admitted facts the question emerges whether the operation of the second proviso to section 88(1)(b) has retrospective effect depriving the appellant of the statutory right of `deemed purchaser '. section 88 of the Act empowers the government to exempt certain other lands from the purview of Ss. 1 to 87 of the Act. The State Government exercised their power from time to time under section 88(1)(b) and issued notification and published in the official Gazette specifying certain areas as being reserved for non agricultural or industrial development i.e., urban development. Consequently the first proviso gets attracted which say that notwithstanding any judgment or order of any court, tribunal or any other authority under the Act to the contrary, once the notification was issued either before or after commencement of the Amendment Act reserving the area so added for non agricultural or industrial development i.e. expansion for urbanisation, to the extent of the area covered under the first proviso, the provisions of Ss. 1 to 87 were not applied and shall be deemed never to have been applied. The second proviso which is material for the purpose of the case further postulates that: "Provided further that if any land in the are so added has been transferred or acquired after the issue of the notification referred to in the first proviso but before the 29th day of October, 1964, such transfer or acquisition of the land shall have effect as if it was made to an area to which this clause applies". (emphasis supplied) What is the effect of the second proviso to the facts is the question? Mr. Dutta, the learned counsel for the appellant contended that the first proviso has the effect of excluding Ss. 1 to 87 of the Act only to those areas which were initially reserved for non agricultural or industrial development and has no application to the land added to it by a 807 subsequent notification though it would become part thereof. Any alienation in violation of the Act would not attract the operation of the second proviso. The Act is an agrarian reform which created a vested right in the tenant as a deemed purchaser with effect from Tillers ' day which cannot be divested retrospectively. The proviso should be construed to inhere in the tenant the vested rights created under the Act. The Withdrawal of the notification dated Oct. 29, 1964 renders the right of the appellant uneffected. It is a cardinal rule of interpretation that a proviso to a particular provision of a statute only embraces the filed, which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted by the proviso and to no other. The proper function of a proviso is to except and deal with a case which would otherwise fall within the general language of the main enactment, and its effect is to confine to that case. Where the language of the main enactment is explicit and unambiguous, the proviso can have no repercussion on the interpretation of the main enactment, so as to exclude from it, by implication what clearly falls within its express terms. The scope of the proviso, therefore, it to carve out an exception to the main enactment and it excludes something which otherwise would have been within the rule. It has to operate in the same field and it the language of the main enactment is clear, the proviso cannot be torn apart from the main enactment nor can it be used to nullify by implication what the enactment clearly says nor set at naught the real object of the main enactment, unless the words of the proviso are such that it is its necessary effect. The effect of the notification issued under section 88(1)(b) was the subject of consideration in several decisions of this Court. In Sukharam @ Bapusaheb Narayan Sanas & Anr. vs Manikchand Motichand Shah and Anr., [196] SCR 59 Sinha, CJ., held that the provisions of section 88 are entirely prospective and apply to such lands as are described in clauses (a) to (d) of section 88(1) from which the Act came into operation, namely, December 28, 1948 and are not a confiscatory in nature so as to take away from the tenant the status of a protected tenant already accrued to him. In Mohanlal Chunilal Kothari vs Tribhovan Haribhai Tamboli, ; a Constitution Bench speaking through Sinha, CJ. held that Clauses (a) to (c) of section 88(1) applies to things as they were on the date of the commencement of the Act of 1948 whereas clause (d) authorised the State Govt. to specify certain areas as being reserved for urban non agricultural or industrial development, by notification in the official Gazette, from 808 time to time. It was specifically provided in clauses (a) to (c) that the Act, from its inception, did not certain areas then identified, whereas clause (d) has reference to the future. The State Govt, could take out of the operation of the Act such areas as in its opinion should be reserved for urban non agricultural or industrial development. Clause (d) would come into operation only upon such a notification being issued by the State Govt. In Sukhram 's case, this Court never intended to lay down that the provisions of clause (d) are only prospective and have no retrospective operation. Unlike clauses (a) to (c) which are clearly prospective, clause (d) has retrospective operation in the sense that it would apply to land which would be covered by the notification to be issued by the government from time to time so as to take that land out of the operation of the Act of 1948, granting the protection. (emphasis supplied) So far as clauses (a) to (c) are concerned, the Act of 1948 would not apply at all to lands covered by them, but that would not take away the rights covered by the Act of 1939 which was repealed by the Act of 1948. Therefore, it was held that by operation of section 89(2) the rights acquired under the Act of 1939 would be available to the tenant. When a doubt was expressed of the correctness of the above views on reference, another Constitution Bench in Sidram Narsappa Kamble vs Sholapur Borough Municipality & Anr., ; , held at p. 65 thus: "New there is no doubt that section 88 when it lays down inter alia that nothing in the foregoing provisions of the 1948 Act shall apply to lands held on lease from a local authority, it is an express provision which takes out such leases from the purview of sections 1 to 87 of the 1948 Act. One of the provisions therefore which must be treated as non existent where lands given on lease by a local authority is in section 31. .but the effect of the express provision contained in section 88(1)(a) clearly is that section 31 must be treated as non existent so far as lands held on lease from a local authority are concerned and in effect therefore section 88(1)(a) must be held to say that there will be no protection under the 1948 Act for protected tenants under the 1939 Act so far as lands held on lease from a local authority are concerned . . 809 the appellant cannot claim the benefit of section 31; nor can it be said that his interest as protected tenant is saved by section 89(2)(b). This in our opinion is a plain effect of the provisions contained in section 31, section 88 and section 89(2)(b) of the 1948 Act". In Parvati & Ors. vs Fatehsinhrao Pratapsinhrao Gaekwad, ; the facts were that the Government issued a notification on May 21, 1958 under section 88(1)(b) of the 1948 Act reserving the land within the municipal limits of the city of Baroda for non agricultural and industrial development. The appellant 's husband had taken possession of certain lands situated in the city of Baroda on lease from the respondent trustee. The respondent laid the suit against the appellant for recovery of arrears of rent. The defence was that the suit was not maintainable. Dealing with the effect of the notification issued under section 88(1)(b), this Court held that the notification had retrospective operation and subject to certain exceptions provided in sub section (2) of section 88 all rights, title, obligations etc. Accrued or acquired under the said Act ceased to exist. Therefore, section 89(2)(b) was inapplicable to protect such right, title or interest, acquired under the Act except as provided in s 89A owing to express provision made in section 88 of the Act. Accordingly it was held that the Civil Court was legally competent to determine the reasonable rent payable by the tenant. In Navinchandra Ramanlal vs Kalidas Bhudarbai & Anr., ; this court was to consider a case that the notification under section 88(1)(b) was issued on May 30, 1959 by which date the tenant acquired the statutory right of a deemed purchaser with effect from April 1, 1957. This Court held that the tenant cannot be divested of his deemed purchase by a subsequent notification issued thereunder. It would be seen that the effect of the second proviso was not considered therein. The above interpretation would equally apply to the interpretation of the notification issued under the proviso to section 88(1)(b) adding to the area reserved for non agricultural or industrial development. Its effect is that notwithstanding any judgment or order of any court or Tribunal or any other authority, the provisions of Ss. 1 to 87 shall not apply and shall be deemed never to have applied to such added area as well. If any land in the newly added area has been transferred or acquired between the date of the notification issued under first proviso and October 9, 1964, such transfer or acquisition of land shall have the effect as if it was made in an area to which the main part of the proviso and section 88(1)(b) would apply. The necessary consequence would be that the provisions of sections 1 to 87 shall not apply and shall be 810 deemed never to have applied to such added area. It is implicit that such transfer or acquisition made, to bring within the net of second proviso, must be valid and bona fide one and not colourable, fraudulent, fictitious or nominal. The Legislature appears to relieve hardship to the bona fide purchasers. The title acquired by such transfer is not effected by the provisions of the Act. The Legislature advisedly used the words `acquired or transferred '. The respondent 's own case is that Vishwesh Rao, Karta of the Hindu Joint Family was under disability due to lunacy. The tenant acquired statutory right as deemed purchaser under section 32. The Act, by necessary implication, divests the landlord of his right to alienate the land held by the tenant. The statutory right topurchase the land under section 32 as deemed purchaser was postponed by operation of section 32 F of the Act till the cessation of the disability or one year after the death of the landlord. In such situation can the son during the life time of the father, has right to sell the same property to the respondents, and whether such a sale made on August 19, 1964 to the respondents was valid and binds the appellant. In Raghavachariar 's Hindu Law Principles and Precedents, Eighth Ed., 1987 in section 275 at p. 39 stated thus: "So long as the joint family remains undivided, the senior member of the family is entitled to manage the family properties, and the father, and in his absence, the next senior most male member of the family, as its manager provided he is not incapacitated from acting as such by illness or other sufficient cause. The father 's right to be the manager of the family is a survival of the patria potastas and he is in all cases, naturally, and in the case of minor sons necessarily the manager of the joint family property. In the absence of the father, or if he resigns, the management of the family property devolves upon the eldest male member of the family provided he is not wanting in the necessary capacity to manage it". Regarding the management of the Joint Family Property or business or other interests in a Hindu Joint Family, the Karta of the Hindu Joint Family is a prima inter pares. The managership of the Joint Family Property goes to a person by birth and is regulated by seniority and the Karta or the Manager occupies a position superior to that of the other members. A junior member cannot, therefore, deal with the joint family property as Manager so long as the Karta is available except where the Karta relinquishes his right expressly or by necessary impli 811 cation or in the absence of the Manager in exceptional and extra ordinary circumstances such as distress or calamity effecting the whole family and for supporting the family or in the absence of the father whose whereabouts were not known or who was away in remote place due to compelling circumstances and that is return within the reasonable time was unlikely or not anticipated. No such circumstances are available here to attract the facts of the case. Vasantrao, the vendor, son of the Karta of the Hindu Joint Family per se has no right to sell the property in question as Manager so long as the father was alive. When father was under disability due to lunancy, an order from the Court under Indian Lunancy Act IV of 1912 was to be obtained to manager the joint family property. No proceedings were taken under sections 39, 43 and 45 of the Indian Lunacy Act to have the inquisition made by a competent District Court to declare him as insane and to have him appointed as Manager of the Joint Family. In P.K. Gobindan Nair & Ors. vs P. Narayanan Nair & Ors., [1912] 23 M.L.J. 706=17 Indian Cases 473 a division Bench of the Madras High Court held that a guardian cannot be appointed as Manager under the Guardian and Wards Act on an adjudication of Karnavan of an undivided Malabar Tarwad as a lunacy. In A. Ramacharlu vs Archakan Ananthacharlu & Anr., A.I.R. 1955 A.P. 261 a division Bench consisting of Subba Rao, C.J. and Satyanarayana Raju, J. (as they were) considered the question of appointment of a son as the Manager of the Mitakshara family whose father was alleged to be a lunatic. Subba Rao, C.J. speaking for the Bench, held that in view of the finding that the Karta, though was mentally not sound, but was capable to manage the property, the application for appointment of a son as manager of the joint family property was not be ordered. Since Vasantrao did not obtain any order from the competent court under the Lunacy Act to have him appointed as Manager of the joint family to alienate the property, the sale is per se illegal. The sale, therefore, appears to be to defeat the statutory right of the appellant. The rigour of the second proviso to section 88(1)(b) is thus inapplicable. Thereby the right and interest as a deemed purchaser acquired by the appellant has not been effected by a subsequent notification issued under section 88(1)(b). The High Court, therefore, committed manifest error in holding that the appellant is not entitled to the relief. The appeal is accordingly allowed and the orders of the High court, The Tribunal and District Collector are set aside and that of the Mamlatdar is confirmed, but in the circumstances parties are directed to bear their own costs. Y.Lal. Appeal Allowed.

The appellant took on lease some agricultural lands from one Viswas Rao and by operation of Section 32(1) of the Bombay Tenancy and Agricultural Lands Act 67 of 1948, which was applicable to the lease, he became a deemed purchaser from tillers ' day i.e. 1.4.1957. Since the landlord was insane, the right to purchase was statutorily deferred under section 32 F till date of its cessation or one year after death. Pursuant to the notification issued under Section 88(1)(b) of the Act, certain lands including those of the appellant 's lease hold lands were reserved for industrial purpose; thereby making sections 1 to 87 of the Act inapplicable to the exempted area. During the subsistence of disability of the landlord, his son Vasant Rao sold the land to the respondent under registered sale deed. Vishwas Rao died in September 1965. The appellant became entitled to purchase the land on and from August 19, 1966. He therefore filed an application before Mamlatdar to fix the price. He fixed on enquiry at Rs.4,95/65 P. which was paid by the appellant. In the enquiry, the respondent contended that he purchased the property from Vasantrao, son of the landlord and by operation of the second proviso to Section 88(1)(b), the lands stood exempted from the operation of Section 1 to 87 of the Act. So the Mamlatdar had no jurisdiction to decide the price of the land. The appellant 's contention was that Vasantrao had no right to sell the lands during the life time of his father, the Karta of the Hindu Joint Family. The sale was invalid and did not bind him. He had acquired statutory right of `deemed purchaser ' and its exemption under section 88(1)(b) did not divest his statutory right. The Mamlatdar accepted the appellant 's contention and allowed the petition. On appeal to the Collector and revision to the Revenue Tribunal, the decision of Mamlatdar was reversed. The Division Bench of the High Court dismissed the writ petition. Hence this appeal by the appellant, after obtaining special leave. On the question: whether the operation of the second proviso to Section 88(1)(b) of the tenancy Act, 1948 has retrospective effect depriving the appellant of the statutory right? 803 Allowing the appeal, this Court HELD: Section 88 of the Act empowers the government to exempt certain other lands from the purview of Sections 1 to 87 of the Act. The State Governments exercised their power from time to time under Section 88(1)(b) and issued notification and punished in the official Gazette specifying certain areas as being reserved for non agricultural or industrial development i.e., urban development. [806C D] It any land in the newly added area has been transferred or acquired between the date of the notification issued under first proviso and October 9, 1964, such transfer or acquisition of land shall have the effect as if it was made in an area to which the main part of the proviso and Section 88(1)(b) would apply. The necessary consequence would be that the provisions of Sections 1 to 87 shall not apply and shall be deemed never to have applied to such added area. It is implicit that such transfer or acquisition made, to bring within the net of second proviso, must be valid and bona fide one and not colourable, fraudulent, fictitious or nominal. [809G 810B] In the instant case, since Vasantrao did not obtain any order from the competent court under the Lunacy Act to have him appointed as Manager of the joint family to alienate the property, the sale is per se illegal, The sale, therefore, appears to be to defeat the statutory right of the appellant. The rigour of the second proviso to Section 88(1)(b) is thus inapplicable. Thereby the right and interest as deemed purchaser acquired by the appellant has not been affected by subsequent notification issued under section 88(1)(b). [811F G] Sukharam @ Bapusaheb Narayan Sanas & Anr. vs Manikchand Motichand Shah & Anr., [196] 2 S.C.R. 59; Mohanlal Chunilal Kothari vs Tribhovan Haribhai Tamboli, ; ; Sidram Narsappa Kamble vs Sholapur Borough Municipality & Anr., ; ; Parvati & Ors vs Fatehsinhrao Pratapsinghrao Gaekwad, ; ; Navinchandra Ramanlal vs Kalidas Bhudarbai & Anr., ; ; P.K. Gobindan Nair & Ors. vs P. Narayanan Nair & Ors., Indian Cases 743; and A. Ramacharlu vs Archakan Ananthacharlu & Anr., A.I.R. 1955 A.P. 261, referred to.

y of the view that the almost unanimous opinion of experts is that after the age of 15, bulls. bullocks and buffaloes are no longer useful for breeding, draught and other purposes and whatever little use they may have then is greatly offset by the economic disadvantages of feeding and maintaining unserviceable cattle disadvantages to which we had referred in much greater detail in Md. Hanif Quareshi 's case (1). Section 3 of the Bihar Act in so far as it has increased the age limit to 25 in respect of bulls, bullocks and she buffaloes, imposes an unreasonable restriction on the fundamental right of the petitioners, a restriction moreover which cannot be said to be in (1) ; 623 the interests of the general public, and to that extent it is void. We may here repeat what we said in Chintaman Rao vs The State of Madhya Pradesh (1): "The phrase 'reasonable restriction ' connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word 'reasonable ' implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in article 19(1)(g) and the social control permitted by clause (6) of article 19, it must be held to be wanting in that quality. " As to r. 3 the grievances of the petitioners are these. Under the rule the prescribed authority for the purpose of section 3 of the Act consists of the Veterinary Officer and the Chairman or Chief Officer of a District Board, Municipality etc. Unless both of them concur, no certificate for slaughter can be granted. It is pointed out that the Chairman or Chief Officer would be a layman not in a position to judge the age or usefulness of cattle. The result would be that the animal in respect of which a certificate is required may have to be shown to the Veterinary Officer as also the Chairman or Chief Officer, who may not be staying at the same place as the Veterinary Officer. If the two differ, the matter has to be referred to the Sub divisional Animal Husbandry Officer. This procedure, it is contended, will involve the expenditure of so much money and time that it will not be worthwhile for the petitioners to ask for a certificate, or having got a certificate, to slaughter the animal. An animal which is above 15 or which has become useless generally costs much less than a young, serviceable animal. If the petitioners have to incur all the expenditure which the procedure laid down by r. 3 must necessarily cost them, then they must close down their trade. As to the right of appeal from an order refusing to grant a (1) ; ,763. 624 certificate, it is contended that that right is also illusory for all practical purposes. To take the animal to the Deputy Director of Animal Husbandry or the District Animal Husbandry Officer or the Sub divi sional Animal Husbandry Officer, as the case may be, and to keep and feed the animal for the period of the appeal and its hearing will cost more than the price of the animal itself. We consider that these grievances of the petitioners have substance, and judged from the practical point of view, the provisions of r. 3 impose disproportionate restrictions on their right. It is difficult to understand why the Veterinary Officer, who has the necessary technical knowledge, cannot be trusted to give the certificate and why it should be necessary to resort to a complicated procedure to resolve a possible difference of opinion between two officers, later followed by a still more expensive appeal. We, therefore, hold r. 3 also to be bad in so far as it imposes disproportionate restrictions indicated above, on the right of the petitioners. (2) We now proceed to consider the Uttar Pradesh Prevention of Cow Slaughter (Amendment) Act, 1958. After the decision of this Court in Md. Hanif Quareshi vs The State of Bihar (1) an Ordinance was passed called the Uttar Pradesh Prevention of Cow Slaughter (Amendment) Ordinance, 1958. This Ordinance was later repealed and replaced by the Act. The petitioners say that in the Bill as originally drafted the age limit below which slaughter was not permissible was put at 15 years; but the Select Committee increased it to 20 years. It will probably be best, for clearness sake, to set forth not the whole provisions of the Act, for that would be too lengthy, but those which form most directly the subject matter on which the controversy turns. Section 3 of the Act reads (omitting portions not relevant for our purpose) "section 3(1) Except as hereinafter provided, no person shall slaughter or cause to be slaughtered or offer or cause to be offered for slaughter (a). . . . . . . (1) ; 625 (b) a bull or bullock, unless he has obtained in respect thereof a certificate in writing, from the competent authority of the area in which the bull or bullock is to be slaughtered, certifying that it is fit for slaughter. (2) No bull or bullock, in respect of which a certificate has been issued under sub section (1)(b) shall be ' slaughtered at any place other than the place indicated in the certificate or within twenty days of the date of issue of the certificate. (3) A certificate under sub section (1)(b) shall be issued by the competent authority, only after it has, for reasons to be recorded in writing, certified that(a) the bull or bullock is over the age of twenty years; and (b) in the case of a bull, it has become permanently unfit and unserviceable for the purpose of breeding and, in the case of a bullock, it has become permanently unfit and unserviceable for the purposes of draught and any kind of agricultural operation: Provided that the permanent unfitness or unserviceability has not been caused deliberately. (4) The competent authority shall, before issuing the certificate under sub section (3) or refusing to issue the same, record its order in writing. Any person aggrieved by the order of the competent authority, under this section, may, within twenty days of the date of the order, appeal against it to the State Government, which may pass such orders thereon as it may deem fit. (5) The State Government may, at any time, for the purposes of satisfying itself as to the legality or propriety of the action taken under this section, call for and examine the record of any case and may pass such orders thereon as it may deem fit. (6) Subject to the provisions herein contained any action taken under this section, shall be final and conclusive and shall not be called in question. " On behalf of the petitioners it has been argued that section 3 imposes a number of unreasonable restrictions. Firstly, it is urged that the age limit with regard to bulls or bullocks is put too high, viz. at 20 years. This is an 626 aspect which we have already considered in relation to the Bihar Act. What we have said about the age s limit in that connexion applies equally to the Uttar Pradesh Act. The 8th Live stock Census, 1956 shows that in Uttar Pradesh bulls and bullocks over 3 years of age, not in use for breeding or work, numbered as many as 126,201 in 1956 as compared to 162,746 in 1951. The Municipal Manual, Uttar Pradesh, Vol. 1, contains a direction that for slaughter of animals, bullocks and male buffaloes in good state of health below ten years of age should be included. Secondly, it is pointed out that not being content with fixing an unreasonably high age limit, the impugned provision imposes a double restriction. It says that the animal must be over twenty years in age and must also be permanently unfit and unserviceable; and in the case of a bullock, the unfitness must be for "any kind of agricultural operation" and not merely for draught purposes. The result of this double restriction, it is stated, is that even if the animal is permanently unserviceable and unfit at an earlier age, it cannot be slaughtered unless it is over twenty years in age. Before a certificate can be given, the animal must fulfil two conditions as to (1) age and (2) permanent unfitness. We consider this to be a demonstrably unreasonable restriction. In Md. Hanif Quareshi 's case (1) this Court had said that a total ban on the slaughter of bulls and bullocks after they had ceased to be capable of breeding or working as draught animals was not in the interests of the general public. Yet this is exactly what the impugned provision does by imposing a double restriction. It lays down that even if the animal is permanently unserviceable, no certificate can be given unless it is more than 20 years in age. The restriction will in effect put an end to the trade of the petitioners. Thirdly, the impugned provision provides (1) that the animal shall not be slaughtered within 20 days of the date of the issue of the certificate and (2) that any person aggrieved by the order of the competent authority may appeal to the State Government within 20 days. It is to be noted that the right of appeal is not (1) 627 confined to a refusal to grant a certificate as in the Bihar Act, but the right is given to any person aggrieved by the order of the competent authority. In other words, even when a certificate is given, any person, even a member of the public, who feels aggrieved by it may prefer an appeal and hold up the slaughter of the animal for a long time. From the practical point of view these restrictions really put a total ban on the slaughter of bulls and bullocks even after they have ceased to be useful, and we must hold, following our decision in Md. Hanif Quareshi 's case (1) that section 3 of the Uttar Pradesh Act in so far as it imposes unreasonable restrictions on the right of the petitioners as to slaughter of bulls and bullocks infringes the fundamental right of the petitioners and is to that extent void. (3) Now, we come to the Madhya Pradesh Act. Several provisions of this Act have been challenged before us as imposing unreasonable restrictions on the fundamental right of the petitioners. Section 4 deals with prohibition of slaughter of agricultural cattle. The expression 'agricultural cattle ' means an animal specified in the schedule: it means cows of all ages; calves of cows and of she buffaloes; bulls; bullocks; and male and female buffaloes. As we have stated earlier, we are concerned in these cases with the validity of the restrictions placed on the slaughter of bulls, bullocks and buffaloes. Now, section 4 is in these terms: "section 4(1) Notwithstanding anything contained in any other law for the time being in force or in any usage or custom to the contrary, no person shall slaughter or cause to be slaughtered or offer or cause to be offered, for slaughter (a) cows, calves of cows, or calves of she buffaloes, or (b) any other agricultural cattle unless he has obtained in respect of such cattle a certificate in writing issued by the Competent Authority for the area in which the cattle is to be slaughtered that the cattle is fit for slaughter. (1) [1959] S.C.R.29. 628 (2) No certificate under clause (b) of sub section (1) shall be issued by the Competent Authority .unless the Veterinary Officer after examining the cattle certifies that (a) the cattle is over twenty years of age and is unfit for work or breeding or has become permanently incapacitated from work or breeding due to age, injury, deformity or an incurable disease; and (b) the cattle is not suffering from any disease which makes its meat unwholesome for human consumption. (3) The Competent Authority shall, before issuing or refusing to issue a certificate under this section, record its order in writing. Any person aggrieved by the order of the Competent Authority under this section, may, within ten days of the date of the order, prefer an appeal against such order to the Collector of the district or such other officer as may, by notification, be authorised in this behalf by the State Government, and the Collector or such other officer may pass such orders thereon as he thinks fit. (4) Subject to the orders passed in appeal, if any, under sub section (3), the order of the Competent Authority shall be final and shall not be called in question in any Court. " Section 5 places a restriction as to the place and time for slaughter and the objection taken before us relates to the time rather than to the place of slaughter. It says in effect that no cattle in respect of which a certificate has been issued under section 4 shall be slaughtered within ten days of the date of issue of the certificate and where an appeal is preferred against the grant of such certificate, till the time such appeal is disposed of. The provision of appeal is contained in sub section (3) of section 4 of the Act which we have quoted earlier. That sub section lays down that any person aggrieved by the order of the Competent Authority, may, within ten days of the date of the order, prefer an appeal against the order to the Collector of the district or such other officer as may, by notification, be authorised in this behalf by the State Government. 629 Section 6 imposes a restriction on the transport of agricultural cattle for slaughter and reads: "section 6. No person shall transport or offer for transport or cause to be transported any agricultural cattle from any place within the State to any place outside the State, for the purpose of its slaughter in contravention of the provisions of this Act or with the knowledge that it will be or is likely to be, so slaughtered. " Section 7 prohibits the sale, purchase or disposal otherwise of certain kinds of animals. It reads . "section 7. No person shall purchase, sell or otherwise dispose of or offer to purchase, sell or otherwise dispose of or cause to be purchased, sold or otherwise disposed of cows, calves of cows or calves of shebuffaloes for slaughter or knowing or having reason to believe that such cattle shall be slaughtered. " Section 8 relates to possession of flesh of agricultural cattle and is in these terms: "section 8. Notwithstanding anything contained in any other law for the time being in force, no person shall have in his possession flesh of any agricultural cattle slaughtered in contravention of the provisions of this Act. " Section 10 imposes a penalty for a contravention of section 4(1)(a) and section 11 imposes penalty for a contravention of any of the other provisions of the Act. On behalf of the petitioners it has been pointed out, and rightly in our opinion, that cl. (a) of sub section (2) of section 4 of the Act imposes an unreasonable restriction on the right of the petitioners. That clause in its first part lays down that the cattle (other than cows and calves) must be over 20 years of age and must also be unfit for work or breeding; and in the second part it says, "or has become permanently incapacitated from work or breeding due to age, injury, deformity or an incurable disease. " It is a little difficult to understand why the two parts are juxtaposed in the section. In any view the restriction that the animal must be over 20 years of age and also unfit for work or breeding is an excessive or unreasonable restriction as we have 80 630 pointed out with regard to a similar provision in the Uttar Pradesh Act. The second part of the clause would not be open to any objection, if it stood by itself. If, however, it has to be combined with the agelimit mentioned in the first part of the clause, it will again be open to the same objection; if the animal is to be over 20 years of age and also permanently incapacitated from work or breeding etc. ,then the agelimit is really meaningless. Then, the expression 'due to age ' in the second part of the clause also loses its meaning. It seems to us that cl. (a) of sub section (2) of section 4 of the Act as drafted is bad because it imposes a disproportionate restriction on the slaughter of bulls, bullocks and buffaloes it is a restriction excessive in nature and not in the interests of the general public. The test laid down is not merely permanent incapacity or unfitness for work or breeding but the test is something more than that, a combination of age and unfitness ' Learned Counsel for the petitioners has placed before us an observation contained in a reply made by the Deputy Minister in the course of the debate on the Bill in the Madhya Pradesh Assembly (see Madhya Pradesh Assembly Proceedings, Vol. 5 Serial No. 34 dated April 14, 1959, page 3201). He said that the age fixed was very much higher than the one to which any animal survived. This observation has been placed before us not with a view to an interpretation of the section, but to show what opinion was held by the Deputy Minister as to the proper agelimit. On behalf of the respondent State our attention has been drawn to a book called The Miracle of Life (Home Library Club) in which there is a statement that oxen, given good conditions, live about 40 years. Our attention has also been drawn to certain extracts from a Hindi book called Godhan by Girish Chandra Chakravarti in which there are statements to the effect that cows and bullocks may live up to 20 or 25 years. This is an aspect of the case with which we have already dealt. The question before us is not the maximum age upto which bulls, bullocks and buffaloes may live in rare cases. The question before us is what is their average longevity and at what age 631 they become useless. On this question we think that the opinion is almost unanimous, and the opinion which the Deputy Minister expressed was not wrong. Section 5 in so far as it imposes a restriction as to the time for slaughter is again open to the same objection as has been discussed by us with regard to a similar provision in the Uttar Pradesh Act. A right of appeal is given to any person aggrieved by the order. In other words, a member of the public, if he feels aggrieved by the order granting a certificate for slaughter, may prefer an appeal and hold up for a long time the slaughter of the animal. We have pointed out that for all practical purposes such a restriction will really put an end to the trade of the petitioners and we are unable to accept a restriction of this kind as a reasonable restriction within the meaning of cl. (6) of article 19 of the Constitution. Section 6 standing by itself, we think, is not open to any serious objection. It is ancillary in nature and tries to give effect to the provision of the Act prohibiting slaughter of cattle in contravention of the Act. Section 7 relates to the prohibition of sale, purchase etc., of cows and calves and inasmuch as a total ban on the slaughter of cows and calves is valid, no objection can be taken to section 7 of the Act. It merely seeks to effectuate the total ban on the slaughter of cows and calves (both of cows and she buffaloes). Section 8 is also ancillary in character and if the other provisions are valid no objection can be taken to the provisions of section 8. Sections 10 and 11 impose penalties and their validity cannot be seriously disputed. However, we must say a few words about section 12 of the Act which has also been challenged before us. Section 12 is in these terms: "section 12. In any trial for an offence punishable under section 11 for contravention of the provision of sections 5, 6 or 7 of this Act the burden of proving that the slaughter, transport or sale of agricultural cattle was not in contravention of the provisions of this Act shall be on the accused. " The argument is that section 12 infringes the fundamental 632 right of the petitioners inasmuch as it puts the burden of proof on an accused person not only for his own knowledge or intention but for the knowledge or intention of other persons. We do not think that this contention is correct. The accused person, so far as sections 5 and 7 are concerned, must be the person who has slaughtered the animal or who has purchased, sold or otherwise disposed of the animal etc. Therefore, the only question will be his knowledge and the legislature was competent to place the burden of proof on him. So far as section 6 is concerned, it specifically refers to the knowledge of the person who has transported or offered for transport or caused to be transported any agricultural cattles from any place within the State to any place outside the State. Therefore, when the section talks of knowledge, it talks of the knowledge of that person who has transported or offered for transport etc. The knowledge of no other person comes into the purview of section 6. We are, therefore, ' of the view that section 12 is not invalid on the ground sug gested by the petitioners. Therefore, the result of our examination of the various provisions of the Act is that the impugned provisions in cl. (a) of sub section (2) of section 4, in sub section (3) of section 4 relating to the right of appeal by any person aggrieved by the order, and in section 5 relating to the time of slaughter, impose unreasonable and disproportionate restrictions which must be held to be unconstitutional. As to the Madhya Pradesh Agricultural Cattle Preservation Rules, r. 3 says "that an application for a certificate under section 4 shall be made to the competent authority," and r. 4 says that on receipt of the application, the competent authority shall by an order direct the person keeping the animal to submit it for examination by the Veterinary Officer Rule 5 reproduces the provisions of cls. (a) and (b) of sub section (2) of section 4 and in so far as we have held that the provision in el. (a) of sub section (2) of section 4 is unconstitutional, the rule must also fall with it. There is one other aspect of these cases which has been emphasized before us, to which a reference must 633 now be made. It is open to the legislature to enact ancillary provisions to give effect to the main object of the Act, namely, the prevention of slaughter of animals like bulls, bullocks or buffaloes which are still useful for the purposes for which they are generally used. It is pointed out that acts innocent in themselves may be prohibited and the restrictions in that regard would be reasonable, if the same were necessary to secure efficient enforcement of valid provisions. For example, it is open to the legislature, if it feels it necessary, in order to reduce the possibilities of evasion to a minimum, to enact provisions which would give effect to the main object of the legislation. We have not ignored this aspect and have kept in mind the undisputed right of the legislature to decide what provisions are necessary to give effect to the main object of the legislation. In these cases the petitioners have complained that the main object of the impugned provisions is not the prohibition of slaughter of animals which are still useful; the impugned provisions as they are worded really put a total ban on the slaughter of bulls, bullocks and buffaloes and for all practical purposes they put a stop to the profession and trade of the petitioners. We have held that this complaint is justified in respect of the main provisions in the three Acts. We, therefore, allow the three writ petitions and direct, as we directed in Md. Hanif Quareshi 's case (1) the respondent States not to enforce the Acts or the rules made thereunder in so far as they have been declared void by us. The petitioners will be entitled to their costs of the hearing in this Court. Petitions allowed.

In order to put the sugar industry on a stable footing, for which it was necessary to develop the cane area, the Ruler of the erstwhile Gwalior State by an order dated 27 7 1946 sanctioned the levy of cess of one anna per maund on all sugar cane purchased by the respondent company. When the Government of Madhya Bharat, which was the successor state of the former Gwalior State, made a demand for payment of the cess, the respondent filed a petition before the High Court of Madhya ,Bharat challenging the legality of the levy on the grounds (1) that the order dated 27 7 1946 was only an executive order and not a law under article 265 of the Constitution of India and that, therefore, there was no authority for the imposition of the cess after January 26, 1950, and (2) that the levy was discriminatory and violated article 14 inasmuch as while the respondent was made liable to pay the cess the other sugar factories in the State were exempt. It was found that at the time when cess was first levied there was no sugar factory in existence in the Gwalior State other than that of the respondent. Held, that (i) the Ruler of an Indian State was an absolute monarch in which there was no constitutional limitation to act in any manner he liked, he being the supreme legislature, the supreme judiciary and the supreme head of the executive. I Consequently, the order dated 27 7 1946 issued by the Ruler of Gwalior State amounted to a law enacted by him and became an existing law under article 372 of the Constitution of India. The levy of cess was therefore by authority of law within the meaning of article 265; Madhaorao Phalke vs The State of Madhya Bharat, ; , followed. (2) the levy of cess did not contravene article 14 because (a) the object was cane development in the particular area and a geographical classification based upon historical factors was a permissible mode of classification, and (b) a tax could not be struck down as discriminatory unless it was found that it was imposed with a deliberate intention of differentiating between 620 (ii) where the order is passed by the Sub divisional Animal Husbandry Officer, under sub rule (5), to the District Animal Husbandry Officer and (iii) where the order is passed by the authority prescribed under sub rule (1) to the Sub divisional Animal Husbandry Officer, if there is one; if not, to the District Animal Husbandry Officer; (b) The appeal shall not be decided against the appellant unless he has been given a reasonable opportunity of being heard. " The argument on behalf of the petitioners is that they are "Kassais" by profession and they earn their living by slaughtering cattle only (not goats or sheep which are slaughtered by "Chiks"); that they have the fundamental right to carry on their profession and trade; and that section 3 of the Act read with r. 3 imposes unreasonable restrictions restrictions not in the interests of the general public on their fundamental right and therefore they are not saved by cl. (6) of article 19 of the Constitution. Some of these arguments were considered by this Court in Md. Hanif Quareshi vs The State of Bihar (1) and it was pointed out that the test of reasonableness 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. It referred to the decision in State of Madras vs V. G. Row (2) and repeated what was said therein that "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." 'Another consideration which has to be kept in mind is that "the legislature is the best judge of what is good for the community,. by whose suffrage it comes into existence. . . . (See The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (3)). But the ultimate responsibility for determining the validity of the law must rest with the (1) (2) ; (3) 621 Court and the Court must not shirk that solemn duty cast on it by the Constitution. We must, therefore, approach the problem before us in the light of the principles laid down by this Court. The most pertinent question is having regard to all the relevant circumstances, is the age of 25 years laid down in section 3 a reasonable restriction on the right of the petitioners in the interests of the general public ? We are unable to say that it is. Apart from the affidavits made on behalf of the petitioners and the respondent State, a large volume of authoritative and expert opinion has been placed before us which shows beyond any doubt that a bull, bullock or she buffalo does not remain useful after 14 or 15 years and only a few of them live up to the age of 25. In the Report of the Cattle Preservation and Development Committee, published by the Ministry of Agriculture, it is recommended by the Committee that the slaughter of animals over 14 years of age and unfit for work as also animals of any age permanently unable to work owing to injury or deformity, should be allowed. In the Report on the Marketing of Meat in India (published by the Ministry of Food and Agriculture) there is a reference to a draft Bill circulated by the Ministry of Agriculture (page 112 of the Report) which contains a clause that animals over 14 years of age and unfit for work may be slaughtered on a certificate from a Veterinary Officer. In the Report on the Marketing of Cattle in India, again published by the Ministry of Food and Agriculture, occurs the following passage as to the price of animals with reference to their age: "Young draught animals up to the age of 4 years being raw and untrained fetch comparatively low prices. Between 4 and 8 years of age, the animals are in the prime of their youth and tender best service, and fetch maximum prices. From the 8th year onwards old age sets in, and a graded decline is observed in their capacity to work and consequently prices depreciate considerably." . In a Food and Agricultural Organisation study of cattle in India and Pakistan (Zebu Cattle of India and 79 622 Pakistan, page 94) it is stated that the active breeding life of a bull is estimated to be about 10 years. In Black 's Veterinary Dictionary (edited by W. C. Miller and G. P. West, fifth edition) it is stated that pedigree ,bulls may reach 12 or 14 years of age before being discarded; and cattle seldom live longer than 15 or 16 years, and when they do, their age is usually of no immediate importance. In another publication of the Ministry of Agriculture called 'Problems of Cattle Insurance ' under Indian conditions, it is stated that the life of cattle is comparatively much shorter, the maximum age being only about 15 years. There is an interesting chart relating to the determination of age in cattle in a publication called 'Cattle Development in Uttar Pradesh ' by R. L. Kaura, Director of Animal Husbandry; that chart shows that at II years incisors appear smaller due to wearing out; at 12 years space appears between the teeth, and after 12 teeth wear out constantly and roots remain far apart from one another. As against all this expert opinion the respondent State has relied on the chart embodying some useful data about domestic animals, prepared by Major A. C. Aggarwala, Director of Veterinary Services, Punjab, and R. R. Gulati, Superintendent, Veterinary Department, Jullandur, which shows the sterility age of a buffalo at 15 and average age at 25, and of a cow sterility at 15 and 16 years and average life 22 years.

ase, there was not a whisper of the application under section 25A (1) of the Act by the appellant on March 15, 1957, when the penalty proceedings were initiated against it. Even on March 20, 1958. when the penalty was imposed, there was no order under section 25A(l) of the Act lt was only on March 26, 1962, that the partition was recognised and order 506 under section 27A(1) of the Act was passed. There was, thus, no bar to the imposition or the impugned penalty. [509E F] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 886 of 1971. (From the judgment and order dated the 18.9.1969 of the Allahabad High Court in I. T. R. Misc. Case No. 836 of 1963.) G. C. Sharma, V. N. Ganpule, D. K. Jain, Anup Sharma and P. C. Kapur, for the appellant. B. Sen and 5. P. Nayar, for the respondent The Judgment of the Court was delivered by JASWANT SINGH, J. This is an appeal by certificate of fitness granted by the High Court of Judicature at Allahabad under section 66 A(2) of the Indian Income tax Act, 1922 (hereinafter referred to as 'the Act ') from its judgment dated September 18, 1969 in I.T.R. Misc. Case No. 836 of 1963. The facts giving rise to this appeal are: The appellant, a Hindu undivided family consisted of Gauri Shankar, the father, and his three sons viz. Chandrabhan, Bengali Lal and Brij Kishan. Gauri Shankar, the karta of the family who was incharge of the affairs of the family during the relevant year which extended from April 13, 1945 to April 12, 1946, the assessment year being 1946 47, died on April 2, 1946. He was succeeded by his son, Chandrabhan as Karta of the family. The appellant had, in the first instance, filed a return showing an income of Rs. 9,701 j . On scrutiny of the relevant material, the Income Tax Officer found a number of discrepencies in the accounts of the appellant and also noted the existence of cash credits to the appellant 's account in the books of another firm viz. M/s. Tilyani Glass Works and a certain sum deposited in an account styled as Abdul Wahid Khan & Sons. He thereupon issued a notice dated March 15, 1957, calling upon the appellant to explain the discrepencies in the accounts as also in the cash credits and to show cause why a penalty under section 28(1)(c) of the Act be not imposed upon it. In response to the notice, a representative of the appellant appeared before the Income Tax officer and voluntarily agreed to a sum of Rs. 15,000/ being treated as its income. After hearing the Appellant 's representative the Income Tax Officer felt satisfied that the appellant had deliberately concealed its income and furnished an inaccurate return. Accordingly, by his order dated March 20, 1958, he added a sum of Rs. 68,550/ to the income of the appellant and imposed on it a penalty of Rs. 26,000/ . Meanwhile, on March 19, 1957, an application under section 25 A of the Act was made to the Income Tax officer for an order recording partition of joint family property in definite portions, which according to the application had taken place amongst the members of the Hindu undivided family on June 22, 1956. The Income Tax Officer on being satisfied after making enquiries that a complete partition of the joint family property has taken place, recorded an order under section 25A (1) of the Act on March 26, 1962, accepting the partition with effect 507 from June 22, 1956, as claimed. Against the penalty of Rs. 26,000/ imposed the Income Tax Officer by his order dated March 20, 1958, the appellant preferred an appeal to the Appellate Assistant Commissioner, who reduced the Penalty to Rs. 15,000/ . Not satisfied with THIS reduction, the appellant went up in further appeal to the Income tax appellate Tribunal and raised before it a number of contentions Amongst other things, it was urged before the Tribunal that since the Hindu undivided family had disrupted on June 22, 1956, as accepted by the Income Tax officer in his aforesaid order date March 26, 1962, passed under section 25 A(l) cf the Act, the imposition of the penalty by the Income Tax officer on March 20, 1958, after the disruption of the family was bad in law and could not be sustained. While rejecting the other contentions raised on behalf of the appellant, the Tribunal upheld this contention by its order dated March 6, 1963. Thereupon the Commissioner of Income tax, U.P. made application before the Income tax Appellate Tribunal under section 66(1) of the Act requesting that the following question of law arising from its decision be referred to the High Court: "Whether in the facts and circumstances of the case the imposition of penalty under section 28 ( 1 ) (c) on the Hindu Undivided family after it had disrupted within the meaning of section 25 A is bad in law". Acceding to the request of the Commissioner of Income Tax, the Tribunal referred the above mentioned question to the High Court which answered the same in the negative The appellant thereupon applied to the High Court and obtained the aforesaid certificate of fitness for appeal to this Court. This is the matter is before us. E Relying on Commissioner of Income Tax vs Sanichar Sah Bhim Sah(1), section A. Raju Chattiar & Ors. vs Collector of Madras & Anr.(2) Mahankali Subha Rao, Mahankali Nageswara Rao & Anr. vs Commissioner of Income Tax Hyderabad(3) and Commissioner of Income tax Punjab vs Mothu Ram Prem Chand(4) counsel for the appellant has reiterated before us that since the Hindu undivided family had dissolved on June 22, 1956 as accepted by the Income Tax officer vide his order dated March 26, 1962 passed under section 25 A of the Act and the Act did not provide any machinery for imposition of the penalty on the Hindu family after its disruption, the imposition of penalty on March 20, 1958 was had in law and could not be sustained. Counsel appearing on behalf of the Revenue has, on the other hand, urged that imposition of impugned penalty cannot be challenged as in view of section 25 A(3) of the Act, a Hindu undivided family must be (deemed to have continued in existence till the date of the passing of the order under section 25 A(l) of the Act. For a proper determination of the question, it is necessary to refer to section 25 a of the Act which at the relevant time stood as under: 25 A. (1) Where, at the time of making an assessment ll under section 23, it is claimed by or on behalf of any member (1) (1957) 27 (2) (3) (4) 508 of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family, the Income tax Officer shall make such inquiry thereinto as he may think fit, and if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions, he shall record an order to that effect: Provided that no such order shall be recorded until notices of the inquiry have been served on all the members of the family (2) Where Such an order has been passed, or where any person has succeeded to a business, profession or vocation formerly carried on by a Hindu undivided family, whose joint family property has been partitioned on or after the last day on which it carried on such business. profession or vocation, The Income tx Officer shall make an assessment of the total income received by or on behalf of the joint family as such, as if no partition(LPN had taken place, and each member or group of members shall in addition to any income tax for which he of may be separately liable and notwithstanding anything contained in sub section (1) of section 14, be liable for a share of the tax on the income so assessed according to the portion of the joint family property allotted to him or it; and the Income tax officer shall make assessments accordingly with provisions of section 23. Provided that all the members and groups of members whose joint family property has been partitioned shall be liable jointly and severally for the tax assessed on the total income received by or on behalf of the joint family as such. (3) Where such an order has not been passed in respect of a Hindu family hitherto assessed as undivided, such family shall be deemed, for the purposes of this Act, to continue to be a Hindu undivided family.`` lt will be noticed that sub section (3) of the above quoted section embodies a legal fiction according to which a Hindu family which has been previously assessed as 'undivided ' is to be continued to be treated as 'undivided ' till the passing of the order under sub section of the section. This view strength from two decisions of this Court in Additional Income tax Officer Quddapah A. Thimmayya & Anr(1) and Joint family of Udayan Chinubhai etc vs Commissioner of Income tax Gujarat(2) where it was held that so long(r as No order under section 25 a(I) of the Act is recorded, the jurisdiction of the Income tax officer to continue to assess as undivided despite partition under personal law a Hindu family which has hitherto been asseesed in that status remains unaffected. It will be profitable in this connection (1) (2) 509 to refer to the following observation made in A. Thimmayya 's case (supra) "The section makes two substantive provisions (i) that a Hindu undivided family Which has been assessed to tax shall he deemed, for The purposes of The Act, to continue to be treated as undivided and therefore liable to be take in that stats unless an order is passed in respect of that family recording, partition of its property as contemplated by sub station (t); and (ii) if at the time of making an assessment it is claimed by or on behalf the members of the family that the property of the joint family has been partitioned; the members or groups of members in definite portions, i.e. a complete partition of the entire estate is made resulting in such physical division of the estate as it is capable of being made. the Income tax Officer shall hold an inquiry, and if he is satisfied that the partition had taken place the shall record an order to that effect . The Income tax Officer may assess the income of the Hindu family hither to assessed as undivided notwithstanding partition, is no claim in that behalf has been make to him or is he is not satisfied about the truth of the claim that the joint family property has been partitioned in definite politics if on account of some error or inadvertence he fails Lo dispose of the claim. In all these cases his jurisdiction to assess the income of the family hitherto assessed as undivided remain unaffected, for the procedure for making assessment of tax is statutory". In face of the aforesaid decisions of this court, it is Court it is not necessary to burden the record by discussing the decisions cited by counsel for the appellant. In the present case, there was not a whisper of the application under section 25 A(1) of the Act by the appellant on March 15, 1957 when the penalty proceedings were initiated against it. Even on March 20, 1958, when the penalty was imposed, there was no order under section 25 A(1 ) of the Act. It was only on March 26, 1962, that the partition was recognised and order under section 25 A(1) of the Act was passed. There was thus no bar to the imposition of the impugned penalty. Accordingly, we find no force in the contention of counsel for the appellant and are of the opinion that the question as was in the rightly by the High Court.

In response to a show cause notice dated March 15, 1957, under section 28(1)(c) of the Income Tax Act, before imposing a penalty for deliberate concealment of its income, the appellant, through its authorised representative, voluntarily agreed to a slum of Rs. 15,000/ being treated as income of Hindu Undivided Family. The Income Tax officer, by his order dated March 20,1958, added a sum of Rs. 68,550/ to the income of the appellant and imposed on it a penalty of Rs. 26,000/ which on appeal was reduced to Rs. 15,000/ . Meanwhile, on March 19, 1957, the appellant filed an application under section 25A of the Act for an order recording partition of joint family property in definite portions from June 22, 1956, claiming that date to be the date of partition. The Income Tax officer, after due enquiries, accepted the disruption of the Hindu Undivided Family as claimed by his order dated March 26, 1962. This led the appellant to contend that, in view of ' the orders dated March 26, 1962, of the Income Tax officer, the imposition of the penalty by him on March 20, 1958 was bad in law and could not be sustained. The Tribunal uphold the contentions of the appellant resulting in a reference under section 66(1) of the Act to the High Court of Allahabad (Lucknow Bench), which reversed the decision or the Tribunal. However, the High Court granted a certificate of fitness for appeal to this Court. Dismissing the appeals the Court, ^ HELD: Sub section (3) of section 25A of the Income Tax Act embodies a legal fiction according to which a Hindu family which has been previously assessed as "undivided" is to be continued to be treated as "undivided" till the passing of the order under sub section (1) of section 25A. So long as no order under section 25(A)(1) 1 of the Act is recorded, the jurisdiction of the Income Tax officer to continue to assess as undivided despite a partition under personal law, a Hindu family which has hitherto been assessed in that status, remain unaffected. [508G H] Additional Income Tax Officer, Quddapah vs A. Thimmayya vs Commissioner of Income Tax, Gujrat , applied. Commissioner of Income Tax vs Sanchar Sah Bhim Sah section A. Raju Chattiar & Ors. vs Collector of Madras & Anr. ; Mahankali Subba Rao Mahankali Nageswara Rao & Anr. v, Commissioner of income Tax. Hyderabad and Commissioner of Income Tax, Punjab vs Mothu Ram Prem Chand , not applicable

Appeals Nos. 1186 1188 of 1972. Appeals by special leave from the Judgment and Order (fated 12/ 13/15th October, 1971 of the Bombay High Court in Special Civil Application Nos. 555, 556 of 1967 and 72 of 1968. K. section Cooper, M. K. Shah, P. H. Parekh and Sunanda Bhandare, for the appellants. B. N. Lokur, Rameshwar Nath, for respondent No. 1. Subodh Markendeya, for Respondent No. 2. The Judgment of the Court was delivered by SARKARIA, J. Whether the principle of apportionment is applicable to the fixation of standard rent of a premises under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (for short, the Act); if so whether on the facts of the case, the principle has been rightly invoked is the two fold question that falls for decision in these three appeals by special leave directed against the judgment of the High Court of Judicature at Bombay. The material facts are as under A big compound, measuring 11,150 sq. yards, at 156 Tardeo Road, Bombay, belonged to Raja Bahadur Moti Lal Mills, Ltd., Bombay, appellant No.1. The Mills were shifted from these premises in the year 1930. In 1932, the whole of this estate including the structures standing on. a part of it, was let out to Sound Studios Ltd. Between the years 1932 and 1940, some part of it was sub let by Sound Studios to Sheraj Ali, who was the proprietor of M/s. Famous 579 Cine Laboratory and another part to Neon Signs (India) Ltd., and the rest of the estate continued to be with Sound Studios. Thereafter, Sound Studios went out of the picture and the whole estate was let out to National Studios Ltd. on October 23, 1940 at a monthly rent of Rs. 1700/ for a period of two years. In July 1941, National Studios surrendered their lease and Sheraj Ali became a direct tenant under appellant 1 in respect of the premises in his possession, called for the sake of identification, 983/1 (whole) and 983/2 (Ground floor). On December 1, 1941 and again in November 1942, Sheraj Ali took on rent additional portions of this estate so that his original rent, which was Rs. 400/ , was first increased to Rs. 600/and then to Rs. 700/ and thereafter in November 1942 to Rs. 875/ . By November 1947, Sheraj Ali was paying Rs. 1200/ per month as rent for the premises demised to him including some new structures which had been built. Sheraj Ali had taken a loan from M/s. Govind Ram Bros. Ltd., Respondent 1 on the security of his Film Studio Equipments. He failed to repay the loan. Thereupon, Respondent 1 instituted a suit for recovery of the amount and obtained a decree from the High Court,. on February 27,1948. As a result of the High Court 's decree, the right, title and interest of Sheraj Ali in the mortgaged property were assigned to Respondent 1. Respondent 1, in consequence, took a fresh lease on March 19,1948 from appellant No. 1 of the, properties (called for identification) 983/1 to 983/12, which were in the tenancy of Sheraj Ali ', at a contractual rent of Rs. 1228/ p.m. On the same date, Respondent 1 executed another lease in respect of three rooms in the same premises (marked for identification as) 984, in favour of appellant 1, on a monthly rent of Rs. 750/ Respondent 1 failed to pay the contractual rent, regularly, which fell into arrears which were not cleared despite the pressing demands made by the Receiver. On March 13, 1954 the Receiver wrote to Respondent 1 threatening to take legal proceedings for the recovery of the rent. This Receiver, who is now appellant No. 2, had been appointed by the High Court in Suit No. 454 of 1949 instituted by appellant 1 against the Insurance Company On April 14, 1954, two applications were filed in the Court of Small Causes by Respondent 1 for fixation of standard rent in respect of the premises comprised in the said two leases one application, R.A.N. 983/54, relates to properties 983/1 to 983/12, and the other (R.A.N. 984) to premises 984. It was alleged in the applications that since on September, 1, 1940, the entire estate, including the properties in question. had been let out on a monthly rent of Rs. 1700/ , standard rent of the premises it question should be fixed on the basis of apportionment In particular, it was pleaded that fair rent of Rs. 983/1 to 983/12 should be 1/8th of Rs. 1200/ which was later corrected as 1700/ . On the same basis it was alleged in the second application, that fair rent of premises 984 should be Rs. 75/ p. m. 580 The appellants resisted these applications and averred in R. A. N. 983/54, that several entirely new structures had been built and substantial alterations made in most of these structures between the years 1940 and 1948, as a result whereof the property had lost its identity, and consequently, fair rent could not be fixed on apportionment basis. On June 11, 1958, Respondent 1 made an application for amendment of the Standard Rent Application (R.A. N. 983154) for adding an alternative ground based on the value of the land and cost of construction so that in the event of the court holding on the preliminary issue in favour of the appellants, the standard rent could be fixed on the basis of the valuation of the land and the construction. This application was disallowed. On July 30,1958 Respondent 1 made an application for amendment of his R. A. N. 984 of 1954 on lines similar to that in R. A. N. 983/54. It was also dismissed by an order, dated July 31, 1958. At the stage of arguments on December 4, 1958, Respondent 1 moved another application for amendment and addition of the plea that they were the owners of the structures in premises 983/10, 983/1] and 983/12. The second amendment was not sought to be made in the other application R. A. N. 98411954 relating to property 984. This prayer was also declined. The trial court (Samson J.) by its judgment dated April 2, 1959, found that the premises in question on account of structural alterations had undergone such a change that they could no longer be identified with the property that existed in September 1940 and that the mode of ,determining rent by apportionment was not available to the tenants. In the result he dismissed the applications, adding "there is no sufficient ,material to ascertain the standard rent in any other way '. Against those orders, Respondent 1 filed a revision petition under section 129 (3) of the Act before the Revisional Court of Small Causes, Bombay, which accepted, the same set aside the order of the trial judge, allowed the amendment and remanded both the applications for fixation of fair rent to the trial court. Against this remand order, dated August 8, 1960, of the Revisional Court, the appellants preferred two Civil Revisions to the High Court of Bombay. During the pendency of those Revisions, the trial court allowed the amendment and proceeded to decide the entire matter afresh. These facts were brought to the notice of the High Court, which, however, ,dismissed the revision petitions by a judgment dated February 3, 1961 holding that the first Revisional Court had, in fact, remanded the entire matter for trial de novo, after rightly allowing both the amendments. After the remand, the trial court by its judgment, dated April 25, 1961 held that except 983/10, 983/11 and 983/12, which were new structures there was no change of identity in the rest of the properties 581 i. e. 983/1 to 983/9; that new structures 983/10, 983/11 and 983/12 belonged to Respondent 1 who was consequently, liable to pay rent only for the land underneath; that the cost of repairs of the properties, 983/8 and 983/9 after they had been destroyed by fire, was mainly borne by Respondent 1, the landlord 's contribution being Rs. 8,500/ only. Applying the principle of apportionment, it fixed the standard rent of the properties 983/1 to 983/12 at Rs. 400/ p.m. subject to permitted increases after 1954. Regarding the premises 984(in R.A.N.984/54), the trial court gave are turn on the investment of Rs.40,000/ made by the landlord inclusive of the cost of structure and the value of land underneath at Rs. 30/ per sq. yard (as that of 1940) and fixed the standard rent at Rs. 386/ p. m. subject to permitted increases after 1946. Aggrieved by these orders of the trial court, appellants and Respondent 2 filed two revision applications under section 129 (3) to the Revisional Court of Small Causes which by its judgment, dated September 30, 1964, substantially upheld the findings of the trial court, inter alia with the exceptions : (i) that the ownership of the new structures 983/10, 983/11 and 983/12 vested in Appellant 1, who was entitled to get a fair return on that investment; (ii) that the value of the land "married" to the new structures 983/10, 983/11 and 983/12, and 984/54, should be taken at Rs. 50/ per sq. yd., i. e. as of 1948 and not as of 1940 as had been done by the trial court on remand. In the result, the standard rent in R.A.N. 983 was raised to Rs. 981 / and in R.A.N. 984 to Rs.411/ p.m. To impugn the decision, dated September, 30, 1964, of the Revisional Court, the parties preferred six Special Civil Applications under article 226/227 of the Constitution to the High Court. By a common order, a learned single Judge of the High Court dismissed these applications except that he corrected some arithmetical errors and, in consequence, fixed the standard rent of properties 983/1 to 983/12 at Rs. 841.07 and that of premises 984/54 at Rs. 462/11 p. m. It is against this decision dated 12/13th October 1971 of the High Court that these appeals have been filed by special leave. The first contention of Mr. Cooper, learned Counsel for the appellants is that there is no provision in the Act which requires standard rent to be fixed on apportionment basis; rather, the definition of "premises" in section 5(8) (b) which speaks of "part of a building let separately," read with clause (i) of section 5(10) and clause (c) of section 11 (1) with due emphasis on the article 'the ' immediately preceding the, word 'premises ' in the said clauses, indicates that the standard rent would be the rent for which the suit premises were first let separately on or, after the basic date i.e. September 1, 1940. If on the basic date proceeds the argument the premises in question did not form the subject of a separate, single ,demise but had been let out together with other portions of larger premises, its standard rent could not be determined on the footing of the rent payable for those different portions. Reliance 582 has been placed on Dhanrajgirji Naraingirji vs W. G. Ward;(1) and Bata Shoe Co ' Ltd. vs Narayan Das Mullick and Ors.(2) Counsel had further tried to distinguish Capital and Provincial Property Trust Ltd. vs Rice(3) and Bhikaji Ramchandra Paranjpe vs Vishnu Ramchandra Paranjpe(4), referred to in the judgment of the High Court. On the other hand, Mr. Lokur, learned Counsel for Respondent maintains that the principle of apportionment has always been accepted by the Bombay High Court as an appropriate guide in fixing standard rent under the Act of premises which on the basic date had been let out as part of a larger entity. It is pointed out that in Narayanlal Bansilal vs Venkatrao Anant Rai(5); a Bench of the High Court while considering the question of standard rent in respect of another portion of the very property of the appellant Mills, had invoked this principle. Before we deal with the contentions canvassed, it will be proper to make a brief survey of the relevant provisions of the Act: The material part of the definition of "premises" in s.5(8) reads: "Premises" means: (a) any land not being used for agricultural purposes; (b) any building or part of a building let separately. " (emphasis supplied) Sub section (10) of the same Section defines "standard rent", in relation to any premises, to mean (a) where the standard rent fixed by the court and the Controller respectively under the Bombay ]tent Restrictions Act, 1939 or the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944, such standard rent; or (b) Where the standard rent is not so fixed/subject to the provisions of section 11, (i) the rent at which the premises were let on the first day of September 1940, or (ii) where they were not let on the first day of September 1940, the rent at which they were last let before that day, or (iii) where they were first let after the first day of September 1940, the rent at which they were first let, or (iv) in any of the cases specified in section 11, the rent fixed by the Court; (1) (2) A.I.R. 1953 Cal. (3) [1952] Appeal Cases 142. (4) (5) 583 Section 1 1 empowers the Rent Court to fix the standard rent at such amount, as having regard to the provisions of this Act and the circumstances of the case, the court deems just (a) where any premises are first let after the first day of September 1940, and the rent at which they are so let is in the opinion of the Court excessive; or (b) where the Court is satisfied that there is no sufficient evidence to ascertain the rent at which the premises were let in anyone of the cases mentioned in sub clause (i) to (iii) of clause (4) of sub section (10) of section 5; or (c) Where by reason of the premises having been let at one time as a whole or in part and another time in parts or a whole, or for any other reasons, any difficulty arises in giving effect to this part; or (d) Where any premises have been or are let rent free or at a nominal rent or for some consideration in addition to rent; or (e) Where there is any dispute between the land lord and the tenant regarding the amount of standard rent. " Clause (c) read with the opening part of section 11(1) is crucial for our purpose. One of the primary objects of the Act is to curb exaction of extortionate rents and to stabilise the same at prewar level. In achieving that object, however, it avoids a Procrustean or mechanical approach. While pegging the basic line to September 1, 1940, it significantly subordinates "standard rent" by its very definition in section 5 (10) (b) to the benignant jurisdiction of the Court under s.11. And the key words of the latter provision, into which the conscience of this anti rack renting statute is compressed, are "the circumstances of the case, the Court deems just". These words inhibit a rigid and ossified determination of "standard rent". They leave sufficient "play at the joints", investing the court with a wide discretion in the matter. According to the scheme of the Act, while "rent" recoverable by the landlord, may owing to permitted increases, fluctuate, the 'standard rent ' always remains fixed or stationary. If on the basic date, the suit premises were not let out separately but were a part of the subject matter of a larger demise as in the instant case difficulty arises in giving effect to the statute. Clause (c) of section II (1) then comes into operation. To resolve the difficulty this clause and the related provisions are not to be construed in a narrow technical sense which would stultify or defeat their object. It is to be interpreted liberally in a manner which would 'advance the remedy ', 'suppress the 584 mischief, and foil 'subtle inventions and evasions ' of the Act. Construed in accordance with this socially relevant rule in Hayden 's case the meaning of 'the premises ' having been let at one time as a whole, spoken of in this clause, can legitimately be deemed to cover ' the larger premises which, on the basic date, had been let as a: whole and of which the suit premises was a part let out subsequently. In any event, the amplitude of the phrase "or any other reason" in the latter part of the clause, is wide enough to embrace cases of this kind and confers a plenary curative power on the Court. True, that unlike the English Rent Control Act of 1920 or the later English Acts, the (Bombay) Act does not expressly speak of apportionment. But the language of its relevant provisions construed consistently with the scheme and in built policy of the Act, is elastic enough to permit the fixation of standard rent on apportionment basis. As noticed already, section II (1) gives a discretion to the Court to fix such amount as standard rent as it "deems just". However, in exercising this discretion the Court has to pay due regard to (i) the provisions of the. Act and (ii) the circumstances of the case. Apportionment or equal distribution of the burden of rent on every portion is a rule of justice and good sense. If the standard rent of a whole was a specific amount, it stands to reason that the standard rent of a part or sub division of that whole should not ordinarily exceed that amount. Therefore, if in the circumstances of a given case the Court feels that for securing the ends of justice and giving effect to the provisions and policy of the Act, it is reasonably necessary and feasible to work out the standard rent by apportionment, it can legitimately do so. This principle, however, is applicable where on the basic date, that portion of which the standard rent is to be determined, had not been let separately as on unit, but the whole, of which it is a part, had been let on that date. Apportionment postulates that on account of its having been let on the basic date, the whole had acquired a standard rent which has to be allocated to smaller units subsequently carved out of it. It is thus clear that the principle of apportionment is not alien to the spirit of the Act, and has indeed been often invoked by the courts in fixing standard rent under this Act. In Narayanlal Bansilal 's case (supra), a Division Bench of the Bombay High Court determined standard rent of another part of this very estate of the Mills in accordance with that principle. However, while conceding that apportionment is not foreign to the scheme, purpose and policy of the Act, we will like to emphasise the need for caution and circumspection in invoking it. It is not to be rigidly and indiscriminately applied as a cast iron rule of law regardless of time and circumstances or the equities of the case. A doctrinaire approach, not consistent with a just and fair determination, stultifies the whole salutary purpose of justice to both, the landlord and the tenant. If necessary, it can be adjusted, adapted and attuned in the light of the particular circumstances of the case, to satisfy the statutory requirement of 585 fixing the standard rent as at a "just amount. Thus if after the material date, the landlord has made investments and improvements in the promises, it will be just and reasonable to take that factor also into account and to give him a fair return on such investments. Further, in appor tioning the rant, the Court must consider other relevant circumstances, such as "size, accessibility, aspect, and other 'Physical advantage enjoyed by the tenant of the premises of which the standard rent is in question, as compared with those of the rent of the property in which it is comprised [see Bainbridge vs Contdon(1)]. Where after the basic date, the premises completely change their identity, apportionment as a method of determining just standard rent, loses its efficacy and may be abandoned altogether. We have only illustrated, not exhaustively enumerated the relevant circumstances and their implications. At this stage, we may notice the decisions in Danrajgirji vs W.C. Ward (supra) and Bata Shoe and Co. vs Narayan Dass (supra) relied upon by Mr. Cooper. In the first, a learned single Judge of the Bombay High Court was considering sections 2(1)(a) and 13(1)(a) of the Bombay Rent (War Restriction Act II of 1918), which were, to an extent, similar to sections 5(8)(b) and (10) and 11(1)(c) of the 1947 Act. There, the Port Trust had in March 24,1915, leased the building known as Watson 's Annexe to one Dr. Billimoria at a rental of Rs. 2,850, besides ground rent and taxes. Dr. Billimoria sublet the premises in different flats to different tenants. The premises in the occupation of the defendant were sublet to him at a rental of Rs. 75/ in September, 1915, i.e. before September 1, 1916 which was the basic date under the 1918 Act. The tenancy of Dr. Billimoria was terminated by a consent decree on July 31, 1923 and thereafter, the defendant held directly under the plaintiff. The question arose as to whether standard rental of the flat should be calculated on the basis of the actual rent of Rs. 75/ , on the basis of the subletting or whether it should be determined by apportionment of the rent which Dr. Billimoria was paying to the Port Trust on the basis of the first letting. Pratt J answered this question thus: "The Rent Act itself in the definition of the premises refers to a part of the building separately let as premises of which the standard rent has to be determined and such standard rent must be determined with reference to those premises in the manner spe cified by s 2(1)(a) of the Act. The standard rent, therefore, must be ascertained on the admitted basic rent of Rs. 75./. . Again, if the head lease instead of being as here the lease of one building consisting of flats had been a lease of a large number of buildings constituting a large estate, it would be almost impossible to make a correct apportionment of the rent. I do not think it was the intention of the Rent Act that landlords and tenants should be driven to do a difficult and expensive process of valuation. and calculation before their rent could be ascertained. " (1) M45Sup. CI/75 586 We see force in the argument as also textual and pragmatic support. But these considerations do not preclude the Court from importing the flexible factors of fairness suggested by the circumstances of the case. Indeed, section 11, as explained earlier, obliges the Court to do it. Moreover, the interpretation of "premises" adopted by the learned judge was a little too literal, narrow and divorced from the purpose and content of the provisions relating to fixation of standard rent. Nor was it in accord with the scheme and object of the 1918 Act. The court 's jurisdiction to consider, as a strong circumstance, proper apportionment of rent is not taken away, in our view. It may be noted that just like the opening clause of section 5 of the 1947Act, which defines "premises" "standard rent" etc., the corresponding section 2(1) of the 1918 Act, also, started with the qualifying words "In this Act, unless there is anything repugnant in the subject or context". While applying these definitions to particular cases and provisions of the Acts, these words should not be lost sight of. The argument in favour of adopting the restricted interpretation, ignores this rider to the definitions, provided by the Legislature in these statutes. We do not intend to over burden this judgment with a discussion the decision in Bata Shoe & Co 's case (supra). Suffice it to say that is a decision under the West Bengal Premises Rent Control Act (17 of 1950) which stands on its own facts. It cannot be accepted as laying down a rule of universal application. It is vulnerable, more or less on the same grounds, on which the decision in Dhanrajgirji 's case can be assailed. We reject the narrow interpretation of the relevant provisions of Ss. 2 and II, canvassed for by the appellants, for two reasons: Firstly, it will leave the door wide open for evasion of this statute by what Abbot C. J. in Fox vs Bishop of Chester(1) called "shift or contrivance" All that a greedy landlord, need do to squeeze out more rent would be to divide his premises into several parts and let them out separately on exorbitant rents. Such an evasion may amount to a fraud upon the statute. Secondly, such a construction so manifestly subversive of one of the primary objects of the Act would be wholly beyond the intendment of the Legislature. For reasons aforesaid we would negative the first contention of Mr. Cooper, as an inflexible proposition and answer the first part of the question posed in the affirmative to the extent indicated. it takes us to the second part of that question namely whether the principle of apportionment was correctly applied to the fact, of the case ? Mr. Cooper contends that the first trial court (Samson J.) had rightly found that the premises in question on account of extensive alterations and constructions undergone a complete change after the basic date, and therefore standard rent could not be determined by apporoining the rent of the whole among the parts. It is maintained that (1) (824) ; at 655. 587 this finding of Samson J. was wrongly set aside by the High Court and must be deemed to be still holding the field. Objection is also taken to the amendments allowed by the trial court on remand. In the alternative, it is argued that even the courts below found that properties 983/10, 983/11, 983/12 and 984/54 were admittedly new structures and extensive repairs and replacements had been made in the remaining suit premises which had been destroyed or severely damaged by fire in 1948 49. On account of these substantial alterations and reconstructions the premises in question had lost their identity and consequently, the principle of appointment was not applicable. The first part of the contention based on the judgment of Samson J. is groundless. The judgment of the first trial court was set aside in toto by the Revisional Court, and further by the High Court and the case was remanded for de novo trial to the trial court which thereafter, decided the case afresh after allowing the applicant to amend his R.A. N.S. It is too late in the day any way to argue on the assumption that the findings still survive. The question whether a certain property has changed its identity after the basic date is largely one of fact. The courts below have found that excepting properties 983/10, 983/11,983/12 and 984/54 which were admittedly new structures contracted near about 1948, the rest of the properties, namely 983/1 to 983/9 had not lost their identity. The courts therefore, worked out the economic rent of these new structures by capitalising their value and gave the landlord a fair return on Ms investments and fixed their standard rent mainly on that basis. It was with regard to the unchanged old properties 983/1 to 983/9 that the High Court and the Revisional Court mainly adopted the method of appointment. Even so, it allowed the landlord fair return over Rs. 14,448/ being the cost of flooring, ceiling and other fixtures fixed to property 983/6. Now it is not disputed that on the basic date (September 1, 1940), these properties in question were parts of a larger entity comprised in a single lease or tenancy in favour of Sound Studios at a monthly rent of Rs. 1700/ . The courts below have therefore taken into account this basic circumstance along with the other relevant facts of the case. We do not find anything so wrong or unfair or untenable in the method adopted by them which would warrant an interference by this Court in the exercise of its special jurisdiction under article 136 of the Constitution. Not that apportionment must be applied in all cases as a rule of law but that, if applied along with other considerations dictated by a sense of justice and fairplay, cannot be condemned by this Court as, illegal. We therefore, overrule this contention, also. Lastly, it is contended that the courts below have seriously erred in evaluating the land under the suit properties at Rs. 30/ per sq. on the basis of an instance (exhibit R 6) of the year 1942, while they should have taken into account the value of the land as in the year 1948. it is added that some photostat co pies of sale deeds pertaining to the rele vant year were produced by Mr. Deweja, architect examined by the Landlord, and the Revisional Court wrongly rejected them As unproved. it is maintained that in 1948, the market value of the site underneath the 288 structures was Rs. 120/ per sq. in support of his contention that the value of the land at the date of the letting is the appropriate value to be taken into account, Counsel has cited Bukmanibai Khunji Cooverji vs Shivnarayan Ram Ashre. We are unable to accept this contention also. The courts below in capitalising the structures, 983/10 to 983/12 and 984/54 did take into account the value of the land married to those properties at the rate of Rs. 50/ per sq. yd; which, according to their estimate, after adding Rs. 30/ per sq. yd for escalation, would be the market value of that land in the year 1948. Since the rent of the old unchanged properties 983/1 to 983/9 was fixed mainly on apportionment basis, the courts did not think it necessary to take the value of their sites separately into computation in fixing the standard rent. Moreover, there was no evidence on the record to show that the value of the land in question, in the year 1948 was Rs. 120/ per sq. We, therefore, do not think it necessary to examine Cooverji 's case cited by the Counsel. We however, do not rule out the propriety of paying regard to escalations in land value as put forward by Mr. Cooper, but do hold that this Court will be loath to re investigate factual conclusions not shown to be perverse or manifestly unjust. Such is not the case here. For all the foregoing reasons, we would answer the question posed for decision.in the affirmative and dismiss these appeals with one set of costs. V.P.S. Appeals dismissed (1)(1966)67 Bom. L.R. 692.

On September 1, 1940, the basic date under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the properties in dispute were parts of a larger entity comprised in a single lease. In March 1948, the respondent took a fresh lease of the properties in dispute, Thereafter, the respondent filed applications in the court of Small Causes for fixation of standard rent on the basis of apportionment. The trial court dismissed the applications holding that the premises, on account of structural alterations, had undergone such a change that they could no longer be identified with the property that existed in September 1940; that the mode of determining the rent by apportionment was not available to the tenant; and that there was no sufficient material for ascertaining the standard ' rent in any other way. This order was set aside in revision and the case was remanded to the trial court. After remand, the trial court held that except with respect to three items of the premises in dispute, which were new Structures, there was no change of identity in the rest of the properties; that the new structures belonged to the respondent who was consequently liable to pay rent only for the land underneath; and on that basis, applying the principle of apportionment, fixed the standard rent. With respect to one item the trial court took into consideration the investment made by the landlord inclusive of the, cost of structures, estimated the value of the land underneath as in 1940, and fixed the standard rent on that basis. In revision it was held that the ownership of the three new structures also vested in the appellant, that he was entitled to get a fair return on that investment also and that the value of the land should be taken as in 1948 and not in 1940, and the standard rent was fixed on that basis. Further revisions to the High Court were dismissed with some arithmetical corrections. In appeal to this Court, HELD : The principle of apportionment is applicable to the fixation of standard rent of the premises in dispute and the principle had been rightly invoked and applied. [584 F G] (a) One of the primary objects of the Act is to curb exaction of extortionate rent. Section II (1) empowers the Court to fix the standard rent at such amount, as having regard to the provisions of the Act and the circumstances of the case, the Court deems just, If on the basic date the premises were not let out separately but were a part of the subject matter of a larger demise then section 11(1)(c) comes into operation. If the standard rent of a whole was a specific amount it stands to reason that the standard rent of a part or sub division of the whole should not ordinarily exceed that amount. Therefore, if in the circumstances of a given case the court feels that for securing the ends of justice and giving effect to the provisions and policy of the Act it is reasonably necessary and feasible to work out the standard rent by apportionment, it can legitimately do so. The language of the Act consistently with its scheme and in built policy is elastic enough to permit the fixation of standard rent on apportionment basis. At the same time, caution and circumspection are necessary in applying the principle to the particular circumstances of a case. For example, if after the material date, the landlord has made investments and improvements in the premises it will be just and reasonable to take that factor also into account and give him a fair return on such investment. Similarly, in apportioning the rent, the Court must also consider other relevant circumstances and advantages enjoyed by the tenant of the premises of which the standard rent is in question as compared with the rest 578 of the Property in which it is comprised. Further,where after the basic date the premises completely changed their identity, apportionment as a method of determining just standard rent loses its efficacy and may be abandoned altogether.[583E 585C] Narayanlal Bansilal vs Venkatrao Anant Rai 67 Bom. L.R. 352, Bainbridge vs Congdon and Fox vs Bishop of Chester ; at 655 referred to. Dhanrajgirji Naraingirji vs W. G. Ward (1925) 27, Bom. L.R. 877 and Bata Shoe & Co. Ltd. vs Narayan Das Mullick and Ors. not approved. (b)(1) The findings of the trial court before remand had been set aside in the order of remand, and there is nothing wrong or unfair or untenable in the method adopted by the lower courts after remand which would warrant interference by this Court in exercise of special jurisdiction under article 136 of the Constitution. [587D G] (ii) The question whether certain property has changed its identity after the basic date is largely one of fact. The factual conclusions arrived at by the revisional court and High Court are not shown to be perverse or manifestly unjust" It was with regard to the unchanged old properties that the High Court and the Revisional Court mainly adopted the method of apportionment. Even so, they allowed the landlord a fair return over the amount invested by him towards the cost of flooring, ceiling and other fixtures. since the rent of the old unchanged premises was fixed mainly on apportionment basis, the courts rightly did not think it necessary to take the value of their sites separately into computation in fixing the standard rent. [588 B D] (iii) As regards the new structures the courts below, in capitalising their value did take into account the value of the land and took the market value of the land as in the year 1948. [588B]

: Criminal Appeal Nos. 343 and 446 of 1988. 503 From the Judgment and Order dated 8.4.1988 of the Patna High Court in Crl. A. No. 140 of 1987 and Death Ref. No. 3 of 1987 and Crl. A. No. 136 of 1987. R.K. Garg, Salman Khurshid, Rakesh Luthra, Irshad Ahmad, Vinayak D. Phadke, Mrs. Bimla Sinha and Gopal Singh for the Appellants. A. Sharan, D. Goburdhan, D.N. Goburdhan and B .B. Singh for the Respondent. The Judgment of the Court was delivered by AHMADI, J. The appellants in these two appeals by spe cial leave are the six accused persons who were arraigned before the learned Third Additional Sessions Judge, Siwan, for trial. Criminal Appeal No. 343 of 1988 is by original accused Nos. 1, 2, 3 and 5 (Allauddin Mian, Keyamuddin Mian, Saheb Hussain and Afzal Mian) and Criminal Appeal No. 466 of 1988_is by original accused Nos. 4 and 6 (Sarif Mian and Mainuddin Mian). For the sake of convenience we will refer to them by their original positions in the Trial Court. AccuSed Nos. 1 and 2 were charged with the commission of offences punishable under Sections 302, 452 and 148, I.P.C. The prosecution case was that accused Nos. 1 and 2 along with accused Nos. 3 to 6 constituted an unlawful assembly, the common object of which was to kill PW 6 Baharan Mian and in pursuance of the said object accused No. 1 caused the death of Sahana Khatoon aged about seven years and accused No. 2 caused the death of Chand Tara aged about seven months. Accused Nos. 1 and 2 were substantively charged under Section 302, I.P.C., whereas accused Nos. 3 to 6 were sought to be held vicariously liable under Section 302/149, I.P.C. Accused Nos. 3 and 4 were further charged under Sections 447 and 148, I.P.C., and accused Nos. 5 and 6 were charged under Sections 447 and 147, I.P.C. The Trial Court convicted accused Nos. 1 and 2 on all the three counts and awarded the sentence of death to both of them for the com mission of the offence punishable under Section 302, I.P.C. Each of them was also sentenced to suffer rigorous imprison ment for one year on each count under Sections 148 and 452, I.P.C. The substantive sentences were directed to run con currently. Accused Nos. 3 and 4 were convicted under Sec tions 302/149, 447 and 148, IPC and for the offence under Section 302/149 each of them was directed to suffer impris onment for life. For the offences under Sections 148 and 447,/.P.C., they 504 were directed to suffer rigorous imprisonments for one year and three months, respectively. The substantive sentences were ordered to run concurrently. Accused Nos. 5 and 6 were convicted under Sections 302/149, 447 and 147, I.P.C. For the offence under Section 302/149, I.P.C., they were sen tenced to undergo imprisonment for life whereas for the offences punishable under Sections 447 and 147, I.P.C., they were directed to suffer rigorous imprisonments for three months and six months, respectively. The substantive sen tences were ordered to run concurrently. Since accused Nos. 1 and 2 were awarded the death penalty a reference was made to the High Court which came to be numbered as Reference No. 3 of 1987. Accused Nos. 1, 2, 3 and 5 preferred an appeal, Criminal Appeal No. 140 of 1987, challenging their convic tions and sentences awarded to them by the Trial Court. Accused Nos. 4 and 6 preferred a separate appeal, Criminal Appeal No. 136 of 1987, against their convictions and sen tences by the Trial Court. The said reference and both the appeals were disposed of by the High. Court by a common judgment. The High Court dismissed the appeal insofar as accused Nos. 1 and 2 are concerned and, while accepting the reference, confirmed the sentence of death awarded to them for the murder of two the infant girls. The conviction of the remaining four accused under Section 302/149 was, howev er, altered to Section 326/149 and the sentence of imprison ment for life given to each of them was substituted by a sentence of rigorous imprisonment for seven years. Their convictions and sentences on the other counts were, however, maintained. Feeling aggrieved by the convictions and sen tences awarded to them on different counts all the six accused persons have preferred the present two appeals by special leave. Briefly stated the prosecution case is that on the afternoon of 25th July, 1985 around 4.30 p.m. when PW 6 Baharan Mian was sitting at the entrance of his house, the aforesaid six accused persons came from the west armed with deadly weapons; accused Nos. 1 and 2 were carrying 'farsas ', accused Nos. 3 and 4 were armed with spears (bhalas) and accused Nos. 5 and 6 were armed with sticks (Lathis). On seeing them PW 6 got up and went to the 'osra ' (verandah) of his house. Accused No. 3 began to untie the buffalo tethered in front of the house while the other accused persons show ered abuses on PW 6, to which the latter objected. There upon, accused Nos. 4 and 6 shouted 'Sale ko jan se mar do '. Immediately thereafter, accused Nos. 1 and 2 moved menacing ly towards PW 6. The two infants Sahana Khatoon and Chand Tara were then playing in the 'dalan ' outside the western room. On seeing accused Nos. 1 and 2 approaching him duly armed with farsas PW 6 apprehended trouble and ran into the adjoining room to 505 arm himself with a spear. His wife, PW 5 Laila Khatun, who was in the room, however, prevented him from going out for fear that he may be done to death by the accused persons. Realising that PW 6 has entered the inner room and was prevented by his wife from coming out, accused No. 1 gave farsa blows on the head, abdomen and left thumb of Sahana Khatoon causing serious injuries. Accused No. 2 gave one farsa blow on the head of infant Chand Tara. The neighbors PW 2 Ful Mohammad Mian, PW 3 Ali Asgar, PW 4 Vidya Giri and others, namely, Jalaluddin Ahmad, Sadik Mian, Ram Chandra Prasad, Bhikhari Mian, etc. intervened, pacified the assail ants and sent them away. After the assailants had left the scene of occurrence the two injured girls were removed to the city dispensary where the First Information Report of PW 6 was recorded at about 6.45 p.m. Unfortunately, Sahana Khatoon died shortly after she was admitted to the dispen sary. Her younger sister Chand Tara succumbed to her in juries on 23rd August, 1985. Immediately after the two injured were removed to the dispensary for treatment, PW 7 Dr. Haliwant Singh who examined Sahana Khatoon noted that she had a sharp cutting injury on the anterior half of the head causing a fracture of cranial bone with the brain substance protruding out, a sharp cutting injury on the left illiao fossa and a sharp cutting injury on the left thumb and left index finger. PW 1 Dr. Anil Kumar Verma, the Senior Assistant Surgeon in Siwan Sadar Hospital, performed the autopsy on the dead body of Sahana Khatoon on the afternoon of 26th July, 1985. Since the fact that Sahana Khatoon died a homicidal death is not in dispute, we need not set out the findings recorded by PW 1 in his postmortem report. Suffice it to say that in the opinion of PW 1 death was due to shock and haemorrhage resulting from the injuries caused to the victim with the farsa. The injured Chand Tara was examined on the same day by PW 7. He had noticed a sharp cutting injury on the anterior half of the head slightly to the right of the mid line with the brain matter coming out from the posterior half. She was admitted as an indoor patient but was discharged on 13th August, 1985. A few days later she died on 23rd August, 1985. PW 10 Dr. Ahmad performed the autopsy on the dead body of Chand Tara and he found that she had an infected ulcer 3" x 1 1/4" by cranial cavity deep communicated with brain on the anteriofrontal portion of the head, On dissection the meningities and the brain matter were found to be congested. In his view, the meningitis and encephalitis which had resulted due to infection resulting from the injury caused by a sharp cutting weapon like a farsa were the cause of death. It is evident from the above evidence that Chand Tara also died a homicidal death. 506 The finding that both the girls died a homicidal death is unassailable in view of the clear evidence of the aforesaid three medical men, namely, PW 1, PW 7, and PW 10. The ques tion then is whether the appellants are re sponsible for their deaths and if so, to what extent? To bring home the guilt against the six accused persons, the prosecution examined five eye witnesses to the occurrence, namely, PWs 2 to 6. These five eye witnesses have unfolded the prosecution case that the six accused persons had formed an unlawful assem bly the common object whereof was to kill PW 6 Baharan Mian. In pursuance of that common object they, duly armed with weapons such as farsas, bhalas and lathis, entered the resi dential premises of PW 6 on the evening of 25th July, 1985 and committed the acts set out earlier. The courts below found that the presence of PWs 5 and 6 in the house at that point of time could not be doubted. In fact these accused persons had come to the house to kill PW 6. PWs 2, 3 and 4 who can be said to be dependable witnesses have also supported the prosecution case as narrated by PWs 5 and 6. The evidence of these prosecution witnesses stands further corroborated by the evidence of PW 7 who had seen the wounds on the two in jured soon after the incident. PWs 1 and 10 who performed the post mortem examination on the dead bodies also lend corroboration to the testimony of the eye witnesses. The courts below, therefore, recorded the convictions relying on the evidence of the aforesaid witnesses as set out earlier. In the backdrop of these facts, the learned counsel for the accused made the following submissions: 1. The evidence adduced by the prosecution to bring home the guilt against the accused, particularly the evidence of PWs 2 to 6, is not reliable and should not be acted upon. Even on the facts found proved by the courts below, the four accused persons, name ly, accused Nos. 3 to 6 cannot be held guilty of murder with the aid of Section 149, I.P.C. as the killings of the two girls was outside the common object of the unlawful assembly 3. Even if the conviction of accused Nos. 1 and 2 for the murder of the two girls is confirmed, the facts of the case do not war rant a death penalty, more so because the procedural requirement of Section 235(2) of the Cr. P.C. was not followed in letter and spirit, and 4. Section 302, I.P.C., and Section 354(3), Cr. P.C., insofar as they permit the imposi tion of the death penalty are violative of 507 Articles 14, 19 and 21 of the Constitution of India. We will immediately proceed to deal with these contentions. The learned counsel Shri Garg took us through the evi dence of the five eye witnesses with a view to satisfying us that their version regarding the incident was not free from blemish and it would be highly unsafe to place implicit reliance on their evidence. We have carefully scrutinised the evidence of the aforesaid five eye witnesses and we are inclined to think that their evidence was correctly appreci ated by both the Courts below. The presence of PWs 5 and 6, the parents of the two victim girls, in the house at that point of time cannot be disputed. In fact, the accused persons had constituted an unlawful assembly with a view to killing PW 6, the father of the two girls. With that avowed object they went, duly armed with lethal weapons, to launch an attack on PW 6. After accused No. 3 had untied the buf fallo notwithstanding the protest from PW 6, accused Nos. 4 and 6 gave the call to kill PW 6. Encouraged by this call accused Nos. 1 and 2 moved menacingly towards PW 6 who was then standing in 'osra '. Realising that accused nos. 1 and 2 were out to kill him, PW 6 went inside the room to fetch a bhala to defend himself. His wife PW 5 who was in the room sensing danger to his life stood in his way and did not permit him to go out and face accused Nos. 1 and 2. PWs 2, 3 and 4 who were neighbours saw the incident from close quar ters when accused Nos. 1 and 2 dealt fatal blows with their farsas to the two girls who were playing in the 'dalan '. PW 2 who is the brother of PW 6 was in the field to the east of the house and was, therefore, in a position to see the incident. PW 3 was returning from the bazar when he saw the accused persons at the door of PW 6. He heard the accused persons uttering abuses and the call given by accused Nos. 4 and 6 to kill PW 6. He also saw the accused persons entering the house and going towards the room which PW 6 had entered to fetch a bhala. In the end he saw accused Nos. 1 and 2 inflicting farsa blows on the two girls. He was cross exam ined at length but except for minor contradictions here and there which are only to be/expected when a witness gives evidence after a lapse of time, nothing substantial shaking the substratum of the prosecution case has surfaced to discredit him. PW 4 was at the saw mill of Ram Chandra Prasad when he saw the accused persons coming from the west and proceeding towards the east. He saw these persons going to the house of PW 6 and heard them showering abuses. In his cross examination an attempt was made to show that he could not be present at Ram Chandra Prasad 's saw mill at that hours since he was a Government Servant and admittedly his normal duty hours were from 508 10 a.m. to 5 p.m. Further effort was to show that he was connected with a case between Bhikhari Dass and Sita Ram Prasad pending under Section 145, Cr. P.C. in respect of possession of some land. He has also disowned knowledge of any dispute between Bhikhari Dass and Mainuddin Mian in respect of another parcel of land. He was cross examined at length to prove that he was an interested and a biased witness. Even if the evidence of this witness is ignored, there is sufficient evidence on record to support the find ings recorded by both the courts below. We are, therefore, of the opinion that there is no substance in the contention of the learned counsel for the accused that the prosecution evidence is not reliable and should not be acted upon for confirming the conviction of the accused persons. It was next submitted by learned counsel for the accused that some of the prosecution witnesses, namely, Jallaluddin, Bhikhari Mian and Ram Chandra Prasad who were admittedly present at the scene of occurrence according to the prosecu tion and had witnessed the entire incident were deliberately dropped with a view to suppressing the truth. We cannot accept this contention for the simple reason that apart from both PW 5 and PW 6 having deposed that they were pressurised by the defence the High Court has found in paragraph 36 of its judgment that efforts were made by the defence to scare away the witnessess from giving evidence. There is ample material on record to conclude that considerable pressure was exerted on the prosecution witnesses to stay away from the witness box. Some succumbed to the threats and pressure while some others did not and displayed courage to give evidence and state the truth. In this backdrop, if the prosecution did not examine Jallaluddin, Ram Chandra Prasad and Bhikhari Mian on learning that they were won over it cannot be said that the prosecution was unfair to the ac cused persons. Mr. Garg submitted that there was nothing to show that the accused persons were in any way guilty of pressurising or threatening the witnesses. That is besides the point. What is relevant is the fact it so happened. Therefore, the non examination of the aforesaid witnesses cannot affect the probative value of the evidence of other prosecution witnesses. We now proceed to consider whether accused Nos. 3 to 6 have been rightly convicted with the aid of Section 149 for the acts of accused Nos. 1 and 2. Section 141, I.P.C., defines an unlawful assembly as an assembly of five or more persons whose common object is to commit any one of the five acts enumerated therein. The explanation to that section makes it clear that an assembly which was not unlawful when it assembled, may subsequently become an unlawful assembly. 509 Section 142 states: whoever, being aware of facts which render any assembly an unlawful assembly, intentionally joins that assembly, or continues in it, is said to be a member of an unlawful assembly. Section 143 sets out the punishment for being a member of an unlawful assembly. Section 144 prescribes the punishment for joining an unlaw ful assembly armed with deadly weapons. Section 145 pre scribes the punishment for joining or continuing in an unlawful assembly which has been commanded to disperse. Section 146 defines rioting. It says that whenever force or violence is used by an unlawful assembly, or by any member thereof, in prosecution of the common object of such assem bly, every member of such assembly is guilty of the offence of rioting. Section 147 then prescribes the punishment for rioting. Section 148 prescribes the punishment for rioting by members of an unlawfully assembly armed with deadly weapons. Then comes Section 149 which reads as under: "If an offence is committed by any member of an unlawful assembly in prosecution of the common object of that assembly, or such as the members of that assembly knew to be likely to be committed in prosecution of that object, every person who, at the time of the commit ting of that offence, is a member of the same assembly, is guilty of that offence. " Therefore, in order to fasten vicarious responsibility on any member of an unlawful assembly the prosecution must prove that the act constituting an offence was done in prosecution of the common object of that assembly or the act done is such as the members of that assembly knew to be likely to be committed in prosecution of the common object of that assembly. Under this section, therefore, every member of an unlawful assembly renders himself liable for the criminal act or acts of any other member or members of that assembly provided the same is/are done in prosecution of the common object or is/are such as every member of that assembly knew to be likely to be committed. This section creates a specific offence and makes every member of the unlawful assembly liable for the offence or offences commit ted in the course of the occurrence provided the same was/were committed in prosecution of the common object or was/were such as the members of that assembly knew to be likely to be committed. Since this section imposes a con structive penal liability, it must be strictly construed as it seeks to punish members of an unlawful assembly for the offence or offences committed by their associate or associ ates in carrying out the common object of the assembly. What is important in each case is to 510 find out if the offence was committed to accomplish the common object of the assembly or was one which the members knew to be likely to be committed. There must be a nexus between the common object and the offence committed and if it is found that the same was committed to accomplish the common object every member of the assembly will become liable for the same. Therefore, any offence committed by a member of an unlawful assembly in prosecution of anyone or more of the five objects mentioned in Section 141 will render his companies constituting the unlawful assembly liable for that offence with the aid of Section 149, I.P.C. In the present case, the common object of the unlawful assembly as alleged in the charge was to kill PW 6 Baharan Mian. To accomplish that objective accused Nos. 1 and 2 went after PW 6. Sensing danger PW 6 ran into the adjoining room to fetch a spear to defend himself. His wife PW 5, however, blocked his way and did not permit him to go out. When accused Nos. 1 and 2 realised that PW 6 was beyond their reach, they, frustrated at their failure to accomplish their mission, wielded their weapons on the innocent girls who were playing in the Dalan. The common object having thus been frustrated, accused Nos. 1 and 2 took out their wrath on the innocent girls which was no part of the common object of the unlawful assembly. It was not necessary to kill these girls to accomplish their object of killing PW 6 as these two girls had not prevented them from reaching PW 6. The learned counsel for the accused, therefore, rightly submit ted that while accused Nos. 1 and 2 can be punished for their individual acts committed after the common object stood frustrated and abandoned on PW 6 placing himself beyond their reach, the other members of the unlawful assem bly could not be punished for the acts of accused Nos. 1 and 2 as the killing of the girls was no part of the common object of the assembly. Once PW 6was beyond the reach of his two tormenters, the common object to kill him stood frus trated and whatever the individual members did thereafter could not be said to have been done in prosecution of the common object of the assembly. It is not the intention of the legislature in enacting Section 149 to render every member of an unlawful assembly liable to punishment for every offence committed by one or more of its members. In order to invoke Section 149 it must be shown that the in criminating act was done to accomplish the common object of the unlawful assembly. Even if an act incidental to the common Object is committed to accomplish the common object of the unlawful assembly it must be within the knowledge of other members as one likely to be committed in prosecution of .the common object. If the members of the assembly knew or were aware of the likelihood of a particular offence being committed in prosecution of the common object they would be liable for the same 511 under Section 149, I.P.C. In the instant case, however, the members constituting the unlawful assembly had gone to the house of PW 6 to kill him. That was the common object of the unlawful assembly. For accomplishing that common object it was not necessary to kill the two girls who were not an hinderance to accused Nos. 1 and 2 accomplishing their common object. We are, therefore, of the opinion that ac cused Nos. 3 to 6 cannot be convicted for the injuries caused to the two minor girls by accused Nos. 1 and 2 with the aid of Section 149, I.P.C. We, therefore, set aside the conviction under Section 326/149, I.P.C., and also the sentence imposed on accused Nos. 3 to 6 on that count. We, however, hold accused Nos. 3 and 4 guilty under Sections 447 and 148, I.P.C., and confirm the sentences awarded to them on those counts. So also we hold accused Nos. 5 and 6 guilty under Sections 447 and 147, IPC and confirm their sentences for the said offences. Having come to the conclusion that Allauddin Mian and Keyambuddin Mian are guilty of murder, the next question is what punishment should be awarded to them, namely, whether extinction of life or incarceration for life. Section 302, IPC casts a heavy duty on the Court to choose between death and imprisonment for life. When the Court is called upon to choose between the convicts cry 'I want to live ' and the prosecutor 's demand 'he deserves to die ' it goes without saying that the Court must show a high degree of concern and sensitiveness in the choice of sentence. In our justice delivery system several difficult decisions are left to the presiding officers, sometimes without providing the scales or the weights for the same. In cases of murder, however, since the choice is between capital punishment and life imprisonment the legislature has provided a guideline in the form of Subsection (3) of Section 354 of the Code of Crimi nal Procedure, 1973 ("the Code") which reads as under: "When the conviction for an offence is punish able 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. " This provision makes it obligatory in cases of conviction for an offence punishable with death or with imprisonment for life or for a term of years to assign reasons .in sup port of the sentence awarded to the convict and further ordains that in case the Judge awards the death penalty, "special reasons" for such sentence shall be stated in the 512 judgment. When the law casts a duty on the Judge to state reasons it follows that he is under a legal obligation to explain his choice of the sentence. It may seem trite to say so, but the existence of the 'special reasons clause ' in the above provision implies that the Court can in fit cases impose the extreme penalty of death which negatives the contention that there never can be a valid reason to visit an offender with the death penalty, no matter how cruel, gruesome or shocking the crime may be. Basing his submission on what is described as the humanitarian ideology or the rehabilitarian philosophy, Mr. Garg submitted that any law which permits the supreme right to life being sacrificed for the failure of the State to establish a social order in which such crimes are not committed must be struck down as offending Articles 14, 19 and 21 of the Constitution. While rejecting the demand of the protagonist of the reformatory theory for the abolition of the death penalty the legisla ture in its wisdom thought that the 'special reasons clause ' should be a sufficient safeguard against arbitrary imposi tion of the extreme penalty. Where a sentence of severity is imposed, it is imperative that the Judge should indicate the basis upon which he considers a sentence of that magnitude justified. Unless there are special reasons, special to the facts of the particular case, which can be catalogued as justifying a severe punishment the Judge would not award the death sentence. It may be stated that if a Judge finds that he is unable to explain with reasonable accuracy the basis for selecting the higher of the two sentences his choice should fall on the lower sentence. In all such cases the law casts an obligation on the Judge to make his choice after carefully examining the pros and cons of each case. It must at once be conceded that offenders of some particularly grossly brutal crimes which send tremors in the community have to be firmly dealt with to protect the community from the perpetrators of such crimes. Where the incidence of a certain crime is rapidly growing and is assuming menacing proportions, for example, acid pouring or bridge burning, it may be necessary for the Courts to award exemplary punish ments to protect the community and to deter others from committing such crimes. Since the legislature in its wisdom thought that in some rare cases it may still be necessary to impose the extreme punishment of death to deter others and to protect the society and in a given case the country, it left the choice of sentence to the judiciary with the rider that the Judge may visit the convict with the extreme pun ishment provided there exist special reasons for so doing. In the face of this statutory provision which is consistent with Article 21 of the Constitution which enjoins that the personal liberty or life of an individual shall not be taken except according to the procedure established by law, we are unable to countenance counsel 's extreme submission of death in no 513 case. The submission that the death penalty violates Arti cles 14, 19 and 21 of the Constitution was negatived by this Court in Bachan Singh vs State of Punjab, Mr. Garg, however, submitted that the said decision needs re consideration as the learned Judges constituting the majority did not have the benefit of the views of Bhagwati, J. who ruled to the contrary. We are not impressed by this submission for the simple reason that the reasons which prevailed with Bhagwati, J., could not have been unknown to the learned Judges constituting the majority. Even a casual glance at the provisions of the Penal Code will show that the punishments have been carefully graded corresponding with the gravity of offences; in grave wrongs the punishments prescribed are strict whereas for minor offences leniency is shown. Here again there is considerable room for manoeuvre because the choice of the punishment is left to the discretion of the Judge with only the outer limits stated. There are only a few cases where a minimum punishment is prescribed. The question then is what proce dure does the Judge follow for determining the punishment to be imposed in each case to fit the crime? The choice has to be made after following the procedure set out in sub section (2) of Section 235 of the Code. That sub section reads as under: "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 sen tence on him according to law. " The requirement of hearing the accused is intended to satis fy the rule of natural ' justice. It is a fundamental re quirement of fairplay that the accused who was hitherto concentrating on the prosecution evidence on the question of guilt should, on being found guilty, be asked if he has anything to say or any evidence to tender on the question of sentence. This is all the more necessary since the Courts are generally required to make the choice from a wide range of discretion in the matter of sentencing. To assist the Court in determining the correct sentence to be imposed the legislature introduced sub section (2) to Section 235. The said provision therefore satisfies a dual purpose; it satis fies the rule of natural justice by according to the accused an opportunity of being heard on the question of sentence and at the same time helps the Court to choose the sentence to be awarded. Since the provision is intended to give the accused an opportunity to place before the Court all the relevant material having a bearing on the 514 question of sentence there can be no doubt that the provi sion is salutary and must be strictly followed. It is clear ly mandatory and should not be treated as a mere formality. Mr. Garg was, therefore, justified in making a grievance that the Trial Court actually treated it as a mere formality as is evident from the fact that it recorded the finding of guilt on 31st March, 1987, on the same day before the ac cused could absorb and overcome the shock of conviction they were asked if they had anything to say on the question of sentence and immediately thereafter the decision imposing the death penalty on the two accused was pronounced. In a case of life or death as stated earlier, the presiding officer must show a high degree of concern for the statutory tight of the accused and should not treat it as a mere formality to be crossed before making the choice of sen tence. If the choice is made, as in this case, without giving the accused an effective and real opportunity to place his antecedents, social and economic background, mitigating and extenuating circumstances, etc., before the Court, the Court 's decision on the sentence would be vulner able. We need hardly mention that in many cases a sentenc ing.decision has far more serious consequences on the of fender and his family members than in the case of a purely administrative decision; a fortiori, therefore, the princi ple of fairplay must apply with greater vigour in the case of the former than the latter. An administrative decision having civil consequences, if taken without giving a hearing is generally struck down as violative of the rule of natural justice. Likewise a sentencing decision taken without fol lowing the requirements of sub section (2) of Section 235 of the Code in letter and spirit would also meet a similar fate and may have to be replaced by an appropriate order. The sentencing court must approach the question seriously and must endeavour to see that all the relevant facts and cir cumstances bearing on the question of sentence are brought on record. Only after giving due weight to the mitigating as well as the aggravating circumstances placed before it, it must pronounce the sentence. We think as a general rule the Trial Courts should after recording the conviction adjourn the matter to a future date and call upon both the prosecu tion as well as the defence to place the relevant material bearing on the question of sentence before it and thereafter pronounce the sentence to be imposed on the offender. In the present case, as pointed out earlier, we are afraid that tile learned Trial Judge did not attach sufficient impor tance to the mandatory requirement of sub section (2) of Section 235 of the Code. The High Court also had before it only the scanty material placed before the learned Sessions Judge when it confirmed the death penalty. Apart from what we have said earlier, we may now proceed to 515 consider whether the imposition of death penalty on the two accused persons found guilty of murder is justified. The Trial Court has dealt with the question of sentence in paragraphs 42 to 44 of its judgment. The reason which weighed with the Trial Court is: it is one of the gravest cases of extreme culpability in which two innocent and helpless babies were butchered in a barbarous manner. After taking note of the mitigating circumstances that both the offenders were married young men with children, the Trial Court found that since the murders were committed without provocation and in cold blood there, was no room for lenien cy as the crime was so abhorrent that it shocked the con science of the court. The High Court while maintaining the conviction of the said two accused persons proceeded to deal with the question of sentence thus: "The conviction of Allauddin Mian and Keyamud din Mian having been upheld the question is whether the reference should be accepted and the sentence of death against them be upheld. In my view Allauddin Mian and Keyamuddin Mian have shown extreme mental depravity in causing serious fatal injuries to helpless girls of the age of 7/8 years and 7 months. In my view, therefore, this murder can be characterised as rarest of the rare cases. the extreme mental depravity exhibited by Allauddin Mian and Keyamuddin Mian impels me to uphold the sen tence imposed on Allauddin Mian and Keyamuddin Mian by the learned Additional Sessions Judge. " It will be seen from the above, that the courts below were considerably moved by the fact that the victims were innocent and helpless infants who had not provided any provocation for the ruthless manner in which they were killed. No one can deny the fact that the murders were ghastly. However, in order that the sentences may be proper ly graded to fit the degree of gravity of each case, it is necessary that the maximum sentence prescribed by law should, as observed in Bachan Singh 's case (supra), be reserved for 'the rarest of rare ' cases which are of an exceptional nature. Sentences of severity are imposed to reflect the seriousness of the crime, to promote respect for the law, to provide just punishment for the offence, to afford adequate deterrent to criminal conduct and to protect the community from further similar conduct. It serves a three fold purpose (i) punitive (ii) deterrent and (iii) protective. That is why this Court in Bachan Singh 's case observed that when the question of choice of sentence is under consideration the Court must not only look to the crime and the victim but also the 516 circumstances of the criminal and the impact of the crime. on the community. Unless the nature of the crime and the circumstances of the offender reveal that the criminal is a menace to the society and the sentence of life imprisonment would be altogether inadequate, the Court should ordinarily impose the lessor punishment and not the extreme punishment of death which should be reserved for exceptional cases only. In the subsequent decision of Machhi Singh vs State of Punjab, this Court, after culling out the guidelines laid down in Bachan Singh 's case, observed that only in those exceptional cases in which the crime is so brutal, diabolical and revolting as to shock the collective conscience of the community, would it be permissible to award the death sentence. In the present case, unfortunately the material for choice of sentence is scanty. The motive for the crime is obscure, the one stated, namely, the quar rel between two infants of both sides, does not seem to be correct. The killings were not for gain. The charge shows that the target was PW 6, the father, and not the two in fants. The killing of the two infants was not in the contem plation of any of the accused. Both the girls were the victims of the offenders ' ire resulting from frustration at the escape of their target. There is nothing so uncommon about the crime as to make the case an exceptional one. The mere fact that infants are killed, without more, is not sufficient to bring the case within the category of 'the rarest of rare ' cases. In Bachan Singh 's case the question of laying down standards for categorising cases in which the death penalty could be imposed was considered and it was felt that it would be desirable to indicate the broad guidelines consist ent with section 354(3) of the Code without attempting to formulate rigid standards. That was because it was felt that standardisation of the sentencing process would leave little room for judicial discretion to take account of variations in culpability even within the same category of cases. After referring to the aggravating circumstances (Para 202) and the mitigating circumstances (Para 206) pointed out by counsel, the Court observed that while 'these ,were relevant factors it would not be desirable to fetter judicial discre tion. It pointed out that these factors were not exhaustive and cautioned: 'courts, aided by broad illustrative guide lines indicated by us, will discharge the onerous function with evermore scrupulous care and human concern ' consistent with Section 354(3) of the Code. In the subsequent decision in Machhi Singh 's case, the Court tried to indicate the type of cases which may fall within the exceptional class without attempting to introduce rigidity. It would not be fair to read the decision as an attempt to fetter judicial discre tion. Even in cases of the 517 type indicated in that case, circumstances may vary, which would necessitate a different approach. For example, the circumstances of this case show that the offenders had killed the two girls not because of any hatred for them or to accomplish their objective but out of frustration and anger at having lost their target. Unfortunately as the trial Judge did not give time to the convicts to reflect on the question of sentence, the chance, however remote, of the true motive for the crime surfacing was lost. The anteced ents of the accused, their socioeconomic conditions, the impact of their crime on the community etc., have not come on record. The absence of these particulars makes the choice of punishment difficult. In view of what we have observed earlier and having regard to the circumstances in which the murders took place, we think the extreme punishment of death is not warranted. In the result both the appeals are partly allowed. The conviction of accused Nos. 1 and 2 under all the heads is confirmed but their sentence of death for killing Shahna Khatoon and Chand Tara, respectively, is converted to im prisonment for life. So far as accused Nos. 3 to 6 are concerned, their conviction and sentence under Section 326/ 149, 1.P.C. is set aside; however, their conviction and sentence under the other heads is maintained. Their bail bonds will stand cancelled if they have already served out their sentences; otherwise they will surrender to their bail and serve out the remaining sentence. The appeals will stand disposed of accordingly. R.S.S. Appeals allowed partly.

Accused Nos. 1 to 6, constituting an unlawful assembly the common intention of which Was to kill Baharan Mian, came to his house armed with deadly weapons. Baharan Mian, appre hending trouble, ran inside Co arm himself but his wife prevented him from coming out again. At that time, Baharan Mian 's two infant daughters, Sahana Khatoon aged about seven years and Chand Tara aged about seven months, were playing in the 'dalan ' of his house. Failing in their object to kill Baharan Mlan, accused No. 1 gave farsa blows on the head, abdomen and left thumb of Sahana Khatoon causing serious injuries, and accused No. 2 gave one farsa blow on the head of infant Chand Tara. As a result of these injuries, Sahana Khatoon died the same day while Chand Tara died after 28 days. Accused Nos.1 and 2 were charged under sections 302, 452 and 148 I.P.C., whereas accused Nos. 3 to 6 were sought to be held vicariously liable under section 302/149 I.P.C. Accused Nos. 3 and 4 were further charged under sections 447 and 148, I.P.C. and accused Nos. 5 & 6 were charged under sections 447 and 147, I.P.C. The Trial Court convicted accused Nos. 1 and 2 on all the three counts and awarded the sentence of death to both of them for the commission of the offence punishable under section 302, I.P.C. Accused Nos. 3 and 4 were convicted under sections 302/149, 447 and 148, I.P.C. and for the offence under section 302/149, each of them was directed to suffer imprison 499 ment for life. Accused Nos. 5 and 6 were convicted under sections 302/149, 447 and 147, I.P.C. For the offence under sections 302/149, I.P.C., they were sentenced to undergo imprisonment for life. The High Court dismissed the appeal of accused Nos. 1 and 2 and, while accepting the reference, confirmed the sentence of death awarded to them for the murder of the two infant girls. The conviction of the remaining four accused under section 302/149 was, however, altered to sections 326/149 and the sentence of imprisonment for life given to each of them was substituted by a sentence of rigorous imprisonment for seven years. Their convictions and sen tences on the other counts were, however, maintained: Before this Court it was contended on behalf of the appellants that (1) the evidence adduced by the prosecution was not reliable; (2) Even on the facts found proved by the courts below, accused Nos. 1 to 6 could not be held guilty of murder with the aid of section 149, I.P.C. as the kill ings of the two girls was outside the common object of the unlawful assembly; (3) the facts of the case did not warrant a death penalty in the case of accused Nos. 1 and 2, more so because the procedural requirement of section 235(2) of the Cr. P.C. was not followed in letter and spirit; and (4) section 302, I.P.C., and section 354(3), Cr. P.C., insofar as they permit the imposition of the death penalty were viola tive of Articles 14, 19 and 21 of the Constitution of India. While partly allowing the appeals by converting the sentence of death in the case of accused nos. 1 and 2 to imprisonment for life under section 302, I.P.C., and setting aside the conviction of accused nos. 3 to 6 under section 326/149 I.P.C., the Court, HELD: (1) There is no substance in the contention that the prosecution evidence is unreliable and should not be acted upon for confirming the conviction of the accused persons. [508B C] (2) If the prosecution did not examine some persons who were admittedly present at the scene of occurrence, on learning that they were won over, it cannot be said that the prosecution was unfair to the accused persons. The non examination of these persons cannot affect the probative value of the evidence of other prosecution witnesses. [508F] (3) Section 149. I.P.C., creates a. specific offence. Since this section imposes a constructive penal liability, it must be strictly construed. [509G] 500 (4) It is not the intention of the legislature in enact ing section 149 to render every member of an unlawful assem bly liable to punishment for every offence committed by one or more of its members. In order to invoke section 149 it must be shown that the incriminating act was done to accom plish the common object of the unlawful assembly. Even if an act incidental to the common object is committed to accom plish the common object of the unlawful assembly, it must be within the knowledge of other members as one likely to be committed in prosecution of the common object. If the mem bers of the assembly knew or were aware of the likelihood of a particular offence being committed in. prosecution of the common object they would be liable for the same under sec tion 149. I.P.C. [510F H] (5) What is important in each case is to find out if the offence was committed to accomplish the common object of the assembly or was one which the members knew to be likely to be committed. There must be a nexus between the common object and the offence committed, and if it is found that the same was committed to accomplish the common object, every member of the assembly will become liable for the same. [509H; 510A B] (6) In the instant case, the common object of the unlaw ful assembly, as alleged in the charge, was to kill Baharan Mian. When accused Nos. 1 and 2 realised that Baharan Mian was beyond their reach. frustrated at their failure to accomplish their mission, wielded their weapons on the innocent girls, which was no part of the common object of the unlawful assembly. For accomplishing their common object it was not necessary to kill the two girls who were not a hinderance to accused Nos. 1 and 2 accomplishing their common object. Accused Nos. 3 to 6 cannot, therefore, be convicted for the injuries caused to the two minor girls by accused Nos. 1 and 2, with the aid of section 149. [511A B] (7) Section 302, I.P.C, casts a heavy duty on the Court to choose between death and imprisonment for life. When the Court is called upon to choose between the convict 's cry 'I want to live ' and the prosecutor 's demand 'he deserves to die ', it goes without saying that the Court must show a high degree of concern and sensitiveness in the choice of sen tence. [511D E] (8) In our justice delivery system several difficult decisions are left to the presiding officer, sometimes without providing the scales or the weights for the same. In cases of murder, however, since the choice 501 is between capital punishment and life imprisonment, the legislature has provided a guideline in the form of sub section (3) of section 354 of the Code of Criminal Proce dure, 1973. [511E F] (9) When the law casts a duty on the Judge to state reasons it follows that he is under a legal obligation to explain his choice of the sentence. It may seem trite to say so but the existence of the 'special reason clause ' in the above provision implies that the Court can in fit cases impose the extreme penalty of death which negatives the contention that there never can be a valid reason to visit an offender with the death penalty, no matter how cruel, gruesome or shocking the crime may be. [512A C] (10) Where a sentence of severity is imposed, it is imperative that the Judge should indicate the basis upon which he considers a sentence of that magnitude justified. Unless there are special reasons, special to the facts of the particular case, which can be cataloged as justifying a severe punishment, the Judge would not award the death sentence. If a Judge finds that he is unable to explain with reasonable accuracy the basis for selecting the higher of the two sentences, his choice should fail on the lower sentence. [512D E] (11) The choice of the sentence has to be made after following the procedure set out in sub section (2) of sec tion 235 of the Code. Since the provision is intended to give the accused an opportunity to place before the Court all the relevant material having a bearing on the question of sentence, there can be no doubt that the provision is salutary and must be strictly followed. [513D, H; 514A] (12) The requirement of hearing the accused is intended to satisfy the rule of natural justice. In the case of life or death, the presiding officer must show a high degree of concern for the statutory right of the accused and should not treat it as a mere formality to be crossed before making the choice of the sentence. If the choice is made without giving the accused an effective and real opportunity to place his antecedents, social and economic background, mitigating and extenuating circumstances, etc. before the Court, the Court 's decision on the sentence would be vulner able. [514C] (13) A sentencing decision taken without following the requirements of sub section (2) of section 235 of the Code in letter and spirit may have to be replaced by an appropri ate order. In the instant case, the Trial Court actually treated it as a mere formality as is evident from 502 the fact that it recorded the finding of guilt on 31st March, 1987, and on the same day before the accused could absorb and overcome the shock of conviction they were asked if they had anything to say on the question of sentence. Immediately thereafter the decision imposing the death penalty on the two accused was pronounced. [514B, E] (14) As a general rule, the Trial Courts should after recording the conviction adjourn the matter to a future date and call upon both the prosecution as well as the defence to place the relevant material bearing on the question of sentence before it and thereafter pronounce the sentence to be imposed on the offender. [514F G] (15) In the instant case, the Trial Court did not attach sufficient importance to the mandatory requirement of sub section (2) of section 235 of the Code. The High Court also had before it only the scanty material placed before the Sessions Judge when it confirmed the death penalty. Absence of particulars of ancedents of accused, their socio economic conditions, the impact of their crime on the community, etc. makes the choice of punishment difficult. [514G H] (16) It is necessary that the maximum sentence pre scribed by law should be reserved for 'the rarest of rare ' cases which are of an exceptional nature. Sentences of severity are imposed t9 reflect the seriousness of the crime, to promote respect for the law, to provide just punishment for the offence, to afford adequate deterrent to criminal conduct and to protect the community from further similar conduct. [515G] (17) In the instant case, unfortunately the material for choice of sentence is scanty. The motive for the crime is obscure, the one stated. namely, the quarrel between two infants of both sides, does not seem to be correct. The killings were not for gain. The change shows that the target was Baharan Mian, the father, and not the two infants. The killing of the two infants was not in the contemplation of any of the accused. Both the girls were the victims of the offenders ' ire resulting from frustration at the escape of their target. There is nothing so uncommon about the crime as to make the case an exceptional one. The mere fact that infants are killed, without more, is not sufficient to bring the case within the category of 'the rarest of rare ' cases. [516C E] Bachan Singh vs State of Punjab, ; and Machhi Singh vs State of Punjab, , referred to.

Civil Appeal No. 3165 of 1981. From the Judgment and Order dated 20.11.1980 of the Delhi High Court in Writ Petition No. 1632 of 1980. 949 M.K. Ramamurthy, M.A. Krishnamurthy and Miss Kuttu Bansilal for the Appellant. N.C. Talukdar and M.C. Thinner for the Respondents. The Judgment of the Court was delivered by SEN, J. The short point involved in this appeal by special leave from a judgment and order of the Delhi High Court dated November 20, 1980 dismissing in limine the writ petition filed by the appellant, is whether the appellate Order passed by the Director General, Border Roads Organisation dated October 14, 1980, is in conformity with the requirements of r. 27(2) of the Central Civil Services (Classification, Control & Appeal) Rules, 1965 ( 'Rules ' for short) which have been made applicable to the personnel of the Border Roads Organisation. The facts are that the appellant was appointed as Supervisor (Barracks & Stores) Grade I attached to 60 Road Construction Company, General Reserve Engineering Force on probation for a period of two years by an order dated July 7, 1976. Before the expiry of the probationary period, the Chief Engineer (project) Dante by an order dated June, 24, 1978 terminated the services of appellant. The order of termination however could not be served on the appellant as he absented himself without leave. Thereupon, the Officer commanding by a movement order dated June 27, 1978 transferred the appellant to 19 Border Roads Task Force. On July 1, 1978 the Officer Commanding forwarded the order of termination issued by the Chief Engineer, but on representation by the appellant, the Director General, Border Roads Organisation by order dated November 17, 1978 cancelled the order of termination presumably on a misapprehension that the period of probation having expired, no order of termination could be made. He however directed the taking of disciplinary action against the appellant as a deserter since he had absconded from service to evade the service of the order of termination. After a regular departmental inquiry, the appellant was served with a show cause notice under Article 311 (2) of the Constitution and after considering the representation made by him, the Chief Engineer (Project), Dante imposed on the appellant the punishment of removal from service in exercise of the powers conferred by r. 12 read with r. 11(VIII) of the Rules with effect from 950 June 10, 1980. Against the order of removal, the appellant preferred an appeal under r. 23 of the Rules before the Director General, Border Roads Organisation. The Director General by the impugned order dismissed the appeal observing: "After thorough examination of the facts brought out in the appeal, the DGBR is of the opinion that the punishment imposed by the CE (P) DANTAK vide his Order No. 10527/762/EIB dated 24 June 78 was just and in accordance to the Rules applicable. He has accordingly rejected the appeal. " Having heard the parties, we are satisfied that in disposing of the appeal the Director General has not applied his mind to the requirements of r. 27(2) of the Rules, the relevant provisions of which read as follows: "27(2). In the case of an appeal against an order imposing any of the penalties specified in Rule 11 or enhancing any penalty imposed under the said Rules, the appellate authority shall consider. (a) whether the procedure laid down in these rules has been complied with and if not, whether such noncompliance has resulted in the violation of any provisions of the Constitution of India or in the failure of justice; (b) whether the findings of the disciplinary authority are warranted by the evidence on the record; and (c) whether the penalty or the enhanced penalty imposed is adequate, inadequate or severe; and pass orders (i) confirming, enhancing, reducing or setting aside the penalty; or (ii) remitting the case to the authority which imposed or enhanced the penalty or to any other authority with such direction as it may deem fit in the circumstances of the case. " 951 The word 'consider ' in rule 27 (2) implies due application of mind '. It is clear upon the terms of r. 27(2) that the appellate authority is required to consider (1) whether the procedure laid down in the Rules has been complied with; and if not, whether such non compliance has resulted in violation of any provisions of the Constitution or in failure of justice; (2) whether the findings of the disciplinary authority are warranted by the evidence on record; and (3) whether the penalty imposed is adequate; and thereafter pass orders confirming, enhancing etc. the penalty, or may remit back the case to the authority which imposed the same. Rule 27(2) casts a duty on the appellate authority to consider the relevant factors set forth in cls. (a), (b) and (c) thereof. There is no indication in the impugned order that the Director General was satisfied as to whether the procedure laid down in the Rules had been complied with; and if not, whether such noncompliance had resulted in violation of any of the provisions of the Constitution or in failure of justice. We regret to find that the Director General has also not given any finding on the crucial question as to whether the findings of the disciplinary authority were warranted by the evidence on record. It seems that he only applied his mind to the requirement of cl. (c) of r. 27(2), viz. whether the penalty imposed was adequate or justified in the facts and circumstances of the present case. There being non compliance with the requirements of r. 27(2) of the Rules, the impugned order passed by the Director General is liable to be set aside. It is not the requirement of article 311(2) of the Constitution of India or of the Rules of natural justice that in every case the appellate authority should in its order state its own reasons except where the appellate authority disagrees with the findings of the disciplinary authority. In State of Madras vs A.R. Srinivasan, a Constitution Bench repelled the contention that the State Government 's order compulsorily retiring the delinquent from service was bad as it did not give reasons for accepting the findings of the inquiring tribunal and observed as follows: "Mr. Setalvad for the respondent attempted to argue that the impugned order gives no reasons why the appellant accepted the findings of the Tribunal. Disciplinary 952 proceedings taken against the respondent, says Mr. Setalvad, are in the nature of quasi judicial proceedings and when the appellant passed the impugned order against the respondent, it was acting in a quasi judicial character. That being so, the appellant should have indicated some reasons as to why it accepted the findings of the Tribunal; and since no reasons are given, the order should be struck down on that ground alone. We are not prepared to accept this argument. In dealing with the question as to whether it is obligatory on the State Government to give reasons in support of the order imposing a penalty on the delinquent officer, we cannot overlook the fact that the disciplinary proceedings against such a delinquent officer begin with an enquiry conducted by an officer appointed in that behalf. That enquiry is followed by a report and the Public Service Commission is consulted where necessary. Having regard to the material which is thus made available to the State Government and which is made available to the delinquent officer also, it seems to us somewhat unreasonable to suggest that the State Government must record its reasons why it accepts the findings of the Tribunal. It is conceivable that if the State Government does not accept the findings of the Tribunal which may be in favour of the delinquent officer, and propose to imposes a penalty on the delinquent officer, it should give reasons why it differs from the conclusions of the Tribunal, though even in such a case, it is not necessary that the reasons should be detailed or elaborate. But where the State Government agrees with the findings of the Tribunal which are against the delinquent officer, we do not think as a matter of law, it could be said that the State Government cannot impose the penalty against the delinquent officer in accordance with the findings of the Tribunal unless it gives reasons to show why the said findings were accepted by it. The proceedings are, no doubt, quasi judicial; but having regard to the manner in which these enquiries are conducted, we do not think an obligation can be imposed on the State Government to record reasons in every case. In Som Datta Datta vs Union of India & Ors, a Constitution Bench of this court rejected the contention that the order of the Chief 953 of the Army Staff confirming the proceedings of the Court Martial under section 164 of the Army Act and the order of the Central Government dismissing the appeal of the delinquent under sec. 165 of the Army Act were illegal and ultra vires as the did not give reasons in support of the orders, and summed up the legal position as follows: "Apart from any requirement imposed by the statute or statutory rule either expressly or by necessary implication, there is no legal obligation that the statutory tribunal should give reasons for its decision. There is also no general principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision. " To the same effect is the decision in Tara Chand Khatri vs Municipal Corporation of Delhi & Ors. Accordingly, the appeal must succeed and is allowed. The impugned order passed by the Director General, Border Roads Organization is set aside and he is directed to dispose of the appeal afresh after applying his mind to the requirements of r. 27(2) of the Central Civil Services (Classification, Control & Appeal) Rules, 1965, with advertence to the points raised by the appellant in his petition of leave. There shall be no order as to costs. N.V.K. Appeal allowed.

The Central Civil Services (Classification, Control and Appeal) Rules 1965 by Rule 27 casts a duty on the Appellate Authority in the case of an appeal against an order imposing any of the penalties specified in Rule 11 to consider: (a) whether the procedure laid down in the rules has been complied with: and if not, whether such non compliance has resulted in violation of any of the provisions of the Constitution or in the failure of justice (b) whether the findings of the disciplinary authority are warranted by the evidence on record; and (c) whether the penalty imposed is adequate and thereafter pass orders confirming, enhancing etc. the penalty, or remit back the case to the authority which imposed the same. The appellant was appointed as Supervisor in the Border Roads Organisation on probation for a period of two years. Before the expiry of the probation period, the Chief Engineer terminated this services. The order of termination however could not be served as the appellant absented himself without leave. He was later transferred and the Officer Commanding forwarded the order of termination to him. On his representation the Director General cancelled the order of termination on a misapprehension that the period of probation having expired no order of termination could be made. He, however, directed that the taking of disciplinary action against him as a deserter since he had absconded from service to evade service of the termination order. After a regular departmental enquiry, he was served with a show cause notice under article 311(2) of the Constitution and after consideration of his representation, the Chief Engineer imposed the punishment of removal from service under Rule 12 read with Rule 11 of the Central Civil Services (Classification, Control and Appeal) Rules 1965. 948 The appeal under Rule 23 of the Rules preferred by the appellant was dismissed by the Director General observing, that 'after thorough examination of the facts brought out in the appeal, the punishment imposed upon the appellant was just and in accordance with the rules '. The writ petition having been dismissed in limine the appellant appealed by special leave to this court. Allowing the appeal ^ HELD: The word 'consider ' in Rule 27(2) implies 'due application of mind '. [951A] In the instant case, there is no indication in the order that the Director General was satisfied as to whether the procedure laid down in the Rules had been complied with. No finding has been given on the crucial question as to whether the findings of the disciplinary authority were warranted by the evidence on record. [951C] 2. The Director General only applied his mind to the requirement of clause (c) of Rules 27(2) viz. whether the penalty imposed was adequate or justified in the facts and circumstances of the case. Rule 27(2) casts a duty on the appellate authority to consider the relevant factors set forth in clauses (a), (b) and (c) thereof. [951E] 3. There being non compliance with the requirements of Rule 27(2) of the Rules, the order passed by the Director General is set aside. He is directed to dispose of the appeal afresh after applying his mind to the requirements of Rule 27(2) of the Rules. [951E; 953E] 4. It is not the requirement of article 311(2) of the Constitution of India or of the Rules of natural justice that in every case the appellate authority should in its order state its own reasons except where the appellate authority disagrees with the findings of the disciplinary authority. [951F] State of Madras vs A.P. Srinivasan, AIR 1966 SC 1827; Som Datt Datta vs V.O.I. and Ors. and Tara Chand Khatri v, Municipal Corporation of Delhi and Ors., AIR 1977 SC 567, referred to.

ivil Appeal No. 673 of 1986. From the Judgment & Order dated 17.2.1986 of the Madhya Pradesh High Court in Election Petition No. 41 of 1985. S.S. Khanduja, Y.P. Dhingra and B .K. Satija for the Appel lant. Mrs. J. Wad for the Respondent. The Judgment of the Court was delivered by KASLIWAL, J. This appeal under Section 116 A of the Representation of People Act, 1951 (in short "the Act") is directed against the Judgment of the High Court of Madhya Pradesh dated 17th February, 1986. Election of Legislative Assembly of the State of Madhya Pradesh was held in the month of February, 1985. One of the Constituencies was No. 14 Lahar (District Bhind). The nomination papers were filed before 6th February, 1985 and the scrutiny was done on 7th February, 1985. Several persons filed their nomination papers. The nomination paper of Ramprakash was rejected by the Returning Officer in the scrutiny. The order passed by the Returning Officer rejecting the nomination paper reads as under: "Candidate is not identified as per electoral roll. His representative has accepted this mistake also. Hence reject ed. Advised for correction but did not correct. The candi date did not correct after advising to correct mistake. Even did not appear at the time of scrutiny to correct mistake. Hence rejected. See section 33(4) R.P.A." Result of the election was declared on 5th March, 1985 and Shri 506 Mathura Prasad appellant declared elected. Ajeem Khan one of the voters of the Constituency filed an election petition under Sec. 88 of the Act challenging the election of Mathura Prasad on several grounds but it is not necessary to state all the grounds as the controversy in the present appeal centres round the wrongful rejection of the nomination paper of Ramprakash. The ground in this regard taken in the election petition was that the nomina tion paper of Ramprakash was wrongly rejected as the defect in his nomination paper was not of a substantial character. It was alleged that in the nomination paper filed by Rampra kash the column meant for stating the candidate 's serial number in the electoral roll was left blank. 1t was thus alleged that the said defect was not of a substantial char acter and the nomination paper should not have been rejected in view of the provisions contained in Section 36(4) of the Act. On the other hand the case of Mathura Prasad, the elect ed candidate was that neither Ramprakash nor any other person on his behalf was present before the Returning Offi cer when the nomination paper of Ramprakash was taken up for scrutiny. At the time of scrutiny, the Returning Officer had pointed out that voter number was not mentioned in the nomination paper and Jaiprakash (RW.3) who 'was the proposer of Ramprakash had told the Returning Officer that he would inform Ramprakash regarding the above defect. The Returning Officer then put that nomination paper aside and took other nomination papers for scrutiny. Jaiprakash remained present in the hail awaiting the arrival of Ramprakash. The Return ing Officer after scrutinising all the other nomination papers again called out the name of Ramprakash. As Rampra kash had not arrived till then, Jaiprakash left the hall after informing the Returning Officer that he would fetch Ramprakash. Jaiprakash left the place and went in search of Ramprakash but his efforts to search Ramprakash went in vain and he did not return back before the Returning Officer. In view of the above circumstances, the Returning Officer passed the order rejecting the nomination paper of Rampra kash under sec. 33(4) of the Act. On the pleadings of the parties Learned Single Judge of the High Court who tried the election petition framed Issue No. 1 in this regard which reads as under: (i) Whether rejection of the nomination paper of Ramprakash by the Returning Officer was illegal, as alleged? 507 Both the parties lead evidence in support of their case. The petitioner in support of his case regarding the above issue examined himself, Mitthookhan, Gourishanker and Pahalwan. By the evidence of the aforementioned witnesses a story was put forward that shortly before the nomination paper of Rampra kash was taken up for scrutiny, Ramprakash had gone out for passing urine. He had left behind Mitthookhan as his repre sentative and when the nomination paper of Ramprakash was taken up for scrutiny and the defect was pointed out, Mit thookhan after informing the Returning Officer went out for calling Ramprakash. He alongwith Ramprakash returned back after five minutes only but the nomination paper had already been rejected by the Returning Officer. On the contrary Mathura Prasad examined himself and Jaiprakash who was not only the proposer of Ramprakash but was also his cousin. Jaiprakash fully supported the case of Mathura Prasad. Learned Single Judge after analysing the evidence of both the parties arrived to the conclusion that the entire story as advanced by the election petitioner and his wit nesses was obviously a fabrication. He further held that such story being fabricated it deserved to be rejected outright. He further observed as under: "The versions of the respondent (R.W. 1) are corroborated not only by the returning officer Shri Hoshiyarsingh, exam ined by the petitioner himself as P.W. 1, but also by the petitioner 's cousin Jaiprakash (R.W. 3) who was also his proposer and the evidence is also consistent with the grounds of rejection stated by the returning officer in his order. The returning officer Shri Hoshiyarsingh (P.W. 1) is an independent witness and Jaiprakash (R.W. 3), who is cousin and proposer of Ramprakash (P.W. 4), also has no reason to tell lies. I, therefore, see no reason to disbe lieve the versions of the respondent (P.W. 1) as to what transpired when the nomination paper of Ramprakash (P.W. 4) came up for scrutiny and under which circumstances it was rejected by the returning officer". After recording the above finding the Learned Single Judge took into consideration the fact that in the nomination paper of Ramprakash, his name, his father 's name, his postal address, the number and name of the Constituency to which nomination paper related and the 508 number of the part of the electoral roll of the same con stituency in which part his name was entered as a voter were duly and correctly filled up. It was further observed that Exhibit P. 1 a certified copy of that part of the electoral roll showed that the total number of voters registered therein was 10 11 and the name of Ramprakash was entered therein at serial No. 735. At the time of scrutiny, the Returning Officer must have naturally been assisted by some members of his subordinate staff. Learned Single Judge further observed that according to the Returning Officer himself the nomination paper was put of by him in the midst of the scrutiny proceedings and it was rejected subsequently after the scrutiny of all other nomination papers was over. There was thus ample time to locate the serial number of the candidate in the above mentioned part of the electoral roll. The Returning Officer had admitted that no effort was made by him to locate it. Learned Single Judge thus concluded that it was not the contention of the Returning Officer that it was not possible for him to locate the name of Ramprakash in the electoral roll and find out his serial number but in fact the Returning Officer made no effort in this regard. Learned Single Judge distinguished a decision of this Court in Lila Krishan vs Mani Ram Godara & Ors., [1985] Suppl. S.C.R. 1 592. He further held that candidate 's absence was immaterial and the Returning Officer could have himself found out the electoral number of the candidate Ramprakash readily with a very little effort by referring to the elec toral roll part mentioned in the nomination paper and the same being also available with him at the time of scrutiny the electoral number could have been found out without the assistance of any of the persons mentioned in Sec. 36(1) of the Act and the defect in the nomination paper cannot be held to be of a substantial character. Issue No. 1 was thus decided in favour of the petitioner Ajeem Khan and as a result of which the election petition was allowed and the election of Mathura Prasad was declared void. Aggrieved against the decision of the High Court, Mathu ra Prasad the winning candidate filed the present appeal before this Court. We have heard learned counsel for both the parties and in our view this appeal has to be allowed. As already mentioned above the Learned Single Judge himself did not accept the story as put forward by the petitioner Ajeem Khan, rather it was held that the entire story narrated by him was a fabrication and the same de served to be rejected outright. The Returning Officer who was an independent witness and Jaiprakash who was a proposer of Ramprakash were believed and it was held that the entire 509 circumstances under which the nomination paper of Ramprakash came up for scrutiny and was rejected were correct. Thus a perusal of the circumstances put forward by these witnesses at the time of scrutiny and rejection of the nomination paper of Ramprakash shows that Ramprakash himself was not present and even his proposer Jaiprakash after having gone to fetch Ramprakash did not return back and ultimately the Returning Officer rejected the nomination paper of Rampra kash. The order passed by the Returning Officer rejecting the nomination paper of Ramprakash clearly makes a mention that the candidate was not identified as per electoral roll. His representative had accepted the mistake also and was advised for correction but did not correct the same. The candidate did not correct after advising to correct the mistake. It further makes a mention that the candidate even did not appear at the time of scrutiny to correct the mis take. In the circumstances mentioned above we have no hesi tation at all in holding that the Returning Officer was perfectly justified in rejecting the nomination paper of Ramprakash. It depends on the facts and circumstances of each case to find as to what mistake in a nomination paper can be considered a mistake of substantial nature. It is correct that the Returning Officer should not reject a nomination paper merely on a mistake of technical or formal nature, where the identity of the candidate can be ascer tained by him on the material made available to him. He should also give an opportunity to the candidate or his representative present at the time of scrutiny to remove the defect. However, in case neither the candidate nor his representative be present and without removing such defect in the nomination paper the identity of the candidate cannot be ascertained, then there is no statutory duty cast on the Returning Officer to make a roving enquiry by going through the Material placed before him and to remove such defect himself. We may also refer to some cases cited before us at the bar. Dalip Kumar Gon vs Durga Prasad Singh, AIR 1974 SC 2343 is the case on which strong reliance has been placed by Learned counsel for Ajeem Khan. In the above case in the column of printed nomination form meant for making a decla ration of the candidates of the Scheduled Caste/Tribe con testing for a reserve seat, Abdul Hamid contesting from general constituency had not (a) filled his specific caste in the blank meant for that purpose and further (b) he had in that column left the words 'Scheduled Castes ' unscored. The Returning Officer rejected the nomination papers on the ground that the failure of the candidate to delete the words 'Scheduled Castes ' means that "he belongs to Scheduled Caste which is not true" and consequently, the 510 nomination papers were not filled up properly. An electoral of the constituency filed an election petition on the ground that the nomination papers of Abdul Hamid and Khatir Ali had been improperly rejected. Learned Single Judge of the High Court upheld the above rejection of nomination paper by the Returning Officer and held that the candidate 's filling of these enteries were on the face of it, not proper and did not comply with the requirements of law. It was further held that this defect was not trivial or technical but of a substantial character. On appeal before the Supreme Court the Judgment of the High Court was set aside and it was held as under: "The High Court 's view that in scoring out only the word 'Jan Jati ' (tribe) and leaving the word 'Jati ' (caste) untouched in the aforesaid column of the nomination form, Abdul Hamid had failed "to comply with the requirement of the law on the subject" 'was entirely misconceived. It overlooked the fact that the Jamtara Constituency was a 'General ' Constituency and the seat for which the candidates wanted to contest the election was not a Reserved seat. Section 33(2) of the Representation of the People Act, 195 1, or any other statutory provision does not enjoin upon a candidate who is contesting the election for a General Seat, and not for a Reserved Seat, to specify in his declaration his caste or tribe. Further, the 'Returning Officer appear ing as R.W. 2, had clearly admitted that at the time of the scrutiny of the nomination papers, he was aware that Abdul Hamid was not a member of the Scheduled Caste and that he had deposited Rs.250 as security. The omission to strike off the column in the printed nomination form relating to Sched uled Caste/Tribe did not amount to a defect in the eye of law, much less was it a defect of a substantial character, warranting rejection of the nomination papers in Amolak Chand vs Raghuveer Singh, ; 1968 SC 1203. The nomination papers of two candidates contesting for a general constituency were rejected on a similar ground. Holding that the rejection was improper, Ramaswami, J. Speaking for the Court stated the law on tile point thus: "The printed form 2 A is meant both for general and reserved constituencies but why it is obligatory for candidates in the reserved constituency to make a declaration in the proper 511 column that he is a member of a particular caste or tribe there is no such rule with regard to general constituency. 33(2) of the Act imposes an obligation on the candidate in the reserved constituency to make a declaration in the proper column but there is no such direction in the statute with regard to the general constituencies. In our opinion, the mention of the caste of the candidate in the nomination form was a clear superfluity because it was not necessary for the candidate to fill in the column when he was contest ing in a general constituency. In the light of what has been said above, we would, reverse the finding of the High Court and hold that the nomination papers of Abdul Hamid were improperly reject ed by the Returning Officer". In the above case the facts were entirely different and it lends no assistance to the case set up by Ajeem Khan, respondent before us. In the above case it was clearly held that Sec. 33(2) of the Act or any other Statutory provision does not enjoin upon a candidate who is contesting the election for a general seat, and not for a reserved seat, to specify in his declaration his caste or tribe. However, the Returning Officer had clearly admitted that at the time of the scrutiny of the nomination papers, he was aware that Abdul Hamid was not a member of the Scheduled Caste and that he had deposited Rs.250 as security. Thus it was held that the omission to strike of the column in the printed nomina tion form relating to Scheduled Castes/Tribe did not amount to a defect in the eye of law, much less it was a defect of a substantial character. In Brij Mohan vs Sat Pal, ; one Dog Ram had filed his nomination papers for contesting election to the Haryana Legislative Assembly from Jind Constituency. His name was proposed by Ram Pratap, an elector of the Constitu ency. Dog Ram was registered as an elector at serial No. 177 and house number 57 in part 39 of the electoral roll of the constituency whereas his proposer Ram Pratap was registered as electoral at serial No. 313. and house number 6 in part 39 of the same constituency. The name and postal address of Dog Ram were correctly given in the nomination papers but the part of the electoral roll was mentioned as 57 instead of 39 by an inadvertant mistake committed by the person who filed the nomination papers. 512 Similarly in the case of the proposer the serial number of the elector and the members of the constituency were given correctly but the number of his house was wrongly entered in the column meant for the part of the electoral roll. At the time of scrutiny no other candidate or proposer objected to the acceptance of the nomination paper of Dog Ram but the Returning Officer of his own rejected the nomination paper on the ground that particulars of the candidate and the proposer had been wrongly entered in the nomination papers. The High Court considered the question as to whether the nomination paper of Dog Ram was improperly rejected. On the evidence led by the parties the Single Judge found that the candidate Dog Ram and his proposer were registered as voters in the constituency and were qualified to contest the elec tion and propose the candidate respectively. It was further found that errors in regard to electoral roll numbers of the candidates and the proposer in the electoral roll and the nomination paper do not constitute defects of a substantial character as mentioned in the Proviso to Section 33(4) of the Act. Learned Single Judge accepted the evidence of the proposer (P.W.2) to the effect that when he and the candi date presented the nomination paper, the Returning Officer told them that it was in order and that the Returning Offi cer had tripped them into an error and if the Returning Officer had told them that there were some discrepancies in the nomination paper they would have either made corrections then and there and could have gone more fully prepared to make objections at the time of the scrutiny. The High Court in these circumstances allowed the election petition on the ground that the nomination paper of Dog Ram was improperly rejected. On appeal to this Court by the elected candidate it was held that the Returning Officer could not be said to have improperly rejected the nomination paper of Dog Ram. This Court did not believe the evidence of proposer (P.W.2) which was not corroborated by the evidence of any other witness. In the facts and circumstances of the case it was held that the Single Judge was not justified in accepting the evidence of P.W.2 and in holding that the Returning Officer was guilty of tripping the candidate and the proposer by any assertion on his part into anyone believing that there was nothing wrong in the nomination paper. In the above case this Court observed as under: "It is not possible to say generally and in the abstract that all errors in regard to electoral rolls or nomination papers do not constitute defects of a substantial character. They 513 would not be defects of a substantial character only if at the time of the scrutiny the Returning Officer either by himself with the materials placed before him during the scrutiny or with the assistance of the candidate or his proposer or any other person is able to find out the correct serial number of the candidate and the proposer in the electoral roll. If that is not the case, he would be commit ting a grave error by accepting the nomination paper without verifying whether the candidate is a voter in that or any other constituency of the State and whether the proposer is a voter in that constituency". "The candidate and,the proposer are always expected to go fully prepared to meet any objection that may be raised by any candidate or even by Returning Officer himself suo motu at the time of the scrutiny and they cannot be expected to go any the less prepared merely because the Returning Offi cer had received the nomination paper without raising any objection. It is at the time of scrutiny which is done in the presence of all concerned that the nomination papers come up for more detailed consideration at the hands of the Returning Officer against whom there is no estoppel in regard to the statutory duty of scrutiny". In the above case this Court clearly held that the defects would not be of a substantial character only if at the time of scrutiny the Returning Officer either by himself with the materials placed before him during the scrutiny or with the assistance of the candidate or his proposer or any other person is able to find out the correct serial number of the candidate and the proposer in the electoral roll. It no where lays down that it is the statutory duty of the Returning Officer himself to cure the defect at the time of the scrutiny. We cannot read in the above authority, as sought to be argued by the Learned counsel for the respond ent, that in the case before us even though Ramprakash or any other representative on his behalf was not present to cure the defect, still it was the duty of the Returning Officer himself to find out the correct identity of Rampra kash. As already discussed above the learned Single Judge had himself held that the case set up by Ajeem Khan was a fabricated one and the story put forward by the winning candidate Mathura Prasad and his witnesses was correct. From the evidence of Returning Officer it was clear that the defect in the nomi 514 nation paper of Ramprakash was brought to the notice of his proposer Jaiprakash and the nomination paper was not reject ed in the first round. An ample opportunity was given to Jaiprakash to bring Ramprakash but he failed to turn up. The nomination paper was then rejected after the scrutiny of all other nomination papers was over. The Returning Officer in the above circumstances was perfectly justified in rejecting the nomination paper of Ramprakash. Learned Single Judge wrongly distinguished the case of Lila Krishan vs Mani Ram Godara & Ors., [1985] Suppl. 1 S.C.R. 592 (supra). In this case the .election of Lila Krishan from Fatehbad Constituen cy of Haryana Assembly was challenged on the ground that the nomination papers of two candidates being Mani Ram Chhapola and Raj Tilak had been improperly rejected by the Returning Officer. The Proposer of Mani Ram Chhapola was one Brij Bhushan while proposer of Raj Tilak was one Upendra Kumar. Brij Bhushan 's serial number in the electoral roll was 26 while Upender Kumar 's was 77. In form 3A these numbers were correctly indicated but in the nomination papers the numbers had been shown as 126 and 177 respectively. The Returning Officer rejected these nomination papers as the serial numbers of the proposers as disclosed in the nomination papers did not tally with reference to the electoral roll. The High Court set aside the election of Lila Kishan holding that the Returning Officer acted mala fide and had either directly or indirectly been responsible for the alteration in the nomination papers, since the nomination papers when filed were in order and while they were in the custody of the Returning Officer 's establishment, interpolations have been made and on the basis thereof of nomination papers had been rejected. Appeal filed in Lila Krishan was allowed by this Court and it was held that the conclusion of the High Court that the Returning Officer either by himself or through somebody caused the interpolation to be done was totally unwarranted. On the basis of the above facts it was held as under: Indisputably the insistence on disclosure of the serial number in the prescribed column against the proposer is for the purpose of indentifying the proposer and ascertaining that he is competent to propose. The scope of scrutiny is obviously to verify the contents of the nomination paper with a view to ascertaining whether the form is in order and what is required to be complied with by the election law has been duly complied with. This Court has repeatedly held that election proceedings are strict in nature and what is 515 required to be performed in a particular manner has to be done as required or the Rules made thereunder. That is why an exception has been made by inserting Sub section (4) of Sec tion 36 of the Act. Therefore, to cast the obligation of the Returning Officer to look through the entire electoral roll of a particular part with a view to finding out the identity of the proposer is not the requirement of the law. To read that as an obligation is likely to lead a unworkable posi tion". "In the instant case, no one was available, for instance, when the Returning Officer took up the nomination paper of Mani Ram Chhapola to indicate to the Returning Officer that his serial number in the electoral roll was 26 and not 126. If this had been pointed out and on summary enquiry the identity of Brij Bhushan was not in dispute, there would have been end of the matter. If the correlation has not been made and the Returning Officer has no assistance to fix up the identification it cannot be said to be a defect not of substantial character. Moreover, it could not be statutory obligation of the Returning Officer to scrutinise the elec toral roll for finding out the identity of the proposer when the serial number turns out to be wrong. But if interested and competent persons point out to the Returning Officer that it is a mistake, it would certainly be his obligation to look into the matter to find out whether the mistake, is inconsequential and has, therefore, either to be permitted to be corrected or to be overlooked. When scrutiny was taken up Mani Ram Chhapola and Raj Tilak on their own showing were not present before the Returning Officer. Similarly, the proposers, Brij Bhushan and Upender Kumar were also absent. Though there is evidence on the side of the election peti tioners that the Assistant Returning Officer was present at the time of scrutiny, he as P.W. 4 has categorically denied that fact. The Returning Officer, R.W. 3, has stated that the Assistant Returning Officer was not present when he took up scrutiny on the nomination papers. There is also evidence from the side of the appellant that the Assistant Returning Officer was not present. In the circumstances, if the nomi nation papers have been rejected for mistake in 516 the nomination papers it is the candidates themselves who have to thank their lot and no mistake can be found with the Returning Officer. Therefore, the nomination papers were validly rejected". Thus in the above case it was clearly laid down that to cast an obligation on the Returning Officer to look through the entire electoral roll of a particular part with a view to finding out the identity of the proposer is not the requirement of the law. In the case before us even if it may be considered for a moment that by making some effort by the Returning Officer, the identity of Ramprakash could have been ascertained, there being no statutory duty cast on him to do so coupled with the fact that neither the candidate Ramprakash nor any representative on his behalf was ready to assist the Return ing Officer in curing the defect and in proving the correct identity of Ramprakash, it cannot be said that the Returning Officer committed any error in rejecting the nomination paper of Ramprakash. The Returning Officer not only granted ample time but even brought the defect to the notice of Jaiprakash proposer but still the defect in the nomination paper was not removed. In the result this appeal is allowed, the Judgment of the High Court dated 17th February, 1986 is set aside and it is held that the Returning Officer rightly rejected the nomination paper of Ramprakash. The appellant would also be entitled to costs. R.N.J. Appeal al lowed.

Election to the Legislative Assembly of the State of Madhya Pradesh was held in February, 1985. For Constituency No. 14 Lahar (Distt. Bhind) nomination papers were filed before 6th February, 1985 and scrutiny done on February 7, 1985. During the scrutiny the nomination paper of Ramprakash who was one of the candidates was rejected by the Returning Officer. The order rejecting the paper reads as under: "Candidate is not identified as per electoral roll. His rep resentative has accepted this mistake also. Hence rejected. Advised for correction but did not correct. The candidate did not correct after advising to correct mistake. Even did not appear at the time of Scrutiny to correct mistake. Hence rejected. See Section 33(4) R.P.A." Result of the election was declared on ' 5th March, 1985 and the appellant declared elected. The election of the appellant was challenged by the Respondent who was one of the voters of the constituency through an election petition on several grounds the main ground being the wrongful rejection of the nomination paper of Ramprakash. On the pleadings of the parties the High Court framed issue No. 1 which reads as under: (i) Whether rejection of the nomination paper of Rampra kash by the Returning Officer was illegal, as alleged? The High Court on an analysis of the evidence came to the conclusion that the entire story advanced by the elec tion petitioner and his witnesses was a fabrication and deserved to be rejected outright. How 504 ever after recording this finding the learned single judge of the High Court went on to hold that the candidate 's absence was immaterial and the Returning Officer could have himself found out the electoral number of the candidate Ramprakash readily with a little effort without the assist ance of any of the persons mentioned in Section 36(1) of the Act and that the defect in the nomination paper cannot be held to be of a substantial character. Issue No. 1 was thus decided in favour of the election petitioner as a result of which the election petition was allowed and the election of the appellant declared void. Hence this appeal by the elect ed candidate. Allowing the appeal and setting aside the judgment of the High Court, this Court, HELD: There is no statutory duty cast on the Returning Officer to himself look through the entire electoral roll of a particular part with a view to finding out the correct identity of a candidate at the time of the scrutiny even though neither the candidate himself nor any other represen tative on his behalf was present to cure the defect. [516B D] A perusal of the circumstances put forward by the wit nesses at the time of scrutiny and rejection of the nomina tion paper of Ramprakash shows that Ramprakash himself was not present and even his proposer Jaiprakash after having gone to fetch Ramprakash did not return back and ultimately the Returning Officer rejected the nomination paper of Ramprakash. The order passed by the Returning Officer re jecting the nomination paper of Ramprakash clearly makes a mention that the candidate was not identified as per elec toral roll. His representative had accepted the mistake also and was advised for correction but did not correct the same. The candidate did not correct after advising to correct the mistake. It further makes a mention that the candidate even did not appear at the time of scrutiny to correct the mis take. In the circumstances mentioned above we have no hesi tation at all in holding that the Returning Officer was perfectly justified in rejecting the nomination paper of Ramprakash. [509A C] . It depends on the facts and circumstances of each case to find as to what mistake in a nomination paper can be considered a mistake of substantial nature. It is correct that the Returning Officer should not reject a nomination paper merely on a mistake of technical or formal nature, where the identity of the candidate can be ascertained by him on the material made available to him. He should also give an opportunity to the candidate or his representative present at the time of scrutiny to remove the defect. Howev er, in case neither the candidate nor his representative be present and without removing such defect in the 505 nomination paper the identity of the candidate cannot be ascertained, then there is no statutory duty cast on the Returning Officer to make a roving enquiry by going through the material placed before him and to remove such defect himself. [509D F] Lila Krishan vs Mani Ram Godara & Ors., [1985] Suppl. S.C.RI 592; Dalip Kumar Gon. vs Durga Prasad Singh, AIR 1974 SC 2343; Amolak Chand vs Raghuveer Singh, ; and Brij Mohan vs Sat Pal, ; , referred to.

iminal Appeal No. 58 of 1970. Appeal by special leave from the judgment and order dated the 3rd December, 1969 of the Orissa High Court in Criminal Revision No. 325 of 67. N. C. Sikri, for the appellant. section Chatterjee and R. N. Sachthey, for the respondent. 657 The Judgment of the Court was delivered by KHANNA, J. Chittaranjan Das appellant was convicted by Magistrate First Class Cuttack under section 16(1) (a) of the (Act 37 of 1954) (hereinafter referred to as the Act) and was sentenced to undergo rigorous imprisonment for a period of six months and to pay a fine of Rs. 50,0 or in default to undergo rigorous imprisonment for a further period of six weeks. Appeal filed by the appellant was, dismissed by the Addi tional Sessions Judge Cuttack. The appellant then went up in revision to the High Court but his revision petition too was dismissed by the Orissa High Court. The appellant thereafter filed the present appeal by special leave. The case for the prosecution is that on July 17, 1965 Food Inspector Behera went to the stall of the accused in the Old Secretariat Compound Cuttack and found potato chops being fried by an employee of the accused in groundnut oil in a frying pan. The Food Inspector disclosed his identity to the accused and after giving the requisite notice, he purchased 375 gms of the groundnut oil in which the potato chops were being fried. After the oil was cooled, the Food Inspector divided it into three equal parts and poured each part of the oil in a clean bottle. The bottles were then sealed. One of the bottles was handed over to the accused. Another bottle was sent to a public analyst. The public analyst found on analysis the groundnut oil to be adulterated as it did not conform to the prescribed standard. The Superintendent of Police, Vigilance thereafter gave written consent for the prosecution of the accused. The accused was after that sent up for trial. It may be stated that the date on which the, sample of groundnut oil was purchased by the Food Inspector from the accused has been mentioned in the Judgments of the trial magistrate as well as those of the Additional Sessions Judge and the High Court to be March 14, 1964. This date was wrong because on reference to the record of the trial court, we find that the date on which the sample of the oil was purchased by the Food Inspector from the accused was July 17, 1965. This mistake in any event does not affect the merits of the case. The plea of the accused at the trial was that the sample of the oil had been taken not from the frying pan but from a tin wherein he had kept burnt oil for the purpose of using it as fuel. The oil, according to the accused, was stored neither for sale nor for being used for frying food articles. This plea of the accused was found by the trial court as well as by the learned Addition Session Judge to be false. In the High Court it was not disputed on behalf of the accused that the groundnut oil purchased by the Food Inspector had been taken out of the frying Dan and that potato chops were being prepared with that oil. One of the contentions which was raised on behalf of the accused before the High Court was that the sanction or consent given by the Superintendent of Police, Vigilance for the prosecution of the accused was not in conformity with section 20 of the Act as the authority 658 contemplated by that section must be in respect of each individual case and a general authority given to the Superintendent of Police to sanction prosecution was not legal. The High Court rejected this contention as also some other contentions which had been raised on behalf of the accused. In appeal before us, Mr. Sikri has at the outset submitted that there was non compliance with the provisions of section 10(7) of the Act as the Food Inspector did not call one or more persons to be present at the time he purchased the sample of groundnut oil from the accused. In this respect we find that the judgment of the High Court shows that no such argument was advanced before the High Court. This argument involves questions of fact and as the accused appellant failed to agitate it before the High Court, we have not permitted the appellant to agitate it before us in this Court. The main contention which has been advanced in appeal before us on behalf of the appellant is that there was no valid consent to the prosecution of the accused appellant in accordance with sub section (1) of section 20 of the Act and, as such, the prosecution of the appellant was not in accordance with law. To appreciate this contention it would be relevant to reproduce the material part of sub section (1) of section 20 of the Act, as it stood before its amendment by Act 49 of 1964. It was as under: "No prosecution for an offence under this Act shall be instituted except by or with the written consent of the State Government or a local authority or a person authorised in this behalf by the State Government or a local authority. ' On December 16, 1964 a notification was issued by the Orissa Government authorising, inter alia, the Superintendent of Police Cuttack Vigilance Division to give written consent for instituting prosecutionfor offences under the Act within the local limits of CuttackMunicipality. The notification reads as under: HEALTH DEPARTMENT NOTIFICATION The 16th December, 1964 "No. 25485 H. In exercise of the powers conferred by sub section (1) of section 20 of the (37 of 1954), the State Government do hereby authorise the following officers of the Political and Services (Vigilance) Department to give written consent for instituting prosecutions for offences under the said Act, within the local limits specified against each in 659 respect of cases detected by the Food Inspectors attached to the concerned Vigilance Divisions: Name of officer Local Limits Cuttack Municipality (1) Superintendent of Police '. Cuttack Vigilance Division By order of the Governor C. VENKATARAMANI Joint Secretary to Government. " The was amended by Act 49 of 1964 with effect from March 1, 1965. One of the amendments made by the amending Act was in section 20 of the Act. As a result of amendment, the material part of sub section (1) of section 20 reads as under : "section 20 (1) : No prosecution for an offence under this Act shall be instituted except by, or with the written consent of the Central Government or the State Government or a local authority or a person authorised in this behalf, by general or special order, by the Central Government or the State Government or a local authority;" The contention which has been raised on behalf of the appellant is that while it is permissible under section 20 of the Act, as it stands after the amendment made by Act 49 of 1964, to issue a general notification authorising a person to give written consent under the above provision of law, such a course was not permissible under section 20, as it stood before the above amendment. It was, according to the learned counsel, essential under section 20, as it stood before the amendment, that the authority should be in respect of some specified individual offence. As notification dated December 16, 1964 was issued before Act 37 of 1954 was amended by Act 49 of 1964 and as the said notification gave a general authority to the Superintendent of Police, Vigilance to give consent for instituting prosecutions for offenses under the Act committed within the local limits of Cuttack Municipality, the said notification, it is urged was not in accordance with law. As against the above, Mr. Chatterjee on behalf of the State has argued that there is no infirmity in the notification dated December 16, 1964 and such a notification could have been validly issued under section 20 of. the Act, as it stood before the amendment. In our opinion there is force in the submission of Mr. Chatterjee. It would appear from what has been stated above that the short question which arises for consideration is whether it is permissible for the State Government or local authority under section 20, as it stood before the amendment, to give a general authority to a person to give consent to the institution of prosecutions for offenses under the Act without mentioning a specified individual offence. We have reproduced 660 above section 20, as it stood before the amendment, and we find nothing in its language which makes it imperative to specify a particular offence in the order authorising a person to give consent to the institution of prosecution. The words "in this behalf" hi the above provision, to which our attention his been invited, indicate that the authority ' conferred by the State Government or local authority upon a person should relate to the giving of written consent for institution of prosecutions for offenses under the Act. It is difficult to spell out an inference from those words that the authority conferred upon a person under the above provision cannot be a general authority in respect of offenses under the Act but must relate to some specified individual offence. If the interpretation sought to be placed upon the words "in this behalf" on behalf of the appellant were to be accepted, in such an event no general authority can be conferred even under sub section (1) of section 20, as amended by Act 49 of 1964, because even the amended section contains those words. The words "by general or special order" in the amended section in that event would become meaningless and lose all significance. It is, indeed, not disputed that under the amended section a general authority can be conferred upon a person for giving consent to the institution of prosecutions for offenses under the Act. The words "in this behalf" in sub section (1) of section 20, as it existed before the amendment, as well as after the amendment must obviously carry the same meaning. If those words in the amended section do not postulate that the authority conferred by the State Government or local authority should have reference to a specified individual offence committed by a particular accused, we fail to understand as to how those words as used in the section before the amendment would carry a different connotation. Perusal of sub section (1) of section 20 of the Act, as it existed before the amendment, shows that the legislature had two fold object in enacting this provision. One object was to prevent institution of prosecutions for offenses under the Act unless written consent to the. institution of such prosecutions was given by the State Government or a local authority or a person authorised in this behalf by the State Government or local authority . The other object was to relieve the State Government or local authority of the necessity of applying it,,,, mind and dealing with each individual case of prosecution under the Act. Provision was accordingly made to enable the State Government or local authority to assign the function of giving written con sent to some other person. In case the authority conferred by the 661 State Government or local authority could not be general but had to relate to an individual offence, the very purpose of the latter part of sub section (1) of section 20 would be defeated, for it would in such an event become necessary for the State Government or local authority first to authorise a person to give written consent in respect of art individual case of prosecution and thereafter for the person authorised to pass another order for giving the written consent. The result would be that what could be done in one step by the State Government or local authority by straightaway giving its written consent would have to be done in two steps. It is difficult to accede to the contention that the above provision instead of simplifying the matter was intended to make it needlessly more cumbersome. The change made in section 20 by Act 49 of 1964 has now put the thing beyond any, pale of controversy. Even without the change made in the section the authority conferred by the State Government or local authority upon a person for giving the consent contemplated by the section, in our opinion, could be of general nature and it was not essential that the order authorising the person should have mentioned specified individual offenses. The amendment made in this section had the effect of making more clear what was already contemplated by the section. The Madras High Court in the case of Corporation of Madras vs Arumugham,(1 the Mysore High Court in the case of Laxman Sitaram Pai & Anr. vs The State of Mysore(2) and the Andhra Pradesh High Court in the case of Public Prosecutor vs Thatha Rao &Ors.(8) have all taken the view that a general authorisation to launch, prosecutions under the Act is sufficient. For the reasons stated above, we agree with the view taken in the above three cases. We see no cogent ground to interfere with the sentence. The appeal fails and is dismissed. V. P. section Appeal dismissed, (1) A. I. R. 1966 Madras 194.

Section 20(1) of the Food Adulteration Act, 1954, as it stood before its amendment by Act 49 of 1964 provided that no prosecution for an offence under the Act shall be instituted except by or with the written consent of the State Government or a local authority or a person authorised in this behalf by the State Government or a local authority. On the written consent of the Superintendent of Police, Vigilance, who was authorised to give written consent for instituting prosecutions for offences, under the Act, the appellant was prosecuted and convicted for an offence under section 16 (1) (a) of the Act. It was contended on his behalf that while it was permissible under the section, after its amendment by Act 49 of 1964, to issue such general notification authorising a person to give written consent, under the section as it stood before the amendment, the authority should be in respect of a specified individual offence. Dismissing the appeal, HELD : There is nothing in the language of the section which makes it imperative to specify a particular offence in the order authorising a person to give consent to the institution of prosecution. The legislature had a two fold object in enacting section 20 (1) (a) to prevent institution of prosecutions for offences under the Act except with the written consent of the authorities mentioned in the section, and (b) to relieve the State Government or local authority of the necessity of applying its mind and dealing with each individual case of prosecution under the Act. In case the authority conferred by the State Government or local authority could not be general but had to relate to an individual offence the very purpose of the section would be defeated, for then, it would become necessary for the State Government or local authority fast to authorise a person to give written consent in respect of an individual case and thereafter for the person authorised to give written consent, so that what could be done in one step by the State Government or local authority would have to be done in two steps. The words 'in this behalf ' indicate that the authority conferred by the State Government or local authority upon a person should relate to the giving of written consent for the institution of prosecution for offences under the Act and not that the authority conferred must relate to some specified individual offence. The amended section also contains those words, and must obviously carry the same meaning. If the interpretation sought to be placed upon these words is accepted no general authority can be conferred even under section 20(1) even as amended , and the words 'by general or special order ' in the amended section would become meaningless and lose all significance. The amendment bad only made more clear what was already contemplated by the section. [659G 661B] Corporation of Madras vs Arumagham. AJ.R. 1966. Madras 194, Laxman Sitaram Pai & Anr. vs The State of Mysore, A.I.R. and Public Prosecutor vs Thatha Rao & Ors., A.I.R. 1968 A.P. 17, approved.

vil Appeal No. 11 (N) of 1969. From the Judgment and Order dated 22/23.8. 1968 of the Bombay High Court in S.C.A. No. 1418 of 1964. V.N. Ganpule for the Appellant in C.A. No. 2211 of 1969. S.B. Bhasme, P.C. Kapur, V.N. Ganpule and S.K. Agnihotri for the Appellants in C.A. No. 1191 of 1970. Nemo for the Respondents in C.A. No. 2211 of 1969. Vinod Bobde, D.N. Mishra and Ms. Sunita for the Respond ents in C.A. No. 1191 of 1970. Mrs. Urmila Sirur, for the Intervener. The Judgment of the Court was delivered by BHAGWATI, CJ. The only question which arises in these appeals is whether sub section 1(b) of section 88B is uncon stitutional and void as offending Article 26 of the Consti tution. The constitutional validity of sub section 1(b) of section 88B is assailed on the ground that by reason of condition (i) in the proviso to this sub section, sections 32 to 32 R of the Bombay Tenancy and Agricultural Lands Act 1948 (hereinafter referred to as the 'Tenancy Act ') are made applicable to lands which are the properties of a Trust for an institution for public religious worship, if such Trust is not registered or deemed to be registered under the Bombay Public Trust Act, 1950 and the applicability of sections 32 to 32R of the Tenancy Act to such lands contra venes the right of the institution to own and acquire move able and immovable property under Article 26 of the Consti tution. The High 869 Court negatived this challenge urged on behalf of the peti tioners. We are also of the view that this challenge must fail. It is not necessary to go into any detailed reasons for the purpose of holding that sub section 1(b) of section 88B does not offend Article 26 of the Constitution on ac count of condition (i) in the proviso to that sub section. This condition provides that in order that the lands belong ing to a Trust for an institution for public religious worship should be entitled to exemption from the operation of sections 32 to 32R of the Tenancy Act, the Trust must be registered or deemed to be registered under the Bombay Public Trust Act, 1950. This condition does not in any way militate against the exception which is made in the main part of sub section 1(b) of section 88B in favour of lands belonging to a Trust for an institution for public religious worship. It merely introduces a requirement that the Trust must be registered or deemed to be registered under the Bombay Public Trust Act, 1950 and this requirement is intro duced in order to ensure that the Trust is really and truly a trust which falls within the language of sub section 1(b) of section 88B, namely, that it is genuinely a trust for an institution for public religious worship. If the Trust is registered or deemed to be registered under the Bombay Public Trust Act, 1950, that would afford incontrovertible proof of the fact that it is a trust for a charitable or religious purpose. This condition does not, therefore, in any way detract from the exemption granted under sub section 1(b) of section 88B. So also, condition (ii) introduced in the proviso does not detract from the exemption, since all that it requires is that the entire income of the lands belonging to a trust for an institution for public religious worship must be appropriated for the purposes of such Trust. If lands be longing to a trust for an institution for public religious worship are to be eligible for exemption under sub section 1(b) of section 88B, it would be quite legitimate for the legislature to insist that the entire income of such lands must be appropriated for the purposes of such Trust. That would ensure that the trust is a genuine Trust for public religious worship and is not merely a facade for carrying out some other purpose. We are, therefore, of the view that sub section 1(b) of section 88B does not offend against Article 26 of the Con stitution by reason of the introduction of conditions (i) and (ii) in the proviso to that subsection. These appeals must fail on this short ground. They are accordingly dis missed but without any order as to costs. S.R. Appeals dis missed.

In order that the lands belonging to a Trust for an institution for public religious worship should be entitled to exemption from the operation of Sections 32 to 32R of the Tenancy Act, 1948, two conditions namely (i) that the Trust must be registered or deemed to be registered under the Bombay Public Trust Act, 1950; and (ii) that the entire income of the lands belonging to a Trust for an institution for public religious worship must be appropriated for the purposes of such a Trust who added under the proviso to section 36B(1)(b) of the Act. The challenge to the constitu tional validity of the same was negatived by the Bombay High Court. Hence the appeals by special leave. Dismissing the appeals, the Court, HELD: Sub section 1(b) of section 88B of the Bombay Tenancy and Agricultural Lands Act, 1948 does not offend against Article 26 of the Constitution by reason of the introduction of conditions (1) and (ii) in the proviso to that sub section. [869G H] Both conditions (i) and (ii) do not in any way detract from the exemption granted under sub section i(b) of section 88B of the Act. Condition (i) merely introduces a require ment that the Trust must be registered or deemed to be registered under the Bombay Public Trust Act, 1950 and this requirement is introduced in order to ensure that the Trust is really and truly a trust which falls within the language of subsection 1(b) of section 88B, namely, that it is genu inely a trust for an institution for public religious wor ship. If the Trust is registered or deemed to be registered under the Bombay Public Trust Act, 1950, that would afford incontrovertible proof of the fact that it is a trust for a charitable 868 or religious purpose. Condition (ii) requires that the entire income of the lands belonging to a Trust for an institution for public religious worship must be appropriat ed for the purposes of such Trust. If lands belonging to a trust for an institution for public religious worship are to be eligible for exemption under sub section t(b) of section 88B, it would be quite legitimate for the legislature to insist that the entire income of such lands must be appro priated for the purposes of such Trust. That would ensure that the trust is a genuine Trust for public religious worship and is not merely a facade for carrying out some other purposes. [869C F]

Appeal No. 165 of 1954. Appeal from the judgment and order dated May 27, 1953, of the Calcutta High Court in Income tax Reference No. 35 of 1952. G. N. Joshi and R. H. Dhebar, for the appellant. Jyotish Chandra Pal and D. N. Mukherjee, for the respondent. May 23. The Judgment of the Court was delivered by BHAGWATI, J. This appeal with certificate of fitness under section 66A(2) of the Indian Income tax Act (XI of 1922) is directed against the Judgment and order of the High Court of Judicature at Calcutta on a reference under section 66(1) of the Act. The respondent owns an area of 6,000 acres of forest land assessed to land revenue and grown with Sal and Piyasal trees. The forest was originally of spontaneous growth, "not grown by the aid of human skill and 104 labour" and it has been in ' existence for about 150 years. A considerable income is derived by the assessee from sales of trees from this forest. The assessment year in which this forest income was last taxed under the Indian Income tax Act was 1923 24 but thereafter and till 1944 45 which is the assessment year in question, it was always left out of account. The assessment for 1944 45 also was first made without including therein any forest income, but the assessment was subsequently re opened under section 34. In response to a, notice under section 22(2) read with section 34 of the Act, the respondent submitted a return showing the gross receipt of Rs. 51,978 from the said forest. A claim was, however, made that the said income was not assessable under the Act as it was agricultural income and was exempt under section 4(3) (viii) of the Act. The Income Tax Officer rejected this claim and added a sum of Rs. 34,430 to the assessable income as income derived from the forest after allowing a sum of Rs. 17,548 as expenditure. The Appellate Assistant Commissioner confirmed the assessment and the Income Tax Appellate Tribunal also was of opinion that the said income was not agricultural income but was income derived from the sale of jungle produce of spontaneous growth and as such was not covered by section 2(1) of the Act. At the instance of the assessee the Tribunal referred to the High Court under section 66(1) of the Act two questions of law arising out of its order, one of which was: "Whether on the facts and in the circumstances of this case, the sum of Rs. 34,430 is "agricultural income" and as such is exempt from payment of tax under section 4(3)(viii) of the Indian Income Tax Act?" The Tribunal submitted a statement of case from which the following facts appear as admitted or established : " (i) The area covered by the forest is about 6,000 acres, trees growing being Sal and Piyasal; (ii)It is of spontaneous growth being about 150 years old. It is not a forest grown by the aid of human skill and labour; 105 (iii)The forest is occasionally parcelled out for the purposes of sale and the space from which trees sold are out away is guarded by forest guards to protect offshoots; (iv)It has been satisfactorily proved that considerable amount of human labour and care is being applied year after year for keeping the forest alive as also for reviving the portions that get denuded as a result of destruction by cattle and other causes; (v)The staff is employed by the assessee to perform the following specific operations: (a) Pruning, (b) Weeding, (c) Felling, (d) Clearing, (e) Cutting of channels to help the flow of rain water, (f) Guarding the trees against pests and other destructive elements, (g) Sowing of seeds after digging of the soil in denuded areas. " The Tribunal found that the employment of human labour and skill in items (a) to (f) was necessary for the maintenance and upkeep of any forest of spontaneous growth. Regarding item (g), however, it found that the said operation had been performed only occasionally and over a small fraction of the area where the original growth had been found to have been completely denuded. Such occasions were however few and far between, the normal process being that whenever a tree was cut, a stump of about 6" height was left intact which sent forth off shoots all round bringing about fresh growth in course of time. This went on perpetually unless an area got otherwise completely denuded. The reference was heard by the High Court and the High Court held that actual cultivation of the land was not required and as human labour and skill were spent for the growth of the forest the income from the forest was agricultural income. It accordingly answered the above question in the affirmative. The 14 106 Revenue obtained the requisite certificate of fitness for appeal to this Court and hence this appeal. The question that arises for consideration in this appeal is whether income derived from the sale of Sal and Piyasal trees in the forest owned by the assessee which was originally a forest of spontaneous growth "not grown by the aid of human skill and labour" but on which forestry operations described in the statement of case had been carried on by the assessee involving considerable amount of expenditure of human skill and labour is agricultural income within the meaning Of section 2(1) and as such exempt from payment of tax under section 4(3)(viii) of the Indian Income tax Act. Section 2(1) of the Act defines agricultural income and states (so far as it is relevant for the purposes of this appeal): (1) "agricultural income" means (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such : (b) any income derived from such land by: (i) agriculture, or (ii) the performance by a cultivator or receiver of rent in kind of any process ordinarily employed by a cultivator or receiver of rent in kind to render the produce raised or received by him fit to be taken to market, or (iii) the sale by a cultivator or receiver of rentin kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in sub clause (ii) . . . . . . . . . . . Section 4(3) of the Act provides: " (3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them; . . . . . . . . . . . (viii) Agricultural income. . . 107 Even though "agricultural income" which is exempted under section 4 (3) (viii) of the Act is defined in section 2(1) as above, there is no definition of "agriculture" or "agricultural purpose" to be found in the Act and it therefore falls to be determined what is the connotation of these terms. An argument based on entries 14 and 19 of List II of the Seventh Schedule to the Constitution may be disposed of at once. It was urged that entry No. 14 referred to agriculture including agricultural education and research protection against pests and prevention of plant diseases while entry No. 19 referred to forests and there was therefore a clear line of demarcation between agriculture and forests with the result that forestry could not be comprised within agriculture. If forestry was thus not comprised within agriculture, any income from forestry could not be agricultural income and the income derived by the assessee from the sale of the forest trees could not be agricultural income at all, as it was not derived from land by agriculture within the meaning of the definition of agricultural income given in the Indian Income tax Act. This argument, however, does not take account of the fact that the entries in the lists of the Seventh Schedule to the Constitution are heads of legislation which are to be interpreted in a liberal manner comprising within their scope all matters incidental thereto. They are not mutually exclusive. If the assessee plants on a vacant site trees with a view that they should grow into a forest, as for example, Casuarina plantations and expends labour and skill for that purpose, the income from such trees would clearly be agricultural produce. It has to be remembered that even though this demarcation between agriculture and forestry was available in the Lists contained in the Seventh Schedule to the Government of India Act, 1935, no such demarcation existed in the Devolution Rules made under the Government of India Act, 1919, and in any event the definition of agri cultural income with which we are concerned was incorporated in the Indian Income tax Acts as early as 1886, if not earlier: vide section 5 of the Indian Income tax of 1886). It has also to be remembered that inspite of this demarcation between agriculture and forests in the Constitution, taxes on agricultural income are a separate head under entry 46 of List II of the Seventh Schedule and would comprise within their scope even income from forestry operations provided it falls within the definition of agricultural income which according to the definition given under article 366(1) means agricultural income as defined for the purposes of the enactments relating to Indian Income tax. The terms " agriculture " and " agricultural purpose" not having been defined in the Indian Income tax Act, we must necessarily fall back upon the general sense in which they have been understood in common parlance. "Agriculture" in its root sense means ager, a field and culture, cultivation, cultivation of field which 'of course implies expenditure of human skill and labour upon land. The term has, however, acquired a wider significance and that is to be found in the various dictionary meanings ascribed to it. It may be permissible to look the dictionary meaning of the term in the absence of any definition thereof in the relevant statutes. As was observed by Lord Coleridge, in R. vs Peters (1): I am quite aware that dictionaries are not to be taken as authoritative exponents of the meanings of words used in Acts of Parliament, but it is a wellknown rule of courts of law that words should be taken to be used in their ordinary sense, and we are therefore sent for instruction to these books. " Cozens Hardy, M. R., also said in Camden (Marquis) vs I.R.C. (2): "It is for the Court to interpret the statute as best it may. In so doing the Courts may no doubt assist themselves in the discharge of their duty by any literary help they can find, including of course the consultation of standard authors and reference to wellknown and authoritative dictionaries. " (1) , 641. (2) 1, 647. 109 Turning therefore to the dictionary meaning of agriculture " we find Webster 's New International Dictionary describing it as " the art or science of cultivating the ground, including rearing and management of livestock, husbandry, farming, etc. and also including in its broad sense farming, horticulture, forestry, butter and ' cheese making etc. " Murray 's ' Oxford Dictionary describes it as " the science and art of cultivating the soil; including the allied pursuits of gathering in the crop and rearing live stock; tillage, husbandry, farming (in the widest sense)". In Bouvier 's Law Dictionary quoting the Standard Dictionary" agriculture " is defined as " the cultivation of soil for food products or any other useful or valuable growths of the field of garden; tillage, husbandry; also, by extension, farming, including any industry practised by cultivator of the soil in connection with such cultivation, as breeding and rearing of stock, dairying, etc. The science that treats of the cultivation of the soil. " In Corpus Juris the term " agriculture " has been understood to mean: " art or science of cultivating the ground, especially in fields or large quantities, including the preparation of the soil, the planting of seeds, the raising and harvesting of crops, and the rearing, feeding and management of live stock; tillage, husbandry and farming. In its general sense the word also includes gardening or horticulture. " Bhashyam Ayyangar J. in Murugesa Chetti vs Chinnathambi Goundan(1) gave the following dictionary meanings of agriculture as culled out from the Century Dictionary and Anderson 's Dictionary of Law: " The primary meaning of agriculture is the cultivation of the ground (The Century Dictionary) and in its general sense it is the cultivation of the ground for the purpose of procuring vegetables and fruits for the use of man and beast including gardening or horticulture and the raising or feeding of cattle and other stock (Anderson 's Dictionary of Law). Its less general and more ordinary signification is the cultivation with the plough and in large areas in order to raise (1) Mad. 421,423. 110 food for man and beast (The Century Dictionary) or, in other words, "that species of cultivation which is intended to raise grain and other field crops for man and beast." (Anderson 's Dictionary of Law). Horticulture, which denotes the cultivation of garden or orchards, is a species of agriculture in its primary and more general sense." Ramesam J. in Panadai Pathan vs Ramasami Chetti (1) referred to the following connotation of 'agriculture ': "Wharton 's Law Lexicon adopts the definition of ,,agriculture" in 8 Edw. VII, c. 36, as including "horticulture, forestry, and the use of land for any purpose of husbandry etc. In 10 Edw. VII, c. 8 section 41, it was defined so as to include the use of land as "meadow" or pasture land or orchard or osier or woodland, or for market gardens, nursery grounds or allotments, etc. In 57 and 58 Viet. c. 30 section 22, the term agricultural property ' was defined so as to include agricultural land, pasture and woodland, etc. " These are the various meanings ascribed to the term " agriculture" in various dictionaries and it is significant to note that the term has been used both in the narrow sense of the cultivation of the field and the wider sense of comprising all activities in relation to the land including horticulture, forestry, breeding and rearing of livestock, dairying, butter and cheesemaking, husbandry etc. It was urged on behalf of the assessee that the Court should accept the wider significance of the term and include forestry operations also within its connotation even though they did not involve tilling of the land, sowing of seeds, planting, or similar work on the land. The argument was that tilling of the land, sowing of the seeds planting or similar work on the land were no doubt agricultural operations and if they were part of the forestry operations carried on by the assessee the subsequent operations would certainly be a, continuation of the same and would therefore acquire the characteristic of agricultural operations. But the (1) Mad. absence of these basic operations would not necessarily make any difference to the character of the subsequent operations and would not divest them of their character of agricultural operations, so that if in a particular case one found that the forest was of spontaneous growth, even so if forestry operations were carried on in such forests for the purpose of furthering the growth of forest trees, these operations would also enjoy the character of agricultural operations. If breeding and rearing of live stock, dairying butter and cheese making etc., could be comprised within the term "agriculture", it was asked, why should these also be not classed as agricultural operations. Considerable stress was laid on the fact that section 4(3)(viii) of the Act enacted a provision in regard to the exemption of "agricultural income" from assessment and it was contended that exemptions should be liberally construed. Reliance was placed on the observations of Vishwanatha Sastri J. in Commissioner of Income tax, Madras vs K. E. Sundara Mudaliar (1): " Exemption from tax granted by a Statute should be given full scope and amplitude and should not be whittled down by importing limitations not inserted by the Legislature. " Mookerjee J. in Commissioner of Agricultural Income tax, West Bengal vs Raja Jagadish Chandra Deo Dhabal Deb (2) also expressed himself similarly: " and the present day view seems to be that where an exemption is conferred by statute, that clause has to be interpreted liberally and in favour of the assessee but must always be without any violence to the language used. The rule must be construed together with the exempting provisions, which must be regarded as paramount. " He also quoted a passage from The Upper India Chamber of Commerce vs Commissioner of Income tax, C.P. & U.P. (3) : (1) , 271. (3) ; A.I.R.1948 All.70 (2) , 438. 112 " It is needless to observe that, as in the present case, we are concerned with the interpretation of an exemption clause in a taxing statute, that clause must be, as far as possible, liberally construed and in favour of the assessee, provided no violence is done to the language used. " It was also pointed out that " Taxes on agricultural income " formed a head of legislation specified in item 46 of List. II of the Seventh Schedule to the Constitution and should be liberally construed, with the result that agriculture should be understood in the wider significance of the term and all agricultural income derived from agriculture or so understood should be included within the category. There was authority for the proposition that the expression " agricultural land " mentioned in Entry 21 of List II of the Seventh Schedule to the Government of India Act, 1935, should be interpreted in its wider significance as including lands which are used or are capable of being used for raising any valuable plants or trees or for any other purpose of husbandry. (see Sarojinidevi vs Shri Krishna Anjanneya Subrahmanyam (1) and Megh Raj vs Allah Rakhia (2). While recognizing the force of the above expressions of opinion we cannot press them into service in favour of the assessee for the simple reason that "agricultural income " has been defined in the Constitution itself in article 366(1) to mean agricultural income as defined for the purposes of enactments relating to Indian incometax and there is a definition of " agricultural income " to be found in section 2(1) of the Indian Income tax Act. We have therefore got to look to the terms of the definition itself and construe the same regardless of any other consideration, though, in so far as the terms " agriculture " and " agricultural purposes " are concerned, we feel free in view of the same not having been defined in the Act itself, to consider the various meanings which have been ascribed to the same in the legal and other dictionaries. (1) I.L.R. (2) , 62. 113 We may also note here the dictionary meanings of the terms "Forestry" and "Cultivation." The Shorter Oxford Dictionary, Vol.1, page 735, gives the meaning of "forestry" as the "science and art of forming and cultivating forests, management of growing timber. " Webster 's New International Dictionary, Vol. 1, page 990, gives the following meaning of forestry: " Science and art of farming, caring for, or cultivating forests; the management of growing timber. " Webster 's New International Dictionary. Vol. 1, page 643, while talking of cultivation says that "to cultivate" means "(i) to prepare, or to prepare and use, for the raising of crops; to till; as, to cultivate the soil; to loosen or break up the soil about (growing crop or plants) for the purpose of killing weeds, etc., especially with a cultivator, as to cultivate the corn; (2)to raise, or foster the growth of, by tillage or by labour and care; to produce by culture; as to cultivate roses; to cultivate oysters. " Whether the narrower or the wider sense of the term agriculture" should be adopted in a particular case depends not only upon the provisions of the various statutes in which the same occurs but also upon the facts and circumstances of each case. The definition of the term in one statute does not afford a guide to the construction of the same term in another statute and the sense in which the term has been understood in the several statutes does not necessarily throw any light on the manner in which the term should be understood generally. The decided cases disclose a variety of opinions in regard to the connotation of the terms "agriculture" and "agricultural purposes. " At one time "agriculture" was understood in its primary sense of cultivation of field and that too for production of food crops for human beings and beasts. This limited interpretation could not be adhered to even though tilling of the land, sowing of the seeds, planting or similar work on the land were the basic operations, the scope of the crops produced was enlarged and all crops raised on the land, whether they be food crops or not were included in the produce raised by agriculture. There was however another school of thought 15 114 which extended the term "agriculture" and included within its connotation not only the products raised by the cultivation of the land but also allied activities which had relation to the land and operations which had the effect of fostering the growth, preservation and maintenance as also the regeneration of the products of the land, thus bringing within its compass not only the basic agricultural operations but also the further operations performed on the products of the land even though they were not necessarily accompanied by these preliminary basic operations. As against these cases which dealt with these preliminary basic operations and also the further operations either by themselves or in conjunction with the former which of course necessarily involved the expenditure of human skill and labour in carrying out those operations, there were instances of products of land which grew wild or were of spontaneous growth without the expenditure of human skill and labour and which it was agreed on all hands could not be comprised within "agriculture" and the income from which could not fall within the definition of "agricultural income". We shall briefly discuss the various cases dealing with these different aspects and try to evolve some principle therefrom which would serve as a guide in the determination of the question before us. Kunhaven Haji vs Mavan (1) was the earliest case in which it was held that a lease of a coffee garden was not an I agricultural lease within the meaning of Transfer of Property Act, section 117. The case however concerned itself with the situation where as far as the Court could gather from the Karar the lease was of the coffee plants only. There was no further discussion of the legal position and it may be noted that Shephard, J., who was a party to this decision stated in the later case of Murugesa Chetti vs Chinnathambi Gounden (2) that he was wrong in the opinion he expressed with regard to a coffee garden in this case. Murugesa Chetti vs Chinnathambi Goundan (2) also was concerned with section 117 of the Transfer of Property Act. The lease there was a lease of land for (1) Mad. 98. (2) Mad. 421,423. 115 the cultivation of betel and the Court held that such a lease was an agricultural lease falling under section 117. Bhashyam Ayyangar, J., who delivered the main judgment of the Court discussed the dictionary meanings of the term " agriculture " and stated that in section 117 of the Transfer of Property Act it was used in its more general sense as comprehending the raising of vegetables, fruits and other garden products as food for men or beast, though some of them may be regarded in England as products of horticulture as distinguished from agriculture. The learned Judge considered the distinction between " agriculture " and " horticulture " and observed : " The distinction between agriculture when it is used otherwise than in its primary and more general sense and horticulture is a fine one even in England and in India, especially, it will be impossible in the case of several products of the land to draw a line between agriculture and horticulture according to English notions. The only practical distinction which I can suggest and one which will give effect to the policy of the Legislature in exempting agricultural leases from the operations of section 107, etc., of the Transfer of Property Act is to regard as agriculture, as distinguished from horticulture, not only all field cultivation by tillage but also all garden cultivation for the purpose chiefly of procuring vegetables or fruits as food for man or beast and other products fit for human consumption by way of luxury, if not as an article of diet. " He then discussed the policy of exemptions setting out the observations of Cave J. in Ellis & Co. vs Hilse(l): " The very object of this exemption is the wellknown one of favouring agriculture an old object of English Legislation in favour of a very important industry ", and stated: " This observation of Mr. Justice Cave will apply with much greater force in this country where the agricultural industry is more, important than in England and is one that is common to wet cultivation (1) 116 as to garden and dry cultivation, the object of all such cultivation being chiefly to procure food for men and cattle and other products of the soil which are usually consumed by the people as gentle stimulants or by way of luxury. Betel leaf is an article of daily consumption with all classes in this country as tobacco leaf is with most classes and betel vine is generally grown side by side with plantations, the products of which are among the chief articles of vegetable food. " The lease in that case being one for the cultivation of betel was therefore held to be agricultural lease and Shephard, J., agreed with this conclusion revising the opinion which he had expressed earlier in Kunhavan Haji vs Mavan (supra). In Raja of Venkatagiri vs Ayyappa Reddy (1) the question was whether land usually fit only for pasturing cattle and not for cultivation, i.e., ploughing and raising agricultural crops, was "ryoti" land, though it might have been "old waste" and a tenant of such land was a "ryot" and any amount agreed to be paid for pasturing cattle was " rent " within the definitions of section 3 of the Madras Estates Land Act (Mad. I of 1908). The Court held that such land was not " ryoti " land inasmuch as it was not fit for ploughing and raising agricultural crops. The ordinary meaning of " agriculture " was taken to be " the raising of annual or periodical grain crops through the operations of ploughing, sowing, etc." (Per Sadasiva Ayyar, J., at page 741). The Chief Commissioner of Income Tax, Madras vs Zamindar of Singampatti (2) was a reference arising out of the assessment for income tax under Act VII of 1918 of the income derived by the Zamindar of Singampatti from forests and fisheries within the ambit of his Zamindari. The assessee objected to the assessment (i) on the ground that the income was agricultural income within the meaning of section 4 of the Act and, therefore, not chargeable to income tax; (ii) that the (1) (1913) I.L.R. 38 Mad. 738. (2) Mad, 5 18 (F.B.) 117 assessment was illegal as contravening the terms of his permanent sanad for the Zamindari and the provisions of Regulation XXV of 1802. The Court held ' that where the peishkush of a permanently settled estate was fixed in commutation not only of the rentals of the cultivated lands but also of all income which might be derived from forests or fisheries, both under the terms of the sanad and section I of Regulation XXV of 1802, these incomes were exempt from further taxation by the Government, and section 3 of the Income tax Act did not abrogate this exemption. In view of this conclusion the Court did not think it necessary to determine whether income from forests or fisheries came under the definition of " agricultural income. " The Court, however, pointed out that " a reference to Murray 's and Webster 's dictionaries shows that the word "agriculture ", while sometimes used in the narrow sense of the art or science of cultivating the ground, is also used in a much wider sense so as to include even " forestry ", according to Webster. In which sense it was used by the framers of the Income tax Act would be a matter for determination and to this end it would not be out of place to consider the probable reason for the exemption of agricultural income from income tax. No other reason is suggested than the equity of exempting from further burden income which had already paid toll to the State in the shape of land revenue. " The question, therefore, whether the income from forests would be " agricultural income " within the meaning of section 4 of the Income tax Act ' was thus left open and the decision that income from forests was not liable to income tax was reached under the terms of the Sanad of section I of Regulation No. 25 of 1802. Kaju Mal vs Salig Ram(1) was concerned inter alia with a field in which tea was grown and the question was whether the land fell within the definition of Cc agricultural income " or " village immoveable property " as given in section 3(i) and (ii) of the Punjab Pre emption Act, 1905. The Court held that fields planted with tea bushes were fields used for agricultural (1) (1919) P.R. NO. 118 purposes and this decision was affirmed by the Privy council in Kaju Mall vs Salig Ram(1). It was held that the words " agricultural purposes " in section 2 (iii) of the Punjab Alienation of Land Act, 1900, included the cultivation of tea; consequently, land which was not occupied as the site of any building in a town or Village, and was occupied or let for the cultivation of tea was " agricultural land" within the meaning of section 3(i) of the Punjab Pre emption Act, 1905. Emperor vs Probhat Chandra Barua (2) was a case under the Indian Income tax Act and the classes of income derived from permanently settled estates were "1. Income from fisheries. Income from land used for stacking timber. Income from pasturage. " The income from the first two heads was certainly not agricultural income or income derived from "land which is used for agricultural purposes" within the meaning of sections 2 and 4 of the Act. But income derived from pasturage was held to be agricultural income which could not lawfully be charged with income tax. There was a difference of opinion between Rankin, J., and Page, J., in regard to the liability of income from fisheries and income from land used for stacking timber based on the construction of the Permanent Settlement Regulations of 1793. But that is immaterial for our present purposes. What is material is that both the learned Judges were unanimous in their opinion that income from pasturage was income derived from "land which is used for agricultural purposes" and was, therefore, within the exemption given by a. 4(3)(viii) to agricultural income as defined by section 2(1)(a) of the Act. In Kesho Prasad Singh vs Sheo Pragash Ojha (3) the Privy Council held that a grove was not land " held for agricultural purposes " within the meaning of section 70 of the Agra Tenancy Act, 1901, affirming the decision of the High Court of Allahabad that it was impossible to hold that that section had, any application whatever to such a property as the grove in fact was. (1)(1923) I.L.R. (2)(1924) I.L.R. (3) All. 831. 119 The Commissioner of Income tax, Madras vs T. Manavedan Tirumalpad (1) was also a decision under the Indian Income tax Act (XI of 1922) and the assessee there was assessed by the Income Tax Officer for the year 1928 29 on the amount received by the sale of timber trees cut and removed from the forests. The question was whether these amounts were liable as such to income tax and the Court observed derived from the sale of paddy which is grown on land and the income derived from the sale of timber cut in a forest; but the profits earned from the sale of paddy would be assessable to income tax but for the special exemption given to that income in the Incometax Act, by reason of its being agricultural income. There is such exemption in the case of income derived from the sale of timber. " There is no further discussion to be found in the judgment which would throw light on the question whether such receipts by the assessee were agricultural income and as such exempt from income tax. The later decision of the Madras High Court in Chandrasekhara Bharathi Swamigal vs Duraisami Naidu (2) however contains an elaborate discussion as to the connotation of the term "agriculture ". The case arose under the Madras Estates Land Act (Mad. I of 1908) and the question which the Court had to consider was whether growing Casuarina trees, i.e., trees for fuel, was an agricultural purpose so as to make the person who held the land for that purpose a " ryot " within the meaning of the Madras Estates Land Act. The Court held that land held for growing Casuarina trees was not land held for purposes of agriculture and the person holding the land for that purpose was not a " ryot " within the meaning of the Act. While delivering the judgment of the Court Reilly, J., embarked upon a consideration of what the term " agriculture " meant and came to the conclusion that agriculture could not be defined by the nature of the product cultivated but should be defined rather by (1) Mad. 21 (S.B.) (2) Mad. 120 the circumstances in which the cultivation was carried on. He observed at page 902: " I agree with the remark of Shephard, J., in Murugesa Chetti vs Chinnathambi Goundan(l) that a man who plants or maintains trees for firewood is not in ordinary parlance an agriculturist. If we take the strict meaning of " agriculture " according to its derivation, it means the cultivation of a field, the cultivation of an open space, as opposed to horticulture, the cultivation of a comparatively small enclosed space. The cultivation either of the field in agriculture or of the garden in horticulture cannot be confined, I think, to any particular product. With great respect, I do not agree with the opinion of Bhashyam Ayyangar, J:, in Murugesa Chetti vs Chinnathambi Goundan(l) that agriculture implies production of things useful as food for men or beast or other products fit for human consumption by way of luxury. That appears to me to be too narrow an interpretation. Still less do I agree with the opinion expressed by Sadasiva Ayyar, J., in Raja of Venkatagiri vs Ayyappa Reddi that agriculture is confined to the production of grain crops. I can see no reason why the cultivation in open spaces of such useful products as cotton, jute, flax and hemp should not be agriculture. Indeed I think agriculture cannot be defined by the nature of the products cultivated but should be defined rather by the circumstances in which the cultivation is carried on. In some cases it has been suggested that agriculture is confined to tillage. I think it can easily be shown that agriculture was carried on in this world before ploughs were invented. In the present day in many places cultivation is done with spades and not with ploughs, but the planting of timber or firewood trees, which are to stand on the land for a considerable number of years, forming plantations or woods or forests, appears to me to be opposed to the idea of agriculture, the cultivation of an open space. It is true that for the purpose of growing trees in a plantation it may be necessary first to prepare the land. (1) Mad. 42I, 423. (2) (1913) I.L.R. 38 Mad. 121 Later on it may be necessary to protect and water the young plants. Still later it may be necessary to thin out the plantation. But, when the land is covered with trees which had to stand on it for a number of years, sometimes as long as a century, during most of which period the land itself is untouched, to describe that as agriculture appears to me inappropriate. To my mind it is something very different from the cultivation of a field or of an open space. It may be noticed that in Kesho Prasad Singh vs Sheo Pragash Ojha (1) their Lordships of the Privy Council approved of the opinion expressed by two learned judges of the Allahabad High Court that land let for a grove was not let for an agricultural purpose. It happened that the case then under consideration was one arising under the Agra Tenancy Act. But in that Act there is no definition of 'agriculture '. Therefore both the learned judges of the Allahabad High Court and their Lordships of the Privy Council were, we may take it, considering what is the meaning of the word I agriculture ' in its general sense. I may mention also that in Commissioner of Income Tax vs Manavedan Tirumalpad (2) a Full Bench of this Court remarked that income from cutting timber was not agricultural income. " It may be noticed that the learned Judge enlarged the connotation of the term "agriculture " by having regard to the circumstances in which the cultivation was carried on rather than the nature of the products cultivated and embraced within the scope of the term not merely the production of things useful as food for man or beast or other products fit for human consumption by way of luxury but also such useful products as cotton, jute, flax and hemp, though he stopped short at those products and hesitated to include therein growing of trees in plantation where the land was covered with trees which have to stand on it for a number of years. The last case to be referred in this series is that of Deen Mohammad Mian vs Hulas Narain Singh(2) (1)(1924) I.L.R. 46 All. (2) , 152. 16 122 where it was held that an orchard is an agricultural land. It was observed: it The case of an orchard is quite different. Orchard trees ordinarily are, and can be presumed to have been, planted by men after preparation of the ground which is cultivation and seasonal crops are gathered. Fruit trees also require seasonal attention such as pruning and digging of the soil around the roots and it cannot be said that this ceases to be cultivation merely because the whole tree is not replanted every year. . . In my opinion the land in suit is agricultural land; it is land from which by preparing the soil and planting and cultivating trees the raiyat expects to enjoy periodical returns in the way of produce for food. " This was a further extension of the idea which had 'germinated in the opinion expressed by Reilly, J., in Chandrasekhara Bharathi Swamigal vs C. P. Duraisami Naidu(1) and even plantation of trees in orchards which did not require to be replanted every year was included in the connotation of the term "agriculture". A still further extension of the term is to be found in the following observations of Vishwanatha Sastri, J., in The Commissioner of Income tax, Madras vs K. E. Sundara Mudaliar (2) at p. 273: " It is a matter of ordinary experience, at least in this part of the country, that mango, cocoanut, palmyra, orange, jack, arecanut, tamarind and other trees are planted usually in an enclosed land, and that these trees do not yield any fruit or crop in the early years of their growth. They remain on the land for a long number of years yielding fruit only after their maturity. There is no reason why the planting, rearing, watering, fencing and protection of such trees and the gathering of their fruits during the annual seasons should not be held to be "agriculture". There is some kind of cultivation or prodding of the soil at the inception when the planting is done and subsequently also at intervals. In the. case of coffee grown on hill slopes, there is no ploughing or tillage as in the (1) Mad. (2) , 271. 123 case of wet and dry fields; but it cannot be maintained that growing coffee is not an agricultural operation. Coffee and tea plants stand on the soil for many years, and their produce is gathered periodically. In the padugai lands or lands lying between the sandy bed and flood bank of rivers, plantains are grown in many places in deltaic tracts. Young plants are often brought and planted in pits dug for the purpose in a row with sufficient interspaces. Trenches are dug by the side of a row of plantain trees in order to catch and detain water. The plantain trees last for about two years, and from each tree off shoots spring up and grow in place of the parent tree. There is thus a natural replenishment of the plantain garden. It cannot be said that the raising of plantains is not an agricultural purpose. Similarly in the case of sugarcane the plants stand on the land for two years or a little more, and there are usually two cuttings. Castor plants stand for some years on the soil and the seeds are periodically gathered in. Bamboo is often planted in enclosed lands by digging pits, filling them with sand and manure and then planting the young stalks in a bunch at suitable distances. Watering is done for the first 2 or 3 years. Every year, the land surrounding each bamboo cluster is dug with a spade and small earthen ridges are put up so as to catch and retain rain water. Bamboo plants attain maturity in about 3 or 4 years, and the thorny branches which grow on the main stem are then fit to be cut off and used for fencing purposes. . . . . I am unable to see why these operations are not agricultural operations. " The cases above noted all of them interpret the term "agriculture" in its narrower sense, though there is a marked progress from the extremely narrow construction put upon it by Bhashyam Ayyangar J. in Murugesa Chetti vs Chinnathambi Goundan(1) to the somewhat wider connotation thereof adopted by Reilly J. in Chandrasekhara Bharathi Swamigal vs C.P. Duraisami Naidu (2) and by Vishwanatha, Sastri J. in The Commissioner of Income tax, Madras vs K. E. Sundara (1) Mad. 421, 423. (2) Mad. 124 Mudaliar(1) It is interesting to note that all throughout these cases runs the central idea of either tillage of the land or sowing of seeds or planting or similar work on the land which invests the operation with the characteristic of agricultural operations and whenever that central idea is fulfilled there is the user of land for agricultural purposes and the income derived therefrom becomes agricultural income. There were, on the other hand, decisions which interpreted the term "agriculture" in the wider sense as including all activities in relation to the land, even though they did not comprise these basic agricultural operations. King Emperor vs Alexander Allen(2) involved the interpretation of the expression "land used solely for agricultural purposes" in sub section (3) of section 63 of the Madras District Municipalities Act (Mad. IV of 1884) as amended by the Madras District Municipalities Amendment Act (Mad. III of 1897) and the Court held that the lands on which potatoes, grain, vegetables, etc., were grown, as well as pasture land, were used solely for agricultural purposes " within the meaning of the sub section. The Court adopted the definition of agricultural land given in the Agricultural Rates Act (59 and 60 Vict., Chap. 16) section 9: " The expression " agricultural land " means any land used as arable, meadow, or pasture ground only, cottage gardens exceeding one quarter of an acre, market gardens, nursery grounds, orchards, or allotments, but does not include land occupied together with a house as a park, gardens other than as aforesaid, pleasure grounds or any land kept or preserved mainly or exclusively for purposes of sport or recreation or land used as a race course." and also the meaning ascribed to it in Murray 's Oxford English Dictionary quoted above and observed: " We also note that it is there pointed out that the restriction of the word agriculture to tillage, as in the following quotation, is rare. The lands were not fields for agriculture but pastures for cattle. We believe that we cannot do better than follow these definitions in (1) , 271. (2) Mad. 627, 629,630. 125 attempting to decide what, for the purposes of subsection (3) of section 63 of the Municipalities Act, are or are not lands used solely for agricultural purposes . . We do not consider that any distinction can be drawn between large and small plots of lands on which roots of grain are cultivated. All such land must be held to be land used solely for agricultural purposes Counsel has urged before us that these so called waste lands are pasture lands and as such should be held to be lands used solely for agricultural purposes If, therefore, it could be shown that these so called waste lands were in reality pasture grounds or lands used for "rearing livestock", we should certainly decide that they were lands used solely for agricultural purposes. " The learned Judges there were influenced by the dictionary meaning of the term agriculture as given in Murray 's New Oxford Dictionary and understood the term agriculture in the widen sense as including the user of land for rearing live stock also. In Panadai Pathan vs Ramaswami Chetti(1) a lease of land was given for growing casuarina trees and the question was whether such a lease was a lease for agricultural purposes within the meaning of section 117 of the Transfer of Property Act. The Court held that it was a lease for agricultural purposes and therefore did not require a registered instrument for its creation. Spence J. in the course of his judgment differed from the opinion of Bhashyam Ayyangar, J., in Murugesa Chetti vs Chinnathambi Goundan (2) that the word agriculture in its more general sense comprehends the raising of vegetables, fruits and other garden products as food for man or beast, if the learned Judge intended thereby to limit it to the raising of food products. For to so restrict the word would be to exclude flower, indigo, cotton, jute, flax, tobacco and other such cultivation. He also differed from the opinion expressed by Sadasiva Ayyar J. in Seshayya vs Rajah of (1) Mad. 710. (2) Mad. 42I, 423. 126 Pittapur (1) and Rajah of Venkatagiri vs Ayyappa Reddi (2) that agriculture meant the raising of annual or periodical grain crops through the operation of ploughing, sowing, etc., as such definition would exclude sugar cane, indigo, tea, flower, tobacco, and betel cultivation from agriculture. He then referred to the dictionary meaning of the term "agriculture" as given in the Oxford Dictionary and the Bouvier 's Law Dictionary set out above and observed: " In my opinion agriculture connotes the raising of useful or valuable products which derive nutriment from the soil with the aid of human skill and labour; and thus it will include horticulture, arboriculture and silviculture, in all cases where growth of trees is effected by the expenditure of human care and attention in such operations as those of ploughing, sowing, planting, pruning, manuring, watering, protecting etc. " Ramesam, J., who delivered a concurring judgment referred to the definition of agriculture adopted in Wharton 's Law Lexicon and was of opinion that it would include the use of land as " meadow or pasture or orchard or osier or woodland, or for market gardens, nursery grounds or allotments etc." but would exclude all cultivation of fibrous plants such as cotton, jute and linen and all plants used for dyeing purposes, such as indigo etc., and all timber trees and flowering plants etc. According to him, the rearing of a Casuarina plantation requires some preparation of the ground and subsequent care by watering the plants and he was therefore of Opinion that rearing of Casuarina trees was an agricultural purpose within the meaning of section 117 of the Transfer of Property Act. It may be observed however that according to both the learned Judges some preparation of the ground or some expenditure of human care and attention in such operations as those of ploughing, sowing, planting etc., was considered essential for constituting these operations agricultural operations. In Commissioner of Income tax, Burma vs Kokine Dairy, Rangoon(3) the question was whether income (1) (1916) 31 M.L.J. 284; 1916 M.W.N. 396. (3) , 509. (2) Mad. 738. 127 from a dairy farm and the milk derived from the farm is agricultural income and exempt as such from incometax. Roberts C.J. who delivered the opinion ' of the Court observed: "Where cattle are wholly stall fed and not pastured upon the land at all, doubtless it is trade and no agricultural operation is being carried on; where cattle are being exclusively or mainly pastured and are none the less fed with small amounts of oil cake or the like, it may well be that the income derived from the sale of their milk is agricultural income. But between the two extremes there must be a number of varying degrees, and the task of the Income tax Officer is to apply his mind to the two distinctions and to decide in any particular case on which side of the fence, if I may use the term, the matter falls. " He then referred to the case of Lean and Dickinson vs Ball (1) where Lord Cullen had said that he proceeded on the footing that the case, which was one dealing with poultry farming, was one in which poultry derived sustenance to a material extent from the produce of the ground. This method of approach was on a par with the one adopted by Lord Wright in Lord Glanely vs Wightman(2) where it was observed: " If authority were needed, the provisions just quoted do at least show that profits of occupation ' include gains from the animal produce as well as the agricultural, horticultural, or arboricultural produce of the soil;. . . . equally it is obvious that the rearing of animals, regarded as they must be as products of the soil since it is from the soil that they draw their sustenance and on the soil that they liveis a source of profit from the occupation of land, whether these animals are for consumption as food (such as bullocks, pigs or chickens), or for the provision of food (such as cows, goats or fowls), or for recreation (such as hunters or race horses), or for use (such as draught or plough horses). All these animals are appurtenant to the soil, in the relevant sense for this purpose, as much as trees, wheat crops, flowers or roots though no doubt they differ in obvious respects. Nor (1) 128 is it now material towards determining what are products of occupation that farming has developed in its use of mechanical appliances and power, not only in such matters as ploughing, reaping, threshing, and so forth, but in such ' ancient methods of preparing its products as making cream, butter or cheese. The farmer is still dealing with the products of the soil, and Schedule B covers the income. " The House of Lords were dealing with the profits of occupation of land not with income derived from user of land for agricultural purposes and therefore not restricted in their interpretation of the term " occupation " and all these activities which were described therein might as well have been comprised within the scope of the taxing statutes. What we have, however, to see is whether these activities fall within the connotation of the terms " agriculture " and " agricultural purpose " which are the only terms to be considered for bringing the income derived therefrom within the definition of agricultural income in section 2 (1) (a) of the Indian Income tax Act. In Moolji Sicka & Co., In re(1) Derbyshire C.J. understood the term ,agriculture" in a wider sense as including operations not only on the land itself but on the shrubs which grew on the soil and were according to him a part of the soil. The assessees were manufacturers of biri, a kind of cigarette consisting of tobacco wrapped in tendu leaves. The tendu plant was of entirely wild growth and propagated itself without human agency in jungle and waste lands. The assessees had taken several villages on " lease " for plucking the leaves of such plants and the work done by the assessees consisted in pruning the trees and burning the dead branches and dried leaves lying on the ground. The Court held that the profits accruing to the assessees by the sale of tendu leaves was not exempt as agricultural income but to the extent to which pruning of the tendu shrub occurred, there was in a technical and legal sense a cultivation of the soil (1) 129 in which the shrub grew and therefore so much of the income as was shown by the. assessee to be profit derived from the collection and preparation, so as to make them fit to be taken to the market, of tendu leaves produced by the pruning of the tendu shrubs was exempt as agricultural income under section 2 (1) and section 4 (3) (viii) of the Indian Income tax Act. The learned Chief Justice observed: " Cutting back or pruning the wild tendu clearly contributes to the growth of the leaves in that shrub and I am prepared to hold that the pruning of the shrub is a cultivation of the shrub and as the shrub grows in the soil and as a part of it, is a cultivation of the soil in a legal and technical sense." The word cultivation was here understood by the learned Chief Justice not only in the sense of cultivation of the soil but in the sense of cultivation of the tendu shrubs which grew on the soil and were therefore a part of it. The operations which were performed on the shrubs were certainly not operations performed on the soil itself and the opinion expressed by the learned Chief Justice has certainly given an extended meaning to the term cultivation and used with reference to the soil. It is significant however to observe that cultivation of the soil was considered an essential ingredient which rendered the income derived from the tendu leaves agricultural income within the meaning of its definition in section 2(1)(a) of the Act. Commissioner of Income Tax, Madras vs K. E. Sundara Mudaliar (1) contains a further extension of this idea where Vishwanatha Sastri J. observed at p. 274: " Pasture land used for the feeding and rearing of livestock is land used for agricultural purposes: Emperor vs Alexander Allen (2) . Rearing of livestock such as cows, buffaloes, sheep and poultry is included in "husbandry". These animals are considered to be the products of the soil, just like crops, roots, flowers and trees, for they live on the land and derive their sustenance from the soil and its produce: Glanely vs Wightman(3) ; Commissioner of Income tax, Burma vs (1) , 27I. (3) ; 638. (2) Mad. 627, 629, 630. 17 130 Kokine Dairy Co. (1) It is therefore not legitimate, in my opinion, to confine the word "agriculture" to the cultivation of an open field with annual or periodical crops like wheat, rice, ragi, cotton, tobacco, jute, etc. Casuarina is usually raised on dry lands of poor quality, and it is usual to find the same land used alternatively "for the cultivation of ordinary cereal crops like ground nut, gingelly, cholam, kambu, etc., and for the raising of Casuarina plantations. The land bears the dry assessment whatever be the nature of the crop raised. " This enlarged connotation of the term "agriculture" has been tinged by the dictionary meanings ascribed to it in Murray 's Oxford Dictionary and the Webster 's Dictionary quoted above which understood the term as including the allied pursuits of rearing, feeding and management of live stock and also including husbandry, farming horticulture, etc., in the widest sense, as also butter, cheese making etc. We shall have to consider at the appropriate stage as to how far such enlargement is warranted, by the definition of " agri cultural income " as given in section 2 (1) (a) of the Indian Income tax Act. The cases above noted all of them involve some expenditure of human skill and labour either on the land or the produce of the land, for without such expenditure there would be no question of the income derived from such land being agricultural income. Where, however, the products of the land are of wild, or spontaneous growth involving no expenditure of human labour and skill there is unanimity of opinion that no agricultural operations were at all involved and there is no agricultural income. In such cases, it would be the absence of any such operations rather than the performance thereof which would be the prime cause of growth of such products. The cases bearing on this aspect of the question may be noted. Kaju Mal & others vs Salig Ram (2) is the earliest case where a stretch of natural forest came in for consideration. It was a forest land and it was held to (1) , 509. (2) (1919) P.R. No. 131 be agricultural land or land used for purposes subservient to agriculture or for pasture, and therefore exempt from pre emption under section 4 of the Punjab Premption Act, 1905. There was no discussion of any legal principles in that decision but when we come to the next case of Province of Bihar vs Maharaja Pratap Udai Nath Sahi Deo(l) which was a case under the Bihar Agricultural Income Tax Act (Bihar VII of 1938), we find the ratio of these decisions laid down in clear terms. The assessees there derived their income from " Bankar " and " Palkar ". " Bankar " was income derived from the sale of wood from virgin jungles or jungles not actually cultivated; and "Phalkar" was income derived from the fruits of wild jungle trees and bushes. The question was whether this income was agricultural income within the meaning of the term as defined in the Act. Harries C.J. who delivered the judgment of the Court observed: "Bankar" : It appears that this head of income was derived from virgin jungles or jungle land not actually cultivated. A few forest guards appear to have been employed to protect the property, but it cannot be said that the trees have grown as the result of cultivation. They appear to have grown naturally in the jungles without the intervention of the human agency, and in my view the growth of these trees cannot be said to result from the cultivation of the soil. In fact, it was the absence of cultivation that permitted the area to develop into a jungle. . . . " " Phalkar ": This is income derived from wild jungle fruits, and it cannot be said that the fruit gathered is the result of the cultivation, but, on the contrary, it is the result of the absence of cultivation. Trees and bushes yielding these fruits grow not on cultivated soil but on the land not under cultivation and frequently the more neglected and wild the land is the thicker grow these wild bushes and trees yielding such crop. Practically in all cases the crop is the result of want of cultivation and not the result of cultivation. (1) [194I] , 328. 132 In my judgment it is not established that the income described as phalkar in these cases is income derived from land used for agriculture or from agriculture and is, therefore, not assessable to agricultural income tax. " In Raja Mustafa Ali Khan vs Commissioner of Income Tax, U. P. & C. P. (1) which went up to the Privy Council, the Oudh Chief Court held that income from the sale of forest trees growing on land naturally and without the intervention of human agency, even if the land was assessed to land revenue, was not agricultural income within the meaning of section 2(1)(a) of the Income tax Act. The Court followed an earlier decision given by it in the case of Maharaja of Kapurthala vs Commissioner of Income Tax C. P. & U. P. (2) in which the court had discussed the meaning to be ascribed to the term "agriculture" and observed at page 93: "A fiscal statute should no doubt be construed strictly, and, if there be any doubt about its construction, the subject must be given the benefit. But we do not feel any doubt that the expression "land used for agricultural purposes" in the Income tax Act does not extend to forests of spontaneous growth, where nothing is done to prepare the soil for trees to be planted therein, and where the growth of the trees is not fostered by tillage. We should not be justified in giving the taxpayer the benefit of the dictionary definition when it is not disputed that the meaning of the term " agricultural" cannot be extended for the purpose of the Income tax Act to all the secondary implications therein suggested. We therefore construe the term in its primary sense. We accordingly hold that income from the sale of forest trees of spontaneous growth growing on land which is assessed to land revenue is not agricultural income within the meaning of section 2(1)(a) of the Income Tax Act. " Yuvarajah of Pithapuram & Anr. V. Commissioner of Income Tax, Madras(3)was also a case where the (1) (2)[1945] ,93. (3)[1946] ,99. 133 assessee derived income from forests of spontaneous growth by the sale of wood, bark, leaves, other usufruct of trees, minor forest produce and licence fees and from trees that had grown wild in non forest areas. The Zamindari of Pithapuram was a permanently settled estate under the Permanent Settlement Regulation (Regulation XXV of 1802) and it was contended that the imposition of income tax in respect of income other than agricultural income derived from a permanently settled estate would not be a breach of Regulation XXV of 1802 relating to permanent settlement. Reliance was placed in support of this position on the decision in Chief Commissioner of Income Tax vs Zamindar of Singampatti (1). It was, however, held that the case was impliedly overruled by the decision of the Privy Council in Probat Chandra Barua vs King Emperor (2) and the Court proceeded to consider whether income derived from forests of spontaneous growth by the sale of wood, bark, leaves, other usufruct of trees, minor forest produce and licence fees and from trees which have grown wild in nonforest areas was agricultural income within the meaning of section 2(1) of the Indian Income tax Act. The Court observed : "There is ample authority for holding that income derived from trees which have grown wild is not agricultural income but without the aid of authority, we should have no hesitation in saying that to describe it as such would involve a distortion of the meaning of the word agriculture '. and such income was accordingly held to be not agricultural income within the meaning of section 2 (1) of the Act. (It may be noted that the appellant preferred an appeal to the Privy Council against this decision but the same was dismissed vide Yuvarajah of Pithapuram & Anr. vs Commr. of Income Tax, Madras (3) Benoy Ratan Banerji vs Commissioner of Income Tax, U.P., C.P. & Berar (4) was another case in which the assessee derived income from the sale of timber from (1) Mad. 518 (F.B.). (2) (1930) L.R. 57 I.A. 228. (3) (4) 134 the Zamindari on which there had been for many years, a number of forest trees, khar and wild plants. There was no evidence on the record to show that the growth of the trees in question was the result of any actual culivation by the assessee at all. The various trees which he sold were of spontaneous growth, not having grown as a result of actual cultivation. The Court held that in order to come within the definition of " agricultural income ", the income had not only to be derived from land which was used for "agricultural purposes" but such income had also to be derived by the process of " agriculture ". The Court observed that being trees of spontaneous growth, to the pro duction of which the assessee had made no contribution by way of cultivation, no question could arise either of the land on which they grew being "used for agricultural purposes" or of the trees themselves and the income they produced being the result of "agriculture." The Court accordingly held that the income from the sale of forest trees of spontaneous growth, growing on land naturally and without the intervention of human agency, was not agricultural income within the meaning of section 2(1)(a) of the Income Tax Act even if such land was subject to a local rate assessed and collected by officers of the Crown as such and such income was not exempt from income tax under section 4(3) (viii) of the Act. A decision of the Nagpur High Court in Beohar Singh Raghubir Singh vs Commissioner of Income Tax, U.P., C.P., and Berar (1) (delivered on September 4, 1946, but reported in 1948) may be noted here. There also the income in question was derived by the assessee from the sale of forest produce such as timber, tendu leaves, mohua flowers, harranuts etc., derived from a forest which was not a cultivated one but was of spontaneous growth. The question was whether such income was agricultural income and as such exempt from taxation under section 4(3)(viii) of the Indian Incometax Act. The Court considered the dictionary meanings of the term "agriculture" which included forestry within its compass but observed that the essence of (1) 135 agriculture even when it was extended to include "forestry", was the application of human skill and labour; without that it could neither be an art nor a science and that was according to them the determining factor in such class of cases. The Court then referred to the various decisions referred to above and cited with approval the following passage from the Judgment of the Federal Court in Meghraj vs Allah Rakhia (1). "Their Lordships confirmed a decision of the Punjab Chief Court to the effect that land used as a tea garden was used for "agricultural purposes." In the judgment of the Chief Court (which was generally approved by their Lordships) it was observed that the term "agricultural land" is used in the Act of 1905 in its widest sense to denote all land which is tilled. . . The, Chief Court had held that land covered by a natural forest was not agricultural land, and this view also would seem to have been confirmed by the Judicial Committee," and they further proceeded to observe " We have underlined the word "tilled" because, in our opinion, that brings out the distinction which we have sought to draw between an agricultural and a non agricultural purpose. The decisions referred to are Kaju Mal vs Saligram and Kajumal vs Saligram (2)". The Court came to the conclusion that it was essential that the income should be derived from some activity which necessitated the employment of human skill and labour and which was not merely a product of man 's neglect or inaction except for the gathering in of the spoils. Not only must the assessee labour to reap the harvest, but he must also labour to produce it and they accordingly held that the income in question was not agricultural income and was not exempt from taxation under section 4(3)(viii) of the Indian Income tax Act. We now come to the decision of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of (1) ,62. (2) [1919] P. R. No. and Lah. 136 Income tax, U. P. Ajmer and Ajmer Merwara (1). It will be recalled that the Oudh Chief Court had in Raja Mustafa Ali Khan vs Commissioner of Income Tax, U. P. & C. P. (2) decided that income from the sale of forest trees growing on land naturally and without the intervention of human agency even if the land was "assessed to land revenue was not agricultural income within the meaning of section 2(1)(a) of the Indian Income tax Act. The appellant took an appeal to the Privy Council against this decision and the main question for consideration before their Lordships was whether the land was 'used for agricultural purposes and the income derived therefrom was agricultural income. Their Lordships of the Privy Council observed that the income in question " was derived from the sale of trees described as forest trees growing on land naturally and the case has throughout proceeded upon the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry and that the jungle from which trees had been cut and sold was a spontaneous growth. Upon those facts the question is whether such income is (within section 2(1)(a) of the Act) rent or revenue. . or alternatively. . whether such income was, within section 2(1)(b), income derived from such land by agriculture. It appears to their Lordships that, whether exemption is sought under section 2(1)(a) or section 2(1)(b), the primary condition must be satisfied that the land in question is used for agricultural purposes; the expression " such land" in (b). refers back to the land mentioned in (a) and must have the same quality. It is not then necessary to consider any other difficulty which may stand in the way of the assessee. His case fails if he does not prove that the land is "used for agricultural purposes. " Upon this point their Lordships concur in the views which have been expressed not only in the Chief Court of Oudh but in the High Court of Madras (see Yuvarajah of Pithapuram vs (1) (2) 137 Commissioner of Income Tax, Madras (1), and the High Court of Allahabad (see Benoy Ratan Banerji vs Commissioner of Income Tax, U.P., C.P. & Berar(2) and elsewhere in India. The question seems not yet to have been decided whether land can be said to be used for agricultural purposes within the section, if it has been planted with trees and cultivated in the regular course of arboriculture, and upon this question their Lordships express no opinion. It is sufficient for the purpose of the present appeal to say (1) that in their opinion no assistance is to be got from the meaning ascribed to the word "agriculture" in other statutes and (2) that, though it must always be difficult to draw the line, yet, unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes within the meaning of the Indian Income tax Act. In the present case their Lordships agree with the High Court in thinking that there is no evidence which would justify the conclusion that this condition is satisfied. " It may be noted that the Privy Council also proceeded upon the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry and these observations are patient of argument that if any regular operations in forestry had been carried on the land they might have made a difference to the result. Their Lordships also did not express any opinion on the question whether land can be said to be used for agricultural purposes within the section if it has been planted with trees and cultivated in the regular course of arboriculture. They were, however, definite in their opinion that unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, the land cannot be said to be used for agricultural purposes within the meaning of the Act. Agricultural operations are thus defined by them to be operations where there was some measure of cultivation of the land, some expenditure of skill and labour upon it. If these conditions were satisfied in regard to any particular land, then (1) , 99. (2) , 18 138 such land can be said to be used for agricultural purposes and the income derived therefrom constitute agricultural income within the meaning of section 2(1)(a) of the Act. The term "agriculture" for the purposes of the Indian Income Tax Act was thus in effect defined by their Lordships to mean some measure of cultivation of the land and some expenditure of skill and labour upon it and unless the operations, whether they be agricultural operations or forestry operations conformed with those definitions, they could not be styled agricultural operations so as to constitute land on which they were performed land used for agricultural purposes. One should have thought that this decision of the Privy Council would put an end to all controversies with regard to the connotation of the term " agriculture " and " agricultural purposes ". That was, however, not to be. The words used by their Lordships in their judgment were cryptic and the controversy arose immediately thereafter as to whether " some measure of cultivation of the land" and "some expenditure of skill and labour upon it" were used by them as cumulative or in the alternative. Considerable ingenuity was exercised in determining what were regular operations in forestry and whether they could be assimilated to agricultural operations which could have the effect of constituting the land upon which they were performed land used for agricultural purposes within the meaning of the Indian Income tax Act so that income derived therefrom could fall within the definition of agricultural income" contained therein. The first case which came up for consideration after the above decision of the Privy Council was the case of Commissioner of Agricultural Income Tax, West Bengal vs Raja Jagadish Chandra Deo Dhabal Deb (1) before the Calcutta High Court. The assessee was the Zamindar of Chilkigarh in the district of Midnapore the western part of which contained jungle mahal. The income in question was derived from the sale of Sal trees which grew in the forest. The forest was not an uncared for virgin forest. The assessee maintained a staff of one forester, 6 guards and 24 Chaukas to look after the (1) , 438. 139 forest and for the proper cultivation of the same. The Sal trees were generally sold off in blocks when about 15 years old. Annually blocks of about 1,000 acres were sold up. All the trees in the blocks sold up were cut down by the purchasers for sale as fuel and house posts. During the rainy season from the stumps of the trees cut down, new shoots come out which grew into mature trees in 15 years, to be cut down again. In order to prevent damage to the young shoots in the early stages of their growth the areas cut down were closely guarded for one year at least from the time when the block in question had been completely denuded of trees, in order to keep cattle and men off from the lands so that they may not damage the young growing shoots. In order to promote the growth of shoots, the ground was also kept free from undergrowth jungle. This was not cleared at the assessee 's expense but the villagers were allowed to clear the grounds of the undergrowth and take the same away free of cost. The existing Sal trees in the forests and the Sal trees which had been sold off in 1350 B.S. had been grown in the same manner as described above. From the above facts it was clear that human care and skill had been utilised for promoting the growth of the Sal trees from which the income was derived in 1350 B.S. The Court discussed the dictionary meaning of the term " agriculture " and following the decision of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of Income Tax U.P., Ajmer & Ajmer Merwara(l) came to the conclusion that income from a virgin forest or forests of spontaneous growth was not agricultural income. The view that the tilling of the soil was the sine qua non for bringing a pursuit within the term agriculture was also held to have been exploded and it was observed at p. 440: " Whether a particular forest is one of spontaneous growth or not has to be decided on one important consideration as indicated by the Judicial Committee in that decision i.e., whether there has been I some expenditure of skill and labour upon it '." (1) [1948] 16 1.L.R. 330. 140 Reliance was placed upon the further observations of the Privy Council that, whether there were " any regular operations in forestry " would be a material fact for consideration and it was observed: " To put it in another form, the introduction of human agency and the application of human efforts would be the criteria for consideration" and after discussing several cases on the subject the Court observed at p. 441 : " On a careful analysis of the reasons given by the learned Judges in the various decisions referred to above it will be apparent that the facts of each particular case must be considered for determining whether there has or has not been sufficient application of human efforts before it can be determined whether the income from a particular forest is agricultural or otherwise. " On the findings of fact recorded by the Tribunal in the case before them the Court was of opinion that the forest in question was not either a virgin forest or containing trees which grew spontaneously and naturally without any human intervention whatever. The circumstance that there was felling of the trees, the new shoots appearing during the rainy season without any human intervention, guarding of the new shoots from either being trampled under foot or being browsed by animals and the removal of undergrowth of fallen leaves were considered regular operations in forestry in the forests in question which required the application of human efforts sufficient to include them under the head agricultural income. It was further observed : " If the view of the Judicial Committee were to exclude all kinds of income from the category of agricultural income unless there was actual cultivation of the soil, reference to "regular operations of forestry" would have been unnecessary. Not that there must always be " some measure of cultivation of the land " and " some expenditure of skill and labour upon it " but that the proof of either would be sufficient to bring the case within either clause (a) or (b) of section 2(1) of 141 the Act. " Regular operations in forestry " do require expenditure of skill and labour upon the land on which the forest grows. " The Court, therefore, came to the conclusion that in the special circumstances as disclosed in the case, there were regular operations in forestry and the income, derived from forests in question was agricultural income within the meaning of section 2 (1) (a) of the Bengal Agricultural Income tax Act, 1944. Jyotirindra Narayan Sinha Choudhury vs The State of Assam (1) arose under the Assam Agricultural Income tax Act, 1939 and the question for the consideration of the Court was whether the amounts realised by the assessee from the sale of Sal tree, , growing in the forest was agricultural income within the meaning of section 2 (1) of the Act. There was no evidence to show that these Sal trees were of spontaneous growth. Even though the possibility of the forests originally having been of spontaneous growth was recognised, it was an admitted fact that forest trees were protected and fostered in growth by the application of human labour and skill. In these forests, operations ' in forestry such as clearing jungles, creepers and climbers, thinning by removal of less healthy trees from thickly grown areas, removal of unsound, crooked and diseased trees, burning of leaves to fertilise the ground, cutting of trees at special heights, reservation of blocks by turns and their operation in cyclic order, preservation of mother trees for the spread of seed, protection of forests from fire, etc., were regularly carried on and regular operations were thus being undertaken for their growth, preservation and regeneration. The Court held that as extensive operations in forestry were employed in the forest of Sal trees, the income from the sale of such trees would be agricultural income as defined in the Assam Agricultural Income tax Act. In arriving at this conclusion, the Court relying on the various dictionary meanings of the term "agriculture " observed at p. 390: (1) 142 " in spite of the diversity as to the scope and purpose of agriculture as revealed by the different definitions, there is one feature which is essentially common to all of these. This is the application of human skill and labour without which there can be no agriculture. " The Court then referred to the decision of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of Income Tax(1) and after quoting the passage from the judgment above referred to proceeded to observe : " Their Lordships have not laid down that some measure of cultivation is absolutely necessary before it can be said that land is used for agricultural purposes. In fact " some measure of cultivation " is placed on a par with " some expenditure of skill and labour ". If either of the two conditions exists, the land could be said as being used for agricultural purposes. Tillage or actual cultivation would not in their view be an essential pre requisite of " agriculture " in its wider implication. " After referring to a decision of the Calcutta High Court in Hedayat Ali vs Kamalanand Singh(2) and Commissioner of Agricultural Income Tax vs Jagadish Chandra Deo Dhabal Deb (3) the Court observed: " The review of the authorities considered above leads to the conclusion that purpose within the meaning of the Assam Act can be agricultural even if its achievement does not involve actual cultivation of the soil. In the words of their Lordships of the Privy Council in the case of receipts from the sale of forest trees, the income would be agricultural if there is some expenditure of skill and labour upon it. Regular operations in forestry necessarily involve expenditure of skill and labour. Where, therefore, such operations take place, the income from the sale of trees in the forest would be within the ambit of agricultural income as defined in the Assam Act." In Pratap Singh Balbeer Singh vs Commissioner of Income Tax, U. P., C. P. & Berar (4), however, the (1)[1948] (2)[1913] 17 C.L.J. 411. (3)[1949] , 438. (4)[1952] 143 High Court of Allahabad struck a different note. The assessee there derived the income from the sale of forest trees growing on land naturally and spontaneously without the intervention of any human agency but carried on forestry operations working the forest for at least some time on scientific lines in accordance with a scheme of making profits. There was a regular working plan and the assessee was deriving regular income from the forest and spending money to increase the profit. The Court held that the " agriculture " and " agricultural purposes " with reference to land clearly implied that some operations must be carried on on the land itself; human skill and labour should be used for the purpose of ploughing the land, manuring it, planting the trees or some similar process, and that mere weeding care and preservation of forest trees which grew spontaneously were not operations on the land which were necessary to constitute the process a process of agriculture. In the course of the judgment, the Court interpreted the above passage from the judgment of their Lordships of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of Income Tax (1) a. , under: " It is quite clear that their Lordships were of the view that, for income to be agricultural income, the essential element that must exist is that there should be "some measure of cultivation of the land" or " some expenditure of skill and labour upon it". The language used by their Lordships of the Privy Council shows that the expenditure of skill and labour must be upon the land and not merely oil the trees which are already growing on it as a result of spontaneous growth." Mere regeneration and preservation of trees could not be said to be expenditure of human skill and labour upon the land itself and the land could not under the circumstances be held to be used for agricultural purposes nor could it be held that any process of agriculture was being carried on. The Court observed that planned and scientific exploitation of a forest of spontaneous growth, though it might yield (1) 144 regular income, would not be income from agriculture as no operations were carried out and no human skill and labour was expended in such a case, on the land itself. Raja Benoy Kumar Sahas Roy vs Commissioner of Income Tax, West Bengal (1) the judgment under appeal before us here struck a middle path. The Tribunal had found that except the sowing of seeds, the operations carried out, though equally necessary for the maintenance and upkeep of any forest of spontaneous growth, did not involve such expenditure of human labour and skill as to constitute them operations in agriculture. The sowing of seeds were " few and far between " and the normal process by which the forest grew again, after a part of it had been cut down, was by the growing out off shoots from the stumps left, the operations were therefore in the main only operations for the " maintenance, preservation, nursing and rearing ", of the forest. It was urged before the High Court on behalf of the assessee that the exemption from agricultural income tax determined in Commissioner of Agricultural Income Tax, West Bengal vs Raja Jagadish Chandra Deo Dhabal Deb(2) covered the case and it was submitted that the facts here were if at all far stronger in favour of the assessee. The decision of the Privy Council in Raja Mustafa Ali Khan vs Commissioner of Income Tax, U.P., Ajmer and Ajmer Merwara (3) was considered and the Court observed at p. 87: " I do not think that when the Privy Council said that there must be 'some measure of Cultivation on the land, some expenditure of skill and labour upon it ", their Lordships intended to say that the expenditure of skill and labour must always be in the form of cultivation. The word "or" introduced by the Allahabad High Court between the two phrases does not occur in the original, but I think it is implied. The idea, it seems to me, is that if the land has been left to the forces of nature to grow what products such forces could, there is no agriculture and there can be (1) , 87. (2) [1049] , 438. (3) 145 SUPREME COURT REPORTS agriculture only if the labour and skill of man has operated on the land to cause or aid the growth of certain products. All that is necessary is that the land should be actively exploited with a view to procuring growth or better growths from the soil but it does not seem to be also necessary that the exploitation should be by tillage. " The Court accordingly came to the conclusion that even though tillage was thus not essential, human labour and skill must be expended on the land itself and not merely on the growth from the land. When income is derived from the natural growths from the land, it is derived from land but not derived from land by the process of agriculture. It is derived from land by agriculture only when the land is subjected to the labour and skill of man, whether in the form of cultivation or otherwise, in order to produce or the improvement of the produce which yields the income. On the facts before them the learned Judges were of opinion that if forest of natural growth was taken over and then the land was regularly weeded and cleared, if it was supplied with moisture, necessary for the nourishment of the trees, by the cutting of channels across it and by the distribution of rain water through them and if the land was dug, and sown with seeds whenever bare patches appeared and while all this was done, if elaborate subsidiary arrangements were also maintained for the protection of the trees and the tending of new shoots springing from the stumps of old trees cut down till they themselves grew into new trees, it might well be said that operations in forestry involving agricultural operations were carried on on the forest land and that income derived from the land was derived from agriculture. Sir Kameshwar Singh vs Commissioner of Income tax, Bihar & Orissa (1) which is the subject matter of C.A. Nos. 11 2 to II 7 of 1956 before us also was a case under the Indian Income tax Act (XI of 1922). It was found by the Appellate Tribunal that the Sal and ebony trees which grew in the forest were conserved by allowing each a circle of 15 feet, that there was cutting down (1) , 19 146 of the trees and jungles which fell within that circle leaving sufficient space for growth and that forest conservancy staff was maintained to look after the forest. The Court construed the observations of the Privy Council in Raja Mustafa Ali Khan 's case (1) to mean that " in order to show that an income is agricultural income within the meaning of the definition, it must be found that the land itself was cultivated and that there was some expenditure of skill and labour upon it." The Court held that even conceding that the two conditions laid down by the Privy Council in Raja Mustafa Ali Khan 's case were to be read as alternative conditions, there was no material on which to hold that there was any expenditure of skill and labour upon the land and therefore the income from the sale of forest trees was not agricultural income. In Jyotikana Chowdhurani vs Commissioner of Income Tax, Assam (3) which is also under appeal before us in Civil Appeals Nos. 57 to 62, a Special Bench of the Assam High Court considered whether income, derived by the assessees from the sale of trees of spontaneous growth where there was no planting or sowing or employment of any human agency for the purpose of tilling the land but operations in forestry were carried on by the assessee involving considerable expenditure of human skill and labour was agricultural income within the meaning of section 2 (1) (a) of the Indian Income Tax Act. The majority of the Court consisting of Sarjoo Prasad C.J. and Ram Labhaya J. (Deka J. dissenting) held that even though there was no tilling of the land or planting of seed or saplings and the trees were of spontaneous germination, the operations carried on by the assessees were conducive to the growth and development of the trees and in essence involved the expenditure of human skill and labour on the land itself. Those operations were "agricultural operations" and the land on which the trees stood was being used for "agricultural purposes" and, therefore, the income from the sale of the trees was "agricultural income" and was exempt from taxation under section 4(3)(viii) of the Income tax Act. (1) (2) , 439, 461. 147 Sarjoo Prasad C.J. explained the test laid down in Raja Mustafa Ali Khan vs Commissioner of Incometax(1) in the manner following: " The contention of Mr. Iyengar is that the expression "some expenditure of skill and labour upon it" is used merely in further clarification of the expression "cultivation of the land" and, therefore, all ' that their Lordships held was that cultivation of the land was necessary. I do not concede that the word "cultivation" is necessarily synonymous with ploughing or tillage. But even if it were, I am unable to accept the argument for the simple reason that if precision is the hallmark of Privy Council decisions, as I think it is, then their Lordships would have stopped short with the phrase "some measure of cultivation of the land". This, in itself, was quite expressive and no further expressions were needed to clarify the matter. Therefore, when they proceeded to add after a 'comma, the phrase "some expenditure of skill and labour upon it", they evidently intended to signify something more than mere cultivation. There is, of course, no conjunctive phrase between the two expressions, but in the context the meaning seems to be plain." Ram Labhaya J. expressed himself in the test laid down by the Privy Council in these words: " A test however was laid down for finding out when land may be said to be used for agricultural purposes. The test requires that there must be some measure of cultivation of the land; some expenditure of skill and labour upon it. It has however to be borne in mind that their Lordships when stating the facts did point out that the case had proceeded on the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry. This statement has an important bearing on the inter pretation of the test. Such operations in forestry are carried on in forests. They involve the use of human labour and skill on the soil. They aim at stimulating growth and could easily satisfy the requirements of the (1) 148 test evolved by their Lordships. Due importance, therefore, has to be given to the absence of operations in forestry in Raja Mustafa Ali Khan 's Case (1) when interpreting the test laid down therein. " Vikram Deo Varma vs Commissioner of Income tax, 'Bihar & Orissa (2) is the last case of this series. The assessee derived income from extensive forest areas in the impartible estate of which he was proprietor. Over several decades the whole of the forest area had been subjected by hill tribes to a process of "podu" cultivation setting fire to ' the trees and cultivating the forest lands and raising crops thereon so that it was impossible to say that there was any virgin forest left. Through a huge forest establishment considerable amount of human labour and skill was spent (i) in fostering the growth of trees and preserving them from destruction by men and cattle; (ii) in cultivation of the soil by felling and burning trees from time to time; (iii) in planned exploitation of trees by marking out the areas into blocks: (iv) in systematic cutting down of trees of Particular girth and at particular heights (v) in planting new trees where patches occur; and (vi) watering, pruning, dibbling and digging. The Tribunal had held that as there was no forest cultivation or tilling as such the income was not due to agricultural operations and therefore not exempt under section 4(3)(viii) of the Indian Income Tax Act. In the course of the judgment the learned Judges referred to the observations of their Lordships of the Privy Council in Raja Mustafa Ali Khan 's Case (1) but observed that their Lordships did not lay down what the measure of that cultivation should be or what the nature of skill and labour expended should be, in order to bring the operations within the meaning of the expression " agricultural purposes " as used in the definition section. The question to be determined in each case should, therefore, be whether the land out of which the rent or revenue was derived was used for " agricultural purposes. " Unless the land was subject to some measure of cultivation or there was some expenditure of human skill and labour on it in order to (1) (2) 149 derive the rent or revenue, the purpose would not be agricultural. It was observed that the cultivation was not mere tilling but the science and art of cultivating the soil may depend upon the nature of the soil the atmosphere and various other factors. It was therefore idle to regard" tilling " as the sole or indispensable test of agriculture. On the facts before it, the Court held that the operations carried on by the assessee through the forest establishment showed that there had been both cultivation of the soil as well as the application of human skill and labour upon the land as well as on the trees themselves, and that therefore the income derived from the forest was exempt from taxation under section 4(3) (viii) of the Indian Income tax Act. Before parting with these cases it may be apposite here to note the following observations of Vishwanatha Sastri J. in Commissioner of Income Tax, Madras vs K.E. Sundara Mudaliar (1) at page 277: " In Commissioner of Agricultural Income Tax vs Raja Jagdish Chandra Deo Dhabal Deb (2) it was held by a Division Bench of the Calcutta High Court that income derived from the sale of sal trees growing spontaneously in forest and not planted by man was " agricultural " income within the meaning of section 2(1) of the Bengal Agricultural Income Tax Act. There was no digging or ploughing of the land nor planting of trees but there were " operations in forestry " such as guarding the forest trees to keep away cattle and allowing leaves and undergrowth to be removed by people of the locality. There was no breaking up of the soil, no sowing or planting or watering or fencing. Whether the decision is correct or not can only be authoritatively declared by the Supreme Court of India. It seems to rest on an undue extension of the principle laid down by the Judicial Committee in Raja Mustafa Ali Khan 's Case(3) and goes much further than our decision in the present case. " It appears from the above survey that there has been a divergence of opinion amongst the various (1) ,271. (2) , 438. (3) 150 Courts not only in regard to the connotation of the terms "agriculture ' and "agricultural purposes" but also in regard to the nature of forestry operations performed in the forest which can be styled agricultural operations so as to constitute the "land used for agricultural purposes" within the definition of agricultural income as given both in the Indian Income tax Act and in the several Agricultural Income Tax Acts passed by the various States. It may be noted at the outset that the definition of "agricultural income" given in section 2(1) of the Indian Income tax Act is in identical terms with the definitions of that term as given in the various Agricultural Income tax Acts passed by the several States. It will be idle therefore to treat "Taxes on Agricultural Income" which fall within the legislative competence of the State Legislature as having no relation at all to the corresponding provisions of the Indian Income tax Act. Once it is determined that the income in question is derived from land used for agricultural purposes by agriculture, it would be agricultural income and as such exempt from tax under section 4(3)(viii) of the Indian Income tax Act and would fall within the purview of the relevant provisions of the several Agricultural Income tax Acts passed by the various States. The result of this determination would be that the assessee would not be liable to assessment under the Indian Income tax Act but he would have to pay the Agricultural Income tax which would be levied upon him under the relative Agricultural Income tax Acts. The only enquiry which would therefore be relevant is whether the income in question is agricultural income within the terms of the definition thereof and that would have to be determined in each case by the Court having regard to the facts and circumstances of the particular case before it. In order that an income derived by the assessee should fall within the definition of agricultural income two conditions are necessary to be satisfied and they are: (i) that the land from which it is derived should be used for agricultural purposes and is either assessed for land revenue in the taxable territories or is subject 151 to local rates assessed and collected by the officers of /the Government as such; and (ii) that the income should be derived from such land by agriculture or by one or the other of the operations described in cls. (ii) and (iii) of section 2 (1) (b) of the Indian Income tax Act. It was at one time thought that the assessment of the land to land revenue in the taxable territories was intended to exempt the income derived from that land from liability for payment of income tax altogether and that theory was based on the assumption that an assessee who was subject to payment of land revenue should not further be subjected to the payment of income tax, because if he was so subjected he would be liable to pay double taxation. It is interesting to note at this stage the genesis of the provision exempting agricultural income derived from the lands assessed to land revenue as understood by the Courts. Vishwanatha Sastri J. in this context observed in the Commissioner of Income Tax, Madras vs K.E.Sundara Mudaliar(l) at page 270: "I shall briefly advert to the genesis of the provision exempting agricultural income derived from lands assessed to land revenue, as I consider that the subject matter with which the Legislature was dealing, and the facts existing at the time with respect to which the legislation was made, are legitimate topics for consideration in ascertaining the object and scope of the exemption from income tax conferred on agricultural income. This exemption, it would be noticed, has been a persistent feature of the Income tax legislation of this country from 1867 onwards, and nothing like it is found in the English Income Tax Acts. Even at a time when there was no provision like Section 100 of the Government of India Act, 1935, with Federal and Provincial Lists and there was no incompetency on the part of the Central Legislature to levy a tax on agricultural income, the Income Tax Acts passed from time to time by the Central Legislature including the existing Act of 1922, exempted from income tax the agricultural income of land assessed to public revenue. (1) , 271. 152 This exemption was granted for no other reason than the justice and equity of exempting from further burden income which had already paid its toll to the State in the shape of land revenue either as a permanently fixed peishkush under Regulation No. XXV of 1802 or as an assessment periodically fixed under the ryotwari settlement. Under what may be called the common law in India, the State had the immemorial prerogative right to collect a share of the produce of the land from its owner, the latter having the full right to enjoyment of the land and its produce, subject only to the aforesaid contribution to the State. Land revenue is collected annually from the proprietor of the land and is presumably exigible from the income of the land. Cash payment in lieu of a share of the produce due to the State was substituted long ago to facilitate collection of revenue. Income derived from the produce of the land having been subjected to the payment of the annual land revenue, it was thought inequitable to subject the same income again to annual income tax. Hence the exemption of the agricultural income of assessed lands or lands whose revenue had been remitted either in whole or in part, as in the case of the inams. Mines, minerals, and quarries having been reserved by the State, at any rate in respect of lands other than those comprised in a permanently settled estate, income derived from such sources was not exempted from income tax. The revenue assessment was based on the quality of the soil and the income derived from the produce of the lands, and therefore the exemption from income tax was limited to agricultural income derived from assessed lands. Such is the reason for exemption from income tax of agricultural income. " Whatever may have been the genesis of the exemption of agricultural income from income tax, the liability to pay land revenue or fixed peishkush under Regulation XXV of 1902 was not considered by Rankin J. as a deterrent against the levy of incometax in appropriate cases, even on certain classes of income derived from the permanently settled estates, if that was the clear intention of the legislature. The 153 learned Judge observed in Emperor vs Probhat Chandra Barua (1): ,,Some reference was made at the bar to the practice of the Revenue Authorities since 1886 as regards fisheries in permanently settled estates but there is no agreement as to what that practice if there be any practice has been. Assuming that it would have been open to us to place some degree of reliance upon an interpretation settled by practice as contemporanea expositio we are in fact without any such assistance. " Some reference was also made to what has been called a" presumption against double taxation ". In Manindra Chandra Nandi vs Secretary of State (2), royalties from a coal mine were held liable both to cess under the Cess Act, 1880, and to income tax under the Act of 1886, but it was said that "it may be considered that courts always look with disfavour upon double taxation, and Statute will be construed, if possible, to avoid double taxes. " Reference was made to certain dicta of American Courts and to the English case of Carr vs Fowle (3) But the only observation in this case was to the effect that the statute presumably did not intend that a vicar should in effect pay the same tax (land tax) twice on the same hereditament. This is plain enough. Thus the income tax is one tax, and income assessed under one schedule cannot be assessed all over again under another. That there is any legal presumption of a general character against " double taxation " in any wider sense is a proposition to which I respectfully demur as a principle for the construction of a modern statute. In Manindra Chandra Nandi vs Secretary of State (2) it did not avail to cut down clear ' though absolutely general language. " This view of Rankin J. was upheld by the Privy Council in Prabhat Chandra Barua vs King Emperor(4). In the later case of Yuvarajah of Pittapuram vs Commissioner of Income Tax, Madras (5) the Privy Council held that the imposition of Income tax in respect of income derived from the permanently settled estate (1) Cal. 504. (2) Cal. 257, 287. (3) (4) (1930) L.R. 57 I.A. 228. (5) 20 154 would not be a breach of the Madras Permanent Settlement Regulations No. XXV of 1802. The assessment of land to land revenue or its being subject to local rates assessed and collected by the officers of the Government as such is merely an indication that the land is an agricultural land as distinguished from land which can be used for agricultural purposes but carries the matter no further. We have, therefore, to consider when it can be said that the land is used for agricultural purposes or agricultural operations are performed on it. Agriculture is the basic idea underlying the expressions "agricultural purposes" and "agricultural operations" and it is pertinent therefore to enquire what is the connotation of the term "agriculture". As we have noted above, the primary sense in which the term agriculture is understood is agar field and cultra cultivation, i.e., the cultivation of the field and if the term is understood only in that sense, agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby, tilling of the land, sowing of the seeds, planting and similar operations on the land. They would be the basic operations and would require the expenditure of human skill and labour upon the land itself. There are however other operations which have got to be resorted to by the agriculturist and which are absolutely necessary for the purpose of effectively raising the produce from the land. They are operations to be performed after the produce sprouts from the land, e.g., weeding, digging the soil around the growth, removal of undesirable under growths and all operations which foster the growth and preserve the same not only from insects and pests but also from depredation from outside, tending, pruning, cutting, harvesting, and rendering the produce fit for the market. The latter would all be agricultural operations when taken in conjunction with the basic operations above described, and it would be futile to urge that they are not agricultural operations at all. But even though these subsequent operations may be assimilated to agricultural operations, when they are in conjunction with these basic operations, could it be said that even 155 though they are divorced from these basic operations they would nevertheless enjoy the characteristic of agricultural operations ? Can one eliminate these basic operations altogether and say that even if these basic operations are not performed in a given case the mere performance of these subsequent operations would be tantamount to the performance of agricultural operations on the land so as to constitute the income derived by the assessee therefrom agricultural income within the definition on that term ? We are of opinion that the mere performance of these subsequent operations on the products of the land, where such products have not been raised on the land by the performance of the basic operations which we have described above would not be enough to characterise them as agricultural operations. In order to invest them with the character of agricultural operations, these subsequent operations must necessarily be in conjunction with and a continuation of the basic operations which are the effective cause of the products being raised from the land. It is only if the products are raised from the land by the performance of these basic operations that the subsequent operations attach themselves to the products of the land and acquire the characteristic of agricultural operations. The cultivation of the land does not comprise merely of raising the products of the land in the narrower sense of the term like tilling of the land, sowing of the seeds, planting, and similar work done on the land but also includes the subsequent operations set out above all of which operations, basic as well as subsequent, form one integrated activity of the agriculturist and the term "agriculture" has got to be understood as connoting this integrated activity of the agriculturist. One cannot dissociate the basic operations from the subsequent operations, and say that the subsequent operations, even though they are divorced from the basic operations can constitute agricultural operations by themselves. If this integrated activity which constitutes agriculture is undertaken and performed in regard to any land that land can be said to have been used for " agricultural purposes " and the income 156 derived therefrom can be said to be " agricultural income" derived from the land by agriculture. In considering the connotation of the term " agriculture" we have so far thought of cultivation of land in the wider sense as comprising within its scope the basic as well as the subsequent operations described above, regardless of the nature of the products raised on the land. These products may be grain or vegetables or fruits which are necessary for the sustenance of human beings including plantations and groves, or grass or pasture for consumption of beasts or articles of luxury such as, betel, coffee, tea, spices, tobacco etc., or commercial crops like, cotton, flax, jute, hemp, indigo etc. All these are products raised from the land and the term "agriculture" cannot be confined merely to the production of grain and food products for human beings and beasts as was sought to be done by Bhashyam Ayyangar J. in Murugesa Chetti vs Chinnathambi Goundun (1) or Sadashiva Ayyar J. in Rajah of Venkatagiri vs Ayyappa Reddi (2) but must be understood as comprising all the products of the I and which have some utility either for consumption or for trade and commerce and would also include forest products such as timber, sal and piyasal trees, casuarina plantations, tendu leaves, horranuts etc. The question still remains whether there is any warrant for the further extension of the term " agriculture " to all activities in relation to the land or having connection with the land including breeding and rearing of livestock, dairy farming, butter and cheese making, poultry farming, etc. This extension is based on the dictionary meanings of the term and the definitions of agriculture " collated in Wharton 's Law Lexicon, as also the dicta of Lord Cullen and Lord Wright in Lean & Dickinson vs Ball (3) and Lord Glaneley vs Wightman (4) quoted above. Derbyshire C.J. in Moolji Sicka & Co., In re(5) treated tendu plants growing on the soil as part of the soil and therefore considered the pruning of the shrub (1) Mad. 421, 423. (2) Mad. (3) (4) ; 638. (5) 157 as cultivation of the soil in a legal and technical sense and this extension of the term "agriculture" was also approved by Vishwanatha Sastri J. in Commissioner of Income Tax vs K. E. Sundara Mudaliar (1). We are however of opinion that the mere fact that an activity has some connection with or is in some way dependent on land is not sufficient to bring it within the scope of the term and such extension of the term "agriculture" is unwarranted. The term "agriculture" cannot be dissociated from the primary significance thereof which is that of cultivation of the land and even though it can be extended in the manner we have stated before both in regard to the process of agriculture and the products which are raised upon the land, there is no warrant at all for extending it to all activities which have relation to the land or are in any way connected with the land. The use of the word agriculture in regard to such activities would certainly be a distortion of the term. A critical examination of the definition of "agricultural income" as given in section 2(1) of the Indian Income tax Act and the relevant provisions of the several Agricultural Income tax Acts of the various States also lends support to this position. In the first instance, it is defined as rent or revenue derived from land which is used for agricultural purposes; and it is next defined as income derived from such land by agriculture or by the activities described in cls. 2 and 3 of section 2(1)(b) of the Act. These activities are postulated to be performed by the cultivator or receiver of rent in kind of such land in regard to the products raised or received by him which necessarily means the produce raised on the land either by himself or by the actual cultivator of the land who pays such rent in kind to him. If produce raised or received by the cultivator or receiver of rent in kind is thus made the subject matter of cls. (ii) and (iii) in section 2 (1)(b) of the Act, the term "agriculture" used in cl. (i) of section 2(1)(b) must also be similarly restricted to the performance of the basic operations on the land and there is no scope for reading the term agriculture " in the still wider sense indicated above. (1) , 271. 158 If the term " agriculture " is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and the raising on the land of products which have some utility either for consumption or for trade and commerce, it will be seen that the term " agriculture " receives a wider interpretation both in regard to its operations as well as the results of the same '. Nevertheless there is present all throughout the basic idea that there must be at the bottom of it cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar work done on the land itself This basic conception is the essential sine qua non of any operation performed on the land constituting agricultural operation. If the basic operations are there, the rest of the operations found themselves upon the same. But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations. All these operations no doubt require the expenditure of human labour and skill but the human labour and skill spent in the performance of the basic operations only can be said to have been spent upon the land. The human labour and skill spent in the performance of subsequent operations cannot be said to have been spent on the land itself, though it may have the effect of preserving, fostering and regenerating the products of the land. This distinction is not so important in cases where the agriculturist performs these operations as a part of his integrated activity in cultivation of the land. Where, however, the products of the land are of spontaneous growth, unassisted by human skill and labour, and human skill and labour are spent merely in fostering the growth, preservation and regeneration of such products of land, the question falls to be considered whether these subsequent operations performed by the agriculturist are agricultural operations and enjoy the characteristic of agricultural operations. It is agreed on all hands that products which grow wild on the land or are of spontaneous growth not involving any human labour or skill upon the land are 159 not products of agriculture and the income derived therefrom is not agricultural income. There is no process of agriculture involved in the raising of these products from the land. There are no agricultural operations performed by the assessee in respect of the same, and the only work which the assessee performs here is that of collecting the produce and consuming and marketing the same. No agricultural operations have been performed and there is no question at all of the income derived therefrom being agricultural income within the definition given in section 2(1) of the Indian Income tax Act. Where, however, the assessee performs subsequent operations on these products of land which are of wild or spontaneous growth, the nature of those operations would have to be determined in the light of the principles enunciated above. Applying these principles to the facts of the present case, we no doubt start with the finding that the forest in question was of spontaneous growth. If there were no other facts found, that would entail the conclusion that the income is not agricultural income. But, then, it has also been found by the Tribunal that the forest is more than 150 years old, though portions of the forest have from time to time been denuded, that is to say, trees have completely fallen and the proprietors have planted fresh trees in those areas, and they have performed operations for the purpose of nursing the trees planted by them. It cannot be denied that so far as those trees are concerned, the income derived therefrom would be agricultural income. In view of the fact that the forest is more than 150 years old, the areas which had thus become denuded and replanted cannot be considered to be negligible. The position therefore is that the whole of the income derived from the forest cannot be treated as non agricultural income. If the enquiry had been directed on proper lines, it would have been possible for the Income tax authorities to ascertain how much of the income is attributable to forest of spontaneous growth and how much to trees planted by the proprietors. But no such enquiry had been directed, and in view of the long lapse of time, we do not consider it desirable to direct any such 160 enquiry now. The expenditure shown by the assessee for the maintenance of the forest is about Rs. 17,000 as against a total income of about Rs. 51,000. Having regard to the magnitude of this figure, we think that a substantial portion of the income must have been derived from trees planted by the proprietors themselves. As no attempt has been made by the Department to establish which portion of the income is attributable to forest of spontaneous growth, there are no materials on which we could say that the judgment of the court below is wrong. The appeal is accordingly dismissed with costs. Appeal dismissed.

The question for decision in this appeal by the Commissioner of Income tax was whether a sum of Rs. 51,978 shown by the assessee in his return as income from his forest land was agricultural income within the meaning of section 2(1) Of the Indian Incometax Act and was as such exempt from taxation under section 4(3)(viii) of the Act. The forest was of spontaneous growth, 150 years old, and consisted of sal and piyasal trees. It was in parts denuded of trees from time to time by destructive elements and the assessee had to plant fresh trees in those parts. Considerable amount of human labour and skill had to be applied year after year for maintaining the 'forest, protecting the offshoots from the stumps of the trees that had been cut and sold and in reviving its denuded parts by fresh plantation. The staff employed by the assessee performed such operations as pruning, weeding, felling, clearing, cutting of channels, guarding the trees and sowing seeds by digging the soil in the denuded areas. The Income tax Officer rejected the assessee 's claim of exemption and added a sum of Rs. 34,430 to the assessable income, allowing a sum of Rs. 17,548 as expenditure. The Assistant Commissioner of Income tax confirmed the assessment. The Appellate Tribunal held that the sowing of seeds were few and far between and the income, derived as it was from jungle products, was not agricultural income within the meaning of the Act. The High Court took a contrary view, held that tillage of the soil was not essential, and the income was agricultural income as human labour and skill had been expended on the land itself and answered the question in favour of the assessee. No attempt was, however, made by the Income tax Authorities to ascertain the income actually derived from the trees planted by the assessee, nor were any materials placed on the record from which its exact amount could be ascertained, but having regard to the magnitude of the expenditure shown by the assessee as against the total income this Court held that a substantial portion of it must have been derived from the trees planted by the assessee. Held, that the income actually derived from the trees planted by the assessee was agricultural income within the meaning of 2(1) of the Indian Income tax Act and no attempt having been 102 made to ascertain its exact amount and a fresh enquiry being undesirable after such a long lapse of time, the appeal must be dismissed. The term 'agriculture 'in section 2(1)(b)(i) of the Indian Income tax Act connotes the entire and integrated activity of an agriculturist performed on the land in order to raise its produce and consists of such basic and essential operations, requiring human skill and labour on the land itself, as the tilling of the soil, sowing of the seeds, planting and similar operations on the land and such other subsequent operations, performed after the produce sprouts from the land, as weeding, digging of the soil around the growth, removal of undesirable under growths, tending, pruning, cutting, harvesting and marketing. But these subsequent operations, if unconnected with the basic operations, cannot by themselves constitute agriculture. It is only when the land is subjected to such integrated activity, that :It can be said to be used for ,agricultural purpose ' and its income called agricultural income within the meaning of the Act. Case law discussed. Whatever is produced by such agriculture must be an agricul tural product and the ambit of the term 'agriculture ' cannot be confined merely to the production of grain and food for men and cattle but must extend to all products of the land that have some utility either for consumption or trade and commerce. Fruit and vegetable plantations, groves, pastures, articles of luxury such as betel, coffee, tea, spices, tobacco etc. or commercial crops like cotton, flax, jute, hemp, indigo etc. as also forest products such as timber, sal and Piyasal trees, Casuarina plantations, tendu leaves, horranuts etc., can come within its ambit. Murugesa Chetti vs Chinnathambi Goundan, Mad. 421 and Raja of Venkatagiri vs Ayyappa Reddy, Mad. 738, disapproved. Such an extended meaning of the term 'agriculture ' and its processes and products can be tenable only where there is cultivation, which means the basic operations, and can never be dissociated from them. There is, therefore, no warrant for its further extension so as to include activities which are in some way connected with or dependent on land, such as breeding and rearing of livestock, dairy farming, butter and cheese making and poultry farming. Moolji Sicka & Co., In re,(1925) 10 T.C.341 and Commissioner of Income Tax vs K. E. Sundara Mudaliar, (1950) 18 I.T.R. 259, disapproved. Although human labour and skill are required both in the performance of the basic as well as the subseqent operations, it is only in the case of the basic operations alone that such skill and labour can be said to have been spent on the land itself, and this distinction becomes important where they are disjointed and do 103 not form an integrated activity, as in the case of products of land that are of spontaneous growth where human skill and labour are spent merely in fostering the growth, preservation and regeneration of such products. Judicial opinion is unanimous that products which grow wild on the land or are of spontaneous growth and do not involve any human skill or labour on the land, and all that the assessee has to perform in respect of them is only to collect them for consumption and marketing, are not products of agriculture and the income derived from them is not agricultural income within the meaning Of section 2(1) Of the Act. When, however, the assessee performs subsequent operations on these products of land, the nature of those operations will have to be determined in the light of the principles enunciated above. Held further, that there is no basis for the argument that the demarcation of agriculture and forestry as separate heads of legislation in Entries 14 and 19 of List 11 of the Seventh Schedule to the Constitution has the effect of making them mutually exclusive. Income from forestry coming within the definition of agricultural income ' contained in section 2(1) of the Indian Income tax Act will be agricultural income under Entry 46 and thus fall within the purview of that Act.

: Criminal Appeal No, 385 of 1976. (From the Judgment and Order dated 22 12 1975 of the Gujarat High Court in Crl. Appeal No. 180/74) N.N. Keswani & Ramesh N. Keswani for the appellant. K.H. Kazi & M.N. Shroff for the Respondent. The Judgment of the Court was delivered by BHAGWATI, J. This appeal, by special leave, is directed against an order passed by the High Court of Gujarat setting aside the acquittal of the appellant and directing that he, along with other accused, be retried not only for the of fence of consumption of liquor of which he was acquitted but also for the offence of possession of liquor punishable under section 66(1)(b) of the Bombay Prohibition Act, 1949. The question arising for determination is a short one, but in order to appreciate it, it is necessary to state the. facts giving rise to the appeal. The appellant, original accused No. 2, was at all mate rial times working as District Health Officer in District Amreli in the State of Gujarat. He was, according to the prosecution, found of liquor and whenever he used to go out of Amreli in connection with his duties, he used to partici pate in drinking parties. On 3rd August, 1972, he visited Kodinar, a town situate in the District of Amreli and late in the evening of that day, he attended a drinking party which was arranged by accused No. 1 in his agricultural farm situate at a place called Ghantwad about 50 Kms. away from Kodinar. Besides accused Nos. 1 and 2, six other persons who were arraigned as accused Nos. 3 to 8 were also present at the drinking party. On receiving information about the drinking party, the District Magistrate and the District Superintendent of Police along with other police officers and panch witnesses raided the agricultural farm where the drinking party was in progress. The raid was carried out at about 00.30 hrs. after midnight and on seeing the police, the appellant and the other accused tried to run away but they were apprehended. The raiding party, also found five glasses and two empty bottles, all smelling of liquor, twelve empty soda water bottles and one full ' bottle con taining liquor and these articles were seized by the raiding party in the presence of the panch witnesses and the panch nama was prepared. The appellant and the other accused were thereafter taken to the Amreli hospital where their blood was taken by the Civil Surgeon for the purpose of carrying out 874 the necessary test for determining the presence of alcohol. The analysis of the blood revealed that, in the case of the appellant, the concentration of alcohol in the blood was more than 0.05 per cent weight in volume while in the case of the other accused, it was less than 0.05 per cent. On these facts, the appellant and the other accused were charge sheeted before the Judicial Magistrate, Kodinar. The charge against accused No. 1 was that he possessed as well as consumed liquor in contravention of the provisions of the Act and was, therefore, guilty of offences punishable under section 66(1)(b), while the charge against the other ac cused, including the appellant, was that they were guilty of consuming liquor in contravention of the provisions of the Act and were hence liable to be punished for the offence under section 66(1) (b) of the Act. The learned Judicial Magistrate accepted the evidence in regard to the concentra tion of alcohol in the blood of the accused, but taking the view that breaches of certain rules in the Bombay Prohibi tion (Medical Examination and Blood Test) Rules, 1959 were committed in taking the blood of the accused, the learned Judicial Magistrate acquitted the accused including the appellant of the offence of consuming liquor under section 66 (1 ) (b). The learned Judicial Magistrate also acquitted accused No. 1 of the offence of possessing liquor under section 66(1)(b) on the ground that it was not proved by the prosecution beyond reasonable doubt that he was in posses sion of liquor. The State preferred two appeals against the order of acquittal passed by the learned Judicial Magistrate. Both the appeals were heard by a Single Judge of the High Court any they were disposed of by a common judgment. The High Court did not examine whether the order passed by the learned Judicial Magistrate acquitting the appellant and the other accused of the offence of consuming liquor was right or wrong nor did it consider whether the acquittal of ac cused No. 1 for the offence of possessing liquor was correct or incorrect. But, taking the view that there was no dis tinction between the case of accused No. 1 on the one hand and that of the appellant and accused Nos. 3 to 8 on the other so far as the charge of possession of liquor is con cerned, the High Court held that, on the material on record, the learned Judicial Magistrate should have flamed a charge against the appellant and accused Nos. 3 to 8 not only for the offence of consuming liquor but also for the offence of possession of liquor as in the case of accused No. 1. The High Court observed: "Whenever "Drinking Parties" are detect ed by the police, it is the imperative duty of the prosecution to allege that all the partic ipants of the same are charged with the "possession" of liquor in contravention of the provisions of law contained in Sec. 66(1 )(b) of the B 'bay Prohibition Act, 1949. It may be emphasised that in such cases, "possession" of liquor does not only necessarily mean actual, physical or conscious possession of the owner or the occupant of the premises". In such cases of "Drinking Parties", it is always open to a participant to stretch his hand and to take the liquor in question for his own use and consumption. But, in all such cases of 875 "Drinking Parties", the Court must be satis fied that the attendant circumstances should clearly indicate that the accused persons are the participants in a "Drinking Party". In the case before me, why should the accused persons, during the night hours, having gath ered together go to a distant farm house ? Why should they be found with the aforesaid articles ? Why should they create a situa tion as a result of which a constable had to jump over a wall ? Why should they try to run away when they Were apprehended by the respon sible officers for Amreli ? In such circumstances, it is the duty of the prosecution to see that all the partic ipants are charged with the commission of the offence viz. of possessing liquor in contra vention of the provisions contained in Sec. 66(1)(b) of the B 'bay Prohibition Act, 1949. " The High Court, on this view, set aside the order of acquittal in 'its entirety without examining its correctness and remanded the case to the learned Judicial Magistrate with a direction to try the appellant and the other accused not only on the charge of consuming liquor but also on the further charge of possession of liquor. Accused Nos. 1 and 3 to 8 did not challenge the correctness of this order made by the High Court, but the appellant impugned it by prefer ring the present appeal with special leave obtained from this Court. The impugned Order made by the High Court consists of two parts. One part set aside the order of acquittal and directed retrial of the appellant on the charge of consuming liquor while the other directed that the appellant and accused Nos. 3 to 8 'should also be tried on the further charge of possession of liquor. The appellant attacked both parts of the Order and the contention urged by him in sup port of the appeal was a two fold one. The first limb of the contention was that the order setting aside the acquit tal of the appellant for the offence of consuming liquor and directing retrial of the appellant for that offence was improper, since it was not competent to the High Court in appeal to set aside the order of acquittal and direct retri al, unless it_found that the acquittal was wrong. Here in the present case, the High Court did not even consider whether the acquittal of the appellant was correct or not and without finding that the acquittal was erroneous, pro ceeded to set aside the acquittal and direct retrial. This, according to the appellant, was impermissible for the High Court to 'do and it was said that the order setting aside the acquittal must, therefore, be reversed and the acquittal restored. The second limb of the contention related to that part of the impugned order which directed that the appellant and accused Nos. 3 to 8 should be retried not only on the charge of consuming liquor but also on the further charge of possession of liquor. The argument of the appellant under this head of contention was that in the appeal, the High Court was confined merely to a consideration of the question whether the acquittal of the appellant for the offence of consuming liquor was right or wrong and it was, not compe tent to the High Court 6 1338SCI/76 876 to frame a new charge for possession of liquor and direct trial of the appellant and the other accused on such now charge. These were the twin grounds on which the order made by the High Court was challenged on behalf of the appellant. Now, there can be no doubt that there is great force. in the first part of ' the contention of the appellant. The learned Judicial Magistrate acquitted the appellant of the offence of consuming liquor. The State preferred an appeal against the acquittal and manifestly, in this appeal, the acquittal could not be set aside unless the High Court, on a consider ation of the evidence, came to the conclusion that the acquittal was wrong. It was not competent to the High Court to set aside the acquittal without finding that it was erroneous. The High Court, however, did not even care to examine whether the acquittal was right or wrong, but merely because it took the view that a further charge should have been framed against the appellant and accused Nos. 3 to 8, it set aside the acquittal and directed retrial of the appellant and the other accused. This was plainly and indubitably wrong and the: order setting aside the acquittal must, therefore, be quashed. But from that it does not necessarily follow that the acquittal must be restored. The High Court having failed to consider the merits of the acquittal,. the matter would have to go back to the High Court for the purpose of deciding whether on the evidence on record, the acquittal was justified or not. The appeal being directed against the correctness of the acquittal, the High Court would have to determine whether on merits, the acquittal should be maintained or reversed. We must, there fore, quash that part of the order of the High Court which set aside the acquittal of the appellant for the offence of consuming liquor and remand ' the case to the High Court for disposing of the appeal against the acquittal of the appel lant on merits. That takes us to the second limb of the contention directed against the order of retrial on the further charge of possession of liquor. It is true that originally when the case was tried before the learned Judicial Magistrate, there was no charge against the appellant and accused Nos. 3 to 8 for the offence of consuming liquor and the appeal of the State was also directed 'only against their acquittal for ,the offence of consuming liquor. But there can be no doubt that if, while hearing the appeal, the High Court found that, on the material before .him, the learned Judicial Magistrate should have framed a further charge against the appellant and accused Nos. 3 to 8 but he failed to do so, the High Court could certainly direct the learned Judicial Magistrate to frame such further charge and try the appel lant and accused Nos. 3 to 8 on such further charge. The High Court could legitimately in the exercise of its juris diction, set right the error committed by the learned Judi cial Magistrate in not flaming a proper charge. Here, the High Court, on a consideration of the material which was before the learned Judicial Magistrate, came to the conclu sion that this material warranted the framing of a further charge against the appellant and accused Nos. 3 to 8 for possession of liquor and it, therefore, directed that the case should go back to the learned judicial Magistrate and he should try the appellant and accused Nos. 3 to 8 on 877 such further charge. The High Court clearly had jurisdic tion to make such an order. But then, the complaint made on behalf of the appellant was that the material before the learned Judicial Magistrate did not justify the framing of a charge against the appellant and accused Nos. 3 to 8 for possession of liquor and hence the order directing their trial on such further charge was not justified. This is, however, a complaint on facts and we do not see any reason why we should, in the exercise of our extra ordinary juris diction under Article 136 of the Constitution, entertain such a complaint. It is true that there are certain obser vations made by the High Court which are a little too wide but it cannot be gained that even a person who participates in a drinking party can in conceivable cases be guilty of the offence of possession of liquor. Suppose a person is found at a drinking party and he has a glass with him with liquor in it at the time when the raid is carried out, would it not be correct to say that he was at the relevant time in possession of liquor ? The liquor in his glass would be liquor in his possession. But at the same time it would not be correct to say that merely because a participant in a drinking party can stretch his hand and take liquor for his use and consumption, he can be held to be in possession of liquor. The question is not whether a participant in a drinking party can place himself in possession of liquor by stretching his hand and taking it but whether he is actu ally in possession of it. Possession again must be distin guished from custody and it must be conscious possession. If, for example, a bottle liquor is kept by. some one in the car or house of a person without his knowledge, he cannot be said to be in possession of the bottle of liquor. It can not, therefore, be laid down as an absolute proposition that whoever is present at a drinking party must necessarily be guilty of the offence of possession of liquor and must be charged for such offence. Whether an accused is in posses sion of liquor or not must depend on the facts and circum stances of each case. Here in the present case, the prose cution will have to establish at the trial by leading satis factory evidence that the appellant and the other accused were in possession of liquor as else the prosecution on the charge of possession of liquor will fail. The order direct ing trial of the appellant and the other accused for the offence of possession of liquor must, therefore, be main tained, but we think it would be desirable if this trial is taken up after the disposal of appeal by the High Court in regard to the acquittal of the appellant for the offence of consuming liquor. We accordingly allow the appeal in part and reverse that part of the 'order of the High Court which set aside the acquittal of the appellant for the offence of consuming liquor and remand the case to the High Court for disposing of the appeal against the acquittal of the appellant on merits, but so far as the other part of the order directing trial of the appellant and the other accused on the charge of possession of liquor is concerned, we do not see any reason to interfere with the same and we accordingly reject the appeal in so far as it is directed against that part of the order. S.R. Appeal partly allowed.

Section 66(1)(b) of the Bombay Prohibition Act 1949 makes any person liable for punishment on conviction for the offence of "consuming, using, possessing or transporting any intoxicant or hemp." Section 66(2)(b) prescribes a statutory limit of 0.05 percentage of alcohol in the veinous blood taken from the accused. In summary case Nos. 798 and 799 of 1972 before the Judicial Magistrate 1st Class, Kodi nar, Gujarat State, the appellant/accused No. 2 along with six others was charged with consumption of liquor while accused No. 1, the owner of an agricultural farm, where a drinking party took place was charged with the offence of possessing liquor. h spite of the fact that the percentage of alcohol present in the veinous blood taken from the body of accused No. 2 was more than the statutory limit, in view. breaches of certain statutory rules, in Bombay Prohibi tion (Medical Examination and Blood Test) Rules, 1959, the appellant/accused No. 2 was acquitted along with accused 3 to 8 in whose cases the percentage was less than the statu tory limit. Accused No. 1 was also acquitted for lack of evidence on the charge of possession of liquor. In the State appeal, taking the view that in a drinking party there should always be a further charge of possession of liquor, the High Court without examining the correctness of the findings of fact leading to the acquittals, set aside the orders of acquittal in respect of all and 'ordered retrial. On appeal by special leave, the Court, HELD: (i) In a State appeal against acquittal, the acquittal should not be set aside unless the High Court on a consideration of the evidence. comes to the. conclusion that the acquittal was wrong. In the instant case, the High Court did not even consider whether the acquittal of the appellant was correct or not and without finding that the acquittal was erroneous proceeded to set aside the. acquit tal and direct retrial. It 'was not competent to the High Court to set aside the acquittal without finding that it was erroneous. Setting aside the acquittal order and ordering retrial merely because. it took the view that a further charge should have been framed against the appellant and accused No. 3 to 8 was plainly and indubitably wrong. [876 B D] (ii) If while hearing an appeal, the High Court, finds that, on the material before it, a further charge should be framed, the High Court can legitimately, the exercise of its jurisdiction set right the error committed by the trial court in not framing a proper charge. [876 G H] 873 (iii) In the exercise of extra ordinary jurisdiction under Article 136 of the Constitution, the Supreme Court would not ordinarily entertain a complaint on facts. [877 B] (iv) Possession is distinguishable from custody and it must be conscious possession. Whether the accused is in possession of liquor or not must depend on the facts and circumstance of each case. [877 D]

ivil Appeals Nos. 921/78 and 425/79 Appeals by Special Leave from the Judgment and Order dated 27 4 1978 of the Allahabad High Court in Writ Petition No. 3732/77. M. V. Goswami for the Appellant (In CA 921/78) section section Ray, D. Gupta, Shiv Dayal, N. R. Khaitan, U. K. Khaitan and G. Mitra for the Respondent in CA 921/78 and Appellant in CA 425/79. section N. Kacker, Sol. of India, G. C. Dwivedi, section C. Bhudhwar, section Markendaya and K. Madan Mohan Reddy for U. P. State Electricity Board (Appellant No. 2 in CA 921/78). 717 The Judgment of the Court was delivered by SHINGHAL J. These appeals by special leave arise from the judgment of the Allahabad High Court dated April 27, 1978. While Civil Appeal No. 921 of 1978 has been filed by the State of Uttar Pradesh, the U.P. State Electricity Board and the Executive Engineer of the Rihand Power Station, hereinafter collectively referred to as the State, Civil Appeal No. 425 of 1979 has been filed by the Hindustan Aluminium Corporation Ltd., its Vice President and Chief Accountant, hereinafter referred to as the Company. We have heard the two appeals together and will dispose them of by a common judgment. The controversy relates to the supply of electrical energy (for short "energy") for the production of aluminium, which is the most modern of the common metals. Unlike the other common industrial metals like iron, copper, zinc and lead, pure aluminium is not produced by the direct smelting of its ores. The metal is now produced by the modern electrolytic method under the influence of direct current. It takes about 10 kilo watt hours of electricity to produce a pound of aluminium, and the supply of cheap electric power is therefore an essential requisite or raw material for its production. The metal has many advantages and uses and has gained such importance that it is an essential commodity under the Essential Commodities Act and its production is one of the scheduled industries under the Industries (Development and Regulation) Act. While the State feels aggrieved because the High Court has interfered with the Uttar Pradesh Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977, dated September 19, 1977, hereinafter referred to as the Order, which it made under section 22B of the Electricity Act, 1910, (for short the Act), the Company 's grievance is that the High Court has not granted all the reliefs which it had claimed in its petition under article 226 of the Constitution. The Court 's record is much too voluminous, but it appears to us that the appeals can be adequately disposed of on the basis of the important averments in the lists of dates drawn up by counsel for the parties about which there is no dispute before us. When the question of establishing a new aluminium factory arose for consideration by the Government of India, it took into consideration the consent of the Government of Uttar Pradesh to make energy available for the factory from the Rihand Hydro electric Scheme which was expected to go into operation by the end of 1960, and granted an industrial licence to the Company on September 26, 1959, for the manufacture of 20,000 metric tonnes of aluminium ingots per year at Rihand. An agreement was also entered into between the State of 718 Uttar Pradesh and the Company on October 29,1959 for the supply of 55 m w of power on a firm, continuous and uninterrupted basis at a rate of 1.997717 paise per unit for a period of 25 years from the date of commencement of the supply. The Company set up and commissioned its aluminium plant at Renukoot (near Rihand Dam) with an installed capacity of 20,000 metric tonnes per annum in April 1962. It was granted a further licence for the expansion of its installed capacity by 40,000 metric tonnes per annum. As the State was unable to meet the extra requirement of energy, sanction under section 28 of the Act was granted to the Company, at its request, on November 12, 1964, to set up a generating station at Renusagar, near Renukoot, through its subsidiary the Renusagar Power Company Ltd. It had two generating units of 67.5 m w each. The first unit started generating power in 1967 and the other in 1968. The 40,000 metric tonnes expansion unit was commissioned in 1968. In the meantime the Company was granted a licence in December 1966 for effecting a further expansion of 60,000 metric tonnes per annum in its installed capacity for the production of aluminium. The Company thought of setting up the plant for the production of 60,000 metric tonnes of aluminium in Gujarat State as it was informed by the Gujarat State Electricity Board that it would be able to meet the requirement of energy there at a rate of Rs. 320/ per kilowatt year, which was much higher than the rate at which it was receiving energy from U.P. State Electricity Board (U.P.S.E.B.). The Government of U.P. held negotiations with the Company, and it was decided that the Company would produce the additional 60,000 metric tonnes of aluminium also in Uttar Pradesh. The Chief Secretary to the government of U.P. wrote a detailed letter to the Company on November 20, 1968, in which the position regarding the supply of energy was stated as follows, "Regarding the power plant, I can see no difficulty in meeting the interim requirements for 2 to 3 years from the U.P. State Electricity Board, nor do I see any difficulty in arranging for parallel running of your new power station, with the U.P. State Electricity Board. " The Company then addressed a letter to the State Government on September 26, 1969 stating the position regarding the supply and generation of increased energy for the expansion of aluminum production as follows, "5(a) The Scheme of power supply for our expansion by UPSEB is interlinked with the question of expansion of 719 Our Renusagar power plant and its parallel operation with your system. The application for the expansion of our Renusagar Power Plant has already been submitted to your office, a copy of which is enclosed herewith for your ready reference. The necessary permission for the same is requested as early as possible. (b) The emergency assistance under parallel operation would be required for about 100 m w and the terms and conditions for the same would have to be decided simultaneously with the permission for expansion of our Power Plant. " It may be mentioned that the Company was granted sanction to expand Renusagar generation by 250 m w. In 1972 the Company expanded its installed capacity for the production of aluminium by 35,000 metric tonnes per year. On its part, the U.P.S.E.B. sanctioned 110 m w additional energy under a phased programme to be compelled by June 1, 1975. It was clearly stated in the letter of the U.P.S.E.B. dated September 2, 1972, that the supply would be without prejudice to the power of the State Government to control the distribution and consumption of energy under section 22B of the Act. Reference in the letter was made to the acute shortage of power because of scanty rainfall in the catchment area. It so happened that additional energy was not made available to the Company during 1972 75 although the rate was substantially increased (to 11 paise instead of 1.997717 paise) with retrospective effect from June 30, 1975, under the new aluminium policy of the Government of India. An agreement was however entered into between the Company and the U.P.S.E.B. on November 30, 1976 for the supply of 85 m w of energy on a continuous basis, for a period of 5 years, in supersession of the earlier agreements, and it was stipulated that it would be read and construed in all respects in conformity with the provisions of the Act, the , and the rules and the regulations and the amendments thereto The Company received that supply and was even promised an additional supply of 35 m w over a phased period from July 1977, but did not get it. The Company was all the same able to raise its production of aluminium to 95,000 metric tonnes by April 7, 1977, because of the supply of 85 m w of energy. In the meantime, the State Government took a decision by the end of December 1976 to reconnect some 70,000 pumping sets which had 720 been disconnected for non payment of the electricity dues. That placed an additional load of about 400 m w on the grid system of the State. The Chairman of U.P.S.E.B. submitted a note on the power situation which was likely to obtain from April to July 1977. He pointed out that there was acute shortage of energy and suggested the imposition of some restrictions upto the end of July 1977 by when the demand for agriculture was expected to decrease and the Rihand and Matatila reservoirs would be filled up. That was proposed to meet the needs of agriculture and related industries and to meet the industrial demand to the extent possible. One of the proposals was for a 50 per cent cut in the demand of the Company and some other industrial units including Kanoria Chemicals and Industries Ltd. That note came up for consideration in the State Cabinet on April 1, 1977, and was partially approved. The U.P. Electricity (Regulation of Distribution and Consumption) Order, 1977, was therefore issued on April 7, 1977. Under clause 6(a) (i) of the Order, the Company could draw energy only to the extent of 42.5 m w i.e. 50 per cent of its monthly consumption; but it was allowed to draw 55 m w for the time being. Uttar Pradesh came under the President 's rule on April 30, 1977, and the Company was allowed to draw 55 m w until further orders. It is the case of the State that the shortage of energy became more acute in the third week of May. The Company, in the meantime, filed its first writ petition [No. 1790(c) of 1977] on receipt of a letter of the Executive Engineer (O.&M.), Rihand, that the power supply to the Company should be cut off completely with immediate effect. The writ petition was dismissed on May 20, 1977, because of a subsequent letter by the Government requiring the U.P.S.E.B. to continue the supply of 42.5 m w energy instead of 55 m w in accordance with the aforesaid Order of April 7, 1977. The Secretary of the Power Department of the State government sent a note to the Governor on May 24, 1977, proposing some additional cuts in the supply of energy. Decision thereon was deferred until information was obtained from other States in regard to availability of energy to aluminium plants. A fresh note was thereafter prepared for orders. In that note dated May 31, 1977, it was stated that there was a large gap between demand and availability of energy and that was creating a serious imbalance requiring load shedding on a large scale, and that had given rise to discontent in all sectors of the economy and, in particular, in the rural sector. It was also pointed out that overriding public interest, particularly the need to maintain 721 food supply and the industrial production, required that units which were heavy consumers of energy should be subjected to further cut in the consumption of energy. It was particularly pointed out that as the Company was itself generating energy at Renusagar, it will have more than 50 per cent of energy even if the Board 's supply of 42.5 m w was completely withdrawn, and that will service some 8500 pumping sets. It was, all the same, stated that the Company would continue to have 60 m w from the U.P.S.E.B. as stand by supply as in the past. The Governor approved that proposal on June 1, 1977. A proviso was, inter alia, inserted in clause 6(a)(i) of the U.P. Electricity (Regulation of Distribution and Consumption) Order, 1977, on June 2, 1977, according to which the industrial consumer which had its own source of generation of energy from which it obtained 50 per cent or more of its total consumption would suffer a cut of 100 per cent in the energy supplied by the U.P.S.E.B. The Company was accordingly given time to bring about the total cut. In the meantime, the Company filed its second writ petition [No. 2160(c) of 1977] along with an application for stay. The High Court admitted the writ petition, but rejected the application for stay. The Company then moved this Court for special leave. The Hon 'ble Vacation Judge made an observation that the matter may be discussed by the parties concerned, and the State agreed to give 20 m w of energy to the Company for the time being. Fresh elections were held to the State Legislative Assembly, and the new Cabinet was sworn in on June 23, 1977. It decided to reduce the supply of energy to the Company to zero, in pursuance of the amendment dated June 2, 1977, and called for a fresh note on the position regarding the generation and distribution of energy. The Executive Engineer, Rihand, accordingly asked the Company to reduce the consumption to zero. A detailed note was prepared by the Secretary concerned on June 28, 1977, and it came up for consideration in the Cabinet on June 30, 1977, but no decision was taken and the note was kept pending. It appears that the Chairman of the U.P.S.E.B. prepared a note on August 26, 1977, in which he pointed out the shortage of energy, including a substantial fall in the generation of thermal energy and in the "import" of energy. It appears that the Minister concerned made some statements in regard to the generation of energy in the State and the position of the Company, but we shall refer to them later when we deal with the allegation regarding malice in law. It will be sufficient to say that the State Government made the Order 722 on September 19, 1977, called the Uttar Pradesh Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977. It has undergone some amendments, but learned counsel are in agreement that they have no bearing on the controversy before us. The Company filed its third writ petition (No. 3732 of 1977), against the Order, on September 26, 1977. It was admitted the same day and the earlier writ petition (No. 2160 of 1977) was dismissed as withdrawn. The High Court directed the Company to make an application under clause 10 of the Order, for exemption, but it was rejected all December 9, 1977 when made. The High Court ultimately heard and decided the writ petition by the impugned judgment dated April 27, 1978 against which these appeals by special leave have been directed as aforesaid. This Court made an order on May 4, 1978 for the supply of 20 m w of energy to the Company as a purely interim arrangement. That was raised to 35 m w by an order dated August 29, 1978, and the State is now supplying 42.5 m w to the Company as an interim arrangement. These basic facts are not in dispute before us. We shall examine the arguments of the learned counsel for the parties with reference to them, after taking into consideration the other well settled facts on which reliance has been placed by learned counsel, and with due regard to the relevant averments of the parties. The High Court has recorded a number of findings. We shall have occasion to refer to those of the findings which have been challenged before us. It may be sufficient to say here that the High Court has worded the operative part of its judgment as follows, "In view of the aforesaid discussion the provisions of the first proviso to clause VI (a)(i) of the Uttar Pradesh Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977 dated September 19, 1977 are declared ultra vires and are quashed. The U. P. State Electricity Board is directed to supply electrical energy to the petitioner in accordance with law without taking into consideration the provisions of the said proviso". In order to examine the findings of the High Court about the invalidity of the proviso to clause 6(a) (i) of the order, it will be convenient to examine the relevant findings of the High Court on the various points of law. The High Court has taken the view that it is the statutory obligation of the U.P.S.E.B. because of the obligation of a licensee under 723 sections 18 and 26 of the to supply electrical energy to a consumer. Reference in this connection has also been made to clause VI of the Schedule to the Act. Clause (h) of section 2 of the Act defines a "Licensee" to mean any person licensed under Part II to supply energy. Section 26 of the Act of 1948 provides, inter alia, that, subject to the provisions of that Act, the Electricity Board shall in respect of the whole State, have all the powers and obligations of a licensee under the , and the Act of 1948 "shall be deemed to be the licence of the Board" for purposes of the Act (of 1910). The first proviso to the section excludes the application of some sections, including section 22, of the Act, and the second proviso states that the provisions of clause VI of the Schedule to the Act shall apply to the Board in respect of that area only where distribution mains have been laid by the Board and the supply of the energy through any of them has commenced. While, therefore, the U.P.S.E.B. is a licensee under the Act, it will be sufficient, for purpose of the controversy before us, to say that section 22 of the Act is not applicable to it, and clause VI of the Schedule is applicable to it subject to the restriction contained in the second proviso to section 26 of the Act of 1948. So even though the Board is a licensee, the obligation under section 22 of the Act to supply energy to every person within the area of its supply is not fastened on it. The provisions of the Schedule to the Act are deemed to be incorporated in, and to form part of, every licence granted under Part II. Clause VI of that Schedule states that where after distributing mains have been laid down and the supply of energy through them has commenced, a requisition is made by the owner or occupier of any premises situate within the area of supply requiring the licensee to supply energy for such premises, the licensee shall make the supply and shall continue to do so in accordance with the requisition. But, as has been pointed out, the second proviso to section 26 of the Act of 1948 places a restriction on that obligation for it says that the provisions of clause VI shall apply to the Board in respect of that area only "where distribution mains have been laid by the Board and the supply of energy through any of them has commenced". Clause (i) of section 2 of the Act defines a "main" to mean any electric supply line through which energy is or is intended to be, supplied to the public. A "distribution mail" has been defined by clause (e) of the same section to mean the portion of any main with which a service line is, or is intended to be, immediately connected. We 724 have also gone through the definitions of "electric supply line" and "service line". They leave no doubt that a "distributing main" is different from an electric supply line, for to it a service line is immediately connected. The High Court has stated that the Company gets its supply from the Pipri Bus Bar, which is composed of a set of conductors which are made up of thick aluminium core steel reinforced cables, and has taken the view that the Pipri Bus Bar is a "distributing main" under section 2(e) of the Act and is an electric supply line as defined in section 2(f) so that clause VI of the Schedule to the Act would be fully applicable to the Board in so far as its obligation to the Company is concerned. But as has been stated in the second proviso of section 26 of the Act of 1948, the provisions of clause VI of the Schedule to the Act could apply to the U.P.S.E.B. in respect of that area where distribution mains had been "laid by the Board". It was therefore a question of fact whether that was so, and had to be examined on the basis of the averments of the parties to that effect. It is however not disputed before us that the Company did not plead that distributing mains had been laid by the Board for supply of energy to the Company, or to any one else, from the Pipri Sub station. The State had therefore no occasion to controvert any such allegation. This has in fact been admitted to be so by Mr. Ray in his arguments, and the High Court went wrong in recording a finding of fact against the State without any basis for it in the pleadings. We have also gone through section 18 of the Act of 1948 to which reference has been made in the judgment of the High Court, but it is also of no avail to the Company. The section makes a mention of the general duties of the Board, but it does not make it obligatory for it to supply energy to every person irrespective of its practical difficulties. The High Court has in fact quoted extensively from its earlier judgment in Civil Miscellaneous Writ Petition No. 618 of 1972 to which one of the two Judges was a party. It is not disputed, however, that when an appeal was taken against that judgment, the writ petition was itself withdrawn and was dismissed, so that judgment of the High Court may not be said to have subsisted thereafter, and need not have formed the basis of the finding of the High Court against the Board in regard to its duty to supply the energy asked for by the Company the more so when the decision on the point should have turned on the facts pleaded and established on the record. 725 Mr. Ray for the Company has however invited our attention to a decision of the Rajasthan High Court in firm Sadul Cotton Ginning and Pressing Factory vs Rajasthan State Electricity Board.(1) But that was a different case where it was not pleaded by the Electricity Board that clause VI of the Schedule to the Act was not applicable to it as the distributing mains had not been laid by it. The High Court therefore erred in taking the view in the present case that the Board was bound by the terms of clause VI of the Schedule to the Act to supply energy to the Company within one month of the making of the requisition or within such longer period as the Electrical Inspector may allow. But even if it were assumed that the Board was under an obligation to supply energy to every person, the fact nonetheless remains that the State Government had the overriding power to provide, by order made under section 22B of the Act, for regulating the supply, distribution, consumption or use thereof. In fact sub section (2) of that section categorically states that, without prejudice to the generality of the power under sub section (1), the order, may direct the Board not to comply with any contract, agreement or requisition for the supply of energy etc. The High Court erred in taking a contrary view. It has next been argued that only the energy which was generated by the Board could be the subject matter of an order under section 22B of the Act and it was not permissible for the State to take into account the energy generated by the Company for its own use. It may be recalled that the Company applied for the grant of sanction under section 28(1) of the Act to generate 120 m w of energy for the additional production of aluminium. That was allowed and a notification was issued on November 12, 1964, granting sanction to the Renusagar Power Company Limited (a wholly owned subsidiary of the Company) to engage in the business of supplying energy to the Company. It has two generating units and 135 m w power is being generated by the Renusagar Station for the exclusive use of the Company, and it is this energy for which it has been argued that it cannot be the subject matter of an order under section 22B. But sub section (1) of section 28 of the Act in terms refers to, and deals with, engaging by a non licensee, in the business of supplying energy to the "public". It is therefore futile to contend that what was generated by the Renusagar Power Company was not meant for supply to the public but was the Company 's own energy. It is true that that generation became, in the circumstances, the "captive" generation for the use of the Company, but that is far from saying that, in 726 the eye of law, it was not energy meant for supply to the public or that it was not amenable to control under section 22B. It must therefore be held that it was not amenable to control under section 22B. It must therefore be held that it was also liable to equitable distribution by an order under section 22B of the Act. The expression "energy" has been defined by clause (g) of section 2 of the Act as follows, "(g) "energy" means electrical energy (i) generated, transmitted or supplied for any purpose, or (ii) used for any purpose except the transmission of a message". It is therefore a pervading definition, and there is no reason why energy generated and supplied under section 28 of the Act should not fall within its sweep. We are mindful of the fact that while section 22B of the Act occurs in Part II, the aforesaid section 28 is in Part III, but that will not really take the supply of energy under section 28 out of the control of section 22B. Part II deals with "supply of energy" by licensee, while Part III deals with "supply, transmission and use of energy by non licensees". But when it was thought necessary to vest the State Government with the power to give directions to licensees (under section 22A), and to control the distribution and consumption of energy (under section 22B), it became necessary to insert sections 22A and 22B by Act 32 of 1959. The Legislature therefore inserted both the sections in Part II which occurred earlier than Part III, and under the broad fabric "Supply of Energy". As is obvious, insertion of sections 22A and 22B would not have been appropriate in Part III, and the Legislature cannot be blamed if it preferred the inclusion of the two sections together in Part II rather than in the residuary Part IV. Moreover it is by now well settled that the true meaning of a provision of law should be determined on the basis of what it provides by its clear language, and with due regard to the scheme of the law as a whole, and not merely by the place it finds in the formation of its Parts or Chapters. An ancillary argument has been advanced that if sub section (1) of section 22B of the Act is read with due regard to sub section (2), it will appear that, like sub section (2), sub section (1) is also confined to a licensee and will not be applicable to the energy supplied by a sanction holder under section 28. Our attention in this connection has been invited to the use of the article "the" in sub section (2) while stating that the order made under sub section (1) may direct 727 "the licensee ' not to comply with the matters stated in clauses (i) to (iii). The argument is untenable for two reasons. Firstly, subsection(1) of section 22B refers to the State Government 's power to control the distribution of energy as a whole and not merely the energy generated by a licensee, and there is no rule of construction by which the restricted scope of sub section (2), which deals only with the licensees should govern the scope of sub section (1) and confine it to licensees. Secondly, the purpose of sub section (2) is to provide exceptions of the nature which are peculiar to licensees and are necessary to save them from the statutory obligations mentioned in the three clauses of the sub section. It appears that the use of he article "the" in sub section (2) is not quite appropriate, but we have no doubt that there is no justification for the argument that section 22B is applicable only to licensees and not to a sanction holder under section 28. What section 22B of the Act authorises the State Government to do, is to make an order providing for "regulating" the supply, distribution, consumption or use of energy, and it has been held by the High Court that the section does not confer the power to prohibit the supply of energy to any consumer. The High Court has gone on to hold that Parliament did not confer on the State Governments the power to cut off supply to existing consumers. Mr. Ray has supported the view of the High Court and has invited our attention to the decisions in Municipal Corporation of the City of Toronto vs Virgo,(1) Attorney General for Ontario vs Attorney General for the Dominion and the Distillers and Brewers ' Association of Ontario,(2) Birmingham and Midland Motor Omnibus Co. Ltd. vs Worcestershire County Council(3), Tarr vs Tarr(4), The Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan and others(5) and State of Mysore vs H. Sanjeeviah(6). As against that the learned Solicitor General has placed reliance on the view taken in Fatechand Himmatlal and others vs State of Maharashtra etc.(7) that 'regulation ', if the situation is necessitous, may reach the limit of prohibition. It appears that a distinction between 'regulation ' and 'restriction ' or 'prohibition ' has always been drawn, ever since Municipal Corpora 728 tion of the City of Toronto vs Virgo (supra). 'Regulation ' promotes the freedom or the facility which is required to be regulated in the interest of all concerned, whereas 'prohibition ' obstructs or shuts off, or denies it to those to whom it is applied. The Oxford English Dictionary does not define "regulate" to include prohibition so that if it had been the intention to prohibit the supply, distribution, consumption or use of energy, the Legislature would not have contented itself with the use of the word "regulating" without using the word "prohibiting" or some such word, to bring out that effect. But where the High Court went wrong was in thinking that the Order had the effect of prohibiting the supply of energy to the Company, which was an "existing consumer". The proviso to clause 6(a) (i) of the Order to which exception has been taken, states as follows, "Provided that where any such industrial consumer has his [own source of generation of energy which alone enables him to obtain] 50 per cent or more of his total consumption, then a cut of 100 per cent in the energy supplied by the Uttar Pradesh State Electricity Board shall be exercised. " What has therefore been ordered is no more than a cut of 50 per cent in the monthly consumption of electricity and not a total prohibition of consumption of energy. That is a step in the direction of regulating the consumption of energy as far as it goes, and it is overridden with the further regulation contained in the proviso in the case of an industrial consumer having its own source of generation of energy "which alone" enabled him to obtain 50 per cent or more of his total consumption so as to ensure even to him a consumption of 50 per cent of energy and not a total prohibition. The proviso therefore operates in a special or particular field and for a particular purpose where it is considered necessary for regulating the supply etc. of the energy in the interest of the other consumers, for section 22B is meant to maintain the supply and secure the equitable distribution of energy to all concerned. We are constrained to say that the High Court did not properly appreciate this aspect of the matter. The High Court has gone on to hold that no power was vested in the State Government under section 22B of the Act to issue an order that certain preferences will be followed in supplying energy. The High Court has found it established that after power supply was totally "disconnected" by the Board to the Company, "power supply connections were given to the agricultural sector and agro based industries. " This appears to be the High Court 's finding in regard to the argument that the Order was bad as it was not permissible to adjust the priorities 729 by an order under section 22B. Learned counsel for the Company have argued that the only permissible preference was that under section 22A in favour of an establishment mentioned in it and that the preference shown to individual consumers was illegal. Now so far as clause 6(a) (i) of the Order is concerned, it does not, by itself, provide for any preferences or priorities, beyond excluding "fertilizers" from the cut of 50 per cent on all large and heavy industrial power consumers receiving power at 33 k v and more. Clause 7 of the Order deals with "exemptions", and "fertilizers manufacturing establishments" have been included there amongst the consumers to whom the cut referred to in clause 6 of the Order shall not be applicable. It has not been argued before us that it was not permissible for the State Government to provide for exemptions in an order under section 22B, and we have not been referred to any such data or material on the basis of which it may be possible to examine whether the exemptions in question were in derogation of the concept of "maintaining and securing the equitable distribution of energy" under section 22B. It may be that the State Government was of the opinion that supply of energy to the agricultural sector and agro based industries was more necessary and would benefit the state more substantially than the supply made to heavy industrial consumers, but merely because any such preference has been entertained by the State Government, it cannot be said that it necessarily runs counter to the concept of equitable distribution of energy stated in section 22B. In fact counsel for the Company have repeatedly urged before us that the cut of 50 per cent referred to in clause 6(a) (i) was meant to deprive only a few consumers of energy, and that the cut of 100 per cent under the proviso operated exclusively against the Company. And it has to be appreciated that clause 6(a) (i) deals only with large and heavy industrial power consumers receiving power at 33 kv and above, and it is hardly permissible for such a heavy consumer as the Company to complain of any preference that may have been shown to small consumers in the field of agriculture, or agro based or other small industries. The fact remains that large and heavy industrial consumers of the category mentioned in clause 6(a) (i) are a class by themselves and it is hardly permissible for them to complain that the small preference shown to agriculturists in supplying energy for their water pumps or tube well, or in energising State tube wells supplying water to them, or the supply of energy to small scale industries has really created a privileged class of consumers or brought into existence any such concept of priorities as to run counter to or defeat the objective of bringing about the equitable distribution of energy by an order 730 under section 22B. No glaring instance of any preference has been brought to our notice so as to raise in us a desire to examine the question whether it was necessary or proper for the State Government to provide guidelines for the small preferences shown by it to the aforesaid consumers. In fact it has been admitted in the written arguments which have been filed and received in Court that, in the present case, the company is "not sure as to what exactly has happened". In such a situation, we are not persuaded that the High Court had any real justification for recording an adverse finding against the State on the question of the so called preferences or priorities. Learned counsel for the Company were not able to refer us to any plea in the writ petition about illegal priorities or preferences. Nor could they refer to a plea that any preference or priority shown by the State was the very antithesis of the concept of equitable distribution which, for the purpose of maintaining the supply of energy, was the very object of the Order. If any such plea had been taken, it would have been permissible for the State to take any defence that may have been open to them. But merely because the word preference or priority has been used by the State for the purpose of comparing the grantees of energy in preference to the Company, or as a matter of priority over the consumption of energy by a giant consumer like the Company, it will not be fair and reasonable for us to hold that the State has established a class of privileged consumers, and to set aside the grant of energy to them in their absence and without examining the facts and circumstances of their respective cases. The purpose of the Order is to maintain the supply of energy and to secure its equitable distribution. One such method was to conserve energy by virtue of the provisions of clause 6(a) (i). If that has been done according to law; and if the resultant saving of energy is frittered away by showing unlawful preferences or creating unlawful priorities by other orders of an administrative nature, there is nothing to prevent the aggrieved party, including the Company, from challenging it according to the law, in an appropriate proceeding, if so advised. But any such grievance cannot be examined in these proceedings for the Order has the avowed object of bringing about equitable distribution of the conserved energy in an honest and forthright manner and there is nothing on the record for us to hold otherwise. It has next been argued that the validity of the Order, which is by way of a piece of subordinate legislation, is open to judicial scrutiny and that the subjective satisfaction of the State Government in making it is open to challenge in a court of law. It will be enough for us to say that subordinate legislation is by now a well recognised form of legislation for practical reasons. The modern 731 administrative machinery is quite complex and it is often found difficult to pass complicated legislative measures through the full parliamentary procedure and on a permanent or durable basis. Even a carefully drafted Act may not work well in actual practice. It may also be that the exact means of achieving the object of an Act may not be adequately comprehended all at once, and it may be useful to provide for some elasticity in the actual working of a law. That can best be done by leaving some of the details to subordinate legislation. That is why some legislative powers are delegated to executive authorities, subject of course to the purpose and the scheme of the parent Act, the constant vigil of the Parliament or the State Legislature, and the Judicial control. These are reliable safeguards and with their easy availability, it is no surprise that subordinate legislation is now so voluminous that it may well be said to have dwarfed the parent. The grounds of challenging the validity of subordinate legislation are well known. The challenge may be on the ground that the power to make the law could not have been exercised in the circumstances which were prevailing at the time when it was made, or that a condition precedent to the making of the legislation did not exist, or that the authority which made the order was not competent to do so, or that the order was not made according to the procedure prescribed by law, or that its provisions were outside the scope of the enabling power in the parent Act or were otherwise violative of its provisions or of any other existing statute. As it happens, none of these grounds or circumstances has been shown to exist in the present case. The High Court has taken the view that the Company was unable to establish as a fact that there was no shortage in the generation of energy at the time when the order was made under section 22B. It is no body 's case that the State Government was not competent to make the order, or that it did not comply with any procedural requirement of the Act in making the order, or that its provisions (or any of them) are outside the scope of the enabling power or are violative of the provisions of any other law. We have examined some of the points of law on which the High Court has found some provisions of the order to be invalid, and we have given our reasons for taking a different view. We have no doubt that the State Government formed its opinion about the necessity and expediency of making the order for the purposes of maintaining the supply and securing the equitable distribution of energy at a time when that was called for, and this Court cannot sit as a court of appeal to examine any and every argument in an attempt to show that the opinion of the State Government was vitiated for one fanciful reason or the other. It has to be appreciated that the question whether the reasons which led to the 732 making of the order were sufficient, was essentially for the State Government to consider. The validity of the order has been challenged on the ground that it suffers from the vice of malice in law. But that is a point by itself and we shall examine it separately. It will thus appear that the above arguments which have been advanced against the validity of clause 6(a) (i) of the order are not justified. The whole of the clause reads as follows, "6(a) (i) In respect of electrical energy consumed by all large and heavy power industrial consumers receiving power at 33 kv and above, excepting fertilizers, from the U.P. State Electricity Board a cut of 50 per cent in their monthly consumption of electricity both in respect of energy and demand shall be exercised: Provided that where any such industrial consumer has his own source of generation of energy which alone enables him to obtain 50 per cent or more of his total consumption, then a cut of 100 per cent in the energy supplied by the Uttar Pradesh State electricity Board shall be exercised. " It thus deals with the consumption of energy by all (excepting fertilizers) large and heavy industrial power consumers receiving power from the U.P.S.E.B. at 33 kv and above. It imposes a cut of 50 per cent in their monthly consumption of energy. Then it adds the provision that where such an industrial consumer has his own source for the generation of energy which by itself gives him 50 per cent or more of his total consumption of energy (provided for in the main clause), then it will not receive any energy from the U.P.S.E.B. as the cut in its supply will then be 100 per cent. The clause therefore subserves the purpose of section 22B for, in a period of scarcity or insufficiency of the supply, it will have the effect of regulating the same and thereby securing the equitable distribution thereof. It is true that although the order has been made on the ground that the State Government is of opinion that it is necessary and expedient for maintaining the supply and securing the equitable distribution of electrical energy, to provide for regulating the supply, distribution, consumption and use thereof, and has been called the Uttar Pradesh Electricity (Regulation of Supply, Distribution, Consumption and Use) order 1977, it does not deal with all those matters in details. In fact it may well be said to be an order relating essentially to compulsory cut in the consumption of energy. But that cannot detract from the basic fact 733 that the order has the sanction of section 22B of the Act and subserves the main purpose thereof, even though there may be justification for the criticism that it does not go far enough in its regulative enterprise in the expansive field set out for it in the preamble. At any rate, it cannot be said to be beyond the scope and the ambit of that section, and its validity is not really open to challenge as a piece of subordinate legislation. It has however been strenuously argued on behalf of the Company that the order should be struck down on the ground of malice in law on the part of the State Government. That no doubt is another aspect of the doctrine of ultra vires, for an offending Act can be condemned simply for the reason that it is unauthorised. Bad faith has often been treated as interchangeable with unreasonableness and taking a decision on extraneous considerations. In that sense, it is not really a distinct ground of invalidity. It is well settled that if a discretionary power has been exercised for an "unauthorised purpose", that is enough to invite the Court 's review, for as has been said quite widely but properly by Rand J. in Roncarelli vs Duplessis,(1) malice is "acting for a reason and purpose knowingly foreign to the administration. " But the question is whether this has been Proved to be so in the present case. Mr. Ray has argued on behalf of the Company that the order is malafide, and has been made in the colourable exercise of the power under section 22B of the Act simply to compel the Company to agree to the payment of a higher rate for the supply of energy to it. He has tried to establish his argument on the basis of the statement of the Chief Secretary of the State Government dated July 8, 1977 and some statements of the Minister concerned. We shall examine them separately. What the Chief Secretary said in his press statement dated July 8, 1977, was that the State Government had reduced the supply of power to the Company from 85 m w to 10 m w and that it had been decided to almost double the rate for the supply of the power which was being given to the Company. It will be remembered that by virtue of the amendment which was made to the U.P. Electricity (Regulation of distribution and consumption) order on June 2, 1977, the Company was required to reduce its consumption of the Board 's energy to zero, but it was, nonetheless, allowed to draw 30 m w for some time. That led to further directions for the reduction of consumption, and ultimately an order was made on June 29, 1977 for disconnecting the supply. A representative of the Company met the Minister concerned and explained the Com 734 pany 's difficulties. He asked for permission to draw at least 10 m w to keep the pots warm. The Minister agreed to that request, but only against the standby agreement for the demand of 60 m w. A letter to that effect was sent to the Company on June 30, 1977. As under the standby agreement, energy was to be supplied at the rate of 24 paise per unit, instead of 11 paise, the Chief Secretary merely stated the factual position on July 8, 1977. At any rate there is nothing to show that the plea of scarcity of energy was merely a ruse to charge a higher rate from the Company. Mr. Ray has invited our attention to the statements of the Minister concerned dated July 18, 1977, July 28, 1977, September 14, 1977, August 29, 1978 and his reply to the Company dated October 18, 1978, to show that the State Government was not satisfied with the contractual rate for the supply of energy as it was below the cost of generation, and wanted to review and rescind the agreement altogether. We have gone through the record of the proceedings of the Legislative Assembly and we find that what the Minister said there was essentially correct that 10 m w energy was being supplied to the Company under the standby agreement. It was in that content that the Minister informed the Assembly that the charges for the said standby supply came to 26 28 paise per unit. The learned Solicitor General has taken us through the relevant record to show that the Minister did not really want to harm the Company unnecessarily, and if he stated further that he was never approached personally by the Company, or in a proper manner, or that the relief to the Company would be considered depending on how it contacted him for that purpose, the Minister simply wanted to state the facts and to convey his resentment against the attempt to influence him politically, or through any Minister of the Central Government. The State has in fact filed a chart with its supplementary counter affidavit about the supply of energy to the Company from February 1973 to April 7, 1977. It shows that during the period February 1973 to August 7, 1975 the Company received energy from 27.50 m w to 1.25 m w. It was only after the declaration of emergency on June 26, 1975 that the Company received some 55 m w of energy, and then a fresh agreement was made soon after on November 30, 1976 to supply 85 m w of energy. But even before that date, for a sufficiently long period, the Company got far more energy than what it was entitled to. We are therefore not satisfied that the Company has been able to establish malice in law merely because of what the Chief Secretary or the Minister stated here and there. It may well be that the new State Government was dissatisfied with the new agreement which had been 735 entered into at the instance of the political party which was then in power, but it cannot be said that the new Minister 's desire to examine the validity or propriety of that agreement arose out of any extraneous or improper consideration so as to amount to malice in law. Our attention has also been invited in this connection to certain statements on behalf of the State Government and the Board that energy was available in abundance, and it has been urged that even so the Company was denied its supply in spite of the agreements and the assurances of the State Government to the contrary. That is a point relating to the contractual rights of the Company and we shall come to it in a while. Then it has been argued that even though the State Government professed in its affidavit that the cut in the consumption of energy by the Company could not be restored because of the desire to provide more energy for agricultural purposes, that was not really so and that any such attempt was in the nature of an extraneous consideration which vitiated the implementation of the Order. Reference in this connection has been made to the Company 's averments in the supplementary affidavit that the load on account of agriculture and irrigation had declined, and there was in fact no diversion of energy to agriculture. In order to examine the point, we directed the State to prepare a statement for the entire period from January 1977 to December 1978. The Order was made on September 19, 1977, and the statement shows that consumption of energy for agricultural and irrigation purposes increased appreciably thereafter, and there is no justification for the argument to the contrary. Another "extraneous" factor which is said to have been taken into consideration by the State Government in making the Order is said to be its view that the major portion of the aluminium produced by the Company was being consumed outside the State. A similar objection was raised before the High Court on the basis of an averment in the counter affidavit of the State. The High Court has, however, recorded the finding that it would be "unsafe" to uphold that contention, and we see no reason to take a different view. The other factors to which reference has been made as extraneous factors which vitiated the Order are said to be consideration of the facts that the Company had failed to expand its generating capacity, the financial loss suffered by the U.P.S.E.B. and the non payment of the coal surcharge by the Company. But there is nothing on the record to show that these factors were taken into consideration at the time of making the Order. It may be that those or somewhat similar facts were mentioned 736 at one time or the other in answer to the complaint of the Company, or in justification of what the State Government had done, by way of defence, but that cannot justify the argument that they formed the basis for the making of the Order. It has also been argued that while making the Order the State Government failed to take into consideration the facts that the production of aluminium was of considerable importance to the national economy and that the Board was capable of generating more energy but was not doing so. Reference has also been made to the new aluminium policy which the Central Government announced on July 15, 1975, and to the benefits which the U.P.S.E.B. was deriving from the aluminium products manufactured by the Company. But the argument is untenable because there is nothing to show that these factors were not taken into consideration while making the Order, and an inference that they were ignored cannot be drawn against the State merely because the Company was not permitted to consume all the energy it wanted and there was a fall in the production of aluminium because of the restriction imposed by the Order. It may be that the U.P.S.E.B. was capable of generating more energy, or that it was not running efficiently and had not succeeded in reaching its target of ideal generation. But here again it will be enough to say that although the High Court arrived at the conclusion that the Company deserved the writ which it granted, it did not find it possible to hold that the U.P.S.E.B. had deliberately under utilised its generation capacity. That is a finding of fact which does not call for interference by us. There is thus no justification for the argument that there was malice in law on the part of the State Government in making the Order. It may be that the State gave an impression, after the Order had been made, that it had some spectacular effect on the fortune of the Company, or that it had brought about such efficiency as to ensure supply of energy to new entrepreneurs. It may also be that in doing so the State over stated its resources of energy in order to open up a State which had not been able to develop its industrial resources satisfactorily, but what has to be examined in such cases is the true and the dominant purpose behind the Order. And as long as the dominant motive is proper and reasonable, and is not sullied by a mere pretext, the Order based on it will be valid when it is well within the true scope and policy of the Act and is an honest attempt to deal with the situation for which the power to make the Order had been granted by the Act. It has however been further argued by Mr. Ray that the Order is invalid as it does not subserve the purpose of section 22B of the Act inasmuch as it does not secure the "equitable distribution" of energy. 737 Reference has been made to Jowitt 's Dictionary of English Law, where "equitable" has been stated to mean "that which is fair", and to Corpus Juris Secundum to show that equitable is that which is done "fairly, justly and impartially". Our attention has been invited to the facts and circumstances which led to the establishment of the Company in the State of Uttar Pradesh and the agreement with and the assurances which were given to the Company. Our attention has also been invited to the new connections which were given by the U.P.S.E.B. to the other consumers while denying the contractual supply of energy to the Company. It cannot be doubted that only that distribution can be said to be "equitable" which is "just and right under all the circumstances of the particular case" (The Century Dictionary). It will be remembered that the High Court has recorded a finding that there was shortage in the generation of energy when the Order was made. A great deal of statistical data has been laid before us and Mr. Gupta has tried to make full use of it on behalf of the Company. But the fact remains that the demand for energy was far in excess of the supply from all the sources available to the U.P.S.E.B. It has also been well established that a situation had arisen when it became necessary to obtain an order from the State Government about the course of action to be adopted by the Board. Self contained notes were therefore drawn up in March 1977, and on May 24, 1977, June 28, 1977 and August 26, 1977. We have gone through the notes and they are quite detailed and objective. We have made a mention of the developments which took place because of those notes, including the making of the Order. We have no doubt that it was made because a situation had arisen when regulation of the supply, distribution, consumption and use of energy had become necessary, and the Order was a genuine attempt to secure equitable distribution of energy. It is true that the Company was the worst sufferer under clause 6(a)(i) of the Order, but then it was also the greatest consumer. The basis for the making of the Order was the necessity or expediency for maintaining the supply and securing the equitable distribution of energy by means of an order providing for the regulation of the supply, distribution, consumption and use of energy. It has been argued by Mr. Ray that as power was supplied indiscriminately to new consumers after imposing a cut on the Company 's consumption of energy, the issue of the Order was really a colourable exercise of the State Government 's power under section 22B of the Act. Our attention in this connection has been invited to the averments in the affidavits which have been filed on behalf of the Company and to a 738 list of new connections filed as Annexure to the supplementary rejoinder affidavit of Suresh Chandra, Special Officer of the Company. Reference has also been made to a list of new connections filed in the High Court on March 6, 1978. Learned Solicitor General has however pointed out that even if all the new connections were to become effective within a period of two years, their incidence would be no more than 4 per cent of the total connected load as the real impact on the system would merely be an additional load of only 18 m.w. It has also been pointed out that while there was an increase of 9 per cent in the installed capacity of the U.P.S.E.B. for the generation of energy, the increase in the connected load was not more than 2 per cent. We have been informed that the percentage increase in the connected load had declined from 10 in 1974 75 to 2 in 1977 78, which showed that great care was being taken in incurring extra liability. The State has also filed a list of those applicants to whom new connections were sanctioned, but were not actually released, making a total of some 23 mw. It has been urged on behalf of the Company that the Board had deliberately reduced its thermal generation. It has been pointed out that while there was a substantial increase in hydro electrical generation, the performance in the thermal field was highly unsatisfactory. The State has supplied the necessary information which shows that the fall in thermal generation was due to the initial troubles of new plants, the poor performance of the plants, and the breakdown at Harduaganj. We have been informed that the performance of the U.P.S.E.B. was better than the Boards in the other States. We have also been told that the proposition that there was deliberate under capacity operation of thermal machines is technically unsound because of the operating constraints in running the large thermal machines at loads lower than the rated capacity. We have made a reference to the finding of the High Court against the Company in this respect. Another aspect of the controversy before us relates to the contractual liability of the State to supply the energy which it had assured to the Company. It has been pointed out that under the agreement dated October 29, 1959, the State was bound to supply 55 m w of energy upto 1987 and then an agreement was entered into on November 30, 1976, to supply additional 30 m w, making a total of 85 m w for a period of 5 years. It has therefore been argued that instead of fulfilling its obligation under the agreements and the other assurances which were given by the State from time to time, the State took resort to the provisions of section 22B to get out of its obligation and the making of the impugned Order was really a colourable exercise of that statutory power. 739 We find from the counter affidavit of the State (October, 1977) that, as would appear from the Chief Secretary 's letter dated November 20, 1968, what the State Government had assured the Company was to meet the interim requirement of the Company for 2 or 3 years from the U.P.S.E.B. and to facilitate the parallel running of the Company 's new power station, in addition to the station which had been set up at Renusagar. It is also not without significance that the State was not a party to the agreement dated November 30, 1976, for the supply of additional 30 m.w., because that agreement was made between the Company and the U.P.S.E.B. It was in fact expressly stated in that agreement that it would be subject to the provisions of the Electricity Acts of 1910 and 1948 and the rules and regulations, including the amendments thereto. Care was also taken to provide that the U.P.S.E.B. shall not be responsible for damages or diminutions in the supply of energy according to the orders issued by the State Government, A similar provision was made in the earlier agreement of 1959. Reference was in fact specifically made in the Board 's letter to the Company dated September 2, 1972, to the State Government 's power to "control the distribution and consumption of energy under section 22B of the ". We have made a reference to the manner and the stages in which the State Government took decisions for the restrictions to be imposed on the consumption of energy with due regard to the detailed factual notes which were submitted for its orders on account of the acute shortage of energy in the State. Decisions in the matter were taken by the different State Governments, including the Governors ' Advisors, and it cannot be said that the cuts were imposed suddenly, or without due regard to the Company 's difficulties in reducing its consumption of energy in the manner directed by the Order. We are therefore unable to take the view that the State wantonly disregarded its contractual obligations to the Company. But even if the Company had some cause of grievance on that account, that may well be said to be unavoidable, in the situation which had arisen when the Order was made on September 19, 1977. It has to be appreciated that subsection (2) of section 22B of the Act specifically provided that it was permissible for the State Government to direct by the Order that the U.P.S.E.B. shall not comply with the provision, inter alia, of any contract made by it. A direction to that effect was expressly made in clause 11 of the Order, and it is not permissible for the Company to complain on that account. It is not disputed that the consumers which were hit by the provisions of clause 6(a) (i) of the Order were the Company, the Kanoria 740 Chemicals and Industries Ltd., the Indian Railways, the Indian Explosives Ltd., and the Fertiliser Corporation of India. The last three of these have been exempted from the rigour of the Order. As regards the Kanoria Chemicals and Industries Ltd., the State has stated in its reply that it was manufacturing Benzena Chloride and BHC which are used for agricultural purposes and for purifying drinking water. They were entitled to 50 per cent of their consumption, and the State allowed them exemption to the extent of 3 m w making it permissible for them to consume 12.5 m.w. It cannot therefore be said that the continued supply of energy to Kanoria Chemicals was proof of any hostility on the part of the State in so far as the Company was concerned. It may also be that, as has been argued on behalf of the Company, some other restrictions which were initially imposed on some other consumers under the Order were withdrawn, so that it is the Company which is the main sufferer under the Order. Even so, it is not reasonable to take the view that the Order was not justified when it was made, and it cannot be held to be invalid merely because the Company is the main sufferer under it. It is not its case that the Order was discriminatory and should be struck down under article 14 of the Constitution. As has been stated the High Court has in fact found that the Company was "unable to establish as a fact that there was no shortage in the generation of electricity when the impugned Order was made under section 22B of the Act of 1910. " The Order was therefore justified and was a valid Order when it was made on September 19, 1977. The question is whether there is force in the argument that it has ceased to be in force and stood impliedly repealed because of the change in the circumstances which brought it into existence. The High Court has recorded a finding in this connection in favour of the Company. Craies on Statute Law, seventh edition, has mentioned six different classes of enactments at pages 357 8 which are considered as having ceased to be in force, "1. Expired that is, enactments which having been originally limited to endure only for a specified period by a distinct provision, have not been either perpetuated or kept in force by continuance, or which have merely had for their object the continuance of previous temporary enactments for periods now gone by effluxion of time; 2. Spent that is, enactments spent or exhausted in operation by the accomplishment of the purposes for which they were passed, either at the moment of their first 741 taking effect or on the happening of some event or on the doing of some act authorised or required; 3. Repealed in general terms that is, repealed by the operation of an enactment expressed only in general terms as distinguished from an enactment specifying the Acts on which it is to operate; 4. Virtually repealed where an earlier enactment is inconsistent with, or is rendered nugatory by, a later one; 5. Superseded where a later enactment effects the same purposes as an earlier one by repetition of its terms or otherwise; 6. Obsolete where the state of things contemplated by the enactment has ceased to exist, or the enactment is of such a nature as to be no longer capable of being put in force, regard being had to the alteration of political or social circumstances. " These six have been mentioned as the enactments which are selected for inclusion in the Statute Law Revision Acts of England as having ceased to be in force otherwise than by express repeal, or having by lapse of time or otherwise become unnecessary. It is quite an exhaustive list and the question is whether the Order could be said to have "spent" itself or become "obsolete", for the other four categories are inapplicable to the present case. But whether a piece of legislation has spent itself or exhausted in operation by the accomplishment of the purpose for which it was passed, or whether the state of things contemplated by the enactment has ceased to exist, are essentially questions of fact for the Legislature to examine, and no vested right exists in a citizen to ask for a declaration that the law has been impliedly repealed on any such ground. It has to be appreciated that the power to legislate is both positive in the sense of making a law, and negative in the sense of repealing a law or making it inoperative. In either case, it is a power of the Legislature, and should lie where it belongs. Any other view will be hazardous and may well be said to be an encroachment on the legislative field. In an extreme and a clear case, no doubt, an antiquated law may be said to have become obsolete the more so if it is a penal law and has become incapable of user by a drastic change in the circumstances. But the judge of the change should be the Legislature, and courts are not expected to undertake that duty unless that becomes unavoidable and the circumstances are so apparent 742 as to lead to one and only one conclusion. This is equally so in regard to the delegated or subordinate legislation. We have gone through the cases reported in Elwood Hamilton vs Kentucky Distilleries & Warehouse Co.,(1) Chastleton Corporation vs A. Leftwich Sinclair(2) and Nashville, Chattanooga & St. Louis Railway vs Herbert section Walters(3) on which reliance has been placed by Mr. Ray, but they are of no real help to the Company. Thus in Elwood Hamilton(1) it has been held that it requires "a clear case" to justify a court in declaring that a Federal Statute adopted to increase war efficiency has ceased to be valid, on the theory that the war emergency has passed and the power of Congress no longer exists. In Chastleton Corporation(2) it has been held that courts would pronounce on the continued operation of law upon facts which they "judicially know. " We have also gone through Nashville(3) case where the view has been taken that a statute valid when enacted may become invalid by change in the conditions to which it is applied. We have gone through The petition of the Earl of Antrim and Eleven other Irish Peers(4) also where a declaration was asked for by some Irish Peers that the peerage of Ireland had in accordance with the provisions of the Union with Ireland Act, 1800, the right to be represented by 28 Lords temporal of Ireland for life. Their petition was rejected because the provisions of the Act of 1800 had ceased to be effective on the passing of the Irish Free State (Agreement) Act, 1922. That was therefore quite a different case. Mr. Ray has placed reliance on Pannalal Lahoti vs State of Hyderabad,(5) but what has been held there is that a temporary legislation cannot be allowed to outlast the war emergency which "brought it forth". In The Union of India vs Ram Kanwar and others(6) it was held that as the building in question was being used for a purpose other than that for which it was originally requisitioned under the law, it was liable to be de requisitioned. The question is whether any such situation has been found to be established in the present case ? Now what the High Court has found in this respect is as follows, "This Court finds that circumstances have materially changed since the impugned order was made. The shortage in reservoir from which water is drawn for the generation of 743 Hydro electricity has ceased and further supplies of electrical energy are available from newly commissioned units. The respondents admit that fresh power connections have been given. In these circumstances, the continuance of the impugned order is no longer justified and consequently, the order must be held to have outlived the purpose for which it was made and, as such, it must be held to be no longer valid. ' It has thus found three facts: (i) the shortage in the reservoir(s) for generation of hydel energy had ceased, (ii) further supply of energy was available from newly commissioned units, and (iii) fresh power connections had been given by the U.P.S.E.B. But what was lost sight of was the important fact that it was all along the case of the State that hydel energy was only one third of the total generation, and that generation of thermal energy which met two third of the total requirement had declined for reasons beyond the control of U.P.S.E.B. The High Court did not therefore undertake a careful examination of the facts, and took some new connections into consideration without attempting to examine their magnitude and effect on the over all generation and availability of energy from all the sources. The State has filed a detailed affidavit dated October 12, 1978, where it has been stated that the U.P.S.E.B. was at best capable of generating electrical energy to the "tune of 10,185 m u," whereas the total requirement of the State for 1978 79 was 13,866 m u so that there was a gap of 393 m u. The High Court therefore erred in taking the view that the continuance of the order was no longer justified. Even so, the High Court abstained from striking down the whole of the Order and merely declared that the provisions of the first proviso to clause 6(a) (i) was ultra vires, and quashed it. We have given our reasons for taking the view that the whole of clause 6(a) (i) of the order, including the proviso, is valid, and the question remains whether we should restore the quashed proviso. The answer to the question is simple. The learned Solicitor General has made a statement at the Bar that at present, or in the near future, there is no difficulty in supplying 42.5 m w energy to the Company, and that the Company is getting that much energy already. He has been frank enough to say that this will be so even if the proviso is restored by this Court. He has stated that the State Government has been reviewing the position from time to time, and has given the 744 assurance that it will continue to do so in future. He has also stated that although the application of the Company for grant of exemption under clause 10 of the Order had been rejected on December 9, 1977, there is nothing to prevent the Company from making a fresh application if it thinks that there is a real and substantial improvement in the generation of energy in the State. The fact therefore remains that, as things stand at present, the proviso, which admittedly applies only to the Company, is of no practical use for the time being. So even though it is valid and has wrongly been quashed by the High Court, we do not think it necessary to restore it, so that it shall not be deemed to form part of clause 6(a) (i) of the Order. But if there is deterioration in the generation of energy again, or there are other sufficient reasons within the purview of section 22B of the Act to reinsert the proviso, in the present or modified form, it will be permissible for the State Government to do so according to the law. In the result, while C.A. No. 921 of 1978 is allowed to the extent mentioned above, C.A. No. 425 of 1979 fails and is dismissed. In the circumstances of the case, the parties shall pay and bear their own costs in both the appeals. N.V.K. C.A. 921/78 allowed. C.A. 425/79 dismissed.

At the time of granting licence to the company for the establishment of a new Aluminium factory the Government of India obtained the consent of the Government of U.P. To make available to the company in bulk cheap electricity from the Rihand Hydro Electric Scheme. An agreement was entered into between the Company and the State Government for the bulk supply of electricity on a firm, continuous and uninterrupted basis at 1.99 odd paise per unit for a period of 25 years. The company set up and commissioned its aluminium plant at Renukoot in April, 1962. It was granted a further licence for the expansion of its installed capacity. As the State was unable to meet the extra requirement of energy, sanction under section 28 of the Electricity Act 1910 was granted to the Company, at its request, on November 12, 1964, to set up a generating station at Renusagar, near Renukoot. It set up two generating units of 67.5 mw each. The first unit started generating power in 1967 and the other in 1968. In the meantime, permission was granted to increase the Company 's installed capacity from 40,000 metric tonnes to 60,000 metric tonnes. The Company thought of setting up a plant for the production of 60,000 metric tonnes of aluminium in the State of Gujarat. But the Government of U.P. entered into negotiations with the Company and in its letter dated November 20, 1968, it stated that there could be no difficulty in meeting the interim requirements of energy for 2 to 3 years from the U.P. State Electricity Board and also for arranging for parallel running of their new power stations. The Company was granted sanction to expand the Renu Sagar Generation by 250 mw, and after negotiations with the State Government it was agreed that the U.P.S.E.B. would meet the additional energy under a phased programme. The U.P.S.E.B. stated in its letter dated September 2, 1972, that the supply would be without prejudice to the power of the State Government to control the 710 distribution and consumption of energy under section 22B of the Act. The additional energy was not made available to the Company during 1972 75 although the rate was substantially increased with retrospective effect. An agreement was however entered into between the Company and the U.P.S.E.B. on November 30, 1976, in supersession of the earlier agreements, and it was stipulated that it would be read and construed in all respects in conformity with the provisions of the and its rules and the regulations and the amendments thereto. The State Government took a decision in December 1976 to reconnect some agricultural pumping sets which had been disconnected and this placed an additional load on the grid system of the State. On the note of the UPSEB that there was acute shortage of energy, and its suggestion for the imposition of some restrictions, the U.P. Electricity (Regulation of Distribution and Consumption) order 1977, was issued by the Government on April 7, 1977. Under cl. 6(a)(i) of the Order, the Company could draw energy only to the extent of 50 per cent of its monthly consumption. As the shortage of energy became more acute the Secretary of the Power Department sent a note to the Governor dated May 3, 1977 stating that there was a large gap between demand and availability of energy and that overriding public interest, particularly the need to maintain food supply, required that units which were heavy consumers of energy should be subjected to further cut in the consumption of energy. It was particularly pointed out that as the Company was itself generating energy at Renusagar, it will have more than 50 per cent of energy even if the Board 's supply was completely withdrawn. The Governor approved that proposal on June 1, 1977. A proviso was inserted in cl. 6(a) (i) of the U.P. Electricity (Regulation of Distribution and Consumption) Order, 1977 in June 2, 1977 according to which an industrial consumer having its own source of generation of energy from which it obtained 50 per cent or more of its consumption would suffer a cut of 100 per cent in the energy supplied by the UPSEB. The company was given time to bring about the total cut. Fresh elections were held to the State Legislature Assembly, and the new Cabinet was sworn in on June 23, 1977. It decided to reduce the supply of energy to the company to zero, in pursuance of the amendment dated June 2, 1977 and called for a fresh note on the position regarding the generation and distribution of energy. The Chairman of the UPSEB prepared a note on August 26, 1977, in which he pointed out the shortage of energy, including substantial fall in the generation of thermal energy, and in the "import" of energy. The State Government made an order on September 19, 1977 called the U.P. Electricity (Regulation of Supply Distribution, Consumption and Use) Order, 1977. That order was made for maintaining the supply and securing equitable distribution of electrical energy, and to provide for regulating the supply, distribution, consumption and use thereof. Clause 6 of the order which provided for compulsory cut in consumption of energy and demand, affected the company. 711 The clause provided as follows: "6(a)(i): In respect of electrical energy consumed by all large and heavy power industrial consumers receiving power at 33 kv. and above excepting fertilizers, from the U.P.S.E.B. a cut of 50 per cent in their monthly consumption of electricity both in respect of energy and demand shall be exercised: Provided that where any such industrial consumer has his own source of generation of energy which alone enables him to obtain 50 per cent or more of his total consumption, then a cut of 100 per cent in the energy supplied by the UPSEB shall be exercised. " Being aggrieved by the compulsory cut imposed by the Government the company filed its third writ petition against the order. The company 's earlier writ petitions were dismissed as withdrawn. The High Court took the view: (a) that it was the statutory obligation of the UPSEB to supply electrical energy to a consumer and held that the Pipri Bus Bar was a "distributing Main" under s.2(o) and was an electricity supply line as defined in s.2(f) of the Act; (b) section 22B of the Act did not confer power on the State Governments to cut off supply of energy to existing consumers or to issue an order that certain preferences will be followed in supplying energy, (c) though the company deserved the writ, it could not be said that UPSEB had deliberately under utilised its generation capacity, and held the first proviso to Clause 6(a)(i) of the order ultra vires, quashed it and directed the UPSEB to supply electrical energy to the company in accordance with law, without taking into consideration, the provisions of the said proviso. Appeals were filed in this Court by the State and the Company, the State being aggrieved because the High Court had interfered with the U.P. Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977 dated September 19, 1977 made under section 22B of the Electricity Supply Act, 1910 and the Company felt aggrieved on the ground that the High Court had not granted all the reliefs which it had claimed in its petition under article 226 of the Constitution. In the appeals it was contended: (a) Only the energy which was generated by the Board could be the subject matter of an order under section 22B of the Act and it was not permissible for the State to take into account the energy generated by the Company for its own use. (b) Sub section (1) of section 22B of the Act was confined to a licensee and would not be applicable to the energy supplied by a sanction holder under section 28. (c) The only permissible preference was that under s.22A in favour of an establishment mentioned in it and the preference shown to individual consumers was illegal. (d) The validity of the Order, which was by way of subordinate legislation, was open to judicial scrutiny; the subjective satisfaction of the State Government in making it was open to challenge in a court of law, the order suffered from the vice of malice in law; it had been made in the colourable exercise of 712 the power under section 22B of the Act simply to compel the company to agree to the payment of a higher rate for the supply of energy to it. While making the order the State Government failed to take into consideration the facts that the production of aluminium was of considerable importance to the national economy and that the Board was capable of generating more energy but was not doing so. The issue of the Order was really a colourable exercise of the State Government 's power under section 22B of the Act as power was supplied indiscriminately to new consumers after imposing a cut on the Company 's consumption of energy. (e) The Board had deliberately reduced its thermal generation. ^ HELD: 1. The High Court erred in taking the view that the Pipri Bus Bar, which was composed of a set of conductors which were made up of thick aluminium core steel reinforced cables, was a 'distributing main ' under section 2(e) of the Act and was an electric supply line as defined in section 2(f) and that cl. VI of the Schedule to the Act would be fully applicable to the Board in so far as its obligation to the Company was concerned. In view of the second proviso of section 26 of the Act of 1948, the provisions of cl. VI of the Schedule to the Act could apply to the U.P.S.E.B. in respect of that area only where distribution mains had been laid by the Board and the supply of energy through any of them had commenced. [724B F] The High Court, therefore, erred in taking the view that the Board was bound by the term of cl. VI of the Schedule to the Act to supply energy to the Company within one month of the making of a requisition or within such longer period as the Electrical Inspector might allow. But even if the Board was under an obligation to supply energy to every person, the fact nevertheless remained that the State Government had the over riding power to provide, by order made under section 22B of the Act, for regulating the supply, distribution, consumption or use thereof. Sub section (2) of that section categorically states that, without prejudice to the generality of the power under sub section (1), the order may direct the Board not to comply with any contract, agreement or requisition for the supply of energy. [725B D] 2. Sub section (1) of section 28 of the Act in terms refers to and deals with, engaging by a non licensee, in the business of supplying energy to the "public". It was, therefore, futile to contend that what was generated by the Renusagar Power Company was not meant for supply to the public, but was the Company 's own energy. It is true that generation became, in the circumstances, the "captive" generation for the use of the Company, but that was far from saying that, in the eye of law, it was not energy meant for supply to the public or that it was not amenable to control under section 22B. It was therefore also liable to equitable distribution by an order under section 22B of the Act. [725G 726A] 3. The expression "energy" had been defined by cl. (g) of section 2 of the Act to mean electrical energy, generated, transmitted or supplied for any purpose or used for any purpose except the transmission of a message. It was therefore a pervading definition and there was no reason why energy generated and supplied under section 28 of the Act should not fall within its sweep. [726B C] 4. Though the use of the article "the" in sub section (2) was not quite appropriate, there was no justification for the argument that section 22B was applicable only to licensees and not to a sanction holder under section 28. [727C] 713 5. What section 22B of the Act authorised the State Government to do, was to make an order providing for 'regulating" the supply, distribution, consumption or use of energy. [727D] 6. A distinction between 'regulation ' and 'restriction ' or 'prohibition ' had always been drawn. 'Regulation ' promotes the freedom or the facility which is required to be regulated in the interest of all concerned, whereas 'prohibition ' obstructs or shuts off, or denies it to those to whom it is applied. The High Court went wrong in thinking that the order had the effect of prohibiting the supply of energy to the Company, which was an 'exciting consumer '. [727G 728C] Municipal Corporation of the City of Toronto vs Virgo, ; Attorney General for Ontario vs Attorney General for the Dominion and the Distillers and Brewers ' Association of Ontario, ; Birmingham and Midland Motor Omnibus Co. Ltd. vs Worcestershire County Council, Tarr vs Tarr. ; The Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan & Ors., [1963] 1 SCR 491; State of Mysore vs H. Sanjeeviah, ; ; Fatehchand Himmatlal & Ors. vs State of Maharashtra etc. ; at p. 851. 7. What had been ordered was no more than a cut of 50 per cent in the monthly consumption of electricity and not a total prohibition of consumption of energy. That was a step in the direction of regulating the consumption of energy, and not a total prohibition as envisaged in the proviso to cl. 6(a) (i) of the Order. [728E] 8. The proviso operates in a special or particular field and for a particular purpose where it was considered necessary for regulating the supply etc., of the energy in the interest of the other consumers, for section 22B was mean to maintain the supply and secure the equitable distribution of energy to all concerned. The High Court did not properly appreciate that aspect of the matter. [728F] 9. Large and heavy industrial consumers of the category in cl. 6(a)(i) are a class by themselves and it is hardly permissible for them to complain that the small preference shown to agriculturists in supplying energy for their water pumps or tube wells, or in energising State tube wells, supplying water to them, or the supply of energy to small scale industries had really created a privileged class of consumers or brought into existence any such concept of priorities as to run counter to or defeat the objective of bringing about the equitable distribution of energy by an order under section 22B. The High Court had no real justification for recording an adverse finding against the State on the question of the so called preference or priorities. [729G H, 730B] 10. There was no doubt that the State Government formed its opinion about the necessity and expediency of making the Order for the purpose of maintaining the supply and securing the equitable distribution of energy at a time when that was called for and this Court cannot sit as a Court of appeal to examine any and every argument in an attempt to show that the opinion of the State Government was vitiated for one fanciful reason or the other. [731 G H] 11. Although the U.P. Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977, had been made on the ground that the State Government was of the opinion that it was necessary and expedient for main 714 taining the supply and securing the equitable distribution of electrical energy, to provide for regulating the supply, distribution, consumption and use thereof, it did not deal with all those matters in detail. In fact it may well be said to be an order relating essentially to compulsory cut in the consumption of energy. But that cannot detract from the basic fact that the order had the sanction of section 22B of the Act and subserved the main purpose thereof. Therefore its validity was not open to challenge as a piece of subordinate legislation. [732G 733B] 12. Malice in law is another aspect of the doctrine of ultra vires. An offending Act can be condemned simply, for the reason that it is unauthorised. Bad faith has often been treated as interchangeable with unreasonableness and taking a decision on extraneous considerations. In that sense, it is not really a distinct ground of invalidity. It is well settled that if a discretionary power has been exercised for an 'unauthorised purpose ' that is enough to invite the Court 's review. [733 D] Roncarelli vs Duplessis, p. 141 (Canada Law Reports); referred to. In the instant case, the Company had not been able to establish malice in law, merely because of what the Chief Secretary said in his press statement dated July 8, 1977, or what the Minister informed the Assemble. It may well be that the new State Government was dissatisfied with the new agreement which had been entered into at the instance of the political party which was then in power, but it could not be said that the new Minister 's desire to examining the validity or propriety of that agreement arose out of any extraneous or improper consideration so as to amount to malice in law. [734H 735A] 13. Although the High Court arrived at the conclusion that the company deserved the writ which it granted, it did not find it possible to hold that the UPSEB, had deliberately under utilised its generation capacity. That was a finding of fact which did not call for interference. [736E] 14. As long as the dominant motive was proper and reasonable, and was not sullied by a mere pretext, the Order based on it would be valid when it was well within the due scope and policy of the Act and was an honest attempt to deal with the situation for which the power to make the order had been granted by the Act. There was thus no justification for the argument that there was malice in law on the part of the State Government in making the order. [736G, F] 15. That distribution can be said to be "equitable" which is "just and right under all the circumstances of the particular case". The High Court had recorded a finding that there was shortage in the generation of energy when the order was made. The fact remains that the demand for energy was far in excess of the supply from all sources available to the UPSEB. It had also been well established that a situation had arisen when it became necessary to obtain an order from the State Government about the course of action to be adopted by the Board. Self contained notes were therefore drawn up in March, 1977 and on May 24, 1977. June 28, 1977 and August 26, 1977, which were quite detailed and objective and led to the making of the Order. The Order was a genuine attempt to secure equitable distribution of energy. It was true that the Company was the worst sufferer under cl. 6 (a)(i) of the Order, but then it was also the greatest consumer. [737C F] 715 16. From the Chief Secretary 's letter dated November 20, 1968 it appeared that the State Government had assured the Company that it would meet the interim requirement of the Company for 2 or 3 years from the UPSEB and facilitate the parallel running of the Company 's new power station in addition to the station which had been set up at Renusagar. But the State was not a party to the agreement dated November 30, 1976 for the supply of additional 30mw. because the agreement was made between the Company and the UPSEB. It was expressly stated in that agreement that it would be subject to the provisions of the Electricity Acts of 1910 and 1948 and the rules and regulations thereunder, including the amendments thereto. Care was also taken to provide that the UPSEB shall not be responsible for damages or diminutions in the supply of energy according to the orders issued by the State Government. A similar provision was made in the earlier agreement of 1959. In the Board 's letter to the Company dated September 2, 1972 reference was specifically made to the State Government 's power to "control the distribution and consumption of energy under section 22B of the ." [739A D] 17. Decisions in the matter of restrictions to be imposed on the consumption of energy on account of acute shortage of energy in the State, were taken by the different State Governments, including the Governor 's Advisors, and it cannot be said that the cuts were imposed suddenly, or without due regard to the company 's difficulties in reducing its consumption of energy in the manner directed by the order. It cannot therefore, be said that the State wantonly disregarded its contractual obligation to the company. [739E F] 18. Sub section (2) of section 22B of the Act specifically provided that it was permissible for the State Government to direct by the order that the UPSEB shall not comply with the provisions inter alia of any contract made by it. A direction to that effect was expressly made in cl. 11 of the Order, and so it is not permissible for the company to complain on that account. [739G] 19. Craics on Statute Law (7th Edn.) pages 357 58 has mentioned six different classes of enactments which are considered as having ceased to be in force. These six have been mentioned as the enactments which are selected for inclusion in the Statute Law Revision Acts of England as having ceased to be in force otherwise than by express repeal, or having by lapse of time or otherwise become unnecessary. [740G, 741D] The question is whether the order could be said to have "spent" itself or become "obsolete". Whether a piece of legislation has spent itself or exhausted in operation by the accomplishment of the purpose for which it was passed, or whether the state of things contemplated by the enactment has ceased to exist are essentially questions of fact for the legislature to examine, and no vested right exists in a citizen to ask for a declaration that the law has been impliedly repealed on any such ground. [741E F] 20. The power to legislate is both positive in the sense of making a law, and negative in the sense of repealing a law or making it imperative. In either case it is the power of the legislature, and should lie where it belongs. In an extreme and a clear case, no doubt, an antiquated law may be said to have become obsolete the more so if it is a penal law and has become incapable of user by a drastic change in the circumstances. But the judge of the change should be the legislature, and courts are not expected to undertake 716 that duty unless that becomes unavoidable and the circumstances are so apparent as to lead to one and only one conclusion. This is equally so in regard to the delegated or subordinate legislation. [741G 742A] Elwood Hamilton vs Kentucky Distilleries & Warehouse Co., ; ; Chastleton Corporation vs A. Leftwich Sinclair, ; ; Nashville, Chattanooga & St. Louis Railway vs Herbert section Walters, ; ; The Union of India vs Ram Kanwar & Ors., ; ; referred to. The Petition of the Earl of Antrim & 11 Other Irish Peers, ; distinguished. The High Court found three facts (i) the shortage in the reservoirs for generation of hydel energy had ceased, (ii) further supply of energy was available from newly commissioned units, and (iii) fresh power connection had been given by the UPSEB, but lost sight of the important fact that it was all along the case of the State that hydel energy was only one third of the total generation, and that generation of thermal energy which met two third of the total requirement had declined for reasons beyond the control of U.P.S.E.B. The High court did not therefore undertake a careful examination of the facts, and took some new connections into consideration without attempting to examine their magnitude and effect on the overall generation and availability of energy from all the sources. The High Court therefore erred in taking the view that the continuance of the Order was no longer justified. Even so, the High Court abstained from striking down the whole of the Order and merely declared that the provision of the first proviso to cl. 6(a) (i) was ultra vires, and quashed it. [743C F] 22. Even though the proviso is valid and has wrongly been quashed by the High Court, it is not necessary to restore it in view of the statement of the Solicitor General, so that it shall not be deemed to form part of cl. 6(a)(i) of the Order. But it there is deterioration in the generation of energy again, or there are other sufficient reasons, within the purview of section 22B of the Act to reinsert the proviso, in the present or modified form, it would be permissible for the State Government to do so accordingly to the law. [743G H, 744C]

Appeal No.389 of 1956. 297 Appeal by special leave from the judgment and order dated April 19, 1955, of the Allahabad High Court in Agricultural Income tax Miscellaneous Case No. 202 of 1952. G. section Pathak and G. C. Mathur, for the appellants. K. L. Misra, Advocate General of Uttar Pradesh, and C. P. Lal, for the respondent. September 4. The Judgment of the Court was delivered by BHAGWATI, J. This appeal with special leave against the judgment of the High Court of Judicature at Allahabad raises a question of the interpretation of section 11(1) of the U.P. Agricultural Income tax Act, 1948, Act III of 1949 (hereinafter referred to as "the Act"). The appellants are the trustees of the estate settled on trust under the last will and testament dated May 17,1917, of one J. J. Holdsworth which, inter alia, comprised of a certain zamindari estate known as the Lehra Estate situate in the District of Gorakhpur, Uttar Pradesh. The clauses of the will so far as they are relevant for the purpose of this appeal provided that the trustees were to take possession of all real property in the United Provinces of Agra and Oudh and elsewhere in British India (including the houses at Lehra and Gorakhpur and the grounds thereof) and all live and dead stock in or about his estate in British India or any buildings thereon and the contents of any houses or stabling in British India belonging to him (which was called his estate) and manage the same in all respects and in such manner as they shall deem most advan. tageous and with all the powers of absolute owners. The trustees were to stand possessed of the net rents and profits of the settled estate after payment of the Government land revenue tax, and of all management expenses, upon trust to pay thereout certain annuities to 12 annuitants therein mentioned. If the net rents and profits of the said estate were less than seventy thousand rupees in any year or if the said estate or any portion thereof shall be sold at less than twenty years purchase of the net rent of seventy thousand rupees or 298 an equivalent proportion thereof in respect of the proportion so sold, the annuities bequeathed as above and for the time being payable except annuities Nos. (1), (2) and (3) were to abate proportionately and no such annuitant was entitled to have the deficiency of his or her annuity made good out of the rents and profits of the said estate in respect of any subsequent year. If there was no survivor alive then it was to go William Orlando Holdsworth, the son of the testator. Seven of the said annuitants died and at the relevant period the following annuities werepayable: (i) Mrs. J. C. Holdsworthpound 2,500/ (ii) Mr. W. 0. Holdsworthpound 1,000/ (iii) Miss Lucy Marion Holdsworthpound 50/ (iv) Lt. Col. L. R. J. C. Wilkinsonpound 500/ (v) Mr. Horace Claud Holdsworthpound 400/ The trustees entered upon the trust and managed the trust properties in accordance with the terms of the said will. The Act came into force in 1949 and a notice of assessment of agricultural income tax was issued to the trustees for the year 1357 Fasli (1949 50). The Additional Collector, Gorakhpur, the assessing authority for the area in question, by his order dated December 14, 1950, assessed the ' trustees to agricultural income tax upon the total agricultural income received by them, overruling their contention that the tax should be computed in accordance with the method of computation laid down in section 11(1) of the Act and that they should be called upon to pay the aggregate of the sums payable as agricultural income tax by each of the five annuitants. The trustees preferred an appeal before the Agricultural Income tax Commissioner, Lucknow, who by an order dated November 22, 1951, upheld the order of the Additional Collector. He observed that the beneficiaries were neither jointly interested in the land held by the trustees nor in the agricultural income derived therefrom, and that the agricultural income of the Lehra Estate accrued to the trustees and not to the beneficiaries directly as it left the hands of the various tenants who paid rent or from self cultivation that was done by the trustees themselves. , 299 The trustees then moved an application under a. 24 (2) of the Act before the Agricultural Income tax Board, U.P., for reference of certain questions of law to the High Court for its decision. The said Board however decided to act, under the third proviso to section 24(2) of the Act and to considerthe questions of law itself instead of referring them to the High Court for its decision. In the exercise of this power the Board held inter alia that the entire property vested in the trustees and that the latter could not claim the benefit of section 11 of the Act and refused to make a reference. The trustees moved an application under section 24(4) of the Act before the High Court of Judicature at Allahabad praying that the High Court may be pleased to require the Agricultural Income tax Board, U.P., Lucknow, to state a case and to refer to the High Court certain questions of law arising in the case. The application was allowed by the High Court on February 5, 1953, and an order was passed directing the said Board to refer the relevant question of law to the High Court. Accordingly a statement of case was drawn up by the Agricultural Income tax Board and submitted to the High Court and the following question of law was referred for its decision: " Whether on the facts and in the circumstances of the case the trustees can be said to be holding land on behalf of beneficiaries and can the beneficiaries be said to be jointly interested in the land or in the agricultural income derived therefrom within the meaning of Section 11 (1) of the U.P. Agricultural Income tax Act, 1948 ?" The said reference was heard by the High Court and by its judgment dated April 19, 1955, the High Court held that the trustees could be said to be holding land on behalf of beneficiaries but the beneficiaries could not be said to be jointly interested in the land or in the agricultural income derived therefrom within the meaning of section 1 1 (1) of the Act and accordingly answered the first part of the question in the affirmative and the latter half in the negative. 300 Thereupon the trustees filed an application before the High Court under article 133(1) of the Constitution for leave to appeal to this Court which was rejected with the result that the trustees applied for and obtained on April 16, 1956, special leave to appeal against the judgment of the High Court. Section 11(1) of the Act which falls to be considered by us runs as under: " Where any person holds land, from which agricultural income is derived, as a common manager appointed under any law for the time being in force or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom, the aggregate of the sums payable as agricultural income tax by each person on the agricultural income derived from such land and, received by him, shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural income tax so payable by each such person and shall be liable to pay the same. " This section concerns itself with the mode of computation of agricultural income tax in certain cases. The charging section is however section 3 of the Act which talks of agricultural income tax and super tax at the rate or rates specified in the schedule to be charged for each year in accordance with, and subject to the provisions of the Act. and rules framed under cls. (a), (b) and (c) of sub section (2) of section 44, on the total agricultural income of the previous year of every person. "1 Person " is defined in section 2(11) to mean an individual or association of individuals, owning or holding property for himself or for any other, or partly for his own benefit and partly for that of another, either as owner, trustee, receiver, manager, administrator, or executor or in any capacity recognized by law, and includes an undivided Hindu family, firm or company but not to include a local authority. According to the above definition the trustees before us would be included in the definition of " person " and would as such be liable to agricultural income tax under the 301 charging section. That liability to pay income tax would however be on the trustees as a "person" without anything more. Where however section 11(1) comes into operation the agricultural income tax would be assessed not on the ordinary computation but on the computation specified therein which has the effect of reducing the incidence of the tax by reason of the person being liable to pay only the aggregate of the sums payable as agricultural income tax by each of the persons jointly interested in such land or in the agricultural income derived therefrom. Two conditions are requisite before section 11 (1) can come into operation: (1) that the person holds land from which agricultural income is derived, as a common manager appointed under any law for the time being in force or under any agreement or as receiver, administrator or the like on behalf of other persons and (2) such persons should be jointly interested in such land or in the agricultural income derived therefrom. If both these conditions are satisfied the person holding such land is liable to be assessed in the manner specified in section 11(1) of the Act and the aggregate of the sums payable as agricultural income tax by each of these persons jointly interested on his share of the agricultural income derived from such land and actually received by him is to be assessed on such common manager, receiver, administrator or the like, and the latter is to be deemed the assessee in respect of the agricultural income tax so payable by each such person and is liable to pay the same. It is to be noted that the primary liability for the payment of agricultural income tax is on the person who is interested in the land or in the agricultural income derived therefrom. The incidence of the tax is on that person and the amount of tax is determined with reference to the aggregate income derived by him. Inasmuch as however such land is held by some other person who@ is a common manager, receiver, administrator or the like on behalf of such person and others jointly interested in such land or in the agricultural income derived therefrom, the agricultural income tax is assessed on such common manager, 302 receiver, administrator or the like instead of the assessment being made on each of such persons who is jointly interested in such land or, in the agricultural income derived therefrom. Section 11.(1) prescribes a mode of assessing such common manager, receiver, administrator or the like and he is deemed to be the assessee in respect of agricultural income tax so payable by each such person and is liable to pay the same. Such common manager, receiver, administrator or the like would certainly be covered by the definition of person contained in section 2(11) of the Act because he would be holding property for others as receiver, manager, administrator or the like and would be liable to pay the agricultural income tax on the agricultural income derived by him from the land which he thus held. If there was nothing more, the incidence of the tax would be on the total income which has come to his hands. But, in so far as he holds the land from which agricultural income is derived as such common manager, receiver, administrator or the like on behalf of the persons jointly interested in such land or in the agricultural income derived therefrom, the agricultural income tax is levied not on the computation of the whole agricultural income which has come to his hands but if; limited to the aggregate of the sums payable as agricultural income tax by each of the persons jointly interested in such land or in the agricultural income derived therefrom and received by him. The agricultural income tax in such cases is determined with reference to each of the persons jointly interested in such land or in the agricultural income derived therefrom, and the agricultural income tax payable by each of such persons is computed on the actual amount of the agricultural income derived from such land and received by him and the aggregate of the sums payable as agricultural income tax by each of such persons is assessed on such common manager, receiver, administrator or the like with the result that he pays agricultural income tax which would be substantially lower than what he would have otherwise had to pay if the computation of such tax was on the total agricultural income 303 derived from such land and come to his hands. Such common manager, receiver, administrator or the like would in the course of management or administration of such land debit to the account of each such person an aliquot share of the whole of the agricultural income tax paid by him. If such common manager, receiver, administrator or the like were assessed on the total income derived from the land which comes to his hands, the amount thus debited to each of such persons would be larger than the amount which the latter would have to pay by way of agricultural income tax, if agricultural income tax was levied on the actual amount of agricultural income derived from such land and received by him as falling to his share. This provision therefore is designed to lower the incidence of the agricultural income tax upon each such person and such common manager, receiver, administrator or the like by virtue of these provisions is deemed to be the assessee in respect of agricultural income tax so payable by each such person and is made liable to pay the same. This position however is not available unless and until such common manager, receiver, administrator or the like holds, the land from which agricultural income is derived on behalf of persons jointly interested in such land or in the agricultural income derived therefrom. Such common manager, receiver, administrator or the like should hold the land on behalf of these persons and not on his own behalf. The very words " on behalf of " predicate that the land is held by such common manager, receiver, administrator or the like not as the owner but as the agent or representative of these persons and he manages or administers the same either in accordance with law or the terms of the agreement arrived at between the parties. There is no vestige of ownership in him and all that he is entitled to do is to manage or administer the land on behalf of persons who are jointly interested in the agricultural income derived therefrom. This could be predicated of receivers managers, administrators or the like but cannot be predicated of owners or 304 trustees who are equally with the manager, receiver, administrator or the like included within the definition of " person " contained in section 2(11) of the Act. The case of the owner does not require any elaboration. He holds the land on his own behalf and also for his own benefit. Ho certainly cannot come within the scope of section 1 1 (1) of the Act. The position of a trustee is also similar to that of the owner. A trust is thus defined in English Law: " A trust in the modern and confined sense of the word, is a confidence reposed in a person with respect to property of which he has possession or over which he can exercise a power to the intent that he may hold the property or exercise the power for the benefit of some other person or object." (Vide Halsbury 's Laws of England, Hailsham Ed., Vol. 33, p. 87, para. 140). " The property affected by the confidence is called the trust property or trust estate. It is usually in the legal ownership or under the legal control of the trustee. The cestui que trust is said to have a beneficial or equitable interest in it." (Ibid p. 89 para. A trustee is thus usually the legal owner of the trust property or the trust estate and holds it for the benefit of the certui que trust. Reliance was however placed upon an observation of Sir John Romilly, M. R., in Lister vs Pickford (1) " A trustee, who is in possession of land is so on behalf of his cestuis que trust, and his making a mistake as to the persons who are really his cestuis que trust cannot affect the question. " What the Court was considering there was the question of limitation and adverse possession and these observations were made in that context. It is significant however to note the further observations of the Master of the Rolls in that very context at p. 583: " Suppose that they had imagined bona fide that they themselves were personally entitled to the property, and that they were not trustees of it for anyone, it would, nevertheless, have been certain that they would (1) (1865)34 Beav. 576, 582; ; 305 have been trustees for the cestuis que trust, and no time would run while they were in such possession. The legal estate was vested in them, no other person could have maintained an ejectment against them; they are bound to know the law, they ought to have taken possession as soon as they saw who were the real beneficiary devisees, and, being in possession, they ought to have applied the proper proportion of the rents for the benefit of such residuary devisees. " The passage quoted above makes it abundantly clear that the legal estate is vested in the trustees and they hold it for the benefit of the beneficiaries. Whatever be the position in English Law, the (II of 1882) is clear and categoric on this point. Section 3 of that Act defines a Trust as an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner: the person who accepts the confidence is called the "trustee": the person for whose benefit the confidence is accepted is called the "beneficiary": "the beneficial interest" or "interest" of the beneficiary is his right against the trustee as owner of the trust property; the subject matter of the trust is called "trust property" or "trust money. " These definitions emphasize that the trustee is the owner of the trust property and the beneficiary only has a right against the trustee as owner of the trust property. The trustee is thus the legal owner of the trust property and the property vests in him as such. He no doubt holds the trust property for the benefit of the beneficiaries but he does not hold it on their behalf. The expressions " for the benefit of " and " on behalf of " are not synonymous with each other. They convey different meanings. The former connotes a benefit which is enjoyed by another thus bringing in a relationship as between a trustee and a beneficiary or cestui que trust, the latter connotes an agency which brings about a relationship as between principal and agent between the parties, one of whom is acting on behalf of another. Section 11(1) therefore can only 39 306 come into operation where the land from which agricultural income is derived is held by such common manager, receiver, administrator or the like on behalf of, in other words, as agent or representative of, persons jointly interested in such land or in the agricultural income derived therefrom. Even though such persons were the beneficiaries cestui que trust under a deed of trust, they would not be comprised within the category of persons on whose behalf such land is held by the trustees and the trustees would not be included in the description of common manager, receiver, administrator or the like so as to attract the operation of section 11(1). Trustees do not hold the land from which agricultural income is derived on behalf of the benefi ciaries but they hold it in their own right though for the benefit of the beneficiaries. The beneficiaries are also not necessarily persons who are jointly interested in such land or in the agricultural income derived therefrom. The term "jointly interested" is well known in law and predicates an undivided interest in the land or in the agricultural income derived therefrom as distinguished from a separate or an individual interest therein. If on a true reading of the provisions of the deed of trust the interest which is created in the beneficiaries is a separate or individual interest of each of the beneficiaries in the land or in the agricultural income derived therefrom, merely because they have a common interest therein, that cannot make that interest a joint interest in the land or in the agricultural income derived therefrom. The words "jointly interested" have got to be understood in their legal sense and having been used in a statute are not capable of being understood in a popular sense as meaning a common interest or an interest enjoyed by one person in common with another or others. If regard be bad to the above construction put upon the terms of section 11 (1) of the Act, it follows that the appellants who were trustees of the deed of trust in the present case did not hold the land from which agricultural income is derived as common manager, receiver, administrator or the like on behalf of the annuitants 307 and the annuitants were not jointly interested in the land or in the agricultural income derived therefrom with the result that section 11(1) of the Act did not come into operation at all. The appellants were the legal owners of the trust estate and did not hold the land from which agricultural income was derived "on behalf of" the annuitants. Each of the annuitants, moreover, was separately or individually interested in the agricultural income derived from the land comprised in the trust estate to the extent of the annuity payable to him under the deed of trust and the interest of one annuitant was not affected by whatever happened to the interest of the other. There was thus no fulfilment of either of the two conditions pre requisite before section 11(1) of the Act could come into operation at all. The learned judges of the High Court were therefore in error in answering the first part of the question referred to them in the affirmative, though their answer to the latter part in the negative was correct. We are of opinion that both the parts of the question should have been answered by them in the negative. The ultimate result however is the same and this appeal of the appellants is therefore bound to fail. The appeal will accordingly stand dismissed with costs. Appeal dismissed.

Section 11( 1) of the U. P. Agricultural Income tax Act, 1948, provided: "Where any person holds land, from which agricultural income is derived, as a common manager appointed under any law for the time being in force or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom, the aggregate of the sums payable as agricultural income tax by each person on the agricultural income derived from such land and received by him, shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural income tax so payable by each such person and shall be liable to pay the same. " The appellants were the trustees of an estate settled on trust under a will which inter alia provided that the trustees were to take possession of the trust properties and to manage the same with all the powers of absolute owners and to pay the annuities to certain persons. The assessing authority assessed the appellants to agricultural income tax upon the total agricultural income received by them, overruling their contention that the tax should be computed in accordance with the method of computation laid down in section 11(1) of the Act and that they should be called upon to pay the aggregate of the sums payable as agricultural income tax by each of the annuitants. Held: (1) that the trustees who were the legal owners of the trust property did not hold the land from which agricultural income was derived, on behalf of the annuitants and that each of the annuitants was separately or individually interested in the agricultural income derived from the land comprised in the trust estate to the extent of the annuity payable to him. (2) that section 11(1) of the Act was not applicable to the case and that the appellants were liable to pay agricultural income tax upon the total agricultural income received by them

Civil Appeal No 837 of 1975. Appeal by special leave from the judgment and order dated 6th March,, 1975 of the Andhra Pradesh High Court in Writ Appeal No. 96/75. A. V. Koteswara Rao and B. Kanta Rao, for the appellant. P. Ram Reddy and P. P. Rao, for the respondent. The Judgment of the Court was delivered by ALAGIRISWAMI J. On 15 7 1974 the appellant applied for a licence under the Andhra Pradesh (Andhra Area) Places of Public Resort Act, 1888 for conducting games of skill and dances and other quality performances in a village adjoining the district headquarters ' town of Nellore, with its 12 cinema theaters, in Andhra Pradesh. That Act has been extended to this Panchayat. On 25 9 1974 the licence was refused by the Executive Officer of the Panchayat. Its grant had been objected to by the Superintendent of Police as also two associations called Mitramandali and the Town Yuvajanasangham. But on appeal to the village Panchayat as provided in section 129 of the Panchayats Act a licence was granted on 1st October, 1974. The Mitramandali made a representation to the Chief Minister and the District Panchayat officer, the Deputy Superintendent of Police, the Superintendent of Police, the Tehsildar, and the Revenue Divisional officer also reported against the grant of licence. On 21st January 1975 the Additional District Magistrate issued a notice to the appellant to show cause why the licence issued to him should not be cancelled. The appellant had in the meanwhile put up semi permanent structures as required under the terms of the licence which even according to the Executive Engineer, Zila Parishad, Nellore should have cost him Rs. 27,000/ . He commenced his business on 22nd January 1975 and the show cause notice issued by the District Magistrate reached him on the 25th. He sent a reply on the 27th and on the 28th the licence was cancelled. The appellant 's writ petition questioning the cancellation was dismissed by a Single Judge of the Andhra Pradesh High Court, so was an appeal against that dismissal by a Division Bench. This appeal has been filed in pursuance of special leave granted by this Court. In his reply to the show cause notice the appellant had asked for copies of the various documents on the basis of which the show cause notice had been issued and stated that in their absence he was not in a position to submit a detailed explanation in reply and he was, however,, offering a tentative explanation promising a fuller and detailed 4 L1276SCI/75 40 explanation after the receipt of the copies. In particular in respect of a reference to a murder in the show cause notice he stated that it took place in the premises of another amusement park long after it was closed for want of licence. The District Magistrate considered that the explanation offered was a routine one and was not convincing. Section 12 of the Andhra Pradesh (Andhra Area) Places of public Resort Act enables the District Magistrate to call for and examine the record, of any proceeding taken under the Act, to call for any report in connection therewith, to make or cause to be made any further enquiry and to pass any order which the authority holding the proceeding might have passed. Under section 9 any authority granting a licence may for reasons recorded in writing, revoke or suspend the same when he has reason to believe: (a) that the licence has been fraudulently obtained; (b) that the enclosed place or building has been used for other purposes of public resort or entertainment than that for which the licence was granted; and (c) that the place or building can no longer be safely used for the purpose for which the licence was granted. Undoubtedly none of the reasons applied in this case. Under section 7 if the authority is satisfied (a) that the enclosed place or building may safely be used for the purpose of public resort or entertainment proposed; (b) that no objection, arising from its situation, ownership, or the purpose proposed, exists, he shall grant to the applicant a written licence. The only ground in this section applicable to the present case would be 'the purpose pro posed '. The argument before us was that the power of the District Magistrate to revoke the licence under section 12 can be for only any of the grounds mentioned in section 9. The power under section 12 is to pass any order which the authority holding the proceeding might have passed" that is, an order granting revoking or suspending. In other words, if the authority competent to grant the licence refuses, the District Magistrate in exercise of his power under section 12 may grant the licence and vice versa, Similarly he can revoke or suspend the licence granted by the authority or where the authority has revoked or suspended the licence cancel that order. In other words the power under section 12 is to pass the kind of order which might be passed under section 7 or 9. The reasons for which this power can he exercised are not restricted to those mentioned in section 7 or 9. The revisional power under section 12 is not a limited one. It is as wide as that of the original authority. The considerations which the District Magistrate took into account in revoking the appellant 's licence were the same as those which were before the Village Panchayat when it decided to grant the licence. The revising authority is entitled on the same material to take a view different from that of the authority whose order is revised. 41 But the main ground of attack against the order of cancellation is that in making it the district Magistrate had failed to observe the principles of natural justice. The order that the District Magistrate passed is a quasi judicial order and therefore the appellant is right in contending that the principles of natural justice should have been followed before that order was passed. It is now well established by decisions of this Court that such is the requirement of law even where the statute in question itself does not so provide. It is also well established that the principles of natural justice do not necessarily conform to a fixed formula, nor is it a procrustean bed into which all proceedings must be fitted. The principles of natural justice will always depend upon the facts of each case. The learned Judges of the High Court examined the various documents the copies of which had been asked for by the appellant and came to the conclusion that the show cause notice issued to him contained a summary of all those documents which was sufficient to enable the appellant to make his representation. We cannot say that this conclusion is wrong. It is not always necessary that the documents asked for should itself be furnished provided the substance of those documents is furnished, always provided, however, that the summary is not misleading. Such is not the case here. But when the appellant asked for the original documents he could at least have been told that he had already been given a summary of the documents which was sufficient to enable him to make his representation and he could make his fuller representation as he had promised in his earlier so called interim reply. The District Magistrate 's characterisation of the interim reply of the appellant as a routine one is not correct. After all the opinion of the Village Panchayat which is a representative body of all the villagers is entitled to great if not greater weight than that of the Mitramandli and the Town Yuvajanasangham, the composition of which or the strength of which we do not know. The Village Panchayat was also competent on a consideration of all the facts to form its own opinion. The opinions of representative bodies should not be lightly brushed aside unless of course there is reason to think that they have acted out of considerations other than relevant. We are of opinion that the order passed by the District Magistrate post haste immediately he received the appellants reply without either giving him the copies asked for or at least telling him that the material already furnished was sufficient to enable him to make his representation and if he had ally further representation to make he could do so offends the principles of natural justice. We are aware that we are dealing with an appeal questioning the proceedings initiated under Article 226 of the Constitution where the power of the court is a limited one, that is to say, limited to cases where there is any error of law apparent on the face of the record. But the observance of the principles of natural justice is fundamental to the discharge of any quasi judicial function. We therefore allow the appeal and set aside the order of the District Magistrate. There will be no order as to costs. P.B.R. Appeal allowed .

Section 12 of the Andhra Pradesh (Andhra Area) Places of Public Resort Act, 1888, empowers the District Magistrate to can for examining the record any of any proceeding taken under the Act to can for any report in connection . therewith, to make or cause to be made any further enquiry and to pass any order which the authority holding the proceeding might have passed. Section 7 of the Act states when the authority concerned could grant a licence Section 9 states when an authority granting a licence could revoke or suspend the same. The appellant was granted a licence for conducting games of skill and dances and other quality performances. Objections having been raised the Additional District Magistrate issued a show cause notice to the appellant In reply the appellant had asked for copies of certain documents on the basis of which the show cause notice had been issued. In the meantime, however the appellant submitted a tentative explanation stating that a detailed explanation would be sent after the receipt of the copies of the documents. Immediately thereafter the District Magistrate cancelled the licence on the ground that the explanation offered was a routine one and was not convincing. The High, Court dismissed the writ petition of the appellant. On appeal to this Court it was contended that (i) the order of cancellation was in violation of the principles of natural justice. and (ii) the District Magistrate could revoke the licence under s.12 only on any of the grounds mentioned in s.9. Allowing the appeal. ^ HELD : 1 (a) The order passed by the District Magistrate immediately after he received the appellant 's reply without either giving him the copies asked for or at least telling him that the material already furnished was sufficient to enable him to make his representation and if he and any further representation to make, he could do so, offends the principles of natural justice. [41 F]. (b) It is now well established by decisions of this Court that an authority making a quasi judicial order should follow the principles of natural Justice before passing an order, even where the statute in question does not so provide. It is also well established that principles of natural justice do not necessarily is l; conform to a fixed formula nor is it a procrustean bed into which all proceedings must be fitted. The principles of natural justice will always depend upon the facts of each case. [41 B]. In the instant case when the appellant asked for the original documents, . he could at least have been told that he had already been given a summary of the documents which was sufficient to enable him to make his representation. The District Magistrate 's characterisation of the interim reply of the t appellant as a routine one is not correct. [41 D E] 2. The revising authority under the Act is entitled on the same material, to take a view different from that of the authority whose order is revised. " The power under section 12 is to pass any order which the authority holding the r 39 proceeding might have passed, that is an order granting, revoking or suspending a licence. If the authority competent to grant a licence refuses, the District Magistrate, in exercise of his powers under section 12, may grant a licence and l ice versa. Similarly, he could revoke or suspend the licence granted by the authority or where the authority has revoked or suspended the licence, cancel that order. The reason for which this power could be exercised are not restricted to those mentioned in section 7 or 9. The revisional power under section 12 is not a limited one. It is as wide as that of the original authority.[40 G H].

Special Leave Petition (Civil) No. 8001 of 1986 From the Judgment and order dated 8.7.1986 of the Allahabad High Court in W.P. No. 9664 of 1986. U.R. Lalit and T. Sridharan for the Petitioner. The Judgment of the Court was delivered by MISRA, J. The short question which arises for consideration in this case is whether a suit is maintainable in a civil court for an injunction restraining the Hearing Authority appointed under section 68 D of the (hereinafter referred to as 'the Act ') from proceedings with the hearing of matters under that provision and from approving a scheme published under section 68 C of the Act either with or without any modification. The petitioner is the holder of a permit issued under Chapter IV of the Act to ply a stage carriage on Bulandshahr Siana Garh Bugrasi Brijghat Bhasians Shambhaoli Babugarh Jadol Jahangirabad route in the State of Uttar Pradesh. The State Transport Undertaking of the State of Uttar Pradesh published a scheme dated March 7, 1975 in the U.P. Gazette dated April 5, 1975 under section 68 C of the Act pro posing to operate its stage carriages to the exclusion of all private operators on the route referred to above. The petitioner filed his objections to the said scheme along with several others. After a number of adjournments the Hearing Authority empowered under section 68 of the Act was able to conclude the proceedings by April 26, 1979 and it is alleged that the Authority in the course of the hearing ob served that it would finalise and approve the scheme by 21.5.1979. Before the Hearing Authority could give its approval to the scheme under section 68 D of Act, the petitioner filed original Suit No. 145 of 1979 on the file of the Civil Judge, Bulandshahr for a declaration that the above scheme published under section 68 C of the Act was illegal, void and ultra vires and for an injunction restraining the defendants in the suit from finalising and approving the scheme and acting upon it after it was published. The State Transport Undertaking, i.e., the Uttar Pradesh State Road Transport Corporation, the State of Uttar Pradesh and the Regional Transport Authority, Meerut were impleaded as the defendents in the suit. The defendants contested the suit. L one of the pleas raised in their written statement was that the suit was 543 not maintainable in a civil court for the reliefs prayed for by the petitioner. During the pendency of the suit the petitioner filed an application before the Civil Court for staying the hearing of the suit till the disposal of a special leave petition before this Court since the question relating to the maintainability of suits of similar nature was involved in the said special leave petition. The learned Civil Judge declined to grant the request of the petitioner and fixed the suit for arguments on November 8, 1985. Aggrieved by the order of the Civil Judge, the petitioner filed a revision petition before the Additional District Judge, Bulandshahr. That revision petition was dismissed. Against the order of Additional District Judge, the petitioner filed a writ petition. On the file of the High Court of Allahabad. That petition was also dismissed. This special leave petition is filed against the order of the High Court of Allahabad. We have heard the learned counsel for the petitioner in this case on the question of maintainability of the suit out of which this petition arises. The question for consideration in this case is, as mentioned above, whether a suit is maintainable in a civil court for an injunction restraining the Hearing Authority under section 68 L) of the Act from proceeding with the hearing and approving the scheme either with or without modification. The contention of the respondents before the trial court was that the suit was not maintainable for the reliefs prayed for by the petitioner since the jurisdiction of the civil courts in such matters was impliedly barred. Chapter IVA of the Act was introduced into the Act by Act 100 of 1956. Section 68 D of the Act provides that the provisions of the Chapter IVA and the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in Chapter IV of the Act or any other law for the time being in force or in any instrument having effect by virtue of any such law. Chapter IVA contains certain special provisions relating to the State Transport Undertakings. A 'State Transport Undertaking ' is defined by section 68 A(b) of the Act as any Undertaking providing road transport J service where such undertaking is carried on by (i) the Central Government or a State Government; (ii) any Road Transport Corporation, established under section 3 of the ; and (iii) any municipality or any corporation or company owned or controlled by the Central Government or one or more State 544 Governments, or by the Central Government and one or more State Governments. Chapter IVA of the Act provides for the preparation and approval of a scheme enabling the State Transport Undertaking to operate road transport services to the exclusion complete or partial of other persons. The procedure laid down for the preparation of the scheme is contained in sections 68 C and 68 D of the Act. Section 68 C of the Act provides that where any State Transport Undertaking is of opinion that for the purpose of providing an efficient, adequate, economical and properly co ordinated road transport service, it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State Transport Undertaking, whether to the exclusion, complete or partial, of other persons or other vise, the State Transport Undertaking may prepare a scheme giving particulars of the nature of the service proposed to be rendered, the area or route proposed to be covered and such other particulars respecting thereto as may be prescribed, and shall cause every such scheme to be published in the official Gazettee and also in such manner as the State Government may direct. Section 68 D of the Act provides that on the publication of any scheme in the official Gazette any person already providing transport facilities by any means along or near the area or route proposed to be covered by the scheme, any association representing persons interested in the provision of road transport facilities recognised in this behalf by the State Government and any local authority or police authority within whose jurisdiction any part of the area or route proposed to be covered by the scheme lies, may within thirty days from the date of its publication in the official Gazette file objections to it before the State Government. The State Government may, after considering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State Transport Undertaking to be heard in the matter if they so desire, approve or modify the scheme. The scheme as approved or modified as stated above shall then be published in the official Gazette by the State Government and the same shall thereupon become final and shall be called the approved scheme and the area or route to which it relates shall be called the notified area or notified route. Under section 68 I of the Act the State Government is authorised to make rules for the purpose of carrying into effect the provisions of this Chapter. The rules which are promulgated provide for the details relating to the manner in which objections or representations can be filed under section 68 D(i) and the procedure to be followed at the hearing of persons who have filed such objections 545 and/or representations and the representatives of the State Transport Undertaking. The rules also provide for the particulars to be incorporated in the scheme published under section 68 C of the Act. From the above provisions it is clear that on the publication of the scheme under section 68 C of the Act any person who is aggrieved by the proposed introduction of the scheme is entitled to file his representations and objections and to appear before the Hearing Authority under section 68 D of the Act and make his submissions in support of his objections or representations. Sub section (ii) of section 68 D of the Act authorises the Hearing Authority to approve the scheme either with or without modification. By necessary implication it can also reject a scheme if it feels that it is not necessary to introduce the scheme. When the scheme is approved or modified under section 68 D of the Act, such approved or modified scheme is required to be published in the official Gazette and on such publication it becomes final. It is thus seen that Parliament has created a special machinery by the provisions contained in Chapter IVA of the Act for bringing jnto force an approved or modified scheme which would have the effect of excluding completely or partially other persons from operating motor service vehicles on any route or in any area. After the scheme become final, as provided in sub section (iii) of section 68 D of Act, the transport authorities concerned can issue permits only in accordance with the scheme and the other provisions contained in Chapter IVA of the Act . This Court in H. C. Narayanappa and Ors. vs The State of Mysore and Ors., ; at page 753 has observed that the scheme approved or modified and published under section 68 D of the Act may properly be regarded as 'law ', within the meaning of Article 19(6) of the Constitution, made by the State excluding private operators from notified routes or notified areas, and immune from the attack that it infringes the fundamental right guaranteed by Article 19(1)(g) of the Constitution. Section 9 of the Code of Civil Procedure, 1908 provides that the courts (subject to the provisions contained therein) have jurisdiction to try all suits of civil nature excepting suits of which their cognizance is either expressly or impliedly barred. It is no doubt true that there is no express provision in the Act taking away the jurisdiction of the civil courts to try a suit in which the validity of the proceedings under Chapter IVA of the Act is called in question. But we are of opinion that the jurisdiction of the civil courts is impliedly barred from entertaining suits of the present nature. The jurisdiction of the State Government (the Hearing Authority under section 68 D of the Act) is exclusive in character and it is not open to a civil court to issue an order of injunction restraining the Hearing Authority from proceeding 546 with the hearing of the case and exercising its statutory functions. Whenever statute uses the expression that a decision of an authority shall be final, the jurisdiction of a civil court to go into the correctness or otherwise of the decision is taken away. We have gone through the plaint presented in this case. It is not disputed that the scheme had been duly published under section 68 C of the Act by an authority which had the power to publish it and that the authority which was hearing the case under section 68 D of the Act had the power to do so. All the contentions urged in the plaint relate to the merits of the scheme and the desirability of bringing the scheme into force. All such objections relating to the merits of a scheme or the desirability of bringing such scheme can be raised by an aggrieved person before the Hearing Authority under section 68 D of the Act and it is for the Hearing Authority to consider such objections and representations and to pass appropriate orders thereon. Where the Statute gives finality to the orders of a special tribunal the civil courts jurisdiction must be held to be excluded insofar as the merits to the case is concerned. If jurisdiction is so excluded, the civil courts have jurisdiction only to examine whether the provisions of the Statute have not been complied with or the tribunal had or had not acted in conformity with the fundamental principles of judicial procedure. In cases of the present nature where invariably reliance is placed by the private operators on Article 19(1)(g) of the Constitution, a writ petition lies before the High Court. In such cases a suit is hardly the remedy which can be availed by them. If suits of this nature are allowed to be entertained, the very object of the several provisions of Chapter IVA of the Act can be frustrated by interested parties by resorting to a civil court with the sole object of delaying the implementation of a scheme. Such attempts should be curbed at the earliest opportunity. The learned Civil Judge was right in declining to stay the further proceedings in the suit. This is a suit which should have been rejected at the threshold under order 7 rule 11 of the Code of Civil Procedure on the ground that it did not disclose a cause of action. We, therefore, do not find any ground to interfere with the orders of the High Court, the District Judge and the Civil Judge. The Civil Judge is directed to dispose of the suit in the light of the observa tions made in this order. The petition fails and is dismissed. P.S.S Petition dismissed.

Section 68 C, occurring in Chapter IVA of the provides for publication of the scheme where any State Transport Undertaking is of opinion that it is necessary in the public interest that road transport services in relation to any area or route be run and operated by such undertaking. Section 68 D(l) provides for filing of objections to the scheme before the State Government, section 68 D(2) for approval or modification of the scheme by the State Government after giving a hearing to objectors, while s.68 D(3) states that the approved or modified scheme when published shall become final. Before the Hearing Authority could give its approval, the petitioner in the Special Leave Petition, a stage carriage permit holder, who had earlier filed objections to the scheme published under section 68 C, filed a civil suit for declaration that the said scheme was illegal, void and ultra vires and for an injunction. It was contended by the defendants respondents that the suit was not maintainable since the jurisdiction of the Civil Courts in such matters was impliedly barred. During the pendency of that suit the petitioner filed an application before the Civil Court for staying the hearing of the suit till the disposal of a special leave petition before the Supreme Court in which question relating to the maintainability of suits of similar nature was involved. The Court declined to grant the request and fixed the suit for arguments. The revision to the District Judge and the writ petition to the High Court preferred by the petitioner were dismissed. In the special leave petition to the Court on the question: Whether a suit is maintainable in a Civil Court for an injunction restraining the Hearing Authority under section 68 D of the from pro 541 ceeding with the hearing and approving the scheme. Dismissing the special leave petition, ^ HELD: The Civil Judge was right in declining to stay further proceedings in the suit. This is a suit which should have been rejected at the threshold under order 7 rule 11 of the Code of Civil Procedure on the ground that it did not disclose a cause of action. [546F G] The Jurisdiction conferred on the hearing authority under s.68D of the is exclusive in character and it is not open to a civil court to issue an order of injunction restraining the said authority from proceeding with the hearing of the case and exercising its statutory functions. [545H; 546A] Whenever a statute uses the expression that a decision of an authority shall be final, the jurisdiction of a civil court to go into the correctness or otherwise of the decision is taken away. The civil courts then have jurisdiction only to examine whether the provisions of the statute have not been complied with or the tribunal had or had not acted in conformity with the fundamental principles of judicial procedure. Their jurisdiction is barred insofar as merits of the case is concerned. [546B;D E] In the instant case the scheme had been duly published under s 68 C by an authority which had the power to publish it and the authority which was hearing the case under s.68 D had the power to do so. All the contentions urged in the plaint related to the merits of the scheme and the desirability of bringing the scheme into force and these can be raised by an aggrieved person before the Hearing Authority under section 68 D of the Act. It is for the Hearing Authority to consider the objections and to pass appropriate orders thereon. [546B D] Parliament has created a special machinery by the provisions contained in Chapter IVA of the Act for bringing into force an approved or modified scheme which would have the effect of excluding completely or partially other persons from operating motor service vehicles on any route or in any area. The very object of enacting that Chapter can be frustrated by interested parties by resorting to a civil court with the sole purpose of delaying the implementation of a scheme if suits as in the instant case are allowed to be entertained. [545C D: 546E F] H.C. Narayanappa and Ors. vs The State of Mysore & Ors., [19601 3 S.C.R. 742 referred to.

Civil Appeal Nos. 2:96 of 1970, 2712 and 2714 of 1972 On appeal by Certificate from the Judgment and Decree dated 12.3.1970 of the ' High Court of the Mysore at Banglore in M F. Appeals No 155 & 168 of 1965. K.N. Bhat and Miss Madhumulchandani for the appellant, in C.A. No. 2196 & Respondent CAs. No. 271 ' 14. K. Rajendra Choudhary for the Respondent in CA No. 2195 & Appellants in CAs. 2713 14. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. In respect of acquisition of land pursuant to notifications issued under section 4(1) of the Land Acquisition Act on November 28, 1957, compensation of Rs. 5250 for the land in section No. 83 and compensation at the rate of Rs. 800 per acre for the land in section No. 74 was awarded by the Land Acquisition Officer. On a reference under section 18 of the Land Acquisition Act, the Civil Judge enhanced the compensation to Rs. 18,000 for the land in section No. 83 and Rs. 14,250 for the land in section No. 74. The High Court, on appeal, further enhanced the compensation to Rs. 8000 per acre for the land in section No 83 and Rs. 2500 per acre for the land in section No. 74. The claimant has filed Civil Appeal No. 2196 of l970 to enhance the compensation and the State of Karnataka has preferred Civil Appeal Nos. 2713 and 2714 of 1972 to reduce the same. We are unable to find any question of principle involved in any of the appeals and accordingly we have no option but to dismiss them, 916 However, in the appeal filed by the claimant, Shri K.N. Bhat, learned counsel, urged that in view of the Land Acquisition Amendment Act, 1984, his client is entitled to be paid solarium of 30% of the compensation instead of the 15% to which he had been held entitled by the lower courts under the unmended Act. He relied open sec. 15(b) and sec. 30(2) of the 1984 Amendment Act which are in the following terms: "15. In Section 23 of the Principal Act, (a) . . . . . . (b) in sub section (2) for the words "fifteen per centum", the words "thirty per centum" shall be substituted." . . . . . . . . . . . "30. (1) . . . (2) The provisions of sub section (2) of section 23 and section 28 of the Principal Act as amended by clause (b) of section 15 and section 18 of this Act respectively, shall apply, and shall be deemed to have applied, also to, and in relation to, any award made by the Collector or Court or to any order passed by the High Court or Supreme Court in appeal against any such award under the provisions of the Principal Act after the 30th day of April, 1982 (the date of introduction of the Land Acquisition (Amendment) Bill 1982, in the House of the People) and before the commencement of this Act," Shri Bhat 's submission was that section 30(Z) of Amendment Act made the amended section 23(2) which increased the solarium to thirty per centum applicable to all proceedings in regard to compensation which had not become final whether they be pending before the Collector, Court, High Court or Supreme Court. We are unable to agree with Shri Bhat 's submission. It is worth while remembering at this juncture that awards made by the Collector under section I l and by the Court on reference under section 18 only are described as awards in the Land Acquisition Act, while further appeals are provided to the High Court and the Supreme Court. The new section 23(2), of course, necessarily applies to awards made by the Collector or Court after the commencement of the Act, that is after September 9, 1984 which was the date on which the act received that assent of the President. 917 The Bill which ultimately became the Amendment Act was introduced into Parliament on April 30, 1982. Parliament obviously desired to give effect to the amended s 23(2) from the date of introduction of the Bill. So the amended provision was expressly made applicable by section 30(2) to awards made by the Collector or Court between April 30, 1982 and September 24, 1984 also. A natural corollary was that the new provision should apply to orders made by the High Court or by the supreme Court in appeals against such awards, that is, awards made between April 30, 1982 and September 24, 1984. Parliament did not intend and could not have intended that whatever be the date of the award, however ancient it may be, solarium would stand enhanced to 'thirty per centum ' if an appeal happened by chance or accident to pending an April 30, 1982. Surely it was not the intention of Parliament to reward those who kept alive the litigation of Parliament to make the amended section 23(2) applicable to all proceedings relating to compensation wherever they be pending, the words after the 30th day of April 1982 (the date of introduction of the Land Acquisition Amendment Bill, 1982 in the House of the People) and before the commencement of this Act" in section 30(2) and would become meaningless. It is clear that Parliament wanted the amended s.23(2) to have very limited retrospectivity. It made the provision applicable to awards made after April 30, 1982 and before September 24, 1984 also and further to appeals to the High Court as the Supreme Court arising from such awards. In this view we see no force in the submission of Shri Bhat. All the appeals are dismissed. No costs. N.V.K. Appeals dismissed.

The Land Acquisition (Amendment) Act, 1984 by section 15(b) amended section 23(2) of the Land Acquisition Act, 1894 to provide that in sub section (2) of section 23 for the words "fifteen per centum ', the words ' thirty per centum" shall be substituted. Section 30(2) of the Amendment Act provided that the increased solution was to be applicable "in relation to, any award made by the Collector or Court or to any order passed by the High Court or Supreme Court in appeal against any such award under the provisions of the Principal Act after the 30th day of April, 1982 (the date of introduction of the Land Acquisition (Amendment) Bill, 1982, in the House of the People) and before the commencement of this Act. "The lands of the appellant claimant were acquired pursuant to notifications issued under section 4(1) Land Acquisition Act, 1894 on November 28, 1957 Being dissatisfied with the compensation awarded by the Land Acquisition Officer, Civil Judge and the High Court, appeals were filed to this Court for enhancement. The State filed appeals for reduction of the compensation. It was contended on behalf of the appellant claimant that section 30(2) of the Land Acquisition (Amendment) Act, 1984 made the amended section 33(2) which increased the solatium to thirty per centum" applicable to all proceedings in regard to compensation which had not became final whether they be pending before the Collector, Court, High Court, or Supreme Court. Dismissing the Appeals, ^ HELD: The Parliament did not intend and could not have intended that whatever be the date of the award however ancient it may be, solarium 915 would stand enhanced to 'thirty per centum ' if an appeal happened by chance or accident to be pending on April 30,1982. It was not the contention of parliament to reward those who kept alive the litigation even after several years. If it was the intention of Parliament to make the amended section 23(2) applicable to all proceeding relating to compensation wherever they may be pending the words "after the 30th day of April 1982 (the date of introduction of the Land Acquisition(Amendment) Bill, 1982 in the house of the people and before the commencement of this Act in section 30(2) to have very limited retrospectivity. it made the provision applicable to awards after April 30, 1982 and before September 24, 1964 also and further to appeals to the High Court as well as Supreme court arising from such awards [917C E]

Civil Appeal No 5014 of 1984. From the Judgment and Order dated 3.9.84 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 1604 of 1981 C in Order No. 674 of 1984 C. 101 A. Subba Rao for the Appellant. Soli J. Sorabjee, Attorney General, Ms. Indu Malhotra and P. Parmeshwaran for the Respondent. The Judgment of the Court was delivered by SAWANT, J. The appellant imported Top Line Tube Winder Enddless Belts of the value of Rs.31,101 from the United Kingdom under the Bill of Entry dated 6.8.1979. The goods were assessed to duty under heading 40.05/16(3) at 40% plus countervailing duty at the rate of 25% under Item 16 A(4) of the . The appellant thereafter made an application for refund of the excess of duty so charged contending that the goods were in fact liable to be classi fied under heading 59.16/17 and without countervailing duty. The Assistant Collector rejected the claim by his order of 12.10.1979. Against it, the appellants preferred an appeal under Section 128 of the (hereinafter referred to as the 'Act ') to the Appellate Collector of Customs. On May 2, 1981, the Appellate Collector allowed the appeal holding that the goods were classifiable under head ing 59.16/17. 2. On November 21, 1981, the Government issued a notice to the appellant under Section 13 1(3) of the Act asking him to show cause as to why the goods should not be classified under heading 39.07 which attracted duty at 100% ad valorem and also to show cause as to why the order of 2nd May, 1981 passed by the Appellate Collector should not be annulled. Against the said show cause notice, the appellant preferred an appeal to CEGAT. The contention with regard to limitation was that the show cause notice was barred by limitation as laid down by sub section (5) of Section 131 read with Sec tion 28 of the Act, which was six months from the date of short levy and in any case six months from the date of the Appellate Order. The Tribunal dismissed the appeal holding that the notice was in time and also further that the as sessment proposed to be made under heading 39.07 was proper. It is against this decision of September 3, 1984 of the Tribunal that the present appeal is preferred. Before us the only contention raised is that the show cause notice was barred by limitation and hence, the Govern ment had no power to annul the Appellate Collector 's Order under Section 131(3) of the Act. The argument is that the limitation for initiating action under sub section (3) of Section 131 is laid down in sub section (5) 102 thereof. For, the cases in which the Central Government would initiate action under sub section (3) can only be the cases either of the absence of levy or of the short levy or of refund. In any of the said case,the limitation laid down under sub section (1) read with subsection (3) of Section 28 is six months. In the present case, the levy of duty was on 6.8.1979 and the order of the Appellate Collector was of May 2, 1981, while the show cause notice was issued on November 21, 1981. In any case, therefore, the notice was beyond six months and hence barred by limitation. According to us, this contention is not available to the appellant in view of the decision of this Court in Geep Flashlight Industries Ltd. vs Union of India & Ors., ; in which it is held that the provisions of Section 13 1(5) and therefore the limitation laid down in Section 28 of the Act do not apply to the action taken by the Govern ment under Section 131(3). The relevant observations are as follows: "Once the provisions contained in section 131(3) are at tracted, the Central Government may of its own motion annul or modify any order passed under Section 128 or Section 130. This provision is the power of Central Government to annul or modify any order. This power is exercised by the Central Government suo motu. Of course the power is to be exercised on giving notice to the person concerned. The provisions contained in section 131(5) of the Act speaks of limitation only with regard to non levy or short levy. It is significant that section 131(5) does not speak of any limitation in regard to revision by the Central Government of its own motion to annul or modify any order of erroneous refund of duty. The provisions contained in section 13 1(5) with regard to non levy or shortlevy cannot be equated with erroneous refund inasmuch as the three categories of errors in the levy are dealt with separately. Further, even if it was held that the limitation as laid down in Section 28 would apply to the initiation of action under Section 131(3), since the appellate order has only allowed the appeal of the appellant declaring him as being entitled to the refund, and no refund has yet been made, the action of the Government under Section 131(3) is 103 clearly not barred by limitation. Section 28 of the Act states that when any duty has been erroneously refunded, the proper Officer may, within six months from the relevant date, serve notice on the persons chargeable with the duty to whom the refund has erroneously been made, requiring them to show cause why they should not pay the amount specified in the notice. Sub section (3) of Section 28 then defines the expression "relevant date" for the purposes of sub section (1). Clause (c) of the said sub section (3) states that the "relevant date" in a case where duty has been erroneously refunded means the date of refund. The decision in Geep Flashlight Industries Ltd. case (supra) has while dealing with this very aspect pointed out that in the case of erroneous refund, the notice under Section 28 of the Act has to be given within six months from the date of "actual" refund. If no refund has in fact been made, limitation cannot be said to arise inasmuch as the "relevant date" under Section 28 in the case of erroneous refund speaks of the date of refund. The Order granting refund is not actual refund. Admittedly, in the present case no refund has been made to the appellant under the Appellate Customs Order dated May 2, 1981. Hence, even if it is held that the provi sions of sub section (3) of Section 131 are governed by sub section (5) thereof and, therefore, the limitation laid down under Section 28 of the Act applies to the action of the Government under Section 131(3), the present show cause notice is not barred by limitation. Even otherwise we are also of the view that the orders which are contemplated under sub Section (3) of Section 131 are orders passed under Section 128 or Section 130 only, namely, the order passed in appeal by the Appel late Collector or in revision by the Board respectively. Sub section (3) does not speak of any other order. That is clear from the language of the said sub section which reads as follows: "(3) The Central Government may of its own motion annul or modify any order passed under Section 128 or Section 130". It is, therefore, clear from the provisions of the said sub section that it does not give power to the Central Government to act suo motu to annul or modify an order passed by the original assessing authority. On the other hand, the provisions of sub section (5) of Section 131 contemplate proceedings against actions of the original assessing authority which have resulted in either not levy ing or short levying the goods. That sub section by implica tion also covers cases of refunds. when goods are cleared initially under a provisional assessment, and 104 the final assessment shows that the assessee is entitled to a refund of duty charged in excess earlier. But all the cases whether of non levy, short levy or of refund which are contemplated in sub section (5) are cases arising out of the acts of omissions and commissions of the original assessing authority, and it is when such orders passed by the original assessing authority which are sought to be annulled or modified, that the provision of limitation contained in Section 28 applies. Thus the situations contemplated by sub section (3) and by sub section (5) are mutually exclusive in that whereas sub section (3) speaks of the annulment or modification of the appellate or revisional orders, sub section(5) speaks of the orders passed by the original assessing authority. Hence, the limitation applies when Government seeks to annul or modify orders of the original assessing authority under sub section (5) and not when the Government takes action to annul or modify the appellate or revisional orders under sub section (3). This interpretation is also consistent with the provisions of sub sections (1) and (4) of Section 13 1. Sub section (1) speaks only of appellate and revisional orders passed under Sections 128 and 130 respectively and of no other order. Similarly, clauses (a) and (b) of the sub section (4) make a distinction between the appellate and revisional orders passed under Sections 128 and 130 respec tively. Where an appellate or revisional order has already been passed enhancing any penalty or fine in lieu of confis cation or confiscating goods of greater value, it does not permit Government to pass any order again enhancing the penalty or fine. It, however, permits passing of such order in any other case, but within a period of one year from the date of the order sought to be annulled or modified. Hence the legislature has in Section 131 all along maintained the distinction between the orders passed under Sections 128 and 130, and other orders. Viewed from this angle also, it is necessary to read the provisions of sub section (3) of Section 131 as being applicable only to orders passed under Sections 128 and 130 and the provisions of sub section (5) as being confined to orders other than those passed under Sections 128 and 130. Hence, the conclusion is inescapable that the limita tion prescribed by Section 28 is applicable when under sub section (5) of Section 131 the Government seeks to annul or modify orders other than those passed under Sections 128 and 130. It is not applicable to the action taken under sub section (3) for annulling or modifying orders passed under Sections 128 and 130. Since in the present case the 105 impugned show cause notice is issued to annul/modify the order passed by the Appellate Customs under Section 128, it will have to be held that it is not barred by limitation. In this view of the matter the appeal fails and is dis missed with costs. PUNCHHI. J. Has the Central Government violated the bar of limitation while exercising suo motu revisional powers under section 131 of the is the limited question which crops up for consideration in the instant appeal against the judgment and order of the Customs, Excise & Gold (Control) Appellate Tribunal. New Delhi dated Septem ber 3, 1984 passed in Appeal No. CD(SB)(T) 1604/8 I C. The appellant imported a consignment of top line tube winder endless belts valued at Rs.31,101. The consignment came from the United Kingdom and was covered under a Bill of Entry dated 6.8.1979. The goods were assessed to duty under heading 40.05/16(3) at 40% plus counter vailing duty at the rate of 25% under Item 16 A(4) of the . The appellant lodged a refund claim with the Assistant Collector on grounds which are factual in nature, asserting that the goods had not correctly been assessed to duty and that they should have been assessed under a different head ing 59.16/17 of the . On 12.10.1979 the claim for refund was rejected by the Assistant Collector by an order. On appeal by the appellant the Appellate Col lector of Customs took a different view as to the nature of the consignment imported and assessed it to duty under heading 59.16/17 allowing the appeal with consequential relief. On the report of the Collector of Customs the Gov ernment issued a suo motu show cause notice dated 21.11.1981 prima facie being of the view that the Appellate Collector was not correct in classifying the goods under heading 59.16/17 of the , as also that the original classification under heading 40.05/16(3) done by the Assistant Collector was also not in order. The matter thus was sent to the Customs, Excise & Gold (Control) Appel late Tribunal, New Delhi where the plea of limitation was raised by the appellant besides raising factual pleas with regard to the nature of the consignment and its liability to be classified under an appropriate head. The Tribunal, 106 instead, on facts classified the consignment as articles of plastic under heading 39.07 of the and not under heading 59.16/17 as done by the Appellate Collector and thus set aside the order of the Appellate Collector allowing the revision. The plea of time bar raised by the appellant was re pelled by the Tribunal in the following words: "On the question of time bar we find that the Appellate Collector issued the orders on 4.7.1981, the show cause notice was issued on 21.11.1981 and served on the party on 24.11.1981. The show cause notice has therefore been issued within the period of six months. Section 13 1(5) of the refers to a case of non levy and short levy. For those cases the time limit of section 128 would be applicable. Section 131(3) provides for the Central Gov ernment to annul or modify any order passed under section 128 or 130. The Supreme Court in 1983 ELT 1596 held as follows : 'The provisions contained in section 13 1(5) of the Act speak of limitation only with regard to non levy or short levy. It is significant that section 131(5) does not speak of any limitation in regard to revision by the Central Government of its own motion to annul or modify any order or erroneous refund of duty. The provisions contained in sec tion 13 1(5) with regard to non levy or short levy cannot be equated with erroneous refund inasmuch as the three catego ries of errors in the levy are dealt with separately. ' That was a case of refund. In 1984 ( 16) ELT 332 (Collector of Customs, Bombay vs Nav Bharat Enterprises, New Delhi, ) it was held that section 13 1(3) of the empower the Central Government to annul or modify any order passed under that Act and that the time limit provided in section 131(5) would not be applicable to the notice issued under 131(3). Further 'relevant date ' as provided under the third proviso to section 36(2) will be computed from the date of passing of the Appellate Order and not from the date of passing the order by the original assessing authority. The show cause notice is therefore in time." 107 Learned counsel for the appellant has confined this appeal to the question of limitation. The fact that the consignment was classifiable under head 39.07 of the Customs Tariff Act, 1979 remains in these circumstances unques tioned. Section 131 of the is as follows: "131: REVISION BY CENTRAL GOVERNMENT (1) The Central Government may, on the application of any person aggrieved by (a) any order passed under section 128, or (b) any order passed under section 130 otherwise than on the application of any aggrieved person, or (c) any order passed on the application of any aggrieved person under section 130 where the order is of the nature referred to in either of the provisions to sub section (1) of that section, annul or modify such order. (2) An application under sub section (1) shall be made within six months from the date of the communication to the applicant of the order against which the application is being made: Provided that the Central Government may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the aforesaid period of six months, allow it to be presented within a further period of six months. (3) The Central Government may of its own motion annul or modify any order passed under section 128 or section 130. (4) No order enhancing any penalty or fine in lieu of con fiscation or confiscating goods of greater value shall be passed under this Section (a) in any case in which an order passed under 108 section 128 or section 130 has enhanced any penalty or fine in lieu of confiscation or has confiscated goods of greater value; and (b) in any other case, unless the person affected by the proposed order has been given notice to show cause against it, within one year from the date of the order sought to be annulled or modified. (5) Where the Central Government is of opinion that any duty of customs has not been levied or has been shortlevied, no order levying or enhancing the duty shall be made under this section, unless the person affected by the proposed order is given notice to show cause against it within the time limit specified in section 28." The Tribunal seems to take the view that sub section (3) of section 131, if employed, eclipses sub section (5) of sec tion 131. In other words, the Tribunal seemingly is of the view that when the Central Government on its own motion proposes to annul or modify any order passed under section 128 or section 130 then it is not lettered by the time limit specified in section 28 even though it entertains the opin ion that any duty of customs has either not been levied or has been shortlevied. This approach appears to us to be wholly erroneous. There is nothing in the language of sub section (3) to suggest that it over powers or renders otiose sub section (5). Both the sub sections need not militate against each other, components as they are of the singular power conferred by the legislature on the Central Government for revision. The harmonious way to read these sub sections would be that the Central Government is empowered on its own motion to annul or modify any order passed under section 128 or section 130 but if it is an order whereby any duty of customs has either not been levied or has been short levied, the Central Government can levy or enhance the duty by giving the person affected by the proposed order a notice to show cause against it but within the time limit specified in section 28, which is six months from the date of the order. Section 28 envisages three kinds of errors in regard to custom duties. One is non levy. This means that the goods were not classified to duty whereas they could be. The second is short levy. In this could be included a case in which the goods could be classified in one Entry but were erroneously classified under another Entry resulting in shortlevy of customs duty, or the like. The third is the case of erroneous refund. This category springs up in the process of assessment only where two kinds of errors. i.e., non levy or short levy, may occur and lead to an erroneous refund. Since levy is linked to assessment, a case 109 for refund may arise which may be erroneous. These are the three categories of known errors in regard to duties. In Geep Flashlight Industries Ltd. vs Union of India and Others, ; , this Court had occasion to deal with a case of erroneous refund and while examining the scope of section 28 of the Act ruled as follows: "The provisions contained in section 28 of the Act speak of non levy, short levy and erroneous refund. The provisions state that notice of non levy, short levy or erroneous refund should be given within six months from the relevant date. Section 28(3) states what the 'relevant date ' means. In the case of duty not levied, the 'relevant date ' is the date on which the proper officer makes an order for the clearance of the goods. In a case where duty is provisional ly assessed under section 18 of the Act, the relevant date is the date of adjustment of duty after the final assess ment. In a case where duty has been erroneously refunded, the relevant date is the date of refund. In any other case, the relevant date is the date of payment of duty. " It can thus be clearly gathered that in cases of duty not levied or short levied the "relevant date" is the date on which the concerned officer makes some orders for the clear ance of the goods on payment of no duty or the date of adjustment of duty on framing the final assessment, as the case may be. Now reverting to the facts of the instant case it is evident that the goods were classified and assessed to duty under one heading, say A, on 6.8.1979 whereafter claim for refund was made by the appellant which was rejected by the Assistant Collector on 12.10.1979. The exercise of the Assistant Collector in levying duty under heading A, when it should have been levied under another heading, say C, de spite the appellant 's claim that it should be still under another heading, say B, was a case of short levy in so far as the goods were classified as attracting lesser duty under heading A whereas higher duty should have been attracted on classifying it under heading C. So the orders of levy of duty had two facets. The duty from the point of view of the appellant had been excessively levied necessitating him to challenge the same and seek refund. On the other hand, from the point of view of the revenue the duty had been short levied giving rise cause to have it levied under proper heading. If these two facets are understood in the right perspective, it was incumbent on the Central Government to exercise its suo motu power under sub section (3) read with sub section (5) of section 131 within six months from 6.8.1979, the date when 110 the duty was short levied and undeniably the Central Govern ment did not take such timely step even though it had a cause to do so. The appellant, however, made claim for the refund of the excess duty levied taking shelter under anoth er heading and on its refusal by the Assistant Collector on 12.10.1979 had its appeal accepted on 2.5.1981 from the Appellate Collector who ordered refund. The Central Govern ment then got a cause to take suo motu action under section 13 1(3) of the to annual or modify the order of the Appellate Collector, or the actual refund itself under that order, in accordance with Geep Flashlight Industries case (supra). It being a case of erroneous refund sub section (3) of section 131 was attracted and not sub section (5) of section 131 as at that point of time it was not a case of non levy or short levy, and these two catego ries of errors could not be equated with the error of erro neous refund inasmuch as these three categories of errors are treated separately in the scheme of things. Merely because the Central Government had the power to suo motu revise the orders of refund passed by Appellate Collector it does not follow a fortiori that it had the vower to revise the orders of short levy at that stage. The ultimate analy sis is that if there was an error of short levy in the order of the Assistant Collector in classifying goods at A instead of C as claimed by the revenue and not classifying them at B as claimed by the importer, then on the grant of relief by the Appellate Collector classifying them under heading B, can at best give occasion to the Central Government to annul or modify the classification brought under head B, and so as to leave it classified at heading A, but could not have it re classified under heading C unless the exercise was under taken within the period of limitation prescribed under section 28 as required under sub section (5) of section 131 of the . The error committed by the Tribu nal, for the view afore expressed,, is so patent that it cannot be allowed to go uncorrected as a tolerable error. Inevitably this appeal is to be, and is, hereby allowed. modifying the orders of the Tribunal passed in Appeal No. CD(SB)(T) 1604/81 C so as to revive the order of the origi nal assessment dated 6.8.1979 and the order of the Assistant Collector of Customs, Madras dated 12.10.1979, keeping upset the orders dated 2.5.1981 of the Appellate Collector of Customs, Madras passed in Appeal No C, 3,,2 12/80. The appellant shall have their costs. ORDER According to the decision of the majority. the appeal stands dismissed with costs.

The appellant imported Top Line Tube Winder Endless Belts which were assessed to duty under heading 40.05/16(3) at 40% plus countervailing duty at the rate of 25% under Item 16 A(4) of the . Thereafter, the appellant made an application for refund of the excess of duty so charged contending that the goods were in fact liable to be classified under heading 59.16/17, and without countervailing duty. The Assistant Collector rejected the claim by his order dated October 12, 1979 and against it the appellant pre ferred an appeal under Section 128 of the to the Appellate Collector who allowed the appeal holding that the goods were classifiable under heading 59.16/17. The Government, however, issued a suo motu show cause notice dated November 21, 1981 to the appellant under Sec tion 131(3), asking the appellant to show cause as to why the goods should not be classified under heading 39.07 which attracted duty at 100% ad valorem, and also as to why the order dated May 2, 1981 passed by the Appellate Collector should not be annulled. Against the aforesaid show cause, the appellant pre ferred an appeal to the Customs Excise and Gold Control (Appellate) Tribunal, contending that the show cause notice was barred by limitation under sub section (5) of Section 131 read with Section 28 of the Act, which was six months from the date of short levy, and in any case six months from the date of the Appellate order. 97 The Tribunal dismissed the appeal holding that the notice was in time, and that the assessment proposed to be made under heading 39.07 was proper and set aside the order of the Appellate Collector allowing the revision. In the appeal to this Court, the question for considera tion was: whether the Central Government violated the bar of limitation while exercising suo motu revisional powers under Section 13: of the . Dismissing the appeal by a 2:1 Majority, this Court, HELD: (Sabyasachi Mukharji, CJ. and P.B. Sawant, J. Per Sawant, J.) 1. The provisions of Section 131(5) and therefore the limitation laid down in section 28 of the Act do not apply to the action taken by the government under section 131(3). [103D] Geep Flashlight Industries Ltd. vs Union of India, ; , followed. Even if it was held that the limitation as laid down in Section 28 would apply to the initiation of action under Section 131(3), since the appellate order in the instant case, has only allowed the appeal of the appellant declaring him as being entitled to the refund, and no refund has yet been made the action of the Government under section 131(3) is clearly not barred by limitation [102G H] 3. In the case of erroneous refund, the notice under section 28 of the Act has to be given within six months from the date of 'actual ' refund. If no refund has in fact been made, limitation cannot be said to arise inasmuch as the 'relevant date ' under section 28 in the case of erroneous refund speaks of the date of refund The Order granting refund is not actual refund. Admittedly, in the instant case no refund has been made to the appellant under the appellate customs order dated May 2, 1981. Hence even if it is held that the provisions of subsection (3) of Section 131 are governed by sub section (5) thereof and, therefore, the limitation laid down under section 28 of the Act applied to the action of the Government under section 131(3), the present show cause notice is not barred by limitation [103C D] 4. It is clear from the provisions of sub section (3) of Section 131 that it does not give power to the Central Government to act suo motu 98 to annul or modify an order passed by the original assessing authority. On the other hand, the provisions of sub section (5) of Section 131 contemplate proceedings against actions of the original assessing authority which have resulted in either not levying or short levying the goods. That sub section by implication also covers cases of refunds, when goods are cleared initially under a provisional assessment, and the final assessment shows that the assessee is entitled to a refund of duty charged in excess earlier. But all the cases whether of non levy, short levy or of refund which are contemplated in sub section (5) are cases arising out of the acts of omissions and commissions of the original assessing authority, and it is when such orders passed by the original assessing authority which are sought to be annulled or modified, that the provision of limitation contained in Section 28 applies. [103G H; 104A B] 5. Thus, the situations contemplated by sub section (3) and by sub section (5) of Section 131 are mutually exclusive in that whereas sub section(3) speaks of the annulment or modification of the appellate or revisional orders, sub section (5) speaks of the orders passed by the original assessing authority. [104B] 6. Hence, the limitation applies when the Government seeks to annul or modify orders of the original assessing authority under subsection (5) and not when the Government takes action to annul or modify the appellate or revisional orders under sub section (3) [104C] 7. The above interpretation is also consistent with the provisions of sub sections (1) and (4) of Section 131. [104D] 8. The conclusion is inescapable that the limitation prescribed by Section 28 is applicable when under sub sec tion (5) of Section 131 the Government seeks to annul or modify orders other than those passed under Sections 128 and 130. It is not applicable to the action taken under sub section (3) for annulling or modifying orders passed under Sections 128 and 130. [104G H] 9. In the instant case, since the impugned show cause notice is issued to annul/modify the order passed by the Appellate Collector of Customs under Section 128, it is not barred by limitation. [105A] (Per M.M. Punchhi, J. dissenting) 1(a) Section 28 envisages three kinds of errors in regard to custom duties. One is non levy. This means that the goods were not 99 classified to duty whereas they could be. The second is short levy. In this could be included a case in which the goods could be classified in one Entry but were erroneously classified under another Entry resulting in short levy of custom duty, or the like. The third is the case of erroneous refund. This category springs up in the process of assess ment only where two kinds of error, i.e. non levy or short levy may occur and lead to an erroneous refund. [108H; 109A] (b) It is clear from section 28 that in case of duty not levied or short levied, the 'relevant date ' is the date on which the concerned officer makes some orders for the clear ance of the goods on payment of duty on framing the final assessment as the case may be. [109E] Geep Flashlight Industries Ltd. vs Union of India & Ors., ; , referred to. Since levy is linked to assessment, a case for refund may arise which may be erroneous. [109A] In the instant case, the Tribunal seems to take the view that sub section (3) of Section 131, if employed, eclipses sub section (5) of Section 131. It was of the view that when the Central Government on its own motion proposes to annul or modify any order passed under Section 128 or Section 130 then it is not lettered by the time limit specified in Section 28 even though it entertains the opinion that any duty of customs has either not been levied or has been short levied. This approach appears to wholly erroneous. [108D E] 3. There is nothing in the language of sub section (3) to suggest that it over powers or renders otiose sub section (5). Both the sub sections need not militate against each other, components as they are of the singular power con ferred by the legislature on the Central Government for revision. [108E] 4. The harmonious way is, therefore, to read these sub sections would be that the Central Government is empow ered on its own motion to annul or modify any order passed under Section 128 or Section 130, but if it is an order whereby any duty of customs has either not been levied or has been short levied, the Central Government can levy or enhance the duty by giving the person affected by the pro posed order a notice to show cause against it but within the time limit specified in Section 28, which is six months from the date of the order. [100F G] 100 5. Merely because the Central Government had the power to suo motu revise the orders of refund passed by the Appel late Collector it does not follow a fortiori that it had the power to revise the orders of short levy at that stage. [110D] 6. The orders of levy of duty in the instant case, had two facets. The duty from the point of view of the appellant had been excessively levied necessitating him to challenge the same and seek refund. On the other hand, from the point of view of the Revenue, the duty had been short levied giving rise cause to have it levied under proper heading. It was incumbent on the Central Government to exercise its suo motu power under sub section (3) read with sub section (5) of Section 131 within six months from 6.8.79, the date when the duty was short levied and undeniably the Central Govern ment did not take such timely step even though it had a cause to do so. The appellant, however, made claim for the refund of the excess duty levied taking shelter under anoth er heading and on its refusal by the Assistant Collector on 12.10.79 had its appeal accepted on 2.5.81 from the Appel late Collector who ordered refund. The Central Government then got a cause to take suo motu action under Section 131(3) of the to annul or modify the order of the Appellate Collector or the actual refund itself under that order. It being a case of erroneous refund sub section (3) of Section 131 was attracted and not sub section (5) of Section 131 as at that point of time it was not a case of non levy or short levy, and these two categories of errors could not be equated with the error of erroneous refund inasmuch as these three categories of errors are treated separately in the scheme of things. [109H; 100A B] 7. The error committed by the Tribunal, in the instant case, is so patent that it cannot be allowed to go uncor rected as a tolerable error. The appeal has, therefore, to be allowed The orders of the Tribunal passed in appeal have to be modified so as to revive the order of the original assessment dated 6.8.79 and the order of the Assistant Collector of Customs dated 12.10.79, keeping upset the orders dated 2.5.81 of the Appellate Collector of Customs. [ 110G H]

Civil Appeal No. 3634 (NEC) of 1989. From the Judgment and Order dated 11.8.1989 of the Karnataka High Court in Election Petition No. 6 of 1988. M.C. Bandare, Ranjit Thomas and Mrs. C.K. Sucharita for the Appellant. Shanti Bhushan, B.R.L. Iyenger, R.B. Mehrotra and E.C. Vidyasagar, for the Respondents. For the (State of Karnataka) M. Veerappa. Raju to the State Legislative Coun cil, and directing the recount of the votes after excluding those of 242 nominated members. The election was held by adopting the 'single transferable vote method '. The polling took place on 3.7. 1988 and the counting was taken up on the next date, that is, 4.7. 1988. After several rounds of counting the appellant was declared as the successful candi date. The election in question relates to the Chitradurga Local Authorities Constituency, comprising 121 Mandal Pan chayats. The last date and time fixed for receiving nomina tion papers was 3.00 p.m. on 3.6. According to the appellant 's case, a decision was taken by the Chitradurga Zilla Parishad in its special meeting held on 28.5. 1988 to nominate two members from each Mandal Panchayat, that is, a total number of 242 members. Accordingly, steps were taken under the provisions of the Karnataka Zilla Parishads, Taluk Panchayat Samithis, Mandal Panchayats and Nyaya Panchayats Act, 1983 (hereinafter referred to as the Parishads Act) read with the rules framed thereunder, and 242 members were duly nominated in time to be included in the electoral roll. This has been denied by the election 340 petitioner respondent No. 1, as also some of the respondents who contested the election. According to their case, the inclusion of the names of the nominated members in the electoral roll took place after the period for nomination was over and they were, therefore, not included in the electoral roll in the eye of law. The main question in the case which thus arises is as to whether the names of the 242 nominated members were included in the electoral roll within the time permitted by the law. The Deputy Commissioner, who was impleaded in the elec tion petition as the 5th respondent (in this appeal also he is respondent No. 5), had triple role to play in connection with the disputed election. He was authorised under the Parishads Act and the Karnataka Zilla Parishads, Taluk Panchayat Samithis, Mandal Panchayats and Nyaya Panchayats (Conduct of Election) Rules, 1985 (hereinafter referred to as the Parishads Rules) to take steps for completing the nomination of the members; under section 13B of the Representa tion of the People Act, 1950, he was the Electoral Registra tion Officer for preparation and revision of the electoral roll; and he was also the Returning Officer under the Repre sentation of the People Act, 1951. According to the case of the appellant, a resolution was passed by the Zilla Parishad on 28.5. 1988 nominating the aforementioned 242 members, and the Chief Secretary of the Zilla Parishad sent the list of the names to the Deputy Commissioner on 30.5. The Deputy Commissioner was, under section 5(9) of the Parishads Act, required to publish the said names so as to complete the process of nomination. He was also vested with the jurisdic tion to include the names in the electoral roll under the provisions of the Representation of the People Act, 1950. It is relevant to note at this stage that the question of inclusion of the names in the electoral roll could arise only after the nomination was complete in the eye of law. A nominated person was entitled to be included as a voter for the election to the Council Constituency after he became a member of the Mandal Panchayat and not before. Having learnt about the nominations on the eve of the election, some persons challenged the same and objected before the Deputy Commissioner to the proposed publication. However, the Deputy Commissioner on 1.6.1988 passed an order directing the necessary steps to be taken under the Parishads Act, and accordingly a list of the nominated members was pasted on the notice board of the office of the Deputy Commissioner. Before the nominated persons could be treated to have become members of the Panchayats it was necessary that certain other steps also were taken in accordance with the Parishads Act and the Parishads Rules. Subsection (1) of section 40 of the Parishads Act, which is mentioned below, 341 makes it clear that a nominated person becomes the member of a Mandal Panchayat only on the publication of his name under section 5(9): "40. Commencement of term of Office (1) The term of office of the members elected at a general election or at a second election held under sub section (7) of section 5, or nominated shall commence on the date imme diately after the expiry of the term of office of the out going members of the Mandal Panchayat or the period of appointment of an Administrative Committee or Administrator under section 8, or on the date of publication of their names under sub section (9) of section 5, whichever is later. " The manner of publication of the names has been prescribed by r. 73 of the Parishads Rules in the following terms: "73. Publication of names of members elected or nominated to Mandal Panchayat. The Deputy Commissioner shall, as soon as conveniently may be, publish the list containing the names of the members elected or deemed to have been elected or nominated to the Mandal Panchayat by causing such list to be affixed on the notice board of his office, office of the Tahsildar, concerned Mandal Panchayat and in the Chavadi. " With a view to complete the nomination, the Deputy Commis sioner sent out the names for affixing the same on the notice boards of the office of the concerned Tahsildars and Mandal Panchayats and in the Chavadis. The Deputy Commis sioner could have taken steps for inclusion of the names in the electoral roll of the State Council Constituency after receipt of the information of their due publication in the offices situated at different places. There is a serious dispute as to when the necessary information became avail able at Chitradurga and the formal steps of including those names in the electoral roll were actually taken. After examining the evidence led by the parties, the High Court has held that the names were not included in the electoral roll by 3.00 p.m. on 3.6.1988. Mr. M.C. Bhandare, the learned counsel appearing in support of the appeal, has contended that the High Court fell in grave error in deciding the disputed issue against the appellant as it failed to 342 take note of the provisions of the Explanation to section 40(1) of the Parishads Act, which reads as follows: "Explanation. When the names of members elected at a general election or at a second election held under sub section (7) of section 5 or nominated are published on more than one date, the date by which the names of not less than 2/3rd of the total number of members has been published shall be deemed to be the date of publication for ' purposes of this section. " The learned counsel argued that the evidence on the record establishes that information of the publication of the names of more than 2/3rd of the total number of nominated persons had reached the Deputy Commissioner in time for the amend ment of the Council Constituency roll and the Deputy Commis sioner had actually made an order for the inclusion of the names in the roll on 2.6.1988. Accordingly, the final elec toral roll including the nominated members was ready in the office of the Returning Officer, and the appellant, as a matter of fact, had inspected the same. Reliance has been placed on his deposition as well as on the documentary evidence in the case. The most important evidence in the case is to be found in the statement of the Deputy Commissioner examined as P.W. 4. Besides, the election petitioner examined several other witnesses. An examination of evidence on record leads to the conclusion that the Chief Secretary of the Zilla Parishad had sent the list of the nominated members to the Deputy Commissioner on 30.5. 1988 and a copy thereof was placed on the notice board of the Deputy Commissioner 's office on 1.6.1988. However, that did not complete the process of nomination. The provisions of section 40(1) of the Parishads Act make it abundantly clear that a nominated person would become a member of the Panchayat only after due publication of his name in accordance with r. 73. It was therefore necessary to have the names of the nominated persons affixed on the notice board of the office of the Tahsildars, the notice boards of the Mandal Panchayats and in the Chavadis. Mr. Bhandare is right that in view of the Explanation to section 40(1) it was not necessary for the Deputy Commissioner to have waited for the information in this regard from all the places. On his satisfaction that the publication of 2/3rd of the total number of the names were complete, he was free to proceed further and to revise the electoral roll under the Representation of the People Act, 1950 by including all the nominated members. But the ques tion is as to when the Deputy Commissioner 343 did receive the information about the 2/3rd of the total number, and further whether he, as a matter of fact, revised the electoral roll before 3.00 p.m. on the 3rd of June, 1988. It is significant to note that the electoral roll did not get automatically amended on the completion of the process of nomination of the additional members. Ordinarily the question of inclusion of a new name in the electoral roll arises only when an application is made before the Electoral Registration Officer in this regard, but the power can be exercised by the Officer even without such an appli cation. In the present case it appears that a tactical battle was going on in the political arena between the two rival groups; one attempting to get the electoral roll amended by the inclusion of the nominated members and the other trying to foil it. The Deputy Commissioner was under pressure from both sides, and as the evidence discloses, he had to consider the different stands taken before him, which slowed down the entire process. Let us examine the evidence in this background. The Deputy Commissioner has, in his evidence, stated that his office received the information about the nomina tion from the Zilla Parishad on 30.5. 1988 when he was at Bangalore. He returned back to Chitradurga on 31.5. 1988 and examined a copy of the resolution of the Parishad as also the list of the nominated persons. Soon thereafter he was approached by the two groups, one supporting the resolution and the other opposing it. Ultimately he decided to publish the list as required by section 5(9) of the Parishads Act read with r. 73 of the Parishads Rules. Accordingly, a copy of the list was placed on the notice board of his office and lists for the publication in the Taluk offices were handed over to the Tahsildars who were already present in Chitra durga The lists for the publication in the offices of the Mandal Panchayats and Chavadis, which were scattered at considerable distances, were sent to the Chief Secretary of the Zilla Parishad. The Deputy Commissioner postponed the further step for modification of the electoral roll awaiting the report on publication from the different offices. Some reports from the Taluk offices were received on 1.6.1988 itself, but the Deputy Commissioner in his evidence was not in a position to give the details. His examination in chief was, therefore, discontinued and he was asked to bring the documents on the next date with reference to which he could answer the further questions. Accordingly, he later appeared with the papers and stated that the last reports regarding the publication from the Taluk Office of certain places were received on 4.6.1988. In his cross examination the Deputy Commissioner stated that on the basis of his records he could say that he had received reports from 5 Taluk Offices only on 1.6.1988, and 344 none from the Mandal Pancnayats; and on 2.6.1988 he had received reports about the publication in the Mandal Pan chayats from 2 Taluks. As there were only 9 Taluks in his district, it can be presumed that information about the publication of 2/3rd number at Taluk offices had reached the Deputy Commissioner by the evening of the 2nd June, 1988. However, there does not appear to be any relevant evidence available on the records, and none has been shown to us by the learned counsel, with regard to the publication of the requisite number of names in the Mandal Panchayat offices and in the Chavadis. It has been contended on behalf of the appellant that since the burden is on the election petition er to prove such facts which may vitiate the election, he must fail in the present state of evidence. Before adverting to this aspect we propose to consider the other evidence relating to the revision of the electoral roll. The electoral roll was produced before the High Court and was marked as Ext. Although it ought to have borne the dates of its preparation and revision, none is to be found there. The inclusion of the names of the nominated members was, according to the evidence, done by attaching slips to Ext. The Deputy Commissioner was unable to state as to the date on which Ext. P 6 was prepared and typed. So far the "updated Voters ' List" was concerned, it was placed on the notice board of the office of the Deputy Commissioner at 8.55. p.m. on 3.8.1988, after a lot of wrangling between the rival groups. In answer to a question in cross examination the Deputy Commissioner stated, "I cannot say if the preparation of this list was complete by 3.00 p.m. on 3.6.1988 as it is a ministerial part of it." As has been mentioned earlier, the dispute about the validi ty of the belated nominations had been raised on 31.5. 1988 before the Deputy Commissioner when he returned to Chitra durga from Bangalore and he took a decision on 1.6.1988 to proceed with the publication so as to complete the process of nomination. According to his statement, which he made after verifying from the documents, the necessary informa tion from the Mandal Panchayats and Chavadis started reach ing him on 2.6.1988. But they were inadequate as they were only from two Taluks. At the earliest the information about the publication of the necessary number of names reached Chitradurga on 3.6.1988 when the two groups were arrayed against each other in his office, one urging the revision of the electoral roll and the other opposing it. The deadline was 3.00 p.m. on 3.6.1988 which was approaching fast. But it 345 is important to note that the Deputy Commissioner was not aware that the period available for the revision of the electoral roll was expiring in the afternoon. He was under a wrong impression that the entire calender date of 3.6.1988 was available for the purpose. Towards the end of paragraph 3 in his written statement the Deputy Commissioner categori cally stated that he "was under a bona fide impression that direction for the inclusion of the name in the electoral roll of the constituency shall be given under Section 23 at any time on the last date for making nominations". In the earlier writ petition between the parties (in which the issue raised was not decided) the respondent No. 5 had made a similar statement in paragraph 2 of his reply. Being under that wrong impression he was not in a hurry to take the decision in regard to the revision of the electoral roll quickly. The election petitioner, P.W. 1, was himself not a candidate but was an active supporter of one of the candi dates and was seriously involved in the question of the revision of the roll, and, as stated in his evidence, the publication of the names under r. 73 of the Parishads Rules was complete by 3.6.1988 only in some of the Mandal Panchay ats. After the deadline at 3.00 p.m. on 3.6.1988 was crossed an application, which has been marked as 'Annexure R III ', signed by the Secretary, District Janata Party, was given to the Deputy Commissioner asserting that no further additions or deletions in the electoral roll were permissible and an endorsement to that effect should be made by the Returning Officer. The Deputy Commissioner did not immediately give his reply thereto. The parties were also insisting for the publication of the electoral roll in its final shape. Ac cording to the further evidence of P.W. 1, the Deputy Com missioner promised them that he would contact the Chief Electoral Officer at Bangalore by telephone and only there after he would decide on his further action. The party workers including the witness awaited the further develop ment and at 8.55 p.m. the Deputy Commissioner declared that the names of the newly nominated members were included in the voters list. Soon thereafter he also replied to the letter of the Janata Party Secretary by a letter headed as "ENDORSEMENT", stating, "With reference to the above, you are hereby informed that action has been taken to include the nominated members by the Zilla Parishad to the Mandal Panchayat in the District and as per Section 27(c) read with Section 23(3) of the R.P. Act, 1950, the Electoral Roll for Local Authority Constituency has been up dated and a copy pasted in the office on 3rd June 1988 at 8.55 P.M." 346 Two other Janata Party members have been examined as P.Ws, 2 and 3 in the case supporting the above version. Mr. Bhandare has relied upon the oral evidence of the appellant wherein he claimed to have gone to the office of the Deputy Commissioner on 2.6. 1988 to secure a prescribed form for filing his nomination as a candidate in the elec tion and was allowed to examine the electoral roll which was kept on a table in the office. He asserts that after verify ing his name and serial number in the list he discovered that the names of nominated members were also included therein. He stuck to this story in the cross examination and insisted that it was at 11.00 in the morning on 2.6.1988 that he had seen the revised roll. It is difficult to accept his case on this evidence. According to the Deputy Commis sioner himself the report about the publication in the office of the Mandal Panchayats from only two Taluks were received by the evening of 2.6. 1988 and it is, therefore, not believable that the Deputy Commissioner had amended the roll before 3.6.1988. The Deputy Commissioner has not claimed to have revised the roll on 2.6.1988. On the other hand, he made a very significant assertion in his written statement in the present election petition which is quoted below: "The Deputy Commissioner issued direction for the inclusion of the names of nominated members on 3.6.1988 and the elec toral roll for local Authorities Constituency has been up dated and a copy pasted in the office on 3.6.1988 at 8.55 P.M." In the earlier writ petition also he had made a similar statement, as mentioned below, towards the end of paragraph 2 of his reply: "The Deputy Commissioner issued direction for the inclusion of the name of Respondents 3 to 246 on 3 6 1988 and the electoral roll for Local Authorities Constituency has been up dated and a copy pasted in the office on 3 6 1988 at 8 55 P.M." A plain reading of the above statement suggests that both the updating of the electoral roll and pasting a copy there of took place on 3.6. 1988 at 8.55 p.m. The statement cannot be interpreted to mean that the revision of the electoral roll had been done about 6 hours earlier. The circumstances that (i) the Deputy Commissioner was not able to assert in his evidence before the Court that the revision of the roll had taken place before 3.00 p.m.; (ii) he was under an impression 347 that the revision was permissible till the midnight; and (iii) in spite of the available documents to him he was not in a position to assert that the report of publication of the names of 2/3rd or more of the nominated persons in the offices of the Mandal Panchayats had been received in his office before the deadline, strongly support the case of the election petitioner. It has been contended on behalf of the appellant that the burden to prove that the names of the nominated members were not included in the electoral roll in time is on the election petitioner and unless he is able to lead acceptable evidence to discharge the same, the election petition is bound to fail. The argument is that the oral evidence led by the petitioner cannot be accepted for recording a finding that the controversial names had not actually been included in the electoral roll before 3.00 p.m. which was in the custody of the Deputy Commissioner. The fact that political opponents of the appellant who were opposing the inclusion of the names were repeatedly asking the Deputy Commissioner orally as well as in writing to inform them whether the names were actually included in the electoral roll or not itself shows that they could not be sure of the actual position till 8.55 p.m. The bald assertion of the witnesses for the petitioner in this regard cannot be given much weight. Thus the position, according to the learned counsel, available from the records of the case is that there is no reliable evidence on the crucial issue and, therefore, the election petition must be dismissed. Apart from supporting the finding of fact recorded by the High Court in favour of the election petitioner, Mr. Shanti Bhushan, learned counsel for the respondents, argued that the electoral roll must be held to have been modified in the eye of law only at 8.55 p.m. when the alleged inclu sion of the names was made public and not earlier. He rea lied upon the decision in Bachhittar Singh vs State of Punjab, [1962] Supp. 3 SCR 713. The appellant in that case was appointed as a Kanungo and later promoted as Assistant Consolidation Officer in the former State of Pepsu. A de partmental inquiry was held against him as a result of which he was dismissed by the Revenue Secretary. He preferred an appeal to the State Government. The Revenue Minister ex pressed his opinion in writing that instead of his dismissal he should be reverted to his original post of Kanungo. The said remarks were, however, not communicated to the appel lant officially and the State of Pepsu was merged with the State of Punjab. The matter was thereafter re examined and the Chief Minister passed an order confirming the dismissal of the appellant. This order was com 348 municated to the appellant which led to the filing of the writ petition in the High Court. The High Court dismissed the writ application and the appellant appealed before this Court by special leave. One of the questions considered by this Court was as to the effect of the order in writing by the Revenue Minister, Pepsu, recommending reversion of the appellant in place of his dismissal. For the reasons, men tioned below, the Court held that the order of the Revenue Minister was of no avail to the appellant. "Thus it is of essence that the order has to be communicated to the person who would be affected by that order before the State and that person can be bound by that order. For until the order is communicated to the person affected by it, it would be open to the Council of Ministers to consider the matter over and over again and, therefore, till its communi cation the order cannot be regarded as anything more than provisional in character. As has been pointed out earlier, the evidence of the appellant that he had actually seen the final voters list in the office of the Deputy Commissioner must be rejected as unreliable. There is no acceptable evidence at all to show as to when the alleged corrections were made in the voters list. At 8.55 p.m. on 3.6.1988 the inclusion of the names was made public for the first time. The question is as to whether the electoral roll will be deemed to have been modified when it was made public at 8.55 p.m. or earlier when the actual correction in the list was made in the Deputy Commissioner 's office which fact was kept confiden tial in spite of repeated demands for information. Besides fixing the identity of the persons to be allowed to vote at the election, the purpose of the prepara tion of the roll is to enable the persons included therein to decide as to whether they would like to contest the election. It is also helpful to such persons in assessing their chances of success by reference to the voters finally included in the roll. For the purpose of canvassing also, the intending contestant requires a copy of the final vot ers ' list. The intending contestants and their supporters thus heavily depend upon the final electoral roll for decid ing their future conduct, and it is, therefore, extremely essential that it is made available to them before the expiry of the period fixed for filing the nomination papers. It the roll as it stood earlier, was confidentially correct ed by the Electoral Registration Officer concerned sitting in his office which did not see the light of the day, the same cannot be considered to have been prepared according to law. 349 The observations in Bachhittar Singh 's case will be fully applicable in as much as the Officer here also could recon sider the list again. Mr. Bhandare in reply relied upon the judgment in B.K. Srinivasan and Others vs State of Karnataka and Others, , and argued that unlike the Karnataka Town and Country Planning Act, 1961 and the Rules which were under consideration in the said case, the Representation of the People Act does not require a display of the electoral roll. The learned counsel is correct and he rightly said that putting the final voters list on the notice board is not a necessary requirement under the law. But that does not lead to the further conclusion that the electoral roll can be prepared secretly and kept in the drawers of the Officer without any information or knowledge to persons who are interested in finding out its final shape. The reported case was dealing with the principle of subordinate legislation and in paragraph 15 of the judgment made important observa tions which support the respondents ' point of view. It was stated thus: "There can be no doubt about the proposition that where a law, whether Parliamentary or subordinate, demands compliance, those that are governed must be notified direct ly and reliably of the law and all changes and additions made to it by various process. Whether law is viewed from the standpoint of the 'conscientious good man ' seeking to abide by the law or from the standpoint of Justice Holmes 's 'Unconscientious bad man ' seeking to avoid the law, law must be known, that is to say, it must be so made that it can be known. " It was further observed that unlike Parliamentary legisla tion which is publicly made, delegated or subordinate legis lation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary and it was, therefore, necessary that subordinate legislation in order to take effect must be published or promulgated in some suitable manner whether such publication or promulgation is prescribed by the parent statute or not. It will then take effect from the date of such publication or promulgation The decision instead of helping the appel lant is clearly against him. The vital difference between an Act of a legisla ture and a subordinate legislation was earlier noted in Harla vs State of Rajasthan, ; The Acts of the legislature are passed by the accredited representatives of the people who in theory can be trusted to 350 see that their constituents know what has been done, and this is done only after debates take place which are open to the public. The matter receives wide publicity through the media. But the case is different with the delegated legisla tion and, if we may add, also in the case of orders passed by the authorities like that in the present appeal before us. The mode of publication can vary but there must be reasonable publication of some sort. A reference may also be made to the decision in Fatma Haji Ali Mohammad Haji and Others vs The State of Bombay,, ; , where the question as to whether certain powers given to the Govern ment for issuing a direction to the Collector not to act in accordance with the prescribed rules had been actually exercised or not was under consideration. It was stated that the power had to be exercised in clear and unambiguous terms and, "the decision that the power has been exercised should be notified in the usual manner in which such decisions are made known to the public." Before closing this discussion we should refer to the case of State of Maharashtra vs Mayer Hans George, [1965] 1 SCR page 123, where the English decision of Johnson vs Saragant & Sons, , relied upon by this Court in Harla 's case came to be considered. The respondent Mayer Hans George was a German Smuggler who was carrying gold from Switzerland to Manila by an aeroplane which stopped at Bombay for sometime. The respondent did not get down from the plane but he was searched by the Indian Officers and was found to be carrying gold illegally. He was charged with criminal activity on the basis of a notification requiring him to declare the gold as transhipment cargo in the mani fest of the aircraft, which he had failed to do. His defence was that he had no knowledge of this notification. After his conviction by the trial court, the High Court on appeal acquitted him. The Supreme Court by a majority judgment reversed the decision and found him guilty on the ground that the notification had been published in the official gazette of India. The defence plea that since he was a foreigner and was, therefore, not expected to be aware of the notification was rejected. While discussing the argu ments addressed in the case, the Court appreciated the criticism of Prof. C.K. Allen against the judgment in John son vs Sargant, but there was no comment or suggestion against the correctness of the judgment in Harla vs The State of Rajasthan. On the other hand, the observations at page 163 G H are on the same lines. It was stated that where there is no statutory requirement as to the mode or form of publication, "we conceive the rule to be that it is necessary that it should be published in the usual 351 form i.e., by publication within the country in such media as generally adopted to notify to all persons concerned the making of the rules." Having regard to the nature and pur pose of the power for rectification of the electoral roll by the Electoral Registration Officer, the principle enunciated in the abovementioned cases must be held to be applicable. We accordingly hold that in the eye of law the electoral roll in question was not modified by the inclusion of the names of the nominated members before 8.55 p.m. on 3.6.1988. We, therefore, affirm the decision of the High Court and dismiss the appeal with costs. R.S.S. Appeal dismissed.

The appellant contested the election to the Karnataka State Legislative Council from the Chitradurga Local Author ities Constituency, comprising 121 Mandal Panchayats. The last date and time fixed for receiving nomination papers was 3.00 p.m. on 3.6.1988. and revision, if any, of the elector al roll had to be completed before that time. The polling took place on 3.7.1988 and the appellant was declared as the successful candidate. Earlier, a decision had been taken by the Chitradurga Zilla Parishad on 28.5.1988 to nominate two members from each Mandal Panchayat, that is, a total number of 242 mem bers. With a view to complete the nomination, the Deputy Commissioner took the necessary steps in accordance with the Karnataka Zila Parishads, Taluk Panchayat Samithis, Mandal panchayats and Nyaya Panchayats Act, 1983, read with the rules framed thereunder, and sent out the names for affixing the same on the notice boards of the office of the concerned Tehsildar and Mandal Panchayat and in the Chavadis. On his satisfaction that the publication of 2/3rd of the total number of the names was complete, the Deputy Commissioner was free to proceed further and to revise the electoral roll under the Representation of the People Act, 1950 by includ ing all the nominated members. In this regard, in his writ ten statement before the High Court the Deputy Commissioner stated that the electoral roll had been up dated and a copy pasted in the office on 3.6.1988 at 8.55 p.m. Sub section (1) of section 40 of the Parishads Act made it abundantly clear that a nominated person became the member of a 337 Panchayat only on the publication of his name under section 5(9) of the Parishads Act read with rule 73 of the Parishads Rules. A petition was filed in the High Court challenging the appellant 's election on the ground that the inclusion of the 242 nominated members in the electoral roll took place after the period for nomination was over and they were, therefore, not included in the electoral roll in the eye of law. After examining the evidence led by the parties the High Court held that the names were not included in the electoral roll by 3.00 p.m. on 3.6.1988. Accordingly, the High Court set aside the election of the appellant and directed recount of votes after excluding those of 242 members. Before this Court in appeal it was inter alia contended on behalf of the appellant that (i) the evidence on the record established that information of the publication of the names of more than 2/3rd of the total number of nominat ed persons had reached the Deputy Commissioner in time for the amendment of the Council Constituency roll, and that the Deputy Commissioner had actually made an order for the inclusion of the names in the roll on 2.6.1988 (ii) putting the final voters list on the notice board was not a neces sary requirement under the law; and (iii) since the burden was on the election petitioner to prove such facts which may vitiate the election, he must fail in the present state of evidence. On behalf of the respondents it was contended that the electoral roll must be held to have been modified in the eye of law only at 8.55 p.m. on 3.6.1988 when the alleged inclu sion of the names was made public and not earlier. Dismissing the appeal, this Court, HELD: (1) A plain reading of the evidence suggests that both the up dating of the electoral roll and pasting a copy thereof took place on 3.8.1988 at 8.55 p.m. [346G] (2) The circumstances that (i) the Deputy Commissioner was not able to assert in his evidence before the Court that the revision of the roll had taken place before 3.00 p.m.; (ii) he was under an impression that the revision was per missible till the midnight; and (iii) in spite of the docu ments available to him he was not in a position to assert that the 338 report of publication of the names of 2/3rd or more of the nominated persons in the offices of the Mandal Panchayats had been received in his office before the deadline, strong ly support the case of the election petitioner. [346H; 347A] (3) Besides fixing the identity of the persons to be allowed to vote at the election, the purpose of the prepara tion of the roll is to enable the persons included therein to decide as to whether they would like to contest the election and to help such persons in assessing their chances of success. [348F] (4) The intending contestants and their supporters thus heavily depend upon the final electoral roll for deciding their future conduct, and it is, therefore, extremely essen tial that it is made available to them before the expiry of the period fixed for filing the nomination papers. [348G] (5) If the roll as it stood earlier, was confidentially corrected by the Electoral Registration Officer concerned sitting in his office which did not see the light of the day, the same cannot be considered to have been prepared accordingly to law. [348H] Bachhittar Singh vs The State of Punjab, [1962] Supp. 3 SCR 713, referred to. (6) It is correct that putting the final voters list on the notice board is not a necessary requirement under the law. But that does not lead to the further conclusion that the electoral roll can be prepared secretly and kept in the drawers of the Officer without any information knowledge to persons who are interested in finding out its final shape. [349B] S.K. Srinivasan and others vs State of Karnataka and Others, , referred to. (7) The Acts of the legislature are passed by the ac credited representatives of the people who in theory can be trusted to see that their constituents know what has been done, and this is done only after debates take place which are open to the public. The matter thus receives wide pub licity through the media. But the case is different with the delegated legislation and, if one may add, also in the case of orders passed by the authorities like that in the present appeal. The mode of publication can vary but there must be reasonable publication of some sort. [349H; 350A B] 339 Harla vs State of Rajasthan, ; ; Fatma Haji Ali Mohammad Haji vs State of Bombay, ; ; State of Maharashtra vs Mayer Hans George, ; and Johnson vs Sargant & Sons, , referred to.

Special Leave Petition (Civil) No. 1265 of 1987. From the Judgment and Order dated 24.11.1986 of the Bombay High Court in Appeal No. 1042 of 1986. J.P. Cama and Raju Ramachandran for the Petitioner. Miss Indira Jaisingh and Ravi P. Wadhwani for the Respond ents. The Order of the Court was delivered by VENKATARAMIAH, J. In this Special Leave Petition filed under Article 136 of the Constitution of India, which is filed against the decision dated November 24, 1986 of the High Court of Bombay in Appeal No. 1042 of 1986, the ques tion whether the petitioner had violated the provisions of section 4 of the (No. 25 of 1976) (hereinafter referred to as 'the Act ') arises for consideration. 665 The petitioner is a company carrying on the business of rendering supporting services to water transport, like operation and maintenance of piers, docks, pilotage, light houses, loading and discharging of vessels etc. referred to as Item No. 12 under the heading 'Water Transport ' in the list of establishments and employments to which the Act has been made applicable under sub section (3) of section 1 of the Act. Respondent No. 1 Audrey D 'Costa was one of the employees working under the petitioner till June 13, 1977 on which date her services were terminated. During the period of her employment under the petitioner she was working as a Confidential Lady Stenographer. After her services were terminated, she instituted a petition before the Authority appointed under sub section (1) of section 7 of the Act complaining that during the period of her employment, after the Act came into force, she was being paid remuneration at the rates less favourable than those at which remuneration was being paid by the petitioner to the Stenographers of the male sex in its establishment for performing the same or similar work. She claimed that she was entitled to recover from the petitioner the amount equivalent to the difference between the remuneration which she was being paid and the remuneration which was being paid to the male Stenographer who had put in the same length of service during the period of operation of the Act. The petitioner opposed the said petition. The petitioner contended inter alia that the business which was being carried on by it was not one of those businesses notified under sub section (3) of section 1 of the Act; that there was no difference in the scales or grades of pay between lady Stenographers and other male Stenographers at the time when the case was pending before the Authority referred to above; that the Respondent No. 1 and other lady Stenographers who had been doing the duty as Confidential Stenographers attached to the senior Executives of the petitioner company were not doing the same or similar work which the male Stenographers were discharging; and that there was no discrimination in salary on account of sex. The petitioner contended that section 4 of the Act had not been violated by it. After hearing both the parties, the Authority which heard the complaint of the Respondent No. 1, found that the male Stenographers and the lady Stenographers were doing the same kind of work, but it, however, rejected the complaint holding that in view of a settlement which had been arrived at in 1975 between the employees ' Union and the management, the Respondent No. 1 was not entitled to any relief. The Authority held that the petitioner had not committed the breach of section 4 of the Act as no discrimination on the ground of sex had been made. It accordingly rejected the complaint of the 666 Respondent No. 1 by its order dated March 30, 1982. Ag grieved by the order of the Authority appointed under sub section (1) of section 7 of the Act, the Respondent No. 1 filed an appeal before the Deputy Commissioner of Labour (ENF), Bombay, who was the Appellate Authority appointed under sub seCtion (6) of section 7 of the Act. The Appellate Authority came to the conclusion that there was clear dis crimination between the male Stenographers and the female Stenographers working in the establishment of the petitioner and ,the petitioner had committed the breach of the provi sions of the Act. Accordingly, the appeal was allowed by the Appellate Authority on May 31, 1982. It directed the peti tioner to make payment of Rs.7,196.67 paise which was the difference between the basic salary of the Respondent No. 1 and the basic salary of her male counter parts from 26.9. 1975 to 30.6.1977 on which date her services came to be terminated. The petitioner was also directed to make payment of the difference in the amount of dearness allowance paid to the Respondent No. 1 and the dearness allowance paid to her male counter parts during the said period. The petition er was also directed to contribute to the Employees ' Provi dent Fund account on the basis of the above directions. Aggrieved by the decision of the Appellate Authority, the petitioner filed a writ petition in the High Court under Article 226 of the Constitution of India in Writ Petition No. 1624 of 1982. The learned Single Judge who heard the writ petition found that there was no doubt that the work performed by the female Stenographers and work performed by the male Stenographers were indentical and that the Respond ent No. 1 and other female Stenographers were being paid less than their male counter parts who were in service for an equal number of years and the Respondent No. 1 was enti tled to the difference between the pay and allowances which had been paid to a male Stenographer who had put in service for the same number of years as the Respondent No. 1 and the amount of pay and allowances actually paid to her for the period between October 8, 1976 and June 13, 1977. Since the Appellate Authority had committed an error as regards the period in respect of which Respondent No. 1 was entitled to relief the case was remanded to the Appellate Authority for computing the amount due to the Respondent No. 1 afresh. The order of the Appellate Authority was affirmed in other respects. Aggrieved by the decision of the learned Single Judge, the petitioner filed an appeal in Appeal No. 1042 of 1986 before the Division Bench of the High Court which came to be dismissed on November 24, 1986. Aggrieved by the decision of the Division Bench, the petitioner has filed this petition under Article 136 of the Constitution of India. 667 Before dealing with the contentions of the parties, it is necessary to set out the relevant legal provisions gov erning the case. Article 39 (d) of the Constitution of India provides that the State shall, in particular, direct its policy towards securing that there is equal pay for equal work for both men and women. The Convention Concering Equal Remuneration for Men and Women Workers for Work of Equal Value (for short, Equal Remuneration Convention, 1951) was adopted by the General Conference of the International Labour Organisation on June 29, 195 1. India is one of the parties to the said Convention. Article 2 of that Convention provides that each Member shall, by means appropriate to the methods in operation for determining rates of remuneration, promote and, in so far as is consistent with such methods, ensure the application to all workers of the principle of equal remuneration for men and women workers for work of equal value and that this principle may be applied by means of (a) national laws or regulations, (b) legally established or recognized machinery for wage determination, (c) collec tive agreements between employers and workers, and (d) a combination of these various means. Article 3 of the Conven tion provides that where such action will assist in giving effect to the provisions of the Convention, measures shall be taken to promote appraisal of jobs on the basis of the work to be performed. The methods to be followed in this appraisal may be decided upon by the authorities responsible for the determination of rates of remuneration, or where such rates are determined by collective agreements, by the parties thereto. In England the above Convention is given effect to by the enactment of Equal Pay Act, 1970. Almost all other European community States have also signed the convention. The European Economic Community Treaty also provided that during the first stage that is before 31st December, 1961 each. member State should ensure and subse quently maintain the application of the principle that men and women should receive equal pay for equal work. (See E.E.C. Treaty article 119, 1st Para). Many cases have been since decided by the national courts in those States and also in the European Court of Justice on the basis of the several laws enacted by the said States in implementation of the Equal Remuneration Convention, 1951. The E.E.C. States are obliged to observe this Convention faithfully. A short account of this branch of law is to be found in Halsbury 's Laws of England 4th Edn. 52, paras 20.11. to 20.18. Many interesting cases are referred to in those paragraphs. In one case it is held that (i) where a job classification system is used for determining pay, it must be based on the same criteria for both men and women and so drawn up as to exclude any discrimination on the ground of sex. In another case concerning the pay of a woman who claimed equal pay with her 668 predecessor, a man, the European Court held that the concept of equal pay in the E.E.C. Treaty was not restricted to cases where men and women were employed contemporaneously but also applied where a woman, received less pay than a man employed prior to her by the employer on equal work (See Macarthy 's Ltd. vs Smith, 1981 Q.B.180.). In order to implement Article 39 (d) of the Constitution of India and the Equal Remuneration Convention, 1951, re ferred to above, the President promulgated on the 26th September, 1975 the Equal Remuneration Ordinance, 1975 so that the provisions of Article 39(d) of the Constitution of India might be implemented in the year which was being celebrated as the International Women 's Year. The said Ordinance provided for payment of equal remuneration to men and women workers for the same work or the work of a similar nature and for the prevention of discrimination on account of sex. The Ordinance also ensured that there was no dis crimination against recruitment of women and provided for the setting up of Advisory Committees to promote employment opportunities for women. The above Ordinance was replaced by the Act Which received the assent of the President on Febru ary 11, 1976. The long title of the Act states that it is intended to provide for the payment of equal remuneration to men and women workers and for the prevention of discrimina tion on the ground of sex against women in the matter of employment and for matters connected therewith or incidental thereto. Sub section (3) of section 1 of the Act provides that the Act shah come into force on such date, not being later than three years from the passing of the Act, as the Central Government may, by notification, appoint and differ ent dates may be appointed for different establishments or employments. Insofar as the establishment of the petitioner was concerned, the Act came into force with effect from October 8, 1976. The expressions 'commencement of this Act ', 'remuneration ' and 'same work or work of a similar nature ' are defined in section 2(b), (g) and (h) respectively of the Act. Commencement of this Act ' means in relation to an establishment or employment, the date on which the Act comes into force in respect of that establishment or employment by the issue of the necessary notification under section 1(3) of the Act. 'Remuneration ' means the basic wage or salary and any additional emoluments whatsoever payable, either in cash or in kind, to a person employed in respect of employ ment or work done in such employment, if the terms of the contract of employment, express or implied, were fulfilled. 'Same work or work of a similar nature ' means work in re spect of which the skill, effort and responsibility required are the same when performed under similar 669 working conditions, by a man or a woman and the differences, if any, between the skill, effort and responsibility re quired of a man and those required of a women are not of practical importance in relation to the terms of conditions of employment. Section 3 of the Act has given overriding effect to the provisions of the Act. It provides that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any award, agreement or contract of service, whether made before or after the commencement of the Act, or in any instrument having effect under any law for the time being in force. The crucial section which arises for consideration in this case is section 4 of the Act. It reads thus: "4. Duty of employer to pay equal remuneration to men and women workers for same work or work of a similar nature (1) No employer shall pay to any worker, employed by him in an estab lishment or employment, remuneration, whether payable in cash or in kind, at rates less favourable than those at which remuneration is paid by him to the workers of the opposite sex in such establishment or employment for per forming the same work or work of a similar nature. (2) No employer shall, for the purpose of complying with the provisions of sub section (1), reduce the rate of remunera tion of any worker. (3) Where, in an establishment or employment, the rates of remuneration payable before the commencement of this Act for men and women workers for the same work or work of a similar nature are different only on the ground of sex, then the higher (in cases where there are only two rates), or as the case may be, the highest (in cases where there are more than two rates), of such rates shall be the rate at which remuneration shall be payable, on and from such commencement, to such men and women workers: Provided that nothing in this sub section 'shall be deemed to entitle a worker to the revision of the rate of remuneration payable to him or her with reference to the service rendered by him or her before the commencement of this Act. " 670 Section 5 of the Act prohibits any kind of discrimina tion being made while recruiting men and women workers. Section 6 of the Act provides for the appointment of an Advisory Committee to advise the appropriate Government with regard to the extent to which women may be employed in such establishments or the employments as the Central Government may, by notification, specify in that behalf. Section 7 of the Act provides for the appointment of the adjudicating Authority whenever a dispute arises between the management and the employees as also an Appellate Authority which can hear an appeal against the decision of the Authority. Sec tion 16 of the Act provides that where the appropriate Government is, on a consideration of all the circumstances of the case satisfied that the differences in regard to the remuneration or a particular species of remuneration of men and women workers in any establishment or employment is based on a factor other than sex, it may, by notification make a declaration to that effect and any act of the employ er attributable to such a difference shall not be deemed to be a contravention of any provision of the Act. The point which arises for consideration in this peti tion is whether the Respondent No. 1 is entitled to any relief within the scope of section 4 of the Act. In order to grant such relief under section 4 of the Act the employee should establish that the remuneration paid by the employer, whether payable in cash or kind, is being paid at rates less favourable than those at which remuneration is paid by him to the employees of the opposite sex in such establishment for performing the same work or work of a similar nature. Whether a particular work is same or similar in nature as another work can be determined on three considerations. In deciding whether the work is the same or broadly similar, the Authority should take a broad view; next, in ascertain ing whether any differences are of practical importance, the Authority should take an equally broad approach for the very concept of similar work implies differences in details, but these should not defeat a claim for equality on trivial grounds. It should look at the duties actually performed not those theoretically possible. In making comparison the Authority should look at the duties generally performed by men and women. Where however both men and women work at inconvenient times, there is no requirement that all those who work e.g. at night shall be paid the same basic rate as all those who work normal day shifts. Thus a woman who works days cannot claim equality with a man on higher basic rate for working nights if in fact there are women working nights on that rate too, and the applicant herself would be enti tled to that rate if she changed shifts. (See I.T. Smith and J.C. Wood: Industrial Law, 2nd Edition, (Butterworths) 671 page 308). We do not suggest that there can be no discrimi nation at all between men and women in the matter of remu neration. There are some kinds of work which women may not be able to undertake. Men do work like loading, unloading, carrying and lifting heavier things which women cannot do. In such cases there cannot be any discrimination on the ground of sex. Discrimination arises only where men and women doing the same or similar kind of work are paid difer ently. Wherever sex discrimination is allegeo, there should be a proper job evaluation before any further enquiry is made. If the two jobs in an establishment are accorded an equal value by the application of those criteria which are themselves non discriminatory (i.e. those criteria which Iook directly to the nature and extent of the demands made by the job) as distinct from criteria which set out differ ent values for men and women on the same demand and it is found that a man and a woman employed on these two jobs are paid differently, then sex discrimination clearly arises. (See Paul Davis and Mark Freedland: Labour Law, Text and Material 1979 page 297). It has been found by the Authority, the Appellate Au thority and by the learned Single Judge that the Confiden tial Lady Stenographers were doing the same work or work of a similar nature as defined by section 2(h) of the Act which the male Stenographers in the establishment of the petition er were performing. The Respondent No. 1 was working as a lady Stenographer. The lady Stenographers working in the establishment of the petitioner were called 'Confidential Lady Stenographers ' since they were attached to the senior Executives working in the petitioner company. In addition to the work of Stenographers they were also attending to the persons who came to interview the senior Executives and to the work of filing, correspondence etc. There was practical ly no difference between the work which the Confidential Lady Stenographers were doing and the work of their male counter parts. It was suggested that the lady Stenographers were found by the management to be proper persons to be Confidential Stenographers. It may be so. It, however, does not mean that they should suffer for their loyalty, integri ty, sincerity and punctuality and receive less pay for possessing those qualities when they are doing the same kind of work as men. In the circumstances of the case, applying the true tests which are discussed above to the facts of this case, we do not find any ground to take a view differ ent from the view taken by the learned Single judge, the Appellate Authority and the Authority who have dealt with this case. The next question is whether the lady Stenographers were being 672 paid the remuneration, which included basic pay, and any additional emoluments whatsoever payable either in cash or in kind, less than what was being paid to their male coun ter parts who had put in service for the same number of years. It is true that there was a settlement arrived at between the employees ' Union and the management in the year 1975 and it had been arrived at after negotiations between the parties to the settlement. Prior to the settlement the Respondent No. 1 was getting as basic salary of Rs. 560 in the pay scale of Rs.150 15 180 20 340 25 440 28 496 32 560 in addition to a fixed D.A. of Rs.525 per month. Thus the Respondent No. 1 was getting a remuneration to the tune of Rs.1085 per month. Under the settlement her basic salary was reduced to Rs.245 from Rs.560 and the D.A. was increased to Rs.935.25 paise. In all she was getting a remuneration of Rs.1180.25 paise per month under the settlement, thus in creasing her gross salary by Rs.95.25 paise. On the other hand, her male counter part who had put in service for an equal number of years was being paid Rs.585 by way of basic pay and Rs.1325.45 paise by way of dearness allowance under the settlement. In all he was being paid Rs.1910.45 paise. Thus it is seen that the Respondent No. 1 was getting every month Rs.730.20 paise less than the remuneration which her male counter part was getting. The question for considera tion is whether the management was justified in paying such remuneration to her. It was urged on behalf of the manage ment that the difference between the remuneration of the male Stenographers and the remuneration of the Confidential Lady Stenographers was on account of the settlement which was arrived at after proper negotiation and that the Court must have regard to it. Section 3 of the Act clearly pro vides that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any award, agreement or contract of service, whether made before or after the com mencement of the Act, or in any instrument having effect under any law for the time being in force. The petitioner cannot, therefore, rely upon the settlement arrived at between the parties. The settlement has to yield in favour of the provisions of the Act. It was next contended on behalf of the petitioner that the discrimination between the male Stenographers and the Confidential Lady Stenographers had not been brought about only on the ground of sex. We find it difficult to agree with this contention. It may be that the management was not employing any male as a Confi dential Stenographers attached to the senior Executives in its establishment and that there was no transfer of Confi dential Lady Stenographers to the general pool of Stenogra phers where males were working. It, however, ought not to make any difference for purposes of the application of the Act when once it is es 673 tablished that the lady Stenographers were doing practically the same kind of work which the male Stenographers were discharging. The employer is bound to pay the same remunera tion to both of them irrespective of the place where they were working unless it is shown that the women are not fit to do the work of the male Stenographers. Nor can the man agement deliberately create such conditions of work only with the object of driving away women from a particular type of work which they can otherwise perform with the object of paying them less remuneration elsewhere in its establish ment. In the present case the place where the employees worked is irrelevant for purposes of section 4 of the Act. We shall now proceed to consider the effect of sub section (3) of section 4 of the Act on which much emphasis was placed by the management. It provides that where in an establishment or an employment the rates of remuneration payable before the commencement of the Act for men and women workers for the same work or work of a similar nature are different only on the ground of sex, then the higher (in cases where there are only two rates), or, as the case may be, the highest (in cases where there are more than two rates), of such rates shall be the rate at which remunera tion shall be payable, on and from such commencement, to such men and women workers. The meaning of sub section (3) to section 4 of the Act is that if for doing the same or similar work there are more than two or three rates of remuneration, the higher or the highest of such rates shall be the rate at which the remuneration shall be payable from the date of the commencement of the Act to men and women workers doing the same or similar kind of work in the estab lishment. The proviso provides that nothing in the sub section shall be deemed to entitle a worker to the revision of the rate of remuneration payable to him or her with reference to the service rendered by him or her before the commencement of the Act. The salient features of the settle ment of 1975 are as follows: "I. Clerical & Subordinate Staff: Pay scales remain unaltered. However they will be granted increments as under: (a) All staff who have completed one or more than one year 's service as on 1.5.75 will get one increment in their respective scales with effect from 1.5.75. (b) All staff who have reached the maximum of their 674 respective pay scales including those in 'E ' grade who have completed 35 years of service will receive one increment as per the last increment of the scale, with effect from 1.5.75. (c) In addition to this, those who retire during the course of the Agreement, i.e., during the period 1.5.75 to 30.4.78 will receive one increment in the year of their retirement. Lady Stenographers: Their pay scales will be brought on par with their male counterparts in the fol lowing manner: (a) All those who have completed 7 years of service or less on 1.5.75 will be fitted to the starting figures of 'B ' grade clerical scale. (b) All those with more than 7 years of serv ice but less than 10 years of service as on 1.5.75 will be fitted to that stage of 'B ' grade which is one step higher than the start ing figure. (c) All those with more than 10 years of service as on 1.5.75 will be first fitted to the starting salary of grade 'A ' and then given one increment in the scale for every 5 years of service or a fraction thereof, over and above 10 years of service. (d) The revisions will come into effect with effect from 1.5.75. (e) While effecting fitments as explained in (a), (b) and (c) above, if the revised gross emoluments happen to be less than the existing gross salary, or, if the enhancement of gross emoluments as a result of the revision works out to less than Rs.50, then, in such individ ual cases, the basic salaries in the respec tive scales will be stepped up in such a way, as to ensure a minimum of Rs.50 increase in gross salary. (f) The figures for comparison will be the gross salaries for the month of May 1975. 765 (g) All other terms and conditions as applica ble to clerical and subordinate staff will also apply to lady stenographers with effect from 1.5.75 . . . . . . It is not disputed that the male Stenographers came under the category of 'Clerical & Subordinate Staff '. It is also not disputed that the terms regarding the fitment of lady Stenographers either in the 'A ' grade or 'B ' grade, referred to in the settlement is less favourable to them and the same conditions were allowed to remain in force even after the Act came into force. The very fact that the lady Stenographers are treated diferently and as a class differ ent from the clerical and subordinate staff by paying less remuneration even though they have put in the same length of service and they are placed in the same scale of pay smacks of discrimination. The discrimination thus brought about by the terms of settlement only on account of the sex of the employees cannot be allowed to persist in view of section 4 of the Act. We do not agree that the work of the Confiden tial lady Stenographers is a sex based one like the work of air hostesses. There is no custom or rule that only ladies can be Confidential Stenographers. If only women are working as Confidential Stenographers it is because the management wants them there. Women are neither specially qualified to be Confidential Stenographers nor disqalified on account of sex to do the work assigned to the male Stenographers. Even if there is a practice in the establishment to appoint women as Confidential Stenographers such practice cannot be relied on to deny them equal remuneration due to them under the Act. The management is liable to pay the same remuneration to all the Stenographers on the same basis irrespective of their sex. The salary and remuneration payable to the lady Stenographers should be computed in accordance with the terms applicable to all the male Stenographers. When so computed, it is not disputed, that the Respondent No. 1 would be entitled to higher remuneration as observed by the Appellate Authority and the learned Single Judge of the High Court. We are of the view that the petitioner cannot derive any benefit from sub section (3) of section 4 of the Act and the proviso thereto because sub section (3) would be at tracted only where in an establishment or an employment rates of remuneration payable before the commencement of the Act for the men workers and for the women workers for the same work or work of similar nature are different. In the instant case after the settlement was arrived at there was a common pay scale both for men and women as can be seen from the settlement, referred to above. The discrimination was, however, brought about while carrying out the fitment of the lady 676 Stenographers in the said scale of pay. The proviso to sub section (3) to section 4 comes into operation only where sub section (3) is applicable. Since there are no different scales of pay in the instant case sub section (3) of section 4 of the Act would not be attracted and consequently, the proviso would not be applicable at all. The proviso cannot travel beyond the provision to which it is a proviso. This is a case to which sub section (1) to section 4 of the Act applies because the impugned remuneration payable to lady Stenographers has been reduced on account of the inequitable provision regarding fitment in the common scale of pay which is applicable to both men and women Stenographers. Having stated that there was a common pay scale for both male Stenographers and female Stenographers it is not open to the petitioner to contend that the order of the High Court was contrary to the proviso to sub section (3) to section 4 of the Act. We, therefore, reject the contention that the order passed by the High Court is contrary to the proviso to sub section (3) of section 4 of the Act. It is lastly urged on behalf of the petitioner that the enforcement of the Act will be highly prejudicial to the management, since its financial position is not satisfactory and the management is not able to pay equal remuneration to both male Stenographers and female Stenographers. The Act does not permit the management to pay to a section of its employees doing the same work or a work of similar nature lesser pay contrary. to section 4(1) of the Act only because it is not able to pay equal remuneration to all. The ap plicability of the Act does not depend upon the financial ability of the management to pay equal remuneration as provided by it. We do not find any ground to interfere with the judgment of the High Court. The petition, therefore, fails and it is dismissed. There shall, however, be no order as to costs. A.P.J. Petition dismissed.

After the services of the respondent No. 1, who was working as a Confidential Lady Stenographer with the peti tioner company, were terminated on June 13, 1977, she insti tuted a petition before the Authority appointed under sub section (1) of section 7 of the complaining that during the period of her employment, after the Act came into force, she was being paid remuneration at the rates less favourable than those paid to the Stenographers of the male sex in the petitioner 's establishment for performing the same or similar work 660 and claimed that she was entitled to recover the difference between remuneration paid to her and the male Stenographers. The petitioner opposed the petition contending, inter alia, that the business carried on by it was not one of those businesses notified under sub section (3) of section 1 of the Act; that there was no difference in the scales or grades or pay between lady Stenographers and male Stenographers; that the respondent No. 1 and other lady Stenographers who had been doing the duty as Confidential Stenographers attached to the Senior Executives were not doing the same or similar work which the male Stenographers were discharging; and that since there was no discrimination in salary on account of sex s.4 of the Act had not been violated. The Authority found that the male Stenographers and the lady Stenographers were doing the same kind of work, but rejected the complaint holding that in view of a settlement arrived at between the employee 's Union and the management the respondent No. 1 was not entitled to any relief and that the petitioner had not committed the breach of section 4 as no discrimination on the ground of sex has been made. The Appellate Authority allowed the appeal of Respondent No. I holding that there was clear discrimination between the .male Stenographers and the female Stenographers and the petitioner had committed the breach of the provisions of the Act and directed the petitioner to make the payment of the difference between the basic salary and dearness allowances paid to respondent No. 1 and her male counter parts from 26.9.1975 to 30.6.1977 and to contribute to the Employees Provident Fund. In the petition under Article 226 the Learned Single Judge affirmed the order of the Appellate Authority but remanded the case for computing the amount due to the re spondent No. 1 afresh. The Division Bench dismissed the further appeal. Dismissing the Petition, HELD: 1. To implement article 39(d) of the Constitution of India and Equal Remuneration Convention, 1951 (adopted by International Labour Organisation), the came to be enacted providing for the payment of equal remuneration to men and women workers and for the prevention of discrimination on the ground of sex against women in the matter of employment and for matters connected therewith or incidental thereto. In so far as the establish ment 661 of the petitioner was concerned, the Act came into force with effect from October 8, 1976. [668B F] 2. In order to grant relief under section 4 of the Act the employees should establish that the remuneration paid by the employer, whether payable in cash or kind, 1s being paid at rates less favourable than those at which remuneration is paid by him to the employees of the opposite sex in his establishment for performing the same work or work of a similar nature. [670D E] 3. In deciding whether the work is the same or broadly similar and whether any differences are of practical impor tance, the Authority should take an equally broad approach, for, the very concept of similar work implies differences in details, but these should not defeat a claim for equality on trivial grounds. It should look at the duties actually and generally performed not those theoretically possible by men and women. Where, however, both men and women work at incon venient times, there is no requirement that all those who work e.g. at night shall be paid the same basic rate as all those who work normal day shifts. Thus a woman who works days cannot claim equality with a man on higher basic rate for working nights if in fact there are women working nights on that rate too, and the applicant herself would be enti tled to that rate if she changed shifts. [670E H] I.T. Smith and J.C. Wood; Industrial Law, 2nd Edition (Butterworths) page 308, referred to. 4. It cannot be suggested that there can be no discrimi nation at all between men and women in the matter of remu neration on the basis of nature of work which women may not be able to undertake but in such cases there cannot be any discrimination on the ground of sex. Discrimination arises only where men and women doing the same or similar kind of work are paid differently. Wherever sex discrimination is alleged, there should be a proper job evaluation before any further enquiry is made. If the two jobs in an establishment are accorded an equal value by the application of those criteria which are themselves non discriminatory (i.e. those criteria which look directly to the nature and extent of the demands made by the job) as distinct from criteria which set out different values for men and women on the same demand and it is found that a man and a woman employed on these two jobs are paid differently, then sex discrimination clearly arises. [671A C] Paul Davis and Mark Freedland: Labour Law, Text and Material (1979) page 297, referred to. 662 5. In the instant case, the Authority, the Appellate Authority and the Single Judge have found that the Confiden tial Lady Stenographers were doing the same work or work of a similar nature as defined in section 2(h) of the Act which the male Stenographers in the establishment of the petitioner were performing. The respondent No. 1 was working as a lady Stenographer. The lady Stenographers working in the estab lishment of the petitioner were called "Confidential Lady Stenographers" since they were attached to the senior Execu tive working in the petitioner company. In addition to the work of the Stenographers they were also attending to the persons who came to interview the senior Executives and to the work of filing, correspondence. There was practi cally no difference between the work which the Confidential Lady Stenographers were doing and the work of their male counter parts. If the Lady Stenographers were found by the management to he proper persons to he Confidential Stenogra phers it does not mean that they should suffer for their loyalty, integrity, sincerity and punctuality and receive less pay for possessing those qualities when they are doing the same kind of work as men. Applying the true tests to the facts of the instant case there is no ground to take a different view from the view taken by the Authorities and the Single Judge. [671D H] 6. Though a settlement was arrived at between the em ployee 's Union and the management in the year 1975 after negotiations, but after the settlement the respondent No. 1 was getting every month Rs.730.20 paise less than the remu neration which her male counterpart was getting. In view of the provisions of section 3 the management cannot rely upon the settlement arrived at between the parties. The settlement has to yield in favour of the provisions of the Act. The fact that the management was not employing any male as a Confidential Stenographer attached to the senior Executives in the establishment and that there was no transfer of Confidential Lady Stenographer to the general pool of Ste nographers where males were working ought not to make any difference for purposes of the application of the Act. Once It is established that the lady Stenographers were doing practically the same kind of work which the male Stenogra phers were discharging the employer is hound to pay the same remuneration to both of them irrespective of the place where they were working unless it is shown that the women are not fit to do the work of the male Stenographers. Nor can the management deliberately create such conditions of work only with the object of driving away women from a particular type of work which they can otherwise perform with the object of paying them less remuneration elsewhere in its establish ment. [672B H; 673A B] 663 7. The meaning of sub section (3) to section 4 of the Act is that if for doing the same or similar work there are more than two or three rates of remuneration, the higher or the high est of such rates shall be the rate at which the remunera tion shall be payable from the date of the commencement of the Act to men and women workers doing the same or similar kind of work in the establishment. The proviso provides that nothing in the sub section shall be deemed to entitle a worker to the revision of the rate of remuneration payable to him or her with reference to the service rendered by him or her before the commencement of the Act. [673E F] 8. Under the settlement of 1975 the male Stenographers came under the category of "Clerical and Subordinate Staff". Undisputedly the terms regarding the fitment to lady Stenog raphers either In the 'A ' Grade or 'B ' grade, referred to In the settlement is less favourable to them and the same conditions were allowed to remain in force even after the Act came into force. The very fact that the lady Stenogra phers are treated differently and as a class different from the clerical and subordinate staff by paying less remunera tion even though they have put in the same length of service and they are placed in the same scale of pay smacks of discrimination. The discrimination thus brought about by the terms of settlement only on account of the sex of the em ployees cannot be allowed to persist in view of section 4 of the Act. The work of the Confidential Lady Stenographer cannot be said to be sex based one like the work of air hostesses. There is no custom or rule that only ladies can be Confiden tial Stenographers. If only women are working as Confiden tial Stenographers it is because the management wants them there. Women are neither specially qualified to be Confiden tial Stenographers nor disqualified on account of sex to do the work assigned to the male Stenographers. Even if there is a practice in the establishment to appoint women as Confidential Stenographers such practice cannot be relied on to deny them equal remuneration due to them under the Act. [675B E] 9. The management is liable to pay the same remuneration to all the Stenographers on the same basis irrespective of their sex. The salary and remuneration payable to the lady Stenographers should be computed in accordance with the terms applicable to all the male Stenographers. When so computed, undisputedly the Respondent No. 1 would be enti tled to higher remuneration as observed by the Appellate Authority and the Single Judge. The management cannot derive any benefit from sub section (3) of section 4 of the Act and the proviso thereto because sub section (3) would be attracted only where in an establishment or an employment rates of remuner ation payable before the commencement 664 of the Act for the men workers and for the women workers for the same work or work of similar nature are different. In the instant case, after the settlement was arrived at there was a common pay scale both for men and women as can be seen from the settlement. The discrimination was, however, brought about while carrying out the fitment of the lady Stenographers in the said scale of pay. [675E H; 676A] 10. The proviso to sub section (3) to section 4 comes into opera tion only where sub section (3) is applicable. Since there are no different scales of pay in the instant case sub section (3) of section 4 of the Act would not be attracted and consequently, the proviso would not be applicable at all. The proviso cannot travel beyond the provision to which it is a proviso. This is a case to which sub section (1) to section 4 of the Act applied because the impugned remuneration payable to lady Stenogra phers has been reduced on account of the inequitable provi sion regarding fitment in the common scale of pay which is applicable to both men and women Stenographers. [676A C] 11. The Act does not permit the management to pay to a section of its employees doing the same work or a work of a similar nature lesser pay contrary to section 4(1) of the Act only because it is not able to pay equal remuneration at all. The applicability of the Act does not depend upon the financial ability of the management to pay equal remunera tion as provided by it. [676E]

Civil Appeal No. 2843 of 1986 From the Judgment and Order dated 17.12.1982 of the Punjab & Haryana High Court in Civil Writ Petition No. 5548 of 1982. V.M. Tarkunde, Raian Karanjawala, Mrs. M. Karanjawala and Ejaz Mazbooi for the Appellant. Naunit Lal for the Respondents. The Judgment of the Court was delivered by 619 OZA,J. Leave granted. This appeal arises out of the judgment of the High Court of Punjab and Haryana in Civil Writ Petition No. 5548 of 1982 dated 17.12.1982. The appellant is a shopkeeper occupying Shop No. 13 situated on the road along side the Railway Line, Golebagh site in the city of Amritsar. There are 56 other shops similarly situated which are occupied by other allottees like the petitioner. The premises in occupation of the petitioner and other shopkeepers are on licences given by the Railway since April 1981. After the sanction was given to Railway for construction of these shops some dispute arose and the Corporation chose to revoke the sanction and ultimately as a result of litigation the present petitioner and the other shopkeepers similarly situated were given a notice to show cause by the Municipal Corporation, Amritsar and under section 269(i) of the Punjab Municipal Corporation Act, 1976. This was a composite notice also under Section 270(1) of the said Act. The petitioner received this notice along with other shopkeepers in the first half of October 1981. The petitioner and other shopkeepers submitted their replies to the Commissioner of Municipal Corporation and the Commissioner passed an Order directing the demolition of the shops on 9.11.1981. This order was served on the petitioner and all other shopkeepers. The petitioner being aggrieved by this order preferred an appeal before the District Judge under Section 269 sub clause (2). In this appeal before the District Judge the District Judge rejected an application submitted by the petitioner for recording of evidence and it was against this order passed by the District Judge that the petitioner filed a writ petition before the High Court wherein the Division Bench of the High Court took a view that if the District Judge so feels the application for recording of evidence could be considered under Order 41 Rule 27. The only question raised in this appeal is about the interpretation of Section 384. It was contended before us by the learned counsel for the appellant that in view of the language of Section 384 of the Punjab Municipal Corporation Act, 1976 in this appeal before the District Judge the procedure of a civil suit as provided in the Code of Civil Procedure will have to be followed and on the basis of this provision it was contended that the District Judge was bound to follow the procedure of a civil suit thereby framing of issues and recording of evidence 620 is necessary whereas the learned counsel for the respondent Municipal Corporation contended that the language of Section 384 only provides that in these proceedings before the District Judge the procedure of a civil suit as far as possible will be followed. It was, therefore, contended that the expression "civil suit" in Section 384 includes an appeal as an appeal is nothing but a continuation of proceedings of the civil suit and therefore the meaning of Section 384 could only be that in case of appeal the procedure of appeal under the Code of Civil Procedure shall be followed. Learned counsel for the parties also draw our attention to various facts and the manner in which the shops were initially allotted and the grievance that the Municipal Corporation had about the allotment of these shops to the particular persons. But in our opinion those are matters not relevant for the purpose of decision of this case. The only question that arises is as to whether in an appeal filed under Section 269 sub clause (2) the procedure of a civil suit as provided in the Code of Civil Procedure will have to be followed in view of language of Section 384 of the Punjab Municipal Corporation Act, 1976. Section 384 reads as follows: "The procedure provided in the Code of Civil Procedure, 1908, in regard to suits shall be followed, as far as it can be made applicable, in the disposal of applications, appeals or references that may be made to the court of the District Judge under this Act or any bye law made thereunder. " This provision talks of the procedure provided in the Code of Civil Procedure in regard to a suit shall be followed but it also refers to "as far as it can be made applicable" and the phrase that follows refers to an application, appeal or reference. This, therefore, clearly indicates that in the appeal, application or reference the same procedure need not be followed although it talks of the procedure of a civil suit but it is also mentioned that as far as it can be made applicable this goes to show that the procedure of a civil suit will have to be followed if it is consistent with the proceedings pending before the District Judge. The suit has not been specifically defined in the Code and from the scheme of the Code of Civil Procedure it appears that an appeal also is a continuation of the suit. The language used in Section 384 621 therefore only indicates that the procedure as comtemplated in the Code of Civil Procedure will have to be followed in these proceedings under this Act when the matter goes to the District Judge either by way of an application, reference or appeal. The procedure of this suit will include even the procedure of an appeal and it is because of this that the phrase as far as it can be made applicable has been used in this section. It, therefore, could not be contended that in an appeal under Section 269 sub clause (2) before a District Judge the procedure of a suit as provided in the Code of Civil Procedure (filing of plaint, written statements, issues, recording of evidence) will be necessary. The three proceedings contemplated in Section 384 are application, reference and appeal and therefore out of the scheme of the Code of Civil Procedure pertaining to the procedure of a civil suit or an appeal the relevant provisions will have to be applied for purposes of guidance of procedure and therefore the use of the phrase as far as it can be made applicable clearly indicates that it is not expected in any one of these proceedings to follow the procedure of a suit technically and strictly in accordance with the provisions contained in the Code of Civil Procedure. It is only for purposes of guidance that the procedure of a suit as provided in the Code of Civil Procedure can be considered and it will be the discretion of the authority (the District Judge) to apply as far as it could be applied in the appropriate proceedings. In our view, therefore, what High Court said, appears to be proper as the High Court stated in the impugned judgment that if the District Judge so feels, he may allow any additional evidence to be led under Order 41 Rule 27 of the Code of Civil Procedure. In fact, it would be enough to say that in an appropriate case whenever the District Judge feels satisfied he may give an opportunity to the parties to lead evidence as it will be open to the District Judge to apply the procedure as far as it can be made applicable in the facts and circumstances of each case. We, therefore, see no substance in this appeal. It is, therefore, dismissed. In the circumstances, no order as to costs. P.S.S. Appeal dismissed.

Section 384 of the Punjab Municipal Corporation Act 1976 states that the procedure provided in the Code of Civil Procedure in regard to suits shall be followed, as far as it can be made applicable, in the disposal of applications, appeals or references that may be made to the District Judge under the Act or any bye law made thereunder. A dispute between the Railways and the Municipal Corporation resulted in revocation of the sanction for construction of certain shops situated on the road along side the railway line in the city of Amritsar. Subsequently, the Municipal Commissioner passed an order directing demolition of these shops. The appellant, who is an allottee of one of these shops on licence from the Railways, being aggrieved by that order preferred an appeal before the District Judge under section 269(2) of the Act. In that appeal, the District Judge rejected an application submitted by the appellant for recording of evidence. The appellant filed a writ petition against that order before the High Court which took the view that if the District Judge so feels the application for recording of evidence could be considered under Order 41, Rule.27 of the Code of Civil Procedure. In the appeal by Special Leave to this Court on the question: 618 Whether in an appeal filed under section 269(2) of the Punjab Municipal Corporation Act 1976, the procedure of a civil suit as provided in the Code of Civil Procedure will have to be followed in view of the language of section 384 of the 1976 Act. Dismissing the Appeal, the Court, ^ HELD: The language used in section 384 of the Punjab Municipal Corporation Act 1976 only indicates that the procedure as provided in the Code of Civil Procedure in regard to a suit will have to be followed in proceedings under that Act when the matter goes to the District Judge either by way of an application, reference or appeal. The use of the phrase "as far as it can be made applicable" in that section goes to show that it is not expected in any one of the proceedings contemplated therein that is, applications, appeals and references to follow the procedure of a suit technically and strictly in accordance with the provisions contained in the Code of Civil Procedure. It is only for the purposes of guidance that the procedure of a suit as Provided in the Code of Civil Procedure can be considered. [621A B; C D] In an appropriate case whenever the District Judge feels satisfied he may give an opportunity to the parties to lead evidence under Order 41, Rule 27 of the Code of Civil Procedure, as it will be open to him to apply the procedure as far as it can be made applicable in the facts and circumstances of each case. [621E F] It, therefore, could not be said that in an appeal under section 269 sub cl.(2) before a District Judge the procedure of a suit as provided in the Code of Civil Procedure will be necessary. [621B C]

iminal Appeal No. 87 of 1962. Appeal by special leave from the judgment and order dated February 21, 1962, of the Punjab High Court in Cr. A. No. 1231 of 1961 and Murder Reference No. 98 of 1961. ' 587 Purushottam Trikamdas, C. L. Sareen and R. L. Kohli, for the appellants. N.S. Bindra and P. D. Menon, for the respondent. August 10. The two appellants Gurcharan Singh and Surjit Singh along with three others, Baland Singh, Daljit Singh and Ajit singh, were tried before the 2nd Addl. Sessions Judge Ferozepore for offences under Section 148 and section 302/149 I.P.C. The prosecution case against these five persons was that on or about the 18th May, 1961, they formed an unlawful assembly at the village Jhote with the common object of killing Arjan Singh, Sukhjit Singh Gurdial Singh and Piara Singh alias Balo, and that in prosecution of the said common object, they committed the offence of rioting when they were armed with deadly weapons. That is the essence of the charge under section 148. It was further alleged that on the same day and at the same time and place the said members of the unlawful assembly carried out its unlawful object and in so doing, the appellant Gurcharan Singh murdered Gurdial Singh and Sukhjit Singh, while the appellant Surjit Singh murdered Arjan singh and Piara Singh. That is how all the five accused persons were charged under section 302/149 of the Indian Penal Code. The trial Judge held that the charges against Daljit Singh had not been proved beyond a reasonable doubt and so, according to him, the prosecution case under section 148 had not been proved and that charge under section 149 bad not been sustained. In regard to the four other accused persons, he held that they were guilty under section 302/34 I.P.C. Having thus convicted them of the said offence, the learned Judge sentenced Gurcharan Singh, Baland Singh 588 and Surjit Singh to death and directed that Ajit Sigh should suffer imprisonment for life. The sentence of death imposed by the learned trial Judge was submitted to the Punjab High Court for confirmation, while all the four convicted persons preferred an appeal challenging their convictions and sentences imposed on them. The High Court considered both the matters together and has come to the conclusion that the charge under section 302/34 had not been proved against Baland Singh and Ajit Singh. That is why the said two accused persons have been acquitted, whereas the conviction of the appellants Gurcharan Singh and Surjit Singh as well as the sentence of death imposed on them have been confirmed. It is against this order that the two appellants have come to this Court by special leave. The incident which has given rise to the present criminal proceedings against the appellants took place on May 18, 1961, and as a result, four persons have been murdered they are Arjan Singh, Sukhjit Singh. Gurdial Singh and Piara Singh. The prosecution case is that on May 18, 1961, at about 6.30 A.M., the appellant Gurcharan Singh was pro ceeding to the house of his friend, Ajit Singh. GurCharan Singh, Surjit Singh and Daljit Singh are the sons of Baland Singh. Whilst Gurcharan Singh was thus proceeding to the house of Ajit Singh, he had to pass by the house of Saudagar Singh. Saudagar Singh objected to Gurcharan Singh paying by his house and that led to an altercation. In this altercation, Saudagar Singh and his two sow Kulwant Singh and Darshan Singh inflicted some injuries on Gurcharan Singh as well as on Ajit Singh who came on the scene. Gurcharan Singh and Ajit Singh thereupon ran away. This is the first incident which took place on that day. About half an hour after this incident, another incident took place. It appears that the five 589 accused persons got together and wanted to avenge the beating given by Saudagar Singh and his sons to Gurcharan Singh and Ajit Singh. Gurcharan Singh and Daljit Singh armed themselves with gandasas, Surjit Singh carried a gun for which his Gaj brother Daljit Singh had a licence, Ajit Singh carried a 'dang ', while Baland Singh, the appellants ' father, headed the party, but was not armed. This partly came across Arjan Singh near the house of Jarnail Singh. It appears that Arjan Singh was afraid of these men and so, he used to carry with him a licensed gun. As soon as Arjan Singh was sighted, Baland Singh told his sons and Ajit Singh to assault him, and the party began to assault Arjan Singh. A gandasa blow was given on his forearm as a result of which Arjan Singh lost his grip on the gun and it fell down. Immediately thereafter, Gurcharan Singh picked it up. Arjan Singh then implored his assailants not to beat him and offered to go to the Gurdwara to take an oath that the allegation against him was untrue. It is suggested that Baland Singh was satisfied with this offer and so persuaded his sons and their friend not to harass him any more. This is the second incident which took place as a result of the first incident. It is the epilogue of the second incident which followed soon after that led to the murder of the four victims. It appears in evidence that while Arjan Singh was imploring his assailants not to attack him and soon after the attack stopped, Gurdev Singh, the son of Arjan Singh, happened to come, out of the Gurdwara and saw his father facing a dangerous crowd. So, he ran to his house and asked his brothers to come and help him to rescue their father. While Arjan Singh was returning to his house, on the way. he met his sons Gurdev Singh, Gurdial Singh and Gurcharan Singh who had armed themselves, and were. proceeding towards 590 the spot where he had been encircled by his opponents. At that time, Rekha Ram also come on the spot and he was being followed by his brother Piara. Sukhjit Singh and Jagjit Singh also came on the scene. Arjan Singh told them all to go back and assured them that his offer to take the oath in the Gurdwara had pacified his opponents and he was no longer in any difficult situation. As a result of this statement of Arjan Singh, the persons who were going to the spot to help him desisted from going any further. At that time, all the five accused persons spotted Arjan Singh 's sons coming to the spot and that infuriated Baland Singh. He then rene wed his exhortation to his companions and asked them to finish their enemies Soon thereafter, Gurcharan Singh fired a shot from the gun which hit Gurdial Singh on his forehead and in consequence, he fell down dead on the spot. Surjit Singh fired two shots in quick succession which hit Arjan Singh and killed him. Gurcharan Singh fired another shot which hit Sukhjit Singh who fell down with serious injuries. Surjit Singh again fired another shot which hit Piara and. he fell down dead on the spot. All the five accused persons then indulged in lalkaras and abused their enemies. This occurrence was witnessed by Gurdev Singh (P.W. 2), Sukhdev Singh (P.W. 3, Gurcharan Singh (P.W. 4), Rakha Ram (p.w.5) and Jagjit Singh (P.W. 6). sukhjit Singh who lay seriously injured was taken to the hospital at Ferozepure for medical treatment, but not withstanding the treatment, he succumbed to his injuries. I at, in brief, is the prosecution case against the appellants. The prosecution attempted to prove its case by examining the eye witnesses, Gurdev Singh, Sukhdev Singh, Gurcharan Singh and Rekha Ram, Jagjit Singh was tendered for cross examination. The defence admitted that Guroharan Singh and Ajit Singh were present on the scene and,that 591 Gurcharan Singh fired twice from a gun, but that was in self defence. The remaining three accused persons denied their presence on the scene of the offence and alleged that they had been falsely implicated. It does appear that there was bitter enmity between the two parties for several years past. Criminal proceedings had taken place between them and there is no doubt ' about the existence of hostility between them. Sometime before this occurrence, Kulwant Singh (P.W. 7) was arrested in an excise case for running a still, and in that case, the appellant Gurcharan Singh was a prosecution witness. Besides, the appellant Gurcharan Singh had opposed Arjan Singh for the office of Sarpaneh but had failed. The defence, therefore, was that it is out of enmity and hostility that the three accused persons who were not present had been falsely involved in this case and that in respect of Gurcharan Singh and Ajit Singh who were present, the truth was that they had been attacked by the persons belonging to the party of Arjan Singh, and Gurcharan, Singh had fired in exercise of his right of private defeence. The trial Judge examined the evidence adduced before him, considered the arguments raised by the defence and came to the conclusion that the charge of murder under section 302/34 had been proved against Baland Singh, Gurcharan Singh, Surjit Singh and Ajit Singh. The High Court, in substance. has agreed with the conclusions of the trial Court in respect of the prosecution case against the two appellants Gurcharan Singh and Surjit Singh. It has, however held that the evidence about the exhortation alleged to have been given by Baland Singh was not proved by satisfactory evidence and the main charge against Baland Singh and Ajit Singh had not been proved beyond a reasonable doubt. It is on this 592 finding that the said two accused persons were acquitted, whereas the appellants ' conviction 'and sentence have been confirmed. Mr. Purushotam for the appellants contends that the judgment of the High Court suffers from some serious infirmities and so, he argues that in the interest of justice, we ought to examine the evidence ourselves. It is, therefore, necessary to examine the broad arguments on which the judgment under appeal has been attacked by Mr. Purushotam. The first point which has been urged before us is that the High court has not properly considered the pies of self defence raised by Gurcharan Singh, and it is pointed out that in rejecting the said theory, the High Court had relied on a prior statement of Gurcharan Singh which had been excluded from evidence by the trial Judge. It appears that Gurcharan Singh had filed a complaint against the prosecution witnesses and that complaint was admitted at the trial as Exbt. The said document first describes the injuries inflicted on Gurcharan Singh and then proceeds to give a detailed account of the incident which led to the said injuries. This document was proved by Sub Inspector Udham Singh by the defence in cross examination. When this document was tendered, the part of the document which referred to the injuries on Gurcharan Singh was marked and admitted in evidence. The remaining portion of the document was excluded. When the High Court considered the theory of self defence urged on behalf of Gurcharan Singh, it took the view that the said theory could not be accepted because it was inconsistent with Gurcharan Singh 's version about the incident contained in Exbt. Mr. Purushotam objects to this part of the judgment and we think, rightly. It is unfortunate that the attention of the High Court was not drawn to the fact that the portion of document DE on which it was basing its criticism against the defence theory 593 of self defence had not been admitted in evidence. That no doubt is a serious infirmity in the reasoning and so, Mr. Purushotam is entitled to say that the conclusion of the High Court on this part of the defence case cannot be accepted without examination of its merits by us. The other contention which Mr. Purushotam has raised before us is that in dealing with the case of Self defence, the High Court has not referred to the injuries on the person of Gurcharan Singh. The evidence adduced in the case shows that Gurcharan Singh had 13 injuries on his person, 12 of which were. contusions and one was a grievous hurt as disclosed by X ray. It was an injury on the foot and it may be that there was a fracture or a crack. Whether these injuries decisively helped the defence version or not is a different matter. The argument is that these injuries should have been considered by the High Court when it was called upon to decide the validity of the defence claim of the exercise of the right of private defence. There is some force even in this contention. Since we are satisfied that these two contentions are well founded, we have examined the plea of self defence ourselves and in that connection, we have considered the oral evidence adduced by the prosecution. It is true that Gurdev Singh and Gurcharan Singh can be said to be interested witnesses and in that sense, their evidence is the evidence of parti san witnesses and has to be carefully examined. On the other band, Sukhdev Singh and Rekha Ram are not shown to be hostile to the appellants and their evidence cannot, therefore, be characterised as partisan. It is true that Rekha Ram 's brother Piara has been murdered, but Piara has apparently died as a result of reckless shooting and it is not shown that either Piara was the enemy of the appellants or Rekha Ram is hostile to them. The attempt made 594 in the cross examination of Sukhdev Singh to show that he was related to the complainants ' party has failed, and so, Sukhdev Singh must be held to be disinterestedwitness. Purushotam fairly conceded that the account given by all these witnesses about the occurrence is consistent and cogent and the only criticism he had to make against that evidence was that it is partisan evidence. We have consi dered the whole of this evidence, and we are satisfied that the courts below were right in substantially accepting it against the appellants. If this evidence is believed, then the sequence of events that took place is clearly disclosed and that shows that the plea of self,defence urged by the appellant Gurcharan Singh cannot be accepted. Injuries on his person are of a minor character and they may have been inflicted while some of the victims may have beaten him with a stick. However that may be, having regard to the sequence of events, it is impossible to accede to the argument that Gurcharan Singh fired twice from the fire arm in order to save himself. In this connection, it is relevant to recall that the party of the appellants was armed with deadly weapons. Gurcharan Singh had picked up the gun which fell down from the hands of Arjan Singh and Surjit Singh had a gun for which his brother Daljit Singh had a licence. The others were armed with gandasas and similar deadly weapons. Therefore, when the incident took place, the two appellants were armed with fire arms and on the evidence which is believed) aggression proceeded from them and not from Arjan Singh or his friends. That also shows that the theory of self defence cannot be accepted. Therefore, though the High Court has not considered this point as well as it should have, and though a part of the reasoning 595 adopted by the High Court in dealing with this point suffers from the infirmity to which we have referred. in the result, its conclusion on this point seems to be right. Incidentally, it may be pointed out, that this plea of self defence was not seriously pressed before the High Court. That takes us to the next broad criticism made by Mr. Purushotam against the judgment of the High Court. It is urged that the High Court did not take into account the fact that Gurcharan Singh who had been charged under section 19 (f) of the Indian Arms Act has been acquitted by the same learned Sessions Judge who convicted him for the offence of murder under section 302/149. It appears that the prosecution case is that Gurcharan Singh produced the fire arm when he surrender and since he had no licence to keep a fire arm and indeed, the fire arm in question belonged to Arjan Singh, a charge under section 19(f) had been framed against him. The learned trial Judge believed the evidence of the two witnesses Puran Singh and Sohan Singh as well as the evidence of the Sub Inspector Udham Singh, and held that about 6.30 P.M. on May 18, 1961, Gurcharan Singh produced the fire arm. The evidence shows that Arjan Singh Sarpanch of Valtoha took Gurcharan Singh and Ajit Singh to Udham Singh and the two of them then surrendered. The document containing the memo, about this surrender has been duly proved (Ext.P.21). The trial Judge delivered his judgment in the principal case on November 18, 1961. It appears that on the same day, he delivered his judgment in the companion case in which Gurcharn Singh was charged under section 19(f) of the Indian Arms Act and held that the said charge had not been proved and so, he acquitted him of that charge. It may be conceded that in this judgment, the same evidence about the production 596 of the weapon by Gurucharan Singh has been dis believed. On these facts. Mr. Purushotam contends that this matter was argued before the High Court and it was urged that the finding of the trial Court in the principal case about the recovery of the weapon from Gurcharan Singh should not be accepted, and this argument has not been considered by the High Court. It would be noticed that this argument is based on the decision of. this Court in Pritam Singh vs State of Punjab(1). There is no doubt that if the order of acquittal under s.19(f) had been pronounced before the judgment in the principal case was delivered, then in the latter case the prosecution will not be entitled to contend that Gurcharan Singh was in illegal possession of the fire arm. This position cannot be and is not disputed. The question, however, still remains as to whether the judgment in the fire arm case was pronounced first or the judgment in the murder case was pronounced first. Mr. Purushotam frankly stated before us that he was not in a position to contend that the judgment on which he reliefs was pronounced in point of fact before the judgment in the murder case. The manner in which this judgment has been produced before this Court is very irregular. The judgment does not appear to have been filed in the High Court as it should have been if it was intended to rely upon it But the petition for special leave states that it was utilised for the purpose of raising the point in appeal before the High Court. This judgment was not filed before this Court along with the; petition for special leave. It has been tendered at a later stage when the index of papers was settled for inclusion in the paper book in this Court. In our opinion, this (1) A.I.R. (1956) S.C. 415. 597 method of producing this document is irregular. But apart from this, unless it is shown that the judgment on which the defence relies was pronounced first, no argument can be raised about the invalidity of the conclusion in the murder case that Gurcharan Singh surrendered the gun. Prima facie, the judgment in the murder case must have been delivered fir at. It is numbered as 88 and 93 of 1961, whereas the arms case is numbered as 89 and 94 of 1961. Therefore, we do not think it is open to the appellants to contend that the acquittal of Gurcharan Singh under a. 19(f) was prior to his conviction under s 302/149 and so, the finding that he surrendered the weapon should not be accepted. It is to be regretted that the same learned Judge should have rendered two inconsistent findings in two companion cases in judgments pronounced on the same day. This is a matter to which his attention ought to be drawn by the High Court. Though the point sought to be raised on the strength of this judgment cannot technically arise, we thought it necessary to examine the evidence about the production of the weapon ourselves. We have accordingly gone through the evidence of Puran Singh, Sohan Singh and Udham Singh and we have taken into account the fact that Gurcharan Singh was produced by Arjan Singh who is a Sarpanch of Valtoha. We feel no hesitation in holding that this evidence clearly establishes the fact that Gurcharan Singh produced the weapon, as disclosed by the production memo. In this connection, we may recall the fact that Gurcharan Singh in fact admitted that he had used a fire arm and had fired twice in self defence. He, did not admit that was the gun which was snatched from the hand of Arjan Singh ; but that is another matter. Therefore, the argument that the acquittal of Gurcharan Singh in arms case affects 598 the finding as to the surrender of the gun by him cannot be sustained. The last argument on which the judgment on the High Court was attacked by Mr. Purushotam arises from the fact that a ballistic expert has not been examined in this case. , It is urged that this ground was taken before this High Court and has not been considered by it. Petition for special leave makes a definite averment to that effect. As the argument was presented before us by Mr. Purushotam, it assumed that a report had been received from the ballistic expert, but that report had not been proved, because it was apprehended by the prosecution that it would destroy its case. There is no doubt that the two fire arms along with two empty cartridges were sent to the Scientific Laboratory. , Chandigarh (Ext. P. Z.) on June 28, 1961. Of the two guns which were sent for examination, one was used by Gurcharan Singh which he picked up as soon as it fell down from the hand of Arjan Singh and the other was used by Surjit Singh which was taken by him from Daljit Singh. It appears that Daljit Singh produced that gun and surrendered it on. May 27, 1961, i.e., nearly a week after the incident took place. Mr. Purushotam contended that since these weapons had been sent for examination by a ballistic expert and a report had been received, it was the duty of the prosecution to examine the ballistic expert. We were impressed by this argument, and so, we adjourned the hearing of the case and called upon Mr. Bindra to produce that report before us. Accordingly, the report has been produced and it shows that according to the expert opinion, out of the two fired cartridges sent for expert examination one had been fired from the right barrel of the gun contained in parcel No. 1 and the other had been fired from the left barrel of the same gun. in other words, this reports shows 'that two empties found near the scene of the offence had been fired 599 from the same gun. After this report was received and a copy of it was served on Mr. Purushotam, he fairly conceded that the said report was not inconsistent with the prosecution case, though he argued that it did not corroborate it either. This report has not been proved and no ballistic expert has been examined in this case. But having regard to the fact that the report prima facie is not inconsistent with the prosecution case, we do not see bow it would be urged that the failure of the prosecution to examine a ballistic expert is due to the 'fact that it was apprehended that the expert opinion would be against the prosecution case. That is the. only argument which it was alleged had been urged before the High Court but had not been considered by it. We are inclined to think that this argument may not have been pressed before the High Court and in any event, now it is conceded that there is no substance in that argument. That is why we do not think any useful purpose would be served by examining the ballistic expert at this stage. Whilst we are on this point, we may briefly indicate the nature of the prosecution case so far as the use of the guns is concerned. The appellant Gurcharan Singh has fired two shots, one of which killed Sukhjit Singh and the other Gurdial Singh. The appellant Surjit Singh had fired three shots, two at Arjan Singh and one at Piara. The evidence seems, to show that Surjit Singh loaded the gun once in the presence of the witnesses and whilst so doing, he put two cartridges in the gun and the spent cartridges in his pocket. The two empties which had been sent for expert examination were found and picked up on a thoroughfare in front of the house of Jarnail Singh. Apparently, the prosecution case is that these two cartridges had been fired by the appellant Gurcharan Singh from Arjan Singh gun picked up by him. In any event, the report shows that the two cartridges had been 600 fired from the same gun. That is why the failure to prove the report cannot be said to have prejudiced the appellants ' case at all. Mr. Purushotam, however, argued that a ballistic expert should have been examined in order to ascertain whether the gun surrendered by Daljit Singh had been used at all. But this argument is obviously untenable for the simple reason that this gun was surrendered more than a week after the incident and it takes imagination to realise that when Daljit Singh surrendered the gun, he must have cleaned it so as to remove any evidence about its user on the date of the incident. It has, however, been argued that in every case where an accused person is charged with having committed the offence of murder by a lethal weapon, it is the duty of the prosecution to prove by expert evidence that it was likely or at least possible for the injuries to have been caused with the weapon with which, and in the manner in which, they have been alleged to have been caused; and in support of this proposition, reliance has been placed on the decision of this court in Mohinder Sinqh vs The State (1). In that case, this court has held that where the prosecution case was that the accused shot the deceased with a gun, but it appeared likely that the injuries on the deceased were inflicted by a rifle and there was no evidence of a duly qualified expert to prove that the injuries were caused by a gun, and the nature of the injuries was also such that the photo must have been fired by more than one person and not by one person only, and there was no evidence to show that another person also shot, and the oral evidence was such which was not disinterested, the failure to examine an expert would be a serious infirmity in the prosecution case. It would be noticed that these observation were made in a case where the prosecution (1) ; 601 evidence suffered from serious infirmities and in determining the effect of 'these observations, it would not be fair or reasonable to forget the facts in respect of which they came to be made. These observations do not purport to lay down an inflexible rule that in every case where an accused person is charged with murder caused by a lethal weapon, the prosecution case can succeed in proving the charge only if an expert is examind. It is possible to imagine cases where the direct evidence is of such an unimpeachable character and the nature of the injuries disclosed by post mortem notes is so clearly consistent with the direct evidence that the examination of a ballistic expert may not be regarded as essential. Where the direct evidence is not satisfactory or disinterested or where the injuries are alleged to have been caused with a gun and they prima facie appear to have been inflicted by a rifle, undoubtedly the apparent inconsistency can be cured or the oral evidence can be corroborated by leading the evidence of a ballistic expert. In what cases the examination of a ballistic expert is essential for the proof of the prosecution case, must naturally depend upon the circumstances of each case. Therefore, we do not think that Mr. Purushotam is right in contending as a general proposition that in every case where a fire arm is alleged to have been used by an accused person, in addition to the direct evidence, prosecution must lead the evidence of a ballistic expert, however good the direct evidence may be and though on the record there may be no reason to doubt the said direct evidence. In the present case, no useful purpose could have been served by examining an expert for the purpose of showing that the gun had been used by Surjit Singh, because, as we have already pointed out, Daljit Singh took care to keep the gun with himself for over a week and. then surrendered it. It would be idle in ouch a case to suggest that it was 602 necessary for the prosecution to examine an expert even though it is extremely unlikely that traces of its use had not been removed by Daljit Singh before he surrendered it. Then, as to Gurcharan Singh, it is admitted that he fired twice and there is nothing on the record to show that the injuries disclosed by the post mortem notes and deposed to by the doctor could not have been caused by a gun which, it was alleged, belonged to Arjun Singh and which was picked up by Gurcharan Singh after it fell down from his hands. Therefore. , in the circumstances of this case, we do not think it would be possible to accept the plea that the failure of the prosecution to examine a ballistic expert has introduced a serious infirmity in the prosecution case. Even so, since we were satisfied that the judgment of the High Court suffered from some infirmities and was not as satisfactory as it should have been, we have read the evidence with Mr. Purushotam and heard his comments on it. Having carefully considered the said evidence, we see no reason to differ from the conclusion reached by the Courts below that broadly stated, the incident took place as it has been deposed to by the prosecution witnesses and that eliminates the exercise of the right of private defence by the appellants and establishes that they used their fire arms aggressively and thus committed the offence of murder under section 302/34. Before we part with this case, however, we would like to observe that in dealing with confirmation cases, the High Court should consider the evidence carefully and record its conclusions clearly after dealing with all the points urged before it by the counsel for the defence. In all criminal appeals, the findings recorded by the High Court bind the 603 parties and this Court is generally reluctant to interfere with them. This principle is usually followed even in confirmation cases, but it is hardly necessary to emphasise that in dealing with confirmation cases, judicial approach both at the trial and in appeal has to be careful and thorough and so,it is of utmost importance that no room should be left for any legitimate complaint by the defence that important points were argued before the High Court and were not considered by it. In the present appeal, we have come to the conclusion that some of the reasons given by the High Court are erroneous and apparently, some of the arguments urged before it have not been duly considered. That is why we had to go through the evidence for ourselves. In the result, the appeal fails and the order of confiction and sentences passed against the appellants is confirmed. Appeal dismissed.

The two appellants G and S together with three others B, D and A were tried for the muder of four persons by shooting them with guns. Two spent cartridges were recovered at the spot; G produced a gun on the very day of occurrence and D produced a gun one week after the occurrence. The cartridges and guns were sent for examination to the ballistic expert but neither he nor his report was produced before the Sessions judge. The Sessions judge convicted the appellants and B and D but acquitted A. The same judge tried G under s.19(f) Arms Act for being in possession of the unlicensed gun which G had surrendered but acquitted him of the charge. On appeal against the conviction for murder the High Court confirmed the conviction and sentence of, death passed against the appellants but acquitted B and D. The appellants contended (i) that in view of his acquittal in the s.19(f) Arms Act case, the allegation of the recovery of the gun from G in the murder case could not be accepted, (ii) that the failure to produce the ballistic expert and his report had introduced a serious infirmity in the prosecution case, and (iii) that the High Court had failed to deal with these and other points raised before it. Held, that the conviction of the appellants was not vitiated by any infirmities. The acquittal of G in section 19(f) Arms Act case did not affect his conviction in the murder case. If the order of acquittal under s.19(f) had been pronounced before the judgment in the murder case, then in the latter case the prosecution could not contend that G was in illegal possession of the firearm. Though the two judgment were pronounced on the same day there was nothing to show that the judgment in the s.19(f) Arms Act case was pronounced earlier. On the other hand there were indications that it was pronounced 586 after the judgment in the murder case. The evidence clearly established that G bad produced the gun. Pritam Singh vs State of Punjab, A.I.R. 1956 section C. 415, referred to. There is no inflexible rule that in every case when a person is charged with murder caused by a firearm, the prosecution can succeed only by examining an expert to prove that the in juries could be caused by the weapon alleged to have been used. Where the direct evidence is not satisfactory or disinterested or where the injuries are alleged to have been caused with a gun and they prima facie appear to have been inflicted by a rifle, the apparent inconsistency can be cured or the oral evidence can be corroborated by the evidence of a ballistic expert. In the present case there was no necessity to examine an expert. Admittedly, G had fired twice and there was nothing to show that the injuries could not have been caused by the pun which was in his hands. D had kept the gun with him for a week before surrendering it and it was unlike that D had not removed tracks of its use. The report of the ballistic examiner, which was sent for by the Supreme Court did not help the defence and no inference could be drawn against the prosecution from its failure to produce it at the trial. Mohinder Singh vs The State, 1, referred to. In dealing with confirmation cases the High Court should consider the evidence carefully and record its conclusions clearly after dealing with all the points urged before it by the defence. In all criminal appeals before it the Supreme Court is reluctant to interfere with the findings of fact recorded by the High Court. In the present case some of the reasons given by the High Court were erroneous and some of the arguments urged before it were not duly considered and the Supreme Court had therefore to go into the evidence.

ivil Appeal No. 3297 of 1981. From the Judgment and Order dated 17.8.1981 of the Orissa High Court in Misc. Appeal No. 145 of 1981. R.K. Mehta for the Appellant. A.K. Sen, Arun Madan, R.K. Sahoo and J.D.B. Raju for the Respondent. The Judgment of the Court was delivered by VERMA, J. This appeal by special leave under Article 136 of the Constitution challenges the judgment dated 17.8.1981 of the High Court of Orissa dismissing Misc. Appeal No. 145 of 1981 against the judgment dated February 28, 1981 passed by the Subordinate Judge, Baripada, District Mayurbhanj in Title Suit No. 106 of 1980 by which the arbitrator 's award for a sum of Rs.21,11,835.00 in favour of the plaintiff respondent, Niranjan Swain, was made a rule of the court and a decree was passed for that amount together with interest at the rate of six per cent per annum from the date of the decree. The main ground taken in this appeal was that the arbi trator 's award was per se invalid since it gave no reasons. Some other points were raised to which we shall advert later. The question of invalidity of an arbitrator 's award merely on the ground that it gave no reasons was involved for decision in a large number of matters pending in this Court and in view of the importance of this common question the bunch of cases was heard and decided by the Constitution Bench in Raipur Development Authority and others vs M/s Chokhamal Contractors and others, 1. The Constitution Bench has held that the absence of reasons in the award does not by itself result in its invalidity except where the giving of reasons by the arbitrator for the award is the requirement of the arbitration agreement or the deed of submission or an order made by the Court or statute governing the arbitration. Accordingly, this contention raised in the present appeal 824 and all other similar matters was rejected by the Constitu tion Bench with a direction that all such cases should go back to the Division Bench for disposal in accordance with law on the remaining points surviving therein for decision. This is how the present appeal has come before us. The conclusion reached by the Constitution Bench in the above case and the direction given therein is as under: "Having given our careful and anxious consid eration to the contentions urged by the par ties we feel that law should be allowed to remain as it is until the competent legisla ture amends the law. In the result we hold that an award passed under the is not liable to be remitted or set aside merely on the ground that no reasons have been given in its support except where the arbitra tion agreement or the deed of submission or an order made by the court such as the one under Section 20 or Section 21 or Section 34 of the Act or the statute governing the arbitration requires that the arbitrator or the umpire should give reasons for the award. These cases will now go back to the Division Bench for disposal in accordance with law and the view expressed by us in this decision. " The only points now urged by Shri G.L. Sanghi, learned counsel for the appellant, are two, namely, (1) no interest could be awarded by the arbitrator in the present case upto the date of the award but the same is obviously included in the lumpsum award of Rs.21, 11,835.00; and the invalid part of the award not being severable from the rest, the entire award must be set aside; and (2) the High Court in its cryptic order has wrongly assumed as correct the trial court 's refusal to call the arbitrator for being examined in the court. The learned counsel contended that any one of these defects was sufficient to set aside the entire award. In reply Shri Arun Madan, learned counsel for the re spondent, primarily contended that the arbitrator was empow ered to award interest upto the date of award. In the alter native, learned counsel for the respondent contended that the invalid part of the award relating to grant of interest upto the date of the award was severable and, therefore, only that part should be set aside instead of setting aside the whole award. He also contended that the High Court did not make any wrong assumption and refusal to call the arbi trator for examination 825 was justified. It was also urged that in the present case there was nothing to indicate that calling the arbitrator for examination in the court was at all necessary. Before proceeding to consider the surviving points now urged on behalf of the appellant we may refer briefly to the few facts which alone are relevant at this stage. The con tract for the work "Construction of Earth Dam (balance work) of Sansiali Nai M.I. Project" in Division Mayurbhanj, Bari pada, was given by the appellant, State of Orissa, to re spondent, Niranjan Swain and the agreement between the parties contained an arbitration clause for adjudication of disputes arising out of the contract. Consequently, the dispute relating to the remaining claim for payment made by the respondent was referred for adjudication to the arbitra tor in terms of the arbitration clause contained in the agreement. The respondent 's claim before the arbitrator was for the amount of Rs. 19,04,689.00 as the balance amount due to him and for return of the security deposit of Rs.28,000.00 or in all the total of Rs. 19,32,689.00 as the principal amount. The respondent also claimed interest on the sum of Rs. 19,04,689.00 at the rate of 18 per cent per annum from 15.4.1977 to 15.5.1978, namely, the date of submission of the statement of claim before the arbitrator amounting to Rs. 3,71,4 14.00 and interest on the security deposit of Rs. 28,000.00 at the same rate from 15.9.1977 to 15.5.1978 amounting to Rs.3,360.00. The respondent further claimed interest at the rate of 18% per annum from 16.5. 1978 till payment of the amount to the respondent by the appellant. In the statement of claim the total amount claimed was mentioned at Rs.23,07,463.00 together with interest @ 18% per annum on Rs. 19,32,689.00 from 16.5.1978 to the date of the award. The appellant denied the respond ent 's claim including the claim for payment of interest. The arbitrator gave the award dated 2.12.1980 as under: "AWARD After perusal of the claim statements and counter statements, the counter claim of the respondent, the rejoinder of the claimant, the documentary and oral evidence and on a careful consideration of the submissions and arguments of the parties and the IR advocate, I have come to the conclusion that the claimant is entitled to get a sum of Rs.21,11,835.00 (Rupees twenty one lakhs eleven thousand eight hundred thirty five only) in full and final satisfac 826 tion of his claims till the date of the award from the respondent. The respondent is not entitled to get any amount towards his counter claim from the claimant. sd/ B.S. Patnaik Arb itrator 2/1 2/1980" (emphasis supplied) It is on the basis of the contents of this award that the above contentions have to be considered and decided. We may dispose of the second point urged by learned counsel for the appellant straightaway since it does not merit any elaborate consideration. The argument of the learned counsel for the appellant relating to calling the arbitrator for examination as a witness in the court was based on the decision of the Orissa High Court in State of Orissa vs D.C. Routray, AIR 1983 Orissa 163. That decision itself says that even though an arbitrator is a competent witness, the court must exercise the power of calling him as a witness cautiously and sparingly and not in a routine manner. It is obvious that when the court is requested to call the arbitrator for examination as a witness it must be shown that there is some cogent ground for his examination within the permissible limits. Nothing has been shown in the present case to indicate that it was at all necessary to call the arbitrator as a witness to depose on any matter which could legitimately be examined by the court in the proceedings. This alone is sufficient to justify the view taken by the High Court. This contention of learned counsel for the appellant is, therefore, rejected. The only point surviving for consideration now relates to the grant of interest by the arbitrator and its effect on the validity of the award. It is obvious from the contents of the award and the details of the respondent 's claim before the arbitrator that a lumpsum amount of Rs.21,11,835.00 awarded in the respondent 's favour by the arbitrator was in full and final satisfaction of all the respondent 's claims before the arbitrator till the date of the award. As mentioned earlier, the respondent 's claim before the arbitrator mentioned the sum of Rs.19,04,689.00 plus the security deposit of Rs.28,000.00 or in all Rs. 19,32,689.00 only as the total principal amount of the claim and the sum claimed in excess thereof was on account of interest. The grant of a lumpsum amount of Rs.21,11,835.00 in the award in full and final 827 satisfaction of all the claims till the date of the award must, therefore, obviously include interest also. It is equally plain that the claim for the entire principal amount was not accepted by the arbitrator. The effect on the ques tion of validity of the award has to be decided on this basis. It is settled by the decision of this Court in Executive Engineer (Irrigation), Balimela and others vs Abhaduta Jena and others, 18 that in cases wherein the reference to arbitration was made prior to the commencement of the , on August 19, 1981, the arbitra tor is not empowered to grant interest for the period either before the commencement of the proceedings or during the pendency of the arbitration. This is clear from the position summarized in Abhaduta Jena 's case (supra), as under: "In the remaining cases which arose before the commencement of the , the respondents are not entitled to claim interest either before the commencement of the proceed ings or during the pendency of the arbitra tion. They are not entitled to claim interest for the period prior to the commencement of the arbitration proceedings for the reason that the Interest Act, 1939, does not apply to their cases and there is no agreement to pay interest or any usage or trade having the force of law or any other provision of law under which the claimants were entitled to recover interest. They are not entitled to claim pendente lite interest as the arbitrator is not a court nor were the reference to arbitration made in suits. " The learned counsel for the respondent placed reliance on the decision of this Court in Gujarat Water Supply and Severage Board vs Unique Erectors (Gujarat) (P) Ltd. and another; , in support of his primary conten tion that the arbitrator was empowered to grant interest upto the date of award. We are unable to construe this judgment in the manner suggested by learned counsel for the respondent. The decision clearly refers to Abhaduta Jena 's case (supra) and also follows it. The primary contention of the learned counsel for the respondent that the award does not suffer from any infirmity by grant of interest therein upto the date of award is, therefore, rejected. It cannot, therefore, be disputed that in the present case wherein the reference to arbitration was made and even the award was given prior to the commencement of the Inter est Act, 1978, on August 19, 1981, the arbitrator had no jurisdiction to grant any amount as interest 828 for any period either upto the date of submission of the claim before him or pendente lite upto the date of the award. From the above, it follows that inclusion of the amount of interest in the lumpsum award of Rs.21,11,835.00 by the arbitrator does render that part of the award invalid. The question now is of the consequence of this invalidi ty on the entire award. The learned counsel for the appel lant contended that the invalid part of the award not being severable from the rest the entire award must be set aside. On the other hand, the learned counsel for the respondent urged that there is no difficulty in separating the invalid part from the rest and this could easily be done by deduct ing from the total sum of Rs.21,11,835.00 granted in the award, the maximum interest calculated at the rate of 18% per annum which was claimed by the respondent before the arbitrator upto the date of the award (2.12.1980). He urged that such a view cannot, in any manner, prejudice the appel lant and if at all it can work only to the detriment of the respondent who make this suggestion. In our opinion it is possible in the present case to sever the invalid part relating to interest in order to sustain the valid part of award. Accordingly, we requested both sides to calculate the total amount of interest and give to us the agreed figure. The agreed figure of Rs. 12,65,87 1.97 has been given by them as the maximum amount of interest which could be included in the award of Rs.21, 11,835.00, in accordance with the respondent 's claim before the arbitrator. It is common ground that the invalid part of the award on the basis of grant of interest by the arbi trator cannot exceed the amount of Rs. 12,65,87 1.97 out of the total Sum of Rs.21, 11,835.00. It is also not disputed that the balance amount remaining after deduction of Rs. 12,65,871.97 cannot be tainted with any invalidity. The learned counsel for the respondent has confined the respond ent 's claim in the alternative to upholding of the award only in respect of this balance amount and no more. We do not see any reason why the award should not be modified and sustained to this extent only. We are conscious of the fact that the interest amount of Rs. 12,65,871.97 so calculated for deduction from the total amount of Rs.21, 11,835.00 granted in the award is in excess of the interest calculated on the remaining balance treated as principal amount at this stage on the above suggestion. However, in the peculiar circumstances of this case and in view of the alternative contention on 829 behalf of the respondent, we see no reason for rejecting, in the present case, this alternative contention also. Viewed in this manner, the balance amount of the award would not be tainted with any invalidity and, therefore, it would also be just and proper to sustain the award to this extent only. We, therefore, reject the contention of learned counsel for the appellant that the entire award should be set aside and instead accept the alternative contention of learned counsel for the respondent. In view of the above, the agreed amount of interest upto the date of the award (2.12.1980), that is, Rs. 12,65,871.97 is deducted from the amount of Rs.21,11,835.00 leaving the balance amount of Rs.8,45,963.03 say Rs.8,45,963.00. This amount of Rs.8,45,963.00 survives as the valid part of the award and, therefore, the decree of the courts below is modified to this extent so that the decree in favour of the respondent now remains for the sum of Rs.8,45,963.00 only together with interest thereon at the rate of 6% per annum from the date of the decree passed by the trial court until payment. In view of the partial success of both sides, the parties shall bear their own costs throughout. The appeal is partly allowed in this manner. We are informed that the respondent has withdrawn a certain amount against the decree during the pendency of this appeal. We direct that the amount due to the respondent shall be calculated on the basis of this modified decree. In case, the amount obtained by the respondent is less than the amount to which the respondent is found entitled as a result of this modified decree, the remaining amount shall be paid to the respondent with interest @ 12% per annum from 8.12. 1981 in terms of the interim order of that date passed in this appeal; and in case, the amount obtained by the re spondent is in excess of that to which he is found entitled, the excess amount shall be refunded by the respondent to the appellant similarly with interest at the same rate of 12% per annum from 8.12. 1981 upto the date of its refund. T.N.A. Appeal allowed partly.

The respondent was awarded a contract for construction of Earth Dam by the appellant State of Orissa. His dispute relating to the remaining Claim for payment was referred to an arbitrator for adjudication. Before the arbitrator the respondent claimed (i) the balance amount due to him; (ii) his security deposit with the appellant; and (iii) interest, on the balance amount due and security deposit, upto the date of award. On 2.12.1980 the arbitrator gave a lump sum award in favour of the respondent inclusive of interest upto the date of award. The Trial Court made the award a rule of the Court and accordingly passed a decree in favour of the respondent for the amount awarded together with interest at the rate of six per cent from the date of decree. The appeal filed by the State was dismissed by the High Court. In this appeal it was contended on behalf of the State that the award was invalid because; (i) the arbitrator gave no reasons; (ii) no interest could be awarded by the arbi trator upto the date of award, and the award being inclusive of interest was not severable. it was also contended that the High Court was wrong in assuming that the Trial Court was correct in refusing to call the arbitrator for being examined. Allowing the appeal partly, HELD: 1. The absence of reasons in the award does not by itself result in its invalidity except where the giving of reasons by the 822 arbitrator for the award is the requirement of the arbitra tion agreement or the deed of submission or an order made by the Court or statute governing the arbitration. [823G H] Raipur Development Authority & Ors. vs M/s Chokhamal Contractors and Ors., [1989] 2 S.C.C. 721, applied. Even though an arbitrator is a competent witness, the Court must exercise the power of calling him as a witness cautiously and sparingly and not in a routine manner. When the Court is requested to call the arbitrator for examina tion as a witness it must be shown that there is some cogent ground for his examination within the permissible limits. [826D] In the instant case, nothing has been shown to indicate that it was at all necessary to call the arbitrator as a witness to depose on any matter which could legitimately be examined by the Court in the proceedings. The High Court was, therefore, justified in refusing to call the arbitrator for examination. [826E] State of Orissa vs D.C. Routray, A.I.R. 1983 Orissa 163, approved. In cases wherein the reference to arbitrator was made prior to the commencement of the , on August 19, 1981 the arbitrator is not empowered to grant interest for the period either before the commencement of the proceedings or during the pendency of the arbitration. In the instant case, the reference to arbitrator was made and even the award was given prior to the commencement of the . Therefore, the arbitrator had no jurisdiction to grant any amount as interest for any period either upto the date of submission of the claim before him or pendente lite upto the date of the award. [827F G] Executive Engineer (Irrigation), Balimela & Ors. vs Abhaduta Jena & Ors., [1988] 1 SCC 418, applied. Gujarat Water Supply and Sewerage Board vs Unique Erec tors (Gujarat) (P) Ltd. & Anr. , ; , held inapplicable. In the instant case, the inclusion of the amount of interest in the lumpsam award by the arbitrator does not render the whole award 823 invalid since it is possible to sever the invalid part relating to interest. The balance amount of award remaining after deduction of interest would not be tainted with any invalidity, and it would be just and proper to sustain the award to this extent only. The decree is, therefore, modi fied to this extent. [828E F; 829C]

ivil Appeal Nos. 410 and 520(N) of 1973. From the Judgment and Decree dated 21/22/23.11.1972 of the Gujarat High Court in First Appeal Nos. 454 and 455 of 1970. B.K. Mehta, D.N. Misra, J.B. Dadachanji & Co. and N.J. Modi, for the Appellants. 236 S.K. Dholakia, P.H. Parekh, J.H. Parekh, Ms. Sunita Sharma, Krishan Kumar, Vimal Dave and H.J. Javeri, for the Respondents. The Judgment of the Court was delivered by SHARMA, J. These appeals are directed against the deci sion of the Gujarat High Court in an appeal arising out of a suit for partition instituted by the respondent No. 1, Vadilal Bapalal Modi (since deceased). The father of the plaintiff Vadilal was Bapalal who had 5 sons the plaintiff, Ramanlal, Gulabchand, Kantilal and Jayantilal; and a daughter Champaben. Gulabchand was impleaded as the first defendant in the suit and on his death his heirs and legal representatives have been substi tuted. Kantilal and Champaben are defendants No. 2 and 3 respectively. Ramanlal predeceased Bapalal and his wife and son are defendants No. 4 and 5. Jayantilal also died earlier and his wife Smt. Chandrakantaben, defendant No. 6 is the appellant in Civil Appeal No. 418 of 1973. Their children are defendants No. 7 to 12. CiviI Appeal No. 520 of 1973 has been preferred by the 7th defendant, Narendra. The suit by VadilaI was instituted in 1960, claiming share in the considerably large properties detailed in the Schedule to the plaint, but the present appeals are not related to any other item excepting the property described as a chawl admeasuring 7 acres and 2 gunthas of land with 115 rooms and huts, situated in the Naroda locality in Ahmedabad under Lot No. 8 of the plaint which has been referred to by the counsel for the parties before us as the chawl or the Naroda chawl. According to the case of the defendants No. 6 to 12, this property exclusively belongs to defendant No. 6 and is not liable to partition. The other defendants contested the claim of the plaintiff with respect to some other items, but so far the disputed chawl is con cerned, they supported the plaintiffs ' case that it belonged to the joint family and is liable to partition. The land of Lot No. 8 was acquired by Bapalal in 1932 for a sum of Rs.9,450 and the rooms were constructed thereon in about 1934. It has been held by the High Court, and the finding has not been challenged before us, that Bapalal acquired the property and built the chawl with the aid of ancestral joint funds, and the property, therefore, belonged to the family. According to the case of the defendants 237 No. 6 to 12, Bapalal orally gifted the property to his daughter in law Chandrakanta the 6th defendant, in March, 1946 and made a statement before the Revenue authorities on the basis of which her name was mutated, and she was put in possession thereof. Admittedly 114 rooms in the Naroda chawl had been let out to tenants, and one room was retained for the caretaker. According to Chandrakanta 's case, although she came in peaceful possession, the management which in cluded realisation of rent was in the hands of Gulabchand (defendant No. 1). It appears that in 1952 some dispute arose and Chandrakanta assumed direct charge of the Naroda chawl and has remained in possession thereafter. Thus she has been in exclusive possession of the disputed chawl since 1946, and acquired good title therein by adverse possession before the suit was filed in 1960. The learned Judge, City Civil Court, Ahmedabad, who tried the suit, held that BapalaI and his sons constituted a joint Hindu family and the business carried on by Bapalal was for the benefit of the family and the income from the business was thrown in the common pool and all the proper ties including the disputed chawl were treated as belonging to the family. Proceeding further it has been found that the case of the defendant No. 6 about the gift, the mutation of her name, and her exclusive possession from 1946 till the date of the suit was correct. She was accordingly held to have acquired a title by adverse possession. The suit, therefore, was dismissed with respect to the disputed chawl. For the purpose of the present appeal it is not essential to mention the findings of the trial court relating to the other items of the suit property. The plaintiff appealed before the Gujarat High Court. Some of the defendants also filed two separate appeals against the judgment of the trial court dealing with other items of property with which we are not concerned. The appeals were heard and disposed of to gether by a common judgment in November 1972. The High Court reversed the finding of adverse possession in regard to the disputed chawl and granted a decree for partition. It was held that the defendant No. 6 remained in exclusive posses sion of the property only since 1952 and the period was thus short of the time required for prescription of title. Deal ing with the relief for rendition of accounts, the Court held that since the rents of the chawl from 1952 were col lected by Jayantilal, Chandrakanta 's husband and after his death by her son Narendra (defendant No. 7), Chandrakanta was liable to render accounts till the death of her husband and she along with defendant No. 7 would be jointly liable for the period thereafter. The present appeals are directed against this judgment. 238 5. According to the case of the defendant No. 6, her husband, Jayantilal, used to indulge in speculative business and he was, therefore, not considered a dependable person. To ensure economic stability of Chandrakanta and her chil dren, her father in law, Bapalal decided to make a gift of the Naroda chawl to her. Both Bapalal and Chandrakanta appeared before the Talati of Naroda on 5.3.1946 and made statements. The original statement of Bapalal recorded by the Talati and signed by Bapalal was produced and marked as Ext. 268 in the trial court and similarly the statement of Chandrakanta as Ext. Bapalal has stated in Ext. 268 that Chandrakanta had loyally served him and, therefore, he was making the gift. A prayer was made for substitution of her name in the revenue records. A similar prayer was made by the lady in Ext. The extract from the Record of Rights is Ext. 247 which mentions Bapalal as the occupant of the Naroda chawl. The entry was made in May 1933. This entry appears to have been placed within brackets and a second entry inserted mentioning Chandrakanta 'wife of Jayantilal Bapalal '. Mr. B.K. Mehta, the learned counsel for the appel lant has strongly relied upon the revenue entry as proof of her title. Reference was made to the decision in Gangabai and others vs Fakirgowda Somaypagowda Desai and others, A.I.R. 1930 Privy Council 93; and Desai Navinkant Kesarlal vs Prabhat Kabhai, 9 Gujarat Law Reporter 694. It was point ed out by the learned counsel that in the Privy Council case also the revenue records, which were under consideration, were prepared under the Bombay Land Revenue Code, that is the same Code under which Ext. 247 was prepared and it was observed in the judgment that the revenue entry furnished presumptive evidence of title. The Gujarat case also indi cated that a presumption as to the rights in the concerned property arose in favour of the person whose name was en tered. We are not very much impressed by this part of argu ment of the learned counsel as it cannot be denied that title to Naroda chawl could not have passed to the defendant No. 6 by virtue of the entry Ext. The value of the chawl even in 1946 was large and no registered instrument of transfer was executed. Besides Ext. 247 describes Bapalal and thereafter Chandrakanta as Kabjedar, that is, occupant. In these circumstances the presumption which can be raised in favour of Chandrakanta from this entry is with respect to her possession and possession only. There is a serious dispute between the parties as to the actual physical possession of the chawl during the period 1946 to 1952 and we will have to consider the evi dence on this aspect in some detail. In 1952 there was direct confrontation between Chandrakanta and the defendant No. 1, Gulabchand. On 14.4.1952 a public notice was 239 published in a local daily named 'Sandesh ' vide Ext. 254 wherein Gulabchand informed and called upon the tenants in the chawl to pay the rent to him within 3 days against receipts to be issued, failing which legal steps would be taken against them. On the very next day 'Sandesh ' carried another public notice Ext. 255 issued by Chandrakanta as serting her title and exclusive possession and repudiating the claim of Gulabchand. The tenants were warned that Gulab chand or any other person on his behalf had no right or authority to dispute her claim. On the same day, i.e., on 15.4.1952 another public notice was published in 'Sandesh ' at the instance of Gulabchand reiterating his claim and asserting that his father Bapalal (who was then alive) was the owner. It appears that no further action was taken by any of the parties. The evidence on the record shows that Bapalal had withdrawn himself from wordly affairs and was staying in Vrindavan near Mathura. The evidence led by Chandrakanta of her exclusive possession from 1952 through her husband and son till the date of the suit was accepted as reliable by the High Court. Thus there is concurrent finding of both the two courts below accepting her exclusive possession from 1952 onwards. The learned counsel for the plaintiff has, therefore, rightly not challenged before us this finding which we are independently also satisfied is a correct one. The actual position of the chawl from 1946 to 1952 becomes crucial, as Chandrakanta is bound to fail if she is not successful in proving her adverse possession for this period. As has been stated earlier, the suit was filed in 1960 and her possession since 1952 cannot be treated long enough for a prescriptive title to accrue. The parties have, therefore, taken great pains to prove before us their rival cases as to the possession of the chawl from 1946 to 1952. The defendant No. 1 was admittedly managing the properties belonging to the family. Out of 115 rooms in Naroda chawl only 114 were let out to tenants and one room was retained in which, according to the case of Chandrakan ta, a caretaker known as Gangia Pathan, engaged by Bapalal, was staying. After collecting the rent from the tenants the Pathan used to hand over the money to the defendant No. 1. After the gift, it was decided that the same arrangement would continue but the defendant No. 1 would be managing the property on her behalf and after receipt of the rent he would deliver the same to her. She claims that this arrange ment was acted upon. Admittedly the total rent collection from the chawl was not large and after deducting the ex penses including the maintenance and repair costs and the salary of the Jamadar (caretaker) the money left was not a considerable sum. 240 According to the evidence of Chandrakanta the Pathan left the service and his whereabouts are not known and another Jamadar with the name of Maganji came in his place. He looked after the chawl till 1950. Thereafter he was substi tuted by Nathu Singh. Maganji 's present whereabouts are also not known. In 1952 Gulabchand made a claim to the chawl repudiating the ownership of Chandrakanta and he was, there fore, removed. The appellant has relied on a large number of rent receipts filed by her and her learned counsel laid great stress on five of them which have been marked as Exts. 240 to 243 and 250 issued in December 1947, January 1948, June 1948 April 1949 and July 1947 respectively. It is signifi cant to note that the defendant No. 1 was in charge of the collection of the rent upto 1952 according to the case of all the parties. The parties contesting the claim of the appellant contend that he was so doing on behalf of the entire family and not on behalf of Chandrakanta as claimed by her. The defendant No. 1, however, did not choose to enter the witness box nor did he produce any document which could have supported his case. The counter foil receipts were in his possession and neither they were filed by the defendant No. 1 nor the plaintiff called for the same. Defendant No. 6 was able to examine two of the tenants Vajesingh (D.W. 1) and Nathaji (D.W. 2). They filed a large number of receipts issued to them evidencing payment of rent. The list of documents filed by them are printed on pages 394 to 395 of the paper book and have been marked as Exts. 237 and 239. 12 receipts in the list Ext. 237 are for the period 1.6.1946 to 30.5.1949 and 7 of the list Ext. 239 are from 1.1.1947 to 30.9.1949. They support the case of Chandrakanta inasmuch as on the top of these receipts are printed the following words: " CHAWL OF BAI CHANDRAKANTA THE WIFE OF MODI JAYANTILAL BAPALAL" Out of them the receipts Exts. 240 to 243 were admittedly issued when the defendant No. 1 was incharge of collection of rent and it is not denied that they were issued at his instance during the crucial period. The other receipt Ext. 250 was issued for the period 1.6.1947 to 1.7.1947 under the signature of the plaintiff Vadilal and this also similarly carried the description of the chawl as belonging to Chan drakanta. No explanation is forthcoming on behalf of either the defendant No. 1 or the plaintiff as to how they were issuing receipts of the above description. 241 11. From the evidence it appears that although defendant No. 1 was in charge of the management of the chawl during 1946 to 1952, the actual collection from the individual tenants was made by the Jamadar (caretaker) who generally signed the receipts and handed over the collected amount to the defendant No. 1. The tenant Nathaji (D.W. 2) has said that Maganji Jamadar used to prepare the receipts. It has been argued before us on behalf of the plaintiff that the receipts were filed after the examination of the plaintiff was over and so he could not explain the same, specially the one receipt issued under his signature. It is significant to note that the cases of the plaintiff, the defendant No. 1 and the other defendants excepting defendants 6 to 12 are common so far the Naroda chawl was concerned and the turn of these defendants leading evidence at the trial of the suit came later. The evidence of Chandrakanta was closed on 29.9.1964 and the witnesses for the defendant No. 1 were examined on 20.10.1964. Besides, the plaintiff could have re examined himself if he had any explanation to offer. The cross examination of D.W. 2 on his behalf also indicates that no suggestion to the witness by way of explanation was made. In his evidence plaintiff stated that he was also collecting the rent from the different tenants in chawl at the instance of defendant No. 1 and he used to hand over the collections to him. He admitted the fact that there were counter foils which ramained with the defendant No. 1. The High Court while examining this aspect accepted and relied on Ext. 250 signed by the plaintiff, but failed to appreci ate the significance of the description of the Naroda chawl on the receipt as the property of the defendant No. 6. Similar is the position of the defendant No. 1 who did not come to the witness box at all. Chandrakanta examined her self as D.W. 3 and supported her case. Although there are some minor discrepancies in her deposition, the same is consistent with the documents and the circumstances in the case and appears to be reliable. While reversing the finding of the trial court that Chandrakanta was in exclusive possession of the chawl not only from 1952 onwards but even earlier since 1946, the High Court was mainly impressed by three items of the evidence, namely, i)certain account books claimed to be the books at the joint family, ii) several IncomeTax returns filed by the defendant No. 1, and iii) a document of agreement, Ext. So far the Income Tax papers are concerned, they are of the period after 1952 and it has already been stated earlier that the High Court has agreed with the trial court that since 1952 the defendant No. 6 was in adverse possession of the chawl. In view of this finding, with which we fully agree, the Income Tax documents do not 242 have any impact, except showing that the author of these returns was falsely including income therein which did not accrue to the family. So far the account books and the deed of agreement are concerned, it will be necessary or appreci ating their true nature and impact on this case, to consider some more facts. The account books were produced by the defendant No. 1 within a list of documents, Ext. 123. The defendant No. 1, however, did not lead any evidence with respect to the same when his turn at the trial came. As mentioned earlier, he personally avoided the witness box, but examined some wit nesses who did not attempt either to prove the books or speak about their authenticity. The books were admitted in evidence and marked as exhibits on the statement of the plaintiff which he made in cross examination. Some of the books were shown to him and he admitted that they were in his hand writing, but immediately added; "I have written them as per the instructions of defendant No. 1 and as directed by him. They are maintained from month to month. " The income from the Naroda chawl which was admittedly very small as compared to the vastness and the present value of the property, was included in the account books. According to the case of the respondent the books are authentic, and disclosed the true state of affairs. There was considerable discussion at the bar before us as well as before the High Court as is apparent from the judgment under appeal, relat ing to the law of evidence dealing with account books. Reliance was placed on Sec. 34 of the which provides that entries in books of account regularly kept in the course of business are relevant whenever they refer to a matter into which the Court has to enquire. It has been contended on behalf of the respondents that since the plaintiff stated that the books were being maintained from month to month the requirement of law was satisfied. Mr. Mehta, the learned counsel for the appellant argued that apart from the formal proof of the execution of the docu ment, the party relying thereon was under a duty to lead evidence in support of the correctness of the entries in the books which is completely lacking here. Besides, it was pointed out that the relevant books are merely joint khata bahis of Samvat 2005 to 2006 equivalent to 1948 to 1949 without the support of primary evidence of the cash books. , ,The other relevant documents which are admittedly in pos session of the defendant No. 1 have not been produced, including the account books of other years during the cru cial 243 period, the Income tax returns and assessment orders for the period 1946 to 1952 and the counter foil rent receipts. It is apparent from the evidence that nobody takes the responsibility of supporting the correctness of the entries in the account books. When they were produced in Court the plaintiff filed his objection as per his purshis, Ext. 172 (page 368 of the paper book). Many of the documents produced by the defendant No. 1 were accepted, but the account books which were serial nos. 123 75 to 123 97 of the list Ext. 123 were in express terms not admitted. The plain tiff said that they might be exhibited, but subject to his objection. The defendant No. 6 also filed her objection as per the purshis Ext. The plaintiff did not make any statement supporting the books in his examination in chief and only in reply to the question of the cross examining lawyer of the defendant No. 1, he stated as mentioned earli er. It is significant to note that by saying that he had written as per the instructions of the defendant No. 1 he made it clear that he could not vouchsafe for their reli ability. In spite of this situation, the defendant No. 1 could not sommon courage to support them either personally or through any witness. No reason has been suggested at all on his behalf as to why he did not produce the other impor tant documents in his possession which would have supported the account books and the joint case of the parties resist ing the appellants ' claim. In view of all these circum stances we have no hesitation in rejecting the account books as not reliable. So far Ext. 167 is concerned, the High Court has relied upon it as the Naroda chawl has been treated by the document as belonging to the joint family. It was executed on 24.10.1954 by the plaintiff and his three brothers but not by Jayantilal, the husband of defendant No. 6, although he is also shown as a party thereto. The brothers appear to have settled their dispute with respect to different items of property and the disputed Naroda chawl is shown as the seventh item in the list of properties. Although the four brothers personally signed the document, so far Jayantilal 's branch was concerned the signature of Narendra, defendant No. 7, who was a minor then, was taken. Reliance has been placed on the attestation of Bapalal, the father of the executants. Two days earlier, i.e., on 22.10.1954, he had executed a release deed, Ext. 222 giving up his right in the family properties for a sum of money named therein. He was already staying in Vrindavan for sometime past and proposed to spend the rest of his life there. The release deed, however, did not contain any list of properties and the document, therefore, is not of any help to either side. SOl far the 244 agreement Ext. 167 is concerned, it has not been stated by anybody that Bapalal went through its contents or that somebody read the same to him before he attested it. There is no presumption that an attesting witness of a document must be assumed to be aware of its contents. What is signif icant, however, is that it was executed in 1954 when the defendant No. 6 was in adverse possession to the exclusion of the defendant No. 1 and the other members of the family, and Jayantilal did not join the document and his brothers chose to get the signature of his minor son. This is con sistent with their dishonest attempt to include the income from the chawl in the Income Tax returns of the period after 1952, when the defendant No. 6 undoubtedly was in exclusive possession. As has been stated earlier, in 1952 there was a direct confrontation between them on the one hand and the defendant No. 6 on the other, when public notices were published in 'Sandesh '. If their case about their earlier possession had been true they would have produced their Income Tax returns and the assessment orders of that period, i.e. 1946 to 1952. The family was possessed of vast proper ties and was paying Income Tax. The entire circumstances lead to the irresistible conclusion that after the defendant No. 1 was removed by the defendant No. 6 from the management of the disputed Naroda chawl he and the other members of the family started creating evidence in support of their false claim. We do not in the circumstances place any reliance on this deed of agreement. So far the oral evidence in the case is concerned, the plaintiff, Vadilal examined himself as a witness, but was not supported by any other member of the family, al though his brothers, Gulabchand and Kantilal, defendants 1 and 2 respectively, were alive when the case was heard in the trial court. Even his nephew, Rajnikant, defendant No. 5, son of deceased Ramanlal did not prefer to come to the witness box. The husband of the defendant No. 6, Jayantilal had died in 1956, i.e., about 3 4 years before the institu tion of the suit. Chandrakanta examined herself in support of her case and was cross examined at considerable length. Her son, Narendra defendant No. 7, who was minor in 1954 when Ext. 167 was executed, was also examined as a witness. After the death of his father, Jayantilal in 1956, he start ed collecting the rent of the chawl, and as stated earlier both the courts have concurrently held in favour of the exclusive possession of the defendant No. 6 from 1952 on wards. The plaintiff, however, claimed that the chawl was in the possession of the family even later than 1952. We have been taken through his evidence and the evidence of Chandra kanta in extenso by the learned counsel for the parties, who made long comments thereon during their arguments. Both the judg 245 ments of the trial court and the High Court have discussed the evidence at length and we do not consider it necessary to once more deal with them in detail. We agree with the reasons given by the trial court for accepting the case and the evidence of the defendant No. 6 and rejecting the plain tiff 's oral evidence and the case of the respondents. The plaintiff contradicted himself so seriously during his examination that at one stage he had to expressly admit that several of the statements made in his examination in chief were 'false ' (see paragraph 25). It was demonstrated by the further cross examination that he had made many more incor rect statements. On the other hand, Chandrakanta 's evidence is far superior. Although she also made some inconsistent statements, but the discrepancies did not relate to any matter of vital importance. Her evidence substantially is reliable and is supported by important circumstances of (i) the mutation of her name in place of Bapalal on the basis of a statement of the latter; (ii) the description of the chawl as belonging to her on the printed rent receipts given to the tenants out of which some were issued by the defendant No. 1 and the plaintiff, and (iii) the suppression of vital materials in possession of the defendant No. 1 which were withheld from the Court. The conduct of the parties in not filing the suit before 1960 is also consistent with the correctness of her case. When the defendant No. 1 was effec tively removed from the management of the property by the defendant No. 6 in 1952, Bapalal was alive. The defendant No. 1 as also the other members of the family contesting her claim kept quiet and did not risk starting a litigation during his life time. Even in 1960 it was the plaintiff and not the defendant No. 1 who instituted the present suit in which he included the Naroda chawl in the schedule of properties to be partitioned. The defendant No. 1 was manag ing the affairs of the family, but did not take any steps to dislodge the defendant No. 6 from the chawl. The impugned judgment indicates that there were serious differences between the plaintiff and the defendant No. 1 on other items of property and the main reason for the plaintiff to file the suit does not appear to be his claim to the Naroda chawl. We do not consider it necessary to reiterate the other reasons given in the trial court judgment in support of the decision in favour of the appellant, with which we agree. We, therefore, hold that the defendant No. 6 remained in exclusive adverse possession of the disputed Naroda chawl right from 1946 onwards till the suit was filed in 1960. Mr. Dholakia, the learned counsel for the contesting respondents contended that since the chawl has remained in actual possession of the tenants, Bapalal or the family must be held to be in symbolic 246 possession in 1946 and for that reason the defendant No. 6 also can not be treated to have come in actual possession of the property, which could have permitted her to prescribe a title in the chawl. The learned counsel further argued that since the defendant No. 1 and the plaintiff were actually collecting rent from the tenants they also must be held to be in joint possession and, therefore, the defendant no. 6 can not succeed as she has not been able to prove their ouster. The other members of the joint family will also be entitled to rely on this aspect so as to successfully defend their right. Reliance was placed on the decision of the Patna High Court in Hari Prasad Agarwalla and another vs Abdul Haq and others, A.I.R. 1951 Patna 160; in support of the argument that for adverse possession actual physical possession is necessary and mere constructive possession is not sufficient. We are afraid, it is not possible to accept the argument. The subject matter of dispute in the present case is the title to the chawl as the owner landlord subject to the tenancy of the tenants in possession. Neither the plaintiffs nor the defendants are claiming the actual physical posses sion of the chawl by eviction of the tenants. Any reference to the actual physical possession of the tenant is, there fore, wholly irrelevant for the purpose of the present controversy. It has to be remembered that the title to the chawl as owner, subject to the tenancy was an interest in immovable property so as to be covered by Article 144 of the Indian Limitation Act, 1908, which specifically mentioned," . or any interest therein". These words were retained in Article 65 of the new Limitation Act. It is true that it is the intention to claim exclusive title which makes possession adverse and this animus possidendi must be evidenced and effectuated by the manner of occupancy which again depends upon the nature of the property. The manner of possession depends upon the kind of possession which the particular property is susceptible. That possession to the extent to which it is capable of demonstration must be hostile and exclusive and will cover only to the extent of the owner 's possession. In the present case the parties have been fighting for the rent from the chawl so long as it continues in possession of the tenants. Before the gift of 1946 the defendant No. 1 was collecting the rent and he continued to do so even thereafter till 1952. The appellant has, however, established her case that the defendant No. 1 acted as her agent after 1946 and when he repudiated this agency in 1952 he was effectively removed from the manage ment of the chawl. Since 1946 the tenants attorned to the defendant No. 6 and paid rent to her under printed receipts announcing her ownership, but of course through her agent the defendant No. 1. The actual physical possession of the tenants in 247 the circumstances would enable the appellant to establish her prescriptive title. The decision in Uppalapati Veera Venkata Satyanarayanaraju and another vs Josyula Hanumayamma and another, , indicates that if a tenant makes an attornment in favour of a person who is not the true owner and follows and paying the rent to him, such a person must be held to have effective possession. The land lord must be deemed to be in possession through his tenant is also demonstrated by another illustration. If the tenant trespasses over the neighbour 's land treating it to be covered by his tenancy and remains in possession for the requisite period so as to prescribe a title thereto, his interest therein is limited to the interest of the tenant and his landlord acquires the title of the owner. The con duct of such a tenant has been aptly described as stealing for the landlord (see I.L.R. 10 Calcutta 820 and The fact that the tenants have been in actual physical possession of the chawl is, in the circumstances, of no assistance to the respondents. What is material is that they paid the rent to the defendant No. 6. 19. There is no merit in the further argument that the defendant No. 1 must be treated to be in joint possession as he was actually collecting the rent from the tenants. It is well settled that the possession of the agent is the posses sion of the principal and in view of the fiduciary relation ship the defendant No. 1 cannot be permitted to claim his own possession. This aspect was well emphasised in David Lyeii vs John Lawson Kennedy, [1889] XIV H.L. (E) 437, where the agent who was collecting the rent from the tenants on behalf of the owner and depositing it in a separate ear marked account continued to do so even after the death of the owner. After more than 12 years of the owner 's death his heir 's assignee brought the action against the agent for possession and the agent defendant pleaded adverse posses sion and limitation. The plaintiff succeeded in the first court. But the action was dismissed by the Court of Appeal. The House of Lords reversed the decision of the Court of Appeal and remarked: "For whom, and on whose behalf, were those rents received after Ann Duncan 's death? Not by the respondent for himself, or on his own behalf, anymore than during her life time". Emphasing the fiduciary character of the agent his possession was likened to that of trustee, a solicitor or an agent receiving the rent under a power of attorney. Another English case of Williams vs Pott, L.R. XII Equity Cases 149, arising out of the circumstances similar to the present case was more interesting. The agent in that case was the real owner of the estate but he collected the rents for a considerably long period as the agent of his principal who was his mother. After the agent 's death his heir claimed the estate. 248 The mother (the principal) had also by then died after purporting by her will to devise the disputed lands to the defendants upon certain trusts. The claim of the plaintiff was dismissed on the plea of adverse possession. Lord Romil ly, M.R., in his judgment observed that since the possession of the agent was the possession of the principal, the agent could not have made an entry as long as he was in the posi tion of the agent or his mother, and that he could not get into possession without first resigning his position as her agent which he could have done by saying: "The property is mine; I claim the rents, and I shall apply the rents for my own purposes". The agent had thus lost his title by reason of his own possession as agent of the principal. A similar situation arose in Secretary of State for India vs Krishna moni Gupta, 29 Indian Appeals 104, a case between lessor and lessee. There the proprietors of the land in dispute, Mozum dars were in actual physical possession but after getting a settlement from the Government in ignorance of their title. The Government contended that the possession of the Mozum dars was, in circumstances, the possession of the Government claiming the proprietory right in the disputed land and that such possession was in exclusion and adverse to the claim of the Mozumdars to be proprietors thereof. The plea succeeded. It was observed by the Judicial Committee. "It may at first sight seem singular that parties should be barred by lapse of time during which they were in physical possession, and estopped from disputing the title of the Government. But there is no doubt that the possession of the tenant is in law the posses sion of the landlord or superior proprietor, and it can make no difference whether the tenant be one who might claim adversely to his landlord or not. Indeed, in such a case it may be thought that the adverse character of the possession is placed beyond controversy. " We are, therefore, of the view that the defendant No. 6 was in adverse possession from the period 1946 to 1952 through her agent defendant No. 1 and thereafter through her husband, Jayantilal and son, defendant No. 7 till 1960 when the suit was filed, the total period being more than 12 years. For the reasons mentioned above, the decision of the High Court must be held to be erroneous. Consequently the decrees for accounts against the defendants No. 6 and 7 must also go. Accordingly, the appeals are allowed, the decision of the High Court, so far 249 the subject matter of the present appeals is concerned, is set aside and that of the trial court restored. In view of the close relationship of the parties and the other circum stances, the parties are directed to bear their own costs throughout. N.V.K. Appeals allowed.

Respondent No. 1 in the appeals instituted a suit for partition against his younger brothers and sisters, and the heirs of his deceased brothers. The plaintiff was the eldest among the brothers and sisters. The 1st and 2nd Defendants were his brothers, the 3rd Defendant his sister, the 4th and 5th Defendants, the widow and son respectively of the third brother. Defendant 6 was the widow of the fourth brother, and Defendants 7 to 12 were his children, while Defendant No. 14 was the wife of Defendant No. 1, and Defendants 13, 15, 16 and 17 were their children. The subject matter of the appeals related only to one item of property known as "Naroda Chawl" measuring 7 acres and 2 gunthas of land, where 115 rooms and huts stood con structed, out of which 114 rooms had been let out to ten ants, and one room was retained for the caretaker. According to Defendants No. 6 to 12 this property exclu sively belonged to defendant No. 6 and was not liable to partition. The other defendants however supported the plain tiff 's case that it belonged to the 233 joint family and was liable to partition. Defendants 6 to 12 pleaded that the plaintiff 's father Bapalal orally gifted this property to his daughter in law Defendant No. 6 in March 1946 and made a statement before the Revenue authorities on . the basis of which her name was mutated and she was put in possession thereof, that although she came in peaceful possession, the management which in cluded realisation of rent was in the hands of Defendant No. 1, that as some dispute arose in 1952 she assumed direct charge of the chawl and had remained in possession thereaf ter, and that she had acquired good title therein by adverse possession before the suit was filed in 1960. The City Civil Judge who tried the suit, held that there was a joint Hindu family and a business was carried on for the benefit of the family and the income therefrom was thrown into the common pool and all the properties including the disputed chawl were treated as belonging to the family. As the case of Defendant No. 6 about the gift, the mutation of her name, and her exclusive possession from 1946 till the date of the suit was found correct, it was held that she had acquired title by adverse possession, and the suit was dismissed with respect to the disputed chawl. The plaintiff appealed to the High Court. Some of the defendants also filed appeals in respect of the other items of property. All these appeals were heard and disposed of by a common judgment. The High Court reversed the finding of adverse posses sion in regard to the disputed chawl and granted a decree for partition. It held that Defendant No. 6 remained in exclusive possession of the property only since 1952, the period was thus short of the time required for prescription of title. It further held that since the rents of the chawl from 1952 were collected by her husband and after his death by her son (Defendant No. 7), she was liable to render accounts till the death of her husband, and she along with Defendant No. 7 would be jointly liable for the period thereafter. Separate Appeals were preferred by Defendant Nos. 6 and 7 to this Court. Allowing the Appeals, setting aside the decision of the High Court and restoring that of the Trial Court. 234 HELD: 1. The principle that revenue entry furnishes presumptive evidence of title is inapplicable in the instant case. It cannot be denied that title to Naroda Chawl could not have passed to Defendant No. 6 by virtue of the entry Ext. The value of the chawl even in 1946 was large and no registered instrument of transfer was executed. Besides Ext. 247 describes the plaintiff 's father (Bapalal) and Defendant No. 6 (Chandrakanta) as Kabjedar, that is occu pant. In such circumstances, the presumption which can be raised in favour of Defendant No. 6 from this entry is with respect of her possession and possession only. [238F G] Gangabai and others vs Fakirgowda Somaypagowda Desai and others, AIR 1930 Privy Council 93; and Desai Navinkant Kesarlal vs Prabhat Kabhai, 9 Gujarat Law Reporter 694, referred to. The account books have to be rejected as not reli able. It is apparent from the evidence that nobody takes the responsibility of supporting the correctness of the entries therein. Many of the documents produced by Defendant No. 1 were accepted, but the account books which were section Nos. 123 75 to 123 97 of Ext. 123 were in express terms not admitted. The plaintiff filed his objection Ext. Defendant No. 6 also filed her objection Ext. The books were admitted in evidence and marked as exhibits on the statement of the plaintiff which he made in cross exami nation. The plaintiff by saying that he had written as per the instructions of Defendant No. 1 made it clear that he Could not vouchsafe for its reliability. Defendant No. 1 could not summon courage to support them either personally or through any witness. No reason has been suggested as to why he did not produce other important documents in his possession which could have supported the account books and the joint case of the parties resisting the appellant 's claim. [243B E] 3. Defendant No. 1 cannot be treated to be in joint possession as he was actually collecting the rents from the tenants. it is well settled that the possession of the agent is the possession of the principal and in view of the fidu ciary relationship, Defendant No. 1 cannot be permitted to claim his own possession. [247D E] David Lyeii vs John Lawson Kennedy, [1889] XIV H.L.(E) 437; Williams vs Pott, L.R. XII Equity Cases 149 and Secre tary of State for India vs Krishnamoni Gupta, 29 Indian Appeals 104, referred to. It is the intention to claim exclusive title which makes 235 possession adverse and this animus possidendi must be evi denced and effectuated by the manner of occupancy which again depends upon the nature of the property. The manner of possession depends upon the kind of possession which the particular property is susceptible. That possession to the extent to which it is capable of demonstration must be hostile and exclusive and will cover only to the extent of the owner 's possession. [246E F] (b). The title to the chawl as owner, subject to the tenancy was an interest in immovable property so as to be covered by Article 144 of the Indian Limitation Act, 1908, which specifically mentioned, ". or any interest therein". [246E] In the instant case, the parties have been fighting for the rent from the chawl so long as it continued in posses sion of the tenants. Before the gift of 1946 the Defendant No. 1 was collecting the rent and he continued to do so even thereafter till 1952. The appellant has, however, estab lished her case that the Defendant No. 1 acted as her agent after 1946 and when he repudiated this agency in 1952 he was effectively removed from the management of the chawl. Since 1946 the tenants attorned to the Defendant No. 6 and paid rent to her under printed receipts announcing her ownership, but of course through her agent the Defendant No. 1. The fact that the tenants have been in actual physical posses sion of the chawl is, in the circumstances, of no assistance to the respondents. What is material is that they paid the rent to the Defendant No. 6. Defendant No. 6 was in adverse possession from the period 1946 to 1952 through her agent Defendant No. 1 and thereafter through her husband and son Defendant No. 7 till 1960 when the suit was filed, the total period being more than 12 years. [246G H; 248G] Uppalapati Veera Venkata Satyanarayanaraju and another vs Josyula Hanumayamma and another, and Hari Prasad Agarwalla and another vs Abdul Haw and others, A.I.R. 1951 Patna 160, referred to.

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

The appellant was the managing agent of a company which was, at the relevant time, carrying on the business of transporting cargo in boats which touched ports in British India and in the Indian State of Cochin and other States. Under the managing agency contract the remuneration payable to the appellant was expressed in the following terms: " That the managing agent shall as and by way of remuneration for its services receive a commission of ten per cent. of the gross freight charged to the shippers. Such remuneration shall be payable to the managing agents at the place where the same is earned by the company unless other wise requested by the managing agent. " The Income tax Officer and the Excess Profits Tax Officer assessed the appellant to tax in respect of the whole of the managing commission received by it on the footing that the entire commission accrued or arose in British India. The appellant claimed that a part of the managing agency commission accrued in the Indian States and not in British India and that it would be entitled to an apportionment of the managing agency commission and to claim exemption from tax in respect of the commission which accrued outside British India under section 14(2)(c) of the Indian Income tax Act, 1922, and the third proviso to section 5 of the Excess Profits Tax Act, 1940. The Appellate Tribunal found that except booking and collecting some freight at Cochin, all other important and responsible work of managing the company was done from the head office at Bombay and not from Cochin: Held, that normally the commission payable to the managing agent of a company accrues at the place where the business is actually done, that is, where the services of the managing agent are performed, and as on the finding in the present case the appellant practically performed all the services at Bombay, the commission which it earned though computed on the percentage of freight, accrued or arose in British India. Commissioner of Income tax, Madras vs K. R. M. T. T. Thia garaja Chetty and Co., , followed. Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai and Co., Bombay, ; and Commissioner of Income tax, Bombay Presidency and Aden vs Chunilal B. Mehta, , distinguished, 73 558 Sall and industries Agencies Ltd., Bombay vs Commissioner of Income tax, Bombay City, , considered.

: Criminal Appeal No. 76 of 1976. T. C. Raghavan and N. Sudhakaran for the appellant. Debabrata Mookerjee and R. N. Sachthey for respondent No. 1. The Judgment of the Court was delivered by SARKARIA, J. This appeal by special leave is directed against an order, dated July 1, 1975, of the High Court of Kerala, dismissing 533 the Criminal Revision Petition filed by the appellant. It raises questions with regard to the scope and interpretation, inter alia, of sections 399 (3) and 484(2) (a) of the Code of Criminal Procedure, 1973 (hereinafter referred to as the New Code). The facts are these: On February 2, 1971 the Director of Enforcement, New Delhi made a complaint against four accused persons. alleging the commission of offences under section 120 B, Penal Code and section 5(1) (aa) and B; 5(1) (c) of the Foreign Exchange Regulation Act, 1947 (for short, called the Act) in the Court of the District Magistrate, Ernakulam. The appellant herein was accused No. 2 in that complaint. By an application he raised two objections to the maintainability of the complaint and prayed for its dismissal. First, the opportunity as required under the proviso to section 23 (3) of the Act was not given to the accused for showing that he had permission from the Reserve Bank of India for doing the alleged acts. Second, that the complainant did not comply with the conditions in the proviso to section 23D (1) of the Act, in as much as there was on additional material before him to come to the conclusion that the penalty which he is empowered to impose under section 23, would not be adequate and that consequently, it was necessary to file a complaint in Court. Dr By an order dated September 5, 1973, the trial court dismissed the application holding inter alia "that the points raised here will be considered after recording the evidence". On the same day, against this order dated September 5, 1973, accused No. 2 (P. Philip) filed Cr. Revision Petition No. 27 of 1973 under section 435 of the Code of Criminal Procedure, 1898 (hereinafter called the old Code) before the Sessions Judge, Ernakulam, who dismissed the same by an order dated August 6, 1974. Aggrieved by the order of the Sessions Judge, P. Philip preferred Cr. Revision Petition No. 393 of 1974 to the High Court. This Revision was heard by a Division Bench along with two other Revisions (Cr. Rev. Petns. Nos. 409 and 411 of 1974) and dismissed, without going into the merits, on the ground that it was not maintainable in view of section 399(3) of the New Code. Mr. Raghavan, learned Counsel for the appellant contends that the order under appeal is manifestly erroneous because at the time when the revision petition was filed before the Sessions Judge, the old Code was in force, and in view of section 484 of the New Code, it had to be disposed of in accordance with the old Code. As against this, Mr. D. Mukherji submits that the word "application" in section 484(2) (a) of the Code of 1973 is a word of limited import. According to the Counsel only those applications which could be finally disposed of by the Sessions Judge would be covered by this word. Since the revision application, in the instant case proceeds the argument was one for reference to the High Court under section 438 of the Code of 1878, and could not be finally disposed of by the Sessions Judge at his level, it would not be an "application" within the contemplation of section 484(2) (a) of the Code of 1973. It is pointed out that procedural rights are not vested rights, that whereas a right of 534 appeal is a substantive right, the procedural facility to move in revision does not involve such a right. On these premises it is maintained that the saving clause in section 484 should be very strictly construed, with the result that the Code of Criminal Procedure, 1973 will govern all revisions which were pending on April 1, 1974 when it came into force. We are unable to accept the interpretation of section 484(2) (a) of the new Code suggested by the learned Counsel for the respondents. The language of this provision is clear. Its material part runs as under. "(1) The Code of Cr. Procedure 1898 (V of 1898) is hereby repealed. (2) Notwithstanding such repeal: (a) If, immediately before the date on which this Code comes into force, there is any appeal, application, trial, inquiry or investigation pending, then, such appeal, application, trial, inquiry or investigation shall be disposed of, contained, held or made, as the case may be, in accordance with the provisions of the Code of Criminal Procedure, 1898 (V of 1898) as in force immediately before such commencement . as if this Code has not come into fore. " It will be seen that the word "application" in the saving provision contained in clause (a) of sub section (2) of section 484 immediately follows the term "appeal". It therefore takes some colour from the collocation of words in which it occurs. It is synonymous with the term "petition" which means a written statement of material facts, requesting the court to grant the relief or remedy based on those facts. It is a peculiar mode of seeking redress recognised by law. Thus considered there can be no doubt that the word "application" as used in clause (a) of section 484 of the Code of 1973 will take in a revision application made under section 435 of the old Code. Such a revision application does not cease to be an "application" within the purview of the aforesaid clause (a) merely because in the event of the application being allowed, the Sessions Judge was required to make a reference to the High Court under section 438. Whether such an application is granted or dismissed by the Sessions Judge, he finally disposes of the matter so far as his court is concerned. May be that a purely interlocutory application in a pending action, which by itself is not an independent mode of seeking redress recognised by law is not covered by the word 'application ' as used in the aforesaid clause (a). But it is not necessary to express any final opinion on that point because a revision application of the kind before us is not by any recokning, such an interlocutory application. In the present case, the revision application made by P. Philip was pending before the Sessions Judge when the New Code came into force. In view of section 484(2) (a) of the New Code, this revision was required to be disposed of in accordance with the provisions of the old Code. 535 The above being the position, the learned Judges of the High Court were clearly in error in holding that in view of section 399(3) of the New Code, the appellant was not competent to maintain a revision in the High Court against the order dated August 6, 1974 of the Sessions Judge. For these reasons we allow this appeal, set aside the order of the High Court and send the appellant 's revision petition (No. 393 of 1974) back of it for disposal with utmost expedition in accordance with law. Appeal allowed and R. P. 393/74 remitted.

In February, 1971 the Director of Enforcement made a complaint against 4 accused for violation of certain provisions of the Foreign Exchange Regulations Act, read with section 120 B of the Indian Penal Code. The appellant herein who was accused No. 2 made an application before the Trial Court raising two preliminary objections to the maintainability of the complaint and prayed for its dismissal. The Trial Court by its judgment dated 5 9 1973 dismissed the application holding that the points raised would be considered after recording the evidence. The appellant filed a Revision Application to the Sessions Court under section 435 of the Code of Cr. Procedure 1898, which was dismissed in August, 1974. The appellant filed a Revision Application to the High Court which was dismissed by the High Court on the ground that it was not maintainable in view of section 399(3) of the new Code. In an appeal by Special Leave, the appellant contended: At the time when the Revision petition was filed before the Sessions Judge the old Code was in force and in view of section 484 of the new Code the application had to be disposed of in accordance was the old Code. The respondents on the other hand, contended that the word 'application ' in section 484(2) of the new Code is a word of limited import and that it would include only those applications which could be finally disposed of by the Sessions Judge. ^ HELD: The word 'application ' in the saving provision immediately follows the term 'appeal '. It, therefore, takes some colour from the collection of words in which it occurs. It is synonymous with the term 'petition ' which means a written statement of material facts, requesting the Court to grant the relief or remedy based on those facts . is a peculiar mode of seeking redress recognised by law. There is no doubt that the word 'application ' as used in clause (a) of section 484 of the new Code will take in a revision application made under section 435 of the old Code. The Revision Application made by the appellant was pending before the Sessions Judge when the new Code came into force. Therefore it was required to be disposed of in accordance with the provisions of the old Code. [534D F, G H]

Appeals Nos. 678 and 679 of 1963. Appeals from the judgment and order dated April 4, 1961 of the Kerala High Court in Tax Revision Nos. 52 & 53 / 1959. G.B. Pai, T. N. Ramachandra, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants (in all the appeals). Govinda Menon and V. A. Seyid Muhammad, for the respondent (in both the appeals). C.S. Pathak, section N. Andley, Rameshwar Nath and P. L. Vohra, for the interveners (in both the appeals). March 20, 1964. The judgment of GAJENDRAGADKAR,C.J., WANCHOO, RAJAGOPALA AYYANGAR AND SIKRI, JJ. was delivered by AYYANGAR J. SHAH, J. delivered a separate Opinion. AYYANGAR, J. The appellant owns several estates wherein inter alia tea is grown and was assessed to sales tax in respect of the tea sold by it during the years 1954 55 and 1955 56, by the Sales Tax Officer, First Circle, Quilon in the State of Travancore Cochin by his order dated December 23. In the taxable turnover on which sales tax was computed by the assessing authority were included two items which are the subject of complaint in these two appeals which relate to these two years of assessment. Before the assessing officer the appellant claimed that certain sales of its tea which were 393 conducted by auction at Fort Cochin a place which at the relevant date was in the Madras State, were sales "outside" the Travancore Cochin State and that consequently these sales were exempted from taxation by the State of Travan core Cochin under article 286(l) (a) of the Constitution. The Sales Tax Officer rejected this contention and included the sum involved in these sales in the taxable turnover. An appeal filed to the Appellate Assistant Commissioner also failed, this authority holding that as the tea sold was, at the date of the auction, admittedly in godowns in Willingdon Island in the State of Travancore Cochin, the sales must be deemed to have taken place within taxing State by virtue of a provision in the State Sales Tax Act to which we shall refer later and hence liable to be included in the taxable turnover. There was a further appeal taken by the Appellant to the Sales Tax Appellate Tribunal which upheld the appel lant 's contention and set aside the assessment in so far as it included the turnover relating to the auction sales of tea held at Fort Cochin, this turnover amounting to Rs. 56,43,184/11/in regard to the assessment year 1954 55 and Rs. 62,13,604/3/in regard to the assessment year 1955 56 and remanded the case for fresh disposal by excluding these sums from the computation of the taxable turnover. A revision petition was thereafter filed before the High Court by the State under section 15(b) of the General Sales Tax Act of Travancore Cochin and the learned Judges allowed the Revision and upheld the order of the assessing officer and the Appellate Commissioner holding the turnover represented by these auction sales to be validly taxable under the State law relating to sales tax. The appellant thereafter applied to the High Court for a certificate of fitness and this having been granted the appeals are now before us. Before proceeding further it is necessary to set out the statutory provision contained in the taxing enactment of the State. The General Sales Tax Act (Act XI of 1125 (ME) 1950) which imposed a sales tax on sales by dealers defines a "sale" by section 2(j) in these terms: " 'Sale ' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration and includes also a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge; x x x x Explanation (2) Notwithstanding anything to the contrary in the Sale of Goods Act for the time being in 394 force, the sale or purchase of any goods shall be deemed for the purpose of this Act, to have taken place in the State wherever the contract of sale or purchase might have been made (a) if the goods were actually in the State at the time when the contract of sale or purchase in respect thereof was made . or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in the State at any time after the contract of sale or purchase in respect thereof was made. " When the Constitution came into force a new section numbered section 26 was inserted by the Adaptation Order bringing the Act into line with article 286(1) of the Constitution and this read: "No law of a State shall impose. or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place(a) outside the State or (b). . . . . . Explanation For the purposes of sub clause (a) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. " The position, therefore, was that though cl. (a) to Explana tion 2 to section 2(j) enacted that "notwithstanding anything contrary in the Sale of Goods Act, the sale or purchase of goods shall be deemed to take place in the State if the goods were actually in the State at the time the contract for sale or purchase of goods thereof was made", still by the non obstante provision contained in section 26 a tax on the sale or purchase of goods could not be imposed where such sale or purchase took place "outside" the State of Travancore Cochin. It is only necessary to add that even if section 26 were ignored still by the terms of article 286(1)(a) the position would be the same and the State could not validly levy a tax on a sale which is "outside" that State. Now the question is can a sale of the tea effected by the Appellant by auction at Fort Cochin and which were included in its taxable turnover be said to be "outside" the State? The facts in relation to the transaction relating to the sale of the tea and which the learned Judges of the High Court held not to be an "outside" sale may be stated in their own words: "The sales of teas were concluded at Fort Cochin and the goods were stocked in godowns situated in the 395 Travancore Cochin State. The deliveries of the goods were also made to the buyers from the godowns in Willingdon island in the Travancore Cochin State. The Appellate Tribunal has come to the conclusion that the ownership of the commodity having passed in Fort Cochin, the property had not passed within the taxing State, accordingly they would be 'outside ' sales for purpose of article 286(1) and exempt from taxation. " The Appellate Tribunal had recorded a finding that the property in the goods sold passed at Fort Cochin on the fall of the hammer at the auction and the learned Judges of the High Court proceeded on the same basis. The point on which the, learned Judges differed from the Tribunal was only as regards the effect of the circumstance that the tea sold, was at the point of sale, physically in godowns situated in the State of Travancore Cochin. The Appellate Tribunal had, in reaching the conclusion in favour of the appellant, as to the taxable character of the turnover represented by these auction sales, referred to a large number of decisions of this Court and to the observations contained in them as well as to several decisions of the various High Courts. When the matter came up before the High Court the position was, that that Court had after a review of most of the earlier cases which had been referred to by the Tribunal, held in Deputy Commissioner of Agricultural Income tax and Sales tax, Trivandrum vs A.V. Thomas & Co.(1) that the word 'outside sale ' in article 286(1)(a) had no reference exclusively to the transfer of the property in the goods according to the provisions of the Sales of Goods Act, and therefore that Explanation 2 to section 2(j) was not violative of article 286(1)(a) and that if at the moment when the property passed, it not being very relevant where the property passed, the goods were in the State of Travancore Cochin, then it was not an "outside" sale quoad Travancore Cochin and could be subjected to salestax by that State. Before the learned Judges a decision of this Court in India Copper Corporation Limited vs State of Bihar(2) was however relied on as leading to a different result but the learned Judges held that the decision of this Court could be distinguished on the facts and they held that their previous decision reported in A.V. Thomas 's case(1) was still good law and entirely covered the point raised. The question for consideration in the appeal is the cor rectness of the view expressed by the High Court. The decision in Deputy Commissioner of Agricultural Income tax and Salestax, Trivandrum vs A. V. Thomas & Co.(1) was brought before this Court on appeal and has been reversed (See A.V. Thomas & CO. Ltd. vs Deputy Commissioner of Agricultural Income tax and Sales tax, Trivandrum(3). In so doing this Court pointed (1) I.L.R. [1960] Kerala 1395. (2) ; (2)[1963] supp. 2 S.C.R. 608. 396 out that the decision of this Court in the Indian Copper Corporation case(1) had settled the law by laying down that the State (other than a "delivery cum consumption" State) which could tax a 'non explanation sale ' (to adopt the phraseology used in these cases to identify a sale falling outside the explanation to article 286(1)(a)) could only be that State in which the property in the goods passes. Now, as regards the facts, there is no distinction between the facts in the A. Y. Thomas 's case(2) and the case now under appeal and, indeed, the learned Judges of the High Court have proceeded on that basis. Dealing with the question as to what is an "outside" sale Kapur, J. speaking for the Court said in the case of A. Y. Thomas & Co.(2) Ltd.: "It has been foundand it has not been disputed that the title to the goods in the present case passed at Fort Cochin the question is whether the sale was 'outside sale ' or 'inside sale ' as the expressions have been compendiously used in various judgments to indicate sales taking place within a State or without it. The Explanation to article 286(1) (a)explains what a sale outside the State is where the Explanation applies the difficultyabout the situs is resolved but in a case like the present one the difficulty still remains because the Explanation does not operate in the sense that the rival States claiming to tax the same taxable event are not the States of delivery for consumption in that State and those where the title in the goods passes. " After referring to the decision in the India Copper Corpo ration Ltd. vs State of Bihar (1) the Court held that the sale in the case before them was an "outside" sale quoad TravancoreCochin, because the title passed at Fort Cochin in the State of Madras. On this reasoning this Court reversed the decision in the case of the High Court and held that the sale there in question being an "outside" sale was not taxable by reason of the prohibition contained in article 286(1)(a). Dealing with the connotation of the expression 'outside ' in article 286(1)(a) this Court had observed, in India Copper Corporation Ltd. vs State of Bihar.(1): "If a single State was designed to have the power to tax any particular transaction of sale, the question that next falls to be considered is the determination of that State in regard to which it could be predicated that the sale in question was not 'outside ' that State or in other words, the determination of the (1) ; (2) [1963] Supp.2 S.C.R.698 397 particular State in regard to which it could be said that the sale was 'inside ' that State. The key to the problem is afforded by two indications in the Article itself: (1) the opening words of Article 286(1) which speak of a sale or purchase taking place and (2) the non obstante clause in the Explanation which refers to the general law relating to sale of goods under which property in the goods has, by reason of such sale or purchase, passed in another State '. These two together indicate that it is the passing of property within the State that is intended to be fastened on, for the purpose of determining, whether the sale in question is 'inside ' or outside ' the State, and therefore subject to the operation of the 'Explanation ' that State in which property passes would be the only State which would have the power to levy a tax on the sale. As was explained in the recent decision of this Court in Burmah Shell Oil Storage and Distributing Co. of India Ltd. vs The Commercial Tax Officer. " It was the principle of law laid down in this passage that was given effect to by this Court in A. V. Thomas 's case(1) and it was on this basis that the appeal was allowed. it would therefore follow that the present appeals which are wholly dependent on the correctness of the meaning of the expression 'outside sales ' in article 286(1)(a) which High Court adopted in A. V. Thomas 's case have necessarily to be allowed. Learned Counsel for the respondent State, however, urged that in the present case a point had been raised before the High Court as to whether on the facts the property in the goods sold by auction conducted at Fort Cochin really passed at Fort Cochin in the Madras State or whether it passed in Willingdon island in Travancore Cochin when the goods were actually delivered to the buyer. As regards this question of fact or of mixed fact and law the position is this. The Sales Tax Appellate Tribunal recorded a finding on this matter in these terms: "The question whether the sales took place outside the State or not will have to be decided on the basis of the general law relating to sale of goods. We hold that in the case of auction sales of full lots the sales were of ascertained goods and hence became complete on the fall of the hammer and that the sales took Place within the Madras State." In the revision application which the department filed to the High Court this question Whether the property in the goods (1) [1963] Supp. 2 S.C.R. 608. 398 did pass at Fort Cochin was raised but nevertheless the argument before the High Court proceeded wholly on the basis; of the correctness of the finding by the Appellate Tribunal that the property in the teas did pass on the fall of the hammer at Fort Cochin. The point about the property not having passed in the Madras State does not appear to have been even argued before the High Court. Even in the statement of the case filed by the respondent it is not stated that this point about the property not having passed at Fort Cochin in Madras was urged before the High Court during the course of the argument. Before concluding it might be mentioned that in A. Y. Thomas 's case (supra) where, as we have stated earlier, the nature of the trans action was identical with the one in the appeals before us this Court observed: "It has been found and it has not been disputed that the title to the goods in the present case passed at Fort Cochin. " In these circumstances, we declined to permit learned Counsel for the respondent to urge any ground relating to the property in the goods in the teas sold not having passed in Fort Cochin in the Madras State to be raised, as the point which is not one of pure law was not urged before the learned fudges of the High Court. The appeals are, therefore, allowed ' and the, order of the High Court reversed and that of the Sales Tax Appellate Tribunal restored. The appellant will have his costs here and in the High Court one hearing fee. If the question raised in these appeals were res integra, I would hold that the price obtained at auction sales of tea held at Fort Cochin when the goods were lying in warehouses in the Travancore Cochin State was liable to be taxed under the General Sales Tax Act (11 of 1125 M.E.), for in my view article 286(1)(a) Explanation, before it was amended by the Constitution (Sixth Amendment) Act, did not altogether exclude the doctrine of territorial nexus in its application to salestax legislation. It is settled law in this Court that under the Government of India Act, 1935, the Provincial Legislatures could, relying upon the territorial nexus, levy sales tax upon transactions of sale, not wholly completed within their territory, fixing upon one or more ingredients of a sale furnishing a territorial connection with the taxing Province: Poppat Lal Shah vs The State of Madras(1) and The Tata Iron & Steel Company Ltd. vs The State of Bihar (2). By the Constitution certain restrictions were placed upon the power of the States (1) ; (2) 399 to legislate in respect of taxes on sales and purchases. By article 286(1)(a) read with the Explanation, an Explanation sale i.e. a sale in which goods sold were actually delivered in a State for the purpose of consumption in that State was made taxable only by the State in which the goods were delivered for consumption. But article 286 was, in my view, not intended to exclude the operation of the doctrine of territorial nexus in the field not covered by the legislative prohibitions. In dealing with the effect of section 33 of the Bihar Sales Tax Act which incorporated the prohibitions imposed by article 286(1) & (2). with the concurrence of section K. Das J., it was observed by me in Indian Copper Corporation Ltd. vs The State of Bihar and others(1) at P. 293: " x x x by enacting that a tax shall not be imposed under the Act when the sale takes place outside the State of Bihar x x, "Only the power to tax "Explanation sales" which do not take place within the State of Bihar is taken away, but not the power to tax "non Explanation sales" in which though under the general law of sale of goods the property passes outside the State, there exists between the taxing power of the State and the sale a nexus as contemplated by the definition of sale in section 2(g). If the sale is one in which the goods have been delivered outside the State of Bihar, but not as a direct result of the sale or not for the purpose of consumption in the State of first delivery, the sale will not be covered by the Explanation, and the right to tax the sale, if arising otherwise under the Act relying upon the territorial nexus, will not be impaired by the prohibition imposed by cl. (1)(a)(i) of section 33. " It may be mentioned that section 33 of the Bihar Sales Tax Act was enacted to give effect expressly to the legislative restrictions imposed by article 286 of the Constitution. In Indian Copper Corporation Ltd. 's case(1) certain transactions of sale were effected by the assessee after the promulgation of the Constitution, under which the property in the goods passed in the State of Bihar but delivery was effected outside the State of Bihar for consumption also outside Bihar. In some of these transactions goods were delivered in the State of first destination for consumption therein whilst in others the goods were delivered not for consumption in the State of first delivery. The assessee contended that both these categories of transactions were exempt from tax under article 286(1)(a) as they were (1) ; 400 outside sales. This Court unanimously negatived the conten tion of the assessee in respect of sales in which delivery in the State of first destination was not for consumption therein, and the transactions were on that account not "Explanation sales". It was held that the State of Bihar was competent to tax those "Non explanation sales" in which the property in the goods had passed in the State of Bihar. But two different grounds were given in support of the conclusion in that case. My brethren Hidayatullah, Das Gupta and Rajagopala Ayyangar, JJ., were of the view that passing of property within the State alone was intended after the Constitution to be fastened upon for the purpose of determining whether the sale is inside or outside the State, and therefore subject to the operation of the Explanation that State in which the property passes would be the only State, which had the power to tax the sale. section K. Das. J., and I were of the view that sale transactions not falling within the constitutional prohibitions remained taxable because in adjudging whether a "non Explanation" sale transaction was "outside the State", the doctrine of territorial nexus could not be wholly excluded from consideration. In a recent judgment of this Court in A.V. Thomas & Co. Ltd. vs Deputy Commissioner of Agricultural Income tax and Sales tax, Trivandrum(1) this Court held in construing article 286(1)(a) in the light of the Explanation before that Article was amended by the Constitution (Sixth Amendment) Act, that: Where the Explanation to Article 286(1)(a) of the Constitution of India is inapplicable, it is the 'passing of property within the State ' that is intended to be fastened on for the purpose of determining whether a sale is 'inside ' or 'outside ' the State. Therefore subject to the operation of the 'Explanation ', that State in which the property in the goods passes would be the only State which would have the power to levy a tax on the sale. " In A. V. Thomas & Co. Ltd. 's case(1) chests of tea were stored in warehouses at Willingdon Island in the Travancore Cochin State, but auctions of the tea chests were held at Fort Cochin which was at the material time within the State of ' Madras, and after the price was paid at Fort Cochin delivery orders were given to the purchasers addressed to the warehouse keepers at Willingdon Island and actual delivery was given at the warehouses. The chests of tea were then sent from Willingdon Island for consumption in other parts of India or were exported out of India. It was held by the Court in that (1) [1963] Supp. 2 S.C.R. 608. 401 case that the property in the goods passed at Fort Cochin and as the goods were delivered not for the purpose of consumption in any particular State, the sales were not inside the State of Travancore Cochin but were outside that State and were not liable to be taxed under the Travancore Cochin General Sales Tax Act (11 of 1125 ME). The Court observed that in sales which were not "Explanation sales" passing of property within the State was decisive of the liability to pay sales tax. No opinion was expressed on the question whether the doctrine of territorial nexus as investing the State with the right to tax a sale transaction outside the legislative restrictions imposed by article 286, was, since the promulgation of the Constitution, rendered ineffective. As the fact which give rise to this case are substantially the same as the facts on which a. V. Thomas & Co. Ltd. 's case(1) was decided, the decision of the appeals must be in favour of the assessee. It is necessary to record this judgment, lest it be assumed that I agree with the view that the doctrine of territorial nexus in its application to sales tax legislation has, since the enactment of the Constitution, been completely abrogated. It may be pertinent to note that since the amendment of the Constitution by the Constitution (Sixth Amendment) Act, article 286(1)(a) (which remains unamended) is now free from the shackles of the Explanation which is deleted and by cl. (2) the Parliament is invested with power to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in cl. (1), namely, outside the State or in the course of the import of the goods into, or export of the goods out of, the territory of India. Exercising the power under cl. (2) the Parliament has enacted the (74 of 1956), and by section 4(2) the doctrine of territorial nexus has been given legislative recognition, though in somewhat limited form. That subsection provides: "A sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State (a) in the case of specific or ascertained goods, at the time the contract of sale is made; and (b) in the case of unascertained or future goods. at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Explanation. Where there is a single contract of sale or purchase of goods situated at more places than [1963] Supp. 2 S.C.R. 608. 402 one, the provisions of this sub section shall apply as if there were separate contracts in respect of the goods at each of such places. " The doctrine of territorial nexus had full play in sales tax legislation under the Government of India Act, 1935: it also applies subject to certain modifications since the amendment of the Constitution by the Constitution (Sixth Amendment) Act. And I am unable to persuade myself that by the enact ment of article 286 of the Constitution, it stood abrogated in the interregnum between the promulgation of the Constitution and the amendment of article 286 by the Constitution (Sixth Amendment) Act. Appeal allowed.

The appellant company owns several estates wherein tea is grown and it was assessed to sales tax by the Sales Tax Officer in respect of the tea sold by it during the years 1954 55 and 1955 56. An appeal filed by the appellant was rejected by the, Appellate Assistant commissioner on the ground that the tea when sold was admittedly in godowns in the State of Travancore Cochin and that consequently the sales must be deemed to have taken place within the State of Travancore Cochin and hence liable to be included in the taxable turn over. When a further appeal was taken to the Sales Tax Appellate Tribunal, it was held that the property in the goods sold passed at Fort Cochin in Madras State on the fall of the hammer at the auction and hence the same was not taxable. The State filed a revision petition to the High Court. While the High Court accepted the finding of the Tribunal that the property in the goods sold passed at Fort. Cochin on the fall of the hammer at the auction, it differed from the Tribunal as regards the effect of the circumstance that the tea sold was, at the point of sale, physically in godowns situated in the State of Travancore Cochin and held the sales to be taxable. The appellant came to this Court after obtaining a certificate of fitness from the High Court. The only question argued before this court was whether a sale of tea effected by the appellant by auction at Fort Cochin in Madras State was a sale outside the State of Travancore Cochin orinside it and whether the same was taxable or not. Accepting.the appeal. HELD: No sales tax was to be levied in this case as the sales took place outside the State of Travancore Cochin. The test for determining whether a sale is inside or outside a State is where the property in the goods passed and in the present case the property in the goods passed in Fort Cochin in Madras State on the fall of the hammer at the auction. The point about the property not having passed in the Madras State was not argued before the High Court and was also not urged in the statement of case filed by respondent and hence the same was not allowed to be argued in the Supreme Court. Per Shah. The property in the goods passed at Fort Cochin in Madras State and as the goods were delivered not for the purpose of consumption in any particular State, the sales were not inside Travancore Cochin but were outside the 392 State and were as held by this Court in A. V. Thomas & Co. vs Deputy Commissioner of Agricultural Income tax and Sales Tax Trivandrum, 14 S.T.C. 363, not liable to be taxed under the Travancore Cochin General Sales Tax Act, 1950. The doctrine of territorial nexus had full play in sales tax legislation under the Government of India, Act, 1935 and was not abrogated by the enactment of Art, 286 of the Constitution. It continued to be in operation in the interregnum between the promulgation of the Constitution and the amendment of article 286 by the Constitution (Sixth Amendment) Act, 1956. It also applies now subject to certain modifications. Parliament has been given the power to formulate principles for determining when a sale or purchase of goods takes place outside the State or in the course of the import of the goods into or export of the goods out of the territory of India. Exercising the power under cl. (2) Parliament has enacted the and by section 4(2) the doctrine of territorial nexus has been given legislative recognition though in somewhat limited form. Deputy Commissioner of Agricultural Income tax and Salestax, Trivandrum vs A.V. Thomas & Co., I.L.R. 1960 Kerala 1395; India Copper Corporation Limited vs State of Bihar, ; ; A. V. Thomas & Co. Ltd. vs Deputy Commissioner of Agricultural Income tax and Sales tax, Trivandrum 1953 Supp. 2 S.C.R. 608 363; Poppat Lal Shah vs The State of Madras, ; ; and the Tata Iron & Steel Company Ltd. vs The State of Bihar , referred to.

No. 543 (NT) of 1970. Appeal by certificate from the Judgment and order dated December 2, 1969 of the Allahabad High Court in Civil Misc. No. 955 of 1969. A.K. Sen, Yogeshwar Prasad, section K. Bagga, Shakeel Ahmed and Mrs. section Bagga for the appellant. section C. Manchanda and O. P. Rana for the respondents. The Judgment of the Court was delivered by KHANNA, J. This appeal on certificate is directed against the Full Bench decision of Allahabad High Court whereby that court answered by a majority of two to one the following question referred to it by a Division Bench in the negative against the assessee appellant : "Whether, in order to recover interest under section section (1 A) of the U.P., Sales Tax Act, it is necessary for the Sales Tax Officer to make an assessment order in respect of the interest and to issue a notice of demand in respect of such interest.", The appellant, a partnership firm, is a large scale manufacturer of biris. The Appellant was assessed to tax under the (U.P. Sales Tax Act, 1948 (U.P. Act No. 15 of 1948) ( hereinafter referred to as the Act) for the assessment years 1957 58 and 1958 59 as per assessment orders dated June 10, 1959 and February 12, 1963 respectively. On an application sent by the appellant to the Minister of Finance, U.P. Government requesting for compounding of tax, an order was issued on May 6, 1959 staying the recovery of tax due from the appellant. The stay order was vacated by order dated September 25. On October 9, 1967 the Sales Tax Officer sent a recovery certificate to the Collector Allahabad for a sum of Rs. 1965,684.43 for the recovery of arrears of sales tax for the year 1957 58. The recovery certificate also mentioned that interest at the rate 1 of 18 per cent per annum calculated on the amount of tax with effect from February 1, 1964 till the date of final payment should also be recovered as arrears of land revenue in terms of the provisions of section 8(1 A) of the Act. On October 25, 1967 another recovery certificate for recovering a sum of Rs. 26,238.08 in respect of the year 1958 59 on account of arrears of sales tax was sent by the Sales Tax Officer to the Collector Allahabad. It was mentioned in the certificate that the aforesaid amount would carry interest at the rate of 18 per cent per annum calculated with effect from February 1, 1965 till the date of final payment and the same too should be recovered as arrears of land revenue in terms of the provisions of section 8(1 A) of the Act. The case of the appellant firm is that the amount of the sales ' tax mentioned in the two recovery certificates was paid by it. The appellant, however, contested its liability to pay interest amounting to Rs. 1,36,000 on the amount of sales tax under section 8(1 A) of the Act. A petition under article 226 of the Constitution was consequently filed fly the appellant in the High Court challenging the recovery of the interest amounting to Rs. 1,38,000. The main ground which was taken by the appellant in this,connection was that without making an assessment order and without issuing a notice of demand 27 the Sales Tax Officer had no jurisdiction to initiate proceedings for the recovery of interest. Reliance in this connection was placed on behalf of the appellant upon an earlier Division Bench decision in the case of Beni Ram Mool Chand vs The Sales Tax Officer(1) wherein the Division Bench had held that issuance of a notice of demand was it condition precedent to the recovery of penal interest. As the correctness of that decision was challenged, the Division Bench hearing, the writ petition of the appellant referred the question reproduced earlier to the Full Bench. The Full Bench by a majority of two to on, , as already mentioned, answered the question in the negative and against the appellant. Before dealing with the contentions advanced in this Court, we may refer to the relevant provision of the Act. Section 3 of the Act creates liability to sales tax. Under this section every dealer is liable to pay tax on the turnover which shall be determined in such manner as may be prescribed. Section 7 provides for determination of turnover and assessment of tax. Section 8 deals with payment and recovery of tax. 'Sub sections (3), (1 A) and 6 of section 8 read as under "8. Payment and recovery of tax. (1) The tax assessed under this Act shall be paid in such manner and in such instalments, if any. and within such time, not being less. than fifteen days from the date of service of the notice of assessment and demand, as may be specified in the notice. In default of such payment, the whole of the amount then, remaining due shall become recoverable in accordance with sub section (8). (1 A) If the tax payable under sub section (1) remains unpaid for six months after the expiry of the time, specified. in the notice of assessment and demand, or the commencement of the Uttar Pradesh BikriKar (Dwitiya Sanshodhan) Adhiniyam, 1963, whichever, is later, then without prejudice to any other liability or penalty which the defaulter may, in consequence of such non payment, incur under this Act, simple interest at the rate of eighteen per cent per annum shall run on the amount then remaining. due from the date of expiry of the time specified in the said notice, or from the commencement of the said Adhiniyam, as the case may be, and shall be added to the amount of tax and be deemed for all purposes to be part of the tax Provided that where as a result of appeal, revision or reference, or of any other order of a competent court or authority, the amount of tax is varied, the interest shall. be recalculated accordingly Provided further that the interest on the excess amount of tax payable under an order of enhancement shall run from the date of such order if such excess remains unpaid for six months after the order. x x x x (1) (1969) 23 S.T.C. 423. 28 (8) Any tax or other dues payable to the State Government under this Act, or any amount of money which a person is required to pay to the assessing authority under sub section (3) or for which he is personally liable to the assessing authority under sub section (6) shall be recoverable as arrears of land revenue. " It may be mentioned that sub section (1 A) of section 8 reproduced above was added by U.P. Sales Tax (Second Amendment) Act, 1963 (U.P. Act 3 of 1964). The above provision was apparently added with a view to tighten up the machinery for collection of sales tax and as a deterrent measure so that. the dealers may not evade or delay the payment of tax, U.P. Act 3 of 1964 also added section 33 to the Act. The material part of section 33 reads as under "In respect of any sum recoverable under this Act as arrears of land revenue the assessing authority may forward to the Collector a certificate under his signature specifying the sum due. Such certificate shall be conclusive evidence of the existence of the liability, of its amount, and of the person who is liable, and the Collector on receipt of the certificate shall proceed to recover from such person the amount specified therein as if it were an arrear of land revenue; Mr. Sen on behalf of the appellant has argued that it was essential for the Sales Tax Officer to make an assessment order in respect of the interest before he could issue recovery certificate against the appellant. In any case, according to Mr. Sen, recovery certificate in respect of the interest could not be issued till such time a notice of demand in respect of the interest had been issued by the Sales Tax Officer to the appellant firm. These contentions, in our opinion, are not well founded. There is no provision in the Act which makes it obligatory on the part of the Sales Tax Officer to make an assessment in respect of the interest which the amount of sales tax would carry under section 8(1 A) of the Act. There is also no provision in the Act which requires the issue of a notice of demand in respect of the interest by the Sales Tax Officer to the assessee before the Sales Tax Officer forwards recovery certificate to the Collector. Reference has been made by Mr. Sen to sub section (1 A) of section B, according to which interest shall be added to the amount of tax and shall be deemed for all purposes to be part of the tax. The above deeming provision, in our opinion, has been added only for the purpose of recovery. The object apparently was that the amount of interest should be recovered in the.same manner as the amount of sales tax. The amount of sales tax and other dues under sub section (8) of section 8 can be recovered 'beyond any pale of controversy and to obviate any objection that the interest on sales tax cannot be recovered as land revenue that subsection (1 A) provided that the interest shall be added to the amount of tax and be deemed for all purposes to be a part of the tax, 29 According to section 8(1 A), simple interest at the rate of 18 per cent per annum shall run on the amount of arrears of sales tax. from the date specified in that sub section. It would thus appear that the liability to pay interest is automatic and arises by operation of law. The amount of interest on the date of payment of tax is not constant but increases from day to day. The amount of interest can,. therefore, be not predicated till such time as the arrears of sales tax are paid and it is consequently not possible to specify a definite figure in respect of the interest in the recovery certificate. At the time the arrears of sales tax are paid, there can be no difficulty in finding the amount of interest which has. become due. The, amount of tax on which interest is to accrue, the rate of interest, the date from which interest is to commence and the date up to which interest is to be counted are all known. It is, therefore, a matter of more arithmetical calculation to arrive at the figure of interest. We find nothing in any of the provisions of the Act as may warrant making of another assessment order by the Sales Tax. Officer regarding the amount of interest or making it obligatory for him to issue a demand notice in respect of the interest before sending the recovery certificate to the Collector. We are also not impressed by Mr. Sen 's argument that the Sales Tax Officer should specify the amount of interest in the recovery certificate. As the amount of interest would go on increasing every day fill the recovery of the sales tax, it is plainly not possible to specify the exact amount of interest in the recovery certificate. The exact amount of interest can only be known on the day the arrears of sales tax are paid. No elaborate procedure is required for determining the amount of interest because, as mentioned earlier, it is a matter of simple arithmetical calculation. There was some argument before us on the point as to when U.P. Act 3 of 1964 came into force. This Act received the assent of the President on January 25, 1964 but was published in the official Gazette on February 1, 1964. It was submitted on behalf of the appellant that the Act came into force on the date it received the assent of the President. As against that, Mr. Manchanda on behalf of the respondents stated that the Act came into force on February 1, 1964. the day it was published in the official Gazette. The stand taken by Mr. Manchanda in this respect is correct because according to clause (b) of sub section (1) of section 5 of the U.P. General Clauses Act, 1904 (U.P. Act No. 1 of 1904) where any Uttar Pradesh Act is not expressed to come into force on a particular day, then in the case of an Uttar Pradesh Act made after the Commencement of the Constitution, it shall come into operation on the day on which the assent there to of the Governor or the President, as the case may require, is first published in the official Gazette. It may also be mentioned that in para 33 of the writ petition filed in the High Court the appellant ' too had taken the stand that the U.P. Act 3 of 1964 had come into, force 'on February. 1, 1964. Argument has also been advanced by Mr. Sen that the interest on arrears of sales tax could not be realised for the period during which 30 the recovery of sales tax was stayed. We find it difficult to accede to this contention because there is nothing in the language of section 8(1 A) of the Act which prevents the running of interest because of the operation of any stay order. Indeed, the liability to pay interest is created by the statute and the Sales Tax Officer has no discretion to grant any exemption from the payment of interest. Mr. Sen has pointed out that the amount of sales tax payable by the appellant was reduced on appeal and the appellant is entitled to a consequential relief on that account. This is a matter which is outside the ambit of the question which has been dealt with in the judgment under appeal. In case the appellant is entitled to any relief on account of reduction of the amount of sales tax in appeal, it would be for him to agitate the matter in appropriate proceedings. The appeal consequently fails and is dismissed with costs.

The appellant firm was assessed to sales tax for the assessment years 1957 58 and 1958 1959. On an application made by the appellant for the composition of tax the recovery of the tax for 1957 58 was stayed. The stay order was vacated oh September 25. Thereafter the sales tax officer issued a certificate to the Collector for the recovery of arrears of sales tax for the said assessment years. In the certificate it was mentioned that 8% interest per annum on the arrears of tax was also to be recovered as arrears of land revenue in terms of the provisions of section 8(1 A) of the U.P. Sales Tax Act, ' 1948 as amended by Act 3 of 1964. in a writ petition under article 226 of the Constitution the appellant challenged the recovery of interest mainly on the ground that there was no assessment order in regard to the interest and no notice of demand had been issued. The High Court dismissed the petition. Appeal in this Court was filed with certificate. Dismissing the appeal, HELD : (i) The provision in sub section (1 A) of section 8 according to which interest shall be added ' to the amount of tax and shall be deemed for all purpose to be part of tax has been added only for the purpose of recovery. The object apparently was that the amount of interest should be recovered in the same manner as the amount of sales tax. The amount of sales tax and other dues under sub section (8) of section 8 can be recovered as arrears of land revenue. It was with a view to nut the matter beyond any pale of controversy and to obviate any objection that the interest on sales tax cannot be recovered as land revenue that sub section (1 A) provided that the interest shall be added to the amount of tax and be deemed for all purposes to be a part of the tax. It is a matter of mere arithmetical calculation to arrive at the figure of interest. There is nothing in any of the provisions of the Act as may warrant making of another assessment order by the sales tax officer regarding the amount of interest or making it obligatory for him to issue a demand notice in respect of the interest before sending the recovery certificates to the Collector. [28G 29C] (ii)The argument that the sales tax officer should specify the amount of interest in the recovery certificate could not be@ accepted. As the amount of interest would go on increasing every day till the recovery of the sales tax it is plainly not possible to specify the exact amount of interest in the recovery certificate. [29D] (iii)According to clause (b) of subsection (1) of section 5 of the U.P. General Clauses Act, 1904 where any U.P. Act is not expressed to come into force on a particular day than in the case of a U.P. Act made ' after the commence ment of the Constitution it shall come into operation on the date on which the assent thereto of the Governor or the President as the case may require is first published in the official gazette. In the present case the President 's assent to U.P. Act 3 of 1964 was published in the official Gazette on February 1, 1964 and hence it must be held to have come into force on that day and not on the date on which the President 's assent was given, [29F] (iv)There is nothing in the language of section 8(1 A) of the Act which prevents the running of interest because of, the operation of any stay order. Indeed the liability to pay interest is created by the statute and the Sales tax Officer has no discretion to grant any exemption from the payment of interest. [30A] 26

Special Leave Petition (Civil) No. 2730 of 1987. From the Judgment and Order dated 8.12.1986 of the Punjab and Haryana High Court in R.S.A No. 1773 of 1986 (0 & M). K.G. Bhagat and Sunil K. Jain for the Appellants. The Judgment of the Court was delivered by VENKATARAMIAH, J. The short question which arises for consideration in this case is whether under the provisions of the (hereinafter referred to as 'the Act ') a step son of a female dying intestate is entitled to claim a share in her property simultaneously with her son. In other words the question involved is wheth er the word 'sons ' in clause (a) of sub section (1) of section 15 of the Act includes 'step sons ' also. The facts involved in this Special Leave Petition are thus. One Battan Singh who was also known as Badan Singh had two wives, namely, Mahan Kaur and Khem Kaur. Mahan Kaur died during his life time after giving birth to two sons Lachman Singh (petitioner) and Gurdas Singh from the loins of Battan Singh. Respondent No. 1 Kirpa Singh is the son of Battan Singh and Khem Kaur. Gurdas Singh died during the life time of Battan Singh leaving behind his widow Gurbux Kaur and his son Amarjit Singh. Battan Singh died intestate after the Act came into force. On his death his property devolved on his heirs including his second wife Khem Kaur in accordance with the provisions of the Act. Thereafter Khem Kaur died. On her death dispute arose between her son Kirpa Singh on the one side and Lachman Singh, Amarjit Singh and Gurbux Kaur on the other. Kirpa Singh claimed the entire property left behind by Khem Kaur on the ground 936 that he was the only son of Khem Kaur. Lachman Singh, Amar jit Singh and Gurbux Kaur claimed that Kirpa Singh was entitled to only one third share in the property of Khem Kaur, Lachman Singh was entitled to one third share and Amarjit Singh, who was the son of Gurdas Singh, was entitled to the remaining one third share. Both the parties relied upon clause (a) of section 15(1) of the Act. While Kirpa Singh contended that the word 'sons ' in section 15(1)(a) of the Act meant only sons born of the body of the Hindu female dying intestate the others contended that the word 'sons ' in that clause included stepsons also. In view of the above dispute Kirpa Singh filed a suit on the file of the Sub Judge 1st Class, Nakodar in the District of Jalandhar inter alia for a declaration that he was entitled to the entire property belonging to Khem Kaur against Lachman Singh, Amarjit Singh and Gurbux Kaur who contested the suit. The trial court vide its judgment dated February 18, 1984 de creed the suit declaring that Kirpa Singh was entitled to the property belonging to Khem Kaur. Lachman Singh preferred an appeal against the decree of the trial court in R.C.A. No. 202 of 1985 on the file of the learned Additional Dis trict Judge, Jalandhar. That appeal was dismissed on Febru ary 19, 1986. The second appeal filed by him against the judgment of the Additional District Judge, Jalandhar, in R.S.A. No. 1773 of 1986 on the file of the High Court of Punjab & Haryana was also dismissed in limine on December 8, 1986. Aggrieved by the judgment of the High Court Lachman Singh has filed this petition for special leave under Arti cle 136 of the Constitution of India. Section 15 of the Act, which is relevant for purposes of this case, reads thus: "15(1). The property of a female Hindu dying intestate shall devolve according to the rules set out in section 16 (a) firstly, upon the sons and daughters (including the children of any predeceased son or daughter) and the husband; (b) secondly, upon the heirs of the husband; (c) thirdly, upon the mother and father; (d) fourthly, upon the heirs of the father; and (e) lastly, upon the heirs of the mother. 937 (2) Notwithstanding anything con tained in sub section ( 1 ), (a) any property inherited by a female Hindu from her father or mother shall devolve, in the absence of any son or daughter of the deceased (including the children of any predeceased son or daughter) not upon the other heirs referred to in sub section (1) in the order specified therein, but upon the heirs of the father; and (b) any property inherited by a female Hindu from her husband or from her father in law shall devolve, in the absence of any son or daughter of the deceased (including the children of any predeceased son or daugh ter) not upon the other heirs referred to in sub section (1) in the order specified there in, but upon the heirs of the husband. Section 15 of the Act deals with the general rules of suc cession in the case of female Hindus. Sub section (1) of section 15 provides that the property of a female Hindu dying intestate shall devolve according to the rules set out in section 16 of the Act firstly, upon the sons and daugh ters (including the children of any predeceased son or daughter) and the husband; secondly, upon the heirs of the husband; thirdly, upon the mother and father; fourthly, upon the heirs of the father; and lastly, upon the heirs of the mother. Sub section (2) of section 15 of the Act arises for consideration only when a female Hindu dies intestate leav ing property without leaving behind her any son or daughter (including the children of any predeceased son or daughter) and in that event any property inherited by her from her father or mother shall devolve not upon the other heirs referred to in sub section (1) of section 15 of the Act in the order specified therein but upon the heirs of the father and any property inherited by her from her husband or from her father in law shall devolve not upon the other heirs referred to in sub section (1) of section 15 in the order specified therein, but upon the heirs of the husband, Rule 1 of section 16 provides that among the heirs specified in sub section (1) of section 15 those in one entry shah be preferred to those in the succeeding entry and those includ ed in the same entry shall take simultaneously. It is not necessary to refer to rule (2) and Rule (3) of section 16 of the Act for purposes of this ease. The only question which is to be determined here is whether the expression 'sons ' in clause (2) of section 15(1) of the Act includes 938 step sons also, ie., sons of the husband of the deceased by another wife. In order to decide it, it is necessary to refer to some of the provisions of the Act. Section 3(j) of the Act defines 'related ' as related by legitimate kinship but the proviso thereto states that illegitimate children shall be deemed to be related to their mother and to one another, and their legitimate descendants shall be deemed to be related to them and to one another and that any word expressing relationship or denoting a relative shall be construed accordingly. Section 6 and section 7 of the Act respectively deal with devolution of interest in coparcenary property and devolution of interest in the property of a tarwad, tavazhi, kutumba, kavaru and illom. Sections 8 to 13 of the Act deal with rules of succession to the property of a male Hindu dying intestate. We are concerned in this case with the rules of succession to the property of a female Hindu dying intestate. Sections 15 and 16 of the Act are material for our purpose. Ordinarily laws of succession to property follow the natural inclinations of men and women. The list of heirs in section 15(1) of the Act is enumerated having regard to the current notions about propinquity or nearness of relationship. The words 'son ' and 'stop son ' are not defined in the Act. According to Collins English Dic tionary a 'son ' means a male offspring and 'step son ' means a son of one 's husband or wife by a former union. Under the Act a son of a female by her first marriage will not succeed to the estate of her 'second husband ' on his dying intes tate. In the case of a woman it is natural that a step son, that is, the son of her husband by his another wife is a step away from the son who has come out of her own womb. But under the Act a step son of a female dying intestate is an heir and that is so because the family headed by a male is considered as a social unit. If a step son does not fall within the scope of the expression 'sons ' in clause (a) of section 15(1) of the Act, he is sure to fall under clause (b) thereof being an heir of the husband. The word 'sons ' in clause (a) of section 15(1) of the Act includes (i) sons born out of the womb of a female by the same husband or by different husbands including illegitimate sons too in view of section 3(j) of the Act and (ii) adopted sons who are deemed to be sons for purposes of inheritance. Children of any predeceased son or adopted son also fall within the meaning of the expression 'sons '. If Parliament had felt that the word 'sons ' should include 'step sons ' also it would have said so in express terms. We should remember that under the Hindu law as it stood prior to the coming into force of the Act, a step son, i.e., a son of the husband of a female by another wife did not simultaneously succeed to the stridhana of the female on her dying intestate. In that case the son born out of her womb had precedence over a step son. Parliament would have made express provision in the Act if it intended that there 939 should be such a redical departure from the past. We are of the view that the word 'sons ' in clause (a) of section 15(1) of the Act does not include 'step sons ' and that step sons fall in the category of the heirs of the husband referred to in clause (b) thereof. The decision of the Mysore (Karnataka) High Court in Mallappa Fakirappa Sanna Nagashetti and Others vs Shivappa and another, A.I.R. ; takes the view which we have expressed above. According to the decision of the Bombay High Court in Rama Ananda Patil vs Appa Bhima Redekar and Others, A.I.R. 1969 Bombay 205 the emphasis in clause (a) of section 15(1) of the Act is on the aspect that the sons or the daughters are of her own body and not so much on the husband who was responsible for their birth and that therefore children of a female though by different husbands inherit her estate simultaneously. The High Court of Punjab and Haryana has in Gumam Singh vs Smt. Ass Kaur and Others, A.I.R. 1977 P & H 103 following the observations in the decisions of the Mysore and Bombay High Courts, referred to above, held that the word 'sons ' in section 15(1)(a) of the Act does not include a 'step son '. The High Court of Calcut ta has also taken the same view in Smt. Kishori Bala Mondal vs Tribhanga Mondal & Others, A.I.R. 1980 Calcutta 334. It is true that the Allahabad High Court has taken a contrary view in Ram Katori vs Prakash Wati, I.L.R. 1968 (1) Allahabad 697. In that case the facts were however slightly different, but the point involved was almost the same. The facts of the case were as follows. One Chandu Lal had mar ried a woman. She died during the life time of Chandu Lal leaving behind her a daughter by Ram Katori. Thereafter Chandu Lal married a second woman by name Ram Kali through whom he got a daughter by name Prakashwati. Chandu Lal died in 1920 and on his death Ram Kali being his widow succeeded to his estate as a limited owner. After the coming into force of the Act in 1956 her limited estate ripened into absolute estate and she became the full owner of the estate inherited by her from her husband. Ram Kali died thereafter. On her death Ram Katori, the daughter of Chandu Lal by his first wife contended that she was entitled to succeed simul taneously with Prakashwati to the estate of Ram Kali which originally belonged to her father and claimed one half share in it. Her claim was resisted by Prakashwati stating that the word 'daughters ' in section 15(1)(a) of the Act did not include 'step daughters ' and that Ram Katori would fall under the category of the heirs of the husband and would be entitled to succeed either under clause (b) of section 15(1) or under clause (b) of section 15(2) of the Act and that too in the absence of 940 sons and daughters of Ram kali (including children of prede ceased sons and daughters). It was further contended by Prakashwati that the fact that the property in question had formerly belonged to the husband of Ram Kali did not matter at all because Ram Kali had left behind her who was a daugh ter of her own body entitled to succeed under section 15(1)(a), and that Ram Katori being a step daughter could not claim under section 15(1)(a) of the Act. The High Court of Allahabad felt that there was a distinction between clause (a) of section 15(1) and clauses (a) and (b) of section 15(2) of the Act in that whereas in section 15(1)(a) the words 'sons and daughters ' were unqualified, the words 'son or daughter ' in clauses (a) and (b) of section 15(2) were qualified by the words 'of the deceased ' and therefore conclusion was irresistible that the unqualified words 'sons and daughters ' in section 15(1)(a) of the Act indicated that they included also the children of her husband by another wife. The High Court also appears to have been moved by the consideration that the opposite construction would be pat ently unfair to the children by her husband 's another wife since they would be deprived of their share in the property which originally belonged to their father. We feel that neither of these reasons is correct. The words 'sons and daughters . . and the husband ' in clause (a) of section 25(1) only mean 'sons and daughters . and the husband ' of the deceased. They cannot be 'sons and daughters . and the husband ' of any body else. All relatives named in the different clauses in sub section (1) of section 15 of the Act are those who are related to the deceased in the manner specified therein. They are sons, daughters, husband, heirs of the husband, mother and father, heirs of the father and heirs of the mother of the deceased. The use of the words 'of the deceased ' following 'son or daughter ' in clauses (a) and (b) of sub section (2) of section 15 of the Act makes no difference. The words 'son or daughter of the deceased (including the children of any predeceased son or daughter) ' in clauses (a) and (b) of section 15(2) of the Act refer to the entire body of heirs failing under clause (a) of section 15(1) of the Act except the husband. What clauses (a) and (b) of sub section (2) of section 15 of the Act do is that they make a distinction between devolution of the property inherited by a female Hindu dying intestate from her father or mother on the one hand and the property inherited by her from her husband and from her father in law on the other. In the absence of any son or daughter of the deceased (including the children of any predeceased son or daughter), in a case failing under clause (a) of section 15(2) of the Act the property devolves upon the heirs of the father of the deceased and in a case falling under clause (b) of section 15(2) of the Act the property devolves upon the heirs of the husband of the 941 deceased. The distinction made by the High Court of Allaha bad on the ground of the absence or the presence of the words 'of the deceased ' in sub section (1) and sub section (2) of section 15 of the Act appears to be hyper technical and the High Court has tried to make a distinction where it does not actually exist. The second reason, namely, that exclusion of 'step sons ' and 'step daughters ' from clause (a) of section 15(1) of the Act would be unfair as they would thereby be deprived of a share in the property of their father is again not well founded. The rule of devolu tion in section 15 of the Act applies to all kinds of properties left behind by a female Hindu except those dealt with by clauses (a) and (b) of section 15(2) which make a distinction as regards the property inherited by her from her parents and the property inherited from her husband or father in law and that too when she leaves no sons and daughters (including children of predeceased sons and daugh ters). If the construction placed by the High Court of Allahabad is accepted then the property earned by the female Hindu herself or purchased or acquired by her would devolve on step sons and stepdaughters also along with her sons and daughters. Is it just and proper to construe that under clause (a) of section 15(1) of the Act her stepsons and step daughters, i.e., children of the husband by another wife will be entitled to a share along with her own children when the Act does not expressly says so? We do not think that the view expressed by the High Court of Allahabad represents the true intent of the law. When once a property becomes the absolute property of a female Hindu it shall devolve first on her children (including children of the ' predeceased son and daughter) as provided in section 15(1)(a) of the Act and then on other heirs subject only to the limited change introduced in section 15(2) of the Act. The step sons or step daughters will come in as heirs only under clause (b) of section 15(1) or under clause (b) of section 15(2) of the Act. We do not, therefore, agree with the reasons given by the Allahabad High Court in support of its decision. We disagree with this decision. In the circumstances, we hold that the High Court of Punjab and Haryana against whose decision this petition is filed was right in affirming the decree passed in favour of Kirpal Singh, Respondent No. 1 herein. The Special Leave Petition is, therefore, dismissed. A.P.J. Petition dismissed.

Battan Singh had two wives, namely, Mahan Kaur and Khem Kaur. Mahan Kaur died during his lifetime after giving birth to two sons, Lachman Singh (petitioner) and Gurdas Singh. Gurdas Singh pre deceased Battan Singh leaving behind his widow Gurbax Kaur and his son Amarjit Singh. Respondent No. 1, Kirpa Singh is the son of the Battan Singh and Khem Kaur. Battan Singh died intestate after the came into force and his property devolved on his heirs including his second wife Khem Kaur. On her death, Kirpa Singh claimed her entire property on the ground that he was her only son. Lachman Singh, Amarjit Singh and Gurbax Kaur claimed that Kirpa Singh was entitled to only 1/3rd share in the property of Khem Kaur, Lachman Singh was entitled to 1/3rd share and Amarjit Singh was entitled to the remaining 1/3rd share. Kirpa Singh filed a suit for declaration that he was entitled to the entire property belonging to Khem Kaur against Lachman Singh, Amarjit Singh and Gurbax Kaur. The trial Court decreed the suit. The appeals filed by Lachman Singh before the Additional District Judge and in the High Court were dismissed. Dismissing the Special Leave Petition, HELD: 1. Ordinarily laws of succession to property follow the natural inclinations of men and women. [938C D] 2. The list of heirs in section 15(1) of the is enumerated having regard to the current notions about the propinquity 934 or nearness of relationship. The words 'son ' and 'step son ' are not defined in the Act. [938C D] 3. Under the Act, a son of a female by her first mar riage will not succeed to the estate of her 'second husband ' on his dying intestate. In the case of a woman it is natural that a step son, that is, the son of her husband by his another wife is a step away from the son who has come out of her own womb. But under the Act a step son of a female dying intestate is an heir and that is so because the family headed by a male is considered as a social unit. If a step son does not fail within the scope of the expression 'sons ' in cl. (a) of section 15(1) of the Act, he is sure to fail under cl. (b) thereof being an heir of the husband. [938D F] 4. The word 'sons ' in cl. (a) of section 15(1) of the Act includes: (i) sons born out of the womb of a female by same husband or by different husbands including illegitimate sons too in view of section 3(j) of the Act, and (ii) adopted sons who are deemed to be sons for purposes of inheritance. [938F G] 5. Under the Hindu law as it stood prior to the coming into force of the Act, a step son, i.e. a son of the husband of a female by another wife did not simultaneously succeed to the stridhana of the female on her dying intestate. In that case the the son born out of her womb had precedence over a step son. Parliament would have made express provi sion in the Act if it intended that there should be such a radical departure from the past. [938G H; 939A] 6. The word 'sons ' in cl. (a) of section 15(1) of Act does not include 'step sons ' and that step sons fail in the category of the heirs of the husband referred to in cl. (b) thereof. [939A B] Mallappa Fakirappa Sanna Nagashetti and Others vs Shi vappa and another, A.I.R. ; Rama Ananda Patii vs Appa Bhima Redekar and Others, A.I.R. 1969 Bombay 205; Gumam Singh vs Smt. Ass Kaur and Others, A.I.R. 1977 P & H 103 and Smt. Kishori Bala Mondal vs Tribhanga Mondal & Others, A.I.R. 1980 Calcutta 334 approved. Ram Katori vs Prakash Nati L.L.R., [1968] 1 Allahabad 697, overruled. The rule of devolution in section 15 of the Act applies to all kinds of properties left behind by a female Hindu except those dealt with by cls. (a) and (b) of section 15(2) which make a distinction as regards the property 935 inherited by her from her parents and the property inherited from her husband or father in law and that too when she leaves no sons and daughters (including children of prede ceased sons and daughters). [941B C] 8. When once a property becomes the absolute property of a female Hindu it shall devolve first on her children (including children of the predeceased sons and daughter) as provided in section 15(1)(a) of the Act and then on other heirs subject only to the limited change introduced in section 15(2) of the Act. The step sons or step daughters will come in as heirs only under cl. (b) ors. 15(1) or under cl. (b) or section 15(2) of the Act. [941E F]

Civil Appeal No. 6 of 1954. Appeal from the judgment and order dated the 8th day of June 1951 of Calcutta High Court in Income tax Reference No. 1 of 1951. R. J. Kolah and P. K. Ghosh, for the appellant. 552 G. N. Joshi, Porus A. Mehta and R. H. Dhebar, for the respondent. May 8. The Judgment of the Court was delivered by BHAGWATI J. This is an appeal with certificate under section 66 A(2) of the Indian Income tax Act, 1922 from the judgment and order passed by the High Court of Judicature at Calcutta on a reference under section 66(1) of the Act, whereby the High Court answered the referred question in the negative. The appellant is a timber merchant. On 5th February 1930. he obtained a loan of Rs. 1 lakh from the Bank of India on the joint security of himself and one Mamraj Rambhagat. On the same day Mamrai Rambhagat obtained a loan of Rs. 1 lakh from the Imperial Bank of India. , Bombay on the joint security of himself and the appellant. The appellant paid off his loan of Rs. I lakh to the Bank of India but Mamraj Rambhagat failed to make good the amount of his loan to the Imperial Bank of India, Bombay. This sum of Rs. 1 lakh was realised by the Imperial Bank of India from the appellant with interest thereon of Rs. 626 on 24th March 1930. Mamraj Rambhagat failed in his business and his estate went into the hands of the receivers on 25th April 1930. The appellant opened a ledger account in the name of Mamraj Rambhagat and the total amount of Rs. 1,00,626, was debited to this account. The appellant received the dividends from the receivers: Rs.31,446 on 30th October 1930, Rs. 9,434 on 25th April 1934 and Rs. 4,716 on 17th May 1938, aggregating to Rs. 45 596 leaving a balance of Rs. 55,030 unpaid, which sum he wrote off as bad debt in the assessment year 1941 42 (the account year being 1997 Ramnavmi) and claimed as an allowable deduction under section 10 of the Act. The Income tax Officer disallowed the claim holding that the said loss was a capital loss, and so did the Appellate Assistant Commissioner. It was argued on behalf of the appellant before the Appellate Assis 553 tant Commissioner that it was the usual custom in Bombay to secure loans on joint security from Banks by persons carrying on business. It was stated that this manner of securing loans on joint security was preferred by the Banks and it was also in the interest of the traders as lower rate of interest was charged, if the loan was on joint security. It was also stated that the appellant used to borrow money on joint security frequently and certain old pro notes jointly executed were submitted before the Appellate Assis tant Commissioner. Reference was made to the case of Commissioner of Income tax, Madras vs section A. section Ramaswamy Chettiar(1), where it was held that it was a custom amongst Nattukottai Chettiars to stand surety for one another for borrowing from ' Banks for the purpose of lending out at higher rates of interest and that the loss incurred under the agreement of guarantee by the Chettiar firm should be allowed as a deduction. The Appellate Assistant Commissioner, however, distinguished the case on facts and held that even though the appellant stood surety for Mamraj Rambhagat in course of securing finance for his business of timber, it was the loss of a sum borrowed by another, the sum borrowed was capital in its nature and the loss suffered by the appellant on account of Mamraj Rambhagat 's failure to pay was a capital loss. On appeal taken by the appellant before the Income Tax Appellate Tribunal, the Tribunal was of the opinion that the Appellate Assistant Commissioner had not expressed any opinion in his order as to whether there was such custom or not nor had he asked the appellant to establish the custom. The Tribunal in these circumstances held that the custom was accepted by the Department. The Tribunal did not see any distinction between the money lending business and timber business which were both financed by this type of borrowing and differing from the Appellate Assistant Commissioner followed the decision in Commissioner of Income tax, Madras V. section A. section Ramaswamy Chettiar (supra)., and came to (1) 554 the conclusion that the loss suffered by standing surety was an allowable loss and upheld the contention of the appellant. At the instance of the respondent the Tribunal stated a case to the High Court under section 66(1) of the Act and referred the following question for its decision: "Whether on the facts found the sum of Rs. 55,030 is allowable as a bad debt under the provisions of section 10(2)(xi) of the Indian Income tax Act". The said reference was heard by the High Court and in its judgment the High Court held that the Tribunal had proceeded on an erroneous assumption as to the facts of the case and the application of the money. ' Since ' no part of the loan, which had been taken from the Imperial Bank of India by Mamraj Rambhagat on the joint security of himself and the appellant, was applied to the appellant 's own business, there was no question of an allowable deduction in relation to the business of the appellant. The High Court held that the Tribunal was in error even in law inasmuch as under section 10(2) (xi) it is only a trading. or business debt of the trade or business of the appellant, which could be claimed as a loss and as the debt claimed was not in respect of the business of the appellant, which was the business of trading in timber and not of a person carrying on the business of standing surety for other persons, the loss suffered by the appellant was a capital loss and not a business loss at all. Regarding the decision relied upon by the Tribunal, the High Court referred to a later decision in Commissioner of Income tax, Madras vs section R. Subramanya Pillai(1), which held that the earlier decision must be read as confined to its peculiar facts and not applicable to business other than money lending business of Nattukottai Chettiars. The High Court, therefore, answered the referred question in the negative. Hence this appeal. The sole question for our determination in this appeal is whether the loss of Rs. 55,030 suffered by the appellant in this transaction was a capital loss or (1) 555 was a trading loss or a bad debt incurred by the appellant in the course of carrying on his business of timber. It is clear that no part of the monies borrowed on the joint security of the appellant and Mamraj Rambhagat from the Imperial Bank of India, Bombay went to finance the timber business of the appellant, but they were all utilised by Mamraj Rambhagat in his own business. These monies were not required to finance the timber business of the appellant, nor was the debt due by Mamraj Rambhagat and in respect of which the account was opened by the appellant in his ledger in the name of Mamraj Rambhagat a debt due by Mamraj. Rambhagat to the timber business of the appellant. If any monies had been borrowed by the appellant in his timber business, they would certainly have been his capital and whatever loss he incurred therein would have been his capital loss. The manner in which these monies were sought to be connected with the timber business and treated as a trading loss or bad debt of the timber business was by showing that it was the custom amongst the persons carrying business in Bombay to borrow monies from Banks on joint security and if A wanted monies for financing his business, he could do so by asking B to join him as surety, but he could not ask B to join him as such unless he stood surety for B in the loans which B borrowed in his turn from the Bank. A s joining B as surety was thus a consideration for B 's joining A as surety in his transaction with the Bank and, therefore, although no part of the monies borrowed by B came into the business of A, A joined B as surety for the purpose of financing his own business, which he could not do without B joining him as surety in the loan which he himself obtained from the Bank for the purpose of financing his own business. The transaction of A 's joining B as surety in the matter of B 's procuring a loan for the financing of his business was thus an essential operation of the financing of A 's business and was, therefore, an incident of A 's business and any loss incurred by A in the transaction could thus be treated as a trading loss in the course of carrying on of A 's 72 556 business. The loss incurred by the appellant in the transaction of his joining Mamraj Rambhagat as surety in the loan which Mamraj Rambhagat procured from the Imperial Bank of India could, it was urged, thus be treated as a trading loss or bad debt of the appellant 's timber business. It is necessary, therefore, to see what is the exact nature and scope of the custom said to have been accepted by the Department. The custom stated ' before the Appellate Assistant Commissioner was that persons carrying on business in Bombay used to borrow monies on joint security from the Banks in order to facilitate getting financial assistance from the Banks and that too at lower rates of interest. A businessman could procure financial assistance from the Banks on his own, but he would in that case have to pay a higher rate of interest. He would have to pay a lower rate of interest if he could procure as surety another businessman, who would be approved by the Bank. This, however, did not mean that mutual accommodation by businessmen was necessarily an ingredient part of that custom. A could procure B, C or D to join him as surety in order to achieve this objective, but it did not necessarily follow that if A wanted to procure B, C or D to thus join him as surety, he could only do so if he in his own turn joined B, C or D as surety in the loans, which B, C of D procured in their turns from the Banks for financing their respective businesses. Unless that factor was established, the mere procurement by A of B, C or D as surety would not be sufficient to establish the custom sought to be relied upon by the appellant so as to make the transaction of his having joined Mamraj Rambhagat as surety in the loan procured by Mamraj Rambhagat from Imperial Bank of India, a transaction in the course of carrying on his own timber business and to make the loss in the transaction a trading loss or a bad debt of the timber business of the appellant. The old pronotes jointly executed by the appellant and others, which were submitted before the Appellate Assistant Commissioner did not carry the case of the appellant far enough and stopped 557 short of proving the custom alleged by the appellant in, its entirety. The transaction in question could not, 'therefore, be. deemed to be one entered into by the appellant in the course of or in carrying on his timber business. Procuring finances for his timber business would no doubt be an essential operation in the course of his carrying. on his business, but the same thing could not be predicated of this transaction of his joining Mamraj Rambhagat as surety for procuring Rs. 1 lakh from the Imperia Bank of India, which was wholly to finance Mamraj Rambhagat 's business and not the timber business of the appellant. Learned counsel for the appellant laid particular emphasis on the finding by the Appellate Assistant Commissioner that "it was in the course of securing finance for the business of timber that he stood surety with Mamraj Rambhagat". This finding merely records the statement of fact, but does not go so far as to establish the custom sought to be relied upon by the appellant. The old pronotes submitted by the appellant before the, Appellate Assistant Commissioner merely related to his own transactions, where he had been joined by others as surety and did not establish that the others had been similarly accommodated by him in the matters of loans which they had in their turn procured from the Banks. The solitary instance of the appellant 's having joined Mamraj Rambhagat in the transaction in question could not be sufficient to establish the custom sought to be relied upon by him and we do not see any reason to enlarge the scope of the so called custom beyond what is warranted by the facts as set out in the order passed by the Appellate Assistant Commissioner. The custom among the Nattukottai Chettiars held proved in Commissioner of Income tax, Madras vs section A. section Ramaswamy Chettiar (supra) was that they stood surety for one another, when they borrowed from Banks for the purpose of lending out at higher rates of interest. It was, moreover, an essential element in the carrying on of a money lender 's business that 558 money, which Was thus lent out should be procured and that could not be done unless it was borrowed on the joint security of Nattukottai Chettiars, who stood surety for one another. Unless that type of suretyship was resorted to, a Nattukottai Chettiar by himself could never procure any monies which he could invest in his money lending business. The following passage from the judgment at page 238 is every apposite: "It is their custom to borrow from banks for the purpose of lending out the sums so obtained at higher rates of interest. The banks require such overdrafts to be guaranteed by other Chettiars. The Chettiars stand surety for one another in these borrowings. If a Chettiar refused to accommodate another moneylender in this way, he would not be able to obtain a guarantor for his own essential borrowings. The assessee in this case borrowed money on the guarantee of others and in turn stood surety for other Chettiars". There were thus elements of mutuality and the essential ingredient in the carrying on of the money lending business, which were elements of the custom proved in that case, both of which are wanting in the present case before us. It is significant to note that this case was distinguished by the learned Judges of the Madras High Court in Commissioner of Income tax, Madras V. section B. Subramanya Pillai (supra), where it was held that that decision must be confined to its own peculiar facts and does not apply to businesses other than Nattukottai Chetty money lending business. In that case the assessee was a bookseller, who borrowed from time to time jointly with one L a sum of Rs. 16,200 out of which the assessee took a sum of Rs. 10,450 for his business needs and L took the balance. The joint borrowing was necessitated by the business needs of both the borrowers and by the insistence of money lenders, who required the joint security of the two persons. L failed in his business and the assessee had to repay the creditors the whole of the joint borrowing. The assessee had also to 559 spend a sum of Rs. 658 in an unsuccessful attempt to recover the amount due from L. The assessee 'Claimed to deduct the sum of Rs. 658 and also the sum of Rs. 520495 which he had to pay the creditors on account of L 's share of the joint loan; in the computation of his business profits. It was held that the assessee was not entitled to deduct these sums in the computation of his business profit either under sec tion 10 (2) (xi) or section 10 (2) (xv) or as business loss. This case furnishes the proper analogy to the present case and points to the right conclusion in regard to the claim of the appellant. The following passage from the judgment of the learned C. J. under appeal correctly sums up, in our opinion, the whole position: "The debt must therefore be one which can properly be called a trading debt and a debt of the trade, the profits of which are being computed. Judged by that test, it is difficult to see how The debt in the present case can be said to be a debt in respect of the business of the assessee. The assessee is not a person carrying on a business of standing surety for other persons. Nor is he a money lender. He is simply a timber merchant. There seems to have been some evidence before the Appellate Assistant Commissioner that he had from time to time obtained finances for his business by procuring loans on the joint security of himself and some other person. But it is not established, nor does it seem to have been alleged, that he in his turn was in the habit of standing surety for other persons along with them for the purpose of securing loans for their use and benefit. Even if such, had been the case, any loss suffered by reason of having to pay a debt borrowed for the benefit of another, would have been a capital loss to him and not a business loss at all. The result, therefore, is that the appeal fails and must stand dismissed with costs. Appeal dismissed.

The appellant who was a timber merchant obtained a loan from the Bank of India on the joint security of himself and a third party, M. On the same day M obtained a loan from the Imperial Bank of India on the joint security of himself and the appellant. M failed in his business and the Imperial Bank of India realised the amount of the loan from the appellant who after getting some dividends from the receivers, wrote off the balance as bad debt in the assessment year in question and claimed it as an allowable deduction under section 10 of the Indian Income tax Act, 1922 on the footing that it was in the course of securing finances for the business of timber that he stood surety with M and that it was the usual custom to secure loans on the joint security from Banks by persons carrying on business. It was not established that the appellant was in the habit of standing surety for other persons along with them for the purpose of securing loans for their use and benefit. Held, that the debt in question could not be considered a debt in respect of the. business of the assesses who was not a person carrying on a business of standing surety for other persons and that, in any event, the loss suffered by reason of having to pay a debt borrowed for the benefit of another would be a capital loss and not a business loss and was not an allowable deduction under section 10(2) (xi) of the Indian Income tax Act. Commissioner of Income tax, Madras vs section A. section Bamaswamy Chettiar ([1946] , distinguished. Commissioner of Income tax, Madras vs S, B. Subramanya Pillai ([1950] , approved.

Civil Appeals Nos. 1303 of 1972 and 1538 of 1971. Appeals by Special Leave from the Judgment and Orders dated 13 4 1971 of the Assam and Nagaland High Court in Civil Rule No. 368/68 and 174/68. M. N. Phadke and section N. Choudhary for the appellant in CA. No. 1538 and Respondent in CA No. 1303/72. P. R. Mridul and K. P. Gupta for Respondent No. 1 in CA 1538 and Appellant in CA No. 1303/72. The Judgment of the Court was delivered by KRISHNA IYER, J. These two appeals, turning on the validity of the retrenchment of 23 workmen way back in 1966, are amenable to common disposal. Mr. Phadke, appearing for the Management, argued straight to the point; so did Shri Mridul, with the result that we could get the hang of the case without much wrestling with time or getting paper logged. Since, in substance, we are inclined to leave undisturbed the Award of the Industrial Tribunal, affirmed, as it were, by the High Court, both these appeals will be given short shrift with brief reasons. 968 The facts, to the extent necessary to appreciate the issues canvassed, are brief. The Management of a tea plantation by name Jorehaut Tea Co., Ltd., retrenched 23 workmen, 16 of whom were paid retrenchment compensation allegedly in terms of s.25F of the Industrial Disputes Act (for short, the Act) and in the order of 'last come, first go ', while the services of the other seven were terminated, although on payment of retrenchment compensation, allegedly in breach of section 25G of the Act, i.e. out of turn. The dispute that was raised was decided by the Tribunal which upheld the validity of the retrenchment of the 16 but set aside the termination of the other 7. Consequently it directed their reinstatement with some back wages. The Award granted the following relief: In respect of the workmen, viz., Sri Bhogeswar Saikia Sri Nandeswar Bora, Sri Gunai Bora, Sri Premodhar Sarma, Sri Alimuddin Ahmed, Sri Deven Sarma and Shri Harlal Biswas whose retrenchment has been found to be not justified they are entitled to reinstatement with continuity of service. These workmen have not come forward to say that they remained unemployed from the date of their retrenchment. In the circumstances of the case, I think they may be given wages at half the rate from the date of retrenchment till the date of publication of the award in the Gazette. We may first dispose of the workers ' appeal. In all, 23 persons were retrenched. In respect of 16 the rule of 'last come, first go ' was applied. Thus homage was paid to s.25G of the Act. But then, the workmen in their appeal, contended before us that section 25F had been breached and, therefore, the termination was bad in law. The Management 's case is that, as a fact, all or most of them had been reinstated when fresh vacancies had arisen, although neither party is able to assert with certainty this case of reinstatement. That apart, if there be non compliance with s.25F, the law is plain that the retrenchment is bad. However, when probed further as to how s.25F had been violated, Shri Mridul argued that the amount paid by way of retrenchment compensation envisaged in s.25F fell short of what was legally due and hence there was non compliance. Under more searching interrogation, Shri Mridul stated that the compensation had been computed on the basis of wages previously paid and in derogation of the Wage Board Award which had been implemented by the Management with effect from 1 4 1966. The retrenchment was on November 5, 1966, i.e. months after April 1, 1966. Therefore, the revised pay scales as per the Wage Board Award should have been adopted in calculating the retrenchment compensation. This spinal flaw rendered 969 the tender of compensation insufficient and, therefore, the retrenchment itself was invalid. Maybe, there is apparent force in this contention. But Shri Phadke countered it by saying that it was not open to the workmen to spring a surprise on the Management especially when the question was one of fact. He urged that before the Tribunal no plea based on the Wage Board Award was made and it was quite possible that the Management would have adequately met the contention if such a plea had been raised. The fact is that before the Tribunal the contention pressed before us was neither pleaded nor proved. There is no hint of it in the Award. In the High Court this new plea based on the facts was not permitted. Had there been some foundation laid at least in the written statement of the workmen, we might have been inclined to explore the tenability of the plea, especially because there is no dispute about the Wage Board Award and the fact that it had been given effect to from 1 4 1966 and the further fact that in the retrenchment notice the wages were not calculated according to the Wage Board 's Award. It must be remembered, however, that the Wage Board 's Award was subsequent to the retrenchment although retroactively applied and the workmen had accepted the retrenchment compensation on the wages prevalent at the time of the retrenchment. In the absence of any basis for this new plea we are unable to reopen an ancient matter of 1966 and, agreeing with the High Court, dismiss the appeal. But the 16 workmen, being eligible admittedly for the Wage Board scale, will be paid the difference for the period between 1 4 1966 to 5 11 1966. Now, we will take up the merits of the Management 's appeal which relates to the retrenchment of seven workmen. Admittedly, the rule in s.25G of the Act, which postulates that ordinarily the 'last come, first go ' will be the methodology of retrenchment, has not been complied with provided we treat all the workmen in the category as one group. It makes for better appreciation of the point if we read section 25G at this stage: Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman. The key note thought of the provision, even on a bare reading, is evident. The rule is that the employer shall retrench the workman who came last, first, popularly known as 'last come first go '. Of 970 course it is not an inflexible rule and extra ordinary situations may justify variations. For instance, a junior recruit who has a special qualification needed by the employer may be retained even though another who is one up is retrenched. There must be a valid reason for this deviation, and obviously, the burden is on the Management to substantiate the special ground for departure from the rule. Shri Phadke brought to our notice the decision in M/s Om Oil & Oilseeds Exchange Ltd., Delhi vs Their Workmen to make out that it was not a universal principle which could not be departed from by the Management that the last should go first. The Management had a discretion provided it acted bona fide and on good grounds. Shah, J. in that very ruling, while agreeing that a breach of the rule could not be assumed as prompted by mala fides or induced by unfair labour practice merely because of a departure or deviation, further observed that the Tribunal had to determine in each case whether the Management had acted fairly and not with ulterior motive. The crucial consideration next mentioned by the learned Judge is that the Management 's decision to depart from the rule must be for valid and justifiable reasons, in which case "the senior employee may be retrenched before his junior in employment. " Surely, valid and justifiable reasons are for the Management to make out, and if made out, section 25G will be vindicated and not violated. Indeed, that very decision stresses the necessity for valid and good ground for varying the ordinary rule of 'last come first go '. There is none made out here, nor even alleged, except the only plea that the retrenchment was done in compliance with section 25G grade wise. Absence of mala fides by itself is no absolution from the rule in section 25G. Affirmatively, some valid and justifiable grounds must be proved by the Management to be exonerated from the 'last come first go ' principle. It must be remembered that the above provision which we have quoted insists on the rule being applied category wise. That is to say, those who fall in the same category shall suffer retrenchment only in accordance with the principle of last come first go. The short point raised is that the seven workmen are not in the same category. The finding of the Tribunal, concurred in by the High Court is that they fell in the same category. We quote the award: "It will be seen that when there is no trade test or anything to mark efficiency, there is no basis for placing the workmen in different grades and when all the workmen of the same category are to do the same work inasmuch as by the management 's own evidence there is no gradewise allo 971 cation of duty within the same category. Although in the evidence the Management wanted to justify their departure from the principle of 'last come first go ' there is nothing to show that such a reason was recorded for deviating from the principle. In the circumstances of the case it cannot be said that the management 's selection of persons to be retrenched leaving the juniormost in some category was justified and the reason now adduced for deviating from the principle cannot be accepted in the absence of the reason being not recorded at the time of retrenchment. Further it will be also noticed that although there is classification of workmen into grades (?) within the category, there is nothing to distinguish one workman of one grade from another workman of another Grade inasmuch as there is no allocation of duties amongst the workmen of different Grades in the category. " The seniority list is the same, which is a telling circumstance to show that they fell in the same category. Grading for purposes of scales of pay and like considerations will not create new categorisation. It is a contusion or unwarranted circumvention to contend that within the same category if grades for scales of pay, based on length of service etc., are evolved, that process amounts to creation of separate categories. This fallacy has been rightly negatived by a detailed discussion in the Award. The High Court has avoided the pitfall and we decline to accept the submission. The result is that the Award must hold good in regard to the illegally retrenched seven workmen. What remains to be considered is the last submission of Shri Phadke that the engineering establishment wherein these seven workmen are to be reinstated is no longer in existence. Further, he pleads that on account of long lapse of time on account of the pendency of the appeal is this Court the compensation payable by way of full wages may amount to a huge sum disproportionate to the deviance from the law. He, therefore, pleads for moulding the relief less harshly. We cannot sympathise with a party who gambles in litigation to put off the evil day and when that day arrives prays to be saved from his own gamble. The Award had given convincing reasons for reinstatement and even reduced the back wages to half. Still, the workmen were dragged to the High Court and, worse, when worsted there, were driven from Assam to Delhi to defend their pittance. The logistics of litigation for indigent workmen is a burden the Management tried to use by a covert blackmail through the judicial process. 972 Misplaced sympathy is mirage justice. We cannot agree. Even so, we take note of the inordinate delay due to long pendency which is part of the pathology of processual justice in the Supreme Court. So we direct that half the back wages between the date of retrenchment and the publication of the Award shall be paid, as directed in the Award itself. For the post Award period, full wages will be paid until the High Court 's judgment on 13 4 71 and thereafter 75% of the wages will be paid until 30 4 1980. Counsel contends that the Workshop is not in existence now and reinstatement is physically impossible. Sri Mridul, for the workmen, states that a just solution by the court in the given circumstances is acceptable. We direct that, in lieu of reinstatement, one year 's wages calculated on the scale sanctioned by the Wage Board recommendations for each such workman be paid. All the sums, if not paid before 15 5 80, shall carry 12% interest. And upto 15 5 80 they shall carry 9% interest in supersession of the interim order dated 5 5 72. Rough and ready justice, for want of full information, is not satisfactory but cannot be helped. We dismiss the workmen 's appeal. No costs. We dismiss the Management 's appeal, subject to the above directions, with costs quantified at Rs. 5,000/ . section R. Appeals dismissed.

The Management Tea Co. Ltd. appellant in C. A. 1538/71 retrenched on November 5, 1966, 23 workmen, 16 of whom were paid retrenchment compensation allegedly in terms of section 25F of the Industrial Disputes Act based on wages obtaining prior to Wage Board Award, which came into force on 1 4 66 retroactively and in the order of 'last come, first go ', while the services of other seven were terminated, although on payment of retrenchment compensation, allegedly in breach of Section 25G of the Act, i.e. out of turn. The dispute that was raised was decided by the Tribunal which upheld the validity of the retrenchment of the 16, but set aside the termination of the other seven. The High Court agreed with the Tribunal 's Award and hence the appeals both by the workmen and the management after obtaining special leave. Dismissing both the appeals, the Court ^ HELD: 1. The plea that the amount paid by way of retrenchment compensation envisaged in Section 25F of the Industrial Disputes Act, not having been computed as per the revised pay scales as per the Wage Board Award, fell short of what was legally due and hence there was non compliance is not tenable because before the Tribunal this contention was neither pleaded nor proved. There was no hint of it in the Award. In the High Court this new plea based on the facts was not permitted. Further the Wage Boards ' Award was subsequent to the retrenchment although retroactively applied and the workmen had accepted the retrenchment compensation on the wages prevalent at the time of the retrenchment. In the absence of any basis for this new plea Supreme Court cannot reopen an ancient matter of 1966. But the 16 Workmen, being admittedly eligible for the Wage Board scale, would be paid the difference for the period between 1 4 66 to 5 11 66. [969 A E] 2. Section 25G of the Industrial Disputes Act postulates that ordinarily the 'last come, first go ' will be the methodology of retrenchment. Of course, it is not an inflexible rule and extra ordinary situations may justify variations. There must be valid reason for this decision, and, obviously, the burden is on the Management to substantiate the special ground for departure from the rule. Surely, valid and justifiable reasons are for the management to make our, and if made out, section 25G will be vindicated and not violated, varying the ordinary rule of 'last come first go. ' There is none made out here, nor even alleged, except the only plea that the retrenchment was done in compliance 967 with section 25G grade wise. Absence of mala fides by itself is no absolution from the rule in s.25G. Affirmatively, some valid and justifiable grounds must be proved by the Management to be exonerated from the 'last come first go ' principle. The above rule can be applied category wise. That is to say those who fell in the same category shall suffer retrenchment only in accordance with the principle of last come first go. [969 E, H, 970 A, B, D F] M/s. Om Oil & Oil Seeds Exchange Ltd., Delhi vs Their Workmen, , followed. Grading for purposes of scales of pay and like considerations will not create new categorisation. It is a confusion or unwarranted circumvention to contend that within the same category if grades for scales of pay, based on length of service etc., are evolved, that process amounts to creation of separate categories. In the instant case, the seniority List is the same which is a telling circumstance to show that they fell in the same category. [971 C E] 4. Supreme Court cannot sympathise with a party who gambles in litigation to put off the evil day and when that day arrives prays to be saved from his own gamble. The Award had given convincing reasons for reinstatement and even reduced the back wages to half. Still, the workmen were dragged to the High Court and, worse, when worsted there, were driven from Assam to Delhi to defend their pittance. The logistics of litigation for indigent workmen is a burden the management tried to use by a covert blackmail through the judicial process. Misplaced sympathy is a mirage justice. [971 G H, 972 A B]

Criminal Appeal No. 222 Of 1986 From the Judgment and Order dated 11.3. 1986 of the Sessions Judge, Karnal in Misc. Sessions Case (D) No. 1072 of 1985 Harbans Lal and G.K. Bansal for the Appellant. V.C. Mahajan and C.V. Subba Rao for the Respondent. The Judgment of the Court was delivered by NATARAJAN, J. While allowing this appeal and setting aside the conviction of the appellant Balbir Singh under Section 4 of the Terrorist and Disruptive Activities (Pre vention) Act, 1985 (in short the 'Act ') by our order dated 30.10.86 we had stated that the reasons for our judgment will follow. We now proceed to give the reasons for our judgment. The appellant who holds the degrees of M.A. and B.T. was originally a Lieutenant in the Armed Forces. On account of some mental ailment he was discharged from the Army. There after he joined the Haryana Education Department and was appointed as a Lecturer in the Government Higher Secondary School at Siwah. After about 7 years of service in that School he was transferred to the Government 1098 Senior Secondary School at Sanauli Khurd. He, however, continued to reside at Siwah since he could not get accommo dation at Sanauli Khurd. The circumstances under which the appellant has come to be convicted under Section 4 of the Act are to be found in the evidence of two prosecution witnesses viz. P.W.I Jagdish Chander, a Police Constable and P.W.2, Gian Chand, a Head Constable. One other witness Ramji Lal (P.W.3), an Assistant Sub Inspector of Police is also a prosecution witness but since he speaks only about the filing of the charge sheet his evidence is not very material. The evidence of P.Ws. 1 and 2 is to the following ef fect. Pursuant to a call given by the Bhartiya Kisan Union for a Rail Roko Abhiyan on 2.9.85 a crowd of about 1500 persons had gathered on the forenoon of that day at a place near the railway line in the village Siwah, Tehsil Panipat, district Karnal. To safeguard the railway line and to main tain the law and order, the authorities had posted a large contingent of police at the place of gathering of the demon strators. In spite of the presence of the police force the demonstrators became violent and attempted to cause damage to the railway line and also indulged in throwing brickbats at the police force. To control the situation the police party had to resort to lathi charge on four or five occa sions and also to firing tear gas shells. At one point of time, as the violence did not abate the police had to resort to shooting also. One of the demonstrators died on account of gun shot injuries and some others sustained injuries due to the lathi charge. The appellant, it is stated, came at about 8 or 8.30 P.M. to the place where the lathi charge and shooting had taken place and addressed the demonstrators and incited them to violence. In his inflammatory speech the appellant is said to have condemned the actions of the Central Government and the State Government in trying to appease the rebel elements and extremists of Punjab by sacrificing the inter ests and welfare of the people of Haryana and further stated that if the people of Haryana want to protect their rights they should also resort to the ways and methods adopted by the Punjab extremists and that for his part he was prepared to lead their struggle since he had an eight chamber revolv er and that he had on earlier occasion attempted to kill Ch. Bhajan Lal, Chief Minister of Haryana and hence the demon strators may lend him their cooperation so that the Govern ment can be forced to safeguard the interests of the people of Haryana. 1099 P.Ws. 1 and 2, who were on intelligence duty, carefully listened to the speech and on the next morning P.W. 1 pre sented a report (Exhibit P.A.) at the Police Station at Nissing. Thereupon a case was registered against the appel lant under Section 4 of the Act and after completion of investigation he was charge sheeted in the Court of Shri S.K. Jain, Judge, Karnal, the Designated Court under the Act. As already stated the prosecution rested its case on the testimony of P.Ws. 1 and 2, they being the material witness es. The appellant denied the prosecution case and stated in defence that on compassionate grounds he went to the place of congregation of the demonstrators to make enquiries when he came to know in the evening, on his return from School, that the police had resorted to lathi charge and firing to disperse the demonstrators and that one person had died on account of the firing. In support of his defence the appel lant examined two witnesses besides himself and further sought to contend that about 60 persons who had been arrest ed were let off without being prosecuted while he alone has been unjustly charge sheeted on false avernments. The learned Judge of the Designated Court has accepted the prosecution evidence and found the appellant guilty and convicted him under Section 4 of the Act. After hearing the appellant on the question of sentence the Court has awarded him the minimum sentence of three years ' R.I. Arguing the case of the appellant before us Mr. Gopal Kishan Bansal, learned counsel levelled many criticisms against the prosecution case and submitted that the learned Judge of the Designated Court ought not to have acted on the testimony of P.Ws. 1 and 2 and convicted the appellant. The learned counsel took us through the evidence of P.Ws. 1 and 2 and also the relevant portions of the judgment under appeal and adverted to several infirmities in the evidence of the witnesses and also drew our attention to the lack of credible evidence in the case. Section 16 of the Act provides for an appeal against a judgment rendered by a Designated Court to the Supreme Court alone and to no other court. Consequently, this appeal constitutes the first appeal as well as the final appeal against the judgment of the Designated Court. Such being the case, we have to necessarily scrutinise the evidence in its entirety and re appraise the testimony of witnesses to determine its evidentiary value. On making such scrutiny and re appraisal of the evidence we find the contentions of the appellant 's counsel to have 1100 merit and substance in them. We find the prosecution evi dence to be not only lacking in credibility but also to suffer from numerous infirmities. At the outset we would like to point out that even according to the prosecution a crowd of about 1000 to 1500 persons had gathered near the railway line in the village of Siwah on the morning of 2.9.85 in response to the call given by the Bhartiya Kisan Union for a Rail Roko Abhiyan. It is the further case of the prosecution that the demonstrators became violent and attempted to cause damage to the raiway line and in order to safeguard the railway property and maintain law and order the police force, assembled in ade quate numbers, had resorted to lathi charge four or five times during the day and in addition the police had also to fire tear gas shells and even to resort to shooting. One man had died on account of the shooting and several persons had sustained injuries on account of the lathi charge. Neverth less the crowd had not dispersed but continued to remain at the scene to carry on their agitation. In such circumstances it is natural to expect the police force to have remained, in strength at the scene to maintain effective control over the demonstrators and to safeguard the railway line. Curi ously enough, the entire force comprised of a Deputy Super intendent of Police, Inspectors, Sub Inspectors, Assistant Sub Inspectors, Head Constables and Constables is said to have left the place en masse except P.Ws. 1 and 2. It is significant to note P.Ws. 1 and 2 were not on security duty at that place but were only there to submit intelligence reports. When a lathi charge had been made even at 4.30 P.M. it is inconceivable that the entire police force would have left the place in the evening and gone away elsewhere. We are, therefore, led to think that this unnatural version is put forward to cover up the lacuna for not examining any police officer of a higher rank than P.Ws. 1 and 2 regarding the inflammatory speech alleged to have been made by the appellant at about 8.30 P.M. on that day. Even assuming for argument 's sake that the entire police force had left the scene and only P.Ws. 1 and 2 were left at the place, the prosecution could have certainly examined some independent witnesses to prove what the appellant had spoken on that night. Surely, it cannot be said that among the 1500 or 2000 persons present there, no one would have come forward to give evidence about what the appellant spoke on that night. No explanation has been offered as to why no independent witness has been examined. In fact P.Ws 1 and 2 have not even stated that they tried to find out the names of any of the people assembled there or made any effort to note down their names 1101 so that they can later be summoned to appear as witnesses if a case was to be filed against the appellant. Admittedly, the appellant was a stranger to P.Ws. 1 and 2 and hence they could not have known who he was and what was his occupation. P.Ws. 1 and 2 had not made any enquiries to find out who the appellant was and where he was residing. The strange version given by P.W. 1 is that before the appellant began his speech he introduced himself to the demonstrators by giving out his name, address and occupa tion. The statement, apart from its artificiality is not corroborated even by P.W. 2. Another discrepancy noticed is that while P.W. 1 has stated that the appellant addressed the gathering from the Chaubara with a microphone in his hand, P.W. 2 has stated that the appellant stood in the midst of the demonstrators and addressed them and moreover P.W.2 makes no reference to the appellant having any micro phone. While P.W. 2 has stated that he did not apprehend any violent reaction from the public on account of the speech made by the appellant, P.W.i would say that from the moment the appellant started introducing himself to the demonstra tors he anticipated things and began to take notes of the appellant 's speech. A noticeable feature in the case ifs that the report Exhibit P.A. is said to have been prepared on the basis of the "rough notes" prepared by P.W. 1 but the "rough notes" is not forthcoming and has not been marked in evidence and it is said to have been destroyed. Since the "rough notes" constitute the first recorded entry of the speech it is an important document and in the absence of it the fair report cannot be given unreserved acceptance. Even in the matter of the preparation of the report, one would expect P.W. 2 holding a higher rank than P.W. 1 to have prepared it. Not only has P.W. 2 not prepared any report but his own admis sion is that he did not sign or even initial the "rough notes" or the fair report Exhibit P.A. Apart from the failings in the evidence of P.Ws. 1 and 2 we also find that virtually no investigation has been done before the appellant was charge sheeted. The Investigating Officer has not taken any steps to find out the antecedants of the appellant and whether he was a member of any politi cal party. No investigation has been made to find out wheth er the appellant had an eight chamber revolver as he is alleged to have claimed and whether he had made any attempt on the life of Ch. Bhajan Lal on an earlier occasion. With out making any effective investigation the police authori ties have lightly launched a prosecution against the appel lant solely on the basis of the report given by P.W.I. 1102 Having regard to the numerous infirmities which are apparent in the prosecution case, we are clearly of the opinion that the learned Judge of the designated court was not justified in holding the prosecution case proved beyond reasonable doubt and finding the appellant guilty under Section 4 of the Act and convicting him accordingly. We are constrained to observe that it is highly regret table that the authorities concerned should have launched a prosecution under the Act in a manner which can be easily termed as cavalier. The Act though intended to effectively deal with terrorists and disruptionists contains drastic provisions for punishing terrorists and disruptionists under Sections 3 and 4 of the Act. Anyone convicted under Section 3(2)(i) of the Act is liable to be punished with death and whoever is convicted under Section 3(2)(ii) of the Act is liable to be punished with imprisonment for a term which shall not be less than 5 years but which may extend to term of life and shall also be liable to fine. Whoever is con victed under Section 4 of the Act is liable to be punished with imprisonment for a term which shall not be less than 3 years but which may extend to term of life and shall also be liable to fine. Furthermore, against any judgment, sentence or order rendered under the Act, an appeal would lie direct ly to the Supreme Court and not to the High Court. Having regard to all these features the investigation of cases under the Act has not only to be thorough but also of a high order. In this case we find the investigation to be nowhere near the required standards and likewise the evidence ad duced in the case to be far from satisfactory to justify the conviction of the appellant under Section 4 of the Act. The appeal has, therefore, to be necessarily allowed and the conviction and sentence awarded to the appellant set aside. M.L.A. Appeal al lowed.

A crowd of about 1500 persons had gathered near the railway line in the village Siwah, District Karnal on the morning of 2.9.85 in response to a call given by the Bhar tiya Kisan Union for a Rail Roko Abhiyan. To safeguard the railway line and to maintain law and order the authorities posted a large contingent of police. Since the demonstrators became violent and attempted to cause damage to the railway line, the police force resorted to lathi charge four or five times during the day and in addition fired tear gas and even resorted to shooting. The appellant, it is alleged, came at about 8 or 8.30 p.m. to the place where lathi charge and shooting had taken place, addressed the demonstrators and incited them to violence. According to the prosecution, P.Ws. I and 2, who were on intelligence duty, carefully listened to the speech and on the next morning P.W.I presented a report at he Police Station. Thereupon a case was registered against the appellant under s.4 of the Terrorists and Disruptive Activi ties (Prevention) Act, 1985 and after investigation he was charge sheeted. The Designated Court under the Act accepted the prosecution evidence and found the appellant guilty and convicted him under s.4 of the Act. Allowing the appeal by the appellant, this Court, HELD: 1. The Judge of the designated court was not justified in holding the prosecution case proved beyond reasonable doubt and finding the appellant guilty under s.4 of the Act and convicting him accordingly. The prosecution evidence is not only lacking in credibility but also suffers from numerous infirmities. It is far from satisfactory to justify the conviction of the appellant under s.4. The conviction and sentence awarded to the appellant are there fore set aside. 1096 2. Section 16 of the Act provides for an appeal against a judgment rendered by a designated court to the Supreme Court alone and to no other court. Consequently, this appeal constitutes the first appeal as well as the final appeal. Such being the case, the Supreme Court has to necessarily scrutinise the evidence in its entirety and re appraise the testimony of witnesses to determine its evidentiary value. [1099G H] 3.1. I and 2 were not on security duty at that place but were only there to submit intelligence reports. When a lathi charge had been made even at 4.30 p.m. it is inconceivable that the entire police force would have left the place in the evening and gone away elsewhere. Therefore, this unnatural version is put forward to cover up the lacuna for not examining any police officer of a higher rank re garding the inflammatory speech alleged to have been made by the appellant at about 8.30 p.m. on that day. [1100E F] 3.2 The prosecution could have certainly examined some independent witnesses to prove what the appellant had spoken on that night. Surely, it cannot be said that among the 1500 or 2000 persons present there, no one would have come for ward to give evidence about what the appellant spoke on that night. No explanation has been offered as to why no inde pendent witness has been examined. In fact P.Ws. I and 2 have not even stated that they tried to find out the names of any of the people assembled there or made any effort to note down their names so that they can later be summoned to appear as witnesses if a case was to be filed against the appellant. [1100G H; 1101A] 3.3 The appellant was a stranger to P.Ws.1 and 2 and hence they could not have known who he was and what was his occupation. I and 2 had not made any enquiries to find out who the appellant was and where he was residing. The strange version given by P.W.I is that before the appellant began his speech he introduced himself to the demonstrators by giving out his name, address and occupation. The state ment, apart from its artificiality is not corroborated even by P.W .2. Another discrepancy noticed is that while P.W. I has stated that the appellant addressed the gathering from the Chaubra with a microphone in his hand, P.W.2 has stated that the appellant stood in the midst of the demonstrators and addressed them. Moreover P.W.2 makes no reference to the appellant having any microphone. [1101A C] 3.4 The report Exhibit P.A. is said to have been pre pared on the basis of rough notes prepared by P.W.I, but the 'rough notes ' is not forthcoming and has not been marked in evidence and is said to have 1097 been destroyed. Since the rough notes constitute the first recorded entry of the speech it is an important document and in its absence the fair report cannot be given unreserved acceptance. Even in the matter of the preparation of the report, one would except P.W.2 holding a higher rank than P.W.I to have prepared it. Not only has P.W.2 not prepared any report but his own admission is that he did not sign or even initial the rough notes or the fair report Exhibit P.A. [1101D F] [The Court observed that it is highly regrettable that the authorities concerned should have launched a prosecution under the Act in a manner which can be easily termed as cavalier. The Act though intended to effectively deal with the terrorists and disruptionists contains drastic provi sions for punishing them. Furthermore, against any judgment, sentence or order rendered under the Act, an appeal would lie, directly to the Supreme Court and not to the High Court. Therefore, the investigation of the case under the Act has not only to be thorough but also of a high order.]

vil Appeal No. 539 of 1958. Appeal by special leave from the judgment and order dated March 13, 1958 of the Andhra Pradesh High Court in Special Appeal No. 4 of 1957, arising out of the judgment and order dated November 18, 1957, 428 of the Election Tribunal, Hyderabad in Election Petition No. 83 of 1957. N. C. Chatterjee, A. N. Sinha and T. Satyanarayana, for the appellant. P. Banta Reddy and R. Mahalingaiyer, for respondent No. 1. section section Shukla, for respondent No. 2. 1959. May 20. The judgment of B. P. Sinha, Jafar Imam, P. B. Ganjendragadkar and K.N. Wanchoo, JJ. was delivered by P. B. Gajendragadkar, J. J. L. Kapur, J. delivered a separate judgment. GAJENDRAGADKARJ. This appeal by special leave, arises from an election petition filed by Mr. V. V. Giri (hereinafter called the appellant) in which the validity of the election of Mr. Dippala Suri Dora (hereinafter called respondent 1) was challenged. The Parliamentary Constituency of Parvatipuram in the State of Andhra Pradesh is a double member constituency; one seat is reserved for the scheduled tribes and the other is general. In the General Election to the House of the people held in 1957 four candidates had been nominated from the said constituency. The appellant and Mr. B. Satyanarayana Dora (hereinafter called respondent 2) were adopted by the Congress Party, while respondent 1 and Mr. 'V. Krishnamoorthy Naidu (hereinafter called respondent 3) were the candidates of the Socialist Party. For this constituency polling took place between February 25 and March 19, 1957, and the counting of votes disclosed that the appellant and the three respondents had secured 1,24,039, 1,24,604, 1,26,792 and 1,18,968 votes respectively. The result of the election was declared on March 19, 1957. It was announced that respondent 2 had been, elected to fill the reserved seat and respondent 1 the general seat. On April 16, 1957, the appellant filed the present election petition No. 83 of 1957 challenging the validity of respondent 1 's election. He alleged that respondent I had offered himself as a candidate for the reserved seat and as such he was not entitled to be elected for the general seat. In the alternative he urged that 429 respondent 1 was not a member of the scheduled tribe ' at the material time and so the declaration made by him in that behalf was false. According to the appellant respondent 1 's nomination had, therefore, been L improperly accepted and it had materially affected the election. That is why the appellant claimed a twofold declaration. He wanted the tribunal to declare that the election of respondent I under the Representation of the People Act, 1951 (Act 43 of 1951) (hereinafter called the Act) was void and that he had himself been duly elected to the House of the People from the Parvatipuram Parliamentary Constituency for the general and non reserved seat. These allegations were denied by respondent 1. Broadly stated the main part of the appellant 's case rested on two grounds. He relied on the fact that both the Congress and Socialist Parties had adopted two candidates each, one for the reserved seat and the other for the general seat. Respondent I had been adopted for the reserved seat and in the nomination forms filed on his behalf he had made the requisite declaration that he was a member of the scheduled tribe. # He conducted his election campaign on the basis that he was a candidate for the reserved seat and the voters must have voted for him on the same basis. If it is found that his rival candidate for the said reserved seat (respondent 2) secured a larger number of votes and so he was declared elected to fill the said seat, it is not open to respondent to claim election for the general seat. If a candidate offers himself for one seat, how can he claim to be elected for the other, asks the appellant. The appellant concedes that the reservation of seats for the scheduled castes or tribes is a special concession shown to the members of the said castes and tribes in view of the fact that they are educationally socially and financially very backward; it is also conceded that members of the scheduled castes or tribes are entitled to contest election for the general seat; but the argument is that a member of a scheduled tribe must make up his mind and decide which seat he wishes to contest. If he wants to contest the general seat he 430 may do so and in that event he should not make the prescribed declarations on his nomination form; on the other hand, if he wants to contest the reserved seat he should elect to do so, make the necessary declaration and then concentrate his attention on the reserved seat. Having once made his election he cannot subsequently fall back upon his right to be elected for the general seat. Thus presented the argument no doubt appears to be plausible and even attractive. Respondent 1, however, dispute the validity of this contention. His case is that the reservation of seats is intended as an additional and special concession to the scheduled castes or tribes. That, however, does not affect the right of the members of the said castes or tribes to claim along with the other citizens of the country the right to be elected to the general seat. In other words, according to respondent 1, a member of the scheduled tribe is entitled to claim election either to the reserved seat or to the general seat in a double member constituency, where one seat is reserved for the scheduled tribes or castes. When a member of the scheduled tribe makes a declaration about his status on his nomination form it merely means that he claims the additional benefit of being eligible for election to the reserved seat. If in the fight for the reserved seat his rival candidate defeats him, that cannot detract from, or affect, his right to claim election to the general seat; and if the voters in the constituencies have expressed their confidence in him by putting him at the top amongst the remaining candidates, he is entitled to claim election to the said general seat. The object of reserving seats obviously is to create confidence in the minds of the backward castes and tribes and to give them an assurance about their welfare and future in the political set up of the country. This object necessarily implies that the members of the said castes and tribes should have a double opportunity of seeking election from a double member constituency. Respondent 1 does not concede that he contested the election solely for the reserved seat. It is admitted on his behalf that he did make the necessary declaration and he may have brought it to the notice of the voters 431 that he was a member of the scheduled tribe. That was inevitable since he was claiming to be elected for the reserved seat. It is, however, urged that if in law election took place for the constituency as a whole, and not for separate seats, the fact that his nomination paper referred to " the reserved constituency " and some of his statements during the course of his ' election campaign mentioned the fact that he was t member of the scheduled tribe would not prejudicially affect his right to claim election for the general seat. Incidentally respondent I claimed that the declaration of his election to the general seat in fully consistent with the express provisions of section 54(4) of the Act, whereas the appellant pleaded in reply that the construction sought to be placed upon the provisions of section 54(4) by respondent I was unreasonable and if not the said provision was ultra vires. On the three major points which thus arose for decision in the present election petition the Election Tribunal at Hyderabad and the High Court of Andhra Pradesh have differed. The Tribunal upheld the appellant 's contentions, made the two declarations claimed by him and allowed his election petition with costs. On appeal to the High Court the points made by respondent I have been accepted, the findings made by the tribunal and the declarations granted by it have been reversed and the appellant 's election peti tion dismissed with costs throughout. The appellant 's application for a certificate was dismissed by the High Court. Thereupon he applied to this Court and obtained special leave to appeal. That is how this appeal has come before us. What then is the true constitutional and legal position with regard to the election to the House of the People from a double member constituency where one seat is reserved for the members of the scheduled tribes or castes? The answer to this question would depend upon the effect of the relevant provisions of the Constitution and the Act respectively. Let us first examine the relevant articles of the constitution. Article 325 provides that there shall be one general electoral roll for every territorial constituency for 432 election to either House of Parliament and that no person shall be ineligible for inclusion in any such roll or claim to be included in any such electoral roll for any such constituency on grounds only of religion, race, caste, sex or any of them. Article 326 which deals inter alia with the elections to the House of the People lays down that the said elections shall be on the basis of adult suffrage, that is to say, every person who is a citizen of India and who is not less than 21 years of age at the relevant date and is not otherwise disqualified under the Constitution or any law made by the appropriate Legislature on the grounds specified shall be entitled to be registered as a voter at any such election. It is thus clear that the electoral roll is prepared on a purely secular basis without any reference to religion, race, caste or sex and that the qualification for being included as a voter on the said electoral roll is likewise wholly secular and of general application to all citizens in the country. Let us then refer to the articles that deal with the composition of the House of the People and qualification for membership of Parliament. Article 81 (1) provides that subject to the provisions of article 331 the House of the People shall consist inter alia of not more than 500 members chosen by direct election from territorial constituencies in the States. This article contemplates the division of the States into territorial constituencies and it provides for the election of 500 members from these constituencies to the House of the People. Article 84 deals with the question of qualification and it provides that a person shall not be qualified to be chosen to fill a seat in the Parliament unless he is (a) a citizen of India, (b) in the case of a seat in the House of the People not less than 25 years of age, and (c) possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament. It is by virtue of article 84(c) that the Parliament has passed the two relevant statutes. They are the Re presentation of the People Act, 1950 (Act 43 of 1950) and the Act. We will presently refer to the relevant provisions of the Act. Meanwhile we would like to 433 refer to another article of the Constitution which is very important. It is article 330. It occurs in Pt. XVI of the Constitution which deals with special provisions relating to certain classes. It provides for the reservation of seats for scheduled castes and scheduled tribes in the House of the People. Article 331 lays down that seats shall be reserved in the House of the People for the three categories enumerated in (a), (b) and (c). In the present case we are concerned with the second category which deals with the scheduled tribes. Article 330(2) provides inter alia that the number of seats reserved in any State for the scheduled tribes under sub Art.(1) shall bear as nearly as may be the same proportion to the total number of seats allotted to that State in the House of the People as the population of the scheduled tribes in the State or part of the State as the case may be in respect of which seats are so reserved bears to the population of the State. In providing for the members of the scheduled tribes the special concession by way of reservation of seats the Constitution has adopted the fair, just and equitable method of fixing the number of the said reserved seats on the basis of the proportion mentioned in article 330(2). Whilst we are referring to this article we may incidentally mention article 334 which provides that the reservation of seats provided by article 330 shall cease to have effect on the expiration of a period of ten years from the commencement of the Constitution subject to the proviso. Thus it is clear that election to the House of the People even from a double member constituency where one seat is reserved for the members of the scheduled tribes in one, and though the Constitution shows just anxiety to afford necessary protection to the members of the scheduled tribes, it deliberately refused to adopt the system of separate electorates. The constituency is one and election is held to the said constituency from one joint electoral roll prepared on the basis of qualifications which are of general and uniform application. In regard to double member constituencies like Parvatipuram the Constitution has not even adopted the course of providing for a special constituency 55 434 confined to the members of the scheduled tribe. All that is done is to provide for the reservation of seats for the members of the said tribes or castes in the manner already indicated. Even for the reserved seat all voters in the constituency are entitled to vote. The reservation of a seat in a double member constituency cannot, therefore, affect the main basic position that the constituency is one and for returning representatives to the House of the People it is the same joint electorate that goes to the poll. Let us now proceed to consider the position under the relevant provisions of the Act. It is necessary to begin with the definitions of parliamentary constituency and election. Section 2(f) of the Representation of the People Act, 43 of 1950, defines a " parliamentary constituency " as meaning a constituency provided by law for the purpose of elections to the House of the People; whereas section 2(d) of the Act defines "election " to mean an election to fill a seat or seats inter alia in House of Parliament. These definitions show that it is a parliamentary constituency that sends the representatives to fill the seats in the House of the People. Elections are held from such constituencies and candidates declared duly elected fill the seats in the House of Parliament to which they are elected. Section 4 prescribes qualification for membership of the House of the People. Section 4(b) provides that a person shall not be qualified to be chosen to fill a seat in the House of the People unless in the case of a seat reserved for the scheduled tribes he is a member of any of the scheduled tribes and is an elector for any parliamentary constituency. This section expressly provides what was clearly implicit in the relevant articles of the Constitution that before a person can claim to be elected to fill a seat reserved for the scheduled tribes he must be a member of the said tribes besides being an elector for the parliamentary constituency in question. Section 32 deals with the nomination of candidates for election and it provides that any person may be nominated as a candidate for election to fill a seat if he is qualified to be chosen to fill a seat under the provisions of the Constitution and the Act. The next section 435 to consider is section 33. It deals with the presentation of nomination papers and prescribes the requirements for a valid nomination. Section 33(2) is relevant for our purpose. It provides that any constituency where any seat is reserved a candidate shall not be deemed to be qualified to be chosen to fill that seat unless his nomination paper contains a declaration by him specifying the particular tribe of which he is a member and the area in relation to which the tribe is a scheduled tribe of the State. Section 33(6) lays down that nothing in this section shall prevent any candidate from being nominated by more than one nomination paper for election in the same constituency. The effect of section 33(2) is that unless a member of the scheduled tribe makes the required declaration he would not be entitled to claim election to the reserved seat. In other words, if a member of the scheduled tribe does not want to be considered for election to the reserved seat be need not make the said declaration; and in that case be would be entitled to contest the election only for the general seat. But it does not follow that if a scheduled tribe candidate makes the said declaration he forfeits his right to contest for the general seat. It is necessary to point out at this stage that the prescribed nomination paper (Form 24) is common to all the candidates. In regard to the candidates contesting for the reserved seat, however, the form prescribes the declaration which they are required to make. In the matter of deposits required by section 34 another concession is made in favour of the members of the scheduled castes or tribes; whereas 'in the case of an election from a parliamentary constituency a candidate is required to make a deposit of Rs. 500 the amount is fixed at Rs. 250 in the case of members of scheduled castes or tribes. It is significant that this concession is not confined to members of the scheduled tribe contesting the election only for the reserved seat. It is available to them even if they want to contest only for the general seat. Section 35 requires a notice of nominations and a time and place for their scrutiny to be published; and section 38 requires a list of contesting candidates to be published, The two prescribed forms for 436 the said notices are Forms 3A and 4 ;_they make no reference to the two respective seats and give the particulars about all the candidates in the respective columns. It is true that in col. (6) of Form 3A particulars of caste or tribe of candidates belonging to scheduled castes or tribes are required to be mentioned. That is consistent with the requirement of section 33(2). It would thus be seen that the scheme of the relevant provisions of the Act, like the scheme of the relevant articles of the Constitution, is clear. The election to the House of the People from a double member constituency is held as an election from the whole of the constituency as such. It is on that basis that the nomination papers are required to be filed. The notifications about the nominations are published and the list of the validly nominated candidates is announced on the same basis. The counting of votes is similarly made by reference to all the candidates. It is only when the result of the election is prepared for declaration that the votes of candidates who have made the prescribed declarations are first taken into account and the result of the election in respect of the reserved seat is first determined, and then the votes secured by the remaining candidates are taken into account and the result of the election for the other general seat is determined and declared. Section 63 of the Act would also assist us in deciding the point in dispute between the parties. Section 63 (1) provides for the method of voting and it lays down that in plural member constituencies other than Council constituencies every elector shall have as many votes as there are members to be elected but no member shall give more than one vote to any one candidate. It is not disputed that voters in a double member constituency are not bound to vote in reference to the two seats. If the Act had intended that the election in such a constituency should take place by reference to the two respective seats, it would have provided for voting by the electors on that basis, and would have required the voters to cast their two votes respectively by reference to the two seats. Section 63(1) on the other hand allows voters to cast their two 437 votes to any two candidates of their choice whether both of them claim to be elected to the general seat or to the reserved seat or one of them claims one seat and other claims the other. This method of voting is inconsistent with the appellant 's case that the election to the double member constituency is held seat wise. Section 54(4) emphatically brings out the same position. Section 54 (1) provides that it shall apply in relation to any election in a constituency where the seats to be filled include one or more seats reserved for the scheduled castes or scheduled tribes. Subsection (4) reads thus: " If the number of contesting candidates qualified to be chosen to fill the reserved seats exceeds the number of such seats, and the total number of contesting candidates also exceeds the total number of seats to be filled, a poll shall be taken ; and after the poll has been taken, the returning officer shall first declare those who, being qualified to be chosen to fill the reserved seats, have secured the largest number of votes, to be duly elected to fill the reserved seats, and then declare such of the remaining candidates as have secured the largest number of votes to be duly elected to fill the remaining seats. " On a fair and a reasonable construction of this provision there can be no doubt that in a case like the present, after respondent 2 was declared duly elected to the reserved seat, the votes secured by the remaining three candidates had to be considered before declaring the election for the unreserved seat and that is precisely what the returning officer has done when he declared that respondent I had been duly elected to the said seat. The illustration to this sub section makes this position absolutely clear. This is how the illustration reads: " At an election in a constituency to fill four seats of which two are reserved there are six contesting candidates A, B, C, D, E and F, and they secure votes in descending order, A securing the largest number, B, C and D are qualified to be chosen to fill the reserved seats, while A, E and F 438 are not so qualified. The returning officer will first declare B and C duly elected to fill the two reserved seats, and then declare A and D (not A and E) to fill the remaining two seats. " In our opinion section 54(4) and the illustration are wholly consistent with the relevant provisions of the Constitution and of the Act. Whilst we are dealing with section 54 we may incidentally refer to the appellant 's argument based on section 6(2) (c) of the (81 of 1952) which provides that in every two member constituency one seat shall be reserved either for the scheduled castes or for the scheduled tribes, and the other seat shall not be so reserved. It is urged that in view of this provision the case contemplated by the illustration to section 54 (4) is not likely to occur any more and in that sense the illustration has become otiose. That may be true. But even so the significance of the illustration lies in the fact that it clarifies and explains concretely how the reservation of seats for the depressed castes and tribes will actually work out in elections in the relevant constituencies. There is another argument which nay be noticed. It was faintly suggested by the appellant that section 54(4) is ultra vires since it is inconsistent with articles 14 and 330 of the Constitution. One has merely to recall the provisions of article 15 (3) and (4) to reject the argument that section 54(4) offends against article 14. As regards Art 330 it is obvious that the reservation of seats as therein specified is intended to guarantee a minimum number of seats to the scheduled castes and tribes; therefore if members of the said castes and tribes secure additional seats by election to general unreserved seats there would be no repugnancy at all. There is no substance in the contention that section 54 (4) is ultra vires. There is one more section of the Act to which reference must be made. It is section 55. For the avoidance of doubt this section declares that a member of the scheduled castes or scheduled tribes shall not be disqualified to hold the seat not reserved for members of those castes or tribes if he is otherwise qualified to 439 hold such seat under the Constitution and the Act. If the appellant 's contention is upheld then the provisions of section 55 would be inapplicable to a member of the scheduled tribe solely because he has made the. prescribed declaration in his nomination form in order to claim the benefit of the concession of the reserved seat in his constituency. We see no justification for adopting such an artificial and restricted construction of section 55. In our opinion section 55, like section 54(4), is consistent with the other relevant provisions of the Constitution and the Act. A member of the scheduled tribe is entitled to contest for the reserved seat and for that purpose he can and must make the prescribed declaration; but it does not follow that because he claims the benefit of the reserved seat and conforms to the statu tory requirement in that behalf, he is precluded from contesting the election, if necessary, for the general seat. Once it is realised that the election is from the constituency as a whole and not by reference to two separate and distinct Beats there would be no difficulty in accepting the view taken by the returning officer when he declared respondent I to have been duly elected for the general seat. It is true that some articles of the Constitution and some sections of the Act refer to seats in connection with election to the House of the People. For instance, when article 81 (2) (b) provides for the same ratio throughout the State between the population of each constituency and the number of seats allotted to it, it does refer to seats, but in the context the use of the word " seats " was inevitable. Similarly article 84 which lays down the qualification for the members of Parliament begins by saying that a person shall not be qualified to be chosen " to fill a seat " in Parliament unless he satisfies the tests prescribed by its cls. (a), (b) and (c). Here again the expression " to fill a seat " had to be used in the context. The same comment can be made about the use of the word " seat " in articles 101 (2) and in 330. There is no doubt that when a candidate is duly elected from any constituency to the House of the People he fills a seat in the House as an elected representative of the said constituency; 440 and so the expression " filling the seat " is naturally used whenever the context so requires. The position in regard to the sections of the Act which use the word " seat " or the expression "fill the seat" is exactly similar. Section 32 of the Act says that any person may be nominated as a candidate for election to "fill a seat" if he is qualified in that behalf. This section does not mean that the nomination of a person as a candidate for election is for a seat; such nomination is for the constituency. After the election is over the elected candidate is qualified to fill a seat in the House of the People to which he is elected. It is in that sense that the expression " a candidate for election to fill a seat" is used in this section. The use of the same expression in sections 33(2), 53(2), 54 and 55 bears the same interpretation. The use of the said expression or the reference to "seat" in some of the articles of the Constitution or the sections of the Act does not, therefore, mean that election to the House of the People from a double member constituency is held not for the constituency as a whole but by reference to the two seats. There is. no doubt that in the case of double member constituencies recognised political parties usually adopt two candidates, one for the general seat and the other for the reserved seat; and it does appear that under the relevant statutory order issued by the Election Commission the symbol reserved for the party is allotted to both such candidates with the only difference that the symbol allotted to the scheduled caste or the scheduled tribe candidate of the party is the particular symbol enclosed within a thick black circle. This order has been issued for convenience in order to enable the very large number of illiterate and uneducated voters to identify the political affiliations of the candidates for election; and to show which of the candidates are eligible for the reserved seat; but the said order cannot affect the nature of the election nor does it purport to do so. Similarly a candidate who has made the prescribed declaration under section 33 may withdraw his candidature under section 37 which would mean that he is no longer contesting any seat in the 441 constituency; but that again cannot justify the inference that his candidature was in regard to a reserved seat for which election was separately intended to be held. In fact, in regard to a double member constituency election recognises no compartments at all; it is one general election with reservation of seats; that is all. It was then contended by the appellant that even if it may be open to a member of the scheduled tribe to seek election either for the reserved seat or failing that for the general seat he ought to file two. nomination papers in that behalf. In our opinion this contention is not wellfounded. It is conceded that there is no provision for the presentation of two nomination papers for two different seats in the same constituency. Indeed such an assumption would be inconsistent with the basic character of the election from a double member constituency. In our opinion, the true posi tion is that a member of a scheduled caste or tribe does not forego his right to seek election to the general seat merely because he avails himself of the additional concession of the reserved seat by making the prescribed declaration for that purpose. The claim of eligibility for the reserved seat does not exclude the claim for the general seat; it is an additional claim; and both the claims have to be decided on the basis that there is one election from the double member constituency. In this connection we may refer by way of analogy to the provisions made in some educational institutions and universities whereby in addition to the prizes and scholarships awarded on general competition amongst all the candidates, some prizes and scholarships are reserved for candidates belonging to backward communities. In such cases, though the backward candidates may try for the reserved prizes and scholarships, they are not precluded from claiming the general prizes and scholarships by competition with the rest of the candidates. We are, therefore, satisfied that the High Court was right in rejecting the appellant 's contention that respondent 1 could not have been validly elected 56 442 for the general seat from the constituency of Parvatipuram. That takes us to the alternative contention raised by the appellant against the validity of respondent 1 's election. That contention is that respondent I had ceased to be a member of the scheduled tribe at the material time because he had become a kshatriya. In dealing with this contention it would be essential to bear in mind the broad and recognized features of the hierarchical social structure prevailing amongst the Hindus. It is not necessary for our present purpose to trace the origin and growth of the caste system. amongst the Hindus. it would be enough to state that whatever may have been the origin of Hindu castes and tribes in ancient times, gradually castes came to be based on birth alone. It is wellknown that a person who belongs by birth to a depressed caste or tribe would find it very difficult, if not impossible, to attain the status of a higher caste amongst the Hindus by virtue of his volition, education, culture and status. The history of social reform for the last century and more has shown how difficult it is to break or even to relax the rigour of the inflexible and exclusive character of the caste system. It is to be hoped that this position will change, and in course of time the cherished ideal of casteless society truly based on social equality will be attained under the powerful impact of the doctrine of social justice and equality proclaimed by the Constitution and sought to be implemented by the relevant statutes and as a result of the spread of secular education and the growth of a rational outlook and of proper sense of social values; but at present it would be unrealistic and utopian to ignore the difficulties which a member of the depressed tribe or caste has to face in claiming a higher status amongst his coreligionists. It is in the light of this background that the alternative plea of the appellant must be considered. The evidence adduced by respondent I shows that all the documents from 1885 to 1928 consistently described him as a Mukka Dora or a member of the scheduled tribe. The appellant has, however, produced documentary evidence which indicates that from 1928 443 onwards respondent 1 has described himself and the members of his family as belonging to the kshatriya caste. Oral evidence led by the appellant is intended to show that respondent 1 has for some years past adopted the customs and the rituals of the kshatriya caste. It shows that marriages in the family of respondent I are celebrated as they would be amongst the kshatriyas, and homa is performed on such occasions. It is also attempted to be shown that the family of respondent is connected by marriage ties with some kshatriya families, that a Brahmin priest officiates at the religious ceremonies performed by respondent 1, and that he wears a sacred thread. The High Court has held that even if the documentary and oral evidence adduced by the appellant is accepted at its face value, it falls far short of establishing his plea that respondent had become a kshatriya at the material time. The caste status of a person in the context would necessarily have to be determined in the light of the recognition received by him from the members of the caste into which he seeks an entry. There is no evidence on this point at all. Besides the evidence produced by the appellant merely shows some acts by respondent 1 which no doubt were intended to assert a higher status; but unilateral acts of this character cannot be easily taken to prove that the claim for the higher status which the said acts purport to make is established. That is the view which the High Court has taken and in our opinion the High Court is absolutely right. Therefore the alternative plea made by the appellant cannot succeed. In the result the appeal fails and is dismissed with costs in favour of respondent 1. KAPUR J. I regret I am unable to agree with the judgment prepared by my learned brother Gajendragadkar and I shall proceed to give my reasons for my dissent. In an election for Parliament the candidate asks for the votes of the electors by offering himself for a seat in a parliamentary constituency and it is a fundamental principle of elections that the. voters exercise their suffrage in favour of a candidate who is standing 444 for a particular seat in a single or in a two member constituency. The language used in the Constitution as well as in the Election Laws tends to show that the election though in a constituency is for the filling of a seat and it is for the filling of that seat that the voters in a constituency exercise their right to vote. The Constitution itself shows that the election is for filling a seat in a constituency. The scheme of the Constitution itself when it deals with Parliament and election to Parliament supports this view. Parliament, its composition and qualification for membership of Parliament are dealt with in Chapter 11 of Part V of the Constitution. Article 81 deals with the composition of the House of the People. Sub cl. (a) of cl. (1) of article 81 lays down that there shall be not more than 500 Members chosen by direct election from territorial constituencies and not more than 20 Members to represent Union territories. Clause (2) of article 81 provides that to each State shall be allotted a certain number of seats in the House of the People in such manner that the ratio between the number and population of the State is the same for all States and sub cl. (b) provides that the State shall be divided into territorial constituencies in such manner that the ratio between the population of each constituency and the number of seats allotted to it is the same throughout the State. Article 84 provides for the qualifications of persons to be chosen to fill a seat in Parliament and in el. (c) it is laid down that the qualifications shall be such as may be prescribed by an Act of Parliament. Part XV deals with Elections. Under article 324 there is one general electoral roll for every territorial constituency and there is no exclusion from such roll on the ground only of religion, race, caste, creed, sex or any of them. Article 327 confers on Parliament the power to make provision with respect to elections to Legislatures. Part XVI of the Constitution make special provision relating to certain classes and under article 330 seats are reserved in the House of the People for Scheduled Castes and Scheduled Tribes and it also provides for the proportion that these seats shall bear to the 445 total number of seats allotted to any State and the reservation of seats and special representation are to cease after 10 years (article 334). These provisions show that the emphasis is on seats. The number seats is fixed so also reserved seats and election is to fill a seat and for that purpose qualifications of candidates are prescribed by Parliamentary legislation. A perusal of those various articles mentioned above shows that there is no separate electoral roll and that the elections are on the basis of joint electorate. Although there is reservation of seats for the Scheduled castes there is no exclusion of Scheduled Castes or Scheduled Tribes from what are called general seats and every citizen without any consideration of caste, creed or sex is entitled to vote as well as stand for election provided he is otherwise qualified. The reservation of seats was a concession given to the Scheduled Castes and Tribes because of their social and educational backwardness and it had to have only a temporary existence and it must be conceded that although there is a reservation of a certain number of seats for the Scheduled Castes and Tribes the members of these castes or tribes are not excluded from contesting general seats. In order to carry out the intention of the Constitution in regard to elections two Acts were enacted by the Parliament. The Representation of People 's Act, 1950, (43 of 1950) (hereinafter called the 1950 Act) and the Representation of People 's Act 1951, (43 of 1951), (hereinafter called the 1951 Act). The object of the 1950 Act was to provide for allocation of seats and delimitation of constituencies for election and the object of the 1951 Act was to provide for the conduct of elections to the Houses of Parliament etc. and the qualifications and disqualifications for membership. In section 2(f) of the 1950 Act a Parliamentary constituency is defined as a constituency provided for the purpose of election to the House of the People. In Part II of that Act provision is made for the allocation of seats in the House of the People and for reservation of seats in that House for Scheduled Castes and Tribes for filling up of seats in that House and all these provisions 446 show that the seats in the House of the People allotted to the various States have to be filled by direct elections. It is significant that in all these provisions the word used is 'seat ' and the election is to fill a seat. Coming to the 1951 Act, election is defined in section 2(d) to mean an election to fill a seat or seats in either House of Parliament. . . In section 2(e) an elector means the person whose name is entered in the electoral roll of a constituency. Section 4 of the 1951 Act lays down the qualifications for membership of the House of the People and a person is not qualified to be chosen to fill a reserved seat in the House unless he is a member of a Scheduled Caste or Tribe and he is an elector for any Parliamentary constituency. In the case of any other seat the only qualification required is that he is an elector in a Parliamentary constituency. Part V of 1951 Act deals with nomination of candidates. Section 31 provides for public notice of elections and section 32 for nomination of candidates for election. Under this section no person may be nominated as a candidate for election to fill a seat unless he is qualified to fill that seat. Section 33 deals with presentation of nomination papers and the requirements for a valid nomination. Under sub section (1) a nomination paper completed in the prescribed form and signed as required under that provision has to be presented to the Returning Officer and under sub section (2) where in a constituency any seat is reserved the candidate is not qualified to be chosen to fill that seat unless his nomination papers contain a declaration by him specifying the caste or tribe to which he belongs and sub section (6) provides that a candidate can file more than one nomination paper for election in the same constituency. Under section 34 for a valid nomination for election a deposit has to be made which in the case of members of Scheduled Castes or Tribes is Rs. 250 and in other cases Rs. 500. The contention raised on behalf of the appellant was that these various provisions of the 1951 Act show that the election is for filling a seat and therefore when a member of the Scheduled Caste or Tribe contests an election he has to make a choice as to which seat he is 447 contesting. There is no prohibition against his standing for election for the general constituency but if he wants to do so he has to indicate to the electors that he is so standing because when the electors vote they vote for the election of the candidate to that particular seat and to no other. This is made further clear by the fact that only one vote out of the two which every elector has the right to cast can be polled in favour of one candidate. Every candidate has to have a symbol the necessity for which arises because of the illiteracy of the general electorate. Each party has allotted to it a symbol. In the present case the successful candidate Mr. Dippala Suri Dora was standing for the reserved seat on behalf of the Socialist Party and had been allotted the symbol of a tree which was his party symbol. In the case of a reserved seat the distinguishing feature is the black circle round the symbol so that the electors would know where to cast their vote in the case of a Scheduled Caste or Tribe candidate. It is true that the Form 2A is the same whether the candidate is contesting a reserved seat or a general seat but in the case of a person contesting a reserved seat there is a further declaration to be made that he belongs to Scheduled Caste or Tribe. It is also true that in Form 3A when notice of nomination is given the Form used is the same for both the seats but in column (6) of this Form the particulars of the caste or tribe are to be given presumably to show which of the candidates belongs to a Scheduled Caste or Tribe otherwise indicating the caste is meaningless. Similarly in Form 7A which is for the final list of contesting candidates after withdrawals have taken place the names of candidates are given along with their addresses and symbols allotted to them but candidates belonging to members of the Scheduled Castes or Tribes are distinguished by separate special marks against their names. All these distinguishing features have been provided so that electors when they cast votes for the various candidates know which of them is contesting the reserved seat and which is contesting the general seat. If that is not the object the giving of the caste would be meaningless, if not against the ideal of castelessness, 448 it was contended that section 32 only deals with nominations for election to fill a seat but it has nothing to do with qualifications which are laid down in section 33 and that sub sections (2) and (6) of section 33 showed that the election was for a constituency and not for a seat but this argument ignores the definition of election which means election to fill a seat and therefore where the word 'election ' in a constituency is used it is to be construed as election to fill a seat in a constituency. Besides sub section 2 of section 33 makes it clear that a candidate cannot be qualified to be chosen to fill a reserved seat in a constituency unless he makes a particular declaration. The emphasis is again on a seat. It is true that a candidate has to make a deposit for due nomination for election from a constituency but here again the word 'election ' must be read as election to fill a seat from a constituency. These various sections indicate therefore and particularly the definition of the word election in section 2(d) of the 1951 Act that when a candidate offers himself for election in a constituency he does so to fill a particular seat in a constituency. At a pole every elector can cast one vote in favour of one candidate and another in favour of another. It was contended that it was open to an elector to cast both his votes in favour of the two candidates standing for a general seat or the two candidates for the reserved seat or one for the general seat and the other for reserved seat and that there was no law which enjoins an elector to cast one vote for the general seat and the other for the reserved seat. But this will lead us nowhere because if there are only four candidates as they were in the present case two belonging to Scheduled Castes or Tribes and two non Scheduled Caste candidates then the voter who casts both his votes one for one Scheduled Caste and the other for the other or one for the non Scheduled Caste and the other for the other non Scheduled Caste candidate would be wasting his votes. One has to presume that the elector when he takes the trouble of going to the polling booth and to vote is not going to waste his votes. 449 In the present case the party which set up Mr. Dippala Suri Dora set him up as a candidate for the Scheduled Caste constituency which is clear from the application on behalf of the party setting him up. The final list of candidates for Parliament Ext. P3(c) also shows that Mr. Dippala Suri Dora was a candidate for the reserved seat in Parvatipuram double member constituency. The nomination papers filed by him also show that he was being nominated for election from the Parvatipuram reserved parliamentary constituency. Thus as far as Mr. Dippala Suri Dora was concerned he had made it quite clear to the electorate that he was seeking their suffrage for filling a reserved seat in the constituency and in this view of the matter as far as he and the electors were concerned the contest was for the reserved seat and not the general seat and the people voted for him for filling the reserved seat and not the general seat. Counsel for the respondent Mr. Dippala Suri Dora submitted that the mere fact that respondent filed his nomination papers in a particular manner does not give a different interpretation to the various provisions of the law and if under the law a nomination like that of the respondent Mr. Dippala Suri Dora was a nomination for both the seats the mere fact that he had filled his form differently would make no difference. This contention is correct but as I have indicated above the election is to fill a seat in the constituency and the nomination must be taken to fill that seat and no, other. Reliance was next placed on sections 53, 54 and 55 of the 1951 Act to support the case put forward on behalf of the respondent Mr. Dippala Suri Dora. No doubt in sub s.(4) of section 54 it is laid down that in a case where the number of contesting candidates qualified to be chosen to fill the reserved seat exceeds the number of such seats and the total also exceeds the total number of seats to be filled, then after the poll has been taken the qualified candidate receiving the largest number of votes for the reserved seat has to be declared elected and then such of the remaining candidates as have secured the largest number of votes have to be declared 57 450 elected to fill the remaining seats and there is an illust ration added to the section which supports the case of the respondent. But in view of section 8 of the , which makes provisions for readjustments and delimitations it is doubtful if the provisions of section 54(4) retain their efficacy. Under section 8 cl.(2) of Delimitation Act it is provided that all constituencies have to be single member constituencies or two member constituencies and wherever practicable seats may be reserved for Scheduled Caste or Tribe in a single member constituency but in every two member constituency one seat has to be reserved for Scheduled Caste or Tribe. This provision destroys the effect of section 54. If in a single member constituency a seat can be reserved which means that only a Scheduled Caste candidate can be elected to that seat the effect of reservation of seat in the double member constituency will also be that when a member of the Scheduled Caste offers himself for election to a reserved seat he can be elected only to that seat and to no other. This is also supported by the definition of electoral rights in section 79 of the 1951 Act which is defined as a right of a person to stand or not to stand as a candidate at an election, i.e., an election to fill a seat in either House of Parliament. The electoral right which a citizen has is to stand for election to fill a seat and a successful candidate is one who is elected by securing the largest number of votes cast for that seat. This necessarily leads to the conclusion that the respondent Mr. Dippala Suri Dora who offered himself for election to fill a reserved seat could only be elected to that seat and not to the general seat. The next contention raised on behalf of the appellant was that if a member of the Scheduled Caste or Tribe wants to contest both the seats, i.e., general and reserved he would have to file two nomination papers and pay two deposits. In view of what has been said above and in view of sections 32 and 33 and the definition of the word ' election ' such candidate has to file two nomination papers one for the general seat and the other for the reserved seat setting out the necessary qualifications which are required under the law 451 Similarly he will have to make two deposits under section 34 for the same reason. A question of some importance has been raised as to whether a member of Scheduled Caste or Scheduled Tribe can by his own act transform himself into different and higher. caste. That depends upon the view one takes of the caste system and whether cast is dependent upon birth or it varies as a consequence of Guna, Karma and Subhavana that is merit on qualities, actions and character. In Hinduism caste had its origin in vocation and was not dependent upon birth. Birth as the sole criterion of caste is a much later development and caste became rigid and hereditary when vocations became hereditary. Caste was nothing but division of labour. There is a high authority to support the view that in Hinduism caste was dependent upon actions and not on birth. In Bhagwat Gita in the fourth Discourse it is stated: "The four castes were created by me in accordance with their aptitude and actions; know me the author of these castes, though I am actionless and inexhaustible. " There are Verses in the Mahabharta also which go to support this. One such Verse is given as follows: " Truth, Charity, fortitude, good conduct, gentleness, austerity and compassion he in whom these, are observed is a Brahmana. If these marks exist in a Sudra and are not found in a twice born, the Sudra is not a Sudra nor the Brahmana a Brahmana" (Teaching given by Yudhisthira) Even in Bhagwata Purana it is stated: " One becomes a Brahmana by his deeds and not by his family or birth; even a Chandala is a Brahmana, if he is of pure character". In the Chandogya Upanisad there is the interesting incident of Satyakama who was raised to the position of a Brahmana because he had spoken the truth. Thus it was his character and not his birth which deter. mined his caste. Amongst the Hindus many have raised themselves to the position of Brahmana by their good qualities and one such instance is of Sage 452 Matanga who was a Chandala. Vishva Mitra was a Kshtriya and became a Brahman. Hinduism might have become static at one stage but its modern history shows that this is not so now and it would not be wrong to say that caste in Hinduism is not dependent upon birth but on actions. The whole theory of karma is destructive of the claim of caste being dependent upon birth. In my opinion Mr. Dippala Suri Dora had by his actions raised himself to the position of Kshtriya and he was no longer a member of the Scheduled Caste or Tribe and on that ground also his election cannot be supported. I would therefore allow this appeal, set aside the order of the High Court and restore that of the Tribunal. The appellant will be entitled to costs of this Court as well as of the Courts below. ORDER. In view of the majority judgment of the Court the appeal is dismissed with costs in favour of Respondent No. 1. Appeal dismissed.

In a double member Parliamentary constituency one seat was reserved for the scheduled tribes and the other was general. Four persons filed their nominations for the election, G 1 and G 2 for the general seat and S1 and S2 for the reserved seat. At the polls the number of votes received by the candidates were in the following order: S1, S2, G1 and G2. In accordance with the provisions of section 54(4) of the Representation of the People Act, 1951, S1 was declared elected to the reserved seat and S2, who had received the largest number of votes out of the remaining candidates, was declared elected to the general seat. G1 filed an election petition for a declaration that the election of S2 was void and for a further declaration that he had himself been duly elected to the general seat. The petition was based on three grounds, viz., (i) that upon a proper interpretation Of section 54(4) a candidate who had filed his nomination for the reserved seat could not be declared elected to the general seat ; (ii) that if the interpretation be otherwise then section 54(4) was ultra vires; and (iii) that S2 had ceased to be a member of a scheduled tribe at the relevant time and his nomination was improperly accepted. Held, (Kapur, J., dissenting) that, S2 was properly and validly declared elected. The provisions of the Constitution and of the Act show that the election in a double member constituency was held for the whole constituency and not for the seats and a candidate who had filed nomination as a member of the scheduled tribes was entitled to contest for both the seats. On a fair and reasonable construction Of section 54(4) Of the Act there could be no doubt that in a case like the present, after S1 was declared duly elected to the reserved seat, the votes secured by the remaining three candidates had to be considered before declaring the election for the general seat. A member of the scheduled tribe or caste did not forego his right to seek election to the general seat merely because he availed himself of the additional concession of standing for the reserved seat by making the prescribed declaration for that purpose. It was not necessary for him to file two nomination papers for the two seats. Section 54(4) of the Act did not offend article 14 or article 330 Of the Constitution and was not unconstitutional. 427 Held, further, that the appellant had failed to establish that S2 had ceased to be a member of the scheduled tribe and had become a Kshatriya. Whatever may have been the origin of Hindu castes and tribes in ancient times, gradually castes came to be based on birth alone. A person who belonged by birth to a depressed caste or tribe would find it very difficult, if not impossible, to attain the status of a higher caste by virtue of his volition, education, culture and status. The caste status of a person had to be determined in the light of the recognition received by him from the members of the caste into which he sought an entry ; unilateral acts of such a person asserting a higher status were not enough to establish the higher status. It is to be hoped that this position will change, and in course of time the cherished ideal of castless society truly based on social equality will be attained under the powerful impact of the doctrine of social justice and equality proclaimed by the Constitution and sought to be implemented by the relevant statutes and as a result of the spread of secular education and the growth of a rational outlook and of proper sense of social values ; but at present it would be unrealistic and utopian to ignore the difficulties which a member of the depressed tribe or caste has to face in claiming a higher status amongst his co religionists. Per Kapur, J. The election Of S2 to the general seat was not valid. When a member of the scheduled tribe or caste offered himself for election to a reserved seat he could be elected only to that seat and not to the general seat. The provisions of the Constitution and of the Act show that the election in a constituency was for filling of a seat in the constituency and not for a constituency. When a candidate offers himself for election in a constituency, he does so for election to fill a seat in the constituency. Therefore, if a candidate wanted to contest both the seats he had to file two nomination papers one for the general seat and the other for the reserved seat and he had to make two deposits. Section 8(2) Of the destroyed the effect of section 54 of the Act. Caste in Hinduism had its origin not on the basis of birth but of guna, karma and subhavana (quality, actions and character). Caste is nothing but division of labour. Hinduism might have become static at one time; it is no longer so and it is wrong to say that caste is dependent upon birth and not on kayma i.e. action. section 2 had by his actions raised himself to the position of a Kshatriya and he was no longer a member of the scheduled tribe or caste.

itions Nos. 53, 100, 101, 105 and 106 of 1967. Petitions under article 32 of the Constitution of India for the enforcement of the fundamental rights. M. C. Setalvad, A. V. Koteswara Rao, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the petitioners (in W. P. No. 53 of 1967). N. C. Chatterjee, A. V. Koteswara Rao, K. Rajendra Chau dhuri and K. R. Chaudhuri, for the petitioners (in W.P. No. 100 of 1967). A. V. Koteswara Rao, K. Rajendra Chaudhuri and, K. R. Chaudhuri, for the petitioners (in W.P. No.101 of 1967). K. R. Chaudhuri and K. Rajendra Chaudhuri, for the peti tioners (in W.P. Nos. 105 and 106 of 1967). C. K. Daphtary, Attorney General and A. V. Rangam, for he respondents (in W.P. No. 53 of 1967). P. Ram Reddy and A. V. Rangam, for the, respondents (in V. Ps. No. 100, 101, 105 and 106 of 1967). Sachin Chaudhury, G. L. Sanghi and O. C. Mathur, for the intervener (in W.P. No. 53 of 1967). The Judgment of the Court was delivered by Bachawat, J. In all these writ petitions under article 32 of the the petitioners ask for an order declaring that section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961 (Andhra Pradesh Act No. 45 of 1961) is unconstitutional and ultra vires and a direction prohibiting the respondents from levying tax under section 21 and to refund the tax already collected. Section 21 of the Act is in these terms: "21(1) The Government may, by notification, levy a tax at such rate not exceeding five rupees per metric tonne as may be prescribed on the purchase of cane required for use, consumption or sale in a factory. (2) The Government may, by notification, remit in whole or in part such tax in respect of cane used, or intended to be used in a factory for any purpose specified in such notification. (3) The Government may, by notification, exempt from the payment of tax under this section (a) any new factory which, in the opinion of the Government has substantially expanded, to the extent of such expansion, for a period not exceeding two years from the date of completion of the expansion. P(N)7SCI 6 708 (4) The tax payable under sub section (1) shall be levied and collected from the occupier of the factory in such manner and by such authority as may be prescribed. (5) Arrears of tax shall carry interest at the rate of nine per cent per annum. (6) If the tax under this section together with the interest, if any, due thereon, is not paid by the occupier of a factory within the prescribed time, it shall be recoverable from him as an arrear of land revenue." Section 2(1) defines a factory which means "any premises including the precincts thereof, wherein twenty or more workers are working or were working on any day during the preceding twelve months and in any part of which any manufacturing process connected with the production of sugar by means of vacuum pans in being carried on or is ordinarily carried on with the aid of mechanical power. Section 2(m) defines the occupier of a factory. B: Ordinance No. 1 of 1967 which was replaced by Act No. 4 on 1967, the following new sub section (I A) was inserted and other consequential amendments were made in section 21 of the principal Act "(1 A) The Government may, by notification, levy a tax at such rate, not exceeding three. rupees and fifty paise per metric tonne, as may be prescribed on the purchase of cane required for use, consumption or sale in a khandsari unit". Also the following sub sections (kk) and (kkk) were inserted in section 2 of the principal Act: "(kk) 'khandasari sugar ' means sugar produced by open pan process in a khandasari unit from sugarcane juice, or from rab or gur or both, containing more than eighty per cent sucrose; (kkk) 'khandasari unit ' means a unit engaged or ordinarily engaged in the manufacture of khandasari sugar and includes a bel;" It may be mentioned that sales and purchases of sugarcane a exempt from tax under the Andhra Pradesh General Sales Tax Act, 1957. The petitioners own sugar factories as defined in 2(1). Their agents are the occupiers of the factories as defined in section 2(m). They purchased cane from canegrowers within their respective factory zones. The State Government had issued notifications levying tax under section 21. For the last several years the petitioners have paid the tax on their purchases of sugarcane and further demands are being made on them for payment of the tax They challenge the vires and the , constitutionality of section 21 of various grounds. The principal submissions were made by M. M. C. Setalvad who appeared in Writ Petition No. 53 of 196 709 and his arguments were adopted by counsel appearing in the other petitions. Mr. N. C. Chatterjee who appeared in Writ Petition No. 100 of 1967 raised a few additional contentions. The submission of Mr. Setalvad is that section 21 so far as it levies a tax on the purchases of sugarcane by or on behalf of the petitioners from the canegrowers in their respective factory zones is ultra vires the powers of the legislature under Entry No. 54, List 11, Sch. VII of the Constitution in the light of the decision in State of Madras vs Gannon Dunkerley & Co.(1). Now, in Gannon Dunkerley 's case(1), the actual decision was that the legislature had no power under List II, Entry 48, Sch. VII of the Government of India Act, 1935 to impose a tax on the supply of materials under an entire and indivisible contract for construction of buildings. But the Court also held that the phrase "sale of goods" in the Entry must be interpreted in the legal sense which it had in the Indian Sale of Goods Act, that the Provincial Legislature had no power to tax a transaction which was not a sale of goods in that sense and that in order to constitute a sale there must be an agreement for sale of goods for a price and the passing of property therein pursuant to such an agreement. Ventakarama Aiyar, J. laid at pp. 397 398: "Thus, according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of course presupposes capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be no sale. " in the light of this decision, the expression "sale of goods" in Entry 54, List II, Sch. VII of the Constitution must be given the ame interpretation. On a parity of reasoning, to constitute a purchase of goods" within this Entry, there must be an agreement for purchase of goods and the passing of property therein pursuant to such an agreement. The question, therefore, is whether the purchases by or on behalf of the petitioners from the cane growers in their respective factory zones were made under agreements of purchase and, sale. It appears that the Cane Commissioner is empowered under s.15 of Act No. 45 of 1961 to declare any area as the factory one for the purpose of supply of cane to a factory during a particular crushing season. Under section 16(1), on the declaration of the factory zone the occupier of the factory is bound to purchase such quantity of cane grown in that area and offered for sale to the factory (1) ; 710 as may be determined by the Cane Commissioner in accordance with the provisions of the schedule. Section 16(2) prohibits the the canegrowers in a factory zone from supplying or selling cane to any factory or other person otherwise than in accordance with the provisions of the schedule. Section 28(2)(1) empowers the Government to make rules providing for the form of agreement to be entered into under the provisions of the Act. Rule 20 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1951 framed under the Act provides that a canegrower or a canegrower 's co operative society may within 14 days of the order declaring an area as the factory zone or such extended time as may be fixed by the Cane Commissioner, offer in Form No. 2 to supply cane grown in that area to the occupier of the factory and such occupier of the factory within 14 days of the receipt of the offer shall enter into an agreement in Form No. 3 or Form No. 4 with the canegrower or the canegrower 's co operative society as the case may be for the purchase of the cane offered. Form No. 3 is the statutory form of agreement with a canegrower. By the agreement in Form No. 3 the occupier of the factory agrees to buy and the canegrower agrees to sell during the crushing season certain sugarcane crop grown in the area at the minimum price noticed by the Government from time to time upon the terms and conditions mentioned in the agreement. The agreement contains an arbitration clause and is signed by or on behalf of the occupier of the factory and the canegrower. The agreement in Form No. 4 with a canegrower 's co operative society is on the same lines. All the terms and conditions of the agreements and the mode of their performance are fixed and regulated by the Act, the Rules and orders made under the Act. Contravention of the provisions of the Act or of any rule or order made under the Act is punishable under section 23. The minimum price of sugarcane is fixed under the Sugarcane Control Order, 1966. The learned Attorney and Mr. Ram Reddy attempted to argue that the occupier of the factory has some option of not buying from the canegrower and some freedom of bargaining about the terms and con ditions of the agreements. But after having read all the relevant provisions of the Act and the Rules, they did not pursue this point. We are satisfied that under the provisions of Act No. 45 of 1961 And the Rules framed thereunder, a canegrower in a factory zone is free to sell or not to sell his sugarcane to the factory. He may consume it or may process it into jaggery and then sell the finished product. But if he offers to sell his cane, the occupier of the factory is bound to enter into an agreement with him on the prescribed terms and conditions and to buy cane pursuant to he agreement in conformity with the instructions issued by the Cane Commissioner. The submission of the petitioners is that as ,hey or their agents are compelled by law to buy cane from the 711 canegrowers their purchases are not made under agreements and are not taxable under Entry No. 54, List 11 having regard to Gannon Dunkerley 's case(1). This contention requires close examination. Under section 4(1) of the Indian , a con tract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. By section 3 of this Act, the provisions of the apply to contracts of sale of goods save in so far as they are inconsistent with the express provisions of the later Act. Section 2 of the provides that when one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of the other to such act or abstinence, he is said to make a proposal. When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise. Every promise and every set of promises forming the consideration for each other is an agreement. There is mutual assent to the proposal when the proposal is accepted and in the result an agreement is formed. Under section 10, all agreements are contracts if they are made by the free consent of parties competent to contract for a lawful consideration and with a lawful object and are not by the Act expressly declared to be void,. Sec tion 13 defines consent. Two or more persons are said to consent when they agree upon the same thing in the same sense. Section 14 defines free consent. Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake as defined in sections 15 to 22. Now, under Act No. 45 of 1961 and the Rules framed under it, the canegrower in the factory zone is free to make or not to make an offer of sale of cane to the occupier of the factory. But if he makes an offer, the occupier of the factory is bound to accept it. The resulting agreement is recorded in writing and is signed by the parties. The consent of the occupier of the factory to the agreement is not caused by coercion, undue influence, fraud, mis representation or mistake. His consent is free as defined in section 14 of the though he is obliged by law to enter into the agreement. The compulsion of law is not coercion as defined in section 15 of the Act. In spite of the compulsion, the agreement is neither void nor voidable. In the eye of the law, the agreement is freely made. The parties are competent to contract The agreement is made for a lawful consideration and with a lawful object and is not void under any provisions of law. The agreements are enforceable by law and are contracts of sale of sugarcane as defined in section 4 of the Indian . The purchases of sugarcane under the agreement can be taxed by the State legislature under Entry 54, List 11. (1) ; 712 Long ago in 1702, Holt, C.J. said in Lane vs Cotton(1): "When a man takes upon himself a public employment, he is bound to serve the public as far as this employment goes, or an action lies against him for refusing. " The doctrine that one who takes up a public employment is bound to serve the public was applied to innkeepers and common carriers. Without lawful excuse, an innkeeper cannot refuse to receive guests at his inn, and a common carrier cannot refuse to accept goods offered to him for carriage. See Halsbury 's Laws of England, 3rd Edn., Vol. 4, article 375 and Vol. 21, article 938. A more general application of the doctrine was arrested by the growth of the principle of laissez faire which had its heyday in the. midnineteenth century. Thereafter, there has been a gradual erosion of the laissez faire concept. It is now realised that in the public interest, persons exercising certain callings or having monopoly or near monopoly powers should sometimes be charged with the duty to serve the public, and, if necessary, to enter into contracts. Thus, section 66 of the Indian Railways Act, 1890 compels the railway administration to supply the public with tickets for travelling on the railway upon payment of the usual fare. Section 22 of the compels a licensee to supply electrical energy to every person in the area of supply on the usual terms and conditions. Cheshire and Fifoot in their Law of Contract, 6th Edn., p. 23 observe that for reasons of social security the State may compel persons to make contracts. One of the objects of Act No. 45 of 1961 is to regulate the purchase of sugarcane by the factory owners from the canegrowers. The canegrowers scattered in the villages had no real bargaining power. The factory owners or their combines enjoyed a near monopoly of buying and could dictate their own terms. In this unequal contest between the canegrowers and, the factory owners, the law stepped in and compelled the factory to enter into contracts of purchase of cane offered by the canegrowers on prescribed terms and conditions. In The Indian Steel & Wire Products Ltd. vs The State of Madras(2), the Court held that. sales of steel products authorised by the Controller under cls. 4 and 5 of the Iron and Steel (Control of Production and Distribution) Order, 1941 were eligible to tax under Entry 54, List 11. The Court found that the parties had entered into contracts of sale though in view of the Order the area of bargaining between the buyer and the seller was greatly reduced. Hegde, J. speaking for the Court said that as a result of economic compulsions and changes in of the political outlook the freedom to contract was now being confined gradually to narrower and narrower limits. We have here a case where one party (1); , (2) ; 713 to a contract of sale is compelled to enter into it on rigidly prescribed terms and conditions and has no freedom of bargaining. But the contract, nonetheless, is a contract of sale. In Kirkness vs John Hudson & Co. Ltd.,(1) the House of Lords by a majority held that a compulsory vesting of title of the company 's railway wagons in the British Transport Commission under section 29 of the Transport Act, 1947 was not a sale within the meaning of the phrase "is sold" in section 17 of the Income tax Act, 1945. Under section 29, there was a compulsory taking of property. The assent of the company to the taking was not required by statute. By force of law, the property of the company was taken without its assent. There was no offer, no acceptance and no mutual assent and no contract resulted. The House of Lords held that mutual assent was an element of a transaction of sale. In Gannon Dunkerley 's case(1), the Court approved of this principle and rejected the argument of counsel that an involuntary transfer of title as in Kirkness 's case(2) was a sale within the meaning of the legislative Entry. But the Court did not say that if one party was free to make an offer of sale and the other party was obliged by law to accept it and to enter into an agreement for purchase of the goods, a contract of sale did not result. In the present case, the seller makes an offer and the buyer accepts it. The parties then execute and sign an agreement in writing. There is mutual assent and a valid contract, though the assent of the buyer is given under compulsion of statute. Setalvad relied on the following passage in the Law of Contract by G.H. Treitel, at p. 5: "Where the legislation leaves no choice at all to one party, the transaction is not a contract. " But the author does not cite any authority in support of the proposition. , He adds that even a compulsory disposition of property may be treated as contract for the purpose of a particular statute and cites the case of Ridge Nominees vs I.R.C.(3). There, the Court distinguishing Kirkness 's case(3) held that the compulsory transfer of shares of a dissenting shareholder by a person "authorised to make the transfer on his behalf under section 209 of the Companies Act, 1948 corresponding to section 395 of our was having regard to the machinery created by the section a conveyance on sale within section 54 of the Stamp Act, 1 91. The Lord Justices gave separate opinions. It is worthwhile quoting the opinion of Donovan, L. J. who said: "When the legislature, by section 209 of the Companies Act, 1948, empowers the transferee company to appoint an agent on behalf of a dissenting shareholder for the purpose of executing a transfer of his shares (1) (2) ; (3) 714 against a price to be paid to the transferor company and held in trust for the dissenting shareholder, it is clearly ignoring his dissent and putting him in the same position as if he had assented. For the purpose of considering whether this results in a sale, one must, I think, bear that situation in mind, and regard, the dissent of the shareholder as overridden by an assent which the statute imposes upon him, fictional though this may be. in the context of section 209 the transfer becomes in law a conveyance on sale. This conclusion, in my opinion, does not run counter to what was said in the House of Lords in Kirkness (Inspector of Taxes) vs John Hudson & Co. Ltd.,(1), where, in terms of the statute there under consideration, property belonging to other persons was declared to vest on a specified date in the Transport Commission against payment of compensation. This may be no more than a difference of machinery, but machinery may make the very difference between a sale and a mere expropriation against compensation. "Lord Simonds, I venture to think, implies as much when he says he gets no assistance from the cases decided under the Stamp Acts. " In M/s. New India Sugar Mills Ltd., vs Commissioner of Sales Tax, Bihar(2), the Court by a majority held that the supply of sugar by a sugar factory to a Provincial Government in obedience to the directions of the Sugar Controller given under the Sugar and Sugar Products Control Order, 1946 was not a sale taxable under List II, Entry 48, Sch. VII of the Government of India Act, 1935. Mr. Setalvad placed strong reliance on the fol lowing passage in the judgment of Shah, J. at pp. 469 470: "A contract of sale between the parties is therefore a pre requisite to a sale. The transactions of despatches of sugar by the assessees pursuant to the directions of the Controller were not the result of any such contract of sale. It is common ground that the Province of Madras intimated its requirements of sugar to the Controller, and the Controller called upon the manufacturing units to supply the whole or part of the requirement to the Province. In calling upon the manufacturing units to supply sugar, the Controller did not act as an agent of the State to purchase goods: he acted in exercise of his statutory authority. There was mani festly no offer to purchase sugar by the Province, and no acceptance of any offer by the manufacturer. The manufacturer was under the Control Order left no volition: he could not decline to carry out the order; if he (1) (2) [1963] Supp. 2 S.C.R. 459, 469. 715 did so he was liable to be punished for breach of the order and his goods were liable to be forefeited. The Government of the Province and the manufacturer had no opportunity to negotiate, and sugar was despatched pursuant to the direction of the Controller and not in acceptance of any offer by the Government." Divorced from the context, this passage gives some support to the contention that there can be no contract if the acceptance of the offer is made under compulsion of a direction given by a statutory authority. But the passage must be read with the facts of the case. By cl. 3 of the Sugar and Sugar Products Control Order, 1946, producers of sugar were prohibited from disposing of sugar except to persons specially authorised in that behalf by the Controller to acquire sugar on behalf of certain Governments. Clause 5 required every producer or dealer to comply with the directions issued by the Controller regarding production, sales, stocks and distribution of sugar. Clause 6 authorised the Controller to fix the price of sugar. Clause 7(1) authorised the Controller to allot quotas of sugar for any Province and to issue directions to any producer or dealer for the supply of the sugar specifying the price, quantity and type or grade of the sugar and the time and manner of supply. Contravention of the directions entailed forfeiture of stocks under cl. 11 of the Order and was punishable under r. 81(4) of the Defence of India Rules, 1939. The admitted course of dealings between the parties was that the Governments of the consuming States used to intimate to the Sugar Controller their requirement of sugar and the factory owners used to send to him statements of their stocks of sugar. On a consideration of the requisitions and the statements of stock, the Controller used to make allotments. The allotment order used to be addressed by the Controller to the factory owner, directing him to supply sugar to the Government in question in accordance with the latter 's despatch instructions. A copy of the allotment order used simultaneously to be sent to the Government concerned and the latter then used to send to the factory detailed despatching instructions. In these circumstances, Kapur and Shah, JJ. (Hidayatullah, J. dissenting) held that by giving intimation of its requirement of sugar to the Controller and applying for allotment of sugar, the Government of Madras did not make any offer to the manufacturer. The direction of the Controller to the manufacturer to supply sugar to the Government was given in the exercise of his statutory authority and was not the communication of any offer made by the Government. The despatch of the goods in compliance with the directions of the Controller was not the acceptance by the manufacturer of any offer, nor could it be deemed to be an offer by the manufacturer to supply goods. On the, special facts of that case, the majority decision was that there was no offer and acceptance and no contract resulted. That decision should not be 716 treated as an authority for the proposition that there can be no contract of sale under compulsion of a statute. It depends upon the facts of each case and the terms of the particular statute regulating the dealings whether the parties have entered into a contract of sale of goods. Under Act No. 45 of 1961, a canegrower makes an offer to the occupier of the factory directly and the latter accepts the offer. The parties then make and sign an agreement in writing. There is thus a direct privily of contract between the parties. The contract is a contract of sale and pur chase of cane, though the buyer is obliged to give his assent under compulsion of a statute. The State Legislature is competent to tax purchases of canes made under such a contract. Mr. Setalvad submitted that there can be no levy of a pur chase tax with reference to the tonnage of the cane. We cannot accept this contention. Usually the purchase tax is levied with reference to the price of the goods. But the legislature is competent to levy the tax with reference to the weight of the goods purchased. The contention of Mr. Chatterjee that a purchase tax must be levied with reference to the turnover only is equally devoid of merit. Where the purchase tax is levied on a dealer, the levy is usually with reference to his turnover, which normally means the aggregate of the amounts of purchase prices. But the tax need not necessarily be levied on a dealer or by reference to his turnover. It may be levied on the occupier of a factory by reference to the weight of the goods purchased by him. Mr. Chatterjee next submitted that a purchase tax must be levied on goods generally, and there can be no purchase tax with reference to their subsequent use, consumption or sale. He based his argument on paragraphs 17 to 20. III, Vol. III of the Report of the Taxation Enquiry Committee. There, the Committee while discussing the comparative merits of sales tax in relation to customs, excise and octroi, pointed out that sales tax was a major source of revenue and could be applied to the generality of goods, while customs, excise and octroi could be applied to only a limited portion of the industrial output of the country. The Committee did not express any opinion on the scope of List II, Entry 54. Under that Entry, the State legislature is not bound to levy a tax on all purchases of cane. It may levy a tax on purchases of cane required for use, consumption or sale in a factory. The legislature is competent to tax and also to exempt from payment of tax sales or purchases of goods required for specific purposes. Other instances of special treatment of goods required for particular purposes may be given. Section 6 and Sch. 1, item 23 of the Bombay Sales Tax Act, 1946 levy tax on fabrics and articles for personal wear. Section 2(j)(a)(ii) of the C.P and Berar Sales Tax Act, 1947 exempts sales of goods intended for use by a registered dealer as raw materials for the manufacture of goods. 717 Mr. Chatterjee submitted that the tax levied under section 21 was a use tax and referred to McLeod vs Dilworth & Co.(1) and C. G. Naidu & Co. The State of Madras(2). He argued that the State legislature could not levy a use tax which was essentially different from a purchase tax. The assumption of counsel that section 21 levies a use tax is not well founded. The taxable event under section 21 is the purchase of goods and not the use or enjoyment of what is purchased. The constitutional implication of a use tax in American law is entirely irrelevant. The observation in the Madras case that the Explanation to article 286(1)(a) of the Constitution conferred, a power on the State legislature to levy a use tax is erroneous. The Explanation fixed the situs of certain sales. It did not confer upon the legislature any power to levy a use tax. To appreciate another argument of Mr. Chatterjee, it is necessary to refer to a few facts. It appears that paragraph 21 of the Bill published in the Gazette on March 3, 1960 preliminary to the passing of Act No. 45 of 1961 provided for a levy of a cess on the entry of cane into the premises of a factory for use, consumption or sale therein. On December 13, 1960, this Court in Diamond Sugar Mills Ltd. and Another vs The State of Uttar Pradesh and Another(3) struck down a similar provision in the U.P. Sugarcane Cess Act, 1956 on the ground that the State legislature was not competent to enact it under Entry 52, List II as the premises of a factory was not a local area within the meaning of the Entry. Having regard to this decision, paragraph 21 of the Bill was amended and section 21 in its present form was passed by the State Legislature. The Act was published in the Gazette on December 30, 1961. Mr. Chatterjee submitted that in this context the levy under section 21 was really a levy on the entry of goods into a factory for consumption, use or sale therein. We are unable to accept this contention. As the proposed tax on the entry of goods into a factory was unconstitutional, paragraph 21 of the original Bill was amended and section 21 in its present form was enacted. The tax purchase of goods. The taxable event is the purchase of cane for use, consumption or sale in a factory and not the entry of cane into a factory. As the tax is not on the entry of the cane into a factory, it is not payable on cane cultivated by the factory and entering the factory premises. Mr. Setalvad submitted that section 21 impeded free trade, com merce and intercourse and offended article 301 of the Constitu tion and relied on the decision in Firm A. T. Mehtab Majid & (1) ; (2) A.I.R. 1953 Mad. 116, 127 128, (3) ; 718 Co. vs State of Madras(1). In that case, the Court held that r. 16(2) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939 discriminated against imported hides or skins which had been purchased or tanned outside the State by levying a higher tax on them and contravened article 304(a) of the Constitution. At p. 442, Raghubar Dayal, J. said: "It is therefore now well settled 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 regulatory measures. Sales tax of the kind under consi deration here, cannot be said to be a measure regulating any trade or a, compensatory tax levied for the use of trading facilities. Sales tax, which has the effect of discriminating between goods of one State and goods of another, may affect the free flow of trade and it will then offend against article 301 and will be valid only if it comes within the terms of article 304(a). " That case decides that a sales 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). But the tax levied under section 21 does not discriminate against any imported cane. Under section 21, the same rate of tax is levied on purchases of all cane required for use, consumption or sale in a factory. There is no discrimination between cane grown in the State and cane imported from outside. As a matter of fact, under the Act the factory can normally buy only cane grown in the factory zone. A non discriminatory tax on goods does not offend article 301 unless it directly impedes the free movement or transport of the goods. In Atiabari Tea Co. Ltd., vs The State of Assam and others(2). Gajendragadkar, J. speaking for the majority said: "We are, therefore, satisfied that in determining the limits of the width and amplitude of the freedom guaranteed by article 301 a rational and workable test to apply would be: Does the impugned restriction ope rate directly or immediately on trade or its movement?. It is the free movement of the transport of goods from one part of the country to the other that is intended to be saved, and if any Act imposes any direct res trictions on the very movement of such goods it attracts the provisions of article 301, and its validity can be sustained only if it satisfies the requirements of article 302 or article 304 of Part XIII. " (1) [1963] Supp. 2 S.C.R. 435. (2) ; , 860 861. 719 This interpretation of article 301 Was not dissented from in Automobile Transport (Rajasthan) Ltd. vs State of Rajasthan(1). Normally, a tax on sale of goods does not directly impede the free movement or transport of goods. Section 21 is no exception. It does not impede the free movement or transport of goods and is not violative of article 301. Mr. Setalvad next submitted that section 21 offended article 14 of the Constitution in several ways. It was argued that section 21 read with section 2(e) discriminated between producers of sugar using the vacuum pan and open pan processes. Under section 2 1, as it stood before its amendment by Act No. 4 of 1967 tax was levied on purchases of cane by factories producing sugar by means of vacuum pans but purchases of cane by khandasari units producing khandasari sugar by the open pan process were entirely exempt from the tax. Even the amended section 21 levies a lower rate of tax on the purchases of cane by khandsari units. It was also argued that there was discrimination in favour of producers of jaggery by exempting their purchases of cane from payment of the tax. But the affidavits filed on behalf of the respondents show that factories producing sugar by means of vacuum pans and khandasari units producing sugar by the open pan processes form distinct and separate classes. The industry using the vacuum pan process is in existence since 1932 33. No tax was levied on this industry until 1949. In 1949 when the industry became well established, tax was levied on it for the first time by section 14 of the Madras Sugar Factories Control Act, 1949. The khandasari units carry on a small scale industry. They are of recent origin in the State of Andhra Pradesh. Until 1967, this industry was exempt from the levy. When the industry came to be somewhat established by 1967 a smaller rate of tax was levied on it. In 1965 66, factories adopting the vacuum pan process bought over 32 lakh tonnes of cane while the khandasari sugar units in the State bought about 2.70 lakh tonnes of cane. The manufacture of jaggery has no resemblance to the manufacture of sugar by the vacuum pan or the open pan system. It is a cottage industry wherein individual canegrowers process their cane into jaggery and market it as a finished product. Having regard to the affidavits, we are satisfied that the differential treatment of the factories producing sugar by means of vacuum pans, khandasari units producing sugar by. the open pan process and cane growers using cane for the manufacture of jaggery is reasonable and has a rational relation to the object of taxation. There are marked differences between the three classes of users of cane and their capacity to pay the tax. The legislature could reasonably treat the three sets of users of cane differently for purposes of levy. (1) [1963] 1 S.C.R. 491, 533. 702 It was next argued that the power under section 21(3) to exempt new factories and factories which in the opinion of the Government have substantially expanded was discriminatory and violative of article 14. We are unable to accept this contention. The establishment of new factories and the expansion of the existing factories need encouragement and incentives. The exemption in favour of new and expanding factories is based on legitimate legislative policy. The question whether the exemption should be granted to any factory, and if so, for what period and the question whether any factory has substantially expanded and if so, the extent of such expansion have to be decided with reference to the facts of each individual case. Obviously, it is not possible for the State legislature to examine the merits of individual cases and the function was properly delegated to the State Government. The legislature was not obliged to prescribe a more rigid standard for the guidance of the Government. We hold that section 21 does not violate article 14. The petitioner in Writ Petition No. 101 of 1967 raised the contention that it was a new factory and that the Government of Andhra Pradesh should have exempted it from payment of tax under section 21(3)(a). The contention was controverted by the respondents. The affidavits do not give sufficient materials on the point, nor is there any prayer in the petition for the issue of a mandamus directing the State Government to grant the exemption. In the circumstances, we do not think it fit to express any opinion on the matter. It will be open to the petitioner in Writ Petition No. 101 of 1967 to raise this contention in other proceedings. In the result, the petitions are dismissed with costs, one hearing fee. G.C. Petitions dismissed.

Under the Andhra Pradesh (Regulation of Supply and Purchase) Act 1961 the occupier of a sugar factory had to buy sugarcane from canegrowers in conformity with the directions of the Cane Commissioner. Under section 21 of the Act the State Government had power by notification to tax purchases of sugarcane for use, consumption or sale in a sugar factory. The tax was leviable subject to a maximum rate per metric tonne. The maximum rate for khandsari units was less than that for factories; sugarcane purchased for production of jaggery was not taxed at all. The petitioners were sugar factories in Andhra Pradesh. They filed writ petitions under article 32 of the Constitution challenging the validity of section 21 mainly on the ground that as the petitioners or their agents were compelled by law to buy cane from the canegrowers, their purchases were not made under agreements and were not taxable under Entry 54 List II having regard to Gannon Dunkerley 's case. It was further urged that the tax leviable under section 21 was not truly a purchase tax as it was levied with reference to weight of the goods, that it was levied with reference to use and was therefore a use tax, and that it was the entry of the goods into the factory that was sought to be taxed Articles 14 and 301 of the Constitution were also said to be contravened. Held: (1) There has been a gradual erosion of the laissez faire concept which prevailed in the nineteenth century. It is now realised that in the public interest persons exercising certain callings or having monopoly or near monopoly Powers should sometimes be charged with the duty to serve the public, and if necessary, to enter into contract& The canegrowers scattered in the villages had no real bargaining power. In the unequal contest between the canegrowers and the factory owners, the law stepped in and compelled the factory to enter into contracts of purchase of cane offered by the canegrowers on prescribed terms and conditions. [713 C.F.]. Under Act 45 of 1961 and the Rules framed under it, the canegrower in the factory zone is free to make or not to make an offer of sale of cane to the occupier of the factory. But if he makes an offer, the occupier of the factory is bound to accept it. The resulting agreement is recorded in writing and is signed by the parties. The consent of the occupier of the factory is free as defined in section 14 of the Indian Contract Act. The compulsion of law is not coercion as 706 defined in section 15 of the Act. The, agreements are enforceable by law and are contracts of sale as defined in section 4 of the Indian Sale of Goods Act. The purchases of sugarcane under the agreement can be therefore taxed by the State Legislature under Entry 54 List II. Section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961 is accordingly not ultra vires. [712 F H]. State of Madras vs Gannon Dunkerley & Co. ; and New India Sugar Mills Ltd., vs Commissioner of Sales Tax, Bihar, [1963] Supp. 2 S.C.R. 459, distinguished and explained. Lane vs Cotton, ; E.R. 17, Kirkness vs John Hudson & Co. Ltd. and Ridge Nominees vs I.R.C. , referred to. The Indian Steel & Wire Products Ltd., vs The State of Madras, ; , relied on. (ii) Purchase tax need not always be levied with reference to price of goods or with reference to turnover. It may be levied on the occupier of a factory by reference to the weight of the goods purchased by him. [717 C E]. It cannot he accepted that a purchase tax must be always levied on goods generally and never with reference to their use, consumption or sale. Under List II Entry 54 the State Legislature is not bound to levy a tax on all purchases of cane. It may levy a tax on purchases of cane required for use, consumption or sale in a factory. The tax so levied is not a use tax. [717 F 718 B]. McLeod vs Dilworth & Co. ; and C. G. Naidu & Co. vs State of Madras, A.I.R. 1953 Mad. 116, referred to. The tax under section 21 is not a levy on the (entry of goods into the factory. Cane cultivated by the factory and entering it cannot be taxed under the section. [718 G]. Diamond Sugar Mills Ltd., and Anr. vs State of Uttar Pradesh and Anr. , ; , referred to. (iii) Section 21 does not impede free trade, commerce and intercourse and therefore does not offend article 301 of the Constitution. The tax levied under section 21 does not discriminate against any imported cane. [719 E 720 A]. A. T. Mehtab Majid and Co. vs State of Madras, [1963] Supp. 2 S.C.R. 435, Atiabari Tea Co ' Ltd., vs State of Assam (Rajasthan) Ltd., vs State of Rajasthan, [1963] 1 S.C.R. 491, referred to. (iv) The differential treatment of factories producing sugar by means of vacuum pans, khandsari units producing sugar by the open pan process and canegrowers using cane for the manufacture of jaggery is reasonable and has a rational relation to the object of the Act. There is thus no violation of article 14 of the Constitution. [720 G H]. Nor does discrimination result from the exemption under section 21(3) of factories which are new or which in the opinion of the Government have substantially expanded. The exemption is based on legitimate legislative policy. The question whether the exemption should be granted to a factory and if so for what period and the question whether a factory has substantially expanded and if so the extent of such expansion have to be decided with reference to the facts of each individual case. It is not possible for the State 707 Legislature to examine the merits of individual cases and the function was properly delegated to the State Government. The legislature was not obliged to prescribe a more rigid standard for the guidance of Government. [721 A C].

vil Appeal Nos. 2403 05 of 1989 From Orders Nos. 568 to 570/88 A dated 31.10.1988 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. C/A. No. 808 to 810 of 1987 A and C/Misc. No. 390 of 1987 A. S.K. Dholakia and S.K. Kulkarni for the Appellant. Kapil Sibal, Additional Solicitor General, P. Parmeswa ran and Mrs. R. Rangaswamy for the Respondent. The Judgment of the Court was delivered by KASLIWAL, J. All these appeals under Sec. 130(e) of the (hereinafter referred to as the Act) are directed against the common order made by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi dated 31.10.88 in C.A. Nos. 808 to 8 10/87 A. Brief facts of the case are that M/s. Sharp Business Machines (Pvt.) Ltd., Bangalore (hereinafter referred to as the company) is a small scale manufacturing unit duly regis tered as such since 1984. The company had started the phased manufacture of plain paper copiers and obtained a licence in this regard dated 25.11.86 for Rs.4,94,500 from the licens ing authority. The company imported components and consuma bles in SKD/CKD for plain paper copiers. Three consignments were imported from M/s. Paralax Industrial Corp., Hongkong under airways bill numbers 098, 4960, 3120; 098, 4960, 3116; and 098, 4960, 3105 all dated 21.1.87. The goods were re ceived at the air cargo complex, Bangalore. The company sought the clearance of the imported goods under bills of entry Nos. 2044, 2045 and 2046 all dated 3.2.87. Similarly, the goods were also imported from M/s. Alpha Papyrus Trading Co. Pvt. Ltd., Singapore under airway bill No. 098 4925 4914 dated 19.2.87. the clearance for this consignment was sought under bill of entry No. 4993 dated 11.3.87. The company had declared the value of each of the consignments at Rs.32,182 Rs.43.359), Rs.5,412 and Rs.18,659 respectively in respect of the above mentioned bills of entry Nos. 2044, 2045. 2046 and 4993. The total value declared was Rs.99,612 under all the four bills. 32 Proceedings were held before the Appraiser of Customs air cargo complex Bangalore for verification of the goods and their valuation etc. and the statements of the company 's Managing Director Sh. Sadanand were also recorded on 11.2.87.10.3.87 and 18.3.87 under Sec. 108 of the Act. The Collector of Customs issued a notice to the company under Sec. 124 of the Act on 4.3.87 relating to the first consign ment. In the said notice it was stated that 4 items were not covered by the licence and the same were liable for confis cation. However. on 30.3.87 the Collector issued another notice in supersession of the earlier notice dated 4.3.87. Notice was also issued on the same date in respect of bill of entry dated 11.3.87. By the said notices the Collector proposed to enhance the value of the goods imported and further proposed to confiscate the entire goods imported and also to levy a fine and other penalties. The company was accused of misdescription of the goods, misdeclaration of value, suppression of the relationship with the suppliers, suppression of the place of origin of goods etc. The Collector by his order dated 13.4.87 decided all the points against the company. The Collector held that the quotations given by M/s. Shun Hing Technology Ltd. along with the application for approval of their PMP during July 1986 should be taken as the correct value of the goods imported. and the plea of the company that it had received a special discount in view of the bulk purchases and promise of future purchases was not accepted. The Collector in these circumstances determined the price of the goods at Rs.7,15,485 for the purposes of Sec. 14(1) of the Act. The Collector thus held that there was a misdeclaration of the value to the tune of Rs.6,15,873 and the duty payable there on would be Rs.10.96,228.20p. The Collector further held that the entire goods imported were liable to confiscation under Sec. 111(m) of the Act. The Collector also held that the goods imported were fully finished copiers in SKD/CKD form and as such there was a misdeclaration that the import ed goods were only parts of the copiers. The Collector also held that description of most of the items in the invoices had been deliberately manipulated to suit the description in the licence. The goods covered by three bills 2044, 2045 and 2046 were held to be one consignment and one AWB and thus viewed as one consignment, it amounted to the import of ten copiers. The goods imported under the 4th bill No. 4993 were four fully finished copiers in SKD/CKD form. The Collector further held that in terms of note (i) to Imports Control Order. 1955 and Customs Tarrif Act, 1975, these goods will be deemed to be filly assembled copiers for the purpose of valuation and licence. Thus the goods imported as 33 fully assembled copiers were not permissible to be imported and this was a clear violation of the Act and the terms of the licence. It was also held in the alternative that even if all the parts imported were viewed individually, none of the items tally with the licence. The Collector in this regard gave detailed reasons for arriving at this conclu sion. The Collector also held that the value of the parts imported for the purposes of Sec. 14(1) of the Act would be Rs.5,63,332 whereas the importers were permitted to import goods worth Rs.4,94,500. There was thus an excess of Rs.68,832 and as such the goods were liable to confiscation under Sec. III(d) of the Act. The Collector in these circum stances passed an order for confiscation of the entire goods with an option to the company to redeem them on payment of a fine of Rs.3 lacs. The Collector also imposed a fine of Rs.1 lac on the company and Rs. 1 lac on Sh. Sadanand the Manag ing Director of the Company. The company filed two appeals aggrieved against the common order of the Collector relating to both the notices and a separate third appeal was preferred by the Managing Director before the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal dismissed all the three appeals by a common order dated 31.10.88. The company and the Managing Director aggrieved against the order of the Tribunal have filed the above mentioned three appeals before this Court. One of the arguments raised before the Tribunal was that the Collector erred in treating SKD/CKD parts of the copiers imported, as assembled copiers, for the purpose of Schedule I to the Imports (Control) Order. 1955 and the case Union of India vs Tarachand Gupta & Bros., ; applied on all force to the instant case. The Tribunal in this regard set aside the finding recorded by the Collector and placing reliance on a decision of the Calcutta High Court in Collector of Customs, Calcutta vs Misuny Electronic Works, held that one has to look into the re spective licence and not to the fact that if all the con signments covered by all the bills of entry are assembled together, there will be complete machines. The Tribunal, however, upheld the other findings recorded by the Collector to the effect that even if all the imported parts contained in SKD/CKD packs of copiers were viewed individually the licence produced was not valid for any of the items import ed. Tribunal thus held that the Collector was right in holding that the imported goods were not covered by the valid licence. The Tribunal also held that the Collector was right in rejecting the price shown by the company in the invoices. The Tribunal also rejected the contention made by the counsel for the 34 company that the valuation made by the Collector was exorbitant. As regards the question of imposing fine and penalty also the Tribunal found the order of the Collector as correct. and did not find any cogent reason to interfere in the order of the Collector. We have heard Mr. Dholakia for the appellants and Mr. Kapil Sibley learned Addl. Solicitor General for the re spondents. It was argued by Mr. Dholakia that the Tribunal commit ted a serious error in holding that the invoices submitted by the company were undervalued and could not be relied upon for determining the correct value of the goods imported. It was contended that the Collector Customs was not correct in determining the value of the imported goods on the basis of the quotations of M/s. Shun Hing Technology Ltd., Hongkong. The quotation of Shun Hing indicated prices at Hongkong and not the place of importation. There was no other material on record to determine the value of the imported goods. It was thus contended that in the absence of any other relevant material, the invoice price has to be taken as the basis for valuation. It was also submitted that there was no justifi cation in discarding the price shown in the invoices which contained the correct value of the goods imported and in case of Customs authorities were not placing reliance on such prices mentioned in the invoices. then the burden lay on the Customs department to find out the correct value of the goods by collecting material and other adequate evidence before enhancing the value of the imported goods. The onus to prove the charge of undervaluation against the company was on the Customs department and the evidence relied upon by them, as contained in the adjudication order. is not at all sufficient to discharge that onus. It was further argued that any reliance placed on the quotations furnished at the time of submitting the application for grant of licence was wholly erroneous. At the time of submitting the application for grant of licence the prices are quoted for fixing the upper limit of the value of the licence. When the actual purchase transactions were entered into, the company negoti ated for the price and having regard to the quantum of purchase and the prospects of future sales, the company was given 25% , ' count by the suppliers. It was also submitted that the prices quoted by M/s. Shun Hing Technology Ltd., Hongkong were not the value of the components imported by the company in SKD/CKD form of plain paper copiers. Thus any price quoted by M/s. Shun Hing can never form any basis for arriving at a proper and correct valuation of the goods imported by the company in the present case. 35 On the other hand it was submitted by the learned Addl. Solicitor General that it has been admitted by Sh. P.N. Sadanand, Managing Director of the company in his statement dated 10.3.87 that the goods imported in the present case by the company were of Japanese origin and manufactured by M/s. Matushita Electric Company Ltd., Japan. M/s. Shun Hing Technology Ltd., Hongkong were the authorised agents of M/s. Matushita Electric Co. Ltd., Japan, who are the manufactur ers of Panasonic copies. He further admitted that normally the Panasonic copies were supplied to Hongkong in fully assembled form and then they were dismantled in Hongkong by the agents and thus supplied in India in SKD/CKD form. Sadanand admitted to have visited Hongkong during January, 1987 alongwith his Engineer Sh. K.S. Radhakrishan for pur chase of 10 copiers 6 Nos. Model EP 1300 and 4 Nos. Model EP 2625 and that he alongwith the Engineer dismantled the fully assembled copiers. It was submitted that the goods contained in the cartons comprised of all the parts required for full and complete assembly of copiers. At the time of examination of the goods covered by Bill of Entry No. 4993 dated 11.3.87, it was found that out of the six cartons, four cartons were the original cartons used for packing fully finished/assembled copiers Model EP 2625. The descrip tion, model number, brand, manufacturer and country of origin/manufacture of the copier (viz. Plain Paper Copier EP 2625 Panasoni, Matushita Electric Co. Ltd. and Japan respec tively) were clearly marked on these four cartons, one set of cassettes, trays, covers, one drum, one developer unit and a bottle of developer. It was thus argued that the original packing cartons used for packing fully finished copiers are normally supplied only if fully finished copiers are purchased. It was submitted that the adjudicating au thority has given detailed reasons for showing that the goods imported were not components of plain paper copiers as declared. In fact, the company had purchased 14 fully fin ished copiers 10 in Hongkong and 4 in Singapore and had then dismantled for importing the same in the guise of components of copiers. The company had submitted application for ap proval of their phased manufacturing programme to the Devel opment Commissioner, Small Scale Industries Govt. of India, New Delhi in July, 1986 and alongwith this application they had also submitted the quotations received by them from M/s. Shun Hing Technology Ltd., Hongkong which covered all the items imported except a few items like toner, drum and table for model FP 2625. The company in the present case not only violated the terms and conditions of licence but also com mitted a complete fraud in importing fully finished copiers which was a totally prohibited item, in the guise of sepa rate components and accessories by dismantling the fully finished copiers. In the above 36 circumstances the adjudicating authority was fully justified in not believing the value mentioned in the invoices and in placing reliance on the prices mentioned in the quotations given by M/s. Shun Hing Technology Ltd., Hongkong. It was further argued by Mr. Sibbal that the prices quoted by M/s. Shun Hing were based on the prices given by the manufactur ers i.e. M/s. Matushita Electric Co. Ltd., Japan and there was no question of supplying the components of the copiers on a lesser price than given by the manufacturers them selves. The company had a special relationship with M/s. Shun Hing Technology Ltd., Hongkong as a sort of collabora tor with no formal agreement and that M/s. Paralax Industri al Corp., Hongkong were in turn agents of M/s. Shun Hing Technology Ltd., Hongkong. We have considered the submissions made by learned counsel for the parties. Section 14 of the Act provides for valuation of goods for the purpose of assessment. Section 14(1) which is relevant for our purposes reads as under: 14. "Valuation of goods for purposes of assessment: (1) For the purposes of the (51 of 1975), or any other law for the time being in force whereun der a duty of customs is chargeable on any goods by refer ence to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale: Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50." According to the above provision the value of the goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation, in the course of interna tional trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. In the present case the 37 company itself had produced a copy of the quotations re ceived by them from M/s. Shun Hing Technology Ltd., Hongkong in respect of the copiers and other items imported alongwith their application for approval of their phased manufacturing programme. The company itself having produced these quota tions, they cannot dispute the correctness of the prices mentioned therein. The company has not only not disputed the correctness of these quotations but has not produced any other material on record to show that the value mentioned in the invoices was the correct market value of the goods imported at the relevant time. The adjudicating authority in these circumstances was perfectly justified in taking the prices mentioned in the quotations as a basis for determin ing the correct value of the imported goods. Mr. Dholakia next contended that the Tribunal itself had set aside the finding of the adjudicating authority on the question of treating SKD/CKD packs of the copiers imported comprised of all the 100% components of copiers. The company had tried to practice a fraud in defeating the import policy itself. The intention and purpose of the import policy was to give incentive and encouragement to the new entrepreneurs establishing small scale industries and in the first phase to import 62% of the components of the copiers and the balance of 38% was to be manufactured by them indigenously. According to the import policy this percentage of 62% was to be reduced in the subsequent years. The import policy was not meant for such entrepreneurs who instead of importing 62% of the components, imported 100% of the components of a fully finished and complete goods manufactured by a foreign country. It is an admitted position that fully finished plain paper copiers were a prohibited item for import and thus the device adopted by the company in the present case was a complete fraud on the import policy itself. Apart from the above circumstances in our view the Tribunal was not right in setting aside the finding of the adjudicating authority and in taking the view that one has to look into the respective licence and not to the fact that if all the consignments covered by all the bills of entry assembled together, there will be a full and complete machinery. It is an admitted position that goods covered by the three bills of entry Nos. 2044, 2045 and 2046 were all dated 3.2.87 and had been shipped from Hongkong on the same day i.e. on 21.1.87. The entire goods had arrived on the same day and by the same flight on 30th January, 1987. The goods covered under the three bills of entry have been supplied by the same supplier viz. M/s. Paralax Industrial Corp., Hong kong. The goods covered by these bills of entry are ten numbers 38 copiers in SKD/CKD condition, accessories, spares, consuma bles and excess items. The goods covered by the 4th bill of entry are four numbers copiers in SKD/CKD condition and consumables. the licence produced is valid for certain components and is not valid for fully assembled copiers. The fully assembled copiers are the end products of the import ers and hence cannot be imported by them. Plain Paper Copi ers are electronic equipments. The case Union of India vs Tara Chand Gupta & Bros. (supra) lends no assistance to the appellants in the facts and circumstances of the present case. In the above case Tara Chand & Bros. held an import licence dated July 10, 1956 permitting them to import parts and accessories of motorcycles and scooters as per Appendix XXVI of the Import Policy Book for July December, 1956. Under the said licence, the respondents in that case imported certain goods which arrived in two consignments, each containing 17 cases by two different ships. According to the respondents, the goods so imported by them were motorcycle parts which their licence authorised them to import. The Customs authorities, on the contrary held, on the examination of the goods, that they constituted 51 sets of "Rixe Mopeds complete in a knocked down condition". After holding an inquiry the Deputy Collec tor directed confiscation of the said goods with an option to the respondents to pay certain sums in lieu of confisca tion and also personal penalties. That order was passed on the basis that the goods imported were not parts and acces sories of motorcycles and scooters presumably under entry 295 of the Schedule to the Import (Control) Order but were motorcycles/scooters in completely knocked down conditions, prohibited under remark II against entry 294, a licence in respect of goods covered by it would authorise import of motorcycles and scooters. The Deputy Collector held that though the goods were not in completely knocked down condi tion it made no difference as the tyres, tubes and saddles were easily obtainable in India and their absence did not prevent the machines being otherwise complete. He also found that there was a trade practice under which traders were supplying motorcycles without tyres, tubes and saddles unless the purchaser specially asked for these parts. Ac cording to him the goods could not be regarded as spare parts but were "Moped in disassembled condition. " The re spondents in the above case filed a civil suit and the matter went in appeal to the High Court. The Letters Patent Bench of the High Court held that the Collector 's jurisdic tion was limited to ascertain whether or not the goods imported by the respondents were spare parts and accessories covered by entry 295 in respect of which they undoubtedly held the licence, and therefore, he could not have 39 lumped together the two consignments which. though imported under one licence, arrived separately and were received on different dates and could not have come to the conclusion that the plaintiffs had imported 51 "Rixe" Mopeds in com pletely knocked down condition. The respondents were enti tled to import the said goods and therefore. Section 167(8) of the Sea did not apply and the respondents consequently could not have been held guilty of breach either of that Section or Section 3 of the Imports & Exports (Control) Act. It was further held that the decision of this Court in Girdhari Lal Bansi Dhar vs Union of India, ; did not over rule but only distinguished judgment in D.P. Anand vs Mls. T.M, Thakore & Co., C.A. No. 4/1959 decided on August 17, 1960 (H.C.) and therefore, the binding force of that decision remained unshaken. The Union of India came in appeal to this Court by grant of certificate. This Court held as under: "Under entry 295, except for rubber tyres and tubes for whose import a separate licence could be obtained under entry 41 of Part V, there are no limitations as to the number or kind of parts or accessories which can be imported under a licence obtained in respect of the goods covered thereunder. Prime facie, an importer could import all the parts and accessories of motor cycles and scooters and it would not be a ground to say that he has committed breach of entry 295 or the licence in respect of the goods described therein, that the parts and accessories imported. if assem bled, would make motor cycles and scooters in CKD condition. 3There are no remarks against entry 295. as there are against entry 294, that a licence in respect of goods cov ered by entry 295 would not be valid for import of spares and accessories which, if assembled, would make motor cycles and scooters in CKD condition. Apart from that, the goods in question did not admittedly contain tyres. tubes and sad dles, so that it was impossible to say that they constituted motor cycles and scooters in CKD condition. The first two could not be imported and were in fact not imported because that could not be done under the licence in respect of goods covered by entry 295 which expressly prohibited their import and a separate licence under entry 41 of Part V would be necessary. The third, namely. saddles were not amongst the goods imported. No doubt, there was, firstly, a finding by the Collector that a trade practice prevailed under which motor cycles and scooters 40 without tyres, tubes and saddles could be sold. Secondly. the tyres and tubes could be had in the market here and so also saddles, so that if an importer desired, he could have sold these goods as motor cycles and scooters in CKD condi tion. The argument was that since there was a restriction in entry 294 against imports of motor cycles and scooters in CKD condition, the importer could not be allowed to do indirectly what he could not do directly. The argument apparently looks attractive. But the question is what have the respondents done indirectly what they could not have done directly. In the absence of any restrictions in entry 295, namely, that a licence in respect of goods covered by entry 295 would not be valid for import of parts and accessories which. when taken together. would make them motor cycles and scooters in C.K.D. condition. the respond ents could import under their licence all kinds and types of parts and accessories. Therefore, the mere fact. that the goods imported by them were so complete that when put to gether would make them motor cycles and scooters in C.K.D. condition. would not amount to a breach of the licence or of entry 295. Were that to be so, the position would be anoma lous as aptly described by the High Court. Suppose that an importer were to import equal number of various parts from different countries under different indents and at different times, and the goods were to reach here in different con signments and on different dates instead of two consignments from the same country as in the present case. If the conten tion urged before us were to be correct, the Collector can treat them together and say that they would constitute motor cycles and scooters in C.K.D. condition. Such an approach would mean that there is in entry 295 a limitation against importation of all parts and accessories of motor cycles and scooters. Under that contention, even if the importer had sold away the first consignment or part of it, it would still be possible for the Collector to say that had the importer desired it was possible for him to assemble all the parts and make motor cycles and scooters in C.K.D. condi tion. Surely, such a meaning has not to be given to entry 295 unless there is in it or in the licenee a condition that a licensee is not to import parts in such a fashion that his consignments, different though they may be, when put togeth er would make motor cycles and 41 Scooters in C.K.D. condition. Such a condition was advisedly not placed in entry 295 but was put in entry 294 only. The reason was that import of both motor cycles and scooters as also parts and accessories thereof was permitted, of the first under entry 294 and of the other under entry 295. A trader having a licence in respect of goods covered by entry 294 could import assembled motor cycles and scooters, but not those vehicles in C.K.D. condition, unless he was a manufacturer and had obtained a separate licence therefore from the Controller of Imports who, as aforesaid. was autho rised to issue such a licence on an ad hoc basis. Thus the restriction not to import motor cycles and scooters in C.K.D. condition was against an importer holding a licence in respect of goods covered by entry 294 under which he could import complete motor cycles and scooters and not against an importer had a licence to import parts and acces sories under entry 295. If Dr. Syed Mohammad 's contention were to be right we would have to import remark (ii) against entry 294 into entry 295, a thing which obviously is not permissible while construing these entries. further, such a condition, if one were to be implied in entry 295, would not fit in, as it is a restric tion against import of motor cycles and scooters in C.K.D. condition and not their parts and accessories. There is, therefore, no question of a licensee under entry 295 doing indirectly what he was not allowed to do directly. What he was not allowed to do directly was importing motor cycles and scooters in C.K.D. condition under a licence under which he could import complete motor cycles and scooters only. That restriction, as already observed, ' applied to a licen see in respect of goods described in entry 294 and not a licensee in respect of goods covered by entry 295. The result is that when the Collector examines goods import ed under a licence in respect of goods covered by entry 295 what he has to ascertain is whether the goods are parts and accessories, and not whether the goods, though parts and accessories, are so comprehensive that if put together would constitute motor cycles and scooters in C.K.D. condition. Were he to adopt such an approach, he would be acting con trary to and beyond entry 295 under 42 which he had to find out whether the goods imported were of the description in that entry. Such an approach would, in other words, be in non compliance of entry 295." This Court distinguished the case of Girdhari Lal Bansi Dhar (supra) by making the following observation: "It will be noticed that the Bombay decision in D.P. Anand 's case was not dissented from but only distinguished, and therefore, the High Court in the present case was justified in following it. It is true, however, that counsel for the appellant there relied on that decision in support of his proposition that a ban on completed article cannot be read as a ban on the importation of its constituents, which, when assembled, would result in the prohibited article, and this Court pointed out in answer that in D.P. Anand 's case, the imported components could not have when assembled, made up the completed article because of the lack of certain essen tial parts which admittedly were not available in India and could not be imported. The real distinction, however, be tween the two cases was that the decision of the Collector in D.P. Anand 's case was not, as was the decision in Gird bari Lal 's case under which of the two competing entries the imported goods fell but that the imported goods in question, if assembled together, would not be the goods covered by the entry, and therefore, not the goods in respect of which the licence was granted. Further, the articles in question, even when assembled together, were not prohibited articles as in Girdhari Lal 's case. Girdhari Lal case is clearly distin guishable because it is not as if motor cycles and scooters are prohibited articles as was the case there. The restric tion is not against licensees importing motor cycles and scooters under entry 294 and parts and accessories under entry 295 but against the licensees under entry 294 import ing motor cycles and scooters in CKD condition. The question in the instant case was not under which of the two entries, 294 or 295, the goods fell, but whether the goods were parts and accessories covered by entry 295. " In our view the Tribunal was not correct in placing reliance on the case Union of India vs Tara Chand Gupta & Bros. (supra) in the facts and circumstances of the present case. In the case before us the 43 import of fully assembled copiers was prohibited. The appel lant was only entitled to import 62% of the components. As already mentioned above, the device adopted by the appellant in the present case was a complete fraud on the Import Policy and the appellant was doing indirectly what he was not permitted to do directly. We are further of the view that the facts in the present case are more akin and similar to the facts of the case Girdhari Lal Bansi Dhar vs Union of India, (supra) which was distinguished in the case of Union of India vs Tara Chand Gupta & Bros. (supra). Mr. Dholakia also tried to assail the finding recorded by the Collector and upheld by the Tribunal and argued that the components imported by the appellant tallied with the parts which were permitted under the licence. We do not find any force in this submission. The Collector has given de tailed reasons for holding that the imported goods were not covered by the valid licence and the Tribunal having upheld such finding, the same cannot be challenged by the appellant before this Court. Mr. Dholakia also submitted that in the facts and cir cumstances of the case the order confiscating the goods and imposing fine and penalty both on the company and Sh. Sada nand, the Managing Director was too high and ought to be reduced. We find no force in this submission as well. This is a case where the appellant had not only violated the terms and conditions of the licence but also committed a fraud on the Import Policy itself. Thus we find no ground or justifica tion to reduce the penalty or fine. In the result we find no force in these appeals and the same are dismissed with one set of costs. P.S.S. Appeals dismissed.

Section 14(1) of the provides that where a duty of customs is chargeable on any goods by refer ence to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale. for delivery at the time and place of importation. in the course of international trade. The appellant company, a small scale manufacturer of plain paper copiers. had submitted. alongwith their applica tion for approval of the phased manufacturing programme, the quotations received by them from their foreign collaborators based in Hongkong in respect of the various components and obtained a licenee in this regard for Rs.4,94,500. Subse quently, they imported three consignments of components and consumables in SKD/CKD form from suppliers at Hongkong and another consignment from Singapore. The total value declared under the four bills of entry was Rs.99,612. The Collector of Customs found that the invoices submit ted by the company were undervalued and determined the price of goods at Rs.7,15,485 with reference to the quotations, for the purposes of section 14(1) of the Act. He thus held that there was a misdeclaration of value to the tune of Rs.6,15,873, that the duty payable thereon would be Rs.10,96,228.20 and that the entire goods were liable to confiscation under section 111(m) of the Act. He also held that the goods imported were fully finished copiers in SKD/CKI) form and as such there was a misdeclaration that the import ed goods were only parts of the copiers, that description of most of the items in the invoices had been deliberately manipulated to suit the description in the licence, that fully assembled copiers were not permissible to be imported and this was a clear violation of the Act and the terms of the licence. In the alternative he held that even if all the parts contained in SKD/CKD packs were 29 viewed individually, none of the items was covered by the licence. He further held that the value of the parts import ed for the purposes of section 14(1) of the Act would be Rs.5,63,332, whereas the importers were permitted to import goods worth Rs.4,94,500, that there was thus an excess of Rs.68,832 and as such the goods were liable to confiscation under section 111(d) of the Act. Consequently, he directed con fiscation of the entire goods with an option to the company to pay Rs.3 lakhs in lieu thereof and also Rs.2 lakhs in personal penalties. The Customs, Excise and Gold (Control) Appellate Tribunal dismissed their appeals. In these appeals under section 130(e) of the Act, it was contended for the appellants that the quotations had indi cated prices at Hongkong and not the place of importation, that at the time of submitting the application for grant of licence the prices were quoted for fixing the upper limit of the value of the licence, that when the actual purchase transactions were entered into the company negotiated for the price and having regard to the quantum of purchase and the prospects of future sales the company was given 25 per cent discount by the suppliers, and that in the absence of any other material on record the invoice price alone could form the basis of valuation of the imported goods. For the respondents, it was contended that the prices quoted by the collaborators were based on the prices given by the manufac turers. and there was no question of supplying the compo nents on a lesser price than given by the manufacturers themselves, that the goods imported were not components of plain paper copiers as declared, that the cartons in fact comprised of all the parts required for full and complete assembly of 14 copiers, that the company in importing them in the guise of separate components and accessories had not only violated the terms and conditions of the licence but also committed a complete fraud, that in the circumstances the adjudicating authority was fully justified in placing reliance on the prices mentioned in the quotations. Dismissing the appeals under section 130(e) of the Act, the Court, HELD: 1.1 According to section 14(1) of the for purposes of assessment the value of the imported goods is to be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation, in the course of interna tional trade, where the seller and the buyer have no inter est in the business of each other and the price is the sole consideration for the sale or offer for sale. [36G H] 1.2 In the instant case the appellant company itself had produced 30 a copy of the quotations received by them from their collab orators at Hongkong in respect of the copiers and other items imported, alongwith their application for approval of their phased manufacturing programme. They, therefore. could not dispute the correctness of the prices mentioned in the said quotations. Not only that, they have also failed to produce any other material on record to show that the value mentioned in the invoices was the correct market value of the goods imported at the relevant time. The adjudicating authority in these circumstances was perfectly justified in taking the prices mentioned in the quotations as a basis for determining the correct value of the imported goods. [37A C] 2.1 The goods covered by the three bills of entry dated 3rd February, 1987 had been shipped from Hongkong on the same day i.e. on 21st January, 1987. The entire goods had arrived on the same day and by the same flight on 30th January, 1987. These goods had been supplied by the same supplier. They comprised of ten numbers copiers in SKD/CKD condition, accessories, spares, consumables and excess items. The goods covered by the 4th bill of entry were four numbers copiers in SKD/CKD condition and consumables. If assembled together these would constitute full and complete copiers. The licenee produced was valid for certain compo nents and was not valid for fully assembled copiers. The appellant company was thus doing indirectly what they were not permitted to do directly under the licence. [37H; 38A B] Girdbari Lal Bansi Dhar vs Union of India, ; referred to. Union of India vs Tarachand Gupta & Bros., ; distinguished. 2.2 The intention and purpose of the import policy was to give incentive and encouragement to the new entrepreneurs establishing small scale industries and in the first phase to import 62% of the components of the copiers and the balance of 38% was to be manufactured by them indigenously. This percentage of 62% was to be reduced in the subsequent years. The import policy was not meant for such entrepre neurs who instead of importing 62% of the components, im ported 100% of the components of a fully finished and com plete goods manufactured by a foreign country. Fully fin ished plain paper copiers were the end product of the im porters and hence could not be imported by them. The device a, looted by the company in the instant case was thus a complete fraud on the import policy itself. [37D F] 31 2.3 The order confiscating the goods and imposing fine was, therefore, rightly made.

Civil Appeal No. 3133 of 1979 Appeal by special leave from the judgment and order dated the 30th July, 1979 of the Allahabad High Court in Sales Tax Revision No. 573 of 1979. 150 G.L. Sanghi, Bharat Ji Aggarwal, Naresh Kumar Sharma and Vineet Kumar for the appellant. S.C. Manchanda and Mrs. Sobha Dixit for the respondent. The Judgment of the Court was delivered by VENKATARAMIAH, J. The short point for consideration in this appeal is whether the expression 'cooked food ' used in certain notifications issued under the U.P. Sales Tax Act, 1948 (U.P. Act XV of 1948) (hereinafter referred to as 'the Act ') can be construed as including within its meaning 'biscuits ' also. The assessee, the appellant herein, is a registered firm engaged in the business of manufacture and sale of biscuits intended for human consumption. The assessee is a registered dealer under the Act. During the assessment proceedings under the Act for the year 1972 73 the assessee claimed that the turn over relating to biscuits manufactured and sold by it amounting to Rs. 35,09,920.38 P. was liable to be taxed at two per cent which was the rate prescribed by a notification issued by the State Government for cooked food contending that 'cooked food ' included 'biscuits ' also. The notification relied on was one issued on October 6, 1971 under subsection (2) of section 3 A of the Act in supersession of an earlier notification dated July 1, 1969. In both the notifications the tax was fixed at two per cent of the turn over payable at all points of sale in the case of cooked food. The Assistant Commissioner (Tax Assessment) Sales Tax, Kanpur who was the assessing authority rejected the contention of the assessee that cooked food included biscuits also and imposed tax at the rate of three and a half per cent on the turn over relating to biscuits treating the same as an unclassified commodity. An appeal filed against the order of the assessing authority before the Deputy Commissioner Sales Tax and a further appeal before the Judge (Appeal) Sales Tax, Lucknow were unsuccessful. The High Court of Allahabad also declined to interfere with the said order. This appeal by special leave is filed against the order of the High Court under Article 136 of the Constitution. The only ground urged before us is that biscuits should have been treated by the authorities under the Act and by the High Court as cooked food and sales tax should have been levied on the turnover of biscuits at the rate prescribed in respect of cooked food under the notification referred to above. The argument urged on 151 behalf of the appellant is that biscuit which was consumed by human being for nourishment is food and since it is prepared by baking which is a kind of cooking process it should be treated as cooked food. Relying on some foreign English dictionaries it is contended that cooking means preparation of food by application of heat as by boiling, baking, roasting, broiling etc. and biscuit should therefore be treated as cooked food. What is of significance in this case is that the Hindi version of the notification issued uses the expression cooked food (pakaya hua bhojan) for 'cooked food ' found in the notification in English language. It is a well settled rule of construction that the words used in a law imposing a tax should be construed in the same way in which they are understood in ordinary parlance in the area in which the law is in force. If an expression is capable of a wider meaning as well as narrower meaning the question whether the wider or the narrower meaning should be given depends on the context and the background of the case. In Hinde vs Allmond the question was whether tea was an "article of food" within the meaning of an Order designed to prohibit the hoarding of food namely Food Hoarding Order of 1917. The learned judges held it was not even though in some other decisions it had been held to be an "article of food". Shearman, J. one of the judges said that he rested his judgment on the common sense interpretation of the word 'food ' in the Order, apart from its meaning in any other statute '. It is interesting to note that in a case before the Allahabad High Court in Annapurna Biscuit Manufacturing Co. vs State of U.P. the assessee had contended that biscuit was an article of confectionery and that contention was negatived. It is relevant to note, as we have mentioned earlier, that when the Hindi text of the notification was issued contemporaneously with the English version, the words ( 'pakaya hua bhojan ') were used as the equivalent of the words 'cooked food '. It may be that biscuit is served at tea time and in its wider meaning 'cooked food ' may include biscuit. But ordinarily biscuit is not understood as cooked food. If a person goes to a hotel or restaurant and asks for some cooked food or cooked food ( 'pakaya hua bhojan ') certainly he will not be served with biscuits in Uttar Pradesh. While it is not necessary to state in the present case as to what all items may be called as cooked food, we can definitely say that in the context and background of the notification biscuit cannot be treated as cooked food. 152 The High Court of Allahabad has in an earlier case in Commissioner of Sales Tax vs Jassu Ram Bakery Dealer held that biscuit was not cooked food. The High Court of Madhya Pradesh has also taken the same view in Commissioner of Sales Tax Madhya Pradesh vs Shri Ballabhdas Iswardas. We approve of the views expressed in the aforesaid decisions. There is no ground to interfere with the orders under appeal. In the result, this appeal fails and is dismissed. No costs. S.R. Appeal dismissed.

Dismissing the appeal, the Court ^ HELD: 1. In the context and background of the notification "biscuit" cannot be treated as "cooked food". In the Hindi text of the notification, issued contemporaneously with the English version, the words (cooked food) were used as the equivalent for cooked food. Ordinarily biscuit is not understood as "cooked food". Nor any one asking for some "cooked food" in a hotel will be served with "biscuits" in Uttar Pradesh. The item has been correctly treated as "unclassified commodity" and tax levied accordingly. [151F,G,H] Commissioner of Sales Tax vs Jassu Ram Bakery Dealer, 38 S.T.C. 461; Commissioner of Sales Tax Madhya Pradesh vs Shri Bailabhdas Iswardas, 21 S.T.C. 309, approved. It is a well settled rule of construction that the words used in a law imposing a tax should be construed in the same way in which they are understood in ordinary parlance in the area in which the law is in force. If an expression is capable of a wider meaning as well as narrower meaning the question whether the wider or the narrower meaning should be given depends on the context and the background of the case. [151 C E] Hinde vs Allmond, , quoted with approval.

Civil Appeal Nos. 42 and 43 of 1961. Appeals by special leave from the judgments and orders dated September 7, 1960 of the Chief Commissioner, Pondicherry in Appeals Nos. 56 and 57 of 1960. WITH Petitions Nos. 297 and 298 of 1960. Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights. A. V. Viswanatha Sastri R. K. Garg, M.K. Ramamurthy, S.C. Agrawal and D. P. Singh, for the appellants/petitioners (In both the appeals and the petitions.) C. K. Daphtary, Solicitor General of India, B. Sen, B. R. L. Iyengar and T. M. Sen, for the 983 respondent No. 1 (in both the appeals) and respondents Nos. 1 and 2 (in both the petitions). A. section R. Chari, K. R. Choudhri and R. Mahalingier, for respondent No. 2 (in both the appeals). R. Gopalakrishnan, for respondent No. 3 (in both the petitions). December, 8. The Judgment of Gajendragadkar, Wanchoo and Ayyangar, JJ., was delivered by Ayyangar, J. The judgment of Sarkar and Das Gupta, JJ., was delivered by Sarkar, J. AYYANGAR, J. The two Civil Appeals are by special leave of this Court and the two Writ Petitions have been filed by the respective appellants seeking the same relief as in the appeals, the relief sought being the setting aside of orders passed by the Chief Commissioner of Pondicherry as the State Transport appellate authority (under the Motor Vehicles Act). All these four have been heard together because of a common point raised regarding the jurisdiction of this Court to entertain the appeals and the petitions. It is manifest that the preliminary point about the jurisdiction of this Court should have first to be considered before dealing with the merits of the contentions raised in the appeals and petitions. It might be convenient to state a few facts to appreciate the context in which the questions debated before us arise and the point concerned in the order now passed. Sivarama Reddiar the appellant in Civil Appeal 43 of 1961 and the petitioner in Writ Petition 298 of 1960, is a citizen of India and is engaged in the business of motor transport. By a notification dated December 27, 1958 in the Official Gazette of Pondicherry the State Transport Commission of Pondicherry invited applications for the grant of stage carriage permits to be submitted before February 27, 1959, including the route from Pondicherry to Karaikal, the latter being another 984 former French possession. In response to this notification, Sivarama Reddiar as well as one Gopal Pillai who is the second respondent to the appeal and the second respondent in the Writ Petition were two of the 19 persons who made applications for the grant of this permit to them. Before the State Transport Commission dealt with these applications, the Government of India in the exercise of its powers under section 4 of the published a notification in the Official Gazette of Pondicherry extending the provisions of the Indian as in force in Delhi to Pondicherry with effect from June 19, 1959. Rules 3(4) and 4 of this order promulgated under the provided: "3(4). Any Court, tribunal or authority required or empowered to enforce the said Act in Pondicherry may for the purpose of facilitating its application in relation to Pondicherry construe the said Act with such alteration not affecting the substance as may be necessary or proper with respect to the matter before the Court, tribunal or authority as the case may be. " Rule 4 effected a repeal of existing laws in these terms: "Repeal of existing laws: All laws in force in Pondicherry immediately before the commencement of the Order which correspond to the Act and the rules, notifications and 'Orders applied to Pondicherry by this order shall, except in so far as such laws relate to the levy of any fee, cease to have effect save as respects things done or omitted to be done before such commencement. " On July 21, 1959, the Chief Commissioner of Pondicherry, in exercise of the powers conferred on him by section 44 of the constituted a State Transport Authority for Pondicherry The 985 State Transport Authority, Pondicherry thus created, issued a notification on August 1, 1959 by which it required persons who had applied for Stage Carriage permits in response to the notification dated December 27, 1958 to furnish particulars with regard to a number of matters which were relevant for being considered for the grant of a Stage Carriage permit under the . Both the appellant petitioner Sivarama Reddiar as well as inter alia the respondent Gopal Pillai furnished the required particulars. The Particulars supplied by the parties were checked and verified by designated authorities and thereafter the State Transport Authority by an order on April 30, 1960 directed the grant of the permit to the appellant petitioner Sivarama Reddiar rejecting the claims of all others including the respondent Gopala Pillai. Though the which had been extended to Pondicherry included section 64, whereby persons aggrieved by an order of a State Transport Authority could file appeals against such order, no appellate authority had been constituted by the Chief Commissioner. This situation was remedied by a notification by the Chief Commissioner dated May 4, 1960 whereby he constituted himself under section 68 of the Act as the appellate authority for the purpose of exercising jurisdiction under section 64 thereof. Several of the aggrieved operators including Gopala Pillai preferred appeals to the Chief Commissioner. By an order dated September 5, 1960 the Chief Commissioner, Pondicherry allowed the appeal of the respondent Gopala Pillai, set aside the order of the State Transport Authority granting the permit to the appellant Sivarama Reddiar and directed that the permit for the route Pondicherry to Karaikal be issued in favour of the respondent Gopala Pillai. Writ Petition 293 of 1960 has been filed to secure the setting aside of this order of the Chief Commissioner on the ground that the order violates the fundamental rights guaranteed to the petitioner by 986 of the Constitution and Civil Appeal No. 43 of 1961 is directed to obtain the same relief. It is not necessary at this stage to set out the facts of the other appeal and petition by Masthan Sahib, because except that the route is different and so, are the grounds on which the order of the Chief Commissioner is sought to be impugned, the other material facts relevant for the consideration of the preliminary point to which we adverted are exactly the same. The preliminary objection that is raised to the entertainment of the appeal is shortly as follows: article 136 (1) of the Constitution under which the appellant has obtained special leave reads: "136 (1). Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India. " In order, therefore, that this Court might have jurisdiction to entertain the appeal it is a prerequisite that the Court or tribunal from whose judgment or order the appeal is preferred should be one in the territory of India. It is urged on behalf of the respondent that Pondicherry is not part of the territory of India, with the consequence that the Chief Commissioner whose order is impugned in the appeal is not "a Court or tribunal in the territory of India. " The question thus raised is of great political and constitutional significance and it is not disputed that if this area were not part of the territory of India, this Court would have no jurisdiction in the absence of any legislation by Parliament under article 138 (1), and the Civil Appeal would have to be dismissed as incompetent. It was common ground that this was the position in regard to the maintainability of the appeal 987 but in regard to the Writ Petition Mr. Vishwanatha Shastri learned Counsel for the petitioner sought to sustain its maintainability on slightly different grounds. He invited our attention to the terms of article 12 of the Constitution which reads: "In this Part, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India." Learned Counsel pointed out that for the purpose of the exercise of this Court 's powers under article 32 of the Constitution for the enforcement of the fundamental rights its jurisdiction was not limited to the authorities functioning within the territory of India but that it extended also to the giving of directions and the issuing of orders to authorities functioning even outside the territory of India, provided that such authorities were subject to the control of the Government of India. This submission appears to us well founded and that the powers of this Court under article 32 of the Constitution are not circumscribed by any territorial limitation. It extends not merely over every authority within the territory of India but also those functioning outside provided that such authorities are under the control of the Government of India. The power conferred on this Court by Part III of the Constitution has, however, to be read in conjunction with article 142 of the Constitution which reads: "142 (1) The Supreme Court in the exercise of the jurisdiction may pass such decree or makes such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or order so made shall be enforceable throughout the territory 988 of India in such manner as may be prescribed by or under any law made by Parliament and until provision in that behalf is so made, in such manner as the President may by order prescribe. (2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respects the whole of the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself. " It would be seen that article 142 brings in a limitation as regards the territory which the orders or directions of this Court could be enforced. It is manifest that there is an anomaly or a discordance between the powers of this Court under article 32 read with article 12 and the executability or enforceability of the orders under article 142. It is possible that this has apparently arisen because the last words of article 12 extending the jurisdiction of this Court to authorities "under the control of the Government of India" were added at a late stage of the constitution making while articles 142 and 144, the latter reading: "All authorities, civil and judicial, in the territory of India shall act in aid of the Supreme Court". were taken, in whole or in part, from section 210 of the Government of India Act, 1935 and that no necessary changes were made in article 142 to bring it into line with article 12 as it finally emerged and the powers of this Court under article 32. But this however offers us no solution to the question which is whether, in view of the limitation imposed by article 142 on the area within which alone the directions or orders of this Court could be directly 989 enforced, the Court could issue a writ in the nature of certiorari or other appropriate writ or direction to quash a quasi judicial order passed by an authority outside the territory of India, though such authority is under the control of the Government of India. If the order of the authority under the control of the Government of India but functioning outside the territory of India was of an executive or administrative nature, relief could be afforded to a petitioner under article 32 by passing suitable orders against the Government of India directing them to give effect to the decision of this Court by the exercise of their powers of control over the authority outside the territory of India. Such an order could be enforceable by virtue of article 144, as also article 142. But in a case where the order of the outside authority is of a quasi judicial nature, as in the case before us, we consider that resort to such a procedure is not possible and that if the orders or directions of this Court could not be directly enforced against the authority in Pondicherry, the order would be ineffective and the Court will not stultify itself by passing such an order. In these circumstances it becomes imperative that we should ascertain the constitutional and political status of Pondicherry in relation to the Union of India. Certain documents have been placed before us and in particular an agreement dated October 21, 1954 entered into between the Government of India and of France by which the administration of Pondicherry was ceded to the Government of India. Mr. Viswanatha Sastri learned Counsel for the appellant petitioner contended that on the terms and conditions contained in this agreement, Pondicherry was a part of the territory of India. On the other hand, Mr. Chari learned Counsel for the respondents urged that the reservations contained in the agreement were such as to preclude the Court from reaching the conclusion 990 that there had been a transfer of complete sovereignty, which according to him was necessary in order to constitute the area as part of the territory of India. The learned Solicitor General who appeared in response to the notice to the Union of India, submitted that the Union Government was agreeable to the respective contentions urged by the parties being decided by the Court. We have considered the matter urged before us with great care and desire to make the following observations: So far as the Constitution of Indian is concerned, we have an express definition of what the phrase "territory of India" means. article 1 (3) enacts: "1. (3) The territory of India shall compromise (a) the territories of the States; (b) the Union territories specified in the First Schedule; and (c) such other territories as may be acquired. " There might be little difficulty about locating the territories which are set out in cls. (a) & (b) but when one comes to (c) the question arises as to when a territory is "acquired" and what constitutes "acquisition". Having regard to the subject dealt with, the expression "acquired" should be taken to be a reference to "acquisition" as understood in Public International Law. If there were any public notification assertion or declaration by which the Government of this country had declared or treated a territory as part and parcel of the territory of India, the Courts would be bound to recognise an "acquisition" as having taken place, with the consequence that that territory would be part of the territory of the Union within Art.1(3)(c). In the present case, we have this feature that the administration of the territory is being conducted under the powers vested in the Government under the . The preamble to that Act recites that it was: 991 "An Act to provide for the exercise of certain foreign jurisdiction of the Central Government". and accordingly the expression "foreign jurisdiction" is defined in its section 2(a) to mean "the jurisdiction which the Central Government has for the time being in or in relation to any territory outside India. " Thus this would prima facie show that Pondicherry has not been "acquired" but still continues to be outside the territory of India. In our opinion, however, though this might be very strong evidence that the territory has not been "acquired" and so not part of the "territory of India", it is still not conclusive. In this state of circumstances two courses would be open to us: (1) to decide for ourselves on the material that has been placed before us in the shape of the agreement between the two Governments etc. Whether Pondicherry has been "acquired" so as to become part of the territory of India, or (2) to invoke the assistance of the Government of India by inviting them to state whether the territory has been acquired within article 1(3) of the Constitution and whether Pondicherry is thus now part of the "territory of India". We originally proposed to avail ourselves only of the procedure indicated in s.6 of the which enacts: "6. (1) If in any proceeding, civil or criminal, in a Court established in India or by the authority of the Central Government outside India, any question arises as to the existence or extent of any foreign jurisdiction of the Central Government, the Secretary to the Government of India in the appropriate department shall, on the application of the Court, ' send to the Court the decision of the Central Government on the question, and that decision shall for the purposes of the proceeding be final. 992 (2) The Court shall send to the said Secretary in a document under the seal of the Court or signed by a Judge of the Court, questions framed so as properly to raise the question, and sufficient answers to those questions shall be returned to the Court by the Secretary and those answers shall on production thereof be conclusive evidence of the matters therein contained." But the learned Solicitor General very properly pointed out that an answer to the question which could be referred under this provision would relate merely to "the existence or extent of jurisdiction" and that information on these points might not be sufficient to solve the problem posed by the preliminary question raised in the appeals and petitions as to whether Pondicherry is a part of the "territory of India" or not. We agree with the learned Solicitor General that information relating to the "existence or extent" of the jurisdiction exercisable by the Union Government in the territory might not completely solve the question for our decision as to whether Pondicherry is part of the territory of India or not, but still if the extent of the jurisdiction vested in the Union Government by the arrangements entered into between the two Governments virtually amounts to a transfer of sovereignty for every practical purpose, it would be possible to contend that such a transfer or cession was so incompatible with the existence of any practical sovereignty in the French Government as to detract from the surrender or transfer being other than complete. It is for this reason that we consider it proper to exercise the powers vested in the Court under section 6 of the . It would be observed from what has been stated above that it would be more satisfactory and more useful for the disposal of the proceedings 993 before us if we ascertain from the Union Government an answer to the question whether they do or do not consider that Pondicherry is part of the territory of India. We have only to add that on the decisions in England, the Court has jurisdiction to invite the Government to assist it by information as to whether according to Government any territory was part of Her Majesty 's Dominion or not (vide The Fagernes L. R. 1927 Probate 311). Besides, the learned Solicitor General agreed that the Government would assist us by answering our reference. In view of the matters set out above we direct that the following questions shall be forwarded to the Union of India under the seal of this Court for the submission of their answers: (1) Whether Pondicherry which was a former French Settlement is or is not at present comprised within the territory of India as specified in article 1(3) of the Constitution by virtue of the Articles of the Merger Agreement dated October 21, 1954 between the Governments of India and France and other relevant agreements, arrangements, acts and conduct of the two Governments. (2) If the answer to Question 1 is that Pondicherry is not within the territory of India, what is the extent of the jurisdiction exercised by the Union Government over the said territory and whether it extends to making all and every arrangement for its civil administration, its defence and in regard to its foreign affairs. The Government of India might also state the extent of jurisdiction which France possesses over the area and which operates as a diminution of the jurisdiction ceded to or enjoyed by the Government of India. On the receipt of the answers to these questions the appeals will be posted for further hearing. SARKAR J. Four matters came up for hearing together. Two of these are appeals brought with leave 994 granted by this Court and two are petitions under article 32 of the Constitution. One appeal and one petition are by one party and the other appeal and petition are by another. The appeal and the petition by each party challenge an order made by the Chief Commissioner of Pondicherry under the . Each of the two orders challenged was made on applications for the grant of bus permits. By one of the orders a permit for a certain route had been given to a person other than one of the parties who has moved us, in preference to him. By the other order, similarly, the claim of the other party moving us to a permit for a different route was rejected. All the matters raise substantially the same question concerning the validity of the Chief Commissioner 's orders. Now, Pondicherry was earlier a French possession administered by the Government of France. By an agreement between the Governments of India and France, the administration of Pondicherry was transferred to the Government of India as from November 1, 1954. The Government of India had been exercising power in Pondicherry since, under the . The Chief Commissioner of Pondicherry is an officer of the Government of India appointed under the powers derived as a result of the agreement. With regard to the appeals, question arose at the hearing before us as to whether they were competent. The appeals had been filed with leave granted under article 136 of the Constitution. It was said that the appeals were incompetent because Pondicherry was outside the Indian territories and under article 136 no appeal from any court outside such territories lay to this Court. It was, however, contended on behalf of the appellants that since the Indo French agreement or very soon thereafter, Pondicherry became part of the Indian territories as a territory acquired by India and, therefore the appeals who 995 competent. As the most satisfactory way of deciding the question whether Pondicherry is within India or not is to seek information from the Government on the point, the majority of the members of the bench are of opinion that the Government of India should be approached to enlighten us about it. The learned Solicitor General, appearing for the Government, has not objected to this procedure being adopted. With regard to the Petitions under article 32, it was contended that the Chief Commissioner of Pondicherry was a State within the meaning of article 12 of the Constitution as under that article any authority under the control of the Government of India outside the territory of India was a State for the purpose of Part III of the Constitution. On this basis it was contended on behalf of the petitioners that the petitions under article 32 asking for certain writs to quash the orders of the Chief Commissioner of Pondicherry were also competent. A further question then arises as to whether in view of article 142 of the Constitution the writs, if issued, could be enforced against an authority under the control of Government of India at Pondicherry, if Pondicherry was outside India and if they could not, whether the Court should issue the writs as it would only be stultifying itself by doing so. It seems to us that it is unnecessary to decide these questions at this stage, for we are going to ask the Government to inform us whether Pondicherry was at the relevant time part of Indian territories. If the Government inform us that Pondicherry was part of India, then no question would arise concerning the powers or jurisdiction of this court in any of the matters now before us. If the information from the Government is that Pondicherry is not within the territories of India, that will, in our opinion, be the 996 proper time to consider whether the Court can still give the petitioners the relief which they ask. These cases involve other questions of difficulty and importance on which it would be proper, in our view, to make a pronouncement after the Government of India 's answer to our request is received. As to none of these are indeed any question arising in these cases we express any opinion at this stage. We wish, however, to observe now that it seems to us exceedingly strange that if this Court finds that a party 's fundamental right has been violated, from which it would follow that that party has a right to move this Court under article 32 and to obtain the necessary writ, this Court could refuse to issue it for the reason that it would thereby be stultifying itself. If a party is entitled to a writ under article 32, then we are not aware that there is any discretion in the Court to refuse the writ on the ground that the writ cannot be enforced. Even assuming that in view of article 142 of the Constitution, a writ cannot be enforced outside India as to which we pronounce no opinion now might is not be said with justification that it is not necessary for us to be unduly pressed by considerations of the difficulties of the enforcement of the writ and that if would be reasonable for us to think that the Government of India has sufficient respect for this Court to do all that is in its power to give effect to this Court 's order, whether or not there might be technical difficulties in the way of its enforcement by this Court. In view of these doubts, we are unable, as at present advised, to concur in the opinion expressed in the Judgment of the majority of the learned Judges constituting the Bench that article 142 stands in the way of this Court issuing a writ under article 32 in this case. We would reserve our opinion till a later stage and till it becomes necessary to express any opinion at all. 997 BY COURT : We direct that the two questions set out in the majority judgment be forwarded to the Union of India under the seal of this Court for submission of their answers. On receipt of the answers to the questions the appeals will be posted for further hearing. The Judgment of Gajendragadkar, Wanchoo and Ayyangar, JJ., was delivered by Ayyangar J. The Judgment of Sarkar and Das Gupta, JJ., was delivered by Sarkar J. AYYANGAR, J. In compliance with our directions the two questions were forwarded to the Union Government and they submitted their answers to them in the following terms: "Question No. (1) Whether Pondicherry which was a former French Settlement is or is not at present comprised within the territory India as specified in Article 1(3) of the Constitution by virtue of the Articles of the Merger Agreement dated October 21, 1954 between the Governments of India and France and other relevant agreements arrangements, acts and conduct of the two Governments. Answer The French Settlement (Establishment) of Pondicherry is at present not comprised within the territory of India as specified in clause (3) of Article 1 of the Constitution by virtue of the Agreement dated the 21st October, 1954, made between the Government of France and the Government of India or by any other agreement or arrangement. By the aforesaid Agreement, dated the 21st October, 1954, the Government of France transferred, and the Government of India took over, administration of the territory of all the French Establishments in India, including Pondicherry, with effect from the 1st November, 1954. A copy of the Agreement is enclosed. This is expressed to be a de facto transfer and was intended to be 998 followed up by a de jure transfer. A treaty of Cession providing for de jure transfer has been signed by the Government of France and the Government of India on the 28th May, 1956, but has not been so far ratified in accordance with the French Law as well as in accordance with the article 31 of the Treaty. A copy of the Treaty is also enclosed. The Government of India has been administering Pondicherry under the , on the basis that it is outside India and does not form part of the territory of India. Question No.(2) If the answer to question 1 is that Pondicherry is not within the territory of India, what is the extent of the jurisdiction exercised by the Union Government over the said territory and whether it extends to making all and every arrangement for its civil administration, its defence and in regard to its foreign affairs. The Government of India might also state the extent of jurisdiction which France possesses over the area and which operates as a diminution of the jurisdiction ceded to or enjoyed by the Government of India. Answer The Government of India has been exercising full jurisdiction over Pondicherry in executive, legislative and judicial matters in accordance with . In doing so it has followed the aforesaid Agreement. The Government of France has not also exercised any executive, legislative or judicial authority since the said Agreement. The jurisdiction of the Government of India over Pondicherry extends to making all arrangements for its civil administration. The administration of the territory is being carried on under the , and in accordance with the French Establishments (Administration) Order, 1954, 999 and other Orders made under sections 3 and 4 of that Act. The Government of India have been aiming at conducting the administration of Pondicherry so as to conform to the pattern of administration obtaining to in India consistent with the said Agreement. Accordingly a large number of Acts in force in India have already been extended to Pondicherry. The Government of India hold the view that the sole responsibility in regard to arrangements for the defence of Pondicherry devolves on themselves. Pondicherry has no foreign relations of its own. No claims have been made by the Government of France in this matter nor have the Government of India recognized the existence of any such claim. The Government of France do not possess any de facto jurisdiction over Pondicherry which would imply any diminution of the jurisdiction exercised by the Government of India. " The appeals and the writ petitions were thereafter posted for further hearing before us on October 9, 1961. Mr. N. C. Chatterji learned Counsel for Shri Masthan Sahib, appellant in Civil Appeal No. 42 of 1961 and petitioner in writ petition No. 297 of 1960, urged before us two contentions. The first was that the answer to the second question clearly established that the French establishments including Pondicherry were part of the territory of India, having been acquired by the Union Government within the meaning of article 1(3)(c) and that in view of this position it was not necessary to consider nor proper for us to accept the views expressed by the Union Government in their answer to the first question wherein they had expressly stated that they did not consider the French "establishments" covered by the agreement between the Union Government and the Government of France dated October 21, 1954 as being within the territory of India within 1000 Art.1(3) of the Constitution of India. Secondly, a point which was necessarily involved in the first one just set out that this Court was not bound by the statement of the Government of India in its answer to Question No. 1 and that it should disregard such an answer and investigate for itself on the materials placed before it as to whether Pondicherry was part of the territory of India or not. In support of the first submission Mr. Chatterji placed considerable reliance on the passage in our judgment rendered on April 28, 1961 reading: "Still if the extent of the jurisdiction vested in the Union Government by the arrangements entered into between the two Governments virtually amounts to a transfer of sovereignty for every practical purpose, it would be possible to contend that such a transfer or cession was so incompatible with the existence of any practical sovereignty in the French Government as to detract from the surrender or transfer being other than complete. " The argument was that the answer to the second question showed (1) positively that the Government of India exercised complete jurisdiction over the territory executive, legislative and judicial, its authority being plenary and extending to the making of laws. Their execution and the administration of justice with complete power over its defence and foreign affairs and (2) negatively that the Government of France possessed no authority in the territory, so much so that it could not be predicated that there had been any retention of even a vestigial sovereignty to detract from the completeness of the transfer. In the circumstances, learned Counsel urged that he was justified in inviting us to ignore or disregard the answer to the first question and instead answer the question as to whether these French establishments were within the territory of India or not on the basis of the second question. 1001 Having regard to the nature of this argument it is necessary to state briefly the circumstances in which we felt it necessary to frame the two questions that we did. At the stage of the hearing of the petitions on the first occasion, notice was issued to the Union Government and the learned Solicitor General appearing in response to the notice did not convey to us any definite views on the part of the Government as to whether Pondicherry was or was not considered by them to be part of the territory of India but invited the Court to decide the question on the materials that might be placed the parties before us. At that stage therefore we were not quite certain whether Government would be prepared to make a formal statement about their views on this question. If therefore the Government were inclined still to leave the matter to the Court, we desired to have complete information as to the factual position regarding the government of the territory. It was in view of that possibility that Question No. 2 was framed. It was, of course, possible that Government might communicate their views to the Court and with a view to enable this to be done we framed Question No. 1. In these circumstances nothing is gained by reference to the passage in our judgment dated April 28, 1961. The passage extracted is certainly not an authority for the position as to whether if Question No. 1 was answered, the Court could properly consider any implications or inferences arising on the answer to Question No. 2. We shall therefore proceed to consider the principal question that arises at this stage, viz., whether the answer of the Government is reply to a specific and formal enquiry by the Court that it did not consider a particular area to have been "acquired" by the Indian Government and therefore not a part of the territory of India was binding on the Court or not. A number of decisions of the English and Australian Courts in which the point 1002 has been considered were placed before us and we shall proceed to refer to the more important of them. In Duff Development Company vs Government of Kelantan(1) the question related as to whether the Sultan of Kelantan was the ruler of an independent sovereign State, such that the Courts in England had no jurisdiction over the Sultan or the Government of that State. The Secretary of State for the Colonies who was requested by the Court to furnish information as regards the status of the ruler and of the Government stated that the Sultan was the head of an independent sovereign state. The binding character of this statement was however questioned and it was argued before the House of Lords on foot of certain public documents that Kelantan was merely a dependency of the British Government and not a sovereign State. On the other side; it was pressed upon the House, that the statement of the Secretary of State was binding and this latter submission was unanimously accepted by the House. In doing so Viscount Cave observed: "If after this definite statement a different view were taken by a British Court, an undesirable conflict might arise; and in my opinion it is the duty of the Court to accept the statement of the Secretary of State thus clearly and positively made as conclusive upon the point." Viscount Finlay expressed himself thus: "It has long been settled that on any question of the status of any foreign power course is that the Court should apply to His Majesty 's Government, and that in any such matter it is bound to act on the information given to them through the proper department. Such information is not in the nature of 1003 evidence; it is a statement by the Sovereign of this country through one of his Ministers upon a matter which is peculiarly within his cognizance." Lord Sumner said: "Where such a statement is forthcoming no other evidence is admissible or needed. " There is one other decision of the House of Lord to which reference may usefully be made Government of the Republic of Spain vs Arantzazu, Mendi.(1) The question for decision was whether it was General Franco 's Government that was the Government in Spain or the Republican Government. The Secretary of State for Foreign Affairs had, in a formal communication to the Court in reply to a letter forwarded under the direction of Bucknill J., stated that His Majesty 's Government had recognised the Nationalist Government as the Government which had administrative control over a large portion of Spain and particularly over the Basque Provinces wherein the ship, title to which was in question, had been registered. Lord Wright in his speech said: "The Court is, in my opinion, bound without any qualification by the statement of the Foreign office, which is the organ of His Majesty 's Government for this purpose in a matter of this nature. Such a statement is a statement of fact, the contents of which are not open to be discussed by the Court on grounds of law. " No doubt, these decisions were in relation to the status of or recognition by the Government of foreign sovereign and are therefore not ad idem with the point which now arises for consideration viz., whether a particular piece of territory is or is not part of the territory of India. A statement by Government in relation to a similar question 1004 came up before the Court of Appeal in Fagernes (1) The question for the Court 's consideration was whether the Bristol Channel, particularly at the point where a collision was stated to have taken place, was or was not part of British territory. Hill J. before whom an action for damage caused by the alleged collision came up held that the waters of the Bristol Channel were part of British territory and therefore within the jurisdiction of the High Court. The defendants appealed to the Court of Appeal and at that stage the Attorney General appeared and in response to a formal enquiry by the Court as to whether the place where the collision was stated to have occurred was within the realm of England, replied that "the spot where the collision is alleged to have occurred is not within the limits to which the territorial sovereignty of His Majesty extends." On the basis of this statement the Court of Appeal unanimously reversed the judgment of Hill J. An argument was raised before the Court as regards the binding character of the statement by the Attorney General and in regard to this Akin L.J. said: "I consider that statement binds the Court, and constrains it to decide that this portion of the Bristol Channel is not within British jurisdiction, and that the appeal must be allowed. I think that it is desirable to make it clear that this is not a decision on a point of law, and that no responsibility rests upon this Court save that of treating the statement of the Crown by its proper officer as conclusive." Lawrence L.J. observed: "It is the duty of the Court to take judicial cognizance of the extent of the King 's territory and, if the Court itself is unacquainted with the fact whether a particular place is or is not within the King 's territory, the Court is entitled to inform itself of that fact by making 1005 such inquiry as, it considers proper. As it is highly expedient, if not essential, that in a matter of this kind the Courts, of the King should act in unison with the Government of the King, this Court invited the Attorney General to attend at the hearing of the appeal and at the conclusion of the arguments asked him whether the Crown claimed that the spot where the collision occurred was within the territory of the King. The Attorney General in answer to this inquiry, stated that he had communicated with the Secretary of State for Home Affairs, who had instructed him to inform the Court that "the spot where this collision is alleged to have occurred is not within the limits to which the territorial sovereignty of His Majesty extends. " In view of this answer, given with the authority of the Home Secretary upon a matter which is peculiarly within the cognizance of the Home office, this Court could not, in my opinion, properly do otherwise than hold that the alleged tort was not committed within the jurisdiction of the High Court". Bankes L.J., though he agreed with his colleagues in allowing the appeal, however struck a slightly different note saying: "This information was given at the instance of the Court, and for the information of the Court. Given under such circumstances, and on such a subject, it does not in my opinion necessarily bind the Court in the sense that it is under an obligation to accept it" The entire matter is thus summarised in Halsbury 's Laws of England, Third Edition, Volume 7: "There is a class of facts which are conveniently termed 'facts of state '. It consists of matters and questions the determination of which is solely in the hands of the Crown or 1006 the government, of which the following are examples: (1) . . . . . . . . . (2) Whether a particular territory is hostile or foreign, or within the boundaries of a particular state." Mr. Chatterji, however, invited our attention to certain observations contained in two decisions of the High Court of Australia Jolley vs Mainka and Frost vs Stevenson (2).In both these cases the point involved was as to the status of the territory of New Guinea which Australia was administering as mandatory territory under a mandate from the League of Nations. There are, no doubt, observations in these cases dealing with the meaning of the word 'acquired ' in section 122 of the Commonwealth of Australia Act, but the point to be noticed however is that there was no statement by the Government of the Commonwealth of Australia as to whether this area was or was not part of the territory of Australia, such as we have in the present case. We do not, therefore, consider that these observations afford us any assistance for the solution of the question before us. Both Mr. Chatterji and Mr. Viswanatha Sastri learned Counsel who appeared for Sivarama Reddiar, the appellant and petitioner in the other cases, stressed the fact that what we were called upon to decide was the meaning of the expression 'acquired ' in article 1 (3) (c) of the Constitution and that in the case of a written constitution such as we had to construe, jurisdiction of this Court was not to be cut down and the enquiry by it limited by reasons of principles accepted in other jurisdictions. In particular, learned Counsel stressed the fact that it would not be 1007 proper for the Court to ignore patent facts and hold itself bound by the statement of Government in cases where, for instance, the Government of the day for reasons of its own desiring to exclude the jurisdiction of this Court denied that a part of territory which patently was within article 1(3) was within it. It is not necessary for us to examine what the position would be in the contingency visualized, but assuredly it is not suggested that the case before us falls within that category. The proposition laid down in the English decisions that a conflict is not to be envisaged between the Executive Government and the judiciary appears to us to rest on sound reasoning and except possibly in the extreme cases referred to by the learned Counsel, the statement of the Government must be held binding on the Court and to be given effect to by it. There is one other matter which was specially pressed upon us during the course of argument to which is necessary to refer. The submission was that the answer by the Union Government to the two questions were really contradictory and that whereas the answer to the second question made it out that the French establishments had been acquired and were part of the territory of India, the Government had in relation to the first question made a contradictory answer. We do not consider this argument well founded. In cases where the only fact available is the de facto exercise of complete sovereignty by one State in a particular area, the sovereignty of that State over that area and the area being regarded as part of the territory of that State would prima facie follow. But this would apply normally only to cases where sovereignty and control was exercised by unilateral action. Where however the exercise of power and authority and the right to administer is referable to an agreement between two States, the question whether the territory has become integrated with and become part 1008 of the territory of the State exercising de facts control depends wholly on the terms upon which the new Government was invited or permitted to exercise such control and authority. If the instruments evidencing such agreements negatived the implication arising from the factual exercise of Governmental authority then it would not follow that there is an integration of the territory with that of the administering power and that is precisely what has happened in the present case. As annexures to their reply the Union Government have included The Treaty of Cession dated May 28, 1956, which is a sequel to the agreement dated October 21, 1954, transferring the powers of the Government of the French Republic to the Government of the Indian Union. Under the terms, this Treaty would become operative and full sovereignty as regards the territory of the establishments of Pondicherry, Karikal, Maha and Yanam would be ceded to the Indian Government only when the treaty comes into force. It is not necessary to refer to all the clauses of this Treaty except the one which stipulates that it would come into force on the day of ratification by the two Governments concerned. According to the Constitution of France an Act of the France Assembly is required for the validity of a Treaty relating to or involving the cession of French territory. It is common ground that the Treaty has not been ratified yet. The resulting position therefore is that by the agreement dated October 21,1954, though complete administrative control has been transferred to the Government of India, this transfer of control cannot be equated to a transfer of territory, that being the common intention of the parties to that agreement. Unless a ratification takes place there would legally be no transfer of territory and without a transfer of territory there would not be in the circumstances an "acquisition of territory", with the consequence that at present Pondicherry has to be treated as not part 1009 of the territory of India. It is unnecessary to consider what the position would have been if the Union Government had, notwithstanding the terms of the Treaty, treated the former French establishments as having become part of the territory of India. There was one minor submission made by Mr. Viswanatha Sastri to which a passing reference may be made. He suggested that the term "territory of India" in article 142 might not represent the same concept as 'the territory of India ' within article 1(3) and that in the context of article 142 the term 'territory of India might include every territory over which the Government of the Union exercised de facto control. We are not impressed by this argument. The term 'territory of India ' has been used in several Articles of the Constitution and we are clearly of the opinion that in every Article where this phraseology is employed it means the territory of India for the time being as falls within article 1(3) and that the phrase cannot mean different territories in different Articles. We have already dealt with the question as to what the effect on the maintainability of the appeals and the petitions would be if Pondicherry were not part of the territory of India. In view of Pondicherry not being within the territory of India we hold that this Court has no jurisdiction to entertain the appeals. The appeals therefore fail and are dismissed. The writ Petitions must also fail and be dismissed for the reason that having regard to the nature of the relief sought and the authority against whose orders relief is claimed they too must fail. They are also dismissed. We would add that these dismissals would not include the petitioners from approaching this Court if so desired, in the event of Pondicherry becoming part of the territory of India. In the peculiar circumstances of this case we direct that that the parties bear their respective costs. 1010 Before leaving this case, we desire to point out that the situation created by the French establishments not being part of the territory of India is somewhat anomalous. Thier administration is being conducted by the extension of enactments in India by virtue of the power conferred by the . We have had occasion to point out that though technically the areas are not part of Indian territory, they are governed practically as part of India. But so far as the orders of the courts and other authorities judicial and quasi judicial within that area are concerned, the Superior Courts in India have not, subject to what we have stated as regards the limited jurisdiction of the court, any appellate or revisional jurisdiction over them and this might in a large number of cases lead to injustice and a sense of grievance. There is enough power in Government even at the stage of the de facto transfer to remedy the situation. By appropriate action under the , or by Parliamentary Legislation under the entry 'Foreign Jurisdiction ' the appellate Jurisdiction of the High Court or of this Court could be enlarged under articles 225 and 138 [1] respectively so as to afford an adequate remedy for the inhabitants of these areas. To this aspect of the matter we consider that the attention of Government should be drawn. SARKAR, J. On the earlier occasion when these cases came up before this Court, we postponed further hearing of them till we received the answers of the Government of India to two questions which we then referred to it. These questions substantially were, (a) whether Pondicherry is or is not within the territories of India and (b) if it is not, the extent of the jurisdiction exercised by the Union Government over it and the jurisdiction which France still possesses in regard to it. These questions were put because considerable doubt was felt as to the real status of Pondicherry. If it 1011 was a foreign territory, no appeal could lie to this Court under article 136 of the Constitution from any tribunal in Pondicherry and two of these matters were such appeals. The other two matters were petitions asking for writs against certain authorities in Pondicherry and the majority held that no writ could issue to a foreign territory in view of article 142 of the Constitution and therefore for the purposes of these petitions also it was necessary to ascertain the status of pondicherry. We however then felt some difficulty about the question whether we could refuse to issue writs to an officer of the Government of India outside the territory of India and expressed our inability to concur in the opinion of the majority. We said that the proper time to discuss that question would be when on receipt of the Government 's answers to our questions, it had to be held that Pondicherry was a foreign territory and reserved our final decision on the question till then. The Government 's answers to our questions have now been received. On the basis of these answers, for the reasons hereafter mentioned, it has to be held that Pondicherry is a foreign territory. We, therefore, now wish to say a few words on the question on which we reserved our opinion on the former occasion. The opinion of the majority no doubt prevails in spite of what we shall say. Before we discuss the question which we reserved we desire to observe in regard to the appeals that it must be held that they are not maintainable as Pondicherry is a foreign territory. Now, the writs are sought to quash the orders of a quasi judicial authority functioning in Pondicherry on the ground that they violate certain fundamental rights of the petitioners This authority however is an officer of the Government of India. How far writs can be issued under article 32 of the Constitution of India to quash a quasi judicial order even if made in India, itself a 1012 question of considerable difficulty on which there has been a difference of opinion in this Court. That question was recently discussed before another Bench but the judgment in that case has not yet been delivered. For the present purpose however we will assume that writs can be issued under article 32 to quash a quasi judicial order. The First observation that we wish to make is that it has now been finally held by this Court, dealing with an application under article 32 that "the right to move this Court by appropriate proceedings for the enforcement of the rights conferred by Part III of the Constitution is itself a guaranteed right": Kavalannara Kottarthill Kochunni vs The State of Madras. (1) A right to move this Court by a petition under article 32 is, therefore, a fundamental right. That being so, a right to obtain a writ when the petition establishes a case for it, must equally be a fundamental right. For, it would be idle to give a fundamental right to move this Court and not a similar right to the writ the issue of which the petition might clearly justify. If then a fundamental right to a writ is established, and that is the assumption on which we are examining the present question the party who establishes such right must be entitled ex debito justitiae to the issue of the necessary writ. There would then be no power in the Court to refuse in its discretion to issue it. But it is said that if a writ was issued in the present case, it could not in view of article 142 which says that an order of this Court shall be enforced throughout the territory of India, be enforced Pondicherry. Let us assume that is so. Then it is said that if the Court were to issue the writ it would only be stultifying itself and should not therefore issue it. We are unable to accede to this contention. If a party has been given by the 1013 Constitution a fundamental right to a writ, there is no power in the Court to refuse that right. Supposed practical considerations of incapacity to in force the writ issued cannot be allowed to defeat the provisions of the Constitution. No authority has been cited to us in support of the proposition that when a party in entitled as of right to an order, a court can refuse to make that order on the ground that it would thereby be stultifying itself. So far as we have been able to ascertain orders are refused on this ground when the matter is one for the discretion of the Court. Such cases have, for instance, frequently occurred in proceedings relating to the issue of injunctions, to grant or not to grant which is well known, in the discretion of the Court. The discretion has no doubt to be judicially exercised as indeed all discretions have, but none the less the right to the relief is in the discretion of the Court as opposed to a relief to which a party is entitled ex debito justitiae, a distinction which is well understood. Thus, dealing with a case of the issue of an injunction restraining a person from. proceeding with an action in a foreign court, Jessel M.R. Observed, in In re International Pulp and Paper Co. Ltd.(1), "Therefore, as to a purely foreign country, it is of no use asking for an order, because the order cannot be enforced". Take another case. In England an information in the nature of quo warranto is not issued as a matter of course as a matter of course [R.V. Stacey and therefore the courts there refused to issue it when in information would be futile in its results. Halsbary Laws of England (3rd ed.) Vol. 11 p. 148. So in Reg. v Fox(2) the Court refused to issue the information for the reason that the person sought to be removed by it could be reappointed at once. These however are cases in which a Court would be inclined not to make 1014 a discretionary order on the ground that the Court would thereby be stultifying itself. Instances might be multiplied but it is unnecessary to do so. We do not think that the principle of these cases can be applied where a court has no option but to make the order which we think is the present case. It would clearly be less applicable to a case like the present where, as we shall immediately show, it would be wrong to think that the order would not be carried out. Lastly, can we be certain that the Court would be stultifying itself by issuing the writ in this case ? That would be only if our order is sure to be ignored. We think that this Court would be fully justified in proceeding on the basis that any order made by it would be carried out by any officer of the Government of India to whom it is directed wherever he may be, out of respect for the Constitution and this Court and this without requiring to be forced to do so. In this connection the case of R.v. Speyer, R. vs Cassel(1) is of interest. There Speyer and Cassel had been called upon by the court by rules nisi to show cause why an information in the nature of quo warranto should not be exhibited against them to show by what authority they respectively claimed to be members of His Majesty 's Privy Council for Great Britain. Speyer and Cassel were naturalised British subjects and the question was whether under certain statutes they were not disqualified from being appointed to the Privy Council. One of the arguments on behalf of the respondents was that the court would be powerless to enforce a judgment of ouster for it could not prevent the immediate reinstatement of the names of these persons in the roll of Privy Councillors if the King though fit to alter it. The answer that Reading C.J. gave to this argument was 1015 "Although it may be interesting and useful for the purpose of testing the propositions now under consideration to assume the difficulties suggested by the Attorney General, none of them would in truth occur. This is the King 's Court; we sit here to administer justice and to interpret the laws of the realm in the King 's name. It is respectful and proper to assume that once the law is declared by a competent judicial authority it will be followed by the Crown. " The other members of the Bench also took the same view, Lush J. observing, "The consequences he suggests are argumentative and not real, and we cannot regard them as fettering the exercise of our jurisdiction". Now this was a case of a discretionary order. Even so, the Court felt that it would be wrong to stay its hand only on the ground that it could not directly enforce its order. This salutary principle has been acted upon in our country by Das J. who later became the Chief Justice of this Court, in In re Banwarilal Roy(1) There Das J. issued an information in the nature of quo warranto in spite of the fact that he could not command the Governor of Bengal to comply with his order which might therefore have become futile. We think it is a very healthy principle and should be followed. We do not think that we can allow our powers for the protection of fundamental rights to be fettered by considerations of the enforcement of orders made by us; we must assume that the authorities in Pondicherry will willingly carry out our order. We turn now to the other questions arising on the Government 's answers. Pondicherry was admittedly a French possession but under an agreement with France, the Government of India is now administering it. The Government has definitely stated that Pondicherry is not comprised 1016 within the territory of India. It has also said that it has full jurisdiction over Pondicherry under that agreement, that the liability for defence of Pondicherry is on it and that Pondicherry has no foreign relations. It has further said that France does not possess any de facto jurisdiction over Pondicherry which would imply a diminution of the jurisdiction exercised by it. It was contended that we are not bound by the Government 's answer to the first question, namely, that Pondicherry is outside India and that on the basis of the answer to the second question we should hold, in spite of the Government 's view, that Pondicherry is a part of Indian territory. It was said that since India had admittedly full jurisdiction over Pondicherry and France exercised none, it must be held the India has acquired sovereignty over it and that it had, therefore, become Indian territory by acquisition. We are entirely unable to accept this contention. We think that we are bound by the Government 's decision at least in a case where we have referred to it for our guidance. That is the view taken in England and it is a view which is based on sound principle: see Duff Development Co. vs The Govt. of Kelantan.(1) Any other view would create a chaos and we cannot be a party to it. We may say that by a treaty. as in the present case, India may acquire full jurisdiction over a foreign territory which under the same treaty may nonetheless remain a foreign territory. It was contended that this would be absolute surrender to the executive Government; that such a view would enable the Government when it so liked, to disown a territory which was patently a part of India so that it might act therein as it liked in complete disregard of the laws and without any check from any court including this Court. This contention, to use the words of Luch J. in Speyer 's case(2)is "argumentative and not real". 1017 We cannot imagine that in a democracy any Government would ever act in the way suggested and we are sure no Government of this country will ever do so. Furthermore, the contention has no foundation whatever and is wholly imaginary. It is the duty of a court to take judicial notice of the extent of the territory of its own State. Section 57 of the Evidence Act requires that. Therefore, if the fact is patent that a certain territory is within India, the courts will take judicial notice of it and there will be no occasion to refer to the Government for any information regarding it. It may however be that in certain circumstances the fact is not patent but even then it appears that it will be the duty of a court to take judicial notice and it does so by requesting the Government to enlighten it on the point. So Lawrence L. J. said in Fagernes (1), "It is the duty of the Court to take judicial cognisance of the extent of the King 's territory and, if the Court itself is unacquainted with the fact whether a particular place is or is not within the King 's territory, the Court is entitled to inform itself of that fact by making such enquiry as it considers necessary. " It is only in cases where the Court is not aware of the facts that the question of referring to the Government will arise and therefore no occasion can possible arise where the Government might have the chance of distorting a patent fact. This is all that we desire to say. As the majority of the learned Judges of the Bench have taken a different view, the order to be made will follow their decision.

The Supreme Court referred two questions to the Union Government viz (i) whether. Pondicherry was comprised within the territory of India, and (ii) if not, what was the extent of the jurisdiction exercised by the Union Government and the French Government over the territory. The answers given were that (i) Pondicherry was not comprised within the territory of India and (ii) the Union Government exercised full jurisdiction over Pondicherry and the French Government did not exercise any de facto jurisdiction over it. There was a treaty of cession between France and India in respect of Pondicherry but it had not been ratified as required by the French and Indian laws. The appellant contended that the answer of the Union Government to the second question established that Pondicherry was part of the territory of India and that the Court was not bound by the answer to the first question. ^ Held, that Pondicherry was not comprised within the territory of India as specified in article 1(3) of the Constitution. The answer of the Union Government on this question was binding on the Court. There was no conflict between the answers to the two questions. Though complete administrative control over Pondicherry had been transferred to the Government of India it could not be equated to a transfer of territory. Unless there was ratification of the Treaty there could legally be no transfer of territory. Accordingly, no appeal could be entertained by the Court under article 136 of the Constitution against the decisions of the authorities in Pondicherry. 982 Duff Development Company vs Government of Kelantan , Government of the Republic of Spain vs Arantzazu Mendi. (1939) A. C. 256 and Fagernes 1927 Probate 311, applied. Jolley vs Mainka ; and Efrost vs Slevenson; , , distinguished. Per Gajendragadkar, Wanchoo and Ayyangar, JJ. Having regard to the nature of the relief sought no writ under article 32 of the Constitution could be issued to the authorities in Pondicherry. Per Sarkar and Das Gupta, JJ The Supreme Court could issue a writ under article 32 to the quasi Judicial authorities in Pondicherry. Article 32 was a fundamental right and the right to obtain a writ was equally a fundamental right. If the Constitution gave to a party a fundamental right to a writ the Court could not refuse that right. The consideration that the writ issued may not be enforced in Pondicherry could not be allowed to defeat the provisions of the Constitution. Such a consideration is relevant only in the case of discretionary orders. K. K. Kochunni vs The State of Madras, [1959] Supp. 2 S.C.R. 316, In re International Pulp and Paper Co. Ltd., , Reg vs Fox, ; , R. vs Cassel, (1916) I K B. 595 and In re Banwarilal Roy, , referred to.

Civil Appeal No. 3115 of 1979. Appeal by Special Leave from the Judgment and Order, dated 6 8 1979 of the Delhi High Court in Civil Writ No. 395 of 1979. K. K. Venugopal, H. K. Puri and section C. Dhanda for the Appellant. A. K. Gupta for the Respondent. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. The Jawharlal Nehru University, considered to be one of the prestigious academic institutions of the country, is the appellant in this appeal by special leave of this Court under Article 136 of the Constitution. Named after the great liberal, humanist and democrat of the century, the University was established by Act of Parliament to "embody a unique synthesis of Humanities, the Sciences and Technology" and to "endeavour to promote the study of principles for which Jawaharlal Nehru worked during his lifetime, namely, national integration, social justice, secularism, democratic way of life, international understanding and scientific approach to the problems of society". 'The Court ' is the supreme authority of the University and it has the power to review the acts of the Executive Council and the Academic Council. The Vice Chancellor is the Principal Executive and Academic Officer of the University. The Executive Council is the executive body of the University, in charge of the general management and administration of the University while the Academic Council is the academic body of the University, responsible for the maintenance of standards of instruction, education and examination within the University. The Executive Council is empowered to make 'Statutes ' in the manner prescribed by the Jawaharlal Nehru University Act and to make 'Ordinances ' in the manner prescribed by the Statutes. Ordinances have been duly made and Ordinance 13 deals with the award of M.A., B.A., (Honours) and B.A. (Pass) degrees. The University offers Integrated Five Year Programmes of studies leading to the award of M.A. Degree in several Disciplines and Languages. Russian is one of the languages in which such a programme of studies is offered. The programme is spread over ten semesters, 620 in five academic years. In the first two semesters, courses described as 'C ' level courses are given, in the next four semesters 'B ' level courses are given and in the last four semesters 'A ' level courses are given. Each 'C ' level course carries two credits, each 'B ' level course three credits and each 'A ' level course four credits. Paragraph 7.3 of Ordinance 13 prescribes a minimum of 144 credits in the case of Social Sciences and 176 credits in the case of languages for the Master of Arts Degree, out of which there have to be a minimum of 20 credits from 'C ' level courses, 60 from 'B ' level courses and 64 from 'A ' level courses in the case of Social Sciences and a minimum of 28 from 'C ' level courses, 84 from 'B ' level courses and 64 from 'A ' level courses, in the case of languages. It is further prescribed that a minimum of 50% of credits but not more than 75% should be in the discipline in which the student is formally registered for the Master 's degree. It may be mentioned here that the courses in the discipline in which the student is formally registered are known as the 'core courses ' while the other courses for which also the student has to prescribe are known as 'Tool courses ' and 'optional courses '. Paragraph 7.5 prescribes that the courses on the basis of which a student earns his 'C ' level credits shall be atleast from four disciplines. Paragraph 7.6 provides that a student shall be required to earn atleast a minimum of ten credits from courses in Tools, Techniques and Methodology. Paragraph 8 of Ordinance 13 prescribes the method of evaluation. Sessional work is to carry the same weight as the semester examination. In each course a student is graded on a ten point scale and the final grade point is obtained by applying the formula Fg = #n Cigi/#n Ci Where F is the final grade point of the student C is the credit of the ith course, G is the grade point secured by the student in the ith course and n is the total number of courses for which the student has prescribed. A student who fails in a course is required to repeat the course or clear another course in lieu of the course in which he has failed. Paragraph 9 of the Ordinance prescribes the minimum standard of grade point requirements. Every student is required to maintain a minimum cumulative grade point average of 2.0 during the first two semesters. At the end of the sixth semester the cumulative grade point average has to be 4.0 if he is to further continue in the programme of study. If he is to be awarded the Master of Arts degree he must have a minimum cumulative grade point average of 4.0. Paragraph 11 of the 621 Ordinance is important for the purposes of this case and it may be extracted here. As it stood at the relevant time, it was as follows: "The Board of the School, on the recommendation of the Centre, may remove the name of a student from the course on the basis of unsatisfactory academic performance". The respondent B. section Narwal was admitted, in 1974, to the five year integrated programme of study leading to Master of Arts Degree in Russian Language at the Centre of Russian Studies in the Jawaharlal Nehru University. As he was seeking a degree in Russian Language, the 'core courses ' had necessarily to be those concerned with Russian language, literature and translation. In the first two semesters, he failed to take the sessional tests in any of the 'core courses ' in Russian and consequently he was not allowed to sit for the end semester examinations. He thus failed to clear any of the 'core courses ' in the first two semesters. He, however, appeared for the examinations in the 'tool ' and the 'optional courses ' in the first two semesters and prescribed for five credits in two courses, in the first semester and eight credits in three courses, in the second semester. In the third semester the respondent requested permission of the University to repeat the courses of the first semester so as to enable him to pass them. As a special case, he was permitted to do so, but he failed in all the five courses in respect of which he sought and obtained permission to so repeat. The respondent, however, passed (securing B+) in an optional course for which he prescribed in the third semester. At the end of the third semester the net result was that he had not cleared a single 'core course '. The Centre of Russian Studies was dissatisfied with the performance of the respondent and some other students and at a meeting held on January 20, 1976, the Centre decided to recommend to the Board of Studies, School of Languages, that seven students including the respondent should be struck off the rolls of the University for unsatisfactory performance. The recommendation of the Centre of Russian Studies was accepted by the authorities of the University and by an office order, dated January 31, 1976, the respondent and others were removed from the rolls of the University for unsatisfactory performance as recommended by the Centre. The respondent appeared to accept the decision of the University and kept quiet for a period of two years and six months, but in August, 1978, he filed a Writ Petition in the Delhi High Court challenging the order removing him from the rolls of the University 622 on the ground that the order had been made in violation of the principles of natural justice. The Writ Petition was opposed by the University but when the Writ Petition came for hearing on November 24, 1978, on a query by the Court whether it was feasible to readmit the respondent, the University agreed to reconsider the question sympathetically. Thereupon, the Writ Petition was dismissed. Pursuant to the assurance given before the High Court the Centre of Russian Studies considered the question once again and found itself unable to admit the respondent in the middle of the academic year. The respondent was, however, informed that his case could be considered in the monsoon semester commencing from July 1979, that is, at the beginning of the academic year. The respondent was advised to send a fresh application for admission. The respondent being dissatisfied with the attitude of the University filed a fresh Writ Petition in the High Court, once again, challenging the order removing him from the rolls of the University. The High Court by their judgment, dated August 6, 1979 allowed the Writ Petition firstly on the ground that the respondent was given no opportunity to show cause before action was taken against him and secondly on the ground that the University did not apply its mind to the question whether the petitioner 's performance was unsatisfactory. The High Court quashed the order removing the respondent from the rolls of the University and gave the following directions to the University: "(1) That the petitioner B. section Narwal should be admitted in the 7th semester which is the monsoon semester of 1979; (2) that the petitioner should be permitted to complete the ten semesters by the end of the academic year 1981 so as to qualify him to get his M.A. Degree; (3) that the petitioner should be permitted to secure the required 180 credits by the end of the academic year 1981 and to make up the deficiency in the credits he has secured so far by taking up the contact hours, sessional tests and semester examination of the appropriate semester before the completion of his 10th semester; (4) that the University shall permit the petitioner to join the appropriate groups for taking up the required courses and make proper arrangements of sessional tests and semester examinations at reasonable intervals so as not to crowd too many academic requirements at one time". The first question for our consideration is whether the respondent was entitled to an opportunity of being heard before action 623 was taken removing him from the rolls of the University. What should be mentioned right at the outset is that this is not a case of expulsion of a student pursuant to a claim, by the authorities of a University to discipline the student at their discretion and the right of the student to freedom and justice. The case is merely one of assessment of the academic performance of a student which the prescribed authorities of the University are best qualified and the Courts perhaps, are least qualified to judge. Nor can there be any question of any opportunity to be heard being given. One does not hear of a claim to be heard when a candidate fails to qualify at an aptitude or intelligence test, written or oral. When duly qualified and competent academic authorities examine and assess the work of a student over a period of time and declare his work to be unsatisfactory we are unable to see how any question of a right to be heard can arise. The duty of an academic body in such a case is 'to form an unbiased assessment of the student 's standard of work based on the entirety of his record and potential(1). That is their function. The very nature of the function of academic adjudication (if the use of the word adjudication is permissible in the context) appears to us to negative any right to an opportunity to be heard. If the assessment by the academic body permitted the consideration of 'non academic ' circumstances also, a right to be heard may be implied. But if the assessment is confined to academic performance, a right to be heard may not be so implied. Of course, if there are allegations of bias or malafides different considerations might prevail, but in the absense of allegations of bias or malafides we do not think that the declaration by an academic body that a student 's academic performance is unsatisfactory, is liable to be questioned in a Court on the ground that the student was not given an opportunity of being heard. Large and expanding, perhaps rightly, as the field of natural justice and fail dealing is, necessary and wholesome as 'hearing ' an affected partly even by academic bodies is, there are limits to attempt at unnatural extensions of the doctrine of 'audi alteram partem '. Without granting absolutism to academic authorities even in academic matters, we think this case hardly calls for judicial intervention. The learned Counsel for the respondent relied on Regine vs Aston University Senate(2) to contend that the examining body of the University was bound to give an opportunity to a student before requiring him to withdraw from the University consequent on his 624 failure in the examination. Admittedly, in that case, the examiners took into consideration a "wide range of extraneous factors some of which their very nature, for example, personal and family problems might only have been known to the students themselves". Therefore. Donaldson J., observed that in common fairness the students should have been given an opportunity. Even so, Lord Parker C. J., did not appear to be convinced about the correctness of Donaldson J 's view and in Herring vs Templeman & Ors. (supra), the Court of Appeal expressed the view that Donaldson J 's opinion required reconsideration on some suitable future occasion. From the earlier narration of facts it would be seen that the respondent had not cleared any of the core courses in the first three semesters. If a candidate for the M.A. degree in a certain discipline fails to clear any single core course in that discipline in the first three semesters, surely, no one can complain that the academic body which has declared the academic performance of the candidate as unsatisfactory has acted arbitrarily in so declaring. The complaint of the respondent, however, was that he was unable to clear the 'core courses ' in the first two semesters because the University authorities failed to provide teachers to take classes and this was a factor which the authorities of the University had failed to consider and the authorities must, therefore, be held not to have applied their minds. It appears that in the very first semester the respondent joined the University late and missed several classes. The result was that while the rest of the students had made sufficient progress in Russian language the respondent who had yet to learn the alphabet could not straightaway join the rest of the students attending the core courses. The therefore, had to attend other classes in Russian language where Russian language was taught not as a 'core subject ' but as a 'tool or optional subject '. According, to the respondent there was none to teach Russian language to his group between October 6. 1974 and December 6, 1974. Again, in the second semester, though there were Russian classes from 10th February to 30th March, 1975, there were no arrangements to teach Russian language to his group after 30th March. The High Court appeared to attach great importance to the failure of the University to expressly deny the respondent 's allegation that there were no teaching facilities between October 6 and December 6. 1974 and again between 10th February and 30th March, 1975. True the University did not in express terms deny the allegations. But the University did mention the following facts in their counter affidavit. In paragraph 5 it was said 625 "He joined the first semester on 22nd of August 1974 although it started from 9th August 1974. So much so he was to be grouped together with students who had offered Russian as a non core subject and for whom the Russian classes happened to be starting from 1st September. Again, from 8th October 1975 to 20th December 1975, he was not regular in attendance. How could the respondent University afford a special curriculum for the sake of a particular student who does not avail of the regular course of teaching provided by the University to a class of students? It was no fault of the University if the petitioner could not attend the classes when they were conducted, and the petitioner should be blamed for his irregular attendance". Again in paragraph 9 it was said: "In reply to paragraph 9, I say that the petitioner did not join the course on 9th August 1974 when the classes for Russian as a core subject commenced. When the Petitioner came on 22nd August 1974 to join the course, the students who had offered Russian as a core subject and started their classes on 9th August, had made substantial progress. The Petitioner, being a beginner in Russian language, could not be accommodated in any of those groups. He had, therefore, to be grouped together with students who had offered Russian classes happened to be starting from September 1. " These statements show that the University did run the necessary classes for the 'core courses ' but the Respondent was unable to take advantage of them on account of his insufficient knowledge of Russian, for which reason he had to attend classes for 'optional ' courses instead of classes for core courses. The University naturally could not run a special programme for an individual student. These statements went unnoticed by the High Court. We are, therefore, of the view that the finding of the High Court that the authorities of the University were oblivious of the circumstance that the University itself had failed to provide teaching facilities in Russian and therefore, must be considered not to have applied their minds is without factual foundation. We have, therefore, no option but to allow the appeal and dismiss the Writ Petition filed by the Respondent. We may add that we would not, in any case, have confirmed the directions given by the High Court, as they appear to involve a virtual re writing of that ordinances of the University. While allowing the appeal, 626 we leave it to the University, to consider if the career of the respondent cannot be salvaged by admitting him into some appropriate semester in accordance with the ordinances, if he chooses to submit an application for admission. There will be no order regarding costs. Civil Miscellaneous Petition No. 1926 of 1980 is dismissed.

The appellant University offered integrated 5 years programme of study leading to the award of M.A. degree in several disciplines and languages. The programme was spread over ten semesters in 5 academic years. The courses in the discipline in which a student was formally registered were known as the 'core courses ' while the other courses for which also the student had to prescribe were known as 'tool courses ' and 'optional courses '. The respondent was a student of the five year integrated programme of study in the Master of Arts degree in Russian Language at the appellant University. In the first two semesters, he failed to take the sessional test in any of the 'core courses ' in Russian and consequently he was not allowed to sit for the end semester examinations. He, however, appeared for the examinations in the 'tool courses ' and the 'optional courses ' in the first two semesters. In the third semester the respondent requested permission of the University to repeat the courses of the first semester so as to enable him to pass them. The University permitted him to do so but he failed in all the five courses in which he was permitted to do so. Dissatisfied with his performance the Centre of Russian Studies recommended to the Board of Studies that the respondent 's name be struck off the rolls and his name was accordingly removed from the rolls. The High Court, allowed the respondent 's writ petition on the ground that: (1) no opportunity to show cause was given to him before his name was struck off the rolls, and (2) that the University did not apply its mind to the question whether the respondent 's performance was unsatisfactory. In the appeal to this Court on the question: whether the respondent was entitled to an opportunity of being heard, before removing him from the rolls of the University. Allowing the appeal: ^ HELD: 1. In the absence of allegations of bias or mala fides, the declaration by an academic body that a student 's academic performance is unsatisfactory is not liable to be questioned in a Court on the ground that the student was not given an opportunity of being heard. [623 E F] This is not a case of expulsion pursuant to a claim by the authorities of a University to discipline the student at their discretion and the right of the 619 student to freedom and justice. The case is merely one of assessment of the academic performance of a student which the prescribed authorities of the University are best qualified and the Courts are least qualified to judge. [623 A B] Herring vs Templemen & Ors. & 584; Regina vs Aston University Senata referred to.

Criminal Appeal No. 26 of 1989. From the Judgment and Order dated 17.4.1984 of the Gujarat High Court in Crl. Appeal No. 1097 of 1980. V.B. Ganatra and V.N. Ganpule for the Appellant. Girish Chandra, M.N. Shroff and M.N. Goswami for the Respondents. The Judgment of the Court was delivered by 142 VENKATACHALIAH, J. By this petition for grant of Special Leave under Article 136 of the Constitution, coming up after notice to the State of Gujarat, the applicant seeks leave to appeal to this Court from the judgment of the High Court of Gujarat in Criminal Appeal No. 1097 of 1980 restoring the conviction and sentence passed by the Chief Judicial Magis trate, Valsad, against the petitioner in Criminal Case of 48 of 1979 for an offence under the Prevention of Food Adulter ation Act 1954. ( 'Act ' for short) Special Leave is granted and the appeal is taken up for final hearing, heard and disposed of by this judgment. Appellant was charged before the Chief Judicial Magistrate, Valsad, by the Food Inspector, Navasari Munici pality, with the offence of selling "Kesari coloured sweet supan sali" alleged to have been adulterated with "Yellow basic coal tar dye". The learned Magistrate found the appel lant guilty of the offence and imposed a sentence of an year 's simple imprisonment and a fine of Rs.2,000, both of which were the statutorily compulsory minimum sentences under Section 16(1)(A)(i) of the Act. Learned Sessions Judge, Valsad, by his judgment, dated 14.3.1980, in Criminal Appeal 32 of 1979 preferred by the appellant, however, set aside the conviction and sentence and acquitted the appellant of the charge. On further appeal by the State against the said acquit tal, the High Court of Gujarat allowed the State 's appeal and, in reversal of the judgment of acquittal of the learned Sessions Judge, restored the conviction and sentence passed by the learned Chief Judicial Magistrate. Appellant is a tradesman carrying on business within the limits of Navsari Municipality. On 7.12.1978, respondent No. 2, the ' food inspector of Navsari Municipality, pur chased from the appellant 600 gins. of "kesari coloured sweet supari sali" and after complying with the procedural formalities packed and sealed the "supari" into three sepa rate packages of 200 gins. each and one of them was sent to the Public Analyst who by his report dated 20.12.1978 (Ext. 12) affirmed that the sample contained a "yellow basic coal tar dye" and that it did not conform to the standard laid down under the Rules. On 19.1.1979, the Food Inspector with the prior sanction of the District Health Officer, Valsad, (Ext.14), filed a complaint in the Court of the 143 Chief Judicial Magistrate, Valsad. The prosecution culminat ed, as aforesaid, in the conviction and sentence imposed by the learned Chief Judicial Magistrate, and later restored by the High Court. Appellant now seeks to assail the legality of the conviction. We have heard Sri V.B. Ganatra, learned counsel for the appellant and Sri Girish Chandara and Sri M.V. Goswami, learned counsel for Respondents. 1 and 2, respectively. Though a number of grounds are taken in the memorandum of the Petition for special leave, however, at the hearing Sri Ganatra confined his submission only to one aspect of the matter which, if accepted as correct, would go to the root of the case for the prosecution. Apparently, this contention in the form in which it is presented here was not placed before the High Court as we find no reference to it in the judgment. Appellant 's Learned Counsel contended that "Supari" or "Betel nut" is basically and essentially an yield of the Areca Palm and must, therefore, be held to fall under "Fruit products" within the meaning of Rule 29(f) of the Prevention of Food Adulteration Rules, 1955, ( 'Rules ' for short) and, accordingly, the use of permitted coal tar food colours in it is not prohibited by law. It was further urged that the Public Analyst had not held that the "Yellow basic coal tar dye", found in the sample, was not one of those food colours prohibited under Rule 28 and that, there fore, its use in "supari" which was a "Fruit product" cannot be said to be prohibited. Alternatively, Sri Ganatra con tended that the "supari" in this case was a "flavouring agent" within the meaning of Rule 29(m) in which case also the use of permitted coal tar food colours, was not prohib ited. On the contentions urged at the hearing, the points that fall for consideration are, first, whether the "supari" concerned in this case was a "Fruit product" or, alterna tively, a "Flavouring Agent" within the meaning of Rule 29(f) or (m) respectively and, accordingly, the use in it of permitted coal tar dyes or food colours was not prohibited and, secondly, whether, even if, after an elaborate enquiry, it was held that "supari" was not a "Food product" appellant having acted bonafide on a possible and not an unreasonable view of the nature and classification of the goods, was, at all events, entitled to the benefit of the doubt. It was not disputed that supari was an article of food. It was so held in Pyarali K. Tejani vs M.R. Dange, [1974] 2 SCR 154. It was also not disputed that if "supari" did not admit itself of being classified 144 under "Fruit products" or under "Flavouring Agents" under Rule 29(f) or 29(m) respectively, the use in "supari" of even a coal tar food colours permitted under rule 28 would amount to adulteration. The argument that "Supari". or "Betel nut" is a "Flavou ringAgent" has clearly no substance. The first contention, therefore, narrows itself down to whether "supari" in the form in which it was offered for sale though vegetative in origin and is derived from the usufruct of areca palm, can be said to be a "Fruit Product" in the sense in which that expression is used and is required to be understood in Rule 29(f). To appreciate Sri Ganatra 's contention, the scheme of the relevant rules, in particular rules 23, 28 and 29, requires notice. Rule 23 prohibits the addition of any colouring matter to any article of food except as specifi cally permitted by the rules. Rule 28 provides that no coal tar food colour or a mixture thereof, except the food colours specifically enumerated in rule 28, shall be used in food. Item 2 of the list of food colours permitted under Rule 28 includes 'Sun set Yellow FCF '. We shall proceed on the premise that the basic yellow coal tar dye found in the "supari" by the Public Analyst is amongst those enumerated food colours excepted from the prohibition under Rule 28 and is, therefore, permitted to be used. Then, Rule 29 prohibits the use of even the coal tar food colours permitted under rule 28 in or upon any food other than those enumerated in rule 29. "Fruit Products" is one such item of food so enu merated under clause (f) of rule, 29. The result is that permitted coal taar food colours, i.e. foodcolours permitted by Rule 28, can be used if the food articles in question are "Fruit Products" as understood in Rule 29(f). But this exception from prohibition, in favour of "Fruit Products" is further subject to such exceptions or restrictions as are otherwise made in Appendix 'B '. Sri Ganatra 's contention is that there having been no provision otherwise made in Appen dix 'B ' in respect of supari and supari being includible in "Fruit Products", the use in it of permitted coal tar food colours is prohibited. Shri Ganatra submits that the legis lation being penal the expression "Fruit Products" in rule 29(f) should receive a reasonably liberal construction and that, so construed, "supari" would reasonably admit of being considered such a "Fruit Product". We have had our attention drawn by Sri Ganatra to certain passages in 'Common Trees of India ' by Dr. Santatau (at page 111); in "Wealth of India Raw Materials" Vol. I A (pages 390, 402 03) and certain passages in the 'Dravya Guna Vignyan ' (Part II & III: at page 145 672) in support of Sri Ganatra 's contention that "Supari" or "Betelnut" being the usufruct of "Areca" tree must be held to be a "FruitProduct". Sri Ganatra says that having regard to the accepted cannons of construction appropriate to penal statutes, "supari" or "Betel nut" which was derived from the usufruct of Areca palm admits of being classified amongst "Fruit Products" in Rule 29(f). At all events, says learned counsel, such a construction being a plausible one, the appellant who had conducted his affairs on such a plau sible meaning of the statute should be entitled to the benefit of the doubt. In Encyclopaedia Britannica (Vol. 3, p. 55 1) with reference to "Betel nut" it is mentioned: "The name betel is applied to two different plants which in the east are very closely associated in the purposes to which they are applied. The betel nut is the fruit of the areca or betel palm (Areca catechu) . . " "For chewing, the fruits are annually gathered between the months of August and November, before they are quite ripe, and deprived of their husks. They are prepared by boiling in water, cutting up into slices and drying in the sun, by which treatment the slices assume a dark brown or black colours . " " . . Betel nuts are used as a source of inferior catechu (g.v.); its chief alkaloid is arecoline, to which anthelmintic properties are attributed. The drug finds some use in veterinary medicine as an anthelmintic. " There is no dispute that "supari" is derived from and pre pared out of the usufruct of the Areca palm. But the ques tion as to what is the context of the idea of "Fruit Products" in Rule 29(f). The argument, no doubt, is somewhat attractively presented; but we are afraid, it is more attractive than sound. The fact that a particular article of food, as indeed most of the articles of food of vegetative origin are, was of plant origin did not render that article necessarily a "Fruit Product". Even products derived from, or associated in their origin with fruits need not ipso facto be "Fruit Products" for purposes and within the meaning of rule 29(f). What were envisaged as "Fruit Products" in rule 29(f), will be indicated by the array of items dealt with in Appendix 'B ' under item 16 "Fruit 146 Products" though the list was in the nature of an exception of R.29. Under the relevant head in Appendix 'B ' items referred are: "Fruit Juice"; "Tomato Juice"; "Fruit Syrup"; "Fruit Squash"; "Fruit Beverage" or "Fruit Drinks"; "Tomato Sauce"; "Tomato Ketchup"; "Tomato Relish";"Marmalade"; Fruit Chatni" and "Sauce" etc. The object and the purpose of the Act are to eliminate the danger to human life from the sale of unwholesome arti cles of food. The legislation is on the Topic 'Adulteration of Food Stuffs and other Goods ' [Entry 18 list III Seventh Schedule]. It is enacted to curb the wide spread evil of food adulteration and is a legislative measure for social defence. It is intended to suppress a social and economic mischief an evil which attempts to poison, for monetary gains, the very sources of sustenance of life and the well being of the community. The evil of adulteration of food and its effects on the health of the community are assuming alarming proportions. The offence of adulteration is a socio economic offence. In Municipal Corpn. vs Kacheroo Mal, ; Sarkaria, J. said: "The Act has been enacted to curb and remedy the widespread evil of food adulteration, and to ensure the sale of wholesome food to the people. It is well settled that wherever possible, without unreasonable stretching or straining the language of such a statute, should be construed in a manner which would suppress the mischief, advance the remedy, promote its object, prevent its subtle evasion and foil its artful circumvention . . " (Emphasis Supplied) The construction appropriate to a social defence legis lation is, therefore, one which would suppress the mischief aimed at by the legislation and advance the remedy. The offences under the 'Act ' are really acts prohib ited by the police powers of the State in the interests of public health and wellbeing. The prohibition is backed by the sanction of a penalty. The offences are strict statutory offences. Intention or mental state is irrelevant. In Good fellow vs Johnson, at 944 referring to the nature of offences under the Food and Drugs Act, 1955, it was said: "As is well known, section 2 of the Food and Drugs Act, 1955, constitutes an absolute offence. If a person sells to the 147 prejudice of the purchaser any food, and that includes drink, which is not of the nature or not of the substance or not of the quality demanded by the purchaser he shall be guilty of an offence. The forbidden act is the sell ing to the prejudice of the purchaser . " Smedleys Limited vs Breed, is a case, both interesting and illustrative. Smedleys Ltd. were manu facturers of canned peas of repute. Out of the three and a half million tins of peas the company produced in the year 1971, only 4 complaints were received about the presence of extraneous matter in the tins. One of them had been pur chased by a certain Mrs. Voss from a well known stores. On opening the tin, Mrs. Voss found a small larva of a moth in the tin. The commendable civic zeal of Mrs. Voss who report ed the larva infestation of the peas to the local authority had the effect of arraigning Smedleys Ltd. before court on charge of violation of the Food and Drugs Act, 1955. Section 3(3) of the Act enabled a defence which the company raised that the extraneous matter was "an unavoidable consequence of the process of collection or preparation" The company, it would appear from the facts appearing in the report, had installed and elaborate system of spot checking of the peas by mechanical screening process before canning which elimi nated extraneous matter of significantly higher or lower specific gravity than that of the peas. This process was also strengthened and supplemented by visual inspections by properly trained and experienced employees who worked for short periods to enable sustained concentration along the conveyer belt carrying the peas to the canning site. To the strange ill luck and embarrassment of Smedleys the larva which had a specific gravity and size similar to that of the peas beat the screening machine and also managed, by virtue of its colour and shape, to escape the surveillance of the alert visual inspectors, who, it is said, were also paid a bonus if they detected and extracted any extraneous matter. The peas, incidentally, would be pressure cooked for 20 minutes at 250xF which, would render the larva harmless to human health even if consumed. The company contended that the existence of the larva was despite every possible pre caution and was "an unavoidable consequence of the process of collection and preparation" within the meaning of Section 3(3) of the Act. The defence did not succeed. Smedleys as well as the seller were convicted. The House of Lords con firmed the conviction. Lord Hailsham said: " . . This innocent insect, thus deprived of its natural destiny, was in fact entirely harmless, since, prior to its 148 entry into tin, it had been subjected to a cooking process of 20 minutes duration of 250xF, and, had she cared to so, Mrs. Voss could have consumed the caterpillar without injury to herself, and even, perhaps, with benefit . . " [p. 24] "Thereafter, the caterpillar achieved a sort of posthumous apotheosis. From local authority to the Dorchester magistrates, from the Dorchester magistrates to a Divisional Court presided over by the Lord Chief Justice of England,from the Lord Chief Justice to the House of Lords, the immolated insect has at length plodded its methodical way to the highest tribunal in the land. It now falls to me to deliver my opinion on its case." [p. 24] Referring to the nature of the penalties under laws against food adulteration, Lord Chancellor said: "My Lords, as has been pointed out by my noble and learned friend, Lord Diplock, the expres sion 'absolute offence ' is imprecise. Clearly the offence contemplated in section 2(1) of the Food and Drugs Act 1955 is an absolute offence if all that is .meant by that is an absence of mens rea. It is one of those offences de scribed by Wright J in Sherras vs De Rutuzen which 'are not criminal in any real sense, but are acts which in the public interest are prohibited under a penalty '." [p. 26] Confirming the conviction, Lord Chancellor held: " . . sympathise as one may with a manu facturer with a reputation and record as excellent as that of the appellants, to con strue the Food & Drugs Act 1955 in a sense less strict than that which I have adopted would make a serious in road on the legisla tion for consumer protection which Parliament has adopted and by successive Acts extended, over a period, now, of more than a century . . " [ p.29] In Pyarali K. Tejani vs Mahadeo Ramchandra Dange, [1974] 2 SCR 154 this court held that what constitutes the offence under the 149 'Act ' is nothing more than the 'actus reus ' and mens rea need not separately be established. In Criminal Law by J.C. Smith & Brian Hogan, (5th Edn.), referring to offences in their social context the authors say: "The courts are greatly influenced in their construction of the statute by the degree of social danger which they believe to be in volved in the offence in question. They take judicial notice of the problems with which the country is confronted. The greater the degree of social danger, the more likely is the offence to be interpreted as one of strict liability. Inflation, drugs, road accidents and pollution are constantly brought to our attention as pressing evils; and in each case the judges have at times invoked strict li ability as a protection for society." [p.9 2] 9. We now come to the specific question whether "supari" is includible under "Fruit Products" under rule 29(f). Sri Girish Chandra says that in arriving at the meaning of "Fruit Products", it is not the technical or scientific sense, but the sense as understood in commonparlance that matters. That sense is one Sri Girish Chandra says, which people conversant with the subject matter with which the statute is dealing would attribute to it. The words must be understood, says counsel, in their popular sense, in their common commercial understanding, "for the legislature does not suppose our merchant to be naturalists or geologists or botanists. " The standard of the test for ascertaining the meaning of words in common parlance is set by the Candanian case in Planters Nut and Chocolate Co. Ltd. vs The King, "Would a house holder when asked to bring home fruits or vegetables for the evening meal bring home salted Peanuts, cashew nuts or nuts of any sort? The answer is obviously 'NO '. " This test has been referred to with approval by this court. [See: Ramavatar Budhai Prasad vs The Assistant Sales Tax Officer, (XII STC 286)] Sri Girish Chandra says that in the context of the Indian House holder we may, with justifica tion, add Betel nut to the list of salted pea nuts, cashew nuts etc. 150 10. The distinction between literal and legal meaning of statutory language lies at the heart of the problem of interpretation of statutes. The court is not entitled to decline to determine the legal meaning of a statute on the principle 'non liquet '. In the present case, a wider con struction of "Fruit Products" in clause (f) which is in the nature of exception to Rule 29 results automatically in a corresponding narrower construction of the substantive provision in Rule 29. This is not a case of a relieving provision excepting from the definition of an offence where the Rule of construction against doubtful penalisation operates. The offence is really a violation of a prohibition imposed on a penalty as a social defence mechanism in a socio economic legislation. No form of words have ever yet been framed, with regard to which some ingenious counsel could not suggest a difficulty. But in the context of the present statute, it would be a strain on the statutory language and the statutory scheme to include "supari" in the form in which it was sold, within "Fruit Products" as under stood in clause (f) of Rule 29. The first contention has, accordingly, no substance. The second contention is that petitioner had acted bona fide on a particular understanding of the Rule 29(f) which could not be said to be wholly implausible and that, therefore, even if that understanding is found to be defec tive, he should be entitled to the benefit of the doubt. The question of what a word means in its context within the 'Act ' is a question of legal interpretation and, therefore, one of law. The choice of the proper rule of construction to be applied to ascertain the meaning is again a matter of law. To countenance the contention of Sri Ganatra would be to "contradict one of the fundamental postulates of a legal order that Rules of law enforce objective meanings to be ascertained by the courts" and to "substitute the opinion of the person charged with the breach of the law for the law itself. " Otherwise, the consequence would be that whenever a defendant in a criminal case "thought that the law was thus and so, he is to be treated as though the law was thus and so, that is, the law actually is thus and so". [See Criminal Law: Smith & Hogan p. 70]. Justice Holmes in United States vs Wurzbach, ; at 399 said: "Wherever the law draws a line there will be cases very near each other on opposite sides. The precise course of the line maybe uncer tain, but no one can come near it without knowing that he does so, if he thinks, and if he does so it is familiar to the criminal law to make him take the risk. " 151 Referring to the principles that guide the matter, learned authors in Criminal Law (Smith & Hogan) say: " . . for, in the great majority of cases, it is irrelevant whether he knows it or not. It must usually be proved that D intended to cause, or was reckless whether he caused, the event or state of affairs which, as a matter of fact, is forbidden by law; but it is quite immaterial to his conviction (though it may affect his punishment) whether he knew that the event or state of affairs was forbidden by law . " [p.68 ] " . It was held that a Frenchman might be guilty of murder in the course of duelling in England, even if he did not know that duelling was against English law . ." [p.68] 12. The plea in the last analysis reduces itself to one of ignorance of the law. This would be no justification. Ten thousand difficulties, it is said, do not make a doubt. As the learned authors (supra) put it. "One who, being ignorant of the law, sells goods at a price in excess of the miximum fixed by the statute, could hardly be said to have been led astray by his conscience while the 'harm prescribed ' lacks objective wrongness". The Statute we are concerned with prescribes a strict liability, without need to establish Mens Rea. The Actus Reus is itself the offence. There might be cases where some mental element might be a part of the Actus Reus itself. This is not one of those cases where anything more than the mere doing of the prescribed act requires to be proved. There is thus no merit in the second point either. The appeal would, therefore, require to fail. The sen tence, which is the statutory minimum, cannot also be light ened by the court. But there is one poignant aspect on which learned counsel made an impassioned plea. Sri Ganatra pointed out the hardship of a small time tradesmen who, as here, purchase the goods from big manufac turers and sell them in retail. Very often, the manufactur ers or wholesalers are not touched, but the small fry are exposed to prosecution. 152 Indeed in Ganeshmal Jashraj vs Govt. of Gujarat and Anr. , ; Bhagwati, J. had occasion to say: " . . It is common knowledge that these small tradesmen purchase the food stuff sold by them from the wholesalers and sometimes even directly from the manufacturers and more often than not the adulteration is made either by the wholesalers or by the manufacturers. Ordinarily it is not the small retailers who adulterate the articles of food sold by them. Yet it is only the small retailers who are caught by the food inspectors and the investi gative machinery of the food department does not for some curious and inexplicable reason turn its attention to the wholesalers and manufactures. The small tradesmen who eke out a precarious existence living almost from hand to mouth are sent to jail for selling food stuff which is often enough not adulterated by them and the wholesalers and manufacturers who really adulterate the food stuff and fatten themselves on the misery of others escape the arm of the law . . " [p. 1117] " . . The result is that a wrong impres sion is being created on the public mind that the law is being properly enforced, whereas in fact what is really happening is that it is only. the small tradesmen who are quite often not themselves responsible for adulteration who are caught and sent to jail while there is no effective enforcement of the law against the real adulterators. This is a failing which we notice in the implementation of many of our laws. It is only the smaller flies which get caught in the web of these law while the bigger ones escape . . " [p.1118] " . . The implementation of the law does create an impression that it is a law meant to be operative only against the smaller men and that the rich and the well to do are beyond its reach. Moreover the law operates very harshly against the small tradesmen because a minimum sentence is provided and the small tradesmen are liable to be sent to jail . . " [p .1118 9] (Emphasis Supplied) 153 Krishna Iyer, J. in Inderjeet vs U.P. State, ; said: " . . We are disturbed that it is possible that small men become the victims of harsh law when there is no executive policy which guides prosecution of offenders . . " [p. 257] " . . Even otherwise, there is a general power in the Executive to commute sentences and such power can be put into action on a principled basis when small men get caught by the law." [p. 257] (Emphasis Supplied) The present case, as Sri Ganatra rightly pointed out, is one where bigger offenders who manufactured the supari and who distributed them to the retailers have gone scot free. Unfortunately, appellant did not, and perhaps could not, invoke the benevolent provisions of Section 19(2) of the Act. The offence was ten years ago and the appellate court had acquitted the appellant. The expression "Fruit Products" in the context of what the Delegated legislative authority really meant and wanted to convey, was not a model of preci sion. The degree of precision should be such that not only those who read it in good faith understand but also that those who read it in bad faith do not misunderstand. Indeed this somewhat imperfect definition of "Fruit Products" in Rule 29(f) has since been amended enumerating precisely the specific products in which the food colours permitted by Rule 28 could be used leaving no room for the possibility of any argument of the kind advanced in this case. This amendment which came into force with effect from 15.11.1984 deleted the expression "Fruit Products" and in its place specifically enumerated the items under Rule 29(f) in which the use of permitted coal tar food colours was allowed. It is for these reasons that we think we should hold that this is a 'fit case in which the appropriate Government should exercise its executive powers of remission of the substantive sentence of imprisonment though not of the fine under Section 432 Cr. P.C. or under other law appro priate to the case. We, therefore, direct that the 154 imposition of the substantive sentence of imprisonment shall be postponed till appellant 's prayer for remission, which appellant shall make within a month from now before the appropriate Government or Authority, is considered and disposed of taking into account the observations made in this judgment. Subject to these circumstances, the appeal is dismissed. P.S.S. Appeal dismissed.

Rule 23 of the Prevention of Food Adulteration Rules, 1955 prohibits the addition of any colouring matter to an article of food, except as specifically permitted by the rules. Rule 28 interdicts use of coal tar food colours or a mixture thereof, except those specifically enumerated there in, in food. Item 2 of the said list includes 'sun set yellow FCF '. Rule 29 prohibits the use of even the coal tar food colours permitted under Rule 28, in or upon any food, other than those enumerated in Rule 29. 'Fruit products ' was one such item of food so enumerated under cl.(f) of Rule 29 as it stood at the relevant time. Section 16 of the Preven tion of Food Adulteration Act, 1954 provides for punishment of the offenders. The appellant, a tradesman, was found guilty by the Trial Court of the offence of selling 'Kesari coloured sweet supari sali ' adulterated with yellow basic coal tar dye and sentenced to one year 's simple imprisonment and a fine of Rs.2,000, both being statutorily compulsory 139 minimum sentences under section 16(1)(a)(i) of the Act. He was, however, acquitted of the charge by the first appellate court but on appeal by the State the High Court reversed the judgment of acquittal and restored the conviction and sen tence. In this appeal by special leave, it was contended for the appellant that the legislation being penal, the expres sion 'Fruit products ' in Rule 29(1 ') should receive a rea sonably liberal construction, and if so construed, 'supari ' being basically and essentially an yield of the arecapalm would reasonably admit of being considered such a fruit product in which the use of coal tar colours was not prohib ited. In the alternative, it was contended that 'supari ' in the form in which it was offered for sale in this case was a 'flavouring agent ' within the meaning of Rule 29(m), in which case also the use of permitted coal tar food colours was not prohibited. It was further contended that the appel lant having acted bona fide on a particular understanding of Rule 29(1) which could not be said to be wholly implausible, he should be entitled to the benefit of doubt. Lastly, a grievance was made that the appellant, who was a small time tradesman and had purchased the supari from a big manufac turer to sell in retail, had alone been exposed to prosecu tion while the distributor had gone scot free. Dismissing the appeal, HELD: 1.1 The scheme of Rule 23, 28 and 29 of the Pre vention of Food Adulteration Rules, 1955 makes it apparent that coal tar food colours permitted by Rule 28 can be used if the food articles in question are 'Fruit products ' as understood in Rule 29(1). [144C, F] 1.2 'Supari ' in the form in which it was offered for sale in the instant case though vegetative in origin and derived from and prepared out of the usufruct of areca palm, does not admit of being classified as a 'Fruit product ' under Rule 29(1). Merely because a particular article of food was of plant origin did not render that article neces sarily a 'Fruitproduct '. Even products derived from, or associated in their origin with fruits need not ipso facto be 'Fruit products ' for purposes and within the meaning of Rule 29(1). Item 16 of Appendix B to the Rules, which dealt with 'Fruit products ', referred to juice, syrup, squash, beverage, drinks, sauce, ketchup, relish, marmalade, chatni etc. That indicated what were envisaged as 'Fruit products ' in Rule 29(1). 'Supari ' also does not admit of being classi fied as a 'flavouring agent ' under Rule 29(m). [145F H; 146A] 140 2. The distinction between literal and legal meaning of statutory language lies at the heart of the problem of interpretation of statutes. The Court is not entitled to decline to determine the legal meaning of a statute on the principle of non liquet. In the instant case, a wider con struction of 'Fruit Products ' in cl.(f) which is in the nature of exception to Rule 29, results automatically in a corresponding narrower construction of the substantive provision in Rule 29. This is not a case of relieving provi sion excepting from the definition of an offence where the rule of construction against doubtful penalisation operates. The offence is really a violation of a prohibition imposed on a penalty as a social defence mechanism in a socio eco nomic legislation. The construction appropriate to such a legislation would be one which would suppress the mischief aimed at and advance the remedy. It would, therefore, be a strain on the statutory language and the statutory scheme to include 'supari ' in the form in which it was sold, within 'Fruit products ' as understood in cl.(f) of Rule 29. [150A D] Planters Nut and Chocolate Co. Ltd. vs The King, ; Ramavatar Budhai Prasad vs The Assistant Sales Tax Officer, XII STC 286; Municipal Corpn. vs Kacheroo Mal, ; ; Goodfellow vs Johnson, [1965] 1 All E.R. 941 and Criminal Law: Smith & Hogan, 5th Edn. p. 92, re ferred to. 3.1 The question of what a word means in its context within the Act is a question of legal interpretation and, therefore, one of law. The choice of the proper rule of construction to be applied to ascertain the meaning is again a matter of law. To countenance the contention of the appel lant that he had acted bona fide on a particular understand ing of Rule 29(f) would be to contradict one of the funda mental postulates of a legal order that rules of law enforce objective meaning to be ascertained by the courts, and to substitute the opinion of the person charged with the breach of the law for the law itself. Otherwise, the consequence would be that whenever a defendant in a criminal case thought that the law was thus and so, he is to be treated as though the law was thus and so, that is, the law actually is thus and so. [150D G] United States vs Wurzbach, ; (@) 399; Criminal Law: Smith & Hogan, 5th Edn. p. 70, referred to. 3.2 The statute prescribes a strict liability without need to establish mens rea. The actus reus is itself an offence. There might be cases where some mental element might be a part of the actus reus itself. This is not one of those cases where anything more than the mere doing 141 of the prescribed act requires to be proved. The appellant is, therefore, not entitled to the benefit of doubt. [151F] Pyarali K. Tejani vs M.R. Dange, [1974] 2 SCR 154; Goodfellow vs Johnson, ; Smedleys Limited vs Breed, and Criminal Law: Smith & Hogan, 5th Edu. p. 92, referred to. The big offenders who manufactured the 'supari ' and who distributed them to the retailer in the instant case have gone scot free. The offence was committed ten years ago and the appellate court had acquitted the appellant. Fur thermore, the expression 'Fruit products ' in Rule 29(f) in the context of what the delegated legislative authority really meant and wanted to convey was not a model of preci sion and has since been deleted enumerating in its place precisely the specific products in which the food colours permitted by Rule 28 could be used, leaving no room for the possibility of any argument of the kind advanced in this case. [153D E, F] This is, therefore, a fit case in which the appropriate Government should exercise its executive powers of remission of the substantive sentence of imprisonment, though not of fine, under section 432 Cr. P.C. or under other law appropriate to the case. The imposition of the substantive sentence of imprisonment on the appellant to be postponed till his prayer for remission, which he shall make, is considered and disposed of. [153G H; 154A B] Ganeshmal Jashraj vs Govt. of Gujarat and Anr. , ; and Inderjeet vs U.P. State, ; , referred to.

Petition Nos. 1483, 1494 and 1544 of 1986 etc. Under Article 32 of the Constitution of India. Dr: Y.S. Chitale, Satish Chandra, P.K. Banerjee, S.N. Kacker, K.C. Agarawal, S.S. Rathore, L.K. Garg, M.K.D. Namboodiary, P.M. Amin, Ashok Grover, Bulchandani, M.N. Shroff, P.H. Parekh and Sohail Dutt for the Petitioners. K. Parasaran, Attorney Genera1, G. Ramaswamy Additional Solicitor General, G. Subramaniam, A.S. Rao, Ms. Relan and P.P. Parmeshwaran for the Respondents. R.S. Nariman, (Indo Afghan Chamber of Commerce). Kapil Sibal, (M/s Raj Prakash Chemicals) and Rajiv Dutta for the Interveners. The Judgment of the Court Was delivered by SABYASACHI MUKHARJI, J. Writ Petition No. 1483 Of 1986 is directed. against 'the Show Cause Notices dated 21st August, 1986, 11th September, 1986 and 26th September, 1986 issued to the petitioners Messrs.D. Navinchandra & Company, a partnership firm and Dilip Kumar Dalpatlal Mehta, a part ner 'of the said firm. In order to 'appreCiate this chal lenge;, it is necessary to refer to certain facts. This petition raises the question of the rights of the petition ers and 993 other diamond exporters who were entitled to export house certificates and additional licences under import policy of 1978 79 and who were granted the same pursuant to the judg ment and 'order of this Court dated 18th April,1985. As we shall explain later, there is no conflict With this decision of a Bench which consisted of a bench of three judges and the subsequent decisions of this Court which We. Shall presently refer. It is necessary also that in order to make out. a case, the petitioners have sought to emphasise on the point that the decision dated 18th April, 1985 was a deci sion of three learned Judges, in Order to spin out a case of some sort of conflict with this decision and certain subse quent decisions of this Court consisting of benches of two ' learned judges. It appears that the import policy issued by the Government of India for the year 1978 79 by paragraph 176 provided for, additional licences. On 29th April, 1979, the first petitioner, a diamond exporters, was refused Export House Certificate. The said. petitioner filed a writ petition before the High Court of Bombay. being Misc. peti tion No. 1293/1979. By his order and judgment, Pendse , J. made the rule absolute holding that canalised items were not banned items, and there was no reason why the first peti tioner should not be compel " led to approach the canalising agency for import of the same. On 7th April, 1983, the Delhi High Court delivered a judgment in Civil writ Petition No. 1501 of 1981 (which for the sake of convenience, the party has chosen to describe as Rajnikant Bros. & Ors. case allow ing the diamond exporters the same and holding that merely Canalising an item could not be regarded as import of that item being absolutely banned. Against` these judgments special leave petitions were filed in this Court, Appeal was also filed on 27th March. 1984 by the Import Control Authorities and Union of India against the judgment dated 11th November, 1983 mentioned hereinbefore passed by Pendse, J. and the said appeal as dismissed on that date. Against the ' same, the, Export Control authorities and Union of India filed special leave petition No. 7190 Of 1984 in this Court. Similar special leave petitions were filed in this Court against similar judgments of the Bombay High Court. On 18th April, 1985, by a common judgment, the special leave. petitions were disposed of. As much has been made out 'of this judgment and order, it is necessary to refer to the same. The matter was disposed of by the order in Civil Appeal No, 1423 of 1984 ' by a bench consisting Fazal Ali, J., Varadarajan, J. and one of us (Sabyasachi Mukharji, J.). It was held by the said order that there was no requirement of diversification of exports as a condition for the grant of Export 994 House Certificate in the Import Policy for 1978 79. There fore, while confirming the High Court 's judgment, quashing the order impugned in the writ petitions in the High Court, this Court directed the appellants namely Union of India and Import Control authorities to issue necessary Export House Certificates for the year 1978 79. It was further directed that Export House Certificates should be granted within three months from that date. The order stated that 'save and except items which are specifically banned under the preva lent import policy at the time of import, the respondents shall be entitled to import all other items whether cana lised or otherwise in accordance with the relevant rules '. The appeals were disposed of accordingly with no order as to costs. Pursuant to the aforesaid order, on 29th July, 1985, import licence was issued, it is claimed, to the first petitioner. of the c.i.f. value of Rs.71,15,900. Pursuant to the said import licence, the first petitioner imported several consignments of items failing either under Appendix 3 (List of Limited Permissible Items), Appendix 2B (List of Restricted Items) or Appendix 5 (Canalised Items). According to the petitioner, in the matter of clearance of such con signments different standards were applied by the Custom authorities. On 18th October, 1985, in special leave petition No. 11843 of 1985 In the case of Raj Prakash Chemicals Ltd. vs Union of India this Court directed that Acrylic Ester Mono mors would not be permitted to be cleared until further orders unless they had already been cleared. Similarly, on 31st January, 1986, interim order was passed in the case of M/s Indo Afghan Chambers of Commerce vs Union of India (Writ Petition No. 199 of 1986) directing that Dry Fruits in respect of which Custom clearance had been obtained till 30th January, 1986 would be allowed to be cleared and no clearance of Dry fruits from 31st January, 1986 onwards would be made by the Custom authorities until further or ders. On 5th March, 1986, judgment was delivered in the case of Raj Prakash Chemicals Ltd. and Another vs Union of India and Others, by a bench consisting of three learned Judges Tulzapurkar, J. and two of us (R.S. Pathak, J. as the Chief Justice then was, and Sabyasachi Mukharji, J.). This Court held that additional licence holders were entitled to import items permissible to Export Houses under Import Policy 1978 79 excluding those items which fell in Appendix 3 (List of Banned Items) of the Import Policy 1985 88. This Court observed that diamond exporters who were granted Addi 995 tional Licences had formed a bona fide belief that they could import all the items accessible to them under Open General Licence under the Import Policy of 1978 79 except those placed in Appendix 2 Part A of the Banned List under the Import Policy 1985 88. This belief was formed on the basis of consistent orders of the High Courts and consistent manner in which Import Control authorities construed those orders. In view of such a belief, it was further held by this Court, in the interest of broad principles of justice, equity and fair play and to avoid undeserved hardship, without going to the legal technicalities that those diamond exporters who were granted Additional Licences under the Import Policy 1978 79 and had opened and established irrevo cable letters of credit before 18th October, 1985 i.e. the date on which the interim order was passed by this Court in Raj Prakash 's case as mentioned hereinbefore, should be permitted, notwithstanding the construction placed by this Court on the order dated 18th April, 1985 of this Court, to clear the goods imported, or to be imported by them pursuant to such irrevocable letters of credit. In other words, all imports effected pursuant to such letters of credit should be deemed to have been legally and properly made, and should entail no adverse consequences whatsoever. This Court fur ther reiterated that the Court must be presumed to have given effect to law That presumption can be rebutted only upon evidence showing a clear intention to the contrary, either expressly or by necessary implication. This Court noted that the order dated 18th April, 1985 which we have set out hereinbefore used the expression "specifically banned" and the controversy before this Court in Raj Pra kash 's case was on the meaning of the expression 'specifi cally banned ' and the controversy between the parties cen tered round the meaning of the words 'specifically banned '. It was mentioned that Appendix 3 is the list of items which could not be imported by an Export House on additional licence, it was a ban with reference to the category of importers. Appendix 4 is the list of items which could not be imported by anyone whosoever. This Court, therefore, was of the view that when regard is had to the Import Policy 1984 85, reference must necessarily be made to the corre sponding Appendix 3, formerly described as the List of Banned Items and now described as the List of Limited Per missible Items, and Appendix 2 Part A which is now the list of Banned Items replacing Appendix 4 (List of Absolutely Banned Items). In other words, said the Court, the Addition al Licences to be issued to diamond exporters entitled them to import items permissible to Export Houses under such licence under the Import Policy 1978 79 excluding those items which fell within Appendices 3 and 4 of the Import Policy 1978 79 and also excluding items which fell in Appen dix 3 and Appendix 2 Part A of the Import This Court was of the view that this is the meaning which must be given to the terms of the order dated 18th April, 1985. This Court noted that when this Court made the previous order on 18th April, 1985 when the Import Policy of 1985 88 was in force. there were only two items which were absolutely banned. and these were animal tallow and animal cannot. That was also Substantially the position under the Import Policy 1984 85. This Court was of the view that in the Import Policies of 1984 85 and 1985 88 the items open to import under Open General Licence were then set forth, when Raj Prakash 's judgment was delivered i.e. in Appendix 6. A perusal of Part I1 of List 8 in Appendix 6 indicated that it enumerated in fairly long detail the items allowed to be imported by the Export Houses holding Additional Licences for sale of those items to eligible Actual Users (Industrial) subject to Actual User conditions. That was the entitlement of the holder of an Additional Licence under paragraph 265(4) of the Import Policy 1985 88. It is necessary to set out in detail the aforesaid judgment and also to refer to the order of 18th April. 1985 to emphasise that whether non canalised items could be imported directly. and not through canalised agency, was not in issue in either of these two cases. nor decided or adju dicated upon. In the judgment in Raj Prakash 's case (supra), it was held that Additional Licence holders were entitled to import items permissible to Export Houses under the Import Policy 1978 79 excluding those items which fell in Appendix 3 (list of banned items) of the Import Policy 1985 88. On 17th March, 1986, letter was written by the Joint Chief Controller of Imports to Messrs. B. Vijay Kumar and Co. stating that against Additional Licences issued in terms of this Court 's Order dated 18th April, 1985, import of items permissible against Additional Licences in terms of Policy for 1978 79 would be allowed even if such items were in the list of canalised items in Policy for 1978 79. On 3rd April, 1986, there was a meeting with Member of C.B.E.C. and Principal Collector where the minutes recorded that items which were under O.G.L. during 1978 79 and subse quently canalised in Policy for 1985 88 would be allowed to be imported. On 23rd April, 1986, a circular was issued from the Under Secretary to the Government of India to port authorities stating that canalised items 997 were not covered within the purview of this Court 's decision in Raj Prakash 's case and Additional Licence holders would be allowed to import canalised item. By a letter on 14/15th May, 1986 from Principal Collector to Chairman, Western Region, Federation of Indian Export Organisation, the matter had been clarified and clearance of canalised items against Additional Licences was unconditionally allowed. This Court again dealt with the question in the case of M/s Indo Afghan Chambers of Commerce and Another etc. vs Union of India and Other etc., [1986] 3 SCC 352. In that decision two of us (R.S. Pathak, J. as the learned Chief Justice then was and Sabyasachi Mukharji, J.) were parties. It was held that under the import policy of 1978 79 dry fruits (exclud ing cashewnuts) could be imported by all persons under the Open General Licence. There was no need to obtain any Addi tional Licence for importing items in the year 1978 79 and therefore, the wrongful denial of Additional Licences to diamond exporters in the year 1978 79, could not justify any restitution subsequently in regard to the import of dry fruits (other than cashewnuts). It was further observed that under the Import Policy 1985 88, dry fruits (excluding cashewnuts and dates) were no longer open to import under the Open General Licence. The sanction for importing them must be found under some other provision of the Import Policy. The diamond exporters, it was held, ' could not be regarded as dealers engaged in the trade of stocking and selling dry fruits (excluding cashewnuts and dates). They were, therefore, not entitled to the advantage of paragraph 181 (3) of the Import Policy 1985 88. Dry fruits, it was further held, must be regarded as consumer goods of agricul tural origin. The words "agricultural origin" in Item 121 of Appendix 2 Part B are used in the broadest sense. The words 'consumer goods ' in item 121 referred to dry fruits imported for supply to Actual Users (Industrial). It was further held that dry fruits do not appear in Appendix 3 Part A and 5 nor can be imported under the Open General Licence under the Import Policy 1985 88, Inasmuch as they fail within Item 121 of Appendix 2 part B they are excluded from the scope of Item 1 of Appendix 6, and cannot be imported as raw materi als and consumables for sale to Actual Users (Industrial). Appendix 2 Part B (List of Restricted Items) was also suc cessor of Appendix 4 (List of Absolutely Banned Items) under the Import Policy 1978 79. This Court reiterated, and it was important to emphasise, that On the reasoning which found favour with this Court in Raj Prakash 's case, it must be held that diamond exporters holding Additional Licences were not entitled to import goods enumerated in Appendix 2 Part B of the Import Policy 1985 88. As held in that case, holders of Additional Licences were 998 entitled to import only those goods which were included in Appendix 6 Part 2 List 8 of the Import Policy 1985 88. Dry fruits were not included in that list and therefore they could not be imported under Additional Licences. It is stated that on 20th May, 1986, there was an order of adjudication in respect of one consignment of the first petitioner in this case i.e. Messrs. D. Navinchandra & Co. of items falling in Appendix 2B (List of Restricted Items) ( 10 Bills of Entry) imposing fine aggregating to Rs.45,000. Then on 21st August, 1986, a show cause notice was issued to the first petitioner in this petition in respect of consign ment falling in Appendix 5 (Canalised Items) of the Policy for 1985 88. Reply was duly given on 9th September, 1986 and a show cause notice was issued on 11th September, 1986 to the first petitioner in respect of one consignment falling in Appendix 2B (List of Restricted Items) of Policy for 1985 88. In the meantime, this Court had occasion to examine some passage of this decision. This question was examined and it is necessary to refer to the said two subsequent decisions of this Court. The first one is the decision in Union of India vs Godrej Soaps Pvt. Ltd. and Another, ; and the second one is the decision in M/s Star Diamond Co. India vs Union of India and Others, ; It is neces sary first to refer to Godrej Soaps ' case. It was held that a diamond exporter could import the items he was entitled to import under the Import Policy 1978 79 provided they were importable also under the Import Policy ruling at the time of import. These are items which are open to import by an Export House holding an Additional Licence for sale to eligible Actual Users (Industrial). These are items which could be directly imported, for example, the items enumerat ed in Part 2 of List 8 of Appendix VI of the Import Policy 1985 88. These are items which are not 'canalised '. 'Cana lised ' items are those items which are ordinarily open to import only through a public sector agency. There is, howev er, nothing to prevent an Import Policy from providing in the future that an Export House holding an Additional Li cence can directly import certain canalised items also. In that event, an Export House holding an Additional Licence would be entitled to import items "whether canalised or otherwise", meaning thereby items open ordinarily to direct import (non canalised items) as well as items directly importable although on the canalised list. It is in that sense that the Court had intended to define the entitlement of a diamond exporter by using the words "whether canalised or otherwise" in its order dated 18th April, 1985. 999 In that case this Court found that in respect of Palm Kernel Fatty Acid which was a canalised item listed as Item 9(v) in Appendix V Part B of the Import Policy 1985 88, there is no provision in that policy which permitted the import of such item by an Export House holding an Additional Licence. Therefore, both on grounds of equity and construc tion the claim of the diamond exporters, or, as in that case, a purchaser from the diamond exporter, was held to be not maintainable. As importation of canalised items, this Court reiterated, directly by holders of additional licences was banned, it should not be construed to have been permit ted by virtue of the order of this Court and the items sought to be imported do not come within List 8 of Part 2 of Appendix 6 of the Import Policy of 1985 88 against addition al licences. It was found that the goods were purchased by the respondents in that case after they were aware of the position of law as enunciated in Raj Prakash 's case as well as Indo Afghan Chambers of Commerce 's case. No question of any restitution of rights, therefore, arose. Goods in ques tion being specially banned goods, these could not be im ported under Item I of Appendix 6 (Import of items under Open General Licence) of Import Policy, 1985 88, more so the import being not by the Actual User (Industrial) but by somebody else from whom the respondent purchased the goods. This position was reiterated in the case of M/s Star Diamond Co. India vs Union of India and others (supra). This Court further reiterated that a decision of this Court is binding on all. To complete the narration of events, reply was given by the first petitioner to the show cause notice dated 11th September, 1986 on 18th September, 1986. On 26th September, 1986, another show cause notice was issued to the Petitioner in respect of another consignment falling in Appendix 2B (List of Restricted Items) of Policy for 1985 88. Personal hearing was given to the first peti tioner thereafter. The petitioner moved this Court under Article 32 of the Constitution, for quashing the show cause notices dated 21st August, 1986, 11th September, 1986 and 26th September, 1986 and the order of adjudication dated 20th May, 1986 and for consequential relief. We are, however, unable to find any merit in this appli cation either in law or in equity. 1000 One of the points on which an argument was sought to be built up was that the Bench of two judges of this Court in the subsequent decisions had cut down the effect of the decision of this Court dated 18th April, 1985 in the case of Union of India vs Rajnikant Bros. It has been stated that in subsequent decisions referred to hereinbefore, this Court had deviated and indeed differed from the view expressed in that case. It was urged that in Rajnikant Bros. case a bench of three judges categorically stated that the respondents would be entitled "to import all other items whether cana lised or otherwise" except those which were specifically banned under the prevalent import policy at the time of import, with the relevant rules. In our opinion, the subse quent decisions referred to hereinbefore do not take any different or contrary view. Indeed it gives effect to the letter and spirit of the said decision. It has to be borne in mind, that the basic background under which the Rajni kant 's decision was rendered, the Export Houses had been refused Export House Certificates because it was insisted that they should have diversified their export and that was a condition for the grant or entitlement of an export house certificate. It was found and it is common ground now that that was wrong. Therefore, the wrong was undone. Those who had been denied Export House Certificates on that wrong ground were put back to the position as far as it could be if that wrong had not been done. To do so, the Custom au thorities and Govt. authorities were directed to issue necessary Export House certificates for the year 1978 79 though the order was passed in April, 1985. This was a measure of restitution, but tile Court, while doing so, ensured that nothing illegal was done. It is a presumption of law that the courts act lawfully and will not ask any authority to do anything which is illegal. Therefore, the court directed that except those which were specifically banned under the prevalent import policy at the time of import, the respondents shall be entitled to import all other items whether canalised or not canalised in accordance with the relevant rules. Analysing the said order, it is apparent, (1) that the importation that was permissible was of goods which were not specifically banned, (2) such ban ning must be under the prevalent import policy at the time of import, and (3) whether items which were canalised or un canalised would be imported in accordance _with the relevant rules. These conditions had to be fulfilled. The court never did and could not have said that canalised items could be imported in any manner not permitted nor it could have given a go bye to canalisation policy. It must be emphasised that in the case of Raj Prakash (supra), this position has been explained by saying that only such items could 1001 be imported by diamond exporters under the Additional Li cences granted to them as could have been imported under the Import Policy of 1978 79. the period during which the dia mond exporters had applied for Export House Certificates and had been wrongly refused and were also importable under the import policy prevailing at the time of import which in the present case would be during the import policy of 1985 88. These were the items which had not been 'specifically banned ' under the prevalent import policy. The items had to pass to two tests. firstly, they should have been importable under the import policy 1978 79 and secondly they should also have been importable under the import policy 1985 88 in terms of the Order dated 18th April. 1985 and if one may add. in such terms in accordance with the import rules ' whether canalised or not canalised. It must be emphasised that in this case also. the CoUrt had no occasion to consid er the significance of the words 'whether canalised or otherwise ' mentioned in the Order dated 18th April. 1985 because that point did not arise in the case before it. What did the court then intend by these words used by the court? We have seen that diamond exporters could import the items which they were entitled to import under the Import Policy 1978 79 provided they were importable also under the import policy ruling at the time of import. These are items which were open to import by Export Houses holding Additional Licences for sale to the Actual Users (Industrial). These are items which were directly imported, for example, items in Part 2 List 8 of Appendix 6 of Import Policy 1985 88. These are items which are not canalised. Canalised items are those items which are ordinarily open to import only through a public sector agency. Although generally these are import able through public sector agencies, it is permissible for any import policy to provide an exception to the rule and to declare that an importer might import a canalised item directly. It is in that sense and that sense only that the Court could have intended to define the entitlement of diamond exporters. They would be entitled to import items which were canalised or not if the import policy prevailing at the time of import permitted them to import items falling under such category. This was also viewed in that light in the case of Indo Afghan Chambers of Commerce (supra). It must be emphasised that in the Order dated 18th April, 1985, this Court did not do away with canalisation. That was not the issue before this Court. The expression 'whether canalised or not canalised ' was to include both. This Court did not say that canalised items could be import ed directly by the importers ignoring the canalisation process. We are of the opinion that this Court did not say that canalisation 1002 could be ignored. That was not the issue. High public poli cy, it must be emphasised, is involved in the scheme of canalisation. This purpose of canalisation was examined by this Court in Daruka & Co. vs Union of India & Ors., ; where the Constitution Bench of this Court ob served that the policies of imports or exports were fash ioned not only with reference to internal or international trade, but also on monetary policy, the development of agriculture and industries and even on the political poli cies of the country and rival theories and views may be held on such policies. If the Government decided an economic policy that import or export should be by a selected channel or through selected agencies the court would proceed on the assumption that the decision was in the interest of the general public unless the contrary was shown. Therefore it could not be collaterally altered in the manner suggested. The policy of canalisation which is a matter of policy of the Government was not given a go bye by the observations referred to in the Order of 18th April, 1985. Indeed it is possible to read the Order in a manner consistent with canalisation scheme in the way we have indicated. If that is so, then it should be so read. When this Court observed that the fact whether items were sought to be imported by diamond merchants were canalised, would not be an impediment to the import directly by them, the Court meant to say that this could be imported directly by them through the canalisation organisation. The need for canalisation stands on public policy and that need cannot be lightly or inferencially given a go bye. It should not be presumed that collaterally the court had done away with the system of canalisation based, on sound public policy. We have found nothing in the different authorities on this subject, which militate against the above views. Therefore, the action taken by the Custom authorities in issuing adjudication notice and pro ceeding in the manner they did, we are of the opinion that they have not acted illegally or without jurisdiction. This must proceed in accordance with law as laid down by this Court which, in our opinion, is clear enough. The fact that in subsequent decision, the petitioner is not a party is not relevant. Generally legal positions laid down by the court would be binding on all concerned even though Some of them have not been made parties nor were served nor any notice of such proceedings given. As held in Star Diamond 's case (supra), the meaning of the expression "whether canalised or otherwise" used by this Court in Rajnikant Bros ' case as explained in Godrej Soaps Pvt. Ltd. case and reiterated and followed in the present case is applicable to the present petitioner. 1003 We see no substance in the submission made in the peti tion and reiterated before us in this Court for a reconsid eration of this question by a larger Bench. In the aforesaid view of the matter, we are unable to sustain the grounds urged in support of this petition. We are, therefore, of the opinion that proceedings must go in accordance with law. The government 's understanding of the matter at one point of time is irrelevant. There are several applications for impleadment. These are allowed, and they are impleaded. Their statements are taken on record. Before parting with this case, certain factors must be noted. The diamond exporters and dry fruit exporters have their full round in this Court. Speaking entirely for my self, my conscience protests to me that when thousands remediless wrongs await in the queue for this Court 's inter vention and solution for justice, the petitions at the behest of diamond exporters and dry fruit exporters where large sums are involved should be admitted and disposed of by this Court at such a quick speed. Neither justice nor equity nor good conscience deserves these applications to be filed or entertained. There is no equity of restitution against the law declared categorically and repeatedly by this Court and no principle of estoppel involved in these applications. The Writ petition is dismissed and in the facts and circumstances of this case, we direct that the petitioner must pay cost of this application. It has been prayed that clear cut date must be fixed where contracts had been entered into and in which letters of credit prior to 15th April, 1986 have been entered into, there should be no prosecution. It has been further prayed that where however contracts have been entered into but no letters of credit have been opened, such parties should not be penalised in the facts and circumstances of the case. No direction is necessary by this Court on this aspect. The authorities concerned will decide the same in taking into consideration all the facts and circumstances and taking into consideration the case of the petitioners and the alleged claim of bona fide on their part. A submission was made on the principle of promissory estoppel and reliance was placed on the several observations of several cases including the case in Union of India and Others etc. vs Godfrey Philips India Ltd. etc. ; , It is true that the doctrine of 1004 promissory estoppel is applicable against the Government in the exercise of its government, public or executive func tions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel. But in this case no such case of promissory estoppel has been made out. The intervention applications filed in this connection are allowed and the submissions contrary to what we had stated hereinbefore are rejected. As the points involved in Writ Petition No. 1494 of 1986 are same, this is also dismissed with costs. Interim orders, if any, are vacated forthwith. The proceedings will proceed as expeditiously as possible in accordance with law. For the same reasons, Writ Petition No. 1544 of 1986 is also dis missed with costs with the same observations. H.L.C. Petition dis missed.

By a common order dated April 18, 1985 in C.A. No. 1423 of 1984, etc., Union of India vs Rajnikant Bros. the Court had directed issue of Export House Certificates and Addi tional Licences to the petitioners and other diamond export ers under the Import Policy 1978 79 stating: "Save and except items which are specifically banned under the preva lent Import Policy at the time of import, the respondents shall be entitled to import all other items whether cana lised or otherwise in accordance with the relevant rules". The petitioners, who were issued Additional Licences pursu ant to this order, imported several consignments of items falling under Appendices 2B, 3 and 5 of Import Policy, 1985 88, and, while clearing them, the Customs Authorities imposed a fine of Rs.45,000 in respect of certain items failing in Appendix 2B and issued show cause notices in respect of certain other items failing in Appendices 2B and 5. The petitioners challenge was directed not only against these orders, but extended to certain subsequent decisions of the Court which, according to them, had cut down the effect of the Court 's earlier order dated April 18, 1985 in Union of India vs Rajnikant Bros. Dismissing the petitions, HELD: The decisions rendered subsequent to the decision dated April 18, 1985 in Union of India vs Rajnikant Bros. do not take any different or contrary view. Indeed, they give effect to the letter and spirit of that decision. The basic background in which the decision in Union of India vs Rajni kant Bros. was rendered was that Export Houses had been refused Export House Certificates on the ground that they had not diversified their exports. It was found that was wrong. The wrong was undone by directing issue of Export House Certificates for 990 the year 1978 79 though the order was passed in April, 1985. That was a measure of restitution, but the Court, while doing so, ensured that nothing illegal was done. It is a presumption of law that the courts act lawfully and will not ask any authority to do anything which is illegal. It was directed that except those items which were specifically banned under the prevalent import policy at the time of import, the respondents therein were entitled to import all other items whether canalised or not canalised in accordance with the relevant rules. Analysing the said order, it is apparent: (1) that the importation that was permissible was of goods which were not specifically banned, (2) that such banning must be under the prevalent import policy at the time of import. and (3) whether items which were canalised or uncanalised would be imported in accordance with the relevant rules. These conditions had to be fulfilled. The court never did and could not have said that canalised items could be imported in any manner not permitted nor it could have given a go bye to the canalisation policy. [1000C H] (ii). In Raj Prakash Chemicals vs Union of India,, it was explained that only such items could be imported by diamond exporters under the Additional Licences granted to them as could have been imported under the Import Policy 1978 79 and were also importable under the Import Policy prevailing at the time of import. These were the items which had not been 'specifically banned ' under the prevalent Import Policy. The items had to pass through two tests, firstly, they should have been importable under the Import Policy 1978 79 and, secondly, they should also have been importable under the Import Policy, 1985 88 in terms of the Order dated 18th April, 1985 and if one may add, in such terms 'in accordance with the import rules ' whether cana lised or not canalised. The Court had no occasion to consid er in that case the significance of the words 'whether canalised or otherwise ' mentioned in the Order dated 18th April, 1985 in Union of India vs Rajnikant Bros., because that point did not arise there. [1000H; 1001A D] (iii) What did the court then intend by the words 'whet her canalised or otherwise ' used in the order dated 18th April, 1985 in Union of India vs Rajnikant Bros? The diamond exporters could import the items which they were entitled to import under the Import Policy 1978 79 provided they were importable also under the Import Policy ruling at the time of import. These are items which were open to import by Export Houses holding Additional Licences for Sale to the Actual Users (Industrial). These are items which were di rectly imported, for example, items in Part II List 8 of Appendix 6 of Import Policy 1985 88. These are items which are not canalised. Canalised items are those 991 items which are ordinarily open to import only through a public sector agency. Although generally these are import able through public sector agencies, it is permissible for any Import Policy to provide an exception to the rule and to declare that an importer might import a canalised item directly. It is in that sense and that sense only that the Court could have intended to define the entitlement of diamond exporters. They would be entitled to import items which were canalised or not if the Import Policy prevailing at the time of import permitted them to import items failing under such category. [1001D G] (iv) In the Order dated 18th April, 1985 in Union of India vs Rajnikant Bros., this Court did not do away with canalisation. That was not the issue before this Court. This expression 'whether canalised or not canalised ' was to include both. This Court did not say that canalised items could be imported directly by the importers ignoring the canalisation process. High public policy, it must be empha sised, is involved in the scheme of canalisation. This purpose of canalisation was examined by.this Court in Daruka of this Court observed that the policies of imports or exports were fashioned not only with reference to internal or international trade, but also on monetary policy, the development of agriculture and industries and even on the political policies of the country and rival theories and views may be held on such policies. If the Government decid ed an economic policy that import or export should be by a selected channel or through selected agencies, the court would proceed on the assumption that the decision was in the interest of the general public unless the contrary was shown. Therefore, it could not be collaterally altered in the manner suggested. The policy of canalisation which is a matter of policy of the Government was not given a go bye by the observations referred to in the Order of 18th April, 1985. Indeed, it is possible to read the Order in a manner consistent with canalisation scheme in the way we have indicated. If that is so, then it should be so read. When this Court observed that the fact whether items were sought to be imported by diamond merchants were canalised, would not be an impediment to the import directly by them, the Court meant to say that this could be imported directly by them through the canalisation organisation. The need for canalisation stands on public policy and that need cannot be lightly or inferentially given a go bye. It should not be presumed that collaterally the court had done away with the system of canalisation based on sound public policy. We have found nothing in the different authorities on this subject, which militate against the above views. Therefore, the action taken by the Customs Authorities in issuing adjudica tion notice and proceeding in 992 the manner they did we are of the opinion that they have not acted illegally or without jurisdiction. This must proceed in accordance with law as laid down by this Court which, in. our opinion is clear enough. The fact that in subsequent decision, the petitioner is not a party is not relevant. Generally legal positions laid down by the court would be binding on all concerned even though some of them have not been made parties nor were served nor any notice of such proceedings given. [1001H; 1002A G] Union of India vs Rajnikant Bros., C.A. No. 1423 of 1984 decided on April 18, 1985; Raj Prakash Chemicals Ltd. & Anr. vs Union of India & Ors. , ; M/s. Indo Afghan Chambers of Commerce &Anr., etc. vs Union of India & Ors., etc., [1986] 3 S.C.C. 352; Union of India vs Godrej Soaps Pvt. Ltd. &Anr., ; ; and M/s. Star Diamond Co. India vs Union of India & Ors., [1986] 4 S.C.C. 246, discussed, explained and reiterated. Daruka & Co. vs Union of India & Ors., ; , referred to.

Civil Appeal Nos. 2705 & 5383 of 1985. From the Judgment and Order dated 20.12.1984 of the Delhi High Court in Writ Petition No 4037 and 4038 of 1982. L.M. Singhvi, Kailash Vasdev, G.L. Rawal, Ms. Neerja, Sandeep Narain, R. Narsimha. Abhishek Manu Singhvi and C. Mukhopadhya for the Appellants. 955 T.S.K.M. Iyer, R.P. Srivastava and C.V.S. Rao for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, J. These appeals by certificate are directed against the common judgment of a full Bench of the Delhi High Court dated December 20, 1984, in two writ petitions under Article 226 of the Constitution. The appellants are respectively a Company and its Managing Director. The Company was the holder of Letter of Authority in respect of three licences for import of coconut oil in one case and of two licences in the other and was appointed Letter of Authority Holder in respect of the said licences. It imported two consignments of 5342.369 Mts. and 3002.557 Mts. of refined industrial coconut oil from Sri Lanka and the delivery port was Kandla. The respective ships carrying the aforesaid cargo arrived at the port of destination on 22nd September, 1982, and 10th September, 1982, and appellant No. 1 filed the bills of entry for release of the said cargo in the office of the Assistant Collector of Customs at Kandla. Instead of release of the cargo on the basis of steps taken by appellant No. 1, notices to show cause were received by appellant No. 1 on the allegation that import of industrial coconut oil was not legal as it was a canalised item. The appellant No. 1 was called upon to show cause as to why the cargo may not be confiscated under section 111(d) of the as also why the appellants may not be penalised under section 112 thereof. The appellants showed cause and took the stand that import of industrial coconut oil was not banned under the Import Policy of the Government for the relevant period and the premises upon which the authorities had proceeded to direct issue of show cause was factually untenable. When personal hearing was afforded, on behalf of the appellant No. 1 it was pointed out that the notices by respondent No. 3 were the outcome of bias and the said statutory authority had not applied his own mind to the matter in controversy. It was also pointed out that Shri Takhat Ram, Joint Chief Controller of Imports and Exports had taken undue interest in the matter to the prejudice of the appellants and had brought to bear upon the statutory authority pressure to act against the interests of the appellants. By the adjudication orders dated 17th December, 1982 and 20th December, 1982, the respondent No. 3 came to the conclusion that "coconut oil, whether edible or not, were canalised items and fell within the ambit of Appendix 9 para 5(1) of the Import Policy of 1980 81. It was not an item under the O.G.L. of 1980 81 Policy". Respondent No. 3 further held that either of the consignments was covered by the import 956 licences produced by the appellants and was, therefore, liable to be confiscated under section 111(d) of the Act but gave an option to appellant No. 1 to redeem the goods on payment of Rs.3 crores and Rs.2 crores respectively as redemption fines. On 27.12.1982 two writ petitions were filed in the High Court of Delhi challenging the action of the Collector. The said writ petitions were finally placed before a Bench of three Judges of the High Court; two of them being Sachar and Khanna, JJ., came to hold that the writ petitions were liable to be dismissed while the other Judge being Wad, J. took the view that the action of the Collector was totally untenable and that the writ petition should be allowed and the order of the Collector should be set aside. The majority of the learned Judges were of the further view that the quantum of redemption fine should be considered by the Appellate Tribunal. Sachar, J. with whom Khanna J. concurred, directed: "I would in the circumstances remit the matter to the Appellate Tribunal but only on the question of consideration of the question of quantum of redemption fine. The Appellate Tribunal could hear and dispose of this matter as if it was hearing an appeal filed by the petitioners but, only on the question of quantum of redemption fine. " In the absence of any challenge, this part of the order of the High Court has become final and has to operate irrespective of the fate of the two appeals. The following common contentions have been advanced by learned counsel for the appellants: (1) The import policy of which year would be applicable to the facts of the present case the period during which the licences were issued or the time when import actually took place. (2) Whether "coconut oil" appearing in para 5 of Appendix 9 of the Import Policy of 1980 81 was confined to the edible variety or covered the individual variety. (3) Whether in the face of the decision of the Board and Central Government as the statutory appellate and revisional authorities, it was open to the Collector functioning in lower ties to take a contrary view of the matter in exercise of quasi judicial jurisdiction; and 957 (4) Whether the order of the Collector was vitiated for breach of rules of natural justice, and collateral considerations in the making of the orders. It is not in dispute that the relevant import policy to be referred to is of the year 1980 81 as all the licences were issued during that period. The Collector found and the High Court has not recorded a different finding that when the licence was first revalidated on 18.1.1982, such revalidation was subject to paragraph 215 of the Import Policy of 1981 82. Again while revalidating some of the licences on 25.9.1982, it was stipulated that during the extended period, items which do not appear in Appendix 5 and 7 of Import Policy of 1982 83 could not be allowed to be imported and items which appear in Appendix 26 of the Import Policy of 1982 83 will also not be allowed to be imported. The Collector turned down the plea that the licences allowed the import of items appearing in Appendix 5 and 7 of 1979 80 policy and 1982 83 policy in addition to the items appearing in the OGL and Industrial coconut oil. In the instant case, the licences were of either of 1980 or 1981 and were revalidated from time to time. For convenience we may refer to a sample order of revalidation dated 28.6.1982. Revalidation was subject to the following conditions: "This licence is revalidated for a further period of six months from the date of revalidation with the condition that during the extended period of validity the items which do not appear in Appendix 5 and 7 of the Import Policy of 1982 83 will not be imported. This licence will also not be valid for the import of items appearing in Appendix 26 of the Import Policy of 1982 83 during the extended period of validity. " The High Court has come to the correct conclusion that the terms of the import policy of 1980 81 would apply to the facts of these cases. The basic question is whether at the relevant time, import of coconut oil had become canalised through the State Trading Corporation ( 'STC ' for short). Rule 3 of the Imports (Control) Order, 1955 made under the Imports and Exports (Control) Act, 1947 provides: "3(1) Save as otherwise provided in this order, no person shall import in case of the descriptions specified in Schedule I except under and in accordance with the licence 958 or a custom 's clearance permitting grant by the Central Government or by any officer specified in Schedule II. " Para 5 of Appendix 9 ran thus: "In the case of the various items mentioned therein, import will be made only by the State Trading Corporation of India on the basis of foreign exchange released by the Government in its favour. The items mentioned therein are. " It is thus clear that if 'coconut oil ' of the industrial variety was covered by paragraph 5 of Appendix 9, then it would not have been included in Appendix 10 and, therefore, could not have been imported under OGL. In Appendix 9, no classification of coconut oil is given and; therefore, all varieties of coconut oil should be taken as covered by the term. There is no warrant for the assumptions that item 1 of paragraph 5 of Appendix 9 covered only the edible variety when 'coconut oil ' as such has been mentioned. It is not disputed that 'coconut oil ' without anything more could cover both the edible as also the non edible (commercial or industrial) varieties. When a customer goes to the market and asks for coconut oil to buy, he is not necessarily supplied the edible variety. Coconut oil is put to less of edible use than non edible. Reliance has been placed on the entry in the Import Policy of 1981 82 where in paragraph 5 of Appendix 9 it has been said thus: "In the case of the following items, whether edible of non edible, import will be made only by the S.T.C. . (1) Coconut oil. . . . . ." "All other oils/seeds, whether edible or non edible, not specifically mentioned above or elsewhere in this policy, will also be imported only by S.T.C. under these provisions. " In our view no support can be had for the contention advanced by appellants ' learned counsel from the change in the language of paragraph 5 in the Import Policy of the subsequent year. Whatever may have been the reason for specifying 'edible and non edible ' classification in 1981 82, if 'coconut oil ' takes within its fold all varieties of it, it must follow that in 1980 81, all varieties of coconut oil were 959 included in paragraph 5 of Appendix 9. It is, in our opinion, unnecessary to refer to authorities and precedents to support such an obvious conclusion. Similarly no support is available from the communication by way of reply received by the appellants from the S.T.C. to the effect that import of edible coconut oil alone was canalised through it. When the question before us is as to what exactly was the ambit of the entry No. 1 in paragraph 5 of appendix 9, the letter of the S.T.C. has no light to throw and the matter has to be ressolved with reference to broader aspects than the letter of the Corporation. Nor can that letter or the representation contained therein be used to build up a plea of estoppel. The S.T.C. was not competent to bind the customs authorities in respect of their statutory functioning and if on actual interpretation it turns out that 'coconut oil ' covered what the appellants have imported, the fact situation cannot take a different turn on account of the letter of the S.T.C. At the most, it may have some relevant when the quantum of redemption fine is considered by the Tribunal in terms of the direction of the High Court. Massive arguments were built up by learned counsel for the appellants on the basis that the decision of the Central Board and the Central Government rendered in similar matters were binding on the collector and he could not have acted to the contrary. Several precedents have been cited during the hearing. In a tier system, undoubtedly decisions of higher authorities are binding on lower authorities and quasi judicial Tribunals are also bound by this discipline. In Broome vs Cassell and Co., ; , the Lord Chancellor delivering the opinion of the House observed: "I hope it will never be necessary to say so again that in the herichical system of courts which exists in this country, it is necessary for each lower tier, including the Court of Appeal, to accept loyally the decisions of the higher tiers." This Court in Kaushalya Devi Bogra vs Land Acquisition officer, has clearly approved this position. There is aubundance of authority that quasi judicial tribunals too are bound by this rule. That, however, does not assist the appellants at all. It may be that the Collector of Customs should have felt bound by the decision of 960 the Board or the Central Government but the matter has passed that stage. What we are now concerned with is not disciplining the Collector in his quasi judicial conduct but to ascertain what the correct position in the matter is. Very appropriately, appellants ' learned counsel has not found fault with the High Court for not following the quasi judicial opinion of the Board or the Central Government nor has he pleaded for acceptance of that by us as a precedent. Once on analysis we reach the conclusion that 'coconut oil ' of every description was covered in paragraph 5 of appendix 9, the quasi judicial decision ceases to be relevant. We propose to say no more on this aspect of the submission. What survives for consideration is the argument relating to the vice of breach of natrual justice and the vice of collateral pressure of the Import Authorities in the making of the order. We must frankly state that this aspect of the argument has not at all impressed us. It has not been disputed that show cause notices were issued, cause was shown and considered by the statutory authorities. It may be that more of opportunities than extended were expected by the appellants in view of the fact that large stakes were in issue. The observance of the Rules of Natural Justice is not referable to the fatness of the stake but is essentially related to the demands of a given situation. The position here is covered by statutory provisions and it is well settled that Rules of Natural Justice do not supplant but supplement the law. We have not been able to find any breach in the compliance of the statutory procedure. We are not inclined to agree that the role played by Sri Takht Ram vitiated the order of the Collector. All the contentions fail and these appeals are, therefore, dismissed. The respondents are entitled to their costs throughout. S.L. Appeals dismissed.

The appellants are a Company and its Managing Director. The Company imported two consignments of refined industrial Coconut oil. The ships carrying the aforesaid cargo arrived at the port of destination on 10th September, 1982 and 22nd September, 1982. The appellant No. 1 filed the bills of entry for release of the said cargo in the office of the Assistant Collector of Customs. Instead of release of the cargo, notices to show cause were received by the appellant on the allegation that the import of industrial coconut oil was not legal as it was a canalised item. The appellant No. I was also called upon to show cause as to why the cargo should not be confiscated under section 111(d) of the and also as to why he should be not penalised under Section 112 thereof. The appellant showed cause and took the stand that import of industrial coconut oil was not banned under the import policy of the Government for the relevant period. When personal hearing was afforded, it was also pointed out that the notices issued by Respondent No. 3 were the outcome of bias, and that the Joint Chief Controller of Imports and Exports had taken undue interest in the matter. By the adjudication orders dated 17th December, 1982 and 20th December, 1982, the respondent No. 3 came to the conclusion that 953 "coconut oil", whether edible or not, were canalised items and fell within the ambit of Appendix 9 Para 5(1) of the Import Policy of 1980 81, and that it was also not an item under the o. G.L. of 1980 81 Policy. It was held that the items that were imported were liable to be confiscated under section 111(d) of the , but an option was given to redeem the goods on payment of Rs.3 crores and Rs.2 crores respectively as redemption fines. The appellants filed two Writ Petitions challenging the action of the Collector. The Writ Petitions were heard by a Full Bench of the High Court. Two Judges held that the writ petitions were liable to be dismissed, while the third Judge took the view that the action of the Collector was totally untenable and that the writ petitions should be allowed and the order of the Collector should be set aside. The majority of the Judges were also of the view that the quantum of redemption fine should be considered by the Customs Appellate Tribunal. In the appeals to this Court it was contended on behalf of the appellants: (1) The import policy of which year would be applicable the period during which the licences were issued or the time when import actually took place. (2) Whether "coconut oil" appearing in para 5 of Appendix 9 of the Import Policy of 1980 81 was confined to the edible variety or covered the industrial variety. (3) Whether in the face of the decision of the Board and Central Government as the statutory appellate and revisional authorities, it was open to the Collector functioning in lower tier to take a contrary view of the matter in exercise of quasi judicial jurisdiction, and (4) Whether the orders of the Collector were vitiated for breach of rules of natural justice, and collateral considerations in the making of the order. Dismissing the Appeals, ^ HELD: 1. The High Court has come to the correct conclusion that the terms of the Import Policy of 1980 81 would apply to the facts of these cases. [957F] In the instant case, the licences were either of 1980 or 1981 and were revalidated from time to time subject to the condition that items which do not appear in Appendices 26, 5 and 7 of the Import Policy of 1982 83 will not be imported.[957D] 2(a) Whatever may have been the reason for specifying 'edible and non edible ' classification in 1981 82, if 'coconut oil ' takes within its 954 fold all varieties, it must follow that in 1980 81, all varieties of coconut oil were included in paragraph 5 of Appendix 9. [958H;959A] (b) If 'coconut oil ' of the industrial variety was covered by paragraph 5 of Appendix 9 then it would not have been included in Appendix 10 and, therefore, could not have been imported under OGL. [958C] (c) In Appendix 9, no classification of coconut oil is given and, therefore, all varieties of coconut oil should be taken as covered by the term. [958D] (d) When a customer goes to the market and asks for coconut oil to buy, he is not necessarily supplied the edible variety. Coconut oil is put to less of edible use than non edible. [958E] (e) The S.T.C. was not competent to bind the customs authorities in respect of their statutory functioning, and if on actual interpretation it turns out that 'coconut oil ' covered what the appellants have imported, the fact situation cannot take a different turn on account of the letter of the S.T.C. At the most, it may have some relevancy when the quantum of redemption fine is considered by the Tribunal. [959C D] 3. In a tier system, undoubtedly decisions of higher authorities are binding on lower authorities and quasi judicial Tribunals are also bound by this discipline. However, what the Court is now concerned with is not disciplining the Collector in his quasi judicial conduct, but to ascertain what the correct position in the matter is. [959H;960A B] 4. The observance of Rules of Natural Justice is not referable to the fatness of the stake but is essentially related to the demands of a given situation. The position here is covered by statutory provisions and it is well settled that Rules of Natural Justice do not supplant but supplement the law. [960D E] Broome vs Cassell & Co., ; referred to.

minal Appeal No. 120 of 1960. Appeal by special leave from the judgment and order dated February 28, 1958, of the Madhya Pradesh High Court (Gwalior Bench), in Criminal Appeal No. 3 of 1957. I. N. Shroff, for the appellant. The respondent did not appear. January 25. The Judgment of the Court was delivered by AYYANGAR, J. This is an appeal by special leave by the State of Madhya Pradesh against the dismissal of an appeal preferred by it to the High Court of Madhya Pradesh (Gwalior Bench) which declined to reverse the order of acquittal passed by the Sessions Judge holding the respondent not guilty of an offence under section 302 of the Indian Penal Code. The ground of acquittal by the Sessions Judge, which was concurred in by the High Court was that the respondent was of unsound mind at the time of the commission of the crime and so was entitled to an acquittal under section 84 of the Indian Penal Code. There is very little dispute about the facts or even about the construction of section 84 of the Code because both the learned Sessions Judge as well as the learned Judges of the High Court on appeal have held that the crucial point of time at which the unsoundness of 585 mind, as defined in that section, has to be established is when the act was committed. It is the application of this principle to the facts established by the evidence that is the ground of complaint by the appellant State before us. Section 84 of the Indian Penal Code which was invoked by the respondent successfully in the Courts below runs in these terms: " Nothing is an offence which is done by a person who, at the time of doing it, by reason of unsoundness of mind, is incapable of knowing the nature of the act, or that he is doing what is either wrong or contrary to law. " It is not in dispute that the burden of proof that the mental condition of the accused was, at the crucial point of time, such as is described by this section lies on the accused who claims the benefit of this exemption (vide section 105, Indian Evidence Act, Illustration (a)). In order to appreciate the point raised for our decision it is necessary to refer to the findings of the Sessions Judge which were in terms approved by the learned Judges of the High Court. Before we do so, however, we shall narrate a few facts regarding which there is no dispute: The deceased Bismilla was related to the accused respondent as the mother of his wife Jinnat whom he had divorced. The accused nurtured a grievance against his mother in law for matters it is unnecessary to set out. Bismilla went to bed in her own house on the night of September 28, 1954. On the morning of the next day the body of Bismilla was found by her husband lying in a pool of blood on the cot on which she was sleeping with the head missing. The First Information Report was immediately lodged by the son of the deceased. The police were informed that the respondent bad borne ill will towards Bismilla and thereafter the Sub Inspector who was in charge of the investigation sent for the respondent. The respondent admitted having committed the murder and stated that be had put the head of Bismila and the knife with which it had been severed from the body in a cloth bag which he had hid in an underground cell in the furniture shop 586 of his father. The respondent was taken to that shop where he took out the articles in the presence of Panch witnesses. He also took out a torch from the cash box of the shop and handed it over to the police with the statement that the torch had been used by him on the occasion of the murder to locate the deceased in the darkness. The accused further stated the manner in which he managed to scale over the wall of the house of the deceased, how he gained entrance into the room, how he found her asleep on a cot and how he severed the head from the trunk and carried the former away and hid it at the place from which he took it out. The respondent was produced before the District Magistrate before whom he made a confessional statement reciting all the above facts. He was thereafter committed to stand his trial before the Court of Sessions Judge, Gwalior, for the offence under section 302 of the Indian Penal Code. We have only to add that the confession which was substantially corroborated by other evidence was never withdrawn though in his answers to the questions put to him by the committing magistrate and by the Sessions Judge under section 342 of the Criminal Procedure Code he professed ignorance of everything. On behalf of the defence, in support of the plea of unsoundness of mind three witnesses were examined, two of them being medical men. The first witness Mahavir Singh was the District Civil Surgeon and Superintendent of the Mental Hospital. He spoke of having treated the accused in August 1952 as a private patient. His deposition was to the effect that the accused had an epileptic type of insanity, the last time that he saw him being in August 1952, i.e., over two years before the date of the occurrence. His evidence therefore cannot be very material not to say decisive on the question as to whether at the moment when the offence was committed the accused was insane as defined by section 84 of tile Code or not. The other medical witness examined for the defence was the Superintendent of the Mental Hospital who had examined the accused on and after November 18, 1954, i. e., nearly two months after the occurrence. His 587 deposition also was to the effect that the accused was suffering from epileptic insanity. The witness testified, that at the first stage of the attack of a fit the patient becomes spastic, that in the second stage the patient would have convulsions of hands and feet and in the tertiary stage becomes unconscious and at the last stage the patient might do acts like sleep walking. Obviously this was expert evidence about the nature of the disease which the doctor stated the accused was suffering from, and not any evidence relating to the mental condition of the accused at the time of the act. The other witness who spoke about the mental condition of the accused was his father. In his evidence he stated : " The accused was in a disturbed state of mind in the evening of September 28, 1954. He bad not taken food for two days. When I went to the shop on the morning of September 29, 1954, at 7 30 or 7 45 I found the accused was unconscious and that his hands and feet were stiffened. Just then the police came there and took away the accused. " On the basis of this evidence the learned Sessions Judge after correctly stating the law that under section 84 of the Indian Penal Code the crucial point of time at which unsoundness of mind should be established, is the time when the act constituting the offence is committed and that the burden of proving that an accused is entitled to the benefit of this exemption is upon him, summarised the evidence which had been led in the case in these terms: " The next thing therefore to consider is whether the accused was incapable of knowing the nature of the act. The fact that the accused went at night to the house of his mother in law, deliberately cut her head and brought it to his house is too obvious to show that the accused was capable of knowing the nature of the act. To put it differently, the accused while killing Bismilla was not under the impression that he was breaking an earthen jar. Even the learned counsel for the defence laid no stress on this aspect of insanity. He, however, contended that the accused was incapable of knowing that what he was doing was either wrong or contrary to law. " 588 The learned Judge, however, rested his decision to acquit the accused on the following reasoning: "There is the circumstance that soon after the crime the accused was admitted to the mental hospital and the Superintendent of the Hospital at least confirms that the accused suffers from epileptic fits. Now epilepsy is a kind of disease which may cause insanity. This is called epileptic insanity. In this insanity the patient commits brutal murders without knowing what he was doing. The accused who suffered from epilepsy has committed a brutal murder. There is thus ground to believe that he may have committed this murder in a fit of epileptic insanity. . . These. things give rise to the inference that the accused may have committed the crime in a fit of insanity and without knowing that what he was doing was either wrong or contrary to law. 1, therefore, find that the accused Ahmedullah did kill Bismilla by severing her head from the body with a knife but that by reason of unsoundness of mind he was incapable of knowing that what he was doing was wrong or contrary to law and that he is, therefore, Dot guilty of the offence of murder with which he is charged under section 302, Indian Penal Code and I direct that the said accused be acquitted. " The learned Judge had definitely found that the accused knew the nature of the act he was doing, finding which as we shall presently point out, was concurred in by the learned Judges of the High Court. In the face of it we find it rather difficult to sustain the reasoning upon which the last conclusion is rested on the facts of this case. From this order of acquittal by the learned Sessions Judge the State filed an appeal to the High Court. The learned Judges of the High Court also correctly appreciated the legal position that to invoke the benefit of the exemption provided by section 84 of the Indian Penal Code it would be necessary to establish that the accused was, at the moment of the act insane. The learned Judges, on this aspect of the case, said : " About the mental condition immediately before and after the crucial moment, we have the 589 circumstances, the conduct of the respondent on the morning of the 29th and his confession given on that afternoon. By themselves they do not support the theory of mental unsoundness necessary for Section 84, though they are explicable, consistently with epileptic insanity. The murder itself has been committed with extraordinary cunning, and attention to the most minute detail It is certain the respondent knew at that time the physical nature of what he was doing; he did not believe that he was breaking a pot or cutting a cabbage, but was taking the life of a human being which he says within 16 hours, he did for vindicating his honour. In fact, the condition at the time of the confession is one of elation rather than of depression or a black out . . . The learned Sessions Judge has held that the respondent was in a fit of epileptic insanity on the 28th night, when he killed his mother in law; it is not clearly recorded, but it also seems to be his finding that this fit of epileptic insanity continued at least till the time of his confession. This finding is not one without any evidence to support it, or one that can be called perverse; still, it is one that could properly be arrived at, only if it is consistent with the observation made on the respondent immediately after the 29th September, 1954. " They proceeded to point out that there was no observation by medical experts soon after the act to enable an inference to be drawn as to the mental condition of the accused just prior thereto. After detailing the arguments on either side the learned Judges concluded: " Thus we have no evidence pointing to that kind and degree of mental unsoundness at the time of the act as required by section 84 of the I.P.C. ; but on the defective material adduced, it would have been in my opinion, an unsatisfactory conclusion either way In a case like this when the proved facts would otherwise support a conviction for murder it was for the defence to adduce evidence and it should, in principle, reap the consequence of any omissions in this regard," 590 From these observations it would appear as if the learned Judges of the High Court were differing from the learned Sessions Judge in his conclusion as regards the application of section 84 to the facts of the present case. They however, continued: " The Sessions Judge was satisfied that the defence has discharged the onus of proving that at the time of the commission of the offence the accused was mentally so unsound as not to know that the act was wrong and contrary to law. Now it is for the State to establish in appeal that the finding is perverse and that there are compelling reasons why that decision should be reversed." and it is on this ground that the learned Judges dismissed the appeal by the State. We find ourselves wholly unable to concur with this conclusion or with the reasoning on which it is rested. The learned Judges failed to appreciate that the error in the judgment of the Sessions Judge lay not so much in the implicit acceptance of the testimony of the father of the accused because he was obviously an interested witness, and of this the appellant State could certainly and justifiably complain but in proceeding on a basis wherein inferences and probabilities resting on assumptions were permitted to do duty for proved facts, which the statute required to be established before the exemption under the section could be claimed. Refusal to interfere with an acquital in such circumstances could hardly be justified under any rule as to " impelling reasons " for interference even assuming the existence of such a rule. The error in the judgment of the High Court consisted in ignoring the fact that there was nothing on the record on the basis of which it could be said that at the moment of the act, the accused was incapable of knowing that what he was doing was wrong or contrary to law. In this connection we might refer to the decision of the Court of Criminal Appeal in En, gland in Henry Perry(1) where also the defence was that the accused had been prone to have fits of epileptic insanity. During the course of the argument Reading, C.J., observed : (z) 14 Cr. Appeal Rep. 48. 591 " The crux of the whole question is whether this man was suffering from epilepsy at the time he committed the crime. Otherwise it would be a most dangerous doctrine if a man could say, 'I once had an epileptic fit, and everything that happens hereafter must be put down to that '. " In dismissing the appeal the learned Chief Justice said: " Every man is presumed to be sane and to possess a sufficient degree of reason to be responsible for his acts unless the contrary is proved. To establish insanity it must be clearly proved that at the time of committing the act the party is labouring under such defect of reason as not to know the nature and quality of the act which he is committing that is, the physical nature and quality as distinguished from the moral or, if he does know the nature and quality of the act he is committing, that he does not know that he is doing wrong. There is, however, evidence of a medical character before the jury, and there are statements made by the prisoner himself, that he has suffered from epileptic fits. The Court has had further evidence, especially in the prison records, of his having had attacks of epilepsy. But to establish that is only one step; it must be shown that the man was suffering from an epileptic seizure at the time when he committed the murders; and that has not been proved. " We consider that the situation in the present case is very similar and the observations extracted apply with appositeness. We consider that there was no basis in the evidence before the Court for the finding by the Sessions Judge that at the crucial moment when the accused out the throat of his mother in law and severed her head, he was from unsoundness of mind incapable of knowing that what he was doing was wrong. Even the evidence of the father does not support such a finding. In this connection the Courts below have failed to take into account the circumstances in which the killing was compassed. The accused bore illwill to Bismilla and the act was committed at dead of night when he would not be seen, the accused 76 592 taking a torch with him, access to the house of the deceased being obtained by stealth by scaling over a wall. Then again, there was the mood of exaltation which the accused exhibited after he had put her out of her life. It was a crime committed not in a sudden mood of insanity but one that was preceded by careful planning and exhibiting cool calculation in execution and directed against a person who was considered to he the enemy. The appeal is therefore allowed, the order of acquittal passed against the respondent set as de and in its place will be substituted a finding that the respondent is guilty of murder under section 302 of the Indian Penal Code. In the normal course the proper punishment for the heinous and premeditated crime committed with inhuman brutality would have been a sentence of death. But taking into account the fact that the accused has been acquitted by the Sessions Judgean order which has been affirmed by the High Court we consider that the ends of justice would be met if we sentence the accused to rigorous imprisonment for life. It is needless to add that the State Government will take steps to have the accused treated in an asylum until he is cured of his illness, if this still continues. Appeal allowed.

The High Court affirmed an order of acquittal of the respondent on a charge of murder under section 302 of the Indian Penal Code passed by the Sessions judge on the ground that the accused was of unsound mind. The prosecution case was that the accused committed the murder of his mother in law against whom he had borne ill will, by severing her head from her body while she was asleep at dead of night. He made a confession of the crime but a plea of insanity was taken at the trial. On appeal with special leave by the State : Held, that the crucial point of time at which unsoundness of mind should be established is the time when the crime is actually (1) I.L.R. [1938]2 Cal, 337. 75 584 committed, the burden of proving which lies on the accused in order to entitle him to the exemption provided under section 84 of the Indian Penal Code. It is not sufficient only to prove that the accused suffered from an "epileptic type of insanity" before or after the commission of the crime. Henry Perry, 14 Cr. Appeal Rep. 48, followed. There was nothing on the record of the instant case to show that at the moment when the crime was committed the accused was capable of knowing that what he was doing was wrong or contrary to law and as such he was not entitled to an acquittal under section 84 of the Indian Penal Code. Refusal by the High Court to interfere with an acquittal in the proved circumstances of the case could not be justified under any rule as to " impelling reasons ".

Appeal No. 405 of 1957. Appeal from the judgment and order dated May 15, 1956, of the Calcutta High Court in I.T.R. No. 20 of 1953. section Mitra, B. Das and section N. Mukherjee, for appellants Nos. 2 to 41. A. N. Kripal and D. Gupta, for the respondent. November 23. The Judgment of the Court was delivered by HIDAYATULLAH, J. The point involved in this appeal is a very short one; but it requires a long narration of facts to reach it. The appeal is against the judgment and order of the High Court of Calcutta dated May 15, 1956, arising out of an Income tax Reference. By the Calcutta Municipal Act VI of 1863, there was established a Corporation under the name of "The Justices of the Peace for the Town of Calcutta". By a notification issued on November 2, 1864, one square mile of land forming part of the Panchannagram Estate was acquired by the Government of Bengal at the instance of the Justices. Section CXII of the Municipal Act provided that the Justices might "agree with the owners of any land for the absolute purchase thereof. . for any other purpose whatever connected with the conservancy of the Town". Under section CXIII, it was provided that if there was any hindrance to acquisition by private treaty, the Government of Bengal upon the representation of the Justices would compulsorily acquire the land and vest 600 such land in the Justices on their paying compensation awarded to the proprietor. The action which was taken by the notification was under section CXIII of the Municipal Act, and the acquisition was under Act VI of 1857, an Act for the acquisition of land for public purposes. The Panchannagram Estate was permanently settled under Regulation 1 of 1793. After the acquisition, the proprietor of Panchannagram Estate was granted abatement of land revenue assessed on the Estate to the extent of Rs. 386 7 1. This represented the proportionate land revenue on the land acquired. In August, 1865, the Justices were required to pay Rs. 54,685 2 10 as compensation payable to the proprietor and to other persons holding interest in the land. Another piece of land which is described as an open level sewer, was also acquired about the same time, and separate compensation was paid for it. With the amount of conveyance charges, the total compensation thus paid by the Justices was Rs. 57,965 8 10. On October 27,1865, the Government called upon the Justices to pay a further sum of Rs. 7,728 13 8. This order has not been produced in the case; but from other correspondence, it is easy to see that the amount represented an amount capitalized at 20 years ' purchase of land revenue attributed to the area acquired, which, as has been stated above, came to Rs. 386 7 1. This payment was made on or about January 12, 1866. Similarly, another amount was paid in July of the same year for redemption of the land revenue in respect of the strip of land for the open sewer. On December 5, 1870, a conveyance was executed by the Secretary of State in favour of the Justices of the Peace. It was there stated, inter alia: "Whereas the Honourable the Lieutenant Governor of Bengal hath thought fit that the said land so acquired as aforesaid would be vested in the said Justices of the Peace for the Town of Calcutta a Corporation created by and authorised to hold land under the said Act No. VI of 1863 of the Council of the Lieutenant Governor of Bengal to the end and intent 601 that the said land may be held by the said Justices for a public purpose, namely, for the conservancy of the Town. . and subject in every way to the same ' Act but free and discharged from all payment of land revenue, land tax and all and every tax or imposition in the nature of revenue derivable from land payable to Government in respect thereof; NOW THIS IN DENTURE WITNESSETH. .to hold the saidpieces of land, hereditaments and premises intended to be conveyed with the appurtenances except as aforesaid unto the said Justices of the Peace for the Town of Calcutta and their successors for ever free and clear and for ever discharged from all Government land revenue whatever or any payment or charge in the nature thereof to the end and intent that the said land may be used for a public purpose namely for the conservancy of the town upon the trusts and subject to the powers, provisions, terms and conditions contained in the said Act No. VI of 1863 of the Council of the Lieutenant Governor of Bengal and to the rules heretofore passed or hereafter to be passed by the Government of Bengal under the the said last mentioned Act;". On January 23, 1880, a temporary lease of the land known as the 'Square Mile ' was granted by the Justices of the Peace to the predecessors in title of the appellant (assessee), Srish Chandra Sen who has, since the filing of the appeal, died, leaving behind 40 legal representatives who have been shown in the cause title of the appeal. The lease was renewed for further periods, and the rent was also progressively increased. The conservancy arrangements for which the land 'was held were carried out, but, the lessee had the right to carry on cultivation with the aid of sewage. The assessee derived from this land various kinds of income, some being purely agricultural and some, non agricultural. For the assessment year 1942 43, the total agricultural income was computed at Rs. 99,987 9 6, and non agricultural income, at Rs. 12,503 8 0. Agricultural income tax was charged by the State of Bengal under the Agricultural Income 602 tax Act, on the agricultural income less expenses. For the assessment years, 1943 44, 1944 45, 1945 46 and 1946 47, the assessments were made along similar lines. In 1947, the Income tax Officer reassessed the income for the assessment year, 1942 43 after reopening the assessment under section 34 of the Income tax Act on the ground that the so called agricultural income had escaped assessment to income tax under the Indian Income tax Act. Assessments for the other years, 1943 44, 1944 45, 1945 46 and 1946 47 were also reopened, and the income in those years wag also similarly reassessed. The assessee appealed to the Appellate Assistant Commissioner against all these orders of the Income tax Officer, but his appeals failed. Against the orders of the Appellate Assistant Commissioner, appeals were filed before the Income tax Appellate Tribunal (Calcutta Bench). The Tribunal dealt with the assessment for 1942 43 separately, and allowed the appeal as regards assessment for that year. It held that the reassessment was improper under section 34 of the Income tax Act, because the Income tax Officer had not proceeded on any definite information but in the course of a "roving enquiry". The Tribunal also held that the income was exempt from taxation to income tax under section 4(3)(viii) of the Act, inasmuch as this income was derived from land used for agricultural purposes, which continued to be assessed to land revenue. In the appeals arising out of assessments for the subsequent years, a common order was passed by the Tribunal, remanding the appeals to the Appellate Assistant Commissioner for a rehearing. The Tribunal stated that the appellants had filed a number of documents to establish that land revenue was assessed on the land which, the Department contended, proved the contrary. The Tribunal felt that the matter should be reconsidered by the Appellate Assistant Commissioner, and hence remanded the cases. The Appellate Assistant Commissioner in the rehearing held that the land in question continued subject to land revenue, and that the lump sum payment was merely payment of revenue in advance. He accordingly allowed the appeals, and ordered exclusion of the income 603 from the assessments for the four years in question. On appeal by the Department, the Tribunal changed its opinion, and came to the conclusion that the ' payment of a lump sum was not a payment in advance of the land revenue due from year to year but was land revenue capitalised. It referred to the deed by which the proprietorship in the land was ves ted in the Corporation by the Secretary of State, and stated that by the document and the capitalisation of land revenue, the demand for land revenue was extinguished for ever. It accordingly allowed the appeals, and restored the orders of assessment made by the Income tax Officer. The assessee next moved the Tribunal for a reference setting out a number of questions which, he contended, arose out of the Tribunal 's order. The Tribunal referred the following question of law for the opinion of the High Court: "Whether on the facts and in the circumstances of this case the Tribunal 's conclusion that the land was not assessed to land revenue within the meaning of section 2(1)(a) of the Indian Income tax Act is justified?" The reference was heard by Chakravarti, C. J., and Sarkar, J., (as he then was). In an elaborate judgment, the learned Chief Justice upheld the conclusions of the Tribunal, and answered the question in the affirmative. Sarkar, J., in an equally elaborate order expressed his doubts about the correctness of the Chief Justice 's reasons, but declined to disagree with him. The question that arises in this case, as we have stated in the opening of this judgment, is a very short one. It is an admitted fact that by payment of ' a lump sum the liability to pay land revenue was redeemed and no land revenue was de manded or was ever demandable from the Justices or their assigns in perpetuity. The contention of the assessee is that this redemption saved the Justices from the liability for payment but did not affect the assessability of the land to revenue under Regulation I of 1793. Unless, it is contended,. there was a cancellation of the assessment, a,% is to be found in the 604 Land Tax and Tithe Redemption Acts in England, the liability must be deemed% to continue and land would still be assessed to land revenue for purposes of section 2(1)(a) of the Indian Income tax Act. That section reads as follows: "2(1) 'Agricultural income ' means (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in (the taxable territories) or subject to a local rate assessed and collected by Officers of (the Government) as such". It is not denied that both the conditions, namely, "used for agricultural purposes" and "is either assessed to land revenue or subject to a local rate. . . have to co exist. It is admitted by the Department that there is no question of subjection to a local rate assessed and collected, in this case. The income derived from the land was from its use for agricultural purposes, and the first condition is thus satisfied. The dispute centres round the point whether the land .can be said to be assessed to land revenue, in spite of the lump sum payment in 1865. In the High Court, the matter was examined from three different points of view. The first was the effect of acquisition of the land by Government upon the continued assessability of the land to land revenue. The learned Chief Justice held that by the acquisition the assessment ceased to subsist. The second was the effect of the redemption of land revenue by the Justices by a lump sum payment. The learned Chief Justice was of opinion that it had the effect of cancelling the assessment. The last was the effect of the grant free from land revenue, about which the learned Chief Justice was of opinion that it freed the land from assessment to land revenue. Sarkar, J., agreed as to the first, but expressed doubts about the second and third propositions. According to the learned Judge, the acceptance of a lump sum payment in lieu of recurring annual payments was more a matter of agreement than a cancellation of assessment to land revenue. The matter has been argued before us from the 605 argument about the interpretation to be placed on the, conveyance by the Secretary of State which, according to him, only freed the Justices from 'payment ' of the assessed land revenue but did not cancel the assessment. No Act of Legislature bearing upon the power of Government to accept a Iump sum payment in lieu of the annual demands for land revenue has been brought to our notice. Counsel admitted that they were unable to find any such legislative provision. We have thus to proceed, as did the High Court, without having before us the authority of a legislative enactment. The only materials to which reference was made are: an extract from the explanatory notes in the Revenue Roll of the Touzi which shows that an abatement of land revenue pro tanto was granted to the proprietor of Panchannagram Estate, and a despatch from the Secretary of State for India (Lord Stanley) No. 2 (Revenue) dated December 31, 1858 recommending redemption of land revenue by an immediate payment of a sum of equivalent value, together with a Resolution of Government (Home Department No. 3264 (Rev) dated October 17, 1861) on permission to redeem the existing land revenue by the immediate payment of one sum equal in value to the revenue redeemed. By the resolution, it was provided that such redemption would be limited to 10 per cent of the total revenue in the Collectorate and the price to be paid was to be fixed at 20 years ' purchase of the existing assessment. It may be mentioned that in Despatch No. 14 dated July 9, 1862, the Secretary of State for India (Sir Charles Wood) did not agree with the earlier policy, but did not cancel it. It may thus be assumed that what was done was under the authority of the Crown, which was then paramount, which paramountcy included the prerogative to free land from the demand of land revenue with or without conditions. We have, therefore, to examine three things: the effect of acquisition on the continuance of the assessment to land revenue, the effect of redemption by a down payment on the same, 77 606 and the effect of the grant, free from land revenue, to the Justices. The acquistion was under Act VI of 1857. That Act provided in B. XXVI as follows: "When any land taken under this Act forms part of an estate paying revenue to Government, the award shall specify the net rent of the land including the Government Revenue, and the computed value of such rent: and it shall be at the discretion of the Revenue authorities either to pay over the whole of such value to the owner of the estate on the condition of his continuing to pay the jumma thereof without abatement; or to determine what proportion of the net rent shall be allowed as a remission of revenue, in which case a deduction shall be made from the said value proportionate to the value of such remission. " This provision only saved the Estate assessed to land revenue from liability to pay land revenue proportionately falling upon the land acquired compulsorily, subject to a like proportionate reduction in the amount of compensation payable to the proprietor of the estate, but the provision cannot be stretched to mean that the liability of the land actually acquired, to land revenue in the hands of grantees from the Government also ceased. Be that as it may, it is hardly necessary to view the present case from this angle at all, because, whether the land acquired continued to be subject to an assessment or must be deemed to be reassessed as a separate estate, the result would be the same if Government demand still subsisted on it, as, in fact, it did. There could have been no redemption of the liability by a down payment if no land revenue could have been demanded. The fact that the recurring liability was redeemed by a lump sum payment itself shows that in the view of Government as well as of the Justices, the 'Square Mile ' was still subject to the recurring demand and was thus still assessed to land revenue. It is, therefore, not profitable to investigate the effect of acquisition on the continued liability of the land to land revenue between the time there was acquisition and the vesting of the land in the Justices. For the above reason, we need not examine at 607 length the case in Lord Colchester vs Kewnoy where the acquisition by the Crown was held not to make, the area acquired immune from land tax, because the burden of the tax would then have fallen upon the remaining land situated in the unit from which it was acquired and on which unit a quota of the land tax was chargeable. Such a position does not arise here, because the Panchannagram Estate was given abatement and a lump sum was paid to free the land acquired from the liability to land revenue. Similarly, the decision of this Court in The Collector of Bombay vs Nusserwanji Rattanji Mistri and Others (2), where on the acquisition of some Foras lands held under Foras Land Act (Bombay Act VI of 1851) the Foras tenure was declared to have come to an end and on the same lands being resold by Government as freehold, they were declared not to be subject to assessment to which they were previously subject, is not very helpful. There do not appear to be any rules prior to 1875, which were framed under the Land Acquisition Act of 1870 (Act X of 1870) and which are to be found in the Calcutta Gazette of July 7, 1875, p. 818. If there were, they have not been brought to our notice. But a practice similar to the rules seems to have obtained under section XXVI of the Act of 1857. That Act also did not contain any provision for making rules, as are to be found in the subsequent Acts for compulsory acquisition of land. In the absence of any statutory law or rules, we must take the facts to be that after acquisition the Panchannagram Estate was given abatement of land revenue, and the demand for land revenue was transferred to the land acquired and granted to the Justices. At that stage, the liability to assessment remained, and it was that liability which was redeemed by a down payment. We next consider the effect of redemption. Learned counsel for the appellant contends that redemption in this connection means that by a single payment, the liability for periodical payments is saved but the assessment on the land remains uncancelled. He has cited Wharton 's Law Lexicon to show the meaning of (1) (2) ; 608 the word "redemption", which is "commutation or the substitution of one lump payment for a succession of annual ones: e.g. See the Land Tax and the Tithe Redemption Acts and many other statutes". Redemption is the act of redeeming which in its ordinary meaning is equal to bringing off a charge or obligation by payment. To what extent this redemption freed the land or its holder from the obligation depends not so much upon what the obligation was before redemption as what remained of that obligation after it. Here, the payment itself was meant to be "an immediate payment of one sum equal in value to the revenue redeemed" (vide the Resolution of Government dated October 17, 1861). By the down payment, the entire land revenue to be recovered from that land was redeemed. The payment was equal to the capitalised value of the land revenue. When such a payment took place, it cannot be said that the assessment for land revenue remained. The land was freed from that assessment as completely as if there was no assessment. Thenceforward, the land would be classed as revenue free, in fact and in law. In The Land Law of Bengal (Tagore Law Lectures, 1895) p. 81 section C. Mitra described these revenue free lands as follows: "There is another class of revenue free lands which comes within these rules laid down in the Registration and Tenancy Acts, namely, lands of which Government has, in consideration of the payment of a capitalised sum, granted proprietary title free in perpetuity from any demand of land revenue. " That this is what had happened here is quite apparent from the conveyance by the Secretary of State vesting the land in the Justices. It is significant that there is no mention of the payment of Rs. 7,728 13 8, nor of the assessability of the lands to land revenue. On the other hand, the deed of conveyance merely reaffirmed the position, which existed before by stating: ". to hold the said pieces of land, hereditaments and premises intended to be conveyed with the appurtenances except as aforesaid unto the said Justices of the Peace for the Town of Calcutta and their successors for ever free and clear and for ever discharged 609 from all Government land revenue whatever or any payment or charge in the nature thereof. " There can be no doubt that the land revenue was for ever extinguished and the land became free from land revenue, assessment in perpetuity. It cannot thereafter be said that the land was still assessed to land revenue. Mr. Mitra made a great effort to construe the operative part quoted above with the aid of the recital in the deed, where it was stated: ". but free and discharged from all payment of land revenue, land tax and all and every tax or imposition in the nature of revenue derivable from land payable to Government. He drew attention to the word 'payment ', and contended that what was saved was payment of land revenue. He argued that in case of ambiguity it was permissible to construe the operative portion of a deed in the light of the recitals, and cited Halsbury 's Laws of England, 3rd Edn., Vol. XI, p. 421, para. 680, Gwyn vs Neath Canal Co. (1) and Orr vs Mitchell (2). If there was any ambiguity in the operative portion of the deed, we may have taken the aid of the recitals. But there is no ambiguity in the deed. The history of redemption is a matter of record, and it is plain that Government was accepting a down payment and freeing land from land revenue. This is precisely what was done, and the result of the down payment is set out with great clarity in the deed itself, and it is that there was no land revenue assessed on or demandable from that land. In fact, no demand or payment or charge in the nature of land revenue could ever be made on it. In view of this, it is, in our judgment, quite satisfactorily established that this land was not assessed to land revenue and the income from it did not fall within section 2(1)(a) of the Income tax Act. The answer given by the High Court was thus correct. In the result, the appeal fails, and will be dismissed with costs. (1868) L R. Appeal dismissed (2) , 254.

By a notification dated November 2, 1864, a piece of land forming part of the Panchannagram Estate which was permanently settled under Regulation 1 of 1793, was acquired by the Government of Bengal at the instance of the justices of the Peace for the Town of Calcutta, which was a corporation established under the provisions of the Calcutta Municipal Act, 1863, and the justices were required to pay the compensation payable to the proprietor of the Estate. After the acquisition, the proprietor of the Estate was granted abatement of land revenue assessed on the Estate to the extent of Rs. 386 7 1, being the proportionate land revenue on the land acquired. On October 27, i865, the Government called upon the justices to pay a sum of Rs. 7,728 13 8, which represented the amount capitalised at 20 years ' purchase of land revenue attributed to the area acquired. On December 5, i870, the Secretary of State executed in favour of the justices of the Peace a conveyance of the land acquired, which stated, inter alia, that it was "ever free and clear and for ever discharged from all Government land revenue whatever or any payment or charge in the nature thereof to the end and intent that the said land may be used for a public purpose, namely, for the conservancy of the town." On January 23, 1880, a lease of the land was granted by the Justices to the predecessors in title of the appellant, under which the lessee had the right to carry on cultivation with the aid of sewage. Before the income tax authorities the appellant claimed that the agricultural income derived by him from the land was not liable to income tax, but the claim was rejected on the ground that on the payment of a lump sum in 1865 the liability to pay land revenue was redeemed and no land revenue was demanded thereafter; consequently, the income derived from the land was not agricultural income within the meaning of section 2(1) of the Indian Income tax Act, 1922, and was not, therefore, exempt from tax. The appellant 's contention was that the redemption only saved the justices from liability for payment but did not affect the assessability of the land to revenue under Regulation 1 of 1793. 599 Held, that by the down payment of a lump sum in 1865 the entire land revenue to be recovered from the land was redeemed and the land became free from land revenue assessment in perpetuity, as completely as if there was no assessment. Thereafter, the land could not be said to be assessed to land revenue within the meaning of section 2(1) of the Indian Income tax Act, 1922, and, consequently, the income derived therefrom could not be considered to be agricultural income under that section. The Collector of Bombay vs Nusserwanji Rattanji Mistri and others; , , distinguished.

Appeal No. 48 of 1954. Appeal from the Judgment and Order dated the 1 1 th January, 1954, of the High Court of Judicature of Mysore in Civil Petition No. 29 of 1953, quashing the Order of the Election Tribunal, Shimoga, dated the 15th January, 1953, in Shimoga No. I of 1952 53. K. section Krishnaswami Iyengar (K. section Venkataranga Iyengar and M. section K. Iyengar, with him) for the appellant. Dr. Bakshi Tek Chand (R. Ganapathy Iyer and M. section K. Sastri, with him) for respondent No. 1. C. K. Daphtary, Solicitor General for India (Jindra Lal, Porus A. Mehta and P. O. Gokhale, with him) for respondent No. 3. 1954. May 5. The Judgment of the Court was delivered by MUKERGEA J. This appeal is directed against a judgment of a Division Bench of the Mysore High Court, dated the 11th January, 1954, by which the learned Judges granted an application, presented by the respondent No. I under article 226 of the Constitution, and directed a writ of certiorari to issue quashing the,, proceedings and order of the Election Tribunal, Shimoga, dated the 15th January, 1953, in Shimoga Election Case No. 1 of 1952 53. The facts material for purposes of this appeal may be briefly narrated as follows: The appellant and respondent No. 1, as well as eight other persons, who figured as respondents Nos. 2 to 9 in the proceeding before the High Court, were duly nominated candidates for election to the Mysore Legislative Assembly from Tarikere Constituency at the general election of that State held in January , 1952. Five of these nominated candidates withdrew their candidature within the prescribed period and the actual contest at the election was between the remaining five candidates including the appellant and respondept No. 1. The polling took place on the 4th January, 1952, and the votes were counted on the 26th of January following. As a result, of the counting the respondent No. 1 was found to have secured 8,093 votes which was the largest in number and the appellant followed him closely having obtained 8,059 votes. The remaining three candidates, who were respondents Nos. 2, 3 and 4 before the High Court, got respectively 6,239, 1,644 and 1,142 votes. The Returning Officer declared the respondent No. 1 to be the successful candidate and this declaration was published in the Mysore Gazette on the 11th February, 1952. The respondent No. 1. lodged his return of election expenses with the necessary declaration sometime after that and notice of this return was published on the 31st March, 1952. The appellant thereafter filed a petition before the Election Commission, challenging the validity of the election, inter alia, on the grounds that there was violation of the election rules in regard, to certain matters and that the respondent No. I by himself or through his agents were guilty of a number of major corrupt practices which materially affected the result of the election. The petitioner prayed for a declaration that the election of respondent No. I was void and that he himself was duly elected. This petition, which bears date, 10th of April, 1952, was sent by registered post to the Election Commission and was actually received by the latter on the 14th of April,; following. The Election Commission referred the matter for determination by the Election Tribunal at 253 Shimoga and it came up for hearing before it on the 25th of October, 1952. On that date the appellant filed an application for amendment of the petition, heading it as one under Order VI, rule 17, of the Civil Procedure Code, and the only amendment sought for was a modification of the prayer clause by adding a prayer for declaring the entire election to be void. It was stated at the same time that in case this relief could not be granted, the petitioner would, in the alternative pray for the relief originally claimed by him, namely, that the election of respondent No. I should be declared to be void and the petitioner himself be held to be the elected candidate at the election. Despite the objection of respondent No. 1, the Tribunal granted this prayer for amendment. The hearing of the case then proceeded and on the averments made by the respective parties, as many as 27 issues were framed. Of them, issues Nos. 1, 5, 6, 11, 12 and 14 are material for our present purpose and they stand as follows : (1) Has there been infringement of the rules relating to the time of commencement of poll by reason of the fact that the polling at Booth No. I for Ajjampur fixed at Ajjampur to take place at 8 A.m did not really commence until about half an hour later as alleged in paragraph 4 of the petition ? (5) Did the 1st respondent hire and procure a motor bus which was a service bus running between Tarikere and Hiriyur, belonging to one Ahmed Jan, as alleged in paragraph I of the particulars and thereby commit the corrupt practice referred to in it ? (6) Did the 1st respondent take the assistance of a number of Government servants to further the prospects of his election as alleged in paragraph 2 of the list of particulars ? (11) Is the return of election expenses lodged by the 1st respondent false in material particulars and has the 1st respondent omitted to include in the return of election expenses, expenses incurred by him in connection with the election which would easily exceed the sanctioned limit of, Rs. 5,000 as per particulars stated in paragraph 7 of the list of particulars 254 (12) Has the election of the 1st respondent been procured and induced by the said corrupt practices with the result that the election has been materially affected ? (14) Would the petitioner have obtained a majority of votes had it not been for the aforesaid corrupt and illegal practices on the part of the first respondent? The Tribunal by a majority of 2 to 1 found all these issues in favour of the petitioner and against the respondent No. 1 and on the strength of their findings on these issues, declared the election of respondent No. 1 to be void and the petitioner to have been duly elected. The judgment of the Tribunal is dated the 15th of January, 1953. On the 5th February, 1953, the respondent No. I presented an application before the Mysore High Court under article 226 of the Constitution praying for a writ or direction in the nature of certiorari calling for the records of the proceeding of the Election Tribunal in Election Petition No. I of 195253 and quashing the same including the order pro nounced by the Tribunal as mentioned above. This application was heard by a Division Bench consisting of Medappa C.J. and Balakrishnaiya J. and by their judgment dated the 11th January, 1954, the learned Judges allowed the petition of respondent No. 1 and directed the issue of a writ of certiorari as praved for. It is against this judgment that the appellant has come up to this Court on the strength of a certificate granted by the High Court under articles 132(1) and 133(1) (c) of the Constitution. The substantial contention raised by Mr. Ayyangar, who appeared in support of the appeal, is, that the learned Judges of the High Court misdirected themselves both on facts and law, in granting certiorari in the present case to quash the determination of the Election Tribunal. It is urged, that the Tribunal in deciding the matter in the way it did did not act either without jurisdiction or in excess of its authority, nor was there any error apparent on the face of the proceedings which could justify the issuing of a writ to quash the same. It is argued by the learned counsel 255 that, what the High Court has chosen to describe as errors of jurisdiction are really not matters which affect the competency of the Tribunal to enter or adjudicate upon the, matter in controversy between the parties and the reasons assigned by the learned Judges in support of their decision proceed upon a misreading and misconception of the :findings of fact which the Tribunal arrived at. Two points really arise for our consideration upon the contentions raised in this appeal. The first is, on what grounds could the High Court, in exercise of its powers under article 226 of the Constitution, grant a writ of certiorari to quash the adjudication of the Election Tribunal ? The second is, whether such grounds did actually exist in the present case and are the High Court 's findings on that point proper findings which should not be disturbed in appeal ? The principles upon which the superior Courts in England interfere by issuing writs of certiorari are fairly well known and they have generally formed the basis of decisions in our Indian Courts. It is true that there is lack of uniformity even in the pronouncements of English Judges, with regard to the grounds upon which a writ, or, as it is now said, an order of certiorari, could issue, but such differences of opinion are unavoidable in judge made law which has developed through a long course of years. As is well known, the issue of the prerogative writs, within which certiorari is included, had their origin in England in the King 's prerogative power of superintendence over the due observance of law by his officials and Tribunals. The writ of certiorari is so named because in its original form it required that the King should be " certified of " the proceedings to be investigated and the object was to secure by the authority of a superior Court, that the jurisdiction of the inferior Tribunal should be properly exercised (1). These principles were transplanted to other parts of the King 's dominions. In India, during the British days ' the three chartered High Courts of Calcutta, Bombay and Madras were alone competent to issue (1) Vide Ryots of Garbandho v, Zemindar of Parlkime 70 I,A. 129 at page 140 256 writs and that too within specified limits and the power was not exercisable by the other High Courts at all. " In that situation " as this Court observed in Election Commission, India vs Saka Venkata Subba Rao (1), " the makers of the Constitution having decided to provide for certain basic safeguards for the people in the new set up, which they called fundamental rights, evidently thought it necessary to provide also a quick and inexpensive remedy for the enforcement of such rights and, finding that the prerogative writs, which the Courts in England had developed and used whenever urgent necessity demanded immediate and decisive interposition, were peculiarly suited for the purpose, they conferred, in the States ' sphere, new and wide powers on the High Courts of issuing directions, orders, or writs primarily for the enforcement of fundamental rights, the power to issue such directions " for any other purpose " being also included with a view apparently to place all the High Courts in this country in somewhat the same position as the Court of King 's Bench in England. " The language used in articles 32 and 226 of our Constitution is very wide and the powers of the Supreme Court as well as of all the High Courts in India extend to issuing of orders, writs or directions including writs in the nature of habeas corpus, mandamus, quo warranto, prohibition and certiorari as may be 'considered necessary for enforcement of the fundamental rights and in the case of the High Courts, for other purposes as well. In view of the express provisions in our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particular cases by English Judges. We can make an order or issue a writ in the nature of certiorari in all appropriate cases and in appropriate manner, so long as we keep to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law. One of the fundamental principles in regard to the issuing of a writ of certiorari is, that the writ can be (I at 1150, 257 of judicial acts. The expression " judicial acts " includes the exercise of quasi judicial functions by administrative bodies or other authorities or persons obliged to exercise such functions and is used in contrast with what are purely ministerial acts. Atkin L. J. thus summed up the law on this point in Rex vs Electricity Commissioners (1) : " Whenever any body or persons having legal authority to determine questions affecting the rights of subjects and having the duty to act judicially act in excess of their legal authority they are subject to the controlling Jurisdiction of the King 's Bench Division exercised in these writs." The second essential feature of a writ of certiorari is that the control which is exercised through it over judicial or quasi judicial Tribunals or bodies is not in an appellate but supervisory capacity. In granting a writ of certiorari the superior Court does not exercise the powers of an appellate Tribunal. It does not review or reweigh the evidence upon which the determination of the inferior Tribunal purports to be based. It demolishes the order which it considers to be without jurisdiction or palpably erroneous but does not substitute its own views for those of the inferior Tribunal. The offending order or proceeding so to say is put out of the way as one which should not be used to the detriment of any person(2). The supervision of the superior Court exercised through writs of certiorari goes on two points, as has been expressed by Lord Sumner in King vs Nat.Bell Liquors Limited (3). One is the area of inferior jurisdiction and the qualifications and conditions of its exercise ; the other is the observance of law in the course of its exercise. These two heads normally cover all the grounds on which a writ of certiorari could be demanded. In fact there is little difficulty in the enunciation of the principles; the difficulty really arises in applying the principles to the facts of a particular case. (I) (1924] I K.B. 17I at 205. (2) Vide Per Lord Cairns in Walshall 's Overseers vs London and North Western Railway Co., 4 A.C. 30, 39. (3) [1922) 2 A.C. 128, 156, 33 258 Certiorari may lie and is generally granted when a Court has acted without or in excess of its jurisdiction. The want of jurisdiction may arise from the nature of the subject matter of the proceeding or from the absence of some preliminary proceeding or the Court itself may not be legally constituted or suffer from certain disability by reason of extraneous circumstances(1). When the jurisdiction of the Court depends upon the existence of some collateral fact, it is well settled that the Court cannot by a wrong decision of the fact give it jurisdiction which it would not otherwise possess (2). A Tribunal may be competent to enter upon an enquiry but in making the enquiry it may act in flagrant disregard of the rules of procedure or where no particular procedure is prescribed, it may violate the principles of natural justice. A writ of certiorari may be available in such cases. An error in the decision or determination itself may also be amenable to a writ of certiorari but it must be amanifest error apparent on the face of the proceedings, e.g., when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent error which can be corrected by certiorari but not a mere wrong decision. The essential features of the remedy by way of certiorari have been stated with remarkable brevity and clearness by Morris L. J. in the recent case of Rex vs Northumberland Compensation Appellate Tribunal(3). The Lord Justice says: It is plain that certiorari will not issue as the cloak of an appeal in disguise. It does not lie in order to bring up an order or decision for re hearing of the issue raised in the proceedings. It exists to correct error of law when revealed on the, face of an order or decision or irregularity or absence of or excess of jurisdiction when shown." In dealing with the powers of the High Court under article 226 of the Constitution this Court has expressed itself in almost similar terms(1) and said (I) Vide Halsbury, 2nd edition, Vol.IX, page 88o (2) Vide Banbury vs Fuller, 9 Exch.III ; R. vs Income Tax Special Purposes Commissioners, (3) [19521 1 K.B. 338 at 357.(4) Vide Veerappa Pillai v, Ramon & Raman Ltd., [1952] S.C.R. at 594. "Such writs as are referred to in article 226 are obviously intended to enable the High Court to issue them in grave cases where the subordinate Tribunals or bodies or officers act wholly without jurisdiction, or in excess of it, or in violation of the principles of natural justice, or refuse to exercise a jurisdiction ,vested in them, or there is an error apparent on the face of the, record, and such act, omission, error or excess has resulted in manifest injustice. However extensive the jurisdiction may be, it seems to us that it is not so wide or large as to enable the High Court to convert itself into a Court of appeal and examine for itself the correctness of the decision impugned and decide what is the proper view to be taken or the order to be made." These passages indicate with sufficient fullness the general principles that govern the exercise of jurisdiction in the matter of granting writs of certiorari under article 226 of the Constitution. We will now proceed to examine the judgment of the High Court and see whether the learned Judges were right in holding that sufficient and proper grounds existed for the issue of certiorari in the present case. The grounds upon which the High Court has granted the writ have been placed in the judgment itself under three heads. The first head point; out in what matters the Election Tribunal acted without jurisdiction. It is said, in this connection, that the Tribunal had no jurisdiction to extend the period of limitation for the presentation of the election petition and it had no authority also to allow the petitioner 's prayer for amendment and to hear and dispose of the case on the basis of the amended petition. The second head relaters to acts in excess of jurisdiction. The Tribunal, it is said ' acted in excess of jurisdiction in so far as it went into and decided questions not definitely pleaded and put in issue, and not only did it set aside the election of respondent No. 1 but declared the petitioner to have been duly elected, although there was no definite finding and no proper materials for arriving at 260 a finding, that the petitioner could secure more votes than respondent No. 1 but for the corrupt practices of the latter. The third head purports to deal with errors apparent on the face of the record. These apparent errors, according to the High Court,, vitiated three of the material findings upon which the Tribunal based its decision. These findings relate to the commencement of polling at one of the polling booths much later than the scheduled time, the respondent No. 1 's obtaining the services of a Government servant to further his prospects of election and also to his lodging a false return of expenses. We will take up these points for consideration one after another. As regards absence of jurisdiction the High Court is of opinion that the Tribunal acted without jurisdiction, first in extending the period of limitation in presentation of the election petition and secondly in allowing the petitioner 's prayer for amendment and dealing with the case on the basis of the amended petition. The view taken by the High Court seems to be that under the Representation of the People Act (hereinafter called "the Act"), no power is given to the Election Tribunal to condone the delay, if an election petition is presented after the period prescribed by the rules, nor is it competent to allow an amendment of the petition after it is presented, except in the matter of supplying further and better particulars of the illegal and corrupt practices set out in the list annexed to the petition, as contemplated by section 83(3) of the Act. Assuming, though not admitting, that the propositions of law enunciated by the learned Judges are correct, we do not think that they at all arise for consideration on the actual facts of the present case. As regards the first matter, the election petition, as stated above, was despatched bythe petitioner by registered post to the Election Commission on the II th of April, 1952, and it reached the Commission on the 14th of April following. We may take it therefore that 14th of April was the date when the election petition 261 could be deemed to have been presented to the Election Commission under section 81(2)(b) of the Act. Under rule 119 of the Election Rules framed under the Act, an election petition against a returned candidate is to be presented at any time after the publication of the name of such candidate under section 67 of the Act, but not later than 14 days from the date of publication of the notice in the official gazette under rule 113, that the return of election expenses of such candidate and the declaration made in respect thereof have been lodged with the Returning Officer. It is not disputed that this notice of the return of election expenses was published in the Mysore Gazette on the 31st of March, 1952, and the petition therefore was just in time as it was presented within and not later than 14 days from that date. The High Court seems to think that in computing the period of 14 days the date of publication is to be included. This seems to us to be an unwarrantable view to take which is opposed to the ordinary canons of construction. Dr. Tek Chand appearing for the respondent No. 1 plainly confessed his inability to support this view and we must hold therefore that there is no question of the Tribunal 's entertaining the election petition after the prescribed period in the present case. Coming now to the question of amendment, the High Court, after an elaborate discussion of the various provisions of the Act, came to the conclusion that the Election Tribunal which is a special Court endowed with special jurisdiction has no general power of allowing amendment of the pleadings, and that the express provision of section 83(3) of the Act, which empowers the Tribunal to allow amendments with respect to certain specified matters, impliedly excludes the power of allowing general amendment as is contemplated by Order VI, rule 17, of the Civil Procedure Code. Here again the discussion embarked upon by the High Court seems to us to be unnecessary and uncalled for. The only amendment applied for by the petitioner was a modification in the prayer clause by insertion of an alternative prayer to the original prayer in the petition. No change whatsoever was sought to 262 be introduced in the actual averments in the petition and the original prayer which was kept intact was repeated in the application for amendment. The alternative prayer introduced by the amendment was not eventually allowed by the Tribunal which granted the prayer of the petitioner as it originally stood. In these circumstances the mere fact that the Tribunal granted the petitioner 's application for amendment becomes altogether immaterial and has absolutely no bearing on the actual decision in the case. We are unable to hold therefore that the Tribunal acted without jurisdiction in respect to either of these two matters. The High Court has held that the Tribunal acted in excess of its jurisdiction in entering into certain questions which are not covered by the pleadings of the parties and not specifically put in issue. The other act in excess of its authority committed by the Tribunal, according to the High Court, is that it declared the petitioner to be a duly elected candidate, on a mere speculation although it did not find and had no materials to find that the petitioner could secure more votes than the respondent No. 1. On the first point the learned Judges have referred only to the allegation of corrupt practice made by the appellant, regarding the hiring and procuring by the respondent No. 1 of a motor bus belonging to Ahmed Jan for transporting his voters to the polling booths. The issue framed on this point is issue No. 5 which is worded as follows: "Did the first respondent hire and procure a motor bus which was a service bus running between Tarikere and Hiriyur, belonging to one Ahmed Jan, as alleged in paragraph 1 of the list of particulars and thereby commit the corrupt practice referred to in it?" The Tribunal found that the hiring of the bus by respondent No. 1 was not proved, but it was proved that the first respondent did procure the service bus of Ahmed Jan, who was acting as his agent, for conveying his voters. The Tribunal further found that even if Ahmed Jan was not an agent of the first respondent, as he was actually carrying the voters of the latter 263 from Gowrapur to Sollapur in a bus, which bore the first respondent 's election symbol, with his knowledge and connivance, the first respondent must be held guilty of the corrupt practice in question. The High Court says that as it was nowhere alleged in the petition that Ahmed Jan was an agent of respondent No. I or that he was carrving the voters with his connivance, the Tribunal must be held to have acted 'in excess of its jurisdiction in going into matters which were not definitely pleaded. We do not think that this view of the High Court can be supported. In paragraph 8 of the petition the appellant definitely stated that the first respondent by himself and through his agent committed major corrupt practices, one of which was the hiring or procuring of Ahmed Jan 's motor bus. The Tribunal found, on a consideration of the evidence adduced in the case, that the motor bus was procured by the first respondent and his conduct in this respect, as disclosed by the evidence, showed that his voters were being carried by Ahmed Jan with his knowledge and connivance. It may be pointed out that in paragraph 9 of the petition the petitioner clearly stated that the corrupt practices were committed by respondent No. 1, or his agents, or by several persons with his knowledge and connivance. The finding of the Tribunal arrived at on this point is a finding of fact based on evidence adduced by the parties and it is not in any way outside the pleadings or inconsistent therewith. The other ground put forward by the High Court that the Tribunal exceeded its jurisdiction in declaring the appellant to be the duly elected candidate, although it had no materials to come to the conclusion that he could have secured more votes than respondent No. 1 but for the corrupt practices committed by the latter, seems to us to be without substance. It appears that the learned Judges did not properly advert to the findings arrived at on this point by the Election Tribunal. The petitioner, it may be noted, got only 34 votes less than the respondent No. 1. The Tribunal has found that the bus of Ahmed Jan, which was procured by respondent No. 1, did carry to the polling booths about 60 voters in two trips and in the, circumstances of the case it could 264 be legitimately presumed that the majority of them did vote for respondent No. 1. If the votes of at least 40 or 50 of these persons be left out of account as being procured by corrupt practice of the first respondent, the latter 's majority by 34 votes would be completely wiped out and the petitioner would gain an undisputed majority. In paragraph 33 of its judgment the Tribunalstates as follows: "Hence on the 14th issue we hold that the petitioner would have obtained a majority of votes had it not been for the aforesaid corrupt practices on the part of the first respondent." Thus the finding is there and there is evidence in support of it. Whether it is right or wrong is another matter and it may be that the view taken by the dissenting member of the Tribunal was the more proper; but it cannot be said that the Tribunal exceeded its jurisdiction in dealing with this matter. We now come to what the High Court has described as errors apparent on the face of the record. These errors, according to the High Court, appear in respect of three of the findings arrived at by the Tribunal. The first of these findings relates to the time when the polling at Booth No. I at Ajjampur commenced on the date of election. The Tribunal has held that the time fixed by notification was 8 A.M. in the morning but the polling did not commence till 25 minutes after that and the result was that a number of voters went away. It is said that some of these voters would in all probability have voted for the appellant and as there was a difference of only 34 votes between him and the respondent No. 1 the results of the election have been materially affected by this irregularity or violation of the election rules. There was evidence undoubtedly to show that some of the voters went away as the polling did not commence at the scheduled time; but the exact number of these persons is not known and there could not be any positive evidence to show as to how many of them would have voted for the appellant. If the Tribunal had on the basis of these facts alone declared the appellant to be the duly elected candidate holding 265 that he could have secured more votes than respondent No. 1, obviously this would have been an error apparent on the face of the record, as such conclusion would rest merely on a surmise and nothing else. The Tribunal however discussed this matter only in connection with the question as to whether the violation of any statutory rule or order in the holding of election did materially affect the result of the election which would entitle the Tribunal to declare the election of the returned candidate to be void under section 100(2) (c) of the Act. This, the Tribunal *as competent to do under the provisions of the Act and in doing so it could take into consideration the circumstances And probabilities of the case. But as we have stated already, the Tribunal declared the appellant to be duly elected upon the specific finding that, but for the corrupt ' practice of respondent No. I in the matter of procuring the service bus of Ahmed Jan, the appellant would have got majority of the votes. We cannot say that this is an error apparent on the face of the record which would entitle the High Court to interfere by writ of certiorari. As regards the other two findings, one relates to the receiving of assistance from Paramessh warappa, who is a Patel, by respondent No. 1, in furtherance of his prospects of election. The High Court does not dispute the facts alleged by the appellant that Paramesshwarappa accompanied the first respondent and actually canvassed at several places and that he openly canvassed at one polling booth on the polling day. The ]earned Judges say that even if these facts are believed, they only establish that Paramessh warappa canvassed for the petitioner but that would not amount to respondent No. 1 's taking assistance from him. This does not seem to us to be a proper view to take. There was allegation by the appellant of the respondent No. 1 's taking assistance from a Government servant within the meaning of section 123(8) of the Act. In proof of the allegation evidence was given of the facts mentioned above. If from these facts, which were found to be true, the Tribunal drew the conclusion that there )lad been an assistance taken from a Government 266 servant which would come within the purview of section 123(8) of the Act, it is impossible to say that this is an error apparent on the face of the record. The remaining finding relates to the allegation of the petitioner that the respondent No. 1 in his return of election expenses omitted to include several items and if they had been taken into account the election expenses would have exceeded the sanctioned limit. The Tribunal has held that the respondent No. 1 omitted to include, in his return of expenses, the petrol charges, the hiring charges in respect of some cars and vans hired by him and also the dinner expenses incurred in the hotels. The High Court has observed that as regards the first item the finding of the Tribunal is based on no evidence and rests on mere speculation. We do not think that we can accept this view as correct. The first respondent stated that he had used two cars which were his own and incurred petrol expenses to the extent of Rs. 1,083 3 0. The Tribunal has found in paragraph 29 of its order on the basis of both documentary and oral evidence that the respondent No. I had used six other cars and had purchased petrol for them for the purpose of his election campaign. The Tribunal held that the first respondent must have spent not less than the sum of Rs. 1,250 on this account which was not included in the list of expenses. We are unable to say that this finding rests on no evidence. As regards the omission to include hiring charges the High Court has observed that the Tribunal did not record any finding that such hiring was proved. The Tribunal has in fact found that as regards some cars they were hired, while others had been taken on loan, the money value for their use having been paid by the first respondent which is tantamount to saying that he had to pay the hiring charges. The matter has been dealt with in paragraph 29(d) of the Tribunal 's order and the entire evidence has been gone through. We are unable to say that the finding of the Tribunal that the respondent No. 1 had omitted to include in his return of election expenses the dinner and hotel charges is a finding unsupported by any evidence. Reference may be made in this connection to paragraph 29(f) of the 267 Tribunal 's order which deals with the matter in detail. On the whole our opinion is that the so called apparent errors pointed out by the High Court are neither errors of law nor do they appear on the face of the record. An appellate Court might have on a review of this evidence come to a different conclusion but these are not matters which would justify the issue of a writ of certiorari. In our opinion the judgment of the High Court cannot be supported and this appeal must be allowed. The writ issued by the High Court will therefore be vacated. We make no order as to costs of this appeal. Appeal allowed.

The issue of prerogative writs in the nature of habeas corpus, mandamus, quo warrantto, prohibition and certiorari had their origin in England in the King 's prerogative power of superintendence over the due observance of law by his officials and Tribunals. The powers of the Supreme Court as well as of all the High Courts in India under articles 32 and 226 of the Constitution respectively are very wide. The Supreme Court as well as the High Courts in India can make an order or issue a writ in the nature of certiorari in all appropriate cases and in appropriate manner so long as the broad and fundamental principles of English law regulating the exercise of jurisdiction in the matter of granting such writs are adhered to. A writ of certiorari can be availed of only to remove or adjudicate upon the validity of judicial acts, which expression includes the exercise of quasi judicial functions by administrative bodies or other authorities or persons obliged to exercise such functions but does not include purely ministerial acts. In granting a writ of certiorari the superior Court does not exercise the power of an appellate Tribunal, the control exercised through it being merely in a supervisory and not appellate capacity. It does not review or reweigh the evidence upon which the determination of the inferior Court is based nor does it substitute its own views for those of the inferior Tribunal. A writ of certiorari is generally granted when a Court has acted without or in excess of its jurisdiction. The want of jurisdiction may &rise from the nature of the subject matter of the proceeding or from the absence of some preliminary proceeding or the Court itself may not be legally constituted or may suffer from a certain disability by reason of extraneous circumstances. If the jurisdiction of the Court depends upon the existence of some collateral fact the Court cannot by a wrong decision of the fact assume jurisdiction which it would not otherwise possess. A writ of certiorari is available in those cases where a Tribunal though competent to enter upon an enquiry acts in flagrant disregard of the rules of procedure or violates the principles of natural justice where no particular procedure is prescribed. 251 A mere wrong decision cannot be corrected by a writ of certiorari as that would be using it as the cloak of an appeal in disguise but a manifest error apparent on the face of the proceeding based on a clear ignorance or disregard of the provisions of law or absence of or excess of jurisdiction, when shown, can be so corrected. Held, that in view of the facts and circumstances of the case the High Court was not right in holding that sufficient and proper grounds existed for the issue of certiorari in the present case. Ryots of Garabandho vs Zemindar of Parlakimedi (70 I.A. 129, 140); Election Commission, India vs Saka Venkata Subba Rao ([1953] S.C.R. 1144, 1150). Rex vs Electricity Commissioners ([1924] 1 K.B. 171, 205); Walshall 's Overseers vs London and Northern Western Railway Co. (4 A.C. 30, 39); King vs Nat Bell Liquors Limited ([19221 2 A.C. 128, 156); Banbury vs Fuller, ; ; Queen vs Commissioners for Special Purposes of the Income Tax ; Rex vs Northumberland Compensation Appellate Tribunal ([1952] 1 K.B. 338, 357); Veerappa Pillai vs Raman & Raman Ltd., ([19521 S.C.R. 583, 594); and Halsbury, Vol. IX, 2nd edition, page 880, referred to.

Civil Appeal Nos. 95 and 96 of 1971. From the Judgment and order dated 3rd October, 1969 of the Allahabad High Court in Writ Petitions Nos. 351 and 462/69. section C. Manchanda and o. P. Rana, for the Appellants. Promod Swarup and section Markendeya, for the Respondent. The Judgment of the Court was delivered by FAZAL ALI, J. These appeals by the sales tax officer have come up to this Court by certificate of fitness granted by the High Court of Allahabad. The appeals involve a very short point, turning upon the interpretation of rule 7A of the U.P. Sales Tax Act (hereinafter referred to as the Act). It appears that the respondent is a partnership firm, carrying on business in the district of Moradabad. The assessment quarters in question are two quarters of 1968. By an order dated 31st December, 1968, the sales tax officer found from the 777 turn over of the firm as revealed from the quarterly returns filed by the assessee that it disclose an assessable income. The sales tax officer, therefore, proceeded to make a provisional assessment in respect of the portion of the assessment year concerned, purporting to act under section 7A of the U.P. Sales Tax Act. The assessee being aggrieved by this order, instead of going in appeal against the order, challenging the same before the High Court praying that the sales tax officer had no jurisdiction to make a provisional assessment, because the assessee had in fact filed a return. This argument appears to have found favour with the High Court which quashed the order of the sales tax officer and held that the sales tax officer could have made a provisional assessment to the best of his judgment only if no return had been filed by the assessee. Mr. Manchanda appearing in support of the appeals has contended that the High Court has completely overlooked the purport ambit of section 7A of the Act, which does not exclude but in fact implies the provisions of the Act, including section 7(3). The sheet anchor of the High Court 's judgment is section 7(3) which runs thus "If no return is submitted by the dealer under sub section (1) within the period prescribed in that behalf or, if the return submitted by him ` appears to the assessing authority to be incorrect or incomplete, the assessing authority shall after making such enquiry as he considers necessary, determine the turnover of the dealer to the best of his judgment and assess the tax on the basis thereof. ' Provided that before taking action under this sub section the dealer shall be given a reasonable opportunity of proving the correctness and completeness of any return submitted by him. " The High Court was of the opinion that as conditions mentioned in section 7(3) did not apply to the facts of the present case inasmuch as it was not a case in which the assessee had not filed a return at all, no assessment could have been made by the sales tax officer. In our opinion, the High Court was in error in taking this view. Section 7A runs thus: (1) "The State Government may require any dealer to submit return of his turn over of a portion of the assessment year, and the assessing authority may, without prejudice to the provisions of section 7 may provisional assessment in respect of such portion of the assessment year in accordance with the provisions of this Act in so far as they may be made applicable if the turn over of the dealer as determined by the assessing authority for such portion of the amount, if any, specified in or notified under sub section (2) of Section 3 or sub section (2) of Section 3 D, as the case may be, as the period under assessment years to twelve months. 19 L925SCI /75 778 (2) Where the assessing authority has made a provisional assessment under sub section(1), it shall not, by reason of such assessment,, be precluded from redetermining in the turn over and making the assessment for the whole year. " This section clearly authorizes the assessing authority to make a provisional assessment in respect of the assessment year to the best of his judgment, and does not contain any pre conditions at all. On the other hand, it applies the provisions of the Act which includes the provisions of section 7(3), which is the provision that confers power on the assessing authority to make all assessment to the best of his judgment. The High Court was rather carried away by the language of rule 41(3) which runs thus: "(3) If no return is submitted in respect of any quarter or month, as the case may be, within the period or if the return is submitted without the payment of tax in the manner prescribed in Rule 48, the Sales Tax Officer shall, after making such enquiries as he considers necessary, determine the turnover Lo the best of his judgment, provisionally assess the tax payable for the quarter or the month, as the case may be and serve upon the dealer a notice in Form XI and the dealer shall pay the sum demanded within the time and in the manner specified in the notice.

By an order dated 31st December, 1968, the sales tax officer found from the turnover of the respondent firm as revealed from the quarterly returns filed by the assessee that is disclosed an assessable income. He proceeded to make a provisional assessment in respect of the portion of the assessment year 1968 concerned purporting to act under section 7A of ' the U.P. Sales Tax Act. The respondent challenged the same before the High Court praying that the sales tax officer had no jurisdiction to make a provisional assessment, because the assessee had in fact filed a return. The High Court of Allahabad accepted the contention and quashed the order of the sales tax officer. The High Court hold that as conditions mentioned in section 7(3) did not apply to the facts of the case in as much as it was not a case in which the assessee had not filed a return at all, no assessment could have been made by the sales tax officer. Allowing the appeal by special leave, ^ HELD: Section 7A clearly authorises the assessing authority to make provisional assessment in respect of the assessment year to the best of his judgment, and does not contain any pre conditions at all. On the other hand it applies the provisions of the Act which includes the provisions of section 7(3) which is the provision that confers power on the assessing authority to make an assessment to the best of his judgment. It is true that sub rule (3) of rule 41 contains a provision that the provisional assessment to the best of the judgment can be made where no return is submitted, but this rule has to be read as supplemental to the provisions of the parent Act. What this rule implies is that whether the return is filed by the assessee or not, the assessing authority will have the power to make provisional assessment. There is no inconsistency between section 7A and rule 41(3) of the Rules framed under the Act. [778 A B, D F]

Special Leave Petition (Civil) No. 11015 of 1986. From the Judgment and Order dated 2.5.86 of the High Court of Punjab & Haryana at Chandigarh in Regular Second Appeal No. 1504 of 1977. R.K. Jain, D.S. Mehra and Ms. Abha Jain for the Petitioners. Ram and Hari Chand are sons of one Kesaria. The suit land be longed jointly to Respondents 5 to 7. They sold it to Re spondents 1 to 4Nathi Mal Kejriwal, Radhey Shayam Kejriwal, Smt. Daropdi Devi and Nagar Mal Kejriwal, who were strangers to their family for a consideration of Rs.33,000 under a sale deed registered on 25.10.1971. The petitioners, who claimed themselves to be the sons and nephews of the ven dors, instituted a suit in Civil Suit No. 466 of 1972 on the file of the Sub Judge, 1st Class, Palwal for possession of the suit land on payment of Rs.33,000 claiming that they were entitled to the right of pre emption in respect of the suit land either under clause 'First ' or 'Secondly ' of Section 15(1)(a) of the Punjab Pre emption Act, 1913 (here inafter referred to as 'the Act ') as in force in the State of Haryana or under clause 'First ' or 'Secondly ' of Section 15(1)(b) of the Act. The learned Sub Judge upheld the plea of the petitioners and decreed the suit for possession of the suit land against Respondents 1 to 4 who had purchased the suit land as well as against Respondents 5 to 7 who had sold it subject to the petitioners paying a sum of Rs.36,642 ' which included the consideration of Rs.33,000 and interest thereon at 8 per cent per annum. The learned Sub Judge further directed the petitioners to deposit the sum of Rs.36,642 minus the zare punjam amount on or before 3rd May, 1976 and that on their failure to deposit the said amount, he directed that the suit should be deemed to have been 70 dismissed with costs. Aggrieved by the judgment of the learned SubJudge, Respondents 1 to 4 filed an appeal before the District Judge, Gurgaon in Civil Appeal No. 69 of 1976. The appeal was dismissed. Against the judgment of the learned District Judge, Respondents 1 to 4 filed a second appeal before the High Court of Punjab and Haryana in Regu lar Second Appeal No. 1504 of 1977. That second appeal was taken up for hearing on 2nd May, 1986. By that time this Court had delivered its judgment in Atam Prakash vs State of Haryana and Others, ; declaring clauses 'First ', 'Secondly ' and 'Thirdly ' of Section 15(1)(a), clauses 'First ', 'Secondly ' and 'Thirdly ' of Section 15(1)(b), clauses 'First, 'Secondly ' and 'Thirdly ' of Sec tion 15(1)(c) and the whole of Section 15(2) of the Act as ultra vires the Constitution. Following the said decision the High Court allowed the second appeal and dismissed the suit since the provisions under which the petitioners claimed the right of pre emption had been declared void by this Court. This petition is filed praying for special leave to prefer an appeal against the judgment of the High Court in the second appeal. At the hearing of this Special Leave Petition the learned counsel for the petitioners contended that even though the petitioners were not able to claim the right of pre emption under clauses 'First ', and 'Secondly ' of Section 15(1)(a) or clauses 'First ' and 'Secondly ' of Section 15(1)(b) by reason of the decision in the Atam Prakash 's case (supra) they were entitled to claim the right of pre emption under clause 'Fourthly ' in Section 15(1)(b) of the Act. Section 15(1)(b) reads thus: "15. Persons in whom right of pre emption vests in respect of sales of agricultural land and village immovable property (1)The right of pre emption in respect of agricultural land and village immovable property shah vest ( a ) . . . . . . . . (b) where the sale is of a share out of joint land or property and is not made by all the co sharers jointly First, in the sons or daughters or sons or daughters ' sons of the vendor or vendors; Secondly, in the brothers or brother 's sons of the vendor or vendors; 71 Thirdly, in the father 's brother or father 's brother 's sons of the vendor or vendors; Fourthly, in the other co sharers; Fifthly, in the tenants who hold under tenancy of the vendor or vendors the land or property sold or a part thereof; . . . . . . . . . . " It is argued by the learned counsel for the petitioners that since the suit land belonged to the joint family and it had not been sold by all the co sharers they were entitled to claim the right of pre emption under clause 'Fourthly ' of Section 15(1)(b) of the Act because they happened to be the non alienating co sharers Although there is no specific finding that the property is the joint property in this case, we shall assume for purposes of this judgment that the suit land was joint property. In order to understand the meaning of the ' words 'other co sharers ' in Section 15(1)(b) we have to read of the Act as it stood before the decision in Atam Prakash 's case (supra). It is seen that the expres sion 'other co sharers ' in clause 'Fourthly ' of Section 15(1)(b) of the Act refers to only those co sharers who do not fall under clause 'First ' or 'Secondly ' or 'Thirdly ' of Section 15(1)(b) of the Act. Since the petitioners admitted ly fall either under clause 'First ' or under clause 'Second ly ' of Section 15(1)(b) of the Act they are clearly outside the scope of clause 'Fourthly '. Therefore, the petitioners cannot claim the right of pre emption under clause 'Fourth ly '. We do not, therefore, find any substance in this con tention which was urged for the first time before the High Court The suit was, therefore, rightly dismissed by the High Court holding that the petitioners were no longer entitled to any relief under the Act. This petition, there fore, fails and it is dismissed. M.L.A. Petition dis missed.

Respondent Nos. 5 to 7 were joint owners of the suit land. They sold it to respondent nos. 1 to 4 on 25.10.71. The petitioners, sous and nephews of the vendors, instituted a suit before the sub Judge, Palwal for possession of the suit land on payment of the sale consideration on the ground that they were entitled to the right of the pre emption in respect of the suit land either under clause "First", or Secondly, of section I5(1)(a) or under clause 'First ' or 'Second ly ' of section 15(1)(b) of the Punjab Pre emption Act 1913 as in force in the SLate of Haryana. The Sub Judge decreed the suit for possession. The appeal of Respondent Nos. 1 to 4 against the aforesaid order having been dismissed by the District Judge, they filed a second appeal before the High Court. During the pendency of the second appeal, the Supreme Court delivered its judgment in Atam Prakash vs State of Haryana & Ors., ; The High Court allowed the second appeal and dismissed the suit since the provisions under which the petitioners claimed the fight of pre emption had been declared void by the Supreme Court in Atam Pra kash 's case. Being aggrieved by the judgment of the High Court, the petitioners in the special leave petition contended that since the suit land belonged to the joint family and it had not been sold by all the sharers, they were entitled to claim the right of pre emption under dause 'Fourtidy ' of s.15(1)(b) of the Act because they happened to be the non alienating co sharers. Dismissing the petition, HELD: The expression 'other co sharers ' in clause 'Fourthly ' of section 15(1)(b) of the Act refers to only those co sharers who do not fall 69 under clause 'First ' or 'Secondly ' or 'Thirdly ' of s.15(1)(b) of the Act. Since the petitioners admittedly fail either under clause 'First ' or under clause 'Secondly ' of section 15(1)(b) of the Act, they are clearly outside the scope of clause 'Fourthly '. Therefore, the petitioners cannot claim the right of pre emption under clause 'Fourthly '. [71D E]

Civil Appeal No. 219 of 1970. Appeal by Special Leave from the Judgment and Decree dated 30 4 1969 of the Rajasthan High Court in section B. Civil Regular Second Appeal No. 569/65. section M. Jain, section K. Jain and Indira Makwana for the Appellant. R. K. Garg, V. J. Francis and Sushil K. Jain for the Respondent. The Judgment of the Court was delivered by CHANDRACHUD, C.J. A deed of adoption is alleged to have been executed by one Mansaram on August 10, 1944, stating that he had adopted the appellant, Madan Lal. A suit to challenge that deed was dismissed by the trial Court. The learned District Judge, Jodhpur, confirmed the judgment of the trial Court but in second appeal No. 569 of 1965, a learned single Judge of the Rajasthan High Court set aside the judgment of the Courts below and decreed the suit. By this appeal by special leave, the defendant questions the correctness of the High Court 's judgment dated April 30, 1969. The principal point of controversy involved in the suit was whether Mansaram was in a fit state of mind when he executed the deed of adoption. This, substantially, is a question of fact but we find that the trial Court and the District Court wholly ignored the weight of preponderating circumstances on the record and allowed their judgments to be influenced by inconsequential matters. The High Court was, therefore, justified in reappreciating the evidence and in coming to its own independent conclusion on the basis of that evidence. 596 Earlier, Mansaram had allegedly executed another deed of adoption in favour of the appellant Madan Lal but the Registrar refused to register that deed by his order Exhibit 2 dated January 29, 1940 on the ground that Mansaram, who presented the deed for registration, appeared to him to be a lunatic. The matter was remanded by the Mahakma Khas to the Registrar with a direction that Mansaram be recalled and the question whether the deed should be registered decided afresh. The Registrar thereupon examined Mansaram and passed an order Exhibit 3 dated July 14, 1940, stating that Mansaram, no doubt, appeared to be a little better but that, while at one time he talked like a same man, he would, on occasions, fall into a reverie and was completely lost to the world. The Registrar noted that Mansaram was unable to understand the simplest questions put to him, that he took an unreasonably long time to answer those questions and gave wholly incorrect answers to elementary questions like whom he had adopted and whether he himself was married or unmarried. The Registrar, therefore, reaffirmed his pre remand view and refused to register the deed. A suit was then brought by the appellant on September 11, 1940 for the compulsory registration of the aforesaid deed of adoption. The Court of Joint Kotwal (No. 2), in which the suit was filed, was, concededly, a regular Civil Court of competent jurisdiction at the relevant time. A written statement was filed in that suit by one Shri Raj Narain, advocate, on behalf of Mansaram admitting the appellant 's claim that he was validly adopted by Mansaram. The authority of that admission having been challenged, the learned Chief Justice of the High Court, sitting in revision, made an order Exhibit 15 dated August 16, 1941, stating that the matter did not appear to him to be "absolutely clear". He observed that Mansaram claimed to be an M.A. in English though, in fact, he did not understand a simple sentence in English. The learned Chief Justice, therefore, examined the matter further and made an order Exhibit 18 dated December 4, 1941, directing that an issue be framed on the question whether Mansaram was of sound mind and was capable of protecting his own interest in the suit. After the remand, the learned Joint Kotwal recorded the statement of Mansaram on December 14, 1943. That statement is at Exhibit 5. Mansaram 's wit and wisdom is reflected in a part of that statement wherein he said that he was 65 years of age and that his mother was about 50 years old. When the fundamental absurdity of this hypothesis was pointed out to him, he made a feeble attempt to correct himself by saying that his mother may be of 70 years of age. In fact, the record of the evidence given by Mansaram before the Joint Kotwal shows that he gave, at one time, an impression 597 that his mother was alive and was living with him although, admittedly, she had died long since. In the circumstances, the Joint Kotwal passed an order on January 4, 1944 (which was the only order to pass) that he had no hesitation in holding that Mansaram was not of sound mind and was incapable of protecting his interest in the suit. The learned Judge formed the impression, which he recorded in the proceedings, that Mansaram was tutored to make certain statements on the questions arising in the suit and that he looked like a "frightened animal". The deed of adoption dated August 10, 1944, which is impugned in the present suit, contains a bald assertion that Mansaram had taken the appellant Madan Lal in adoption. But, significantly, the deed does not mention the year, the date or the place of adoption. It does not either mention, as adoption deeds generally mention, the names of persons who were present at the time of adoption. In fact, on the record of this case there is no evidence whatsoever to show when and where the adoption took place and even whether the necessary ceremonies were performed. We cannot accept the submission, though strongly pressed upon us by Shri Sobhagmal Jain who appears on behalf of the appellant, that what the plaintiff had challenged in the suit was the validity of the deed of adoption and not the factum of adoption. On a broad and careful reading of the plaint we are left in no doubt that the real drift of the plaint is that Mansaram was not in a fit state of mind at the relevant time, that no adoption could have taken place in fact and that, therefore, the deed of adoption cannot confer on the appellant the rights of an adopted son. Relying on the evidence of Somdatt D.W. 2, Shri Raj Narain D.W. 6, a lawyer, Moolraj D.W. 9 and Dr. Umraomal, D.W. 10, Shri Sobhagmal Jain argues that Mansaram was in a fit state of mind when he executed the impugned deed. We are unable to accept this submission. Indeed, the halting evidence of Dr. Umraomal itself throws a cloud on the mental capacity of Mansaram and renders it improbable that he could perform or authorise the performance of the act of adoption or that he could have executed the deed of adoption with an understanding mind. His mental faculties were evidently too enfeebled to enable him to enter into a transaction which, in law has a religious cum spiritual significance and which, in a worldly way, affects valuable rights to property. The High Court has examined every facet of the evidence with great care and we are in agreement with the learned Judge that Mansaram was not in a fit state of mind when he executed the deed of adoption. He could 598 not have, possibly, understood the nature and consequences of what he was doing. In the result, the appeal fails and is dismissed but there will be no order as to costs. May we add that this judgment, properly understood, will not be a charter for interference by the High Courts with findings of facts recorded by the final Court of facts. The situation, here, was of an exceptional character where evidence which was incapable of supporting more than one conclusion was considered as justifying a conclusion which no reasonable tribunal could rationally reach. N.K.A. Appeal dismissed.

A deed of adoption was executed by one M on August 10, 1944 stating that he had adopted the appellant. A suit to challenge this deed was filed contending that M was not in a fit state of mind when he executed the deed. The suit was dismissed by the Trial Court and this order was confirmed by the District Court. In second appeal the High Court set aside the judgments of the Courts below and decreed the suit. Earlier M had executed another deed of adoption in favour of the appellant, but the Registrar refused to register that deed on the ground that the executant appeared to him to be a lunatic. The matter was remanded by the Mahakma Khas to the Registrar with a direction that the executant be recalled and the question decided afresh. The Registrar thereupon examined the executant and finding him unable to understand the simplest questions put to him, and giving wholly incorrect answers to elementary questions like whom he had adopted, reaffirmed his pre remand view and refused to register the deed. A Suit was then brought by the appellant on September 11, 1940 for the compulsory registration of the aforesaid deed of adoption. A written statement was filed on behalf of M admitting the appellant 's claim that he was validly adopted. The authority of that admission having been challenged, the High Court, in revision, examined the matter further and directed that an appropriate issue has been framed on the question. After the remand, the Joint Kotwal passed an order on January 4, 1944 holding M was not of sound mind and was incapable of protecting his interest in the suit. The High Court agreed with the findings of the Joint Kotwal. On appeal by special leave, and dismissing the appeal, it was, ^ HELD: (1) Apart from the bald assertion that the appellant was taken in adoption, the deed does not mention the year, the date or the place of adoption. It does not either mention the names of persons who were present at the time of adoption. In fact there is no evidence whatsoever to show when and where the adoption took place and even whether the necessary ceremonies were performed. [597 C D] (2) The real drift of the plaint is that M was not in a fit state of mind at the relevant time, that no adoption could have taken place in fact and that, therefore, the deed of adoption cannot confer on the appellant the rights of an adopted son. [597 E] 595 (3) The argument that M was in a fit state of mind when he executed the deed cannot be accepted. Indeed the halting evidence of the doctor, one of the witnesses, throw a cloud on the mental capacity of M and renders it improbable that he could perform or authorise the performance of the act of adoption or that he could have executed it with an understanding mind. His mental faculties were evidently too enfeebled to enable him to enter into a transaction which in law has a religious cum spiritual significance and which, in a wordly way, affects valuable rights to property. [597 F H] (4) The trial court and the District Court wholly ignored the weight of prepondering circumstances on the record and allowed their judgments to be influenced by inconsequential matters. The High Court was, therefore, justified in re appreciating the evidence and coming to its own independent conclusion on the basis of that evidence. [H] (5) The situation here was of an exceptional character, where evidence which was incapable of supporting more than one conclusion was considered as justifying a conclusion which no reasonable Tribunal could rationally reach. This judgment will not be a charter for interference by the High Courts with findings of facts recorded by the Final Court of facts. [598 B C]

Appeals Nos. 1091 1103 of 1964. Appeals from the judgment and decree dated April 17, 1957 of the Patna High Court In Second Appeals Nos. 1447 of 1950 etc. C.B. Agarwala and D. Goburdhun, for the appellant (in all the appeals). U.P. Singh and K.C. Dua, for respondents Nos. 3 and 4 (in C.A. No. 1091 of 1964) respondent No. 3 (in C.A. No. 1092 of 1964) respondent No. 4 (in C.A. No. 1093 of 1964), respondent No. 7 (in C.A. No. 1094 of 1964), respondent No. 3 (in C.A. No. 1096 of 1964) respondents Nos. 4 and 5 (in C.A. No. 1095 of 1964) and respondent No. 4 (in C.As. 1099, 1100 and 1101 of 1964). The Judgment of the Court was delivered by Hidayatullah, C.J. These are 13 appeals by certificate against the common judgment in second appeal, April 17, 1957, of the High Court of Patna. The appellants are the original plaintiffs. The appellants had filed 12 title suits for ejectment in the court of the Second Munsif at Buxar. Eleven suits were dismissed. It was held that the plaintiffs had no title to suit lands. One suit was compromised and decreed in terms of the compromise. Two other suits one by Kedar Nath (one of the plaintiffs in the 12 title suits) and the other by one Udholal were filed for rent for 1335 1337 Fasli in respect of some lands comprised in Survey No. 3385 of Mouza Buxar against the tenant Ram Chhabi Lal. The two rent suits were heard together. Kedar Nath was held to be the landlord and not Udholal. The suit of the former was decreed and that of the latter dismissed. On appeals filed by Udholal the decision was reversed. Appeals by Kedar Nath to the High Court were dismissed on the ground that in the title suits from which eleven appeals were filed it was held by the High Court affirming the decision of the courts below that Kedar Nath had no title. Since the success of the last two appeals depended on whether Kedar Nath had title or not it is not necessary to refer to them at this stage. We shall deal with the other eleven appeals first. in these appeals, plaintiffs and defendants 1 to 3 are common. Plaintiffs are purchasers from the mortgagees of the suit 206 lands who had purchased the suit lands in an auction sale in execution of the mortgage decree. Defendants 1 to 3 were the former owners of these suit lands and the other defendants were either purchasers at auction sales in execution of money decrees against the owners or transferees from the auction purchasers. The suits concern plots formed out of two Survey Nos. 3384 and 3385. It is thus that the other two suits get connected with the title suits because in those suits the rent of certain plots from Survey No. 3385 was involved. The history of the plots is as follows : One Laxmi Narain was the previous owner of these 2 Survey Nos. On his death his daughter 's sons Ram Narain Ram, Sheonarain Ram and Gopal Ram inherited these Survey Nos. alongwith other properties. The first two sons were defendants 1 to 2 in the suits and defendant 3 is the son of Sheonarain Ram. In 1930 the other two brothers sued Gopal Ram for a partition. Preliminary decree was passed on April 15, 1931 and the final decree on September 10, 1932. Half share in the property went to Gopal Ram and the other half jointly to the other two brothers. The suit Survey Nos. came to the share of Ram Narain Ram and Sheonarain Ram. On April 27, 1931 Ram Narain Ram executed a mortgage of a half share in 27 plots made in the two Survey Nos. and some other property with Buxar Trading Co operative Society. On April 20, 1933, the Society released Ram Narain Ram 'S share in the 27 plots from the mortgage by a registered release deed. On September 20, 1932 Sheonarain Ram filed a suit for 'partition against Ram Narain Ram. The preliminary decree was passed in May 1933, that is to say, after the release by the Society. The two brothers divided the two Survey Nos. half and half between them. No final decree in this partition suit seems to have been passed. Devendra Nath (one of the defendants) obtained settlement of 3 k 13 d of land out of Survey No. 3384 from Sheonarain Ram on June 10, 1933 and in execution of a money decree against Ram Narain Ram and Sheonarain Ram purchased on August 13, 1934 the remaining portion of Survey No. 3384 and Survey No. 3385. He obtained possession on February 27, 1935. He had obtained attachment of the two plots before judgment, on April 23, 1934. Devendra Nath disposed of 3 k 13 d by settling them on his wife and she was one of the defendants in the suits. Devendra Nath 's title depends on whet.her the release by the Society was valid and binding on the Society or not. If the release was valid and binding on the Society, the Society could not obtain a decree in respect of these two Survey Nos. and bring them to sale. 207 This is one of the points for consideration in these appeals. The High Court and the court below have decided unanimously that the release was binding on the Society and Devendra Nath obtained no title. On April 26, 1934, that is to say, before Devendra Nath 's purchase but after attachment by him, the Society applied to ,.he Registrar, Co operative Societies for a mortgage award. In that application the surety of Ram Narain Ram was also joined. On August 16, 1934 a money award was given against Ram Narain Ram and his surety. On September 20, 1934 the money award was cancelled and a preliminary mortgage award was passed. Admittedly the mortgage award had the force of a mortgage decree. The final mortgage award was made on May 28, 1935. The award ordered sale of all .mortgage properties including the half share of Ram Narain Ram in survey Nos. 3384 and 3385. No mention was made of the earlier release of the Survey Nos. by the Society by a registered deed. In execution of the decree the Society purchased the two Survey Nos. on February 7, 1936 and obtained possession o.n July 20, 1937. One Dwarikanath had a money decree against the Society and he attached the two disputed Survey Nos. and brought them to sale. The Buxar Central Co operative Bank purchased the two Survey Nos. in auction sale on February 8, 1940 obtaining possession on July 5, 1941. On March 28, 1943 the Society and the Bank went into liquidation. The right, title and interest of the Society and the Bank was sold by the common Liquidator to Kedar Nath including the 27 plots made in the two Survey Nos. Kedar Nath 's purchase was on March 20, 1943 but he took the sale benami in the name of Dhanesar Pandey, who was plaint. ill No. 2 in the title suits while Kedarnath was plaintiff No. 1. The title of the plaintiffs Kedar Nath and Dhanesar Pandey is based on this purchase. After the release of the two Survey Nos. by the Society, Ram Narain Ram and Sheonarain Ram, and after his purchase, Devendra Nath, made settlement of the plots to various persons. They are the remaining defendants in the suits and respondents in the various appeals before us. The High Court has given a chart of these persons and the dates of pattas but as nothing turns upon these details it is not necessary to mention them here. The plaintiffs (Kedar Nath and Dhanesar Pandey) in these title suits asked for declaration of title and possession. Their case was that the release was void and inoperative and not binding on the Society. Therefore, the mortgage award and the auction sale was binding on Ram Narain Ram and all those who derive title 208 from him. Their next contention is that. , in any event, the transfers to the defendants were effected during the pendency of the mortgage award proceedings and were affected by the doctrine of lis pendens. These two grounds were not accepted by the High Court and the courts below and it is these two grounds which were urged before us in these appeals. The other side seeks to avoid the effect of lis pendens by pleading that the mortgage award was claimed mala fide against the suit plots after their release and, in any event, there was attachment of these plots before the petition for the mortgage award was made. Before we deal with these two points it may be mentioned at once that neither ground of appeal applies to the transfers by Sheonarain who was not a mortgagor and who was not affected by the release deed made by the Society. Mr. C.B. Aggarwal frankly conceded that the transfer by him could not be assailed and must stand. He, therefore, did not press Civil Appeals Nos. 1091, 1092, 1093 and 1094 of 1964. These appeals are accordingly dismissed with costs. We may first consider whether the release was binding on the Society or not. When Ram Narain Ram mortgaged the property to raise a loan from the Society of which he was a member, half share in the plots belonged to him because these plots had fallen in the preliminary decree to. the share of his brother Sheonarain Ram and himself. That preliminary decree was passed on April 15, 193 1. The Society had fixed a ceiling on the amount which could be borrowed, at Rs. 3000/ . The mortgage deed recited that the amount borrowed was Rs. 3000/ with interest at Actually Rs. 1890/ were given as a loan. The release deed, releasing the suit plots was executed in pursuance of a resolution of the Society (Res. No. 4 dated April 4, 1933). The release stated thus: " . relinquished and released the properties, specified below, from the debt due to the said Ram Narain Ram, to the said society, entered in the said mortgage bond, in favour of Ram Narain Ram . The said property shall not be made liable for any debt of the said society nor shall any incumbrance be recovered from the said property. The said property shall come in possession of Ram Narain Ram. The said Ram Narain Ram shall have right to sell the property to keep the same in whatever ways he likes. The said society neither has nor shall have any objection thereto. " 209 Why the release was granted by the Society was stated in the following words: " . A petition was filed on behalf of the said Ram Narain Ram in the meeting of the members in the presence of all the members of the society for releasing some land from the said mortgage in order to repay the debt. of Rs. 500/ forming part of the debt due by the said Ram Narain Ram to the said co operative society which was put up before all the members and accepted by them . ". It appears that Ram Narain Ram did not pay the amount of Rs. 500/ to the Society and the Society considered itself free to include these two plots, notwithstanding the release, in their application for an award decree. In our opinion the release was binding on the Society. The argument. in opposition to the binding nature of the release is that it was conditional on payment of Rs. 500/ . This is no true. No. doubt the motive for the release was the payment of Rs. 500/ to the Society promised by Ram Narain Ram, but the payment was not made a condition of the release. There was no attempt to release this amount from Ram Narain Ram. Therefore, the release being absolute and unconditional and by a registered deed must be treated as binding. It is open to the promisee to waive the performance of any part of the contract or to release any property from the operation of a 'mortgage or charge. If he wishes his rights to continue in the. event of some condition simultaneously imposed on the promisor, he must see that the release is made dependent on the performance by the promisor of his part of the agreement. Here the Society merely released the two plots without making the payment a condition precedent, and the release operated. That, however, is not the end of the matter. The Society filed on April 5, 1934 a petit.ion for a mortgage award before the Assistant Registrar, Co operative Societies. The petition is headed 'Petition for mortgage decree '. The petition mentioned that the mortgage was made on April 27, 1931 and that the amount secured was Rs. 3,000/ with interest at 121/2% per annum. The petition then described the property mortgaged and it included plots Nos. 3385 and 3384. The amount due on December 31, 1933 was said to be Rs. 2440/3. The relief asked for was: "We the punches therefore pray that a decree may be passed by your honour against the said member and he may be directed under the decree to pay the debt, principal and interest, amounting to Rs. 2440/3/ within 3 months, that in case of non payment this order may be passed that the entire amount may be realized by 210 auction sale of the mortgaged property and that if the mortgaged property would not be sufficient for the satisfaction of the entire amount of the decree the punches of the committee be allowed to pray for passing a personal decree against the said member. " When the Registrar made his order he overlooked that a mortgage award had to be pass.ed. On August 16, 1934 he ordered that an award jointly with sureties be issued. However, on September 2, 1934, .he corrected Iris earlier order thus: "S1. '6. Read along with S1. By mistake of the 2nd Asst. simple award was issued instead of Mortgage award. Issue mortgage award and ask the C.B. to return the simple award which will be cancelled here. Syed Ozair. D.F.A. Addl. A.R. 2 9 34. " After 'this mortgage award which had the force of a preliminary decree, the Society on December 16, 1934 resolved that a final mortgage decree be obtained from the Assistant Registrar, and a final decree was obtained and the property brought to sale on February 7, 1936 and purchased by the Society itself with the permission of the court executing the decree. Possession was obtained on July 20, 1937. Therefore, litigation in respect of this mortgage remained pending from April 5, 1934 to July 20, 1937. Under Explanation to section 52 of the the whole of this period denoted pendency of the proceeding for purposes of application of the doctrine of lis pendens. All the leases made by Devendranath were after the proceedings commenced. Devendranath purchased the right title and interest of Ram Narain Ram on August 13, 1934. His acquisition was prima facie hit by the doctrine of lis pendens. Three arguments were advanced before us to meet this situation and we shall now deal with them seriatim. The first argument is that there could be no lis pendens till August 16, when the money award was issued because a money suit for proceeding cannot lead to the application of the doctrine of lis pendens. As a proposition of law the argument is sound but it is wrongly grounded on fact. The proceeding was to get a mortgage award, the equivalent of a mortgage decree. The Court made a mistake and treated it as a proceeding for a money decree. When the court corrected its,order, the mortgage award related back to the petition as made and the whole of the proceeding must be treated as covered by the doctrine. We cannot, therefore, accede to the suggestion that the doctrine did not apply; at any rate, on this suggested ground. 211 The second ground of attack is that before the proceedings commenced before the Registrar these fields had been attached and, therefore, the doctrine of lis pendens again cannot apply. We are unable to accept this argument either. If the property was acquired pendente lite, the acquirer is bound by the decree ultimately obtained in the proceedings pending at the time of acquisition. This result is not avoided by reason of the earlier attachment. Attachment of property is only effective in preventing alienation but it is not intended to create any title to the property. On the other hand, section 52 places a complete embargo on the transfer of immovable property right to which is directly and specifically in question in a pending litigation. Therefore the attachment was ineffective against the doctrine. Authority for this clear position is hardly necessary but if one is desired it will be found in Moti Lal vs Karrab ul Din and others(1). Lastly it was contended that the sale was by court auction and the doctrine of lis pendens would not apply to such a sale. This point was considered in Samarendra Nath Sinha and Anr. vs Krishna Kumar Nag(2) by one of us (Shelat, J.) and it was observed as follows : " . 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 it must bind the person driving his right, title and interest from or through him. This principle is well illustrated in Radhamadhub Holdar vs Monohar(3) 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 he principle of lis pendens applies to such alienations. (See Nilkant vs Suresh Chandra(4) and Moti Lal vs Karrab ul Din(1). ' ' This ground also has no validity. Lastly it was argued that if the fields were released from the operation of the mortgage they could not be made the, subject of a mortgage decree, and whatever was done in the mortgage proceedings was not of any consequence. this there are two answers. Firstly, the respondent before the Registrar (Ram Narain Ram) made no objection to ,the inclusion of the plots in the petition for a mortgage award. Secondly, the doctrine of lis pendens applies irrespective of the strength or weakness of the case on one side or other. See Gouri Dutt Maharaj vs Sukur Mohammed and Ors.(5). There is, however, one condition that (1) 24 I.A. 170. (3) 15 I.A. 97. (2) ; (4) 12 I.A. 171. (5) 75 i. A. x65. 212 the proceedings must be bona fide. Here no doubt the Society knew that the plots had been released from the mortgage, but it was also clear that the release was to enable Ram Narain Ram to dispose of some of the plots and pay Rs. 500/ to the Society. This amount was never paid and the Society must have bona fide felt that the plots still remained encumbered. In fact the attitude of Ram Narain Ram in not claiming that these plots be removed from the mortgage award shows that he too felt that this was the true position. In Gouri Dutt Maharaj 's(1) case referred to by us, it was said that if the proceedings were bona fide, the applicability of section 52 was not avoided. For the above reasons we are clear that the purchase by Kedarnath was protected by the doctrine of lis pendens, the prior transfer to the defendants notwithstanding. In this view of the matter the judgment of the High Court cannot be sustained. The appeals will, therefore, be allowed. The judgment and decree of the High Court will be set aside and the suits of the appellant will be decreed with costs throughout. In this Court the costs will be one set. R.K.P.S. Appeals allowed. (1) 75 X.A. 165 L 1 Sup./70 6 7 70 GIPF.

One R executed a mortgage of his share in two survey Nos. to a Cooperative Society. On his application and in order to enable him to repay a sum of Rs. 500/ , the Society released the property in 1933, but R never paid the amount to the Society. The Society filed an application for a mortgage award on April 5, 1934 and the Assistant Registrar made an award in the nature of a preliminary decree, on December 16, 1934. Thereafter a final mortgage decree was passed by the Assistant Registrar and the two survey nos. were brought to sale and purchased by the. Society and possession was obtained on July 20, 1937. Meanwhile, one D obtained attachment before judgment of the two survey nos., as the property of R, in a suit for money against R, and, in execution of the money decree, purchased the two survey nos. on August 13, 1934. In 1943, the Society went into liquidation and the liquidator sold the properties of the Society and the appellant bought the two. survey nos. He filed a suit for a declaration of his title and possession of the properties in the two, survey nos. from various persons who were in possession of the properties under R and D. The High Court dismissed the .suit. In appeal to this Court, HELD: (1) The motive of the release, in 1933, of the properties by the Society in favour of R was the payment of Rs. 500/ by R to the Society, but it was not a condition Of the release. Therefore, the release was binding on the Society. [209 D E] (2) But R did not object to the inclusion of the items in the mortgage award. Therefore, the Society must have bona fide felt that the properties remained encumbered. [211 G] (3) The proceedings in respect of the mortgage were pending from April 5, 1934 to July 20, 1937. The proceedings were for obtaining a mortgage award equivalent to a mortgage decree and not for a money decree. The fact that they were attached before judgment in D 's suit does not affect the application of the doctrine of lis pendens. Attachment is only effective in preventing alienation and does not create title to property. If in fact, the property was. acquired pendente lite, the acquirer is bound by the decree ultimately obtained. Therefore, D 's purchase on August 13, 1934, was hit by the. doctrine. of lis pendens in section 52 of the . Since D 's purchase was hit by the doctrine the properties continued to be those of the Society and hence, the appellant was entitled to them. [210 E, G H; 211 A C] 205 Samarendra Nath Sinha & Anr. vs Krishna Kumar Nag, ; , followed. Moti Lal vs Karrab ul Din & Ors. 24 I.A. 170 and Gouri Dutt Maharaj vs Sukur Mohammed and Ors. 75 I.A. 165, applied.

Appeal No. 151 of 1953. Appeal by Special Leave granted by the Supreme Court of India by its Order dated the 29th May, 1953, from the Judgment and Order dated the 4th May, 1953, of the Election Tribunal, Allahabad, in Election Petition No. 270 of 1952. I C. K. Daphtary, Solicitor General for India (G. C. Mathur and C. P. Lal, with him) for the appellant. Naunit Lal for respondents Nos. I to 4. 1954. May 20. The Judgment of the Court was delivered by GHULAM HASAN J. This appeal preferred under article 136 of the Constitution against the order, dated May 4, 1951, of the Election Tribunal, Allahabad, setting aside the election of Sri Vashist Narain Sharma to the Uttar Pradesh Legislative Assembly, raises two questions for consideration. The first question is whether the nomination of one of the rival candidates, Dudh Nath, was improperly accepted by the Returning Officer and the second, whether the result of the election was thereby materially affected. Eight candidates filed nominations to the Uttar Pradesh Legislative Assembly from Ghazipur (South East) Constituency No. 345, three withdrew their 511 candidature and the contest was confined to the remaining five. The votes secured by these candidates were as follows 1. Vashist Narain Sharma 12868 2. Vireshwar Nath Rai 10996 3. Mahadeo 3950 4. Dudh Nath 1983 5. Gulab Chand 1768 They were arrayed in the election petition as respondents Nos. I to 5 respectively. The first respondent having secured the highest number of votes was declared duly elected. Three electors filed a petition under section 81 of the Representation of the People Act (Act XLIII of 1951) "praying that the election of the returned candidate be declared void and that respondent No. 2 be declared to have been duly elected; in the alternative, that the election be declared wholly void. The election was sought to be set aside on the grounds, inter alia, that the nomination of respondent No. 4 was improperly accepted by the Election Officer and that the result of the election was thereby materially affected. The Tribunal found that respondent No. 4, whose name was entered on the electoral roll of Gahmar Constituency Ghazipur (South East) 'personated ' (meaning passed himself off as) Dudh Nath Kahar and used the entries of his electoral roll of Baruin Constituency ghazipur (South West), that the Returning Officer had improperly accepted his nomination, and that the result of the election was thereby materially affected. Allegations of major and minor corrupt practices and non compliance with certain statutory rules were made but the Tribunal found in favour of the returned candidate on those points. Dudh Nath, respondent No. 4, is Rajput by caste. His permanent or ancestral home is Gahmar but since 1943 he had been employed as a teacher in the Hindu Higher Secondary School at Zamania a town 10 or 12 miles away and he had been actually residing at village Baruin which is quite close to Zamania. The person for whom Dudh Nath 'personated ' is Dudh Nath Kahar whose permanent house is at Jamuan, 512 but his father lives at Baruin. Dudh Nath Kahar used to visit Baruin off and on but he was employed at Calcutta. The nomination paper filed by Dudh Nath gave his parentage and age which more properly applied to Dudh Nath Kahar. He gave his father 's name as Shiv Deni alias Ram Krit. Ram Krit is the name of Dudh Nath Kahar 's father. The electoral roll (Exhibit K) of Gahmar gives Dudh Nath 's, father 's name as Shio Deni with no alias and his age as 39, while the electoral roll of Pargana Zamania Monza Baruin (Exhibit C) gives Dudh Nath 's father 's name as Ram Krit and his age as 31. In the electoral roll of Jamuan Dudh Nath 's age is entered as 34 but in the supplementary list it is mentioned as 30. When the nomination paper was filed on November 24, 1951, at 2 20 P.m. it was challenged by Vireshwar Nath Rai on the ground that Dudh Nath 's father 's name was Shivadeni and not Ram Krit but no proof was given in support of the objection and it was overruled on November 27. This order was passed at 1 P.m. One of the candidates, who later withdrew, filed an application at 3 25 P.m. before the Returning Officer offering to substantiate the objection which the objector had not pressed. This application was rejected on the ground that the nomination had already been declared as valid. In point of fact no evidence was adduced. This acceptance of the nomination on the part of the Returning Officer is challenged as being improper under section 36(6) of the Representation of the People Act and as the result of the election according to the objector has been materially affected by the improper acceptance of this nomination, the Tribunal is bound to declare the election to be wholly void under section 100(1) (c) of the Act. Mr. Daphtary on behalf of the. appellant has argued before us with reference to the provisions of sections 33 and 36 that this is not a case of improper acceptance of the nomination paper, because prima facie the nomination paper was valid and an objection having been raised but not pressed or substantiated, the Returning Officer had no option but to accept it. There was, as he says, nothing improper in the action of the, Returning Officer, On the contrary, 513 it may, according to him, be more appropriately described as a case of an acceptance of an improper nomination paper by the Returning Officer, inasmuch as the nomination paper contained an inherent defect which was not discernible ex facie and could be disclosed only upon an enquiry and upon the taking of evidence as to the identity which was,not then forthcoming. Such a case, it is argued, is not covered by section (1)(c) but by section 100(2)(c) in which case the election of the returned candidate is alone to be declared void, whereas in the former case the election is wholly void. We do not propose to express any opinion upon this aspect of the matter, as in our view the appeal can be disposed of on the second question. Section 33 of the Representation of the People Act, 1951, deals ' with the presentation of nomination paper and lays down the requirements for a valid nomination, On the date fixed for scrutiny of the nominations the Returning Officer is required to examine the nomination paper and decide all objections which may be made to any nomination, and after a summary enquiry. if any, as he thinks necessary he is entitled to refuse nomination on certain grounds mentioned in sub section (2) of section 36. Sub section (6) lays down that the Returning Officer shall endorse on each nomination paper his decision accepting or rejecting the same and, if the nomination paper is rejected, shall record in writing a brief statement of his reasons for such rejection. This sub section shows that where the nomination paper is accepted. , no reasons are required to be given. Section 100 gives the grounds for declaring an election to be void. The material portion is as follows: (1) If the Tribunal is of opinion (a). . . . . . . . (b). . . . . . . . (c)that the result of the election has been materially affected by the improper acceptance or rejection of any nomination, the Tribunal shall declare the election to be wholly void. It is under this sub section that the election was sought to be set aside, 66 514 Before an election can be declared to be wholly void under section 100(1) (c), the Tribunal must find that "the result of the election has been materially affected. " These words have been the subject of much controversy before the Election Tribunals and it is agreed that the opinions expressed have not always been uniform or consistent. These words seem to us to indicate that the result should not be judged by the mere increase or decrease in the total number of votes secured by the returned candidate but by proof of the fact that the wasted votes would have been distributed in such a manner between the contesting candidates as would have brought about the defeat of the returned candidate. The next question that arises is whether the burden of proving this lies upon the petitioner who objects to the validity of the election. It appears to us that the volume of opinion preponderates in favour of the view that the burden lies upon the objector. It would be useful to refer to the corresponding provision in the English Ballot Act, 1872, section 13 of which is as follows: " No election shall be declared invalid by reason of a non compliance with the rules contained in the first schedule to this Act, or any mistake in the use of the forms in the second schedule to this Act, if it appears to the Tribunal having cognizance of the question that the election was conducted in accordance with the principles laid down in the body of this Act, and that such non compliance or mistake did not affect the result of the election." This section indicates that an election is not to be declared invalid if it appears to the Tribunal that non compliance with statutory rules or any mistake in the use of such forms did not affect the result of the election. This throws the onus on the person who seeks to uphold the election. The language of section 100(1)(c), however, clearly places a burden upon the objector to substantiate the objection that the result of the election has been materially affected. On the contrary under the English Act the burden is placed upon the respondent to show the negative, viz., that the result of the decision has not been affected. This view was expressed 515 in Rai Bahadur Surendra Narayan Sinha vs Amulyadhone Roy & others (1), by a Tribunal presided over by Mr. (later Mr. Justice) Roxburgh. The contention advanced in that case was that the petitioner having established an irregularity it was the duty of the respondent to show that the result of the election had not been materially affected thereby. The Tribunal referred to the provisions of section 13 of the Ballot Act and drew a distinction between that section and the provisions of paragraph 7(1) (c) of Corrupt Practices Order which was more or lesson the same lines as section 100(1) (c). They held that the onus is differently placed by the two provisions. While under the English Act the Tribunal hearing an election petition is enjoined not to interfere with an election if it appears to it that non compliance with the rules or mistake in the use of forms did not affect the result of the election, the provision of paragraph 7(1) (e) placed the burden on the petitioner. The Tribunal recognized the difficulty of offering positive proof in such circumstances but expressed the view that they had to interpret and follow the rule as it stood. In C. M. Karale vs Mr. B. K. Dalvi etc. (2), the Tribunal held that the onus of proving that the result had been materially affected rests heavily on the petitioner of proving by affirmative evidence that all or a large number of votes would have come to the returned candidate if the person whose nomination had been improperly accepted had not been in the field. In Babu Basu Sinha vs Babu Rajandhari Sinha etc. it was emphasized that it is not enough for the petitioner to show that the result of the election might have been affected but he must show that it was actually affected thereby. The case of Jagdish Singh vs Shri Rudra Deolal etc. was one under section 100(1) (c) of the Representation of the People Act. It was held that the question should always be decided on the basis of the material on the (1) Indian Election Cases by Sen and Poddar, page 188. (2) Doabia 's Election Cases, Vol. 1 (P. I78). (3) Indian Election Petitions (Vol. III) by Shri jagat Narain, page So. (4) Gazette of India (Extraordinary) October 13, 1953. 516 record and not on mere probabilities. The Tribunal distinguished between an improper rejection and an improper acceptance of nomination observing that while in the former case there is a presumption that the election had been materially affected, in the latter case the petitioner must prove by affirmative evidence, though it is difficult, that the result had been materially affected. The learned counsel for the respondents concedes that the burden of proving that the improper acceptance of a nomination has materially affected the result of the election lies upon the petitioner but he argues that the question can arise in one of three ways: (1) where the candidate whose nomination was improperly accepted had secured less votes than the difference between the returned candidate and the candidate securing the next highest number of votes, (2) where the person referred to above secured more votes, and (3) where the person whose nomination has been improperly accepted is the returned candidate himself. It is agreed that in the first case the result of the election is not materially affected because if all the wasted votes are added to the votes of the candidate securing the highest votes, it will make no difference to the result and the returned candidate will retain the seat. In the other two cases it is contended that the result is materially affected. So far as the third case is concerned it may be readily conceded that such would be the conclusion. But we are not prepared to hold that the mere fact that the wasted votes are greater than the margin of votes between the returned candidate and the candidate securing the next highest number of votes must lead to the necessary inference that the result of the election has been materially affected. That is a matter which has to be proved and the onus of proving it lies upon the petitioner. It will not do merely to say that all or a majority of the wasted votes might have gone to the next highest candidate. The casting of votes at an election depends upon a variety of factors and it is not possible for any 517 one to predicate how many or which proportion of the votes will go to one or the other of the candidates. While it must be recognised that the petitioner in such a case is confronted with a difficult situation, it is not possible to relieve him of the duty imposed upon him by section 100(1) (c) and hold without evidence that the duty has been discharged. Should the petitioner fail to adduce satisfactory evidence to enable the ' Court to find in his favour on this point, the inevitable result would be that the Tribunal would not interfere, in his favour and would allow the election to stand. In two cases [Lakhan Lal Mishra vs Tribeni Kumar etc. (1) and Mandal Sumitra Devi vs Sri Surajnarain Singh etc. (2) ], the Election Tribunal, Bhagalpur, had to consider the question of improper acceptance of the nomination paper. They agreed that the question whether the result of election had been materially affected must be proved by affirmative evidence. They laid down the following test: "If the number of votes secured by the candidate, whose nomination paper has been improperly accepted, is lower than the difference between the number of votes secured by the successful candidate and the candidate who has secured the next highest number of votes, it is easy to find that the result has not been materially affected. If, however, the number of votes secured by such a candidate is higher than the difference just mentioned, it is impossible to foresee what the result would have been if that candidate had not been in the field. It will neither be possible to say that the result would actually have been the same or different nor that it would have been in all probability the same or different." In both the cases the margin of votes between the successful candidates and the next highest candidate was less than the number of votes secured by the candidate whose nomination was improperly accepted. They held that the result was materially affected. We are unable to accept the ' soundness of this view. It seems to us that where the margin of votes is greater (1) Gazette of India (Extry.) Feby. 2, 1953. (2) Gazette of India (Extry.) Feby. 26,1953. 518 than the votes secured by the candidate whose nomination paper had been improperly accepted, the result is not only materially not affected but not affected at all; but where it is not possible to anticipate the result as in the above mentioned cases, we think that the petitioner must discharge the burden of proving that fact and on his failure to do so, the election must be allowed to stand. The Tribunal in the present case rightly took the view that they were not impressed with the oral evidence about the probable fate of votes wasted on Dudh Nath Singh, but they went on to observe : "Considering that Dudh Nath respondent No. 4 received more votes than the margin of votes by which respondent No. 1 was returned we are constrained to hold that there was reasonable possibility of respondent No. 2 being elected in place of respondent No. 1, had Dudh Nath not been in the field. " We are of opinion that the language of section 100(1)(c) is too clear too any speculation about possibilities. The section clearly lays down that improper acceptance is not to be regarded as fatal to the election unless the Tribunal is of opinion that the result has seen materially affected. The number of wasted votes was 111. It is impossible to accept the ipse dixit. of witnesses coming from one side or the other to say that all or some of the votes would have gone to one or the other on some supposed or imaginary ground. The question is one of fact and has to be proved by positive evidence. If the petitioner is unable to adduce evidence in a case such as the present, the only inescapable conclusion to which the Tribunal can come is that the burden is not discharged and that the election must stand. Such result may operate harshly upon the petitioner seeking to set aside the election on the ground of improper acceptance of a nomination paper, but neither the Tribunal, nor this Court is concerned with the inconvenience resulting from the operation of the law. How this state of things can be remedied is a matter entirely for the Legislature to consider. The English Act to which we have referred presents no such conundrum and lays down a. perfectly sensible 519 criterion upon which the Tribunal can proceed to declare its opinion. It directs the Tribunal not to set aside the election if it is of opinion that the irregularity has not materially affected the result. Mr. Nauinit Lal argued that the finding that the result of the election has been materially affected is a finding of fact which this Court should not interfere with in special appeal but there is no foundation for the so called finding of fact. If the Tribunal could not be sure that the respondent No. I would get only 56 out of the wasted votes to give him an absolute majority, how could the Tribunal conjecture that all the wasted votes would go to the second best candidate. The Tribunal misdirected itself in not comprehending what they had to find and proceeded merely upon a mere possibility. Their finding upon the matter is speculative and conjectural. Mr. Naunit Lal also attempted to argue that he could support the decision of the Tribunal on other grounds which had been found against him and referred to the analogy of the Code of Civil Procedure which permits a respondent to take that course. That provision has no application to an appeal granted by special leave under article 136. We have no appeal before us on behalf of the respondents and we are unable to allow that question to be reagitated. The result is that we set aside the order of the Tribunal and hold that it is not proved that the result of the election has been materially affected by an improper acceptance of the nomination, assuming that the case falls within the purview of section 36(6) and that finding is correct. We accordingly set aside the order of the Tribunal and uphold the election of the appellant. The appellant will get his costs from :the respondents incurred here and in the proceedings before the Tribunal. Order accordingly.

The words "the result of the election has been materially affected" in section 100 (1) (c) of the Representation of the People , indicate that the result should not be judged by the mere increase or decrease in the total number of votes secured by the returned candidate but by proof of the fact that the wasted votes would have been distributed in such a manner between the contesting candidates as would have brought about the defeat of the returned candidate. Section 100 (1) (c) clearly places a burden on the objector to substantiate the objection that the result of the election has been materially affected by the improper acceptance or rejection of the nomination paper. The said section is too clear for any. speculation about possibilities and it lays down that improper acceptance is not to be regarded as fatal to the election unless the Tribunal is of opinion that the result has been materially affected. If an Election Tribunal misdirects itself in not comprehending the real question before it and proceeds merely on possibilities, speculation and conjecture, its order must be set aside.

ption that the profits would be diminished or greatly reduced ' it could not be held that there was any infringement of article 19(1)(g). [57 A D] (iii) Under Act XVI of 1952 as amended by Act X of 1958 the Government could grant exemption from payment of tax, by means of a notification, in respect of any motor vehicle running in a particular area, and such an exemption was given to the operators in the Telengana region 53 for the reason that before the extension of the Act XVI of 1952 to this area no tax similar to the ,one levied under that Act was payable in that area and that this exemption was granted under a different enactment. Therefore, the challenge Under article 14 could not succeed. [58 A C] No question of discrimination arose when taxes were being imposed under two different sets of laws in different States or geographical areas The laws in Madras and Andhra Pradesh were different and persons having primary permits from Madras were naturally governed by the laws operating in that State. [58] & CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 69, 112 and 113 of 1968. Appeal from the judgment and order dated October 25, 1962 of the Andhra Pradesh High Court in Writ Petitions Nos. 1307, 1305 and 1353 of 1961. K. Srinivasamurthy and Naunit Lal, for the appellants (in all the appeals). P. Ram Reddy and P. Parmeshwara Rao, for the respondent No. 1 (in all the appeals). The Judgment of the Court was delivered by Grover, J. These appeals by certificate from a judgment of the Andhra Pradesh High Court which disposed of several petitions under article 226 of the Constitution including the petitions filed by the appellants involve the question of the constitutionality of the Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods Amendment and Validation) Act, 1961, Andhra Pradesh Act XXXIV of 19 61. The appellants hold permits either for stage carriage or for public. carriers issued under the . They ply these vehicles on different routes in the State as also on some of the inter State routes. They were subject to tax levied under the Madras Motor Vehicle Taxation Act, 1931. 1952 the Madras Motor Vehicles (Taxation of Passengers and Goods) Act, 1952 (Act XVI of 1952) was enacted by which every operator had to pay Rs. 12.50 per seat per quarter or 37 naye paise per seat per mile over and above the tax payable under the Madras Motor Vehicles Taxation Act, 1931. Under that Act the operators were paying tax of Rs. 30 per seat per quarter. The validity of Act 16 of 1952 was challenged before the Madras High Court. In Mathurai Pillai vs The State of Madras(1) its validity was upheld except as to. the proviso to section 3 of the Act. After the formation of Andhra Pradesh State the Governor promulgated an Ordinance amending Madras Act 16 of 1952 in the light of the (1) (1954) I.M.L.J. 110. 54 above judgment. The provisions contained in the Ordinance were subsequently reenacted as President 's Act 11 of 1954. The operators, therefore, paid taxes imposed under Act 16 of 1952 as amended in the State of Andhra Pradesh. By means of Act 21 of 1959 the legislature of Andhra Pradesh amended Act 16 of 1952. Section 3 of Act 16 of 1952 as amended read as follows: "In cl. (a) of sub rule (i) of rule 1 in the schedule to the Principal Act, for the words 37 np. per seat per year per mile the words Rs. 1.48 np. per seat per year per mile and for the words Rs. 12.50 np. per seat per quarter the word Rs. 50/ per seat, per quarter shall be substituted and cl. (b) of the said Sub rule for the words Rs. 22.50 np. per month the words Rs. 45/ per month shall be substituted." The validity of the Amending Act 21 of 1959 was challenged by means of writ petitions before the High Court. A Division Bench. struck down the impugned provisions as unconstitutional and ultra vires on the ground that since that Act imposed a restriction on the operators ' freedom of trade and commerce under article 301 of the Constitution the previous sanction of the President was necessary under the proviso to article 304(b) and because that had not been obtained the Act was legally inoperative: Venson Transport vs The State of Andhra Pradesh(1). Subsequently Act 34 of 1961 was enacted after the sanction of the President was obtained to the Bill under the proviso to article 304(b). It validated two acts, namely, Act 21 of 1959 and Act 22 of 1959 and also amended Act 16 of 1952 and substituted sub section (3) of section 3 of that Act by a new sub section. It further validated the realisation of the tax paid or payable and the fee paid or payable and other action taken under Act 21 of 1959 and Act 22 of 1959. It empowered the Government to levy additional tax at the rate of Rs. 50/ per seat per quarter from May 8, 1959 to January 16, 1961. Thereafter from January 17, 1961 to November 3, 1961 the rate was fixed at Rs. 12.50 per seat per quarter. After the commencement of the Validating Act 34 of 1961 the rate was to be Rs. 37.50 per seat per quarter. This was to be operative till April 1, 1962 when the Act would cease to have any effect. The validity and constitutionality of Validating Act 34 of 1961 were challenged by means of various petitions under article 226 of the Constitution. It was sought to be contended before the High Court that the impugned legislation was not regulatory in character. The sole object was to augment the revenues of the State. This brought the statute within the mischief of article (1) [1961] I. An. W.R. 351. 55 301 of the Constitution. The High Court was of the view that the question whether the statute was regulatory or compensatory was relevant in the context of Part XIII of the Constitution only in the event of non compliance with the proviso to article 304(b) of the Constitution. As the previous sanction of the President had been obtained in terms of the proviso such points could no longer be canvassed. The challenge on the ground of article 14 before the High Court also failed. An argument was addressed that the impugned Act was repugnant to article 19(1)(g) of the Constitution. The reasonableness of the restriction within the meaning of article 304(b) also came up for consideration. The High Court, in the light of the facts and figures placed before it, held that the increase in surcharge of the fares and freights contemplated by the impugned Act did not constitute an impediment to the trade of the transporters and that the restriction in the shape of additional imposts was not unreasonable. It is unnecessary to refer to the other points agitated before and decided by the High Court. Counsel for the, appellant has urged the following points before us: (1) The impugned Act imposed a tax for augmenting the revenues of the State. It was neither regulatory nor compensatory in nature and it fell directly within the mischief of article 301 of the Constitution. (2) Even though there had been compliance with the proviso to article 304(b) in the matter of obtaining the requisite sanction it was open to the court to go into the question of reasonableness both with reference to the aforesaid provision and article 19(1)(g) read with clause (6) of that Article. The court was equally entitled to determine whether the imposition was in the public interest. (3) The impugned Act violated article 14 of the Constitution and was discriminatory inasmuch as (a) it had not been made applicable to the Telengana area although it was applicable to the Andhra area and (b) the vehicles on inter State routes on 'permits granted by other States had not been subjected to tax. In order to decide these points the principles which have been settled by this Court with regard to article 301 and article 304(b) may be noticed. According to the majority view in Automobile Transport (Rajasthan Ltd. vs The State of Rajasthan & Others(1) if a tax is compensatory in character it cannot be said to fall within the mischief of article 301. Subba Rao J., (as he then was) (1) [1963] 1 S.C.R. 491. 56 who concurred in the majority decision but delivered a separate judgment preferred to rest his view on the regulatory nature of such taxing statute as would escape the mischief of article 301. In Khyerbari Tea Co. Ltd. & Anr. vs The State of Assam(1) the difference between the view expressed in the Automobile Transport (Rajasthan) case(2) and an earlier decision in Atiabari Tea Co. Ltd. vs The State of Assam & Others(3) with regard to the scope and effect of the provisions of article 304(b) was noticed . It was observed that according to the majority view expressed in Atiabari Tea Co. case(3) if the Act is passed under article 304(b) and its validity is impeached the State may seek to justify the Act on the ground that the restrictions imposed by it are reasonable and in public interest and in doing so it may rely on the fact that the taxes levied by the impugned Act are compensatory in character. On the other hand, according to the majority decision in the Automobile Transport (Rajasthan)(2) case compensatory taxation would be outside article 301 and cannot fall under article 304(b). since it was not urged that the tax was of a compensatory nature in Khyerbari Tea Co. Ltd.(1) case this Court proceeded to examine whether the restrictions imposed by the statute impugned in that case were reasonable and in public interest within the meaning of article 304(b). The effect of compliance with the provisions of the proviso to article 304(b) by obtaining the previous sanction of the President to the Bill was also considered and it has been laid down that notwithstanding the sanction the question of the restrictions. being reasonable and in public interest is op.en to examination by the court. The Act can be held to. be valid only if it is shown that the restrictions imposed by it are reasonable and in public interest. It has not been contended on behalf of the State that the impugned Validating Act imposes a tax which is by way of a regulatory or compensatory measure. It has, therefore, to be seen whether the restrictions imposed are reasonable and in public interest within the meaning of article 304(b). Before the High Court an attempt was made on behalf of the appellants to show that by raising the rate of tax the burden had been increased to such an extent that the business of the appellants had been virtually annihilated. According to some of the affidavits filed on behalf of the writ petitioners, profits derived in recent years did not exceed an average of Rs. 2,000/ per stage carriage even without the additional burden which had been imposed and the transporters would suffer heavy losses if the tax as increased by the impugned legislation were to be realized. The High Court referred to the computation of the income by the Income tax department of some (1) [1964] 5 S.C.R.975. (2) (3) ; 57 of the transporters in whose assessments the income in regard to each bus had been calculated at a figure of Rs. 7,000/ annually, which showed that the profits were much higher than Rs 2,000/ . It was not disputed before the High Court that the transporters had been permitted to enhance the fares. If the fares could be enhanced it was obvious that the burden would not fail on the transporters. It was urged that owing to competition from the railways and from operators whose vehicles had been registered in the Madras State and who could charge lower rates the appellants were not in a position to collect extra fares which they had been permitted to do. This argument also cannot hold and was rightly repelled by the High Court on the ground that if the operators were not prepared to charge higher rates as a matter of policy or for the purpose of business competition that could not impinge on the reasonableness of the restriction. Apart from a faint attempt to repeat some of the arguments which were addressed before the High Court on this point nothing new has been brought to our notice which would justify the view that the tax which has been imposed exceeds the limits of permissible reasonableness. As regards public interest we are unable to find nor has any attempt been made to satisfy us that the provisions of the impugned Validating Act with regard to imposition of tax are not in public interest. This is sufficient to dispose of the challenge under article 19(1)(g), as well. We may in this connection refer briefly to the conclusion of the High Court which was reached on a consideration of the affidavits filed before it. It has been found that there is no material which would warrant the conclusion that the increase in the surcharge of the fares and freight contemplated by the impugned Validating Act would constitute an impediment to the trade. The utmost that could be said was that it would result in the diminution of profits. Even on the assumption that the profits would be diminished or greatly reduced it cannot be held that there is any infringement of article 19(1)(g). Coming to the attack on the ground of violation of article reference may be made to the background relating to taxation of passengers and goods carried in motor vehicles in the State prior to the formation of Andhra Pradesh. It appears that there was no law in the erstwhile Hyderabad State imposing any tax on passengers and goods. After the merger of Telengana and Andhra areas the laws in operation in the Telengana region continued to remain in force by virtue of the provisions of section 119 of the States Reorganization Act, 1956. By Act X of 1958 the State of Andhra Pradesh amended Act XVI of 1952 inter alia extending that to the Telengana area. This Act (Act X of 1958) also amended the Principal Act by adding section 19 according to which the 1 sup. CI/70 5 Government could grant an exemption by means of a notification in respect of any motor vehicle running in a particular area. On November 4, 1961 a notification was issued exempting passengers, luggage and goods carried in stage carriages from payment of tax under the aforesaid Act within the Telengana area. There can be no manner of doubt that this exemption was given to the operators in the Telengana region for the reason that before the extension of the parent Act to this area no tax similar to the one levied under the parent Act was payable in that area and that this exemption was granted under a different enactment. It is apparent that for these reasons the challenge under article 14 cannot succeed. The same is the position with regard to the tax payable by the appellants and that which the transporters having permits for inter State routes have to pay. As has been pointed out in the affidavits filed on behalf of the State the laws in the two States, Madras and Andhra Pradesh are different and persons having primary permits from Madras are naturally governed by the laws operating in that State. No question of discrimination can arise when taxes are being imposed under two different sets of laws in different States or geographical areas. The appeals, therefore, fail and are dismissed with costs. One hearing fee. R.K.P.S. Appeals dismissed.

The appellants, motor transport operators, challenged the increase in surcharge of the fares and freights imposed by the Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods) Amendment and Validation Act, 1961. They urged: (i) the Act was neither regulatory nor compensatory in nature and, it fell directly within the mischief of article 301 of the Constitution; (ii) the imposts exceeded the limits of permissible reasonableness, were not in the public interest and, therefore, violated articles 304(b) and 19(1)(g); and (iii) the Act violated article 14 (a) inasmuch as it had not been made applicable to the Telegana area although it was applicable to the Andhra area and (b) the vehicles on inter State routes on permits granted by other States had not been subjected to tax. HELD: (i) It was not the contention of the State that the impugned Act imposed a tax by way 'of a regulatory or compensatory measure. Therefore, it had to be been whether the restrictions imposed were reasonable and in the public interest within the meaning of article 304(b); these questions were open to examination by the court notwithstanding the fact that the sanction of the President was obtained in compliance with the Article. [55 E F] Mathurai Pillay vs State of Madras, , Automobile Transport (Rajasthan) Ltd. vs State of Rajasthan vs State of Assam. ; and Atiabari Tea Co. Ltd. vs State of Assam, ; , referred to. (ii) There was no material which would justify the view that the tax which had been imposed exceeded the limit of permissible reasonableness or was not in the public interest. The argument that by raising the rate of tax the burden had been increased to such an extent that the business of the appellants had been virtually annihilated had no substance. The operators had been permitted to enhance the freights and if the freights could be enhanced, obviously, the burden would not fall on them. If the operators were not prepared to charge higher rates as a matter of policy or for the purpose of business competition that could not impinge on the reasonableness of the restrictions. This disposed of the challenge under article

No. 19 of 1986 etc. (Under Article 32 of the Constitution of India). R. Venkataramani, K.B. Rohtagi. C.V. Subba Rao and Miss Sushma Relan for the appearing parties. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. The petitioners describe themselves as 'catering cleaners of Southern Railways represented by V. China Thambi and M. Mohan of the Vegetarian Refreshment Room, Central Station, Madras '. The petition is claimed to be filed in a representative capacity on behalf of about three hundred and odd catering cleaners working in the catering establishments in various railway junctions of the Southern Railway and in the pantry cars of long distance trains running under the control of the Southern Railway. Since a long time they have been agitating for the abolition of the Contract system under which they are employed to do cleaning work in the catering establishments and the pantry cars and for their absorption as regular employees of the principal employer, namely, the Southern Railway. They complain that they are not even paid minimum wages. They are paid a pittance averaging from Rs. 2.00 to Rs.2.50 per day. Although the contract system has been abolished in almost all the other Railways, the Southern Railway persists in employing contract labour for cleaning its catering estab lishments and pantry cars. As the several representations made by them to the authorities concerned proved fruitless they have been forced to seek the intervention of this Court 167 under article 32 of the Constitution to direct the respondents to exercise their powers under Section 10(1) of the and to abolish the contract system in respect of catering cleaners in the Southern Railway and further to direct the respondents to regularise the services of the existing catering cleaners employed in the catering establishments at various junctions and in the pantry cars of long distance trains and to absorb them as employees of the catering establishments of the Southern Railway. They also seek a direction to extend to them the service benefits presently available to other categories of employees in the catering establishments of the Railways. We issued notice to the respondents on January 21, 1986. After some considerable time the writ petition was listed before us on August 5, 1986. We were informed at that time that in almost all the railways except the Southern Railway, the contract labour system had been abolished in regard to catering cleaners. We wondered why the Southern Railway could not also fall in line and directed the Southern Rail way Administration to consider whether the contract labour system could not be abolished in the Southern Railway also and whether the services of the catering cleaners could not be suitably regularised. The learned counsel for the workmen complained before us that the workmen were not even being paid the minimum wages. As the Railway Administration was the principal employer, we directed the Railway Administra tion to take immediate steps to see that the minimum wages were paid to the catering cleaners. As the interim order of the Court regarding payment of wages was not complied with, the petition was adjourned from time to time. On April 19, 1986 we also made a further order that the Southern Railway Administration should not take any further action pursuant to the tenders invited by them for contract labour. On December 4, 1986 the Additional Solicitor General who ap peared on behalf of the Railway Administration undertook to deposit the arrears due from August upto date with the Deputy Labour Commissioner, Madras. We also directed the learned counsel for the employees to file a list of the employees entitled to be paid wages. We directed that the amount should be paid after verification by the Deputy Chief Superintendent, Southern Railway. We were told that there is some dispute about the names of the employees. We now direct that the Deputy Labour Commissioner, Madras will enquire into the question as to who were working as catering clean ers in the Madras Central Station, and also to determine the wages due to them from August, 1986 upto date giving credit to any amount that may have been paid to them. On such determination, the Railway 168 Administration shall deposit the amount with the Deputy Labour Commissioner who shall pay over the same to the employees. The determination by the Deputy Labour Commis sioner is directed to be completed before February 28, 1987 and the deposit by the Administration is directed to be made before March 15, 1987. This part of the order covers only the catering cleaners employed in the Central Station, Madras. In answer to the writ petition the Railway Administra tion has adopted a somewhat unhelpful attitude. According to the Administration it has not been found to be possible to abolish the contract labour system because the nature of the cleaning work in the catering units of the Southern Railway was fluctuating and intermittant. The contract labour system is followed not only in the Southern Railway but also in the South Central Railway and the South Eastern Railway. They claim that any departmental units not working profitably could be handed over to a private licensee and this was the alternative that was adopted by the Southern Railway in the case of catering cleaners. Experience showed that it was difficult to extract work from catering cleaners if they were engaged on a regular basis by the railway and it was not possible to supervise their work effectively. According to them, all pros and cons were examined before entrusting the cleaning work to private contractors. The Southern Railway had a moral responsibility to the public to ensure satisfactory service and that was the reason why the work was entrusted to a private agency which was considered the most suitable method of doing the work. We notice that the Railway Administration has not chosen to support its statements by any facts and figures but has contended itself by making vague and general statements. No attempt has been made to explain why what has been done in most of the other railways cannot be and should not be done in the Southern Railway too. It is not explained why clean ing work is considered to be intermitted and what difficulty exists in supervising the work. The Railway Administration wants to suggest that the units are working at a loss with out expressly saying so. The suggestion is implicit in the statement that departmental units not working profitably could always be handed over to private licensees. We are afraid that everything that has been said by the Administra tion of the Southern Railway against abolishing the contract labour system and regularising the services of the catering cleaners has been contradicted by the Parliamentary Commit tee of Petitions under the Chairmanship of Shri K.P. Tewari who went into the question in some depth. The Committee was submitting its report 169 on the complaint of Shri Samar Mukherji, a member of Parlia ment regarding the grievances of the railway catering work ers working under contractors in the Southern Railway. The Committee first dealt with the grievances of the Bearers and Servers. In paragraph 2.19 of their report the Committee noticed that the railway catering department was earning a profit of about Rs.50 lakhs per annum. In paragraph 2.21 the Committee dealt with the grievances of the catering clean ers. We think that it will be useful to extract here the whole of paragraph 2.21 of the report. It is as follows: " It has been submitted in the representa tion that as the job of the cleaners is of permanent nature, these cleaners should be absorbed by the Railways on regular basis. During their study visit, it was pointed out by the petitioners to the Committee that cleaners were not paid minimum wages statuto rily fixed by State Governments by the con tractors and there was no machinery set up by the Southern Railway to ensure that all labour laws regarding minimum wages, overtime allow ances, payment of compensation etc. were implemented in their case. In this connection, the Ministry of Railways (Railway Board) in their written note have stated that the work of cleaning is entrusted to contractors as per the recommendations of High Power Committee (Alagesan Committee) appointed by the Ministry of Railway in the year 1955 so that the estab lishment cost could be kept down. If this work is entrusted to the regular railway employees the establishment cost would go up and this would prove to be an uneconomical proposition. The Ministry have further stated that the cleaning contractors at Madras and Bangalore City have engaged 61 and 22 cleaners respec tively who are paid fair living wage of Rs.5.25 per head at Madras Central Railway Station and at Rs.8.06 per cleaner per day at Bangalore City Railway Station as fixed by the State Government of Tamil Nadu and Karnataka. These payments are witnessed by the Railway 's representative. The Committee, however, are of the opinion that the job of cleaning in Railway Catering Units is of a permanent nature. Further if the work which is at present being done by a very small number of cleaners em ployed through the contractors by the Southern Railway is entrusted to the regular employees the establishment cost would increase 170 only marginally and it will not in any way affect the profits being earned by the Cater ing Department. The Committee recommended that the Government should review the present practice of employment of cleaners through contractors and consider their employment directly by the Railways. This would end the exploitation of cleaners which has also been alleged in the representation. New Delhi K.P. Tewari Dated the 30th April, 1984 Chairman Vaisaka 10, 1906 (Saka) Committee of Petitions. " The Report, we see, states that the railway catering department was earning a profit, that the work of the cater ing cleaners was of a perennial nature, that the cost of entrusting the work to regular employees would increase the establishment cost only marginally and that the laws relat ing to minimum wages, over time allowance etc. and other labour laws were not being observed in regard to catering cleaners. The recommendation of the Committee was that in order to prevent the exploitation of cleaners, it was neces sary that the Government should review the existing practice of employing them through contractors and consider their direct employment by the Railway Administration. Strength ened by the report of the Committee, the catering cleaners submitted several memoranda to the authorities concerned but to no avail. The practice of employing labour through contractors for doing work inside the premises of the primary employer, known to researchers of the International Labour Organisa tion and other such organisations as 'Labour only contract ing ' or 'inside contracting ' system, has been termed as an arobaic system and a relic of the early phase of capitalist production, which is now showing signs of revival in the more recent period. Of late there has been a noticeable tendency on the part of big companies including public sector companies to get the work done through contractors rather than through their own departments. As pointed out by a group of researchers in the Economic and Political Weekly, Review of Management, dated November 29, 1986, it is a matter of surprise that employment of contract labour is steadily on the increase in many organised sectors including the public sector, which one expects to function as a model employer. More than a quarter of a century ago in the Stand ard Vacuum Refining Company of India Ltd. vs Its Workmen, ; this Court had 171 occasion to refer to some of the pernicious features of the contract labour system. It is an important decision, unfor tunately not very much noticed in later cases. The impor tance of the case lies in the fact that it was held to be competent for an Industrial Tribunal functioning under the Industrial Disputes Act to abolish the contract labour system in an industrial undertaking which happened to be a private enterprise in that case. The facts are interesting. A dispute was raised by the workmen of the company with respect to contract labour, employed by the company (the Standard Vacuum Refining Company of India Limited) for cleaning maintenance of the refinery (plant and premises), belonging to the company. The system was that the work was entrusted to a contractor who engaged the labour. The regu lar workmen of the Company made a demand for abolition of the contract system and for absorbing the workmen employed through the contractors into the regular service of the company. The complaint of the workmen was that the contract labour had no security of service though they were doing the work of the company and that they were being paid much less than the wages paid by the company to its unskilled regular workmen. They were also not entitled to other benefits and amenities such as provident fund, gratuity, bonus, privilege leave, medical facilities and subsidised food and housing to which the regular workmen of the company were entitled. Their case was that though the work was of a permanent nature, the contract system had been introduced to deny them the rights and benefits which the company gave to its regu lar employees. On behalf of the company, it was contended that the reference under Section 10 of the Industrial Dis putes Act was incompetent as there was no dispute between the Company and its workmen, that, it was a matter for the Company to decide what was the best method of carrying out its business, whether by employing a Contractor or otherwise and that the Industrial Tribunal could not interfere with that function of the management. The dispute regarding wages and conditions of service was really one to be settled between the Contractor and his employees and had nothing to do with the Company. The Tribunal by its award gave a direc tion to the company to discontinue the practice of getting the work done through contractors and to have it done through workmen engaged by itself. The company was directed to engage regular workmen for this work and to give prefer ence to the workmen employed by the contractor. There was an appeal to the Supreme Court by special leave under Article 136 of the Constitution. The Supreme Court held that the Tribunal was justified in giving the direction for the abolition of the contract system, observing that it was relevant to bear in mind that industrial adjudication gener ally did not encourage the employment of contract labour in 172 modern times. Quoting from the report of the Royal Commis sion on Labour, it was said that whatever merit there was in the system in primitive times, it was now desirable for the management to discharge completely the complex responsibili ty laid upon it. The Court also referred to similar opinions expressed by several Labour Enquiry Committees appointed in different States. Proceeding to consider the merit of the contract labour system in the case before them, Wanchoo J. speaking for the Court observed: "The contract in this case related to four matters. But the reference is confined to one only, viz., cleaning maintenance work at the refinery including premises and plant and we shall deal with that only. So far as this work is concerned, it is incidental to the manufac turing process and is necessary for it and of a perennial nature which must be done every day. Such work is generally done by workmen in the regular employ of the employer and there should be no difficulty in having regular workmen for this kind of work. The matter would be different if the work was of inter mittent or temporary nature or was so little that it would not be possible to employ full time workmen for the purpose. Under the cir cumstances the order of the tribunal appears to be just and there are no good reasons for interfering with it. " The Court held that the contract in the case was a bona fide contract but that it did not affect the issue. The award of the Tribunal was upheld. The Supreme Court having pronounced on the 'primitive ' and baneful nature of the system of contract labour, there was a cry raised against the system by the Planning Commis sion and various other committees appointed by the Govern ment. The Indian Labour Conference discussed the award of the Tribunal in 1959 and following its recommendation but after considerable delay, the Contract Labour (Abolition and Regulation) Act was passed in The Statement of Objects and Reasons was as follows: "The system of employment of contract labour lends itself to various abuses. The question of its abolition has been under the considera tion of Government for a long time. In the second Five Year Plan, the Planning Commission made certain recommendations, namely, under taking of studies 173 to ascertain the extent of the problem of contract labour, progressive abolition of system and improvement of service, conditions of contract labour where the abolition was not possible. The matter was discussed at various meetings of Tripartite Committee at which the State Government were also represented and general consensus of opinion was that the system should be abolished wherever possible or practicable and that in cases where this system could not be abolished altogether, the working conditions of contract labour should be regulated so as to ensure payment of wages and provision of essential amenities. The proposed Bill aims at abolition of con tract labour in respect of such categories as may be notified by appropriate Government in the light of certain criteria that have been laid down, and at regulating the service conditions of contract labour where abolition is not possible. The Bill provides for the setting up of Advisory Boards of a tripartite character, representing various interests, to advise Central and State Governments in admin istering the legislation and registration of establishments and contractors. Under the Scheme of the Bill, the provision and mainte nance of certain basic welfare amenities for contract labour, like drinking water and first aid facilities, and in certain cases rest rooms and canteens, have been made obli gatory. Provisions have also been made to guard against details in the matter of wage payment. " The long title of the Act describes it as "an Act to regu late the employment of contract labour in certain establish ments and to provide for its abolition in certain circum stances and for matters connected therewith". 1(4) makes the Act applicable to all establishments in which 20 or more workmen are employed or were employed on any day of the preceding 12 months as contract labour and to every contractor who employs or who employed on any day of the preceding 12 months 20 or more workmen. 1(5) makes the Act inapplicable to establishments in which work only of an intermittent or casual nature is performed and further provides that the question whether work performed in an establishment is of an intermittent or casual nature, if raised, shall be decided by the appropriate Govt. in consul tation with the Central Board or State Board as the case may be and that such decision final. , (c), (e) and (g) define "Contract Labour", "Contractor", "Establishment" and "Principal Employer" in the following terms: "(b) a workman shall be deemed to be employed as "contract labour" in or in connec tion with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer;" "(c) "contractor", in relation to an estab lishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub contractor;" "(e) "establishment" means (i) any office or department of the Government or a local authority, or (ii) any place where any industry, trade, business, manufacture or occupation is carried on;" "(g) "principal employer" means (i) in relation to any office or department of the Government or a local au thority, the head of that office or department or such other officer as the Government or the local authority, as the case may be, may specify in this behalf, (ii) in a factory, the owner or occupier of the factory and where a person has been named as the manager of the factory under the , the person so named, (iii) in a mine, the owner or agent of the mine and where a person has been named as the manager of the mine, the person so named, (iv) in any other establishment, any person responsible for the supervision and control of the establishment. 175 Explanation: For the purpose of sub clause (iii) of this clause, the expres sions "mine", "owners" and "agent" shall have the meanings respectively assigned to them in clause (j), clause (I) and clause (c) of sub section (1) of section 2 of the . " Section 3 and 4 provide for the constitution of the Central and State advisory Boards. Sec. 7 provides for the registration of establishments. Sec. 8 provides for revoca tion of registration in certain cases and Sec. 9 prescribes the effect of non registration. 10 provides for the prohibition of employment of contract labour in certain processes, operations or other work in establishments by the appropriate Government after consulation with the Central or State Board as the case may be. 10 is as follows: "10.(1) Notwithstanding anything contained in this Act, the appropriate Government may, after consulation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract Labour in any process, operation or other work in any establishment. (2) Before issuing any notification under sub sec.(1) in relation to an establish ment, the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as (a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the estab lishment; (b) whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment; (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; (d) whether it is sufficient to employ consid erable number of whole time workmen. 176 Explanation: If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final. " Sec. 12 provides for licensing of contractors. Sec. 13, 14 and 15 provide for the grant, revocation, suspension, and amendment of licensces and appeals. Sections 16 to 21 make detailed provision for the Welfare & Health of contract labour. 16 deals with canteens, Sec. 17 with Rest rooms, Sec. 18 with facilities for drinking water, latrines, urinals and washing and Sec. 19 with first aid facilities. 20 provides that if any amenity required to be provided under Sec. 16 to 19 for the benefit of contract labour employed in an establishment is not provided by the contrac tor within the prescribed time such amenity shall be provid ed by the Principal Employer within such time as may be prescribed. Sec. 21, while making the contractor responsible for payment of wages to each worker employed by him as contract labour, further provides that every Principal Employer shall nominate a representative duly authorised by him to be present at the time of disbursement of wages by contractor to ensure and certify that wages are paid in the prescribed manner. It is further provided that if the Con tractor fails to pay wages within the prescribed time or makes short payment, it shall be the liability of Principal Employer to make payment of wages in full. 22 to 27 provide for penalties and procedure. 28 provides for appointment of inspecting staff. 30 makes the provi sions of the Act effective notwithstanding anything incon sistent therewith contained in arms of any agreement or contract of service or any standing orders applicable to the establishment. Any favourable benefits that the Contract labour may be entitled to under the agreement, contract of service or standing orders are however saved. Sec. 31 pro vides for exemptions. 33 enables the Central Govt. to give directions to any State as to the carrying into execu tion in the State the provisions of the Act. 35 pro vides for the making of rules for carrying out the purposes of the Act. The Rules made by the Central Govt. are required to be placed before the Parliament. The Central Govt. , in exercise of the powers conferred by Sec. 35 of the Act, has made the Contract Labour (Regula tion and Abolition) Central Rules, 1971. Chapter II of the rules relates to matters pertaining to the Central Board, while Chapter III of the Rules deals with registration of establishments and licensing of contractors. Rule 25 pre scribes the forms, terms & condition of licence and in particular Rule 25(ii)(iv) prescribes that it shall be the condition of every licence 177 that the rates of wages shall not be less than the rates prescribed under the . Rule 25(ii)(iv) prescribes that it shall be the condition of every licence that the rates of wages shall not be less than the rates prescribed under the for such employment where applicable, and where the rates have been fixed by agreement, settlement or award, not less than the rates so fixed, Rule 25(ii)(v)(a) prescribes that it shall be the condition of every licence that, "In cases where the workmen employed by the contractor perform the same or similar kind of work as the workmen directly employed by the principal employer of the establishment, the wage rates, holidays, hours of work and other conditions of service of the workmen of the contractor shall be the same as applicable to the workmen directly employed by the principal employer of the establishment on the same or similar kind of work: Provided that in the case of any disagreement with regard to the type of work the same shall be decided by the Chief Labour Commisioner (Central) whose decision shall be final." Similarly Rule 25(ii)(v)(b) provides that in other cases the wage rates, holidays, hours of work and conditions of serv ice of the workmen of the contractor shall be such as may be specified in this behalf by the Chief Labour Commissioner (Central). While determining the wage rates, holidays, hours of work and other conditions of service under Rule 25(ii)(v)(b) the Chief Labour Commissioner is required to have regard to the wages rates, holidays, hours of work and other conditions of service obtaining in similar employ ments. On the facts presented to us and on the report of the Parliamentary Committee of Petitions it appears to be clear that the work of cleaning catering establishments and pantry cars is necessary and incidental to the industry or business of the Southern Railway and so requirement (a) of section 10(2) is satisfied, that it is of a perennial nature and so re quirement (b) is satisfied, that the work is done through regular workmen in most Railways in the country and so requirement (c) is satisfied and that the work requires the employment of sufficient number of whole time workmen and so requirement (d) is also satisfied. Thus all the relevant factors mentioned in S.10(2) appear to be satisfactorily accounted for. In addition we have the 178 factor of profitability of the catering establishments. On these facts the petitioners straight away invite us to issue a mandamus directing the Central Government to abolish the contract labour system under which cleaners in catering establishments and pantry cars are at present employed in the Southern Railway. But, we refrain from doing so because under Section 10, Parliament has vested in the appropriate Government the power to prohibit the employment of contract labour in any process, operation or other work in any estab lishment. The appropriate Government is required to consult the Central Board or the State Board as the case may be before arriving at its decision. The decision, of course, will be subject to judicial review. But we do not think that we will be justified in issuing the mandamus prayed for unless and until the Government fails or refuses to exercise the power vested in it under section 10. In the circumstances the appropriate order to make in the present case is to direct the Central Government to take appropriate action under section 10 of the Contract Labour (Abolition and Regulation) Act in the matter of prohibiting the employment of contract labour in the work of cleaning catering establishments and pantry cars in the Southern Railway. This must be done within six months from today. Without waiting for the decision of the Central Government the administration of the Southern Rail way will be free, of its own motion to abolish the Contract labour system and to regularise the services of the employed in the work of cleaning catering establishments and pantry cars in the Southern Railway. In any case, the administra tion of the Southern Railway will refrain, until the deci sion of the Central Government under section 10, from employing Contract labour. The work of cleaning catering establish ments and pantry cars will be done departmentally by employ ing those workmen who were previously employed by the Con tractor on the same wages and conditions of work as are applicable to those engaged in similar work by the Western Railway. If there is any dispute whether an individual workman was or was not employed by the Contractor such dispute shall be decided by the Deputy Labour Commissioner, Madras. Any further directions may be sought, if necessary, from the Madras High Court. If the Central Government does not finally decide the question within six months from today, the Southern Railway administration will within three months thereafter absorb the workmen into their service and regularise their services. S.R. Petition disposed of.

More than a quarter of a century ago, in the Standard Vacuum Refining Company vs Its Workmen, ; the Supreme Court affirmed the direction of the Industrial Tribunal for the abolition of the contract system of labour. As a result thereof, the Contract Labour (Abolition and Regulation) Act came to be passed, "to regulate the employ ment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith". The Central Government, in exercise of its powers conferred by section 35 of the Act, has made the Contract Labour (Abolition and Regulation) Central Rules, 1971 Section 10 of the Act empowers the appropriate Government to prohibit by notification in the Official Gazette, employment of contract labour in any process, Operation or other work in any establishment sub ject to the fulfilment of the conditions in sub section (2) thereof and after consulting the Central Board or the State Board as the case may be. Rule 25 prescribes the forms, terms and condition of licence including the payment of minimum wages under the holiday, hours of work etc. The Writ Petitioners, alleged that in spite of the Report of the Parliamentary Committee of Petitions under the Chairmanship of Shri K.P. Tiwari dated 30.4. 1984 and their representations the Southern Railway persisted in employing contract labour for cleaning its catering establishments and pantry cars by paying a pittance averaging Rs.2.00 to Rs.2.50 per day. Most of the other Railways had abolished the 165 system of employing labour through a contractor. Therefore, they sought relief for the abolition of the Contract Labour system by the issuance of a writ of mandamus under Article 32 of the Constitution and for a direction to treat them as regular employees. Issuing an appropriate writ in the nature of a direc tion, the Court, HELD: 1.1 It is clear that, on the facts presented and on the report of the Parliamentary Committee of Petitions, the work of cleaning catering establishments and pantry cars is necessary and incidental to the industry or business of the Southern Railway and so requirement (a) of S.10(2) is satisfied, that it is of a perennial nature and so require ment (b) is satisfied, that the work is done through regular workmen in most Railways in the country and so requirement (c) is satisfied and that the work requires the employment of sufficient number of whole time workmen and so require ment (d) is also satisfied. Thus all the relevant factors mentioned in section 10(2) of the Contract Labour (Abolition and Regulation) Act are satisfactorily accounted for. In addi tion there is the factor of profitability of the catering establishments. [177F H; 178A] Despite this, the Supreme Court will not issue of writ of mandamus to the Railway unless and until the Government of India fails or refuses to exercise the power vested in it under section 10 of the Act. Under section 10 Parliament has vested in the appropriate Government the power to prohibit the employment of Contract Labour in any process operation or other work in any establishment. The appropriate Govern ment is required to consult the Central Board or the State Board as the case may be before arriving at its decision. The decision, of course, will be subject to judicial review. In the circumstances the appropriate order to make in the present case is to direct the Central Government to take appropriate action under section 10 of the Contract Labour (Abolition and Regulation) Act in the matter of prohibiting the employment of contract labour in the work of cleaning catering establishments and pantry cars in the Southern Railway within a period of six months. [178B D] (The Court further directed that (i) without waiting for the decision of the Central Government the administration of the Southern Railway will be free, of its own motion to abolish the Contract labour system and to regularise the services of those employed in the work of cleaning catering establishments and pantry cars in the Southern 166 Railway. In any case, the administration of the Southern Railway will refrain, until the decision of the Central Government under section 10, from employing Contract labour; (ii) The work of cleaning catering establishments and pantry cars will be done departmentally by employing those workmen who were previously employed by the Contractor on the same wages and conditions of work as are applicable to those engaged in similar work by the Western Railway. If there is any dispute whether an individual workman was or was not employed by the Contractor such dispute shall be decided by the Deputy Labour Commissioner, Madras; (iii) Any further directions may be sought, if necessary from the Madras High Court; (iv) If the Central Government does not finally decide the ques tion within six months the Southern Railway administration will within three months thereafter absorb the workmen into their service and regularise their services. [178D G]

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

By para 4 of a notification issued under section 15 of the Police Act the Rajasthan Government exempted the Harijan and Muslim inhabitants of certain villages from payment of the cost of additional police force stationed therein. The notification was challenged as being violative of the guarantee contained in article 15(i) of the Constitution of India. Held, that since para 4 of the notification had discriminated against the law abiding members of other communities and in favour of the Muslims and Harijans on the grounds of caste and religion, it was directly hit by the provision of article 15(i) of the Constitution and as such must be declared to be invalid.

eview Petition No. 16 of 1960. 519 Petition for Review of this court 's Judgment and order dated April 26, 1960, in Civil Appeal No. 64 of 1956. A. V. Viswanatha Sastri, R. Ganapathy Iyer and Gopalkrishnan, for the petitioners. K. N. Rajagopala Sastri, and P. D. Menon, for respondent. November 23. Das, J., delivered his own Judgment. The Judgment of Kapur and Hidayatullah, JJ. was delivered by Hidayatullah, J. section K. DAS, J. I had taken a view different from that of my learned brethren when this appeal was heard along with Pringle Industries Ltd., Secunderabad vs The Commissioner of Income tax, Hyderabad (1), and that view was expressed in a very short judgment dated April 26, 1960. Now, we have had the advantage of hearing a very full argument with regard to the facts of the appeal, and I for myself have had the further advantage and privilege of reading the judgment which my learned brother Hidayatullah, J., is proposing to deliver in this appeal. I have very carefully considered the question again with reference to the facts relating thereto and, much to my regret, have come to the conclusion that I must adhere to the opinion which I expressed earlier. My view is that the facts of this case are indistinguishable from the facts on which the decision of the Privy Council in Mohanlal Hargovind vs Commissioner of Income tax, C.P. and Berar(2) was rendered, and on the principles laid down by this court in Assam Bengal cement Co., Ltd. vs The Commissioner of Income tax, West Bengal (3), it must be held that the expenditure of Rs. 6111/ in this case was on revenue account and the respondent firm was entitled to the allowance which it claimed. 520 The short facts are these. The respondent firm carried on a business in the purchase and sale of conch shells (called chanks). It used to acquire the stock of conch shells (1)by purchase from the Fisheries purchase from the Fisheries Department of the Government of Madras and (3) by fishing for and gathering such shells from the sea. It disposed of the stock so acquired at Calcutta, the different between the cost price and selling price less expenses being its profit made in business. On November 9 1945 it took on lease from the Director of Industries and Commerce, Madras, the exclusive right. liberty and authority to fish for, take and carry away "chank" shells in the sea off the coast line of the South Arcot District including the French Kuppama of Pondicherry. The boundary of the area within which the right could be exercised was given in a schedule to the lease. The lease was for a period of three years from July 1, 1944 to June 30 1947 on a consideration of an yearly rent of section 6111/ to be paid in advance. Clause 3 of the lease contained the material terms there of and may be set out in full. The lesser hereby convenants with the lesson as follows: (i) To pay the rent on the day and in manner aforesaid. (ii) To deliver to the Assistant Director of Pearl and Chank Fisheries, Tuticorn all Velampuri shells that may be obtained by the lessee upon payment of their value as determined by the Assistant Director. (iii) To collect chanks caught in nets and by means of diving as well. In the process of such collection of shells not to fish chank shells less than 2/1/4 inches in diameter and if any chank shells less than 2/1/4 inches in 521 diameter be brought inadvertently to shore, to return at once alive to the sea all such undersized shells. (iv) Not at any time hereafter to transfer or underlet or part with possession of this grant or the rights and privileges hereby granted or any part thereof without the written consent of the lessor. (v) At the end or sooner determination of the term hereby created peaceably and quietly to yield to the lesson the rights and privileges hereby granted, and (vi) To report to the Assistant Director of Pearl and Chank Fisheries (South), Tuticorn the actual number of shells kept unsold in different stations after the expiry of the lease period. For the assessment year 1946 47, the respondent firm submitted a return of its income to the Income tax Officer, Karaikudi Circle, showing its income from sale of chanks purchased from divers at Rs. 7194/ by sale of chanks purchased from Government Department at Rs. 23, 588/ and Rs. 2819/ by sale of chanks gathered by themselves (through divers) after deducting Rs. 6111/ being the rent paid to Government under the contract referred to above. It sought to deduct Rs. 6111/ from its profits from business on the ground that this was an expenditure not of a capital nature but wholly and exclusively laid out for the purpose of business under section 10(2)(xv) of the Income tax Act. This claim was disallowed by the Income tax Officer and on appeal by the Appellate Assistant Commissioner. On further appeal to the Appellate Tribunal the respondent firm contended that the 522 decision of the Privy Council in Mohanlal Hargovind vs Commissioner of Income tax(1)applied to this case inasmuch as the payment was to secure the stockin trade for its business. The Appellate Tribunal was of the opinion that the Privy Council decision covered the case, but felt itself bound by the decision of the Full Bench of the Madras High Court in K. T. M. T. M. Abdul Kayum Hussain Sahib vs Commissioner of Income tax, Madras (2). The Tribunal acceded to the demand for a reference to the High Court, and accordingly referred the following question to the High Court for its decision. "Whether on the facts and circumstances of the case the payment of the sum of Rs. 6111/ made by the assessee under the terms of the agreement entered into with the Director of Industries and Commerce, Madras on 9th November, 1945 was not an item of revenue expenditure incurred in the course of carrying on the business of the assessee and, therefore, allowable under the provisions of section 10 of the Indian Income tax Act?" The reference first came before a Division Bench and was then referred to a Full Bench. By its judgment dated April 2, 1953 the Full Bench answered the question in favour of the respondent firm. On a certificate of fitness granted by the High Court the Commissioner of Income tax, Madras, brought the present appeal to this Court. In Assam Bengal Cement Co., Ltd. vs The Commissioner of Income tax (3), this Court referred to the decision in Benarsidas Jagannath. In re.(4) and accepted the following broad principles for the purpose of discriminating between a capital and a revenue expenditure. 523 (1) The outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment [See Commissioners of Inland Revenue vs Granite City Steamship Company Ltd.(1)]. Such expenditure is regarded as on capital account, for it is incurred not in earning profits but in setting the profit earning machinery in motion. In my opinion this test does not apply in the present case where no profit earning machinery was set in motion. (2) Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade. [See Atherton vs British Insulated and Helsby Cables Ltd. (2)]. In elucidation of this principle it has been laid down in several decisions that by "enduring" is meant "enduring in the way that fixed capital endures" and it does not connote a benefit that endures in the sense that for a good number of years it relieves the assessee of a revenue payment. In Robert Addie & Sons Collieries Ltd. vs Commissioners of Inland Revenue (3) Lord Clyde formulated the same test in these words: "What is 'money wholly and exclusively laid out for the purposes of the trade ' in a question which must be determined upon the principles of ordinary commercial trading. It is necessary accordingly to attend to the true nature of the expenditure, and to ask one 's self the question, is it a part of the Company 's working expenses? is it expenditure laid out as part of the process of profit earning? or, on the other hand, is it a capital outlay? is it expenditure necessary for the acquisition of property or of rights of a permanent character, 524 the possession of which is a condition of carryin on its trade at all?" This test was adverted to by the Privy Council in Tata Hydro Electric Agencies Ltd. vs Commissioner of Income tax(1).In my opinion the application of this test makes it at once clear that the sum of Rs. 6111/ which the respondent firm spent was expenditure laid out as part of the process of profit earning; it was not a capital outlay, that is, expenditure necessary for the acquisition of property or of rights of a permanent character, the possession of which was a condition of carrying on its trade. Under the contract in question the respondent firm did not acquire any right to immovable property. It acquired no right in the bed of the sea or in the sea. The only right conferred on the respondent firm was the right to fish for, gather and carry away conch shells (in motion under the surface of the sea) of a specified type and size. The respondent firm was under an obligation to return to the sea conch shells less than 2 1/2 inches in diameter. The business of the respondent firm consisted in buying and selling conch shells. No manufacturing process was involved in it. Therefore, the stock in trade of the respondent firm was conch shells. It secured this stock in trade in many different ways, by purchase from divers, by purchase from Government and private parties, and also by gathering conch shells under the contract in question. In my opinion, the contract into which the respondent firm entered was merely for securing its stock in trade. It is indeed true that in considering whether an item of expenditure is of a capital or a revenue nature, one must consider the nature of the concern, the ordinary course of business usually adopted in that concern, and the object with which the expense is incurred. The true nature of the transaction must be collected from the entire 525 document with reference to all the relevant facts and circumstances. Having regard to the nature of the respondent firm 's business and the course adopted by it for carrying it on, it appears to me to be rather far fetched to hold that by the contract in question the respondent firm acquired property or right of a permanent character, the possession of which was a condition of carrying on its trade. To me it seems that the better view, in a business sense, is that the respondent firm merely acquired by means of the contract its stock in trade, rather than a source or enduring asset for producing the stock in trade. It was argued before us, as it was argued in the High Court, that what was acquired in the present case was the means of obtaining the stock in trade for the business rather than the stock in trade itself. I am unable to accept this argument as correct. The contract entered into by the respondent firm was wholly and exclusively for the purpose of obtaining conch shells, which were its stock in trade. As I have stated earlier, the contract granted no interest in the sea, sea bed, or sea water etc. It was simply a contract giving the grantee the right to pick and carry away conch shells of a specified type and size which of course implied the right to appropriate them as its own property. In my opinion, in a case of this nature no distinction can be drawn in a business sense between the right of picking and carrying away conch shells and the actual buying of them. It is not unusual for businessmen to secure, by means of a contract, a supply of raw materials or of goods which form their stock in trade, extending over several years for the payment of a lump sum down. Even if the conch shells were stored in a godown and the respondent firm was given a right to go and fetch them and so reduce them into its ownership, it could scarcely have been 526 suggested that the price paid was capital expenditure. I may explain what I have in mind by giving a simple illustration. Take the case of a fisher may who sells fish. Fish is his stock in trade. He man buy the fish he requires from other persons; or he may obtain the supply of fish he requires by catching the fish of a specified size and type in particular water over a short period under a contract entered into by him and take them away. I do not think that in a business sense any distinction can be made between the two means of obtaining the stock in trade. Both really amount to securing the stock in trade rather than acquiring an enduring asset or a permanent right for producing the stock in trade. And a business man, like the fisher man in the illustration given above, would indeed be surprised to learn that buying of fish for his business is revenue expenditure whereas catching fish in particular water under a contract entered into by him for the purpose of obtaining his stock in trade on payment of a lump sum down, is capital expenditure. (3) The test whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business does not arise in the present case and need not be considered. No different principles were laid down by my learned brethren in their decision in Pringle Industries Ltd. vs Commissioner of Income tax(1) and so far as that case is concerned, their decision must hold the field. The difficulty and difference of opinion that arise now relate to the application of those principles to the facts of the present case. One is reminded in this case of what Lord Macmillan said in Tata Hydro Electric Agencies Ltd. vs Commissioner of Income tax(2) at page 209: 527 "Their Lordships recognise and the decided cases show how difficult it is to discriminate between expenditure which is and expenditure which is not, incurred solely for the purpose of earning profits or gains. " Lord Greene (Master of the Rolls) expressed himself more strongly and adverting to the distinction between capital and income, said: "There have been many cases where this matter of capital or income has been debated. There have been many cases which fall upon the borderline: indeed, in many cases it is almost true to say that the spin of a coin would decide the matter almost as satisfactorily as an attempt to find reasons." [Vide Commissioners of Inland Revenue vs British Salmson Aero Engines Ltd.(1)]. Perhaps, the case before us is not as bad as the cases which the Master of the Rolls had in mind when he made the above observations. It is, however, a truism that each case must turn upon its own facts. Nevertheless the decisions are useful as illustrations of some relevant general principles. The nearest illustration that we can get is the decision of the Privy Council in Mohanlal Hargovind vs Commissioner of Income tax(2). That decision was binding on the Indian Courts at the time when it was given and as I think that it is still good law and is indistinguishable from the present case, I offer no apology for referring to it in great detail. The facts of that case were these. The assessees there carried on a business at several places as manufacturers and vendors of country made cigarettes known as bidis. These cigarettes were composed of tobacoo rolled in leaves of a tree known as tendu leaves, which were obtained by the assessees by entering into a number of 528 short term contracts with the Government and other owners of forests. Under the contracts, in consideration of a certain sum payable by instalments, the assessees were granted the exclusive right to pick and carry away the tendu leaves from the forest area described. The assesees were allowed to coppice small tendu plants a few months in advance to obtain good leaves and to pollard tendu trees a few months in advance to obtain better and bigger leaves. The picking of the leaves however had to start at once or practically at once and to proceed continuously. On these essential facts, the Privy Council held that the contracts were entered into by the assessees wholly and exclusively for the purpose of supplying themselves with one of the raw materials of their business, that they granted no interest in land, or in the trees or plants, that under them it was the tendu leaves and nothing but the tendu leaves that were acquired, that the right to pick the leaves or to go on to the land for the purpose was merely ancillary to the real purpose of the contracts and if not expressed would be implied by law in the sale of a growing crop, and that therefore the expenditure incurred in acquiring the raw material was in a business sense an expenditure on revenue account and not on capital, just as much as if the tendu leaves had been bought in a shop. I can find no distinction which would make any difference between the facts of that case and the facts of the present case. Let me compare the essential facts of these two cases and see whether there is any difference. (1) Two of the contracts were taken as typical of the rest by the Privy Council. One contract was for the period from September 5, 1939 to June 30, 1941 and the other was for the period from October 1, 1938 to June 30, 1941. Thus one of the contracts was for a period of about two years and the other contract for a period of about three years. 529 In the case under our consideration the period of the contract is three years. Indeed, there is no vital difference between the periods in the two cases. (2) In the case before us the contract area is described in a schedule. In the two contracts which were under consideration by the Privy Council the contract area was also indicated in a schedule. The boundaries of the forests in which tendu leaves could be plucked were delimited by the schedule. Same is the case with the contract before us. The contract area in which conch shells of a specified type and size can be picked and gathered is described in a schedule. Such description does not mean that the assessee gets any right other than the right to gather conch shells. In the Privy Council case the assessees were granted no interest in land or in the trees or plants; it was the tendu leaves and nothing but the tendu leaves that were acquired. In the case before us no interest was given in the sea bed or in the sea water or in any of the products thereof. Conch shells of a specified type and size and nothing but such conch shells were acquired by the contract. I do not think that the reference to the coast line off the South Arcot District makes any difference between the present case and the case on which the decision in Mohanlal Hargovind vs Commissioner of Income tax (1) was rendered. If in the matter of plucking of tendu leaves the expenditure under the contract was, in a business sense, expenditure on revenue account, I fail to see why a similar expenditure for gathering conch shells in motion under the surface of the sea near the coast line should not, in a business sense, be considered as expenditure on revenue account. This aspect of the case was emphasised by their Lordships in the following paragraph: 530 "It appears to their Lordships that there has been some misapprehension as to the true nature of these agreements and they wish to state at once what in their opinion is and what is not the effect of them. They are merely examples of many similar contracts entered into by the appellants wholly and exclusively for the purpose of their business, that purpose being to supply themselves with one of the raw materials of that business. The contracts grant no interest in land and no interest in the trees or plants themselves. They are simply and solely contracts giving to the grantees the right to pick and carry away leaves, which of course, implies the right to a appropriate them as their own property. " In the case under our consideration the only right granted to the respondent firm was to take and carry away conch shells of a specified type and size, which of course, implies the right to appropriate them as the respondent firm 's own property. The right to go into the sea and cast nets etc. was merely ancillary to the real purpose of the contract. Nor do I think that the circumstance that the contracts conferred an exclusive privilege or right is a matter of any significance. In Mohanlal Hargovind vs Commissioner of Income tax (1) the contracts were exclusive and their Lordships stated: "It is true that the rights under the contracts are exclusive but in such a case as this that is a matter which appears to their Lordships to be of no significance. These observations are as apt in their application to the present case as they were in the case before their Lordships of the Privy Council. (3) The Privy Council draw a distinction between cases relating to the purchase or leasing of 531 mines, quarries, deposits of brick earth, land with standing timber etc. On one side and the case under its consideration on the other. It referred to the decision in Alianza Co. vs Bell(1) and said: ". the present case resembles much more closely the case described and distinguished by Channell, J. at page 673 of the report in Alianza Co. vs Bell of the cost of material worked up in a manufactory. That side the learned Judge, is a current expenditure and does not become `a capital expenditure merely because the material is provided by something like a forward contract, under which a person for the payment of a lump sum down secures a supply of the raw material for a period extending over several years '. " In Kauri Timber Co. Ltd. vs Commissioner of Taxes(2) the company 's business consisted in cutting and disposing of timber. It acquired in some cases timber bearing lands, in other cases it purchased the standing timber. The leases were for 99 years. So far as the cases where the land was acquired were concerned there could have been no doubt that the expenditure made in acquiring it was capital expenditure. In the case of the purchase of the standing timber what was acquired was an interest in land. The purchasers bought the trees which they could allow to remain standing as long as they liked. It was pointed out that so long as the timber at the option of the company remained upon the soil, it derived its sustenance and nutriment from it. The additional growths became ipso jure the property of the company. In these circumstances it was held that the expenditure was capital expenditure. In the case before us some reliance was placed by the appellant on the term that shells less than 2 1/4 inches in diameter brought inadvertently to shore had to be returned at once alive to the sea. 532 The argument was that such shells might later grow in size by receiving sustenance and nutriment from sea water and could be later gathered by the respondent firm when they reached the size of 2 1/4 inches in diameter or more. This, it was argued, brought the present case nearer the decision in Kauri Timber case (1). I am unable to agree. It is to be remembered that live shells move under the surface of the sea and they do not remain at the same place, as trees do. A shell less than 2 1/4 inches in diameter returned alive to the sea may move away from the contract area and may never be gathered by the respondent firm. In these circumstances the appellant is not entitled to call to his aid the test of "further vegetation" or "sustenance and nutriment" referred to in the Kauri Timber case (1). From whatever point of view we may look at the case, it seems to me that the facts of the present case are indistinguishable from those of the case in Mohanlal Hargovind vs Commissioner of Income tax(2) In Mohanlal Hargovind 's case (2) the right was to pluck tendu leaves; in our case the right was to gather conch shells of specified type and size. This distinction, it is obvious, makes no difference. In the High Court it was contended on behalf of the appellant that Mohanlal Hargovind 's case (2) related to the acquisition of raw materials whereas the present case relates to the acquisition of "chanks" by a dealer who sells them without subjecting them to any manufacturing process, and this distinction, it was contended, made the decision in Mohanlal Hargovind 's case (2) inapplicable to the present case. The High Court rejected this contention and in my opinion rightly. I agree with the High Court that on principle and in a business sense, there is no distinction between acquiring raw materials for a manufacturing business and acquiring or purchasing goods by a dealer for the purpose of sale, particularly when there is no question of any excavation 533 etc., in order to win the goods and make such goods parts of the stock in trade, a point which weighed with the Court of Appeal in Stow Bardolph Cravel Co. Ltd. vs Poole (1) and with my learned brethren in Pingle Industries Ltd. V. Commissioner of Income tax (2). No such point is present in this case. I have been unable to find any other distinction between the two cases which would make a difference in the application of the principles for discriminating between capital expenditure and revenue expenditure. To adopt again the language of Lord Green, I see no ground in principle or reason for differentiating the present case from the case in Mohanlal Hargovind vs Commissioner of Income tax (3). On behalf of the respondent firm a further question was agitated, namely, whether an allowance for the cost of gathering the conch shells by nets etc., should not be given, even though the rent paid under the contract was not allowable, under section 10 (2) (xv) of the Income tax Act and a reference was made in this connection to the decision in Hood Barrs vs Commissioners of Inland Revenue (4). I do not think that we are concerned with that matter in the present appeal. The only question which arises for decision is the one referred to the High Court. I have held that the High Court correctly answered the question which related to the payment of the sum of Rs. 6111/ only. The question having been correctly answered by the High Court, the appeal fails and must be dismissed with cost. HIDAYATULLAH, J. This appeal was heard with Pingle Industries, Ltd., Secunderabad vs The Commissioner of Income tax (5), in which judgment was delivered by us on April 26 1960. In accordance with the decision in Pingle Industries case (1), 534 this appeal was allowed. Later, a review petition of (No. 16 of 1960) was filed on the ground that this appeal was not governed by the decision in Pingle Industries case (1), and that as it was not fully argued, it should be reheard. It is unnecessary to go into the reasons why the rehearing was granted, except to say that there was perhaps a misunderstanding about the concessions made by counsel. We were, therefore, satisfied that we should grant the rehearing, and have since heard full arguments in this appeal. K. T. M. T. M. Abdul Kayoom and Hussain Sahib (respondent) is a registered firm, and carries on business in conch shells locally known as "chanks", which are found on the bed of the sea all along the coast line abutting on the South Arcot District. The respondent took on lease from the Director of Industries and Commerce, Madras "the exclusive right, liberty and authority to take and carry away all chanks founnd in the sea" for a period of three years ending on June 30, 1947. The consideration was Rs. 6, 111/ per year payable in advance. For the year of assessment, 1946 47 (the year of account ending June 30, 1945) the respondent in showing its profits from business sought to deduct Rs. 6,111/ on the ground that this was an expenditure not of a capital nature but wholly and exclusively laid out for the purpose of business under section 10 (2) (XV) of the Income tax Act. This claim was disallowed by the Income tax Officer, and on appeal, by the Appellate Assistant Commissioner. On further appeal to the Appellate Tribunal, the respondent contended that the ruling of the Privy Council in Mohanlal Hargovind 's case (2) applied to the case, inasmuch as the payment was to secure the stock in trade for its business. The Appellate Tribunal, though it was of opinion that the Privy Council case applied, felt itself bound by the earlier Full Bench decision of the Madras High 535 Court in K.T.M.T.M. Abdul Kayoom Hussain Sahib vs Commissioner of Income tax, Madras (1) relating to this respondent, and dismissed the appeal. The Tribunal, however, acceded to a demand for a case, and referred the following question to the High Court for its decision : "Whether on the facts and circumstances of the case the payment of the sum of Rs. 6,111 made by the assessee under the terms of the agreement entered into with the Director of Industries and Commerce, Madras, on 9th November 1945 was not an item of revenue expenditure incurred in the course of carrying on the business of the assessee and, "therefore, allowable under the provisions of section 10 of the Indian Income tax Act". The reference went before a Divisional Bench, which referred the case for decision of a Full Bench. The Full Bench held that the case was covered by the Privy Council case above referred to, observing: "In our opinion, the facts in the case before the Judicial Committee are indistinguishable from the facts of the present case. In one case, the leaves had to be picked from trees by going upon the land, while in the other case the chanks had to be collected and gathered by dividing into the sea. It is impossible to construe the documents in the present case as conferring any interest in that portion of the sea from which the exclusive right of winning the chanks was conferred upon the assessee. " The High Court also did not see any difference between raw materials acquired for a manufacturing business and the acquisition of chanks in the present case, and held that the chanks were acquired as the stock in trade of the respondent and the transaction was tantamount to purchase of goods, 536 The High Court, however, certified the case as fit for appeal, and the Commissioner of Income tax has filed this appeal. The material terms of the agreement in the case are as follows : "1. The lessor hereby grants unto the lessees the full free and exclusive right, liberty and authority to fish or take and carry away all chank shells in the sea off the coast line of the South Arcot District including the French Kuppams of Pondicherry more particularly described in the schedule hereto to hold the premises to the lessees from the first day of July 1944 for a period of three years ending 30th June 1947 paying therefor the yearly rent of Rs. 6, 111 (rupees six thousand one hundred and eleven only) to be paid yearly in advance, the first payment to be made within fifteen days from the date of intimation of acceptance and the second and third payments to be made on or before the 15th June 1945 and 1946, respectively at the Government Treasury at Tuticorin or Madras. x x x 3. The lossee hereby covenants with the lessor as follows : x x x (ii) To deliver to the Assistant Director of Pearl and Chank Fisheries, Tuticorin all Velampuri shells that may be obtained by the lessees upon payment of their value as determined by the Assistant Director. (iii) To collect Chanks in nets and by means of diving as well. In the process of such collection of shell not to fish chank shells less than 2 1/4 inches in diameter if any chank shells less than 2 1/4 inches in diameter 537 be brought inadvertently to shore, to return at once alive to the sea all such undersized shells. (iv) Not at any time hereafter to transfer or underlet or part with possession of this grant or the rights and privileges hereby granted or any part thereof without the written consent of the lessor. x x x (vi) To report to the Assistant Director of Pearl and Chank Fisheries (South), Tuticorin the actual number of shells kept unsold in different stations after the expiry of the lease period. " An analysis of the agreement shows that the respondent obtained an exclusive right to fish for "chanks" by the method of diving and nets and to appropriate them except those below 2 inches in diameter, which had to be returned alive to the sea and Velampuri shells which had to be sold compulsorily to Government. The respondent had also to report to its lessors at the end of the term, the number of shells not sold. The right was exclusive, but was not capable of being transferred or underlet, and it was for a fairly long period. The coast line involved was also fairly long. There is no doubt that the payment of Rs. 6,111/ was an expenditure wholly and exclusively for the purpose of the business of selling shells, just as the payment to the divers and other sundry expenses were. But an expenditure for the purpose of the business may be of a capital nature, and if it is so, it cannot be claimed as a deduction. The question is whether this payment was of a capital nature. What is attributable to capital and what, to revenue has led to a long string of cases here and 538 in the English Courts. The decisions of this Court reported in Assam Bengal Cement Co., Ltd. vs Commissioner of Income tax and Pingle Industries case (1) have considered all the leading cases, and have also indicated the tests, which are usually applied in such cases. It is not necessary for us to cover the same ground again. Further, none of the tests is either exhaustive or universal. Each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo * by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, its broad resemblance to another case is not at all decisive. What is decisive is the nature of the business, the nature of the expenditure, the nature of the light acquired, and their relation inter se, and this is the only key to resolve the issue in the light of the general principles, which are followed in such cases. A trader may spend money to acquire his raw materials, or his stock in trade, and the payment may often be on revenue account but not necessarily. A person selling goods by retail may be said to be acquiring his stock in trade when he buys such goods from a wholesaler. But the same cannot be said of another retailer who buys a monopoly right over a long period from a producer of those goods. The amount, he pays to secure the monopoly, through a part of the expenditure to secure his stock in trade is not of the same character as the price he pays in the first illustration. By that payment, he secures an enduring advantage and an asset which is a capital asset of his business. In the same way, if a manufacturer buys his raw materials he makes a revenue expenditure, but when he acquires a source from which he would derive his 539 raw materials for the enduring benefit of his business, he spends on the capital side. Thus, a manufacturer of wollen goods buys his wool buys his raw materials, but when he buys a sheep farm, he buys a capital asset. There is then no difference between purchase of a factory and the purchase of the sheep farm, because both are capital asset of enduring nature. The respondent in this case has tried to distinguish Pingle Industries case (1) and to bring its case within the ruling of the Privy Council in Mohanlal Hargovind 's case (2). When the former case was argued, the attempt was to bring it also within the rule of the Privy Council, but now, the differences between the two cases are recognised and Pingle Industries case (1) is said to be entirely different. In deciding the present appeal, it is hardly necessary to do more than analyses once again the facts and circumstances of these two cases to show why those two cases were differently decided, and the present case will then be easily disposed of, not on its similarity to another but on its own facts. We shall begin with the Privy Council. Mohanlal Hargovind and Co., was a firm of bidi manufacturers, which needs tendu leaves in which tobacco is wrapped to make bidis. Tendu leaves were thus the raw material of the business. Tendu leaves can be bought from dealers who sell tendu leaves in a large way. Now, what did the firm do ? It took leaves of forests with a right to pick the leaves. This right carried with it the right to coppice small tendu plants and to pollard the tendu trees. There was, however, no right in the trees or the land and the right to go over the land was merely ancillary. Looked at from the point of view of business, there was no more than a purchase of the leaves, and the leaves were needed as raw materials of the business. In deciding the case, the Judicial Committee discounted the right to 540 coppice small tendu plants and to pollard the tendu trees as a very insignificant right of cultivation necessary to improve the quality of the leaves, but which right ranked no higher than the right to spray a fruit tree. The right of entry upon the land was also considered ancillary to the main purpose of the contract, which was acquisition of tendu leaves and tendu leaves alone, and it was observed that even if this right of going on the land and plucking the leaves was not expressed in the contract, it would have been implied by law. Their Lordships then observed that the High Court diverted its view from these points, and attached too much importance to cases decided upon quite different facts. They then observed that "cases relating to the purchase or leasing of mines, quarries, deposits of brick earth, land with standing timber. " were of no assistance, and concluded: "If the tendu leaves had been stored in a merchant 's godown and the appellants had bought the right to go and fetch them and so reduce them into their possession and ownership it could scarcely have been suggested that the purchase price was capital expenditure. Their Lordships see no ground in principle or reason for differentiating the present case from that supposed." (p. 478) That case thus involved no right in land or trees; the licence to be on the land was merely an accessory right; the right of cultivation was insignificant. The term was short, and the collection of leaves was seasonal. Leaves once collected, the operation pro tempore was over till the fresh crop came. There was thus no acquisition of an enduring asset in the way capital endures; it was more a purchase of crops of two or three successive years shewered on an agreement to ensure the supply of raw materials, 541 Contrast this with the facts of Pingle Industries case (1). The business of the assessee there, was selling stone slabe called flag stones. These stones were first won from the quarries and then dressed and shaped and then sold. Now, what did the assessee do ? It took leases of stone quarries in a large number of villages for twelve years. Primarily, this was done to obtain stones for its business. It could have been a contract by which it would have been entitled to so many cubic feet of stones to be extracted in a particular period. It took long term leases of vast areas in several villages to ensure supplies for a considerable time. The leases were not limited by quantity, nor did they refer to any stones in particular. It could take all or it could take none; but it could not have carried away all the stones, if the supply outran its efforts. The stones were embedded in earth, layer upon layer, and had to be systematically extracted. Till the stones at the top were removed, it could not remove those at the bottom, and there were still more layers further below. In there circumstances, no specific quantity having been bought or sold either expressly or impliedly, the stones being immovable property or a part thereof and the contract being long teem contracts, Mohahlal Rargovind 's case (2) was held inapplicable, and it was held that the assessee in Pingle Industries case (1) had acquired an enduring asset and the expenditure was on capital account. These cases between them show adequately the dividing line, which exists between capital expenditure and revenue expenditure. To determine on which side of the line the particular expenditure falls, one may often put himself the question posed by Lord Clyde in Robert Addie and Sons Collieries Ltd. vs Commissioners Inland Revenue (3) 542 "It it part of the Company 's working expenses, is it expenditure laid out as part of the process of profit earning ? or, on the other hand, is it capital outlay, is it expenditure necessary for the acquisition of property or of rights of a permanent character, the possession of which is a condition of carrying on its trade at all?" The same question was again posed by the Judicial Committee in Tata Hydro Electric Agencies, Ltd. vs Commissioner of Income tax (1). The answer to this question in each of the two case of Mohanlal Hargovind (2) and Pingle Industries (3) is entirely different. The difference can be noticed easily, if we were to read here what Channell, J. said in Alianza Co. Ltd. vs Bell (4): "In the ordinary case, the cost of the material worked up in a manufactory is not a capital expenditure, it is a current expenditure and does not become a capital expenditure merely because the material is provided by something like a forward contract, under which a person for the payment of a lump sum secures a supply of the raw material for a period extending over several years. .If it is merely a manufacturing business, then the procuring of the raw material would not be a capital expenditure. But if it is like the working of a particular mine, or bed of brick earth and converting the stuff into a marketable commodity, then, the money paid for the prime cost of the stuff so dealt with is just as much capital the money sunk in machinery or buildings. " The first part of the observation is applicable to Mohanlal Hargovind 's case (2) and the latter part, to Pingle Industries case (3). What is said of a manufacturing concern is equally applicable to a non manufacturing business. It is the quality of the payment taken with what is obtained, that is decisive of the character of the payment. 543 We may now pass on to the facts of the case before us. The respondent carried on the business of selling chanks. It obtained its supplies from divers, from whom it purchased the chanks, and having got them, perhaps cheap, it resold them at a profit. This is one mode in which it carried on its business. In this business, it was directly buying its stock in trade for resale. The other method was to acquire exclusive right to fish for chanks by employing divers and nets. The business then changed to something different. The sale was now of the product of another business, in which divers and equipment were first employed to get the shells. It thus took leases of extensive coastline with all the right to fish for chanks for some years. The shells were not the subject of the bargain at all, as were the tendu leaves; but the bargain was about the right to fisht. There can be no doubt that what it paid the divers when it bought chanks from them with the view of reselling them was expenditure laid out wholly and exclusively for the purpose of its business, which was not of a capital nature. That business was buying goods and reselling them at a profit. But a different kind of business was involved when it went in for fishing for chanks. To be able to fish for chanks in reserved waters it had to obtain the right first. It, therefore took lease of that right. To Mohanlal Hargovind, the leaves were raw materials, and that firm preferred to buy a number of crops over years rather than buy them as it went along. Hence the remark that the leaves were bought, as if they were in a shop. Under the lease which the respondent obtained, it had a right to take only chanks of particular dimensions and shape, but it had to fish for them and obtain them first. The rest of the chanks were not its property. The smaller chanks had to be returned alive to the sea, and Velampuri chanks had to be compulsorily sold to the state. Of Course, the smaller chanks put back into the sea 544 would grow, and if fished later, be its property to take, but till they grow, it had not claim. The chanks were on the bed of the sea. Their exact existence was not known, till the divers found them, or they got netted. Chanks which were there one day might have been washed back into the deep sea, and might never be washed back into a place where they would be within reach. Similarly, other chanks not there one day might come within reach on another day. All these matters make the case entirely different from the case of a purchase from the divers. In obtaining the lease, the respondent obtained a speculative right to fish for chanks which it hoped to obtain and which might be in large quantities or small, according to its luck. The respondent changed the nature of its business to fishing for chanks instead of buying them. To be able to fish, it had to arrange for an area to fish, and that arrangement had to be of some duration to be effective. This is not a case of so much clay or so much salt petre or a dump of tailings or leaves on the trees in a forest. The two modes in which the respondent did the business furnish adequate distinguishing characteristics. Here is an agreement to reserve a source, where the respondent hoped to find shells which, when found, became its stock in trade but which, insitu, were no more the firm 's than a shell in the deepest part of the ocean beyond the reach of its divers and nets. The expenses of fishing shells were its current expenses as also the expenses incurred over the purchase of shells from the divers. But to say that the payment of lease money for reserving an exclusive right to fish for chanks was on a par with payments of the other character is to err. It was possible to say of the former, as it was possible to say of the tendu leaves in Mohanlal Hargovind 's case (1), that the chanks were bought because the money paid was the price of the chanks. But it would be a straining of the imagination to say that the amount paid 545 for reserving the coastline for future fishing was the price of chanks, with which the respondent did its business. That amount was paid to obtain an enduring asset in the shape of an exclusive right to fish, and the payment was not related to the chanks, which it might or might not have brought to the surface in this speculative business. The rights were not trasferable, but if they were and the firm had sold them, the gain, if any, would have been on the capital side and not a realising of the chanks as stock in trade, because none had been bought by the firm, and none would have been sold by it. In our opinion, the decision of the High Court, with all due respect, was, therefore, erroneous, and the earlier decision of the Full Bench of the same High Court was right in the circumstances of the case. In the result, the appeal is allowed; but there will be no order about cost. BY COURT. In accordance with the majority judgment of the Court, the appeal is allowed, but there will be no order about costs.

The assessee firm carried on the business in purchase and sale of conch shells. It obtained a lease for 3 years for gathering specified types of shells from the sea along the coastline abutting on the South Arcot District. It sought to deduct the amount paid as lease money from its profits from business on the ground that this was an expenditure not of a capital nature but wholly and exclusively laid out for the purpose of business. under section 10(2)(xy) of the Income Tax Act. ^ Held, (per kapur and Hidayatullah, JJ., Das, J. dissenting) that the expenditure was capital expenditure and could not be deducted from the profits. The business of the assessee was buying and selling shells but when it took the lease it went in for a new speculative business of fishing for shells. The amount paid for reserving the vast coastline for future fishing was not price paid for obtaining the stock in trade i.e. shells with which assessee did his business. The amount was paid to obtain an enduring asset in the shape of an exclusive right to fish and the payment was not related to the shells. Mohanlal Hargovind vs Commissioner of Income tax, C. P. & Berar, , distinguished Pringle Industries Ltd., Secunderabad vs Commissioner of Income tax, Hyderabad, [1960] 3 section C. R. 681, applied. Per Das, J. The expenditure was not capital expenditure and was deductible from the profits. It was not an expenditure for the acquisition of property or of rights of a permanent character, the possession of which was necessary for carrying on of the assessee 's trade By this lease the assessee acquired its stocks in trade rather than a source or enduring asset for producing the stock in trade. Mohanlal Hargovind vs Commissioner of Income tax, C. P. & Berar , applied. Pringle Industries Ltd., Secunderabad vs Commissioner of Income tax, Hyderabad, , distinguished.

ivil Appeal No. 1369 of 1990. From the Judgment and Order dated 16.6.1989 of the Bombay High Court in W.P. No. 2513 of 1989. Anil B. Diwan, Y.R. Naik, section Thananjayan and K.R. Choud hary for the Appellant. Dr. Y.S. Chitale, Y.T. John, C.V. Francies, C.V. Rappai, 3. Prakash and V.K. Purwani for the respondents. The Judgment of the Court was delivered by AHMADI, J. Special leave granted. Can a licensee occupying a flat in a tenant co partner ship society be evicted therefrom under Sub Section (1) of Section 91 of the Maharashtra Co operative Societies Act, 1960 (Act No. XXIV of 1961), hereinafter called 'the Socie ties Act ', notwithstanding the protection extended by Sec tion 15A of the Bombay Rents, Hotels & Lodging House Rates Control Act, 1947 ( 'Act No. LVII of 1947), hereinafter called 'the Rent Act ', as amended by Act XVII of 1973 or whether such proceedings would be governed by Section 28 of the Rent Act? That is the question which arises for our determination in he context of the fact that the appellant licensee claimed to be in actual possession of the flat on 1st February, 1973, under a subsisting licence, albeit without the express permission of the society. The actual matrix in which this question needs to be answered may be briefly stated as under: The Vishwa Co operative Housing Society Ltd., respondent No. 1, hereinafter called 'the Society ', was registered sometime in 1948 ruder the provisions of the Bombay Co operative Societies Act, 1925 and is deemed to be registered by virtue of Section 166(2) under the present Societies Act. On 2nd March, 1949 one Laxmi Devi Kejriwal was admitted to the membership of the society and was allotted Flat 865 No. 25 of the multi storeyed building known as 'Vishwa Mahal ' situate on "C" Road, Churchgate, Bombay 20. The said Laxmi Devi gifted her interest as the allottee member of the society to her brother Ambica Prasad Sharma of Udaipur. One D.P. Kejriwal who was looking after this flat inducted the appellant therein w.e.f. 1st June, 1957 under a leave and licence agreement on a licence fee of Rs.400 per month. While the appellant was in actual occupation of the flat, the allottee member Ambica Prasad Sharma transferred his interest therein to his brother Hari Kumar Sharma, respond ent No. 2, sometime in July 1967. The said respondent was admitted to the membership of the society on 15th July, 1967. It appears that even after this transfer D.P. Kejriwal continued in management of the flat and collected and re ceived the licence fee from the appellant till the middle of 1979 when he received a letter from respondent No. 2 claim ing onwership of the flat. The appellant then filed an interpleader suit in the Court of Small Causes, Bombay, seeking a direction to whom he should pay the rent for the flat occupied by him. This interpleader suit was disposed of on 21st June, 1983. Immediately thereafter respondent No. 2 deposited Rs.5,500 on 28th June, 1983 with respondent No. 1 society towards the society 's cost to initiate proceedings for eviction of the appellant from the flat in question under Section 91(1) of the Societies Act. Two days later the respondent No. 2 filed a suit for the eviction of the appel lant from the flat in the Court of Small Causes, Bombay. After respondent No. 2 deposited Rs.5,500, the society passed a resolution on 5th July, 1983 to initiate proceed ings under Section 91(1) of the Societies Act for the evic tion of the appellant from the flat in question. Thereupon the society served the appellant with a notice to quit dated 11th July, 1983 and thereafter instituted the action under Section 91(1) of the Societies Act. The appellant raised several defences, two of which may be noticed. He firstly contended that the so called document of leave and licence in fact created a lease and, therefore, the proceeding under Section 91(1) of the Societies Act was not competent. Secondly he contended that even if it is assumed that the relationship was of a licensor and a licen see under the deed, since he was in actual occupation and possession of the flat in question under a subsisting li cence right from 1957 to 1st February, 1973 he was a statu tory tenant under Section 15A of the Rent Act and was, therefore, entitled to protection from eviction till a competent court granted eviction on any of the grounds set out in Sections 12 or 13 of the Rent Act. He, therefore, contended that the Cooperative Court had no jurisdiction under Section 91(1) of the Societies Act and the proper court to approach was 866 the one under Section 28 of the Rent Act, which the respond ent No. 2 had in fact approached. The Cooperative Court came to the conclusion that the relationship created under the document of leave and licence was that of a licensor and a licensee. On the question of tenancy under Section 15A the Court concluded as under: "So far as second part of the issue regarding opponent No. 2 contending to be tenant of opponent No. 1 is concerned, the opponent No. 1 in his evidence has mentioned to the effect that after his becoming a member of the society he initially accepted the opponent No. 2 as his licensee and allowed him to occupy the suit flat temporarily on his promise to vacate when required by opponent No. 1. He has further stated that he filed the case in the Small Causes Court for ejectment of opponent No. 2 in his own right as advised by his Advocate in that case. He has also stated that he accepted Opponent No. 2 as his tenant because after 1.2.1973 there is change in law and so he had to accept opponent No. 2 as his tenant. In view of this evidence I have to give a finding in the affirmative in respect of part of the issue whether opponent No. 2 proves that he is a tenant of opponent No. 1". In other words the Cooperative Court came to the conclusion that the appellant was a tenant of respondent No. 2 under Section 15A of the Rent Act since he was in occupation of the flat on 1st February, 1973. After finding the appellant to be a tenant of respondent No. 2 under section 15A, the Cooperative Court proceeded to observe as under: "Now regarding the effect of findings on the parts of issue No. 2 as mentioned hereinabove, the position in law is quite clear that even though the non member occupant could at best be regarded as tenant of member, he cannot be deemed as tenant of the society because the society does not fall within the definition of the term landlord under the Rent Act". The Cooperative Court, therefore, came to the conclusion that the society could maintain an action under Section 91(1) of the Societies Act notwithstanding the fact that the occupant was a tenant under Section 15A of the Rent Act qua the member allottee. In this view, the 867 Cooperative Court passed an ejectment order against the appellant and ordered that the member shall personally occupy the flat in question within 15 days from the receipt of possession thereof. The appellant feeling aggrieved by this order filed an appeal under Section 97 of the Societies Act to the Maha rashtra State Cooperative Appellate Court, Bombay, being Appeal No. 206 of 1988. The said appeal was dismissed with costs on 22nd December, 1988. The appellate court also took the view that regardless of the relations between the occu pant of the flat and the member allottee, the society was entitled to maintain an action under Section 91(1) of the Societies Act since there was not and there could not be any relationship of landlord and tenant between the society and the occupant. It accordingly confirmed the order passed by the Cooperative Court. Feeling aggrieved by the concurrent findings recorded by the said two courts, the appellant preferred writ petition No. 25 13 of 1989 in the High Court of Judicature at Bombay. The said writ petition was summarily dismissed on 16th June, 1989 but by a speaking order. The learned Singe Judge while dismissing the writ petition observed as under: "It has now been repeatedly held by the Supreme Court that the protection even though available to the occupier against member of the cooperative society, such protection cannot be claimed against a housing society. A reference to the deci sion in O.N. Bhatnagar vs Rukibai Narsindas, reported in ; , is sufficient". The decision of this Court in Hindustan Petroleum Corpora tion Limited vs Shyam Cooperative Housing Society, ; was distinguished as not laying down any proposition that a licensee is entitled to take advantage of Section 15A of the Rent Act even against the society. So stating the learned Judge dismissed the writ petition. That is how the appellant is before us by special leave. Section 91(1) of the Societies Act insofar as relevant for our purposes reads as under: "Notwithstanding anything contained in any other law for the time being in force any dispute touching the constitu 868 tion, . . . management or business of a Society shall be referred by any of the parties to the dispute . . to the Cooperative Court if both the parties thereto are one or other of the following: (a) a society . . (b) a member, past member or a person claiming through a member, past member or a deceased member of the society Sub section (3) reads as under: "Save as otherwise provided under sub section (2) to Section 93, no court shall have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in sub section (1)" Sub section (2) of Section 93 lays down that: "Notwithstanding contained in this Act the Cooperative Court may, if it thinks fit suspend any proceedings in respect of any dispute, if the question at issue is one involving complicated questions of law and fact, until the question has been tried by a regular suit instituted by one of the parties or by the society". Sub section (1) of Section 99 which begins with a non ob stante clause gets attracted if there arises any dispute touching the business of a society. Such a dispute can be referred to a Cooperative Court if both parties to the dispute are one or other of those enumerated in clauses (a) to (e) thereof. These include a society, a member or a person claiming through a member or a past member or a deceased member. The dispute in the present case is between the society, its member and appellant, a person stated to be one claiming through the present member or the past member. The crucial question which arises is whether the dispute or controversy between the parties can be said to be one touch ing the business of the society. If yes, the Cooperative Court alone will have jurisdiction since the jurisdiction of every other court is ousted by virtue of Sub section (3) of Section 91 except for the limited purpose stated in sub section (2) of Section 93 of the Societies Act. 869 Under bye law No. 2 the objects of the society are inter alia to carry on trade of building, buying, selling, hiring, letting and developing land on cooperative principles. Regulation 4 in Form A provides that no tenant member shall assign, under let, vacate or part with the possession of the tenement or any part thereof without the previous consent in writing of the society. Bye law 7A lays down that an outsid er non member can be allowed to take advantage of the mem ber 's flat only on production of a written confirmation of the member before the society and on the society thereupon admitting such member as a 'nominal ' member of the society. Admittedly in the present case no written permission of the society was obtained either by the member or by the appel lant before the latter was put in possession of the flat in question nor was any request made to the society to admit the appellant as a nominal member. It was, therefore, con tended on behalf of the society that the entry of the appel lant in the flat in question was clearly in violation of Regulation 4 and bye law 7A adverted to above and, there fore, the dispute was clearly one touching the business of the society attracting Section 91(1) of the Societies Act. The appellant 's challenge as pointed out earlier can be said to be two fold, namely, (1) the dispute between the appel lant and the society cannot be said to be in any manner related to the business of the society and (2) since the jural relationship between the member and the appellant was admittedly of landlord and tenant, the jurisdiction of the Cooperative Court under the Societies Act was clearly barred by virtue of Section 28 of the Rent Act which is a special statute dealing with landlord tenant relationship. The Rent Act was enacted to amend and consolidate the law relating to the control of rents and repairs of certain premises, of rates of hotels and lodging houses and of evictions and also to control the charges for licence of premises, etc. Section 15A which was inserted by amending Act 17 of 1973 provides as under: "15A(1) Notwithstanding anything contained in this Act or anything contrary in any other law for the time being in force, or in any contract, where any person is on the 1st day of February, 1973 in occupation of any premises, or any part thereof which is not less than a room, as a licensee he shall on that date be deemed to have become for the purposes of this Act, the tenant of the landlord, in respect of the premises or any part thereof, in his occupation". The expression 'licensee ' is defined in sub section (4A) of Section 5 as under: 870 '5(4A) licensee ', in respect of any premises or any part thereof. means the person who is in occupation of the prem ises or such part, as the case may be, under a subsisting agreement for licence given for a licence fee or charge; and includes any person in such occupation of any premises or part thereof in a building vesting in or leased to a co operative housing society registered or deemed to be regis tered under the Maharashtra Co operative Societies Act, 1960); but does not include a paying guest, a member of a family residing together, a person in the service or employ ment of the licensor, or a person conducting a running business belonging to the licensor, for a person having any accommodation for rendering or carrying on medical or para medical services or activities in or near a nursing home, hospital or sanatorium, for a person having any accommoda tion in a hotel, lodging house, hostel, guest house, club, nursing home, hospital, sanatorium, dharmashala, home for widows, orphans or like premises, marriage or public hall or like premises, or in a place of amusement or entertainment or like institution, or in any premises belonging to or held by an employee or his spouse who on account of the exigen cies of service or provision of a residence attached to his or her post or office is temporarily not occupying the prem ises, provided that he or she charges licence fee or charge for such premises of the employee or spouse not exceeding the standard rent and permitted increases for such premises, and any additional sum for services supplied with such premises, or a person having accommodation in any premises or part thereof for conducting a canteen, creche, dispensary or other services as amenities by any undertaking or insti tution; and the expressions 'licence ', 'licensor ' and 'pre mises given on licence ' shall be construed accordingly". The definition of a 'landlord ' in Section 5(3) includes in respect of a licensee deemed to be a tenant by Section 15A, the licensor who has given such licence. Similarly the expression 'tenant ' as defined by Section 5(11) includes such licensees as are deemed to be tenants by Section 15A. Section 14(2) may also be noticed which reads as under: "Where the interest of a licensor who is a tenant of any 871 premises is determined for any reason, the licensee, who by . Section 15A is deemed to be a tenant, shall, subject to the provision of this Act, be deemed to become the tenant of the landlord, on the terms and conditions of the agree ment consistent with the provisions of this Act". The Courts below have come to the conclusion that the appel lant was a tenant of respondent No. 2 by virtue of Section 15A of the Rent Act since he was in actual occupation of the flat on 1st February, 1973. Having recorded the relationship of landlord and tenant between the member, respondent No. 2, and the occupant appellant, the courts below took the view that as there was no such jural relationship between the society and the occupant, the society was entitled to evict the occupant from the flat in question by taking recourse to Section 91(1) of the Societies Act as the dispute between the society, its member and the occupant claiming through the member was essentially one touching the business of the society. In other words according to the courts below while the member could not evict the occupant except through proceedings initiated under the Rent Act, the society was free to evict the occupant, without dis continuing the membership of the licensor, by virtue of Section 91(1) of the Societies Act. There is, according to the courts below, no conflict between Section 91(1) of the Societies Act and Section 28 of the Rent Act because in order to attract the latter provision it must be shown that the relationship between the society and the occupant is that of a landlord and a tenant or a licensor and a licensee who is entitled to the benefit of Section 15A of the. Rent Act. Unless such a relationship is established, the society cannot be precluded from initiating eviction action under Section 91(1) of the Societies Act against an occupant with whom it has no privi ty of contract, notwithstanding the fact that he was induct ed in the flat by the member allottee, albeit contrary to the regulations and bye laws of the society, and by passage of time a relationship of landlord and tenant has developed between the two by virtue of Section 15A of the Rent Act. What impelled the legislature to introduce Section 15A and the related provisions on the statute book by Act XVII of 1973? The acute paucity of accommodation, particularly in urban and metropolitan centres, is of common knowledge. Section 15 of the Rent Act initially prohibited sub letting. Despite this prohibition sub letting took place on a large scale because of non availability of rented premises. The legislature had to face this hard reality and was required to extend protection to such sub tenants when they were threatened with evic 872 tion by enacting the Bombay Rents, Hotels & Lodging Houses Rates Control Act (Amendment) Ordinance, 1959. Thereafter also the acute shortage of accommodation continued and to circumvent the prohibition of sub letting in Section 15 increasing use of inducting third parties in rented premises through the expedient of leave and licence agreements was made. This becomes evident from the Objects and Reasons for Act No. XVII of 1973, which read as under: "It is now notorious that the Bombay Rents, Hotel and Lodg ing House Rates Control Act, 1947, is being avoided by the expedient of giving premises on leave and licence for some months at a time; often renewing from time to time at. a higher licence fee. Licensees are thus charged excessive licence fees; in fact, several times more than the standard rent, and have no security of tenure, since the licensee has no interest in the property like a lessee. It is necessary to make provision to bring licensees within the purview of the aforesaid Act. It is therefore provided by Clause 14 in the Bill that persons in occupation on the 1st day of Febru ary, 1973 (being a suitable anterior date) under subsisting licences, shall for the purposes of the Act, be treated as statutory tenants, and will have all the protection that a statutory tenant has, under the Act. It is further provided in Clause 8 that in the case of other licences, the charge shall not be more than a sum equivalent to standard rent and permitted increases, and a reasonable amount for amenities and services. It is also provided that no person shall claim or receive anything more as licence fee or charge, than the standard rent and permitted increases, and if he does re ceive any such amounts, they should be recoverable from the licensor". The legislative policy is evident from the opening words of Section 15A Notwithstanding anything contained elsewhere in this Act or anything contrary in any other law for the time being in force, or in any contract which convey in no uncertain terms that the legislature desired to protect licensees who were in actual occupation of any premises on 1st February, 1973 from eviction by conferring on them the status of a tenant and thereby bringing them within the purview of the Rent Act regardless of the other provisions of the said enactment or any other enactment or contract to the contrary. A sweeping overriding effect is given over all laws and other provisions of the Rent Act as well as con tract providing to the contrary thereby placing the 873 question of status of licensees in occupation of any prem ises on 1st February, 1973 beyond the pale of doubt. To make matters clear corresponding changes were simultaneously made, in the preamble of the Rent Act and the definitions of 'landlord ' and 'tenant ' and a new definition ' of 'licensee ' was inserted on the statute book. Not only did the legisla ture desire to confer the status of a tenant on such licen sees but it went a step further by providing in Section 14(2) that on the determination of the licenser 's interest in the premises such a statutory tenant under Section 15A will become the tenant of the landlord, thereby establishing a jural relationship of landlord and tenant through statute as distinguished from contract. It, therefore, seems crystal clear to us that the legislative policy was to extend the protective umbrella of the Rent Act to licensees who were in occupation of any premises on 1st February, 1973 by fiction ally conferring on them the status of a tenant, overriding all other provisions of the statute itself, all other stat utes and contracts providing to the contrary. Therefore, every other provision of the Rent Act, every provision of any other law and every covenant of a contract which runs counter to the legislative policy engrafted in Section 15A, meaning thereby which provides to the contrary, must yield to Section 15A read with Section 14(2) of the Rent Act. That is why this Court while overruling the decision of the Full Bench of the Bombay High Court in Ratanlal Chandiprasad vs Raniram Darkhand, writ petition No. 76 of 1980 decided on 18th October, 1985 observed in paragraph 69 of its judgment in Chandavarkar Sita Ratna Rao vs Ashalata section Gurnatn, ; at 478 as under: ". . it must be held that all licensees created by landlords or by the tenant before February 1, 1973 and who were in actual occupation of a premises which was not less than a room as licensee on February 1, 1973 would be the licensees of the landlord or tenant and whether there by any term in the original agreement for tenancy permitting crea tion of such tenancy or licences or not they would become tenant and enjoy the fights granted under the Act specially those mentioned in Section 14(2) of the Act". Therefore, this Court held that a licensee under a licence created by a tenant, be he a statutory tenant or a contrac tual tenant, whether or not his tenancy agreement permitted the creation of such licence, was entitled to the protection of Section 15A of the Rent Act. In other words no statutory bar or contractual bar operated against the conferment of the statutory tenancy on the licensee in occupation of any 874 premises on 1st February, 1973 under Section 15A of the Rent Act. That takes us to the next question whether or not a member of a co partnership type of a co operative society has such interest in the premises allotted to him as would entitle him to give the same on leave and licencee basis to a non member. In a tenant co partnership type of society the members are shareholders; but the title to the property vests in the society which in turn rents the tenements or flats to its members. The cost of construction of dwellings is met from deposits and loans besides the share money. The rental is usually determined on long term basis so calculat ed as to meet the cost of construction and upkeep of the building and to guarantee perpetuity of occupation on repay ment of the whole value of the tenement or flat. At the end of the period the member is credited with additional shares equal to the amount paid by him; the interest on these shares generally matches the rental payable by him to the society. Thus on full payment the member becomes entitled to occupy the tenement or flat free of charge as the rental he has to pay to the society is almost met from the interest received from shares held by him. Thus a member has more than a mere fight to occupy the flat. A similar question came up for consideration before this Court in Ramesh Himmatlal Shah vs Harsukh. Jadhavji Joshi, ; in the context of whether or not the mem ber 's right in the flat was liable to attachment and sale under Section 60 of the Code of Civil Procedure. This Court after analysing the various provisions of the Societies Act, the bye laws and the regulations framed thereunder, came to the conclusion that the member 's right or interest to occupy is a species of property. Proceeding further this Court made the following observations in paragraph 18 to 20 of the Judgment: "There is no absolute prohibition in the Act or in the Rules or in the bye laws against transfer of interest of a member in the property belonging to the Society. The only transfer which is void under the Act is one made in contravention off sub section (2) of Section 47 [See Section 47(3)]. We have not been able to find any other provision anywhere to the same effect. In the Scheme of the provisions a dichotomy is seen between share or interest in the capital and interest in property of the Society. While Section 29(2) refers to transfer of a member 's share or his interest in the capital or property of any Society, Section 31 in contrast speaks of 'the share or interest of a member in the capital of a So 875 ciety '. The Act, therefore, makes a clear distinction be tween the share or interest in the capital and share or interest in property of the Society. We have also noticed that the Act does not recognise interest in the immovable property of the society as well [See section 41(1)(b)]. We have seen the qualifications for membership. There is no reason to suppose that if the qualification under the bye laws are fulfilled an application for membership may be rejected". After pointing out that the right or interest to occupy is a species of property this Court went on to add as under: "We, therefore, unhesitatingly come to the conclusion that this species of property, namely, the right to occupy a flat of this type, assumes significant importance and acquires under the law a stamp of transferability in furtherance of the interest of commerce. We have seen no fetter under any of the legal provisions against such a conclusion. The attachment and sale of the property in this case in execu tion of the decree are valid under the law. XXXXXXXXXXXXXXXXXXXXXXXXX In absence of clear and unambiguous legal provisions to the contrary, it will not be in public interest or in the inter est of commerce to impose a bar on saleability of these flats by a tortuous process of reasoning. The prohibition, if intended by the Legislature must be in express terms. We have failed to find one". It becomes clear from this decision that the member 's right to occupy the flat is a species of property liable to at tachment and sale. It is more than a mere right to occupy. It is transferable and if the transferee answers the quali fications under the bye laws for being admitted to the membership of the Society, the Society would be precluded from unreasonably withholding such admittance. There can, therefore, be no doubt that a member allottee has a right to transfer his interest in the flat to a third party and, therefore, the right to induct a third party on leave and licence basis. It was contended by the learned counsel for the appel lant that Section 15A was inserted in the Rent Act to serve a dual purpose namely (1) to curb exploitation of licensee and (2) to provide security 876 of tenure. If the view taken by the Courts below in the name of maintenance of the 'distinctive mutuality ' principle is endorsed, the very purpose of the amendment, argued counsel, would be defeated. He pointed out that in the State of Maharashtra the cooperative movement had taken rapid strides and the legislature was aware that a large number of licen sees were in occupation of flats situate in Cooperative Societies. It must, therefore, be assumed that the legisla ture desired to extend the protection of the Rent Act to such licensees also by bringing them within the scope of Section 15A of the Act. In support of this contention he placed strong reliance on the decision of this Court in Hindustan Petroleum Corporation Limited (supra). This sub mission was countered by the learned counsel for the society and the member on the plea that the Courts below had rightly concluded that the jurisdiction of the Cooperative Court under Section 91(1) of the Societies Act was not ousted because there was no jural relationship of landlord and tenant between the society and the appellant. According to them if non members could be inducted in tenements or flats belonging to a Cooperative Housing Society of the present type, the entire housing movement would become redundant and the object of forming such cooperative housing societies would be totally defeated. Therefore. submitted the learned counsel, even if it is assumed that the appellant had ac quired the status of a tenant by virtue of Section 15A of the Rent Act, the protection extended by the said provision would extend to the licenser member only and not to the society. In this connection strong reliance was placed on the decision of this Court in O.N. Bhatnagar 's case (supra) which has been referred to and relied on in four subsequent decisions namely, M/s A.V.R. And Co. & Others vs Fairfield Cooperative Housing Society & Others, ; ; Sardar Mohan Singh Ahluwalia vs Maitrai Park Co operative Housing Society and Another, ; ; Hindustan Thompson Associates Ltd. vs Mrs. Maya Inderson Israni & Others, ; and Smt. Krishna Rajpal Bhatia vs Miss Leela H. Advani and Others, ; Five decisions were rendered by a Division Bench of this Court (A.P. Sen & B.C. Ray, JJ.) on a single day i.e. 19th September, 1988 on the question of applicability of Section 91(1) of the Societies Act. In four of those cases, namely, A.V.R. & Co. & Others; Sardar Mohan Singh Ahluwalia; Hindu stan Thompson Associates Ltd. and Smt. Krishna Ralpal Bha tia, this Court on facts took the view that the applicabili ty of Section 91(1) of the Societies Act could not be as sailed. In all those four cases the Court came to the con clusion that the licence was terminated before 1st February, 1973 and, therefore, 877 the occupant could not be said to be in occupation of the flat under a subsisting licence on 1st February, 1973 and hence Section 15A of the Rent Act had no application. In such a fact situation this Court rightly took the view that Section 28 of the Rent Act was not attracted and hence the society was entitled to seek eviction under Section 91(1) of the Societies Act. In Bhatnagar 's case the occupant was inducted in the flat on leave and licence basis after the Society had accepted him as a nominal member. But his li cence was terminated by a notice dated 31st March, 1965 and thereafter his occupation was no more under a subsisting licence to entitle him to the protection of Section 15A of the Act. In the case of A.V.R. & Co. also the licensee 's claim for deemed tenancy was rejected on the ground that the licence had expired long before 1st February, 1973 and had not been renewed since then. The Court, therefore, came to the conclusion that the licence was not in occupation of the flat under a subsisting licence on 1st February, 1973 and, therefore, the benefit of Section lSA could not be extended to him. In the case of Sardar Mohan Singh Ahluwalia also the Court found that as a matter of fact there was no subsisting licence on 1st February, 1973 to attract the application of Section 15A of the Rent Act. In Hindustan Thompson Associ ates Ltd. the facts disclosed that the licence was terminat ed by the member on 1st October, 1972 and the occupant was called upon tO vacate the premises. It was, therefore, held that since the subsequent occupation of the flat by the occupant was not under a subsisting licence his occupation was in the nature of a trespasser and hence Section 15A had no application. The Court, therefore, concluded that evic tion proceedings could be commenced against him under Sec tion 91(1) of the Societies Act. In the last mentioned case of Srnt. Krishna Rajpal Bhatia the court found that the agreement in question created the relationship of a licensor and a licensee and the licence had in fact been terminated by a notice dated 21st May, 1969 and, therefore, the occu pant was a mere trespasser when the action was commenced under Section 91(1) of the Societies Act and was not enti tled to the benefit of Section 15A of the Rent Act. It can, therefore, be seen that the aforesaid 5 decisions on which considerable reliance was placed by the learned counsel for the Society and its member can be distinguished on facts inasmuch as in all those cases the finding of fact recorded throughout was that the licensee was not in occupation of the premises in question under a subsisting licence on 1st February, 1973 to invoke the protection of Section 15A of the Rent Act. However, in the case of Hindustan Petroleum Corporation Limited (supra) the Esso Easter Inc., a company, had taken flat No. 35 878 in Block No. 8 in Sham Niwas on leave and licence basis for a period of one year in terms of a written agreement dated November 26, 1968 from Smt. Nanki M. Malkani. On December 4, 1968 the Society passed a resolution admitting one T.J. Mansukani, an employee of the company, as a nominal member of the society since he was to occupy the flat. The licence agreement was extended from time to time under the renewal clause incorporated in the agreement. After the company was taken over under the Esso (Acquisition of Undertakings in India) Act, 1974 Smt. Nanki M. Malkani sent a communication affirming the terms and conditions of the licence and again confirmed the same on 24th March, 1976. It will be seen from these facts that the licence was subsisting on 1st February, 1973. On 11th September, 1980 the Society passed a resolu tion calling upon the appellant corporation to vacate the said premises and directed its member Smt. Nanki M. Malkani to occupy the same herself. Upon the appellant corporation failing to vacate the premises the Society commenced pro ceedings under Section 91(1) of the Societies Act on 15th September, 1980 for eviction of the appellant corporation and its employee from the flat. The Cooperative Bank Bombay, after considering the evidence adduced by the parties, dismissed the claim of the Society holding that the appel lant corporation was entitled to the benefit of Section 15A of the Rent Act and the said protection could not be taken away by the Society seeking eviction under Section 91(1) of the Societies Act. The Society preferred an appeal which came to be allowed on 17th March, 1984 whereupon the appel lant corporation approached the High Court under Article 226 of the Constitution, but in vain. The appellant corporation obtained special leave to appeal to this Court. This court raised three questions for decision, two of which are relevant for our purpose. The first question was whether the appellant corporation as successor in interest of Esso Eastern Inc., the licensee, was entitled to the protection of Section 15A of the Rent Act having regard to the fact that Esso Eastern Inc. was in occupation of the flat in dispute under a subsisting licence on 1st February, 1973 and whether the society 's action for ejectment of the occupant of the flat could be said to be a dispute touching the business of the society within the meaning of Section 91(1) of the Societies Act. After referring to the relevant statutory provisions of both the Societies Act and the Rent Act, this Court observed that the finding of the appellate court that the appellant corporation was not entitled to the protection of Section 15A the Rent Act could not be sustained. This Court concluded in paragraph 14 at page 758 as under: 879 "In the premises, petitioner 1 Hindustan Petroleum Corpora tion Ltd., is clearly protected under Section 15A of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. In that view of the matter, we do not think it neces sary to deal with the contention as regard the applicability of Section 91 of the Maharashtra Co operative Societies Act, 1960. All aspects arising out of the submissions as to the jurisdiction of the Registrar under Section 91(1) of the Act have already been considered by this Court in O.N. Bhatnagar case and we reiterate the principles laid down therein". This Court did not consider it necessary to deal with the third contention whether a claim for ejectment of an occu pant of a flat in a cooperative housing society who has been put in possession thereof by the member under a leave and licence agreement, is a 'dispute touching the business of the society ' within the meaning of Section 91(1) of the Societies Act, because in its view it was already covered by Bhatnagar 's case. To put it differently the Division Bench accepted the ratio of Bhatnagar 's case as laying down the correct law and did not see the need to restate the same. While in Bhatnagar 's case this Court on facts came to the conclusion that the requirements of Section 15A were not satisfied and, therefore, action under Section 91(1) of the Societies Act was maintainable, it repelled the apprehension that such a view would throw out all licensees of residen tial flats in multi storeyed buildings belonging to Coopera tive Housing Societies in the following words: "The apprehension, if we may say so, appear to be wholly unfounded. The legislature was fully aware of the acute paucity of housing accommodation in the metropolitan cities of Greater Bombay and other urban areas in the State, and also the fact that lessors of ownership flats were adopting a device of inducting tenants under the garb of an agreement of leave and licence which left the licensee with no protec tion. The legislature, therefore, stepped in and by Maha rashtra Act 17 of 1973 the following provisions were insert ed in the Rent Act". After referring Section 15A(1) and Section 5(4A) of the Rent Act this Court proceeded to observe as under: 880 "As a result of the introduction of Section 15A and Section 5(4A) of the Rent Act by Maharashtra Act 17 of 1973, the licensee of any premises or any part thereof in a building vesting in or leased to a cooperative housing society regis tered or deemed to be registered under the Act, who was in occupation of such premises under a subsisting licence as on 1.2. 1973, is by a legal fiction, deemed to be a tenant and thus has the protection of Rent Act. In such a case the dispute between a licensor and licensee relating to posses sion of the premises of a fiat would attract Section 28 read with Section 15A and 5(4A) of the Rent Act and would fail outside the purview of the Registrar 's jurisdiction to adjudicate upon such dispute under Section 91(1) of the Act. Once this aspect is kept in view, there need be no apprehen sion as expressed by learned counsel for the appellant . . . ,,. Indubitably the flat in question fails within the defi nition of 'premises ' in Section 5(8) of the Rent Act. The appellant, a licensee under Section 5(4A), is a deemed tenant under Section 15A and, therefore, falls within the definition of 'tenant ' under Clause (bb) of Section 5(11) of the Rent Act. Such a tenant is entitled to the protection of the Rent Act and cannot be evicted from the premises in his occupation except as provided by the said Act. To hold otherwise would be to render the status conferred on licen sees in actual occupation on 1st February, 1973, under a subsisting licence, nugatory. The appellant was put in possession of the flat in question by the tenant co partner member of the Society and was accepted as such by the suc cessormembers also. As pointed out earlier a member of a tenant copartnership type of Society is under an obligation to pay a fixed rental every month to the Society. This rental is, no doubt. determined on the basis of the member 's financial obligations incurred on account of the cost of construction, price of land or lease rent, as the case may be, interest on borrowings, etc. The primary object of such a society is to provide residential accommodation to its members on easy payment basis. That is why in Bhatnagar 's case this Court stated that 'it is as much the concern of the society formed with the object of providing residential accommodation to its members, which normally is its busi ness, to ensure that the flats are in occupation of its members, in accordance with bye laws framed by it, rather than of a person in an unauthorised occupation, as it is the concern of the member, who lets it out to another under an agreement of leave and licence and wants to secure posses sion of the premises for his own use after the termination 881 of the licence '. Therefore, this Court held that ejectment of an occupant, whose licence is terminated and who does not have the protection of law, such as the Rent Act, can be secured under Section 91(1) of the Societies Act. But what happens when competing provisions vesting jurisdiction under different laws open with a non obstante clause and invest jurisdiction in different Courts? The Societies Act under Section 91(1) confers jurisdiction on the Cooperative Court while Section 28 of the Rent Act confers jurisdiction on the Court of Small Causes, Bombay. This Court observed in Deccan Merchants Cooperative Bank, Limited vs Dali Chand Jugraj Jain, [1969] 1 SCR 887 that 'the two Acts can be harmonised best by holding that in matters covered by the Rent Act, its provisions, rather than the provisions of the Act, should apply '. This view was approved in Bhatnagar 's case also. In Co operative Central Bank, Ltd. vs Additional Industrial Tribunal, Andhra Pra desh, also this Court was required to harmonise the competing provisions in Section 61 of the A.P. Co operative Societies Act, which is substantially the same as Section 91(1) of the Societies Act, and Section 10(1)(d) of the Industrial Disputes Act. This Court applying the test laid down on Deccan Merchants Co operative Bank 's case held that a dispute relating to the service condition of an employee of the society would properly be governed by the Industrial Disputes Act. It was, however, submitted by the learned counsel for the society that the earlier enactment i.e. the Rent Act must yield to the later Act, i.e. the Societies Act, if the competing provisions of the two cannot be reconciled lex posterior derogate priori. But the Rent Act is special law extending protection to tenants, just as the Industrial Disputes Act which makes provision for the benefit of the workmen. Ordinarily, therefore, a general provision, a dispute touching the business of the society, would have to give way to the special provision in the Rent Act on the maxim generalia specialibus non derogant. That is why this Court harmonised the said provisions by holding that in matter covered by the Rent Act, its provisions, rather than the provisions of the Societies Act, should apply. In the present case the appellant seeks protection of the Rent Act since he is a deemed tenant under Section 15A read with Section 5(4A) and 5(11)(bb) of the Rent Act. The status of a tenant is conferred on him by law as the legislature desired to extend the protection of the Rent Act to such licensees. Rights which do not flow from contracts but are conferred by law such as the Rent Act, must, we think, be determined by the machinery, if any, provided by the law conferring the right. 882 The submission that the appellant cannot seek protection against the Society as his entry into the flat was in viola tion of the Bye laws would have been valid had the statute not intervened. To take such a view would tantamount to carving out an exception in Section 15A of the Rent Act that the said provision would not apply to licensees in occupa tion of flats owned by tenant co partnership societies. The language of Section 15A read with Section 5(4A) of the Rent Act does not warrant such a construction. The mere fact that there was a violation of the Bye laws would not make any difference for it is not unknown that even in cases of breach of statute, the legislature has conferred protection on those guilty of breach if the prevailing circumstances so warrant e.g., sub letting was prohibited by Section 15 but when the legislature realised the need to protect the sub tenants it did so by an ordinance promulgated in 1959. Similarly when the legislature felt the need to protect licensees in occupation on 1st February, 1973, it intervened by enacting Section 15A. The legislative policy is quite evident from Section 15A and the protection given to licen sees cannot be taken away on the plea that the initial entry of the licensee in the flat was in breach of the Bye laws. If the occupant licensee who is a protected tenant under Section 15A 'can be evicted by the society on the plea of absence of privity between the society and the protected tenant, it would render the protection of Section 15A redun dant. The situation is more or less similar to the case of an owner landlord whose tenant had contrary to the terms of the contract introduced a licensee who is now protected by Section 15A of the Rent Act. In such a case notwithstanding the absence of privity of contract between the owner landlord and the licensee protected tenant, the latter cannot be evicted except in accordance with the provisions of the Rent Act. We, therefore, do not see any merit in the contention that notwithstanding the protection given by Section 15A, the society can proceed to evict him under Section 91(1) of the Societies Act on the plea that such protection is not available against the society. Such a view would defeat the legislative object of Section 15A of the Rent Act. But the jurisdiction of the Court in which the action is originated must be determined on the averments in the plaint or claim application and not on the defence taken by the adversary party. For example, if the plaintiff goes to court alleging that the defendant is a trespasser, the ordinary court will have jurisdiction and its jurisdiction will not be taken away merely because the defendant pleads tenancy. If, however, the defendant succeeds in proving that he is a tenant in respect of premises, possession whereof is sought, the court trying the case would dismiss the suit on the ground that the plaintiff had failed to prove the 883 jurisdictional fact that the defendant was a trespasser. Here also the claim was lodged by the society in the Cooper ative Court on the ground that the appellant was in wrongful occupation of the flat in question and was a mere trespass er. On facts it is now found that the appellant was and is a protected tenant under Section 15A of the Rent Act. The proceedings initiated under Section 91(1) of the Societies Act cannot, in the circumstances, succeed for the simple reason that the society has failed to prove the fact which constitutes the foundation for jurisdiction. If the society fails to prove that the appellant has no right to the occu pation of the flat since he is a mere trespasser, the suit must obviously fail. That is why even in the case of Hindu stan Petroleum Corporation Limited this Court did not con sider it necessary to deal with the contention based on Section 91(1) of the Societies Act in detail and felt con tent by observing that the point stood covered by the deci sion in Bhatnagar 's case. For the reasons afore stated, we are of the view that the impugned Judgment of the Bombay High Court cannot be allowed to stand. We allow this appeal, set aside the Judg ments of all the Courts below and direct that the claim application filed under Section 91(1) of the Societies Act shall stand dismissed. However, in the facts and circum stances of the case we make no order as to costs. R.N.J. Appeal allowed.

The question for determination is, can a licensee occu pying a flat in a tenant co partnership society be evicted therefrom under subsection (1) of section 91 of the Maha rashtra Cooperative Societies Act, 1960 notwithstanding the protection extended by Section 15A of the Bombay Rents, Hotels & Lodging House Rates Control Act, 1947 as amended by Act XVII of 1973 or whether such proceedings would be gov erned by Section 28 of the Rent Act? The appellant licensee was in actual possession of the fiat on 1st February 1973 under a license without the ex press permission of the Society. He was let in, in 1957 by one D.P. Kejriwal who was looking after the flat originally allotted to one Laxmi Devi Kejriwal in 1949. She gifted her interest as allottee member to her brother who in turn transferred his interest therein to his brother Hari Kumar Sharma, respondent No. 2, in July 1967. Even after this transfer D.P. Kejriwal continued in management of the flat till 1979 when he received a letter from Respondent No. 2 claiming ownership of the flat. The appellant thereafter filed an interpleader suit. On disposal of the said suit Respondent No. 2 deposited a sum of Rs.5,500 with Respondent No. 1, the Society, towards the cost of the Society to initiate proceedings for eviction of the appellant from the flat in question under Section 91(1) of the Societies Act. The appellant contended that the proceeding under section 91(1) was not competent as the document of leave and licence in fact created a lease. Alternatively, as he was in actual possession under a subsisting license right from 1957 to 1st February 1973, he was a statutory tenant under section 15A of Bombay Rent Act and the Cooperative Court had no juris diction under section 91(1) of the Societies Act and the proper court was one under section 28 of the Rent Act which the Respondent No. 2 had in fact approached. 863 The Co operative Court passed an ejectment order against the appellant. The appellant filed an appeal under section 97 of the Societies Act to the State Co operative Appellate Court, Bombay. The appellate court dismissed the appeal and confirmed the order of the Co operative Court. Feeling aggrieved by the concurrent findings of the two courts the appellant preferred a Writ Petition in the High Court of Bombay. The Writ Petition was also dismissed. While allowing the appeal and setting aside the judg ments of all the Courts below and directing that the claim application filed under section 91(1) of the Societies Act shall stand dismissed, this Court, HELD: The appellant was and is a protected tenant under section 15A of the Rent Act. The proceedings initiated under section 91(1) of the Societies Act cannot in the circum stances succeed as the Society has failed to prove the fact of trespass which constituted the foundation for jurisdic tion. if the society fails to prove that the appellant has no right to the occupation of the flat since he is a mere trespasser, the suit must obviously fall. [883B C] The Societies Act, section 91(1), confers jurisdiction on the Cooperative Court while section 28 of the Rent Act confers jurisdiction on the Court of Small Causes, Bombay. [881B] The Status of a tenant is conferred on him by law as the legislature desired to extend the protection of the Rent Act to such licensees. Rights which do not flow from contracts but are conferred by law such as the Rent Act must be deter mined by the machinery, if any, provided by the law confer ring the right. [881G H] Notwithstanding the absence of privity of contract between the owner landlord and the licensee protected tenant the latter cannot be evicted except in accordance with the provisions of the Rent Act. [882B] Chandavarkar Sita Ratna Rao vs Ashalata section Gum am; , at 478; Ramesh Himmatlal Shah vs Harsukh Jadhavji Joshi, ; ; Hindustan Petroleum Corpo ration Ltd. vs Shyam Cooperative Housing Society, ; 1989 SC 295; O.N. Bhatnagar vs Rukibai Narsim das; , ; M/s. AVR & Co. & Ors. vs Fairfield Cooperative Housing Society & Ors., ; ; Sardar Mohan Singh Ahluwalia vs Maitrai Park Cooperative Housing Society & Anr., ; ; Hindustan Thompson Associ ates Ltd. vs Mrs. Maya Inderson Israni & Ors. 864 ; ; Smt. Krishna Rajpal Bhatia vs Miss Leela H. Advani & Ors., ; ; Deccan Merchant Cooperative Bank Ltd. vs Pali Chand Jugraj Jain, [1969] 1 SCR 887 and Co operative Central Bank Ltd. vs Additional Industrial Tribunal, Andhra Pradesh, , referred to.

Appeals Nos. 429 439, 591, 592, 597, 689, 694, 724, 725 and 727 of 1962 and 15, 139, 140, 159, 267 to 269, 331, 334, 337, 340, 342, 343, 347, 352, 389, 746 and 748 of 1963. Appeals from the judg ments and order dated December 19, 1958, March 7, 1959, March 11, 1959, April 22, 1959, April 24, 1959 in Writ Appeals Nos. 135, 122 of 1957 etc. T. V. R. Tatachari, for the appellants (in C.A. Nos. 429 to 434 and 694 of 1962 and C.A. No. 269/63). M. C. Setalvad, P. Kodandaramayya, E. V. Bhagarathi Rao and T. V. R. Tatachari, for the appellants (in C.A. Nos. 438 and 439/62). M. C. Setalvad, and R. Ganapathi Iyer, for the appellants (in C. A. Nos. 436, 437, 724, 725 and 727/62). 458 K. Srinivasamurthy and Naunit Lal, for the appellants (in C. As. Nos. 591, 582, 597, and 689/62 and 140, 267 and 268/63). K. Jayaram and R. Thiagarajan, for the appellants (in C.A. Nos. 139, 159, 330, 334, 337, 340, 342, 343, 347 and 352/63). K. R. Chaudhuri, for the appellants (in C.A. Nos. 15 and 389 of 63). A. Vedavalli and A. V. Rangam, for the appellant (in C. As. 746, and 748 of 63). D. Narsaraju, T. Anantha Babu, M. V. Goswami and B. R. G. K. Achar, for the respondents (in C. As. 435437, 724, 725 and 727/62). D. Narsaraju, T. Anantha Babu, Yogeshwar Prasad and B. R. G. K. Achar, for the respondents (in C. As. Nos. 429434, 438, 439 and 694/62 and 269 of 63). D. Narsaraju, T. Anantha Babu, M. section K. Sastri and B. R. G. K. Achar, for the respondents (in C.A. Nos. 591, 597 and 689/62 and 140, 267 and 268/63) and respondent No. 1 (in C.A. No. 592/62). J.V.K. Sharma and T.Satyanarayana, for respondent No. 2 (in C.A. No. 592/62). D. Narsaraju, T. Anantha Babu, R. Gopalakrishnan and BR. G. K. Achar, for the respondents (in C. As. Nos. 15, 139, 331, 334, 337, 340, 342, 343, 347, 352, 159, 389 and 746 748 /63). March 25, 1964. The judgment of the Court was delivered by GAJENDRAGADKAR, C. J. The principal question of law which arises in this group of 37 civil appeals relates to the construction of section 3 of the Madras Essential Articles Control and Requisitioning (Temporary Powers) Act, 1949 (No. 29 of 1949) (hereinafter called 'the Act '). The dispute which has given rise to these appeals centres round the validity of two notified orders issued by the respondent, State of Andhra Pradesh on the 28th January, 1955, and 30th January, 1955 respectively, and it is the contention of the appellants that the said notified orders are outside the purview of section 3. The appellants in all these appeals are supplied electricity by the respondent for many years past, and several individual agreements have been passed between them and the respondent during the period 1946 to 1952 prescribing the terms and conditions on which the said supply would be made to them. One of these terms stipulated the rate at which the supply of electricity had to be charged 459 against the consumers. The impugned orders have purported to increase this rate, and the appellants contend that the respondent had no authority to change this important term of the contract to their prejudice by taking recourse to section 3(1) and issuing notified orders in that behalf. That, in substance, is the nature of the controversy between the parties before us. It appears that the Government of Madras, and subsequently, its successor, the respondent, had a single power grid system for the whole State comprising Tungabhadra and Machkund Hydro Electric System and the Thermal System of Nellore. The entire energy was integrated into one power system. The Government of Madras entered into agreements with several consumers in the State, including the appellants, for the supply of energy in bulk at the specified rates which were called tariffs, for the years 1951 and 1952. These agreements were to be in operation for ten years. It is common ground that these agreements did not contain any provision authorising the Government to increase the rates during their operation. The charges fixed were calculated at graded regressive rates according to increasing slabs of consumption units, and the overall unit rates including the demand charge were not to exceed 66 annas without prejudice to the monthly minimum payment and the guaranteed consumption. The Government of Andhra then issued the two impugned orders relating to Machkund and Nellore, and Tungabhadra and Chittoore District areas respectively, enhancing the agreed rates. These enhanced rates were specified in Schedules A and B attached to the said orders. According to these orders, these increased tariffs were to take effect from the date on which meter readings were to be taken in the month of February, 1955 and were to operate for the future. The increase in the rates effected by these orders was thus to operate not retrospectively, but prospectively. The impugned orders indicate that the main reason which inspired the said orders was the knowledge that the existing electricity tariffs which were formulated nearly 15 years before, had become completely uneconomic; the charges of labour and the price level of all material had enormously increased; and that in evitably meant continuously growing loss to the Government. The Accountant General made queries in respect of this recurring loss and drew pointed attention of the State Government to the deficits in the working of the Power System. Accordingly, the question of revision of tariffs was considered in the State of Madras, but was not decided because reorganisation of the States was then in contemplation. After the respondent State wits born, its Chief Engineer sumbitted proposals for 460 revisions of tariffs in all the areas covered by the relevant schemes. That is how the impugned notified orders came to be issued by the respondent. The appellants were naturally aggrieved by these orders, because they added to their liability to pay the rates for the supply of electricity by the respondent to them. Accordingly, a large number of consumers moved the Andhra Pradesh High Court under article 226 of the Constitution, and challenged the validity of the two impugned orders. The learned single Judge who heard these writ petitions upheld the appellants ' plea and came to the conclusion that the impugned orders were not justified by the authority conferred on the respondent by section 3 of the Act, and were unauthorised, illegal and inoperative. In the result, the writ petition filed by some of the appellants before us were allowed and an appropriate order was issued against the respondent restraining it from enforcing the revised tariff rates. These decisions were challenged by the respondent by preferring several Letters Patent Appeals. The Division Bench which heard these Letters Patent Appeals took a different view; it held that on its fair and reasonable con struction, section 3 did confer authority on the respondent to issue the impugned orders, and so, the challenge made to the validity of the said orders could not be sustained. That is why the Letters Patent Appeals preferred by the respondent were allowed and the writ petitions filed by the appellants were dismissed. It is against these orders that the appel lants have come to this Court with a certificate issued by the said High Court. After the Division Bench had pronounced its decision on this point, several other writ petitions were filed by other consumers, and naturally the single Judge who heard them followed the decision of the Division Bench and dismissed the said writ petitions. The consumers who were aggrieved by the decision of the learned single Judge were then allow ed to come to this Court directly by special leave, because the points which they wanted to raise were exactly the same as were raised by the other consumers who had come to this Court against the principal decision of the Division Bench. The present group of appeals thus consists of matters which have been decided by a Division Bench of the Andhra Pradesh High Court, as well as those which have been decided by a learned single Judge, and they all raise the same common question about the construction of section 3 of the Act, and the validity of the impugned notified orders. Before addressing ourselves to the question of construing section 3, it is necessary to recapitulate the legislative history of the Act. It will be recalled that during the Second World 461 War, the Government of India passed the Defence of India Act (No. 35 of 1939) on the 29th of September, 1939. By virtue of the powers conferred on the Central Government by section 2 of the said Act, several Rules came to be framed by Central Government known as the Defence of India Rules. Amongst these Rules was Rule 81(2) which clothed the Central Government with power to issue orders which may appear to the Central Government to be necessary or expedient for securing "the defence of British India, or the efficient prosecution of the war, or for maintaining supplies and services essential to the life of the community". These Rules were in operation during the continuance of the war. After the war came to an end, it was realised that the eco nomic situation in the country continued to be serious, and for the proper regulation of economic affairs, it was thought necessary to continue the orders issued under the Defence of India Rule 81(2), because shortage of supply of essential articles was very much in evidence then. The purpose of continuing the orders was to ensure the supply of essential articles to the community at large at reasonable prices and to secure their equitable distribution. In due course, the Defence of India Act came to an end in 1946, but the Central Legislature thought it necessary to pass another Act to take its place and that was the Essential Supplies (Temporary Powers) Act, 1946 (No. 24 of 1946). On the same lines, the Madras Legislature passed an Act in 1946 (No. 14 of 1946). Later, it was replaced by Act No. 29 of 1949 with which we are concerned in the present appeals. After the respondent State was created under the Scheme of Reorganisation of States, it passed Act No. 1 of 1955 and this Act received the assent of the President on the 21st of January, 1955. By this Act, the Legislature of the respondent State virtually adopted the Madras Act. As a result, the impugned orders are, in substance, referable to section 3 of the Madras Act. Before we part with this topic, it may be mentioned that when the Madras Act was passed, its Schedule gave a list of the essential articles as defined by section 2(a) and these articles were 12 in number. When the Andhra Legislature passed Act No. 1 of 1955 and adopted the Schedule of essen tial articles for its purpose, the number of these articles was reduced to two; they are charcoal and electrical energy. The Andhra Act was originally intended to be in operation until the 25th January, 1956, but it was later continued from time to time. It is common ground that when the impugned orders were passed, section 3 of be Act was in operation and the present appeals have been argued on the basis that the said section is constitutionally valid, so that the main point which calls for our decision is the construction of the said section. 462 Mr. Setalvad for the appellants contends that in construing section 3, we ought not to concentrate on the words used in section 3 in isolation, but must look at the said section along with the other provisions of the Act. The rule of harmonious construction, he urges, requires that we must so construe all the provisions of the Act as to avoid any conflict or repugnancy between them. So construed, section 3, according to him, cannot be said to confer power on the respondent to enhance the tariff rate chargeable against the appellants in respect of the supply of energy made by the respondent to them. The whole scheme of the Act indicates clearly that the power to regulate the supply of an essential article which has been conferred on the State Government has to be applied in regard to transaction between citizens and citizens and cannot be applied to an essential article: which the State itself supplies. It would be odd, he suggests, if the State Government is given the power to issue a notified order regulating the rates at which it should supply energy which it itself produces. Therefore, the dealings by the State Government in the matter of supply of energy to the consumers should be deemed to be outside the provisions of section 3, and that would make the impugned orders invalid. The question as to whether the State Government would be bound by the provisions of legislative enactments passed by the State Legislature has sometimes led to difference in judicial opinion; but the decision of this Court in the Director of Rationing and Distribution vs The Corporation of Calcutta and Ors.(1) must be taken to have settled this question. The effect of the majority decision rendered in that case is to recognise the validity of the rule of interpretation of statutes enunciated by the Privy Council in Province of Bombay vs Municipal Corporation of the City of Bombay (2) and that rule is that the State is not bound by a statute unless it is so provided in express terms or by necessary implication. In applying this rule, it is obviously necessary that the Court must attempt to ascertain the intention of the Legislature by considernig all the relevant provisions of the statute together and not concentrating its attention on a particular provision which may be in dispute between the parties. If, after reading all the relevant provisions of the statute, the Court is satisfied that by necessary implication the obligation imposed by the statute should be enforced against the State, that conclusion must be adopted. If there are express terms to that effect, there is, of course, no difficulty. In dealing with this vexed question, sometimes it is necessary also to enquire whether the conclusion that the State is not bound by the specific provision of a given statute, (1) ; (2)73 I.A. 271. 463 would hamper the working of the statute, or would lead to the anomalous position that the statute may lose its effi cacy, and if the answer to either of these two questions indicates that the obligation imposed by the statute should be enforced against the State, the Court would be inclined to infer by necessary implication that the State, in fact, is bound by the statute. Where, however, the question is not so much as to whether the State is bound by the statute, but whether it can claim the benefit of the provision of a statute, the same rule of construction may have to be applied. Where the statute may be for the public good, and by claiming the benefit conferred on it by its provisions the State may allege that it is serving the public good, it would still be necessary to ascertain whether the intention of the legislature was to make the relevant provisions applicable to the State. This position is also established by the decision of the Privy Council in Province of Bomboy(1) and it still continues to be a law in this Country. Incidentally, we may add that where the Crown seeks to take advantage of a statute and urges that though it is not bound by the statute, it is at liberty to take advantage of it, English Law does not easily entertain such a plea, though there are observations made in some judicial pronouncements to the contrary. As Halsbury points out, "it has been said that, unless it is expressly or impliedly prohibited from doing so, the Crown may take advantage of a statute not withstanding that it is not bound thereby. " Having made this statement, Halsbury has added a note of caution by ,,saying that "there is only slender authority for this rule, and since both the rule and such authority as does exist have also been doubted, the rule cannot, perhaps, be regarded as settled law(2)". To the same effect is the comment made by Maxwell when be quotes with approval the view expressed by Sir John Simon that the decisions which recognise the right of the Crown to take advantage of a statutory provision "start with a passage in an unsuccessful argument of a law officer which was not even relevant to the case before the court, but which has been taken out by a text writer and repeated for centuries until it was believed that it must have some foundation(3)". Therefore, in construing section 3 of the Act, we cannot permit the respondent to rely upon the artificial rule that since (1) 73 T.A. 271. (2)", Halsbury 's Laws of England, Vol. 36, p. 432, para 654. (3) Maxwell on Interpretation of Statutes, 11th Ed. p. 136 464 the respondent claims a benefit under section 3, that construc tion should be adopted which supports such a claim. Thus, the position is that when we construe section 3, we must adopt the usual rule of construction; we must not read section 3 in isolation, but must consider it in its proper setting and must have due regard for the other provisions of the Act, and its general scheme and purpose. Reverting then to Mr. Setalvad 's main argument, it may be conceded that when the Act was passed in 1949, mainly and primarily the power conferred by section 3 on the State Government must have been intended to regulate the supply of essential articles made by one citizen to another. The State had not then entered commercial activities on a large scale and when section 3(1) contemplated notified orders issued for the purpose of securing equitable distribution and availability at fair prices of essential articles, the legislature could not have in its mind supply of essential articles made by the State itself. That is one point in favour of Mr. Setalvad 's construction. If we examine the scheme of the Act, it may also have to be conceded that some of the provisions may not be applicable to the State. Take, for instance, the provision of section 4 which relate to the powers of requisitioning and acquisition of properties, and the subsequent two sections that deal with payment of compensation and release from requisition respectively; these provisions may not be applicable to the State. Take, again, the control of agriculture which is contemplated by section 7; it would not be applicable to the State. Section 12 which deals with penalties may also be inapplicable to the State, and so, would section 13 be inapplicable, because it deals with abetment and assistance of contravention of the provisions of the Act. Therefore, the general scheme of the Act and some of its provisions seem to suggest that the State may not have been within the contemplation of the Act. But it is obvious that the rule of harmonious construction on which Mr. Setalvad has solely rested his case, can be invoked successfully by him only if the words used in section 3 are capable of the construction which he suggests. If the said words are capable of two constructions one of which supports the appellants ' case and the other that of the res pondent, it would be legitimate to adopt the first construc tion, because it has the merit of harmonising the provisions of section 3 with the general scheme and purpose of the Act. On the other hand, if the words used in section 3(1) are not reason ably capable of the construction for which the appellants contend, then it would be unreasonable and illegitimate for the Court to limit the scope of those words arbitrarily solely for the purpose of establishing harmony between the 465 assumed object and the scheme of the Act. Therefore, it is necessary to examine the words used in section 3 very carefully. Let us first read section 3(1): "The State Government so far as it appears to them to be necessary or expedient for maintaining, increasing or securing supplies of essential articles or for arranging for their equitable distribution and availability at fair prices may, by notified order, provide for regulating or prohibiting the supply, distribution and transport of essential articles and trade and commerce therein". Sub section (2) provides that without prejudice to the gene rality of the powers conferred by sub section (1), an order made thereunder may provide for objects specified in clauses (a) to (k). The majority of these objects may not be appli cable to the State, while, conceivably, some may be appli cable to it. Section 3(1) is obviously intended to secure supplies of essential articles and to arrange for their equitable distribution and availability at fair prices. If electrical energy is one of the essential articles mentioned in the Schedule, there can be no difficulty in holding that a notified order can be issued under section 3(1) for regulating the supply of the said energy and making it available at a fair price. Indeed, it is not disputed and cannot be disputed that if electrical energy is produced by a private licensee and is then supplied to the consumers, such a supply would fall within the mischief of section 3(1), and the terms on which it can and should be made to the consumers can be regulated by a notified order. There can also be no serious dispute that the terms of a contract entered into between a private supplier of electrical energy and the consumer could be modified by a notified order. Section 3(1) undoubtedly confers power on the State Government to vary and modify contractual terms in respect of the supply or distribution of essential articles. If that be so, on a plain reading of section 3(1) it seems very difficult to accept the argument that the supply of electrical energy which is included in section 3(1) if it is made, by a private producer should go outside the said section as soon as it is produced by the State Government. The emphasis is not on who pro duces and supplies, but on the continuance of the equitable distribution and supply of essential articles at fair prices. If the object which section 3(1) has in mind is such equitable distribuiton and availability at fair prices of essential articles, then that object would still continue to attract the provisions of section 3(1) even though the essential article may be produced by the State and may be supplied by it to the consumers. 466 The words used in section 3(1) are so clear, unambiguous and wide that it would be unreasonable to limit their scope arti ficially on the ground that by giving effect to the wide language of the section, we might reach a result which is not completely harmonious or consistent with the assumed object and purpose of the Act. Indeed, as we have just indicated, if the purpose of the Act is to secure the supply of essential articles at fair prices, it would be irrelevant as to who makes the supply; what is relevant is to regulate the supply at a fair price. Therefore, we are not prepared to accede to Mr. Setalvad 's argument that section 3(1) does not confer on the respondent the power to modify the terms of agreements between it and the appellants. Mr. Setalvad, no doubt, contended that in construing section 3(1), we may have regard to the fact that most of the clauses under section 3(2) would be inapplicable to the respondent State, and so, he virtually suggests that even though the words in section 3(1) may be wide, their width should be controlled by the limited scope of the clauses prescribed by subsection (2). We are not prepared to accept this argument. After the decision of the Privy Council in King Emperor vs Sibnath Banerjee(1), it is well settled that the function of a clause like clause (2) of section 3 merely illustrative (vide also Santosh Kumar Jain vs The State(3)). In other words, the proper approach to adopt in construing clauses (1) and (2) of section 3 is to assume that whatever is included in clause (2) is also included in clause (1). That is not to say that if the words of clause (1) are wide enough to include cases not included in clause (2), they must, for that reason, receive a narrower construction. Therefore, we must ultimately go back to clause (1) to decide whether the supply of electrical energy made by the respondent to the appellants can be regulated by a notified order issued under it or not, and the answer to that question must, in our opinion, be in the affirmative. In this connection, it may be pertinent to refer to section 3(2)(b) which provides for controlling the prices at which any essential article may be bought or sold. It is not easy to see why this clause cannot take in articles which may be purchased or sold by the State. The clause is so worded that the transactions of sale and purchase of all essential articles would be included in it. It is true that where the State wants to sell its essential articles, it may be able to regulate the prices and control them by means of an executive order; but that is not relevant and material in construing the effect (1) 72 I.A. 241 at p. 248. (2) ; 467 of the words; if the words take within their sweep essential articles sold by the State, there is no reason why it should not be competent to the State to issue a notified order con trolling the prices in that behalf. In regard to the purchase of essential articles by the State, the position is still clearer. If the State wants to purchase essential articles, power to regulate the prices of such, articles would seem to be clearly included in section 3(2)(b). In ' deed, during the course of his arguments, Mr. Setalvad did not seriously dispute this position. Therefore, when the State wants to purchase essential articles, it can regulate the price in that behalf by means of a notified order issued under section 3(1) and that shows that in the cases of both sale and purchase of essential articles by the State, section 3(2)(b) read with section 3(1) would clothe the State with the power to issue the relevant notified order. Then, it was faintly argued by Mr. Setalvad that the power to regulate conferred on the respondent by section 3(1) cannot include the power to increase the tariff rate; it would include the power to reduce the rates. This argument is en tirely misconceived. The word "regulate" is wide enough to confer power on the respondent to regulate either by in creasing the rate, or decreasing the rate, the test being what is it that is necessary or expedient to be done to maintain, increase, or secure supply of the essential articles in question and to arrange for its equitable distribution and its availability at fair prices. The concept of fair prices to which section 3(1) expressly refers does not mean that the price once fixed must either remain stationary, or must be reduced in order to attract the power to regulate. The power to regulate can be exercised for ensuring the payment of a fair price, and the fixation of a fair price would inevitably depend upon a consideration of all relevant and economic factors which contribute to the determination of such a fair price. If the fair price indicated on a dispassionate consideration of all relevant factors turns out to be higher than the price fixed and prevailing, then the power to regulate the price must necessarily include the power to increase the price so as to make it fair. That is why we do not think Mr. Setalvad is right in contending that even though the respondent may have the power to regulate the prices at which electrical energy should be supplied by it to the appellants, it had no power to enhance the said price. We must, therefore, hold that the challenge to the validity of the impugned notified orders on the ground that they are outside the purview of section 3(1) cannot be sustained. That takes us to the next question as to whether the im pugned notified orders are invalid, because they contravene 468 the provisions of article 19(1)(f) and (g) of the Constitution. The impugned orders have been notified by virtue of the fore, be treated as law for the purpose of article 19. We may also assume in favour of the appellants that the right to receive the supply of electricity at the rates specified in the agreements is a right which falls within article 19(1)(f) or (g). Even so, can it be said that the impugned notified orders are not reasonable and in the interests of the general public '? That is the question which calls for an answer in dealing with the present contention. It is true that by issuing the impugned notified orders, the respondent has successfully altered the rates agreed between the parties for their respective contracts and that, prima facie, does appear to be unreasonable. But, on the other hand, the evidence shows that the tariff which was fixed several years ago had become completely out of date and he reports made by the Accountant General from time to time clearly indicate that the respondent was supplying electricity to the appellants at the agreed rates even though it was incurring loss from year to year. Therefore, it cannot be said that the impugned notified orders were not justified on the merits. The prices of all commodities and labour charges having very much increased meanwhile, a case had. certainly been made out for increasing the tariff for the supply of electrical energy. But it could not be possible to hold that the restriction imposed on the appellants ' right by the increase made in the rates is reasonable and in the interests of the general public solely because the impugned orders have saved the recurring loss incurred by the respondent under the contracts. If such a broad and general. argument were accepted, it may lead to unreasonable and even anomalous consequences in some cases. This question, however, has to be considered from the point of view of the community at large; and thus considered, the point which appears to support the validity of the impugned orders is that these orders were passed solely for the pur pose of assuring the supply of electrical energy and that would clearly be for the good of the community at large. Unless prices were increased, there was risk that the supply of electrical energy may itself have come to an end. If the respondent thought that the agreements made with the appel lants were resulting in a heavy loss to the public treasury from year to year, it may have had to consider whether the supply should not be cut down or completely stopped. It may well be that the respondent recognised its obligation to the public at large and thought that supplying electrical energy to the consumers who were using it for profit making purposes, at a loss to the public exchequer would not be reasonable and legitimate, and it apprehended that the legislature may well question the propriety or wisdom of such 469 a course; and so, instead of terminating the contracts, de cided to assure the supply of electrical energy at a fair price and that is why the impugned notified orders were issued. We ought to make it clear that there has been no suggestion before us that the prices fixed by the impugned notified orders are, in any sense, unreasonable or excessive, and it is significant that even the revised tariff has to come into operation prospectively and not retrospectively. Therefore,( having regard to all the circumstances in this case, we are disposed to hold that the change made in the tariff by the notified orders must be held to be reasonable and in the interests of the general public. Mr. Setalvad also attempted to challenge the validity of the impugned orders on the ground that they contravene article 14 of the Constitution. In support of this contention, he invited our attention to the allegation made in Writ Petition No. 923 of 1956. In that writ petition, one of the petitioners stated that the rate prescribed under the agree ments had not changed and had remained stationary as far as consumers under the State Government 's licensees were concerned. The affidavit appears to concede that certain ,other licensees had increased their rates, but that increase, it is claimed, was negligible or nominal; and so, the argument was that the rates which are widely divergent between consumer and consumer constitute a contravention of article 14. Mr. Setalvad fairly conceded that these allegations are vague and indefinite and no other material has been pro duced either by the petitioner who has made this affidavit, or by any of the other petitioners who moved the High Court for challenging the validity of the impugned orders. In fact, we do not know what the rates charged by other licensees are and have been, and how they compare with the rates prescribed by the original contracts as well as the rates enhanced by the impugned notified orders. We ought to add that the Division Bench of the High Court appears to be in error when it assumed that the respondent was the sole supplier of electrical energy in the State of Andhra. It is true that the bulk of the energy is supplied by the respon dent; but there are some other private licensees which are licensed to supply electrical energy to the consumers and in that sense, at the relevant time the respondent was not a monopolist in the matter of supply of electricity. This Court has repeatedly pointed out that when a citizen wants to challenge the validity of any statute on the ground that it contravenes article 14, specific, clear and unambiguous alle gations must be made in that behalf and it must be shown that the impugned statute is based on discrimination and that such discrimination is not referable to any classification 470 which is rational and which has nexus with the object in tended to be achieved by the said statute. Judged from that point of view, there is absolulety no material on the record of any of the appeals forming the present group on which a plea under article 14 can even be raised. Therefore, we do not think it is necessary to pursue this point any further. The result is the appeals fail and are dismissed with costs. One set of hearing fees. Appeals dismissed.

Electricity was supplied to the appellants by the respon dent state for many years past, and several individual agreements were passed between them prescribing the terms and conditions for the supply. One of these terms stipulated the rate at which the supply had to be charged. These agreements did not contain any provision authorising the State to increase the rates during their operation. The respondent state issued two notified orders enhancing the agreed rates. The orders indicated that the main reason which inspired the increase was that the existing electricity tariffs which were formulated several years before, had become completely uneconomic and meant continuously growing loss to the State. A large number of consumers challenged the validity of the two orders in the High Court under article 226. The writ petitions were allowed and the respondent was restrained from enforcing the revised rates. These decisions were challenged by the respondent by appeals in the High Court, which took a different view and dismissed the writ petitions. On appeals to this Court, it was contended, inter alia that the respondent had no authority to increase the rate changing this important term of the contract by taking recourse to section 3(1) of the Madras Essential Articles Control and Requisitioning (Temporary) Powers Act, that the power to regulate the supply of essential articles had to be applied in regard to transactions between citizens and citizens and could not be applied to an essential article which the State itself supplied; that the power to regulate conferred on the respondent by section 3(1) could not include the power to increase the tariff rate, that the notified orders were invalid as they contravened the provisions of article 19(1)(f) and (g) and that of article 14 of the Constitution. Held: (i) The challenge to the validity of the notified orders on the ground that they were outside the purview of section 3(1) of the Act could not be sustained. The State is not bound by a statute unless it is so provided in express terms or by necessary implication. In applying this rule, the court must attempt to ascertain the intention of the Legislature by considering all the relevant provisions of the statute together and not concentrating its attention on a particular provision which may be in dispute. Where the question is not so much as to whether the State is bound by the statute, but whether it can claim the benefit of the provision of a statute, the same rule of construction 457 may have to be applied ' Where the statute may be for the public good and by claiming the benefit conferred on it by its provisions the State may allege that it is serving the public good, it would still be necessary to ascertain whether the intention of the legislature Was to make the relevant provisions applicable. Director of Rationing and Distribution vs Corporation of Calcutta, ; and Province of Bombay vs Municipal Corporation of the City of Bombay, [1945 46] L.R. 73 I.A. 271, applied. (ii) In construing section 3 of the Act of the usual rule of con struction must be adopted, section 3 must not be read in isolation, but must be considered in its proper setting and due regard must be had for the other provisions of the Act and its general scheme and purpose. (iii) The purpose of the Act is to secure the supply of essential articles at fair prices, it would be irrelevant as to who makes the supply; what is relevant is to regulate the supply at a fair price. (iv) It is well settled that the function of a clause like cl. (2) of section 3 is merely illustrative. In other words the proper approach to adopt in construing cls. (1), and (2) of section 3 is to assume that whatever is included in cl. (2) is also included in cl. King Emperor vs Sibnath Banerjee, 72 I.A. 241 and Santosh Kumar Jain vs State, ; , applied. (v) The word 'regulate ' is wide enough to confer power on the State to regulate either by increasing the rate or de creasing the rate, the test being what is it that is necessary or expedient to be done to maintain, increase or secure supply of the essential articles in question and to arrange for its equitable distribution and its availability at fair prices. (vi) Having regard to all the circumstances in this case, the change made in the tariff were reasonable and in the in terests of the general public. (vii) There was absolute no material on the record of the appeals on which a plea under article 14 of the Constitution could even be raised.

iminal Appeal No.404 of 1979. From the Judgment and order dated 19.4.79 of the Punjab High Court in Criminal Appeal No.843 of 1976. A.N. Mulla, N.D. Garg and T.L. Garg for the Appellants. Ms. Amita Kohli and R.S. Suri for the Respondents. The Judgment of the Court was delivered by PUNCHHI, J. This appeal by special leave is directed against the judgment and order of the Punjab and Haryana High Court at Chandigarh dated April 19, 1979 passed in Criminal Appeal No. 843 of 1976. The appellants herein are five in number. They along with four others were sent up for trial before the Court of Session, Faridkot on various charges as detailed in the judgment under appeal. Those four co accused of the appel lants were acquitted by the learned Sessions Judge, and the matter seems to have rested there because apparently the State of Punjab did not rake up the issue against those four accused. On the basis thereof, the principle plea of the appellants through their counsel herein is that when four accused have been acquitted, the prosecution story itself has lost credence, entitling the appellants to acquittal. It is this plea which has engaged our attention. 579 The parties belong to village Talwandi Bhagerian, Distt. Faridkot, Punjab. Thereat was a vacant plot belonging to Karnek Singh, Jagatjit Singh and Wasakha Singh sons of Partap Singh, who were living abroadAdjoining thereto was the outer house of Balwant Singh P.W.15. According to the prosecution, Balwant Smgh P.W.15 had put up a boundary wall around it as also a structure thereon storing wheat chaff therein, besides putting cotton sticks and dung manure in the unbuilt space. Mohinder Singh son of the said Balwant Singh P.W.15 moved the Civil Court through a suit on Decem ber 10, 1975 seeking a decree for permanent injunction restraining his co villager Jiwan Singh, his sons Naib Singh appellaht herein and Mohinder Singh an acquitted co accused, as also the minor sons of the aforesaid two accused from interfering in his possession over the suit land. The Court on December 10, 1975 granted interim injunction restraining the impleaded defendants from interfering with the posses sion of the plaintiff over the disputed plot. Later on the request of the defendants, the Civil Court on 29 1 1976 identified the suit property being in Khasra No.345, 346 and 356 and out of the same vide Order exhibit D 16, vacated the temporary injunction in respect of Khasra No. 345 and 346 confirming the same in respect of Khasra No.356. Besides there had been security proceedings between Mohinder Singh aforesaid and his brother Ginder Singh (one of the victims) on the one hand and Nirmal Singh and Darshan Singh acquitted co accused and some others, on the other. However, both parties were ultimately discharged by the Court. The occurrence took place in that integral on 16 12 1975 when the temporary injunction was in force. The complainant party except for P.Ws. 18 and 19 are members of one family. This relationship is disclosed in the judgment of the learned Sessions Judge as also by the High Court. We would not burden this judgment with details thereof. The fact remains that on the night intervening 15th and 16th Decem ber, 1975, Jugraj Singh P.W.14, Balwant Singh P.W.15, Ginder Singh, since deceased and Assa Singh had slept in a room in their outer house, and where they were keeping their cattle also. At about 8.00 a.m. on December 16, 1975, all the inmates of the outer house, and others having joined them having come from their residential house, at that ' time were busy doing their assigned chores. At that juncture, the five appellants namely, Hoshiar Singh, armed with SBBL gun, Jalaur Singh, armed with a 12 bore DBBL gun, Ex.M.O/5, Sardara Singh, armed with a gandasa, Ex.M.O./2, Ram Singh alias Ram Charan Singh, armed with SBBL gun, exhibit M.O./6 and Naib Singh son of Jiwan Singh, armed with a DBBL gun, exhibit M.O./7 entered the house accompanied by five other men. They were the four acquitted co accused namely, Thamman Singh, unarmed, Darshan Singh, armed with a gandasa, 580 Mohinder Singh, son of Jiwan Singh (brother of Naib Singh, appellant) armed with a spear, Nirmal Singh, armed with a rifle and Major Singh, the fifth man, armed with a DBBL gun, who was lately injured during the occurrence. Thamman Singh acquitted co accused raised an exhortation challenging Ginder Singh that he would not be spared. Tham man Singh, then caught hold of the long hair of Ginder Singh and thereupon Nirmal Singh acquitted co accused fired a shot with his rifle hitting Ginder Singh on his left flank. On Ginder Singh falling down by the side of the manger, Sardara Singh appellant gave two successive gandasa blows on the head of Ginder Singh deceased while he was in the process of failing down. This was the first casualty. It was followed by Naib Singh appellant firing at Balwant Singh P.W.15 hitting him in the abdomen reflective of at tempt to murder. Dhanna Singh alias Shinghara Singh a member of the complainant 's family also happened to reach the scene of the occurrence having come from the residential house and while in the door way was fired at by Jalaur Singh appellant with his gun followed by a gun shot by Ram Singh alias Ram Charan Singh appellant hitting Dhanna Singh. This was the second casualty. Sukhminder Singh, P.W.16 also reached there and was fired at by Hoshiar Singh appellant hitting him on the left arm and blank, where upon he fell down. This was the second case reflecting attempt to murder. The female folk Bhagwan Kaur P.W.17 and Raj Kaur present at the place of occurrence while raising alarm laid themselves over Ginder Singh and Sukhvinder Singh respectively. Darshan Singh acquitted co accused gave blows from the reverse side of his gandasa to Bhagwan Kaur P.W.17, and Mohinder Singh co accused to Raj Kaur with the blunt side of his spear. Apart from the members of the family involved Sukhdev Singh P.W.18, Pritam Singh P.W,19, neighbours, had occasion to see the occurrence while standing in their respective houses. On the side of the accused party, so claimed the prosecution, a Barchha(spear) blow of Mohinder Singh meant to hit Raj Kaur accidently hit the abdomen of Naib Singh appellant. Like wise, a shot fired by Jalaur Singh appellant accidently caused injury to Major Singh the co culprit, but that injury later proved fatal. The accused persons took away not only their weapons but a licensed rifle of Ginder Singh and revolver of Mohinder Singh son of Balwant Singh P.W.15 from inside the room (baithak) while going away. This is the whole prosecution case with regard to the motive and the actual occurrence. To complete the picture the deceased persons were taken to the Civil Hospital, Moga wherefrom Dr. A.C. Gupta P.W.I sent intimation to Police Station, Moga Sadar. Avtar Singh, ASI. P.W.20 reached the spot and recorded the statement of Jugraj Singh P.W.14 at 11.00 a.m., within three 581 hours of the occurrence, formal F.I.R. of which was recorded at the Police Station at 11.15 a.m. In that statement vivid details of the occurrence are given. The injured persons were examined and given medical aid. The bodies of the deceased persons were subjected to post mortem. The accused were arrested and weapons were recovered, either from them, or at their instance, on statements made under Section 27 of the Evidence Act. The accused at the trial pleaded denial to the occurrence but Naib Singh appellant gave written state ment, exhibit D 6 as his counter version. The trial resulted in the acquittal of four persons but so far as the appellants were concerned, all of them were held guilty and convicted under Sections 148, 449 IPC awarding them various terms of sentences. Substantively, Sardara Singh appellant was con victed under Section 302 IPC for having caused the death of Ginder Singh by giving him two fatal gandasa blows. The remaining appellants were convicted constructively under Sections 302/149 IPC. All of them were given life sentence. Jalaur Singh and Ram Singh appellants were substantively convicted under Section 302/149 IPC for causing the death of Dhanna Singh and the remaining appellants under Sections 302/149 IPC, and all were awarded life sentence. Naib Singh appellant was substantively convicted under Section 307 IPC for murderously attacking Balwant Singh P.W.15, as also Hoshiar Singh appellant under Section 307 IPC for murderous ly attacking Sukhminder Singh P.W.16. The remaining four appellants in each case were convicted constructively under both counts under Sections 307/149 IPC and awarded various terms of imprisonment. All the sentences imposed were or dered to run concurrently. Appropriate orders of disposal with respect to the weapons recovered were passed by the learned Sessions Judge. As indicated above, the main plea of the appellants is that four accused having been acquitted, despite the eye witnesses deposing to their participation, no credence should be given to the prosecution witnesses in order to maintain the convictions. The maxim falsus in uno falsus in omnibus has been pressed into service. It appears that the argument as such was not raised before the High Court. Rather it appears that the High Court 's attention was not invited to the reasoning of the learned Sessions Judge in acquitting the four co accused. It would be apt therefore to scrutinize that reasoning and see whether the prosecution case has lost credibility on such reasoning. Thamman Singh acquitted accused was empty handed. The role attributed to him is that he gave an exhortation chal lenging Ginder Singh deceased to be ready and that he would not be spared. He then caught hold of the long hair of Ginder Singh. Thereafter Ginder Singh was as 582 saulted. At the end of the occurrence, he is blamed of having taken away the licensed rifle of Ginder Singh. The learned Sessions Judge tended to go in generalities in terming that the evidence of exhortation, in the very nature of things, is a weak piece of evidence and there was quite often a tendency to implicate some person besides the actual assailant. For this he took the cue from a reported decision of this Court in Jainul Haque vs State of Bihar, AIR 1974 SC 45 as well as a decision of the Punjab and Haryana High Court to that effect in support. Then without coming to the specifics the learned Sessions Judge abruptly came to the conclusion that when Thamman Singh acquitted co accused had come to the spot empty handed, the exhortation appears to have been introduced in the prosecution case and that the witnesses apparently were out to rope him in. The two roles attributed to him, namely, of catching the long hair of Ginder Singh and to have carried away the rifle of Ginder Singh went in the same sweep to hold that this was part of the over doing. The fact that the rifle was being carried by Thamman Singh at the time of his arrest was considered by the learned Sessions Judge to be abnormal as otherwise in the normal course of events, it was expected to have been kept concealed somewhere. His finding thus in his own words is "the fact remains that I have not been satisfied about the criminality of Thamman Singh." The only comment worth making is that exhortation is necessarily not a padding or over doing and has to be viewed in the correct perspective, in the facts and circumstances of each case. In the instant case, besides the exhortation, there were other factors available enumerated herein, which could lead the learned Sessions Judge to take the view that he has, and that was a possible view which any cautious Judge could have taken. But that per se does not mean that the witnesses which had deposed to the participation of the accused at the time of occurrence have to be dubbed as liars. With regard to Darshan Singh acquitted accused, the role assigned to him is that he gave gandasa blows to Bhagwan Kaur P.W.17 from the reverse side and that he took away the licensed revolver of Mohinder Singh from the room (baithak) of the outer house. The learned Sessions Judge opined that though the eye witnesses account was that Bhagwan Kaur had received injuries from the reverse side of the gandasa from Darshan Singh, still in the First Information Report given by Jugraj Singh P.W.14, the use of the weapon was mentioned but not of the manner in which it was used. The learned Sessions Judge took the view that it was normally expected of Darshan Singh to have given at least one gandasa blow to someone from the sharp side as well. Besides his taking away the revolver from Mohinder Singh after the occurrence did not inspire confidence, like the case of Thamman Singh. Besides if these two weapons namely the rifle and the 583 revolver were available with the complainant party when the occurrence started it was expected of them to have used those, which had not appeared to have been used. In that light the act of removing the revolver was viewed with suspicion, more so, when its recovery was made as a result of the disclosure statement after a span of eight days from the date of arrest of Darshan Singh. The learned Sessions Judge then concluded with these words, "The case against Darshan Singh, accused does not again stand beyond reasona ble doubt". Now such a view of the learned Sessions Judge was a possible view taken on a cautious approach, without telling on the veracity of the prosecution witnesses. So far as Mohinder Singh acquitted accused is concerned, he is said to have used a spear blunt wise on Raj Kaur. Raj Kaur was not found to have any stab or punctured wound. Further the spear was recovered after seven days of the arrest of Mohinder Singh and that recovery was viewed with suspicion due to the time lag. The version in F.I.R. was pressed into service about the omission of the specific manner in which the weapon had been used. The learned Ses sions Judge then held, "I would accordingly give the benefit of doubt to Mohinder Singh accused and acquit him." This finding could be given by the learned Sessions Judge without causing the least dent to the prosecution case. Shifting the grain from the chaff does not mean loss of grain and gain of chaff. Such a view of the learned Judge cannot caste a reflection on the case as a whole. Lastly Nirmal Singh acquitted accused was described in the F.I.R. to be armed with a "pakki banduq" which descrip tion the learned Sessions Judge translates as "rifle". Since Nirmal Singh is accused to have begun the occurrence by firing at Ginder Singh and Ginder Singh had pellets seen in his dead body, such description of the weapon sowed the seeds of suspicion in the mind of the learned Sessions Judge. It was at best either a case of a mistaken perception or flash impression that Nirmal Singh, undisputably being a licensee of a rifle, had that rifle. Finding the description of the weapon being in discord with medical evidence, the learned Sessions Judge found the prosecution case not proved against Nirmal Singh acquitted accused. Here even though the learned Judge did not extend the benefit of doubt to Nirmal Singh in so many words, his approach is an exercise in that direction. The acquittal of Nirmal Singh too would cause no affectation to the prosecution case as a whole. For the views afore expressed and the totality of the circumstances, we do not think that in the instant case the maxim falsus in uno falsus in omnibus is attracted. The large number of participants in the occurrence would, at some place or the other, leave a place for entertaining some 584 doubt. But here the prosecution case as a whole remains strong supported as it is by the independent evidence of P.Ws 18 and 19, the neighbours, and the occurrence having taken place in the house of the complainant party. It was next contended that the prosecution has cocealed its own guilty part and has not explained the way the in juries were caused to Major Singh Deceased and to Naib Singh appellant. The argument ' is barely to be noticed and reject ed. Significantly Jugraj Singh in the First information Report specifically mentioned that the injuries to Major Singh deceased and Naib Singh appellant were as a result of the doings of accused persons themselves and in the circum stances narrated above all the eye witnesses have cogently and consistently deposed to that effect. The findings of both the courts below are that the occurrence took place in the courtyard of the outer house of the complainant party. Blood stained earth was collected from four places therein during investigation. Time of the occurrence being 8.00 a.m. and the inmates of the house being busy with their daily chores leaves one to pose the question as to why should the complainant party anticipate an assault and be ready with fire arms to put them to use. It does not stand to reason that the complainant party having licensed weapons, if anticipating an assault, to hhave not kept the same ready for use. The fact that these licensed weapons of the com plainant party are not shown to have been used by itself goes a long way to establish that the injuries received by Major Singh deceased and Naib Singh appellant were acciden tal and suffered in the manner as suggested by the prosecu tion. On this score also we remain unconvinced of the argu ment. Having examined the prosecution case as finally estab lished at the level of the High Court and having seen the reasoning of the Court of Session in acquitting the four accused, and also for the reasons set out above, we go to hold the appeal to be devoid of merit and accordingly dis miss the same. The appellants are on bail. They are required to surrender to their bail bonds forthwith . R.P. Appeal dis missed.

A litigation regarding possession of a certain plot of land was pending in the civil court between the complainants and the accused persons. On 16.12.1975 at about 8 a.m. the accused, armed with fire arms and sharp edged weapons, reached the outer house of the complainants and attacked them. According to the prosecution case, accused No. 4 who was unarmed, raised an exhortation challenging deceased 1l, and caught hold of his long hair while accused 1 fired a rifle shot at him and accused No.7 gave two successive gandasa blows on his head. Accused No.9 fired a shot at PW 15. Accused nos.6 and 8 fired one shot each at deceased 2 who also succumbed to his injuries. PW 16 was fired at by accused No. 2 hitting him at the left arm and flank. Accused No. 3 and 5 gave blows from the reverse side of gandasa and spear to PW. 17 and another woman respectively. On the side of the accused, a spear blow of accused No. 5 accidently his accused No. 9 and a shot fired by accused No. 6 accidently hit another man on the side of the accused who later on died. Besides the members of the complainant 's family, the neighbours, PWs, 18 & 19 also witnessed the occurrence. The accused were alleged to have run away taking a rifle and revolver belonging to the complainants. The police investi gation culminated in the trial of the 9 accused. 576 The Trial Court acquitted four accused (nos.1 and 3 to 5 ) but convicted the appellants (accused nos. 2 and 6 to 9) of offences punishable under sections 148, 149, 302, 302/149, 307 and 307/149 and sentenced them to various terms of imprisonment. The appeal filed by the appellant having been dis missed by the High Court, an appeal by special leave to this Court was filed. It was contended on behalf of the appellants that the four accused having been acquitted despite the eye witnesses deposing to their participation in the alleged incident, no credence should be given to the prosecution witnesses in order to maintain the convic tion; and that the prosecution failed to explain the way the injuries were caused to the persons on the accused side. Dismissing the appeal, this Court, HELD :1. The large number of participants in the occurrence would, at some place or the other leave a place for entertaining some doubt. But in the instant case the prosecution case as a whole remained strong supparted as it was by the independent evidence of P.Ws.18 and 19, the neighhours. The occurrence took place in the Courtyard of the outer house of the complainant party. Blood stained earth was collected from four places therein during investi gation. In the totality of circumstances it cannot be said that the maximfalsus in uno falsus in omnibus was attracted. [583 H; 584A,C] 2. Exhortation is necessarily not a padding or over doing and has to be viewed in the correct perspective, in the facts and circumstances of each case. [582E] In the instant case, the roles assigned to accused No. 4 who was acquitted, that he gave [an] exhortation, caught hold of the long hair of deceased 1 and carried away his rifle after the incident, were, according to the Sessions Judge, part of the overdoing. The fact that the rifle was being carried by the accused at the time of his arrest was considered by him to be abnormal as otherwise in the normal course of events it was expected to have been kept con cealed. The Sessions Judge held that he was not satisfied about the criminality of accused No. 4. [582 C D] 577 Besides the exhortation, there were other factors avail able which could lead the Sessions Judge to take the view that he had, and that was a possible view which any cautious Judge could have taken. But that per se does not mean that the witnesses who had deposed to the participation of the accused at the time of occurrence have to be dubbed as liars. [582 E F] Jainul Haque vs State of Bihar, AIR 1974 SC 45, referred to. 3.1 With respect to acquitted accused No. 3, the SeS sions judge held that though PW 17 had received injuries from the reverse side of the gandasa from the accused still in the FIR the use of weapon was mentioned but not the manner in which it was used; and that it was normally ex pected of the accused to have given at least one gandasa blow to someone from the sharp side. Besides his taking away the revolver from the victim after the occurrence did not inspire confidence. In the circumstances, the act of remov ing the revolver was viewed with suspicion, more so, when its recovery was made as a result of the disclosure state ment after a span of eight days of the arrest of the ac cused. The view of the Sessions Judge that the case against acquitted accused No. 3 did not stand beyond reasonable doubt was a possible view taken on a cautious approach, without telling on the veracity of the prosecution witness es. [582 G H; 583 A B] 3.2 Acquitted accused No. 5 was said to have used a spear bluntwise but the concerned victim was not found to have any stab or punctured wound. The recovery of the spear taking place after seven days of arrest of the accused was viewed with suspicion due to the time lag. There was omis sion in the FIR of the specific manner in which the weapon had been used. The finding of benefit of doubt to accused No.5 could be given by the Sessions Judge without causing least dent to the prosecution case. Shifting the grain from the chaff does not mean loss of grain and gain of chaff. Such a view of the learned Judge cannot cast a reflection on the case as a whole. [583 C E] 3.3 As regards acquitted accused No.1, finding the description of the weapon being in discord with the medical evidence the Sessions Judge held the prosecution case not to have been proved against the accused. Even though the Ses sions Judge did not extend the benefit of doubt to the accused in so many words, his approach was an exercise in that direction. The acquittal of accused No.1 too would cause no affectation to the prosecution case as a whole. [589 F G] 578 4.1 The first information report specifically mentioned that the injuries to the persons on the side of the accused were as a result of the doings of accused persons them selves; and all the eye witnesses cogently and consistently deposed to that effect. [584 B C] 4.2 The time of the occurrence being 8.00 a.m. and the inmates of the 'house being busy with their daily chores, the complainant party would not anticipate an assault and be ready with fire arms to put them to use. The fact that the licensed weapons of the complainant party were not shown to have been used by itself established that the injuries received by the persons on the side of the accused were accidental and suffered in the man ner as suggested by the prosecution. [584 D E]

ivil Appeal No. 1408 of 1966. Appeal by special leave from the AWard dated May 19, 1965 February 23, 1966 of the Addl. Industrial Tribunal, Delhi in Industrial Dispute No. 109 of 1965. H.R. Gokhale, G.L. Sanghi and K.P. Gupta for the appellant. Urmila Kapur and Bhajan Ramrakhiani, for the respondents. The Judgment of the Court was delivered by Shah, J. By order February 24, 1965 the Chief Commissioner of Delhi referred for adjudication, industrial disputes between the appellant company and its workmen relating to dearness allowance and introduction of a scheme of gratuity for the benefit of the workmen. The Industrial Tribunal, Delhi framed the following "gratuity scheme": (1) On death or retirement on One months wages for each superannuation or on becoming Year of service of part mentally or physically unfit there of in excess of six for further service. subject to a maximum of 15 months 's wages,In case of death of Employee the gratuity shall be payable to his nominee or if there is no nominee to his legal heirs (2)On termination after five 15 days for each year of se years 'service for any cause rvice or part there of in whatsoever except by way of exces of six months subject retrenchment or resignation to a maximum of 15 months resignation. subject wages (3)On resignation after 10 years of service. 15 days wages for each year of service or part thereof in excess of six months to a maximum of 15 months wages Provided that if termination is for any misconduct causing financial loss to the company, the amount of loss shall be deducted from the gratuity payable. The word 'wages ' in this Scheme shall mean the total pay packet of the workman including dearness which he was last drawing. " The Tribunal also directed that "all workmen who were appointed in 1960 or earlier should get dearness allowance at Rs. 3 for every ten point rise in the cost of Consumer Price Index base 1960 over and above their existing wages with effect from 624 1st January, 1965. In case of workmen appointed after 1960, the consumer price index base 1960 on the date of his appointment shall be found out and he shall be given Rs. 3 as dearness for every ten point rise in cost of Consumer Price index base 1960 above it with effect from 1st January, 1965 or such later date on which the limit of 10 point rise in cost of Consumer Price Index base is crossed. " The Tribunal also directed that dearness allowance will not be enhanced till the limit of ten points be "crossed", and that dearness allowance once granted will not be reduced till the Consumer Price Index falls by more than 10 points. The Company has appealed to this Court with special leave. In the view of the Tribunal, the financial position of the company "is very sound" and that it has "financial capacity and, stability to bear the additional burden of dearness allowance and of the gratuity scheme." In reaching that conclusion the Tribunal relied upon a news item published in the newspapers that 2000 Russian Tractors were being immediately imported by the Company even though the agency of the Company was being terminated. In relying upon newspaper reports the Tribunal may have erred. But the conclusion of the Tribunal is rounded upon a review of several other circumstances. It is true that one of the primary lines of business of the company was of selling tractors as agents of Russian manufacturers. That agency was in danger of being terminated because the State Trading Corporation had arranged to take over the agency. But the balance sheets of the company show that the agency was only one of the many lines of business and the closure of the agency of the tractor manufacturers was not likely to affect the financial structure of the Company seriously. The Tribunal has on appreciation of evidence come to the conclusion that the financial position of the company was sound and assuming that the Tribunal is governed by the strict rules prescribed by the Evidence Act, sitting in appeal with special leave we will not be justified in interfering with the finding of the Tribunal even if it be open to the criticism that a part of the evidence relied upon is not in law relevant. The company had on its roll 244 workmen out of whom 118 entered employment after 1960. The company has been paying to its workmen wages consisting of two components basic wages and 50 per cent of the basic wages as dearness allowance. Payment of wages is made in this form to all workmen whether their employment commenced before the year 1960 or thereafter. It is true that before 1960 the company used to make a consolidated payment without specifying any amount of basic salary or dearness allowance. Since 1960 in every appointment letter it was expressly recited that the employee v,iII get a consolidated salary consisting of 2/3rd of the consolidated salary as basic wages and 625 the balance as dearness allowance. The company has produced before the Tribunal 118 such letters of appointment in respect of all employees employed after the year 1960. In respect of the employees appointed prior to the year 1960 in the salary register basic salary and dearness allowance was separately entered though at the time of appointment of employees there was no allocation as basic wages and dearness allowance. There is no dispute that since the year 1960 there has been a rise in the cost of living. The Consumer Price Index for Industrial Workers which was 100 in 1960, had risen to more than 130 in 1965. The management of the company granted dearness allowance to employees in other concerns under its management even though those other concerns were not financially very sound. No serious argument has been advanced before us that the rise in dearness allowance is not Justified. The only ground of complaint is that by relating the dearness allowance to the total wage packet the workmen are given a: rise both in the dearness allowance and in the basic wage The Tribunal has awarded dearness allowance at the flat rate of Rs. 3 for every 10 point rise in the cost of Consumer Price Index. The rise is not related to the quantum of basic wage or consolidated wage. It is a flat uniform rate applicable to every workman. The Tribunal was of the view that the allocation between the basic wage and the dearness allowance was "not fair", but for the purpose of the present reference, the question is academic because dearness allowance is not related to the quantum of salary that the workmen receive. The argument that the rise will operate to give to the workmen besides the additional dearness allowance, a percentage increase in dearness allowance already paid as part of the consolidated wage cannot be accepted. We do not therefore see any reason to interfere with the order passed by "the Tribunal with regard to the dearness allowance at the rate of Rs. 3 for every 10 point rise in the Consumer Price Index. " Gratuity payable to a workman on termination of employment is to be computed on the total wage packet of the workman including dearness allowance which he has last drawn. This order makes a departure from the normal rule which is adopted in industrial awards. In M/s. British Paints (India) Ltd. vs Its Workmen(1) this Court while introducing a gratuity scheme for the first time in the concern directed that the amount of gratuity shall be related to the basic wage or salary and not to the consolidated wage including dearness allowance. A similar order was made in May and Baker (India) Ltd. vs Their Workmen(2). It is true (1) ; (2) [1961] II L.L 626 that in British India Corporation vs The Workmen(1), an award made by the Tribunal fixing the quantum of gratuity on gross salary i.e., basic wage plus dearness allowance was upheld by this Court. The Court affirmed that the usual pattern in fixing the gratuity is to relate it to the basic wage, but refused to interfere with the order because the. practice in that concern was to fix gratuity on the consolidated wage. similarly in Hindustan Antibiotics Ltd vs their work men(2), the Tribunal directed the employer to pay gratuity at the rate of one half of wages for each month including dearness allowance but excluding house rent and all other allowances for each completed year of service subject to a maximum of wages for ten months. In rejecting the claim of the employers for relating gratuity to the basic wage, this Court observed: "If the industry is a flourishing one, we do no see any reason why the labour shall not have the benefit of both the schemes i.e. the employees provident fund and the gratuity scheme. Gratuity is an additional form of relief for the workmen to fall back upon. If the industry can bear the burden, there is no reason why he shall not be entitled to both the retirement benefits. The Tribunal considered all the relevant circumstances: the stability of the concern, the profits made by it in the past, its future prospects and its capacity and came to the conclusion that, in the concern in question, the labour should be provided with a gratuity scheme in addition to that of a provident fund scheme. There was no justification to disturb this conclusion. " In The Remington Rand of India Ltd. vs The Workmen(8) this Court declined to interfere with the order of the Tribunal awarding gratuity related to the consolidated wage including dearness allowance "in view of the flourishing nature of the concern, the enormous profits it was making, the reserves it had built up as also in view of the fact that it was paying gratuity to. executives on the basis of consolidated wages. " In The Delhi Cloth & General Mills Co., Ltd. vs The Workmen & Ors. (4) this Court had to consider whether gratuity payable to workmen in the textile industry in the Delhi region should be related to. the consolidated wage. After referring to the decisions which were brought to the notice of the Court, it was observed that: "It is not easy to extract any principle from these cases:as precedents they are conflicting . The (1) (1965) Vol. 10 Factory Law Report, 244. (2) [1967] I L.L.J. 114. (3) [1968] 1 S.C.R.164. (4) ; 627 Tribunal has failed to take into account the prevailing pattern in the textile industry all over the country . It is a countrywide industry: and in that industry, except in one case to be presently noticed, gratuity has never been granted on the basis of consolidated wages. " The Court after referring to the schemes framed in respect of the industries in Bombay and Ahmedabad and other industries concluded that "determination of gratuity is not based on any definite rules. In each case it must depend upon the prosperity of the concern, needs of the workmen and the prevailing economic conditions examined in the light of the auxiliary benefits which the workmen may get on determination of employment. " There is no clear evidence on the record, and no precedents have been brought to our notice, to justify a departure from the normal rule that the quantum of gratuity is related not to the consolidated wage packet but to the basic wage. A departure may be made from the normal rule, if there be some strong evidence or precedent in the industry, or conduct of the employer or other exceptional circumstances to justify that course. In the absence of such evidence, we are of the view that gratuity should be related to the basic wage and not to the consolidated wage packet. In the present case it is found that the financial position of the Company is sound but there is no evidence that the company is "making abnormally high profits" 'nor is there any evidence that in its sister concerns or in other engineering concerns in the region there is a practice of awarding gratuity related to consolidated wages. It was urged on behalf of the company that even though the workmen had, in the claim made by them, demanded a scheme of . gratuity benefit at the rate of 15 days wages for each year of service in case of death or retirement on attaining the age of superannuation or on becoming mentally or physically unfit for further service,. the Tribunal had awarded gratuity at the rate of one month 's wages for each year of service subject to a maximum of 15 months ' wages. But the claim was made on the footing that the wages were to include dearness allowance. When the claim is not accepted, we cannot hold the workmen bound by the multiples. We make no modification in clause (1 ) of the scheme. We modify the scheme in so far as it relates to the dearness allowance and direct that for the last sentence of the gratuity scheme the following shall be substituted: "The word 'wages ' in the scheme shall mean basic salary or emoluments excluding dearness 'allowance and 628 other allowances and benefits payable to the workman which he had last drawn. " Subject to the above modification, the appeal fails and is dismissed. There will be no order as to costs in the appeal. Y.P. Scheme modified and appeal dismissed.

The Industrial Tribunal on a reference of the disputes between the appellant company and its workmen framed a gratuity scheme. The gratuity payable to a workman on termination of employment was to be computed on the total wage packet of the workman including dearness allowance which he had last drawn. The tribunal also awarded dearness allowance at a flat uniform rate for every 10 point rise in the cost of Consumer Price Index. The Tribunal found that the financial position of the company was sound and it had the capacity to bear the additional burden. In appeal, this Court HELD: (i) The usual pattern in fixing gratuity is to relate it to the basic wage or salary and not to consolidated wage. A departure may be made from the normal rule, if there by some strong evidence or precedent in the industry, or conduct of the employer or other exceptional circumstances to justify that course. In .the absence of such evidence, gratuity should be related to the basic wage and not to the consolidated wage packet. [627 D] In the present case it was found that the financial position of the company was sound but there was no evidence that the company was "making abnormally high profits", nor was there any evidence that in its sister concern or in other engineering concerns in the region there was a practice of awarding gratuity related to consolidated wages. M/s. British Paints (India) Ltd. vs Its Workmen, ; , May & Baker (India.) Ltd. vs Their Workmen, [1961] II L.L.J. 94, British India Corporation vs The Workmen, (1965) Vol. 10 Factory Law Reports 244, Hindustan Antibiotics Ltd. vs Their Workmen, [1967] I. L.L.J 114, The Remington Rand of India Ltd. vs The Workmen, , and Delhi Cloth & General Mills Co. Ltd. vs The Workmen & Ors. ; , referred to. (ii) The rise in dearness allowance was not related to the quantum of basic wage or consolidated wage; it was a flat uniform rate applicable to every workman. Therefore, the. rise would not operate to give the workman, besides the additional dearness allowance, a percentage increase in dearness allowance already paid as part of the consolidated wage. [625 E F] (iii) The Tribunal, on appreciation of evidence found that the financial position of the company was sound. Assuming that the Tribunal was governed by the strict rules prescribed by the Evidence Act, Sitting in appeal with Special Leave this Court would not be justified in interfering 623 with the finding of the Tribunal even if it be open to the criticism that a part of the evidence relied upon was not in law relevant. [624 F]

ivil Appeal Nos. 483 and 1769 of 1969. Appeal from the Judgment and Order dated 9/10 9 1968 of the Bombay High Court in First Appeal Nos. 844 of 1961 and 245 of 1962. M. C. Bhandare, J. section Sinha and K. J. John for the Appellants. R. H. Dhebar, B. V. Desai and M. N. Shroff for the Respondent. The Judgment of the Court was delivered by TULZAPURKAR J. These appeals by certificate of fitness granted by the High Court of Judicature at Bombay are directed against that Court 's common judgment and decree dated September 9/10, 1968, passed in two cross appeals being First Appeal Nos. 245 of 1962 and 844 of 1961. 1149 A contract for the construction of an aqueduct across the Alandi River at Mile No. 2 of the Nasik Left Bank Canal of the total value of Rs. 1,07,000/ was granted to the appellant plaintiff (originally a partnership but later a proprietary firm of contractors) by the respondent defendant (the State of Maharashtra) after the former 's tender was accepted on June 17, 1955. On July 2, 1955 the Executive Engineer issued the work order to the appellant plaintiff directing him to commence the work by July 5, 1955 intimating in clear terms that the stipulated date for starting the work would be reckoned from July 5, 1955. The formal regular Contract in prescribed From B 2/1 of 1955 56 (exhibit 34) containing the terms and conditions as well as the Schedules, specifications etc. was executed by the parties on July 12, 1955. A security deposit of Rs. 4,936/ was kept by the appellant plaintiff with the respondent defendant. The period for completion of work was fixed as 12 months from the date stipulated for commencement of the work, that is to say, it was expected to be completed on or before July 4, 1956. It appears that on the ground that the appellant plaintiff had not completed the work as expected within the stipulated time the Executive Engineer by his letter dated August 27, 1956 (exhibit 78) rescinded the said contract with effect from August 16, 1956. After serving a notice under section 80 of the Civil Procedure Code the appellant plaintiff filed a suit (being Special Civil Suit No. 23 of 1959) on August 28, 1959 in the Court of the Joint Civil Judge, Senior Division, Nasik making a claim for Rs. 65,000/ in the aggregate against the respondent defendant alleging wrongful and illegal recision of the contract on the part of the respondent defendant. The appellant plaintiff 's case was that the initial fixation of July 5, 1955 as the date for commencement of the work was nominal, that the area where the work was to be done had usually heavy rainfall rendering it impossible to carry out any work from July to November and that, therefore, it was the practice of the Public Works Department to deduct the period of monsoon in case of such type of works and that the appellant plaintiff had been orally informed that this period would be deducted or not taken into account for calculating the period of 12 months under the contract and that on this assurance he had commenced the work towards the end of December 1955. His case further was that in any event time was not of the essence of the contract, that on account of several difficulties, such as excessive rains, lack of proper road and means of approach to the site, rejection of materials on improper grounds by Government Officers, etc., over which he had no control, the completion of the work was delayed and that the extension of the time which was permissible under the contract had been wrongfully refused by the officers of the respondent defendant. Ac 1150 cording to him none of these factors had been taken into account by the Government while refusing the extension and the contract was wrongfully rescinded and, therefore, the respondent defendant was liable in damages. The total claim of Rs. 65,000/ comprised six items (1) Rs. 4,936/ being the amount of security deposit wrongfully forfeited by the respondent defendant, (2) Rs. 10,254/ being the amount due to him for the actual work done by him under Bill No. 1253 dated September 20, 1956 and which had not been paid for, (3) Rs. 7,375/ being the value of the material collected by him on the site for work but which had been rendered useless on account of wrongful recision, the 4th and 5th items sounded in damages, while the last item was interest from date of recision to the date of the suit. The State of Maharashtra resisted the claim contending that time was of the essence of the contract, that the date fixed for commencement was real and not nominal and the 12 months period was fixed after all aspects of the matter had been taken into account, it was further contended that the appellant plaintiff knew the situation of the site and the so called difficulties, that there was no excuse for him for not doing the work during the months of July to November, that the appellant plaintiff failed to carry out the proportionate work during the periods fixed in the contract and that since the appellant plaintiff had rendered himself incompetent to complete the work in proper time it had to rescind the contract and the recision was proper and for adequate reasons; it was further contended that the State was entitled to forfeit the security deposit which it did on the date when the contract was rescinded. The several items claimed by the appellant plaintiff were denied by the State. It was denied that the material of the value of Rs. 7,375/ remained on the site or that it was responsible for its non removal from the site. Regarding items 4 and 5 the State denied its liability to pay the same as it was the appellant plaintiff who had committed the breach of the contract. As regards the amount due under Bill No. 1253 dated September 20, 1956 for the actual work done, it was contended that the State had to deduct the amount of penalty leviable under the contract and for the actual cement supplied to the appellant plaintiff and after making deductions in that behalf only a sum of Rs. 700/ would be due to the appellant plaintiff. On a consideration of the documentary evidence including the terms and conditions of the contract (exhibit 34) and the oral evidence led by the parties, the learned trial Judge held that the date July 5, 1955 fixed as the date for commencement of the work was not nominal but that time was not of the essence of the contract between the 1151 parties, that the respondent defendant (State Government) had wrongfully rescinded the contract, that the appellant plaintiff was entitled to damages but that he had not established the two items claimed as damages and he was entitled to a nominal sum of Rs. 120/ as damages. He further held that since the recision of the contract was wrongful the State was not entitled to forfeit the security deposit nor levy any penalty. He accordingly decreed the appellant plaintiff 's claim in respect of refund of security deposits and as regards the amount of Bill No. 1253 dated September 20, 1956 for actual work done he held that a sum of Rs. 5,845/ only would be due to him after giving credit for Rs. 4,409/ due from the appellant plaintiff to the State. He accordingly decreed the appellant plaintiff 's suit to the extent of Rs. 10,901/ with interest thereon at 6% per annum from the date of recision till date of suit and allowed proportionate costs to him. Two appeals were preferred against the aforesaid decree of the trial court, one by the appellant plaintiff in respect of the claims that had been disallowed (First Appeal No. 245 of 1962) and the other by the State in respect of the claims allowed against it (First Appeal No. 844 of 1961). Curiously enough the High Court did not decide the main issue that arose between the parties, namely, whether time was of the essence of the contract, as it took the view that a decision on that question was really unnecessary for disposal of the appeals. It proceeded to decide the appeals on the assumption that time was not of the essence of the contract by considering the question whether the recision of the contract by the State could be regarded as mala fide or so unreasonable that it must in the place of the judgment of the officers concerned substitute its own judgment and hold that the recision was wrongful. The High Court observed that even the appellant plaintiff had not alleged any mala fide on the part of any of the officers of the State but had pressed into service five or six factors the non consideration whereof by the respondent defendant rendered the recision of the contract arbitrary, unreasonable and, therefore, unjustified. After discussing each one of those five or six factors the High Court held that some of them had not been proved by the appellant plaintiff while others did not head to the inference that the recision of the contract was arbitrary, unreasonable or unjustified. It found that by about July 21, 1956 (vide exhibit Engineer 's letter exhibit 74) the appellant plaintiff had done only 1/3rd of the contract work and that in the circumstances the appellant plaintiff could not have completed the work even within the next three months and, therefore, the respondent 's officers had rightly rescinded the contract and, therefore, it was the appellant plaintiff and not the respondent defendant who had committed a breach of the contract. However, the High Court took the 1152 view that for such breach on the part of the appellant plaintiff, the respondent defendant, on a reading of the cls. 2 and 3 of the Conditions of Contract, was not entitled both to levy compensation and also to forfeit the security deposit. Accordingly, the High Court upheld the forfeiture of the security deposit made by the respondent defendant and while modifying the trial court 's decree it confirmed it only to the extent of Rs. 5,845/ , being the amount due to the appellant plaintiff for the work actually done by him under Bill No. 1253 and which had not been paid. In the result, the appellant plaintiff 's appeal was dismissed and that of the State was partly allowed with appropriate order of proportionate costs. In support of the present appeal counsel for the appellant plaintiff raised two or three contentions. In the first place he contended that the High Court was in error in not deciding the main issue whether the time was of the essence of the contract or not ? He urged that the said issue could not be avoided in the manner done by the High Court, for, if time was not of the essence of the contract then just before the expiry of the 12 months ' period or immediately after its expiry it was up to the respondent defendant to grant some reasonable time to the appellant plaintiff for completing the work undertaken and make the same the essence of the contract and only if the work was not completed by the appellant plaintiff within that time the contract could have been rescinded on the ground that the appellant plaintiff had committed a breach of a contract. According to him such course of action on the part of the respondent defendant was obligatory, when the initial period of 12 months was not of the essence, especially when the request of the appellant plaintiff for extension of time was pending before the concerned officers of the Government since before the expiry of the initial period. He contended that instead of adopting the aforesaid course the respondent defendant had without making time of the essence of the contract rescinded the same with effect from August 16, 1956 by a letter dated August 27, 1956 (exhibit 78), which recision must be regarded as wrongful and illegal. Secondly counsel contended that the High Court further erred in considering the question whether the recision of the contract by the State was either mala fide or wholly unreasonable and, therefore, unjustified. He pointed out it was not the appellant plaintiff 's case that the recision was mala fide and, according to him, the question was not whether the recision of the contract on the part of the respondent defendant was unreasonable, and, therefore, unjustified but whether the respondent defendant was entitled in law to rescind the contract in the manner done when time was not of the essence of the contract. He further urged that the High Court had clearly erred in assuming that the appellant plaintiff 1153 could not have completed the work even within the next three months and, therefore, the contract was rightly rescinded by the respondent defendant. He, however, fairly stated that even if this Court held in his favour that the recision was wrongful and, therefore, the respondent defendant had committed a breach he would merely press for the restoration of the decree passed by the trial Court and not press any other item forming the subject matter of the original claim in the suit. On the other hand, counsel for the respondant defendant sought to support the judgment and decree of the High Court on both the grounds first that time was of the essence of the contract having regard to the express provision contained in cl. (2) of the "Conditions of Contract" and, therefore, on appellant plaintiff 's failure to complete the same within the stipulated time the recision of the contract was legal and justified and secondly, that even if time was not of the essence of the contract, having regard to the circumstances the High Court rightly came to the conclusion that the recision of the contract by the respondent defendant could not be regarded as unreasonable or unjustified and that, therefore, the appellant plaintiff being in breach the security deposit had been rightly forfeited. The first question that arises for our consideration, therefore, is whether time was of the essence of the contract that was executed between the parties on July 12, 1955 (exhibit 34). It cannot be disputed that question whether or not time was of the essence of the contract would essentially be a question of the intention of the parties to be gathered from the terms of the contract. The contract in the instant case is for the construction of an aqueduct across the Alandi River at Mile No. 2 of the Nasik Left Bank Canal and unquestionably 12 months ' period commencing from the date of the commencement of the work had been specified within which the construction had to be completed by the appellant plaintiff. Indisputably, in the work order dated July 2, 1955 the Executive Engineer had directed the appellant plaintiff to commence the work by July 5, 1955 intimating in clear terms that the stipulated date for starting the work would be reckoned from July 5, 1955. Both the trial court as well as the High Court have found that mentioning of July 5, 1955 as the date for starting the work was not nominal but was real date intended to be acted upon by the parties. It is, therefore, clear that 12 months ' period mentioned for the completion of the work was to expire on July 4, 1956. The question is whether this period of 12 months so specified in the contract was of the essence of the contract or not ? On the one hand, counsel for the appellant plaintiff contended that the contract being analogous to a building contract the period of 12 months would not 1154 ordinarily be of the essence of the contract as the subject matter there of was not such as to make completion to time essential, that an agreement to complete it within reasonable time would be implied and that reasonable time for completion would be allowed. On the other hand counsel for the respondent defendant contended that time had been expressly made of the essence of the contract and in that behalf reliance was placed upon cl. (2) of the "Conditions of Contract" where not only time was stated to be of the essence of the contract on the part of the contractor but even for completion of proportionate works specific periods had been specified and, therefore, the appellant plaintiff 's failure to complete the work within the stipulated period entitled the respondent defendant to rescind it. In the latest 4th edn. of Halsbury 's Laws of England in regard to building and engineering contracts the statement of law is to be found in Vol. 4, Para 1179, which runs thus: "1179. Where time is of the essence of the contract. The expression time is of the essence means that a breach of the condition as to the time for performance will entitle the innocent party to consider the breach as a repudiation of the contract. Exceptionally, the completion of the work by a specified date may be a condition precedent to the contractor 's right to claim payment. The parties may expressly provide that time is of the essence of the contract and where there is power to determine the contract on a failure to complete by the specified date, the stipulation as to time will be fundamental. Other provisions of the contract may, on the construction of the contract, exclude an inference that the completion of the works by a particular date is fundamental, time is not of the essence where a sum is payable for each week that the work remains incomplete after the date fixed, nor where the parties contemplate a postponement of completion. Where time has not been made of the essence of the contract or, by reason of waiver, the time fixed has ceased to be applicable, the employer may by notice fix a reasonable time for the completion of the work and dismiss the contractor on a failure to complete by the date so fixed." (Emphasis supplied) It will be clear from the aforesaid statement of law that even where the parties have expressly provided that time is of the essence of the contract such a stipulation will have to be read along with other 1155 provisions of the contract and such other provisions may, on construction of the contract, exclude the inference that the completion of the work by a particular date was intended to be fundamental, for instance, if the contract were to include causes providing for extension of time in certain contingencies or for payment of fine or penalty for every day or week the work undertaken remains unfinished on the expiry of the time provided in the contract such clauses would be construed as rendering ineffective the express provision relating to the time being of the essence of contract. The emphasised portion of the aforesaid statement of law is based on Lamprell vs Billericay Union, Webb vs Hughes and Charles Rickards Ltd. vs Oppenheim. It is in light of the aforesaid position in law that we will have to consider the several clauses of the contract exhibit 34 in the case. The material clauses in this behalf are cls. 2 and 6 of the "Conditions of Contract" which run as follows: "Clause 2: The time allowed for carrying out the work as entered in the tender shall be strictly observed by the contractor and shall be reckoned from the date on which the order to commence work is given to the contractor. The work shall throughout the stipulated period of the contract be proceeded with, with all due diligence (time being deemed to be of the essence of the contract on the part of the contractor) and the contractor shall pay as compensation an amount equal to one per cent or such smaller amount as the Superintending Engineer (whose decision in writing shall be final) may decide, of the amount of the estimated cost of the whole work as shown by the tender for every day that the work remains uncommenced, or unfinished, after the proper dates. And further to ensure good progress during the execution of the work, the contractor shall be bound, in all cases in which the time allowed for any work exceeds one month, to complete. 1/4 of the work in 1/4 of the time 1/2 of the work in 1/2 of the time 3/4 of the work in 3/4 of the time". "Clause 6: If the contractor shall desire an extension of the time for completion of the work on the ground of his having been unavoidably hindered in its execution or 1156 on any other ground, he shall apply in writing to the Executive Engineer before the expiry of period stipulated in the tender or before expiry of 30 days from the date on which he was hindered as aforesaid or on which the cause for asking for extension occurred, whichever is earlier and the Executive Engineer, may if in his opinion there are reasonable grounds for granting an extension, grant such extension as he thinks necessary or proper. The decision of the Executive Engineer in this matter shall be final. " Two aspects emerge very clearly from the aforesaid two clause. In the first place under cl. 6 power was conferred upon the Executive Engineer to grant extension of time for completion of the work on reasonable grounds on an application being made by the contractor (appellant plaintiff) in that behalf; in other words, in certain contingencies parties had contemplated that extension of time would be available to the contractor. Such a provision would clearly be inconsistent with parties intending to treat the stipulated period of 12 months in cl. 2 as fundamental. Similarly, in cl. 2 itself provision was made for levying and recovering penalty/compensation from the appellant plaintiff at specified rates during the period the work shall remain unfinished after the expiry of the fixed date. Such provision also excludes the inference that time (12 months period) was intended to be of the essence of the contract. Further with regard to the provision that is to be found in cl. 2 whereunder a time schedule for proportionate work had been set out (namely, 1/4 of the work in 1/4 of the time, 1/2 of the work in 1/2 of the time and 3/4 of the work in 3/4 of the time), the evidence of the Superintending Engineer Pandit (D.W. 1) is very eloquent. In para 13 of his deposition this is what he has stated: "In the agreement (exhibit 3.1) the rate of work is based on the valuation 1/4th time mentioned means 1/4th in 12 months. The suit contract is for Rs. 1,07,000/ . 1/4th work means the work of about Rs. 27,000/ . It is not possible to do the work of Rs. 27,000/ in 1/4th time as the days were rainy. This was not reasonable. " The witness in para 12 of his deposition has also given the following admission: "It is not specifically mentioned in the agreement (exhibit 34), that the suit work was urgent and that it was to be completed within 12 months. In this agreement (exhibit 34) 1157 there are the clauses of imposing a penalty and extension of time." Having regard to the aforesaid material on record, particularly the clauses in the agreement pertaining to imposition of penalty and extension of time it seems to us clear that time (12 months period) was never intended by the parties to be of the essence of the contract. Further from the correspondence on the record, particularly, the letter (exhibit 78) by which the contract was rescinded it does appear that the stipulation of 12 months ' period was waived, the contractor having been allowed to do some more work after the expiry of the period, albeit at his risk, by making the recision effective from August 16, 1956. Once either of the aforesaid conclusions is reached it would be difficult to accept the High Court 's finding that the recision of the contract on the part of the respondent defendant was proper and justified on the basis that the same was neither shown to be mala fide nor unreasonable. It must be observed that it was never the case of the appellant plaintiff that the recision of the contract on the part of the respondent defendant was mala fide. Counsel for the appellant plaintiff further pointed out and, in our view, rightly that the five or six factors, namely, (1) the contract having been given at the thresh old of monsoon, the period of monsoon (4 months) ought not to have been reckoned, (2) absence of proper road and approach to the work site during the rainy season and a couple of months thereafter, (3) unreasonable rejection by the Government Officers of material brought on the site, which material was later on allowed to be used, (4) difficulty in procuring labour due to malarious climate at the site, (5) delay in issuing quarry permit and (6) extra time taken for doing extra work that was entrusted ought to have been taken into account were put forward by the appellant plaintiff merely for the purpose of showing that the refusal to extend the time by the Superintending Engineer although recommended by the S.D.O. and Executive Engineer was unreasonable and not for showing that the recision of the contract was unreasonable or unjustified. In our view, the question would not be whether the recision of the contract was unreasonable and, therefore, unjustified but whether the recision of the contract in the circumstances of the case was wrongful and illegal. If time was not of the essence of the contract or if the stipulation as to the time fixed for completion had, by reason of waiver, ceased to be applicable then the only course open to the respondent defendant was to fix some time making it the essence and if within the time so fixed the appellant plaintiff had failed to complete the 1158 work the respondent defendant could have rescinded the contract. The High Court has taken the view that the contract was rightly rescinded by the respondent defendant because by about July 21, 1956 (vide letter exhibit 74) the appellant plaintiff had done work of the value of Rs. 35,000/ as against the tender value of Rs. 1,07,000/ , that is to say, only 1/3rd of the total work had been completed and, therefore, even though time was not of the essence of the contract, the appellant plaintiff, in the circumstances, could not have completed the work even within the next three months. In our view, this approach adopted by the respondent defendant and upheld by the High Court is not correct. Long before the expiry of the period of 12 months the appellant plaintiff had by his letter dated June 6, 1956 (exhibit 68) requested for extension of period of completion up to the end of December, 1956; this request was repeated by another letter dated June 23, 1956 (exhibit 69). May be the reasons or grounds on which the request was made may not have appealed to the Superintending Engineer but some reasonable time making it the essence ought to have been granted. In this behalf it may be stated that the S.D.O. by his letter (exhibit 69) had recommended extension upto December 1956 as sought while by his letter dated June 23, 1956 (exhibit 70) addressed to the Superintending Engineer, the Executive Engineer had recommended that extension of time up to October 30, 1956 may be granted to the appellant plaintiff with clear intimation that if he failed to complete the work by then, the maximum penalty allowable under cl. 2, namely, 10% of the cost of the work will be inflicted on him, but the recommendation did not receive approval of the Superintending Engineer. It appears that the appellant plaintiff had an interview with the Superintending Engineer on August 24, 1956 when a written representation (exhibit 99) was handed over and the whole position was sought to be explained to the Superintending Engineer but within three days of the interview by the letter dated August 27, 1956 (exhibit 78) the contract was rescinded and the full security deposit was forfeited to Government. It will thus appear clear that though time was not of the essence of the contract, the respondent defendant did not fix any further period making time the essence directing the appellant plaintiff to complete the work within such period; instead it rescinded the contract straightaway by letter dated August 27, 1956. Such recision on the part of the respondent defendant was clearly illegal and wrongful and thereby the respondent defendant committed a breach of contract, with the result that there could be no forfeiture of the security deposit. In our view, therefore, the trial court was right in coming to the conclusion that the appellant plaintiff was entitled to a refund of their full security deposit of Rs. 4,936/ as also 1159 to Rs. 5845/ being the balance of their Bill No. 1253 dated September 20, 1956 for work actually done by them and not paid for and nominal damages of Rs. 120/ . The appellant plaintiff was also entitled to interest on the aforesaid sums and costs of suit as directed by the trial court. In the result we allow the appeal, set aside the common judgment and decree in F.A. No. 844 of 1961 passed by the High Court and restore that of the trial court. The appellant plaintiff will get costs of this appeal as also costs of F.A. No. 844 of 1961. The High Court 's decree dismissing F.A. No. 245 of 1962 is confirmed. P.B.R. Appeal allowed.

The appellant entered into a contract with the respondent for the execution of a work the essential term of which was that the contract should be completed in 12 months from the commencement of the work. On the ground that the appellant had not completed the work within the stipulated time the respondent rescinded the contract. In his suit for damages for illegal and wrongful recision of the contract the appellant claimed that the date for commencement of the work was merely nominal and that in any case time was not of the essence of the contract. The appellant also alleged that on account of several difficulties such as excessive rains in the area, lack of proper road and means of approach to the site, rejection of materials on improper grounds by the Government officers, completion of the work was delayed, extension of time was wrongfully refused by the officers of the Government, and that none of these factors had been taken into account by the Government while refusing to give extension of time, and in ultimately rescinding the contract. Holding that time was not of the essence of the contract the trial Court decreed the suit, but disallowed certain claims of the appellant. On appeal by both sides the High Court, without deciding the question whether time was of the essence of the contract, held that the recision of the contract was not arbitrary and unreasonable or unjustified. On further appeal to this Court it was contended on behalf of the appellant that (i) the High Court was in error in not deciding the main question whether or not time was essence of the contract; and (ii) it was not the appellant 's case that the recision was mala fide and that, therefore, the High Court erred in considering that question. Allowing the appeal, ^ HELD: The question whether or not time was of the essence of the contract would essentially be a question of the intention of the parties to be gathered from the terms of the contract. Even where the parties have expressly provided that time is of the essence of the contract such stipulation would have to be read alongwith other provisions of the contract and such other provisions may, on construction of the contract, exclude the inference that the completion of the work by a particular date was intended to be fundamental. For instance if the contract were to include clauses providing 1148 for extension of time in certain contingencies or for payment of fine or penalty for every day or week the work undertaken remains unfinished on the expiry of the time provided in the contract such clause would be construed as rendering ineffective the express provision relating to the time being of the essence of the contract. [1155A B] Halsbury 's Laws of England, Vol. 4 p. 1174 referred to. (i) In the instant case, having regard to the terms of the contract particularly the clauses pertaining to the imposition of penalty and extension of time, time was never intended by the parties to be of the essence of the contract. The letter by which the contract was rescinded clearly waived the stipulation of 12 months ' period, the contractor having been allowed to do some more work after the expiry of the period. [1157B] (ii) The approach adopted by the respondent and upheld by the High Court was not correct. Long before the expiry of the period of 12 months the appellant had requested for extention of the period of completion. Even if the grounds made out by the appellant were not agreeable to the Superintending Engineer some reasonable time making it the essence of the contract ought to have been granted. Instead of making time of the essence at some stage or the other, the respondent rescinded the contract which was clearly illegal and wrongful. [1158C] (iii) It was never the case of the appellant that the recision of the contract was mala fide. The various reasons given by the appellant for delay in executing the work were put forward merely for showing that the refusal to extend time by the Superintending Engineer was unreasonable or unjustified. The question was not whether the recision of the contract was unreasonable and, therefore, unjustified but whether the recision was wrongful and illegal. If time was not of the essence or if the stipulation as to the time fixed for completion had, by reason of the waiver, ceased to be applicable then the only course open to the respondent was to fix some time making it the essence and if within the time so fixed the appellant had failed to complete the work, the respondent could have rescinded the contract. [1157D G]

ition (Civil) No. 677 of 1991. (Under Article 32 of the Constitution of India) WITH Civil Appeal Nos.400 403 of 1992. Shanti Bhushan, Somnath Chatterjee, Biswarup Gupta, Bhaskar Gupta, G.L. Sanghi, Arun Jaitley, Dr. Debi Pal, Anil Diwan A.K. Sen, Harish N. Salve, H.S. Prihar, Kuldip section Parihar, Gopal Subramanium, Abhijit Chatterjee, B. Lahiri, J.B. Dadachanji, S.Sukumaran, R.F. Nariman, G.S. Chatterjee, Ms. Sumita Chatterjee, Ms. Mridula Ray, Arun Madan, Ms. Priya Hingorani, Ms. Radha Rangaswamy, C.N. Sreekumar, Rathin Das, Ranjit Ghose, Sushil Kumar Jain, Sudhanshu Atreya and Dr. A.M. Singhvi for the appearing parties. The Judgment of the Court was delivered by KASLIWAL, J. Special Leave granted in all the petitions. This litigation is an upshot of the earlier case Reserve Bank of India vs Peerless General Finance and Investment Company Ltd. and Others, ; decided on January 22,1987. In 1978 th Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (in short `the Banning Act, was enacted `to ban the promotion or conduct of prize chits or money circulation schemes and for matters connected therewith or incidental `hereto. ' The question which arose in the above case was whether the Endowment Scheme piloted by the Peerless General Finance and Investment Company Ltd., (hereinafter in short `the Peerless ') fell within the definition of `Prize Chits ' within ' the meaning of Sec. 2(e) of the above Banning Act. By a letter dated July 23, 1979, the Reserve Bank of India pointed out to the Peerless that the schemes conducted by it were covered by the provisions of the Banning Act which had come into force w.e.f. December 12, 1978. On September 3, 1979 the Peerless filed a writ petition in the Calcutta High Court for a declaration that the Prize Chits Banning Act did not apply to the business carried on by the Peerless. A similar writ petition was filed questioning a notice issued by the Madhya Pradesh Government on the same lines as that issued by the West Bengal 419 Government. A learned Single Judge of the High Court dismissed both the writ petitions but appeals preferred by the Peerless under the Letters Patent were allowed by a Division Bench of the Calcutta High Court. It was declared that the business carried on by the Peerless did not come within the mischief of the Prize Chits Banning Act. Against the judgment of the Division Bench of the Calcutta High Court, the Reserve Bank of India, the Union of India and the State of West Bengal preferred appeals before this court. The question considered in the above case was ``Is the endowment scheme of the Peerless Company a Prize Chit within the meaning of Section 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act? ' ' This court held that section 2(e) does not contemplate a scheme without a prize and, therefore, the Endowment Certificate Scheme of the Peerless Company was outside the Prize Chits Banning Act. Appeals filed by the Reserve Bank of India, the Union of India and the State of West Bengal were accordingly dismissed. Chinnappa Reddy,J. observed: ``It is open to them to take such steps as are open to them in law to regulate schemes such as those run by the Peerless Company to prevent exploitation of ignorant subscribers. Care must also be taken to protect the thousand of employees. We must also record our dissatisfaction with some of the schemes of the Life Insurance Corporation which appear to us to be even less advantageous to the subscribers than the Peerless Scheme. We suggest that there should be a complete ban on forfeiture clauses in all savings schemes, including Life Insurance Policies, since these clauses hit hardest the classes of people who need security and protection most. We have explained this earlier and we do wonder whether the weaker sections of the people are not being made to pay the more affluent sections! Robbing Peter to pay Paul? It was further observed ``We would also like to query what action the Reserve Bank of India and the Union of India are taking or proposing to take against the mushroom growth of finance and investment companies ' ' offering staggeringly high rates of interest to depositors leading us to suspect whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings. One has only to look at the morning 's newspaper to be greeted by advertisements inviting deposits and offering interest at astronomic rates. On January 1, 1987 one of the national newspapers published from Hyderabad, where one of us happened to be spend 420 ing the vacation, carried as many as ten advertisements with `banner headlines ' covering the whole of the last page, a quarter of the first page and conspicuous spaces in other pages offering fabulous rates of interest. At least two of the advertisers offered to double the deposit in 30 months, 2000 for 1000, 10,000 for 5,000, they said. Another advertiser offered interest ranging between 30 per cent to 38 per cent for periods ranging between six months to five years. Almost all the advertisers offered extra interest ranging between 3 per cent to 6 per cent if deposits were made during the Christmas Pongal season. Several of them offered gifts and prizes. If the Reserve Bank of India considers the Peerless Company with eight hundred crores invested in government securities, fixed deposits with National Banks etc. unsafe for depositors, one wonders what they have to say about the mushroom non banking campanies which are accepting deposits, promising most unlikely return and what action is proposed to be taken to protect the investors. It does not require much imagination to realise the adventurous and precarious character of these business. Urgent action appears to be called for to protect the public. While on the one hand these schemes encourage two vices affecting public economy, the desire to make quick and easy money and the habit of excessive and wasteful consumer spending, on the other hand the investors who generally belong to the gullible and less affluent classes have no security whatsover. Action appears imperative. ' ' Khalid, J., another learned Judge aggreeing with the judgment of Chinnappa Reddy, J., further added his short but important concluding paragraph as under : ``I share my brother 's concern about the mushroom growth of financial companies all over the country. Such companies have proliferated. The victims of the schemes, that are attractively put forward in public media, are mostly middle class and lower middle class people. Instances are legion where such needy people have been reduced penniless because of the fraud played by such financial vultures. It is necessary for the authorities to evlove fool proof schemes to see that fraud is not allowed to be played upon persons who are not conversant with the practice of such financial enterprises who pose themselves as benefactors of people. ' ' Taking note of the weighty observations made by this Court, the 421 Reserve Bank of India in exercise of the powers conferred by Section 45 (J) and 45 (K) of the (hereinafter referred to as the Act) and of all the powers enabling it in this behalf and considering it necessary in the public interest issued certain directions by notification No. DFC.55/DG(O) 87 dated the 15th May, 1987 (hereinafter referred to as the `directions of 1987 '). The constitutional validity of these directions of 1987 was challenged by Timex Finance and Investment Company Ltd. (hereinafter referred to as `Timex Company ') by filing a writ petition in the Calcutta High Court before the learned Single Judge. The learned Single Judge granted an interim order in terms of prayers (g) and (h) of the writ petition. The Reserve Bank of India aggrieved against the interim order filed an appeal before the Division Bench. A stay petition was also moved on behalf of the Reserve Bank of India for staying the operation of the order dated 7th October, 1988 passed by the learned Single Judge. After hearing the stay petition for sometime, the Division Bench of the High Court listed the appeal as well as the stay petition for final disposal. The Division Bench of the High Court disposed of the appeal as well as the writ petition by an order dated March 23, 1990 and arrived to the following and conclusions. "(a) Reserve Bank of India is empowered to issue directions to the residuary non banking companies under the provisions of Section 45J and 45K of the for the interest of thousands of depositors. (b) However, to the extent such directions are found to be prohibitory or not workable and as such unreasonable must be held to be beyond the powers of the Reserve Bank of India. (c) The impugned directions providing that they represent irreducible minimum for safeguarding the interest of and for preventing exploitation of small and unwary depositors cannot be implemented without suitable modification. It is not reasonably practicable to comply strictly with the directions as they stand by the writ petitioners and the similarly situated companies. The Supreme Court in Peerless case (Supra). .reserved the liberty to the Reserve Bank of India to take such steps as are open to them in law to regulate the schemes such as those granted by the Peerless to prevent exploitation of subscribers and to protect thousands of employees. The impugned directions without modifications will run counter to the aforesaid directions of the Supreme Court. (d) The business of savings and investments carried on by the company and similarly situated companies having not been declared unlawful or banned, power of the Reserve Bank of India to regu 422 late such business cannot be permitted to be prohibitory resulting in the ultimate closure of the business carried on by the writ petitioner company and other similarly situated companies. If the modifications as suggested by us are not implemented and if ultimately the business is closed down and the company goes into liquidation, the hard earned money of thousands of depositors will be lost and the employees would also lose their job. If even after modifications are made to the impugned directions in terms of this order, any company fails to comply with such directions, the Government may take such steps as are open to them to protect the interests of the thousands of small depositors and numerous employees. (e) The reasons why the impugned directions cannot be complied with and held to be unworkable and unreasonable are mainly because of the definition of liability assigned in the impugned directions. The impugned directions, as they stand now, cannot be implemented by the residuary non banking companies without incurring loss irrespective of their net worth. According to the impugned directions, the liability is the amount of money deposited by the depositions plus the amount of interest whether or not due to them according to the terms of the respective contracts at the given point of time. In other words, the entire collection with the interest, Bonus, etc. whether payable or not would be the liability of the Company. This leaves no fund for working. If the definition of liability is amended as suggested by us, it will be possible for the companies to generate working capital. In our view, liability in clause 6 and in other clauses of the impugned directions should be construed to mean total amount of contractual dues of the depositors including interest, premium, bonus or other advantages by whatever name called, accrued on the amount according to the terms of contract. Section 45J and 45K of the Act do not authorise the Reserve Bank of India to introduce a concept of liability which is contrary to the accepted commercial practice and trading principles. The impugned directions have failed to make distinction between the actual liability in presenti and a liability de futuro. Liberty must be reserved to the companies to adopt normal accountancy practice recognised and accepted in the trading circles so long as such accounting practice provides for payment of the liability to the depositors in accordance with the contractual obligations. However, the Reserve Bank of India may, having regard to the facts and circumstances of each case issue directions regulating the administrative and management expenses and expenditure on com 423 mission and publicity. In the impugned directions no restriction has been imposed on the expenditure by a residuary non banking company on any of these heads. In our view, the impugned directions without modifications, instead of suppressing the mischief, will only lead to adverse unworkable and/or impracticable results inasmuch as if the residuary non banking companies cannot comply with such directions in toto, such companies have to go out of existence. This cannot be the object of the impugned directions. If the liability in terms of the contractual obligations is provided not only in the accounts but also by suitable investment in terms of Clause 6 of the directions, in our view, all the residuary non banking companies, irrespective of their net worth, will be able to carry on the business. (f) Every residuary non banking company shall disclose its Books of Accounts and balance sheet the aggregate amount of liability accrued and payable to the depositors in accordance with the terms of the contract. (g) The directions contained in clause 6 for deposit or investment and the liability shall be read subject to the modification of the designation of the liability as aforesaid. (h) The directions are prospective. The period of deposit and the date of return with respect to all certificates issued prior to 15th May 1987 have been excluded from the purview of the directions as per clause 18 (1). This exemption should include all contractual obligations on those certificates. (i) All funds prior to the issue of the directions should be allowed to be kept in the manner as was being done by the respective residuary non banking company. The direction with regard to the investment shall be applicable from the money collected and/or received on and after 15th May 1987. The companies shall be allowed reasonable time to make good the deficiency in the investment required to be made in terms of the directions after 15th May 1987. (j) We are not unmindful of the fact that exercise of power by legislature and executive is subject to judicial restraint. The only check on judicial exercise of power is the self imposed dicipline of judicial restraint. But although the courts in exercise of judicial power are not competent to direct the enactment of a particular provision of law, if the statutory directions suffer from arbitrariness, the court is competent to issue necessary direction so that the statutory directions may be brought in conformity 424 with law. As we have held that the Reserve Bank of India has transgressed the statutory power to the extent indicated elsewhere in the judgment, we are of the view that the Reserve Bank of India shall modify the directions and make them reasonable and workable to safeguard the interest of depositors and protect the employees. ' ' The Division Bench also considered an application filed by Favourite Small Investment Company and by order dated 20th December, 1990 directed that the Reserve Bank of India should revoke the prohibitory order and permit Favourite Small Investment Company to accept fresh deposits and carry on new business. It may be noted that the Peerless filed a petition before the High Court for becoming a party respondent. The High Court by order dated 31st August, 1990 allowed the said application and further ordered that the cause title and the records proceedings of appeal, memorandum of appeal and the paper book filed be amended accordingly. The Peerless also moved an application for clarification of the judgment and order dated 23rd March, 1990. It prayed that suitable provision should be made for a depositor who wants back the money before maturity. If the depositor intends to get refund of the money invested before the expiry of actual contract period, he should be required to keep the funds for a minimum period in accordance with the contract. Before maturity he can only take loan but not the principle amount with interest. The amounts of returns should also be less than 5 per cent to provide for the collection and other expenses of the non banking companies. The Division Bench of the High Court took the view that the order dated 23rd March, 1990 required clarification as it was not made clear as to whether non residuary banking companies are under an obligation to pay discontinued certificates before the stipulated period in the contract, if so what would be the rate of interest. The Division Bench by order dated December 24, 1990 clarified its earlier order dated 23rd March, 1990 as under : ``(a) If the contract by and between the company and the depositor provides that no payment on discontinued certificate will be made before the expiry of the term stipulated in the contract, in such cases, if the certificate is discontinued any time before such stipulated term and payment is made to the depositors according to the terms and conditions of the contract, in other words, on the expiry of the term stipulated in the contract, such depositor shall be paid interest at the rate of 8% compound per annum, but in such a case the company will be at liberty to deduct an amount not exceeding 5% from the total return in or to provide for collection and other expenses incurred in connection with these 425 discontinued certificates (b) In cases where certificates are discontinued before or after the stipulated term but the depositors obtain refund only upon maturity of the certificates such refund shall be made to depositors with compound interest at the rate 8 % per annum without any deduction whatsoever. (c) Since no payment will be made against the discontinued certificates to the depositors in such cases shall be permitted to take loan, if they so intend, against the payment made till discontinuance of such terms and conditions as the company may stipulate. " The Reserve bank of India aggrieved against all the above orders of the Calcutta High Court has filed appeals against the orders dated 23 rd March, 1990. 31st August, 1990, 20th December, 1990 and 24th December, 1990. The Peerless General Finance and Investment Company Ltd., has also filed a writ petition No. 677 of 1991 directly before this Court under Article 32 of the Constitution of India. In view of the fact that the questions raised in the appeals filed by the Reserve Bank of India against the orders of the High Court and in the civil writ petition filed by the Peerless Company are common, the same were heard together and are disposed of by a single order. Interlocutory applications were also filed on behalf of the employees of the Peerless Company, agents of Peerless Company working in the field, and some of the depositors in the Peerless company. We have heard them also. The main controversy centers round paragraphs (6) and (12) of the directions of 1987 and as such the same are reproduced in full. Paragraph (6) Security for depositors On and from 15th May 1987 (1) Every residuary non banking company shall deposit and keep deposited in fixed deposits with public sector banks or invest and keep invested in unencumbered approved securities (Such securities being valued at their marked value for the time being), or in other investments, which in the opinion of the company are safe, a sum which shall not, at the close of business on 31st December 1987 and thereafter at the end of each half year that is, 30th June and 31st December be less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable: 426 Provided that of the sum so deposited or invested (a) not less than ten percent shall be in fixed deposits with any of the public sector banks. (b) not less than 70 percent shall be in unapproved securities; (c) not more than 20 percent or ten times the net owned funds of the company, whichever amount is less, shall be in other investments, provided that such investments shall be with the approval of the Board of Directors of the Company. Explanation : "Net owned funds" shall mean the aggregate of the paid up capital and free reserves as appearing in the latest audited balance sheet of the company as reduced by the amount of accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance sheet. (2) Every residuary non banking company shall entrust to one of the public sector banks designated in that behalf, deposits and securities referred to in clauses (a) and (b) of the proviso to subparagraph (1) to be held by such designated bank for the benefit of the depositors. Such securities and deposits shall not be withdrawn by the residuary non banking company, or otherwise dealt with, except for repayment to the depositors. (3) Every residuary non banking company shall furnish to the Reserve Bank within thirty days from the close of business on 31st December 1987 and thereafter at the end of each half year that is as on 30th June and 31st December, a certificate from its auditiors, being members of Institute of Chartered Accountants, to the effect that the amounts deposited in fixed deposits and the investments made are not less than the aggregate amounts of liabilities to the depositors as on 30th June and 31st December of that year. Explanation : For the purpose of this paragraph, (a) "Aggregate amounts of liabilities" shall mean total amount of deposits received together with interest, premium, bo 427 nus or other advantage by whatever name called accrued on the amount of deposits according to the terms of contract. (b) "approved securities" means; the securities in which the Trustee is authorised to invest trust money by any law for the time being in force in India and bonds or fixed deposits issued by any corporation established or constitued under any Central or State enactments. (c) "public sector banks" means, the State Bank of India, the Subsidiary Banks and the corresponding new banks referred to in Section 45(1) of the (2 of 1934). (d) "unencumbered approved securities" shall include the approved securities lodged by the company with another institution for advances or any other credit arrangements to the extent to which such securities have not been drawn against or availed of. Paragraph (12) Every residuary non banking company shall disclose as liabilities in its books of accounts and balance sheets the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors. We would first deal with the legal objections raised on behalf of the Peerless and other companies. It has been submitted on behalf of the Peerless and other companies that the directions of 1987 are ultra vires of Section 45J and 45K of the Reseve Bank of India Act, 1934. None of the said sections authorises the Reserve Bank to frame any directions prescribing the manner of investment of deposits received or the method of accountancy to be followed or the manner in which its balance sheet and books of accounts are to be drawn up. It has been contended that Section 45J has no manner of application in the present case. Section 45K (3) of the Act on which reliance has been placed on behalf of the Reserve Bank, merely provides that the Reserve Bank may, if it considers necessary in the public interest so to do, give directions to non banking institutions either generally or to any non banking institutions in particular, in respect of any matters relating to or connected with receipts of deposits, including the rate of interest payable on such deposits and the purpose for which deposits will be received. According so Sec. 45K (4) if any non banking institution fails to comply with any direction given by the bank under sub 428 section (3) the Reserve Bank may prohibit the acceptance of deposits by that non banking institution. It is thus submitted that on a plain reading of Sec. 45K (3) the Reserve Bank is only competent to frame the directions regarding receipt of deposits and such power of direction does not extend to providing the manner in which deposits can be invested or the manner in which the liabilities are to be disclosed in the balance sheet or books of accounts of the company. It is further submitted that the power under subs. (4) is to prohibit acceptance of deposits and as such the permissible field of direction making is limited to receipt of deposits and nothing more. The Reserve Bank of India in framing the directions of 1987 which is a subordinate piece of legislation has clearly over stepped the bounds of the parent statue of Sec. 45K (3) of the Act. It is further argued that the Reserve bank cannot contend that paragraphs 6 and 12 of the directions of 1987 are covered within the powers conferred on the Reserve Bank under Sec. 45L (1) (b) of the Act. It is submitted that the Reserve Bank had at no point of time expressed its intention to invoke its powers under Sec. 45L. Even before the Division Bench of the Calcutta High Court the Reserve Bank did not rely on Sec. 45L as alleged source of its power to issue the impugned directions nor the Reserve Bank referred to Sec. 45L in its pleadings before the High Court. Wherever the Reserve Bank of India wanted to invoke its power under Sec 45L of the Act, it has expressly mentioned that it was exercising its powers under Sec. 45L. In the case of non banking financial companies (Reserve Bank) directions 1977, or the miscellaneous non banking companies (Reserve Bank) Directions, 1977 it has expressly said that it was invoking its powers under sec. 45L of the Act, whereas in the case of the impugned directions, the Reserve Bank has only referred to sections 45J and 45K of the Act. The Reserve Bank of India itself in the affidavit filed before the High Court had stated that the directions of 1987 were framed after careful deliberations at the highest level and now it cannot take the stand that the source of its power in framing the impugned directions was exercised under sec 45L of the Act. It is further contended that in order to invoke the powers under sec 45L of the Act it has to state that the Reserve Bank was satisfied for the purpose of enabling it to regulate the credit system of the country to its advantage and it was necessary to give such institutions directions relating to the conduct of business by financial institution or institutions. In order to exercise its powers under sec. 45L of the Act, it has to apply its mind for the purpose of arriving at the statutorily required satisfaction. In fact, such recital is necessary since such satisfaction is a pre conditions for the Reserve Bank to exercise its powers under section 45L of the Act. On the other hand it has been contended on behalf of the Reserve 429 Bank that the power of the Reserve Bank to regulate deposit acceptance activities of non banking and financial institutions under Chapter IIIB of the Act cannot be disputed. The Reserve Bank has power to issue the impugned directions under Section 45J, 45K and 45L of the Act. The pith and substance of Para 6 of the directions of 1987 is to ensure that deposits received from the public are invested in a manner to secure the repayment of the deposits. A deposit is, by definition, a sum of money received with a corresponding obligation to repay the same. Thus, the repayment of the deposit is an integral part of the transaction of a receipt of deposit. It is contended that the expression "receipt of deposit" must be construed liberally, in the light of the nature of the provisions as well as in the light of the wide language used in the provision. It is also argued that even if the impugned directions of 1987 are not covered under the powers conferred under Sections 45J and 45K of the Act, those are squarely covered by Section 45L of the Act. It is submitted that various provisions under the Act are enabling in nature and confer overlapping powers. Even if there is no recital of Sec. 45L, it would not be of much consequence, if such exercise of power can be related to Sec. 45L of the Act. We have considered the arguments advanced by learned counsel for the parties. Chapter IIIB laying down provisions relating to non banking institutions receiving deposits and financial institutions was inserted in the , by virtue of Act 55 of 1963 w.e.f. 1.2.1964. Section 45J, 45K (3) & (4) and 45L 1 (b) relevant for our purpose are given as under : Sec. 45J "The Bank may, if it considers necessary in the public interest so to do, by general or special order, (a) regulate or prohibit the issue by any non banking institution of any prospectus or advertisement soliciting deposits of money from the public; and (b) specify the conditions subject to which any such prospectus or advertisement, if not prohibited, may be issued. Section 45K (1) . . (2) . . (3) The Bank may, if it considers necessary in the public interest so to do, give direction to non banking institutions either generally or to any 430 non banking institution or group of non banking institutions in particular, in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received. (4) If any non banking institution fails to comply with any direction given by the Bank under sub section (3), the Bank may prohibit the acceptance of deposits by that non banking institution. Section 45L (1) If the bank is satisfied that for the purpose of enabling it to regulate the credit system of the country to its advantage it is necessary so to do; it may (a) . . (b) give to such institutions either generally or to any such institution in particular, directions relating to the conduct of business by them or by it as financial institutions or institution. A combined reading of the above provisions unmistakably goes to show that the Reserve Bank if considers necessary in the public interest so to do can specify the conditions subject to which any prospectus or advertisement soliciting deposits of money from the public may be issued. It can also give directions to non banking institutions in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received. This latter power flows from sub section (3) of Sec. 45K of the Act. The Bank under this provision can give directions in respect of any matters relating to or connected with the receipt of deposits (emphasis added). In our view a very wide power is given to the Reserve Bank of India to issue directions in respect of any matters relating to or connected with the receipt of deposits. It cannot be considered as a power restricted or limited to receipt of deposits as sought to be argued on behalf of the companies that under this power the Reserve Bank would only be competent to stipulate that deposits cannot be received beyond a certain limit or that the receipt of deposits may be linked with the capital of the company. Such interpretation would be violating the language of Sec. 45K (3) which furnishes a wide power to the Reserve Bank to give any directions in respect of any matters relating to or connected with the receipt of deposits. The Reserve Bank under this provision is entitled to give directions with regard to the manner in which the deposits are to be invested and also the manner in which such deposits are to be disclosed in the balance sheet or books of accounts of the company. The word `any ' quali 431 fying matters relating to or connected with the receipt of deposits in the above provision is of great significance and in our view the impugned directions of 1987 are fully covered under Sec. 45K (3) of the Act, which gives power to the Reserve Bank to issue such directions. As a proposition of law we agree with the contention of the learned counsel for the Reserve Bank that when an authority takes action which is within its competence, it cannot be held to be invalid merely because it purports to to be made under a wrong provision, if it can be shown to be within its power under any other provision. Learned counsel in this regard has placed reliance on Indian Aluminium Company etc. vs Kerala State Electricity Board; , In our view as already held above, the Reserve Bank was competent and authorised to issue the impugned directions of 1987, in exercise of powers conferred under Section 45K (3) of the Act. Having cleared the ground of ultra vires we must now turn to the main challenge posed on behalf on the Peerless and other companies and employees. Mr. Harish Salve made the leading arguments on behalf of the Reserve Bank of India. His main thrust of the argument was that the Reserve Bank of India had issued these directions of 1987 in order to carry out observations made by this Court in Peerless case (supra) and in the public interest of safeguarding the money of the depositors in such companies. The Reserve Bank considered it necessary that the interest of millions of small depositors of rural areas should be made safe and may not be devoured by a mushroom of companies with no stake. According to Mr. Salve it was not the intention of the Reserve Bank to put any restrictions in the manner or conduct of business to be done by such companies. But the most important factor weighing in the mind of the Reserve Bank was to safeguard the money of the depositors. It was not the concern of the Reserve Bank as to how and in what manner these companies would regulate their expenses or would be able to conduct such business for earning more profits. According to the Reserve Bank of India these companies cannot be allowed to spend a mighty of deposits for meeting their own expenses. They should find out their own resources for meeting the expenses. According to the Reserve Bank the rate of interest to be paid by these companies to the depositors has been fixed as 10 per cent per annum. They could easily invest such amount in bonds issued by public sector corporation and earn interest at the rate of 14 per cent per annum or more and thereby earn a profit of 4 per cent and regulate their expenses within the limits of such profits. It was submitted that the propensity of the 432 problem has increased manifold in view of the fact that the amount of deposits and investments has gone to staggering heights worth several thousand crores of lower middle class persons living mostly in the rural areas. A bogey of employment hazards of several thousand regular employees and still a large number of agents working in the field cannot deter the Reserve Bank to lay down some directions which may act harshly and resulting in lessening of profits of such companies. It was also submitted that according to the affidavit submitted before this Hon 'ble Court on behalf of the Reserve Bank of India it has been stated that prior to 1987 directions, there were 747 such companies which were conducting deposit scheme. At present they could classify only 392 such companies as required information for classifying of the remaining companies had not been received. Most of such companies have not designated their banks as it required under paragraph (6) of the directions and in most of such cases amounts invested in bank deposits and approved securities fall much short of deposit liabilities. The companies operating in these areas also at times become untraceable in that a number of show cause notices issued have been returned as "addressee not known" etc. In some cases those who have chosen to reply have given evasive replies. It has been further stated in the affidavit that most of these companies did not comply with the financial discipline sought to be imposed upon them and have avoided and abhorred any scrutiny into their accounts. It has thus been submitted that to get over these difficulties, the directions of 1987 attempt to provide a steady, stable identificable and monitorable method by which the companies will be able to disclose all their true liabilities and also utilise the money raised from the depositors for investment in safe indentifiable and quantifiable securities instead of investing them in other ventures. This will ensure complete security to the depositors at all times and will also make the accounts of the companies comprehensible and easy to monitor. As regards the formula laid down by the High Court it has been submitted that if a variable as against a fixed and definite percentage of investment with respect to amounts collected by way of each instalment is permitted it would be impossible to find out and verify whether the amounts invested are in accordance with the directions at any given point of time when there are thousands of certificates with different and varying maturity periods. In the circumstances, the formula laid down by the High Court is self defeating and also deprives the depositor of the security envisaged under the directions. It was also submitted on behalf of the Reserve Bank that it is an admitted position that the business of RNBCs is to collect funds from the public and invest the same in Government securities and bank deposits. In 433 the application forms and in the advertisement 's issued by these companies it is expressly held out to the public that their moneys are safe with the banks and in Government securities. It is the very nature of their business which makes it non viable if they are to give fair return to the depositors and private security for the repayment of their money. The scheme of control as provided in the directions of 1987 might be harsh but the same is in conformity with the assertions held out by these companies to the public at large. These directions subject the companies to proper discipline by monitoring their actions and such directions cannot be considered as unreasonable. The reasonableness of the directions when looked at from the point of view of the depositors for whose safeguard they have been issued, is beyond question. Return provided and the security to be given through proper investment cannot be faulted on any ground. Thus what seems to be an impossible situation for these companies is not due to the impugned directions but because of the nature of business itself. The funds are collected at exhorbitant costs and on that account it becomes difficult for the companies to give a fair return to the depositors. These companies are not genuine investment companies. If they want to do genuine investment business they can do so by choosing freely their investment, but in that case Reserve Bank of India directions applicable to such companies would permit them to accept deposits not exceeding 25 per cent of paid up capital and reserve. The directions of 1987 had not imposed any restriction on the right to carry on business but those directions only place a restriction with respect to one of the modes of raising reserves i.e. through public deposits. It has been further argued that the reasonableness of the directions has not to be looked into from the point of view of the company to whom any such restrictions will be irksome and may therefore be regarded as unreasonable. The framing of the directions are only regulatory in nature keeping in view the interest of the depositors without unduly jeopardising the interest of the employees. Keeping this in mind it has been provided that the minimum return would be at 10 per cent, though there are govt. and public sector bonds which pay interest at a much higher rate. Even presently bank deposits and other company deposits give return varying between 13 to 15 per cent. There is no limitation on the quantum of deposits with reference to the overall capital as shown in the case of companies governed by the Companies (Acceptance of Deposits) Rules 1975, Non Banking Financial Companies (Reserve Bank) Directions, 1977. The linking of deposits with capital as in the case of other regulations is a measure to secure the interest of the depositors namely e.g. Companies (Acceptance of Deposit) Rules, 1975, ensure that the assets 434 are at least three times the deposits received. In view of the low or total non existent capital of the RNBCs, it was not possible to secure the deposits in this manner. Instead, it has been provided that the entire liability towards the depositors should be invested and no part of the deposits be utilised for payment of commission etc. or incurring other expense. In any event, even if, the directions do not prescribe existence of owners capital as security, it does not imply that it is permissible to use the deposits received to bridge the time gap between income and expenditure. Merely because the directions do not fix a ceiling on the rate of commissions it does not imply that the Reserve Bank has granted its permission to payment of high commission or incurring of large expenses on management etc. The RNBCs are free to incur such expenses and organize their business as they desire as long as the depositors are fully secured at all times. The contention that the business of the RNBCs will close down if the directions of 1987 are to be adhered to is not based on facts and misconceived in law. A perusal of Directors ' Report of Peerless for the years 1988, 1989 and 1990 clearly go to show that they did not consider the company in any financial difficulty and in fact paid larger dividends even after complying with the impugned directions of 1987. It has thus been submitted that given a wide latitude in judging the validity of economic legislation on the touch stone of reasonableness, in the absence of patent arbitrariness but having nexus with the public objective sought to be attained, the durations cannot be condemned as being violative of Article 19(1) (g). The result of the contentions put forward on behalf of RNBCs would be that in the case of endowments repayable after, say 10 years, there will be nothing due and payable in the first nine years and as such there would be no need of investing any sums for the first nine years. The interpretation placed by the respondent companies upon the judgment of the High Court is that it is now open to them to determine as per their own peculiar estimate, what would be sufficient to meet the liabilities towards the deposits and accordingly such amount would be their "aggregate liability". According to the Peerless Company if it deposits 75 per cent of the first year 's subscription, it is adequate to cover its liabilities to the depositors. On the other hand as per Timex Company a deposit of only 50 per cent of the first year 's subscription would be adequate to cover its liabilities to the depositors. Whereas the Favourite Company contends that investment of 40 per cent of the first year 's subscription will be adequate to cover the liabilities to the depositors. It has been submitted that according to well accepted accounting practice where any sum is received as a loan or as a deposit it has to be shown as a liability together with accrued interest irrespective of when it is due. The amount contributed by the depositors being a capital receipt and not a revenue receipt cannot under any circumstances be shown in the 435 balance sheet otherwise then at its full value. Moreover, being a capital receipt, it cannot be credited to the profit and loss accounts since Part II of Schedule VI to the requires that the amounts to be shown in the profit and loss accounts should be confined to the income and expenditure of the company. Thus, crediting a part of the first and subsequent year 's deposit instalments to the profit and loss account and not showing them fully as a liability in the balance sheet would be a contravention of the provisions of the . It has been further submitted on behalf of the Reserve Bank that the question which arises for consideration is whether liability to the depositors can be calculated on an actuarial basis. It may be noted that actuarial basis is normally adopted (a) in respect of items of income and expenditure, (b) where there is a significant element of uncertainty. Thus, in so far as the liability arising out of the repayment to the depositors of the amount capitalised by him is considered, the actuarial basis cannot be adopted and this liability must always be stated at its full value. The principle of actuarial valuation is in opposite for the business of RNBCs. It has also been submitted that the formula laid down by the High Court about the quantum of investments to be made by RNBCs is incapable of effectively monitoring and hence the provisions made in the directions of 1987 regarding security to depositors would be rendered wholly illusory. Such impossibility in the monitoring has been demonstrated as follows: (A) These companies do not fix a definite but variable percentage of investment with respect to amounts collected by way of each instalment under the certificates of deposits; e.g. Peerless would invest 75 % of the collections made out of 1st instalment (retaining and taking to P & L A/c, 25 %) and 82 % out of 2nd instalment and so on. At any given point of time, there will be thousands of deposit certificates with varying maturity and the amounts collected would be an impossibility to find out and verify whether the amounts invested are in accordance, with the proportion fixed by the companies with respect to each instalment. Regulatory authority would have to depend entirely on these companies for doing its monitoring exercise. (B) Each company fixes its own proportion of investment with respect to each instalment based on the projected yield from its investment; e.g. Favourite Finance Company claims that it needed to invest only 40 % of the amounts collected by way of 1st instalment claiming that the projected yield from its investment would be 14.8 %. This would compound the impossibility of monitoring further. 436 It has thus been argued that the formula laid down by the High court is self defeating and depriving altogether benefits of security provisions given to depositors under the directions of 1987. Mr. Somnat Chatterjee, learned senior counsel appearing on behalf of Peerless Company contended that the Peerless being the largest RNBC in india having an impeccable record of public service decided to give effect to the directions of 1987 as it wanted to avoid any confrontation with Reserve Bank and further not to give an impression of seeking to avoid "regulatory control", tried its best to comply with the said directions w.e.f. 15th May, 1987 till 31st March, 1989. However, from its working results it appeared bonafide to the Board of Directors of Peerless that it was impossible to carry on its traditional business for any longer period without incurring huge losses. The company as such decided to approach the High Court for obtaining the benefit of judgment delivered in the Timex case. The Peerless has only challenged a part of Paragraph 6 of the directions of 1987 and the consequential direction contained in para 12 which shows that Peerless does not wish to remain outside of the regulatory controls of Reserve Bank but challenges only those directions which make the business totally unworkable. There has been no attempt on the part of Peerless to carry on its business in a manner which may jeopardize the interest of any depositor or which will not protect fully every paisa deposited with Peerless at all points of time. No real complaint was made by or on behalf of Reserve Bank as to any depositor of Peerless running a risk of loss of any amount or that it has carried on or is carrying on the business in an undesirable manner. It has been submitted that Peerless should not be made to suffer for the illegality or improprieties, if any committed by any other RNBC and neither Peerless nor its 14 lac field agents, 3 thousand field officers and 4 thousand direct employees should be made to suffer. The result of following directions of 1987 would be that all the above agents, officers and employees of the Peerless could loose their jobs and their family members will be thrown on the streets. The Peerless had abolished the provision of forfeiture in all its schemes as early as in 1986 that is even prior to coming into force of the directions of 1987. The Peerless has been compelled to challenge paragraphs 6 and 12 of the directions of 1987 since enforcement of these provisions would result in complete annihilation of the undertaking of Peerless in the near future. It was further contended that it is inherent in the business carried on by Peerless and other similar RNBCs that the working capital is generated out of the subscriptions received from the certificate holders. Such business comprises in collecting subscriptions from depositors either in lumpsum 437 or in instalments and such deposits are paid back with the guaranteed accretions, bonus, interest etc. in terms of the contract at the end of the stipulated term. Through this business such companies have rendered great and commendable service to the nation in mobilizing small savings and giving a boost to the movement of capital formation in the country. Such companies have placed at the disposal of Governmental institutions including public sector banks and other financial institutions huge deposits which could not be collected by the said financial institutions themselves or by anybody in the organised sector. The method followed by the companies in carrying on the aforesaid business is that a certain portion of the subscriptions received by it is transferred to the profit and loss account shown as income, and the same is used to defray inevitable working capital requirements of the company, namely, payment of agent 's commission, management expenses, staff salaries and other overheads. However, the balance of the subscriptions (excluding the appropriated part) is transferred to a fund each year and the corpus of the fund is invested in turn in interest bearing investment. The Peerless company initially used to transfer approximately 95 % of the first year 's subscriptions to the profit and loss account and used to invest the subscriptions received from the second year onwards. However, at present, Peerless is appropriating 25 % of the first year 's subscription to the profit and loss account and investing the balance 75 % in the manner and mode prescribed by paragraph 6 of the directions of 1987. It has been contended that the investment is planned in such a manner that at the end of the contractually stipulated maturity period or at any other point of time when any sum of money may become contractually payable to a depositor, an RNBC is always in a position to pay all its conractual dues to the certificate holder. There is thus no threat to the safety of the depositors money inspite of the aforesaid transfer of a portion of the subscription received to the profit and loss account showing it as income and utilising it for meeting the working capital requirements. It was pointed out that Peerless had been assessed to income on the basis of above method of accounting and no objection has ever been taken by the revenue authorities or by the auditors of Peerless or even by R.B.I. before the issuance of the directions of 1987. It was submitted that the Peerless was incorporated in the year 1932 when it used to carry on life insurance business. It changed over to the present form of business from 1956 and since then it has been carrying on such business with the full knowledge of R.B.I. as well as other concerned authorities. The R.B.I. never objected to the accounting system followed by the Peerless. In view of the abolition of the forfeiture clause the alleged risk to the depositors has become totally non existent. It was further argued that the R.B.I. framed regulatory measures in 1973 such miscellaneous non banking companies (Reserve Bank) Directions, 1973. 438 The Reserve Bank granted exception to Peerless from the provisions of the said Directions of 1973, by an order dated 3rd December, 1973. The Favourite Small Investments Limited filed a writ petition challenging the refusal of Reserve Bank to grant exemption to them from the provisions of the said 1973 Directions to granting such exemption to Peerless. In the said writ petition the R.B.I. filed an affidavit justifying the denial of exemption to Favourite Small Investments Ltd. and in the aforesaid affidavit submitted in detail the accounting procedure of Peerless including the fact that Peerless was transferring a portion of the subscriptions to the profit and loss account as income and it also certified that the said method was a permissible business method and by following the said method Peerless would be in a position to pay all contractual dues of the certificate holders at the end of the maturity period. Thus the said system of accounting which is called an actuarial system of accounting was found satisfactory by the R.B.I. The said affidavit filed in the Favourite 's case has been quoted in the Peerless case in ; , and the said actuarial system of accounting was not held as impermissible or against any recognized method of accounting. It was also contended on behalf of the Peerless that the interest of depositors is certainly an important consideration but the interest of the depositors is not impaired in any manner whatsoever by the method of accountancy now being followed by Peerless and in fact by all similar companies, namely, appropriation of a part of the subscription to the profit and loss account and meeting the working capital requirements out of the same. In respect of the above contention certain charts were also produced during the course of arguments and from such charts it was sought to establish that except for the first two years the principal amount paid by a subscriber is always covered by matching investment. Further, on the date on which a deposit becomes contractually repayable, there is full coverage of such liability. It was submitted on behalf of All India Peerless Field Officers Association that the said association represents about 14 lac field workers. These 14 lac persons are engaged by Peerless on the basis of individual contracts of engagements and earn their livelihood solely by collecting business for Peerless. For collecting such business Peerless pays to them commission at a contractual agreed percentage on the value of business collected. The said field officers have to meet all expenses for procuring such business such as travelling expenses, boarding, lodging, office and administrative expenses etc. out of such commission. Field officers have to undertake long tours and have to travel into remote villages to reach the small depositors. It has been submitted that if the directions of 1987 are upheld, the undertaking of Peerless will face inevitable closure and almost 439 14 lac field officers will lose their only source of livelihood and will be virtually thrown on the streets. The field officers and their families will face starvation and extreme penury in case the validity of such directions is upheld. Thus any restriction which would be prohibitive or which would result in closure of the undertaking of Peerless would be against public interest. We have heard the arguments of learned counsel for the parties. It may be made clear at the outset that questions raised in these cases regarding the validity of paragraphs 6 and 12 of the directions of 1987 cannot be determined merely by taking into consideration the working of the financial soundness of the one company alone like Peerles but the matter has to be examined in a broader perspective of all RNBCs. We have to keep in mind, while deciding the controversies raised in the arguments, such RNBCs which are doing the same kind of business of taking deposits and returning the same to the certificate holders after a gap of 7 to 10 years along with interest, bonus etc. In the affidavit submitted before this Court on behalf of Reserve Bank of India it has been stated that prior to 1987 directions, there were 747 such companies which were conducting this business under various deposit schemes. At present they could classify 392 such companies spread over across the entire country. According to the above affidavit, as on 31st March, 1990 in the eastern zone out of 185 companies, only 35 have filed the annual returns and out of which only 30 have filed the balance sheet. Similarly, out of 140 companies in the northern zone only 28 have filed annual returns and 32 have filed balance sheet. A perusal of the returns given by 51 of these companies discloses that 35 companies have a negative net worth (i.e. their losses far exceed their share capital and reserves) which necessarily means that they have not only wiped out the share capital and reserves but their liabilities are far in excess. Only 16 companies have a positive net worth including Peerless. It has been further pointed out in the affidavit that apart from Peerless the aggregate capital investment by 15 companies is Rs. 158 lacs only. As against this, the negative net worth of the 35 companies aggregated to Rs. 3.6 crores. Despite large accumulated losses (in some cases with meager or nominal capital) these companies apart from Peerless, have realised deposits to the tune of Rs. 86 crores. Apart from the financial parameters most of these small companies are family concerns. Most of such companies have not designated their banks as is required under Paragraph 6 of the directions and in most of such cases amounts deposited in banks and approved securities fall much short of deposit liabilities. It has also been pointed out in the affidavit that the companies operating in these areas also at times become untraceable in that a number of show cause notices issued have been returned as "ad 440 dressee not known" etc. Thus we have to keep in mind the above mushroom of companies also which have set foot in this sort of business. It would also be important to note that most of the depositors in such companies belong to the rural areas and who are persons belonging to lower middle class, small agriculturists and small traders, pensioners etc. These companies advertise their schemes widely in beguiling terms. Through such advertisements they lure the small savings of the poor ignorant villagers through a special structure of agents, special agents, different kinds of organisers and so on. The agents commission for the first years subscription is very high and which offers incentive to the agents on securing a fresh business and a disincentive to collect subscriptions of subsequent years. It is a matter of common experience and knowledge that most rural folk particularly those belonging to the lower strata of society will not pay their subscriptions regularly unless somebody takes the trouble of collecting their subscription with the same enthusiasm as may be shown in enrolling the subscribers in the beginning. It is no doubt correct that these companies do tap and collect the deposits from such areas where the agents of public sector banks or public sector companies or instrumentalities of the state are unable to reach. Thus these companies mop up a large amount of money for ultimately investing in the nationalised bank or other Govt. owned corporations or companies. However, the Reserve Bank considered the safety of the money of the depositors as the paramount consideration in issuing the direction of 1987. It cannot be disputed that the interest of the employees as well as the field officers and agents have also to be taken into consideration while deciding the reasonableness of the impugned directions. It may be further noted that in the Reserve Bank of India vs Peerless Company case (supra) this Court though came to the conclusion that the Endowment Certificate Scheme of the Peerless company was outside the Prize Chit and Money Circulation Schemes (Banning) Act, still it was observed that it would be open to the Reserve Bank to take such steps as are open to them in law to regulate schemes such as those run by the Peerless company to prevent exploitation of ignorant subscribers though care must also be taken to protect the thousands of employees. The Court expressed grave concern with regard to the mushroom growth of `financial investment companies ' offering staggeringly high rates of interests to depositors leading to the suspicion whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings. It was clearly pointed out that if the Reserve Bank of India considers the Peerless company with 800 crores invested in Govt. securities, fixed deposits with national banks etc. unsafe for depositors one wonders what they have to say about the mushroom of non banking companies which are accepting 441 deposits promising most unlikely returns and as such what action was proposed to be taken by the R.B.I. to protect the investors. In the above background the Reserve Bank came forward with the impugned directions of 1987. Before examining the scope and effect of the impugned paragraphs 6 and 12 of the directions of 1987, it is also important to note that Reserve Bank of India which is bankers bank is a creature of Statute. It had large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bonafides of the Reserve Bank in issuing the impunged directions of 1987. The Reserve Bank plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country. It is the duty of the Reserve bank to safeguard the economy and financial stability of the country. While examining the power conferred by Sec. 58A of the on the Central Govt. to prescribe the limits upto which, the manner in which and the conditions subject to which deposits may be invited or accepted by non banking companies, this Court in Delhi Cloth and General Mills, etc. vs Union of India, etc. ; , observed as under: "Mischief was known and the regulatory measure was introduced to remedy the mischief. The conditions which can be prescribed to effectuate this purpose must a fortiori, to be valid, fairly and reasonably, relate to checkmate the abuse of juggling with the depositors/investors ' hard earned money by the corporate sector and to confer upon them a measure of protection namely availability of liquid assets to meet the obligation of repayment of deposit which is implicit in acceptance of deposit. Can it be said that the conditions prescribed by the Deposit Rules are so irrelevant or have no reasonable nexus to the objects sought to be achieved as to be arbitrary? The answer is emphatically in the negative. Even at the cost of repetition, it can be stated with confidence that the rules which prescribed conditions subject to which deposits can be invited and accepted do operate to extend a measure of protection against the notorious abuses of economic power by the corporate sector to the detriment of depositors/investors, a segment of the society which can be appropriately described as weaker in relation to the mighty corporation. One need not go so far with Ralph Nadar in `America Incorporated ' to establish that political institutions may fail to arrest the control this everwidening power of corporations. And can one wish away the 442 degree of sickness in private sector companies? To the extent companies develop sickness, in direct proportion the controllers of such companies become healthy. In a welfare state, it is the constitutional obligation of the state to protect socially and economically weaker segments of the society against the exploitation by corporations. We therefore, see no merit in the submission that the conditions prescribed bear no relevance to the object or the purpose for which the power was conferred under Sec. 58A on the Central Government. " The function of the Court is to see that lawful authority is not abused but not to appropriate to itself the task entrusted to that authority. It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power. It must keep within the limits of the authority committed to it. It must act in good faith and it must act reasonably. Courts are not to interfere with economic policy which is the function of experts. It is not the function of the Courts to sit in Judgment over matters of economic policy and it must necessarily be left to the expert bodies. In such matters even experts can seriously and doubtlessly differ. Courts cannot be expected to decide them without even the aid of experts. The main grievance raised on behalf of respondent companies is that if the provisions of paragraphs 6 and 12 of the directions of 1987 are complied with, the companies will be left without any fund to meet their working capital. It would be impossible to run the business without a working capital and to meet even reasonable expenses incurred for payment of agents commission, management expenses and other overhead expenses. During the course of hearing the counsel for the companies had relied on some charts to show the unworkability and unreasonableness of the impugned paragraphs 6 and 12 of the directions. It was also pointed out that the arguments made on behalf of the Reserve Bank overlooked the fact that in case of investments in long term schemes such as Indira Vikas Patra and Kisan Vikas Patra the companies will not be able to utilise its return from such investment before the end of the minimum period for which these schemes operate. The respondent companies will thus be left without any income during the period of operation of such schemes and cannot meet its working capital requirements. It has been submitted that the directions of 1987 really amount to prohibition of the business in a commercial sense without reasonable basis and are thus violative of article 19(1) (g) of the Constitution. In support of the above contention reliance has been placed on Mohammad Yasin vs The Town Area Committee, Jalalabad and another; , ; Premier Auto 443 mobiles Ltd. and anothers vs Union of India; , and on Shree Meenakshi Mills Ltd. vs Union of India ; It has also been contended that it is now well settled by plethora of judicial pronouncements that the restrictions on any business caused by regulations should not be more than what would be necessary in the interest of the general public and such restrictions should not overreach the scope of the objects achieved by the regulations. The contention on behalf of the Reserve Bank is that the directions have been made in public interest of safeguarding the interest of millions of depositors and the Reserve Bank is not concerned and while doing so it was rightly thought necessary by the Reserve Bank that the companies cannot be permitted to incur the expenses out of the corpus of the depositors money. The business carried on by the companies to restructure their organization by curtailing its expenses. If such middlemen or brokers are not able to earn a large profit as was done before the enforcement of the impugned directions, it lies with the companies to continue or not such business when the margin of profit is curtailed. These companies want to do the business without having any stake of their own. The companies doing such business cannot be subjected to the scheme of control applied to other financial and non financial companies for the simple reason that they have no capital and their schemes are for a period much longer than three years. After the decision of the Supreme Court in Peerless case these directions of 1987 were issued after mature consideration with the help and advice of experts. Paragraph 6 of the impugned directions according to the Reserve Bank lays down provisions for security of depositors. it prescribes the mode of investment of funds collected by the companies. It cannot be disputed that while collecting deposits the companies clearly hold out to the members of the public that the moneys so collected by them shall be invested in Government securities or kept deposited with the banks and they also assure the depositors that their moneys are safe and secure. On the basis of such representations and on the strength of exaggerated and misleading advertisements these companies collect huge amounts of deposits from a large number of small, poor and uninformed depositors and that too in such investment spread over a long period. The contention on behalf of the Reserve Bank of India is that in the above context these companies carry on their activities wholly with the funds provided by the public by way of deposits and hardly have any capital of their own. In these circumstances it has been urged on behalf of the Reserve Bank that the provisions made in paragraph 6 of, the impugned directions are abso 444 lutely reasonable and are for ensuring repayment of deposits. It has been submitted that it is common knowledge that small depositors cannot have recourse to courts for recovering their amounts if the companies do not repay the deposits. The direction in paragraph 6 enjoins on these companies to deposit in fixed deposits with public sector banks or unencumbered approved securities or in other investments, a sum which shall not, at the close of business on 31st December, 1987 and thereafter at the end of each half year i.e. 30th June and 31st December not less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable. Thus according to the above provision whole of the aggregate amounts of the liabilities to the depositors whether or not such amounts have become repayable, is required to be deposited or invested. 10 % of such amount is required to be deposited in public sector banks and 70 % in approved securities and 20 % has been allowed to be invested by the company according to its own choice. In order to understand the rigour of the directions laid down in paragraph `6 ', it would be necessary to understand the scope of other directions as well. Paragraph 4 of the directions lays down that the deposit shall not be accepted for a period of less than 12 months or more than 120 months i.e. one years from the date of receipt of such deposits. The normal standard applied to non financial and financial companies is that they cannot accept deposits for a period of more than 36 months (except housing finance company). Thus the companies before us have been permitted to conduct their schemes extending over to a long period upto 120 months. This is a special kind of concession provided to the companies of the kind before us. Paragraph 5 of the directions relates to the minimum rate of return fixed at 10 % per annum for a deposit with a maturity of 10 years. It is a matter of common knowledge that in the present times even the public sector corporations and banks and other financial and non financial companies pay interest at much more higher rates ranging from 14 to 18 %. Thus according to the above scheme the respondent companies and the others doing such business can easily earn a profit of 4 to 5 % on their investments. In case of a request of the depositors for repayment of the deposit before maturity then the amount payable by the company by way of interest etc., shall be 2 % less than what could have been ordinarily paid by the company by way of interest if the deposit had run the full contractual period. However, the question of repayment before maturity or after how many years will depend entirely on the terms and conditions of the contract of such deposit. Paragraph 12 of the directions of 1987 enjoins upon the company to disclose as liabilities in its books of accounts and 445 balance sheets the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors. Under Clause (a) to the explanation to clause 3 of paragraph `6 ' "Aggregate Amounts of Liabilities" shall mean total amount of deposits received together with interest, premium, bonus or other advantage by whatever name called, accrued on the amount of deposits according to the terms of contract. Thus the company is required to deposit or invest the aggregate amounts of its liabilities having accrued on the amount of deposits according to the terms of contract. Without going into the figures shown in the various charts, it is clear that if the directions contained in paragraphs 6 and 12 of the directions of 1987 are to be carried out, the companies are not left to utilise any amount out of the deposits as working capital to meet the expenses. In our view the Reserve Bank is right in taking the stand that if these companies want to do their business, they should invest their own working capital and find such resources elsewhere with which the Reserve Bank has no concern. If we look at the Annual Report and Accounts of Peerles for the years 1988, 1989 and 1990 it is clear that it had conducted its business following the impugned directions of 1987 and still had earned substantial profits in these years. It is clear that Peerless is a company having established as back as in 1932 and had substantial funds to invest the entire amount of deposits and had met the expenses out of its accumulated profits of the past years. This shows that the business can be run and profit can be earned even after complying with the impugned directions of 1987 issued by the Reserve Bank. It is not the concern of this court to find out as to whether actuarial method of accounting or any other method would be feasible or possible to adopt by the companies while carrying out the conditions contained in paragraphs 6 and 12 of the directions of 1987. The companies are free to adopt any mode of accounting permissible under the law but it is certain that they will have to follow the entire terms and conditions contained in the impugned directions of 1987 including those contained in paragraphs 6 and 12. It is not the function of the Court to amend and lay down some other directions and the High Court was totally wrong in doing so. The function of the Court is not to advise in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent. The Court can only strike down some or entire directions issued by the Reserve Bank in case the Court is satisfied that the directions were wholly unreasonable or violative of any provisions of the Constitution or any Statute. It would be hazardous and risky for the courts to tread an unknown path and should leave such task to the expert bodies. This court has repeatedly said that matters of economic policy ought to be left to the Government. While dealing with the validity of an order passed on September 30, 1977 fixing a retail price of mustard oil not 446 exceeding Rs. 10 per kilogram in exercise of powers conferred by Section 3 of the Essential Commodities Act, a bench of 7 Judges of this Court in M/s Prag Ice & Oil Mills and another vs Union of India and Nav Bharat Oil Mills and another vs Union of India ; observed as under: "We have listened to long arguments directed at showing us that producers and sellers of oil in various parts of the country will suffer so that they would give up producing or dealing in mustard oil. It was urged that this would, quite naturally, have its repercussions on consumers for whom mustard oil will become even more scarce than ever ultimately. We do not think that it is the function of this Court or of any Court to sit in judgment over such matters of economic policy as must necessarily be left to the Government of the day to decide. Many of them, as a measure of price fixation must necessarily be, are matters of prediction of ultimate results on which even experits can seriously err and doubtlessly be differ. Courts can certainly not be expected to decide them without even the aid of experts". In Shri Sitaram Sugar Company Limited and another vs Union of India & others with U.P. State Sugar Corporation Ltd., and another vs Union of India & Others, ; this Court observed as under: "Judicial review is not concerned with matters of economic policy. The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The Court does not supplant the "feel of expert" by its own views. When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness. In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably on evidence and whether such findings are consistent with the laws of the land. In R.K. Garg vs Union of India & others, etc. ; , at p. 690 a Constitution Bench of this Court observed as under: "Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, be 447 cause it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The Court should feel more inclined to give judicial defence to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey vs Doud where Frankfurter, J. said in his Inimitable style: "In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative Judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error the bewildering conflict of the experts, and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability". It may also be noted that it is not possible for the Court to determine as to how much percentage of deposit of first instalment should be allowed towards expenses which may consist of commission to agents, office expenses etc. Even amongst the three companies viz. Peerless, Timex and Favourite, there is a difference in this regard. According to the Peerless 25 %, Timex 50 % and Favorite 60 % of the deposits of the first instalment would be necessary for generating the working capital for meeting the genuine expenses. Thus it would depend from company to company based on various factors such as paid up capital, percentage of commission paid to the agents, rate of interest paid to the depositors, period of maturity for repayment, office expenses and various other factors necessary to mop up working capital out of the depositors money. We cannot ignore the possibility of persons having no stake of their own starting such business and after collecting huge deposits from the investors belonging to the poor and weaker section of the society residing in rural areas, and to stop such business after a few years and thus devouring the hard earned money of the small investors. It cannot be lot sight that in such kind of business, the agents always take interest in finding new depositors because they get a high rate of commission out of the first instalment, but they do not have same enthusiasm in respect of deposit of subsequent instalments. In these circumstances, if the Reserve Bank has issued the 448 directions of 1987 to safeguard the larger interest of the public and small depositors it cannot be said that the directions are so unreasonable as to be declared constitutionally invalid. It has been vehemently contended before us on behalf of the Peerless employees and field agents that in case the impugned directions are not struck down, the Peerless will have to close down its business and several thousands of employees and their family and several lakhs of field agents would be thrown on the street and left with no employment. We do not find any force in the above contention. So far as Peerless is concerned there is no possibility of its closing down such business. It has already large accumulated funds collected by making profits in the past several years. Thus it has enough working capital in order to meet the expenses. We are not impressed with the argument of Mr. Somnath Chatterjee, Learned Senior Advocate for the Peerless that after some years the Peerless will have to close down its business if directions contained in paragraphs 6 and 12 are to be followed. The working capital is not needed every year as it can be rotated after having invested once. If the entire amount of the subscribers is deposited or invested in the proportion of 10 % in public sector banks, 70 % in approved securities and 20 % in other investments, such amounts will also start earning interest which can be added and adjusted while depositing or investing the subsequent years of deposits of the subscribers. In any case it lies with the new entrepreneurs while entering such field of business to make arrangement of their own resources for working capital and for meeting the expenses and they cannot insist in utilising the money of the depositors for this purpose. So far as the companies already in this field they must have earned profits in the past years which can be utilised as their working capital. It is important to note that the impugned directions of 1987 have been made applicable from 15th May, 1987 prospectively and not retrospectively. Thus under these directions the question of depositing the entire amount of subscriptions would only apply to the deposits made after 15th May, 1987. We may also observe that the impugned directions of 1987 as well as any other directions issued from time to time by the Reserve Bank relating to economic or financial policy are never so sacrosanct that the same cannot be changed. Even the financial budget for every year depends on the economic and financial policy of the Government existing at the relevant time. So far as the impugned directions are concerned if it is found in future that the same are not workable or working against the public interest, the Reserve Bank is always free to change its policy and scrap or amend the directions as and when necessary. We have no doubt 449 that if in times to come the Reserve Bank feels that business of the kind run at present by Peerless and other companies, in terms of the directions of 1987 are not yielding the result as envisaged by the Reserve Bank, it will always be prepared to consider any new proposals which may be conducive both in the interest of the large multitude of the investors as well as the employees of such companies. Mr. Shanti Bhushan, learned Senior Counsel appearing on behalf of the Reserve Bank made a candid statement on behalf of the Reserve Bank that the Reserve Bank would always be prepared to consider any new proposal which would observe the public interest. In the result I set aside the orders of the High Court and allow the appeals arising out SLP Nos. 6930 30 A of 1991, 7140 of 1991 and 3676 of 1991 filed by the Reserve Bank of India and dismiss the wirt petition No. 677 of 1991. No order as to costs. K.RAMASWAMY, J. While respectfully agreeing with my learned brother since the issues bear far reaching seminal importance, I propose to express my views as well. This Court in Reserve Bank of India etc. vs Peerless General Finance and Investment Co. Ltd. & Ors. ; , for short `first Peerless case ' while holding that does not attract "Recurring Deposits Schemes", pointed out that the schemes harshly operate against the poor sections of the society who require security and protection; urgent action appeared to be called for and was imperative to protect the public and emphasized to evolve fool proof scheme to prevent fraud being played upon persons not conversant with practices of the financial enterprises who pose themselves as benefactors of the people. In pursuance thereof the appellant, Reserve Bank of India, for short `RBI ' issued Residuary Non Banking Companies (Reserve Bank) Directions, 1987 for short `the Directions '. The short shift with avid eye into the relevant provisions of the 2 of 1934 for short `the Act ' and "the directions" would enable us to come to grips with the scope of the scheme of the directions, its purpose and operation. Chapter III(B) of the Act deals with the power of RBI to regulate non banking institutions receiving deposits. Section 45 (1) (bb) defines deposit includes and shall be deemed always to have included "any receipt or money by way of deposit or loan or in any other form but does not include. " exceptions are not relevant and hence are omitted. Section 45(1) (c) defines `financial institution ' to mean any non banking institution which carries on its business, or part of its business, in any of the following activities; clauses (i) to (v) are omitted, clause (vi) collect 450 ing for any purpose of any scheme or arrangement by whatever name called, monies in lump sum or otherwise by way of subscription. or in any other manner by awarding prizes or gifts. , whether in cash or kind or disbursing monies in any other way to persons from whom monies are collected or to any other persons but does not include. the exclusions are not relevant and hence omitted. Section 45J empowers that RBI may, if it considers necessary in the public interest so to do, by general or special order, (a) regulate or prohibit the issue by any non banking institution of any prospectus or advertisement soliciting deposits of money from the public; and (b) specify the conditions, subject to which any such prospectus or advertisement, if not prohibited, may be issued. Section 45K empowers the RBI to collect information from non banking institution as to deposit and to give directions that every non banking institution shall furnish to the Bank, in such form, at such intervals and within such time, such statements, information or particulars relating to or connected with deposits received by the non banking institution, as may be specified by RBI by general or special order including the rates of interest and other terms and conditions on which they are received. Under sub section (3) thereof the RBI is entitled to issue in the public interest directions to non banking institution in respect of any matter relating to or connected with the receipt of deposits including the rates of interest payable on such deposits and the periods for which deposits may be received. The use of the adjective `any ' matter relating to or connected with the receipt of deposits is wide and comprehensive to empower the RBI to issue directions in connection therewith or relating to the receipt of deposits. But exercise of power is hedged with and should be "in the public interest. " Section 45L provides that if the RBI is satisfied that for the purpose of enabling it "to regulate the credit system of the country to its advantage it is necessary so to do"; it may give to such institutions either generally or to any such institution, in particular, "directions relating to the conduct of business" by them or by it as financial institution or institutions including furnishing of information of particulars "relating to paid up capital, reserves or other liabilities", the "investments" whether "in the Government securities" or "otherwise", the persons to whom, and the purposes and periods for which; finance is provided "the terms and conditions", including "the rates of interest", on which it is provided. Section 45Q provides that the provisions of this chapter shall have effect "notwithstanding anything inconsistent therewith contained in any other law" for the time being in force or any instrument having effect by virtue of any such law. The directions became operative from May 15, 1987. They would apply to every Residuary Non Banking Company for short `R.N.B.C ' 451 which receive any deposit scheme in lump sum or in instalment by way of contribution or subscription or by sale of units of certificates or other instruments or "in any other manner" vide Clause II of the definition. Clause III(A) defines deposits as defined in s.45(1) (bb) of the Act. Paragraph 4 regulates receipt of deposits for a period not less than 12 months and not more than 120 months from the first day of the receipt of the deposit. Paragraph 5 prescribes minimum rate of return of 10 per cent per annum (to be compounded annually) on the amount deposited. The proviso empowers R.N.B.C. at the request of the depositor to make repayment of the deposit, after the expiry of a period of one year from the date of the deposit but before the expiry of the period the deposit with two per cent reduced rate of interest from 10 % interest. Paragraph 6, the heart of the directions consists of three sub paragraphs with explanations. The marginal note expresses "security for depositors". Sub paragraph (1) thereof provides that on and from May 15, 1987 every R.N.B.C. shall deposit and keep deposited in fixed deposits with public sector banks or invest and keep invested in unencumbered approved securities (such securities being valued at their market value for the time being), or in other investments, which in the opinion of the company are safe, a sum which shall not, at the close of business on 31 st December, 1987 and thereafter at the end of each half year that is, 30th June and 31st December be less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable. The proviso specifies that the sum so deposited or invested (a) not less than 10 per cent shall be in fixed deposits with any of the public sector banks (b) not less than 70 per cent shall be in approved securities; and (c) not more than 20 per cent or 10 times the net owned funds of the company, whichever amount is less, shall be in other investments. Provided that such investments shall be with the approval of the Board of Directors of the company, the explanation "Net Owned funds" shall mean the aggregate of the paid up capital and free reserves as appearing in the latest audited balance sheet of the company as reduced by the amount of accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance sheet. Sub paragraph (2) enjoins toe R.N.B.C to entrust to one of the public sector banks designated in that behalf. Deposits and securities referred to in clauses (a) and (b) of the proviso to sub paragraph (1) to be held by such designated bank is for the benefit of the depositors. Such securities and deposits shall not be withdrawn by the R.N.B.C. or otherwise dealt with, except for repayment to the depositors. Sub paragraph (3) obligates it to furnish to the R.B.I. within 30 days from the close of business on 31st December, 1987 and thereafter at the end of each half year i.e., as on 30th June and 31st December, a certificate from its auditors, being member of institute of Chartered Accountants, to the effect 452 that the amounts deposited in fixed deposits and the investment made are not less than "the aggregate amounts of liabilities to the depositors" as on 30th June and 31st December of that year. Explanation thereto makes explicit what the "aggregate amount of liabilities"; "approved securities"; and "public sector banks" and "unencumbered approved securities" are meant to be the details of which are not necessary for the purpose of this case. Paragraph 7 abolishes the power of the R.N.B.C. of forfeiture of deposits; paragraph 8 prescribes particulars to be mentioned in the form soliciting deposits; paragraph 9 enjoins issuance of the receipts to the depositors and paragraph 10 obligates to maintain the register with particulars of depositors mentioned therein. Paragraph II enjoins its Board of Directors to furnish the information in their report as envisaged therein. Paragraph 12 which is also material for the purpose of this case provides that every R.N.B.C. shall disclose as liabilities in its books of accounts and balance sheets, the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors. Paragraph 13 enjoins to supply to R.B.I. copies of the balance sheets and accounts together with Directors report. Paragraph 14 obligates the company to submit returns to the R.B.I. in the manner envisaged thereunder. R.N.B.C. has to submit balance sheet, returns etc. to the department of the Financial Companies as per paragraph 15. Paragraph 16 obligates R.N.B.C. to comply with the requirement of the non banking financial companies and miscellaneous non banking companies (Advertisement) Rules, 1977 etc. and actual rate of interest etc. to the depositor. Paragraph 17 applies to the prospective R.N.B.C. to furnish information in Schedule C. Paragraph 18 accords transitory power and paragraph 19 empowers the R.B.I., if it considers necessary to avoid any hardship or for any other just and sufficient reasons, to grant extensions of time to comply with or exempt, any company or class of companies, from all or any of the provisions of the directions either generally or for any specified period, subject to such conditions as the RBI may impose and paragraph 20 excludes the applicability of paragraph 19 of the Non Banking Financial Companies (Reserve Bank) Directions, 1977. The High Court declared paragraphs 6 and 12 to be ultra vires of article 19(1)(g) and 14 of the Constitution holding that though the directions do not expressly prohibit the business of receiving any deposit under any scheme or arrangement in lump sum or in instalment by way of contribution or subscription by R.N.B.C. in effect the operation of the directions inhibit the existing business and prohibits the future companies to come into being. As seen the public purpose of the directions is to secure for the depositors, return of the amounts payable at maturity together with interest, bonus, premium or any other advantage accrued or payable to the 453 depositors. To achieve that object every R.N.B.C. is enjoined to deposit and keep deposited in fixed deposit and invest and keep invested in unencumbered approved securities a sum which shall not, at the close of each half year, be less than the aggregate amount of the liability to the depositors whether or not such amount has become payable. The object, thereby, is to prohibit deployment of funds by R.N.B.C. in any other manner which would work detrimental to the interest of the depositors. The question emerges whether paragraph 6 and 12 are ultra vires of Articles 19(1)(g) and 14 of the Constitution. Article 19(1)(g) provides fundamental rights to all citizens to carry on any occupation, trade or business. 6 thereof empowers the State to make any law imposing, in the interest of the general public, reasonable restrictions on the exercise of the said rights. Wherever a statute is challenged as violative of the fundamental rights, its real effect or operation on the fundamental rights is of primary importance. It is the duty of the court to be watchful to protect the constitutional rights of a citizen as against any encroachment gradually or stealthily thereon. When a law has imposed restrictions on the fundamental rights, what the court has to examine is the substance of the legislation without being beguiled by the mere appearance of the legislation. The Legislature cannot disobey the constitutional mandate by employing an indirect method. The court must consider not merely the purpose of the law but also the means how it is sought to be secured or how it is to be administered. The object of the legislation is not conclusive as to the validity of the legislation. This does not mean the constitutionality of the law shall be determined with reference to the manner in which it has actually been administered or operated or probably been administered or operated by those who are charged with its implementation. The court cannot question the wisdom, the need or desirability of the regulation. The state can regulate the exercise of the fundamental right to save the public from a substantive evil. The existence of the evil as well as the means adopted to check it are the matters for the legislative judgment. But the court is entitled to consider whether the degree and mode of the regulation whether is in excess of the requirement or is imposed in any arbitrary manner. The court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether over stepped the limits of social legislation. Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method. If it directly transgresses or substantially and inevitably effects the fundamental right, it becomes unconstitutional, but not where the impact is only remotely possibly or incidental. The court must lift the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavor should be made to have the efficacy of fundamental right maintained and the legislature is 454 not invested with unbounded power. The court has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right. However, there is presumption of constitutionality of every statute and its validity is not to be determined by artificial standards. The court has to examine with some strictness the substance of the legislation to find what actually and really the legislature has done. The court would not be over persuaded by the mere presence of the legislation. In adjudging the reasonableness of the law, the court will necessarily ask the question whether the measure or scheme is just, fair, reasonable and appropriate or is it unreasonable, unnecessary and arbitrary interferes with the exercise of the right guaranteed in Part III of the Constitution. Once it is established that the statute is prima facie unconstitutional, the state has to establish that the restrictions imposed are reasonable and the objective test which the court to employ is whether the restriction bears reasonable relation to the authorized purpose or an arbitrary encroachment under the garb of any of the exceptions envisaged in Part III. The reasonableness is to the necessity to impose restriction; the means adopted to secure that end as well as the procedure to be adopted to that end. The court has to maintain delicate balance between the public interest envisaged in the impugned provision and the individual 's right; taking into account, the nature of his right said to be infringed; the underlying purpose of the impugned restriction; the extent and urgency of the evil sought to be remedied thereby; the disproportion of the restriction imposed, the prevailing conditions at the time, the surrounding circumstances; the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose. All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction. The court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction. The court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits. This Court in Joseph Kuruvilla Vellukunnel vs Reserve Bank of India & Ors. ,[1962] Suppl. 3 SCR 632, held that the RBI is ``a bankers ' bank and lender of the last resort. ' ' Its objective is to ensure monetary stability in India and to operate regulate the credit system of the country. It 455 has, therefore, to perform a delicate balance between the need to preserve and maintain the credit structure of the country by strengthening the rule as well as apparent credit worthiness of the banks operating in the country and the interest of the depositors. In under developed country like ours, where majority population are illiterate and poor and are not conversant with banking operations and in under developed money and capital market with mixed economy, the constitution charges the state to prevent exploitation and so the RBI would play both promotional and regulatory roles. Thus the R.B.I. occupies place of ``pre eminence ' ' to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body. It also advices the Government in public finance and monetary regulations. The banks or non banking institutions shall have to regulate their operations in accordance with, not only as per the provisions of the Act but also the rules and directions or instructions issued by the RBI in exercise of the power thereunder. Chapter 3B expressly deals with regulations of deposit and finance received by the R.N.B.Cs. The directions, therefore, are statutory regulations. In State of U.P. vs Babu Ram, ; , this Court held that rules made under a statute must be treated, for all purposes of construction or obligations, exactly as if they were in that Act and are to the same effect as if they contained in the Act and are to be judicially noticed for all purposes of construction or obligations. The statutory rules cannot be described or equated with administrative directions. In D.V.K. Prasada Rao vs Govt. of A.P., AIR 1984 AP 75, the same view was laid. Therefore, the directions are incorporated and become part of the Act itself. They must be governed by the same principles as the statute itself. The statutory presumption that the legislature inserted every part thereof for a purpose to and the legislative intention should be given effect to, would be applicable to the impugned directions. The R.B.I. issued the directions to regulate the operations of the R.N.B.Cs., to safeguard the interest of the depositors. Payment of interest, bonus, premium or other advantage, in whatever name it may be called is reward for waiting or parting with liquidity. It is paid because of positive time preference (one rupee today is preferred to one rupee tomorrow)on the part of the depositor. Therefore, the directions avowed to preserve the right of the depositors to receive back the amount deposited with the contracted rate of interest; it aims to prevent depletion of the deposits collected from the weaker segments of the society and also tends to effect free flow of the business of the R.N.B.Cs. who would desire to operate in their own way. The question, therefore, emerges whether the directions in paras 5 and 12 violate articles 14 and 19(1)(g) of the Constitution. 456 The solidarity of political freedom hinges upon socio economic democracy. The right to development is one of the most important facets of basic human rights. The right to self interest is inherent in right to life. Mahatma Gandhiji, the Father of the Nation, said that ``Every human being has a right to live and therefore to find the wherewithal to feed himself, and where necessary, to clothe and house himself ' '. Article 25 of the Universal Declaration of Human Rights provides that ``everyone has a right to a standard of living adequate for the health and well being of himself and of his family, including food, clothing, housing and medical care. ' ' Right to life includes the right to live with basic human dignity with necessities of life such as nutrition, clothing, food, shelter over the head, facilities for cultural and socio economic well being of every individual. article 21 protects right to life. It guarantees and derives therefrom the minimum of the needs of existence including better tomorrow. Poverty is not always an economic problem alone. Very often it is a social as well as human problem. An agriculturist, an industrial worker, the daily wage earner, rickshaw puller and small self employed teacher, artisan, etc. may have an earning but may be prone to spend his/her entire earnings, apart from on daily necessities of life, on socio religious occasions, fairs, festivals etc. The urge for better tomorrow and prosperous future; the clamour for freedom from want of any kind and social security, make the vulnerable segments of the society to sacrifice today 's comforts to save for better tomorrow. The habit of saving has an educative value for thrift. It endeavors to bring an attitudinal change in life. It enables individuals to assess future specific needs and to build up a financial provision for the purpose. The habit of saving becomes a way of life and harnesses the meagre resources to build up better future. During the days of rising prices, small savings serve as instrument to mop up the extra purchasing power. In addition to wage a war against poverty, waste, unwise spending, hoarding and other activities, habit of saving also enables family budgeting and postponing expenditure which can be deffered in favour of better utilisation in future. To strengthen the urge for thrift and streamline the social security, the disadvantaged need freedom from exploitation and Art.46 of the constitution enjoins the State to protect the poor from all forms of exploitation and social injustice. Investment agencies or commercial banks are intermediaries between savers and investors. They embark upon deposit mobilisation campaign to mop up the limited resources. Commercial banks or financial investment agencies, be it public sector or private sector, are vying with one another to scale new heights in deposit growth each year, devising 457 different deposit schemes to suit the individual needs of the depositors or savers. Mushroom growth of non banking agencies put afloat diverse schemes with alluring offers of staggering high rate of interest and other catchy advantages which would generate suspicion of the bona fides of the offer. But gullible depositors are lured to make deposits. It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptitiously close the company and decamp with the collections keeping the depositors at bay. Therefore, the need to regulate the deposits/subscriptions, in particular, in private sector became imperative to prevent exploitation or mismanagement as social justice stratagem. The directions are, therefore, a social control measure over the R.N.B.Cs., in matters connected with the operation of the schemes or incidental thereto. The direction to investment in the channelised schemes at the given percentage in clauses (a) and (b) of proviso to para 6(1) was intended to deposit or keep deposited the collections in fixed deposit in the public sector banks or invest or keep invested in unencumbered approved securities so as to ensure safety, steady growth and due payment to the subscribers at maturity of the principal amount and the interest, bonus, premium or other advantage accrued thereon. The amounts deposited shall not be less than the total aggregate amounts of liabilities to the subscribers. The deposits or securities shall not be withdrawn or otherwise be dealt with except for a repayment to the subscribers. It should always be shown to be a liability till date of the repayment. This court in Hatisingh Mfg. Co. Ltd. & Anr. vs Union of India & Ors. ; , held that freedom to carry on trade or business is not an absolute one. In the interest of the general public, the law may impose restrictions on the freedom of the citizen to start or carry on his business, whether an impugned provision imposing a fetter on the exercise of the fundamental right guaranteed by article 19(1)(g) amounts to a reasonable restriction imposed in the interest of general public, must be adjudged not in the background of any theoretical standard or pre determinate patterns, but in the light of the nature and the incidence of the right, the interest of the general public sought to be secured by imposing restrictions and the reasonableness of the quality and the extent of the fetters imposed by the directions. The credit worthiness of R.N.B.Cs. undoubtedly would be sensitive. It thrives upon the confidence of the public, on the honesty of its management and its reputation of solvency. The directions intended to promote ``freedom ' ' and ``facility ' ' which are required to be regulated in the interest of all concerned. The directions as a part of the scheme of the Act would be protected from the attack. Vide Latafat Ali Khan & Ors. vs State of U.P., 458 The R.N.B.C. is required to conduct its business activities in the interest of the depositors or subscribers who are unorganised, ignorant, gullible and ignorant of the banking operations. If, however, the acts of R.N.B.C. is detrimental to the interest of the depositors, etc. the R.B.I. has power in Chapter 3B to issue directions and the R.N.B.C. is bound to comply with the directions and non compliance thereof visits with penal action. Admittedly except Peerless General Insurance, the other companies do not have either paid up capital or reserve fund worth the name. Peerless was established in the year 1932 and over the years it built up reserve fund. R.N.B.Cs. are carrying their business by crediting the entire first year 's collections as a capital receipt under actuarial accounting method. In the affidavit of Sri S.S. Karmic, the Chief Officer of the RBI filed on August 13, 1991, it was stated that prior to the directions, 747 R.N.B.Cs. were doing the business. As on that date only 392 R.N.B.Cs. were notified to be existing. Out of them 178 are in West Bengal, 15 in Assam, 26 in Orissa, 6 in Manipur and Meghalaya, 26 in Punjab, 64 in U.P., 22 in Delhi, etc. As on March 31, 1990 out of 185, 35 R.N.B.Cs. alone submitted annual returns, and out of them only 30 have filed their balance sheets. 28 R.N.B.Cs. in the northern region filed their annual returns and 23 filed their balance sheets with incomplete date. 35 of them have negative net worth (loss for exceeding their share capital and reserve). Apart from Peerless, the aggregate capital investment of 15 companies accounted to Rs. 158 lacs. The negative net worth of the 35 companies referred to above would aggregate to Rs.3.6 crores. They raised, apart from Peerless, deposits to the tune of Rs. 86 crores. Many of them have not even designated their banks as required under para 6 of the direction. The amount invested in bank deposits and approved securities fell much short of their deposit liabilities. Verona Commercial Credit and Investment Company, one of the respondents, have accumulated losses to the tune of Rs. 3.8 crores. As per balance sheet their assets are inadequate to meet the liability. Favourite Small Scale Investment, one of the respondents as on December 12, 1989, even their provisional balance sheet shows that total liability towards depositors is Rs. 44.62 crores while its investment in banks and Government security is only Rs. 13 crores. The cash on hand was Rs. 1.74 crores. Rs.8 crores were shown to be loans and advances. The accumulated losses are Rs.22.19 crores as against total share capital and reserve of Rs. 20.73 lacs. It is, thus, clear on its face that while total liabilities are Rs. 49.09 crores, the assets including doubtful loans and advances aggregate to Rs. 26 crores. An inspection into the affairs of the said company conducted in February, 1990 disclosed that upto the end of 1989 the deposit liabilities including interest would be in the region of 459 over Rs. 132 crores. The difference between the inspection and the balance sheet would be due to actuarial principle. It had committed default to pay to its depositors to the tune of Rs. 5.4 crores, which is a gross under estimate. Sri Somnath Chatterjee, the learned Senior Counsel for the Peerless and adopted by other counsel, contended that paragraphs 6 and 12 are totally unworkable. Its compliance would jeopardise not only the existing companies but also the very interest of the depositors and large workmen. No new company would be set up. The direction given in the first Peerless case was to keep in view the interest of the workmen as well; in effect it was given a go bye. At least 25% of collections would be left over as working capital of the company, to carry on its business in a manner indicated by the impugned judgment, so that no depositor would lose his money and no workmen would lose his livelihood and it will be in consonance with public interest. Shri G.L. Sanghi, the learned Senior Counsel for Timex, contended that 50% of collection would be necessary to comply with the impugned directions and another company pleaded for 40%. Further contention of Shri Chatterji was that the actuarial accounting neither violates any law, nor objected to by the Income tax Department. Crediting the first year 's subscription in the accounts as capital receipt would generate company 's working capital for its successful business by meeting the expenditure towards establishment, the commission and a part of profits. Forfeiture clause was already dated before the directions were issued. Interest at 10% with annual compounding would be reasonable return to the subscribers which is being ensured to the depositors. The directions issued by the High Court, subject to the above modifications, would subverse the above purpose. Paras 6 and 12, otherwise, are arbitrary and prohibitive violating their fundamental right to do business assured by articles 19(1)(g) and 14. Sri Harish Salve resisted the contentions with ability. Para 12 is myocardium and para 6 ' is the heart of the directions without which the directions would be purified corpse. On the respondents own showing, for the first two years, by actuarial accounting, the liabilities, as against deposits, are inadequate. The regulation intends to preserve the corpus of the deposits and the interest payable thereon as on date to be a tangible and unencumbered asset at all times, though not repayable. Indisputably the depositors/subscribers stand as unsecured creditors. Undoubtedly every measure cannot be viewed or interpreted in the event of catastrophe overtaking the company. The catchy and alluring but beguiled terms of offer attract the vulnerable segments of the society to subscribe and keep subscribing the small savings for better tomorrow. 460 But many a time, by the date of maturity, their hopes are belied and aspirations are frustrated or dashed to ground. They remain to be helpless spectators with all disabilities to recover the amounts. Pathetic financial position of some of the companies enumerated herein before would amply demonstrate the agony to which the poor subscribers would be subjected to. The fixed deposits and unencumbered securities as per Clauses (a) and (b) of the proviso to paragraph 6(1) would be 80% of the collections of the year of subscription and Shri Chatterji contends to reduce it to 75% and to allow free play to use the residue in their own way. The difference is only 5% and others at vagary. The objects of the direction are to preserve the ability of the R.N.B.C. to pay back to the subscribers/depositors at any given time; safety of the subscribers ' money and his right to unencumbered repayment are thus of paramount public interest and the directions aimed to protect them. The directions cannot and would not be adjudged to be ultra vires of arbitrary by reason of successful financial management of an individual company. An over all view of the working system of the scheme is relevant and germane. The obligation in paragraph 12 of periodical disclosure in the accounts of a company of the deposits together with the interest accrued thereon, whether or not payable but admittedly due as a liability, is to monitor the discipline of the operation of the schemes and any infraction, would be dealt with as per law. The certificate by a qualified Chartered Accountant is to vouchsafe the correctness and authenticity of accounts and would and should adhere to the statutory compliance. The settled accounting practice is that a loan or deposit received from a creditor has to be shown as a liability together with accrued interest whether due or deferred. The actuarial accounting applies to revenues and costs to which the concept of the ``going concern ' ' can be adopted. Therefore, in providing the costs of the company it can set apart its costs on the basis that liability is created for interest, bonus etc. payable in foreseeable future. Undoubtedly the actuarial principle applied by the L.I.C. or the gratuity schemes are linked with life of the assured or the premature death before retirement of an employee, but R.N.B.C. in its contract does not undertake any such risk. The deposit is a capital receipt but not a revenue receipt and its full value shall be shown in the account books of balance sheet as liability of the company. It cannot be credited to the profit and loss account. Para II of Schedule VI of the requires that the amount shown in the profit and loss account should be confined to the income and expenditure of the company. Para 12 of the directions is, thus, in consonance with the . Moreover, in its advertisement and the application forms, 461 the R.N.B.C. expressly hold out to the public that their monies are safe with the bank and in the Government securities. Paragraph 6(1) of the directions only mandates compliance of the promise held out by an R.N.B.C. for repayment at maturity. Sub para (3) of para 6 keeps the deposits unencumbered and to be utilised by the company only for repayment. In other words, paragraph 6 only elongates the contract in the public interest to safeguard the interest of the vulnerable sections of the depositors. The R.B.I. cannot be expected to constantly monitor the working of the R.N.B.C. in its day to day function. The actuarial basis cannot be adopted by the R.N.B.Cs. and the liability must always be reflected in its balance sheet at its full value. Compliance of the direction in para 12, dehors any method of accountancy adopted by a company, intended to discipline its operations. No one can have fundamental right to do any unregulated business with the subscribers/depositors ' money. Even the banks or the financial companies are regulated by ceiling on public deposits fixing nexus between deposits and net worth of the company at the ratio of 3:1, i.e. 25% of the capital net worth. No one would legitimately be expected to get immediate profits or dividend without capital investment. The effect of the clause (a) and (b) of the provision to paragraph 6(1) of the direction, no doubt, freezes the right to profit for a short time, and fastens an incidental and consequential obligation to mop up paid up capital or investment towards establishment and commission charges to tide over teething trouble. But that is no ground to say that it is impossible for compliance, nor could it be said that the directions are palpably arbitrary or unreasonable. Anyone may venture to do business without any stake of his own but is subject to the regulations. A new company without any paid up capital, no doubt,cannot be expected to come into existence nor would operate its business at initial existence with profits. Clause (c) of the provision to paragraph 6(1) of the directions gives freedom on leeway to invest or rotate, not more than 20 per cent of collections etc. in any profitable manner at its choice as a prudent businessman to generate its resources to tide over the teething troubles till it is put on rail to receive succor to its existence, without inhibiting the company 's capacity to mop up small savings, and the directions do not control its operation. The only rider is the approval of the Board of Directors which is inherent. Absence of imposition of any limit on quantum of deposit with reference to paid up capital or reserve fund like non banking financial companies, etc. is a pointer in this regard. Thus there is a reasonable nexus between the regulation and the public purpose, namely, security to the depositors ' money and the right to repayment without any impediment, which undoubtedly is in the public interest. 462 Looking from operational pragmatism, the restrictions though apparently appears to be harsh in form, in its systematic working, it would inculcate discipline in the business management, subserve public confidence in the ability of the company to honour the contractual liability and assure due repayment at maturity of the amount deposited together with interest, etc, without any impediment. In other words, the restrictions in paragraph 6 of the directions intended to elongate the twin purposes, viz.habit of thrift among the needy without unduly jeopardising the interest of the employees of the companies and the R.N.B.Cs working system itself in addition to safety and due payment of depositors ' money. True, as contended by Shri Chatterji that there arises corresponding obligation to pay higher amount of commission to its agents and the commitment should by kept performed and the confidence enthused in the agents. But it is the look out of the businessman. The absence of ceiling on the rate of commission would give choice between the company and its agents to a contract in this regard and has freedom to manage its business. The R.N.B.Cs. are free to incur such expenses and organize their business as they desire including payment of commission as they think expedient. But the subscribers/depositors 'liability, under no circumstances would be in jeopardy and the directions were designed to ensure that the interest of the subscribers/depositors is secured at all times, prescribing investment of an equal sum to the total liability to the subscribers/depositors. Paragraph 12 is only a bridge between the depositors and the promise held out and the contract executed in furtherance thereof as a monitoring myocardium to keep the heart in paragraph 6 functioning without any hiatus. It is settled law that regulation includes total prohibition in a given case where the mischief to be remedied warrants total prohibition. Vide Narendra Kumar vs Union of India, ; But the directions do not do that but act as a siphon between the subscriber/depositor and the business itself. Therefore, they are neither palpably arbitrary nor unjust not unfair. The mechanism evolved in the directions is fool proof, as directed by this court in first Peerles case, to secure the interest of the depositors, as well is capable to monitor the business management of every R.N.B.C. It also, thereby, protects interest of the employees/field staff/commission agent etc. as on permanent basis overcoming initial convulsions. It was intended, in the best possible manner, to subserve the interest of all without putting any prohibition in the ability of a company to raise the deposit, even the absence of any adequate paid up capital or reserve fund or such pre commitment of the owner, to secure such deposits. Thus the directions impose only partial control in the public interest of the depositors. The deposits invested or keep invested qua the com 463 pany always remained its fund till date of payment at maturity or premature withdrawal in terms of the contract. The effect of the impugned judgment of the Calcutta High Court namely redefinition of the aggregate liabilities as contractual liabilities due and payable would have the effect of requiring the R.N.B.Cs. to deposit an amount equal to the sum payable only in the year of maturity allowing free play to the R.N.B.Cs. to use the subscriptions/deposits in its own manner during the entire earlier period, jeopardise the security of the subscribers/depositors and are self defeating. The sagging mismanagement prefaced hereinabove would be perpetrated and the depositor was always at the mercy of the company with all disabilities, killing the very goose namely the thrust to save for prosperous future or to tide over future needs. It is well settled that the court is not a Tribunal from the crudities and inequities of complicated experimental economic legislation. The discretion in evolving an economic measures, rests with the policy makers and not with the judiciary. Indian social order is beset with social and economic inequalities and of status, and in our socialist secular democratic Republic, inequality is an anathema to social and economic justice. The constitution of India charges the state to reduce inequalities and ensure decent standard of life and economic equality. The Act assigns the power to the RBI to regulate monitory system and the experimentation of the economic legislation, can best be left to the executive unless it is found to be unrealistic or manifestly arbitrary. Even if a law is found wanting on trial, it is better that its defects should be demonstrated and removed than that the law should be aborted by judicial fiat. Such an assertion of judicial power deflects responsibilities from those on whom a democratic society ultimately rests. The court has to see whether the scheme, measure or regulation adopted is relevant or appropriate to the power exercised by the authority. Prejudice to the interest of depositors is a relevant factor. Mismanagement or inability to pay the accrued liabilities are evils sought to be remedied. The directions designed to preserve the right of the depositors and the ability of R.N.B.C. to pay back the contracted liability. It also intended to prevent mismanagement of the deposits collected from vulnerable social segments who have no knowledge of banking operations or credit system and repose unfounded blind faith on the company with fond hope of its ability to pay back the contracted amount. Thus the directions maintain the thrift for saving and streamline and strengthen the monetary operations of R.N.B.Cs. The problems of Government are practical and do require rough accommodation. Illogical it may be and unscientific it may seem to be, left to its working and if need be, can be remedied by the R.B.I. by 464 pragmatic adjustment that may be called for by particular circumstances. The impugned directions may at first blush seem unjust or arbitrary but when broached in pragmatic perspective the mist is cleared and that the experimental economic measure is manifested to be free from the taints of unconstitutionality. Para 19 of the directions empowers the RBI to extend time for compliance or to exempt a particular company or a class thereof from all or any of the provisions, either generally or for a specified period subject to such conditions as may be imposed. Power to exempt would include the power to be exercised from time to time as exigencies warrant. An individual company or the class thereof has to place necessary and relevant material facts before the R.B.I. of the hardship and the need for relief. A criticism of arbitrariness or unreasonableness may not be ground to undo what was conceived best in the public interest. What is best is not always discernible. The wisdom of any choice may be disputed or condemned. Mere errors of Government are not subject to judicial review. The legislative remedy may be ineffective to mitigate the evil or fail to achieve its purpose, but it is the price to be paid for the trial and error inherent in the economic legislative efforts to grapple with obstinate social issues. It is proper for interference in judicial review, only, when the directions, regulations or restrictions are palpably arbitrary, demonstrably irrelevant or disriminatory. Exercise of power then can be declared to be void under article 13 of the Constitution. So long as the exercise of power is broadly within the zone of reasonableness, the court would not substitute its judgment for that of legislature or its agent as to matters within their prudence and power. The court does not supplement the feel of the experts by its own values. It is settled law that so long as the power is traceable to the statute mere omission to recite the provision does not denude the power of the legislature or rule making authority to make the regulations, nor considered without authority of law. Section 114 (h) of the Evidence Act draws a statutory presumption that official acts are regularly performed and reached satisfactorily on consideration of relevant facts. The absence of reiteration of objective satisfaction in the preamble as of one under s.45L does not denude the powers, the R.B.I. admittedly has under s.45L to justify the actions. Though s.45L was neither expressly stated nor mentioned in the Preamble of the directions of the required recitation of satisfaction of objective facts to issue the directions from the facts and circumstances it is demonstrated that the R.B.I. had such satisfaction in its consideration of its power under s.45L when the directions were issued . Even otherwise s.45K (3) itself is sufficient to uphold the directions. 465 The impugned directions are thus within the power of the R.B.I. to provide tardy, stable, identifiable and monitorable method of operations by each R.N.B.C. and its compliance of the directions. This will ensure security to the depositors at all times and also make the accounts of the company accurate, accountable and easy to monitor the working system of the company itself and continuance of its workmen. The directions in paragraphs 6 and 12 are just, fair and reasonable not only to the depositors, but in the long run to the very existence of the company and its continued business itself. Therefore, they are legal, valid and constitutionally permissible. The Writ Petition is dismissed and the appeals are allowed. The Writ Petitions filed in the High Court stand dismissed. No costs in this Court. G.N. Petition dismissed Appeals allowed.

While pronouncing its Judgment in Reserve Bank of India vs Peerless General Finance and Investment Co. Ltd., ; , this Court observed that it would be open to the Reserve Bank of India (RBI) to take such steps as were open to it in law to regulate 407 the savings schemes run by Residuary Non Banking Companies (RNBCs) to prevent exploitation of ignorant investors while at the same time taking care to protect the thousands of employees working in such companies. This Court also expressed grave concern at the mushroom growth of financial investment companies offering staggering rates of interests to depositors leading to suspicion whether these companies were speculative ventures floated to attract unwary and credulous investors and capture their hard earned savings. Pursuant to the said observations of this Court and keeping in mind the public interest, the RBI in exercise of its powers under sections 45J and 45K of the , and of all powers enabling it in that behalf, issued certain directions by way of Notification No. DFC 55/DG (O) 87 dated 15.5.1987. A Writ Petition was filed before the High Court challenging the constitutional validity of the said directions issued by the RBI. A Single Judge of the High Court passed certain interim orders. Being aggrieved against the interim orders, the RBI preferred an appeal before the Division Bench. The Division Bench disposed of the appeal as well as the Writ Petition. It held that the RBI was empowered to issue directions to the Residuary Non Banking Companies in the interest of depositors; but to the extent such directions were found to be prohibitory or unworkable and as such unreasonable, would be beyond the powers of RBI. Peerless which became a party respondent, filed an application for clarification of the judgment, as regards payment against discontinued certificates. The High Court clarified that in such cases the depositors be allowed to take loan against payments made till discontinuance on such terms and conditions as the company may stipulate. The present appeals were filed by RBI against the orders of the High Court. A Writ Petition has been filed directly before this Court, challenging the directions as being ultra vires of sections 45J and 45K of the as also violative of the provisions of the constitution. On behalf of the Writ Petitioners it was contended that since the 1987 directions issued by RBI were in the nature of subordinate legislation, it was clear that RBI overstepped the bounds of the 408 parent statute; that the source of power for issuing the directions as being derived from section 45L was only an after thought; that from the working results it appeared impossible to carry on the traditional business for any longer period without incurring huge losses; that from in the business carried on by Peerless and other similar RNBCs that the working capital is generated out of the subscriptions received from the certificate holders either in lump sum or in instalments and such deposits are paid back with the guaranteed accretions, bonus, interest etc. in terms of contract at the end of the stipulated term; that the interest of the depositors has not been impaired in any manner whatsoever by the method of accountancy followed by Peerless and all similar companies, namely, appropriation of a part of the subscription to the profit and loss account and meeting the working capital requirements out of the same. On behalf of the appellant RBI, it was contended that it had the power to issue the said directions, that the said directions were issued in pursuance to this Court 's observations, and in public interest; that the said directions had not imposed any restriction on the right to carry on business but only placed a restriction with respect to one of the modes of raising reserves i.e. through public deposits; that the directions cannot be condemned as being violative of Article 19(1) (g); and that formula laid down by the High Court was self defeating and deprived altogether the benefits of security provisions given to depositors under the 1987 directions. On behalf of the Peerless Field Officers Association, it was contended that if the directions of 1987 were to be upheld, the undertakings of Peerless would face inevitable closure and almost 14 lac field officers would lose their only source of livelihood. Allowing the appeals filed by RBI and dismissing the Writ Petition filed by the Finance Companies, this Court, HELD: Per Kasliwal, J 1.1 The Reserve Bank was competent and authorised to issue the impugned directions of 1987, in exercise of powers conferred under Section 45K(3) of the Act. [431 C] 1.2 A combined reading of Section 45J, 45K and 45L of the unmistakably goes to show that the Reserve Bank if it considers necessary in the public interest so to do, can specify the conditions subject to which any prospectus or advertisement soliciting deposits of money from the public may be 409 issued. It can also give directions to non banking institutions in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received. This latter power flows from sub section (3) of Section 45K of the Act. The Bank under this provision can give directions in respect of any matters relating to or connected with the receipt of deposits. Thus a very wide power is given to the RBI to issue dirctions in respect of any matters relating to or connected with the receipt of deposits. It cannot be considered as a power restricted or limited to receipt of deposits only. Such an interpretation would be violating the language of section 45K (3) which furnishes a wide power to the Reserve Bank to give any directions in respect of any matters relating to or connected with the receipt of deposits. The Reserve Bank under this provision is entitled to give directions with regard to the manner in which the deposits are to be invested and also the manner in which such deposits are to be disclosed in the balance sheet or books of accounts of the company. The word `any ' qualifying matters relating to or connected with the receipt of deposits in the above provision is of great significance and directions of 1987 are fully covered under Section 45K (3) of the Act, which gives power to the Reserve Bank to issue such directions. [430 D H; 431 A] 1.3 When an authority takes action which is within its competence, it cannot be said to be invalid merely because it purports to be made under a wrong provision, if it can be shown to be within its power under any other provision. [431 B] Indian Aluminium Company etc. vs Kerala State Electricity Board; , , relied on. 2.1 The function of the Court is to see that lawful authority is not abused but not to attain itself the task entrusted to that authority. It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power. It must keep within the limits of the authority committed to it. It must act in good faith and it must act reasonably. Courts are not to interfere with economic policy which is the function of experts. It is not the function of the Courts to sit in Judgment over matters of economic policy and it must necessarily be left to the expert bodies. The function of the Court is not to advice in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent. It would be hazardous and risky for the Courts to tread an 410 unknown path and should leave such task to the expert bodies. [442 C D] 2.2 Reserve Bank of India which is banker 's bank is a creature of Statue. It has large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bonafides of the Reserve Bank in issuing the impugned directions of 1987. The Reserve Bank plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country. It is the duty of the Reserve Bank to safeguard the economy and financial stability of the country. In fact the directions of 1987 were issued by RBI after mature consideration with the help and advice of experts. [441 B D, 443 D E] Delhi Cloth and General Mills etc. vs Union of India etc. ; , ; M/s Prag Ice & Oil Mills and Anr. vs Union of India; , ; Shri Sitaram Sugar Company Limited and Anr. vs Union of India & Ors. , ; ; R.K. Garg vs Union of India & Ors. etc.; , , relied on. The Reserve Bank was right in taking the stand that if the companies want to do their business, they should invest their own working capital and find such resources elsewhere with which the Reserve Bank has no concern. [445 C] 4. It is not the concern of this Court to find out as to whether actuaial method of accounting or any other method would be feasible or possible for the companies to adopt while carrying out the conditions contained in paragraphs 6 and 12 of the directions of 1987. The companies are free to adopt any mode of accounting permissible under the law but it is certain that they will have to follow the entire terms and conditions contained in the directions of 1987 including those contained in paragraphs 6 and 12. [445 E F] 5.1 It is not possible for the Court to determine as to how much percentage of deposit of first instalment should be allowed towards expenses which may consist of commission to agents, office expenses etc. It would depend from company to company based on various factors such as paid up capital, percentage of commission paid to the agents, rate of interest paid to the depositors, period of maturity for repayment, office expenses and various other factors necessary to mop up working capital out of the depositors money. 411 One cannot ignore the possibility of persons having no stake of their own starting such business and after collecting huge deposits from the investors belonging to the poor and weaker sections of the society residing in rural areas, and to stop such business after a few years thus devouring the hard earned money of the small investors. In such kind of business, the agents always take interest in finding new depositors because they get a high rate of commission out of the first instalment, but they do not have same enthusiasm in respect of deposit of subsequent instalments. In these circumstances if the Reserve Bank has issued the directions of 1987 to safeguard the larger interest of the public and small depositors it cannot be said that the directions are so unreasonable as to be declared constitutionally invalid. [447 E H, 448 A] 5.2 It cannot be said that the directions of 1987 amount to prohibition of the business in a commercial sense and without reasonable basis. Nor are the directions violative of Article 19(1) (g) of the Constitution of India. [442 G H, 443 A B] Mohammad Yasin vs The Town Area Committee, Jalalabad and Anr., ; ; Premier Automobiles Ltd. and Anr vs Union of India, ; ; Shree Meenakshi Mills Ltd. vs Union of India, ; , referred to. So far as Peerless is concerned there is no possibility of its closing down such business. It has already large accumulated funds collected by making profits in the past serveral years. Thus it has enough working capital in order to meet the expenses. It cannot be said that after some years Peerless will have to close down its business if the directions contained in paragraphs 6 and 12 are to be followed. The working capital is not needed every year as it can be rotated after having invested once. If the entire amount of the subscriptions is deposited or invested in the proportion of 10% in public sector banks, 70% in approved securities and 20% in other investments, such amounts will also start earning interest which can be added and adjusted while depositing or investing the subsequent years ' deposits of the subscribers. In any case it lies with the new entrepreneurs while entering such field of business to make arrangement of their own resources for working capital and for meeting the expenses and they cannot insist in utilising the money of the depositors for this purpose. So far as the companies already in this field they must have earned profits in the past years which can be utilised as their working capital. It is important to note that the direc 412 tions of 1987 have been made applicable from 15th May, 1987 prospectively and not retrospectively. [447 H; 448 C F] 7. The directions of 1987 as well as any other directions issued from time to time by the Reserve Bank relating to economic or financial policy are never so sacrosanct that the same cannot be changed. Even the financial budget for every year depends on the economic and financial policy of the Government existing at the relevant time. So far as the impugned directions are concerned if it is found in future that the same are not workable or working against the public interest, the Reserve Bank is always free to change its policy and scrap or amend the directions as and when necessary. If at any time, the Reserve Bank feels that the business of the kind run at present by the Peerless and other companies in terms of the directions of 1987 are not yielding the result as envisaged by the Reserve Bank, it will always be prepared to consider any new proposals which may be conductive both in the interest of the large multitude of the investors as well as the employees of such companies. [448 G H, 449 A B] Per Ramaswamy, J. (Concurring) : 1. The directions of 1987 issued by RBI are within the power of the RBI to provide tardy, stable, identifiable and monitorable method of operations by each RNBC and its compliance of the directions. This will ensure security to the depositors at all times and also make the accounts of the company accurate, accountable and easy to monitor the working system of the company itself and continuance of its workmen. The directions in paragraphs 6 and 12 are just, fair and reasonable not only to the depositors, but in the long run to the every existence of the company and its continued business itself. Therefore, they are legal, valid and constitutionally permissible. [464 G H, 465 A] 2. Section 45K of the empowers the RBI to collect information from non banking institutions as to deposit and to give directions that every non banking institution shall furnish to the Bank, in such form, at such intervals and within such time, such statements, information or particulars relating to or connected with deposits received by the non banking institution, as may be specified by RBI by general or special order including the rates of interest and other terms and conditions on which they are received. Under sub section (3) thereof the RBI is entitled to issue 413 in the public interest directions to non banking institutions in respect of any matter relating to or connected with the receipt of deposits including the rates of interest payable on such deposits and the periods for which deposits may be received. The use of the adjective `any ' matter relating to or connected with the receipt of deposits is wide and comprehensive to empower the RBI to issue directions in connection therewith or relating to the receipt of deposits. But exercise of the power is hedged with and should be `in the public interest '. [450 C F] 3.1 The State can regulate the exercise of the fundamental right to save the public from a substantive evil. The existence of the evil as well as the means adopted to check it are the matters for the legislative judgment. But the court is entitled to consider whether the degree and mode of the regulation is in excess of the requirement or is imposed in an arbitrary manner. The Court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether it over stepped the limits of social legislation. Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method. If if directly transgresses or substantially and inevitably affects the fundametal right, it becomes unconstitutional, but not where the impact is only remotely possible or incidental. The Court must life the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavour should be made to have the efficacy of fundamental right maintained and the legislature is not invested with unbounded power. The Court has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right. [453 F H, 454 A] 3.2 In the interest of the general public, the law may impose restrictions on the freedom of the citizen to start or carry on his business. Whether an impugned provision imposing a fetter on the exercise of the fundamental right guaranteed by Article 19(1) (g) amounts to a reasonable restriction imposed in the interest of general public, must be adjudged not in the background of any theoretical standard or pre determinate patterns, but in the light of the nature and the incidence of the right, the interest of the general public sought to be secured by imposing restrictions and the reasonableness of the quality and the extent of the fetters imposed by the directions. The credit worthiness of RNBCs undoubtedly would 414 be sensitive. It thrives upon the confidence of the public, on the honesty of its management and its reputation of solvency. The directions intended to promote `freedom ' and facility which are required to be regulated in the interest of all concerned. [457 E F] Hatisingh Mfg. Co. Ltd. & Anr. vs Union of India & Ors. , ; ; Latafat Ali Khan & Ors. vs State of U.P., [1971] Supp. SCR 719, relied on. There is presumption of constitutionality of every statute and its validity is not to be determined by artificial standards. The court has to examine with some strictness the substance of the legislation to find what actually and really the legislature has done. The court would not be over persuaded by the mere presence of the legislation. In adjudging the reasonableness of the law, the court will necessarily ask the question whether the measure or scheme is just, fair, reasonable and appropriate or unreasonable, unnecessary and arbitrarily interferes with the exercise of the right guaranteed in of the Constitution. The Court has to maintain a delicate balance between the public interest envisaged in the challenged provision and the individual 's right taking into account the nature of his right said to be infringed, the underlying purpose of the restriction, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the restriction imposed, the prevailing condition at the time, the surrounding circumstances, the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose. All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction. The Court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction. The court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits. [454 B C, E G] 5. The directions are incorporated and became part of the Act itself. They must be governed by the same principles as the statute itself. The statutory presumption that the legislature inserted every part thereof for a purpose and the legislative intention should be given affect to, would be applicable to the directions of 1987 as well. [445 E] 6.1 The RBI issued the directions to regulate the operations 415 of the RNBCs, to safeguard the interest of the depositors. Payment of interest, bonus, premium or other advantage, in whatever name it may be called is reward for waiting or parting with liquidity. It is paid because of positive time preference (one rupee today is preferred to one rupee tomorrow) on the part of the depositor. Therefore, the directions avowed to preserve the right of the depositors to receive back the amount deposited with the contracted rate of interest; it aims to prevent depletion of the deposits collected from the weaker segments of the society and also tends to affect free flow of the business of the RNBCs who would desire to operate in their own way. [455 F H] 6.2 Mushroom growth of non banking agencies put afloat diverse schemes with alluring offers of staggering high rate of interest and other catchy advantages which would generate suspicion of the bona fides of the offer. But gullible depositors are lured to make deposits. It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptiously close the company and decamp with the collections keeping the depositors at bay. Therefore, the need to regulate the deposits/subscriptions, in particular in private sector became imperative to prevent exploitation or mismanagement as a social justice strategem. [457 A B] 6.3 RBI occupies place of `pre eminence ' to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body. It also advises the Government in public finance and monetary regulations. The banks or non banking institutions shall have to regulate their operations in accordance with not only as per the provisions of the Act but also the rules and directions or instuctions issued by the RBI in exercise of the power thereunder. Chapter 3B of the expressly deals with regulations of deposit and finance received by the RNBCs. The directions, therefore, are statutory regulations. [455 B D] Joseph Kuruvilla Vellukunnel vs Reserve Bank of India & Ors., [1962] Suppl. 3 SCR 632; State of U.P. vs Babu Ram, ; ; D.V.K. Prasada Rao vs Govt. of A.P., AIR 1984 A.P. 75, relied on. The objects of the direction are to preserve the ability of the RNBC to pay back to subscribers/depostitors at any given 416 time; safety of the subscribers ' money and his right to unencumbered repayment are thus of paramount public interest and the directions aimed to protect them. The directions cannot and would not be adjudged to be ultra vires or arbitrary by reasons of successful financial management of an individual company. An overall view of the working system of the scheme is relevant and germane. [460 C D] 8. The obligation in paragraph 12 of periodical disclosure in the accounts of a company of the deposits together with the interest securd thereon, whether or not payable, but admittedly due as a liability, is to monitor the discipline of the operation of the schemes and any infraction, would be dealt with as per law. The certificate by a qualified Chartered Accountant is to vouchsafe the correctness and authenticity of accounts and would and should adhere to the statutory compliance. [460 D E] 9. The settled accounting practice is that a loan or deposit received from a creditor has to be shown as a liability together with accrued interest whether due or deferred. The actuarial accounting applies to revenues and costs to which the concept of the `going concern ' can be adopted. Therefore, in providing the costs of the company it can set apart its costs on the basis that liability is created for interest, bonus etc. payable in foreseeable future. Undoubtedly the actuarial principle applied by the LIC or the gratuity schemes are linked with life of the assured or the premature death before retirement of an employee, but RNBC in its contract does not undertake any such risk. The deposit or loan is a capital receipt but not a revenue receipt and its full value shall be shown in the account books or balance sheet as liability of the company. It cannot be credited to the profit and loss account. of Schedule I of the requires that the amount shown in the profit and loss account should be confined to the income and expenditure of the company. Para 12 of the directions is, thus, in consonance with the . Paragraph 6 only elongates the contract in the public interest to safeguard the interest of the vulnerable sections of the depositors. The RBI cannot be expected to constantly monitor the working of the RNBC in its day to day function. The actuarial basis cannot be adopted by the RNBCs. and the liability must always be reflected in its balance sheet at its full value. Compliance of the direction in para 12, dehors any method of accountancy adopted by a company, intended to discipline its operations. [460 E H, 461 A C] 417 10. Regulation includes total prohibition in a given case where the mischief to be remedied warrants total prohibition. The directions of 1987 are neither palpably arbitrary nor unjust nor unfair. The mechanism evolved in the directions is fool proof, to secure the interest of the depositors, as well as capable of monitoring the business management of every RNBC. It also protects the interest of the employees/field staff/commission agents etc. on permanent basis over coming initial convulsion. It was included, in the best possible manner, to subserve the interest of all without putting any prohibition in the ability of a company to raise the deposit, even the absence of any adequate paid up capital or reserve fund or such pre commitment of the owner, to secure such deposits. [462 E G] Narendra Kumar vs Union of India, ; , relied on. Reserve Bank of India etc. vs Peerless General Finance and Investment Co. Ltd. & Ors. ; , , referred to. So long as the power is traceable to the statute, mere omission to recite the provision does not denude the power of the legislature or rule making authority to make the regulations, nor consiered without authority of law. The asbsence of reiteration of objective satisfaction in the preamble as of one under Section 45L does not denude the powers; the RBI admittedly has the power under Section 45L, to justify the actions. Though Section 45L was neither expressly stated nor mentioned in the Preamble of the directions of the required recitation or satisfaction of objective facts to issue the directions, from the facts and circumstances it is demonstrated that the RBI, had such satisfaction in its consideration the power under Section 45L, when the directions were issued. Even otherwise Section 45K (3) itself is sufficient to uphold the directions. [464 F H] 1.2. The court has to see whether the scheme, measure or regulation adopted is relevant or appropriate to the power exercised by the authority. Prejudice to the interest of depositors is a relevant factor. Mismanagement or inability to pay the accrued liabilities are evils sought to be remedied. The directions of 1987 designed to preserve the right of the depositors and the ability of RNBC to pay back the contractual liability. It also intended to prevent mismanagement of the deposits collected from vulnerable social segments who have no knowledge of banking operations or credit system and repose unfounded blind faith on the company with fond hope of its ability to pay back the contracted amount. Thus the directions maintain 418 the thrift for saving and streamline and strengthen the monetary operations of RNBCs. [463 E G]

ivil Appeals Nos. 945 47 of 1991. From the Judgment and Order dated 8.8.1990 of the Punjab & Haryana High Court in L.P.A. Nos. 266, 267 and 268 of 1986. P.P. Rao, J. Lal, Ms. Yasmin Tarapore, S.K. Bagga and C.M. Nayar for the Appellants. G.L. Singhi, J.K. Sibal and Ms. Kamini Jaiswal for the Respondents. The Judgment of the Court was deliverd by FATHIMA BEEVI, J. Special leave granted. These Civil Appeals arise from the common judgment dated 8.8.1990 of the High Court of Punjab and Haryana dismissing Letters Patent Apeals against the judgment dated 12.2.1986 of the single Judge allowing writ petitions filed under Articles 226 and 227 of the Constitution of India. Civil Appeals arising out of S.L.P. (C) Nos. 14471 73 of 1990 are filed by the State of Punjab and Civil Appeals arising out of S.L.P. (C) Nos. 14236 38 of 1990 are filed by Ram Saran and O.P. Singhla, the respondents in the writ petitions. We shall hereinafter refer the contesting respondents Ram Saran and O.P. Singhla as 'the appellants ' and writ petitioners as 'the petitioners ' for the sake of convenience. In the Punjab Excise & Taxation Department, there were two separate and distinct cadres known as Assistant Excise and Taxation 733 Officers governed under the Punjab Excise and Taxation Department (State Service Class III A) Rules, 1956 (hereinafter referred to as Class III/A Rules ') and the Excise and Taxation Officers governed by the Punjab Excise and Taxation Department (State Service Class II) Rules. Under the Class II Rules, appointment to the cadre of Excise and Taxation Officers was made (a) by direct recruitment to the extent of 50% and (b) by promotion from amongst Assistant Excise and Taxation Officers to the extent of 50%. Under Class III A Rules, subordinate staff was eligible for promotion to the extent of 50% of the vacancies of Assistant Excise and Taxation Officers and their shares were as under: (i) Taxation Inspector 25% (ii) Excise Inspector 12 1/2% (iii) Ministerial Staff Head Office 6 1/4% (iv) Ministerial Staff Sub Office 6 1/4% The appellants as well as the writ petitioners joined the ministerial cadre of the Excise and Taxation Department as Clerks and were confirmed as such. The writ petitioners were promoted to the higher post and later appointed as Excise/Taxation Inspectors in 1971 72 by transfers under Rule 7(a)(ii) of the Punjab Excise Subordinate Service Rules, 1943. On such transfer as Excise/Taxation Inspectors, the lien of the writ petitioners was suspended in accordance with the provisions of Rule 3.14(b) of the Punjab Civil Services Rules (Volume I Part I). The appellants continued in the ministerial cadre, Ram Saran as Assistant and O.P. Singhla as Superintendent. The Excise and Taxation Department was reorganised on 18th May, 1977. The cadre of Assistant Excise and Taxation Officers was abolished on 18th May, 1977 and the Assistant Excise and Taxation Officers were redesignated as Excise and Taxation Officers. Thereafter Class III A Rules became redundant and inoperative and under Class II Rules became redundant and inoperative and under Class II Rules, there was no provision for promotion from subordinate staff direct as Excise and Taxation Officers. The Government in order to provide avenues of promotion to the subordinate staff decided to make suitable amendment to the Class II Rules on the following terms: "Rule 5. The members of the service shall be recruited in 734 the following manner, namely: a. xxx xxx xxx b. In the case of an Excise and Taxation Officer; (i) by promotion from amongst the Taxation Inspectors and Excise Inspectors who have an experience of working as such for a minimum period of five years; or (ii) by promotion from amongst the Superintendents, Assistant, Accountants and Senior Scale Stenographers working in the Excise and Taxation Commissioners Head Office and in the Divisional and District Offices of the Department of Excise and Taxation, Punjab," It was further provided that there will be certain quota for each of the above categories for promotion to the rank of Excise and Taxation Officers. The State Government decided to adopt and apply the draft provision of Rule 5 in the matter of filling up of the vacancies in the carde of Excise/Taxation Officers before rules could be formally promulgated. Thus on 22.8.1983, Ram Saran and O.P. Singhla were promoted as Excise/Taxation Officers. The writ petitioners having been transferred to the other cadres of Excise/Taxation Inspectors have continued there for 14/15 years beyond and period of probation and also qualified the departmental test for Inspectors and they were not considered for the promotion as Excise and Taxtion Officers. The writ petitions were, therefore, filed challenging the promotion of the appellant mainly on the ground that on the basis of their seniority and lien on the post in the ministerial cadre, the writ petitioners had a right to be considered for promotion to the post of Excise and Taxation Officers prior to the appellants. The contention of the appellants as well as the State was that though the lien of the writ petitioners in the ministerial cadre was suspended in terms of Rule 3.14(b) of the Punjab Civil Service Rules, if the petitioners wanted that they should be considered for the post of Excise and Taxation Officers on the basis of their lien in the ministerial cadre, they may seek reversion and thereafter their case would be considered on merits and under rules. It was clarified by the Financial Commissioner in the order dated 7.8.1985 that the case of the writ petitioners would be considered in the light of the eligibility under the 735 relevant rule, that is to say, the amended Rule 5. The eligibility prescribed under the said rule for promotion from amongst Superintendents etc. in the ministerial service includes experience of working as such for a period of five years. The writ petitioners felt that if the service rendered by them as Excise and Taxation Inspectors was not being considered as service rendered in the ministerial cadre, they would be ineligible for consideration to the post of Excise and Taxation Officers. The learned single Judge accepted the contention of the writ petitioners that there was no conscious decision to apply the draft rules and consequently for the post of Excise and Taxation Officer, the writ petitioners are entitled to be considered without any bar of eligibility as their juniors had already been considered for the post. On appeal, the Division Bench proceeded on the assumption that the draft rules though not promulgated were rightly implemented. The Division Bench dealt with the question whether the service rendered on transfer to the ex cadre would be available to the writ petitioners in the matter of their promotion to the higher posts thus: "In view of this, question that calls for determination is as to whether on the return of the writ petitioners from the post of Excise and Taxation Inspectors to the Ministerial cadre, the service rendered by them on the post of Excise and Taxation Inspector could by deeming fiction be considered as having been rendered in the Ministerial cadre? The answer to this question is that such a service is to be counted as if the petitioners were always in the Ministerial cadre. Once it is held that the petitioner lien was only suspended under Rule 3.14(b) of the Punjab Civil Service Rules, the petitioners had a right to come back to their posts in the Ministerial cadre and once that is so, the rest would follow as if for all times deemingly they were in the Ministerial cadre. " The Division Bench relied on the decision of this Court in State of Mysore & Anr. vs P.N. Nanjundiah & Anr., , and opined that the entire service rendered by the petitioners as Excise and Taxation Inspectors will be considered in the Ministerial cadre and if that is counted the petitioners would be eligible for promotion under the relevant rules. It rejected the contention that the petitioners could not be said to be retaining a lien in the Ministerial cadre as they had successfully completed the period of probation as Excise and Taxation 736 Inspectors and they will be deemed to be confirmed there. The Division Bench endorsed the view that the revival of the lien essentially means that it stands revived with effect from the date it had been suspended, and dismissed the appeals observing: ". we may observe that the petitioners shall now be considered forthwith for the posts of ETOs from the date their juniors were promoted and if found suitable they will be promoted to that rank from the dates their juniors were promoted and they would be entitled to all the consequential benefits arising out of their promotion from the said date. " Shri P.P. Rao, the Senior Counsel for the appellants, and Shri G.L. Sanghi, the Senior Counsel for the respondents (writ petitioners), conceded that both parties claim promotion to the post of Excise and Taxation Officers only by virtue of the provision in the amended Rule 5 of Class II Rules and, therefore, the question whether there had been conscious application of the said rule before promulgation is only academic. We agree with the view of the High Court that for the purpose of present controversy we have to assume that the amended Rules were rightly implemented before they were formally promulgated in effecting the promotions now challenged. The appellants maintain that the Division Bench as clearly wrong, and that the petitioners in order to claim the benefit of promotion from the ministerial cadre under the amended Rules have necessarily to satisfy the eligibility test. To be more specific, they should have actual experience of five years in the ministerial cadre even when they are reverted back to that cadre. We have said that the petitioners were appointed as Inspectors by transfer under Rule 7 of the Punjab Excise Subordinate Service Rules, 1943 and thereafter they belonged to a different cadre. Their lien had also been suspended after three years. The Punjab Civil Services Rules, Volume, I, Part I, Rule 3.14 reads: "3.14. (a) A competent authority shall suspend the lien of a Government employee on a permanent post which he holds substantively; if he is appointed in a substantive capacity 737 (1) to a tenure post, or (2) to a permanent post outside the cadre on which he is borne, or (3) provisionally, to a post on which another Government employee would hold a lien, had his lien not been suspended under this rule. (b) A competent authority may, at its option, suspend the lien of a Government employee on a permanent post which he holds substantively if he is deputed out of India or transferred to foreign service, or in circumstances not covered by clause (a) of this rule, is transferred, whether in a substantive or officiating capacity, to a post in another cadre, and if in any of these cases there is reason to believe that he will remain absent from the post on which he holds a lien, for a period of not less that three years. (c) xxx xxx xxx (d) If a Government employee 's lien on a post is suspended under clause (a) or (b) of this rule, the post may be filled substantively, and the Government employees appointed to hold it substantively shall acquire a lien on it: Provided that the arrangements shall be reversed as soon as the suspended lien revives. Note 1. xxx xxx xxx Note. When a post is filled substantively under this clause, the appointment will be termed "a provisional appointment"; the Government employee appointed will hold a provisional lien on the post; and that lien will be liable to suspension under clause (a) but not under clause (b) of this rule. (e) xxx xxx xxx (f) A Government employee 's lien which has been suspended under clause (b) of this rule shall revive as soon as he ceased to be on deputation out of India or on foreign service or to hold a post in another cadre . " 738 According to the appellants, the respondents having been transferred to the cadre of Excise and Taxation Inspectors and having continued there for 14/15 years beyond the period of probation, their lien over ministerial post was suspended. The consideration of their names for the purpose of promotion as Excise and Taxation Officers from the ministerial post did not arise. The amended Rule introduced eligibility that would exclude the service rendered by the petitioners in other posts and if such service is excluded, the petitioners would be ineligible. The lien of the petitioners had been suspended by the competent authority under the mandatory provisions of Rule 3.14(b) referred to. They could seek reversion to their parent ministerial cadre and claim consideration for promotion to the post of Excise and Taxation Officers according to their eligibility and suitability. The next below rule does not apply to the case of promotion to the higher posts in other cadres under specific rules governing promotions to those cadres. The recruitment to the post of Excise and Taxation Officer is governed by Punjab Excise and Taxation Department (State Service Class II) Rules, 1956. The eligibility of Taxation Inspectors and Excise Inspectors and members of ministerial establishment for the post is governed by the amended Rule 5. According to the proposed Rule 5(b)(ii), promotion to the post of Excise and Taxation Officer is to be made from amongst the Superintendents, Assistants, Accountants and Senior Scale Stenographers working in the Excise and Taxation Commissioners Head Office and in the District and Divisional Offices. In view of this provision, the Taxation Inspectors and Excise Inspectors whose lien against their posts in the ministerial cadres has been suspended and who are not working on the eligible ministerial establishment posts and who have been working as Taxation Inspectors and Excise Inspectors for a long number of year cannot claim that they are to be considered automatically for recruitment to the post of Excise and Taxation Officer. The normal line of promotion within the cadre for the members of the ministerial establishment was from the lowest post of a Clerk to the highest post of a Superintendent. So also the further channel of promotion was open to the Inspectors to the post of Excise and Taxation Officer. If the Inspectors are to be considered for the post of Excise and Taxation Officer from the quota of the ministerial establishment, that will result in the Inspectors getting two avenues for promotion while the ministerial staff losing even the one which had been provided. The appointment to the ex cadre posts of Excise and Taxation Inspector is made by transfer in accordance with the provisions of Rule 739 7 of Subordinate Service Rules, 1943 which provide that appointment to the cadre post shall be made by transfer or deputation of an official already in Government service. It implies that any Government employee irrespective of his office can be appointed as Excise or Taxation Inspector. The Excise and Taxation Inspectors ' cadre is distinctly different from the ministerial cadre having duties or functions altogether different in nature and content. Instead of waiting for their turn to be promoted from the Inspectors quota, the petitioners have laid the claim to the quota in the ministerial service. The appellants are also persons who have been confirmed in the ministerial cadre and have worked for more than 20 years as such. The result would be that there would be no promotions to the post of Excise and Taxation Officer from the ministerial staff as such, and those who got transferred as Inspectors would be getting double benefit by claiming promotion to the post of Excise and Taxation Officer as members of the ministerial staff while retaining their right to claim promotion from within the quota specifically provided for the Inspectors. The petitioners with suspended lien on the post of Clerk and continuously holding the Inspector 's post for over 13 years cannot be considered to be at par with officials continuously working on the ministerial post for over 21 year. From the scheme of the Rules and the method of recruitment, it is clear that the petitioners while working as Inspectors on appointment by transfer to that cadre had the advantage of being considered for promotion as Officers under the amended Rule 5 out of the quota for Inspectors, while the ministerial staff to the exclusion of the Inspectors were entitled to certain percentage. The petitioners without being on the ministerial cadre even by reversion could not claim promotion as a member of the ministerial cadre without revival of the lien. Such revival could be effected only on reversion and not while the lien remained suspended. When the rule requires members of the ministerial staff to have experience as such for five years to satisfy the elibility requirement, the Inspectors cannot claim that service in the different cadre with their lien suspended be equated to service in the ministerial cadre and treated as experience in the ministerial cadre even if the functions and duties of the Inspectors may be of identical nature. The purpose of the rule is to provide promotional avenues to different categories within specified limits. The benefit intended for one category cannot be extended to another category by stretching the rules, particularly when no injustice would result. The argument that the petitioners if found ineligible would remain in the lower cadre while their juniors are being promoted to the higher cadre 740 cannot be coutenanced. Even when the juniors continued in the lower ministerial cadre for long years, the petitioners were in a different cadre which had a larger promotional avenue and they are satisfied in that post. If the petitioners did not exercise their option to revert back to the ministerial cadre at the right time to qualify themselves for further promotion, the appellants cannot be deprived of the benefit they derived by continuing in the lower cadre on account of that situation. The High Court was clearly wrong in holding that the petitioners have acquired eligibility by rendering service in the cadre of Inspectors since their lien had been suspended. The decision in State of Mysore 's case (supra) is distinguishable on facts. Rule 53(b)(i) of the Mysore Service Rules considered in that case provided that service in another post whether in a substantive or officiating capacity shall count for increments in the time scale applicable to the post on which the Government servant holds a lien or as well as in the time scale applicable to the post, if any, on which he would hold a lien had his lien not been suspended. The Court noticed that the service of an officer on deputation to another department is treated as equivalent to the service in the parent department under the rule. On account of that equation between the service in the two departments, it was held that the service on deputation should be deemed to be rendered in the parent department. The ratio of the decision is, therefore, not applicable in the present case. In C. Narasinga Rao & Ors. vs State of Andhra Pradesh by its Secretary, Vol. 2 1968 S.L.R.644, Rule 9 of the Andhra Pradesh State and Subordinate Service Rules provided that service rendered in the transferred department should be deemed to have been rendered in the parent department for promotion and seniority. And when the rule is thus specific, it was held that the petitioners ' service in the police department should be deemed to have been rendered in the parent department entitling them to promotion. If the Government employee was on deputation or holding a post in another cadre, the lien shall revive as soon as he ceased to hold the post in another cadre. There is no revival of the lien during the period the employee continues to hold a post in another cadre. Therefore, during the period the suspension is operative, the employee cannot claim that he had been continuing in the post in the parent cadre and gaining experience. When the rule is clear and specific that for the purpose of promotion from the cadre of Superintendents, Assistants, Accountants, Senior Scale Stenographers to the post of Excise and 741 Taxation Officers, the eligibility qualification is 'experience of working 'as such ' for five years ' the employee is not entitled to claim the experience in the ex cadre as experience of working in the ministerial cadre. In the light of what has been stated above, we are unable to uphold the decision of the High Court. The writ petitions are liable to be dismissed. Accordingly, we allow the appeals. R.N.J. Appeals allowed.

In the Punjab Excise and Taxation Department there were two separate cadres known as "Assistant Excise & Taxation Officers" governed under the State Service Class III A Rules, 1956 and "Excise & Taxation Officers" governed by the State Service Class II Rules. Under the class II Rules, appointments were made in the ratio of(a) 50% by direct recruitment and (b) 50% by promotion from amongst Assistant Excise and Taxation Officers. Likewise under the Class III A Rules 50% of the vacancies were filled by direct recruitment and 50% by promotion from the subordinate staff comprising the Taxation Inspectors, Excise Inspectors, Ministerial Staff Head Office and Ministerial Staff Sub office who within themselves had shares as laid down. The Writ Petitioners and the contesting respondents Ram Saran and O.P. Singhla had initially joined the Punjab Excise and Taxation Department as clerks and were confirmed as such. The Petitioners were promoted and appointed as Excise/Taxation Inspectors by transfer under Rule 7(a)(ii) of the Punjab Excise Subordinate Service Rules, 1943 and their lien in the taxation department suspended under Rule 3.14(b) of the Punjab Civil Service Rules. Whereas Ram Saran and O.P. Singhla continued in the ministerial cadre and were Assistant and Superintendent respectively at the relevant time. 730 Following reorganisation of the department, the carde of Assistant Excise & Taxation Officers was abolished and all the Assistant Excise & Taxation Officers were redesignated as Excise and Taxation Officers. Consequently Class III A Rules became redundant. As under Class II Rules there was no provision for promotion of subordinate staff direct as Excise & Taxation Officers the Government in order to provide avenues of promotion to the ministerial carde including Taxation Inspectors and Excise Inspectors brought in suitable amendments to these Rules on the following terms. "Rule 5. The members of the service shall be recruited in the following manner namely: (a) xxx xxx xxx (b). In the case of an Excise and Taxation Officer; (i) by promotion from amongst the Taxation Inspectors and Excise Inspectors who have an experience of working as such for a minimum period of five years; or (ii) by promotion from amongst the Superintendents, Assistant, Accountants and Senior Scale Stenographers working in the Excise and Taxation Commissioners Head Office and in the Divisional and District Offices of the Department of Excise and Taxation, Punjab." Applying the draft amended Rules before they were formally promulgated the contesting respondents Ram Saran and O.P. Singhla were promoted as Excise & Taxation Officers on 22.8.1983. The Writ Petitioners who had been transferred earlier to other cardes of Excise/Taxation Inspectors and worked there for 14/15 years beyond the probation period were not considered. They therefore, filed writ petitions in the High Court challenging the promotion of the appellants mainly on the ground that on the basis of their seniority and lien in the ministerial cadre, they had a right to be considered for promotion prior to the appellants. The appellants and the State contended that if the Petitioners wanted to be considered for this post on the basis of their lien in the ministerial carde, they may seek reversion to this cadre and thereafter their case would be considered on merits in accordance with the eligilbility as prescribed under the amended Rule 5 which includes experience of working as such for a period of five years in the ministerial 731 cadre. To this reply of the Writ Petitioners was that if the service rendered by them in the other cadre as Excise and Taxation Inspectors was not considered as service rendered in the ministerial cadre, they would be ineligible for consideration to this post. The learned single judge accepted the petitioners ' contention and in allowing the Writ Petitions held that there was no conscious decision to apply the draft rules and consequently the Petitioners were entitled to be considered for the post of Excise & Taxation Officers without any bar of eligibility as their juniors had already been considered. On appeal, the Division Bench took the view that the draft rules, though not promulgated were rightly implemented. However on the question whether service rendered by the Petitioners on transfer to the other cadres could be considered as having been rendered in the Ministerial cadre, the Division Bench relying on the decision of this court in State of Mysore & Anr. vs P.N. Nanjundiah & Anr., , held that it did and that if that is counted the petitioners would be eligible for promotion under the relevant rules with their suspended lien reviving with effect from the date it had suspended and they shall be considered forthwith. Against this order Ram Saran and O.P. Singhla have preferred appeals by special leave and so has the State separately. Reversing the decision of the High Court and allowing the appeals dismissing the writ petitions, this Court, HELD: From the scheme of the Rules and the method of recruitment it is clear that the petitioners while working as Inspectors on appointment by transfer to that cadre had the advantage of being considered for promotion as Officers under the amended Rule 5 out of the quota for Inspectors, while the ministerial staff to the exclusion of the Inspectors were entitled to certain percentage. [739E] The petitioners without being on the ministerial cadre even by reversion could not claim promotion as a member of the ministerial cadre without revival of the lien. Such revival could be effected only on reversion and not while the lien remained suspended. [739F] If the Government employee was on deputation or holding a post in another cadre, the lien shall revive as soon as he ceased to hold the post in another cadre. There is no revival of the lien during the period the employee continues to hold a post in another cadre. Therefore, during the period the suspension is operative, the employee cannot claim that he had been continuing in the post in the parent cadre and gaining experience. [740G] 732 When the rule is clear and specific that for the purpose of promotion from the cadre of Superintendents, Assistants, Accountants, Senior Scale Stenographers to the post of Excise and Taxation Officers, the eligibility qualification is 'experience of working ' as such ' for five years, the employee is not entitled to claim the experience in the ex cadre as experience of working in the ministerial cadre. [740H 741A] State of Mysore & Anr. vs P.N. Nanjundian & Anr., , distinguished. C. Narasinga Rao & Ors. vs State of Andhra Pradesh by its Secretary, Vol. 2 relied upon.

minal Appeal No. 724 of 1985. From the Judgment and Order dated 21.8.1985 of the Rajasthan High Court in D.B. Criminal Appeal No. 494 of 1974. Mahabir Singh for the Appellant. Aruneshwar Gupta for the Respondent. ANAND, J. This appeal under Section 2(a) of the Supreme Court (Enlargement of Appellate Jurisdiction) Act, 1970 is directed against the judgment and order of the High Court of Rajasthan dated 21.8.1985 in Criminal Appeal No.494/1974 convicting the appellant for an offence under Section 302 of the Indian Penal Code and sentencing him to suffer im prisonment for life by reversing an order of his acquittal recorded by the Additional Sessions Judge, Ganganagar vide judgment and order dated 13.2.1974. 853 According to the prosecution case, Mani Ram appellant and his brother Hari Ram had removed the fencing over the field of Hazur Singh deceased about 20 22 days prior to the occurrence, which took place on 22.6.1972 at about 12.30 noon, and that action of the appellant and his brother had resulted in a quarrel between the brothers and Hazur Singh and had created ill feelings between the parties. On the fateful day of 22.6.1972, Hazur Singh deceased had gone to his field. His wife Surjeet Kaur PW1 and his Son Jaskaran PW2 later on went to the field carrying meals for Hazur Singh. After, Hazur Singh had taken his meal, all the three were returning to their village from the field at about 12.30 p.m. Hazur Singh was ahead of Surjeet Kaur and Jaskaran PWs by about one Kila. When Hazur Singh reached near the water course of the village, the appellant Mani Ram was seen coming from the village side. He gave a 'lalkara ' to Hazur Singh and immediately fired a shot from his pistol at him. His brother Hari Ram who was also armed with a gun exhorted Mani Ram appellant to kill Hazur Singh so that the enemy may not escape. Mani Ram thereupon fired three more shots from his pistol at Hazur Singh, who fell down and died at the spot. At some distance away, Sukh Ram PW4 was present and he also witnessed the occurrence. Surjeet Kaur PW1 accompanied by Ganpatram went to police station Tibi and lodged the first information report, exhibit P/1, at about 3.00 p.m. A case was accordingly registered and the investigating officer, Nisar Ahmed, PW13, visited the spot. He prepared the site plan, the site inspector note and effected recovery of the empty cartridges vide memo exhibit P/6 from the spot. The body of the deceased was sent for port mortem examination, which was conducted by Dr. K.C. Mittal PW9. The autopsy report was prepared. The following injuries found of the dead body of Hazur Singh deceased: (i)Gun shot wound oval in shape with inverted margins, bleeding size 3/4" x 1/2" in the mid right hypochendrium wound is traced upward and backward by the probe. Shirt is torn over the wound. (ii)Gun shot would size 13/4" at the lower and of the left side of chest in midaxillary size. The edges are inverted. Wound is continued downwards and posteriorly as he is identified by probe. Shirt is torn. (iii) Gun shot wound with inverted margin ,, Size 3/4" x 854 1/2" with ulterior medical size of lower and of left arm. Little bleeding. Wound is printing upward and posterior through bone. Shirt over wound is torn. (iv) Gun shot wound 1 1/4" x 2/4" with margins averted ragged with severe bleeding on the posterior lateral size of the upper fifth of left arm. Shirt over wound is torn. (v) Gun shot wound in intra scapular region right side 1" x 1/4" x 3/4" circular averted and tagged margins with severe bleeding. (vi) Gun shot wound mid back left side 11/2" x 1" ragged and averted margins with severe bleeding. According to the Doctor, the death was caused due to rupture of vital organs like liver, lung and big blood vessels causing severe hemorrhage and shock as a result of the gun shot injuries and the same were sufficient in the ordinary course of nature to cause death. After completion of the investigation, the appellant alongwith his brother Hari Ram were sent up for trial. While the appellant was charged for an offence under Section 302 IPC, Hari Ram was charged for the offence under Section 302/114 IPC. Both, the appellant and Hari Ram, were also charged for an offence under Section 27 of the Arms Act. After the trial, the learned Sessions Judge found that there was no case made out against Hari Ram at all and that the prosecution had also not been able to prove the case against the appellant beyond a reasonable doubt. As a consequence, both Hari Ram and the appellant were acquitted of all the charges by the trial court. On the State filing an appeal against the judgment and order of acquittal passed by the Trial Court, the High Court allowed the appeal of the State in part and while it set aside the acquittal of the appellant and convicted him for an offence under Section 302 IPC and sentenced him to suffer imprisonment for life, the acquittal of Hari Ram was maintained. While the State has not questioned the acquittal of Hari Ram, the appellant, as already noticed, has filed this appeal. Mr. Mahabir Singh, learned counsel for the appellant, submitted that the judgment of the Trial Court could neither be styled as perverse nor even as unreasonable and there were no other substantial and compelling reasons which could justify the setting aside of the order of acquittal and, 855 therefore, the High Court should not I have interfered with the order of acquittal. Learned counsel urged that the presence of undigested food in the stomach of the deceased belied the prosecution case and that the Trial Court was right in holding that Hazur Sigh Could not have taken the meals at the time stated by his wife Surjeet Kaur PW1 and his son Jaskaran PW2 or murdered at 12.30 p.m. as alleged. The learned counsel also submitted that the inordinate delay in sending the empty cartridges to the ballistic expert went to show that the possibility that the same had been substituted by the investigating agency could not be ruled out and therefore the conviction of the appellant by the High Court was not justified. In reply, Mr. Aruneshwar Gupta, learned counsel appearing for the State of Rajasthan, submitted that since it was an appeal under Section 2 of the Supreme Court (Enlargement of Appellate Jurisdiction) Act, 1970, this Court could itself appreciate the evidence to determine the guilt or otherwise of the appellant. Learned counsel stated that the findings recorded by the Trial Court were based on surmises and conjectures and the High Court was perfectly justified in reversing the order of acquittal. Learned counsel emphasised that the evidence of PW1 Surjeet Kaur and PW4 Jaskaran conclusively established that the crime had been committed by the appellant by his pistol and their testimony has received ample corroboration not only from the statement of Dr. K.C. Mittal PW9 but also from the evidence of Shri G.R. Prasad PW11, the ballistic expert, who had opined that the four empty cartridges had been fired from the licensed pistol of the appellant and could not have been fired from any other weapon. Replying to the submission regarding the presence of undigested food, learned counsel submitted that being rustic villagers much importance could not be attached to the time given by PW1 and PW2 during their depositions about the exact time when the deceased may have had his meals and therefore it could not be said that the medical evidence had in any way belied the prosecution case. We have given our thoughtful consideration to the submissions made at the Bar and have with the assistance of learned counsel for the parties examined the judgments of the courts below as also the material evidence in the case. We are in agreement with the High Court that the evidence of PW1 Surjeet Kaur and PW2 Jaskaran has not been viewed and considered in 856 the correct and proper prospective by the trial court and undue and unwarranted emphasis had been attached to certain minor discrepancies. Our independent appraisal of the evidence of both the witnesses PW1 and PW2, the widow and son of the deceased, shows that they are consistent in their versions not only about the assailants but also about the manner of assault, as has been noticed by us in the earlier part of this judgment. Both the witnesses have given a vivid description of the occurrence. The statement of PWl Surjeet Kaur that Hazur Singh took his meals at about 10.30 a.m. and that the occurrence had taken at about 12 12.30 in the noon cannot be taken to have been contradicted by the medical evidence. Indeed, in the postmortem examination, Dr. K.C. Mittal PW9 found semi solid undigested food in the stomach of the deceased". The doctor opined that digestion begins in 1 or 1 1/2 hours. From this testimony, what was sought to be made out by the defence was that had the occurrence taken place at 12.30 noon, the deceased would have had his meals before 11.00 a.m. as semi digested food was found in the stomach of the deceased. The emphasis on this aspect of the case by the Trial Court, in our opinion, is misplaced not only because the medical evidence is only an evidence of opinion and is hardly decisive but also because when Dr. K.C. Mittal PW9 stated that digestion begins in 1 or 1.1/2 hours, he did not clarify as to what was the extent of the undigested food in the stomach of the deceased. The process of digestion depends upon the digestive power of the an individual and varies from an individual to an individual. It also depends upon the type and amount of food taken. The period of digestion is different for different types of food. Some food articles like mutton, chicken etc. would take more time for being digested as compared to vegetarian food. No questions at all were asked from the wife of the deceased about the type of food served to her husband or the amount of food taken by the deceased. That apart, the time stated by the witnesses as to when the deceased took his food was only an approximate time as it was not even suggested to PWl that she had a wrist watch and had actually seen the time when her husband took his food. Too much play on such slippery factors goes against realism and is not enough to discredit the otherwise reliable testimony of PW1. In our opinion, the evidence of PWs 1 and 2 does not stand contradicted by the medical evidence at all and as a matter of fact, the presence of semi solid undigested food in the stomach lends support of the testimony of the two witnesses that they had gone to the field latter on with the food for the deceased and had actually served meal to him. It lends assurance to their 857 presence in the field with the deceased. Despite the lengthy cross examination nothing was brought out in the cross examination of either of these two witnesses which could effect the veracity of their testimony. The first information report was lodged by Surjeet Kaur PWl at 3.00 p.m. at a distance of about 15 miles from the place of occurrence and was therefore lodged with great promptitude and the entire version of the occurrence finds mention in that report. The testimony of both the witnesses has impressed us and they appear to us to be truthful witnesses and being the close relations of the deceased would, in the ordinary course of things, be the last persons to screen the actual offender and implicate the appellants falsely. Their testimony also receives ample corroboration from the medical evidence and the testimony of ballistic expert Shri G.R. Prasad PWII. Dr. Mittal PW9, as already noticed, found six injuries on the deceased and opined that the same were sufficient in the ordinary course of nature to cause the death. In the FIR exhibit PI lodged soon after the occurrence PWI Surjeet Kaur had stated that Mani Ram appellant had fired 3 4 shots after he had fired the first shot on her husband. At the trial, she however could not state exactly as to how many shots had been fired by the appellant from his pistol. That is no surprising because she could not be expected to keep an exact account of the shots fired by the appellant, when she found her husband being shot at and having fallen down dead. She categorically attributed the gun shot injuries to the appellant and did not attribute any injury to the acquitted accused Hari Ram. Since, it has been found that the recovered empties had been fired from the pistol of the appellant, it lends sufficient corroboration to her tes timony. We may ignore the testimony of Sukh Ram PW4 as a matter of abundant caution but that would not in any way detract from the reliability of the testimony of PWI and PW2. The pistol, weapon of offence, was taken into possession from the appellant by PW6 SHO Bhim Singh. It is a licensed pistol of the appellant. According to the evidence of ballistic expert PW11, the empty cartridges sent to him for examination had been fired from that pistol and that pistol alone and from no other similar weapon. Of course, the sealed packets containing the pistol and the cartridges were sent to the ballistic expert after a long delay and that could have created some doubts about the possibility of substitution of the cartridges, while the packets remained with the police but the evidence on the record rules out any possibility of such 858 a substitution. The three sealed packets, one, containing pistol, the second, containing the empty cartridge recovered from the spot and the third, containing the three empty cartridges recovered from the appellant alongwith the pistol, were deposited in the malkhana of the police station. They had been received by Head Constable Mani Ram PW10 on 23.6.1972, the very next day after the occurrence. He had sent the same to the Police lines at Ganganagar. The prosecution examined PW12 Amar Singh who had carried the three packets from the police station to the police lines at Ganganagar. He categorically stated that while the packets remained with him, they were not tampered with at all. PW10 Mani Ram also deposed that during the period, the sealed packets remained in the malkhana, they were not tampered with by anyone and that they were handed over to Amar Singh PW12 in the same condition. According to PW7 Ram Chandra, he received the three packets from Amar Singh and after taking them into custody he made an entry in the register and that while the packets remained in his custody, nobody tampered with them. The packets were sent to the ballistic expert and received there by Jaswant Singh PW8 and Mamraj Singh. Jaswant Singh, appearing as PW8, deposed that he delivered the packets to the ballistic expert on the very next day after receiving them and while the packets remained in his custody, nobody tampered with them. According to the Ballistic expert, PW11, the packets when received by him were properly sealed and the seals were intact and tallied with the specimen of the seal sent to him. None of these witnesses were at all cross examined. No suggestion even was made to anyone of them that the sealed packets had allegedly been tampered with while in their custody. No such suggestion was even made to SHO Bhim Singh PW6 that he had either substituted the cartridges sent to the ballistic expert or other wise tampered with the sealed packets. It is, therefore, futile to contend that the possibility of the substitution of the cartridges could not be ruled out. There is no basis for such an argument. The evidence of the ballistic expert, Shri G.R. Prasad PW11, read with the medical evidence of PW9 and the testimony of the eye witnesses PWs1 and 2 clearly establishes that the appellant had fired from his licensed pistol at the deceased and that the deceased dies as a result of the pistol shot injuries received by him. We agree with learned Judge of the High Court that there are no suspicious features at all appearing in the evidence which may cast any doubt on the prosecution version that the deceased was shot at with the pistol by the appellant and that he died as a result of the injuries so received. 859 Thus, in view of what we have discussed above, we find that the prosecution has successfully established the case against the appellant beyond any reasonable doubt and since the Trial Court had passed an order of acquittal on wholly erroneous grounds, the High Court after a proper appraisal of the evidence was right in setting aside the order of acquittal and convicting the appellant for an offence under Section 302 IPC as well for an offence under Section 27 Arms Act. Our independent analysis of the evidence on record shows that the order of conviction and the sentence of life imprisonment and two years rigorous imprisonment recorded by the High Court against the appellant for the offence under Sections 302 IPC and 27 Arms Act respectively is well merited and does not call for any interference. Both the sentences shall, however, run concurrently. Consequently, the appeal fails and is dismissed. The appellant is on bail. His bail bonds shall stand cancelled and he shall be taken into custody to suffer the remaining period of the sentence. V.P.R. Appeal dismissed.

The prosecution case was that about 20 22 days prior to the occurrence the appellant and his brother removed the fencing over the field of the deceased. This resulted in a quarrel and created ill feelings between the deceased and the appellant and his brother. On the date of occurrence, the deceased went to his field. Later on his wife, P.W.1 and his son, PW2 went to the field carrying meals for the deceased. The deceased took his meal and at about 12.30 p.m., all the. three were returning to their village from the field, near at the water course of the village, the appellant, who was coming from the village side, gave a 'lalkara ' to the deceased and he fired a shot from his pistol at the deceased. The appellant 's brother exhorted him to kill the deceased. Thereupon the appellant fired three more shots from his pistol. The deceased fell down and died at the spot. PW1 accompanied by one Ganpatram went to police station and lodged the first information report at about 3 p.m. and the police investigation was commenced. The appellant and his brother were sent up for trial, charging the former under section 302 IPC and the latter under section 302/114 IPC. Both were also charged under section 27 of the Arms Act. The Trial Court acquitted the appellant and his brother of all the 850 charges, as it found that the prosecution was unable to prove the case against them. The State 's appeal was partly allowed by the High Court. The High Court set aside the acquittal of the appellant and convicted him for an offence under section 302 IPC and sentenced him to undergo life imprisonment. The High Court maintained the acquittal of the appellant 's brother. Under section 2(a) of the Supreme Court (Enlargement of Appellate Jurisdiction) Act, 1970 the present appeal was riled, contending that the judgment of the Trial Court could neither be styled as perverse nor even as unreasonable and that there was no other substantial and compelling reasons which could justify the setting aside of the order of acquittal and, therefore, the High Court should not have interfered with the order of acquittal; that the presence of undigested food in the stomach of the deceased belied the prosecutions, case and that the Trial Court was right in holding that the deceased could not have taken the meals at the time stated by his wife PW1 and his son, PW2 or murdered at 12.30 p.m., as alleged; that the inordinate delay in sending the empty cartridges to the ballistic expert went to show that the possibility that the same had been substituted by the investigating agency could not be ruled out and therefore the conviction of the appellant by the High Court was not justified. The State submitted that since it was an appeal under Section 2 of the Supreme Court (Enlargement of Appellate Jurisdiction) Act, 1970, this court could itself appreciate the evidence to determine the guilt or otherwise of the appellant; that the findings recorded by the Trial Court were based on surmises and conjectures and the High Court was perfectly justified in reversing the order of acquittal; that the evidence of PW1 and PW2 conclusively established that the crime had been committed by the appellant by his pistol and their testimony had received ample corroboration not only from the statement of the doctor, PW9, but also from the evidence of PW11l the ballistic expert, who had opined that the four empty cartridges had been fired from the licenced pistol of the appellant and could not have been fired from any other weapon; that being rustic villagers much importance could not be attached to the time given by PW1 and PW2 during their depositions about the exact time when the deceased may have had his meals and therefore it could not be said that the medical 851 evidence had in any way belied the prosecution case. Dismissing the appeal, this Court, HELD: 1.01. The process of digestion depends upon the digestive power of an individual and varies from in individual to an individual. It also depends upon the type and amount of food taken. The period of digestion is different for different types of food. Some food articles like mutton, chicken etc. would take more time for being digested as compared to vegetarian food. No question at all were asked from the wife of the deceased about the type of food served by her to her husband or the amount of food taken by the deceased. That apart, the time stated by the witnesses as to when the deceased took his food was only an approximate time as it was not even suggested to PW1 that she had a wrist watch and had actually seen the time when her husband took his food. Too much play on such slippery factors goes against realism and is not enough to discredit the otherwise reliable testimony of PW1. [856E F] 1.02. The doctor opined that digestion begins in 1 or 1 1/2 hours. From this testimony, what was sought to be made out by the defence was that had the occurrence taken place at 1230 noon, the deceased would have had his meals before 11.00 a.m. as semi digested food was found in the stomach of the deceased. The emphasis on this aspect of the case by the Trial Court, is misplaced because the medical evidence is only an evidence of opinion and is hardly decisive. [856 D] 1.03. The evidence of both the witnesses PW1 and PW2, the widow and son of the deceased, shows that they are consistent in their versions not only about the assailants but also about the manner of assault. Both the witnesses have given a vivid description of the occurrence. The statement of PW1 that the deceased took his meals at about 1030 a.m. and that the occurrence had taken at about 12 1230 in the noon cannot be taken to have been contradicted by the medical evidence. [856 B] 1.04. The first information report was lodged by PW1 at 3.00 p.m. at a distance of about 13 miles from the place of occurrence and was therefore lodged with great promptitude and the entire version of the occurrence rinds mention in that report. [857 B] 1.05. The testimony of the PWs 1 and 2 has impressed the Court and 852 they appear to be truthful witnesses and being the close relations or the deceased would, in the ordinary course of things, be the last person to screen the actual offenders and implicate the appellants falsely. Their testimony also receives ample corroboration from the medical evidence and the testimony of ballistic expert, PW11. [857 B C] 1.06. No suggestion even was made to anyone of the PWs. 6, 7, 8, 10, 12 that the sealed packets had allegedly been tampered with while in their custody. No such suggestion was even made to PW6 that he had either substituted the carriages sent to the ballistic expert or otherwise tampered with the sealed packets. There is no possibility of the substitution of the cartridges. [859 F] 1.07. Thus there are no suspicious features at all appearing in the evidence which may cast any doubt on the prosecution version that the deceased was shot at with the pistol by the appellant and that he died as a result of the injuries so received. The prosecution had successfully established the case against the appellant beyond any reasonable doubt. [858 H, 859 A]

Civil Appeal No. 1419 of 1971. Appeal by Special Leave from the Judgment and Order dated 24 11 1970 of the Orissa High Court in O.J.C. No. 466/66. D. D. Suri (In person). K. K. Venugopal, Addl. of India, R. B. Datar and Girish Chandra for Union of India. L. N. Sinha and G. section Chatterjee for the State of Orissa. The Judgment of the Court was delivered by SEN J. This appeal, by special leave, is directed against the judgment and order of the High Court of Orissa, dated November 24, 1970, dismissing the appellant 's writ petition for fixation of his year of allotment in the Indian Administrative Service as 1942 instead of 1944 and for giving necessary benefits to him in the fixation of his pay. The facts of this case are complicated and involved. It is nevertheless necessary to unravel these complicated facts, in order to appreciate clearly what are the questions which must be dealt with in this appeal. The appellant having been selected by the Special Recruitment Board as an Emergency Recruit from the 'Open Market ', was appointed to the Indian Administrative Service on August 7, 1950 and allocated to the Orissa cadre. He was born on January 7, 1950, and joined the Editorial Staff of the Civil & Military Gazette, Lahore, towards the end of 1938. He continued to serve the Civil & Military Gazette upto January 7, 1943 when he joined the Army. During the 30 Second World War, he was granted an Emergency Commission in the Army w.e f. March 7, 1943 with the rank of Lieutenant w.e.f. June 3, 1948 but with seniority in that rank w.e.f. September 9, 1944. The Government of India, Ministry of Home Affairs, New Delhi, by letter dated July 19, 1951, forwarded a statement showing the years of allotment assigned to various officers borne on the Indian Civil Administrative cadre of Orissa. The year of allotment assigned to the petitioner was 19431/2 for purposes of seniority, on the basis of his particulars as available at that time. On receiving his representation, the Ministry of Defence was requested to furnish information regarding the particulars of his pay and allowances drawn by him during the period December 31, 1944 to December 31, 1948. As the information furnished by the Ministry of Defence did not tally with those furnished by the petitioner in his application for recruitment to the Indian Administrative Service to the Special Recruitment Board, he was asked to explain the discrepancy between the particulars furnished by him and those furnished by the Ministry of Defence. He was also asked to explain why his seniority should not be calculated on the basis of the information furnished by the Ministry of Defence according to which his year of allotment should have been 1945. On receiving his reply, the Government of India, Ministry of Home Affairs, by its letter dated June 11, 1952 decided after due consideration that his 'protection pay ' should be treated as part of his pay, the allowances like the Calcutta Compensatory and Lodging allowances etc. were not to be counted as part of his pay. It was further decided that the deficiency of six days in counting the number of completed years of actual experience could not be condoned. The Government of India, Ministry of Home Affairs, accordingly, fixed the year of allotment of the petitioner to the Indian Administrative Service as 1944. The appellant has had a chequered career. It appears that the petitioner faced heavy weather in the State of Orissa, from where in 1952 he was sent out on deputation to the Government of India i.e. after he had served the State Government of Orissa for a period of little less than two years. Thereafter, he remained continuously on deputation with the Government of India for 12 1/2 years till he reverted to his parent State on April 23, 1965, despite the objection of the then Chief Minister. He served as Deputy Secretary to the Government of India in the Ministry of Transport from 1955 to 1961. On April 1, 1961 he proceeded on long leave. On his return from leave, the petitioner was appointed as the Salt Commissioner and Managing Director, Hindustan Salt Ltd. with headquarters at Jaipur. He held both the posts until December 23, 1963 and only as Salt Commissioner till 31 April 7, 1964, whereafter he was reverted to the State of Orissa. On his reversion to the State, he was first appointed as Managing Director, State Warehousing Corporation, a post usually held by an Additional District Magistrate, but later on allowed to officiate in the super time scale as Revenue Divisional Commissioner, Sambalpur w.e.f. October 24, 1965, by reverting an officer junior to him. While the petitioner was serving as Commissioner of Land Reforms, Orissa, a prosecution was launched against him on November 24, 1967 section 5(2) read with section 5(1) (e) of the Prevention of Corruption Act, 1947, on a charge of having assets to the tune of Rs 3,29,476.90 disproportionate to his income. There was a search of his house at Cuttack on and after November 27, 1967, and he was placed under suspension by the Government of Orissa on November 28, 1967 under Rule 7(3) of the All India Services (Discipline and Appeal) Rules, 1955. Eventually, the prosecution ended in an acquittal. The petitioner was compulsorily retired by the Government on June 9, 1971. On September 1, 1977, the State Government after the order of acquittal, issued an order directing that the period from November 29, 1967 i.e. the date of suspension, till June 9, 1971, i.e., the date of his retirement, shall be treated as period spent on duty. It also made consequential directions in the matter of pay and allowances, treating him in the super time grade from November 29, 1967 to April 24, 1968 and, thereafter in the selection grade, from April 25, 1968 till June 9, 1971. The questions sought to be raised by the appellant who appeared in person, are no doubt of a wide and general importance. The question still remains whether one of them, i.e., regarding the year of allotment need or could be decided at all. Three questions arise for determination on his submissions: First, whether the Court has the jurisdiction or the power to make a direction requiring the Government of India, to re fix the year of allotment of the petitioner as 1942 instead of 1944 as determined, respecting his seniority in the Indian Administrative Service, from which he has retired; secondly, whether the Fundamental Rules applied to the petitioner, and if so, whether he was entitled under F.R. 49 for the period from September 11, 1961 to December 23, 1963 during which he simultaneously held both the posts of the Salt Commissioner and the Managing Director, Hindustan Salt Ltd. with headquarters at Jaipur in the State of Rajasthan, to the full salary of one post and additional salary upto a maximum of 50% of the second post, which salary has been denied to him; and thirdly, whether the Next Below Rule implied in F.R. 30 was applicable to the petitioner while he was serving in connection with the affairs of the Union. inasmuch as his junior in the Orissa cadre, Shri V.V. Anant 32 krishnan was appointed in the super time scale on July 24, 1962 and he was thus entitled to the benefit of the same and had to be placed in the super time scale w.e.f. July 24, 1962 to June 9, 1971, i.e., the date of his retirement. But the whole structure of this argument has no real foundation. The Union of India and the State of Orissa filed counter affidavits and denied the petitioner 's right to relief on any of the grounds. In its elaborate judgment, the High Court carefully considered all the aspects and took the view that the considered decision of the Government of India, Ministry of Home Affairs, on the representation of the petitioner reached after due consideration, cannot be interfered with. They had decided not to condone the deficiency of six days in counting the number of completed years of actual experience, nor take into account compensatory allowance like Calcutta Compensatory allowance and the lodging allowance, in calculating his pay, for determining the year of allotment. Further, the High Court observed that the failure of the petitioner to explain the discrepancy between the particulars as furnished by him and those furnished by the Ministry of Defence, his failure to produce any records to show what the information of the Ministry of Defence was or even the reply that he had ultimately sent to the Government of India in trying to explain the discrepancy, coupled with the fact that he had neither produced the impugned order of the Government of India fixing 1944 as the year of allotment, nor had he furnished the details of his pay and allowances from time to time in respect of the period in question, were fatal to the petitioner 's case. It also observed that in the absence of any good reason being shown to justify intervention by the Court in the exercise of its writ jurisdiction, the contention regarding the year of allotment cannot be accepted. The High Court also held in the alternative, that the Government of India had arrived at the correct year of allotment in respect of the petitioner. In determining the number of completed years in the 'N ' formula, the Government was not duty bound under Rule 3 to relax the same, and its refusal to condone the deficiency of six days, it could not be said that the Government had not dealt with the case in a just and equitable manner. In its view, the benefit claimed by the petitioner, to say the least, would be in direct contravention of the requirement that no fraction of a year was to be taken into account. On a proper reading of the 'N ' formula, it was not possible to read into the same the imposition of a duty on the Government to relax the requirements in appropriate cases, nor would the Government be justified in 33 making a departure from the plain meaning of the instructions in a particular case, merely on the ground of hardship. According to the High Court, the word 'pay ' in the context of the relevant Rules and Instructions, included only such allowances as were intended to form an addition to pay and not compensatory allowances like Calcutta City Allowance and Lodging Allowance etc. , i.e., allowances which were essentially compensatory in character and were intended to be reimbursed to the Government servant for the expenditure incurred by him in the course of his duty and, therefore, they could not be taken to form part of 'pay ' as referred to in the instructions. It lastly held that it was not disputed before it with regard to the applicability of the 'Next Below Rule ', that promotion to a post in super time scale involves an element of selection and not mere seniority, and that there was nothing to show that the Government of India ever failed to apply their mind to the case of the petitioner in respect of his claim to the benefit of the 'Next Below Rule ', nor was it argued before it that the Government of India acted mala fide or in an arbitrary manner. From the language of the clarificatory letter of the Secretary of State for India in Council, dated April 2, 1947, it was clear that no Officer can claim as of right promotion to a post carried in super time scale under the 'Next Below Rule '. It merely embodies the guiding principles governing promotion to such post which involves an element of selection and not mere seniority. There can be no doubt, in our opinion, agreeing with the decision of the High Court, that the petitioner was not entitled to any relief. The High Court has, to our mind, reached a just and correct decision. At the very outset, we tried to impress on the petitioner that his main relief, i.e. with respect to fixation of the year of allotment according to the 'N ' formula, had become infructuous, as he had already retired from service and only the subsidiary relief i.e., for giving necessary benefits to him in the fixation of his pay remains which is nothing but a monetary claim, for the enforcement of which the remedy lay elsewhere. But the petitioner who appeared in person persisted in arguing all the points raised particularly the one regarding fixation of the year of allotment saying that he was doing it for the 'benefit of others '. We have, therefore, no alternative but to deal with the appeal on merits. We fail to comprehend what relief the petitioner can be granted in this appeal. In his application for grant of special leave to this Court under Article 136 of the Constitution, the petitioner has cate 34 gorically stated that 'he was no longer interested in the relief for determination of the year of allotment ', according to the 'N ' formula, since he was on the verge of retirement, and that the arguments advanced on his behalf in the High Court were, therefore, only confined to 'his entitlement to additional pay under F.R. 49 ', irrespective or the fact whether he was given the benefit under the 'Next Below rule or not. ' In this connection, he avers: "2. In the said writ petition, your petitioner had prayed for the following reliefs from the respondents: (a) Proper fixation of his year of allotment in the Indian Administrative Service; (b) Grant to the petitioner of the necessary benefits under Fundamental Rule 49 and 'Next Below Rule ' in the fixation of his pay at a rate higher than the super time scale pay of the IAS from 11 9 1961, the date on which he took over concurrently the two appointments of Salt Limited, and at super time scale pay from 23 12 1963 when he held the appointment of Salt Commissioner only." "4. That the petitioner was much less interested in the adjudication of the claim stated in sub para (a) in view of his impending retirement from service". "the petitioner 's main interest was in his claim stated in detail in sub clause (b) of para 2, particularly its portion relating to his entitlement of extra remuneration under Fundamental Rule 49 for holding two independent posts concurrently, which involved arrears of pay amounting to over 30,000/ ." (Emphasis supplied) In that situation, the petitioner cannot be heard to say that the Government of India had not arrived at a correct decision in assigning 1944 as the year of allotment to him. Even if he were entitled to do so, the contention merits no consideration. The learned Additional Solicitor General has, at our request, placed before us all the relevant records of the Ministry of Home Affairs, Ministry of Finance and the Ministry of Law & Justice which bare upon the questions at issue. On a perusal of these records, it is quite clear that the Government of India evolved uniform policy as a matter of principle to deal with such questions. In the light of the set principles, all the demands of the appellant were considered at 35 each stage, and found that they could not be accepted, keeping in view the desirability of uniformity of policy in such matters. In support of the contention regarding the year of allotment, the appellant 's submission is twofold, namely, (i) the Government of India were in error in not condoning the deficiency of six days in reckoning the completed years of his service after attaining the age of 25 years. He has wrongly been given credit for only 8 years instead of 9 years as there was a short fall of six days to complete 9 years, which short fall should have been waived by the Government, and (ii) he being a regular Army Officer, the definition of 'pay ' in F.R. 9(21) (b) was attracted, so that in determining the year of allotment, 'pay ' would also include allowances like Lodging Allowances. We are afraid, none of the contentions can prevail. It is common ground that as regards Emergency Recruits from the 'Open Market ', the year of allotment was to be determined according to the 'Open Market Emergency Recruitment Scheme ', embodied in the instructions of the Government of India for the preparation of a common gradation list for the officers of the Indian Civil Service cadre in each State issued on July 7, 1950. The relevant instructions adverted to, so far as material, (hereinafter referred to as 'N ' formula) read as follows: "IV Emergency Recruits from the 'Open Market ': These officers should be given an year of allotment on the basis of the following rules below: (1) The number of completed years of actual experience of the officers after attaining the age of 25 and upto the 31st December, 1948 as certified by the Special Recruitment Board will be the period of previous experience to be taken into account. This period will be divided into two parts, N1 and N2 as below: (a) N1 means the period of continuous employment on a pay or income of not less than Rs. 800 per month between 31st December, 1944, and the 31st December, 1948, inclusive. (b) N2 means the entire period of previous experience to be taken into account, exclusive of N1. (2) The year of allotment in each case will be 1949 Y, where Y = N1+1/2 of N2. " 36 These instructions form a part of counter affidavit filed on behalf of the Union of India and are printed in the All India Services Manual, Second Edition, at p. 774, with the heading "Executive Instructions/Orders issued by the Government of India under the Indian Administrative Service (Regulation of Seniority) Rules, 1954". The year of allotment: 'N ' formula: Rule 3 of the Indian Administrative Service (Regulation of Seniority) Rules, 1954, so far as relevant, reads: "3. Assignment of year of allotment (1) Every officer shall be assigned a year of allotment in accordance with the provisions hereinafter contained in this rule. (2) The year of allotment of an officer in service at the commencement of these rules shall be the same as has been assigned to him or may be assigned to him by the Central Government in accordance with the orders and instructions in force immediately before the commencement of these rules." Even according to the appellant, he is not entitled, under the 'N ' formula as it stands, to a credit of more than 8 years. If that be so, the High Court quite properly declined to exercise its extra ordinary jurisdiction under Article 226 of the Constitution inasmuch as no writ or direction could be issued, in a matter which was essentially in the discretion of the Government, to re fix his seniority by giving credit for 9 years instead of 8 years as provided for, as admittedly the relevant instructions require 'completed years of actual experience '. Normally, the decision of the Government of India assigning a year of allotment to a particular officer under Rule 3 of the Indian Administrative Service (Regulation of Seniority) Rules, 1954, or in accordance with orders and instructions issued by the Central Government in that behalf before the commencement of these Rules, is final and cannot be interfered by the Courts under Article 226 of the Constitution unless such decision was capricious or arbitrary or in breach of the said Rules. The same principle should apply to the assignment of a year of allotment under the 'N ' formula. The contention that the Government of India should have condoned the short fall of six days by relaxation of the relevant Rules under the powers vested in it by the All India Services (Conditions of Service Residuary Matters) Rules, 1960, can hardly be accepted. These Rules were not in force when the Government of India, Ministry of 37 Home Affairs, by their letter dated July 19, 1951 issued a statement showing their years of allotment assigned to officers borne on the Indian Civil Administrative Service cadre of Orissa, wherein the year of allotment assigned to the petitioner was 19431/2, or even at the time when the Ministry of Home Affairs by its letter dated June 11, 1952 rejected his representation in that behalf, while revising his year of allotment to 1944. The relevant records of the Government of India, Ministry of Home Affairs disclose that the Government of India adopted a uniform policy in this regard and short falls of even less than 6 days have not been condoned so that there could be uniformity of taking note of 'completed years of service ', irrespective of the short fall of number of days, in calculating the year of allotment in every case under the 'N ' formula. The question of relaxation was considered at the highest level as admitted by the petitioner himself. The records of the Government of India, Ministry of Home Affairs, disclose that by letter dated June 11, 1952, the Government of India after due consideration, rejected the representation of the petitioner, by issuing an order to the following effect: "I am directed to say that the Government of India have carefully considered the points raised by Sri Suri in his representation. The decisions thereon are as follows: (i) Considering the circumstances in which the pay scale in the Army was generally reduced and a 'protection pay ' was given, the Government of India consider that it would only be fair that the 'protection pay ' granted to Sri Suri during his service in Army should be "treated as part of his basic pay for purposes of determining his seniority. (ii) The Calcutta Compensatory Allowance and the Lodging Allowance drawn by Sri Suri during the period October 1944 to August 1947, cannot be treated as part of pay for computing N1 or N2. (iii) Sri Suri has represented that the completed years of service after attaining the age of 25 upto the 31st December 1948, calculated in accordance with the formula falls short of one additional year in his case because of a shortage of six days. He has requested that this deficiency should be condoned. The Government of India have rejected similar requests for condonation of even shorter periods and regret, therefore, that they are unable to accede to the request. On the basis of the decision referred to in para 1(i) above, Shri Suri 's revised year of allotment works out to be 1944. His position in the Orissa Indian Civil Administrative gradation List (forwarded with the Ministry of Home Affairs letter No. 2/3/52 AIS, dated the 26th April, 1952) will therefore be immediately below Sri S.T. Merani (section No. 12) and above Sri S.S. Murthi (section No. 33). The serial numbers of Sri Murthi and officers below him in the list may be changed accordingly." (Emphasis supplied). The matter did not rest at that. Thereafter, the All India Services (Conditions of Service Residuary Matters) Rules, 1960 were framed, and by Rule 3 the Central Government were conferred power to relax the rules and regulations regulating the conditions of service appointed to an All India Service, in any particular case, on the ground 'undue hardship ', as they may consider it necessary for dealing with the case in a just and equitable manner. A doubt was raised whether the power of relaxing rules was intended to be applicable to 'Recruitment Rules ' also. The Government of India have held that the 'Recruitment Rules ' cannot be relaxed under Rule 3. Nevertheless, the petitioner kept on making representations and the question was reconsidered on occasions more than once as reflected in the order of Sri Govind Ballabh Pant, Minister for Home Affairs, dated June 1, 1958, which reads: "Sri Suri 's case has been considered more than once. I do not find, however, any adequate reasons for revising the orders already passed. It would be difficult to condone the deficiency even if it be of only 7 days in the case of only one officer. The rule which gave an advantage to married officers cannot apply to him as he was not married at the time." (Emphasis supplied). Even assuming there was a power to condone the deficiency, the matter rested entirely in the discretion of the Government of India. When a decision in a policy matter like this is left to the absolute discretion of the Executive, we do not see how the Courts can interfere and issue a direction to the Government of India to reconsider the matter afresh, after a lapse of more than 25 years. It would not only disturb the combined gradation list of the officers belonging to the Indian Administrative Service, but also affect the seniority of many officers who have not been impleaded in these proceedings. May be, many of them may have died or retired and even as regards the others, they may have been confirmed in the super time grade. 39 The High Court, therefore, rightly, in our opinion, held that there could be no interference in such matters. `N ' Formula and F.R. 9(21) (b): F.R. 9(21)(b) reads: "(b) In the case of a military officer, in receipt of the rates of pay introduced on July 1, 1924, pay includes the amount which he receives monthly, under the following designations: (i) pay of appointment, lodging allowance and marriage allowance; and "(ii) pay of rank, command pay, additional pay, Indian Army allowance, lodging allowance and marriage allowance. " F.R. 2 provides that the Fundamental Rules shall apply, subject to the provisions of F.R. 3, to all Government servants whose pay is debitable to civil estimates and to any other class of Government servants to which the President may by general or special order declare them to be applicable. It is, however, provided by F.R. 3 that unless it be otherwise distinctly provided by or under the rules, nothing in these Rules shall apply to Government servants whose conditions of service are governed by Army or Marine Regulations. It is, therefore, obvious that the definition of 'pay ' in the case of a military officer, introduced by F.R. 9(21) (b), is for 'protection pay ', when such officer is recruited in civil service under the employment of the Union of India, i.e., for fixation of his pay in such service. For this limited purpose, the term 'pay ' not only includes the 'rank pay ' but also command pay, additional pay etc., and, 'allowances ' like lodging allowance and marriage allowance are treated as part of 'pay '. If a military officer had been receiving any of these allowances, they will fall under the head 'pay ' under F.R. 9(21) (b). F.R. 9(21) (b) had, therefore, no relevance in the matter of fixing the seniority of Emergency Recruits from the 'Open Market ' to the Indian Administrative Service, like the petitioner, even where they were drawn from the Army, but was applicable only in regard to fixation of their initial pay. It is, however, argued that the petitioner was a regular Army Officer at the time when he was appointed as an Emergency Recruit from the 'Open Market ' and, therefore, his pay for purposes of calculating the year of allotment was regulated by F.R. 9(21) (b), in the absence of any provision to the contrary. 40 The argument appears to be somewhat attractive but on deeper considerations must be rejected. The underlying principles on which the 'N ' formula was evolved by the Government of India are set out in the letter of the Ministry of Home Affairs, dated July 18, 1949, the substance of which reads: "4. No decision has yet been reached about the seniority to be accorded to candidates from the 'Open Market ' appointed to the IAS on the recommendation of the Special Recruitment Board. There were two alternative methods by which seniority of such officers should be determined, viz. (a) on the principle of the 'basic pay ' or (b) related to the experience which the candidates concerned had gained in their respective employment, profession or business. The 'basic pay ' of the Emergency Recruits drawn from the 'Open Market ' had been fixed mainly on the basis of age. As regards (a) it was felt that if seniority is to follow strictly the basic pay, the initial 'basic pay ' would be subject to a maximum of Rs. 660/ for the junior scale and Rs 1,000/ in the senior scale which represents the pay admissible in the tenth year of service at the age of 36. The alternative method of approach, i.e., to relate seniority of the new recruits to be length of his actual experience in the previous employment, business or profession, would be fair to the recruits themselves inter se as it would maintain a distinction on the basis of their 'actual experience '. It was, therefore, proposed that credit should be given to the Emergency Recruits for the purpose of determining their seniority in the IAS at the rate of six months in every year of experience which such recruits may have after the age of 25. " The 'pay ' for purposes of determining the year of allotment under 'N ' formula of such recruits like the petitioner was, therefore, the 'basic pay ' which must necessarily exclude allowances. This concept of 'basic pay ' for fixation of initial pay is reflected in the Indian Administrative Service (Pay) Rules, 1954 which takes into account only the 'initial pay '. It has been stated on behalf of the Union of India that the Special Recruitment Board, for this recruitment, interviewed candidates who were already employed under the Government or in commercial firms or business houses and in public or local bodies as well as members of the legal profession and others and out of 153 candidates selected, 115 were Government servants, 15 were from commercial firms and 41 business houses, 8 from public and local bodies, 4 from legal profession and 11 from other sources. The rule which requires credit to be given for the period of continuous employment on pay or income not less than Rs. 800/ p.m. would, therefore, apply uniformly to persons who were previously lawyers or employed in business houses or in Government services. Uniformity in such a case can only be attained by excluding allowances in every case, because the allowances which persons drawn from these different sources would be getting, would be varied in character. The Government of India, therefore, acted fully in consonance with Articles 14 and 16 of the Constitution in excluding allowances in computing the pay. The amount of Rs 800/ p.m. was taken as a basis as it was the first stage in the senior time scale of pay of officers in the Indian Administrative Service. In this scale, the amount of Rs 800/ is the 'basic pay ' without including allowances. Under these circumstances, the decision taken from the beginning was that allowances would not be included in computing the pay and as long as this decision is applied uniformly, without exception, the appellant can have no grievance in this regard to seniority specifically as allowances would have to be added uniformly to all other persons in the seniority list. Thus, the definition of 'pay ' in F.R. 9(21)(b) is applicable only for the fixation of 'pay ' of a Government servant who had been recruited from the armed Forces. In such a case, the total salary including such allowances as falling within the definition, is taken note of. The petitioner admittedly was given an initial pay of Rs 1,000/ i.e. much higher than officers appointed to the Indian Administrative Service on the result of the competitive examinations. Here we are not concerned with the fixation of pay of the petitioner but with regard to the Rules relating to the fixation of his seniority which would take note of the period prior to his recruitment to the Indian Administrative Service and for that purpose the 'basic pay ' alone was relevant. The concept of pay under F.R. 9(21) (b) cannot, therefore, be introduced for purposes of regulating the year of allotment under 'N ' formula, as it relates to fixation of seniority and not of pay. The matter falls to be regulated by the interpretation placed by the Government of India, Ministry of Home Affairs in their letter dated July 18, 1949. If the definition of 'pay ' in F.R. 9(21) (b) was to be taken note of, then Calcutta compensatory allowance and marriage allowance would also be included. Obviously, a rule which makes seniority dependent upon marriage allowance and, therefore, on whether the officer was married or not will be violative of Article 14 of the Consti 42 tution. The appellant gave up before the High Court his claim to the inclusion of marriage allowance though covered by the definition of pay, and in this Court his claim for the inclusion of Calcutta Compensatory Allowance. In dealing with the question, the High Court has observed that the word 'pay ' in the context of the relevant Rules and Instructions included only such allowances as were intended to form an addition to pay and not compensatory allowance like Calcutta City Allowance and Lodging Allowance etc. , i.e., allowances which were essentially compensatory in character and were intended to be reimbursed to the Government servant for the expenditure incurred by him in the course of his duty and, therefore, they could not be taken to form part of 'pay ' as referred to in the 'N ' formula. We cannot see that the appellant is on a better footing as regards lodging allowance, which is usually given to Army Officers in lieu of rent free quarters. They become at once disentitled to such allowance the moment they are allotted quarters. Lodging allowance is, therefore, essentially compensatory in nature. The inclusion of pay as defined in F.R. 9(21) (b) in the 'N ' formula to include the Lodging allowance, is not permissible as the appellant would have to claim the application of the definition of 'pay ' in its full rigour or not at all. Any other construction will lead to manifest injustice as it would result in discrimination between persons similarly situated, i.e., between an Army Officer in receipt of lodging allowance in lieu of rent free quarters and one in occupation of such rent free quartes, in the matter of seniority in the Indian Administrative Service. The inevitable conclusion, therefore, is that the definition of 'pay ' in F.R. 9(21) (b) was not applicable for purposes of fixation of seniority of the appellant. Fundamental Rules and their applicability: It is not necessary for our purposes to deal with the larger question as to whether the Fundamental Rules regulate the conditions of service of members of the Indian Administrative Service. As at present advised, we are inclined to think that their conditions of service are regulated by the provisions of All India Services Act, 1951 and the various Rules and Regulations framed thereunder, such as Indian Administrative Service (Recruitment) Rules, 1954, Indian Administrative Service (Cadre) Rules, 1954, Indian Administrative Service (Pay) Rules, 1954, Indian Administrative Service (Regulation of Seniority) Rules, 1954, Indian Administrative Service (Appointment by Promotion) Regulation, 1955, All India Services (Discipline & Appeal) Rules, 1955 and 1969, All India Services (Conditions of Service Residuary Matters) Rules, 1960 etc. When there is speci 43 fic provision made in regard to them on a particular subject regulating their conditions of service in the said Act and the Rules, the question of applicability of the Fundamental Rules does not arise. Even assuming that the Fundamental Rules were applicable on August 7, 1950 i.e. at the time when the appellant was appointed to the Indian Administrative Service, these Fundamental Rules ceased to be applicable on the coming into force of the aforesaid rules and regulations framed under the Act, unless the President by an order under F. R. 2 declared them to be so applicable. Combination of posts and right to Additional Pay under F.R. 49: The short question for consideration is whether the appellant was entitled under F.R. 49 for the period from September 11, 1961 to December 23, 1963 during which he simultaneously held both the posts of the Salt Commissioner and the Managing Director, Hindustan Salt Ltd., with headquarters at Jaipur, to the full salary of one post and additional salary of a maximum of 50% of the second post. The answer must clearly be in the negative. The provisions of F.R. 49 were not applicable to him after the Indian Administrative Service (Pay) Rules, 1954 were brought into force; and even if they were, F.R. 49, in terms, provides that when a civil servant holds two posts. he is disentitled to draw the salary of both the posts. All that such a civil servant becomes entitled to is the salary of the higher post, but no additional salary can be allowed for performing the duties of the lower post. Thus, the pay of one of the posts can be allowed. Furthermore, the rules relating to pay applicable in 1962 were the Indian Administrative Service (Pay) Rules, 1954 which make no provision for additional pay. Rule 13 of the said Rules reads as follows: "13. Repeal and saving. Any rules corresponding to these rules and in force immediately before the commencement of these rules are hereby repealed: Provided that any order made or action taken under the rules so repealed shall be deemed to have been made or taken under the corresponding provisions of these rules. " It would thus follow that the provisions of Fundamental Rules in regard to pay, even if applicable, ceased to apply from the date on which the Indian Administrative Service (Pay) Rules, 1954 came into force. The appellant therefore, would normally not be entitled to invoke F.R. 49 in regard to the salary paid to him when he was simultaneously holding the two posts in question. 44 Even assuming that the provisions in the Fundamental Rules would continue to apply to a member of the Indian Administrative Service in regard to which no specific provision is made by framing a rule under the All India Services Act, 1951 and, therefore, the appellant was still governed by F.R. 49, he had no claim to any additional salary. The records of the Government of India, Ministry of Home Affairs disclose that the ground on which the claim of the appellant was rejected was that at the time the post of Managing Director, Hindustan Salt Ltd. was brought into existence, there was a down grading of the posts of Salt Commissioner having regard to the diminution in the nature of duties and responsibilities attached to the said post. Normally, this should have resulted in a reduction in the scale of pay of the post of Salt Commissioner, but the Government of India, on due application of mind, refrained from doing so, purely on consideration of his additional charge, and continued the post in the same scale of pay as a result of which the appellant in fact, obtained monetary benefit. For this reason, the Finance Ministry did not agree to any extra remuneration over and above the scale of Rs. 1800 2000/ to the Salt Commissioner cum Managing Director. The grievance of the appellant that his successor in office to the post of Salt Commissioner, Jaipur was given a pay of Rs. 2,250/ was also considered, but his representation was rejected on the ground that the said incumbent had already been drawing Rs. 2,250/ when he was asked to hold the post of Salt Commissioner, Jaipur. The relevant records disclose again a full and detailed application of mind to the issues involved. Thus there was no question of the appellant being entitled to be given an additional pay under F.R. 49 i.e. full salary of one post and additional salary upto a maximum of 50% of the other post, for the period from Sepetember 11, 1961 to December 23, 1963, during which he simultaneously held both the posts. `Next Below Rule ' The intention underlying the second proviso to F.R. 30(1) which is commonly known as the 'Next Below Rule ' is the principle that when an officer in a post (whether within the cadre of his service or not) is for any reason prevented from officiating in his turn in a post on higher scale or grade borne on the cadre of the service to which he belongs, he may be authorised by special order of the appropriate authority pro forma officiating promotions into such scale of pay and thereupon be granted the pay of that scale or grade, if they be more advantageous to him on each occasion on which the officer imme 45 diately junior to him in the cadre of his service draws officiating pay in that scale or grade. The principle behind the so called rule is evidently that an officer out of his regular line should not suffer by forfeiting acting promotion which he would otherwise have received had he remained in his regular line: The State of Mysore vs M. H. Bellary. (1) The real implications of the 'Next Below Rule ' as defined in the Secretary of State for India 's ruling clarified by the Government of India, Ministry of Finance by letter No. 2(25) Est. III/46, dated April 2, 1947: All India Services Manual, 2nd ed. 765 66, in so far as they bear upon the claim or right to the benefits thereunder in respect of the appellant, are extracted below: "The so called 'rule ' is not a rule of any independent application. It sets out only the guiding principles for application in any case in which the Governor General in Council, or the Governor exercising his individual judgment in virtue of the powers conferred on him by the Secretary of State 's Rule of the 14th April, 1942 (published with Home Department Notification No. 195/40 Ests., dated the 9th June 1942), proposes to regulate officiating pay by special orders under the second proviso to Fundamental Rule 30(1). The condition precedent to the application of the 'Next Below Rule ' must, therefore, be fulfilled in each individual case before action may be taken under this proviso. " It would thus appear that the 'next Below Rule ' is not a rule of any independent application. It sets out only the guiding principles for application in any case in which the President or the Governor proposes to regulate an officiating pay by special order under the second proviso to F.R. 30(1). The condition precedent to the application of the 'Next Below Rule ' must, therefore, be fulfilled in each individual case before any action can be taken under this proviso. It was not disputed before the High Court with regard to the 'Next Below Rule ' that promotion to a post in super time scale involves an element of selection and not mere seniority. The Government of India, Ministry of Home Affairs, intimated the petitioner in June 1965 that his representation for fixation of pay in the super time scale on the basis of the 'Next Below Rule ' had been rejected. It was, therefore, accepted before the High Court that there was due application of mind by the Government of India to the case of the peti 46 tioner in respect of his claim to the benefit of the 'Next Below Rule ' and that there was nothing to show that the Government had acted mala fide or in an arbitrary manner in rejecting his claim. The Additional Solicitor General placed before us voluminous records showing that, as a rule of universal application, the benefit of the 'Next Below Rule ' has never been extended when there is promotion to a post in super time scale. This is a problem which has faced the Government of India on numerous occasions and eventually the Government reached a uniform decision that the 'Next Below Rule, should not be applied to a super time scale post, carrying Rs. 2,500 125/2 2750 for considerations of policy which are these: (i) The length of Service which officers in States have to put in before they get promotion to super time scale is not uniform, (ii) Most of the States have got Divisional Commissioners, while some States do not have this post, (iii) The posts of Secretaries in some States carry pay in super time scale while in other these posts carry pay in the senior scale; and (iv) An officer might be good enough to be a Divisional Commissioner, but might not be good enough to be Joint Secretary to the Government of India. The benefit of the 'Next Below Rule ' is available in the selection grade but this benefit has not so far been allowed to the members of the Indian Administrative Service in the super time scale. The considerations on which this policy of the Central Government is based are contained in the note of Sri L. P. Singh which is reproduced below: "The length of service which officers in different States have to put in before they get promotion is not uniform. In some States, officers become Commissioners in the 15th or 16th year of service, in some, even officers who have put in 20 years service in the Indian Civil Service are still drawing pay in the senior time scale. Again while most States have got Divisional Commissioners, some have not. Further, Secretaries to Government in West Bengal, Maharashtra and Gujarat are allowed special rates of remuneration. Again, while an officer may be good enough to be a Divisional Commissioner, he may not necessarily be good enough to be a Joint Secretary to the Government of India. " It appears that the State Government of Tamil Nadu made a reference on the subject, and the matter was studied in depth by the various ministries. The Ministry of Home Affairs was not unfavourably inclined. It expressed that since new guide lines have been evolved and the State Governments have been requested to constitute 47 a Screening Committee for considering the cases of the members of the Indian Administrative Service for appointments to posts carrying pay in super time scale, the benefit of super time scale should be extended to officers on deputation with the Government of India under the 'Next Below Rule '. It, however, agreed that there cannot be complete uniformity at any particular time, since the length of service which officers in different States have to put in before they get promotion is not uniform but expressed that this criterion loses much of its force with the passage of time and that the view that an officer might be good enough to be a Divisional Commissioner and might not be good enough to be the Joint Secretary to the Government of India, hits at the very root of the system of Administration which we have adopted in this Country. It further expressed that the fact that most of the States have got Divisional Commissioners while some States do not have these posts, has no relevance. It, therefore, proposed that officers belonging to the Indian Administrative Service should be given pro forma promotion to the super time scale by the State Government under the 'Next Below Rule ' so that the service rendered by such officer from the date of such promotion, will count for the purpose of fixation of initial pay, on reversion to the present cadre, and also for the purpose of increments, and the benefit should be allowed on 'one for one basis '. It was also suggested in the alternative, that if the benefit of the 'Next Below Rule ' could not be extended to such officer and if he is detained by the Government in a lower post at the Centre against his wishes and in public interest, he should be given the 'higher pay ' on personal basis, i.e., as a measure personal to him within the frame work of the policy quoted above. When the matter was referred to the Ministry of Finance, it did not agree to either proposal, and the Ministry of Law rightly pointed out: "It is not appropriate to raise the scale of ex cadre post to that of super time scale merely because the incumbent has become due for promotion to the super time scale. The pay attached to a post is with regard to the nature of the duties and responsibilities and not with reference to the entitlement of the incumbents. " As regards, the scope of the protection of pay envisaged by the proviso to sub rule (2) of Rule 6 of the Indian Administrative Service (Cadre) Rules, the Law Ministry advised that: "The concept of the basic pay which the officer would have drawn but for his deputation is limited to the basic 48 pay of the post to which he would have been promoted in the natural course of things but not to a post like a supertime scale to which appointment is not only on the basis of seniority but also merit and suitability. " Thus the present position is that the benefit of the 'Next Below Rule is available at the first stage of selection i.e. at the time of appointment in the selection grade but not at the second stage, namely, at the time of promotion to the super time scale. It is, therefore, abundantly clear that the appellant cannot claim as a right the super time scale merely on the basis of his seniority among the members of the Indian Administrative Service belonging to the Orissa cadre. The process of appointment to the super time scale is by selection. When the element of selection comes in, this promotion must be subject only to the claims of exceptional merit and suitability, and is not a matter of right: Union of India vs M.L. (Capoor(1). Promotion to the super time scale is, therefore, not a matter of course. The officer must stand the test of suitability and his integrity must be beyond doubt. For this purpose, there is a Senior Selection Committee which prepares a select list of suitable officers which must be approved by the Union Public Service Commission. The Senior Selection Committee has to prepare a panel of names for each grade and submit the same for approval to the Union Public Service Commission as well as to the Government of India, Ministry of Home Affairs. The select list has to be reviewed and revised every year, and the Senior Selection Committee meets annually. The essence of holding Selection Committee meeting annually is that each annual proceeding is independent of the other. That is why as soon as the proceedings of the new Selection Committee are approved by the Union Public Service Commission, the proceedings of the earlier Selection Committee become inoperative. No manner of continuity can, therefore, be imputed to the proceedings of the various Selection Committees. It is not the petitioner 's case that his name was ever brought into the select list by the Senior Selection Committee and approved by the Government of India, Ministry of Home Affairs, for appointment in the selection grade. If the petitioner was 'consciously ' passed over by the Senior Selection Committee or the Government of India, Ministry of Home Affairs, then there is no question of the applicability of the 'Next Below Rule '. Much stress was, however, laid on the letter of Sri R.N. Mohanti, Joint Secretary to the Government of Orissa, Political & Services Department, dated May 7, 1963, addressed to the petitioner in re 49 ply to his letter dated March 15, 1963 for the submission, that had remained in his parent cadre, he would have been promoted and drawn pay in the super time scale. It was urged that the petitioner should have been given pro forma promotion and the higher scale of pay in the super time grade under the 'Next Below Rule ' because his junior in his parent cadre had been promoted to such scale of pay or granted 'higher pay ', on personal basis to compensate for the financial loss suffered by him due to his retention in a lower post at the Centre. We are afraid, the contention must be rejected. The aforementioned letter only stated that his case would have been 'considered ' in the normal course for appointment to the selection grade as well as to a super time scale post, had he continued under the State Government. It did not at all mention nor could it be construed to mean that he was entitled for appointment to a post in super time scale on account of his seniority on the basis of the 'Next Below Rule '. In any event, the letter, we are afraid, cannot take the place of the recommendation of the Senior Selection Committee. In the result, the appeal fails and is dismissed. There shall be no order as to costs. N.V.K. Appeal dismissed.

The appellant was born on January 7, 1915. He joined the Editorial Staff of the Civil and Military Gazette, Lahore, towards the end of 1938 and continued to serve the Civil and Military Gazette upto January 7, 1943, when he joined the Army. During the Second World War he was granted an Emergency Commission in the Army w.e.f March 7, 1943 with the rank of Lieutenant w.e.f June 3, 1948 but with seniority in that rank w.e.f. September 1944. Later, he, having been selected by the Special Recruitment Board as an Emergency Recruit from the "open market" was appointed to the Indian Administrative Service on August 7, 1950 and allocated to the Orissa Cadre. As regards Emergency Recruits from the open market the year of allotment was to be determined according to the "open Market Emergency Recruitment Scheme" called also 'N ' formula. The year of allotment in each case would be 1949 Y, where Y = N1 + 1/2 of N2. N2 means the period of previous experience. The previous experience is the number of completed years of actual experience of the officers after attaining the age of 25 and upto 31st December, 1948 as certified by the Special Recruitment Board. N1 means the period of continuous employment on a pay or income of not less than of Rs. 800/ per month before 31st December, 1944 and the 31st December 1948, inclusive. The larger the figure of "Y", the earlier the date of allotment and seniority. The period of previous experience (N2) in the case of the appellant worked out to 8 years 11 months 25 days rounded off to 8 years (i.e. 7 1 40 to 31 12 48). The figure of N1 was worked out taking the "protection pay" admissible to Army Officers as per F.R. 9(21)(b) i.e. excluding the Calcutta 25 compensatory allowance and lodging allowance. Therefore, by its letter dated June 11, 1952, the Ministry of Home Affairs fixed the year of allotment of the petitioner to the Indian Administrative Service as 1944. (1949 minus 5). The appellant held various posts in the Indian Civil Administrative Service cadre of Orissa and was also on deputation to the Government of India from 1952 to April 7, 1964. During this period, he was appointed as the Salt Commissioner and Managing Director, Hindustan Salt Ltd. with Head quarter at Jaipur. He held both these posts from September 11, 1953 to December 23, 1963, and only as Salt Commissioner till April 7, 1964, whereafter he was reverted to the State of Orissa. He was compulsorily retired by the Government on June 9, 1971. By its order dated September 1, 1977, the State Government gave him pay and allowances in the super time scale from November 29, 1967 to April 24, 1968 and thereafter selection grade from April 15, 1968 to June 9, 1971. Respondent 1 rejected his representation (a) for refixing his year of allotment by condoning the shortage of 6 days in determining N2 and by taking into consideration allowances for purposes of N1 (b) for granting the benefit of F.R. 49 and (c) for granting the benefit under F.R. 30. The appellant, therefore, filed a writ petition to the High Court claiming three reliefs, namely, (a) Refixation of the year of allotment as 1942 instead of 1944 in the Indian Administrative Service, alleging that by refusing to treat the Calcutta compensatory allowance and lodging allowance as pay under FR 9(21)(b) and to condone the six days ' shortage in determining the number of completed years of editorial experience under 'N ' formula, Respondent 1, by its order dated June 11, 1952, denied him seniority, (b) pay as admissible under FR 49 i.e. full salary of one post and additional salary upto a maximum of 50% of the second post, for the period from September 11, 1961 to December 23, 1963 during which he held both the posts of Salt Commissioner and Managing Director, Hindustan Salt Ltd. and (c) Placement in the super time scale w.e.f. July 24, 1962, i.e. the date when his junior Sri V.V. Ananta Krishnan was appointed to the super time scale, under the "Next Below Rule" implied in F.R. 30. The High Court refused to grant the reliefs, prayed for, and dismissed the Writ Petition. Dismissing the appeal by special leave, the Court ^ HELD: 1. In view of the categorical averment in his application for grant of special leave to this Court under Article 136 of the Constitution that "he was no longer interested in the relief for determination of the year of allotment, according to the 'N ' formula, since he was on the verge of retirement" the appellant cannot be heard to say that the Government of India had not arrived at a correct decision in assigning 1944 as the year of allotment to him. [33H 34A, 34G] (2) Normally the decision of the Government of India assigning a year of allotment to a particular officer under Rule 3 of the Indian Administrative Service (Regulation of Seniority) Rules, 1954, or, in accordance with orders and instructions issued by the Central Government in that behalf before the commencement of these Rules, is final and cannot be interfered by the Courts under Article 226 of the Constitution unless such decision was capricious or arbitrary or in breach of the said Rules. The same principle should apply to the assignment of a year of allotment under the 'N ' formula. [36F] 26 Even according to the appellant, he was not entitled, under the 'N ' formula as it stands, to a credit of more than 8 years. If that be so, the High Court quite properly declined to exercise its extra ordinary jurisdiction under Article 226 of the Constitution, inasmuch as no writ or direction could be issued, in a matter which was essentially in the discretion of the Government, to refix his seniority by giving credit for 9 years instead of 8 years as provided for, as admittedly the relevant instructions require "completed years of actual experience". [36E] There is no question of condoning the short fall of six days by relaxation of the relevant Rules under the powers vested in the Government of India by the All India Services (Conditions of Service Residuary Matters) Rules, 1960, since these Rules were not in force when the Government of India, Ministry of Home Affairs, by its letter dated July 19, 1951, issued a statement showing the years of allotment assigned to officers borne on the Indian Civil Administrative cadre of Orissa, wherein the year of allotment assigned to the petitioner was 1943 1/2, or even at the time when the Ministry of Home Affairs by its letter dated June 11, 1952 rejected his representation in that behalf, while revising his year of allotment to 1944. Further, the Government of India adopted a uniform policy in this regard and short falls of even less than 6 days have not been condoned so that there could be uniformity of taking note of "completed years of service" irrespective of the short fall of number of days in calculating the year of allotment in every case under the 'N ' formula. The Government of India have also held that the 'Recruitment Rules ' cannot be relaxed under Rule 3. [36H 37C, 38D] Even assuming there was a power to condone the deficiency, the matter rested entirely in the discretion of the Government of India. When a decision in a policy matter like relaxation is left to the absolute discretion of the Executive, courts cannot interfere and issue a direction to the Government of India to reconsider the matter afresh, after a lapse of more than 25 years. It would not only disturb the combined gradation list of the Officers belonging to the Indian Administrative Service, but also affect the seniority of many officers who have not been impleaded in these proceedings. [38G] (3) The definition of 'pay ' in the case of a military officer, introduced by F.R. 9(21)(b) is for 'protection pay ' when such officer is recruited in civil service under the employment of the Union of India, i.e., for fixation of his pay in such service, as is made clear by F. Rs. 2 and 3. F.R. 2 provides that the Fundamental Rules shall apply, subject to the provisions of F.R. 3, to all Government servants whose pay is debitable to civil estimates and to any other class of Government servants to which the President may, by general or special order, declare them to be applicable. F.R. 3 provides, that unless it be otherwise distinctly provided by or under the Rules, "Nothing in these Rules shall apply to Government servants whose conditions of service are governed by Army or Marine Regulations". F.R. 9(21)(b) had, therefore, no relevance in the matter of fixing the seniority of Emergency Recruits from the "Open Market" to the Indian Administrative Service, like the petitioner, even when they were drawn from the Army, but was applicable only in regard to fixation of their initial pay. [39E, D, G] The 'pay ' for purposes of determining the year of allotment under 'N ' formula of such recruits drawn from the Army was, as per the underlying principles set out in the Ministry of Home Affairs dated July 18, 1949, the 27 "basic pay" which necessarily exclude allowances. This concept of "basic pay" for fixation of initial pay is reflected in the Indian Administrative Service (Pay) Rules, 1954, which takes into account only the "initial pay". [40G] The rule which requires credit to be given for the period of continuous employment on pay or income not less than Rs. 800/ p.m., would apply uniformly to all recruits drawn from different sources, namely, persons who were previously lawyers, or employed in business houses or in Government service. Uniformity in such a case can only be attained by excluding allowances in every case, because the allowances which persons drawn from those different sources would be getting, would be varied in character. The Government of India, therefore, acted fully in consonance with Articles 14 and 16 of the Constitution. [41A C] The concept of 'pay ' under F.R. 9(21)(b) cannot be introduced for purposes of regulating the year of allotment under 'N ' formula, as it relates to fixation of seniority and not of pay. If the definition of 'pay ' in F.R. 9(21)(b) was to be taken note of, then Calcutta compensatory allowance and marriage allowance would also be included. Then, a rule which makes seniority dependent upon marriage allowance, and therefore, on whether the officer was married or not will be violative of Article 14 of the Constitution. The inclusion of 'pay ' as defined in F.R. 9(21)(b) in the 'N ' formula to include lodging allowance is not permissible as it was essentially compensatory in character. Any other construction will lead to manifest injustice as it would result in discrimination between persons similarly situated i.e., between an Army Officer in receipt of lodging allowance in lieu of rent free quarters and one in occupation of such rent free quarters, in the matter of seniority in the Indian Administrative Service. [41G H, 42D E] (4) The conditions of service of members of the Indian Administrative Service are regulated by the provisions of All India Services Act, 1951 and the various Rules and Regulations framed thereunder, such as Indian Administrative Service (Recruitment) Rules, 1954, Indian Administrative Service (Cadre) Rules, 1954, Indian Administrative Service (Pay) Rules, 1954, Indian Administrative Service (Regulation of Seniority) Rules, 1954, Indian Administrative Service (Appointment by Promotion) Regulation, 1955, All India Services (Discipline and Appeal) Rules, 1955, and 1969, All India Services (Conditions of Service Residuary Matters) Rules, 1960 etc. When there is specified provision made in regard to them on a particular subject regulating their conditions of service in the said Act and the Rules, the question of applicability of the Fundamental Rules does not arise. [42G 43A] Even assuming that the Fundamental Rules were applicable on August 7, 1950 i.e. at the time when the petitioner was appointed to the Indian Administrative Service, these Fundamental Rules ceased to be applicable on the coming into force of the aforesaid rules and regulations framed under the Act, unless the President by an order under F.R. 2 declared them to be so applicable. [43B] The provisions of F.R. 49 ceased to apply from the date on which the Indian Administrative Service (Pay) Rules 1954, were brought into force, as it makes no provision for 'additional pay '. Even if they were F.R. 49, in terms, provides that when a civil servant holds two posts, he is disentitled to draw the salary of both the posts. All that such a civil servant becomes 28 entitled to is the salary of the higher post, but no additional pay can be allowed for performing the duties of the lower post. Thus, the pay of one of the posts can be allowed. Even assuming that the provisions in the Fundamental Rules would continue to apply to a member of the Indian Administrative Service in regard to which no specific provision is made by framing a rule under the All India Services Act, 1951, and therefore, in the instant case, the appellant was still governed by F.R. 49, he had no claim to any additional salary, on the materials on record. [44A] (5) The intention underlying the second proviso to F.R. 30(1) which is commonly known as the "Next Below Rule" is the principle that when an officer in a post (whether within the cadre of his service or not) is for any reason prevented from officiating in his turn in a post on higher scale or grade borne on the cadre of the service to which he belongs, he may be authorised by special order of the appropriate authority proforma officiating promotions into such scale of pay and thereupon be granted the pay of that scale of grade, if they be more advantageous to him on each occasion on which the officer immediately junior to him in the cadre of his service draws officiating pay in that scale or grade. The principle behind the so called rule is evidently that an officer out of his regular line should not suffer by forfeiting acting promotion which he would otherwise have received had he remained in his regular line. [44G 45A] The State of Mysore vs M. H. Bellary, ; , referred to. The 'Next Below Rule ' is not a rule of any independent application. It sets out only the guiding principles for application in any case in which the President or the Governor proposes to regulate an officiating pay by special order under the second proviso to F.R. 30 (1). The condition precedent to the application of the 'Next Below Rule ' must, therefore, be fulfilled in each individual case before any action can be taken under this proviso. [45F] (6) The promotion to a post in super time scale involves an element of selection and is not by mere seniority. As a rule of universal application, the benefit of the "Next Below Rule" though available in the selection grade has never been extended when there is a promotion to a post in super time scale in the Indian Administrative Service for considerations of policy, namely, (1) the length of service which officers in States have to put in before they get promotion to super time scale is not uniform; (ii) Most of the States have got Divisional Commissioners, while some States do not have this post; (iii) The posts of Secretaries in some States carry pay in super time scale while in others these posts carry pay in the senior scale, and (iv) An officer might be good enough to be a Divisional Commissioner, but might not be good enough to be Joint Secretary to the Government of India. [45G,46B D] The process of appointment to the super time scale is by selection. When the element of selection comes in, this promotion must be subject only to the claims of exceptional merit and suitability, and is not a mater of right. Promotion to the super time scale is, therefore, not a matter of course. The Officer must stand the test of suitability and his integrity must be beyond doubt. For this purpose there is a Senior Selection Committee which pre 29 pares a select list of suitable officers which must be approved by the Union Public Service Commission. The Senior Selection Committee has to prepare a panel of names for each grade and submit the same for approval to the Union Public Service Commission as well as to the Government of India, Ministry of Home Affairs. The select list has to be reviewed and revised every year, and the Senior Selection Committee meets annually. The essence of holding Selection Committee meeting annually is that each annual proceeding is independent of the other. That is why as soon as the proceedings of the new Selection Committee are approved by the Union Public Service Commission, the proceedings of the earlier Selection Committee becomes inoperative. No manner of continuity can, therefore, be imputed to the proceedings of the various Selection Committees. [48 D F] In the instant case, the appellant cannot claim as a right the super time scale merely on the basis of his seniority among the members of the Indian Administrative Service belonging to the Orissa cadre, if he was 'consciously ' passed over by the Senior Selection Committee or Government of India, Ministry of Home Affairs. [48 C, G] Union of India vs M.L. Capoor, ; , referred to.

Criminal Appeal No. 405 of 1978. From the Judgment and Order dated 9.8.1977 of the High Court of Orissa in Criminal Appeal No. 131 of 1975. Prithvi Raj and R.K. Mehta for the Appellant. G.S. Chatterjee for the Respondent. The Judgment of the Court was delivered by SEN, J. After hearing learned counsel for the parties, we are satisfied that the judgment of acquittal entered by the High Court was apparently erroneous and has caused manifest miscarriage of justice. We are rather surprised that the High Court should have given credence to the de fence plea of mistake of fact under section 79 of the Indian Penal Code, 1860. The evidence on record shows that the respondent and the deceased had strained relations over grazing of cattles. On the date of incident the deceased had gone to the house of PW 2 for recital of Bhagbat. Some other villagers including the respondent was also present there. At about 10 p.m. recital of Bhagbat was over and the de ceased returned to the house. Some time thereafter, a hue and cry was raised from near the house of the respondent. Several villagers including PWs 2, 3, 4 and 5 ran to the place. They saw the deceased lying on the ground in a pool of blood with a head injury. The respondent along with his mother and wife were tending the deceased and wiping out blood. The deceased was till then in his senses and on query by the villagers stated that the respondent had assaulted him. On being questioned, the respondent stated that during the daytime his bellmetal utensil had been stolen and he was keeping a watch for the thief. He saw a person coming inside his premises and thinking him to be a thief he dealt a lathi blow but subsequently discovered that it was the 788 deceased. On being taken back to his house the deceased told his wife PW 6 that he had been assaulted by the respondent in the presence of his son and grandson PWs 8 and 7. The Doctor PW 9 who performed the post mortem examination found multiple injuries on the body. On dissection he found a depressed comminuted fracture over the right perietal bone and a transverse fracture extending below left parietal prominence. As per the doctor, the head injury could have been caused by a single stroke by means of a lathi if the stroke was dealt with great force. On this evidence, the learned Sessions Judge very rightly and properly held the respondent guilty of culpable homicide not amounting to murder punishable under section 304 Part II of the Indian Penal Code. According to the High Court, the dying declaration made by the deceased as also the extra judicial confession made by the respondent showed that the deceased had kept the bell metal utensil under water in the pond. At the time of occurrence, the deceased had been to the pond to take out the bell metal utensil. Admittedly, it was a dark night. The defence plea was that the respondent had been apprehensive of further theft of his bell metal utensils. When he found someone near the pond, he asked who the person was. As there was no response, believing that person to be a thief, he assaulted him but thereafter discovered that it was the deceased. The High Court held that in the circumstances, the respondent had not committed any offence and was protected under section 79 of the Indian Penal Code. It accepted that the onus to establish the facts to sustain the plea of mistake of fact under section 79 lay on the respondent and he had to establish his plea of reasonable probability or, in other words, on preponderance of probability either by adducing evidence or by cross examining the prosecution witnesses. It referred to some cases where different High Courts under the facts and circumstances of the particular case appearing extended the benefit of section 79 of the Indian Penal Code to the accused where it was proved that the accused had acted under a mistake of fact i.e. an honest and reasonable belief in the existence of circumstances which, if proved, would make the act for which the accused is indicted an innocent act. Section 79 of the Indian Penal Code provides that noth ing is an offence which is done by any person who is justi fied by law, or who by reason of mistake of fact and not by reason of mistake of law, in good faith, believes himself to be justified by law, in doing it. Under this section, al though an act may not be justified by law, yet if it is done under a mistake of fact, in the belief in good faith that it is justified by 789 law it will not be an offence. Such cases are not uncommon where the Courts in the facts and circumstances of the particular case have exonerated the accused under section 79 on the ground of his having acted in good faith under the belief, owing to a mistake of fact that he was justified in doing the act which constituted an offence. As laid down in section 52 of the Indian Penal Code, nothing is said to be done or believed in good faith which is done or believed without due care and attention. The question of good faith must be considered with reference to the position of the accused and the circumstances under which he acted. 'Good faith ' re quires not logical infallibility but due care and attention. The question of good faith is always a question of fact to be determined in accordance with the proved facts and cir cumstances of each case. 'Mistake of fact. ' as put succinct ly in Ratanlal and Dhirajlal 's Law of Crimes, 23rd edn, p. 199 means: " 'Mistake ' is not mere forgetfulness. It is a slip 'made, not by design, but by mischance '. Mistake, as the term is used in jurisprudence, is an erroneous mental condition, conception or conviction induced by ignorance, misappre hension or misunderstanding of the truth, and resulting in some act or omission done or suffered errone ously by one or both of the parties to a transaction, but without its erroneous charac ter being intended or known at that time. " It may be laid down/as a general rule that an alleged of fender is deemed to have acted under that state of things which he in good faith and on reasonable grounds believed to exist when he did the act alleged to be an offence. In the classical work Russel on Crime, vol. 1, p. 76, the concept of mistake of fact is tersely stated thus: "When a person is ignorant of the existence of relevant facts, or mistaken as to them, his conduct may produce harmful results which he neither intended nor foresaw." At p. 79, the law is stated in these words: "Mistake can be admitted as a defence provided (1) that the state of things believed to exist would, if true, have justified the act done, and (2) the mistake must be reasonable, and (3) that the mistake relates to fact and not to law. " The cases on which the High Court has relied were cases where 790 the circumstances showed that the accused had acted under a bona fide belief that he was legally justified in doing the act owing to ignorance of the existence of relevant facts, or mistake as to them. There is no need to encumber the judgment with many citations. We would only refer to three illustrative cases. In Emperor vs Jagmohan Thukral & Anr., AIR 1947 All. 99 the accused while travelling from Saharan pur to Dehradun near the Mohand pass picked up the loaded gun when he saw the eyes of an animal and fired at it which unfortunately hit two military officers. There was nothing to show that the accused knew that there was a military camp or that any military exercise was going on. The question was whether the accused was liable for having committed an offence punishable under section 307 of the Indian Penal Code. The Court held that the accused was protected by section 79 observing. "If he mistook something else as an animal, then section 79 Penal Code comes to his rescue. " That was a case where the accused under a bona fide mistake shot at an object thinking him to be an animal and the mistake was held to be one made in good faith. In Dhara Singh vs Emperor, AIR 1947 Lahore 249 it was held that the accused was labouring under a mistake of fact with regard to the identity of the persons who had surrounded his house followed by an exchange of fire, thinking them to be his adversaries and by reason of that mistake of fact, Explana tion I to section 99 gave to him a right of private defence. This again was a case where the accused shot and killed another person under a mistaken belief, in good faith, that such person had intruded his house for the purpose of killing him and that he has a reasonable belief that he was entitled to open fire in exercise of his supposed right of private defence. In Chirangi vs State, AIR (1952) Nag. 282 where an accused under a moment of delusion, considered that his own son, to whom he was attached, was a tiger and he accordingly assaulted him with an axe, thinking by reason of mistake of fact that he was justified in destroying the deceased whom he did not regard to be a human being but a dangerous ani mal. It was held that the accused was protected under section 79 of the Indian Penal Code. The Court held that the poignant case which resulted in a tragedy was due to delusion of mind, and stated: "It is abundantly clear that if, Chirangi had for a single moment thought that the object of his attack was his son, he would have desisted forthwith. There was no reason of any kind why he should have attacked him and, as shown, they were mutually devoted. In short, all that happened 791 was that the appellant in a moment of delusion had considered that his target was a tiger and he accodingly assailed it with his axe." These considerations do not arise in the present case. There was complete absence of good faith on the part of the re spondent. It cannot be doubted that the deceased and the respondent were having strained relations and the respondent knew full well that the deceased had come for the recital of Bhagbat at the house of PW 2 which he attended along with others. From the dying declaration as well as the extra judicial confession it is apparent that the deceased after the recital of Bhagbat had gone near the pond to take the bell metal utensil. Apparently, the respondent was waiting for an opportunity to settle the account when he struck the deceased with the lathi blow and there was no occasion for him in the circumstances proved to have believed that he was striking at a thief. This is not a case where a person being ignorant of the existence of the relevant facts or mistaken as to them is guilty of conduct which may produce harmful result which he never intended. Even if he was a thief, that fact by itself would not justify the respondent dealing a lathi blow on the head of the deceased. The deceased had not effected an entry into the house nor was he anywhere near it. He had gone to the pond to fetch his bellmetal utensil. It appears that the respondent stealthily followed him and took the opportunity to settle score by dealing him with a lathi with great force on a vulnerable part of the body like the head which resulted in his death. There is no suggestion that he wielded the lathi in the fight of self defence. The respondent therefore must face the consequences. Although it cannot be said from the circumstances appearing that the respondent had any intention to kill the deceased, he must in the circumstances be attributed with knowledge when he struck the deceased on the head with a lathi that it was likely to cause his death. The respondent was therefore guilty of culpable homicide not amounting to murder under section 304 Part II of the Indian Penal Code. We accordingly allow the appeal, set aside the judgment and order of the High Court and convict the respondent for having committed an offence punishable under section 304 Part II of the Indian Penal Code. The respondent is sentenced to undergo rigorous imprisonment for a term of three years. The bail bonds of the respondent shall stand cancelled and he shall be taken into custody forthwith to serve out the remaining part of the sentence. A.P.J. Appeal allowed.

On the date of incident when the deceased was returning from the 'house of PW 2 after reciting Bhagbat, where some other villagers including the respondent were also present, and reached near the house of the respondent he was assaulted by the respondent. On hearing a hue and cry several villagers including PWs. 2, 3, 4 and 5 ran to the place and saw the deceased lying on the ground in a pool of blood with a head injury. The respondent along with his mother and wife were tending the deceased and wiping out blood. The deceased told the villagers that the respondent had assaulted him. The respondent stated that during the day time his bell metal utensils had been stolen and he was keeping a watch for the thief, he saw a person coming inside his premises and think ing him to be a thief he dealt a lathi blow but subsequently discovered that it was the deceased. The deceased also told his wife that he had been assaulted by the respondent. On the basis of the evidence on record the trial court convict ed and sentenced the respondent under section 304 Part Il of the IPC. On appeal the High Court accepted the defence plea and held that the respondent had not committed any offence and was protected under section 79 of the IPC and acquitted him. Allowing the appeal of the State, 786 HELD: 1. The judgment of acquittal entered by the High Court was apparently erroneous and has caused manifest miscarriage of justice. It is surprising that the High Court should have given credence to the defence plea of mistake of fact under section 79 of the IPC 1860. [787E F] 2. Under section 79 of the IPC although an act may not be justified by law, yet if it is done under a mistake of fact, in the belief of good faith that it is justified by law it will not be an offence. The question of good faith must be considered with reference to the position of the accused and the circumstances under which he acted. In view of section 52 of the IPC "good faith" requires not logical infallibility but due care and attention. The question of good faith is always a question of fact to be determined in accordance with the proved facts and circumstances of each case. It may be laid down as general rule that an alleged offender is deemed to have acted under that state of things which he in good faith and on reasonable grounds believed to exist when he did the act alleged to be an offence. Section 79 is attracted where the circumstances showed that the accused acted under a bona fide belief that he was legally justified in doing the act owing to ignorance of the existence of relevant facts, or mistake as to them. [789A E; 790A] Rattan Lal and Dhirajlal 's Law of Crimes, 23rd edn., p. 199 and Russel on crimes, vol. 1, p. 76; 79 relied upon and Emperor vs Jagmohan Thukral & Anr., AIR (1947) All. 99, Dhara Singh vs Emperor, AIR (1947) Lahore 249 and Chiranji vs State, AIR (1952) Nag. 282, distinguished. But the present case was not the one where a person being ignorant of the existence of the relevant facts or mistaken as to them is guilty of conduct which may produce harmful result which he never intended. There was complete absence of good faith on the part of the respondent. Un doubtedly the deceased and the respondent were having strained relations. From the dying declaration as well as the extrajudicial confession it is apparent that the de ceased after the recital of Bhagbat had gone near to the pond to take the bell metal utensils. Apparently, the re spondent was waiting for an opportunity to settle the ac count when he struck the deceased with the lathi blow and there was no occasion for him in the circumstances proved to have believed that he was striking at a thief. Even if he was a thief, that fact by itself would not justify the respondent dealing a lathi blow on the head of the deceased. The deceased had not effected an entry into the house nor he was anywhere near it. It appears that the respondent stealthily followed him and took the opportunity to settle score by dealing him with lathi 787 with great force on a vulnerable part of the body like the head which resulted in his death. There is no suggestion that he wielded the lathi in the right of self defence. The respondent, therefore, must face the consequences. Although it cannot be said from the circumstances appearing that the respondent had any intention to kill the deceased, he must in the circumstances be attributed with knowledge when he struck the deceased on the head with a lathi that it was likely to cause his death. Therefore, the respondent is convicted under section 304 Part I1 of the IPC and sentenced to undergo rigorous imprisonment for three years. [791C G]

Special Leave Petition (Civil) No. 3865 of 1987. From the Judgment and Order dated 2.1.87 of the Allaha bad High Court in Writ Petition No. 17082/86. S.N. Kacker and R.B. Mehrotra for the Petitioner. R.K. Jain for the Respondent. The Order of the Court was delivered by VENKATARAMIAH, J. The Uttar Pradesh Public Service Commission (hereinafter referred to as 'the Commission ') is the petitioner in this petition. It has questioned the correctness of the order passed by the High Court of Allaha bad in Writ Petition No. 17082 of 1986 directing it to comply with the order dated August 30, 1986 passed by the State Government on an appeal filed by Respondent No. 1 against the order passed by the Commission in a disciplinary proceeding held against him. Respondent No. 1 was working as a Section Officer in the office of the Commission. On July 18, 1981 he was placed under suspension on certain charges and a departmental enquiry was initiated against him. In the said enquiry he was found guilty and he was reverted to the rank of an Upper Division Assistant by the order dated April 24, 1982 and by another order passed on the same day he was dismissed from service. Against these orders Respondent No. 1 preferred an appeal before the State Government. The State Government found that Respondent No. 1 had not been given opportunity to cross examine the witnesses produced at the disciplinary enquiry, that he had not been given a reasonable opportunity to produce evidence from his side and that, therefore, the punishment imposed on him was violative of Article 311(2) of the Constitution. Accordingly, the order of dismissal passed against him in the disciplinary enquiry was set aside and the Commission was directed to hold a fresh enquiry in accordance with law. The order of the State Government further directed the Commission to reinstate Respondent No. 1 as an Upper Division Assistant pending final decision in the disciplinary enquiry. It was also ordered that the salary and allowances due to Respondent No. 1 from the date 836 of his dismissal till the date of reinstatement should be paid to him. The above order was passed on August 30, 1986. Respondent No. 1 applied to the Commission on September 3, 1986 to permit him to rejoin the service as ordered by the State Government. When the Commission declined to comply with the order of the State Government, Respondent No. 1 instituted the writ petition, referred to above, in the High Court of Allahabad for the issue of a direction to the Commission to comply with the order of the State Government. After heating the learned counsel for Respondent No. 1 and the Commission, the High Court allowed the writ petition and issued the directions as stated above. Aggrieved by the decision of the High Court, the Commission has filed this petition. Two contentions are urged before us on behalf of the Commission (i) since the Commission, which is a constitu tional authority, is not subordinate to the State Govern ment, the State Government could not have heard the appeal filed against the order passed by the Commission in a disci plinary proceeding. and (ii) in any event the appeal should have been disposed of by the Governor himself and not by the Governor in accordance with the advice of the State Govern ment. The conditions of service of the members of the Staff of the Commission are regulated by the U.P. Public Service Commission (Conditions of Service) Regulations, 1937 made under section 265(2) of the Government of India Act, 1935 (corresponding to Article 3 18 of the Constitution) as they have been continued under the provisions of the Constitu tion. Regulation 20 of the said Regulations, as amended by the Uttar Pradesh Public Service Commission (Conditions of Service) (Amendment) Regulations, 1978 made by the Governor under Article 3 18 of the Constitution reads as follows: "20. Appointments to the gazetted ministerial posts other than those of the Under Secretary and the Assistant Secretary shall be made by the Commission. (Appeals against the order of the Commission shall be to the Governor). " Regulation 28 of the U.P. Public Service Commission Staff Regulations, 1942 lays down as follows: "28. Regulation of pay, leave allowance, pension and other conditions of service Except as provided in these 837 regulations or in any special declaration or order made by the Governor, all matters relat ing to the pay, allowances, pension, gratuity, leave, retirement and other conditions of service of the persons appointed to the staff shall be regulated by the rules, declarations and orders applicable generally from time to time to servants of the State of similar classes under the control of the Uttar Pradesh Government insofar as they are not inconsist ent with any provisions expressly made in these regulations or in the Uttar Pradesh Public Service Commission (Conditions of Service) Regulations. " Rule 69 of the Civil Service (Classification, Control and Appeal) Rules, 1930 is to the effect that the State Government may, of its own motion or otherwise, call for the record of any case decided by an authority subordinate to it in the exercise of any power conferred on such authority by these rules, and inter alia, confirm, modify or reverse the order passed by such authority, or direct that a further enquiry be held in the case. Rule 69 A sets out the proce dure to be followed in filing a petition under rule 69. Rule 69 and rule 69 A are substantially applicable to the members of the staff of the Commission by virtue of Regulation 28 of the Uttar Pradesh Public Service Staff Regulations, 1942, extracted above, even though the Commission may not be an authority subordinate to the State Government because while applying rule 69 to the staff of the Commission the rule should be read with the necessary modification by substitut ing in the place of the words 'an authority subordinate to it ' the words 'the Uttar Pradesh Public Service Commission '. In any event by virtue of the amendment made to rule 20 in 1978 appeals against the orders of the Commission passed in respect of the gazetted ministerial officers other than the Under Secretary and the Assistant Secretary lie to the Governor. Respondent No. 1 being a gazetted officer holding the post of a Section Officer is entitled to prefer an appeal under regulation 20 of the Uttar Pradesh Public Service Commission (Conditions of Service) Regulations, 1937 to the Governor. On the facts and in the circumstances of the case we feel the contention of the Commission that an order passed by it in a disciplinary proceeding cannot be subject to an appeal, is untenable by virtue of regulation 20 of the Uttar Pradesh Public Service Commission (Condi tions of Service) Regulations, 1937 and regulation 28 of the Uttar Pradesh Public Service Commission Staff Regulations, 1942. It may be that as held by this Court in Hargovind Pant vs Dr. Raghukul Tilak & Ors., ; the Com mission may be a constitutional authority not subordinate to any other authority. But the orders 838 passed by the Commission in disciplinary proceedings held against the members of its staff are subject to the appeal to the State Government under rule 69 of the Civil Service (Classification, Control and Appeal) Rules read with regula tion 20 of the Uttar Pradesh Public Service Commission (Conditions of Service) Regulations, 1937. There is no ground for thinking that the independence of the Commission would be affected by the State Government exercising the appellate power in disciplinary matters as provided by regulation 20. We, therefore, reject the first contention. We shall now deal with the second contention. It is no doubt true that regulation 20 provides that appeals against the orders of the Commission shall be made to the Governor. But while exercising his powers under that regulation the Governor has to act on the advice given by the State Govern ment by virtue of Article 163(1) of the Constitution which reads thus: "163(1). There shall be a Council of Ministers with the Chief Minister at the head to aid and advise the Governor in the exercise of his functions, except insofar as he is by or under this Constitution required to exercise his functions or any of them in his discretion. " The function of heating an appeal against an order passed by the Commission in a disciplinary proceeding held against any member of its staff is not one of those func tions which the Governor is required to exercise in its discretion under any of the provisions of the Constitution. The Governor has, therefore, to act on the advise of the State Government. This position has been settled by the decision of this Court in Shamsher Singh & Ant. vs State of Punjab, 14. Ray, C.J. speaking for him self, Palekar, Mathew, Chandrachud and Alagiriswami, JJ. has observed at page 836 thus: "For the foregoing reasons we hold that the President or the Governor acts on the aid and advice of the Council of Ministers with the Prime Minister at the head in the case of the Union and the Chief Minister at the head in the case of State in all matters which vest in the executive whether those functions are executive or legislative in character. Neither the President nor the Governor is to exercise the executive functions personally. " The function of deciding an appeal against an order of punish 839 ment imposed in a disciplinary proceeding is an executive function. Hence, by acting in accordance with the advice tendered to him by the State Government, the Governor has not acted contrary to the provisions of the regulations or of the Constitution. The appellate power is exercised in the instant case in accordance with Article 166 of the Constitu tion. We do not, therefore, find any merit in the second contention too. The petition is, therefore, dismissed. H.L.C. Petition dis missed.

In an appeal preferred by respondent No. 1 against orders reverting him from the post of Section Officer to a lower post and dismissing him from service, the State Gov ernment found that he had not been afforded a reasonable opportunity to defend himself at the inquiry, and set aside the order of dismissal directing the State Public Service Commission to reinstate him in the lower post and hold a fresh inquiry. The Commission having declined to comply with the order of the State Government, respondent No. 1 filed a writ petition, and the High Court directed the Commission to comply with the said order. In this petition for special leave to appeal, the Com mission contended (1) that since it was a Constitutional Authority being not subordinate to the State Government, the latter could not have heard the appeal filed against its order passed in a disciplinary proceeding; and (2) that in any event, the appeal should have been disposed of by the Governor himself and not by the Governor in accordance with the advice of the State Government. Dismissing the petition, HELD: The Commission may be a constitutional authority not subordinate to any other authority. But the orders passed by the Commission in disciplinary proceedings held against the members of its staff are subject to the appeal to the State Government under r. 69 of the Civil Service (Classification, Control and Appeal) Rules, 1930, read with Regulation 20 of the Uttar Pradesh Public Service Commission (Conditions of Service) Regulations, 1937 as amended in 1978. There is 834 no ground for thinking that the independence ,of the Commis sion would be affected by the State Government exercising the appellate power in disciplinary matters as provided by Regulation 20. [837H; 838A B] Hargovind Pant vs Dr. Raghukul Tilak & Ors., ; , referred to. Rule 69 of the Civil Service (Classification, Control and Appeal) Rules, 1930 is to the effect that the .State Government may, of its own motion or otherwise, call for the record of any case decided by an authority subordinate to it in the exercise of any power conferred on such authority by these rules, and inter alia, confirm, modify or reverse the order passed by such authority, or direct that a further enquiry be held in the case. Rule 69 A sets out the proce dure to be followed in filing a petition under rule 69. Rules 69 and 69 A are substantially applicable to the mem bers of the staff of the Commission by virtue of Regulation 28 of the Uttar Pradesh Public Service Staff Regulations, 1942, even though the Commission may not be an authority subordinate to the State Government because while applying r. 69 to the staff of the Commission the rule should be read with the necessary modification by substituting in the place of the words 'an authority subordinate to it ' the words 'the Uttar Pradesh Public Service Commission '. In any event by virtue of the amendment made to Regulation 20 of the Uttar Pradesh Public Service Commission (Conditions of Service) Regulations, 1937 in 1978 appeals against the orders of the Commission passed in respect of the gazetted ministerial officers other than the Under Secretary and the Assistant Secretary lie to the Governor. Respondent No.1 being a gazetted officer holding the post of a Section Officer was entitled to prefer an appeal under Regulation 20 to the Governor. [837C G] 2. It is no doubt true that Regulation 20 of the Uttar Pradesh Public Service Commission (Conditions of Service) Regulations, 1937 provides that appeals against the orders of the Commission shall be made to the Governor. But while exercising his powers under that Regulation the Governor has to act on the advice given by the State Government by virtue of article 163(1) of the Constitution. The function of hearing an appeal against an order passed by the Commission in a disciplinary proceeding held against any member of its staff is an executive function and not one of those functions which the Governor is required to exercise in its discretion under any of the provisions of the Constitution. The Gover nor has, therefore, to act on the advice of the State Gov ernment. [838C F] 835 Shamsher Sing vs State of Punjab, ; , referred to.

vil Appeal No. 113 of 1953. Appeal from the Judgment and Decree, dated the 25th day of March, 1952, of the High Court of Judicature at Bombay (Bavdekar and Dixit JJ.) in Appeal No. 554 of 1951, from Original Decree arising out of the Judgment and Decree, dated the 30th day of June, 1951, of the Court of the Joint Civil Judge, Senior Division of Thana, in Special Suit No. 12 of 1949. K. section Krishnaswamy lyengar, (J. B. Dadachanji, V.B. Rege and Ganpat Rai, with him) for the appellants. section B. Jathar, R. B. Kotwal and Naunit Lal for respondent No. 1. 1954. April 12. The Judgment of the Court was delivered by GHULAM HASAN J. This appeal is brought by leave of the High Court of Bombay against the judgment and decree of a Division Bench of that Court (Bavdekar and Dixit JJ.) dated March 25, 1952, modifying the judgment and decree of the Civil Judge, Senior Division of Thana, dated June 30, 1951. The appeal arises out of a partition between 6 brothers of a joint Hindu family. The joint family carried on joint family business of a grocery shop, liquor shops, a ration shop, a motor bus service and also moneylending under the name of "Sontakke Brothers". The family also Possessed immovable and movable property. Balkrishna Sitaram Sontakke is the eldest of the brothers and is the plaintiff respondent in the present appeal. He will be referred to hereafter as the plain tiff. It is common ground that up to 1944 the brothers were living and messing together and the income from 101 the family business used to be kept with the plaintiff. From April 14, 1945, the situation changed and the parties began to appropriate the proceeds of the various businesses carried on by them separately to themselves. The plaintiff was running the liquor shops, defendants Nos. I and 2 who are the appellants, were carrying on the motor bus service business while defendant No. 4 was running the grocery shop. The parties tried to have partition effected between them through arbitrators but the attempt failed. On June 29, 1945, all the five brothers filed a suit for partition against the plaintiff of all joint family properties including the accounts of all the businesses. The suit was numbered 39 of 1945. It was compromised on March 7, 1946. By this compromise it was declared that prior to 1942 all the accounts of the various businesses had been correctly maintained and shown, that the parties had agreed to have arbitrators appointed through Court for examining the accounts from 1942 up to March 31, 1946, and for determining the amount due up to that date. Each of the brothers was to get one sixth share in the cash balance as found on March 31, 1946, upon examination of accounts by the arbitrators. All the movable property of the joint family including the stock in trade of all the family businesses was to be divided equally among all the brothers. The compromise further declared that the plaintiff was to have one sixth share in the motor garage and that defendants 1 and 2 were to pay the price of one sixth share to him. These are the material provisions of the compromise. One of the brothers was a minor and the Court finding the compromise to be for the benefit of the minor accepted it and passed a pre liminary decree in terms of the compromise on July 25, 1947. If nothing else had happened to disturb the natural course of events, the proceedings would have ended in a final decree for partition. The plaintiff, however, commenced a fresh suit on February 23, 1949, confining his relief to his share of the profits and assets Of the motor business carried on by defendants Nos. 1 and 2 after March 31,1946. His case was that the compromise was made in a hurry, that the parties omitted to provide in the compromise about the future conduct 102 of the motor business from April 1, 1946, that the motor business was still a joint family business and that he had a right to ask for accounts of that business subsequent to March 31, 1946. In defence it was pleaded that the compromise was made after due deliberation, that accounts of the motor 'business and grocery shop should actually have been taken up to April 14, 1945, the date of disruption of the joint family status, but the parties agreed by way of compromise that account of all family businesses should be taken up to March 31, 1946. It was also pleaded that the claim was barred by res judicata. Upon the issues framed in the case the Civil Judge found that the suit was not. barred by reason of the decision in the previous suit No. 39 of 1945, that the decision in that suit was not obtained by fraud and misrepresentation and that the compromise in the previous suit was not due to a mistake or misunderstanding. Despite these findings the Civil Judge held that although the motor business carried on after the partition had ceased to be a joint family business yet as it was carried on by some members of a family their position was analogous to that of a partner carrying on partnership after dissolution and applying the principle underlying section 37 of the Partnership Act he held that the two brothers carrying on the motor business were liable to account. Accordingly he passed a preliminary decree directing the accounts of the motor business to be taken from March 31, 1946, up to the date on which a final decree for payment of the amount found to be due would be made. A Commissioner was appointed to take the accounts to ascertain the profits earned by the use of the capital belonging to the shares of brothers other than those who carried on the motor business. In appeal Bavdekar 'J. with whom Dixit J. agreed modified the decree of the trial Court by directing that the accounts were to be taken up to the date when the businesses discontinued and not up to the date of the final decree. The learned Judges held that the cause of action for the present suit was different from the cause. of action in the previous suit and that the suit was not barred 103 by res judicata or by Order II, rule 2, of the Code of Civil Procedure. After delivering themselves of some conflicting observations to which reference will in detail be made hereafter they held that the consent decree did not expressly negative the right for accounts of the motor transport business. Finally the learned Judges recorded the conclusion that regardless of the pleadings in the case the defendants Nos. I and 2 had made use of the joint family property and that they stood in, the position of co owners and as contemplated in section 90 of the Indian Trusts Act were liable to render accounts for the profits which were attributable to the employment of the assets owned by the parties jointly. Learned counsel for the appellants has contested the view of the High Court upon all the points decided, ,against them. He has contended that the cause of action in a suit for partition is the desire and intention of the family to separate, that the cause of action in the two suits is identically the same and not separate and distinct and. that the suit was, therefore, barred both by the principle of res judicata and by Order II, rule 2, of the Civil Procedure Code. Learned counsel also challenged the view of the High Court about the applicability of section 90 of the Indian Trusts Act It seems to us that upon a fair reading of the compromise arrived at between the parties in the circumstances then existing, the only legitimate conclusion possible is that the parties had agreed to confine the taking of all accounts upto March 31,1946, and had closed the door to reopening them beyond that date. If the compromise was arrived at after full consideration by the parties and was not vitiated by fraud, misrepresentation, mistake or misunderstanding as held by the trial Court a finding which was not interfered with by the High Court it follows that a matter once concluded between the parties who were dealing with each other at arms length cannot now be reopened. What led the parties to confine the period of account to March 31, 1946, and stop further accounting which would have normally extended to the passing of the final decree will appear from the following circumstances. The plaintiff knew that the licence for the liquor shops 104 carried on by him was expiring on the 1st April, 1946, and he was anxious to run the liquor business exclusively and not jointly or in partnership with his brothers after the expiry of the licence. He gave a notice to his brothers through pleader on December 12, 1945, stating inter alia the following : "The period of (licence for) the liquor shops at the said places expires by end of March, 1946. Hence after the expiry of the said period, my client having no desire to conduct liquor shop business jointly or in partnership with any of you again, he intends to run and will run as from the date 1st April, 1946, one or more liquor shops as he pleases belonging to him alone independently. The moneys that will be required for (purchase in) auction of the shops will be paid by my client by borrowing the same from third parties on his own responsibility and my client will not allow the said moneys to have the least connection with the businesses, properties and cash which are at present in dispute in Court and with the profits and income from the said businesses or properties. My client expressly informs you by this notice of the fact, viz., that the liquor shops thus purchased by him will solely belong to him and will be run by him independently of any of you. None of you will have any legal right to meddle with or interfere in the liquor shops which will be thus purchased by my client in the Government auction for the new year beginning from 1st April, 1946, and if any of you make an attempt with malicious intention to cause even the slightest interference in the said business of my client, then my client will hold you fully responsible for any harm suffered by him and for other damages and expenses incurred by him and will take a severe legal action against you therefor. " This notice furnishes a true guide as to the intention of the plaintiff which was none other than that he should run the liquor shops exclusively for himself and appropriate the profits thereof without making himself accountable to his brothers. Although the plaintiff says that he intended to pay for the auction of liquor shops by borrowing he was really in a position of vantage for he admittedly had Rs. 13,000 cash in hand as 105 against the Rs. 3,000 his brothers had. The notice explains the significance of the provision in the compromise that accounts are to be taken only up to March 31, 1946. Since the plaintiff did not want his brothers to interfere with his exclusive running of the liquor business after March 31, 1946, he perforce had to agree that he should sever his connection with other businesses run by his brothers. This arrangement was apparently acceptable to all the brothers as being fair and reasonable and as not giving undue advantage to any party over the other. This being our construction of the compromise, it follows that the plaintiff 's conduct in going back upon that arrangement by filing a fresh suit in regard to the motor business only is anything but honest. The plaint filed in the previous suit leaves no manner of doubt that the plaintiffs in that suit ,sought a complete division of all the family property both movable and immovable and a final determination of all the accounts in respect of the family businesses. It is also significant that after the compromise the plaintiff (Balkrishna) filed an application before the Civil Judge in which he alleged that when he agreed in the compromise that the accounts of the various businesses should be up to the 31st March, 1946, he was under a misapprehension regarding his legal right inasmuch as he thought that when the accounts were to be taken up to a certain date, 'the joint family property after that date would not be allowed to be utilized by some members only of the family for making profits for themselves to the exclusion of the plaintiff. He goes on to say that he laboured under the impression that the joint family business would be either altogether stopped after the 31st March, 1946, or would be run either by the arbitrators or the Commissioners and the profits accruing therefrom would be deposited in Court for distribution among the parties according to their shares. The application was made on November 22, 1947. His pleader, however, stated on April 6, 1948: " The application is abandoned by the applicant as he wishes to pursue his remedy by way of an independent suit for the grievance in the application," and the Court passed the order, "The application is disposed of as 14 106 it is not pressed." The learned Judges of the High Court in referring to this application observe thus: " It is obvious therefrom that really speaking the idea of the profits of several businesses after the 1st of April, 1946, was present to the minds of the parties; but the parties did not care to ask that accounts of the other businesses will be taken up after the 1st of April, 1946. One of the businesses was a liquor business, which admittedly was to come to an end on the 31st of March, 1946; but there was also another business; that Was a kirana shop, which was not a very big business. But all the same it was there, and there is force, therefore, in the contention which has been advanced on behalf of the appellants that it was not as if there has been an oversight on the part of the parties, but the parties knew that the businesses might go on afterwards; but if they were carried on, they did not particularly care for providing by the compromise decree for accounts of those businesses being taken after the 1st of April, 1946. " Having said all this they record the conclusion that the compromise did not expressly negative the right of the plaintiff to an account of motor business. We are unable to accept this conclusion. The observations quoted above negative the plaintiff 's case about mistake or misunderstanding in regard to the true effect of the compromise and show that the plaintiff abandoned the right to Account after the crucial date and the status of the parties thereafter changed into one of tenants in common. If the plaintiff really intended that accounts of the motor business or indeed of all other businesses were to be taken up to the date of the 'final decree, there was no point in mentioning the 31st March, 1946. The normal course, after the preliminary decree was passed by the Court, was to divide all the property by metes and bounds and to award monies as found on examination of the accounts right up to the date of the final decree. But for the compromise which limited the period of the account the plaintiff would have obtained the relief he is now seeking, in the partition suit as accounts would have been taken of all the businesses up to the date of the final decree. The plaintiff has himself to thank for preventing the natural 107 course of events and for forbidding the accounts to be taken after the 31st March, 1946. The plaintiff on the other hand has no real grievance in the matter, for although the defendants Nos. 1 and 2, who continued to run the motor business, may have made some money with the help of the two old motor buses, the plaintiff whose keenness to run the liquor business is apparent from the notice referred to above was not precluded from reaping the fruits of that business. It is hard to conceive that the plaintiff would have agreed to share his burden of the loss if the motor business had sustained any. We hold, therefore, that the compromise closed once for all the controversy about taking any account of the joint family businesses including the motor business after the 31st March ', 1946, and the plaintiff is bound by the terms of the compromise and the consent decree following upon it. The obvious effect of this finding is that the plaintiff is barred by the principle of res judicata from reaitating the question in the present suit. It is well settled that a consent decree is as binding upon the parties thereto as a decree passed by invitum. The compromise having been found not to be vitiated by fraud, misrepresentation, misunderstanding or mistake, the decree passed thereon has the binding force of res judicata. We are also of opinion that the plaintiff 's claim is barred by the provisions of Order II, rule 2(3), of the Code of Civil Procedure. The plaintiff by confining his claim to account up to March 3, 1946, only, implicitly of not explicitly, relinquished his claim to the account for the subsequent period. Sub rule 3 clearly lays down that if a person Omits, except with the leave of the Court, to sue for all reliefs to which he is entitled, he shall not afterwards sue for any relief so omitted. We do not agree with the High Court that the cause of action in the subsequent suit was different from the cause of action in the first suit. The cause of action in the first suit was the desire of the plaintiff to separate from his brothers and to divide the joint family property. That suit embraced the entire property without any reservation and was compromised, the plaintiff having abandoned his claim to account in respect of 108 the motor business subsequent to March 31, 1946. His subsequent suit to enforce a part of the claim is founded on the same cause of action which he deliberately relinquished. We are clear, therefore, that the cause of action in the two suits being the same, the suit is barred under Order II, rule 2(3), of the Civil Procedure Code. As the. suit is barred both by res judicata and Order II, rule 2(3), of the Civil Procedure Code, no further question as to the applicability of section 90 of the Indian Trusts Act can possibly arise under the circumstances. The result is that we allow the appeal and dismiss the suit with costs throughout. Appeal allowed.

It is well settled that a consent decree is as binding upon the parties thereto as a decree passed by invitum. Where a compromise is found, not to be vitiated by fraud, Misrepresentation, 100 misunderstanding or mistake, the decree passed thereon has the binding force of res judicata. Where the plaintiff confines his claim to account for a period up to a certain date only, he relinquishes his claim implicitly if not explicitly to the account for the subsequent period because Order II, rule 2 (3) of the Code of Civil Procedure lays down that if a person omits, except with the leave of the Court, to he sue for all reliefs to which he is entitled, he shall not afterwards sue for any reliefs so omitted.

minal Appeal No. 245 of 1969. Appeal by special leave from the judgment and order dated July 17, 1969 of the Mysore High Court in Criminal Appeal No. 111 of 1968 and Criminal Referred Case No. 2 of 1968. K. M. K. Nair, for the appellant. section section Javali and section P. Nayar, for the respondent. The Judgment of the Court was delivered by Dua, J. The appellant was convicted by the Sessions Judge, Shimoga, under section 302, I.P.C. for the murder of one Govindappa, a village postman and was awarded capital sentence. He was also held guilty of an offence under section 201, I.P.C. and sentenced to rigorous imprisonment for 7 years. The High Court of Mysore confirmed the conviction and sentence under section 302, I.P.C. It also upheld his conviction under section 201, I.P.C. but set aside the sentence on this count observing that when a person is convicted both under section 302 and section 201, I.P.C. it is undesirable to pass separate sentence for both offences. In this appeal with, special leave the appellant challenges his conviction and sentence under section 302, I.P.C. The appellant was tried, along with Laxmamma (accused No. 2) wife of the deceased Govindappa and her mother Gangamma (accused No. 3) wife of late Mylappa. The two women were charged with abetment of murder and were acquitted by the trial court. We are not concerned with them in this appeal. There is no eye witness in the case and the courts below have accepted the prosecution story on circumstantial evidence. The question before us is whether the circumstantial evidence accepted by the courts below establishes the murder of the deceased by the appellant beyond reasonable doubt. The prosecution story may now be stated. The deceased, Govindappa resident of Kommanal village in Shimoga Taluk worked as Extra Departmental Delivery Agent in the postal department. He was attached to the post 217 office at Kommanal and was in common parlance called a postman. G. Sangaiah (P.W. 1) resident of village Abbalagere worked as an Assistant School Teacher in Kommanal. The distance between the two villages is 1 3/4 miles. P.W. 1 also worked as Branch Postmaster in Kommanal, and was called Extra Departmental Postmaster. According to him the duties of the deceased were to bring the postal bags from the M.M.S. Bus on the main road in the morning at about 8.30 a.m. and after the bags were opened by P.W. 1 to deliver the postal articles to their respective addressees. At about 4.30 p.m. he would return to the post office to take the postal bags to the Mail Service Bus. Six villages were, attached to this post office. The deceased used to deliver postal articles in two groups of three villages each on alternate days. On July 21, 1967 at about 10 a.m. the deceased received the postal articles from P.W. 1 for, delivering them to the addressees in, villages Kittadal, Kunchenhalli and Bikkonahalli. The articles to be delivered included two registered letters addressed to Krishna Naika and Halanaika of Kittadal. At about 3.30 p.m. the deceased returned and told P.W. 1 that the addressees, having gone to their fields, were not in the village, and that he would again try to deliver the. registered articles to them. The deceased took the postal bags from the post office for delivery to the Mail bus. He did not return to duty thereafter. As the deceased had been in the service of the post office for nearly 32 years, P.W. 1 did not suspect his bona fides. On July 22, 1967 P.W. I went to the house of the deceased but did not find him there. Thinking that the deceased might have been unavoidably held up somewhere P.W. 1 in addition to his own duties performed those of the deceased as well on that day. On July 23, P.W. 1 went to village KittadaJ to inquire about the delivery of the registered articles to the addressees. There he learnt from Krishna Naika (P.W. 15) that on July 21, 1967 the deceased had delivered to him. the registered article at about 6 p.m. P.W. 15 on being questioned by the court gave the time of delivery to be about 4 p.m. But this differences as to time, in the opinion of the trial court, was due to the fact that the witness had no precise idea of time. After having waited for another day on July 24, 1967 P.W. I reported to the Postal Inspector, Shimoga Circle about the disappearance of the deceased exhibit P 1 is this report. P.W. I informed the Postal Inspector of the steps taken by him in his search for the deceased. Those steps included the inquiries made by him from the addressees of the registered letters which had been delivered by the deceased. P.W. I had looked at those registered letters and left instructions for their production when required. It was further reported that the receipts L11 Sup. CI 15 218 pertaining to the delivery of RL No. 456/Udipi, and RL No. 825/Udipi and the visit book had not been returned by the deceased to the post office. A request was made by P.W. 1 for the appointment of someone in place of the deceased so that the registered articles received on the 24th and 25th July, 1967 be ,delivered to their respective addressees. The Postal Inspector was asked to visit Kommanal for making the necessary arrangements. This report reached the Inspector (S.W. Pawar, P.W. 2) on July 26, 1967 and he visited Kommanal on July 27, 1967. There he collected four Panchayatdars and examined Laxmamma, the wife of the deceased. The same day he submitted his report, exhibit P 3, to the Sub Inspector of ' Police, Kasaba Police Station, Shimoga, attaching with it a copy of the report of P.W. 1, and also a copy of the statement of LaxmaMma. in this report all the relevant facts were stated. The important thing to be noted about this report is that according to it the deceased had two keys of letters boxes fixed at Kunchenhalli and Somanakoppa. The duplicate keys of these locks were, however, available with P.W. 1. This report was sent because, according to P.W. 2, neither the wife of the deceased nor anyone else from the village had reported to the police about the disappearance of the de ceased While investigation into the fact of disappearance of the deceased pursuant to this report was going on, it appears that Bheema Naika, (P.W. 3), resident of Kommanal while grazing his cattle near Ayanoor forest sensed some foul smell from a spot near 'Korakalu '. On going closer, he saw, what appeared to him to be, a human skeleton with Khakhi half pants, khakhi shirt and belt and a pair of chappals. He got frightened and reported to the village patel about what he had seen. As it was late in the evening the patel did not go to the spot that day. The following morning, August 4, 1967, P.W. 3 took the pate (Shankargowda, P.W. 12) and some others to the spot and showed them what he had seen. The pate then reported the matter to the Sub Inspector of Police, Shimoga Taluk (exhibit P 11) Investigation then appears to have started for establishing the identity of the dead body, the cause of his death and, if his death was considered to be homicidal, who was the offender. As a result of the investigation the three accused persons, as observed earlier, were sent up for trial. The three questions requiring consideration by us relate to the identity of the dead body represented to be of the deceased, the cause of the death and whether the appellant has committed the murder. In so far as the question of identity is concerned, there can hardly be any doubt that the skeleton was that of the deceased. The Khakhi shirt, exhibit M.O. 1 and the half pant exhibit M.O. 2 have 219 been identified by P.W. 1 as the uniform given to the deceased. ' The visit book (exhibit M.O. 5) is also proved by P.W. 1 to have been delivered to the deceased The two postal acknowledgments entrusted to the deceased with the registered articles (exhibit M.O. 6) and the two duplicate keys (Exs. MO 3) of the locks of the post boxes at Kunchenhalli and Somanakoppa have also been identified and proved by P.W. 1. All these articles were recovered from near the dead body. This evidence leaves little doubt that the skeleton was of the deceased. Some doubt was sought to be created on the question whether the bones found at the spot were those of a human body. But on this point the testimony of Dr. Shambulingaswami, Assistant Surgeon, Mccann Hospital, Shimoga (P.W. 26) is clear and it establishes beyond doubt that the bones found were those of a human being. For the present we are leaving out of consideration the evidence of Ganga (P.W. 4) and the oral confession made by the appellant to this witness. We will deal with that witness a little later Turning to the question whether the deceased died a natural death or his death was homicidal, Dr. Ramu, Associate Professor of Forensic Medicine , Bangalore Medical College, was required to examine this question and the skeleton concerned was forwarded to him. His report (exhibit P 20) records. the following opinion "I am of opinion that (a) all the bones sent are of ' human origin and appear to belong to the same individual; (b) the bones belong to a male; (c) the age of the person is between 25 35 years; (d) the height of the person is about 5 feet 6 inches one inch; (e) the cause of death is due to external violence; (f) the time since death is about 4 8 weeks from the date of examination. " This report is dated August 30, 1967. When Dr. Ramu appeared as a witness he was cross examined by the counsel for the, appellant. A suggestion was thrown that, the dead body might have been bitten by wild animals. This suggestion was denied by the witness who replied that the gnawing by the wild animals would result in irregular surface which was not the case in respect of the bones sent to him. The witness also refuted the suggestion that the base of the skull in question could have been fractured by a violent fall. The fracture of bones caused by wild animals trampling on them was also stated by the witness to be different in 220 nature from the fractures which were found in the present case. The doctor was clearly of opinion that the injuries caused to the bones sent to him for examination were ante mortem and not postmortem. On being questioned by the court the doctor replied that at least two blows must have been given to the deceased, one on the nape of the neck and the other on the left cheek. He further stated that the spinal cord must have been cut and completely severed because the two pieces M.O. 18 and M.O. 18 (a) were completely severed and this result could not have come about without the spinal cord being cut. The injury on the base of the skull, he continued, must have been the result of a very hard blow and this was by itself sufficient in the ordinary course of nature to cause death. The man whose bones were sent to him, must, according to the doctor, have been brutally attacked with a sharp cutting instrument. This evidence, in our opinion, convincingly establishes that the deceased was the victim of grievous assault as a result of which he died and the courts below were quite right in so concluding. We now come to the question whether it, was the appellant who committed the murder. It is in evidence that the deceased was last seen in the company of the appellant at about 4.30 p.m. when the deceased had gone to deliver the mail bags to the bus. At about 3.30 p.m., according to P.W. 1, the deceased had gone to the post office and taken the postal bags to be delivered to the Mail Bus, M.M.S. Bus Service. He had also told the witness that he would again try to contact Krishna Naika and Halla Naika of Kittadal for delivering the registered articles. Chennabasappa (P.W. 16) has also deposed that he saw Govindappa and the appellant delivering the mail bags to the bus after they had taken coffee in the hotel near the bus stop that evening. P.W. 9, the brother of the appellant who was also at the bus stop that evening saw the deceased and the appellant travelling in the same bus. Gangamma (P.W. 8), the wife of the brother of the deceased who lives in a portion of the same house in which the deceased lived. has stated that she saw the deceased on Friday evening at about 4.30 p.m. with the appellant going from their house towards the post office building. The appellant was at that time carrying an axe on his shoulder. The demeanor of this witness was described by the trial court as natural. Sulochana, an eleven year old daughter of the deceased, appeared as P.W. 10 and stated that on Friday, the day her father disappeared, at about 4.30 p.m. he left the house to deliver the mail bags. At about 5 p.m. the appellant took an axe from her mother and proceeded towards the 'Post office. At about 8 p.m. the appellant returned home. According to this witness four or five days earlier, the appellant had suggested to the deceased to accompany him to the forest area for bringing 221 teak logs so as to be able to make some money. People of village Haramghatta required teak logs and the deceased, according to the suggestion, could earn at least Rs. 151. The deceased first expressed his inability to spare time from his official duties but the suggestion, could earn at least Rs. 151 . The deceased first expresed his inability to spare time from his official duties but the suggestion having been repeated the deceased ultimately agreed. This witness, though being only 1 1 years old was not administered oath, created a favourable impression on the trial court as is obvious from the following note "The witness gave her evidence without faltering or visible signs of hesitancy. She speaks clearly, precisely and straight to the question. " The trial court also interrupted the witness in the middle of her testimony, in order to satisfy itself, by breaking the continuity of the story, that she was not reproducing a tutored version. On going through her statement we are satisfied that she is a truthful witness and her evidence deserves to be accepted and was rightly accepted by the courts below. There is in our opinion, cogent and trustworthy evidence. to support the conclusion of the courts below that the deceased was last seen with the appellant a short time before his disappearance. Having upheld this conclusion, we may appropriately examine the appellant 's explanation. He has merely denied, by expressing his ignorance, that the deceased had been last seen alive with him. In fact he has simply described as false all the material allegations including that of his acquaintance with Laxmamma and that he used to stay in Kommanal. This bare denial without any explanation is not wholly unimportant. This takes us to the motive for the appellant to get rid of the deceased. There can be little doubt on the evidence on the record that the appellant had developed close intimacy with the wife of the deceased. The evidence of Gangamma (P.W. 8), wife of the brother of the deceased who, it may recalled, lives in one portion of the ancestral house owned by the two brothers, is quite clear on the point. Laxmamma, the wife of the deceased, used to run her shop in the other half of the same house. P.W. 8 was, therefore, in a position to know about the appellant 's frequent visits to that shop. According to her the appellant sometimes used to take his food in Laxmamma 's house and also to sleep there. This was due to their intimacy. Though many customers used to come to that shop no one ever stayed on in the house except the appellant. P.W. 8 has also deposed that the deceased and his wife used to quarrel with each other and the deceased used to 222 protest against her feeding the appellant and neglecting him in the matter of food. To this Laxamma used to report that the deceased did not provide her with enough money for that purpose whereas the appellant did. The suggestion that her husband and the deceased had quarrelled over partition of a field was repudiated by her. The trial court was favourably impressed by the demeanor of this witness as well. P.W. 9, the brother of the deceased, has also stated about the quarrels between the deceased and his wife. He has deposed : "My brother and his wife A2 were often quarreling bitterly. That was after Ugadi of last year. lie used to complain to his wife that she was not cooking food at the proper time. A2 in turn used to reply that he was not supplying her with provision and therefore he could not expect her to cook food in time. He sometimes used to thrash A2. She would weep and sleep away. When my brother used to go away without food, I used to invite him to take his food. Sometimes he used to take his food in my house. After the last Ugadi, Thimma (A1) 's visit and stay in my brother 's house increased. Al and A2 used to go together for work. They used to go to Nyamathi Shandy to fetch goods. Al used to carry the goods back to Komminal from Nyamathi. Two days prior to the disappearance of my brother there was a bitter quarrel between A2 and himself. During that quarrel, Govindappa questioned A2 how Al remained under his roof and that she fed him and that by the time he returned, there was nothing left for him. A2 replied that he earns and supplied the provi sions and therefore she was feeding him whereas he (Govindappa) did not supply the provisions and consequently she did not look after him. The quarrel resulted in severe beating of A2 by my brother. A2 never served him food. " From this evidence the motive on the part of the appellant to do away with the deceased is obvious. We now turn to the extra judicial confessions of the appellant and his conduct on the day following the disappearance of the deceased. Ganga (P.W. 4) is a nephew of the appellant, being the son of his elder brother. The appellant, according to this witneSS, had taken up a contract of uprooting plants and trees so as to render the land cultivable. This witness used to visit Laxmamma 's shop when he was working at Kommanal and he 223 also knew the deceased. On Saturday following the day when the deceased had disappeared, in the early hours of the morning a little before sunrise. the appellant went to the house of the witness in Bodekanna colony near Kommannal and woke him up. As the witness began to tether his bullocks the appellant went to, his father 's house nearby. After, a short while the appellant returned and told the witness that the previous evening he had gone to the field of one Mahadevappa and had lost his purse containing Rs. 200/ . The appellant desired the witness to accompany him to find the lost purse. On their way through the forest by the side of the hill they met one Sivappanavar Basappa (P.W. 13) on whose enquiry as to what had brought them there so early, the appellant replied that he had some work in the fallow land of Mahadevappa . On reaching the 'Korakalu ' which was about 2 1/2 ft. deep, the witness saw the dead body of Govindappa. The dead body was lying flat on its back and the witness observed injuries on the neck, face and chest of the deceased. He also saw near the dead body Khakhi shirt (M.O. 1), Khakhi half pants (M.O. 2), a pair of chappals (M.O. 7), a plaster belt (M.O. 8) and banian (M.O. 10). The appellant then pulled the red waist thread (M.O. 10) worn by the deceased and as he took it into his hands, a pair of small keys (M.O. 3 A) were noticed by the witness. The appellant remarked that those were not the keys he wanted. So saying he threw away the thread, the keys and a talisman (M.O. 11) which was also found there. Directing the witness to keep a watch from a higher elevation the appellant cut some branches of the trees and after collecting some twigs covered the dead body with them. After picking up some papers the appellant and the witness started on return journey. After covering some distance the appellant threw away the papers in a bush. The appellant told the witness that he had killed the deceased with the sickle (matchu) given by the wife of the deceased and that the same had been thrown away by him in a bush. As they reached the main road the appellant warned the witness not to disclose to anyone what he had seen and learnt, otherwise he was threatened with the same fate as the deceased had met. The trial court was not favourably impressed by the testimony of Ganga (P.W. 4) though it felt convinced that on the day following the disappearance of the deceased he had knowledge both of the commission of the offence and of the place where the dead body was lying. That court did not rely _on his testimony in regard to the extra judicial confession because it was considered incredible. The High Court on appeal disagreed with the trial court in its appreciation of the evidence of P.W. 4. According to the High Court the evidence of P.W. 4 was corroborated by the evidence of P.W. 13 and P.W. 25. The extra judicial confession was, 224 therefore, held to be admissible and trust Worthy. Before us it was contended, that the extra judicial confession said to have "been made to P.W. 4 is inadmissible and in any event without corroboration in material particulars from independent source it is unsafe to act upon it. It was emphasised that P.W. 4 was at one stage of the investigation suspected of complicity in this murder and, therefore, he should be treated no better than an accomplice. In our opinion, this criticism is not justified. An unambiguous confession, if admissible in evidence, and free from suspicion suggesting its falsity, is a valuable piece of evidence which possesses a high probative force because it emanates directly from the person committing the offence. But in the process of proof of an alleged confession the court has to be satisfied that, it is voluntary, it does not appear to be the result of inducement, threat or promise as contemplated by section 24, Indian Evidence Act and the surrounding circumstances do not indicate that it is inspired by some improperly or collateral consideration suggesting that it may not be true. For this purpose, the court must scrutinise all the relevant factors, such as, the person to whom the confession is made, the time and place of making it, the circumstances in which it is made and finally the actual words. In the case in hand it is quite clear that P.W. 4 is not a person in authority. There can thus be no question of any inducement, threat or promise rendering the confession irrelevant. Nor has any cogent reason ' been suggested why the appellant should have made an untrue confession to P.W. 4 within 24 hours of the disappearance of the deceased. On the other hand, the appellant appears to have been impelled by some inner urge to take the assistance of P.W. 4, his real nephew, to go to the place of occurrence to see as to what had happened to the dead body of his victim. Such behaviour cannot be considered unnatural. The confession appears to us to be free from any taint which would throw suspicion on its voluntary character and it has a ring of truth in it. The fact that during the investigation P.W. 4 was suspected of being involved in the murder would also not cast any doubt on the voluntary character of the confession or on its true nature because it is the knowledge of P.W. 4 derived from this very confession which perhaps invited suspicion on him. We do not consider this to be a cogent ground for holding that P.W. 4 had any motive to concoct the story of confession. This confession is, therefore, admisible in evidence and being true, deserves to be acted upon. The words used are quite clear and 'admit of no doubt of the appellant 's guilt. And then though the evidence of P.W. 4 does not need any corroboration we find that corroboration in material particulars is forthcoming on the record. The existence of the dead body and all the other articles at the place where they were later found and the evidence of Basappa (P.W. 13) which proves the visit of the 225 appellant and P.W. 4 to the spot on Saturday following the disappearance of the deceased furnish strong corroboration. The High Court was thus quite right in relying on the extra judicial confession made to P.W. 4. The confessions said to have been made to P.W. 31 and to Abdul Rahman (P.W. 22) stand on a different footing. Both the courts below have not considered it safe to rely on these confessions and we do not find any sufficient reason for disagreeing with them. Reliance on behalf of the prosecution was also placed on the information given by the appellant which led to the discovery of the dead body and other articles found at the spot. It was contended that the information received from him related distinctly to the facts discovered and, therefore, the statement conveying the information was admissible in evidence under section 27 of the Indian 'Evidence Act. This information, it was argued, also lends support to the appellant 's guilt. It appears to us that when P.W. 4 was suspected of complicity in this offence he would in all probability have disclosed to the police the existence of the dead body and the other articles at the place where they were actually found. Once a fact is discovered from other sources there can be no fresh discovery even if relevant information is extracted from the accused and courts have to be watchful against the ingenuity of the investigating officer in this respect so that the protection afforded by the wholesome provisions of sections 25 and 26 of the Indian Evi dence Act is not whittled down by mere manipulation of the record of case diary. It would, in the circumstances, be somewhat unsafe to rely on this information for proving the appellant 's guilt. We are accordingly disinclined to take into consideration this statement. The trial court and the High Court have also been influenced by the fact that the appellant had absconded after September 1, 1967 when the police got suspicious of his complicity in this offence. It is true that the appellant did make himself scarce with effect from September 1, 1967 till he was arrested on September 5, 1967 and this conduct is relevant under section 8 of. the Indian Evidence Act and might well be indicative to some extent of guilty mind. But this is not the only conclusion to which it must lead the court. Even innocent persons may, when suspected of grave crimes, be tempted to, evade arrest: such is the instinct of self preservation in an average human being. We are, therefore, not inclined to attach much significance to this conduct on the peculiar facts and circumstances of this case. In this case the appellant being a pauper was provided with counsel at State expense in the trial court. The entire prosecution case depends on circumstantial evidence and the dead body 226 was actually recovered in a decomposed state when it was not capable of identification. In view of these peculiar features we undertook to examine the evidence ourselves, a course which this Court as a matter of settled practice, does not ordinarily adopt. We are satisfied that the evidence on the record establishes the appellant 's guilt beyond reasonable doubt and the courts below were quite right in convicting him. On the question of sentence also we do not find any cogent ground for interference. This appeal fails and is dismissed. Y.P. Appeal dismissed.

The appellant was convicted of the offence under section 302 I.P.C. Being a pauper he was defended by counsel at State expense. The entire evidence was circumstantial and the dead body, when it was recovered, was in a, decomposed state and was incapable of identification. Therefore, this Court, examined the evidence afresh, contrary to its settled practice and came to the conclusion that the evidence on record established the appellant 's guilt beyond all reasonable doubt. With respect to three items of evidence, namely, (1) an extra judicial confession by the appellant to his nephew; (2) the 'recovery of the dead body as a result of the appellant 's statement; and (3) the conduct of the appellant in absconding immediately after the police suspected his complicity in the crime, HELD : (1) An unambiguous confession if admissible in evidence, and free from suspicion suggesting its falsity, is a valuable piece of evidence. which possesses a high probative force because it emanates directly from the person committing the offence. The Court, must however be satisfied that it is voluntary and was not the result of inducement, threat or promise as contemplated by section 24 of the Evidence Act and that the surrounding circumstances do not indicate that it was inspired by improper or collateral considerations. For this purpose, the court must scrutinise all the relevant factors, such as the person to whom the confession is. made, the time and place of making it, the circumstances in which it was made and finally, the actual words used. [224 C] In the present case, the person to whom the extra judicial confession. was made was not a person in authority and there was no question of any inducement, threat or promise. Nor has any cogent reason been suggested as to why the appellant should have made an untrue confession within 24 hours of the disappearance of the deceased. The appellant appears to have been impelled by some inner urge to take the assistance of his nephew to go to the place of occurrence and see what happened to the dead body, Such behaviours cannot be considered unnatural. The confession is free from any taint which would throw suspicion on its voluntary character and it has a ring of truth in it. The fact that during the investigation the nephew was also suspected of being involved in the murder would also not cast any doubt on the voluntary character of the confession or on its true nature, because, it was his knowledge derived from the confession that invited suspicion on him. Further, though the evidence of the nephew does not require corroboration, the finding of the dead body and other articles and other evidence on record corroborate it in material particulars. Therefore the confession to, the nephew is admissible in evidence and being true, deserves to be acted upon. [224 E H] (2) When the nephew was suspected of complicity he would have in all probability, disclosed to the police the existence of the dead body and 216 the other articles at the place where they were actually found. Therefore, it would, in the circumstances of the case, be unsafe to rely upon the information given by the accused, leading to the discovery of the dead body, for proving his 'guilt. [225 D F] (3) Evidence of absconding is relevant as evidence of conduct under section 8 of the Evidence Act but the guilty mind of the accused is not the only conclusion that could be drawn by the Court, because, even innocent persons when suspected of grave crimes are tempted to evade arrest. [225 G H]

ivil Appeal Nos. 1201 03 Of 1972 From the Judgment and Order dt. 30.4.1971 of the High Court of Delhi in Civil Writ No. 12)7/67, 455/68 & 16/70. WITH Special Leave Petitions (Civil) NOS. 2820 23 of 1977. From the Judgment and order dt. 18.1.1977 of the High Court of Delhi in Letters Patent Appeals Nos. 3 to 6 of 1977. Anil Devan, A.N. Haksar and D.N. Misra for the Appellant in C.A. Nos. 1201 03172. B.P. Maheshwari for the Petitioners in SLPs Nos. 2820 23 of 1977. Abdul Khader, T.V.N. Chari and R.N. Poddar for tbe Respondents in C.A. Nos. 1201 03/72. The Order of the Court was delivered by TULZAPURKAR, J. Two contentions under a Scheme called "Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 577 1965" framed by the Central Government under section 280 ZD of the Income Tax Act, 1961, which were negatived by the High Court, have again been pressed by the appellant company before us in these appeals but after hearing counsel for the appellant company at some length and after going through the relevant provision of the said Scheme, relevant section of the Income Tax Act, 1961 and section 80 of the Finance Act 1965 we are satisfied that the High Court was right in the view which it took on both the contentions and the appeals deserve to be dismissed. With a view to encourage investment in new equity shares and to stimulate industrial output the Government of India introduced certain special provisions in Chapter XXII B of the Income Tax Act, 1961 for the grant of tax credit certificate and section 230ZD is one of such Provisions which provides for the grant of tax credit certificate by way of incentive for increased production of goods and the "Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme 1965" was framed by the Central Government under this section and it was made applicable to the cement industry in 1965. Under the Scheme the amount of tax credit to which a manufacturer of cement is entitled is calculated at a rate not exceeding 25% of the amount of the duty of excise payable by him on the quantity of excess production during the financial year as compared to the production in the base year and the financial year 1964 65 is defined as the base year in relation to an existing undertaking. For the year 1 965 66 being the concerned year in the instant case the excise duty for cement levied under the (for short the Excise Act) was Rs. 23.60 per ton but under section 80 of the Finance Act 1965 a special duty of excise equal to 25% of the total amount of excise chargeable under the Excise Act on various articles including cement was levied. On the excess clearance of cement made during the concerned year over and above the quantity cleared in the base year the appellant Company applied for the grant of tax credit certificate to the concerned authority under the Scheme for an amount calculated at the rate of 25, ' of the entire amount of duty of excise paid by it, that is to say, 25% of the basic excise duty levied under the Excise Act at Rs. 23.60 per ton plus the amount of special excise duty paid by it under section 80 of the Finance Act. The concerned authority granted tax credit certificate only in respect of the Central Excise Duty levied under the Excise Act, taking the view that the appellant was not entitled to have any tax credit in respect of any other excise duty levied under a different enactment, namely, section 80 of the 578 Finance Act. The appellant challenged before the High Court the aforesaid view of the authorities but the High Court negatived the challenge principally on the ground that tax credit would not be available to the appellant company in respect of the special excise duty levied under section 80 of the Finance Act having regard to the special meaning assigned to the expression 'duty of excise ' by clause (b) of sub s(6) of section 280ZD. It is clear that under section 280ZD (1) a manufacturer of the concerned goods is entitled to be granted a tax credit certificate for an amount calculated at the rate not exceeding 25% of "the amount of duty of excise payable by him" on that quantum of the goods cleared by him during the relevant financial year which exceeds the quantum of goods cleared by him during the base year and clause (b) of sub section (6) of section 280ZD defines the expression 'duty of excise ' for the purpose of the aforesaid provision in a special manner and clause (b) says 'duty of excise ' means the duty of excise leviable under the Central excises and Salt Act, 1944". Obviously the special excise duty which was levied under section 80 of the Finance Act 1965 can not be regarded as having been levied under the Excise Act. Counsel for the appellant company, however, urged before us that having regard to the provisions of sub clause (3) and (4) of section 80 of the Finance Act the special excise duty leviable thereunder should be regarded as duty of excise leviable under the Excise Act. lt is not possible to accept this contention. It is true that the expression 'leviable ' is an expression of wide import and includes stages of qualification and recovery of the duty but in the context in which that expression has been used in clause (b) of sub section (6) of section 280 ZD it is clear that it has been used in the sense of chargeability of the duty. In other words the duty of excise in respect whereof tax credit is available would be in respect of such duty of excise as chargeable under the Excise Act and clearly the special excise duty in respect whereof additional tax credit is sought by the appellant company is not chargeable under the Excise Act but chargeable under the Finance Act. Sub clauses (3) & (4) of section 80 of the Finance Act on which reliance has been placed by counsel for the appellant company in terms refer to the procedural aspect such as the qualification and collection of duty and simply because the qualification and collection of the special duty under the Finance Act is to be done in accordance with the provisions of the Excise Act such duty does not become leviable, that is to say, chargeable under the Excise Act. It is, 579 therefore, not possible to accept the contention of the counsel that such special duty of excise leviable under the Finance Act should also be included or taken into account for the propose of granting tax credit certificate under the Scheme read with section 280ZD of the Income Tax Act 1961. Reference was made by counsel for the appellant to a decision of the Madras High Court in Seshasayee Paper & Boards Ltd. vs Deputy Director of Inspection Customs and Central Excise, New Delhi and Anr.(l) where the view taken by that Court seems to support his contention but having regard to the special definition of the expression 'duty of excise ' given in section 280ZD (6) (b) and the construction which we have put on the word 'leviable, we do not approve the decision of the Madras High Court. The other contention urged by counsel for the appellant relates to the question of limitation but on this aspect the admitted facts are that the first application for tax credit certificate was made by the appellant on June 24, 1966 and the same had been disposed of in December 1966. Thereafter a supplementary application was made on August 26, 1967 which was obviously barred by limitation as per para 5.2 of the Scheme. Further, even the power to condone delay conferred on the Central Authority under para 5.3 would not cover the appellant 's case for under that provision a delay for a period not exceeding 60 days could alone be condoned. Counsel, however, urged that the delay in filing the supplementary application ought to have been condoned having regard to the trade notice that had been issued on June 29, 1967 inasmuch as the supplementary application could be said to have been made because of the clarification issued under that trade notice. It is, however, clear that by the trade notice no amendment was effected but merely a clarification of the existing position in law was given and, therefore, the trade notice could not furnish starting point of limitation for the supplementary application. In our view both the contentions were rightly rejected by the High Court and the appeals are dismissed but without cost. In view of what is stated above the special leave petitions are also dismissed. N.V.K. Appeals & Petitions dismissed.

The Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme 1965 was framed by the Central Government under section 280ZD of the Income Tax Act 1961. It was made applicable to the Cement Industry in 1985. For the year 1965 66, the excise duty for Cement levied under the Central Excise and Salt Act 1944 was Rs. 23.60 per ton, but under section 80 of the Finance Act 1965 a special duty of excise equal to 25% of the total amount of excise chargeable under the Excise Act on various articles including cement was levied. The appellant company on the excess Clearance of cement made during the concerned year 1965 66 over and above the quantity cleared in the base year (financial year 1964 65) applied for the grant of tax credit certificate to the concerned authority. The authority however, granted tho, Tax Credit Certificate only in respect of the Central Excise Duty levied under the Excise Act, taking the view that the appellant was not entitled to have any tax credit in respect of any other excise duty levied under a different enactment, namely, section 80 of the Finance Act. 576 The appellant company challenged in the High Court. .Theafore said view, but it was rejected on the ground that tax credit would not be available to The appellant company in respect of the, special excise duty levied under s.80 of the linance Act, 1965 having regard to the special meaning assigned to the expression 'duty of excise ' by clause (b) of sub section (6) of section 280ZD Dismissing the appeals and Special leave Petitions to this Court. ^ HELD: 1. Under section 280ZD (I) a manufacturer of the concerned goods is entitled to be granted a tax credit certificate for an amount calculated at the rate not exceeding 25% of "the amount of duty of excise payable by him" on that quantum of the goods cleared by him during the relevant financial year which exceeds the quantum of goods cleared by him during the base year and clause (b) of sub sect on (6) of section 280ZD defines the expression 'duty of excise ' for the purpose in a special manner, as "the duty of excise leviable under the Central Excise and Salt Act ]944". [578C E] 2. Sub clause (3) & (4) of section 80 of the Finance Act, 1965 refer to the procedural aspect such as the quantification and collection of duty. Simply because the quantification and collection of special duty under the Finance Act is to be done in the manner indicatcd under the Excise Act, such duty does not become leviable that is chargeable under the Excise Act. [578G H] Seshasayee Paper & Boards Ltd. vs Deputy Director of Inspection, Customs and Central Excise New Delhi. and Anr,. , over ruled.

ivil Appeal No. 4128 of 1988. PG NO 961 From the Judgment and Order dated 3.8.1988 of the Bombay High Court in W.P. NO. 28 of 1987. V.N. Ganpule and Mukul Mudgal for the Appellant. A.S. Bhasme, B.R. Agarwala and Mrs. Sushma Manchanda for the Respondents. The Judgment of the Court was delivered by DUTT, J. Special leave granted. Heard learned Counsel for both the parties. The appeal is directed against the judgment of the Bombay High Court whereby the High Court dismissed the writ petition of the appellant challenging, inter alia, the legality of the action of the respondents refusing to admit the appellant in the post graduate M.D. Course in Obstetrics and Gynaecology for the 1987 session. The appellant passed the MBBS examination from the Kakatiya Medical College under the University of Kakatiya. Warangal, in the State of Andhra Pradesh. She obtained 72%, 66.63% and 67.5% marks in the first, second and third MBBS examinations. She was awarded Governor 's Gold Medal by the State of Andhra Pradesh for her consistent high merit at the MBBS examinations. In August, 1985, she completed her one year internship. She married one Dr. Ashok Patwardhan, a Government Medical Officer working in the State of Maharashtra. He was transferred to Solapur in January, 1985. The appellant had to come to Solapur in October, 1985 and since then she has been residing there with her husband. After coming to Solapur, she intended to prosecute her studies in the post graduate M.D. Degree Course in Obstetrics and Gynaecology in Dr. V.H. Medical College, Solapur, under the Shivaji University, the respondent No. 2. Rules X(2) and (3) of the Rules regulating the appointments of Housemen and House Surgeons at the hospital attached to the Government Medical Colleges in the State of Maharashtra, hereinafter referred to as 'the Rules '. provide as follows: "X. . . . . . . . . . . . . . . . . . PG NO 962 Government have from time to time sanctioned supernu merary posts (1). . . . . . . . . . . . . (2) to allow spouses of Government servants on transfer to undertake studies, if standing high in merit (which means not less than 55% at first attempt in the subject) from another college; (3) to allow students of other colleges in Maharashtra to compete on merit for posts so as to conduct post graduate course for which facilities are not existant or very meagre in their own college. These supernumerary posts should be awarded after fullest consideration of these principles in the above order and on merit and it is not incumbent to fill all of them or to reserve them . . . . . . It is understood that granting of registration does not absolve a candidate from competing on merit and if he cannot earn post on merit, his registration would lapse for failure to compete housemanship requirements . . . ." The appellant made an application to the Government of Maharashtra praying for the creation of a Housepost in Obstetrics and Gynaecology under rule X(2) so as to enable her to do post graduate studies in Dr. V.M. Medical College, Solapur. As she fulfilled and requirements of rule X(2), namely, that she is the wife of a Government servant on transfer and that she stood high in merit securing more than 55% marks in Obstetrics and Gynaecology in her MBBS examination, the Dean of the College specifically recommended her case for the creation of such a supernumerary Housepost. While the application of the appellant was under consideration, the appellant was selected for a Housepost in Surgery in the said College. She joined the Housepost in Surgery in January, ]986 and completed the same in July, 1986. But, in order to be eligible for post graduate studies in Obstetrics and Gynaecology, she was to join another Housepost in Obstetrics and Gynaecology. On July 2, 1986, the Government of Maharashtra in exercise of its power under rule X(2) created a Housepost in Obstetrics and Gynaecology with effect from July 15, 1986 specifically and categorically stating that the PG NO 963 supernumerary Housepost was created to enable the appellant to complete her post graduate studies at Dr. V.M. Medical College, Solapur. The Government resolution dated July 2, 1986 is extracted below: "Government hereby grants permission for creation of one supernumerary non stipendary post of Houseman with effect from 15.7.1986 for a period of six months at Dr. Vaishampayan Memorial Medical College, Solapur, to enable Dr. Mrs. S.A. Patwardhan to complete her Post Graduate Course in the subject of Gynaecology and Obstetrics. Mrs. Patwardhan should join the said post within 10 days from 15.7.1986. In the event of her not joining the said post will be treated as abolished. By order and in the name of the Governor of Maharashtra. Sd/ J.P. Budhwant Deputy Secretary Govt. of Maharashtra" The Dean of the College called upon the appellant to join the Housepost and not to quit the same before completing the term inasmuch as the Housepost was specifically created to enable the appellant to complete her post graduate studies at Dr. V.M. Medical College, Solapur. The appellant joined the Housepost and duly completed the same. The Dean of the College issued an advertisement inviting applications for the post graduate seats in various disciplines for January, 1987 batch. The appellant made an application praying for the issuance of an application form for the M.D. Course in Obstetrics and Gynaecology, but no such form was issued to her. In other words, the appellant was refused admission in the M.D. Course at Dr. V.M. Medical College, Solapur. Being aggrieved by the action of the Dean of the College, the appellant filed a writ petition in the Bombay High Court. The High Court, as stated already, dismissed the writ petition holding, inter alia, that no inference could be drawn that everybody who completed the house job was entitled to get admission to the post graduate course ipso PG NO 964 facto and that granting of registration for house job would not amount to admission to the post graduate course in a Medical College. Hence this appeal. There can be no doubt that there is no question of automatic admission in the post graduate course, simply because one has completed the house job or housemanship. It is not the case of the appellant that as she completed the housemanship, she has acquired a right of automatic admission to the post graduate degree course in the said College. Her complaint is that she was not even given an application form for the post graduate degree course. The College authorities or the University did not at all consider her case for admission. The High Court has not considered this aspect of the appellant 's case. It is contended by the learned Counsel appearing on behalf of the respondents that in view of the provision in the Rules giving institutional preference in the matter of admission, the appellant could not be admitted. The other ground that has been urged on behalf of the respondents is that as the appellant passed the MBBS examination from the Kakatiya University in the State of Andhra Pradesh and as there is failure on the part of the State of Andhra Pradesh to reciprocate with regard to reservation of 25% of the total number of seats in the matter of admission to post graduate degree course in Medical Science, the respondents were justified in refusing admission to the appellant. So far as the first contention is concerned, we do not think that there is any merit in the same. All the seats in the post graduate degree course in Obstetrics and Gynaecology are not reserved for the candidates passing the MBBS examination from the said Dr. V.M. Medical College, Solapur. It is not disputed that certain percentage of seats are reserved for the students of the College. But, no application form was issued to the appellant and, accordingly, the question of not admitting the appellant on the ground of institutional preference or institutional reservation of seats does not arise. In our opinion, the first ground founded on institutional preference seems to be a mere plea. The real ground for refusal to issue even an application form for admission to the appellant is the failure of reciprocity on the part of the State of Andhra Pradesh. The State of Maharashtra, in our opinion, is entitled to refuse to admit any student passing the MBBS examination from any Medical College in the State of Andhra Pradesh, as that State has not reciprocated in the matter of admission to post graduate degree courses in Medical Colleges of that State. But, in the facts and circumstances PG NO 965 of the present case, the respondents are not at all justified in refusing to admit the appellant in the postgraduate degree course. The most glaring fact in this respect is that on the prayer of the appellant a supernumerary Housepost was created so as to enable the appellant to become eligible for the post graduate degree course. It is not the case of the respondents that they were not aware of the fact that the appellant had passed her MBBS examination from a Medical College in the State of Andhra Pradesh. Indeed, it has been categorically averred by the appellant that in her application for the creation of a supernumerary Housepost, she disclosed all facts including the fact of her passing the MBBS examination from the said Medical College in the State of Andhra Pradesh. The State of Maharashtra after considering all facts and circumstances including the high merit of the appellant specifically created a supernumerary Housepost for the appellant. After the appellant had completed her house job and applied for the issuance of an application form for the post graduate degree course, she was refused an application form, presumably on the ground that she had passed her MBBS examination from a Medical College in the State of Andhra Pradesh. In our opinion, the appellant could be refused at the very outset, that is to say, her application for creation of a supernumerary Housepost could be turned down on the ground of failure to observe reciprocity by the State of Andhra Pradesh. But, after creating the supernumerary Housepost specifically for the appellant so as to enable her to become eligible for the post graduate degree course the respondents, in our opinion, are not at all justified in refusing her even an application form and in not considering her case for admission to post graduate degree course, on the ground of failure of reciprocity by the Andhra Pradesh State. We fail to understand how the College authorities and the Government could take this attitude so far as the appellant is concerned. In our opinion, it was unreasonable and unjust for the respondents to refuse admission to the appellant on a ground which is not at all tenable in the facts and circumstances of the case. It is not disputed that the appellant has all the requisite qualifications for admission in the post graduate degree course. She applied to admission in the session commencing from January, 1987, but she was not admitted. The 1988 sessions has also passed, as the appellant had to file a writ petition before the High Court of Bombay which, as noticed already, was dismissed by the High Court. The appellant prays that she may be admitted in the post graduate course in Dr. V.M. Medical College in the 1989 session. PG NO 966 The facts stated above reveal that the appellant has been harassed to a great extent. She was misled by the fact of the creation of a supernumerary Housepost for her by the State of Maharashtra. She has already lost two years of her academic career. Normally, this Court does not interfere in the matter of admission of students in an educational institution. Even if it interferes, it generally directs the authorities concerned to consider the question of admission in accordance with the rules of the institution. But, in the peculiar facts and circumstances of the case, particularly the fact that the appellant had to lose two years of her academic career for no fault of hers, we direct the respondens to issue to her an application form for admission in the post graduate M.D. Course in Obstetrics and Gynaecology and we further direct that after the submission of the application form and compliance with other formalities by the appellant, she shall be admitted in the post graduate course in Obstetrics and Gynaecology in Dr. V.M. Medical College, Solapur, in the 1989 session, provided she is not otherwise unfit. The learned Counsel appearing on behalf of the Indian Medical Council also supports the case of the appellant for her admission in the 1989 session. The judgment of the High Court is set aside and the appeal is allowed. There will, however, be no order as to costs. M.L.A. Appeal allowed.

Rule X(2) of the Rules regulating the appointments of Housemen and House Surgeons at the hospitals attached to the Government Medical Colleges in the State of Maharashtra provides that the Government may sanction supernumerary posts to allow spouses of Government servants on transfer to undertake studies, if standing high in merit, from another college. The appellant married to a Government Medical Officer working in the State of Maharashtra after having passed M.B.B.S. examination and completing one year internship from a college situated in the State of Andhra Pradesh. On her application, the Government of Maharashtra in exercise of its power under rule X(2) created a Housepost in Obstetrics and Gynaecology w.e.f. July l5. 1986 specifically and categorically stating that the supernumerary Housepost was created to enable the appellant to complete her post graduate studies at Dr. V.M. Medical College, Solapur, respondent No. 2. The appellant joined the Housepost and duly completed the same. However, she was refused admission in the M.D. Course by respondent No.2 inasmuch as she was not even issued an application form. Being aggrieved, she filed a writ petition in the High Court challenging the legality of the action of the respondent refusing to admit her in the said post graduate M.D. Course. The High Court dismissed the writ petition holding, inter alia, that no inference could be drawn that everybody who completed the house job was entitled to get admission to the post graduate cousre ipso facto and that granting of registration for house job would not amount to admission to the post graduate course in a Medical College. Hence this appeal by special leave. Allowing the appeal, PG NO 959 PG NO 960 HELD: (l) All the seats in the post graduate degree course for Obstetrics and Gynaecology are not reserved for the candidates passing the M.B.B.S. examination from the said Dr. V.M. Medical College. It is not disputed that certain percentage of seats are reserved for the students of the College. But, no application form was issued to the appellant and accordingly, the question of not admitting the appellant on the ground of institutional preference or institutional reservation of seats does not arise. [964F G] (2) The State of Maharashtra is entitled to refuse to admit any student passing the M.B.B.S. examination from any Medical College in the State of Andhra Pradesh as that State has not reciprocated in the matter of admission to post graduate degree courses in Medical Colleges of that State. [964G H] (3) The State of Maharashtra after considering all facts and circumstances including the high merit of the appellant specifically created a supernumerary Housepost for the appellant. After creating the supernumerary Housepost specifically for the appellant so as to enable her to become eligible for the post graduate degree course, the respondents are not at all justified in refusing her even an application form and in not considering her case for admission in the post graduate degree course on the ground of failure of reciprocity by the Andhra Pradesh State. It was, therefore, unreasonable and unjust for the respondents to refuse admission to the appellant on a ground which is not at all tenable in the facts and circumstances of the cases. [965C F] (4) Normally the Supreme Court does ot interfere in the matter of admission of students in an educational institution. Even if it interferes. it generally directs the authorities concerned to consider the question of admission in accordance with the rules of the institution. But, in the peculiar facts and circumstances of the case, particularly the fact that the appellant had to lose two years of her academic career for no fault of hers, it is directed that the respondents shall issue to her an application form for admission in the post graduate M.D. Course in Obstetrics and Gynaecology and that alter the submission of the application form and compliance with other formalities by the appellant, she shall be admitted in the post graduate course in Obstetrics and Gynaecology in Dr. V.M. Medical College, Solapur, in the 1989 session, provided she is not otherwise unfit. [966B D]

iminal Appeal No. 73 of 1961. 777 Appeal by special leave from the judgment and order dated November 3, 1960 of the Patna High Court in Criminal Appeal No. 326 of 1958. Jai Gopal Sethi, C.L. Sareen and R. L. Kohli, for the appellants. , S.P. Varma, and R. N. Sachthey, for respondent. January 29. The judgment of the Court was delivered by MUDHOLKAR, J. This is an appeal by special leave from a judgment of the High Court of Patna altering the conviction of the appellants under section 304, Part 11 read with section 149 of the Indian Penal Code into convictions under section 326 read with section 149, I.P.C. but maintaining the sentences and affirming the convictions under section 147 and section 426, I.P.C. as well as the sentences awarded in respect of those offences. The prosecution case was that there was a dispute between Ram Bilas Singh of Shahpore and, his two sons Ram Naresh Singh and Dinesh Singh on the one hand (appellants before us) and Deva Singh (P. W. 2) and his brothers on the other with respect to a Dochara in a village Dihara. On April 22, 1957, at about 9.00 a.m. while Deva Singh, along with his brother Laldeo Singh, the deceased and two other persons Dhunmun Singh (P. W. 4) and Dasain Hajam were sitting in the Dochara the appellant No. 1 Ram Bilas Singh arrived there in a truck with a mob of 40 to 50 persons which included the other two appellants before us, besides four other persons who were acquitted by the trial court. Ram Bilas Singh is said to have fired from the gun which he was carrying which hit Laldeo Singh on the chest as a result of which he fell down, but got up later. 778 Thereupon Ramdeo Singh (acquitted by the trial court) fired from his gun and the shot hit Laldeo Singh on the chest and he fell down again. After that, Ram Bilas Singh Gumasta of Dihara (acquitted by the trial court) fired a second shot ' from his gun hitting Laldeo Singh on the abdomen and killing him instantaneously. The appellant Ram Bilas Singh is further said to have fired two shots at Deva Singh hitting him on his right thigh. Appellants Ram Naresh Singh and Dinesh Singh are said to have assaulted Deva Singh with lathis as a result of which he fell down and thereafter the mob proceeded to dismantle the Dochara by demolishing its mud pillars, as a result of which its thatched roof fell down. Having achieved their object, the mob is said to have left the place, taking away along with them a palang, a bamboo cot, two quilts, one lantern and one garansa. The incident attracted it number of villagers to the spot including jagdish Singh, Bhagwat Singh (since dead) and Ajodhya Singh. After report was lodged of the incident, the police arrived on the spot, held the panchnama (inquest) on the body of Lal Deo Singh and followed the ' usual procedure. A starch was made for the seven accused persons, including the appellants, but it took some time to find them out and arrest them. Eventually, they were placed before a magistrate who committed them for trial for offences under section 148, section 302 read with section 149 and section 426, I.P.C., the appellant Ram Bilas Singh, Ramdeo Singh and Ram Bilas Singh Gumasta of Dihara were specifically charged with offences under section 302, I.P.C. for having committed the murder of Laldeo Singh. Ram Bilas Singh was further charged under section 307 of the Indian Penal Code for attempt to commit the murder of Deva Singh while Ram Naresh Singh and Dinesh Singh (appellants 2 and 3) were further charged with offences under section 323, I.P.C. for assaulting Dhunmun Singh (P. W. 4). The court of 779 Session acquitted both Ram Bilas Singh as well as Ramdeo Singh of the offence under section 302, I. P.C. and also acquitted all the seven accused persons of the offence under section 302 read with section 149, I.P.C. It, however, convicted the three appellants before us under section 304, second part, read with section 149 of the I.P.C. and under sections 147 and 426, I.P.C. but acquitted the appellants 2 and 3 of the offence under section 323, I.P.C. Briefly stated, the defence of the three appellants was that the appellant Ram Bilas Singh was in possession of the dochara, that it was Laldeo Singh and Deva Singh who threatened to dismantle the dochara and, therefore, they marched there on the date of the incident at the head of a mob consisting of 15 or 20 persons carrying with them various weapons. During the incident, Laldeo Singh and Deva Singh are said to have flourished their farsis and gandasas while some other members of their party are said to have used their lathis and spears as a result of which four persons on the side of the appellants received injuries. In the meantime, in self defence, one Ram Lakhan Singh (since deceased) fired a shot from his gun and ran away. This shot is said to have hit Laldeo Singh and also Deva Singh. After being injured in this manner, Laldeo Singh is said to have dropped down dead and then the mob dispersed. The defence of the appellants that they were in possession of the dochara and that Laldeo Singh and Deva Singh were the aggressors has been rejected by both the courts below and Mr. Sethi who appears for the appellants has not even sought to controvert the finding on that point. His contention, however, is that the appellants having been acquitted of the offence under section 302 read with section 149, 1. P. C. and appellant No. 1 having been acquitted of the offences under section 302 and section 307, I.P.C. none of them could 780 be convicted under section 326 read with section 149, I.P.C. Learned counsel points out that the clear case of the prosecution in the charge sheet was against seven named persons i.e., the three appellants before us, Ram Bilas Singh Gumasta of Dihara, Sudarshan Singh son of Ram Bilas Singh Gumasta, Ramdeo Singh and Sakal Singh sons of Raghoo Singh and contends that out of these, four persons having been acquitted, the remaining three persons could not be said to have been members of an unlawful assembly and, therefore, they could neither e convicted under section 147 I.P.C. nor could they be convicted of any other offences with the aid of section 149, I. P.C. All that it was competent for the court to do was to convict each of them for their individual acts and no more. Learned counsel further contends that without setting aside the acquittal of the four alleged associates of the appellants, there could be no finding to the effect that there was an unlawful assembly of which the appellants were members and were, therefore, liable for the acts of other members thereof. Further, it was urged by learned counsel that an accused person cannot be held liable vicariously for the act of an acquitted person and, therefore, even assuming that the fatal injuries were caused to Laldeo Singh by one of the four acquitted persons, it was not open to the High Court to hold any of the appellants liable for that act with the aid of section 149, I.P.C. Learned counsel relied upon a passage in the judgment of Agarwala J., in Harchanda vs Rex which reads thus : "Now in a criminal case the burden of proof is always on the prosecution. It is for the prosecution to establish the responsibility of the accused for the crime alleged. Having regard to the fact that there is no appeal against the acquittal of the other five accused before us, and having regard to the fact that we cannot (1)I.L.R. (1951) 2 All. 62, 73. 781 interfere with the finding of the learned Sessions judge, so far as it concerns those accused, we cannot hold that either Durga Das or Sukhbir was responsible for inflicting the incised wounds: and since it was not the prosecution case that there was some unknown person along with the accused, who was also holding a sharp edged weapon, we cannot ascribe the infliction of the incised wounds to some such unknown person. The result of the prosecution evidence, taken with the findings of the learned Sessions judge, is that the prosecution is unable to explain the infliction of the incised wounds. in my opinion in such a case the accused cannot be held constructively liable for the infliction of those wounds. " There is no doubt that the High Court has observed in its judgment under appeal that Laldeo Singh was killed as a result of one of the shots fired at him by Ram Bilas Singh Gumasta who was acquitted by the court of Session. We may quote the observations made by it in this regard. They are "It seems, as I shall show hereafter, the trial court was greatly prepossessed in favour of Ram Bilas Singh of Dihara, and therefore it ruled out without disbelieving the evidence, the possibility of Laldeo Singh having been killed by the third shot fired by Rambilas Singh of Dihara. It is admitted that the two Rambilas Singh and Ramdeo Singh have each held a licensed gun empty cartridge. .These guns and the which had been found by P W. 21 at the place of occurrence were examined by the Fire Arms Expert The trial court has explained away this very strong piece of evidence of unimpeachable character, supporting the version of the witnesses 782 that Rambilas Singh of Dihara had fired one shot from his gun, on a very flimsy ground. " Then the High Court observed that the evidence of the ballistic expert was disregarded by the Court of Session on flimsy grounds. The point, however, is that the High Court has come to the conclusion that the shot which resulted in the death of Laldeo Singh was fired by an acquitted person. If the view taken by the Allahabad High Court is correct then it would follow that it was not open to the High Court before which the acquittal of Rambilas Singh Gumasta was not challenged., to reassess the evidence with regard to him and hold that it was he who had caused the death of Laldeo Singh. We will deal with the decision of the Allahabad High Court presently, but we must refer to certain decisions of this court to which reference was made during arguments. In Topandas vs The State of Bombay (1), this court has held 'that where four named individuals were charged with having committed an offence of criminal conspiracy under section 120 B, I.P.C. and three out of those four were acquitted of that charge, the fourth accused could not be held guilty of the offence of criminal conspiracy. In support of this view, this court ha , relied upon a passage in Archbald 's Criminal Pleading, Evidence and Practice (33rd edn.p. 201, paragraph 361) which reads thus "Where several prisoners are included in the same indictment, the jury may find one guilty and acquit the others, and vice versa. But if several are indicated for a riot, and the jury acquit all but two, they must acquit those two also, unless it is charged in the indictment and proved, that they committed the riot together with some other person not tried upon that (1) [1955]2 S.C.R. 881. 783 indictment. 2 Hawk c. 47 section 8. And, if upon an indictment for a conspiracy, the jury acquit all the prisoners but one, they must acquit that one also, unless it is charged in the indictment, and proved, that he conspired with some other person not tried upon that indictment. " This court has also quoted with approval a passage from the judgment in R. vs Plummer (1), which is one of the decisions on which the above 'passage is founded. In Bharwad Mepa Dana vs State of Bombay (2), this court had to consider the correctness of the conviction of three persons under section 302 read with section 149 I.P.C. when one other person who had been convicted by the Sessions judge of a similar offence had been acquitted by the High Court. It may be mentioned that originally twelve persons were named in the charge and it was alleged that they had formed an unlawful assembly with the common object of murdering certain persons. Seven of them were acquitted by the Sessions judge and only five were convicted under section 302 read with section 149, I.P.C. The High Court, while acquitting one of the five persons, convicted by the Sessions Judge, held that there were ten to thirteen persons in the unlawful assembly though the identity of all the persons except four had not been established, that all these persons had the common object and the common intention of killing the victims and that the killing was done in prosecution of the common object of the unlawful assembly and in ' furtherance of the common intention of all. Upon these facts, this court held that the appellants before it were rightly convicted under section 302 read with section 149, I.P.C., and that there was nothing in law which prevented the High Court from finding that the unlawful assembly consisted of the four convicted persons and some unidentified persons, who, (1) (2) ; , 181. 784 together numbered more than five. This court further observed : embark on a discussion as to the legal effect of the acquittal of nine of the accused persons, except to state that we may proceed on the footing that the acquittal was good for all purposes and none of those nine persons can now be held to have participated in the crime so that the remaining four persons may I be held guilty under section 149 Indian Penal Code. " It is on the above observations that reliance has been placed by Mr. Sethi. He contends that the High Court was wrong in observing that Laldeo Singh was killed as a result of a shot fired at him by Ram Bilas Singh Gumasta and that he has escaped the charge. of murder as he was acquitted by the Sessions judge. Then, there is the decision of this court in Kartar Singh vs State of Punjab (1), where this court has held that if the trial court can legally find that the actual number of members in the assailants party was more than five, that party will in law constitute an unlawful assembly even though ultimately three of the accused persons are convicted. It has further held that it is only when the number of the alleged assailants is definite and all of them are named and the number of persons found to have taken part in the incident is less than five, it cannot be held that they formed an unlawful assembly. Then this court observed "The acquittal of the remaining named persons must mean that they were not in the incident. The fact that they were named, excludes the possibility of other persons to be in the appellant 's party and especially when there be no occasion to think that the witnesses naming all (1) ; 399. 785 the accused could have committed mistakes in recognising them." In support of the above conclusion, reliance was placed by this court upon the decision of this court in Dalip Singh vs State of Punjab (1). In Sunder Singh vs State of Punjab (2) , also this court has considered the effect of the acquittal of some persons of the offence under section 302 read with section 149, I.P.C. on the conviction of the remaining persons who numbered less than five. In dealing with this matter it has observed : Cases sometimes arise where persons are charged with being members of an unlawful assembly and other charges are framed against them in respect of offence committed by such an unlawful assembly. In such cases; if the names of persons constituting the unlawful assembly are specifically and clearly recited in the charge and it is not suggested that any other persons known or unknown also were members of the unlawful assembly, it may be that if one or more persons specifically charged, are acquitted, that may introduce a serious infirmity in the charge in respect of the others against whom the prosecution case may be proved. It is in this class of cases, for instance, that the principle laid down in the case of Plummer may have some relevance. If out of the six persons charged under section 149 of the Indian Penal Code along with other offences, two persons are acquitted, the remaining four may not be convicted because the essential requirement of an unlawful assembly might be lacking. " Upon the facts of the case before it, this court held that the principle set out in Plummer 's case (3), (1) ; (2) [1962] Supp. 2 S.C.R. 654. 663. (3) 786 and which has been accepted by this court in Topan Das 's case (1), did not apply to the case before it. This court then proceeded to consider the powers of the court of appeal under section 423 (1) (a) of the Criminal Procedure Code and observed that if in dealing with a case before it, it became necessary for the High Court to deal indirectly or incidentally with the case against the acquitted accused, it could well do so and there is no legal bar to such a course. Upon the view we are taking it is unnecessary to express any opinion as to whether the interpretation placed in this case upon the ambit of the powers under section 423, Cr. P. C. is consistent with the principle in Plummer 's case (2). Finally, there is the decision of this court in Mohan Singh vs The State of Punjab (3), where a similar question arose for consideration. There, this court, after pointing out that where five or more persons are shown to have formed an unlawful assembly, the mere fact that less than that number are actually tried for the offence committed by the assembly and convicted of that offence would not necessarily render their conviction illegal, because other persons may not have been available for trial or may not be properly identified or for some other reason. This court has observed : ". . . In such cases, if both the charge and the evidence are confined to the persons named in the charge and out of the persons so named two or more are acquitted leaving before the court less than five persons to be tried, then section 149 cannot be invoked. Even in such cases. it is possible that though the charge names five or more persons as composing an unlawful assembly, evidence may nevertheless show that the unlawful assembly consisted of some other persons as well who were not identified and so not named. In such cases, either the trial court (1) (2) [1902] 2 K.B. 339. (3) [1962] supp. 3 S.C.R. 848, 858. 787 or even the High Court in appeal may be able to come to the conclusion that the acquittal of some of the persons named in the charge and tried will not necessarily displace the charge under section 149 because along with the two or three persons convicted were others who com posed the unlawful assembly but who have not been identified and so have not been named. In such cases, the acquittal of one or more persons named in the charge does not affect the validity of the charge under section 149 because on the evidence the court of fact is able to reach the conclusion that the persons composing the unlawful assembly nevertheless were five or more than five. " The decisions of this court quoted above thus make it clear that where the prosecution case as set out in the charge and as supported by the evidence is to the effect that the alleged unlawful assembly consists of five or more named persons and no others, and there is no question of any participation by other persons not identified or identifiable it is not open to the court to hold that there was an unlawful assembly unless it comes to the definite conclusion that five or more of the named persons were members thereof. Where, however, the case of the prosecution and the evidence adduced indicates that a number in excess of five persons participated in the incident and some of them could not be identified, it would be open to the court to convict less than five of the offence of being members of the unlawful assembly or convict them of the offence committed by the unlawful assembly with the aid of s; 149, 1. P. C. provided, it comes to the conclusion that five or more persons participated in the incident. Again, it is clear from these decisions that when a person has been acquitted of an offence, his acquittal will be good for all purposes when the incident in connection with which he was implicated comes up for consideration before 788 the High Court in appeal by a person or persons who were tried along with him and convicted of some offence with the aid of section 149, I. P. C. Sunder Singh 's case (1), has carved out an exception to this rule to the effect that the High Court can, under section 423, Cr. P. C. consider incidentally the question whether the acquitted person was a member of the unlawful assembly for the purpose of determining the case of the appellants before it. As already pointed out it is not necessary in this case to say whether such an exception can be recognised consistently with the principle in Plummer 's case (2) which has so far been uniformly accepted by this court. We have had occasion to consider recently in Krishna Govind Patil vs The State of Maharashtra (3), the effect of the acquittal of person . who were tried along with the persons convicted of an offence under section 302 read with section 3 t. One of us (Subba Rao. J.) speaking for the court, has observed "It is well settled that common intention within the meaning of the section implied a pre arranged plan and the criminal act was done pursuant to the pre arranged plan. The said plan may also develop on the spot during the course of the commission of the offence; but the crucial circumstance is that the said plan must precede the act constituting the offence. If that be so, before a court can convict a person under section 302, read with section 34 of the Indian Penal Code, it should come to a definite conclusion that the said person had a prior concert with one or more other persons, named or unnamed, ' for committing the said offence. A few illustrations will bring out the impact of s.34 on different situations. (i) A, B, C and D are charged under section 302, read with section 34 of the Indian Penal Code, (1) [1962] Supp. 2 S.C.R. 654, 663. (2)[1902] 2 K B. 339. (3 [1964] Vol. 1 S.C.R. 678. 789 for committing the murder of E. The evidence is directed to establish that the said four persons have taken part in the murder. (2) A, B, C and D and unnamed others arc charged under the said sections. But evidence is adduced to prove that the said persons, along with others, named or unnamed, participated jointly in the commission of that offence. (3) A, B, C and D are charged under the said sections. But the evidence is directed to prove that A, B, C and D, along with 3 others, have jointly committed the offence. As regards the third illustration a Court is certainly entitled to come to the conclusion that one of the named accused is guilty of murder under section 302, read with section 34 of the Indian Penal Code, though the other three named accused are acquitted, if it accepts the evidence that the said accused acted in concert along with persons, named or unnamed, other than those acquitted, in the commission of the offence. In the second illustration, the Court can come to the same conclusion and convict one of the named accused if it is satisfied that no prejudice has been caused to the accused by the defect in the charge. But in the first illustration the Court certainly can convict two or more of the named accused if it accepts the evidence that they acted conjointly in committing the offence. But what is the position if the Court acquits 3 of the 4 accused either because it rejects the prosecution evidence or because it gives the benefit of doubt to the said accused? Can it hold, in the absence of a charge as well as evidence, that though the three accused are acquitted, some other unidentified persons acted 790 conjointly along with one of the named per sons? If the Court could do so, it would be making out a new case for the prosecution : it would be deciding contrary to the evidence adduced in the case. A Court cannot obviously make out a case for the prosecution which is not disclosed either in the charge or in regard to which there is no basis in the evidence. There must be some foundation in the evidence that persons other than those named have taken part in the commission of the offence and if there is such a basis the case will be covered by the third illustration. " What has been held in this case would apply also to a case where a person is convicted with the aid of section 149, Indian Penal Code instead of section 34. Thus all the decisions of this court to which we have referred make it clear that it is competent to a court to come to the conclusion that there was an unlawful assembly of five or more persons, even if less than that number have been convicted by it if (a) the charge states that apart from the persons named, several other unidentified persons were also members of the unlawful assembly whose common object was to commit an unlawful act and evidence led to prove this is accepted by the court; (b) or that the first information report and the evidence shows such to be the case even though the charge does not state so, (c) or that though the charge and the prosecution wit nesses named only the acquitted and the convicted accused persons there is other evidence which discloses the existence of named or other persons provided, in cases (b) and (c), no prejudice has resulted to the convicted person by reason of the omission to mention in the charge that the other unnamed persons had. also participated in the offence. Now, coming to the Allahabad High Court decision relied upon, it is sufficient to say that the 791 observations made therein which have been quoted earlier appear to be in consonance with the principle in Plummer 's case (1), and thus affords support to the argument of learned counsel. Applying the law as set out above, we must find out whether what the High Court has done in this case is right. In the first place, though it was vaguely stated by some of the witnesses examined in the case that 40 or 50 persons took part in the incident including the 7 persons mentioned in the first information report and the charge sheet, the prosecution case throughout has been that only seven named persons took part in the incident. Even the first information report of Deva Singh (P. W. 2), one of the injured persons, mentions only the seven persons who were placed for trial and no other. There is no suggestion therein that any other persons took part in the incident. The Court of Session, however, without discussing the point and without finding as to how many persons were members thereof, has come to the conclusion that there was an unlawful assembly, the common object of which was to dis mantle the Dochara and assault Laldeo Singh and Deva Singh. The High Court has proceeded more or less on the assumption that there was an unlawful assembly, only some members of which were put up for trial, four of whom were acquitted and three convicted. It was necessary for the High Court to consider whether the statements of some of the witnesses that the unlawful assembly consisted of many more than seven persons are true or whether they should be rejected in view of the fact that the first information report shows that only seven persons who were named therein, committed the offence. It had also to consider the further question of prejudice by reason of the defect in the charge. Upon the law as stated by this court in Mohan Singh 's case (2) and in other cases it would have been competent to the High Court to look into the entire evidence in (1) (2) [1962] Supp. 3 S.C.R. 848, 858. 792 the case, oral and documentary, and consider whether there was an unlawful assembly or not. But it has not done so. Had the High Court, come to a reasoned conclusion that there was an unlawful assembly consisting of more than five persons, including the appellants and some other persons who were unidentified and convicted the appellants under section 147 and, with the aid of section 149, also of some other offence committed by a member or members of the unlawful assembly other than the acquitted persons the matter would have stood on a different footing. But it has not done so. It is clear from its judgment that the High Court was not satis fied by the manner in which the case had been dealt with by the Court of Session; but then, it should not have stopped there. Instead, it should have fully examined the evidence and come to a definite conclusion as to whether there was an unlawful assembly or not hadstated its reasons for coming to such a conclusion. It should then have ascertained the particularacts committed by any member or members of that assembly in furtherance of the common object as also the question whether any of the appellants had participated in the incident. In the light of its findings on these matters the High Court should then have proceeded to consider whether all or any of the appellants could be held liable vicariously for all or any of the acts found to have been committed by the unlawful assembly or any member or members thereof other than those alleged to have been committed by persons whose acquittal has become final. It is a matter of regret that the High Court has failed to determine questions which it was essential for it to determine. We, therefore, set aside that judgment and send back the case to the High Court for deciding it afresh. Appeal allowed. Case remanded.

The facts alleged by the prosecution were these The first appellant brought with him in a truck to the scene of the occurrence a mob of 40 to 50 persons including the other two appellants and four other persons who were acquitted by the trial court. The first appellant fired a shot from the gun which he was carrying which hit Laldeo Singh on the chest as a result of which he fell down. Thereupon none of the acquitted persons fired from his gun and the shot hit Laldeo Singh again. Thereupon another of the acquitted persons fired a shot at Laldeo Singh which. killed him instantaneously. The first appellant fired two shots at one Deva Singh who was hit on his thigh. The other two appellants assaulted Deva Singh with lathis of the seven persons charged, four were acquitted. The appellants were convicted under section 304 Part II read with section 149 of the Indian Penal Code by the trial court. On appeal the High Court altered their conviction into one under section 326 read with section 149 of the Indian Penal Code but maintained the convictions under section 147 and section 426 of the Indian Penal Code. It was contended before the Supreme Court that as there was no appeal before the High Court against the acquittal of the four acquitted persons who were alleged to have constituted the unlawful assembly along with the appellants there could be no finding that there was an unlawful assembly of which appellants were members and therefore, were liable, for the acts of other members 776 thereof and that an accused person cannot be held liable vicariously for the act of an acquitted person. Held, that even assuming that the fatal in juries were caused to Laldeo Singh by one of the four acquitted persons, it was not open to the High Court to hold any of the appellants liable for that act by resort to section 149 of the Indian Penal Code. Held, further that the legal position deducible from the authorities was (i) that it is competent to a court to come to the conclusion that there was an unlawful assembly of five or more persons, and actually convict less than that number for the offence if (a) the charge states that apart from the persons named, several other unidentified persons were also members of the unlawful assembly whose common object was to commit an unlawful act and the evidence led to prove this is accepted by the court ; (b) or that the first information report and the evidence shows such to be the case even though the charge does not state so ; (c) or that though the charge and the prosecution witnesses named only the acquitted and the convicted accused persons there is other evidence which discloses the existence of named or other persons provided that in cases (b) and (c) no prejudice has resulted to the convicted person by reason of the omission to mention in the charge that the other unnamed persons had also participated in the offence. Harchandra vs Rex. I.L.R. (1951) 2 All. 62, approved. To pandas vs State of Bombay, , R. vs Plummer, , Bharwad Mepa Dana vs State of Bombay, ; , Kartar Singh vs State of Punjab, ; , Dalip Singh vs State of Punjab, ; , Sunder Singh vs State of Punjab [1962] Supp. 2 S.C.R 634, Mohan Singh vs State of Punjab, [1962] Supp. 3 S.C.R. 848, and Krishna Govind Patil vs State of Maharashtra, [1964) Vol. 1 S.C.R. 678, referred to. Held, also that the High Court had failed to determine material questions necessary for property deciding the case, namely that it had not fully examined the evidence to come, to a definite conclusion as to whether there was an unlawful assembly or not consisting of persons other than the acquitted persons and that the High Court had also failed to ascertain the particular act committed by any member or members of that assembly in furtherance of the common object as also whether any of the appellants had participated in, the said incident.

ivil Appeal No. 330 of 1976. From the Judgment and Order dated 13.3.1972 of the Allahabad High Court in ITR No. 457 of 1968. V. Gauri Shankar, section Rajappa and Ms. A. Subhashini for the petitioner. Harish N. Salve, A.T. Patra, Ms. Bina Gupta, Ms. Monika Mohil, Rajiv Shakhdhar and Praveen Kumar for the Respondent. The following Order of the Court was delivered: This appeal is directed against the Judgment dated 13.3.1972 made by a Division Bench of the Allahabad High Court in Income Tax Reference No. 457 of 1968 deciding the following question of law in favour of the assessee and against the Revenue. "Whether on the facts and in the circumstances of the case the assessee can be said to have complied with the provi sions of proviso (b) to section 10(2)(vib) of the Income Tax Act, 1922 and was, therefore, entitled to allowance of development rebate on the plant and machinery installed after 1.1. 1958. " It would be unnecessary to detail out facts which led to the framing of the question and the answer given. The dis pute centered around the timing of the creation of the reserve known as the development rebate reserve. In Commis sioner of Income Tax, Madras vs Veeraswami Nainar & Ors., 55 ITR p. 35, the Madras High Court took the view that develop ment rebate reserve should be made at the time of making up the Profits and Loss Account. This view was affirmed by this Court in Indian Overseas Bank 's Ltd. vs Commissioner of Income Tax, 12. Both cases arose under the Indian Income Tax Act, 1922. Distinction was drawn between develop ment rebate reserve and other reserves creatable under the Companies Act and the Income Tax Act and it was required to be separately created. On appearance of the Indian Overseas Bank 's case on the scene it appears that an 464 important circular of the Central Board of Direct Taxes was unwittingly mowed down. That circular was of October 4, 1965 and stands reproduced in circular No. 189 dated 30th Janu ary, 1976 at page 90 in 102 Income Tax Reports (Statutes). The Board 's Explanation with regard to the position for creation of statutory reserve for allowance of development rebate was in these terms: (a) In the case of certain industrial undertakings, particularly those in which there is Government participa tion either by way of capital, loan or guarantee, and where there are certain obligations by law or agreement about the maintenance of reserve for development purposes, the devel opment rebate reserve may be treated as included in the said reserve though not specifically created as a development rebate reserve. (b) In a case where the total income computed before allowing the development rebate is a loss there was no legal obligation to create any statutory reserve in that year as no development rebate would actually be allowed in that year. (c) Where there was no deliberate contravention of the provisions, the Income tax Officer may condone genuine deficiencies subject to the same being made good by the assessee though operation of adequate additional reserve in the current year books in which the assessment is framed. This led to a spate of litigation, pressing the Indian Overseas Bank 's case some taxing authorities in some cases took revisional and rectificatory actions. These reached various High Courts. The Gujarat High Court in Surat Textile Mills Ltd. vs Commissioner of Income tax Gujarat, 80 I.T.R.P. 1 opted for what may be called a narrow view in assuming that besides Explanation (a) reproduced above explanations (b) and (c) as well too stood wiped out by Indian Overseas Bank 's case. In these circumstances the Central Board of Direct Taxes took the step of withdrawing in the year 1972 the Circular dated October 14, 1965 to the extent it stood superseded by decision in Indian Overseas Bank 's case and the judgment of the Gujarat High Court in Surat Textile Mills Ltd. vs Commissioner of Income Tax. Other High Courts took what may be called a broader view. The trend of reasoning in those cases was that expla nation (a) only was done away with by this Court in Indian Overseas Bank 's case but explanations (b) and (c) were still alive. In this connection Veerabha 465 dra Iron Foundary & Anr. vs Commissioner of Income Tax, ; Tata Iron and Steel Co. Ltd. vs N.C. Upadhyaya, 96 I.T.R.p. 1 and The Commissioner of Income Tax vs Sardar Singh, may be seen. In the face of such difference of opinion, it was repre sented to the Board that earlier instructions dated October 14, 1965 represented the correct position of law and that the withdrawal to the extent it was presumed to be overruled by this Court in Indian Overseas Bank 's case had created unnecessary hardship to the assessees. It appears that the instant case, out of which this appeal has arisen, was decided by the Allahabad High Court taking the broader view, Special leave was sought by the Revenue from this Court on the question of resolving the conflict between the two views. Leave was granted at a time when the Board itself had clarified the matter vide Circular No. 189 dated 30th January, 1986 of which hint has been left earlier. The Board states to have re examined the issue involved coming to the view that except the clarification given in paragraph (a) above, which stood superseded by the decision of this Court in Indian Overseas Bank 's case, the clarifications given in paragraphs (b) and (c) quoted above hold good. It can thus legitimately be stated that the Board has itself opted for the view expressed in Tara Iron and Steel Companies ' case and other cases of the kind taking the broader view in the matter. When the Board has itself opted for that view and that view is being followed by Income Tax authorities concerned, we see no reason to do the exercise of taking any side of the two views and leave the matter at that. It is undisputed that the Board 's view is not only valid under the new Income Tax Act of 1961 but to the Indian Income Tax Act, 1922 as well. For the foregoing discussions this appeal fails and the judgment of the High Court is left untouched. In the circum stances of the case there will be no order as to costs. V.P.R. Appeal dis missed.

In Commissioner of Income Tax, Madras vs Veeraswami Nainar & 9rs. , , the Madras High Court took the view that the development rebate reserved should be made at the time of making up the Profits and Loss Account, and this was affirmed by this Court in Indian Overseas Bank 's Ltd. vs Commissioner of Income Tax, A distinction was drawn between development rebate reserve and other reserves createable under the Companies Act and the Income Tax Act and it was required to be separately created. Consequent to this decision it was noticed that an important circuit of the Central Board of Direct Taxes dated October, 4, 1965 was unwittingly mowed down. This circular gave the Board 's Explanation three paragraphs (a), (b) and (c) regarding the position for creation statutory reserve for allowance of development rebate. A spate of litigation ensued and some of the taxing authorities, relying on the Indian Overseas Bank 's case in some cases, took revitional and rectificatory actions, and these reached various High Courts. The Gujarat High Court in Surat Textiles Mills Ltd. vs Commissioner of Income tax Gujarat, opted for the narrow view in assuming that all the 3 Explanations contained in the 1965 Circular stood wiped out by Indian Overseas Bank 's case. The Central Board of Direct Taxes, therefore, took the step of withdrawing in the year 1972 the Circular dated October 14, 1965 to the extent it stood superseded by deci sion in Indian Overseas Bank 's case. Other High Courts, however, took a broader view to the effect that Explanation contained in para (a) only was done away with by this Court 's decision in Indian Overseas Bank 's case and that contained in paras (b) and (c) were still alive. 462 On account of the aforesaid difference of opinion, it was represented to the Board that the earlier instructions dated October 14, 1965 represented the correct position of law and that the withdrawal to the extent it was presumed to be overruled by the decision in Indian Overseas Bank 's case had created unnecessary hardships to the assessees. In the instant appeal the question, whether the respond entassessee was entitled to allowance rebate on the plant and machinery after 1.1.1958, after due compliance with the provisions of proviso (b) to section 10(2)(vib) of the Income Tax Act, 1922 was answered by the Division Bench of the Allahabad High Court in favour of the assessee and against the Revenue. The Revenue appealed to this Court. Dismissing the appeal, this Court, HELD: 1. The Board itself had clarified the matter by Circular No. 189 dated 30th January, 1986. It states to have re examined the issue involved coming to the view that except the clarification contained in Explanation para (a) which stood superseded by the decision of this Court in Indian Overseas Bank 's case, the clarification given in paragraphs (b) and (c) hold good. [465D] 2. The Board itself has opted for the broader view expressed in the matter in the,Tata Iron and Steel Compa nies ' case and other cases. There is, therefore, no reason to do the exercise of taking any side of the two views. [465E] 3. It is undisputed that the Board 's view is not only valid under the new Income Tax Act of 1961, but to the Indian income Tax Act, 1922 as well. [465F] Commissioner of Income Tax, Madras vs Veeraswami Nainar and Ors., , affirmed. Indian Overseas Bank Ltd. vs Commissioner of Income Tax, , followed. Surat Textile Mills Ltd. vs Commissioner of Income Tax Gujarat, , overruled. Veerabhadra Iron Foundary & Anr. vs Commissioner of Income I.T.R. 425; Tata Iron and Steel Co. Ltd. vs N. C Upadhyaya, and The Commissioner of Income Tax vs Sardar Singh, 86ITR 387, approved.

Civil Appeal No. 653 of 1991. 284 From the Judgment and Order dated 11. 12.1989 of the Central Administrative Tribunal, Chandigarh in O.A. No. 694 of 1988. Avadh Behari, A.K. Sharma and Inderjit Singh Mehra for the Appellants. Dr. Anand Prakash, B. Krishna Prasad and S.M. Ashri for the Respondent. The Judgment of the Court was delivered by SINGH, J. Leave granted. Whether family pension payable under the service rules could be bequeathed by means of a will by the deceased employee during his life time, is the question involved in this appeal. Briefly, the facts giving rise to this appeal are that, Issac Alfred was employed in the Railway Workshop, Jagadhri as a Skilled Mechanic, Tool Shop, he died in harness on 16.10.1984. On his death a dispute arose between Mrs. Violet Issac, widow of the deceased Railway employee, his sons, daughters and Elic Alfred, brother of the deceased regarding family pension, gratuity and other emoluments, payable by the Railway Administration. Violet Issac, widow of the deceased employee made an application before the competent Railway Authority for the grant of family pension and for payment of gratuity and other dues to her, her four sons and one daughter, who are appellant Nos. 2 to 6. The Railway Authorities did not pay any amount to the appellants as an injunction order had been issued by the Sub Judge, 1st Class, Jagadhri in Civil Suit No. 365/85 filed by Elic Alfred, brother of the deceased employee, restraining the appellants from claiming or receiving any amount which were to the credit of the deceased Railway employee towards C.T.D. Account, gratuity, family pension and other dues. It appears that the relations between late Issac Alfred and his widow Smt. Violet Issac and the children were not cordial, as a result of which he had made nomination in favour of his brother and further he had executed a will dated 9.9.1984 in favour of Elic Alfred bequeathing all his properties to him including the family pension, gratuity etc. When the appellants raised claim for family pension and other dues before the Railway Authorities, Elic Alfred filed Civil Suit No. 365/85 for the issue of a permanent injunction restraining the appellants from receiving or claiming any monetary benefits from the Railway Administration. In his suit Elic Alfred had 285 pleaded that in view of the will, his deceased brother 's widow and children were not entitled to any benefit from the Railway Authorities, instead he was entitled to the deceased 's estate including the right to receive family pension and other dues. The Civil Court issued an injunction order restraining the appellants from receiving any amount from the Railway Authorities as a result of which the Railway Administration did not pay any amount to them. The appellants, thereupon, made an application before the Central Administrative Tribunal, Chandigarh for the issue of a direction for the release of the amounts on account of gratuity, group insurance, provident fund, CTD account, and family pension. The appellants pleaded that the will relied upon by Elic Alfred was a forged one and Elic Alfred was not entitled to receive pensionary benefits. On an application made by the appellants the suit pending before the Civil Court was also transferred to the Tribunal 's file. The Tribunal by its order dated 11. 12.1989 held that since the dispute related to rival claims based on title arising from relationship in one case and from a will in the other, it has no jurisdiction to decide the same. The Tribunal further directed for the transfer of the civil suit to the Civil Court for trial in accordance with law. The appellants have challenged the order of the Tribunal by means of the present appeal. The dispute between the parties relates to gratuity, provident fund, family pension and other allowances, but this Court while issuing notice to the respondents confined the dispute only to family pension. We would therefore deal with the question of family pension only. Family Pension Rules 1964 provide for the sanction of family pension to the survivors of a Railway Employee. Rule 801 provides that family pension shall be granted to the widow/widower and where there is no widow/widower to the minor children of a Railway servant who may have died while in service. Under the Rules son of the deceased is entitled to family pension until he attains the age of 25 years, an unmarried daughter is also entitled to family pension till she attains the age of 25 years or gets married, which ever is earlier. The Rules do not provide for payment of family pension, to brother or any other family member or relation of the deceased Railway employee. The Family Pension Scheme under the Rules is designed to provide relief to the widow and children by way of compensation for the untimely death of the deceased employee. The Rules do not provide for any nomination with regard to family pension, instead the Rules designate the persons who are entitled to receive the family pension. Thus, no other person except those designated under the Rules are entitled to receive family pension. The Family Pension Scheme confers monetary benefit on the 286 'wife and children of the deceased Railway employee, but the employee has no title to it. The employee has no control over the family pension as he is not required to make any contribution to it. The Family Pension Scheme is in the nature of a welfare scheme framed by the Railway Administration to provide relief to the widow and minor children of the deceased employee. Since, the Rules do not provide for nomination of any person by the deceased employee during his life time for the payment of family pension, he has no title to the same. Therefore, it does not form part of his estate enabling him to dispose of the same by testamentary disposition. In Jodh Singh vs Union of India & Anr., [ ; this Court on an elaborate discussion held that family pension is admissible on account of the status of a widow and not on account of the fact that there was some estate of the deceased which devolved on his death to the widow. The Court observed: "Where a certain benefit is admissible on account of status and a status that is acquired on the happening of certain event, namely, on becoming a widow on the death of the husband, such pension by no stretch of imagination could ever form part of the estate of the deceased. If it did not form part of the estate of the deceased it could never be the subject matter of testamentary disposition. The Court further held that what was not payable during the life time of the deceased over which he had no power of disposition could not form part of his estate. Since the qualifying event occurs on the death of the deceased for the payment of family pension, monetary benefit of family pension cannot form part of the estate of the deceased entitling him to dispose of the same by testamentary disposition. We, accordingly hold that Mrs. Violet Issac the widow of the deceased Railway employee is entitled to receive the family pension, notwithstanding, the will alleged to have been executed by the deceased on 9.9.1984 in favour of his brother Elic Alfred. As regards appellant Nos. 2 to 6 are concerned, it has been stated on behalf of the Railway Administration that they are not minors, therefore, under the Rules they are not entitled to any family pension. We, accordingly allow the appeal, set aside the order of the Tribunal and direct the respondent Railway Adminstration to sanction family pension in accordance with the Rules to the appellant No. 1 and to pay the arrears within two months. The respondent 's suit, so far as it relates to the 287 family pension cannot proceed but we do not express any opinion, with regard to other claims raised therein. It has been brought to our notice on behalf of the respondent Railway Administration that the appellants have been occupying the Railway quarter which had been allotted to late Issac Alfred, even though they are not entitled to occupy the same. On behalf of the appellants, it was urged that since they had not been paid any dues by the Railway Administration they were not in a position to vacate the premises. The Railway Administration is free to evict them in accordance with the Rules, only after arrears of family pension are paid to Mrs. Violet Issac. The Railway Administration will charge rent from the appellants at the rate on which the quarter had been let out to the deceased Railway employee. There will be no order as to costs. V.P.R. Appeal allowed.

On the death of a Railway employee, dispute arose among his wife, sons, daughters and brother for the family pension, gratuity and other emoluments. The brother of the deceased employee filed a civil suit in the court of Sub judge for a permanent injunction restraining the appellants. the wife, sons and daughter from claiming or receiving any monetary benefits from the Railway Administration, contending that by a will dated 9.9.1984 of the deceased employee, he was entitled to receive the benefits to the deceased employee 's widow. The Railway Authority did not pay any amount, as an injunction had been issued by the Civil Court. The appellants there upon made an application before the Central Administrative Tribunal for a direction for the release of the amounts on the grounds that the will was a forged one, and the beneficiary was not entitled to receive pensionary benefits. The Tribunal held that since the dispute related to rival claims based on title arising from relationship, it had no jurisdiction to decide the same. It also directed transfer of the case to the Civil Court for trial. In the appeal to this court on the question was: whether family pension payable under the service rules could be bequeathed by means of a will. Allowing the appeal, this Court, HELD: 1. Family Pension Rules, 1964 provided for the sanction of family pension to the survivors of a Railway Employee. Rule 801 provides that family pension shall be granted to the widow/widower and where there is no widow/widower, to the minor children of a Railway servant, who may have died while in service. Under the Rules, son of 283 the deceased is entitled to family pension until he attains the age of 25 years, an unmarried daughter is also entitled to family pension till she attains the age of 25 years or gets married, whichever is earlier. The Rules do not provide for payment of Family Pension to brother or any other family member or relation of the deceased Railway employee. The Family Pension Scheme under the Rules is designed to provide relief to the widow and children by way of compensation for the untimely death of the deceased employee. The rules do not provide for any nomination with regard to family pension, instead the Rules designate the persons who are entitled to receive the family Pension. Thus, no other person except those designated under the Rules are entitled to receive family pension. [285E H] 2. The Family Pension Scheme confers monetary benefit on the wife and children of the deceased Railway employee, but the employee has no title to it. The employee has no control over the family pension as he is not required to make any contribution to it. The family pension Scheme is in the nature of welfare scheme framed by the Railway administration to provide relief to the widow and minor children of the deceased employee. [285H 286B] 3. Since, the Rules do not provide for nomination of any person by the deceased employee during his life time for the payment of family pension, he has no title to the same. Therefore, it does not form part of his estate enabling him to dispose of the same by testamentary dis position. [286B C] [The appellant No. 1, widow of the deceased Railway employee is entitled to receive the family pension, notwithstanding the will alleged to have been executed by the deceased on 9.9.1984 in favour of his brother. As regards appellant Nos. 2 to 6 are concerned, they are not minors, therefore, under the Rules they are not entitled to any family pension. [286F H] The Railway Administration is free to evict them in accordance with the Rules, only after arrears of family pension are paid to the widow.] [287B C] Jodh Singh V. Union of India & Anr., [1980] 4 S.C.C. 306, followed.

Appeal No. 43 of 1964, Appeal by special leave from the award, dated August 3, 1962 of the Central Government Industrial Tribunal, Dhanbad in Reference No. 56 of 1961. B. Sen and I.N. Shroff, for the appellants. The respondent did not appear. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by special leave against the Award dated August 3, 1962, of the Central Government Industrial Tribunal Dhanbad, under the 448 449 The appellants are the Employers in relation to Digwadih Colliery and the respondents their workmen. The workmen did not appear in this Court. The dispute was whether the management of the colliery was justified in terminating the services of Jaldhar Singh with back wages. Jaldhar Singh was a 'badli ' workman which means (as defined by the Standing Orders of the colliery) a person appointed in the post of a permanent employee or probationer who is temporarily absent. He worked as badli in the calendar years 1959 and 1960 in different capacities. His employment was, of course, not continuous and there were six breaks of one day to a week in 1959 and eight breaks of one day to a week in 1960. However, he worked for more than 240 days in each calendar year though with these interruptions. In January 1961 the colliery terminated Jaldhar Singh 's service without notice to him or payment of wages in lieu of notice or compensation. A dispute arising, conciliation was attempted but failed and the reference followed. Before the Tribunal the workmen claimed that Jaldhar Singh was a permanent workman while the Employers contended that he was temporary. The Employers stated that as some of the permanent staff had become surplus, there was no need of badli workmen and the termination of Jaldhar Singh 's service was justified. The workmen attempted to prove that Jaldhar Singh was permanent from 1960 and produced some documents from which they asked that this inference be drawn but the Tribunal did not agree. The workmen relied in the alternative upon section 25F of the Act because Jaldhar Singh had put in service of 240 days in each of the years and contended that as the Employers had failed to comply with the provisions of section 25F the termination of service was illegal and unjustified. The Employers submitted that section 25F could apply only if Jaldhar Singh had put in 240 days ' continuous service in any of the years 1959 or 1960. The service of Jaldhar Singh was admittedly terminated as there was no work for him and not on account of disciplinary action or voluntary retirement, superannuation or ill health. This was thus a case of retrenchment as defined in section 2(00) of the Act. Section 25F, which was inserted as part of Chapter VA, with effect from October 24, 1953 by the Industrial Disputes (Amendment) Act 1953 (43 of 1953) provides: "25F. Conditions precedent to retrenchment of workmen. 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 (a) the workman has been given one month 's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has 450 been paid in lieu of such notice, wages for the period of the notice: Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date for the termination of service; (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; and, (c) notice in the prescribed manner is served on the appropriate Government," The section, if it applied, had plainly not been complied with I in respect of any of the conditions precedents Jaldhar Singh, as seen already, had not been given any notice or wages in lieu of notice or paid compensation and no notice had been served on the appropriate Government. The termination of service would, in these circumstances, be illegal. But the Employers pointed, out that section 25F required two conditions: (a) continuous service and (b) service for not less than one year, and contended that these conditions were not fulfilled as the service was not continuous but broken. They relied on the definition of "continuous service" in section 2(eee) which was introduced by the same amending Act: "2(eee) continuous service means uninterrupted service, and includes service which may be interrupted merely on account of sickness or authorised leave or an accident or a strike which is not illegal, or a lock out or a cessation of work which is not due to any fault on the part of the workman;" The workmen, on the other hand, relied upon the provisions of section 25B which read: "25B. Definition of one year of continuous service. For the purposes of sections 25C and 25F, a workman who, during a period of 12 calendar months, has actually worked in an industry for not less than two hundred and forty days shall be deemed to have completed one year of continuous service in the industry. Explanation. In computing the number of days on which a workman has actually worked in any industry, the days on which (a) he has been laid off under an agreement or as permitted by standing orders made under the , or under this Act or under any other law applicable to the industrial establishment, the largest number of days during 451 which he has been so laid off being taken into account for the purposes of this clause, (b) he has been on leave with full wages, earned in the, previous year, and (c) in the case of a female, she has been on maternity leave; so however that the total period of such maternity leave shall not exceed twelve weeks, shall be included. " The definitions in section 2 of the Act do not apply if there is anything repugnant in the subject or context and the question is whether the definition of "continuous service" can at all apply in considering section 25F when what is meant by the expression "one year of continuous service" in section 25F is, by section 25B specially stated. If section 25B had not been enacted the contention of the Employers would have been unanswerable for the words of section 25F would then have plainly meant that the service should be for a period of 12 months without interruptions other than those stated in section 2(eee) itself. But section 25B says that for the purpose of section 25F a workman who, in a period of twelve calendar months has actually worked for not less than 240 days shall be deemed to have completed one year of continuous service. Service for 240 days in a period of twelve calendar months is equal not only to service for a year but is to be deemed continuous service even if interrupted. Therefore, though section 25F speaks of continuous service for not less than one year under the employer, both conditions are fulfilled if the workman has actually worked for 240 days during a period of twelve calendar months. It is not necessary to read the definition of continuous service into section 25B because the fiction converts service of 240 days in a period of twelve calendar months into continuous service for one complete year. Mr. B. Sen drew our attention to the Industrial Disputes (Amendment) Act 1964 which was passed last December. By section 2(iii) of the amending Act of 1964 clause (eee) of the second section of the principal Act was omitted and by section 13, for section 25B in the principal Act the following was substituted: "25B. For the purposes of this Chapter, (1) a workman shall be said to be in continuous service for a period if he is. for that period, in uninterrupted service, including service which may be interrupted on account of sickness or authorized leave or an accident or a strike which is not illegal, or a lock out or a cessation of work which is not due to any fault on the part of the workman; (2) where a workman is not in continuous service within the meaning of clause (1) for a period of one year 452 he shall be deemed to be in continuous service under an employer (a) for a period of one year, if the workman, during a period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than (i) one hundred and ninety days in the case of a workman employed below ground in a mine; and (ii) two hundred and forty days, in any other case; The Explanation to section 25B is the same, mutatis mutandis as before. Mr. Sen contended that the change in the law brought out his contention. We do not agree. The amended section 25B only consolidates the previous sections 25B and 2(eee) in one place, adding some other matters which are not relevant to the present purpose, but the purport of the new provisions is not different. In fact the amendment of section 25F of the principal Act by substituting in cl. (b) the words "for every completed year of continuous service" for the words "for every completed year of service" now removes a discordance between the unamended section 25B and the unamended cl. (b) of section 25B. Neither before these several changes nor after is uninterrupted service necessary if the total service is 240 days in a period of twelve calendar months. The only change in the new Act is that this service must be during a period of twelve calendar months preceding the date with reference to which calculation is to be made. The last amendment now removes a vagueness which existed in the unamended section 25B. We accordingly hold that the decision under appeal is correct. The appeal fails and is dismissed. Appeal dismissed.

A badli workman worked as the appellant 's employee for more than 240 days, with interruptions in each of the calendar years 1959 and 1960. He was retrenched in 1961. An industrial dispute having arisen, it was referred to the Tribunal, which held, that the appellant was not justified in terminating the services of the workman as the provisions of section 25F of the were not com plied with. In its appeal to this Court, the appellant contended that the section could apply only if the workman had put in 240 days ' continuous service in any of the years 1959 and 1960. HELD: Section 25B says that, for the purpose of section 25F a workman who, in a period of 12 calendar months has actually worked for not less than 240 days shall be deemed to have completed one year of continuous service. Service for 240 days in a period of 12 calendar months is equal not only to service for a year but is to be deemed continuous service even if interrupted. Therefore, though section 25F speaks of continuous service for not less than one year under the employer, both the conditions are fulfilled if the workman has actually worked for 240 days during a period of 12 calendar months. It is not necessary to read the definition of continuous service in section 2(fee) into section 25B, because, the fiction converts service of 240 days in a period of the twelve calendar months into continuous service for one complete year. [451C E] The amendments introduced by the Industrial Disputes (Amend ment) Act, 1964 into sections 25B and 25F only removed the discordance between the unmended sections 25B and 25F (b) and vagueness which existed previously. But neither before the amendments nor after, is uninterrupted service necessary, if the total service is 240 days in a period of 12 calendar months. [452D E]

N: Criminal Appeal No. 239 of 1975. Appeal by special leave from the Judgment and order dated 17 10 1974 of the Allahabad High Court in Cr. A. No. 1013 of 1974 and Reference No. 18/74. Badri Das Sharma (amicus curiae) for the appellant. O. P. Rana for the respondent. The Judgment of the Court was delivered by KAILASAM J. This appeal is preferred by Deena alias Din Dayal by special leave against the judgment of the High Court convicting and sentencing him. The case for the prosecution is that on the night of the 20th and 21st June, 1971 the deceased Nainsukh, his brother Hari Singh, his distant uncle Tika Ram, Chandra Pal, daughter 's son of Tika Ram and Chokhey slept on a platform of the Chaupal in village Jar. According to the prosecution a lantern was hanging on the platform from the branch of a Neem tree. In the morning at about 4 a.m. the appellant Deena and four other came to the Chaupal of Nainsukh. The dogs began to bark as a result of which Hari Singh (P.W. 1 ) and others were 108 awakened. Deena and his associates carried pistol and electric torches Deena challenged Nainsukh saying that he would be taught a lesson for appearing as a witness and fired his pistol striking Nainsukh on his head. Hari Singh and Chandra Pal shouted for help. They were also injured. After hearing the alarm Nihal Singh, Panna Lal and others reached the place of the incident but before their arrival the accused had made good their escape. The First Information Report was written by Bharat Singh on the dictation of Hari Singh. The injured witness Hari Singh and Chandra Pal then went to Etah Police Station where the report exhibit Ka 4 was handed over at Police Station Kotwali at 2.05 a.m. On 21st June, 1971. The Police officer took up the investigation and reached the scene at about 1.30 p.m. He found the dead body of Nainsukh and held the inquest, prepared the site plan and recovered the material objects. Nihal Singh, P.W. 2, produced the lantern before the Investigating officer which was burning at the time the occurrence took place. shell of used cartridge was also recovered from the scene. Dr. N. K. Mittal (P.W. 13), the Medical officer of Etah. found two injuries caused by fire arm on Chandra Pal and one injury on Hari Singh. The autopsy on the body of Nainsukh was conducted by Dr. Prasad on 21st June, ]971. He found two gun shot injuries, one on the right side of head above the right ear and the other was non traumatic swelling on the back surface of the right hand. On internal examination it was found that the surface of the scalp of the right side was congested under injury No. 1. The doctor found a fissured fracture of the right parietal bone, vertically placed from the suture line to eye brow. The doctor was of the opinion that the injuries were sufficient in the ordinary course of nature to cause death. Apart from the eye witness P.W. 1 the prosecution examined P W. 2 Nihal Singh, P.W. 3 Panna Lal who saw the accused running away after the incident. Reliance was not placed by the courts below on the evidence of P.Ws 2 and 3. The conviction therefore solely rests on the testimony of eye witness Hari Singh, P.W. ]. Hari Singh P.W. 1 has spoken of the motive. About 4 or 6 years prior to the occurrence one Ram Chandra was murdered. Deena was one of the accused in the case. Deena was found guilty of murder and sentenced to imprisonment for life. In that case the deceased Nainsukh gave evidence against Deena as an eye witness. About two months before the murder of Nainsukh, Deena was released on hail and it was rumoured that Deena was saying that now when he had 109 come out of jail he would teach a lesson to Nainsukh. Nainsukh, Hari Singh and their relations took the threat seriously and were living cautiously. On the date of the occurrence, according to P.W. 1, a lantern was burning and at about 4 o 'clock in the morning he was awakened by the barking of the dogs. Four or five other persons came along with Deena. Deena and one of his companions had torches in their hands and they came flashing their torches. Deena and the other accused came at the Chaupal from the staircase on the eastern side. After coming over the Chabutra of the Chaupal the accused stated "Nainsukh, beware, now I will teach you the lesson for giving the evidence". While flashing the torches on the deceased Deena fired at Nainsukh aiming towards his head. The shot hit Nainsukh on the head. The other shot fired by Deena injured Chandra Pal and the third shot hit the prosecution witness Hari Singh. Hari Singh received an injury on his right shoulder. The plea that was made by the defence on the evidence of P.W. 1 was that it cannot be safely relied on. It was submitted that the other injured witness Chandra Pal who was examined as a court witness did not fully support the evidence of the prosecution. We have gone through the testimony of P.W. 1 and witness Chandra Pal and we do not see any material contradiction. The enmity between Deena on the one side and the deceased and his family on the other side is not seriously contested. The deceased Nainsukh gave evidence against Deena in the murder case in which Ram Chandra was killed. When Deena was released on bail he wanted to teach a lesson to the witness Nainsukh who had appeared against him. This resulted in Deena shooting the deceased to death. The motive as alleged by the prosecution stands amply proved. So far as the scene of the offence is concerned it was not seriously disputed before the High Court. It was submitted before us that no blood stains were scrapped from the scene which circumstance would show that the occurrence took place at some other place. It is seen that there was a bundle of straw and a cot at the scene. The strings of the cot and as well as the straws were stained with blood. The Serologist had found human blood on the straws. We do not find any difficultly in accepting the finding of the High Court that the occurrence took place at the site alleged by the prosecution. The only question that requires consideration is whether there was sufficient light at the scene of occurrence to enable the witness to recognise the accused. Because of the motive, it is highly probable that Nainsukh, Hari Singh and the family slept with the light burning on the platform which was the scene of offence. Three shots were 110 fired and there could have been no difficulty in P.W. 1 identifying the appellant Deena. It is common ground that the witness knew Deena very well. The lantern that was burning was produced by P.W. 2, Nihal Singh, as soon as the Investigating officer came to the scene of occurrence. The witness was sleeping to the south of the deceased person at a distance of few feet and we do not think there could have been any difficulty in identifying the assailant. The High Court has fully considered the question as to whether P.W. 1 would have identified the assailant and has come to the conclusion that the prosecution has established that the lantern was burning and the assailants used torches which enabled the recognition of the accused at the time of the incident. P.W. 1 Hari Singh is a natural witness and his presence cannot be disputed as he had sustained a gun shot injury. He had no particular motive for falsely implicating Deena the accused. The court witness Chandra Pal did not fully support the prosecution except that the incident took place at the chaupal as alleged by the prosecution. But we do not feel any justification for rejecting the testimony of P.W. 1 because of the contradiction in the testimony of C.W. 1 Chandra Pal. We are inclined to agree with the High Court that Chandra Pal was won over by the defence. We also agree with the High Court and find that the appellant Deena was guilty of an offence under section 302 I.P.C. in causing the death of Nainsukh. The High Court confirmed the extreme penalty of law imposed by the Sessions Court. The Sessions Court in imposing the death sentence found that the appellant is a desperate character and that while he was on bail in Rare, Chandra murder case he committed the murder of Nainsukh one of the prosecution witnesses in Ram Chandra murder case. As the offence was committed by a person under a sentence of imprisonment for life for an offence under section 302 I.P.C. the Sessions Court inflicted the extreme penalty. As a charge under section 303 I.P.C. was not framed and as the parties are not able to tell us the result of the appeal filed by Deena in Ram Chandra 's case, we refrain from invoking the provisions of section 303 I.P.C. Regarding the sentence after giving our serious and anxious consideration, we find ourselves unable to come to any different conclusion from that arrived at by the trial Judge and the High Court. The offence was committed after deliberate planning in the night when the victim was sleeping. It was for the purpose of teaching a lesson to a witness who gave evidence against the accused. We do not see any extenuating circumstance. We confirm the sentence of death and dismiss this appeal. M.R. Appeal dismissed.

The appellant was convicted for having committed an offence u/s 302 I.P.C., and was serving a sentence of imprisonment for life. He was released on bail. and during that period. committed the murder of a prosecution witness in the earlier murder case. The Sessions Court found him guilty and imposed the sentence of death on him. The sentence was confirmed by the High Court in appeal . Dismissing the appeal, the Court ^ HELD: The murder was committed by a person under a sentence of imprisonment for life for an offence under section 302 I.P.C. while he was on bail. The offence was committed for the purpose of teaching a lesson to a witness who gave evidence against him in the earlier murder case and was committed after deliberate planning, in the night when the victim was sleeping. We confirm the sentence of death. [110F H]

rit Petition No. 1220 of 1979. (Under Article 32 of the Constitution) P. Govindan Nair and N. Sudhakaran for the Petitioner. M. M. Khader and V. J. Francis for the Respondent. The Judgment of the Court was delivered by KRISHNA IYER, J. The petitioner, an aspirant for admission to the M.B.B.S. course in one or other of the medical college in Kerala, has failed to qualify for selection from the Kerala university pool, not having secured high enough marks, and has failed to fall within the Calicut University pool, not having been a student of that University. What is urged, as a claim for inclusion, is that had she been treated as a Calicut University student her marks would have been sufficient to gain admission and since she belongs to the Malabar region, which 830 is broadly served by the Calicut University, she should be given the benefit of Calicut University students and consequential admission a mixture of district wise backwardness and university wise preference to reach the desired advantage. We cannot agree. Under the existing scheme, the classification for purpose of quota is university wise, not territory wise. Belonging to backward Calicut District is not the same as being an alumnus of the Calicut University. Maybe, the State could have classified candidates university wise, backward region wise or otherwise, separately or in any constitutionally permissible combination. We are not here concerned with the prospects of the petitioner under any different admission scheme or reservation project. Mystic maybes are beyond judicial conjecture. Once we hold that the university wise allocation of seats is valid the misfortune of the petitioner is damnum sine injuria, if we may use that expression in this context. Every adversity is not an injury. Judicial remedy cannot heal every wound or cure every sore since the discipline of the law keeps courts within its bounds. We do not preclude the State from taking any other pragmatic formula or evolving any selection calculus, constitutionally permissible, so as to promote equality against the backdrop of social justice. Indeed, we have by our Judgment in Dr. Jagadish Saran & Ors. vs Union of India & Ors.(1), explained the parameters, the criteria and the correct measures which must be initiated to marry equality to excellence, solemnised constitutionally. Too long has the state been seeking ad hoc solutions and improvising remedies where comprehensive studies and enduring recipes are the desideratum. To keep the education situation uncertain across the nation and the fate of students of higher education tense or in suspense with annual challenge in court or agitational exercises in the streets is dangerous procrastination fraught with negative results where a creative undertaking of responsibility to find an enduring answer to a chronic problem is the minimum that the country expects of the concerned State instrumentality. We dismiss this petition subject to the observations we have made above, leaving it to the Kerala State and its Universities not to contribute to the litigative nursery of medical candidates but to face the task of shaping a firm policy governed by constitutional guidelines, not other pressures. S.R. Petition dismissed.

Dismissing the Writ Petition, the Court ^ HELD: The University wise allocation of seats is valid. Under the existing scheme, the classification for purposes of quota is university wise, not territory wise. Belonging to backward Calicut District is not the same as being an alumnus of the Calicut University. May be, the State could have classified candidates University wise, backward region wise or otherwise, separately or in any constitutionally permissible combination. Mystic maybes are beyond judicial conjecture. The misfortune of the petitioner is damnum sine injuria. Every adversity is not an injury. Judicial remedy cannot heal every wound or cure every sore since the discipline of the law keeps courts within its bounds. [830 A D] Dr. Jagdish Saran & Ors. vs Union of India & Ors. ; relied on Observation: [Too long has the State been seeking ad hoc solutions and improvising remedies where comprehensive studies and enduring recipes are the desideratum. To keep the education situation uncertain across the national and the fate of students of higher education tense or in suspense with annual challenges in court or agitational exercises in the streets is dangerous procrastination fraught with negative results where a creative undertaking of responsibility to find an enduring answer to a chronic problem is the minimum that the country expects of the concerned State instrumentality.] [830 E G]

Appeal. 1644 of 1966. Appeal by special leave from the judgment and order dated January 18, 1966 of the Allahabad High Court in Civil Revision Application 24 of 1966. V. A. Sevid Muhammad and section P. Nayar, for the appellant. section C. Agarwal, R. K. Garg, D. P. Singh and section Chakravarty. for respondents Nos. 1 to 28 and 30 to 57. 727 The Judgment of the Court was delivered by Dua, J. This appeal by special leave is directed against the order of a learned Single Judge of the Allahabad High Court affirming on revision under section 115 Civil P.C. the order of the learned Additional District Judge, Jhansi, who had allowed the respondent 's appeal from the order of the learned City Magistrate, Jhansi, made on an application presented by the respondents under section 15 of the IV of 1936. The City Magistrate was the " 'authority" appointed under section 15 and the district court was the court of appeal under section 17 of the said Act. The respondents through the Assistant Secretary of the National Railway Mazdoor Union Work shop Branch, Jhansi had asserted in their application under section 15 that they were workers within the meaning of section 2(1) of the (63 of 1948) and complained that they were denied wages for overtime work done by them on the erroneous ground that they were not workers within the aforesaid provision. The learned Magistrate held that the respondents had been entrusted with purely clerical duties and they were not connected in any manner with the manufacturing process. On this conclusion their application was dismissed. On appeal the learned Additional District Judge disagreed with this view and came to the conclusion that the work done by the respondents was incidental to or connected with the manufacturing process. It was observed in the order that some of the respondents were entrusted with the duty of checking the time work of each worker in the workshop, a few others were timekeepers and the remaining respondents prepared account sheets on the basis of the time sheets and did other work incidental to the running of the work shop including payment of wages to the staff of the workshop and the office. The High Court on revision as already observed, affirmed the order of the learned Additional District Judge. On appeal in this Court the short question we are called upon to decide is whether the respondents, who are time keepers fall within the purview of the definition of "worker" as contained in section 2 (1) of the . The respondents have raised a preliminary objection that the appeal is incompetent on the ground that respondent No, 29 (T. A. Kolalkar) had died after the order of the High Court but his name continued to appear in the array of respondents. As his legal representatives had not been brought on the record, the appeal against him is incompetent and since there was a joint application on behalf of all the respondents which was dealt with and decided by a common order by the learned Magistrate, the appeal against the other respondents must also be held to be incompetent. The impugned order having become final as the 728 deceased T. A. Kolalkar, the present appeal against other respondents should, according to the argument, be held to be incompetent because the reversal of the impugned order as against them would give rise to conflicting decisions on the point. Recently this Court disallowed.a similar objection in Indian Oxygen Ltd. vs Shri Rani Adhar Singhand others(1) and when the attention of the respondent 's learned counsel was drawn to that decision, the objection was not seriously pressed. We now turn to the merits of the appeal. The word "worker" is defined in section 2(1) of the to mean "a person employed directly or through any agency, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process. " This definition seems to us to be fairly wide because it takes within its sweep not only persons employed in any manu facturing process but also in cleaning any part of the machinery or premises used for a manufacturing process and goes far beyond the direct connection with the manufacturing process by extending it to other kinds of work which may either be incidental to or connected with not only the manufacturing process itself but also the subject of the manufacturing process. The word " manufacturing process" is defined in section 2(k) of the in fairly wide language. It means any process for : "(i) making, altering, repairing, ornamenting, finishing, packing. oiling, washing, cleaning breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or (ii) pumping oil, water or sewage, or (iii) generating, transforming or transmitting power; or (iv) composing types for printing by letter press, lithography, photogravure or other similar process or book binding; (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels;" Now the conclusion of the learned Additional District Judge on the nature of work of the respondents, which, in our opinion, (1) Civil Appeal No. 1444 of 1966 decided on 24th Sept. 1968. 729 being one of fact, must be held to be binding on the High Court on revision and also not open to reassessment on the merits in this Court on special leave appeal from the order of the High Court on revision, is that, the time keepers prepare the pay sheets of the workshop staff, maintain leave account, dispose of settlement cases and maintain records for statistical purposes. Fourteen of the respondents, according to this conclusion, are timekeepers who maintain attendance of the staff, job card particulars of the various jobs under operation and time sheets of the staff working on various shops dealing with the production of Railway spare parts and repairs etc. Four of the respondents are head time keepers entrusted with the task of supervising the work of other respondents. The question arises if on this conclusion it can be held that as a matter of law the respondents fall outside the definition of "worker" as contemplated by section 2( 1) of the and that the High Court erred in dismissing the revision. The appellant 's learned counsel has submitted that the expression "incidental to" or "connected with" connotes a direct connection with the manufacturing process and therefore if the duties assigned to the respondents have no such direct connection with the manufacturing process then they cannot fall within the purview of the word "worker". In support of his submission lie has referred to some law dictionaries. In Law Lexicon in British India by Ramanathan Iyer "incidental power" is stated to be, power that is directly and immediately appropriate to the existence of the specific power granted and not one that has a slight or remote relation to it. The word "incidental" in the expression "incidental labour" as used in Mechanic 's Lien Statutes allowing liens for work and labour performed in the construction, repairs etc. of a building etc. is stated in this Law Lexicon to mean labour directly done for and connected with or actually incorporated in the building or improvement : service indirectly or remotely associated with the construction work is not covered by this expression. Reference has next been made by the counsel to the Law Dictionary by Ballentine where also the expression "incidental power" is stated in the same terms. In Stroud 's Judicial Dictionary the meaning of the words "incident" and "incidental" as used in various English statutes have been noticed. We do not think they can be of much assistance to us. The decision in Haydon vs Taylor(1) noticed in this book at first sight appeared to us to be of some) relevance, but on going through it, we do not find it to be of much help in construing the statutory provisions with which we are concerned. Similarly the decision in Frederick Hayes Whymper vs John Jones Harney(2) seems to be of little guidance. (1) ; (2) 730 On behalf of the respondents our attention has been drawn to a decision of this Court. in Nagpur Electric Light and Power Co. Ltd. V. Regional Director Employees State Insurance Corporation Etc.(1). This decision deals with the Employees State Insurance Act and on a comparison of the definition of the word "employee" as contained in section 2(9) of that Act with the definition of the word "worker" in section 2 (1) of the , it is observed That the former definition is wider than the latter. It is further added that the benefit of the does not extend to field workers working outside the factory whereas the benefit of the Employees State Insurance Act extends inter alia to the em ployees mentioned in section 2 (9) (i) whether working inside the factory or establishment or elsewhere. Reliance has, however, been Placed on behalf of the respondents on the observations at page 99 of the report where reference is made to the clerks entrusted with the duty of time keeping and it is observed that all these employees are employed in connection with the work of the factory. A person doing non manual work has been held in this case to be included in the word "employee" within the meaning of section 2 (9) (i) if employed in connection with the work of the factory. The ratio of this decision which is concerned with the construc tion of different statutory language intended to serve a different object and purpose is of no direct assistance in construing the definition of the word "worker" as used in the . The respondents ' counsel has then submitted that the previous history of the Act throws helpful light on the legislative intendment and in this connection he has referred to the definition of the word "worker" in the XXV of 1934. The word "Worker in section 2 (h) of that Act was defined to mean : "a person employed, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work whatsoever incidental to or connected with the manufacturing process or connected with the subject of the manufacturing ,process, but does not include any person solely employed in a clerical capacity in any room or place where no manufacturing process is being carried on. " It is argued that the deletion of the words conveying exclu sion of persons solely employed in a clerical capacity in a place where no manufacturing process is carried on suggests that the present definition of "worker" is wide enough to take within its fold even those persons who are employed solely in clerical capacity if otherwise they fall within the definition. The appellant counsel has, on his part, by reference to tile definition in the Act (1) 731 of 1934, argued that the deletion of the word "whatsoever" after " any other kind of work" is indicative of the legislative intention to restrict the scope of "any other kind of work" in the current Act. The was enacted to consolidate and amend the, law regulating labour in factories. It is probably true that all legislation in a welfare state is enacted with the object of promoting general welfare; but certain types of enactments are more responsive to some urgent social demands and also have more immediate and visible impact on social vices by operating more directly to achieve social reforms. The enactments with which we are concerned, in our view, belong to this category and, there . fore, demand an interpretation liberal enough to achieve the legislative purpose, without doing violence to the language. The definition of "worker" in the , therefore, does not seem to us to exclude those employees who are entrusted solely with clerical duties, if they otherwise fall within the definition of the word "worker". Keeping in view the duties and functions of the respondents as found by the learned Additional District Judge, we are unable to find anything legally wrong with the view taken by the High Court that they fall within the definition of the, word "worker". Deletion of the word "whatsoever" on which the appellant 's counsel has placed reliance does not seem to make much difference because that word was, in our view, redundant. We have not been persuaded to hold that the High Court was in error in affirming the decision of the learned Additional District Judge. In the result this appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed.

In an application under section 15 of the the respondents claimed that they were workers within the meaning of section 2(1) of the . The Additional District Judge found that some of the respondents were time keepers who maintained attendance of the staff. job card particulars of the various jobs under operation and the time sheets of the staff working on various shops dealing with the production of Railway spare parts and repairs etc. and that other respondents were head time keepers entrusted with the task of supervising the work of other respondents. He, therefore, came to the conclusion that the work done by the respondents was "incidental to" or "connected with" the manufacturing process. The High Court in revision affirmed this order. On the question whether the respondents fell within the purview of the definition of "worker" in section 2(1) of the . HELD : (ii) The conclusion of the Additional District Judge on the nature of the work of the respondents being one of fact must be held to be binding on the High Court on revision and also not open to reassessment on the merits in this Court on special leave appeal from the order of the High Court. (ii) The definition in section 2(1) is fairly wide because it takes within its sweep not only persons employed in manufacturing process but also in cleaning any part of the machinery or premises used for a manufacturing process and goes far beyond the direct connection with the manufacturing process by extending it to other kinds of work which may either be incidental to or connected with not only the manufacturing process itself but also the subject of the manufacturing process. The definition therefore does not exclude those employees who were entrusted solely with clerical duties, if they otherwise fell within the definition of the word " worker". All legislation in a welfare state is enacted with the object of promoting general welfare, but certain types of enactments are more responsive to some urgent social demands and also have more immediate and visible impact on social vices by operating more directly to achieve social reforms. The belongs to this category and, therefore. demands an interpretation liberal enough to achieve the legislative purpose, without doing violence to the language. [728 C D; 731 B D]

ivil Appeal No. 1357 of 1973. From the Judgment and Order dated 10.10.1972 of the Gujarat High Court in Second Appeal No. 93 of 1968. 689 G.A. Shah and M.N. Shroff for the Appellants. Krishan Kumar and Vimal Dave (N.P.) for the Respondents. , The Judgment of the Court was delivered by VENKATARAMIAH, J. The question for consideration in this case is whether the hereditary right of the respondents to recover a sum of Rs.3,500 per annum under an agreement dated 10.8.1914 entered into between the predecessor in interest of the respondents and the former princely State of Junagadh came to an end by virtue of provisions contained in the Gujarat Surviving Alienations Abolition Act, 1963 (hereinaf ter referred to as 'the Act '). There was one Darbar Harsurvala of Mandavad in the former princely State of Junagadh. He had a hereditary right to collect certain quantities of grass, fire wood and timber from the Gir Forest in the State of Junagadh and that right was recognised by a declaratory decree made by the Rajastha nik Court of Kathiawar in the year 1884. On the death of Harsurvala the said right was being enjoyed by his son Jiva Vala till the year 1914. On 10th August, 1914 an agreement was entered into between Jiva Vala and the State of Junagadh under which the State of Junagadh agreed to pay every year (commencing with 1st September of the preceding year and ending with the 31st August of the succeeding year) in the month of January a sum of Rs.3,500 to Jiva Vala and after him to the heirs claiming under him in lieu of the right to collect grass, fire wood and timber which was being exer cised by Jiva Vala. Accordingly, Jiva Vala was receiving the sum of Rs.3,500 every year and on his death his son Kalubhai was receiving the said sum every year from the State of Junagadh and on the State of Junagadh becoming part of the Union of India from the Saurashtra State, then from the State of Bombay in which Saurashtra State was merged and thereafter from the State of Gujarat which came to be estab lished under the Bombay Reorganisation Act, 1960 till his death. After his death Respondent No.1 Kamlaben, the wife of Kalubhai and the other respondents, who were children of Kalubhai were receiving the amount due to them till the year 1964. However, in January, 1965 the Mamlatdar of Visavadar issued notice under the orders of the Collector, Junagadh to the respondents stating that the right to receive the said amount had come to an end on the coming into force of the Act, i.e., the Gujarat Surviving Alienations Abolition Act, 1963, which had come into force on 1st October, 1963 and threatening the respondents that measures such as attachment etc. would be taken if the amount 690 paid for the year 1.9.1963 to 31.8.1964 was not refunded by them to the State Government. Thereupon the respondents instituted the suit before the Court of the Civil Judge, Junagadh out of which this appeal arises for a declaration that they continued to enjoy the right to receive the sum of Rs.3,500 per annum hereditarily and for an injunction re straining the appellants, the State of Gujarat and the Collector of Junagadh from taking any action to recover the amount which had already been paid to them. The Trial Court dismissed the suit. Aggrieved by the judgment and decree of the Trial Court, the respondents filed an appeal before the District Judge, Junagadh in Civil Regular Appeal No. 135 of 1966. The District Judge allowed the appeal holding that the right to receive the amount had not come to an end on the coming into force of the Act. The decree passed by the learned District Judge was confirmed by the High Court of Gujarat in Second Appeal No. 93 of 1968 vide its Judgment dated 10.10.1972. The appellants have filed this appeal by special leave against the judgment of the High Court. There is no dispute about the facts involved in this case. The right of Harsurvala to take grass, fire wood and timber from the Gir Forest belonging to the State of Juna gadh had been declared in a decree (Exhibit 21) passed by the Rajasthanik Court on April 14, 1884. By a further agree ment dated 10th August, 1914 (Exhibit 24) which had been arrived at between Jiva Vala, descendant of Harsurvala and the State of Junagadh, the State of Junagadh had agreed to pay every year a sum of Rs.3,500 to Jiva Vala and his heirs in lieu of the right to collect grass, fire wood, timber from the Gir Forest, as stated above. That the State of Junagadh and then the State of Saurashtra, the State of Bombay and the State of Gujarat were paying the said amount annually to Jiva Vala and his successors till the year 1964. The only question which arises for consideration is whether the said right to receive Rs.3,500 per annum came to an end on the coming into force of the Act. The Act was passed with the object of abolishing certain alienations which were not affected by the earlier enact ments which had been enacted for the abolition of various kinds of alienations in the State of Gujarat and to provide for matters consequential and incidental thereto. The ex pression 'alienation ', as defined in clause (3) of section 2 of the Act reads thus: "3, 'alienation ' means 691 (a) any right in respect of an aghat land enjoyed by an aghat holder immediately before the appointed day, (b) any right in respect of a Taluqdari watan enjoyed by the holder thereof immediate ly before the appointed day, (c) any right, with or without any condition of service, in respect of any other land, village or portion of a village and consisting of (i) any proprietary interest in the soil coupled or not coupled with exemption from the payment of the whole or part of the land revenue, or (ii) a right only to the land revenue or a share of land revenue of the land, vil lage or portion of a village, enjoyed by the holder thereof for the time being and subsisting immediately before the appointed day in limitation of the right of the State Government to assess the land or village or portion of a village to land reve nue in accordance with the Code, whether by virtue of an express grant or recognition as a grant by the ruling authority for the time being or otherwise, or (d) any right to any cash allowance or allowance in kind, by whatever name called, payable by the State Government and enjoyed by any person immediately before the appointed day;" Section 6 of the Act reads thus: "6. Abolition of alienations together with their incidents and alienated lands liable to payment of land revenue. Notwithstanding any usage or custom, settlement, grant, agree ments, sanad or order or anything contained in any decree or order of a court or any law for the time being applicable to any alienation, with effect on and from the appointed day (a) all alienations shall be and are hereby abolished; (b) save as expressly provided by or under this Act, 692 all rights legally subsisting on the said day under such alienations and all other incidents of such alienations (including any right to hold office, or any liability to render serv ice appertaining to an alienation) shall be and are hereby extinguished; (c) subject to the other provisions of this Act, all alienated lands shall be, and are hereby made liable to the payment of land revenue in accordance with the provisions of the Code and the rules made thereunder; and accordingly the provisions therein relating to unalienated land shall apply to all alienated lands. " On such abolition the alienee is entitled to compensation as provided in section 13 of the Act, if the alienation is one covered by section 2(3)(d) of the Act. The right to receive a sum of Rs.3,500 per annum which the respondents were enjoying admittedly did not fall under sub clauses (a), (b) and (c) of clause (3) of section 2 of the Act. The question is whether the said right falls under sub clause (d) of clause (3) of section 2 of the Act and if it falls under that clause whether the payment of the said sum can be abolished constitutionally under the Act. Sub clause (d) of clause (3) of section 2 of the Act is very widely worded and refers to any right to any cash allowance or allowance in kind, by whatever name called, payable by the State Government and enjoyed by any person immediately before the appointed day. The Act is included in the Ninth Schedule to the Constitution of India as Item No. 33 which reads thus: "33. The Gujarat Surviving Alienations Aboli tion Act, 1963 (Gujarat Act XXXIII of 1963), except in so far as this Act relates to an alienation referred to in sub clause (d) of clause (3) of section 2 thereof." Sub clause (d) of clause (3) of section 2 of the Act having been specifically excluded, the said clause does not receive the protection of Article 31B of the Constitution of India. The question which remains to be considered is wheth er the said sub clause can be deemed to be protected by Article 31A of the Constitution of India. Article 3 IA of the Constitution of Indian refers to matters described in sub clauses (a) to (e) of Article 31A(1) of the Constitution of India. It is not claimed 693 on behalf of the State Government that the present case falls under sub clauses (b) to (e) of Article 31A(1) of the Constitution of India. It is, however, urged that the present case falls under sub clause (a) of clause (1) of Article 31A of the Constitution of India, which reads thus: "(a). the acquisition by the State of any estate or of any rights therein or the extin guishment or modification of any such rights, or" In other words it is urged that the provision in question should be treated as a part of a legislation intended for bringing about agrarian reform to which Article 31A(1)(a) of the Constitution of India is attracted. In the instant case the right which the family of the respondents possessed was the right to collect grass, fire wood and timber etc. from the Git Forest and that right had already been surrendered under the agreement dated 10.8.1914 by the said family in lieu of the annual payment of Rs.3,500. In an earlier deci sion in Civil Application No. 1399 of 1968 decided on 18/19.3.1971 a Division Bench (J.M. Mehta and A.D. Desai, JJ.) of the Gujarat High Court had held that sub clause (d) of clause (3) of section 2 of the Act was not ultra vires so far as the alienation in question was by way of an agrarian reform. The judgment in that case had been delivered by J.M. Mehta, J. The Judgment out of which the present Second Appeal arises was also rendered by J.M. Mehta, J. himself. Distinguishing his earlier decision from the present case J.M. Mehta, J. has observed thus: "In the present case the right of plaintiff has originated in the right to take forest produce of the Gir Forest belonging to the former Junagadh State and which had been enjoyed by the ancestor Shri Harsurvala. The right was recognised by the Rajasthanic Court of the then Kathiawad Agency. It was under the agreement, exhibit 24 dated August 10, 1914 that this right was commuted into a lump sum amount of Rs.3,500 and this was enjoyed hereditarily by the plaintiffs ' ancestor. Therefore, this alienation has nothing to do with any agrarian reform and this alienation would not fall within the section 2(3)(d) so that it can have any immunity from the challenge. The State could only succeed if the term 'alienation ' in section 2(3)(d) is interpreted in such wide context which would make it ultra vires as per the settled legal position in the aforesaid Divi 694 sion Bench decision. That is why narrow inter pretation was given by me confining to only those alienations which were incidental to the agrarian reform. The present alienation which consisted of cash allowance as per exhibit 24 is not incidental to any agrarian reform, and therefore, ,the Act would not abolish this alienation. The plaintiffs ' rights are to take forest produce and on commutation of their rights by exhibit 24 they are property rights. When such allowance is being paid the right to this cash allowance could never be acquired by the State as per the aforesaid settled legal position . ." In view of the foregoing the High Court held that sec tion 2(3)(d) of the Act should be read down and construed as not including payment of cash allowance of the type in question. It held that otherwise the said clause would be violative of Articles 14, 19 and 31 of the Constitution of India. It is not disputed by the learned counsel for the State Government that unless the present case receives the protec tion of Article 3 IA of the Constitution of India the action taken by the State Government to treat the right of the respondents as having come to an end would be unconstitu tional since it would be violative of Articles 14, 19 and 31 of the Constitution of India. It is, therefore, necessary to examine the nature of the transaction under which the amount of Rs.3,500 was payable every year to the respondents on the hereditary basis in order to find out whether the abolition of the said right can be considered as a part of agrarian reform which re ceives the protection of Article 31A of the Constitution of India. An extract of the Records of Rights giving particu lars of the agreement dated 10th August, 19 14 entered into between Vala Jiva Harsur and the State of Junagadh is pro duced before the Court. It shows that Vala Jiva Harsur, the predecessor in interest of the respondents had the right to remove from the Gir Forest every year (i) 75 cart loads of teak wood, (ii) 100 cart loads of atcot wood, (iii) 600 cart loads of sarpan, and (iv) 250 cart loads of grass, in addi tion to the right of grazing of cattle and removing two lakhs bundles of grass during the time of famine. It is clear from the above statement that certain rights which the family of respondents possessed in the land comprised in the Gir Forest were agreed to be surrendered against payment of Rs.3,500 annually. It is no doubt true that long before the date on which the Act came into force the agreement had come into existence but it was a 695 right which was originally annexed to land. It may be that the said land formed part of the said forest, but still it falls within the definition of the expression 'estate ' in clause (a) of Article 31A(2) of the Constitution of India. Article 31A(2)(a)(iii) states that any land held or let for purposes. of agriculture or for purposes ancillary thereto, including waste land, forest land for pasture or sites of buildings and other structures occupied by cultivators of land, agricultural labourers and village artisans is includ ed in the expression 'estate ' for purposes of Article 3 IA of the Constitution of India. Article 3 IA, as it stood on the date of the passing of the Act, provided that notwith standing anything contained in Article 13, no law providing for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights shall be deemed to be void on the ground that it was inconsistent with or took away or abridged any of the rights conferred by Article 14 or Article 19 or Article 31 of the Constitution of India. The expression 'rights ' is again defined in Article 31A(2) of the Constitution of India as in relation to an estate, including any rights vesting in a proprietor, sub proprietor, underproprietor, tenure hold er, raiyat, under raiyat or other intermediary and any rights or privileges in respect of land revenue. It is an inclusive definition. The Fight which was being enjoyed by the predecessor ininterest of the respondents was a right in a waste land or a forest land or a land for pasture. In order to .treat a particular law as a part of an agrarian reform, it is not necessary that on the land which is the subject matter of the said law actual cultivation should be carried on. In the State of Kerala and Anr. vs The Gwalior Rayon silk Manufacturing (Wvg.) Co. Ltd. etc. ; , the. constitutionality of the Kerala Private Forests (Vesting and Assignment) Act, 1971 came up for consideration before this Court. In that case one of the questions which arose for consideration was whether the said Act which related to private forests envisaged a scheme of agrarian reform. In that case this Court held that even though the said legislation had the effect of extinguishing or modifying rights annexed to or arising out of the forest land it could be considered as part of agrarian reform because such forest lands also if prudently and profitably exploited could bring about relief to people engaged in agriculture. This Court further observed in that case that agrarian reform was more humanist than mere land reform and scientifically viewed covered not merely abolition of inter mediary tenures, zamindaris and the like but restructuring of village life itself taking in its broad embrace the socia economic regeneration of the rural population. In the present case the extinguishment of the right to receive a certain amount in lieu of the right to remove timber, grass, etc. from a forest area, therefore, formed part 696 of the process of agrarian reform as there was clear nexus between the agreement to pay the amount and the rights arising out of the forest area. It is significant that under the agreement of the year 1914 the State of Junagadh under took to pay Rs.3,500 every year hereditarily in lieu of the rights which the predecessor in interest of the respondents had in the forest area, thereby meaning that if the amount was not paid, the original right to carry timber, grass etc. from the forest area would revive. It cannot, therefore, be said that the extinguishment of the right to receive money alone unconnected with land was contemplated in the instant case. When once the above conclusion is reached then the legislation in question should be construed as having the effect of bringing about the extinguishment of the right in an estate for the purpose of better management of the forest area keeping in view the interests of the people of the State in general and of the people living in or around the Gir Forest in particular. Sub clause (d) of clause (3) of section 2 of the Act should be deemed to include the cash allowance of the type involved in this case and the Act must be held to be valid even though it affects the rights of the respondents which undoubtedly originated from the land covered by the forest area. We, therefore, hold that the view taken by the High Court that it the transaction in question is construed as covered by sub clause (d) of clause (3) of section 2 of the Act, the Act would become void to that extent is not correct. We are of the view that the legislation has the effect of validly extinguishing the right of the respondents to receive annually a sum of Rs.3,500 on a hereditary basis. The respondents are entitled to the payment of whatever compensation is payable under the Act notwithstanding the provisions of Articles 14 and 19 and Article 31 of the Constitution of India (as it existed prior to its deletion). We, therefore, set aside the judgment of the High Court and dismiss the suit instituted by the respondents. We, however, make it clear that the dismissal of the suit does not come in the way of the respondents being paid whatever compensation they are entitled to under the Act. If such compensation has not been paid yet, the authority concerned shall proceed to compute the amount of compensation payable to the respondents and to disburse it within three months from today. The appeal is accordingly allowed. No costs. R.N.J. Appeal allowed.

One Darbar Harsurvala by virtue of a declaratory decree made in 1884 had the hereditary right of collecting grass, firewood, timber etc. from Gir Forest in the erstwhile state of Junagarh. This right devolved on his son Jiva Vala. The State by an agreement dated 10th August 1914 agreed to pay Rs.3,500 every year to Jiva Vala and on his demise to his heirs, in lieu of the right to collect grass, firewood etc. In January 1965 the revenue authorities issued a notice to the Respondents successors in interest of Harsurvala that the right to receive the aforesaid amount had come to an end on the coming into force of the Gujarat Surviving Alienations Abolition Act, 1963 and asked them to refund the amount paid to them for the year 1963 64. The respondents filed a de claratory suit for a declaration that they continued to enjoy the right to receive Rs.3,500 hereditarily and for an injunction restraining the State from recovering the amount already paid to them. The Trial Court dismissed the suit. On appeal the District Judge allowed the appeal holding that the right to receive the amount annually had not come to end. The High Court confirmed the decree passed by the District Judge. The State came up in appeal by special leave against that judgment of the High Court. Allowing the ap peal, this Court. HELD: The Gujarat Surviving Alienations Abolition Act, 1963 was passed with the object of abolishing certain alien ations which were not affected by the earlier enactments which had been enacted for the abolition of various kinds of alienations in the State of Gujarat. [690G] 688 The Act is included in the Ninth Schedule to the Consti tution as Item No. 33. [692F] Sub clause (d) of clause (3) of section. 2 of the Act having been specifically excluded, the said clause does not receive the protection of Article 31 B of the Constitution of India. [692G] The 1963 Act should be construed as having the effect of bringing about the extinguishment of the right in an estate for the purpose of better management of the forest area keeping in view the interests of the people of the State in general, and of the people living in or around the Gir Forest, in particular. [696C] In order to treat a particular law as a part of an agrarian reform contemplated under article 31 A(1) it is not necessary that on the land which is the subject matter of the said law actual cultivation should be carried on. [695E] In the instant case, the right which the family of the respondents possessed was the right to collect grass, fire wood and timber etc. from the Gir Forest and that right had already been surrendered under the agreement dated 10 8 1914 by the said family in lieu of the annual payment of Rs.3,500. The right which was being enjoyed by the predeces sor in interest of the respondents was a pasture. [693C D] The extinguishment of the right to receive a certain amount in lieu of the right to remove timber, grass, etc. from a forest area, therefore, formed part of the process of agrarian reform contemplated under article 31 A(1) as there was clear nexus between the agreement to pay the amount and the rights arising out of the forest area. [695H; 696A] The respondents are entitled to the payment of whatever compensation is payable under the Act notwithstanding the provisions of Article 14 and 19 and Articles 31 of the Constitution of India. [696E F] State of Kerala & Anr. vs The Gwalior Rayon Silk Manu facturing (Wvg.) Co. Ltd. etc. ; , referred to.